Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 26 - Evidence - Meeting of March 30, 2017
OTTAWA, Thursday, March 30, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m., to continue its study of the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[Translation]
The Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
I'm Senator Ghislain Maltais from Quebec and the chair of this committee. I would like to start by asking the honourable senators to introduce themselves, beginning with the deputy chair.
Senator Mercer: Terry Mercer, Nova Scotia.
Senator Beyak: Lynn Beyak from Ontario.
[Translation]
Senator Boisvenu: Senator Boisvenu from Quebec.
[English]
Senator Tardif: Claudette Tardif, Alberta.
Senator Woo: Senator Woo from British Columbia.
Senator Bernard: Wanda Thomas Bernard from Nova Scotia.
[Translation]
Senator Petitclerc: Chantal Petitclerc from Quebec.
Senator Pratte: André Pratte from Quebec.
[English]
Senator McIntyre: Paul McIntyre, New Brunswick.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
[Translation]
The Chair: Today the committee is continuing its study of the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors. Welcome to our witnesses this morning.
[English]
From Cereals Canada, we have Mr. Cam Dahl and from the Barley Council of Canada, Mr. Phil de Kemp.
Mr. Dahl, your presentation, please.
Cam Dahl, President, Cereals Canada: On behalf of Cereals Canada, I want to thank the standing committee for the invitation to appear today. My name is Cam Dahl, President, Cereals Canada, a value chain organization that includes farmers, crop development and seed companies, shippers, exporters and processors. We have representation on our board of directors from all of these groupings across the country.
I want to begin by talking about agriculture's contribution. The brief that has been distributed gives greater detail on the continuous improvements in agricultural sustainability that has occurred over past decades. To me, sustainability means growing food in a way that gives good living to farmers and leaves the land and water in better shape for those who will be farming after us.
Canadian farmers have been doing just that. In the last 20 years the amount of fuel used to produce a tonne of wheat has gone down by 39 per cent while farmers produce more grain from every acre of land. This is an incredible story, especially at a time when governments around the world are searching for policies to reduce energy use.
Every year Canadian farmers are increasing soil organic matter. Every bit of that increase in soil organic matter is sequestered carbon. Farmers are locking away carbon while improving soil health. They do this without any government regulation forcing them into action. How much carbon dioxide has Canada's crop sector sequestered? If we value CO2 at $15 a tonne, the answer is just under $1 billion.
Agriculture and agri-food is a leading contributor to the growth of Canadian exports and our gross domestic product. It has been identified by the finance minister's advisory committee on the economy as one the Canadian sectors that has the potential to lead Canadian economic growth and development. If Canadian farmers are put at competitive disadvantage to other leading exporters, we will not be able to realize that growth potential.
Canadian grain farmers and exporters face fierce competition around the world. A significant increase in the cost of Canadian production will make it an unsustainable business for many. With increased costs and lower income, producers will be forced to consider business and cropping alternatives that may not have the same level of contribution to environmental sustainability as modern agricultural practices. In this case policies designed to lower greenhouse gas emissions may actually have the opposite effect.
An understanding by policy-makers of modern agriculture practices and why farmers use these practices is required. It is an understanding that can only be gained through close cooperation and consultation in the industry.
I would like to highlight a bit what governments can do. Governments can play an active role in helping the sector achieve its potential through the provision of education, extension and financial incentives aimed at decreasing the barriers to the uptake of farming practices that demonstrate the greatest potential.
Cereals Canada has six policy guidelines. Working together, we can develop a policy for a strong future that is outcome focused and based on sound science; that is market driven; that is economically sustainable, which is critically important; that recognizes the significant contribution already made by the cropping sector to greenhouse gas emission reductions and sustainability efforts through modern agricultural practices; that is national in scope; and that is supportive of communication efforts aimed at the general public, helping to inform them about the very strong sustainability record of modern agriculture.
What does this mean practically? What can governments do? They can invest to overcome the barriers to the uptake of the 4R Nutrient Stewardship Program, the right source, right rate, right time and right place. They can encourage the adoption of diesel exhaust fuel systems, facilitate the greater adoption of precision tools such as sectional control on seeding and planting units, and invest in soil and water probes to help improve irrigation efficiency and reduce energy use.
These are just examples, but the one thing that all these policy examples have in common is that they are aimed at improving agriculture's competitiveness while increasing the contribution to Canadian sustainability.
Improved sustainability often goes hand in hand with improved economic viability. Changes in production practices where this is the case are win-win, helping to achieve government's intended objectives while improving the competitiveness of producers.
I look forward to your questions. The brief that you have has more detail.
The Chair: Thank you very much, and Mr. de Kemp, please go ahead.
Phil de Kemp, Executive Director, Barley Council of Canada: Thank you, ladies and gentlemen of the committee. As some of you who know me and have been here before, the Barley Council is a national organization made up of all of the producer barley commissions from British Columbia to Prince Edward Island. It also incorporates a good part of value-added chain sector. The malting industry, which is the second largest exporter of malt in the world, is part of the council. Beer Canada with 85 per cent of all beer that is sold and produced in Canada is a big supporter and quite an influential member of the board, along with researchers, seed companies and development companies. To give you an update, there are 14 people on the board: seven producer groups and seven from industry.
With respect to climate change the questions that came from the clerk talked about opportunities, repercussions and perhaps the role of government with respect to what they can do to help the agricultural sector address the need for mitigating the effects of climate change and reducing carbon dioxide and greenhouse gases.
As far as the opportunities, agriculture is inherently sensitive to climatic changes. It's the most vulnerable sector to the risks and the impacts of global change with respect to variability and extreme events. The associated risks are linked to the need for a strong risk management framework that will allow for the financial protection and sustainability of farms into the future, particularly for new farmers. More importantly, if you get into severe climatic conditions, they don't have the assets or resources of some of the older farmers who save for a rainy day.
Opportunities may exist with respect to the expansion and diversity of field types and the potential for extension in growing seasons, but that certainly may not outweigh the impact of increased variability of weather incidents.
Agricultural soil, though, has and continues to represent an opportunity to contribute to the mitigation of climatic change regionally. Continuous improvements over the decades in land management practices, such as conservation tillage, reduction in summer fallow, an increase in soil sampling, adoption of precision agriculture, enhanced crop rotation, increased nitrogen use efficiency, improvements to diesel engine combustion and a strong commitment by farmers to address soil degradation, have vastly improved and increased the amount of CO2 effectively removed from the atmosphere and stored for sequestration in the soil.
To give some examples, in Alberta, to date, the number of verified tonnes of what we call atmospheric carbon sequestration in soils through zero-till management is nearing 4.1 million tonnes since 2007. That is certainly based on a conservative number. However, I will give you a better number that has a lot more study behind it.
The Prairie Soils Carbon Balance Project, or the PSCBP, is a collaboration of the Saskatchewan Soil Conservation Association and soil scientists with Agriculture and Agri-Food Canada. They analyzed thousands of soil samples taken at intervals over a 15-year period from all farms in all of the soil zones across Saskatchewan's grain growing region.
What that project has found over a 15-year period is that about 0.38 metric tons of carbon per acre is being sequestered by Saskatchewan growers using minimum zero-till tonnage, otherwise referred to as direct seeding.
What does that equate to? There are 23 million hectares of agricultural land in production being used in Saskatchewan. That's the equivalent of taking 1.83 million cars off the road every year, just from Saskatchewan producers alone as far as carbon sequestration. This has further resulted in crop productivity growth at twice the rate of increases in greenhouse gas emissions between 1990 and 2013. In the year 2000, for the first time in Canada's history, agricultural soil sequestered more carbon than was being emitted by agricultural practices. That's a report from Agriculture and Agri-Food Canada. I'd like to repeat that. For the first time in Canada's history, agricultural soil sequestered more carbon than was being emitted by agricultural practices in the agricultural sector.
While existing innovations and adaptation technologies often make good business sense on the farm, they require public policy support and education to increase the uptake of these techniques in order to tip agri-business decision making and not offload the cost to producers alone.
