Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 32 - Evidence - Meeting of April 16, 2013
OTTAWA, Tuesday, April 16, 2013
The Standing Senate Committee on Agriculture and Forestry met this day at 6:41 p.m. to examine and report on research and innovation efforts in the agricultural sector.
Senator Percy Mockler (Chair) is in the chair.
[Translation]
The Chair: I welcome you to this hearing of the Standing Senate Committee on Agriculture and Forestry.
[English]
I welcome the witnesses, Mr. Fitzgerald and Mr. Dickson, to our committee. I will ask the senators to introduce themselves. I am Percy Mockler, a senator from New Brunswick and chair of the committee.
Senator Mercer: I am Senator Terry Mercer from Nova Scotia.
Senator Duffy: I am Mike Duffy from Prince Edward Island.
[Translation]
Senator Dagenais: I am Senator Dagenais from Quebec.
Senator Maltais: Senator Maltais from Quebec.
The Chair: The committee is continuing its review of research and innovation efforts in the agricultural sector.
[English]
The committee was authorized to examine research and development efforts in the context of developing new markets domestically and internationally, enhancing agricultural sustainability and improving food diversity and security. Traceability is certainly a bridge to producing and putting it on the table.
We have two witnesses. Mr. Darcy Fitzgerald is Executive Director of Alberta Pork. We also have Mr. Andrew Dickson, General Manager of Manitoba Pork.
I have been informed by the clerk that Mr. Fitzgerald will make the first presentation, to be followed by Mr. Dickson. Senators will follow with questions after the presentations.
[Translation]
That being said, Mr. Fitzgerald, you have the floor.
[English]
Darcy Fitzgerald, Executive Director, Alberta Pork: Thank you. We provided some speaking notes for you. I will try to be brief with them so we have more time for questions.
The pork industry in Canada has had a number of pressures placed on it, especially over the last 10 years. Some of those concerns are important to try to highlight as we talk about traceability. We have had some trade difficulties where we have seen H1N1 wrongly associated with the pork industry. We have seen country-of-origin labelling, which we are still challenged with today at $2 billion and racking up from our industry.
We are seeing a lack of free trade agreements in some locations — Korea is a good example — which represents about $300 million. It will soon be a lost market if we do not get it. Today we are challenged by the Russian marketplace with the ban on ractopamine, which will cause us some problems in the immediate future.
There are social licence issues that we are seeing, as well as more demands from the public and small groups as well — not the general public, often. Within those areas, it creates some production issues that we need to address and work hard on, from animal welfare to food safety, the environment and, as we speak today, traceability.
Changing policies and support programs that we have seen, in our industry especially, have caused some problems, and those both in Canada and the United States might be related to the policies on ethanol production. We have seen some inflexibility in risk management support programs for our industry especially. That is not to say we have not had some programs that have worked and helped us out, and we appreciate that.
Some lack of negotiating power is probably a big issue for us as we move forward. We are seeing that within the value chain structure itself, and that affects both our pricing and our access to capital to be really self-reliant.
The combination of those pressures and the lack of a real sustainable agricultural policy across the value chain have forced a lot of the primary producers out of the business over the last few years. If we look at the last 12 years for Alberta, we have moved from about 1,200 producers to about 300 today. Knowing that, one would say that maybe they are not efficient. However, the problem is that Western Canadian producers are paid the lowest pretty much in the world but yet still are some of the most globally competitive. There is a problem within the system.
Canadian producers have become really the low-cost providers of high-quality protein with about 67 per cent of our pork products being sold outside of Canada. We traded about 1.2 million kilograms fresh and frozen products to almost 143 countries and at a value of about $3.2 billion. Additionally, we sold about $350 million or 5.6 million live hogs, mostly to the U.S. but to other countries as well, and we are the number three exporter or supplier in the world.
It is unfortunate that prices paid to producers versus the retail prices offered to consumers create a negative return for producers. Right now, we are sitting somewhere in the range of $30 to $35 per market hog, and it has not improved in a while and it is becoming very painful for producers.
Likewise, unfortunately, the price is not differentiated between the cheaper domestic markets, where our consumers do not know the value of what they are buying, versus the more profitable export market. If we look at some of the predatory imported product coming into our marketplace, along with the combined loss leader policy that we seem to have with domestic retailers, we end up with distortion in the marketplace. It creates a rather false sense of what the value of pork is for Canadian consumers. In most cases, consumers are unaware of the origin or the quality of the fresh and frozen products they purchase, at the retail case or in food service. While the value chain uses outdated processes to price domestic pigs, the primary industry is really slowly declining and so too is the $13 billion a year in economic drivers that the industry creates.
Alberta and Canadian pork producers are trying very hard to address and meet the needs of both the marketplace and those expectations of society and the government. However, as we look at the expectations that we try to cover off, both from society and from the government, we need to ensure that the government programs and funding are flexible enough to address the immediate needs, and that can help develop the industry. A balance between innovative and sustainable industry development and research is needed. I try to emphasize that there is a real need between innovation that is in industry development and not just the basic research that seems to get so much money.
In Western Canada, the only government program that we see right now that may provide a level of support for individual pork producers appears to be that of Growing Forward 2, at which time they may be able to do some cost sharing on the lesser societal demands, but we are not sure where that will be. In an industry where you do not have a lot of money, it is hard to take on programs that are matching costs, so it is a consideration.
The federal government's agriculture and research innovation strategies hopefully need to be taken in a balanced approach to help address both research and industry development within the diversity of our very large country. While there are a few important national initiatives before the government related to the Canadian Swine and Health Board, the Swine Innovation pork research group and the Canada Pork International, in some cases we also have to look at regional approaches, which can be very beneficial.
The use of the national traceability system, PigTrace Canada, does put us ahead of our competitors. It is something that we all agree across the provinces will help us. Its flexibility in delivery — Alberta is working with the national PigTrace program — highlights just how you can work on these efficiencies quickly within our industry.
However, we do require financial support from the federal government to develop and maintain a national program that will provide the significant payback while strengthening the industry's position, both globally and domestically. In December 2011, at the request of Alberta Pork producers, the Alberta government introduced its provincial swine movement regulation for farm-to-slaughter traceability requirements. The system is based on a paper manifest that tracks groups in movement. When I go back to this especially, it is groups and not individual animals. Within our industry, that is the preferred choice to move animals and to trace them.
Any movement that uses the public roads requires a manifest, and copies are kept on the farm. They accompany the animal to its final destination.
Throughout the whole process, Alberta Pork has worked with the Alberta government to develop regular industry and delegated authority requirements enabling Alberta Pork to deliver and collect the traceability data within the province. That makes us a rather unique province compared to the others within the national system. However, I highlight that we are working together. As I say, both the provincial governments in many meetings and conversations with our industry have worked very closely with PigTrace.
We have had many conversations as well with CFIA to ensure that we are aligned with the federal process. Equipment, software, upgrades to meet security, storage backup and restoration are being finalized, and we should have our full implementation in Alberta by the summer of 2013.
The system is being developed to facilitate full movement, which will cover all animals being tracked by 2014. At that time we will have an electronic manifest to accompany that as well.
The overall system will connect PigTrace Canada to ensure that we comply with the national system when it is ready. To date, the bulk of the funding required to develop the system in Alberta has been paid for by the Alberta government. However, moving forward, we certainly will need to have federal resources to ensure that we have a successful national program.
While the pork industry is Canada has faced significant losses over the last few years, it has stepped up to meet the challenges through greater efficiency, implementation of a national food safety and animal care assessment certification, our Canadian Quality Assurance program, and the development of welfare standards in full transparent public process through the National Farm Animal Care Council, and in June of this year we will see those published and presented to the public for 60-day information to come back to that council.
