Evidence of meeting #7 for Agriculture and Agri-Food in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jurgen Preugschas  Chair, Canadian Pork Council
Martin Rice  Executive Director, Canadian Pork Council
Edouard Asnong  President, Canada Pork International
Jacques Pomerleau  Executive Director, Canada Pork International
Ray Orb  Director, Board of Directors, Saskatchewan Association of Rural Municipalities

11:10 a.m.

Conservative

The Chair Conservative Larry Miller

I call this meeting to order. I believe we have a quorum. We're 10 minutes late getting started, so if it's okay with everyone, we'll extend our meeting to 10 minutes after one.

Mr. Bellavance, go ahead.

11:10 a.m.

Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Mr. Chairman, I just wanted to make sure that we would be setting some time aside at the end of the meeting or during the meeting to discuss motions. In particular, I would like to discuss one of my motions today.

11:10 a.m.

Conservative

The Chair Conservative Larry Miller

Mr. Bellavance, that was going to my next suggestion, that we go to 10 after one in total, and that at approximately 20 to one, we'd spend the last half hour on motions, if that's okay with everyone.

I'd like to thank all of our guests for being here today. Thank you very much. We'll try to get started here. If we could keep each organization to 10 minutes or less, we would really appreciate it. If you have anything further to add at that point, you can always do it in questions.

With no further ado, I guess I'll call on the Canadian Pork Council. Mr. Rice, are you leading off, or is it Mr. Preugschas?

Mr. Preugschas.

11:10 a.m.

Jurgen Preugschas Chair, Canadian Pork Council

Thank you very much to the committee for inviting us to attend. I'm Jurgen Preugschas, the chair of the Canadian Pork Council, and with me today is Martin Rice, our executive director. We do appreciate the opportunity to speak to you as our producers continue to battle the unprecedented period of losses we've been sustaining on our farms.

We're into our third year now in an ever-changing set of shocks that is coming to our industry. While the crisis started and was set into motion by the rapidly rising exchange rate and the high feed costs, those particular variables have moderated now. Unfortunately, they have been replaced by the whole global economic crisis, which is reducing access to credit. Then in addition, of course, there is the U.S. introduction of mandatory country of origin labelling.

As our sector relies on exports so strongly—in fact, two out of three hogs born in Canada are exported either as live hogs or as pork products—our sector is especially susceptible to global shocks.

We do want to thank the committee for paying attention to the livestock sector during this very difficult time, and we thank the government and the parties who allowed the legislation for the advance payments program, which did help us through the short term. We do thank Minister Ritz for recently announcing the stay of default on those advances and for providing us with more time for repayment. We're quite sure that we'll find a suitable repayment period for that.

We also appreciate the cull breeding swine program. Even though a downsizing of the industry is always difficult, this did allow producers to leave the industry with dignity.

And we have downsized a lot more than the cull breeding swine program anticipated. We've had a lot of producers leave the industry, and the numbers are there to prove it. The Statistics Canada numbers are showing dramatic decreases in the past two years. They show 13.7% fewer farms reporting having hogs in 2009 than the previous year, and 11.3% fewer in 2008 than in 2007. So you in fact have 28% fewer farms across Canada reporting having hogs now compared with January 2006. The hog inventories are down 10.2% from January of last year and a full 18% down from two years ago. These are really significant decreases.

Today we want to remind this committee that while we're trying to remain optimistic about our long-term potential in the Canadian hog sector, it really is increasingly difficult to be prepared for and to manage the shocks that continue to hit us, which are outside of our control.

The most pressing of these shocks right now is COOL, and I'd like to pass over to Mr. Rice to speak on that.

11:10 a.m.

Martin Rice Executive Director, Canadian Pork Council

Thank you, Jurgen.

This committee certainly is aware of what country of origin labelling is. In terms of U.S. legislation it is something that originates in the 2002 Farm Bill.

