Agriculture Committee on Nov. 22nd, 2011

[The Vice-Chair, NDP, Malcolm Allen]

Mr. Miller has informed me he's going to be a few minutes late, so we're going to get started.

Thank you, everyone.

We have with us today Mr. Todd Hames, from the Canadian Canola Growers Association; Christina Patterson, also with the Canadian Canola Growers Association; Beth McMahon, from the Canadian Organic Growers; Ron Maynard, from the Dairy Farmers of Canada; Mark Davies, from the Turkey Farmers of Canada; and Mr. Boyd, also from the Turkey Farmers of Canada.

Welcome all.

For those who haven't been here before, presentations are ten minutes or less. We'll start with the Canadian Canola Growers Association.

[Todd Hames, Vice-President, Canadian Canola Growers Association]

Good afternoon, Mr. Chairman and members of the committee.

Thank you for inviting the Canadian Canola Growers Association to speak to you as you study the Agriculture and Agri-food Canada Growing Forward 2 program and the issues that affect the competitiveness of Canadian farmers, a topic that is critically important to Canadian canola growers.

Along with my brother we farm 9,000 acres of oilseeds and grain crops near Marwayne, Alberta, which is about 30 minutes northwest of Lloydminster, right on the border of Saskatchewan and Alberta.

For any business, the ability to compete is fundamental to its long-term sustainability. This is true for canola growers and part of why canola has been able to expand into a $16 billion economic driver of the Canadian economy. In the agriculture sector, and specifically in the canola industry, remaining competitive in both the domestic and international markets is key to our survival. For the canola industry, being competitive means being able to constantly adapt and innovate in an ever-changing, increasingly competitive global market.

While canola is a good example of agricultural success, to remain competitive and to ensure the success story continues, canola farmers require a policy environment that encourages innovation, defends science-based regulations, and supports good business management practices. Equally important are government policies that facilitate the canola industry gaining and maintaining access to international markets, allowing us to compete on a level playing field with our competitors.

I would like to address some specific areas in which government policy directly affects canola growers’ ability to compete and remain profitable.

The first area is science-based regulations. Canola was born out of science and innovation, and for the canola sector science and innovation remain a top priority in ensuring the long-term success and competitiveness of the sector. The cornerstone of Canadian crop innovation is a predictable and science-based regulatory system that encourages investment in research and development. That system has served the canola industry well in the past, and that system will be required for it to remain competitive in the future. Although canola is a major contributor to the Canadian agricultural industry, on a global scale it is small compared to competing crops such as palm, soybean, and corn, which attract substantially more research dollars from the private sector. Maintaining an investment- and research-friendly environment is critical to attracting investment in the canola sector. Without that, the canola industry will simply not be able to continue on its innovative path, which supports healthy farms, a healthy economy, and healthy consumers around the world. To put that in perspective, canola has 17 million or 18 million acres, and corn has 90 million acres.

Maintaining science-based regulations not only has significant implications for the canola industry’s ability to attract investment in research and development, but it is also critical to our success in international markets.

Another area is market access. The Canadian canola industry is highly trade-dependent, with over 80% of seed and canola products exported on an annual basis. Therefore, the success of the industry is contingent on its ability to export its product around the world. Our ability to compete in international markets is affected by non-science-based regulations in some importing nations. One way to encourage these countries to adopt science-based regulations is for Canada to maintain and defend a strict policy of science-based regulations, setting an example for other countries to follow. Low-level presence policy is a major issue being discussed with the EU and EU industry counterparts. To strengthen our hand in these negotiations and ensure that our access to international markets is not disrupted by unintentional low-level presence of GM events, Canada should adopt its own LLP policy and then work with other countries to encourage them to adopt similar policies. Without accomplishing this, unintended and unexpected disruptions in market access will occur and directly impact the profitability and competitiveness of canola farmers.

The federal government is consulting with industry on developing low-level presence policy, and looking ahead will be critical to securing our market access in international markets. One of the big reasons for this is that the ability to measure such low levels is possible today in the billions. So one-billionth could be detected, and that could be one seed or a couple of seeds in a train load, which can prevent the whole product from moving to market.

On trade, beyond low-level presence, there are other trade restrictions that directly affect canola farmers’ ability to remain competitive with our counterparts in other exporting nations. In a number of markets, canola continues to face discriminatory tariffs. For example, in China and Taiwan, canola seed has a higher tariff than that of soybeans. In Korea, Pakistan, and India, canola oil has higher tariffs than soybean oil. In a highly competitive marketplace, this translates into either fewer sales or lower prices for canola, due to an unfair tariff disadvantage.

