AGRI Committee Report

GOVERNMENT RESPONSE TO

THE THIRD REPORT OF THE

STANDING COMMITTEE ON

AGRICULTURE AND AGRI-FOOD: “COMPETITIVENESS OF

CANADIAN AGRICULTURE”

GOVERNMENT RESPONSE TO THE THIRD REPORT OF THE STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD: “COMPETITIVENESS OF CANADIAN AGRICULTURE”

Introduction

The Government of Canada is pleased to respond to the Third Report of the House of Commons Standing Committee on Agriculture and Agri-Food entitled: “Competitiveness of Canadian Agriculture”. The Government agrees with the spirit of the report and shares the Standing Committee’s commitment to addressing the needs of the agriculture and agri-food sector to improve competitiveness while protecting and enhancing returns to farmers.   

The pace of change in the agriculture and agri-food sector is becoming more rapid and new challenges to sustainable profitability along the value chain have emerged.  More intense competition from low-cost producing countries, reduced demand from traditional export markets, and persistent trade-distorting subsidies in competing countries have contributed to this situation.  Meanwhile, consumers are seeking more from their food, including greater choice, greater assurance of safety, and better information to help them make healthier choices.  They are also becoming more aware of the relationship between agricultural production and the environment. 

While there are challenges, Canada has the potential to benefit from this new and evolving context. New markets, better access to existing markets, and scientific advances offer a sense of optimism that the sector can achieve a prosperous and profitable future. To excel, Canada must capitalize on its strengths, as well as its natural endowments: the skills and knowledge of its people; its significant research and development capacity; and its strong production and regulatory systems.  Segments of the agriculture sector are already competing successfully and are at the forefront of innovation, but we need to broaden that competitive success to the sector as a whole.            

The Government has carefully reviewed the recommendations in the Standing Committee’s Report and welcomes the opportunity to respond to each recommendation individually. The Government Response will address each recommendation in full, but it bears emphasizing that these specific responses cannot capture all of the work undertaken by the Government.

RECOMMENDATION 1.1

The Committee recommends that the Minister of Agriculture and Agri-Food ensures that the Market Access Secretariat continues its effort to resolve technical non-tariff barriers erected by foreign jurisdictions against Canadian products.

The Committee recommends that the Minister of Agriculture and Agri-Food ensures that the Market Access Secretariat (MAS) continues to coordinate with Agriculture and Agri-Food Canada, the Department of Foreign Affairs and International Trade, the Canadian Food Inspection Agency, and the provinces, territories, and industry, in its effort to resolve specific/priority technical non-tariff barriers erected by foreign jurisdictions against Canadian agricultural products.

The Government of Canada's goal is to establish stable, secure and science-based agricultural trade with all countries. Through an active regional and bilateral trade negotiations agenda, Canada continues to pursue opportunities to address tariff and non-tariff barriers to access for Canadian agricultural and agri-food products. Included in this effort, the MAS aims to coordinate activities and engagement with industry associations, and provinces and territories, to ensure a sustained, strategic approach to re-gaining and securing market access for agricultural products in priority markets.

The Government of Canada also continues to support the work of key international organizations such as the World Trade Organization (WTO) (i.e., to address sanitary and phytosanitary measures and Technical Barriers to Trade issues), the Food and Agriculture Organization of the United Nations regarding the International Plant Protection Convention and Codex Alimentarius, the World Organization for Animal Health, and the World Health Organization.

In an effort to resolve technical non-tarrif barriers erected against Canadian products, Canada has engaged the WTO Dispute Settlement Process for the United States' Country-of-Origin Labelling and South Korea's ban on Canadian beef imports. 

RECOMMENDATION 1.2

The Committee recommends that the Market Access Secretariat pursue a strategy of enhancing the value of all animal and plant products to maximize the benefits of improved access for Canadian products.

The Committee recommends that the Market Access Secretariat (MAS) pursue a strategy of enhancing the value of all animal and plant products to maximize the benefits of improved access for Canadian products.

Maintaining, re-gaining and expanding access to international markets are critical to strengthening the competitiveness and increasing the profitability of the Canadian agricultural sector. While meat and livestock-related associations recommended the establishment of the MAS, the Government of Canada presses for market access to increase the trade of all agricultural commodities.

The Government has taken an aggressive approach to resolving market access issues through advocacy efforts both at the bilateral and multilateral levels. As well, a coordinated, strategic, and sustained approach has been initiated, building on the collective market access efforts of Agriculture and Agri-Food Canada, the Department of Foreign Affairs and International Trade, the Canadian Food Inspection Agency, and the provinces, territories, and industry, to ensure that we are synchronized in our efforts, as well as to leverage established political, economic and commercial relationships and explore new linkages.

International market access strategies will focus the Government's collective efforts in achieving greater access for Canadian agriculture and agri-food products into priority markets including China, India, Indonesia, Russia, United States, European Union, Japan, Mexico, South Korea, and Chinese Taipei. These priority markets are most likely to provide achievable and sustainable market access outcomes that will benefit the Canadian agricultural sector.

RECOMMENDATION 1.3

The Committee recommends that Agriculture and Agri-Food Canada develop as promptly as possible a national strategy aimed at establishing an age verification system, in order to harmonize the various provincial systems without weakening those already in place, and put Canadian agri-food products in a better position to access foreign markets, and that this cost not be borne exclusively by farmers.

The Government of Canada and the Canadian cattle sector recognize the benefits and challenges of cattle age verification.  For this reason an industry-government working group of value chain participants was established in January 2010 to strengthen Canada's cattle age verification system, as part of Canada’s livestock traceability system. This group will be looking to make clear recommendations for a functional, accurate and internationally credible age determination system.  The Government is working with industry to build broad-based support for these efforts. In addition, the Government of Canada has invested in the Beef InfoXchange System (BIXS), an initiative of the Canadian Cattlemen’s Association to voluntarily share marketing information among the cattle industry, including cow-calf producers, feedlots and slaughter plants.  Age of the animal is an important part of the information to be shared within the BIXS.

RECOMMENDATION 1.4

The Committee recommends that the Government of Canada create in advance a list of South Korean goods that would be subject to retaliatory trade measures if the WTO special group rules in favour of Canada in this matter. The goods should be targeted in such a way as to maximize the economic consequences for South Korea.

On August 31, 2009, the World Trade Organization (WTO) established, at Canada's request, a dispute settlement panel to hear Canada's challenge of South Korea's continuing ban on Canadian beef. According to the timetable for the proceedings, the final Panel Report is expected to be issued in 2011. The Government's priority is a swift resolution and we seek to maximize opportunities for a mutually agreeable solution and the resumption of normal trade relations.

Following the issuance of the Panel report, and if these efforts to find a bilateral solution are not successful, each party has the right to appeal the ruling to the WTO Appellate Body. Once the WTO Appellate Body has issued its report, the WTO Dispute Settlement Body (DSB) will adopt the report. If the report is favourable to Canada, South Korea will have to inform the DSB of its intentions with regard to the recommendations and rulings adopted by the DSB. Canada will be in a position to seek authorization for retaliation only if South Korea does not comply with the recommendations and rulings of the DSB, and if both parties cannot agree on mutually acceptable compensation. At this point, a disagreement between the Parties on whether the measures South Korea has taken to comply are consistent with the WTO Agreement could lead to another dispute settlement process. In addition, disagreement on the level of suspension of concessions or the sectors to which retaliatory measures should apply could lead to arbitration. It is only when all these procedural steps are completed that Canada will be in a position to take retaliatory measures.

In two previous WTO disputes brought by Canada in the area of agriculture (Australia - Salmon, and European Union - Hormones in beef), Canada took steps to determine the goods on which it would impose retaliatory trade measures only after the DSB had adopted the Panel and Appellate Body reports, which were in Canada's favour. In both of these cases, Canada published a Canada Gazette notice requesting public comments on a proposed retaliation list in the event of non-compliance with the WTO rulings. Therefore, preparatory work on a list of goods that would be subject to such measures could be drafted at a later stage during the WTO process.

RECOMMENDATION 1.5

The Committee recommends that the Minister of International Trade convey to Russia his strong disapproval of the protectionist measures that it has taken to reduce imports of agricultural machinery.

The Government of Canada agrees with and has already acted to implement the recommendation of the Standing Committee to convey to Russia Canada’s disapproval of the protectionist measures it has taken to reduce imports of agriculture machinery. Over the past year, the Minister of International Trade and other representatives of the Government of Canada have raised this issue on several occasions with their Russian counterparts. They will continue to raise this matter forcefully and diplomatically until a satisfactory solution has been reached.

RECOMMENDATION 1.6

The Committee recommends that the government assess COOL’s impact on the North American red meat industry, and in particular that it gather evidence to determine whether companies that would normally have bought Canadian products are actually still buying beef and pork in compliance with the voluntary requirements and the Final Rule.

The Government of Canada is concerned about the discriminatory aspects of mandatory Country-of-Origin Labelling (COOL) and has therefore taken steps at the World Trade Organization (WTO) to ensure that the United States (U.S.) respects its international trade obligations. A dispute settlement panel was established at the WTO on November 19, 2009 to adjudicate this issue. The Government of Canada is aware that because of the additional costs imposed by COOL, some U.S. processors do not buy Canadian animals, buy them only on certain days, or buy them at a discounted price. This practice has had significant negative repercussions for the North American red meat industry.

