Evidence of meeting #42 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 animal.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

3:30 p.m.

Conservative

The Chair Larry Miller

We'll call our meeting to order.

We have Mr. Clarke and Mr. Beretta with us live. Ms. Gibson, thanks for joining us. Can you hear me okay?

3:30 p.m.

Kathleen Gibson Policy Analyst, BC Food Systems Network

I can, thank you.

3:30 p.m.

Conservative

The Chair Larry Miller

Okay. Just in case we experience technological problems, Ms. Gibson, if you're ready, we'll start with you for 10 minutes or less, please.

3:30 p.m.

Policy Analyst, BC Food Systems Network

Kathleen Gibson

I have a technician standing by; let me know if you need him.

3:30 p.m.

Conservative

The Chair Larry Miller

Okay. Thank you.

3:30 p.m.

Policy Analyst, BC Food Systems Network

Kathleen Gibson

Thank you for this opportunity to testify.

My name is Kathleen Gibson. I'm a policy analyst in Victoria, British Columbia. I'm here today to represent the BC Food Systems Network.

I've spent the last seven years on contract to the BC Food Processors Association working on provincial licensing and inspection of slaughterhouses in B.C. under the meat inspection regulation of the Food Safety Act.

B.C. has four categories of provincial licence: two require a licensed, inspected abattoir facility; and two permit slaughter and sale of meat at the farm gate. The farm gate licences were developed in 2010 based on a risk assessment undertaken by the Ministry of Health. The Canadian Food Inspection Agency has been providing inspection in provincially licensed abattoirs on contract to the province but will be leaving that role at the end of 2013. B.C. is currently developing its own inspection service.

The BC Food Systems Network, which I'm here to represent, was formed in 1999. Its focus is sustainable food systems. It defines a food system as the resources and processes required to feed a population. The network connects hundreds of participants, indigenous and non-indigenous, and links agriculture, food, fish, health, labour, environment, and social disciplines, and about 50 community-based food security organizations in B.C. This presentation complements a brief submitted to you by the Food Systems Network in December 2011 regarding Growing Forward 2, and a presentation made to you on February 29 of this year by Anna Paskal of Food Secure Canada.

I'd like to introduce you to three fictional people who could be your constituents. I'm introducing them because I hope it will help illustrate what it's like for people who work with livestock and meat systems at the provincial level.

Al raises rare breeds of sheep on an island in the Gulf of Georgia. He has a farm gate licence to slaughter and sell his lamb. A retired electrician, he supplements the family income with meat and wool sales. He's focused on contributing to his community rather than growing a business.

Bert raises cattle on a 225-acre ranch in southwestern B.C. He sells 70 carcasses a year—30 through his farm gate store and 40 to local restaurants. He uses a provincially licensed slaughterhouse 200 kilometres away. He bought the ranch when he retired from 30 years in the gravel business. Income from quota for 10,000 egg layers helps support the red meat side of his operation.

Charlie has been managing a family-owned red meat processing business near a major urban centre for the last 10 years. The abattoir can process around 1,000 hogs a day. The business sells meat products wholesale and through its nearby store. Charlie's key concern is to develop and retain markets, since large retail won't take meat from provincially licensed processors. He doesn't want a federal licence, though, because of the staffing costs needed to manage the CFIA's food safety system. He's also frustrated that he can't have his products go through distribution facilities that handle federally registered products only.

Here are some basic facts about red meat value chains. Red meat includes beef, pork, lamb, goat, and ratites, such as ostrich. Red meat markets are conditioned by and vulnerable to international trade pressures. Livestock and meat production, processing, and retail is a world of the very few very large and the very many very small. There is virtually no middle. Profit in livestock and meat derives from value-added meat products and from by-products, such as tallow, bone meal, and hides. Beef waste by-products shifted from the income to the expense side of the ledger after BSE controls were introduced in 2007. Product that crosses a provincial border must be from a federally licensed facility. Product from a provincially licensed facility can only be sold within the province. It can cost $150,000 to set up a food safety system, and it will need several full-time staff to operate it for a federally licensed facility.

In the provincial system, it can cost a B.C. producer at least $2,000 to finish a beef animal for market, and it can cost $1 million to build a small provincially licensed red meat abattoir. B.C. specifically—to give some idea of scale—had about 260,000 beef animals from beef and dairy operations available for slaughter in 2011. The number actually slaughtered in provincially licensed abattoirs was about 24,000, about 10%. B.C. has one pork-only federally licensed and 33 provincially licensed red meat slaughterhouses. We also have 72 farm gate licences in remote rural areas.

