Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 11 - Evidence - Meeting of May 18, 2016
CALGARY, May 18, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 9:03 a.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Terry M. Mercer (Deputy Chair) in the chair.
[English]
The Deputy Chair: I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. I am Senator Terry Mercer from Nova Scotia, the deputy chairman of the committee. I would like to start by asking senators to introduce themselves, starting on my left.
Senator Merchant: Good morning. I am Pana Merchant, and I am from Regina, Saskatchewan.
Senator Unger: I am Betty Unger, and I am from Edmonton, Alberta.
Senator Tardif: Good morning. I am Claudette Tardif, from Alberta as well.
Senator Dagenais: Good morning. My name is Jean-Guy Dagenais, and I am from Montreal, Quebec.
The Deputy Chair: Thank you.
Today, the committee is continuing its study into the international market access priorities for the Canadian agricultural and agri-food sector.
We are here in Calgary today, and it would be remiss of me not to mention that it is a very difficult time to be in Alberta for Albertans. We understand the difficulties emanating out of northern Alberta, and we want to assure Albertans that your pain is being felt all across the country. I was in church in Halifax on Sunday, and an extra prayer was added to the prayers of the congregation for northern Alberta, so hopefully that is happening all across the country.
Canada's agriculture and agri-food sector is an important part of the country's economy. In 2014, the sector accounted for one in eight jobs in Canada, employing over 2.3 million people and close to 6.6 per cent of Canada's gross domestic product.
Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global exports of agri-food products in 2014. Also in 2014, Canada was the fifth-largest exporter of agri-food products globally.
Canada is engaged in several free trade agreements. To date, eleven free trade agreements are in force. The Canada- European Union Comprehensive Economic and Trade Agreement, the Trans-Pacific Partnership and the Canada- Ukraine Free Trade Agreement have been concluded, and eight free trade agreements' negotiations are ongoing.
The federal government is also undertaking four exploratory trade discussions with Turkey, Thailand, the Philippines and the member states of the Mercosur, which includes Argentina, Brazil, Paraguay and Uruguay.
We are very happy to be here in Calgary to hear from Western Canadian government and stakeholder representatives involved in the sector of agriculture and agri-food.
As our first witnesses, we welcome from the Alberta Canola Producers Commission Mr. Greg Sears, Chair, and Mr. Ward Toma, General Manager. From the Alberta Pulse Growers we have Leanne Fischbuch, Executive Director, and Mr. Doug Sell, who is a member. From Saskatchewan Canola we have Ms. Tracy Jones, Policy and Producer Relations; and from Manitoba Pulse and Soybean Growers, Mr. François Labelle, Executive Director.
Thank you for accepting our invitation to appear. Following the presentations made by the witnesses, a question- and-answer session will take place. Senators will be given five minutes each to ask questions before the chair recognizes another senator. There will be as many rounds of questions as time will allow, so senators do not need to feel required to ask all their questions at once.
During the question-and-answer session, I would ask senators and the witnesses to be succinct and to the point when asking and answering questions. We will now begin the presentations, followed by questions from senators.
We will start with Mr. Sears.
Greg Sears, Chair, Alberta Canola Producers Commission: Good morning, Mr. Chairman, senators, ladies and gentlemen. Thank you for inviting us to the session today, and we are happy to provide information as you study agriculture and forestry as it relates to international trade.
As introduced, my name is Greg Sears, and I farm with my family near the small town of Sexsmith, Alberta, which is just beside Grand Prairie in the Peace Country of Alberta. I am Chair of the Board of the Alberta Canola Producers Commission.
The ACPC works on behalf of its 14,000 members, canola farmers in Alberta in the areas of market development, research and farmer education. We contribute to national and international issues, policies and programs that affect farm profitability through the Canola Council of Canada and the Canadian Canola Growers Association.
Canola farmers in Alberta rely on international markets. Ninety per cent of the Canola that we produce is exported directly either as seed or as crushed product in the form of oil and meal. In 2015, Canadian farmers produced canola for over forty countries, but 85 per cent of it was destined for just four markets: The United States, China, Japan and Mexico.
Our market priorities are the following: To maintain and expand export markets; to address barriers in existing markets; and to ensure canola reaches export points in a timely, cost-effective way.
Achieving trade agreements that help maintain and expand export markets is key. We need agreements that provide commercially viable access for canola and its products. The comprehensive economic and trade agreement between Canada and the European Union and the Trans-Pacific Partnership will provide new market opportunities for canola and ensure that Canadian farmers remain competitive with their counterparts from other large oil and seed exporting countries, most notably the United States and Australia.
Upon implementation, CETA will eliminate the tariff on canola oil, which will expand market opportunities for canola oil used in European biofuels. Alberta farmers look forward to the implementation of this agreement in 2017 and will work with government as legislation is introduced.
The EU is a world leader in biodiesel consumption, and Canada's canola is an important sustainable feedstock. Canada's participation in the TPP is integral to our long-term viability. It ensures that Canadian farmers remain competitive in accessing key Asia-Pacific markets. Tariff reductions for oil and enhanced rules for trade will create new market opportunities as well as increase cooperation and transparency in addressing non-tariff trade barriers related to biotechnology and plant health.
Exporting canola oil instead of seed means more value-added activity happens here in Canada. Processing Canadian canola in Canada keeps economic benefits at home. Creating a more viable processing industry supports our rural communities through quality job creation, provides marketing options for growers and ensures that Canadians throughout the canola value chain benefit from international sales.
With TPP and CETA, Canada's free trade agreements cover 60 per cent of Canada's canola exports for 2015, the big exception being China. China is Canada's second-largest canola market after the United States with exports totalling $2.6 billion in 2015. ACPC encourages the Canadian government to explore a closer trading relationship with China that would address both tariff and non-tariff trade barriers. There is also interest in exploring trade arrangements and market development opportunities with other markets, including India.
The story of canola is one of innovation, and farming practices borne of our leading-edge research and development activities. For various agronomic, economic and sustainability reasons, canola farmers in Canada overwhelmingly choose to use the products of modern plant-breeding techniques.
As important as tariff reductions, the trade agreements contain provisions to address numerous non-tariff trade barriers. Inconsistent and unpredictable approvals for innovations in crop-protection products and biotechnology continue to cause challenges for Canadian agriculture. Both TPP and CETA provide a platform to address some of these most pressing market access issues facing canola producers.
Using China as an example, canola has seen remarkable growth over the last five years, but we increasingly face non-tariff regulatory barriers. Delays in China for approvals of new canola varieties produced with biotechnology or the establishment of maximum residue limits for pesticides create unnecessary unpredictability and risks for our entire canola sector. Ultimately, it is the farmers who bear the financial cost of this risk and uncertainty.
Finally, I must comment that Canadian agriculture needs a world-class transportation system to capitalize on opportunities presented by these trade agreements. Farmers rely on rail transportation to move our products from Alberta to the port. This is the only viable means of moving grain, and we are captive of services that are largely monopolistic.
The provisions of Bill C-30, the Fair Rail for Grain Farmers Act, extending interswitching limits, introduced a much-needed level of competition in the defined areas. Increased access to lines of competing railways is good for farmers and their grain shippers as it provides potential for new options for routing, improved service levels, and promotes price competition between railways.
In closing, I want to thank you for the opportunity to appear before the committee and would be happy to take any questions. Thank you.
The Deputy Chair: Thank you, Mr. Sears. I appreciate your presentation.
Next, from the Alberta Pulse Growers, we have Mr. Sell.
Doug Sell, Member, Alberta Pulse Growers: Thank you, Mr. Chair and committee members. We appreciate the opportunity to appear before you today. My name is Doug Sell, and I am a farmer from Strathmore, which is just northeast of Calgary. I serve as a member of the executive of the Alberta Pulse Growers Association.
Our commission is a producer-led organization that represents about 5,000 farmers who grow field peas, dry beans, lentils, chickpeas, fava beans and soybeans. We are funded by a one per cent refundable levy on the sale of pulse crops, and we are mandated to invest those dollars into research, marketing and learning opportunities for our growers. We also contribute to our national organization which is Pulse Canada.
Personally, on my farm I grow — in pulses — lentils and field peas.
This is my first time presenting to your committee, but I know you have heard from our national organization many times, including, most recently, on March 8 when a group of producers and members of the trade were present in Ottawa.
My farm has been in our family for 55 years, and I make sure that on my land everything I do enables me to plant, nurture and harvest a crop as well as to be profitable doing it and with — more recently, the latest catchphrase in mind: Is it sustainable? I can assure you, my land is in better shape now than when I began farming — not 55 years ago because I am only 56, but when our family began farming it 55 years ago.
Science has allowed a lot of that to happen. Technologies like fungicide and herbicides are available to farmers only after they have been thoroughly tested and evaluated for human health and environmental safety perspectives. A science-based risk assessment system is as important to farmers as it is to the industry and to consumers. I use this science to make sure I can provide the best crop I possibly can that is demanded by both the markets and by consumers.
Pulse crops leave my farm and go to feed the world, so market access is absolutely critical. Unfortunately, when issues like misaligned approvals and maximum residue limits for crop protection products emerge, it threatens several very important things, the first one being access to those markets, another one being the ability to utilize technology on my farm.
I know those technologies are good, those technologies are safe, and I believe very strongly in a science-based screening program. I believe it is very safe, and the whole world needs to be measured on the same standard.
Canadian farmers can and will be profitable and sustainable if the playing field is level, and that's why agreements like TPP and CETA are so vitally important — the access we get through agreements like those.
I agree with Greg that the other big part of it is internally, we need to have a system to get our products to where they need to go, and I refer specifically to the railroads. I encourage you to be internally vigilant, to hold their feet to the fire and ensure they are accountable for the business they do on behalf of farmers, getting our product out to market.
Risks are increasing each year when Canadian grains enter other countries. Import-required testing is getting more sensitive — now it is done in parts per billion and parts per trillion — and some countries are moving toward their own custom systems. That is a problem, and Codex really is a good international standard. If countries aren't using the same standards, then that can become in itself a tariff barrier whereby they will artificially block trade and trade products.
Finally, for market access purposes, about 85 per cent of my pulses and those of other Canadian farmers go into the export market, and because of that the potential to be disrupted is great if market access becomes less and less a priority. We really do need to have good market access. We continue to rely on moving our products by export to feed the world.
Leanne, our executive director, is going to elaborate further.
Leanne Fischbuch, Executive Director, Alberta Pulse Growers: Our industry joins the world this year in celebrating International Year of Pulses. As the world's largest pulse exporter, we are moving product to over 150 countries across the globe, and our industry has a critical interest in market access and opportunities to improve pulse trade.
Alberta Pulse Growers, like our other provincial counterparts, have industry growth goals. We would like to see 15 per cent of Alberta's arable land being put into pulse crops by 2020. We are now at 8 per cent, and we are growing in our acreage. Our value-added processing sector is emerging but will not be able to use much of the current production as yet. We continue to export the majority of pulses alongside the rest of Canadian production that provided nearly $4.2 billion last year to the Canadian economy.
For international market access priorities for the pulse sector, Canada can be a leader by ratifying the Trans-Pacific Partnership and implementing the Canada-EU Comprehensive Economic and Trade Agreement.
There are many outcomes that we would like to achieve on market access through these agreements, such as: reducing tariffs; reducing tariff escalation, which limits our ability to process and value add here in Canada; and capitalizing on future market opportunities and recognition of scientific standards across borders.
For pulse crops, there are also other markets that we need to focus on, including India and China. These markets are significant for export of field pea, Canada's largest pulse crop, and there are no finalized agreements with either of these two countries. We would recognize that there has been good work with India, and it continues, but it has been quite quiet of late. For the pulse industry, our opportunities should also be explored with China given its prominence now and in the future.
Finalizing trade deals and continuously looking at new opportunities is important, but we also have the opportunity to review internal policy within our own government. Canada can show political, technical and commercial leadership by developing a workable domestic recognition of scientific standards policy along with international outreach targeting adoption of that policy by Canada's trading partners.
This is similar to Canada's leadership on low-level presence and will help food to continue to predictably cross borders as it moves from the world's surplus regions to food deficit regions. This leadership, using sound science and evidence-based processes can travel across international boundaries and enable greater market access opportunities and can help farmers like Doug and others continue to produce and make available healthy, nutritious food for the world.
Thank you for the opportunity to present to you today.
The Deputy Chair: Ms. Fischbuch, thank you very much for your presentation.
Next we will hear from SaskCanola. Ms. Jones, please proceed.
Tracy Jones, Policy and Producer Relations, SaskCanola: Good morning, honourable senators. Thank you for the invitation to be here today to provide input into your study on international market access priorities for the Canadian agricultural and agri-food sector. This topic is critically important to Canadian farmers.
As introduced, my name is Tracy Jones, and I am the Policy and Producer Relations Manager at the Saskatchewan Canola Development Commission. I am here on behalf of the chair of our board, Terry Youzwa, who farms at Nipawin, Saskatchewan. He is currently planting his crop and was unable to make it today.
Like Alberta Canola, SaskCanola is a provincial organisation representing 26,000 Saskatchewan canola farmers. We are a member of the Canadian Canola Growers Association and a core funder of Canola Council of Canada. We work with both of these organizations on national and international policy development as well as programs that impact farm prosperity.
I will be echoing a number of points already shared by Mr. Sears and Mr. Sell.
Canola farmers rely on international markets. Approximately 90 per cent of canola we produce is exported directly as seed, or it is crushed domestically and exported as oil or meal. Our market access priorities are threefold: First, to maintain and expand export markets; second, to address barriers in export markets; and third, to ensure canola reaches export points in a timely and cost-effective way.
Cooperative efforts by industry and government to improve market access have been successful and must continue. The support of market access by the government of Canada through the market access secretariat has been instrumental in achieving the success we have to-date.
As the largest canola-producing province in our country, Saskatchewan farmers rely on international trade to generate farm income. Canada's participation in the Trans-Pacific Partnership or TPP is integral to our long-term viability. Over 90 per cent of the canola grown in Canada is exported, with about 60 per cent of it destined for TPP markets. In 2015, Saskatchewan sold just shy of $3 billion of canola to TPP countries.
By eliminating tariffs on canola oil and canola meal in Japan and Vietnam, our industry estimates that we can increase our exports by approximately $780 million per year. That equates to about one million additional tonnes of oil and meal coming from Canada.
The current Japanese tariff structure restricts exports of oil and meal. The tariff on canola seed is zero, yet on oil it is roughly 15 per cent. As a result, Japan buys canola seed and then crushes it themselves into oil and meal.
For canola, there is nothing to be gained from delaying the ratification of this agreement, and we encourage the government to take action now. Once implemented, the TPP will address this imbalance and shift our exports from a primary commodity to a value-added product, keeping economic benefits at home by adding jobs to our processing sector.
In addition to free trade agreements, addressing trade barriers in existing markets is critical. China, for example, is Canada's second-largest market with exports totalling $2.6 billion in 2015. Canadian canola has achieved remarkable growth in China over the last five years, yet significant untapped growth potential remains because we face non-tariff trade barriers on a regular basis.
As China continues to grow in both population and wealth, they have become more focused on their health. As a result, the demand for heart-healthy canola oil and canola meal for livestock feed will only increase.
In fact, the OECD estimates that by 2024, the demand for protein from oil seeds in China will grow by 23 per cent, and the demand for vegetable oil will increase by 24 per cent. If we want that growth to benefit Canada and the canola sector, we need to support enhanced economic partnership between Canada and China.
Regulatory delays in China on both new canola varieties produced with biotechnology and the establishment of maximum residue limits for pesticides approved here domestically pose risks for our Canadian canola sector.
Due to the global nature of our industry, Canadian companies typically delay the introduction of new varieties and crop protection products until approval has been received in all major countries of trade, including China. In the case of biotechnology, the time it takes to approve a new variety in China has almost doubled in recent years.
Crop-protection products approved for use in Canada also need to have maximum residue limits established in the importing countries, even in the case where the products have been through rigorous safety testing domestically.
For Canadian farmers, the move away from evidence-based decision-making prevents us from using new, innovative technologies on our farms. The Canadian government needs to continue to work with the Chinese government to encourage them to avoid these non-tariff trade barriers and adopt a more efficient science-based approval process.
Lastly, rail service and capacity must also improve because our landlocked province of Saskatchewan relies heavily on rail service to get our products to market. The rail prices of 2013 and 2014 cannot be repeated, as rail logistical challenges adversely impacted farmers' ability to move grains and oil seeds to port, which inhibited the ability to serve international customers.
In order to obtain the needed investment and increased capacity of railways, changes to legislation must address this imbalance of power along the logistic supply chain. Better performance monitoring and more clarity on the railway obligations to its shippers are two areas which really need attention.
In closing, agriculture is an economic driver. The agriculture and agri-food industry generated $106.9 billion in 2014, accounting for 6.7 per cent of Canada's GDP.
Canola is a Canadian success story and one of the most valuable agricultural commodities of this decade. It contributes $19.3 billion to the Canadian economy each year and supports 249,000 jobs. Maintaining and growing prosperity will depend on successfully overcoming future market access challenges.
Thanks again for the invitation to be here, and I look forward to your questions.
The Deputy Chair: Thank you, Ms. Jones.
As we continue to move from west to east, we will now hear from Mr. François Labelle of the Manitoba Pulse and Soybean Growers.
François Labelle, Executive Director, Manitoba Pulse and Soybean Growers: Good morning, Mr. Chair and committee members. It is a pleasure to be here with you today. My name is François Labelle. I am Executive Director of the Manitoba Pulse and Soybean Growers, and I have been farming in the Red River Valley near Carman, Manitoba, for 30 years.
Manitoba Pulse and Soybean Growers is a farmer-directed organization representing more than 38 farmers who grow soybeans, edible beans, peas, lentils, fava beans and chickpeas. We are funded by a half-per-cent refundable levy that is invested in production knowledge, market development and support for our members. I am a founding director of Manitoba Pulse and Soybean Growers, which was formed in 1984 as the Manitoba Pulse Growers Association. I worked for 35 years in the grain industry before retiring and taking on this role.
You heard from our national association Soy Canada on April 21 and Pulse Canada on March 8, as has been mentioned before, but this is the first time that our association has spoken to your committee.
I would like to talk to you about the people who grow the food we eat, farmers and their farms. In the early 1980s when I began working in the industry, Manitoba grew 68,000 acres of pulses. In 2015, more than 1.5 million acres of pulses and soybeans were planted, and in 2016, that number may rise to an estimated 1.75 million acres. This growth is a result of three factors: research, innovation and international trade.
Even in the 1980s, when production was small compared to today, we relied heavily on international trade to market our crops, and this is what allowed farm production to grow. Trade was simple then. You had a contract. Terms were spelled out. You delivered on the contracts, and you got paid. You had rules. You knew the rules, and you worked within them. Times have changed. Market access is no longer as simple.
Canada needs to take a leading role in working toward regulations and policies that are based on science. Farmers need to have a more predictable environment to operate in, a level playing field supported by science and evidence that is anchored in international trade agreements.
Canada also needs to take a leading role in coordinating regulatory approvals domestically and internationally. As an example, this year Xtend soybeans was approved in Canada, the U.S. and China, the largest buyer of soybeans. Unfortunately, as of now this new technology has not been approved in Europe. We are told it is coming, but when?
Europe is an important market for Canadian soybeans, taking more than 30 per cent of our annual crop. Fortunately, in Canada this new technology has not been released to farmers. If it had been, marketing our crops would become much more complicated like it is now in the U.S., where buyers have said they will not accept product grown using this new technology.
The risk of accidental shipment of a product to a market that hasn't been approved is just too high for the buyers to take. Buyers are requiring farmers to sign documentation that the crop being delivered does not include this new technology. In the reality of today's trade rules, a single unapproved seed could turn around an entire 50,000 metric tonne shipment of grain, so ultimately, we need a predictable and synchronized system for approvals.
What happens when an unapproved product gets into a shipment? It could be rejected at the destination country. Canadian farmers take the hit. The exporters pay the initial fees, but they do recoup those losses from the prices that they adjust to the growers, and it comes back to the farmer.
We need to coordinate approvals of biotechnologies and MRLs, maximum residue limits. Trade should not be full of unknowns. It should not be complicated. We need our farmers to be strong and vibrant.
Canada also needs to take a lead in establishing the low-level presence policies which refer to the tolerance of low, unintentional presence of genetically modified material that is deemed safe in the commodity of grain. Without such a policy, zero is the tolerant level, which is just shy of impossible to obtain.
A single genetically modified soybean in a shipment of navy beans is not zero. One soybean in 500,000 pounds or roughly two-and-a-half hopper cars is 1 part per billion. Actually, one bean in 2,500 hopper cars is 1 part per billion. It is phenomenal that we look at these numbers.
Manitoba Pulse and Soybean Growers would also like to see Canada play a role in establishing a system of trade rules that are not easily manipulated. Trade was relatively easy years ago, not anymore. In the interest of liberalizing trade and eliminating duties and tariffs, we have moved to a much more complicated system. There are more new technologies requiring approval and more countries having moved to their own custom policies and technology approval systems, and testing has become much more complicated with accurate methodologies. The better the job we do reducing tariff barriers, the more we see non-tariff barriers coming, and our work is not done till we address both of these.
Farmers do what they can to ensure international trade is not affected or disrupted by their actions. The problem is that the rules they need to follow are not always clear. Some things are beyond their control, and abrupt changes to export chains such as the Triffid flax incident a few years ago can cause significant harm to the market and the farm returns.
Farmers do not operate in a controlled environment. They deal with nature, equipment limitations, unforeseen business forces which, when added up, make it difficult to control every aspect of their product. How can they be certain that there will not be issues with their crops somewhere in the world with so many unknowns?
Farmers care for the environment. They want to grow sustainable-produced crops that are safe for all to eat, including us. Their products need to be competitive in the world market, and they need access to these markets to be competitive.
As farmers continue to innovate, we foresee the increased production of crops, and certainly, like my cohorts have said, transportation infrastructure in this country and the whole transportation system must become more reliable. It is paramount to market access and trade.
To conclude, I would like to thank the committee for allowing Manitoba Pulse and Soybean Growers the opportunity to present our views on this important subject. The work you are undertaking is a step in strengthening our commodity sector and the strength of Canadian agriculture as a whole. I welcome your questions.
The Deputy Chair: Thank you all for your presentations.
Ms. Jones mentioned in her presentation about her being here on behalf of the chairman of the board, who is busy planting his crops. We realized when we decided to come here this week that it would not the most convenient time, not just because of the fires in northern Alberta but because most farmers are on the land planting and getting ready for what we hope will be a very successful crop year.
However, our time is also a bit limited, so we wanted to make sure that we did not spend all of our time in Ottawa talking to people in Ottawa. We wanted to get out here and talk to the real people who do the real work, so we apologize for interrupting some of the planting process.
Mr. Sell, you talked about holding the railways' feet to the fire. I happen to be the longest-serving member of the Standing Senate Committee on Transport and Communications. There is nothing I would like better than to hold the railways' feet to the fire, so that message has been heard with my other hat on as a committee member of transportation.
I remind everyone to be succinct in your questions and answers, please. We will begin with Senator Tardif.
Senator Tardif: Thank you. I am so pleased that our Senate committee can be here in my home province of Alberta. It is wonderful as well to have representatives from the Prairie Provinces to present before our committee.
There has been a lot of cohesion in the messages that we have heard in your testimony today, and I would say that all of you have stressed the importance of getting access to international markets, the question of eliminating barriers that are causing you difficulties, whether they are tariff or non-tariff barriers, as well as improving the access through a good transportation system.
I want to get back to the question of tariffs and non-tariff trade barriers. What would those be for each of your sectors?
Mr. Sears: For canola, a lot of it relates to, as mentioned, biotechnology. A very large percentage of our growers do use seeds which are considered to be GMOs, which is an issue that is tied up with all sorts of very polarized views around the world. We feel it is very important that regulation of those trades be science-based and coordinated around the world.
As an example, recently one of the seed developers was ready to introduce a new product this spring and just before it was set to come out of the warehouse, they cancelled it because of trade approvals in Europe. Europe doesn't typically take a large amount of our canola, but this year due to production issues over there, they became a significant market for our canola. But now this trade isn't approved within Europe, so now that trade is off the table, no longer accessible to Canadian farmers to use. It all ties together with this asynchronous approval of trades in biotechnology and similar works for maximum residue limits for crop-protection products.
A big issue we have had with China is the approval of a chemical called Quinclorac, which is approved in the United States, approved in Canada, all of our major markets except China. We can't use it because it is not acceptable — I shouldn't say "not acceptable'' — it is not defined in China.
We could ship it to China for years and not have an issue. Then if China decides they want to put up some sort of a barrier, they say, "Well, no. We have detected the presence'' — be it parts per billion — "of a product that is not allowed in China and are going to reject your shipment.'' It is a very difficult atmosphere to perform business in.
Senator Tardif: Would it be the same for the pulse growers?
Ms. Fischbuch: For us as well, maximum residue limits would be, probably, our largest at present. I can give you an example of about five years ago with lentils leaving Canada, going into the European Union. Some shipments were held, and it was because of a certain crop-protection product that was put onto that crop. We had to work through the maximum residue limits that were recognized between the EU and Canada.