The Government of Canada has worked, and will continue to work, closely with Canadian industry in order to carefully document the market and trade effects that COOL is having on the North American red meat industry. While a large amount of evidence has already been gathered in order to progress with WTO dispute settlement proceedings, the Government of Canada continues to regularly communicate with industry in order to monitor and gather additional evidence of the effects of COOL.

RECOMMENDATION 1.7

The Committee recommends that Agriculture and Agri-Food Canada propose a program to fund farm-level market development initiatives, such as a livestock age verification system for one example, in a way that is fully compatible with the criteria of the WTO’s “green box” category.

As agriculture is a shared jurisdiction, under the Growing Forward Framework, provincial and territorial governments have the responsibility for farm-level activities.  Based on provincial priorities, a few provinces (British Columbia, Alberta, Newfoundland and Labrador, and Nunavut) have chosen to put in place market development initiatives either at the post-farm level or the farm level.  The Government of Canada is very supportive of its provincial and territorial partners’ efforts towards market development initiatives that will improve sectoral competitiveness while continuing to respect our international obligations.

With respect to age verification, there is an industry-government working group currently outlining the issues and challenges that the sector faces regarding age verification.  Once the efforts of the working group have been completed, Agriculture and Agri-Food Canada (AAFC) will have a better understanding of actions that could be taken by government.

AAFC also has programming such as the Agricultural Flexibility Fund (AgriFlexibility) and the Canadian Agricultural Adaptation Program (CAAP) that provide support so that the sector can position itself to better access foreign markets.

AgriFlexibility is a five-year (2009-2014) $500 million fund. Its objective is to facilitate the implementation of new initiatives, federally and in partnership with provinces, territories and industry that will improve the sector's competitiveness and will help the sector to reduce costs of production, improve environmental sustainability, promote innovation, and respond to market challenges.

To help meet this objective, there are three main elements to AgriFlexibility:

• help reduce the cost of production or improve environmental sustainability for the sector;
• support value-chain innovation or sectoral adaptation; and
• address emerging market opportunities and challenges for the sector.

CAAP is a five-year (2009-2014), $163 million program with the objective of facilitating the agriculture, agri-food, and agri-based product sector's ability to seize opportunities, to respond to new and emerging issues, and to path-find and pilot solutions to new and ongoing issues in order to help the sector adapt and remain competitive.

CAAP funds projects at the national level through a national administration as well as at the regional level through industry councils. There are 14 industry councils across Canada in all provinces and territories (one in each province and territory except Quebec, which has both a processing council and a producer council).

RECOMMENDATION 1.8

The Committee recommends that the federal government undertake immediately a study of the impact that captive supply has on live animal prices in the Canadian beef sector. The results of the study shall be presented before the Committee by representatives of the Department by the first of October 2010.

The issue of the impact of captive supplies on the Canadian beef market has been the subject of considerable discussion within the sector.  While some producers believe that packers use captive supplies to unfairly reduce cattle prices, other producers have taken advantage of some of the various marketing options associated with captive supplies (e.g., forward contracts, grid pricing) to better manage their risk.

The Canadian Cattlemen’s Association (CCA) and Alberta Beef Producers (ABP) have facilitated the completion of several studies.  In 2007, the ABP supported a study undertaken by Dr. Clement E. Ward (Oklahoma State University) and Dr. Ted C. Schroeder (Kansas State University) entitled: “Price Discovery and Captive Supply Implications for Canadian Beef Industry”.  In addition, Canfax Research Services, a division of the CCA, with funding support from the Alberta Livestock and Meat Agency, is in the process of updating a 2006 study related to market power in the red meat packing sector. This comprehensive, three phase update of the 2006 report is underway and is expected to be completed in 2012.

Given that the CCA has initiated a comprehensive study that should include the issues associated with captive supplies, it is Agriculture and Agri-Food Canada’s preference to continue to support this industry-led initiative.  The Standing Committee may wish to invite the CCA to present an update on the study’s progress at a committee meeting in the near future.

RECOMMENDATION 1.9

The Committee recommends that the $50 million earmarked for strengthening packing capacity in Canada be spent

• in the form of direct investments and repayable loans;
• to improve the efficiency of existing packing infrastructure and help some companies focus on specialized niches.

The Government of Canada recognizes the importance of the livestock slaughter and processing industry to Canadians. In Budget 2010, the Government went above and beyond the Committee’s recommendation by providing the Slaughter Improvement Program (SIP) received an additional $10 million in funding to ensure that Canadian cattle producers have viable and sustainable slaughter options available, and that meat packing and processing plants are more competitive in the domestic and global marketplace. This supplements the three-year, $50 million SIP announced in 2009 to support private sector investments with sound business plans aimed at reducing costs, increasing revenues and improving red meat slaughter and processing operations in Canada.

SIP finances the purchase and installation of equipment and new technologies that increase the efficiency of operations. Up to 50 percent of eligible costs can be claimed. Efficiency of operations can be achieved through the development of and investment in new product lines, upgrading existing technologies that enhance operational efficiencies or through the consolidation of operations permitting Canadian red meat packers and processors to better compete internationally.

Program performance indicators have been developed. These indicators will focus on the investments made under SIP and how they assist red meat packers and processors to enhance operational efficiencies. Increased investments in operational improvements and the addition of slaughter capacity in deficit regions, represent the immediate outcomes for the program. The intermediate outcome is enhanced operational performance, which supports an end outcome of improved financial performance among red meat packers and processors. As of May 17, 2010, SIP has ten approved applicants and three conditionally-approved applicants for $37.45 million.

RECOMMENDATION 1.10

The Committee recommends that Agriculture and Agri-Food Canada modify the AgriMarketing Program so that initiatives to grow the domestic market for Canadian products be eligible.

The Government of Canada agrees with the Standing Committee's view that efforts should be made to develop the domestic market. Canadians prefer to purchase Canadian agriculture and food products, but feel that more information should be made available to identify such products. On December 31, 2008, the Government implemented Product of Canada guidelines for the labelling of food products in Canada to ensure that consumers had truthful information about the Canadian agriculture and food content in the products they were buying. Producers and processors can choose to use these guidelines provided they meet the required conditions.  Subsequently, as part of Growing Forward, the Government implemented the Domestic Canada Brand initiative, to provide Canadian agriculture and food suppliers with tools and research support to promote the advantages of their products to Canadian consumers.

With respect to international markets, the challenges faced by Canadian exporters are somewhat different and require a different set of program supports. A central aspect of international agriculture and food trade is the much higher level of complexity and regulation that this trade undergoes compared to most other economic sectors. International trade in agriculture and food is governed by an intricate and extensive system of rules governing sanitary and phytosanitary requirements, including food safety, animal and plant health and technical barriers to trade. In addition, a number of countries also impose special measures, such as tariff rate quotas on agricultural imports. The AgriMarketing Program provides support to export associations, in recognition of the higher costs and risks associated with operating in this particularly complex trading environment. The Canadian agriculture and food sector relies heavily on exports for its survival and success - estimates are that over 40 percent of total Canadian production is exported - and these costs therefore have a particularly significant impact on the sector as a whole.

As the factors which underlie the international mandate of the AgriMarketing Program are not present in the domestic market, the Government is of the view that expanding the program's mandate as recommended would not be appropriate.

RECOMMENDATION 1.11

The Committee recommends that the Canadian Wheat Board increase the maximum amounts permitted under the Field to Plate program.

The Field to Plate program enables small Prairie processors to purchase up to 500 tonnes of wheat or barley directly from farmers each year to transform into processed products. The goal is to encourage and sustain niche, value-added processing ventures.

The Government of Canada supports the recommendation to increase the maximum amount of wheat or barley that small processors can purchase from farmers through the Field to Plate program. Public reports by the Canadian Wheat Board on the number of applications and the outcomes of the program would be useful information for farmers and industry to see how this program is working.

RECOMMENDATION 2.1

The Committee recommends that the Competition Bureau clarify its position regarding the role that price levels play in its assessment of the degree of competition in a given market. The response should be provided in the form of a written report to the Committee.

The Commissioner of Competition (the Commissioner) has the authority under the Competition Act (the Act) to examine a variety of business activities to determine whether they contravene the law. These business activities include mergers between businesses, collusion and/or collaboration between competitors, and the abuse of dominant market power. Sellers¹ of a product or service have market power when a firm, or group of firms, have the ability to profitably maintain prices above the competitive level for a significant period of time². Where the Commissioner determines that there has been a contravention of the Act, she has a number of options at her disposal, including referring civil matters to the Competition Tribunal (the Tribunal) for adjudication, or registering a consent agreement. The Commissioner also has the power to refer evidence of criminal offences to the Director of Public Prosecutions of the Federal Prosecution Service.

Mergers are defined as the establishment of control over, or significant interest in, all or part of a business by one or more persons. Under the merger provisions, a merger is examined to determine whether it is likely that the merged entity would be able to sustain higher prices than would otherwise exist, by reducing existing competition, or by hindering the development of future competition³.

Collusion involves agreements, arrangements or conspiracies between or among competitors or potential competitors to fix prices, allocate markets or restrict output. Bid-rigging is another type of collusive agreement addressed by the Act. Conspiracy and bid-rigging activities are considered to be so damaging to competition that they are prohibited under the criminal law, and the Crown (i.e., the Federal Prosecution Service) is not required to prove that such behaviour had or was likely to have an anti-competitive effect⁴. 

Collaborative behaviour between competitors involves activities such as strategic alliances, joint ventures, or other shared activities of mutual interest to the parties involved. Under the civil agreements provision, there is a concern when the effect of an agreement is to create, maintain or enhance the ability of the parties to the agreement to exercise market power⁵.

