Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 9 - Evidence
OTTAWA, Tuesday, March 22, 2005
The Standing Senate Committee on Agriculture and Forestry met this day at 6 p.m. to study the present state and future of agriculture and forestry in Canada.
Senator Joyce Fairbairn (Chairman) in the Chair.
[English]
The Chairman: I call the meeting to order. Tonight we have before us two witnesses who will speak to us about an issue that is extremely important all across Canada today, that is, the crisis that has overtaken our beef industry with the closing of the American border.
From the Canadian Meat Council, we will hear from Arie Nuys, President, and Jim Laws, Executive Director.
I thank you very much for coming here today. Please proceed with your presentation, after which we will have a period for questions.
Mr. Arie Nuys, President, Canadian Meat Council: Thank you, Madam Chair.
Our opening comments will be in four parts, the first being an overview of the Canadian Meat Council and its membership, the second being the negative issues affecting our industry, the third being the positive developments that have taken place in our industry, and the fourth being the programs and policies the government could put in place to enhance our growth. The extension of that is that when we grow, the producer benefits as well.
The Canadian Meat Council is Canada's national trade association of federally inspected red meat packers and processors. The activities of the CMC focus on federal government issues and liaison with other national trade associations such as livestock producers, meat retailers, consumers and health professionals.
Sales by the membership are approximately $11 billion and we employ about 34,000 people. Our members process 89 per cent of federally inspected beef slaughter and 94 per cent of federally inspected hog slaughter. We are the fourth largest Canadian manufacturing industry.
Our membership consists of various sized corporations. The larger ones are Maple Leaf Foods, Olymel, IBP and Cargill, and the mid-size ones include Better Beef, XL Foods, Delft Blue.
It is interesting that both regular and associate members consist of both Canadian and American corporations. That is why harmonization with the U.S. is important for our industry.
We have included in our presentation our membership in 1980 and our membership in 2005. Eight members remain of the 1980 membership. All the others have been taken over or have consolidated. The industry is in constant flux and has its own problems. We have also included a list of our present membership.
There was a recent consolidation in our industry of Maple Leaf and Schneiders. Currently there is a consolidation in the works of Olymel, Lafleur and Brochu. We believe that integration is a benefit to our industry. It enables us to compete internationally as more efficient producers with lower costs.
We also feel that consolidation in the industry with larger players opens up markets for the smaller packers, including myself. It creates niche markets that complement the larger packers.
All our members are federally inspected by the Canadian Food Inspection Agency. We work with CFIA on a daily basis and have CFIA staff permanently in our establishments. We have a very good relationship with that organization.
The Chairman: For the information of our viewers, the Canadian Food Inspection Agency is a very important player in this difficulty with the industry and the packing plants.
Mr. Nuys: That is true, and I would like to reaffirm that our relationship with the Canadian Food Inspection Agency is very strong.
With regard to ongoing impacts of BSE, there is major uncertainty in the marketplace now with the recent R-CALF injunction delaying the opening of the U.S. border to live Canadian cattle. Regaining beef, veal and lamb market share in markets such as Japan and Korea will be challenging given that other nations such as Australia, New Zealand and Brazil have moved in to fill the gap.
Processes are in place to remove all specified risk materials from all animals. The problem is that the value of the material sent for rendering is gone and the cost of removing the SRMs is a cost to the industry.
With regard to veal, one of our best veal customers, Saudi Arabia, closed its borders to Canadian imports two weeks ago. There are containers in transit, and we do not know whether they will be accepted in Saudi Arabia.
The exchange rate has to be considered for our industry. In the last two years, the Canadian dollar has gained 30 per cent over the U.S. dollar, which is affecting our trade with the United States. Had the U.S. border never closed to Canadian live cattle, our income in Canada would still have decreased as a result of the exchange rate.
During the BSE crisis, the issue of other livestock such as sheep and veal has been forgotten. The milk-fed veal industry, for example, is almost a totally integrated market. The packer either owns the veal farm operations or has a farmer on contract to house and feed the animals it owns. That means that the processor absorbed the losses that occurred in the veal sector as a result of BSE. The veal sector was a victim of BSE, as well as beef.
