Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 28 - Evidence - Meeting of May 4, 2017
OTTAWA, Thursday, May 4, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8:01 a.m. to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Good morning, everyone.
[Translation]
Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
My name is Senator Maltais from Quebec. I'm the chair of this committee.
[Translation]
Today, the committee is continuing its study on the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
[English]
Before we begin the discussion, I will ask the senators to introduce themselves, starting with the deputy chair of the committee.
Senator Mercer: I'm Senator Terry Mercer from Nova Scotia.
[Translation]
Senator Tardif: Good morning. Claudette Tardif from Alberta.
[English]
Senator Woo: Good morning. Yuen Pau Woo, British Columbia.
Senator Bernard: Senator Bernard from Nova Scotia.
[Translation]
Senator Petitclerc: Good morning. Chantal Petitclerc, Grandville, Quebec.
Senator Gagné: Good morning. Raymonde Gagné from Manitoba.
Senator Pratte: André Pratte from Quebec.
[English]
Senator Oh: Victor Oh, Ontario.
Senator Beyak: Lynn Beyak, Ontario. Welcome.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
The Chair: Thank you very much. We have another member of this committee:
[Translation]
Senator Norman Doyle from Newfoundland and Labrador will replace Senator Donald Plett. We will welcome him when he arrives. He is very much interested in our committee's work.
[English]
Today, we welcome, from the Canadian Agri-Food Policy Institute, Ted Bilyea, Chair; and Tulay Yildirim, Director, Policy Research Partnerships. From The Conference Board of Canada, we welcome Louis Thériault, Vice- President, Industry Strategy and Public Policy.
Thank you for accepting our invitation to appear. I would now invite the witnesses to make their presentations.
Ted Bilyea, Chair, Canadian Agri-Food Policy Institute: Good morning. I am addressing you today in my capacity as Chair of the board of directors of the Canadian Agri-Food Policy Institute, CAPI. Accompanying me is Tulay Yildirim, Director of Policy Research Partnerships. Thank you for the opportunity to present on this important issue for the agri-food community.
The World Economic Forum's 2016 top five global risks of highest concern for the next 10 years reads as follows: water crisis, failure of climate change mitigation and adaptation, extreme weather events, food crisis and profound social instability. It is critical to understand that all five are closely linked and emanate from population and economic growth that until now has not meaningfully recognized or accounted for the depletion of natural capital: air, water, soil and biodiversity.
I begin with this as it is central to the paradox of why a country so blessed as Canada, with the most arable land and water per capita of anywhere on Earth, is not experiencing the economic growth in agri-food that one would expect with such bounty. Our substantial ecological surplus doesn't count if much of the rest of the world is content to externalize the cost of depletion or, worse, subsidize it.
So as we reflect on how Canadian agriculture responds to climate change, consider that the difference between surviving and thriving may well come down to the value the rest of the world puts on natural capital and how well we maintain the stock of natural capital.
Climate change is anticipated to benefit Canadian agriculture. Estimates of potential marginally suitable agricultural land in Canada range as high as 2.1 million square kilometres. Our own scientists question this estimate due to the productivity of the additional land and the investment required to clear and drain an area substantially larger than all current lands cultivated in Canada.
Nevertheless, the Ontario government is working on a one-million-acre pilot study to convert scrub forest to grassland in the great clay belt, which lies just south of the aforementioned area. The challenge will be to maintain or enhance ecosystems and biodiversity while increasing economic opportunity.
The increase in degree days and growing season will be very familiar to the committee and is already producing new crops and higher yields particularly on the Prairies: corn, soybeans, quinoa to name but a few. The change is also expected to benefit the livestock sector by reducing feeding costs.
However, the larger benefit to Canada is likely to be the decline of about 800,000 square kilometres of the globe's most suitable farmland to more marginal status as climate significantly impairs agricultural production elsewhere.
Unfortunately, with these benefits come increased risks from extreme weather events such as droughts, floods, storms and early winters. As of last week, we still had close to 1 million acres of 2016 crop on the Prairies to harvest.
With more frequent droughts and increasing floods, demand on non-renewable groundwater is now the source of over 20 per cent of global irrigation of crops, with a net depletion rate of 292 cubic kilometres per year. Rapid depletion of aquifers in key food-producing regions around the world — for example, northwestern India, the North China Plain, the central U.S. and California — is depleting the largest freshwater stock on Earth and threatens the sustainability of food production.
As climate change reduces suitable areas for agriculture, the tandem effect of a growing water crisis will also positively impact Canada, as 11 per cent of food traded globally is reliant on depletion of non-renewable groundwater.
Canada will become the trusted global leader in safe, nutritious and sustainable food for the 21st century. This vision, according to the Advisory Council on Economic Growth, reflects the strength of our starting position, as well as the global trends we can exploit. So how good is that starting position?
Emissions are a measure of waste and environmental inefficiency. Canadian farmers have increased production from $7.5 billion in 1981 to $16.2 billion in 2011 at constant 2007 prices, while keeping emissions fairly stable and thereby reducing greenhouse gas emissions intensity, a key internationally measured benchmark.
The learning from this is market forces drive efficiency through rapid adoption of beneficial management practices: as fast as new knowledge and science are created and disseminated, the visionaries and early adopters pick it up.
Canadian agriculture performs better than other countries in terms of greenhouse gas emissions from meat and crop production. This gives Canada an edge internationally, but we have yet to convert this to economic gains.
I learned early in my career that it is not economically possible to move grain or forage to animals. That is why domestic subsidies and high tariffs are required for grain deficient countries — for example, much of Asia and parts of Europe — in order to engage in animal agriculture. However, these subsidies lock in higher carbon-equivalent footprints. In addition, countries with inadequate feed, poor genetics and animal health issues can produce 90 per cent more greenhouse gas per animal protein unit created than Canada.
As you know, agriculture accounts for only 8 per cent of Canada's greenhouse gas emissions, and fuel use accounts for 15 to 20 per cent of that. The rest is due to biological processes, so a carbon tax would be rather ineffective in curbing agricultural greenhouse gases in Canada.
Canadian scientists see more potential if agriculture focuses on reductions in nitrous oxide than carbon dioxide. Hence, a successful strategy would need to include various policy instruments including offsets — for example, cap- and-trade — to address critical issues of sustainability.
Alberta offers a well-defined experience at scale with agricultural offsets that fit nicely into two global initiatives that are forcing global compliance: the Carbon Disclosure Project and the Global Reporting Initiative. These organizations have over 6,000 businesses and 500 cities worth over $33 trillion voluntarily disclosing their actions on sustainability and carbon. This is exactly the kind of process that will begin to put a value on natural capital.
However, if countries like Canada with low greenhouse gas agricultural intensities unilaterally introduce measures to reduce greenhouse gas emissions, it could make climate change worse as it simply incents production to move to countries without taxes on greenhouse gases, where deforestation is often also involved, and could make the global situation worse. Hence, it is critical to push other countries to move in the same direction.
What should governments do? For Canada to become the trusted global leader in safe, nutritious and sustainable food, Canadian agriculture must up its game as a solution provider by continuing to improve our soils capacity to sequester more carbon, continuing to lower the emissions intensity and improving Canada's water quality through reduced impacts on agricultural production.
There are four key research priorities: the first is tackling issues such as agriculture's response to climate change or, more generally, agriculture sustainability, by bringing together physical scientists with social scientists to assemble meaningful data and analytical capacity to better understand the risks and opportunities for Canadian agriculture.
The second is finding a way to continue increasing carbon sequestration in Canadian soils by at least 0.4 per cent per year, which is sufficient to offset our entire ag sector's emissions annually. Currently, this is happening, but there is concern it may be slowing. Ideas to augment capacity include such things as plant root phenology and use of biochar.
