Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 3 - Evidence - Meeting of February 25, 2016
OTTAWA, Thursday, February 25, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 8:01 a.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Donald Neil Plett (Acting Chair) in the chair.
[English]
The Acting Chair: Honourable senators, I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Donald Neil Plett from Manitoba, the acting chair of the committee.
I will start the meeting by asking my colleagues to introduce themselves, starting with my good friend from Saskatchewan.
Senator Merchant: Hello, and welcome. I'm Pana Merchant from Saskatchewan.
[Translation]
Senator Tardif: Claudette Tardif from Alberta.
[English]
Senator Beyak: Lynn Beyak, Ontario.
Senator Oh: Victor Oh from Ontario.
Senator Unger: Betty Unger, Alberta.
Senator McIntyre: Paul McIntyre, New Brunswick.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Acting Chair: Today the committee is continuing its study from the last Parliament on international market access priorities for the Canadian agricultural and agri-food sector. Canada's agriculture and agri-food sector is an important part of the country's economy. In 2013, the sector accounted for one in eight jobs in Canada, employing over 2.2 million people and close to 6.7 per cent of Canada's gross domestic product. Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global exports of agri-food products in 2014. In 2014, Canada was the fifth largest exporter of agri-food products, globally.
For our first witness today we welcome from the Canada Organic Trade Association Ms. Marie-Ève Levert. I thank you for accepting our invitation, and I invite you to make your presentation. Following that, the senators will have questions for you.
Marie-Ève Levert, Manager, International and Regulatory Affairs, Canada Organic Trade Association: Good morning, Mr. Chair, and honourable members of the committee. It is a pleasure to appear before you for the first time, and I am delighted to be here this morning to share my organization's perspective on international market priorities for the organic sector.
In my capacity as the International and Regulatory Affairs Manager of the COTA, I am responsible for our foreign market access program. I help Canadian companies explore new markets abroad, notably in the U.S., Europe and Japan. I also sit on various industry committees, including the Organic Value Chain Roundtable. COTA also partners with the Organic Science Cluster, the Organic Federation of Canada and Canadian Organic Growers.
COTA is a membership organization that represents organic farmers, manufacturers, inspectors, exporters, distributers and provincial organizations. COTA views progressive trade measures as a means to expand and strengthen the organic marketplace in Canada and abroad, while improving the competitiveness of our farmers and businesses.
The latest statistics show that the global organic market is now valued at more than $80 billion in consumer sales per year. Canada is the fifth largest market in the world, valued at over $4 billion a year. Our organic exports average more than $558 million per year.
To gain international market access, Canada has been negotiating equivalency arrangements with its trade partners. These bilateral agreements are based on mutual recognition of the organic standards and reciprocity. We now have agreements with the U.S., the EU, Switzerland, Costa Rica and, last year, with Japan. Canada is a leader in establishing the trade agreements for organics.
For the past 10 years, organic sales have seen a continued double-digit growth in Canada, but our biggest challenge remains inadequate supply. The numbers of organic growers has increased slightly in the past two years, but the growth at the production base is not enough to keep up with the rising demand. We need more growers and more acres to supply our manufacturers and processors.
There are three key components to ensuring sustainable improvement of our production capacities: We need to increase supply by supporting farmers to transition to organic; we need reliable data to measure our success and to seize new opportunities; and, finally, we need to maintain our equivalency agreements. These components are also inherent to the competitiveness and profitability of the organic sector.
To increase supply, we must support producers transitioning to organic. Transition can take up to three years, which can be costly and disruptive for growers who cannot yet access the organic premium for their crops. The EU and U.S. have assisted farmers with the cost of transition and/or the cost of certification for well over 15 to 20 years and now enjoy a solid producer base as a result.
For example, our trade partner, the U.S., developed in 2002 a National Organic Certification Cost Share Program. This program supports up to 75 per cent of the cost of certification. The Agriculture Act of 2014 allocated more than $57 million to this program.
Implementing a similar national cost-share program in Canada would ensure fair competitiveness for our industry, and it would also help increase our capacity and fill the current organic supply gap.
With five organic equivalency arrangements across the globe now, the Canadian organic sector needs to be able to measure its success and understand the effects of these equivalencies on its internal market. Current information on the exports and imports of organics, as well as information on national production is fragmented and incomplete.
COTA has been working with Statistics Canada and AAFC to create a series of new harmonized system codes to quantify the value and volume of our trades, and we hope our demands will be taken into account. So far, our requests to increase the number and the relevance of the questions related to organic production in the 2016 Census of Agriculture have not been echoed by Statistics Canada.
We cannot emphasize enough that we need routine, consistent, reliable data to make better business-, policy- and program-related decisions.
Maintaining our equivalencies with international jurisdictions and expanding into other key countries, notably South Korea, is crucial for ensuring secure market access for Canadian companies. Our agreement with the U.S. is up for renewal in a few years. In our next negotiation cycle, we must take into account the specificity of Canada's organic regime and ensure that we maintain the concept of critical variances with the U.S.
Canada is one of the largest organic markets in the world. In order to maintain our leading position and continue to increase our international market share, we must build a wider supply across the country and develop support programs for new industry entrants. Increasing our organic food supply and its resiliency is the stepping stone to competitiveness and profitability for the organic sector.
Thank you very much for inviting me today. I'm pleased to answer any questions you may have on my sector.
The Acting Chair: Thank you very much, Ms. Levert, for your presentation.
Just one very quick question before I go to my colleagues: Are you a grower yourself?
Ms. Levert: No, I'm not a grower.
The Acting Chair: And never have been?
Ms. Levert: Never have been.
Senator Unger: Good morning. Thank you for your presentation. My question is in regard to something you didn't mention, and that is agri-food Canada dairy products. Is that something that falls under your jurisdiction?
Ms. Levert: Organic dairy products fall under our jurisdiction, yes.
Senator Unger: Dairy products accounted for 28 per cent of the global organic product market in 2010 and make up the largest contribution to the global organic product market. If the TPP is ratified, do you think it will be easier for you to take advantage of export markets in dairy and, if so, why?
Ms. Levert: Trade agreements like the TPP don't interfere with our equivalency arrangements. They're going to break down some tariff barriers that we might have with other countries, but it's basically the organic equivalency arrangement that helps organic dairy producers export abroad. If we don't have an equivalency arrangement with another country, then the producer needs to be certified to the other country's standards, and it's usually not worth it for dairy producers.
Senator Unger: What is the difference between organic and nonorganic milk? Does this organic milk come from special organic cows? Could you explain that?
Ms. Levert: Yes. They come from a dairy farm that is certified under the organic standards. They have special requirements for the cow and for feeding. They can only give organic feed. They cannot use any GMO corn or soybean in their mixed feed. Then there is a series of regulations for the wellness of the cows as well. They are different standards.
Senator Unger: One last quick question. Is this a part of a supply management organization?
Ms. Levert: Organic dairy producers are subject to supply management.
Senator Unger: So that helps.
[Translation]
Senator Dagenais: Ms. Levert, thank you for your presentation. I am sure you are aware that there are several agri- food sectors that receive government assistance at various levels. Can you tell us whether you receive similar assistance, and could you also compare the traditional sector and the organic sector with regard to government aid? Afterwards I would have another short question for you.
Ms. Levert: Our organization, my association, is funded by our members. However, regarding exports, we receive funding from the AgriMarketing Program. So, we do receive a certain amount of funding from the federal government.
Senator Dagenais: What about the traditional sector? Does it receive similar funding, or more?
Ms. Levert: Since our association represents the whole value chain of organic products, we receive less than other sectors, if you look at the whole chain of agricultural values in Canada.
