Evidence of meeting #37 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was srm.
A recording is available from Parliament.
4 p.m.
Kevin Golding President, Rothsay, Maple Leaf Foods Inc.
Good afternoon. My name is Kevin Golding. I'm president of the Canadian Renderers Association and president of Rothsay Recycling, one of the member companies.
The Canadian Renderers Association represents Canada's independent renderers. By way of background, the committee needs to draw a distinction between a packer renderer and an independent renderer.
Packer renderers render their own slaughterhouse waste material. These are ruminant-based packer renderers--for example, the two in Alberta: Cargill and Tyson.
Independent renderers service the rendering requirements of the entire protein chain. This includes packers that do not possess rendering capabilities as well as butcher shops, small slaughterhouses, grocery stores, etc. This environmental service is provided for a fee.
Packer renderers do not render dead cattle. The pick-up and disposal of dead cattle from farms, feedlots, and slaughterhouses varies from province to province. Generally speaking, dead cattle remain on the farm, or they are removed and rendered for a fee. Fees charged by independent renderers are offset by the value of finished product produced from rendered raw material and the value of rendered hides in the case of dead stock.
The rendering process works as follows. It reduces and recycles animal waste tissue by high-temperature cooking and evaporation. This process reduces the raw volume by about 50%, and it yields useful finished products. Products produced from ruminant-derived raw material are tallow, and meat and bone meal. These finished products are traded as commodities, with the prices for them changing weekly. Tallow is used for a multitude of industrial purposes, and meat and bone meal is used as a high-protein ingredient in non-ruminant animal feed.
The enhanced feed ban due to come into effect on July 12 requires separation of SRM from other ruminant waste material. The enhanced regulation requires that the meat and bone meal derived from SRM be destroyed by incineration or containment. Similarly, SRM that has not been rendered must also be destroyed, contained, or composted.
The federal government has announced the availability of funds to facilitate the separation of SRM from all other ruminant material. It is understood that these funds will be allocated among the packers, renderers, truckers, and others involved in dealing with the separation, collection, rendering, and disposal or destruction of the SRM. However, as we've heard, the allocation of funds has yet to be determined. Industry plans to separate SRM are generally on hold until the amount of funds available to each participant in the SRM chain is announced.
At present, members of the Canadian Renderers Association render most of the ruminant waste material generated in Canada, unless it's rendered by one of the packer renderers that I mentioned. Until proper separation can be achieved, most ruminant material rendered by independent renderers will be treated as SRM. The value of meat and bone meal derived from the SRM-free material that is co-mingled with SRM material will be lost. This will result in substantial rendering fee increases, which will not be mitigated until new separate rendering lines are in place to facilitate the separation and value retention.
The problem of SRM varies by region and province. Plans for separation have been communicated to federal and provincial government officials by members of the Canadian Renderers Association and individual company representatives. However, implementation of separation plans, other than interim compliance, will not proceed until individual companies receive funding commitments from provincial governments responsible for administering the federal assistance program.
Unless and until separation plans are implemented, most ruminant raw material currently handled by independent renderers will be treated as SRM in compliance with the enhanced feed ban regulation on July 12, 2007. As Kathleen said, it actually will be earlier than that, as soon as her members stop buying our product.
Loss of meat and bone meal revenue, increased trucking costs, and additional handling fees and land tipping fees will result in substantial rendering fee increases, which will not be mitigated until separate rendering lines can be built to process SRM-free ruminant material. Economic considerations do not support the building of additional lines if the promised capital funding support is not forthcoming.
Although CRA members expect to implement interim solutions for compliance with the enhanced feed regulation on July 12, delays in making federal government funds available to the renderers for necessary capital improvements will increase disposal and destruction costs more than originally contemplated. These costs will not come down until improvements can be completed. In addition, even interim compliance may be impossible in some provinces unless permitting decisions related to landfills are resolved.
I'm going to give you a short status report on each of the provinces or regions in which Canadian Renderers Association members operate.
With respect to Alberta, B.C., and Saskatchewan, interim plans are in place to deal with SRM in these three provinces. The independent rendering company that is currently processing ruminant material in these three provinces will treat this ruminant material as SRM until such time as it's able to separate and add a separate processing line to facilitate the production of meal and bone meal derived from the SRM-free material. The separation and construction of a separate processing line remains dependent on capital funding assistance being given to this company. The independent renderer operating in these three provinces also expects to receive and process SRM material from the two packer-renderer companies based in Alberta.
