I call this meeting to order.
Welcome to meeting No. 6 of the House of Commons Standing Committee on Agriculture and Agri‑Food.
Today's meeting is taking place in hybrid format, pursuant to the House Order of November 25, 2021. The proceedings will be made available via the House of Commons website. So you are aware, the webcast will always show the person speaking, rather than the entirety of the committee.
Screenshots or taking photos of your screen is not permitted. In addition, we are following the public health guidelines imposed by the Board of Internal Economy.
Colleagues, we'll get right to it.
Pursuant to Standing Order 108(2), in the motion adopted by the committee on Monday, January 31, 2022, the committee is resuming its study of the agriculture and agri-food supply chain.
I would now like to welcome our witnesses on our first panel.
Joining us by teleconference today, we have, from the Canadian Produce Marketing Association, Guy Milette, who is the chair of the board of directors; and Ron Lemaire. Welcome to you both. From the National Farmers Union, we have Katie Ward, who serves as the president.
With us today from the Quebec Produce Growers Association, we have the president, Catherine Lefebvre, and the general manager, Patrice Léger Bourgoin.
We have five minutes for opening statements, and I'm going to turn it over to Mr. Milette to make the five-minute opening remarks for the Canadian Produce Marketing Association.
Thank you, Guy, and thank you, Mr. Chair.
I'd like to thank all the committee members, on behalf of the Canadian Produce Marketing Association, for the opportunity to speak on the ongoing supply chain disruptions having a significant impact on the fresh fruit and vegetable industry, agri-food supply chain and the Canadian economy.
I'll start by saying that many of the supply chain issues we're facing today existed before the pandemic and have been dramatically amplified and further complicated over the last two years. The committee has heard a lot about labour from earlier testimony, so we will not dive into this issue, except to say that labour is undoubtedly a significant piece of the puzzle.
In addition to our ongoing call for improved access to workers under SAWP and the agriculture stream of the TFW program, CPMA is extremely supportive of the proposal for an emergency foreign worker program, as highlighted by Food and Beverage Canada and the Canadian Meat Council.
Regarding our supply chain disruptions, our members are facing death by a thousand cuts as a result of the layering of disruptions, which my chair will touch on shortly. Supply chain issues impacting a fresh produce supply chain that deals in just-in-time delivery of highly perishable food means not only lost sales but also product spoilage and food waste.
There is no doubt that the ongoing supply chain disruptions are complex and interconnected, and so too are the solutions. They require action across multiple federal ministries and departments as well as collaboration with provincial, territorial and local governments.
Short-term and long-term plans need to be established to start the creation of a mechanism to prioritize the movement of perishable and essential goods in the event of disruptions, as we’ve experienced over the last two years.
Additionally, there is a need for a centralized focus in the form of a supply chain commissioner who is mandated and empowered to bring the necessary parties together to find a solution.
We would be happy to discuss the recommendations that were provided to committee.
At this time, I would like to hand it over to my chair, Guy Milette, as he can provide his perspective on the situation and real-life experiences.
Thank you very much, Mr. Lemaire.
Mr. Chair and committee members, I'm pleased to be able to speak with you today.
As chair of the Canadian Produce Marketing Association, or CPMA, I have visibility to the scope of challenges across our supply chain. As a Canadian wholesaler, importer and exporter based in Montreal, I live with these issues every day.
Even prior to the Omicron wave of the pandemic, a survey of CPMA members last fall found labour shortages reported by 92% of growers, 75% of wholesalers, and 100% of retailers—with warehouse labour noted as a particular area of concern.
As international shipping companies have sent empty containers back to Asia and posted record high profits, the availability and costs of containers have become a huge challenge for Canadian importers and exporters. Over the past two years, freight truck shipping costs have also increased 50% to 80%, both cross‑border and domestically.
From my own experience at Courchesne Larose, I can attest that we are seeing the following areas of impact.
Between May 2021 and December 2021, when looking at our volume of at least 400 truck loads per week, we have seen a minimum increase of $250,000 per week in freight costs. That's quite an increase.
We have seen important issues related to access to labour and absenteeism. We currently have a labour gap of 15%, which is lower than the market average of 20% for our sector. We are seeing absenteeism decline as we emerge from Omicron.
We are also suffering from an impact on availability of supply. The just‑in‑time program, which has taken over 10 years to build, is under tremendous strain due to the logistics issues, labour and delays. This is why consumers are seeing disruptions in product availability.
While every port of entry is different, we continue to see challenges both nationally and internationally as most jurisdictions are suffering from trucking issues and labour. Also, maritime ports are seeing significant unloading and loading delays, creating challenges to our integrated supply chain.
These examples all impact the average cost of fresh fruit and vegetables. In the last year alone—
Good afternoon, Mr. Chairman and members of the committee. I'm pleased to provide insights and recommendations from the National Farmers Union regarding agriculture and agri-food's supply chain issues. We represent farmers who operate all scales and types of farms across Canada. We've advocated for economic dignity, social justice and ecological health for over 50 years.
Today's topic is timely indeed but the acute supply chain issues that we face now have roots going back decades. Canada has set ambitious goals to increase agricultural exports, and our reliance on imports has increased. Multinational companies pursue global sourcing and just-in-time delivery to minimize their costs. Our food and agriculture system has now become dependent on long, complicated supply chains with weak links creating vulnerabilities.
We see ever-greater concentration with fewer and larger companies controlling inputs, processing, transportation, financing and distribution. When a small number of corporations dominate their sector, they are able to set prices to maximize their own profits at the expense of individual farmers, workers, small businesses and consumers.
A case in point is that of fertilizer. Companies charging exorbitant prices blame supply chain issues, and yet these same companies are making huge windfall profits. The NFU has asked this committee to investigate all the factors behind fertilizer prices, and we hope you will announce such a study very soon. As farmers, we are price-takers. We have no say in the price of commodities we sell or the inputs we buy.