We are hearing a lot about the repercussions of a carbon pricing mechanism. Obviously we have one in Alberta right now and the other provinces are moving forward with policies such as a carbon pricing mechanism that aims to achieve greenhouse gas reductions. The adoption of practice change must certainly consider the impact on a producer's economic viability, competitiveness and current best management practices.
Our farmers rely on global prices and therefore are price-takers. Any regulations that increase the cost of inputs such as fuel and fertilizer cannot be slowly passed on to the buyers. Therefore they are borne entirely by the producers, which will have an impact on the future economic viability and competitiveness of the agricultural sector.
On the cropping side, the largest farm impact from a carbon price mechanism will come from natural gas use certainly in grain drying which, given the increased weather variability due to climatic changes, could become increasingly significant when we start to see more extreme weather fluctuation events.
The second largest impact will be the potential for increased costs of custom grain hauling. Farmers worry about the impact that will have because of the thin margins. That's the Catch-22 on the grain hauling side. As many of you know from the times I have been here before talking about the transportation issue, we have reduced the number of elevators from 3,000 or 4,000 to 380, which means they have to drive a longer way. It created efficiencies in the rail transportation system but the Catch-22 is borne by the farmers who drive a lot farther to deliver the grain to those terminals.
Incentives could also be further directed to the agri-food value chain in the cropping sector, such as the malting industry, the crushing industry, grain elevators, buyers and flour millers, to help reduce actual energy use. This would ensure that the costs are not added to the basis or perhaps passed on to our producers.
Finally, as far as talking about the roles of the provincial and territorial governments and what they can do, it is imperative that all of these governments understand that agriculture, particularly the cropping sector as I said, has a zero net contribution to carbon emissions.
It is generally recognized that the actual potential for biologically based greenhouse gas emission reductions such as removal and replacement activities can far exceed the emission contributions of the sector from which they arrive particularly in agriculture.
It is estimated that Canadian biological greenhouse gas emission mitigations have the potential to be from 53 million to 65 million tonnes of carbon per year. The study actually talks about 200, but basically they are saying to cut that down to about one-quarter or 30 per cent.
One of the messages today, certainly from producers that sit at our table, is that if emitters of greenhouse gases are penalized through the imposition of a carbon tax on pollution, emissions or reduction limits, it is reasonable that those who are removing the greenhouse gases through carbon sequestration or capture should be compensated in equal measure.
In particular, that shouldn't be based on the fact of starting from 2005 or 2009. That should go back to the time they started. Farmers have been sustainable. If they were not sustainable they wouldn't be in business. They should be recognized for that contribution and not starting at a baseline, like I said earlier.
Funds can be directed at the federal and provincial levels to offset some of those costs maybe through a cost-share or tax incentive structure, or through some of the carbon banking they are talking about in Saskatchewan and Alberta.
Finally, with respect to the next agricultural policy framework initiatives designed to practically mitigate the emissions most attributed to the cropping sector should be included. One of those is certainly going to be on nitrous oxide. Right now CO2 is at about 80 per cent of the carbon GHGs in Canada. Of that 80 per cent, 2.8 per cent is attributed to agriculture. An additional 6 per cent of greenhouse gas is in the nitrous oxide. From what we understand there is a pretty good potential to decrease that in the agricultural sector to between 15 per cent and 25 per cent.
In closing, financial incentives within next policy framework can encourage implementation of the practice changes required to meet climate change objectives and avoid additional costs to producers. We talk about costs? Who will pay for it? Where the money will come from? I'll give you a perfect example as far as the contribution within the barley industry. I think some of you have heard this from me before, but I notice there are new members here. The Conference Board of Canada completed a study a couple of years ago for Beer Canada. It wanted to take a look at what was the financial tax contribution of the beer industry to the coffers of federal and provincial governments.
About $75 million worth of barley is bought by the malting industry, of which I'm still the president, to make into malt for the domestic beer industry. That's about 300,000 tonnes only. That 300,000 tonnes goes just into making beer for the domestic industry. Of that, about $5.8 billion is in taxes, $5.4 billion is right at the cash register when you buy a case of beer between federal and provincial excise taxes. The other $400 million is in municipal property and corporate taxes. We are not talking income tax on employment income. It's straight tax. That's $5.8 billion on 300,000 tonnes of barley.
In our view that $5.8 billion funds the entire budget of Agriculture and Agri-Food Canada at $2.7 billion; Innovation, Science and Economic Development Canada at $2.2 billion; Canadian Food Inspection Agency at $800 million; the Canadian Grain Commission and the Canadian Dairy Commission; and top it off with another $160 million for the budget for the PCO. That's just from 300,000 tonnes of barley.
From our part and on the part of all our industry partners in agriculture, we think the money is there. It's just a matter of attributing where it can be used.
Thank you for your time, Mr. Chair.
Senator Mercer: Mr. de Kemp, if the finance minister or the Prime Minister were listening, the answer to the financial problems is really to grow more barley.
Mr. de Kemp: On that, senators, the beer industry is not even happy with the budget. They talk about the escalator scale that will increase the tax on beer by the Consumer Price Index or inflation every year.
At some point you would rather have more people drinking beer, more barley being grown and growing the tax base on consumption in a safe manner than just increasing the taxes all the time.
Senator Mercer: I've done my part.
Mr. Dahl: I will just add a quick point because in fact you are right. If we look at the Canadian trade surplus in the last quarter, agriculture and agri-food was one the key reasons Canada has a trade surplus. It is a driver of the economy. It is a technological industry that has enormous potential to grow. It is a driver of the economy.
I agree with you, senator. Growing more barley, more pulses, more canola and more cereal crops will absolutely drive the economy and drive growth.
Senator Mercer: If you both could make one recommendation to this committee, and if you were sitting down with Minister MacAulay or the Prime Minister, what would be your number one recommendation?
Mr. Dahl: It would be to recognize the contribution that agriculture is making and be aware of unintended consequences of that contribution. If there are policies that make agriculture production more expensive and less economically sustainable they may have the reverse impact. They may in fact reduce the sustainability.
Mr. de Kemp: I wish I could give you more than one.
As far as policies aimed at the cropping sector they have to be fluid in nature. Things are going to change because of the climate. I don't think we can have a one size fits all. We can talk about innovation for the producers and organizations. If it is risk based but cutting edge funding, some processors will want to take the leap of faith to see if that works.
I know from our producers that they are doing an awful lot of carbon sequestration and there should be recognition of that. That will help alleviate some of the additional costs and allow them to continue to be competitive. At least they are getting compensated for that because they will not get compensated by an importer from another country for taking sustainable practices.
Senator Mercer: This past budget, in my time here, was the one that had the most emphasis on and mention of agriculture and its goal in growing the economy. That's good news as long as it's followed through. Promises in the budget are one thing; delivering on the budget is always another.
Senator Tardif: It's my understanding that the agriculture industry produces more nitrous oxide than carbon dioxide from its emissions. I'm not sure if that's correct but I understand as well that the use of fertilizers where the soil converts the nitrogen into nitrous oxide may be a factor.
What is your industry doing to address nitrous oxide emissions and to reduce the use of fertilizers?
Mr. Dahl: Perhaps I could make three points in response. It's important that modern agriculture practices including the use of fertilizers and other crop inputs is a big part of the reason agriculture is sequestering more greenhouse gases than they are emitting. These are sustainable practices.
If we think back to Google 1930 dust storms, the reason they happened or the reason we saw that environmental disaster was excessive cultivation. Because modern fertilizers and modern crop inputs were not available, summer fallow was required to help with soil fertility.
The use of fertilizers is not part of the problem. The use of fertilizers is part of the solution. It is part of the reason agriculture is sustainable today.
What could we do more? There are some incentives to encourage the uptake of the 4R program to increase the efficiency of fertilizer use. That's helpful for producers because it's an expensive input.
Precision agriculture is also helpful because it allows farmers to control where and when to turn off parts of the equipment where fertilizer might not be needed and use GPS and satellite to guide the equipment. The increased use of precision agriculture will also assist with that, but the starting point is actually that modern agriculture is not the problem. Modern agriculture is the solution.
