Agriculture Committee on Nov. 30th, 2022

[John Barlow, Conservative, Foothills, AB]

My concern with this would be that we have a supply-managed system in Canada for a reason. In your opinion, does this undermine the idea of supply management? What message does this send to other trading partners or potential trading partners regarding how quickly the government eliminated the tariffs and quota on supply management in this case?

[Tim Klompmaker]

Certainly one of the abilities that we have within supply management is around the food safety piece. We have 100% of our farmers on an on-farm food safety program, with 100% of them audited so that we can ensure food safety.

In having product coming in from another jurisdiction that does not meet the same thresholds that other imports would have, the concern is having consumers who do not have trust in the Canadian chicken available to them. Ultimately, when they go to the grocery store, they're not going to be aware of whether that product is Ukrainian product or Canadian product.

[John Barlow, Conservative, Foothills, AB]

I have time for one last quick question.

There was a report of another outbreak of avian flu in the Chilliwack-Hope area. We've now lost close to four million birds in Canada.

Certainly with Ukraine not having the monitoring system in place that we would hope is up to standard, what kind of risk does avian flu pose to the Canadian industry?

[Tim Klompmaker]

With avian influenza, I've seen first-hand what that impact is on some of our farmers in Canada. Certainly we have stringent processes. When we have a case diagnosed on a farm, that farm is automatically shut down and CFIA steps in and—

[The Chair, Liberal, Kody Blois]

Mr. Klompmaker, I apologize. Mr. Barlow said there was a bit of time for a question, but there wasn't really. I tried to give a 15- to 20-second answer, but you were going into a longer preamble and I want Mr. Drouin to have his six minutes. Thank you.

Mr. Drouin, I'll leave that to you for six minutes.

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

Thank you very much, Mr. Chair.

I also want to thank all the witnesses here before us.

Greetings as well to my friends the egg producers at the back of the room. I won't have a chance to speak with them, but I want to express my gratitude to them. Egg producers, like chicken producers, are important people back home. I also want to thank Mr. Laliberté, a good man from the best community in Canada, Hawkesbury, where I grew up.

I obviously sympathize as well with all the people from Ukraine, who are having such a bad time of it. The situation there is terrible.

In their testimony on Monday, the officials from the Department of Finance acknowledged they had quickly reached an agreement but didn't have time to conduct consultations. Now they're open to doing so. Some stakeholders have had a chance to speak with the people from the Department of Finance.

As for me, I'm going to speak to the representatives of the Chicken Farmers of Canada, who are before us today.

I'd like to know more about the market process and predictability. How many kilograms of chicken do the Chicken Farmers of Canada produce every year for the Canadian market?

I know Mr. Klompmaker doesn't speak French, but Mr. Laliberté and Mr. Ruel can. Having said that, I understand both official languages.

[Michael Laliberté]

We produce approximately 1.3 billion kilograms of chicken a year.

You're obviously aware of the three pillars of supply management. The first is production discipline. We normally set our production volumes 14 weeks before a production period starts. That's the process we follow. By the time we've determined that there may be import certificates and are aware of that four to six weeks before the importing of permitted products begins, it's a little too late for us because the production cycle's already under way.

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

How do you go about setting production volumes? I'm thinking of the 2008 recession, for example, which no one was able to predict, apart from perhaps two or three economists. Do you predict it all by contacting the processors, restaurant operators and consumers? How do you determine the number of kilograms of chicken you'll have to produce in a given number of months?

[Michael Laliberté]

It's a very rigorous process that's governed by an operating agreement approved by the provincial ministers and the federal government. There's a process for consultation between the provinces and industry stakeholders, which include processors, further processors and Restaurants Canada.

We conduct economic market analyses based on many factors, including the tariff rate quota, the wholesale price and chicken inventories.

As I said a moment ago, the board of directors meets approximately 14 weeks before the production period starts to set the production volume in accordance with domestic market needs.