In January, Statistics Canada reported that farm families continue to depend on off-farm sources for nearly two-thirds of their family's income. Furthermore, farm income includes program payment money, so income from the market averages less than one-third of farm family incomes. Farm families are subsidizing the system with their off-farm jobs. When agricultural supply chains break down, farmers bear the brunt of the costs.
For rural people, the supply chain is a one-way street such that the results of their work and the value of their crops and livestock disappear into the bank accounts of distant multinational companies. It is not surprising that so many feel left behind. Increasing economic inequality leads to social instability and disempowerment.
The climate crisis will also continue to disrupt production and infrastructure. The prairie drought of 2021 and B.C. and Atlantic floods cannot be seen as outliers but as signals that adaptation is no longer optional.
Resolving supply chain vulnerabilities requires planning to prioritize resilience and stability instead of putting all of our policy eggs in the export-maximization basket. Going forward, agriculture policy should be designed to build in safety valves and surge capacity so that disruptions are manageable challenges instead of full-scale crises.
We urge the committee to avoid the appeal of false solutions such as big data, automation and artificial intelligence, which would intensify inequality, reduce farmer autonomy and create new risks. True solutions will rebalance power, bring greater fairness and equity into our food system, and mitigate greenhouse gas emissions while implementing adaptation measures. The federal government can do this by providing the program, policy and regulatory support needed to develop and sustain our domestic market, creating broader and more diverse supply networks while retaining more of our high-value food dollars within Canada.
Whether the sector is beef, pork or vegetable processing, concentration of infrastructure ownership means that the packers, processors and retailers are benefiting regardless, but in all of these sectors, our past shows us that a different way of organizing our food system is both possible and desirable. Let's use the beef sector as an example. In 1988 there were 119 federally inspected beef-packing plants in Canada. All were 100% Canadian owned and the four largest beef plants killed 35% of Canada's cattle.
Now just two companies slaughter over 95% of our cattle. They failed to prevent COVID outbreaks and deaths, and cattle prices are low while grocery beef prices are skyrocketing. More smaller abattoirs located throughout Canada and available to serve producers in every region, coupled with regenerative production practices, would provide food system resilience and rural jobs as well as climate mitigation and adaptation benefits.
Banning captive supply and legislating caps on packing plant revenues would stop companies like JBS and Cargill from taking unfair advantage of farmers and consumers.
By learning from history and envisioning a more equitable and climate-friendly future, the federal government can create a better framework for rural jobs, infrastructure to serve farmers and farm prices that reflect the cost of production, to bring prosperity and stability to Canada's rural communities and agriculture sector.
I believe my time has nearly run out, so I thank you very much for your attention today and I look forward to answering your questions.
Good afternoon, hon. members.
I'd like to thank you for giving us the opportunity to speak before the committee today.
My name is Catherine Lefebvre, and I'm the president of the Quebec Produce Growers Association, or QPGA. With me today is our general manager, Patrice Léger Bourgoin.
The issues we are discussing today are of concern to our economic sector. The availability and cost of inputs are a constant concern, especially in a context where increases in production costs aren't accompanied by similar increases in sales prices. In fact, the renowned business journalism website MarketWatch stated at the end of January that, despite rising retail food prices, several farm groups are finding that stagnant farm‑gate prices and soaring fuel and fertilizer costs over the past five months are putting our operations at risk.
The globalization of markets has a negative impact on many aspects of the country's market gardening activities. Fruits and vegetables compete with imported products. In many cases, labour and enforcement costs are not comparable to those here. However, sales prices are generally similar.
The very nature of our industry means that producers have no control over the selling prices of their products. Most have a very short life cycle, and they can't be left in the field to be harvested later. Once harvested, they have to be sold and transported as soon as possible. This puts the producer at a significant disadvantage to the buyer.
However, several raw materials such as fertilizers, pesticides, seeds and other essential products such as cardboard, pallets, packing sacks, construction material and machinery parts are affected by the phenomenon of rising prices. Again, we're not in a position to influence the price of our vegetables.
Soaring energy prices have led several countries to cut back on the production of various fertilizers and reduce exports. That's the case for China and several European countries, including Russia. It goes without saying that producing countries will favour the domestic market over exports. Canada is therefore at the mercy of international markets. That said, fertilizer costs are expected to remain high. Farm Credit Canada estimates that fertilizer prices will increase by 60% in 2022. Pesticide and seed prices have also increased significantly.
I will now address the transportation and logistics challenges, also related to fuel costs. Transportation capacity is drastically reduced. Delivery times are increasing and rates are skyrocketing. The shortage of drivers and spare parts are crippling the transportation fleet. Right now, it's not uncommon for a producer of perishable products to pay 42% more to get fruits and vegetables shipped, compared to a few months ago. The situation is untenable. We are really caught in a bind. On the one hand, we need these trucks, but on the other, these costs are directly added to our production costs, which are exploding on all sides.
I will now talk about labour issues. As you know, there are fewer local workers to fill the needs. There are none left. We have had a quality foreign workforce for several decades, but the global pandemic has unfortunately exacerbated several constraints that have slowed the immigration process. In addition, recent changes by Service Canada allow temporary foreign workers in agriculture to be poached by people in the manufacturing and construction sectors. Labour costs continue to be a major challenge. In Quebec, minimum wage has increased by 14% since 2020. Market gardeners are having to absorb this increase without being able to pass it on in the selling price.
We believe that the federal government should move forward with the creation of a supply chain task force. Producers could speak to the key factors affecting their ability to produce, transport and distribute their products. The Government of Canada's appointment of a supply chain commissioner to lead a joint task force would be helpful in guiding this process.
With respect to labour, it is essential to improve programs by ensuring that administrative processes are more efficient and predictable. In that sense, a foreign worker who has been returning to the same place for many years and whose employer has an impeccable track record should be able to benefit from expedited processing.