The third priority is a better understanding of the role of healthy soil biomes in nitrogen and phosphate uptake, emissions abatement and plant immune systems.
Fourth is finding a way to support the visionaries and early adopters who drive change in the industry. One of the CAPI board members is a farmer from Manitoba who has very large land holdings. He is the poster of modern crop farming but has been shifting to focus on building healthy soils. He was proud to show us his results recently, which have brought the farm well onto the road to carbon neutrality while significantly increasing yields and reducing input costs. We need ways to support coffee shop peer networks to put the best practices and science into rapid adoption/ adaptation.
Finally, we need to increase our engagement in all international fora to draw attention not only to the threat of climate change to agriculture, but the existential threats listed by the World Economic Forum that relate to the rapid depletion of natural capital.
Thank you very much.
The Chair: Thank you. Mr. Thériault?
[Translation]
Louis Thériault, Vice-President, Industry Strategy and Public Policy, The Conference Board of Canada: Good morning. Thank you, Mr. Chair. I am pleased to be here today.
[English]
The Conference Board of Canada is the largest research organization in Canada that is independent, not-for-profit and doesn't have an axe to grind. We do evidence-based policy largely based on our economic analysis. We have the largest team of the economists in the country in the private sector with over 50, to set the context.
Some of the points I will make today are tied to some of the work we've done. Others are emerging fields we're working in. I will address a couple of things, starting with some risk and opportunities associated with both agriculture and forestry.
[Translation]
Next, I will discuss the impact of a carbon tax and, to conclude, I will address some implications for the federal and provincial governments.
[English]
One thing we don't talk about often when we talk about the so-called 80 by 50 — reducing Canada's greenhouse gas emissions by 80 per cent by 2050 — is the role of the non-combustion sector as we start reducing the greenhouse gas emissions. We talk about all the time about the combustion sector, such as oil, gas and coal, et cetera. We have done work in partnership with the Canadian Academy of Engineering that was vetted by the David Suzuki Foundation and which looked at technical pathways to the so-called 80 by 50. What becomes evident when you look at the technological solutions to get there, from a technical standpoint, not from a cost-effective standpoint, is that the non- combustion sector for agriculture makes up about 8 per cent of the total emissions, but that sector becomes 20 per cent by the end of 2050.
What we found as part of the study is that other than expert opinions and literature review on what could be done at the margin, it's really hard to compress that. So one of the risks I'd like to put forward from the get go is that as Canada's ambitions to hit those major reductions in greenhouse gas emissions typically focus on the energy sector, the non-combustion sector becomes a central issue. That's one element.
In terms of opportunity, I think this ties in with a lot of the messages we heard earlier this morning. One element of the strategy that Canada has pursued over the years is the whole biofuel agenda, and that industry has evolved significantly over time. I think there are a lot of opportunities for forestry, agriculture and waste biomass, the so-called second-generation biofuel industry, but these technologies need to continue to develop and eventually become commercial.
Again, I'd like to stress the importance of the shift in the economic landscape as we transition towards 80 by 50. The world, as we see it today, will be quite different 35 years from now; we talk about the technology as being a central component of how we will get there, and the biofuel agenda in that context needs to be considered a priority.
As I mentioned, it applies to waste in forestry and also agriculture. I didn't know that; I'm an economist by training, not a scientist. But I know, and you will probably hear some of the experts on what renewable methane can produce from manure via biodigesters, of all things.
Agricultural waste can also be used for energy sources for ethanol plants which in North America these days are integrated with cattle feedlots to produce ethanol. In fact, in certain cases they are even carbon sink, so you can get offsets when you are efficient at this.
As we start looking at that sector, which is more mature than other alternative technologies, I would say the next step in the conversation is to look at what an integrated supply chain would look like, including biorefineries. That conversation has been hard in Canada so far.
That's in terms of a major opportunity I think we need to consider for agriculture and forestry, and with the subsidies phasing out and some of the support and controversy over time, there is a disconnect with some of the scientific realities, and also the level of the ambition when we talk about 80 by 50. Biofuel is a central component.
A word on carbon taxes: In the context of the work we're doing with the Canadian Academy of Engineering, we're looking at the economic impact of adopting the technologies included in these scenarios.
To give you a sense of proportion of what we're talking about, with what we know and the cost of technology today, the implicit cost on carbon, to bring all the technology we know today that is the most greenhouse gas efficient, the most environmentally friendly, would mean an implicit tax around $800 to $1,200 a tonne. That doesn't consider over time that the cost of these technologies will come down. It's in the current price context. This is to give a sense of perspective.
As part of that work, we've stress-tested the economic system to look at what different levels of carbon tax would mean for different industries. I'm a typical economist. On the one hand, you can say it's not that bad; on the other hand, for some industries it is quite severe. I want to give you a sense of proportion of what we're talking about. The report will come out in the next couple of months and all the details will be available publicly.
On industry input price, so for energy-intensive industries, a carbon tax to the tune of $200 a tonne has an impact on pulp and paper on their input price of about 8.5 per cent. You could argue it's not the end of the world. That said, for pulp and paper, energy is a major input cost, and with their profit margin, that industry has been in a constant restructuring for the past 15 years, for as long as I can remember, doing work in the area. The North American industry is integrated. There are not that many players, and because energy is such a fundamental input cost, that 8 per cent on profit margins that revolves around 5 per cent quickly trickles down to make a real impact.
All the energy-intensive industries will take a hit. Food manufacturing, as part of agriculture, is not in the top because they don't depend, as a percentage, as much on energy as other sectors. But when you look at the impact when trade kicks in, food manufacturing becomes an industry among the top that gets impacted by a tax. Those are considerations of a carbon tax.
This is the danger when you look at the overall impact of carbon taxes. Frankly, the percentage impact on overall costs or the impacts on the cost structure of Canadian industry on average is not that bad. When you start pinpointing specific industries, and pulp and paper in particular in the context of what we're talking about today, it's real. When you look at food manufacturing from a supply chain perspective, it is also impacted.
I will turn to a couple of points on what federal-provincial-territorial governments should focus on in order to help achieve the goal and also leverage the opportunities coming from this climate agenda.
Again, I want to stress that agriculture and forestry sectors play a key role in providing low-carbon fuel to the transport sector. Unless you're an expert in the field, it's hard to understand where the pressure comes from, but the transportation sector is where most greenhouse gas emissions have been growing from or the sector that has been contributing to greenhouse gas emissions growth over the last 15 years; so biofuel has been a central part of this. Early days, not mature, not commercially viable throughout yet, some contentious points, but it has meshed well with some of the ambitions and opportunities that come from more land that can be harvested.
So point number one: Canadian provinces are taking a step back in funding biofuel technology directly. We talk a lot about solar and wind, but we forget about something we invested heavily in over the years, the biofuel, and with that industry from the first, second and third generation for biodiesel and ethanol, there is real promise there. Let's not stop now.
A couple of issues on trade, and that's really important in the context of NAFTA and EU. The carbon tax puts some industries at a competitive disadvantage. Treating carbon tax as a generic tool and not understanding the specific implications for industries that are really trade-dependent or that depend on energy as an input to their processes is an error; we have to be careful about that.
I would argue that when you have trade-exposed industries — and Alberta has been starting to talk about that — those are the policies that can be put in place to alleviate some of the competitive pressures from the U.S. not adopting a similar carbon tax. It comes in two different forms, and one is the so-called output-based allocation; in other words, you have the carbon tax imposed on pulp and paper, but you offset some of the cost pressure imposed by the carbon tax by providing a refund of the tax based on an output level. Depending on how much you produce, you take a benchmark of what should be the average of the industry, and you refund, in a percentage of the output produced by the firm, an amount that alleviates the increased cost of production that comes from the tax.