We were quite content with the final rule that the U.S. administration published in December—that would be the former administration—because it did introduce some additional flexibility. We weren't saying that this was it, we'd never worry about COOL again, but we were certainly supportive of the Canadian government shelving the WTO challenge while some time was taken to determine if the changes that were in the final rule would give some flexibility that U.S. processors would still buy Canadian-born livestock. That's the key. And we were looking for flexibility that was quick to come into place and wouldn't take three to four years, which a WTO case can easily take.

We did realize the hope that the new administration would put the final rule in place, but then to our shock and horror, really, and to that of some of the other U.S. government departments, we think, the new Secretary of Agriculture admonished the industry to go much beyond the COOL law as it was put out in January.

The two big issues were that it was looking for the U.S. processors to put on their packages the location of all of the stages of the value chain of the animal--so where it was raised, where it was processed. It was actually taking us back to something more onerous than what the original 2002 Farm Bill asked for. And it was those technical or excessive requirements of the old Farm Bill that led the then, and now still, chairman of the house agriculture committee in the U.S., Collin Peterson, to say that they had to find a change, they had to find a way to make this more practical. And they did. However, what Secretary Vilsack has done has taken it backwards.

Secondly, Secretary Vilsack is also urging the processors to include processed products. Before, processed products were completely excluded. This is even more challenging for a processor, to have all the different labels that would accommodate every potential situation, such as a pig born in Denmark, raised in the U.S., and processed in Canada. That's all a possibility.

We did put in a letter to ministers Day and Ritz that we feel covers quite well all the elements of the issue. That has been provided to you, as will some text that we weren't able to get into our submission before this morning.

In the hog industry in Canada we've seen our live slaughter hog animal exports fall by two-thirds, by 67%, versus last year, and our feeder pig exports by one-third. These are exports that last year accounted for almost 10% of the U.S. swine supply. We have a letter from Morrell, a major U.S. processor that used to handle, for example, up to two million Canadian pigs a year. They have sent a letter to their producer suppliers saying that they will not be taking any more Canadian-born animals after March 2009. We can provide that letter to you at some point perhaps.

We are pushing, I guess, three or four key points on COOL. One is that it has taken us back to before the U.S. Farm Bill and that the processed product aspect will affect exports from Canada of well over half a billion dollars in value. There is just no alternative for Canadian producers, U.S. hog finishers, and U.S. pork processors to find ready alternatives to this supply.

In our view, because things are so unsettled yet in Washington in terms of getting the right people into senior positions, such as in the trade department and the commerce department, the White House really has to be alerted to this grim situation. And in terms of getting their attention, our view is that it really has to come from our central agency, the Prime Minister's Office in particular, to alert the White House that this is a problem that's not just going to affect Canadians, it's going to affect the U.S. Because if you take away 10% or more of U.S. processors' raw material, they are not going to be able to continue in business as they are. We feel there just has to be more effort made. More attention has to be captured in the U.S. administration to understand this.

We are not suggesting that it needs to be in an adversarial manner at all. It is really a matter of having the facts and the logic explained.

I want to say a few words on the Canada-EU trade and economic partnership, which we are hopeful can be announced on May 6 when the EU and Canada have their next summit.

The Canadian Pork Council strongly supports the negotiation of a comprehensive free trade agreement. We would not at all be accepting of excluding pork from such an agreement. We will be looking very shortly, in days, at the first Canadian pork processing plant to be approved to ship to the EU, and we fully expect others to follow. It's a market of 500 million people that we are determined to make better inroads into than we have up to now.

Thank you.

11:15 a.m.

Chair, Canadian Pork Council

Jurgen Preugschas

Thank you, Martin.

I want to continue on with business risk management. During the past two and a half years our sector focused on ways to improve cashflow on hog farms and what was needed to move ahead through that difficult period, and you're quite aware of the asks that we have and improvements to the AgriStability program. In light of the time, I'm not going to go through them; you do have them in front of you. But those are consistent asks that we have, and we need that program to fix some of those inequities that are in there. They should all be done in as trade-friendly a manner as possible.

But as we do that, we're revisiting the issues of how we can keep our producers in business. We see a potential of a huge decrease in our hog production beyond where it's at. In terms of the export industry, the George Morris study shows that about 42,000 jobs are created through that and a $2.8 billion export industry. We think there's a potential of losing 50% of that industry yet.

