Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 4 - Evidence - Meeting of November 1, 2011
OTTAWA, Tuesday, November 1, 2011
The Standing Senate Committee on Agriculture and Forestry met this day at 5:54 p.m. to examine and report on research and innovation efforts in the agricultural sector.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: I would like to welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
I will ask the senators to identify themselves. I will start with me. My name is Percy Mockler. I am the chair of the Standing Senate Committee on Agriculture and Forestry, and I am from New Brunswick.
[Translation]
Senator Robichaud: Good evening, I am Senator Fernand Robichaud from Saint-Louis-de-Kent, New Brunswick.
[English]
Senator Fairbairn: I am Senator Joyce Fairbairn from Lethbridge, Alberta.
Senator Mahovlich: I am Frank Mahovlich, Ontario.
Senator Plett: I am Don Plett, Landmark, Manitoba.
Senator Frum: I am Linda Frum from Ontario.
Senator Duffy: I am Mike Duffy from Prince Edward Island.
Senator Eaton: I am Nicky Eaton from Ontario.
The Chair: Thank you very much. Witnesses, no doubt you have taken into consideration our order of reference, developing new markets, domestically and internationally, and enhancing agricultural sustainability and improving food diversity and security.
We want to take this opportunity to thank you officially for accepting our invitation. As we said before, your knowledge, your recommendations and your visions of agriculture will no doubt be taken into consideration when we do our final report.
[Translation]
Joining us today is Jennifer MacTavish, Executive Director of the Canadian Sheep Federation.
[English]
We also have the honour of having the chair of the Canadian Pork Council, Jurgen Preugschas, and also Catherine Scovil, Associate Executive Director. I have been informed by the clerk that the first presenter will be Ms. MacTavish, to be followed by Mr. Preugschas. Please proceed.
Jennifer MacTavish, Executive Director, Canadian Sheep Federation: Thank you, Mr. Chair and members of the committee, for the opportunity to be here this evening. It is fitting that we are here this evening to discuss innovation in agriculture, when just yesterday the world welcomed its seven-billionth inhabitant. Much of the news over the past few days has been focused on the impacts seven billion people will have on the earth's resources, including our ability to feed them.
To provide the context for the sheep industry's position when it comes to developing new markets, enhancing agricultural sustainability and improving food diversity and security, I would like to take a few minutes to tell you about the Canadian sheep industry.
The Canadian Sheep Federation is a national, non-profit organization that represents Canada's 11,023 sheep producers. All 10 Canadian provinces are members of the CSF, along with three associate members: the Canadian Sheep Breeders' Association, the Canadian Cooperative Wool Growers and the Canadian National Goat Federation.
Canadian lamb production is centralized in Ontario and Quebec. These two provinces are home to 60 per cent of Canada's ewe flock and together are responsible for 63 per cent of the sheep and lambs slaughtered in Canada.
Statistics Canada indicates that farm cash receipts in 2010 totalled $142 million, an increase of 6.5 per cent from 2009. This number, however, does not appropriately represent the value of the lamb industry to the Canadian economy. If you include the value added to the imported product when it arrives in Canada and the distribution of that product, the industry is worth over $600 million.
For the first time since the American border closed to Canadian sheep and lambs in 2003, Canada's sheep flock is showing signs of stabilizing. After losing over 100,000 breeding ewes between 2004 and 2009, 2010 saw the flock hold steady at 543,000 ewes. More encouraging is that the number of replacement animals has increased by 5.3 per cent, which indicates that producers may be holding back lambs to expand their flocks and their production.
While Canada has always been a net importer of dressed meat, prior to the border closing in 2003 we were net exporters of live sheep and lambs. The export of live animals peaked in 2002 and, if the border had not closed, it was projected that our exports would have increased by 72 per cent in 2003, to over $32 million.
By comparison, in 2010, Canada only exported $250,000 dollars worth of live animals. Our primary export market is the United States, and while we can now export slaughter and feeder lambs south, we still, eight years later, cannot export breeding stock to the U.S.
Lamb consumption in Canada decreased by eight per cent in 2010. This decrease can be attributed in part to the drop in the amount of lamb supplied to Canadian consumers. Sheep and lamb production in Canada dropped by 3.5 per cent in 2010, while dressed meat imports decreased by 13.5 per cent. It is important to note that Canada only supplies 42 per cent of its domestic market. The remaining 58 per cent of the lamb consumed by Canadians — 15.7 million metric tonnes — is imported from New Zealand, Australia and the United States.
The decrease in the amount of lamb being supplied to the Canadian market is not surprising given that the flocks worldwide have been shrinking. Over the past year the United States flock shrunk by two per cent, while New Zealand sheep numbers are down by 2.1 per cent. Australia has the smallest flock in 100 years at 67.7 million head. The reduction in the sheep population globally can be attributed to increases in the cost of production, weather-related factors — such as drought — and within country competition with more profitable uses of land, be it other livestock or urban sprawl. This is leading some to speculate that the global shortage in lamb is the tip of predictions for coming food shortages.
The reduction of sheep numbers globally offers a unique opportunity for growth in the Canadian sheep industry. Increasing the supply of lamb is an important strategy for the CSF, as well as improving international market access. The importance of increasing the supply of lamb cannot be overstated. World demand for food is projected to double by 2050. In order to meet this demand, agricultural productivity will need to increase by 1.75 per cent annually above the current rate of 1.4 per cent. As Canada's population becomes more diverse, it will become increasingly more important that a diverse selection of food is made available, including lamb and sheep milk products.
Agriculture and Agri-Food Canada estimates that by 2017, immigrants to Canada will come from cultures where lamb and mutton are important for food security and constitute 26 per cent of their total meat consumption. The result of this immigration trend will be a 30 per cent increase in the demand for lamb in Canada by 2020. The increase in demand is remarkable when compared to other meats. Lamb is the only red meat whose demand is steadily increasing.
Canada is currently in an advantageous position. Higher market prices for sheep and lamb over the course of 2010 and 2011 are setting the industry up for expansion. However, in order to be sustained this expansion needs to be supported by significant investments, research and innovation. These will enable the sector to develop new markets, enhance sustainability and productivity, and improve food diversity and security.
There are two kinds of sustainability that the Canadian sheep industry is concerned about; industry sustainability and environmental sustainability. For the Canadian sheep industry, re-accessing old and developing new markets is part of our industry's sustainability objective. We need access to markets that have been closed to our breeding stock for the past eight years, primarily the United States and Mexico. While Agriculture and Agri-Food Canada's Growing Forward 2 discussion paper may refer to the U.S. markets as mature for other livestock, for it is not for the sheep industry. As an industry, we support science-based trade. However, if there are not consistent and adequate investments made into science relating to animal health and food safety, our ability to access markets will be diminished.
