Agriculture Committee on Feb. 2nd, 2021

[Mathieu Frigon]

I'll let Mr. Barrett answer that question.

[Michael Barrett]

Yes, we certainly have laid out our concepts and our concerns on multiple occasions on being able to ask about the compensation and try to propose a framework, probably just as recently as last week, at the CDC meeting, where we again posed the question as well.

There have been conversations and we have been assured that it is a priority, but we have been looking for fulfillment of that priority since 2015.

[Richard Lehoux, Conservative, Beauce, QC]

Indeed, this dates back to 2015. The first agreements were negotiated six years ago, and no compensation was offered. The effect of opening the market on all the processors you represent has been felt for a number of years now, as you mentioned earlier.

I'd like to talk about equipment upgrades. We know that this is related to the solids non-fat issue, if I may use more specific terms. With the significant increase in quantities, I would imagine that the equipment used to process and dispose of these solids non-fat needs to be modified. Isn't that equipment obsolete now?

[Michael Barrett]

Certainly the balance of our system is between fat, as you have mentioned, and the solids-not-fat. There is a requirement in this country to be able to make sure that we balance the two, or else that will potentially mean restriction in our ability to continue to grow.

Those plants and the replacement of those plants and the aging assets is certainly one of the areas where we would believe there's a possibility of being able to use some of those compensation dollars, to be able to rebuild and revitalize, and being able to create plants that also have greater flexibility and innovation, understanding that we have to build those facilities within a trade agreement that restricts our traditional export markets. Therefore, that innovation dollar is critical.

To be fair, there was funding from the DPIF that came out of the CETA. I have to be fair. It was a small amount that was given to us. It was quickly subscribed, and there were a lot of processors who did not get the opportunity to have that.

[Richard Lehoux, Conservative, Beauce, QC]

I'd like to ask a question about labour. There's a lot of talk about automation, but it still takes labour.

Is there a significant labour problem for Canadian processors as a whole? Does foreign labour play a significant role? Does the famous 10% limit also have an impact on your industry?

[Michael Barrett]

For dairy processing, that's not typically a program that our members would necessarily use. I know there are many other segments that utilize that as a methodology. My compatriots in the beef industry might be able to answer that better. It's not something that's typically used within our sector.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Barrett.

Thank you, Mr. Lehoux.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you.

[The Chair, Liberal, Pat Finnigan]

Now we'll go to Mr. Blois for five minutes.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair, and thank you to our witnesses.

I'll start with the dairy processors.

Of course, we're talking about compensation in relation to the trade deal with Europe and the Pacific partnership. Would you be committed as part of that compensation to having some tied to the amount of supply-managed dairy production in each of the provinces; that is, if there was $500 million on the table, it somewhat resembles where the actual quota is being produced by the producers that are sending it to the processors?

[Michael Barrett]

I'm going to let Mathieu start on that one.

[Mathieu Frigon]

In terms of what we see, Michael just talked about the CETA program. The government typically strives to have equal sharing. Basically, the government always makes sure that the amount is shared in an equitable manner throughout Canada.

[Kody Blois, Liberal, Kings—Hants, NS]

Certainly—

[Mathieu Frigon]

That's typical—

[Kody Blois, Liberal, Kings—Hants, NS]

Yes.

In my area of Nova Scotia, we've seen Saputo and Agropur buy Scotsburn and Farmers Dairy. There have been closures in plants in Saint John, Sydney and others.

Certainly I'll put on the record, and I hope it's part of your conversations with the government, that when we're looking at compensation, we're trying to solidify and improve not just facilities where they're becoming centralized in other parts of the country, but indeed in those areas that still remain in more of the regional economy. That's part of our study as well.

Can I ask about TRQs? I hear you in terms of the importance of the processing compensation. As I understand it, the tariff rate quotas are also given to processors, or some of your membership, where the actual price of the input costs for your products that are being processed is lower than perhaps what the average price is for the supply-managed products in Canada. That's, in some form, a way of compensation.

Is that helping, or is that certainly recognized within the industry as some form of support, although it's not quite exactly what you're asking for here today?

[Michael Barrett]

It does help in some respects, but there's a balance to that as well, depending upon the use of those TRQs. There are restrictions on how they can be used.

Also, we have to put that into context on the demand in Canada for Canadian dairy product. You cannot label a product that comes in from the U.S. as Canadian, or the blue cow program, so there are some potential restrictions.

It can primarily help those larger processors that potentially have businesses on both sides of the border, where they can utilize, let's say, two sets of assets. It is seen as some compensation, but the reality is that the amount of those imports has not significantly swayed the cost—disadvantage or advantage depending on the market.

[Kody Blois, Liberal, Kings—Hants, NS]

My final point, because I do want to go to the Beef Farmers, is around tax credits. I don't have a full list of them here, but I certainly know the government has implemented them, in terms of amortization on the cost of capital, expediting that, accelerating that and allowing businesses to count that as part of their business writeoffs. Is that something your membership has used or has seen as helpful since the last Parliament, when I believe some of these measures were introduced?

[Mathieu Frigon]

Michael.

[Michael Barrett]

I thought that was being addressed to the Beef Farmers. I'm sorry. Was I mistaken?

[Kody Blois, Liberal, Kings—Hants, NS]

No, it was for you, but I have about a minute and 15, so I better go to them. Perhaps you can address that in your next point, if allowed.

Quickly, to the Beef Farmers, of course we've talked about foreign labour and access to temporary foreign workers. Certainly, I think that everyone on this committee recognizes the importance of what that represents. I'll play devil's advocate for a minute. Is opening up and allowing even more access to temporary foreign workers perhaps just putting a band-aid on what is needed, which is more innovation? This has been a persistent problem for decades now in terms of labour in this sector. Is that just pulling us back or being an ankle weight to actually making those innovation changes that are needed?

[Richard Horne]

That's an excellent question. I think it's a balanced approach. We're going to need labour regardless of how much automation there is or how many in-plant improvements are made. The temporary part is the issue that we have a problem with. We want permanent residents, people who are going to plant roots here and develop careers within the industry.

Rob touched on more of a grassroots campaign through education and training in post-secondary institutions, not just around meat cutting but in food processing in general.

It's really a combination approach. Tech and innovation is one side, but labour is going to be here in much-needed demand for years.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Horne.

Thank you, Mr. Blois.

Mr. Perron, go ahead for two and a half minutes.

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

Thank you, Mr. Chair.

My questions are for the beef farmers.

Thank you for being with us.

You mentioned the need to revise the standards, including the specified risk material, or SRM, standard. There are several points of view on this: some people at Bœuf Québec would like to see it removed, while others say they like the resulting geographic division.

Could you elaborate on your opinion on the matter? Do you want to see this standard disappear?

[Richard Horne]

Yes, I think it's very simple on the SRM issue; we need to harmonize with the United States.

The costs are prohibitive. They're creating an unlevel playing field between Canada and the United States. The science does not support the continued policies that we maintain in this country. We have started down that path. I have faith in the CFIA, and I hope they get that done quickly because the costs are significant.

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

Traceability is important in this context. Do you have any difficulties with this? Despite the great concentration in slaughter, are you able to ensure a certain traceability of your products?