Mr. de Kemp: If I could follow up on that a bit, the 4Rs represent the right source at the right rate, at the right time and the right place. That's quite a branding by the fertilizer industry.
On nitrous oxide, 80 per cent of greenhouse gases are carbon emissions and 6 per cent is nitrous oxide. Of carbon emissions, 2.8 per cent or so is related to agriculture. Mr. Dahl was talking about what they are trying to do under the 4R program to reduce the nitrous oxide by 15 per cent to 25 per cent. If the producers will do that, there is a number attributed to the significant savings on a per acre basis.
Everyone recognizes over the years that farmers wouldn't be in business unless they were sustainable. They are not just businessmen. They have to be agrologists, and you name it, to stay in business and embrace the new technologies. That's what is keeping them in business, keeping them profitable and keeping them competitive.
Senator Tardif: I understand that. With the 4R program that you have spoken about, is there an educational program for farmers to make them aware of the 4Rs you have mentioned?
Mr. Dahl: There are a number of initiatives, and not necessarily again government based. Another key point is that farmers are carrying out the improvements in soil health and reductions in fuel without government regulations.
There are programs such as Certified Crop Adviser. Most of the larger commercial farms will employ agrologists. Many are now making use of companies that will help with precision agriculture and programming in how fertilizer is used. Farmers have a number of tools, but increasing the uptake of programs like the 4R would be helpful.
[Translation]
Senator Boisvenu: Thank you very much for your presentations. I worked for the ministry of the environment in southern Quebec for about fifteen years. We worked very closely with farmers on all aspects of production. I made a number of observations during that time, and you can tell me if I am correct.
We have seen a significant increase in corn crops in Quebec. This increase is primarily for the production of biofuel, rather than for animal or human consumption.
We have also seen a significant increase in the use of chemical fertilizers as opposed to animal fertilizers. I am referring to liquid manure, either from cattle or the hog industry. In the 2000s, corn was cultivated in October, according to the strictest standards, to make sure the manure was spread as early in the season as possible so the soil could absorb the fertilizer. Nowadays, it is almost December by the time the corn is harvested in Quebec.
It seems that things have really been stretched out, especially as regards corn production, an important industry in Quebec, and that the focus is on yield rather than innovation. That is my first observation, and you can tell me if I am right or not.
I did a one-year work term in animal farming in France. France was having problems with watercourses at the time, especially in Brittany. France has innovated a great deal in terms of production, especially with regard to nitrate traps. You are no doubt familiar with this approach of speeding up the harvest in the fall and planting the new crop, especially in the feed and legume sector — I am thinking of rapeseed and that type of cereal. This encourages nitrate capture in the soil, instead of stretching out the season as much as possible and leaving the soil bare, which leads to erosion and soil degradation.
Has the agriculture industry in Quebec and Canada not focussed on increasing yields instead of developing new ways of managing the environment in harmony with agriculture?
[English]
Mr. Dahl: First off, I am very proud that les Producteurs de grains du Québec are members of Cereals Canada. In response to your question, for me it's not an either/or. It's not productivity or the environment. They go hand in hand.
We've seen it with the decrease in fuel use. Fuel use in Canada has gone down for every tonne of grain produced. Today it is 39 per cent less fuel use than it was 20 years ago. That's an incredible number.
Soil health is improving. Every year soil organic matter is increasing. Those are innovations. They're coming about because of innovations in farm practices such as reduced tillage, conservation tillage and zero tillage. They're coming about because of innovations in fertilizer use and in seed technologies.
They're improving the sustainability and the environmental footprint of agriculture. Agriculture's environmental footprint is getting better and better all the time. At the same time they're making farms more profitable.
Productivity and profit are going hand in hand with an improved sustainability record.
Mr. de Kemp: If I can, I'll give you a perfect example. I'm from a corn and soybean farm 20 kilometres from here. It is right across from the old Experimental Farm on Woodroffe Avenue. It was expropriated by the NCC way back when and we still farmed it.
My dad was one of the first corn producers here in eastern Ontario. To give you an idea of production versus environment, back in those days I couldn't farm because when I graduated the interest rates were 23 per cent. I was the only son and he said, "Sorry, I can't help you.''
Back then it was broadband for fertilizer. You just spread it. You had a dial and you turned it. It wasn't precision. We used to stick our hoses in the creek to pump up the water to mix with the herbicides and chemicals and it would spill. There were those kinds of dangers.
Now we have windrows and watercourse protections on the farm. We talk about climate change and the relationship with the biofuels and what have you. We have the one right here in Prescott now. When we started growing corn, heat units, which is an indication of what kind of seed you would buy, meaning how many days of sunshine and heat, it was around 2,100 or 2,200 heat units in eastern Ontario. Right now my sister and I are buying seed corn with about 2,800 or 2,900 heat units.
To do that we used to combine in October and now everyone is combining in November. Part of that is because they are pushing up the heat units. Part of it is the drydown rates. The longer it stays in the field, the drier it gets and the less natural gas you have to use going through the grain drier. Obviously it helps when Mother Nature is doing it.
We never had soybeans way back when. Now with the rotations they just started to come on. Regarding production versus impacts on the environment, I've seen firsthand how those techniques have changed. Precision spraying and precision fertilizer applications are all here in eastern Ontario. Most of the big farmers are hiring private agrologists. You don't have field extension people from the provinces anymore. Those days are almost over.
[Translation]
Senator Boisvenu: I completely agree with you. With the great many agronomists coming onto the scene, there were a lot of changes in agricultural practices. This resulted in improvements to soil condition and watercourses. It will take some time of course to repair 30 years of waste, to return the watercourses to the way they were 30 years ago. Nonetheless, not many innovations have been made. The advances in environmental protection relate primarily to agricultural practices. We have not seen widespread innovation.
Why could we not harvest corn in October in Quebec, even if we have to use the existing equipment to bag it? Now the corn is bagged in the fields, whereas before it was done at warehouses. Using the soil for a different crop would offset the intensive use of fertilizers and the practice.
I am from the school that says that practice has steadily improved agriculture in Canada. We have not innovated a great deal, though, in terms of changes and habits. The season is stretched out. Instead of maintaining the same season length, that seasonal gain is used to push agricultural production to the limit. That is my point about agriculture in Quebec, among other things.
[English]
Mr. de Kemp: One of the reasons that farmers are now harvesting corn later in the season is that they have a crop of soybeans to take off ahead of time in October.
That really helps on our farms because you're using less fertilizer because of the nitrogen nodules on the roots. You're putting natural, organic nitrogen back in the soil so you don't have to use as much the next year on your rotation. As far as using the same tractor, you're able to use it for other things. They are growing more soybeans. That crop comes off in October. That's the first crop that comes off.
Not many farmers are using straight corn silage anymore, and there are reasons for that. They're extending the growing season. They're finding other crops to punch in between, which helps with soil improvements and reduction in the use of fertilizer particularly on soybeans or what's required the next year, whether it's putting in corn, barley or what have you. I can only speak from my personal experience.
[Translation]
The Chair: Four senators have asked to speak. We barely have 20 minutes left. I would ask the senators to ask shorter questions and the witnesses to reply briefly.
[English]
Senator McIntyre: Gentlemen, thank you for your presentations. In the closing paragraph of your written presentation you set out four policy options governments should do in order to improve the competitiveness of Canadian agriculture. In other words, and I quote:
Governments should be considering policy options for agriculture that fit this mould, rather than policies that are punitive because they increase the sector's costs.
Very briefly, could you elaborate a bit further on what you mean exactly by punitive policies?
Mr. Dahl: Policies that would increase the cost of fertilizer and make it more expensive to use modern agricultural practices may have the reverse impact from the intended results.
If it makes fertilizer and modern practices more expensive to use, farmers may be forced to go back to practices from 30 or 40 years ago to increase cultivation, for example. That would in fact reduce sustainability.
Senator McIntyre: I have another short question that has to do with carbon pricing mechanisms. Bearing in mind Canada's competitors are Brazil, the European Union and the United States, do you have any knowledge if those competitors had to adopt carbon pricing mechanisms? If so, what effect did these mechanisms have on their farmers?
