Thank you very much, Mr. Chair and committee members. Welcome to Saskatchewan.
It's our privilege to appear before you today to outline some of the issues that are specifically relevant to the hog producers in this province. Indeed these issues have implications to those right across the country.
I want to begin by giving you a bit of an idea of what the industry looks like. We produce about 2.4 million hogs in the province. That's up double from the last ten years. As a result of the Crow rate change in the mid-1990s, livestock production, specifically hog production, has increased significantly in this province.
At the same time that our livestock numbers are going up, the number of producers involved in that business is going down, and going down quite significantly: we had about 18,000 farmers producing hogs in the mid-1980s and we have fewer than 400 today. That is quite significant. The farms of today are quite appreciably different from what they were before.
Even though the industry is very cyclical, both on an annual basis as well as over a four-year period of time, we're presently under a squeeze in terms of high feed-grain prices.
We believe there's tremendous opportunity in this province to expand the hog industry. We are blessed with about 40 million acres of cultivated land. We think hog production adds to the grain farming business. It's very sustainable in terms of the application of manure with the grain farms; you get a continuous loop and add value, and it's good for those who want to be involved in that business.
I want to touch on four or five key issues and speak to them. Hopefully they'll provoke a question or two.
The first one is with respect to packer consolidation and the lack of competitive pricing for hogs. As most of you will understand, in Canada we have two major packing organizations: Olymel out of Quebec, and Maple Leaf Foods out of Toronto and across Canada.
Maple Leaf Foods recently announced that they were closing the Saskatoon plant, the only significant federally inspected slaughter plant in this province, on May 31. While we respect the right of that company to reorganize and rejig their business so that they are more profitable, it really impacts the producers in the province in a negative way.
For your information, during their restructuring Maple Leaf Foods is planning to close plants right across Canada. They sold the one in the Maritimes; they're selling the one in Ontario, selling the one in Saskatoon, and divesting of the one in Lethbridge. They're reducing their slaughter capacity from about 7.4 million a year to about 4.5 million. When you think about that in terms of the implications to this country and our business, it's huge.
It's especially huge to the people in this province. We have about one million hogs within 200 kilometres of Saskatoon. That is roughly the size of the plant that's here. It will force those producers to ship to the Brandon plant that Maple Leaf Foods owns and/or to the Olymel plant in Red Deer. You can appreciate that it will be very expensive: it's a marginal increase of about $4 to $6 a head, as well as the inconvenience that goes along with it. Not everybody has an exact 205 hogs per week that they can load in a semi, so we're back to the old system of assembly yards and all kinds of stuff as a result of this action.
We believe Maple Leaf has an oligopolistic power or a near monopoly power, depending on where you are in this country, given the transportation costs and things like that. Many would suggest and argue that we're the Wal-Mart of North America in terms of hog prices—the lowest there is—and as a result we are seeing a shift in production from market-weight hogs to weanling hogs that are shipped down into the United States to be fed. We're really exporting the value-added part of this business, and we think that's very much a negative thing.
Second, the mood of producers in this province has shifted significantly, given the closure of this plant. Guys are very frustrated. They're really not sure where they're going to go with this thing, and many have made the decision that they're going to exit the business, so we would see a further reduction in numbers as well as in the number of producers who are out there.
Consequently, we believe we need a packing plant in this province. If you consider the hog business and compare it to the grain business, it would be equivalent to shutting down all the elevators and having to transport grain to the neighbouring provinces. We find this to be unpleasant and we'd like to do something about it.
Saskatchewan people are very innovative and creative, as you know, and tend to take things into their own hands, so we have put a partnership together that we believe is unique. We've partnered with a first nation community—with a large-scale hog producer, Big Sky Farms—and we have signed up enough investment dollars from producers to build a million-head plant. We are presently going through a feasibility study to determine the viability of that option and trying to find a marketing partner who will partner with us. My point to all this is to suggest that it would be very useful if the federal government had a program to assist producers in gaining a greater share of the value-added markets. That would be very useful.
Next come profitability and competitiveness—if I'm getting too long-winded, speed me up. Farm support is very near and dear to an awful lot of our producers, and it's a very useful program. The CAIS program has worked for many of those people, although payments in a more timely fashion would be extremely useful.
Animal health and the threat of foreign animal disease has huge implications to our industry. We have three days, after which, in the case of a foreign animal disease, we would have to start killing animals out of the barns, so that is very significant. We need a policy, a federal government policy, that is very clearly articulated and put in place prior to a disaster like this so that people know where they are. It has to compensate not only those people who are directly affected by the disease, but also those who are indirectly affected. That's very important, and I'm sure you understand that.
A lot of people are very keen on ethanol production and biofuels. The agricultural industry is very supportive. The hog industry views it a little bit differently, in that it might increase the price of feed grains, and if you look at $4 corn in the U.S., that's exactly what it's done.
We would argue that we have to have a win-win situation in this. Therefore, if we are going to support ethanol, we also need to make sure we have the varieties of grain that are going to increase the amount of feed grains across this country so that we can remain competitive as well.
Next is a very important point, and I don't think we can underscore it enough: we need a very level playing field on the regulatory side, and we need that regulatory piece right across the globe. About 80% of our product out of this province goes international. Our trade is very important to us. Let me give you three examples that come to mind.
Paylean is a product used in the barns that increases efficiency and gains us about $4 to $6 a head. The United States had the product licensed and in use in their market for six years prior to us; we just received accreditation and licensing last year. We find that totally unacceptable. We need a system that moves ahead and gets things done.
The second thing is circovirus. I think you've all heard about the devastating impact that's had on the hog industry right across eastern Canada, and it's becoming more prevalent in the west now. The vaccine for that is made by a company in France. There is a little side note to this: the withdrawal time on registration within Canada, if you vaccinate sows, is 60 days prior to their being able to be slaughtered; in France, it's zero. Why the difference? How can we remain competitive if you get those kinds of inconsistencies?
One of the other things was noted by Dr. Harold Fast, who was just in China, who exports breeding stock over there and just came back. He is partnering with a fellow, a business associate, who built a million-head slaughter plant in China in less than a year for less cost than the consortium in all the west paid in Winnipeg just for the regulatory issues, for a plant that failed in Winnipeg. They built the plant—complete, the whole deal—and didn't spend as much money as we did in Winnipeg just to try to get through the regulatory issues. How do we compete with that?
On the trade issue, the WTO needs to work for us. We need liberalization on trade.
Thank you very much.