Agriculture Committee on May 8th, 2023

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting number 62 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I'll start with just a few reminders.

Today's meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking, rather than the entirety of the committee.

Colleagues, it's great to be back. I apologize that I have to be here virtually this evening. Unfortunately, family matters require me to be at home, but I'm looking forward to what will be a really important discussion.

I just want to recognize that Mr. Savard-Tremblay is substituting for Mr. Perron, and we're going to have Mr. Epp in for Mr. Barlow for the first hour.

Welcome to you both.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, April 24, 2023, the committee is commencing it's study of the closure of the Olymel processing plant in Vallée-Jonction.

I would now like to welcome our witnesses for the first one-hour panel.

From the Department of Agriculture and Agri-Food, we have Donald Boucher, director general, sector development and analysis directorate. From the Department of Citizenship and Immigration, we have Tal Elharrar, who is the senior director, and Ian Gillespie, director of temporary resident policy and program. From the Department of Employment and Social Development, we have Jacinthe David. From Olymel, we have Paul Beauchamp, who is first vice-president, and Louis Banville, who is vice-president, human resources. From Sollio Cooperative Group, we have Stéphane Forget, senior vice-president, public affairs, co-operation and corporate responsibility.

We're going to have a five-minute opening statement from each organization, with the exception of ESDC. It will be 20 minutes, and we'll try to do our best to get two rounds of questioning in.

I'm going to start with the Department of Agriculture and Agri-Food for up to five minutes, please.

[Donald Boucher, Director General, Sector Development and Analysis Directorate, Department of Agriculture and Agri-Food]

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.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We will now turn to the Department of Citizenship and Immigration, please.

[Dr. Ian Gillespie, Director, Temporary Resident Policy and Programs, Department of Citizenship and Immigration]

Thank you, Mr. Chair and committee members.

I'd like to begin by acknowledging that we are on the traditional, unceded territory of the Algonquin Anishinabe people.

Temporary foreign workers complement Canada's efforts to build domestic labour capacity and represent an important contributor to Canada's prosperity and economic growth.

Canada's temporary worker programs are demand-driven with no limits on the number of work permits that can be issued, so they can remain flexible and responsive to the changing labour market landscape. They address the immediate workforce needs of diverse employers, facilitate the entry of workers with a wide range of skill levels and educational backgrounds, and promote business productivity, growth, and innovation.

Foreign workers can obtain work permits through two programs. First, there is the temporary foreign worker program, which relies on a labour market impact assessment that helps ensure that the hiring of temporary foreign workers will not adversely affect the Canadian labour market. The other way is the international mobility program, which is exempt from the labour market impact assessment and enables the entry of foreign nationals to work in support broader social, cultural and economic interests or where there are reciprocal opportunities for Canadians. Both programs feature conditions and requirements on employers to help ensure the protection of workers while they are here.

The Government of Canada is committed to helping foreign workers who may have lost their employment due to the Olymel factory closure in Vallée-Jonction. Workers who find themselves in a similar position can benefit from a number of recently introduced facilitative measures.

Since May, 2020, workers and prospective employers can leverage the changing employers public policy, which expedites work permit processing for foreign nationals with work permits who are already in Canada to change employers, for example, if they have been laid off, and to begin working for their new employer while waiting for their new work permit.

Employers and workers alike can also benefit from the workforce solutions road map under the temporary foreign worker program, which was recently extended until the end of October 2023. The road map enables employers in seven sectors with demonstrated labour shortages, including food manufacturing, to hire up to 30% of their workforce through the temporary foreign worker program for low-wage positions.

It extended the validity of labour market impact assessments, the time they can be used to support a work permit application, to 18 months from nine months. It also maintained the maximum duration of employment for low-wage positions at two years, a measure originally introduced during the pandemic.

Budget 2022 announced additional measures, including introducing a recognized employer pilot that will aim to reduce red tape for select repeat employers who meet exceptionally high standards.

It also announced the implementation of a new foreign labour program for agriculture and fish processing, increased capacity to process employer applications and improve the quality of employer inspections.

Since then, Employment and Social Development Canada, or ESDC, has improved processing times through several modernization initiatives, including a full transition to an online solution. As of early April 2023, it was taking an average of 30 days to render a decision on a Labour Market Impact Assessment, or LMIA.

Budget 2022 also committed $385 million over five years and $86.5 million ongoing for IRCC and federal partners to ensure the timely and efficient entry of temporary workers to meet the needs of Canadian employers and fill critical labour shortages. These resources have moved the department closer to meeting its service standard of 120 days, which is currently sitting at 134 days for inside-Canada applications.