Mr. Dahl: I would add the former Soviet Union countries. The Black Sea is now the world's largest exporter of wheat. They used to be our biggest customer. No, they are not facing carbon pricing schemes. Australia did have a carbon pricing scheme but doesn't any longer.
If Canadian farmers are facing costs that our competitors don't, it's an intensely competitive international marketplace and that does make it more difficult for Canadian producers.
Senator Pratte: I want to follow up on that. I would like to dig a bit deeper into an idea that both of you expressed in one way or another, that since agriculture sequesters more carbon than it produces farmers should be compensated if there is a carbon pricing scheme in one province or the other or in the whole country.
Have you elaborated on how that would work exactly? Would it be on a scale of individual farms? Would it be at the industry level? If a province has a cap-and-trade system, for instance, how would that work? If you sequester more carbon in a cap-and-trade system you can have an economic advantage from that. How would that work? Have you thought it out?
Mr. de Kemp: Right now there is a program in Alberta. It hasn't worked too well from my understanding. I know producers are talking to the provincial government about tweaking that.
In Saskatchewan, I understand the talk is with all of the organizations because it's a provincial matter right now as far as dealing with the cap and trade. They would like certainly to be compensated. It's like a land bank or a carbon bank. When they do the calculations every year it would be up to them to decide if they wanted to sell it that year or maybe the next year.
Probably at some point it's going to trade up and down like in a futures market. One year they may not need the revenue. If the carbon pricing goes up the next year maybe they will want to take advantage of that, and they should have that opportunity.
If we could pass that on to the country that we're selling to, if they could recognize the cost of sustainability, what it is doing globally and that we're improving things, and if they're willing to pay for that, we wouldn't be having these discussion about cost.
As Cam said, the Black Sea is not doing it and Australia has walked away from it. If you could pass those costs on and it became a sustainability brand for Canada, we wouldn't have to worry about it. However, we're not getting compensated for that right now.
Senator Pratte: If we start making exceptions or exemptions for an industry based on whatever good points the particular industry can make for their case, I am worried then that many industries can make good points for making exceptions also.
Senator Woo: To build on Senator Pratte's question, the design of a cap-and-trade system could allow for credits to be given to sectors which actually take carbon out of the atmosphere. It would make total sense to me and would overcome the problem of special pleadings because the industry or the company would have to show that it's actually reducing or removing carbon from the atmosphere.
That then raises the question of the baseline of cost. In theory, one would only want to reward incremental gains. You can't really reward historical gains, but you've made an argument that you should be rewarded for historical gains.
Can you tell us that argument again? I'm sure this is going to come up in due course. Smart people will be able to design a system that properly punishes, if you will, industries and people who emit carbon dioxide and rewards other sectors of society that reduce it. There should be a system we can design, but the baseline is going to be extremely important. Can you say a bit more about your case for an older baseline?
Mr. de Kemp: As far as cases are concerned, even in the province of Saskatchewan they've been looking at this for 15 years. They have the numbers down pat. They started looking at this 15 years ago before we even started having these debates. They were futuristic in their thinking outside the box and planning ahead. There should be some reward for that.
Senator Woo: Give them credit for that.
Mr. de Kemp: As Cam mentioned the Barton report talks about going from $50 billion or $55 billion in exports to $75 billion over the next 10 years. Agriculture has always walked the talk. Every time we get a free trade agreement or what have you, they say we will increase exports.
I am thinking outside the box, and this is me personally. It would be nice if we could have a competitive advantage. If you can't make the money on the export sale because the margins you're competing with are real tight, maybe then you're going to make it on the carbon thing. That will give you a competitive advantage into the market.
Senator Woo: That's very creative. That's good.
Mr. Dahl: I would also add that we can't forget about unintended consequences. If we put incentives in place that encourage industries and farmers to actually reverse the environmental and sustainability gains that they've made simply to reset their base so that they can remake those incremental gains is a perverse consequence.
We run the risk of that. We run the risk of setting policies with negative unintended consequences that reduce the sustainability of the Canadian environment instead of increase it.
Having a base that is today would encourage farmers to go out and break up all the land that they have been continuously cropping for the last 20 years in order to reset their base. Nobody wants to see that happen.
Senator Woo: What is the relative impact of a carbon price on the various categories of farm inputs that affect your industry, fertilizer versus fuel and other inputs?
Mr. Dahl: I don't have a relative answer at the top of my head.
Senator Woo: Would it impact fertilizer costs much more?
Mr. Dahl: Fertilizer and fuel costs are at the top of that list. I don't have a number to give you, but I put fertilizer at the top of the list.
Senator Beyak: The soil sequestering of the carbon was very impressive. I had the same question as Senator Pratte but you've answered most of it. I wondered who else you are presenting it to besides the Senate. Are you working with other groups? Are you talking to the federal government or leaving it to the provinces?
Mr. Dahl: A number of national initiatives are under way. The Canadian Roundtable for Sustainable Crops is one example and the National Environmental Farm Plan is another.
Yes, we're talking to Environment and Agriculture Canada and yes, we're talking to the provinces.
Mr. de Kemp: With respect to the provincial commissions they're putting as much emphasis and full-court press on with the provinces to articulate the importance of doing the right thing on provincial programs. They're not knocking on doors all the time.
[Translation]
The Chair: Before we finish, I would like to reiterate two points that were made. You can make a lot of soup, and a lot of beer, with 300 tons of barley. My mother made excellent barley soup, but she did not know that the grain could also be used to make beer.
In terms of transporting grain, it is the same story every year. Is there a miracle solution to solve this problem once and for all? If we keep it up, we will have the same problem in 2050. One year it is CP, another year it is CN, the Port of Churchill, or the Port of Vancouver. It is everyone's fault, and no one's fault. Is there a solution to the problem of transporting grain?
[English]
Mr. Dahl: How many more hours do we have? The quick answer is that the industry was very encouraged by the policy announcement Minister Garneau made in October about legislation coming forward this spring that would balance the power between the rail companies and shippers and would bring commercial accountability into the system.
We're very encouraged by those announcements and look forward to that legislation.
[Translation]
The Chair: Thank you very much, Mr. Dahl and Mr. Kemp. Your testimony will be very helpful to the committee. Unfortunately, we are out of time. Thank you for coming and safe trip home. If you have any further recommendations for the committee, please do not hesitate to send them to our clerk.
[English]
Our next witness, from Pulse Canada, is Mr. Gordon Bacon, Chief Executive Officer. Thank you for accepting our invitation to appear.
Gordon Bacon, Chief Executive Officer, Pulse Canada: Thank you and good morning to everyone. I appreciate the opportunity to have a chance to share some of the views of Pulse Canada with you today.
I want to focus my remarks on the committee's interest in hearing views on the repercussion of carbon pricing mechanisms on the competitiveness of Canadian farmers. I also want to share with you the ideas of Pulse Canada on the roles of federal, provincial and territorial governments in addressing greenhouse gas reduction.
Let me jump right into my presentation with an important caveat. Emissions of greenhouse gases should not be looked at in isolation. Greenhouse gas emissions are one of many environmental indicators that need to be considered. Land-use efficiency is important as we think about global solutions to feed 9 billion to 10 billion people. Global biodiversity is another.
Equally important, we have to think of other public policy issues so that we are not making progress in one area and being counterproductive in another.
Most people like to start a discussion on the carbon footprint of food with a focus on agriculture, but I am going to start from the perspective of how we need to look at food and work our way back to primary agriculture. This is a good way to look at how one solution may work and how it will look when viewed from a different perspective.
The second slide in the presentation that was handed out to you takes a look at agriculture's contribution to greenhouse gas emissions for Canada and a comparison of what they are on a global basis.
Farmers in Canada or anywhere in the world will grow what consumers want to eat and what makes sense for those farmers to grow on their farms. When compared to global indicators Canada's contributions to greenhouse gases are weighted slightly differently than the aggregated global data.
