Agriculture Committee on May 16th, 2012

[Graham Clarke]

It fluctuates. It's a supply and demand situation. The world in general is protein short. The reason for that, of course, is largely aquaculture. Aquaculture in Asia and so on is growing. If you look at the graph of growth, it's almost vertical. There is a huge demand for protein meals for feeding farmed fish and shrimp and so on. Yes, the rendering industry does supply the domestic market for animal feed, and there is sufficient supply.

Ruminant meal, of course, with the situation with BSE, has become an issue, especially SRM. We produce 240,000 tonnes a year of SR material alone. When you render that you will get tallow—which is saleable—60,000 tonnes; you'll get steam, the moisture; and you'll get the protein, 60,000 tonnes, which has to be landfilled, because you cannot sell it, you cannot feed it. You have to dispose of it. It's waste material, so that becomes a cost-negative effect. That would be worth, if saleable, $400 a tonne. Instead, it costs $20 a tonne to dispose of, so now it's a negative $420 a tonne, on 60,000 tonnes of material.

Ruminant meat and bone meal are problems because we have an oversupply, so we like to export that.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Okay, so that's one product that you would see exporting.

[Graham Clarke]

Tallow is a major export, of course, to Asia and so on. It's a high-value export, and there's huge demand around the world for that for soap and so on. So we are a major exporter of tallow, especially into Asia. Ruminant meat and bone meal go to Indonesia and the Philippines, but they are the only two markets we have, and they're very vulnerable. If we couldn't sell it to them, we would end up having to landfill it, and we're talking 15,000 tonnes a month, which is very substantial.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

[The Chair, Conservative, Larry Miller]

Thank you very much.

I'm going to give an example. Pierre did a good job of clarifying the new rules or changes for extreme cases. At one time, I had a healthy young cow slip on the ice and she split herself, as they call it, and she couldn't get up. Anybody who has an agriculture background will know what I'm talking about. Perfectly healthy animal, but under the old rules I could butcher that cow and hang it in my garage and use it for my own. But if you have that situation, you want to be able to take that animal and have it properly processed, and it is saleable meat. They're extreme cases.

To dispose of that cow at that time, I had to load it onto a truck to send it to a local sales barn, which in turn transported it to a larger facility the next day. That cow was obviously injured and was suffering. So if you have a process—which this new rule will do—it allows that animal to be properly euthanized right away, the material used, and the farmer gets something out of it. I hope that helps everybody to understand. It's not putting bad or dead meat into the system, as some people have tried to say. It's not that at all. I think it's another great tool for farmers to recoup when bad things happen.

Anyway, Mr. Atamanenko, you have five minutes.

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

Thanks to all of you for being here.

Ms. Gibson, I'd like to look at the way things happen in British Columbia with the meat inspection regulations. I know at one point in time, I think it was in 2007, the provincial government came in and basically shut down slaughtering at the farm gate, and those folks could no longer sell. We lost a lot of small farmers. People were scrambling. The end result of that has been some mobile abattoirs. People have been adapting.

To comment on what Bob said, maybe one of the problems is the docking. There may be a mobile abattoir, but there aren't enough docking facilities that meet the demand, so people don't move it around. Anyway, we're getting a mobile abattoir in the boundary area that I represent.

However, it's still a bit unclear. The provincial government has backed off a bit and has introduced, I think, class C or D licences, which modify their initial regulations. I wonder if you could clarify that for me, please.

[Kathleen Gibson]

Sure. I'll also send a website to all of you that will be helpful, because there's a handy diagram.

British Columbia introduced the meat inspection regulation in 2004. At that time the only option was to upgrade or build a class A or B facility. It involved an actual abattoir-type building. Class A does slaughter and further processing. Class B does slaughter only. They both come from an abattoir facility, but the end product of B is a bird in a bag, or a carcass, where in A you get further cutting, wrapping, processing, and other such things, in one facility.

In the period from 2004 to 2010, it became evident that there were producers, especially in remote parts of British Columbia, such as Haida Gwaii, that had no options. They didn't have the volume of animals or the money, because it costs easily hundreds of thousands, if not a million dollars to put together a red meat facility. They didn't have the resources to build an abattoir and that problem wasn't going away.

