Agriculture Committee on May 30th, 2012
A recording is available from Parliament.
On the agenda
- Dennis Laycraft Executive Vice-President, Canadian Cattlemen's Association
- Jean-Guy Vincent Chair of the Board of Directors, Canadian Pork Council
- Rick Bergmann First Vice-President, Canadian Pork Council
- Stephen Laskowski Senior Vice-President, Canadian Trucking Alliance
- Deanna Pagnan Director, Livestock Transporters' Division, Canadian Trucking Alliance
- John Masswohl Director, Government and International Relations, Canadian Cattlemen's Association
The Chair Larry Miller
I'm going to call the meeting to order and I apologize for keeping our witnesses waiting. We have with us in the room Mr. Rick Bergmann and Mr. Jean-Guy Vincent from the Canadian Pork Council. We have, from the Canadian Trucking Alliance, Ms. Pagnan and Mr. Laskowski; and by video conference from the Canadian Cattlemen's Association, we have Dennis Laycraft and John Masswohl.
Just in case we experience any technical difficulties, we're going to let you go first, so 10 minutes or less, please.
Dennis Laycraft Executive Vice-President, Canadian Cattlemen's Association
First, thank you for the opportunity to appear before you today and for accommodating us here in Quebec City. The Canadian Cattlemen's Association is the national organization that represents over 80,000 beef cattle producers from across Canada and across all sectors of beef cattle production.
In 2011, cattle producers generated $6.5 billion in farm cash receipts, and the beef value chain contributed more than $26 billion to the Canadian economy. Beef cattle production generates significant employment, particularly in rural Canada, and producers carefully manage Canada's vast grazing lands, which sustain biodiversity, provide critical wildlife habitat, and store carbon.
Canada's beef cattle industry is vast and complex, yet produces the best beef in the world. It is composed predominantly of family operations both incorporated and unincorporated. It begins with our seed stock and cow-calf producers from virtually every province in Canada, who produce the best calves in the world on our grazing lands and forages. These cattle are generally sold as feeder cattle or to backgrounders or to feedlots weighing between 500 pounds and 900 pounds in the first stage of production.
The backgrounders will raise the calves to a heavier weight and sell them to a feedlot, which will finish them on a high-energy ration using locally grown forages and feed grains. In these lots the animals are finished to exacting standards, which results in the exceptional eating quality associated with Canadian beef. These finished-on-grain cattle are then sold to packers in Canada and the United States; and it's our national beef grading system, which is privately operated under federal regulation and industry management, that measures quality and provides market direction through this production chain.
Through these stages of production there are many supporting services that are important employers in rural Canada. Feed manufacturers, veterinary services and suppliers, farm machinery and equipment services and suppliers, feed grain producers, auction markets, livestock dealers, financial institutions, and truckers are just a sample of these. A large feedlot is often the largest agricultural employer in their local community.
The beef cattle industry is a global business for Canada, and we're part of an integrated market with the United States. Market integration started over a century ago and has generated many benefits for the industry. Today we have the largest two-way trade in live cattle and beef products in the world and a tariff-free access to the largest beef market on earth.
We are very strong supporters of the Regulatory Cooperation Council process and applaud our Prime Minister on this great initiative. Every dollar of unnecessary cost that we can remove crossing the border will directly increase the price we receive for our cattle, and that's because our price is arbitraged off of the U.S. market.
We're very excited about the future for Canada's beef cattle industry in large part due to the growing global opportunity for high-quality beef. Cattle numbers have been declining worldwide, while human population and per capita income in developing countries continue to grow. Demand for high-quality protein increases with disposable income. The world population is growing by one billion people every 12 to 16 years. Canada will be one of the few net exporting countries that can feed this growing demand. In fact, we believe that agriculture can be one of Canada's most important growth industries for the foreseeable future.
This past year we've seen a large increase in cattle prices, including breeding cattle, resulting in greater heifer retention. This signals our cattle numbers are stabilizing and will begin to grow slowly. These increased prices are a function of tighter supply and increasing global demand that we can now access.
We've regained significant access to all of our top-priority export markets as of January, Korea being the last of the large markets. Each of these markets has different preferences that add value to certain beef products, which in some cases would end up in trim or rendering in Canada if we could not export them.
