Evidence of meeting #4 for Agriculture and Agri-Food in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
4:50 p.m.
Conservative
The Chair Conservative James Bezan
Just to remind everybody, we're in the five-minute round now, so please keep your questions shorter and your answers even more brief.
4:50 p.m.
Director, Canadian Pork Council
Okay. Thanks, Mr. Chairman.
The hog numbers in Canada have steadily increased since I got involved back in the 1970s. For the first time in the last couple of years, our sow numbers are actually starting to drop. We see that just as a function of the economic times, the change in the dollar, and--
4:50 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
I understand that, but I'm wondering whether there are the same number of hog producers now, or has that number also declined?
4:50 p.m.
Director, Canadian Pork Council
I think the number of hog producers is certainly dramatically declining, and again, that's a long-term trend. Every time we go through a downturn, we lose producers. There are times when we lose more producers than we do hogs. The trend is that the smaller producers tend to drop out, although that's not always the case. We certainly have cases where large producers go down as well.
4:55 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
Thank you.
Mr. Littlejohn has already touched on this, indicating that two of three hogs in Canada are exported, as I understand it, principally to the United States and to Japan. Are we at all close to making inroads into other international markets, or is there a heck of a lot of work yet to done?
4:55 p.m.
Executive Director, Canadian Meat Council
I'm the meat guy, but I'm not necessarily the export expert. Certainly from my recollection we exported to well over 100 countries last year for pork and about 65 for beef. I guess some of the challenges we faced were with some major markets. For instance, when Romania joined the EU there were some complications there. They reverted to EU standards, so that was a major market gone for us.
We mentioned—we didn't specify it—that China, for instance, was a pretty important market to us, and growing in terms of the value of the meat they were buying from Canada. They decided to get pretty tough on testing Canadian meat. They put zero tolerance on ractopamine, which is PayLean. It has been used for many, many years in the United States, and just recently introduced in Canada in the last year. It has caused a lot of problems for Canadian exporters that were trying to gain access to that potentially very lucrative market.
4:55 p.m.
Director, Canadian Pork Council
The volatility of the market is amazing. Romania went from no market eight or nine years ago to one of our fifth or sixth largest markets, and when it joined the EU it disappeared. Trying to find those replacement markets in the world trade that we're in today is very difficult. We're watching a situation with our trade talks, as they go on now, where there's a potential that the U.S. may gain access to the EU in larger quantities than we have, and that's just not right. If you want to get tough, there's a spot in which to get tough.
4:55 p.m.
Executive Director, Canadian Meat Council
We certainly see that as well. There are some packers that feel it would be well worth spending the money, if some Canadian packers could invest the money to come up to European Union standards and meet those standards, and then gain access to that market. That is provided we get a good WTO agreement, where they're also forced to lower their tariffs and give us some access.
4:55 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
Mr. Laws, in your presentation you've made mention of a couple of things: the welcome news about the accelerated capital cost allowance, fair enough, and the welcome news about the corporate tax rate decrease. I see those as more medium-term items of relief, and I want to make sure your message is being heard by us. As I understand it, there are a number of hog producers currently for whom a corporate tax rate decrease is not going to help much, because the profit is not there and they don't have the resources to buy new equipment, so the accelerated capital cost is not going to help.
I simply want to know on an immediate basis--so that we're clear--what is it that ideally would be done within the next two months for hog producers?
4:55 p.m.
Executive Director, Canadian Meat Council
From our standpoint, for pork processors...the immediate relief for all the meat sector would be elimination of the inspection fees at the plants. That would be a very helpful thing.
On the beef side, it is some help to expand the program that currently exists to allow eligibility for disposal costs as specified risk materials, because that, unfortunately, is being handled by each province. The rules are not the same in each province, and most provinces are not providing any money for the disposal component. They provided money for capital expenditure, but not disposal, which is certainly a very significant cost to packers.
So those two items....
4:55 p.m.
Conservative
4:55 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Thank you very much, Mr. Chair.
I want to follow up on a couple of questions that were asked, and I'll ask Mr. Wildeman first.
In parallel with our industry, compared with that of the U.S., where's the disparity? Where is the cost so much higher on our side compared with their side?
4:55 p.m.
Chair, Canadian Cattlemen's Association
Right now, I think the significant thing is feed. We acknowledge that the dollar has changed. Here's the two biggest things. The dollar has affected the price. A producer in Nebraska, for example, who sold the same animal would receive about $160 more per head than we do. That's all exchange related, and some freight.
Secondly, it's the feed cost thing, where our feed costs are somewhat higher than corn. There's a long answer for it, but the very short one is that as corn production jumped up and took a lot of acres out of wheat and barley, it drove international markets high—we don't grow corn, we grow wheat and barley out west; it drove the prices crazy, so we're dealing with that. We think that within the next year or two those things will come back in line, but those are the two big factors.
