International Trade Committee on Nov. 3rd, 2009

[John Masswohl]

From a results point of view, before all our markets closed down in 2003, the percentage of Canadian beef that Canadians ate was somewhere in the 60% range. We exported a number of our cows to the U.S., and we exported beef to markets that paid more for it. After our markets were closed down, we didn't have enough slaughter capacity in Canada to process all the cattle we raised. We worked to raise that slaughter capacity. And going hand in hand with that was the marketing effort. This wasn't necessarily consumer marketing. A lot of it was trade marketing to the meat buyers of the processing companies, the meat buyers for the retailers, the restaurants. We were able to use some of those funds—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I'll cut you short because my time is—

[The Chair, Conservative, Lee Richardson]

—over.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Do you have a rough amount you can provide to the committee? If this investment has led to a multiplier effect of two or three, and we've stimulated $20 million or $30 million in additional beef sales, it would make a lot more sense for this government to withdraw Bill C-23 and invest the money in stimulating more beef sales.

[The Chair, Conservative, Lee Richardson]

I'm sorry, John, we're over the time.

[John Masswohl]

I'd like to think we could do both.

[The Chair, Conservative, Lee Richardson]

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

I'd like to welcome our guests back again to this committee. It's good to see you here. I have a couple of questions for you.

I always feel compelled, when I'm in this kind of spot after I've heard various members speak, just to clarify a few things in my mind. Maybe it's me, but I sometimes get somewhat confused about whether some things are fact or fiction. The first point I'd like to say is that it sounds like you have no beef with the beef, if I might be half clever on this.

You've said, sir, that for six and a half years there have been no beef sales in Colombia. As far as I can tell from the math that I was taught as a young kid, zero is zero. If you're not putting any production into Colombia, there's not one dollar being helped to support our beef industry in that particular country in the world. I have heard some folks talk about a small percentage, but quite frankly, I look at it over six and a half years, and not only have you been shut out of that market for six and a half years—which at a minimum would have been, by my math, over 100,000 head of cattle over that six-and-a-half-year period, by your calculations—but at the same time, it would have been allowed to mature. By your comments, it is $6 million in year one as soon as the tap gets turned on, maturing to triple that or around $20 million by the time you're basically in full production there.

I heard some comments that some people are finding this Colombia free trade deal problematic, and that's why it hasn't passed. In fact, my sense is that some parties have tried to make this a political football, and what they've truly done is put amendments and subamendments to block this deal, because there's no deal that they're prepared to accept, full stop. What they have effectively done is to say to the beef industry that they're turning their backs on you. That's what I'm hearing them say. I get troubled by that.

I really struggle with that as an attitude, because what would you tell beef farmers in Quebec, Alberta, Ontario, or B.C., the four provinces you mentioned? What would you tell them if this deal didn't go through? I believe it will ultimately, but it gets delayed because some parties decide they want to...I'll say filibuster this free trade deal.

[John Masswohl]

What we do tell them is how important trade is to their profitability, to their ability to sell cattle at a price they'd like to get for it. I think beef producers know what an impact having all of our market shut out in 2003 has had on beef prices, and we still have not fully recovered from that. On the Colombia agreement, just on the face on it, if we did nothing else, the $6 million is certainly not insignificant if you want to put it in the context of many billions of dollars of the industry. You wonder if that is a big difference or not.

That said, where do you draw that line? We want them all back. We're not going to sneeze at $6 million. That's going to be important to contributing to getting the profitability back. We want Colombia. We want the next one. We want Korea. We want COOL dealt with in the United States. We want an agreement with Europe. We want a WTO agreement, and we'll take the marketing dollars as well.

[Ed Holder, Conservative, London West, ON]

I sincerely hope that political parties around this table have heard that, because I think it speaks to the very potential for survival and growth in the beef industry. You're right. It isn't just one country. It's where you go from here. It's another piece in a larger international puzzle.

I was noting the comment you made that government support was four times greater in the United States than in Canada. By my recollection, their population is ten times larger than ours. Is it fair to say, from your sense of it, that we spend more on beef promotion than the United States, if we look at it on a per capita basis? Is that a fair comment?

[John Masswohl]

I'd have to double-check that, but maybe. I'm not sure.

[Ed Holder, Conservative, London West, ON]

How ready is the cattle and beef industry to go into Colombia? How quickly could you go in?

[John Masswohl]

Yes, we're ready. We've been there.

In fact, one of the staff at the Canada Beef Export Federation, who has accompanied us on these missions a couple of times, is actually a native of Colombia. It's been very helpful to have him on these missions in terms of just having that local culture. As we've been down on these missions, we haven't just been having meetings with government officials and cattle producers. We've been having guys go in there and meet with the retail chains and get to know people. So I think we're ready to get rock and rolling on this.

