International Trade Committee on Nov. 21st, 2013

[John Masswohl]

Those are the main things.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Those are the main things?

[John Masswohl]

Yes. The tariff on beef that Europe has varies depending on the form it goes in, but it's all in the ballpark of about 12.5% of the value, plus approximately—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That was the barrier against your penetrating the European market.

[John Masswohl]

Right. Plus 3,000 euros per tonne, which is prohibitively high.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Are we going to be able to supply the European market to achieve those quotas we have access to?

[John Masswohl]

Absolutely. We estimate we need about 500,000 head per year produced according to the European standards, and there are already many Canadian producers that are raising cattle without the hormone implants or without the beta-agonists, but they are not going through the documentation steps to prove that they meet European standards.

Also, a lot of those producers say that if you go in places like Nova Scotia, Quebec, or Ontario where there are already significant domestic markets for that beef, those cattle would be there, but we don't have any packing plants approved in the east. So if you're in Nova Scotia, you're not going to ship your cattle to Alberta so the beef can get to Europe.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Are we going to able to have access to—

[The Chair, Conservative, Rob Merrifield]

I'm sorry, Mr. Pacetti, your time has gone.

We'll now move to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

Chair, I'm pleased to advise you I'll be sharing my time with the great member of Parliament for Bruce—Grey—Owen Sound.

[Some hon. members]

Hear, hear!

[Ed Holder, Conservative, London West, ON]

As I do I'd like to thank our witnesses for being here today.

I'll start with Mr. Masswohl if I might.

Thank you for your support for the EU agreement. But I was a little curious because perhaps something is.... I'm from London, Ontario. It's the 10th largest city in Canada, and it's an urban oasis in a whole sphere of agribusinesses, everything from cash crops to dairy to beef producers to hog producers. And I chair the southwestern Ontario caucus. We have some strong views as a caucus in support of the EU trade deal.

I have a question for you, and help me understand. You talked about the no growth hormone products still being good for Canadian beef producers. This is the part I don't understand. At what level does it make it worthwhile for a beef producer to get into that market if it's not a market that has been a natural one for us to this point?

[John Masswohl]

You know, we estimate that to raise cattle without using those technologies is probably going to add approximately 20% to the cost of production. So we look at the European market and we figure that, out of each animal, there's probably about 100 kilograms that it makes sense to send to Europe, because our basic principle of how you make money in the cattle industry is being able to sell each piece of the animal to the market that pays the most for it. So if we take those 100 kilograms and they go to Europe, we figure that is worth about $11 per kilogram on a fresh basis.

Our next most valuable market right now is probably Japan, which is getting those high-value cuts at about $6 a kilogram. So if you just do some simple math, probably over-simplified, an extra $5 times 100 kilograms equals an extra $500 a head. That, in and of itself, is in excess of the extra 20% cost of production on those cattle.

The other thing that's interesting is that we already know that, yes, there's a growing domestic market for that sort of beef, for consumers who are willing to pay for it. We know that there are other countries like Russia and China that are putting trade restrictions—unjustified, we feel—on these growth hormones, but we're not philosophical about it. If they're willing to pay for the meat, we'll produce it. So if we have these animals and are sending 100 kilograms of them to Europe, this same beef would be eligible for these other markets, and in that way it would be quite complementary.

[Ed Holder, Conservative, London West, ON]

Thank you.

I had mentioned to Mr. Leduc and Mr. Versteeg, if they don't know, that when you work in Ottawa, one of the things you find is that wine and cheese become the basic staples of the circuit in this place—not that I'm evidence of that, but I would share with you that Monsieur Morin and I are in fact going to be celebrating Quebec cheeses very soon, and if you would like to have your producers participate in that, we would be very pleased.

I'll give some time to Mr. Miller.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you very much, gentlemen. It's great to have you here. I have to make a declaration before I start. I come from a farming background, but I've been in supply management as a dairy producer and as a beef producer.

I enjoyed your presentation, but Mr. Leduc, you started out and finished by saying you weren't against the free trade deal with Europe. Yet you basically spent your whole presentation criticizing it or pointing out negatives, instead of the opportunities there. So I'm getting mixed messages there.

My first question is just a yes or no question. Wouldn't you agree that the government has sent a pretty clear message since 2006 on protecting supply management? Would you agree with that?

[Yves Leduc]

They have reiterated their support towards the plan on many occasions.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you.

You know, when you're negotiating agreements, it's the same as being in business. Whether it's weather or other factors, you don't always get 100% of what you want. Sometimes you have to deal with what's there.

The cheese issues seems to be the big one with your organization and, again, 4% of the total Canadian consumption of cheese is what we're talking about here; it's what is affected. I've talked to artisanal cheese producers in my riding and others in Ontario, and every one of them, to a T, has said this deal will in no way jeopardize their industry. They will still be competitive.

I guess my question goes back to what I'd like to hear more on.... One guy commented that he is not afraid to compete. The dairy producers of Canada now have access, 100% access, to the market in Europe. So my question to you is this. Are you afraid to compete? I think I know what the answer should be, but I'd like to hear your comments on that.

[Yves Leduc]

Compete with what? With the EU treasury?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Compete on a world market and building.... You have an opportunity, sir, in Europe. There are 500 million people. You have an opportunity to build a market. Government isn't going to build the market for you, but you have an opportunity. Are you afraid to compete in that market?

[Yves Leduc]

There may be an opportunity. I'm not disputing this. There is an opportunity, as we speak, in the U.S. market. There have been pilot projects that have been put in place in combination with the Canadian government and Dairy Farmers of Canada to promote fine cheese exports into the U.S. market. It's a very, very tiny amount of cheese that is being exported into the U.S. market, in part because the U.S. also has a heavily subsidized dairy industry.

In a similar manner, therefore, we think it will be extremely difficult for the Canadian dairy and cheese sector, primarily, to position itself on the EU market. We're not saying there are no opportunities, but the opportunities may not be as great as some would like us to believe.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

But going back to my question—

[Yves Leduc]

I'd like to also add that I've spent more time on the negative aspect of this deal for the Dairy Farmers of Canada because we see more negatives than positives in it as far as we are concerned.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Okay. Yet you're not against the deal.

Mr. Masswohl, I was wondering if you could talk a bit—

[The Chair, Conservative, Rob Merrifield]

Very quickly.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

—on the veal component, or the potential there from the beef side.