Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 10 - Evidence - Meeting of February 7, 2012
OTTAWA, Tuesday, February 7, 2012
The Standing Senate Committee on Agriculture and Forestry met this day at 5:26 p.m. to examine and report on research and innovation efforts in the agricultural sector. (Innovation in the agriculture and agrifood sector from the producers' perspective.)
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry. I am Senator Percy Mockler from New Brunswick. I am chair of the Standing Senate Committee on Agriculture and Forestry.
[English]
I will begin by asking senators to introduce themselves. I will then ask our witnesses to share their presentations with us, followed by questions.
Senator Mercer: Terry Mercer from Nova Scotia.
[Translation]
Senator Robichaud: Fernand Robichaud, St-Louis-de-Kent, New Brunswick.
[English]
Senator Plett: Don Plett from Manitoba.
[Translation]
Senator Maltais: Ghislain Maltais, Quebec.
Senator Rivard: Michel Rivard, Les Laurentides, Quebec.
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The Chair: On behalf of the committee, I thank the witnesses for accepting our invitation. The committee is continuing its study on research and innovation efforts in the agricultural sector. Today, we will focus again on understanding innovation in the agriculture and agri-food sector from the producer's perspective.
I welcome Mr. David Fuller, Chair of the Chicken Farmers of Canada; Mr. Jacob Middelkamp, Chairman of the Canadian Poultry Research Council; and Mr. Mark Davies, Chair of the Turkey Farmers of Canada. Mr. Fuller will present first, followed by Mr. Davies and Mr. Middelkamp.
David Fuller, Chair, Chicken Farmers of Canada: Thank you, Mr. Chair. My name is David Fuller and I am Chair of the Chicken Farmers of Canada. I am also a farmer from Annapolis Valley in Nova Scotia. Mr. Chair, it is not my intent to read the entire presentation. I will pick highlights and after that I would be prepared to answer any questions.
The chicken industry is a Canadian success story. Our success is the result of a stable policy environment provided by our supply management system. Chicken farmers deliver a secure and steady supply of fresh, quality Canadian chicken. Consumers get good value for their money and a reliable supply of safe food at reasonable prices. In addition, the Canadian market is open to predictable level of imported food. The system allows chicken farmers to earn their revenue from the marketplace. As such, we do not rely on other government programming for our financial and market stability.
This stability enables our farmers and our processers to invest with confidence to grow their businesses. In fact, as we speak today, new processing plants that are the result of a farmer and processer collaboration are being built in Nova Scotia and New Brunswick.
Farmers across this country are investing in new barns designed to provide a constant, comfortable environment for our birds and protect them from the weather extremes we witness in Canada throughout the year and across the country. These include computer-controlled ventilation systems, backup and sustainable energy generation, heated floors, bio-security and standardized doors to facilitate modular loading.
Supply management also contributes to the sustainability of Canada's rural economy. Other businesses such as feed mills, veterinarians, hatcheries, grain farmers and service entities count on the stability of Canada's chicken farmers to contribute to their successes.
Our farmers generate more than 31,000 direct and indirect jobs in communities in which they live. They contribute $2.5 billion annually to Canada's GDP and pay $357 million in taxes.
Our industry did not reach this level of success without being innovative, nor is it just growth for growth's sake. True to our mission, Chicken Farmers of Canada has built a consumer-driven Canadian chicken industry that provides opportunities for profitable growth for all stakeholders.
Our organization recommends that government continue its long-standing support for supply management as it provides the stability required for our farmers to earn their revenue from the marketplace and contribute to the rural economy without relying on taxpayer support.
As one of its primary objectives, CFC has consumer confidence in the ability of the Canadian chicken industry to meet their expectations for safety, quality and variety, as well as animal care and the environment.
Chicken has come a long way since the days where a whole bird was all one could buy at the grocery store. Our industry has evolved to offer a wide variety of cuts of chicken, including whole birds, boneless, skinless breasts, bone-in breast, thighs, wings and drumsticks.
While all of our birds are grain fed, farmers use a variety of production methods, including organic, free range, free run, without antibiotics, vegetarian and grain fed to meet specific consumer demands. They also raise their birds to be very specific sizes that require farm management skills. This vast diversity of product offering strengthens the Canadian chicken industry's sustainability and allows it to adapt to changing consumer preferences.
The Canadian chicken industry is a leader in food security. There is chicken production in every province. This diversity ensures that Canadians across the country have access to fresh, locally produced chicken. It also ensures that if there is a supply disruption in one region, as we had in 2004 with the avian influenza outbreak in the Fraser Valley in British Columbia, we can ramp up production in other provinces to fill the void. This disparate location of chicken farms also has a positive environmental benefit.
Food security is, however, more than just having access to food. It is about having access to food that is safe, nutritious and raised with care. CFC has been a leader in the development of on-farm and industry value chain programs that address these important aspects of food security.
The on-farm food safety and biosecurity programs ensure that Canadians have safe food. The animal care program ensures that the birds were raised and are well treated. The animal disease preparedness and traceability programs ensure the financial health of the industry and reduce the financial risk to government and to rural communities where we live.
Our organization recommends that the government recognize the shared responsibility that they have with farmers and industry for the food security for Canadians; that the government recognize the shared benefit that they derive from food security programs that farmers and industry have put into place; and that the government provide its share of the cost of the development and ongoing implementation of these programs.
Specifically, the government should support the finalization of the Canadian on-farm food safety recognition protocol; recognize that the federal, provincial and territorial traceability guidelines need to take into account the variety among agriculture industries and permit the use of systems that meet the needs of industry and government in the most cost-effective manner; provide continued financial support to the National Farm Animal Health Care Council in the development of codes of practice and assessment protocols; and ensure throughout the Canadian Food Inspection Agency and the Canada Border Services Agency that imported meat meets the same standards as domestic production, and not undermine consumer confidence in chicken that the Canadian industry has carefully built.
The chicken industry is committed to research and innovation. To date, CFC has pursued and supported poultry research, primarily through the Canadian Poultry Research Council that was established in 2001 by the five national poultry organizations in Canada. A submission from CPRC is being presented to the committee today.
CFC's research funding to CPRC is generated through an internal restricted endowment fund. The fund currently is sitting at $5.6 million and generates $200,000 annually. The focus of our research efforts through the CPRC is on issues that improve on-farm productivity, such as bird health, animal care and improved feed conversions.
In cooperation with the Farm Products Council of Canada, Chicken Farmers of Canada is now exploring the establishment of a national promotion and research agency under the Farm Products Act. The benefit of such an agency is that the levies collected by farmers to promote chicken consumption and research in Canada will be augmented by similar levels on imports.
The challenge before us is to ensure that in cooperation with Canada Border Services Agency there is an effective process to collect the levies on imports. CFC recommends that the government commit sufficient funds through Growing Forward to poultry research to enhance our on-farm productivity and innovation through the poultry value chain; and that the government ensure that the access to the Canada Border Services Agency's import data under the Farm Products Agencies Act is available to research agencies.