Furthermore, the phenomenon of stagnating sales prices and the increase in all the main elements of our production costs greatly affect the profitability of our businesses and jeopardize their long‑term survival. Emergency assistance should be put forward to ensure the country's food security.
In conclusion, our production sector operates in an open global market, which forces us to compete with countries with lower labour costs and a regulatory framework that is much less costly to implement. We have very little control over selling prices.
Thank you very much for your attention.
I would be pleased to answer any questions you may have.
I want to thank the witnesses for their excellent testimony and also for the materials they provided ahead of time.
I'd like to begin with the Canadian Produce Marketing Association.
I'm very interested in your support for a supply chain commissioner, taking a whole-of-government approach to tackle some of these issues. I'm very familiar with the dynamics of a problem that crosses jurisdictions and departments and ministries, having dealt with temporary foreign workers in my own riding and with the intersection of COVID with illegal workforces, bunkhouses, etc. Those dynamics I'm very familiar with.
It reminds me, actually, of my own household from a decade ago, as a father of four daughters. On Saturday morning at chore time I always had five—Alyssa, Carina, Brenna, Kiana and “Not Me”. It was always Not Me's job to take out the garbage.
Starting on that lighter note, although this isn't light, can you provide some specific examples as to issues that have either been punted from department to department or have fallen through the cracks, or where a siloed approach has not been efficient in addressing the issue?
Maybe I'll start, and then I'll see if Guy has any comments to add.
I think you need to start looking at this in a model where we see agriculture playing a significant role in Agriculture Canada and our supply chain being an economic engine for Canada. Based on that, we start looking across multiple jurisdictions. The first jurisdiction, as was noted by one of the witnesses, is on access to labour, especially the on-farm, and the challenges around while improving the process [Technical difficulty—Editor] making sure it's effective.
The greenhouses are a perfect example from your riding. They are the tip of the sword in production. They are one of the first to come in full steam relative to domestic production in Canada. While they have identified that it's been moving better than what they've experienced in the past, there still have been some challenges on delays with last-minute switches to paperwork due to worker changes in the pipeline. Overall, 3,200 workers are on-farm now, and they have another 4,000 to 4,500 coming in for peak in June.
When you start looking at the divisions, you have to look at the divisions between labour, and then you have to look at the other components around the simplicity of transport. If you're a ministry of transportation you start looking at the division of labour. You start looking at the municipal division and jurisdictions around health and the power of the municipal health department. As we start migrating forward, under a supply chain commissioner model, in a simplistic way, we start asking how we streamline. The first piece is looking at reopening Canada as one piece of the puzzle. What are the strategic moves—
Thank you, Mr. Lemaire. I do want to pick up on something you identified there with regard to labour shortages.
I'm aware that your organization supported the emergency worker program. We read all five components of that into the record in the last meeting. We heard from the processing and meat-packing sector about the cap, that raising the cap is primary.
I have two questions for you. First, what issue would be primary, from your perspective, of those five pillars? Second, are you making any progress? Are you meeting with officials? I understand that you had some meetings last night. Can you update this committee on the progress you're making?
I'll start with the progress. has been very responsive to our request, to the 11 organizations that signed the proposal. It's our understanding that conversations on the proposal are under way. However, as industry we're looking for some indication from ministers and that our proposal is being considered for action and for implementation in the immediate future. This is, again, a jurisdictional challenge.
Even after two months, we've yet to receive a definite response on the proposal. We are requesting that ministers and sit down with our associations to discuss the proposal and to immediately look at the measures that can be taken to address the labour risk within that component of our supply chain.
Although the food and beverage processing side of the business is only one of several sectors undergoing labour shortages, the government has identified our sector, which includes that component, as part of Canada's critical infrastructure during the pandemic. The inability to meet those labour needs, as we heard on the meat side and some of the other pieces, is affecting [Inaudible—Editor] animal welfare.
For greenhouse growth to the U.S., it's fundamental. They're our biggest trading partner. As an example, 80% of the product out of Ontario goes to the U.S. We need [Technical difficulty—Editor
] a few key areas.
Going south, we need to ensure that we have access to the main means of transportation, and that is our trucking industry. It's not a federal rule, but we need to look at how we can support the provinces in driving access for more truckers through licensing, insurance schemes and some other strategies around bringing more truckers to market.
On the port side, it's around looking specifically at the issue of moving containers, at moving containers off the ports, so that they can move to distribution centres off the main hub and be addressed and moved out of the system and into the market as quickly as possible, but then go back into the system to be loaded with product to leave the country—
I want to thank all the witnesses for being here and also thank everyone in their industries, the many people who continue to work every day to find those solutions to make sure that we have access to safe and healthy products.
I would like to start where my colleague left off: with the Canadian Produce Marketing Association.
You mentioned in your opening statement the layered disruptions: port congestion, costs of shipping containers, inconsistent product delivery, labour shortages, which we've already delved into, input shortages and stockpiling of consumer goods. Those were the major ones.
I want to continue with port congestion. With ships waiting to dock and unload, especially with perishable products, this could lead to food loss, food waste and loss of sales. What processes could be implemented to prioritize the movement of perishable goods or essential goods to mitigate the congestion and food waste?
I'll quickly talk to that.
I mentioned the point earlier around creating that secondary hub outside the main port to be able to identify perishable items. On top of that is having the resources on ports, so that if it's CFIA or border services they can review and identify the products coming through and the inspections can happen in a timely manner to get the product moving into the system.
On the other side of that, it's also about working with the municipalities and the unions, such as the longshoremen's union, but also enacting the appropriate regulatory model that takes fresh produce as essential, so that in the event of any further disruptions the labour is there to move the product through the port. That's the fundamental principle. There are examples of similar approaches to this already in existence. We're looking for a similar approach for produce, in that if it's held at the port during a disruption, the longshoremen and others within the system are able to take the product and move it out to trucks.
