Evidence of meeting #26 for Agriculture and Agri-Food in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was consumers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sayara Thurston  Campaigner, Humane Society International/Canada
Rex Newkirk  Director, Research and Business Development, Canadian International Grains Institute
Justin Taylor  Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association
Christine Moore  Vice-President, Supply Chain, Unified Purchasing Group of Canada Inc., Canadian Restaurant and Foodservices Association
Bruce Cran  President, Consumers' Association of Canada

5:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

To the restaurant association, I heard this in 2004, 2003, and 2002. I remember stories about not enough KFCs in Toronto, so they're shutting down KFCs. Why hasn't this been resolved within the existing system? Why can't we move forward to get this issue of quality and quantity resolved? What's the hurdle there?

February 27th, 2012 / 5:20 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

Justin Taylor

I think we've been pretty clear. We think the problem lies within supply management.

5:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Again, you have a sector, whether you like it or not, and I have my opinions on it for sure. Are they not willing to talk to you about quality and quantities that are required for those areas?

5:20 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

Justin Taylor

We're currently experiencing situations where suppliers are capping the amount of a specific type of chicken that can be bought by many of the restaurants in our industry. It's changing from region to region. At one point in time, a cap will be introduced. This is because the processors are not able to get the product they need from the growers in a timely fashion.

What is required is a willingness to work towards improving the system. Right now, there is very much a lot of entrenched positions that are being protected within supply management: I have certain rights to produce, and I have a guaranteed profit out of them, and I don't want to see the system changed because I might lose something so that some other producer can gain something.

5:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

In the system that you talked about, you talked about the pricing of the product and the process the price of the product goes through. That's one concern I've heard from talking to people who are in this supply management sector, especially younger farmers—the cost of quota and how that is reflected in the pricing.

Are you seeing that in the pricing of the product, that the cost of the quota is actually reflected back into the cost of the product? I'm being told that it's not.

5:20 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

Justin Taylor

No. The quota is traded on a secondary market, and most farmers end up getting loans from Farm Credit Canada to finance those quotas. So it's a one-time purchase for the right to produce chicken. When the price for quotas spikes or drops, that doesn't affect the price of the chicken that's produced. That's based on a specific formula, which includes the price of buying the chicks, the price of grain to feed the chickens, and a profit margin for the producers.

5:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Okay, but in the profit margin you would have the capital costs for loans and mortgages and operation of the entity, I would assume. It has to be fixed in there somewhere.

5:20 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

5:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

In 2004, the Province of Saskatchewan sued supply management on chicken in particular and tried to increase the quota for Saskatchewan. I believe it was an NDP government that sued the system at that point. You're telling me today that there have been no improvements in the allocation of quotas across Canada since 2005. I know Saskatchewan is growing, Alberta is growing, and B.C. is growing. We have all this wide open area. We can grow a lot of humanely produced chicken if we want. Are you saying that has no impact on how they go about allocating quota across the country?

5:20 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

Justin Taylor

As we said, within the system we're now allowed to allocate a special increase in production for a province if there's a special event. For example, during the Olympics, B.C. was allowed to grow more chicken because there was a special event. So special allocation adjustments happen, but every province has to agree on that. It gets voted on by the board of directors, and it's very difficult to get those things to go through.

Are you familiar with the Farm Products Council of Canada?

5:25 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Yes.

5:25 p.m.

Vice-President, Labour and Supply, Canadian Restaurant and Foodservices Association

Justin Taylor

Nine years ago, in a report, and then again three years ago, the oversight agency that is supposed to be monitoring this identified differential growths—differing growths by region in Canada—as a major problem that needed to be addressed, as well as the allocation process. We're having a very hard time. No one is pushing this forward because there is a guaranteed comfort zone in the way things are being done now. So we are experiencing a lot of difficulty.

Sometimes we do make advances. A special allocation was done for Alberta at one point and one was done for B.C. as well, but it's extremely difficult to get the market to respond to changes in demand.

5:25 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Sayara, it goes on the experience I had in the U.K. when I used to work for Flexi-Coil Case New Holland in Europe. I remember there was an accountability program in the U.K. in the hog industry whereby the grocers went to the farmers and told them to change their format in how they were going to produce their hogs. A lot of these farmers said they would follow that. They spent thousands and thousands, if not hundreds of thousands, of pounds adapting their barns to meet not only the feed but the humane aspects of the requirements from these grocery stores. Of course, the hog crisis hit, and the first thing the grocery stores did to them was say they were going to buy their hogs over here because it was cheaper. All the accountability the producers in the U.K. went through was thrown out the window because of price.

Have you done anything to encourage, market, and highlight those producers who are willing to take on that humane role, so that instead of forcing them to create these changes through regulation, you do it through pricing, through consumer demand? The demand from consumers is highlighted, and you highlight the people who are meeting the Humane Society's stamp of approval in the production of their product.

5:25 p.m.

Campaigner, Humane Society International/Canada

Sayara Thurston

Do you mean our organization specifically?

5:25 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Yes.

5:25 p.m.

Campaigner, Humane Society International/Canada

Sayara Thurston

Yes, absolutely.

For example, just this month, when McDonald's made its announcement, the Humane Society of the United States released a joint press release with McDonald's, welcoming the decision and praising it. Definitely, I would say—

5:25 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

The farmer's going to get paid more because he's going through that process, and the contracting with McDonald's will allow him to get paid more, I suppose. Otherwise, why would he do it?

5:25 p.m.

Campaigner, Humane Society International/Canada

Sayara Thurston

The situation with McDonald's is they have said they will mandate this to everyone who is supplying them in the supply chain for pork, and they have given them until May to come back with a phase-in plan of how they're going to make those changes. Yes, as you say, with McDonald's those producers have that client. They know they'll have the market for that.

5:25 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Okay. Sorry, I've run out of time. I'd like to pursue that a little more, but....

5:25 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much to all our witnesses for being here.

Just a reminder to the members that there is an informal information meeting, if I can call it that, that will be in camera. We have some department officials here. We'll have to move out.

I'm not going to be here, as I have a previous commitment. Pierre, you're going to chair that and take over.

Thanks again to our witnesses for being here.