Thank you, Mr. Chairman.
Thank you for the opportunity to present to you this evening. My name is Scott Dingwell. I am a farmer on Prince Edward Island, a co-owner of NOFGPEI, and the current chair of the Canadian Farm Business Management Council. I will be speaking primarily about the Natural Organic Food Group PEI, or NOFG.
NOFGPEI is the former Garden Province Meats, the island's slaughter facility for hogs. The transition from GPM to NOFGPEI was precipitated by Maple Leaf Foods' exit from a majority shareholder position in early 2006. We know this was the beginning of Maple Leaf's major restructuring plans now under way across Canada. This restructuring is not isolated to one company, but is indicative of the major transformations and forces now reshaping agriculture in Canada.
NOFG is actively transitioning from high-volume, low-price commodity markets to differentiated high-value, branded markets. NOFG has created, and is creating, differentiated pork products that can be directly linked to consumers at the retail level.
Much of the reasoning behind this move is expressed in the research contained in the report, A Maritime Pork Value Chain Assessment, which has been provided to all of you. The report was prepared by the P.E.I. ADAPT Council, the Atlantic Swine Research Partnership, and P.E.I. Pork Plus.
The key findings in the report, which prefaced some of this move, are as follows.
Marketing contracts are increasingly replacing open markets, and true price discovery is difficult. Larger operations can more successfully negotiate this environment.
The trend to fewer and larger players is continuing.
Livestock production and processing is increasingly mobile. Multinational firms may dominate world production and source and sell globally.
Small to mid-sized producers will struggle to integrate into supply chain structures. Higher revenues may be possible in value-added niche markets. These small to mid-sized producers may be able to capture market access and cost advantages of larger producers by joining networks or alliances, but both of these avenues require a high degree of cooperation and interdependence.
Consumers are demanding novel food attributes beyond safety, such as animal welfare, organics, environment, and food with no antibiotics or that is GMO free.
Wal-Mart and other large retailers have significant effects on retailing. Large retailers can co-exist with smaller niche segments.
And the future growth potential for value-added branded, packaged products is very important.
Current industry conditions are dire. I believe that Willem de Boer and Robert Harding of the P.E.I. Hog Commodity Marketing Board will be outlining current conditions and recommendations from the P.E.I. hog industry in your next committee session.
NOFG, like any manufacturer, is very sensitive to throughput. More importantly, and specific to NOFG, is the point that a branded and differentiated program with regional attributes requires regional supply.
We believe we are at the vanguard of new agriculture. NOFG is using some of the competitive issues that hindered us in the past as assets in this new economy.
One of our greatest exposures is the fact that the industry may not be able to transition to this new economy because of current conditions.
There does need to be an active debate on food production as a matter of national security. It's very easy not to think about this when store shelves are full, and it's too late when they are empty. Not having that answer today, I will confine my remarks to the current next-generation APF working vision statement:
An industry that is innovative in seizing evolving market demands for food and non-food products and services within an environment that fosters prosperity and opportunity for the entire value chain, creating benefits for all Canadians.
This is a statement that NOFG was pursuing before it was released.
So what is needed? It's not enough to say the words; we must take the steps to make the words happen. Words are only ink on a page or sounds in the air unless they are supported by actions, policies, and investments. The current vision statement for the next generation of APF has a lot of parental supportive words within it, but agriculture in Canada is a mature industry that requires partnership, not parenting.
The three main points I would like to leave with you today are that strategic investments must be made to allow transition to these new market economics, we need streamlining of policy and regulation to maintain and enhance competitiveness, and we must allow for regional differences in programming.
Strategic investment, as defined in market development and trade under the next generation of APF, is to make investments in innovative production processes, national systems, and other points of differentiation that are informed by market intelligence. That's excellent. NOFG strongly supports that direction, but we must always find ways and tools to support primary agriculture while it transitions to that new market economy. The markets will fail if they cannot be supplied.
The Agri-Opportunities program announced in January is positive and supportive, but we must challenge ourselves again to remember that one of the keys of that program is to increase market opportunities for Canadian agriculture across the value chain and generate demand for primary agricultural products.
Secondly, there must be major improvements to Canada's regulatory environment. The Canadian Pork Value Chain: Strengthening Our Competitiveness report that was released earlier this month--and I will leave this with the clerk--has many good recommendations within it that should be pursued. In order to pursue market-based economies in Canada, we must streamline and raise the effectiveness of its agencies involved in markets and product creation. Label creation has been difficult for NOFG in this circumstance.
Regionality of programs is the third point. It will be very necessary, when dealing with a country as large as Canada, that programs have enough flexibility to account for varying production practices. Programs that have had success in one region of the country have been viewed as unsuccessful in another region. We must have regional latitude when delivering agriculture policies and programs.
In conclusion, there are three points I respectfully submit to the committee.
First, strategic investment must be made to allow transition to these new market economies. That investment must include the primary levels.
Second, we have to have a streamlining of policy and regulations to maintain and enhance competitiveness. Regulation and laws must have parity within the marketplace. That marketplace is global.
Third, we must allow for regional differences within programming. Canada is a large country with very varying practices.
I respectfully submit that all crisis is an opportunity. We must make intelligent decisions when setting targets and goals for the future.
Thank you, Mr. Chairman.