For us as an industry, as a proactive measure, Western Canadian growers have come together and always try to let our farmers know what crop protection products may face some challenges that are uncertainties in the marketplace. We try and inform our growers as best we can, but as mentioned in our presentations across the board here, one of the challenges is when certain countries start developing their own residue limits, and all of a sudden, there is something new that we just don't know yet, and shipments leave Canada, and then we have some challenges. So I would say MRLs are probably our largest difficulty at the moment.
Mr. Labelle: The canola event with seed that wasn't released from the warehouse refers to the Xtend soybeans, and that was the very issue. It is a non-tariff trade barrier. In that particular case, it is a stacked event in that two different products are being used on the commodity. Interestingly enough, both events have been approved. Both products that they can spray on it have been approved, but the fact that they are being put together has not been approved. It is really convoluted as to why it hasn't been approved.
The science is there. It's sound. They have accepted it, but because of a non-tariff trade barrier, it just hasn't been approved to date.
Senator Tardif: Do you think that the ratification of the CETA agreement would solve some of these issues?
Mr. Labelle: What we could hope with agreements like CETA and the TPP being ratified is that there are mechanisms in place that would allow us to work through these issues better than we are now.
Senator Tardif: Would they afford for the synchronization of some of these regulatory, I guess, elements?
Mr. Labelle: There is language in CETA whereby there could be formed technical committees to work through some of these issues. Hopefully, that is where we can get more of our sound science to take a role instead of it being bureaucratic and political.
Ward W. Toma, General Manager, Alberta Canola Producers Commission: Tariffs are the easiest part because they are purely financial penalties for delivering a product into a country. It is a very easy negotiation. The non-tariff trade barriers are the harder ones because anything that you can think of can stop a product from coming into your country. That, in a nutshell, is what it is, anything else they can think of. It can be as simple as you don't the appropriate paperwork. No one may know what the paperwork is, but someone has decided that you don't have the appropriate paperwork.
It can be as convoluted as that, and it can be we don't have rules, as was mentioned. That is the benefit of CETA. That has been a big benefit from NAFTA over the years, and one that we are hoping to get out of the TPP — rules established to address problems when a barrier is thrown up. You don't have the paperwork. All right. Let's work through the rules on what is the paperwork. The paperwork is known. You can go through this.
A lot of it has to do with diseases and the potential, whether they are real or not, of transmission from one country to another, and that is a legitimate concern Canada has and so do our trade partners. We don't want to participate in that. We want to make sure that we don't do that and that we don't receive those diseases, so we have to have the rules in place.
The broad agreements, as was mentioned, allow for these rules to be created and the processes put in place to work through problems where there may not have been a rule, there may not be a standard, there may not be a definition. Not knowing how to create or come to an agreement on a definition is the biggest part of problem with a non-tariff trade barrier. Having the rules and the process in place so that if something does come up, it can be addressed in a timely fashion, and trade can commence.
Senator Tardif: Thank you.
Senator Unger: I would like to echo what my colleague said: Welcome. It is just wonderful to hear firsthand from our Western growers. I thought I was the only person in the world from Sexsmith, but Mr. Sears, it is nice to hear that you are from there. I know there is great farming in that area. My dad was a farmer there a long time ago.
I have listened to the problems with these non-trade barriers. First of all, if you have been exporting your produce to different countries, why would they do that? Why would they look for a reason? Do they get a better deal somewhere else? I know Australia is a competitor, the U.S. especially, for the countries in the TPP, so why?
Mr. Toma: More often than not, they are quite simply reacting to internal political pressures within their country. It may be, and sometime it is, legitimate concerns of plant disease transfer, animal disease transfer of a new disease, a new strain of a disease that may have shown itself in the exporting country, and the importing country does not want to have that transferred to them.
So there are those concerns. We can work through that with research collaboratively with our importing countries. We have done that with China and with Japan to resolve disease issues. There are issues around plant-protection products, herbicides and pesticides and insecticides and ensuring that human safety is, of course, paramount. New products have to be approved. We have to work through that, and governments in countries — as do governments in Canada — have to react to their constituents.
The source of a lot of non-tariff trade barriers is that they are reacting to internal political pressures. We have to account for that and address their needs as our customers and either solve the problem or prove that it is an unwarranted concern.
Senator Unger: You are really dependent on governments to negotiate and ratify deals that will enhance your trade opportunities. You have all said that so much gets exported already, and you would really like to see these deals ratified.
Are you optimistic now, with the change in government, that this is going to happen soon? I know it is a political question, but it all comes back to politics; it really does.
Mr. Toma: We are hopeful that the TPP and CETA will come to fruition. It is in the best interests of Canada. It certainly is in the best interests of agriculture. There are other sectors in the country and other areas in the economy that have concerns, and of course the government has to address those concerns, but that is why the government gets elected, to make those decisions.
Senator Unger: Mr. Sell?
Mr. Sell: I know the new government has indicated support for TPP and CETA, so I am optimistic. Do I have concerns? Yes. A change of government always brings concerns because, you know, what was there yesterday is not there tomorrow, and that is just reality.
I am hopeful because we do not want to pit one commodity group against another.
We are all farmers producing good food that the world needs, so our intention is not to throw somebody else under the bus. We all have international markets that we need to have access to, and as Mr. Toma mentioned, the biggest asset of TPP and CETA is the fact that everyone knows what the rules are. In the absence of rules, you can have the non-tariff trade barriers that, as he said, are just willy-nilly. It can be anything: "I have had a bad hair day, so I am going to reject your shipment because I can get it cheaper elsewhere.'' That is why those agreements are so important, but I am optimistic, yes.
The Deputy Chair: Senator Dagenais.
[Translation]
Senator Dagenais: My first question is for Mr. Sears.
Mr. Sears, you spoke at length about the agreement with the European Union and the TPP. Do you think these agreements will force you to adjust your production? Will you produce enough to meet a greater demand?
I will immediately launch into my third question, which is a lot at once. In your view, what economic impact will the agreement with the European Union and the TPP have on your industry?
[English]
Mr. Sears: I think your first question related to our capacity to provide the increased product that we are anticipating from sales as a result of the successful conclusion of some trade agreements.
I think that Canadian agriculture is very well positioned to increase its productivity without increasing the requirement for land. We are very efficient users of resources, and there is a lot of technology that can be applied that is not at this point because of markets that we will ultimately enter.
The yields that we are getting out of our acreage today are 50 per cent, 75 per cent higher than they were 30 years ago, and I would anticipate we will continue to see similar increases as time progresses.
Do we have any consequences related to the agreements? I have used this analogy before as far as the agreements not being ratified. It is not catastrophic, but what it does is it reduces our potential to grow our exports which (a) reduces price, ultimately, for farmers, but it also reduces the ability of other sectors of our sector to invest in equipment to build tractors in Manitoba, to invest in crop-production research in various places around the province.
Even with the railways, if we do not have the capability to increase our exports, there is less of an incentive for those sectors to increase investment in their businesses to support agriculture. I think those are the negative consequences of not ratifying the agreements. We have talked several times about the positive outcome of the ratification.
Mr. Toma: If I could elaborate a bit more, specifically with the CETA agreement and Europe. The canola industry's gains there are more around rules on product approvals for genetically modified organisms and having biotechnology rules for approvals in place there.
The European Union is fairly self-sufficient in vegetable oils, so it is not a major market for us. It is important in that its rules influence a large portion of the countries of the world. They follow the lead of the European Union, so having solid rules in the EU helps us in other markets. The CETA agreement is, specifically for the canola industry, more about rules in place as opposed to product and sales.
The Trans-Pacific Partnership, on the other hand, the problem is more in some of the markets like Japan. The concern is with tariff escalation. Reducing tariffs on vegetable/canola oil going into Japan would allow the Canadian canola industry to export more oil, keep jobs and process value added here in Canada. Some of the other countries like Vietnam would have the same consequence — allow us to export more product into those growing economies and provide more jobs and value added here in Canada.
Ms. Jones: If I could add as well, the canola industry nationally does have a strategy for increasing our production between now and 2025 using genetics, using production practices over the same amount of land base, so we have put a lot of thought and effort into how we would meet new market demands.
[Translation]
Senator Dagenais: With your permission, Mr. Chair, I want to ask Mr. Sell a very straightforward question.
Last year, we met with heads of railway companies. Correct me if I'm wrong, but we were clearly told that grain transportation needed improvement. Has grain transportation been improved in cooperation with railway companies?
[English]
Mr. Sell: Yes. This past year was, I would say, noticeably better. There is no doubt the winter of 2013 — and they use that as a catchall — was a tough winter. There were some unintentional consequences when they put the limit on of some five thousand cars per week. I have reasonably good access where I farm because I can run from Strathmore, Lyalta or Crossfield out to port, which is very fast, so all of a sudden, we had good rail transportation.
Farmers in Saskatchewan, however, got the short end of the stick. They had no shipping for virtually a year because they decided: "We are going to take it from the close areas, get it where we need to have it. We will meet our quotas.'' But other parts of the prairies suffered even more. That was an unintended consequence of the government saying, "Okay. Five thousand cars is your unload quota. You have to do it, or there are going to be fines.''
The Deputy Chair: I am going to move on to the next question, but I want to stay with the railway issue. One of the issues has always been, particularly with respect to the products of your three provinces, empty rail cars moving through the prairies to Vancouver bypassing products that need to get shipped to the Port of Vancouver.
This is problem ongoing. We have little GPS devices on everything we own these days, but the railways don't know where the empty rail cars are. I am sorry; they have got to do better than that. It really is a problem when you have got product ready to go to market, and the longer you wait the less valuable the product becomes.
Now we will go to Senator Merchant.
Senator Merchant: To stay with the railways, do you have any issues today, as had been in the past — maybe it has been resolved — with transportation costs? They would be different when you are closer to market. What about Saskatchewan? Is there still an issue? You all remember the Crow Rate. Has that been resolved? Is that still a conversation that you are having? Are there some things that the government still needs to address regarding the transportation costs of grains?
Ms. Jones: In recent history, most of the discussion has been around rail service and the ability to just access rail capacity. Rail costs are one of the bigger costs that farmers have to bear. Even though they are not shippers, it does get passed on to them, but I would say rail service is a higher priority.
Mr. Toma: Service has been the biggest issue, but rail cost is still an issue given that the rate at which the railways are compensated for hauling grain and oil seeds is a regulated rate determined by a formula, determined by a government committee and by government. The railway companies would rather that that did not exist and that they could set their own tariffs at their own costs. That, naturally, would benefit their shareholders, but given that we have a virtual monopoly on rail service in Canada, the farmers that I work for are very much opposed to such a system.
That being said, the regulated rate does need to reflect true costs. It does need to reflect reasonable costs. One of those costs is the cost of ownership of cars that haul the grain and oil seeds themselves, the repairs and maintenance therein, and a lot of those grain cars are — "ancient,'' which is a fairly good word that is used quite often. They do need to be replaced, and no one seems to be coming forward to say that they will actually invest in rail cars.
In the past, various levels of government have invested in rail cars, as have farm organizations and provincial governments, and this is a question that is coming at us rather quickly that no one seems to want to talk about, but it does need to be talked about. The rail cars do need to be replaced, and we need to have a system in place that can do this so that the cost that the farmers will end up paying for in the end is reflective of reality and is efficient.
Senator Merchant: Thank you very much for your replies.
Going back to the Trans-Pacific Partnership, when we hear the political conversation from our neighbours to the south, there is some indication that if a certain person is elected the TPP is not going to be ratified. Does that give you any pause? What would happen if the U.S. decided suddenly to not ratify or slow down things for political reasons? How will that affect our trade with those countries and our ability, if we were to ratify without the U.S. being there? Is that something that you think about?
Mr. Sell: Speaking personally, I guess it would be business as usual. It takes, what, 60 per cent of the signature countries in order to make that agreement binding? That is what I have heard. So we need both the U.S. and Japan to sign it in order for TPP to go through.
If it is not approved, then yes, it will be business as usual, which is going to be taking a step backwards. Hopefully then our government will be proactive and make more individual agreements with those same countries.
Mr. Sears: If the U.S. does not ratify, in many ways I think that provides more impetus for us to either ratify TPP or aggressively pursue bilateral agreements. So much of our market is the United States, and to me, non-approval of TPP is an indication that there is a political atmosphere of protectionism growing there, and that is a significant concern for me.
The Deputy Chair: Like oil, we need to develop different markets for our products.
Senator Merchant: I think somebody mentioned biofuels and canola. How important is that to the canola industry? There is a conversation that maybe, environmentally, it is not really as good a thing as we had thought because to convert the canola into the biofuel produces certain environmental aspects and that on balance it may not be as good a deal as originally thought, or is that not the case? How important is the biofuel aspect?
Mr. Toma: The biofuel market is another demand for our product, and, as Mr. Sears said earlier, we have this past year sent a significant amount of vegetable oil/canola oil to the European Union, and that oil was destined for the European biofuel market.
It is not the case that biodiesel produced from canola oil is not as environmentally friendly as we once thought. It is very environmentally friendly. It is a significant reducer of greenhouse gas emissions and other pollutants compared to regular, petroleum-based diesel. That is based on a complete life-cycle analysis that the Canola Council of Canada has done as well as various levels of government. They have shown that it does meet the very rigorous standards set out in Europe for the renewable energy directive on a sustainability side as well as greenhouse gas reduction side.
Given the thought, federally, and the current action within the province of Alberta around carbon taxation, biofuels are excluded, at least in Alberta, from carbon fuel tax. We would hope that such an action would follow federally, that there would be an exclusion should there be a federal carbon tax because it does help with that environmental aspect of things.
So it is an important market. It is not a big market. Quite often you are taking a food product and turning it into fuel, and you have the food-versus-fuel argument thrown up. However, a 5 per cent inclusion rate in the Canadian diesel pool for biofuels would not even use up our surplus production carryover stocks at the end of the year. A 5 per cent inclusion in Canada can easily be met by existing production.
The Deputy Chair: Thank you, Mr. Toma.
I can't help but comment that by 2050, we are going to have 9 billion people on this planet. I have a great deal of faith in the Canadian farmer's ability to respond to the demand in production, but I continue to hear the difficulties around — you can produce it, but if you can't deliver it, you know, it is not going to help solve the problem of feeding 9 billion people.
That will create problems, and I don't think that is a uniquely Canadian problem. I think it is a problem in most Western countries that are part of the solution to feeding 9 billion people. It is a frustration that we all share, and we are paying attention. I didn't say we are going to solve it; I just said we are paying attention.
Now we will move on to the second round. Senator Tardif, please.
Senator Tardif: The United Nations has declared 2016 as the International Year of the Pulse industry. How has that recognition benefited the Canadian pulse industry?
Ms. Fischbuch: One of our objectives nationally with the International Year is to create awareness. One of the biggest challenges we have as an industry is when you talk to consumers, few understand what a pulse is. The word is a challenge, but once you start explaining all of the different crops — field peas, dry beans, lentils, chickpeas, fava beans — people say, "Oh yeah, I eat those. I know what they are.''
Our objective over this past year has been a very strong consumer-focused, millennial-focused campaign with bloggers and others, and we are just starting to accumulate some data to look at recognition of what the word actually means. Across Canada, around 25 per cent of Canadians actually know what a pulse is. It is a base line.
Once we complete this year, hopefully we will start to see that increase, and once they understand what it is, they will incorporate it into their diets. They will understand all the healthy aspects of eating pulse crops. For farmers, we are hoping that translates into increased demand for the crops both domestically and, of course, globally.
Mr. Labelle: All the efforts in trying to get the consumers and the people to speak about pulses and eat them have been, I would say, almost phenomenal.
Back in December, when we started talking to people about it and we did a survey, few people knew what pulse crops were, but now it is rare that when you go somewhere people aren't talking about it. We get inquiries from restaurants. We get inquiries from chefs, bloggers and so on. It is just huge, and you rarely go somewhere now that people aren't talking about pulses or serving them as a dish.
Even though we don't have hard data yet, I think it has been a real success, and to add to that, companies are now starting to include pulse products in their foods and so on. You can go into the grocery store and pick up a black bean cracker that you didn't see two years ago or a year ago. I think this is all taking hold because of the International Year of the Pulse.
Senator Tardif: I must admit that I was one of those people who did not know what the word meant until I became part of this committee. Congratulations on your success.
Ms. Fischbuch, you indicated that in your growth potential, you wanted to go from 8 per cent arable land for pulse crops to 15 per cent. How does that happen? Is it a matter of convincing farmers to dedicate part of their land to growing some of the pulse crops, or is it farmers realizing what an important niche market this may be?
Ms. Fischbuch: I think it is a little of both. We like to say that our farmers grow a variety of crops. Mr. Sell said he grows peas and lentils, but he also grows canola and cereal crops. It is very important that farmers understand how pulses fit into their rotation. There are benefits from inclusion of pulses in a cropping rotation. That is an aspect of encouraging farmers to take a look at the economics of that, and price.
Price always plays a role in what farmers choose to put into the ground, and this year we are seeing significant growth in acres in Alberta predominantly because the prices in the marketplace have been so strong.
Right now, like I said, we are at about 8 per cent. The opportunity to get to 15 per cent probably means an increase of another 2.5 million acres, and we are probably nearing 2 million acres this year in Alberta alone.
Senator Tardif: You indicated that three factors were responsible for your success: research, innovation, and I believe increased market access. Can you tell me the role that research and innovation has played specifically in the success that you have had?
Ms. Fischbuch: Our organization, as Mr. Sell mentioned at the beginning, is run by farmers when we get contributions from them on the cash sales. A significant amount of our dollars in our program goes into research.
We are working with our national organization to include pulses in various food products, like Mr. Labelle mentioned. We are looking at addressing various issues agronomically that may hold us back. For example, in Alberta only a couple of years ago, we discovered what is known as aphanomyces, a type of root rot that could be quite devastating to the pulse industry. Right away, we put a significant amount of money aside to take a look at that issue. If we can address those types of things and stop those issues from carrying forward, finding other measures or results that can impact the farm side of things, we will see the benefits.
Senator Tardif: Is there a dedicated research centre for pulse crops in Canada?
Ms. Fischbuch: There is no dedicated research centre, but there is a variety of research that happens both provincially and at universities across Canada in various ways through implementation of funds like science clusters federally.
Senator Tardif: Thank you.
Senator Unger: Back to taxes. I assume that taxes impact everyone's business. The Alberta government will implement a carbon tax in January of 2017, and additionally, the federal government is also pushing for a federally mandated carbon tax. How will these taxes affect your businesses other than in a negative way?
Mr. Sears: I will take a first stab at this.
A phrase that came up in one of our meetings was "death by a thousand cuts.'' Individually, each one of these taxes on a producer is manageable, but when you take the cumulative impact, it is significant to the economics of the business.
As much as we are very passionate about growing food, we do also have to provide for our families, so the economics still have to be there. That is an important part, that the cumulative impact of these various taxes does not become burdensome. The other side of it is that agriculture has a lot to offer the climate change discussion in terms of carbon capture and storage. We do a lot of practices now that we are actually returning more carbon to the soil than we generate, and it is critical that we are recognized for doing that and also compensated for doing that.
Ms. Fischbuch: One thing I think that farmers are cautious about when it comes to carbon taxes, whether they be provincial or federal, is that you may put producers at a significant disadvantage in terms of trade. If, all of a sudden, we get taxed more and more at the grower level, it is going to, I believe, make producers take decisions about what is to be put into the ground and what we can offer competitively in terms of trade.
For example, India, being our largest export country, will continue to look for pulses, and if, all of a sudden, it is getting more difficult for our producers in Canada to remain competitive on a global level, there will be less opportunity for us to get product to India and into the marketplace, so we won't be able to address that, you know, feeding the significant number of people in the future.
I think that is one of the things we really have to watch out for when it comes to implementation of tax, especially on the carbon side of things.
Senator Unger: Mr. Toma or Mr. Sears mentioned that rail cars need to be replaced, and in the past the government has stepped up to replace them, for private companies. Everyone else seems to go to the government for money for their industry. Have you ever had a conversation with the federal government, asking for money specifically to get cars? You need the trains to provide better service. "Death by a thousand cuts'' certainly comes to mind if it is not one thing, and, of course, you need good weather. Any comments on that aspect?
Mr. Toma: As I indicated, it is a conversation that stems from the recent CTA review of the railways and the cost of maintaining and upgrading the cars. One of the comments made in the review was that the cars are old, and they need to be replaced.
Historically, various levels of governments have invested, but we don't know where that is yet, so no, we haven't officially said to any level of government that you need to do this, but it is an increasing awareness that we are running out of time, really, with these cars. Something has to happen before we get to the point where we are losing more grain out the bottoms, or they physically can't haul the crops over the railways.
The farmers do realize that everybody needs to be involved with this, the railways, the shipping companies, the farmers themselves as well as governments. I mean, it does impact an incredible amount of the economy in Canada, so it is a national problem.
Senator Unger: What if the U.S. didn't ratify the TPP and Canada had to unilaterally make deals with these different countries, and you also mentioned China?
I was really disappointed to read in a national paper yesterday that Canada risks being left behind on China. The previous federal government had started the conversation, but now it just seems to have been bogged down, and Canada was not invited to the Asian Investment Banking Conference to be held soon.
I wonder if you have comments about your belief in the ability of the government to unilaterally negotiate deals if TPP isn't ratified? Anyone?
Mr. Toma: That is an interesting question. My experience with the negotiators who are employees of the Canadian civil service is that they are top-notch folks.
Senator Unger: Yes.
Mr. Toma: They are incredible to watch in action. They are incredible in their ability to achieve, from what I have seen, the best possible outcome for Canadian agriculture for the Canadian economy, for the various sectors that they have to deal with and bring these outcomes to Parliament to be ratified. So if you are asking me if I have faith, that is where I would place my faith, in the professionalism of the negotiators that the Government of Canada employs to work for the economy and for the country.
The Deputy Chair: Thank you, Mr. Toma. The committee should be aware that on June 9, we will actually have the negotiators before the committee, so you will be able to put the questions directly to those people.
Senator Unger: We still need the government, though, to ratify.
[Translation]
Senator Dagenais: My question is for Ms. Fischbuch. You spoke of the added value of your innovative products. To promote the added value of new products, do you think the various provinces should cooperate more effectively? I imagine the work needs to be done as a team.
[English]
Ms. Fischbuch: I will speak with respect to Alberta. I define "processing'' on two levels. There is first primary processing, which I would say would be cleaning and bagging smaller product. Then when I talk about secondary value-added processing, it would be processing into food products; for example, a pea butter created out of a certain variety of field peas, and it would be in competition with something like a soy butter or a peanut butter.
That type of processing needs to be further developed within the province. I know tomorrow you will be hearing from the Alberta Food Processors Association. Within our current provincial government, there is also a desire to create more economic development in our province and to look at ways that will move us, perhaps, a little further away from our dependency on oil and gas. This economic development boom can be supported by agriculture and agri-food value-added production.
We would like to see that happen more and more in Alberta, and I think one of the things that we will see specifically within the next two years is a company that will process ingredients — taking pulse fractions, splitting the pea into fibre, into protein and into starch. As soon as we get that level of processing up and running within the province, I think there will be more and more opportunities for us moving forward.
Does that address part of your question? I think there is a real opportunity here, and it is just a matter of moving forward on it.
Senator Dagenais: Thank you.
Senator Merchant: I wondered if you could just think about the risk strategies that should be built into these trade agreement structures to deal with currency fluctuations. How does that affect you, and what does the government need to be building into these agreements that they set up?
Mr. Toma: Currency risk can be handled fairly well through existing market mechanisms for transactional risk. I think that it would be in the broader scope to ensure against corruption, that sort of thing, so the easier, more cheaply money flow can happen helps trade move forward. Transactional risk on exchange rate fluctuations can be handled, with the existing market structures and market tools. I know that traders are doing that all the time.
It is more the broader things that a government would look at, not necessarily specific to agriculture but to financial transactions. It is more of a central bank issue in a lot of cases than financial risk to agriculture.
Senator Merchant: You don't have any trouble, then, with countries that get into trouble financially? You don't have any trouble collecting?
Mr. Toma: The grain traders, the companies and the individuals who buy and sell canola or pulses or wheat or barley are probably amongst the most conservative, fiscally conservative, risk-averse folks I have ever run across. Quite often, they are dealing with people that they know are going to pay their bills or have paid their bills upfront.
A lot of transactional risk that comes from country-to-country type of business, they are not really running into that. These are folks who have been buying and selling grain internationally for, in some cases, over a hundred if not a couple of hundred years. They watch their pennies very closely. They are very risk-averse folks.
So, there is that, and a lot of the customers are middle-class consumers who want our product. They are not fly-by- night operators. They make sure they pay for it, and they are looking for good-quality product. That's why they are coming to Canada. You still need to have those tools if countries go under, but hopefully that doesn't happen. I guess that is as broad answer.
Senator Merchant: Good. Thank you.
The Deputy Chair: Ladies and gentlemen, I would like to sincerely thank you for appearing today. We continue to learn a lot from the producers directly, and if anybody wonders if trips like this to Alberta are of any value, they need only to have been paying attention for the last hour-and-a-half.
