Agriculture Committee on March 3rd, 2009

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

I have a point of order, Mr. Chair.

I would like a clarification. I believe it was discussed at committee, and in the motion that we were going to—

[A voice]

Forego that.

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

In bringing the NFU forward and allowing them to have 30 minutes, I was under the understanding that we were going to have two other witnesses. This is exactly what the committee said we didn't want to have happen--have five or six witnesses and not have the time to have a fulsome discussion with each one of them.

[The Chair, Conservative, Larry Miller]

That can be discussed as committee business, but the point is well taken, Mr. Storseth.

Mr. Eyking, seven minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chair.

I thank the guests for coming here today while they could be home on their ranch.

I've got to commend the National Farmers Union for the report they did. There was a lot of work on it. I'm disturbed with it, but I'm not surprised, seeing the return our farmers are getting. It's beyond me how the Minister of Agriculture can get up at the Canadian Federation of Agriculture meeting and state that all's well on the farm and ranch.

A couple of years ago I visited an operation in the United States. It was a broiler producer operation, and they were producing broilers for Tyson. He pretty well stated that he buys the feed from Tyson, he buys the chicks from Tyson, he has to sell them to Tyson, and he gets this printout. He pretty well stated that he's like a tenant farmer. He owns the building still, but he doesn't have enough return to put back into the buildings.

My question--why I'm telling you this story--is this. Are we on a bit of a slippery slope here, where, yes, we're still going to have these big processing plants, and we might have farmers in a situation where they're going to be caught in this, where they will have no choice but to buy the supplies and get the return? That's my first question.

My second question is, do you believe we should abolish the vertical integration of these packers, put them under examination or abolish it?

I think it was one of your witnesses here who alluded to the retailers' responsibility here, and I also heard something about grass-fed beef, how it's not getting the recognition and the help from retailers and processors.

My third question is, can you expand on this and tell us how the retailers can be playing a better role in helping the Canadian beef producers?

[Fred Tait]

I'll deal with the retail issue.

We had great difficulty in that we could not determine who was taking what portion of the wealth that we, as farmers, are producing. We know it's disappearing. Our graph shows that. There's no debate about that.

We would need this committee to bring both those sides, the packers and the retailers, before this committee and open the books and determine where it's going and if there's an unnecessary abuse there. As I pointed out, it can be two ways. Their size has made them so inefficient that they have to take a greater share, and if that's the case, one can make a good argument for breaking up the size. The other side of it is if their size allows them to take a greater share, there's also an argument there, because obviously this situation cannot continue. It impoverishes people at the local level.

To that piece, when you talked about a person who was producing broiler chickens in the United States, the industry moves to where it can do its maximum consolidation. In chicken, it takes everything, and the farmer becomes just a tenant who operates the facility. That has now happened in the pork industry in Manitoba.

In the cow-calf industry it can't work that way, so they capture where they can capture, and that's when it leads our farming into the feedlot system. They're capturing all of that. And through a captive supply system, they deal harshly with any of us who try to do our own little thing and feed some finished cattle.

I'll let you comment more on that, Grant.

[Grant Robertson]

On the banning of the vertical integration, we think that has to take place. There are some steps obviously along the road that you would have to take to make sure you're protecting economic activity and you're protecting jobs and those sorts of things, but we think that's a step we need to go to.

One of the things I find absolutely fascinating as a student of history is that we, as a people, as Canadian people, came to this land to create a different kind of community, a community based on merit, to grow and to get rid of the lords of the manor and that sort of thing. Now we're getting back to that again, only now we're calling them CEOs. It just seems to me that somewhere along the line we lost touch. That might be my independent Grey--Bruce nature, that I think I can probably do a better job running the business of my farm than some CEO who tells me I have to do A, B, and C in order to sell my cattle, but I think we've taken a step in the wrong direction. One of the steps back in the right direction is to ban some of the vertical integration that's taken place, because then farmers are without options. You have to start at A to be able to get your count up to D, and all the way through there you're picking up little bits of profit being taken away.

[The Chair, Conservative, Larry Miller]

You have two more minutes, Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Do you see a difference across the country? I'm from Atlantic Canada, and we only have one processing plant and it's on a shoestring, and we have a problem with the retailers supporting our beef. Is there a big difference between beef producers in British Columbia and Atlantic Canada on how they're treated and the price they're getting for their product?

