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.