THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
OTTAWA, Thursday, November 8, 2018
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study how the value-added food sector can be more competitive in global markets; and, in camera, to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors (consideration of a draft report).
Senator Diane F. Griffin (Chair) in the chair.
The Chair: I am Senator Diane Griffin from Prince Edward Island and chair of the committee. I will ask the senators to introduce themselves, starting with the deputy chair, Senator Maltais.
Senator Maltais: Ghislain Maltais, from Quebec.
Senator Dagenais: Jean-Guy Dagenais, from Quebec
Senator D. Black: Douglas Black, Alberta.
Senator Miville-Dechêne: Julie Miville-Dechêne, from Quebec.
Senator R. Black: Robert Black, Ontario.
Senator Mercer: Terry Mercer, Nova Scotia.
The Chair: Thank you, witnesses, for appearing here today. I hope you don’t mind, but I want to take care of one business matter first. Then we will go ahead with our panel.
Senator Black, you had asked for the floor.
Senator R. Black: We were together a couple of weeks ago when I put forward a motion that I would like to change somewhat.
You have the motion in front of you, and it reads as follows:
That, notwithstanding the motion adopted by the committee on Thursday, October 25, 2018, the committee submit its report for its study on support and compensation for supply-managed agricultural sectors in relation to the USMCA, CPTTP and CETA trade agreements to the Senate no later than March 31, 2019.
You will recall that the date was December 6, 2018. Given that we still don’t have the text and there are still some things in flux, I agreed to make the change to March 31m 2019.
The Chair: Are there any questions or comments? Basically, it is the same motion but the date has changed.
Senator R. Black: I think it makes more sense.
The Chair: Especially in light of our difficulty with holding Tuesday night meetings, this will give us more time to make up for that loss.
Senator R. Black: Correct.
Senator Maltais: Senator Black, I commend you for delaying the proposal of your motion, especially since the Minister of Agriculture has created three committees on this issue. So I think it would be wise for the committee to wait for those committees’ conclusions before we proceed. Otherwise, we would be duplicating the work, as we will probably question the same players in that field. We hope those committees will report to the minister by March 31. If we then want to add something, we could always use our motion to add to the report the minister will have tabled in the House. There you go. Thank you.
Senator R. Black: I would like to reply by saying that I think there is an option to work side by side. I would prefer not to wait until after that report. I think there is opportunity for us to work together and maybe contribute collectively. That is my two cents’ worth.
The Chair: Some of the agricultural sectors may be ready to comment prior to others. There is still some ongoing fine tuning. You are right that we don’t have final information yet, so we will go with that.
There being no other comments, we are ready for the question. All those in favour will please say “yea.”
Hon. Senators: Yea.
The Chair: The motion is carried.
We are back to our business at hand. We are continuing our study of the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
At this point I will introduce our two guests. The guest with us in the room is Sylvain Charlebois, Professor in Food Distribution and Policy, Faculty of Agriculture, Dalhousie University, and on the screen with us via video conference is Evan Fraser, Canada Research Chair in Global Food Security, Social Sciences and Humanities, University of Guelph.
Welcome and thanks to both of you for accepting our invitation to appear this morning. We will start with the video conference. The floor is yours, Mr. Fraser.
Evan Fraser, Canada Research Chair in Global Food Security, Social Sciences and Humanities, University of Guelph, as an individual: A little over 18 months ago, as I am sure you know, the Advisory Council on Economic Growth tabled its report on how to grow our economy. Among its recommendations was a very clear focus on agriculture and food. In a sense, they argued that this is an underutilized sector and that we should strive to increase our food exports.
The Chair: Just a minute, sir, we have a problem. There is no translation.
Senator Maltais: Could the witness speak a bit slower, as the interpreters will have trouble making it to the end of the testimony?
The Chair: The interpreter is having trouble keeping up with you. Could you slow it down a tad, please?
Mr. Fraser: We argued, well beyond setting trade targets, that we should strive to become the world’s trusted supplier of safe and sustainable food. If we realize that vision, it would represent a significant shift toward a value-added food system.
Since that report was tabled about two years ago, I have been involved in a number of interesting dialogues, including ones with the think tank Canada 2020 that have brought together industry, civil society, academics, et cetera, to drill into what developing a food system based on notions of safe, trusted and sustainable would look like.
A consensus is emerging that we need to establish a pre-competitive Canada food brand that would demonstrate to our trading partners that when they buy Canadian food, they are buying the world’s most trusted, safe and sustainable. Developing such a brand would incorporate three key things the federal government can help us with.
My first recommendation is that we need to become the global leader in standards pertaining to safety and sustainability. Second, we need to develop the information and technology systems, things like blockchain and other such things, to help steward and safeguard our brand. Third, we need to market our brand so that the Canada food brand becomes globally recognized as and synonymous with safe and sustainable. Let me turn to each of those three recommendations in turn.
