Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 12 - Evidence - Meeting of May 31, 2016
OTTAWA, Tuesday, May 31, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 5:03 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Honourable senators, I declare this meeting open.
Welcome to our guests. My name is Senator Maltais from Quebec, and I would like to ask senators to introduce themselves.
Senator Mercer: I'm Senator Terry Mercer from Nova Scotia.
Senator Beyak: Senator Lynn Beyak, Ontario.
Senator Unger: Betty Unger from Edmonton, Alberta.
[Translation]
Senator Pratte: Senator André Pratte from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Before I introduce our guests, I would like to say a special "thank you'' to Senator Mercer who replaced me for two months as chair of the committee. Thank you very much, Terry. You did a very good job: I saw you on the TV in my hospital room.
[Translation]
I would like to extend a special welcome to Senator Pratte from Montreal, who is a new member of our committee.
Today, we are going to hear from people from Quebec and Canada, because this issue affects New Brunswick and other provinces. From the Conseil de l'industrie de l'érable, we have Eliot Levasseur, Vice-President, and Daniel Dufour, Director General. Welcome, gentlemen. Mr. Dufour will speak first. We have 60 minutes, so the shorter your opening remarks are, the more time the senators will have to ask questions about this very interesting topic. I would also like to welcome our colleague, Senator Tardif.
Daniel Dufour, Director General, Conseil de l'industrie de l'érable: Good evening, senators. We are pleased to be here today. Our brief will be presented in two parts. I will provide a brief introduction of the Conseil de l'industrie de l'érable. Eliot Levasseur, who is President of the CIE, as well as Vice-President of Decacer, will be able to expand on the issues we are concerned about.
By way of a brief introduction, the Conseil de l'industrie de l'érable got started back in 1966, when the Fédération des producteurs acéricoles du Québec was created. The processing industry as we know it today with authorized processors-buyers and producers began operations around the same time. In 1989, the maple syrup producers adopted a joint plan, a legal tool that enables Quebec farmers to organize the marketing of their products. Once it is in place, they can develop regulations and collectively negotiate the marketing conditions for their products with buyers, who are represented by the CIE, which I will speak about a little later.
Nineteen ninety-eight was the first year that the maple industry marketed maple syrup according to the provisions of a marketing agreement between the maple syrup cooperatives and a group of buyers under the maple syrup producers joint plan.
In 2002, the Conseil de l'industrie de l'érable — previously known as the Conseil de l'industrie acéricole — was established, bringing together the authorized buyers of maple syrup. That same year, the maple syrup producers adopted a sales agency regulation to centralize all sales of bulk syrup. An agreement on the marketing of maple syrup sold in bulk was negotiated with buyers in order to govern classification, pricing, quality inspection, processing, labelling, storage, offering for sale, shipment for sale purposes, transport, penning, sale, and so on.
In 2005, the CIE became a member of the Conseil de la transformation alimentaire du Québec, which brings together a dozen affiliated associations, including the CIE and associations in the poultry, alcohol, bakery and other sectors.
In 2010, the CIE was accredited by the Régie des marchés agricoles et alimentaires du Québec to represent all authorized buyers in Quebec more formally. The objective of CIE accreditation is to represent all authorized buyers, which numbered 67 in 2015, and is close to that number this year.
They purchase and process maple syrup in various forms, including syrup, butter, sugar, flakes and so on, across Quebec, for purposes of negotiating a marketing agreement with the federation. Since 2013, the CIE has also included authorized buyers of maple water.
The main objectives of the CIE are to promote harmonious marketing, to promote and defend the interests of the industry, to represent its members, to establish a policy on commercial quality standards — a topic that concerns us — to establish mechanisms for exchanging and disseminating market information, to promote greater transparency in pricing, and to promote innovation.
I will give you a brief legal context. You know that there is legislation on marketing agricultural products in Quebec, known as the Act respecting the marketing of agricultural, food and fish products. Article 60 of the act defines the limits on marketing. No board of producers may trade or engage in the processing of the product targeted under the plan it administers. It is the buyers-processors who market the product. The Fédération des producteurs acéricoles do the generic marketing of products for the producers.
Who is an authorized buyer? Any processing and sales enterprise that receives syrup from a producer, in accordance with the regulations and the agreement. The federation has absolute authority over the annual accreditation of these buyers and thus, paradoxically, determines which companies will be represented by the CIE. So we do not decide who will be a member of the CIE; it is the federation that decides who has authorized buyer status.
Lastly, I would like to talk about exports. Canada is the world's largest exporter of maple products, with exports valued at almost $360 million in 2015. Canada exports to 58 countries, representing about 77 per cent of the world market. Most of the exports are from Quebec, comprising 94 per cent of Canadian exports. That is a significant portion.
The main export markets in 2015 were the United States at about 64 per cent, Germany at 8.6 per cent, Japan at 7.3 per cent, the United Kingdom at 4.5 per cent, and France and Australia at 3.4 per cent each.
The CIE also represents buyers of maple water. An initial pilot project was conducted in 2013-14 by three companies. Today we represent six authorized buyers of maple water, a product that is gradually taking its place on the market.
What is also important to understand is that buyers who are CIE members purchase 85 per cent of Quebec's maple syrup. People often think that the federation sells the products in 58 countries around the world, but it is actually the authorized buyers who buy 85 per cent of the product, sell it and develop these markets. The federation did generic promotion, but the marketing itself is done by CIE members.
I will turn things over to Mr. Levasseur, who will talk to you about the issues of authorized buyers-processors.
Eliott Levasseur, Vice-President, Conseil de l'industrie de l'érable: Good evening and thank you to all the committee members for taking the time to listen to the Conseil de l'industrie de l'érable which, as Daniel just mentioned, brings together 85 per cent of authorized buyers who process maple syrup from producers in Quebec, New Brunswick and Ontario.
We targeted five issues for the CIE, the first of which is supply. We think the industry must be able to rely on a sufficient quality and quantity. We also need to maintain a strategic reserve in case there is a bad season.
The issue regarding quality and production is that producers must obtain a quota in Quebec to produce maple syrup. The strategic reserve is controlled by the Fédération des producteurs acéricoles du Québec. The federation controls these three aspects.
The CIE wants its place in all of this. Of course, we are consulted to find out whether taps should be added or production increased and about quality and the strategic reserve, but we do not have a say beyond that. We are consulted and we are asked to do what they decide. That is the way it works.
Since we represent 85 per cent of maple syrup purchases in Quebec, we would like to have a say and take part, together with the federation, in decisions about the quality, production and strategic reserve, which is controlled by the federation.
Our second issue concerns the importance of paying the right price to producers so that Quebec companies can continue to compete with American companies.
You are no doubt aware that a study on American production was commissioned by the federation and the Conseil de l'industrie de l'érable in 2014. This study concluded that American maple syrup production is increasing rapidly. A certain volume was produced mainly in Vermont previously, but in the last five, six, seven or eight years, we have seen an enormous increase in maple syrup production in the United States. What's more, they do not have a quota the way Quebec does. These producers and processors have an advantage because they do not have to pay a minimum price, like Quebec does.
