Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 27 - Evidence - Meeting of April 6, 2017
OTTAWA, Thursday, April 6, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Good morning, everybody. Welcome to the Standing Senate Committee on Agriculture and Forestry. Today, the committee is continuing its study of the potential impact of the effect of climate change on the agri-food and forestry sector.
Before continuing, I will ask the senators to introduce themselves, starting with the deputy chair of the committee.
Senator Mercer: Terry Mercer from Nova Scotia.
Senator Beyak: Lynn Beyak from Ontario. Welcome.
Senator Tardif: Good morning. Claudette Tardif from Alberta.
Senator Woo: Yuen Pau Woo from British Columbia.
[Translation]
Senator Pratte: André Pratte, from Quebec.
Senator Dagenais: Good morning; Jean-Guy Dagenais, from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Thank you. My name is Senator Maltais. I chair this committee, and I'm from Quebec.
Welcome to our guests. This morning we have from the Canadian Cattlemen's Association Mr. Bob Lowe, Chair of the Environment Committee; and John Masswohl, Director of Government and International Relations.
Do you have a presentation?
Bob Lowe, Chair, Environment Committee, Canadian Cattlemen's Association: Thank you for having us here today. I've met some of you before, but not very many of you. We're here to discuss climate change and beef production in Canada.
I'm a rancher from southern Alberta and chair of the Canadian Cattlemen's Association's Environment Committee, and I also chair the Alberta Beef Producers. I'm joined by John Masswohl, who works in our Ottawa office.
The Canadian beef industry continually strives to be a global leader in sustainable beef production and looks to be a partner in dually achieving Canada's economic and environmental targets. Due to continuous improvements, innovation and commitment of Canadian beef producers, the Canadian beef industry reduced its greenhouse gas footprint by 15 per cent between 1981 to 2011. Through advancements in technology and management, Canada produces the same amount of beef in 2011 compared to 1981, with 29 per cent less breeding stock, 27 per cent fewer slaughtered cattle and 24 per cent less land.
Canadian beef has one of the lowest greenhouse gas footprints per unit of production in the world at 12-kilogram CO2 equivalent per kilogram of live weight, less than half of the world average. Furthermore, substantial amounts of carbon are stored in Canadian rangelands utilized by the beef industry. While contributing $33 billion to the Canadian economy, the beef industry only attributes 3.2 per cent of the country's total greenhouse gas footprint.
The Canadian Cattlemen's Association's active involvement in climate change policy is a natural evolution of our long-time commitment to environmental stewardship. We want to prevent the further loss of grasslands. Indeed, the lands used for beef production are some of the last stands of native grasslands, home to thousands of different species and an important store of 1.5 billion tonnes of carbon.
We estimate that greenhouse gas emissions could be cut by up to 20 per cent through uptake of mitigation strategies and another 5 per cent could be cut from reducing food waste by half. To achieve these reductions, we recommend investing in five key areas: invest in increasing productivity; support the enhancement of resiliency to climate change; support the mitigation of greenhouse gas emissions; support national and international climate change dialogue and action; and measure and monitor the greenhouse gas footprint of Canadian agriculture.
In terms of these five areas, I'm going to ask John Masswohl to outline a number of specific actions that we feel should be undertaken.
John Masswohl, Director of Government and International Relations, Canadian Cattlemen's Association: Good morning.
Key in those remarks was about productivity, research and innovation. One of the things that we want to do is continue the Beef Cattle Industry Science Cluster and further invest in programs that support research, innovation and knowledge transfer regarding practices that reduce the environmental footprint of beef production.
We need to maintain and restore critical capacity at Agriculture and Agri-Food Canada for doing research, as well as the infrastructure to do that research. We need to develop clear triggers and reference materials for the AgriRecovery program in terms of resiliency. Also, we need to improve hay and forage insurance across the country by implementing the recommendations made by federal-provincial-territorial forage task team that completed its study a few years ago.
We need to invest in agriculture water management infrastructure. Examples of that might include supporting the construction of improved irrigation systems and flood structures such as dams, storage or other outlets.
We want to support the creation and further development of payment for ecosystem service programs, PES, that will provide incentives for best land and water management practices to preserve critical agriculture land, improve environmental health and build resiliency into the agriculture sector.
We want to invest in research regarding forage quality, feed additives, animal genetics and animal health as outlined by the Beef Cattle Research Council. We also want to invest in research to better understand food waste causes in Canada and enhance communication efforts to reduce food waste at the consumer level.
We need to develop and support agriculture-focused conservation and stewardship programs and initiatives that support the conservation of healthy rangelands and riparian areas. Some examples of some successful programs are Cows and Fish or creating payments for those ecological services.
We have a Canadian Roundtable for Sustainable Beef. We want to support that by having more participation from experts at Agriculture and Agri-Food Canada as well as Environment and Climate Change. We also want funding of projects under that initiative.
We want to support and participate in the Global Research Alliance on Agricultural Greenhouse Gases. There's also a Global Agenda for Sustainable Livestock that's coordinated through the United Nations.
We need to continue scientific measuring and monitoring of the greenhouse gas footprint of Canadian beef production through continued investment in the Farm Environmental Management Survey and the Census of Agriculture to ensure robust data sets that enable greenhouse gas monitoring.
I think, lastly, our specific recommendation is to support development of global greenhouse gas monitoring methodologies through the Livestock Environmental Assessment and Performance Partnership. That's also something through the United Nations. We want to get the participation of agriculture and agri-food research scientists as technical advisers to that initiative, as well as financial contributions.
Mr. Lowe: Given the federal government's commitment to carbon pricing, we recommend that agriculture be exempt from any carbon pricing scheme and ensure that special care be taken to correct the direct and indirect impacts. We recommend that not only primary agriculture be exempt, but also meat and food processing.
In Alberta, we have a carbon tax already, so we've been doing quite a bit on this. I was talking to one of the major processors the other day. Given a couple of assumptions — that anybody up the chain is going to pass on the cost of the tax to them, and based on $50 tonne carbon — it will cost them an extra $5 million a year. In a climate where we have a lot of regulations already — I'm supposed to stay on script and I'm getting off — we need to keep our processors here. We can't be overregulated.
Our primary reason for the exclusion of Canadian agriculture from the carbon pricing scheme is that Canadian agriculture is already a global leader in sustainable production. At the same time, our products are highly traded commodities.
A national carbon pricing scheme risks making our producers less competitive and could push production to another area of the world that has a higher greenhouse gas footprint than Canadian agriculture production. Correcting for this carbon leakage is very difficult, if not impossible, hence our recommendation for exclusion for both primary production and processing.
We do not want this request for exclusion from a carbon pricing scheme to be confused with lack of environmental commitment. Let our impressive results to already reduce our greenhouse gas footprint and desire to do more demonstrate our commitment. However, we believe the carbon pricing tool is unlikely to be the correct tool to maximize further greenhouse gas reduction from agriculture.
We would like to further emphasize that agriculture, as well as meat and food processing, are highly competitive global industries and policy-makers must be aware of the risk of driving our industry south of the border where significantly lower operating costs exist. To correct the indirect cost and impact of carbon pricing policy on agriculture, we recommend utilizing a portion of the funds obtained from the carbon pricing scheme to invest in our five key strategy areas for reducing our greenhouse gas emissions and the investigation of revenue neutral carbon pricing schemes.
We also recommend ensuring corrections to carbon pricing are made for rural residents, who are disproportionately impacted by carbon pricing due to having higher travelling costs, higher heating costs, et cetera.
In closing, we would like to thank you for the opportunity to present today. We would be very pleased to take your questions.
The Chair: Thank you very much, gentlemen. For the first round, we have the deputy chair of this committee, Senator Mercer.
Senator Mercer: Gentlemen, thank you. It's good to see you here again.
In your statement, you said that Canadian beef has one of the lowest greenhouse gas footprints per unit of production in the world and less than half the world average. Would you like to explain to us, and to those watching, how you have achieved this?
Mr. Lowe: It is mostly research and science. The way we feed our cattle is a grain-based finishing diet, which means that they turn into food faster.
Senator Mercer: It's pretty a simple but understandable explanation. Thank you very much for that.
Recently, of course, the market in China has opened to Canadian beef and many of us on the committee were in Beijing and Shanghai to celebrate that when it happened. We congratulate you for that.
What will carbon pricing do to your re-entry into that market? Has carbon pricing made it more difficult to enter the Chinese market or not?
Mr. Lowe: I will leave that to the trade specialist.
Mr. Masswohl: I think that's one of our large concerns. We operate on a competitive global marketplace, and whether it's China or Japan or even selling here in Canada, most consumers in most parts of the world are concerned about the price they have to pay to be able to feed their families.