We have learned an awful lot, and we appreciate your candour. Again, we know that it is not an easy time to be here because most of those farmers are on the land, taking care of business, and we have the issue in northern Alberta, which is providing a lot of extra attention that none of us need, but we will manage to deal with that too, as always.
For the testimony of our next panel, we will hear from each of you and then go to a question-and-answer session.
We now have with us, from the Prairie Oat Growers Association, Mr. Art Enns, President; from the Alberta Wheat Commission, Mr. Kevin Auch, Chairman, and Mr. Caalen Covey, Business Development and Markets Manager; from Alberta Barley, Mr. Mike Ammeter, Chairman, and Ms. Shannon Sereda, Manager, Policy and Market Development; and from the Saskatchewan Association of Rural Municipalities, Ms. Carmen Sterling, Vice-President.
Mr. Enns will present first.
Art Enns, President, Prairie Oat Growers Association: Thank you, Mr. Chairman, senators and observers.
I farm in the Red River Valley area and am President of Prairie Oat Growers Association. It is an honour to speak on behalf of the Prairie Oat Growers Association. We are a voluntary organization established to promote the interests of oat growers and oat marketing. We represent nearly 90 per cent of the oats grown in Canada.
Canada is the world's largest exporter of oats and the third-largest producer. Canada's oat growers produce more than 3 million tonnes of oats annually and ship over half of the world's exports of crop each year. The U.S. is Canada's largest purchaser of oats, representing about 90 per cent of the annual Canadian oat exports.
Over the last few decades, Canadian oat farmers have turned oats from a domestic crop into a major Canadian export. In 1982, exports accounted for 3 per cent of Canadian oat usage. In 2015, they were 69 per cent.
We highly value the U.S. market for oats and want to serve it to the best of our ability. However, our market is still recovering from the 2013-14 transportation crisis, and movement remains below the five-year averages. During the height of the crisis, the oat market suffered most.
Canada's inability to deliver created a concern with the U.S. millers that they should not be sourcing all of their oats from Canada. There is now a lasting impact on our market share as they have turned elsewhere to manage their risk.
We recognize that overall grain movement has improved, but inadequacies remain in the southern corridors. Oat producers are relying heavily on trucking, which went up 69 per cent even though it is not the lowest-cost option.
The Canadian Transportation Act needs improvement. In particular, POGA believes more gathering of corridor- specific data, corridor-specific planning, both in the short term and long, and better provisions on the service level agreements need to be incorporated in the act.
On the topic of the Maximum Revenue Entitlement, POGA supports its retention. Based on 2013 and '14, the Maximum Revenue Entitlement was not the limiting factor.
POGA also would like to applaud the government's decision to extend the provisions of the Fair Rail for Farmers Act for a further year. In the strongest possible terms, POGA calls on Parliament to enact this extension before the summer recess.
As of March 2016, POGA understands roughly 3,000 grain cars have been shipped under the increased 160- kilometre interswitching distance. Based on an average value, that is worth an estimated $80 million in crops moved, including oats.
As we stated, we highly value the U.S. market. We believe there is an opportunity to regain market share and expand there. However, the current reality means new market opportunities must be created just to have the same amount of oat export Canadian producers had before the transportation crisis.
Thanks to support from Growing Forward, we have already begun to work to increase market share of Canadian oats in Mexico. Mexico is the third-largest importer of oats in the past year alone. Canada has doubled its market share. We are up roughly $8.6 million, and this is based on an AAFC grant of less than $35,000.
The ability to leverage government funds, the efficient use of social media, setting up country-specific websites like www.avenacanada.com and top-notch support from the embassies and consulates are examples of how Canada can promote market access and development.
We have begun to work to expand sales into growing markets in China. Currently, Canada already has access to the Chinese market for oat seed for propagation, but Canadian oats are currently not allowed for human or feed consumption. Working with importers like AAFC and CFIA, we are hoping to get the barrier to trade addressed. In cases such as this, technical support from the government is very important.
In addition, POGA would like to note the importance of science-based decisions made on phytosanitary issues, pesticide MRLs and all plant matters.
So it is clear: Canada needs more access to diverse market. As a result, the Trans-Pacific Partnership and NAFTA are very important to Canada. POGA actively encourages Canada to ratify the TPP agreement as soon as possible. We also want to further protect and strengthen agreements like NAFTA and CETA, which also needs ratification.
Several of the TPP members are already key trading partners for Canada and represent 51 per cent of Canada's agricultural and agri-food exports. The U.S., Mexico and Japan are major importers of oats, and all are TPP members. Other TPP members also represent important potential new markets.
Recognizing we need more diverse opportunities and fair transportation, the final piece of the puzzle is further innovation in the oat sector. One of the key issues is the need for variety development. Currently at AFC, there is one remaining oat researcher in Western Canada. A successor needs to be assigned, as the current breeder is expected to retire in 2018.
POGA, along with industry players, are ready to pay for 100 per cent of one of two new oat researchers in the two- year position and 25 per cent of the other. We hope AFC will have both individuals hired by October 2016. These positions underpin the success of oats as a sustainable Canadian crop.
Moving forward, we also expect farm traceability and certification programs could become more common. Canadian standards should precisely mirror or default to the U.S. standard as the larger market. Two different standards would be inefficient and redundant.
Diversification of oat consumption is also needed. Consumers need to see their oats can be used for breakfast, lunch and dinner in North America and abroad. We appreciate the support for international market programs and also believe funding for marketing is needed here at home. Domestic market access matters just as much as global.
Thank you, and I hope senators will enjoy some of the oat products out there soon.
The Deputy Chair: Thank you, Mr. Enns. We appreciate your presentation.
Next, we will hear from Mr. Kevin Auch.
Kevin Auch, Chairman of the Board. Alberta Wheat Commission: Good morning. My name is Kevin Auch. I am Chair of the Alberta Wheat Commission, and I also farm near Carmangay, Alberta.
I would like to thank you for including us in today's Senate committee hearing to share key background information on priority market access and policy topics relevant to Alberta's wheat farmers.
Over the next few minutes, I will discuss the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement and the importance of these trade deals to maintain Canada's competitive edge in the international marketplace. I will also discuss sustainability, an important market access issue, and finally, I will touch on the current state of policy related to green transportation.
Alberta farmers rely heavily on access to markets as over 70 per cent of Canadian wheat is exported. Export demand drives local prices received by farmers, which in turn determines our profitability. Historic trade agreements such as CETA and TPP are expected to bring long-term benefits to Canadian wheat growers and increase our ability to function as profitable businesses.
Canada's participation in both CETA and TPP are key priorities for Alberta's wheat producers to maintain competitive market access on the world stage. AWC looks forward to legislation being introduced into Parliament and working with the federal and provincial governments to ensure the CETA agreement is implemented in 2017.
The TPP will create a free-trade zone among 12 nations around the Pacific, making it the world's largest trade deal, accounting for 40 per cent of the world's economic output and 800 million potential consumers. Specific to agriculture, TPP signatories purchase a combined $5.4 billion in agricultural exports annually from Alberta and $56 billion from Canada.
Furthermore, tariffs on wheat will be eliminated within this zone, paving the way for long-term viability for the agriculture sector. The TPP will also include improved harmonization of required documentation to mitigate risks of non-tariff trade barriers, including technical barriers to trade.
Signatories to the TPP agreement include some of Canada's most important wheat markets, including Japan, the United States and Mexico. Three others, including Peru, Chile and Vietnam, buy significant quantities of wheat on an annual basis, and the deal also includes countries with emerging markets that could further enhance international trade.
Joining the TPP would maintain a level playing field with our competitors and increase market access to high-value key markets in the Pacific Rim, namely Japan, which has the largest GDP in the world behind the U.S. and China.
If Canada does not participate in the TPP, Canadian farmers would be at a competitive disadvantage in these key export markets. Major competitors such as the U.S. and Australia would see preferential market access while Canada would be left playing catch-up as we are doing now with the signing of the Canada-South Korea Free Trade Agreement.
As Canada looks to be a leader in providing valuable, safe food to the world while diversifying our economy, the TPP provides trade rules that allow for science-based terms of trade while providing opportunities for stable economic growth within Canada. We strongly encourage the Canadian government to ratify the TPP Agreement as soon as possible to signal Canada's commitment to trade and strengthening our economy.
Sustainability is a key consumer-driven market access issue that is growing increasingly important to our consumers. Sustainable farming practices in Alberta are among the most advanced globally and continue to improve in the absence of any regulations.
From 1990 to 2013, crop productivity increased at twice the rate of the increase in emissions. Much of this occurred because the agricultural sector already made major system improvements to reduce the emission intensity of production. Some of these advancements include: widespread adoption of conservation tillage; responsible fertilizer use through the widespread adoption of the 4R Nutrient Stewardship Plan; adoption of precision agriculture technology; and significant financial investments in research to improve crop genetics using biotechnology and traditional plant breeding methods.
As we strive to continue to reduce our carbon footprint, we feel that the federal government has a role to play in supporting the agricultural sector. Climate change policies aimed at the cropping sector need to be science based and not put us at a disadvantage in international markets. Further research is needed to identify scientific bases for practice improvements that can lower emissions and increase food production sustainability without creating barriers or increased costs to producers.
Climate change policies must also consider the impact on a producer's economic viability. Farmers rely on global prices and, as such, are price takers. Regulations such as the imposition of carbon taxes that increase costs to producers for fuel, fertilizer or transportation cannot be passed on to buyers and, therefore, are borne by producers.
Regulators need to take into account that zero till practices used by farmers today actually reduce greenhouse gas emissions by sequestering carbon in the soil.
Climate change policies should also be flexible, adaptive and voluntary. Education and extension are the biggest barriers to adoption of practice changes. The cropping sector is committed to advancement in this area because it makes good business sense, but a one-size-fits-all regulatory approach would be counterproductive.
I will now move on to the final topic I wish to discuss, which is transportation. In light of the recent Canadian Transportation Act Review Report, Alberta farmers were disappointed to learn that the report fails to provide long- term solutions to improve Canada's grain transportation system.
The report fails to recommend a clear mechanism to improve railway accountability, and we continue to advocate for mandatory inclusion of reciprocal penalties in service level agreements, as this is the most effective way to ensure railways perform at high levels.
Farmers also oppose the report's recommendation to rescind the extension of the interswitching limits from 160 kilometres back to 30 kilometres. Interswitching has proven to be one of the few tools available to shippers to enhance railway competition.
AWC was pleased to hear the government intends to extend key provisions of Bill C-30, including extended interswitching, to allow for a full review of the CTA report.
Farmers also oppose the report's recommendation to phase out the Maximum Revenue Entitlement, better known as the MRE, over seven years. AWC believes eliminating the MRE will impose higher costs on farmers with no evidence that it will lead to better service.
The MRE acts as a measure of competitive pricing between shippers and railways, and in its absence, monopoly pricing will occur, resulting in additional costs being downloaded to the farmer. Therefore, AWC strongly recommends that the MRE not be eliminated.
This concludes the summary of topics I wanted to bring forward today on behalf of Alberta wheat farmers, and I want to sincerely thank you for including us today in the standing committee hearing and providing us with this important opportunity to bring forward these topics of key importance to our industry.
The Deputy Chair: Thank you very much, Mr. Auch. We appreciate your candour.
We will now go to Mike Ammeter, please.
Mr. Ammeter: Thank you. My name is Mike Ammeter. I am Chair of the Alberta Barley Commission and a farmer near Sylvan Lake, Alberta. I want to thank you for the opportunity to speak on behalf of Alberta barley farmers today.
Canada produces around 7.12 million metric tonnes of barley, and over 58 per cent of that is produced here in Alberta. Canada provides over one-third of the barley exports in the world, with approximately 1.5 million tonnes of barley being exported each year to, mostly, the United States, Japan and China.
Close to 80 per cent of barley produced annually in Alberta is used as feed for livestock, including cattle, hogs, poultry and sheep. Most notably, barley fuels a multi-billion-dollar Alberta beef industry.
Alberta barley producers participate in a highly export-driven industry. Our agricultural exports drive economic growth, create jobs and build strong rural communities.
With growth in demand for global food exports, farmers need the support of the federal government to provide a competitive, predictable and open trade environment. Removing barriers to trade opens new market opportunities, maintains existing markets and ensures that Canada remains competitive to other food-producing nations.
Current market access issues of concern for barley farmers centre around transportation, free trade and social license. A key concern and priority for accessing international markets is the need for a long-term solution to Canada's grain transportation system. Without improved service, reliability and accountability, Canada's reputation with respect to the movement of agricultural products will continue to be damaged and hinder our ability to respond to international market opportunities.
Recently, the Canadian Transportation Act Review Report was tabled by Minister Garneau, and Alberta barley farmers were disappointed in the review report because it did not fully address the fundamental problems of railway market power imbalance and the impact it has on the needs of the Canadian agriculture industry as a competitor in the global marketplace. As an example of the imbalance of railway market power, the 2013/2014 grain transportation crisis impacted the entire value chain and damaged Canada's brand and reputation as a reliable supplier of agricultural products, resulting in lost global sales. The crisis cost farmers, grain handlers, exporters, value-added processors and, ultimately, the Canadian economy as a whole.
Emergency provisions put into place by Bill C-30, the Fair Rail for Grain Farmers Act, were meant to improve rail service for the shippers of our products and were a step in the right direction. However, the CTA review report presented by David Emerson recommended permanent removal of many of these provisions.
We are pleased with the recent announcement by Minister Garneau and Minister MacAulay to extend certain provisions of Bill C-30 for an additional year in order to maintain predictability while they continue to review the report. However, history shows that if the underlying structural issues are not addressed, transportation failures will recur.
Canadian agriculture and the Canadian economy cannot afford for this to happen again. As such, Alberta Barley continues to advocate for the collaborative development of permanent measures that promote long-term railway accountability and adequate rail service, which allows for secure access to international markets.
The second international market access priority that impacts Alberta Barley is the importance of enhanced free trade. It is important that Canada's agricultural exports maintain a level playing field to major international competitors in key export markets.
Trade agreements such as the TPP and CETA create significant opportunities for Canadian agricultural products. For Alberta Barley, doubling or tripling of beef exports to Japan if TPP is ratified will present a significant growth in domestic barley feed demands for Western Canadian barley producers.
The third market access issue I would like to discuss relates to sustainable farming and social license. Gaining public trust and understanding of agricultural science and technology and on-farm practices is crucial to ensure continued market access both domestically and internationally.
When it comes to sustainable improvements to production capabilities, Alberta farmers are world leaders. We have continually made improvements which improve efficiency while reducing emissions intensity and the impact on the land.
Farmers have adopted a wide range of practices, including: conservation tillage, responsible fertilizer use, adoption of precision technology, crop rotation, wetland preservation and investment in biotech and plant breeding. Agricultural land acts as a biological sink for CO2 emissions, and soil sequesters a considerable amount of carbon.
These practices have been implemented voluntarily in the absence of any direct regulation. Policies that support the adoption of climate change mitigation measures must be recognized as dramatic improvements that have already been made voluntarily and based on research to identify the scientific basis for practice improvements without creating barriers or increased costs to producers.
Currently, Alberta Barley is working with other crop commissions to continue work on surveying our farmers to identify areas of strength in their sustainable practices and identify areas of weakness in order to direct educational efforts to ensure continuous improvements. Through sustainable practice improvements, increased productivity has been evident. Most of this has occurred largely due to, first, enhanced research and innovation on breeding and genetics and, second, innovative technological improvements.
Innovative technologies like pest-control products and plant biotech allow farmers to grow more food without cultivating significantly more land. Continued funding and support for research and innovation is a key needed to ensure food security and Canada's ability to respond to these growing global needs.
Concerted efforts of the Canadian agricultural sector towards gaining social licence is imperative. Helping consumers understand the importance of biotech from a social, economic and environmental perspective is of great importance in order to further add value to our communities and the economy and the global food supply.
In summary, from the perspective of the Alberta Barley Commission, the competitiveness and profitability of Canada's agriculture and agri-foods sector hinges on three key points: one, promoting free trade through the signing of international trade agreements; two, long-term improvement to the rail transportation system; and three, continued funding for innovation and research and enhanced consumer understanding of biotechnology and on-farm practices.
I thank you very much for your time today.
The Deputy Chair: Thank you very much. We really do appreciate it.
Next, from the Saskatchewan Association of Rural Municipalities, Ms. Carmen Sterling.
Ms. Carmen Sterling, Vice President, Saskatchewan Association of Rural Municipalities: Good morning, ladies and gentlemen. My name is Carmen Sterling, and I am Vice President of the Saskatchewan Association of Rural Municipalities, also known as SARM. My husband and I farm in the Weyburn, Saskatchewan area. It is my privilege to be here today to speak to you about what international market access means to SARM and our members.
First of all, I will provide you with some brief background information on SARM. SARM is the independent association that represents all 296 rural municipalities in Saskatchewan. It is a grassroots organization where the membership provides direction and the policies are developed accordingly.
Rural municipalities in Saskatchewan are tasked with facilitating and supporting economic growth and development while ensuring that their ratepayers' needs are being met. The major sectors in rural Saskatchewan include agriculture, oil and gas, potash, forestry and other natural resource industries that are important to both Saskatchewan's and Canada's economies.
According to the 2011 Census of Agriculture, Saskatchewan accounted for just over half of the canola area in the country, about 48 per cent of spring wheat area in Canada and approximately 40 per cent of the total farm area in Canada. In addition to being home to a strong grain industry, Saskatchewan also has a large livestock industry. Saskatchewan is the second-largest beef producer in Canada, producing more than $1 billion worth of beef annually. In 2014, Saskatchewan totalled $13.9 billion of agriculture exports. This grew to $15.3 billion in 2015. These statistics illustrate the size of Saskatchewan's agriculture industry.
Access to international markets is important for continuing economic development in Saskatchewan and for ensuring that our quality agriculture products continue feeding the world as global population continues to rise. Trade agreements such as the TPP and CETA bode well for Saskatchewan's economy and its producers by creating new market access and reducing existing tariffs with existing trade partners.
SARM is using every opportunity to express its support for the aforementioned trade agreements and the benefits that they will bring to the province and agriculture producers through increased international market access.
It is important that producers and grain companies have a clear and strong understanding of their requirements in trade agreements, obligations, regulations and legislation. Where this is not the case, situations may arise where producers don't have a clear understanding of what is required of them, or there may be excessively stringent controls that may interfere with trade.
The proposed China grain law is an example of a phytosanitary issue that may turn into a trade issue with implications for the domestic Canadian grain industry. This issue raises questions around China's commitment to international trade agreement obligations, the potential for unnecessarily restrictive approaches to phytosanitary assurance systems and regulating quality requirements.
Another market access issue facing the grain industry is how Mexico has limited the import of Canadian canary seed. This threatens trade stability and production, which ultimately trickles down and negatively affects producers. SARM commends the Canadian Food Inspection Agency on working with Mexico to allow a pilot project that allows certification of Canadian canary seed into Mexico at an acceptable standard.
Similarly, the Government of Canada and the Canada Grains Council have been working together with China on the China grain law issue, and the implementation date has been pushed back to September of this year to allow for further discussions and preparations.
A third market access issue has been the country-of-origin labelling that was recently repealed. This was a win for the livestock industry in Canada, and it was an issue that SARM was actively involved in. It is very important that the Government of Canada does its best to ensure that trade agreements, trade decisions and market access are all based on the available evidence, that trade partners are treated fairly, and that all participants follow the rules of the World Trade Organization.
Another area that supports market access is research. Research on crop genetics helps to ensure that Canadian products are resilient and of a high quality. SARM would like to see an increase in research funding for grain varietal development, and SARM believes it is important that Canada fosters a friendly environment for researchers in this field. It is important that research is adequately funded so that Canadian products remain high-quality and in demand globally.
A strong Canadian transportation system specifically for grain transportation by rail is a critical component for Canada to effectively access international markets. We are all familiar with the grain backlog experienced in 2014 and the consequences of an ill-prepared transportation system.
SARM's position on the CTA Review Report can be surmised by the following points: SARM believes that the Canada Transportation Agency ought to have enhanced power and authority to ensure that backlogs are avoided in the future. SARM would like to see the continuance of a minimum standard of grain moved to ensure there is constant movement of grain. This should include strategic car allocation to avoid the preferential use of main corridors at the expense of other lines.
SARM asks that the federal government commit to keeping the Maximum Revenue Entitlement in place. This ensures that railways cannot overcharge for the movement of grain. It was disappointing to see the review's recommendation that it be eliminated within seven years. A strong transportation system will ensure that Canada remains a significant partner in international markets.
Sustainable development is a major underlying component for the agriculture sector as all initiatives should seek to conserve the environment, use resources efficiently, meet consumer demand and plan for their long-term economic competitiveness. Sustainability is more important now than ever before.
In closing, the position of SARM on international market access is that the Government of Canada must ensure that trade obligations are fair and understood by producers; that adequate funding is available for crop research; that Canada's grain transportation system be modernized to ensure that products are moved efficiently and that Canada's agriculture sector develops in a sustainable manner.
Thank you for the opportunity to speak to you today.
The Deputy Chair: Thank you very much for that presentation, Ms. Sterling.
Since I was appointed to the Senate in 2003, I have served on two committees, this one and the Senate Transport and Communications Committee. I am amazed at the crossover of issues. It is a frustration for me as the deputy chairman of this committee and a member of the Standing Senate Committee on Transport and Communications dealing with the railroads and their ability to deliver timely, available cars to very productive farmers, as I mentioned to the earlier panel. If I went to play golf this afternoon, on my golf cart and at many golf courses there would be a little piece of equipment that would tell them where my golf cart was, and also where my ball went, which, by the way, is usually into the woods. The frustration to me is that we know that across the prairies, cars are going back to Vancouver empty, and they are going right by crops that need to be shipped to where? Vancouver.
If they can't get their act together — and I'm not a big fan of having government intervention in everything like some people — but I really believe that sooner or later, both railways are going to have to step up to the plate and start to get into the real world. They can track these cars in this day and age. A little addition to each car — and a cheap one, not an expensive one — can identify, say, an empty car coming through Saskatchewan for a farmer who needs to get a pulse product to market, to the Port of Vancouver, to get it shipped to the customer overseas.
Now you have heard about my frustration. We will now go to questions, and you can hear the frustrations of my colleagues. Hopefully you will help solve some of them.
[Translation]
The first question will be asked by Senator Dagenais.
Senator Dagenais: You brought up the merchandise transportation issue. Okay, the government doesn't need to make all the decisions. However, Mr. Auch, you mentioned Bill C-30. Do you think it goes far enough? Also, what could you recommend to our committee to improve the situation?
[English]
Mr. Auch: Well, C-30 was a stopgap, a temporary situation. We would like to see something more permanent that addresses the problem into the future. C-30 addressed some of the things like the minimum amount of grain that was being shipped, which was very important because there was a tremendous backlog at that time that cost us somewhere in the neighbourhood of $5 billion to $6 billion that year. What we would like to see is a little bit of an extension that works into the future.
Also, we are looking at the reciprocal penalties. If a shipper is late in filling a car, they get penalized, as they should. I mean, the railway drops off the car, but there is nothing on the other side. If they promise the shipper that they are going to deliver them a car, they get extra staff and everything, getting ready to fill these cars, and then they don't show up, there are no consequences to the railroad. We would like to see something like that in there as well, more permanence, so everybody knows where it is going.
Mr. Enns: Senator Mercer mentioned that he is frustrated. I think it is very important that that extension is given on the interswitch because it creates competition. I think interswitching has finally allowed some real competition to happen, not only with an American line coming in but even within. Some of the grain handlers are finally realizing that there is some competition. They have been able to get lower rates. As you know, the provision sun sets at the end of July, so we don't have much time there. The extension while you review the CTA is really important, and I encourage you to really move this thing forward as quickly as possible.
[Translation]
Senator Dagenais: I have a question for Mr. Ammeter. Signing the TPP Agreement and the agreement with the European Union will give you better access to foreign markets. However, I want to know about the traceability of food and your products.
Will these agreements force you to take other measures to ensure the proper traceability of products in international markets?
[English]
Mr. Ammeter: As far as traceability goes, if I move the grain off of my farm, tracing that to an end user is probably very difficult in that my grain could be loaded in a ship in Vancouver or Thunder Bay, so it is part of a very large load. What we can do — and this is something we have looked at a little bit to verify sustainability on the prairies, is take a sample of producers for purposes of our production practices — not necessarily for traceability but from a sustainability standpoint and to ensure the product.
Realistically, for producers to keep their products segregated is nigh onto impossible. It would have to be all containerized. It is very difficult to trace that, but you can, through sampling, verify the quality of a product, for lack of a better term.
[Translation]
Senator Dagenais: Ms. Sterling, I want to ask you about the pest issue. Obviously, you work on pest management and things of that nature.
Are your methods, which are chemical, suitable for managing the pests that can affect your products, or do you plan to conduct additional research to improve the situation?
[English]
Ms. Sterling: I think what we have available to us now is doing the job, but there is always a need for us to be evolving our products so that we are always using the most environmentally friendly products and not unnecessarily jeopardizing other beneficial pests per se.