In closing, I want to thank the honourable senators for the opportunity to share our views on how the Canadian chicken farmers are investing in research and innovation in order to grow our industry and contribute to the future of Canadian agriculture. We would be happy to answer questions when it is convenient, Mr. Chair.
The Chair: Thank you very much, Mr. Fuller. Now we will be asking Mr. Davies to make his presentation.
Mark Davies, Chair, Turkey Farmers of Canada: Thank you very much, Mr. Chair, and again, thank you to the senators for this opportunity today to bring forward a number of points in relation to the other presentations this afternoon.
With your indulgence, I will give a quick overview of our industry, and then I will get into the main points that we want to present today.
The Turkey Farmers of Canada was proclaimed by Parliament in 1974 and has represented Canada's registered turkey farmers for 38 years. The agency is entirely funded by levies remitted by our farmers on a per kilogram basis of the turkey that is actually marketed per year.
Our eleven-member board of directors is comprised of eight farmer elected representatives, two appointed primary processing sector members, and one appointed member from the further processing sector. We believe the makeup of our board underscores the basic reality of modern agriculture with a focus on a value chain approach to identify and capitalize on market opportunities. Our mission is to develop and strengthen the Canadian turkey market through an effective supply management system that stimulates growth and profitability for economic stakeholders. This, for us, is job number one. We have a uniquely Canadian marketing system, well supported and well equipped to be foundational for the development of competitiveness of individual farms and firms.
Our primary objectives, which are drawn directly from section 21 of the Farm Products Agencies Act, state, one, to promote a strong, efficient and competitive production and marketing industry and, two, to have due regard to the interests of producers and consumers of turkey.
Our role as a national organization is to create a platform where individual enterprises from the farm throughout the value chain can continue to develop their own competitive edge in the domestic market. In a mature marketplace, innovation, production, processing and product development is critical. In many ways, TFC, with its obligations and responsibility under the FPAA, is a facilitator for enterprises within the turkey sector playing a key role in how challenges and opportunities are addressed. Our role in fostering competitiveness and innovation in the turkey industry is focused on a number of priorities.
The first of those priorities would be on-farm food safety. With support from Agriculture and Agri-Food Canada, Turkey Farmers of Canada has developed the TFC On-Farm Food Safety Program, otherwise known as OFFSP, an auditable national program that incorporates biosecurity protocols and detailed on-farm recordkeeping to reduce and control potential food safety hazards on farm.
The program and its management system have passed technical review by the Canadian Food Inspection Agency. By providing proactive management of potential on-farm food safety risks, the program helps to ensure that Canadian turkey farmers are prepared to meet the requirements of downstream sectors in the food production and distribution chain. In addition, it offers increased protection of human health and also reduces the risk of potential animal disease outbreak.
It is important to note that continued funding for the ongoing maintenance and continuous improvement of industry on-farm food safety programs is recommended to ensure that producers can best maintain the safety of Canadian food through risk prevention on the farm.
Second is flock care. Turkey Farmers of Canada's Flock Care Program is an auditable national program that provides our farmers with measures to ensure the proper handling and care of their birds. It is based on the Canadian Recommended Code of Practice for the Care and Handling of Farm Animals. Chickens, turkeys and breeders from hatchery to processing plant, as well as other international programs and standards, require detailed on-farm record keeping and documentation and complements the animal care related measures covered by the TFC On-Farm Food Safety Program.
Following requests from the Turkey Farmers of Canada, Chicken Farmers of Canada, the Canadian Hatching Egg Producers and the Canadian Poultry and Egg Processors Council, the National Farm Animal Care Council has commenced a review and update of the code of practice for chickens, turkeys and breeders which was last revised in 2003. It is worth noting that in order to be effective the codes of practice must be reviewed regularly and revised as production and management systems evolve. Also, revisions to the codes of practice are supported by funding received from Agriculture and Agri-Food Canada's AgriFlexibility Fund. The maintenance of this funding is critically important for the ongoing practical relevance of the codes.
Third on our list is disease surveillance. Canadian turkey farmers participate in the Canadian Notifiable Avian Influenza Surveillance System, a joint initiative of government, industry and Canadian farmers to protect, detect, minimize and eliminate the presence of notifiable avian influenza in Canada's domestic poultry flocks. The program is a very important component in the management of foreign animal disease. This program is run by the Canadian Food Inspection Agency and is designed to meet current disease guidelines from the World Organization for animal health as well as trade requirements from importing countries. Our members' participation in these types of programs contributes significantly to industry and consumer confidence in the products we produce.
Fourth is scientific research. Agriculture and the food system as we know them have changed rapidly over the past 10 to 15 years, and it is unlikely that the economic and socio-economic drivers behind this pace of change will decline. Poultry research is a vital factor for the Canadian turkey sector in terms of productivity, economics, competitiveness and food quality assurance, as well as general societal concerns about poultry farming and food production; for example, the environment, bird care and food safety.
In terms of productivity, it takes 30 per cent less feed today to produce the same amount of turkey meat compared to 30 years ago. This is a direct result of improvements along the supply chain, from enhanced feeding programs and formulations to management practices on the farm, something we realize has a real tangible result.
Through research, Turkey Farmers of Canada seeks to keep pace with the ongoing competitive changes in the Canadian marketplace while maintaining expectations of the Canadian consumer through innovation and excellence in turkey production and providing a high quality and healthy product to customers.
In 2010, the TFC research committee conducted an environmental scan to assess the strengths, weaknesses, opportunities and threats presented to the research industry of our industry in Canada. Referencing this information, a formal TFC research strategy was drafted and approved by the TFC board of directors in May 2011. Our research strategy lays out a viable research program specific to the needs of the Canadian turkey industry from the hatchery to the final product that keeps pace with ongoing changes on-farm and in the marketplace to ensure continued innovation and competitiveness.
The development of the TFC research strategy is complementary to and partially the result of the work of and support from the Canadian Poultry Research Council. We, in partnership with the CPRC, are committed to reducing human health risks from entering the poultry value chain; continuing to promote the prudent use of antimicrobials and increasing the use of antimicrobial alternatives; enhancing existing and developing new production methods and strategies to further improve the well-being of Canada's poultry flocks; and developing functional and value-added products that enhance the health and well-being of Canadians and also meet niche market demands.
Under market research, one of the five key elements of Turkey Farmers of Canada's ongoing business plan is to probe opportunities and the development of our sector's value chain within the context of the TFC mandate and our role in this industry. By addressing challenges and creating stronger production and marketing relationships, we hope to generate and nurture opportunities at both the farm and the firm level. We have identified the need for a turkey market development committee and we have developed terms of reference for this committee, which is expected to begin full operation in early 2012. Committee members will include producers, processers, representatives from the Canadian Restaurant and Foodservices Association and the Retail Council of Canada, as well as a Canadian registered dietician and even a Canadian foodie or chef. The committee will work toward creating opportunities for our farms and firms by encouraging the consumption of turkey, researching the needs and wants of consumers and food service outlets, influencing the retail sector to increase turkey representation in store, and making recommendations to the TFC board.
