Agriculture Committee on Nov. 5th, 2009

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

Mr. Asnong and Mr. Pomerleau, I hope you can shed some light on these export figures.

Unfortunately, they were not provided directly by Statistics Canada. Rather, they were taken from a newspaper article. Nevertheless, I would like to compare them to what Statistics Canada officials are saying and to what you said earlier about the decline in exports.

I'm not sure exactly what period the figures refer to, but mention is made of October 1. According to Statistics Canada, as of October 1, hog exports—most of which were comprised of piglets for US livestock production—declined no less than 27% compared to the same period last year. According to your figures—which apply to the first eight months of 2009—exports were down by 4.7% compared to the same period in 2008. There really is quite a discrepancy here.

Could you please enlighten us and give us the correct figures, to help us understand the situation?

[Jacques Pomerleau]

The explanation is quite simple, because we're talking about two different things. You're talking about live hogs, while I am talking about pork.

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

So then, are the Statistics Canada figures correct?

[Jacques Pomerleau]

The ones I gave you are correct.

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

So then, there has been a decline of 27%...

[Jacques Pomerleau]

...in piglet and live animal exports.

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

And what is the reason for the drop in exports? Is it because of the infamous swine flu?

[Jacques Pomerleau]

No, the reason for the decline is the COOL program.

[France Bonsant, Bloc, Compton—Stanstead, QC]

The COOL program?

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

Clearly, since the introduction of COOL, exports to the US are down by 27%.

[Jacques Pomerleau]

We're talking about piglets and live hogs. However, in reality, the numbers are higher, because these calculations are for last year, and exports had already begun to drop before then.

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

So then, it's directly tied to this initiative.

Have the financial losses associated with declining exports been evaluated?

[Jacques Pomerleau]

I will ask Mr. Preugschas to answer that question.

[Stephen Moffett]

I'll comment on the issue around COOL, because in my case I do ship weaner pigs down to the States. We actually maintain ownership down there and then sell the pigs to the slaughter plant. We had a four-year contract with the slaughter plant.

When the new administration came in and the new agriculture secretary said, “Thou shall abide by the rules, and in fact we want you to go further than that, or else we'll change the law”, many of the plants just didn't know what to do. So the slaughter plant that I sell to said to us, “Look, you guys, I'm sorry, but we're not sure we can kill your pigs, so you go find somewhere else.” Do you know what that does?

All the people in that region who used to love to buy Canadian hogs because they're better, they're healthier, and have good genetic material, and who could buy them in large quantities and fill barns all in and all out, said, “We just can't risk it. If we buy a load of weaner pigs now and fill the barn, six months down the road we might not have a market for them.” So those producers just say, “Look, sorry, guys, I know you have a long-term contract, but you'd better find somewhere else for your pigs.”

For a while last year, we had guys in Manitoba who couldn't give pigs away for zero dollars, or crazy prizes. So we have producers who've found that they have to go out of business—and it's directly related to COOL, which created so much uncertainty that it destroyed the markets for all of those animals. They just quit buying them. What do the producers do? If you're a hog farmer, it's devastating. Talk about inhumane: people put their life and soul into these farms and they just have to quit. But it's directly related to COOL.

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

We had never seen exports drop that dramatically in such a short period of time prior to the adoption by the US of the country of origin labelling policy. This is the first time that we have been affected so strongly by an initiative taken by one of our economic partners, namely the United States. This had never happened to us before.

[Stephen Moffett]

It's probably the most successful non-trade barrier that we've ever seen.

[Jurgen Preugschas]

We have reported that to you at this table. We've already shown you the drop; now it's just a little longer time. We predicted it and we've reported it. It's devastating some of our producers. Some of them have changed their business model and are finishing their hogs in Canada. The market has changed a little bit and guys are getting a half-decent dollar for the weanlings right now, but they are still getting nowhere near what American pedigreed hogs are fetching.

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

Are you in touch with US producers and can they tell you if their situation has improved at all since the adoption of the US COOL policy? Has any improvement been noted?

[Jurgen Preugschas]

In actual fact, we're in very close contact with the National Pork Producers Council. They never supported COOL and feel that its long-term impact will actually be more negative for the U.S. than Canada. The short-term effect is damaging to some of our producers who had that business model, but the long-term effect is that it's going to reduce the number of slaughterings in the United States and will ultimately result in jobs layoffs of further processing in the U.S.