In 1968, the Animal Research Centre in Ottawa, or Arcott, started a research project to see if sheep production could be increased and intensified. The result was the production of three composite breeds: the Outaouais, Canadian and Rideau Arcotts. In 1989, Agriculture and Agri-Food Canada released these breeds for sale to the industry. The Rideau Arcott became the most popular of the three. This maternal breed was developed for higher fertility, good milking and mothering characteristics, excellent body confirmation and growth rates. Since its introduction, this breed has gained international interest for its prolificacy and abilities to raise multiples on its own, significantly improving ewe and flock productivity. This is a great example of a Canadian research success story and part of the reason why international interest in Canadian sheep genetics was increasing prior to 2003.
Before moving on, you might be interested to know the reason why the Arcott breeds were released to the industry. It was because the federal government cut research funding for sheep and closed the federal research station in Ottawa. Fortunately, the Quebec government took over the research station in La Pocatière. However, without federal involvement — or seeming interest in sheep research — the work that is done is quilted together by sheep organizations, universities and provincial initiatives. This often leads to duplication of resources. Since markets remain closed to small-ruminant genetics, an alternative for the industry would be to access genetic markets through the use of new reproductive technologies. This would allow producers in Canada to raise their breeding programs to a higher level. Research dollars are needed to expand the use of genetic technologies such as artificial insemination and embryo transfer in the small ruminant industry.
The sheep industry is a great example of an industry that can increase production through the use of on-farm efficiencies. Prolific breeds such as the Rideau Arcott or Romanov-Dorset cross can easily provide two lambs per ewe. However, on average Canadian producers are marketing 1.25 lambs per ewe per year. If Canadian producers increased the number of lambs marketed per ewe per year to two, it would increase the supply of Canadian lamb on the market by 59 per cent. To help producers market two lambs per ewe per year, there is a need for research into reducing lamb mortality. Currently there is no comprehensive work being done on lamb mortality and corresponding methods to improve lamb survival.
Additionally more research needs to be done on production-related issues such as flock health, nutrition, management and investments made into the technology transfer required to implement changes on-farm. A great example of a production-limiting issue for producers would be parasitic infestations. Canadian sheep producers are faced with having to manage parasites with limited access to medication and an increasing rate of parasite resistance.
This can be coupled with growing consumer demand for local and organically produced food. An increased investment into animal production research could help ensure Canadian sheep producers are able to access new and emerging markets while simultaneously addressing animal health and welfare issues. Any research that focuses on helping producers manage animal health problems will benefit the Canadian sheep industry.
One of the major hurdles the industry faces is its inability to access medications. Not only is this a production-limiting issue, but it also has the potential to become an animal welfare issue.
The industry would also benefit from research relating to improving flock management systems and producer business management skills. There needs to be an investment into research that provides the entire agricultural supply chain with new technologies to help increase productivity and decrease costs. For example, there needs to be continued investment into traceability so that it works for everyone. Traceability should not just be about putting a tag in an animal's ear. If the investment is made, traceability has the potential to be about innovation, new ideas, new technology and new tools for producers, processors and retailers to help them decrease costs and increase productivity.
Ruminant production lends itself well to helping ensure Canadians have a secure, environmentally sustainable food supply. Not only can sheep graze lands that are not suited for crop production for human consumption, but grass-based meat production is sustainable and improves soil structure and quality. Ruminants are able to convert solar energy in forage to high-quality human foods. There needs to be more pasture-based research, both in terms of management and species breeding and selection for our changing climate. Most of the yield work done is on single forage species. There is a need for research on forage mixtures that complement each other and finding the right grasses and legumes that work together to produce the maximum yield throughout the year.
Research could then expand into the possibility of producing lamb with omega-3 and omega-6 fatty acids. This could be branded and provide new marketing opportunities.
With feed costs being highly variable and the largest expense in livestock production, grazing research needs to be conducted to ensure its viability and sustainability. Unfortunately this is not the kind of research that private companies want to spend money on. Even if they did, they are not known for sharing their results.
Sheep producers have the ability to have a diverse income source from sheep, including meat, milk and wool. There is a lot of potential for research related to dairy and wool that could help improve sheep producers' profitability. Sheep products also have the ability to meet consumer demands for environmentally responsible products and healthy food. Very little original sheep milk or dairy research is carried out in Canada. Yet sheep milk has higher levels of conjugated linoleic acid, higher calcium content and three times more whey protein than cattle milk. Money should be invested in researching the health benefits associated with consuming sheep dairy products.
Currently, most of the Canadian wool sold is sold as raw wool to China. With a growing interest in sustainable living, there could be research done into alternative uses for wool, such as the use of wool for home insulation.
As stated earlier, to feed a growing population, agricultural productivity will need to increase by 1.5 per cent annually. However, agricultural productivity is affected by natural resource constraints, such as the decline in per capita arable land, primarily due to population growth and urbanization, and the competition for water use. Canada, though, has an abundance of land and water. According to the report Feeding a Future World, published by the Population Information Program at Johns Hopkins School of Public Health, Canada is one of only a handful of countries, including Australia and the United States, that currently have sufficient crop land to meet most of their own current food needs. This will probably remain the case for many decades to come. The document goes on to say that these countries could probably produce enough to meet the food needs of all food deficient countries, if those countries could afford to buy the food. It should be noted that the document says that Canada could probably produce enough food. Without committing to long-term investments in agriculture, the ability to be self-sufficient in food production is not a given.
Through research into new reproductive technologies and innovation in ways to access live genetics, the Canadian sheep industry can develop new markets. Through investigating production-related issues such as lamb mortality, access to medication and ways to deal with anthelmintic resistance, and through research into flock management systems, the industry can enhance agricultural sustainability.
By capitalizing on the ability of ruminants to convert solar energy into high quality protein sources, and by conducting research on sheep dairy products and alternative uses for wool, the sheep industry can improve food diversity and security, both nationally and internationally.
In order to capitalize on the incredible opportunity facing the industry, the following recommendations are being made: The federal government needs to ensure that long-term, predictable research-funding commitments for the industry are made. The sheep industry needs funds to develop a comprehensive national plan that incorporates provincial initiatives and takes a strategic approach in selecting research priorities and allocating research money. The current system of allocating and delivering research funding on a five-year basis needs to be re-examined. Significant delays in the delivery of the Growing Forward Program produced a two-year funding gap, and then a three-year window, to perform and complete what would have been a five-year plan. This limits the achievements that can be realized, and makes it difficult to attract research talent. It also reduces returns on investments.
The current funding structure, which requires industry to have matching funds, needs to be re-examined. This practice makes it impossible for smaller industries to have a science cluster as other commodities do. Funding programs have to be designed to have the flexibility to allow smaller industries the opportunity to access funds to research and implement projects that increase their sector's productivity, profitability, efficiency and diversity.
