As far as the differences between Canadian and US regulations are concerned, the Americans have a so-called short list. They struggled with BSE just like Canada did, but the problem was much milder for them. Could it be that they encounter fewer problems because they don't go looking for them? Opinion is divided on that subject.
Canada's program proved to be very effective when it came to identifying cases, which were all concentrated in the same region, that is in several animal feed plants. This is one area on which we need to focus our research to avoid a recurrence of the problem in the future.
The Canadian Food Inspection Agency decided to use the long list of all bone parts or nerves removed from animal carcasses to deal with the BSE crisis. This list is from three to five times more costly to administer that the US list. Rendering by-products from slaughterhouses cannot be used as widely in Canada as they can in the United States, and thus their value is lower.
I cannot tell you in percentage terms what this represents in lost profits for Canadian slaughterhouses versus US slaughterhouses. However, I can tell you that according to a study by the Canadian Meat Council released yesterday in Calgary, Canadian slaughterhouses spend about $30 million more a year disposing of risk material.
Slaughterhouses have not been making a profit for a number of years now. It is an extremely difficult market. Canadian slaughterhouses in particular have not seen any profits. That explains why the slaughterhouses that started up after the 2003 BSE crisis have all closed their doors. None has been able to weather the crisis. Even the large multinational corporations, most of which are US owned, have cut back on their slaughtering operations. Livestock are being shipped to US slaughterhouses instead of being slaughtered here in Canada, because Canadian regulations can be by-passed. The products still end up back here in Canada. Significant quantities of USDA beef are imported with the short list.
Canadian regulations are somewhat inconsistent and stringent. Our animals are slaughtered elsewhere, while we continue to buy meat from other countries with less stringent regulations. Our actions need to be consistent. I'm very serious and extremely nervous about the situation. I meet with producers from across Canada and let me tell you that we have lost the critical mass to continue operating large slaughterhouses in Canada properly. By losing this critical mass, we have become less competitive and volumes are going elsewhere. When a business cannot compete, there is only one way to resolve the situation and that is by shutting down operations. That is what slaughterhouses and producers have opted to do. The number of producers in Canada is declining. Not only is the volume of production declining, but the number of producers is declining as well. Part of the reason for this is that the average age of producers is going up, as was mentioned earlier. However we are also losing producers who are in their forties. They are not getting into the business of livestock production. The same is true of people in their thirties and their twenties. If no action is taken, the average age of producers will not be 60, but more like 65 or 68 years of age.
In Western Canada, some of the farmers attending meetings of grain producers are over 70 years of age. There are no young people coming along to take their place. I see Mr. Menzies nodding in agreement. He knows firsthand the situation in these regions. He is not 70 years old, but he knows what it's like in these regions where many older farmers can't find anyone to take over their farming operations for them.
I want it to be clearly understood that two types of production are at risk in the Canadian livestock market. Over the past 18 months, hog production in Canada is down 5 million out of a total of 31 million hogs. This dramatic decline in production threatens our slaughterhouses because critical mass has disappeared.
The issue has been settled in the Maritime provinces. There are simply no more slaughterhouses. Hog production has almost disappeared, while cattle production is marginal. There are no longer any working slaughterhouses in Quebec. The Cargill slaughterhouse in Ontario has cut back its operations. Slaughterhouses in Manitoba and Saskatchewan are in dire straits. Alberta is cutting back a great deal on its shipments of live animals to the United States.
We need to sound the alarm, and quickly.