We recently estimated these preferences add over $200 per head to what we would receive in Canada. We want to applaud the efforts of the Market Access Secretariat, the Ministers of Agriculture and Trade, and the Prime Minister, on their many efforts to regain these markets for our members.
Recently we heard some questions raised about the Minister of Agriculture and Agri-Food's travel expenses over the past two years. His efforts have generated at least a $720 million increase in our prices this past year alone. That is an over $2,600 return for every single dollar that was incurred by the minister for travel. Those market access efforts must continue. We estimate that there's another $139 million that could be readily realized in our major markets.
We also continue to strongly support both the CETA agreement with Europe and the CEPA initiative with Japan, which could provide Canada with preferential access that would create a huge advantage for us over our competitors. We also support the efforts to join the Trans-Pacific Partnership, particularly if Japan enters into that agreement. Over the next ten years, the EU and Japan are projected to have the largest growth in demand for beef imports.
You have asked us to comment on the specific challenges, issues, and other factors that favour or hinder our success and your interest in the federal government’s role in addressing those challenges or issues.
In the short time that I have, I will mention some of the challenges we face. These include the remaining market access issues related to BSE, such as the under 21 months for Japan and under 30 months in certain countries, i.e., Mexico; the increased operating costs that we’re all facing; increased operating lines of credit due to higher cattle prices and input costs; the productivity lag in relation to the US—and I’ll mention a couple of areas, such as the feed grain yields, forage variety development, etc.—labour shortages and Canadian labour unwillingness to work in many rural areas; and a non-competitive regulatory environment in a number of areas.
We believe some of these issues require a strong collaboration between industry and government, and others require a competitive business climate to allow the private sector to flourish.
One clear area for collaboration is food safety. We all share this as a top priority, and we will achieve the greatest outcome by working together. Our industry has declared this as a non-competitive area where all interests share information and technology. Research and innovation are crucial for our future success. The establishment of agri-science research clusters that mesh with our value chain round tables is a very positive development. A longer term commitment to shared funding and maintenance of key federal research resources are critical to success in this area. Regulatory cooperation and modernization are also critical to attract greater investment and early adoption of new science, including plant varieties. Canada’s smaller market size and novel rules have resulted in companies seeking approval in the U.S. first.
The Market Access Secretariat has established a focused, coordinated, and highly skilled team that works closely with industry to address technical market access issues. The investment in Market Access Secretariat has generated some of the highest returns for any government expenditure and needs to be maintained and strengthened.
Once MAS and the ministers have negotiated market access, export market development takes over. We are working to establish the Canadian beef advantage in every market. As mentioned earlier, these markets generate greater value back to every animal and allow our processing industry to be more competitive. Continued shared funding of these programs is important and necessary to compete with countries such as the United States, which provides lucrative market development support to the U.S. industry.
Regulatory modernization is welcome and will remove some archaic policies that actually obstruct adoption of improved procedures and technology. Our vision is to have Canadian high-quality beef products recognized as the most outstanding in the world. A regulatory system that allows timely innovation is needed to facilitate continuous improvement. In many cases, this means less prescriptive regulations and more outcome-based objectives.
Risk management and disaster relief remain important areas for industry and government collaboration. We have recommended some changes to the current business risk management programs and are advocating a national price insurance program based on the Alberta model, which is designed to be actuarially sound. Nine years after discovering BSE, there's still not an adequate disaster program to deal effectively with a foreign animal disease border-closing event.
There is a shortage of agriculturally skilled labour, particularly in western Canada. Our production methods and systems, starting with animal handling, are among the most sophisticated in the world. Finding properly skilled employees who want to work and live in some parts of rural Canada is a huge challenge that will only get more difficult.
We're advocating changes to the temporary foreign worker program to make it more efficient and to facilitate permanent immigration status.
The value chain round tables have proven to be excellent forums for bringing entire sectors together with government. We strongly recommend they continue.
I will end by mentioning a number of initiatives we are undertaking on behalf of the industry. We're the first, and to date, the only national group to establish a national check-off to fund research and market promotion activities. Recently we merged our marketing groups into a new global marketing organization named Canada Beef Incorporated. CBI is working to build the Canada beef advantage based on a value proposition and excellence in safety, quality, and service.