Technology transfer needs to be well funded. Support needs to be available for producers to help them implement changes on farms to increase productivity and profitability. There is no point in doing research if it cannot be extended to the farm and implemented.
The Chair: Thank you very much, Madame MacTavish.
Jurgen Preugschas, Chair, Board of Directors, Canadian Pork Council: Good afternoon. My name is Jurgen Preugschas, and I am a hog producer from Mayerthorpe, Alberta. I am also the chair of the Canadian Pork Council's board of directors. The Canadian Pork Council, the CPC, serves as a national voice for hog producers in Canada. It is a federation of nine provincial pork industry associations. Our organization's purpose is to play a leadership role in achieving and maintaining a dynamic and prosperous Canadian pork sector.
Our board of directors is comprised of 11 producers, from across Canada, who volunteer their time to provide leadership to the industry and to work on initiatives to further strengthen the sector. I would like to thank the members of the Standing Senate Committee on Agriculture and Forestry for the invitation to appear before you this afternoon to discuss the Canadian hog industry.
It has been some time since the Canadian Pork Council has appeared before this committee. While some of the economic pressures have changed, our industry remains extremely fragile. The Canadian hog sector is emerging from the most challenging period in its history. Since the fall of 2006, hog producers have battled one unforeseen event after another, from high feed costs, high exchange rates and foreign policies such as country-of-origin labelling, to the impacts of H1N1.
The landscape of the Canadian hog sector has changed. The industry is now smaller, with significantly lower numbers of producers and hogs. On January 1, 2011, there were 6,995 farms reporting hogs, which was 41 per cent lower than just five years before. The number of hogs on farms has fallen 21 per cent in the same period, to just under 11.9 million. The number of sows and bred gilts has fallen over 17 per cent, to just under 1.3 million.
While the past years have been difficult, the future is more optimistic. The hog sector will continue to be a key player in Canadian agriculture and a very important exporter.
The industry will continue to export 50 to 60 per cent of its pork production and will also continue on export live hogs, although at lower levels than in the recent past. The key challenges for the industry will continue to be the value of the Canadian dollar, the availability of feed grains, preferences of consumers, the trade environment and the uncertainty that comes with the future.
CPC is just completing its strategic plan. We are identifying our challenges as an industry and, more importantly, deciding how we can maximize our opportunities and build on our strengths. Our plan focuses on three areas. The first is industry integrity, which means, essentially, demonstrating to the world that the Canadian hog industry produces high quality and safe food, using humane practices and making benign impacts on the environment. The second area of focus relates to competitiveness, which means enabling our industry to reduce its cost of doing business while receiving a fair price for our hogs. The third area of focus is that of market penetration, which is directed both at domestic and international opportunities.
We believe that the importance we attach to the work that we plan to implement and that is related to our strategic plan, is shared by the Government of Canada. The Canadian government has supported producers in the past through the Cull Breeding Swine Program, Emergency Advance Payment Program, government-backed loans through Canadian financial institutions, and the Hog Farm Transition Program. The CPC has developed a number of key initiatives to help further strengthen the pork industry and to address emergent issues that will affect the competitiveness of the sector.
The proposal includes initiatives to better understand, respond to and adapt to emerging societal trends in animal care, antimicrobial resistance and the environment. The initiatives will focus on those actions that will turn vulnerabilities stemming from societal pressures into opportunities. They will demonstrate that we are an industry that produces high quality and safe food, using humane practices, that can coexist with its neighbours and have few impacts on the environment.
For the Canadian pork industry to remain successful and viable, we need market access through free trade agreements. A critical market for us is South Korea. Yet free trade agreement talks with this country have been stalled since 2008, while other countries are moving ahead.
With the recent ratification of the Korean FTA by the U.S. Congress, any further delaying conclusion of Canadian FTA talks with South Korea will seriously undermine the competitiveness of the pork industry. It will lead to the loss of jobs and contraction in the production and the processing sector in Canada. Other principal competitors have all reached or are negotiating FTAs with South Korea, and that is the EU, Chile and Australia. Canada's current pork trade with South Korea, projected to be $3 hundred million in 2011, or approximately 10 per cent of total Canadian pork exports, will disappear to those who enjoy FTA preferences.
Regarding the EU FTA, the Canadian-EU relationship holds tremendous potential for the pork industry and is one of the last high value pork markets Canada can access. The EU has a population of 500 million, and a majority of them view pork as their favoured meat. With the completion of a Canada-EU FTA, no other nation other than the EU countries themselves has the potential to capture a market share.
I want to add as well that Japan, in this last week, has developed into a concern to us. Canada has been doing some negotiations with them to look at doing a free trade deal. It appears as if Japan will join the TPP, the TransPacific Partnership. If that happens, and if Canada is left out of the TPP, our major export market will also be at risk. Korea is 10 per cent, and Japan is nearly 30 per cent of our market. We have to ensure that we retain access to these markets that are so important to our industry.
In 2010, CPC officially incorporated the Swine Innovation Porc to facilitate research, technology transfer and commercialization initiatives to enhance the competitiveness and differentiation of the pork industry. Swine Innovation Porc is also aligned to achieve the activities of the main pillars established by the Pork Value Chain Roundtable.
Swine Innovation Porc is funded within the framework of the Growing Canadian Agri-Innovations Program and Canadian Agri-Science Clusters Initiative, as well as financial support of the private sector. This research program consists of 14 projects and involves over 100 researchers. CPC considers the Growing Canadian Agri-Innovations Program and the Canadian Agri-Science Clusters Initiative as a success and invites the federal government to substantially increase the funding of this specific program in Growing Forward 2.
Support needs to continue for business risk management programs as well, with the following items of particular interest to the Canadian pork industry.
We believe AgriStability needs to be maintained as the core safety net program for Canadian agriculture. This program assisted our pork producers when they needed it most. Without this program, a larger number of producers would have exited the industry.
The use of futures markets and hedging should be facilitated. There are currently two initiatives that warrant investment. The first is to see loan guarantees provided by the federal government to help producers meet margin calls on positions taken in the futures market. The second is to see price insurance programs, currently only offered in Alberta, to be more widely available with affordable premiums. Use of these tools will enable farmers to better manage risk on their farms and smooth out their variability.
Canadian pork producers also look forward to the day when they can access livestock insurance programs. While the concept has been discussed for a least a decade, only recently is a mortality insurance program being considered in Manitoba. We hope this recent development leads to such insurance being offered across the country, with affordable premiums.
The Canadian Swine Health Board was established to help the industry address emerging disease issues. Its work program over the past two years has helped establish infrastructure to meet this goal, but swine health infrastructure and personnel require a stable and ongoing source of funding and support in order to address economic and One Health-related important swine health problems and issues.
