Agriculture Committee on Feb. 27th, 2012

[The Chair, Conservative, Larry Miller]

Mr. Zimmer, you're out of time.

Mr. Eyking, you have five minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chair.

It's good to be back on the committee and to see all my buddies here.

Ms. Thurston, I was watching your thing on the chickens, and you almost had me convinced for a while that this is the way to go. And it might be the way to go, but....

When people buy free-range eggs, they have this vision that the chickens are out running in the fields or whatever. But the reality, as your clip shows, is that the chickens are in a controlled environment building. They're on a floor and they're quite tight, although they might have a little more square footage than the caged bird.

I thought it was a pretty good presentation you had there. Do you ever talk to the egg producers about consumer trends, about trying one of these types of systems in one of their barns? Or is there a disconnect between your group and their group?

[Sayara Thurston]

No, no, I often talk to producers and producers' associations. At the moment, HSI Canada, for example, is part of the Quebec government's strategy for animal health and welfare, which involves sitting on a board with the producers' association and individual producers.

From my personal experience, they are very much aware of this trend. They are taking steps at the moment because they know that in the immediate future they're going to have to deal with it.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I don't see the difference. Consumers drive industries, so I think it would be beneficial for you to be in constant communication with them. Try it your way, and they might get a bigger return.

The problem is that the stores will pay the same price and ask you to produce a product that way, but then turn around and give you the same price you had before. That's always the concern we have with the grocery stores.

My next question is to you guys, and it's interesting. I was with my son and we went to buy a snack pack. He said, “Dad, look at the size of these pieces of chicken. Was it always like that?” I said no. I can remember when they were twice that size, and we used to get a Pepsi with it. Now you guys are selling them a big Pepsi, with these little pieces of chicken in there.

Is that the farmers fault? I think it comes down to you guys fooling the public by saying you get a bucket of chicken, 20 pieces, but in reality there's about as much chicken as there used to be in 10 pieces.

You can't blame the farmer. But it's a shame to take that chicken before it's mature. The chicken is just starting to put on weight. I think it's a shame that they are doing that to these chickens before they are ready to put on good weight. Everybody thinks he's getting 20 pieces of chicken, but in reality he's getting the equivalent of 10 pieces of the chicken we used to get. I think it's a bit of a stretch saying that the farmers won't produce the chickens. Kill them earlier and get them over to us so we can sell smaller pieces and pay you less. You're paying the farmer less, because you're paying by the kilo. I don't think the consumer is demanding more pieces. They are demanding more chicken.

I know KFC is not going to change this in their head office, and nothing is going to change this, but that's what it's all about. Get the pieces smaller, pay the farmer less, and then turn around and tell the people about all the pieces of chicken they have. But really, all you are getting is bones and gristle instead of true meat. That's my rant on that part.

I'll go back to the milk and the eggs. If you travel to the United States, you'll see that, sure, in Seattle it's cheaper because they are trying to get Canadians across the border. Sure, it's cheaper in Detroit—they are trying to get Canadians across the border to get them in their stores. It's a different thing. But you go to Florida or Arizona, and the milk and eggs are no cheaper down there. So it's not fair to say it's cheaper down there, because it's not, really.

I have one more thing on the restaurants. Most people—it's no different from going to a grocery store—want locally produced products in their restaurant. They want locally produced eggs and milk. They believe in that.

Frank Sobey said something to me years ago. He said if I treat my farmers right, they are going to be in my community and they are going to be shopping in my stores. I think if you bring in cheap cheese or cheap products, sometimes you're cutting down your own consumer.

Are there any comments about the prices across the border? Do you look at every state? Do you look at Colorado? Do you look at the states where the retail price is not along the border?

[Justin Taylor]

Most of the numbers we have used in our studies were arrived at by third-party groups, like the Conference Board of Canada and the Montreal Economic Institute. These numbers are different from the ones I know many members here have received from the supply management groups that do their own research to meet their own research demands. We have had a number of allegations where it has been suggested that I have done my best to find the cheapest price in the U.S. and the most expensive price in Canada. That is not at all what we've done, and that's not our intent.

I also wanted to talk a little bit about some of the things you suggested with eggs and changes in production. Right now under supply management, producers cannot shift over to different methods of production and get a higher price for it. The price is set by supply management policy. Even within the suggestions that you have made for possible areas where we can evolve in the market, it would require an evolution in supply management.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I think they would be open to that.

Christine, what do you think about that chicken business?

[The Chair, Conservative, Larry Miller]

Mark, you are over time with your rant.

Christine, if you want to comment, I'm going to allow it. I enjoyed his rant, so I have to let you respond to it.

[Christine Moore]

That's not the case. KFC's first spec has not changed in the last 20 years. It's the same. We were asking the farmer for the same product 20 years ago as we're asking for today.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

You're asking for smaller wings and smaller legs.

[The Chair, Conservative, Larry Miller]

You've made your point, Mark. Just let her comment, and then we're going to move on to the next question.

[Christine Moore]

It's the same product spec that we're asking for from the farmer. Again, if things have changed with the growing of that animal, that's something different. We're asking for the exact same product we asked for 20 years ago.

[The Chair, Conservative, Larry Miller]

Mr. Lobb, five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

I think Mr. Eyking is saying this so he can eat extra. When he sits down, he makes this excuse to his wife about why he can eat twice the amount.

My first question is for Ms. Moore. With Taco Bell Canada, do they buy Canadian beef in their stores or American?

[Christine Moore]

It's a U.S. product by U.S. contract.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay.

Mr. Taylor, if I understand correctly, one of your key arguments against supply management is that they are price setters, not price takers, more or less.

[Justin Taylor]

That is one of the elements that concerns us, yes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

When I look at price takers, are there any other sectors that the restaurant industry would use that would encompass their cost structure that you folks advocate against or lobby against?

[Justin Taylor]

Sorry, I don't quite understand the question.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I'll run down some examples of price setters for you that a restaurant owner would have to deal with: property insurance; property tax; utilities; mortgage rates—commercial rates are higher than residential rates by quite a few percentage points; building permits; legal fees; snow removal; waste removal. All of these costs are price setters, not price takers.

Do you exercise the same amount of lobbying with those sectors as you do with supply managers? Maybe I've only listened to the one argument, but it seems like an inordinate amount of emphasis is on the supply management sector.

[Justin Taylor]

I think you've just done a fantastic commercial for why people should be members of the Canadian Restaurant and Foodservices Association. Our association has been able to negotiate discounts with suppliers who are willing to work with our industry to reduce the cost for restaurants for every single one of those items. We have discount programs for natural gas. We have discount programs for insurance, because it's a free market where groups can negotiate between one another. The supply managed commodities are the only commodities, the only major restaurant input costs, where it is an understanding between the federal government and the provincial government to suspend competition law to ensure that producers get to set the price.

[Ben Lobb, Conservative, Huron—Bruce, ON]

So have you been able to negotiate then for reduced commercial mortgage rates with the big banks?

[Justin Taylor]

No.

[Ben Lobb, Conservative, Huron—Bruce, ON]

And what about with public utilities, for electricity and sewer rates and so forth?

[Justin Taylor]

Right now, no, not public utilities, but those are monopolies as well. As for natural gas, we have a great program.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I guess at the price natural gas is set at right now, they should be giving you a good deal.

Ms. Thurston, I have a question for you. With your group, you would want to take what we would call today in traditional agriculture, for example, a layer barn.... The end goal for your group is to take every layer barn in Canada and make it like the example on your slide presentation. Is that the gist of your goal with your group?