Agriculture Committee on March 3rd, 2009

[Ken Strawbridge, Consultant, Perth County Beef Farmers Association]

During our investigation we had a conversation with dairy farmers to talk to them about what they were doing with their industry, especially with supply management. We made a statement to them that when we looked at their industry, it looked like there were two product lines. One was the dairy product line, which they had managed very well. The other product line was their quota system, which hadn't had very good management and was going to cost them. Their response to us was that we were right and that they were concerned about that.

So in that sense we don't believe that type of supply management is what the industry needs. We do look to other industries around the world that manage their supply chains, and they are very careful to make sure that all stakeholders within that supply chain can meet the demands that the consumer is placing upon it. That is what we believe the industry needs.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Fossen.

[Ed Fossen]

I think if COOL were fully implemented it would be very bad for our industry, and as my neighbour here, Henry, alluded to, we still have this 50% to 60% of the cattle numbers. What would we do with them?

I believe that in the end, COOL will be implemented, but I'm just hoping, Alex, that it's done in a balanced way so that our cattle can be sold into the U.S. There will be a COOL implemented; it's just whether it's balanced or not.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Rosing.

[Henry Rosing]

Regarding the east-west movement of beef, I think the cattle and the meat seem to go where the market is or where it's most efficient. We sell feeder cattle to Quebec or Ontario. It all depends on the cost and gain.

It comes back to the central question, though, that whether we realign where the beef is produced or what goes where does not address the issue that we currently produce 60% too much, and the enormous implication of letting that go. So I think it remains standing that we have to fight for our export markets.

Historically, from where we are, the mechanism of price discovery in beef is through the Chicago Mercantile Exchange, where futures prices are set. For the live cattle, for decades and decades--I'll be very brief--we've looked at the Omaha or Nebraska price. That's the live cattle. In the futures we sometimes see divergence of the basis because of speculation in the markets or delivery problems, but the relation to the live cattle usually clues off the Central American plains, and then it's off where the beef has to go, the transport costs.

So in a normal world, the price to us in Manitoba would be the Nebraska price minus transportation, which is about 6¢ per 100 pounds. Our negative basis is minus 21 in the latest CanFax report. The other 15¢ has to do with other costs. We cannot get that price because of export permits due to the anti-terrorism laws by the U.S., compliance with COOL, and a whole host of other issues.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Rosing.

We'll move on to Mr. Storseth, for seven minutes.

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

Thank you very much, Mr. Chair.

I'd like to thank all the witnesses for coming forward today and giving us some excellent presentations. I only wish we could have more time with each and every one of you.

I have just a comment for Mr. Rosing. I understand the farmers in your area have been undergoing some significant problems with flooding and with the weather over the last year. I can tell you that your member of Parliament has been very vocal and somewhat of a pain in the butt about it at times. He came out to my riding last fall and ended up telling my farmers, “If you think you have it bad, you should see what we have going on here.” He has been working very hard to get a resolution to some of the issues you've brought forward.

Ms. Haley, I'd like to talk to you about a couple of things. First, when you started out, you really hit home on marketing, research, and production when you talked about the new reality. I believe those were the words you used for it. I think these all fold under the umbrella of competition and our competitiveness in the world. There's one other aspect I would add to it, and that would be our regulatory burden on our farmers. Sometimes it's necessary, but as well, we have to put our farmers on a level playing field with others around the world.

Would you agree that these four items are probably the most significant long-term changes and challenges that we have to face for the industry?

[Carol Haley]

I think there are many challenges inside this industry, Brian, but we did a lot of work on the regulatory burden prior to the report that I participated in last year. We were trying to find out where we're really at, competitively speaking, with the United States. There was some indication that our regulatory burden is higher. I think it's because it's regulated in every province as well as federally, so we have overlapping and contradicting regulations. Work needs to be done on that.

I think TILMA, the agreement between Alberta and B.C., helps to reduce some of those things. At least it highlights them and brings into the light what they might be.