We have also looked at the significance of maintaining a high level of herd health and biosecurity. In our country we can certainly stand and say that we have one of the best.
Developing the national traceability system, PigTrace Canada, will enhance the value overall for the Canadian system and the quality of our products.
However, the issues of structural changes within the value chain and fair pricing in the marketplace are still paramount in Canada if we are to remain a global leader in the production of pork.
Canada is a significant exporter in a very complex marketplace. Our ability to enhance agricultural sustainability can be made more promising through program flexibility, through government and industry collaboration, and through a focus on a balanced approach to ensure the issues at hand are covered.
If we are going to invest public resources to improve our industry, as other countries do, we need to do that more efficiently and with outcomes that have greater meaning to our industry.
The Chair: Thank you very much, Mr. Fitzgerald. We will ask Mr. Dickson to make his presentation.
Andrew Dickson, General Manager, Manitoba Pork: Thank you for inviting me here today. I apologize; I do not have a printed presentation. I was hoping to do it this afternoon, but flight problems arose. I got here eventually.
I am representing Manitoba Pork Council. It is a small farm organization. We were created under the Manitoba Farm Products Marketing Act. We do not market pigs, but we have all the authorities of a regulated product in Manitoba. In other words, pigs are regulated the same way dairy, chicken or eggs are regulated, like any other product that falls within that legislation. That gives us an ability to have a compulsory levy, which we use to raise about $4 million each year to run our council.
Our council is a body elected by producers, and we have gone out of our way to ensure we have representation from across the industry so that anyone who produces, for example, $300,000 in levy has a seat on our board of directors. This allows the big companies like Maple Leaf or HyLife to sit as a director on our board. This way we ensure that all the major players in the industry are at the table when we develop programs and activities to help improve the sustainability of the industry from both an environmental and an economic perspective.
I will pass around a handout. I would ask you to turn to a chart on page 16. I do not have a French version of the material but we will arrange to get it translated and can circulate it later. On page 16 is a flow chart describing the industry. It will indicate to you the complexity of what we have to deal with.
Essentially, we have 300,000 sows in the province, producing each year about 4.2 million finished pigs and about 3.5 million weanling pigs. We process all the finished pigs in the two major federally inspected plants at Brandon and Neepawa. We also bring in finished pigs from Saskatchewan. About half the production in Saskatchewan comes to Manitoba for further processing. We export currently about 3.5 million pigs into the United States. These are baby pigs usually weighing about 12 pounds — some might be 40 pounds — to finishing barns in Minnesota and Iowa. We used to ship over 6 million but because of country-of-origin labelling that was cut off because packers down there would not want to get involved with the multiple labelling. We used to ship out of the province about 1 million slaughter animals to processing plants in the U.S., and that number was cut significantly as well.
Traceability is a complex topic. It is not simple. People think it should be easy to trace the pork chop that you buy in the store back to the farm where that pork chop came from. Unfortunately, it does not work like that. We could bring some technology to play that might in the long run be able to do that through DNA analysis, but experiments to date have shown it is pretty expensive. We do have a system that seems to meet the needs of our customers and the various regulatory authorities that have to deal with other issues that I will talk about.
As a council, we are a small body. We have about 10 or 12 staff. We are not a big organization. We operate a wide variety of programming. We have essentially summarized much of it in an environmentally sustainable plan for the industry. We also provide publications to various people on how pigs are raised and so on. We do consumer marketing. We provide monies for research and development. We support the national bodies, both the Canadian Pork Council and Canada Pork International, to do international marketing and represent the industry at the national level.
We got involved in this idea of a traceability program partly as a result of the BSE outbreak in Canada, where in turn the concerns and fears were driven by what happened in the United Kingdom with both the BSE and foot-and- mouth disease. The lessons were that we do not want to repeat those bad experiences, especially in Europe, how to limit the potential problems here and how to recover from them if they were to happen.
In 2005, the council hired its own specialist, Jeff Clark, and his job was to set up a traceability program for Manitoba in cooperation with the other provinces and with the national body. We got involved in various provincial and national committees. There was a major effort by both levels of government to try to institute a national animal traceability program. At one time it was seen that we would take a multi-species approach; in other words, cattle and pigs would be lumped together. We have decided that we will do a species-by-species approach. The hog industry, pork industry, has played I would consider the lead role in this in terms of the bigger animals.
There was a model in Quebec called ATQ which had been in place for some time. It had not been done in hogs, but they were working closely in terms of trying to expand the program into other species, and they learned many lessons. In fact, Quebec has quite a complex and well-structured system in place now that has in a sense become the model for the rest of Canada.
Our board represents the whole industry. We have a number of concerns about traceability, why we want it in place. One is how to mitigate the impact of diseases. We need critical information on animal movements in order to guide disease control and management. We want to learn the lessons from Europe of how they have handled various hog diseases. We know foot-and-mouth disease is endemic in places like South America, and we have people from Manitoba who go to South America. There are links between farmers. At some point we might have a problem, so we need something in place.
For food safety, we need to have a system in place to trace the potential impact on public health, for example, of the inappropriate use of a chemical on a farm or antibiotics. If something happened to an animal that has entered the system, a problem has been identified with the animal at the packing plant, we would be able to trace back where it came from.
From a public health point of view, a lot of diseases that were mentioned earlier, for example, the HxNx type of diseases, are zoonotic diseases. In other words, they share a common host among humans, pigs and birds. We need to be able to deal with this from a public health perspective. If a disease were to arise that posed a significant threat to public health, yet on the farm there were no issues from a production perspective, we need to be able to show our health colleagues how we are managing the movement of that disease within our farms. Also, we need to give assurance to the general public that we know what we are doing as an industry with our animals. In other words, it is not some sort of Wild West show. People want to see that the industry is in charge of its issues.
Fourth, from a product marketing perspective, in Manitoba we export almost 90 per cent of our production to other provinces and to the world. Our customers are demanding trace-back systems. For example, in the Japanese market you will see pictures of farmers on the meat shelves. This will indicate to the Japanese consumer that the product came from a Japanese farmer. We want to be able to assure our Japanese customers that we have a similar ability to trace back.
It also gives us an attribute to the product, which gives us a competitive edge. The United States has major problems in trying to develop a traceability system. There are all kinds of good reasons why, but it gives us an edge if we could get our act together and get this thing up and running properly.
Some markets are starting to demand trace-back systems. In other words, if you want to sell into that market, you have to have something in place.
Fifth, on disaster recovery, we recognize that bad things happen, but successful businesses have recovery plans in place to minimize the economic impact of those bad events. In other words, you want to be able to get back on your feet as quickly as possible so that you can recover financially from the losses you have incurred.
With respect to traceability, you need a rapid system to identify the sources of the problems. You need to allow for effective control measures to be undertaken, and that will provide a guide to the disease prevention managers in how to prevent the spread of disease within a geographic area.
There is a debate in the province and amongst us as an organization about industry and public benefits. Manitoba pig producers are not in any financial position at this moment in time to pay all the costs of a traceability system. I have to emphasize that. We have been losing significant amounts of money in the last year, about $30 per pig, principally because of the American drought. It has sent feed prices skyrocketing. My colleague mentioned it earlier; it is no different in Saskatchewan or in Alberta.
Second, the marketplace at the moment is not paying a premium for pigs that are on traceability programs. The thought amongst some people is this is just something you have to do. It is part of the normal course of business.
