Agriculture Committee on Nov. 15th, 2016

[François Couture]

As to the objective of substantially increasing our contribution to the GDP, I tuned in to a U.S. interview of Warren Buffet this week. He said that the innovation economy depends on big ideas.

Our companies have to generate these big ideas, they have to be very creative. That is what will help us move forward and develop export contacts. We have to not only identify the market destination but also go there, see what is being done elsewhere. That will help us generate ideas, in Canada and in the agriculture sector. This diversity and innovation process must be triggered, based not only on our domestic vision, but also on what is happening elsewhere. That will be very important for the future.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Couture.

My next question is in that vein.

Some countries, such as the Netherlands, are leaders in production, processing and exports. Can we learn something from those governments and those countries as regards the synergy between the processing and the production sectors?

[François Couture]

Quite right. They created the Food Innovation Strip in FoodValley. Their industry is at the heart of decisions made regarding innovation and research activities, specifically at the University of Wageningen.

For an innovation to gain currency in the market, a company or entrepreneur must have a vision that it puts forward to change things and it must be willing to take risks to do so.

The other major university is in northern California, near Sacramento. It is the University of California, Davis.

The food industry is now a vector for change globally. Canada must also become a vector for change internationally through this industry. By practising healthy farming that connects food and health, we can have a significant impact on people's quality of life and on wealth creation. This is a new continuum we have to work on, especially as regards food.

[Carla Ventin]

The Netherlands is an excellent example. I know that the department has done a study trip there. One of the things that I took away from what I've learned is that the Dutch think big. They think beyond their small place in the world. They think big, and they're innovative. The government has decided that agrifood is a strategic sector, and they fund that. They attract global mandates of R and D, which is extremely impressive. Also, they look to the future. They readily adapt new and disruptive technologies and new innovative products that consumers want.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Ms. Cloutier, you also talked about the major challenges in recruiting workers for the food processing industry. To recruit labour, the industry must offer good jobs. Why are people shunning those jobs? Is it because the companies are too far from the big centres where so many people are looking for work?

If you set up a plant in my region that needs 2,000 workers, you would have tremendous difficulty finding people to fill those jobs. Around big cities like Montreal, there are about 250,000 or 300,000 people looking for work, but they do not want to commute 40 or 50 kilometres to take those jobs.

Do you have anything to suggest?

[Sylvie Cloutier]

As you know, food processing plants are often located close the supply source. That is why there are lot of plants in the region. They are often close to the farms that supply the food.

Workers would have to be bussed to the region from Montreal to meet daily labour needs. Efforts will definitely have to be made in certain communities to attract workers.

Right now, people tend to live in the big centres. We will have to start thinking about local and regional programs to encourage those interested in working in the food processing sector to go where the work is.

Unfortunately, moving plants to major centres, whether Montreal, Toronto or elsewhere, no longer in any way meets the needs of the channel between suppliers and purchasers in the case of food processing companies.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Cloutier and Mr. Gourde.

Unfortunately, we have run out of time. This is a very interesting conversation. We can certainly not separate consumers from the companies that process the raw materials.

Thank you for your presentation.

Thank you everyone.

We will now give the new group of witnesses a few minutes to take their seats.

[The Chair, Liberal, Pat Finnigan]

There will be a vote at 11 o'clock this morning, so we're a bit pressed for time. At 10:30 there probably will be bells, so we'll get going immediately.

Today we have, from the Canadian Meat Council, Mr. Troy Warren, president and chair of the board of directors; and Ron Davidson, director of international trade, government and media relations. From the Chicken Farmers of Canada, we have Mike Dungate, executive director; and Lauren Kennedy, senior government relations officer.

Welcome to all of you.

We will have a 10-minute opening statement by the Canadian Meat Council.

Mr. Troy Warren, the floor is yours.

[Troy Warren, President and Chair of the Board of Directors, Canadian Meat Council]

Good morning. Thank you for the opportunity to present the Canadian meat industry's perspective on the next agricultural policy framework.

