Agriculture Committee on Feb. 23rd, 2021

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

Do I have time for another question?

[The Chair, Liberal, Pat Finnigan]

I added 15 seconds to your speaking time.

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

Go ahead.

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

Thank you, Mr. Chair.

This is for the Canadian Cattlemen's Association. In your opening remarks, Mr. Lowe, you were referring to the problems that the beef industry has had in maintaining small to medium-size packers and so on.

Last summer, in late August, I was invited by the B.C. Cattlemen's Association to come to the south Okanagan region and visit two ranches that had won sustainability awards. Of course we were talking about the stresses that the pandemic had caused, with the backlogs in processing capacity. I remember the ranchers talking about how they had to develop a few innovative ways to try to do their own processing.

Do you have any threads or stories that you can share with the committee? You talked about the resiliency that the cattle industry has shown through this. Are there any lessons that can be learned from how that resiliency manifested itself and how they tried to take what was essentially a very bad deal from the rolling backlog and maybe try to promote a little more local food security and get connected a little more with local food networks, and so on?

[Bob Lowe]

There's actually an example of a young couple, right at home where I live. You don't hear much about young couples starting out in the cattle industry and making a go of it, but they seem to be doing it, and they've had a little farm-to-plate private.... People just come and get their grass-fed beef, actually. They went from about 110 animals a year to over 250. They had enough of a reputation amongst little provincial packers that they got at it right off the bat and booked ahead. They're still delivering beef on those deals that they made probably in the first part of April or May.

There are some people in Ontario who have switched their business plans in the same way. That's not the bulk of the industry, though. That all helps, but the bulk of the industry.... In our own particular case, we ended up shipping beef to small plants in Idaho because we couldn't get them done anywhere else.

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

Thanks. That's about my time.

[The Chair, Liberal, Pat Finnigan]

The time is up.

We'll go to the five-minute round with Mr. Epp.

Go ahead.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

That was excellent testimony from all of you. Thank you very much.

I'll begin with Ms. Gosselin and Novalait. I want to begin with your funding model, which is something I'm quite familiar with, if I understand correctly, where you're actually having check-offs come from both the processing side and the producing side, and then coming at some agreement around funding models.

With the increased access to the Canadian market through CUSMA, CPTPP and the CETA agreements, are you feeling any of that in your funding model? Are you collecting—I think I know the answer to this question—any check-off on the imports? I think the answer would be no. If it isn't, please inform us. Has there been any other compensation talked about from the research aspect?

[Élise Gosselin]

That is a good question.

The answer is no, indeed. The check-off is taken for litres of milk bought and sold. No compensation is returned in the form of financing for Novalait.

The check-off is stable, but the volume of milk traded has increased over the last five years. However, during the last year, these volumes have indeed decreased significantly. The amount of money collected through the check-off is decreasing more than it is currently increasing.

There is no mechanism to consider the market losses that we have incurred in the agreements as investments in research.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

I'll stay along the same thought process, but I'll move to the CCA. I've always known the cattle industry to be free market-oriented. I appreciate that. You've called for the setting up of a red meat industry export development fund. What's the advantage of actually having that funded by government as opposed to by check-off from the industry?

[Dennis Laycraft]

I can comment on that.

First of all, it's intended to be a matching fund. Industry would be putting money up. It's kind of a 50-50 match. Any time you're building to deal with a surge capacity or contingency capacity, it's hard to factor that into a pure business model, but when you have the matching money it does allow for that additional investment to be there so that when you have the need for some additional capacity, you're not starting from scratch; it's already in existence.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you. That's new information to me, about the matching component, so I appreciate that.

I've actually presented this information before at committee. Dr. Sarah Lloyd presented a 10-year chart comparing retail pricing along with the pricing paid back to the cattle producer. This is done in American funds. I know the Speaker of the House would rule me out of order, but I think I can get away with this, or maybe not. The numbers aren't important, but it's basically showing in the middle of that chart, around January 2015, a divergence in what the producer receives relative to the retail pricing of beef.

This is American data. I don't know whether that's applicable across Canada, but that break happens to align with the chart that you've provided in your briefing materials right along the Korean FTA. Is that sheer coincidence? I'm looking around January 2015. Is there a relationship between the divergence of those margins and that particular trade agreement, remembering that this is U.S. data, not Canadian data?