In 2008, a comprehensive turkey nutrient value analysis was jointly undertaken by TFC and Health Canada. At that time, the nutrition information for turkey meat on Health Canada's Canadian Nutrition File was primarily out of date and the information was sourced from the United States. Obviously Canadian data is key in developing our research strategies.
Sixth on our list is promotion activities. The most valuable and sustainable market for Canadian turkey farmers is the domestic market. Over the last 18 years, the industry has seen the retail market share for further processed products increase from 15 to 22 per cent in volume. More important, though, in terms of value, sales of further processed products have increased from 33 per cent of sales dollars in 1993 to 56 per cent in 2010, a huge increase.
Canadians have repeatedly said that they want Canadian-produced food and that they support Canadian farmers. In many surveys over the years they say we should produce enough Canadian food to satisfy our needs, that food produced in Canada is a lot or somewhat better than food produced elsewhere, and that they trust the Canadian farmer.
In 2010, the Turkey Farmers of Canada participated in consultations with staff from Agriculture and Agri-Food Canada with regard to the development of the Canada branding initiative, which aims to clearly define Canada as a brand and highlight the benefits and attributes inherent with products of the Canadian agricultural industry.
In November 2011, TFC received approval to use the Canada brand identification in web and email communications to generically promote Canadian turkey and the Canadian turkey industry.
Promotion programs or generic marketing initiatives provide the industry at large with the means to inform consumers about the benefits of turkey meat; for example, health benefits, nutrition information, taste, quality and other intrinsic characteristics. These programs are paid for by farmers through levies or check-offs on their production. Part III of the Farm Products Agencies Act allows for the establishment of promotion and research agencies under which national research and promotion programs can be developed and funded.
In 2002, Canada established the first such agency — the Canadian Beef Cattle Research, Market Development and Promotion Agency. This could be of benefit to the turkey industry as well. TFC, which is a Part II agency under the Farm Products Agencies Act, will be pursuing the authority to apply a check-off to import, but without having to create a separate governance and administrative structure.
Number 7 is market segmentation. Market segmentation is an economic concept that in the simplest terms means developing a commercial advantage through product differentiation. When done correctly, market segmentation and product differentiation allow the industry to divide end users into groups so that supply and demand, as well as the price relationship of both, is in equilibrium.
We allocate several classes of quota that are end-use based. The agency's primary multiplier breeder quotas are established to cover the marketing of mature turkey meat domestically, but the intent is to ensure that these two segments of the industry, which have a significant export dimension for breeding stock — for example, eggs and poults — which are not import controlled can expand or contract in correlation with the international market.
On the domestic side, our agency allocates quota for whole turkeys that are primarily marketed and consumed during the festive seasons we are all familiar with — Thanksgiving, Christmas and Easter — and are fairly stable markets. The further processing segment is our sector's growth driver and the part of the market where innovation abounds. This segment encompasses raw cut up parts, deli meats, roasts, niche products, et cetera, and is allocated based on individual processor requests.
This market-driven approach to allocation is required to service what is seen as the highest value market segment of the industry that holds the most promise for growth in the coming years. Contrary to what some critics of supply management argue, we at TFC, along with our other counterparts in supply management through our mandate, create an environment for product development and innovation.
In conclusion, as committee members are well aware, the next decade will bring challenges but also opportunities for Canadian agriculture and the agri-food industry, including our sector. As consumers taste change and the demand for more specialty products grows, market segmentation and product differentiation provide opportunities to maximize sales if we can outpace our competitors to deliver these products to the marketplace. This means having timely information on consumer trends and a supportive platform from which our members' sectors can pursue innovation in production, processing and product development all to improve our competitiveness.
This brings us full circle to the concepts of the value chain: market research, promotion, food safety, animal care and scientific research. They were all addressed earlier in this presentation.
At this point, I would like to thank you for your time and, again, if there are any questions I would be more than happy to answer them.
The Chair: Thank you.
I will ask Mr. Middelkamp to make his presentation and then we will move on to questions. I have been informed that senators have read most of the documents that were sent to us, but not the recommendations, so maybe you will have some questions on those and recommendations also.
Jacob Middelkamp, Chairman, Canadian Poultry Research Council: Mr. Chairman, on behalf of the Canadian Poultry Research Council and its member organizations, I would like to thank you for the opportunity to appear before the Standing Senate Committee on Agriculture and Forestry.
The Canadian Poultry Research Council was established in November 2001 to provide funding and coordination for national research activities for its members, which include Canadian Hatching Egg Producers, Canadian Poultry and Egg Processing Council, Chicken Farmers of Canada, Egg Farmers of Canada and Turkey Farmers of Canada.
CPRC's mission is to address its members' needs through dynamic leadership in creation and implementation of programs for poultry research in Canada. It may also include social concerns. Our organization began funding research in 2003 and members have since approved nearly $3 million in research funding through CPRC. Those funds have helped support in excess of $11 million of Canadian poultry research.
In addition to funding, CPRC activities include acting as project manager for poultry research cluster program funded by Agriculture and Agri-Food Canada under the Canadian Agri-Science Clusters initiative section of the Growing Forward program, industry and other provincial funding choices. I will now address the specific areas of interest for the terms of reference.
Developing and maintaining markets: The research in innovation has the potential to improve products and also create opportunities for economic benefits from research outputs. Many discoveries have application beyond Canadian borders. Universities and other research institutes are increasingly supporting research and education through royalties collected on commercialization. Research impacts are also important in maintaining existing markets, especially in areas of food safety and poultry welfare.
Consumers have become much more aware of food-related health issues and are seeking information on how their food is being produced. Almost half of the projects funded by CPRC have an element of food safety involved. CPRC, in cooperation with Agriculture and Agri-Food Canada, the Poultry Research Council and University of Guelph established the Poultry Welfare Centre to conduct research on housing, transportation and handling systems and their impact on bird welfare. Many of these initiatives are designed to enhance the credibility of the Canadian poultry industry with consumers and society as a whole, to maintain and increase demand for poultry products.
Enhancing agricultural sustainability: For the purpose of this presentation, we use the definition of agricultural sustainability from the United Kingdom Department of International Development. Agriculture is sustainable when current and future food demand can be met without unnecessarily compromising economic, ecological and socio-political needs.
Based on a 2010 study, poultry production created the smallest carbon footprint of any Canadian livestock sector. Research is one of the most important tools to maintain and enhance agricultural economic sustainability. While CPRC generally funds research into the technical aspects of poultry production, other industry participants conduct research on consumer opinion and desire, as well as social issues. The results of this broad range of research move along the research value chain to create commercial opportunities for all stakeholders in the industry while meeting consumer needs.
Improving food diversity and security: While the diversity of food available in Canada to Canadian consumers has increased significantly over the past decades, the genetic diversity of livestock and plants that provide food has narrowed. Breeds that have desired traits are emphasized. CPRC and Egg Farmers of Canada support the maintenance of poultry genetic diversity through a research project to investigate storage of poultry genetic material.