Work needs to be done. We have to do a much better job of marketing our cattle on a global basis. We need to take a step back, look at what Australia has been successfully doing, and wonder why we're not doing it here. I don't have an easy answer for you other than to say that I'm disappointed in the Canadian Cattlemen's Association and our own local organization of Alberta Beef Producers, because they take millions of dollars every year from livestock producers under check-offs, and what's the result? I don't see a result, which is why we decided to move forward with ALMA.

Research is important. There's global research on beef, and we can be part of that global research pattern if we take the time to get involved with it.

Production lines are important. Traceability, age verification, and on-farm food safety programs are key to making sure the world believes that our beef is safe again.

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

I agree with you.

On the age verification aspect, I would like to ask for your thoughts on how important you feel this is. You made it very clear that you think age verification should be on a more national scope rather than what Alberta has gone for. How essential do you feel age verification is going to be in opening up new markets for our producers? Everybody here has said that we need more markets and larger markets. How essential do you see age verification being in that? Do we have any proof of it working as of yet? Alberta has had this in place for a year now, I believe.

[Carol Haley]

Actually, it's the 2008 calves that we've been trying to get registered on an age verification.

I think it's absolutely essential. Anywhere you go to try to sell your product, like Hong Kong or Korea, for example, the very first question is, “Are they all age verified?” There are strict limits. Everybody wants 30 months.

We don't want any limit, but 30 months is bearable. Twenty-one months is much more difficult. But how do you prove it if you don't have an age verification system? We're doing it because we have roughly two-thirds of the cattle in Canada. We have to move forward.

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

There's one last question I have for you, Ms. Haley, before I give the rest of my time to Mr. Richards. You mentioned the legacy fund. This isn't something that we've heard about at the committee yet. Do you have concerns about the legacy fund?

[Carol Haley]

Well, I don't believe it's doing anything. The Alberta government has put in $30 million and the federal government said it would match it. It's being managed through the Canadian Cattlemen's Association through another committee they've set up, one of many, and I'm not sure that anybody could actually find any results for any of it. I think it matters. It was for marketing.

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

Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Mr. Storseth, for letting me use some of your time.

Thank you to all the witnesses for being here today.

I want to say a special thank you to Ms. Haley. She was my MLA for 15 years, until just recently, so I have to give her a special welcome. It's nice to see a familiar face from back home up on the screen today. That's great.

[Carol Haley]

Thank you.

[Blake Richards, Conservative, Wild Rose, AB]

I appreciate all of you taking the time to address the committee.

I am going to focus my question to Ms. Haley, given that she is from Alberta. I want to give the opportunity for the committee to hear more of an Alberta perspective as much as I possibly can, because that's representative of my farmers and ranchers back home in my riding.

Ms. Haley, can you give me and the committee a bit of perspective, on behalf of grassroots farmers and ranchers in Alberta, on your take on the two approaches to the problems the industry faces? Certainly our government has focused very extensively on opening up export markets, new markets, market access. It's something we've been very successful in doing. So I wanted to get a sense of how you feel that approach works. Maybe you can contrast that with the more protectionist approach that I've heard from others, to the idea of more ad hoc government payments. Could you give me a bit of a sense as to how Alberta grassroots ranchers and farmers feel about those different approaches?

[Carol Haley]

Well, I'm sure there are as many different opinions between the farmers and ranchers here as there are everywhere else in Canada. There are, of course, some that want supply-side management, which I don't agree with, and as somebody who ranched for 17 years, I'm horrified by even the concept of it. But I guess we could start selling quota for beef as we do for everything else. We are fighting these things in the World Trade Organization, so I'm not sure where we would go with that if we're part of the World Trade Organization.

As for the approaches that Minister Ritz is taking, I appreciated very much his trip into Hong Kong and getting some marketing things happening again. But it's a big world, and we need to be in Russia, we need to be in India, we need to be in China, and we need to be doing them now, and we need to be supplying the product that those countries want.