Much has been written about this study. It has been updated twice, each time confirming that the Americans are producing more and more. This morning, a press release informs us that total production in Quebec in 2016 is 148 million pounds, an unprecedented all-time record in Quebec. In the United States, the volume is 40 million pounds, but the calculation mechanism used is probably less valid than in Quebec. The harvest may be 50 million pounds.
Production in the United States represents about a third of what Quebec produces today, in terms of farm production. We have a little luck right now with the favourable exchange rate, and the Americans are continuing to buy from us, but the fact remains that, if they decide to drop Quebec, if they end up becoming self-sufficient — it is happening, and that is their goal — we will be very vulnerable. It is a major market. Daniel gave you the statistics that close to 64 per cent of what we export goes to the United States.
To counter this issue, which we call the American threat, we need to find a way with the federation and the Conseil de l'industrie de l'érable to establish a price formula. Depending on production, the formula is not determined. A price formula needs to be determined as quickly as possible because the Americans are very quick. We have been talking about this for a year and a half.
As I said, things are going well right now because of the exchange rate, but we cannot do business on that basis. We have to get moving and find a formula to stabilize the price, higher or lower, and to have access to the strategic reserve that the federation holds so that the Americans do not dip into as they see fit.
I will not read the full brief because you have a copy of it, and our recommendations are very well explained in it.
Our third issue is quality, traceability and the Quebec and Canada brand. There is no way around it today, and quality is the prime issue. Traceability is the topic of the day. It is important to maintain the quality or even improve it, both at the farm and in our factories.
Therefore, we recommend improving programs that are already in place to help companies keep up with certifications so that they can get access to financing to continue exporting around the world.
Our fourth issue is financing to support the efforts of the industry and the strategic reserve. The federal government is already taking part; there is a Canadian maple industry advisory committee that includes New Brunswick, Quebec, Nova Scotia and Ontario. Quebec and the federation manage funds paid by the federal government and are responsible, based on approval from the advisory committee, for investing these funds in generic promotion. So the federal government funds a portion of this generic promotion.
We recommend maintaining this funding and even boosting it since the programs have been cut in half in the last two years. In our opinion, it is important that the federal government improve these programs to help us conduct generic promotion around the world.
The strategic reserve is currently self-funded by federation producers. Federal-provincial discussions have been held to find common ground whereby the federal and provincial governments could fund this reserve, so that Quebec producers would be paid 100 per cent, given that they have a quota system. This proposal is being discussed currently, at the federal-provincial level, I believe. So this is another of our recommendations.
The last issue is one of the most important and has to do with fair business rules for everyone. On March 8 of this year, your committee heard from representatives of the Association des érablières-transformateurs. This group includes maple syrup producers who process their product on the farm. These producers work on the farm and sell at the farm gate, and directly in grocery stores in their region and a little in chains through intermediaries but, in reality, they have been competing with us directly on the international markets for the past four or five years. These producers do not have to pay the minimum price imposed by the federation under the agreement. So they can sell their production on export markets at the prices they choose.
We see nothing wrong with producers who process their own product at the farm and sell at the farm gate, on the contrary. However, we must state in our recommendations that producers be supervised or that they have a sales territory to prevent them from selling maple syrup from their sugar bushes on international markets. They found a way to skirt the system by grouping sugar bushes, by renting the sugar bushes of neighbours to create more volume, to have more maple syrup and to sell it to export. What they are doing is legal, but they are skirting the system a bit.
As for us, we have to respect a minimum price set by the agreement. We are buying the syrup, and we are in competition on the markets, when they arrive with maple syrup without a minimum price and compete with us. This situation is unfair on international markets. This is not about limiting this group. We can give them a territory so that they can sell their production in a specific territory, but as soon as they export or exceed their production volume at their sugar bushes, they should pay a minimum price, like we do. They will then be welcome on the international markets and will be able to compete with us, no problem. We can live with that because the market is the market.
The Chair: Thank you very much, Mr. Dufour and Mr. Levasseur. That shows you the importance of our committee. In our report, we will be studying international market access for the Canadian agricultural sector. There is a direct link with what you have just said about the United States, which is still a huge market, but which in coming years may perhaps tend to reduce their purchases in Quebec and in Canada. The committee is focusing on access to new markets and our report will be along those lines. I imagine that is the direction that committee members will be taking in September when we table the report.
[English]
Senator Mercer: Gentlemen, I'm interested in the potential here. You said there are about 42.5 million taps currently, and that annual production will increase by about 5 million taps to be planned for the next five years, which would bring the number up to 67.5 million taps. That's a lot of taps.
What is the potential? Would all of those extra taps be in Quebec, or would there be some in New Brunswick, Nova Scotia and Ontario?
[Translation]
Mr. Levasseur: Those 5 million new taps are in Quebec only. We are currently operating 43 million taps and syrup has been in short supply for two years. This season, the production was historic, and that was great, but we and the federation asked the Régie des marchés agricoles for those additional 5 million taps for the 2017 season. That makes 47 million to 48 million taps in operation. Quebec has the potential for 100 million taps in total.
New Brunswick has no federation, so they are able to increase the number of taps however they like. On public lands, naturally, there are still moratoriums in New Brunswick and Nova Scotia, and in Ontario too, I think. But there are no limits as to the number of taps they can add across the provinces and in the United States.
[English]
Senator Mercer: It doesn't matter how many taps you have if you don't have a market to sell syrup.
You said that currently 63.7 per cent of your exports are going to the United States, 8.6 to Germany, 7.3 to Japan, 4.5 to the United Kingdom and 3.4 per cent to France and Australia.
That's a widely dispersed market, other than the 63.7 per cent. As you know, Canada is involved in two free trade agreements — the TPP and the Canadian European Union agreement — that are yet to be ratified.
Do you see a potential there for us? Is that what's driving your annual production increases of 5 million taps a year for the next three to five years?
[Translation]
Mr. Levasseur: Partly, yes. We cannot wait for the agreements to be ratified so that we will be able to remove the tariff to the country in question. Certainly, we look at that opportunity with optimism, and, by the way, we are very anxious for that to get settled. However, in terms of the 5 million additional taps, we are still hesitant about some markets, and, as processors, we have put on the brakes, if I may use that expression.
We have a federation that controls production in Quebec and we depend on it. For example, in the last two years, 2014 and 2015, our syrup was a little darker. The inventory of lighter syrup dropped to zero. Yes, we had syrup, but basically we did not have what the customer wanted. That is why we increased the number of taps in an attempt to rebuild the stocks and to create a stable supply of all grades of syrup in the federation's inventory and in our own personal inventories as processors.
As for our request for 5 million taps, we should be getting an answer shortly from the Régie des marchés agricoles. But the syrup is already sold. My competitors can speak for themselves, but last year, we were short of syrup.
[English]
Senator Mercer: Sold where? You said you think the product from those 5 million taps could be sold, but where? Would exports continue to be at the heavy end of 64 per cent to the U.S.?