The primary challenge is to maintain, replace and grow the science, intellectual and infrastructure capacity to do research and make progress for the control and prevention of swine diseases as well as the maintenance of acceptable animal health standards.
It is widely recognized that animal health is of increasing importance for trade, and we must address issues that threaten our trade-dependent Canadian pork industry.
The Canadian Pork Council is asking that the Canadian government work with the swine industry to strengthen it into the future. Strategically investing into the industry now will pay dividends long into the future.
The Chair: Thank you. Following the presentation of the witnesses, we will now move to questions.
Senator Plett: I have a couple of questions. First, Ms. MacTavish, why are the majority of the sheep raised in Ontario and Quebec? Is there any reason, such as climate or geography?
Ms. MacTavish: A lot of it has to do with the market. The majority of consumption is in the Toronto-GTA area and Montreal, so access to market is the primary reason. When the Arcott research station was in Ottawa, there was a lot of support for the small ruminant industry in Ontario and Quebec, and that definitely contributed to it as well.
Senator Plett: You say your exports are way down since 2003, I think it was.
Ms. MacTavish: Yes.
Senator Plett: That poses a problem. Yet, you also said we import a lot.
Ms. MacTavish: Yes, we import 58 per cent of the lamb meat consumed. We do not import a lot of live animals.
Senator Plett: Why would we do that if we have a shortage here? We cannot export as much, and yet we are importing. Why would we want to export all this lamb if we are importing a lot of lamb? Why do we not just raise it ourselves?
Ms. MacTavish: We would like to export live animal genetics, so breeding animals as opposed to exporting feeder or slaughter animals. I am not really sure why this happens, but what usually tends to happens is that when an agricultural livestock group organization has a strong export market for its breeding stock, it raises the population and the strength of the domestic commodity. We want to encourage breeding of purebred animals for replacement animals within Canada, and part of doing that is also providing producers with a diverse international market as well.
Senator Plett: You list five recommendations at the end of your presentation on what you would like to see government do. I do not see in there anywhere what your industry does. I do not disagree that sometimes we need to give industries a hand up, but to me this looks a lot like a handout rather than a hand up. How much money does your industry spend on research and development now?
Ms. MacTavish: It is difficult to get a handle on that.
We have very few areas where we conduct research. Some sheep research is being conducted out of Truro in the eastern part of Canada, specifically around grass-fed lambs and pasture management. There is a national project on the Voluntary Scrapie Flock Certification Program, so we are addressing the issue of scrapie as a transmissible spongiform encephalopathy. That is part of why we are having difficulty accessing the U.S. market, so we are trying to address that issue to help us to regain the entire U.S. market. We have research being conducted in Alberta on traceability to help producers. Instead of just tagging an animal, there is a management practice to help identify animals and track their performance, so it becomes more of a management tool rather than something that is required in order to be able to ship animals. We have research being conducted across the country, but I do not have a collective number on how much it is because, as I stated here, it is not a strategic or unified or collective approach to research.
Senator Plett: Are there numbers available, though, that you could maybe provide?
Ms. MacTavish: Yes, I could get a list of research to you. No problem.
Senator Plett: One more question, if I may, chair, for both witnesses. I know we have had problems with the United States in respect of our exports and so on. You were suggesting that it would be great to get into South Korea, and I agree. In the sheep industry, it does not look like there is very much at all, but where do we export the majority of our meat to, other than the United States? I just came back from China, where there are 1.3 billion people. Are we exporting either sheep or hogs to China and, if so, to what extent?
Mr. Preugschas: Certainly, I can answer on the hog side. By volume, the U.S. is our largest customer; and in dollars, Japan is our largest customer. It is the U.S. first, Japan second, and Korea is our third largest this year. The other major ones are China and Australia. After that, we export to over 100 countries. Those are our major markets that we send pork into. Russia is a key one as well. You need several countries for export because different countries import different products of the pig. For example, Japan and Korea take the expensive cuts, such as the loins and the tenderloins. The U.S. buys mainly manufacturing meat from scraps for sausages and other products. If we could get into Europe, it would be hams. In Russia, it is mainly fat and some manufacturing meat. China imports the offal — the parts that most of us do not eat — which sell at a very good price. It is very important to have access to all of these markets. That is why I mentioned so many of them. It is absolutely critical to get that value out.
The Americans have done a lot of work on what the value is for these markets. They say that this Korean deal will increase the hog price in the U.S. by $10 a hog. If we do not have access, our processors will not have that advantage. We producers are already paid about $15 below the U.S., and that will drop the price even more. The disparity will change, and our industry will become less and less competitive with our American neighbours.
Ms. MacTavish: I would agree with what Mr. Preugschas said in terms of needing various markets for different products. Canada ships sheep heads into Mexico, and we export a small amount of mature lamb or mutton to the U.S. Part of the main issue for the sheep industry is that the majority of lambs are slaughtered in provincially inspected plants. We cannot access other provincial markets let alone international markets with some of our products.
Senator Plett: Do we not have federal meat inspectors for sheep?
Ms. MacTavish: We have some but not nearly the volume. A number of years ago there was a federally inspected plant processing hogs and lamb. They were investigating the Chinese market and trying to develop it for both lamb and pork. Unfortunately, it was not successful. Most of our lamb is consumed in the province in which it is slaughtered, which is an issue for us.
[Translation]
Senator Robichaud: Ms. MacTavish, my son had some friends over last week. The meat for the main course was lamb, which was not usual for us because we have it quite rarely. I think young people are increasingly going for this type of meat and that is very good. And we certainly eat a lot of pork, Mr. Preugschas.
You mentioned that we need to do a lot of research. Does that mean that there is very little research being done in your industry, Ms. MacTavish?
[English]
Ms. MacTavish: The industry is doing what it can with the resources that it has. It is a really small industry, and not just financially small but also small in human resources. We do not have a lot of researchers who focus on sheep. Those we have spend a lot of their time trying to find research dollars to conduct the research.
As I indicated earlier, I will provide for you a list of the research currently being done on sheep in Canada. We are doing what we can, but we have a wish list, if you will, of more research that we want to do. As in all research, good research leads to more questions and more research. The information that we are generating is posing more questions, which has us wanting to do even more research.
[Translation]
Senator Robichaud: Is your organization in talks or in contact with any universities? We know that the University of Guelph does a lot of research. Have you talked to those people to find out how they could get involved?
Quebec universities should also be involved, since most producers are from Quebec and Ontario, correct?
[English]
Ms. MacTavish: That is correct. Most of the lamb producers are in Ontario and Quebec. We work very closely with the University of Guelph. They currently have a number of research projects under way. In fact, we just completed one on parasite in sheep with the University of Guelph. Quebec has much more research being conducted on sheep than Ontario has. We partner with them when we can. We sometimes have difficulty, though, getting the research out of the universities and into the hands of the producers — taking the theoretical to the practical, which is a bit of an issue.
