Agriculture Committee on May 16th, 2012

[Graham Clarke]

Certainly. The price of fuel, as you know, is very high. With fats and oils you're looking at a price of around $1,000 per tonne. It's expensive. Grease theft has increased greatly in the last 24 months. In the U.S. last year they estimated that $39 million of material was being stolen. In Canada it was estimated at around $250,000, but that has now increased dramatically. They're very sophisticated operations.

The association wrote to the minister about it last year. We recognize there's not much the federal government can do. It's a municipal issue, a police issue, and the police have more interesting things to do, or more responsibility than grease. However, they are now taking a much bigger interest in it because of the scale of this and the possibility that organized crime is becoming involved.

We see this as a major risk, not only from the point of view of loss of raw material, but also with respect to the potential for damage to the whole industry. If you have unscrupulous dealers with this material and they start feeding it to the feed industry and mixing it with sources of oil that are contaminated, there is the potential for a major crisis. This happened and we had to point it out.

So we're meeting about this next week, and the Americans are meeting next Tuesday, to discuss this whole issue and see if there's anything else that can be done.

We've used cameras, GPS tracking, and investigators. Some court cases have been brought, but unfortunately it's very hard to prove whose grease is what. So it's becoming extremely difficult to actually bring people to court.

We haven't asked the government for mandatory licensing of the trade, because it's unregulated to a degree. Of course, some in the feed industry may be buying this material without even realizing it and putting everybody at risk.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Valeriote, you have five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

I want to thank you all for your presentations today. They're extremely helpful toward the advancement of the investigation we're undertaking here at the committee.

Around this table we're all advocates for farmers, but at the same time we're advocates for consumers, as you know, as well as everyone in between. Yesterday, an issue came to the foreground that I think needs some consideration, specifically the amendments to the meat inspection regulations. I had somebody write me about this yesterday.

Mike, I'm going to ask you first, and then Kathleen, if you could respond.

It says that the proposal to amend the meat inspection regulations, the home-farm slaughtered animals to be processed in federally inspected plants, is misguided. One worry is that international markets will be imperilled by a regulation that diminishes the quality of inspection.

This is according to this letter and I want your opinions on this. It says to consider the conflict of interest the “on-farm veterinarian” is confronting in such situations. As you know, there has to be an ante-mortem prior to the killing of the farm animal. It also says to consider the implications of euthanasia on the farm vis-à-vis what is really going to happen.

There's a suggestion, of course, that the animal wouldn't be properly euthanized. I guess process and protocol is very important here.

The letter goes on to say that someone will have to shoot the animal and cut its throat to achieve the bleed out, and that's best left to plant operators and staff. So they realize that farmers have a unique interest, especially the small farmers who are more likely to have to make use of this.

Could you shed some light on your perception of the impact on trade and the real impact on food safety?

If Michael could go first, and then Kathleen, please.

[Mike Beretta]

From a beef standpoint, I'd have to concur with the person who wrote to you. Beef animals, by nature, tend to be quite large, obviously, so the sheer logistics of shooting an animal, bleeding it out, and somehow transporting it to a federal facility, if that's what's required, would be quite a strain, I think, especially if you look at environment and distance. Our cattle are all out on pasture. If I were to euthanize an animal that was two or three miles from home, what would I be looking at in terms of the transport of that animal, either ante-mortem or post-mortem?

To your first point, I do think that right now food safety is a very fragile thing. We've noticed that in the beef industry with regard to BSE and everything that's gone on, and all the money that's been spent at slaughterhouses to address the so-called BSE issues for international trade.

I think this runs the risk of simply compounding an existing fragile situation.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

Kathleen.

[Kathleen Gibson]

Perhaps you could clarify for me what we're talking about. Is it a carcass that's been slaughtered on a farm and being taken to a federally registered facility for further processing? Is that what we're talking about?

[Frank Valeriote, Liberal, Guelph, ON]

Right, following the introduction of the changes to the regulations yesterday.

[Kathleen Gibson]

Okay. I actually haven't seen those changes.

I'm a bit baffled by that constellation, because it's not one that I imagine happening in British Columbia. When we introduced the on-farm slaughter licences provincially, they were only for meat for sale at the farm gate. The carcass was not taken off the farm; it was slaughtered at the farm gate. The whole idea of those farm gate slaughter licences was that the number of animals would be very low—it's restricted—and the sale would be restricted to a very small area.

I'm not familiar in B.C. with the possibility of a farm-slaughtered carcass going to a federally registered facility. I'm racking my brain and I can't think of how that could happen.

[Frank Valeriote, Liberal, Guelph, ON]

That's fine.

[Kathleen Gibson]

But I agree with the reservations expressed by the writer and the other witness.