When we are dealing with parasites, whether it is soil-borne or whether it is something that we are spraying in-crop, there will always be a need to continue developing the technology to ensure that we are using the best products to get the job done.
Then when we have to keep an awareness of international partners and the minimum requirements we have to meet there as well, I think the challenge becomes making sure that those approvals are coming. Many of the other speakers have mentioned that necessity. A lot of those delays because we are not able to put some of these products into use and are waiting for approvals in those international markets can be detrimental to Canadian production.
Senator Tardif: I want to get back to the question of railway transportation. All of you have stressed the importance of the Canadian grain transportation system, how important it is to have stable, transparent, reliable grain transportation system, one that will help you get your products to market and that will preserve Canada's reputation on the international market. We saw what happened in 2013 when grain was not delivered and Canada's reputation was hampered, and as well, you suffered many losses.
My question is to Mr. Enns to begin with. You have indicated that you suffered some losses, but the shortfalls — and let me just quote what you said here:
We recognize that overall grain movement has improved, but shortfalls remain in the southern corridors.
Are you talking about the U.S.-Mexico corridors when you are talking about southern rail corridors, and why would those have suffered more than some of the others?
Mr. Enns: I think one of the things is the U.S. market has been affected in a large way because they look at us as not being a reliable source anymore. When they went looking for other places, they went to Scandinavia, as mentioned in one of the previous sessions at your Senate hearings we had in 2013. The U.S. had to go to Scandinavia to access oats when they had oats 600 miles from the mills. By doing that, they are saying, "We can't put all our markets in one place.''
The second thing they have done is encouraged in a certain area in the U.S. more oat production, and we see a lot of that happening. This year their imports are down quite a bit. We are down, most probably, 30 per cent into the U.S. market at this point, and we know that it is a direct result of some local oats that have been grown. They have started to diversify their market, so that is why we are looking at other opportunities.
Mexico we have been able to hold well. The U.S. market has been the largest market affected by the transportation system. With Mexico we also have the option of shipping by ocean freight right now, which is cheap and makes us compatible. We have actually been able to increase our markets by over 50 per cent this year alone.
Senator Tardif: You mentioned the ocean. Would you ship as well by rail or truck to Mexico, for example?
Mr. Enns: I know in 2013-14, we had actually some people meeting contracts by using trucks to ship all the way from Canada into Mexico, and we know they took a heavy loss.
Into the U.S. right now, there is a lot of truck traffic, and it affects certain areas where you have a lot of trucks coming up from the U.S. bringing corn and soybean meal. They are looking for load-backs, so they will load up with oats and go back or something like that. The trucking industry works with certain commodities but not all commodities. In the U.S. market, it is definitely one mode that is working.
Senator Tardif: Is that the same for some of your industries as well?
Mr. Ammeter: Thank you for the question. I think the topics that were covered in the earlier presentations — about international trade, about innovation and research and social license, sustainability, et cetera. — if I can't get my product off the prairies, if I am not a reliable shipper, what does it matter?
Senator Tardif: Yes, we have heard the frustration, as our chair has indicated. That message has been coming through loud and clear.
Mr. Auch: What we don't want is the railways to be given the opportunity to exploit their monopolies, and the only means we can see to counter that is through some kind of regulation.
If they are allowed to charge just below what it costs to truck out to Vancouver or to Thunder Bay, that is exactly what they will do. So far the Maximum Revenue Entitlement and some of the other legislation that we have has kept them from being able to charge up to what the public will bear.
I am all for markets operating properly, but if you have a monopoly situation, the market will not operate the way it should, and being farmers, we get to be on the receiving end of this. It just cuts into our profits and gives excessive profit to another sector in the supply chain.
Senator Tardif: The Alberta Canola Producers Commission has written a letter to many parliamentarians indicating that the extended interswitching should be extended from 160 kilometres to perhaps even 1,000. Would you agree with that, and support something like that? They are saying that large areas, for example, of Alberta, especially around the Peace River area, are not covered by the 160-kilometre extension that has now been given by C-30.
Mr. Auch: I guess that is for you guys to figure out the issues there. We would love to see that because basically that creates a competitive market. Then you have got various railroads that could go up those lines, but it is up to the government to balance that against property rates and that kind of thing too. That would definitely allow competition on the rails.
Senator Tardif: Ms. Sereda, did I see a reaction. No?
Ms. Sterling: In Saskatchewan, we have a large number of short-line rail systems, and we find that they have been integral in taking the pressure off our infrastructure. They suffered as well as a part of that backlog. Extended interswitching would again give them the opportunity, as well, to bring that grain from those areas where we don't have that transportation mechanism, and we also don't have the tax base to support the pressure that is being put on that infrastructure.
The Deputy Chair: On the issue of the extension of Bill C-30, we have done a quick search. There was a statement by Minister Garneau and Minister MacAulay on April 29 where they made the commitment that they were going for an extension.
We have also just asked my office to perhaps try to arrange at least a phone call between myself and the two ministers to express your concern and to follow-up. We will see where that goes.
Next is Senator Merchant, please.
Senator Merchant: I want to thank you again for being here this morning.
First of all, Mr. Enns, you expressed some concern about an oat researcher, that there is only one and he is about to retire, and that you could actually use two. What can we do to help you with that? What can this committee do? Is there something that you would like to see in our report? What is the issue here? Are there no researchers that you can engage?
Mr. Enns: I think it is a little bit of what has been happening in Western Canada where the public research system has not kept up with demand out there. We see a lot of people retiring, and the money hasn't gone into the public breeding program. It is being shifted over to the private researchers. That works well for the larger commodities like canola and wheat and some of the others, but a lot of the smaller grains like oats, flax, canary seed, maybe even barley are very small niche markets.
None of the multinational companies will put a lot of time and money into those grains, so we are really pressed to find people that will do that work, and that is why we have stepped up to the plate and worked together. Actually, we had a good meeting with Agriculture and Agri-Food Canada, and also the minister in Ottawa the other time said, "We'll help you on this one to fill these positions.''
So they are working, but if you look at long term, it needs a commitment of money and research, and that is something that the government will have to move on, to see if they are willing to invest the time and money.
We just see a large block of researchers who are all getting to retirement age, and the younger ones are looking at where the best opportunity is for the future. If you have a program that is kind of in limbo, they are not going to go there. They are going to go with the private systems.
Senator Merchant: Where is this researcher located?
Mr. Enns: The one that we are talking about specifically is with the federal government. She was in Winnipeg and she is now in Brandon. She is right now the only one in Western Canada. There are a couple of breeders in Eastern Canada, but we are talking primarily about Western Canada here.
Senator Merchant: Mr. Ammeter, you spoke about some of the difficulties with traceability. How does that then relate to food security which is also a, you know, buzzword, that "food security'' is important to the consumer?
Mr. Ammeter: Yes, I think it goes back to ability. In Alberta, we have 42,000 producers. To have a system in place to trace every last bushel, every last kernel of grain in the entire system would be a nightmare.
I think probably the answer is more, like I said earlier, about sampling your producers, taking a certain number of producers, whether it is 5 to 10 per cent — that may be a high number — and saying, "We are confident in what they are doing and that is representative of the industry as a whole,'' At this stage of the game that is probably your best route for building confidence in the system.
Not only that sampling but even the products we use that are approved or vetted by the CFIA, a pest management regulatory agency or Health Canada help build confidence in that system.
Senator Merchant: Is that sufficient, then, when we are working on these trade deals with overseas countries? Would they accept that as, you know, as the standard? With CETA, for instance, there are so many countries in Europe. It is not just dealing with one, it is not monolithic. Different governments have different issues, and they need something different.
A lot of people also spoke about lack of regulation. Some of you said that you do things voluntarily, but how do we get this thing to be workable or to be the kind of thing that our trade partners demand of us?
Mr. Ammeter: I would say building confidence in our system if the answer for the most part. We have to be able to demonstrate that to a certain degree, but, like I say, to verify and certify every last thing that comes off the prairies in production is impractical.
Then, you start rolling into the non-tariff trade barriers, and then you are back to your negotiators to help you on that.
I don't know if anybody else wants to weigh in on that topic?
Senator Merchant: Some of you said that in the absence of regulations — I think it was regarding sustainability — you were doing things voluntarily but that you require regulation.
What is the issue? Why aren't there some regulation?
Mr. Auch: Our position is that education is actually more effective. If farmers understand the products they are using and use them properly, then there is no problem. There has to be an education component, and I think Ms. Sterling mentioned it as well. We have to understand, as farmers, what we are doing to the food that we are producing. If everything is used properly, then there are no problems, and we can sample, as Mr. Ammeter said, to make sure that what we are producing is safe.
Education is a big part of it. It is probably far more effective than regulation to let farmers know what it means when you are using a product improperly. I am not saying that is happening a lot. I am just saying that it is good to have education in the system. Farmers must understand what they are doing to the food and how it affects the final destination, the consumer. We don't want to mess that up. That's our bottom line in the future.
Mr. Enns: I think the key thing that Mr. Ammeter was mentioning too, is you need some sort of standards before you can have traceability. Each country has its own standard. I will give you an example. We are interested in shipping oats into India. They have a regulation whereby all of their product has to be fumigated with methyl bromine. It is not even allowed in Canada. Even if we wanted to ship it, we can't treat it, so they don't allow it in.
We need to set up some standards that work within the different countries and companies, and having minimum residue tolerances is key before we can even get into traceability to a certain degree.
Senator Merchant: So international standards?
Mr. Enns: Absolutely.
Senator Unger: Thank you to all of you for your interesting presentations.
There are so many issues facing farmers. I admire your tenacity. I was born and raised on a farm in northern Alberta, and way back then I knew of struggles, but they were nothing like what you face today.
Mr. Auch, you talked about how climate change policies are affecting everything. I take that to mean emissions, that sort of thing. How can they be regulated? You also commented about regulators needing to take into account zero-till practices used by farmers today which actually reduce greenhouse gas emissions. Those are great points.
How do you market that so that this elephant in the room called "social licence'' doesn't really have a big impact? A previous speaker described those two words as amorphous, which I think they are. Would you comment on that?
Mr. Auch: I guess there are a couple of things going on there. One is the increased cost of a carbon tax, and it is not just our diesel that we burn. There is electricity and there is natural gas. Once our product leaves our farm, there are the truckers who take it to the elevator and bring the fertilizer to our farm, the fuel involved there. All that stuff gets passed on to us, and we have nobody to pass it on to because our price is determined by the world price.
The other part of your question was about how we market in the face of that. That is a good question. I don't think people realize just how much a no-till farmer is putting into the ground. I am a no-till farmer. The last tillage I did was in 1998. I have seen on my soil tests the organic matter come up. This is anecdotal because unless it is sampled in exactly the same place, it is not exact science. However, over that time, I have seen about a half a per cent increase in organic matter, which is — I did the math on it once — about 10 times the amount of energy I have ever consumed on my farm. All of that has been sequestered in my soil over that same period of time, so it is a huge thing that people just don't understand.
Why are we being penalized with carbon taxes when we are actually part of the solution? I guess it is twofold. There is regulation that says we get to pay the carbon tax, but consumers and the public have to understand that we are part of the solution, not part of the problem. We shouldn't be penalized in fuel taxes.
Ms. Sterling: I would just add to that as a producer, and I think it has only recently come out: Other areas are already marketing our good farming practices. You can go to areas in Europe, and buy a bag of potato chips that says they are a net-zero for carbon footprint because the potatoes come from Canada. Other companies are starting to use our good farming practices to market their products. We need to find a way, I guess, to make sure that we celebrate that domestically and share in the benefit.
Of course, we get the recognition when those types of products are bought and people are talking about them, but how do we take it to the next level as producers to say, "I can demonstrate that''? One of the practices we have on our farm is similar to what Mr. Auch was alluding to. We take regular soil samples. We have been zero-till since the late 1980s, early 1990s, and we go back every year to the same sites, and since we have had the technology we GPS the soil samples.
We are able to demonstrate that as well. What good does it do us? It doesn't do us much good as an individual because we are still selling into a bulk system where the traceability becomes difficult. I myself know that I have the practices in place, but unfortunately, when it gets put into a big shipment, that gets lost in translation.
Mr. Ammeter: You talk about the marketability aspect; it is probably something from which we don't extract a premium, but it might give us market access. If I have a product and I can demonstrate through my activities on the farm, which we have identified, that it is preferable to another system, that might give you access to a market. It might not be a premium.
Senator Unger: I really think that your industry does need to market that good story, and I hope that our Senate report will reflect that as well because this concept of social license, for good or for ill, is just becoming more and more predominant in conversations right across the board.
The railways, of course, are a problem. I also have been on the same committees as our chair. There are always two sides to the story, but how optimistic are you that there could be a fair balance, a truly fair balance, because as you know, the other huge market for the railways is petroleum/hydrocarbon related?
Since pipelines are getting so much grief, the oil industry relies on railways and trucks. Do you think that a truly fair system could be made into law that would accommodate your needs?
Secondary to that, is it possible that more U.S. trains could come to Canada to alleviate some of this transportation issue?
Mr. Enns: In regard to your question on fairness, one of the positives I have seen since the 2013-14 transportation crisis is that industry, railways, shippers, everybody is starting to work together a little bit better and doing some planning. I don't know if that was happening before, but I know grain companies are now going to the railways and asking, "What can we expect from you?'' From that conversation they base their sales, and maybe that wasn't being done before. Are there some problems there? Obviously there are huge problems; there is no doubt about that.
Back to your question on the U.S., there is a limited distance that U.S. trains will run into Canada. It is usually along the border where there are close associations. The question was about getting interswitching into the Peace River. I am not sure any American lines are going to go all the way up there.
You only see that within a certain area from the U.S. border, so I think that is limited. It is always interesting how we see different railways being bought up by Canadian and U.S. groups, so I am not sure how independent it all is, but it is an interesting concept.
Mr. Auch: I think you would be more likely to have some of your short lines if they were allowed access to the rail lines to make their deliveries. I don't know what you would call that, open running rights or what, but that would do more for areas like the Peace, probably, than letting the BNSF come up.
The Deputy Chair: Thank you very much.
Senator Dagenais will start our second round of questions.
[Translation]
Senator Dagenais: Thank you. My question is for Mr. Auch and all our witnesses.
Let's go back to the carbon tax. I would not call myself an expert, but I think adding a tax may help reduce greenhouse gases. However, I believe that it may also harm the economy, in particular the agriculture sector. I heard a number of witnesses, and I am not sure that adding a tax would help the economy.
If it can help reduce greenhouse gases, all the better, but will it harm our economy? The question must be asked. I would like to hear your thoughts.
[English]
Mr. Auch: Yes, definitely, it will be hard on agriculture. My point was that we have been part of the solution. To penalize us for using hydrocarbons as our fuel — natural gas and electricity are very much part of that system too — and put that extra cost onto us when we have no ability to pass it on to our customers is counterproductive, especially in light of the sequestering of the carbon that goes into our soils.
When you consider that in there, we are actually part of the solution. Yes, we use energy, but so does everyone. If you took the net, then fine, but to put that extra tax on us would very definitely harm our sector of the economy.
[Translation]
Senator Dagenais: Thank you very much, Mr. Auch. I once heard a very apt expression, "you can't build a country with only bike paths.'' Means of transportation must also be planned.
That's my little contribution for this morning, Mr. Chair, and I am pleased to provide it. Thank you very much.
[English]
The Deputy Chair: Thank you, senator.
Next is Senator Tardif, please.
Senator Tardif: We have been speaking about sustainable agriculture becoming important in the international marketplace, and I understand that there is a new initiative in Alberta that the Alberta Wheat Commission, Alberta Barley, Alberta Pulse Growers and Alberta Canola Producers Commission have launched the Alberta Crop Sustainability Certification Pilot Project. Do you see this pilot project as having an economic impact on Western producers' profitability?
I guess it would be either to Mr. Ammeter or to Mr. Auch.
Mr. Ammeter: I was scheduled to participate in the pilot project, but I had to haul grain that day, so I didn't get to do it. I know Mr. Auch participated. It was just a pilot project, and it was just to examine how we would build a sustainability model, I guess you could say. However, it comes back to the questions regarding traceability.
That is one of the things that would come out of that, a better mechanism of verification of what happens on the farm. As I said earlier, with 42,000 farmers it is very difficult to survey everybody, but you could do some sampling.
Senator Tardif: Mr. Auch?
Mr. Auch: I had the pleasure to be part of that pilot project. Like you were saying, there is a potential for using that as a marketing tool to illustrate the social good that we are doing in our production practices.
There are many things that we have done on our farms for economic reasons and that are improving our environment. I mean, for farmers, everything we do has to make a profit. Some of the things we have done mesh very well and combine both to help the environment and to help our bottom line, so if you do it right, we can benefit both ways. I guess that is what this project is trying to do is to alert the industry, our fellow farmers, that you can improve your bottom line and do things to help the environment.
Senator Tardif: Do you export your products under the Canadian brand? How important is it if you are marketing your oats, barley or wheat to say, "This is a Canadian product''?
Mr. Enns: We are seeing a lot of success with that in Mexico. A couple of years ago when we were down there, we saw a lot of bags of oat flour and oat products with a Canadian flag indicating product from Canada, and it was moving well. We are trying to take that to other products that are out there.
It is a good thing to brand. I don't know if it is as well-accepted in all countries, but I know in Mexico it was a big deal. I know that some of it is being done in other countries, but that is the only one I can really talk to.
Senator Merchant: I have a further question for Ms. Sterling. You spoke about innovation, and I can't remember the exact word, but I wondered how are these programs funded? Is there an issue with credit, availability of credit for you to renew infrastructure and to do the kind of research you talked about?
Ms. Sterling: Yes, our focus has been on crop research for new varieties. To stay competitive in the global marketplace, we have to have crops that are ever evolving.
Also, it seems like a pretty basic statement, but they are not making any more farmland. We are using up farmland in other developments. We do have to get better at our production, and we have been making huge strides. Sometimes it is difficult to fund some of these programs, and maybe the commission can comment on it.
There are voluntary and mandatory levies, and it makes a big difference if we get the buy-in from producers to maintain those voluntary levies that are directed towards research. In our province, a couple of our levies are voluntary, and there are people who request that funding back for various reasons, but that is only one component of what is funding research.
The other part is what our federal government is willing to put into that research as well, and we need those technologies to continue to develop. The limiting factor, as always in a lot of things, is resources. Flat out, we need money to do these things, and we need to place priorities on some of these initiatives so that the money is directed.
Senator Unger: Do you get any federal funding for research, or is that just something on your wish list?
Mr. Auch: The AFSC has buildings all over the prairies and Canada as a whole. They also have scientists that they pay, and the federal government is very much a partner with farmers.
There are projects that we also fund that the various levels can partner with as well, so there is funding. I think what Ms. Sterling is talking about, and Mr. Enns has mentioned it too, is the scientists, the breeders and those kinds of people are getting older, and we want to make sure that there is a continuation plan.
Mr. Enns: Prairie Oat Growers works extensively with government funding. We pay 25 to 30 per cent and get matching funding, and we have been very successful in leveraging funding. Growing Forward is kind of a spin-off and some of it is research and some of it is market development.
Is it available? Is it enough? No, of course not. There are always more needs out there than we can meet, but try and be very responsible.
You were talking about the levy money. Our organization is no different than some of the other ones. We get requests, but we have been able to keep it under about 4 per cent, somewhere in there, and be really accountable to our producers and be good stewards of the money because it is producer money. That is the big key.
Senator Unger: Thank you for your presentations.
Senator Tardif: I have two quick questions, the first to Mr. Ammeter.
I am curious about the barley industry. Now, you have malt, food and feed. Which, according to you, is the most important international market sector, and do you think that the agreements that we have either with CETA or the TPP will grow one market area in particular or all three?
Mr. Ammeter: In a roundabout way, probably the feed industry is the most important. It is not so much that we will ship feed out of the country, but I will haul my barley to a feedlot or a livestock producer who may have access to these large markets through the TPP or CETA. That, in a roundabout way, is how I get my barley out of the country, turn it into a different source of protein and move it out that way. Malt barley is a component of that; food barley, not so much. It is probably a dream of ours to get everybody to take a little bit of barley in their diet on a daily basis, but probably the biggest one is the feed industry and, like I say, through converting that feed barley into something else that can be exported to other countries.
Senator Tardif: Ms. Sterling, you mentioned that Mexico has limited the import of Canadian canary seed. I have not heard about Canadian canary seed. What is Canadian canary seed, and why is Mexico limiting the import of that particular seed?
Ms. Sterling: They have changed some of the parameters around tolerance levels for foreign material for example. Generally, canary seed is birdseed.
Senator Tardif: Is it because of the maximum residue level, is that why?
Ms. Sterling: Yes. I don't know if it is a market mechanism for them so they can develop a better canary seed for production. I don't know all of the details.
Senator Tardif: Do we export a lot? Is this an important market for us?
Ms. Sterling: It is probably not one of our bigger crops. Mr. Enns commented that there are some smaller crops that don't get the attention that they sometimes need, and canary seed is probably one of those, but a great deal of it would be exported.
The Deputy Chair: Mr. Enns, you have a comment.
Mr. Enns: One of the benefits of TPP is that it involves countries that have huge populations, a growing middle class. If I look at the oat industry, it is considered a healthy food product. The TPP provides great possibilities for exporting some of these products.
Nothing is firm yet, but I think it is a great opportunity for Canada to sign on and give all of our crops around this table, everybody, an opportunity to carve out new markets. I think that is the biggest thing in this whole trade deal, all trade deals; they provide opportunities and a level playing field.
Senator Tardif: Thank you.
The Deputy Chair: Ladies and gentlemen, thank you very much for your presentations. You have continued the trend that we have seen so far in our visit to Calgary of bringing these quality presentations, posing tough problems but also, I think, prompting some action.
I come back to the transportation issue that we talked about, about C-30. We have already sent a note to Ottawa to start the process of trying to find out about that commitment that was made on April 29, when it is going to come to fruition. It requires that something be passed in both houses before we rise in June. The clock is ticking, so I will take it under advisement.
I assure you that my office is now trying to get some time with both the ministers involved and we will get back to you. If I find an answer one way or the other, I will make sure we get back to you.
It is a pleasure to be here, and it is an even greater pleasure to have this opportunity to meet with all of you.
I would like to thank our next panel of witnesses for accepting our invitation to be here. I want to remind people that the agriculture and agri-food sector is a very important part of the Canadian economy. The number of people who are employed in the industry is phenomenal, and the opportunities that are going to be presented to us are extraordinary.
We now have with us, from the Manitoba Organic Alliance, Ms. Kate Storey, President; from Saskatchewan Organics, Ms. Marla Carlson, Executive Director; from Organic Alberta, Ms. Becky Lipton, Executive Director; from the Certified Organic Associations of BC, Ms. Carmen Wakeling, President; and from Grain Millers Canada Corporation, Mr. Terry Tyson, Grain Procurement Manager.
We are going to start with Ms. Wakeling.
Carmen Wakeling, President, Certified Organic Associations of BC: Good afternoon, and thank you so much for having us. It is very exciting for us to be here today.
I am Carmen Wakeling, and I live on Vancouver Island. I have a company called Eatmore Sprouts & Greens Ltd. We grow 9,000 pounds of sprouts and greens a week, year-round. We employ 40 people, and alfalfa sprouts are our most requested sprout product.
I am here representing the Certified Organic Associations of BC, and we are going to talk about the organic sector in British Columbia and the Canadian and international marketplace.
A little bit of background on the Certified Organic Associations of B.C., which I am now going to refer to as COABC: It is a provincial not-for-profit organization that oversees the organic certification process in British Columbia. We represent approximately 700 certified operations across the province, and they are all engaged in organic production.
The organic sector is one of the fastest-growing agricultural sectors in Canada and worldwide. Our goal is to ensure high quality organic products are produced with sufficient quantity and in a manner that nurtures healthy soil, biological diversity and ecological harmony.
Let me tell you about the basics of organics in Canada, just so you have some background information. The Canadian organic regime contains the national organic standards and the regulations that govern the organic sector in Canada. Under the regulations, conformity verification bodies or CVOs oversee the certification bodies or the CBs who then certify organic operators.
The multilevel system ensures a high level of accountability within the sector. The system provides transparency, traceability and quality assurance for the consumer, which is essential to building the integrity of the Canadian organic brand both domestically and abroad.
There are seven basic principles in organics, and I am just going to quickly read them so that you have that background for your records. The seven principles include: to protect the environment, minimize soil degradation and erosion, decrease pollution, optimize biological productivity and support a sound state of health. The second is to maintain long-term soil fertility by optimizing conditions for biological activity within the soil. The third is to maintain biological diversity within the system. The fourth is to recycle materials and resources to the greatest extent possible within the enterprise. Five is to provide attentive care that promotes the health and meets the behavioural needs of livestock. Six is to prepare organic products, emphasising careful processing and handling methods in order to maintain the organic integrity and vital qualities of the products at all stages of production. The seventh is to rely on renewable resources in locally organized agricultural systems. Those are the basics of organics.