It is critical that the rules of international trade do not put our canola at an unfair competitive disadvantage. Minister Ritz, Minister Fast, and the federal government have pursued a trade strategy that includes free trade agreement negotiations with Europe and India, and more engagement with Asian countries such as China, Japan, and South Korea, who now have a trade deal with the U.S., leaving Canadian farmers at a disadvantage to our American counterparts.

Canadian Canola Growers encourages the government to continue moving forward on an assertive trade strategy with those other countries. Uninhibited market access to new and existing markets is vital to expanding the canola trade around the world.

On research, the canola industry has set an aggressive goal of 15 million tonnes of sustained demand and production by 2015. The industry is on track to reach this goal, with 13 million tonnes of production in 2011 alone. However, in order for this goal to be reached and sustained, government policies that stimulate investment and encourage innovation will be required. Perpetual innovation and investment in the canola industry has led to new seed varieties with improved health and agronomic characteristics, facilitating improvements in stewardship and market development.

While research needs to be industry-driven, support from the government is essential. Most of the agronomic research in Canada is conducted by Agriculture and Agri-Food Canada research stations. This research is critical to the competitiveness of the canola sector. Crop production research has helped to improve yields, lower input costs, manage new and emerging diseases and insects, and improve sustainability.

For example, clubroot is a serious soil-borne disease that emerged in canola only a few years ago. The federal government’s contributions have been very valuable in the effort to combat this disease. Specifically, the clubroot risk mitigation initiative was launched with the assistance of the federal government.

Continued research into the nutritional benefits of canola, such as reducing the risk of cardiovascular disease and improving the ability to manage diabetes, is also important in improving the market demand, as is research done to improve the nutritional profile of canola. The results of this research will help increase consumer consumption of canola and improve the health and wellness of all Canadians, which has the ultimate impact of reducing health costs for Canadians.

The federal government’s continued and expanded support of research directed at both the agronomic and the end-use properties of canola will play a significant role in keeping canola growers competitive. In addition, programs like the recently announced agricultural innovation program will help facilitate innovation in the entire agricultural sector.

On rail service, with the majority of canola grown in Canada being shipped to export market by rail, canola growers rely heavily on the service of Canadian railways to market their grain. Industry competitiveness in the global marketplace is dependent on the railways providing timely and efficient service to Canadian agriculture. A more effective rail system in Canada would make canola growers, along with all grain farmers, more competitive.

The Canadian Canola Growers has strongly advocated for an improvement to the rail service in Canada through participation in the government’s rail service review. The recent appointment of a facilitator and the establishment of a working group are important steps in moving forward, and we are encouraged by these steps. However, this is only the beginning of a process that is required to address the significant issues that farmers face with rail service. Only by moving forward on all of the aspects of the review will there be any significant improvement to the efficiency of the rail service in Canada.

[The Chair, Conservative, Larry Miller]

Would you like to wrap up, Mr. Hames, please? You're over time now, but we'll allow you to wrap up.

[Todd Hames]

Okay.

Access to affordable credit is of major importance for growers to manage their cashflow and take advantage of marketing opportunities whenever they may present themselves. The federal government’s advance payment program, administered by CCGA and many other commodity groups, provides farmers with advances of up to $400,000, with $100,000 interest-free.

Feedback from the program from farmers is also generally very positive. But one area in which they are telling us this program could be improved is by increasing both the total limit and the interest-free limit. Fertilizer alone on the farm is up 50% this year.

Farm size has grown substantially over the last decade. In addition, input prices have risen significantly. For this to remain a relevant and effective cashflow management tool, we believe it is time now to increase these limits to more accurately reflect the current economics of farming in Canada.

Increasing the cash advance limits would allow producers to take advantage of more market opportunities with expanded credit, and it would better serve young farmers with higher debt loads.

Business risk management is another area with government support. While not perfect, the current suite of programs plays a valuable role in achieving the long-term sustainability of the industry. CCGA has done its own research in this area to help provide solutions to the challenges we see with the current suite of programs.

Thank you for your time. I look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to the Canadian Organic Growers. We have with us Ms. Beth McMahon for ten minutes, please.

[Beth McMahon, Executive Director, Canadian Organic Growers]

Thank you, Chair, honoured members, for inviting me here today. I am Beth McMahon, the director of the Canadian Organic Growers. This is Canada's oldest organic agriculture organization, which first started in 1975.