[Translation]
Mr. Levasseur: There is slight growth in the United States, but in Europe, the growth in the last three years has been more significant. So we have the European market and we know that the partnership should be in effect shortly. We are making marketing efforts in those countries and there is still room. Last year, speaking personally and for some of my competitors, we did not turn down any orders, but we were forced to curb the enthusiasm of clients who were asking for syrup, because we did not have enough. Those 5 million additional taps are not a problem for us. We also want to plan three to five years ahead. We do not want to be limited to those 5 million taps. If we succeed in selling the syrup next year and if the federation does not add taps, what are we going to do? Our growth depends on the taps the federation adds. That is my first challenge, for the CIE to be part of the federation's decisions in this case.
[English]
Senator Mercer: I understand your desire to increase the number of taps and your sales. You are also worried about the price, if I heard you correctly, particularly in the United States. It would seem to me that if your concentration of market expansion is not in the United States but elsewhere — the European Union and the countries in the Trans- Pacific Partnership — that that would help you keep the price at a respectable level. If you're competing well with the Americans in the international market, that is also going to keep the price favourable in the United States as well.
Am I reading this correctly?
[Translation]
Mr. Levasseur: At the moment, the United States base their prices on those in Quebec, but economic variables, such as the favourable exchange rate, for example, make it all work.
The fact remains that, with the minimum price of syrup bought in Quebec, Americans getting into another market could try to lower their prices and gain market share. At the moment, the Americans mostly stay in the United States. They are beginning to eye markets in the United Kingdom, Europe and Australia. They are not really a presence in Japan. They are not a presence on markets other than their own.
[English]
Senator Mercer: In the other markets besides the American market, is the Canada brand a good marketing tool? The maple leaf on it distinguishes itself from any other supplier: It is from Canada.
[Translation]
Mr. Levasseur: Yes, that is quite true. If we go to Japan, the Japanese will certainly buy maple syrup from Canada rather than from the United States. The same goes for Europe. In France, they really like Quebec's logo. The Canadian logo, the maple leaf, allows us to set ourselves apart from American maple syrup. Some American states know that maple syrup also comes from Canada, not just from Vermont.
Senator Tardif: Thank you for your presentations.
We have been fortunate to hear about the maple industry from three groups. You expressed different points of view, and I am trying to understand your comments. According to the Association des érablières-transformateurs des produits de l'érable, there should be no quotas in Quebec, the only province to require them. Given that situation, Quebec is stagnating, and the Americans are taking over a greater share of the market. That is what you indicated to us.
Then, the Fédération des producteurs acéricoles du Québec declares that the current quota system must be preserved, because it ensures stability and development.
Finally, if I understand correctly, the Conseil de l'industrie de l'érable wants to improve the existing system to make prices more flexible. You also talked about a common development strategy.
How can we reconcile these different opinions? To what extent do they prevent you from being competitive? In addition, what can the federal government do to support the development of competitive markets for maple syrup?
Mr. Dufour: Your question is not easy to answer. Some members of the Association des érablières-transformateurs des produits de l'érable are also members of the Conseil de l'industrie de l'érable. They market their own syrup, but, as they stated last March, when there is a shortage of syrup, they put on their authorized buyers hats and acquire syrup in the same way as any other authorized buyer. Either way, they end up getting lower prices. They also have their own syrup.
We have taken a position. We sent out a bulletin to explain our position with respect to the quota system and to the submission of the Gagné report. We have to all sit down together to find solutions, something we have not succeeded in doing to date. We certainly support quotas as a way of avoiding chaos in the system in the short and medium terms. But we believe that it has to be modernized. As Mr. Levasseur explained earlier, the number of taps has been stable at 43 million for five years, with a price that jumped in 2008 and has never gone down since. As processors, we would all like that increased price to be maintained.
We also have to make sure that the pricing system is more flexible. The federation seems to be doing a good job, but the system is a little rigid. Ways of making the system more flexible could be found.
Mr. Levasseur: You were wondering what steps the government could take to come to the assistance of the industry. We have held discussions and negotiations between the three parties, but it is our responsibility to find solutions. However, the government must continue its efforts to help the industry. We may criticize the federation but it has helped with brand promotion through allocations from the federal budget. Processors have ridden the wave of research and development that discovered the health benefits of maple syrup. A number of studies will soon be published, including on the glycemic index. These are federal funds managed by the federation to help with investments. So it is important for the government to maintain and increase this financial assistance.
The quality of the product must also be considered. If we don't have quality control, the price can go down. The producer-processors collect the syrup on the farm and sell it. As authorized buyers, we buy the syrup, which is then inspected and graded by a third party. We buy it at the fixed price. The inspectors decide whether the product is of good quality or not. At that point, if we start selling maple syrup of lower quality, the situation will go on for up to five years. Basically, the customers decide if they are going to buy maple syrup or honey. In the partnership between the CIE and the producer-processors — you probably do not see things the same way — we have to maintain that system of quality. The government must continue to play an active role in research and development and in promoting maple syrup as a brand.
Mr. Dufour: We try to work closely with the federation on development. I went to London last January as part of a very worthwhile promotion activity organized by the Canadian High Commission. We feel that they cannot get enough maple products in Great Britain. We are working in ever-closer partnership with the federation, which looks after overall promotion. We bring the products to market. Clearly, we have to be able to count on the assistance of the federal government. The industry needs considerable funding. The Government of Canada has invested a lot of money, about $10 million, for five or six years. The government has invested $10 million and the industry put in an equivalent amount.
Senator Tardif: Have you received government money?
Mr. Dufour: Our advisory committee, made up of the four producing provinces and federal government officials, decide how the government money will be spent.
Mr. Levasseur: Those amounts do not go directly to companies. All the provinces come to an agreement on how the funds will be invested, such as in which country or in which market. We do not decide. We have ways of finding government funds in order to promote our products, but those sums of money are managed by the federation. The federation also keeps track of our comments, through the federal advisory committee.
Mr. Dufour: We are aware of the importance of social media. The federation is doing a remarkable job to promote the brand and the products through social media, and that also benefits the processors.
Senator Pratte: Let me make sure I am following you. One part of your presentation deals with your relationship with the federation, which can run hot or cold. This is an area where the Government of Canada cannot do a lot.
I would like to bring up the matter of the strategic reserve with you. I am new here and I am no expert in agricultural matters, although, like a lot of people, I do like maple syrup.
You seem to think that the Government of Canada can play a role in the strategic reserve, specifically by funding it. You mentioned negotiations that are apparently going on at the moment between the provincial governments and the federal government. Could you tell us a little more about that?
Mr. Levasseur: Certainly negotiations are currently going on between the federation, the federal government and the provincial government. As processors, we are not involved in the negotiations. It is not a matter for which processors are responsible, although it affects us greatly. It is really the federation that heads all that up.
My comment is tied to the fact that the federal government waited for a number of months or years before becoming involved. It seems that the federal government is now ready. The provincial government said to wait until the federal government was ready, but it has contradicted itself in recent months. There is not a lot left to fuss about on the federal side; the provincial side still has a little work to do if it wants to end up finding a solution.