Many of our research projects relate indirectly to Canadian food security by investigating the unique conditions under which the Canadian poultry value chain supplies poultry products to consumers. A viable and sustainable Canadian poultry value chain will ensure that Canadian consumers have secure access to a broad range of healthy and attractive poultry products.
I would like to provide a few examples of industry applications from CPRC support research.
Two projects have discovered methods of influencing gut bacteria in poultry. One project researched the enhancement of beneficial bacteria, while the other investigated protection against disease-related bacteria. Both projects will help reduce the use of antibiotics in poultry products and are currently being commercialized.
Two projects investigated the use of lighting in poultry barns to enhance bird welfare and productivity. Information from both projects is being developed by the industry.
Two research projects address vaccines to reduce the need for antibiotic treatments. The results of both projects are in the commercialization stage and will soon be available for poultry producers.
This sample of results indicates the value to the industry, economy, consumers and society of a strong Canadian poultry research system.
Research and innovation are of vital importance to the poultry sector. The industry recognizes this fact and continues to take steps to support our Canadian poultry research value chain. The Canadian federal government is an important partner in our efforts through its internal research capacity, communications ability and funding. We recommend that the Government of Canada commit sufficient funds to poultry research and innovation to maintain and enhance the present system's capacity; recognize the structure of the research value chain so that all parts, from primary research to application and commercialization, are sufficiently funded; establish structures to support communication aimed at adoption of discoveries and innovations as quickly as possible; and establish structures to cooperate with other interests, such as health, education and environment, to address common issues.
I would like to thank the committee, and I am willing to answer questions.
The Chair: Thank you very much, Mr. Middelkamp.
Senator Robichaud: All three of you talked about research, and it is done currently. What percentage of that research is funded by the producers? In your last presentation, you say that you encourage the government to commit sufficient funds to poultry research. What would be sufficient funds from the government?
Mr. Middelkamp: When you have the cluster for Growing Forward, if I am correct, two thirds is from the government and one third is from the producers. We would like to keep that so we can do more research for the poultry industry.
Senator Robichaud: You say two thirds is from the government, which is Agriculture and Agri-Food Canada.
Mr. Middelkamp: Yes.
Senator Robichaud: One third comes from producers?
Mr. Middelkamp: Yes.
Senator Robichaud: When you say "maintain sufficient," is there any threat or any indication that you would be losing part of that?
Mr. Middelkamp: Not at this moment.
Senator Robichaud: I will not ask you to look into the future.
You say "research and innovation." How hard is it to communicate to your producers the results of research that would "innovate" certain practices in the industry?
Mr. Fuller: We do have a communication plan where we provide our producers with that information. More important, as a little bit of response to your first question as well, the infrastructure needs to be in place that allows us to do that research and it is important that the federal government maintain that infrastructure as well as the funding that comes along for the research that we need to continue to move our industry into the future. Our goal, of course, is to continue to provide Canadians with high-quality fresh meat. We continue to look for the government to help us deliver on those aspects of that.
Mr. Davies: Currently at TFC we are taking much the same steps. Communication is key from the grassroots. At this point in time, we are trying to target specifics, one of them being the antimicrobial issue we are all aware of now and trying to get a feel for on-farm practices in a more detailed way than we have in the past so we are aware of what we are dealing with and what direction we have to move in the future. I think it really comes from the grassroots. The farmer is the one who lives it day to day and is very aware of the importance of research, even at that level.
Senator Plett: I want to continue along the line that Senator Robichaud already asked.
Just to clarify, Mr. Middelkamp, when he asked for percentages, I thought you said one third government and two thirds producer. It is the opposite, and two thirds government is correct.
Mr. Middelkamp: Yes.
Senator Plett: For the one third that is raised by the producers, how are the levies put forward? I think you collect levies on imports. I would like you to answer what that is, as well as how the levies are put on the producers in Canada.
Mr. Fuller: First, you mentioned a levy on imports. We do not collect a levy on imports at this present point in time. We were talking about a promotion of a research agency, and moving down that road would allow us that opportunity to collect levies on imports.
Senator Plett: You are correct. I see that.
Mr. Fuller: In the chicken industry, as a national organization, we have set up an endowment fund and have continually put money into it. Only the interest from the endowment fund is used for research. That is how we obtain the money for research that we use to access some government money for research projects. It is not a levy. It is money that is collected through levies, but the organization has made a decision that we will build an endowment fund of $10 million and that at Chicken Farmers of Canada we will only use the interest for research.
Senator Plett: As a chicken farmer, do you pay to the research council X number of dollars per chicken marketed, and Turkey Farmers of Canada the same thing? Do you pay the council? I assume the research is done through Mr. Middlekamp's council and you pay them. Is that correct?
Mr. Fuller: Yes.
Senator Plett: How do you collect the money?
Mr. Fuller: We collect levies from farmers that go to a number of different reasons. Part of the money collected ends up in the research component of our budget.
Mr. Davies: It is much the same way with us. It is out of the general levy collection, which we have identified as a priority. We have a commitment to CPRC for the funding as the other agencies have. It is out of the general revenue.
Senator Plett: On import-export issue, I think turkey farmers are net exporters. Is that correct?
Mr. Davies: Yes.
Senator Plett: What percentage of turkeys are exported and where?
Mr. Davies: The actual figure I would not know, but mostly to the U.S. Our market is segmented historically into white and dark meat. It is a breast-driven or white-meat-driven market in Canada. Some of the darker cuts would be exported primarily to the U.S.
Senator Plett: I love the dark meat. How about chicken?
Mr. Fuller: These are not exact numbers, but I would suggest that we export about 6 per cent of our market. The reason, as Mr. Davies just indicated, is that Canadians prefer white meat over dark meat. We export dark meat to places like Cuba, South Africa and the Philippines, and we import white meat mainly from the United States and some from Brazil. Those would be the two.
Senator Mercer: It is always good to have people here who work on the farm, in particular in Nova Scotia.
Mr. Middelkamp, your presentation said that since 2003, members have approved nearly $3 million in research funding through the Canadian Poultry Research Council. Those funds have helped to support in excess of $11 million in Canadian poultry research. The $3 million has acted as a lever to get money from other groups, in particular governments, to conduct that research. It has been a good partnership.
Mr. Middelkamp: That is correct. The Canadian Poultry Research Council was formed in 2001 by the full poultry board processes. All five members put money toward research projects, as well as to the administrative side.
Senator Mercer: Mr. Fuller, you mentioned that you wanted the Canadian Food Inspection Agency and the Canada Border Services Agency to monitor the quality and safety of imports; and you talked about the availability of import data. Are you saying that no data is kept on what we are importing and from where?
Mr. Fuller: No, I am not saying that. Data comes to us from Agriculture and Agri-Food Canada and from Statistics Canada. It tells us where it comes from. Is it 100 per cent accurate? One only can hope that it is. Our hope would be to get more accuracy.
Regarding your first question, we believe that there is a demand on food producers in Canada to provide a product to Canadians that is safe and nutritious. We believe that an imported product must meet the same conditions as a domestically produced product. If you want us to compete, then we have to compete on a level playing field.