Senator Robichaud: We have documents from our research that say the average number of heads is 68. Is that correct?
[Translation]
". . . with 12,000 farms and an average flock size of 68 animals . . ."
Is that the case?
Senator Rivard: It is for sheep. It is 1,700 for hogs.
Senator Robichaud: Yes, I am talking about sheep.
[English]
Ms. MacTavish: This is for sheep, yes.
Senator Robichaud: Is that right?
Ms. MacTavish: Yes.
Senator Robichaud: In comparison with other livestock, they are quite small, are they not?
Ms. MacTavish: Yes. They are usually in conjunction with other livestock commodities, so producers who produce sheep are also producing another livestock or crop. There are not very many who focus strictly on raising sheep.
However, the numbers are growing. These numbers come from Statistics Canada. I will give you a short example on the issue we have there. We had what we would consider a large flock operator who had 2,500 ewes on his farm. He decided not to participate in Statistics Canada questionnaires anymore. Chances are he was not replaced with someone who had 2,500 ewes. We struggle with how accurate the numbers provided for us are. While 68 is the average flock size if you go by the numbers provided, we are seeing a growing number of producers who are increasing their flock size. There has been a lot of work done in the provinces to encourage producers to increase their flock and production. I am not sure how accurate it is, but those are the numbers we have to deal with.
Senator Eaton: It is a banner day for me, having the producers here of the two meats I eat regularly and the most of. Mr. Preugschas, remind me again why Canada might not be included in TPP negotiations?
Mr. Preugschas: It is a complex answer. I do not believe that the Americans want us in, if my information is correct. They are pushing to get Japan part of the TPP. I think if we had made a side deal with Japan and had an FTA — and Japan and Canada is not part of the TPP — it would not have affected us that much. However, if Japan becomes part of that through pressure from other countries and we are left out, then we are in a really difficult position.
My comment is that if Japan joins, we need to push extremely hard to be part of that.
Senator Eaton: Is there great urgency?
Mr. Preugschas: There is urgency. As you heard in the news, this is going to happen probably within the next three weeks.
Senator Eaton: Ms. MacTavish, there is something I would like to pursue, being a huge lamb eater. The remaining 50 per cent of the lamb consumed by Canadians is imported from New Zealand, Australia and the United States. Is that because of interprovincial trade barriers or because they have a stronger brand in the supermarket? Do people ask for Australian lamb as opposed to Canadian lamb? We could have a strong brand with pre-salé. We produce wonderful lamb.
Ms. MacTavish: A lot has to do with the fact that we are not producing enough within the country to meet demand.
Senator Eaton: Why are we not producing more? It if there is a consumer demand, would that not encourage people to grow more lamb?
Ms. MacTavish: We have an issue with interprovincial trade. I will start with that part first.
Senator Eaton: It is important for this report.
Ms. MacTavish: If you are a producer in Saskatchewan and you want Canadian lamb, it will be hard for you to find it. Your lambs are getting shipped to Ontario to be slaughtered. Over 80 per cent of those lambs are slaughtered provincially and are consumed in the GTA.
Senator Eaton: You send your lamb from Saskatchewan to Toronto, where it is slaughtered and processed?
Ms. MacTavish: Yes.
Senator Eaton: It does not go back out to Saskatchewan?
Ms. MacTavish: No, because the vast majority — well over 80 per cent of the lamb in Ontario — are slaughtered provincially.
Senator Eaton: Could it go back out there?
Ms. MacTavish: If it was slaughtered in a federally inspected plant it could. If we could address the interprovincial trade barriers it could. It must be slaughtered in a federally inspected plant in order to come out of Ontario and into another province. There are fewer slaughter facilities out west. There are a few in Alberta. The majority of lambs are coming east to be slaughtered.
Senator Eaton: What we need to encourage the chicken or the egg is more federally inspected slaughterhouses?
Ms. MacTavish: As well as the ability to move product that has been slaughtered in a provincial plant into another province.
Senator Robichaud: You say it is slaughtered in a provincially inspected plant in Ontario. That is why it cannot be moved?
Ms. MacTavish: That is right. It is safe to eat in Ontario but not in Saskatchewan.
Senator Eaton: It has been slaughtered in Ontario. It is provincially inspected but not federally inspected. Does the same apply to pork?
Mr. Preugschas: The same applies to all products. If it is not CFIA-approved then you are not allowed to move product across provincial borders. Sometimes we have more difficulty moving product within Canada than outside.
Senator Eaton: That is something we can do. I would think interprovincial trade barriers and the lack of federal inspection is something we should highlight in this report.
Mr. Preugschas: It is moving forward. At the last FPT meetings of agriculture ministers there have been pilot projects. They are working towards having that provincially inspected at a higher level, so that the meat can cross borders. From the hog industry, we would encourage that to move quicker.
Senator Plett: I understand that because of the small amount of sleep we have it is a problem. However, hog killing plants like Maple Leaf are federally inspected and are shipping pork all over the country?
Mr. Preugschas: Pork does not have an issue in terms of having availability. The problem comes when you have small slaughtering plants close to the border — or specialty sausage makers — that are provincially inspected. Let me use Alberta as an example. Lloydminster straddles the Saskatchewan-Alberta border. If the killing plant is on the Alberta side, the neighbour across the road is not allowed to buy that product. They can buy it directly and illegally move it across the border to their kitchen. Legally it is not possible for them to sell it in a meat shop across the border. That is where the issue comes for the hog industry.
In terms of availability in stores, our industry is big enough that it is not an issue.
Senator Eaton: You are a big industry and you are a small industry. I would have thought — with the sophistication of marketing, and political lobbying these days — that you would have spent some money, time or imagination educating the consumer. Have you thought about mounting a campaign informing Canadian consumers? There is such a big local movement now in food. You can access more Canadian cheese, pork, lamb if we could get inspections coordinated amongst all the provinces. Have you considered bringing the consumer on your side a little bit?
Mr. Preugschas: I believe the consumer is on our side. I do not think consumers have a problem at all.
Senator Eaton: I do not think they realize why they cannot have access to more Canadian lamb. If you grow a lamb in Alberta it is shipped to the GTA. I cannot buy the same roast lamb in Regina. Pork is the same.
Mr. Preugschas: It is more complex than that. Not every commodity agrees. We have some discussions amongst ourselves in agriculture because some of our industries that are more controlled are not really happy with opening up the borders to do that.
Senator Eaton: Are they agricultural products?
Mr. Preugschas: Yes, they are.
Senator Eaton: Which ones are they?
Mr. Preugschas: I think you would have to talk to them. I am sure you will be having them at the table, and you can ask them those questions.
