Agriculture Committee on Feb. 26th, 2009

[The Chair, Conservative, Larry Miller]

That's not a point of order, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

It is a point of order. I agree with what John said.

[The Chair, Conservative, Larry Miller]

No, it's not a point of order.

Order, please.

We'll move on to the Bloc, with Mr. Bellavance.

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

Thank you, Mr. Chair.

No one can be against competitiveness; it is like apple pie. But the feeling I am now getting from the Conservative government is that they are trying to make it their trademark. They say that competitiveness is important and that they are going to do this, that and the other. But does it not actually harm competitiveness if our standards are not harmonized with those in place in the United States, our principal trading partner, particularly for specified risk materials, for example? We have regularly discussed this here and we have often asked you questions about it. I know that sometimes perhaps we are repetitive, but we really have no choice because the government and the Minister of Agriculture do not seem to be able to get it into their heads. On the new standards for specified risk materials, officials, and politicians on the government side, come here to tell us that it will all turn out fine and that, at the end of the day, our producers will not be penalized because the Americans are going to adopt the same standards eventually. But that is not so. We are losing $40 or $50 per head of cattle because of it. And, at present, we are in an economic crisis. Agricultural producers are not in their own separate box, they are not immune from the economic crisis. This is global, so it cuts into our market even more.

What do you think about that? It is always important, but, at the moment, is it not even more urgent to have standards harmonized?

[John Masswohl]

I was making a little list of some of the issues.

With the economic situation we're in right now, people are not buying cars, they're not buying shoes, they're not buying furniture, they're not buying things made with leather. That, right there, has reduced the price of cattle by about $30 to $35 a head on the price of the hide.

Also, on not having access to markets, we're not selling. Every animal has a liver and a set of lungs, and those aren't going to the markets that value them most. That is costing about $80 to $100 a head.

On the costs of the enhanced feed ban, which is not harmonized with the United States, depending on what type of cattle and on what part of the country you're in, the cost is anywhere from $10 to $50 a head.

Country-of-origin labelling is costing us about $90 a head, and then there are other regulatory issues.

So easily, just with those items, we're at somewhere between $250 and $300 a head. Compare that to a per-head payment, which is sort of a one-time shot of $40 or $100 a head. It doesn't compare to getting your regulatory costs in order, getting your markets back, and getting your regulations harmonized, and to the economy returning to where people are buying leather and all those sorts of things.

We're much better off getting an additional $200 to $300 per head than we are getting a government payment of a fraction of that.

[Dennis Laycraft]

Yes, absolutely, the more we can do on harmonization with the U.S. and reducing those transactional costs.... Our prices are hinged directly to U.S. prices. Every time you add a transaction cost or a different cost, it costs the Canadian cattle and pork industries, but in this case, when you look at the feed ban....

But I also want to come back to the tolerance issues, when we're looking at the symptomatic issues underneath, which don't necessarily stand up when you look purely at harmonization. In the U.S., for instance, they're creating a tolerance whereby they can vacuum out the brain as part of their procedure. In Canada, we don't have that tolerance. We have to condemn the whole skull. So suddenly we still have another 25 to 30 pounds of additional material that they don't in the U.S., all because of a tolerance difference between the two.

You have to get back to that solutions-based approach: does doing this actually achieve anything more than doing that? That's why, first, it's the firm principle of harmonization, which we in the round table agree with, but secondly, it's back to how you put in place appropriate tolerances and looking at what the actual outcome of doing that is.

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

Have you already...

[The Chair, Conservative, Larry Miller]

You have 10 seconds left.

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

Have you already looked at the cost of establishing SRM standards since they have been in existence? Have you also looked at the costs that can be attributed to the fact that the United States does not have the same standards?

[The Chair, Conservative, Larry Miller]

Could you answer that quickly?

[Dennis Laycraft]

I've got a person who sort of concentrates on doing that. We could produce some information on the differences in standards.

