Evidence of meeting #18 for Agriculture and Agri-Food in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was producers.
A recording is available from Parliament.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
With the production based on last year, our NAFTA partners can come in without a tariff. Other countries can still come in, but they have to pay a 5%—
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
How much are we allowing in? You quoted a figure today of—
Chair, Chicken Farmers of Canada
It's about 82 million kilograms under the access component. The way I've tried to explain it is that if we take what Atlantic Canada and Saskatchewan grow on an annual basis, that's about the size of it. It's significant kilograms.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
If that quota were to be increased to 10%, would we be taking a hit? Would we feel it?
Chair, Chicken Farmers of Canada
Absolutely. If we were to increase that access to 10%, you would see a reduction in the Canadian chicken industry effective immediately.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
The reason I ask is there are trading partners that I know would like us to do that.
Chair, Chicken Farmers of Canada
There are trading partners that would like us to allow the whole Canadian market.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Thank you.
Mr. Vincent, you talked about the free trade agreement with South Korea and the fact that negotiations with that country were stalled.
Why do you think they have stalled?
Vice-President, Board of Directors, Canadian Pork Council
That's the question we're asking ourselves. It's a lucrative market, and one that is growing. It has really expanded this year. The United States has concluded negotiations which, from what we were able to observe, were difficult right up to the end, for both the Koreans and that the Americans. The fact remains that this is an ideal market for the pork industry. If we want to get the best price in the market and the best markets in order to reduce government involvement, we have to do business in the most lucrative markets.
Ultimately, I don't know the answer.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
You also discussed the free trade agreement with Europe. You said it was potentially a very lucrative market. And yet the Europeans' quota in the pork industry is now 0.5%, whereas, in the supply management context, ours is 7.5%.
Your association spoke with those people. Do you think they're ready to increase their quota? I know they're highly protective of their industries, particularly the pork industry.
Vice-President, Board of Directors, Canadian Pork Council
In those negotiations, we first of all requested access to recognized quotas. The negotiations between Canada and Europe appear to be going well. They are always tough negotiations, but Canadian pork producers are demanding access to those export quotas. Europe has no restrictions on exports of its pork products to Canada. We want some openness, but based on what currently exists.
There were two other points. Catherine, I don't know whether you remember them.
During the year, a processor has to plan, all at once, for the rest of the year, when he has to state the volume he must buy. In fact, he can't know that. Requests to enable Canadian producers in this sector to access the European market are very much accessible to the Europeans. Based on the information at our disposal, the negotiations are going well and matters are progressing. However, that does not mean that everything is finalized and that we are not concerned about this. That is why we remind the government once again the European market is important and that it is important to have access to it.
Conservative
Bob Zimmer Conservative Prince George—Peace River, BC
Thank you again for coming.
I have a question and a comment to Mike and David from the Chicken Farmers of Canada.
I was speaking with a constituent of mine who happens to run a small restaurant chain. He's a member of the Canadian Restaurant and Foodservices Association. Speaking personally, I've appreciated supply management, in that it's good supply and it's good product. We want to buy Canadian chicken, absolutely; that's what I expect when I go to a restaurant. But he had deep concerns about the association deliberately causing a shortage in the domestic supply market to keep prices high. I want you to comment on that.
Chair, Chicken Farmers of Canada
Just so it's clear, and I will be very quick, about how we set allocation and determine how much we produce, we have a 14-person board made up of farmers, primary processors, further processors, restauranteurs, and fast-food people who sit down every eight weeks and determine what we believe, through surveys and through discussions with the rest of the country, is an adequate supply.
We do not shorten the market. Our number one responsibility is to fulfill that market. In fact, we have an organization that oversees us to make sure we take our responsibility seriously, and if we don't, there are always outlets that are able, if the market is short, to bring product in from outside. So we do not deliberately shorten the market to increase the price. That is a myth and it is wrong. It is false.
Conservative
Bob Zimmer Conservative Prince George—Peace River, BC
I appreciate that, and that's just clarifying.... Obviously, it may be a miscommunication or whatever.
I had the same question, and believe me, again I'm supportive, but I look at it in terms of risk. I look at risk in terms of you as an industry. I look at chicken prices now, where they're almost $7 per kilogram in Canada and they're $2.75 per kilogram in the U.S. I look at that and I think, as much as we want to, and we will continue to support supply management, the deep concern about the pressure that that's causing to the market, and that pressure in terms of even causing a crisis, I would say.... I have received e-mails about this while we're sitting here.
