Agriculture Committee on Feb. 15th, 2007

[Kevin Golding]

I could maybe follow up on that by painting the volume picture a little bit. These are estimates--because we don't really know until things come out--but essentially we're looking at approximately 4,000 metric tonnes a week of specified risk material across the country that has to be dealt with. I think that comes from the Informa study that George Morris did.

Putting that in perspective, there's approximately 25,000 tonnes right now of ruminant-based material that goes to the rendering plants. So 4,000 or so of that would be SRMs, and that's going to come out of the chain. Every week that goes by, there is an extra 21,000 tonnes that you have to deal with.

As Kathleen said, if we haven't got a way to dispose of it, then for every week that goes by, what do we do with it? We have to put it in hangers or bins or....There's not that kind of storage around. That's one of the issues. When BSE hit, to begin with, our company had thousands of tonnes of material that we had to find short-term storage for, at nowhere near this kind of level, and that wasn't easy to do.

[The Chair, Conservative, James Bezan]

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair, and my apologies for having to go over to the House for a few minutes.

We did make a commitment internationally, and certainly we definitely have to stick to it or our credibility will be bad. But the simple facts are these, Mr. Chair. We're three short months from the first crucial deadline. There are rules, but nobody seems to know what they are. There's money, but we don't know where the money went and how much is left.

My question is this. Who's in charge and who's responsible for the rules? That's question number one.

[Dennis Laycraft]

The first thing is that we know there's money, but none of it's been spent, so it hasn't even gone anywhere. That's part of the problem.

[Wayne Easter, Liberal, Malpeque, PE]

Right at the moment, though, Dennis, do you know, from your perspective, who is in charge and who is responsible for the rules? That's my first question.

[Dennis Laycraft]

Well, the indication we've gotten, as far as the $80 million and then the subsequent 40% match that's expected of the provinces goes, is that while they have a working group looking at this, the expenditure of that money is going to fall back to each single province once they've signed the agreement.

CFIA has taken a strong role in terms of working out some of the specific details that various companies will need to meet. This is not a simple process when you get into a processing operation, and they've been working very actively with various individuals throughout the country, coming up with clarification on those things. We could get into that in great detail as well.

As far as getting this all resolved is concerned, a new working group has been struck, and we've attended federal-provincial meetings, and we've been doing that for a period of time. Every time it seems as though you're only weeks away from an agreement, every time you meet--and there are months between meetings--it seems to just keep moving forward. We're getting to the point where.... We thought it was critical to have this in place by November. Then we indicated it was essential we have it in place by January 1. Now we're in the middle of February, and we're having the same discussion again. There's not a good answer when you get into these types of negotiations.

[Wayne Easter, Liberal, Malpeque, PE]

The federal government has a lot of authority through various acts, whether through CFIA, whether through some of the federal-provincial agreements, and it's not unknown for the federal government to basically take charge and put the money out. Money has been expended before, and a bill has been sent to the provinces. Maybe that's what we ought to do in this case.

What I'm wondering is if we, as a committee, were to decide to call an emergency meeting for a Wednesday, Mr. Chair, who would be the players we'd have to call? Basically on this issue somebody has to take charge. I've been involved in federal-provincial negotiations, and I'm not blaming the federal government by any means. You can say this one's to blame, and that one's to blame, and years pass.

I really think we're at a point here, because we don't want our international credibility.... We have some authority as a committee, and I would suggest that if we knew who the key catalyst would be to move this thing along, whether it's the federal Minister of Health or the federal Minister of Agriculture or the president of CFIA or whoever, we should ask for an emergency meeting and say, look, get your act together; it's got to happen. Whether we ask all the players.... For that matter, we can subpoena people from the provinces, if we really want to, as a committee.

We cannot miss that deadline. It's that simple.

[Kathleen Sullivan]

I think one of the challenges we've had is that there are so many different people who have authority over different parts of this whole puzzle. CFIA is certainly responsible for the regulations themselves, the technical pieces, and ultimately compliance. Agriculture Canada has always held the money, the provinces are responsible for disposal, and in some cases disposal is going to rest on municipalities for landfills. Authority has really fallen across so many different camps that I say this has largely been a coordination challenge. But those would really be, in addition to the industries you see here today, the main players in this regulation.

[Brad Wildeman]

I have an additional comment. Private industry doesn't usually get filled in on what's happening in intergovernmental negotiations. I know there's some frustration here because we can't tell you the answer, but as private industry, we're not often privy to what's being negotiated, so that does make it tough for us to try to give you a really appropriate status report.

[Dennis Laycraft]

Just to add to that, we're not even privy to how much money is allocated province by province.

[The Chair, Conservative, James Bezan]

You may have a final comment, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

There's no reason we can't turn this into an opportunity. I was talking to Mr. Anderson earlier in the day about the technology by which you can maybe even make energy out of some of this waste. But we have to meet our commitments and try to seize the opportunities that are here, and we're not going to do it unless somebody takes charge. So if you could get to us the names of those who you think are the key players, maybe, Mr. Chair, we could discuss this and see if it would be possible to hold an emergency meeting, call the players in, and provoke at least some quick movement.

[The Chair, Conservative, James Bezan]

Point taken.

We're going to finish off this round with Mr. Gourde, then we have some housekeeping to do.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chairman.

Since I'm the last person to speak, I'll try not to ask the same questions.

