Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 1 - Evidence - Meeting of February 4, 2016
OTTAWA, Thursday, February 4, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Welcome, everybody. Just before starting the meeting, the Senate is now broadcasting in widescreen format, so not only the senator speaking but their neighbour may also be visible on screen. We would ask you to be aware of this.
Today we have a panel of three groups.
I am Senator Maltais, chair of this committee. I would like to ask the senators to introduce themselves, beginning with the deputy chair.
Senator Mercer: Senator Terry Mercer from Nova Scotia.
Senator Tardif: Good morning, Claudette Tardif, Alberta.
Senator Beyak: Senator Lynn Beyak from Dryden in northwestern Ontario.
Senator McIntyre: Senator Paul McIntyre, New Brunswick.
Senator Plett: I'm Don Plett. I'm from Manitoba.
Senator Oh: I'm Victor Oh from Ontario.
Senator Unger: I'm Betty Unger from Edmonton, Alberta.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
[Translation]
Senator Dagenais: Good morning, I am Senator Jean-Guy Dagenais from Quebec.
The Chair: Thank you very much.
We will begin with our first group of guests. I am going to ask our guests to be concise in presenting their briefs. The shorter the brief, the longer senators will have to ask questions, and that is the objective. Once again, welcome, and we will begin with the following witnesses —
[English]
— Chicken Farmers of Canada, Mr. Dave Janzen, chair.
Dave Janzen, Chair, Chicken Farmers of Canada: I am Dave Janzen. I'm Chairman of Chicken Farmers of Canada and a chicken farmer from Abbotsford, B.C. Thank you for inviting us today to share our perspectives on international market access priorities for the Canadian agriculture and agri-food sector.
Chicken Farmers of Canada is a national organization that represents 2,700 chicken farmers. Our board of directors includes farmers, processors, further processors and restaurant food service operators.
When it comes to farm animals, chickens are not very big but their impact on the Canadian economy is. With the chicken industry benefiting both urban and rural economies from coast to coast, it is easy to see why chicken is more than just a good choice for Canadians. It is also a good choice for Canada.
Our industry sustains 78,000 jobs, generates $2.4 billion in farm cash receipts and contributes almost $6 billion to Canada's gross domestic product, pays $2 billion in tax revenues and purchases about 2.5 million tonnes of feed annually.
We also respect Canada's trade commitments by providing significant access to our market. Everyone focuses on the high over-quota tariffs of supply management products, but nobody pays them. They avoid talking about the tariff that everybody pays for chicken imports into Canada, which is zero, from every one of our free trade partners and only 5.4 per cent from all other countries.
We import a lot of chicken. In 2015, Canada imported 214 million kilograms of chicken, making us the seventeenth- largest importer of chicken in the world. We are the third most important market for U.S. chicken exports.
Among the 12 Trans-Pacific Partnership member countries, Canada imports more chicken than the U.S.A., Peru, New Zealand, Australia, Malaysia and Brunei combined. Put into context, only 10 per cent of world chicken production is traded, with the U.S.A. and Brazil counting for 75 per cent of those exports. With the TPP agreement, our level of imports will represent more than 9.5 per cent of our production, which is right in line with the global chicken trade.
These statistics clearly demonstrate the high level of concentration in the world chicken market that benefits countries like the United States and Brazil, and it is unrealistic to expect Canada to play a significant role in the international chicken trade market. Our northern climate, with cold winters and warm summers, results in significantly higher production costs that are not incurred in the United States and Brazil.
The best way for our industry to contribute to the Canadian economy is to maintain our continuous stable growth on our domestic market. The chicken industry is a growth and value-addition success story. Our producers are located in every province, and we have more farms than when we were first established in 1978. Our production has grown steadily: more than 20 per cent in the past 15 years. We have led the agriculture sector on implementing on-farm food safety, animal care and antibiotic use reduction programs.
Chicken is Canada's number one meat protein for good reason, and consumers are looking for our "raised by a Canadian farmer'' brand.
The chicken industry is a key component of Canada's agriculture investment portfolio. It provides steady revenue through market ups and downs. Diversification is the key to building a strong and sustainable agriculture portfolio that will grow over the years.
The TPP will have a direct impact on the Canadian chicken industry. At the end of the implementation period, 26.7 million kilograms of new access will be provided annually on top of our existing WTO and NAFTA agreements that provide for 80 million kilograms of access, equalling almost 10 per cent of our market.
The displacement of our production resulting from additional TPP access can be mitigated by the elimination of the import control circumvention. Three specific measures were announced by the government on October 5 at the conclusion of the TPP negotiations, and it is critical that the government implement them as soon as possible.
First is the exclusion of chicken under the Duties Relief and Duty Drawback programs of CBSA. These programs permit Canadian processors to import, process and re-export chicken within four years. I'm not sure it would taste very good after that amount of time.
Ninety-six million kilograms were imported in 2015, representing 9 per cent of our production. Companies should have to use the Global Affairs Canada Import for Re-export Program. The government needs to make chicken ineligible under the Duties Relief Program. There will be no impact on legitimate companies.
Second, implementation of mandatory certification for all spent-fowl imports. Old laying hens are not subject to Canada's TRQ and can be imported in unlimited quantities. Imports of 100 million kilograms, representing another 9 per cent of our production, are robbing Canada of almost 9,000 jobs and $600 million in GDP. In fact, we are importing more spent-fowl breast meat than is produced in the United States. That speaks to something wrong.
The government needs to implement mandatory certification of spent fowl and start using the DNA test developed by Trent University to distinguish chicken from spent fowl, and modification of the specially defined mixture rule to ensure that chicken products with sauce are subject to import controls.
The solution is simple: The government needs to reinstate the sauce and cooking requirements that are in Canada's negotiated WTO schedule into the customs tariff. That is fully within Canada's international trade rights and obligations.
In addition to the import control circumvention measures, indemnity programs were also announced to help the industry face new TPP access. We believe these programs recognize the difficult concessions Canada had to make to gain new access to other markets and, albeit temporarily, they will provide some relief to farmers and processors.
In conclusion, the chicken industry and its evolving supply management system continue to be a significant contributor to the overall health and strength of the Canadian agriculture industry. We are innovating and investing in our industry and evolving our system to meet changing market requirements and consumer demands. We support a rules-based trading system and rely on the government to implement, as soon as possible, the termination of the import circumvention measures so we can fully seize the opportunities of the Canadian market.
Thank you very much.
The Chair: Thank you, Mr. Janzen. Now Peter Clarke, Chair of the Egg Farmers of Canada.
Peter Clarke, Chair, Egg Farmers of Canada: Thank you for having us as part of your continued study of international market access priorities for our sector.
We were here in November 2014 to describe how supply management allows us to produce eggs for Canadians that are among the best in the world and how, by doing so, we provide stability at home while agricultural industries with greater export potential pursue opportunities in international markets.
During the TPP negotiations that ensued we continued to make that case, yet we also shared that we recognize the opportunity that the TPP brings to Canada and the economy as a whole.
For these reasons, we appreciate the support of government and the ability of negotiators, civil servants and elected officials to maintain supply management and to expand trade opportunities for agricultural industries with greater export potential.