Abuse of a dominant position occurs when a dominant firm, or group of firms, in a market engage in conduct that is intended to eliminate or discipline a competitor or to deter entry or expansion by competitors, with the result that competition is prevented or lessened substantially. Under the abuse of dominance provisions, there is a concern when market power has been created, preserved, or enhanced⁶.

Use of Price Data

The Bureau examines the foregoing types of business activities, as appropriate, the evaluation of which often involves a complex analysis of a variety of facts and information. Price data, in general, plays a significant role in this analysis as a possible indicator of whether these business activities are likely to have an anti-competitive effect. 

In merger cases, the use of price data may be helpful in defining product or geographic markets.  For example, if the data shows that the two firms that propose to merge have, in the past, been able to increase price without eliciting a competitive response from other firms in another location (such as the United States), it would undermine arguments that the products of those other firms are part of the product market ⁷, and support the position that the proposed merger would increase market power – i.e., the transaction would substantially prevent or lessen competition.

With respect to abuse of dominant position, being a dominant firm, or even a monopoly, with the associated market power, is not in and of itself a contravention of the Competition Act.  In all markets, some businesses will be better positioned than others to compete. For example, some may have superior products, more efficient distribution methods or greater marketing experience. The objective of the Act is to preserve competition and to establish the bounds of competitive behaviour in order to protect consumers and to give all firms an opportunity to either succeed or fail based on their ability to compete⁸. 

In abuse of dominance cases, when sufficient data is available, the Bureau may look directly at price levels to demonstrate that a dominant firm possesses market power. In Tele-Direct Canada (Director of Investigation and Research) v. Tele-Direct (Publications) Inc. (1997)⁹, for example, the Tribunal accepted that Tele-Direct’s high profits were a direct indicator of Tele-Direct’s market power. Similarly, in Canada (Commissioner of Competition) v. Canada Pipe (2005)¹⁰, the Tribunal accepted evidence of significant variations in price by region, along with the ability to lower prices in response to increased competition or entry, as evidence of pricing above competitive levels, although these indicators alone were not sufficient to establish market power. In both cases, market power was also shown to exist through indirect indicators.

Price data is an important tool in assisting the Bureau to assess allegations of anti-competitive business activities, but only one tool. Depending on the case, it can be difficult to measure market power with confidence, even with evidence of pricing above competitive levels. Direct indicators, such as profitability or high prices are not always conclusive – it can be difficult to define the price level that would have prevailed in the absence of the merger or the alleged anti-competitive conduct. In addition, such analysis often entails significant data requirements. Thus, the Bureau uses a number of additional indirect indicators to assess market power.  How that evidence enters into the analysis varies with the specific facts of a case, as well as the nature of the information and data available. The Bureau also publishes Guidelines on its analytical approach¹¹.

RECOMMENDATION 2.2

The Committee recommends that Agriculture and Agri-Food Canada in cooperation with the Competition Bureau undertake a study to explore competition issues affecting the agricultural sector in the 21st century and the appropriate role for competition and regulatory enforcement in that sector. The study will address the dynamics of competition in agriculture markets, including, among other issues, buyer power and vertical integration. The study should also include an examination of the impact of agricultural concentration on food costs, the effect of agricultural regulations and statutes or other applicable laws and programs on competition, which relate to patent and intellectual property affecting agricultural marketing or production and market practices such as price spreads, forward contracts, packer ownership of livestock before slaughter, market transparency and increasing retailer concentration.

The Government acknowledges the importance of competition for the success and prosperity of the Canadian agriculture and agri-food industry and has been monitoring these areas for many years. In particular, there have been multiple analyses done in Canada, the United States and by international organizations, such as the Organization for Economic Cooperation and Development (OECD).

Regarding concentration and food costs, while most of the analysis confirms that there has been an increase in consolidation at all levels of the food supply chain in Canada (food retailing, wholesaling, processing, farm and agriculture inputs), the analysis is broadly inconclusive as to whether this has led to a change in market power, higher retail food prices and /or lower returns to farmers. One of the reasons is that international trade limits the potential for companies in Canada to extract extra income from their suppliers when most imports are traded at world prices.

None of the studies has established the basis for a claim that anti-competitive practices are operating to the substantial disadvantage of farmers. Given the amount of research already undertaken, a new study of the scale proposed in the report is not needed at this time. Rather, Agriculture and Agri-Food Canada (AAFC) will continue to monitor the situation and will, where circumstances warrant, bring the matter to the attention of the Competition Bureau.

With respect to the effect of agricultural regulations and statutes or other applicable laws and programs on competition, the following actions have been taken, and are adhered to:

·         AAFC has undertaken, or received from industry groups, several reports in the past five years that highlight that while Canada’s agricultural regulatory systems are generally sound, regulatory changes are needed to ensure the long-term competitiveness of Canada’s agriculture and agri-food sector.

·         The Growing Forward Regulatory Action Plan was developed in response to consultations on the next generation of agriculture and agri-food policy. The Action Plan targets priority areas in which stakeholders have indicated that competitiveness and innovation were being negatively impacted by regulations that are not responsive to their needs. For example, the Minor Use Pesticides Program includes a focus on increasing the competitiveness of Canadian growers by improving access to new and effective crop protection tools and technologies.

·         The Cabinet Directive on Streamlining Regulation (2007) requires that regulations promote a fair and competitive market economy that encourages entrepreneurship, investment, and innovation. The application of this Directive ensures that stakeholders are consulted and that the net benefits of proposed regulations are maximized.

·         Regulatory programs that focus on organic production and on-farm food safety allow producers to be competitive in a changing marketplace.

·         Budget 2010 proposes several new initiatives to improve the federal regulatory system, such as a Red Tape Reduction Commission, involving both Parliamentarians and private sector representatives, to review federal regulations in areas where reform is most needed to reduce the compliance burden and provide specific recommendations for improvement.

·         The Competition Act (the Act) contains a variety of provisions that allow the Commissioner of Competition to investigate mergers that may reduce competition, or alleged anti-competitive activity, in any sector of the Canadian economy, including the agricultural sector.

The Competition Bureau (the Bureau) has recently reviewed mergers in the beef packing and fertilizer industries, and has investigated complaints into allegations of anti-competitive conduct in the agricultural sector. The Bureau will continue to maintain market contacts and investigate complaints, where appropriate, to promote competition in the agricultural sector. The Standing Committee can be assured that the Bureau will not hesitate to apply the provisions of the Act to protect and promote competitive markets.

RECOMMENDATION 2.3

The Committee recommends that the Competition Bureau, as part of its study of the fertilizer industry’s pricing and marketing practices, thoroughly examine the level of competition that led to the potash prices observed in the first half of 2009.

In September 2009, the Commissioner of Competition (the Commissioner) responded to the Standing Committee’s request that the Bureau undertake a study of pricing and marketing practices in Canada’s fertilizer industry. At that time, the Commissioner acknowledged and expressed agreement with the Standing Committee’s desire to ensure that the fertilizer industry’s pricing and marketing practices conform to the provisions of the Competition Act (the Act). However, the Commissioner further explained that an independent study of the pricing and marketing practices in Canada’s fertilizer industry was not appropriate at that time, owing to a number of factors. Some of these factors included the impact of such studies on the Bureau’s limited resources, concerns regarding the costs to businesses associated with providing assistance to the Bureau, the availability of internal expertise in relation to the industry in question and whether a formal inquiry was currently ongoing in that industry.

In light of the high price of potash in the first half of 2009, the Commissioner would like to assure the Standing Committee that the Bureau is committed to fulfilling its obligations to protect and promote competitive markets, and to eliminate practices and policies that subvert competition, by conducting formal inquiries under the Act, followed by enforcement action, where warranted.

It should be noted that high prices, in and of themselves, are not unlawful under the Act. If and when, however, the Bureau concludes that high prices are the result of anti-competitive behaviour, the Bureau will take appropriate action, in the case of the potash industry, or any other. In any investigation, should the Bureau conclude that an offence has been committed, evidence may be referred to the Director of Public Prosecutions with a recommendation that criminal charges be brought, or the Commissioner may file an application for a remedial order with the Competition Tribunal under the appropriate civil provision.

The 2009 amendments to the Act create a more effective criminal enforcement regime for the most egregious forms of cartel agreements (i.e., an agreement between a group of businesses, organizations, or individuals seeking to limit or eliminate competition by agreeing to fix prices, restrict output, etc.), while at the same time removing the threat of criminal sanctions for legitimate collaborations to avoid discouraging firms from engaging in potentially beneficial alliances. The amended criminal prohibition is reserved for agreements between competitors to fix prices, allocate markets, or restrict output that constitute obvious restraints on competition (restraints that are not reasonably necessary for carrying out a legitimate collaboration, strategic alliance, or joint venture). Other forms of competitor collaborations, such as joint ventures and strategic alliances, may be subject to review under a civil provision that prohibits agreements only where they are likely to substantially lessen or prevent competition.

Finally, it is perhaps worth noting that in any examination of the potash industry, the Bureau is mindful of the export defence contained in the Act. The export defence is a qualified or limited exception for agreements between competitors that relate only to the export of products from Canada. Similar provisions exist in other jurisdictions and are designed to enhance export trade by facilitating export agreements between competing firms. It is our understanding that most potash exported by Canadian potash producers takes place through Canpotex, an export consortium of Canadian potash producers. Canada has among the largest known reserves of potash in the world, and Canpotex is among the largest potash suppliers in the world.