My first recommendation is that we must become the global leader in standards pertaining to safety and sustainability. Here, we have a lot to be proud of and a wonderful foundation on which to build. We have a food regulatory system that is the envy of the world. Similarly, our processors and farmers are global leading. We can build on that foundation by codifying and solidifying what safety, trust and sustainability mean.
We don’t want to reinvent the wheel. We have great existing programs, such as the Environmental Farm Plan or the Canadian Roundtable for Sustainable Beef. However, at present many of these systems are fragmented and we don’t have a full-value chain sustainability assurance system.
There is an emerging program called the Canadian Agri-Food Sustainability Initiative that could provide the foundation for leadership from the federal government as a way of establishing a governance body to codify standards around safety and sustainability. This would be an important first step in helping realize that vision of the advisory council’s report. It could also be built into the upcoming food policy for Canada that is exploring the ideas of a national food policy council.
My second recommendation relates to creating an IT infrastructure. Once we have those standards in place, we need to have information technology systems to ensure that Canadian food systems are transparent and cyber secure. This moves our discussion into the realm of cloud computing, cybersecurity and blockchain.
A good IT system for food has two key components. First, increasingly consumers concerned about food safety and sustainability are demanding systems to have a clear line of sight back through the food supply chains. Things like QR codes on packaging that allows consumers to see each step their food takes from food to fork. As we move into that increasingly sophisticated IT system, we will be able to do a better job of managing problems such as food recalls when they emerge.
For instance, IBM has been working with Blockchain and Walmart and recently tested a system to do tracebacks for mangoes piloted earlier this year. They tested their old system, and it took seven days to figure out the trip a mango had taken from farm to store. With a blockchain system they were able to do it in less than two seconds. It is this sort of thing we need to be investing in on a systems-wide level.
The second important point of having a food system backed up with a sophisticated IT infrastructure is to better protect ourselves against cybersecurity attacks. Think of it in this way: In the olden days, when all we were doing was trading on price, the easiest way for our competitors to take our markets was to beat us on price. However, if we are to develop this system based on trust, safety and sustainability, a value-added food system, we have to assume and be prepared for malicious hacking that tries to undermine those claims. Again, the federal government can play a critical role in creating the IT infrastructure to ensure that Canadian food is both transparent and secure.
With my first recommendation, I was essentially arguing that we needed to create the standards and protocols that would give us the empirical basis for a Canada food brand. My second recommendation is about IT to give us the safety, security and transparency. My third recommendation is to ensure that we are rewarded by our international competitors for doing these things.
My third recommendation is that we need marketing programs. There is a consensus emerging in the industry that affluent consumers, especially affluent consumers in Asia, are willing to pay more for food that they trust as safe and sustainable.
In addition to establishing the protocols and the IT infrastructures, we need to market the Canada food brand. Again the federal government can play a key role with trade missions that explicitly focus on Canadian agri-food as safe and sustainable and influence their campaigns in social and traditional media. I recommend that we consider putting the notion of Canada food brand at the centre of our agri-food trading policy.
To close, I believe that the basis of an agriculture and food system that is value added can put the notion of a Canada food brand right at the front and ensure that our food becomes synonymous with food safety.
Feeding the world’s growing populations while dealing with things like climate change will in some ways define the current century, but this challenge of global food security represents a unique opportunity for your country. With our already existing sophisticated infrastructure, our food sector, and our existing reputation for safety and stable regulatory environment, we can build a Canada food brand that will be used to demonstrate to consumers around the world that when they buy Canadian food, they are feeding themselves and their families the safest and most sustainable food the world has to offer.
I speak with a great deal of confidence that a huge consensus is emerging in industry and among the sector that this is a way to differentiate ourselves and build the value-added food system you are interested in talking about. Thank you.
The Chair: The floor is yours, Mr. Charlebois.
Sylvain Charlebois, Professor in Food Distribution and Policy, Faculty of Agriculture, Dalhousie University, as an individual: I believe this is the seventh time I have appeared before this committee over the years. It has always been a privilege to be invited and speak about our country’s future in food and agriculture. Therefore, I am honoured to be talking to you again today.
This time I was asked to provide comments about how to make our agri-food sector more competitive globally. For my brief statement, I would like to address three distinct issues: public governance and innovation, infrastructure, and global trade agreements.
First, on public governance, in governments across the country food processing is often the forgotten child in agri-food. Ministries of agriculture and food are often pressed to look at farmgate-related issues more so than anything else. We often resort to well-known paradigms of growing things faster and better rather than following a demand chain management mantra like we see in countries where their agri-food sector is thriving.
Marketing boards and supply-side economics have provided great support over the years but have now become barriers for growth. To better understand future markets and to pinpoint opportunities we need data and, to recognize its power, we need lots of data. As a simple example, potatoes are important to our economy, but no one seems to know what the potato industry will look like in 20 or 30 years. We need those answers. That is just one example.