Traceability does add cost through the whole food production system. Records have to be kept and stored and they have to be analyzed. There are costs involved with that; it does not just happen. We can minimize these, and our plan is to try to adapt a traceability system that matches the existing business information systems as a dual function. One is to help the business be successful, and the other is to provide public benefits in terms of, as mentioned earlier, disease management, emergency situations, public health protection and so forth.
In a small province like Manitoba, a catastrophic disease would have huge impacts on the provincial economy. We account for 10 per cent of the manufacturing in the province. The Brandon plant is the largest single manufacturing plant in the province, with over 2,300 employees. We account for a very significant share of provincial exports into the provinces but principally into the United States and two or three large markets. We have plants that are geared up for exporting. If there were a disease outbreak, for example, in Iowa today, our industry would close down tomorrow. We need to be able to get back on our feet as quickly as possible. Our industry is not integrated into a North American pig production system. Our producers get the same price in Iowa backed off essentially for transportation and certain other costs.
Our feed costs are dictated on a North American basis; they are not made in Canada. When people suggest that we bring in traceability programs, either there must be some way that our producers have to recover it from the market price or there must be government subsidies to help us get through this period.
On a detailed basis, we have put money into helping our national body to develop a management system and to set up a contractual arrangement with the federal government to try to get the traceability program to the point of implementation. We go to many meetings with CFIA and provincial and federal authorities to try to work out all the details on how it can be done through a regulatory process. We have spent a lot of time educating producers through this process, and we have built up a high level of comfort. We have re-registered all the premises in Manitoba. We have about 1,600 sites that might have two or three barns. They have all had to be re-registered. We have issued new premises identification numbers to all of these sites, and we have provided animal identification numbers to them, essentially a number that can be printed on the ear of a small pig, a slap tattoo that goes on the side or we provide ear tags. We work closely with trucking companies and processing plants to develop unique information systems to be able to handle the data input and the data management.
One of our staff members has actually been seconded to become the national manager for PigTrace Canada, but he is based in Winnipeg. We deliberately did that to ensure that the person who is trying to get this thing running has his feet on the ground with actual producers and can work closely with them, rather than being at the national office here in Ottawa. That is not so say there are not pig producers in the Ottawa area, but I think there are more in Manitoba.
We also bought a new computer database to handle all this information. We worked closely with Alberta, which initiated it, and then we modified it to suit our situation.
We have had regular contact with ATQ in Montreal. The ATQ now has the contract. They will become the national service agency for handling the national program, and there seems to be a high level of comfort with using them because of their experience.
In terms of challenges, the biggest problem I see personally is the lack of certainty in funding. We cannot run a national traceability program on five-year funding agreements. It just does not make any sense. This is a program that has huge implications for public health. It has major implications for the sustainability of our industry. We have been in pig production since the inception of this country; there will be pigs 100 years from now. How do we ensure that we have a proper system built into our normal method of governance, at both the federal and the provincial levels, rather than having something funded on some sort of ad hoc basis every five years?
Industry will invest in a traceability system if they see there is long-term funding in place.
As an industry, we do not have formal responsibility for protecting general public health. In other words, if there are concerns from the medical field about the implications of all these diseases and how they are carried in a genetic pool within the pig industry, then there must be some sort of meeting of the minds on how we will fund this.
Last — and this is a pet peeve of mine — we also need two levels of insurance to be put in place. We need a disaster insurance program to be put in place so that if we had a foot-and-mouth disease outbreak or something like that, we do not want the farms where the disease occurred to have the most valuable animals in Manitoba because that farm will be compensated under current legislation, but no other farm will. All of the plants will close, however, and the animals will have to be humanely destroyed. We are talking about millions of animals that will have to be destroyed.
To get compensation, we do not want what happened in the United Kingdom, where animals were moved from one farm to the other to ensure that they were infected so you would get the compensation. That cannot happen.
Second, and I have worked on this for the last six or seven years now, is trying to get an individual mortality insurance program in place for the pig industry so the producers can pay a premium, in the same way crop insurance is subsidized by the federal and provincial governments, so that if they do have an outbreak on their farm, they get some compensation, but it means there is assurance that they will have enough money to get back into business.
In other words, you do not want to have diseases on your farm. However, if you do have them you know money will flow in so you can get back on your feet and you will invest in your operation to minimize the potential for disease. We have run a major biosecurity upgrading program in the last year and a half, and we do not want see that good work disappear.
We have had major problems in getting acceptance from both levels of government in terms of moving ahead to get insurance programs. This is not an issue solely to the hog industry. The cattle and chicken industries and so on are looking at it.
The last point I want to make is that, to be frank, I think we are dancing on the edge of the Grand Canyon on this matter. It amazes me to no end that we have not had a major disease outbreak in this country. Obviously what we have in place works, otherwise we would have had it. However, I can remember during the BSE issue coming back from Europe and walking through an airport in Canada over little plastic mats with some solution, thinking this is a major barrier to prevent foot-and-mouth disease. This is an interesting exercise, but I am not sure it is the most scientific or thorough way of attacking a disease. At the end of the day, it obviously worked because we have not had it here. Thank you.
The Chair: Thank you very much, Mr. Dickson. Thank you for the document that you have shared with us. I have instructed the clerk to have it so that honourable senators will have it in both official languages.
That said, we will start with Senator Plett from Manitoba to be followed by Senator Mercer. Honourable senators, we have seven senators requesting —
[Translation]
Senator Robichaud: Senator Mercer had asked for the floor before Senator Plett, in fact before he even arrived.
[English]
Senator Plett: I think maybe those discussions could be had in camera, senator.
[Translation]
Senator Robichaud: This is not something we need to do in camera. I am simply saying to the chair that Senator Mercer had asked to speak, even before Senator Plett arrived. I do not know what method is used to favour one side over the other. I find this unacceptable.
[English]
The Chair: I accept the comments made by Senator Robichaud. With this, the chair has recognized Senator Plett. Senator Plett is from Western Canada, from Manitoba. We will follow, and the chair has always recognized one side to the other. This said, Senator Robichaud, I take into consideration your comments and will ask Senator Plett to commence the questions to be followed by Senator Mercer, Senator Buth and Senator Merchant.
Senator Plett: Thank you, chair. Have a good night, Senator Robichaud.
Senator Robichaud: We will talk this over again because this is not the way you do business in committees.
Senator Plett: Sorry about that, gentlemen. I am sure I certainly agree with the last comment that the senator made and support that, and I apologize that you are part of that.
I also apologize for being a little late so I did not hear the very beginning of your comments, Mr. Fitzgerald. However, I think I got the gist of it. In light of the time, I will keep my questions to only two questions. I have a number of them and maybe I will get to them.
My first question is with regard to traceability, if we had the money. Mr. Dickson painted a bit of a bleak picture on the money. I am from a hog producing province, and I think some of our farmers have done well over the years, and certainly we have a couple of plants there that are doing well. However, if we had the money would it be possible for us to have a system like Denmark has? They have a birth to fork traceability system, but we do not. Back in 2002 I think the Canadian Pork Council asked that we have a birth to slaughter traceability system. If we had the finances, the resources, would it be possible for us to have a birth to fork traceability?
Mr. Dickson: The issue is that we can trace the pig from the farm to the plant relatively easily. When the pig is cut in half and graded, the next issue is in the plant. I hate to use the word, but you have an explosion of parts. The animal gets cut into multiple pieces that follow different systems, in terms of conveyor belts, to be converted into pork chops, sausages, ham, bacon and so on. It then arrives at a distribution point. If they run into problems in a plant beyond where the animal gets cut in half — say they are making pork chops and they find something wrong even though it has been inspected all along — the only way they know what farm that came from is timing. They know what time the animal arrived at a plant. They look back and find out what big pigs arrived at a certain time, and they can get it down to four or five farms where that pork chop came from.