We do not have the details, we have been cut out of the matter, but it would seem that there has been some openness recently on the federal government side.
Senator Pratte: The problem is that self-funding was not enough to be able to fund the strategic reserve.
Mr. Levasseur: It is supported by the producers. Yes, they have a set price, but they are paid as a function of their current year's sales. There is a formula by which unsold syrup is not paid for. Producers are paid perhaps 75 or 80 per cent. The reserve went down a lot last year, and if a mechanism could be put in place between the federal and provincial levels so that producers could be paid 100 per cent for each pound of syrup they produce, that would get rid of a lot of the problems and it would solve the problem for one part of the producer-processors. They wear two hats: when the situation is not to their liking, they sell the syrup and get $3 per pound, and when the situation is to their liking, they come into our markets and reduce the prices. When that no longer works, they sell their syrup to the federation in barrels for the year in question, because it is more advantageous for them.
If the producers were paid 100 per cent, perhaps there would still be producer-processors who would sell on the farm in a specific area of Quebec. But they would not perhaps resort to exports to sell their syrup and deliver it to the federation because they are paid. I have been discussing this issue with the federation for years. I am not up-to-date on the details, but we have to find a way of funding that reserve so that producers are paid 100 per cent and do not sell their syrup themselves in a country without having it inspected and graded by a third party. That would prevent low- quality syrup finding its way back into our markets. Funding the reserve is important.
Senator Pratte: Do I understand that non-Canadian buyers have access to the strategic reserve? In other words, could an American processor, for example, buy maple syrup from Quebec's strategic reserve?
Mr. Dufour: Absolutely, if there is a shortage.
Mr. Levasseur: If they have a bad season, the U.S. processor lacking syrup could buy syrup from the federation at the same price as the Centre ACER, which has paid the federation for 17 years and supports it. Processors have volume limits, but they still have access to the reserve, whether or not they are authorized buyers.
Senator Pratte: There is no priority mechanism so that a Canadian processor would have priority over the U.S. processor.
Mr. Levasseur: We are in talks with the federation to set limits, but there is always the fact that we cannot impose limits on the U.S., in light of the rules of competition. Of course the federation wants to sell its syrup, but I think it is starting to understand that we must find a mechanism to provide access to the first buyer from Quebec before granting access to foreigners. Someone from Japan could buy syrup from the reserve and send it to Japan in a barrel. Tomorrow morning, if I were from Japan or Germany, I could buy the syrup in barrels directly from the federation, package it at home and create jobs elsewhere, unfortunately.
Senator Dagenais: Gentlemen, thank you for your presentations. I would like to turn to export and talk about the future.
You mentioned that our U.S. neighbours are very important, because they buy nearly 64 per cent of our syrup production. However, I must tell you that this is still a dangerous concentration, because 64 per cent of sales are to the United States. You say that Americans are very aggressive on the market. This means that the increase in production by the Americans may seriously affect the trade capacity of producers here.
What other options are available elsewhere in the world to liquidate your merchandise? Do you think you could offset a significant drop in the demand from the U.S.? Knowing the Americans, who are self-sufficient in oil now, they can probably do the same with other products, and they will.
Mr. Levasseur: As part of the study done in 2014 by Forest Lavoie, as we mentioned in the brief, there is a joint action plan between the federation and the Conseil de l'industrie de l'érable that will make it possible to set up a mechanism. We have already started to address the U.S. threat on several fronts. Things are not moving quickly enough for entrepreneurs, but perhaps they are for the federation.
The problem has to do with the rate of implementation, but there is still an action plan now to deal with the threat. We need to find a price formula, to develop new markets, and to focus on the quality, grading and inspection of syrup.
There is also the whole issue of Canada's logo in Quebec, depending on the market we are talking about. There is also the issue of health benefits, research and development, and the advisory committee I mentioned earlier in relation to the investment of federal funds. In practical terms, the fact remains that there is a lot of work to do, and that we must prepare for it. The U.S. threat is also a fact.
Mr. Dufour: To add to that, if I understand the question Senator Tardif asked just now, this may be where the Government of Canada could support the industry, because, if we want to develop attractive markets, there are costs attached to it.
We were talking about the advisory committee whose funds were cut in part. There are still some left, but perhaps things need to be reversed and the funding should be increased to help us develop other markets.
Senator Dagenais: We know that the success of Quebec producers depends on the two factors you mentioned: minimum prices with which producers in other provinces may not agree, and the low Canadian dollar.
How long do you think you can last in this kind of situation, which is somewhat artificial? You said we could not always count on the dollar. How long do you think you can stay the course in this kind of situation, when it comes to international trade? That is where you need to go.
Mr. Levasseur: Time is one thing, but we cannot assess how long it will take the Americans to push and pull ahead of us. As entrepreneurs, we invested $8 million in our plant. Yes, Quebec has this whole system, but at the Centre ACER, we are the first ones to support this system and to buy in Quebec.
We must not forget that we can buy in the United States and set up plants there. This is not a threat, but the system might not give us a choice. Some have already started to explore the possibilities of buying a warehouse elsewhere. When I say that the action plan is not being developed quickly enough, that is both a concern for me personally and for the industry. With time, I could not say, but the fact remains that our advantage right now is the quality, the Canadian flag, the reputation. We have been around for a long time and know the market, but Americans are very quick to act. Will it be in five or 10 years? We do not know. That is why we are putting pressure on the current system. We do not want to eliminate it, but we want to fix it to be able to face this threat.
[English]
Senator Unger: Gentlemen, I will be honest. I'm from Alberta, but I'm finding this very confusing. Maybe you could explain if I have misunderstood you.
Why do you allow other countries access to this strategic fund? I do not understand that. The other part of this is, if that's the case, why would the government give money to something that others can access?
[Translation]
Mr. Levasseur: First, the strategic reserve is not dependent on the Conseil de l'industrie de l'érable. This is the first issue I had mentioned. We cannot do anything about that. It really is the federation. We are told: "This is our syrup, our business, stay out of it.'' We cannot get involved, but we are trying to put pressure on the federation to limit access to the reserve.
You are absolutely right when you say that the money for marketing is benefitting the Americans. That makes no sense. Nevertheless, the CIE has no control over the reserve.
Mr. Dufour: I told you from the outset that the federation is the one that decides who can be an authorized buyer. The important thing is to have a business place in Quebec. It can be a warehouse or anything, it can be a small sugar bush, for example, and you automatically have the authorized buyer status in Quebec, just like a company based here, that hires employees in Quebec and processes the product in Quebec, in Canada.
What Mr. Levasseur said is true. We are not the ones defining the authorized buyer status. You should perhaps ask the federation, but it is true that this sort of thing makes no sense.
[English]
Senator Unger: That puts you in a very precarious situation, and you're afraid of what the Americans might or might not do.
The Canadian industry must ensure that maple products found on shelves of foreign retailers are actually Canadian. It's crucial for protecting consumers' rights as well as the image of the maple syrup industry in Canada.
Have you found evidence of this that you have been able to identify?