In Ontario, Atwood Pet Food will be in a position shortly to render the 250 to 300 metric tonnes per week of dead stock, which is in balance with the dead stock currently collected today in Ontario.
Because the government funding has not yet been released, Atwood has not begun construction to accommodate the approximately 160 metric tonnes per week of slaughterhouse SRM material. This material will have to go to landfill in the interim. In the long term, the slaughterhouse SRM material will be disposed of based on the most economical solution: rendered, to landfill, or some other form. As of yet, no equipment, containers, trucks, or trailers have been ordered or purchased to collect or transport any of this material, and no landfills have been approved to receive either the rendered finished or the raw SRMs.
The meat processing plants are in various stages of design and implementation of the changes required to meet the SRM regulation, and it's uncertain whether all the plants can be ready by July 12.
In the Maritimes, despite our company's efforts, there's been very little discussion between government and industry, and we're unaware, at this time, of plans in those three provinces to deal with SRMs.
In Manitoba, since BSE in 2003, ruminant material has been collected from the small abattoirs in the province and taken to landfill. The province has occasionally sponsored a ruminant dead-stock cleanup program, and that material has also been taken to landfill. It's expected that the ruminant material will continue to go to the dump as a long-term solution for Manitoba.
In Quebec, on July 12, SRM could be processed with non-SRM mixed material at a cost of approximately $286,000 a week, or more than $50 million a year. The non-SRM raw material provider will not bear this cost. This company, Sanimax, has gone through the engineering, planning, permitting, and price quotes phases for a dedicated SRM processing line at the Lévis, Quebec, plant. If the provincial-federal agreement with Quebec giving the go-ahead to Sanimax is not finalized within two weeks, a dedicated SRM processing line will not be ready by July 12, let alone by May 1. Sanimax does not believe that all the ruminant slaughterhouses will be ready for July 12.
Thank you.
4:05 p.m.
Conservative
The Chair Conservative James Bezan
Thank you, Mr. Golding.
We'll go to Mr. Wildeman.
If you can speak slowly for our translators, we would really appreciate that. We have the best translators in the entire Parliament; they give them to the agriculture committee, but they still need some time to translate. So the slower, the better.
4:05 p.m.
Brad Wildeman Vice-President, Canadian Cattlemen's Association
I'll only speak as fast as I can think, Mr. Chairman.
Thank you, Mr. Chairman, for holding this hearing on the enhanced feed ban and inviting us to advise this committee on the policies we believe Canada's nearly 100,000 cattle producers require.
My name is Brad Wildeman. I'm an elected member of the Canadian Cattlemen's Association. I serve as their vice-president and chair of their foreign trade committee. I am also the president of Pound-Maker Agventures, a 30,000-head capacity feedlot and a 12-million-litre ethanol facility in Lanigan, Saskatchewan.
Along with me is Dennis Laycraft, whom many of you know. He is the executive director of CCA.
I think it's important to begin with the statement that Canada's cattle producers compete in a North American market and that we're part of a long, integrated supply chain. Each piece of that chain relies on the strength and the ability of the next.
While we are supportive of the enhanced feed ban due to come into force on July 12, we also have some concerns. Our colleagues have outlined their concerns in meeting the rigorous demands of the enhanced ban by July. This is further complicated by the failure to date of the federal and provincial governments to work out the agreements necessary to provide the financial incentives intended to assist in making these necessary investments and these operational changes.
All were advised in September 2006 of the urgent nature of completing these agreements quickly or at least ensuring the retroactive eligibility of projects started following July 2006. We know all too well that any measures that slow down their operations will have a negative impact on all cattle producers in Canada. We are already facing very difficult circumstance from losses incurred because of BSE, the appreciating Canadian dollar, labour shortages, escalating labour costs, and the huge increase in feed grain prices driven by government policies towards energy and environment, both in the United States and in Canada. We are told now that we can expect an additional $20 per head for livestock disposal.
Since the finding of the first case of BSE in May 2003, the cattle business has been a challenge. Since that time we have seen just how resilient this Canadian beef industry is. We've increased our slaughter capacity. We've increased our utilization of commercial beef. We've increased our share of domestic consumption and are regaining key export markets. In fact, we were the first country to resume exports after finding a native case of BSE--in one year--and hope to see our North American market return to its integrated pre-BSE state later this year if we're successful with regard to passing and implementation.