That said, it came with an impact for us. Canada will need to import a total of 19 million dozen additional eggs per year once the agreement is ratified and fully implemented after 18 years.
To put that in context, that's almost as much as we are already obliged to import under the current trade rules, and it means Canadians will be much purchasing more imported products that they prefer to be fresh and local. However, we remain confident that our industry's resilience and growth will lessen the impact and the TPP's completion will remove much of the uncertainty we have faced for years. The industry can now continue to plan domestic production to meet the growing needs of Canadians, knowing the volume of imported eggs as a result of the trade agreement.
We understand that to get something in some areas, something had to be given up in others. Taken holistically — meaning that when we look at the overall deal — the access granted in eggs, the provisions of the compensation and our growth as an industry, we remain supportive. This, of course, assumes that appropriate results on the compensation will be reached. In light of this, we continue to work with the government to investigate the mix of compensation programs for the supply management sector announced in conjunction with the trade deal.
I would like to conclude with a few forward-looking comments about how we see ourselves in the post-TPP era in areas that I hope are of interest to you.
Egg Farmers of Canada believes in an inextricable link between social licence and business success. We nurture our acceptance nationally and internationally — not just because it's the right thing to do, but because it bolsters our aspirations of profitability and enhanced social economic development. We donate substantially to important causes such as Food Banks Canada, Breakfast for Learning and the Breakfast Club of Canada that ensure more vulnerable Canadians benefit from the potent nutrition of eggs. We have exceptional national on-farm food safety and animal welfare programs and invest significantly in R & D, applied and blue-sky, which benefits our industry and others.
In fact, even though we have a modest environmental footprint relatively speaking, we are benchmarking and helping our farmers move further ahead. We will be announcing a new partnership with UBC through which we will establish a research chair in sustainability, the fourth chair of our growing program.
We are growing our international development work, through the International Egg Foundation, to help burgeoning egg farms and industries become established and sustainable. Essentially we are exporting our knowledge and expertise to where it is needed most.
As an example, Heart for Africa, our newly built egg-laying farm, has welcomed its first flock. The farm is now offering thousands of nutritious eggs to orphaned Swazi children. This enhanced Heart for Africa's feeding program that delivers 74,000 hand-packed meals each month. Several of our Egg Farmers of Canada directors and farmers from our youth leadership program have been there throughout. They have immersed themselves in what it takes to build an operation that puts the local community and environment's realities first, and we are teaching the locals how to operate the farm on a long-term basis. We are sharing invaluable practices that supply management has allowed us to nurture in parts of the world where hunger and malnutrition are rampant, which is critical given impending global population growth and food insecurity.
These are key ways in which we continue to exemplify an industry that provides stability at home, providing Canadian families a product of world-class standards that they enjoy and need, and one that ensures our knowledge, expertise, compassion and generosity knows no boundaries.
This is a unique reality about our industry that we sincerely hope the committee remembers as it continues to consider Canada's international trade agenda and future negotiations undertaken by our government.
Thank you very much.
The Chair: Thank you very much, Mr. Clarke. Now we will hear from the Turkey Farmers of Canada, Mark Davies, Chair.
Mark Davies, Chair, Turkey Farmers of Canada: Good morning, honourable senators. Turkey Farmers of Canada appreciates this opportunity to participate further in the Standing Senate Committee on Agriculture and Forestry study on international market access priorities for the Canadian agricultural and agri-food sector. There have been numerous developments in our industry since the agency's last appearance before the committee in December 2014, but we will focus our comments here on the most serious and far-reaching developments which, of course, is the conclusion of the negotiations of the TPP, or Trans-Pacific Partnership.
Under this, like most trade agreements, the TPP represents a careful balance of give-and-take or pros and cons for each member country. Canadian turkey farmers have been following the TPP negotiations for several years and recognize the importance of this opportunity for the Canadian economy as a whole.
On the positive side for our industry, the final TPP agreement maintains the over-quota tariffs currently in place, which provides a fairly high level of assurance that imports of turkey meat in excess of Canada's minimum access commitments will not occur under normal domestic and international conditions.
On the side of concern, new market access under a TRQ that will be implemented in two stages was granted for our industry. Under the first stage, access will be increased by 583,000 kilograms in each of the first six years, resulting in a total access of 3.5 million kilograms. These are notable figures in that this represents a two-thirds increase in access in five years. Under the second stage, the access volume of 3.5 million kilograms will be subject to a 1 per cent compounded annual increase for 13 years until it reaches a fixed total volume of approximately 4 million kilograms. In total, this new TRQ volume is equal to a 71 per cent increase in access and between 2.3 and 4.4 per cent of current 2015 production, depending on the final meat product imported. That comes down to whether it is a whole bird or breast meat. The value is really in the breast meat, so that accounts for the disparity in the two figures. This equals up to $14 million in lost farm cash receipts per year, about $270 million over the 19-year period. This does not account for impact on live prices as a result of market access increase. We don't know what will come to be when a new price is set because of the pressures on our industry.
There could be approximately 26,000 in lost farm cash receipts per farm per year if the impact is distributed across the country. You can see that it is not a small impact. It should also be noted that our industry does not see any major export opportunities emerging under the TPP, despite what some rumours have stipulated over the last few months.
To put this in context, U.S. turkey production was just over 2.5 billion kilograms, which is about 15 times the size of Canada's production. They are the primary supplier to Mexico, which leaves little opportunity for Canada to access this market for the lower valued off cuts to any degree which is viable. That is what their market is, the darker meat.
Although there may be niche opportunities for Canadian turkey in the U.S. and Japan, there is nothing in TPP that provides any major benefit in that regard. Non-tariff, sanitary and phytosanitary barriers to trade remain in other jurisdictions as far as we understand, as the agreement does not address those.
When we talk about the programs announced for the supply managed producers, with the conclusion of the TPP negotiations in October the Government of Canada announced a series of programs and initiatives to support supply- managed producers and processors throughout the implementation of the agreement. Acknowledging that the agreement will compromise producers' incomes and sector growth, an overview of the Quota Value Guarantee Program, the Income Guarantee Program, the Market Development Initiative and the Processor Modernization Program were released.
I have just a few comments on each of those, if you will permit me. First, with the Income Guarantee Program, the market access granted under TPP is substantial for all our industries. However, when it comes to us, if it enters Canada in all breast meat, which is the expectation, the impact is equal to the entire yearly production of two of our small provinces, Nova Scotia and New Brunswick, combined. We have only had very preliminary discussions with government officials to date on these, so we anxiously await the details of the programs.
We are still concerned about and in need of further information on how the estimated payment of the value they determine for each individual farm will be calculated. In our case, it was 88,000 per turkey producer over 15 years. We will need assurances that the $2.4 billion set aside will not be unilaterally reduced and details on how the programs will function and be delivered are of utmost importance.
When it comes to the Quota Value Guarantee Program, no one foresaw the U.S. implementing country-of-origin labelling, predicting BSE in cattle or AI in poultry or the financial collapse in 2008. It's within this context of not knowing what could happen or what the unintended consequences of the TTP might be that from our perspective we see merit in keeping the Quota Value Guarantee Program of $1.5 billion and it being in place for at least 10 years.