The United States, Europe and many other nations share democratized data to better support industry, SMEs and family businesses that try to become successful. Canada is behind when it comes to sharing and using analytics to better support strategies and policies. Better analytics can also lead to better innovation.
One example I could give is that Dalhousie and the University of Guelph publish every year Canada’s Food Price Report. We are preparing our ninth edition for December. We are using 254,000 data points, all of them coming from the U.S. That is right: We are trying to forecast Canadian retail food prices by using St. Louis Federal Reserve data. That is how bad our situation is in Canada.
When dealing with innovation the sector is always forced to push regulatory boundaries. We need to allow the sector to dare, to discover, and to go beyond conventional acceptances in food. Compared to other sectors the agri-food industry is not known for its ingenuity, but things are slowly changing.
Most companies coming in with different novel ideas and disrupting forces are not originally from the agri-food sector. In fact, some of the most fascinating ideas we see are from women leaders, people with different cultural and ethnic origins who are now allowed to make their mark more than ever. I personally am mentoring 10 CEOs of start-ups in the agri-food sector from Halifax to Montreal to Calgary. Nine of the 10 are women and most have unique cultural and ethnic backgrounds. In agri-food, diversity enables conditions in order to innovate. I don’t think that has been underscored enough over the years.
The creation of the Protein Industries Supercluster in Saskatchewan should be celebrated. It is forcing stakeholders that would not work together normally to think beyond what they know and to collectively look at growth opportunities. This will generate opportunities for many stakeholders.
I have always believed that the first true food supercluster we have had in Canada was President’s Choice, but the network was intended to support privately owned brands, successful ones at that. The model just needed to be replicated in a way that it makes market development for an entire chain a truly inclusive and more open endeavour. This needs to be replicated for fisheries, seafood, mustard, livestock and horticulture, to a certain extent.
The second point I would like to raise concerns infrastructure. Our infrastructure definitely has to be maintained forever. We are in one of the biggest countries in the world. Without developing intermodal transportation, it is impossible to develop new markets for the agri-food sector. An awakening has taken place over the past few years, but we must continue to invest in port facilities, airports, roads and railways.
The last point I would like to raise has to do with international agreements. I commend the current government, as well as the previous government, for signing and ratifying those important international trade agreements with three continents. However, few businesses are benefiting from those agreements. For example, we are seeing the disappointing results of the new Canada-EU agreement. We must support our businesses upstream in the discovery of our markets. I absolutely agree with Mr. Fraser that our businesses must be supported more upstream, so they can benefit from those agreements.
The food processing sector is critically important for the country’s agri-food economy. However, the continued tensions between distribution and processing, which are something of an “elephant in the room”, limit the sector’s chances to innovate and to take advantage of the opportunities here and abroad. The sector needs analytical science for a better understanding of market trends and conditions and recognition of the sector’s real issues. Unfortunately, we don’t know much about the future of various sectors and we are conducting few strategic foresight studies. The lack of information for the sector is obvious, and the way we make decisions and develop public policies must change. Thank you.
The Chair: Thank you, Mr. Charlebois.
Senator Maltais: Welcome, Mr. Fraser. Welcome again, Mr. Charlebois. The reason we see you here often is because we need you. That it is crystal clear.
Mr. Fraser, you talked a lot about innovation. I just came back from the Paris expo, the SIA, where innovation in agriculture was set out as a priority. When you talk about the Canadian brand, you are right to say that we are certainly lagging behind when it comes to that aspect, which helps us sell our products. In your opinion — and I’m not talking about for today, but for the upcoming years — what steps should the government take with the agri-food industry to improve the image of the Canadian brand, which has good recognition?
We took a step back with the free trade agreement. A solution needs to be found for that brand to come back strong over the coming 5 or 10 years.
Mr. Fraser: Thank you very much for that question. I will return to the Advisory Council on Economic Growth that said we should grow our brand through becoming trusted, safe and sustainable. Those are the three key adjectives that Dominic Barton and the advisory council utilized. For me, unpacking those three adjectives gives us the roadmap for what we can do to create food brand Canada. It is the basis upon which I am involved in a large number of dialogues and conversations. “Trusted” has to do with transparent information technology systems to create that clear line of sight between consumers and producers.
We have some great examples of that, for instance identity-preserved soybeans, a non-GMO edible soybean for which Ontario soybean producers have created a high value-added market, specifically feeding the Japanese consumer demand for things like soybeans, edamame and miso. They have created an identity-preserved system which allows the consumer a clear line back to the farmer and an understanding of what happened at each step of the way. That is what trusted is.
“Safe” builds on the CFIA and our regulatory environment, which is already one of the best in the world. We need to ironclad those claims that our food safety regulatory environment is the best in the world.
Then we have some work to do around “sustainable”. We need to work with industry to codify standards and branding around sustainability as a way of demonstrating to our consumers all over the world that when they buy Canadian food, they are buying something that is a bit special.