The other challenge also is that a lot of the federally inspected plants say, "We have an advantage; we can move product across borders." We do not want to lose that. We have to spend more money to be CFIA-approved, so we do not want provincial plants to have the same advantage, without being held to the same standards. It does become relatively complex.
Senator Eaton: I see. I still think something should be done.
Mr. Preugschas: It is a great idea that you have. Our domestic marketing strategy is going to be totally that, to buy Canadian, because, even though we export 60 per cent of our product, we import 25 per cent of our consumption from the U.S.
Senator Eaton: We can do better. Thank you.
Senator Mahovlich: A few years ago, this committee travelled out west — I believe we were in Alberta — and visited a hog farm. I guess it was 2004. There were problems then with the hog farming — pollution and all kinds of things. This farmer was having trouble. Someone came along and offered him doves. He started to raise doves. Is that still going on? He got rid of all of his hogs. Was it doves or pigeons?
Mr. Preugschas: It was pigeons. They called him the Pigeon King from Ontario. It was a scam.
Senator Mahovlich: Oh, was it?
Mr. Preugschas: There are not any more pigeons raised in hog barns.
Senator Mahovlich: He was going to sell them to India or somewhere.
Mr. Preugschas: The people that were involved in that lost a lot of money, unfortunately.
Senator Mahovlich: You have to be careful. That was quite a story.
We will make a deal here and go to South Korea. Will we be able to have enough pork to satisfy their demand? Do we have enough farmers to satisfy them?
Mr. Preugschas: There is no question that if the demand is there, the hog industry would grow to meet that demand.
Senator Mahovlich: You have the potential?
Mr. Preugschas: We were at 32 million hogs three or four years ago, and now we are at 26 million hogs. That can change very rapidly. As you heard, sheep farmers sell 1.8 lambs per year. We sell 25 to 30 pigs per sow per year, so we can expand much, much quicker if the demand is there.
Senator Mahovlich: I went shopping the other day and bought some lamb. It was quite expensive. Has the price of lamb gone up in the last two years? I had six chops, I think, and I had to pay over $20.
Ms. MacTavish: The price of imported lamb is quite expensive.
Senator Mahovlich: It probably came from New Zealand.
Ms. MacTavish: Most likely it did.
Senator Mahovlich: I am up in Muskoka. Do we not have a Muskoka lamb? They used to advertise Muskoka lamb.
Ms. MacTavish: I am not sure of all the regional marketing campaigns for lamb, but there was a chef in Muskoka who promoted lamb a couple of years back.
Senator Mahovlich: I grew up with lamb. My parents were from a European country, so families used to get together and barbecue a lamb on a spit. It was one of the most tasty meals I have ever had.
Quite often, I will throw goat's cheese in my salads, but I do not ever hear of lamb cheese. Is there any cheese that comes from sheep?
Ms. MacTavish: Yes, you can get sheep milk cheese. The real feta cheese is made with sheep milk, not goat milk.
Senator Mahovlich: We are under the impression it was goat.
Ms. MacTavish: It can be made with goat milk, but if you go to Greece, they make it with sheep milk.
[Translation]
Senator Rivard: Earlier you talked about the market in South Korea. In your presentation, you also mentioned the European Union market. It seems that a Canada-EU agreement might be signed in 2012, based on what we know about the progress of negotiations.
Do you think that, with the current number of hog farms, we will be able to handle a market of 500 million, or should there be more? You must surely have done some studies to assess the capacity needed to meet the EU demand, correct?
[English]
Mr. Preugschas: As I mentioned before, the European market is a huge market. It would be portions of the pig that we would sell there. The main market would be for hams. Hams are something we struggle to market in North America. The ham value in Europe is much, much higher than it is here, but because of the tariffs and the difficulty of getting it in there right now, we do not send much over there. If we do get this signed, that would give us the ability to market into the EU. Then it would be the hams that we would send. It probably would not create a lot more production. What it would do is create more value.
Europe, by the way, is actually relatively self-sufficient in pork. It is just that they do export a bunch as well, and they are short of hams. They export other parts of the pig.
[Translation]
Senator Rivard: I think I have heard that the number of bankruptcies has increased over the past few years, especially in Quebec. Would you say it is because of a weaker market, mismanagement, undercapitalization or even environmental responsibilities for processing pig manure? Today, we need to have purification pits, so that plays a major part.
In your view, why are there more bankruptcies than before?
[English]
Mr. Preugschas: The main reason is that the whole industry, over the last five years, has been under severe stress. It started with the drop of the U.S. dollar and the rise of the Canadian dollar. I always say as a hog farmer, "Every cent the dollar moves costs me $1 per pig." I sell 250 pigs a week, so that is $250 that comes off of my income with every cent. So when it shifted 35 cents, it had a huge impact on our producers.
Then there were the high feed costs. In 2008, when the cost of grains shot up, our income was down, and our expenses were way up. At one point, in 2008-09, we were losing somewhere close to $75 per pig. In my case, selling 20,000 pigs a year, do the math.
That is cash losses, not paper losses. Quebec producers were somewhat protected through the provincial program that they have. They are feeling the real crunch this year, and especially this last winter, when their program was not paying out as much. They have had a lot of bankruptcies in the last year, whereas the bankruptcies in the rest of Canada have slowed down.
[Translation]
Senator Rivard: Do you know what percentage of hog production costs is a result of environmental obligations? Is it 5 or 10 per cent of total production costs? I am talking about processing slurry, among other things.
[English]
Mr. Preugschas: I do not have a total answer for you on that. I do believe, though, that changes in how we manage and doing a better job in the environment are a good thing. I think that had to happen. Generally, hog producers have done a good job, but where it is changed is the application of manure cannot be put on frozen ground any more. We need storage for a full year for that. You may even have to have them covered in some jurisdictions, and certainly that your pits do not get into the ground water. We feel that those are really important areas that had to be done. For those that built new barns and implemented that, the cost structure really was not that much higher. It is difficult for those production units that were built and needed to invest into changes. That was hard on them, and certainly it was an extra blow and made it harder for them to compete.
[Translation]
Senator Rivard: To your knowledge, are Canadian environmental standards comparable to those of the U.S., our competitor? In your view, do the same environmental conditions apply to both countries?
[English]
Mr. Preugschas: I would say generally speaking our standards are higher than the Americans', but the Americans are catching up as well. We were higher before. It is under provincial jurisdiction as well, so we have differences between each province as well as being different than the United States.
[Translation]
Senator Rivard: When new environmental rules were implemented, do you remember whether there were any federal or provincial government assistance programs to help hog producers meet those new environmental obligations?
