Evidence of meeting #55 for Agriculture and Agri-Food in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was provinces.
A recording is available from Parliament.
3:30 p.m.
Conservative
The Chair Conservative Bev Shipley
Welcome, colleagues, and welcome to our witnesses who are with us today.
We have a couple of guests at our table. Mr. Choquette and Mr. McCallum, welcome and thank you for joining us today. It's good to have downtown agriculture here.
3:30 p.m.
Liberal
3:30 p.m.
Voices
Oh, oh!
3:30 p.m.
Conservative
The Chair Conservative Bev Shipley
Also, Mr. Leef is here with us. We are continuing our discussions with our witnesses regarding the promotion of domestic trade in agriculture and agrifood products by the reduction of interprovincial barriers.
In our first hour, colleagues, we have with us, from the Canadian Federation of Agriculture, Mr. Ron Bonnett, president; and from the Canadian Sheep Federation, Corlena Patterson, executive director. Welcome to both of you.
In the form of having ladies first, I'll turn it over to Ms. Patterson for 10 minutes.
3:30 p.m.
Corlena Patterson Executive Director, Canadian Sheep Federation
Thank you.
On behalf of the Canadian sheep industry, I would like to thank the committee for its invitation to speak to you and address some of the challenges our sector faces. So thank you.
The Canadian Sheep Federation is a national not-for-profit organization that represents over 11,000 Canadian sheep producers. Established in 1990, the primary responsibility of our organization is to set national policy for the sheep industry. Our mission is to work closely with all levels of government and industry-related organizations, both domestically and abroad, to further the viability, expansion, and prosperity of the Canadian sheep industry. To that end, the Canadian Sheep Federation is pleased to take this opportunity to share with the Standing Committee on Agriculture and Agri-Food the challenges the sheep industry faces as a result of interprovincial trade barriers, and the opportunities that exist to eliminate these barriers.
In May 2012, the Canadian Sheep Federation sent a letter to the Minister of Agriculture and Agri-Food, the Honourable Gerry Ritz, supporting the proposed amendments to the Meat Inspection Act that promised a movement towards streamlining and simplifying the requirements for federally inspected processing facilities. There have been positive changes to regulations since that time, and there remains a need to continue reforming the existing system and examining opportunities for minimizing barriers to interprovincial trade.
The news of a less onerous recognition system for federally inspected abattoirs was promising for the sheep industry. We are a sector that sees 70% of its animals processed in provincially inspected facilities, and only 30% processed under federal inspection. To provide some perspective on this, I would point out that Ontario processes 53% of Canadian-born lambs, with over 90% of those processed and handled through provincially inspected facilities. This means that 48% of Canadian-born lambs have to be consumed in Ontario and remain unavailable to the rest of Canadian consumers.
The challenge for the sheep and lamb sector is in fact infrastructure. In 2014, there were only 10 federally inspected facilities in three Canadian provinces with the capacity to process sheep and lamb. Despite encouraging processors to attain federal inspection, we have been repeatedly told that it's not only the cost of making the transition from provincial to federal accreditation, but also the cost of maintaining it. Two Ontario processing plants that endured the transition from provincial to federal inspection subsequently closed and filed for bankruptcy. With large national grocery outlets reluctant to carry meat products from provincially inspected plants, given their interprovincial distribution system infrastructure, there is a genuine need to address how Canadian lamb is going to make it to Canadian consumers. Despite Ontario's overall processing capacity, the shortage of federal processing, along with retailers' reluctance to carry provincially inspected product, means that even Ontario consumers don't have access to Canadian lamb. A lack of federally registered kill facilities and the inability to move provincially inspected product between provinces limit the productivity and profitability of the Canadian sheep industry.