[Grant Robertson]

There's not an appreciable difference. It moves around. There is some better programming in some of the provinces. We have a patchwork quilt of programming across the country right now, which is a significant problem because it's driving down prices in lots of places. So the short answer is yes, it is different, but the long answer is that basically everybody is still getting whacked the same way, when you move outside the programming and the government purse to the public purse being used to go back into the system.

We retail all our beef, absolutely. We finish all our own cattle and put it through. We can't retail it in a store. We cannot get it on the shelves. Even though our local grocery store may want to, there's just no possible way to be able to do that, because of the way the system works. We have a high-quality gourmet product that comes from what the chairman and I might agree is the best beef producing area of the country, and yet we can't get it on grocery store shelves.

[The Chair, Conservative, Larry Miller]

You have a few seconds, Mr. Eyking, if you want to make a run at it. I don't think you have time for a question.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chairman. I'll pass on that.

[The Chair, Conservative, Larry Miller]

Okay. We'll give you that time.

We'll move on to Mr. Bellavance.

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

Thank you very much.

Mr. Tait and Mr. Robertson, one of the key points you raised in your report concerned the concentration of operations. You also stated, however, that some small slaughterhouses were not profitable or they were inefficient and that that was perhaps the reason why there were less slaughterhouses. That is the case in Alberta, for example, where there used to be 17 average-sized beef slaughterhouses. Larger businesses are establishing more and more very large slaughterhouses. For example, if Tyson Foods succeeds in selling its Brooks slaughterhouse in Alberta to XL Foods, XL Foods and Cargill Foods will own 80% of the slaughterhouses in Canada.

Your reports states that part of the solution lies in creating meat processing plants that belong to the producers. That raises the whole question of slaughtering capacity. There's only one good-sized slaughterhouse left in Quebec, in all of eastern Canada, probably, and that is the Levinoff-Colbex plant in Saint-Cyrille-de-Wendover, not far from my riding. It is very difficult to get the federal government involved, even though we have heard over the past few years that the federal government is open to the idea of providing assistance to preserve the slaughterhouse. Ever since the SRM standards, that is the specified risk materials standards, were enforced, it has become very difficult. Apart from the verbal expression of openness, nothing has actually been done.

In the 2009 budget $50 million were announced, but it should be clear that this will be spread over three years for the whole of Canada. The budget also mentions new slaughterhouses. It is far from probable that our slaughterhouse will qualify for the assistance.

According to your report, the solution, or one of the solutions, would be to encourage the creation of a greater number of slaughterhouses in various regions. However, how do we avoid repeating the experience of closing smaller less efficient plants? Increasing the number of slaughterhouses only to close them again is not a solution.

[Fred Tait]

The assumption that the smaller plants were inefficient perhaps needs to be looked at a bit. What I saw happen in the context of Manitoba was that when Cargill established its presence in Alberta, Burns was quite active in Manitoba. Cargill's buyers in the spot market, purchasing fed cattle in Manitoba, bid the price up to a level that would put Burns in a negative position. Then Cargill used its big volume and its assets, which are deep, to do a loss-leader in the retail market that Burns had formerly been servicing. Burns cried uncle pretty quick at that. In this country we do not have competent antitrust legislation to protect the producer and the consumer and society from these types of abuses.

I took some good advice from a colleague of yours from Quebec, Gib Drury. He said that being successful in the local provincially oriented packing industry is not possible without provincial government support, and I would add to that federal government initiatives.

You talked about $50 million being announced in the budget. In all likelihood, if we follow past precedent, that $50 million will be administered so that it flows through our hands into the pockets of the multinational packers, as it did with BSE compensation in 2004. I suspect that the result of that would be that the members of this committee, perhaps, would block any effort, again, to open the packers' books so that we could examine why they took that money. I would expect that this is the way it would be.

If one wanted to be creative and wanted to strengthen the constituency one represented in rural Canada, one could say that if one could get the province to match that $50 million with $50 million and could get the producers themselves to match with another $50 million, with a joint effort we would have $150 million to invest in local packers across the country. Then we could provide local food to local people with local brands. One can only dream that those things are possible. Let's see which way the people around this table who have the power to determine that recommend that it go.