I'll hand it over to Guy to see if he has any other comments.
Thank you very much, Mr. Chair.
I'd like to thank all the witnesses for being with us this afternoon.
I will address Ms. Lefebvre first.
Ms. Lefebvre, you raised several points in your presentation that bothered me, including the difference between the price you get for your fresh fruits and vegetables and the price they sell for on the market. You note that the market price is going up, but the price you're getting is stagnant.
Could you explain the causes for this discrepancy? What's the problem?
Yes. You can round out my answer.
Essentially, we see that, as part of the COVID‑19 amendments, Service Canada has put in place a process to try to speed up the processing of applications. However, this approach has been understood by people from other sectors that are not related to agriculture, and they have put in place a system to facilitate poaching of employees who come to Canada to work in agriculture.
Ultimately, Mr. Perrault, the market gardener pays for the whole administrative process and for the airline tickets, foreign workers arrive in Canada and, a few days later, workers are diverted by the manufacturing or construction sector, for example, which won't have to pay the costs associated with the worker's arrival.
Ms. Lefebvre, I'll let you continue.
Thank you very much, Mr. Chair.
[Technical difficulty—Editor] from the National Farmers Union.
I think you made it quite clear in your opening comments that the supply chain issues cannot be looked at in a silo apart from the ongoing climate crisis. In my home province of British Columbia, last year we transitioned, in the space of three months, from brutal wildfires to some of the worst flooding we've ever seen, effectively isolating Vancouver and its port from the rest of the country for a fair amount of time.
Of course, we've seen disastrous droughts in the Prairies and the incredible impacts they've had on farmers and supply chains there. I invite you to expand on some of your opening remarks. From your perspective and the National Farmers Union's perspective, what do we need to shift systematically to create resilience and flexibility in our food system that will mitigate our having to put out these fires or react all the time to these events, which we know are going to part of a pattern in future years?
Those are measures that seem to, of course, increase resilience but also positively impact a farmer's bottom line because of the cost of inputs and so on.
Also, as you may recall, in the last Parliament, our committee looked at processing capacity in Canada, and I really appreciate your remarks about JBS and Cargill and their absolute dominance of the Canadian market. The shift in a few short decades and the way the free market has really been centralized to give complete control to just two players has been quite incredible.
I'd like you to expand a little bit more on that, because processing capacity and supply chains are intricately linked. Maybe you could take some time to expand on what you would like to see our committee recommend, vis-à-vis the federal government, to ensure that smaller communities have better access to processing capacity and therefore increased resilience.
I'd like to thank the witnesses for being here.
My question is primarily for Ms. Lefebvre.
Ms. Lefebvre, you mentioned a number of situations where you have very complex problems, including the cost of fertilizer or transportation.
I'll address the labour issue. First of all, we heard Mr. Milette talk about an agreement and the fact that there is progress with . There are still discussions to be had with and . Has anyone thought about creating a joint committee to bring these three departments together?
There seems to be a particular difficulty in communicating to get the files moving more quickly. There's a problem, particularly with the issue of labour market impact assessments, or LMIAs, and the whole issue of poaching. We know that there have been changes. I understand that because producers in my region have asked me why this was brought forward because of COVID‑19. That didn't help vegetable producers. In fact, it hurt them.
How do you see the poaching situation?
What do you think about a joint committee bringing together the three departments? I'm a little tired of hearing that they're passing the buck between them. Couldn't they all sit down together and sort this out? How is that seen by the producers you represent, Ms. Lefebvre?
I would be happy to respond.
I know that when the committee did a study at the beginning of the pandemic on AgriStability, we were quite enthusiastic about the possibility of removing the reference margin and making the program much more valuable to farmers.
We've seen over the past year, with the absolute upheaval with weather affecting production, from northern Ontario, everywhere west, that AgriStability and AgriRecovery have been absolutely key for farmers to be able to just maintain a toehold, frankly. Without them, I think that the situation on our farms and our ranches would be orders of magnitude worse. We need to do everything we can to maintain access to those programs for farmers, and to improve access.
I just want to note that one of the comments we have seen throughout our industry is the strain on the market and part of the challenge is lack of investment on innovation because of the challenges around the pandemic.
That is part of the issue we're dealing with. It is not a lack of interest, but everyone within the supply chain from growers right through to retail are looking at that complexity of labour, which we heard through testimony, the complexity of all the attributes that are causing challenges in getting product to the consumer.
The innovation side is secondary in some ways. It's just a matter of, especially for our fruit and vegetable world where you sell it or smell it, wanting to get the product off the farm and into the truck, if they have a truck, across the border—at this point we aren't in full production, but if it's greenhouses, it's likewise—and then into a warehouse. In some cases it's the warehouse not having enough labour to get the product into the store and then not having enough labour in the store to get it on the shelves to the consumer. All those pieces come into play.
Guy didn't have an opportunity to talk to the increase in cost. I will just note that from our sector, operations like Guy's have seen a 16% minimum increase in cost, so the 5% food inflation number we heard in January, we can expect the numbers from the fresh fruit and vegetable perspective to be much higher coming down the pike.
Maybe I'll turn to the Canadian Produce Marketing Association. When we had the Agri-Food Innovation Council before our committee, there was a little bit of a back and forth with them regarding looking at people's supply chains in real-time when they might be impacted by something unexpected; for example, when the Port of Vancouver was cut off by flooding, and of course most recently when three of our major border crossings were blockaded by illegal blockades.
Can you talk to me a little bit about businesses in your sector? Are some of them starting to incorporate technology that allows them to get real-time updates on supply chain problem? Also, does the Government of Canada need to do more to invest in this type of technology so that shipments can possibly be re-routed using artificial intelligence.
Do you have anything you can contribute to that conversation?
I will answer very quickly.
