:
I call this meeting to order.
Welcome to meeting number 92 of the House of Commons Standing Committee on Agriculture and Agri-Food.
I'm going to start with just a few reminders. Today's meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. I note for your information that the webcast always shows the person speaking rather than the entirety of the committee.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, November 2, 2023, the committee is resuming its study on the challenges facing the horticultural sector.
I would now like to welcome the witnesses who will be with us for this first hour.
[English]
We have Ron Lemaire, who is no stranger to this committee. Ron, welcome. Ron is going to be participating virtually today. He's from the Canadian Produce Marketing Association.
From the Fruit and Vegetable Growers of Canada, we have Stefan Larrass, who is the chair of business risk management, and from my home province of Nova Scotia and right from the Annapolis Valley, we have, from Horticulture Nova Scotia, William Spurr, who is the president and a hell of a farmer.
It's great to have you here in Ottawa.
We're going to start with five-minute opening remarks from each organization.
Mr. Lemaire, it's over to you for five minutes, my friend.
:
Thank you, Mr. Chair, and good morning, committee members. I want to thank the committee for the opportunity to speak on the issues impacting Canada's horticultural sector.
CPMA, as you know, represents 850 companies growing, packing, shipping and selling fresh fruit and vegetables, and is responsible for 90% of the produce sales in Canada. In 2023 the Conference Board of Canada pegged our sector's contribution to the national GDP at almost $15 billion and found that the fresh produce supply chain supported over 185,000 jobs in rural and urban communities across the country.
The issues impacting the fresh produce supply chain are diverse and complex. First, fresh produce consumption is declining. This is a concern. Government support is needed to keep produce accessible to Canadians and make it easier for Canadians to meet Canada's food guide recommendation to fill half your plate with fruits and vegetables.
Year over year, consumption rates have decreased as food prices have increased. Canadian adults should be eating seven or more servings of fruits and vegetables daily, but recent reports found that 34% of Canadians are consuming just one or two servings per day. In fact, the latest Stats Canada numbers show that almost 80% of Canadians over the age of 12 are eating less than five servings a day.
There are both health and economic consequences to these trends. A recent report by Professor Krueger at the University of British Columbia found that as fruit and vegetable consumption has decreased, the economic burden attributed to low consumption in Canada has increased to close to $8 billion annually, a 60% increase since 2015. Supporting access to nutritious produce, including through a national school food policy and school meal program, could contribute significantly to Canadians' health and well-being, while also decreasing the government's health care spending.
Second, increasing overall access to fruits and vegetables across Canada requires government programs and policies to address the regulatory burden and significant challenges impacting our sector's ability to produce and distribute fresh fruits and vegetables, such as the availability and costs of labour, production costs, transportation and border access. The national supply chain office and the development of a national supply chain strategy are important opportunities for more effective cross-government collaboration to help ensure that Canadians can continue to put our essential products on their table.
Third, it is crucial to recognize the costs of adjusting our supply chain to meet the challenges posed by emerging sustainability and environmental policies. CPMA members have been showing leadership in addressing such areas as biodiversity, greenhouse gas emissions, carbon sequestration, food loss and waste, renewable energy, soil health, water conservation and much more. The fresh produce sector has also undertaken significant efforts to align with the government's zero plastic waste agenda. Since 2019, our sector has experienced a 17% decrease in plastic volumes due to industry programs to address the government targets. However, the produce industry remains concerned with recent ECCC proposals related to the fresh produce packaging elimination strategy and targets that are impossible to meet for our sector.
We are keen to work with the government to support and build on industry's substantial efforts with regulatory and policy initiatives that align with global practices and policies to ensure the sustainability and competitiveness of the agri-food industry, offer incentives for industry efforts, provide secure access to safe food for Canadians and do not create unintentional food waste or increase the carbon footprint of the Canadian food supply.
I would be remiss if I did not mention financial protection for produce sellers and the grocery code of conduct. CPMA is greatly appreciative of the support shown by all committee members for Bill . We hope you will strongly encourage your Senate counterparts to prioritize the passage of this important legislation. Also, as an interim board member of the code, I can attest to the fact that everyone continues to work hard to introduce a voluntary code that is uniquely Canadian.
As noted earlier, the issues impacting our sector are very complex. We need to take a full food system approach. We have shared with the committee our list of recommendations for the 2024 federal budget. These recommendations include areas not covered in my remarks.
I would close with this: The government needs to make food a federal priority and promote effective policies to support the production and movement of perishable items like produce to ensure the long-term viability of the fresh produce supply chain in Canada.
Thank you very much for the opportunity to join you today. I'm happy to answer questions later.
:
Thank you, Mr. Chair. It is a pleasure to present to this committee today, and it's icing on the cake that I get to do it with Ron. It's good to see everyone.
My name is Stefan Larrass. I'm the chair of the business risk management working group at the Fruit and Vegetable Growers of Canada.
I will do my best today to provide you with the collective perspectives of our 14,000 farm members who grow fruits and vegetables across the country today.
I know this committee is examining issues affecting the horticultural sector. The critical issue for our sector that I will focus on today is financial viability.
A 2022 survey conducted by our association revealed that 44% of our growers are operating at a loss and that 77% can't offset production cost increases. Our findings are consistent with AAFC's analysis of recent farm income trends at the sectoral level.
There are several headwinds I want to speak to that are causing this financial challenge, the first one being inflation on input costs. Consumers are experiencing 15%-20% increases, commonly, in many of their grocery prices. What they often don't know is that this includes the share of the retailer and wholesaler as well, and not just the farmer. What consumers definitely can't be expected to know is that farming input costs, like nitrogen fertilizer, have increased by as much as 128%, and diesel by 110%, and natural gas by 85% between 2020-2023.
Labour costs are typically the largest operating expense for fruit and vegetable farms, which often rely significantly on manual labour, due to the sensitivity of our crops, as you are well aware. When the federal government projects that the only major input cost that isn't stabilizing or declining in the foreseeable future is labour, this is particularly worrisome for our sector, because it will impact our farms' bottom line five times more than others, like livestock and grains.
The other headwind is asymmetrical regulatory burden and support compared to our competitors.
I will start with some questions.
How much do we expect ourselves to know about the environmental regulations for blueberries from Peru before we buy them, or for grapes from Chile? How much can we expect to know about the labour regulations for raspberries or tomatoes from Mexico before we buy them? How much should we expect ourselves to know about the financial support levels for U.S. farming imports before we buy American lettuce or cauliflower?
