Good afternoon.
My name is Brian Lewis. I'll give you a bit of background. I come from a poultry and cash crop operation nearby.
I have just a couple of points here.
I'll begin with some of the challenges. There are a number of them, but a lot of them circle right back to return on investment. It's true; it's cashflows from our farms. Producers--we're price-takers, and that's part of the problem. We go and say, “What will you give me for my product?” It has nothing to do with input cost. It has nothing to do with return on investments. Other industries set their price. We seem to take it, and we have to work within that framework. We can't set our price of corn at, say, $5.50 a bushel. It's whatever the futures are, and the basis, and that's it--supply and demand. It makes investment decisions difficult when you're looking at what to do. You just don't have that power.
Primary agricultural production's return on investment is low compared to that of other industries. Because of that, it's a game of economies of scale. We all know that. Bigger isn't always better, but it's just something you have to do to pay the bills; we have to get those economies of scale. Agriculture is a very capital-intensive industry, which just makes it that much more difficult to work with.
You really need to take a peek at the levels in having such a small percentage of income on our side versus the end-user price, whether it's consumers, whether it's another broker, or what have you. You can do that on the grain side by taking a look at the percentage of the input costs on a box of cornflakes versus what we get and what the end-user pays. You can do it on beef. You can do it on pork. You can do it on chicken. I'll just speak to chicken, because I know we get paid about $1.40 per live kilogram. If you look at breast meat in the store, it's $20 or $22 per kilogram, anywhere around in there. That's a big gap. Supply management is the only thing that allows us to get our $1.40. It's not the be-all and end-all, but it does help us to get some of that return on investment. I think it actually does work for family farms, and I think it does need to be supported through the trade talks.
Input costs are another challenge that we have. Costs of production, whether those be seed, fertilizer, chemicals, or labour, can change without any reflection on our selling costs. Our cost of a bag of corn is $200-and-some. Chicago says supply and demand, and the price goes up or it goes down regardless of what our inputs are, and usually our inputs are contracted long before we sell them.
With regard to the concentration of power within Canadian agriculture, this happens with both input suppliers and end-users. When you get into the retail side of things, there are only a few players that you can sell to. I know on the livestock side, either you can sell it or you can't. There's not a lot of competition out there, and it makes it difficult.
Labour is an interesting one. It's getting more and more difficult for us to find qualified people. Part of it is because agriculture isn't necessarily a glamorous job. We know that with some of the job descriptions.
The other thing--again, this goes back to being a price-taker--we have to compete with other industries that can afford higher wages; there's no question about it. Because it's difficult for us to pass those costs along to the end user, that all comes out of our return on investment, so it is something that definitely needs to be looked at.
Self-sufficiency in our food supply is another issue. It comes back to supply management. Exporting as a form of growth is fine, but we must create a sustainable agricultural industry here in Canada to ensure a stable food supply for our citizens. It's absolutely true, but to have an industry based solely on exports is dangerous, because political squabbles can cause anything to happen. You can see COOL as being an artificial trade barrier, you can see it with BSE and the U.S. They close the borders and who pays the price? It's the primary producers, there's no question about it.
With regard to government regulations and level playing fields, we on the chicken side have an OFFSP program on farm food safety. It's certainly a good program, but there are additional costs to it. We have nutrient management plans that some of us are involved in. It's added costs, no question. I think we need to really look at exports coming into Canada. Are they subjected to the same costs, the same standards we are subject to? I'm not so sure they are. At times they may be, at times they may not.
That's really the big thing with imports on our side; I'll speak to the livestock. We have to watch the veterinary agreements as well. I don't have all the details, but I know in the past there were veterinary agreements signed with other companies that effectively allowed their chicken into Canada. The question is are they set to the same standards that we have? I know that we have increased standards since then. Is that being looked at, or is that something that was taken ten years ago? That's a level playing field that I think we all need to take a peek at, and it's not necessarily on the broiler side, it's with any inputs. To hold us to a higher standard than somebody else who can bring it in at a cheaper cost, and think that we can compete, simply isn't fair, and it doesn't work.
That were just a bunch of concerns I had. I'm sure most of them will come in, roundabout, but it effectively gets down to ROI: being price-takers rather than price-setters.