Evidence of meeting #5 for Agriculture and Agri-Food in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cattle.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Dennis Laycraft  Executive Vice-President, Canadian Cattlemen's Association
John Masswohl  Director, Governmental and International Relations, Canadian Cattlemen's Association

11:55 a.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thank you.

I agree with you, and I'm glad to hear your comments about the importance of international trade for the beef sector and that it's an additional market or markets that increases demand.

Certainly an issue that comes up with international markets is the foreign trade agreements, international trade agreements, that we have in place. There's been talk about direct subsidies. Some people would like to see direct subsidies at a national level, a per-head payment program to livestock producers. I'd like to know what your thoughts are on the risks that might be posed with respect to NAFTA, with respect to WTO in terms of countervail risks, if a national direct payment subsidy was put in place.

11:55 a.m.

Director, Governmental and International Relations, Canadian Cattlemen's Association

John Masswohl

In our recommendations about business risk management and the approach to take, we certainly have not gone in that direction, other than at one point we were talking about an advance payment, a repayable advance payment, because, exactly as you say, countervail is a large concern for us, particularly for the number of cattle that we ship into the United States. As you go across the country, you hear people say we're too dependent. We hear other people say we don't have enough access, and you get it all the way around.

With the WTO agreements—I'm trying not to go too into depth on the WTO—you may have heard of these different coloured boxes--the amber box, the blue box, the green box. People will often talk about structuring a payment so that it's green and not amber. Amber is basically the bad subsidies, to put it simply. We try to avoid those, but all subsidies are potentially countervailable. We have groups like R-CALF and the U.S. National Farmers Union down there that watch the trucks very closely. The trucks all go through the same roads going to the same destinations, and that has sparked these groups like R-CALF, and they have brought countervail cases in the past.

We're quite concerned that this is going to happen again. If we have per-head payments, we run a very high risk that we could lose a countervail argument. Even having some of these ad hoc payments from time to time increases the risk that there will be a countervail complaint, and even when there's a complaint there's an investigation. It takes a long period of time to go through the investigation. Even if we win at the end of it, we'll have suffered many months of damage during the investigation because of the uncertainty that brings. So we definitely do try to stay away from these per-head payments.

We've advocated eliminating the viability test, making some changes as to how the reference margins are calculated. There are a number of recommendations in that regard. It's about trying to get a national program that works well for everybody across the country. What we've seen is, just over the last year, that Alberta had their program; Quebec has had a program for many years; we've seen an announcement today in Saskatchewan. Those are all temporary band-aids.

Fundamentally, we have to get to the underlying problems on this. I almost liken the situation to a patient who keeps getting sick year after year—it's a cold, it's the flu, it's bronchitis. Maybe there's a problem with the immunity system of this particular person. Why does this person keep getting sick? For us, our immunity system is having access to our international markets. Here we are, nearly six years into not having that access. I can guarantee that if we don't get these important markets open to us around the world, we'll be talking about a new crisis. I don't know what the crisis next year will be, but there will be one, because we don't have the ability to come out of it if we don't have access to our markets.

Noon

Conservative

The Chair Conservative Larry Miller

Thanks, Mr. Masswohl.

Mr. Eyking, a five-minute round.

Noon

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

Thank you, Mr. Chair.

Mr. Easter already alluded to the three initiatives the minister could be doing, and it's false, he didn't come through with those initiatives, so we know the failure there.

What also bothers me are the negotiations with Korea. We're still buying their cars, and they're not buying our beef products. I don't know why we're not being a little more heavy-handed with them. If they're buying U.S. beef, there's not much difference between a steer produced in Alberta or a steer produced in North Dakota, so I don't know why we're not pushing harder on that file.

You alluded to the fact that most of the problems cattlemen are having are weather-related. That's totally false, especially on the east coast. Our cattlemen back on the east coast are just not getting enough for their product.

I was talking to the new president of CFA yesterday, Mr. Pellerin, I think, from Quebec. He had 500 animals and he's going down to between 50 and 100. There's just no money there, and the graph will show you. When you look at the return in the last six or seven years, it says here the steer price as a percentage of retail price the farmer gets went from 24% down to 16%; that's a one-third drop from what they're getting on the retail shelf. When farmers send their cattle to the market, they see the price they get and then they go to the grocery store and prices are going up, so that's the reality of it. That's why they're going out of business.

I don't know how you can allude to the fact that it's weather-related. I'm really concerned about your organization lobbying for the cattlemen. Why are you not pushing these guys a little harder on how come they're not delivering, and why are you not standing up for the farmers when you're dealing with the processors and the retailers?

