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Evidence of meeting #27 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 need.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Ted Johnston  President and Chief Executive Officer, Alberta Food Processors Association
Rick Culbert  President, Food Safety Division, Bioniche Life Sciences Inc.
Anna Paskal  Senior Policy Advisor, Food Secure Canada

4:10 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

As do tax cuts, right? As an example, there are general business tax cuts that agriprocessors benefit from when they're buying new capital equipment.

4:10 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

Coming back to the context of small and medium-sized businesses, the largest number of companies in this country are the small and the medium-sized ones. The tax cuts are not the biggest issue to them. The biggest issue is being able to get dollars up front to do the thing in the first place so that they can make the profit where the tax cut comes into play. They need the up-front dollars.

4:10 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

I guess that's where I see AgriFlexibility or WD. There are economic development programs they can apply to for funding to help them with that kind of expansion.

4:10 p.m.

Conservative

The Chair Conservative Larry Miller

Pierre, you're—

4:10 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thank you, Chair.

4:10 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you.

Go ahead, Mr. Eyking, for five minutes.

4:10 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

Thank you, Chair.

I just hope the parliamentary secretary realizes that sometimes loans are not going to be the answer, and that with all these new regulations that are coming down, it's a downloading. When you look at the United States, I think you see that they have a lot more money in place to help the processing plants, and that's the reality.

Mr. Johnston, I've toured many facilities throughout Alberta. Do you remember that? Yes? We toured a chicken plant, and the next day it was gone. I hope they are back in business, but it was quite a tour we had.

It's surprising that people don't realize how much value-added food is being produced in Alberta. I have to tip my hat to the Alberta government for what they are doing there to make things happen.

You mentioned a few things. One thing that bothers me is what's happening with the Loblaws and Walmarts of the world. I find that if farmers or food processors have an operation, they continually get not just inspections but new mandates from whomever. One day the federal government is coming in, or it could be the provincial government, and the next thing Loblaws is coming in. It's borderline harassment, almost, on where they have to go, and they have to change all their policies and how they process stuff.

Shouldn't the federal government be taking a lead in bringing the Loblaws and the Walmarts and the Sobeys of the world into a room together and saying, as was stated by everybody here, “Okay now, Canadians want safe food, and we all agree with that, so how do we get there and what do we have to do?”? We would have a game plan that we could take to farmers or to any producer to show what needs to be done, and then we could ask how we could help them achieve that, whether it's through outright money....

Right now it's not only almost harassment of these food producers, but it becomes a matter of increased costs. They have to stop production to modify their facilities, and then they turn around and don't get any more money for their product.

Shouldn't the federal government take the lead in getting all the stakeholders in a room to establish where we are going and how we are going to achieve it?

4:15 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

Thank you for the lead-in to the action plan, because that topic of concentration is addressed specifically in that industry-government action plan. It says “retail concentration”, but you have a worse concentration in food service. One-third is food service. The two major companies are both American; one even moved their buying office out of Canada. They don't have a buying office here anymore; you have to go to Grand Rapids, Michigan, if you want to talk to them. The Government of Quebec has conducted a study on the impact of this retail concentration in Canada, and I think there are probably some pretty scary things in there. They haven't published it at this point in time.

However, our point with the round table has been that the Government of Canada does need to take some kind of lead on this position. I'll give you one anecdotal story.

A gentleman who runs a further meat processing facility in Alberta just spent $3.5 million to get his plant to the level where he can be federally inspected and approved by CFIA, and he is. He still can't sell to Loblaws, because it's not BRC. That would require another $1.5 million. He said he went into the bank and said he needed another $1.5 million. They said, “Well, what's your sales increase plan?” He said, “There is no sales increase; this is just to try to keep the business I already have.”

There's no economic upside, but the cost is attached to it, so yes, it's harassment. Yes, it's a problem. It's a huge problem.

4:15 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

I have a couple more questions. They only allow me to ask one question. I only get five minutes for the whole two hours. I'd just like to get that on the record.

4:15 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

I took part of it in my presentation.

4:15 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

With regard to local food, we have local producers in our region. Let's say you grow good raspberries or strawberries and you want to make jams or jellies. In order to go that extra step or be able to sell locally, you almost have to sell individually in your backyard. As soon as you go to the so-called Loblaws, even if you have the right codes and everything, it's almost impossible for local producers to get into that big network. We see that with honey producers as well. It's great to talk about doing it and to encourage everybody to do it, but there's a big disconnect between what we can produce and who will help us sell it.

Shouldn't there be some bridging happening there, or some expectation? The retailers have no problem promoting their “buy local” campaigns, but even though there are four honey producers right around the region, they're buying honey from Argentina because it's easier for them.

4:15 p.m.

Senior Policy Advisor, Food Secure Canada

Anna Paskal

I couldn't agree more. In fact, those are some of the concrete elements of a local food strategy that we would propose.

In Canada we need to rebuild the middle of our agriculture system. We need to rebuild regional processing and local processing so that people have access to that kind of transformation locally. This will have huge benefits for the economy as well.

It would also be very helpful—and policy can support it—to have front-end representatives for those local food systems. They could aggregate local food so that it would be as easy to buy local sustainable food as it is to go to Sysco, for example. We have some examples of that already in the food movement. The local Food Plus is a very good example of that. They'll bring together what you want—meat, produce, honey, grains—and sell it to you so you don't have to find individual buyers.

4:15 p.m.

Liberal

Mark Eyking Liberal Sydney—Victoria, NS

I'm not just picking on Loblaws, but it's a real problem getting through that door. It's a shame. There has to be some way for us to encourage those....