When we talk to truckers, we have the flexibility to change their route relatively easily. The impact of the Ambassador Bridge closure was felt immediately. It caused delays for us, as trucks got stuck in long lines. So trucks can be moved easily. However, if you want to change the route of a container, it's a tedious process that can often take one to two weeks, which is often the same delay you'll experience if you keep the same route.
There are already tools provided to us by maritime companies. We are in a very modern era, so a lot of tools are available. I don't think we are looking for tools to have flexibility in terms of transportation. Rather, we are looking for tools to establish rules, find truckers and make the job attractive. New generations don't want to become truck drivers, and there are fewer and fewer of them.
Some jobs need to be made more attractive. Farm workers, warehouse workers and truck drivers are all jobs that are no longer in demand. So we have to do everything possible to make sure that the people who take these jobs can get what they need out of them.
I call the meeting back to order.
It is great to see everyone. We will continue with the second hour of our testimony here today.
With us by video conference, from the Canadian Chamber of Commerce, we have Robin Guy, who serves as the senior director of transportation, infrastructure and regulatory policy, and Jarred Cohen, who is a policy adviser. From Pulse Canada, we have Greg Northey, who serves as the vice-president of corporate affairs. From the Retail Council of Canada, we have Jason McLinton, who is vice-president of the grocery division and regulatory affairs.
Welcome to all our witnesses. As you know, you have five minutes for opening remarks.
We are going to start with Mr. Guy.
Thank you very much, Chair.
Honourable members, it's a pleasure to be appearing at this committee for the first time. My name is Robin Guy. I'm the senior director of transportation, infrastructure and regulatory policy at the Canadian Chamber of Commerce. I am joined today by my colleague, Jarred Cohen, policy adviser.
I recognize that it may seem out of the norm for the Canadian Chamber of Commerce to appear at this committee, but as the country's largest industry association with members in all sectors, we have a deep stake in the success of the agriculture and agri-food industry. Our membership includes companies and associations at various points of the agriculture supply chain, including producers, processors, retailers and ancillary business.
Over the last number of months, the Canadian Chamber of Commerce has been running the Canada's FoodLink campaign, which has been seeking to draw visibility toward a number of priorities for the industry, such as regulatory competitiveness, trade and innovation. As such, the committee's study is both welcome and timely.
Before discussing a few specific priorities for the committee's consideration, it's worth noting the volume of papers littering the town talking about the sector's potential. This includes the advisory council on economic growth, the agri-food economic strategy table, the industry strategy council and the Guelph statement.
Although the sector has remained resilient in the face of a destructive two years, I mention these reports not for posterity purposes, but to underscore that it's important to ensure we take the voluminous work that has been produced and put it into action. I hope this committee can catalyze on that action.
In the time available, allow me to focus on a few points in the areas the committee has identified as points of interest.
The first is regulatory. While, oftentimes, the cost of input fluctuations is due to market forces, the regulatory burden imposes a significant cost on companies and it's a cost that is within our control. Diverging from regulatory best practice and science-based international standards raises the cost of business. It makes Canadian companies less competitive and it prevents small business owners from running their companies. Too often, regulators do not give sufficient consideration to economic and business impacts when making decisions. To remain competitive, this cannot be the case.
We would urge the government to adopt an economic and competitive lens mandate for regulators to ensure that they do not hinder growth for Canadian business. As Canadian business turns to recovery, I would also stress that now is simply not the right time to introduce new regulations that would hurt economic growth and add new strains to our supply chain.
The second point of interest is transportation corridors. Extreme weather events and aging infrastructure remain challenges to ensuring we can get products to buyers and to markets. We have a serious infrastructure deficit in Canada, which will require us to perform triage. It's essential that we avoid the temptation to spread whatever money is available like peanut butter across Canada. Infrastructure capacity takes time to build and we need to move now to reap benefits later. We cannot simply address existing gaps, but must look to our future needs to reach our potential. This forward vision is essential to ensuring that our transportation system can meet the future needs of our economy.
The Canadian Chamber of Commerce commends the government for its investments through the national trade corridors fund. Through this program, we must continue to look at building redundancy through tools such as twinning of rail in high congestion areas, increasing the capacity of our bridges and protecting industrial lands around airports and ports.
I would also stress that the investments must be based on clear priorities with measurable economic returns. These priorities must be clearly communicated by governments, so that the private sector can act accordingly, and they must be backed by data to ensure we can see the impact projects are having to strengthen our trade corridors.
I would also like to commend the government for launching the supply chain summit. Partnership and dialogue between the government and the private sector are critical to working through these complexities. Establishing supply chain work groups for information sharing and moving issues forward cannot be overlooked. These are not flash-in-the-pan issues that will be solved overnight.
The third and last point of interest is supporting supply chains through innovation. The success of the Canadian agriculture sector relies on our ability to adopt new technologies that will support the sustainable economic growth of the agriculture and agri-food sector. The long-term viability of the industry also relies on innovation to enable the tackling of climate change. The government needs to work closely with industry to develop a technology-neutral, net-zero transition plan, such as the 4R nutrient stewardship program, and support carbon capture, usage and storage for the upcoming federal budget.
Thank you again for the opportunity to address the committee.
I look forward to your questions.
Good afternoon to committee members. As was mentioned, my name is Greg Northey. I'm the vice-president of corporate affairs at Pulse Canada.
Pulse Canada is the national association representing growers, traders and processors of Canadian pulses, which include peas, lentils, beans, fava beans and chickpeas. We are proud to be leading the future of healthy, sustainable food through the growth of Canada's pulse industry. We are the world's largest exporter of pulses, shipping to over 130 countries. Our industry's growth is directly related to our ability to meet global customer demand. To do that, we need a reliable, functioning supply chain.
Unfortunately, our sector is currently facing historically poor rail performance. In addition, for the past two years we have experienced considerable disruption to service in the Canadian container shipping market. Roughly 40% of pulses are exported via shipping container, which means the current container disruptions we are seeing are severely impacting our industry's ability to participate in international trade.