My name is Troy Warren. I shall address you today as president and chair of the board of directors of the Canadian Meat Council. I'm also vice-president of product management, planning, and procurement at Maple Leaf Foods. Accompanying me is Ron Davidson, who's the CMC's director of international trade, government and media relations.

The Canadian Meat Council has represented Canada's federally inspected meat plants and processors since 1919. The council includes 50 members that are packers and processors and 90 members that provide goods and services to our industry.

The meat industry is the largest component of Canada's food processing sector. The industry is an indispensable link in a highly integrated, globally competitive value chain that encompasses feed grain farmers, hog producers, cow-calf producers, feedlot operators, dairy farmers, and goods and services providers. The meat industry registers annual sales of $24 billion, exports of over $5.7 billion, and provides 65,000 jobs. Establishments vary from less than 100 to over 2,000 workers. A packing facility is typically one of the largest, and sometimes the largest, employer and taxpayer in a community.

Unfortunately, the employment and economic contributions of the food and meat processing industries are not well recognized. If Canada is to benefit from its natural and technological and human capital advantages, it's important that the committee identify three things: one, champion recognition of food processing as Canada's number one manufacturing sector, and the meat industry as the largest component of food processing; two, insist that food and meat processing be acknowledged and treated as such by policy-makers; and three, advocate for a coherent and supportive whole-of-government policy, program, and decision framework that allows the meat industry to achieve and maintain globally competitive status.

The meat industry welcomes the six overarching objectives and the six priority areas of the next agricultural policy framework, but it believes success will require commitments that extend beyond the mandates of Canada's ministers of agriculture and agrifood. I shall begin by commenting on the current version of the framework, and then reflect on several additional factors on which action will be necessary to ensure that the anticipated outcomes will be achieved.

The first is markets and trade. The Canadian livestock and meat sector cannot be a globally competitive value chain in the absence of access to export markets. As the recognition of access to foreign markets is an exclusive mandate of the government, this activity cannot be undertaken by industry. Unfortunately, as technical barriers become ever more complex and as new international trade agreements are negotiated, government resources allocated to overcoming trade barriers have been reduced. The reduction of support for exports pertains most particularly to the Canadian Food Inspection Agency.

There are in excess of 300 foreign market access barriers on the priorities list maintained by the market access secretariat. Given the characteristics of the prioritization mechanism, it seems unlikely that many items will ever be actioned. Hence, while the next agricultural policy framework emphasizes increased global competitiveness and trade, the reduction in government resources that support exports is in fact compressing production, value-added innovation, exports, investment, economic growth, and jobs. It is critical that resources available to the market access secretariat, and to the export support responsibility of the Canadian Food Inspection Agency in particular, be increased to the levels that would permit these organizations to fulfill their mandates.

The second area is science, research, and innovation. Continuous investment in science, research, and innovation is more important as animal welfare, food safety, nutrition, health, and environmental requirements evolve. Industry consultation in the establishment of government priorities for science, research, and innovation should be institutionalized.

Three is risk management. Animal agriculture is excluded from the largest area of business risk management expenditure. There is $941 million allocated to AgriInsurance. Animal health and mortality risks are not adequately mitigated or managed through ad hoc disaster programs. Combined with the significant erosion of AgriStability, the absence of Agrilnsurance severely exposes the livestock and meat industry sector to market and biological risks. Animal agriculture should be eligible for Agrilnsurance.

Four is environmental sustainability and climate change. The Canadian livestock and meat sector has registered major advances in the areas that impact the environment, including feed conversion and the use of water. These concrete achievements should be taken into account when decisions are being taken on future environmental policies and programs.

Five is value-added agriculture and agrifood processing. The inclusion of agrifood processing as a priority for Growing Forward 2 was a positive development. The meat industry appreciates the support it received under the slaughter improvement program and the AgriInnovation program. The next agriculture policy framework should build on this success.