RECOMMENDATION 2.4

The Committee recommends that the Competition Bureau, in its role of ensuring that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy, study the impact of the discounts-for-shelf space practices and of loyalty agreements in the food distribution industry, and the legality of eliminating those practices.

The Competition Bureau shares the Standing Committee’s concern to promote competitive markets in this area, as the Canadian grocery sector is one of the key sectors of the Canadian economy, affecting both producers and consumers every day. In the face of consolidation and vertical integration, industry participants have raised concerns over the perceived increased potential for abuse of market dominance. To respond to this concern, the Bureau published the Interpretation Bulletin: “The Abuse of Dominance Provisions as Applied to the Canadian Grocery Sector” (the Grocery Bulletin), in November 2002, to articulate its enforcement policy on the treatment of discounts-for-shelf-space in the Canadian grocery sector. The Bureau also continues to vigorously examine mergers and complaints of alleged anti-competitive conduct related to this important industry sector.

The practice by suppliers of providing discounts to retailers in exchange for listing their products on the store shelves is generally assessed under the abuse of dominance provision of the Competition Act (the Act). As noted in the Grocery Bulletin, discounts-for-shelf-space, often referred to as slotting allowances, and other types of listing fees, are quite common in the Canadian grocery sector and, in most cases, do not contravene the abuse of dominance provision.

As explained in the Grocery Bulletin, owing to a finite supply of retail shelf space, retailers face significant risk when listing a product on their shelves. One of the common reasons why a retailer demands discounts from its suppliers is to recoup losses in the event that a product’s sales performance does not meet expectations. This type of discount can serve as a risk-sharing mechanism between a supplier and a retailer.

Only in exceptional cases would the Bureau seek remedial action in connection with these practices. Typically, this would require evidence that discounts and/or other allowances are being paid by a dominant firm, or group of firms, for the purpose of harming a competitor. The level of harm would need to be such that competition is substantially prevented or lessened in a relevant market. To illustrate the point, examples of such instances could include a situation where a dominant supplier of a product makes large lump sum payments or provides other monetary inducements to a retailer conditional upon the retailer refraining from stocking a competitor’s product; or a dominant supplier of a product obtains a long-term, exclusive contract with a retailer by providing the retailer with large lump sum payments or other monetary inducements.

The practice of providing discounts-for-shelf-space is not necessarily an offence under the Act; it is a reviewable practice, where the Bureau would be required to prove that the practice is likely to have an anti-competitive effect. It is important to appreciate that in many cases, such conduct can be a pro-competitive and efficient mechanism for grocery retailers to mitigate risk in the market. Thus, an outright ban on discount-for-shelf-space would be inappropriate. If, in a particular case, the Bureau finds that a practice does, in fact, violate the Act, the Bureau would take steps to stop such a practice, including seeking an order from the Tribunal prohibiting the conduct in question.

Loyalty agreements signed by franchisees, as referenced in the Standing Committee’s Report, often contain restrictions and rules that establish the conduct of a franchise operator. From the Bureau’s perspective, independent business people who enter into franchise agreements make the choice of foregoing full autonomy in the market for the benefits of being part of an established business network. As such, these private business decisions do not generally raise competition concerns.

RECOMMENDATION 2.5

The Committee recommends that the federal government conduct a feasibility study, in the form of a cost-benefit analysis, of the possibility of providing incentives for the establishment of two new food terminals in Canada. The analysis should include the long-term positive impact on the development of small and medium-sized enterprises in Canada’s agri-food sector.

Since the establishment of a new food terminal is essentially a business decision, the Government would welcome an industry-led cost-benefit analysis to determine whether additional food terminals in Canadian cities would assist producers to gain domestic market access. To date, only limited research on terminal markets and their economic rationale has been conducted. A feasibility study would identify the value of any additional terminals on access to Canadian markets by Canadian producers of fresh produce.

Currently, Canada has one terminal market, the Ontario Food Terminal (OFT), located in Toronto.  The OFT is run by an independent board, but is an arms-length asset of the Ontario Ministry of Agriculture, Food and Rural Affairs. Montreal also has a wholesale market in Marché Central, but unlike the OFT, there are relatively few wholesalers and these wholesalers must shoulder the cost of their own delivery, storage and distribution facilities.   Relative to the OFT, a greater proportion of buyers at Marché Central are reported to be larger grocery chains. 

RECOMMENDATION 2.6

The Committee recommends that the Competition Bureau continue to monitor the beef-processing market closely in connection with the implementation of mandatory country-of-origin labelling in the United States. The Committee also recommends that the Bureau take action when there will be indications that the competition provided by American packers in the Canadian livestock market is weakening.

In February 2009, the Competition Bureau (the Bureau) announced that it would not challenge the acquisition by XL Foods Inc. (XL) of the beef packing plant operated by Lakeside Farm Industries, Ltd. (Lakeside). The Bureau’s investigation of the transaction under the Competition Act (the Act) included interviews with over fifty industry participants in Western Canada, and the Bureau obtained investigatory orders requiring the production of documents and information from all major industry participants.

The implementation of United States (U.S.) mandatory Country-of-Origin Labelling (COOL) was addressed within the context of this specific merger examination. It appeared at that time that the way in which COOL was being interpreted and administered by U.S. authorities was not significantly inhibiting Canadian cattle producers’ ability to sell into the U.S. market. This was an important consideration during the Bureau’s review of this merger, which (as noted above) concluded with a decision not to challenge the transaction at that time. However, as some industry participants did express concern that more rigorous labelling requirements for beef products could be adopted in the future, significantly affecting Canadian ranchers’ access to the U.S. market and U.S. processors’ demand for Canadian cattle, the Bureau decided to watch the industry through monitoring the impact of the transaction.

To that end, following the March 2009 acquisition, the Bureau assessed developments in relation to the cattle and beef processing industry, and COOL legislation in particular, in connection with the completed merger transaction. The Bureau had indicated to the parties in 2009 that it would undertake this analysis for a period of one year, and did so up to the end of March 2010. After this year of monitoring, the Bureau still had no basis to challenge the merger, given the way COOL was being administered by the U.S. Government. No application to the Tribunal may be made to challenge a merger more than one year after its substantial completion; this one-year period has now lapsed in the case of XL/Lakeside. 

While the specific issue of the implementation of COOL now falls outside of the purview of the Act, it is being addressed by the Government of Canada, which continues to monitor and gather additional evidence of the effects of COOL. Steps have been taken at the World Trade Organization to ensure that the U.S. respects its international trade obligations.

As always, where the Bureau has reason to believe that the Act has been contravened, it stands ready and will continue, as part of its mandate, to examine any allegations of misconduct on the part of industry participants to determine if the facts give rise to an issue under the criminal or civil provisions of the Act. For example, pricing patterns that are the result of agreements among competitors could constitute a violation of the conspiracy provision of the Act, which is a criminal offence. Sanctions for conspiracy include significant fines and even jail terms.

Further, agreements between competitors in relation to the purchase of a product, such as a joint buying arrangement among competing agricultural commodity processors, would be subject to review by the Bureau and, potentially, remedies could be ordered by the Tribunal under the civil agreements provision of the Act, where such agreements are likely to prevent or lessen competition substantially.

The Bureau also investigates complaints that pricing patterns are the result of one or more dominant firms engaging in a practice of anti-competitive acts that restrict competition. When the Commissioner establishes that such practices are likely to prevent or lessen competition substantially, the Tribunal can order remedies, including recently enacted administrative monetary penalties of up to $10 million for a first offence (and $15 million per subsequent offence). 

Key to the examination of a potential violation of the abuse of dominant position provision is an assessment of market power. To be specific to the beef-packing context, an analysis of the level of competition provided by American beef packers would be relevant to any such assessment. In this context, and generally, it must always be remembered that an ability to influence price, in and of itself, does not constitute a contravention of the Act. The Bureau must establish that the observed pricing pattern is a result of anti-competitive acts by dominant player(s), to the substantial detriment of competition. Of course, there may be reasons that are not related to anti-competitive conduct behind industry pricing patterns, such as changing feed costs, exchange rates, labour, wages and capacity utilization, oversupply of cattle, or a reduction in demand for beef products, as well as local demand and supply conditions.

RECOMMENDATION 3.1

The Committee recommends that the government carry out a comprehensive review of its scientific capacity and realign and/or increase its resources with the needs and gaps identified by the research action plan being implemented as part of Growing Forward.

Growing Forward, the current multilateral agricultural policy framework, provides an investment of over $300 million over five years to support innovation. Agriculture and Agri-Food Canada (AAFC) is implementing new initiatives under Growing Forward that focus on applied science and innovation programming, including the development and implementation of new models for conducting and delivering science with increased use of public-private partnerships to maximize scientific resources and accelerate innovation. 

AAFC has established an integrated approach to planning that ensures the strategic alignment of its science and innovation investments. The Research Branch Strategic Action Plan provides a detailed roadmap to guide the implementation of AAFC’s Science and Innovation Strategy within the context of Growing Forward. The Strategic Action Plan consists of:

·         ensuring that AAFC science priorities continue to focus on the science needed by the agriculture and agri-food sectors;

·         aligning the AAFC’s science and innovation activities with government and departmental priorities;

·         creating opportunities for building strong collaborations with science partners outside the department; and

·         ensuring that AAFC utilizes its science resources – people, infrastructure and funds – effectively and efficiently.