[Frank Valeriote, Liberal, Guelph, ON]

Okay, thank you.

[The Chair, Conservative, Larry Miller]

Very brief, you have a few seconds.

[Frank Valeriote, Liberal, Guelph, ON]

Very brief.

Mike, I'd like you to talk to me about the concern that some have about the vertical integration occurring in the red meat sector—the companies controlling several stages of the supply chain from feedlot to processing. Can you talk to me, from your experience, about the negatives and positives of that?

[Mike Beretta]

Yes, there definitely are both. As I mentioned earlier, the supply chain is so broken up into different stages that there is a real communication issue within the beef industry, which doesn't exist with poultry and pork, and specifically with something like genetics, right?

So you have a cow-calf operator who has been raising young calves for sale and is selling them to a buyer, who then sells them to a feedlot, which then sells them to a packer. There's no discussion point throughout this, so if I'm a cow-calf operator, I'm making decisions on genetics—what kind of bull to use on what kinds of cows—with no understanding of what the end product actually looks like.

To get to your point, vertically integrating this would definitely assist them from a genetic standpoint and would bring all the parties together so that they're working to create a more uniform product, which is something that I think the poultry and the pork businesses have done far better than the beef business. So in that regard, I'm all for it.

On the flip side, of course, like all things that become a monopoly, you run into that risk of price controls and the lack of third-party involvement in terms of how the animals are reared and how they're processing them right through. So I'm giving you an ambiguous answer, but I think there are pros and cons for both. I think the pros would definitely be on the production side. The cons would definitely be anything related to something on that scale and to what Kathleen has been talking about—eliminating the small farmer.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

I know that Francis' question kind of touches on the supply chain, and it kind of doesn't. I don't want to use up all my time commenting on it, but I will just make a very brief comment on the changes to the regulations.

Kathleen said.... It's actually the same federally. It's going to be very rare that we would have an animal euthanized on a farm and then have it transported to a federal facility for further processing. This is not going to become a main occurrence. It's under very rare circumstances.

To address Mike's point about when you might have an injured steer three miles in, if that's not safe, it's not going to happen. If he's at the farm gate, he has a broken leg, and you say, listen, why do I have to dispose of this animal when in fact everything is fine if we could just get it to a meat processing plant...?

So the idea is to help you with your business, but the underlying criteria is that it is safe for human consumption. If it's not, it's simply not going to happen. So for your case, where it's off in the distance or you're not able to bleed it out properly, it's just not going to happen. It just will not happen. If it's safe for human consumption, there's an option. That's basically what the regulations are talking about.

But let me move on to the supply chain for a moment.

Graham, I'm really glad you're here, because rendering is something that I think the public really knows very little about, yet it's an important part of the supply chain. Because there are all of these animals that are rendered, it provides a service to the farmer, and it is its own industry that is supported by the farmer.

Let me ask you, first of all, where you source your material from. I know that a very basic answer will be that it's primarily from the farm, but I'd like to know whether you also get animals that need to be rendered from places other than the farm, from a dead animal on the farm.

[Graham Clarke]

Yes. I mean, the major source of raw material is from the packing industry, such as Cargill, XL, and all the big packers.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Right.

[Graham Clarke]

So that's the major source.

Then, of course, in the past, deadstock has been a fairly substantial source. Before BSE, Sanimax alone had 50,000 pickup points in Quebec for deadstock. It was pretty much every farm.

As has been pointed out—not in every province, but depending on the environmental regulations of the province, because some are stricter than others—it has become uneconomic, certainly for bovine. Because of the fact of SRM, or specified risk material, you end up having to basically throw the carcass away, as has been pointed out by Kathleen. Whereas before this they were paying the farmers, now it's the farmers who have to pay to have the animals picked up. So that of course is an issue, and there's the side effect of all the other stock and so on.

The other source of material is restaurants, supermarkets—it's pretty much everything. When you think about it, a certain percentage of everything you eat, as far as the meat supply goes, is rendered. In some species, it's as much as 60%. At other times, it's about 30% by weight. So it's big.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

It's at the tail end of the supply chain, in a sense, but then it feeds into different products again.

[Graham Clarke]

You talk about the supply chain, but the value chain is actually not a linear chain. It's a circle.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Yes, right. That's a good way to look at it.

[Graham Clarke]

A lot of those protein meals are fed as animal feed, pet food, and for domestic animals.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

You were saying it would be nice to be able to export more product to other countries. The question I have is about domestic consumption, particularly since the input has dropped, you were saying, because government programming has ended in some provinces. The carcasses you're seeing have diminished. Are you able to supply the domestic need? Are you saying there's oversupply, and material could be exported under these current conditions, or is that under the older model of a few years ago?