Pre-Study of the Trans-Pacific Partnership Agreement (TPP)
International Trade Committee on May 12th, 2016
Best Western Plus Waterfront Hotel, Ontario/Erie Room, 277 Riverside Drive West, Windsor ON
09:00 am: The Chair, Mark Eyking
Good morning everyone. It’s great to be here in Windsor. You know that we are the House of Commons trade committee.
We are a very active committee. We have a lot of things on our plate. We’re finishing up the CETA agreement and we have the softwood lumber issue, but the biggest thing on our plate right now is the TPP. Since Parliament started, our committee has been travelling the country. This is our sixth province. We have four provinces and the territories left to visit. We’re also doing a lot of consultations in Ottawa with various stakeholders.
In our last few meetings, we’ve opened up the last hour to the public to get their views on the TPP. We’ll be doing this over the next few months. We have also received submissions from the public via email, and we’re at over 10,000 right now. We’ll be taking them and putting them all together for our final report.
That said, we have four panels this morning. With us on our first panel we have Unifor, the Windsor and District Labour Council, and the Essex County Federation of Agriculture.
The members of our committee are from across the country. We have Karen Ludwig from New Brunswick, Linda Lapointe from Quebec, and Mr. Peterson from Ontario. We also have Mr. Van Kesteren from Ontario and Ms. Ramsey from Ontario. Gerry Ritz and Randy Hoback are from Saskatchewan. So we have good representation.
Without further ado, we’ll start with our witnesses.
11:35 am: The Chair, Mark Eyking
Thank you, sir, for your presentation.
We’re going to move over to the Lambton Federation of Agriculture.
Gentlemen, for five minutes. Go ahead.
11:35 am: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
Thank you, Mr. Chair, members of the committee and staff for taking your time and allowing us to speak today.
I’m Kevin Forbes, the past-president of the Lambton Federation of Agriculture. I am currently operating our family farm, which is a 200 cow dairy.
The Lambton Federation of Agriculture represents over 1,200 farm families across a very diverse array of industries, from cash crop, beef, pork, dairy and poultry, to dairy goat, sheep, alpacas, fruit orchards, vegetable crops, vineyards, wineries, greenhouse production, and maple syrup.
First off, we would like to congratulate politicians, the negotiators, and staff for all of the hard work over the past decade to bring the TPP to fruition. This has the potential to be a monumental trade deal for Canada. With all of the agriculture speakers today, we are going to try not to be redundant.
The TPP has potential to benefit industries such as beef, pork, and some of the grains and oilseed sectors by gaining access to, most specifically, Japan and Vietnam. There is also some small potential for the sugar beet industry as it tries to develop itself within Canada, which Gary will talk about in a minute.
Unfortunately, as with all trade deals, not every industry was able to make gains. The supply managed sector did have to make sacrifices to make the deal successful. We feel that negotiators did an excellent job in mitigating the losses to supply management. That being said, we’ve been proud so far as an industry not to have to accept direct payment from the government, and we’d like to keep it that way going forward.
However, the truth now will be how the government helps farmers mitigate the concessions made to their industries. In an October 5, 2015, press release, it stated that it government would provide an income guarantee program over the next 15 years. There is also a quota value guarantee program, a processor modernization program, and a market development initiative.
It is incredibly important for the government to step up and follow through with these programs. The two most important ones are the income guarantee and the processor modernization programs.
For the dairy industry, it is a vital time for processor investment. There are many aging dryers in Canada for processing skim milk, and they aren’t going to last forever. There is currently over $200 million dollars of product coming into Canada tariff free because our processors can’t even produce this—and the product is diafiltered milk.
An investment in one plant in Ontario and one plant in the west would help alleviate the stress in our system and would also be enough to cause a quota increase itself, which would help almost eliminate the impacts of the concessions of the TPP. The side benefit of investing in processors is the windfall of jobs that can come into the economy, and not just for the benefit of farmers.
For poultry producers, they accept the concessions that were made but are looking for government to stop the current fraudulent practices, including importers being able to import unlimited quantities of chicken by simply adding sauce or other ingredients, by importing spent fowl and falsely declaring it at as chicken, and allowing companies to substitute high-valued import cuts with low-valued domestic cuts.