Moreover, the recent 2010 audit of science management conducted by the Office of Auditor General has also provided valuable advice on how AAFC could better align and communicate our science and innovation activities. AAFC has responded by developing a number of initiatives that improve our ability to manage science consistent with both the objectives of the Federal Science and Technology Strategy and AAFC’s Science and Innovation Strategy. Such initiatives include the development of an Investment Framework to guide resource allocation, a Collaboration Framework to focus and strengthen our efforts with science partners, a Human Resource Plan to ensure the Department has the necessary skills to support the sector now and in the future, and enhanced strategies to better engage and communicate both within the Department and externally. 

The Strategic Action Plan is evergreen, and is revisited annually, to make any necessary adjustments to ensure its continued relevance in a rapidly evolving environment. In this way, AAFC is continually striving to ensure that we maximize our ability to support the sector both as a provider of science and innovation activities and also as a catalyst to focus and coordinate the activities of all science providers within the Canadian agri-science and innovation system.  This is critical to ensure that all available capacity is maximized in a coordinated and efficient approach that best support the needs of the sector and Canadians.

AAFC’s Science and Innovation Strategy is well aligned with the Federal Science and Technology Strategy, entitled “Mobilizing Science and Technology to Canada's Advantage” (2007), which outlines the ways in which federal science will contribute to Government priorities by: promoting science excellence to help Canadians perform at world-class levels in science and technology; focusing on priorities by targeting research in areas of strength and opportunity; encouraging partnerships to leverage Canadian efforts toward world-class success and accelerate the pace of discovery and innovation; and enhancing accountability to demonstrate to taxpayers that results are being achieved.

RECOMMENDATION 3.2

The Committee recommends that the government revise its intellectual property protection policy with respect to plant breeding and prepare a legislative action plan to introduce this revised policy, which should also consider the farmers’ ability to save their own seeds.

The Canadian Food Inspection Agency (CFIA) has been working on a legislative action plan to modernize its current legislative framework.  With respect to Plant Breeders’ Rights (PBR), the CFIA has been assessing potential changes to modernize the Plant Breeders’ Rights Act (PBR Act) and has conducted consultations with external stakeholders. Canada’s current PBR Act implicitly allows farmers to save harvested seed of a protected variety for replanting on their own land as an exception to the breeder’s right.  Future revisions to PBR policies would consider the scope of the farmers’ ability to save their own seeds for planting on their land.  PBR is a form of intellectual property (IP) protection that enables breeders of new varieties of plants to have exclusive rights to sell (and produce for the purpose of selling) reproductive material of their new plant varieties.

Canada is a signatory to the 1991 Convention of the International Union for the Protection of New Varieties of Plants (UPOV) which strengthened the rights of plant breeders. To ratify the 1991 Convention, Canada needs to amend the PBR Act, which is currently based on the 1978 UPOV Convention.  Modernization of the PBR policies would bring Canada in line with international standards of IP protection for plant breeders and would encourage continued investment in plant breeding in Canada. It would also help improve producers’ access to foreign varieties and products of innovation that are available to key trading partners and competitors.

RECOMMENDATION 3.3

The Committee recommends that the government renew and expand Canada’s system of publicly-funded plant breeding and variety development, and ensure that breeding and development be carried out in cooperation with publicly-owned research stations and universities.

The Government of Canada agrees with this recommendation and is renewing Canada’s system of publicly-funded plant breeding and variety development. Agriculture and Agri-Food Canada (AAFC) plant breeding capacity is being deployed in a number of AAFC’s Agri-Science Clusters under Growing Forward that help key industry-led agricultural organizations pull together national scientific and technical resources that support innovation for enhanced profitability and competitiveness, and the Developing Innovative Agri-Products Program (DIAP) that supports industry-led science and technology projects to bridge the gap between ideas and discoveries and products in the marketplace.  These project governance structures are serving to engage Canadian producers actively and meaningfully in the management of Canadian public sector breeding programs.  Furthermore, many of these projects will receive funding by way of non-repayable contributions from AAFC to support producers’ engagement. 

RECOMMENDATION 3.4

The Committee recommends that the government introduce a new variety registration system and work with the variety recommending committees to make the selection criteria more flexible.

The Government of Canada agrees with this recommendation and has already implemented a new, more flexible, tiered variety registration system. In response to the evolving needs of the industry and producers for more timely and increased access to new varieties, the Canadian Food Inspection Agency (CFIA) has been working with stakeholders to update the variety registration system.

In July 2009, the Government implemented a new tiered variety registration system that allows registration requirements to be tailored to the needs of specific crops. These changes have created immediate benefits for potatoes and sunflowers, in particular. The CFIA is also continuing to work with stakeholders to tailor the registration requirements of other crop kinds to meet their specific needs. For example, forages and oilseed soybean have been identified for potential changes in registration requirements in the tiered registration system. 

The CFIA has also been working with the variety recommending committees to make changes to simplify the variety assessment process and reduce regulatory burden.  For example, the variety registration requirements for canola have been changed to focus more specifically on key quality requirements.  In addition, a new “general purpose” class of wheat has been established by the Canadian Grain Commission to accommodate high yielding varieties intended for use as livestock feed or in ethanol production.  The variety registration requirements for general purpose wheat varieties do not require assessment of the end use quality of the new varieties.  The registration requirements instead focus on the variety’s agronomic performance and reaction to diseases.

The Government continues to improve the variety registration system by exploring options to reduce regulatory burden and enhance producer access to new varieties, while safeguarding health and safety, protecting consumers and facilitating trade.

RECOMMENDATION 3.5

The Committee recommends that the government follow up on the report entitled The National Commercialization Assessment: Taking Commercialization National and develop, with the provinces’ agreement, a national commercialization expansion program and a national agri-technology commercialization funding vehicle.

The Government of Canada agrees that there is a need in the Canadian agriculture and agri-food sector to improve innovation commercialization and that a more coordinated approach with provinces would be beneficial.

As the report entitled The National Commercialization Assessment: Taking Commercialization National points out, financial challenges exist for Canadian entrepreneurs to commercialize novel technologies. In Canada, as elsewhere, there is a shortage of early stage capital for technology commercialization and this is especially true for commercializing agricultural innovations. 

While government has had some success with the launch and implementation of programs such as Developing Innovative Agri-Products Program and Industrial Research Assistance Program, more needs to be done. 

Improving commercialization will require a mix of policy instruments. As the report indicated concepts such as of flow through shares, a tax-based approach, to improve early-stage capital access for non-revenue producing companies may need to be explored in some circumstances. Governments may also need to consider increasing access to capital using public-private capital-formation partnerships as well as increased attention to invention disclosures by public sector research performers, better and broader marketing of these disclosures, and identification and engagement of commercialization mentors. The Government acknowledges the requirement for public sector capacity to develop and implement innovation programs in a timely fashion that respond to businesses’ needs while ensuring accountability. To that end, AAFC’s Promoting Agri-Based Investment Opportunities initiative encourages greater interaction between potential investors and entrepreneurs within the Canadian agriculture, agri-food and agri-based products sector by supporting the delivery of a series of national events, the Agri-Investment Symposia, that brings together early stage and later stage agri-enterprises with potential private investors (venture capitalists, angel investors, institutional investors, and strategic corporate investors) to promote and explore potential investment opportunities in agri-based business ventures.

RECOMMENDATION 4.1

The Committee recommends that the government provide financial compensation to the beef industry for the additional cost arising from the disposal of specified risk materials caused by the Canadian regulations on animal health, and monitor this program to ensure it is effective.

The Government of Canada has provided significant assistance to mitigate the costs of specified risk materials (SRM) collection and disposal due to the significant challenges experienced by the beef industry following the discovery of bovine spongiform encephalopathy in Canada’s cattle herd in 2003.  In June 2009, the Government of Canada, as part of the Economic Action Plan, announced the creation of a $50 million Slaughter Improvement Program (SIP) to support investments made by the private sector and other levels of government in sound business plans aimed at reducing costs, increasing revenues and improving operations of meat packing and processing operations in Canada. Budget 2010 announced that $25 million will be targeted to slaughter plants that handle cattle over 30 months of age, $40 million will be provided to facilitate innovation as it relates to SRM, and an additional $10 million was allocated to the SIP.

RECOMMENDATION 4.2

The Committee recommends that the CFIA’s policy on meat inspection fees be revised to eliminate billing for inspections during normal working hours.

The Government of Canada agrees that many Canadian Food Inspection Agency (CFIA) inspection fees need to be reviewed and, potentially, revised. The CFIA recognizes the need to modernize its user fee structure and service standards in order to respond to user demand for improved service delivery, create more consistency in the application of fees across sectors, reflect current delivery costs, and adhere to government policies related to the application of user fees and service standards.

The CFIA began a broad dialogue with stakeholders in April 2010 on the modernization of user fees by consulting on a draft Cost Recovery Policy and Framework.  The Framework sets out the process by which the CFIA will implement its user fee policy and promotes a consistent and robust approach to determining individual fees for services across CFIA programs.

The CFIA is currently gathering information to support the development of user fee proposals for areas that are demand-driven and industry supported, as well as new programming initiated by the CFIA.  The examination of meat inspection fees will be considered in accordance with the CFIA Cost Recovery Policy and Framework and the User Fees Act requirements.

Changes to CFIA service standards or user fees, including for meat inspection, will require extensive analysis and consultation with stakeholders, in accordance with the requirements of the User Fees Act.

RECOMMENDATION 4.3

The Committee recommends that the government undertake a study into the level to which imported agricultural products do not meet the same standards required of Canadian producers and provide recommendations, which can be implemented to resolve this matter and that the report be submitted to the Committee.

