Good afternoon.
Thank you, Mr. Chair and members of the committee.
My name is Philip O'Shaughnessy and I am the general manager of Canards du Lac Brome ltée. Our company began operations almost 110 years ago. We have several farms and two processing plants. Our main site is located in Val-des-Sources, in the Eastern Townships.
I'd like to take the time today to share with you the two biggest challenges facing the company: labour shortages and high production costs.
Currently, the bottleneck for our company is the lack of unskilled labour in our processing plants, mainly at the Val-des-Sources slaughter site. We currently operate our processing centres with a number of employees below the minimum required threshold, which has a direct impact on our production volume. Another effect of this lack of manpower is that many by-products cannot be recovered for sale and are therefore wasted, representing a loss of several hundred thousand dollars annually.
This problem seems to be widespread in slaughter sites. We believe it is much more serious for companies located in the regions, like ours. Indeed, they do not have access to the labour pool of nearby large cities.
We believe that the Canadian government can easily solve this problem by allowing more temporary foreign workers into our food processing facilities. Indeed, with more of these workers, we could quickly increase our processing volumes. This approach, which seems to us to be by far the best solution, has proven its worth in our business to date, both in agriculture and in processing. These workers are recognized as being of high quality and reliability. In addition, they occupy unskilled labour positions that too few Canadians want to work in.
The current limit of 10% is clearly insufficient to meet the needs. With respect to our specific situation, a limit of 30% on temporary foreign workers would be necessary to meet our unskilled labour needs.
The second challenge that we would like to bring to your attention is high processing costs, which are constantly increasing and are undeniably a barrier to increasing our processing capacity. This is primarily related to environmental management costs and animal health and welfare requirements imposed by the Canadian Food Inspection Agency. We are also talking about wage increases as well as the general increase in all other production costs. In our industry, these cost increases are very rarely offset by price increases. In the duck industry, profit margins are constantly decreasing. This situation is a barrier to the development of new markets.
Moreover, in our specific case, we are in a niche market. Canards du Lac Brome must therefore make additional and essential efforts to make its products known and create new consumption habits. This is what has been done successfully by Canards du Lac Brome since the early 2000s, mainly in the retail market in Quebec. In fact, we must face the fact that the North American population consumes few ducks, unlike European or Asian populations. We made significant investments in the past, but the return on investments had been very conclusive.
However, to continue this approach outside of Quebec, we would have to invest far too much money in consumer education through tastings and advertising campaigns. This is now too risky financially, because the return on investment will not be there in this case. For example, products imported at a discount from certain European countries have benefited greatly from our advertising offensives, without having to invest any money in market development. We recommend that the government offer support in target markets and financial assistance for the development of new markets. Promotion of the multiple benefits of duck consumption could be of great benefit to our industry.
In the same vein, we are seeing more and more buyers turning to imported products at lower prices and with lower quality standards than Canadian standards. The agency's Canadian standards are still recognized by the industry as the highest in the world. However, European and U.S. standards are officially considered equivalent to Canadian standards. The high costs associated with the agency's standards, compared to those of the European Union, contribute considerably to the fact that our production costs are sometimes higher than the selling prices in some of these countries. As a result, since the free trade agreements, some Canadian products are at a distinct disadvantage compared to foreign products. Many customers are not prepared to pay the costs related to our standards. These standards are no longer necessarily to our advantage. The fact that we have stopped selling in Japan in favour of other markets is a perfect example of that.
The role of the federal government is crucial in this matter. By reviewing equivalency standards, it will allow Canadian products to be competitive with imported products in our own market.
In conclusion, we recommend the implementation of the following three actions:
First of all, the unskilled labour shortage must be addressed, through the use of temporary foreign workers in particular. Second, we are asking for financial support to enable the development of new markets. Finally, we must ensure that products imported into Canada meet the same standards as those required for Canadian products.
I would like to thank the members of the committee for giving me the opportunity to share with them the challenges our company faces in increasing our processing capacity and competitiveness.