[Translation]
Mr. Dufour: The Quebec industry — I mean the sector, the federation and the Conseil de l'industrie de l'érable — is carrying out a pilot project right now; during our trips around the world, we bring samples back to Quebec. I brought some from England. We have them analyzed at the Centre ACER to know if the product has been altered. Perhaps we can talk about it at the end of our project.
We have no evidence right now, but we are doing this preliminary study to know what we are dealing with. That is a good question.
[English]
Senator Unger: Is there any evidence of China using the Canadian label on their maple syrup?
[Translation]
Mr. Levasseur: That is what our oversight is going to let us find out, whether there are fake maple syrups or even pure maple syrup that could be bought from the United States and carry Canada's brand. Right now, I have gone around or almost around the world and I have yet to see products from China that might be copying or presenting fake syrup with the Canadian logo. We have not seen this yet, but it could happen. We will find out the results of our oversight in the summer.
Mr. Dufour: Once again, the federal government's assistance will be important, especially if we find that the products have been tampered with abroad.
Mr. Levasseur: We need the federal government's assistance, not necessarily in financial terms.
Mr. Dufour: Yes.
[English]
Senator Beyak: Thank you, gentlemen. We all love maple syrup. Do you have the capacity to supply other countries with all these new free trade agreements?
Do you have a marketing wing? In tourist shops all across Canada we see the little sugar maple leaves, and I was thinking of how popular it would be in other countries to have a logo of their country or flag. I'm thinking of Brussels and the little mannequin fellow. Have you thought about that on the marketing side, and do you have the capacity to do it?
[Translation]
Mr. Levasseur: Are you thinking of a bottle of maple syrup with Belgium's logo, for instance? Is that what you mean? Perhaps that would be a marketing strategy, but, right now, on markets, the maple leaf is much more popular than the flag of another country. People truly identify maple syrup with Canada, perhaps not in the U.S., but everywhere else.
I have an importer in France who insists on the colour of Quebec. He wants the Canadian flag or Quebec's flag, not the French flag. Since the product is from somewhere else, why place the French flag on it? That is the question they are asking. It is more a marketing decision. Perhaps attempts have been made, but for now, maple syrup comes from Canada or Quebec.
[English]
Senator Beyak: I'd want to always keep the Canadian flag on it for sure, so they would know where it's coming from. My thought was, to sell it to their people over there with something related to the local country to make them proud to buy Canadian, but to show off their country as well.
[Translation]
Mr. Levasseur: On the European markets, there are a lot of private brands, so, yes, some labels provide information about the history of maple syrup. However, they may want to replace the traditional image with a healthier image of purity.
Some store chains require a label different from the traditional Canadian maple leaf. However, they can write a little story on the label indicating that it is a Canadian product made from a sugar maple tree. The people there do not always know where maple syrup comes from. They need a few explanations.
The Chair: I have a final question before we adjourn. We know that maple syrup is a completely natural product, 100 per cent pure. Today, people are increasingly drawn to organic products, what we might call pure products. Why does the label not say "100 per cent organic''? That would not be more expensive.
Mr. Levasseur: This issue falls under the federal government's jurisdiction. We cannot put whatever we want on a label. In terms of the system in place today for the Canada medium product, we can write "100 per cent pure'', but we cannot describe it as "pure and natural'', because it is illegal. There is a whole range of rules on labelling. However, in terms of organic certification, we can write "maple syrup Canada number 1, medium, organic''; it is a requirement to write it on the label.
It is mandatory to write on the label that it is a pure product. In December 2016, four new categories will be added. The regulations have been approved and we have already started the transition to the new labelling, but once again, we will indicate "grade A, robust taste, dark''. This issue falls under a federal piece of legislation on labelling maple products. We cannot write whatever we want. On the label on the back of the product, we can write more of a story, but it is limited. If it is organic, we write it.
For some time, there has been a trend toward organic products. Between us, maple syrup is always organic, because it comes from a tree, but it still has to be certified by an organic products auditor to be allowed to write the word "organic'' on the bottle. That is the trend, and production is also tailored to the organic certification.
The Chair: Thank you very much, Mr. Levasseur, Mr. Dufour. Your testimony before the Senate Standing Committee on Agriculture was very useful for the senators, and I am sure that we will consider your recommendations in the final report that needs to be submitted and published in September. Your claims are the same as many others in agriculture, whether in the potato, chicken, egg or other industry. One feeling is that access to the international market is essential in the coming years, for all types of production in Canada, specifically for refined products such as maple syrup.
We must never forget that it is a luxury product and it must be sold as such. Maple syrup cannot be sold like sugar syrup or corn syrup, but as a luxury product; that is the strength of the maple syrup market on international markets.
Mr. Dufour: I am available. Since I have a permanent seat on the Conseil de l'industrie de l'érable, if you ever have other questions, do not hesitate to contact me, and I will be pleased to provide you with an answer.
[English]
The Deputy Chair: Back, by popular demand, is the deputy chair in the chairman's seat.
I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Senator Terry Mercer, and I am from Nova Scotia and the deputy chairman of the committee. I would like to start by asking my colleagues to introduce themselves, starting on my left.
Senator Beyak: Senator Lynn Beyak from Ontario. Welcome.
Senator Tardif: Claudette Tardif from Alberta.
Senator Unger: Betty Unger from Alberta.
Senator Pratte: André Pratte from Quebec.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Deputy Chair: Thank you, colleagues.
Today, the committee is continuing its study on the international market access priorities for the Canadian agricultural and agri-food sector. Canada's agriculture and agri-food sector is an important part of Canada'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, 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 agreement negotiations are ongoing.
The federal government is also undertaking four exploratory trade discussions with Turkey, Thailand, Philippines and the member states of Mercosur, which includes Argentina, Brazil, Paraguay and Uruguay.
Tonight we have with us, from the Canadian Chamber of Commerce, Mr. Ryan Greer, Director, Transportation and Infrastructure Policy; and Ms. Adriana Vega, Director of International Policy.
Thank you for accepting our invitation to appear.
I'm going to invite the witnesses to make a presentation and then, following that, we will go to questions from the senators and, hopefully, good, succinct answers from our witnesses. We would hope that your presentation would be no longer than 10 minutes. That would allow us to have more interaction with my colleagues around the table.
Mr. Greer, I believe you are going to start.
Ryan Greer, Director, Transportation and Infrastructure Policy (The Canadian Chamber of Commerce): Thanks to the committee for inviting the Canadian Chamber of Commerce to participate in your study on international market access priorities for the Canadian agriculture and agri-food sector. We applaud the committee for undertaking such a timely study and are impressed with the wide range of representatives and industry experts that you've had at this table so far.
I would like to focus my brief remarks on some competitiveness issues affecting the export posture for the sector in the context of Canada's trade agenda.
I'll start by saying that the Chamber is a strong supporter of Canada's new trade agreements. We're pleased to see CETA getting to the finish line, and we continue to encourage the government to ratify the Trans-Pacific Partnership.
In fact, our president and CEO is in Paris today talking to French leaders about the benefits of CETA to both of our economies.