If farm income does decline from increased market access there may well be pressure on farm values in our sector. Although we hope these payments are never triggered under the Quota Value Guarantee Program, it provides a safety net if the unforeseen arises. We will work with officials to make the program operational if that need arises.
When it comes to the market development initiative, we welcome the $15 million of new funding over five years to help the supply-managed sectors maintain, develop and expand market share. If we want to mitigate the impact of increased access on our industries, the key is to increase domestic consumption. This will drive investment and product development in the industry. This is a win for the consumers, producers and our processor partners.
It will be important that the allocation of these funds is such that each sector will have appropriate access. Under the Processor Modernization Program, we welcome the announcement of funding for our processing sector. Technology is constantly changing, as you know, and this funding will allow our industries to keep pace with international and domestic competitors across the meat protein sector.
When it comes to the tariff rate anti-circumvention measures announced, which we know is a key pillar of our supply management, we have our import controls. In announcing the TPP agreement, the government committed to fixing a number of the long-term issues related to the circumventing of import quotas. That was addressed by Dave earlier in the chicken industry. We share the same concerns with the border controls and how it is being manipulated, for lack of a better word. I will not go into detail on that. I think that has been covered, but we know these measures need to be implemented as a matter of urgency. It is something that we feel should have been corrected many years ago, but now is the time with this agreement eminent.
In closing, by offering new guaranteed market access to the supply-managed sectors in exchange for potential export opportunities for other sectors of the Canadian economy, supply-managed farmers will face lost production and income. This erodes the contribution made by our farmers to rural economies and Canadian society. The access provided in the turkey sector will replace our future growth, as the TRQ will be utilized in the further processing sector, which is the driver of our growth domestically.
It is within this context that the government announced additional domestic programming and the commitment to fix long-standing issues related to border measures and TRQ circumvention. We see these as a simple statement for the government's commitment to our farmers and needed in order to secure the TPP agreement. We are supportive, as an industry, of these announcements but of course expect concrete action.
Thank you very much for your time.
The Chair: Thank you very much, Mr. Davies, Mr. Clarke and Mr. Janzen for your presentations.
Senator Mercer: Good morning, gentlemen. Thank you for being here. I have a question that I'd like to ask all of you. The government has signed the TTP. It doesn't mean implementation; it means they have signed it. It will now go before the House of Commons. There will be debate, eventually a vote and it will move through the process. The simple question is: Are you ready?
I was trying to keep score as you gave your presentations. Correct me if I'm wrong, but the chicken farmers are ready, the egg farmers may be ready and the turkey farmers aren't ready. Have I kept score properly? Can you tell me: Are you ready?
I'm a huge supporter of supply management, but the critics of supply management would say there are hurdles here and this may get in the way of our trade agreements. I want to know if you are ready. I want to know one thing the government can do to help you be more ready.
Mr. Janzen, I said the chicken farmers are ready; am I right?
Mr. Janzen: You are absolutely right; we are ready.
Senator Mercer: Is there one thing government can do to make you more ready?
Mr. Janzen: The government needs to follow through on the mitigation efforts they announced on October 5, plain and simple.
Senator Mercer: I do the majority of grocery shopping in my house. When I shop, I try to buy Canadian products, and that goes from produce to meat products. It's more difficult with produce, of course, depending on the time of year. You made a statement that Canadians enjoyed going to the store and buying Canadian-produced chicken.
Mr. Janzen: Correct.
Senator Mercer: I put on my hat as a person who has been on this committee a long time and have been to the United States a number of times and fought the battle with them over COOL. The country-of-origin labelling is something we have been against. Are you suggesting that country-of-origin labelling benefits chicken production in Canada in our domestic markets?
Mr. Janzen: It's only for marketing purposes.
Senator Mercer: That's what it's for anyway, and I think the Americans would make the same argument, that it's for marketing American chicken.
Mike Dungate, Executive Director, Chicken Farmers of Canada: The distinction is we are not talking about regulation put in by government; we are talking about a marketing campaign we have. We put our brand on our chicken so people can make that choice. It's a marketing effort from us. It is not a regulatory requirement being put in place.
Senator Mercer: That answers my question.
Mr. Clarke, are you ready?
Mr. Clarke: Honestly, I hate to start of the day disagreeing with you, but you didn't capture us quite correctly because we are ready.
Senator Mercer: That's good news. The interesting thing I'd like to underscore in your presentation was social licence. I'll talk only about egg farmers for a moment; I'm not excluding the others. The commitment that egg farmers have made to support the communities in which they operate is very significant.
Mr. Clarke: Thank you.
Senator Mercer: If we did not have the level of supply management that we have, do you think that would disappear or at least lessen the extent to which it would be noticeable in communities, where our social licence really has an impact, particularly inner cities and poorer communities?
Mr. Clarke: Absolutely, senator. If you actually asked the people that we've had an impact on with such things as school programs, Breakfast for Learning, et cetera, they would be the best people to answer the question. I'm not speaking for them, but I'm sure they would tell you and everyone else who would listen that it has a significant impact on communities across the country. I believe it is because of the success of supply management that we're able to give back to the community. We're passionate about doing that. All of us here at the table are involved in similar types of programs. It isn't just the egg farmers; supply management in general has the ability to do that.
So, senator, we are ready. The one thing I would ask the government of the day do is respect the compensation program and mitigating controls to lessen the blow to supply management upon the TPP being ratified. Those are key to us. If those are accomplished and respected by the government of the day, we'll be fine.
Senator Mercer: I'm very cautious about this. As we know, in dairy, where we control products that come across the border, that a decision by one person to allow a certain product to come across — by saying that it was not a dairy product — has had a tremendous effect on the dairy industry. We need to make sure that everybody's trained here; that everybody knows we're talking about agriculture. That doesn't mean the guy in the finance department doesn't need to know what we're talking about, the guy in Revenue Canada or the border services people.
Mr. Davies, I'm aware of some of the large turkey producers in the United States. I haven't been on their farms, but I've been by them, and they're huge. I've been in grocery stores in various parts of the United States and looked at the products. I think marketing of turkey on the retail side is a loss leader. Turkey is a perfect product for loss leaders. It's not something that you necessarily buy every week, but when you buy it you sometimes want it bigger and you obviously want quality. Am I correct there? What is the biggest fear that you have? Am I correct in saying that your industry is the least ready of those at the table?
Mr. Davies: I hate to be the second guy from the Annapolis Valley to correct you, senator.
Senator Mercer: There are other guys from the valley at the table who always disagree with me, too. Senator Ogilvie hasn't had a chance to get at me yet this morning.
Senator Ogilvie: The way you're going, I never will.
Mr. Davies: If I gave that impression, I have to clarify. We're ready. It's just the impact on our industry is significant. You may not see it until you dig deeper. I went into it briefly in my presentation. First what will come in is breast meat. That's the economic driver in our industry. It displaces the production in our country by a factor of 1 to 4, so it will all come in as breast meat. That's what has historically come in from the U.S. and many other importers of significance. That will displace production right off of a Canadian farm.
We have to have these mitigating measures put in place, as indicated by CFC, and the measures Peter has laid out.