Limitations imposed by the current meat inspection system affect more than just the processing sector. Producers in provinces without federally inspected establishments are required to either direct-market to a much more limited customer base, or ship live animals to provinces with larger processing capacity. For some producers, the additional cost incurred in transporting sheep and lambs across several provinces can equate to 10% of the animal's value, which significantly impacts producers' profitability. Provinces that have the land base and capacity to expand the ewe flock lack the ability to move product out of the province, and they lose profitability in moving live animals to provinces with the greatest retail demand. Likewise, the cost of producing sheep and lamb in provinces with major consuming metropolises is ever-challenged by rapidly increasing land prices.
The recently released domestic livestock movement demographic study commissioned by the Canadian Food Inspection Agency suggests that, on average, over 30,000 sheep and lambs are shipped from western provinces to eastern Canada annually, and in some years that number is over 50,000 head. With interprovincial transport times for live animals easily exceeding 48 hours, animal welfare concerns can keep some producers from being able to market directly to abattoirs or through auction marts that service provinces with high processing capacity.
Nova Scotia provides a pointed example of how Canada's meat inspection system is failing Canadian producers. The Sheep Producers Association of Nova Scotia, in one of our member provinces, has worked extensively to produce and market premium Nova Scotia lamb to consumers. As industry marketing efforts have driven up demand for this local product, customers look for premium Nova Scotia lamb on grocery store shelves. However, with maritime grocery distribution centres located in different provinces, and no federally inspected processing facility in Nova Scotia, producers cannot get premium Nova Scotia lamb into major retail outlets and in front of Nova Scotia consumers.
The limited ability of producers to get Canadian lamb into mainstream retail outlets means that domestic demand is met largely with imported product. The Canadian sheep industry currently supplies less than 50% of the sheep and lamb consumed in Canada, demonstrating the tremendous capacity for industry growth were it not, in part, for the current limitations on domestic trade. Moreover, Canada's changing population demographics promise to further increase demand for sheep and lamb products by Canadian consumers. Canada's population growth is expected to come predominantly from immigrants originating from south and southeast Asia, the Middle East, and Africa, creating an unprecedented demand for new types of food which are different from the traditional food offerings in major Canadian grocery stores, in particular for sheep and lamb products. According to CIBC World Markets, about 70% of spending growth in the next decade will come from visible minority groups.
The combination of population growth and shifting consumer demand indicate that there will be a growing demand for lamb in Canada in the coming years. This is an opportunity that the industry needs to be able to capitalize on in order to ensure its long-term viability and profitability. However it remains a challenge to get Canadian product into major retail grocery chains and in front of consumers.
The Canadian Sheep Federation asks that the committee consider an innovative national meat inspection system which would preserve Canada's high standard in food safety and satisfy the expectations of both our domestic and international markets while eliminating the superfluous red tape that restricts the capacities of processors servicing up-and-coming sectors. Likewise, a renewed inspection system should continue to support regional processors that provide local and customized services to farmers and consumers alike.
The Canadian sheep industry is uniquely positioned to experience tremendous growth that will allow it to capture greater domestic market share. Regulatory red tape impedes industry growth, and Canada's current meat inspection system fails Canada's sheep farmers and Canadian consumers alike.
From a sheep industry perspective, meat inspection in Canada is broken, and those who are paying the price are producers and consumers. The role of government and federal policy needs to be one of supporting Canadian farmers and Canadian agriculture. Eliminating barriers to interprovincial trade and opening the domestic market for sheep and lamb will support the viability, expansion, and prosperity of the Canadian sheep industry as it meets the ever-increasing demand from Canadian consumers.
Thank you for your time. I appreciate it.
3:35 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you very much, Ms. Patterson.
Now we'll go to Mr. Bonnett for 10 minutes, please.
3:35 p.m.
Ron Bonnett President, Canadian Federation of Agriculture
Thank you, Mr. Chairman and members of the committee, for the invitation to be here to present on behalf of the Canadian Federation of Agriculture.
My name is Ron Bonnett. I'm a beef producer from northern Ontario, and I'm president of the Canadian Federation of Agriculture. The Canadian Federation of Agriculture represents, through its member organizations, more than 200,000 farm families across Canada, and we promote the interests of Canadian agriculture and agrifood producers to ensure the continued development of a viable and vibrant agriculture and agrifood industry in Canada.
