Agriculture Committee on May 26th, 2010

[Chan Wiseman]

Yes. I have just a brief comment.

In Newfoundland and Labrador, outside of supply management, it's very difficult to get into or start a farm enterprise, because the vegetable industry, the hog industry, and the cattle industry are essentially open to the free market. Farmers in those commodities in the province simply can't compete with the rest of the country or North America.

In Newfoundland and Labrador, we consume in the area of about $120 million to $130 million worth of beef products. Probably about one or two million dollars' worth of that is actually produced in the province, and that's purchased in the fresh market, for instance. Eugene listed a couple of the major supermarkets in the province where someone would go and buy beef, but most of that beef is coming from South America. It's coming from the U.S. and it's coming from other parts of the world.

It's very challenging to get into that industry. As well, the slaughterhouse capacity is not there. So in order to...well, the slaughterhouse capacity is there, I should say, but it's provincially inspected and the federal regime is simply not there through CFIA. That's one issue. We just don't have the capacity in a lot of cases to get into those particular industries.

But in supply management, it's very profitable. It's healthy. Dairy, chicken, and eggs are doing very well. Young farmers who are engaged in that side of agriculture are doing very well and they're able to have a life, as well as running their farm operation.

But the other side of agriculture, in a lot of ways.... Young people are leaving rural towns and communities. They're either going to St. John's, to the urban centre--and that's not a very big area, St. John's, with about 200,000 people--or simply going to Alberta to the oil sands to work. That's one of the challenges we're certainly facing in our province: a lot of young people are not staying in the rural towns and communities.

[The Chair, Conservative, Larry Miller]

Thanks very much, Mr. Wiseman.

We'll now move to Mr. Shipley for five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

I appreciate the input from what I would call our young farmers and future farmers, everyone, I really do, Travis and Jill and Chan.

Travis, I have a quick question. I'm trying to understand. All of them have talked about profitability. You mentioned how important the marketing is when we're developing trade agreements. I agree. I always call the market “the whole animal”, because there are different appetites and different cultures; it was well put and better put than I've often done.

I was in a slaughterhouse and we were talking about that. Has that been a benefit? Yes, it has been a benefit, and we need to get those markets. Second, I asked about hides. I asked what they were getting for hides now and if it was $64 a hide. I said, “So what were you getting a few months ago...$20 a hide?” A year ago we were getting zero dollars; we had trouble getting rid of them.

Earlier we talked about how important it was to get the $31.77 to the producers, which in our minds was not the right place to go. That's $64 an animal that I'm thinking you should have had. Can you tell me if you did or not?

[Travis Toews]

I think it would take a dozen economists to determine exactly who split the value of that $64. However, I can certainly say that we've seen a rebound in live cattle prices in the last several months. That has been fairly significant. Products such as the hides and some other byproducts do play a real role in the value of the animal, and the global recession has been hard on those values.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

How do we know how much you get? How do we get that to you? When the animal jumps on the truck for the last time, which may have been the last three or four times it's been on a truck, how do you get the most value? One guy in our tour said that you get the value of the market if you take the market risk.

How do we help you get the benefit when these prices are going? I'm looking for suggestions. We've talked about the value of some of the cultures and tastes of other countries. How do we know you're going to get it? Help us to understand that, if you could.

[Travis Toews]

I think the first piece is that we have to believe that we have a competitive process in place for bidding live cattle; in other words, that there are enough competitors within North America who will bid on live cattle in expectation of making a profit and that the competition will be keen. If all packers have extra opportunity, then they're all able to go out and bid higher for those cattle, if there's sufficient competition. Also, given that premise, I think if there's sufficient competition—and that market power shifts depending on the supply and availability of live cattle—where supplies are not burdensome relative to packer capacity and demand for that week, one could argue that certainly a majority of the value will go back to the producers.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I have a quick question. I want to go back to Jill and Chan.

One of the things we've talked about are programs that we would see as being of benefit to the general public. I've forward a motion, M-460, which actually dealt with most of the regulations you've talked about today--and in fact that every meeting did--about if we have products in Canada that we're restricted from or can't get and yet we allow those products to come into Canada, products used either on beef or pork, or insecticides or pesticides.... Can you tell me that if there's a general benefit to the public, and it may be traceability, or it may be animal identification that we are requiring as a Canadian standard...do you believe that should be picked up by the public? Or if the products we don't have do come into Canada, should we allow them to?

[The Chair, Conservative, Larry Miller]

Okay. Who wants to answer that?

Chan? You have one minute, please.

[Chan Wiseman]

Look, I'm a firm believer in free trade. There are certain products we need. I drink a lot of coffee, so we need free trade. I'm just using that as a very simple example. There are certain products, such as oranges and so forth, that we need to import.

