I call the meeting to order.
Dear colleagues, welcome to meeting No 30 of the Standing Committee on Agriculture and Agri-Food.
Today's meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking, as opposed to the entirety of the committee. Taking screenshots and photos of your screen is not permitted.
Colleagues, I've called for the first hour of this committee to focus on committee business. We have a number of motions that have been given notice. As opposed to disrupting the proceedings of the studies we've talked about and are currently under review, I thought it would be best to move forward and discuss the motions put forward.
We have a little bit of committee business to do.
Mr. MacGregor, I see you would like to move forward, so I will start with you.
To give credit where credit is due, I appreciate your booking an hour of the committee's time today to make room for this.
Colleagues, I'm going to formally move the following motion. I move:
That, pursuant to Standing Order 108(2), the committee undertake a study on profit-driven inflation in the grocery sector and the costs of groceries going up while large chains are making record profits; that the committee examine the record profits of large grocery chains and their CEOs in relation to employee wages and the cost of groceries in Canada; that the committee also examine the ability of large grocery chains leveraging their size to cut into the earnings of Canadian farmers; that the committee invite witnesses with specific knowledge on profit-driven inflation and affected stakeholders from the industry, including grocer CEOs, economists, unions and farmers or representative organizations; that no fewer than six meetings are set aside to hear from witnesses; that the committee report its findings to the House and that, pursuant to Standing Order 109, the government table a comprehensive response to the report.
Mr. Chair, I won't take too much time. I would like to spend just a few minutes outlining why I believe this motion is important. We are seeing excess profits in the corporate sector at a time of historically high inflation. We all know around this table that food is a core necessity. It is something that Canadian families see week in, week out. It's forcing them to make extremely difficult choices.
If you look at the earnings that are publicly reported, you can see that from 2020 to 2022, Empire's net profits jumped up by 27.8%. For 2021-22, Loblaws' net profits went up 17.2%. In the same time period, Metro's profits went up by 7.8%.
This, I believe is important because of our committee's jurisdiction not only over agriculture but over agri-food. Yes, I know we mostly deal with the producer and processor side of it, but I also feel that we have a duty to the Canadian public to launch a parliamentary inquiry into this matter to be sure that the stranglehold that these three companies have on the Canadian market—because I think they do have over 80% of the market—is not negatively affecting the choices that Canadians have to make.
We have had a number of economists on the record—Jim Stanford from the Canadians for Tax Fairness—who have all said that corporate profits are, to some extent, driving this inflationary practice. We also know that, on the other end, farmers have had their own problems with the grocery sector—processors and producers—which is why talks are currently under way on a grocery code of conduct.
I'll end with this, Mr. Chair.
Since last week when my notice of motion became public, we received an email from an employee who wishes to remain anonymous. I'm not going to reveal his name or the company he works for, but I will read this into the record. He states he is employed as a file maintenance clerk. He says:
My duties require me to make sure that retail price adjustments sent down from Corporate are properly represented at [the] store level on signage. I have noticed a worrying trend over the last year of large quantities of retail price increases being sent down on a weekly basis.... However cost increases on these items don't match increases of retail prices that are sent down.
He goes on to say:
I have noticed a trend where retail prices consumers must pay for products will increase, and cost increases will come down months after the fact, if at all. Based on what I know of our systems at store level this means that the profit margins on saleable goods will increase for the company until a related cost increase brings it back down. Thus prices consumers must pay are overinflated until costs align with the retail change.
...I believe that a federal probe into grocery store price increases should be supported in our parliament.
I'll end there, Mr. Chair. I hope I can garner the support of colleagues around the table to launch this inquiry and get the answers Canadian consumers need.
I would like to welcome everyone here.
Mr. MacGregor, I would like to thank you for your motion that speaks to a very important issue in my eyes. That said, I have a few questions about the wording.
A little while ago, I gave our clerk a draft document that contains some amendments. I propose that a copy of this document be sent to committee members and that we look at it together once everybody has received it. In the meantime, I would like to get my colleagues' opinion on a certain issue.
Inflation is obviously a big concern, and grocery store prices are climbing faster than inflation in general. We have all noticed that something is going on, and I think the issue merits study.
But if there were to be a study on the retail trade and its operations, as well as profit margins, such as what is suggested here, shouldn't that work be done by the Standing Committee on Industry and Technology?
I am not against the proposed study. Indeed, I have come up with some amendments that will guarantee my support. However, I am just wondering if it really falls to the Standing Committee on Agriculture and Agri-Food to look at the issue of grocery store prices.
This is a very technical issue, and I am not sure if we would be able to get answers from public servants.
Do you wish to answer now or would you rather that I continue to talk about my proposed changes?
At any rate, these were the questions that popped up in my mind.
Let's have a quick look at what I am proposing. I spoke earlier with Mr. MacGregor and members of the subcommittee, and gave them a copy of my suggestions. Nothing is written in stone here, obviously. Looking at what I drew up in French and in English, the English wording may not be word-perfect, because I wrote it today. I will therefore read the French version:
“That, pursuant to Standing Order 108(2), the Committee undertake a study on inflation [...]. ”
I would take out “profit-driven inflation.” We don't actually know yet if this is actually the case, because we haven't studied the issue. I think we have to be careful about the way the recommendations are worded so as not to come up with conclusions before having done the study. We will probably learn that it is indeed the case, but we won't know for sure until we do our study.