I can add from my experience in agriculture that we know Canadian farmers are doing a very good job and would be rated among the highest, if not the highest, in the world in their ability to sustainably produce food.
How do we tackle greenhouse gases from a food perspective? As shown in slide 3, the biggest pasta company in the world and the biggest snack food company in the world have shown that the biggest impact in greenhouse gas emissions related to food production occurs at the farm level, but ingredient production is looking at only one variable. We also want to look at what people choose to eat and how the food they eat can be formulated and manufactured to reduce its contribution to greenhouse gas emissions. We need to simultaneously address several socially important policy issues related to food.
Slide 4 adds other issues to our discussion like food's impact on human health. As the slide shows nearly 2 billion people in the world are overweight or obese. In 2016, Canada ranked 166 out of 190 countries when looking at the number of adults who were overweight and obese. It is a bit shocking and sobering to think that there were only 24 countries out of those 190 in the world that had a higher percentage of adults who were overweight and obese.
With obesity being a leading risk factor for cardiovascular disease and diabetes, it suggests we need to look at food solutions that will not only improve the health of planet but also improve the health of the people.
Let's bring a third factor into this discussion. Food was featured prominently in the recently released Economic Council report as a potential leading area of economic growth for Canada. We have the land, the water, a proven record of innovation and food safety. We are a net exporter of cereals, pulses and oilseeds. Feeding an expanding population both in terms of numbers and unfortunately girth with food that addresses health issues and sustainability issues at the same time is Canada's opportunity to make a contribution to these global challenges.
Slide 5 provides the framework that Pulse Canada believes is the measure against which initiatives that focus on food should be measured. Are we moving in the right direction with policy initiatives when evaluated against the important public policy issues of economic growth, environmental sustainability and food's contribution to improving social indicators of health, like obesity, and the affordability of food? Let's keep in mind that the Advisory Council also cautioned against regulatory approaches that are suboptimal in their design and narrowly focused.
Let's look at how carbon pricing stacks up against this measure of program evaluation. How does carbon pricing fare as an approach when looking at the impact on economic competitiveness and growth of exports?
As previous witnesses have mentioned, carbon pricing adds costs to key inputs like fertilizer and fuel. Carbon pricing is a cost that is not paid by farmers in other agricultural exporting nations. These costs can't be passed along by Canadian farmers to the value chain in an open market and thus will negatively impact the competitiveness of Canadian agriculture vis-à-vis the rest of the world.
It has been suggested that higher prices will act as catalyst to encourage innovation. Farmers already pay the cost for fertilizer bills and fuel, so the economic incentive for efficiency has always been in place. Canadian farmers have been among the world's leaders in innovation to optimize their returns on investments and things like fertilizer through the development and adoption of new technologies.
The motivation for efficiency and optimization of inputs like fertilizer exists without an added cost of carbon. Carbon pricing will suboptimize the potential for economic growth in agriculture and food production in Canada and may reduce Canadian production as farmers will recalculate their optimal use of inputs.
In order to feed a hungry world this could end up driving food production to other regions of the world that are less carbon efficient than Canadian farmers but are now economically more efficient because of a lower tax structure.
I would also add that there are no direct signals to consumers when carbon pricing is applied midpoint in the value stream. When the impact is felt at the farm level and not by consumers, consumer behaviour is not going to change. Food company behaviour would not change since Canadian farmers will still need to sell to them at globally competitive prices.
My view is that this policy does not provide incentives for the entire value chain to innovate. Clearly carbon pricing does not address issues like growing health care costs associated with rising rates of obesity and the related diseases of cardiovascular disease and diabetes.
How effective will a carbon pricing policy be on reducing carbon emissions from agricultural production? It's a key question. We are going to have to ask the people that developed the policy. I would like to know what is the incremental reduction measured in tonnes of GHG or greenhouse gas emissions that will be reduced and is associated with the sliding scale of pricing from $10 to $50 per tonne by 2022.
A good policy decision is one that has a clear tonnage target in mind and a sound rationale that links the increasing pricing with an increasing reduction in greenhouse gas emissions. That rationale and the target to be achieved are not evident for this policy as it relates to agricultural production.
Here's my scorecard on the effectiveness of carbon pricing to achieve the goal of greenhouse gas reductions: Unproven. Scorecard on fostering economic growth potential of the sector as identified in the Dominic Barton report: Suboptimal, to use his words. I think suboptimal is far too kind of a description. It will have a measurable impact in reducing the opportunity for economic growth in this sector in Canada. There is no link to providing any value to addressing non-communicable diseases, so we can say that this policy is not of consequence in contributing to a reduction in health care cost savings.
Let's move to the second question that you were interested in that I said I would address, and that's the role of governments in addressing greenhouse gas reductions and the other socially important issues of health care and economic growth.
Slide 6 addresses the same issue as was looked at by another group. The World Economic Forum addressed the issue of how we can build the world we want and the world we need. This is a far more holistic approach than simply trying to address one challenge with the overused tool of taxation.
Let's go beyond what the World Economic Forum talked about and look at what other countries are already doing to address a wide range of socially important issues. Slides 7 and 8 demonstrate what four countries are doing to influence and change consumer knowledge about making informed food choices. Perhaps no dietary guidance message is as clear as is shown on slide 8, where the Swedish food guide says, on page 2:
What you eat isn't just important to your own personal well-being; it's important to the environment as well.
We can go beyond government policy statements and dietary guidance messages related to food and follow what the food industry is already doing. Earlier this year a privately owned French company announced their investment of $400 million in Portage la Prairie, Manitoba, to build a pulse fractionation plant. Slide 9 contains quotes from the chair of Roquette and the CEO of the company. This investment by an ingredient company in Canada is in response to what food companies are already interested in doing to address growing consumer interest and their own corporate commitments to reducing environmental impact.
Let's bring it even closer to home. Canadian companies are already reformulating food to improve the nutrition in ways that give Canadians the option to choose a path to healthier and more sustainable food. They are doing this through the innovative use of ingredients and manufacturing processes to reduce greenhouse gas emissions. They are leaders in rethinking our approach to food as a way to contribute to healthy people and a healthy planet.
Let me illustrate this with what can be done with a slice of Canadian bread. While slide 10 shows how we can reformulate and transform the health of people and the health of the planet with each slice of bread, as I talk about it I want you to think about everything from snack foods to breakfast cereals, pasta, crackers, cookies, and the wide range of food around the world that is made with cereal crops.
In this bread example one slice of this new bread, 45 grams of Country Harvest Canadian rustic bean bread, is being compared to the same weight of 45 grams of white bread, which in fact is two slices. The Canadian rustic bean bread has three times the fibre of an equal comparison of weight of white bread and one and a half times the amount of protein. Using the inclusion of a 20 per cent pea flower in the bread, we would also be able to reduce the greenhouse gas emissions associated with this food by 23 per cent with the simple act of immediately changing the formulation.
How quickly will carbon pricing bring down greenhouse gas emissions related to food production is the question we need to look at. You can only evaluate the efficacy of one policy when you consider what some of the other options to it are.
Let's embrace a change in how we look at food. This is the future of food. It's a path to innovation and growth for Canadian farmers and the markets they sell to. It's a path to innovation for growth for Canadian food manufacturers. This is the way we need to go to simultaneously improve the health of Canadians and reduce greenhouse gas emissions associated with food production.
If the private sector is already introducing transformative change, what is the role for government? That's the second question I said I would address. Has the government provided the framework to foster this kind of innovation? No, it has not. We have the opportunity to make Canada great again, put us in the driver seat of now being seen as the healthy people and healthy planet food basket for the rest of the world. This is where our opportunity lies.
I will close with one example of what government can do to create that enabling environment to simultaneously address environmental and human health concerns. Canada is only one of two countries in the world that includes a protein quality regulation for food companies. Our regulation is based on methodology that was introduced in 1913. This regulation is sadly out of date and is a deterrent to Canadian food companies innovating and introducing innovative food products to Canadian consumers.