A competitiveness challenge confronting Canada's manufacturing industry, including meat processing, is process innovation to drive cost reduction and productivity improvement. Although process technology innovations such as robotics, digital processing controls, machine vision systems, and artificial intelligence exist at prototype stage in other countries, few are manufactured or supported in Canada. Consistent with its innovation agenda, the government should offer grants for in-plant demonstration pilots where manufacturers, engineers, integrators, and academic partners collaborate to prove out and cost proposed innovations.

Six is public trust. Public trust is vital to the continued growth of our livestock and meat sector. The industry supports and advocates for public audits of animal production. Within packing and processing establishments, achievement of ever-increasing levels of food safety is priority one. In addition, the industry is investing in outreach initiatives to provide science-based information on the value of high-quality meat protein, vitamins, and minerals in a balanced diet.

On missing components, an agricultural policy framework confined to the mandates of the Minister of Agriculture and Agri-Food is not sufficient for a sector that is impacted broadly and deeply by other government departments and agencies. It is vitally important that there be a whole-of-government commitment to policy, programs, and decisions that support increased agriculture and agrifood production, value added, innovation, exports, investment, and jobs.

Concerning taxation and fees, the meat industry values the current government's policies and programs, such as internationally competitive taxation and accelerated capital cost allowance. These policies have had a positive impact on the retention and creation of meat production and processing jobs in Canada, and it is of the utmost importance that they be continued.

Conversely, government fees are placing the industry at an increasing disadvantage relative to international competitors. In the U.S., food safety is a public good, and the government provides funding for meat inspectors. Canadian companies must contribute to the salaries of government-employed meat inspectors. The U.S. industry funds foreign regulatory officials who audit the U.S. meat inspection system. In Canada, the Canadian government invoices the industry for 50% of expenditures incurred by foreign officials who audit our food safety system.

The government will soon publish the new safe food regulations for Canadians. We understand these regulations will be accompanied by a new fee regime that will further disadvantage processing in Canada. Regardless of whether it is sold in the domestic or foreign marketplace, non-aligned government taxes and fees disadvantage the Canadian livestock and meat sector on every kilogram of meat produced. Non-aligned taxes and fees function in direct cross-purposes to the objectives of the next agricultural policy framework.

On regulation, the meat industry is the most intensely regulated food industry in Canada. Science-based, outcome-oriented, and competitive regulations must be the foundation of commercial competitiveness. The next agricultural policy framework should not remain silent on this subject. For example, mandatory temperature requirements for carcass cooling, cutting, and boning are significantly more lenient in the EU. Nevertheless, the CFIA allows EU meat products to enter Canada despite their less onerous production conditions. In addition to food safety implications for consumers, the divergence between Canadian and EU standards penalizes Canadian companies in terms of yield and operating cost.

Canada and the U.S. have quote-unquote equivalent meat inspection systems. Nevertheless, shipments of U.S. meat into Canada proceed directly across the border to a CFIA-inspected facility. Conversely, shipments of Canadian meat into the U.S. incur unwarranted waste of time and expense associated with mandatory stops at privately owned facilities before proceeding to the USDA inspection facility. Food safety requirements that disadvantage production in Canada function in direct cross-purposes to the objectives of the next agricultural policy framework.

On labour, meat processing companies require full complements of skilled workers to remain competitive. However, an insufficient number of Canadian workers are willing to become meat cutters or butchers, and fewer still are willing to relocate to our rural towns. Each worker on the production line in a meat plant creates four other jobs in the economy. By preventing access to workers for jobs that most Canadians will not do, current government policies are suppressing the creation of many more jobs that Canadians would want. The absence of sufficient workers is a leading threat to the retention of a competitive livestock and meat sector in this country.