Turning to other issues, the World Health Organization has said that mad cow disease is only one of numerous new diseases that have emerged in recent years. In the last decades of the 20th century, more than 30 new diseases, including HIV/AIDS and Ebola hemorrhagic fever, were detected for the first time in history and we could be in for other surprises in the future. The risks are getting higher. It takes only one incidence to affect everyone. With BSE, with one animal found in Alberta the entire industry was in chaos. Walkerton had E. coli 0157-H7 in the water supply. Avian flu caused the quarantine of large poultry operations in British Columbia. A packing plant in Aylmer, Ontario was accused of selling meat from dead stock.
Another negative issue is the U.S. anti-dumping duty on hogs. They imposed no countervail duty but did impose an anti-dumping duty on hogs of approximately 10 per cent. There is also pending anti-dumping action on veal.
Another item of very serious concern to us is U.S. country of origin labelling that is expected to be implemented in the United States in 2006. This could have a very negative impact on our sales to the U.S. market. It is a serious trade barrier for our industry.
Mr. Law, our executive director, will now speak to you about some positive developments in our industry.
Mr. Jim Laws, Executive Director, Canadian Meat Council: There have been many positive developments over the past couple of years in the meat industry in Canada.
The slide now being displayed shows how live animals sometimes end up in our plant. The next slide illustrates a major investment at a plant in Western Canada that invested in this hide on carcass wash. It is basically like a huge car wash. It required the investment of several million dollars and an expansion of the plant. Its sole purpose is to deal with naturally occurring E. coli bacteria that resides on the hides of animals, that being the source of contamination. We have all heard about E. coli 0157:H7 food poisoning in hamburger. All the packers are concerned about that and have invested a lot of money to put systems in place to deal with it.
By November 2005, all HACCP registered plants have to be in compliance with the Food Safety Enhancement Program, which is a very positive development in the industry. The inspection process with the Canadian Food Inspection Agency is forever evolving. We get new directives from them all the time to keep up with new developments and processes.
The technology on traceability and animal identification is amazing. Radio frequency identification tags that are unique to one particular animal now cost less than $3 and are read by a $5 reader. This technology allows us to do quite a few things.
Another great development is that processing capacity has increased tremendously in Canada since the borders were shut to us. In 2003, we were processing 70,000 animals per week, and as soon as June of this year we may well be processing up to 90,000 animals per week. That is an increase of 20,000 per week or over 1 million animals per year. The capacity issue is well addressed. Over the last couple of weeks, some of the cow slaughterers could not get enough animals to fill their packing plants. That could well be due to the time of year, but even with prices that are pretty good for this time of year, they could not get enough animals to fill their plants.
The Chairman: What region would that be?
Mr. Laws: In a particular plant in Quebec and in plants in Western Canada they could not get enough mature animals to fill their plants
At the same time, there are many success stories. Many of the large hog and processing plants have expanded. Maple Leaf has a beautiful plant in Brandon, Manitoba, and they are looking at putting in a second shift, thereby doubling their capacity. As well, the Red Deer Olymel plant has announced expansion plans, and I believe construction has begun. There a lot of good news stories.
The slide now being displayed was captured from the Agriculture Canada weekly beef supply at a glance. The solid line is the five-year average. The top graph represents the fed slaughter, or the younger animals. The bars represent 2004, and the squares represent 2005, so you can see that we are well above the five-year average, and things are moving well in the right direction.
The next slide in of Freybe Gourmet Foods in the lower Fraser Valley of British Columbia. This is a family-owned business, as many of the packing and food processing plants in Canada are. This building recently won an architectural award. It is only several years old.
The next slide shows their beautiful facility that took into account the environment around it, which includes a salmon creek. Inside the plant, you can see the cleanliness, the modern equipment and design, as well as the care they have taken to look after their employees. That is one example of many success stories in Canada.
Technology is affecting everyone's business. We all have machines that we did not dream of several years ago. Technology in the packing plants is amazing. Traceability is one example. Maple Leaf has developed a DNA tracing system and Brochu, in Quebec, developed a bar coding system. Many plants can track their products extensively using tattoos on hogs and bar codes on beef animals.