The Canadian Organic Growers enjoys a large and diverse membership, with more than 1,500 individuals and businesses across Canada across the value chain. We have four regional affiliates, ten chapters, and a quarterly magazine.

My position with COG is quite recent. However, for the past eight years I have been executive director of ACORN, the Atlantic Canadian Organic Regional Network, which is the organic association for Atlantic Canada. I'm also a member of Agriculture Canada's Organic Value Chain Roundtable and a director of SOIL, Canada's national sustainable farm apprenticeship program.

In working with the organic sector, what has struck me the most is the innovation and motivation of producers and processors. Although spread across commodities, scales, and geography, this sector is enthusiastic about sharing information, encouraging growth, and celebrating the success of others. I believe these core values are leading to financial gains, adaptation, renewal capacity, and further innovations, a positive feedback loop that we're encouraging.

I've personally witnessed the intentional information sharing and leadership in livestock, horticulture, and various companies and commodities.

Our sector has created producer networks for sharing information on seed production, grains, and community-supported agriculture. Encouraging these types of communication initiatives is a very cost-effective way to facilitate industry collaboration and problem sharing.

In no other part of our agriculture are the new entrant rates as strong as what we are now seeing in organic production. We know that renewal in the general farming sector is of great concern, so supporting organic production can be an important part of the solution for supporting the whole base of agriculture. Many of our new entrants do not come from farm backgrounds and require significant training and support.

Access to funding for new entrants is still a challenge I hear about on a regular basis. With many entering into the field with hefty student loans, even with production experience and solid business plans, farm loan boards and commercial banks are not interested in supporting start-ups. Creativity and determination abound in our sector, which is why we're seeing strong growth in the community-supported agriculture models, but greater access to capital is required for scaling up.

Even at smaller scales, the values of organic agriculture are important to rural economies, succession options, and farm knowledge transfer. The surge in interest in organic farming is also providing current producers with new sources of labour and aspiring farmers with real-life education. Through on-farm training initiatives like CRAFT in Ontario and SOIL, which is across Canada, aspiring farmers are placed on farms for a full growing season. Last year in Canada there were over 200 farm apprentices, which led some to start their own operations, others as skilled labour for future years, and yet others who realize farming just isn't for them. Many farm hosts are playing an important role of extension agent in their communities, filling part of the large gap that government used to lead. Our organization believes there would be considerable value in supporting more people on the ground who can provide technical organic guidance to new producers, those in transition, as well as those who are looking to adapt their operations to more lucrative markets.

Certainly one of the most efficient methods of increasing knowledge sharing and collaboration are in-person meetings and conferences. As organizer of one of Canada's largest agricultural conferences, I can personally vouch for how incredibly important they are for encouraging innovation and adaptability.

Ten days ago we had more than 500 people at the ACORN conference in Dartmouth, with hundreds coming from out of province. What you may find interesting is that most participants were not organic, but everyone was there to learn something from more than 40 workshops in soil fertility, pasture management, new crops, marketing, financial profitability, and more. There were also side meetings for the Maritime Hop Growers Cooperative, a new provincial food distribution initiative, and another meeting for the development of the Nova Scotia organic sector strategic plan. No one left this conference without new ideas, energy, and enthusiasm after what was a pretty dismal growing year. We achieved all of this without large government grants, just a few sponsors and registration fees, as well as the volunteer efforts of more than 70 people.

This is an example of how our organic associations are providing value to the entire agricultural sector. Run without the revenues of check-offs and mandatory memberships, organic farmers, businesses, and supporters generously provide funding to keep our organizations operating. Human resources are also spread thin, with fewer than ten full-time staff working in various organic organizations in Canada. As identified in the GF2 discussion paper, support for industry associations is critical, and this is very true in the organic sector. Our heavy reliance on volunteer contributions does not provide much stability. We need greater support and investment to build our core human resources, ensuring the infrastructure to share knowledge, lessons learned, avoid duplication, and increase our general capacity for our sector's competitiveness.

In the past three years there have been thousands of hours volunteered by organic stakeholders participating in the consensus-based methods of the Canadian Organic Standards, which is managed by the Canadian General Standards Council and the Canadian Organic Products Regulations. This investment is one of the reasons that Canada is now so well regarded internationally for its organic products. This is the only reason we were able to achieve a bilateral trade agreement with both the U.S. and EU, which is a first in the world. This places Canada in a very competitive position since these two regions represent 96% of the organic marketplace. It is essential to review and maintain our organic standards in order to protect these important trade agreements and develop others.

