Agriculture Committee on April 21st, 2009

[The Chair, Conservative, Larry Miller]

I call the meeting to order.

We're going to continue our study today on the competitiveness of Canadian agriculture. We have with us as witnesses the Chicken Farmers of Canada; the Ontario Cattlemen's Association; and as an individual, John Vancise, a farmer.

We'll start off with 10 minutes per organization and individual. We'll start with Mr. Dungate, representing the Chicken Farmers of Canada.

Go ahead, sir, for 10 minutes, please.

[Mike Dungate, General Manager, Chicken Farmers of Canada]

Thank you, Mr. Chairman.

On behalf of Chicken Farmers of Canada, I'd like to thank you for the opportunity to share our views with you on the issues affecting competitiveness of all Canadian agriculture. Our chairman, David Fuller, sends his regrets that he wasn't able to make it up to Ottawa this morning. I will pinch-hit as I can.

Chicken Farmers of Canada is a national organization funded through producer levies. Our primary responsibility is to ensure that those 2,800 farmers produce the right amount of safe, fresh, high-quality chicken to meet consumer needs. In terms of the economic impact of our industry, we generate $9.5 billion in economic activity. Our farm cash receipts are $1.8 billion a year, and we directly employ, on farms and in processing plants, 19,000 Canadians, plus sustain over 50,000 people through spin-off industries.

In 2007, chicken production passed the one billion kilogram mark, and we also contribute to the success of grain and oilseed farmers by purchasing 2.4 million tonnes of feed annually, worth over $800 million.

Strong leadership and proactive strategies will always play an integral part in the ongoing competitiveness and success of our industry.

I am not following everything according to the document.

In terms of competitiveness, as defined by Agriculture Canada, it's “a sustained ability to profitably gain and maintain market share in the domestic and/or export market”. For the Canadian chicken industry, we compete against imported chicken, mainly from the United States and Brazil, and we compete against all other meats—our prime competitors are pork and beef—for the share of the Canadian meat consumption market.

In terms of the imports and competing against imports of chicken from outside of Canada, I need to underscore that Canada is not a closed market for chicken. In fact, the 33 million Canadians are the twelfth largest consumers of imported chicken in the world. So that's a big statement for 33 million people. But what we need to run our effective supply-managed system is a predictable level of imports so that we can produce the right amount of chicken. We undertake to import that chicken. We don't come up with phony science or other measures to block those imports that are negotiated at the WTO, but we produce to our portion of the market. I think it's easy to say that's not consistent across the globe.

Where it becomes important is at WTO negotiations, and we have absolutely appreciated the support of the government and all parties for supply management at the WTO. However, the current draft--that is of December, the draft modalities text--cannot, in our view, be the basis of the negotiations of a deal. For us, sensitive products are the key. The text right now does not allow for enough tariff lines to cover all supply management products. It would require us to cut our over-quota tariffs by a minimum of 23%, and up to 70% if we don't get rid of the tariff cap. And on top of that, we would have to provide another 4% to 6% of duty-free access inside of that.

Another issue on the import side comes when we put in place the Uruguay Round. Canada's the only country where a product that's 87% chicken is not deemed to be chicken. So add 13%, some rice or some stuffing and some other vegetables, and all of a sudden that escapes the tariff. So we really do need a change to this rule so that we don't erode the market for chicken. I think you've looked at things like that around labelling to cover off that type of thing already.

We also are very pleased and proud of the on-farm programs and the work that we do to maintain high-quality chicken in Canada. We're the first to have an on-farm food safety program recognized by CFIA. In 2009 we're rolling out our animal care program, which has the support of both the Canadian Federation of Humane Societies and the Canadian Veterinary Medical Association.

These measures are a must to maintain consumer confidence, but they come at a cost that's fully borne by the industry. So our request here is that both the Canadian Food Inspection Agency and the Canadian Border Services Agency ensure that imports meet the same standards that Canadian domestically produced chicken must meet. You have a subcommittee on food safety that's looking at some things, and this is a key element in terms of that.

