Agriculture Committee on Nov. 3rd, 2009

[Philip Cola]

No. I said “relatively speaking”, with our U.S. counterparts. I'm not saying that markets have not been re-opened, but what I say is, on a relative basis, compared with our U.S. counterparts, they have access to the same markets we do. It's not to say that we haven't re-opened certain markets since BSE. We're looking, again, at that relative difference.

One point that I wanted to bring up as well--

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

But you must be competitive. You made an application, I suspect, for the slaughter improvement program?

[Philip Cola]

Yes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

And you got $9.6 million to help you build a new processing plant?

[Philip Cola]

Well, it's to integrate some of our operations.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Now obviously there must be a future within that or you wouldn't be doing this.

[Philip Cola]

Well, we definitely think that will help in making us more competitive on a relative basis.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you. I think that's really important for all of us to understand, because one of the things that was brought up.... I actually have a colleague, Alex, who talked about it, and it's something I'm bringing forward as a motion. When we talk about the beef industry, and there's a host of other ones also....

We have product from the United States that...in this particular case, the SRMs over there do not have to be removed the same as we do here. Yet we know that the food is safe. We know that it's just a competitive issue in terms of that material being able to come back into Canada as a product for Canadians to consume.

So one of the things I'm hoping is that we can get support, certainly within the government, for that discussion to actually happen so we can look at regulations and help CFIA and those organizations to move it along.

You talk about the main issue. The main issue seems to be COOL, and I appreciate Mr. Read's and everyone's comments about COOL. I think those are the steps that had to be taken. Is it basically then the over 30 months with the cost of the SRM that is the issue?

[Philip Cola]

Correct.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So the change in working through a regulatory group, a working group, to come up with some change in how we could deal with the regulation would seem to be the better route to go.

I'm concerned, not unlike my colleague, quite honestly. I'm not sure where the $31.70 will go. It didn't work very well the last time that happened. So I don't know where the guarantee is that the $31.70 actually...how that will filter down to the producer. When BSE happened, that isn't how that worked.

I'm wondering if Mr. Read or Mr. Dessureault might help me with that.

[Brian Read]

I think it's a great question. I think that's the underlying issue here, that it's money that would be...whatever. It's the old stigma that the packers carry walking in here, and this is why it's amazing that we have the producers on the same page.

Talking about your working group, I happen to sit on that working group. John Ross chairs it. CFIA is very present and very active. We've committed that the $31.70.... Everything we look at takes a minimum of one year. We're in our peak culling period of cows in this country right now. This is when the money is needed the most. During the season we kill anywhere from 8,000 to 10,000 a week. Right now we're killing upwards of 12,000 to 15,000, and this is where we become really hooked and that's why there is this urgency.

But coming back to the working group, we've also suggested that we take that regulation and we move it into policy, so that we can tweak it but still not affect our OIE status. That's the start to reduce this $31.70, so it doesn't end up a cash cow, as we sit here and believe it may. It's a necessity, and that's what we're targeting. So that would be one step.

The other step would maybe be to take the brains out of the skulls so we don't have to throw the entire skull away. That would be like 18 pounds a head that could now end up as a good source of revenue.

All of those schemes--but everything we look at takes a minimum of one year. There is no tomorrow fix. We've looked at it. We've committed to roll up our sleeves to continue to reduce the $31.70. I fully understand that concern. We're not here because of that. We're here because we did the right thing for the country. We believe we did, along with the producers. Brad has left, but John is still here.

That's the reality of this thing. I don't know if that helps you.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I think it does. You want to change it from regulation to policy, and that's good, but it's going to take time to do that.

[Brian Read]

Everything takes a year, because we have to go through the House to change the regulation. The regulation lists the skull, the brain, the dorsal root ganglia, the ganglia, the tonsils, and the eyes. It lists all those under the regulation. If we want to, say, not take the eyes out of the skull, just as an example—don't take that anywhere—we have to come through the House and it takes a year to do it. We're saying take the regulation back to the House, take it out of regulation and put it into policy that is still managed by CFIA and under its scrutiny.

We'd have to review it with the world to see if is going to be accepted. We're not changing anything as far as the rule goes, but it's in policy. Now if we can justify how to remove the brain properly, we can throw 18 pounds into good meat and bone meal. That's what we're working on. But everything you look at is a year away.

On the hype to generate power, that's been looked at. I'm sure there's a time to do it, but we just don't have the time. We've all looked at it and it's a tremendous capital cost. Sorry.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

No, that's fine.

Thank you.

[The Vice-Chair, Liberal, Mark Eyking]

Thank you very much, Mr. Shipley. Time is up.

We're going to go back to the Bloc.

We have Mr. Pomerleau. Welcome.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you, Mr. Chairman.

First of all, thank you for your presentations.

