AGRI Committee Report
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Competitiveness in the Agriculture Sector: Supplementary Report by the Conservative Party of Canada Members of the Standing Committee of Agriculture and Agri-Food 1. The Conservative members on the Standing Committee of Agriculture and Agri-Food (SCAAF) are pleased to submit a supplementary opinion to the Competitiveness Report. Throughout our consultations, it is known that the Government of Canada is investing in the agriculture of today and tomorrow, and that this is having a beneficial impact throughout the entire agricultural sector. This supplementary report is submitted in order to highlight areas the main report has omitted or erred on important matters. 2. Before commencing the supplementary report, Conservative members would like to thank each of the witnesses that came before committee to present evidence. The time and effort they dedicated to our study has provided all Committee members and parliamentarians a better understanding and insight into the issues affecting the agricultural industry. 1. Development of New Markets 3. The Conservative Party believes that in order to be competitive, our farmers must have access to international markets to sell their products. Time and again, the committee heard witnesses across all sectors state that opening and expanding markets is fundamental to their competitive success. Both Free Trade Agreements and Bilateral trade agreements were often highlighted as a solution for increasing competition in Canada’s agriculture sector. The Committee also heard positive feed back on the Market Access Secretariat (MAS), announced in January 2009 by the Minister of Agriculture and Agri-Food, the Honourable Gerry Ritz, PC, MP. It important to note that the details regarding the MAS are available on Agriculture and Agri-Food Canada’s website. 4. The Government has been successful in negotiating many Free Trade Agreements and Bilateral agreements through a number of trade missions. However, in a minority parliament, the Government needs support from the Opposition parties to pass the legislation necessary to put the agreements into place. Recommendation 1: That the Government, with the support of all Opposition parties, immediately pass the Canada-Colombia and Canada-Jordon Free Trade Agreements. 5. It is important to note that the Government, in the best interests of farmers, is currently challenging several countries before the World Trade Organization. This process needs to be conducted in a manner that does not damage or strain trade relations beyond the trade irritant being disputed. Conservative members strongly disagree with the Oppositions’ decision to include Recommendation 1.4 in the main report, which calls on “the Government of Canada to create in advance a list of South Korean goods that would be subject to retaliatory trade measures.” This is an extremely counter-productive recommendation. 6. The Government of Canada is challenging several countries in regards to trade restrictions and barriers that are adversely affecting the agricultural sector. None has been more adverse on the competitiveness and economic sustainability of the livestock sector than Country-of-Origin-Labelling (COOL) laws and regulations implemented by the United States. Numerous witnesses testified that COOL is negatively impacting the livelihood of the livestock industry in a significant manner. 7. The Government of Canada has defended the interests of the cattle, hog and red meat sector by launching a World Trade Organization dispute settlement process against the U.S. mandatory COOL legislation. The Government has maintained that a forthright and open dialogue with the U.S. on this issue is in the best interest of farmers on both sides of the border. Therefore, although the Committee has provided the Government significant direction within its main report, it is believed two additional recommendations should have been included within the Committee report. Recommendation 2: That the Government of Canada and the Minister of Agriculture and Agri-Food continue to pressure the US Administration and Secretary of Agriculture Vilsack to change COOL. Recommendation 3: That the Government of Canada, the Minister of Agriculture and Agri-Food and other parliamentarians, continue to lobby Congress and other interest groups regarding the long term consequences that COOL will have on the entire North American livestock sector. 8. Conservative members of the Committee are encouraged with the action the Government has taken to increase the competitiveness in the cattle processing sector, particularly by investing $75 Million in Budget 2010. The investment includes: · Increasing funding available under the Slaughter Improvement Program by $10 Million to support the introduction of new, cost-effective technologies. This brings total funding for the Slaughter Improvement Program to $60 Million; · Targeting $25 Million to cattle processing plants that handle cattle over 30 months of age; and · Investing $40 Million to support the development and commercialization of innovative technologies related to the removal and use of Specified Risk Materials (SRM). 9. Conservative members disagree with the analysis of the National Farmers Union and their proposals on how to deal with so-called captive supply and the marketing of beef. Canada is an export oriented nation and for that purpose specifically the Canadian cattle industry produces far more beef than can be consumed in the Canadian market place. Therefore, the continued export of Canadian live cattle and beef is essential to the continued success of the beef industry and no marketing limits should be imposed on Canadian beef producers. 