Senator Dagenais: Regarding organic products, how are you perceived in the United States? If you had recommendations to make to us that could help you, what would they be? For instance, in the context of the Trans- Pacific Partnership Agreement, the United States is our main market. I would imagine that you sell a lot of products to the United States. So, how do the Americans perceive you?
Ms. Levert: We have an equivalency agreement with the United States, which means that our producers, our processors and our organic companies can use the Bio Canada logo or the USDA logo. So there is no hostility; it is very easy for us to export to the United States. It is one of the biggest markets, and the most important recommendation I could make, in fact, would be to maintain our equivalency. Over the next year or two, we will have to renew our equivalency agreement, and it will be important to do so. Organic products are governed by the Safe Food for Canadians Act. When the law comes into force, we need to be able to sign our agreement once again without encountering any problems.
[English]
Senator Oh: Thank you, chair. Thank you for your presentation. Organic is a nice name. It's good for my grandchildren, but I think it's a bit too late for us sitting here.
Ms. Levert: Too late?
Senator Oh: This is a big market — $64 billion a year — and Canada is the fourth largest organic market producer. How do we supervise this? A $64-billion market is huge. Are there that many organic farmers that produce that much for the supply and demand? Who overlooks every country that has its own organic producers?
Ms. Levert: Each country has their own organic standards, and it depends, but it's usually supervised by the government. For example, the Canadian organic regime is under the CFIA. Each country is responsible for implementing its own standards and ensuring that their producers and growers are following the standards that they're supposed to.
Senator Oh: What are the global market challenges that you are facing?
Ms. Levert: For the past few years, we had an issue with our equivalency with Europe, which was asymmetrical. That meant that other products could come into the country, either 100 per cent from Europe or products that were processed with ingredients from across the globe but that were certified to the EU organic standards.
The equivalency was asymmetrical, because we could only export products that were 100 per cent Canadian, with 100 per cent Canadian ingredients. We're working hard with the CFIA to fix this equivalency, and we think it will be done in the next few months. That's a good step for our processors and producers in Canada.
Senator Oh: Do you agree that the younger generation — my son's generation — is very organic? I went to their house for dinner. They tell me, "Tonight, everything served on the table is organic."
Ms. Levert: Organic appeals to the young generation, but our study shows that it also appeals to new parents, and usually it's new parents who start to buy organic for their kids. As their family grows, they continue to buy certain key organic products for their families.
Senator Merchant: Thank you for being here.
Organic is a nice name, Senator Oh says, and his children are serving organics.
For me, when I go, for instance, to look at an organic carrot and the regular carrot, what will happen if I choose to eat the regular carrot? What's the difference? For instance, with fish people say don't eat swordfish because it has so many parts of mercury per million. They try to make you understand what is different between one kind of fish or the other.
Should there be a warning on the nonorganic carrot saying that if you buy it you are putting into your system something that is harmful? Is it healthier, or is it just a fad? Is it that it is more expensive? When I go and look at milk and the organic milk is twice as expensive, sometimes I buy it because I think, "Gee, I'm drinking that. Why should be deny myself?" Maybe I will deny myself something else.
What exactly is organic? You say you have had double-digit growth. Why is that? What is the measurement? You said different countries have different standards, so they can't be just something that — I don't understand that.
Ms. Levert: Different countries have different standards. This is why we're doing equivalency arrangements. When we make equivalency arrangements, we're looking at both standards to make sure they are aligned and if there are critical variances we need to know about.
For example, in the U.S., they accept hydroponic culture as organic, they could be certified organic, and we don't. They accept Chilean nitrate as a pesticide and we don't, so there are variances. When we're negotiating equivalency, this is what we're focusing on. We're making sure that both standards are aligned, and if something is not then we make critical variances in our trade.
Senator Merchant: What is the difference if I drink organic milk or nonorganic milk? What am I doing to myself by drinking regular milk?
Ms. Levert: People eat organic for different reasons. The organic system has standards in which GMOs and pesticides are prohibited. There is a permitted substance list. There is a strict list of what growers can put in their soil or a manufacturer can put in their products.
When you decide to buy organic, you're deciding to buy products that have been certified to those standards and that are, from our perspective, more environmentally friendly, no use of pesticides or GMOs. Those are the three main reasons why people buy organic.
The Acting Chair: Let me try to phrase the question this way: What I hear you saying is you're not using pesticides to help grow organic, so the farmers that are growing organic are more environmentally friendly. It's not that the food is necessarily better at the end; it's the way they produce the food that is more environmentally friendly. Is that what you're saying?
Ms. Levert: The organic system is a process-based standard. It's all about the way you're growing the food in the environment. There are studies that show that some organic foods are healthier and have more nutrients. I don't have the full studies with me, but the organic standard is a process-based standard.
[Translation]
Senator McIntyre: Thank you for your presentation, Ms. Levert. As you mentioned, there has been considerable growth in the organic products sector, and in Canada the consumption of organic products has increased faster than their production. I understand that we offer Canadian organic products and imported organic products. How do we meet the growing demand for organic products in Canada? How would you say the competitiveness of Canadian organic products compares to imported ones?
Ms. Levert: Was your first question about the proportion of imported products in our plate? It depends on the category of product. For instance, vegetables are generally a part of the category of foodstuffs that are purchased more locally. Processed products come from throughout the world. In 2013, a study on food consumption and the organic market in Canada showed that approximately 52 per cent of products were imported and 48 per cent came from Canada. Since we have very little information on imports and exports, it is hard for me to answer more specifically. We would like to obtain better data in order to better understand what we import and what we export, since at this time we have a shortfall. That is why we need more information.
Senator McIntyre: My second question is about the review of organic farming standards. Could you tell us about the main changes made to organic farming standards in Canada? Could you explain to us very briefly the organic certification process, and how products are certified?
Ms. Levert: There is a three-year transition period. The products are certified. Any producer or processor who wishes to obtain a certification must apply to a certification organization. The certification organizations are accredited by the CFIA, which inspects the producers or processors on site in order to verify that they are respecting organic standards.
Senator Tardif: Good morning, Ms. Levert. Thank you for your presentation. You stated that organic production is not sufficient to meet the demand. In your opinion, what are the factors that are limiting the sector's expansion? What would you recommend in order to facilitate this transition toward organic production?
Ms. Levert: One of the most prohibitive factors is the cost of transition measures for the producer or farmer. It can take up to three years, and during that time, the farmer grows his or her products according to the standards, but cannot benefit from the added value for organic products. So those three transitional years can be very difficult financially.
Senator Tardif: Why does it take three years?
Ms. Levert: According to the standards, you have to wait three years for the soil to be certified organic. There is a list of substances. All of the substances on it can no longer be used on the land. You have to wait up to three years to ensure that all of the substances are no longer present in the soil.
Senator Tardif: What is the most common certified organic crop in Canada?
Ms. Levert: In fact, in Canada, there are 3,766 farmers. The big field crops and the basic crops such as fruit, vegetables and grains are the most commonly grown. Then there are the processors, and there are 1,500 of them in Canada.
Senator Tardif: Are the standards the same from one province to the next in Canada?
Ms. Levert: We have set national standards that apply to all certified persons. All of the producers or businesses in Canada who engage in interprovincial or international trade and wish to obtain organic certification must comply with national certification standards. In some provinces, for instance in Ontario, there is no provincial certification. If a producer only grows for provincial trade, he is not subject to the national certification.
Senator Tardif: If he does not sell outside of the province, he does not need to obtain the national certification?
Ms. Levert: No.
Senator Tardif: Can he obtain the certification anyway?
Ms. Levert: Absolutely.
Senator Tardif: So there is no consistency in Canadian standards?
Ms. Levert: Yes, there is consistency. All of the provinces that apply standards are consistent, nationally. In addition, we are working very hard with the provinces who have not yet taken these steps.