Obviously, we can't ask consumers to reflect on this, when all they want to do is buy food for their families and contain their growing grocery bill. Groups like this and policy-makers need to reflect on these questions because they matter.
The answers explain so much about why many of our Canadian growers find themselves struggling to keep up with our international competition. For example, when it comes to financial support, the U.S. provides twice as much as Canada to sectors that are outside of the supply management system. When it comes to environmental regulations, research like the 2020 study by the Fraser Institute showed that Canada ranked well ahead of import competitors like Chile, for example, on important issues like pesticide use. The only countries more stringent than Canada in this study were European countries, and they happen have twice as much support level as Canada.
Again, I don't think we can expect people to know all of the regulations or support levels that surround each fruit or vegetable being put into their grocery cart. We do know that Canadians—and we know this for sure—care to know that whatever is grown in Canada is grown at the highest level of care, responsibility, and due diligence, whether we're talking environmental standards, labour laws or otherwise, and that is entirely fair and appropriate.
The question I hear from growers that I want to share with this committee is this: If we can't force other countries to raise their regulations to meet ours, but we allow their blueberries to be sold next to ours, and if we can't force other countries to lower their financial support to our levels, but we allow their subsidized lettuce to be sold next to ours, can we really be that surprised that many of our domestic growers report they can't keep up and are facing a financial crisis as a result of the recent inflation input costs?
I will conclude with this question. What can be done? I know this committee is examining crop insurance and one-off programs. I will conclude on those two themes by starting with a quote from Alan Ker, who is a researcher at the University of Guelph and the managing editor of the Canadian Journal of Agricultural Economics. He said:
Note that AgriInsurance is mainly for field crops whereas AgriStability is mainly for livestock operations.
Moreover, the horticulture sector which faces significant product quality variability does not fit either program.
That's the challenge that I welcome for discussion. AAFC analysis shows that not only does our sector have significant gaps in the crops that have crop insurance available to them, but even for crops where coverage is available, the uptake is, on average, significantly lower than in the cash crop sector. This reflects the difficulty to develop effective insurance products for the 120 crops in our sector.
The difficulty in establishing a crop insurance product is a cautionary signal for anyone hoping that revenue insurance will be a silver bullet for our sector, since revenue insurance essentially relies on a given commodity having an underlying crop insurance product.
Our growers have made it clear that AgriStability needs to be fixed to make it effective, particularly for those with insufficient or no crop insurance options. The program's trigger level needs to be returned to 85% of a farm's historical reference margin. Our growers believe that while AgriStability remains at the current 70% trigger level, there is a significant opportunity for the federal government to provide additional support to this sector in the short to medium term.
Provinces like Ontario and Quebec have shown that sector-specific solutions are possible. Our growers are looking to the federal government to work with provinces and territories to develop or enhance regional solutions that address the financial challenges experienced in our uniquely diverse sector.
With that, on behalf of Canada's fruit and vegetable growers, I would like to thank you for the opportunity to share our perspectives.
Honourable members of the standing committee, I thank you for inviting me here today.
I am here as an advocate for agriculture and as a concerned farmer who is invested in the overall health and well-being of our industry.
Before I delve into the challenges facing Nova Scotia horticulture, allow me to provide some context about myself.
As mentioned, I'm William Spurr, president of Horticulture Nova Scotia, and I'm a farmer. My family farm is a fifth-generation farm that grows onions, carrots, potatoes, winter wheat, apples, pears, peaches, garlic, strawberries and more. I mention this to emphasize the diversity of our farm and of most horticulture farms in Nova Scotia.
Reflecting on the past of not that long ago, I cannot help but recall a time when I was optimistic and enthusiastic about farming. Agriculture in our province seemed to be at the top of its game. The apple industry was thriving, the wine industry was making a name for itself on the international stage and the horticulture sector was adapting and investing in new equipment and technology. It was a time of prosperity and promise, fuelled by innovation and good yields.
However, in recent years, I've witnesses a troubling trend. Over the last few years, it feels as though we are heading downhill at a very fast pace. Last year was especially extremely challenging. The rain, the polar vortex, the winds and the fire wreaked havoc on our farms. This served as a stark reminder of how fragile our agriculture industry really is.
Aging demographics, rising costs and climate change, with increasingly unpredictable weather, threaten to undermine the progress we have made and jeopardize the future of Nova Scotia agriculture.
Access to healthy food is fundamental to maintaining a healthy population. As farmers, we play a critical role in ensuring that fresh, locally grown produce is readily available. We face challenges of food security and limited access to affordable healthy foods. We need to get the cost of production down. It is imperative that we work together to address these issues and create a food system that prioritizes local, healthy and accessible foods.
We need to invest in agriculture. Farmers face numerous obstacles. Rising input costs and labour costs are major concerns going forward. By investing in agricultural innovation and technology, we can strengthen, compete and help farming families in rural communities.
I cannot talk about agriculture without talking about the environment. The health of our environment is paramount to the long-term prosperity of Nova Scotia agriculture. Climate change poses a grave threat to our agricultural lands, with more frequent extreme weather events. As stewards of the land, we must prioritize sustainable farming practices that mitigate greenhouse gas emissions, conserve soil and water resources, and preserve biodiversity, but we need help to do this. We need to advocate for policies and initiatives that prioritize the production, distribution and consumption of locally grown foods that are environmentally sustainable.
I also must draw attention to the pressing issue of business risk management programs, which are currently failing to adequately serve our horticulture sector. Despite the diverse nature of our farms, existing BRM programs struggle to accommodate this diversity, making it challenging for farmers to access the support they need.
The reduction of AgriStability triggering compensation levels has left our sector very vulnerable to climate change impacts, with only a small fraction of horticulture acreage covered by existing production insurance. As we anticipate more severe weather events in the future, the inadequacy of current BRM programs becomes even more apparent.
In conclusion, the health of Nova Scotia agriculture requires help. I urge you to prioritize policies and investments that support agriculture sectors and promote healthy local food in Nova Scotia and Canada.
:
I was just in Europe last week. We had the opportunity to have one of our team on a panel with German, Dutch and Belgian panellists, an individual from the U.K. and an Italian. There's great concern in the EU, where we're seeing a shift towards looking at how to move to a plastic-free environment for produce.