Already, there are many outstanding issues to review in the standard, but no means to do so. We need government to commit to the maintenance of the standard. This is a key priority for the sector and critical to our adaptability. Volunteers can't do it alone.

The organic sector is in a strong position of growth. With more than $2.6 billion in sales in Canada last year, the consumer appetite for organic products is undeniable. Despite having 4,000 primary producers and 1,200 processors, demand still exceeds production, so most of that $2.6-billion sales figure represents imported product, and this is an incredible opportunity for our organic sector.

Organic production and processing is providing the consumer with an assurance that what they are buying was grown without synthetic pesticides or genetically modified seeds, processed without artificial additives, and raised in humane conditions. This requires significant record-keeping for traceability, on-site inspection, labour, and expense. Organic producers and processors must also have systems in place to avoid contamination, planting buffer zones and adding extra standard operating procedures for processors and abattoirs. The organic sector goes the extra mile to meet consumer expectations, but it's not enough.

Currently we're facing the threat of increased GM contamination. If GM alfalfa is registered, our buffer zones won't block these tiny seeds, which can travel with pollinators for several miles. Alfalfa is also the first transgenic perennial crop grown to tolerate glyphosate, which also presents a long-term risk to any producer who wishes to avoid GM crops. There are no programs to compensate organic producers for lost market premiums or, more seriously, lost certification due to GM and environmental contamination.

Increasing organic production and exports benefits Canadian agriculture as a whole, contributing to Canada's brand position: "Quality Is in Our Nature". Canada will always be in a difficult position to remain globally competitive on price. However, we can excel in quality and trust, and organics is an excellent fit in this model. Most of the work that we are engaged in has broad applications to all of agriculture, from the scientific research on low-input systems, to new farmer training and knowledge transfer, to building Canada's reputation for high-quality foods.

I would urge this committee to ensure that your support for organic is clear in the Growing Forward 2 parameters and negotiations with the provinces, thereby ensuring the continued growth of this innovative sector across Canada.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

Before we move on to our next witness, I'd like to make the committee aware that we have a number of guests in the audience who just arrived from the Republic of Bangladesh. I'd like to welcome all of you here. With this delegation, there are four members of Parliament, including the chairs of the committees on social welfare, agriculture, labour and employment, and fisheries and livestock.

Our committee today, ladies and gentlemen, is continuing our study into Growing Forward 2, which is a slate of programs that delivers continuity and stability to agriculture in Canada. They're about to be renewed, and when we're done with this report, it will get reported back to the ministry and the House of Commons. The component of this study that we're doing right now is on competitiveness in the industry.

I hope that you enjoy your time here in Canada and at the committee here today. Welcome.

With that, we'll now move on to Dairy Farmers of Canada and Mr. Maynard.

[Ron Maynard, Vice-President, Dairy Farmers of Canada]

Thank you, Mr. Chairman.

Thank you, first of all, for inviting us here today to make a presentation.

My name is Ron Maynard. I'm a dairy producer from Prince Edward Island. I farm there in partnership with my cousins and we milk 150 cows. I've been involved in the dairy organizations for a number of years, and the file I'm mainly responsible for at Dairy Farmers of Canada is the environment and animal welfare and the research that goes along with that.

Today we'll talk about the Canadian dairy sector. The Canadian dairy industry, farming and processing together, is the second-biggest food sector in Canada. Dairy is one of the top two sectors of seven out of ten provinces. In addition to being jobs sustainers, we also contribute $3 billion in tax revenue to the three levels of government.

Canadian dairy farmers are efficient. From the introduction of supply management until 2008, according to USDA statistics, yield increases in Canada, at 138%, have been higher than in the U.S., at 110%; the U.K., at 81%; and much greater than New Zealand, at 35%. Farm size and efficiency have continued to increase under supply management. Canada has had comparable rates of decline in farm numbers to the U.S. in the nineties. Moreover, when compared with the decline in farm numbers on a longer period, the rate of decrease is very comparable. From 1970 to 2009 farm numbers decreased 90% in both Canada and the U.S.

Since the introduction of supply management in 1971, average herd size has increased from about 20 cows to 76. Shipments per farm have increased by 600% from 1976 to 2010. The productivity gains in Canadian dairy producers are comparable to if not better than any of the producers in the rest of the world.

Canadian dairy genetics are sought after worldwide and are frequent topics during the agriculture ministers trade missions. The government and the dairy sector continue to invest to maintain our world-class genetics.

