Agriculture Committee on March 22nd, 2010

[Travis Toews]

Well, we too agree that we need a solution, but in my view, it's going to be about a three-pronged solution. I think we would see the ultimate solution as harmonization of our regulatory playing field with that of the U.S., but we know that we're some days, or months, or perhaps years away from that.

So in the interim, we also believe that part of the solution will be seeing our processors adopt the technology that's been discussed here today in terms of reducing the cost of SRM and perhaps creating some marginal benefit through technology. Also, in the short term, we believe it's critically important that we have the costs of SRM disposal offset in this budget.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

We are talking about innovation and possible solutions. Representatives of slaughterhouses have appeared before this committee. It seems that certain technologies or methods are very expensive and unprofitable. Do we, the farmers, have in mind a solution that would be suitable? Quebec farmers and your association could join forces. Everyone in Canada could then suggest to the three ministers I mentioned earlier how best to resolve this problem that is damaging the agriculture industry in Quebec and Canada.

[Travis Toews]

I think this budget announcement is one of the short-term solutions that was partially a result of collective agreement among producers across Canada, including producers in Quebec, as they saw a need for, in the short term, some cost offset on SRM disposal.

Again, we believe the long-term resolution to this problem is regulatory harmonization. As exporters, as an exporting country, we will work toward that goal, but we will have to work carefully toward that goal so we don't jeopardize any markets that we currently have open or markets that we're working hard to regain right now.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I also sit on the Standing Committee on International Trade. Last year, we talked about the difference between Canadian rules for country-of-origin labelling and the U.S. ones. We briefly discussed this issue earlier. As a member of the committee, I had the opportunity to go to Washington and meet with U.S. representatives, and even senators and people from the USDA. We have come to the conclusion that as far as possible solutions go, cattle traceability could be an acceptable compromise.

I would like to know what your organization thinks about the idea of establishing a full-fledged traceability system for Quebec and Canada, so as to eventually increase our exports.

[Travis Toews]

We appreciate your work in Washington on the country-of-origin labelling file.

Traceability is an issue our industry is dealing with currently. It's an issue our industry began dealing with in about 1998, when we established animal ID across the country, and traceability is a file we're moving forward with.

We certainly can recognize and appreciate the robust nature of the Quebec system, but as we look to move forward with our traceability system in the cattle industry across the country, we're moving forward, but we do so cautiously, to ensure we don't move forward by taking on further regulatory burden in our industry that is going to leave us less competitive in the North American market.

So we're moving forward, but we're moving forward carefully and cautiously.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Guimond; your time has expired.

Mr. Eyking, five minutes.

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

Thank you, Mr. Chairman.

And I thank you again for coming today.

In Atlantic Canada I think we lost almost half our producers, and the production of many people who are in there is down quite a bit. We only have one plant there, so it's really on a shoestring to keep open with those numbers.

As we hear from producers right across this country, in Quebec, Ontario, and even out west--and you already alluded to the shortage of money coming into their pockets--the industry is in rough shape financially, and it's hard to say if any of this money that's been allowed to the specific risk management material is going to ever get down to the producers. I think it's highly unlikely, the way the structure of the system is. It's definitely going to help the capacity of slaughtering beef, but it's not going to get down to the producers.

Mr. Easter asked you a question about AgriStability. It was mentioned before, and it's mentioned by the producers in Ontario, that really the money's not getting into their pockets. We had a memo from them before, and they see a problem with two things. One is the reference margins, and the other is the viability test.

If you could rewrite the way this thing is done to help beef producers, what would you change in the whole way the thing's set up? We're all concerned about international trade rules and all that, and I think we went through all that before, but how would you help, if you had the money to help the beef producers, by changing that whole system they got put in place?

[Travis Toews]

We have a few recommendations on the books regarding AgriStability, recommendations we believe would improve the program and make it more responsive to cattle producers across the country. The first recommendation, regarding the reference margin calculation, is that the government move to the best of previous three years or Olympic margin calculation. That would be one measure that would improve the reference margin calculation for producers. The second recommendation we have is to eliminate or change the viability test, because the viability test, as it stands today, in our view, excludes some operations that we expect are viable or will be viable. And the third recommendation we made was to increase negative margin coverage from 60% to 70%.

We thought collectively those three recommendations, if implemented, would go some distance to improving the responsiveness of the program.

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

Have you had any response from the minister on those requests from the Cattlemen's Association?

[Travis Toews]

We've forwarded those recommendations. We discussed them. They're in federal-provincial discussions. Clearly the provinces have to be onside with the changes as well. A number of our members have made those recommendations provincially. We believe the recommendations would improve the program. We're going to continue to articulate them, and we're hopeful that the changes will be made.