I want to be very clear about what these disruptions have meant for pulse growers and exporters. Shipping lines have removed historic routes to the Indian subcontinent, South America and other destinations that our trade has traditionally relied upon. As a result, average transit times for our containers of pulses have gone from between 20 and 40 days to reach destination to now between 70 and 90 days, depending on the destination.
We have experienced record low schedule reliability due to vessel delays and blank sailings. An estimated 90% of pulse exports were either rolled to a later vessel sailing or missed shipment altogether in 2021. Some containers of pulses have sat at port for up to six months before getting on a vessel.
In addition, Canada's export shipping capacity has effectively been cut in half through the decision by container shipping lines to ship empty containers back to Asia instead of shipping containers fully laden with Canadian exports.
As a result, our industry has experienced lost sales and cancelled sales contracts, which has impacted our competitiveness in international trade markets. This has been exacerbated by record high freight rates and additional supply chain costs. For example, the cost to retain a single shipping container for use for export increased from between $1,300 and $1,800 for a container in 2020 to between $4,000 and $5,000 in 2021.
At the same time there have been these excessive freight increases and poor service, it is notable that the profitability of container shipping lines has hit record levels. It is predicted that collective carrier profits for 2021 are in the region of $120 billion to $190 billion. This is a record for them. There is no doubt that a good portion of these profits has been extracted from the pockets of farmers, exporters and Canadian consumers.
This is why Pulse Canada helped found a cross-commodity initiative beyond agriculture, called containercrunch.ca, which is calling on the federal government to act to fix the container crunch and fix the issues facing the containerized supply chain.
We are here today to advocate for two things. The first is that the government immediately open an investigation under section 49 of the Canada Transportation Act to investigate what is contributing to the current container disruptions and to better inform the legislative and regulatory changes required to address the competitive failures in the container shipping industry. We do have a real need to update our legislative system regarding the governance of shipping lines.
The second piece is that we are asking the government to name a supply chain commissioner to lead the recently announced industry-government task force to bring together stakeholders to identify immediate solutions to address supply chain disruptions specific to containerized shipping.
These two actions are critical next steps to help ensure that we identify immediate solutions to the disruptions, but also to help ensure that we are able to move to a new, more desirable state with improved operating levels and financial performance for all who are using the containerized supply chain.
When given a level playing field, Canada's pulse industry can compete in any market around the world. If we are to increase the production and export of sustainably grown, nutritious pulse crops, our industry needs access to a well-functioning, resilient supply chain.
The committee has an important role to play by helping to draw needed attention to this issue, and by providing recommendations that will end the harm this issue is having on Canadian businesses and consumers.
I want to thank you for the opportunity to be here today, and I look forward to answering your questions.
Thank you, Mr. Chair and members of the committee, for the opportunity to come and discuss the agriculture and agri-food supply chain with you today.
Let me give you a quick introduction to the Retail Council of Canada, the RCC.
Retail is the largest private employer in Canada. Over 2 million Canadians work in our industry. Recognized as the voice of retail in Canada, the RCC represents more than 45,000 businesses of all types, including department stores, specialty stores, discount stores, independent businesses, online shops and, most importantly, food retailers.
RCC member food retailers are a proud and integral part of the Canadian food system. They are the stakeholders who are in direct contact with consumers, providing Canadians with the wide variety of foods they eat every day.
The COVID‑19 pandemic has caused unprecedented upheaval in the Canadian food supply system. The RCC and its members have worked closely with Canadian producers, processors and importers throughout this crisis to adapt to emerging challenges and changing consumer behaviours and demands.
We recognize and applaud the work that the government of Canada has done to date, but more needs to be done to ensure that the country is well placed to meet the medium and long-term challenges of maintaining our food supply chain in the wake of the COVID‑19 pandemic.
In this regard, I would like to point out that our members are already expressing serious concerns about the current supply chain challenges and pandemic-induced shortages that are greatly affecting the availability and costs of food products on retail shelves.
Challenges include international container availability and cost; extreme weather events, such as the flooding in British Columbia; rising fuel and transportation costs; the availability and cost of labour; and rising costs that suppliers are charging for goods. These challenges have been severely exacerbated by border crossing blockades, and this at a time when Canada is particularly dependent on fruits and vegetables from outside the country, impacting their perishability and further compounding the issue of availability and price.
RCC is respectfully calling on the federal government to help stabilize supply chains and lower inflationary pressures in three key areas.
First, as significant progress has been made towards removing existing blockades, RCC is asking the federal government to work together with all levels of government to swiftly develop proactive solutions for each unique crossing, point of entry—land, air and rail—and critical supply line in Canada to prevent future disruptions elsewhere in the country in the days and weeks ahead.
Second, we ask the government to delay the implementation of any discretionary regulations so that retailers can focus resources on ensuring the stability and reliance of their supply chains. While RCC members are supportive of the intent behind such proposed regulations as front-of-pack nutrition labelling and reformulating labels for natural health products, every new regulatory consultation and requirement requires a shift in focus and adds additional costs at a very sensitive and fragile time.
Finally, the federal government can help ease inflationary pressures in areas where it has direct control. This includes allocating quota under Canada’s new free trade agreements at the retail level, which is the level closest to Canadian consumers, if Canadian families are to see some of the benefits of free trade agreements in the form of savings and choice. Quota is currently being allocated by Canada to processors. This adds an unnecessary layer and added cost, and essentially gives all the quota to those who compete with the very products that would be imported.
This also includes conducting a review of the process for setting dairy prices in Canada. The Canadian Dairy Commission’s current process does not include, in any meaningful way, the views of the grocery and restaurant retail industries, along with those of consumers, and instead relies on self-reported and unverified data. We ask the federal government to improve this process based on the need for greater representation, transparency and authentication.