But certainly, it's very hard to understand why we're bringing carrots into Newfoundland and Labrador. They're sitting on the shelf. They're there for a dollar or a dollar fifty, yet a producer down the road can't sell that bag of carrots into that grocery chain. It may be a Loblaws or a Sobeys. I'm not trying to pick on any of the grocery chains, but it's very complex. We all know that, but it's very hard to understand why that situation has occurred.

I certainly believe that we need to support local producers. We need to support Canadian producers. The public puts great demand on producers in this country, whether it's concerning environment or food safety, you name it. It just keeps getting downloaded onto the farmers. Where does it end? I think the public does have a key role to play in that regard.

[The Chair, Conservative, Larry Miller]

Okay. Thank you. That's a good comment, Chan. We have heard that quite a bit across the country. The consumer has a role here. They have to get out of this mindset that it all has to be based on price. If you say you want to buy Canadian, you talk the talk, but you don't walk it. Walking that talk is actually going in and buying Canadian.

Mr. Eyking, you have five minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chair. I thank the guests for coming here today. We've had quite the trip across the country. I think a lot of my colleagues here have their eyes a lot more open now to the reality of what's happening out there. It's easier to ask the questions, I guess, after coming off the tour.

I was talking to my father. He said he's getting the same for a steer now as he was 30 years ago. I don't know if he's very far off. My mother says she pays three times as much for beef in the store as we did 30 years ago. So there's something happening out there. A farmer's union came in here with figures. Once, I think, they said that they're only getting 20% of what's on the retail shelf.

Mr. Lake talked about supply management. When you look at milk, you see that the farmer gets almost 60% of the retail value. That will tell you how things can change. When you look at the three big retailers and the big packers, you can see that they are getting more efficient. They have distribution centres, and with the way they store their stuff, the efficiencies are there, so one has to wonder what's going on with the cattle industry.

We've visited a feedlot out in Alberta. We got asking the question, “Whose cattle are these?” We found out that a lot of the cattle there were not owned by the feedlot. A lot of them were owned by the packer we had just visited an hour earlier.

Now, it's my understanding that there's a law in the United States that came out of Texas. The law is that the packers are allowed to own cattle for only a very short time. I don't know if it's for a couple days or a week. We don't have that same law here in Canada, so my number one question is whether we should have the same law in Canada, whereby packers can own cattle for a very short time, a minimum amount, which helps, of course, in not going with the prices....

My second question is, what is going on in the United States? Are consumers paying less for beef down there? Maybe there's more competition. Are cattlemen getting more for their cattle, then? Those are my three questions.

I guess I'll ask you, Travis.

[Travis Toews]

First, I have not seen any statistics on the retail value of beef in the U.S. relative to Canada, so I can't answer that, although it would be an interesting question to have answered.

Speaking of captive supplies, from my understanding, captive supply legislation has basically been implemented state by state. It hasn't been implemented federally in the U.S. Consequently, it is not uniform state by state. It is an issue that comes up in the Canadian industry. It is an issue that clearly comes up in the U.S. industry as well.

This is our concern. Clearly, market power shifts from time to time depending upon the availability of supply, depending upon demand, and there are efficiencies for processors to ensure that they have enough cattle ready on-site to optimize their kill every day. In fact, manufacturing plants have to run at a certain level of capacity in order to be competitive and profitable.

I have not seen a real recent study regarding captive supply. The study I have seen is several years old, but it was a Canadian study. At the time, it concluded that the efficiencies the packers gained by being able to procure cattle and have them available to ensure that they could kill steadily and process steadily every day of the week, those efficiencies that they gained--and then, of course, they were able to compete with other packers and then pay more for live cattle--at times outweighed the times when they had all the market power and by owning those cattle they were able, in fact, to offer less, because both situations happen, depending, again, on availability of supply. I will say--

[Mark Eyking, Liberal, Sydney—Victoria, NS]

So just on that, you are in agreement with keeping our laws and not having the same laws as in Texas, but in the province of Alberta...?

[Travis Toews]

At this point in time, we're not advocating for a change in the law, but I will agree with you that it's an issue that warrants observation, and continued observation, as conditions change. But at this point, we're not advocating for packer ownership regulation.

[The Chair, Conservative, Larry Miller]

You're out of time, Mr. Eyking.

With that, I note that we have votes coming up, and because of their proximity, I'm going to end the questioning at this point.

I'd like to thank all of you for being here today. All of you, I believe, travelled a long way, so thank you very much.

I'm not sure of the exact dates yet for this report, but it will be online at some point well before Parliament breaks. Again, thank you very much for being here.

We're adjourned until Monday.