For the same reason, I would cross out the part that says, “and the cost of groceries going up while large chains are making record profits.”
I'm not against the part of the motion that deals with CEO salaries and the wages of their employees. I do wonder, however, if we should be looking at this now or in the context of another study.
I am also wondering if this issue might not rather be the remit of the Standing Committee on Agriculture and Agri-Food.The motion deals with the way companies manage the wages of their employees and the bonuses given to their CEOs.
We have, of course, all seen the news reports about huge bonuses that seem inappropriate, but I think that delving into this issue would take up a lot of time. Right now, I wouldn't include it. We could possibly undertake another study on the issue later.
I omitted “and their CEOs in relation to employee wages.” Then, rather than stating that the large grocery chains are leveraging their size to cut into the earnings of Canadian farmers, we could say, “examine the supply mechanisms with the producers and transformers. ” Again, I'm not stating that we will not come to this conclusion, but I don't think that we can do so before doing the study. The same goes for the other part that I crossed out earlier.
Finally, I would initially set aside four meetings for this issue, rather than six. We could always add meetings later, if need be.
Those are my proposals.
Colleagues, I await your reactions.
Thanks, Mr. MacGregor, for bringing this forward. I think this is a very important issue.
Many of my concerns with the motion as it reads are quite similar to those of Mr. Perron. I am not opposed to supporting a study of this nature. I guess my concerns would be on a few things.
I believe there is a balancing act here between industry and finance. I believe this is being done at finance right now or something similar. When we get into the discussion of wages and CEO actions, I think we're talking about competition, which I don't think is necessarily under our mandate. I think there are ways we can tighten this up, and I would concur with probably most of Mr. Perron's amendments.
One other thing that we would like added, Mr. MacGregor, if we get down that far, is something about increases in input costs and the impact that's having on groceries. We can have more discussion on the impact this is having at the farm gate, on farms and on grocery prices as well—not just further down the supply chain.
I don't think I have much more to add other than that I understand where Mr. MacGregor is going. I don't think I have a problem with that. I just have an issue in terms of what the mandate of our committee is. We are the agriculture and agri-food committee. I get what Mr. MacGregor is saying, but when we start getting into some of the stuff about CEOs and costs in relation to the wages for their staff, I think that's not really in our scope.
I do agree with Mr. Perron as well when we talk about profit-driven inflation and record profits. I think we're already assuming the outcome of the study before we've even started it, so I would much prefer to take some of that language out, but I think the essence of that is still there.
In summary, I think if we were able to tighten this up and be more focused on the agriculture side, we could still get to what Mr. MacGregor is talking about. I know he has an opposition day motion tabled tomorrow. Congratulations on that, Mr. MacGregor. Thanks for more work for me. Apparently he has a bee in his bonnet, which we will talk about later.
I do think I understand where you're trying to go. I think we can get there. I just have some concerns with the scope of what the motion says in terms of what is under our mandate for the to actually action the items that would come from the study.
The last thing I will mention is what we would like to see inserted in this. I agree with Mr. MacGregor that this is important, but obviously you know where we stand with . I want to see C-234 finished. We would like to add in there that we start this study as soon as the clause-by-clause on C-234 is finished.
Thanks, Mr. MacGregor, for bringing this at this time, which is great because it didn't disrupt some of our other meetings, which I appreciate very much.
Thanks to the chair for creating some time for committee business for this discussion.
I think this is an important motion. I generally share your concern with the fact that.... I think you're quite rightly pointing to the net profits of the three major companies as your evidence that indicates this as an area for inquiry. Certainly, there is some conversation that could be had about whether this is the best committee to study it. I think Canadians don't particularly care about that. What I think is that our committee covers the agri-food industry. We've probably prioritized producers more in our work and some of the supply chain that excludes retailers, but I don't see why that should necessarily exclude us from studying this, especially given that this topic is so important today with the cost of living being something that we're all talking about every day in the House of Commons. I certainly hear in my riding that people are concerned about the rising cost of living.
There's a tendency to look at the inflationary pressures globally and to talk about that divorced from some of the businesses that control a lot of the supply chain. I think, in this case, you're talking about net profits, and net profits are excluding costs—over and above the cost to operate a business. I ran a business for many years. I was the CEO of that company, and I know that net profits were hard to come by, so those companies' claiming those massive net profits is a concern at a time when Canadians are feeling those pressures.
I support the motion generally. In terms of wording, I think others have made some good suggestions. I appreciate Mr. Perron's suggestions. I also think that there might be an opportunity to look at the impact on farmers and also to look at the supply chain in general. One of the concerns I've often had with our agri-food system is that there is a lot of consolidation that's happened within the processing.... The whole supply chain has been consolidated over many years. That gives more market share to fewer companies that thereby have more influence on the market. Ultimately, the consumer, at the end of the day, stands to feel it, especially if those companies are claiming large net profits. I think we should all be concerned about that at a time like this.
I appreciate your reading the anonymous statement as well, because I've heard some similar things in my riding. I appreciate that. I appreciate your bringing it forward, and I think we should study it. I'd just suggest that perhaps we could look at the supply chain and the impact on farmers, which I think coincides with some of the other comments that were made.
I'll stop there, but thanks.