The Government of Canada agrees that international cooperation with the Organization for Economic Co-operation and Development (OECD) member countries should continue in order to minimize the competitive disadvantage that producers may face due to access differences. Ongoing efforts have resulted in Canadian agricultural producers having improved access to new pesticides and veterinary drugs and reduced trade barriers for food products without compromising Canadian health and environmental protection standards. It is important to note that, whether imported or domestically produced, all agricultural products sold or traded in Canada must meet strict Canadian standards.

Significant efforts have been made to align regulatory processes for the review of new pesticides with international partners. The OECD’s Global Joint Review Program is proving to be the preferred way of doing business, as most new agricultural pesticide products are being introduced through this process. This allows all new pesticides submitted for review in the United States (U.S.) to be submitted for review in Canada at the same time.

In addition, Health Canada (HC) continues to work with producers to identify those pesticides and uses in the U.S. that are not currently registered in Canada. In early 2009, HC, in collaboration with grower groups and registrants created the Canadian Grower Priority Database, which identified these gaps and prioritized their needs by commodity to help inform registration decisions.

In an effort to decrease the duplication of work and approval times when reviewing veterinary product submissions, HC is taking into consideration the work of other countries whenever possible. Similarly, HC is working with international organizations, such as Codex Alimentarius, and International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH) to promote the harmonization of technical requirements for veterinary product registration. HC is also working with drug manufacturers to promote the same-time filing of submissions in the U.S. and Canada, which will allow Canadian producers to have access to veterinary drugs simultaneously with their American counterparts.

HC is also modernizing the pre-market submission process for food products, including food additives and has implemented an aggressive backlog reduction exercise focused on pending regulatory amendments, which includes those for food additives.

RECOMMENDATION 4.4

The Committee recommends that the regulations on approval of generic pesticides allow for the immediate marketing of generic products as soon as the required PMRA scientific review has been completed.

The Government of Canada agrees with the Standing Committee that regulatory amendments for pesticide data protection should increase the competitiveness of Canadian growers by encouraging the registration of new, innovative pesticides, and by facilitating the timely entry of competitively priced generic pesticides to the Canadian market.

In developing the data protection regulations, published in the Canada Gazette Part II in June 2010, Health Canada consulted widely with growers of major and minor crops and registrants of innovative and generic products.  The consultation generated the following approach:

·                     Negotiation and arbitration may conclude prior to the end of the exclusivity period so that there will be minimal delay in registering the generic product; and

·                     Escrow provisions allow a generic company the option of obtaining an early registration before a settlement or award is reached at arbitration.

The data protection regulations are similar to data protection frameworks used by other countries and is consistent with international trade agreements such as the North American Free Trade Agreement (Article 1711) and the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (Article 39.3).

RECOMMENDATION 4.5

The Committee recommends that the government introduce a policy of systematic evaluation of the effects of all labelling and food safety regulations, new or in force, on the competitiveness of Canada’s agriculture and agri-food sector, and take action to expedite the timeliness of the approval process without undermining the integrity of the system.

The Government of Canada agrees with the Standing Committee that regulations, new or in force, should be regularly evaluated and that approval processes should occur in a timely manner that maintains the integrity of the Canadian system.

The Government recognizes the important role that the regulatory framework plays in promoting health, protecting public safety, and sustaining economic well-being. The Cabinet Directive on Streamlining Regulation, implemented April 1, 2007, requires departments and agencies to assess new regulatory proposals at an early stage to determine where approval processes can be streamlined and where resources should be focused when developing new regulations. Departments must consider cost or savings to government, business, or Canadians and the potential impact on the Canadian economy and its international competitiveness, in their assessment of new regulatory proposals.

AAFC’s Growing Forward Regulatory Action Plan (RAP) targets the challenges to sector competitiveness in the areas of veterinary drugs, minor use pesticides, health claims, novel foods and ingredients, and fortified foods.  With regard to veterinary drugs, support for closer harmonization of technical requirements with other jurisdictions and more timely approval processes are improving competitiveness through increased availability of new and more effective drugs for Canadian livestock producers.

Regarding minor use pesticides, grower access to minor use pesticides has improved as a result of Agriculture and Agri-Foods Canada’s (AAFC) Pest Management Centre (PMC).  The PMC works closely with Health Canada's Pest Management Regulatory Agency to facilitate access for Canadian growers to new pesticides, which contributes to their competitiveness, especially with their United States counterparts. 

In the areas of health claims, and novel foods and ingredients, the four elements that address regulatory barriers to the marketing of safe innovative food are: building regulatory awareness, understanding and capacity in the sector; providing scientific evidence to fill gaps in the substantiation process required for determining the safety of novel ingredients and the validity of health claims; providing regulatory process improvements to enhance policy frameworks, standards and regulations that respond to technological advancements and innovative products; and making the pre-market approval and review processes for health claims, novel foods and ingredients more predictable, transparent and timely without compromising health and safety standards. 

The goals of the fourth component of the RAP, food fortification, are to develop a system of pre-market approval for foods fortified on a discretionary basis and to develop a knowledge base supporting the development of approaches to managing fortified foods, in order to facilitate accelerated market entry of new products that are safe and broaden consumer choice.

Budget 2010 proposes several new initiatives to improve the federal regulatory system, such as the Red Tape Reduction Commission. This Commission involves both Parliamentarians and private sector representatives in reviewing federal regulations in areas where reform is most needed to reduce the compliance burden, and to provide specific recommendations for improvement.

RECOMMENDATION 4.6

The Committee recommends that the government maintain the 98% rule for Canadian content, but exclude, from this percentage, ingredients, such as spices and sugar, that are not grown in Canada.

The Government of Canada brought in the "Product of Canada" and "Made in Canada" guidelines to provide Canadians with the information they need to choose Canadian foods produced by our farmers and processors.  When the guidelines came into force on December 31, 2008, the Government committed to review the policy after a period of time.  Since then, the Government has been listening to Canadian consumers, processors and producers and is, at the time of drafting this Response, reviewing certain elements of the current guidelines to ensure that they meet the needs of industry and the expectations of consumers. 

As part of the review, between April and May 2010, consumers and industry stakeholders were invited to share their views on the merits of exempting certain food ingredients, such as sugar, salt or vinegar, from the requirements for the "Product of Canada" claim and of removing qualifying statements from the "Made in Canada" claim.  The consultation included on-line questionnaires, interviews, focus groups and roundtable discussions.  The Government is reviewing the guidelines based on the feedback and will advise consumers and industry stakeholders if any changes are required.  The results of the consultation are expected to be announced later in 2010.

RECOMMENDATION 4.7

The Committee recommends that the federal government continue to maintain supply management and its three pillars—producer pricing, import controls and production discipline—as an integral business risk management program in Canada, and that market access for Canada’s agricultural exporters is strengthened so that all sectors can continue to provide producers with a fair and equitable income.

The Government of Canada strongly supports supply management.  Supply management is a business risk management program that dairy, poultry, egg and hatching egg producers have chosen as being the best course for them. At the international level, Canada continues to firmly defend interests important to supply management in all international trade negotiations.

At the same time, Canada also remains committed to further strengthening market access opportunities for Canadian agricultural exporters.  Canada is actively engaged in the World Trade Organization (WTO) agriculture negotiations, through which Canada is seeking to achieve a fairer and more level international playing field for our agricultural producers, processors and exporters. At the WTO, Canada is continuing to press for a favourable outcome from the Doha Round, and in particular for the elimination of all forms of export subsidies, the substantial reduction of trade distorting domestic support, and real and significant market access improvements.

The Government is also working to advance Canada's commercial agriculture interests through an aggressive bilateral and regional trade agenda.  Consistent with Advantage Canada and the Government of Canada's Global Commerce Strategy, this agenda complements and reinforces our efforts at the WTO and aims to further expand market access opportunities for Canadian agricultural producers, processors, and exporters around the world.  In this regard, Canada is currently negotiating new trade agreements with a number of partners including the European Union, South Korea, Ukraine, the Central America Four (El Salvador, Guatemala, Honduras and Nicaragua), the Caribbean Community (CARICOM), and the Dominican Republic.

RECOMMENDATION 4.8

The Committee recommends that the government update its capital cost allowance schedule for new farm equipment purchases, as proposed by the Association of Equipment Manufacturers and the North American Equipment Dealers Association

The capital cost allowance system determines how much of the cost of a capital asset a business may deduct each year for tax purposes.  The Government of Canada’s approach has generally been to set capital cost allowance rates so that the deduction for capital costs is spread over the useful life of the asset.  Alignment of capital cost allowance rates with the useful life of assets ensures that the tax system accurately allocates the cost of capital assets over their useful lives, resulting in a better measurement of income for tax purposes. This ensures a neutral tax treatment for different types of assets so that investment is allocated to its most productive use. The useful life of assets can change over time for several reasons, including technological change.  The Government conducts reviews on an ongoing basis using the latest available information to evaluate the appropriateness of capital cost allowance rates and to ensure that they reflect, as closely as possible, the useful life of assets.

RECOMMENDATION 4.9

The Committee recommends that the government follow up promptly on the conclusions of the study on levels of service in rail transport of grain currently being conducted by Transport Canada.

The Government's comprehensive review of rail freight service is currently underway and is aimed at identifying ways to improve the efficiency, effectiveness and reliability of Canada’s rail-based logistics system, which includes railways, shippers, terminal operators, ports and vessel operators.  The review is being led by a Government-appointed panel that will focus on identifying service issues and their impacts and will make recommendations on potential solutions.  Upon receiving these recommendations, which are due at the end of 2010, the Government will respond in a timely fashion.