They have taken DNA sampling and searched individual animals all the way back. The other way is to put little plastic tags on different parts of the animal as it goes through the system. I think they do that in Denmark if I remember correctly. It is complex, and you add material into the processing system that you may not want to do because things get lost and so on. It is not impossible, but it can be done.
Mr. Fitzgerald: There are two points that I want to pick up on that Mr. Dickson talked about. First, when we look at DNA traceability, we have had a system in Alberta. There was a facility called Sturgeon Valley Pork, but unfortunately with predatory U.S. pricing, the plant no longer exists. It had a DNA system. It traced all its meat. It could tell you right at your table by taking a sample of that meat, the pork chop you purchased, exactly where that pig came from. That system has happened. It was not inexpensive, but it was in place.
Mr. Dickson also mentioned this ability to move product around. A few years back in a previous position, I had the opportunity to invest $1 million into a system in a beef plant that no longer exists in Alberta because, again, we were unable to meet the big challenges of the corporations that compete against smaller facilities. In that smaller facility, a moving board system does exist. They are in place in Europe. You can actually track down each piece of meat onto a board. It is tracked through the plant and a bar code goes on the end of it. It is expensive, and you have to compete against the other systems that do not do it. Today, the ability to take that animal from the farm to the plant is probably one of your bigger steps. Having that done within the plant, there are things that make it easier to track back, but not to that specific product you might buy unless you go to DNA testing.
Senator Plett: To carry on with the same question, HyLife ships probably 90 per cent or more of their product to Japan. Are they a lot fussier than other areas that we ship our pork to in Manitoba?
Mr. Dickson: For the benefit of the other senators, HyLife is an integrated operation.
Senator Plett: Our committee visited HyLife, so I think most of us are aware of it.
Mr. Dickson: The Japanese market is the most fastidious market in the world. They pay top dollar for their product. They are very demanding, and depending on the type of store you sell into or system that you work with there, they have information demands back. A company like HyLife is so integrated because they breed their own animals, nurse them, finish them and ship them — sometimes in their own trucks — bring them to their own plant, and their staff cut them into pieces and market them. There is a way of keeping the knowledge about where that product came from and providing that information to a customer in Japan.
There are certain customers that do not want that information. To be honest with you, there are retailers in Canada that are quite happy bringing in American product. In fact, we have a hard time getting them to ensure that it says ``product of the United States'' on the package on the outside. The United States has probably garnered 25 per cent to 30 per cent of our domestic market now, mainly because of price.
Senator Plett: Thank you very much.
I have a final question. Alberta and Manitoba are using two different systems. In our notes, I read that Alberta is using a system that has been developed by Sunterra, Maple Leaf and the Western Hog Exchange. Maple Leaf obviously is more dominant in Manitoba, I think, than they are in other parts of Western Canada.
Why would we not across the country get together with one system, whether it be PigTrace or the system that Alberta uses? Does Alberta feel theirs is better? Does Manitoba feel PigTrace is better? Maybe if we would collaborate and get together, that might solve some of our problems right there.
Mr. Fitzgerald: That is a very good question, senator. As a matter of fact, we do collaborate. I would say the two systems are virtually identical because they are based on what the national system would be.
There is only one difference between Alberta and the rest of the other provinces. When we talk about traceability, disease and issues that happen and we go back to BSE, we are a bit paranoid about everything. We felt that if we could jump forward and have a great traceability system, that would be great.
It was the producers of Alberta who asked their provincial government to help them move that forward to help them expedite regulations to allow that to happen. We have regulations in place that do make it mandatory that all pigs leaving the farm to their endpoint in slaughter have some traceability in place.
We decided the best thing for us was paper to start with because having a bill of lading for a shipment of any sort of product seems to make sense; it gives you a bill of sale and allows you to track. You have a piece of paper and everyone can have the same thing. We are working toward an electronic manifest that will be similar to every other province.
We work with the different plants and allow some differences to happen at those different facilities. However, over time as we work with them, they start to blend and become the same thing. You have to take those little steps with private companies to get them to buy in, and that is what we have done.
The whole process, even talking with the provincial government, is that we have always had in our mind that if something comes along and it is universal to the country, we will blend in with that, and we watch to ensure that we dovetail and everything goes similarly.
How we operate today versus how the rest of the country operates is similar. We gather information, and our intent is to upload into a system that is the national system on a day-to-day basis. Regardless of which province you are in, you will still always need a delivery agent and a collector of the information. It is a body, a person or someone who looks after it.
It is a database system that is set up. We have to ensure the information gets into the hands of a central body, so it is available for CFIA and the provincial vets if something should happen. Throughout the whole system we have worked on, we have always collaborated and made sure that would be our ultimate goal.
It just becomes a delivery agent to the national mechanism. That is what we are seeing today.
Senator Plett: Thank you. Do you have anything to add, Mr. Dickson?
Mr. Dickson: I wish to emphasize that Manitoba is working closely with PigTrace, and we want to ensure that PigTrace is accepting of other systems. In other words, the information in a computerized world can flow in from, say, a different system or a slightly different one. For example, Quebec or Alberta might have slightly different systems. We need to recognize provincial needs.
Regardless, it flows into a system that accepts that and then processes that information and gives us the information that we need to be able to do our business in terms of selling the product or to be able to handle things like disease management in periods of crisis. Computers and data management systems are so flexible these days that we can do that and allow for a certain amount of different approaches on the thing.
Senator Mercer: My province does not have a lot of hogs anymore because of the toughness of the business. We would love to have the same number of people working in the industry as work in Manitoba and Alberta.
Senator Plett used the words ``if we had the money to start up.'' There is a time that happens, like when we had BSE, that not having the money is not a question anymore; it means government and industry have to get together and solve the problem. You both have said that you are talking about doing it in advance and obviously trying to avoid any problems or any crises. One of the things I like about what you are talking about is solving the problem beforehand. If a crisis does happen, the government will have to help. Government will have to find the money at that time.
My questions are educational for me, but I think educational for the viewing audience as well.
One of you said — I think it was Mr. Dickson — that if there was a disease outbreak in Iowa, it would close down the industry in Manitoba. I did not understand that.
Mr. Dickson: We sell something like 2 million weanling pigs into Iowa directly. We sell about a million in Minnesota and about half a million into other states. For example, if there was foot-and-mouth disease in Iowa, there is a risk that a truck coming back from a farm in Iowa could potentially be carrying the disease into Manitoba. The United States is attempting to set up a system whereby each state could be closed. I do not know how they would do it in Iowa, but potentially that is what they are talking about.
Our veterinary services and industry would view this at that moment in time like ``How good is this? Is this disease contained? If they do not have a traceability system in place, what will we do?'' These trucks are coming back.
We have pigs on farms. We only have about five or six days of capacity to hold these baby pigs on our farms, so they have to go out. There is a huge pressure every week to be shipping pigs out. Otherwise, we are into humane destruction of animals, and we are talking about thousands of animals.
We are entering into a world of unknown here; we are not sure how this would all work.
We do have a system in place, or did — there are some funding issues right now — with the ability, if a disease occurred in Western Canada, to close or have a chokepoint at Falcon Lake. We could close the border essentially with Ontario and stop trucks moving into Eastern Canada. Eastern Canada could continue to do business in the pig business and it would be contained, say, in Western Canada, or vice versa. However, we would be entering into a number of weeks in there where it would be very troubling waters.