Senator Mercer: Do you take an opportunity to test Mr. Davies' turkeys against those produced in the U.S? Is that part of the research? Do you test the competition's product to make sure it is up to our standards?
Mr. Fuller: No, we do not test product. The Canadian Food Inspection Agency is in charge of ensuring that product entering Canada meets the same standards as Canadian product.
Senator Mercer: Is testing available to you?
Mr. Fuller: I am not aware of any testing or data that would be available.
Senator Mercer: Mr. Fuller, you said that all of your chickens are grain fed. I assume that applies to turkeys as well. We are often concerned in this committee that the price of grain is too low. Of course, you are concerned that the price of grain is too high. I do not want to get into a fight with my friends, the grain growers.
Generally, where do you get your grain? Would a turkey or chicken farmer in any part of the country buy their grain locally? Would it come from the major producers in Western Canada or from local farms in your area?
Mr. Fuller: I can speak first. The product is either bought locally or comes from other parts of Canada. In our region in Atlantic Canada, we do not have the land base to grow enough corn to fulfill the need, so we bring the corn in from Ontario. The grains come from Western Canada. Wherever the product is needed, we move it, but it moves within Canada.
Mr. Davies: Exactly. I echo Mr. Fuller's comments. We have to keep in mind that it is a world price no matter where you obtain it. We all know what the commodities market has done and how it has performed over the last four or five years.
Senator Mercer: I would assume that the use of biofuels and corn is affecting you, which has a detrimental effect on the retail price at the supermarket.
Mr. Davies: Yes. The percentage of corn in particular that has gone into the ethanol industry in the past year has eclipsed the amount of feed corn that has been produced. We are seeing the tipping of the scales and its results in higher-priced grains.
Senator Plett: On that last comment, are you not feeding your birds corn because it is going somewhere else, or are grain-fed birds just much better than corn-fed birds?
Mr. Davies: Corn is still a huge part of the diet. It is just the effect of the cost increase because of the subsidies in the biofuels industry.
Senator Plett: You would still use corn.
Mr. Davies: Yes.
Mr. Fuller: I have a clarification. When we, as a meat industry, talk about grain, corn is included because corn is a grain.
Senator Plett: Thank you.
Senator Nolin: I am a new member to this committee, so excuse my lack of knowledge. I eat a lot of chicken and turkey. When it is well done, it is very good. I will try your recipe.
For clarification, Mr. Middelkamp, you talked about government funding for research. Is provincial and federal funding in the two thirds that you mentioned or is it only federal?
By the way, in Senate committees you can talk to me directly. It is much more open here than it is in committees of the House of Commons. You can answer me directly.
Mr. Middelkamp: When there is a research project, provincial government money is involved, which gets taken out of the federal government's money.
Senator Nolin: I will tell you exactly why I am asking you the question. Our research is telling us that in 2010 the federal government provided 49 per cent to your organization and the provincial government provided 22 per cent. That adds up to 71 per cent.
I am trying to understand your testimony with the figures that we have been provided by research. That is my question. Then I will have a question for you on hormones.
Mr. Middelkamp: I do not know the numbers exactly. I can get back to you later.
Senator Nolin: Then you can answer to the chair and he will absorb that information.
The Chair: You can provide the information to the chair through the clerk, Mr. Middelkamp.
[Translation]
Senator Rivard: Your presentation was so excellent that you answered a number of my questions without me having to ask them.
You mentioned that most exports go to the United States. Is the poultry you export live or ready to eat, or both?
[English]
Mr. Fuller: Exporting to the U.S., no. The percentage we would export to the U.S. would be very small.
There is a program in Canada that is called the Import for Re-Export Program, where companies in Canada have the opportunity to import, work the product and it has to go back out. That is not Canadian product. That is U.S. product that is moving in and back out. As far as Canadian product moving to the U.S., it would be very small.
[Translation]
Senator Rivard: I would like to draw a parallel with pig farming. We recently heard from witnesses who explained to us how pig farming was being done more humanely. Have your research and innovation projects helped improve the quality of poultry farming or do you use traditional methods instead? Has poultry farming evolved? And if so, is that as a result of innovation?
[English]
Mr. Fuller: What I can tell you is that at Chicken Farmers of Canada, we have initiated and put into place an animal care program. It is a program that all farmers in Canada will be under. It has been introduced. It is out in the field and a number of provinces are completely, 100 per cent on it. We are still working across the country to ensure everyone is there, but it is an auditable animal care program that looks after the interests of, in our case, the chicken.
[Translation]
Senator Rivard: From an environmental standpoint, how do you treat the residues of poultry, whether it be chicken or turkeys? We could joke and say that their feathers are used to fill pillows, but I believe that would mean too many pillows. How do you handle the residues after slaughter?
[English]
Mr. Davies: There are a number of different ways from composting. It is part of our flock care program or our industry overall. Provincially, it is mandated a lot by the provincial environmental departments in how it is put in place. There are varying degrees across the country, but it is important to growers that it becomes that cycle that is respectful of the environment.
These types of programs are usually composted. They are very aware of the clean-out of barns and the biosecurity measures that have to be in place when you are dealing with this type of product. It is something that is top of mind with producers and is integrated into our programs.
Senator Eaton: I loved reading your three presentations. I have lots of questions, but I will control myself.
To both Mr. Fuller and Mr. Davies, when you talk about the Canadian turkey and chicken — safe, excellent, nutritious — we are looking in this committee right now at the export market and innovation. Have you tried to consciously create a strong brand for both chickens and turkeys? In other words, the Canadian chicken or turkey someone buys on an American supermarket shelf or anywhere else is all of these things. Have you developed a brand?
Mr. Fuller: I can tell you right now that our board has identified and we are in the process of doing a branding strategy. We are in that process, looking for, hopefully before the end of 2012, to come up with a branding strategy for Chicken Farmers of Canada.
Mr. Davies: Within the turkey industry, as I indicated in my presentation, we are adopting the brand Canada, so we are able to use that in our web-based items. We have gone down the road of the generic promotion in the past. Unfortunately, it did not pan out the way we had envisioned.
Senator Eaton: I read that you were picking up the nutritious part of turkey from the U.S. websites.
Mr. Davies: That is the old information. We have now gone to our own Canada-based information. That will be a huge tool for us to use because it is specific to our industry and to our consumers here in Canada.
Senator Eaton: Are you developing a brand as well?
Mr. Davies: Very much so, yes.
Senator Eaton: When you talk about productivity, are you looking at new markets? Are you looking to export more product or do you think that Canada will give you enough outlets for your product?
Mr. Fuller: I think it is important to understand what kind of system we work under. Both turkey and chicken are under a system called supply management. Supply management is domestic; it is not meant to go out into the export market. Our objective is to fill Canadian needs, taking into account what comes into this country. We absolutely look at every opportunity that is out there.
Senator Eaton: Say Canada entered into trans-Pacific free trade with New Zealand and Japan down the line. Will you get out there and hustle? Is this something you would like to do, or would you prefer to concentrate on this country?