RECOMMENDATION 4.10

The Committee recommends that the government establish a program similar to the Marine Security Contribution Program to assist Canadian agricultural retailers financially in implementing an integrated security plan and averting the potential threat of the use of fertilizers and pesticides for criminal purposes.

The Government of Canada has demonstrated its commitment to ensuring the safety of the Canadian public from criminal activities and to creating an economic environment that facilitates the competitiveness of Canadian farmers. Following the September 2001 terrorist attacks in the United States, the Government of Canada reviewed the Explosives Act and Regulations and regulations to identify any improvements required in the provisions dealing with explosives security.  On March 19, 2008, new Restricted Components Regulations were published in the Canada Gazette, Part II. The new Restricted Components Regulations require that anyone who sells, acquires for sale or possesses for sale restricted components enroll with Natural Resources Canada, comply with security measures, verify customer identification, ensure accurate record-keeping practices, and provide an annual report. In developing these regulatory improvements under the Explosives Act and Regulations and regulations, the Government of Canada carried out extensive consultations with stakeholder groups during the policy development phase, including the Canadian Association of Agri-Retailers (CAAR), the Canadian Fertilizer Institute (CFI), and the Canadian Federation of Agriculture (CFA).  Great care was taken to ensure that these regulations reflected the comments received during the consultations. The regulations, as adopted in 2008, demonstrate the Government of Canada’s commitment to ensuring public safety and security while minimizing the costs to Canadian industry and end-users.  

The Government of Canada supports the industry’s initiative to institute additional voluntary security practices. Although industry has requested funding to support the implementation of additional security measures, the Government has not yet received any analysis from industry that clearly demonstrates that the current regulations under the Explosives Act and Regulations and regulations do not adequately ensure public safety and security, thereby requiring these additional security practices. As such, and until such time an analysis is provided, the cost of implementation of such security practices would be at the cost of industry. With that being said, the Government of Canada is open to further discussion with industry on this issue.

The Government of Canada appreciates the recommendations from the Conservative Party members issued through the Supplementary Report.  The Government is committed to the continued development of new markets, and is also committed to continued efforts to help ensure that regulations keep pace with innovation and scientific advances leading to competitive and economic advantages for farmers and the sector in the long-term.

RECOMMENDATION 1

That the Government, with the support of all Opposition parties, immediately pass the Canada-Colombia and Canada-Jordan Free Trade Agreements.

The Government of Canada welcomes and supports Recommendation 1 of the Supplementary Report by the Conservative Party of Canada members of the Standing Committee that the Government, with the support of all Opposition parties, to immediately pass the Canada-Colombia and Canada-Jordan Free Trade Agreements (FTAs).

The Government believes strongly that these FTAs will bring substantive benefits for Canadian producers and exporters, and will help further strengthen our respective bilateral relationships. 

Implementing legislation for the Canada-Jordan FTA was tabled in Parliament on March 24, 2010. The Second Reading debate started on March 29, and is set to continue in fall 2010 once Parliament resumes. The immediate elimination of tariffs on the vast majority of current Canadian exports to Jordan will benefit Canadian exporters. Key Canadian sectors that will immediately benefit include forestry, manufacturing, and agriculture and agri-food. These are sectors in which Canadian companies are global leaders. The Canada-Jordan FTA will similarly contribute to Jordan’s economic development by creating new market opportunities for exports of Jordanian goods.  In 2009, two-way merchandise trade with Jordan totaled $82.5 million.  Once implemented, the FTA with Jordan will stimulate the growth of our commercial relationship and help level the playing field for Canadian business vis-à-vis competitors who already have or are seeking preferential market access in Jordan.  An FTA with Jordan will also demonstrate the importance that Canada places on further developing relations with Jordan, especially given its role as a moderate Arab state that promotes peace and security in the Middle East. 

The Canada-Colombia FTA, as well as parallel Agreements on Labour Cooperation and the Environment, were passed by the House of Commons on June 14, 2010 and the Senate on June 21, 2010. The agreement subsequently received Royal Assent on June 29, 2010. Once Colombia has completed its domestic approval processes, the agreement can come into force. Once implemented, the Canada-Colombia FTA will benefit Canadian exporters, service providers and investors. Strong agreements on labour and the environment will contribute to labour rights and environmental protection in Colombia.  Colombia is an established and growing market for Canadian exporters, in particular for the agricultural sector (wheat, pulses, and pork) and the manufacturing sector (mining and explorative equipment). The overall trade pattern between Canada and Colombia is largely complementary. In 2009, two-way merchandise trade between Canada and Colombia totaled $1.335 billion.  For the same year, the stock of Canadian investment in Colombia reached $773 million. This FTA will open new market opportunities for Canadian goods and services, exporters and investors, and will help level the playing field vis-à-vis competitors that have or are seeking preferential access to Colombia’s market, including the United States, the European Free Trade Association and the European Union. Pursuing free trade with Colombia is also consistent with Canada’s priority of deepening its engagement in the Americas; in particular, in the areas of democracy, prosperity and security.

RECOMMENDATION 2

That the Government of Canada and the Minister of Agriculture and Agri-Food continue to pressure the US Administration and Secretary of Agriculture Vilsack to change COOL.

The Government of Canada and the Minister of Agriculture and Agri-Food have been actively engaging with United States (U.S.) counterparts at all levels (including at the Assistant Deputy Minister, Deputy Minister, and Ministerial levels) and at every possible opportunity in order to advocate and defend the interests of Canadian producers in relation to Country-of-Origin Labelling (COOL). In addition, the Government of Canada has engaged with U.S. officials on COOL during meetings of the World Trade Organization (WTO) Technical Barriers to Trade Committee and the Canada-U.S. Consultative Committee on Agriculture. The Government of Canada has also taken steps at the WTO negotiations to ensure that the U.S. respects its international trade obligations. Nonetheless, Canada remains interested and willing to explore any mutually beneficial solution that could eliminate the negative effects of COOL on our livestock industry. 

RECOMMENDATION 3

That the Government of Canada, the Minister of Agriculture and Agri-Food and other parliamentarians, continue to lobby Congress and other interest groups regarding the long term consequences that COOL will have on the entire North American livestock sector.

The Government of Canada, the Minister of Agriculture and Agri-Food and other Parliamentarians have regularly engaged with key United States’ (U.S.) political and industry decision- makers in relation to Country-of-Origin Labelling (COOL). The Government’s advocacy efforts have emphasized that mandatory COOL has also had negative impacts in the U.S. by adding costs for U.S. retailers, processors, feedlots and producers that are associated with the segregation of foreign animals/meat as well as record-keeping and labelling, regardless of whether or not the animals/meat is of foreign origin. These messages have been regularly conveyed to Congress and various U.S. interest groups at bilateral meetings, industry events, and through targeted distribution of printed information. As well, Government of Canada representatives situated at the Canadian Embassy in Washington and the Canadian Consulates throughout the U.S. regularly meet with industry groups and state legislators in order to inform them about the long-term consequences that COOL will have on the entire North American livestock sector. 

RECOMMENDATION 4

That the Minister of Agriculture and Agri-Food work with the cattle processing sector to develop a framework that will help the industry reduce the costs associated with the removal of SRM.

A joint government-industry Enhanced Feed Ban (EFB) working group was established in 2007, and is co-chaired by the Canadian Food Inspection Agency (CFIA) and Agriculture and Agri-Food Canada (AAFC).  The goals of the working group are to find ways to streamline the implementation of the feed ban, explore options to reduce specified risk material (SRM) volumes produced by packing plants, and to increase utilization of bovine slaughter.

Work is being done by the EFB working group in several areas to reduce the costs associated with SRM removal.  Such work includes developing and assessing technologies to more efficiently remove SRM from the animal or better manage the waste generated in the packing plant; considering potential regulatory amendments to alter the list of SRM being removed from the feed chain; permitting wider use of composted SRM and SRM use in fertilizers; exploring options such as destruction technologies to generate less waste; and undertaking preparatory work for the EFB review. The preparatory work is to be completed by July 2012.

AAFC’s Beef Value Chain Roundtable (BVCRT) has also been actively engaged in the EFB initiative and will continue to be involved in developing a longer-term approach to managing BSE in general as it seeks to address competitiveness issues facing Canada’s beef industry. 

In 2006, the Government provided assistance to mitigate the costs of SRM disposal and removal through the $130 million federal-provincial SRM initiative to help industry comply with the EFB.  The federal contribution was directed at improving infrastructure and funding research opportunities.  In June 2009, the Government of Canada, as part of the Economic Action Plan, announced the creation of a $50 million Slaughter Improvement Program (SIP) to support investments made by the private sector and other levels of government in sound business plans aimed at reducing costs, increasing revenues and improving the operations of meat packing and processing operations in Canada.  Budget 2010 announced that $25 million will be targeted to slaughter plants that handle cattle over 30 months of age, $40 million was provided to facilitate innovation as it relates to SRM, and an additional $10 million was allocated to the SIP, for a total contribution of $75 million.

The Minister of Agriculture and Agri-Food will ensure that AAFC continues to work with the industry through the BVCRT and the EFB working group to seek ways to reduce the cost of SRM handling and disposal. 

RECOMMENDATION 5

That the Government of Canada table legislation in the House of Commons that will give Western Canadian grain farmers market freedom.