In summary, the LFA is generally in support of the TPP agreement and we look forward to its being ratified in the future.
Gary does have something to add to that.
11:40 am: Gary Martin, Director, Lambton Federation of Agriculture
Hi. I’m Gary Martin from southern Lambton County. I’m part of a farm there that’s been in operation for 150 years as of last year.
I’ll give you a bit of the history of our farm. Back in the fifties, my grandfather and father used to grow sugar beets. We still have some of the wagons kicking around the farm today. As for the history of the sugar beet industry, sugar beets had been grown locally well before 1900 and were processed in Michigan. In 1901 sugar processing plants were built in Wallaceburg, Dresden, Kitchener, and Wiarton. Further consolidations after those plants were built resulted in one company processing beet sugar until 1967, all the way from 1920. When cheap imported cane sugar took over, they stopped producing sugar from sugar beets.
Where are we today?
The U.S. has a protected sugar industry and bans sugar imports. The local producers today in Canada are allowed to export beets to Michigan, where they’re further processed in Michigan. Beet farmers in Lambton County and Chatham-Kent are excited that the TPP will again allow for local sugar processing, with U.S. accepting imports. However, on further inspection, it appears that the TPP falls short in guaranteeing the increased market access to the United States that would allow for the investment and processing in Canada.
The main problem of predicting market viability for sugar is that sugar happens to be the most distorted traded agricultural product worldwide, with domestic exports and trade-distorting policies across the world, while Canadian processors cannot benefit from these policies.
Thank you.
11:50 am: Dave Van Kesteren, Chatham-Kent—Leamington, ON
Of course, the government promised at the last election that they would pass that PACA agreement. So we need to put their feet to the fire and make sure this becomes a reality.
As a southern Ontario boy, I’ve watched farming and have been part of farming to some degree, too. This has been a theme that we’ve heard out west, about how important the commodity sector is. In this area, I think my recollection is correct that we’re the largest corn producers in Ontario. I’m talking about Kent County, but we might as well talk about the area. I think we’re second-largest in wheat, if not the top; in soybeans, likewise, I think we’re number one; as well as in a number of others. But on those three commodities, how important is it for you to open up new markets, say, in the non genetically modified soybeans in the Japanese market? Do you see potential for growth there, Kevin?
11:50 am: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
I guess any time you’re dealing with a market the size of Asia or the trans-Pacific there’s tremendous opportunity. As we know, grains and oilseeds travel very easily across oceans. Especially when you look at the conglomerate of counties within southwestern Ontario, which is a kind of breadbasket or heartland with soil and heat units that grow very diverse brands and types of grains and oilseeds, I believe there’s tremendous potential.
11:50 am: Kyle Peterson, Newmarket—Aurora, ON
Thank you, gentlemen, for being here and for your informative presentations. We do appreciate it.
I have a few questions, and I’ll start with you, Kevin. You mentioned supply management. I think you mentioned that if you had your way, you wouldn’t have to accept any government compensation, or you would prefer not to. What sectors do you represent that are supply managed right now?
11:50 am: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
Specifically I’m a dairy farmer. I have some speaking notes on the poultry industry, but my expertise, or whatever amount I have, is in the dairy industry.
11:50 am: Kyle Peterson, Newmarket—Aurora, ON
I’ll ask a straightforward question. If the TPP goes through, you’ll be seeking compensation on that part?
11:55 am: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
That’s something our federal and provincial bodies will work with government on, to assess the actual impact of products coming in. I believe it is a bit open: 3.25% is the percentage that was given out for dairy. We’d have to assess the financial impact to our industry and could possibly be looking for compensation if our industry is negatively affected by the trade deal.
11:55 am: Kyle Peterson Newmarket—Aurora, ON
Okay. I’m just trying to gauge whether your support of the TPP likely would be contingent on having compensation.
11:55 am: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
I would say that by the looks of the trade deal, it would have a negative impact on our industry, and we would likely look for some form of compensation to cover our losses.