One recent note of concern in terms of CFIA and looking at that is the plan to stop pre-market labour approval for all meat imports. This means that products can be on store shelves before they're approved by CFIA. We're not prepared to take that risk and jeopardize the confidence in our system by allowing that to happen.

On the new market access secretariat that was announced by Minister Ritz in January 2009, we've had some good discussions on that with government. The clear focus here is on technical barriers to trade. In our view, it has to look at them from both the export side and the import side. What we're not looking for is a watering down of what we have in Canada to meet other countries but ensuring, on a science base, that they meet the requirements that we have here.

As the Canadian market accounts for 70% of what we produce and process across all of agriculture, it's critical that a strong domestic market be the foundation for competitiveness for all of Canadian agriculture.

In terms of those technical barriers to trade, however, we had avian influenza positive tests on two farms in the Fraser Valley in January. We also had this in 2004. Mexico has maintained a ban for the past five years. It seems a little strange, though it isn't a market that is of a lot of importance to us. However, two markets that are currently closed and that are key to our marketing are the Philippines and Taiwan. Many other countries have looked at what we've been doing to contain these incidents, and their bans are getting, actually, very restrictive now, and are down to a 3- or 10-kilometre range. We appreciate that kind of thing rather than just a blanket ban on Canada.

On the competitive meat side, overall consumption of meat has been fairly consistent in the last 10 years in Canada, hovering around 95 to 96 kilograms per person. Chicken consumption has steadily increased. There was actually quite strong growth up until the start of this decade. It has been flatter since then. However, in 2005 chicken overtook beef as the most consumed meat in Canada for the first time, and it has maintained that leadership level.

Probably the biggest challenge for us in the last two years has been the oversupply of meat in North America in terms of chicken, pork, and beef across both sides of the country. We've been cutting back production since last July to try to bring profitability back to our processors, who haven't been able to maintain a sustainable wholesale price because of, frankly, distressed pricing in the U.S. in the chicken industry.

There has also been a fair amount of liquidation of both cattle and hog inventories. We thought we were about to break out of this, but we understand the U.S. is looking at a dairy cow cull program now for 2009 because there are too many dairy cows there. That's, once again, going to put a lot more pressure on all the meat commodities in North America.

The last point I want to talk about is an issue that affects the competitiveness of the whole meat complex, and that's feed prices. There's a chart in the presentation on the last page that shows how closely feed prices track the cost of producing chicken. Feed is the single most expensive input we have in our production. We have witnessed what I would call a skyrocketing pricing of feed since 2007. And frankly, while 2005 may not be a legitimate area--because grains and oilseed producers have to make money, and they certainly didn't in those years--there has to be a good equilibrium point.

We need to take a closer look at alternative fuel legislation. Corn is our big feed source. It is the key user for ethanol. We need to look at alternative fuels, which are probably cellulosic-based, other than corn because that directly impacts us.

In conclusion, Mr. Chairman, competitiveness for the Canadian chicken industry is measured in our ability to compete with imported chicken and with domestic and imported beef and pork for the share of consumers in our chosen marketplace.

In our view, in order to be competitive, the Canadian chicken industry needs a WTO agreement that preserves an effective supply management system. We need changes to the 13% rule so that imported chicken does not circumvent our tariff rate quota system. We need strict enforcement by the Canadian Food Inspection Agency and the Canada Border Services Agency of import standards so that we don't undermine consumer confidence in what we're producing. We require government recognition that the domestic market is the foundation for the success of all Canadian agriculture and provides that springboard for success in export markets. And we need policies that deliver feed prices that do not drive meat out of consumer diets.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Dungate.

We'll now move to the Ontario Cattlemen's Association. We have Ms. Kim Sytsma, Mr. Gord Hardy, and Mr. Dave Stewart. Welcome. You have ten minutes.

[Gord Hardy, President, Ontario Cattlemen's Association]

Thank you, Larry.