So there are intricacies in the design of that, but I would encourage you to look at that for pulp and paper in particular and some of the food manufacturers that will suffer from the impact of a carbon tax, even in what I would call the lower end of the zone, around $200.
Again, the pan-Canadian framework on climate change that is being negotiated is central to this. I think some transparency in support of policies for all industries should be a central component. So far, the political ambition has been clear, which is great. Personally, I'm an energy economist. I've been involved in Rio, Kyoto, Copenhagen, Paris and have followed that and done a lot of analysis on it. The political ambition has never been what it is today; so it's becoming real.
What I find difficult is that evidence-based policymaking in this context is hard because the so-called economic forecasting models, energy models, are structured to give an indication at the margin of what the impact of a tax and a political objective is. Eighty by fifty is not a marginal change; it is a fundamental structural change. I feel we're lacking some of the hard evidence to make proper policy in that context.
Those are my remarks.
[Translation]
The Chair: Thank you, Mr. Thériault. Before we start, I have two quick questions for you. In the years from 1985 to 1990, there was a very big fashion in Canada, which was the de-inking of newsprint. Every ecologist on the planet was against the papermakers. The old newspapers had to be de-inked and recycled to remake paper. It was hard and didn't last long, because once the newspaper was de-inked, what do you do with the ink? Nobody wanted it, so it stayed there.
My question to you is that in most sawmills, for example, the engines are electric. I give you the example of Quebec sawmills; I don't know if that's the case in other provinces. How can they produce carbon? How can an electric- powered sawmill produce carbon?
Mr. Thériault: You're right. When the engine is electric, it is the source of energy to produce electricity that is the —
The Chair: I'm talking about hydroelectricity. Does hydroelectricity produce carbon?
Mr. Thériault: No, not in Quebec.
The Chair: Second, if you have to add a tax of 8.5 per cent on newsprint in addition to the 20 per cent U.S. tax, we will have to let our trees grow a bit, because at 28 per cent, with the value of the Canadian dollar, it's death for the industry.
Mr. Thériault: What I was saying is that the tax is on carbon, not on the product.
The Chair: A tax of 8.5 per cent.
Mr. Thériault: If there is no carbon in the energy source used, there will be no impact. The effect will be felt where there is carbon in the energy source used to produce pulp and paper or wood. In Quebec's case, there will be no impact.
[English]
Senator Mercer: Mr. Thériault, I'm going to move away from that. The subject matter today is climate change and its effect on agriculture, agri-food and the forestry sector.
You said something in your opening remarks that puzzled me. You talked about subsidies phasing out. I'm the longest-serving member of this committee; I've been here since I was appointed to the Senate. I'd go line for line with you in the budget, if you want, if you can point out what subsidies you're talking about in agriculture in Canada. What are these subsidies that you see phasing out?
Mr. Thériault: For me?
Senator Mercer: For you.
Mr. Thériault: I was talking about biofuels in particular.
Senator Mercer: In your opening remarks, you talked about subsidies phasing out. You used those words. I wrote them down. I'm curious what subsidies. There are people watching this committee meeting, and they've heard you say that. There's somebody somewhere in Canada saying, "Yeah, we have to get rid of those subsidies in agriculture.'' I'm curious what subsidies you're talking about.
Mr. Thériault: I was referring to the biofuels sector. The biofuels sector has been supported for many years. We're also talking —
Senator Mercer: Okay. That's separate from the agriculture sector that we've been trying to focus on. To my knowledge, there are no subsidies in Canadian agriculture. We manage our agriculture differently than other places around the world, but there are no subsidies.
Let's move on to the subject at hand. By 2050, we're going to have 9.5 or 9.7 billion people on the planet, and somebody needs to plan how we're going to feed all those people. In that planning, we have to consider the greenhouse gas problem that will be generated. Because agriculture is not the problem. As Mr. Bilyea said earlier, agriculture is only 8.9 per cent of the greenhouse gas problem, but agriculture is a major part of the solution. That's an awful lot of pressure to put on the sector. You're not the problem, but you're the solution; you didn't cause this problem, but you're going to fix it for us. That's a lot of pressure to put on the agriculture sector. How do we do this without damaging the agriculture sector?
Mr. Bilyea: I mentioned two of the possible areas where we could do a lot of work. One is that most of the research in agriculture has gone into what grows on the top. We've discovered what is almost a new cosmology. What's growing on top is growing on a biome, not just soil. So over the next few years, we're going to see massive developments in looking at the roots of plants that operate like your intestines. They move nutrients in and out, and they require massive microbia to do a good job. We're just learning about this. This is early days. If we went to school 10 years ago in the soil sciences, we didn't learn about this.
So agriculture has the potential to store more carbon, if we look at what's stored underground. There are issues with that. Canada has done very well. As you see in the diagram I presented, we've already done a great job of increasing our carbon storage in soils through a variety of new techniques, no till being a big one and a lot of other things. There is an argument that we may be reaching some saturation, but with the science that I'm talking about here, that particular science may be an answer.
Second, we're learning about biochars and we're trying to understand. We may be able to store carbon for a long time using biochars in soil. There are a variety of techniques.
Most important, though, is thinking about where we do agriculture in the world. It's not similar. That's the big problem. Most of the greenhouse gases in agriculture have been created by essentially opening new lands that were previously tropical forests. That is by far the largest contributor. We can begin to rationalize agriculture.
Let me pick up on the subsidies. We can have people begin to think about the concept that some parts of the world are subsidizing very poor behaviour in terms of creating greenhouse gases by subsidizing agriculture that shouldn't be there. Can anybody explain why Asia, for example, would be trying to raise beef? It's totally deficient in feed grain and forage, yet the countries in Asia are moving to beef. That makes no sense whatsoever. It makes marginal sense for poultry. Pork is in the middle. If you're refeeding slurry, yes. If you're feeding grain, no, because you're importing an enormous footprint to get it there.
Part of the problem staring us in the face is that we don't produce things rationally around the world. I put the water charts in there to show the same thing. It would be a huge step forward for Canada if we could do that.
Senator Mercer: Your proposition of beef is an interesting one, except that, from a Canadian perspective, Asians moving to consuming beef is good news from our point of view because of our export market. Indeed, the committee was recently in China at the time the Chinese market opened up for beef, and within the sector, it was quite a celebration of the fact we have now opened this market to our beef producers. While you may have a point about their production, it is good news for us.
Mr. Bilyea: It's very much a good-news story, but it's not a good-news story that most of the beef they're consuming is not coming from Canada. It's coming from high greenhouse-gas-producing areas.
Senator Mercer: Well, we'd like to fix that.
Mr. Bilyea: If you were there recently, you were in a supermarket that I helped put the Canadian government in. Yes, they're very interested in Canadian beef. But the point is that it's less than 1 per cent of the beef that would be consumed there.
Senator Oh: Thank you, gentlemen. This is very interesting. It's like we're going into space travel, and 100 or 200 years from now, mankind will be surviving there on food.
You have a publication on the neo-strategy approach, and you talk about the sector addressing the climate and environmental change effects on the Canadian agri-food sector. What are the risks? Are they also opportunities? What measures could the sector take now and in the future to overcome these challenges?
Mr. Thériault: I agree with the opportunity side that we talked about. I started my remarks by talking about an element that is often forgotten. As we move towards meeting the 80 by 50 greenhouse gas emissions reduction goal, the non-combustion side of the economy becomes bigger and bigger. As part of the process to transition to a low-carbon economy, we need to start factoring in today what we will do to reduce the non-combustion side.
