Agriculture Committee on Dec. 3rd, 2007

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

I want to come back to co-ops. Earlier, you mentioned the example in Quebec. I heard it twice. Are you talking about the Capital régional et coopératif Desjardins that was set up by the Quebec government of the time? The program provides a tax credit like an RRSP. It is run by the Desjardins Credit Unions and the Coopératives de développement régional. Is that what you are referring to?

[Carol Hunter]

That's a different fund in Quebec. The CIP is a co-op investment plan through which a producer would get a tax credit for investing in the cooperative and it's targeted to agricultural and worker co-ops. The venture capital fund is a different fund. It's not just agricultural and producer co-ops.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Quebec tax credits are not just issued to producers.They are available to anyone who wants to buy a share. It costs $2,500 per year, and the capital must be left in place for seven years. This investment pays off automatically because of the tax credit. I have had some for five years, and they are a good investment. As well as the tax credit, they make money for me. It has been very successful. You mentioned $397 million from 1997 to 2006.

The government had to set limits on cooperatives because their success was going through the roof. It was costing the government a lot as people paid less tax. The government had to impose limits.

So you want the federal government to do the same thing for cooperatives and to establish standards. That could provide a tax credit, even though it would be less than an RRSP provides. That is the sort of thing you want, right?

[Carol Hunter]

The average investment for cooperatives, actually with the Quebec model, was $182,000. That was raised with the Quebec model and the average investment that each producer made was only about $3,400. But with that modest amount of income, it was able to leverage significant moneys. So that, I think, is the argument for leverage. It's a long-term investment in the agricultural enterprise.

Research has also shown that cooperatives stay in business longer than other kinds of businesses. They take longer to start, as they have to mobilize the community capital and other forms of capital, but once they're in business they actually stay in business much longer. We do have research from Quebec on the longevity of cooperatives, but they don't have access to traditional capital markets. So the CIP, co-op investment plan, is a unique program for cooperatives that can offset that pressure without having to go to public markets, like Saskatchewan Wheat Pool did, and become a publicly traded company.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, madam.

I would like to come back to the egg and poultry producers.

I have a very important question to ask you. More and more, in some other kinds of production, a concentration develops in distribution, where there are only big players, and it is happening pretty much everywhere. Here in Canada, there are four large distributors. They are large grocery companies and large wholesalers. Presently, they are putting pressure on some products, including potatoes. The distributor wants to buy the product and remove the producer's name. Then it becomes his product, thank you very much.

Are you under this or any other pressure for eggs and poultry?

[The Chair, Conservative, James Bezan]

Mr. Davies.

[Mark Davies]

Thank you for the question.

I'll let the others speak to this, but it varies across the country. Where Mr. Fuller and I reside, we are co-op-based. It's the model we work under. There was in the past a private company there that has since exited the industry. Ontario is much more diverse. Quebec, of course, is a co-op, and out west it's more privately owned, I guess. There's a co-op out there. Dave would know more about that.

There is a concentration to a certain degree, but we don't have an industry that allows room for a lot of players because of the size of our industry. When we compare ourselves to our neighbours to the south, we're one-tenth of that. We don't have that to the same level of concern. It just has to find its proper level right now. There's still a huge co-operative movement and involvement in the industry, but it does vary.

[David Fuller]

Just to comment, when I look at the chicken industry, there are four major key players. Two of the four major key players are co-ops. There's a good, strong cooperative movement in the poultry industry from one end of the country right to the other, and the cooperative has been extremely strong in our industry. We have not seen it shrinking in size. We have actually seen it going the other way.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

More and more, when you go to the grocery store, you want to know where the product comes from. Take the example of Sobeys. Sobeys buys your product and puts it in Sobeys packaging lickety-split. No one knows where it comes from.

Are large concerns requiring you to use their packaging, meaning that the consumer no longer know where the product comes from? That is my question to you.

[The Chair, Conservative, James Bezan]

Mr. Roy's time has expired, so please give a quick response.

[David Fuller]

There's no question that the major buyers of our product would like to put their own brand name on. It doesn't matter which one they have. Either of the two major players in Canada have their own major brand, and there's no question that they are putting more pressure on, that they want to put their own product name on their own product.

That, of course, is having an impact on the primary processing industry of poultry. Because their name is now no longer on that product, it is now the major retailer's name that wants their name on that product.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. St. Denis.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Thank you, Mr. Chair.

Thank you all for being here. I recognize that a few had to leave earlier. It has been quite the travel day for people, so thank you for being here.

