Agriculture Committee on May 8th, 2023

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

Thank you for that.

Conestoga Meat Packers recently launched, I think, a 120,000-square-foot expansion, with support and funding from the federal government, which will allow them to increase international shipments. Now they'll be able to sell frozen and fresh cuts to about 30 countries in the world.

What's the importance of processing facilities innovating, and what are the challenges to do that and stay competitive?

[Eric Schwindt]

We've heard quite a bit this evening about access to labour. The more innovation and the more robotics are involved in the plants, you get better products because there's less contamination, there's more precise cutting and there's less labour required. All that makes a more competitive product on the national stage. Japan sees value in that. They want to buy Ontario pork, Canadian pork, because of that.

That is the way of the future. It does require scale and large capital investments. There's a limit to how many of those you can have in any one jurisdiction.

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

Thank you, Mr. Schwindt.

Maybe I can turn to Mr. Roy.

Recently I visited the Centre for Meat Innovation and Technology, which is located at the University of Guelph. They mentioned there's a 7:1 return on investment in meat processing, but they also mentioned there's a lag in investing in technology. They listed some of the challenges for technology. We've heard this from other witnesses today: space, innovation such as robotics takes up room; adoption, we need to encourage adoption of that; and also the challenges in finding innovative systems that will work for smaller processors and smaller companies.

Can you expand on any of those things and how we can help processing plants invest in that technology?

[René Roy]

Let's talk about research first. There are two levels of research that are important. There is one that we do through our industry with the help of the government through Swine Innovation Porc, and other research that is done at the producer level in the various provinces. This helps the adoption of new technology. This is a great partnership that helps producers a lot. When there is a new technology, it's possible to have the technology but not adopt it here. This helps to bring the technology into the Canadian reality with our climate and market situation. There are various questions it can help solve if we have good research.

The other part is at the processing level. There is other research that is done that helps to build products that are competitive in the world. I just want to mention that we've been one of the first in the world to market fresh pork to Japan. This has been a huge win. I'll just mention that it started in Vallée-Jonction. All this knowledge was built there with producers, processors and workers on the floor. It's sad what we see happening today.

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

On that knowledge, that co-operation among industry, government and post-secondary settings, I've heard of some of the added value products. How can we differentiate our products to help us be more competitive on the global scale? What are some of the innovations you're hearing about?

Today we've heard about food safety, quality, traceability and a skilled labour force. Those can make us more competitive, but how can innovation help us set our products apart?

[Stephen Heckbert, Executive Director, Canadian Pork Council]

I will say—and thanks for the question—that we're an incredibly innovative industry. Farmers innovate every single day when they enter the barn. The challenge really is that we're a bit stuck in terms of innovation. We have access to markets that we're not allowed to access because our trading partners have put non-tariff trade barriers in our way. Even if we were more innovative, Great Britain and Europe would find new ways of preventing the sale of our product in those markets.

What we really need is the Government of Canada to say to those foreign markets that our animal welfare standards are equal to theirs, that our innovation is equal to theirs and that the quality of our product is equal to theirs. We have negotiated trade agreements, but we simply can't access those markets. If we could access those markets, some of the questions around Vallée-Jonction might, in fact, not be asked today. We might not be facing this situation if we simply accessed the markets that we are supposed to have access to.

It's really incumbent on us to hold—

[The Chair, Liberal, Kody Blois]

Thank you.

Unfortunately, we're at time. I'd ask you to recognize the chair. I know that you were trying to finish that off, but I've given you an extra minute.

Thank you to Mr. Louis.

Thank you to the witness.

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

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

Thank you, Mr. Chair.

I would like to thank all the witnesses for being with us today.

Good evening, Mr. Duval. I'll start with you. We know that there is a lot of stress and discouragement among producers at the moment. We also know that the Quebec government has committed to helping you.

Would you recommend that the federal government do the same by adding its efforts to those of Quebec and the provinces, and if so, how?

[David Duval]

That's a very good question. I would indeed like to make that request.

The first thing to understand is that we are also in a storm and it is related to two factors. Hog production is cyclical. We can deal with a cycle. On the other hand, this plant closure comes during a cyclical period when the number of hogs in Quebec must be reduced by one million. We are currently exporting these hogs to all the other provinces and we are doing so in a haphazard fashion, which is having a negative impact on the industries in the other provinces. This creates a lot of stress for all producers.

With inflation, keeping the Olymel processing plant in Vallée-Jonction open is going to cost us $500,000 a week starting this summer. Producers who have to move their hogs will have to pay additional costs of $4 to $6 per hog. There is significant psychological stress. There were unfortunately two suicides among hog producers a few weeks ago in the Beauce region. This is an extremely difficult time.

We are ready to reduce production. We have toured the regions and we have found that producers are ready to do so. But it will cost them. Now we're asking the producers who are going to stay to pay for those who are going to leave.

The provincial government has committed to helping us. I would like the federal government to help us as well to reduce the bill for the producers who are going to stay, especially since most of them are young people. They are the ones who have invested in animal welfare and technology over the last few years. We can't ask them to pull out now. They are too indebted. Even if they are successful producers, the next few years will be really difficult for them.

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

Thank you for that recommendation; we will take note of it.

My next question is for the representative of the Canadian Pork Council.

Mr. Roy, I imagine that, for many producers, the closure of the plant will result in increased transportation costs. Do you have an estimate of these additional costs?