It is essential that farmers supply milk to meet Canadians' demand for milk and milk products. This is the first pillar of supply management. The steady supply of quality milk to meet consumers' demand for milk and dairy products has the benefit of stabilizing prices from farm to fork. Farmers collectively negotiate prices for milk. Prices are regulated. By being able to negotiate collectively, farmers are better able to cover the cost of producing milk, including labour and investments. Farmers are thus empowered to deal as equals with the small number of large processors that buy their milk. Clearly these three pillars are interlinked. If a single pillar is compromised, then the entire system is affected.

Canada is a high-cost producing country. We have to deal with five months of winter and seasonality, similar to the climate of other Nordic countries, even with our highly efficient dairy herds. Seasonality of the dairy production has been practically eliminated. In 1960 we produced twice as much milk in the summer as we did in the winter. That has now been stabilized and levelled out. This contributes to processor plants' efficiency, because plants can run at 100% year-long, day in and day out--and that's efficiency.

Stable, predictable prices for the whole supply chain are effective against volatility in world markets. Where other governments are dispensing subsidies, a direct transfer from taxpayers to the farmers--in the U.S., $5 billion--in Canada we charge the consumer the true, actual cost to produce the milk. This volatility has led to discussions over the last couple of years in the U.S., where they are looking at developing a supply management system to assist their farmers.

Dairy is known as one of the most volatile agricultural commodities. The severe shifts in price in recent years are a testament to that and reinforce the need for high tariffs, because the world markets are so inefficient in balancing supply with demand. High volatility requires higher tariffs, but Canada still allows more access to our dairy market than the U.S. or the EU.

Yes, we are seeing more expensive prices in Canada right now, but in the last decade Canada has had a 40% advantage, and no one was talking about that. We were in supply management then as well, and that didn't get the credit for the price advantages.

So what do stable prices get us? Stable prices are a benefit throughout the chain. If the price is stable and there's no volatility transferred to the retailer, once again we see stability in the share of the dairy chain and a greater share returned to the farmer than our fellow farmers receive in other countries. All stakeholders benefit from stability in the Canadian industry.

At the height of global food prices, we can see the range of price increases for dairy products: 14% to 15% in Europe; 10% to 12% in the U.S; and 2% in Canada. Other countries are coping with this through subsidies. The government in Canada has had no desire to see our farmers have to compete against the treasuries of other countries.

What supply management means is that the dairy farmers get a fair price for their milk from the market. Processors get a stable supply of high-quality milk throughout the year. Despite the higher prices paid to farmers, processors earn adequate profit, and consumers pay reasonable prices for dairy products.

Canadians spend about 10% to 12% of their disposable income on food. Dairy products constitute about 15% of this spending on food. There are no financial contributions by government to supplement the farm producers' income, so Canadian consumers pay only once for the true value of the product. Production discipline limits surplus production that could otherwise distort world markets.

Moving to the Growing Forward 2 recommendations, we have made a number of recommendations to AAFC during the Growing Forward 2 consultations that have taken place thus far.

DFC places a major priority on research. We are committed to the next phase of the dairy cluster and are prepared to commit $5 million in the one-to-three industry-to-government ratio to fund the next cluster.

We are also looking at ways to continue to help and encourage farmers to reduce on-farm costs by installing, for example, digesters or wind power. Our former president, Jacques Laforge, as some of you may know, has installed a digester on his farm. I have a windmill on my farm, and we have solar panels, which are quite common for heating the water we use for our cleaning.

There needs to be a long-term industry and government commitment to animal welfare, animal health, traceability, research, food safety, and biosecurity. Dairy producers are seeking collaboration with government to empower industry with the regulatory environment and policy instruments that will help facilitate and foster an environment of stability and predictability. These are imperative to the Canadian dairy industry's pursuit of opportunities for growth and an effective response to current and future consumer demands.

As more and more Canadian consumers voice their interest in being more aware of their food, they expect government to keep them safe, so there is a continued need for effective and enforced national regulation standards. We need to improve the resources given to the border inspectors to help them do their jobs, as it's getting increasingly complex. Border controls are important for all goods. We need a border surveillance system that inspects and verifies.

In conclusion, our definition of competitiveness is that it should be measured by the ability of an industry to provide sustainable profitability in every sector of the industry, including at the farm.

Thank you for your time.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Maynard.

Now we'll move to the Turkey Farmers of Canada. We have Mr. Mark Davies and Mr. Phil Boyd. You have ten minutes, gentlemen.

[Mark Davies, Chair, Turkey Farmers of Canada]

Thank you, Mr. Chairman.

