Agriculture Committee on Nov. 23rd, 2006

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

My second question concerns the environment. There are rules, especially in the communities, which are making life more difficult for you. How do we find solutions in this area?

[Lise Grenier-Audet]

I'm going to start, and if Mr. Schlegel has something to add, he may do so.

This is one of the cases in which the government could offer financial support through the amber programs. The public sets requirements, but that's not compensated for by the price of our product. When consumers buy it, we don't recover what it cost us to meet those requirements. Back home in Quebec, environmental costs have increased astronomically, to the point where the price of pork is now 25¢ a pound — not a kilo — less than what we got a few years ago.

Production costs are rising because of events over which we have no control. The public is making demands, for shelterbelts, for example, to block odours. But they have to be installed in appropriate areas and maintained. That's fine, but there's still a cost related to all that. Similarly, we hire agronomists and engineers, and we pay all those people real salaries, whereas, today, we don't have any salaries. It's as simple as that. For more than two years now, we haven't had any salaries; we're living on thin air. A number of producers even have to work outside the business in order to support their families.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

What price do you get compared to American producers?

[Lise Grenier-Audet]

I'm going to tell you about prices in Quebec these days. Prices aren't the same across Canada, I believe. According to an American reference based on various markets, I can tell you that the price in Quebec this fall was 35¢ less per kilo than the U.S. price. We asked the Régie des marchés agricoles et alimentaires to freeze the price. It's now 16¢ lower than the American price. The difference used to stand around roughly 1¢.

Since September 2005, and more particularly since the summer, prices have collapsed. At our slaughterhouses, we're told they can't pay more. In Quebec, there's collective marketing system based on auctions. There's a big buyer, and the big buyer says it can't pay the price. It sets the price. The others obviously follow it. We now figure things can't continue like this any longer. We're asking that the price be equivalent to that of other years. For the moment, it's 2¢. The Régie has not issued a decision on the subject.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

My question is for the processors and the producers.

In Europe, as far as I know, there is a tariff rate of 0.5%. In other words, they accept quota at 0.5% if we want to export pork to certain countries in Europe. As far as I understand it, there's a free flow of American pork coming into Canada.

Should we be instituting some regulations similar to the Europeans' to protect our industry here until we get back on our feet, or should we continue to allow access to American pork coming into Canada?

[Don Davidson, Vice-President, Business Development, Government and Industry Relations, Maple Leaf Foods Inc.]

There is American pork coming into Canada. We have what we'll call free trade in pork going both ways, and the U.S. is a very big market for us in pork. We are a much larger exporter of pork to the U.S. than they are an exporter to Canada.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

It wouldn't be to our advantage?

[Don Davidson]

No, it would be much to our disadvantage, I think, to piss them off.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Okay. My question—

[The Chair, Conservative, Gerry Ritz]

Thank you for the clarity, Mr. Davidson.

[Clare Schlegel]

What we really need is to have the multilateral trading platform back on its feet. We need access to the European market. We need the Canadian government to negotiate greater access than 0.5%, and that's where the opportunity lies. For instance, if there were appropriate access to the European pork market, the world pork trade could increase by as much as 25% to 50%.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

My next question is to the transformateurs. I had the great pleasure, and I'm not sure whether it was a pleasure, to visit over 17 abattoirs a couple of years ago—Olymel, Maple Leaf—along with a Russian vet, when I worked as an interpreter. So I have an understanding: I was a specialist, for a couple of weeks, on your operation.

Mr. McAlpine, you mentioned value-added as opposed to commodity. What I saw was that from the start you take the pigs, cut them up, put them in boxes, and send them away, but you're saying you would like to do more; you would like to introduce more of the value-added work—in other words, taking that meat to make it into ham and sausage, as opposed to exporting the fresh meat.

Is that what you're saying?

[Rory McAlpine]

Yes, that's correct. It would be moving away from the traditional primal cuts—or fresh and frozen commodity pork, often, which is then further value-added in the market. With much of what we send to Japan, that's what happens.

Understand that value-added today doesn't just mean cooked; it means all kinds of fresh product, marinated, all kinds of new consumer-packaged product—convenient, ready to prepare quickly—and as well, moving into meals: combinations of ready-to-eat entrées. There's a whole, vast array of opportunity in those market segments that we feel we can tap into, and we intend to.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

The other question is on—

[The Chair, Conservative, Gerry Ritz]

This is your final point.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

—labour market flexibility. You're asking for more flexibility. Obviously, you don't have enough workers. People work hard there; I saw that. I guess because of the world situation you're not able to pay them more to keep them. Is that correct? In other words, you can't really pay a good living wage or union-type wage for Canadians, so because of the world situation you require foreign workers to keep your operation going. Am I correct?

[Don Davidson]

Yes. I think our ability to hire sufficient workers in the west because of the boom in Alberta due to oil has been an issue. We are paying competitive wages in the packing industry. We just can't pay oil wages in the packing industry. That's the dilemma.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Atamanenko.

Mr. Beauchamp.

[Paul Beauchamp]

I believe my colleague has already discussed the subject, but I'll nevertheless point out that the problem here isn't the wages we pay. For the type of business we operate, these are really very competitive wages. Olymel currently offers the best wages in North America, but that's not enough to attract workers to this manufacturing sector instead of to the oil and gas sector. That's what's penalizing us. It isn't our businesses' ability to pay.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Beauchamp.

Mr. Easter, for five minutes, please.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

My first question is to Maple Leaf. You said, Rory, that you are going to 100% ownership on the Elite Swine. Just how heavy into vertical integration at the production side is Maple Leaf? Is this in contracts? Is it full ownership? How much of your business is with producers who are family farmers, so to speak?

[Don Davidson]

I'll take a stab at it. I'm not totally conversant with exactly what our numbers would be. We have somewhere in the neighbourhood of about twenty-some percent ownership of our current hog systems, but it's not 100% in 22%, or whatever. It's 100% in some, parts in others, and then others where we're contract farming.

Really what we're doing is we're consolidating everything so we'll have a similar amount of ownership to what we do now, only what we do will be 100% and the rest will be going to potentially the partners we're with or others.

[Wayne Easter, Liberal, Malpeque, PE]

One of the things I'm concerned about, and you would expect this, is that if we look at the United States, basically with Tyson and some others, the primary producers themselves have basically become cheap labour in the pork production system in the United States in some areas. That worries me. We have to keep in mind that the primary producer at the end of this chain has to be able to survive too. I just wanted to know those numbers, and we'll check on it further.

To Clare, with respect to the chart on page 2, I believe it was, page 5 of the George Morris Centre's...you didn't mention it in your presentation, but when I was going through it, it's absolutely scary when you look at the exports going up and the income going down to the extent they have, starting in 2004. That can't be just due to exchange rates.

I'm going to ask you a couple of others, Clare, because I'll run out of time. On page 2 of your own, it shows how the U.S. is in fact expanding their exports. I think all presentations gave some reasons for that. Could you review those for us again as to what the U.S. is doing right and what we are doing wrong?

Third, I'm absolutely shocked that on the veterinary product review and registration process, it requires 1,200 days in Canada. We run into exactly the same thing on pesticides and herbicides with PMRA.

Who should this committee be inviting in to deal with that issue directly? Mr. Chair, I think that's an issue we can deal with and we need to do it. Who should be the witnesses we ask in to get at who we've got to get at, if I can put it that way? You don't have to table that now, as long as we get the information soon.

[Clare Schlegel]

Wayne, can you help me with your first question again? I don't think I was looking at the correct chart.

[Wayne Easter, Liberal, Malpeque, PE]

It's on page 5, the George Morris Centre one.