So we have to find creative solutions. We need to work at that and we need to work with the Pork Value Chain Roundtable to do a long-term sustainable program.

11:20 a.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

We are going to move to Canadian Pork International, and Mr. Pomerleau and Mr. Asnong. Go ahead, please.

11:20 a.m.

Edouard Asnong President, Canada Pork International

Good morning. I was pleased to accept your invitation to appear before you today.

Canada Pork International is the export market development agency of the Canadian pork industry. Established in 1991, it is a joint initiative of the Canadian Pork Council and of the Canadian Meat Council. Our organization deals primarily with market access issues, the promotion of Canadian pork abroad, providing market intelligence as well as working on other significant export-related issues.

On the first page of our brief you will see statistics about last year's exports, in tonnes and in dollar value. I would also like to mention that the industry set a new record, both in tonnes and in value.

Canada exported to 107 countries in 2008 and to more than 140 in the last four years.

More than 50% of the total Canadian pork production is exported. It is worth noting that Canadian pork exports to the US now represent less than 30% of the country's total exports. When CPI was first established this market represented more than 75% of our total exports. This is the proof that our strategy to diversify away from the US and to be less dependent on one market was successful. However, one must keep in mind that past success is no guarantee of future results.

With the uncertainty surrounding the implementation of the US Country of Origin Labelling legislation, there are fewer hogs being exported to the US and as a direct consequence, the number of hogs processed in Canadian plants has increased by 5% in the first seven weeks of this year—and in the French text the word "months" should be replaced with the word "weeks"—when compared to the same period last year.

The average carcass being heavier, this translates into an increase of 6.5% in total pork meat production for that period. This means that at this moment more pork needs to be exported considering that the consumption remains rather stable.

We expect 2009 to be a difficult year for exports as the economic conditions prevailing in some major markets, especially Russia, China and South Korea, have already resulted in much lower sales. It is too early to tell what our exports will total at the end of the year, but even if they remain the same as last year, we are almost certain that this will result in lower revenues for the industry as many markets will buy lower-value cuts and as our exporters might be forced to discount higher-value cuts. Tight credit will definitely continue to be a factor in the coming months.

The favourable exchange rate will certainly help, but it is not good enough if countries are determined to limit imports.

I will now deal with the issue of market access. Maintaining access to existing export markets and seeking access to new markets has been and remains the top priority of Canada Pork International. Over the years, we established a strong working relationship with the Canadian Food Inspection Agency, the Department of Foreign Affairs and International Trade and Agriculture and Agri-Food Canada. This partnership has been successful so far as demonstrated by the number of countries Canada has been able to export to. However, exporting to a country does not mean that one has full access to that market. In fact, there are several markets where we have a limited access and where we continue to seek full access with varying results.

Given the current economic and financial crisis, we are starting to see an increased tendency in some markets to use technical barriers as a means of limiting or prohibiting imports. In too many cases, import requirements are either not based on science or are unjustifiable too restrictive, not taking into account actual trade and distribution conditions.

The Canadian pork and beef sectors are working closely together on market access and we recently came up with a series of recommendations for enhancing Canada's technical market access capabilities for agri-food products, not only meat. We are both very pleased that in response to our request the Minister for Agriculture and Agri-Food, Mr. Gerry Ritz, has recently announced the establishment of an agri-food Market Access Secretariat that would set priorities and timetables as well as identifying and allocating the required resources.

We are looking forward to working with federal government officials to get the structure in place as soon as possible.

The Canadian Food Inspection Agency has a unique mandate of negotiating access to foreign markets as well as certifying that our meat exports are in compliance with those agreements. As we mentioned earlier, it is our pleasure to acknowledge that the CFIA has done an excellent job over the years in helping us gain and maintain access to a large number of countries. It is paramount to our industry that the CFIA retains a very credible reputation with its foreign counterparts. With the increasing number and complexity of recent issues, some major like BSE and the short ban on Canadian pork imposed by Russia, we are not pleased to witness the fact that the CFIA technical resources have been stretched to the point that they can no longer deal easily with two major crises at the same time.