In 2010, after doing a consultation in three remote sites, the province introduced two new categories of farm gate licence. For those, you don't have to build a facility. You do have to take a training program. The training program teaches you how to develop a food safety plan. The program is taught and the food safety plan is monitored by an environmental health officer from the health authorities. That's distinct from the A and B classes, which are monitored and operated by the B.C. Centre for Disease Control.

For an extra layer of complication, the inspectors used in the A and B facilities are CFIA personnel on contract to the province. The A and B facilities have one system, and the D and E farm gate licences have another. The distinction between the D and the E is that for the E you're limited to 10 animal units a year. An animal unit is 1,000 pounds of live weight. You can translate that into a lot of chickens, a few lambs, and one steer. That's an E licence. A D licence allows you to slaughter and sell other people's animals at the farm gate, as well as your own, up to 25 animal units. You may sell them to local retail and restaurants, but only within your regional district. The Ds and Es are largely restricted to regional districts that do not have an A or B. There are some exceptions, but I think that's enough detail. That change was made in 2010.

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

Thank you. I have a few more minutes, and there is another thing I wanted to ask you.

You mentioned a national food strategy. This has been on the radar of many organizations. The question in regard to the red meat sector is, can we have a national food strategy and look at this through the lens of controlling our food supply or food sovereignty, and still respect the trade we have as a trading nation? How can we look at that whole strategy from the point of view of the red meat sector?

[Kathleen Gibson]

I think that's where you need what we call a “graduated system”. I totally understand the level of export activity that Canada's agrifood is engaged in. I know that the federal government has made significant commitments and is seeking others for trade agreements.

It's a question—if you're thinking of Al, Bert, and Charlie—about how they continue to function much more at the ground level. The experience we had with the meat regulation in B.C. is that if you're going to have different levels on scales of activity—and they're going to have them on the regulatory radar, because food safety, animal health, and public health are important—then you have to graduate the requirements so they remain doable.

My belief is that you can have levels of requirement that coexist. Canada can have an export type of requirement under its trade agreements and subnational systems, rather like we have in the meat inspection regulation, that allow a Charlie the possibility of growing and still honour the activities of an Al who's selling at the farm gate. I know that you cannot have Al and Bert, or perhaps even Charlie, function if they're subjected to an export-level requirement.

Also, let me say that this is not about lowering a standard. It's about adapting a methodology so that different levels of business can function.

[The Chair, Conservative, Larry Miller]

Thanks very much.

We'll now move to Mr. Payne.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair, and thanks to the witnesses for coming.

Mike, we hear a lot about organic and natural, so I'm going to have a few questions around that. But first of all, could you describe what organic is and what natural is?

After that, I'd like you to talk about your marketplace, how you manage to get into the marketplace, what the pricing is on that, and then maybe some more after that.

[Mike Beretta]

I was expecting this type of a question. Organic means “certified organic”. The biggest difference between organic and natural has to do with the fact that, first, there is a third party that is hired to authenticate the claims to make it certified, and second, that the feed is certified organic as well. It would be the Cadillac of meat. You have third-party inspection, and all the feed given to the animals has been grown without pesticides, without any chemical fertilizers, following a strict crop rotation.

After that point, organic is the same as natural. Neither natural nor organic uses antibiotics in the animals. There are no growth hormones, steroids, or genetically modified organisms. So the difference between the organic and the natural stems primarily from the feed and from the fact that organic has a strict third-party control.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thanks, that's very helpful.

[Mike Beretta]

That's quite similar in most of the species. I'm talking beef, but chicken and pork would be the same.

[LaVar Payne, Conservative, Medicine Hat, AB]

How do you manage to separate the product? How do you manage to get it into the market? What's the pricing aspect? How does that work for you in competing with other beef?

[Mike Beretta]

My wife and I began as certified organic. We didn't make a transition. When we took up farming we jumped right into certified organic and didn't know any better, so we never went through a conversion piece.

What we ended up doing was adding natural afterwards, which is not the logical thing, but we found that with certified organic, because it's at the highest price point, there was a dedicated and loyal following but the growth would be much slower. So that was one challenge, the price point and not being able to grow it.