If we're operating in an environment where there's carbon pricing on beef production in Canada, but our competitors in the United States don't have to pay those costs, it's natural to assume that eventually the production is going to shift into the lower-cost environment, and we're very concerned about that.
Senator Mercer: Of course, in the current environment, there's no move in the United States to get into this at all. Greenhouse gases don't exist in the United States; it's a myth, false news.
Has it started to have an effect on the price in Alberta?
Mr. Lowe: No, I don't think it has. We're just getting into it. Since January, there has been no real farming started. On our own, we farm a substantial amount of land at home and marked fuel is exempt from the carbon tax, but nothing else is. It costs us about $20 an acre to harvest a crop in marked fuel, and $85 an acre in fertilizer. And the fertilizer is not exempt from the carbon tax. It will have a huge effect. We haven't felt it yet, but it will have one.
Senator Oh: With carbon pricing, we know there are other countries, Australia and New Zealand, who are producing the same thing as we are producing. Are we all on an equal footing with carbon pricing? Who checks on this? Are we all on a level playing field?
Mr. Masswohl: I think you're really hitting on what is the concern. The question isn't whether there will be carbon pricing or not. Some countries are saying they're not doing it. But we have all kinds of transitional uncertainty going on. Canada is saying one thing, but what about this country, that country? Even within Canada, we understand that the federal scheme is essentially a target to be developed by provinces, and different provinces are taking different approaches.
What is the impact on the competitive nature of cattle production in Alberta versus Saskatchewan, for example? We don't know the answer to a lot of these questions. We hear there will be exemptions. Exemptions on what? On farming? What about fuel, fertilizer? There are a lot of these transitional questions that are all going to affect the competitive makeup. We don't fully know the answer to all of these things, but we're wondering about them.
Senator Oh: Are we jumping into carbon pricing too early, too quickly, too fast?
Mr. Masswohl: One of the keys is that there needs to be international coordination of these things as opposed to unilateral declarations of "here it is.''
We would like to see, if it's going to be it true carbon pricing, the term "price'' suggests there's a carbon market, which also suggests that there's an opportunity to earn carbon credits. Our view is that people who have vast tracts of grasslands and grow green things that sequester carbon should be rewarded for that. That's an environmental service farmers are providing that they're not compensated for.
Senator Tardif: Good morning. Thank you very much for this fact sheet on Canadian beef production and greenhouse gas emissions. It's very concise, yet all of the information is there and it's presented in an interesting way.
You mentioned in your brief that more support was needed for the Canadian Roundtable for Sustainable Beef through Agriculture and Agri-food Canada. I know that the roundtable is putting forward sustainability indicators for beef production. Could you explain how beef producers will be using these sustainability indicators?
Mr. Lowe: I'll go back a little bit. I don't know if you're familiar with the McDonald's pilot project on sustainable beef —
Senator Tardif: Perhaps, for our viewers, explain it a little bit.
Mr. Lowe: Three our four years ago, McDonald's restaurant decided they were going to source their beef sustainably and they came to Canada to do it. We developed some indicators based on the global roundtable's criteria, which is moved through the Verified Beef Production program and to the CRSB.
Senator Tardif: CRSB?
Mr. Lowe: That's the Canadian Roundtable for Sustainable Beef, and they have these indicators. If you do them as a producer and go through it, that's, on a global basis, what the definition of sustainability would be. Our goal is that the Canadian beef industry adopts these indicators as a total industry, based on the global round table criteria for sustainable beef, and what it amounts to is we're there already. This is basically a method of proving to consumers that we're there.
Senator Tardif: Is there an uptake by the producers to use these?
Mr. Lowe: We're working at that, is the best answer.
Mr. Masswohl: I think that's where the incentives need to come in. In anything, you have a group of the population that are early adopters. They want to lead the way, they're innovators and will do it and you have some who are never adopters. But you have a large group in the middle who know there's a better way to do it and want to evolve but they need some help and some education. If it involves putting up fences around waterways or changing equipment, financial incentives tend to help with the adoption of these things.
Senator Tardif: If these indicators were used and they were certified, would this lead to an increase in trade opportunities?
Mr. Lowe: I believe it would. I think that's the whole thing. I believe, globally, it will be a market access question. We're going to have to do it. If we rely on 40 or 50 per cent or something of our production going out of country, we have to have the trade. This is just another tool to assure we're ahead of somebody else.
Senator Woo: Good morning. Thank you for your presentations. I'd like to ask you to tell us a bit more about the Payment for Ecosystem Services, and particularly whether there is any direct contribution from PES to GHG reduction specifically, apart from other kinds of environmental benefits that PES might encompass.
Mr. Masswohl: We know that the public, or portions of the public, are increasingly interested in how their food is produced, which for agriculture producers is very exciting, because part of our interest is we want to tell the story and we want the public to be closer connected. Because of that, we know that there are certain things that the public and society want. They want clean water. They want safe food. They like wildlife and want there to be habitat. They want to protect species at risk.
Farmers, and particularly beef farmers, are in a very good position to provide those services, and do provide them. Of the over — what is it — probably close to 150 million acres of agriculture land in Canada, about a third of that is in beef production. Natural grasslands provide that habitat and provide the sink for carbon and put it in the ground, so there are all those things we provide. There is no way currently for society to reward the farmer financially for that. Yes, there are some consumers who say, "That's important to me and I'll pay extra,'' but there's not enough of those consumers. Most consumers, as I said, are going to the grocery store and trying to stretch their budget as best they can to feed their family, so we have to be conscious of all of those things. If we could look at that desire to have those things and provide a way to have the farmers keeping the grassland as grassland, that would be a huge objective and a huge accomplishment if we could do that.
Senator Woo: A part of these ecosystem services would be directly contributing to GHG reduction, particularly the role of farmland as sinks, but other parts of PES have to do with social preferences and contribution to society in general.
Mr. Masswohl: Right. Certainly, we think there's an aspect for carbon credits, which isn't specifically reducing the footprint but is closely associated with the net outcome of that. But some of it is for other aspects of the environment.
Senator Woo: Can I follow up with a question on carbon pricing? I understand the logic and we've heard the same argument from your colleagues in other parts of agriculture about the threats to your competitiveness. I think we're very sympathetic to that, and it's a tough problem to deal with. But a carbon price is most effective if it has as few exemptions as possible. This is a policy challenge for the government to figure out whether to allow exemptions, and how many.
But the one tool that has been discussed a lot in carbon pricing that can help offset the competitiveness challenges to industries that trade internationally is revenue neutrality: the idea that any proceeds from a carbon price would be returned to the economy by way of tax cuts or, perhaps, by way of investments in innovation, technology and so on.
Can you say something about the way in which a revenue-neutral carbon price could provide some offset to the increased costs in your industry and make it less painful?
Mr. Lowe: There are the five areas we talked about. I believe the main one would be research.
Senator Woo: You don't want to pay the carbon price, but you want the revenues from the carbon price; is that your position?
Mr. Lowe: Sure.
Senator Woo: Got it.
Mr. Lowe: Like you said, it's hard to do something. To me, I don't know how you design it, because it's for people smarter than me, but something shouldn't come into place so that all of a sudden you need a bunch of exemptions. However you can figure it out so there are no exemptions is probably the best way to do it. But when you're taxing the production of food on a global basis, to me there's just something fundamentally not good about that in a time when we're short of food.
Senator Pratte: I'd like to follow up on this a little bit, because many other industries are in the same situation that you're in; that is, they're also competing on the global marketplace and with companies that are in markets where there may be other forms of carbon pricing, lower carbon prices or no carbon prices at all. They're also hoping that they will be exempt.
So why would agriculture or specific parts of the agricultural industry be exempt and not others?
Mr. Masswohl: I guess I would say we are talking just about the beef industry. We're not saying don't do something for someone else. I think one of the things that you would want to look at is the sectors in which Canada is already a global leader, in terms of environmental protection and greenhouse gas reduction, and that's certainly very true in the beef sector. We've already been working for a lot of years, not with the express objective of reducing our greenhouse gas footprint, but with the objective of making ourselves more efficient producers, and that's had the benefit of actually reducing our greenhouse gas footprint.
Compare that to, I would say, some of the very high emitters, which might be China, India and some of the South American countries. If you then say: Okay, Canada, you've been doing very well in this sector, and now we're going to put a tax on you, and the effect will be to drive the production out of Canada and presumably into countries that have not achieved our level of results, what have you achieved overall in terms of global environmental protection? You've actually made the situation worse.
Our whole objective here, as we've said, is to help us to do even better than we have. We've identified a number of things that we're already doing and working on, because we think we can make our greenhouse gas footprint even smaller. We don't think that the tax is the right tool to help us do that. We think there are incentives in innovation and research. Then, once we have done that, we can actually be a leader in terms of helping other countries see what they can do to improve their situation.