I will go to Mr. MacGregor, but just before I do, procedurally, Mr. Perron, I believe, has signalled his intention to move an amendment, and he has distributed those copies.
Mr. Barlow, at least verbally, has moved what I would see as a subamendment. Certainly, the language is something to the effect that this study wouldn't take place until after Bill is reported back to the House.
Mr. MacGregor, you've heard some of the comments of the Liberal colleagues on the bench. Technically, we would have to actually vote back up towards the motion, and if my Liberal colleagues here to my right would like to move a motion or actually move something of a language change in what Mr. MacGregor has proposed, that would ultimately be the time to do it.
However, why don't we hear from Mr. MacGregor about his thoughts on what he's heard so far.
I'll address the comments in the order I heard them.
I understand the concerns about whether or not this particular issue belongs at the industry committee and whether the language should be tightened up a bit more. I would argue no. I think that this committee, in other studies, has dealt with things like the grocery code of conduct, which has come up repeatedly. You could argue that belongs at the industry committee. We have heard from witnesses like the Retail Council of Canada. We've heard from many organizations that represent grocers; they have appeared here.
Our committee's mandate is to follow food from the farm to the factory to the fork. If Canadians are having trouble accessing healthy, nutritious food because of the cost, that means something in our system is broken. I've read into the record an email. I'm keeping it anonymous because the person who wrote us said they fear reprisal if their name becomes public. I'm not going to read their name into the record, but I can tell you that it's a real email.
We have someone from in-house confirming what I'm alleging. We have a correlation between record net profits and high food prices for consumers. Yes, costs are going up across the line, but grocers are still able to make a high profit above and beyond those high costs.
I have the benefit of having in-laws who live in Australia. Australia's food market is dominated by two chains, and they have had news stories in previous years in which those food chains would announce the price that they would buy carrots at, for example. It was up to the farmers to try to match that price. These are total cutthroat business tactics. It goes to that point of farmers being price-takers. They don't always have the option. They have to try to compete at the price the grocer sets.
I would argue that this very much is within the mandate of our committee. I agree with Mr. Turnbull in that I don't think Canadians much care about specific mandates of committees. That aside, I think we do have a proper mandate here, but what Canadians care about is what they're seeing week in and week out. I think they need to see their parliamentarians respond to those very real concerns.
On Mr. Barlow's suggestion, I agree on Bill . I think this is an important motion, but I know my Conservative colleagues have been waiting for a while on C-234, so I will agree with not upsetting the current order of things. As soon as that bill completes its journey here, I would like to see our committee embark on this study.
Quite a few things were brought up, and I want to be sure that I followed everything.
I'm in full agreement with Mr. Barlow about the fact that we are redoing the study on Bill . This study has already been done, but we are able to fix this.
As to my amendment, I would like to know if Mr. MacGregor agrees with the changes that I suggested. I also want to reiterate that I'm flexible.
Mr. Turnbull, I believe I understood that you wanted to keep the part at the beginning of the motion that says, “the Committee undertakes a study on profit-driven inflation.” I just want to be sure that I understood correctly. Personally, I have no problem with that.
Very few of you spoke about what I suggested. Do we keep that in or not?
I reviewed the proposed amendments by Mr. Perron. I don't have a huge problem with any of them. There's one word in English that may not be translated. It says, “with the producers and transformers”. I think it should be “processors” perhaps.
Other than that, I think the spirit of the motion is still there even if you eliminate the word “record” and just keep the word “profits”. I think it's there. I think the supply chain is already included, so I don't see any particular problems.
I note that there's one change to it, which reduces the number of meetings, so I don't know if Mr. MacGregor sees any challenges with that. It says “no fewer than six meetings” in the original motion Mr. MacGregor moved. Mr. Perron, I think in your version it says “no fewer than four”. We're only specifying the minimum, so it's not really a problem.
My concern, Mr. Turnbull, would be that we could keep adding meetings on Bill and just drag that out longer. Obviously I don't believe we need to do that. I could put in my amendment, Mr. MacGregor, of a limit of two—with two more meetings on Bill, or three—to put a time limit on that.
This is not to you guys across the way, but I don't want the powers that be to try to drag this out and then further delay what you're trying to achieve here. I am more than willing to add that into the amendment as well, if there's support on the floor to do that, so that we could put some sort of timeline on it.
It was a little more than two minutes, but I appreciate everyone's participation.
In my understanding as your chair, the way this should work is that we are going to seek to get unanimous consent to withdraw the subamendment and the amendment. We're going to allow Mr. MacGregor to reread into the record what I think will satisfy everyone on this committee.
I'm going to seek unanimous consent for Mr. Barlow's subamendment to be removed.
The Chair: Great.
Mr. MacGregor, the floor is yours to read your motion into the record, and then we'll go from there.
I will try to be brief, but what I have to say is important.
Our committee's work was suspended because an issue had to be dealt with quickly, which is perfectly acceptable. I agreed at the time, because needs must, but I would ask that we be very careful.
This has taken time, but I would like my colleagues to understand why. I demanded that I be given the document in French because we were changing what I proposed, but working with another document. Theoretically, we should have been using the first document and working with that one. I myself submitted a text in English and in French. If I am capable of making that effort, all members of the committee should do so as well. This is very important if we want to make things work.
You know that I am a very nice person, but I would like to say to the members of the committee that if this happens again, I will make my opposition known. We are under the gun right now; the second group of witnesses has arrived and we are going to have to rush to pass a motion very quickly.
