Evidence of meeting #8 for Agriculture and Agri-Food in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was covid-19.
A recording is available from Parliament.
3:35 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
What about international markets then, more so from the United States? Will they have an impact on our local markets, as opposed to our bringing in more food from other countries or not?
3:35 p.m.
Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
We were pleased to see, with the renegotiation of CUSMA, the renegotiated NAFTA, that the Canadian government was able to keep the de minimis threshold at a reasonable level to prevent an unfair competitive advantage going to international online competitors. I anticipate that Canadian retailers will continue to remain very competitive in the online space.
3:35 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
Ms. Cloutier, when you were talking about there being more protective equipment in slaughterhouses and various things to keep workers safe, do you believe there's enough money left that can be passed on to the consumer, or is there too much for the consumer to bear and the government will have to implement and assist with some of these programs?
3:35 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
Currently, just the cost of additional protective equipment is estimated at $70 million. That's not for slaughterhouses alone; it's sector-wide. Eventually, all of this will indeed affect the prices consumers pay, without more assistance in the medium or short term.
3:35 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Mr. Soroka.
My apologies, I think I skipped the cattlemen's association, so I think we'll go to them now. Sorry about that.
Bob Lowe, president, and Tyler Fulton, director, I believe I skipped you, didn't I? Were you able to make your statement?
3:35 p.m.
Liberal
3:35 p.m.
Some hon. members
Oh, oh!
3:35 p.m.
President, Canadian Cattlemen's Association
Thank you, Mr. Chairman and members of the committee, for inviting the Canadian Cattlemen's Association to present on the challenges and solutions for Canadian beef producers during COVID-19.
My name is Bob Lowe. I'm the president of the Canadian Cattlemen's Association. With me today are Tyler Fulton, a director on our board and a beef producer from Manitoba, and Fawn Jackson, our director of government and international affairs.
Earlier this week, the Government of Canada announced funding for Canada's beef sector. I would like to state first that we are thankful for this initial investment, but we must stress that what was announced was one part of our three immediate asks, and we really do need the other two to be able to manage through the difficult situation that COVID-19 has put our industry in.
First, I would like to update the committee on the situation in the beef industry, as it changes frequently. Backed up within our beef supply system, we now have over 100,000 head of cattle that were supposed to be harvested but have nowhere to go. It costs on average four dollars a day to feed a market-ready animal, so this is costing our industry an additional $400,000 a day. Although Cargill is back up and running, it is at a significantly reduced rate. We estimate that we are adding 5,000 head of cattle to the backlog each day. As you can see, we are in a serious situation.
Certainly, the $50 million in funding that was announced for the set-aside program is helpful. We are currently working hard, in coordination with governments, to establish this program as quickly as possible. We are also thankful for the $77.5 million that will be invested in processing. We know that eastern Canada in particular needs more processing capacity and that processing facilities in Canada are continuing to make adaptations for COVID-19. Processing shortage is the crux of the challenge we are faced with, so this is a sound investment.
I would like to express our deep gratitude to the workers within these plants, who are integral members of our community and critical to the foundation of Canada's food system.
Your work is essential and it does not go unnoticed. You are certainly our food heroes.
I would also like to express our gratitude for the meat-packing companies that are continuing their investment and innovation in these beyond challenging times.
We will continue to strive to use the best information available to us and implement appropriate actions, and we will certainly take lessons away from COVID-19.
I want to say that I have been impressed by the level of coordination and collaboration throughout the full supply chain, from the team at the market access secretariat, which helped to make sure we had all the information to continue international trade, and the CFIA, which quickly mobilized to ensure we had adaptable inspection services, to the plants, which implemented best practices, and the front-line food workers, who continually adapted to the difficult situation. It hasn't been easy, and it likely won't be easy for some time, but I can tell you that team Canada is a great team to be on.
Again, I must stress that we beef producers have challenges in front of us and we need to act quickly. Our board is very focused on the future and our young producers, and we know that COVID-19 is especially detrimental to the financial health of their farming operations.
I'm now going to hand it over to Tyler, as one of the younger producers on our board, to talk about our two remaining asks.
3:40 p.m.
Tyler Fulton Director, Canadian Cattlemen's Association
Thanks, Bob.
First off, we want to build an understanding about what risk management programs work for beef producers and which ones currently don't. In a nutshell, price insurance works, but AgriStability still has many challenges in its current form. Why doesn't AgriStability work for beef producers? The answer has to do with the structure of the program and the structure of the beef industry. Reference margin limits are one of the key reasons AgriStability doesn't work well for cattle producers. Without getting into too many details, this has to do with the fact that many producers, especially cow-calf producers, have low eligible expenses on the program, and we often produce our own feed and have low labour costs. What this results in is that our margin has to drop further than other commodities' before triggering benefits for the program.
For a long time, CCA has been advocating for changes to the program to improve equity and effectiveness for beef cattle producers. This includes the removal of the reference margin limit—the problem Bob was describing earlier—removing payment caps and enhancing the trigger to 85% of the reference margin. We don't have more recent program participation rates, but in 2017 only 31% of farms participated in AgriStability, and we expect that very few of those were beef farms.
While we understand Minister Bibeau's referencing the importance of utilizing existing programs, it has to be understood that these existing programs, especially AgriStability, aren't largely used by beef producers. The main risk management tool for beef producers is livestock price insurance in the west, the RMP program in Ontario and ASRA in Quebec. It should be noted that our fellow producers in the Atlantic provinces don't have access to any appropriate tool. Our immediate recommendation to federal and provincial governments have been on these programs.