Senator Mercer: The loss leaders I referred to are almost exclusively either complete birds or breast meat. It's never dark meat.
Mr. Davies: With the exception of thigh meat, which has gained some popularity, it's a white-meat market. Markets I indicated, like Mexico is a dark-meat market. Anything that comes into our market, it's the value we're concerned about.
Senator Mercer: Since white meat is the primary product, is there an opportunity for turkey farmers with the TPP to increase our exports of dark meat?
Mr. Davies: It's something our processors are always looking at. They're always looking for opportunities. The dollar value it generates isn't there compared to the white meat. They are opposites in our industry.
They're always trying to develop that market here in Canada through further processing. That's where our growth has been, and when this breast meat comes in that's what it's going to offset. It's really a concern for us. It's where we've focused our energies because consumers have demanded further processed products. That's where the growth is. The bagged market or traditional market grows with population, but it's at a steady level. It's the further processing that really moves our market.
Senator Mercer: Thank you.
Senator Plett: I will try to be fairly specific with my questions so that other senators will have the opportunity. Most of my questions, at least to the chicken producers, might be the same as they are to the turkey producers. There are some similarities.
Mr. Janzen, you say our northern climate, with cold winters and warm summers, result in significantly higher production costs not incurred in the U.S.A. and Brazil. Are we producing, on both the chicken and turkey fronts, as much as we can produce considering our climates? If we are, is everything as good as it can be?
Mr. Janzen: We definitely have the capacity for growth. We've been growing at significant rates these past few years. We've seen an uptake in our market. We're capable of generating 4 or 5 per cent growth annually.
Senator Plett: I agree with Senator Mercer, I prefer to buy Canadian product, but at what cost?
Mr. Janzen: Exactly.
Senator Plett: I have shared many times with the committee that I have a cottage on the Manitoba-Minnesota border that is five minutes away from a large grocery store south of the border. Even with the dollar value, and of course it's more equal now, but a year ago I could go across the line and buy. I quite frankly much prefer our chicken to that of the U.S. — it's not just wanting it to be Canadian, but I think we have better chicken. Nevertheless, the cost is significant. Are we asking people to pay more money? I don't want to be flippant, but is that what we're asking the Canadian public to do?
Mr. Janzen: Certainly there's a higher cost of doing business in Canada. We grow our birds in completely closed- barn environments. If you go down south, you'll see chicken houses in open-sided barns, flow-through ventilation because the natural ambient temperatures are better for livestock production. Feed costs are less than up here, so unit costs are considerably lower there.
Senator Plett: Being from Manitoba, they would be worse in Manitoba than in Abbotsford.
Mr. Davies, would you have similar concerns?
Mr. Davies: I won't get into a lot of detailed discussion, but I do a lot of interviews around festive seasons about turkey, and that's one of the questions that always come up: Why do we pay more? Dave started that conversation when he said it costs more to do business in Canada. Second, a lot of those are loss leaders, as was indicated by the previous senator, especially along the border.
Our focus is really the domestic market. That's what the supply-managed system is all about. We really focus on providing our consumers with what they need and the high quality. I can't reiterate enough that Canada has a higher cost in any commodity.
Senator Plett: You're not that concerned about wanting to export a lot?
Mr. Davies: No. To be frank, we can't compete with the huge infrastructure in the U.S., as a lot of Canadian industries can't do unless they're of significant size.
If I may, I just want to ask Phil if he could comment on some retail pricing, which might shed a little more light.
Phil Boyd, Executive Director, Turkey Farmers of Canada: When we were here in early December 2014, we talked a bit about consumer pricing. We've done some analysis on whole-bird pricing between Canada and the States using the statistics available to us. We found over the 14-year time frame on whole-carcass turkeys, for festive seasons or what have you, Canadian and U.S. prices were in a relevant range of each other, plus or minus a little bit. It was certainly nothing that would suggest Canadian turkeys were overpriced relative to the United States. In fact, over the 14 years we looked at, Canadians paid 5 per cent to 8 per cent less; so it's fairly tight.
The idea that consumer prices are automatically higher here doesn't always hold. I just wanted to draw your attention to that. I believe that's in our material from December 2014.
Senator Plett: There was a moratorium again last summer. If I wanted to eat chicken at the cottage, I had to bring it from home because I could not bring it across the line. Was that right across the line? They lifted the restrictions in Minnesota a few months ago but not in North Dakota. Is this something right across the line? Why was it? Did it help Canadian producers by not allowing us to deliver poultry and eggs?
I suppose it's the same question to Mr. Clarke, because I also couldn't bring eggs across the line.
Mr. Janzen: Well, certainly we noticed an uptake in chicken products almost immediately.
Senator Plett: Why was that moratorium there? I was told only that I couldn't bring it across. I was kind of happy about the fact that we finally shut them down instead of them us.
Mr. Clarke: I believe you're probably referring to the circumstance of avian influenza in the U.S. when the borders were closed because of it. As part of the international community, when an outbreak of avian influenza happens, border controls take precedence with regard to stopping traffic and product moving across the border. That was to ensure safety in areas that did not have avian influenza so they did not develop AI in their respective flocks, whether chicken, turkey or egg producers. I believe that was the circumstance. It wasn't a moratorium.
Senator Plett: Not a moratorium — I should not have used the word "moratorium.''
Mr. Clarke: There is a proper protocol always in place with regard to a period of time that our livestock has to be AI-free, regardless of the country; and that's respected. As time permits that they are AI free, those controls lessen, regardless of whether they're a state or a province. Therefore, trade starts to roll again.
The rules we have in play today are pretty well utilized in that not necessarily is a whole country shut down; we can have states or provinces where the controls are within only certain areas of states and provinces. It doesn't stop commerce on a large scale but minimizes the commerce distribution.
Tim Lambert, Chief Executive Officer, Egg Farmers of Canada: The AI conversation relates back a little to your earlier question and comment: Are we just asking Canadians to pay more? Similar to turkey, it's not always the case that eggs are more expensive in Canada, but accepting that in many cases product in the U.S. is somewhat cheaper, it's true of most things. We have a different tax structure. We have a health care system. We have all the things that you know of that benefit us as Canadians.
The other thing that is probably less widely known is that in order for the U.S. to produce the way they do, it's done through massive economies of scale. The average egg farm in Canada is about 22,000 birds. The average layer farm in the U.S. is 1.5 million birds. Just think of the environmental challenges and disease management challenges. They lost 36 million birds in the Midwest through the AI crisis in the past year. We had a couple of isolated outbreaks. We have production right across the country in smaller units. We have the contribution to rural stability and that local economy of supported feed mills, vet practices and machinery dealerships.
The impact of having supply management and stable domestic production goes far beyond and far deeper than just the per-unit cost of the product. I don't think Canadians want to buy their food from that kind of massive-scale production that's concentrated in a few areas.
Senator Plett: Mr. Janzen, in your presentation you mentioned something that you kind of went over fairly rapidly. One of the biggest concerns that I have heard from the Manitoba Chicken Producers when they have come here and visited me is the spent fowl situation. Could you explain that for our viewers' benefit? There are people who watch this show at 3 o'clock in the morning when they have insomnia, so they might be interested in what spent fowl is and what the big problem is with the spent fowl situation.