There is strong consumer demand here for local and sustainable food, including meat. Lamb and goat meats are particularly in short supply.

There are four key areas of public policy involved in livestock and meat at federal, provincial, and municipal levels. Two operate throughout the chain—from farm through slaughter to retail. The first is public health, protection against food-borne illness. Concerns include micro-organisms that are resistant to antibiotics. New mutations such as E. coli 0157:H7 are constantly appearing.

The second is the environment, the handling and disposing of solid waste. In addition, the CFIA's enhanced feed ban requires that all specified risk materials—certain parts of beef carcasses—have to be separated from the solid waste stream and specially handled to control BSE. Disposal options in B.C. are very limited.

Two policy areas operate at the farm and slaughterhouse levels only: animal health for detection of animal-borne diseases—some of which can infect humans—and animal welfare, specifically, humane handling and euthanasia of meat animals.

So, how does this play out for folks in the business at the provincial level? The very big and the very small differ in size, but also in approach. The very big seek economies of scale. The very small tend to be place-based, more holistic, and more diversified. For the last 50 to 60 years, the very small have increasingly been operating in a world framed by government policies and programs designed for the very large. Regulators tend to introduce global-level standards without considering whether or not they are workable. The trouble with this is that the very small find policy requirements, at best, a poor fit, and at worst, functionally unworkable. If they can't make it work, these businesses go broke, or they go underground.

Some of you may be thinking that the big players should simply take over and forget the very small as too insignificant or too much trouble to support or regulate. We don't agree. We believe that ignoring or abandoning our subnational livestock and meat businesses—and Al, Bert, and Charlie—is unwise. There are seven reasons why. One, diversity is key to resilience, and thus to sustainability. Two, consumers want choice. Three, chefs long for a variety of meat products and cuts that they can't get from the big suppliers. Four, community-based meat producer and processor businesses are key participants in community economies. One provincially licensed processor can serve over 100 producers and 10 or more butcher shops as well as restaurants and retailers. Five, the provincial system can be an incubator for businesses that may choose to scale up. Six, smaller, decentralized facilities can rapidly be isolated in case of disease outbreaks. They also have a relatively small environmental footprint and low fossil fuel requirements. Seven, B.C. geography means that if you try to centralize too much, the activity becomes economically unviable, goes underground, and becomes untraceable, with negative implications for public interests.

We have three high-level recommendations for the federal government, as well as some specifics. First, put food back on social policy radar. Food systems are not only about profit. That's why we have the example of Al in the Gulf Islands. They are about society-wide health and well-being, which are the responsibility of governments. We echo the request of Food Secure Canada and the recommendations to Canada of Olivier De Schutter, United Nations special rapporteur on the right to food, for a national food strategy.

Second, acknowledge, support, and help promote subnational food production, processing, and retailing businesses in meat. This includes five things. It includes policy frameworks and tools that are appropriately scaled—that is, based on an assessment of risks to the public. In B.C. we have examples of that. It includes extension, networking, training, case studies, and pilots for market and value chain development. Some of the tools that the Canadian Agri-Food Policy Institute has developed could come in here. Third is to define “local” at several levels. Don't just say local means Canada. Fourth is research and development support and prototypes for small-scale, efficient, clean technologies for handling slaughter waste; and finally it includes a solution for the distributor cross-docking problem.

Third, our last recommendation is to undertake a formal and thorough review of the four following matters. First, review hazard analysis critical control points as the framework for food safety and meat processing and the approach used by the CFIA in federally licensed facilities, so that our friend Charlie can manage under a federal licence. Does this effectively address food safety priorities?

Second, review CFIA practices. Interactions with industry are often dysfunctional, resulting in poor relationships and costly delays. Implementation of the appeal mechanism is a good step.

Third, the assumption that every bovine carcass is contaminated with BSE needs to be re-examined.

Fourth is supply management, not just the pros and cons of the existing system, but of the potential alternatives. Red meat may offer a picture of what chicken and turkey could become without supply management. Is that good for Canada? Bert's layers, for instance, form a key part of his farm financial plan and support his beef operation.

We look forward to your response on these recommendations and to any questions you may have.

Thank you.

3:40 p.m.

Conservative

The Chair Larry Miller

Thank you very much, Ms. Gibson, and we'll now move to Beretta Organic Farms and Mr. Mike Beretta, for 10 minutes for less, please.

3:40 p.m.

Mike Beretta Chief Executive Officer, Beretta Organic Farms

Thank you for this opportunity to come. It's my first time. My wife and I are organic farmers north of Toronto in Ontario. We've been asked to come and speak a bit to the organic and natural side of the supply chain. So, more specifically, I'll talk with regard to beef. That's what we know best and we raise a cattle herd at home.