Canadian companies simply will not provide the amount of effort that's needed because they don't believe the methodology of a rat-feeding model is an effective indicator on how human health will be affected. At a minimum we're recommending that Canada could take the approach being following in the U.S. as an interim step but move quickly to adopting the European approach to addressing protein in a completely different way.
Perhaps this committee will consider the opportunity to rethink the approach that Canada could take to effect change in how we look at food as the vector to deliver on some key broad societal needs like sustainability as well as economic growth in important social issues like human health care and health care costs.
Go back to slide 6 and consider the need to collaborate across what is a siloed approach within government as well as the broader opportunity to address social, economic and environmental opportunities and help consumers make informed choices.
I'll end on this point: We can calculate the tonnage reduction in greenhouse gas reduction that could be achieved through food reformulation and dietary innovation through sourcing from sustainable cropping systems in Canada. Let's encourage companies and consumers to make informed choices in what is produced and what is consumed. Let's talk about the approach that will deliver the outcome we all agree upon of encouraging Canadians and Canadian companies to embrace a future of healthy people and a healthy planet.
Senator Mercer: Mr. Bacon, thank you for your very interesting presentation. On support for carbon pricing I will put you down as doubtful.
The issue is complicated. It is getting more complicated for us as Canadians because we have a neighbour that might not be as committed to helping solve the problem as they were six months ago. That doesn't mean that we don't act.
What do we do with this problem that we have? Everybody must come to the table to help solve this problem because there are no borders that prevent greenhouse gases from moving around. The issues of climate change affect all of us.
If it's not carbon taxing, what is it that Canadians bring to the table that will have an effect and start a worldwide movement to solve this problem? If it's not carbon taxing, is it strictly dietary changes, one of the things you suggested? What is the one thing we need to do?
Mr. Bacon: Let's make it personal for every Canadian and provide guidance to Canadians on how to make an informed choice on the impact of their dietary choices. Let's encourage them to make choices in terms of traditional foods. We can also make bread from 100 per cent wheat but sourcing that wheat and producing flour from sustainable cropping systems will have an enormous impact.
We need to bring it back to the level of Canadians and encourage a rethink of how we look at food. We can't talk about bread as it once was because we already have companies that are making bread that is completely different. We have to rethink how we look at food and how we can set a target of 20 per cent reduction for the personal impact of Canadians on greenhouse gas emissions associated with food. State that as your goal and now work your way back.
Senator Mercer: I'm the principal grocery shopper in my home and I'm usually the main cook when I'm home. Obviously by the size of me I don't do a good job on the dietary side. When I shop for a product I like to buy healthier products but the products on the shelf that I see aren't screaming out to me: "Hey, I'm healthier than the guy sitting next to me.''
Mr. Bacon: Absolutely. You have no indication on the carbohydrate quality of one package of bread versus another. You have no indication from labelling on what the sustainability measurement of one food product versus another. If we want to help consumers make informed choices we need systems that allow communication to consumers about important factors like carbohydrate quality. Labelling for glycemic index would be one way to achieve that.
On environmental sustainability, we all have homework to do to figure out how we would do that and we need to do it coordinated on a global approach.
Senator Mercer: This committee visited Maple Leaf Foods in Toronto a number of years ago. We met with Mr. McCain, the president and CEO, about a bunch of things. Getting back to being the grocery shopper in my family because my wife does the other kinds of shopping, I commented on a gluten-free sliced ham product of his that I had been buying in the local Sobeys store in my community. I asked Mr. McCain if it had gluten in it before the packaging was labelled as gluten free and he said, "No, there has never been gluten in it at all. We kept getting calls from people about whether it was gluten free so we started putting gluten free on the labels and it improved sales.''
Is that what we need to do to help educate manufacturers? Is it a good idea to do what Maple Leaf Foods has done by putting gluten free on a product that never had gluten in the first place?
Mr. Bacon: Consumers have a lot of requests for information. There probably isn't room on the label to put everything, but this is where we can look at a smart labelling initiative as a way to provide additional information to consumers using smartphones and other things.
We have to make it a personal goal of Canadians and provide the right information so they can make an informed choice not only on health but on environmental sustainability of the food choices they make.
Senator Mercer: I have to compliment you that you didn't spend all your time telling us that we need more pulse products in our diet, although you talked about bean bread.
Mr. Bacon: This is an important shift in the approach we are taking at Pulse Canada. We are shifting to talk about dietary approaches. We have to find solutions that work for the dairy industry, Cam's wheat industry and the meat industry. We have to find ways to allow consumers to make the choices they want. We need to do it on a global basis.
If we are going to partner with groups like Diabetes Canada or others, they are not going to be interested in promoting pulses on my behalf. Let's look at dietary approaches to allow the information to be put on labels and allow it to be communicated.
Primarily the role of government is to get into this century. The discussions in the United States in their last dietary guidance message had their expert panel making recommendations that the U.S. food guide should contain references to sustainability. We haven't even had those discussions in Canada.
Senator Mercer: Should Canada's Food Guide that we are all familiar with be rewritten to have a greenhouse gas element to it?
Mr. Bacon: I believe we have some best practices in countries like Sweden, the U.K., France, the Netherlands and Germany. We need to look at what those countries are doing. As I pointed out in slides 7 and 8, all of those food guides make reference to the importance of the short and long-term human health issue. Environmental protection is part of the long-term strategy. I believe it should be part of Canada's as well.
Senator Pratte: I would like to come back to what you said about carbon pricing. First of all I want to make sure I understand correctly. You talked about carbon pricing as not being a good policy in the agricultural sector.
I want put that in context. I'm not sure whether you want to say anything about this, but do you have anything to say about carbon pricing in general? Do you believe that carbon pricing is a good policy to reduce GHG emissions in general? Do you believe it should not be applied to the agricultural sector, or do you believe that carbon pricing in general is bad policy?
Mr. Bacon: I will use by example a tax strategy on alcohol or cigarettes. There are examples where taxation is an encouragement to change in behaviour. In examples where we have an encouragement to change in behaviour, it's almost always accompanied by programs to provide education to consumers, to provide encouragement for behavioural change at the consumer level.
I believe an approach to greenhouse gas reduction needs to be at the end point at the consumer level. We need to have it as part of an education program. As it stands alone as simply a tool of taxation, it is an incomplete policy in my view.
Senator Pratte: All carbon pricing policies are not equal. You can also have a cap-and-trade policy which is quite different from a carbon tax. If consumers made different choices which had an effect, some farmers would change crops or adopt crops that had less impact on GHG emissions. They could benefit from cap and trade. They could use a cap-and-trade system to reap economic benefits. Is your statement about carbon pricing policy also valid for the cap- and-trade system?
Mr. Bacon: I don't start with a discussion of cap and trade because I think it's starting at the wrong point. We should have a food policy. I would question what cap and trade would do to motivate change in consumer behaviour. It is not a tax policy that is equivalent to a GST tax, which is end point taxation designed to change consumer behaviour and have a pushback down the chain.
I'm not an economist, but I don't understand what the value is in starting at midpoint in the chain. It is failing to address consumer behavioural change. In a market-based economy it has to be the primary consideration. It certainly is an opportunity that we need to more fully explore so we can compare that option to issues like cap and trade and other forms of carbon pricing as an incentive or disincentive to applying certain behaviours.
Senator Pratte: I have a very short supplementary question. If climate change is an urgent problem and according to almost all scientists necessitates urgent changes to our economic system, do we have time to adopt the policy you suggest to educate consumers so they change their behaviour and bring change to agricultural practices and so on? I'm not sure we have the time to do that.
Mr. Bacon: I would argue that a reformulation of food would have an immediate effect. We don't have a timeline. You will have to explain to me the timeline for how a sliding scale of carbon pricing will reduce emissions. It is relying on assumption that technology will be sped up and sometime in the future will reduce carbon emissions.
With food reformulation pulses are part of the solution because they don't require nitrogen fertilizer. A combination of sourcing from sustainable systems and reformulation will bring immediate results. My argument is this is the option that addresses issues immediately to achieve that 20 per cent reduction in the greenhouse gas footprint of the food we all eat, and this policy is decades long to achieve results.