The CFA supports the goals of reducing barriers to interprovincial trade and recognizes the need to eliminate unwarranted barriers to interprovincial movement of goods, investment, and labour to reconcile standards. Harmonizing standards across Canada would enhance the ability of Canadian farmers to serve the needs of the domestic food market as well as the export markets that so many farmers depend on.
We also believe that these goals must be pursued in a manner that recognizes the diverse social, cultural, and economic characteristics of the provinces, and respects the diverse marketing requirements of the various sectors of Canadian agricultural production. We have heard concerns raised by farmers across Canada about the number of differing standards and regulations across the country that hinder or add unnecessary costs to those who wish to market their products outside of the province. This is especially true in cases where farms are located in areas that abut other provinces. These barriers include differing transportation regulations, which can include everything from truck weights, dimensions, and tire sizes, and things like differences in standards for animal housing, new management regulations, and the variance in disease-prevention regulations between provinces.
In the case of animal production, differences in provincial meat inspection, which have been outlined by my colleague here, have a significant impact on livestock and poultry farmers, as many retailers won't purchase products from provincially inspected plants. This includes products produced in the province and products that go across provincial lines. In addition, we've heard from food processors about a number of regulations that are different across different provinces.
Another area that needs to be addressed is the standardization of farm data. Provincial regulations vary considerably, and having a robust baseline of information across the country is necessary to compare different approaches used by provinces, to gauge their impact, and to develop appropriate policy responses. One example may be the information on investments of corporate entities, foreign ownership, and other land data that could benefit an understanding of what is happening in the industry.
As mentioned, CFA supports the goal of reducing or eliminating unnecessary burdens on interprovincial trade in agriculture; however, we also believe there should be legitimate exceptions that would be recognized. This could include measures to protect animal and plant life, protection of the environment, and consumer protection.
The one other area of concern that must be addressed is having measures in place to support the supply management system for dairy and poultry producers in Canada. Under the supply management system production is managed at the provincial level and interprovincially, and rules are needed to make sure that this is in place. The agricultural chapter within the Agreement on Internal Trade has recognized that nothing in the agreement shall be construed to prevent the provinces from adopting or maintaining measures relating to supply management marketing systems regulated by federal and provincial governments and provincially regulated marketing boards that are not technical measures. The sector has asked that the statement be further clarified, given the vagueness of the term “not technical measures”, so that measures supporting supply management are exempt from the dispute settlement process contained in the agriculture agreement on trade.
While federal, provincial, and territorial ministers responsible for trade approved an interpretive note addressing these issues, we have not seen the written text of that, and it has not been made public. We are therefore seeking the assistance of this committee to make sure that the interpretive note is available to those sectors that would be impacted prior to its being ratified.
In 2006 the Senate banking, trade, and commerce committee did do an examination of interprovincial trade; however, no report was issued. But from the information that we've been able to gather, they had a hard time finding real details on what is impacting trade, and they had a hard time as well quantifying what the impact would be.
In summary, we think the goal of reducing unnecessary barriers to interprovincial trade would enhance the ability of Canadian farmers to serve the needs of the domestic food market, as well as position them better for export opportunities. We recommend that the committee do a thorough assessment of the mechanisms and regulations in place that may hinder interprovincial trade in agriculture while keeping in mind that there may be some legitimate exceptions to this rule.
Secondly, we would recommend that the committee assist us in making the interpretative note to the AIT public so that Canadian supply-managed sectors can be assured that the measures supporting these sectors are exempt from the dispute resolution process.
Thank you, and I look forward to your questions.
3:45 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you very much, Mr. Bonnett.
Colleagues, now we'll start our rounds of five minutes each. I'll start off with Mr. Choquette, please. Five minutes.
3:45 p.m.