Our business has evolved into covering all the meat species, but primarily beef, which has taken us right across the country. Our supply chain involves four provinces: Alberta, Saskatchewan, Manitoba, and Ontario. We raise beef under two brands, Beretta Organic, which is a certified organic brand of beef, as well as Beretta Ranch, which is a natural version of the organic.

I'll give a little background history. The natural beef is raised without the use of antibiotics, hormone implants, or steroids. It's vegetable and grain fed, and all our cattle are born and raised in Canada. Our business has evolved over the years. We're in our twentieth year now and what started out as a home delivery business has evolved to the degree where we now supply large retailers such as Loblaws, American companies like Whole Foods, Longo's, and the Chipotle restaurant chain.

Both our organic and natural meat sales, as I said, began with home delivery and have evolved into a much larger scale. So most of the challenges we're facing now are around how we ramp up that scale and try to put a supply chain together that's sustainable both from a profitable standpoint and also from a logistical one.

I'll try to pinpoint a few of the challenges I thought would be most relevant to a group like this. Growing the cattle supply presently is the most challenging. The intricacies of the cattle industry are such that there's a long timeframe involved, and most of the supply chain is broken up into three key areas, which are cow-calf, backgrounding, and feedlot. Those three segments of the industry tend to be somewhat disjointed and are very rarely shared by the same farmer.

Growing the cattle supply tends to be our number one issue, and closely linked to this is the funding of that supply. So on a branded program such as ours, which involves both the organic certification and the natural, we're challenged with having to fund cattle right through that pipeline, because more and more of the smaller farmers are not able to maintain their inventory longer than they need and they tend to have to sell to maintain their cash flow. So we've been put into a situation now where we're trying to build a supply chain on a larger level and finding that the funding tends to be one of the most critical components.

Third would be the Canadian geography. The way the cattle industry is set up, the markets are here in Ontario and Quebec, and most of the cattle are out west. So trying to figure that out, especially when we're competing against a lot of American companies that are moving up here, is quite challenging.

The last one in terms of a challenge, which I do see as an opportunity, is that most of the larger retailers we deal with do their buying based on USDA cutouts, which is a formula based on packer sales in the U.S.. By law, they all have to be entered in and then the USDA publishes a daily cutout. So the Canadian retailers continually put pressure on us to build our pricing models on a USDA-based one, which is not relevant at all to our costs of production or the Canadian beef industry.

In terms of opportunities—and you probably hear this day in and day out—the marketplace needs to be more balanced. I think Canada has an opportunity to develop a USDA equivalent that's relative to our cost of production in Canada and that takes into consideration things like Canadian geography and our costs. I think there needs to be some incentives to support more of the smaller Canadian farmers, something such as a loan guarantee, that would allow them to retain ownership longer in the cattle supply side.

I think there needs to be some incentives to help more of the cattle supply move east. In our situation, we tend to purchase young cattle from out west and then gradually move them across the country until they're finished in Ontario. One of the reasons we've done that on a more gradual scale is to take into consideration animal welfare. It's a huge country and a two- to three-day truck ride with cattle is not something consumers are going to want to hear about in terms of animal welfare.

I think there also needs to be an incentive for Canadian retailers to look at buying more Canadian. I think because of the constant pressures put on by U.S. meat companies and the supply up here, they're very reluctant to celebrate the fact that we do have great Canadian beef. And it should be celebrated, and it should be marketed as such.

Finally, on more of a personal note, I think there's a difficult but not insurmountable challenge, and it has to do with the average age of the Canadian beef farmer. I attend beef meetings—Ontario Cattlemen's, Canadian Cattlemen's—and the average age, as you probably read recently, is well into the fifties. I'd say that's very conservative. I don't recall the last beef meeting that wasn't all grey hairs. We need to try to generate some kind of incentive that will capture the interest of younger people to get into this industry. That's an opportunity as much as it is a challenge.

Thank you for your time.

3:45 p.m.

Conservative

The Chair Larry Miller

Thank you very much.

I'll now move to the Canadian Renderers Association and Mr. Graham Clarke for 10 minutes, please.

May 16th, 2012 / 3:45 p.m.

Graham Clarke Government Affairs, Canadian Renderers Association

I'd like to thank you for the opportunity to express the views of the rendering industry to this committee.

My name is Graham Clarke. I am an independent consultant who represents the Canadian Renderers Association in Ottawa.