[René Roy]

It depends on where the production is done. If we leave the Beauce to go to another slaughterhouse, that represents about 200 or 300 kilometres more for producers in our region, depending on where they start. So they're going to have to travel a lot of kilometres, and they're not going to have the option of crossing a bridge. All of this obviously represents additional costs.

We estimate that the additional costs will be about $6 to $8 per hog. Having said that, there is a mechanism in place in Quebec to spread a portion of the transportation costs, but it is still the producers who have to bear those costs.

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

Do you have any recommendations to help producers cover these costs?

[René Roy]

There are different options. In Quebec, Olymel currently does 80% of the slaughtering. We are going through a difficult cyclical period, it's true, but we know that after a downturn, prices rise and the situation improves. We are actively looking for potential investors, as this would allow us to diversify our offer to buyers. In the long term, this competition would provide us with a better income.

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

Thank you, Mr. Roy.

How much time do I have left, Mr. Chair?

[The Chair, Liberal, Kody Blois]

You have two minutes left.

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

That's fine.

I would now like to address the representative of the Ontario pork producers. Mr. Schwindt, it is surprising to see you here, since we are discussing an Olymel plant located in Beauce. How are Ontario pork producers affected by this closure?

In other words, I'm asking you to talk to us about the broader production chain.

[Eric Schwindt]

Before Olymel started reducing their production a couple of years ago, we were shipping approximately 25,000 market hogs per week to Olymel. As the cutbacks happened, it tended to be the Ontario hogs that would be cut back first, or in conjunction with Quebec hogs. That would force Ontario hogs west or south to alternative markets, increasing transport costs and generally meaning less returns for those hogs.

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

So the situation at Olymel takes away that possibility.

Will Ontario's slaughter capacity be sufficient?

[Eric Schwindt]

We are short at least 25,000 hog processing spaces per week for Ontario production, and you could argue that could be 30,000 or 35,000 hogs per week. There is definitely room for another large processor in the Ontario market exporting Canadian pork and Quebec pork around the world. Ontario pork and Quebec pork, I think, we're aligned. We would love to have a processing plant anywhere in eastern Canada. We think there's an opportunity there.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Savard-Tremblay.

Mr. MacGregor, you now have the floor for six minutes.

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

Thank you very much, Mr. Chair.

One thing that's struck me with a lot of the testimony that our committee has heard during this meeting is that I'm getting this sense of déjà vu, because one of the first studies that our committee embarked on was the study of processing capacity. We're now seeing the consequences bear out in real time with the Olymel plant closure.

Mr. Schwindt, I was paying attention to your opening remarks, and when you said that the lack of processing capacity remains the biggest obstacle to your growth, and we compare that with Olymel's presentation to this committee, listing all of the challenges that company is facing and the reasons why they've had to close, it's quite an incredible juxtaposition for our committee to grapple with. You're saying you need more capacity to realize growth, and they're listing all of the different challenges that they're experiencing.

During our committee's study on this, one of our recommendations was that the Government of Canada, in collaboration with the provinces and territories and the private sector, identify some strategic funding opportunities to address that regional processing capacity, all in an effort to strengthen our agri-food supply chain.

We're only doing one meeting on this closure. We ultimately want to have this meeting inform a letter that we're going to authorize our chair to send to the minister. I know you've touched on a few points, but is there anything else you would like to add that you'd really like to see in this letter? Can you draw from some of the experiences that our committee has had or the recommendations we made previously? Is there anything else you wanted to add to this?

[Eric Schwindt]

I think our three key points are labour, market access and having a competitive environment to produce pork in this country. We'd like to get those three things.

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

Thank you. That's good. I think that's something that we've heard a lot of.

I'll turn to the Canadian Pork Council.

I was also listening to the overview of how we need to be quite strategic. You mentioned the Indo-Pacific strategy. In fact, our committee is about to embark on a study on the Indo-Pacific region specifically related to our agricultural exports. We have seen what's happened to your sector with China, with our exports reaching quite stratospheric heights in 2020 because of their own internal issues, but then, of course, there was quite a catastrophic drop-off in 2021 and 2022.

As our committee embarks on this study, is there anything you want to add that we should be keeping in mind when we're looking at the witnesses to select, the kinds of questions to ask and so on—as a precursor to when we finally get into that study?

[René Roy]

I would like to mention the fact that non-tariff trade barriers could be a shadow that strongly impacts our trade ability. Even if we have a trade agreement, if we have non-tariff barriers in place—such as we have right now with Europe—it means that we are not able to trade.

There are also some political statements that could have an impact. We've seen it with China. It has impacted our industry quite strongly, so this is also to be taken into consideration, because we are partnering with various countries in the world. It has to be considered. Political statements have been hard on our industry, and I think it's important for everybody to take this into consideration as they are made because we have been a collateral victim of them.

[Stephen Heckbert]

I would just add to that, Mr. Chair, and I will try to pay attention to you in case I get cut off this time.

I would add that, in terms of the Indo-Pacific strategy, those are some big markets for potential pork products. The Philippines is an enormous area of growth opportunity for us. There are very many markets in South Korea. As we look to expanding our trade in those markets, again, it's about helping us access those markets but keeping that access, as well, once we've begun to access it. It's about gaining access and then keeping the access.

We would ask the government to not just open an office but to make a long-term strategic commitment to that office. This is a part of the world that makes decisions in 20-year time frames, not in five-year time frames.