Good morning. Bonjour. Thank you for your invitation to appear before you today. We greatly appreciate the committee's interest in and commitment to the beef industry in our great country. We hope that our presentation will answer many of your questions outlined in the letter of invitation, but we also look forward to answering your individual questions to the best of our abilities.

The Ontario Cattlemen’s Association represents 19,000 beef producers in the province of Ontario. Our vision is to help foster a sustained and profitable beef industry and have Ontario beef recognized as an outstanding product by our consumers.

The Ontario beef industry is very important to our economy. Beef farming is carried out in every county and district in Ontario. By investing in the Ontario beef industry, the government is investing in the families, businesses, and communities in Ontario, both urban and rural. The income and employment derived from our industry helps support a broad range of rural infrastructure such as hospitals and schools. Beef farms create jobs in rural communities, from feed supply stores to grocery stores, as well as supporting employment in packing plants and further processing in urban areas.

In a study entitled The Economic Impact of the Ontario Cattle and Beef Sector, published by the Department of Food, Agricultural, and Resource Economics of the University of Guelph, it was shown that the economic impacts arising from the Ontario beef industry are approximately the equivalent to the economic impacts of adding an automobile assembly plant. Your government recognizes the effect that a decline in the automotive sector has had on our economic health. It should also realize that the decline in agriculture sectors will have a similar negative effect.

The immediate problem affecting our ability to compete is the reduction in cattle numbers in areas of the country, and the immediate threat that places on the existing infrastructure and jobs, both urban and rural. The January 1 numbers published by Statistics Canada show that cattle on feed in Ontario have declined by 22% when compared to January 2003, which, as you know, was before BSE rocked our industry. Similarly, cows and heifers for breeding have declined by more than 17% over the same period.

Over the past year, our producers have fought to maintain their businesses while dealing with a combination of factors, including the newly implemented processing regulations, government ethanol programs and policy, lack of access to key markets, and high input costs. Many producers are questioning their future in the beef industry. I am sure you have heard this from your constituents.

We foresee our situation being further compromised due to the program announced last summer by Alberta unless immediate action is taken by the federal government. During times of volatile commodity prices, as we have seen over the past year, rapidly escalating farm input costs cannot be reflected in farm gate prices for beef in a timely manner due to the length of our production cycle.

Our recommendations to you fall into four categories: regulation, equalization between provinces, ethanol policy, and trade. In terms of specific regulations that are detrimental to our industry, one that began our basis slide is the enhanced feed ban. As I am sure you are aware, this outlines the requirements for removal and disposal of SRM materials. I know you have heard from others on the cost of this regulation. Depending on the plant, this can range from $10 per head to $80 per head for smaller provincially inspected plants.

While we recognize that we are moving into a new era of global supply chains, we must have protocols in place to open borders, not just to shut them. We accept that regulators are expected to devise systems that ensure the safety of the food we eat. We accept that there will be a movement to full traceability, likely within the next decade. However, you need to accept that we must harmonize our regulations with those of our largest trading partner, the United States. To do otherwise would place Canadian farmers in a position of permanent competitive disadvantage to our competitors. That can only lead to weakness and ruin.

Our regulations such as on the own use importation of veterinary drugs and the approval of pest control products are beginning to show some positive movement due to the response of the recommendations coming out of the Beef Value Chain Roundtable. It does not make sense to us that our competitors are allowed to use interventions that are not available to us.

We need to know why these approvals take so long. If there is an honest question concerning food safety with any of these products, then we ask why product produced with them in other countries is allowed to be imported into Canada.

Our second recommendation concerns the issue of equalization between provinces and the need for a national business risk management program that works. During recent meetings with our young producers, the number one need young farmers identified after the start-up loan program was a BRM program that works. More experienced beef farmers also identify that same need.

You must take action now. You cannot keep delaying. Producers across this country, except in Alberta, are desperately awaiting your help. If you do not have your own program to roll out, deliver the Alberta program to everyone. Also, make the changes to AgriStability that have been on the table for so long. Our requested changes to this program are as follows: offer the better of the Olympic and previous three-year average on reference margin calculation; eliminate the viability test; enhance reference margins; increase coverage to 70% of negative margins; allow producers the better of AgriStability tier one or AgriInvest; remove caps from AgriInvest and AgriStability.