We had an experience of this. Some years ago at a Hormel plant in Austin, Minnesota, the U.S. federal veterinarian inspecting the animals thought that some of the animals coming from Manitoba had foot-and-mouth disease and actually closed the plant. It happened just before Labor Day in the United States. That plant with all its trucks and everything were frozen; they could not move. The production was halted for three days until they got this disease properly analyzed. It turned out it was nothing. It looks like foot-and-mouth disease but it is not.
However, there was a major reaction back in Manitoba. Everyone was on edge, wondering what was going on — ``Do we close the border or do we not?''
Senator Mercer: The advantage that I see is that we do have the border between the states and the provinces. We do not have those kinds of controls other than if you drive on or off the island of Newfoundland, you have to wash your vehicle underneath because they have had issues with potato blight. That is to protect the farmers in Prince Edward Island, New Brunswick and so on. This is an interesting problem.
You also talked about disaster insurance. The issue is one you talked about in terms of foot-and-mouth disease in Great Britain and what happened there.
A disaster would become whatever the next level of crisis is above a disaster if this were to happen in Western Canada, if we do not have an insurance system that is fair and equitable and protects all farmers, whether they are the farmers who are affected with the disease or those who are affected because there is disease in the system. Is there a solution to this? Is there a solution that is industry-based, or is it a solution that needs to be industry plus government? Does it need to be government and industry?
Mr. Dickson: In a former life I worked for the provincial government for 30 years. I spent a lot of time working in management with three serious floods. There is a system in place to compensate people for floods. What struck me about the 1997 flood was that it was unknown what the compensation would be for many people and their homes, so people would make heroic efforts to sandbag their homes. They had 12-foot dikes made of sandbags around their homes with pumps, trying to pump the water out to preserve their house. People did not know what the compensation would be, but it was dangerous.
I always felt if you know ahead of time what the compensation will be, you will work with the authorities in terms of managing the problem. For example, in diseases, what would it be like if we knew that it was not just the animals on the farms that have the disease but also how we will compensate the producers whose animals are being destroyed for humane reasons? The packing plants are closed and you cannot ship the animals. We only carry seven days of feed on our farms. We can hold the animals for maybe a week to 10 days before we have to start slaughtering them because the pigs are getting bigger and taking up room in the barn. Some of them will have to be killed.
If there is no compensation, what will you do? We do not want situations where farmers are bringing in diseased animals. It will just make the situation worse. The aim is to try to contain the disease, get on top of it, clean it up and get business back on its feet again.
Second, if we have individual insurance in place, just like with crops, you will encourage producers to manage their farms better in terms of biosecurity and disease management because there is an economic advantage to doing so. Right now we do not have anything in place.
Senator Mercer: That is a good point. My final question again is an educational question. We are all new at traceability. This is not something we have been doing for 100 years, but it is something we have been doing for a number of years. It surprises me, having been on this committee when we dealt with the BSE issue, that we still have not found a traceability system that is working well. I want you to comment on the comparison between our system and the U.S. system because what I heard from both of you, or at least I think I heard, is that the U.S. system is no better than ours and maybe not as good as ours.
Mr. Fitzgerald: If we looked at traceability, the last 100 years, if I just took the beef industry, they have had one. It was a fire and a hot iron. That is just how it operated, with a brand, so you recognized that was your animal. You may not have known of the 300 which one was named Bob. You had a batch of animals.
Today we have the same kind of system. It is more sophisticated with electronic tags that can recognize individual animals, but in a batch setting like the hog industry, it works better if the animal has a tattoo and it follows the animal through. We have a system where we can operate that way and the animals move together as a collective group. They are not individually sold one at a time; they go as a lot in a truck and are delivered. They sit in rooms together and they are moved in rooms. It is just the nature of the business, and it is how the animals are best suited to be together.
As we go forward from the plant, I think people start to think that they do not know everything about the product that moves through the plant and ends up on their shelf, but to a large extent, as long as the cutting and things are done together and they work their way to the retail case, a lot of that is pretty close if you can get back to the day of the animals that move through and the systems today. We find a lot of things very quickly. It is not that system itself, without having to go to each individual piece of meat, whether it is tagged and traced. Sometimes we go overboard.
The steps we are taking today are the steps that give us a lot of comfort, and it builds a lot of comfort into the system, because there are other things built into this as well from certification programs and HACCP in plants. There is that comfort I think that the public should have that many good things are happening. To add a huge complex system on top of it, if the consumer is willing to pay for it, you can certainly go down that road, but otherwise not.
As far as our system goes, I think we are very close, especially in the hog industry. We are working through the negotiations with CFIA to ensure everything works out right. I think we have gazetted at least once to look at having legislation in Canada. We have a province like Alberta that has already made a regulation and has things in there. We want to ensure everything is riding smoothly and we are trying to get ourselves there. Hopefully, by 2014 we will have a system in place that we can all use.
Going forward, if we use our producers as the example, we should have all of our producers, but the majority anyhow are going through the system now filling in manifests, electronically in most case. The bigger plants supply us that information electronically on all movement. By this summer we probably will be looking at doing audits on the system to make sure it does work and having our provincial chief vet looking at that information as well to make sure we are on track. Again, our vet service within the province works with CFIA to ensure that everyone is talking to each other and we are following the same rules.
Is that happening in the U.S.? I would say not. Is it in the same speed as we are? I would say no as well, but I think the system we are trying build now really will be a good one. Again, we talk about funding. If we had all the money in the world for any issue, we would probably still ask for more, but within the system that we are trying to get towards, I think the funding that is being asked for is fairly reasonable, and much of comes down to the delivery mechanism. Someone must move physical paper and enter data to ensure things move along.
At this time with our industry, to ask them to hire people to do that and push forward, we have to decide which other thing will go. This is a problem when we have programs like this. We tend to pick the shiny penny; we work on that issue and then when another one comes we drop that and we fall behind on so many issues without progressing ourselves forward.
Senator Buth: My question is not so much related to traceability as to the viability of the industry. Comments like Canadian producers are paid the lowest; feed prices have never been higher; we are losing $30 per animal on a consistent basis — what is the viability of the industry and how long can producers hang on?
Mr. Fitzgerald: I wish we knew. We would be paid a lot more for our jobs. In my opening presentation I tried to relay the issue of industry development and research. We tend to see funds go to things that are easier to put in a box and look after. Research would be one. Risk management programs in some sense would be another. When we want to develop the industry and we want to change things that go on, we seem to shy away from that. We call it marketing or advertising if it does not work out right.
I think we in the industry can all agree the value chain is broken. Someone makes a lot of money and there are people who make no money and are going in the hole and leaving the industry. Somehow in that system we have to figure out the price that should be paid to a producer. I would like to call it fair trade. Somehow within that we need to look at how that producer gets paid, and we have a system that needs to be fixed. Our relationships in our country need to change, among the producer, the packer and the retailer, and somehow the consumer needs to get involved in that. I use the analogy of salt. If you are given salt and salt and salt all the time, you like the taste of salt, and when one day we take you off salt you notice the difference.
Our problem is that we have been using pork for so long in the retail case in this country as a loss leader, that if we change that price, the retailer will have backlash from all the consumers who say, ``What happened to that pork? I loved it, but I loved it when it was only zero dollars or $5 or so much and now it has become more expensive.'' We do not see that happen with other products, so that becomes a bit of a problem, and we slowly have to change that so that we are getting paid for what the product should cost.