[English]
Senator Moore: I recently came across an article involving the U.S. organic farm industry. The statistics are interesting as compared to what we are experiencing in Canada. About 1 per cent of the farmland in the U.S. is organic, 14,000 farms of a total of 2 million farms, but their business has really grown, from $3.6 billion in sales in 1997 to nearly $40 billion in 2014.
One of the senators asked, and I think you commented about the three-year transition from traditional crops to organic production. In North Dakota and Minnesota they've provided some modest funding to encourage farmers to do that. Is there such a program in Canada?
Ms. Levert: Not at the moment. That is our main ask because we think it will help us. We have agreements, and because the United States is one of our largest markets for export we think it would be useful and help us to compete on a more level playing field with the U.S.
Senator Moore: Senator Tardif asked you about the consistency of the standards in Canada. Maybe you better tell us for the record, what provinces don't have standards?
Ms. Levert: I know Ontario doesn't.
Senator Moore: Does not?
Ms. Levert: No. Alberta and Saskatchewan don't either. Some provinces, like Quebec, for example, had a standard before our national standard was even created.
Senator Moore: What you say with regard to help with transitional funding, who do you ask that of? Who do you approach for that money? Is it Agriculture Canada?
Ms. Levert: Yes. We're hoping it will be included in Growing Forward 3.
Senator Moore: Your organization has numbers and stats; you know what's going on. Do you administer the standards? Do you say, yes, you qualify? Do you certify a province or a farmer?
Ms. Levert: No. We are the trade association. Certifiers would be my members but we do not certify any producers or province for anything.
Senator Moore: Who certifies in Canada? Is it the Minister of Agriculture in a given province or territory? How does that happen?
Ms. Levert: Certification bodies certify. It is a third-party certification, supervised by the CFIA.
Senator Moore: By CFIA?
Ms. Levert: Yes.
Senator Moore: The main market is the U.S., as has been mentioned. Are we trying to certify our organic farmers to be consistent with that equivalency so they have a major opportunity to export into that market? Who is doing that?
Ms. Levert: The certification body will certify the producers at the national standard level. When you are certified at the national standard level, you can export to the U.S. because we have this equivalency arrangement that permits that.
Senator Moore: This is certified by CFIA, I take it?
Ms. Levert: This is certified by the third-party certification, supervised by the CFIA.
Senator Moore: Okay. How many total farms are there in Canada? There are 3,600 organic farms, I think you said. What is the total number of farms in Canada?
Ms. Levert: The latest number is 3,700, and we have around 300 in transition right now. In the next few years we will be looking at 4,000.
Senator Moore: Thank you.
Senator Beyak: I think you've answered all my questions with other senators, but I wanted to ask one more about the transition. You said your inadequate supply is the biggest problem and you want to encourage transition. The main ask, of course, would be for money to help people do that. In the meantime, what is the best way to get people to transition?
Ms. Levert: There is some program in the Prairies for people who are trying to help conventional producers transition and make a business case for it. One way of approaching farmers is by talking to them about why it could be a good investment to have a mixed operation, for example. That is, have part of their farm certified organic but not the other, so helping to spread the word.
Also, I know a lot of companies that are lacking supply, for example, in hemp. We lack organic hemp supply. They are going on their own and talking to producers to try to make the business case that it could be a good way to generate more revenue as well.
The Acting Chair: Before we go to the second round, I would like to ask one or two questions myself.
I met some months ago with a group from the Jilin Province in China. They were anxious to get organic products. Their biggest problem in China is air quality. Their air quality doesn't meet the standards.
I don't think there is a shortage of resources for the Chinese to help farmers here if it's a matter of some funding possibly; I'm not sure. Has that avenue been studied? China is a big country of 1.3 billion people already, I think. That seems like a great market for Canada to go into and sell organic products.
Ms. Levert: China has its own regulations. They decided, and I don't know exactly when, to create their own organic standards. It means that because they have their own standards, people who would like to export to China would need to get certified to China's organic standard, and it is really hard for producers to get an inspector from China to come to the country and inspect their crops. That is one of the issues, because they have their own organic standard and it cuts access to their market.
However, there are one or two ways that some companies have found to be able to export. Notably there is e- commerce and there are some tax-free zones in China where you can export to directly. However, because China has its own organic exports it is harder to export.
The Acting Chair: I certainly do not want to tell the organic industry how to do their business, but you say it is hard. I am fortunate enough to be on a delegation that is going to China on March 25 and there are about 10 of us. We get on an airplane and, 13 hours later, we're there. I don't find it that hard. To bring inspectors here to inspect the fields, if there are enough people who want to buy the product, I would think farmers here would be happy to meet those standards.
Ms. Levert: I don't think the issue is on our side. I think people have been trying to get the inspectors here from China, and they either don't answer their request or they just decide not to come.
The Acting Chair: They have an annual food fair. We may not be going to it this year, but hopefully this committee might be going to that food fair next year. It's a very large food fair in Shanghai. Do you attend those food fairs?
Ms. Levert: China is not part of our market priorities for now. I haven't attended any food fairs or any event in China yet.
Our sector is pretty young as well. If you are looking at the demand currently for organic products, it is mostly in Europe and the States. It is normal that we are trying to secure those markets now in establishing more solid trade partnerships.
The Acting Chair: Maybe before asking the government for money you should be trying to break into the Chinese market. Anyway, that's an observation.
Ms. Levert: We don't have enough supply in Canada. Maybe when we are growing more supply, we will be able to export in sufficient quantity to China.
The Acting Chair: What comes first, the chicken or the egg?
Senator Beyak: The three of us were wondering when you were founded? We didn't hear it in the presentation.
Ms. Levert: COTA was founded in 2007. We have the national organic standard. The first version was in 2009.
Senator Unger: Again, thank you for your information. It is very interesting.
According to Becky Lipton, Executive Director of Organic Alberta, 58 per cent of Canadians buy organic products every week, yet just 1.8 per cent of farms in Canada are certified organic. You said Ontario, Alberta and Saskatchewan don't have certified organic farms. Is there the odd one?
Ms. Levert: They do have certified organic farms; they just don't have a provincial standard. Certified organic farms in Alberta, for example, can decide to be certified at the national level. So they do have some.
Senator Unger: Some?
Ms. Levert: They do have hundreds of certified organic farms.
Senator Unger: I am still trying to get my head around this $64 billion figure in exports. Given that this is a relatively new market and it takes three years for certification. That seems to be a very large number. I know that Europe wants — we have heard from previous witnesses — and as you have said, 100 per cent Canadian product. So they're picky, and standards are a big issue, equivalencies. The $64 billion —
Ms. Levert: That is global sales. So $80 billion U.S. is global organic sales. For us, we are exporting $558 million. That is our conservative estimate. The overall market in the U.S. is around $40 billion, so around $40 billion sales in the U.S.
Senator Unger: Could you comment on this: As you know, vegetables are becoming more and more expensive, and I don't think we are talking about organic, which is even more expensive.
A few days ago on a radio program they were talking about that issue, and they had an expert on. I don't know who he was, but he was presented as an expert. He said that people should buy canned foods because, in the end, canned foods are canned under strict conditions. When people buy vegetables, sometimes they are overcooked, so you don't have the same benefit.
If I couldn't afford to buy organic, even cauliflower, which is the vegetable that a lot of people hear about, in your opinion, how would canned foods rate?
Ms. Levert: I am sorry; I can't answer this question. I am not a nutritionist.
The Acting Chair: I am not sure that that is a market-access question; it might be.
Senator Oh: We get all kinds of organic food on the supermarket shelves now, but I haven't seen any organic eggs. I used to buy omega eggs. Are organic eggs coming?
Ms. Levert: There are organic eggs in all the major retailers in Canada.