These changes to the existing program could really help some people who deserve it. We request that you make these changes.

Our third area of recommendation is trade. Many products from our animals are not consumed here in Canada. Therefore we need to have commercially viable market access to maximize carcass value. This is a good measure to support the long-term health of our industry. We are pleased with the Government of Canada’s increased pressure in recent months to open international markets to Canadian beef. However, we continue to request that the Government of Canada launch a WTO challenge against the United States regarding mandatory country of origin labelling. COOL places a cost burden on packers and retailers that will be borne by the primary producer, equalling approximately $90 per head.

Our final recommendation concerns the long-term systemic negative effects that ethanol production policies have on our industry in Ontario. I would suggest that you have Al Mussell from the George Morris Centre come and present his findings to you. Al's original prediction is that if a counteracting policy is not put in place out there, feeding of cattle and hogs in Ontario will, over time, decline by 70%. That’s huge. It will of course destroy most of the infrastructure our industry currently has in place. This has very large implications for those of you who have seats in Ontario.

In summary, I see a great future for our industry. Farmers are having a little trouble finding the road to that future right now, but there is no doubt in my mind that demand for beef will climb as the world economy improves, and specifically as countries such as China and India develop their economies. The beef industry is good for our economy. We have the potential to expand our output of beef without significantly changing the capacity in Ontario. This could add about $400 million every year to value-added GDP and add about 6,000 good working jobs. When all is known, and when you see the trouble the auto industry is in, all parties should be paying attention to the opportunities agriculture has to help our economy.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

Now we'll move to Mr. Vancise for ten minutes.

[John Vancise, Farmer, As an Individual]

Thank you, Mr. Chairman. I look forward to this opportunity.

Bonjour. Hello.

My presentation will visit the area of competitive advantage through regulation and brand power.

The purebred seed stock industry, like the beef industry, has a global aspect. To be competitive, one needs the following: a product that excels, a market and a viable strategy to access it, and—most important—health certification that is accurate and irrefutable based on sound science.

Government has a role to play in all areas, but undoubtedly the most important role is health and health certification. All this together equals brand power and success. Flaws or erosion of any component puts this brand power at risk. Health certification is paramount and CFIA is entrusted with a cornerstone role. In 1985, Canada became the first nation in the world to eradicate brucellosis. That feat garnered respect, trust, and admiration for CFIA throughout the industry and around the world.

Once the bar is raised and new standards are set, backsliding is no longer an option. Vigilance, enforcement, checks and balances—all these play a role in maintaining the status quo. That is why checks and balances must be built into a system, and any breaches of established protocol must be dealt with openly and under a policy of full disclosure. For example, the policy of on-farm isolation and re-test of imports must be reinstated. It is cost-effective, especially in view of the fact that breaches in protocol often have serious financial implications. This provides a valuable check. When re-tests were discontinued on March 31, 1996, it took less than 100 days for CFIA to screw that one up.

For trust and respect at all levels to flourish, and to prevent erosion of Canadian agriculture brand power, we need third party overview. This would provide a known entry point to allow more industry input into CFIA operations. This office could also facilitate dialogue.

We need to be certain that CFIA is a positive influence in our lives and performs up to expectations.

Situations must be dealt with expeditiously to avoid downstream domino effects. Competitiveness and financial viability are at risk if mistakes are allowed to erode brand power and go unresolved. All Canadians need to be concerned.

CFIA must divest itself of its self-monitoring role, because the temptation is always there for cover-up. Having an independent third party doing the monitoring would raise the bar of health and certification. As it now stands, when errors or total screw-ups occur, CFIA has no one to answer to, and anyone injured by their mistakes has little recourse and virtually no access to government for restitution.

