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.