I'd like to take this opportunity to thank you as well as the other committee members for letting us express our views on the Growing Forward program under the competitiveness banner.

As stated earlier, I'm Mark Davies, and I hale from the Annapolis Valley in Nova Scotia, where I run a family farm there that was started about 35 years ago, when supply management came to be.

As just a quick overview, our board of directors at TFC is an 11-member board of directors, comprised of eight farmer-elected representatives, two appointed primary processing sector members and one appointed member from the further processing sector. I mention this because I think it's important to recognize that we have all facets of the industry involved. That serves us well in the decision-making process and as we design programs and policies to benefit our members.

Our mission is to develop and strengthen the Canadian turkey market through an effective supply management system that stimulates growth and profitability for all economic stakeholders. This, for us, is job number one. We have a uniquely Canadian marketing system that is well supported and well equipped to be foundational for the development of competitiveness by individual farms and firms.

Our role as a national organization is to create a platform where individual enterprises from the farm throughout the value chain can continue to develop their own competitive edge in the domestic market. In many ways, our organization, with its obligations of responsibilities under the federal-provincial act, is a facilitator for enterprises within the turkey section, playing a key role in how challenges and opportunities will be addressed. In that context, our role in fostering competitiveness in the turkey industry is focused on a number of priorities. What I'll do is just touch briefly on each of those.

The first priority would be on-farm food safety. With support from Agriculture and Agri-Food Canada, our organization has developed the TFC on-farm food safety program, known as OFFSP, an auditable national program that incorporates biosecurity protocols and detailed on-farm record-keeping to reduce and control potential food safety hazards on-farm. The program and its management system have passed technical review by the Canadian Food Inspection Agency.

I think it’s worthy to note that continued funding for the ongoing maintenance and continuous improvement of the industry on-farm food safety programs is recommended to ensure that producers can best maintain the safety of Canadian food through risk prevention on the farm.

The second item I’d like to touch on is flock care. Canadian turkey farmers have long been committed to providing wholesome and safe food to consumers in a way that ensures the humane care and treatment of their birds. Our flock care program is an auditable national program, as mentioned, that provides turkey farmers with measures to ensure the proper handling and care of their birds, based on the Canadian recommended code of practice for the safe care and handling of farm animals--chickens, turkeys, and breeders--from hatchery to processing plant.

Following a request from the Turkey Farmers of Canada, in conjunction with the Chicken Farmers of Canada, the Canadian Hatching Egg Producers, and the Canadian Poultry and Egg Processors Council, the National Farm Animal Care Council has commenced a review and update of the code of practice for chickens, turkeys, and breeders, which was last revised in 2003. In order to be effective, the code of practice must be reviewed regularly, and revised as production and management systems evolve. Revisions to the code of practice are supported by funding received from Agriculture and Agri-Food Canada’s agri-flexibility program. The maintenance of this funding is critically important for the ongoing practical relevance of these codes.

Moving on to the third point, which would be disease surveillance and compensation, Canadian turkey farmers participated in the Canadian notifiable avian influenza surveillance system, known as CanNAISS, a joint initiative of government, industry, and Canadian farmers to prevent, detect, minimize, and eliminate the presence of notifiable avian influenza in Canada's domestic poultry flocks. The program is a very important component in the management of foreign animal disease. At this point in time we're entering our third year of this process, and to this point have had a clean bill of health, 100%, for all members tested.

New compensation maximums payable to owners of birds ordered destroyed under the authority of the Health of Animals Act were announced in March 2011. These revised figures better reflect the market values of birds and represent the culmination of extensive consultation between industry stakeholders and government.

Good progress has also been made on market value assessments. Adequate compensation is considered a critical component in both effective disease surveillance and pre-emptive cull programs, in which the ultimate goal is to contain a disease before it spreads and save all partners—governments, the public, and the industry—the cost of managing a full disease outbreak.

Compensation maximums must be reviewed on a regular basis by the Canadian Food Inspection Agency to ensure that they are fair and will adequately cover legitimate costs in the event of an ordered cull. The means for calculating payouts to individuals must be transparent and must reflect the market value of the birds at the time of the ordered cull.

Moving on to scientific research, poultry industry research is a vital factor for the Canadian turkey sector in terms of productivity, economics, competitiveness, food quality assurance, and general societal concerns about poultry farming and food production; for example, concerns for the environment, bird care, and food safety.

In terms of productivity, it takes 30% less feed today to produce the same amount of turkey meat compared with 30 years ago. This is the direct result of improvements along the supply chain, from enhanced feeding programs and formulations to management practices on farm.

