Agriculture Committee on Jan. 28th, 2021

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

Thank you very much, Mr. Chair.

I would like to thank the witnesses for being with us today.

I'll begin with you, Mr. Aitken. You talked about the concentration of transformation. Of course, it isn't a question of replacing what already exists, but rather of complementing it and perhaps securing food processing in the country. Moreover, outbreaks in some processing centres have highlighted this element during the recent crisis.

In concrete terms, if you had one or two very clear recommendations for the government about what you could do to help you grow and process more, or to encourage the emergence of new players, what would they be?

[Jason Aitken]

Fabrication is your area with the greatest.... You have people density and risk of the contagion, so as it relates to us our bottleneck is in fabrication. Having a combination of better layout and automation would greatly improve both the productive capacity and the safety of workers in that sector.

An example might be a carni boning system on a fab floor. An example might be a customized cut for Asian markets. There are lots of areas where we can add value.

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

Okay.

Basically, could the government help you by giving a tax credit for automation or something like that?

Is this the most important need?

[Jason Aitken]

A tax credit for automation would be good, but it's the upfront capital to actually get that moving, on site; I would say an endorsement, a guarantee.... For example, if you're going to a Japanese customer, they need to know that they have guaranteed supply.

HyLife in Neepawa, Manitoba, is such a great example. Look at the pork industry in Canada, with its real success stories in Japan and Asia. It's because of that commitment to those markets, to high quality. Japan spends more on their food as a percentage of their discretionary market than any other country in the world. We have this treaty that has reduced tariffs specifically for beef and made it more competitive for Canada going in there, yet all we have is an office for Cargill and JBS in Tokyo that represents Brazil and the U.S. We need to put Canada first.

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

Okay.

You mentioned earlier that under the emergency processing fund, there were no funds allocated for strategic investments.

Do you think there's a real need to minimally boost this fund?

[Jason Aitken]

I think so, and with a realistic timeline. The timeline was that projects had to be completed by September 30. Anything strategic takes time, so especially during a pandemic it wasn't really realistic in terms of the framework and the execution. I'm not complaining here. I think it's great that we have these programs in the first place. I'm just explaining the needs of my organization, and I'm sure others, to have this incubation of processing facilities.

If anything, if it isn't already built, it's even harder now. The lead time is longer. We're competing against other countries. When I have a call with Japan—I mean, I speak Japanese to these guys—we're competing against Australia, Brazil and the U.S. Why are we better? This is all hands on deck to increase our Canadian productivity.

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

Thank you.

We're here for your comments. Don't feel uncomfortable offering criticisms, on the contrary. We work in a constructive way.

I have one last question for you, and it's about standards. Stakeholders from different sectors say that reciprocity of standards is a drawback.

Some beef processors, particularly in Quebec, have named one the “BSE standard”, referring to bovine spongiform encephalopathy.

First, I'd like to hear your thoughts on the reciprocity of standards. Second, what do you think of this standard? Is it still needed? Should it be reviewed?

I'd like a brief response, please.

[Jason Aitken]

I'm sorry, are those the humane handling standards you're talking about?

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

I'm referring to the “BSE” standard, for mad cow disease.

[Jason Aitken]

So it's the over-30-month and under-30-month standard.

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

Yes.

[Jason Aitken]

You could look at it. Certainly, that's an issue that's deregulated in many markets. Yes, Canada has been impacted more than other countries, for sure, on that front. I think opening deregulation is a good thing in that respect. On standards, the bigger thing is growing the Canadian cattle herd again and keeping the cattle in Canada. Fifty percent are trucking south. Why are we doing that? Let's build up processing capacity in Canada. It benefits all Canadians.

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

Thank you very much.

Mr. Sarsfield, you talked about the 10% increase in foreign workers. I understand that you still have local labour. Would it be enough to try to reach 20%, or should we be aiming for 30%?

[Jeff Sarsfield]

Yes, I would think that eventually we would want to be looking at probably upwards of 40% in total, if our labour trends continue the way they have in the last five or six years.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Sarsfield.

Thank you, Mr. Perron.

Now we will go to our MP who is closest to that Asian market, all the way from the western coast.

Mr. MacGregor, you have six minutes. Go ahead, please.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair. Yes, my riding is on Vancouver Island on the beautiful Pacific coast.

Mr. Sarsfield, maybe I'll start with you. I appreciate hearing about how your business has grown. I've taken a look at the website. You have some pretty awesome-looking products there.