Senator McIntyre: There is no question that consumers have a role to play in reducing greenhouse gas emissions. As you have indicated they could buy more products containing pulses, thereby reducing greenhouse gas emissions.
In your opinion what is keeping Canadians from buying foods that help to reduce greenhouse gas emissions? Is it a cost factor?
Mr. Bacon: They can also produce and buy meat products, dairy products and wheat products identified as being sustainably produced. I'm not here solely to give a pep talk for pulses.
One key thing Senator Mercer pointed out was that when he goes to the grocery store there is no indication on a food package whether there is a difference between one food item and another. I'll use the dairy industry as an example because I used to work for the Alberta government in a dairy area. The land use efficiency of some of the operators in Alberta is tremendous. We have a story to tell. We need to understand ecosystem-specific stories around the food products.
To answer your question with a short answer, it is because we don't provide them with any information about how to make an informed choice.
Senator McIntyre: My second question has to do with pulse crops and the use of fertilizer. I understand from your presentation that there is no question pulse crops result in a relatively low use of fertilizer. Therefore it is important from your point of view to include pulse crops in a crop rotation system.
Bearing in mind this crop rotation system, what limits the introduction of practices such as crop rotation using pulse? You've covered that a bit but I would like you to go over that again.
Mr. Bacon: It's one the recommendations I would make because in some regions of Canada we don't have pulse crops that are ideally agronomically adapted. We can talk about Quebec or Ontario where the pulse crop is beans. We need research to improve the nitrogen fixation efficiency of beans in those regions of the world.
I very much agree that it is a crop systems approach. We need to look at reducing the footprint of all crops that come off of that rotation. Wheat looks better when grown after pulses. It's not just a sales pitch on pulses. It's that we need to provide that kind of science-based approach, combined with consumer behaviour and the right incentive at the food manufacturing level to bring all of these together. At the risk of being repetitive, this should not be looked at in isolation of issues like economic competitiveness as well as the health and the wellness of people consuming foods. It needs a more integrated approach, and consumer information is key.
Senator Bernard: My question follows nicely on Senator McIntyre's. Thank you for the preamble that I now don't have to give.
I really appreciate the work that you've been doing and the emphasis on addressing both environmental health and human health simultaneously. I also like the work that you are saying you've been doing and that needs to be done in terms of breaking the silos and working across these issues.
I actually haven't heard about poverty and how poverty influences food choices. We know that poor people and people who live in poor communities are more likely to live in food deserts. They're more likely to be consumers and not producers. They're more likely not to have good quality supermarkets in their neighbourhoods though they are travelling farther. They are less likely to have access to transportation to get to those places where they have better choices. They are also more likely to have health-related issues such as the ones you've identified: obesity, cardiovascular and diabetes. As a senator from Nova Scotia I know that in both the Mi'kmaq community and the African-Nova Scotian community there's a higher proportion of people with diabetes, for example. All of these issues impact or influence choices around purchasing food.
Is your organization looking at those realities? Some consumers are making purchase decisions based on the economics. Many people in the country are living below the poverty line.
Mr. Bacon: The answer is: Yes, we are. One of the projects we undertook in International Year of Pulses 2016 was to work with Community Food Centres Canada to develop training material that would provide education on how to integrate pulses as part of an affordable dietary approach to nutrition. It doesn't address all of the issues of availability and proximity to affordable fresh produce but certainly it gets back to education of consumers.
Also a food transformation system involves a shift in diet, approaches to diet and retraining, as well as the availability of foods to take this novel-for-some Canadian approach. It is part of the solution. It's an education of consumers on how to use products that will provide a better health outcome. It links back to initiatives that we need to advance rapidly. That's things like glycemic index labelling of food to help people make the right choice.
Senator Bernard: You're sort of saying switching attitudes around food and food consumption. A lot of that is very culturally bound as well. There has been some really good research done in Canada on the relationship of culture and history to food and food choice and those sorts of things.
Are you aware of some of that work? Is some of that feeding into the work that you're doing here and more importantly into the educational piece? To go into some communities with an educational agenda that totally leaves absent the cultural relationship to food would not be the right direction to go in.
Mr. Bacon: I agree completely. I've discovered in working with the pulse industry around the world is that many of the cultural elements have been lost. The modernization of the food industry has resulted in the loss of some important traditions.
I will just give one quick example. The Three Sisters is a traditional First Nations story in the Americas about the partnership among three sisters: corn, to provide carbohydrates; squash, a fresh fruit and vegetable that stores well; and beans, a source of protein. It is a story about nutrition, the importance of environmental sustainability, and a partnership of working together in an integrated way.
There are many of those kinds of stories in cultures from around the world. Of course traditional diets include pulses, the grain legume, as a source of protein. It is a modern phenomenon to have shifted to more meat consumption and more dairy consumption. It is not part of the tradition. It depends on how far back we need to go in some of these traditions and traditional diets.
Civilizations were developed in Asia and the Middle East around a pulse and cereal partnership. It's only when we've enjoyed affluence that we have been able to afford to shift to more animal-based protein sources.
[Translation]
Senator Boisvenu: Thank you for your very interesting presentation. In reading you résumé, I can see that your organization focuses on innovation. Is that correct?
Mr. Bacon: Yes.
Senator Boisvenu: The agriculture industry deals with millions of workers who own their land and their equipment. They are ultimately conservative people. We own the land and it is more difficult for us to change our practices than it is for a factory worker who does not own the equipment and who has to change their work habits for health and safety reasons. The automotive industry has innovated a great deal in the past 50 years to reduce emissions and consumption by adopting new practices and also by innovating. Is the role played by organizations such as yours truly effective in terms of innovation in order to achieve environmental protection objectives? Are these organizations on a par with other industries that have made dramatic strides?
[English]
Mr. Bacon: My job has allowed me to travel to more than 60 countries around the world. I am proud of Canada's leadership on many fronts. I would note that we are a global leader in innovation in primary agricultural production. We are modelled by other countries as the approach to go to in terms of efficiency, scale and scope.
Funding for my organization has come from the primary agricultural production level. Primarily farmers have also shown tremendous foresight to fund the work that we've carried out at Pulse Canada for 20 years, which has shifted away from talking about agricultural production to a food system transformation.
We're funding work today with ETH Zurich, one of the top 10 universities in the world, to develop a system of how we can measure food to take a look at its human health and environmental health impact.
We're fostering innovation at the production level. We have innovative farmers who are fostering leadership in the policy area as well. I'm very proud to be part of the industry that believes with great passion that we have an opportunity to change the world.
Canada can emerge as a great leader again, emerging from what we were 150 years ago as the breadbasket of the world to now be seen as the innovator of healthy people and healthy planet in a broad dietary approach. I think we're there.
[Translation]
Senator Boisvenu: My last question will be brief. Does the federal government play an active enough role or do you think it could play a different role?
[English]
Mr. Bacon: I give a great deal of credit to the policy frameworks over the last 20 years that have provided matching funding to industries like Pulse Canada to foster this thinking beyond traditional approaches.
I'm not critical of what we've done but I say in going forward we really have to take a transformative approach. It's time to break down the silos. The Prime Minister gave the Minister of Agriculture and Agri-Food a mandate to develop a food policy for Canadians.
In my view the food policy has to simultaneously address issues which fall under the jurisdiction of Environment and Climate Change Canada, Health Canada, Industry Canada and Global Affairs Canada. Whether it is the agricultural minister alone or in collaboration with all of his other colleagues, this is the time to make the transformative shift. I believe we've moved beyond the point where we can focus on simple incremental improvement to what we already do. The opportunity for the future is this transformative shift to changing how we look at food.
Senator Woo: You raise a really important point that consumer choices ultimately are key to reducing greenhouse gases. We know that in the case of transportation, for example, it's basically our choice to buy cars and drive cars which drive energy production. We know in terms of our housing choices that many of us prefer to live in single-family dwellings which are far away from where we work and cause more carbon emissions when we could be living in high- density apartments, for example. As you've pointed out it's true also in terms of food choices. The food choices that we make have an impact on the types of crops that are grown and the products that are produced. I buy all of that.