There is an effort underway to locate each farm in Canada, which can easily be done with global positioning systems. When these systems first came out several years ago, they cost about $900 each and they now cost less than $100. It is amazing technology.
These plants also have amazing packaging equipment. It is very sanitary, high-speed and modern. Internet marketing and rapid communication are changing the way the world works. As an example, I understand that these proceedings are being web cast as we speak. Amazing things are happening.
The next slides come from my colleagues at the Canada Beef Export Federation and Canada Pork International. The first slide illustrates beef exports since 1990. You can see that in 1990 exports were less than 100,000 tonnes per year, and in a decade they went up to five times that amount. Of course, they dropped in 2003, but the good news is that in 2004 we are back up to the year 2000 level. That is a good news story in itself.
The next slide shows Canadian pork exports, which are about twice that of beef exports around the world. The pork industry is very important to Canada and it has grown tremendously as well in the last 15 years. There is a huge demand for bacon and the price for it is quite good. Of course, the price of live hogs is high as well. We cannot underestimate the effect that the Atkins diet has had. We have all seen the statistics. Americans and Canadians are carrying too much weight, and the Atkins diet has helped sales significantly.
Many supermarkets are now contracting out case-ready packaging to plants such as Delft Blue, where our president, Mr. Nuys, works. This is a significant change in our industry. In this way, butcher shops take on less risk. This is a much cleaner method and there is increased food safety when it is done at one centralized location. The plant attaches the logo of the store they supply and the price tag. The store need only wheel it in and load it into their cases; it is consumer-ready. That is a tremendous change over the last few years in the Canadian meat industry.
What do we need the government to accomplish? We are currently in the middle of the Doha Round at the World Trade Organization and there are significant talks surrounding agriculture. Things need to change. We must conclude with significant cuts to export subsidies, improved minimum access and reduced subsidies. We know how important export sales are to the Canadian meat industry and we are concerned that Canada participate at the table. We are free traders in the meat sector and, although there are sensitivities in the Canadian system, we have to recognize that the meat industry is Canada's fourth largest manufacturing sector. It is extremely important, and we must not underestimate the importance of a successful negotiation at the Doha round.
We are still working on many regulatory priorities. For example, we are still trying to get approval for sodium lactate in uncooked meats. It is used in the United States to control bacteria. Another example is irradiation of fresh and frozen ground beef. Americans are allowed to use this technology, which is, ironically, Canadian technology. We are not allowed to use it here, but we would like to have that option.
We are strong proponents of research and are much appreciative of government support in this. We would like to see research into such things as biofilms on equipment; listeria monocytogenes; a rapid test for BSE on live animals; E. coli 0157:H7 reduction, which is a constant problem for us; and pork quality attributes.
With respect to animal health issues, you probably heard about the desire to have Canada split into two distinct zones at West Hawk Lake on the Ontario-Manitoba border. We certainly support that.
We think there needs to be more work done on national emergency preparedness for the animal industry overall. We may not be ready for emergencies. Some of the big packing plants have good plans in place but, as we saw, it took only one animal to close the borders to Canadian exports. We must ensure that everyone is prepared for this.
With regard to animal identification, tracking and traceability, you have probably heard that Canada is ahead of the United States in terms of being able to track, identify and age cattle. We would like to see the acceleration of all farmers adopting radio frequency identification tags. That would be a benefit to us.
Another issue that constantly affects our members is the availability of skilled labour for our plants. It is tough work. It is cold and repetitive, and it takes some skill to work in these plants. Even with technology, there is still much manual labour involved, although robotics is splitting carcasses in some of the pork plants. There is much competition from the oil patch in Alberta for skilled labour. Similarly, in Ontario, there is much economic activity competing for workers.
We have been to Washington many times over the last several years, working with our colleagues at the American Meat Institute. We cannot forget that the Americans are our major customer. Thankfully, we are still able to send plenty of boneless beef from younger animals the United States. The situation could have been much worse.
The Canadian Food Inspection Agency and the USDA have worked out an equivalency agreement for many years. They audit each other every couple of years. It is an ongoing issue and we cannot forget our American customers. They are so close and so important to us.
