Agriculture Committee on May 14th, 2012

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I'd appreciate it.

[The Chair, Conservative, Larry Miller]

Yes, I thought you might.

[Rory McAlpine]

I'll take a shot at it. I'm no food safety expert.

The origin of the system, I'm told, was when they were preparing for the Apollo space program and they had to feed astronauts in space. They started to think differently about how you would prepare food and ensure that no one was going to get sick in space. The basic concept is that it's a production control system where every so-called critical control point in manufacturing, right from receiving animals through to manufacturing, is monitored, and everything—we talked about temperature, cook times, sanitation processes—is delivered according to standard procedures and the outcomes are always tracked. You build in safety. You can't ultimately inspect every pound of beef or pork that comes out of the plant. You have to have a system that begins at the beginning and controls risk at all those critical control points from beginning to end, and you have an oversight system that ensures you're doing that.

HACCP is hazard analysis and critical control points. It's based on that philosophy. Canada was a leader in making it mandatory in the meat industry, and it's a universal standard now.

[The Chair, Conservative, Larry Miller]

Okay, thanks very much.

Mr. Storseth, you have the last questions.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair.

Thank you for your great interventions today.

Mr. McAlpine, it's good to see you, as always. We've gotten to know each other since the listeriosis committee that we both attended quite often. I have to thank you for the work you've done and for being as readily available as you have been over the last several years.

Brian, it's always good to see you. I would like to thank XL Foods Inc. for making sure that the Brooks plant stayed open. It was very important for our province and for the western Canadian beef industry as well.

I always like to talk about...when we talk about free-range chickens, or as my colleague, Ben Lobb, was talking about, “free-run turkeys”.... My wife is a city girl, and she watched some news report that was talking about caged chicken. She decided last year that we were going to go and get some of our own chickens out at dad's farm. She was going to raise them and do all of it. We didn't get past opening the door before she decided she would rather go down and buy some Maple Leaf chicken.

So education is always a positive thing for everybody. I hope this is in camera, so she doesn't hear it.

[Voices]

Oh, oh!

[Malcolm Allen, NDP, Welland, ON]

I'll send her a copy of Hansard in the morning.

[Brian A. Read]

Boiling water and slaughtering the chicken in the backyard for supper is a problem, too.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Brian, you talk about markets and how they need to find themselves. Your issue was a perfect example of a barrier-free market, or as close as we could be, with the United States 15 years ago. My impression is that the cattle industry has tightened up. The U.S. has changed its regulatory approach. We've had to change ours.

Where do you find that we're at with the United States at this point in time?

[Brian A. Read]

That's an interesting question.

In the marketplace today we sense the border thickening—for different reasons. The trucks show up. Now we're going to start pulling STEC samples. They want to develop a baseline on all beef in their country. It probably should have been done before the regulation.

This is in camera, right? I might retract that one. I might play a Galen Weston and pull that one back. The cart sometimes gets ahead of the horse on occasion.

We appreciate they are now looking at developing a baseline for these new six STECs.

We wouldn't approach the border with ground beef, for example, because of the risk of delays, because it is time sensitive. We couldn't afford to lose 48 hours at the border or somewhere inside the country and deliver to the customer on time. Ground beef would not leave Canada because of those errant risks. Because of the current process where they come into Canada and go to source, they have the luxury of bringing it in and inspecting it at source.

As a matter of fact, I have to leave tonight for Washington because of the RCC program. I know Canada is really engaged in it, and I'm hoping the United States becomes more engaged in it and there's more willingness to eliminate those possible risks and delays at the border, which do affect food safety.

We've asked the AMI—the American Meat Institute, which is equivalent to the Canadian Meat Council—to put more emphasis behind it from their side for their regulators to understand the value to them of eliminating the I houses and going to the source. That would make a more unfettered, uninterrupted marketplace both ways. That's really what we need.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

With this thickening of the border—I know you've talked about it, but I think it's important to emphasize it—how important does that make our trade agenda and getting more trade agreements aggressively with other countries?

Secondly, I know we do have a lot of allies in the United States within their own cattle industry who see the harm that the thickening of the border does to them as well. I know the chair and myself have met with them at the embassy in Washington.

What kind of progress do you see? Do you see it continuing to get worse or better, and how important are the other markets to us?