Canadian producers might be greenhouse gas-efficient compared to others, but the fact is, in absolute terms, let's say Canada's trade agenda makes beef export the preferred choice for the rest of the planet, that means a lot more production from Canada. So our footprint for greenhouse gas emissions from the non-combustion side, the agriculture side, will grow. That's one side.
If you don't factor in that we offset emissions that would have taken place in Asia in the process, then we're shooting ourselves in the foot. Canada being a small, open and trade-dependent economy, as part of the climate change challenge, Canada really quickly needs to start factoring in the offset that our production contributes in terms of greenhouse gas emissions, because we're producing for others that are less greenhouse gas-efficient.
That's the case in point, here: For the non-combustion sector or the agricultural sector, I would say if we're not very clear in our trade negotiations around what it means to have Canadian products exported and what that means for the net greenhouse gas emission footprint, then we're definitely shooting ourselves in the foot. It's not a domestic agenda; the greenhouse gas emissions reduction target is a world agenda. We make up 2 per cent of global emissions, so we have to do our share and we can do our share. In fact, in trading and increasing our own, you can push it to that level. We could increase our greenhouse gas emissions in Canada if we can be recognized for the net reduction we're contributing to because other countries are not producing using less efficient technologies and creating more greenhouse gas emissions.
As we talked about, regarding the effectiveness of our production processes and limiting the amount of greenhouse gas emissions each time we bring meat to market, as one example, if we don't make that a central part of the trade talks, then we will have a problem. As I mentioned, again, energy has been the central focus of this political agenda, but the non-combustion, non-energy side will have to become a central piece of the discussion really quickly because there are no obvious, easy ways to reduce greenhouse gas emissions much more, locally and domestically in Canada, from the non-combustion side.
Senator Oh: In addressing climate change, is Canada on the world stage? Are we a front runner or are we far behind other countries?
Mr. Bilyea: I can only speak for agriculture, and if you're looking at agriculture, we are in front considerably. That's quite clear. That's not because we're just great at things we do, but part of it's because of the fact that we have pretty good circumstances that we're working with.
I'd like to push one point that may have been missed. To the extent that we begin to take this calculation into consideration, we're working in a world in which we can't force people to stop eating beef or pork or meat, and we're not trying to, but to the extent that people recognize that it is very inefficient to produce that product in certain areas, and because of that they begin to stop producing in certain areas, exactly as China is doing today in pork. They're moving pork out of the major areas that it was produced in. They're moving it to the northwest and the northeast. They're shrinking it and everyone is surprised that they have less pork than expected. It's because of exactly what we're talking about. It's not only climate change: it's also health and pollution issues.
When that happens, what happens? It raises the price in the other parts of the world that can efficiently produce that, and it has been benefiting North America recently.
Think about that issue. What we're trying to say is if we get this right, what will actually happen is the price will rise. That will have an impact on the amount consumed, but it will have a great, beneficial impact on the Canadian farming community and agriculture in Canada.
That's the point I was trying to make with the natural capital issue. If we can't get a focus on the fact that natural capital is shrinking, and do it in some way where we're not penalizing ourselves directly but are pushing the ball in the right direction, that is the single best way to improve the economics of agriculture in Canada. There's no doubt about that. But it's not easy to do, and it has to be done internationally, not unilaterally.
Senator Oh: Thank you.
[Translation]
Senator Dagenais: Thank you to our guests. My first question is for Ted Bilyea. Mr. Bilyea, some Canadian provinces already have a carbon tax. Do you think it would be possible to manage such a tax in a way that has no impact on producers? What kind of program would you like the government to adopt? We could include your suggestion in our report.
[English]
Mr. Bilyea: Although taxes are very efficient methods of doing things, what we've tried to point out is that in the case of carbon, since there are so few carbon equivalents in this industry that are not biological, really the tax isn't going to have much of an impact, except maybe a negative one, so we need to be thinking deeper about what other mechanisms could be used. It's not an either/or thing, necessarily; it's just that there may be more effective ways when it comes down to agriculture. As we both said, consider the amount of actual carbon as opposed to nitrous oxide, which is the big one in agriculture. We can't do anything about that. We can put all the carbon tax on it that we want, but it won't have any effect on nitrous oxide, and that's the big issue.
We're trying to be more subtle about this in saying, "Why not look at other methods that we can deal with?'' There is a lot of logic in what Alberta is trying to do with its cap-and-trade, because it's measuring a variety of impacts, not just carbon.
Carbon is great if you're in the energy industry; you're taxing the right thing. But if you're taxing carbon and want any efficiency in agriculture, I don't know how you'll get it. Eventually we'll figure out how to have electric tractors, and that will be the end of the carbon issue to a large degree.
As I said, one of our key board members who has a very large acreage in Manitoba is getting close to carbon neutrality. He's the poster of modern agriculture. He's the kind of guy who doesn't need to be in his tractors because they can run automatically and he's doing all the right things with new fertilizing techniques, but what he's concentrating on is building the biome in the soil. He's interested in the bacteria in his soils. Those are the hard workers, the bacteria in the soil. He's trying to figure out how to massively reduce his inputs and increase his yields, and his costs have changed. I'm not necessarily against the idea of carbon taxes for the right things, but I don't know how it works in agriculture. I've been looking at it for a while. We've researched it as well. I don't know how it works.
[Translation]
Senator Dagenais: I have a question for Mr. Thériault. Changes in GHG emissions are often difficult to accept, especially in the agricultural sector. It's all about profitability for producers. In your comparative study outside of Canada, can you give us examples of policies that worked well and were more acceptable to producers?
Mr. Thériault: I totally agree that the carbon tax is not a very effective tool for the agricultural sector. The problem stems from the non-combustible portion, which is a whole other debate.
An example of integrated intervention within our greenhouse gas reduction target is the emphasis on biofuels. There are first-generation biofuels from canola and corn, and second-generation biofuels from waste, either from the forestry industry or from the agricultural sector. I referred to the example of bio-digesters. It is a process of using the energy sources contained in waste from agricultural production and converting them into ethanol. So it's a portion of the energy sector that can offset the increase in greenhouse gases that would come from the growth of the agricultural sector, which are not necessarily related to the energy sector. Thanks to upstream policies, the energy sector can play a counterbalancing role in the growth of the agricultural sector. This leads to an integrated reflection on efforts to encourage the agrarian sector in Canada to export more, with the effects of the resulting increase in greenhouse gases. Even if it is very effective, at present, GHG emissions will continue to increase. If it can be demonstrated that effect of GHGs is counteracted by adopting upstream biofuel policies, an "elegant'' solution can be offered in the context of the fight against greenhouse gases.
From what I've heard — I'm talking about advanced biofuel technologies in the agricultural sector, particularly in the United States — not only have plants achieved a zero carbon footprint, but they have even achieved a negative carbon footprint by integrating a strategy. The debate is not yet open, but I think it is central. If we keep the activity in the agriculture sector and the greenhouse gas rate as we see it today — assuming we're going to reach our goal — we're talking about 20 per cent of greenhouse gases coming from the agricultural sector in 2050. So it has to be built into our policies so that we can achieve our objectives.
The Chair: We only have a few minutes left, and four senators have asked to speak. Please ask very short questions and provide very short answers.
[English]
Senator Woo: Thank you, witnesses. I have just a very quick question on the idea that we should encourage agricultural activities to take place in areas that are more suitable for those activities — the intriguing idea about the Chinese, for example, and the shift in pork production.
Concomitant to that idea is that you need open markets, particularly open capital markets, and receptivity to international investment that would allow capital-rich countries to deploy capital away from places that are less suitable for certain activities to places that are more suitable. We've had a discussion in this committee in a previous study about receptivity to foreign investment in agriculture in Canada. You know what I'm getting at here, of course. If there's huge demand for beef, say, in China, and cattle raising is not a good idea in China, then we should open up the Canadian beef industry to massive investment from places like China and other countries that are capital-rich and that have domestic markets that demand the product as well as entrepreneurs who understand how to tap that market. What is your view on that proposition, both of you?