5 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
If it isn't a phenomenon with the feed costs, what is industry's plan to move forward at that point? Does the CCA have a plan to move forward if, as you said, the feed costs aren't simply a phenomenon that's occurring right now, if we return to general pricing?
5 p.m.
Chair, Canadian Cattlemen's Association
I think Mr. Miller raised that a little bit. There are different feeding strategies that we can do, so clearly feeding more forage is an option, and changing some of the production things.
We're also doing a lot of work on redefining our industry and repositioning our industry, what we call the Canadian beef advantage. There's a lot of work going on there to reposition our product in the U.S. for country-of-origin labelling, but also around the world, to try to get some higher value for that.
We still believe in free trade, so we're certainly not talking about imposing any import restrictions. Remember, prior to 2002, for every pound of beef we brought into Canada from the U.S., we exported eight. Now we export six. So there's a long way to go.
We talked about getting tough. I think the answer is to get serious about trinational harmonization talks that have been going on for a long time, and then we need to get over to some of these international markets together and start demanding what's rightfully ours.
But to beat up on the Americans I don't think is what we think is the right thing to do. We think that serious talks about harmonization, which have been going on for several years, have to be finalized.
5 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
In terms of harmonization, one thing that struck me a little bit in listening to you today--and I've met with many of your members--was the difference between what the CCA asked for in the SRM and what you actually got. You told the chair that you got between $35 and $40 a head.
Would you say we're overregulated at this point with our industry?
5 p.m.
Chair, Canadian Cattlemen's Association
Yes. Again, talking about SRM, we wanted to put in an SRM ban that was similar to the ban in the United States because our classifications are the same. At one time we believed that was to be the case. Unfortunately, not only did we move ahead of them more quickly but we also imposed a much longer list than what they were proposing.
Secondly, yes, the devil's in the details. It has raised costs considerably that we took this comprehensive approach and also that it was interpreted this way. It's making it very difficult. And part of that $160 is because of that.
5 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Perhaps I can ask a little bit more of a broad question now.
One thing that I think we have to work on, and that we have talked a little bit about today, is opening up international markets and making ourselves more competitive on the international stage.
To anyone who wants to answer, which markets do you perceive us needing to open up most quickly that will have the most value for both of these industries, and what progress have you seen on that in the last couple of years?
I'll leave that out there. I'd like to ask a bunch more questions, but....
5 p.m.
Director, Canadian Pork Council
I'll give you a quick answer on that. I mentioned the Korean market and the Russian market. I think these two should be in our grasp and should probably be priorities.
The meat guys might have more insight on this than I do.
5 p.m.
Executive Director, Canadian Meat Council
Certainly it would be the Asian countries. For instance, with Korea, now that the Americans have a deal, we want the same deal. Otherwise we won't get the same preferential access.
Japan, as well, has a pretty stringent tariff system and safeguard mechanism that they've put in place. We'd like to see that negotiated away at the WTO, or, if that doesn't come to play, negotiated separately with them. It's pretty important. There are a lot of people over there.
That's where we think it would certainly be to our advantage.
5 p.m.
President, Fédération des producteurs de porcs du Québec
When we talk about regulations and we think about consumers who want regulations, we introduce regulations to protect them. At the same time, consumers do not buy these products, because they are too expensive. That is what we are talking about when we talk about domestic and international competitivity. If there are regulations in place to protect consumers, we should be protecting them all the way. Let's set some rules about importation standards.
Mr. St. Amand was talking about the international market. The Canadian Pork Council has a consultant. We asked MARCON-DDM to do a study. We asked it to analyze the entire export market and the importance of this market for Canada, and to make some suggestions as to how to protect it. We could send you the results of this research, which was done by Mr. Jean Dumas.
5:05 p.m.
Conservative
November 26th, 2007 / 5:05 p.m.
Bloc
Jean-Yves Roy Bloc Haute-Gaspésie—La Mitis—Matane—Matapédia, QC
Thank you, Mr. Chairman.
I would like to come back to what you were saying, Mr. Vincent. We actually import more and more meat from the United States, but we are much more demanding than the Americans about the production and the quality of the product. That means that we allow into Canada products for which the regulatory requirements are much less stringent and that consumers are much less protected because we import these products.
Did I understand correctly?
5:05 p.m.
President, Fédération des producteurs de porcs du Québec
Yes. We're not talking just about pork, but about all imported products. Once we impose rules to protect the consumer, why not impose the same rules for consumer protection on imported products?
5:05 p.m.
Bloc
Jean-Yves Roy Bloc Haute-Gaspésie—La Mitis—Matane—Matapédia, QC
For our part, we do not do that just for products for domestic consumption. We want to export a high-quality product that is recognized on the international market. Consequently, our requirements are more stringent. That is our message. For years, pork producers benefited from the fact that pork produced in Canada and Quebec was of higher quality. It is true that the meat was of higher quality. Are we still enjoying that benefit today on the international market?