We've developed the Beef InfoXchange System, which has created the most modern and successful beef cattle information-sharing system in the world. The program was launched this winter at the cow-calf level, and now includes detailed carcass information that's available back to the original producer who makes the investment in the national ID ear tag. We're adding additional production and animal health information at the feedlot level, and will use this system to encourage age records and tracking information for our traceability system.
Finally, we started the cattlemen's young leaders program two years ago to attract more youth in our industry. We're pleased to say this is one of our most successful initiatives, and it's continuing to grow.
I will stop there. I know there will be questions later. Again, thank you for the opportunity to appear.
The Chair Larry Miller
Thank you very much, Dennis.
We'll now move to the Canadian Pork Council for 10 minutes or less, please.
Jean-Guy Vincent Chair of the Board of Directors, Canadian Pork Council
Thank you, Mr. Chair.
My presentation will be in French.
Good afternoon, my name is Jean-Guy Vincent. I am Chair of the Canadian Pork Council. I am a hog producer from Sainte-Séraphine, Quebec, and Chair of the Canadian Pork Council's Board of Directors. I produce over 25,000 hogs per year. I will be making the first part of the presentation, and the vice-chair, Rick Bergmann, will make the second one.
I would like to thank the members of the House of Commons Standing Committee on Agriculture and Agri-Food for the invitation to appear before you this afternoon to discuss the animal products supply chain for red meat, and the Canadian hog industry.
As hog producers, we have several national organizations that are dedicated to delivering value. The Canadian Pork Council sets overall direction at the national level, operates programs and represents producers with the federal government and international bodies. CPC's directors are producers from across Canada and chosen to sit on CPC's board by their peers within their own province.
Canada Pork International promotes Canadian pork in international markets and is governed by a board of directors representing producers, processors and traders. The Canadian Swine Health Board addresses swine health and is comprised of producers, processors, genetics companies and veterinarians. Swine Innovation Pork, recruits the best Canadian scientists to study critical production and product issues, and is led primarily by producers.
Together, these organizations deliver programs and services that benefit producers directly on the farm and beyond the farm. They leverage producers' investments with other funding sources and generate significant benefits for producers and the industry.
Canadian Pork Council plays a lead role coordinating input from the industry and communicating with the federal government about the needs of producers. During tough years when the industry needed it, the federal government, CPC and industry cooperated to introduce significant programming for producers, including: emergency advances and related stays; the Cull Breeding Swine Program; the Hog Fund Transition Program; and the Hog Industry Loan Loss Reserve Program.
Despite the industry's downturn, the Canadian Pork Industry continues to be known for its production standards and high quality products. Global markets are demanding agriculture and food products that are safe, of high quality, and maintain established sound practices.
The industry recognizes the importance of establishing systems to ensure food safety, providing for animal welfare and traceability, and ensuring stringent biosecurity measures. We need to maintain an advantage over global competitors. It is essential to offer products that exceed expectations, are second to none, that stand out by their quality and add value to the final product.
The Canadian Quality Assurance Program or CQA is CPC's national HACCP-based program that is controlled by producers and is used with 95% of domestically processed pigs. It is a resource to manage input usage and reduces the potential costs of on-farm food safety incidents. Just one food safety program satisfies the requirements of all Canadian processors and retailers and creates a Canadian advantage in foreign markets. It avoids the costs and confusion of a multitude of customer-imposed requirements.
The Animal Care Assessment tool and the soon-to-be-revised code of practice gives the needed proof to gain and maintain customer confidence, domestically and internationally. Without animal care standards, Canadian products will be challenged in key markets, including here in Canada.
The hog industry takes disease prevention very seriously. A public investment managed by Canadian Swine Health Board will result in 95% of production having the tools and training to implement a national standard of biosecurity. This will safeguard pork producer operations, lower the risk of disease incidents and lower the overall cost of production.
Additional investments will result in key sectors, such as transportation, being brought within the standard. This will further reduce on-farm risks and strengthen the bottom line. The CSHB works with veterinarians and a network of animal health agencies, creating a national system of surveillance, with real-time reporting and analysis. When disease outbreaks occur, actions will be taken to limit the damages of catastrophic loss. This alone can mean the difference for a producer between business as usual and their worst nightmare.