Mr. Thériault: Again, Canada being a small, open and trade-dependent economy, when we say "open economy,'' it doesn't mean only when we export; it also means we import, and supply chains are integrated in imports and exports.
It also includes FDI, foreign direct investment. It's not just when Canadian companies are investing abroad for benefit that we think is in Canada. In fact, often the benefit will be in the host company of that capital that flows out of Canada, and vice versa. You're totally right. In-and-out FDI is a central component of this. If it hadn't been for inward FDI, Canada wouldn't be the country we are today. In that same logic, I totally agree.
Senator Woo: There's a GHG reduction benefit as well, in addition to an economic benefit. That's my point.
Mr. Thériault: That's one of the major policy tools that was talked about in the early 1990s — the joint international venture capital projects. It hasn't come back on the agenda, but it's something that we at the Conference Board have been pushing.
The challenge with that is the inventory, because we all recognize conceptually that there's a net benefit for the planet, but the agendas are led by countries individually. If Canada cannot be recognized for the reduction in greenhouse gas emissions it contributes to by investing abroad — or vice versa, when a foreign company invests here and contributes a reduction in greenhouse gas emissions — how do you, from an inventory perspective, demonstrate that we're meeting our objectives? That's the challenge.
Mr. Bilyea: I tend to agree. We're going to see the capital flow inward anyway. That's happening today, I would argue. I think our issue should be about making sure the governance processes are in first-class shape before it happens in a major way, because if they are not, then we will not make the progress on preserving the natural capital that we intend.
[Translation]
Senator Tardif: My question is for Mr. Bilyea. You mentioned that, among the five crises that could affect the planet, lack of water was one of the most major. I am originally from the Prairies, from Alberta. Our province often experiences periods of drought, and this is also the case in the northwestern United States. What strategy is being put in place now to help farmers adapt better to these conditions? Is there a common strategy between Canada and the United States on the water issue?
[English]
Mr. Bilyea: Because of time, my comments were related specifically to groundwater, which is not heavily used in Canada. We are a rain-driven, mountain-melt-driven country, largely. That's unusual, actually, in global agriculture. We live in a bit of a bubble in the sense that we are not dependent on deep aquifers that are geological.
Having said that, I'll go back to your question. I think the biggest area that can be worked is, again, the soil biome, because if you have very healthy soils, they have much greater water-retaining capacity. That has a great deal to do with the types of rotation we're using. There's a lot being thought about and done now I would say on the Prairies and in the northern plains of the U.S. to work on that. There is no other real answer to it other than water storage programs, which if you are in Alberta make a lot of sense; if you're in Manitoba, of course, it makes no sense because it's all downhill from there. It's too complicated for this question.
Senator Tardif: Thank you for the clarification about the groundwater.
Mr. Bilyea: This is a very important difference.
Senator Petitclerc: In many answers, you've highlighted how the challenges are global, international, and most likely the solutions are as well, and I wanted a clarification on how this conversation is happening and how it is organized. Or is it something that should happen? I wanted to have an idea on that.
Mr. Bilyea: It is happening. I think we can do a great deal more and we need to do more. That's the answer.
[Translation]
Senator Gagné: I would like to talk about research. I wondered whether Canada is investing sufficiently in agronomic research and climate change. Are we able to transfer knowledge from researchers to farmers? We might even think of the reverse; you talked about the example of the Manitoban who researched his land. How can the transfer be done in reverse? You mentioned a network of some kind.
[English]
Mr. Bilyea: I think that's a question we should be asking ourselves a lot more. It is a brilliant question. From what we have observed, some of the best breakthroughs have come from the farm back to the universities, and not the universities, necessarily, to the farm.
Farm people who are experimenting come up with very interesting things, and they have built a great industry around it. I don't know exactly how to do that, but I do know we need to bring together the physical scientists and social scientists, along with the leaders or the early adopters and discoverers. That's where you will get really good new ideas.
People on the farm realized that if their soils were healthy, long before they knew there was bacteria down there and which bacteria were working, they knew that it was storing more water and they knew they could lower their inputs. It took a long time to back up and say, "Well, why is that happening?'' Then they discovered all this microbial work.
No one knows the answer, but I think in general, yes, we should be spending more time and money in that area because the paybacks are huge, and globally they may be necessary because of this inherent existential risk.
[Translation]
Senator Gagné: Do you think it would be a good recommendation to make to the Canadian government?
[English]
Mr. Bilyea: I certainly would.
[Translation]
The Chair: Mr. Thériault, Mr. Bilyea and Ms. Yildirim, thank you very much for your testimonies. You have seen the interest of the committee members in this matter. Since we will be continuing our work over a long period, we may have an opportunity to meet again. I thank you for your work, and encourage you to continue what you're doing. The future of the Canadian agri-food industry is in your hands.
Before asking the next witnesses to give their testimonies, I would like to inform the committee that Senator Plett's replacement on the steering committee will now be Senator Dagenais. The steering committee will be composed of Senator Mercer, Senator Woo, Senator Dagenais and me.
This morning we have two representatives from the Canadian Meat Council.
[English]
Mr. Troy Warren, Chair of the Board of Directors; and Ron Davidson, Senior Vice-President, International Trade and Public Affairs.
Thank you very much for accepting the invitation to appear. I believe Mr. Warren will begin.
Troy Warren, Chair of the Board of Directors, Canadian Meat Council: Good morning. Thank you for the opportunity to present the Canadian Meat Council's perspectives on the potential impact of climate change on the agriculture and agri-food sector generally and on the repercussions of the proposed carbon pricing mechanisms on the meat industry specifically.
The Canadian Meat Council has represented Canada's federally inspected meat packers and processors since 1919. The membership of the council includes 50 companies that are meat packers and processors and 90 companies that provide goods and services to the industry. The meat industry is an in dispensable link in a highly integrated value chain that encompasses feed grain farmers, hog producers, cow-calf producers, feedlot operators, dairy farmers, goods and services providers, rural communities and consumers across Canada as well as in some 100 other countries around the world.
With sales of $28 billion, exports of $6 billion and more than 66,000 jobs, the meat industry is the largest component of Canada's food processing sector. A meat-packing facility is typically either one of the largest, and often the largest, employer and taxpayer in a community.
The current and future sustainability of the livestock and meat sector is profoundly dependent on global competitive access to international markets. The competitiveness of the livestock and meat sector necessitates the production of more meat than can be consumed by Canadians. Meat packers require export markets to maintain commercially viable scale, balance the supply and demand of particular cuts and market products that are not consumed by Canadians.
Price comparison is a key factor in consumer purchasing decisions in both domestic and foreign markets. When reflected in selling price, a difference of 1 cent per kilogram in costs of production can differentiate success from failure. The Canadian market is open to quota-free and tariff-free imports of meat from other countries, including the United States, our number one source of meat imports, our number one export destination, and our number one competitor in foreign markets.
Situated at the end of the fertilizer, manufacturer, feed grain farmer, livestock producer, transporter, meat packer value chain, meat packers and processors must offer meat at a globally competitive price, while absorbing the costs accumulated at all levels of the chain.
For this reason, business sustainability in both the domestic and international marketplace is acutely dependent upon the existence of an internationally competitive policy and regulatory context throughout the entire value chain.
Our planet is on the precipice of a daunting obligation of feeding 2 billion more people by 2050 — that is only three decades from today — and of doing so without the recourse of traditional solutions on which the world has relied — more land, more water, cheap energy. Failure to satisfy the inevitable growing demand for food would include unprecedented levels of political instability and mass migration, with their attendant security and economic risks, including for Canada.