Canadian agriculture needs an ombudsman watchdog to take on these challenges, someone to strike a balance in the system, someone who has the power to get the answers and compensate for mistakes—past, present, and future. This ombudsman watchdog needs to be empowered to ensure fairness and expedience while maintaining a level of service equal to the respect and admiration of 1985 CFIA. We need a Sheila Fraser in overalls.

Ways must be found to right past wrongs and compensate those harmed by substandard service. Waiting for their collapse is not an option, nor is it the Canadian way.

As an individual who has suffered a devastating and debilitating blow to his business, I know first-hand how a CFIA meltdown in 1996, left unresolved, has devastated me and my family. To give you some insight into our situation, I start with an excerpt from the financial impact statement, written September 22, 1996, by Dr. Brian Keyes, veterinarian, Barrie, Ontario: “On July 8, 1996, Mr. Vancise imported four purebred Hereford bovine from the state of Kansas, U.S.A. The animals were certified by a USDA accredited veterinarian, and an appropriate certificate was endorsed by the USDA.” He goes on to say, “The testing and health requirements as outlined by Canada's Health of Animals Act/regulations for export to Canada was to have been fulfilled as per the certificate.”

This obviously didn't happen. The CFIA website states no vaccine is licensed and vaccination is not part of the disease control strategy for anaplasmosis in Canada. The import certificate states these cattle were vaccinated the 25th of November, 1995, for anaplasmosis.

Secondly, on the continuation sheet, paragraph four: “To the best of my knowledge anaplasmosis has not existed clinically or serologically in the herd of origin for two years preceding this exportation“. The health paper stated that on May 8th, one animal was tested positive on a composite fixation test with a one-in-ten dilution. When we went through our quarantine, a one-in-ten dilution positive was a death sentence.

I quote Dr. Keyes' letter of January 16, 2007:

If an animal is tested in the country of origin for a specific disease, it is inherent the animal is not vaccinated for this disease. Tuberculosis, anaplasmosis for cattle imported from the United States. Why? The answer is on page 12 of Oklahoma State University paper on Anaplasmosis (2003). Both live and killed vaccines rely on the field strain of A marginale. These vaccinations do not prevent persistent infection of A. Marginale although they prevent or reduce clinical disease. Persistent infections in cattle contribute to the further spread of A. Marginale because these cattle serve as a reservoir of infection for mechanical spread of the disease or as infection for ticks. Vaccinated cattle develop persistent infection that produce livelong immunity. Revaccination is usually not required. There was also a short 30 day T.B. test reported and the required time frame interval is 60 days. This is where the problem started the time line shows how it unfolded. An appropriate check and balance in the system would be: 2 independent vet scrutinizers of the import certificate at port of entry and endorsed by both. 2- Retest upon arrival on farm quarantine. The time line shows mid March 1996 I was given incomplete information on testing. It shows the health certificate was submitted a week ahead to CFIA border vet Dr. Jack Orange for his input and approval. It shows 148 day quarantine – CFIA’s original estimate 7-10 days. It shows CFIA did not and would not quarantine for all four diseases. They would not test. They would not allow me to test. My test done by Dr. Geiger in Michigan

--after the cattle were taken back to the States--

exposed the problem. CFIA’s sample I demanded they draw for reference was not even sent for testing until after the results on my test came back. It shows no mitigation for Anaplasmosis until September 19, 1996 over 2 months in peak fly season.

--that's when they were ordered under a roof--

It shows the sensationalism that erupted in media and the area, population as two fairs could not hold their cattle shows. However, the absolute hell and financial devastation over the last 13 years due to CFIA incompetence can never be totally portrayed. We had lived it every day and have struggled to pay a debt caused by CFIA’s incompetence. In June 1996 I had a preferred status with the bank, one I had enjoyed for 25 years. I had no machine debt or mortgages. By December of the same year, our cattle nearly worthless and our business devastated, that no longer was the case. I ask this committee to get a committed date time for me to meet with Minister Ritz meets with me to develop a plan to resolve this situation and provide restitution based on forensic account. I ask this committee to recommend changes to CFIA and AAFC based on this presentation. I would like to see the office of Ombudsman/Watchdog for Agriculture established that can also facilitate access and dialog with CFIA and AAFC. After nearly 13 years of hell, sooner would be best. Together we can achieve more.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Vancise.