As you alluded to in your remarks, Mr. Chair, Canada's agriculture and agri-food sector is one of the most trade- dependent in the world. As you've heard from many at this table, Canadian producers and food manufacturers cannot afford to be outside of new multilateral agreements such as the TPP, both in terms of accessing new markets and maintaining the growing share in our existing markets.
We believe that the federal negotiating strategy for CETA and TPP has been appropriate and that Canada should have access to these markets, but not at any cost.
Access to markets is only one piece of the export puzzle. There are a series of issues related to the sector's competitiveness that must be considered within a whole-of-government approach to put Canadian producers and manufacturers in a position to thrive in these markets.
The first issue is one that the Canadian Chamber profiled in our 2016 Top 10 Barriers to Competitiveness, which is that new free trade agreements must be accompanied by parallel policies to help our farmers and food manufacturers overcome hurdles selling in new markets. I think you heard some of that from the previous witnesses and others who have been at this table.
We have many existing programs and services already, but some of these need to be correctly oriented so that the sector can take advantage of these new opportunities.
AAFC provides a number of good business development services, but there is more that can be done.
For one — and this was touched on in your previous presentation this evening — we should look at improving and unifying Canada's agricultural brand abroad. As has been discussed here, a foodstuff made or grown in Canada has a very positive reputation but at this point there's no real umbrella brand that our food exporters can take better advantage of.
When it comes to the iconic maple leaf, there are many versions of it that show up on different kinds of Canadian products, but there's not always a brand unity that would be beneficial to some of our exporters.
Second, the government should look at providing single-window access to all trade promotional services across government. These trade promotional agencies do fantastic work, but small- and medium-sized exporters in particular may not have the time or the ability to navigate through all the complexities of accessing these services.
Lastly, the government should ensure that the Trade Commissioner Service has the resources to maintain capacity and provide timely, consistent and effective services to their private sector and government clients, especially in light of these new trade agreements.
In addition to these measures to strengthen economic diplomacy, we recommend that the government prioritize efforts to reduce non-tariff regulatory barriers. There are two fronts on regulatory cooperation: our initiatives to reduce "behind the border'' impediments to trade with the U.S., and with our international partners.
In 2014, $50 billion in agricultural trade crossed the Canada-U.S. border, so it is no mystery why we need to intensify efforts to align our agriculture and agri-food regulatory regimes. This is current being done through the Regulatory Cooperation Council, or RCC, which was launched between the two countries in 2011.
One example of a success under the RCC is that Canada and the U.S. have agreed to harmonize the terminology for wholesale cuts of meat. Beforehand, industry had to maintain separate inventories with two sets of names and terms for each country. This is only one small example across a large swath of regulatory differences, but it results in real savings for processors.
These kinds of successes also build regulator-to-regulator and industry trust for future cooperation to align our regulations in other areas.
Going forward under the RCC, the CFIA and USDA have a number of work plans in progress in the areas of animal health, food safety and meat inspection and certification, all of which stand to benefit the sector. We encourage the government to continue to make this work a top priority so that we can continue to improve competitiveness as it relates to our most important market.
The RCC itself is at a relatively early phase, but the best practices that Canada imparts from it will be crucial to moving forward within the regulatory cooperation chapters in CETA and TPP.
Regulatory chapters in these agreements are relatively new features of international trade agreements, as technical barriers to trade continue to emerge as the real tools of protectionism. We still don't know what regulatory cooperation under these agreements will look like in practice, but if it is done right it has a tremendous opportunity to benefit Canadian farmers and manufacturers by collaborating with our trade partners for regulations that are consistent, science-based and not domestically focused. We only need to look at some of the advancements in the area of biotechnology and how varying regulation across borders can inhibit both our domestic farmers and the supply chains that they try to integrate into.
International regulatory cooperation is, of course, far more of an immature undertaking than even our own regulatory cooperation with the U.S., but it will continue to increase in importance in this era of global supply chains. We encourage the government to use what has been learned through the RCC and aggressively pursue cooperation through these agreements so that our sector can effectively integrate into these supply chains.
The last two issues I'll touch on are domestic issues that impact the international competitiveness of the sector.
The first is that we shouldn't lose sight of how a more integrated domestic market can help the sector achieve greater exports. The patchwork of overlapping federal and provincial agricultural laws and regulations can put farmers at a disadvantage depending on where they are located in the country, and certainly hurt their export prospects.
One example of this issue is one that this committee has already studied, which is the restrictions on certain seed treatments that have been introduced in Ontario in response to concerns regarding the effect on bee health. The responsiveness and coordination of our federal and provincial regulatory regimes should be better aligned so that grain growers — or any producers — in all provinces are on a level playing field with their counterparts across the country through consistent science-based regulations.
This is particularly important when it comes to innovation in agriculture, a key ingredient in Canada's future as a global exporter. The ability of our sector to innovate in areas such as biotechnology is already constrained by the mismatched regulatory regimes across international borders. We should not be adding to this challenge through mismatches within our own borders.
The second domestic issue I'll raise is Canada's trade infrastructure. New export markets in the emerging global middle class and these new trade agreements that we have before us are a huge opportunity for our agricultural and agri-food sectors, but only if we can get our products to market in a reliable and cost-effective manner.
In recent years, the quality of Canada's roads, rail, waterways and other forms of transportation that we need to move our goods to market have been declining in international comparative rankings. A combination of domestic underinvestment, while our competitors are making major investments, stands to hurt our export opportunities if we do not reverse the trend.
As the recently released Canada Transportation Act Review found, the international competitiveness of our agricultural sector is directly linked to this infrastructure, and we highly recommend that trade infrastructure be a priority in the upcoming federal infrastructure plan.
I'll conclude here: The Canadian Chamber is very supportive of our new trade deals, but there are a range of competitiveness issues that should be focal points alongside these agreements' ratification so that our farmers and agri- food processors are in a stronger position to capitalize on these new opportunities.
The Deputy Chair: Thank you very much, Mr. Greer.
Interestingly enough, you mentioned bee health in your final two comments. This committee spent a very long time studying the importance of bee health to sustainability and food production in Canada, so we understand the importance of that. Some of the issues coming out of Ontario may have been a result of our study here.
Bee health is not something that Canadians were attuned to until people like us and the Government of Ontario brought it to their attention. It is very important for domestic food production and for our international products. Thank you for mentioning that.
I found it interesting that you are the Director of Transportation and Infrastructure at the Canadian Chamber of Commerce. I was waiting for you to talk about it: I am the deputy chairman of this committee but, when I put my other hat on, I am also the longest-serving member of the Standing Senate Committee on Transportation and Communications.
Our ability to produce our products is one thing, but our ability to get our products to market is another. A question I ask as often as I can, of people who have some knowledge of our infrastructure, is about our ability to get the product from the farm gate to the customer's front door.
We've had many representations, particularly from farmers in Saskatchewan who are trying to get their products to market. There are hundreds of empty containers going back to Vancouver on rail lines through, or not far from, their properties.
Has the Chamber given any thought, consideration or study to the proper management of railcars in the country? We're driving empty cars past farmers who want to ship their products. It doesn't make any sense.