We acknowledge without reservation that the priority of the CFIA must remain food safety, but at the same time, the Canadian government must also recognize that nobody else can negotiate veterinary agreements and certify meat exports and the one role can not and must not be played at the expense of the other. We would hate to come back here in a few years and complain that the CFIA has become a constraint to our exports because the government did not take the time to review and assess the need to hire and train the highly-skilled professional staff required to deal with an increasingly difficult trade environment.

At times, political involvement is required to resolve market access issues. We are strong supporters of missions abroad led by the Ministers of International Trade and Agriculture and Agri-Food when they provide a unique opportunity to resolve an issue or to make progress toward its resolution.

I will now turn the floor over to Jacques Pomerleau, Executive Director of Canada Pork International.

11:25 a.m.

Jacques Pomerleau Executive Director, Canada Pork International

In the interest of time, I will continue in French.

Transportation is another concern. Although there is no longer a container shortage as was experienced last year, transportation is still an issue that the Canadian meat industry is concerned with. When dealing with the Canadian rail companies in particular, a large number of our members are finding it difficult to adapt to their demands and requirements. They are left with the impression that perishable products are considered a nuisance and they are questioning the commitment of the railways to provide quality service.

I will not go into details about the coalition we are proposing. You will find that in our brief.

I will turn to export market development. The overall objective of the Canadian pork industry is to become the preferred supplier of high quality pork. To achieve this, the industry will need to be able to supply a well differentiated product and effectively position and market it in a domestic and export marketplace. And this assumes that we would have enough to market the product, as Mr. Preugschas mentioned a few moments ago.

It is recognized that the quality advantage that Canadian pork once enjoyed over its competitors has narrowed and our traditional differentiation points no longer suffice. A science-based differentiation is now required to improve the competitiveness of Canadian pork.

Pork is the most versatile meat, but we have yet to exploit its full potential. More research and development is required to do so.

Developing new products and successfully differentiating Canadian pork will not fully benefit the industry unless there is effective marketing. Better marketing tools need to be developed.

We still believe that Canada remains one of the best places in the world, if not the best place in the world, to produce high end quality pork. At this time our industry not only needs some assistance in positioning and marketing its product, but more coordinated and better focused research and development as well.

Thank you very much.

11:30 a.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much for staying under the time limit. I appreciate that.

We'll turn it over to Mr. Ray Orb from the Saskatchewan Association of Rural Municipalities. Thank you for coming.

Please go ahead.

11:30 a.m.

Ray Orb Director, Board of Directors, Saskatchewan Association of Rural Municipalities

Good morning. Mr. Chairman, I'd like to thank you for adding us to the agenda at such a late date.

I am a director with the Saskatchewan Association of Rural Municipalities. I'm also a grain producer and I run a cow-calf operation in the Regina area.

SARM represents all of the municipalities in the province of Saskatchewan. It's also driven by grassroots. It's an independent organization, so we feel we can speak from a truly Saskatchewan perspective.

I'd like to talk about the state of the livestock industry this morning, particularly pork and beef.

The red meat sector in Canada has faced many challenges over the last six years. Cattle producers today are still facing the long-term impacts of BSE. Issues such as market access, increased regulatory pressures, and input costs are making our producers less competitive in the world market and therefore are impacting the prices they can access for their products.

Hog producers have also faced negative price and market pressures. The high Canadian dollar and other economic factors have resulted in the loss of domestic slaughter capacity.

On January 1, 2009, Statistics Canada reported a 10.2% drop in hog inventory in Canada over January 1, 2008. I'd like to mention that the Saskatchewan industry lost the most, reporting a total loss of 31%.

In more recent years, these same producers have been facing the pressures of the economic downturn, which has resulted in severely depressed prices. These are the same factors as are collapsing other export-based industries, such as the auto industry and the aerospace industry.

From January 1, 2008, to January 1, 2009, Canadian cattle producers reported a 5.1% drop in inventory.

The livestock industry is also facing specific negative market pressures from the United States' country of origin labelling, which we believe has created an artificial trade barrier between Canada and the U.S. and has increased the slaughtering costs for U.S. processors, resulting in less demand and lower prices for Canadian red meat.