The Government of Canada is aware that Olymel will be closing its Vallée-Jonction facility and continues to work with the employer to explore options to facilitate the transfer of impacted temporary foreign workers to other Olymel plants in the province of Quebec. New or previously approved LMIAs will need to be leveraged should workers wish to be transferred to another plant, as these new workplaces are not located in the same economic region.

The decision to relocate will ultimately come down to Olymel and the workers themselves. Both IRCC and ESDC are committed to facilitating this process and working with the Province of Quebec to ensure a smooth transition. Both departments are also working with Olymel to facilitate the extension of LMIAs and work permits to ensure that the Vallée-Jonction plant is fully staffed until the day it closes.

In closing, I'll simply note that IRCC and ESDC will continue to work with employers and workers to ensure they have the support and protection they need to help our economy grow.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much.

I would now like to invite either of the Olymel representatives, Mr. Beauchamp or Mr. Banville, to speak for five minutes.

[Paul Beauchamp, First Vice-President, Olymel L.P.]

Thank you, Mr. Chair.

Good morning, members of the Standing Committee on Agriculture and Agri-Food.

To begin, I would like to say a few words about Olymel. Olymel is the largest meat processor in the country. We operate in the pork and poultry sector. Our facilities are located in five Canadian provinces: New Brunswick, Quebec, Ontario, Alberta and Saskatchewan, where we operate farms. As a major pork producer and processor, we are an important economic player not only in Quebec, but in Canada.

As was mentioned a few moments ago, our market is not only in Canada, but also around the world. On the other hand, Olymel occupies a relatively smaller place on the world stage. We have to deal with international players with a presence on several continents and whose activities are much broader in scope than ours. We consider our $4.5 billion in sales to be modest compared to those of internationally owned and capitalized companies.

I mentioned our two business segments, which are fresh pork and processed pork, and fresh poultry and processed poultry. The last three sectors have performed exceptionally well, which has allowed the company to face the situation we have been going through over the last few years. Our most unprofitable sector was fresh pork. As mentioned at our last annual meeting, the company has lost more than $400 million over the past two years. Essentially, these losses are related to our international operations.

We had to make a choice: redesign our business model or die with it. We decided to review our business model in order to support the industry, both in Quebec and in Canada. Our business volume is smaller and more modest, but we are at least ensuring sustainability. Moreover, the outlook is more encouraging than seeing the main meat processor exposed to the turbulence of the international market.

As mentioned earlier, the international market has been disrupted by the labour shortage, but less so than Canada. The labour shortage, of course, coupled with the loss of our ability to export to the Chinese market, obviously amplified our losses. This made it impossible for us to offer value-added products to meet the demands of Canadians.

Essentially, for too many months, we were slaughtering animals to prevent them from going to humane slaughter. This allowed us to keep basic, non-value-added cuts. It was this problem in particular that led us to decide to review our business plan.

According to this business plan, if we wanted to continue to slaughter the same number of animals, we had to close one of our facilities. We thought long and hard about it and analyzed all the factors: the availability of labour in each region; the ability to use employment agencies, and the estimated investment needed to keep the facility operating and to meet both environmental and public requirements.

In the end, we realized that the Vallée-Jonction facility was the most difficult to maintain. There was no doubt that the closure of this facility located in an important production region of Quebec would have an impact. It was obvious, but we had to close a facility in one of the four regions of Quebec where we operated slaughterhouses.

I want to reassure the members of the committee that the comprehensive analysis was conducted seriously and without preconceived ideas by the most senior executives of the organization. We wanted to make sure that we were making the best possible decision for the organization and for the industry.

In fact, the announcement of the closure and the choice of facility was made not because we were in negotiations with the hog farmers in Quebec for a new marketing agreement, but because it allowed us to make our decisions based on what was going to happen during marketing. Working with the hog producers, we found a way to reduce or at least try to reduce the impact on production and producers in the Vallée-Jonction area. I know that there is a representative from that riding who is involved in the work. We will have the opportunity to discuss more specific issues with him.

We will work with the government to try to relocate as many workers as possible, whether they are temporary foreign workers or workers who live here and are part of our communities. However, it should be noted that Olymel expects to receive another 1,200 temporary foreign workers.

Despite the efforts of the Quebec and Canadian governments, there is an extremely large labour shortage, which we hope will be reduced in the coming years. We have the capacity to take on new employees in our other facilities, without penalizing any Quebec workers already employed by Olymel.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Beauchamp. I'm sorry, but your time is up. I even gave you a little more time.

I will now give the floor to Mr. Forget, from the Sollio agricultural cooperative.

[Stéphane Forget, Senior Vice-President, Public Affairs, Cooperation and Corporate Responsibility, Sollio Cooperative Group]

Thank you, Mr. Chair.

Good evening, ladies and gentlemen of the committee.