Mr. Greer: Thank you for the question. We haven't done any specific work on containers and the management of containers in the rail system. We have done work on supply chains. We have done work on a number of issues relating to our export infrastructure and how we integrate into global supply chains and how we move all kinds of product, including that coming from Saskatchewan farms, to our ports and our international markets.
The problem you describe is part of a larger problem, which is that our supply chains function relatively effectively for the demand that they have now, but it is not always as smooth and as integrated as it needs to be. Certainly, our supply chains are not necessarily prepared for the demand that is coming in the future. We haven't studied that particular issue, but I think it's indicative of a larger problem in part of our supply chains that we need to be looking at it.
The Deputy Chair: Far be it for me to tell the Chamber of Commerce what to do, but, if you're looking for a study that would have a significant impact on international trade, particularly in the agricultural sector, this would be one.
I recommend that to you, and I would add to that the infrastructure of the port system in Canada, the major ports of Vancouver, Prince Rupert, Montreal and Halifax, and their ability to get there.
If you do take on that study, do not forget to analyze the labour situation in those ports. My colleagues would be disappointed if I didn't tell you that there has not been a labour dispute at the Port of Halifax since 1976, and that's why people should be thinking more about Halifax.
Senator Tardif: You indicated in your presentation that it was important to improve Canada's agricultural brand, that we did not have an umbrella brand and that we needed to have brand unity.
Yet, I'm surprised that you consider the Canada brand to be an impediment to competitiveness. I believe you indicated that the Canada brand was one of the top 10 barriers in your April 2016 report, or did I misunderstand that?
Mr. Greer: No. Yes, in our 2016 Top 10 Barriers to Competitiveness, we mentioned that Canada's overall business and tourism brand abroad could be strengthened.
Canada and Canadian goods and products are so well received overseas, and the fact is that we don't do a better job taking advantage of this. How we market both business opportunities and, I would argue, agricultural goods and services from this country could be better harmonized.
It is not the idea that Canada is a weakness, but certainly how we promote and use that brand to our advantage could be strengthened.
Senator Tardif: Thank you for that clarification. I was surprised because some of the stakeholder groups have said that it has been successful for them when they have marketed their products under the Canada brand.
Mr. Greer: I think that's the point. Some organizations, some groups and some goods and services have had tremendous success with it. Others, using similar or different types of branding, have not.
The opportunity for a unified brand that is still, of course, voluntary but something of an umbrella brand that different goods could fit under as they see fit might drive stronger brand awareness overall and some more consistency. It's finding what's worked best for some organizations. Maybe that comes into a unified brand that helps maybe smaller sectors or those who haven't had as much success fold under.
An example right now in Australia is Australian beef. It has had tremendous success marketing under the True Aussie brand in China and some other markets. It has been so successful that now other agricultural producers are trying to fold in or see how they can take advantage of that same brand's success. It's really just a matter of finding what works and seeing how that can be applied across the sector.
Senator Tardif: You spoke as well about the non-tariff barriers. We've been told that non-tariff barriers are often dealt with on a product-by-product basis.
In your opinion, could you use a blanket agreement that would deal with all of the products all at once, or is it necessarily the case that it has to be negotiated on a product-by-product basis?
Mr. Greer: It depends on which areas we're trying to tackle. For long-existing industries, with products or services whose regulations haven't changed significantly, it's harder to go back and retroactively align regulations that have been in place for a long time. When it comes to new product areas, it's much easier for regulators to cooperate and develop those in tandem.
Under the Regulatory Cooperation Council between Canada and the U.S., when it first started it was very much done on a product-by-product basis, in which stakeholders helped to identify 29 specific areas for regulators to try to find harmonization, many of which were agricultural barriers. There were a lot of successes, one which I mentioned in my remarks, but there were also areas where it was just too hard to get a foothold, too hard to get the regulations changed, too hard to drive harmonization or progress was simply slow. It took three or four years to make one simple fix.
The RCC has now reoriented itself to have more of a regulator-to-regulator focus. So, instead of being top down and saying, "These are 30 areas you need to work on,'' it's about creating greater relationships between regulators on both sides of the border so that they can have the people responsible for drafting the regulations and consulting on the regulations and who very much own the regulations on a working basis with their counterparts in the other countries so that it's easier to find areas where we can harmonize.
There is opportunity for greater harmonization if it's done on a more regulator-to-regulator basis. With these new agreements that have these new regulatory chapters in them, it's very much going to be about the relationship between regulators. It is not often a business organization would come before a committee and suggest that funds for civil servants to go to international meetings with their counterparts might be the best way to spend money but, really, sitting down and getting to know their counterparts one to one is the only way we're going to have success doing this. Top down, on a product-by-product basis, simply isn't enough.
[Translation]
Senator Dagenais: The low Canadian dollar will surely encourage trade relationships with certain countries in the coming years, including the TPP and the agreement with the European Union. How worried should our producers be about that? If they invest with a view to growth, based on sales projections on the dollar of today, they might be disappointed in five or 10 years. Could you elaborate on this situation, among others?
[English]
Mr. Greer: It's certainly something that producers need to be aware of when looking at selling into new markets, and their risk-management processes and financial processes had best be set up to look at a number of different scenarios in which the Canadian dollar isn't where it's at now.
At the same time, the low Canadian dollar, certainly for our agri-food sector, is providing tremendous opportunities for investments in new technology and new equipment. When the dollar maybe does find itself higher than it is now, they will have invested in that equipment that is going to give them a leg up in those markets.
Using the low-dollar environment to, for lack of a better term, make hay while the sun is shining, is not a bad thing. I think you are right that the operating environment — just ask the oil industry — isn't going to be the same or will never be guaranteed to be the same five or ten years out. Preparing for all circumstances will be important for the sector in how it prepares.
[Translation]
Senator Dagenais: I would like to hear what you have to say on the issue of barriers between the provinces. Tell us about the disadvantages of those barriers, to help us better understand the matter and to make recommendations in our report.
[English]
Mr. Greer: The Chamber has been a strong advocate for knocking down interprovincial trade barriers for quite some time. In our Top 10 Barriers to Competitiveness it has been on the list every year since we started making it.
There is an agriculture chapter under the AIT. It has been added to over years, but there are still significant gaps when it comes to regulatory policy. In a number of areas we're hindering the ability of our producers to sell within our own country before they even get a chance to consider exporting. If a producer or a manufacturer finds that it's easier to try to sell in Europe as opposed to try to sell in British Columbia, they'll do so. It might have been easier to try to find their legs going to B.C. before going overseas.
The federal government has said it's working with the provinces on a new agreement on internal trade. For the purposes of this committee, I would look at recommending that a comprehensive negative list approach is adopted when it comes to internal trade. Right now, the Agreement on Internal Trade is a positive list approach. It's the opposite of all our trade agreements in the manner that all of our current trade agreements, including CETA and TPP, are negotiated. Simply moving to a negative list that makes it transparent for what is excluded and, by default, including everything else — including agriculture — is the easiest and the most obvious solution.