By going back to those three words, trusted, safe and sustainable, we can drill into and develop game plans for each of those things based on IT, CFIA and sustainability standards. There is a strong consensus among the people I talk to that we will do well if we do that.
Senator Maltais: That is why research and development at your universities are important.
Mr. Charlebois, you raised an issue that we see regularly on the ground when the committee travels or hear from stakeholders here or by video conference.
You have not raised a factor your are very familiar with: interprovincial barriers. They are a major problem. It is ridiculous. We are signing free trade agreements with a number of countries, but we should have one for free trade within our country. It is completely ridiculous that the barrier between the provinces exists in 2018.
That said, the other problem has to do with infrastructure used by grain, fruit, beef and potato producers. I will give you a concrete example. Prince Edward Island potato producers are at a significant disadvantage in the competitive market because they must pay to cross the bridge. That makes them less competitive than New Brunswick producers.
Could you help us find a solution to that problem over the next few years?
Mr. Charlebois: Thank you, senator. Those are two good questions. I want to start by saying that interprovincial barriers are a problem. I think everyone knows that. It reassures me to know that international agreements will force us to think differently about free trade.
I have never seen Canada as an important player. I came back form China two weeks ago, where I participated in an international conference on beverages. That sector is doing extremely well, but the international market is not being considered. Focus is placed on supporting a very limited domestic market. There is no development strategy. What reassures me is that international agreements force us to think differently.
For the first time, we have a debate in Canada on the provinces and the way to increasingly liberalize the Canadian market. Most consumers don’t know this. I think that politicizing the problem is the first step to resolving it. We are hearing about it more and more. I feel that we will get there eventually. A few Comeau cases may be needed, but I think we will get there eventually.
You asked another question about infrastructure. I live in Halifax, a port city. The seaway is incredibly powerful. There is no seaway in the west. The trade and transportation corridors initiative is of key importance. The country must invest more in that initiative. Canada is a very large country. It is expensive to marshal the resources. When you go the the United States, you see that the infrastructure is very different. They have created places with fairly significant intermodal transport capacity, including in Chicago and Kansas City. All that is very well framed and thought-out, and that is what I think should be done here to help companies do business better with Asia and Europe. The agreements are a good start, but they must be supported through a well-thought-out national strategy
Senator Mercer: Thank you, gentlemen, for being here. I will start with a quick comment that I give at almost every one of our meetings. It is the issue of 9.7 billion people on the planet by 2050 and the fact that nobody collectively organizing the answer to the question of how to feed 9.7 billion people. This will lead to a major world crisis of some sort. There will be a couple of million hungry or angry people. It will lead to trouble. I am hoping, in your responses to questions, you keep that in mind that is a place where we need to go.
Food security is a new term to most Canadians. When I go to the grocery store in Nova Scotia, I don’t think of food security. I think of quality. I think of price. I also think of the origin of the food. In recent times, I have refused to buy products grown in the United States. I know sometime this winter I will buy some of the products grown in the United States because of availability to Canadians because of our weather.
How do you explain the term food security to Canadians so that they get the picture?
Mr. Charlebois: At Dalhousie, actually, we have a new strategic research plan with five clusters. One of them is called food security. It means different things to different people. People are becoming more educated about what food security means. For nutritionists and dieticians, it would mean nutritional security. It is not necessarily to have enough to eat; it is what you eat. Right now we are at the nexus of both dimensions.
In Nova Scotia, by the way, insecure food levels are the highest in the country. It is a huge concern in Nova Scotia. The public dialogue around food security is more around what we are eating. That is why we are having a lot of discussions about animal proteins versus vegetable proteins. What is best for consumers, the planet, animal welfare and health?
Back in 2015, the WHO stated concern around the consumption of process meats, for example. Last week both Guelph and Dalhousie published a new report on meat consumption. I was privileged to have several conversations with people around the country on this issue last weekend. You can feel the plant-based narrative is changing everything.
You are talking about feeding 9.6 billion people. I would say we have the solution. We have effective food systems. If you look at Canada in particular, we have a lot to offer to the world. We are not taking advantage of it because we are so commodities focused. We don’t think much about innovation.
My China trip was depressing because the show there was six times the size of CAEO in Paris. There were companies from Italy, Germany and elsewhere in the world, but not a single company from Canada. I was the only Canadian there. It was unfortunate. I was looking around. Innovation at the farmgate is important, but we need innovation across the food chain.
Senator Mercer: I suggest you take the testimony we have just heard and send it to the chair of the subcommittee on internal economy because they created huge embarrassment with their decision, not just for the agricultural sector but for the country. Shame on them. I ask you to do that.
The Chair: That is not something the witnesses need to comment on.
Dr. Fraser, do you have a comment related to Senator Mercer’s question?
Mr. Fraser: Senator Mercer, thank you for raising this. Without any doubt, the challenge of feeding the world’s growing population while dealing with climate change and not undermining the ecology and environment on which we depend for life is a grand challenge.