In conclusion, Canada's globally competitive livestock and meat value chain has the desire and capability to provide increased production, value added, innovation, exports, investment, and jobs. We welcome the commitment of the Minister of Agriculture and Agri-Food to the next agricultural policy framework. However, we also believe that the success of the next agricultural policy framework will require a coherent and supportive whole-of-government framework of policies, programs, decisions, and government-industry co-operation.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Warren.

We now go to the Chicken Farmers of Canada.

Mr. Dungate, go ahead.

[Mike Dungate, Executive Director, Chicken Farmers of Canada]

Thank you, Mr. Chair.

Chicken Farmers of Canada proudly represents 2,800 chicken farmers. While the number of other farmers may be shrinking, we are up a hundred farmers in the last year. We are a growth industry on farmers even. We have a value chain, and it's a value-added industry. We have 244 hatching egg farms that go to 40 hatcheries, 76 feed-mills, and 191 processing plants across the country. We purchase 2.6 million tonnes of feed a year, supporting farmers in the grains and cash crop sector.

We are a driving force in supporting jobs, economic growth, and prosperity in both rural and urban communities across every province. We sustain 87,000 jobs, contribute $6.8 billion to the economy, and pay $2.2 billion in taxes.

We welcome the development of the next agricultural policy framework. Past frameworks have provided farmers from coast to coast with the policy support and programming required to make agriculture a success in this country. Our farmers have appreciated the opportunity to be engaged and consulted by government in order for it to better understand the needs of our industry and our priorities moving forward.

Chicken Farmers of Canada was present in Calgary when the “Calgary statement” was approved in July. We believe that the requests of the Canadian chicken industry are in alignment with that statement.

First and foremost, from a policy perspective, we appreciate your continued support of supply management, a system that allows us to provide stability and that is really our risk management program. We have made many representations over the past couple of years in terms of the integrity of the import control pillar with regard to illegal imports around spent fowl and the duties relief program. I'll leave those for another time.

Our first recommendation pertains to the issue of public trust. Public trust is really three things: doing the right thing, implementing assurance systems, and communicating to consumers.

Canada's agriculture sector is one of the most respected and valued sectors, both at home and abroad. However, with the heightened dissemination of information that comes with growing social networks and technological advances, consumers are becoming concerned about where their food comes from and more aware of the environmental, animal welfare, and health and safety impacts of food production.

Our farmers are proud of the chicken they raise—safely, with care, to high standards. They are doing the right thing on their farms.

Chicken Farmers of Canada has a federal, provincial, and territorial on-farm food safety system that is recognized. We are the first commodity to receive full recognition, in 2013. Only one other commodity, dairy, has passed through that program. It has best practices in terms of biosecurity and disease prevention. It is audited annually, and 100% of the farmers are on the program.

We also have a third party audited mandatory animal care program. It is designed to demonstrate the level of care that we have. It is based on the code of practice, and we just updated our code of practice in 2016. It includes animal care requirements, and it's based on research and science.

I think the biggest difference between the two is that one has an FPT-recognized protocol and the other doesn't. One of our biggest first tasks here is that we implement for animal welfare the same type of recognition protocol that we have on food safety.

We are going through an animal care assessment framework right now. There are animal rights groups and researchers involved in this committee. We think this forms the basis of the technical recognition of a program, and we would like to see that put in place. As Troy was saying, food safety and animal care are a shared responsibility and a public good. We take our part very seriously.

In respect of the on-farm animal care and food safety programs, Chicken Farmers of Canada and its partners across the country spend $3.4 million a year managing this system and implementing it. That means training, certifying auditors, program administration, conducting third party audits, and revising and updating the program and keeping it current.

Of that portion, on the food safety side, about $100,000 a year goes for the CFIA third party audit that has to be done each year. We pay $3.4 billion. We think there is a public good and a sharing, and we would like to see that sharing on an ongoing basis. Our second ask is that we put in not a program that lasts for two or three years but one in which there is an ongoing sharing of the costs that are certain for us moving forward. We don't want to develop programs that are at no cost to us and then, once the government funding goes, the programs fall apart because we haven't factored them into our overall costs.