Thank you for the opportunity to address you today.

I'm going to start by giving you a little background. Sollio Cooperative Group has been in business for over 100 years and is the only pan-Canadian agricultural supply cooperative with roots in Quebec. We represent more than 123,000 members, agricultural producers and consumers in 43 traditional agricultural and consumer cooperatives.

We have more than 15,000 employees across Canada in our three divisions: BMR, Quebec's leading retailer of building materials and hardware products; Sollio Agriculture, which supplies farms; and Olymel, as Mr. Beauchamp explained, which specializes in pork and poultry processing.

Our agricultural cooperatives are corporations freely formed by agricultural producers to ensure the supply necessary for their operations, to improve production conditions and to facilitate the marketing of products, particularly by extending the value chain. As such, as mentioned by some of you, Olymel plays an important role in the Canadian agri-food ecosystem and makes a significant contribution to the member cooperatives of our network and to all players in the pork industry, particularly the pork producers who are members of our network and the pork division of our cooperative.

You should also know that the objectives of our group have always been to offer quality pork products at competitive prices to customers here and around the world. We also aim to generate enough wealth for all the links in the chain.

Our presence today can certainly be explained by the fact that the Quebec pork industry, the second largest production sector after the dairy industry, and the first in terms of exports, is facing the most dire economic situation in its history. On the one hand, as mentioned previously, processors must try to hold their own in a market where there is overproduction and where the price of pork has not kept pace with inflation like other comparable commodities. On the other hand, there are producers who are struggling to make ends meet with rising grain prices, given that 65% of the cost of raising a hog is its feed. Coupled with this are the rising interest rates that are dealing a blow to those who have invested in updating their facilities, especially to ensure animal welfare.

Olymel is certainly not happy about the bold decisions it has had to make to ensure its profitability and continue to play an active role in the value chain.

That said, we firmly believe that the pork industry plays an important role in the economy and vitality of our regions, and that it is important to invest in and support the industry's stakeholders.

We believe that we must now send a message of hope to the producers who represent the industry's future, because the situation of independent producers is cause for concern. In this regard, we invite the members of the committee to consider creating an assistance program to compensate affected producers. This could be based on two initiatives created by the federal government in 2009 and 2014: the hog farm transition program and the hog industry loan loss reserve program. This would be a concrete way to help the hog industry weather the current crisis, and even emerge stronger, with the support of provincial governments.

Lastly, the challenge of the labour shortage continues. We can count on the support of Immigration, Refugees and Citizenship Canada as well as Agriculture and Agri-Food Canada. The contribution of foreign workers or immigrant workers is significant, if not essential, to meeting the needs.

We hope to be able to count on the support of your committee to ensure the full contribution of those who wish to work in the sector. We must continue to promote the value of careers in the essential sector that is agri-food.

Thank you, Mr. Chair.

I'm ready to take questions.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Forget.

Mr. Lehoux, on behalf of the committee, I would like to tell you that we recognize the impact that the closure of the Olymel plant will have on workers, farmers and pork producers. It's serious, and that's why our committee has decided to hold this meeting.

You have the floor for six minutes.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair. Thank you for allowing this study to be held this evening.

I would like to greet all our guests who are here today as well as those who are participating in the meeting virtually.

My first question is for Mr. Beauchamp, and I want to talk about the 122 Olymel workers at the Vallée-Jonction processing plant.

[Paul Beauchamp]

There are 123.

[Richard Lehoux, Conservative, Beauce, QC]

A very large number of them came to see me at my riding office.

Is it possible to direct them to other industries? Could we let them go to other Beauce companies, for example?

[Paul Beauchamp]

This possibility does not depend solely on Olymel; it also depends on the federal authorities. As far as we are concerned, we are going to work with the authorities so that those who wish to stay in the region can do so, although we are prepared to welcome them elsewhere.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Beauchamp.

I spoke with Minister Fraser last week, and there seemed to be an openness on his side to accelerate this process.

We know that the Chinese market has represented a significant percentage of the sector's market share in recent years. Are there other avenues that could be considered?

For my part, I am going to talk to Agriculture and Agri-Food Canada about developing other markets. My region is where 30% of the production is concentrated. It might be relevant to have other possibilities.

It is true that it would be interesting to take into account the programs that could help producers get through the crisis, but have you analyzed other market opportunities?

[Paul Beauchamp]

We are working on it every day. The idea of reducing our exposure to the export market stems from the fact that it is the most volatile market. We lost the one in China. Fortunately, we were able to start exporting by‑products to China again. This is a base, it will not change.

It is for meat that we need to find new markets. As far as the volatility I mentioned is concerned, you know that many countries have decreased their production, including the United States, where large companies have announced the closure of pig maternity units. This is not an Olymel problem, it's an industry-wide problem. The world is reviewing its strategy.