What's interesting is that in the European Commission, Parliament shot down the wording that was proposed. It's gone back to the EU commission. The commission has proposed new wording that looks at introducing a model with a series of caveats. It's the opportunity to basically enable the state governments to not incorporate an elimination strategy if there is a disproportionate economic and administrative cost.
I'm just looking at this, which is from our EU partners. I apologize for looking at a document here. It's looking at whether they see issues relative to increased water loss or turgidity loss, microbiological hazards or physical shocks, oxidation.... All of these exemptions for which the states would be enabled have gone back to the European Parliament.
We understand that the Parliament is potentially going to reject this as well because of the hypersensitivity in the EU relative to where industry is, where the ability is to actually meet these targets and the dramatic impact on the consumer in these jurisdictions because of the inability to transfer from a plastic environment.
The bigger picture here is a circular economy. How do we keep the plastics in the system? How do we enable collection and recycling—
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I think it's very important.
Our breakfast program has had a huge uptake. I have two kids in elementary school, and a lot of times I have fresh fruit to give them, and they'll eat that, and then they'll go to school and eat some more. There are a lot of kids out there who wouldn't have fresh fruit available to them, and it has a lot to do with cost.
I'm fortunate that I can grab a bag of apples and not care if they only eat half the apple, but a lot of people can't do that. When they can go to school and get fresh fruit, fresh vegetables, it's definitely really beneficial.
There are other industries too. I know that when wild blueberries.... There are a couple of other people who had a lot of inventory and were trying to get it into the hospitals. I think they eventually got in, but it took a very long time. If we could streamline that and have contracts, I think it would be very beneficial for both parties.
Just to set the expectation clear, I don't think we're looking at changing or lowering the standards. That's not the message I want to convey.
There is no simple answer, but I'll offer that the European model is that they view their agricultural system as having a social contract with their government, and for every layer of additional expectations that is imposed on their domestic farming sector, there is a green portion of the funding, the green pillar of farm support funding, that the European government makes available to its farmers. The total amount of farm support from their income support that's responsive to production losses and income revenue losses, added to the green support, is more than twice what we have in Canada.
I'm not saying that we necessarily need to model that one, but I think it is an existing model in which the expectations on the farmers are accompanied by corresponding compensation, and it reflects a spirit of co-operation between government and the farming sector.
:
I think we should reject a product that doesn't meet the standards we set for people here. That's the message I wanted to send.
Mr. Spurr, you discussed rising costs and climate change, two challenges to which you're very much exposed and for which you have no support. Current insurance programs don't cover those risks.
Would you please tell us more about that? Would you have any recommendations to make to the committee to solve the problem? How can we make adjustments accordingly?
In recent years, things have not gone well, for different reasons in each year. Consequently, we can't anticipate the circumstances of the next year. The objective of the committee's study stems from the challenge that climate change represents. We want to know how we can determine the actual nature of those risks. Perhaps more collective agricultural risk-sharing would help us produce a food supply based on local products and not depend on outside sources for our food.
What are your observations on the subject?
:
Thank you for your answer.
I agree with you when you say something has to be done right now. The Sustainable Canadian Agricultural Partnership is very rigid and won't be amended until 2028. We'll have to wait and see the shape it takes, but producers have been demanding that for months.
I'm less familiar with the situation in Nova Scotia but I'm pretty sure it's similar to that of Quebec. Nothing has happened at the federal level, even with regard to the emergency loans granted through the Canada emergency business account, the CEBA. People requested that the deadline for repayment of their federal loans be extended to allow them some respite. They asked that they at least be granted that if the government did nothing else. The response was a flat refusal by the government.
In Quebec, the Quebec government granted access to no-interest emergency loans to assist producers. However, as the federal government required that the emergency loans it had granted be repaid, many producers used the money from the provincial government to repay their federal loans. They were caught up in a vicious circle and ultimately wound up with no assistance at all.
What clear message would you like to send, or what recommendation would you like to make to the government today?
:
I think it needs to be up to the province. You have to allocate the money, and then the province needs to work together to figure out what works best for them.
I know about just Nova Scotia. For Nova Scotia, what I can recommend is that we need something done right now. We can't wait any longer. The new uptake is going to be coming out in two months. It's not a lot of time, and we just need help with premiums. The premiums are too high.
We have a lot at stake. When we have one bad year, it's not the end of the world; when we have two bad years, a lot can happen. We need to have some insurances in place.
All I can really say is that we really need help with the premiums, just for a transition year or a couple of transition years until we can really figure out what works best for Nova Scotia.
:
Thank you very much for that.
Mr. Lemaire, I'd like to turn to you.
You and I have had conversations about plastics. I think it's very important in this conversation to also put in the perspective of the coastal communities. I live on Vancouver Island and, of course, we deal with the very real problem of microplastics, the bioaccumulation in the food chain. It's pretty sure knowledge that every time I go fishing off the coast of Vancouver Island, I'm probably ingesting salmon that has some component of microplastics because of that bioaccumulation.
I understand very well and I'm very sympathetic to the plight that you find yourself in with these new regulations, but I really want to delve a little bit further into your exchange with Mr. MacDonald.
You were just about to start on the circular economy. Can you offer this committee any suggestions on how the federal government can maybe partner a little bit more with industry to start realizing that circular economy?
The problem I hear from constituents and even from people who are involved in the waste chain is that when it comes to sorting plastics, if there's too much confusion, most of it will just go into the garbage stream. What can be done to ensure that those plastics are in fact being reused and are not ending up in the waste stream?
:
Thank you, Mr. MacGregor.
This is the complexity of the issue. We need a strategic approach federally that brings together the provinces, harmonizes our EPR systems, and educates Canadians. That's the simple answer.
When we look at the proposed regulatory approach and the P2 notice, we see that it is actually removing the ability to handle compostables and biodegradable plastic materials. We have members who have invested in new technologies that have a totally biodegradable material that do not leave any microplastics in the environment. It's quite costly, but the industry is invested.
This is where we look at a combination. There's no silver bullet. We need to look at how we build the infrastructure and then federally enable and support provinces and municipalities. The Federation of Canadian Municipalities needs to be engaged effectively to ensure municipalities that are very fragmented are enabled and supported and that the right funding mechanisms are put in place to bring the system together.