You asked a specific question, senator. The World Food Programme defines food security as access at all times for all people to culturally appropriate food that allows them an active life. If you want a simple one-sentence definition, that’s the one I revert to. Mr. Charlebois is absolutely correct. Many people, myself included, layer on top of that issues of sustainability, animal welfare, nutrition and safety as well.
You are right that this is one of the defining challenges. Like Mr. Charlebois, I am also not pessimistic about it. We waste a third of the world’s food. With the exception of fruits and vegetables, we already produce enough. We live in a paradoxical situation where both hunger and obesity are rising. We face a world where the food system, for all its many benefits, is also quite inefficient in that distribution is poor and nutrition in some parts of the world is poor. Those problems can be solved. They are tractable through poverty alleviation in the developing world and through appropriate incentives for the farming system.
On the optimistic side, we have to realize that agriculture is on the cusp of a digital agricultural revolution that will change how we produce and how efficiently we produce. In my opinion, it will radically reduce the environmental footprint of farming.
When I weigh all those things, I see the challenge of feeding 9.7 billion as one of the defining challenges of the 21st century. I also see it as one that is obtainable through technology and policy together.
Senator Mercer: You are making me feel a lot better when you spoke about our system being the best in the world and about taking more risk in agriculture.
You also suggested that we push the envelope a bit. That could happen around this table, but at the table down the street, where the agriculture committee of the House of Commons meets, there is a bunch of people who are not risk takers when it comes to agriculture because if something goes wrong, or a mistake is made, they will wear it. We might be able to share some of the blame too, but the results for us are not as drastic as they might be for them.
How do we square that we have the best system in the world with the need to take more risks?
Mr. Charlebois: Canada is not alone. Every time we talk about agri-food issues, it gets political all the time. It’s not uncommon to see that.
There is a difference in what I see in Canada versus Australia and the U.S. I was in Australia about two months ago, talking about blockchain technologies by the way. They actually think about the future 20 or 30 years from now. They actually think of themselves as playing a role globally.
As Canadians, we often look at domestic issues. We only look at present or current issues. We don’t really think strategically, even though we think we do. As Mr. Fraser has done, I have chaired international conferences. If you compare some of the dialogues around the world, you will feel that Canada is trade reliant and not trade focused at all.
Senator Mercer: Mr. Fraser, do you have anything to add?
Mr. Fraser: I echo what Mr. Charlebois just said. I have nothing to add.
Senator Miville-Dechêne: Good morning, gentlemen. Mr. Charlebois, I would like to come back to your presentation. You talked about the “elephant in the room”, which is supply management, and about marketing boards, which you more or less said were an obstacle to growth. Of course, you are familiar with the current political context. Politics is also involved in this area. Right now, the conversation is mostly focused on the situation affecting dairy producers. You are an academic, so you are not involved in that sector. How do you see the development of that sector in Quebec? How do you see the situation of the UPA relative to that of the Union paysanne? There are tremendous tensions, but some farmers make a living that way. How can things be changed?
Mr. Charlebois: That is an excellent question. Every time I have been invited to the Senate, I have been asked to talk about all kinds of things, but supply management is a question that always comes back. It is a symbol that represents the heart of this issue in Canada, in my opinion. In 1972, Canada had 42,000 dairy farms and, today, it has 11,000 of them. That is a closed club that has never really considered its role internationally. The dairy farm has never been asked to think differently. Supply management was paramount, and it was useful for a period of time. However, I think it has reached the end of its useful life. The industry must think of other solutions. International agreements force us to think differently.
Senator Miville-Dechêne: How? People are saying that, without price protection, producers will disappear.
Mr. Charlebois: I don’t fully agree with that. If there was a strategic reform of supply management—
First, it would be a mistake to abolish the quota system. Those assets are used by Farm Credit Canada, which is a Crown corporation. Canadians are just as involved in supply management as agricultural producers are. We all participate in that system, in one way or another, be it as consumers, taxpayers or owners within Farm Credit Canada. The Canadian Dairy Commission should revise the tariff formula to encourage producers to be more competitive.
Second, I would move forward with a new quota system to help new players tap into international markets.
Third, the tariff formula should be revised. All that would lead to a major sector transformation. I think that Canadian milk, as Mr. Fraser said, is a high quality product. The industry has innovated for us but not for others. That is the crux of the issue. There is enough milk for everyone.
Mr. Fraser, would you have something to add to this issue, which is at the forefront of the news right now?
Mr. Fraser: Mr. Charlebois is the expert on this issue. My only concern with criticisms of supply management is that as we proceed to imagine how the industry will evolve in the rapidly changing technological and trade environment of the next 10 years, we don’t throw the proverbial baby out with the bathwater.
Certainly, the dairy farms that I know in Ontario, where the average herd size is approximately 125 to 150 cows that are being milked, those are typically well-managed farms with very high animal welfare standards and a relatively light environmental footprint.