So the National Pork Producers Council lobbied against it. It was the groups like R-CALF and some of the other extreme right-wing protectionist groups that were successful in bringing this in.

[The Chair, Conservative, Larry Miller]

Thank you. Your time has expired.

Mr. Shipley, for five minutes.

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

Thank you.

Thank you, witnesses, for being here.

Leza, also, I want to thank you for your great presentation. Most of us around this table do farm. From the early eighties when interest rates hit 24%, I know exactly some of the situations you're going through. There are some very tough decisions.

Jurgen, you mentioned earlier in the discussion some of the inequities and some of the things that would help level the field a little bit. Obviously the levy is one, going both ways. But in terms of the availability of products, you also mentioned antibiotics, etc., that can be used on hogs in the United States, which actually then end up sitting on the shelf close by ours in the industry or within supermarkets. Our producers, for various reasons, have been banned, or have not been licensed, or won't get licensed because there's not enough of it, or whatever. That's the concern that we hear time and time again, whether it's the livestock industry, the cropping business, or horticulture. If we had the regulatory and scientific research that could parallel or work with those who are approving the licences in other countries, particularly the United States, since they're our largest competitor....

Do you have any idea what impact it actually has on your industry, not having those regulatory things in place that would be similar for Canadian producers?

[Jurgen Preugschas]

I'm going to respond very briefly and then I want Jacques to respond, but certainly levelling the playing field is absolutely key.

A simple example is Carbadox. We banned it in Canada. We are not allowed to use it anymore. It has never been banned in the U.S. Supposedly it is carcinogenic and that's why it was banned in Canada, but we have absolutely no issue with importing it into Canada and our meat sitting beside theirs and our consumers not being aware that it has been raised under different conditions. That's what I want to comment on here.

Maybe you need to talk a bit more about some of the labelling issues--or I guess that's more for the Canadian Meat Council. The Meat Council has told us many times that labelling is another huge issue, where, for example, Canadian producers must put French and English on all their labels. The Americans don't follow that. They should be required to do that. We have the rule in Canada that we want our consumers to have bilingual labels, but when the Americans export into Canada, we don't make them follow the same rules. I don't think that's right, and neither should our consumers accept that.

There are other labelling issues where they incorrectly label, and CFIA isn't prepared to hold up those shipments. Our products get held up at the border if there's an issue. We should just sometimes, when they do something wrong, absolutely hold it up and send it back. They'll smarten up.

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

It's amazing what a little experience does to correct the situation.

I'm just trying to understand a little bit how we can move forward, Jurgen, and I have other questions for comment.

Back in the early 2000s in my area, we had these loops develop. The dollar was at 65¢. They were building barns faster than they could get contractors for. There were individuals going into the pork business who had never seen a pig before. Then suddenly things started to unravel at the borders. There didn't seem to be a plan B. There did not seem to be a concern.

When I talked with one of the individuals who was running one of these, I said, “What are you going to do the day something happens at the border?” The reply was, “Well, it won't. We have biosecurity, we have the genetics, all those sorts of things.” But here we are.

This is not being critical, but it's a question I've been asked before. I know the industry itself has faced us, because it's made up of individuals such as you and Leza--in fact, all of you are producers. So what can you do to help us moving forward so that we don't get into this again? Those numbers have skyrocketed. They've more than doubled in 10 years. So how do we work through that, going forward?

[Jurgen Preugschas]

I think you've actually hit the problem and the solution we need to have. That was the meeting I was at and why I didn't show up in Ottawa earlier, because I felt that it was so critical that we develop this. What we are working on right now is a comprehensive plan Canada-wide, where we look at our whole value chain structure of how we actually ensure that the producer has some ability to share in the good times and not carry all the risk in the bad times.

It's nothing against our feed industry, but we are expected to cover the losses when things are lost. All our suppliers say they have to raise prices because they need their margin, and I appreciate that, but right now we take all the risks and get very little of the reward. What we're working at is a plan to maybe change the pricing as well, off the U.S. prices, where we have a built-in-Canada meat price rather than the U.S. price

It's not really simple, and this is going to take us some time, but we will be asking government to help us structure this. We don't want subsidies on it. What we want us is just for you to help us develop the plan and let our industry then work that out in an integrated fashion, whereby ultimately the Lezas, the Stephens, and the Jurgens of the world will still be here five years from now producing hogs.

[The Chair, Conservative, Larry Miller]

Thank you. Your time has expired.

Our last questioner is Mr. Valeriote, for five minutes.