The membership of the Canadian Renderers Association is composed of the three major independent renderers in Canada. They are Sanimax, which has operations in Quebec, Ontario, Alberta, the United States, and Mexico; Rothsay, which is part of Maple Leaf Foods and has operations in Nova Scotia, Quebec, Ontario, and Manitoba; and West Coast Reduction, which is based in Vancouver and has operations in British Columbia, Alberta, and Saskatchewan. Other companies that have large rendering operations in Canada are Cargill, in High River, Alberta; XL Foods, in Brooks, Alberta; and Maple Lodge Farms. These are all sizeable businesses. Rothsay, for example, employs over 500 people in its six plants across the country.

Every year the Canadian rendering industry recycles approximately three billion kilograms of perishable material generated by the livestock and poultry slaughter and processing industry; some fish processing companies; and the food processing, supermarket, and restaurant industries.

The industry produces protein meals, fats, and oils through this recycling process. These are valuable ingredients or raw materials for the animal feed and pet food industry and for the oleochemical industry, where they are used in the manufacture of soap, paint, varnish, cosmetics, pharmaceuticals, leather goods, textiles, lubricants, and many other commodities, including renewable fuels, such as biodiesel.

From an environmental perspective, you should note that biodiesel derived from recycled materials, such as used cooking oil and rendered fats, has a greenhouse gas reduction, versus conventional diesel, of greater than 90%.

The industry is also a major exporter to Asian countries as well as to the U.S., Africa, and Central and South America.

Ultimately, the rendering industry is a service industry. The major customers are the livestock producers and the packing industry. But the industry also collects and recycles material from restaurants, supermarkets, and other food production facilities.

The rendering industry does what it can to service these industries in the best way possible, and it takes very seriously its responsibility to provide a timely and efficient means for its customers to dispose of their waste products. I don't need to explain the impact on stakeholders in the entire red meat value chain that a cessation of service for a couple of days would have.

There are a number of challenges currently being faced by the industry. The first one is in the category of raw material supply. The rendering industry, of course, relies heavily on the domestic slaughtering industry for its raw material. It is very vulnerable to downturns in the domestic livestock and meat processing industry in that the supply becomes reduced when these downturns occur.

Deadstock is another source of raw material. But the increasing cost of pickup, as a side effect of the BSE situation, as you have already heard, has a negative effect on the livestock producers' ability to pay. Consequently, they tend to dispose of the carcasses themselves. This further reduces the raw material supply.

Just for clarification purposes, bovine deadstock, by definition, contains specified risk material. The amount of deadstock being collected has dropped by 30% to 60%, depending on the part of the country we're talking about, from pre-BSE times, meaning prior to 2003.

This raw material, the deadstock, is now being buried on the farm, composted, incinerated, or in some cases, left to decompose in the environment, which is clearly not a satisfactory situation. Economically, it's very unfortunate that the farmers are no longer able to pay for collection.

The other environmental impact of this applies to all deadstock, because when you lose the volume of bovine deadstock, which constitutes a very large volume, it is no longer economical to run trucks along the trucking routes to pick up the material. Consequently, it has an impact on small stock, such as hogs, sheep, and so on.

Another major concern right now is the theft of raw material, in particular grease, which is generated by the restaurant industry. This has become a very serious issue in the past 24 months. In fact, the industry is meeting about this next week to look at anything further that can be done to prevent it. The high market value of fats and oils has led to an increase in the theft of this material, which is now calculated to be in the millions of dollars annually. It's very costly for the industry due to the loss of raw material and damage to containers. They need to supply more expensive and secure ones, along with other preventative measures.

I just need to tell you that an unregulated market in grease poses potential threats of contamination to the whole animal feed chain due to the potential for mixing this material with fats from other sources. This could be extremely costly and would be a threat to animal and public health, and it could generate enormous negative publicity for the entire livestock value chain.

Four major incidents have occurred in Europe in the past 13 years. Two were in Germany, the last one in January 2011, one was in Belgium, and one was in Ireland. Each time fat destined for industrial use ended up in animal feed. The May 1999 incident in Belgium resulted in costs estimated at $1.5 billion, and the Irish problem with pork, in 2008, cost the industry 100 million pounds.

There's also increasing competition from alternate disposal methods. I personally believe that rendering is still the most efficient and effective recycling process for animal by-products. The industry continues to try to improve efficiency in order to reduce the costs.

Other means of animal by-product disposal, such as biogas, hydrolysis, and composting, are being researched and promoted, which may create competition for raw material. To date, these alternate methods have not seriously impacted the rendering industry, but they might have the ability to do so in the long term.