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

If you read Maclean's magazine this week about what's happening with the beef situation worldwide, it said that the Asian countries are picking up a lot of demand for beef worldwide and the western countries are stepping back from it for various reasons. It said in the article that now they're having one day without beef. They're promoting it in schools and that.

How is your industry going to counteract this? We even have Paul McCartney doing this big spiel around the world on it. He did it with us, with the seal industry in Atlantic Canada. You have the production issue and various things, but do you see a bit of a problem on the horizon of beef getting a bad rap and that translating down to sales?

[Travis Toews]

We know there are opposing forces out there. We have the Beef Information Centre, which is the North American industry's marketing-arm promotion group, which works to put forward facts on beef consumption, nutrition, and that kind of thing. Critical work will need to be accomplished by this organization, and it will be critical that it be funded well in the future in order to do that.

We also know there are challenges on the horizon from animal rights groups and what not. As an industry, we're working proactively on animal welfare issues. We in the cattle industry have a good story to tell. We need to make sure we're getting out there and telling it and that we're proactively dealing with it.

Recent demand trends in North America perhaps have more to do with the recession and disposable income than other trends do, although we know that the other issues are present and they need to be dealt with. We are dealing with a lack of “middle meat” demand, “high cut” demand, in North America due to less disposable income.

[The Chair, Conservative, Larry Miller]

Thank you.

Mark, you make a good point: beef has had a bad rap for a long time. Some of that's been corrected, but certainly not all of it. It irks me every time the k.d. langs of the world step up to criticize it.

Mr. Storseth, five minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair. I'll try not to refer to your friend k.d. lang.

I will be sharing my time with Mr. Stanton.

First of all, some parts of the sector get a bad rap, but there has been some success with branding. Alberta beef is a prime example of a very successful brand within the industry.

I want to go back to a couple of questions that I picked up from Mr. Eyking. One is on the impacts of the recession on our higher cuts and the demand for them. Do we have any dollar figures on that? Are there any estimates that the industry has on that?

[Travis Toews]

I don't have any figures with me today, in terms of hard numbers, that I could pass along. I apologize for that. But certainly every analyst I've sat with in the last year...whether it be CanFax on the Canadian side, or CattleFax on the U.S. side, the number one story has been lack of demand due to economic uncertainty.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

If you do have numbers, could you table them with the committee at a later date? I think that would be a very interesting read.

[Travis Toews]

Yes, we can do that.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

There's been a lot of talk lately at the committee about AgriStability and changes that need to be made to the overall suite of programs. The minister was on the record last year as saying that these programs have to be living programs that change when things need to be changed. If we can bring something up that addresses that this has to happen....

As a major player in the industry, you proposed changes at the federal-provincial meetings. What is your feeling on how close we are to getting some of these changes? It's 60-40, so obviously we have to have the provinces onside. Are there certain provinces that are harder to get onside than others? What is your general feeling about these meetings and about the potential for changes?

[Travis Toews]

The first thing I'll say is that the recommendations we put forward are very credible and responsible. I can't honestly answer as to whether we're closer today with implementation of those recommendations. I have had assurance that they are in full consideration, and I recognize the complexity of working with the provinces as well as the federal government in coming to agreement, but I can't answer as to whether we are closer to implementation.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Do you know which provinces are particularly a problem in moving some of this, or not really?

[Travis Toews]

I can't name particular provinces, because I'm not aware of them. With the budgetary realities, the fiscal realities across this country right now, these may be challenging recommendations, yet we believe they are responsible recommendations to implement.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

We talked about markets and there has been a lot of follow-up talk about markets today. What is the one most important market that your industry needs to get opened up?

[Travis Toews]

We have the most important market opened up behind Canada, and that is the U.S. But in terms of the remaining markets to open, if we could move Japan from under 21 months to under 30 months, our information tells us that would have a direct effect on fed cattle prices in Canada. That is our number one priority in terms of market access. South Korea is clearly another important priority, which we have a WTO case on now.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Chairman, I'd like to squeeze in one more question.

There has been a lot of talk on the $25 million for SRM costs. I've obviously been on the record on that at committee. What assurances do you have that our cow-calf producers are going to see some of this money, that they are going to see an increase in the price of their animals? What assurances do you guys have that this is going to happen?

[Travis Toews]

Again, as I've explained, we view this solution as a short-term one with two objectives. The primary objective is to keep the processing capacity in Canada for producers today, tomorrow, and down the road. That is really our primary objective in terms of this program, and that will benefit producers.

But secondly, in order for packers to keep those cattle in Canada, they will have to outbid their American counterparts. I can't predict whether that is going to be by 3¢, 5¢, or 10¢ a pound, but I do know they will have to outbid them. Consequently, there will be some immediate benefit back to Canadian producers today, but our primary concern is the long-term issue of ensuring that we have competitive processing capacity in Canada. We do not want to end up in the situation we were in during 2003.