Senator Oh: We should have organic chicken. You need chickens to produce the eggs, so they have to be organic chicken.
Ms. Levert: There are organic livestock farms, including organic chicken and egg farms.
The Acting Chair: I think if you go to Sobey's you will find some, senator.
Senator Oh: But definitely no organic lobster?
Ms. Levert: There are no organic lobsters.
Senator Oh: As Senator Plett says, China, actually the whole Pacific Rim, the emerging market, has huge potential for Canadians to develop and expand the organic market over there. The younger generation is all hoping for organic food on the table. Explore the Asian Pacific Rim.
The Acting Chair: We need to move along, colleagues. We have three questioners on the second round, and then we are going to have to bring it to a close. Please keep your questions concise, and the answers as well.
[Translation]
Senator Dagenais: You know that Canada is a vast country and that some crops are specific to some regions. I would like you to give us some details on organic products, by region. In Quebec, for example, are there any specialized crops?
Ms. Levert: To my knowledge, Quebec producers grow a wide variety of crops. They produce organic maple syrup, in large quantities in some cases. They also produce a lot of dairy products. In the Prairies, Saskatchewan is the third largest producer of legumes in the world. In British Columbia there is large-scale production of fruit from fruit trees, vegetables, and large-scale field crops, and they also produce certain organic wines. No one region is necessarily specialized in one type of production. There is really a variety of crops everywhere, the same crops as you find in the traditional sector. I am thinking among others of fruit trees and the wine production in British Columbia.
Senator Dagenais: Which organic product has the highest profit margin? Of course, we should also mention the one that generates the smallest profits, and may even be produced at a loss.
Ms. Levert: I cannot answer that question, because I do not have that information. It all depends on the company, and its capacity to generate a profit margin with the inputs at its disposal. I cannot answer your question.
[English]
Senator Merchant: You are encouraging people to move to organic farming because there is a demand for it. As people move to organic farming, number one, is that better for the soil? You seem to be concerned about the environmental aspects of farming. If we were to convert to organic farming, in the long term the soil would be good. If it is better for the soil not to use fertilizers, pesticides and herbicides, then are we going to be able to grow just as much food because the soil is good? We have to have a worldview, too, because populations are increasing. We are going to need food to feed the world. Organic is expensive, of course; not everybody's going to be buying organic.
However, in Canada, because we have ideal conditions in our water, air and soil, should everyone grow organic? Can we grow enough food? Is it better for the soil? Can growers make enough money to be encouraged to grow organic?
Ms. Levert: Some studies show that for some cultures going organic doesn't affect the yield at all. For some, it takes years and the yields can go down a bit and then up again. The idea is to be able to have better biodiversity and build better soils for the farming community.
Studies show that yield can be the same and that it can increase in time with organic. There are no studies done on a large scale. Also, organic can be a solution for more farms as some growers see the benefits of some of the organic techniques. Some conventional growers could use the techniques developed by organic growers for building better soil for the future.
The view of our organization is that there is the conventional way and the organic way. Farmers and the community may see added value in organic standards. There are several options for various growers. Organic is one option. Studies show that yields can increase and that organic builds better soil. Some techniques we develop can be applied to other types of agriculture.
[Translation]
Senator Tardif: In reply to questions put by my colleagues, you indicated that China was not a priority for you at this time. However, you mentioned that South Korea was an attractive market. Why is that?
Ms. Levert: Regarding processed products, South Korea has equivalency arrangements with several European countries and with the United States. Since Korea has developed its own standards and has equivalency arrangements with other countries, our producers who export to Korea must now have their products certified to Korean standards, which is costly.
And so we want to ensure that we have the same equivalency arrangements that our large trading partners have, so that we can export to markets where standards are valid and where demand is high.
[English]
The Acting Chair: Earlier in Senator Merchant's questioning and my supplementary you mentioned that some studies might be available. If you have any material relevant to our study, please submit it in writing to the clerk for the committee to look at.
Ms. Levert: Okay. The study can be relevant to nutrition, or is it only about market access that you want information on?
The Acting Chair: The main study is about market access, but if there is something that shows why organic is better it would benefit the study.
Ms. Levert: Okay. I will send you that.
The Acting Chair: Thank you very much for your presentation today and for coming here. It has been educational.
The committee will now hear from our next panel of witnesses. We have with us today from Ontario Pork, Ms. Amy Cronin, Chair; and Mr. Stefan Larrass, Policy Analyst. From the Beef Farmers of Ontario we have Mr. Matt Bowman and Mr. Dave Stewart, Executive Director. From the Veal Farmers of Ontario we have Mr. Brian Keunen, Chair.
Thank you for accepting our invitation to appear. With three panels, hopefully the presentations will be brief so that we have significant time for questions. Without further ado, I invite you to make your presentations, after which we'll have questions.
Amy Cronin, Chair, Ontario Pork: My name is Amy Cronin. My husband Mike and I farm in Huron County with our six children. We were the recipients of the Canada's Outstanding Young Farmers 2015 award. I have been the chair of Ontario Pork since 2012.
I want to thank you for having us here this morning. It is an honour for Mr. Larrass and me to talk to you about the pork industry, not only in Canada but specifically in Ontario.
As part of my presentation, I want to share some of the perspectives of Ontario Pork, which represents over 1,300 producers in this province, and I would also like to highlight some of the work of the Ontario Agri-Food Growth Steering Committee of which I was a co-chair with our Deputy Minister of Agriculture.
In terms of an industry overview, it's really an exciting time to be a hog producer in Canada and in Ontario. We are a resilient bunch. We've overcome many challenges in the past, most recently with porcine epidemic diarrhea and the challenges of country-of-origin labelling. I would say that we have come out on top of these challenges, but it is with help of government on a lot of these issues, at both the federal and provincial level.
The economic impact of our industry extends far beyond that of the farm. We really are a value chain that offers a lot of economic input into Canada's economy. Combined, farm to fork, we have a significant share of Canada's agriculture and agri-food sector: In 2014, we had $1.1 billion in GDP. That is in Ontario. We had $3.2 billion in economic output, and we represent over 20,000 full-time-equivalent jobs in our province. We represented, in 2015, 4.3 per cent of North America's hog market. What is probably less known is the fact that we are primarily family farms in Ontario, and we're very diversified.
Ontario pork is sought after for its high quality. We are known around the world for producing pork that comes with high food safety standards, grown with fantastic air quality and access to fresh water. We produce a product that is in demand around the world.
For example, in 2014, we shipped to over 60 international markets, and that accounted for over $650 million, or roughly one fifth of Canada's pork exports. In essence, I'm saying that our industry is a really important part of agriculture and agri-food.
In 2015 we were the first commodity in Ontario to be proactive in developing a social responsibility report. As pork producers, we understand that social licence is important to consumers, not only in Ontario but in Canada and around the world, as well. We're really proud to have a social responsibility report that benchmarks where we are as an industry and also indicates where we want to go in the future.
Today I'm here to talk about the importance of trade markets around the world. As an industry that exports approximately two thirds of our domestic production, international market access is a cornerstone of economic success for our industry. We believe that increasing and maintaining markets around the world are crucial to our industry in many different ways.
For our current markets, we need to maintain the sales volume that we have. For example, when the U.S. beat us to a trade agreement with South Korea, that put us at an automatic economic disadvantage; it meant that we lost 30 per cent of our sales to South Korea, which is a high-value and important market for us. So we need to be able to maintain the current markets that we have when it comes to market access.
Also, we produce a product that is of high quality and to high standards. It is important that we create competition among international buyers for our product. In doing so, we are able to increase the value of that. One example of increasing value with something we produce domestically is our trade agreement with Japan. By shipping pork into Japan, we are able to get a lot more value for the pork that goes there, which increases the value of pork that we produce in Canada by a great deal.