Although the final rule for COOL has yet to be fully implemented, the deadline to import cattle feeders to be classified as U.S. beef was July 2008. Exports for the last six months of 2008 slowed by 9.7% from the same period a year ago. Once the final rule comes into place in March 2009, Canadian exports will be further hampered. I'll get back to COOL a little bit later.

On market access, Canadian exports of beef must continue to grow. As populations in developing countries grow and become more affluent, perhaps demand for Canadian beef will increase even more.

We must continue to reopen foreign markets that were closed to Canadian beef as a result of BSE. SARM believes that the federal government has done a better job of engaging in more bilateral trade agreements, creating more market access for Canadian beef, and this needs to continue.

SARM also appreciates the federal government's investment of $50 million over the next three years to strengthen slaughterhouse capacity across Canada.

SARM is encouraged by the new export market access secretariat initiated by the federal government. This should help coordinate the efforts of the industry, trade experts, and governments, more effectively promote Canadian agriculture exports to foreign markets, and help identify and remedy trade barriers.

Canadian beef surveillance will almost certainly be improved, for example, by a new BSE test that can be done on live animals. This involves a blood test. It has been developed by the University of Calgary. If accepted, it will mean that the likelihood of borders closing will be drastically reduced, and it will dramatically reduce wait times for animal testing.

We must continue to move forward on a nationwide age verification system. This should create a marketing advantage for our producers to utilize when trying to access new markets or expand sales into existing markets.

On country of origin labelling, some recent amendments by the U.S. administration have created some uncertainty. As of February 20, U.S agriculture secretary Tom Vilsack indicated that the final rule of COOL doesn't meet the intent of the law passed by Congress. If what Mr. Vilsack is suggesting becomes reality, Canadian beef and pork will be facing further limited access and lower prices.

In our recommendation, because of the uncertainty surrounding the final rule for COOL and the potential hurt to the Canadian red meat sector if the rule is implemented, SARM will be encouraging the federal government to reinitiate its WTO challenge.

On reducing regulatory costs, federal regulations that impose costs on the livestock industry should be minimized. Currently, Canadian cattle producers are paying added costs to manage the removal of specified risk materials, SRMs, from cattle. If Canadian livestock producers are absorbing domestic regulatory costs it can make them uncompetitive in the world market. We know that the current list of regulated SRMs in the U.S. is shorter than that in Canada, making it less restrictive and less costly to the industry to remove the required materials.

The absence of regulatory harmonization between Canada and the U.S. considerably weakens the competitiveness of Canadian slaughter plants and the entire Canadian cattle industry. It has been estimated that the cost differential between the U.S. and Canada is approximately $40 per cow.

SARM believes that governments should be assisting industry with these regulatory costs to ensure we are on a level playing field with other markets. The Canadian government should be encouraging harmonization of such regulations with the U.S. to ensure that U.S. producers don't have a cost advantage and therefore a marketing advantage. Before any regulatory changes are implemented, they should be reviewed to determine if and how these changes could impact international trade.

On the changing needs of protein consumers, according to Statistics Canada's February 2009 report, total red meat consumption, including beef, veal, pork, and mutton, has been declining since 1999. One reason for the decline could be that Canada's population is aging and young people are consuming less red meat in their diets, with a trend toward non-red-meat or vegetarian diets. Another reason could be competition from other cheaper protein sources.

On our recommendations, the industry and the government must do a better job of promoting healthy beef at home and abroad, and perhaps initiate a Buy Canadian program for beef in Canada. They can maintain programs like the environmental farm plan and the Canadian agricultural skills service program to promote environmental benefits to the public and provide education to farmers.

We're also asking for assistance for the industry itself. Canada's beef herd is now very close to 1999 levels, therefore we must maintain a base livestock herd to supply domestic and international demand. SARM believes that effective short-term and long-term programming is required.

We encourage the federal government to consider providing financial assistance to the industry in the short term to maintain a base cow and hog inventory to supply domestic and international markets. Short-term assistance has to be implemented to ensure that the livestock industry can survive long enough to a allow long-term program to be developed.