Some important information about organic production: As of 2012, the Canadian organic market was worth $3.5 billion per year, showing a threefold growth since 2006. The organic sector continues to be an economic driver, especially in B.C. In 2012, 58 per cent of Canadians purchased organic food weekly, while in B.C. that number was 66 per cent.
I am going to talk a little bit about things that are happening in our province and how they impact the international marketplace, et cetera. Some of the priorities for growth internationally for the organic sector in B.C. include a number of things. B.C. is very well positioned to access Asian markets, but many of the organic producers are not export- ready, so by supporting domestic growth, the government will facilitate the expansion of organic businesses into the export market.
B.C. has a diverse farming community, so we require strong support systems that function on multiple levels. From new entrants to established producers, building support will encourage growth and will lay the foundation for a vibrant future export market in the organic sector.
In order to take advantage of export opportunities, the organic sector requires high-functioning data systems. This has been a challenge for us all. Creating these will allow participants to identify market opportunities and fully understand the economic impact. Understanding areas for potential growth will encourage businesses to scale up production, which is a benefit for both the international and domestic markets.
We need help facilitating the transition to organics. Providing the tools needed to make the transition less overwhelming and to help in managing potential risk in giving up what is known for a new way of producing food would be very beneficial. Capacity building, investment in organics to create volumes required to fill the opportunities, especially with the national and international buyers, is essential to the long-term supply.
Infrastructure: of course, in B.C., we may benefit dramatically from things such as processing hubs dedicated to organic production, collaboration in distribution and help in reaching international markets. By investing in these areas, we can create medium- and long-term capacity to fulfil market demand internationally.
More research and development funding specific to organic production would be very helpful, and collaboration at all levels is needed. We know that by working together we can make a bigger impact. If we want to provide for the world stage we need to build strong working communities. We need to provide information to industry groups and individuals about funding opportunities which support producers to both pursue existing opportunities and to explore needs that would be beneficial, support all agriculture to understand more the impact our sector is having on climate change and provide information to producers so we can be better partners in reducing or reversing climate issues. Organic producers are leaders in this area.
There is one challenge we are facing right now, and it is the impact of the GMO release in Canada on organic and conventional international markets. To frame it: GMOs are not allowed in organic food systems. For me personally, Roundup Ready Alfalfa is prohibited for sprouting. Coexistence with a perennial, which is a plant that lives for more than a year, for crops such as alfalfa is not a reality.
Internationally, GMO technology is not widely accepted. The introduction of more GMOs within Canada threatens the credibility of the Canadian organic brand and our access to the international marketplace. In the case of the Arctic apple, alfalfa and others, even the credibility of the conventional sector is being threatened.
By working together locally, provincially, nationally and at an international level, we will build robust food systems that will not only help facilitate export but will be capable of feeding our nation healthy, high quality food while caring for the planet.
Thank you for your time on this matter.
The Deputy Chair: Thank you very much.
Next we will hear from Organic Alberta and Ms. Becky Lipton.
Becky Lipton, Executive Director, Organic Alberta: Good afternoon, Mr. Chair and honourable members of the committee. Thank you very much for your invitation to speak about the organic sector and market access priorities.
Demand for organic products is booming, both domestically and internationally. Market access is a key priority for the organic sector, and we have been working nationally, regionally and provincially on this key issue.
The priorities that I will outline below come from my knowledge and work on several different levels. I am a member of the Organic Value Chain Roundtable, which is a federal government-industry partnership to provide leadership for the sector.
I am also the program director for the Prairie Organic Grain Initiative, a prairie-wide, four-year, $2.2 million initiative dedicated at achieving resiliency and stability in the prairie organic sector by focusing on increasing quality and quantity of organic grains and on market development and market access.
I am a board member of the Prairie Organic Development Fund, which is an innovative funding model that allows industry to invest in the development of the organic sector in the Canadian prairies. I have also worked with and been the executive director of Organic Alberta for the past eight years, and Organic Alberta is the provincial association which represents and supports the entire organic sector in the province.
The key message that I want to convey to you today is that the global organic market is very strong, and there is a lot of room for continued growth. It is a tremendous diversification opportunity for the Canadian agricultural sector, and I hope that by the end of my presentation, you will also agree with me on that.
The global organic market is valued at over US$80 billion per year. Canada is the fifth-largest market in the world, valued at over $4 billion. Our organic exports have reached more than $558 million per year. Fifty-eight per cent of Canadians buy organics on a weekly basis. The U.S. organic market, our largest trading partner and the purchaser of the vast majority of the organic grain commodities coming out of the prairies, increased from $3.6 million in 1997 to $39 billion in 2014.
With the Prairie Organic Grain Initiative, we have participated in trade missions to our key markets such as the United States and the EU as well as to key emerging markets such as Japan and South Korea.
In organics, we have an additional trade barrier above and beyond the regular barriers that face agricultural products. This is because many countries around the world have adopted their own organic certifications and standards. In order to import product such as organic, you must also certify to their standards, so we are asking our producers to carry the Canadian organic standard as well to certify to a standard in other countries.
Canada now has several equivalency agreements, including with the United States, the EU, Japan, Costa Rica, and are in the final stages with South Korea. This means our standards are harmonized and they accept certification to the Canadian organic standard, so, therefore, the producers only have to carry the Canadian standard to access their markets. These equivalency agreements are key to market access and must be maintained with new agreements pursued.
Our most important trading a partner is the United States, and the demand for Canadian organic grain products, in particular, is extremely strong. Through the Prairie Organic Development Fund, we have had major companies such as General Mills, as well as Grain Millers and many others, invest directly in the prairie organic sector in order to increase our supply.
The emerging markets also show tremendous potential, such as, for example, Japan. It is the ninth largest organic market in the world, and Canada is already Japan's fourth largest agri-food and seafood supplier. The market is currently strongest for processed products because of limited domestic processing capacity in Japan, but we are increasingly also seeing rise in demand for commodities.
The prairies are the third largest producer of organic pulses in the world. Eighty-nine per cent of organic wheat and oat, as well as 85 per cent of organic rye in Canada come from the prairies. I will also add that Alberta and Manitoba have invested in our processing sectors and that Alberta, in particular, has the majority of organic beef, pasture and forage production.
We have almost perfect conditions for growing oats, which allows two-thirds of Alberta organic producers to grow some of the highest quality and most sought-after oats in the world.
I sent to the clerk a copy of our latest statistical documents so that you can see some of the details in terms of acres and so on.
Alberta and the Canadian prairies has the ability to supply the international market, but in order to do so, we have a few key issues.
To reduce market barriers, a continued focus on equivalency agreements is key. We also face issues related to acceptance of organic products because of traces of genetically modified materials and pesticide residues. Our industry has, for example, seen shipments of organic product to the EU rejected because of trace pesticides and GMO levels from contamination.
The other major threat to our competitiveness is lack of supply. Currently, imports are flooding into Canada and North America to fill the demand. This is reducing the price obtained by Canadian farmers. It is allowing purchasers of organic grain to build a reliance on foreign markets and is threatening the integrity of organic because of lack of confidence in the integrity of those foreign commodities.
Organic production offers a strong diversification strategy for Canadian agriculture. There are significant risks associated with the transition to organic production, and in organic production that must be mitigated through policy and programs that can be offered by the Canadian government.
These should be focused on the various stages and risks associated at each stage. For example, they include: comprehensive organic crop insurance programs, financial assistance during transition and early years to counter some of those reduced yields that they face, reliable data to measure our success and to understand and position ourselves to take advantage of opportunities. HS codes that measure organic exports are needed, and agronomic support programs to assist learning the new production management systems will all be integral to meeting the very strong global market demand for organics.
Thank you very much for inviting me to share with you the evidence on opportunities facing the organic sector, and I hope that you now agree that market demand for organics provides tremendous opportunity for diversification within Canadian agriculture.
The Deputy Chair: Thank you, Ms. Lipton.
Next we will hear from Terry Tyson from Grain Millers Canada Corporation.
Mr. Tyson: Good afternoon and thank you, Mr. Chair, honourable members of the committee. Thank you for the opportunity to present our thoughts to you today regarding the opportunities and challenges facing the organic agricultural sector.
Other people addressing you today will or have discussed other important topics, including data collection gaps, the organic principles and standards, the threat posed to the sector by GMO alfalfa and some transportation issues, I think, have been touched on. As such, I will focus my thoughts on the state of the market itself, the opportunities that are present for the Canadian organic sector and how the Canadian government can help build supply capacity in the sector such that we can capitalize on those opportunities.
A little bit about us: Grain Millers Inc. is a food ingredient manufacturer headquartered in Eden Prairie, Minnesota. We operate in 11 locations out of four countries and employ over 900 talented people committed to providing safe, high-quality food products. Our Canadian operations are based in Yorkton, Saskatchewan. We have facilities and partnerships across the prairies, including in Saskatoon, Saskatchewan and Rycroft, Alberta.
Our core business is the manufacture of oat food products. We also provide multigrain blends, corn products, flax products and other specialty and food ingredients. Across all segments of our business, we participate in both the conventional and organic sectors, and we have done so since our company's inception over 30 years ago.
While conventional markets still underpin the majority of our volumes, growth in most of our conventional sectors has been slow or flat over the past several years. During that time, the organic sector has provided a significant contrast. We have experienced double-digit annual growth year-over-year for the past 15 years in the organic sector, with the exception of a small period of flatness during the teeth of the financial recession in 2008.
More recently, it has become increasingly apparent that the marketplace for organic and specialty food ingredients will continue to grow. Respected market participants are projecting that organic food could comprise as much as 25 per cent of the U.S. food market by 2025, and that stands at only around 4 per cent today, which itself is significant growth.
Virtually every major food company and many smaller ones are looking for ways to differentiate their products. Our customers and their customers, consumers, are increasingly demanding healthy, nutritious food that is produced in a transparent, sustainable way, and many of those are equating that choice with organic products.
While the demand for these products continues to grow, the supply chain has not kept up. As a result, varying crop interests vie for production within the acreage base available each year in a highly competitive fashion. Inevitably, each year there are shortages of some commodities that lead to prohibitive commodity price runs and complete stock drawdowns. This has led to the rationing of demand in some cases and to high-priced imports displacing Canadian production in others.
Depending on origin, the organic integrity of imported product can also be suspect, which poses a threat to the credibility of the entire sector. Ultimately, it is this supply uncertainty that presents the largest challenge and stifles growth in the sector.
Counter-intuitively, adding supply-side production does not pose a significant threat to organic commodity prices. Increasing supply in Canada would first serve to displace imports and would also serve to embolden food companies wishing to join the sector to do so.
Over the past few years, we have had multiple major food companies approach us with interest in entering the sector either by transitioning existing product streams into organics or by developing new streams within their companies, and many of those companies have not taken that step because of concern over supply.
At the same time, we haven't been in a position to really assuage those concerns. In fact, we have actually spent a lot of time and effort working with some of them on strategies to transitioning supply from conventional to organic so that they could eventually take that step at the corporate level.
For that reason, we at Grain Millers have taken a very active role in the development of the Prairie Organic Development Fund or PODF, which Ms. Lipton alluded to in her presentation. Currently, I am the president of PODF, which is an industry-funded entity designed to help build capacity in the organic sector by providing financial support to the provincial organizations in the prairies as well as to innovation through research, development and extension initiatives.
The provincial organisations fill a vital role of providing a recognizable and respected voice for advocacy and government relations as well as a delivery mechanism for extension programs. The innovation funding will provide support for specific projects designed to better the sector. Currently, all the innovation funding has been directed to the Prairie Organic Grain Initiative which Becky Lipton just described as well.
It is worth noting that as we developed PODF and started to seek industry funding, the level of support forthcoming from stakeholders was pleasantly surprising. Getting money from industry participants can often be very difficult, and it speaks to the supply-side issues. Virtually everyone we approached was at least a willing listener, and most listeners became cheque writers.
When multinational companies such as ourselves at Grain Millers, General Mills, Nature's Path, Dave's Killer Bread and Clif Bar aren't just willing but actually excited to have a place they can put money into an organized effort to strengthen the sector, it again speaks volumes about the situation and those companies' perception about where their money can make an impact. Their investments in PODF are investments directly into Western Canada's organic agriculture sector.
Perhaps no one is better positioned than Canada to capitalize on this growing organic demand. While developing countries can bring dormant acres into production immediately, Canada's agricultural infrastructure and support, our long history of agricultural innovation and our proximity to the largest organic market in the world offer Canadian producers and the Canadian economy an extremely exciting opportunity.
Unlike much of the U.S., Canadian agriculture has not yet been reduced to a one- or two-crop game. Canadian farmers generally still take pride in fostering biodiversity and in shepherding their land and their resources, qualities that fit so well within the organic sector.
As well, while land values in Western Canada have climbed significantly over the last decade, they remain relatively affordable, which makes land accessible to smaller farmers. That is not to say that large farms can't thrive in an organic system; many do, and more and more view transitioning some acres into organics as a sound diversification strategy, but there is no question that the stewardship involved with organic farming as well as the returns offer ways to keep more Western Canadians on the land and slow the gradual stagnation of rural economies.
Having said all of that, making the transition from conventional to organic can be a daunting step for farmers. The transition process, with the exception of freshly cleared or broken land, takes three years, during which yields inevitably suffer while returns remain at conventional prices. Eventually, yields often start to come back closer to conventional yields, but that usually doesn't happen until several years of organic production have improved soil health.
While organic commodity prices offer a strong incentive for farmers to consider transition currently, the current reality of highly leveraged farming operations and tight cash flows make taking that step a very significant and risky leap of faith. As a result, I have had several farmers tell me that they can't transition acres because of their debt structure or debt load, and others that have made the transition explained that the first person they had to get onside was their banker.
Besides the economic risks of the decision, cultural factors also play a huge role. In many areas of the prairies, there is still a stigma associated with organic farming, one of unpaid bills and dirty fields. In addition to that peer pressure, there is also the uncertainty of departing from long-held and relatively easy practices. I don't want to imply that conventional farming is easy, but compared to organic farming, there is an ease factor.
Departing from those and embracing new methods can be daunting. Concerns about what their fields will look like and what their yields will be keep many farmers from taking this leap. As a result, I would urge the government to consider taking steps to reduce the impediments farmers face with transitioning acres to organic production.
To address cultural impediments and doubt-related inaction, that could mean increasing investments in organic breeding programs and agronomy research. Through the development of genetics uniquely adapted to flourish under organic production systems and the continuous improvement in production practice through scientifically executed trial and error, the gap between conventional and organic agronomic performance can continue to be closed while employing more environmentally and friendly sustainable systems.
To address the financial impediments, the development of programs to assist farmers in weathering the storm could have significant long-term payoff for Canada's agriculture and agri-food sector and for the economy as a whole. In many jurisdictions, such assistance programs exist.
There could be any number of ways to provide assistance, ranging from outright grants or cost reimbursements to some form of premium stabilization program whereby organic premiums that will be realized could be borrowed against during transition.
While the sector faces some significant hurdles, it is worth stressing that they are the good kind of hurdles, those borne of growth. Consumer demand for specialty product continues to increase, meaning that this growth opportunity will persist.
I thank you for taking the interest in learning more about our sector today, and I hope I have helped illuminate some of the ways you may be able to assist Canadian organic stakeholders in meeting their challenges and capitalizing on that voracious consumer demand.
The Deputy Chair: Mr. Tyson, thank you very much for your presentation.
We will now go to Kate Storey, President of the Manitoba Organic Alliance.
Kate Storey, President, Manitoba Organic Alliance: Thank you for your interest in organics and for inviting me to address you on behalf of the Manitoba Organic Alliance.
The alliance is a farm organization. It was created by farmers to bring the whole organic value chain together. Our purpose is to improve organic production, to promote trade and to build a stable, successful organic sector in Manitoba. Our board includes representatives from each aspect of organics, including buyers, certifiers, researchers, food processors and retailers, but the majority of our board members are farmers.
I am speaking to you as the President of the Manitoba Organic Alliance and as an organic farmer. From the perspective of a farmer, the difference between organic farming and conventional farming is that organic farmers can't go to a store and buy products to solve problems or to make their crops grow. We can't use man-made chemicals or fertilizer. Organic farmers have to make their soil and animals healthy through production techniques, and that takes knowledge.
Farming knowledge is called agronomy. Organic agronomy is knowing what crops to grow, when to plant them to get optimum yield, how to make soil fertile without buying fertilizer, how to prevent weeds without needing chemicals, and how to keep the animals healthy so they don't need medicine.
Organic foods are in high demand, and organic farmers want to get efficient and produce those higher yields to fill that demand. Our international buyers are asking Canada for those organic commodities now.
My first recommendation to you is to invest in agronomic supports to help organic farmers increase production. Invest in research, in crop rotations, cover crops, animal nutrition, improving soils. Farmers want fact sheets, websites, manuals. Farmers need demonstration sites, crop trials just like conventional agriculture already has. Farm organizations need your help so we can initiate the research projects and get the knowledge out to farmers.
My second recommendation is to open international markets. Include organics in government trade missions, brand Canada as a reliable producer of high quality organics, treat organic agriculture like the important growing sector that it is. Some of this work has already begun with the Prairie Organic Growers Initiative, but we always need more.
My third recommendation is to ask you to protect Canada's organic crops from contamination so that we can assure our international consumers, customers that Canadian organic commodities meet their standards. In particular, please help stop genetically engineered alfalfa from ruining organics in Canada. GM alfalfa has recently been approved for sale in eastern Canada. There is no question that GM alfalfa will contaminate Canada's organic crops, and this could shut down many of our international sales. Many countries have a zero-tolerance for any GMO contamination.
To help stop this economic threat, you need to understand that normal alfalfa is a wonderful, versatile plant which is used by most organic farmers to feed cattle and to build soil. Normal alfalfa could be called the backbone of organic agriculture.
The new GM alfalfa is a threat because its pollen travels for miles from farm to farm, carried on the wind and by bees. When GM alfalfa pollen lands on an organic field, it cross-pollinates, contaminating the organic crop with new GM alfalfa plants. This will ruin many of Canada's key organic export sales because we will no longer be able to declare our products to be GMO free. GM alfalfa was approved for sale in Canada without any consideration of the economic damage it will do to organics.
The curious thing is that GM alfalfa is of limited use because it depends on the chemical glyphosate. The purpose of GM alfalfa is that the glyphosate is supposed to kill every plant in the field except the GM alfalfa, resulting in a pure stand of only alfalfa, except that it does not work very well, and many farmers don't want it. Pure alfalfa can kill a cow, so most farmers grow a mixture of grass and alfalfa.
Plus, there are a growing number of weeds and crops which are not killed by glyphosate, so that pure stand is often not attainable, and if it were, GMOs are shut out of some alfalfa markets. This essentially means that Canada's government has decided to sacrifice the organic sector and has done so for the benefit of only a part of the alfalfa sector.
Pitting one sector against another like this should be unacceptable in Canada. I feel confident that once you understand the economic damage which GM contamination will do to organics, you will help stop the sales of GM alfalfa in Canada.
Organics is an important and growing sector of Canadian agriculture with many side-benefits. Organics protects diversity. It helps sequester carbon. Organics takes less money and gives higher returns per acre, which means that it is a good option for Canada's struggling young farmers. The really great thing about organic agronomy is that those techniques are extremely helpful for increasing production on nonorganic farms too.
The Manitoba Organic Alliance looks forward to working with you to build the productive capacity of organics through investments in agronomy research, by stopping GM alfalfa, and by expanding Canada's international organic sales.
Thank you for allowing me to address the Senate Committee on Agriculture on behalf of the Manitoba Organic Alliance.
The Deputy Chair: Ms. Storey, thank you very much for your presentation.
We will conclude the presentations with Marla Carlson.
Marla Carlson, Executive Director, SaskOrganics: Good afternoon, Mr. Chair and honourable members of the committee. Thank you for your invitation to appear before your committee. The organic sector represents a billion dollars, Canadian, opportunity globally, and I am pleased that the committee has provided this time on your agenda today to hear evidence on the issues as they relate to our sector.
My remarks are based on my 10 years' experience working in the organic industry in Saskatchewan. For the first eight years, I worked for an organic farmers' grain co-op where I learned firsthand about the grain trading business.
I also serve as President of the Board for Organic Connections, the largest biannual conference for organic farmers on the prairies and am secretary of the board of the Prairie Organic Development Fund, a recently incorporated not- for-profit that brings together industry, organic farmers, organic industry associations and government to provide an innovative response to the organic sector's investment requirements on the prairies.
SaskOrganics is a farmer-led membership not-for-profit. We serve all certified organic entities throughout the value chain in Saskatchewan by advocating for a sustainable and thriving organic community through leadership in research, market development and communications. Our organization represents 842 certified primary producers, 28 certified organic livestock producers and 89 certified organic processors.
Our members farm over 2 million certified organic acres, 1.2 million acres in field crops, just under a million acres in pasture and forage and 1,765 acres in fruit and vegetable production. Saskatchewan organic farmers produce 76 per cent of the pulses, 93 per cent of the oil seeds, 72 per cent of the cereals, 80 per cent of the wheat, 91 per cent of the organic flax grown on the prairies and grow 97 per cent of Canada's organic lentil production. As you can see from these numbers, Saskatchewan makes a significant contribution to Canada's $558 million export market.
If SaskOrganics had been asked to appear before the committee a year ago, I would not have been able to provide the committee with these statistics. The $2.2 million investment in the Prairie Organic Grain Initiative by the Western Economic Diversification Fund is strengthening the sector in many ways, including collecting and collating detailed organic production data from prairie producers for the first time.
This is a great starting point, but as things stand at the moment, the funding for this data collection will end with the project in 2018. The lack of consistent data, both federally and provincially, limits the industry's ability to strategically plan and execute programs and services to best meet the needs of our members and grow supply to meet the year-on- year increase in the global demand for certified organic crops and food products.
SaskOrganics recommends to the committee that the inclusion of more questions relating to certified organic operations in the Census of Agriculture, for example, a question that would identify the number of area acres under organic production and to expand the harmonized code system to better quantify the range of organic products imported into Canada and the introduction of HS codes for exported products.
The Canada organic regime was developed by the organic industry in 1999 and subsequently amended in 2006 through a Canadian General Standards Board review process. The standards remained voluntary until they became a part of the organic products regulation, which came into force as an annex to the Canada Agricultural Products Act in June 2009.
When the COR was first developed, Agriculture and Agri-Food Canada was designated as the sponsor the standards and agreed to cover the costs of the standards development and maintenance for five years. They remained the sponsors through the amendment of COR in 2006.
The standard went through a full review in 2013 to 2015. The cost of this review was $1.3 million and was funded by the CGSB, the AAFC and industry. When the standard comes up for review in five years' time, the government has stated that it will no longer fund the review process.
Canada's major trading partners, the U.S. and the European Union, have standard development and maintenance systems that are funded entirely by their respective governments. Canada has negotiated equivalency agreements with both partners, providing Canadian organic exporters easy access to these large and growing markets. Imposing the responsibility for funding the maintenance of COR on organic producers could create a competitive disadvantage for the Canadian market. To help mitigate this risk, SaskOrganics is recommending that the government reconsider its decision to stop funding the maintenance of COR.
SaskOrganics made a submission to the Canada Transport Review as rail capacity and car allocation procedures impact the health and growth of the organic industry. Approximately 600 rail cars of organic grains are shipped annually from Western Canada to customers in eastern Canada, the U.S. and overseas destinations, representing about 80 per cent of all Canada's export sales. All of the rail cars are shipped from various small elevators and private rail sidings throughout the prairies, and many are spotted as five-car orders or less.
Timely rail service is essential to ensure Canadian organic grains are moved efficiently. If rail service is poor, Canadian organic grains can quickly become uncompetitive with organic grains grown in South America, Eastern Europe and Turkey.
In 2013 and 2014, Canadian companies lost sales due to the significant delays in getting rail cars spotted. SaskOrganics would ask the committee to keep in mind that rail car allocation policies which disadvantage small car spots are detrimental to the organic industry as we rely heavily on the movements of one to five cars; that rail car allocation policies that give movements to Eastern Canada and the United States are low priority are also detrimental to the organic industry as a large proportion of our business is in these corridors, and that producer car loading sites are maintained.
SaskOrganics, along with a coalition of 14 other farm organizations, wrote to Minister MacAulay in April asking for a stop to the release of genetically modified alfalfa seeds in response to Forage Genetics International's sale of a limited quantity of GM alfalfa seed for the planting this spring in Eastern Canada. This is the first time any GM alfalfa seed has been released in Canada. The Canadian Biotechnology Action Network made the letter available on their website, and an additional 133 farms and farm groups have signed onto the letter, and 2,500 individuals have submitted letters to the minister expressing their concern over the impact the release of GM alfalfa seed will have in Canada.
With the movement toward GMO labelling in the U.S., our largest trading partner, and existing GMO labelling laws in 64 countries, the introduction of GM alfalfa presents a serious risk to organic markets through contamination. In light of this, SaskOrganics recommends that the committee assist the sector in maintaining the integrity of markets for organic alfalfa by supporting our request to Minister MacAulay to halt the sale of GM alfalfa in Eastern Canada.
The latest statistics show that the global organic market is now valued at over $100 billion Canadian per year in consumer sales. Canada is the fifth-largest market in the world, valued at over $4 billion. Our organic exports have reached more than $558 million per year. For the past 10 years, organic sales in Canada have continued with double- digit growth.