Some people might have their own views on the subject, but it was important for me to say these things. I recognize the fact that I asked for the document in French and that you provided me with one. I will let it go this time. It remains, however, that things would be much easier if people came prepared next time.
I suggested having at least four meetings, which was informally agreed to. That is the only change that I would make to the document that we have received.
I want to point out that I am in agreement with the motion we just passed that was wordsmithed as a group. I'm in full agreement with that.
I think what you allowed earlier in the meeting was an anonymous email to be read into the record, for fear of reprisal. I understand that. I get that. It's not lost on me. However, we have witnesses at committee all the time when we do our studies, and many of them come here with a fear of reprisal based on their testimony, from either industry partners, suppliers, customers or whomever it may be.
I would just want to caution you, Chair—you have allowed this today—that this does not become a precedent. I don't think that's the direction we want to go in. We want witnesses to come here and to put an identity behind the information that's provided to committee. That's all I'm asking.
Colleagues, welcome back.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, May 30, 2022, the committee is resuming its study of global food insecurity.
I'd like to welcome our witnesses for our first panel.
Joining us, from CropLife Canada, here in the room we have Ian Affleck, who is the vice-president of biotechnology, and Dennis Prouse, who is vice-president of government affairs. From Nutrien, we have Mark Thompson, the executive vice-president, chief strategy and sustainability officer. He's joining us by video conference. From Sollio Cooperative Group, we have Ghislain Gervais, who is the president, and Casper Kaastra, who is the chief executive officer.
I know that Monsieur Perron will want to know about testing beforehand.
Mr. Gervais was unable to test ahead of time but does have the proper headset. We don't anticipate that there will be any problems. Otherwise, we have both of our witnesses in the room and Mr. Thompson completed his check. We should be fine on all fronts.
To our witnesses, you have up to five minutes for opening remarks. I'm going to start with our fine folks from CropLife Canada.
I will turn it over to you for up to five minutes, and we'll go from there.
Thank you, committee members.
My name is Dennis Prouse, and I am the vice-president of government affairs for CropLife Canada. My colleague Ian Affleck, our vice-president of plant biotechnology, is with me.
The issue of global food insecurity is one that is of great concern to everyone across the value chain in Canadian agriculture and agri-food. We take our role in helping to feed a hungry world very seriously, and we are united by a belief that Canada has a moral responsibility to act now in the face of rising global food insecurity to do its part.
In talking about solutions, we think it's also useful to gain some historical context on where we've come from. In 1962 when the world population was four billion, the United Nations estimated that 25% of the world's population was starving or malnourished. Sixty years later, with the world population approaching eight billion, the UN estimates that 9.9% of people are facing hunger. While the world population doubled, we cut the number of people facing hunger by more than half. While that number is still too high, it's a remarkable achievement. The green revolution in modern agriculture, namely innovation and the farmers who have embraced it and skilfully applied it, is what helps drive this success.
In the Canadian context, today's Canadian farm can produce twice as much output as 50 years ago with the same total input. This astounding increase in productivity has been matched by improved sustainability. Total emissions from Canada's agriculture sector have been relatively stable for 20 years, resulting in a decrease of greenhouse gas emission intensity of 50% from 1997 to 2017 compared to a 36% decrease for the economy as a whole in the same period. Due to the adoption of soil conservation practices, agricultural soils in Canada have been sequestering carbon for 20 years.
Plant science and innovation are helping farmers grow stronger, healthier crops across Canada. The data is clear in showing that pesticides and plant-breeding innovations deliver many benefits to Canadian consumers and the environment. Canadian families save an average of $4,500 per year on food costs thanks to efficient, high-yield farming practices.
Notwithstanding the gains we've discussed, though, we know that food insecurity has now started to rise again globally due to the pandemic, global conflicts and climate change. The number of malnourished people may have risen by as much as 150 million people over the last two years. Many members of Parliament are seeing food insecurity at home as well.
There's no magic wand or simple solution to these challenges, but we do believe strongly that modern agriculture and approved sustainable productivity growth can play a role in helping to address food insecurity here at home and abroad. We know that, given the right tools, Canadian farmers and Canadian agri-food businesses can grow and export more. This, in turn, can make Canada more prosperous.
The government-commissioned Barton report in 2017 talked about the untapped potential of Canadian agriculture. In a 2019 report, the Royal Bank of Canada stated that, with the correct skills mix, the agriculture sector could add another $11 billion to Canada's GDP and make the sector more productive than auto manufacturing and aerospace combined.
Modern Canadian agriculture is more sustainable than it's ever been. We're producing more food on less land, using fewer inputs and less water per acre, and burning fewer fossil fuels. This is due to innovation, and the farmer is embracing it. There's an opportunity for us to step up and do more to address food insecurity, but we need the tools to do it. We need a regulatory climate that facilitates and rewards innovation and makes Canada an agriculture technology hub.
Our recommendations, Mr. Chair, would be the following.
One, focus on regulatory modernization as a tool to encourage innovation. Our industry needs a regulatory system that is prompt, predictable and science-based. Politically motivated policy adventures in regulation on crop protection products or biotechnology would put Canadian farmers at a huge disadvantage globally.