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

Would you agree with me that in the area of slaughterhouses there will have to be measures to increase the number of plants throughout Canada? I was referring more specifically to eastern Canada, especially since the Ontario Gencor plant closed. There is indeed increased concentration. For example, in my area people need to go to the States. Our producers are therefore absolutely dependent on prices offered by larger businesses which are concentrated and, worse still, are American. Mr. Rosing mentioned the COOL measures. These measures will mean that American plants will become less and less interested in taking our animals. Once again we will be in a vicious cycle.

[Grant Robertson]

I would agree that we have to start looking at regional, provincial, and even local production. I'm sure the chairman knows well the old Paisley plant right in my community that used to produce some of the best quality products around. An unfortunate fire took place there. It's still a federally inspected plant. It still has most of the stuff that you would need to go ahead with. But trying to get investment, including from the successive federal governments, has been difficult. That's the kind of action we need.

[The Chair, Conservative, Larry Miller]

Thanks very much.

We move on to Mr. Atamanenko for seven minutes.

[Ed Fossen]

Mr. Chair, could I make just a brief comment?

[The Chair, Conservative, Larry Miller]

Keep it very brief, Mr. Fossen.

[Ed Fossen]

You were asking at the end about different pricing in different parts of the country. Just to give you some idea, when we sell our cattle at auction, they will probably end up going to Alberta or closer to a packing plant. Usually I think we're anywhere from 4¢ to 10¢ off the Alberta price per pound. In our operation that could make a difference of approximately $10,000 a year. The distance from a packing plant and the consolidation of packing plants are also factors.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Fossen.

Mr. Atamanenko.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

Thanks to all of you for being here. I'd like to first of all thank you folks at NFU for this report. I think it's very clear. It makes me understand the industry a bit better. I think it bears strict and critical analysis by government, perhaps in consultation with your organization and the Cattlemen's Association.

I would like to see us move forward. We've been back and forth on this issue since I've been elected. Everybody has good intentions. Whether it's the minister, whether it's members around this table, we all seem to react, but we don't seem to have moved very far. I think this report may be a key to start looking at this. I would like to submit that now is the time for our government to do something in cooperation with all of us, and I'd like to encourage that.

I have one question for each of you, and I'll try to be very brief to give every one of you a chance to respond. I'll ask the questions first and we'll come back to the answers.

Ms. Haley, you mentioned that the federal government must take a stand. I'd like to find out from you what specifically you'd like the federal government to do.

Bill, thanks for attending our food security tour in Stratford. You talked about collective marketing and independence. You mentioned--and I'll never forget--that the rancher is only independent until the end of his driveway. You said it again today. You talked about collective marketing. Can supply management work in the cattle sector? This is a question that people don't want to touch, but can it work?

Ed, what if we're not able to successfully challenge COOL? What if we're not able to do that? What if this continues for two or three years as we do the process and we try to challenge it? What's the answer to keeping our beef industry alive?

Mr. Rosing, I guess this question is in the same vein. You talked about two choices: restore the value-added meat industry with its domestic consumption only or export the beef. It's my understanding that Ontario, for example, imports most of its beef from the United States for consumption, whereas western Canada exports something like 60% of it, and it goes back and forth. I'm not sure of the statistics. Is it maybe time now to look at encouraging more domestic consumption? If so, how can we do that?

My last question is to you folks, Grant and Fred. Of all these recommendations, if we could sit down tomorrow and start implementing them, which would be the two or three you would recommend that we do immediately?

Having said that, maybe we can start with Ms. Haley, please.

[Carol Haley]

Thank you.

From my perspective, what the federal government should be working on is being very aggressive on their policy statement. The government needs to embrace and endorse things like age verification. I don't think the government should be afraid to move forward on COOL, because I don't believe we can win this battle with the States. Three years from now, if we do finally win it, I'm not sure what the end results will be anyway, and it will probably already be too late. I think we need to work aggressively to re-establish our presence in international marketplaces. The Canadian embassies and consulates could be very beneficial to Canadian farmers on that. I think the government needs to look again at what the legacy fund is doing, and at policies such as E. coli testing--issues that impact farmers on a day-to-day basis.

[The Chair, Conservative, Larry Miller]

Thank you.

Do you want to respond?

Mr. Strawbridge.