Mr. Janzen: Thank you very much for that question. Spent fowl are old laying hens that have completed their laying cycle and then go for slaughter. That meat is used for human consumption. Spent fowl is not on the import control list, so it can come into this country tariff-free and duty-free. Miraculously, when it comes to the border, it's classified as spent fowl. After it comes into this country and goes through a processing and packing facility, it becomes chicken and enters the Canadian chicken market. It's one of those great mysteries. It comes as spent fowl and ends up on the grocery shelves as chicken. This has become a significant displacement of our domestic production, representing nearly 10 per cent.
Senator Plett: Who's doing the cheating? Is it the Americans or us or both?
Mr. Janzen: Not all of it is cheating. Spent fowl can come legitimately into this country. Our problem is that not all of it is actually spent fowl. They're chickens masked as spent fowl because that's the way they can bring it in and get around the import controls. That's the problem.
Senator Tardif: My question is to all three associations before us today. If I've understood correctly, the impact of increased access to your industries because of the TPP agreement will be negative unless you can offset that impact through an increase in market access to your products in the domestic market. Is that correct? If that is so, what can be done to increase the domestic market for your products? Will the costs come down because of that?
Mr. Davies: Thank you for your question. In our case, it might be unique as compared to my colleagues. I'd indicated in my presentation that we have a mature market in turkey. We don't, unfortunately, share the same type of growth that chicken does. At this point in time, with the increase in access, it is targeting our one growth area, which is further processing. We've targeted a lot of energy and resources and actually changed the whole way we allocate our production to recognize that and focus on that, as I'd indicated. That's what the consumer wants, is the further processing industry. So what is going to come in is directly going to target and offset that because that's the high-value part of our industry.
It's not just the number of kilograms that will come in; it's the dollar impact it will have, as well as what it removes off the farm from the actual farmer. It will affect the processing industry as well as the farmer community, the producer community.
Mr. Clarke: Thank you. For us, our markets, we have been very successful in market growth, both in the table consumption and further processing of eggs. Over a period of time that natural growth will actually help to soften the blow of the impact of the eggs, of the 19 million dozen I spoke about, but it will take several years for that to be offset.
We're fine with regard to the market access that we have, both on the table side and the process side. I'm sure that, through new development, new products, we always have and will continue to have those opportunities.
Your question was also if the prices or costs will come down. Costs will be what they are relative to our inputs, and not necessarily over time would those costs actually come down, although we have demonstrated, in the past, that our markets move with the costs of our inputs. I can't categorically say that they will come down, but they're always a good price to the consumers.
Mr. Lambert: Just to build on that, our industry has grown a little over 22 per cent in the last nine years, so we've shown steady growth over the last decade, year over year. But the fact remains that that 19 million dozen is, every year, production we won't have in Canada, so it does have an impact. While you're growing, you don't ever really totally grow out of it because you've always lost that economic output. It does have a real and lasting impact. That's where it is a package deal with the mitigating strategies to help us manage it, many of which were talked about today and are within government's control, and the compensation. I think those things, taken together, are key in terms of helping industries overcome this.
Senator Tardif: Yes, Mr. Janzen?
Mr. Janzen: Absolutely any market access that's negotiated in a trade agreement is permanent. It becomes a permanent piece of the Canadian chicken industry pie.
Our efforts have been working with the government all along, during the trade negotiations, to mitigate that risk by dealing with these other import-control issues that I've outlined. That is the way that we can regain, to your question, some of our domestic market and strengthen our industry. It brings us predictability, increases our production and lowers our unit costs. That's the way that we can benefit and strengthen the Canadian chicken industry: by mitigating these import-control issues.
Senator Tardif: What is our market outlook for Canadian products, especially in the Asian market?
Mr. Dungate: I think this is part of the challenge, we're saying. From a meat perspective, in chicken, only 10 per cent of global chicken production is traded. It's primarily a fresh market, a local market. Chicken has the shortest shelf life of any meat. You can ship beef around the world. You can age it en route; you can do all of that. Ours tends to go stale-dated very quickly, unless you'll freeze it. As soon as you freeze it, you lose about half the value.
We are already about the eighth-largest exporter of chicken in the world. You say, "Really?'' But that's because Brazil and the U.S. are 75 per cent of global trade in chicken. Everybody else is small by comparison. It is really a market. The U.S. does it to balance the market between white and dark meat, as we do. In our market, they export about 18 per cent. So they're the top country exporting, and they export 18 per cent. That's what I'm saying. There really isn't a market that far away for a chicken product, unless you're adding a whole bunch of value into a prepared meal that's frozen or something like that. With the cost issues we have, that's a long way to go.
Senator Tardif: Thank you. Mr. Lambert?
Mr. Lambert: In the case of eggs, it's largely a fresh market. There's trade with the U.S. That's about it. Some powdered egg will go to Asia, but that's really a very low-value market. It's more if we have surplus. It's just not a driver or even really an opportunity for the egg industry.
[Translation]
The Chair: I would ask that senators and witnesses be more concise with their questions and answers, if we want to have a second round of questions so that we can give all of the senators an opportunity to put questions.
Senator Dagenais: I am going to make you smile a little. I was in the United States over the holidays. We bought a turkey at Winn-Dixie for 65 cents a pound; it was not expensive, and we ate a lot of it over the holidays. In fact, I am going back to the United States next week; I expect that there is some left in the freezer and that we are going to eat some again. That said, it was quite good. As for the price — I do not do the shopping, as opposed to Senator Mercer — we purchased a dozen eggs for $1.50, and my wife told me that that was not expensive. I do not know the prices, but she was very surprised by them.
Which leads me to my question: ever since I have been a member of this committee, we have heard a lot about spent fowl. My question is for Mr. Janzen: I would like to have an example of what spent fowl consumers find on the market, without necessarily knowing what it is.
I also have a second question: if you had recommendations to make to the government, how do you think it could it intervene to settle this matter?
I believe I understood that these products could be offered in Canada — the word may not be too strong — in a fraudulent way, in some processed way.
[English]
Mr. Janzen: Thank you very much, senator, for those questions. Some typical examples of finding spent-fowl products in Canada would be in further processed products, such as chicken burger patties. Anything that has been marinated and further processed with some batter could have any composition of spent fowl in it as well, and you would not know that because the label would say "chicken.'' They can mix it in with regular chicken meat. So the consumer really doesn't know.
In terms of recommendations to government, we've been absolutely clear in our requests. We request that the government require certification at the border that the products and shipments coming in have been certified by the USDA to be spent fowl. The American industry has voluntarily submitted to a certification system but, as yet, we cannot get the Canadian authorities to require it at the border. That would be a very simple first step.
Mr. Boyd: Senator Dagenais, I appreciate your comments on the 65-cents-a-pound turkey. I'm glad you enjoyed it, by the way, but we know that that's extremely undervalued at 65 cents a pound. We see turkeys featured from time to time at 99 cents a pound. That's undervalued. That's the loss leader thing; it's certainly not the norm or where we would like to see turkeys priced.