Bill C-27 is currently being considered in Parliament. We support this bill. We do not see many changes in it from the meat industry act. We have already been subjected to very high enforcement at the federal level, and we do comply with the rules. This bill just puts the enforcement powers into one act. It provides the ability to work on tampering a bit more quickly, and it supports North American security and the Canada Border Services Agency Act. We are most excited that it provides for the issuance of electronic export certificates. This is currently done manually with seven copies. It is not as fast as it could be. New Zealand and Australia use this and we think it is an important thing to implement.
Finally, we turn to BSE. If the government is considering a new BSE program for farmers, please do not make it a market-distorting one. Packers have taken a lot of heat on this over the last 20 months. We did not design the programs, and we did not shut the borders down. We have spoken to many people about the effect of this one program that was put in place by government, not by us.
We also believe that there should be a program to target older animals born before 1999, largely the purebred beef and dairy cattle that are most likely to contract BSE. We do not want to find more of these cases, but we should get these older animals through the system. We do not believe there should be a mass cull of these animals, and we believe there is still commercial value for them. As I said, we cannot get enough to fill our plants right now.
We have heard it said that we should be loosening up the rules to allow some provincial plants to ship interprovincially. We are quite worried about that and do not support it. We believe that the federal food inspection system is a good one. It is in place right across the country and we do not need to develop some type of compromise. Nine tenths of all meat goes through federal plants. Let us simply bring everyone under the one system. We employ full-time quality control managers and a veterinarian is present in our plants at all times during slaughter. That is not the case in other provinces, but it should be the case right across the country.
The Chairman: Mr. Laws, the Senate Agriculture and Forestry Committee has been holding hearings on these issues for some time. I believe that your presentation today has been the most positive words we have heard in an otherwise gloomy world. That is not to take away at all from Mr. Nuys' presentation, which reflected the concerns and difficulties of the industry. On the other hand, you have illustrated that all is not dark and there are some positive aspects.
Senator Tkachuk: At the end of your remarks, you spoke of the market distortions created by the federal government program. What were some of the flaws in the program and what problems did it create specifically?
Mr. Laws: One problem is that the program had a deadline. People were in a rush to participate so there was a massive offering of cattle, which pushed the price down. Our buyers were being offered cattle for less than the price we had been offering. That forced the price down and it was as a result of the deadline.
Mr. Nuys: In 2003, including the government subsidy, the average profit a producer made on a steer was $39.32. In 2004, including the subsidy, the profit was $7.61. On average from 1991 to 2004, the producer lost $16.71.
Senator Tkachuk: The producer lost that amount?
Mr. Nuys: That is correct. Therefore, producers did better in 2003 and 2004 than the previous 12-year average.
Senator Tkachuk: What were some of the bad years?
Mr. Nuys: The worst year was 1997, when the producer lost $82. The second worst year was 1995, when they lost $65.
Senator Tkachuk: In other words, we have had losses greater than those caused by BSE?
Mr. Nuys: No, the losses were less as a result of the 2003-04 subsidy.
Senator Tkachuk: I will let Senator Mercer follow up on that, because he was concerned about this program.
You said that country of origin labeling would have a negative impact. Is the negative impact the actual packaging that would be required or the fact that it would be identified as Canadian product?
Mr. Nuys: The problem is the difficulty of tracing. Under this program, processors would have to track product from country of origin right through to the consumer, which is bothersome to do. To avoid having to do this, American processors will likely avoid Canadian products and buy only American products.
Senator Tkachuk: American processors will not have to identify American product?
Mr. Nuys: They will only have to identify it as American. If the product is mixed, you would have to declare on the label where the animal was born, where it was raised, and where the product was processed. You can imagine what the label would look like in a grinding operation using product from three or four countries.
Senator Tkachuk: This looks, obviously, like a barrier to trade. Is there anything that Canada can do to try to prevent that from happening? Can we take this to the WTO?
Mr. Nuys: It is not a WTO issue. It is being fought by the American Meat Institute and the American retailers. It is a government issue and, naturally, R-CALF is in support of it as well as the cattlemen's association.