Our biggest challenge remains supply. The number of organic producers has grown over the past two years. The production base is still not enough to keep pace with rising demand. The Prairie Organic Grain Initiative is providing much-needed investment in the prairies to help increase the number of certified organic farmers and help existing organic farmers optimize their operations through better agronomic support, research and educational opportunities.
If growth in the sector continues at a similar rate and Canadian organic farmers are going to benefit from this growth, we need additional ongoing support to keep the sector responsive to increasing demand. Federal programs to assist farmers to transition to organic production, funding for organic research and the transfer of this knowledge to the farm will be needed.
SaskOrganics applauds the federal government's work with our trading partners through each equivalency agreements and its investment in the organic sector to attend international trade shows, to build relationships and grow export opportunities for farmers and food manufacturers. The statistics shared with the committee today demonstrate that organics is moving rapidly from niche to mainstream.
In the past, as an industry we have focused on organic-only trade shows and trade missions. To better serve a changing marketplace where large conventional food manufacturers and food ingredient buyers are introducing organic products, and to diversify and strengthen the Canada brand, we are recommending that organic farmers and food manufacturers be represented in all international trade delegations in addition to the organic-only missions.
It is an exciting time to be in the organic industry in Canada. For too long, emphasis has been placed on the differences between organic and conventional farming. The reality is we are more alike than we are different. All farmers grow food. All farmers want to grow the best crops they can and run profitable businesses. We all contribute to the agriculture and agri-food sector in Canada.
SaskOrganics looks forward to continuing to work with the government at all levels and industry partners to constructively and effectively address our challenges so that we can capture trade opportunities available to Canadian farmers in the growing global organic marketplace.
Thank you.
The Deputy Chair: Ms. Carlson, thank you very much for your presentation.
We are going to go to questions in a moment, once I give up the microphone because I have a couple that I want to get in myself.
One of the issues that we are talking about here is not just the Canadian market, but in 2050 there will be 9 billion people on this planet. Somebody has got to feed them. This is a very real issue that goes not only to nutrition, but to safety. It goes to world peace because if you don't feed 9 billion people, there are going to be disruptions. There could be wars. There could be all kinds of problems.
That being said, you haven't told the committee anything about how organics has been able to increase yield. We need to increase yield if we are going to be able to feed 9 billion people in 2050. We are not going to be able to solve that problem in 2049. We need to start thinking about that problem today to get there. I know it seems far off, but we can't plan for 2050 in 2049. Does anybody have a comment on that?
Ms. Storey: May I speak to that?
The Deputy Chair: Certainly.
Ms. Storey: There are two ways to increase the yield of a crop. The first is to apply fertilizer. Whether that fertilizer comes from the back end of a cow or it comes from a truck, it doesn't really matter; the plant needs nutrition. The second way is through agronomy — I kind of touched on that — crop rotations, cover crops, building organic matter.
Research into agronomy has really been deficient in Canada and around the world. The yield potential of getting an increased yield by using more fertilizer and a stronger plant variety has pretty well plateaued. The new increases in production will have to come from agronomy, and that agronomic research is critical to organics now. It is critical to the increase in all conventional agriculture soon, so if you invest in organic agronomy, you are helping to feed the world in 2050.
The Deputy Chair: Thank you.
Mr. Tyson, in your presentation you talked about addressing the financial impediments to the development of programs to assist farmers in weathering the storm of long term pay-offs for Canadians and for Canada's agriculture and agri-food sector and for the economy as a whole. Such assistive programs exist in many jurisdictions.
How do we square that with our current agreements with some of our trading partners? My colleagues around the table are never surprised when I criticize the American farming sector. I always say that the most important piece of equipment on an American farm is the mailbox because that is where the money from subsidies comes in. They can call them what they want; they are subsidies.
There are very few problems about being a Canadian. One of them is our honesty, and when we have a subsidy, we call it a subsidy.
How does your proposal, how does it sit with our current trade agreements that we would have, particularly with our American colleagues, who are our biggest customers still? How do you square that circle?
Mr. Tyson: Off the top, if you needed to defend some sort of certification assistance, the first place you could go is to the many U.S. states that provide that assistance, so at face value, we would offer maybe nothing different from them.
The other approach you could take — and I mentioned it — is sort of a stabilization program that wouldn't necessarily add revenues or pay fees for farmers but might help advance money against organic premiums that will come after transition is done. That could then be offset down the road.
The Deputy Chair: A subsidy by any other name is still a subsidy.
Ms. Carlson, you said that the government has stated that it will no longer fund the review process when the standard comes up for review. Which government said that, the current government or the previous government?
Ms. Carlson: The previous government.
The Deputy Chair: Has the organization spoken to the current government to see where they stand on this subject?
Ms. Lipton: An organization that represents us nationally is the Organic Federation of Canada, and they currently have a submission in requesting ongoing funding.
The Deputy Chair: For Minister MacAulay or for another minister?
Ms. Lipton: It is to Agriculture and Agri-Food Canada.
The Deputy Chair: If I recall correctly, some of this funding did not come through Agriculture Canada but through Western Diversification, did it not?
Ms. Lipton: No. Western Diversification has invested $1.2 million in the Prairie Organic Grain Initiative, but that is separate entirely from the ongoing maintenance of the standards.
The Deputy Chair: Thank you.
Now we will go to other senators for questions. I will stop hogging the floor, but I do have the gavel.
Senator Unger, please.
Senator Unger: Thank you, everyone, for your interesting presentations.
I like the idea of buying organic, but my tendency is to support the farmers who bring their own locally grown produce to farmers' markets. You are talking about an entire industry — fledgling, to be sure. According to Organic Alberta, 58 per cent of Canadians buy organic products every week, yet about 2 per cent of farms in Canada are certified organic. That is really a small minority.
I was thinking of agriculture and how farmers years ago never got help or subsidies as I was noticing your wish list: Funding, for sure, GMOs and specifically GM alfalfa should be stopped, and also you need rail cars in small numbers. Those rail cars would have to be sanitized/sterilized before loading. That, to me, is a lot to ask for to get your industry going. Do you really think it is fair, you know, to kill one industry, GM alfalfa, to promote yours?
I am completely impartial on this issue, but your comments struck me along the same line the Chair mentioned, a subsidy is still a subsidy.
Ms. Wakeling: I would like to start, but I think that everybody around the table probably should participate in the answers.
Some of the things that I have brought forward have already been initiated. We are getting going on these things. It is always good to have more support. Our province, B.C., is fairly advanced in a lot of areas in this regard, and we have very strong support from our provincial ministry, but we are talking about national and international export markets. Those areas still need the strengthening, and I know the other provinces do need that support as well.
By working collaboratively, I think we will be able to really benefit, and sometimes short-term investment will really pay long-term dividends. That is my response to some of those aspects.
I can't speak to the rail cars, but the GM alfalfa I can certainly speak to. If GMO comes in, it will have a large impact to the conventional market as well as the organic market. The conventional industry will be impacted deeply by this as well.
I am going to hand it over to somebody else now.
Mr. Tyson: I could speak a little bit to both of those topics as well. First off, on the rail car issue: Those cars don't typically need to be cleaned and sanitized by the provider. Typically, the shipper cleans those themselves, so that isn't something that is sort of hoisted on to the provider.
Senator Unger: They still need that though.
Mr. Tyson: Yes, they do. Typically, with organic shipments you will have a clean vessel affidavit, so they will need to clean or wash out those cars before they are loaded.
On the organic alfalfa scenario, this intertwines a lot with improving organic yields. It is not simply about the organic alfalfa market. It is the utility of alfalfa in organic crop rotations. Alfalfa is a significant soil builder in organic rotation as it fixes nitrogen and helps to kind of clean up fields. It is not simply about harm to the organic alfalfa market; it is harm to the sector in general. As Kate mentioned in her submission, it really has dubious benefit to the conventional side.
Ms. Storey: What organics is asking for is equal treatment to what the conventional agriculture side has received all along. The government helps conventional agriculture develop. Organics is now a couple of decades behind, but we are now developing. We are not asking for anything more. We are asking for equal treatment.
As far as the GM alfalfa issue, we are also asking for respect. Organics didn't complain when GM canola came out — we can't grow canola; we were growing it and then we were unable to grow it — because genetically modified canola stays in the farmer's field. The problem with GM alfalfa is that the pollen can leave one farmer's field and contaminate another farmer's field; it moves.
If organics had some technique that was going to threaten other farmers, then conventional agriculture would be on our case very quickly and it would be shut down. Now, we have GM alfalfa, which is threatening not only organic farmers but also the viable forage seed industry, honey production, and there are a couple more that are threatened by GM alfalfa, but nobody is willing to stop that.
It is like discrimination. It is like some sectors are more equal than others. We are just asking for equal treatment.
Senator Unger: Ms. Carlson, do you have a comment?
Ms. Carlson: I don't think I have anything additional to add to what has already been said, unless there was a further question on the rail cars.
Senator Unger: I want to raise something we heard from the Alberta Wheat Commission earlier today. We were talking about carbon taxes, and they feel that regulators need to take into account the fact that zero-till practices used by farmers today actually reduce greenhouse gas emissions by sequestering carbon in the soil, so they are putting back value into the soil. I asked, or opined that they should be marketing that fact because I don't think most people know it.
Is your industry aware that conventional farmers are not just using pesticides or different modified fertilizers for their crops, but are actually doing things that help the soil as well?
Ms. Lipton: One thing that I would like to emphasize to the committee is that we in organics also see ourselves as a part of all of agriculture. We realize that there are many benefits for the organic sector in working with the rest of agriculture, and there will be many benefits through us to the rest of agriculture.
For example, there is a lot of renewed interest in intercropping, in a number of practices in all of agriculture that organics specializes in. One of the things that we really want to do is reach out and build some of those bridges that perhaps in the past were not there.
The reason I go down this route is so you understand that we do see the many benefits that are happening in conventional agriculture as well. We do not see ourselves in an us-versus-them scenario. In this particular instance, yes, certainly there are a lot of benefits that come from no-till, and in fact we also have a subset of organic agriculture that is trying to move toward no-till as well.
We have many similarities. We have a lot of benefits that will come through working together.
Ms. Wakeling: I just want to add one thing: the importance of soil micro-organisms. That is something in the last number of years that we are just really starting to open up.
I understand that there has been a lot of studies on micro-organisms in this world and that our bodies are made up of those same organisms. By treating the soil as you would your own body and trying to support the beneficial micro- organisms living in the soil through all sorts of different practices will help, in the long run, in carbon sequestering and building healthy soil. That is really important to build on.
Ms. Storey: I don't know if you intended it or not, but your question kind of raises an important point. Organic farmers are not trying to replace conventional farmers. There may be a message coming from some consumers that organic is better, and maybe in their minds it is and maybe it isn't. Different consumers have different needs. Organic farmers are really only concerned about their production, improving their own yield, doing the best possible job.
I have been on lots of committees, and sometimes I get the feeling that conventional farmers are worried that organic farmers are setting themselves up as better-than, but that is not coming from the organic farmers. It is not coming from the organic farm organizations. We consider ourselves, as Ms. Lipton said, part of agriculture.
Senator Unger: Okay. I didn't mean to convey that that was the case.
Ms. Storey: No, it just raised the question, and I thought it was a good opportunity.
Senator Unger: Thank you.
The Deputy Chair: Senator Merchant, please.
Senator Merchant: Thank you for your presentations. I was interested in this report that Saskatchewan is producing so much from organic farming. Why is that? We just heard from British Columbia, and I would have thought that with their weather they would be the number one producer. Why is Saskatchewan such a producer?
Ms. Carlson: Again, I think a kind of theme is developing. Saskatchewan is a huge agricultural province, and organics is a reflection of that. Also, 97 per cent of what we produce is grain and we export that to the world basically. That is why we have more producers. We also have more potential for the expansion of organics because of the land base.
We have been doing a lot of transitioning to organic workshops in Saskatchewan and in Alberta and Manitoba to raise awareness of all of the things that we have been talking about here today to try and increase our supply and because there is so much potential there in Saskatchewan to transition.
I really like the point that Kate made, it is not about better or worse. It is not that whole polarization that a lot of the discussion can devolve into but, rather, looking at organics as a business opportunity, as a niche market and its huge potential. That is a long answer to your short question.
Ms. Wakeling: I just wanted to address B.C. In British Columbia, we have a lot of very small producers. I live in a community on Vancouver Island. I have 450 producers in my region, but they are all very small. There is a difference in scale in the different provinces. It is very interesting to see the diversity and the differences between the provinces. It is quite intriguing.
Senator Merchant: In a previous study this committee did, we learned also that sometimes farmers who wanted to buy untreated seed were not able to buy it. There are other players in the mix that have a part to play. I'm not sure if untreated seed is organic seed. I don't know if that is synonymous, but you don't use any seed that is treated . Is that an impediment to organic farming, that the companies themselves don't always have the seed available for farmers to use?
Mr. Tyson: It can be. There has not been the development of a seed infrastructure in the organic sector. On organic farms, that leads to a lot more farm-saved seed regrowth, and that can actually impact some of the agronomic issues — germination levels and that type of thing along the lines.
As new genetics come out and come to market, they are less available to organic farmers right away. Essentially, if an organic farmer wishes to switch a variety to a new variety, they need to seek an exemption to buy conventional seed that is not treated. Those two things aren't necessarily synonymous, but not treated certainly is a part of being organically acceptable. They have to get an exemption to buy seed that they then grow out to use as their seed for the following year.
Ms. Carlson: Also, it raises another potential collaboration and partnership because this year actually was the first year that GMO crop acreage decreased since their introduction, by 1 per cent globally. Again, conventional farmers are responding to the marketplace and saying that: If I'm going to market my crops, at a minimum they need to be GMO free.
That, again, points to the concept that we are all part of agriculture, and if we work together we can figure out solutions to some of the issues, and meet demand.
Ms. Lipton: Just one additional piece: One of the challenges we also face is with varieties and what varieties are available. Different varieties grow either well or poorly under organic conditions, and they are not necessarily bred under organic conditions. We have to kind of reach out and figure out which of those varieties will work well under organic management practices.
Then it does occur where those varieties may not be available, and some of that is due to the size and the amount of demand that we can put on the market. I had a conversation recently with an organic potato grower who had found, through trials on their own farm, a number of varieties that would work well, and then, all of a sudden, those varieties were no longer available from the seed suppliers. That type of thing does happen in our industry as well.
Senator Merchant: Thank you.
Senator Tardif: It is wonderful to see four provinces representing the organic sector here today. As you are speaking, I am sure that you are already telling yourselves, "Oh, that is an area for collaboration'' with each other, and it's great if the Senate can contribute to increased collaboration between the provinces on this matter.
Ms. Wakeling, in your presentation you indicated seven general principles of organic production. For my own personal curiosity, do you use pesticides in organic crops?
Ms. Wakeling: I don't personally but some are allowed. I don't even know the language because it is not my thing at all. There is a permitted substances list, and on that list are things that we are allowed to use, and that does support us.
The seven principles are directly from the standards and those are the basic values associated with organic production. We do all sorts of interesting things to try and reduce pest issues, crop rotation being a big one. I have a small vegetable production area. My focus is the indoor sprouting facilities, so I buy a lot of grains from these folks here. I will let them speak to the pesticide issue though.
Ms. Lipton: There are a limited number of biological substances, naturally based substances that can be used under organic management practices. However, we find that very few organic producers use them, and that is because organic producers must manage their entire system from a very holistic perspective. That means that they have to focus on soil biology, soil health, the entire plant system, health ecosystem and so on.
It is more of a preventative system. When you use those production practices, there tends to be very little need for those types of things. Then if a producer is to use some of those substances, they need to explain why they have resorted to them. It can't be something that is used over the long-term. They have to have a preventative management system in place.
Ms. Storey: The permitted substances list includes things like salt. Now, every animal needs salt, but which salt? From where? Some salts come with additives. The list tells you which brand names are pure enough to be used, those that don't contain other substances that are not allowed under organics.
As far as the pesticides go, there are a lot of companies out there trying to devise a lot of things, and some of them are coming from natural chemicals. They don't work very well. They cost a lot. Really prevention, as Ms. Lipton said, is what organics is based around.
Ms. Wakeling: I want to add one more thing. I think there are some challenges. I think the tree fruit industry in British Columbia has some challenges, and they have had to work pretty hard to come up with some solutions. They have seemed to be able to do that, and I think you have somebody speaking from the BC Fruit Association afterwards.
Senator Tardif: I know that some crops use pesticides to increase their yield. You don't. You use, as you said, a preventative approach. Does that have impact on your yield capacity, the fact that you are not using chemicals or additives or anything that is not natural?
Ms. Storey: Not really. Fertility seems to be the key thing in organics, making sure that the soil can support the crop. Also, there is the knowledge of when to plant because weeds grow at a particular temperature and moisture level. Every plant has its own little niche of when they grow, and if you seed your crop at just the right time you won't have much of a problem with weeds.
It comes right back to the agronomy and the knowledge. If you do it right, it doesn't have an impact on the yield.
Senator Tardif: Capacity has been a big problem, as you have indicated, and you have signed equivalency agreements with certain countries, Costa Rica, I believe, the U.S. Because you have access now to those markets and they have access to our market, does that put increased pressure on your capacity to meet those increased demands? For example, access to exporting to the U.S. or to Costa Rica or to some of the countries that we have equivalency agreements with?
Mr. Tyson: It can. Equivalency agreements make it easier to market into those countries just by virtue of automatically accepting Canadian farmers who hold a Canadian certificate. Whether there is an equivalency agreement with another country doesn't necessarily mean the market is closed. That may mean additional certification issues.
Overall, the market demand, as it grows within our borders, in the U.S. or in the EU, puts pressure on that supply capacity almost regardless of equivalency agreements.
[Translation]
Senator Dagenais: My first question is for Ms. Wakeling.
In your presentation, you emphasized the importance of providing good quality products. I imagine you are aiming to move your products onto the international market. Do you think we should be implementing traceability systems for your products to improve security at least on the international market?
[English]
Ms. Wakeling: Sorry, I missed the initial component of the question.
[Translation]
Senator Dagenais: In your presentation, you said it was important to provide good quality products. You also said that, sooner or later, you want to make your organic products available on the international market. Do you think that, when exporting to the international marketplace, it would be a good idea to have traceability systems for your products?
[English]
Ms. Wakeling: Actually, traceability is a key component to organics. It is one of the biggest focus areas. When we have our organic inspections, we need to be able to pull our product backwards and forwards make sure that we know where it is going. At that level it is addressed in organics and always will be as part of the management of the organic program. Having somebody come and do that inspection is a fairly in-depth process.
[Translation]
Senator Dagenais: Okay. Thank you very much.
Ms. Lipton, we know that some organizations expressed reservations about signing the TPP Agreement. We know that the agreement will be signed. We know what to expect. Obviously, the agreement will also focus on organically made products.
Do you agree with signing the TPP Agreement, which should open new markets for your industry?
Ms. Lipton: Can you repeat the question? What exactly is the question?
Senator Dagenais: Certainly.
We know that some organizations expressed reservations about signing the TPP Agreement, for many reasons. The agreement will be signed shortly, and the major points have been explained to various producers. Are you in favour of signing the TPP Agreement?
Ms. Lipton: Right. I'll try to answer in French. If I need to, I'll switch to English.
Senator Dagenais: No problem.
Ms. Lipton: Our sector, the organic sector, includes all sectors. Some sectors support the TPP, and others have questions or issues. The same is true for the organic sector, and it all depends on the sector.
Obviously, for commodities such as cereals, we are currently unable to access certain markets, and the TPP will give us access. Surely this will benefit our sector.
However, I need to inform you that trade barriers still exist and that's very important to keep in mind. Even though the TPP can eliminate the tariffs or trade barriers currently in place, without an equivalency agreement, it will be difficult, or another step may be required, to access the market.
Senator Dagenais: My next question is for Mr. Tyson.
A number of witnesses, even this morning, spoke of the importance of exporting products to foreign markets at a reasonable price, a competitive price, but they also spoke of the problems related to transporting the products. If a problem exists, what could we do or what could we recommend to the government to improve transportation and its associated costs?
[English]
Mr. Tyson: The transportation systems for grains out of Western Canada can be a problem. It isn't always a problem, but it seems like when it is a problem, it is a major problem.
What can we do to address that? From my perspective, what is missing in the transportation system is accountability on the part of the providers. There are asset-use charges liberally applied to users of transportation companies' assets, rail cars. If you don't load a car in 24 hours, you pay a fine. There is no reciprocity on that.
If I order cars and have them approved, the provider can simply shortfall that approval. I may have lined up in- bound logistics to meet those rail cars that are coming, but then at the last minute they are not provided, and there is no recourse, really, for shippers, small or large, in that respect.
The same would apply to — you do get the cars you have ordered, you have loaded them — transit times. There are people who watch that, but I don't know that there are serious implications to CN or CP if my car, for example, sits in a yard in Winnipeg for two weeks without moving.
I don't know exactly how you build in reciprocal accountability, but at the base of it, I think that is the issue with the system.
The Deputy Chair: In most other businesses, if you did what the railways do, you wouldn't be in business.
Mr. Tyson: Correct.
The Deputy Chair: They should be ashamed of themselves, but that is not the first time we have said that in this committee. Hopefully, sometime we will get to the point where it will be the last time we will say it.
Thank you, Senator Dagenais.
We have a couple of minutes left only, so Senator Unger for one question and then Senator Merchant for another question.
Senator Unger: I would like an idea of your organization's size. Ms. Wakeling, you mentioned you have 450 producers, but they are very small?
Ms. Wakeling: That is just in my community region. Our organization in British Columbia represents 700 producers.
Senator Unger: Okay. Alberta?
Ms. Lipton: In Alberta we have approximately 360 organic operators. Our organization also represents the rest of the businesses that provide services to the entire industry, so upwards of about 450.
Mr. Tyson: Our company is the world's largest organic oat-ingredient producer in North America, of course, and the largest in the world.
Senator Unger: And how many people is that?
Mr. Tyson: Do we employ?
Senator Unger: Yes.
Mr. Tyson: Over 900 people we employ. In Canada that would be 150.
Senator Unger: And in Manitoba?
Ms. Storey: Last year there were 153 organic farmers and processors in Manitoba. We have just added 10 I think, so that is like an 8 per cent growth rate in one year.
Senator Unger: Saskatchewan?
Ms. Carlson: We have 870 certified organic producers and 89 certified organic processors.
Senator Unger: Thank you.
Senator Merchant: When we ratify, let's say, CETA or the TPP, what country will be your largest competitor in the organic market?
Maybe you can find out for us? I would be curious to know, and you could send us your response at some different time.
The Deputy Chair: Yes, and on that note, if there are any other items you think you forgot to tell us or in response to Senator Merchant's question, please don't hesitate to send us something in writing. Address it to the clerk, and he will circulate it to the rest of the committee.
I want to thank you for being here this afternoon. It has been very informative. I think we have had a fairly good exchange of questions and answers, and we continue to learn.
To this next panel, we are very pleased to be here in Calgary. It is an unusual time for us to be here because many farmers, of course, are in their fields, planting, et cetera. We apologize for that, but it is very difficult to find the right time.
But we are also very conscious of the fact that we are at a sensitive time here in Alberta. Enough said. We have sympathy and best wishes for our friends in northern Alberta.
People asked me last week why I was so concerned about the situation in northern Alberta. I said, "Because many of my constituents work in northern Alberta.'' They travel back and forth from Nova Scotia every couple of weeks, so it is affecting all of us, Though it is happening here, it is being felt everywhere, and we want you to know that we are with you.
As our last panel of the day, we are pleased to have with us from the BC Fruit Growers' Association, Fred Steele, President, and Glen Lucas, General Manager; from the National Sunflower Association of Canada, Darcelle Graham, Executive Director; from BC Blueberries, Debbie Etsell, Executive Director; and from the British Columbia Landscape & Nursery Association, John Byland, President.
Thank you all for being here. We will start with Fred Steele.
Fred Steele, President, BC Fruit Growers' Association: Before we begin, I would like to say we have a couple of things in common, Mr. Chair. I was born in Cape Breton, and we sympathize with the people of Alberta as well and northern Alberta.
In 2003 we had the same unfortunate experience in Kelowna, where I am from, where we had over 40,000 people evacuated, so we know well.
The Deputy Chair: It is an experience that the rest of us do not want to share with you. We don't want to do it ourselves.
Mr. Steele: No.
I thank you for the opportunity to be here today. I am Fred Steele. Glen Lucas is the manager of the BCFGA.
Just to give a little bit of background: The BCFGA, BC Fruit Growers' Association, is the second-oldest horticulture organization in the country, established in 1889. In the interior of British Columbia, our farm-gate sales are approaching $75 million a year with a pack value of $160 million, and we generate about $550 million-plus in economic activity, mostly in apples, pears, cherries and some other soft fruit.
Glen Lucas, General Manager, BC Fruit Growers' Association: We are tag-teaming. I hope that is okay.
The high value cherry and apple export markets are our targets. Tree fruits freely enter the Canadian market from other countries. Improved access for Canadian tree fruit to other countries is needed.