Not only does food production contribute to climate change, a changing climate makes food production more difficult. The formidable challenge for humanity will be to satisfy the increase of global food demand while decreasing the environmental footprint of food production. Any policy, program or decision that either reduces the total availability of food or increases the price of food will intensify the gravity of domestic as well as global food insecurity.
In its February 6, 2017, report entitled The Path to Prosperity, Canada's Advisory Council on Economic Growth described this country's agriculture and agri-food sector as one in which Canada has the potential for substantial growth and export improvement and to become a trusted leader in safe, nutritious and sustainable food for the 21st century.
The Canadian livestock and meat value chain possesses not only the potential and the desire to realize a substantial increase in production, but is capable of doing so with a substantially lower environmental footprint than most other countries.
The agriculture and agri-food sector is climate- and weather-dependent and benefits from climate and weather moderation and predictability. Droughts, floods, volatile weather patterns and record temperatures affect our industry negatively. Consequently, as is the case, constantly improving productivity, reducing greenhouse gas emissions and improving environmental performance are already priorities for our livestock and meat sector.
The greenhouse gas footprint of Canadian livestock and meat production is among the lowest in the world and the value chain is committed to continuous further improvement.
Between 1981 and 2011, each kilogram of beef produced required 24 per cent less land, 27 per cent fewer cattle and produced 14 per cent less methane, 15 per cent less nitrous oxide and 12 per cent less carbon dioxide. During this period, the greenhouse gas intensity per kilogram of beef produced decreased by 14 per cent.
A study conducted in the pork industry revealed that between 1959 and 2009, pig production had achieved a 35 per cent decrease in carbon footprint, a 41 per cent reduction in water usage, and a 78 per cent drop in land needed to produce pork.
It would be counterproductive should Canadian livestock and meat production become subject to policies that increase our costs to a greater extent than those incurred by foreign countries. The perverse outcome of this scenario would be reduced meat production and jobs in Canada in favour of increased meat production and jobs in countries with a higher environmental footprint. The result would be an even greater global production of greenhouse gases.
The extent to which carbon pricing schemes will impact the livestock and meat sector is yet to be fully understood, as the systems are still in the process of being designed or implemented. The main concern of the meat sector is not the existence of a carbon tax per se, but rather the uncertainty associated with the multiple schemes that are still evolving across Canada and in some but not all key competitor countries; unknown cumulative impact of various schemes at the fertilizer, crop farmer, livestock producer, transporter and meat processor levels; unknown relative and perhaps competitiveness determining effects of multiple domestic and foreign schemes on Canadian competitiveness; unknown future availability of tools to reduce emissions; and the absence of programs to support the sequestration of carbon in the Canadian agriculture and agri-food sector.
It is important to bear in mind that the cost competitiveness is relative, not absolute. If an increased cost burden, such as a carbon tax, is distributed equitably on all players and a level playing field exists between all companies and between all countries, a discriminatory disincentive would be imposed more on the environmentally efficient producers. In this context, the meat industry believes it is most important that a coordinated action be undertaken by government in all major meat producing and exporting nations.
Good policy does not have a singular objective. Protecting the environment should be considered in a broader context than addressing climate change in a policy silo. It is possible for this country to achieve positive environmental benefits while keeping livestock on carbon-absorbing agricultural landscapes, providing an income for food producers, creating jobs for Canadians, ensuring economic activity in local municipalities and feeding hungry people in both Canada and food-deficit nations.
This potential must be pursued not through the increased use of land, water or energy but primarily via intensified research and incentives leading to increased productivity and efficiency by all links in the value chain. Its achievement will also require the adoption of underutilized, existing as well as still-to-be-discovered new technologies. Any policy, program or decision that either reduces Canadian competitiveness or constrains the development or adoption of new technologies will have negative implications on global food production, security and the environment as well as for rural Canada.
The environmental and food production challenges are both serious and of global proportions. Neither will be solved by countries or companies acting in isolation. The responses and solutions must include interlocking policy areas acting in concert in both national and international fora. If Canada can get our policy right, we have the ability to not only meet nutritional needs of our own population but also to help feed billions around the globe, while at the same time reducing the environmental footprint of food production.
In this context, it is important that this committee advocate for a coherent and supportive whole-of-government policy, program and decision framework that allows the Canadian livestock and meat sector to maintain competitiveness while continuing its already established trajectory of progressively reducing its environmental footprint.
Thank you.
The Chair: Thank you very much, Mr. Warren. We will go to questions.
Senator Tardif: Thank you very much for your presence here this morning, and thank you for your very interesting presentation. I understand and am reading your conclusion here where you're indicating that there are many other mechanisms that one can use besides carbon tax pricing, and that the agricultural sector per se probably has a lower carbon footprint than, for example, the energy or transportation sector, and you certainly don't want to be penalized for some of the good things going forward.
You indicated that, in your mind, you need a whole-of-government policy approach, more research in certain areas and new technologies. Can you expand on what those areas might look like?
Ron Davidson, Senior Vice-President, International Trade and Public Affairs, Canadian Meat Council: In the presentation, we talked about increased productivity throughout the value chain, and that clearly is the amount of greenhouse gas produced — not just carbon, but all greenhouse gases — per kilogram of meat produced. What we were driving at here is that research and technology are really important.
An aspect of the other part is the acceptance of the technology. It's not our sector, but in the grain sector, there are certain technologies we are using in Canada that other countries aren't using. I'm talking about GMO, as one example, and there are others. These do improve productivity substantially throughout the value chain, and yet, because of resistance, we would suggest by people who don't fully understand these technologies, they are having a negative impact on the productivity of the sector and, frankly, the carbon capacity production of the world, because we aren't able to use those technologies.
It's, first, the research on productivity throughout the value chain, including on reducing greenhouse gases, and second, the acceptability of that research and a policy environment that helps promote that research at the consumer level.
Senator Tardif: Biodigestion has been brought up by prior witnesses. Do the slaughterhouses have the technological capacity to incorporate biodigestion in the way they move forward, such as using it for electrical purposes to run the slaughterhouse?
Mr. Warren: I'm not aware today of any companies that are using that technology in Canada. As it's emerging, there will be an application for that in our industry. It's just a matter of what our input is and whatever energy we can extract through that process, if you will.
I work on behalf of Maple Leaf. We're looking at an overall environmental footprint, so wherever possible, if we can reduce the waste that is leaving our facilities, we're trying to do that.
When we process livestock in this country, there's very little that goes to waste. The product goes to rendering and ends up back in the value chain, where the rendering stream is starting to enter into the biodiesel and so forth. Any policies that help encourage that "recycling'' of what little waste does exist in our industry, we would be supportive of.
Senator Tardif: Thank you.
[Translation]
Senator Dagenais: My question is for Mr. Davidson. The Canadian Meat Council talks about animal welfare. What would you like to see in our report about animal welfare in Canada? It's something we don't talk about often.
[English]
Mr. Davidson: Animal welfare has an impact at two levels: at the producer side and also at the meat-processing side. There are regulations that the Canadian Food Inspection Agency enforces at the meatpacker side that are very explicit. The government veterinarians who are on site enforce those regulations strictly.
At the producer level, there is a separate set of regulations, and between the two, there's transportation. Right now, there is discussion going on in the government about changing the regulations at the transportation level. Our primary input into this process that affects both the producers and the processors is that these regulations be based on science- based consideration. A lot of discussion that happens on the animal welfare side is not science-based; it's emotion- based. It's very difficult when we're in an emotionally based environment to have a factual discussion.
The answer to your question is: Let's base it on real fact rather than emotion.