Senator Mercer: Thank you for being here. I appreciate your taking the time to meet with us. This committee is becoming more and more knowledgeable about this problem. We just returned from Washington, where, at the congressional agricultural committee meeting, we were amazed to hear people whom I had been criticizing for some time say all the right things for us. I had some humble pie to eat, and I am willing to do that.
However, one thing they said at the meeting, which was erroneous but not too far off the mark, was with regard to the expansion of our capacity to process cattle north of the border. That is the good news story out of this very bad situation.
Once the border is opened, will we able to sustain that expansion or will we fall victim to big corporate American predators that will put us back in the situation we were in before BSE?
Mr. Laws: We have said all along that we hope Canadian farmers will not soon forget what happened, because they will have the option of either trucking their animals down to the United States, as many of them used to do, or trying to sell their animals in Canada before doing that. It will be a totally open market and it will be a matter of who is offering more for the animals.
From that standpoint, it is good that the Canadian dollar has strengthened considerably over the last couple of years. On the other hand, that has affected the overall market. With some of these new generation co-ops, farmers will tie some supply agreements to the plant that may or may not be built, and that will also help them to be successful
Senator Mercer: I find your message interesting. In my meetings with people in the agricultural community over the last couple of years I have found that people are both pessimists and optimists. The nature of the agriculture business is that you have to be pessimistic about what is going wrong and optimistic about what will happen in the future, and I salute everyone in the industry for that.
You talked about zoning in Canada, perhaps drawing a line at the Ontario-Manitoba border. That is an interesting concept, but I get nervous about it. I am from Nova Scotia. That may sound like good news to us in the East because BSE has only been in the West. However, I am a nationalist and I am just as much at home in Calgary as in Halifax.
I am worried that drawing a line at the Ontario-Manitoba border would create a two-tier view of our agriculture industry — to the west we have BSE and to the east we do not.
Do you see that as an issue?
Mr. Laws: That is more applicable to contagious diseases. Since BSE is not a contagious disease, that would not work anyway. However, with avian flu the mountains created a natural barrier and we were able to convince the rest of the world that we had the disease contained in this zone, which meant that Canada could keep up its trade, because there is some export of chicken meat from Canada, so that was a good thing.
I understand that there is one main road across the Ontario-Manitoba border, so it could be controlled by requiring all truckers of live animals to stop and report.
Senator Mercer: You should drive that road. It is a lonely route.
My friends in the opposition are always keen on government moving away from regulations. I am a Liberal and tend to favour government regulation. However, in this case I get a little nervous about how government departments work. I met representatives of the egg marketing people this morning and a dairy farmer from New Brunswick. The dairy farmer told me about how someone with the Canada Border Services Agency decided that milk powder did not need to be greatly tariffed. Suddenly milk powder started to come into the country and it is now being used to process cheese, particularly in eastern Canada. They went to court to try to get this reversed. They lost the case, and milk powder continues to come in.
Although this does not relate directly to non-dairy cattle, do you see government agencies making these kinds of mistakes? Although not necessarily the Department of Agriculture, related agencies can make rulings that have tremendously negative effects on the dairy issue, particularly in the Province of Quebec, which has a huge dairy industry, and in Atlantic Canada, where we rely heavily on dairy.
Mr. Laws: I do not have too many worries there. Border security is an important issue. If someone is overly cautious on one particular issue, that is not worrisome.
We work with the Canadian Food Inspection Agency and find that the people there are very qualified. Many highly educated veterinarians work there and anyone who says that the Canadian Food Inspection Agency is not doing their job may need to look at their own organizations, because that is a fantastic organization.
Senator Mercer: You talked about the lack of skilled labour. I am fascinated by this because in my part of the country we fought for years with high unemployment. We are now doing much better, thank you very much.
I am interested in how you advertise outside of Western Canada for labourers to do that very labour-intensive work. Have you talked to people in the Department of Immigration about who we are attracting to Canada? Are we attracting people who could do that kind of work for you? If we attract new Canadians who can get good quality jobs in the meat processing industry, that is a win-win situation for everyone.