I just wanted to clarify that price is definitely the product of a retail strategy in a local market.
Senator Unger: Going back to spent fowl, is it such a bad thing to eat? I was raised on a farm and we ate chicken a fair bit. Listening to you, Mr. Janzen, what is wrong with a chicken burger? I'm really perplexed by this negative commentary. I agree that it's not right that the labels aren't properly applied at the border. Especially now that COOL has been repealed, people should know what they are eating. But soup, chicken stew, pot pie and all of those things, we put spent fowl in that. Is that bad?
Mr. Janzen: Thank you for the question. No, it's not bad if the consumer knows that they are buying a stewing hen and they want to make soup out of that. That's not a problem at all.
Our problem is if they buy a box of chicken and they think it's Canadian-produced chicken but may contain spent fowl product, that lessens our brand. We are working very hard to develop our brand of "raised by a Canadian farmer,'' and we pride ourselves in a very high-quality product that is safe to eat. We know where it was raised and we know under what conditions it was raised.
Senator Unger: So it's mainly an issue of labelling, as far as you're concerned?
Mr. Janzen: It goes beyond that.
Mr. Dungate: The issue for us on spent fowl is fraud. You can import spent fowl. We're not trying to stop spent fowl imports if it's legitimate spent fowl for soups, pot pies and those types of things. With spent fowl, the muscle is tougher in the meat. You put it in soup and it works. If you put in young broiler meat, it kind of dissipates because of the marination. It's a better product for soup, so it has its uses.
But when somebody is circumventing our import controls — when we import more spent fowl from the U.S. than they produce in the U.S. — we know they are cheating and bringing in broiler chicken and claiming it is spent fowl when it is not. It has nothing to do with marketing spent fowl. Label it and put it where you want, but don't import it and let people circumvent our import control system.
Senator Unger: How long have you been trying to get this issue of fraud corrected?
Mr. Dungate: Four to five years easily, in terms of that, and the number keeps going up. As long as we don't do it, people are encouraged to keep doing it because they are getting away with it.
This is the point that, as Mr. Janzen said, it will not affect any legitimate use. The spent fowl companies in the U.S. are seeing their market eroded by this illegal work, because they have a market for legitimate spent fowl here, and it's being disrupted because of illegal imports under the guise of spent fowl. They don't want to see an overreaction from Canada in terms of it and stopping all spent fowl imports; they want legitimate spent fowl to be able to come in freely as it is.
Senator McIntyre: Thank you, gentlemen, for appearing before our committee. Thank you for your presentations, which I found rather interesting.
There are 11 senators asking questions, so a lot of the questions I wanted to ask have already been asked and answered. So I'll ask you two short questions.
You all represent farmers. What about the farmers themselves? As you've indicated, there are victories but there are also sources of concern regarding the TPP agreement. Are those concerns shared by a majority of the farmers you represent? Short answers, please.
Mr. Davies: Thank you very much for your question. I think it's a good one.
Over the last few years, even before the TPP, there was the WTO. There is always this cloud of uncertainty hanging over producers of agricultural commodities — be they exporters or domestic. In our case, there was always that cloud of uncertainty.
Having the TPP come close to a resolution — as indicated, it has not been ratification yet but has been signed — that provides us with a base from which to work. We have some level of certainty, if you will, on what the future looks like, and I've identified some of those challenges in here. They are much greater than we would have liked as an outcome. We are ready, as I've indicated before, and we will do what we can to mitigate those, along with the government and some of the commitments they've made.
If anything, it has provided a level of certainty on a go-forward basis, but it's always of concern. During this year's annual meeting rounds, when we do the provinces, it will be a number-one topic.
Mr. Clarke: Mark has covered it well. It is our ability as supply management to always keep in tune with the farmers because of the different organization structure we have across the country that we are always talking to our farmers. Yes, they are concerned, but they are on side with us in regard to making sure we have the best deal we can. As long as things are respected in regard to the compensation and honouring the mitigating circumstances, they will be comfortable with this deal, with the security of knowing where they are and going forward from here.
Mr. Janzen: Our farmers view this as a package. They were very concerned about the concessions that Canada had to make in chicken in order to garner a deal, but they view this as generational deal. This is a huge trade agreement. It's in place for generations to come.
But, as already mentioned, it provides predictability and certainty if it is implemented as a package. That includes the anti-circumvention import-control issues.
Senator McIntyre: More and more Canadians are buying organic foods. I'm one of them. Are we in Canada producing more organic eggs, chicken and turkey? What about other countries?
Mr. Clarke: From our perspective, it's key to produce what the consumers really want. Are we producing more organic probably than we were a few years ago? Yes. But we always try to keep in tune with what the consumer wants, and we're going to try to provide that, whether it's organic, value-added, omega-3, et cetera. We are always going to address that market, and our farmers are prepared and will gear up to do that.
Mr. Janzen: We're certainly seeing some shift in the market in terms of organic, free-range and specialty products. We are very much aware of that. We are continually working with our primary processors in supplying the products that they require. Is it a huge market at this point? No, but it's there. It's an emerging market.
Senator McIntyre: I always read the labels, and I like to see chicken running free, and I buy it.
Senator Beyak: Thank you, gentlemen. Your presentations were informative, up-to-date and very proactive. I'm very proud to be a Canadian and buy Canadian products. I'm sure, as Senator Plett said, those watching at home feel the same way.
My question is about marketing, and I think "raised by a Canadian farmer'' touches everyone. We hear from witnesses that Canadian products are loved worldwide because of our clean air, clean soil and clean water. I wonder if you have marketing divisions that work together to market your products. I've seen some wonderful commercials. I think turkey should be a monthly event, personally. Do you work together to promote our Canadian products?
Mr. Lambert: Each one of our commodities has their own marketing and communications team. We work closely with each other. For example, on Sparks Street in the summer — in fact it will be early in June, and we invite you all to come — we have our downtown diner and we bring our supply-managed commodities partners. We do a lot of our own and we do some work across commodities.
Mr. Davies: I would reiterate what Tim said. The one thing with turkey, I appreciate the comment on a monthly event. That's been our struggle. It's not just a festive food, and we are slowly gaining ground there. You see more turkey products in the context of fast food and the offerings in the grocery store that are easily prepared. We're making ground there; it's just getting the mindset changed. We hope this new generation is open to that. We're always looking for opportunities within our processing industry, and there are more products every day.
To come back to my presentation, that's where our growth is as well as our concern. You can see we have a challenge ahead of us. We would like to make it a weekly event, if we can push it even further.
Mr. Dungate: Rather than just the strict marketing per se, we talked about social licence and what we do. I would put all of us as the leaders in on-farm food safety, animal-care programs, reducing the use of antibiotics in production of animals. We are at the forefront because that's what consumers want and that's where it's going.
We are not only looking at science; we are looking at what consumers want and getting ahead of the curve. You will find our three organizations at the front of all those programs, and we compare and work together on these issues and market our products within that. That's where we've got to keep pushing.
Senator Beyak: I imagine you love the A&W commercials for the antibiotic-free chicken.