I will be happy to answer your questions.
Thank you very much to our witnesses for some great information.
Mr. Northey, I'm going to start with you. You brought up a couple of what I think are pretty critical issues that we have been trying to raise for some time. In fact, a letter was written to some of the ministers several weeks ago at this point.
You mentioned, in one of the points that you're asking of this committee and certainly asking of this government, initiating that investigation under section 49 of the Canada Transportation Act to address some of the supply chain disruptions and to be proactive so we can address some of these things in the future. I assume from your points that it hasn't happened yet.
What has been the explanation from the government as to why that step has not been taken, considering it's been many weeks since it has been raised as an option?
We initially raised this about a year ago, and it was in response to what we're seeing particularly in the U.S. but in other countries where, at the highest level, and certainly in the U.S.... The current administration at the presidential level has raised containerized supply chain issues as one of the key drivers for economic growth and for risks to their economy.
One of the things that we felt section 49 would do, if launched, would be to raise the profile of the issue that we believe is an incredibly important issue, not just for us but for many people in the supply chain. An investigation would be similar to what other countries have done. Regulators have looked at the issue, assessed it, collected data and evidence, and they've mapped a path forward.
We haven't seen that happen in Canada; we haven't seen a section 49 investigation. Obviously there's potential to do that now. We'd like to see it launched as soon as possible.
I'm going to shift to the Canadian Chamber of Commerce.
As a result of the United States having the shipping czar and now Canada not being able to get our products to market, we're seeing shipping lanes being diverted from Canada to pick up products in the United States, because we are losing our reputation as a trusted trading partner. This is not a new issue. This is certainly something that's been going on.
To Mr. Guy, I know that, in the fall or when it was announced that there would be the vaccination mandates on international truckers, the Canadian Chamber of Commerce strongly encouraged the government to delay that decision. Of course it did not, and we've seen a result of that.
Has the chamber or any of your members provided the government with any scientific evidence or data that would show that the trucking mandate was not necessary, that this was not a step that needed to be taken?
Thanks to all the witnesses for being here today. We appreciate your testimony and your time.
I'm going to focus first on the Retail Council of Canada.
Mr. McLinton, I have a couple of questions for you.
I think that unfortunately we've heard a narrative for the past few weeks, mostly from the opposition party members—or some of the members there—that the grocery store shelves are empty and this is caused by the federal government's vaccine requirements for cross-border truckers. The Retail Council is quoted in an article published on February 16 as saying that “the council's grocery members have reported that 90 to 94 percent of products that are supposed to be on shelves are actually currently available.”
There still seem to be individuals in the opposition benches who are pushing this, I would say dangerous, narrative that Canadians are going to go hungry. Can you confirm the quote from the council, published just yesterday, about the high percentage of products still available on Canadian grocery store shelves?
Grocery retail is a highly resilient industry. There are a number of pressures, as I mentioned in my opening remarks, that members are facing. Certainly, the blockades have been a major contributor recently, but there are a number of pressures, so to point to any one of them to say that this is the one thing that is causing the challenges I think is inaccurate. There are a number of challenges facing the industry.
At the best of times, our members are never at a 100% fill rate. It's probably closer to 98% or something like that. A couple of weeks ago, we were hearing that for the fill rates, depending on where you were in the country, maybe the lowest we were hearing of was in the lower 80% range, so we're probably at around the 90% range.
It's a very resilient industry. What our members need to do is to be able to do their jobs, and that's by having reliable points of entry, and that's by avoiding unnecessary regulation and whatever the government can do to lower inflationary pressures. If these things are in place, then retailers are highly resilient.
I note that Michelle Wasylyshen, the spokesperson for the Retail Council of Canada, said recently, “There is no threat to the overall robustness of the food supply system in Canada.”
I think it's also important to remember, from my perspective, that there's a reputable professor from the University of British Columbia Faculty of Land and Food Systems, James Vercammen, who said recently that, if anything, panicking and hoarding might make the shortages last even longer.
I wondered if you think that it's actually kind of irresponsible for people in leadership positions to be scaring Canadians into potentially panicking and hoarding food and other supplies. Couldn't this exacerbate the challenges we're already experiencing, Mr. McLinton?
Thank you, Mr. Turnbull. I guess there are two parts to that question.
In terms of panic buying, that does not help. We saw that early on in the crisis with food. We saw it with other products; I think everybody heard about toilet paper and things like that. That not only does not help, it wasn't necessary, because grocery retailers are very resilient, have very good relationships with their suppliers, did whatever they had to do and continue to do that in order to adjust.
I think the real issue here, though, is being able to allow retailers to operate in the environment that they're best at in order to be able to do their business, and it's by doing all the things I mentioned. Any assistance is helpful. There are many pressures, and so any areas where the government can assist will alleviate some of the pressure on supply chains.
On foreign workers, we have no comment.
However, related to our current supply chains, our bigger issue with labour is that we're having to lay people off because we can't execute trade. With regard to members of our supply chain, whether it's transloaders through Vancouver, through to traders and processing plants, right now we can't move product, so we're having to lay people off.
Obviously there are different checks and balances that have to happen, but with the labour perspective, that's our current problem, and then it's getting them back if we do manage to get our supply chains working again.
But they are likely to be working elsewhere.
Mr. Northey, in your opening remarks you talked about the creation of a procurement commissioner. We have looked at your proposal. However, we have heard from other witnesses that the creation of such a position might not be the answer. It would create an additional structure, there would be reporting, but it would have little effect.
Could you tell us more about this recommendation?
Would you not prefer establishing a coordinator position or minister responsible for this file?
I think it would have to be defined by two main things.
The first one we would like to see is someone given a mandate to bring together members of the supply chain to address current issues. If you take the Vancouver ecosystem right now, there are multiple players in the containerized supply chain side who are making suboptimal decisions and creating more havoc. In the immediate term, someone who can come in and address that would be key.