It is one thing to give it away. If I decide to buy a product and give it away to anyone, that is my choice, but if I decide I have the power to buy your product for nothing and give it away for nothing, then we are putting a whole industry out of business, and that is really what we are facing now within the supply chain, the value chain, and we need to change that. It is not the government's problem so much as it is ours, but sometimes we need support to make that work as well as on some of the other issues we face as we move along.
Senator Buth: What does that support look like?
Mr. Fitzgerald: Personally, working within my own province and looking at some of the things we are doing, it is those times when we have — I will use last year as an example. With the drought in the U.S., suddenly our grain prices skyrocket, and we have risk management programs that do not help our producers. We are asked to apply. We have producers that pay $3,000 to $5,000 to have accountants go through their work to submit and pay fees to have applications go in and to look at risk management support programs, and they are turned down. Not only are you losing money, you have just lost more money trying to gain money you were told if you applied you probably would get but you do not. It is a Catch-22, and you keep going down that road.
The system in place will then pay someone else who is making a profit who only loses a small margin to be able to apply. In the case of the grain industry making lots of money, if their income dropped slightly and they were still making a profit, they could actually collect in the system; whereas another industry, like the pork industry which is losing at the time because grain prices are so high and prices of the product have not gone up at the same time, then we are not allowed to because our reference margins do not quite work out the same way.
It is a complicated system, but it does not have to be, and that is where we need to look at the flexibility of how to have risk management programs and the types of things we are doing in Growing Forward to help all producers.
If we want producers to change and make a difference, which are societal issues as well, we have to be more flexible in the programs, and sometimes we are not. Sometimes we just sit down with a program and say it is black and white and that is it, but we need to look at some of the shades of grey that move the industry along. I know I am being kind of scattered in my answer.
Senator Buth: I am curious, because you are making these comments, was the industry not consulted in terms of the risk management programs that were put in place?
Mr. Fitzgerald: I think we are all consulted over time. We are asked what we think, how it would be best. We set margins and decide how things will happen, but we have no control, as all producers say, over the weather, foreign markets or policies that pay, and we do have policies in Canada and the United States that have paid other industries to buy the product that we require, which has then allowed the price to go up in feed grain.
If we use ethanol as a prime example, in the United States today, I am not sure what we will do if there is another drought there, for the amount of corn being used for ethanol. Canada uses a lot of our feed as well, especially feed wheat, to go into ethanol production. It is a competitor, so we are taking food and turning it into energy.
As an Albertan, it is a little tough to look at that and think there is a lot in the ground, and we are taking food and turning it into ethanol.
Mr. Dickson: I know it looks dark, but you have to be optimistic. Otherwise, you may as well just close up the barn door and go home. You have to believe the future will be better.
The hog industry historically has been a profitable business, and it will continue to be a profitable business. Yes, we have major problems. You cannot have one of the worst droughts in U.S. history not impact Canada. Just because we did not get a big drought in Western Canada does not mean it did not happen. You cannot have 4 billion bushels of corn taken off the market without an impact on feed grain prices.
In fact, the odd thing is in Manitoba, barley has actually become a specialty crop. Canola, which the senator is very familiar with, is probably our leading crop in the province now, and that is good for the grain farmer.
We will get out of this. The Americans are about to, we hope, seed the next biggest corn crop in their history probably, and hopefully we will get back up to 14 billion bushels of corn in the United States.
What is happening right now is a financial crisis facing the industry. We essentially have a cash crunch. We came up with a bit of a plan in Manitoba. The provincial government turned us down, but I do not think they understand the issue. The problem we have is cash. We do not have enough money for the guys to buy their feed, buy their pigs and pay their staff. They are running out of cash. They have used up their operating loans. When they go to the bank to convert current equity into more operating, they have to essentially convert some of their operating loans into term loans. The difficulty with term loans is you have to apply it against security or secured assets. If you have a negative cash flow for over more than a year on your books, your assets are worth zero because it is based on net present value of assets, so it is a dilemma for the financial institutions. Do we extend further credit on a term basis rather than operating?
We need to get this solved. This is an industry that has five-year cycles. We do not have a financial system in place that deals with an industry like ours. It is inappropriate. We need different mechanisms.
Second, we had a safety net that was called the AgriStability program. I vividly remember going to a meeting at the legislature in Manitoba, sitting for almost two hours listening to the provincial minister asking for our views on AgriStability before he went to a big meeting with the federal government. We said, ``Do not cut the AgriStability program.'' What happened? They cut it from 85 per cent to 70 per cent. That is nice. I mean, it is probably very good for the cereal industry and everyone else, but it is a broad sweep of change for a program that we needed. What will we do now? We do not have that safety net in place.
We will get through this somehow, but it will be a different type of industry a year from now. The trend is actually for us to be exporting more. More and more product will be exported. Our farmers' view is that if the Japanese customer is prepared to pay more for the pork than a consumer in Ottawa, we will ship to the lady in Japan or the Chinese guy in Hong Kong or to the U.S. We actually ship a lot of pork to the United States. I have been to Des Moines, Iowa, and picked up a little ham in the supermarket that said ``Brandon, Manitoba.'' Iowa produces 32 million pigs per year, more than all of Canada.
We will get through this, but we need some assistance from the government to help us out at this moment in time.
Senator Merchant: I hesitate to ask my first question. I do not like to take the time, but I am wondering, is pork a red meat biologically? Is it categorized in the same way? Sometimes you hear people are confused about that.
Mr. Fitzgerald: I think the confusion happened with the U.S. marketing campaign calling it ``pork, the other white meat.'' I think people started to think that was a smart way of marketing to move away from red meat, but it is a red meat, yes.
Senator Merchant: Mr. Dickson, you said something about labelling in the supermarket where you have difficulty getting something to say it is Canadian. I think you mentioned that. Do you need legislative assistance in order to make it easier for you to market Canadian product in Canada?
Mr. Dickson: We have to be careful here. We just won a major case at the World Trade Organization about country- of-origin labelling.
We have a voluntary program in Canada, and we as an industry have actually supplied labels to various supermarkets that say ``Product of Canada.'' It is put on product that the company knows came from Canada. We like that approach. It works well.
We would like the legislation and regulations to be tightened so that American product coming in is properly identified, the same way our stuff is very carefully identified in the United States. The labels I am talking about have been in place for over 20 or 30 years. In other words, if the product comes wrapped, such as pork chops that come in a small package, ready for retail, and it is from the United States — cut up and packaged in the United States — that label should read ``Product of the United States,'' the same way we ship them down to the United States. All we are asking is for the authorities to ensure that happens.
Right now, you can bring in big caseloads of pork chops. If you take them all out, even though the outside of the package says ``Product of the United States,'' and put them in little packages, you do not have to place any label on them at all. That is the problem we are facing. There are certain stores that bring in a lot of American product. Some of it is clearly labelled, and sometimes it is not.
Senator Merchant: Should adherence to traceability systems be mandatory the way it is in Japan or Australia? If not, we have to decide this might cause some problem down the road, if we do not make that mandatory. It is the degree of risk we must then be able to accept.
Mr. Fitzgerald: I think producers have accepted the fact that we want to have traceability. We are willing to accept it and move down that road. Our big issue now is funding it to start with. We will see how this goes. Well, all producers like to let it go for at least one generation so we could have some funding in place, and we have had a little bit to move it forward and ensure that we are able to track and gather the data and keep information secure in the right way and it meets the CFIA needs, as well as provincial vets.