I buy the idea that education is a good idea so that individual consumers make choices that are better for them and better for society. Government has some role to play in that.
We get into a lot of normative issues, cultural issues and social issues when you move into the space of trying to change consumer behaviour. I'm not a nutrition expert, but in the case of food my sense is that in the extreme a diet with no animal protein, a diet with no products that are highly processed, would likely result in better health outcomes for the population as a whole. It would also reduce GHGs for society as a whole.
I don't think we want to go there. A lot of people would be very unhappy if the government were to advocate no meat proteins and absolutely no processed products like potatoes chips and all of that, but we know it would be better for society. Based on your argument we would also likely find that scenario would lead to lower GHGs for Canada and for the world.
If we believe climate change is a problem and we want to tackle it, the price mechanism is the best way to get at changing consumer behaviour without making nominative judgments about whether your meat diet is harming the planet. If there's a way in which we could capture all the externalities of carbon emissions through the entire supply chain from production to transportation to the grocery shelf and have it show up in the price, it's more likely to influence consumer behaviour than anything else you and I or the government can do. That's the theory anyway and that's why the carbon price is there.
You've raised some interesting points about how it might not change the behaviour of some farmers, but maybe that's because you are looking at it only from your point in the supply chain. There is a supply chain that includes the truckers, the shippers, the grocery store and the people who do packaging for the product. All of these people will be affected by the carbon price one way or another. That will show up in the end in the product price. If that product price somehow leads to more innovation or reduction of use of products or practices that are GHG emitting, it will lead to some improvement in the overall goal of reducing carbon emissions for the country.
The corollary to this is that if you feel that health considerations should be factored into the overall approach to how we deal with the food system, maybe what you're saying is that we need not just the carbon price but taxes on food products that are unhealthy, taxes on food products that will cost society more in the long run.
In the same way that carbon emissions are an externality that creates a cost for society as a whole, some of the problems you raise about unhealthy food products create costs for society as a whole that will be borne by not just the people who get ill but all of us.
These are partly comments but partly an invitation for you to respond and give us your further thoughts on how we can deal with this conundrum of wanting to reduce GHGs in the entire system and doing so using what I think is the most neutral price mechanism rather than simply through moral suasion.
Mr. Bacon: I'm smiling. I wish you knew me better because my nature is to be argumentative. I'm going to say I don't agree with you. I think taxation and carbon pricing are blunt instruments that will ultimately impact the food insecure in Canada to the greatest degree.
We're underestimating the ability of consumers to make informed choices. We're underestimating the role of government to provide leadership in a food transformation role including incentives to look at food reformulation. Food reformulation will result in a dietary approach that is more affordable. We have an approach where we apply tax, which is to drive behaviour by increasing cost. This is inconsistent with our need to address the needs of the food insecure in Canada.
I think we can do more and do more quickly by the approach that I'm suggesting than to use taxation.
Senator Woo: Are you talking about moral suasion, not regulation?
Mr. Bacon: Enabling regulation incentives.
Senator Woo: Can I ask a follow-up question?
The Chair: A very small question.
Senator Woo: I'm really interested in this Roquette investment of over $400 million in the pea protein plant in Canada announced in January of this year.
Can you give us a bit more of the back story to this investment? Presumably they made this investment in the knowledge that Canada is going to move ahead with a carbon price.
Mr. Bacon: Canada is the world's biggest pea producer and exporter, so they put in place a plant in the nation that provides innovation leadership, plant breeding and production of pulses.
There's a global shortage for protein from plant-based protein. Pulse protein has some very unique interest and attraction to the food industry. You only need to read the quotes of the CEO or chair to see the food industry recognizes this opportunity and is already putting their money in place.
I would ask in a sort of rhetorical way what the government has done to provide encouragement to foster what companies are already doing. The answer is I can't come up with an example.
I think government in Canada particularly is 20 years behind where some other countries are. I think we're behind where the Americans are. We're far from a leadership position. That's why it's time to shake things up, and not through an approach of taxation. There are better, more finesse tools which will address a broader range of social issues than taxation.
[Translation]
Senator Petitclerc: Thank you very much for your presentation.
[English]
I think my question was answered. I couldn't help thinking about Diet for a Small Planet, one of the first books I read in college that was written in 1971. What you are telling us now really echoes what was written in 1971.
Why are we not there yet? You did answer much of that, but perhaps you could tell us briefly the strongest resistance. Where does that resistance come from? Is it the farmers or the big corporations? Is it too much of a vision? I'm curious to see why we are not there yet and where the resistance is from.
Mr. Bacon: What do we teach children in schools? Knowledge in food is passed down from parents, but as we lose traditional knowledge and traditional approaches to food we now become influenced by the environment we're living in today.
I'll go back to the idea that consumer demand is going to be the driver of the change. The way we have consumers making choices that will drive this diet for a healthy planet or a small planet is going to be by creating the demand pull for this approach.
I've said very critically and boldly that we're 20 years behind in Canada. We don't have an equivalent at a provincial, federal or territorial level with the exception of Quebec, which is by far the leading province in the country in terms of taking an approach at a societal level for dietary shift. Quebec perhaps could go further if we had federal regulations that would provide more incentive.
I don't think we've made this a public priority, but as we talk now about public policy issues of climate change addressing rising health care costs we simply cannot continue to do what we've done more efficiently. One argument is that you will simply get to a point of failure quicker. We have to make this shift. I think that's both an opportunity and a challenge.
I'm going to go back and say the answer is that I don't feel it internally. I'm not reminded of what we need to do. I speak sort of as an individual within society. Government is now trying to find ways to address these issues. With all respect to Senator Woo, I'm saying I think there are other ways we need to explore.
Senator Beyak: Mine is a practical question as always. I'm sure everyone at home wants to know if they can buy that wonderful new bread or if it's still in a marketing and promotion stage.
Mr. Bacon: We have two national bread brands. One is put out by a Western family, which is Overwaitea Save-On- Foods available in Western Canada which carries the Pulse Brand and the leading brand of Country Harvest. I would encourage people to seek out foods and look for ways to understand more about what they can do at an individual level.
I'm not going to give a Pulse advertisement. You know that's what I would like to do. To me, this is an area of passion for people. I think they can find the solution and the path that will give them that opportunity. By the way, it is delicious bread.
Senator Beyak: Thank you very much for your tax comments. We work as Canadians until June 7 every year to pay taxes and then our money is ours to keep. Taxes are important for me, and I agree with every word you said.
[Translation]
The Chair: Mr. Bacon, you talked about all the work that has been done over the years regarding the sale of harmful products, such as tobacco. In the end, the results have been very good, in particular owing to taxation. As of July 1, 2018, it will be possible to grow a new product on agricultural land, one that also produces smoke. Will this product emit as much carbon as barley does? Will we have to tax it the same way as tobacco is taxed? What are your thoughts on this?
[English]
Mr. Bacon: The tobacco taxation issue is a really good example. To be effective in Canada we have very strict border controls. In food, we do not have anywhere close to that kind of control. A taxation policy on cigarettes versus a taxation policy on food doesn't work.
Only in supply management commodities where you have very tight control over trade can you be taking a look at what impact pricing would have. With an open border and food companies able to source from anywhere in the world, we can't have unique policies in Canada unless we have very tight border control. We're a free-trading nation. We have to be in agriculture because we export 80 per cent of what we produce.
I can't address the question about the new crop introduction because I'm not aware of the agronomic footprint of that crop. I can only talk about some of the major crops that I've seen the data on.
[Translation]
The Chair: So that will be a first in Canada, an agricultural crop that might not emit any carbon.
[English]
Mr. Bacon: After sunlight, carbon dioxide and water, nitrogen is the most essential plant nutrient. All life forms need nitrogen. To optimize crop production you need to add supplemental nitrogen, with the exception of grain legumes or other leguminous crops that don't require it. Every other crop is going to need nitrogen from some source.
[Translation]
The Chair: Thank you very much for your very interesting testimony, Mr. Bacon. Let me say that you would have made a good politician.
(The meeting adjourned.)