Senator Oh: Gentlemen, thank you for providing a lot of information. I would like to take it overseas on marketing. The TPP agreement provides tariff concessions on Asian and Oceania countries. We have been exporting blueberries from B.C. and lobsters to the Asian market in a big way. With the low Canadian dollar, do you see a good opportunity for you to enter the Asian and Oceania market? There is a huge market over there. Many airlines link Asia to Canada. Every day there are many jets coming from Asia. They need to have something going back to Asia. Can you comment on that?
Mr. Lambert: Eggs can be fairly quick because, as we mentioned earlier, they are a fungible product. It's typically local. It's not easy to transport shell eggs, so we don't see much of an opportunity to the egg industry. There is some egg product exported but it's quite limited, and we don't see that as a significant opportunity.
Mr. Dungate: We gave up significant access in the TPP, and while that access is provided to all 11 other countries, only the U.S. is going to get chicken access to Canada because it has to be fresh and local. They are the only ones placed to take advantage of the Canadian market.
The reciprocal is also the case. It's difficult for us to take advantage of other markets. We export to Asia, but it is frozen dark meat. It is not a high-value product; it is a lower value product and is really a protein source. Just like the United States, it is a balancing of our main market of white meat and an Asian preference for dark meat.
We will take the small advantages where we can, but I don't think it is a huge opportunity for us.
Mr. Boyd: I would echo the same comments as Mike. Turkey meat is popular in Europe and North America, but not always so popular or even known in parts of Asia and Oceania. There is a huge challenge in terms of introducing a brand new meat protein to various parts of the world.
Maybe there are tariff concessions in place. There are non-tariff barriers to trade as well, whether there are sanitary and phytosanitary issues or other non-tariff barriers that still exist and are difficult to overcome, even if tariffs are low.
In terms of our trade, we export frozen dark meat. A couple of years ago whatever we exported, on average, was 90 cents a kilogram in world markets. What we're bringing in on the import side averaged about $5 a kilogram, largely breast meat from the U.S. There is that balancing act that the U.S. is contending with that we contend with as well.
As Mr. Davies pointed out, we are not sure we see a lot of opportunity for export of Canadian turkey meat as a result of the TPP agreement, as we understand it. Maybe we will be surprised down the line; we'll see. At this point we're not so optimistic about that.
Senator Oh: With the low Canadian dollar, things coming from the U.S. are more expensive. Does that help your market?
Mr. Clarke: For us, yes, it does. It changes the commerce just because of the low Canadian dollar.
Mr. Dungate: Food prices are going way up because of some drought in California. We rely a lot on imports for fresh produce coming into Canada. If you look at our commodities and the price relative to other meats, chicken has been stable. In fact, over the last two years the price that the farmers are getting paid is down 7.7 per cent. Even when food is up at retail, what the farmer is getting paid is down. Why? Because we are becoming more efficient, we contain costs, feed prices are down, and we pass those down to consumers. We don't take them ourselves; we pass it on in the chain.
In supply management, we keep a stable environment, and if you look at the food price increases, if you look at all the supply-managed commodities, they are fairly stable over the last two to four years compared to every other commodity that you are buying in the grocery store.
Mr. Davies: I would agree with Mike. To our producers, it is the same thing. The live price has gone down, mostly because of our highest input cost, which is the feed grains. That is a real positive force, supply management, and it shows we are on the leading edge of technology and lowering costs to provide the same or higher quality product and new products on an ongoing basis without incurring higher costs.
Senator Ogilvie: I have followed your industries for some time and appreciate your presentations today and understand them very well, particularly the issue of fraud in composition of materials coming across the border. It occurs in many of the produce areas, and it astounds me that we have not followed up on it.
My question is related to the use of antibiotics which, as you are all aware, is a major international issue. As humanity we are entering a very dangerous era of antibiotic resistance. The lack of antibiotics effective against major and common diseases is increasingly an issue. One of the concerns has been the general use of antibiotics in agricultural areas, in animal and fowl production.
There are two categories of use of antibiotics. One necessary use is when you have a detected illness that requires a prescribed antibiotic for a definitely-identified challenge. That's a reasonable, required and necessary event.
My question deals with the general incorporation of antibiotics as routine in the feed going into production. Are you seeing significant changes in that area in recent year? Is there a plan to gradually reduce that to as low a level as possible?
Mr. Lambert: Antibiotic use is not common in the egg industry. There is often criticism of layers being in conventional cage systems, but when they are in caged systems they are separated from their manure and unlikely to come in contact with bacteria or viruses so they don't tend to get sick. We rarely use antibiotics.
Where it creeps into our system from time to time is through feed mills where they haven't properly cleaned out from a previous batch of feed. We're working closely with them and we'd like to get to the point of being able to claim that we're antibiotic-use free, but we are not able to do that yet. I think it is widely misunderstood by the public; in layer production it is hardly ever used.
Mr. Clarke: I couldn't tell you when we last used antibiotics in egg production because it's been that long, and then it would have only been for a prescribed rationale, as you indicated. As Mr. Lambert indicated, it is not a part of our industry — and should not be tied negatively to our industry — unless under prescribed application. I hope that's clear.
Senator Ogilvie: I was somewhat aware of the differences. My question is more directed to the meat production side of the issue. Can I get a quick answer on that?
Mr. Davies: Senator, you framed it well in laying out how it should be, and that's exactly our focus. Antibiotics should only be used under the supervision of a veterinarian and when needed; not as a course of production, and not as a program. It used to be years ago. Within our industry, we have done surveys to determine the level of use, and it's not a very high level. We're moving quickly toward no use whatsoever. At this point I'm secure in saying that it's really under a vet's supervision. That's the focus of our industry. We are heading down that path, and hope to be there very soon.
Mr. Janzen: Thank you very much for those questions, Senator Ogilvie. It is a very important topic for Chicken Farmers of Canada. Antibiotic use has been a critical priority for us for the last five years, and we have continually addressed looking at reduction of antibiotic use. In May 2014, we eliminated the preventive use of all class 1 antibiotics — those most important to human health. Antibiotics are a critical part of our livestock production, but we take their usage seriously and are very concerned about resistance and the effectiveness of those antibiotics in humans.
Right after this meeting we are going to a public health meeting discussing antibiotic usage in livestock.
Senator Mercer: To our friends the chicken farmers, it seems to me that in advertising today, more and more people are talking about "no antibiotics.'' Senator Beyak mentioned the A&W commercials.
I want to go back to the spent fowl discussion we had earlier. It would seem to me that advertising "contains no spent fowl'' might draw the public's attention to the fact they don't know what spent fowl is. We are just learning what spent fowl is. It might be an interesting marketing tool to qualify "no spent fowl'' and address the issue of it coming across the border.
Senator Moore: My questions pertain to the chicken industry. Mr. Dungate, I think you said that Brazil and the U.S. account for 70 per cent of the world's — Production? Market? What was that?
Mr. Dungate: It was 75 per cent of global exports of chicken. They are the two largest producers in the world, but they wouldn't have 75 per cent of the production. Of global production 10 per cent is traded, and they account for 75 per cent of that.
Senator Moore: Where is Canada in terms of those percentages?
Mr. Dungate: We are the eighth-largest exporter of chicken in the world, but we would export about 6 per cent of our production.