Because some emergencies are inevitable, CSHB is leading the creation of a federal government supported emergency response capability, which will come to the aid of producers, in the event of a catastrophic event. This can dramatically minimize shutdowns.
It is widely recognized that animal health is of increasing importance for trade, and we must address issues that threaten our trade-dependent Canadian pork industry.
In 2010, CPC officially incorporated Swine Innovation Porc to facilitate research, technology transfer and commercialization initiatives to enhance the competitiveness and differentiation of the pork industry. Innovation and research are crucial in maintaining the competitiveness of the industry. The important research offers ways to reduce the cost of production and enables the industry to stand out. The fundamental commitment is to ensure that research results are transferred to producers, in the form of cost effective on-farm solutions.
I will yield the floor to Mr. Bergmann who will continue the presentation.
The Chair Larry Miller
You have two minutes.
Rick Bergmann First Vice-President, Canadian Pork Council
Good afternoon. Thanks for this opportunity. I'd like to speak a little bit about Canada Pork International.
The pork industry's exports have skyrocketed in the past 20 years. We are now very export-dependent. Market access is therefore very critical.
The swine industry's interest must be reflected in Canada's trade negotiations with Europe, with its 500 million people; with the Trans-Pacific Partnership, which represents 30% of the world's GDP; and as well with Korea and Japan, which already have some success stories with us.
CPI is Canada's face in our export markets. It is aggressively operating in priority foreign markets by differentiating the Canadian pork industry, particularly in relation to food safety and meat quality.
CPI understands market requirements, develops competitive intelligence, addresses logistical barriers to entry, and implements comprehensive market development activities that enable increased pork sales. However, a key factor in the ongoing recovery of our sector is sustaining our global market share of pork sales and developing existing and new markets.
The federal government provided the pork industry with a multi-year funding arrangement currently managed by Canada Pork International, which is often referred to as the international pork marketing fund. This funding was used to implement a long-term strategy to increase and diversify market sales for Canadian pork.
This fund has been a tremendous success in our sector. In Japan and in other markets around the world, the international pork marketing fund complements the government's trade agenda. Furthermore, we can clearly demonstrate to the government that we have been successful in implementing this fund. We need the government's continued support through a renewal of this fund for another four years.
Canada's pork exports in 2011 were $3.2 billion worth of product to more than 140 countries. We're a major player, Canada. We have to continue to focus on that and grow that.
Unfortunately, Canada's national market has not reached the same success as our international trade. The consumption of pork has plummeted in Canada, by 16% in the past 10 years. To make matters worse, imports have risen dramatically. Consequently, total consumption of Canada pork has declined by 32% in a decade.
CPI is planning for a national development approach that is similar to the proven methods it has implemented overseas. Initiatives would be designed to increase Canadian pork in Canadian retail and food services channels.
I'd like to talk about the CPC's strategic plan.
The Chair Larry Miller
Finish up, Mr. Bergmann. You can always add a lot in on questioning.
First Vice-President, Canadian Pork Council
As we move forward and government and industry look to the future with the Growing Forward 2 program, we find it critical that we work together on these programs and develop them together to ensure that we have a program that's workable for all producers in Canada.
Thank you very much.
The Chair Larry Miller
Thank you very much.
We'll now move to the Canadian Trucking Alliance.
Stephen Laskowski Senior Vice-President, Canadian Trucking Alliance
Thanks, Mr. Chair.
Thank you very much, committee, for having us here.
My name is Stephen Laskowski. I'm the senior vice-president of the Canadian Trucking Alliance. Joining me, among her many hats, is Deanna Pagnan. She's the director of our livestock division. She will explain to you some of the issues we're getting into. I'll just open with some introductions about who we are and what our livestock division is.
The alliance is a federation of provincial trucking associations from across Canada. Our board of directors is made up of the various provincial trucking association executives and chairmen of those associations, who in turn have their own membership. In total we represent 4,500 carriers from across Canada, some of whom are of course involved in moving livestock, including sheep, cattle, and swine.