12:05 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

First, we were talking about debt, and I said it was considerably exacerbated in areas by weather. The whole question of the current financial situation, as I alluded to, was a series of events that have created it, so I'd like to put that in proper context. In my mind it's important.

We recognize that improving the value that farmers and ranchers receive for their livestock is ultimately going to be the most important thing that will turn the situation around for producers across this country.

The various parts in there...there are people in New Brunswick who face very serious weather-related.... It doesn't mean everybody else has had an easy time either, and we don't want to create the impression that it's just purely weather-related. We fully understand and have talked about a whole range of things that have impacted on the ability of our industry to remain viable.

As we move forward we believe that concentrating on those things that can generate more value back, reduce some of the costs in our industry, and at the same time have adequate safety nets in place to deal with the current situation are all parts that need to be examined here. We've indicated we aren't satisfied.

I don't think you can put all that blame at the federal government's doorstep. We've been at a number of federal-provincial meetings, and a number of provinces have actively worked against the recommendations our industry and the pork industry have put forward. I think we need to find a better way of getting those various processes to work and address these real changes that need to be made. There's enough frustration to go around in terms of where the problem has been in fixing these programs. We've been advocating significant change for two years, and we are obviously frustrated when we see another provincial program put in place that creates a greater regional disparity across the country.

12:05 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

Yes, but back to the price they're getting for the product. If you were head of the chicken producers association and their return dropped by one-third, I would say your job would be in question to let that happen. How come there's not a big pushback from you guys to these processors killing plants and the retailers on giving the farmers a fair share for the product they bring to market?

12:05 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

First of all, in terms of the numbers that have been related there, we operate on the world market in what we receive. When you take a look at this--and it hasn't been easy, which is their assumption, that it's been a cakewalk--the question then is why are we seeing our processors operating at 70% capacity? Why have all the new entrants that came into business a couple of years ago now gone out of business? There isn't just a simple question of captive supply and their getting a much larger portion of this. There are regulatory and cost issues all the way through the entire value chain that need to be addressed. There hasn't been a single one of the producer-owned plants that's been viable, that's been brought forward on either side of the border over the last 10 years. There's been more rationalization. That's a reality that's occurred around the world in concentration.

What is going to be critically important to get competitive bidding--and I think at the end of the day that's the real issue here--is how we can maintain access to a sufficient number of plants so that every day there's active enough bidding that we're getting appropriate value back in terms of the finished product, the beef products and the other products, what they're worth from those animals. The great devaluation we've seen over the last three months is the price of tallow and hides. The beef product itself has actually held up fairly well.

That gets back to the question of how we reduce the cost going into the border and get rid of some of the uncertainty going into the border, because clearly, at this point in time, having access to those additional plants, they recognize, as was indicated earlier, that our cattle are some of the highest yielding cattle in the world. They like processing Canadian cattle. In our view, it is always going to get back to how to create enough competitive bidding around those cattle to achieve that.

12:10 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you. Your time is up.

We'll move to Mr. Storseth.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

Thank you very much, Mr. Chair.

I want to thank Dennis and John for coming. It's good to see you guys again. I've had several meetings with you. I have only five minutes, so I want to be brief.

First of all, I would like to set the record straight. You're absolutely right, we've had some very damaging weather out in the prairies. I know our member from Selkirk--Interlake has worked very hard with our minister to help out with the flooding in that area. I know guys in the prairies who've had some droughts. Minister Ritz has been on top of these things with some of the changes we've tried to make to our suite of Growing Forward products.

I'd also like to make another comment. I'm from Alberta. There's not another province in this country that is going to be able to match what Ed Stelmach has done and the commitment he's made to Alberta farmers with his per-head payment. But as John said, it's not the answer; it's a band-aid. It might be a little bit bigger band-aid than anybody else can afford, but it doesn't solve the real problems we have. I think you guys hit the nail on the head: competitiveness and getting into other markets are the biggest problems we have with this industry right now. Would you agree with that?

12:10 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

Yes, we'd agree with that. As I mentioned, there are some regulatory issues, and we have a bit of breathing room that our dollar has given us. We'd better take full advantage of that as we speak.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

I do want to talk to you about that. The parliamentary secretary has talked about the great work that Minister Ritz has done opening up new markets.

I would like, quickly, your thoughts on age verification and if your organization believes that will help our producers access more of these markets in the future.