Mr. Fuller: If Canada enters a trans-Pacific partnership, Canada, in the chicken industry, will be the second largest exporter in those member countries. The U.S. is the only country that exports more chicken than Canada in that group of countries.
We are absolutely committed for Canada to get involved in these negotiations. However, in all honesty, I have tell you that we expect Canada — as they have in the past through WTO and bilateral negotiations — when they get to the sensitive sectors, will find an avenue in which they can put supply management.
Every country in this world has sensitive sectors, whether it is agriculture or not. We are not unique and we look for this government — as the previous governments have — to make it clear that supply management is a tool that will not be put on the table, because we know exactly what supply management delivers for Canada, especially rural Canada.
Senator Eaton: Not touching the supply management issue, because you have obviously the expertise and you are the largest exporter of chicken in the world, would that not give you a head start to explore a lot more if the markets were open to you?
Mr. Fuller: I think we have to recognize that in chicken production there are five major players in the world. Brazil and the U.S. account for probably 90 per cent of the exports. Thailand is a small player, but most of the exports are done from the U.S. and Brazil. They have a scale that is completely different than Canada. For example, with respect to the grain production in Brazil, they are cropping twice a year now. The cost of producing chicken in the U.S. is half the price it is in Canada. When you go to Brazil, it is half the price again as it is in the United States.
Senator Eaton: Is that labour as well as grain?
Mr. Fuller: It is everything involved. You live in a different environment in Canada than we do in the U.S., and they live in a different environment in Brazil.
Senator Eaton: Is the quality the same?
Mr. Fuller: There is product that comes from the U.S. and Brazil into Canada now, and according to the Canadian Food Inspection Agency it meets the criteria to come into the Canadian economy.
Senator Eaton: Mr. Middelkamp, in your very interesting presentation you said that the genetic diversity of livestock and plants that provide food is narrowed and breeds that have desired traits frequently related to production characteristics are emphasized. Is taste one of them? It seems to me that we are so busy producing food that is safe that taste is sometimes not uppermost. Has that come back, especially with artisanal farmers providing locally grown food to restaurants and with "trace your product," which is becoming more and more the thing in restaurants? Do you discuss taste?
Mr. Middelkamp: We discuss taste at home.
Senator Eaton: Is this something that you consider when looking for desired traits?
Mr. Middelkamp: To my knowledge, we do not discuss taste. Every person has a different taste. You have different taste than I, but as far as I know we do not talk about that in our research.
Senator Eaton: When you do the brand work that you are about to do, will you emphasize taste as well as nutrition?
Mr. Davies: Ours speaks for itself, I think. That is one of our main selling points.
Senator Duffy: There are a lot of very interesting questions. Presumably the taste changes depending on the feed mix. Certainly that is what they tell us about beef. I say that as someone who has tried a bit over the years.
I am intrigued by the notion of import for export. In the world around us, more and more of our processing has been shipped offshore to low wage/cost areas. Can somebody explain to me the economics of bringing a product to Canada, processing it here and re-exporting it? If it works for you, why would it not work in other industries? What is the magic there?
Mr. Fuller: There are a couple of things that we must recognize. Under this program other things happen as well. It creates jobs in Canada, to be frank, but they do not make only products that go back out. They make products in Canada that stay in Canada. That is just one component that they have, one program they can use as a company. There are different avenues that they can use, and this is one. They make products for Canadians, and they also have a program that allows them to bring in product from the U.S. and rework it, and it has to go back to the U.S. It cannot stay in Canada. It goes back to the U.S. and competes in the American market.
Senator Duffy: That allows them to expand?
Mr. Fuller: Exactly.
Senator Duffy: It is better capacity utilization of their facilities.
What is the price difference between a turkey or a chicken processed in that same plant, one going to the domestic Canadian market and the other imported and sent back out? You also talk about competing on the international market. Would you be selling product into the international market at a price lower than Canadians can buy it here?
Mr. Fuller: No. When we talk about supply management, we talk about commitments Canada has made to import product. In the chicken industry, our commitment is 7.5 per cent of our previous year's production. Last year we grew about 1 billion kilograms of Canadian domestically produced chicken. That allowed approximately 80 million kilograms to come directly into this country tariff free. That product is what goes to these companies and then on to the Canadian market.
Senator Duffy: So it is managed trade with the United States? We have agreed to accept that much?
Mr. Fuller: Yes, and it is not just the United States.
Senator Duffy: We have a similar thing with softwood lumber.
Mr. Fuller: Yes, but it is a lot broader than the United States. In the chicken industry we import from Thailand, Brazil and Chile. We have commitments with members from around the world from which we import product.
Senator Duffy: Finally, just to be clear, no one in the current government has done anything other than support our supply management system in all of the various fields. Despite what you might hear, do not believe for a minute that it is on the table. That is called freedom to market.
Finally, with regard to employment and factory farms versus large corporate farms, are there any small producers in the chicken or turkey business?
Mr. Fuller: Absolutely. The factory farm is a definition that we do not like because it is an incorrect definition. I am from Nova Scotia where there are 85 small farms. They vary in size because you build some efficiencies with size, but there are many family farms in my province and right across this country. We represent family farms. Their size varies greatly, but family farms are who we represent.
Senator Duffy: Twenty or more years ago when I was covering similar such meetings, there was a concern about the uneven nature of the turkey market. There was Thanksgiving, Christmas and Easter, and then another five or six months where the business was not as good. Part of the plan at that time was to increase marketing of white meat as being healthy, tasty and easy to prepare; all of the good things that it is. How has that evolved over the years? Have consumers' tastes increased? Has your market share increased and have some of those spikes evened out a bit?
Mr. Davies: A challenge we have always had in the turkey industry is getting people to think of it outside of those three festive times of year. As of late, we were seeing a more balanced approach to consumers' desire for the bird. Thigh meat and dark meat is now becoming a popular commodity. Parts that used to be exported are now being developed for products domestically. Part of that is a price point. We see that as part of the economics challenges we have had in the last few years.
It is still primarily a white-meat-driven commodity, but that is our chance. I think we are making inroads. We have divided our allocation into further processed versus the traditional whole bird market, which really focuses on those three festive times. Further processing is sort of a bottom-up approach. If the processor asks for it and he can justify that it is new business and an innovative product, he is awarded that allocation so that he can develop products. That is seen as our driver, as I indicated in my presentation. That has been a huge driver over the last couple of years. To be honest, that is where the growth is in our industry at this time.
Senator Nolin: Mr. Fuller, my question is directed to you, but your colleagues may jump in if they have some information.
My question is about the use of hormones in your industry. A few weeks ago I was listening to the CEO of an important restaurant chain from Quebec who sells a lot of chicken. He was asked about hormones in chicken, and his answer was, "If I do not use that chicken, my selling price will be too high for the consumers to come to my restaurant."
What do you have to say to Canadian consumers who are listening to us tonight? To what level are you using hormones? What is the downside of using hormones and what is the upside?
Of course, Mr. Middelkamp, I hope you also have answers to those very scientific questions.