I have Mr. Valeriote for seven minutes please.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you so much to each of you for coming to Ottawa to speak to us today. I'm going first because I have to leave at noon for an automobile meeting that you each referred to.

Mr. Hardy, thank you for your presentation. On the first page you say, “Over the past year, our producers have fought to maintain their businesses while dealing with a combination of factors, including newly-implemented processing regulations.” Can you tell me what is most problematic about those newly implemented regulations? Extend your statement to us, please.

[Gord Hardy]

The regulations pertain to the packing industry. When the feed ban came into effect in July 2007, a regulation was put in place that made us uncompetitive with the United States.

[Frank Valeriote, Liberal, Guelph, ON]

In that same paragraph you also say, “I am sure you have heard this from your constituents. We foresee our situation being further compromised due to the program announced last summer by Alberta unless immediate action is taken by the federal government.” What is your perception of what was introduced in Alberta and what changes need to be made? How should the government react to that?

[Gord Hardy]

The Province of Alberta recognizes the benefit of the beef industry. They stepped right in and stood behind their producers, as they always have. They've done a great job of standing behind their producers. The federal government has basically let them do that. The rest of the provinces cannot come up with the money to roll out programs as rich and productive--I believe it was a $300 million program.

On the role of the federal government, they should not allow one province to run this industry. Other provinces that have an equal number of farmers in the business should stay in business and not lose it all to one area.

[Frank Valeriote, Liberal, Guelph, ON]

So they've gained a competitive advantage because of the money that's been given to them by their government.

[Gord Hardy]

Definitely.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

Mr. Dungate, you made reference to phony science that seems to create barriers to trade. Can you be more specific? I'm curious about what you mean by that.

[Mike Dungate]

When it comes down to it, we're dealing mostly with tariffs now. As we start to see tariffs go down, countries that truly want to protect their markets find other means to do so. I'll compare Canada with U.S. and Australia in terms of chicken.

The U.S. doesn't have any tariffs to protect its chicken market. But it's biggest competitor is Brazil, and it keeps Brazil out because it claims it's not Newcastle-free. There are some cases of Newcastle, but Brazil is a country about a third the size of Canada, so something can be at the far end of a country and not at the other end, and they claim that status. Therefore even our shipments of Brazilian chicken into Canada can't go into a U.S. port. Ships have to go to Europe and then to Canada to bring Brazilian chicken here. That's what the U.S. does to keep it out.

I talked about Mexico and where they were. Australia has a permanent avian influenza ban. It has never banned Canadian chicken for avian influenza because it has a ban that says you have to cook it until it's essentially pet food before it can get on that island, because it's so pristine, therefore nobody exports chicken to Australia.

So it's those types of things under the guise of other matters. Frankly, the market access secretariat has to play its role by going out and vetting those ones where we're getting blocked by illegitimate freezes.

[Frank Valeriote, Liberal, Guelph, ON]

You say in your conclusion that in order to be competitive the Canadian chicken industry needs changes to the 13% rule so imported chicken does not circumvent our tariff rate quota system. Can you be more specific? What kinds of changes would you like to see in percentage terms or otherwise?

[Mike Dungate]

In our view you have a harmonized tariff system. Anything in chapter 16 is declared a meat product. For something to be categorized in that chapter it needs to have at least 20% meat content. So if it's in chapter 16 and it's a meat product, it's either a chicken, beef, or pork product. Go into the grocery store, and that's how they sell all the food. It doesn't matter what they add to it; they sell it on the protein. In our view, if it has 20% or more meat content it has to be declared a chicken, beef, or pork product. If it's pizza, soup, or something like that in a different chapter of food preparation and has less than 20% meat, it's something else. They're selling it as pizza; they're not selling it as chicken.

[Frank Valeriote, Liberal, Guelph, ON]

I'd like to ask you a question on research.