Members engaged in the livestock division are very different from those carriers who are engaged in moving dry goods or manufacturing goods. It's a specific segment within the industry, perhaps the most specialized—even more specialized than moving dangerous goods or fuel.
Livestock carriers within CTA are very much committed to the safe transport of animals. We understand that moving forward, it's not just about moving a commodity but moving a commodity safely and within the expectations of government, ourselves, and the consumers.
Moving livestock, as I've said, is far more complicated than moving anything related to manufacturing. There are preparation of animal compartments, loading and sorting, proper cleaning, safety of the animals in transit, associated paperwork, and also, different driving skills are involved in moving animals. It's a very specialized business, and one in which we are running into challenges.
Deanna will explain some of those challenges going forward.
Among the issues we'll be dealing with today, we'll talk about training, traceability, and some other issues involved in attracting people to our industry.
With that introduction, I'll turn the mike over to Deanna Pagnan.
Deanna Pagnan Director, Livestock Transporters' Division, Canadian Trucking Alliance
Thank you, Stephen.
Thank you for having us here today.
As Stephen said, livestock transport is very specialized. Livestock drivers are responsible for many other duties besides those involved in hauling dry goods. For that reason, our members engage in specialized training. It usually includes an in-class component, an on-the-road component, and then some experience with an experienced driver. Many years ago, livestock drivers used to come from a farming background. From farm consolidation, this pool of labour is no longer available. That has made training even more important.
One of our main initiatives at CTA is to work to develop a national training program for drivers. The main tenet of this program is that it must be recognized as the standard to transport livestock in Canada throughout the supply chain. The content will include animal behaviours, needs and skills required to transport, and relevant regulations. This program will be delivered in a method consistent with driver learning habits, including online content with interactive components, in-class parts, and audits.
This course will be available across the country and will take into account regional differences. It will also include a secure database, so that various stakeholders throughout the supply chain can verify whether a driver possesses the required training to haul different species of animals. As I said, we are working with supply chain partners. This training is demanded throughout the supply chain, from our customers to the end consumer.
A second issue is that of data traceability. CTA is engaged through the IGAC, the Industry Government Advisory Committee on traceability, on the development of a traceability framework. CTA is supportive of this initiative, as the increased level of information that will be available to drivers assists us in performing our duties.
The one issue we have with fully supporting traceability is tag responsibility. Currently, it is prohibited to transport an animal that is not bearing an approved tag. Transporters are therefore expected to only transport animals that are bearing an approved tag. If an animal that is not bearing a tag is found to be transported or arrives at a facility without a tag, the transporter is subject to AMPs fines. These AMPs fines are quite often detrimental to small operations.
For numerous reasons, it is impractical to hold transporters responsible for this. For one, the RFID tag is small, and it is difficult to ascertain its existence visibly. It may actually be unsafe for the driver to get close enough to a large cattle beast, for instance, to inspect its ear, and pickups most often occur in the dark, so it's very difficult to check visibly for the presence.
The tags are also applied either by the owner or the tagging facility, not the transporter. During pickups, drivers are responsible for many things, including loading, sorting, herding the animals, etc., to ensure safe transport. This is their number one priority—safe transport. Adding the additional responsibility of tagging really takes away from their focus on fulfilling all of their core duties.
There are some issues with CFIA, while I'm on the subject of AMPs. Our members are somewhat frustrated at times with the way that inspectors seem to apply regulations. CTA supports the idea that inspectors must have a certain degree of decision-making authority in their method of applying regulations; however, there is some frustration with their inconsistent approach. For instance, some of our members feel that, in the west, there is a tendency to use perhaps an educational approach, whereas the experience of members in the east is that inspectors are more likely to apply an AMP.
As I said before, AMPs are very detrimental to a small livestock business. We suggest that CFIA increase their use of educational enforcement, particularly when dealing with an individual who does not have a previous offence.
The last item I want to discuss is CTA's food safety project.
About eight years ago, CTA developed a trucking food safety program with the support of CFIA and AFAC. The program is a “hazard analysis critical control point” program. Its basis is to identify and eliminate hazards before food can become contaminated. The program includes core elements that all carriers have in place, and then a series of product-specific modules that carriers can add depending on what they haul.