I represent the riding of Drummond. The Levinoff-Colbex slaughterhouse is therefore in my riding. Moreover, I have visited it. I was very impressed, and yet despite that, I am a neophyte when it comes to the field of agriculture and everything that pertains to it. This is the first time that I have been to this committee.

My question is a question that a neophyte would ask because I have to answer questions raised by the people in my riding on this subject. I have to provide them with an explanation about what is going on and I am telling them that there is a fundamental problem. It appears that we Canadians do not have the same regulations as the Americans, resulting in higher costs for us. People are always telling me that we should simply adopt the American standards.

My question is for Mr. Couture. What was our rationale for doing that, and given that you work on both sides of the border, what are we doing here that they do not do there, or vice versa?

[André Couture]

I will answer on behalf of my clients in the meat sector. We have to realize that in Canada, half of our production is exported. Hence, when export markets close, this is much more serious for Canadians than it is for Americans because, in the U.S., exports account for less than 10% of their sales. That is the main reason. Canada is smaller, and is not a powerful player internationally. The Americans...

Well, they're trying to get away with the least amount of cost.

They are trying to do a minimum. They do not respect the OIE standards and they have succeeded, by twisting the Koreans' arms, in getting the markets reopened. In other words, they twist arms.

[Roger Pomerleau, Bloc, Drummond, QC]

We therefore have no choice, if we want to sell our products abroad, elsewhere than in the American market.

[André Couture]

Canada chose to comply with OIE standards in order to have access to other markets and has enjoyed a certain level of success. However, that comes at a cost, and it is our clients who pay. That is why we are asking that some assistance be provided until the regulations have been harmonized. In order for that to happen, we either have to lower our standards or wait for the Americans to comply with international standards. The pressure exerted on the U.S. meat sector is very different from that felt by the meat sector in Canada.

[Roger Pomerleau, Bloc, Drummond, QC]

If we were to lower our standards and adopt the equivalent of American standards, would we lose these foreign markets? Is that difficult to say?

[André Couture]

I cannot answer for my colleagues, but as far as the rendering sector is concerned, we still find it very difficult to break into the markets that we had prior to 2003.

[Michel Dessureault]

I will attempt to answer as well.

In Canada, we made regulatory choices to allow for open borders. We subscribed to these regulations, but always in the hope that we could achieve regulatory harmonization between the two countries.

Earlier, Mr. Shipley referred to the fact that our current positions were different than those we held a few months ago. Yet, in 2003, 2004 and 2005 we were right in the middle of the BSE crisis and the borders were closed. At the time we were totally in competition with Canadian companies within Canada. Since July 2007, the regulations which allowed for the opening of borders has have huge adverse affects on the industry. They are assessed at $31.70. If the market were closed, the entire Canadian cattle industry would lose out.

The Canadian cattle industry has made gains on some levels and continues to do so. But does that mean that we have to agree to stop the slaughter of cattle of over 30 months of age? That is the question we're asking. Until there is some harmonization of the regulations and we meet the new OIE requirements, can the government temporarily support the industry so it can survive this crisis?

I think we need to keep our markets open and not drop any further. In Quebec, we specialize in the slaughter of animals over 30 months. But in today's reality, in other words an open market and different regulations, all Canadian industries involved in the slaughter of animals over 30 months of age will not be able to implement the project you referred to earlier on if this important issue of the slaughter of cows in Canada is not addressed.

[The Vice-Chair, Liberal, Mark Eyking]

Thank you very much. Your time is up.

We'll go back to the Conservatives, with Mr. Storseth.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chairman.

I'd like to thank the witnesses for coming forward today.

It's been an interesting discussion, and I can assure you it's one we've had often, not only here but in our ridings—obviously, I represent a large cow-calf-producing region. It's an issue nobody really feels they have an answer for.

I do have some concerns with what I'm hearing today. Maybe it's just what happens when such a broad spectrum of organizations gets together. At the end of the day, and as it's been stated here, this was a solution the industry came to us with, obviously hoping regulations would sync up with the Americans. That hasn't happened, which has left a void in the differential there and has left us at a regulatory disadvantage.

I agree, but the answer I'm hearing from you gentlemen is that you want $31.70 a head to make up for that and you want to keep the regulation that's creating the problems.

Mr. Read.

[Brian Read]

From an industry standpoint, that's why we're working due diligence with the working group that's been struck by the minister, with John Ross, Agriculture Canada, etc. We're looking at $31.70. We're also looking at finding ways to improve this rule. That's the intent. For example, with the 18 pounds of skull going to meat and bone meal, if that's worth $3, then reduce the $31.70 by $3 and so on. That's the intent. That's the spirit of this. Keep in mind that packers are equipped to deal with this. That's the intent.

Does that help you?