Thank you for having us here today.
The Conseil de la transformation alimentaire du Québec, or CTAQ, is the main alliance of food and beverage processing companies. Its mission is to help entrepreneurs reach their full potential to ensure the sustainability of the food industry in Quebec.
The sector purchases over 70% of all agricultural products and almost 100% of fishery products in Quebec. The sector also enhances the products' value and processes and packages the products to provide quality food that the public can easily find at grocery stores year-round. The sector is the critical component of the chain from primary agriculture to retail.
Since the start of the COVID-19 pandemic, food and beverage processors have been facing major immediate challenges as they manage the health of their workers and address the need to maintain Canada's food supply in a constantly and rapidly changing environment.
As the first active phase of the pandemic continues, many food companies have stopped or cut back on their operations as a result of cash flow issues, their inability to manage health considerations or increased worker absenteeism. These challenges will have a significant impact over the medium and long term.
Given this changing situation, it's still a little early to truly understand the risk of company closures and the full impact of the crisis. However, some companies are already reporting certain things.
First, revenues are decreasing as a result of the significant drop in food service sales. Restaurants Canada estimates that 53% of restaurants have temporarily closed because of COVID-19 and that one in ten restaurants will permanently close. The pandemic has significantly affected food and beverage processors, and especially the food services sector. A number of food processors are experiencing the same drop in revenues as a result of school and hotel closures and the shutdown of air and rail transportation.
In addition, the increased costs associated with COVID-19 are directly related to several factors: increased absenteeism; labour shortages; salary bonuses paid to retain employees; increased use of personal protective equipment; schedule changes, including staggered shifts and lower line speeds to ensure greater physical distancing; increased spacing among workers, which reduces production capacity and drives up unit costs; temporary non-structural changes within plants to protect workers where physical distancing isn't possible; the purchase of health screening tools; increased benefits, such as child care subsidies; and the use of consulting services.
In the animal protein sector, the potential need and cost of animal slaughter should also be a concern, along with plant closures and slowdowns, which lead to a decline in processing capacity.
The industry is grateful for the emergency support programs announced by the various levels of government to help companies cope with the COVID-19 pandemic. These programs will benefit a number of food and beverage companies. However, some companies aren't eligible.
The food sector has maintained a continuous supply throughout the crisis. However, many companies are reaching the end of their resilience. The most recent federal announcement promising $252 million in assistance falls far short of the needs identified by the entire network. The Canadian Federation of Agriculture is asking for about $2.6 billion in emergency funding. We've estimated that the costs and losses for food processors across Canada since the start of this crisis, from March to today, amount to $820 million. Just for the health equipment needed to protect employees, costs are expected to reach $70 million by the end of 2020. The current programs don't properly address the exceptional circumstances at this time.
Our goal for the short term and the coming months is to ensure that as many food manufacturers as possible are eligible for financial support programs related to COVID-19. If food companies close, there's no guarantee that they'll reopen when the health and economic crises stabilize. By supporting companies in the immediate future, we have a better chance of keeping them running and ensuring a strong food system after the pandemic.
The additional safety measures, the complete or partial closure of major components such as slaughterhouses, the collapse of the hotel, restaurant and institutional market—which accounted for 35% of sales—and market disruptions entail significant, if not insurmountable, costs for thousands of food processing companies.
Overnight, a significant portion of these markets disappeared, which created an imbalance in the supply chains. This uncertainty puts pressure on the integrity of the food supply for the public, which depends on the ability of each component to play its role effectively.
The workforce situation presents a paradox. In Canada, the unemployment rate is 13%, while in Quebec, the rate now stands at 17%. Seven and a half million Canadians have registered for the Canada Emergency Response Benefit, but companies are facing a labour shortage. This serious shortage will require a readjustment of existing programs to maintain the minimum number of workers needed to keep companies operating. The Government of Canada must implement programs to encourage people to return to work.
The current crisis calls for exceptional measures. To fulfill our mission as food processors, we must have access to more generous, better adapted and, above all, flexible assistance programs to take into account the changing reality of our coexistence with COVID-19. In addition to experiencing and responding to the impact of the current crisis, we must ensure that supplies are sufficient and that we remain competitive in the markets. The assistance announced to date can't meet all the needs.
Flexible financial assistance programs for farmers and food processors must be implemented to limit long-term and supply chain effects and to ensure food security for the public. The temporary foreign worker program must be more flexible. The program must facilitate the transfer of workers from one company to another, as needed, or from agricultural production to processing.
The Government of Canada must act now to support the entire agrifood sector. The sector is also a job creator and a major and essential economic player for the vitality of the regions. We must remain consistent when it comes to such an essential and vital issue for our society and for the resilience of a significant part of our economy and territories.
We're proposing the following concrete solutions to support farmers and food processors: a specific fund to meet the needs of processors in terms of the loss of margins and the disappearance of certain markets; specific assistance for small businesses whose main market is the hotel, restaurant and institutional sector; assistance for stock support and freezing; assistance for the processing sector to cover the additional costs associated with protective equipment and the adaptation of production lines; a program to encourage employees to return to work; and, lastly, an economic recovery plan for the manufacturing sector, starting this summer.
Thank you.