We're asking the federal government to refocus business risk management programs, such as AgriStability and AgriFlexibility, that will effectively manage economic crises such as the one the livestock industry is currently experiencing. If these programs were restructured effectively, the industry would be assured that if they face such hardships in the future there will be effective long-term programming in place to provide the assistance required.

Thank you again for the opportunity to present.

11:35 a.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much for being brief.

I'll turn it over to questioning. The first round will be for seven minutes, including the questions and answers.

Mr. Easter.

11:35 a.m.

Liberal

Wayne Easter Liberal Malpeque, PE

Thank you.

Thank you, folks, for your presentations.

Mr. Orb, you said there needs to be a restructuring of the AgriInvest and AgriStability programs. Specifically what do you mean? Do you mean eliminating the viability test, going to the better or the olympic or previous three-year averages for reference margins calculations, and giving an option to producers on the better of AgriStability tier one or AgriInvest?

Those are simple things the government could have done yesterday. Is that basically what you're asking for in restructuring, or is it something broader?

11:35 a.m.

Director, Board of Directors, Saskatchewan Association of Rural Municipalities

Ray Orb

I commented on AgriStability and AgriFlex. I did not comment on AgriInvest, which is the top 15% of the AgriStability program of the margins themselves.

We believe that the problem with AgriStability is the declining margins. If you're a hog or cattle producer your margins are slowly dropping, so that program doesn't necessarily kick in.

We're asking the government to look at this AgriFlex program. We've seen it mentioned in the budget, but we're not sure what it is. We met with some federal officials on that, and they said it has something to do with Canada's competitiveness, and there are things that can be done internally.

We realize there are a lot of problems with AgriStability. We worked through some of them. I think there have been some good improvements made, but it leaves a lot more to be desired.

11:40 a.m.

Liberal

Wayne Easter Liberal Malpeque, PE

They will talk a lot about AgriFlex. They promised $500 million over four years. They came in with really $190 million new money over five years, and it's not available for risk management programs in Ontario and Quebec. So it's a promise, but don't count on it. That's $38 million or $37 million a year. Do you think that's going to solve the farm crisis? I mean, give me a break. They're good at making announcements but not very good at coming through with money.

Anyway, on the COOL, Jurgen, I might just mention that the Canada-U.S. parliamentary association was in Washington last week. You may not know what that is, but it's an all-party committee. Members work together in what I think is a really strong, non-partisan sense, and all parties were represented last week in Washington. COOL was one of the issues they were working on. They had somewhere in the range of 44 meetings with congressmen, plus, I think, 12 or so with senators and something like 15 with governors who were in town at the time as well, so the committee was very active. They met with Collin Peterson as well.

I would say that given the report I had back from them, I really believe there's an understanding at the U.S. congressional level that COOL is a really serious problem for the North American beef and hog sector, and a specific problem for us. But there just does not seem to be any movement.

I think your letter's a good letter. It outlines the problem. But why should we wait? Why not issue the challenge right now? Has your letter been responded to yet by either Minister Day or Minister Ritz? It was written on February 23, but why wait? Why not just issue that challenge right now.

Our industry's going down a hole. We're losing our industry. We've lost 60% of our hog producers in P.E.I. The biggest hog producer in Nova Scotia just went out of business here two or three weeks ago.

11:40 a.m.

Chair, Canadian Pork Council

Jurgen Preugschas

I think, to answer that question, it's quite clear that we probably need to go ahead with a WTO challenge, but an answer for that is two or three years down the road, so what good is that when we're not in business anymore?

Our point of view is that we need our government, our Prime Minister, to take this straight to the White House immediately, and as was suggested in our brief, do it in a non-adversarial fashion but take it directly to the White House. This is affecting jobs both in the United States and in Canada. We all read the papers every day. We see how many jobs are being lost. This is where government is forcing more loss of jobs, and that has to be made very clear at the highest levels.

11:40 a.m.