[English]
Mr. Preugschas: I really cannot speak for all of the provinces. I know in Alberta there would have been none. I believe in Manitoba now, they have got some very strict rules. They have said that they will assist in making some of those changes. I do not know what programs were available in each province. It varies per province. In the Growing Forward program, if you did some environmental work, you did your environment farm plan and did some changes, then you were able to access money, but not a lot. I think it was up to a maximum of $30,000. The hog industry did not take advantage of much of that simply because our guys have had no money to do this work in the last five years. If they had cash, they would have probably been big users of it but, in the last five years, they were struggling to survive rather than to invest.
Senator Fairbairn: This is a fascinating discussion about opportunities far away, in Japan and beyond. In the activities in Alberta and British Columbia, are they advantaged by not having to move all across Canada? They will be very close to the countries that you have spoken of. With our mountains and all of that, it is difficult enough to do what we do with the United States, let alone going further beyond. Are you involved in encouraging that connection in those parts of Canada towards moving across into China and these kinds of places?
Mr. Preugschas: Your comments are very knowledgeable, clearly, because we in Alberta and Western Canada are the closest to the Asian market. We are closer than Los Angeles by about three days, I believe it is, going through Vancouver, Prince George if we go by ship. Those three days are very important days. Yes, we are at a real advantage if we can sell into those markets and we use that advantage. Australia is another competitor, and Chile. They are much further, so they have difficulty sending fresh pork into those markets. We sell a lot of fresh pork into Japan and Korea, and some fresh pork into China as well. Yes, it is very important. We have Canada Pork International. We actually do a lot of work in those countries. In fact, right now, the executive director is in Korea as we speak. He is working on markets there and relationships. Yes, we spend a lot of time in Japan, China, Korea, Vietnam, Indonesia and the Philippines. They are all big markets for us.
Senator Fairbairn: This is very exciting, and all dealing with young people going through university. They are looking over there and they want to help.
Mr. Preugschas: I think we can do much more. They also want our oil and energy, especially in China. I think it is an opportunity for us in Canada, in our negotiations, to tie some of that together. For every barrel of oil that goes over there, let us attach a steak and a pork shop, and maybe some lamb as well. That actually is part of a negotiated trade deal.
Senator Duffy: Ms. MacTavish, thank you for coming. Small producers are big business in P.E.I., small businesses hoping to get bigger, and in many areas across the country there are people with small flocks, as you say.
I remember very well the big battles between Australia and Canada. Eugene Whalen was the Minister of Agriculture who complained about the Australians and New Zealanders dumping frozen beef and lamb and mutton in this country. Is there still a concern about dumping in terms of price?
Ms. MacTavish: It is not a concern that is spoken of very often, if it is a concern. They are often referred to as a competitor, although some people are starting to view them more as a collaborator. They keep lamb on the shelf for consumers when we cannot. There is a bit of a shift in how we are viewing them in terms of their role in the Canadian lamb industry.
Senator Duffy: They have also, I am sure you remember, had a very successful advertising campaign for New Zealand lamb.
Ms. MacTavish: Yes.
Senator Duffy: Have we ever had a similar thing for Canadian lamb?
Ms. MacTavish: No, but we will be starting. The Canadian Lamb Cooperative is starting. They will be incorporated in January, and they have been going around the country getting producers signed on. They will brand Canadian lamb. It has been spearheaded by the Saskatchewan Sheep Development Board, and they are talking to processing plants now. They will address some of the issues that have been raised about getting lamb slaughtered in federally inspected plants so it can reach markets across the country and not just in certain provinces.
Senator Duffy: Senator Robichaud mentioned a family loving lamb. My mother would not eat lamb unless it was local. She demanded it. She did not want any of that frozen stuff. If Eugene Whalen told her it was not good, she was not going to have it.
On the question of sheep milk, many people are starting small farms to become small producers. They want to be integrated, as you say, by using the wool, the milk and the meat. What are the provincial regulations affecting milk and how do they affect you? Do they encourage or discourage the expansion of your industry in that area?
Ms. MacTavish: That is a difficult question to answer because it depends on the province. In some provinces sheep milk and sheep dairies fall under the dairy cattle regulation. In some provinces, they do not seem to fall under any regulation. Historically, lamb production has been much more popular with producers, but we are seeing more producers diversify their flocks and milking the sheep, primarily in Ontario and Quebec. There does not seem to be enough regulation to prevent them from doing it. We have not heard a lot from producers indicating that anything is discouraging them from producing sheep milk.
Senator Duffy: I hope that provincial governments are not getting in the way of having the kind of vibrant industry we all want. As someone who spent many years covering provincial premiers' conferences, I found they always had at the bottom of the list interprovincial trade barriers, trucking regulations and so on. In all my years, they never got their act together on this. Has it improved in any way? Do you still have problems? People say issues, but issues are really problems. Mr. Preugschas I would like to get your take on that as well.
Ms. MacTavish: Yes, it is still an issue for us. Again, we are seeing the dairies come up around the market where the demand is the greatest. We have a lot of demand for sheep dairy products in the greater Toronto area. We have a sheep dairy in Fergus, Ontario, that supplies part of that market. We have not had to address the issue fully because we are just producing around the demand right now.
Senator Duffy: Mr. Preugschas, we know the Americans do not want the competition. What barriers do you see for us in concluding a FTA with Korea?
Mr. Preugschas: Well, we understand the biggest barrier is the auto industry. Unfortunately, it is just ill-informed. With the FTA as we understand it, the U.S. has Korean cars being built in the southern U.S., while under our NAFTA deal, the cars can come here anyways. Whether Canada signs a FTA with Korea, the car issue will not change. By using that as a crux, it is harming our agricultural industry.
Senator Duffy: I know this is a government that cares about farmers, so I am sure they will be on it fast.
Mr. Preugschas: We have been working and lobbying hard. We need your help as well. Keep telling our government.
Senator Duffy: Thank you all for coming tonight. This has been very informative.
Senator Robichaud: Before going into how much room there is for innovation, I will ask: How much Canadian product does a store like Costco sell? They sell many products but how much of that is Canadian? Do you have any idea?
Mr. Preugschas: I can certainly answer that. The beef is 100 per cent Canadian. The pork was 100 per cent U.S. until early this year when they did a pilot project in the Ottawa region with Canadian pork. Obviously, it was successful because one of our processers in Toronto signed a deal to supply the entire Ontario Costco chain with Canadian pork. The rest of Canada is still importing pork from the U.S. All Costcos in Ontario, except Ottawa, I believe, are supplied with Canadian pork.
Ms. MacTavish: The lamb is 100 per cent Australian.
Senator Robichaud: This would represent quite a market for you, would it not?
Mr. Preugschas: It is a huge market.
Senator Duffy: Is the issue straight price?
Ms. MacTavish: No the issue is supply. We cannot produce enough lamb consistently week in and week out to meet the demand.