[The Chair, Conservative, Larry Miller]

Thank you.

I'll turn to Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you, Mr. Chairman.

Thank you to the witnesses for being here today.

Certainly in my short time as a member of Parliament and as a member of this committee, I know you've put out a number of very good studies and reports that have been very helpful to me, and I know to other members of the committee as well. And I certainly appreciate all the hard work you do on behalf of Canadian beef producers and cattle farmers. Again, thank you for being here.

I want to go back to some of the points that have been talked about a little bit previously, but also talk about market access one more time, because I think that's a very important point, something I know our government is working very hard on. I think we've had a lot of very positive results. Certainly, our minister has done a lot of good work there. I certainly get the sense you would agree with these comments.

I think it's important that here in Canada we can't be as reliant on the American market as we have been. We have to look at other markets. Just to make sure I'm clear on that, would you agree with these points?

[Dennis Laycraft]

Yes, absolutely. In fact, I was one of the people who helped create the Canada Beef Export Federation in 1989, to diversify. It's been a constant effort. That said, market forces still make the U.S. important, but these other markets are where you can add tremendous value as well. So we believe it's really almost a symbiotic type of relationship. You get the best of every market, to get the type of returns we need to survive.

[Blake Richards, Conservative, Wild Rose, AB]

I appreciate that.

Now I want to go back to some of the points our Liberal opposition has made, because I think there are some fundamental differences in the way our government, the Conservative government, looks at the situation and the way they look at the situation on the other side.

Mr. Easter asked you a direct yes or no question on a few points concerning some deliverables, whether they had or hadn't been done. He asked you a direct yes or no question. Well, I'd like to do the same, ask you a direct yes or no question.

Would you say that these points of market access and competitiveness for the industry would be more important than the points the Liberals have raised today, yes or no?

[Dennis Laycraft]

Yes, long term.

[Blake Richards, Conservative, Wild Rose, AB]

Okay, thank you very much for that. I appreciate that.

I want to move on to another line. It was touched on a little bit briefly: young farmers and the future. I want to, again, ask a pretty direct question. Do you see a future for the cattle industry, for young farmers just getting started?

[Dennis Laycraft]

Yes, we do. We see growth in beef demand, and we believe if we are able to address competitiveness issues, we will remain one of the largest exporters of beef in the world. But it will be built around our ability to produce and sell beef, not just in Canada but around the world.

[Blake Richards, Conservative, Wild Rose, AB]

Great. Thank you.

What would you say would be the single most important thing we can do to help ensure that future for young farmers? Would you say it is looking at the competitiveness issues, looking at the market access, or is there something else you can point to as well that's important to help ensure that future for young farmers? I have a real concern for the future of farming, for our young farmers, and I want to make sure we're doing everything we can to address that. So any advice you could provide there would be very helpful.

[Dennis Laycraft]

Competitiveness is never simply one or the other. It's a whole range of things you have to do. We have to create an environment where we attract the right investment as well.

I take a look at what we are doing in terms of research and having access to new technologies, and we're one of the world leaders in biotechnology. Personally, I'm concerned right now about that whole industry. They depend on venture capital, and you ought to try to get venture capital these days. They seem to be being ignored right now in all of these discussions, and yet a lot of the significant improvements we're going to see are going to come out of things like genomics. They're going to come out of things like our Canadian Beef Advantage, where we start to develop and use these new tools more effectively.

Regulations and the changes in the environment help, but there are things that we as an industry need to do that will position ourselves stronger. It's not just traceability and it's not just age verification. They're important, but when we use these tools and do things differently and better, as an industry, we can continue to maintain a lead in genetics, a lead in quality, and a lead in safety over the rest of the world.

[The Chair, Conservative, Larry Miller]

You have a little bit of time left.

[Blake Richards, Conservative, Wild Rose, AB]

Okay, great.

Maybe I'll just quickly address, then, the topic of COOL. We haven't really talked a lot about it today, but it has been brought up. Certainly there have been some developments in that area over the last couple of weeks.