When I travel through the States and visit farms that maybe milk between 2,000 and 15,000 cows in the U.S., I see rapid consolidation that can happen there and the massive environmental pollution associated with enormous dairy herds. I am cognizant of the fact that although our system has resulted in significant consolidation and a drop in the number of farms, as Mr. Charlebois said, it has not resulted in the consolidation you see in Colorado or California. I am nervous about that scenario.
For whatever policies we think of in the future, we need to be mindful of the environmental footprint of farming and the animal welfare issues, both of which are better handled at the 150-cow scale and are really problematic at the 1,000-cow to 10,000-cow scales. If we abandon or move radically away from supply management, I worry that we’ll start seeing consolidation at the scale that we see in the U.S. That makes me nervous.
The Chair: Mr. Charlebois, do you have a quick comment?
Mr. Charlebois: Very briefly, Madam Chair.
To come back to your question, there is hope. For example, fairlife and Coca Cola have invested millions of dollars in Peterborough, Ontario, to build a new factory to market fairlife in Canada using Canadian milk. The agreement was negotiated between the Dairy Farmers of Ontario and Coca Cola recently to help the association become more competitive. That is reassuring.
I would like to remind you that, in 2013, Chobani wanted to build a factory in Kingston, Ontario, and create 1,000 jobs to produce Greek yogourt. Chobani tried to come to an agreement with the Dairy Farmers of Ontario, but that agreement never materialized. Five years later, we see that the situation is changing. Dairy producers know it.
What worries me a lot, however, is Quebec, or the Union des producteurs agricoles, where there is no openness. That is really worrisome.
Senator Miville-Dechêne: Thank you.
Senator D. Black: Getting back to the topic at hand, I would mention, as we go through our recommendations, that the banking committee has looked extensively at the interprovincial trade issue. You might reference that, and you might look at the work we did on the Northern Corridor, which addresses Dr. Charlebois’ concerns about infrastructure.
You have identified a tremendous opportunity for Canada. It’s well agreed. If we can start to play a major role in agriculture internationally, it’s a great boon for the country.
Dr. Fraser, you have indicated three points of concern. Can you tell us, please, how you think we are doing on each of those three matters?
Mr. Fraser: In terms of our ability to synthesize, aggregate and set global standards for sustainability and safety, I think we are doing okay but a tremendous amount needs to be done. Industry is organizing itself to do it but could definitely benefit from a shot in the arm and some leadership by the federal government.
Senator D. Black: What does a shot in the arm look like? Be precise and be specific, because we would like to hear how we can be of assistance.
Mr. Fraser: For instance, under the auspices of a food policy for Canada, there is a consideration that the federal government set up a national food policy council. That would be a good move. It should be given the mandate to codify existing sustainability and safety standards and to ensure that they are the most rigorous in the world. That is very tangible.
On my second point with regard to information technology infrastructure, we are falling significantly behind. Places like Netherlands and Israel are doing a much better job at allowing data to be pooled and aggregated so that intelligent decisions can be made and data analytics can be derived. Industry is way far ahead, and in this regard we are behind.
Again, under perhaps the auspices of a national food policy council or the Canadian Agricultural Partnership, we need to establish national standards for pooling and aggregating agricultural data. This picks up on one of Mr. Charlebois’ points. There is a very strong role for federal leadership to help ensure that our data is handled in a way that is safe, transparent and cybersecure.
That is a very very big issue. It is one that industry is talking about. However, I don’t think the incentive to pool data, make data consistent and put consistent cybersecurity infrastructure around it is in the best interests of individual industries. That will have to come from the federal government.
We have a huge reputation upon which we can build for safety and sustainability. I am nervous that we don’t have an ability to protect that, which relates to my second point, but in terms of global appearances and global perceptions we are far ahead. For whatever reasons we can trade on our reputation, but we had better build on the first and second points if we don’t want to have our good reputation sullied. That is my third point.
Senator D. Black: Mr. Charlebois, would like to build on that and on your striking point that there is no data in Canada when you are trying to do food pricing?
Mr. Charlebois: There is data in Canada. It is poor data.
Senator D. Black: We have to fix that. How do we fix that?
Mr. Charlebois: If there is one message I would like to leave you with this morning, it is that we are literally flying in the dark. We don’t know what is going on. Lots of companies have a lot of data.
I meet with people at Sobeys, Loblaws, Metro and Costco in Seattle, and they have a lot of data. There are two problems: They don’t share the data or they may not know what to do with it. There is no place in Canada, not even at StatCan. We are forecasting food prices for the next 12 months. The reason that our forecasting is getting better is that we don’t use Canadian data because it is not accurate.
Senator D. Black: What do we do about that?
Mr. Charlebois: We need to get better at it.
Senator D. Black: How?
