Agriculture Committee on Feb. 23rd, 2021

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

I do hear a lot about the disparity between provincial and federal inspection agencies and about how there needs to be some more communication between those two agencies. Is that a place where we definitely need to work to increase opportunities for growing our capacity in the processing sector in Canada?

[Dennis Laycraft]

I think it's all of the above. The large plants are absolutely vital to satisfy world demand. If you're trying to sell to Costco Japan, you need a pretty sizable operation just to meet its weekly requirements.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Laycraft. The time has run out.

Thank you, Mr. Steinley.

Mr. Drouin, you have the floor for five minutes.

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

Thank you very much, Mr. Chair.

I would like to thank all our witnesses.

I will start with you, Ms. Gosselin. I know that your group does a lot of research in the dairy sector. Earlier, we mentioned milk protein. I spoke with people in the cheese industry. This sector needs dryers, for example. The systems, without saying that they are archaic, would need to be updated and automated.

What approach do you think should be taken to help the industry process its products?

[Élise Gosselin]

Thank you for your question.

Indeed, processing capacity is central in some very important processes, especially in the case of the dryers you mentioned.

For example, to obtain butter, you must first go through skimming and churning. We can add value to buttermilk in a certain way, but unfortunately skim milk is not always returned to high value-added processing. It is mostly dried to make skim milk powder. This is part of our surplus problem. Since butter is very popular, we increased its processing. As a result we wound up with skim milk powder.

From what I understand, the dryers are reaching the end of their useful life. We were talking about investments, and in the case of these companies, they are massive. They need to change these technologies to try to make products that are more valuable than skim milk powder, which has little future in the marketplace and sometimes has to be sold in Canadian markets for animal feed, whereas skim milk has a very high nutritional value.

I talked about other ideas and research. We want to find alternatives with higher added value, as our competitors abroad have done. For example, they have developed protein isolates. In short, they have isolated the protein to make very high value-added ingredients, rather than a low-value product.

This brings us back to the discussion we had earlier about the importance of supporting the industrial sector, including access to financial support programs, to leverage these investments. These points are important.

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

I know there are import barriers, but our competitors in Europe and the United States are able to create these products.

Is it because of intellectual property issues that our Canadian processors can't create these products here in Canada, or is it because we don't yet have the know-how in Canada or in Quebec?

[Élise Gosselin]

Many dairy processors in Canada are also present in other parts of the world. Our three largest processors are among the top 20 processors worldwide.

It's not so much a question of process as a question of financial environment and volumes. Volumes must be sufficient to allow for a competitive business model for these types of products. The Canadian market does not necessarily achieve this goal.

The issues are more financial in nature. That's why we're trying to find alternatives that are different from those of our competitors, to be able to work with the volumes that are available here in Canada.

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

Thank you very much for your answers.

Mr. Lowe, I heard your opening remarks, and I know that your organization was strong on set-aside programs. In your overall observations and what you've seen over the past almost 12 months now, we know that your members who are selling into a market that...and processors who we know now are somewhat vulnerable to COVID-19 and to any potential outbreaks within the industry.... We know that one industry—I can cite the Alberta example, obviously, as it's been in the news....

What suggestion do you have for our committee?

[The Chair, Liberal, Pat Finnigan]

I'm sorry. Unfortunately, we're past the time.

You may be able to answer some other time, Mr. Lowe.

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

There's no such thing as a five-minute conversation.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Lowe.

Thank you, Mr. Drouin.

Mr. Perron, you have two and a half minutes.

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

Mr. Lowe, you mentioned that the Emergency Processing Fund was not sufficient. So it would be good to invest some money into it.

You also talked about standards. We've heard from previous witnesses about the bovine spongiform encephalopathy, or BSE, policy. That policy could be withdrawn, now that the situation is secure.

What do you think?

[Bob Lowe]

I'm not familiar with what the member is mentioning, so I'll turn it over to Dennis.

[Dennis Laycraft]

Thanks, Bob.

I'm not sure that I know what ESB is. It may be getting lost in the translation.

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

You didn't hear the interpretation.

Mr. Chair, can I start over?

[The Chair, Liberal, Pat Finnigan]

Yes.

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

Can you hear the interpretation?

[Dennis Laycraft]

I do, yes.

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

Good.

You said that regulation should be flexible.

Previous witnesses have told us about a policy for bovine spongiform encephalopathy, or BSE.

[Dennis Laycraft]

Do you mean BSE?

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

I don't know the English name for it.

I'd like to know what you think about that.

Could that policy be withdrawn to make us more competitive, particularly with the United States?

[Dennis Laycraft]

Yes, I think we're talking about the BSE requirements.

Certainly, when you look at the cost of processing, especially in the specialized plants, we've lost a deal. That would be with the over-30-month, the older, mature animals. Clearly there's a huge advantage to U.S. processors versus the smaller processors in Canada.

Right now we have an application in for negligible risk. We're waiting to see the response to that. The interesting thing with BSE is that they even quit reporting numbers, all the way back in 2016, because there are so few numbers reported anywhere in the world. Since 2016, there have only been two cases reported on the entire planet. Hopefully we're able to move past the old rules that are out there.

I mentioned the volumes earlier. You see this huge volume that has to be taken in and put into contained disposal or a destruction procedure. In the U.S. that is going into a whole range of other uses, including fertilizer. Narrowing that gap would help.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Laycraft.

Thank you, Mr. Perron.

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

Did you adjust my speaking time, Mr. Chair?

[The Chair, Liberal, Pat Finnigan]

I gave you more time.