I have a northern Ontario riding, but like a lot of rural areas across the country, no doubt areas that you come from, we're seeing a rebirth of local agriculture. I think Ms. Hunter mentioned it in her remarks. This is for anyone, but maybe to Carol first.

We are seeing a rebirth of local agriculture. Not only is the consumer becoming more conscious of the safety of food and there's more certainty about food that you can drive to acquire, if you can.... Even in northern Ontario, where I'm from, we are seeing that happen.

I have written to both the federal Minister of Agriculture and Agri-Food and, in the case of Ontario, the Ontario minister asking them to look at policies that prevent the growth of local agriculture. For example, hospitals are not buying their carrots locally and instead buying them from far away. That's not to be against the carrots from far away, but there's a transportation cost, a contribution to climate change, and so on.

Could you tell me a little bit about local agriculture as you're seeing it? Because the consumer is interested, and I think there's a potential there for our communities.

[Carol Hunter]

Certainly. Consumer research from Ipsos Reid does demonstrate that consumers do want to know where the products come from that they're eating. So the demand among consumers for local products has been demonstrated.

We are certainly in agriculture seeing a renaissance of small niche market agricultural cooperatives, not the large multinational businesses. Farmers markets and community-supported agriculture where consumers pay upfront to producers to buy a certain amount of product are proliferating.

The buy local is something that we support, certainly. It's not only knowing where it has come from but that it's Canadian-owned, because of the loss of so many businesses to offshore interests. There really is a growth across the country for small local markets--from Newfoundland and the blueberry industry, right through to Victoria.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

I think historically there has been a resistance by the large food chain wholesalers and retailers to buying locally, probably because of volume and consistency concerns and the ability to fulfill contracts, given that it's a micro-market. Is that resistance still there, or are you finding that there is a willingness to consider more local product in the big chain stores?

[Carol Hunter]

There is that resistance there because they have to pay for shelf space, but we do know that with one of our members, Federated Co-operatives, which owns 300 retails across the west, their first policy is to buy Canadian. If they can't get it in Canada, then they try to buy it from a cooperative, and the third one is source it elsewhere, if they can't get it from Canada. So some of the cooperatives are very intentional in where they source the product from, as long as the reliability and the quality is there, because that has to be there as well.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Are there any other comments?

[Lynne Markell, Advisor, Government Affairs and Public Policy, Canadian Co-operative Association]

In our agricultural co-op development program we have offered people some help and some grants to be able to help start new co-ops. One of the wonderful examples is what is happening on Vancouver Island, where not only the farmers but also consumers got together to develop a new kind of system.

One of the things they had to do was bypass the large retailers and go directly to restaurants. They've been going to hospitals and asking what people need that they can provide. They're then starting to give the co-ops orders; they say they need potatoes wrapped in a certain size of bag or they need these herbs or whatever. They are starting to develop a system that goes all the way from the customer--the restaurant, the hospital, the school--back down to the producer who says this is what the new customer wants.

It is definitely an issue. Mr. Easter knows about the issue of the co-op slaughterhouse in P.E.I. They're producing good Atlantic beef and they're having difficulty getting that product into the non-co-op stores. The co-op stores are buying it, but the non-co-op stores still seem to be wanting to select and buy centrally and then ship out to the regions, which is so ridiculous when you've got something being produced right in the region, in the Maritimes, and it could easily go to the large retail stores in the Maritimes.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired, and just while we were having fun.

Mr. Miller.

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

As you've heard, Growing Forward is hoping to enable a little more federal or provincial or territorial flexibility. With what you've seen so far of the flexibility that could be in here, how does that differ from the first agricultural policy framework?

Maybe one or two of you could comment on that.

[The Chair, Conservative, James Bezan]

Mr. Fuller.

[David Fuller]

To be frank with you, concerning the talk about the flexibility, some areas are still grey for us. We need some clarity in those areas and we've raised a couple of those areas.

Once we have clarity in those areas, we need to find out if they have given us more flexibility or if they have given us some limited flexibility. That is the first one.

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

Could you enlarge on those areas, Mr. Fuller?

[David Fuller]

In our presentation we talked about one of them, which is the old CAIS program. Another one is the Health of Animals Act. There is an issue there.

So there are some issues we have to have some clarity on and which we have to move forward on before we can say this one has provided more flexibility because these areas are of concern to our organizations. We tried to have those addressed from the last one, and at this point there is still a little bit of grey there and we need to have some more clarification on those.

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

The CFA has a flexible program, I believe. They were here the other day. First of all, have any of you heard of that proposal by the CFA? Obviously not.