Another trade issue is the continuing negative impact of BSE on exports. Since Canada had its first case of BSE, some countries have banned the importation of certain rendered products from Canada. Many of these countries banned the importation of not only meat and bone meal but also tallow—a ban which is unscientific and not in compliance with OIE regulations. It has taken many years to negotiate the reopening of markets for tallow, but progress is being made and finally a reopening of the export market to China is hopefully close.

Canada, as you know, is classified as a “controlled risk” country by the OIE. The OIE recommends that importing nations not allow the import of ruminant meat and bone meals from controlled risk countries, which is a major barrier to the export of ruminant protein meals from Canada.

Canada does export ruminant meat and bone meal to Indonesia and the Philippines under bilateral agreements, but would like to have access to additional markets to ensure export stability. Recent problems with the trade to Indonesia have highlighted this as a major issue.

There are a few other issues I'd like to mention in passing, mainly three of them. One is perception, and the others are environmental regulations and energy costs.

The major market for rendered products is the domestic animal feed market. Certain livestock and food companies market their products to the consumer as not being fed animal by-products. This puts some restriction on sales to some feed companies.

As far as the environment goes, increasingly costly environmental standards are being imposed on the industry, which can restrict its ability to build new infrastructure in convenient locations and which raises both the operating and development costs. Rothsay, for example, has invested more than $50 million in environmental upgrades during the past seven years.

Lastly, there are the energy costs. Rendering is a very cost-effective recycling process, but it is a high user of energy, so increasing energy costs for raw material, collection, operation, the rendering, and transportation all negatively impact the process and may negatively impact overall profitability.

This concludes my presentation. I appreciate the time you've given me. I'll be happy to answer any questions.

3:55 p.m.

Conservative

The Chair Larry Miller

Thank you very much.

We'll start with Mr. Allen for five minutes.

3:55 p.m.

NDP

Malcolm Allen Welland, ON

Thank you, Chair.

Ms. Gibson, you went through a myriad of things, and I know that you touched on them quite quickly. It would probably take a few hours to explain some of the things you went through. But if you can, would you explain to me whether there is a future for the small red meat producer in this country? I hear your piece about the geography of B.C. and I think we all understand that. But if you have any expertise around this, is it viable, say in Ontario or Quebec—or east, as we go to New Brunswick, etc.?

Is that possible?

3:55 p.m.

Policy Analyst, BC Food Systems Network

Kathleen Gibson

Thanks for the question.

I really can't speak to the other provinces. I can say, however, and this is the reason I gave you the examples of Bert and Charlie, that when you have tenacious and creative business people like them....

The reason for giving you those three examples was that they are of different sizes. Bert's business is much smaller and more localized than Charlie's.

I think that if you have people who are as tenacious and creative as they are, who work really hard on their product and their consumer and customer loyalty, and also who are active in their industry associations, there's a future.

These folks have a strong sense of their bottom line. They know that they have to comply with regulations, but they're more than capable of speaking to them, if they are concerned that the regulations don't fit. Your earlier speaker alluded to some of those things. They apply at all levels—the difficulties of complying with environmental requirements and others.

So I would say, yes, but only for the tenacious, determined, customer-focused, and vigilant.

3:55 p.m.

NDP

Malcolm Allen Welland, ON

Based on that, then, if indeed they are vigilant, are they still under threat, or would they in your view potentially face extinction from a value chain that is increasingly consolidated? I think we saw it the other day with Mr. McAlpine from Maple Leaf Foods, who was talking about the pork industry, in which they produce live pork at one end and basically ready-to-eat pork down at the other end.

Is there a sense that a tenacious individual or individuals can withstand what ostensibly is an economy of scale they have no hope of competing against? Can they stay out of trouble of being swamped by that particular value chain—they are providing a value chain, albeit it's localized in a way—or are they in jeopardy of actually being swallowed up?

4 p.m.

Policy Analyst, BC Food Systems Network

Kathleen Gibson

It's interesting. I've talked to people in what I would call the industrial meat system—two people who were involved in beef export, in fact—and asked them what place the provincial-level operations have in the larger scheme of things. They both felt in principle that the world of the very small is important; however, to some extent the world of the very small exists on the sufferance of the very large. What the two people I talked to said was that there is a kind of no man's land in between.

A person like Charlie, when he wants to get a federal licence, is going to go from being a large fish in a small provincial pond to being a much smaller fish in a larger, national pond. He may or may not make it, because if the very large players see him as a threat, they'll make a move to take him out.

Those are the kinds of realities you have in the red meat sector with the very few—and when I say very few, it is because there are two packers in the nation who handle the majority of the red meat.... That's the nature of the situation. I don't think even a Charlie could prevail, if a Maple Leaf decided he was in the way.