At the time?
Evidence of meeting #50 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wine.
A recording is available from Parliament.
Evidence of meeting #50 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wine.
A recording is available from Parliament.
3:50 p.m.
NDP
3:50 p.m.
President, Canadian Meat Council
I believe there was one that they initially stopped. Of course, Japan had their own BSE problems ahead of Canada's.
3:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Right. But we've had 15 cases of E. coli in this country. It's fair to say we have had a wider problem with E. coli than we did with BSE. Yet, we see with BSE, to this day, that we can't get full access to the Japanese market because they are, quite rightfully, concerned about the safety of beef.
I want to ask you about the CFIA cuts. Our information is that in May of this year, the Minister of Agriculture announced that planned spending in the CFIA is declining by approximately $46 million and 314 FTEs, from 2012 to 2014-15. In budget 2012 the next three-year outlook for food safety indicates a projected cut of $56 million. Wouldn't you agree with me that this is going to be a difficult sell to the Japanese, when we have an outbreak of E. coli, when we're cutting food inspection, inspectors, and food inspection money in this country and we want access to a market that is more concerned about food safety than probably any other country?
3:50 p.m.
President, Canadian Meat Council
Japan has less meat inspection than Canada currently does, and it would have less meat inspection even if there was a change to the inspection system. From the perspective right now, Canada is a world leader when it comes to meat inspection and is ahead of the Japanese as far as actual government meat inspection is concerned.
3:50 p.m.
Vice-President, International Sales, Maple Leaf Foods Inc.
I would also add that the Japanese will tend to look at our standards in Canada as a floor. I think they are quite confident with what we do in Canada, as Ray was saying. They tend to focus on individual companies. They will put a lot of time toward understanding exactly what their partners are doing, what their standards are, how they operate, and what the protocols are in their plant. They will scrub that very hard to gain confidence in the individual company.
3:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Mr. Sutton, if they are confident in Canada's standards, though, why to this day do they have a ban on more than 20-month-old beef?
3:50 p.m.
President, Canadian Meat Council
I can answer that because it's a beef question more than a pork question. The reason they have this is that the Japanese system went to a 20 month and under situation instead of a 30 month and under. It's something that the Americans are caught up in, and anybody who has had BSE is caught up in, and they're changing. It's a very slow process. In Japan, of course, they have been testing every animal, whereas we have not been thinking that way is a situation that would make sense on BSE, which it doesn't.
3:55 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Thank you, Mr. Price and also Mr. Sutton, for coming.
I'm going to follow up. I'm not sure why we are so interested in putting a fear factor in this trade on two different things. I believe that with BSE there were one or two animals affect. That carries a totally different context to health than E. coli does. E. coli, we know, is everywhere. Actually, there have been 15 people now who have been diagnosed as having E. coli that has come from the beef from XL Foods. Let's be clear that the two are totally different.
I'm glad to hear, Mr. Price, that you were able to clarify the issue around the health standards. I just want to be sure. Did you indicate to us that the Canadian standards on food and meat would be as good or higher than those in Japan? I think you said they do focus. That's one of the things about the Japanese.
They actually pay premiums in many cases. In this case, it is about having a standard that they meet. Is it a fair statement to say we have one of the best standards around the world?
3:55 p.m.
President, Canadian Meat Council
Barry can also say it. Everywhere I have been, that would be the case.
Certainly in the Japanese market you have to be at a standard to be food safe. I would say our plants are at a better standard than what the Japanese internal plants would be, on average, mostly because we are 15 to 20 days away. We have to be better at what we do. That's an important part, yes.
3:55 p.m.
Vice-President, International Sales, Maple Leaf Foods Inc.
I would add to that the fact that the Japanese regularly test my product for a range of coliforms. They go through, as I say, a variety of shelf-life testing. Since we have 20 years of experience with them, they have a lot of confidence in what we're providing and confidence in our system.
3:55 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
I think we do understand the significance of the Japanese market, not only because of the population base that's there, but also in terms of the value added or the high value for the product that you talked about. Could you expand on that from both perspectives, please?
3:55 p.m.
President, Canadian Meat Council
Sure. The Japanese are very interested in quality. Food safety is certainly a part of it, but it's the quality overall, so they're prepared to pay a premium. In our small company, 70% of all of our production goes to Japan. Barry can talk about it, but one plant is dedicated to Japan. That's because they want something specific and they're willing to pay for it, and that's a very high-value proposition.
To bring that back to where the duties and the tariffs are and to how those impact it, if you look back a few years to when Japan opened the border up and went from a 50% to a 38.5% tariff on beef coming in from anywhere, consumption went up by about 70%. It became affordable to have high-quality meat imported, and the market expanded. That's a big reason we feel it's a very critical part of what we need to do.
3:55 p.m.
Vice-President, International Sales, Maple Leaf Foods Inc.
I would also say that the differential duty system, which creates a minimum floor price for pork in Japan, which is in the range of $6.50 a kilogram, will pull up pricing. It actually pulls up our margins on the Canadian side, so that's one factor.
The Japanese market is by a considerable premium our best sale anywhere in the world.
Having said that, I've worked in Japan since the late 1980s. I can also say that Japan is one country that really respects value. It really respects quality and will go out of its way to pay for it. Canadian companies that have been successful in Japan have made sure they understand that equation and that they align to deliver it.
Even with the gate price system there are many products that I sell in the pork business, which is a relatively lower cost protein, for which I exceed the gate price by creating value in Canada. We're not just providing a pork loin; we're providing a very specialized cut with very tight specifications, and that's what the Japanese will pay for.
4 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
I'm from Ontario, and a number of pork producers right now and beef producers are struggling just a little bit. When we talk about the value of that and then on the other side we have to be competitive, if you're designating lines or plants in some cases specifically to Japan, how does that return to the producer and still be competitive against other countries that have trade agreements?
4 p.m.
President, Canadian Meat Council
The way I have looked at it is to say that if we have a deal that's better, and say our duty goes from 4.3% down to zero, then that's all new revenue to the Canadian operation.
Typically, meat packers and processors take a piece of it and then pass it on to the producer. It's a very competitive industry, so any tariff reduction generates additional revenue, additional value for the livestock. It just flows through. It just happens. That's the way it always does.
If we had a $12 reduction in our tariff which, say, the United States or other countries didn't have, that $12 would end up being split heavily towards the livestock sector, but it would be split.
4 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Because this is so important to both your industries in terms of the agriculture that you represent, how do you see yourself involved in the consultations and having input into them?
4 p.m.
Vice-President, International Sales, Maple Leaf Foods Inc.
In the case of Korea, I picked up on the ball a little early.
I have to admit that any time I ask for a meeting or we are given an opportunity, and there are many, to speak up, such as in a process like this, it is excellent. This allows me to get in front of the issue and make sure that we present our position, and it allows you understand where we stand. I think you do an excellent job in that regard.
4 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
I want to make sure that we continue to ensure those avenues are open, not just for you but for all, so that we actually have a thorough and investigative discussion on this agreement.
Thank you.