In 2010, the Turkey Farmers of Canada research committee conducted an environmental scan to assess the strengths, weaknesses, opportunities, and threats presented to turkey research in Canada. Referencing this information, a formal TFC research strategy was drafted and approved by the TFC board of directors in May 2011.

The development of the research strategy is complementary to and partially the result of work and support from the Canadian Poultry Research Council. Some of the objectives and priorities are reducing human health risks from entering the poultry value chain; continuing to promote the prudent use of antimicrobials and increasing the use of antimicrobial alternatives; enhancing existing while developing new production systems and strategies to further improve the well-being of Canada’s poultry flocks; and developing functional and value-added products that enhance the health and well-being of Canadians and meet niche market demands.

In the fall of 2010, the federal government committed to invest up to $1.8 million in poultry industry research through the Canadian Poultry Research Council’s poultry science cluster initiative. The funds allocated by the government have helped to increase Canada’s capacity for poultry research and have assisted turkey farmers in addressing priorities and challenges by promoting innovation and fostering national coordination among scientists.

The industry needs the support of government programs to achieve the significant societal benefits that poultry research and innovation bring to Canadians. We recommend that Growing Forward 2 commit sufficient funds to poultry research and innovation to maintain and enhance the capacity of the present system. Programs must recognize the structure of the value chain so that all parts, from primary research to application, are sufficiently funded.

To be a world leader, Canada must have a world class research facility and clearly identified objectives. Industry cannot do it alone; government must be involved financially and in capacity-building at an institutional level, an example being the science cluster I just mentioned.

Turkey Farmers of Canada has identified the need for a turkey market development committee and is in the process of developing the terms of reference for this committee, which is expected to begin full operation in early 2012. Committee members will include producers, processors, representatives from the Canadian Restaurant & Foodservices Association and the Retail Council of Canada, as well as a Canadian-registered dietitian, and maybe even a Canadian foodie and/or chef—they seem to have a lot of influence in our society as of late.

In 2008, a comprehensive turkey nutrient value analysis was jointly undertaken by TFC and Health Canada. At that time, the nutrition information for turkey meat on Health Canada’s Canadian nutrient file was primarily out of date and sourced from the United States. This has been a valuable tool for us in moving forward and espousing the benefits of turkey meat in the marketplace.

Marketing and promotion, including access to market information, is not inexpensive. Government expenditures in this area are not considered trade-distorting and therefore constitute an area in which a transparent and easily accessible program could be enhanced; for example, in the area of matching funds.

Under promotional activities, the most valuable market for Canadian turkey farmers is the domestic market. Over the last 18 years the industry has seen the retail market share for further processed products increase from 15% to 22% in volume.

More important, though, in terms of value is that sales of further processed products have increased from 33% of sales dollars in 1993 to 56% in 2010. I think that is a commentary on societal changes—in people's eating habits and in their day-to-day lives—and how these have evolved over the last decade or so.

Under the rubric of domestic branding, having been involved in the consultative process with staff from Agriculture and Agri-Food Canada, the Turkey Farmers of Canada have long been aware of the Canada branding initiative, which aims to clearly define Canada as a brand and highlight the benefits and attributes inherent in products of the Canadian agricultural industry.

As of this month, our agency has received approval to use the Canada brand identification in web and email communications to generically promote Canadian turkey and the Canadian turkey industry. The Canada branding identification is now in place in our email signatures and on TFC’s bilingual website, which targets Canadian consumers.

The application process for this was well-ordered and efficient.

Market segmentation is an economic concept that in the simplest terms means developing a commercial advantage through product differentiation. If done correctly, market segmentation and product differentiation allow the industry to divide end users into groups, so that supply and demand and the price relationship of both are in equilibrium.

We at TFC allocate several classes of quota that are end-use-based. The agency’s primary and multiplier breeder quotas are established to cover the marketing of mature turkey meat domestically, but the intent is to ensure that these two segments of the industry, which have a significant export dimension for breeding stock—for example, eggs and poults, which are not import-controlled—can expand or contract in correlation with the international market.

On the domestic side, the agency allocates quota for whole turkeys that are primarily marketed and consumed during the festive seasons, those being, as we all know, Thanksgiving, Christmas, and Easter; these are fairly stable markets.

The further processing segment, which encompasses raw cut-up parts, deli meats, roasts, niche products, etc., is allocated based on individual processor requests. This market-driven approach to allocation is required to service what is seen as the highest-value market segment of the industry and the one that holds the most promise for growth in the coming years.