It's important for us also to be able to find high-value markets for the not-so-traditional products that we produce in a domestic market. For example, pig feet are something that we in Canada don't eat a lot of — in Ontario we don't eat a lot of it — but it is a popular and high-value product in China. By having access to a market like China, we're able to increase the overall value of our product.
The Trans-Pacific Partnership is one example that would incorporate all three of the things I just talked about. When it comes to sales volume, in 2014 our exports to Japan were over $1 billion. Research shows that by being a part of the TPP agreement we could increase those sales by $300 million.
But we can't just look at where we might be able to increase sales. We have to realize the impact of not being a part of the Trans-Pacific Partnership. So not only would we lose the potential of the $300 million in sales, but we would lose the $1 billion in sales that we already have.
My point is that we need to be a part of that agreement to maintain what we have and to be able to grow our markets. When you're in an industry like the pork industry, the way you can grow is through exports.
We also know that it will allow us to increase the competition among our buyers, because it brings in 11 new players. Japan is not one of them, but there are a lot of new players within that TPP agreement, and we know there are many markets within those 11 different countries for some of those nontraditional products that we produce here in Canada.
Ontario Pork is very encouraged by and strongly supportive of the federal government's continued commitment to market access. We know it has been of high importance in the last few years and we hope, moving forward, that this is something the government will make a priority, because it's absolutely essential for our industry. We also very much value the support that the government has shown with respect to country-of-origin labelling.
I'll move on to some of the other benefits of market access. We know that by increasing market access we're able to have a positive investment environment in Canada's agricultural industry. It not only helps primary producers, but it helps the entire value chain. It helps to increase the value of our product and encourages investment in our economy. That's something that is really important for the future.
Ontario's Premier challenged agriculture and agri-food to double its rates of GDP and increase exports from $11.8 billion to $20 billion by 2020. I co-chaired that growth steering committee, and we came up with seven recommendations that we thought agriculture and agri-food could work towards to help reach those goals. Three of the seven recommendations have to do with market access because we realize, as an industry, that it's through global market access and increasing our export markets that we'll be able to grow our industry.
It's also really important that government supports a positive and vibrant business environment for producers and for agriculture and agri-food. We need solid government policy that will create a vibrant business opportunity.
I want to reiterate support for what the Canadian Pork Council said last week about the importance of risk management programs for our producers so we continue to have solid primary agriculture to feed the entire value chain. We need to have access to labour, both at the primary agricultural level and at our processor level because we really are a value chain. It's through our entire value chain that we're able to feed into international markets. We need to have adequately resourced staff for government agencies.
I want to thank everybody for listening to some information about Ontario Pork this morning and the importance of market access around the world.
Brian Keunen, Chair, Veal Farmers of Ontario: Thank you for giving us the opportunity to come here and present to you about market access. I took it from the perspective of the issues facing us. We're definitely in agreement with a lot of what Amy said, and I'm sure some of the other people will reiterate that.
From a veal perspective, food sustainability, animal welfare and producing quality products is very important to us. I went around and talked with a number of the exporters who are exporting product to different countries and asked them what their number one issue was. What issue impedes you from exporting more product? The issue was competitiveness. We need to be competitive. From that perspective, there are a number of different ways to be competitive.
One is, from a producer perspective, being able to access pharmaceuticals used in other countries. If they can use a product that we can't, they have an advantage as far as animal health, animal performance and competitiveness from a regulatory standpoint. They may be able to use a product and have no MRL, so no residual level in the animal, whereas we may have a much higher level.
That same product is coming into our market so there shouldn't be a difference between our market and what is happening in their market. Basically everything is going together, and our product is supposed to be coming into the same markets as theirs. If we are at a competitive disadvantage from that perspective, it hurts our industry.
We have differences in our definition of "veal." For instance, in Canada or in Ontario, veal is defined by the weight of the animal when harvested. In Europe, veal is defined by the age of the animal. Our typical age of an animal is going to be around seven months. In Europe they're allowed to go to 8 months to be defined as veal, and up to 12 months for some of the definitions of "rosé veal."
There are some competitive issues as far as cost of growing the animal when you're going with a larger animal versus a smaller one.
We have issues with Health Canada and the way they define what products we can use in our animals. It's much more restrictive for veal than in other countries because of the cost of the manufacturers to develop products for the veal industry, which is a smaller industry in Canada than it is in Europe. Veal is a bovine animal. Different treatments are allowed for a calf if it's destined for one market than another, but it's really the same animal.
Another area is awareness of our products in other markets. We feel that we have to better educate those markets, and there's a lot of work and a lot of cost involved with educating those markets about our product. It's a unique product, and countries out there don't necessarily have full knowledge of it.
There's a regulatory cost. BSE had major impact on our industry, much like the beef industry. There were markets lost because of closures due to BSE, and there are still markets closed due to BSE. That has an effect on our ability to export product. For the ones that reopened, it took a lot of time and money to get back into those.
I want to raise something that Amy mentioned about needing a viable sector at the primary level. RMP is an important aspect of that. It really makes a difference when the markets go down; we don't lose our entire infrastructure. If we start losing primary production, we start losing suppliers and packer space. There's a ripple effect through the market. RMP is really an important pillar as far as the veal market is concerned.
Thank you for giving us this opportunity.
Matt Bowman, President, Beef Farmers of Ontario: I'm Matt Bowman, the new president of Beef Farmers of Ontario as of last Thursday.
The Acting Chair: Congratulations.
Mr. Bowman: Thank you. My family and I farm just north of New Liskeard in northern Ontario, and I appreciate the opportunity to discuss the importance that market access can play for agriculture in Canada and how we might capture more economic benefit while expanding to provide food security for Canadians.
Trade agreements are highly valued, however production that contributes to global trade must also be supported. Access must be real and meaningful in order to provide true benefit for producers. We cannot support free trade deals that are free in name only.
For example, while the CETA agreement provides potential beef access to one of the world's largest markets, the current technical conditions that processing facilities must operate under to export to Europe are preventing us from taking advantage of that wealthy market. Dozens of countries already accept the sanitary measures we have in place, and the EU must do the same or our support for CETA will evaporate.
The Trans-Pacific Partnership is another agreement that could provide significant benefits to Ontario, with potential access to a market of nearly 40 per cent of the world's economy. Of particular importance, the agreement will ensure that Japan provides improved and equal access to all TPP beef supplier members, a top priority for the Canadian beef industry. This will offer important benefits to the Ontario flagship beef brand, Ontario Corn Fed Beef, which recently partnered with the Kinsho grocery chain in Japan. Ontario's beef farmers and processors deserve the opportunity to compete on an equal footing in the rapidly growing Pacific region. As such, we urge you to support the implementation of the Trans-Pacific agreement.
A recent report from the Organization of Economic Cooperation and Development — the OECD — and the United Nations estimates that global beef trade will increase by 25 per cent by 2023. Canada is extremely well positioned to take full advantage of this growth, given our reputation for producing safe, flavourful and high-quality beef. However, the beef industry must expand to take full advantage of the new and existing trade agreements and the projected growth in global demand. Access to start-up and expansion capital for farmers and competitive low-cost financing will help spur growth in our industry and allow us to take advantage of market access opportunities.
The Ontario Feeder Cattle Loan Guarantee Program is one example of a program that provides low-interest, private-sector loans to beef farmers through community cooperatives and is backed by a provincial government guarantee that covers up to 25 per cent of loans in cases of default. There has never been a draw on this guarantee in the program's 25-year history, which includes the BSE years.
Federal participation in this program through a federal government guarantee would allow funding to more than double in size at no direct cost to the government. This is a model that could be applied to all feeder cattle loan programs across the country.
