Agriculture Committee on May 29th, 2020

[Jean-Michel Laurin]

I would just add one more point that we put forward to the government. Several of our members began, as early as late February and early March, to put up plexiglass screens to separate employees as a security measure. We were told that expenses would only be eligible if they were incurred after March 25, when the Quarantine Act came into effect. We would like to make sure that proactively incurred expenses that were made by some of the companies in our industry will also be eligible. Several investments were made prior to that date.

[Richard Lehoux, Conservative, Beauce, QC]

That's a very important point, Mr. Laurin. Thank you for raising it.

It's important to be far-sighted in life and you've been far-sighted while protecting your workers. We can take our hats off to you in this regard.

What I understand is that there are still a lot of parameters to be defined. They probably won't work for everybody and they probably won't ultimately meet the needs of business. I hear your message. There will certainly be changes to this program, and it will have to be improved eventually. I've heard from companies that are converting about the costs they face, which are in excess of $150 million. So the $77 million earmarked to help them will not be enough.

[Joël Cormier]

That is true.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Cormier and Mr. Laurin.

My next question is for the representatives of the Fédération des producteurs d'œufs du Québec.

Mr. Bouchard, you talked about the potential impact of the import issue. You're not against trade, and I understand that, but the direct consequences could result in a considerable cost to egg producers if better ways of doing business are not adopted.

[Paulin Bouchard]

Yes, absolutely. Thank you for your excellent question, Mr. Lehoux.

Producers are going to have to euthanize birds prematurely. Programs, paid for collectively by producers, will be put in place so that there is no impact on the consumer. There is also the supply management system. However, if the problem is exacerbated by poor management of the quotas granted in these agreements, the impact on producers will be disproportionate.

People really need to understand that, in our sector, it is the producers who are responsible for the surpluses. Every truck that comes from the United States is one more truck for the producers' association to take care of, as they dispose of and liquidate the surpluses.

What we would like to see is better coordination of tariff rate quota distribution to minimize the impact and avoid ending up with additional imports.

[Richard Lehoux, Conservative, Beauce, QC]

I understand the problem. Reference was also made to previous agreements that were signed under the Comprehensive and Progressive Trans-Pacific Partnership Agreement, or CPTPP. Tariff rate quotas have a significant effect. What we've heard regularly here in the committee is that it's important to bring the management of these quotas, whether for production or processing, as close as possible to the first stage, that is, production.

Is that right, Mr. Bouchard?

[Paulin Bouchard]

Absolutely; you've understood well.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Bouchard.

I'd like to put my next question to Mr. McAlpine.

[The Chair, Liberal, Pat Finnigan]

Unfortunately, Mr. Lehoux, your time is up.

Mr. Drouin, you have the floor.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I'll go first and I'll share my time with Mr. Louis.

Mr. McAlpine, I want to touch base on a point you raised with regard to Canada having a better cross-sectoral plan.

One of the questions I have in agriculture is that it's one of those industries that sort of falls with the federal government and falls with provincial governments. I know you once wore another hat previously in your life and have some experience in the federal government. Do you believe there should be a better coordination body to deal with agriculture?

[Rory McAlpine]

It is a big question, and agriculture is a big space. I'm not saying we need a new organization or a new approach singularly for the whole sector. What I wanted to focus on was particularly around emergency management and crisis response. In this case, with many jurisdictions and many players who have to make real-time decisions with uncertain information and deal with an economic and health crisis at the same time, there are some critical trade-offs and decisions, and we struggle to do that.

I have remarked that in some ways the strength of our coordinated federal-provincial process and the time and effort we use to build programs that frankly do work well in peacetime are very ill-suited to wartime. We've seen that in the way some poor decisions have been made and the time that it has taken to address some of the immediate operational hurdles.

I would say that I live in the world of animal health, particularly as a representative from Maple Leaf Foods. That's where I see a particular weakness. We thought of every risk of major disease events occurring that can destroy our export-oriented industries, and we have to fix the governance by which industry and government work together. The pandemic has really illustrated that, and that's why we're talking about creating a group called Animal Health Canada, which would be kind of a co-management partnership for animal health, so you are right on.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. McAlpine, you've identified the lack of co-ordination or an emergency response plan, but we started hearing about COVID-19 cases in China in December. How did Maple Leaf react going into January, February and March? Obviously we know the rest, but how did you react as an organization?

[Rory McAlpine]

It's a good point.

We're not strangers to crisis. Many of you will know our company had a terrible crisis with listeriosis in 2008.

We have a very well-developed emergency management process, but in this case I don't think we could have anticipated such a debilitating impact across the business. We did work very quickly to pull together what we call a pandemic plan or playbook. We built into it all the standard operating procedures to protect our employees while trying to protect the continuity of our business, recognizing that food was designated as critical infrastructure and that we obviously had to keep operating.

It evolves almost every day as we learn things. We've invested tremendously in plant operations and also the remote working that we're all into right now.