Senator Pratte: Are all carbon-pricing schemes equivalent in your mind? You did mention, for instance, that for the moment cap-and-trade schemes do not seem to be applicable to agriculture, but could some kind of carbon-pricing scheme be designed to be applicable to farms? Therefore, there could be a system where you would benefit from your efforts.
Mr. Masswohl: I think so. There is a lot of moving parts in these things, so it's hard to say that everything is equivalent. One of our concerns is it might be this system in one jurisdiction, that system in another. Eventually, producers will figure out where the best jurisdiction is in which to produce to maximize the benefit or minimize their exposure to the tax.
Senator Pratte: I have one small question. You mentioned a lot of different areas where research would be profitable, but rather than spreading bits and bits of millions, is there one area where research could be concentrated where it would be more profitable?
Mr. Lowe: Yes. Are you familiar with the Beef Cattle Industry Science Cluster?
Senator Pratte: No, I'm not. I suppose viewers are not either.
Mr. Lowe: John, would you explain that a little bit?
Mr. Masswohl: That's a question that we constantly deal with, because there is never enough funding for research and innovation, but there are so many areas we want to get into. Because of that, we have created an off-shoot of our organization called the Beef Cattle Research Council. They are now coordinating their third Beef Science Research Cluster.
The objective there is to take our industry money that we put into research, put that together with educational institutions, other private research and government research, and come up with the objectives regarding where the most bang for the buck is where we can get into research.
We are looking at forage and nutritional research. What are the different varieties of grasses that can perhaps be best digested so the animal can use the feed most efficiently, produce the most amount of beef with the fewest amount of resources? Research in that area.
We also look at disease prevention. Animals get sick, are not efficient and sometimes they don't make it; they die. Not only is there an economic cost to the producer, but there is an environmental impact having raised an animal that doesn't produce anything.
Those are some of the areas for sure.
Senator Beyak: Thank you, gentlemen. Your information is always so well researched, is such common sense and so easy for viewers to relate to. I appreciate it.
I don't think the current government is aware of the high impact of over-taxation and over-regulation. You started to go off-script, and I wondered if you would continue on that, Bob. Just point out again how it's hurting our competitiveness around the world.
Mr. Lowe: What I read is that we're going to be in a global food shortage. Our biggest competitor is the U.S., and they are also our biggest customer. Forty to 50 per cent of our industry, the beef industry, gets exported. We have to be able to compete globally. When our biggest customer and competitor is moving this way and we're moving this way, that's going to be pretty tough to do.
I brought up the processors, and that was one of the major processors. We have two in Canada. We're facing problems with labour — higher wages in our competitor. We can't get the labour to do the things in the processing sector. Now you add something else to the top of that. At least in Alberta, we're really big on value-added, but we're chasing the value-added people out of the country. To be competitive globally, you can't do that for very long, or you lose the industry.
Senator Beyak: Thank you.
Mr. Masswohl: One of the things we were really happy to see was the report that came about two months ago from the Minister of Finance's council of economic adviser. I think some people refer to it as the Dominic Barton report. From our perspective, it couldn't have been better if we had written it ourselves. He recognizes that when it comes to Canadian agriculture, in particular, we can be an agriculture super power in the world if we have the correct competitive operating environment. That's everything across the board: regulatory, fiscal, tax policy, trade agreements, access to markets. So these are all pieces of the same picture.
We absolutely believe that not only can we make a huge contribution to feeding Canadians, but we can also feed the world and do so in a way that is environmentally sustainable.
That's why we have this Canadian Roundtable on Sustainable Beef, which feeds into a global round table on sustainable beef and a number of the initiatives at the UN. We're trying to get there.
[Translation]
Senator Dagenais: Our American neighbours live in both the north and the south, but in fact a large number of them are in the south. I don't think there is a huge difference in the climate of our two countries, but our politics surely differ, among other things regarding the carbon tax. Canadian producers may have to face competition on the cost of products here as compared to the cost of American ones. Would it be possible to put in place policies that would have a positive impact for Canadian producers, without having American producers do the same thing? As you said, the competition will make things difficult.
[English]
Mr. Lowe: If the investment is right — and we mentioned our five different areas that we feel the investment should go into from the tax — I believe there is a way of doing this. I don't know how, but I'm not paid to figure out how.
I do not believe we have to align ourselves with the U.S. policies completely. We talk about carbon-neutral or revenue-neutral tax. I would have to go back through my papers without shuffling, but if the money can go into research and into how to live with it — make it something good instead of just another tax. That's the big thing. I guess that's up to you people to figure out how to do that.
[Translation]
Senator Dagenais: Sooner or later, the famous carbon tax will have an effect on the cost of products. When we go to the United States and purchase American products, we see that there is sometimes a difference in their cost, which leads to competition on the market. At a given point, consumers are the ones who decide. Is there not some way for the government to neutralize the effect the carbon tax may have on the cost of products by putting in place other incentives to decrease taxes for Canadian producers?
[English]
Mr. Masswohl: The first thing is exempting agriculture production from the carbon tax in the first place. The second one is looking at where the opportunity is to store sequestered carbon. Grasslands, you want to keep grasslands as grasslands, as opposed to taking grasslands out of cattle production. What will those lands do? Will they be used usefully to plant a crop, which means plowing up native grasslands? As soon as you plow that up, you release the carbon in the ground, so you're increasing the carbon footprint by doing that. You're losing habitat. So that's a very negative scenario, that we want to keep those grasslands as grasslands.
Some people might say, "Well, just let the land go wild.'' If you do that, you're probably also affecting the ecosystem. You're changing the equation of the biodiversity. You're probably reducing habitat for certain species, particularly species at risk. Before the cattle were on the land, what was there? The buffalo were on the land. The cattle are serving the purpose that the buffalo used to provide. So we absolutely need to keep those grasslands as grasslands.
In terms of your previous question about what Canada could do differently than some other jurisdictions, in particular, the area that we talked about in terms of resiliency, responding to natural disasters. As we notice, some of the weather is becoming more severe. We have more flooding or more drought. That's probably going to be fairly unique to Canada in some areas, the flood plains. We know that there are certain areas, particularly Manitoba, that are more prone to flooding. Things like water infrastructure projects would be unique to that.
If you want to look at things that would be unique, it's probably on the resiliency and adaptation side.
Senator Petitclerc: Thank you very much for your presentation. My question might be broad and ideological as well. I was reading a few days ago in La Presse a very interesting article talking about consumption of beef and meat, health and the environment. For me, it was one of the very first times that I saw this, because we have seen a trend with recommendations for maybe eating a little less meat, and beef especially, in the past. But the link with the impact on the environment, I had not seen that. It also said that since the 1970s, the impact on the environment has lowered by 25 or 29 per cent, which is pretty amazing, the impact of the production of beef.
I have two questions. First, how do you address that? Because some people may say to lower the impact on the environment, the solution is just to eat less beef. But that's your business. So I want to know how you address that.
Also, that 29 per cent or 25 per cent reduction impressed me. You did mention it a bit, but I want you to project. Is the solution that it will get so much better that the trace will be so little if we think about the next 10 or 15 years? I don't know how you deal with that.
Mr. Masswohl: Where we start from in there, in terms of the consumer perception of things, is that we know that the average person wants to do something to help, right? But they don't necessarily know what. So they might read an article like this, or they might read that. They are often not going out to farms and talking to farmers or reading technical journals or scientific things. They are watching a movie or something. So the impressions aren't always the most accurate thing.
One of the challenges we have is that it's actually counterintuitive. We know that cattle produce greenhouse gases. We know that. But what is less obvious is about the environmental benefit of cattle production, if you look at it from the whole cycle about what is the land providing? Sometimes it's easy to say, "just get rid of the cattle out of the equation and we'll eat more carrots or broccoli or whatever.'' You have to think about that land.
So if you're going to take grassland, which is serving a purpose out there — storing carbon and providing habitat — and plow it up, the average person isn't necessarily going through that whole thought process of saying if we are doing that, we're releasing the carbon that is in those deep root systems that have never been plowed up. And if we're planting a field of broccoli, you're going from an ecosystem to creating a monoculture. So again, negative. It isn't necessarily all about carbon production, but our whole thing is not to focus on just one piece of the puzzle. We have to look at the whole environmental picture. There are a lot of things that are interconnected. If you move this one lever, what have you done over here?
We have to get better at telling the story. The little fact sheet that Bob was passing out is part of how we do that. But to tell that story, it's not necessarily about telling the public about scientific research and what is happening in a research barn at the University of Saskatchewan. It's how you take that research and tell a story with it.
