Distinguished parliamentarians, I would like to begin by thanking you for this invitation. I'm honoured, excited even. I love the level of consideration this committee gives to issues. This is the first time I've been invited to appear before a federal committee. It's very exciting for me. I hope my presentation will interest you in some way.
Globalization puts Quebec and Canadian beef production in competition with the world. It's a commercially unstable industry, highly complex and high-risk. This is why the processing sector is concentrated in the hands of a few giants.
I would like to highlight four elements that illustrate the challenges we face.
The free market exposes beef producers and processors to highly volatile prices, and few businesses survive. Several countries have abundant and inexpensive labour, including the United States, Mexico and Brazil. Regulations lack reciprocity. Beef is imported from producers who are subject to production standards that are lower than Quebec's, both in terms of animal health and welfare and the environment. The same is true for producers in the rest of Canada. Finally, several governments support their processing sector financially.
Boeuf Québec is an innovative initiative for the recovery of the industry. Sales are doubling every four to six months, and we hope that this pace will be maintained for the next two years, even though it is still a small industry.
How can the government support the Boeuf Québec program so that we can seize the opportunities? The Boeuf Québec program is simple, and I'll tell you a big secret later. It is based on four key elements to strive for excellence and be among the best in the world. The government assistance announced today must help us innovate to meet these four major challenges. What are they?
First, we need to better respond to consumer demands. Indeed, the consumer is the final arbiter of our project.
Second, there is a need for better vertical coordination from farm to table, because collaboration between the links in the production chain leads to significant gains in productivity and agility. Mr. Graydon pointed out the difficulties of working with distributors and major brands.
Thirdly, we must start the race for greater business productivity. If we want a relaunch, we must seek better value and profitability for all businesses, especially processors, slaughterhouses and producers. In Canada, there is no recovery in the beef industry, and it's even worse in Quebec.
Fourth, we need to increase the competitiveness of the business environment. We need to innovate to better manage risk, better regulate, train the workforce, and foster research, investment and innovation. Government support is an essential lever to offset global disparities. It's clear that we aren't on a level playing field with the rest of the world.
The needs are clearly expressed to accelerate the Partenaires Boeuf Québec program, which takes the same direction as the Canadian Beef program. The challenge of such a program is to make it work on a large scale, and all partners have a stake in making it work.
On a more concrete level, I will now say a few words about productivity.
The key element that will require the most investment over the next few years is productivity. There will be no revival of production and processing in the Boeuf Québec industry without an increase in business profitability. I'm convinced that this is the same challenge across Canada.
As far as producers are concerned, one of Boeuf Québec's objectives is to increase production profitability by 6% by launching a pilot project in 2021. More value must be produced at lower cost. Today, this means innovating, selling better and producing better. That's how we'll get producers to invest and produce more.
As far as slaughterhouses and processors are concerned, we can now turn our weak links into a driving force. We have several slaughterhouses that are federally inspected. Surprisingly, in Quebec, slaughterhouses are constantly being shut down or doing other activities because they can't do it. Some provincially inspected slaughterhouses demonstrated during the pandemic that they have a tremendous capacity for strategic slaughter. Again, if left to their own devices, they won't be able to do it.
We need to make a radical technological shift. Technology allows us to manage the complexity of a project like Boeuf Québec's and allows us to be more productive. We need to make a radical technological shift in production and processing now. This is synonymous with automation, robotization, industry 4.0, blockchain. We have to focus on innovation, otherwise we won't be able to compete on a level playing field with other countries.
We are currently working on a blockchain project that will change the way we produce. We need the government to make this chain a technological leader and to compete with the giants that dominate this industry. You've probably already seen the robots coming into the factories at high speed. In five years, if we haven't innovated, we'll be dead.
I brought a note. Currently, there are two destabilizing issues in the processing sector that need to be seen and understood. The first one is technology—I think I've expressed it pretty well. A comet is coming towards us, and if we don't turn the corner now, I think it'll be too late in five years. The second earthquake came with the pandemic crisis. North America has been undercapacity in slaughter for years.
In “Business Insider” it says:
The era of big beef may be over as Americans turn to small-scale butchers in the pandemic.
The COVID-19 pandemic has exposed the fragile nature of America's meat supply chain as tens of thousands of meat industry workers fell sick, and hundreds died. Small-scale farms have seen a huge spike in demand as consumers search for alternative meat sources. Right now, 80% of the US beef market is controlled by four huge meat producers, and they're the target of a Justice Department antitrust investigation.
The current context is particular. There is an undercapacity in slaughter, and we are faced with the need to make not only a technological shift, but also a shift in relation to the consumer. The consumer is asking more questions and is willing to ask more questions. Demand must be met now.
For years, the beef production sector was viewed as a commodity producing system. In a sense, that era may be coming to an end. That's where we come in, and I go back to the strategic points I mentioned earlier: the consumer, productivity, vertical coordination and competitiveness.
My goal is for us to in some way become the Cirque du Soleil of the beef industry in North America. To do so, we subscribe to a marketing strategy called the “blue ocean”. In my opinion, that's what we're achieving through Boeuf Québec. We want to surprise you.
I, for one, find it quite exciting to have conversations like the one being held today with Canada's leaders in this field. However, I believe that we need to be able to—