If a similar loan guarantee program was provided for cow-calf producers, more Ontario-born and -raised animals could be produced to capitalize on the growing demand for local food and the increased global demand for Canadian beef.
Another action the federal government could take to ensure the competitiveness of Ontario's beef industry is to partner with farmers and the Ontario government in the Ontario Risk Management Program. The RMP was designed to help Ontario farmers manage uncontrollable price risks. The program operates as an insurance program with producer premiums set at 30 per cent of the long-term program cost, which makes it fiscally sound and responsible, and allows all partners to share in and manage future risks. The RMP is an excellent example of a successful program that is contributing to the success of farm businesses by providing the confidence to allow farmers to invest in their operations, and to support new farmers who face high start-up costs entering the industry.
Lastly, I'd like to briefly discuss our vision for expanding beef production in northern Ontario, to provide increased food security for the next generation of Canadians.
Under moderate climate change scenarios, Canada is one of the few nations poised to take advantage of the warming climate, given our abundance of natural capital, namely healthy soil and clean water. There are almost 200 million acres of land and 16 million acres of underutilized Great Clay Belt in northern Ontario. Having sustainable beef operations on just a fraction of these acres will reduce the threat of processing plant closings, and increased production can be used to access new and growing markets in Ontario and around the world.
Every decade we are losing over a million acres of great farmland to urban sprawl in Ontario. To address this concern, the BFO has asked our provincial government to begin to unlock Crown lands in northern Ontario for agricultural expansion.
An independent economic study conducted by Beef Farmers of Ontario found that developing farms in northern Ontario is the most significant, economically sustainable plan for the region and will contribute a sustainable economic base for decades to come.
Our model provides a plan for beginning young farmers to enter the industry, and is focused on grass and forage- based cow-calf and backgrounding sectors. It is our vision for increasing food security for our children and grandchildren.
Ultimately, industry and governments at both levels need to begin to think about ways to secure the food supply for the next generation of Canadians. We need to collectively address existing land acquisition barriers. BFO is willing to work hard with anyone willing to come and expand agriculture in northern Ontario.
In closing, I would like to express my sincere thanks to the committee for your work on behalf of Canadian farmers, and for the invitation to appear here today. Thank you.
The Acting Chair: Thank you to all of three of you. We will begin our questioning in just a few seconds here. Senator Moore, you asked our previous witness how many farmers there are in Canada in total. According to some googling that we did, Statistics Canada says there are about 300,000 farm operators in Canada, and 3,700 or 3,800 of those are organic.
Senator Moore: So there are 14,000 organic, and 2 million farms in the U.S.
The Acting Chair: That's correct.
Senator Moore: Thank you for that.
The Acting Chair: I'm going to take the liberty of asking the first question.
Ms. Cronin, you talked about the Premier of Ontario having encouraged you, or mandated you, to increase your exporting by 2020. Is that what it was?
Ms. Cronin: That's right.
The Acting Chair: In exporting to other countries, how much competition is there between provinces and how much of this is done federally? I'm from the small province of Manitoba. However, we raise almost as many hogs as the largest provinces.
How is it determined as to who gets to send pork and/or beef to China? Any one of the three of you can answer this.
Ms. Cronin: I think it's a fantastic question. We know that in China, for example, there is a huge demand for Canadian pork. I don't believe that by Ontario accessing markets in China it in any way impacts Manitoba. There's enough room for all of Canada to play this game. I think that all of Canada produces an excellent high-quality pork product, and it is as a country that we access these markets through trade agreements.
Our premier is trying to grow agriculture and agri-food in Ontario because she recognizes that it's the number one driver, although that's not well known. Agriculture and agri-food is a very strong part of the economy in Ontario, and we know that for the future of Ontario it's important to grow that sector.
Through the Agri-Food Growth Steering Committee we recognize that the way to grow that sector, because our population in Ontario is not growing, is by exporting products around the world.
I don't think it is a provincial competitiveness issue. I know that we have federal packing plants in many of our provinces. In Brandon, you have a major one. In Ontario we have two, and I think there's room around the world for all of us.
Mr. Keunen: My thought is that it actually doesn't really matter where in Canada the products come from. Any time that you export, it's going to raise the value of the products across all provinces and across the country.
If we get product out of Ontario, it's going to raise the value. You'll have movement of hogs from Manitoba or Quebec into Ontario. It really doesn't matter where, as long as it does leave. As long as we export it, that's the main criterion. It's going to improve the overall benefit for the whole country.
From a veal perspective, most of ours is produced in Ontario and Quebec, and we see a lot more export from Quebec primarily into the U.S. That will assist the markets in Ontario as well. I think it's a win no matter which way you look at it.
Mr. Bowman: In the beef industry, there are cattle moving across provincial borders all the time. We have major packers in Alberta and Ontario. The concentration of finished cattle, or slaughter-ready cattle, is in Alberta and Ontario, but cows are across the province and they move to where the need is, basically.
The Acting Chair: In light of what the Premier of Ontario wants, and a comment that you made, Mr. Bowman — I'm not sure whether it was a million acres a year — Ms. Cronin is saying the population isn't growing. I'm trying to square this. We want to export more, and I fully support that. Let me be very clear on that. The population isn't increasing, and yet we're losing agricultural land by the millions of acres. Why is that? Is it just that people want to move out of the city and buy acreage? I know we have a lot of that in Manitoba, and of course they move out of the city and buy acreage and then are upset that there's a hog farm next door to them. How does that play out here?
Mr. Bowman: I think you have hit the nail on the head. They want to get out of the city, so as soon as they have a little bit more money they want to have a bigger space to live in and play in and they move to where they have that space.
The Acting Chair: Farmers are subdividing their land — and, again, this is the chicken or the egg — because they can make more money on that, and the city dweller comes and then complains about the farmer that sold them the land. Anyway, now I'm testifying.
Ms. Cronin: There is one more piece that goes with that. Agriculture is not an easy industry to be in. We see a movement of the rural population to the city. Cities are growing. That takes away from agricultural land as well. There is a migration, for sure, of population from the rural parts of Ontario — I can't speak for the rest of Canada — to the cities, which is causing cities to continue to grow and use prime agricultural land.
The Acting Chair: Certainly in Manitoba for sure that is the case. We have a little over a million, 1.1 or 1.5, people in Manitoba, and 800,000 of them live in one city.
Mr. Keunen: I think it also deals with a little bit of the relative economic viability of people in town versus people in the rural areas.
When agriculture is struggling we see a lot more migration to the rural areas because they can afford the land. Producers can't afford to pay the prices that the people in the urban areas can. You sell your house in Toronto for $1 million, and you can go buy a farm, right? I think that is part of it. A strong and viable agriculture sector will mean that more of it stays in production and less of it is used for recreational purposes.
Senator McIntyre: Thank you all for your presentations. My question has to do with fact-finding missions. I assume that, at one time or another, representatives of your industries, pork, veal and beef, have all travelled to other countries on fact-finding missions to study the governance and practices of agri-food products in those countries. If so, what were the key findings of those fact-finding missions? I understand Ontario recently travelled to Australia on a fact- finding mission.
Ms. Cronin: I can speak to the trade mission that Ontario had to China last spring. I was able to attend with Minister Chan, our Minister of Trade, and with Minister Leal, our Minister of Agriculture, Food and Rural Affairs.
What I learned from that mission was that Canada is looked upon very favourably when it comes to food production. Our food safety standards are very high. Especially with what has happened in China in the last few years, there is an understanding that food from other countries may be safer. I think that their population sees that as well.
What I noticed, though, is that we can't always continue to do things the way that we do them in Canada when you want to access a new market. You need to understand what their consumers are looking for, the way that they like to see things packaged, the way that you need to market to their specific consumers and, when it comes to our industry, how you need to cut that particular product and present it as well. There are all kinds of opportunities in that country.