Mr. Lowe: To add to that a bit, this came to me last summer in some place I was at. My number one goal in life is to feed my family and my friends. If you take away the science of food production, my family and my friends are still going to be fed. I'm going to be fine. But we live in a society that has very cheap food, all of it, beef included. The reason for that is because we have the science to do it.
For the rest of society to eat, we need to be able to use the science. You said to project forward 10 years. I have no idea what that is going to be. But I do know it goes back to profit. The margins in agriculture get smaller and smaller, so you need more and more of the units, and the efficiencies. That all comes out of the science. I don't know where it's going to go, but I do know if the funding is there, we will still be able to produce food as cheaply as anybody in the world.
Senator Petitclerc: I have one other question. I'm interested in your perspective. Paint me a brief portrait on producing organic beef versus conventional beef, in terms of the impact on the environment. Because spontaneously you would think it's so much better, but maybe you can give me an idea of what that looks like in terms of sustainability or access to consumers, with organic versus conventional beef production?
Mr. Lowe: It's all good. It's all selling beef. But we aren't going to feed a society on organic production. That's going back in time. That's going back 50, 60 or 70 years ago. I believe the science is very good. We're producing a whole lot more with a whole lot less. To go back to all our food production in organic, we're going to get fairly hungry.
Senator Oh: My question is going back to the pricing again, marketing. On the carbon pricing scheme, now Australia has an FTA with the Chinese market. Their beef is all over in China. So with your market going into China, they have import duties that are lower with the FTA. Now with the carbon pricing scheme applying to you, how do you see your competing prices overseas?
Mr. Masswohl: It certainly is one piece of the puzzle. As we know, the carbon tax is not fully implemented here yet. We don't know all the details. We don't know what the exemptions are. But we always have a concern.
You raise the specific example of a competitive environment in one market, in China. We know we have a huge competitor in Australia. We did just expand our access for Canadian beef into China to get bone-in product. We have to ship only frozen. We can't ship fresh product. For us, we provide a high-quality product.
The thing that is so exciting about China for us is there is a very high-end market, there. There are a lot of very wealthy people in China that are willing to pay for a high-quality product. Fresh is what we need. We still need access for fresh beef into China that will probably be flown in to serve that market.
So all of these things come into the equation. If we have a tax that one of our competitors doesn't have, if we have a tax at a certain level that they don't have or they have an exemption from it that we don't have, that will be a factor. The tariff is also a factor. So the tariff on beef going into China varies depending on the nature of the product, but it's in the neighbourhood of 20 to 25 per cent.
I know that Canada and China have announced they are going to explore the possibility of a Canada-China free trade agreement. We would be very supportive of that moving forward to get rid of that tariff to put us on an even level with our competitors in Australia and New Zealand; New Zealand has had a free trade agreement with China for a few years now. These are all pieces of the overall the competitive landscape.
Senator Terry M. Mercer (Deputy Chair) in the chair.
The Deputy Chair: Thank you, Senator Oh.
Senator Woo, please.
Senator Woo: I'm trying to do the math on the carbon tax with your industry. This is back-of-the-envelope, but your presentation tells us that Canadian beef production accounts for about 12 kilos of CO2 equivalent per kilogram of live weight. By my rough ballpark calculation, that works out to 36 cents per kilo of live weight additional costs if we assume a carbon price of $30 per tonne. You can check the calculations, but does that sound about right? And if it is 36 cents per live weight of cattle, how large is that as a share of your costs? I'm trying to figure out what the real financial impact of a $30 per tonne price on carbon would be on the industry. Does 36 cents per kilo of live weight sound about right?
Mr. Lowe: I have never worked that out. I'm not going to argue that. It's the fact that it's just another cost.
Senator Woo: I know, but I'm trying to get proportions, you know? Of course, all industries will have to face new costs because, look, the oil price may jump back up to $80 in three months and we will be faced with more costs but it's about the size of the impact, and how that can be mitigated, if at all.
Perhaps this is not a fair question, but if you are able at some point to give us calculations, I would be very interested to really dig into the numbers to see what kind of material impact it will have on your industry and other industries.
Mr. Masswohl: As I kind of in my mind take your calculation, maybe, to the next step and whether it's 30, 35 or 40 cents, it's something.
Senator Woo: Yes.
Mr. Masswohl: The way the beef processing and beef markets work is that Bob produces a live animal, which he sells to a beef packer, who disassembles that animal into 300 different pieces, and they have to sell each piece to the customer that was willing to pay the most for it.
When you've been at the grocery store, you have seen that a ribeye costs this much, a round steak costs that much and ground beef is this. It's all a different price. The question is: If you take that additional cost, how can you translate that price into the marketplace on this cut or that cut? The reality is you probably can't because if you take each of those pieces and put it in a Canadian grocery store, and the grocers and the consumers also have the chance to see that, okay, Canadian beef will be this much, U.S. beef is going to be that much and Australian beef will be lower, there are some consumers who will pay more for Canadian, absolutely, but there are not enough of them.
We figure maybe somewhere in the neighbourhood of 15 per cent of consumers are more concerned with buying something local and are willing to pay more for it, but most people are just trying to get a deal on the product. Or — sorry guys — they might switch to pork, fish, chicken or something else.
There are a lot of variables in the marketplace for that consumer so we think that putting this tax in, however much it is, changes the equation of the entire marketplace if it's not done in a manner that is uniform across jurisdictions and across different competitors.
Senator Woo: Speaking of uniformity, there is an idea circulating in some circles about a Canadian border adjustment tax on imports of products from countries that do not have a carbon adjustment scheme, like a carbon tax. In your industry that would, of course, apply to the United States. Can you give me an opinion on this idea?
Mr. Masswohl: I guess we have started to hear about that. I don't know if we have really heard about that in official policy circles as a proposal. I guess there are a lot of questions as to how that fits in with your trade obligations at the WTO. Is that an import tariff? It is an import tariff.
Senator Woo: Yes. It's a border adjustment tax.
Mr. Masswohl: Right, which is new terminology coming from a certain country that we're going to have a real problem with.
Senator Woo: Yes.
Mr. Masswohl: You know, we're already seeing in this country the government talking to Americans and saying that if there isn't a border adjustment tax imposed in that country, they can expect there to be retaliation. So what is good for one applies to the other.
Senator Woo: Okay.
The Deputy Chair: Of course, the other complication is that in the beef industry, the cattle move back and forth across the border almost as frequently as Canadians themselves do, so where is that animal actually from? That's a complication.
I have a couple of very quick questions before we finish.
How do you know that only 15 to 20 per cent would buy Canadian beef over other beef even if the price were different? How do you know that?
Mr. Masswohl: For a lot of years, we were battling something called country of origin labelling in the United States and the way that they had applied it. Now, it's not necessarily that we are against the concept of origin labelling and providing that information to consumers, but the United States applied it in such a way that it was intended to be discriminatory towards imported livestock. We did a lot of studies, in that time frame, of Americans.
We had also looked, from the marketing perspective of Canadians' attitudes, into the different factors that consumers look at when they are in the grocery store. Through a lot of research, we consistently found that the origin of the product, out a list of 10 factors, was somewhere around sixth or seventh in terms of importance. Price was always at the top, along with the colour of the product and those sorts of things.
The Deputy Chair: I knew the answer. I just wanted you to put it on the record. As the main grocery shopper in my house, the first thing I look at when I hit the meat department is the price and the quality.
The other interesting thing that has happened in the Canadian market in the last year or so is that there is at least one fast food chain which has put a lot of emphasis on what they claim is serving hormone- and steroid-free beef. But they don't talk about where the beef is from. I know that another major chain does spend a lot of time talking about the fact that they use almost exclusively Canadian beef.
Has this had an effect? It's had an effect on their sales. I don't shop enough at fast-food outlets anymore to do a price comparison, but I think that their product is of a higher price than some other fast food outlets. Has it had an effect on the cattle industry?
Mr. Lowe: Probably in a minor way. It's nothing that we can measure. I mean, they are selling beef. That's the number one criteria.
The Deputy Chair: But is it Canadian beef?
Mr. Lowe: Well, I know which chain you're talking about, and actually in Alberta, it is. It's the rest of Canada I'm not sure of.
In Alberta, it is Canadian beef, but that's the only province. I know that that's true. But as one fellow said, they could have quit selling hamburgers and gone to chicken burgers, which is not good for the beef industry. So if they are selling beef, they are selling beef. We would prefer that never-ever advertising didn't exist, because that implies that the main food is not as good.
The Deputy Chair: I think the complication is that some people take this and use it as a marketing tool. Are there any facts around this other than the fact that the beef they're using has no hormones or steroids? That doesn't necessarily make it any better.