12:10 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

We've always been a proponent of age verification. The only issue was whether it should be mandatory or whether we should try to encourage an environment for doing it and make sure the systems are ready for it.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

But you are a proponent of it?

12:10 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

Yes, we are a proponent of age verification. And in regard to our beef advantage here, that's one of the conditions of being part of it, that producers will.

We believe that Japan is ready to move to 30 months. In terms of Korea, we are recommending to take Korea to the WTO. We would prefer that the talk about that will get them back to the table and we won't need to do it. But we need to get them off-centre, because they clearly are stalling right now, and that is a market where there is no excuse--nor is there an excuse in any of the other markets--to not open it up.

If Japan moves to 30 months, then that creates more supply than the under-20 months, but there are still other good reasons for age verification.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

I'd also like to quickly comment on the WTO and filing the trade challenge that the minister did go forward with. I know he and Minister Day worked very hard in the back rooms to try to get some changes that we have been hoping to get.

Do you not agree that doing everything we can includes that action and trying to have a positive relationship with the U.S.? At the end of the day, if we have to go to the WTO challenge, whether we win or lose, our farmers are going to lose, because it's going to be five years before it's ever resolved and we'll never get all of our money back. Do you agree with that?

12:10 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

Absolutely, the more you can address it through good, effective negotiation and good relations.... The best dispute is one you prevent, and the next best is the one you can resolve quickly.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

How much time do I have left, Mr. Chair?

12:10 p.m.

Conservative

The Chair Conservative Larry Miller

You have a little more than a minute and a half left.

12:10 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

I have many more questions for you. Competitiveness is the big issue that we have to deal with. Competitiveness talks about the Competition Act; it talks about pricing; it talks about, as you said, the value for dollar that our farmers get, whether they're buying or selling; and it also talks about the regulatory burden we have.

I have two questions. One, on the three deliverables that Mr. Easter talked about, if they were all solved tomorrow, would the industry be solved? Would we have no more issues if those three he was talking about were solved? Would we just be able to walk away from the table? Two, if not, would you agree we have to deal with the competitiveness issues as a priority, as I just talked about, the regulatory burden, the pricing?

Lastly, I'm sure you've seen R-CALF's and NFU's coalition. Could you just give me a couple of brief comments on that?

12:10 p.m.

Executive Vice-President, Canadian Cattlemen's Association

Dennis Laycraft

I'll take the first one, and I know John would like the pleasure of answering the final one.

Just simply addressing business risk management gives you the ability to get to where you can overcome these challenges. You have to create the right environment.

As producers look at this, they're asking those questions, too. As a young person, do I want to get into this industry, or do I still want to go out and feed cows every day or feed cattle every day in feedlots? They're looking at this as a long-term choice. When they can see the opportunity that we are going to improve competitiveness, that we are going to improve market access and the ability to compete and remove some of those barriers from them, that's going to make the main difference as to whether or not they keep those cows, whether or not they continue feeding. So absolutely, competitiveness at the end of the day is absolutely crucial to the future of the industry.

12:15 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

Thank you.

John.

12:15 p.m.

Director, Governmental and International Relations, Canadian Cattlemen's Association

John Masswohl

As we were preparing our response to the NFU report, one of the things we thought was that it's just an over-simplification of our situation. As we were thinking that, we were also thinking that it's very much like the R-CALF approach in the United States—over-simplifying what the market is, pitting one segment of the industry against another segment of the industry. R-CALF makes no bones that they believe there are only certain people who deserve to be in the beef industry. Then we saw that the Canadian NFU was invited to this meeting in Montana with a number of groups that are known to be of a certain philosophy that we just don't agree with, and a number of quotes were attributed to them that they have not denied, such as being allies with R-CALF, that R-CALF is not the enemy. It's very disturbing to Canadian cattle producers that we've spent millions of dollars fighting for our access in the U.S., fighting against these people, and to have people who claim to be interested in advancing the interests of Canadian cattle producers saying that these guys are our friends and we need to work with them is just beyond the pale.

12:15 p.m.

Conservative

Brian Storseth Conservative Westlock—St. Paul, AB

I can assure you it's very disturbing to us as well having a Liberal agriculture critic as a huge proponent of the NFU policies.

12:15 p.m.

Conservative

The Chair Conservative Larry Miller

Mr. Storseth, your time is up.

12:15 p.m.

Liberal

Wayne Easter Liberal Malpeque, PE

On a point of order, Mr. Chair, I disagree strenuously with the NFU on that.