11:55 am: Kyle Peterson, Newmarket—Aurora, ON
I understand. I just wanted to get that clear.
11:55 am: Tracey Ramsey. Essex, ON
I think nothing speaks to southwestern Ontario more than a panel full of farmers and business interests working together.
Mr. Forbes, we’ve heard from many dairy farmers across the country. Two hundred head is a big dairy farm. I’m sure that’s a big enterprise that you have. There are things of grave concern to us. We in the NDP are disappointed that the s voted against the diafiltered milk issue we brought forward. That already costs you $220 million per year. This is already a huge hit.
We heard from dairy farmers that under the TPP they will lose $400 million per year, forever. Although there may be some compensation, it’s not clear at this point if there is, what it will be, or how much it will offset. The loses are significant. For chicken farmers the losses are $150 million. We know the hit will be hard for your industry.
These phytosanitary conditions, and other non-tariff barriers, are larger issues I think for agriculture than the tariff barriers are, and those need to be addressed.
Noon: Tracey Ramsey, Essex, ON
I’d like to go back to agriculture and talk about the import controls and how those controls aren’t being properly enforced. It’s ending up costing us a lot to our domestic market. What we often hear at this table from many different sectors is that what we currently have isn’t working. We want to fix X, Y, and Z, but let’s go into this new trade agreement. The TPP will not fix the harmonization issues that we have currently. Although there are committees that will be struck, it’s unclear whether these will be fixed at that committee level.
I wonder if you could speak a little more to the harmonization issues that you see in the TPP in your sectors.
Noon: George Gilvesy, Chair, Ontario Greenhouse Vegetable Growers
I can’t speak to the ones particular to the TPP, but I can speak to what we did see out of the Regulatory Cooperation Council with America. There were four main issues with regard to harmonization, which are critical to ongoing success. PACA was in that, as far as harmonization with the RCC was concerned.
There’s also the North American perimeter strategy I spoke about in my remarks, which I had to rush through quickly. We need to have a North American approach on invasive pests and diseases. These are problems to us. For example, last year the Dominican Republic was banned from sending peppers into the United States because of a bug. What happened? Those immediately came to Canada. Then you get potential co-mixing of that product with our product. It hits the U.S. border and shuts our border down.
The North American strategy and the harmonization you’re talking about are absolutely critical.
Noon: Gary Martin, Director, Lambton Federation of Agriculture
By import controls, are you talking about import quota and stuff like that?
Noon: Tracey Ramsey, Essex, ON
Yes, there are import controls for things that are coming to the border, like the broiler chickens we see coming in. We see pizza kits. We see things that are coming in under the guise of other products, and they are passing through that border because there isn’t a second inspection point there to determine whether or not they’re actually being brought in under the proper category.
Noon: Gary Martin, Director, Lambton Federation of Agriculture
Well, any import quotas are going to cause a distortion in the market. In the free market, there shouldn’t be any import quotas at all, but we can’t control what import quotas other countries have that affect us. For instance, I’ll go back to sugar. The United States has a ban on imported sugar. We can’t do that, so we use cheap imported sugar.
12:10 pm: Karen Ludwig, New Brunswick Southwest, NB
Good afternoon. I’m very pleased to hear your presentations.
I’m also pleased, Mr. Martin (sic), to suggest that our government is committed to sustainable solutions regarding diafiltered milk. We have an agricultural committee that is going to be reviewing that and working together with farmers in developing a solution, which we’ll hopefully have by at the end of June. If you would like to be involved in that, I can certainly pass your information along.
12:10 pm: George Gilvesy, Chair, Ontario Greenhouse Vegetable Growers
Trucking is becoming a problem for our sector. One of the things here is that our members have control of a lot of their internal logistics as well, so they’ve got many of their own trucks. But with drivers, there is going to be a problem. Getting the adequate human resources to be able to fill those trucks is a problem.
12:10 pm: Karen Ludwig, New Brunswick Southwest, NB
Okay. Thank you.
Regarding the agricultural sector as a whole, we have certainly heard across the country, and know demographically, that we have an aging population. Is there a plan in or strategy in place in terms of succession planning for future farming in southern Ontario as your farmers are aging or the farms are changing the succession plan for that?