Senator Moore: In your brief, with regard to the TPP, you say the Income Guarantee Program would provide approximately $225 million over 15 years. Who decided on that number, and how was it decided? After 15 years, what happens? You also mentioned mitigation. What does that include?
Mr. Dungate: I assume officials at Agriculture Canada developed the model in terms of the impact. They came out with a number and presented it to us; I think our number is somewhere around $80,000 per farm. It works out to $5,600 per farm in Canada before tax. If we look at our own calculation of the impact, it will be a loss of about $61 million a year in sales. If you take $225 million, it will provide compensation for four years, and it will be there permanently. This is not keeping us whole; this is the number that is there. We're trying, as Mr. Boyd said, to ascertain how they came up with the calculation, how it was done, and on what basis.
Senator Moore: Your organization did not have input?
Mr. Dungate: No, none of us did.
Senator Moore: Is that same with the other organizations?
Mr. Davies: To be clear, we provided a lot of information. We were always willing to sit down with them to provide information — figures, facts, suggestions — at any time, until the eleventh hour. We had expected to be talked to.
Senator Moore: But you didn't have the opportunity. What did you mean by "the share of the Canadian market can be maintained by mitigation?'' What does mitigation include?
Mr. Dungate: There are issues for us in terms of circumvention of our import controls. We are going to allow access in through our tariff-rate quota: it provides access, we allow it in and we don't play games. There are people playing games around that, and one was spent fowl, the fraud there. Second was the Duties Relief Program. What we've seen is you can bring in agricultural products, process them, and you have four years to re-export them. The program at CBSA was not designed for agricultural products. There is a program at Global Affairs Canada that is, and you have to re-export within three months; but you're not keeping food around that long.
So what we have is people importing and marketing this extra product in the domestic market. Are they going to go out of business before the four years comes when they have to export the stuff?
Senator Moore: You mentioned that the U.S. has agreed to regulations with regard to the spent fowl issue, but you said that our border people are not enforcing that.
Mr. Dungate: They have not accepted the certification.
Senator Moore: Who are "they?''
Mr. Dungate: Is it the responsibility of the Canadian Food Inspection Agency or Canada Border Services Agency?
Senator Moore: That's what I'm asking.
Mr. Dungate: There is an issue around who is responsible and who will do it. We understand that discussions are ongoing. Our point is: Let's get moving.
Senator Moore: How long has this been such a major issue? What's being done today about fixing that and sorting out the jurisdiction between those two agencies and getting it enforced?
Mr. Dungate: We had an import working group in 2011 with a report signed off by Minister Ritz. One of the key issues said that it would be implemented on January 1, 2012.
Senator Moore: We've gone by that, so now what?
Mr. Dungate: We've gone by that timeline.
The Chair: Excuse me; Senator Unger has a short question for you.
Senator Unger: Yes. Are you prepared to lobby against the TPP if you don't feel that all of your conditions are being met?
Mr. Clarke: It's certainly premature for us to answer that. As we indicated before, our best understanding is how the deal is put together and what the opportunities are for us mitigation-wise and so on. If in fact that rolls out true, we're going to be comfortable in supporting it as it is.
Senator, with regard to your previous comments on mitigation for egg farmers, one of the most important things for us is our right to direct that new product as it comes across the border today and into the future under the TPP. If Egg Farmers of Canada can have the right to direct that product, it would be extremely important for us.
Senator Moore: Does that apply to turkey farmers, too?
Mr. Davies: As I've indicated before, we've taken a substantial hit, but even under that notion we're still willing to work and manage if the agreement is laid out in the way indicated and the mitigating and programs are put in place. Again, it's a little premature, but if what we expect to happen actually happens, we'll manage our way through it and have a healthy industry at the end.
[Translation]
The Chair: Before closing this meeting, I would like to congratulate Mr. Clarke for his work in schools regarding the breakfast clubs. I hope that this will spread throughout Canada and that other associations will join you. Mr. Janzen, we have two questions we will forward to you in writing, since our time is limited. If you would be so kind as to answer them, this would help us greatly in our work.
Finally, I would like to raise one other point. All of the fast food restaurants in Canada, from Newfoundland to Vancouver or Victoria, always say that "Canadian chicken'' is used. However, we are not sure that these establishments use Canadian chicken. If your organization were producing the publicity materials for these establishments and added its endorsement, they would no doubt be obliged to purchase Canadian chicken. That is food for thought.
I want to thank you sincerely for your statements, which will be very useful in our work. If you have other concerns that have not been raised today, please send them to our clerk and analysts. That way, when we draft our report it will be well substantiated and will faithfully reflect your testimony.
We will now allow our witnesses to leave the room. We have a few minutes left to examine the committee's budget. Do you all have in hand a copy of the budget for the trip to Moncton? Have you had time to look at it? Do you have questions on that budget?
[English]
Senator Mercer: Mr. Chair, you all have in front of you the budget as proposed by the steering committee. I would move approval of that budget, Mr. Chair.
Senator Plett: I second that.
[Translation]
The Chair: Are senators agreed? Do you have a question?
[English]
Senator Unger: Yes, I have a question about Senator Oh's question to our panel. Basically, they said they're not prepared to export anything to Asia. He used the example of lobster, which is a very short-term product as well, being exported all the time; but these guys really didn't seem interested.
Senator Plett: I'm sorry, Senator Unger, that is not what they said. These were egg farmers, chicken farmers and turkey farmers, not lobster farmers. They said they couldn't export chicken because it is a fresh food product. Eggs and chicken would not stand the test of time going across the ocean. None of these were lobster farmers. We are asking questions of chicken farmers; let's not ask them to answer for lobster farmers.
Senator Mercer: You don't farm lobsters, by the way.
The Chair: There is a motion on the table. It's necessary to vote on the motion.
Senator Moore: Question.
Senator Mercer: Question.
The Chair: We have an obligation to choose a date for our trip to Moncton. Afterwards, senators can continue the conversation.
Senator Tardif: We had spoken of our study in a different context. We're just presenting one part of it; is that correct? There was a question of perhaps going to the West as well, to look at the study, and perhaps travel internationally.
[Translation]
The Chair: Yes, that is it. We separated them. There is a trip to the Maritimes, and as we were all in agreement, we chose Moncton. There is also the trip out west, and we agreed to go to Edmonton. The witnesses from Quebec and Ontario will come here, since they are closer to the city of Ottawa. In that way, we will not have to travel in the two central provinces. Agreed?
Senator Tardif: The budgets will come back?
The Chair: Yes. They will come back for Edmonton.
Senator Tardif: Very well.
The Chair: Has someone made a motion? I believe that was done. So, everyone is in agreement?
Some hon. members: Agreed.
The Chair: Now, as for the dates, the steering committee gave this some thought and chose the period from March 13 to 16, during which the Senate is in recess. If those dates suit you, this will allow us to make all of the necessary preparations to go to Moncton. We would like to have the participation of as many senators as possible, but we will also understand if certain senators already have commitments, and we will respect that. However, all of those who can come will be welcome. Does that time period suit you? It is difficult to find time before May 7.
Some hon. members: Agreed.
(The committee adjourned.)