Over the long term, in having a position like that, whether it's a commissioner or someone else, the real outcome we need is someone to be able to assess the Canadian situation and ultimately containerize the supply chain, by June specifically for us, but for all of them—
Thank you very much, Mr. Chair.
I'm very pleased to be participating in this meeting of the Standing Committee on Agriculture and Agri-Food.
I would like to thank all the witnesses for being with us today to share their reality and to talk to us about these issues which are crucial, especially for companies and for the members of the associations they represent.
The pandemic and the temporary shutdown of the economy have disrupted all economic activities, and resuming these activities is very complex. Indeed, it is not as easy as simply flipping a switch. Many people and subcontractors are working to make all kinds of products available to our citizens. Disruptions in the supply chains are a big part of the reason for the rise in inflation, which is driving up the cost of living for many of the people we represent as elected officials. So the issues we are talking about today are critical in many ways.
My question is for Mr. Northey of Pulse Canada.
Mr. Northey, you said that a shipment normally takes 20 to 40 days to reach its destination, and that, because of the disruption, some shipments are now taking 70 to 90 days to reach their destination.
Could you tell us more about the containercrunch.ca initiative you mentioned earlier, which is related to the container issue?
What kind of partnership with government would be needed for your sector to put in place effective measures like this initiative?
Specifically on those numbers, that is the transit time once a container is on a ship to a destination.
If we take India, for example, which is a major market, previously it would take upwards of 40 days and now it could take about 90 days. That is really down to changes in the cancellation of certain routes that would have been quicker and more transshipment having to happen in other countries. It exacerbates that there's a deprioritization generally of our ability to execute to the markets we have. From the shipping line perspective, they're not as profitable.
Our main piece here is that the immediate fix is.... I mentioned when somebody...the outcome being that we're able to bring together members of the supply chain immediately to address those suboptimal decisions that are being made. Ultimately, from a container supply chain standpoint, our big need is to work within Canada, but with other partners, on the proper governance structure around shipping lines.
We have a piece of legislation that exempts them from the Competition Act, which is over 40 years old and out of date. Right now we're in a really great position to look at what kind of structure we need to put in place to govern shipping lines. Ultimately, every country is looking at this right now. The U.S. has a bill that's being deliberated specifically on this issue. We have the opportunity right now to make sure that we're actually doing that correctly.
Thank you very much, that's very interesting.
Mr. Northey, the recent blockades on the Canada-U.S. border caused a lot of disruption to the agricultural sector. Indeed, the resulting costs are likely to run into the billions of dollars.
Planting season is coming up in a few weeks. Have these delays had an impact on essential products, such as seeds or fertilisers, that have been held up at the border?
What effect, if any, have these blockades had?
I would now like to ask Mr. McLinton a question.
Mr. McLinton, you mentioned the problem of labour shortages. You are not alone in facing this problem, as it is widespread throughout Quebec and Canada. Part of the answer is immigration, as you mentioned. We in the NDP agree with that.
However, what troubles me is the processing time for files sent to Immigration, Refugees and Citizenship Canada. For the past two years, the department has slowed to a crawl, hasn't been meeting deadlines...
Thank you very much, Mr. Chair.
I appreciate the time and I appreciate the witnesses and their presentations.
I would like to go back to the conversation with Mr. Turnbull and Mr. Guy for a second.
I don't think it's panic that some of us have brought up with our constituents. I do have pictures of empty grocery shelves in Regina: produce, yogourt and fruit. We can't take that out of context, because there are some issues. Just because grocery stores in other parts of the country have their shelves stocked, it doesn't mean there aren't issues in other ridings. Even if those grocery shelves are stocked, the prices are getting so high that people can't afford their groceries anyway. This puts a bit of context into what some constituents are feeling in other areas of the province.
Mr. Guy, you talked about the blockade being an issue for the supply chain. Did you contact the Liberal government in 2020 to take proactive measures back then when there were blockades backing up the port in Vancouver and shipping lanes?
Thank you very much, Mr. Chair, and thank you to all the witnesses for being here.
I want to start with the Chamber of Commerce.
You made some comments early on about regulatory burdens and also investment in transportation infrastructure. You mentioned that you wanted to look at measurable economic returns. Again, with regulatory burdens, you mentioned economic and competitive mandates.
Your third point was really more about climate and net-zero plans, etc. How do you bring together the need for climate action and climate events when you're just looking at economic returns in these first two areas and not really factoring in environmental concerns? It seems like it's rather broken out into separate silos, if you will.
I have a question for Mr. McLinton from the Retail Council of Canada.
You mentioned that retailers were highly resilient and that most of the shelves were still quite full despite the different impacts we've had to our supply chains, but labour was really one of the big issues. During the pandemic, the frontline workers in retail operations were given an increase in their hourly wage. Despite that, our large retailers still had record profits.
Do you think maintaining those higher wages for these essential workers might help solve the labour shortage you're experiencing in retail operations?
Thank you very much, Mr. Chair.
I'm going back to the question I started to pose to Mr. McLinton during the previous round of questions.
Immigration can be an answer to some labour shortages. As New Democrats, we agree with that. That said, there have been significant delays at Immigration, Refugees and Citizenship Canada for months under the Liberal government. In my riding, we hear horror stories about all kinds of applications, whether they are for work visas, temporary workers or permanent resident permits. The processing times can be as long as 12, 18 or even 24 months. As an industry, are you worried about these delays from Immigration, Refugees and Citizenship Canada?
Thank you very much, Mr. Boulerice.
This brings our second round of questions to an end.
I would like to thank our witnesses very much for being here this afternoon, for their testimony and for their work within the agriculture and agri-food industry.
I would also like to thank our interpreters and the whole team for their work.
Colleagues, thank you so much for your time. We will see you back on March 1. Have a great day.