Public trust also requires that government convey messages about our industry. We will convey our messages through our value chain on our sector, but we need good government communication from a public trust perspective in order to assure the public that government is doing its part. Whether it's CFIA or standing up for CFIA, we need to ensure that trust is conveyed not by us but by government as an amplifier of what we're doing.

Federal and provincial governments have made it clear in their mandates that the environment is a key priority for everyone in the coming years. We're looking at our impact in terms of that. Chicken production has one of the lowest meat impacts in environmental production. We're looking at it. We're doing a life-cycle assessment right now to understand exactly where we are and where we can improve. We hope to have that concluded in 2017.

I'll talk for a minute on innovation. We're pleased to see in that Calgary statement the importance of innovation. We support that. We like the cluster funding program that had gone on in the last agricultural policy framework. We think it needs to be enhanced from a contribution perspective in the funding level, but we would also like to see it not limited to five years. Can we not do an ongoing funding process so that we can make long-term commitments?

The challenge for us in poultry is that, unlike in beef and pork, that have three and two Agriculture Canada research stations, we have no research stations for poultry at Agriculture Canada. In the last cuts, we lost our last two poultry scientists.

In the whole poultry industry, we have developed a network of research and chairs at universities across the country. In order to provide that on an ongoing basis, we want to see cluster funding that goes on a long-term basis, not just for five years where we have to go back, and now it's a case of whether or not we can re-fund at those research stations at universities.

We are taking a significant step ahead on antimicrobial use reduction. This is one of our public trust issues. The poultry industry has voluntarily, across the whole industry, agreed not to use class one antibiotics on a preventative basis in poultry production. That has been in place since 2014.

The challenge for us on the innovation side is that we're looking at antibiotic alternatives. We need to work with authorities on approving antibiotic alternatives. If we're going to do the research on these alternatives but then we can't get them approved for use here because we're a smaller market or we classify them as drugs versus feed additives, then that research and innovation we're doing is going for naught.

We support the federal action plan on antimicrobial resistance and use in Canada, we're working with government on the next steps, and we're designing our next reduction strategy accordingly. One of the key parts in doing that is the Canadian global food animal residue avoidance data bank. We use gFARAD in order to determine what antibiotics can be used and to make sure there are withdrawal times. It is fully funded by industry. We think there should be a cost-sharing with government. It is not a high-ticket item.

To wrap up, we're in a partnership with you. We're in a partnership with government on food safety, animal care, the environment, what we're doing. We think there is a shared responsibility. We also think there's a shared benefit in what we're doing. That's why we're asking for a shared cost, because it is a partnership as we move forward.

We want to work on our third party audits. We want to see an animal care recognition program in place. We want to innovate and put that in place, and we're looking forward to having further discussion with you in terms of where the framework is going.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Mr. Dungate.

We'll now proceed with the question part.

Mr. Anderson, you have six minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

Both of you have had trade challenge issues. A lot of the discussion around APF is around funding, but we've also been talking about market research and development and those kinds of things. I want to talk a little bit about those trade challenges and the resolutions of them. Within APF, does there need to be some content about mechanisms to deal more efficiently with trade challenges? I'm interested in both of your perspectives on this.

[Mike Dungate]

I think the point is that agriculture is our sector. The agriculture department is our home. We need policy support from Agriculture Canada. One of the challenges is that it really does take a whole-of-government approach. We need to work across Finance and Canadian Border Services Agency and CFIA, which is now more under Health Canada where it was Agriculture before. I'm not sure that there are policy or regulatory implications within the agriculture minister's mandate that need to be done, but he absolutely has to take the policy lead in terms of it.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Okay.

Mr. Warren, you guys faced the COOL challenges for years. It took a long time to resolve that.

[Troy Warren]

Yes.