Research is important to me, particularly coming from Guelph and the University of Guelph area. In practical terms, what specific changes are needed to current government research and development programs?

I'd like to ask you that, Mr. Hardy, and then Mr. Dungate if there's time.

[Gord Hardy]

I missed that.

[Frank Valeriote, Liberal, Guelph, ON]

I'm talking about research in your industry. Are you familiar with the areas of research? Can you recommend changes you think should be made to research programs? Should it be about changing or redesigning the current programs, as opposed to merely investing money in them?

[Gord Hardy]

I think our research has been working well. The investing and having a chair, especially in agriculture, and having chairs in specific sectors certainly helps.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

[The Chair, Conservative, Larry Miller]

Your time has expired. Maybe we'll get a chance to further that.

Mr. Bellavance, you have seven minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Yes.

Thank you for your testimony.

Mr. Dungate, in your presentation, you talked about poultry imports from the United States, and that topic was discussed at great length during the Annual General Assembly of the Éleveurs de volailles du Québec. This general assembly took place last week or the previous week. It was held very recently.

There is some concern in particular about these US imports. You also mentioned Brazil. According to the Quebec federation, American poultry imports have increased annually by about 25% for the past eight years. That is a tremendous amount!

We are told that the chicken coming in from the United States will be processed here and supposedly returned to the United States. However, we are wondering whether or not this chicken really is sent back to the United States. It is difficult to know exactly what happens with respect to transportation.

As for the Annual General Assembly of the Quebec Poultry Producers' Association, which was attended by the Honorouble Jean-Pierre Blackburn, Minister of State (Agriculture), I would like you to explain what he said exactly. Indeed, the minister was quoted in a media article on the file, where he said that the government was now looking at proteins rather than weight as that enabled them to have better control over the quantity of chicken imported from the United States.

I do not know whether or not you understand exactly what he meant, but I would like to hear your explanation. Obviously we should be asking him the question. That being said, I would like to understand exactly what that would mean.

When we talk about competitiveness, we must obviously deal with this situation even though we are protected by the supply management system. Today we can see that, in many countries, they are starting to take a serious look at the applications of the supply management system. However, in many cases, and not so long ago, there was an attempt to make it seem as though this supply management system no longer existed, to help with competitiveness, although there are still countries that want it.

However, there has been a reversal of this trend towards a supply management system. I am pointing this out because this is an interesting fact.

Despite the protection that you enjoy, there are some aspects that may be very worrisome for the competitiveness of your sector.

[Mike Dungate]

You're going to be able to test my French when I start talking about protein content.

First of all, we are not against the Import for Re-export Program that is now in place. We do, however, have some major concerns about it, in the way that it is applied and in the possibility that white meat may remain in the Canadian market, whereas something else is exported in order to meet the requirements of this program.

This problem pertains in particular to spent poultry, namely layers that have gone beyond their laying days and are now to be used for something else. We are concerned that the processors may be importing a high-quality product and replacing it with a non-quota product. There is no quota for spent poultry. There is perhaps some way to resolve this issue. That is what is concerning us.

Last year, as far as these two programs were concerned, one program pertaining to turkey and the other for chicken, and because of the drop in the American market, the turkey program fell by 47%. At the same time, even with a 9% reduction in US production, the Import for Re-export Program increased by 11% over the last year. Given the market conditions, this does not make sense.

We are therefore monitoring the situation very closely. I know that the Department of Foreign Affairs has done some follow-up, but I am not sure that it has the capacity to conduct evaluations in the slaughterhouses to know exactly which chickens are broilers and which are spent chickens.

With respect to protein, there is a way to assess it. Generally speaking, chicken contains 23% protein. If other things are added, such as soya protein or something else, the protein content in the chicken is lowered. So if we test a chicken and find that it has a protein content of 12%, that means that 50% of the proteins come from other ingredients that have been added to it. This is deemed to be a chicken suitable for export and meets the requirements of the Import for Re-export Program.

I hope that I have been clear.