Mr. Charlebois: I have tried to reach out to StatCan and partner with them to better understand how they collect data in general. It hasn’t been clear. We don’t know exactly how they actually assess the situation in the marketplace.
More transparency with the methodology would help, so that we, as universities and researchers, can actually help StatCan to better collect data to help the industry.
To me, the democratization of data is critical. It’s great to collect data, but it also has to be shared. The USDA and FDA publish information on agri-food every day in the U.S., so that we know pricing, what is going on with commodities, and how climate change is affecting commodities.
There is a lot of guessing and intuitive-driven decisions going on in Canada more so than in the U.S.
Senator D. Black: Would you say that this committee should recommend our looking at the U.S., Netherlands and Israeli models?
Mr. Charlebois: It’s a mix of different things. I am using the U.S. as an example, but when you spend time in Europe you realize they are concerned about sustainability because they don’t have space. They are confronted with similar problems we have but 30 years ahead of us. We can learn from them. The one way they do it is with an analytics, with data.
Senator R. Black: Dr. Charlebois, you mentioned CETA and the fact we need to support them in proactive ways. Can you be specific? What specific things does government need to do?
Mr. Charlebois: Government?
Senator R. Black: I think it was during the French portion of your presentation that you said government needed to be more proactive when you were talking about a shot in the arm. What shots in the arm?
Mr. Charlebois: Those were Mr. Fraser’s words, actually. In terms of helping and supporting industry, I am a big believer that industry and trade groups can make a difference.
It is narrative and more of a mentality shift that need to happen. We are always playing defence in Canada. When we look at CETA, we look at the products that can potentially reach the market, but we don’t think about how to sell to Europe. It’s more of a paradigm shift.
You are asking me what government can do. It can build awareness, encourage companies to look abroad and set up missions.
Many small and medium size businesses can’t afford to go to Europe to meet clients. I have met many people in Europe who are looking at Canadian products. Selling Canadian cheese in Italy may not be a good idea because the quality is pretty strong and the level of competition is high. However, there are opportunities elsewhere in Germany and France where Canada could benefit greatly.
By facilitating these discussions and brokering relationships between industry and targeted markets are where the government could play a much larger role.
Senator R. Black: I have another question for Mr. Fraser and Mr. Charlebois. We have heard lots about animal versus plant proteins in our fact-finding missions and from witnesses here.
I gather from your discussions that we are moving to plant-based proteins. How do we play that out with our Canadian livestock producers? What do we say to them?
Mr. Fraser: That is one of the most interesting questions facing food discussions right now. I’ll say a few things, and then directly answer your question.
First, animals play a vital role in many sustainable agroecosystems because they cycle nutrients and provide all sorts of valuable ecosystem functions. Second, there are probably a billion people on the planet, many of whom are poor, that depend on animal agriculture for income or for their livelihood. Third, consuming animal products is culturally, culinarily and nutritionally important all over the world.
I am in no way advocating a cessation of animal agricultural. That said, Michael McCain, the CEO of Maple Leaf Foods, recently bought one insect-based and two plant-based protein companies. They have started to move heavily into plant-based protein and alternative proteins. I was teasing Michael by asking, “What is the hot dog guy doing buying an insect company?” He said, “Evan, the future is less but higher quality meat.” That’s almost a direct quote, and that’s the mantra I think we need to hold on to.
It’s that animal agriculture is going to go away. It’s that it will reduce as a portion of our overall diet for sustainability, health and simple market reasons, all tied together. Industry is bringing on new alternatives that consumers are finding really exciting. The demand for the newly branded President’s Choice cricket protein exceeds supply.
The industry as a whole has to realize that their total volume will shrink, but their profit levels can be maintained if they adopt a higher value-added product by marketing as organic, free range or free from. Another successful product launched by Loblaws is their “Free From Meats” program.
The industry will have to transition to a high-value, low-volume model, and you are getting that from no one less than the CEO of Maple Leaf Foods.
Mr. Charlebois: This summer I toured six cities in Alberta: Vermilion, Red Deer, Edmonton, Calgary, Grande Prairie and Lethbridge. I saw a lot of cowboy hats. These people are really concerned. They know what’s going on. They know that annually Canada is eating 94 million kilos less beef this year than in 2010.
What should we do? My message to them is very simple and consistent with what Mr. Fraser just said. In Canada most agri-food producers see their commodity in isolation. They don’t see their product as part of a portfolio of ingredients. I tell them to befriend the enemy and to consider beef as part of a portfolio of ingredients. It is okay to tell Canadians that perhaps cooking meatloaf with lentils and beef is not a bad idea. When I say co-existing, that is what I mean.
The Chair: I would like to have the recipe.
Mr. Charlebois: It is a good one.
Senator Bernard: I thank both of you for being with us this morning. It is always nice to see a fellow Dalhousian.
My first question picks up on Senator Doug Black’s question in terms of data. What are the specific barriers? What is stopping us from not only getting the data, but getting the right kinds of data? What is in the way?
