That's quite all right. Thank you, Mr. Chair. People should know we actually came from the same county in Ontario at one time.
My name's Ron Bonnett. I'm vice-president of the Canadian Federation of Agriculture, but I'm also a cow-calf beef producer from northern Ontario.
I think it's excellent you're taking a look at the red meat sector, and I think it's broader than just one issue. There are a number of issues that have to be addressed.
Over the last 30 years, the red meat sector has evolved due to a number of factors. If you take a look at all of the globalization and the opportunities for trade, there was a lot of work done by the industry to address those types of markets, but at the same time it aggressively went after filling domestic markets as well. I want to speak a bit to both of these focuses, the domestic and the export. The evolution that has taken place, though, has taken place with a number of factors that have been influencing the industry. I will just talk about a few of these.
First, on the trade side, we've had to address a number of challenges and barriers related to market access over the last number of years. These include tariff barriers that restrict access to our product. We've had several countervail cases in which other countries, particularly the United States, have been watching what it is we do and what we do with it. In the beef sector we've had the case of BSE, which completely devastated market access, not only to the United States but around the world.
There's also the issue of non-tariff barriers. I think the primary offender in this is Europe. These include sanitary and phytosanitary barriers. Some people say putting these artificial barriers in place allows for another rule to be created to block imports. A couple of examples of that would be the European Union veterinary standards and the hormone restrictions placed on beef being imported into Europe.
The other issue currently in the trade challenge would be the labelling standards, and those get into the country of origin labelling. I'll briefly refer to those later.
As well, over the last number of years we've seen input costs subject to a lot of volatility. On the feed side, we've seen the cost of grains escalate rapidly. We've seen fuel costs move up and down, creating a lot of uncertainty in the market. But I think one of the things that have had an impact on the industry over the last number of years is the cost of regulations at the municipal, provincial, and federal levels, for everything from environment to food safety to meat inspection types of concerns, which have added to costs to producers.
Then there is the currency value. Again, huge fluctuations in currency value have had an impact on the industry.
The final point I want to make is about how changing consumer demands and preferences are affecting the industry. On the domestic side, there are things like 100-mile diets, demands on food safety and traceability, and high costs for environmental compliance, but on the export side there's an increasing demand for animal protein, which does create some opportunities for the industry.
The Canadian Federation would like to talk about a few of these issues, and provide some recommendations and ideas on how to move forward.
On the trade issue and market access, I think the BSE case really put in perspective how vulnerable we are when there's a blockage of trade. Fifteen years ago we were projecting exports of beef to be about 800,000 tonnes by 2015. Those estimates have now been revised down to 450,000 tonnes. That gives you an example of how one thing can change the positioning in the marketplace.
But the question is, then, what you do to solve some of these market access issues. One thing, which was proposed by the Canadian cattlemen, the Canadian Pork Council, and Canada Pork International, is to have a market access secretariat. Minister Ritz has indicated support for that concept. I think it's something that has to go ahead aggressively. Taking a look at the technical barriers to trade and finding out how we can remove some of those technical barriers will be a solution to some of these other problems.
We need to aggressively work on new free trade agreements. I think there's concern about the pace of the WTO moving forward. There are talks taking place, particularly with the European Union now. We have to aggressively go after some of those markets because those are high-value markets where we can position our product properly.
I mentioned briefly the WTO. We're not sure where that's going to go, but I think it's going to be an ongoing struggle to keep that balance in there to try to aggressively reduce things like domestic support, export subsidies, and tariff barriers.
On the non-tariff barriers, the sanitary and phytosanitary barriers, as I said earlier, the European Union is a large culprit. Pork and beef have had trouble getting into those markets on everything from veterinary equivalency agreements to hormone restrictions on beef. All new agreements in the WTO have to make sure that we have science-based sanitary and phytosanitary rules so that there is an understanding of what is going to be in place.
On the issue around labelling, there has already been quite a bit said about country-of-origin labelling. The cost incurred by our producers is basically devastating the industry. I think there's a huge amount of uncertainty, mainly because we have a rules-based system that was supposed to be in place and now we have a Secretary of Agriculture making statements that might go beyond the rules. I think it's a real concern to figure out how we're going to address that. Monday, I guess, is a deadline date coming up, and I think what we have to do is watch to see how the industry is going to respond.
There are three things that government can do to respond to what is going on. Number one is to continue to document what the losses are to the industry with country-of-origin labelling. The second is to continue negotiations to try to make sure that the rule is right. The third is to aggressively make sure that we launch the trade challenge, because I think it's broader than just country-of-origin labelling. This is about having trade agreements in place, and about having our trading partners recognize that if they're not going to live up to those agreements, they're going to be challenged.
On the input costs, everything from feed costs to fuel costs, we have to look at what we can control. The one thing that I think governments can have a role in is controlling the cost of regulation. I have a couple of examples. One is CFIA inspections for new slaughterhouses. Sometimes there are rules like moving a light bulb two feet rather than something that is really based on outcomes or food safety. We must have rules that are scientifically based and are addressing food safety issues. There has to be some work on that.
Another example was just mentioned. It's the regulations around the types of products that were used. As a producer, I know that for some of the products I use in my cattle herd, I can buy them for half the money if I'm able to get them in the United States. If we are going to be competitive, we must have regulations that equalize the prices on both sides of the border.
On the domestic side, there are still a number of things that can be done as well to improve the markets we have. We have made a huge push on exports, but there is a growing demand for local products. Parallel to our export initiative, I think we also have to focus on some of those domestic markets. The product-of-Canada labelling is improving, but what we need to do is make sure that we put marketing programs in place so that people understand what they are purchasing with Canadian products.
We need review of the regulations on Canadian processing as well. This is interprovincial. We have an issue where some provincially inspected plants aren't allowed to ship their products across borders, or they don't have access into the stores.
In conclusion, what I'd like to say is that when you're looking at the red meat sector, there is a need to balance the demands of the export market and the domestic market. We need both for the industry to survive. You're likely going to hear a huge number of mixed messages. You'll hear everything from people demanding that we have country-of-origin labelling in Canada to people demanding supply management for the red meat sector, but those things have their risks. We have to make sure that we support the export side and encourage domestic consumption and make them move ahead together.
The last point I want to make in this presentation is that governments at all levels have to avoid the politics of policy development. What I mean by this is that in the EU we now see the politics of animal welfare standards becoming a barrier. In Canada, we see things like pesticide bans and the banning of hog barns. All of those things are based on the public's perception of where the industry is, but we need to make sure that when governments are putting policy in place, it is science based and it understands that any regulations and rules that go ahead could have an impact on whether or not we can compete in the industry.