Focusing in on the livestock price insurance program, this is a program this is actuarially sound. This is something that we as an industry are very proud of. It's a tool that works very well at very little cost to Canadian taxpayers. Right now is when cow-calf producers like me typically buy price insurance. Unfortunately, the cost of premiums are tied to market volatility, and we all know market volatility has skyrocketed. Premiums for a calf would typically be around $10 to $15 per head, but because of COVID-19, the cost has risen to about $50 to $70 per head. As cow-calf producers, we have until May 28 to decide whether we are going to buy price insurance. For many, it's been too expensive.
We are asking federal and provincial governments to cost share the premiums with us for this year, similar to the way they do it for crop insurance. This will maintain participation in the program and allow producers who are facing significant market uncertainty to weather the storm.
On our farm, I consider price insurance to be the most important tool that we have access to. Without it, we have no control over the biggest risk that our operation is exposed to, which is market price risk. Being a younger operator with significant debt, my lenders require that I have a method to mitigate price risk. It allows young producers the ability to ensure a floor price on cattle and helps to secure the future of their growing beef operations. Furthermore, young producers are typically highly leveraged and don't have equity to fall back on during downturns in the cattle market, putting Canada's long-term food security at risk. This underscores the importance of managing price risk with a timely and bankable program, which livestock price insurance provides.
As you can see, price insurance is a very important tool, yet our Atlantic neighbours still operate without it, and this limits their ability to manage risk and grow the beef sector. The region has land and forage to grow the herd, but lacks this important risk management tool that supports herd expansion. Access to a price insurance program is key to achieving these expansion objectives.
Canadian and maritime beef producers would like to emphasize to the committee the utmost importance of establishing an eastern settlement index under the livestock price insurance program. It would contribute to the national price insurance coverage across Canada.
Ontario doesn't have livestock price insurance, but they do have their RMP program. They have requested a topping up of it, as last year they had processing capacity shortages that resulted in significant financial pressures on their industry. The program's funding cap severely limits its ability to provide adequate levels of support, particularly in challenging years.
For these reasons, we are recommending further dollars be allocated to assist with the main risk management tools utilized by Canada's beef producers: livestock price insurance and RMP.
Our third recommendation is to enhance the advance payments program by increasing the interest-free portion for beef cattle to $500,000, increasing the overall cash advance limit to $3 million and extending repayment terms for beef cattle to 36 months.
As the industry experiences reduced processing capacity and significant uncertainty in how long COVID-19 will last, these enhancements could provide added liquidity and flexibility for cattle producers to market their commodity at the best time and the best price, and could allow them to retain more breeding cattle in their cow herds.
3:45 p.m.
Liberal
The Chair Liberal Pat Finnigan
Mr. Fulton, we're unfortunately out of time. We have to move on. You might be able to finish your thoughts during the questions. Again, I apologize for skipping over you the first time.
We will now go to questions.
Lyne Bessette, you have five minutes. You can split your time.
3:45 p.m.
Liberal
Lyne Bessette Liberal Brome—Missisquoi, QC
Thank you, Mr. Chair.
I'll be sharing my time with my fellow member Mr. Blois.
I'd like to thank the witnesses for being here today.
We all know how important the Canadian Food Inspection Agency's inspections are when it comes to protecting the food chain and ensuring food security for all Canadians. That's why our government announced it will be providing the agency with $20 million to increase its inspection capacity.
My question is for the Conseil de la transformation alimentaire du Québec representatives.
Have any of your members flagged issues tied to inspection capacity, or have there been any closures related to that during the pandemic?
3:45 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
I'll let my colleague Mr. Fraeys answer that.
3:45 p.m.
Dimitri Fraeys Vice-President, Conseil de la transformation alimentaire du Québec
Prior to the $20 million that was announced, yes, some plants were not operating at capacity. I will say that things have been a lot better in the past two or three weeks.
The crux of the issue, however, is that some inspectors are afraid to go into the plants, and that can significantly reduce the rate at which animals are slaughtered. As well, not all employees are willing to work given the fears around COVID-19. Something of a climate of fear has taken hold. Even when employers provide masks and face shields, we are seeing a slowdown in some plants.
3:50 p.m.
Liberal
Lyne Bessette Liberal Brome—Missisquoi, QC
Thank you.
Does the CTAQ consider some sectors to be more affected than others?
3:50 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
I'll answer first.
All sectors directly tied to food services are very much affected, whether it be hotels, restaurants and institutions—essentially, the HRI sector—cafeterias or food service operators. The meat industry is also impacted, of course.
3:50 p.m.
Liberal
3:50 p.m.
Liberal
Kody Blois Liberal Kings—Hants, NS
Thank you, Ms. Bessette.
My first question is also for Ms. Cloutier.
You said your industry had incurred $820 million in losses or additional costs. Are you expecting compensation from the Government of Canada to cover all those losses?
3:50 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
We'd like to see the government adjust current programming to make it more flexible, so food processors who need the support can get it.
We clearly have certain expectations of the government, including not creating problems in the field to fork value chain. If there's a weak link in the chain, it will have consequences for the longer term.
3:50 p.m.
Liberal
Kody Blois Liberal Kings—Hants, NS
Thank you very much.
I will go quickly to Mr. McLinton. Your retail council.... Are profit margins being impacted on the retail side, and are there some success stories? I know, in my riding of Kings—Hants, some of our smaller retailers are actually doing quite well. They've been able to pivot and have a lot of success.
Could you highlight that in about 30 seconds?
3:50 p.m.
Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
Yes. Thank you for the question.
Without question, our grocery members have been very fortunate in that they've been able to operate throughout this crisis. It has had significant impacts in terms of PPE and having to restructure stores. We've seen violent incidents, unfortunately, increasing quite a bit, so there has been a very big impact there.
To answer that question, a significant number of our members who have not been deemed essential have not been in operation right now, and they are looking to reopen their stores as the economy reopens. It's really great to see that the economy is reopening and the retail sector is going to be able to come fully back to life again.