[Richard Lehoux, Conservative, Beauce, QC]

That's right. Thank you, Mr. Beauchamp.

My next question is for the Agriculture and Agri-Food Canada representative. For the past few years, you have certainly been working very hard to find ways to access other markets. I am thinking in particular of the Indo-Pacific market.

Have you taken steps in this direction? Is there a potential opening for new markets?

[Donald Boucher]

Thank you for the question.

Steps are being taken through the AAFC Market Access Secretariat, a division of Agriculture and Agri-Food Canada. There are also programs in place, including the Canadian Partnership for Sustainable Agriculture. Under this program, the pork sector has received money to help it access and maintain access to various international markets.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Boucher.

We know that a large part of our production, 70%, is currently destined for export. We could reduce production, but given the food shortage in the world, there may be something to be done in that regard.

My next question is for representatives of Immigration, Refugees and Citizenship Canada, or IRCC. From what I understand, there is an opening to accelerate the process of extending the work contracts of people who want to stay in the region.

For some, it has only been a year and a half since they arrived in the region. They have already started to create links with the population. Is it possible to speed up the process?

You mentioned the possibility of extending contracts until September 2023, but we know that the plant is scheduled to close completely in December. Since there are people who are at the very end of the program, would it be possible to extend the contracts specifically for them?

[Dr. Ian Gillespie]

As you mentioned, IRCC and EDSC are working with Olymel to identify affected workers and to review work permits and LMIAs. In fact, we want to extend the length of stay for these workers so that they can stay until the plant closes.

[Richard Lehoux, Conservative, Beauce, QC]

I received an email this morning about this. There are about 40 workers who have not arrived in Canada, but who have a work contract with the Olymel plant. Since they have not yet arrived in Canada, there was some concern about this. These are workers from Senegal and Tunisia who were supposed to come and work at the Vallée-Jonction slaughterhouse.

Will they have to go through the whole hiring process again? Could IRCC speed up the process to allow them to come to Canada?

[Tal Elharrar, Senior Director, Department of Citizenship and Immigration]

Thank you for the question.

If they want to come to Canada to work for another organization in the same area, unfortunately they will have to start the process all over again.

If they come in within the next six months, because the plant stays open until December, they can come in and then change employers. It depends on when they want to come and whether they can change employers quickly or not.

[The Chair, Liberal, Kody Blois]

Mr. Lehoux, you only have five seconds left.

I'm going to go to Ms. Taylor Roy for six minutes.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you, Mr. Chair.

Thank you very much to the witnesses, who are here virtually and in person.

I'd like to begin by expressing my condolences to the people of this region. The member opposite has described the disruption and the distress caused by such a plant closure. As members of the agriculture committee, we're very supportive of our farmers and realize that a transition such as this is very difficult.

Thank you to the government officials for the work you do to try to make this transition easier.

The member opposite has been speaking about individual cases and temporary foreign workers. It's something we deal with in our office in a different way—on a constituency basis and often dealing with immigration.

I'd like to back up a bit to the bigger picture of what's happening here in Canada with the pork industry.

First, perhaps, to Mr. Forget, do you think this is a short-term issue because of the difficulties during the COVID pandemic and supply chain issues, or do you think we're seeing a transition in global demand, perhaps due to many issues but including a transition to plant-based food, welfare concerns and a shifting of consumer preferences? That, obviously, has implications for how we deal with this kind of closure.

[Stéphane Forget]

I could start answering the question, and then I'll turn it over to Mr. Beauchamp from Olymel, who is an expert on this particular aspect, if the chair will allow me.

For Sollio Cooperative Group, the pork production and processing sector is an important sector in which we believe and in which we continue to invest. That said, Olymel had to face a perfect storm. The global context was much more difficult. The closure of the Vallée-Jonction plant is more a consequence of the global context than the result of a completely independent phenomenon.

If you agree, Mr. Chair, I will let Mr. Beauchamp tell you more about this.

[Paul Beauchamp]

Madam, the hog industry is very cyclical. Right now, we are in a slump. We alluded to the labour issue. The pandemic, which made recruitment extremely difficult, prevented us from minimizing the impact of the situation, including the loss of the China market.

As for possible avenues in the industry, I would say that Olymel has not decided to withdraw from the sector, but rather to refocus its activities on a volume that is more in line with our ability to add value to the product, either through our meat processing sector, or on value-added markets such as Japan and Korea, or on our domestic fresh meat market. For us, this is a refocusing, coupled with a withdrawal. Despite this, we will continue to play an extremely important role in our industry across Canada. The choice that has been made is to protect us from an unfavourable cycle.