Thank you very much, Mr. Chair.
On behalf of Agriculture and Agri-Food Canada, or AAFC, I would like to thank the committee for the opportunity to comment on the closure of the Olymel processing plant in Vallée-Jonction.
First of all, I would like to mention that AAFC wants to listen to the needs of the industry and works closely, within its mandate, with the agricultural and agri-food sector and businesses, while respecting their business decisions.
As a result, AAFC is well aware of the challenging environment that the pork industry has faced in recent years. Pork producers are struggling with rising input costs and interest rates. It is also important to remember that the pork industry has experienced several years of turmoil, including the COVID‑19 pandemic, supply chain disruptions and the devaluation of the yen, which has hurt pork sales in Japan, to name a few.
However, the outlook for Canada's meat industry is largely dependent on export markets as China, the world's largest consumer of hogs, rebuilds its herd after African swine fever. In order to continue to compete in global markets, the Canadian pork industry must be able to adjust quickly to the challenges of market access. As the world's population increases, the demand for animal protein will remain strong.
The hog industry plays a major role in the Canadian agricultural sector. It generated more than $6.5 billion in farm gate revenues, and more than 35% of hogs are produced in Quebec. In this context, it is easy to understand the importance of Olymel, the largest hog processor in Quebec, which handles about three-quarters of the province's slaughter. As such, it is an important company in the sector with whom AAFC works regularly, whether it is through ongoing African swine fever preparedness work or through AAFC's sectoral engagement table on animal protein.
AAFC officials maintained ongoing contact with representatives of the pork industry in Quebec following the mid-April announcement of the closure of the Vallée-Jonction processing plant.
The company cited labour shortages as the reason for this decision. More generally, the problem of labour shortages exists in many companies in the agri-food sector, particularly in the meat production sector. In 2022, there were over 2,100 vacancies in the meat slaughter and cutting sector. AAFC is working closely with Employment and Social Development Canada and Immigration, Refugees and Citizenship Canada to ensure that the temporary foreign worker program is responsive to the needs of the agriculture and agri-food sector. I will let my colleagues explain their efforts in this regard.
AAFC is also developing a strategy to address chronic labour shortages in agriculture and food processing. Public consultations have been held, and focused dialogue with employers, unions and under-represented groups, as well as collaboration with provinces and territories, is underway. In addition, we are working closely with the Canadian Agricultural Human Resource Council on the development of their own labour force policy framework to ensure that our respective initiatives are complementary.
The closure of the Chinese market in the 2020 to 2022 period, also cited as a reason for the company's difficulties, affected several Canadian slaughterhouses, including the one located in Vallée-Jonction. This closure was linked to Chinese requirements regarding COVID‑19. As a result, more than half of the country's hog slaughter capacity could no longer be sold on the Chinese market. Canadian government officials moved quickly to request that the suspension of the affected plants be lifted and to seek clarification of China's requirements. While export permits to China have been reinstated, there is no doubt that these actions have had a negative impact on the pork industry.
All in all, AAFC's actions are consistent with its role of providing services to the industry and markets. Given the importance of Olymel in Quebec and the place of the pork sector in our economy, the department places great importance on the company's difficulties. AAFC remains mindful of the impact of this decision on producers, workers and rural communities. Hog production in Quebec is different from other Canadian provinces in terms of marketing. It is based on a joint plan that has been negotiated between producers and processors. This model is based on the co-operation of all the links in the chain and provides great resilience in the face of obstacles.
That said, AAFC will continue to work with all industry stakeholders to mitigate the impact of this closure. AAFC offers a wide range of support programs to the hog industry.
Thank you again for your attention to this important issue. I would be pleased to answer your questions.