We also need to create an economic engine. We need to enable the value of these materials in the system.
:
This is a dramatic shift. We need to look at the targeted and time-limited carbon tax exemption for the agriculture industry.
For greenhouses specifically, right now the sector estimates that the carbon tax costs about $22 million annually. If we move forward, that's going to rise to between $82 million and $100 million by 2030. When we talk about food costs, this tax is putting them through the roof.
In many ways, when you look at all of the carbon sequestration that happens, also in the greenhouse, and some of the new technologies that are being pushed through, there's an amazing push to work toward carbon neutrality. However, we're not there yet, and we need time, which is the key to a limited carbon tax exemption that will enable us to be functional.
Mr. Spurr, you said you need help now to get through what could be another tough season. We're feeling the same in western Canada, with not much of a snowpack and with water always being an issue.
Bill would exempt the carbon tax from farms on natural gas and propane, specifically greenhouses, and for you in produce, exempt heating and drying of product in barns. It would immediately remove the carbon tax for you.
Would it be a benefit to you in your production, and to your colleagues in Nova Scotia, to remove that carbon tax from your bills?
:
Thank you for that question.
It would be tremendously important to have the exemption that was originally in place be reinstated before the modifications to the bill are made. A full exemption on inputs like natural gas for heating purposes would be the equivalent of tens of millions in financial relief. It would be tremendously impactful. It is urgently needed.
I just want to reiterate the point that from a consumer's perspective, ideally, the greenhouse operations would take on that cost themselves, but can we really expect growers to volunteer to take on that cost? Some of that cost is going to be passed on, so if we're talking about tens of millions in the financial equivalent of that carbon tax on greenhouse operations, tens of millions will make their way into the food price that Canadians are paying.
It's impactful not just to our members but ultimately to consumers as well. If the carbon tax could be removed from the operation costs for greenhouses, growers and consumers would benefit significantly.
:
Thank you very much. Thanks for sharing your time.
Thank you to all the witnesses for being here.
It's an incredibly important conversation, because I think confronting the challenges of climate change and pollution while supporting our farmers is what's needed. I was very encouraged by the conversation Mr. MacGregor had about how we can provide solutions. Leaving things the way they are is not a solution.
One thing I like to say is that often, when some of the members talk about the costs of these programs, they don't talk about the cost of doing nothing.
You were talking, Mr. Spurr, about the increasing climate events you and many farmers are facing. We know that with plastic production, not only are these microplastics getting into our environment, but they affect groundwater, food chains and supply chains, and they are having a huge impact on human health. We never look at the costs that are incurred from that; we only see the one side of it.
You said that the quality and the environmental standards are very important to you.
I spoke with two members from your organization yesterday, Dave and Aaron. We were talking about the greenhouses in particular. One thing they were talking about was how the carbon is captured in the greenhouses to be used for growing the plants. I thought that was really encouraging.
Is that one thing we can look at in terms of continuing to have a price on pollution to help us reduce greenhouse gases, but at the same time rewarding farmers for what they are doing to help with environmental goals?
Mr. Larrass, I'd ask you that first.
:
Thank you for the question.
I understand the goal of creating incentives to stop, as you mentioned. The cost of doing nothing is that bad behaviour could continue if the incentives aren't there. As a parent, I will say I believe in incentives.
I think the main message I want to leave you with is about a true partnership. In the European model, there is significantly higher support. If you look at it on a dollar-for-dollar basis, you see that it's.... I said it's twice, but it's actually more than twice for our sector, which is not supply managed. It's significantly higher. It's a true partnership, rather than the idea that “you need to do better”. We know we can do better, but where's that partnership? I think that's where I welcome the dialogue.
As for greenhouses and the recirculation of carbon, it's a great example of how innovation and technology can help solve the problem. Rather than just exhausting that furnace exhaust outward, we bring it back in to the plants. We're getting much closer to carbon neutrality through that kind of technology. Technology can get us a long way.
I don't know if that answers your question.
It throws production costs out of whack.
Mr. Larrass mentioned grapes from Peru, blueberries from Chile and strawberries and raspberries from Mexico. We could also mention carrots from China.
Are we really exercising control at the border?
Isn't there something we could do to exercise effective control?
Should we consider setting tariffs for products where standards aren't consistent with our own? The money thus collected could be used to help our businesses improve their environmental performance.
What do you think of that?
:
I have a great concern on a tariff-based system, only because the country that establishes tariffs is also the country that has to deal with tariffs on their trading programs.
We've been fortunate enough in the fresh fruit and vegetable industry to be a non-tariff form of business, and we work effectively with our trading partners to ensure that we have open markets. That way, we can ensure that the Canadian grower has access to markets without the burden of additional tariffs, because we've put similar models in place, and then a reciprocal model is then in place.
I want to quickly talk about the EU. You were correct relative to the standards in the EU and access to that market: If you don't meet the standards, you don't access the market.
However, one thing we saw in the EU—and this is important—is that on their pest regulatory framework, they've stepped back from removing pest management tools from their regulatory tool box because they've realized that the growers need them and there are no other alternatives.
It's something we need to watch closely in the same context in Canada. Let's not burden the grower without having tools in their tool box to effectively grow the products Canadians need.
Mr. Lemaire, I'd like to continue with you on the packaging alternatives.
In British Columbia we have a very strong attachment to our forest industry, and I want to put a plug in for a local pulp mill in my riding, the Crofton Pulp and Paper Mill, because they were, for a number of years, really trying to upgrade their paper line to make specialty paper products that would replace single-use plastics. They have run into some troubles because of fibre availability.
I remember that when I was at the CPMA convention in Montreal—I think it was in April of 2022—I saw an industry showcase on some of the fibre-based innovative packaging that was coming out. Can you talk a little bit more about some of the developments that are going on in that area? I understand that they are not suitable in all cases, but do you see that maybe in the next five to 10 years, some really critical advances in fibre-based packaging could help support struggling pulp mills out on the west coast of British Columbia?
:
Thank you, Mr. MacGregor.
The question is good.
There is a CPMA member company whose product line is called Earthcycle. They actually were with us in Europe promoting this Canadian product. It has a fibre base, and they have a range of other products that do meet the market and meet an environmental footprint.
On your comment, is it a one solution for all? No, and this is where we have to pick the right package for the right product for the right system, and there's the complexity of what that means.