The one thing that I thought was beneficial about that fact-finding mission was it was business and government in partnership going on the mission. Government spoke to government; business spoke to business. But there was a sense of security for business in having discussions around market access. There was also recognition on behalf of government that there needs to be support for businesses when accessing markets in a different country, with a different culture and possibly a different business environment.
Mr. Bowman: On the beef side, we went to Australia. Australia is recognized as having one of the best traceability systems for individual animal traceability. That is definitely one of the things for market access that we have been told all along, that we need a better traceability system. Australia is known as one of the world leaders in traceability.
The system that we looked at there is definitely workable. There are some portions of that that could be adapted to Canada. Our issue has always been that traceability has to be commerce and trade friendly, and it can't be cost prohibitive to the industry to keep it moving forward. Those are the pillars that we worked on, and we think that, once we get this traceability issue sorted out, it will give us some more market access as we move forward.
Senator Unger: I think my question might pertain most to you, Mr. Bowman.
Data from Canfax, a research firm in the slaughter section, show that consumer beef prices have risen since 2000, despite a decline in domestic demand.
How do you explain that trend? Which factors have had a significant impact on Canadian beef prices?
I would like you all, if you would, to comment about labour availability or shortage.
Mr. Bowman: I would say the reason for the biggest spike in domestic beef prices has been the supply. The numbers of cows and supply of beef has decreased over the last 10 years almost 33 per cent. We compound that with the drought that they had in Texas, which is the U.S.'s biggest supplier of beef. North America being basically one market, all of a sudden the demand for beef outstripped the supply. That is why you saw the spike in domestic beef.
Senator Unger: So we exported more?
Mr. Bowman: We still maintained our exports, but the domestic price rose at the same time.
Senator Unger: What factors have an impact? I am wondering about labour.
Mr. Bowman: The people from the Cargill plant at High River in Alberta would tell you that they are about 300 people short of running a full plant there. It is not that they aren't killing the cattle there that are ready, it is the value- added portion. They can't take advantage of that because they don't have the people to further process the meat in the plant to take advantage of some of that exotic meat that is demanded in China, South Korea and those places. The cuts of beef that you see on the shelf are not being affected by the loss of labour. It is the value-added of each carcass that we are missing out on because of the shortage of labour.
Senator Unger: Any other comments regarding this?
Ms. Cronin: With regard to the labour issue and costs, I think it goes back to what I said about the importance of creating a vibrant business opportunity for agriculture and agri-food. I think that that is a responsibility that lies both with government and with industry.
When it comes to labour, primary agriculture and processing is very intensive. It is difficult often to find the people that you need. For example, on my farm, I live in Huron County. We have a very small population; we are very rural. I need a lot of people on my farm. My six kids aren't enough for that job. So we bring in help from Guatemala through the low-skilled worker program. It has been extremely successful on our farm. We are able to give them an opportunity that they wouldn't have in their own country, and they provide us with a labour source that we are not able to find around us. We look in our own area first and foremost.
I think it is also about the value chain. In Ontario our federal processors have been fairly successful in being able to find labour, but in Manitoba, for example, at the Brandon plant, this is a big issue. I think we need to look at the whole country, not just Ontario, when we are looking at this one. If Brandon isn't able to get the labour that they need and then they need to shut down shifts or they are not able to process as much pork, that impacts the entire value chain.
We need to ensure that both primary agriculture and our processors are able to access the labour that they need to be able to carry on with their operations. Without that, we are not able to grow market access.
Senator Unger: Are you suggesting temporary or permanent foreign workers?
Mr. Bowman: Start with the Temporary Foreign Worker Program and make sure that we have them.
Senator Unger: Have you approached government on that issue?
Mr. Bowman: Yes, we have, absolutely.
Ms. Cronin: Yes.
Senator Unger: How is that going?
Mr. Bowman: Limited success, I would say.
Mr. Keunen: The Canadian Cattlemen are working hard on that because out west they have been affected by it. From the conversations I have had on the beef round table the foreign workers program, when they made those changes, dramatically affected the ability to access labour. Those people were coming in as foreign workers, and they were transitioning them to become full Canadians and being fully integrated into the communities; so changing that program certainly made a huge difference.
Back to the price aspect of it, the market is a North American market and cattle and veal and hogs are flowing both ways in different segments of the market. It is not necessarily always east-west; it is often north-south as well. Consumers are always evaluating whether to buy beef, pork or veal. What do I buy today and cook for supper? If there is a shortage in one marketplace, it affects others. You can't really put all the blame on one sector, but it is a totally integrated system.
[Translation]
Senator Dagenais: My first question is for Mr. Bowman. You mentioned that there had been an increase in the price of beef for Canadian consumers. Inevitably, you must turn to exports because of the decrease in consumption in Canada. When you export to the United States, for instance, the market is more competitive. In that case, can you maintain the same prices as in Canada, or do you have to reduce your prices?
[English]
Mr. Bowman: To talk about price in North America, in many cases it is very much run together. When the price increases in Canada, the price increases in the U.S. Tthat pricing model tends to flow together.
The export out of North America is where we see the greatest increase in value for our beef products. In saying that, the riches for the whole carcass are still the North American markets and the domestic market. Keeping Canadians fed is still where a good chunk of our money comes from.
[Translation]
Senator Dagenais: I would like to put a question to Ms. Cronin, and I want to congratulate her on the success of her family farm and her six children. These days, that is a big family. You have your work cut out for you. And furthermore, you are radiant!
But seriously, you said that you operate a family farm that is very successful. I expect that all of the agreements with other countries put pressure on family farms. Does that mean, consequently, that the less successful ones will have to go out of business, because producers must have the capacity to produce in a global context?
[English]
Ms. Cronin: In the pork industry, our price is based off of a U.S. price. We are based off of the Chicago Mercantile Exchange. When Canada is able to access global markets around the world, it doesn't disadvantage any particular family or farm. Like most pork producers in primary agriculture only, we don't have our own processing plant. We are paid based on the same price as everyone else, depending on where we ship our pigs. I am part of a cooperative, along with 165 other farmers; so our price is based off of what our processing can sell it for. Other farmers are based off of a U.S. price as well.
When Canada is able to access global markets, it increases the price for everyone. It doesn't disadvantage anyone in particular. Family farms can only stand to benefit from being able to access markets around the world. Even if the processing plant that you feed into doesn't access those trade markets, it will help to bring up the price for everyone.
In no way does it disadvantage any family farm, but I appreciate the thought of how that might happen.
Senator Oh: Thank you for coming here today.
You were talking about the Chinese market. Senator Plett and I went to a big food show in Shanghai two years ago. There was a big Canadian pork and beef pavilion. It was successful and a lot of people were there. When we travel we always go to support Canadian food fairs and all of your exports.
In doing business in China, official government support is very important. It is a confidence to the local business people.
As a family farmer, do you do direct exports or must you go to the association?
Ms. Cronin: We don't do any direct export ourselves because we don't process our own product. We are a cooperative that owns processing, but it is the processing plant that accesses those global markets. I'm not involved with that part.
As a family farmer, we grow the product on our farm and sell it to a processor. What happens beyond that is not within our control. It's part of the reason that I volunteer so much of my time for my industry, because I really believe in having a vibrant industry for farmers in as many ways as possible.
Senator Oh: The same thing for the beef industry?
Mr. Keunen: Yes, for veal it is the same thing. It is the processors that are purchasing our product. We are producing the product and selling it to a processor. It is the processor that is marketing it worldwide. We don't have any direct access to the market. It's those processors that look after that.
Senator Oh: What happens if a buyer from China wants to buy your products? They have to go to the processor's plant?