[Brian A. Read]

Market access globally gives us alternatives. In running a business, alternatives are a nice thing. It's critical we continue to go down that road. We can't let our major trading partner get ahead of us. It's better that we try to be the lead.

As far as the United States goes, we really realize the importance of the elected officials having relationships with their counterparts, and the same at the regulatory level, which we have. We have a balanced trade with the United States. Agriculturally we're its largest customer. And it works in that country. It's imperative that we have good, strong relationships with them. That takes time, it takes effort, and it takes resources, both from industry as well as regulators, and from elected officials in this room. We need everybody to be pulling, not pushing, the rope—but we need to start pulling the rope.

I thank everybody for their efforts. I think everybody in this room understands that.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

You made a comment on corporate tax structure.

[Brian A. Read]

Yes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Would you carry on with that a little bit and talk about how it actually helps your business in Canada?

[Brian A. Read]

You have implemented new equipment taxes that we can get back. We don't have to wait 52 weeks. We can get it back within 90 days after installation—90 days or 30 days? Don't quote me on that. It's returned almost instantly. We appreciate all that.

The other issue is when you look at Canadian income—Rory deals with it on the pig side and we do on the beef side—we pay a couple of dollars an hour more for our labour in Canada, with pride. We have great benefit programs that our Canadian people are used to, and we shouldn't do with anything less. We try to maintain those within our infrastructures. Because of our system in Canada, it allows us to do that. We're very appreciative. It's really important, because we're dealing with a par dollar.

An interesting thing is that we all thought if we hit a par dollar, the world would come to an end. I was probably one of them. We survived that, but it's still an issue. If the United States dollar bumps a couple of pennies above us, it's kind of a couple of pennies gained for that day, but you'd better not build a business plan on it. We build our business plans on par. We see that for the next couple of years because of our natural resources.

[The Chair, Conservative, Larry Miller]

Thank you very much.

[Brian A. Read]

I hope I answered your questions, Brian.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Yes.

[The Chair, Conservative, Larry Miller]

You mentioned infrastructure again, Brian. I made a note when you started talking. Back when BSE hit, if I have the figures right, we were about 86% of slaughter capacity in Canada to supply beef to our domestics, so the government put in a bunch of money at the time and got it up to about 102%. We were bringing in feed cattle from outside.

That worked temporarily, but as soon as somebody offered more money, the farmer shipped his product away, and we ended up losing that slaughter capacity.

In the whole scheme of things, is there a way to keep that from happening again? Having that infrastructure in place is complicated.

[Brian A. Read]

Mr. Chair, we have to decide whether we want to maintain an infrastructure in Canada; that's critical. There are no guarantees. We're working hard to keep the feedlots full in western Canada, as well as in the east, but the economics will go where they believe the money is the best. That's going to be the challenge of tomorrow, keeping the cattle home for processing, because we'll need to keep everything home that we possibly can to maintain what we currently have.

The east could have more challenges, not maybe because of supply but for other reasons. I'm talking further east. That's why keeping us equivalent and giving us every opportunity to operate in equivalency with the United States, because that's what we—as a grower of livestock, they use the baseline, the basis for selling their cattle; they use the American base price. Whether that's right or wrong, that's what we believe is the right price. That's going to be bullish. In the United States they are short of livestock for their plants. We just talked about the Mexican drought. But to maintain livestock in Canada and keep these plants running is going to be the challenge for the next...it could be as many as five years. I'd put in a range from three to five years, Mr. Chair. I think we're just seeing heifer retention start, so there is some excitement now as pregnant cows are worth record money, and that's a good thing. Don't take any of that negatively, as long as we can cut them out and keep the thing home.

The other thing we may see too is that...between cow-calf feedlots...we talk about hormone-free and raised without antibiotics. That's creating partnerships all the way through the chain. Will we see more of that? That would be interesting and fun to watch on full feedlots in partnership with the packing industry. Wouldn't that be something to note? It could happen.

[The Chair, Conservative, Larry Miller]

Thank you.

Rory, is there anything from poultry or pork to add to that?

Thank you, gentlemen, for being here today.

[Brian A. Read]

Thank you. It's always a pleasure.

[The Chair, Conservative, Larry Miller]

It is a pleasure to have both of you, and I'm sure we'll see you back here at some point, so thanks again.

[Rory McAlpine]

Thank you.