[Bob Lowe]

I think, Dennis, that question went in a different direction. You'd better take it.

[Dennis Laycraft]

No, there is no relation to the Korean FTA at all.

If you were to take a look at 2014, there were probably record-high prices in both markets.

It's interesting that when you get into the utilization argument, when you're trying to get that share, there's a kind of sweet spot in utilization. It's around 92%. When you go above 92% utilization, the price the producers get usually drops about 1.3%. If you drop below that rate, it goes up 1.3%.

When you have this capacity available and you get more competitive bidding, it affects the share. Ideally, you want to land in the spot where both processors and producers are making money.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

More capacity in Canada, then, should alleviate some of that diversion, if I'm understanding you correctly.

[Dennis Laycraft]

Yes. You also want U.S. bidders in our market. When you bring Tyson in, and Agri Beef, it makes a big difference in pricing.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

I'm going to go to Maple Leaf Foods, if I may.

[The Chair, Liberal, Pat Finnigan]

You have four seconds.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

On the retailer code of conduct, is Maple Leaf Foods big enough to withstand the parries from the big five?

[The Chair, Liberal, Pat Finnigan]

Thank you for the question. She may get a chance later to answer it.

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

Go ahead, Mr. Louis.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Thank you to all the panellists. This is very informative. I very much appreciate your advocacy and your time.

I would start with Ms. Theodore.

We've heard a lot of talk in this study about the need for skilled labour, and you were talking about educating people as to the well-paying and stable jobs that are out there.

I want to know what kind of relationship you have with institutions. I'm in Kitchener-Conestoga, which is near the University of Guelph and Conestoga College. Both have some strong programs.

What relationship do you have with those post-secondary institutions, and what can we as a federal government do to help promote, for lack of a better word?

[Nadia Theodore]

Thank you for that question.

We at Maple Leaf Foods have very good relationships with universities across Canada.

We have a summer student program across many universities; we have co-op programs; we have a centre of excellence program where you can come into the organization of Maple Leaf Foods and then do various jobs in various areas in the business in order to learn about the business and then decide where it is that you might like to go finally, as you start your permanent career with the company. When it comes to our relationship with the universities, we're doing okay.

In my humble opinion, the rub comes when we're in those universities and are pitching Maple Leaf Foods beside the banks, and so on—name another sector; I'm not just singling out the banks. To me, it's too late by then. People have already more or less made up their minds as to what they believe to be high-growth, high-potential, “on the cutting edge of innovation” types of jobs. We know that the workers of tomorrow who are in our universities right now are looking for those types of jobs. They're looking to be part of the future of the economic growth of Canada. They're looking to be part of cutting-edge innovation, disruptive technology.

That is the talent we want to attract, absolutely, across all types of jobs at Maple Leaf Foods and across the sector, but we are not doing a good enough job of selling the story.

Just to conclude, I think that part of it goes back to us, when we're talking about how we're going to manage and shape the sector going forward, to make sure that we ourselves, in the sector, are at the cutting edge of innovation.

The federal government is helping us in doing that, helping the Canadian agri-food and agriculture sector be at the cutting edge of innovation in the agriculture space. That will help us to attract that talent.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you.

Boy, I wish I had more time.

I'm going to move to the beef farmers, but Ms. Gosselin, you mentioned green chemistry, and I want to talk about biomass. If you want to talk about ways of moving forward quickly, that would be fantastic.

However, I don't know that we're going to get time, because I want to specifically ask.... The gentleman from the beef farmers ended up talking about a young couple who went from 110 animals to 250. Now, a lot of our local farmers are in that exact situation, small producers working with small processors. I know that the big players are going to get support, and we want to help them, but we want to help our small producers and small farmers and our own neighbours too.

What kind of things can we do to help that couple that you referred to?

[Bob Lowe]

What I think—and I haven't really had a chance to mention it—is that one good thing that came out of government during COVID was the government's changes to our AgriStability program. Those mean a lot to the cattle industry in particular. I guess it's the case for everybody, but I know the cattle industry.

The big thing is that the feds have said, “Here it is,” and it's up to the provinces to accept this. That would be one of the major things, I would think.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Okay, there you go.

I'm not going to push it with 10 seconds left, Mr. Chair. I cede my time.

Thank you, all.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Lewis.

Mr. Lehoux, you have the floor for six minutes.