Senator Unger: Thank you, for your presentation.
According to some witnesses, the Canadian handling and transportation system needs to be more flexible and efficient to improve the transportation of agriculture and agri-food products to ports abroad.
In your opinion, what factors could explain the current state of Canada's handling and transportation system?
Mr. Greer: Thank you very much for the question.
Overall, Canada has a relatively good transportation system, but it's all relative. As I alluded to in my remarks, in international rankings by the people who use these systems — shippers, providers and producers — Canada has steadily declined over the last seven or eight years in international rankings on trade infrastructure and overall infrastructure. Part of this is due to under investment here domestically, but also because our competitors, who see the importance of this infrastructure in getting goods to market faster and cheaper, have been making significant investments on their own.
From a Canadian perspective, when we look at the customers for our goods, they will be comparing how quickly our competitors can get there and how quickly and cheaply our competitors can get their goods to market, and they will grade us against that and use that to make their purchasing decision. When we look at forecasted future demands in Canada, there are some studies that suggest that by 2025 the demand on our transportation system will increase fourfold on certain bulk commodities. When we look at some of the strain that the system is currently already under there is a clear need for significant investment, not just in infrastructure overall but a strategic approach to finding where the bottlenecks are and investing in them.
The government had previously a number of programs to do this, including the Asia-Pacific Gateway and Corridor Initiative. This wasn't just about building more things. It was about working together between the federal and provincial governments and with private-sector stakeholders to collectively identify where bottlenecks are and invest along a particular corridor to help improve fluidity.
With more programs and approaches like that there is greater spending, but the coordination of spending will help unlock some of these bottlenecks and improve the competitiveness of the entire sector, which in these competitive new agreements will be very important.
Senator Unger: Would those be your recommendations as to how to improve things?
Mr. Greer: The federal government has a substantive new infrastructure agenda that it has announced. It includes significant commitments for green, social and transit infrastructure, all of which are, I think, badly needed. We would recommend that trade infrastructure not be lost in that conversation and that export infrastructure, that which contributes the most to the well-being of Canadians by increasing our collective wealth, be included in that plan.
The Deputy Chair: In a letter addressed to Minister MacAulay, dated December 10, 2015, the Canadian Chamber of Commerce highlighted increasing technology and productivity in Canadian food manufacturing as one of its four resolutions making up its three-year national policy mandate. Throughout its study, the committee has heard about the problem of labour shortages hurting agriculture and agri-food businesses and their growth prospects.
Should the Canadian food processing sector grow, how would you recommend the labour shortages be overcome?
Mr. Greer: That's a very good question, and one that's confronting a number of sectors, but certainly the agri-food processing, which is the largest manufacturing sector in Canada.
I think a big part of what the government can do is in relation to its innovation agenda, which it said will be a major part of its five-year mandate. We would argue that, within that agenda, the talent side of innovation should not get left behind.
Innovation is not just something that happens as a result of government programs or by researchers but also by the people who work in these companies and doing this work. As part of the innovation agenda the government needs to take a long look at how and where talent fits into that agenda. I think there is room for significant investment or looking at new ways to invest with companies in the skills of their workers.
In agri-food processing, it's moving to a lot of advanced technology, robotics and very highly skilled work. It is not just transitioning current workers to get ready for that, but also working with our colleges and schools to train workers. I think it is a multi-faceted problem that will require a whole-of-government effort across a number of their initiatives to ensure we have the people that we need to do this work in coming years.
The Deputy Chair: The Chamber tried to interact with community colleges across the country to promote this type of reaction. One of the things that I've and others in Nova Scotia have experienced is when the federal government announced the major shipbuilding contract for the shipyards in Halifax. That day the community college initiated a change in their program to provide greater training in welding: a much-needed skill in shipbuilding. Because the market hadn't demanded it earlier, they had allowed the welding program not to deteriorate but not to grow.
Has the Chamber taken an initiative to interact with community colleges to help community colleges react to demands happening on a daily basis across the country? We continually hear about labour shortages and having to import skilled and unskilled people from around the world when we have people in Canada going to skills training.
Mr. Greer: Yes, thanks for the question. We have done some work in this area. You're exactly correct that it's not just federal programming that will help us meet these skills gaps. Employers must be working with the community colleges and others to help define what their needs are going to be in the future and ensure those community colleges are pumping out the students that can do those jobs.
The shipbuilding initiative was a great example of that. The guarantee of demand for that kind of worker made a program like that a bit of low-hanging fruit. A shipbuilding program of that length and time will guarantee a certain number of workers and certainly made it a bit of a no-brainer, but this is something that we've long said. Some of my policy colleagues have done some very good work on how business needs to work with community colleges and others to help prepare workers for these sectors.
Senator Beyak: My question was just answered, but I wanted to commend you on the Canada brand and Senator Tardif's question as well, to have uniformity to it. We've heard from so many witnesses that sometimes it's hidden on the back of a package, sometimes in a script form. It could be a distinctive Canadian brand and even, to use your language, whether it was "world-renowned'' or "internationally famous'' — Canadian cheese, Canadian eggs, Canadian beef. I think you're on to something that we've heard from many witnesses, that Canada is out there. People want our things because of the pristine environment they are grown in. It's a great tool that you're using, so thank you.
The Deputy Chair: You mentioned earlier recommending sending civil servants to international meetings, a bit tongue-in-cheek, but it is a great investment to have Canadian public servants in front of other groups around the world to represent Canada. We all cannot be there. You can't be there all the time, and the public service has some of the best and the brightest and we should be utilizing them.
Senator Unger: Mr. Greer, you mentioned the word "robotics,'' and I wonder if the Chamber has taken a look at the hundreds of thousands — maybe that's an overstatement — of jobs that are being lost to robotics and automation. It happens every day: look at Safeway, Walmart and all the stores where you check yourself through. Have you looked at that?
Mr. Greer: My colleague Scott Smith, who does innovation at the Canadian Chamber, has done some work in this area. There is no doubt that there are major shifts happening in the economy.
The move to advanced manufacturing is creating a whole wealth of new, high-quality jobs that require high levels of education and specialized skills, but there is a shift happening in the economy when it comes to the kinds of work and manufacturing across all sectors, including agri-food.
There is enormous potential for Canadian agri-food producers to be on the front end of advanced manufacturing and do this high-value work in Canada, particularly where some of it isn't being hosted in other countries. While many jobs are certainly being replaced, there is also a tremendous opportunity to be at the front end of this shift in manufacturing if Canadian producers take advantage of it.
On the agri-food side, many of them are. There has been a major overhaul of agri-food facilities across the country to make them more productive and produce a greater variety of high-quality goods. This is a big shift, but also a big opportunity.
Senator Unger: There will be many jobs that will be lost as a result.
The Deputy Chair: Mr. Greer and Ms. Vega, thank you for your presentation and for being here.
For me, at least, this discussion has indicated that we need to be talking more to the Chamber and the Chamber needs to be talking more to us. You have been a help, and I hope that you will continue to be a help.
Thank you very much for your attendance this evening.
(The committee adjourned.)