Mr. Fuller: I want to get some clarification.
Senator Nolin: Well, do not ask me for clarification. I eat chicken, but my understanding about chicken is listening to that CEO and listening to you.
Mr. Fuller: If the discussion is on growth hormones, they have been illegal in the chicken industry since the 1960s. We do not give growth hormones. That is why I was trying to seek the clarification, because if it was a hormone issue that is one thing. If it was something else that is another thing and that is why I was seeking the clarification.
Senator Nolin: Hormones are a no-no, but are there other substitutes to help to grow the birds?
Mr. Fuller: No. Again, I am just making an assumption here because I am aware of the interview you are talking about. I believe it was on antibiotics.
Senator Nolin: Maybe. Does it affect the price of the chicken?
Mr. Fuller: I believe the discussion was on antibiotics. We can raise chicken without antibiotics. Does it cost a little bit more? Yes, it does. We do it now in some parts of this country. There is no question of whether we can do it; yes, we can. We were going to increase it, and I am sure Mr. Middelkamp will make some comments on this one.
Senator Nolin: I hope.
Mr. Fuller: However, there is no question that we as an industry are geared and ready to do some things that are necessary, but people have to understand that there is a cost in doing that.
Senator Nolin: Okay, so for hormones it is a no. It is illegal.
Mr. Fuller: Growth hormones.
Senator Nolin: Can everybody who is listening to you tonight be convinced that there are no hormones, no such thing?
Mr. Fuller: Growth hormones are illegal in the chicken industry.
Senator Nolin: Okay, good.
Do antibiotics help the price? That CEO was talking more about the price for the consumer in his restaurant.
Mr. Middelkamp: Just on what Mr. Fuller said already regarding the use of antibiotics, we can raise the poultry without antibiotics, but then the price goes up and it takes longer for the birds to grow.
Senator Nolin: What is the margin between using it and not using it? Is it a large influence on the price or it is marginal? Is it 5 per cent or 12 per cent?
I think Mr. Fuller has an answer.
Mr. Fuller: I do not have an answer at this point. We do not have an answer on this. There has been some work done. We are trying to get it down, but there is an additional cost. There is some production in Canada now that is done that way, but I have not asked and they have not shared with me what the additional cost is to do that.
Senator Nolin: When you get that information can you inform the clerk? When you hear the CEO of an important food chain talking about the influence of it, he was basically saying to consumers that if they want to keep paying $10 to eat chicken in his restaurant, they have to accept that there will be additives to the chicken on the plate. I am trying to explore that. That is my intent.
Thank you for your answers.
Mr. Davies: I just want to be very clear.
Senator Nolin: I love brown turkey meat.
Mr. Davies: I appreciate that.
I know it was stated, but the same is true in the turkey industry. There is no hormone use. There is a basis for a lot of our farmers, me included, trying not to use anything. That is the way of the future. You want less and less going into the bird. You want it more natural. That is what the consumer demands. However, all of this research and all of these steps cost money. You are really on the point when you talk about the CEO and he is well informed in the fact that he realizes it is a cost that has to be passed on to the consumer. It is what the consumer demands. At some point they have to be willing to pay for it.
Senator Nolin: The consumer could be willing to pay an extra few per cent. He may not even notice the increase, but it depends on the amount of the increase. In listening to that CEO it seems to me that it was of huge importance. I understand that you are also aware of that interview.
Mr. Fuller: Yes.
Senator Nolin: He is probably buying millions of chickens every day.
Mr. Fuller: The other thing everyone needs to recognize is for the production of our products at "X," what the consumer pays is "Y" and farmers have no say on the end result.
Senator Nolin: Of course; I understand that.
Senator Duffy: On this question, we hear in the media about Frankenfood. People talk about drugs or other things that are injected into poultry or other birds. Can we make this clear? Growth hormones are not injected into turkeys or chickens, which would cause them to grow faster, but to prevent chickens and turkeys from becoming ill while they are in the pens with the other chickens, some producers give them antibiotics to make sure that we do not have sick birds spreading disease from one to the other. Is that not the reason antibiotics are used, to keep all of the birds safe for our consumers?
Mr. Davies: I believe that is a fair statement.
Mr. Fuller: Yes, I would agree with that.
Senator Duffy: Thank you.
Senator Robichaud: I heard that there was research being done to reduce the use of antibiotics. Was there not?
Mr. Middelkamp: That is correct. The research is done. There is still research going on to reduce the antibiotics, and the results are not in yet.
Senator Robichaud: However, over the years, has there been a reduction in the use of antibiotics.
Mr. Davies: Yes. Another thing is that we are always looking for natural substitutes for anything like an antibiotic or a vaccine. That is one of the focuses and that is the future.
[Translation]
Senator Maltais: I am new to this committee and to the Senate. My colleagues have asked a number of questions. Mine will concern the consumer directly. In one of your briefs, you mentioned work that you have done on Omega-3 eggs. Is that the result of your research, or an order from consumers? How did you discover Omega-3 fats in eggs? Are they really there or is that a grocer's trick?
[English]
Senator Nolin: Maybe someone should repeat the question for the gentlemen to answer. Did you understand the question?
Mr. Davies: We were struggling with the fact that it is probably the Egg Farmers of Canada's issue more specifically than ours.
[Translation]
The Chair: That is not an issue for them.
Senator Maltais: Do you have any control over the feed for your poultry? When your producers show up with containers of grain, do they have a way to ensure that the grains distributed to the poultry are indeed grains that meet your criteria?
[English]
Mr. Davies: Most growers, at least the ones we represent, obtain their feed through registered feed mills, usually federally inspected feed mills. Some do it on farm, but they have very rigid and stringent programs they must follow and protocols to ensure the quality of the feed. That is monitored by government regulation. It is something that may vary slightly between feed companies with competitiveness and trying to tweak the formula of the combination of grains, and whatnot, in order to get the optimum result. However, they must follow very stringent guidelines as far as transport is concerned and what is allowed in the feed and the mixture before it arrives at the farmers' establishment.
[Translation]
Senator Maltais: When Canadian consumers buy a chicken or turkey at the grocery store, the packaging states that it is a product of Canada. How can consumers in restaurants be sure that they are in fact eating a product of Canada and that it is indeed the poultry stated? How can they check?
[English]
Mr. Fuller: To the question, we are getting a little bit caught off-guard, if you do not mind me saying, Mr. Chair, because we are here is to talk about why we believe the government needs to be involved and the government needs to help work with farmers to share the responsibility. Our number one priority is that we give Canadian consumers good quality food, and we do that by the development of a number of different programs. We need the government to be cooperative and act with us to help implement those programs and make sure that we have the dollars to continue to provide Canadians with that product. The most important thing to our industries is that Canadians are eating good, quality product. That is what our objective is, and we need the federal government to help us put programs into place, carry those programs on and be able to make sure that we do, in fact, deliver to give consumers what they want, and that is Canadian product.
[Translation]
Senator Maltais: What measure would you advocate to ensure that consumers in restaurants can be certain they are eating a Canadian product? How do you see that?