NDP
Francine Raynault NDP Joliette, QC
Thank you, Mr. Chair.
Ms. Patterson, when I was a farmer, I raised sheep and lambs. That was very difficult at the time, and I don't think the situation has changed much.
As you said in your presentation, 90% of lambs are processed through provincially inspected facilities. However, 48% of Canadian-born lambs have to be consumed in Ontario. That may be one of the reasons why, even in Quebec—I am the member for the riding of Joliette, north of Montreal—it's difficult to find local lamb. I am not necessarily talking about Quebec, but the fact remains that the lamb always comes from abroad. I would really like to eat lamb from here. It's what I like best, actually.
When it comes to interprovincial trade barriers, I would like to know what measures you would like the government to implement so that lambs, regardless of where in Canada they are raised, could be delivered to all provinces. There are only 10 packing plants in 3 provinces, and that's really not a lot. Health-wise, travelling for too long is not good for animals that are unfortunately going to be slaughtered.
What measures would you like the government to adopt to really help out those producers, so that Canadians could eat lamb raised in Canada?
3:45 p.m.
Executive Director, Canadian Sheep Federation
Our largest limitation is that our major retail grocery stores, despite having a product that is processed within the same province as those stores, are still reluctant, if not completely resistant, to selling provincially inspected product, based largely on the fact that their distribution centres require interprovincial movements and they don't wish to rely on having to sort products by province.
There is an adamant request for federally inspected product. In some sectors where a large number of animals are processed, and where the federal inspection abattoirs can justify the cost of gaining federal accreditation under the current system, that's not a limitation. For the sheep sector, we of course don't process the same number of animals and not every facility can process every sort of livestock. Sheep processing facilities can be very specific to processing sheep, but they have a lower capacity. Oftentimes they can't endure the cost of both becoming federally accredited and maintaining that accreditation.
Not that I have an exact, prescribed answer for a solution is, but in generalized terms for our sector, we need to find a way of facilitating a less onerous federal inspection system that allows small processing facilities to still generate an income on processing a smaller number of animals than, let's say, Maple Leaf would process beef cattle.
We know anecdotally that oftentimes the only difference between a provincial and federal level of inspection can be an extra bathroom and a paved driveway. That is superfluous red tape. It has precious little impact on food safety. It should not drive the value of the product whether or not an inspector has his own bathroom in the facility, but oftentimes that's the only difference.
That's a very long-winded way of my saying that we need a less onerous, less prescriptive, more outcome-based federal inspection system.
3:50 p.m.
Conservative
The Chair Conservative Bev Shipley
You're just about at the five minutes, so I'm going to—
Mr. Bonnett?
I'm sorry.
3:50 p.m.
President, Canadian Federation of Agriculture
I have just a quick comment on that question. One thing to remember is that provincially inspected plants and federally inspected plants are still producing safe food. A lot of it is, as you said, paved driveways, extra bathrooms, some extra paperwork.
The federal government initiated a pilot several years ago looking at how to harmonize the regulations between provincially and federally inspected plants. I think the next step from that would be to see what recommendations could come forward to ensure that the processing done in those smaller plants would be accepted by the larger retail chains.
3:50 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you very much.
Now we'll go to Mr. Keddy, please, for five minutes.
3:50 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman.
Welcome to our witnesses.
We have already gone over with other commodity groups a number of the issues we're discussing here today.
One of the main obstacles, without question, is the provincial abattoir inspection versus the federal abattoir inspection. I have never really thought about it before, but maybe we're looking at this in the wrong way.
I want to throw this at both of you. We keep coming back to the federal government every time. We need the federal inspection for export; we understand that. We don't need it for domestic sales. So the plants that are already set up for federal inspection have an advantage over other plants. Maybe we should look at this with the provinces. It would be as simple as the provinces accepting one another's regulations domestically; then this issue goes away. We keep coming back to the federal side for the export opportunity, but we're not looking for an expert opportunity; we're looking for domestic sales, especially in the sheep and lamb industry.