The other issue that we didn't talk about today and we don't have time to now is the fact we're going to have nine billion people on the planet by 2050, and we have to be able to feed them. That means we have to be more efficient in how we produce food. That may mean that we need more interventions with chemicals and things like steroids and hormones to be able to meet that demand. If we can't feed nine billion people and there are another billion who are hungry, they will not only be hungry but angry, and angry people do things that the rest of us are not going to like. So we need to be prepared to develop that.
Thank you, gentlemen. We do appreciate your time. You're always welcome to come to the meeting and answer our invitations, and we appreciate that. We congratulate you for your recent successes in China and hope that those grow substantially.
Senator Ghislain Maltais (Chair) in the chair.
The Chair: Welcome to the second panel, ladies and gentlemen.
[Translation]
We now welcome Corlena Patterson, Executive Director of the Canadian Sheep Federation; Barbara Johnstone- Grimmer, Director, British Columbia, Canadian Sheep Federation; Norman Martineau, Second Vice-Chair of the Canadian Pork Council, and Gary Stordy, Manager, Public Relations. Good morning.
[English]
Corlena Patterson, Executive Director, Canadian Sheep Federation: Good morning and thank you, senators. On behalf of the Canadian Sheep Federation and Canada's sheep industry, I'd like to thank you for this opportunity to speak to you about what our sector sees as some of the changes that we can expect in sheep farming in Canada as a result of climate change; some of the adaptation and mitigation efforts that can be undertaken; and some of the support that we, as an agriculture sector, could really benefit from in order to implement those adaptation and mitigation changes.
I serve as Executive Director with the Canadian Sheep Federation. I'm joined by our Director from British Columbia, Barbara Johnstone-Grimmer. She has written quite a few pieces on climate change and their influences on Canadian sheep farming.
I'll provide a presentation for you and Barb will certainly give me a hand in responding to questions. I've provided a presentation that goes into more detail than what I'll speak to today. That's for your consideration at a later date.
Ranchers and farmers have always worked around changes in the weather, but the climate trends that have been ongoing for the last few decades and into the future present new opportunities and challenges for agriculture. Increases in extreme, highly variable weather events such as droughts and floods; rising annual temperatures; increasing winter precipitation over most of Canada, possibly with less snowfall, as we're seeing to his outside; falling lake levels; lower stream flows; and retreating glaciers result in declining soil moisture and are expected to be the new normal for us.
To limit the global increase in warming and the ongoing impacts is agriculture requires a global effort. To take it a step further, "climate smart'' sheep farming could also improve production efficiencies and profitability while adapting to climate change and reducing GHG at the same time.
Our northern latitude will give us some advantages over warmer regions. There are indications that up until 2060, Canadian prairie grazing capacity will remain productive with an increase in warm season grasses on sandy soils. Earlier seeding dates and unchanged to improved soil moisture levels with warmer, drier summers and earlier spring warming are predicted in most regions, although overall dryer conditions may occur in some locations.
Although growing seasons will be extended, the hotter summers will shorten the season for cool season crops and grasses. Increasing temperatures are usually related to increasing net primary productivity, but heat waves are expected to decrease productivity as evapotranspiration increases and soils become increasingly dry.
Increased CO2 levels could result in more plant growth but could also negatively impact plant distribution and type, forage quality and quantity. Rising CO2 levels could favour weed growth and the general warming trend could expand the range of weeds and invasive species. Severe droughts are expected for many of the ranching eco-regions. Forest fires are expected to increase with increased temperatures and summer droughts and pine beetle kills. Coastal areas are likely to experience wetter winters and with the warmer weather, we will probably see greater problems with parasites.
Climate change has been implicated in increased parasitic infections, and generally wet and warm equals worms. This has been experienced in areas such as the Maritimes and the West Coast, where we're often plagued with parasitic resistance.
Aside from changes to growing conditions and crops, livestock directly impacted by temperature extremes and heat stress can have reduced appetites, sweating and panting, increases in stress hormones, decreases in thyroid hormones, behavioural thermoregulatory responses, water deprivation, nutrient imbalances and deficiencies. These changes reduce productivity and increase morbidity and mortality of livestock.
Sheep that are exposed to high temperatures have impaired reproductive functions, worsened with high humidity. This is accompanied by reduced feed intake, reduced feed efficiency and utilization of feed with disrupted digestive metabolic processes and reduced milk production.
Increased summer temperatures can also influence meat quality of livestock through direct effects of heat causing dehydration, weight loss, altered muscle metabolism and stress, and especially taking place during transport and handling to abattoirs or auction marts. Diseases such as anthrax, foot-and-mouth disease, haemonchosis and bluetongue are influenced by climate through changes in their range of distribution, timing of outbreaks or intensity of outbreaks. Diseases spread by flying insects will probably have lengthened seasons and redistributed ranges across Canada.
So what can we do in the face of these changing conditions in agriculture? Adaptation to climate change can occur in reaction to observed changes on the farm and by long-range planning for anticipated changes in climate. Each farm will need to determine its own vulnerabilities and opportunities. Resources and tools that help forecast regional climate trend and impacts are important, and some new ones are in development and even more needed. Programs like AAFC's Holos program allows producers to benchmark GHG production levels, target adaptation measures and demonstrate GHG reduction over time.
Adaptation measures can include securing and enhancing water supplies, installing drainage and irrigation, diversifying the farm, altering planting and harvest dates or breeding and lambing times, improving livestock shelters and infrastructure or harnessing new and adaptive technologies.
Likewise, mitigation efforts aimed at reducing the net amount of heat-trapping GHG released into the atmosphere are essential to slowing climate change. Mitigation strategies that our sector can undertake include using energy and climate audits to gauge and improve whole farm productivity and resource efficiency; optimizing productivity to improve resource efficiency; implementing biosecurity measures; improve disease and vector surveillance; and refining pest management strategies to combat the northern migration of disease vectors; and the adaptability of disease- causing organisms.
We can work at sequestering carbon in trees, grasses and soils, develop nutrient management and environmental farm plans to promote best practices, reduce soil disturbances, tillage, summer fallow and overgrazing. We can manage water resources essential to flock health and welfare, and critical for protecting pasturing range lands, and exploring carbon-replacing renewable technologies such as wind, water, soil and biofuels.
To support this, federal and provincial governments play a key role in adaptation and mitigation efforts. Policies and support through incentive programs are essential for fostering industry changes in management and technology, and supporting holistic approaches to sustainable intensification, mitigation and adaptation.
Investments in technology, sustainable collaborations and research that drive adaptability are imperative. Key research priorities need to include advances in soil sequestering, minimizing GHG in various production systems as they differ across the gamut, crops inputs for changing environments and managing enteric fermentation from livestock.
Sheep-specific research in their areas is particularly important as our sector is frequently subject to policies and programs based on the impact of other species on the environment. Sheep have a great sustainability story that is not yet well understood or appreciated. More extension support and technology transfers are important for moving technology into the field. Clean technologies require significant capital investments and need to be supported through things like tax credits and changes in depreciation schedules that help drive investment.
In their current form, Canada's carbon pricing plans will negatively impact the competitiveness of Canadian agriculture. As an industry of price takers, Canadian farmers and ranchers cannot afford to pass on input costs to consumers and carbon taxes only serve to increase the cost of production and threaten industry sustainability.
Carbon banking and tax credits for GHG emission mitigating efforts in agriculture needs to be included in Canadian carbon pricing strategies with credit calculated fairly compared to the taxes that are imposed for their use. Credits for carbon fixing that offset carbon tax for agricultural inputs need to be expanded in support of Canadian farmers and ranchers, and jurisdictional differences in those plans and how they're administered needs to be managed in a way that doesn't create a domestic competitiveness challenge.
Business risk management programs need their own level of adaptability to keep pace with the changing nature of the risk that Canadian farmers face as the climate changes.
Likewise, the next Agricultural Policy Framework needs to inherently support adaptation and sustainability measures. Federal programs like the National Water Supply Expansion Program, which work to improve water resource infrastructure but has fallen by the wayside, need to be reinstated. Finally, feed-in credits for farmers and ranchers contributing to carbon-replacing renewable energy technologies need to be supported across all jurisdictions.
The adaptability of sheep to changes in grazing, feed and environment, combined with the comparatively small GHG hoof print could position the industry for growth in an era of increased environmental responsibility provided the right level of support.
Canada has a unique advantage of having a climate with a long history of cold, ice and snow. For some a bit of warming, especially today, would be a welcome change and give us more of an advantage globally. At this point, the level of uncertainty and the projected extreme weather events for the future make it hard to be confident in that view, but perhaps hope for the best and plan for the worst might be good advice for the future.