I'd like to hear your evaluation of this voluntary labelling that the Americans are now asking for and are going to be evaluating. What do you think the impact of that will be? Are we better off with that than we would have been without any changes at all?

I know certainly we were looking at a serious negative impact on the Canadian industry prior to our government pursuing our action and the changes we were able to negotiate with the Americans, but of course now, with these changes being made by the new administration, what impact do you see? Do you see an improvement here over what could have been had we not been able to pursue any changes at all?

[John Masswohl]

About a dozen U.S. packing plants, fairly large packing plants, are important for us to send our Canadian cattle to, whether we send them as feeders to get finished in the U.S. or feed them in Canada and ship them for immediate slaughter.

When COOL came into effect, we lost access to about two-thirds of those facilities. Basically, the companies in the U.S. determined that the easiest way for them to comply with COOL was just not to take the Canadian cattle at certain facilities.

For example, Tyson, which had been taking Canadian cattle at four different facilities, said three of the four were not taking them. They'd take them only at Pasco, Washington. They'd only take them two days a week, and they were going to drop the price on them. That was their company strategy to deal with the logistical complexities of having to keep cattle separate, to label different meat with different origins.

JBS did the same, and other facilities did similar things.

One of the things we were pleased to see after the WTO consultations took place was that the Americans agreed that they had created a structure where Canadian cattle fed in the U.S. had an advantage over Canadian cattle fed in Canada. They said, “You can take those two different groups of Canadian cattle, commingle them, and label that beef all the same.”

That's what came out in January and caused the government to say, “Okay, we'll suspend the case until we can evaluate how the market responds to that.” In the discussions we had with the companies in the U.S., Tyson, for example, said, “You were at four, and we dropped you down to one plant. We're going to start taking them at two more plants.” So now we're back to three out of four plants, and the fourth one is related to the Korea issue that Dennis mentioned earlier.

That was a very positive development for us. We had been losing $90 a head because of the situation since September. We felt that this was going to get us a chunk of that $90 back, but we won't know until we see how the market reacts.

With what the secretary has done last week, he has said that rule can come into effect, and it will come into effect on time, on March 16. That's positive. That's a good thing. But at the same time that he was giving with the one hand, he was taking away, potentially—potentially is the important word—with the other by saying, “I want companies to voluntarily, on every package of meat, show where it was born, where it was raised, and the country where it was slaughtered.” By doing that, he's effectively causing all the cattle to have to be segregated again. The only way companies can comply with that is probably back to the strategy, and even worse than the strategy, that they weren't taking Canadian cattle at certain facilities.

Our response to the government definitely has been that this is very negative. It's worse than it has been. We have to use all actions, including getting right back to the WTO, if that's what we need to do.

The words I take from the minister are that he's evaluating this day by day; he's having discussions with his counterparts, and officials are doing the same. I think there's a role for members of Parliament to talk to congressmen as well.

The catch in there is that if these changes are implemented and the negative consequences do occur, we're right back at the WTO. So it's important to have that thread to try to prevent that from happening.

[The Chair, Conservative, Larry Miller]

Thanks, Mr. Masswohl.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Mr. Chair.

This question is for either Mr. Masswohl or Mr. Laycraft.

I come from a community in which there is a large meat processing plant--Cargill. This plant provides a lot of jobs to the people in Guelph.

I understand the government is taking the need for an increase in slaughterhouse capacity quite seriously, to the extent that they have proposed to invest another $50 million in the next three years to increase slaughterhouse capacity in various parts of the country.

This is the fourth program that has been implemented to increase slaughterhouse capacity since 2004. Yet there are media reports that suggest that some small slaughterhouses that receive government assistance actually had to shut down following the BSE crisis when the borders were reopened.

Could either of you enlighten us a little more and give us your opinion about slaughterhouse capacity and whether these strategies to increase capacity have been successful thus far?