[Ed Holder, Conservative, London West, ON]

I want to come back to Canada and the United States both dealing with the issue of their free trade agreements with Colombia and the impact it has for Canada to be there first.

I cannot see any advantage to Canada in waiting and allowing the United States to usurp our position in beef production by getting there first. As a business person, I understand that if I'm first in the marketplace I will have some opportunities that others won't have. So to delay it so that we can play catch-up with the United States when we have an opportunity to be ahead of the curve on this.... What is the impact on your industry of being ahead?

[John Masswohl]

We know we're playing catch-up with the Americans in a number of markets. We had to play catch-up when Taiwan and some other markets opened. We'll be playing catch-up when Korea eventually opens. Here we finally have an opportunity to get ahead of them. We want that opportunity and we need Parliament to deliver that opportunity for us, because it's sitting there for the taking.

The last one I can think of where we got in ahead of the Americans was Hong Kong, and we've done very well in Hong Kong since we opened up. Being there first has definitely helped.

[Ed Holder, Conservative, London West, ON]

Can you elaborate on that a little?

[John Masswohl]

It goes back to the BSE restrictions. Hong Kong shut down to both Canada and the U.S. in 2003, and in 2004 we were both negotiating with Hong Kong. They had a requirement that they wanted us to implement a certain protocol on how the carcass was split and the use of certain equipment. We were willing to do it, but the Americans weren't. So we did and Hong Kong opened up to Canada. The Americans held out for a better deal and eventually got it two years later. But we were certainly ahead of them, and that has paid off for us.

[Ed Holder, Conservative, London West, ON]

Good for us.

Thank you, Mr. Chairman.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Holder. Those were great questions.

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

If you'll agree, Mr. Chair, I'd like to ask Mr. Masswohl a question on country-of-origin labelling.

[The Chair, Conservative, Lee Richardson]

Yes.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Masswohl and I were at the PNWER conference in Boise, Idaho, this summer. He was on the panel. I think the head of the National Grocers Association in the U.S. said that country-of-origin labelling was going to increase the price of U.S. groceries by $3 billion in the first year of implementation and $2 billion every year after that.

I'd like your advice, Mr. Masswohl. From our perspective here in Canada, in the last year or so we have seen the western hemisphere travel initiative, which thickens the border, go through Congress. We're seeing country-of-origin labelling and “buy American” provisions. Every time you turn around there's something else that creates an artificial barrier between our economies.

This is not a partisan question, but how can we better defend Canadian interests in the U.S.? How can we better align our Canadian interests--in this case the livestock industry and country-of-origin labelling--with U.S. organizations and groups like the National Grocers Association?

Other countries are hiring lobbyists in Washington and taking their cases directly to the congressmen's districts. They're running ads, along with the National Grocers Association, saying, “If Congressman B votes in support of this legislation he will be adding $200 a year to your grocery bill”, or whatever. They're taking very aggressive approaches.

Should we be reforming how we deal with the U.S. and taking a more mercenary approach? For France, the U.K., and other countries we use our ambassadors and that's it. But in the U.S. should we be taking a different approach? Should we align our commercial interests with their commercial interests more directly and have them put pressure on their congressmen and senators?

You have spent a lot of time down there. I'm interested in your views.

[John Masswohl]

I think what is very different in the U.S. versus either Ottawa or other countries, where the traditional diplomatic means maybe work a little better, is that in the U.S. Congress, every congressman and senator is basically independent. Sure, there are some party-line votes and that sort of thing, but they can all introduce bills, and all those bills can move. On the way they can introduce amendments, you have to be on top of all of them and have relationships established.

So we try to be very active at the state level, the local level. We have found that by the time issues get to Washington, it's too late, because the congressman or senator is going to vote the way the people back home want them to vote. I try to go to a lot of PNWER conferences, state cattle meetings, and local meetings.

A couple of days ago I was down at the Texas Cattle Feeders, and they had a panel with Safeway and Food Lion. They were saying very similar things to the gentleman who was in Boise. It has cost them billions of dollars, with no benefit to consumers. They said they've received basically no food safety comments. There's been very little curiosity from their customers. Think of the millions of customers those two organizations have, yet they've received fewer than 100 questions or comments. So you have to wonder.

But that's the opportunity you get when you meet folks like that. We need to take advantage of those relationships and basically give them some homework to do. So that's what we try to do in the U.S.

On an issue like country-of-origin labelling, I think we'll eventually turn the tide by working with those organizations and the cattle organizations that are against it. Texas Cattle Feeders are very much opposed to country-of-origin labelling, because they feel that eventually it's going to cost them some of their members. Some large feed lots will probably not be able to compete in the long run because of a law like that. It adds costs but has no benefit.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

That's very helpful. I appreciate that sidebar. That's good information.

I think it's time to herd this to a conclusion. Maybe we can ask for a round-up.

Mr. Keddy, steer us in the right direction here.