On the pulp discussion, fibre packaging had a 14% increase at the end of 2023. That was on top of a 13% increase in the spring. A 27% increase in fibre packaging in Canada has a tremendous impact to the cost of product through the system. As Stefan has mentioned, it doesn't always get conveyed to the consumer in full because the grower and the supply chain absorb some of that, but we're at the end.
I want to talk about a couple of other components in a study. In Canada, as you know, I'm the chair of the Global Coalition of Fresh Produce. Labour costs are up 18% in Canada. This was in 2023. There was a 16% increase in plant-based material costs, a 21% increase in crop protection costs, a 24% increase in energy costs, and a 20% increase in the cost of machinery and equipment. These are generalized numbers across the fruit and vegetable industry, but those costs have to move somewhere. The growers cannot burden themselves with them anymore. We're at a tipping point.
On behalf of the committee, I'd like to thank Mr. Spurr for coming from Nova Scotia and Mr. Larrass for coming on behalf of Fruit and Vegetable Growers of Canada. We also thank Mr. Lemaire, who is no stranger to this committee, for coming on behalf of the CPMA. Thank you.
Colleagues, before we suspend, we talked about a grocery code of conduct and sending letters to grocery CEOs. We've done that work. I suggested to the analysts that we would include a press release explaining that the committee is calling for that. I'm looking for your approval in that regard.
Are there no issues with a press release to inform folks of what we're doing? Good.
Okay. The meeting is suspended. We'll be right back. Please don't go too far.
:
Colleagues, we're going to get started on the second hour. That was a great first hour of testimony.
For our second hour, we have three different witnesses with us.
[Translation]
We would like to welcome Catherine Lefebvre, president of the Association des producteurs maraîchers du Québec, and Patrice Léger Bourgoin, general manager of that same organization. Welcome to you both.
We also have Jennifer Pfenning, president of the National Farmers Union.
[English]
It's nice to see you online, Ms. Pfenning.
From the Nova Scotia Fruit Growers' Association, and no stranger to our folks in the Annapolis Valley, we have Emily Lutz, executive director, and Jeffrey Walsh, who is a director and an apple grower.
It's great to have you guys here in Ottawa.
We're going to have five minutes for opening remarks, and then we'll turn it over to questions. We might have to go just beyond one o'clock, but I'll do my best to manage the time.
[Translation]
Mr. Léger Bourgoin, go ahead for five minutes.
:
Ladies and gentlemen, thank you for inviting us to appear before you and for the time you are giving us.
For some months now, fruit and vegetable growers in Europe and Quebec have obviously expressed despair at a challenging economic and societal climate. Last summer, 60% of Quebec farmland was affected by excess water, which resulted in estimated lost sales of at least $143 million. Climate vagaries have also resulted in additional costs of approximately $7.3 million.
These few numbers illustrate the economic pressure that our businesses are now facing. Every season, fruit and vegetable entrepreneurs have to invest millions of dollars in their farms if they are large producers, and tens—or even hundreds—of thousands of dollars if they are small producers, before they can make a single dollar. To finance their operations, farmers are, now more than ever, forced to put their land up as collateral in order to get financing. This cannot go on for much longer.
In the specific case of Ireland, a new and troubling trend began in the summer of 2023. Many vegetables, such as cauliflower, carrots and broccoli, temporarily disappeared from grocers' shelves. One prominent economist, Jim Power, outlined his analysis to industry leaders, noting that the number of Irish field vegetable producers had decreased from 377 in 1999 to 166 in 2014, a 56% decline. And that number has fallen even further since then.
In light of this observation, a more equitable sharing of risk among supply chain partners has become inevitable. For several years now, for example, the European Union has been considering measures to improve protection for farmers in the supply chain, and an act has been passed to prohibit 16 commercial practices.
In the circumstances, we welcome the efforts that Mr. Champagne, the Minister of Innovation, Science and Industry, is making to identify solutions for price volatility. However, the consequences of those solutions must not undermine the economic health of fruit and vegetable producers. In Ireland, economist Jim Power has observed that rising imports and the increasing concentration of a small number of very powerful retailers have had a significant negative impact. The growing market share of the discount chains has had a significant effect on the prices that fruit and vegetable producers have received for their products. Consequently, again according to Mr. Power, many farmers have been forced to shut down operations.
A safety net must be put in place to protect small and medium-sized businesses from the giant food chains.
:
In addition, our main sustainable development concern is the level of regulatory requirements in both Quebec and Canada. We're being hurt in three ways in Quebec.
First, most consumers perceive no added value in purchasing fresh fruit and vegetables that have been produced in accordance with high social responsibility standards.
Second, our governments don't rigorously observe reciprocity in international standards the way they should.
Third, with respect to environmental, social and governance factors, ESG factors, all major retailers in Canada boast about the constant, sustainable efforts they make, but they in fact don't abide by their own rules. If they did apply those factors, Canadian products would be favoured over others, and purchasers would pay a premium on those products for meeting the applicable standards.
Consider this example. In January 2024, a major food chain purchased an entire shipment of products from a Quebec producer and raised the farm gate price by 114% to set the retail price. A few days later, the producer was told to take back more than two-thirds of the shipment because the retailer had been offered a lower price by a Mexican producer. Despite the cut to the price paid by the retailer, the in-store selling price remained unchanged. Consequently, there was no benefit for consumers.
Now let's consider solutions. It's impossible to address climate change without seriously attacking it head-on. It's almost essential that the federal government introduce a food security and climate change adaptation plan together with producers and the provincial governments. To do this, financial support for businesses is critical in enabling them to adapt to climate change.
In the circumstances, we would welcome an enhancement of the AgriStability program to reflect successive years of losses as a result of weather and climate change. The interest-free tranche for early payments, which was increased by $100,000 this year, should also be maintained at $350,000.
In conclusion, whereas the Canadian population is now—
I am a farmer and a mother of the next generation of farmers. Founded in 1981, our family farm has grown to approximately 700 acres of organic vegetables. The third generation on this land, my sons and nephews, have chosen to make their careers in farming food in the family business. We grow carrots and a variety of other root crops, as well as leafy greens and cooking vegetables. We are also a distributor, providing market access for a network of other local farms.
Thank you for inviting us to participate in your study of this critically important issue. Canada’s food guide recommends, as you heard from Mr. Lemaire earlier, that half our plate be made up of produce, horticultural crops, at every meal. We can’t overstate how important it is for Canada to have a thriving horticulture sector to provide this food.