12:10 pm: Gary Martin, Director, Lambton Federation of Agriculture
I think we’re representing a couple of farmers here who have taken over. I’d like to think that despite my grey hair, I’m still a young farmer.
12:10 pm: Karen Ludwig, New Brunswick Southwest, NB
Yes, you are.
12:10 pm: Gary Martin, Director, Lambton Federation of Agriculture
Being under 50 I think would be an abnormally young farmer. I know that Kevin is younger than I am, so I’m hoping that it shows. I know a lot of the neighbours have taken over from their fathers, who’ve either passed on or decided to retire.
12:10 pm: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
I believe that within Ontario there are some different programs. There is some government funding available for grants for succession planning to help farms go through that. I do believe that in the next number of years you’re going to see a number of farms transfer to a younger generation. If you look at the demographics, there are a number of baby boomers who will be retiring in the next number of years. Whether those farms are passed on to their kids or sold, only time will tell, but I can say that if there’s profitability in farming and agriculture, there will be a next generation there to take over.
12:15 pm: Gerry Ritz, Battlefords—Lloydminster, SK
Kevin, on the compensation side—I hate to call it “compensation”, but it is transitionary—the big push was to make sure that the value of quota was maintained. We didn’t want to see a run on quota values, because those have become leveraged to allow people to build that new barn, to expand to 200 animals. You probably didn’t start with 200, but you’re there now using that quota value as a lever. So it’s to maintain that. It’s like a milk stool. There’s more than one leg or you fall over, and that’s why the processor money, the marketing money, all of those things…. Rather than compensation and taking money from the government, I would look at it as transitioning into a little larger outlook than you have right now.
12:20 pm: Kevin Forbes, Member and Past President, Lambton Federation of Agriculture
Yes, to add to what he was saying, any good stool or chair has four legs, and the supply management system has four pillars. The federal and provincial organizations within supply management worked alongside the previous government to come up with those compensation packages, transition packages, and certainly we would like to see the government implement those in the future as this agreement’s ratified.
12:20 pm: Kyle Peterson, Newmarket—Aurora, ON
It sounds like you’re doing a lot of good work, so I commend you for that. Do keep up the good work. That’s great to see.
I’ll go back to the agricultural sector. As you may know, we’ve been across the country already. We started out west. We’re working our way around. We’ve heard from a lot of agricultural companies and agri-food companies, and they’re excited, I think it’s fair to say. The ones we’ve heard from are excited about the opportunity that the TPP presents. There are some challenges that some may have, but generally speaking they’re excited about expanding into new markets, particularly for key products within different provinces. We’ve heard about cranberries in Quebec, and the pulse industry in western Canada.
Would you say there’s a prime product or a product that will most benefit from TPP, or is most poised to tap into the expanded markets here in Ontario, either on the greenhouse side or on the agricultural side?
12:20 pm: 12:20 pm: George Gilvesy, Chair, Ontario Greenhouse Vegetable Growers
If I can comment on ours, it would be all three of our products. I think that’s because of the quality, the food safety, and traceability aspects. From our investigations over there, we’ve seen a great desire for imports there. The foreign competition that we would see there would be from Holland. Holland has a tremendous greenhouse sector. But they’re doing it, and if they’re doing it, there’s no reason that we can’t do it. I would say that all three of our main commodities have opportunities on that basis.
12:20 pm: Kyle Peterson, Newmarket—Aurora, ON
Gary or Kevin?
12:20 pm: Gary Martin, Director, Lambton Federation of Agriculture
Basically, it’s any product that Japan or Vietnam would import. If you think about it, they have high tariffs, and without an agreement there’s no way to police what tariffs they would put on it. They can put whatever they want, as there would be no countervailing issues with it. If you think about pork, soybeans, anything that you can think of that would go into Japan would benefit from the TPP, because there would be an agreement to go against if they wanted to increase the tariffs.
From: Evidence of meeting #18 for International Trade in the 42nd Parliament, 1st Session.
Check against delivery.