Barriers for our tree fruits reaching other countries include tariffs, but more commonly, they are phytosanitary barriers. Canada, in particular, B.C. producer advantages for export markets are late-season cherry production. We have opened up new markets in China in the last couple of years, and also Europe and the U.S. are very important for late-season cherry production, a very high-valued crop that we sell there.
Ambrosia apple variety was discovered in South Okanagan, developed by a company that we own. The U.S. southwest is a very important export market, and there are potential export markets and high-growth areas in all countries.
Mr. Steele: Some of the issues that we face in the industry: of course, as always domestic and foreign labour; invasive pests are a major problem, and access to capital for planting and expanding the industry, which we are trying to do as well; and, of course, phytosanitary barriers that crop up.
Mr. Lucas: What is a phytosanitary barrier? A country may protect its domestic industry from introduction of a new pest or disease that is not yet present there, but these pests could come in from imports of fruit.
To overcome a phytosanitary barrier in order to export into that market that is protecting its producers, the Canadian Food Inspection Agency must develop a pest regulatory assessment to prove that there is minimal risk of pest/disease introduction on fruit exported to that foreign country.
Mr. Steele: The CFIA, of course, does a very good job if not a great job, but they are handicapped by a lack of resources. The CFIA's job is to develop PRAs for the marketplace and supporting visiting inspectors to retain access to the markets we already have. The CFIA also does important work in maintaining quarantine areas, detecting invasive pests and being involved in control of pest outbreaks, and there are other demands that are made on the CFIA.
Mr. Lucas: Other parts of accessing those foreign markets: Agriculture and Agri-Food Canada and the Department of Foreign Affairs and International Trade are doing great jobs. They support trade shows. Export market information is provided, including an understanding of those foreign markets and how they work.
Work on new trade agreements is important. Korea is probably the newest one, and the CETA and TPP were also mentioned earlier as opportunities. Trade agreements are great, but without support for those pest regulatory assessments that CFIA does and assistance with annual export inspections — those are in effect the follow-ups to the PRAs — the value of those trade agreements is diminished. We can't access as many markets as there are trade agreements.
Mr. Steele: The way it is right now, one new market access comes about every year or two for a single commodity. For example, it was cherries in 2014; last year and this year, blueberries. For tree fruits, we need access to several new markets every year. One of the prime ones is Korea but that isn't even on the radar yet. Within five years, there will be no tariff there. Another one is Japan.
The U.S. places more resources to get their product in faster, and they are there before we are. We have a fantastic reputation for our product. However, being the first mover gives a decided advantage in the marketplace of the country you are going to. The Canadian economy, therefore, is being restricted by a lack of access to new markets due to an inability to resolve the phytosanitary access of the PRAs.
Mr. Lucas: Beyond that large issue of the pest regulatory assessments, we have some other minor issues. One is the California market. We were recently informed by CFIA that they would no longer assist with the annual inspection of our industry which supports the PRA process. We think it is probably because of a lack of resources in CFIA. They are pinched.
The rationale that they provided, though, was that California is not a country, and they only deal country-to- country, although in previous iterations they helped us out.
The possibility of accessing market development funds to assist industry in hosting foreign inspectors is a real possibility with the existing programs, but we probably need to speed up that process of accessing those resources.
Recently, just this weekend, Donald Savoie received the Donner Prize, a government policy book prize, and his book is called What is Government Good At? He was interviewed in one of the newspapers, and he distilled what was needed down to a couple of sentences:
We need government for visionary investments for the economy to grow. Where I think government has failed is in managing operations. It has not been as efficient as it could be. It has not been as efficient as it was 30 years ago. It has lost ground, and we need to address it with a sense of urgency.
I mention that because I think we need that for the PRAs and for the CFIA.
Mr. Steele: Some conclusions: The B.C. tree fruit industry and horticulture in general aims for premium foreign markets, niche markets, and these markets allow for growth of the sector. We need to speed up the access to foreign markets by processing the PRAs and getting faster results.
There are appropriate and adequate resources for export market development activities. However, with TPP and CETA, we need to step up the pace as it has outgrown the capacity.
What is the resolution to this? That greater resources be provided to CFIA so that we can do more than one priority at a time and that there be faster access to resources for hosting foreign pest inspectors through the long-term industry strategy and that there be related funding for market development. That is pretty much it in a nutshell.
The Deputy Chair: Thank you very much. That was very good.
Now on behalf of the National Sunflower Association of Canada, we will hear Darcelle Graham.
Darcelle Graham, Executive Director, National Sunflower Association of Canada: Thank you, Mr. Chairman, and good afternoon, senators, ladies and gentlemen.
Thank you for the invitation to appear before the Standing Committee on Agriculture and Forestry as you study Canadian market access priorities for agriculture and the agri-food sector.
As introduced, my name is Darcelle Graham, and I am Executive Director of the National Sunflower Association of Canada. NSAC is a national producer-funded organization representing 350 sunflower farmers. The organization's mission statement is to ensure the profitability and long-term growth of the sunflower crop through industry-wide leadership. The association is future-focused, working on initiatives that will make the Canadian sunflower industry prosper over the next decade and beyond.
Sunflowers, although small in acreage, are a diverse, sustainable and rotational cash crop for producers. Sunflowers have been commercially grown in Canada for the past six decades and produce annual production of sunflower seeds at an average of 85 metric tonnes per year on 72,000 hectares seeded. Manitoba produces roughly 85 per cent of the acres with smaller regionalized production in southern Alberta and southern Saskatchewan.
Canada produces both confectionery and oil seed varieties of sunflower seeds and is a competitive partner in the growing international market for this special crop. Currently, there are four market opportunities for sunflower seeds, and those include in-shell, kernel, bird food and crush.
Canada's share of the world export market for sunflower seeds is very small, roughly only 1 to 2 per cent. Historically, Canada exports most of its sunflower seeds to the U.S., which is about 80 per cent, and in some small volumes to the UAE, Turkey and Kuwait. Exports to the Middle Eastern countries have been halted due to the unrest in those countries over the past number of years.
NSAC and Canadian exporters are aggressively working to source new market opportunities for our products, including a submission to the agri-marketing program to attend the 2017 Anuga food fair in Cologne, Germany. Participation at this event will be to promote the Canadian sunflower industry to buyers around the world and to advance industry-to-industry advocacy in the area of market access.
Attendance at Anuga will allow NSAC to gather market and competitive intelligence information on trade markets and disseminate this information to Canadian sunflower processors and exporters to encourage effective marketing and exporting decisions.
Although trade outside of the U.S. is small, NSAC supports a continued trade discussion and free trade agreements to open export opportunities as our industry works to expand production and the reputation of a sustainable, quality supplier of sunflower seeds.
The sunflower crop faces three challenges in gaining acreage as growers make planting decisions: Relative price based on competitive crops; perception about sunflower production; and the time lines for movement of the crop.
NSAC, through our 2015 strategic plan, has laid out a detailed plan to address and assist sunflower producers in the production and marketing of their crop. Communicating the outcome of these initiatives to producers will be critical to advance the sunflower industry.
Public and private research on sunflowers in Canada is almost nonexistent, not to mention breeding. Canadian sunflower growers are entirely dependent upon U.S. seed companies for seed supplies, which results in varieties that are not completely adaptable to our northern growing conditions. Therefore, Canadian growers do not have access to the range of seed varieties and crop-protection products that would help to stabilize annual yields and help to ensure consistent quality.
The lack of genetic offerings combined with delayed access to resistant traits has resulted in a steady decline in sunflower acreage over the past 10 years. In addition, inconsistent supply and quality has made it difficult for our buyers and processors to compete in the international marketplace against competing countries that have current seed and crop-protection technologies.
Therefore, the largest initiative and financial expenditure of sunflower check-off levies began in the fall of 2011. NSAC, with the financial support from the Government of Canada, initiated the Confection Sunflower Variety Development Initiative. The project's goal is to develop new, adaptable, long- type confection sunflower hybrids that will produce a consistent quality and desirable seed for our existing and new sunflower markets for Canadian growers.
In addition to the production of hybrids, the program will incorporate herbicide tolerance and disease resistance to provide a commercial edge. Successfully developing a competitive long-type confection sunflower hybrid will allow Canadian producers and processors to become more competitive and successful in their respective sectors.
Oil seed sunflower hybrid development for Canada is also underway. Advanced Fresh Concepts Corp. Indian Head, along with the Saskatchewan government through the Agriculture Development Fund are testing new mid-oleic and high-oleic sunflowers for adaptability to the Saskatchewan growing region. Saskatchewan could be a growth opportunity for sunflowers when short-season oil seed hybrids become available.
The return to this sector will allow for an increase in sunflower production in Canada as the hybrids will be easier to produce while providing a product that sunflower exporters and processors can market both domestically and internationally. In return, Canada will regain our status and brand as a consistent quality sunflower seed production area.
More recently, the sunflower sector has had several discussions regarding sunflower crush capacity. Sunflower oil is the preferred oil in most of Europe, Eastern Europe, Russia, Mexico and countries along the Mediterranean and several South American countries.
Since the late 1980s, Canada's crush facilities switched over to canola as acreage was increasing in Manitoba. Since the closure of the sunflower line, Canada no longer has any large-scale crush capacity for sunflowers. Ironically, Canada is the No. 1 importer of U.S. sunflower oil, 65 per cent of their total exports in 2014/2015.
In addition to the domestic consumption, our office fields one to two calls per week from international buyers looking to source Canadian sunflower oil specifically. NSAC believes that Canada's positive international reputation and sunflowers being a non-GMO crop attract attention for our oil.
NSAC is exploring opportunities of small-scale crushers to determine if there is an opportunity to access a switch plant or modify an existing facility so that sunflowers could be crushed as part of an existing crush business. Regionally, adding additional agri-food processing on sunflowers while increasing domestic consumption would benefit Canada with future possibilities for export on Canadian sunflower oil.
As a small, special crop in Canada, it is important that the Government of Canada recognizes the important contribution that sunflowers can play in supporting agriculture through diversity, and especially even more so with the focus on sustainability.
Thank you very much.
The Deputy Chair: Thank you very much for an interesting presentation and raising our awareness, which is also important.
Now we will hear from the BC Blueberries. I have to say that I come from the blueberry capital of Canada, so I am looking forward to this presentation with some interest, not that I want to prejudice anything.
Debbie Etsell, Executive Director, BC Blueberries: Thank you so much. I appreciate your comments. I have read some transcripts where you have fully supported the East Coast of Canada's product.
We are not the growers' association; we are the development council, BC Blueberry Council, so we represent in British Columbia over 800 growers that are farming on over 28,000 acres of land. I always say there are great Canadian blueberries on the East Coast and the West Coast. It is a great, dynamic industry for Canada.
B.C. is 97 per cent of the highbush blueberry industry in Canada, so we are currently in the works of working towards a national highbush blueberry council. Blueberries are the No. 2 single agri-food export for British Columbia, and combined with lowbush in the east, we are the No. 1 exported fruit out of Canada. That just shows you what an important international market industry we are.
Our farm-gate value is about $250 million, and I think you have heard that we have these monster bushes in British Columbia that are 6 to 10 feet tall. I hate to disillusion you, but they are a little bit smaller than that even though we would love to have 10-foot bushes because that would mean more production.
To show you the growth of our industry, I have given you some notes. In 2010, we were producing 90 million pounds, and just last year we reached 172 million. This year we have again a good crop in the ground, and it is looking like it could be around 190 million pounds. This is huge. In this 80- by 20-kilometre area, we are the largest highbush blueberry growing region in the world.
To show you some other stats: North America is 727.8 million, and that includes us. South America — you hear a lot about Chile and blueberries; they are coming on very strong because they are able to negotiate deals through the free trade agreement because they have copper and fruit, so it is much easier. Their production is growing incredibly at 268 million, but that is a whole country. Europe is 142 million. Asia, which is mostly China, which is emerging very quickly — these stats are all from 2014 — is 82.5 million. You can see the size of this little what we in B.C call "the little engine that could.''
On international exports, our No. 1 partner has been U.S.A. One of the reasons we started looking at export markets is that their economy fell and our currency fell about 10 years ago, it made it very difficult for the blueberry industry, so they started intentionally working on export marketing. Our No. 2 partner is Japan, and you can see that we have done $2.5 million. Then, just recently, Australia became our No. 3 partner with $1 million, which is amazing because we can't send fresh there; only frozen.
Saying that, the recent trade deals have been really beneficial to the blueberry industry. The TPP deal has not been ratified, but many of our current markets and emerging markets are involved in this deal. Yes, China and Korea are not in there right now, but they have such huge populations. Demand in some of these countries and even countries that don't know what a blueberry is but are learning about its health benefits are wanting.
Asia is really important because of our geographical location. It is easier for us to ship to Asia. In Southeast Asia we have the recent deal with Korea. Last year was a victorious year for us because one day apart we got market access to China and Korea for fresh blueberries. This year is going to be an exciting season for us.
All of the emerging markets of South Asia have a chance to be at zero tariffs, which is what a lot of our larger competitors, one being Chile, have been able to achieve.
I just returned from South Korea on the weekend. This will be our first season shipping to them. The negotiations did not include immediate tariff reduction like other agri-foods. Both B.C. cherries and blueberries have the arrangement 10 years for fresh for us and seven years for frozen. The tariffs are quite high, so presently, even though we are in our second year of reduction of tariff, we are still at 31.5 per cent on fresh and 21.4 per cent on frozen. Then if you add on the tax, that puts us at over 40 per cent for fresh.
Chile is currently at zero, and U.S.A. is at 12.8 per cent. This is in light of Canada being the first country to enter into free trade agreement discussions. It was a difficult one, although we were quite happy with what came about in September of 2015.
It is a big opportunity for both fresh and frozen. I was just there, and they know blueberries; they love blueberries. We just have to somehow figure out how we can get past these tariffs.
The CETA deal was also very welcome by BC Blueberries. The EU has been a very strong trading partner for Canada. Yes, it needs to be ratified, but on that one we were able to negotiate a zero tariff, which will help greatly because shipping from the West Coast all the way over to Europe is a costly enterprise.
China has been the crown and glory, I would say, for our industry this year. It has been long-awaited. It took us nine years. We were behind cherries, rooting them on, and so we are looking forward. The deal is signed. The inspectors still need to come. To give you an idea of the opportunity: Chile shipped in 2013 — see, they are even celebrating — in 2013, no berries at all. In 2014, they sent 11 million pounds. In 2015, they sent 89 million pounds, so there is great opportunity for moving forward.
The tariff there right now is 33 per cent, but the demand is there even with their economic downturn.
We really have appreciated the trade deals that Canada has worked on for us over the last few years. It has been a struggle. As said, the CFIA can only work on one. The tariffs repeatedly have been an issue for many of the produce commodities. What happens quite often when we get these trade deals is other issues will block the flow of trade. Minimum residue levels, it seems you get access, and then all of a sudden they lower what they allow to come in. Canada already is limited in the amount of products they can use for production to prevent disease and pests, so when it is lowered to these very low limits, it becomes very much a challenge.
Regulatory issues such as changing what you need to put on labels; phyto requirements and certificates become an issue. It is an increasing problem that seems not to be dealt with in free trade agreements.
Another issue that I didn't note on your notes there was we have probably some of the highest-cost land you will find in Canada. I think you would be surprised to know that our farmland sells for $110,000 an acre right now. We are one of the prime areas for growing blueberries because we have warm days and cool nights, which is perfect for growing blueberries naturally.
I want to say that because in the southern hemisphere, they grow a lot under tunnels and in greenhouses, whereas we grow it out in nature naturally, I think this is really one of our strengths and a message we need to tell.
BC Blueberries goes to a minimum of four trade shows a year, and one of the things we found very valuable is the Canada brand. Most people around the world don't know who B.C. is. British Columbia, they think is are part of the U.K. We always associate that red maple leaf with us, and we always try to exhibit in a Canada pavilion because this does have a measure and value.
The other thing that we found to be a great strength is the trade commissioners that Canada has. They are invaluable to us, especially as you are growing your export market. They have a lot of expertise, connections and talent, but it has been really difficult to watch over the last few years their abilities and funding be cut to almost where they struggle to exist. We have also seen this, as noted by the fruit growers, with CFIA, which is especially short-staffed in the plant health department.
One of our recent strengths and probably common combined issue is the berry breeding program used to be owned by Ag. Canada, and all of a sudden, they decided that they wouldn't be doing cultivar trials anymore but that they would keep berry breeding germ plasm and move it to Atlantic Canada, even though the majority of berry production is in B.C. So we have taken on this berry breeding program, this being strawberries, blueberries and raspberries in British Columbia, and it has been good because Growing Forward 2 has been helping to sustain that under a 75/25 ration for the last four years.
We are hoping to continue that support into the future because this is important for international markets. We have been dealing with a lot of old varieties. As climate change comes along, there need to be new ones that adapt to that. As well, as we start to ship more berries; you have to have a better berry that can ship. There are a lot of proprietary programs out there, so we would like to see continued support there.
The agri-marketing program — I know that the lowbush industry talked about this — is vital to them, and to us. We hope to be able to continue with that program.
You have heard about what we have experienced over the last few years, and I just want to say that there have been a lot of federal programs that BC Blueberries has benefited from. We look forward to being part of that in the future too.
Thank you
The Deputy Chair: Thank you very much.
From the British Columbia Landscape & Nursery Association, Mr. Byland.
John Byland, President, British Columbia Landscape & Nursery Association: Good afternoon, Mr. Chair and senators. Thank you for the opportunity to speak to you today.
I am here today representing the British Columbia Landscape & Nursery Association. I am also the chair of the nursery growers commodity sector of our national industry association, the Canadian Nursery & Landscape Association.
My family and I operate a 400-acre nursery located in Kelowna, and we grow about 3 million plants annually, of which we sell quite a few trees to the B.C. fruit industry. We grow many of the new varieties which have brought them success, and we are very proud of that.
Nationally, our farm gate is about $700 million in our industry. B.C. is an important growing province, and export sales are critically important to our sector.
Although Canada's reputation as growers of high-quality and hearty nursery stock is of interest to many off- continent markets, international phytosanitary regulations prohibit the import and export of products with moving soils to all countries other than the United States. This makes the U.S. our largest trading partner by far with over 95 per cent of our export sales going there.
Our volume of sales to the U.S. is largely impacted by the value of our currency in relationship to the U.S. dollar. It is important to understand that nursery products are a perennial crop with generally one- to five-year production cycles. For every $1,000 of product that leaves our farm, there is another $2,000 or more in the field growing for future sales. This represents a considerable financial risk to growers. Managing this risk requires that nursery growers strive to be as efficient as possible in order to retain their competitive advantage when the value of the dollar rises.
Efficiency and competitiveness do not happen without innovation. Innovation must always be an ongoing focus, and it should be fostered by the sector with assistance from all levels of government. Accelerated capital cost allowances on equipment purchases and research funding assisting the development of new products are two simple but effective roles that can be played by government.
We must always maintain access to our seasonal offshore worker program, and at the other end of the labour spectrum, government should make it easier for us to bring in skilled labour and expertise when we are not able to acquire those within our borders.
Maintaining access to the U.S. marketplace also requires that systems and regulations are in place that foster a level playing field for growers on both sides of the border. We understand that while Canada and the United States operate under very similar regulatory regimes, the apparent subtle differences between "similar'' and "the same'' can sometimes be vast.
The differences in our pesticide approval process has long been a source of frustration for the agricultural sector. U.S. growers have access to many crop-protection products not available to Canadian growers, and yet product grown with these products is allowed entry into Canada.
U.S. growers' access to more effective and often lower cost crop protection products is only one example of how non-harmonized regulations result in a non-level playing field to the disadvantage of Canadian producers.
A more specific recent example where subtle differences of the regulatory response is one concerning sudden oak death, a serious quarantine pest of particular concern to British Columbia and all United States West Coast states. Canadian plant movement was restricted by genus compared to the U.S. movement restriction, which was by species, thus providing an increased market access to our U.S. counterparts.
We appreciate that CFIA and USDA engage in significant bilateral discussions intended to harmonize regulations as much as possible. Even so, the implementation of NAPPRA regulations that were designed to prevent the spread of invasive pests contain enough inconsistencies that it cannot be considered to be a truly harmonized regulation. The acronym NAPPRA means "not authorized pending pest risk analysis,'' quite a mouthful.
These are only a few of the examples why the nursery sector fully supports the concept of the North American perimeter approach to trade between Canada and the United States. While the concept of increased regulatory cooperation between Canada and the U.S. is much talked about, it is our observation that the regulations and red tape have increased rather than decreased over the past few years.
As a consequence, many smaller to medium-sized companies do not feel they have the appropriate resources or infrastructure in place to consider exporting their product to the United States.
The federal government through CFIA have put a great deal of emphasis on traceability systems to assist all parties to effectively deal with pest outbreaks. Although emphasis has been appropriately assigned to the food sector, traceability programs are of importance to the nursery growers as well. It is critically important to the nursery grower sector that nursery products be able to travel across the country and across the border with a minimum of restrictions. Traceability systems are an important management tool, but working cooperatively with assistance from the CFIA, the sector will also continue to place increased emphasis on prevention through improved biosecurity practices.
In conclusion, we have been asked to comment on the possible impact to our sector of free trade agreements such as the TPP and CETA. The Canadian nursery industry fully supports any agreement which provides Canada and Canadians a robust and healthy economic climate in which to operate our businesses. However, these agreements have no direct impact, good or bad, on the Canadian nursery sector.
We thank you for this opportunity to present to the committee with some insights into the challenges that face our sector and to maintain and hopefully improve our export sales to the United States marketplace. Thank you.
The Deputy Chair: Thank you, ladies and gentlemen, for some interesting presentations.
I am not going to argue about the highbush blueberries and their lack of qualities when it goes to the lowbush blueberries. That will go to the consumer, and we know that the results will be favourable. Seriously, it is important to introduce blueberries to the world, and blueberries, particularly lowbush blueberries, can grow in some very strange and difficult places where you can't grow much else. If in Nova Scotia, we could develop a market for the rocks that we have, we would be in great shape. However, we can plant blueberries, and it has been great.
I was interested, though, in the presentation from our friends the BC Fruit Growers' Association. One of the things I thought you would mention was the Summerland Pacific Agri-Food Research Centre. I remember when this committee visited Summerland we talked to people in the cherry industry about the fact that you are now harvesting cherries over a long period of time, when at one time your cherries, like the rest of the world ripened in month A and that was it. Now you are harvesting cherries over a number of months, and Summerland played a role in that. As well, we met with people in the wine industry, and they talked to us about the role Summerland played in helping them increase production and develop a better quality grape on various varieties of grapes. Summerland played a role with apples too.
The cutbacks to our various research centres across the country have been significant, have hurt the development of products. Would you care to comment on the importance of Summerland. Is it still as important as it was?
Mr. Steele: Absolutely. most people do not realize that 80 per cent of all the commercial varieties of cherries now grown around the world actually came out of the Summerland Research Station.
The Deputy Chair: There you go.
Mr. Steele: We owned a company formerly known as PICO, and it administers the intellectual property rights, Summerland Varieties Corp. We manage the intellectual property rights for that for apples and for the Ambrosia apple around the world.
The cutbacks have created two things. It has created some problems, but it has also created within the nation, a new and redeveloped plan to actually work together across the country to develop varieties. It includes genomics and all kinds of things that are now taking place. You know, sometimes a disadvantage can be turned into an advantage, and I always look at it from the view that whatever problems you have, if you can turn those into advantages, you can compete in the marketplace.
We are not the cheapest, and that goes for blueberries, it goes for nursery and it goes for a lot of things, but we are known for quality. That is why we need to concentrate on getting the PRAs done on more than one variety at a time. We have that niche market quality, and what we have to be able to do is get into the marketplace at the same time or even ahead of the United States and other countries in order to create an advantage by being first movers.
The Deputy Chair: One of the strengths of the Canadian agriculture and agri-food sector, over the last 140 years, has been the commitment of the Government of Canada to research and development to developing new, quality products. Your comment on the cherries is a prime example.
Any one of us from across the country can talk about successes. I know in my province the introduction of new species of apples to the Annapolis Valley, for example, has changed the industry. Their continued development in the berry industry of various berries, whether it be strawberries, raspberries, et cetera. is important. It is, to me, one of the gems of the government.
As to the government's recent cutbacks, I go back to that old saying that my mother used to use: You cut off your nose to spite your face. Here we have cut something that has continued to develop products that are famous worldwide. These are Canadian products, and you have just mentioned a few.
I was startled by the cost of land, $110,000 an acre. I wondered if you were farming in downtown Vancouver.
Mr. Steele: In some areas, that's a bargain, by the way.
The Deputy Chair: Certainly in downtown Vancouver.
I am going to start the questioning with Senator Merchant.
Senator Merchant: Our study is focusing on market access priorities, and one theme that came across — at least with the three gentlemen and perhaps with the others — were the labour shortages, the skilled worker situation and the seasonal workers.
What would you like this committee to take forward in our report? What is happening right now, and where do you think we should be going?