As for being mandatory, I think we are in that process. Alberta has it. It is mandatory. You must fill out these forms and make sure the stuff is put into place. On a national basis, it is all moving itself through the system now. As we said earlier, it would be nice if it could be done by 2014 and that we work our way through, but the bigger issue would be whether we can make legislation without the funding, and now we have created this issue where producers become a little ticked off, to say the least. They see now they have to pay for it. Somehow we need to determine, as Mr. Dickson said, whether it is for the public good or is it for industry good. I think there is a balance there as to how we get ourselves forward, but we are headed now to mandatory, as soon as we have legislation.
Senator Merchant: Is there any political impetus to move to a DNA genome kind of system? I know you said it is very expensive. How are we coming along in that direction?
Mr. Fitzgerald: If we look at what we have today, it will be a good system that we are working toward. It is like making everyone a BMW or Mercedes. We have good cars that are not that expensive. If we make everything the best, we have eliminated the opportunity for the marketplace to bear the cost and work itself through. I think if we keep on our course, we are giving opportunity for different groups and different organizations to work together to figure out what those costs would be and to build them into the cost of their products. Over time, you go from one place to the next in a logical step, and you make improvements and get to places, but you give that innovative opportunity to those who can put into the marketplace as well, too.
[Translation]
Senator Dagenais: My question is addressed to both of our guests, and I thank them for their presentation. My concern regarding pork production is always the outbreak of disease; you referred to this. Of course, the outbreak of a disease poses a danger to consumers, but often, the cause of the danger is the delay in advising the population of the outbreak.
Are you contemplating something to shorten those delays? We know that there was an incident, and we do not want to name the company — Maple Leaf — but has anyone thought of a solution to shorten the timeframe between the moment when the disease appears and the point when consumers are made aware of it? This also has adverse effects on production, and you are aware of the ensuing consequences.
[English]
Mr. Fitzgerald: I think we have had some good examples, and different meat products have different disease issues related to them. I will talk only about pork. I think if we look at a lot of the issues that we talk about with disease tracking, many of them are economic issues. They are economic diseases. They are not so much a public health issue, although they could be, but most have been economic issues. If we use foot-and-mouth disease, that would be an economic issue. We have the status of not having that disease here. It becomes an economic barrier for us to be able to export our product, so we want to stop it really quickly so we have that export ability. In our system that we have today, we have seen some with the vets from CFIA within a plant in Alberta in particular about two years ago where there as a suspicion of a disease. The plant was stopped, everything was closed and no movement was allowed to happen. We did testing and found out there was nothing. We move on.
I think the bigger issue in some of these things is ensuring that the procedures and processes within the regulatory bodies who determine how you shut a plant down and how you allow animals to move really work well with the industry. In that situation in Alberta, with the Olymel facility, it did not work very well, and it cost the industry hundreds of thousands of dollars. Olymel bore much of that cost. The producer thankfully does not in most cases, and other organizations took up that cost. Again, it comes down to what Mr. Dickson said about compensation packages. If you have a disease, the system then pays you to compensate you. If you do not, there is no compensation. Even if we make a mistake in thinking we are looking at something, there is no compensation. It is only if there is a positive disease verification.
With that right now, with our traceability system in the pork industry, if a disease comes through, we have many inspectors, and hopefully we maintain that. Canada has a very good reputation for having high-quality inspection with CFIA. If we can work together with the industry and maintain that, I think we catch a lot of it. With the nature of how our traceability system works as we move animals to the plant, we are seeing a quick turnaround, and the Red Deer issue two years ago showed how quickly that can happen. It was very fast.
Mr. Dickson: Briefly, we have to be careful not to confuse food safety issues with disease management. We have production diseases on farms and stuff like this that have no impact on public health. There is no threat to the human being. For example, some of the H1N1 diseases and so on affect the lungs and so on. You do not eat lung material. You eat pork chops and roasts. You cannot get it that way. The issue then becomes how to convey information to the general public about products, and we have to be careful about that. I think there is some misapprehension about a farm that we live with in terms of how well the animals do well and they do not suffer very much, but there is a potential for human impact. We have to be careful. In many cases, there is more of an issue of humans being in contact with the animals. I think in all these stories, we live in an age when everything is instant news. Suddenly some children are getting sick in Mexico, there is a hog farm somewhere nearby, suddenly some guy has called it a swine flu and suddenly pigs are a major threat to the public health. We all have to be careful about how stories are handled.
Senator Callbeck: Thank you both for your presentations this evening. I come from Prince Edward Island, and our hog producers there have had a very rough time. In the last two years, we are down over 50 per cent in the number of farmers, probably closer to 70 per cent.
Mr. Dickson, you mentioned about herd health and that Canada is pretty near the top in this. I understand my own province is, too. I also understand that in P.E.I., when animals come into the province, they have to be inspected and declared healthy. Is that true in other provinces?
Mr. Fitzgerald: I do not know.
Senator Callbeck: That is my understanding.
Mr. Fitzgerald: It would all depend on the nature and where the animals come from, especially if they come from outside Canada, definitely.
Manitoba and Alberta move animals across the Prairies. When it comes to the hog industry, we move animals as efficiently as it sounds from Alberta to Manitoba; and we move animals sometimes from Manitoba to Alberta. They pass each other as they drive on the highway. We do the same thing in B.C. We have facilities there where almost 100 per cent of the pigs processed come from Alberta. They get a nice Rocky Mountain view coming back into Alberta to be sold. I am not sure for P.E.I. where it might be a bit different.
Senator Callbeck: PigTrace is a voluntary initiative. Is that right?
Mr. Fitzgerald: Correct.
Senator Callbeck: When the new regulations were presented, I believe last July, you had 30 days to comment. With those regulations, will this be mandatory?
Mr. Fitzgerald: That would be the intent, yes.
Senator Callbeck: Did either of you have any problems with any of these regulations? Did you make comments?
Mr. Fitzgerald: One of the major issues we had, and we will have to see how it has turned out, was that Alberta currently has a process in place. We ask that the producer fill out the manifest. It can be paper or electronic, but it needs to be in that same format so that it is always standardized. The manifest needs to travel with the animals. Regardless of whether it is electronic, a piece of paper needs to travel with the truck that delivers the animals no matter where the animals go. At its final destination, the piece of paper or electronic receipt needs to come back to the authority collecting the data. We ask that it be the final destination that sends back the information. We do not want the producer to have to put the piece of paper in or anyone else in the system because we then end up with all kinds of data coming in and somehow we have to marry it all up.
We ask that everyone has the information so that if they are audited we can find it. There are other ways of seeing the information: provincial vet inspections for numbers and a levy system, although we do not want to tell everyone that we are using the two to match each other. You need to have ways of auditing the system to ensure that the right number of animals is going through the system and that they show up on a manifest or the traceability system. The way we are headed now will cover that off. It will be mandatory, as it is in Alberta now. Hopefully when the bill passes, we will have that for everyone on a national basis.
Senator Callbeck: This is up to the province. Each province decides whether they will take on this initiative.
Mr. Fitzgerald: We are at the stage where it is a national issue. We in the industry have agreed to go forward on this. I hope that we get our way for the individual issues that we have talked about; they are not insurmountable. There have been only a few small issues that we wanted to ensure we covered off. For us it was to ensure that if we do not have unique numbers on a piece of paper that goes from here to there, then you cannot match the piece of paper that this individual sends with that individual. We want to make sure the system is not overly bureaucratic, that it runs smoothly and that people do not think they have been asked to do too much. If we can make it simple, they tend to want to fill in the forms and work their way through them. If it does not work, we can always change the legislation, I think.