Senator Robichaud: That would not be a problem with pork, would it?
Mr. Preugschas: Costco tells us that it is a bit of a supply issue as well. They insist that they want X number of loins every week. It does not matter if you have a better market somewhere else, they will pay a certain price year round; it has to be there. They demand huge volumes. They are able to bring in from the much larger plants in the U.S. and be guaranteed the preferred buyer. They tell us that that is a bit of an issue, but we have been successful with the one plant supplying Ontario; so it is possible.
Senator Robichaud: How much room is there for innovation in the pork industry? Is it in genetics or in the feed? My question applies to lamb as well.
Mr. Preugschas: There is always room for innovation. Most importantly, it does not matter what industry you are in. If you take money out, you need to do your basic and applied research. If you fail in that, ultimately your industry will die. That holds true in producing animals. Innovation includes everything. We are doing genomics in genetics, which is being funded. I happen to sit on the Alberta Livestock Meat Agency, which funds a lot of research. We have funded a lot of money in genome research for livestock, which is critical. If we can be at the leading edge of that research in the world, it will put our total livestock industry a leg up on everyone else. Whether it is about feed usage, environmental aspects, creating energy out of what we produce, innovation is endless. You can never over emphasize the importance of research. Unfortunately in the 1990s, we dropped our funding for research, so we are back a little bit. We have to ensure that it stays in place.
Senator Robichaud: You say that with more research and innovation, we could be at the leading edge. How far behind are we? Do you have any idea?
Mr. Preugschas: It varies depending on the research. Fortunately, research crosses borders. If you are part of that, you can use it much more quickly. Ms. MacTavish mentioned how important it is to bring that research to the farm level — the technology transfer. We work hard at transferring that technology to the farms for their use. It is the total package.
Senator Robichaud: We have heard a few times that it is a matter of communication from the researcher to the producer. Somehow, things do not work like they should work. I do not know what recommendations could be made to streamline that communication so that the producers are aware of the research and able to use it.
Ms. MacTavish: There are a couple of ways to approach it. In our industry, there has been a lot of extension staff cut from provincial governments. Therefore, producers do not have a person within the provincial government to help them with implementing new technologies or new management practices on the farm.
The other hiccup in our industry is that we do not have a lot of sheep producers passing on their farms to the next generation. We do not have generation after generation of passing on that knowledge. We need to look at different ways to get the information out and we need to talk to producers about how they want it. With iPads and new technology, there can be ways to centralize information and to get it into one spot. That person can be responsible for getting it out. We need to talk to producers and ask how they want the information and in what way they learn the best. We need to talk to adult educators, because that is what we are doing when we are doing extension work, and ensure that we are not just providing them the information but providing them the information in a manner that they will receive it, a manner that will make sense for them and a manner that they can incorporate on to their farm.
Mr. Preugschas: To add to that, strong organizations are important. The stronger the producer organizations that we represent, it seems the better the work is done in terms of technology transfer. The directors are producers. They understand that and that you hold conferences and whatever is required to get that technology transfer.
One of the things that certainly can always be done is to ensure that producer organizations are strong.
[Translation]
Senator Rivard: We have recently met with people from the Agricultural Producers Association who told us how difficult it is for them to recover the money when they sell on foreign markets. It is so serious that they have set up a payment insurance fund and the members contribute because they do not have government protection.
Do your hog or sheep producers have the same difficulty in getting paid on foreign markets? If so, are you thinking of setting up this type of payment protection like the agricultural producers?
[English]
Mr. Preugschas: That goes a bit beyond my expertise, senator. In our case, generally speaking the exporters, the traders, do the work outside of the country. That is, either the Olymels or the Maple Leafs of Canada, the larger companies, do the trading. In more risky countries, however, they give it to other trading houses that understand that market to minimize the payment. It is very important, and I think business does sort of look after that to a certain degree.
Concerning insurance, I think EDC does some of that. I am also a genetics producer and sometimes there are issues there and EDC will guarantee payment in some cases, or insure it, and that is a very valuable tool that we have.
[Translation]
Senator Rivard: My last question has to do with organic markets. I am not sure whether you have any statistics on private companies that are not necessarily on the stock exchange. In Quebec, DuBreton is in the organic market. Do you know whether they are successful and always making progress, especially outside Canada?
[English]
Mr. Preugschas: We feel differentiation is good. If you can differentiate yourself and develop a market, that is absolutely critical. We do not really discuss whether or not we should have organic production. We encourage differentiation. If someone does a good job of providing safe pork, whether it is produced through organic methods or other methods, we encourage it and we support that. It is mainly differentiating and finding that niche market. We support all of them.
The Chair: Any further questions?
Senator Robichaud: What can you tell me about the Enviropig?
Mr. Preugschas: Concerning the Enviropig, years ago, when it first started, I was president of the Canadian Swine Breeders Association when we put some money into starting the research on that. The Enviropig is something that environmentalists should be cheering loudly about because that pig has the ability to digest phosphorous better than your normal pig. Therefore, the environmental impact of the manure that you put on the ground is much less in terms of leaching, and so on. I believe it is one of those tools that we need to embrace as we look into the future to feed the nine billion people that we will feed. If we do not use genetic tools that are available, whether it is in animals or plants, we will have difficulty with the environment because you need more acres to produce the same amount of food. The Enviropig fits right into that same mould.
We are always cognizant of the fact that regulations have to be approved to be used in food. From the CPC's standpoint, we do not promote that. We need to allow the health department and everyone to make the decision about whether it is a safe product. Once it is safe, I would say it is something that we should be promoting.
Senator Eaton: As long as it does not affect the taste.
Mr. Preugschas: I think that is important, absolutely; it should not affect the taste.
The Chair: We are being enlightened by the Canadian Sheep Federation and the Canadian Pork Council.
[Translation]
Senator Rivard: The hog industry is not well-regarded in cities, towns and villages, especially in villages, since it is very rare in cities and towns. There is the "not in my backyard syndrome"!
In Quebec, every time a hog producer wants to set up shop, he has to deal with the public. Is that a typical Quebec problem?
[English]
Mr. Preugschas: I think it is true across Canada. If you think there are problems in Quebec, look at what Manitoba has to deal with. Maybe I should not say, but they are making it difficult for the hog producers in Manitoba. The answer is yes. Somehow, the hog industry got a bad name when those huge farms were built in Carolina. Ours are not nearly that size, but people seem to think that our larger farms are that big. They have had some environmental issues down there. We really have not had many environmental issues, but to change that thinking is very difficult. We are working hard at trying to do that.
The Chair: Before we close, I would like to thank the witnesses very much for accepting our invitation. As we progress toward the mandate that we have, and in the event that you would like to add to what you have said today, please do not hesitate to communicate with us.
(The committee adjourned.).