This Government believes in allowing marketing choice to wheat and barley farmers to enable them to sell their grain to any domestic or foreign buyer, including the Canadian Wheat Board (CWB).  The Government of Canada intends to continue to act on behalf of farmers who want and deserve marketing freedom. The March 2010 Speech from the Throne reiterated that: "the Government will also ensure the freedom of choice for which Western barley farmers overwhelmingly voted".  The 2010 Budget stated that: "the Government remains committed to working with Canadian grain farmers to promote marketing freedom to address the evolving needs of the sector."

Many see the CWB as standing in the way of greater domestic processing of wheat and barley.  The Canadian malting and brewing industries have lost confidence in the ability of the CWB to reliably supply the malting barley that they need to be competitive in the dynamic international malt and beer markets. The Government intends to introduce legislative changes, which would give Western Canadian farmers the same rights as farmers in the rest of Canada to decide how to market their wheat and barley, the same as they currently do for other crops.

RECOMMENDATION 6

That the Government of Canada table legislation in the House of Commons to modernize the process of electing Directors to the Canadian Wheat Board.

On May 14, 2010, the Government of Canada introduced Bill C-27, Canadian Wheat Board Payments and Election Reform Act, in the House of Commons to modernize the process of electing directors to the Canadian Wheat Board (CWB). Bill C-27 would give a greater voice to producers who rely on the operations of the CWB for their livelihood by reforming voter eligibility rules. Producers of at least 40 tonnes of grain in the year of the election or in either of the previous two crop years would be eligible to cast a ballot in the election of directors. Grain includes, in addition to wheat and barley, oats, rye, flaxseed, rapeseed and canola.

RECOMMENDATION 7

The Minister of Agriculture and Agri-Food continue to pursue solutions to reduce the cost of SRMs, which are consistent with international obligations and commitment to human health and animal safety.

In 2006, the Government of Canada provided assistance to mitigate the costs of specified risk material (SRM) disposal and removal through the $130 million federal-provincial SRM initiative to help industry offset the cost of developing the infrastructure required to comply with the Enhanced Feed Ban.  The federal contribution was directed at improving infrastructure and funding research opportunities. 

Budget 2010 dedicated $75 million to ensure that Canadian cattle producers continue to have access to competitive processing operations in Canada. Of that amount, $40 million is allocated to support research, development and commercialization or adoption of innovative technologies or processes related to the removal and use of SRM to reduce handling costs and to create potential revenue sources.

The $75 million provided in Budget 2010 also included $25 million for plants processing cattle over 30 months of age and an additional $10 million was provided for the Slaughter Improvement Program, for which $50 million was previously provided through Budget 2009.

The program was announced on July 5, 2010 and is currently accepting applications. The Minister of Agriculture and Agri-Food will ensure that approved projects will not compromise Canada’s controlled risk status for bovine spongiform encephalopathy granted by the World Organisation for Animal Health as well as Canada’s commitment to human health and animal safety.  Additionally, the Minister continues to work with industry through the Enhanced Feed Ban Working Group to pursue solutions for identifying commercially viable options for reducing the cost of SRM handling and disposal that are consistent with domestic and international obligations.

RECOMMENDATION 8

That the Government of Canada consult with consumers and industry leaders about the value of exempting specific ingredients from the “Product of Canada” guidelines.

The Government of Canada brought in the "Product of Canada" and "Made in Canada" guidelines to provide Canadians with the information they need to choose Canadian foods produced by our farmers and processors.  When the guidelines came into force on December 31, 2008 the Government committed to review the policy after a period of time.  Since then, the Government has been listening to Canadian consumers, processors and producers and is, at the time of drafting the Government Response, reviewing certain elements of the current guidelines to ensure that they meet the needs of industry and the expectations of consumers. 

As part of the review, between April and May 2010, consumers and industry stakeholders were invited to share their views on the merits of exempting certain food ingredients, such as sugar, salt or vinegar from the requirements for the "Product of Canada" claim and of removing qualifying statements from the "Made in Canada" claim.  The consultation included on-line questionnaires, interviews, focus groups and roundtable discussions.  The Government is reviewing the guidelines based on the feedback and the results of the consultation will be announced later in 2010.

RECOMMENDATION 9

That the Government of Canada continue its strong support for the supply managed sector domestically and internationally.

The Government of Canada has strongly supported the supply managed sector at every opportunity and in all fora - domestic and international.  Internationally, the Government has taken action on Article XXVIII under the General Agreement on Tariffs and Trade to establish a tariff quota on milk protein concentrates, has made a commitment to bring into force the World Trade Organization (WTO) Special Agricultural Safeguard, if and when needed, and has established cheese compositional standards to ensure real milk is an ingredient in Canadian cheese.  In addition, the Government has invested $1.2 million to help increase sales of Canadian dairy genetics in international markets through the AgriMarketing program.  Also, the Government has made available up to $10 million to the Dairy Farmers of Canada for innovations to help Canadian dairy producers make their herds more productive, to make their products more nutritious, and make their on-farm food safety systems stronger. At the same time, Canada continues to firmly defend interests important to supply management at the WTO and in all other international trade negotiations.

GOVERNMENT RESPONSE TO THE BLOC QUÉBÉCOIS SUPPLEMENTARY OPINION TO THE REPORT OF THE STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

The Government of Canada appreciates the spirit of the comments from the Bloc Québécois members issued through the Supplementary Opinion relating to food sovereignty. As stated in the Opinion, the Government agrees that there is, as yet, no clear consensus on the concept of food sovereignty as different groups continue to define and interpret the concept according to their interests. Food sovereignty usually refers to the right of nations to define their own agricultural and food policies. The concept encompasses a broad range of issues, such as sustainable agricultural production, local food production, rural livelihoods, access to land, and international trade. All of these issues are important to the development of sound competitiveness policy.

Canada’s agricultural trade policy

The Government of Canada agrees that food sovereignty is an important concept to consider in the development of sound policy that will position Canada for success into the future. And as stated in the Opinion, one particular area of concern is that the concept of food sovereignty may be used to promote protectionist interests. As a trading nation, Canada depends heavily on trade and market access to ensure the success of the Canadian agriculture and agri-food sector. It is, therefore, recommended when referring to the concept of food sovereignty, or to components of the concept, that one ensure there is consistency with Canada’s trade and agricultural policies and obligations. First and foremost, Canada is sovereign in its agricultural and agri-food policy and has chosen a policy designed to facilitate the development of a competitive, profitable and innovative agriculture and agri-food industry that is market-oriented and that contributes to society's priorities with respect to the environment and food safety.

The Government of Canada’s agricultural trade policy is designed to support growth and prosperity for the whole sector, which includes both export-oriented and supply-managed sectors. Canada remains actively engaged in the World Trade Organization (WTO) agricultural negotiations and continues to press for progress and the best possible outcomes for Canada's entire agriculture sector, including both supply-managed and export-oriented industries.

Supporting organizations that work to develop local and collective marketing

Under Growing Forward, Agriculture and Agri-Food Canada (AAFC) has allocated $1.5 million to develop and implement a domestic branding initiative which will, among other things, enable Canada’s food and agricultural sector to capitalize on Canadian consumers’ willingness to buy domestic products. There are other new and ongoing federal programs that complement the efforts of Growing Forward and support producers and processors in more fully exploiting the opportunities presented by the domestic market. In 2008, the Government also supported Farmers’ Markets Canada in commissioning a national study to assess the potential of the farmers’ market industry in all ten provinces and to measure its importance to Canadians and the Canadian economy. In 2009, the Government of Canada expanded the eligibility under the Canadian Agricultural Loans Act to include Agricultural co-operatives with a majority farmer membership (50 percent + 1 farmer members) for loans of up to $3 million with the Minister’s approval for the processing, marketing or distribution of farm products. Previously, loans were limited to co-operatives owned 100 percent by farm members.

Given the shared jurisdiction over agriculture in Canada, provincial and territorial governments play an active role when it comes to supporting local food production systems. While the federal government tends to focus on national efforts to increase awareness of the agriculture and agri-food industry in Canada, the provinces and territories play an important role relative to direct consumer promotion and education. The Government, therefore, strongly supports producers in their choice of orderly and collective marketing arrangements, including supply management.  The Government of Canada also recognizes the importance of initiatives which help to grow market opportunities for producers and contribute to the competitiveness of the agriculture and agri-food sector. If desired, producer groups may also pursue protection for product names or other aspects of these local or regional products through the use of certification marks, which form part of the Canadian intellectual property system.

Accelerating regulations on organic products

The Organic Products Regulations, 2006 (OPR 2006) were announced in December 2006. Following a review of the OPR 2006, it was determined that certain elements required clarification and elaboration in order to allow the Canadian Food Inspection Agency (CFIA) to implement a fair and effective regulatory framework upon its coming into force.

The Organic Products Regulations, 2009 (OPR 2009) address the issues identified in the OPR 2006 review and will add new provisions to allow the preservation of the organic nature and integrity of organic products. The OPR 2009 came into force in June 2009, providing a framework for a federally regulated organic regime in Canada, and allowing the CFIA to fully implement the Canada Organic Regime and achieve the intended and expected outcomes of a federally regulated program for organic agriculture. The OPR 2009 meets the objectives of facilitating international market access, providing protection to consumers against deceptive and misleading labeling practices through a uniform approach to organic product certification and labeling, and supporting further development of the domestic market. Additionally, over the past two years the majority of differences between the Québec and the national organics standards have been harmonized. The CFIA continues to support industry in harmonizing the remaining differences.           

Finally, it is important to highlight for the Bloc Québécois that on top of our strong support for agriculture, the Government of Canada recognizes the important role of provinces relating to the competitiveness of agriculture and respects and chooses not to interfere in areas within their jurisdiction.