I'm proud to say we shared all that learning with all our industry and government partners right from the beginning, and I think a number of other players took advantage of what we developed to adapt it to their company situations.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you.

Tim, feel free to jump in.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Thank you to the witnesses.

Mr. McAlpine, some of my questions involve sharing practices exactly as you talked about, and some involved measures you took to protect your employees. You have already touched on that. I appreciate all the ideas you have as well, looking forward.

Right now we're planning next steps as we come through this. As you said, the opportunities are fantastic, but we are also in stabilization mode right now.

This morning I saw a video on social media—and I wouldn't mind having that discussion—in which your company, Maple Leaf, talked about diversity and inclusion and mental health. I know that touches home here, because we've got a hatchery plant in my riding of Kitchener-Conestoga, so that's a concern. I'm glad to see you're taking some positive steps.

If you could elaborate on diversity and inclusion and the mental health aspect of keeping workers safe, that would be helpful.

[Rory McAlpine]

It's a great question.

We have put a whole new effort into that. We had already planned that as part of one of our initiatives. I'm talking about the mental health issue before COVID-19 hit. We've upped it in the past several weeks with weekly sessions with experts and online tools and support, because both the front-line workers and the office workers are facing a lot of stress in their work. We've tried to put in place those kinds of supports and learning, and it's amazing to see how many people have taken advantage of them.

It's a big priority for the company, for sure.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

I appreciate that. What I hear, especially in the agriculture sector, is that people's employees are like their families. That was what I wanted to discuss today, so I appreciate your time.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Louis and Mr. McAlpine.

Mr. Perron, you have the floor for six minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

I'll be sharing my time with Ms. Desbiens.

My first questions will be directed to representatives of the Canadian Poultry and Egg Processors Council, Mr. Cormier and Mr. Laurin.

You mentioned that you are in an open market. You obviously don't have the privileges of supply-managed producers, who can absorb the blows of certain variations. So you need more support.

You also mentioned that the measures to protect your workers have been extremely important and very costly and that the amounts currently invested in this regard were not sufficient.

You said that AgriRecovery and a wage subsidy could be solutions. Does that mean you're not currently eligible for the emergency wage subsidy?

[Joël Cormier]

Thank you for your question, Mr. Perron.

Member companies of the Canadian Poultry and Egg Processors Council are not eligible for the Canada emergency wage subsidy. This is because our sales have not declined enough as the supply of eggs and poultry has always been there, while markets have disappeared. The markets collapsed, but we still had to sell our production. The prices meant that we were not able to reduce our sales enough to qualify for the subsidy. To do so, we would have had to reduce our production by 30% from the first day the restaurants closed. We would have stopped processing 30% of the eggs, turkeys and chickens. We would then have been eligible for the subsidy, but this would have resulted in massive on-farm euthanasia.

In fact, the reason there has not been massive euthanasia on farms in Canada is because processors have maintained production even though there was no longer a market. So we subsidized, in a sense, what others would have subsidized in that situation. That is why today we are saying that this is important. We have shouldered our essential role, which, as I said in my presentation, is twofold. We have to supply Canadians with food, but we also have to make sure that the supply chain does not stop. We fulfilled the mandate that was given to us, but today we are on our own.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

I take my hat off to you.

It's ironic that important industries like yours that need support don't have access to the Canada emergency wage subsidy, when several political parties benefit from it. That was an aside, but my message has been received.

You also talked about the processor quotas under the free trade agreements that have been negotiated, and their impact. I don't know if the people from the Fédération des producteurs d'œufs du Québec want to speak as well, but since you're processors, I think that's more of a concern to you.

Can you explain what will happen if we repeat the mistake made in other agreements, that is to say give too large a percentage to people who are not related to the sector?

[Joël Cormier]

I will let Mr. Laurin answer your question.

[Jean-Michel Laurin]

You mentioned the free trade agreements. In fact, the CPTPP is in force, but there are no imports related to our products yet. The new agreement with the United States will come into effect on July 1. It is important that the tariff rate quotas that will be granted under these agreements be given to processors, because they are the ones who will have to deal with the arrival of these products on the market.

In the egg sector, for example, the agreement with the United States specifies that the quotas must be mainly for eggs that have to be broken, i.e. those intended for the processing market. Because these are eggs that are going to come into Canada and are going to be distributed to the processing market, if they don't go to the processors and they go to other players in the market, we risk losing a very large part of the egg processing sector in Canada. It would face unfair competition because other enterprises would have access to imported eggs at lower costs, while we would continue to buy from producers like those represented by Mr. Bouchard.

This example concerns the egg sector, but it is the same kind of problem in the chicken and turkey sector.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

As I understand it, you don't have a commitment from the government yet regarding this, do you?

[Jean-Michel Laurin]

We don't have one. As a result of negotiating these agreements, we were promised programs. In a working group that we had participated in, a number of ideas were exchanged. We had two main demands. The first was to have a program that would facilitate the modernization of the plants so that we could be more competitive. Second, we wanted TRQs to be given to our industry.