Senator Callbeck: There has not been any decision as to who will pay for it.
Mr. Fitzgerald: That is correct.
[Translation]
Senator Rivard: Gentlemen, thank you for being here. I do not know if you are aware of this, but in last Saturday's issue of the newspaper La Presse, there was a three-page article entitled ``Pork Production Success,'' and then, in large print, ``No Subsidies in Denmark.''
The article stated that Denmark exports 90 per cent of its production. It is the second largest exporter in the world, the first being the United States. Now, I am willing to admit that Denmark is a much smaller country than Canada, and so the level of pork production must be lower; thus, 90 per cent of a given amount may be greater for us in absolute terms.
What surprised me nevertheless in the article, aside from the fact that there are no subsidies for the pork industry there, is that it said that a sow in Denmark produces 28.1 weanling pigs per year, whereas a sow in Canada only produces 22 weanlings a year, a difference of 37 per cent. How do you explain that? I do not think it has anything to do with subsidies. Is it due to the conditions the pigs are raised in, or to the food they consume? What are the reasons that could explain the large gap between the fertility of a sow in Denmark and one in Canada?
[English]
Mr. Dickson: Denmark is a wonderful model that everyone looks at. It has a very integrated industry. It is dominated by a number of key players. They have had a history of co-ops in Denmark for 100 years. It is one country and has no provinces. Essentially, they supply the European Union, which is right across the border in Germany. They supply a lot of weanling pigs to Germany. Their industry is not as happy as they would like it to be. Our industry studies Denmark assiduously. We have all kinds of reports on the Danish and how they do business. Parts of it we can fit into the North American pork production system, and parts we cannot fit in.
In Manitoba, and I do not know what it is like in the other provinces, our sows are very productive. We average about 25 weaned pigs per sow per year. We have targets of hitting 30. There are farms in South Dakota where the average is 30 weaned pigs per sow; and that is our new industry target. It makes our business in Manitoba cost- competitive with Iowa for about 40 per cent to 50 per cent of our industry. Iowa is the most cost-competitive pork production system in the world. The whole Canadian industry is hopeful because of the shakeout we have had over the last five years that our average will probably be a lot higher.
On the processing side, Danish Crown and other companies have done amazing work. We know the technologies, and they are doing nothing new that we have not seen before or are trying to do in Canada. We will continue to monitor our competition. We intend to beat the Danes in the world market.
The Chair: That is the Canadian way.
Mr. Fitzgerald: There is another aspect to this. We give you the numbers when we talk about where our industry sits and the negative margins we see. We talk about a pig. That is just to give everyone an idea that you have one pig; you can see it. However, we are paid by the number of kilograms we sell. If I produce 28 piglets and I make less money than I do on 20 piglets, was it smarter to grow 20 or 28? The reality we need to reach is that a producer produces kilograms of pork. That is how he is paid. If I can get more for producing less, then I am the smarter farmer.
Today, for us to produce 28 or 30 pigs and we are making minus $35 on each of them, it might be smarter for us to produce only 15. I am not saying to do that, but you have to balance the numbers with how you are paid.
[Translation]
Senator Rivard: I would like to make a final comment on this topic. I do not think the La Presse article was reprinted in the English press, but I invite you to read it and even to send us your comments, because this might not be the first time a reporter has made a mistake.
I found that article shocking, especially as regards productivity and the fact that they do not have subsidies as we do.
Mr. Chair, I will give you the article, and I would like to get feedback from our witness; I want to know whether the facts put forward in it are true or not.
The Chair: Thank you for your comment.
[English]
Senator Duffy: Thanks to our witnesses for coming tonight. It has been a fascinating exposition of an important part of our agricultural economy.
Earlier, Mr. Dickson talked about us walking along the edge of the Grand Canyon. I worry that Canadians at home who are watching this broadcast might think — and we know the history of pork — for a long time there was a problem giving pork the same kind of recognition on store shelves and in the consumer marketplace. The industry, with government help, did quite a strong and good marketing job. I think pork is now much more popular among Canadian consumers than it ever has been.
Would you both like to take a minute to look at the positive side of this story, the safety aspect and the fact that the value for money for the consumer at home is quite remarkable?
Mr. Fitzgerald: I will take that one on first to start with. Thank you, senator. That is a great question. I think more people are turning to pork. The world is based on pork as a protein. It is the most-eaten protein source on the planet. Yet we have kind of forgotten about it in our own country other than perhaps Quebec, which has done a great job of maintaining the ability to cook, look after a product, to really celebrate in restaurants and make use of food.
If I gave anyone the hugest credit right now it might be the Food Network. Chefs are the new superheroes. They are rock stars. People are looking at it and saying food is a good, passionate thing. In Alberta we have a campaign called Passion for Pork. It is based on the passion for food and family, to sit down and enjoy. I have seen many presentations made by physicians and people talking about family values and where things work. There are studies that show families that sit together and eat a meal tend to communicate better and the children grow up to be better educated. There are all sorts of things that come from that. Being together, eating food, understanding where you are getting food from.
Nutritionally, we have to take responsibility in the food industry to let people know that the nutrition value of pork is second to none.
Senator Duffy: It is really heart healthy.
Mr. Fitzgerald: It is. Thank you for saying that. We are often compared to chicken. Not to take away from chicken, but it is often touted as the leaner, healthier choice. However, it depends on the cut of meat that you have. Pork can be just as healthy, even leaner in cases.
The bigger issue for pork today is that people are starting to come back to perhaps where our grandparents were, who knew about the value of pork, and that it is so flexible. It can be used so many different ways. We like to comment that it is delicious from the snout to the tail.
Senator Duffy: Mr. Dickson, all of our witnesses here are concerned about food safety. How would you rate our food safety system in comparison to others around the world when you are speaking to consumers who are going out to make their household purchases the rest of this week?
Mr. Dickson: I have travelled many countries in the world and I have to tell you the Canadian food system is probably the best in the world. The range and quality of products, the price, the affordability of our food in our supermarkets and safety are phenomenal. We are world leaders in this stuff. People come to this country and are amazed at what they see. Look at the morbidity and mortality rates. They are phenomenal. You do not get sick from food like you used to 50 to 60 years ago. It has completely changed. Your public health inspectors will tell you that.
Yes, we have gotten more ``industrialized'' — we will use the phrase — about allow we produce our food and so on, but look at the range of products we now eat. Prosciutto ham used to be unique to the European Union. You can get it in supermarkets in Winnipeg now. I am not bringing down Winnipeg, but we are not the epicurean centre of the universe like Paris, Berlin or London. However, I can go into a supermarket and get products from across the world that I know I can feed to our family and be perfectly assured that we will live and eat well. In fact, if anything we probably eat too much.
On the import side, there is an issue. In the old days you used to put a pork chop in a fry pan and cook it up and it was good. What we have done in response to consumer demand — and people have forgotten about this — is we have taken out as much of the fat from the pig as we could. In fact, we probably made it too lean now. We probably lost a bit of the taste because the fat within the muscle tissue holds the taste. We are looking at how we can introduce a bit more marbling back into the pork chop, roast, pulled pork or whatever it is to give it a little more taste. If you want to eat well my suggestion — and I am biased on this thing — is go buy some pork.
Senator Mercer: That has been a paid political announcement on behalf of the pork producer.
The Chair: To the pork industries of Manitoba and Alberta, you have done a wonderful job. We thank you for sharing your comments and vision with the Standing Senate Committee on Agriculture and Forestry.
With that, honourable senators, I declare the meeting adjourned.
(The committee adjourned.)