The restaurant association sees it as a crisis, that there's a deep difference in price. If you can explain in terms of risk, if you see a risk in having that price difference...you know what I'm saying.
Chair, Chicken Farmers of Canada
If I could, I'll just make a couple of comments, because I know Mike wants in on this as well.
Chair, Chicken Farmers of Canada
Clearly, chicken farmers, just like our beef, pork, and grain farmers, do not set retail prices. There is a misconception out there that farmers set prices in stores. That is inaccurate. What we do is negotiate a price with our primary processor. He buys our product. The primary processor sets the wholesale price. If he sells it to a further processor, he sets that price. The retailer sets their price. Farmers in this country, no matter what commodity they are in, do not set retail prices.
I'm going to let Mike in, because we have done some work here in Ottawa this week, and I think it's important that he put it on the table.
Mike.
Executive Director, Chicken Farmers of Canada
I'll just do it quickly. I'll come back and talk off line.
The price in the United States is less than what it is in Canada right now. The U.S. industry is having severe problems right now. Their largest processor, Pilgrim's Pride, went bankrupt at the start of 2009 and was bought out by Brazilian JBS, and they're still losing money. Three other major processors this year have gone bankrupt in the U.S., all of them larger than our largest processors in Canada.
The industry in the U.S. is losing on average 13¢ to 17¢ a kilogram for every kilogram they sell. They are now severely restricting supply in the U.S. They tried to blow their brains out at each other, and now they're cutting back and going out of production. So when people say we have to have the same price as the guys in the U.S., I ask, are you asking us to lose as much money as them?
It's not a fair comparison. If you want to compare us to an industry that is profitable and sustainable, then that's a fair comparison. Right now, that price difference is causing us grief with the U.S. because it puts pressure on imports. Those imports that come in—the 7.5% we talked about—is really 15% of our white meat market, our highest-value market, so it has an influence on the price our processors are able to get. Our processors are finding it difficult to pass on feed increases, which are affecting all animal industries right now, to consumers because of that. So there are a lot of dynamics going on right now with feed prices, which is a major cost for all of us.
NDP
Liberal
Frank Valeriote Liberal Guelph, ON
Thank you, Mr. Chair.
First, for those who have come to Ottawa, I want to apologize for my not being here. I was in the House on a point of privilege on the Canadian Wheat Board issue and the Federal Court decision yesterday, and then with members of the other parties in a scrum.
I'll be limited in my questions because I haven't heard your presentations, but I will ask Mr. Fuller a question.
I think we're all aware of just how supported the American farm industry is with the farm bills they have, in which hundreds of billions of dollars are distributed to farmers, so it's not fair to make a comparison between the United States and Canada when they have such support. Is that an accurate comment?
Chair, Chicken Farmers of Canada
Absolutely.
Besides that, last year the U.S. government went in—and I'll use our industry as an example—put $300 million on the counter, and bought up chicken out of the U.S. industry to try to help their industry survive, and they're talking about doing it again. And this is outside of their Farm Bill, so this is additional money.
We have to remember that in Canada, when a Canadian consumer buys his chicken, he pays once for it, and that's at the retail counter. In the U.S., you pay at the retail counter and you pay your taxman.
Liberal
Frank Valeriote Liberal Guelph, ON
You made well the point about your not controlling these prices at the retail level. Retailers charge what they want. Mr. Zimmer has raised the issue, as did the restaurant association, and I acknowledge the commitment that's been made by the government to supply management.
I've talked to Mr. Lemieux about that, and he has assured me that there will be no changes, but I have to ask this: if there are no changes to the tariffs but they change the percentage of the market share that may be available to, say, the European Union, would you be at risk, if it's chickens, even if it's value-added at some point—sending in processed legs, or wings, or something—of then having to rely on business risk management programs that you may not rely on now?
Chair, Chicken Farmers of Canada
If you increase the market access, you absolutely put us at risk. At what magnitude will depend on where that market access goes. Even now, with the 7.5% market access that we have, it has a price relation on our product, and we acknowledge that. So, absolutely, it puts us at risk.
As we have continually said, we see supply management as our business risk management tool. We don't want to use the other programs. That is our program that we want to use.
Go ahead, Mike.