I definitely think it should be included in the framework. The challenge, obviously, with many international countries—I can rhyme off a few, the U.S., Russia, China—is that despite what would be a ruling by WTO or something, they either don't acknowledge that ruling or they work to extend whatever policy they've put in place for as long as they possibly can, such as in the case of COOL.

The challenge for us as a country that's so heavily dependent upon exports is that the damage is done by the time we finally get resolution. With COOL, you can say we won victory, but it nearly took a decade to claim that victory and to get our market access back. In the livestock industry in Canada, on pork and beef, animals really flow back and forth. They had probably knocked that industry down by 50% to 60% by the time we finally won that ruling, and there's no compensation in the meantime for those people who have gone out of business because their model of accessing some of these markets has disappeared.

So that's the biggest challenge. It's a great opportunity to export, it provides growth opportunities, but when an export market gets shut down, depending on its impact within the sector, the effect can be long-lasting. Whatever conditions could be included to help during those periods of time would also be very helpful.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

This might be a difficult question, but do you have any suggestion on any mechanisms that might be included in APF? I know these are international challenges and they're typically done with trade, but do you have any ideas of anything we can suggest within APF that would work?

[Ron Davidson, Director, International Trade, Government and Media Relations, Canadian Meat Council]

There are a couple of things. One might be more active participation and better funding for Canadian participation in international standard-setting bodies. For example, there are understandings that are reached there that, as Troy was mentioning, some countries won't abide by or won't adopt. I'm talking in this case, for example, about products, beta-agonists, used in animal production in Canada, which other countries simply ignore.

The other thing is that when we come up against trade challenges, such as what happened with COOL, the industry put a lot of money, millions and millions of dollars, into that. Certainly funding is an issue as to whether or not we even engage in trying to challenge them up front.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

It's actually interesting, and it just came to my mind, that one of the things that was a strength for us was our ability to work with some of the associations in the United States. Maybe there's something there as well.

This is a fairly predictable question, I think, from what we've heard in the committee, but do you want to talk a little bit about the labour challenges faced by your sector? This has come up time and again in various ways. Do you have any advice for us? We're going to write a report and make some recommendations. Do you have any recommendations in terms of labour challenges?

[Troy Warren]

We would like to see ourselves included in any kind of base of agriculture where people are still able to access workers, be it on farms and so forth, and to have that access to labour.

With regard to the loss of the temporary foreign worker program, I mean, our industry would be a success story in terms of the pathway to permanency. I can speak specifically to our operation. We're short by 100 workers. We've been fighting to fill those 100 jobs for, honestly, multiple years now. We just churn through people. We actually go through on average about 50%; we have 50 to 60 workers who churn every single month. It's very difficult to run an operation when you're constantly trying to train people and educate them. This is food. We have high standards as to what needs to be done in our operation.

That's a burden on our plants. The way we get around that often is with overtime, or we move work to other parts, or we don't do value-added activities. It's something that needs to be addressed. Despite our efforts to do labour assessments and various other things like that....

I can speak to where we are in western Canada. We are active in trying to hire people out of the native community as well, and yet we can't staff our operations.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Warren.

Thank you, Mr. Anderson.

Mr. Peschisolido.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Mr. Chair, thank you.

I would like to thank the witnesses for joining us.

I would like to follow up a little on Mr. Anderson's questioning. Our agriculture minister has talked about Canada becoming a world superpower in food. Obviously we need to maintain the productions that we have with the U.S., particularly in hogs and cattle.

I'm from the Vancouver area, and a lot of focus now has been on Asia—China, Korea, Japan. You talked about 300 barriers to trade. Other than negotiating, is there anything from the framework agreement that we can take to facilitate our guys here, so that we can eliminate some of these barriers, or deal with them at least?

[Ron Davidson]

I want to be clear that 300 is for the whole agriculture sector. That's from the market access secretariat.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

How about for livestock?

[Ron Davidson]

A lot of them.