The Chair: Thank you very much. Mr. Martineau, you have the floor.
[Translation]
Norman Martineau, Second Vice-Chair, Canadian Pork Council: Good morning, my name is Norman Martineau. I am a pork producer on a farm close to Quebec, and the second vice-chair of the board of directors of the Canadian Pork Council. We represent nine regions in Canada. You probably know that the pork industry employs 31,000 people in Canada, and provides 103,000 direct and indirect jobs, and $24 billion in economic spinoffs. There are 7,000 pork producers in Canada, and we raise 25 million hogs for internal consumption, as well as the international market, every year.
First, I would like to thank the members of the committee for having invited us to discuss the potential impact of the effects of climate change on the agricultural, agri-food and forestry sectors.
Climate change is a real issue. Our planet truly needs environmental electroshock therapy. As we redouble our efforts to reduce greenhouse gas emissions, we also have the duty to be lucid and to adapt to the new realities. Insofar as climate change is concerned, the balance of the threats and opportunities could work to Canada's advantage, to the extent that we prepare properly. Be that as it may, we did not wait to change our practices in order to limit our impact on the environment.
As a sector that is taking itself in hand, cattle ranching demands 24/7 commitment all through the year. In addition to the well-being of their animals, producers care about the healthy management of our environmental heritage. Thanks to continuous technological advances, we now raise more animals on less land, and consume fewer resources, thus limiting the impact of our production on the environment. Research has allowed us to improve reproduction, farm animal health programs and animal nutrition so as to increase productivity.
Our American colleagues at the National Pork Board carried out a study which showed that over the past 50 years, we improved the feed conversion ratio by 33 per cent, reduced water usage by 41 per cent, reduced the total use of land from 59 per cent to 78 per cent, and reduced our carbon footprint by 35 per cent. Producers manage animal waste rigorously by taking part in agro-environmental management programs. These plans are developed with soil and water experts, and indicate the quantity and the time when nutrients are to be applied in our fields and on our crops.
In several regions in Canada, producers use manure injection methods, where manure is injected directly into the soil. This contributes not only to reducing runoff, but also reduces the emission of nitrogen, a powerful greenhouse gas. The planting of odour-blocking windbreaks and riparian strips to capture CO2 are also encouraged.
The results are there. According to data published by the Food and Agriculture Organization of the United Nations, the FAO, the carbon footprint of our pork production is the smallest in the entire world. As compared to the global average, that means 31 per cent fewer greenhouse gas emissions per kilogram of carcass. Over the past decade, the agricultural industry has done research and invested in liquid manure management technology, such as anaerobic digesters.
In order to remain competitive in a competitive market, the pork industry is committed to the sound management of our natural heritage and to the development and use of renewable fuels. However, it cannot ensure its continued progress without fair rules. We have to remain competitive in a market where margins are tight and competition is very fierce. Producers are concerned about an eventual carbon tax and the consequent increase in the cost of production inputs. As price takers, we cannot transfer additional production costs to consumers. Our success as an industry depends essentially on our competitiveness on domestic and international markets. It is jeopardized when competing countries do not impose constraints as strict as those imposed in Canada. In an industry where margins are low, it is possible that one or several provinces will establish a carbon pricing plan that will put producers at a competitive disadvantage with producers in another province. Consistent and fair rules are essential.
However, there are a few concerted lines of action. Close to half of the pork production carbon footprint is attributable to pig feed. Consequently, the conversion ratio, as I mentioned earlier, and the health of our herds are important starting points to reduce the global emissions due to pork production. It would thus be appropriate to support research projects — and we do this very well in Canada — that may lead to practical improvements in the facilities that will generate even more feed, water and energy savings. In addition to the cost of animal feed, the cost of electricity and fuel represents a large part of production costs. The heating of buildings is the only major part of costs that depends on fossil fuels. The cost of electricity can vary from one province to another, and so it is essential to find ways of reducing those costs and to have fair rules of the game.
The government can also help producers to become more effective by helping them invest in the construction of new, more efficient buildings equipped with new ventilation systems. More energy-efficient buildings would improve animal productivity, mitigate environmental impacts, and reduce seasonal temperature variations in the buildings.
We are in fact very pleased that the 2017 federal budget includes funding for the development and transfer of clean technologies. It is essential that research and innovation be at the core of global improvement in productivity in our sector, and that support for research be maintained in discussions on the new agricultural policy framework.
In conclusion, our industry has three expectations: the development of a regulatory framework that will allow our industry to remain competitive internationally despite the carbon tax; support for research on technology to reduce greenhouse gases caused by animal production; financial support to help producers adopt innovative technologies and infrastructure to reduce greenhouse gases, for instance to facilitate investment in ventilation, storage structures, riparian strips and biomethanization, to mention only those.
I thank you for your attention, and for having chosen to deal with this issue which is crucial to our future. We will be very pleased to answer your questions.
The Chair: Thank you very much, Mr. Martineau. I now yield the floor to the deputy chair of the committee, Senator Mercer.
[English]
Senator Mercer: Thank you all for being here. Those were very interesting presentations.
Mr. Martineau, you talked about the need for better buildings and better ventilation, and then in your presentation you also talked about the government assisting you in some way, but you were not specific about what that assistance would look like. How would that work and help to promote your industry? How would you do that and not trigger an appeal by one of our competitors to the World Trade Organization?
[Translation]
Mr. Martineau: As regards government support for agricultural industries, every country supports its agricultural sector in different ways. As I am sure you know, pork industry facilities in Canada are obsolete. We have reached a point where we must implement new technology to make better use of our animals and to achieve better feed conversion ratios. In all productions, better ventilation and better environmental conditions will mean that the animals will consume less, which will improve our management of all greenhouse gas emissions.
[English]
Senator Mercer: You didn't say how government could help. In your presentation, you talked about government helping with the new buildings and better ventilation, in other words building new buildings, but in answer to my question, you didn't talk about what you would anticipate government doing to facilitate that.
[Translation]
Mr. Martineau: We need you to put in place an investment program to allow us to renovate our buildings and eventually implement new technologies. I think we have reached a stage where those improvements could be supported by investment programs.
[English]
Senator Mercer: Thank you. I encourage the sector and particularly pork and sheep producers to capitalize on a market that will be growing, and hopefully the opportunities will be there. However, we have to be careful that we don't jeopardize our trading relationships by having government too involved.
Those of us around this table understand that we don't provide subsidies to the agriculture sector in this country, but we also understand that our competitors do, even though they say they don't. As we know, the most important piece of farm equipment for the American farm is the mailbox because that's where the government money comes in. We're with you, but we have to be careful how we move forward. Did you want to comment?
Gary Stordy, Manager, Publication Relations, Canadian Pork Council: Yes, I was just going to add that certainly our industry is sensitive to the issues we raised. We pay a tremendous amount of attention to ensuring that our industry is not in a situation where we could be counterveiled. When it comes to some of the facilities that need to be renovated, it's similar to some of the homes in Canada, where really there need to be some improvements to deal with air circulation, dealing with weather conditions or whatnot, whether in a home analogy that's replacing windows or a better roof.
When it comes to some of the facilities or barns that we raise our hogs in, there are a number of ways the government can help. Supporting research into better design, better materials is one aspect as a start.
Another aspect is improving existing programs such as the CALA loans, which is a loan program available to producers, but for the hog industry, the amount that is actually available that a producer could borrow is frankly insignificant to allow a modern barn to be built.
In addition to that, our industry is proud that many of our producers use better technology to deal with manure treatment. The best example is direct injection technology into the ground. In this case, rather than manure being spread into the air, it's injected into the ground. It's an environmental advantage. It allows the nutrients to go right into the ground, prevent water run-off, and the nutrients are in the soil where it's necessary.
A lot of that transition for our industry to go from a technology that is still applicable to the direct injection technology was through federal-provincial programming 10 years ago where programming didn't subsidize the cost of the machine but gave the producer the choice as to purchasing the machine, the spreader, or there would be help with the additional cost of going to a more environmentally friendly machine. When it comes to ventilation within a barn, that is a situation we could use. I apologize for taking too much time, but I thought that would be helpful.
Senator Mercer: No, that's not too much time. That was a very valuable contribution. Thank you very much.
Senator Oh: Thank you, witnesses. Is there an international convention for carbon pricing mechanisms on the hog industry, shipping or the livestock? Do you get together and talk about how this pricing will affect you and how you may solve this problem with a carbon pricing mechanism?
Mr. Stordy: Within the hog industry, and I'll also implicate the cattle industry, we are very networked with our global partners, other producers across Canada. We get together in the pork sector with our United States and Mexican counterparts to talk about issues and pricing.