Senator Pratte: We're in a context now where the American administration doesn't seem to be very intent on fighting climate change. You mentioned that American companies are your main competitors. In that kind of context, what is the Canadian government to do if a carbon tax is not good policy, in your view, for obvious reasons? Is the Canadian government then to do nothing for four or eight years because the American government is not interested in doing anything, or is there an alternative in your view for Canada to do its share in fighting climate change?
Mr. Warren: Our industry sees value in this country taking a leadership approach to climate change.
But we operate in a very lean economic business model, if you will. What needs to be thought through is that if there are to be taxes applied on the meat processing sector — a carbon tax, per se — then the imports into this country need to be subject to a similar tax, and that the playing field within our own borders is at least equal. That's one solution, but as a country that exports almost two thirds of our meat production, we can defend our domestic industry consumption here but that raises costs to consumers. The challenge for us, then, is how we can remain competitive internationally, because our biggest competitor into Japan, China and so forth is the Americans.
I think what we would be looking for is how to create the policy so that we can make the investments and so forth and maybe get some tax allowances, if you will, to invest in technology to keep us on a level playing field. For sure, it's a significant threat to our industry just because of how our border, at the present time, is open and we compete head- to-head in pretty much every international market against the Americans. It's a big concern.
Senator Pratte: You did mention the different kinds of schemes there are, like the idea of a carbon tax. There's the idea you just mentioned, which has been raised before this committee previously, of a carbon tax where revenues would be reinvested in research and technologies that could help the industry reduce its carbon footprint, and there's cap-and- trade. Even though I understand you don't like any of those, do you have any preference for any of those different methods of pricing carbon?
Mr. Davidson: The one comment I would make in response to that is if the carbon tax money was going to be put back into research, that would be beneficial. As was mentioned by the previous panel, in the case of our sector, it's not the carbon per se that's the issue; there are a couple of other products, like methane and nitrous oxide. I think what we should be doing with these programs is looking at where we can make the best impact for the dollar spent, and in the value chain, it's on methane and nitrous oxide. I'm not talking about the meat industry here; It's the value chain.
I think that's one comment I would make: let's go at the big problem, which is all the greenhouse gases, not just that one.
Senator Woo: If I could pick up a bit on Senator Pratte's question, have you done the number crunching on the increase in input costs from, I don't know, a $30-per-tonne carbon tax? In the previous panel, we had a witness from the Conference Board, and he gave us the estimate of the increase in input costs for pulp and paper, and he mentioned food and manufacturing but didn't give us a number. Do you have a number for the increase in input costs?
Mr. Davidson: We haven't derived a number. You've already had the pork producers and the cattlemen here, and the point I would make is that, frankly, most of the impact is going to come at the producer end, not inside the plant. If you want to pose that question to them, I think they can give you some answers, but it's not really ours.
Senator Woo: Right. Would your increase be incrementally more than what they have?
Mr. Davidson: We're the cumulative impact. Everything that happens at the fertilizer end and in transportation comes before us; we're at the cumulative end.
The other point I'd like to make is that we talk about being an export-dependent industry, but that keeps us competitive in the domestic environment. If we lost our export competitiveness, we would not even have the Canadian market. It would be imported meat.
Senator Woo: Unless it's a border adjustment tax, which Mr. Warren has cited.
Mr. Warren: Yes.
Senator Woo: You make a really good point that there has to be some kind of international co-operation and coordination, even, among major meat-producing nations. Is there such a forum, and is it even possible for these disparate countries to have this kind of conversation, let alone come to an agreement? What's your view on that? Is there an international meat producers forum?
Mr. Davidson: Yes, there is something called the International Meat Secretariat, but that is for the producing countries. It doesn't necessarily include all of the consuming countries. Given the kinds of issues the panel is talking about, such as encouraging meat production in countries that might not be the best place for it, it doesn't necessarily get at those countries. But there is a forum called the International Meat Secretariat that could look at that.
When we come back to talking about subsidies for agriculture production, this has been in the WTO, or the previous GATT, forever, and we've had very little success over the years in really getting rid of those domestic subsidies. We've pretty much done it on export subsidies, but not on domestic production subsidies. The International Meat Secretariat is probably not going to solve European subsidies, if you wish, or even American subsidies, which are pretty large. The WTO is the forum where that should take place.
Senator Woo: Thank you.
Senator Beyak: Thank you very much, gentlemen.
You answered Senator Tardif's question on biodigestion perfectly, but this is one of the most-watched committees in Canada, I guess because we all have to eat and so many of us live in areas that are agriculturally based. Biodigestion is understood well by the committee, but I wonder if you could explain to those at home how we turn waste into power.
Mr. Davidson: We will not claim to be the experts on exactly how that will happen. It's not just biomass from agriculture. It could be forestry, and it could be virtually any living product or component that we have.
I'll use methane from farms, if you want, as an example. What happens is the manure pits are covered, because they produce methane. You cover those pits, you capture the methane and then you burn that methane to produce power, essentially. So you're taking a waste and turning it into energy and, in doing that, you're also avoiding the greenhouse gas effect of the product. In a sense, everybody is a winner at it.
The technology already exists, and we can always make it more efficient. What Mr. Thériault, I believe, mentioned was trying to go to the second generation. He was talking about biofuels with canola and corn, but also getting into more of the fibre and how we can turn that into biomass that we can turn into energy. We're already on the road, partially, but there's a second generation out there that could cover a lot more products and certainly be helpful in reducing energy and production costs.
Senator Beyak: I was in Europe about seven years ago and I was amazed: In the homes, there was actually a hole in the kitchen wall into which they could throw everything, like banana peels, garbage bags and coffee grounds, and it powered the homes. I certainly didn't understand it at the time, and I know when I speak with friends at home, they don't realize there's a huge industry there, and I hope Canada is on the forefront of using it. I'm pleased to see it already happening in agriculture. Thank you.
[Translation]
The Chair: My question is for Mr. Warren. Canada is considered a very important meat producing country globally, and we know that population growth is on the rise worldwide. What will Canada's production capacity be in the coming years? Will Canada be able to provide 50 per cent or 75 per cent more meat to feed the other countries of the world? Can Canadian soil and climate withstand such an increase? I remember that there was talk of doubling production over the next 25 years.
[English]
Mr. Warren: I think our country most definitely has the potential to double our production over the next 25 years. Most of my time is spent in the pork sector, and I've travelled through Europe, which is one of our regional competitors around the world, and within Europe there are different countries that are even more competitive.
The best example is that Spain today produces twice as much pork as Canada. You could probably shove Spain into Manitoba, and maybe a little bit of Saskatchewan, and they double our output as an industry. It's an example of an industry that has a lot of government support, and they've worked very well to create an environment to grow out their industry. They are now a massive exporting nation and it's a large part of the Spanish economy.
When I put them in context relative to what we have here in terms of arable land and so forth, I believe we have four to five times — and maybe even more than that — the arable land that they have, yet they're at double where we are today. I think we most definitely have the land base, the water base, the producers, the technology and the desire to more than double our production in the next 10 to 20 years, if you will. We have all the ingredients and I think we've got the will.
Mr. Davidson: I'd just like to add one comment to that. Earlier this week, we met with the European Commissioner of Agriculture. An interesting statement he made was, "We need your grains and oilseeds so we in Europe can have a competitive agricultural and livestock sector.'' They want our grains and oilseeds transported to Europe so they can compete with us in livestock production. In relation to what Mr. Warren said, we have the potential here; we just need to do it.
[Translation]
The Chair: My question is for Mr. Warren or Mr. Davidson. We produce the large quantities of grain crops needed for animal nutrition. Do you think it would be better to do this with the animals as well? Instead of transporting the grains, we could ship well-packed meat to Europe. Would we be competitive?