CTA has always believed that the program will have more credibility in the market if it has formal recognition. However, until last year, a recognition process for off-farm HACCP programs did not exist. That void has now been filled with a new CFIA recognition process.
When this recognition program was put into play, CTA applied to AFAC for funding to upgrade its program with the goal of seeking formal recognition. Our application was submitted in June and we are pleased to say we did receive support.
The project is now under way, and we have a carrier advisory committee in place and work has begun to automate the process to deliver a carrier program. The project is scheduled to be completed in February 2013, when we hope to work for the recognition process with CFIA.
Again, thank you for your time.
The Chair Larry Miller
Thank you very much.
Mr. Atamanenko, five minutes.
Alex Atamanenko British Columbia Southern Interior, BC
Thank you, Mr. Chair.
Thanks to all of you for being here.
I'd like to address my first question to Mr. Laycraft in regard to CETA. As have many Canadians, I've been studying this potential trade agreement, and there's a number of issues that have been flagged that I'm concerned with. Among them are subnational contracts, the potential costs of prescription drugs, the threat for potential to supply management. In the area of agriculture, there's the possible infringement on local procurement, and the whole investors' rights—you know—the ability to sue a municipality. So within this framework of CETA, we're trying to hammer out more access for our agricultural producers, which is good.
My first question is, what is our current access to Europe in regard to beef? I know that in the organic sector, we had an outfit in Alberta that was exporting organic beef, and I think it was something like 20,000 head. I'm not sure where we're at with that, if that's still happening.
Also the concerns that Europeans have in regard to GMOs, is there a push back in regard to our cattle being fed GMO feed and will that have an effect on us getting access to the export market? That's my first question.
The second question is for Mr. Vincent. We know that there are obstacles in Europe to the pork sector and that they now have a 0.5% quota, if I understood correctly.
In your opinion, are efforts being made at the negotiations to increase that quota, and does this mean that we will have to change our supply management system? In short, are you aware of what is going on in the negotiations?
I'll leave those two questions and see what you can come up with.
Executive Vice-President, Canadian Cattlemen's Association
Let me introduce John Masswohl, who is our director of international affairs. John has been working very actively on the CETA file. Before I do that, a number of us who were involved for many years will recall in the early eighties that Europe was our second largest export market before a series of measures came into effect. So we know we have had a good relationship with them, and we believe there is a great opportunity moving forward. But to more specifically answer your questions, I'll turn it over to John, who's been to Brussels several times already this year on the file.
John Masswohl Director, Government and International Relations, Canadian Cattlemen's Association
Despite that tradition of transatlantic beef and cattle trade, our access right now is currently very limited for beef. We see the CETA as a very important opportunity to address that scenario. They do have what they refer to as the hormone ban, which is not exactly correct. It's any growth promotants that are used, whether they're hormone implants or beta-agonists, are not allowed.
On top of that, they have a very prohibitively high tariff, with some small tariff rate quota access. We can send 11,500 tonnes at a 20% duty. That's a quota that has existed for a number of years and that we share with the United States. More recently, there has been a new quota negotiated as compensation for the hormone ban. Currently it's sitting at 21,500 tonnes duty-free, and will increase to 48,200 tonnes annually as of August 1. To put those numbers in perspective, Europe is a market that consumes eight million tons of beef per year. So those quotas that we share with other countries are a small drop in the bucket.
We're certainly seeing CETA as the opportunity to get some real tariff access, but also to address a number of technical issues.
You mentioned an outfit in Alberta, and you may have been referring to a cooperative of a number of ranches in western Canada that market their beef through one small processor in Alberta. Really, right now that's the only operating processor in Canada that's approved to export to Europe, for beef anyway. We would really see CETA as needing to recognize the Canadian federal inspection system as equivalent to the European system, so that we can get additional facilities approved.
We have both the technical and the non-tariff. You mentioned GMO feed. GMOs have been an access issue in Europe, but not so much with respect to animal feed. In fact, Europeans are experiencing the same shortages and high cost for livestock feed as we are. Over the last couple of years they have been modifying their regulations related to GMOs, specifically to allow some GMO feed products into their markets. We certainly have not see that as an issue with respect to feeding our livestock here in Canada.