You can't do a report of this nature or be in the National Farmers Union without trying to look to the future and make sure we're working towards the best interests of family farmers.
We came up with some solutions. We're not saying that these solutions are the be-all and end-all. We're saying they're a place to start the discussion about moving the industry forward. There are going to be discussions around some of these things, but we think this is the place to get started.
Our number one recommendation is to ban packer ownership and control of cattle. Putting a high proportion of cattle through open and independent auctions creates significant benefits: increased bidding intensity; transparent price discovery; enhanced access for small farmers and independent feeders to important markets; opportunities for small processors to buy fed cattle; and protection from packer retaliation.
The other thing that is important is the fact that we're going to always have contracts. Contracts reduce travel, handling, and auction costs. On both sides of the equation, there are always going to be those who want contracts. We're not suggesting that contracting cattle is wrong. What we're saying is that the contracts should be much more open and transparent. They must have a fixed price in them so that the farmer is not taken advantage of through predatory practices. Also, they must be fully disclosed in real time.
Related to that is restraining packer power and reversing concentration. To restore prices to the levels that were routine from the 1940s to the 1980s, when they were double what they are today, we must rein in this concentration. Only by fixing the power imbalance in the beef chain can we fix the profit distribution and balance. We're saying that we need to stop mergers of packers, takeovers, and plant sales.
We're saying that we need to work with the U.S. government towards a deconcentration in the North American beef sector. It's going to be happening in the United States. In a continental market, if we don't move with the United States in the direction they're going, that of restraining packer control and banning outright some of these practices, we're going to leave Canadian cattle producers in a very, very vulnerable position.
We also need to create and implement a national meat strategy for Canada that shifts the ownership, the location, and the conduct of our major packing plants and moves us towards a meat system that better serves the economic, nutritional, social, and community development needs, a system where we actually have regional processors. They can work with regional producers and move us towards a system where it's not all concentrated in one single location. Not only does that single location concentrate some of the good parts of it, but it also concentrates an awful lot of very bad things that are happening.
Connected with that is decoupling vertically integrated packers. Packers are now starting to own the feedlots, the trucking companies, the insurance, and so on. It leaves farmers in a very vulnerable position.
We need to examine and restrain retailer/wholesaler power. What we're finding is that, adjusted for inflation, consumers are paying somewhere around what they did for hamburger 20 to 30 years ago, but rather than the price differential being passed on to farmers, that's all just been scooped up through the system. Consumers have been able to have relatively stable prices, but farmers have had the brunt of that, because the cost benefits of the efficiencies that have gone on have not been passed back to farmers.
Another recommendation is to succeed in creating farmer-owned packing plants. A lot of that has to do with regulatory work.
As well, we need to change some of our food safety regulations in order to encourage abattoirs. If you go along the side roads and concessions and range roads, and what have you, across this country, and talk to small processors, they will tell you that the regulatory burden placed on them under the guise of food safety often has almost nothing to do with food safety, but impinges on their ability to compete and to be able to expand and work with local markets.
We also believe that we need to build collective marketing agencies. It stands to reason that in the concentrated system that we have now, where we have three, or maybe two, packers controlling the overwhelming majority of the system, we need to have some collective concentration on the farmers' side as well.
The last point in my section of the presentation is tests for BSE and banned hormones. Canada is a trading nation. We agree with the many who say that we need to export our beef. But one of the main constraints we have is this ban on testing for BSE. It excludes us from some of the most lucrative markets in the world. If there were no ban, we could maintain some kind of alliance with the United States through their packers.
The irony is that we've now moved to the point where testing for BSE is actually significantly cheaper than the costs associated with SRM removal. Testing for BSE is way cheaper than what we're now paying to remove SRMs, and yet we are continuing to do that. We're continuing to put in regulation after regulation after regulation, all jammed down onto farmers. We now have to birthdate our cattle, we have to register them, we have to age verify everything, all of this just so that we don't have to test for BSE.
There's a reason that the Americans are worried about testing for BSE. Why we continue to ensure that Canadian farmers pay the price for that fear in the United States about testing for BSE is absolutely beyond me.