Mr. Byland: There are two components to that. The seasonal worker program — which gives many sectors in agriculture scalability, which allows us to export products, whether you are a blueberry farm or a cherry grower, to different parts of the world — is one. In many cases these operations are becoming larger. Many acres are being planted, and the local labour supply is just not sufficient or reliable enough to create scalable business to export. That is one thing. The seasonal agriculture worker program is crucial for the survival of our businesses and to keep them on a scalable level.
On the skilled side, Canada, for whatever reason, has not done a good job of developing skilled managers and workers within Canada, and yet they are available within many parts of the world.
We need people who have the right skills, and if we can't find these individuals in Canada, we need the ability to fast-track their entry into Canada. It shouldn't take a year or longer or whatever the process is right now. We need to simplify it so that if we identify a need, we can find a suitable candidate. Let's streamline the process to get them into the country a little bit quicker. That would be our request from the Nursery Association.
Senator Merchant: What countries can we bring skilled workers from?
Mr. Byland: Right now, ironically enough, I hear there are a lot of them are available from England. For whatever reason, the socioeconomic conditions of English farms are such that it is just not attractive for young farmers to continue on there. Apparently there is quite a migration to Saskatchewan and the Prairie Provinces right now, so I guess this is actually underway.
In our case, we are actually looking at getting some skilled managers who are Spanish-speaking because we have so many Spanish speaking seasonal agriculture workers. Those countries would be maybe Argentina, Peru, Mexico, perhaps, Central American countries, maybe Spain. In our case, countries with Spanish-speaking managers would be really helpful.
Mr. Steele: In the tree fruit industry in the Okanagan and the Columbia Basin has, over the years, has had people come from everywhere; from Japan, Portugal, Spain, other countries in Europe, and they have always been the next successive generation to take over the farm. This has lent new skills, new opportunities and new ideas to promote growth.
Right now it is the Indo-Canadian community, of which they have about half, I would say, of the industry. Workers from Mexico and the Caribbean, could be the next workers to take over the farm, and I would like to see us work on a basis of providing some avenue to citizenship.
Senator Merchant: With the Indo-Canadian community, that would be good also because the middle class in India is growing. Maybe if these people who come and work in Canada have connections there can be an exchange of ideas.
Does the Indian population eat blueberries?
Ms. Etsell: Out of that 800 growers, about 70 per cent are from India. They want to make sure we have third- and fourth-generation, even, blueberry growers, and they do not encourage their children to be farm workers. They are to be going to university in Canada.
Mr. Steele: You mention the populations with growth. Most people don't realize that in China, for example, 30 million people a year are joining the middle class. They have got more disposable income. We can take advantage of that through niche marketing of cherries, apples, blueberries and other products that people want to buy.
Again, it comes back to having the resources to get the PRAs in multiple commodities fast enough in order to be able to access those markets and be there in a timely fashion. We put all kinds of effort into modernizing plants, working together with government and in ways of investing, and then we end up not getting the PRAs done fast enough in order to take advantage of the market at peak time.
Senator Merchant: I would like to ask a question of the sunflower people because they are in Saskatchewan. May I?
The Deputy Chair: You go right ahead.
Senator Merchant: You said that crushing plants are an issue, and that you are looking maybe at refurbishing a plant, or are you looking for just government financing? Is that the P3 model where the province and the private sector get together? What is your thinking that you might be able to do something like that?
Ms. Graham: First, we would need to do a kind of economic profile to see if it is actually viable. We know that it could not be solely a sunflower crush facility simply because the acres aren't there, but we could look at maybe some of the smaller crush facilities in Saskatchewan. There are a number of larger ones that crush canola, and canola would be one of those crops that we could equally work with. I am just not sure that some of those larger companies would be interested.
At this point maybe the funding could be for doing a sector investigation. If that is something that the government would support, we would want to look at something like that.
Senator Merchant: Good. Thank you.
The Deputy Chair: Senator Tardif, please.
Senator Tardif: I often have occasion to go to the Okanagan. I have a summer cottage there, so I very much enjoy the B.C. fruit and, as well, the shrubs and plants from Byland Nursery.
I want to explore the issue of the phytosanitary barriers. You have indicated, I believe, Mr. Steele and Mr. Lucas, that Canada is at a disadvantage because the lack of access to new markets is due to inability to resolve phytosanitary access with PRAs. Why are we not moving more rapidly with the pest regulatory assessment issue?
Mr. Lucas: I think Ms. Etsell can speak to this as well. We have a common experience, and it is really just a lack of resources at the Canadian Food Inspection Agency. They only have enough people on the ground to do one a year, maybe, and I think it is more like one every three years, but it is purely having the people to do the work.
Senator Tardif: So it is a human resource issue?
Mr. Lucas: Yes.
Senator Tardif: Have there been cuts in recent years to the number of inspectors?
Ms. Etsell: Yes, definitely. The numbers have been diminished, especially, as I mentioned, in the plant health department. I think there is an additional effort on the other side. China, in that respect, said they would only do one commodity at a time, so you are trying to match the two together.
As well, I spoke about Chile being very successful at it. For us, the Canadian automotive industry had a problem with Korean motors coming in, which also held up the PRA and the free trade agreement as well.
Mr. Lucas: One other thing: It is not just that there are fewer resources; there are more opportunities. All of a sudden we have more trade agreements, more countries we can access, and the tariff levels are starting to come down, but we can't get into those markets because there is another barrier. That is the phytosanitary barrier.
Senator Tardif: Is it the Canadian inspectors or foreign inspectors that we need more of, or both?
Mr. Lucas: Canadian.
Senator Tardif: Canadian inspectors?
Mr. Lucas: Foreign inspectors can hold things up, but as Ms. Etsell noted, other countries aren't finding that it is foreign inspectors that are restricting their access. They have adequate equivalent to CFIA resources in the U.S. or in Chile, and they are getting into markets years before we are, so it is not the foreign country holding it up. It is our resources holding it up.
Senator Tardif: Ms. Etsell, I saw you pause on that intervention.
Ms. Etsell: I would agree with that in general. There may be some special cases. This past year, China decreased their number of inspectors and, therefore, it became an issue on that side too.
Senator Tardif: Now, in November 2014, Canada and China signed a phytosanitary agreement on cherries, if I understand correctly. Is this on a fruit-by-fruit basis that these agreements are signed.
Mr. Lucas: Correct.
Senator Tardif: So you don't do it by industry with the horticultural industry or the fruit and vegetables industry signing an agreement with another country? It is product by product?
Mr. Lucas: Yes, and it is even more bizarre than that. It might be the same pest that they are concerned about in blueberries and cherries, but we go through the whole process twice, and sequentially, not at the same time, because of the lack of resources here.
Senator Tardif: Interesting. What is the time lapse? For example, for CFIA to be doing a pest regulatory assessment, what would be the length of time to get that through?
Mr. Lucas: For cherries, it was about three years, but it was first through the door. Blueberries, I am going to say, were a little shorter, and if there were other berries or fruit crops, it would probably be more reasonable. The first one through the door is always the most difficult.
Mr. Steele: But the blueberries had to wait. That's the problem.
Senator Tardif: Mr. Steele, do you grow genetically modified fruit?
Mr. Steele: No.
Senator Tardif: So you are not growing the Arctic apple?
Mr. Steele: No. The BCFGA at the convention, I think the vote among delegates was something like 18 or 20 to one opposing it based on economics. Years ago, we had the product I still whisper which is Alar. We lost thousands and thousands of dollars because of a negative impact, and we don't want to go there again. It is that simple.
Senator Tardif: I will leave it at that for now.
The Deputy Chair: That was an interesting response. Is it because your customers are asking for non-GMO product, or is it because your farmers are not interested in growing GMO?
Mr. Steele: The farmers are not interested in growing it because of the economics. At the same time, I think one of the things that is creeping into agriculture as well as into television sets, for example, is a thing called "social license,'' social license and the perception of what is out there. Perception is more real than the reality, and some people have benefited greatly by it. A&W is a prime example where they have fostered that whole realm. I don't think you are going to grow a third eye, but by the same token, I think it would damage sales.
The Deputy Chair: Yes, I continue to go back to the position that, in 2050, we are going to have 9 billion people on this planet, and if we don't find a way to feed them, it is going to cause social unrest. It is going to cause conflict. It is going to cause wars. If we were to have 9 billion people tomorrow, we couldn't feed them.
We don't plan to feed 9 billion people in 2050 in 2049. We have got to do that now, and I am not convinced that GMOs are not part of that answer. I am willing to be convinced, but nobody has done that yet.
The next questioner will be Senator Dagenais, please.
[Translation]
Senator Dagenais: Mr. Steele, let's pick up on the foreign workers. Last year, I visited a farm that hired foreign workers, and I was told that they work for eight months, return home, then can come back a second time to work for another eight months. However, they can't return a third time because the government doesn't give permission to renew the contract.
The problem is that the people are trained and become qualified, but after two years, businesses lose their skilled workers and must start over and train new workers.
Do you have the same issue with foreign workers? Or can you renew contracts for a certain number of years?
[English]
Mr. Steele: It depends on the program. There is the Temporary Foreign Workers Program. There is a program for youth that they can work on the concept of passports and move on. There is the Seasonal Agriculture Workers Program, and I think ours last more than two or three years.
Mr. Lucas: If I could elaborate, the Seasonal Ag. Worker Program has no limitation, but the Temporary Foreign Worker Program, agriculture stream, there is that four-year limitation that you mentioned, and in Quebec it is very important. In the tree fruit sector, probably a quarter of their total worker supply comes through that ag. stream of the Temporary Foreign Worker Program.
In B.C., we don't make as much use of that program. It is fairly minor. It is probably less than 5 per cent of our seasonal agriculture workforce.
It may be more important in the landscape nursery?
Mr. Byland: The Temporary Foreign Worker Program is important for the landscape sector but not for the growing sector, so as a nursery, we subscribe to the Seasonal Agricultural Worker Program, and we have had workers return to us for eight and 10 years for consistency.
The Deputy Chair: To clarify, that is the same workers coming back for eight and ten years?
Mr. Byland: Under the Seasonal Agricultural Worker Program, we have had workers who have worked for as long as we have had the program, which is almost 10 years.
The Deputy Chair: One of the issues that I have heard from people in the industry is that they spend a fair amount of time in year one and maybe year two training the workers on how to do the job, how to use equipment that they may not be familiar with, and when they reach their maximum benefit, the program ends and they have to start all over again.
Mr. Byland: I think that is the Temporary Foreign Worker Program. Under the Seasonal Work Program, anybody who we would like to have back can come back on a yearly basis, so our staff are fully trained, and they return every year and have for several years. For the Temporary Foreign Worker Program, yes, those restrictions you described could come into play.
Mr. Lucas: I would just add that we very much sympathize with our Quebec brothers and sisters in resolving that issue. They should not lose their workers after four years. You can imagine operating a factory and then having all the workers leave after four years and starting over again. It doesn't work, so that needs to be resolved.
I believe too for the greenhouse sector in B.C., as was said, the Seasonal Ag. Worker Program is eight months. People have to go home on December 15, period, end of story. For greenhouse, under the ag. stream they can stay over that Christmas period, and that is a period when they are planting, starting new crop, and they really need those workers over that period of time to bridge. The greenhouse sector in B.C. would rely on the Temporary Foreign Worker Program to a greater degree than blueberries or tree fruit or nursery.
Mr. Steele: We are already having a problem right at this table today as to which program we are talking about, whether it be temporary foreign workers or whether it be seasonal agriculture workers, and the big difference, if you can picture it in your mind, is oversight. The Seasonal Agriculture Worker Program has federal government oversight even from the integrity branch. We have the consulate from the Caribbean and Mexico and the industry, so there is oversight in everything from housing to working conditions whereas some of the other programs don't have that.
The Deputy Chair: Senator Dagenais, I interrupted your line of questioning. I apologize.
[Translation]
Senator Dagenais: Thank you, Mr. Chair. My next question is for Mr. Lucas.
In your presentation, you spoke of the new opportunities offered by international markets. Will you produce enough to meet the demands of the new markets? If necessary, will you be forced to reinvest in your industry to meet the growing demand?
[English]
Mr. Lucas: Yes.
Senator Dagenais: Thank you. I am sure you have more explanations.
Mr. Lucas: Actually, the tree fruit industry itself only produces 50 per cent of what is consumed in Canada. However, because of the expense of our land, our labour and all of our input costs, we need to sell premium product. Those are the markets we are focusing on, both in Canada and abroad. Opening up those markets is important.
In terms of could we supply new markets, with cherries there are many young plantings; they are maturing and there are more products. Ms. Etsell mentioned how the blueberry industry is growing as well. So, yes, we need to access those new markets just from that perspective.
Could we redouble our efforts and produce even more? Yes, we could. When we mention that to our packers — the people who process the fruit, wash it and grade it — they get a little panicky because they have bricks and mortar to worry about. We would like to see, both on the growing side and on the bricks-and-mortar side, more infrastructure funding aimed at expanding that capacity.
The national apple group proposals will be around helping with financing — really, the interest. We are not looking at paying the capital. After you plant a blueberry bush or a cherry tree, it takes five years before you get full income. Help through the infrastructure program with financing the interest would go a long way, and it is really efficient for a government because you are not buying the whole cherry tree, just financing it for five years. We would really like to see that type of approach.
Similarly for the capital infrastructure, I don't think anyone would expect the government to go build plants and spend a lot of money that way, but help with the financing would be huge, and that makes that infrastructure funding stretch so much further. If there is $100 million in infrastructure, you can buy so many buildings, or you can finance probably 20 times as many buildings by helping with the interest. We would like to see the government take that approach.
Mr. Steele: If I could, there was a similar comment with regard to sunflowers. We have a situation where they said that they didn't have the capacity to build the plant that they needed. If they could finance and get the plant that they needed, they could probably get the product. It is the chicken-and-the-egg thing, and in many cases in the tree fruit industry, for example, our infrastructure is 60 years old. If you can only imagine doubling the capacity, what that is going to do from an infrastructure standpoint: Houston, we have a problem.
[Translation]
Senator Dagenais: My next question is for Ms. Etsell.
I must tell you that I love blueberries. They're very good when covered in maple syrup from Quebec, obviously.
On a more serious note, I can see that new markets are opening for your industry. You spoke of transporting frozen blueberries. I am wondering about transportation between the point of origin and destination, given the growing demands of new markets. You say the product is frozen. Have you absorbed losses from transporting the product? You obviously want to deliver a good quality product. Does the product arrive in good condition? Or, when the product reaches its destination, do you absorb losses from transporting frozen products?
[English]
Ms. Etsell: There are challenges for both fresh and frozen. You pointed out frozen — yes, especially in countries where they are struggling with their own cold storage supply, India and China in particular. We work with them on that because we have a really broad knowledge base. We have been doing this for over 50 years, so we check on that market and how they are handling it. We try and instruct them on how they should be handling the product too.
Saying that, yes, there are still losses, and it depends on the business contract as to who takes that loss. Is it the buyer or the supplier?
One of the things that we are working on now is controlled atmosphere to lower the costs of sending product. Air is quite costly. Chile is very good at this, and it is something we are looking at, new technology for sending fruit on ships under controlled atmosphere containers.
Senator Dagenais: Thank you.
The Deputy Chair: Senator Unger, please.
Senator Unger: My question is for Ms. Graham. How competitive is the Canadian production of sunflower seeds compared with other producing countries?
Ms. Graham: We are very small in terms of production of acres. We only have about 100,000 acres in Canada, and that doesn't even compete. As far as where we are scaled, we are probably in the bottom third or even less than that compared to countries like the Ukraine, Russia, China. We are very small right now.
Senator Unger: And sunflower oil, you said, has been overtaken by canola. Were you ever a dominant player in sunflower oil?
Ms. Graham: Around the world, certainly sunflower oil is a popular product, and as I mentioned, being that we are non-GMO and probably will always remain non-GMO, I would say we are going to start to see more demand for sunflower oil. It also has a really high fry point, so it is definitely being used in restaurants, that kind of thing, and also for salad dressings.
There are opportunities in Canada. It seems that a lot of the calls that we get into our office are specifically Canadian based, and oftentimes when I have to refer them to the U.S. to source oil, they are not really happy with that answer.
The majority of our production is in Manitoba, and we can't compete against the 1.5 million acres of canola in our province. We have got to figure out how to strategically place ourselves in terms of being able to supply that oil.
Senator Unger: To the cherry producers, GMO anything is just bad these days. Is there any comparison between a hybrid variety and GMO? I know they are different things, but how are hybrids perceived globally?
Mr. Lucas: With tree fruit — probably with blueberries as well — for example, the seeds in an apple, every seed will grow to be a different type of tree. The way that we replicate is actually from cuttings, and to discover a new variety, you do all these crosses, which would be a hybrid. There is no negative perception there. the public perception is that's natural.
There are two issues with the public perception of genetically modified products. One is people don't know what it is. That is the biggest one, this uncertainly of what they are eating. A long time ago, I did my grad project on regulation of GM products, and one of the things I concluded many years ago, 30 years ago, was it is a government failure. They haven't educated the public about what it is.
All of a sudden, the government is saying these products are good, but the public is not ready. That will come back and could negatively impact the industry. That is the issue that we are dealing with today.
The other issue with genetically modified products today is that they are all transgenic. For example, the Arctic apple has some genes from a cauliflower mosaic virus and also bits of antibiotic-resistant bacteria in it. They include bits of other types of organisms in them. For those that do understand, that is an issue for many of them.
I think some of the more higher powered new generation genetic tools — there is one called CRISPR; I don't understand what it is — do not include other organisms when they do the slicing and dicing, so that may be less of an issue in the future. For today it is an issue.
Mr. Byland: If I could just make one quick comment: Most people don't understand how long it takes to bring a new cherry variety, for example, to market from the breeding program. Literally, if Summerland started today to come up with a new cherry, by the time it would be in orchards, it is 20 years. It is an incredibly long period of time using traditional breeding methods.
Mr. Steele: You mentioned the Arctic apple a little bit earlier, and that is an apple that doesn't brown. We already have one, essentially. It is called Ambrosia, and you can cut that apple and leave it sit on the counter for six hours. It is a chance seedling, which means that one tree grew differently in an orchard and produced apples, and basically, every tree grown since has come from that mother tree.
The last time that happened was in 1810 with the Macintosh in Ontario. There are chance seedlings, there are hybrids and there is GMO. It all comes down to public acceptance as well. If you had a GMO apple that did something like gave you an improvement in diabetes or something of that nature, it would be well worth it, but to risk a market venture as far as revenue is concerned, on the basis that it doesn't brown — so what? It is a case of after couple of days, do you want the salad?
Senator Unger: Another committee is studying social licence, and it was described by one of our previous witnesses as something amorphous. It begs the question: Who gave people the right to issue social licences to perfectly legitimate businesses?
My point is you said GMO was never well explained, Mr. Lucas. Is that almost similar to this concept of social licence, and companies or businesses need to get this?
Mr. Lucas: Social licence tends to be almost the reverse. It is like social reprobation. Really, social license is about protecting your perception in the marketplace, so when we say, "social licence,'' we really mean not losing it and not risking it.
The education part of that is if the consumers were educated about GM products and accepted it, then there would be less risk to our social license from growing GM products. As it stands, it is a big risk because consumers don't know what it is, and even if they did know, they might not like it. We have two problems there and both impact on social licence.
Senator Unger: On page 2 of your presentation, Mr. Byland, you talk about the differences in the pesticides approval process and how U.S. growers have many crop-protection products not available to Canadian growers, and yet their products are allowed entry to Canada. That seems patently unfair, and we have heard this many times before. What, in your opinion, could or should be done about this?
Mr. Byland: In our sector, which is horticulture, it is relatively small users of these products compared to, like, a grain sector or something like that just on the basis of acreage. I think, logically, if we could harmonize our registration processes between Canada and the United States such that if a product is registered in Canada, it is registered in the U.S. and vice versa, it would allow us to have less expensive products, for example. We do pay a premium for that process to occur in Canada right now, and it would probably fast-track a lot of much safer chemicals and plant- protection products that are currently not available because the regulatory process often hinders safer products from coming into the market in Canada.
Really, what we just want to do is harmonize regulations on both sides of the border where if it has been properly registered in the U.S., that automatically allows for registration in Canada, and I would argue that the contrary should be true too.
The Deputy Chair: Thank you very much. It is the old — and we have argued about this for years — once approved, twice accepted. We wanted to get to both sides of the border because it is a costly thing and we have seen example after example before this committee of products that were approved in the United States waiting a long time to be approved on the other side of the border. It doesn't necessarily mean that we are wrong, but it is a real hindrance to industry development.
Ms. Graham, I have a question. If I heard you correctly, sunflowers are being used in crop rotation situations?
Ms. Graham: Yes. They are actually a very good rotational crop, as we witness, I guess, in Manitoba where the largest amount of acres are. We are seeing big acres of soybeans and canola come in. That is not sustainable for growers. They are going to end up putting themselves in a situation where the crop is going to have pests and that kind of thing, so sunflowers are a good alternative for growers.
In some cases, I know a number of directors have talked about the sunflower crop actually has subsidized their lower-production crops in terms of maybe a cereal at the time, based on cost.
The Deputy Chair: With the number of acres in canola production and using sunflowers as a rotation, it would seem to me that would want to increase production of sunflowers and sunflower seeds significantly in, of all places, Saskatchewan.
Ms. Graham: The one thing that we are missing in Saskatchewan is our breeding system, obviously. It is not based in Canada, so we are sourcing product that is from the U.S.
Even Manitoba and Fargo being about three hours south of where the main production area is in Manitoba, there is a significant difference in terms of the days to maturity of that product. That is even more so a problem in Saskatchewan. That is why AFC and Indian Head are working with, actually, the government in the U.S. to develop short-season sunflowers for Saskatchewan, and there is big opportunity to expand our acres there.
The Deputy Chair: I buy sunflower seeds in 50-kilogram bags for bird feed, and I try to feed birds year-round. I pride myself on having lots of birds around my place in the wintertime. I don't put as much out in the summertime because there is lots of other stuff for them, but when I buy that — I have to admit I haven't looked at the bag — am I buying Canadian product?
Ms. Graham: Most likely, you are. Any of the oil seed products, like, the oil seed sunflowers produced here in Canada, because the crush option is actually in the U.S. — the bird food price actually follows the crush price — will go towards bird food.
The Deputy Chair: Okay. I feel better that I am being a good Canadian and buying Saskatchewan sunflower seeds.
It is an interesting industry when you consider that you are using it for crop rotation. If you don't have a production facility, it becomes problematic. Is there not the economic viability for a crushing facility? How much would a crushing facility cost? Perhaps there is another type of crushing facility that is adaptable to sunflower seeds.
Ms. Graham: The majority of production in Canada right now is confectionery, so, actually, those aren't going to be crushed. Those are eaten in-shell or used in the bakery market in breads, cookies, that kind of thing.
In the 1980s Manitoba grew 300,000 acres of sunflowers, and those were crushed. We did have a crushing line, but then the acreage started to switch from oil seeds to confectionery and that crush line disappeared. Then they started growing for the in-food stack market.
We are going to have to do a little bit of work to regain our acreage, so crops like canola and soybeans can be bad crops for us to rotate simply because they are susceptible to sclerotinia, which is also something that sunflowers are.
The Deputy Chair: I have to put in a plug: One of the reasons I am interested in sunflowers is that the sunflower is the symbol of the Ovarian Cancer Association of Canada, and I am a big supporter of that. My wife is an ovarian cancer survivor. I am happy to see you are in the business, and I wish there were more people in the business because it would help draw attention to another issue.
There being no further questions, I want to thank our witnesses. It was a very interesting exchange, a different perspective than what we have had.
I am also glad to get an update on Summerland. I try to avoid being political when I am sitting in the chair, but I was very disappointed when I visited Summerland a few years ago to see the cutbacks that were happening, the labs left unused, but I was also very impressed by the work that had been done previously, and I sure hope that we can get back to developing things that are going to make us the world leaders we have been in product development and product innovation.
Mr. Lucas: The parking lot at Summerland seems to be fuller now than it was several years ago.
The Deputy Chair: That's good. In talking to people in the Summerland area and in talking to people who work there, one of the biggest disappointments that people have is the lack of care for the Summerland grounds.
It used to be a place people visited for its beauty and how well maintained it was, and I notice that the research station in Kentville, Nova Scotia, where I go on occasion, has been able to maintain the beauty of the grounds. It is much smaller than Summerland. I don't know how they do it, but it adds so much to the community in the small town of Kentville, and it used to be a wonderful tribute to the hard work of the people at Summerland when it was maintained that way.
Anyway, I am off on a tangent.
[Translation]
Senator Dagenais: I have something to add, Mr. Chair. Obviously, we avoid politics in committee meetings. We also can't say that we will find a better solution. I think that, overall, any success is owed to our producers, regardless of the governments in place, and that we need to trust the producers. Things will pick up again in that sector or fade out. I think we have to trust the people.
The Deputy Chair: Exactly.
Senator Dagenais: I know it's what you meant to say, but I found a way to say it.
[English]
The Deputy Chair: It is not the first time he has done that.
Thank you. We stand adjourned until 9 a.m. tomorrow.
The committee adjourned.