We're dealing with a product that will contain SRM material. I don't know why that is, given that a decision was made to eliminate SRM material nationwide. Witnesses told us that these materials currently had no value, even though several tons are produced weekly. Under the circumstances, I fail to understand why industry officials are not jumping on the opportunity to sign up for programs that promote biodiesel use, since we are talking about a steady supply source.

No doubt such programs will allow us to eliminate these materials in the short term. This appears to be a relatively clear and simple solution to ensuring that SRM materials do not find their way into the food chain. Why wouldn't we band together to eliminate these materials by turning to this energy source? From an environmental standpoint, everyone would benefit from this solution that would give some value added to the product.

[Brad Wildeman]

I'll take the first stab at it.

I think a lot of us have looked at that opportunity, but I think there are a couple of things that are yet unknown. First, how much of this product will be available? And of course, that's fully dependent on what kind of segregation we're going to be able to achieve, what the regional differences are going to be, and where the location of those specified risk materials will be. That's the first thing.

Second, we're unaware of the chemical characteristics of some of this product until we understand what's in the mix. So that's the second thing.

And third, we're not exactly sure what the cost of it is.

So those are the other things. My other comment would be that if we extract it for biodiesel, or if we use it for biodigestion for thermal generation in electrical production, for example, that doesn't eliminate the problem; it doesn't get rid of all the byproduct. There's still considerable byproduct left. You're only taking the oil-fat portion out, remember, so you're still going to have this. Will we have degraded the prions appropriately enough so they can be disposed of in other manners?

There are a number of questions that need to be answered. We think it's certainly an honourable and appropriate thing to be researching and putting a lot of effort towards, but I'd argue today that these are unknown things. And to have private industry adopt it with all its unknowns is simply not going to occur. So that would be my answer.

[Jim Laws]

Mr. Goldring broached this subject earlier when he talked about Maple Leaf Foods Inc. As for these products, I would like to point out that in Montreal, fat is rendered for commercial uses. What we really need to render are proteins.

Regarding biodiesel, we even sold these materials two years ago to the City of Montreal for its buses. SMR material is now being used to power city trucks.

In short, Mr. Goldring is taking the initiative and many projects of this nature are being carried out. But rendering proteins continues to be a problem.

[Kevin Golding]

My last comment on this is that it's important to realize the two streams coming out of the rendering process. Go back to the process, which is that the raw material goes in, water is evaporated off, and two usable streams come out--one is the tallow and the fats. The tallow and the fats actually are either going into commercial use for chemicals, feed fat, or actually being used in biodiesel in Montreal. The proteins aren't appropriate for biodiesel; they don't go into that. The issue with that is whether they can be used for things like energy, or in your boilers or whatever. That will be investigated. It's not commercially viable anywhere that we're aware of now.

I think the issue, as I said before, is that we have weeks and we have to deal with it on a base case, and that is to make this stuff go away as quickly as possible, as economically as possible. Then over the course of time, as Dennis said--and Brad, I think--can we close the gap and get some commercially viable things on the protein side? We hope so.

[Dennis Laycraft]

The reality on July 13 is that the product that was worth $150 to $200 a head is going to be worth about minus $60 to minus $80 a tonne. In the U.S. it's still going to be worth $150 to $200 a tonne, so they're going to be competing for those cattle. That may change if they adopt a different policy, but there's no evidence that's going to occur quickly. We are working with companies that are involved in things like the new hydrolysis process, which looks like it can deactivate, but it involves a lot of units, and those are still probably in the range of two years, best-case scenario, from being available to us.

We're funding research into composting. There's some evidence to suggest enzyme mixtures also lead to a significant risk reduction, and you can compost quite efficiently without odour and do this fairly quickly if it's done in the right types of protocols.

We are looking at cogeneration, but right now there's only one company that we're aware of that's prepared to even accept this for burning purposes. When you are only negotiating with one company, they just want to know how much you're going to pay them to take it. So until you get enough uses out there that you actually create some competitive pull for it, we're going to be dealing with a negative-valued product that was worth a considerable amount of money prior to the introduction of this policy. That doesn't mean this is a bad policy, but it means we're facing a vastly different economic equation when we get to July.

[Kevin Golding]

So, for example, one of the ways we're looking to mitigate is through the cement business, but essentially still you have to take the rendered products, get it to the cement manufacturer, and as Dennis said, they're not necessarily going to pay you for it, they're going to charge you for it. And they can only use a certain amount. That's actually what is happening in some parts of Europe.

[The Chair, Conservative, James Bezan]

Our time is up for today. I want to thank all of you for coming in and bringing this to our attention and the urgency that surrounds the matter. We'll figure out as a committee how we wish to proceed.

We do have some housekeeping that we want to do right now, so we'll wait for one minute until our witnesses leave the table.

[Wayne Easter, Liberal, Malpeque, PE]

I wonder, before you leave, whether it is possible for you to give the chair some.... If we were to hold an emergency meeting, who would you suggest to come? We can take it from there. Perhaps you could get back to James on that right away.

[The Chair, Conservative, James Bezan]

It doesn't have to be right now, but if you could get back to us in the next 24 to 48 hours, we'd really appreciate that.

[A witness]

Okay.

[The Chair, Conservative, James Bezan]

We won't go in camera.

On the schedule, there's a change coming up. I've already talked to the vice-chairs. Minister Emerson is available to appear before committee, as requested by Monsieur Bellavance. He is going to appear on February 27 and can be here for about 45 minutes. We had scheduled that day for the Wheat Board witnesses and the report, so I don't know how you want to deal with the rest of that day.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Chairman, you say the minister is going to be here for an hour?