Thus, all of these different branding tools that we can use--age verification, traceability, hormone-free--are absolutely essential, and I think a lot of farmers in Alberta, whether they're part of a feedlot or part of a small family operation with only 30 or 100 or 400 cattle on it, would agree that if we don't do something, then a lot more is going to get lost.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll start a five-minute round.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

My question is for Ms. Carol Haley. I don't want to assume any preconceived notions about what your answer might be about this. I read the report from the National Farmers Union, and it really is almost an indictment of the captive supply issue. I look at the budget and see $50 million being provided over three years to expand slaughterhouse capacity. Really, I think this is advancing Mr. Bellavance's question.

If you look at this industry from 20,000 feet, it seems to me that small slaughterhouses are ultimately going to be consumed by the larger ones. For a neophyte like myself in this area, it really looks to me like there's going to be a big problem if slaughterhouse capacity isn't addressed, and by capacity, I mean their ability to really control the prices that farmers are getting.

I'm looking at page 11, particularly, of the presentation by the Farmers Union. Mr. Tait, I believe, said that the reduction that farmers are receiving in profits is a result of either the concentration of ownership in packing or the fact that their being much larger is making them less efficient and therefore requiring them to take a bigger piece of the profit.

Without taking a position myself, I'm curious about your position on that issue and what you see is the solution. Without going all the way to supply management, which I understand you're not in favour of, don't you agree that something needs to be done about that issue?

[Carol Haley]

Allow me to go back just a little bit. Years ago we had government loans, back before I was elected in 1993. There were government loans to organizations such as Gainers, which as you all know is a packing plant. Of course, they went broke and didn't pay their loans back, so the taxpayers of Alberta picked that up. Along came BSE, and we found ourselves with an enormous number of fed cattle ready to be slaughtered and absolutely no place to send beef. So the Alberta government once again went to work through Agriculture Financial Services, and we helped come up with loans for organizations such as Rancher's Beef and Ranchers Meats, both of which are broke again now, and once again taxpayers are paying off that money.

This is a much more complex issue than just saying vertical integration is bad, Cargill is bad, or Tyson is bad. The truth is that a lot of the smaller companies couldn't make a go of it, and that's why they sold or just shut down. Burns moved out of Alberta a number of years ago because the labour unions wanted more wages. Burns was already operating on a razor-thin margin. They just shut down. I don't think there's a quick or easy answer. Regional packing plants are not easy to establish. They require large amounts of water. They require large amounts of cattle to be run through them to make money. Rancher's Beef had no end of problems just trying to get started, but we helped them because we were trying to help the farmers in our province sell their product.

There is not one simple answer, sir. I wish there were.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

First of all, I'm not suggesting that Cargill or Tyson is bad. Those words didn't cross my lips.

[Carol Haley]

There have been comments.

[Frank Valeriote, Liberal, Guelph, ON]

Those words didn't cross my lips.

I am concerned, however, that this idea of captive supply is something that is not being taken seriously and not being more actively pursued. I would really like it if you could just focus your answer on whether you feel that some form of regulation should be undertaken with respect to the size of these abattoirs and their ability to maintain their own stock of cattle right across the street, so they can control the prices.

[Carol Haley]

The last time I checked, we were still living in a free and democratic country, where people could sell and enter into contracts to sell their product to someone else. I have to tell you that I do have concerns if I hear that somebody is not being treated fairly by a packer, but I think that with your antitrust legislation, if you feel there's a problem you can look there. But I don't know that we need to be telling somebody who is already barely hanging on in our province.... We only have two major packers; there are smaller ones, but there are two majors. If we tell them now that we're going to step in and change the rules they're operating under yet again, in a market where they're not making any money, I'm not sure where that leaves us.

[The Chair, Conservative, Larry Miller]

Thank you. Your time is up.

I'll move to Mrs. Bonsant.