When it comes to carbon pricing specifically, it's really a Canadian discussion at this point, so that has not evolved at that level. However, we do get together — both through our trilateral meetings, but also through a global community of meat producers — to talk about the impact that agriculture and specifically livestock has on the environment. It's called the International Meat Secretariat, to be more precise. They meet regularly to talk about some of the issues, environmental issues and whatnot, as well as other competitive concerns.
Barbara Johnstone-Grimmer, Director, British Columbia, Canadian Sheep Federation: We don't really have a communication internationally about this, but within our country, our chief Value Chain Roundtable has a social licence working group, and that's one of our priority items. I'm the chair of the working group, and one of our priority items is to determine what the carbon pricing structures are across Canada. In B.C. we have had the carbon tax for awhile. Our own province just last month announced that it would allow the planting of trees for carbon credits on agricultural land. It's a work-in-progress that we're examining to see the impacts.
I know in B.C. the carbon tax has really affected us in ways we can't even measure because it affects us every day. Where I live in the Gulf Islands, the price of a litre of gas is over $1.50. If the effect of a carbon tax is to change the public's behaviour, it certainly does that when the price of gas is that high.
A carbon tax — this is my personal opinion — does increase awareness of the issue across Canada when it affects everybody.
Again my personal issue is that I don't think agriculture should be exempt, but I do believe that they should take opportunities where they are, and you can't manage what you can't measure, so we do need more research into the opportunities we have for carbon credits in agriculture.
Senator Oh: So do you know if your competitors worldwide — Australia, U.S., Brazil, Argentina — who are big livestock producers, are doing the same thing as we are doing? Would you be able to compete if they did not do anything and you just kept on increasing your cost of exports?
Ms. Johnstone-Grimmer: I know that in the United States in agriculture they are talking about carbon pricing for agriculture for across the livestock commodities as to how they can also benefit from a carbon tax.
In Europe, I took some courses through Wales Bangor University. Europe is ahead of us in a lot of this research. They also are going more of a regulatory route through the EU, but we are taking more of an opportunity route, I believe.
[Translation]
Mr. Martineau: It is certain that it will be difficult to oppose the tax, but if there are programs to support research in order to diminish or improve our feed conversion ratios, improve animal efficiency and have better reproducers, I think that although there may on the one hand be a negative effect, we will have productivity gains which will allow for a certain balance.
Over the years, we have always managed to hold our own, production-wise. We compete with countries that have cheap labour at their disposal. A kilo of meat costs less there than in Canada. We have our own markets and quality standards. There are certainly advantages to all of that. There have been improvements as well due to research over the past decade, and this will continue. The health of our herds could allow us to do much better than we have.
[English]
Ms. Patterson: I wanted to make an observation on that point. It's not specific to our sector, but more of a global response to that. I sat through a meeting webinar with the FSDS, the Federal Sustainability Development Strategy group, that has frequently — I think every three years — updates a SWAT analysis of sustainability plans, globally. In that recent updated SWAT analysis of what is being done in terms of sustainability, because environment and climate change are rightfully included in that sustainability concept, the countries that have plans are very Europe-heavy. There was a very pointed question: "How come you didn't show us what the U.S. or Mexico are doing in terms of sustainability development?'' The response was "because they don't have plans.''
That speaks to where we are as a country — to be proud of the fact that at least we're paying it some attention, and it is developing policies. We're benchmarking where we are in terms of our contribution to climate change, looking at the adaptation and mitigation, and we have the ability to improve advances on that.
There are a number of countries, including some of our industry's major competitors, that don't have those measures in place. That's why when we talk competitiveness, at least for us in certain cases, it's very much an issue. Our major competitors won't have — or currently at least don't have — a carbon tax affixed to their cost of production. It really impacts how competitive we can be.
On a global perspective, it speaks to how there can be a shortage outside of Europe in strategies that encompass climate change and make it a challenge to have kind of a global round table on climate change specific to an industry, livestock sector or agriculture in general.
Senator Oh: We have to be careful in our market share. There is no market share, there is no carbon tax.
Ms. Patterson: Absolutely, yes.
Senator Woo: Thank you for your testimony. I want to ask our colleagues from the sheep industry about the real-life experiment that we have had for nearly a decade in British Columbia with the carbon tax in place and its impact on the B.C. sheep industry, both before and after the exemption for farm fuel. In particular, I'm interested about the impact on the international trade of sheep products and lamb.
There has been a big debate in this committee now for weeks, since we started these hearings, on the impact that a national carbon price will have on the agricultural sector. Uniformly, we have heard that it affects competitiveness, it will decrease trade and so on. But we have a real-life experiment that's been going on for some years already in British Columbia, in certain agricultural sectors, because B.C. doesn't represent the spectrum of agricultural industries in the country. But sheep farming would be one good example.
We would love to hear from you on what has been the experience in British Columbia.
Ms. Johnstone-Grimmer: Like I mentioned, I believe we see an overall increase in our cost to production. We are price takers, so it's difficult.
In British Columbia, lamb tends to be marketed direct. We can actually set our price better that way. We're working toward a premium B.C. lamb product with a B.C. abattoir association. In Canada, we just unveiled a verified sheep program. That gives us a little bit more of something we can offer to the consumer in terms of on-farm food safety, biosecurity and animal welfare. We also have our environmental farm program.
But the carbon tax is insidious. Not everybody has access to farm gas. But I think the B.C. government has also — I have read but I haven't really seen it in my tax bill — a bit of a credit toward our farm taxes. So there has been a little bit of a break there.
We have worked around it by trying to direct market more, or work with retailers more to work on a value-chain basis as to what our reality is.
Senator Woo: Are you familiar with the 2014 study by Rivers and Schaufele? The Canadian Journal of Agricultural Economics did a specific study on the impact of the carbon tax in B.C. on agricultural trade between B.C. and international markets. It found that there was no impact whatsoever.
Ms. Johnstone-Grimmer: Yes, I read that. They thought maybe they didn't give it enough time when they did the study, but they found that there was no impact on agriculture.
Senator Woo: In spite of the carbon tax.
Ms. Johnstone-Grimmer: In spite of the carbon tax. Yes, I have it on my phone if anybody wants to read it.
Senator Woo: Just to follow up your approach to developing — you didn't use these words, but I think you're trying to say a "premium product,'' where you have qualities of your product that other producers don't have. What kind of premium can you get out of that kind of focus?
Ms. Johnstone-Grimmer: We have a very strong market in B.C. Consumers in B.C. are very conscious of local food, and they are looking for local product. We're able to get significantly higher than our cost of production, because that's the only way that we can continue to operate.
Senator Woo: Yes.
Ms. Johnstone-Grimmer: There is a big ethnic demand for lamb in British Columbia, exceeding what we can produce.
Senator Beyak: Thank you, witnesses. The care that our ranchers and farmers give to their animals is world- renowned, as is the resulting quality that comes from that. I was surprised to hear about the stresses on animals. I wonder if you could elaborate on that and tell us how you work with the challenges.
Ms. Johnstone-Grimmer: We had a very bad drought a few years ago, and four months with no rain at all. It's a moisture-deficit area in a good year. In order to take good care of the animals, we also follow with their own behaviours. The sheep are very adaptable to changes in climate. They will start grazing earlier in the morning, later into the evening and they will look for shelter during the day.
So we make sure they have a lot of access to shade, fresh water — not water dugouts, but fresh, potable water — and we'll put them into drought pens and feed them.
It's good for us, too, because they will remain productive.
Senator Beyak: Do you have anything to add for how it affects your animals?
[Translation]
Mr. Martineau: It is certain that ventilation allows us to stabilize temperatures in our buildings. There are ideal temperatures for our production that improve the feed conversion ratio and the animals. When the temperature goes higher, our animals are more inclined to rest and to limit their consumption in order to avoid moving or making efforts that would mean that they would be even hotter. So our animals consume less and perform less. For most animals, dairy cattle and other species, a higher temperature means a reduction in animal performance.
[English]
Senator Beyak: Thank you, chair.
[Translation]
Senator Pratte: My first question is for Mr. Martineau. If I understood correctly, even if you are not very happy about the carbon tax, you will accept it insofar as the money from the tax is used for investment purposes in your sector. I must admit that I am a little surprised, because up till now producers in other sectors of the agricultural industry have expressed their unconditional opposition to a carbon tax. Even if the money is returned to them for investments in their sector, they replied that this would have an extremely adverse impact on competitiveness. What is different about the pork industry that allows you to say that you have always managed in the past and will continue to do so?