In spite of all these gains, the challenges faced by the beef industry in the past almost four years have eroded our competitive advantage over other beef-exporting nations, and we are not without continuing challenges. The industry is still rebuilding, and many of our producers remain in a fragile circumstance. It's critically important that we do not shock this system unnecessarily while we're still recovering. This enhanced feed ban has the potential to do just that if all the parties are not fully engaged in implementing it and complying with it by July 12 of this year.
Today Canada is the largest exporter of grain-fed cattle and beef products in the world. We can compete providing we have a level playing field. While we support enhancing the feed ban, everyone must recognize that it means higher costs for Canadian processors and cattle producers than for our U.S. competitors.
While we hope that over time alternate uses will reduce this cost disadvantage, the stark reality is that they're likely two to three years away. It's vitally important we do not put our industry in crisis yet again. This enhanced feed ban, without further transitional support measures, has the potential to do just that.
Every week Canada slaughters approximately 75,000 head of cattle, with a potential capacity of over 100,000 head. These are sold to beef packing plants in Canada and in the U.S. by feeding companies just like my own. Some are bigger operations, and some are much smaller.
When fed cattle are ready to market, there's a short period of time when they must be processed. Any delay in the time it takes to market fed cattle can cause a backlog in the system, similar to what happened in the early days of the BSE crisis, which resulted in decreased prices for Canadian cattle producers.
Our immediate concern is that if Canadian packing plants are not fully ready to comply with this feed ban by July, they have to either greatly restrict the number and type of cattle they process each day or reduce the number of days they operate. Either way, it will lead to another sharp decline in cattle prices, more cattle and jobs will leave this country, and cattle will be processed in the United States.
Our industry has worked hard to increase our processing capacity, our identification and age verification capabilities, and our global marketing efforts. Cattle producers are also required to play a significant role in implementing changes within their operations to comply with the new feed enhancement regulations. They're preparing to fulfill their specific obligations in ensuring complete implementation of these changes throughout the beef value chain. We must not, however, let our regulatory and government policies push the packing industry out of Canada, or all this effort will be in vain.
We are supportive of at least a two-year transitional program, along the lines advocated by the Canadian Meat Council, while we push forward with the investments and new technologies that will eventually reduce this burden. In the longer term, the competitive impact of this policy needs to be carefully monitored, and further programs may be necessary to offset competitive disparities that may well persist.
We ask for your support in the creation of transition measures to ensure the timely and non-disruptive implementation of the enhancements to our feed policy. This issue reaches outside of federal jurisdiction right down to municipal waste disposal that's already been described. We have seen in the past how this kind of situation can drag out the decision-making process endlessly. This time, Canada's beef cattle industry cannot afford this type of delay. We critically need the federal government to take the lead on this issue, pressing the provinces where needed, and ensuring that Canada is ready.
In closing, when it comes down to it, we are really representing the whole industry with the same message.
Thank you for this opportunity to speak to you. We'll be pleased to answer questions.
4:15 p.m.
Conservative
The Chair Conservative James Bezan
Thank you for all your presentations.
We'll start with the first round and Mr. Boshcoff, please.
4:15 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
Thank you, Mr. Chair.
Of the $80 million allocated federally, is it not strange that there's no process to access this? When they announced this, wouldn't the government have some kind of application process or distribution system?
4:15 p.m.
Executive Director, Canadian Meat Council
That's our view exactly. It's too bad, because they were in discussions with the provinces well before they made the announcement at the end of June 2006, so they knew it was coming. We would have preferred just one single program where the rules were known. It's not that complicated, but because a certain amount is given to each province, it got very complicated.
4:15 p.m.
Liberal
4:15 p.m.
Executive Director, Canadian Meat Council
Canada Gazette part I was issued in December 2004, and that's when their proposed regulation was put in place. It was June 2006 when Canada Gazette part II came out, with pretty much the same regulation as proposed in part I. So there was plenty of time in between to decide what was going to happen.
4:15 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
The Province of Ontario has promised to set aside dollars, but only during their budget process, which could be after May 1. So how many other provinces are in the same situation? I'm not saying they're playing a game, but this can certainly stifle a cooperative effort.
4:15 p.m.
Executive Director, Canadian Meat Council
Apparently they're all pretty much in the same boat, so that's where the complication lies. It would have been nice if the rules had been made very clear to everyone. Then things would have moved forward.
4:15 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
So would it have been up to the federal minister to resolve these jurisdictional disputes? Were there not forums before where all the agricultural ministers met on these things?
4:15 p.m.