In conclusion, as committee members are well aware, the next decade will bring challenges but also opportunities for the Canadian agriculture and agri-food industry. As consumers’ tastes change and the demand for more specialty products grows, market segmentation and product differentiation provide opportunities to maximize sales, if we can outrace our competitors to deliver these products to the marketplace. This means having timely information on consumer trends.

This brings us full circle to the concepts of value chain, market research, promotion, food safety, animal care, and scientific research, which are addressed elsewhere in this presentation, and to the role of government in those areas.

The thought I'd like to leave you with is one I mentioned at the beginning of my presentation. At our agency we believe that we create the platform that allows for the development of the tools necessary to move the industry forward in new and innovative ways that will serve both stakeholders and consumers alike.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to questions.

Mr. Atamanenko, you have five minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you all for being here.

Ms. McMahon, you mentioned GM alfalfa. What are your thoughts on putting a moratorium on GM alfalfa, and why or why not?

[Beth McMahon]

Of course that is something that our entire sector is very actively pursuing. Last year your bill failed to evaluate the economic impact that GM would have—on all sectors: you don't have to be organic to be affected by GM contamination in potential markets. Certainly alfalfa is, as I mentioned in my address to you, of heightened concern, because it is such a small seed and the pollinators that are required to activate it can travel something like 12 kilometres. We don't really have a system here in Canada to know whether your neighbours are using it or are not using it, and so one of the concerns is that you really don't know where that cross-contamination may come from. And because it's such a small seed and a perennial seed, it's not something that's going to be frost-killed in one season, if you realize that there's alfalfa growing in your field and you didn't plant it—if you were even going that far in detail.

In our consumer markets, one of our promises to the consumer is that by choosing organic products you are avoiding GM content. We have already put in place a system that mitigates that. This is what our producers have done—and our processors. We already do testing; as I said, we plant buffer zones; we get letters from neighbours saying that they are not growing.... For example, in P.E.I. there is a lot of non-GMO canola for the Japanese market. It's not organic.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I'm going to interrupt you. I'm sorry, but I have only five minutes. Thank you for that.

Mr. Hames, would your sector support them? You're established. You have a market, and you're doing well. Would you support the organic sector and others who are calling for a moratorium specifically on GM alfalfa?

[Todd Hames]

What we support is science-based regulation. The other way to combat that a bit, as we talked a little about, is through low-level presence. I really believe you need this policy on low-level presence.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I'm going to stop you there. Would you support a moratorium now on GM alfalfa until we do the scientific studies, until we do the market impact studies so that these folks don't take an economic hit if all of a sudden there's this low-level presence? Would you support them in that?

[Todd Hames]

I don't think it's for the canola industry to get into the debate on whether alfalfa.... We're not here to put down other farm groups or what not.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I just want to take up the low-level presence. The government wants to allow 0.1% or higher of our food being contaminated with genetically modified foods that have not been approved by Health Canada for safe human consumption. In other words, these foods would have been approved somewhere else, which might have different safety standards, but would not have been evaluated by our own regulators. So I don't understand why, for example, the canola industry would be calling for low-level presence, since you have a market. Obviously an overwhelming majority of canola is genetically modified. You have markets. Either it's acceptable in another country or it's not. So why would you even be considering or calling for a low-level presence when you already have the presence and you have the markets? I don't quite understand that.

[Todd Hames]

There are some genetically modified events that may not be registered, or registrations may not be kept up because of the cost of that kind of process in some countries. When you measure such small quantities, an old event that is past registration or is not recognized in a marketplace could appear in a test of one-billionth of a cargo, and that can cause trade disruption if that country is looking hard enough for that single event. As I say, it could be a small contamination in the corner of a ship that some seeds are lodged in. There are a number of different ways contamination can occur at very small levels. Having a low-level presence allows for the equipment that can test at such small amounts.

[The Chair, Conservative, Larry Miller]

Thank you. We're out of time, Alex.

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

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

Thank you very much, Mr. Chairman.

Thank you, everybody, for coming today.

Mr. Hames, you're from the same part of Alberta I'm from. It's good to see you here.

How many organic producers would there be in your neck of the woods, as a percentage, would you say?

[Todd Hames]

I certainly have no idea.

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

I'm not going to hold you to the details, but I mean of the guys in your area that you know.

[Todd Hames]

There are organic farmers, I think, across this country, and in my area I know there are organic farmers.

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

Would you say it's about 20%?