Senators offer value-added vision for food

New report supports rules-based trade, ‘Canada Brand’ program and reduced barriers to interprovincial trade

The Senate wants Canada to process and export more food.

At the same time, senators say the government should maintain the supply management system for poultry and dairy products.

That contradiction was just one part of a comprehensive report from the Senate committee on agriculture and forestry, released in July.

The report, Made in Canada: Growing Canada’s Value-Added Food Sector, is 96 pages long and offers nine recommendations on how to bolster the value-added food sector and agri-food processing across the country.

“This is a sector where we’re already seeing incredible ingenuity in the development of products that meet both national and international demand,” said senator Diane Griffin, committee chair. “With support from the federal government to break down regulatory barriers and foster further innovation, Canada’s value-added sector could become an essential component of the Canadian economy.”

Most of the recommendations are familiar to farmers and other players in Canada’s agri-food industry:

  • Canada should support and advocate for a “rules based” international trading system and address non-tariff barriers to trade.
  • The federal government should fund a “Canada Brand” program to make global consumers aware of Canadian foods.
  • All governments should reduce barriers to interprovincial trade.

However, recommendation number eight says the government should continue to support supply management and “promote growth” in the poultry and dairy sectors.

Some economists, including Colin Carter of the University of California, Davis, would argue that supply management obstructs growth in the poultry and dairy industries.

“We are holding back innovation and gains from trade in order to shore up the status quo,” Carter said.

In 2016, Carter and Pierre Merel, also of UC, Davis, wrote a paper called the Hidden Costs of Supply Management in a Small Market, which was published in the Canadian Journal of Economics.

In the paper, they argued that supply management is hurting Canada’s dairy and chicken industries because producers and processors cannot export to a world hungry for chicken meat and dairy products.

”The long-run opportunity costs of these programs could be on the rise as they prevent Canadian producers from serving a growing world demand for high-value processed animal products,” they wrote. “Growing export opportunities in dairy and poultry products, which currently represent a largely untapped source of economic surplus for Canada, should be seen as a catalyst for SM (supply management) reform.”

The opportunity cost is especially high in Western Canada, a region with a massive supply of feedgrains. Those grains could be fed to chickens and the chicken meat could be exported to the world.

“Feed accounts for a very large share of the costs of production,” said Carter, who grew up on a grain farm in Alberta and was an assistant professor at the University of Manitoba before joining UC, Davis.

The senators ignored the issue of supply management, but they did take a stand on Health Canada and burdensome regulations for farmers and the food processing industry.

They criticized Health Canada for taking years to approve new crop traits.

“Limagrain, which just built a research centre in Saskatoon, has a high-fibre wheat that allows for more efficient milling and a healthier final product,” Dennis Prouse of CropLife Canada told the Senate committee.

“(It) will be for over three years before it comes to Canada. U.S. farmers will grow it first, U.S. millers will mill it first, and the finished product processing plants will be built south of the border first.”

In the report, the senators said the agri-food regulatory agencies must be reformed and modernized.

“(Their) mandates (should) include innovation, growth and overall agri-food sector competitiveness as a core consideration,” the senators wrote. “As well … establish a permanent and independent panel of industry experts and other stakeholders to advise regulators.”

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