They advertise local produce, but they're not buying local honey because it's just simpler to bring in a pallet load from somewhere else. That's what it's all about, but nobody holds these people to check.

4:20 p.m.

Senior Policy Advisor, Food Secure Canada

Anna Paskal

There are two sides to that. One is making it easier for them to buy it by aggregating that local sustainable food. The other side is making a policy environment where those large retail stores have to buy local and sustainable food.

One example to look at is biofuels. We've legislated a10% biofuel content. We can legislate a certain percentage of local and sustainable Canadian food into our retail system. We have that power, and we have the precedent.

4:20 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

Mr. Payne, you have five minutes.

February 29th, 2012 / 4:20 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Thank you, Chair.

I thank the witnesses for coming.

There are a number of important topics in terms of consumers' demands. One of the issues we've heard quite often is around safety, and another one is being competitive in the marketplace.

I was interested, Mr. Johnston, in your comments on the 60¢ dollar and the 85¢ dollar. If you're going to be competitive, you have to be competitive at that level as well, whether it's a 60¢ dollar or a $1 dollar.

I'd like to hear a little about your food processors. Is there some rationale for why they haven't been able to compete on that basis?

4:20 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

It comes back to this whole discussion about the cost of food in terms of what goes on. In this country the percentage of our disposable income that we spend on food is way lower than pretty much everywhere else in the world, particularly relative to Europe. Food is relatively inexpensive in this country, and the margin squeeze from that concentration of retail in food service comes down to the processors, so their margins are squeezed.

How you see that manifested is that the Americans are investing at the rate of about 2.5% capital over their depreciation. We're at about 0.8%. What that tells you is that we're trying to cover some of our bottom line out of the depreciation. We're not investing even what we're taking as depreciation currently. That has been going on for a number of years, and it has negatively impacted modernization and automation.

The Netherlands has gone in the entirely opposite direction. The Netherlands, after World War II, said they were never going to starve again. They invested in this industry. They are automated. The trade attaché from Washington told me they've invested $54,000 of capital for every hour of labour they use in their food processing industry. They have higher wage and benefit rates than the Americans do, yet they beat the Americans at their own game because they have very highly automated and very sophisticated processing facilities. That's really where we need to be in this country.

We've got this huge agricultural base. We've got all this wonderful agricultural output that we could transform. We've got a huge percentage of the world's fresh water and we haven't been able to figure out how to capitalize. What we have to do is take this industry, modernize it, and get it automated. We'll still have lots of jobs for people, because we've got areas that are going begging right today. If this country had a policy that it wanted to be back to number three or preferably number two in terms of food nations in this world, the only thing stopping us is really the will to get on with it and get it done.

4:20 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

In today's economy we know as well that we're facing some budget restraints and that there are certainly going to be some cuts, so the question is how we'll manage to do that in Growing Forward 2, because we won't be able to put out the number of dollars we have available. My colleague Mr. Lemieux talked about $50 million being available, and I think only $20 million was taken up. It seems to me that there's some area there for some of the processors to do that.

What does your organization do, or have you done anything, in terms of innovation around food safety for producers?

4:20 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

Do you mean for producers or for processors?

4:20 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

I meant for processors; sorry.

4:20 p.m.

President and Chief Executive Officer, Alberta Food Processors Association

Ted Johnston

In terms of food safety innovation, basically all these standards, as I said, are going on all over the place. We've got the global food safety initiative, we've got ISO 22000, we've got SQF, we've got BRC, we've FSEP. We don't have to do anything. We've got more stuff coming at us in terms of all of these various standards.

We participate in consultations. There was a federal-provincial food safety policy conference in Edmonton about four weeks ago today, which I attended. Many senior bureaucrats from CFIA and Health Canada were there to participate and discuss that issue. They made the one fundamental point that what we need to do is move towards a single standard. We've got to get to a single standard because of the cost and all of those things.

This industry does not object to regulation. There are some people who think that we do. We don't object at all, but we need one standard. Tell us what it is, and we'll get on with it and give you exactly what you're looking for, but we can't afford to do five standards.

The API initiative is a good example, although our numbers disagree. The numbers that I have are a little higher in terms of what's gone out the door on API. One of the areas that it does not do is it will not support change that's based on food safety.

4:25 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

I have a question for Mr. Culbert.

You talked about funding the vaccine for cattle. I don't have a clue as to how much it would cost to fund it or who should be responsible for that. Should the producer be responsible for it? Should there be some government funding for it? Is that a shared cost between the producer, the province, the federal government? I don't know if you've got any numbers that would help us understand that aspect.

4:25 p.m.

President, Food Safety Division, Bioniche Life Sciences Inc.

Rick Culbert

Thank you for that question. The challenge, as I said, is that incurring the cost of a public health intervention is very hard for an agricultural commodity producer to do. Who's going to pay him back for it? In reality, the answer to this is more of a cross-departmental hybrid, if you will. It is quite conceivable that this could be mandated like a public health immunization. However, it's just not given to the public. It goes through veterinarians and the animal industry.

The math is pretty strong. If all the cattle in Canada were vaccinated, it would cost $50 million, but the benefit just in terms of health care costs is $221 million. According to the George Morris Centre and some of the agricultural economists, the return in consumer confidence would be about $80 million, so it would be over $300 million in all.

The math shows an easy return, but it's coming from multiple sources: it's potentially benefiting trade, it's benefiting public health, itt's benefiting municipal wells. It's just that the cost should not be borne by the guy who's raising cattle, and the cattle would be perfectly healthy.

4:25 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Do I have any time left?

4:25 p.m.

Conservative

The Chair Conservative Larry Miller

No, you're out of time.

Mr. Rousseau, you have five minutes.