Another part of the motion that's guiding our committee's current study is also looking at how the Government of Canada can basically identify opportunities and solutions with the goal of supporting capacity to protect food security. I'm wondering if you have any thoughts on that part of the motion that's guiding our study. For example, how many apples does your company process each year, and how important is your business to apple farmers in Canada? Could you offer any thoughts to help our committee look at that particular aspect of the study?

[Jeff Sarsfield]

Two of the major constraints that we have.... Labour was one that I highlighted. The other is that the main product we produce would be mostly frozen, baked apple pies that we sell to retail chain stores throughout Canada and the U.S. Mostly on the U.S. side, it's heavy concentration of the product that we're most competitive with, which would be apple pie.

Currently we do produce more than what's grown here in Atlantic Canada. At one point we probably had about 95% of our local supply even though the overall production has increased in the province. It's probably down this year to closer to 70%, so we are bringing product in from Ontario and B.C., as well as a fair bit from Washington state.

One thing that we do need in the longer term is something to encourage more local production. One of our bigger issues would be for the processing. Apples are typically only about a quarter of the purchase price of what some fresh apples would be. This region in Nova Scotia probably has the strongest apple farmers as far as returns in all of North America because we do an outstanding job growing the Honeycrisp apple. It has a premium price, so all the local farmers have converted their production to that Honeycrisp.

We actually take the imperfect apples out of that production. There's typically, on average, around 20% of peelers that would come, but the majority would be the fresh fruit. That's really where we partnered with the packers and the growers. They take that imperfect fruit and it's been a win-win for this local growing area in the sense that we're giving the processors a decent price and they're getting a premium price for the majority of their crop.

In the past, the government has supported some planning programs for processing apples. It is something that we may require down the road to help us develop that side of the industry where the economics are just not there for the growers.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you.

Mr. Aitken, maybe I can send the same question your way. You've been concentrating a lot of your efforts on exports, but do you have any thoughts on processing and how it relates to food security?

In the summer, just before Parliament started in September, I took a trip out to the Okanagan. I was talking with some ranchers there who were talking about the struggles they were having when big processing plants had closed down and they really had to find innovative ways to process beef locally for a local market.

Do you have anything that you can offer to our committee to help us with this particular aspect of our study?

[Jason Aitken]

I think you have to build a culture of innovation, which you alluded to. In our case, we were the first to commercialize the rinse and chill technology in Canada. We commercialized a fully automated organic and grass-fed ground beef brick line. We're looking at custom fabrication.

It's about differentiation. I think the advantage of the smaller producers is that it's more authentic when you deal with someone at home who's smaller and in your community. That's a real advantage that everyone processing locally in each province can bring to the table. I want to see that encouraged.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Do you think that there is a little bit more of that encouragement now from COVID-19, given the experiences that we've had over the last 10 months?

[Jason Aitken]

Absolutely it's encouraged, but I also want to explain that in the beef industry, in particular, where it's so concentrated.... I gave you the PlayStation example where there are loss leaders in beef. You need that global reach because, whether it's crown-cut tongues or mountain chain tripe, if you can't sell the other parts of the animal at some kind of profitability factor, you're going to get killed by the two economies-of-scale packers.

The model won't work unless you have an anchor tenant that's providing the throughput and the basic economies to allow you to pursue the craft elements of the local authentic strategy.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you for that answer.

[The Chair, Liberal, Pat Finnigan]

Now we'll go with five-minute rounds.

Go ahead, Mr. Steinley.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you very much, Mr. Chair.

Jason, it's very good to see you again. I'll have my questions focus on our Saskatchewan plant out in Wolseley and what we can do to help make you guys as successful as possible.

You talked about the fluidity of capital and how that is one of the major issues you're facing. You touched on irrigation for a second and about having a large quantity of feed available. That is something that would obviously be seen as beneficial. You talked about that $4-billion investment in irrigation to increase not just your capacity but that across the country. Is that something we're looking at? Can irrigation infrastructure play a vital role in making sure that we do have beef processing capacity increased across the country and specifically in your situation?

[Jason Aitken]

Well, I think it's all about raising the productivity of the agriculture that you have and adding value to it. My interest is in regenerative agriculture. Agriculture is essentially an indirect investment in water and it's all about soil health. The most important technology we have for combatting climate change is a cow grazing across grasslands, basically stimulating the soil. That's where I want to encourage it, and within that life cycle of cattle, the abattoir is a fundamental component. There's a lot of climate discussion, but the same way a router is critical to the Internet, an abattoir is critical to regenerative agriculture and its economic activity and raising the value of everything.

That irrigation project is a long-term project for the benefit of Saskatchewan, and we need to make more investments in our long-term strategic objectives.