Thank you, Mr. Chairman. I truly thank you for the opportunity to come and share what we have found as we have moved through an inquiry into the beef industry of Ontario.
I am William Jeffrey. I was born and raised on a beef and dairy farm near Stratford, Ontario, in the county of Perth. My wife of 34 years and I have raised four boys together on our beef farm.
Today we are in the business of finishing cattle with a feedlot capacity of 900 head. We buy calves weighing 600 pounds and feed them through to 1,400 pounds, marketing them directly to the packing house.
I've been raising cattle for 50 years, and I'm a member of the Ontario Cattlemen's Association, and of the Perth County Beef Farmers Association, where I am currently serving my third year as president. The ongoing financial crisis in the beef industry, not only on our farm but on all beef farms in Ontario, has caused me to realize that we cannot continue to market our beef the way we have for the last 50 years.
I recently found a definition of the word “insanity”. Insanity is continuing to do the same thing over and over again and expecting different results. Because of this, I took the initiative to form a committee of 14 members from six counties in southwestern Ontario. We are all elected officials, serving as presidents, vice-presidents, and county directors. We have engaged a professional marketing consultant, Ken Strawbridge of ALPHA Strategic Consulting, to lead our inquiry into the entire industry, starting with the consumer, through the retailers, wholesalers, processors, packers, beef feedlots, and the cow-calf producer. We believed it was important to look outside the box for a fresh look at our entire industry.
In the past, we in Ontario have relied primarily on two research centres for understanding and direction of our industry. Beef farmers have believed that we could independently market our product, but our committee now realizes that independence stops at the farm gate. The beef farmers I've met everywhere, not only in Ontario but in Canada, are independent. I'd add that I believe beef farmers are fiercely independent. In order to be viable, we must receive a farm gate price that includes the cost of production, including wages. To be sustainable we must receive a reasonable return on our investment.
Of late there has been much effort put into developing risk management programs to sustain producers through the low points of what has been viewed as industry cycles. This reactive response to these low points will never fix a problem or even provide a wage. It's time to become more proactive through the implementation of improved management and controls for the whole industry. We can no longer continue in the direction we are going, which not only exploits beef farmers but allows for the importation of beef raised through methods prohibited in Canada. If we continue to lose young farmers who have been forced to pursue off-farm income and who are now exiting the industry, who's going to produce the food for the citizens of not only Ontario but all of Canada?
Our inquiry has uncovered significant evidence for what has caused the current state of the Canadian beef industry and what must change if we are ever to be viable and sustainable. Despite a significant amount of activity in the beef industry aimed at improvements, there remains little sustainable change. In the past five years since the onset of BSE, there have been only two months when the average beef producer could cover costs of production. Indeed, what faces us is the likelihood that this significant source of food will be increasingly supplied through foreign markets.
Farmers in Canada will no longer provide beef due to the year-over-year inability to even cover our costs. Furthermore, when the primary source for the supply chain vanishes, all other stakeholders in the industry will also suffer.
We have developed three goals that stakeholders believe must be embraced. Aligning supply and demand of beef to these goals will cause all members of the industry to be successful without negatively impacting others. It will deliver what is required, to whom it is required, and it will do this consistently. Only then will we have a viable, sustainable future.
Our scope required us to see an all-inclusive view of the marketplace. In order to manage influences between stakeholders, we needed to identify key factors for an organized production from producer to consumer. We have worked to identify a business model that showed us to be business oriented and customer focused.
Finally, a sustainable future will not be possible if we cannot demonstrate operational excellence for a return on an investment and key business goals to drive our industry.
We have met with consumer groups, health officials, bankers, retailers, processors, harvesters or slaughterhouses, producers, pharmaceutical companies, feedlot operators, and provincial government officials. The consumer groups emphasize the importance of balance between consumer and industry. It is clear that focus in this area is not consistently viewed by all stakeholders and as such requires improvement for the industry.
Today's consumer is going beyond quality and flavour and is becoming increasingly concerned with health, safety, methods of farming, and the environment. On the other hand, beef production has recognized some aspects of quality but tends to focus predominantly on price. This means that stakeholders further up the chain must become brokers for the difference.
At the onset of our investigation, we studied sustainable business practices, and it became apparent that environmental stewardship is also key to long-term viability. It is true that the industry needs to align with the government's agenda of reducing our carbon footprint. There are numerous opportunities that we can pursue that will move us towards a greener environment for now and future generations in Canada and around the world. We believe that regulations governing standards of quality are required by everyone, but the applications of these standards are currently inconsistently applied. We are not opposed to such standards. What we do know is that these quality management practices must be unilaterally employed.
The evidence is clear that government subsidy programs, although sought after with good intentions, are actually undermining the industry. All things being equal, it is those with the largest subsidies that have remained standing at the end of the day. Where is the consumer in this? What about the purpose for raising beef? Does this ensure that the producer who has worked to develop a well-balanced operation survives? Industry best practices confirmed a long time ago that subsidies tend to be viewed as free money and usually instill the bad behaviour of always looking for more. Return on investment, on the other hand, causes one to focus on the viability in business. Simply put, stop subsidies; they're killing us.
For much too long we have just pushed beef onto the market. We believe it is time to focus on those who consume our product, providing delivery through an adaptable business structure that will see us through the good and bad times. Our inquiry found that standard business capabilities do not exist in our industry. The adoption of these capabilities is imperative if we are ever to improve management and controls. With the increased rate of change around us and no mechanism available to change, our industry will drift like an ocean liner that has no captain or rudder. We will be left to the wind and the currents. It's amazing. Can you see them? No, you can't. It's like our beef industry, as we watched the fluctuating dollar. Did we see that coming? Did we see BSE coming? No. The things we don't see will hurt us.
The fluctuating dollar, the potential of disease, changes to regulation, inputs such as feed, fertilizer, and fuel, and external pressure from foreign beef imports continue to push us where they will. We have no mechanism to respond to these industry pressures. They will eventually leave our industry on the rocks of disaster.