The second thing was that with certified organic there is a three-year transition for a farm to fall under that. So for three years the land and the animals and the livestock, everything, has to go through that period.

The challenge for us in growing our supply for organic was how do you convince a farmer to convert to organic and follow the organic methodology of farming without any kind of premium? The opportunity lay there to offer something as a premium for what would be considered the natural, which would fall right underneath the organic. We did that with one larger account that we had, thinking that the natural would bridge the gap as we grew our organic supply chain.

What happened instead was that we found there was a large group of consumers who wanted to take one step healthier in terms of their food choices but weren't prepared to go all the way to organic. That's where the natural has met that void.

One of the biggest challenges we've had, then, is that because there isn't a strict third-party control of natural—at least at a government level—we, as a brand and as a company, have said, we'll take ownership of that. We'll put in all the steps that we believe need to be in place, we'll advertise that to the customer, and we'll perform our own self-audits where needed to make sure that natural follows that strict protocol.

That's how we've been able to bridge that gap.

The danger of course is that natural becomes a grey area and can be abused and can create some lack of confidence in the marketplace. That's really where the challenge is with natural, which doesn't exist with organic.

So if you're looking at comparing it to an automobile, you'd have your Ferrari, you'd have your Toyota, and then you'd have your Lada. I don't know if that's politically correct, but that would be the way to distinguish between organic, natural, and what's considered commodity.

[LaVar Payne, Conservative, Medicine Hat, AB]

I also noticed in your presentation you talked about U.S. supply flooding the Canadian market at cheaper prices. Is this strictly on the organic and natural that you were talking about?

[Mike Beretta]

It happens in all of them, but far less in the organic and the natural because the United States is at a deficit right now in terms of organic supply. So we've been competing with American buyers to lock up organic beef in some of the prairie provinces.

In that regard I'm talking more of the commodity side of things being flooded here. On the organic side it's more that we're competing for a finite supply.

[The Vice-Chair (Mr. Malcolm Allen), Conservative, Larry Miller]

Thank you.

Madam Raynault.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

My question is for Ms. Gibson.

On your website, you define a number of aspects of food security. One of the statements you make is that food dependence carries both economic and political dangers, and that any government that cannot feed its people is at the mercy of whoever can.

Do you think that, in a free trade context, a government may be at the mercy of an agri-food company operating in its country? Do you think that would be possible?

[Kathleen Gibson]

I'm thinking about that one. I hadn't thought of it quite that way.

The idea that the country is at the mercy of whoever can provide the food is an extension of the idea that if you rely too much on very few players to provide the food the population needs, and something goes wrong with the very few players, the population's health is in jeopardy. That's the concept.

Or if you rely on other countries to provide your food, if you extend the core competency argument too far and give away your ability to produce food at all and rely on other jurisdictions to provide it, you are arguably putting the population at risk.

We're not saying that anyone is proposing that the nation go that far, but if you see the nation losing an ability to provide food and feed its own people, you start to ask those sorts of questions.

[Francine Raynault, NDP, Joliette, QC]

Could you tell me about a concrete way to achieve food independence and explain what makes that issue strategic for ensuring our food independence?

[Kathleen Gibson]

I don't believe that you can assert total food sovereignty in a world of globalized trade, but it does seem to me that there should be opportunities protected, to some extent, for Canadian food and agrifood businesses that can stand beside export arrangements.

Supply management is a good case in point. It's very challenging, I understand, to have—or even try to maintain—a program like supply management in an increasingly globalized world. I know that supply management has been put on the table for the Trans-Pacific Partnership, and I've read the arguments in favour of amending or getting rid of it, many of which I agree with.

In a case such as supply management, I don't know how much you can adapt it. I don't know how far you can go towards saying that the health and the sustainability of food for the population is important, but I think it would be remiss not to make some statements in that regard.

[Francine Raynault, NDP, Joliette, QC]

I really liked your document's introduction, which talks about your mission. I agree with you that, when people live better, they live longer and happier. They may be in better shape to look for work, and they live better in our society.

[The Vice-Chair (Mr. Malcolm Allen), Conservative, Larry Miller]

Let's try again.