10. In regards to captive supply, the Conservative Party recognizes that a review of the entire beef value chain is appropriate and solutions should be sought to increase competition throughout the value chain with the goal of increasing beef producer incomes. Some solutions that were suggested to the Committee during its study on competitiveness included further expanding foreign market access, reducing regulatory discrepancies between Canada and our major trading partners, beef branding initiatives and increased competition in the global and domestic beef processing and food distribution industries that will create greater demand and higher prices for beef and live cattle. Recommendation 4: That the Minister of Agriculture and Agri-Food work with the cattle processing sector to develop a framework that will help the industry reduce the costs associated with the removal of SRM. 11. An element that has not been clearly addressed in the Main Report regarding competitiveness in the agricultural sector is the monopoly of the Canadian Wheat Board (CWB). The CWB is a monopolistic state trading enterprise that restricts and limits Western Canadian grain farmers and prevents them from independently marketing their own wheat and barley. The Government has always been clear that Western Canadian farmers deserve marketing freedom. This position was reiterated in the Speech from the Throne that opened the 3rd Session of the 40th Parliament. Recommendation 5: That the Government of Canada table legislation in the House of Commons that will give Western Canadian grain farmers market freedom. 12. Conservative members are encouraged that Opposition members of the Committee and the CWB have agreed that reform of the CWB must start with the election of directors and fully support that recommendation in the Main Report. Recommendation 6: That the Government of Canada table legislation in the House of Commons to modernize the process of electing Directors to the Canadian Wheat Board. 2. Competition in the Agri-Food Sector 13. In order for the agricultural sector to be competitive, the Government believes that a strong Agri-Food sector is fundamental. The Committee heard from witnesses across the Agri-Food industry on its importance to Canadian agriculture. Under Canada’s Economic Action Plan, the Government has funded many initiatives through Agri-Flexibility to promote the Agri-Food sector. Some of the initiatives include: Canada Brand Advocacy, the Agri-Processing Initiative, the Renewable Energy Initiative and Bio-Economy Crop Initiative. 14. For additional information regarding Agri-Food funding, please refer to the Appendix in this respect of this report. 15. It is important to note that the Main Report discussed the prospects of deregulating the Interact debit card network. Although this issue falls under the Department of Finance, it does indirectly affect the Agriculture sector and it is worth highlighting initiatives the Government has taken with regards to this industry. As such, the Government recognizes that the Competition Bureau is an independent law agency. However, as a strong supporter of small business, we also recognize the concerns surrounding the credit and debit card industry. That’s why the Government recently released a code of conduct for the credit and debit card industry in Canada. As announced in Budget 2010, that code is being made available for adoption by credit and debit card networks and their participants. To further underline our commitment to this issue and the code, the Government has also introduced legislation (The Jobs and Economic Growth Act, presently before Parliament) to provide the Minister of Finance with the authority to regulate the conduct of the credit and debit card networks and their participants, if necessary. 3. Agricultural Research 16. The Conservative Party understands that for the agricultural sector to continue to be competitive investment into research is paramount. That is why the Government has continued investment in science and innovation that will improve the competitive advantage of farmers in the long-term. Some of the projects undertaken include: the Growing Canadian Agri-Innovation Program, the Agri-Opportunties Program, and Canadian Agricultural Adaptation Program. 17. For additional information regarding research and innovation funding please refer to the Appendix. 18. With regards to Recommendation 3.1, the Office of the Auditor General (OAG) audited the Research Branch (RESB) of AAFC from April 2005 to September 2009. The OAG’s intent was to determine whether the research initiatives undertaken were meeting their objectives as outlined by AAFC’s Science and Innovation Strategy and the Growing Forward policy framework. The OAG concluded that AAFC was not meeting all of its strategic initiatives and proposed six recommendations in its report. 19. The Government has indicated that it agrees with the OAG’s findings and has developed several initiatives which will address the report’s findings, including:
4. The Regulatory Framework and Competitiveness 20. Agriculture is regulated in our country to protect animal and plant resources, our environment, and the health of Canadians. The Government believes that this measure of protection is very important, but we also need to be sensitive to the agricultural sector’s need to compete in the international market place. If the approval process for regulated items does not keep pace with innovation and leading edge science, our producers will suffer long-term economic disadvantage. 21. The Conservative members believe that Recommendation 4.1 and the Oppositions’ support for it is not a long-term solution for the industry because the recommendation does not drive innovation or higher productivity. The Government has taken, and will continue to take, concrete action to encourage long-term solutions to reduce the costs of SRMs. Some of the initiatives to date include: · The Minister of Agriculture asked AAFC and CFIA to lead an Enhanced Feed Ban (EFB) working group to explore further options to reduce the financial impact of SRM. The EFB working group hopes to identify opportunities, including alternative uses of SRM, to minimize the impact of the EFB on cost-competitiveness with the U.S. At the same time, however, contemplated changes will have to be assessed against the risks posed to human and animal health, consistency with international obligations, risks to Canada’s OIE “controlled BSE risk” status and market access into the U.S. and beyond. · Budget 2010 provides additional funding of $10 million under the Slaughter Improvement Program to introduce ‘cost-effective technologies’ for slaughterhouses and $25 million to cattle processing plants that handle cattle over 30 months of age. The Government will also be investing $40 million to support the development and commercialization of innovative technologies related to the removal and use of Specified Risk Materials. Recommendation 7: The Minister of Agriculture and Agri-Food continue to pursue solutions to reduce the cost of SRMS, which are consistent with international obligations and commitment to human health and animal safety. 22. Canadians have told us that they want truthful information on food labels. They are looking for more information about where their food comes from and they want the assurance that when they see “Product of Canada” on the label, the product has been made and processed according to Canadian standards that they trust. The Government’s new guidelines provide consumers with certainty and confirmation that the Canadian ingredients in the foods they choose have been produced by our Canadian farmers and processors. 23. Under the guidelines, when a manufacturer chooses to use the voluntary “Product of Canada” label, significant ingredients, processing and labour used to make the product must be Canadian. There should be very little or no foreign content, with the exception of minor additives or spices that may not be available in Canada. Labels consistent with the “Made in Canada” guidelines help Canadians identify foods that have been ‘processed’ in Canada and ‘may’ contain some Canadian ingredients. When one buys food with one of these two labels, one can be confident that they are contributing to Canadian jobs and to the Canadian economy. 24. Although the new guidelines have been successful in ensuring that food labels are clear and understandable for Canadians, some sectors of the industry face challenges in consistently sourcing some Canadian ingredients. The Government recognizes this difficulty which Canadian food processors face. For this reason, we are consulting industry and consumers alike for their views about exempting certain specific food ingredients, such as sugar, salt and vinegar, from the “Product of Canada” guidelines. Recommendation 8: That the Government of Canada consult with consumers and industry leaders about the value of exempting specific ingredients from the “Product of Canada” guidelines. 25. Another important aspect of the regulatory framework that ensures that the agricultural sector is competitive in Canada is supply management. It allows our farmers to produce what the market needs. The system balances supply with demand and takes into account the cost of production. This helps farmers pay for their farms and make a decent living for their families. It provides stability to the farmer and certainty of supply and price to the processor and consumers. 26. The Conservative Party has been very clear on our strong support for supply management. We have consistently supported supply management. For example, the Government took action under Article 28 of the General Agreement on Tariffs and Trade to limit imports of low-duty milk protein concentrates through establishment of a new tariff-rate quota. 27. At the World Trade Organization, we continue to strongly defend the interests of supply-managed industries. The Government has committed to making the WTO Special Agricultural Safeguard fully operational for supply-managed goods. The WTO Special Agricultural Safeguard permits WTO members to provide enhanced stability for sensitive industries by imposing temporary surtaxes in response to sudden over-quota import surges or significant reductions in over-quota import prices. Recommendation 9: That the Government of Canada continue its strong support for the supply managed sector domestically and internationally. 5. Conclusion 28. In conclusion, the Conservative Party understands Canada’s agricultural sectors are facing many challenges to their competitiveness. However, farmers can count on the Conservative Party and the Minister of Agriculture to put farmers first in everything they do. Whether it is marketing agricultural products internationally, supporting farmers domestically or bringing marketing freedom to grain growers, the Conservative Party of Canada will continue to stand up for our producers. Appendix BUDGET 2010 & CANADA’S ECONOMIC ACTION PLAN The government would like to highlight the actions taken by the Government to help the agriculture sector throughout the recent economic crisis. In Budget 2010, the Government of Canada is: · Investing $75 Million to ensure that Canadian cattle producers continue to have access to competitive cattle processing operations in Canada. This includes: o Increasing funding available