Two, promote and defend the sustainability of Canadian agriculture on the world stage. While we work towards continuous improvements, we would like to see Canada promote the sustainability success story of Canadian farmers on the world stage and ensure that it is recognized in all international forums and negotiations. Canada is a world leader in sustainable agriculture and can be a world leader in sustainable productivity growth.
Finally, support exports by promoting science-based trade rules. We ask the government to better use international mechanisms and institutions to ensure science-based, predictable, more transparent trade rules for agriculture. A well-functioning trade system allows nations and regions to focus on the crops and products they produce more efficiently, thus helping to address food insecurity.
Thank you, Mr. Chair. We look forward to any questions the committee might have.
Good afternoon. Thank you, Mr. Chair, for the introduction and for the invitation to appear today.
My name is Mark Thompson, and I am Nutrien's executive vice-president and chief strategy and sustainability officer. I'm joining you today from Saskatoon. I'd like to honour our company's practice of acknowledging that this is Treaty No. 6 territory and the homeland of the Métis.
I'll start with a few words on Nutrien. Our company was created in 2018 through a merger between Agrium and Potash Corporation of Saskatchewan, previously two of Canada's leading agriculture and mining companies. We're now the world's largest provider and producer of crop inputs and services. Our global business spans four operating segments across 13 countries, including our retail division, also known as Nutrien Ag Solutions, and the manufacturing and mining of potash, nitrogen and phosphate fertilizers. We have a fertilizer production capacity of over 27 million tonnes. Our retail business serves over 500,000 growers around the world.
We are headquartered here in Canada. Our operations here are extensive and growing. We operate six potash mines in Saskatchewan, four nitrogen manufacturing facilities in Alberta, and nearly 300 ag retail outlets primarily across western Canada. This is in addition to our two corporate offices in Calgary and Saskatoon.
On the issue at hand, food security is a global issue that affects all of us. Increasing concern over global food supplies makes Nutrien's purpose to safely and sustainably feed a growing world more important than ever. Nutrien plays a critical role in global food security by ensuring that farmers have the products, services and technologies they need to sustainably increase food production.
By some estimates, the use of fertilizers accounts for approximately 50% of global crop yields and is critical for growers to meet the continued growth in demand for food. We're taking action to help fill the gap for food and fertilizers caused in part by Russia's invasion of Ukraine and the resulting disruption to the production and trade of energy, fertilizers, grains and oilseeds from this region. While it's impossible for one company to offset these supply impacts alone, we're doing everything we can to meet our global customers' demands.
In June we announced that we would safely accelerate the ramp up of potash production capabilities at our Saskatchewan mines to 18 million tonnes annually—in several increments over the next three years. In the past two years, more than 70% of additional global production brought online has come from Nutrien alone.
I'd be remiss not to mention our ambitious plans to do all of this while also solving for the challenge of climate change. When dealing in societal imperatives like food security and climate, we must think holistically and work collaboratively together. We can't simply choose one or the other. We must solve for both.
That's why in 2021 we launched our feeding the future plan, which includes commitments to help reduce our carbon footprint while preserving and growing food production. Some of these commitments set to be achieved by 2030 include achieving at least a 30% reduction in scope 1 and 2 greenhouse gas emissions intensity, while also investing in the transition to low-carbon fertilizers and scaling up a comprehensive carbon program that empowers growers to accelerate climate-smart agriculture and soil carbon sequestration, where growers are rewarded for their efforts through the generation of carbon credits and assets. On this latter effort, we are in our second year of piloting our carbon program, and we're now targeting 675,000 acres across North America. Interest from growers has been extremely encouraging.
Nutrien is working directly with growers to build customized croplands that reduce their carbon footprint. We assist in taking soil samples and baselines, providing products and technologies and verifying carbon performance. We're also paying growers directly for their participation, anticipating that we need to be ready to support growers in a compliance or voluntary offset market with a focus on scalable, long-term viability.
We're in regular communication with Environment and Climate Change Canada as well as Agriculture and Agri-Food Canada on our learnings and findings, and communicating with provincial government stakeholders.
Enabling Nutrien's carbon program and market-based offset systems are key to helping the federal government achieve its stated ambition of creating pathways to reduce nitrous oxide emissions from fertilizer use. To be clear, based on the advanced practices and performance of growers in Canada relative to other global crop-producing regions, reducing N2O emissions by 30% is extremely ambitious and presents significant risks if viewed in isolation from food production and security.
However, through our joint efforts, we believe we can make significant progress. To the point of today's discussion, we can help Canada tap into significant opportunity in agriculture to deliver on our nationally determined contributions, while addressing domestic and global food security through increased crop production—and build resilience for the future.
With that, I thank the chair and members of Parliament for your time today. I'm pleased to answer any questions you might have.
Mr. Chair, vice-chairs, ladies and gentlemen of the committee, good afternoon.
Mr. Casper Kaastra, chief executive officer of our Sollio Agriculture Division, and myself, Ghislain Gervais, president of Sollio Cooperative Group, thank you for giving us the opportunity to speak to you today.
I operate a farm with my wife, my son and my brother in Saint-Guillaume, in the Centre-du-Québec region.
Sollio Cooperative Group has been in business for 100 years and is the only Canada-wide agricultural supply cooperative. We represent more than 123,000 members, agricultural producers and consumers, who belong to 48 traditional agricultural and consumer cooperatives.