Ms. Cronin: That is correct. They need to go through a processor, not to an individual farmer. Likely, they would want to do that because there is usually a demand for high volume, and one producer wouldn't be able to provide that.
Mr. Keunen: The producers aren't necessarily able to do the processing. You need those plants to do that. It makes sense and is a natural step and place for them to go, rather than to the individual producer.
Senator Oh: For the Asian market, especially China, you have a lot of added value to beef and pork. There are many parts that people probably wouldn't use here, but they could be exported in large numbers to China and other parts of Asia and the Pacific Rim.
Ms. Cronin: I completely agree with that. Things like pig ears and pig feet, which Canadians don't eat, they are high- value products in China. It is important to be able to sell the whole pig. Sometimes that means you have to have 40 or 50 different markets to do that.
Senator Beyak: Thank you all so much. Canadians watch these programs. I tell that to all the committee witnesses. What you do within the food industry is imperative for all of us. The presentations today are excellent.
Can you tell me if they still use pig tails in the Kitchener area? There used to be a restaurant there to which we drove two hours to have barbecued pig tails. Is that a value-added product as well?
Ms. Cronin: Any product of the pig can be. It just depends on how you prepare it and the market you have for it.
In Kitchener-Waterloo, we took our board to a place on Lancaster Street that just specializes in pork product, and pig tails is one of those things. It is a fantastic restaurant.
But it might be pig tails at that restaurant, pig feet in China and pig ears in the Philippines. It is about finding those markets and being able to capture the value for each one of those pieces.
Senator Beyak: Just a quick supplemental. I think our minister Gerry Ritz was instrumental in getting that Canada brand out there years ago, and it is nice to see the provinces falling into line as well, because Canada is unique. You are vibrant, and you do portray so well why Canadian food is better across the world for marketing. Thank you all again.
Senator Moore: Thank you, everyone, for being here.
Mr. Bowman, you mentioned that we need to do better with animal traceability. I am familiar with COOL and all that. We worked hard to get rid of that, and last December the U.S. passed legislation to get rid of that.
What does that mean, animal "traceability"?
Mr. Bowman: The idea is that we should be able to trace an animal from birth to plate so we know every step of the production: where it has lived, where it has been.
Senator Moore: You are a beef farmer.
Mr. Bowman: Yes.
Senator Moore: So you grow an animal.
Mr. Bowman: Yes.
Senator Moore: And you sell it to a processor?
Mr. Bowman: No.
Senator Moore: You do or you don't.
Mr. Bowman: The problem is that a normal animal would go through two or three owners along the way because of different stages of production. I will sell my calves to somebody who will put them to grass or puts more weight on them. Then they will sell them to somebody else who will put the last 200 pounds on them.
With the whole production system, each animal would go through, on average, three owners before it actually gets to its final resting place.
Senator Moore: Who keeps the piece of paper that lists those things?
Mr. Bowman: As of right now, nobody.
Senator Moore: Nobody?
Mr. Bowman: The current system —
Senator Moore: We know they started with you.
Mr. Bowman: And we know where they ended, but we don't necessarily know all of the places in between. The system we are trying to develop is one that will trace that from where it is born to where it ends.
Senator Moore: What is the issue? What do you have to overcome in order to put that in place?
Mr. Bowman: Cost is one; a slowdown in trade and commerce is another. At sales barns, where they are selling these cattle, each individual tag would have to be read and entered into some kind of database so we can track where these animals are going.
Those are issues. We don't want them to have to spend three days trying to figure this out.
Senator Moore: Does each animal maintain its own tag throughout the whole process?
Mr. Bowman: That is the idea right now, yes.
Senator Moore: That is the idea. Is it happening?
Mr. Bowman: We are working on getting better. We are at more than 90 per cent where the tags are retained from at birth to harvest.
Senator Moore: Is there some way, like in the store with the barcodes, to do that?
Mr. Bowman: That is the system we are working toward. It is just that when you start moving thousands of head through a sales barn in a day, it gets complicated. When the animals are coming from hundreds of producers and going to hundreds of different producers, it can start to be very complicated.
Senator Moore: You say we are 90 per cent there. How does it work now? Do you want to measure or keep track of the animals that leave your farm, or is it up to the person in the second phase who has to record it?
Mr. Bowman: Yes. My responsibility is to make sure there is a tag on that animal when it leaves my property.
Senator Moore: So if you sell it to me, and I am the second stage, what do I do with it now?
Mr. Bowman: At this point, nothing; you don't have to do anything.
Senator Moore: So when I sell it to the third person in the chain, I don't have to do what you did?
Mr. Bowman: Your responsibility, when they go on the truck, is that each one has a tag. So if it has lost a tag while in your possession, you have to replace that tag. Other than that, you have no responsibility.
The proposal for the system we're moving toward is that you would record the numbers when they move into your possession. That is the proposal at this point.
The Acting Chair: Ms. Cronin, do you wanted to add something to this?
Ms. Cronin: It is different in the pork industry in Canada. As of July 2014, we had mandatory traceability in our industry. That means that each movement of a pig is recorded and uploaded into the PigTrace database, so we know from where our animals originated. When they get to the processing plant, we know where those animals came from and the different places that they were along the way.
It is important to have traceability because of food safety. If ever in our industry we see a problem with an animal at one phase in production, we are able to quickly log on to that PigTrace database and find out where that animal has been, when, and when it was moved and by whom.
I appreciate that when the government rolled this program out in July 2014, they started it on an educational basis. We are seeing a huge amount of uptake across our industry. I would say we are getting close to 100 per cent, and the government has said that pretty soon it will move beyond an education transfer.
The Acting Chair: We need to move on, but I want to ask a short supplementary that might help Senator Moore.
Would it be a little easier for the pork producer to do this than for a beef producer because of the pyramid system that we have in pork production? You actually have a pyramid with the pork producers where the weanling comes into the system, and it stays in a system where a group of farmers own the entire pyramid.
Would that make it any easier than it is in the cattle industry where it might simply be going to different areas?
Ms. Cronin: In the pork industry, there are definitely contracts like you speak of where, when I produce an early wean, it goes to this barn every single time. But there are also all kinds of transactions that happen where a farmer decides, "Now I have too many animals, and I am going to sell them on the open market to this particular place." We are able to account for all of those animals within the system.
The Acting Chair: I was not aware that was still going on.
Ms. Cronin: Yes, sir.
The Acting Chair: At least in Manitoba most barns are owned by three or four organizations, and a particular farmer may own the barn itself but is on contract with Maple Leaf or so on.
Ms. Cronin: Ontario has a different system. We are primarily individually owned operators in Ontario.
Senator McIntyre: My question has to do with the Beef Farmers of Ontario and the Canada-EU agreement. As I understand it, the Beef Farmers of Ontario have said that, although that agreement has been signed, outstanding technical differences remain to be negotiated before the beef sector can access the EU market.
Can you tell us about these technical difficulties, and are you aware of the status of these technical negotiations? Perhaps Mr. Stewart can answer that question.
Dave Stewart, Executive Director, Beef Farmers of Ontario: I can provide a bit of background on it. I am not the expert in the field, but they are what we call phytosanitary agreements. They are over the types of products we use to wash the carcass within the processing plants. The materials we use allow us to integrate with the U.S. very well and are accepted everywhere else around the world.
The EU wants a different material used. That would then, as I understand it, cut off our access to the U.S.
That is sort of a trade barrier that is outside of the agreement, but the CFIA people are working on resolving this issue. We had thought it would have been done by now, but it is not.
Senator McIntyre: Thank you.
The Acting Chair: Thank you very much to all of you for spending the time with us. We very much appreciate it. We will be making good use of the information you gave us here today.
(The committee adjourned.)