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.