Vice-President, Canadian Cattlemen's Association
Certainly this was a topic of discussion at several federal–provincial meetings of agriculture ministers and others. The announcement was made, the funding was out there. The problem, of course, is that no one government has jurisdiction over all these things. Municipal disposal, for example, is an issue for the provinces. And each province is different, as Kevin has described. Some have landfill options, some don't. These increases in costs, increases in logistics....
So the money was out there. But it seems to us there wasn't much discussion about what the appropriate measures were initially, what those costs would be. And there has been no agreement on the funding formula. So we have, as you guys are always aware, a federal–provincial issue about what the funding split should be, whether it's 60-40, 90-10, or 100-0, and so I think that's hurting it. And of course getting close to the budget cycles within the provinces, that's likely occurring right now. A lot of this is being hung up in budgetary consideration by the province.
And of course we understand all those things, except that the clock is ticking and it's ticking quickly and we're going to comply. We have no choice. We've promised the world we'll comply with this. We've all committed to this. And we simply can't continue to wait for all these processes to come together over several months and years.
4:20 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
Would the $80 million federal commitment have been enough on its own? Could it be delivered independently without provincial or territorial support?
For mobile abattoirs, in the rural parts where we don't have massive plants to deal with this, they're already in a somewhat precarious economic situation. What is SRM going to do to these businesses?
February 15th, 2007 / 4:20 p.m.
Dennis Laycraft Executive Director, Canadian Cattlemen's Association
Mr. Chairman, to your previous question, then your latter question, certainly there are elements you have to have the provincial governments involved in, and then you fall into the regulations to deal with disposal. An enormous amount of work has gone into trying to address that, but with federal–provincial agreements it always comes down to that point around getting the final financial agreements signed. And we even asked to have the simple commitment, to just tell us it would at least be retroactive if we started on these projects, so we don't make ourselves ineligible. To date, I think only one province has made that commitment, and that's been frustrating. In terms of the type of transition measures we're talking about today, that can be done strictly under federal jurisdiction.
4:20 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
I think that's somewhat of a solution.
I have two fast points, Mr. Chairman. How much time do I have?
4:20 p.m.
Executive Director, Canadian Cattlemen's Association
Do you want me to answer the smaller-plant question?
4:20 p.m.
Liberal
4:20 p.m.
Executive Director, Canadian Cattlemen's Association
Or the mobile operations. But even the smaller provincially inspected plants, because of the smaller quantities, are not going to be able to do the level of segregation. It's estimated they'll have at least twice the costs associated with implementing this program than the larger plants will experience.
4:20 p.m.
President, Rothsay, Maple Leaf Foods Inc.
I'd like to make one comment on that as well.
One of the things in the regulation is a six-month exemption for small abattoirs. Essentially, once the SRM rule comes in, that exemption really won't.... That would be meaningless, because for anybody who's going to pick up their material at that plant, it will be essentially SRM.
4:20 p.m.
Liberal
Ken Boshcoff Liberal Thunder Bay—Rainy River, ON
When you talk about additional costs, two things come to mind: the farmer who is saying there are more costs here, and then the fear of actually losing jobs and businesses to massive operations south of the border.
Anybody who wants to comment, please do so.
4:20 p.m.
Vice-President, Canadian Cattlemen's Association
There's no question, I think, that those are the issues. We can only absorb enough cost until the cattle start going somewhere else. So we'll either be non-competitive in the feeding sectors against our U.S. counterparts, who have very large capacities—they could easily swallow up the feeding activity we're doing in Canada—or we'll lose our packing industry down there because they can't bid the kind of prices it takes. So it'll be easier to have the animals trucked to the U.S., slaughtered, and the meat come back up onto our grocery shelves. And we'll lose a good portion of our processing sector. And after all this industry has been through and all the work and effort we've done to try to rebuild our slaughter capacity so we wouldn't be so vulnerable, we're at a very real risk of going back there and perhaps even farther than that.
So I think that is the issue.
4:25 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Thank you for your presentations.
The real question here is whether we will be able to fulfill the terms of the mandate awarded by the federal government by July 12. I think industry is committed to eliminating SRM material by then. As you mentioned earlier, we have international obligations.
I read a second time a report or a comprehensive, highly interesting overview of the situation that you prepared in November 2006. I wanted to congratulate the Canadian Meat Council and the Animal Nutrition Association of Canada on this initiative.
However, three months have passed since this overview was done. Three months later, that is five months before the deadline, we don't seem to have made much progress.
Am I wrong?