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

There are obviously margins of error. It's impossible to predict with 100% accuracy what market needs will be in three or six months.

How do you apply corrective measures? What's acceptable to you? Do you use a delta? When I worked in statistics, we always talked about the Six Sigma concept. It's a quality control method according to which a 3% variance either way is acceptable. Do you use the same kind of formula when setting production volumes? What's your tolerance threshold? Is it acceptable in your industry for the production volume to be 3% above or below the market level?

[Yves Ruel]

It isn't an exact science.

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

I know; I say that, but I'm not an economist.

[Yves Ruel]

Actually, even an economist or a statistician wouldn't be able to predict the number of kilograms of chicken that Canadians will eat 14 weeks from now. It's virtually impossible to predict exactly.

We nevertheless have some historical knowledge of consumption trends. For example, we see more consumption during the summer months. There are also periods when certain meats have more market share than their competitors, such as turkey during festive periods such as Thanksgiving. We keep track of certain factors, but we can't determine consumption to the kilogram.

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

You obviously have to ship your chickens elsewhere. How do processors adjust to that demand?

Incidentally, I want to congratulate you on the fact that the price of chicken has remained relatively stable despite inflation. There have been some increases, but the price hasn't risen as much as those of other meats or proteins. I congratulate you for that. It's proof that our supply management system's working well.

How do you adjust if you're ever unable to meet the demand from processors? How do processors adjust? Do they import additional meat?

[Yves Ruel]

I can't answer for the processors, but there are always adjustment mechanisms. Canada has a tariff rate quota that permits the importing of a certain number of kilograms. There are also various market options: processors may decide to increase inventories or do more further processing, for example, by selling fresh or frozen product. They have various ways to adjust to market needs.

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

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Ruel and Mr. Drouin.

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

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

Greetings to all my colleagues.

Greetings as well to all the witnesses, whom I thank for their testimony.

I'll have some open-ended questions shortly, but I'd like to start with a few quick questions that I would ask you please to answer with a yes or a no.

Is it true that Poland is considered as having an outbreak of avian influenza?

[Michael Laliberté]

Yes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Perfect.

The Canadian Food Inspection Agency reports that there are no cases of avian influenza in Ukraine.

Is it true that a chicken is a bird and that birds rarely respect borders?

[Michael Laliberté]

Yes, that's correct.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Perfect, thank you.

Now I'll ask you my more substantive question, which is for whoever wants to answer it: what are the consequences for a chicken farmer when an outbreak of bird flu is detected on a farm?

[Yves Ruel]

I think it's important that you hear the answer to that from the chair of our association, Mr. Klompmaker. He's a farmer and he's very familiar with what a farmer goes through when he has a case of avian influenza on his farm. It's very trying. So I'll let Mr. Klompmaker describe his experience in greater detail.

[Tim Klompmaker]

From a farmer's perspective, once a flock is diagnosed with AI, automatically the farmer is basically removed from even entering their barns and that. CFIA takes control of it and they put a quarantine in place around that facility. Once that occurs, then the CFIA will order those birds to be euthanized. Once the birds are euthanized, then we go through the process of cleaning up that farm and getting it back to a point where it can repopulate.

It's basically a cleanup, which is like a white-glove cleanup on-farm. It takes several months to actually get to that point. What also ends up happening during that quarantine time is that there is a buffer zone that is established around that farm. Within that, there are restrictions that occur around transportation within that zone. Also, anything on and off that farm just does not occur until such time as they get a clean bill of health.

The impact on farmers is not just financial. When you take a look at the mental toll this takes on our farmers, it's gruelling for them. We understand the process we have, and we need to have that process to ensure the safety and no more spread of the flu.

It's a very stringent process we undergo.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What I mainly understand from your remarks is that the matter before the committee today, on which we're seeking your testimony, doesn't merely concern reciprocal standards. It's also a sanitation issue.

Please tell us more about that.