under the Slaughter Improvement Program by $10 Million to support the introduction of new, cost-effective technologies. This brings total funding for the Slaughter Improvement Program to $60 Million; o Targeting $25 Million to cattle processing plants that handle cattle over 30 months in age. o Investing $40 Million to support the development and commercialization of innovative technologies related to the removal and use of Specified Risk Materials. · Providing $52 Million over the next two years to support the operations of the Canadian Grain Commission. Despite the Opposition’s decision to block the progress of Bill C-13 in the previous session of Parliament and deny western Canadian farmers a modernized Grain Commission, the Government remains committed to modernizing the Canadian Grain Act and the operations of the Canadian Grain Commission to address evolving needs of the sector. · Fighting Invasive Alien Species (IAS) by providing $38M over two years to support federal programs under Canada’s IAS Strategy. The CFIA will receive approximately $12 Million a year to support their ongoing IAS initiatives. The Commitments in Budget 2010 build upon the strong initiatives launched through Canada’s Economic Action Plan for agriculture. In the Economic Action Plan, the Government is: · Making an additional $1 Billion in loans over the next five years available Canadian farm families and cooperatives through the recently passed Canadian Agricultural Loans Act. · Investing $500 Million through the Agri-Flexibility Fund to proactively drive innovation, to take advantage of market opportunities, and to bring new products to market, including: o $20 Million for the Livestock Auction Traceability Initiative to build a vital link in the traceability chain that tracks Canadian livestock from the grocery store back to the original farm gate; o $32 Million for the Canada Brand Advocacy Initiative to help the Canadian agriculture and food industry proactively capture and develop markets around the world; o $50 Million for the AgriProcessing Initiative to support new technologies and agriprocessing projects that will improve the Canadian agriprocessing sector; o $1.6 Million for the Grow Canola 2.015 project to develop an innovative communication system using new web technology and social media platforms to deliver relevant information to Canadian canola growers and help them increase exports, economic activity and jobs in the canola sector; o $7.8 Million investment to the Canola Council of Canada to develop a comprehensive strategy that will open new markets and examine current legislative, regulatory and administrative trade barriers; o $4.2 Million for the Renewable Energy Initiative that will audit and promote the use of agriculture-based renewable energy sources and equipment; o $1.7 Million for the BioEconomy Crop Initiative, that will evaluate the economic and environmental benefits of crops such as fall rye, perennial grasses and hybrid willows to plant and harvest for energy generation; and o $6 Million investment to help the sheep and goat industry. · Investing an initial $50 Million for the Slaughter Improvement Program to improve competitiveness through investments in new technologies and processes. This includes: o $9.6 Million to Levinoff-Colbex – a Quebec beef packer- to help improve the long-term profitability of eastern Canada’s largest culled cattle slaughter plant; o $10 Million to Keystone Processors Ltd. – a Winnipeg processing company - to upgrade a beef processing plant and to open new markets for Manitoba beef producers.; and o $2.7 Million for écolait Ltée to install state-of-the-art equipment to upgrade its slaughter and processing facility. · Investing $25.9 Million for the Modernizing Federal Laboratories program to update eight facilities, providing long-term economic benefits for farmers and an immediate economic stimulus. · Investing $123,000 for New Brunswick potato farmers to capture new markets and increase profitability by investing in a new market information database. · Investing $2.2 Billion to support industries and communities. This will help create job opportunities in all parts of Canada that have been hit hard by the economic downturn. It provides support for affected sectors, including agriculture. TRADE AND MARKET ACCESS The Minister of Agriculture is very active in opening new markets around the world. The Government of Canada is:
o secured an agreement with China to re-open its markets to Canadian pork; o regained full access for Canadian beef to the key export market of Hong Kong; and o signed an agreement with Sinograin to increase Canadian canola oil imports to China by an additional 200,000 tonnes, for a total of 350,000 tonnes in 2010. · Signing and concluding Free Trade Agreements with EFTA (Switzerland / Liechtenstein / Iceland / Norway), Peru, Colombia and Jordan. · Negotiating Free Trade Agreement negotiations with many trading partners including with the EU, Panama and the Canada-Central America Four Countries (El Salvador, Guatemala, Honduras and Nicaragua). · An active participant in the WTO negotiations to: o eliminate export subsidies; o reduce trade-distorting domestic support; and o increase market access. · Strongly supporting supply management at the WTO and EU FTA negotiations. The Government has: o Taken action on Article 28 under GATT to limit imports of milk protein concentrates; o Committed to bring into force the WTO Special Safeguard; and o Established cheese compositional standards to ensure that real milk is a key ingredient in Canadian cheese. · Continuing to defend the interests of the cattle, hog and meat sectors by launching a WTO dispute settlement process over