Mr. Martineau: Regarding current taxes, we are taxed on oil, cars and the means of transportation used to move our animals. We have to be treated fairly. If we are the only country in the world to impose a carbon tax, I find it hard to see why we should shoulder those costs, when our American and Brazilian competitors do not have to do so. If you decide to implement a carbon tax, and if we see that we are the only ones to pay it internationally, I wonder why we would go there. However, if there is a tax and if the money comes back to us for research projects that will improve our productivity, our industry will benefit in gains for the animals, reproduction and health. Many factors impact productivity in our industry.
[English]
Senator Pratte: My next question is for the Canadian Sheep Federation.
I'm trying to understand better your point of view on a carbon pricing scheme. I'm not sure I understand correctly. You seem to be saying that you're open to certain carbon pricing schemes; you don't necessarily like them but you're open to certain schemes as long as you get some kind of compensation. I'm wondering whether, if there was a revenue- neutral carbon pricing scheme where the revenues from that scheme would be reinvested in the industry, for instance, to reduce the industry's carbon footprint, if that would be acceptable to your industry.
Ms. Johnstone-Grimmer: Yes, I believe so, if it went into research in particular. We have big gaps in research, especially with sheep and in terms of education. I believe the federal-provincial-territorial governments could work together on this. It would be very useful if they could help support the education of producers as to what they can do. I think there needs to be more work done in that area.
Ms. Patterson: Likewise, I do believe you listened to some presentations from the Barley Council of Canada, for example, that gave some definitive and benchmarked demonstrations of how agriculture can actually help slow climate change when mitigation and adaptation efforts are put in place that do things like increase carbon sequestering in the soil.
We're all in climate change together, whether you are an urbanite or live in a rural area. What we also think is important is that the efforts that we make and the technologies that we put in place that actually help sequester and slow climate change over time need to be benefitted against whatever impact our use of carbon products has — in other words, a bit of a carbon credit for those activities that help slow climate change over time.
So I think if we can find a system that can recognize that, it would be beneficial to all. It's beneficial to us in agriculture, of course, because it decreases the cost of production but more importantly it's beneficial to society in terms of having a positive impact on climate change.
Agriculture's footprint is not all negative when it comes to the impact and changing climate. We use fuels on the farm, but probably not as much as the car next to me in this morning's traffic may have. There were lots of them, and not so many tractors. That's not to be flippant about it but to be realistic about how our industry has the capacity to contribute to a change in climate, perhaps more so than to be implicated in the negative changes in climate. I think if we can find a system that is equitable in that, that would be fairly acceptable to many.
[Translation]
Mr. Martineau: I would like to add a comment in reply to the question you asked earlier. The FAO has recognized that our carbon footprint is 31 per cent lower than anyone else's, per kilo of pork produced. Will our pork industry one day be recognized for its efforts to consume less water and less feed? A lot of research is being done at this time. We are working to reduce greenhouse gas emissions. It should also be recognized that producers are already making efforts to reduce the impact of our activities on our natural resources as much as possible.
Senator Petitclerc: I have a question for you. I'd like to go back to the human aspect. In listening to you I realize that when it comes to climate change, we must look to research, science and technology for solutions. I was curious to know how well things are being accepted, because when we look beyond the industry, there are people, families, and small, medium and large producers. Is there resistance to these changes that are and will continue to be necessary? Do those people have the tools they need, are they equipped and prepared to make the technological conversion? How is that going?
Mr. Martineau: That is a very good question, Senator Petitclerc. Our industry must inform, educate and raise the awareness of our producers with regard to all of the changes to come. Our international perspective is helpful. We derive a lot of inspiration from Europe with regard to livestock density. We look to those countries to avoid repeating the mistakes that were made in other sectors. We are training our producers as we go along. We make them aware of our environmental impact. We have to be accountable to the public. Our consumers are members of the public, and we have to respond to their concerns. And so we keep abreast of changes. It is our duty to respond to our consumers, and they let us know what they think through newspapers and social media such as Facebook, Twitter and so on. These media mean that we have to be up-to-date in our animal production techniques. Internationally, whether we like it or not, by reducing our feed consumption we are able to offer a very high quality product at an internationally competitive price.
[English]
Ms. Patterson: That's a great question. Is there an openness to it? I imagine there's a gamut of openness across those different ranges of producers. I think generally there is an openness to taking measures because we're all in this a bit together.
In some of the adaptation measures that we had outlined, and in more detail in what we've provided to the committee, there's increased productivity in those as well. It's not just about minimizing the amount of time to market that creates a smaller carbon hoof print, but it also increases productivity and profitability on the farm. It's understanding the benefits that those adaptation and mitigation efforts have, not only in terms of their impact on the industry but in terms of the bottom line for the producer that could be very beneficial.
We did also suggest, though, that between the research part and the implementation part is that technology transfer piece. Is it a matter of resistance across the population of producers? Likely less so than an access to the technology and some support in understanding how it's implemented, and how it's implemented in their situation.
That extension piece and the technology transfer piece from the research to the field, so to speak, could be very beneficial and will at the end of the day improve uptake in implementing those technologies and measures that can help.
Ms. Johnstone-Grimmer: I think there's far less resistance now because we've already experienced such weather extremes and people are outside every day working on their farm 24-7. They do need more tools. That is one thing for sure.
In the U.K. they have wonderful nutrient management planning, like software, so people can input when they want to apply manure on their fields. They've already figured out all the different — you talked about the injection methods. They compare that to a broadcast method and they will tell the farmer, "Your emissions will be much better if you use this equipment, and if you apply it on this day, we know your rainfall and soil type and you should apply less because we know what's in your soil.'' So they can have a more precision application and provide less pollution. But we don't have all the tools that I've seen them use in Europe that the farmers can have access to.
We also have to consider, as I'm outside every day, the stress this puts on farmers who are dealing with weather variability all the time, and then they see something they've never seen before.
There's a new concept called One Welfare, which has to do with the impact of these extreme events on the mental health of farmers as well and their ability to provide good animal welfare to their animals at the same time. There's that concept as well.
Also in the U.K. and in Europe, they've found approaching it as a smart method of approaching climate change in telling farmers they will have better profitability if they use these methods that not just adapt but also mitigate. Sometimes farmers just don't know what the right thing to do is and that's where we need to provide more educational opportunities.
[Translation]
Senator Dagenais: Thank you to our witnesses. My question is addressed to Mr. Martineau. Personally when I hear the word "tax'', it scares me a little because it is often reflected in the cost of the consumer's plate. I have no doubt that we have very high quality products, but often people have no choice but to turn toward less expensive products. In addition, we must compete with our American neighbours. I am not sure that the new carbon tax policy will help anything.
That being said, senate committees conduct studies and make recommendations in their reports. We don't always know what the House of Commons does with our reports. Do you have some idea of how much attention the House of Commons is paying to your request concerning the redistribution of that tax revenue? The House may respond favourably, but it may keep part of it to do something else. I agree with Senator Pratte on this; the redistribution of that tax revenue will allow you to have competitive prices. Obviously, the consumer is the consumer, and he will purchase products that cost a little less. I would not want this famous carbon tax, which affects us all, to sooner or later be reflected in the consumer's plate. I would like to hear what you think of the attention that is being paid to you by the people in the House of Commons.
Mr. Martineau: We certainly make our governments aware of the fact that we don't want to go forward if we are not on the same footing as our competitors. The danger is that this measure will increase the cost of food for our population. As for our representations to the House of Commons, we are not the only ones who need the Canadian government. There is certainly a danger that part of that tax revenue will not be redistributed to the pork industry.
[English]
Ms. Patterson: Again, it's redistribution and back. Do we have a big enough hand in the house to be able to influence how those taxes are distributed post-collection? I don't know that we do as a sector, but I also don't know that we do as an industry.
I think we've seen a number of taxes collected for different reasons, aside from agriculture, that were intended and earmarked for certain purposes that have never made it there. There was an earlier question about are we happy about the tax to begin with? Likely not. If it could support research, that would be great. Have we been able to demonstrate a great enough influence to ensure that what is collected in agriculture comes back full circle to agriculture? I'm not hugely confident, but hopeful, if that doesn't burn too many bridges in saying it that way.
We consult beyond what we're doing here in climate on everything with respect to CFIA programming, Agriculture Canada programming and the next Agricultural Policy Framework, and we are always challenged in the APF to get more work into the same amount of money. If it could end up with a system like that, which could be accessed by farmers to support infrastructure and technology and implementation over time, it certainly would be helpful. But that's a cry for making sure it comes back to agriculture at the end of the day.
[Translation]
The Chair: We extend our sincere thanks to our witnesses for their testimony today. It will be very helpful to us in the preparation of our report. If you have additional information to provide to the committee before we wrap up our hearings, please do not hesitate to do so. You may contact our clerk at any time. Your representations are always very helpful to the committee.
(The committee adjourned.)