I just want to throw that at both of you and get some feedback.
3:50 p.m.
President, Canadian Federation of Agriculture
I think there are two aspects. You captured one, having the provinces recognize their individual inspection systems and allowing product to move back and forth. However, the other aspect that needs to be dealt with is the perception by the retail sector that there is a difference in standards and in food safety. This is the area in which we need to have a broader discussion with the whole sector, including the retail sector, to make clear that we're not talking about a difference in food safety responsibilities or in the ability to produce high-quality and safe food. What we're talking about is making sure that we have a system that can respond to the needs of both the producers and the consumers.
3:50 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
What we now have—excuse the pun—is far too many silos, without question. But I don't think we have ever sat down to look at this with our provincial counterparts and tried to deal with the food inspection industry for domestic rather than international trade. There may be some hope.
I understand Ms. Patterson's comments on the provincial system. I've been in a number of provincial plants, and many of them are state-of-the-art and are up to all the specifications, except for exporting. With the added cost for that, they just stay away from it—and probably couldn't make it, quite frankly, if they went there, because they're not in the export business.
The other aspect concerns the shippers. We have a reluctance from the provinces to accept one another's products, although if I travel to another province I'll eat provincially inspected lamb or provincially inspected beef or provincially inspected produce of any kind. We all do. But the other aspect, which I didn't realize, is the reluctance from the shippers; they won't take farm gate delivery. They want it to go to a central depot, and then that central depot can send it wherever.
I don't know how we get around this or whether it is even possible to get around it. But maybe there needs to be consumer pressure. Most consumers, if they want local lamb, buy local lamb from the butcher or from the abattoir.
I don't know whether you have any ideas on how we can apply that pressure or whether it is possible. They're too big.
3:55 p.m.
Executive Director, Canadian Sheep Federation
I would reiterate that it has to be one of those focuses. I think that if there were a SWOT analysis done of the level of provincial versus federal inspection, you would find that in a lot of cases there isn't a lot of difference between the two. That might be a good starting point in determining how we get the provincial level to recognize the federal level. A lot of it can be a matter of education for those distribution centres and those major retailers in understanding, then, that the provincial level of inspection will match it.
What becomes interesting is that in so many different provinces we see initiatives to “eat local” and at the same time a reluctance to accept local or provincial standards. There certainly needs to be some looking at harmonizing of those standards and an acceptance of the end product of that harmonization of standards between the two levels. I would agree.
Thank you.
3:55 p.m.
Conservative
The Chair Conservative Bev Shipley
Thank you very much, Mr. Keddy.
I'll go to Mr. McCallum now, for five minutes, please.
3:55 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Thank you.
Welcome.
As was pointed out, I'm from the city and don't necessarily know much about farming, but I know something about economics. When I listened to you, Ms. Patterson, the first thought that occurred to me was that we as a country are leaving a lot on the table if we import half of our lamb needs and there is capacity to do more. You mentioned the growing population, the diverse population, and all the potential demand out there, and we don't seem to be able to get our domestic act together.
It was the first thought that occurred to me, but I see now that others have asked questions about it. Why on earth can't lambs that are inspected in Ontario plants, for example, be exported to other provinces? It doesn't seem to make any sense. Is it because the retail sector objects or the farmers in the other provinces don't like Ontario lamb coming in? What's holding it back? From the industry point of view and from a national point of view, this doesn't seem to make any sense at all.
3:55 p.m.
Voices
Oh, oh!
3:55 p.m.
Executive Director, Canadian Sheep Federation
I would suggest that we don't see a tremendous amount of competitiveness among producers between provinces. We see the general push coming from those retailers who want to accept federally inspected product regardless of whether it has met a provincial standard. That's the limitation and why they won't take it. It's the quality assurance people, the food safety people in those chains, who are saying that they want federally inspected product. That limits the capacity to a certain extent.
3:55 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
What's so good about federal...? They don't think that Ontario, for example, can do the job?