I am a farmer and I need to make a living. I need affordable seed, affordable land, suitable water for irrigation when necessary, a return that allows me to pay employees a fair wage and provide safe working conditions, and as predictable a climate as possible to accomplish all of this. We know that long-lasting GHGs will keep warming the planet even if we stop emitting today. We must adapt, and we must drastically reduce our emissions.
You as members of the agriculture committee have a duty to do everything you can to reduce emissions from the oil and gas industry and to stop the destruction of the wild areas and biodiversity that remove atmospheric CO2.
The existing BRM solutions are designed for broadacre crops and so do not work well for horticulture, and even less well in the context of climate disruption. The costs of applying can exceed any potential return if AgriStability is triggered. The high value per acre, diversity and perishability of our crops make damage assessment so complex that it is extremely difficult to create formulas to assess weather and storm losses. Thus, any compensation available is low and may not be adequate to keep affected farms in production, particularly if claims are processed so slowly that the next revenue-generating crop is unduly delayed.
We must invest in the on-farm infrastructure needed to adapt to our changing climate. Some specific examples are water treatment infrastructure for sustainable irrigation, photovoltaics integrated into shade structures and greenhouse design and technology that integrate photovoltaics and heat storage. We also need public plant breeding of locally adapted horticultural crop varieties made available royalty-free to growers.
Class 1 and 2 farmland located near urban centres must be protected for our food sovereignty. Canada needs policy solutions to ensure that this land is protected and reserved for farmers growing food. To ensure that farmers can succeed under changing climate conditions, the NFU proposes that AAFC establish a Canadian farm resilience agency to provide farmers in horticulture and other sectors all across the country with trustworthy advice delivered by independent extension personnel who are not tied to agribusiness corporations.
With public agronomists to provide practical advice and researchers to develop new methods, farmers can increase their farms’ resilience to climate change and reliably produce the food Canadians need. Spending just a dollar or two per acre of Canadian farmland could result in the necessary adaptation and resilience. Savings from preventing crop losses and BRM payments would greatly exceed the cost of extension services, so these important services for farmers could be had at no net cost. By promoting the resilience needed for Canadian horticulture farmers, we can expand their market share and keep a much higher proportion of the Canadian food dollar within our economy.
We are here to address the climate impacts threatening the economic viability of our farms. We also face a rapid rise in costs of production, accompanied by downward pressure on the price we can command.
The farmer’s share of the consumer food dollar is small, so grocery store price increases disproportionately benefit the large retailers. Increasing ownership concentration in wholesale and food processing further depresses our returns. Falling returns are creating a structural deficit. The difference is being taken out of the land, farm workers' labour and the farmer's income. Failure to address these issues means ever fewer Canadian horticultural farms; less of our food being grown in Canada; and vulnerability to environmental, political and economic conditions in the countries our imported food comes from.
Addressing these overarching issues is supported by Canada's food policy vision, which is: “All people in Canada are able to access a sufficient amount of safe, nutritious and culturally diverse food.”
:
Good morning, everyone.
Distinguished committee members and fellow presenters, my name is Jeffrey Walsh. I am a third generation apple farmer from Rockland, Nova Scotia. I'm here representing the Nova Scotia Fruit Growers' Association as the recently elected vice-president.
Our association represents tree fruit growers of Nova Scotia, which means primarily apples, but we also grow pears, peaches and other stone fruit.
The NSFGA was created in 1863 and has a long history of promoting education and advocacy among farmers. Over the last 30 years, Nova Scotia apple growers have invested in high-density orchards of valuable new varieties, making us a leader in Canada's production of apples.
Today I'm going to speak on three issues facing our industry.
The first issue is pest management and crop protection products required for growing apples.
As a farmer, I see the challenges that arise when certain products are either deregistered or limited to the extent that it's impractical to use them at all. The PMRA, or Pesticide Management Regulatory Agency, is responsible for rules and decides which products are allowed or not. The pest management centre, or PMC, is a different body that helps generate new data for guiding rules around pesticide use.
While the PMRA has been undergoing work to become more transparent and accountable, the PMC does not seem to be receiving the same support. The PMC collects data through research and studies that provide information on important decisions that have enormous impacts on our industry. As an example, many apple farmers in Canada are facing a serious disease in orchards called “fireblight”, which causes trees to die. There are limited products to fight this disease, and the ones we do have are essential to protecting our orchards. If we lose them, our entire industry is in jeopardy.
We need to invest in solid data and evidence to prove the safety and efficacy of these products and also to seek good alternatives if there are reasons to, so that we can continue to grow food. This leads me to my final point on this topic, which is that our association supports private member's Bill . We should take advantage of work in other trusted jurisdictions to allow quicker access to safe and tested crop protection products for our Canadian farms.
The second issue is labour. Most horticulture farmers take advantage of seasonal agricultural worker and temporary foreign worker programs. These programs are essential to our businesses, and we could not farm successfully without them.
Some of these programs require the provision of on-farm housing, meaning that farmers are either buying or building accommodation, which is a huge cost. Due to the current housing market, many are choosing to build new; however, as I recently discovered after investing in accommodations of my own, none of the HST on the new build was eligible for an input tax credit, due to a policy of the Department of Finance. This came as a shock, as most other commercial necessities on farms are eligible for a rebate.
Along with the Nova Scotia Federation of Agriculture and the Canadian Federation of Agriculture, we are requesting that this be changed, and we encourage you to support us in this work. It would help farms with cash flow and encourage more investment in worker housing. It's really important that farmers provide high-quality homes for employees to live in, as we want them to feel safe, valued and comfortable in their housing and hopefully return to us year after year.
As a final note on labour, I want to recognize the Government of Canada for implementing the recognized employer pilot, which has made it easier for farmers to apply and has reduced red tape while also ensuring that those who do not follow the rules are restricted in accessing these programs. It's imperative that we work together to make sure the employees and the farmers are benefiting and the rules are being followed.
The final issue I want to briefly to speak on today is cost. It's becoming more expensive to grow food, and despite high prices in grocery stores, farmers are seeing declining returns. For costs like labour, trellises, trees, orchard maintenance equipment, fuel and even the bins to put apples in, everything is going up. We are competing with exports from other countries and with states like Washington that put downward pressure on our prices. Oftentimes, those countries see less pressure in their costs of production than we face in Canada, and many of them are well supported by their government in the work they do.