[English]
Mr. Warren: We are absolutely competitive today and we can be more competitive in the future. As our industry grows in scale, we can be as competitive as anywhere else in the world.
If you look at the places that produce meat, and there are many different studies that exist out there, Canada typically is first, second or third, depending, sometimes, on the prevailing exchange rate and crop conditions and so forth. We are always top five in terms of where in the world it's most cost-effective to produce protein.
Yes, we absolutely should be producing that protein here and shipping it into Europe. Often, our challenge in going into Europe is there are a lot of non-tariff trade barriers that still exist despite our most recent CETA agreement. Their industry receives a lot of that that our industry does not, and that helps protect their industry and has actually seen it grow in recent years, when it may, in fact, be a bit artificial compared to the conditions that exist in Canada.
[Translation]
The Chair: One last point. In Europe, given that CETA is on the table right now between Canada and Europe, many citizens are concerned about the very stringent Canadian standards of safety and traceability. Consumers — I am talking about small restaurants and small grocery stores — are not in favor of CETA because of these standards. Do you think that can be resolved? Is Canada too tough or is Europe not tough enough?
Mr. Davidson: Are you talking about Canadian or European citizens?
The Chair: Europeans.
Mr. Davidson: Okay.
[English]
You're getting into an area here where we spend a lot of time, and that is comparing food safety. Mr. Warren mentioned some of the challenges we're facing under the CETA, and food safety is a major one related to meat exports to Europe.
We believe, frankly, that our production system produces meat that is as safe, and probably safer, than what's being produced in Europe. That's partly because of the environment in which we function in Canada and in North America, where it's a responsibility to our society and our legal system that the meat manufacturers take every possible measure to reduce pathogen content.
We have met with European veterinarians, who have been quite frank with us. They say that in Europe, they expect consumers to do something, too. They're told to cook the meat, and we expect them to cook it, whereas if you have people who don't think they need to cook meat, there's a different environment over there. We have a different philosophy in food safety to begin with.
The first point I would make is that our meat is at least as safe, from a consumer perspective, as what they're producing, and we think more so.
On the traceability side, when we're exporting to Europe, we have to be able to trace that meat right back to the farm it came from, so I don't think those particular concerns are warranted.
Having said that, there are a lot of small regional geographic indicators they use in Europe, and we can do that too. If the consumer wants to pay the price to know which farmer the meat comes from and have that marked on the label, it does happen here. We can do that; it's just a matter of how much it costs to do all of these segregations.
I've met with the Europeans, and I would suggest to you that those concerns aren't valid if you really understood all of the issues associated with them that are under discussion. We can give a lot of detail on this, because they're major, but fundamentally I would say they're not valid and they're based, again, on misunderstanding.
[Translation]
Senator Petitclerc: Thank you very much for being here.
[English]
I do have a question. We've heard of this a bit from other expert witnesses on the health side of things, who simply advise that we should, at least, eat less meat for health reasons, and some even go to the extreme of saying we should not eat meat. There are more links than before that suggest it is a solution both for health and for the environment. I wanted to hear a bit of your position on how you address that.
Mr. Warren: I would suggest that our meat industry has been under attack, if you will, in terms of a lot of negative information regarding the consumption of red meat.
I think our perspective as an industry — and I can speak, again, for where I work — is that, like anything in life, moderation is what really matters. Eating a healthy, balanced diet of protein and so forth is critical for humans to have good health. We certainly aren't advocates of overindulging in any product; for that matter, I know when I overindulge on the weekend, I sometimes pay for it the next morning.
If you have a life of accumulation, you probably aren't going to have good health at the end. From our perspective, what we advocate for is balance, a healthy diet and proper consumption per the food guides that have existed out there for quite some time.
Mr. Davidson: Once again, we can spend a long time talking about this, but let me just hit a couple of points.
First of all, with respect to the quality of meat, it is the most complete protein we have out there. If you're looking at getting all of the essential amino acids, plus the bioavailable minerals — and I'm thinking particularly of iron, but also zinc — in meat, as a nutritional food there's nothing else that equals it.
On the plant-based diet side, you can come close but it takes a lot of work to get the right mixture of products. Frankly, most people, including some I know very well, aren't spending the time to develop that. They're eating a plant-based diet but they aren't getting the full variety of products.
The second is bioavailability. If you look at the health of Canadians, particularly — I'm going to be quite frank as to what we're told by scientists — pregnant women and young girls, iron in particular is a really big problem. It's a matter of getting bio-available iron. So I would make that point.
You hear a lot about the Mediterranean diet. There's the Mediterranean diet in people's image and the real one. If you go look at Mediterranean countries, they're actually eating as much meat as Canadians are.
Third, there's a perception we're eating a lot of meat in Canada. We're not among the biggest meat eaters in the world. In fact, our consumption of meat is not higher than these Mediterranean countries I'm talking about, and it's not higher, on average, than what the food guide suggests it should be. I'm not saying there aren't people who probably are eating too much.
Going back to the balanced diet, it's clearly where we think people should be. Eat more vegetables, for sure. Eat more fruits, for sure.
But meat is probably not the biggest problem in the diet right now. Clearly, there are other items in the diet over the last 50 years where meat consumption has gone down and you look at the graphs and see problems going up. There are other things out there, and the research is showing where they are.
Senator Petitclerc: So you would not suggest or say that lowering meat consumption is a solution to the environment?
Mr. Davidson: That's the second part of your question. I imagine the cattlemen addressed that when they were here, but if you look at pasture lands around the world, these are major opportunities to act as carbon sinks, frankly. If you take the whole value chain into consideration, that aspect of the production seems to be totally missed — where pasture lands are a major carbon sink.
Senator Petitclerc: Thank you.
Senator Tardif: I don't think this is a concluding question, but I am curious what factors decrease the greenhouse gas intensity per kilogram between beef and pork. Does beef, for example, have a higher footprint intensity per kilogram produced than pork does? If so, why?
Mr. Davidson: I can't tell you how much per kilogram, pork versus beef. They're somewhat different in the sense that they're different animals. You have a digestive system in cattle that means the animal itself is producing a lot of the methane, whereas a pig is a different type of animal. There, more of the issue from the environmental side comes for the manure. Going to the biodigesters and using the methane is one of the solutions to that.
We talked about the improvement in productivity. Part of that is the value chain improvement. It goes back and looks at, particularly in pork more than beef, the increased productivity in grain. If you're producing more grain with the same amount of input, because pork uses a lot more of it per kilogram, it carries through the value chain.
There's the issue that different animals have different problems, and also the value chain approach, which means the environment wins for increased productivity. It doesn't matter where it happens in the chain.
Senator Tardif: Thank you.
[Translation]
The Chair: I would like to address one last point. Among the countries we consider Nordic, including Denmark, Sweden, Norway, Finland, Estonia, Latvia and the countries surrounding the Baltic Sea, despite the fact that these countries are major fish producers, their consumption of pork is much higher than the average European consumption. Can we say that the further north you are, the more meat you consume? Have you come to such findings in your research?
[English]
Mr. Warren: I don't know if the geographic location determines meat consumption. We were just discussing that the American population would eat more than Canadians. Likely, the Brazilians and the Australians would too. The majority of those people would be in a warmer climate than we are here in Canada. It's probably just a taste and preference approach, if you will, in terms of what they've grown up on and what has been built into their diets.
The one thing that's quite interesting about the meat industry is that every country sort of consumes pork a little bit differently, eats different parts of the pig in different quantities and so forth. I don't know if there's anything with respect to where they're located, the temperature or being a northern nation, et cetera.
[Translation]
The Chair: Thank you very much for your testimony, which has been very interesting, positive and constructive for our committee. I hope we will have the opportunity to see you again as part of this study.
(The committee adjourned.)