Mr. Nuys: It is a difficult situation. Even in Europe there is a tremendous shortage of skilled labour in the meat trade. That is the reason case-ready was almost forced upon us. The retailers were having difficulty finding skilled labour for their stores. We have taken it upon ourselves to do the job for them, but that creates a shortage of butchers at the plant level for us as well. It is not a matter of finding them overseas but rather a matter of training them within the organization or the school system.
Senator Mercer: You do not think there is a need for us to recruit overseas if that labour is available elsewhere?
Mr. Nuys: It is difficult to recruit overseas when there is a shortage there as well.
Senator Mercer: That does not bother us when we recruit professionals.
Mr. Laws: I understand that at one time there were quite a few people from Newfoundland in Brooks, Alberta and now there are quite a few Sudanese there. That certainly changed the nature of that town.
There are many projects underway. I know these packing plants have big human resources departments trying to attract people. There are some organizations actively trying to get people to come from other parts of the world.
Senator Mercer: I understand what you are saying. A colleague told me this afternoon that Fort McMurray is the third largest city in Newfoundland.
Senator Trenholme Counsell: Yours has been a special presentation.
I know some beef farmers very well in my part of southeast New Brunswick. They are great friends of mine and I understand their anxieties and the challenges they face.
I have looked at your data on beef plant expansions and it surprises me to see the increase over 2003 when the crisis struck this country. There was an increase of 16 per cent in one year and some optimism is being expressed that there will be a 40 per cent increase by next year.
How does this fit with our picture of the difficulties that beef farmers have experienced? I am sure they are not exaggerating.
Mr. Laws: It is good news, because we were able to process many more animals and we were able to sell a lot of the high-value meat to the United States, and continue to do so. Canadians have consumed a lot and we have increased capacity considerably. By this June, we will have capacity for a million animals per year, which is substantial. That is good news for everyone. The markets have largely recovered, and that is a good news story.
Senator Trenholme Counsell: Have they recovered by now, or are they recovering?
Mr. Laws: The markets have recovered substantially from when BSE hit in 2003. There have been reports indicating what the price have would have been with the strengthened Canadian dollar had the border never closed. The prices are very close to what they would have been had the borders not closed. That is a direct result of increased slaughter capacity and the markets we have been able to get and maintain for our product. It is a good thing that the Canadian government has been helping beef farmers with these extra subsidies because, in combination with the market prices for cattle, that has kept many people in business.
Senator Trenholme Counsell: Can you give an indication of the price per pound carcass weight for producers comparing 2003 and 2005? The market is doing well, but how does that translate to the price to producers?
Mr. Laws: Five out of every six animals slaughtered are young animals, usually about 18 months of age. The cow market is a different story. Before the borders closed, the price was around $115 per hundred pounds live weight, so about $1.15 per pound live weight. Over the last several months, the price has been around 85 cents per pound live weight. That is not very far off what previously were record prices. You cannot forget what we are comparing. Prices for live cattle were almost record highs when the border closed, so we are comparing to a record year, which is not entirely fair. The markets really have recovered well.
Senator Trenholme Counsell: It is a big drop from $1.15 to 85 cents.
Mr. Laws: The Canadian dollar has strengthened by 30 per cent and that has affected all Canadian exports. Others will tell you that the price would probably have been around 90 cents, and 85 cents is not far from 90 cents. That is a good news story.
Senator Trenholme Counsell: I am interested in the regulatory priorities that you have outlined. I am a physician and therefore wonder what the import is of sodium lactate in uncooked meats.
Mr. Laws: Sodium lactate is a substance they wish to add to processed meats such as sausage. It is bacteria static.
Senator Trenholme Counsell: Not to ground beef?
Mr. Laws: No, not to ground beef.
Senator Trenholme Counsell: I worry about sodium content in food.
What is irradiation?
Mr. Laws: Irradiation is largely for ground beef. Our concern with ground beef is E. coli 0157. If there is any surface contamination when you grind meat, it is ground into the hamburger. That is why it is so important for everyone to cook hamburger right through, unlike whole muscle meat which does not have much bacteria action in the middle. Americans have the option of using that process. Not a lot is sold that way, but if we had the option to use that technology, it would help in the fight. E. coli 0157 is pretty serious, as we all know.
Senator Trenholme Counsell: Are these regulations in effect in other countries?