I encourage all of you to keep fighting on behalf of farmers so that we can continue to compete. I appreciate the work all of you do on this committee to support growers and farmers in our sector. I appreciate your time today and I thank you very much for the invitation to speak.
:
Thank you very much, Mr. Chair.
I'm going to give you my last two minutes of speaking time, since we have people from your province, Nova Scotia. I wouldn't dare cause you to miss an opportunity to question the good people of Nova Scotia who have come to see us here in committee.
However, I'm going to take this opportunity as well to ask Mr. Bourgoin and Ms. Lefebvre some questions in French.
We spoke in November, and I also spoke to several fruit and vegetable producers. They told me that new situations arise from field to field because some fields may have dried up, whereas others a few kilometres or a few hundred metres away are flooded. I know that situation causes a certain amount of stress among the producers you represent.
We've often discussed crop insurance and the affordability of insurance premiums, and there's one thing I'd be curious to know.
I know you've begun a study, and the witnesses from Nova Scotia who appeared before you discussed it. There appears to be a problem in the fruit and vegetable industry. Insurance premiums are too high, which undermines our producers' profitability.
What solution would you suggest for that? What would be an acceptable premium relative to revenue? With what other sectors could you compare your situation?
I'd like to hear your comments on that.
:
First, what makes fruit and vegetables a complex sector is the fact that insurance has to cover all the vegetables that we produce, which isn't the case today. Some protections aren't available for certain niche vegetables or small vegetables.
Second, the producer pays a contribution of 40% of the total crop insurance premium rate, and we expect to get the minimum amount corresponding to that 40% contribution, which isn't the case in all provinces.
Third, the problem with crop insurance is that it covers the shortfall in a hard year, that is to say, only when a small portion of the area of the fields is lost.
We experienced a tough situation in 2023. Some farms lost more than 50%, even up to 85%, of the area of their fields. Crop insurance didn't cover that loss. We agree that crop insurance covers approximately 30% of the revenue that was lost.
I'm wearing my Annapolis Valley tartan tie today because we have some folks from Nova Scotia, just outside my boundary, but of course they're good advocates in the province.
Jeff, I want to pick up on what you talked about around the HST input tax credit. As I understand it, because we have had this conversation, I want this committee to understand what you're asking. Right now, when you go to build new housing for seasonal workers, let's just say that the cost was a million dollars. In Nova Scotia, the HST would be 15%. As I understand it, you are able to take the entirety of that expense and claim it against your taxable income over the lifetime of the house.
What you're proposing, and what you said to this committee today, is that it would be nice to be able to have that HST provided up front, when the purchase of the home is actually made or the home is actually built, for cash flow purposes. Is that correct? It's just so this committee can understand.
Thanks to the witnesses for being with us today.
Ms. Lefebvre, I'm going to continue on the same subject as I discussed with Mr. Drouin. You spoke to us on the very interesting topic of reform. That's the purpose of this study; it's the alarm that you sounded early last summer. However, we still haven't had a response from the federal government, and we obviously want one.
When you talked about the "agri-disaster" program, you clearly explained that AgriRecovery doesn't cover the remaining 70%. How do you think it would be possible to introduce that program in short order?
Do you have a written recommendation that you could send to the committee?
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One thing is clear, and that's that we're seeing a new and unfortunate trend toward private standards on which governments have no say. We've cited numerous examples during meetings before the committee.
As you know, listed companies increasingly have ESG standards. Most of the major grocery chains doing business with Canada have them. I encourage you, over coffee on a Sunday morning, to peruse the 50-or-so-page reports of each of the major chains.
The question you have to ask yourself after reviewing those documents is this: If they're applying everything that's described in those documents, how is it that carrots from China are being consumed in Canada in October and November, when the refrigerators of Ontario and Quebec producers are full?
As the saying goes, you've got to walk the walk.
I would like to thank all the witnesses for being here and for helping guide our committee through this study.
Ms. Pfenning, I would like to start with you and the National Farmers Union.
It is a fact that extreme weather events driven by climate change are going to come with more frequency and more severity in our future. We know that farmers are on the front lines of that. I have spent six years on this committee and I have often heard farmers say that they are on the front lines of climate change.
There are some particularly worrisome trends coming our way. I know there is a lot of concern on the Prairies for this upcoming summer because of low snowpacks and precipitation levels.
I have always had my work on this committee guided by the theme of establishing resiliency. I know farmers are very wary of an “Ottawa knows best” approach, but there are farmers who are showing us the way. I think it's the job of this committee and indeed of all parliamentarians to find those farmers who are leading the way, put them up on a pedestal and help them spread the knowledge.
I was very taken by your mention of a Canadian farm resilience agency. Would you mind expanding a little on that? How do you think this committee should tailor its recommendation to that effect?
:
Thank you very much for the question.
I want to say thank you again for taking the time to study this issue.
A Canadian farm resilience agency would be a comprehensive way of supporting farmers' resilience.
I appreciate that you recognize that farmers are very independent. We don't want handouts and we don't want to be dependent on Ottawa to give us what we need; however, we need programs, systems and regulations that support our ability to do what we do best, which is grow food.
When we're talking about the knowledge and research that's required to adapt to the changing climate and increased impacts from wilder weather, it needs to come from a space that is not attached to a sales pitch. Right now, most of the information that we have access to for new research, new products or new ways of doing things comes from an agribusiness source that attaches a sales pitch to the information.
One key piece of the CFRA would be offering information and making it accessible to farmers across the country. It would be developed on farms by farmers and by publicly funded researchers. It would be an agronomy base that would be in the best interests of the country and serve Canadians, not a business that is making a profit off of it.
:
Thank you very much. You've touched on a really important point. I saw the notice that the report had hit my inbox, but I haven't had a chance to look at it.
I'll just talk for a minute about a specific example. On my farm, in the peak of our season, we employ roughly 150 people, and 45 of those individuals come from overseas. We have, as a country, been relying on offshore labour, human beings who come to our country to work on our farms and do the essential work of producing food. At the beginning of the pandemic, we saw what happened when we didn't have those skilled hands in our fields.
