I'd like to thank the chair and the members for asking us to participate in this meeting. It's a privilege, and I thank you very much.
My name is Calvin Vaags, and I am here representing True North Foods, a federally inspected packing plant in the middle of the country. We are right in Manitoba. Our closest federal beef-packing plant to the west is in Brooks, and our closest one to the east is in Guelph, so we cover a wide geographical area. We employ, right now, about 160 people and we process about 180 animals per week. We're a relatively small plant, but I feel we are very important geographically and as a foundation to our industry within Canada.
Here is a little bit more background on myself. I also farm, and I have extensive experience right through the beef value chain: from cow-calf to feeding cattle, finishing cattle and retail and wholesale. I have a pretty well-rounded view of the entire beef value chain in Canada and globally.
The topic you asked us to speak on was beef reference pricing as it pertains to the U.S. As everybody knows, it is very true, both in pork and in beef—I'm going to talk primarily about beef, of course—that our pricing does start in the U.S., and there's a reason for that. We work in a global market. Canada produces more beef and more animals than we consume ourselves; the U.S. is our closest market, and it becomes a release valve.
We have free and open trade with the U.S., and it's very important that we keep that trade going. If you remember BSE in 2003, that border was closed for a period of time, and it was devastating to our beef prices and our beef industry within Canada. Yes, our prices do start out in price discovery through the U.S. market. That's not a bad thing.
Having said that, when it comes and gets converted to a Canadian price, there are basis considerations with freight, regulation and many things there. Those are things, perhaps, we could look at to get better transparency for the Canadian consumer, better transparency for government and better transparency and competitiveness for some of the smaller processors that don't have that insight into that market.
I'd like to talk a little bit about some of those things. The key point, though, is that U.S. reference pricing should not be considered the enemy, but it is incomplete when we apply it to Canada without adjustments.
I suspect that part of the reason this committee has been convened is to look at and address why our beef price is so high. I'd like to talk about that a little bit. Really, the reason we have such high beef prices in Canada and in the U.S. is not necessarily just a cyclical market but more coming from a structure that is not performing the way it should.
What I'm getting at here is that over the last 20 years, our primary producers—our cow-calf industry—have not made enough money, have not been profitable or prosperous enough and have not had the motivation to reinvest in the industry. What has happened is that our supply of cattle has shrunk more than it should have to stimulate new supply. Normally, when the supply goes down, demand goes up, and we get higher prices that stimulate rebuilding of the herd, but that is taking too long. The reason is that these guys haven't made enough money. They haven't had enough support over the last 20 years, and now we have a critical supply shortage.
It's going to take some very deliberate action to try to get that supply back. That is one thing I'd really like to drive home. The beef prices are not high because of artificial doings or things like that. They're really high—