Mr. Charlebois: First, funding is a big one because to collect the right data takes time and resources.
I will give you a simple example. Are consumers going to the grocery store more or less often today than five years ago? How much time are they spending in the store? How many stores do they visit on a regular basis? We did a study recently but we were just measuring perceptions. To assess these things takes a great deal of time. That is one barrier.
The other barrier is access. As soon as you start dealing with food companies, they are very protective of their data. They are scared. I write case studies on a lot of things. I recently wrote case studies on Maple Leaf, Sobeys, Monsanto and Ben & Jerry’s. I can go on. Every time the first person you talk to after the CEO is an attorney. That is the reality. Once you conduct interviews, you are in a boardroom with counsel and the person you want to interview. It is difficult. Those are the two barriers.
Senator Bernard: This question also is for you, Mr. Charlebois. In your remarks you mentioned the need for innovation and said that you were mentoring 10 CEOs, nine of whom are women and are reflective of a lot of the equity and diversity in our country.
Is enough attention paid to the value of having more diverse leadership in the sector? Does that make a difference in terms of driving innovation?
Mr. Charlebois: It does. To me, it is really a must. You are starting to see change but I don’t think it is happening fast enough. Michael Medline,the CEO of Sobeys, and I recently had lunch together. He actually had an opportunity to be a CEO in many different sectors. What I said about the fact that the sector is not innovative were his words, actually. He is not a grocer. He is not from the food sector. He has been CEO of Sobeys, the second largest food distributor in the country, and he sees problems.
I ran a live case study with him in the MBA class at Dalhousie recently. He brought in his seven top executives, and three of them were women. I would argue that 10 years ago all of them would have been white men. When you look at Sobeys now, it is more innovative than before.
In processing, it is the same. The 10 CEOs deal with different products that are not getting the attention of the establishment, as I call the main grocers like Walmart and Costco. They can’t afford price lists or SKU fees. That’s a problem. To give these new ideas a chance, you need mentors, support and frankly more flexibility closer to the consumer from grocers.
Senator Bernard: Thank you.
Senator Dagenais: The benefit of being the last person to ask question is the ability to revisit issues we have discussed. You got my attention when you talked about Quebec and the UPA. Supply management has been talked about a bit. Unless I am mistaken, you said that supply management, without being abolished, must be harmonized and modernized. We can’t be using a 35-year-old agreement without making any changes to it.
You got my attention by saying that Quebec’s silence was worrisome. Why is it so worrisome?
Mr. Charlebois: Thank you, that’s a good question.
This is a very polarized debate, whether people are for or against. No one cares about what is between the two. How can a logical model be developed? The UPA is a union monopoly that projects its ideas, thinking that the union represents everyone. However, Quebec dairy producers can read and know what is going on. Not to mention any names, but what is happening with Mr. Bernier’s argument is that abolition of the system is being advocated without providing an alternative path for the future. Yet these are family farms. Supply management cannot simply be abolished all of a sudden. A framework is needed to give those people hope, and that is what they are trying to do. Some producers are reinvesting in their farm, but there is still no vision.
Monday, I will be at McGill to participate in a debate with the UPA, at Macdonald College. I am looking forward to it, but 10 years ago, such a debate on supply management in Quebec never would have taken place. Today, they are starting to invite me, and that may be a source of hope.
Senator Dagenais: I would have liked to attend that debate.
Mr. Charlebois: In Ontario, in British Columbia and in Manitoba, a lot of debates are being held, but not in Quebec.
Senator Dagenais: I would like to come back to transportation infrastructure. You said that the issue with Canada is its vastness. How can the cost of transportation harm Canada’s industry and prevent it from being competitive in international markets? Transportation is expensive when our products are exported. Does that impact the competitiveness of our industries?
Mr. Charlebois: Yes, absolutely. It is a matter of access, and it goes both ways. We want to sell, but we also want to buy. There are often technologies that cannot be developed here in Canada and that should be purchased at a lower price. It costs a lot to bring that technology here. The more we invest, the more effective we make railways, the better it will go. Do you remember the grain backlog in the west a few years ago? That was extremely expensive. Not much was said about it, but it was a disgrace. That shows you that we have a problem in Canada, especially in the west. In the east, the seaway is taken for granted, but it is amazing, and it helps the east be more competitive. The same thing is needed in the west, especially for the Asian market, as that is where phenomenal economic growth is happening.
Senator Dagenais: Perhaps pipelines should be created to move the grain.
Mr. Charlebois: Instead of gas, yes.
Senator Dagenais: Thank you very much, Mr. Charlebois.
The Chair: I apologize to the couple of people who wanted a second round, but we are past our time by close to 10 minutes. In the second part of our meeting today we were to consider a draft report, and I am not sure we have enough time.
I would thank our two panellists. Obviously, there was a lot of interest in your presentations. It has been great to have you with us today.
(The committee continued in camera.)