Liberal

Wayne Easter Liberal Malpeque, PE

I agree 100% that's what should happen. I also agree that it'll be three years or four years or five before you get an answer out of the WTO, and then if we win.... Once the Americans lose based on the law, they never come through on the money they're supposed to pay anyway, but I would agree on that point for sure.

On the point you made in response, though, Jurgen, what good is it when we're out of business? And that comes to the point of both the Canadian Pork Council and the Canadian Cattlemen's Association, which I certainly have a problem with. We did our report on the livestock industry last year. Both the Canadian Pork Council and the Canadian Cattlemen's Association were dead against ad hoc programs, and I understand why, but we can play this game of being fair and reasonable traders under the rules when nobody else is and we're not going to have an industry left.

You have Alberta coming in with a $60, I think it was, payment per breeding animal. You have Saskatchewan now with $40. You have P.E.I. and some of the rest with none. We have a patchwork quilt of funding across the country and a patchwork quilt of policy, because there's no federal leadership.

So what do we do in the meantime? What good is it? The federal government should be there, I think, with money. Where you are right now in the industry, you have a hell of a lot more debt than you had two years ago. Things haven't improved. COOL's coming in worse than we thought it was, so what are we going to do? Are we going to demand there be payments in the meantime, or are we just going to say, well, to heck with the industry and we'll see what happens? We're losing it in the Maritimes, and we're a deficit area. We're a deficit area for beef and hog production, and we're losing our industry.

11:45 a.m.

Chair, Canadian Pork Council

Jurgen Preugschas

I think you make some excellent points. We do need to look at it as a Canadian thing, across Canada, rather than the regions. Due to the lack of a total Canadian approach, we've had some provincial reactions to attempt to save our industry.

I believe we have to be creative. And I don't have the answer. I don't know what the answer should be. But maybe we do have to start looking at a more ad hoc type of program so that we do have an industry in the future. Otherwise, we are not going to have an industry left.

I really believe we're putting a lot more of our producers at risk. We need to look at it. Let's be creative. Let's all work together in a non-partisan manner and try to find solutions.

11:45 a.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

Mr. Bellavance, seven minutes.

11:45 a.m.

Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Thank you very much for your testimony.

The representatives of the Canadian Pork Council suggest some possible solutions, and I appreciate that very much. You talk about changes that should be made to Business Risk Management. It is very helpful to us to determine what pressure we can apply on the government regarding changes so as to improve things for the industry.

The pork industry is very dependent on exports. You spoke about that in your remarks, Mr. Pomerleau. In fact, you all spoke about it. For the United States, 2008 was an exceptional year. Can we say the same of Canada?

11:45 a.m.

Executive Director, Canada Pork International

Jacques Pomerleau

We set a record in terms of volume in 2008, but I would not say that it was an exceptional year. Let us just say that we had some momentum. However, there are no guarantees that this will happen again. We also benefited from an exceptional situation regarding Russia and China in particular. Two years ago, the Chinese market was virtually non-existent. It literally exploded. The same is true of Russia, but it has cut our quotas for next year. So it was an exceptional year, but it will probably not happen again.

11:45 a.m.

Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Why will it not happen again?

11:45 a.m.

Executive Director, Canada Pork International

Jacques Pomerleau

Because there is a danger the markets will collapse. We have seen that in the case of Russia and China and Hong Kong—the two must be considered together because one is the gateway to the other. As for our exports to South Korea, that country is not buying the cuts we would have liked to sell. So it looks like it could be difficult.

11:45 a.m.

Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

During an economic downturn, people may tend to buy lower quality cuts. An effort has been made, particularly in Quebec, to develop a niche market for more specialized, higher quality cuts. Is that still what should be done in the future, or do we have to make up our minds to produce as much as possible?

11:45 a.m.

Executive Director, Canada Pork International

Jacques Pomerleau

We absolutely have to create a distinctive advantage. If we simply continue to produce the commodity, we will not be able to compete for very long with countries such as Brazil, which have comparative advantages, even though Canadian pork currently sells for less than Brazilian pork on the international markets. Our efforts have been mostly focused on Japan. The statistics show that we now export our higher value products to Japan, not the United States.