[English]
Mr. Fuller: I am sorry, Mr. Chairman. We are getting caught off guard here a little bit. I think that we need to have a talk about those kinds of things and have a session on how we do those kinds of things. Today, we are here to talk about research and innovation, and we have to be careful that we want to ensure we deliver our message, which is what we are trying to do.
Excuse me, Mr. Chairman, but we are kind of diverting a little bit. We want to make sure that this committee understands clearly how important research and innovation is to our industries and what we need from the federal government for our industries to be able to move to the future in innovation and research.
Mr. Davies: If I could, if I had my way, of course that would be something I would like to see in black and white in a restaurant so people know what they are eating. You have to look at a number of factors getting that product to either the restaurant or to the grocery store. It depends on the definition of "Canadian." I know that is something that industry struggles with, and not just the food industry. Some of your input or some of the grains we have identified may come from across the border. Does that constitute as not being 100 per cent Canadian? There are a number of questions that have to be asked before we can just take the definition of "made in Canada" and be able to offer that to the consumer. I think those are some of the questions that have to be answered before we can just establish it as a Canadian product.
Senator Eaton: So you have not, as a group, determined what is Canadian? We were looking at innovation in markets. This is important.
Mr. Davies: I would say that we, as a commodity, would probably have a pretty good idea of what we would envision as Canadian, but it is what does the public envision as Canadian, what would the government or regulation —
Senator Eaton: What do you envision as Canadian?
Mr. Davies: I would envision "Canadian" — and I am taking maybe a page from some of the books in the past — as the majority of the product or the growth of the product or the manufacturing of the product taking place in Canada.
I will use our industry for an example. When this was brought to our table a while ago, some of our what are called poults — chickens or chicks, turkeys — do come from across the border and are grown here. The struggle would be, is that a product of Canada when 95 or 99 per cent of the inputs, the growth, the processing, the sale, the transport of it is done in Canada? Would that qualify as being made in Canada by everybody's standards?
Senator Duffy: If we walk into a chicken restaurant when we leave here tonight, what are the chances we were not eating a Canadian chicken? Is importation of chicken to mass chicken restaurants marketers a problem for your industry? I have not heard of that as being a problem in the past.
Mr. Fuller: All I can tell you is that Canada has obligations under trade agreements to allow a certain percentage of imported product into Canada. That product flows into a number of different areas in Canada, including restaurants, retail and the food service. It goes everywhere. I do not know what the chances are that the product you are eating is Canadian or is not. The important thing is it has to be safe for you to eat, and that is why we are here, to make sure that the programs that are put in place are there to make sure that Canadians get high quality chicken and turkey products. We need the government's assistance in trying to make sure that programs that provide confidence to Canadians that the product or food they are eating is safe, and that is what we were here for, is to try and get that confidence and get that support from the federal government.
The Chair: Mr. Fuller, the message has been given by your group.
Senator Plett: Before I go to the initial question I had, I am going to jump on this a little bit and not ask you whether a drumstick is made in Canada but simply ask you something closer to what you could answer. I asked you earlier how much of your chicken was exported and how much turkey was exported.
First of all, our government has been very clear in our support of supply management. Supply management clearly talks about quotas. In order to assure ourselves in Canada that we are eating Canadian chicken, do we have sufficient quotas out there? Are we doing all that we can to make sure that we have enough farmers in Canada raising chickens and turkeys so that we can have the best possible opportunity to eat Canadian chicken or turkey? Clearly, that is the area where you as farmers would be able to do something about it. Rather than not eating any chicken at all, I will eat an American chicken. I like chicken. I am with Senator Nolin, and I like dark meat. I am not going to have much of a problem because it is the white meat you are exporting and keeping the dark meat here — or it is the opposite, sorry. You have an excess of dark meat. Answer that question on the quota. Would we be able to open up more quota? Would that help us?
Mr. Fuller: I will explain to you how we set the production for Canada.
Every eight weeks, our board of directors sits down and we talk about other issues, but our major responsibility is to fulfill the Canadian market and the needs of Canadians. On our board of directors we have farmers, primary processers, further processers and the fast-food retail industry. The different organizations do surveys with their members to see what they feel the need is going to be for the period in question that we are setting allocation. We then sit down and the 14 members determine what that number needs to be. If we need to increase it because the demand is up, we increase it. If we need to lower it because we have softened, then we lower it. There are times in the year, like Christmas, when my friend here does a little bit better in the marketplace than I do. We do that every eight weeks. If we need to increase, we have the capacity to do it. If we need to slow down a little bit, we have the capacity to do that. We always try to make sure that, as in my case, there is always one more chicken than the market needs, so that Canadians have adequate supply of fresh, quality chicken.
Mr. Davies: We are much the same, but we do it once a year and constantly monitor it throughout the year. It is much the same process, without getting into the details. Mr. Fuller mentioned that it is one of the main pillars of the supply management system and inherent in its name is this: to manage the supply to ensure that it matches the consumers' needs in Canada.
Senator Plett: Going back to where we started this evening, I see that the chicken farmers, at least, contribute $2.5 billion annually to Canada's GDP and pay $357 million a year in taxes, which is wonderful. However, this report I am reading also says that your success depends on effective government policy and not on taxpayers' dollars. Yet, one of your recommendations is that the government continue to put money into your system. The government does not have money. It is your money and my money, and that is taxpayers' money.
I wonder if it is a correct statement when you say, "As such, we do not rely on other government programming for our financial and market stability." If you are asking for government help — and I am supporting you — I wonder if it is an entirely correct statement that you are not somewhat dependent on taxpayers' dollars.
Mr. Fuller: Thank you for the question.
The money that flows from the government flows to a lot of commodities in agriculture. The federal and provincial governments adopted and said that every food commodity has a program to ensure that the food is safe for Canada. These kinds of programs cost money. This is where we are looking for investment from the federal government. It was their request. They asked us, as an industry, to do this. We are asking them to help us develop and implement the programs. It is the same with animal care. We do not get any government support directly to our farmers. Their revenue comes from the marketplace. The money we get in the chicken industry is for programs such as on-farm food safety. It would be through research at the CPRC, which farmers also contribute to. We farmers do not take any direct support from any government anywhere. The support is for our programs. We are not asking for anything more than all other commodities are asking for. All commodities are looking for the same thing: Help to develop and implement these programs.
Senator Plett: I support that, Mr. Fuller, but I believe you are splitting hairs.
The Chair: To the witnesses collectively, thank you for giving us your message. We appreciate that you have taken the time to come to the Standing Senate Committee on Agriculture and Forestry on this order of reference specifically on agriculture and agri-food.
There are a few questions that I will ask the clerk to send to you in writing that we would like to have your comments on, for example, the big new retailers in our communities, such as Costco and others, relevant to Canadian products. Also, we would like to have your comments on genetically modified organisms and on imports. Last weekend I participated in a tasting of traditional bacon versus turkey bacon. Believe me, it was quite a beautiful quality taste. You will receive those questions from the clerk of the committee.
(The committee adjourned.)