We have more than 15,000 employees in our three divisions: Olymel, which specializes in pork and poultry processing; BMR, Quebec's retailer of building materials and hardware; and Sollio Agriculture, which supplies farms.
Over to you, Mr. Kaastra.
My apologies; thank you very much.
Sollio agriculture supports producers in eastern Canada to help them maximize their yields by specializing in the marketing of agriculture inputs and value-added agronomic services. We are proud to have fulfilled our duty to ensure our producers were supplied with fertilizer this past spring and to avoid shortages despite the sanctions imposed on fertilizer coming from Russia.
The prices, the large volumes required and the logistical constraints are the reasons that traditionally explain why eastern Canadian farmers purchase fertilizer from Russia. In eastern Canada, we normally fill our warehouses before the St. Lawrence Seaway closes to ensure we have at least half of the quantities of nitrogen required to supply growers for the 10 or so days of spring planting. The other half, which represents more than 10 ships for us, then arrives in the spring just in time to keep up with the rate at which our warehouses are emptied during planting.
This usual process calls for considerable collaboration and planning by producers and their suppliers in order to have the product available in the spring. However, because of the impacts of the war in Ukraine, some types of nitrogen are not currently available and producers are having to adjust their plans accordingly.
As a result, many are concerned about product availability and high prices and are delaying their orders. Consequently, without firm orders, we must review our supply strategy to avoid stock outs, knowing furthermore that our deadline is February to avoid the food insecurity associated with a decrease in production.
I'll turn to Mr. Gervais.
Producers need to be confident that the government will adequately support them through major fluctuations in fertilizer costs. Otherwise, producers will change their seeding plans and cut their fertilizer applications, which will reduce yields and hurt both domestic production and Canadian exports.
In the short to medium term, innovation and technology will not be enough to reduce reliance on foreign fertilizer. The tariff creates an additional production cost for Eastern farmers, compared to their counterparts in other provinces or the United States.
We are calling for clear and consistent policies for the 2023 season so that we do not find ourselves in the same perilous situation we were in this past March when the sanctions came into effect.
The federal government must lift the 35% tariff on Russian fertilizer. We understand and respect the sanctions imposed on Russia. That said, if necessary, we should consider lifting the sanctions on fertilizer from Russia to ensure our food security and our ability to do our part to feed the world.
The government should provide a stable and predictable business environment for Eastern farmers.
Thank you again for your invitation. We will be pleased to answer your questions.
Thank you, Mr. Barlow, for the question.
As was mentioned by me and other panellists today, our view is that Canadian agricultural producers are already leading on the world stage in terms of production per unit of greenhouse gas emissions. Given the situation we're in globally, with tight supplies of crop commodities and fertilizers—and strong demand for each—we're acutely aware that any further disruptions to these supply chains could result in further tightness in the supply chain, putting food security at risk to a greater degree.
The war in Ukraine has exacerbated a situation that had already been worsening over the past few years. Food security was becoming more of an issue due to suboptimal production in North America and South America in 2021. Given the significance of Ukraine and Russia in the production and export of key global commodities, this situation has become much worse. Therefore, were we to impose a situation where fertilizers were cut arbitrarily, without consideration for food security, we could see that balance tighten even further and put the world in dire need of food supplies.
As I mentioned in my opening comments, many studies point to the fact that fertilizers account for up to 50% of global crop yields. Therefore, they are of paramount importance. Our focus is on continuing to increase performance on a greenhouse-gas intensity basis, while also accounting for food production.
You are right, Mr. Lehoux.
We are making our procurement plans for the next season. Obviously, we are looking at buying from countries other than Russia, as I said earlier.
Before, approximately 60% of the fertilizer imported for Eastern Canada came from Russia. The percentage was even higher for nitrogen, which was about 80%.
We are currently looking to source our supplies elsewhere, in the Middle East, Africa, Nigeria or Trinidad and Tobago, to name a few. I would add, however, that things are not that simple.
Thank you very much, Mr. Chair.
My first question is for the representatives of the Sollio Cooperative Group.
If I understood you correctly, you are suggesting to the committee that the 35% tariff be abolished.
In December of last year, I received calls from farmers in my riding, when nitrogen prices shot up by 100%. I must state that this was not caused by the war in Ukraine. The rise in prices preceded the war.
Obviously, there is the issue of the tariff, but we can't encourage Canadian businesses to continue to do business with Russia.
You have suggested that the tariff be abolished, but what is the guarantee that Russia will be a reliable partner? We have seen what has happened in the North Sea. Russia will not be a reliable partner, whether it be on a short, middle or long-term basis.
What can I say to farmers in my riding?
Is Sollio making changes to its supply chains for nitrogen? As we know, Eastern Canada imports 40% of the nitrogen that it uses.
I'd like to thank the witnesses for being with us today.
My question is for Mr. Gervais or Mr. Kaastra.
To conclude this discussion, what problems might the global decline in fertilizer production have over the next year? What supply issues do you foresee? If I understood your answer to Mr. Drouin's last question correctly, supply negotiations are going on outside of Russia, particularly in Africa.
Can we expect regular supplies and access to fertilizer for producers?
All right, that's clear. Thank you very much.
I'll now turn to Mr. Affleck or Mr. Prouse from CropLife Canada.
I'd like to talk about food security. You say that regulations must be modernized based on science, that there must be adequate monitoring and that the public must be well informed.