the U.S. mandatory country-of-origin labelling (COOL) legislation and by maintaining a frank and open dialogue with the U.S. on this issue in the best interest of farmers on both sides of the border. · Reinforcing the safety of Canadian pork while dealing with h1N1 and restoring market access across the world for our pork producers including the Chinese market following Prime Minister Harper’s trip to Beijing in December 2009. · Continuing to push Korea to open its market to Canadian cattle. The Government has filed a second request for the establishment of a WTO settlement panel regarding Korea’s measures blocking the importation of bovine meat and meat products from Canada. · Coordinating government and industry efforts to open and expand markets through the recently created Market Access Secretariat. · Promoting Market Access by launching the Trade and Market Development Program, including $88 Million for the AgriMarketing initiative. · Kickstarting the Canada Brand Initiative in Japan with an initial investment of $1 Million. · Investing $1.2 Million to increase sales of Canadian dairy genetics in international markets through the AgriMarketing program. · Investing through the Canadian Agriculture Adaption Program of up to $900,000 over five years to support the Scaling-up Organics Initiative to help the Certified Organic Associations of BC implement a new and comprehensive market development strategy. · Investing an $118,000 to the Organic Trade Association under the Agri-Marketing program to remain ahead of international market trends, developing promotional materials, and building a long-term international strategy for the organic sector. HELPING THE LIVESTOCK SECTOR The Government of Canada is: · Investing $75 Million in Budget 2010 to improve slaughter capacity in Canada and to help the livestock sector cope with SRM removal costs. · Delivering a comprehensive restructuring plan for pork producers, which includes: o $17 Million for the International Pork Marketing Fund; o Long-term loans with government-backed credit that financial institutions can offer to allow viable hog operations to restructure their businesses; and o $75 Million for the Hog Farm Transition Program. · Increasing Advance Payments Program amounts to $3.3 Billion. · Increasing emergency advances from $25,000 to $400,000 with $100,000 interest free. · Increasing access to payments to producers through the Targeted Advance Payments. · Paying out $1.5 Billion for livestock producers through new and existing programs. · Paying out $76 Million to combat disease and enhance prosperity and stability in the hog sector. · Paying out $50 Million for a Cull Sow program to reduce breeding herds in the hog industry to align it with the market. · Implementing tax deferrals for farmers affected by drought and flooding. · Investing $6 Million to the Canadian Cattlemen’s Association to lead a National Beef Research Cluster. GROWING FORWARD AND BUSINESS RISK MANAGEMENT The Government of Canada is: · Implementing responsive and flexible programs in consultation with farmers, provinces and territories. o Delivering regional and flexible Growing Forward programming with the federal, provincial, and territorial governments of $1.3 Billion cost-shared over five years. o Investing an additional $1.05 Billion in federal-only programming through Growing Forward. · Implementing Business Risk Management programming that farmers can count on including: o AgriInvest – provides a matching government payment to a producer account. This program was “Kickstarted” with an investment of $600 Million announced in December 2008 to help producers start their accounts. · As of March, 2010 - $523 Million has been paid out in AgriInvest payments with over $553 Million in the bank accounts of producers. o AgriStability – provides payments when farmers experience large margin declines. · As of March, 2010 - $1.5 Billion has been paid out through Agristability. o AgriInsurance – supports a farmer when they experiences production losses. · As of March, 2010 - $2.4 Billion in indemnities has been paid out in AgriInsurance. o AgriRecovery – rapid assistance for producers hit by regional disasters. · As of March, 2010 - $71 Million has been paid out through AgriRecovery. SCIENCE AND INNOVATION The Government of Canada is: · Investing $158 Million for the Growing Canadian Agri-Innovations Program turning new ideas and technologies into viable market opportunities; · Investing $134 Million for the Agri-Opportunities Program bringing new products, processes and services to the marketplace; · Investing $8.4 Million for a world-class greenhouse facility at the Eastern Cereal and Oilseed Research Centre in Ottawa; · Investing $2.3 Million in funding under the Developing Innovative Agri-Products initiative for Canadian Tree Fruit Products Development to enhance and accelerate the commercialization of new high-quality apple and sweet cherry varieties; · Investing $3.9 Million in Developing Innovative Agri-Products funding for the Flax Council of Canada to develop non-genetically engineered herbicide tolerant flax; · Investing up to $1.9 Million in national Canadian Agriculture Adaption Program funding to analyze the GM in flaxseed situation with the EU and to develop a method that can be used for seed testing and for determining the likely source of contamination by isolating flax genomic sequences; and · Investing $14.5 Million to bring together the best scientific expertise for a Canola Cluster to focus research and innovation on three areas: oil nutrition, meal nutrition and production, to enable the industry to expand the profile of canola oils as a healthy oil while increasing the value of the meal. |