Mr. Laws: Americans are allowed to use sodium lactate as well as irradiation, which is Canadian technology.
Senator Trenholme Counsell: You indicate that every animal is inspected. I have heard on the news that the United States government has asked that every animal be tested. Is that correct?
The Chairman: It is not the government. Members of Congress are suggesting this, but not the government.
Mr. Nuys: Countries such as Japan have been asking for 100 per cent testing.
Senator Trenholme Counsell: When you say every animal is inspected, is that just checking that they are on their four legs?
Mr. Laws: They are inspected live by the veterinarian as well who has to sign off before they are moved into the slaughter facility. A viscera container follows the carcasses in line, and the veterinarian and inspectors look for specific diseases in some of the organs of every animal. Any suspect animals are pulled off into an inspection rail where they are inspected in more detail. That is not the case all across Canada in all slaughterhouses, but it is the case in federally inspected slaughterhouses.
Senator Trenholme Counsell: Is the DNA traceability limited to Maple Leaf Foods? Is it only an idea, or is it in practice?
Mr. Nuys: It was offered to the whole industry, but only Maple Leaf went with the program. Everyone in the industry was given the option to participate in the DNA research program.
Senator Trenholme Counsell: Is that done in other countries?
Mr. Nuys: The research came out of England, but I think Maple Leaf is the first to successfully implement it.
Senator Trenholme Counsell: Are they using it with all of their hogs?
Mr. Nuys: It is a work-in-progress. I am not sure what the status is.
Mr. Laws: They are targeting the pork they send to Japan. It is largely for tracking purposes. They have done blood and DNA typing on all their sows, because they have their own sow barns, and they can track a particular meat back to a particular sow. It is exciting.
Senator Kelleher: The government has a plan and you have a plan to increase slaughter capacity, with which I agree. Of course, this will mean fewer cattle for the Americans. What do you think the Americans' reactions will be to this increase in slaughter capacity in Canada?
Mr. Nuys: Some of the increased capacity in Canada is by American corporations, such as IBP and Cargill, so it will be interesting to see how that plays out. I do not have insight into what goes on inside the boardrooms of Cargill and IBP. There will definitely be some impact when companies such as Taylor Packing come into Canada and buy over-30-month cows again. It is too premature to say how it will all play out.
Senator Kelleher: Will a price war develop?
Mr. Nuys: If it does, it will be beneficial for the producer.
Senator Kelleher: Should we ask the government not to authorize any supplemental import permits in order to try to increase our slaughter capacity? Would it not be beneficial for that goal?
Mr. Laws: There is currently a subcommittee, and before a supplementary import permit is issued the importers have to contact the suppliers in Canada. Now they will be given 48 hours to respond as to whether they can provide the product. If they cannot provide the product, it is beneficial for the Canadian market to ensure they have the product, otherwise you might lose that market to some other source of protein. When a restaurant prints its menus for the year, it sets its pricing, and it has to be able to supply the product to its customers. There is still some value, but the statistics for the last year show that there were virtually no supplementary import quotas issued and in fact only a little over half of the 76,000 tons of the regular allowable amount came in.
I daresay that was an issue of price and availability. The product was available in Canada, and they bought it in Canada. That was the good news. The way it currently works is not a scary thing because supplementary import quotas are only issued when the product is not available in Canada.
The Chairman: I want to thank you so much for appearing today. You have given us a new perspective. Those of us who spent the better part of a week in Washington came home slightly frustrated. You have opened areas for us that we have not pursued before. I thank you for that and for coming back. As time goes on, we may have you come back again. Good luck to you.
Mr. Laws: We would be happy to come back any time.
Mr. Nuys: You must not forget that we are not fighting the American government, the American Meat Association or its members. It is only one group in the United States that is against us.
The Chairman: I am very glad you mentioned that, Mr. Nuys, because we had conversations with organizations and individuals in Washington who were very supportive of getting this partnership working again and getting the border open. We know there are difficulties in certain areas. While we were very disappointed that the border did not open and that there are still legal battles to be fought, we know that we have considerable support across the border. We certainly have support from the President, the new Secretary of Agriculture and the United States government.
The committee adjourned.