You talk about promoting sustainability and the environment. You say we need to have science-based rules. That amounts to pretty much the same thing.
One of the major problems in the food industry is waste. Much of the production doesn't make it to the consumer when it could be used to feed people in need.
What are your organization's policies for preventing food waste?
Thank you for that question.
When speaking about crop inputs we talked about fertilizer, but when you look at seed varieties that are more hardy and resistant to deteriorating in the field and crop protection products that avoid damage to those crops so that they store well—we don't see them either rotting in storage or in the field before they even have a chance to arrive to the plate—that's where these technologies are so important if we're going to avoid food waste.
To that point, I think the regulations you speak of are incredibly important. Canada is a science-based regulatory role model for the world. What we do here reverberates around the world and can either support or hinder food security.
With that in mind, when there are public questions or concerns especially with pesticides, GMOs or gene editing, it's important that we continue the government's work on this and not pause the work. We have to double down on engagement with the public and explain science-based regulation rather than pausing it. I will give two very quick examples of this where I think we've done well and maybe not so well as a government.
Last week Health Canada published an excellent response in The Hill Times to misinformation around their recent policies on gene editing. It was an excellent defence of a science-based regulatory system. It demonstrated what the truth behind that science was and why they chose that direction.
In contrast to that, last summer the government paused the activities on pesticide maximum residue limit adjustment and review in the face of public questions and considerations. It's completely understandable that people have questions, but pausing internationally aligned science-based work in order to figure out how to respond to the public just jeopardizes the science-based system. It confuses our trading partners by which these MRLs create an ability for us to move our Canadian produce into areas of food insecurity.
We have a great example in The Hill Times of defending the science-based process and moving forward, and an unfortunate pause on MRLs on the other side, which creates a confusing message. We really think it's important that public engagement, communication and risk understanding is critical versus a pause in activity.
Thank you very much, Mr. Chair.
Thank you to all of our witnesses for joining us today and helping us with our study.
I'd like to start with CropLife. We are seeing some pretty crazy weather patterns happening over these years. We know that climate change is going to drive that further and further. My own riding of Cowichan—Malahat—Langford is going through a drought right now, and drought is not synonymous with Vancouver Island in October. In British Columbia last year, we went from wildfires to catastrophic floods in a matter of months. We know that in the Prairies they have had their own experiences.
It's just getting harder and harder for farmers to predict what is going to come their way, and they're already dealing with a lot. We're putting so much pressure on farmers. We're setting these export goals. We know that they are leaders in innovation. They have taken gigantic strides in producing more food with less land, which I think you very clearly outlined. At the same time, they are fighting this rearguard action against climate change, and it's coming up unexpectedly.
You can't separate food security from climate change and the effect it's having on our land and our ability to produce food. Can technological advances keep pace with the change that is coming our way—for example, developments in hardier crops and their ability to withstand these crazy weather patterns? Do you have anything you can add to our discussion in that specific area?
There's absolutely an opportunity for that to occur. Again, with Canada being a regulatory role model, its recent policies on plant breeding innovation to clarify how conventional crops are bred, and gene editing and GMOs, all provide opportunities for hardier varieties that can withstand droughts or be more water-efficient and more pest-resistant. That shortens the time by which it takes to get a new variety to market. It used to take 10 years in traditional breeding. If you can introduce gene editing, maybe you can get that down to six or five. That changes your ability to respond to weather patterns. If we can get those varieties out to farmers for them to select what works best on their farm, they have a better chance of weathering the storm that could come their way.
I'm from Prince Edward Island. We don't have a drought. We had a very different situation, but whether it's my cousins who had barns blown down or the amount of rain that fell on the crops they were trying to harvest, it's the same issue. There is a great opportunity for technology to address those issues, but I would come back to the regulatory piece and to being a science-based regulatory leader as much as we're able as a government to allow innovation to thrive.
We want safety first, but then it's how to ensure safety with the least amount of impact on the speed of innovation. It's always safety first, but then it's looking for the quickest route to get that innovation to market in the safest way possible.
Yes, those are very good points. It's not only Canadian agricultural products but also Canadian know-how and expertise in this field.
That's a great segue to my next question. So many countries in the Horn of Africa are going through famine-like conditions right now. So many countries depended on Ukrainian grain. That stop in Ukrainian exports really affected many countries in a horrible way. It truly is a breadbasket for the region. While exports are resuming, it shows the vulnerability of supply chains to geopolitical incidents and conflict.
We've had witnesses say that Canada could also be doing more to try to establish better resiliency in those countries and better know-how, so that those farmers have the ability to withstand the ravages of supply chain interruptions and climate change, which we know is having a big effect in the Horn of Africa as well.
Do you have any comments on how, from your perspective, Canadian know-how and expertise could be exported to those countries to help build that resiliency there?
First, in the spirit of today's conversation, we see Canada in an extremely advantageous position, and I think Nutrien is a great example of that. Canada has an ability, with the right regulatory framework and attraction of investment, to increase fertilizer production.
We're doing just that, but also, when you look at the crops that have been left in shortfall by the crisis in Ukraine, Russia and Ukraine accounted for about 20% of global exports of corn and canola, about 30% of wheat and barley and over 60% of sunflower oil. When you look at what crops we have in Canada and our climate and mix, we're perfectly positioned to play a larger role on the world stage.