Ultimately, if we want to address that labour shortage, we have to ensure that we set farming up. Specifically, horticulture has a very great demand for physical and human labour that cannot be replaced by machines, as the technology has not been adapted to do that. I struggle to see how that would happen in any short period.
We require many people. If we want to address that need, we have to ensure we have a system that enables the people working in the field to produce the food we eat to have a dignified work experience, no matter where they come from.
Increasingly relying on workers who come here and are subjected to very strict controls that reduce their agency, and in many ways disenfranchise them and make them vulnerable, is not a productive or positive way forward.
We, as the NFU, have many papers on that.
I'm Emily Lutz, the executive director here to support Jeff in his questions.
Speaking directly to that, the FVGC is looking for an $8-million increase for the PMC. That directly translates into the ability to do more projects and collect more data.
What's important to recognize, too, is that the best data helps us address increasingly complex issues, and some of that is also driven by climate change. It's not just the products we're using right now, but it's the projects and challenges we're facing moving forward.
Climate change has brought insects to our industry from elsewhere that we have never seen before because of our warming climate. Looking ahead, it's going to be essential for the PMC to collect that data for us in order for us to make good farming choices.
:
Thanks for your question.
[Translation]
Consumers would definitely view healthy relations between suppliers and retailers as a positive.
At the request of the federal, provincial and territorial departments, we worked for two and a half years to establish a dialogue in order to develop a retailer code of conduct and industry good practices. That work was done with considerable maturity and extensive dialogue.
We talked to each other, eyeball to eyeball, and, to the satisfaction of the ministers, managed to present a code of conduct that, in our humble opinion, will serve the interests of everyone in the country.
However, one industry actor in particular came and said he didn't agree. The consultation process took two and a half years, but, at the last minute, someone said he didn't agree and didn't want to be part of the process. That attitude is simply unacceptable.
:
I'll give you one example.
[Translation]
This happened last January. A Quebec producer got a call from a major chain that wanted to sell one of its products, as my boss mentioned earlier. The product was subject to an agreement between the producer and the major chain. A few days later, the same chain received a better price from a Mexican producer and then decided to cancel the order from the Quebec producer.
When the major retailers come to the table, they simply say that their aim is to lower prices for consumers.
However, in this specific case, in the following days, we kept gathering information on the withdrawal of the Quebec product in favour of the Mexican product. Strangely, we saw that the price displayed on the circular and in stores hadn't dropped. The chain had simply maintained the price, even though it had obtained a product from outside Canada at a lower price.
:
Thank you, Chair. Thank you to all the witnesses.
I'll be splitting my time with Ms. Taylor Roy
. I'm going to direct my questions to Jen Pfenning of the National Farmers Union, because it's an honour to speak in this committee to a farmer who lives 15 minutes down the road from me in Kitchener-Conestoga. We've had many conversations on your back porch and at the kitchen table.
You mentioned in your statement off the top that class 1 and 2 farmland must be protected and reserved for farmers to grow food. Can you expand on the importance of keeping this farmland for us to have that local food?
I understand that we're losing 319 acres of farmland every day in Ontario. What can we do to keep those small and medium-sized family farms like yours in our communities? What measures can we take to protect farmland, and how can all levels of government work together?
:
Thank you very much. It's always a pleasure to speak with you, Tim, and I look forward to having some more chats on the deck or at the kitchen table.
I probably don't need to remind all of you just how precious class 1 and 2 farmland is in our country. Less than half of a per cent of our total land mass fits into that category, and more than 50% of it is in southern Ontario. It's mostly very close to urban centres. Those urban centres are the source of pressure on that very farmland that feeds us because of the expansion of the urban centres and sprawl.
All levels of government need to work together to ensure that the protections that exist are not eroded and in fact are strengthened. Farmland needs to be seen as a non-renewable resource, because it is. If we allow the existing dynamic to continue, we will lose the capacity to feed ourselves eventually and in the not too distant future.
Farming should be the number one highest priority for class 1 and 2 farmland use, for every piece of it across this country. By enshrining protections that ensure it is kept, we will enable ourselves to continue to feed ourselves into the next generation.
It's been very difficult for individual farmers to prevent the loss of farmland, because we're under pressure to sell. For the next generation to take over, it is very difficult. We don't have a way to save for retirement beyond the increased value of our farmland that we have to then sell. Those falling returns for what we grow are creating the structural deficit I mentioned. Input companies and landlords are taking too much and buyers are paying too little, with the difference being taken out of our land, out of the labour and out of our income.
Allowing it to continue is unsustainable. We need to look to the future.
:
Thank you very much for that question.
I'm very familiar with the farms you mentioned as well. I enjoy Southbrook wine a lot.
The organic standard is the key to maintaining our ability to protect organic farmers from imports that don't meet the same standard. As we are reviewing it currently, we have received funding from the government and we're very grateful for that as a sector, but we need supports in place to ensure that the support to review and maintain the standard is ongoing.
Other jurisdictions around the world are supporting their organic standard. Our biggest trading partner, the U.S., is investing far in excess of what we have invested per capita into organics. That's our biggest competition as farmers in Ontario, in Canada. We are competing south of the border.
:
Thank you for that question.
My French isn't good enough for me to answer you in French.
[English]
I apologize. My sound cut out a bit during the question.
Yes, we're asking for it to be decentralized, but it needs to be nationalized. We need centres across the country.
As we all know—this isn't something that I need to explain to anybody, I'm sure—we all have different conditions on our farms across the country. We're facing different environmental stressors, so we will need those centres to be adapted to and addressing the specific conditions in each area.
For example, right now the snowpack—
:
Colleagues, thank you so much. We ran a little over our time, but I thought the testimony was great today.
Let me thank our witnesses from l’Association des producteurs maraîchers du Québec, Ms. Lefebvre and Mr. Léger Bourgoin; our witness from the National Farmers Union, Ms. Pfenning; and our witnesses from Nova Scotia, Ms. Lutz and Mr. Walsh.
Thank you for your testimony today.
Colleagues, we're going to be on a break week next week, but we'll be back on February 27. The first hour will be on horticulture and the second hour will be with on the continuation of efforts to stabilize food prices.
As a quick note on the grocery code of conduct, there were great exchanges today with our friends here around the table. This committee believes in the grocery code of conduct and will be writing to the CEOs to express our complete desire and to call for them to adopt that code.
We'll see you after the break week, colleagues. The meeting is adjourned.