Exports take up about 50% of our production, so in addition to other countries that can meet that shortfall, I would say that Canada has a very significant and important opportunity.
Thank you very much, Mr. Chair.
Thank you to all the panellists for being here. I very much appreciate this.
Maybe I'll continue the conversation with Mr. Thompson.
It's important to hear that we can have those conservation practices that you mentioned and we can reduce emissions without sacrificing productivity. That's one of the reasons we're having this study.
In one of the things you mentioned in your opening statement, you talked about verifying carbon performances. Can you expand on that? What did you mean by how we can help in verifying carbon performance and seeing how we can measure the progress that our farmers are making and reward them for that?
Thank you to the member for the question.
In our carbon program that I referenced today with Nutrien, we're looking at two pathways to reduce emissions in the field. One is creating more removals, which is sequestering more carbon in soils through practices that I mentioned, like cover cropping and no-till, and then reducing nitrous oxide emissions from the application of fertilizers, which, again, can be achieved through practices like enhanced efficiency fertilizers, inhibitors and variable rate prescriptions in terms of how we use fertilizer in the field.
Part of our program today involves rigorous soil testing to start the program, and that's to establish a carbon baseline. Nutrien owns the largest U.S. soil-sampling company, and that's given us capabilities to support growers in this effort so that any outcomes we have in the program are science-based and verifiable. That was what I meant when I made that comment.
Second, we do have modelling, albeit historical and probably not up to date for today's practices, that Nutrien is working with industry partners to modernize in terms of today's practices used by Canadian farmers, as an example, and what we can expect in terms of nitrous oxide emissions in the field. We're creating baselines and performance measures for both of those things, so that we understand when we implement these practices what types of performance gains we're getting. We do see those from the early stages of our carbon pilots.
Above all else, for growers to adopt these practices at scale, there will need to be an economic incentive. To achieve some of the outcomes I've talked about, there is an investment required, and there is a cost. In our carbon program, we've not waited for the moment for these voluntary markets or compliance markets to reach scale. Nutrien has believed over the past few years that we have to take action now to put that infrastructure in place. On the basis of our performance measurement and baselining, we're actually paying growers for their carbon performance in these pilots to create that economic incentive for practice adoption.
For this to happen at a larger scale than we're working on today, we'll need partners and policy-makers from across the ecosystem to come together and align on a set of hopefully universal standards that will allow this program to flourish. The market-based incentive will certainly be a part of that. To the extent that's there, growers make economics-based decisions and they care about sustainability. We will see those programs flourish if that incentive is there.
Thank you very much, Mr. Chair.
The fertilizer issue is getting a lot of airplay in the news these days. I personally think it's a laudable goal to try to find ways to reduce our emissions from fertilizer. I think if you had two farmers with the same amount of fertilizer, you could get two different emissions results based on how they apply that same amount of fertilizer. It's not about reducing the amount of fertilizer. I think it's about getting smart in how it's applied and how it's used.
I also know that a lot of farmers are leading the way in reducing their own fertilizer use. They are employing regenerative methods. They are paying attention to that important symbiotic relationship between plants and the microbiology in the soil. There is a way of doing this. There's a way of having an adult conversation about this. It will also serve to reduce farmers' input costs, ultimately.
In terms of selecting varieties of crops that can grow under conditions of less fertilizer use, paying attention to that microbiology and that important symbiotic relationship in the soil food web, is there anything CropLife can tell us about that important work that's being done?
Thank you, Mr. MacGregor.
Colleagues, I don't do it often, but you know I used to love asking questions when I was not your chair. If you'll indulge me for about 90 seconds, I'm going to ask Mr. Thompson two quick ones.
Mr. Thompson, obviously the war in Ukraine has, I presume, created trade disruptions about the patterns. We actually heard that from Sollio a little bit today.
Can you give the committee a bit of a sense of who might still be buying Russian and Belarusian inputs for the fertilizer process, whether or not the war has had an impact in that domain, where Canada—whether it be companies like Nutrien or otherwise—can try to help fill that gap, and what that gap actually is?
I think the most illustrative example of the war in Ukraine specifically with regard to the fertilizers—and I've already talked about the impact on grains and oilseeds—is in potash fertilizers. If you look at the market for potash globally, it's about 70 million tonnes. Russia and Belarus account for about 40% of the global trade in potash.
Actually, in 2021, before the war broke out, Belarus had its own geopolitical issues as a result of actions it had taken that resulted in sanctions that severely disrupted supplies of Belarusian potash to the market. After the war broke out, what we saw was a combination of continued sanctions on Belarus, new sanctions on Russia and logistics disruptions as a result of the war. Therefore, our view is that we will see that 70-million tonne market and the supply available to that market reduced by roughly eight million to 10 million tonnes this year as a result of those disruptions.
Certain western nations and countries have elected to not purchase Russian or Belarusian fertilizers. However, in the case of potash, we are still seeing purchases from countries like Brazil, India and China.
In the case of Nutrien, as I said in my opening comments, we have accounted for about 70% of the increase in global potash production alone in the last two years and have made a commitment to increase our production volumes by three million tonnes over the next three years. We're the only producer globally that is in a position to do that, and we acted quickly because of this topic today—that we see a looming food security crisis—and are doing our part to make sure that growers have the potash they need, notwithstanding the supply disruptions in the former Soviet Union.