Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 5 - Evidence - Meeting of March 15, 2016
MONCTON, Tuesday, March 15, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 9 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. I am Senator Maltais from Quebec, chair of the committee. I would like to start by asking the senators to introduce themselves, beginning with this side.
Senator McIntyre: Senator Paul McIntyre from New Brunswick.
Senator Victor Oh: Senator Victor Oh from Ontario.
Senator Mockler: Percy Mockler, New Brunswick.
Senator Hubley: Senator Elizabeth Hubley, Prince Edward Island.
Senator Mercer: Terry Mercer from Nova Scotia.
The Chair: Thank you very much.
We'll begin with, from the Prince Edward Island Potato Board, Brenda Simmons, Assistant General Manager; and from Taste of Nova Scotia, Janice Ruddock, Executive Director.
Welcome, ladies. It is a great pleasure for us to have you here today.
Brenda Simmons, Assistant General Manager, Prince Edward Island Potato Board: Thank you and good morning.
As you say, I am Brenda Simmons. I am the Assistant General Manager of the Prince Edward Island Potato Board. It is a pleasure to be with you here this morning to represent our potato growers in Prince Edward Island.
Our board of directors is actually meeting today too. We had already scheduled that. I will try my best to represent them and let you know that there are lots of people back home who are very interested in your proceedings and in the topic of the hearing.
I have handed out a deck which I am going to try to stick to as I go through today fairly quickly. Senator Hubley, you will recognize some of those folks on the front. They are the Linkletter family from the Summerside area of Prince Edward Island.
The potato industry in Prince Edward Island is a major economic engine for our province. It generates a great deal of employment and prosperity for Islanders. According to a 2012 analysis done by Dalhousie University it directly or indirectly employs over 8,200 Islanders, which is about 12 per cent of our provincial workforce. The total economic output was estimated at over a billion dollars in direct and indirect spinoffs from the potato industry in 2012 and that itself is 10.8 per cent of Prince Edward Island's GDP.
On the next page, I want to emphasize that our industry does consist of family farms. We do have some that are incorporated, but that is just for tax reasons and so on. Family farms do represent 93 per cent of our potato acreage. There are 200 farm operations in Prince Edward Island that grow potatoes. There were 89,000 acres harvested in 2015. Just so you know, we do rotate our potato production with grain, oilseeds and forage crops. I will talk about potatoes but all those farms grow those other crops as well.
In Prince Edward Island we have a land mass of about 600,000 acres. Every year about 15 per cent of that arable land is in potato production.
The harvested yield in 2015 was just under 25 million hundredweight. A hundredweight is a hundred pounds of potatoes, so 25 million 100-pound bags of potatoes in 2015. That represents about 25 per cent of Canadian potato production.
In terms of our industry, about 60 per cent of our production now goes to processing companies like Cavendish Farms, McCain Foods and Frito Lay. We also have a dehydration facility, AgraWest, in the eastern end of Prince Edward Island. Thirty per cent goes to fresh market. When I say "fresh market'' I mean table stock for food service or in grocery stores and fresh for use in processing facilities around the world. Ten per cent is grown and sold as seed potatoes.
Prince Edward Island continues to be a major potato producer due to our favourable growing conditions, our history of quality potato production, a proximity to major markets and ports. Our access to water is very important to us.
I believe you had the minister and deputy minister of Prince Edward Island here yesterday.
On the next slide, total agri-food exports from Prince Edward Island in 2014-15 were $345.9 million. That is quite substantial for us. In terms of potatoes and potato products, of that, $296 million was potatoes. It is quite an important part of our exports. It represented 86 per cent in 2014-15.
Total Prince Edward Island agri-food exports have increased by $53 million or 18 per cent over the last three years. The dollar has certainly helped with that increase. The dollars I'm reporting are in Canadian dollars.
Over that same time period of the last three years, fresh and processed potato product exports increased by $41 million. In the last complete year, we shipped seed potatoes to about eight countries, fresh potatoes to 20 different countries and processed potatoes to 40 countries.
As I mentioned earlier, our total potato exports in 2014-15 were $296 million. The United States is a major market for us, taking about $241 million or 81 per cent of the total. The United States is a very important market to us. We have a long history of shipping there, and the United States shipping into Canada as well and lots of longstanding relationships. Despite that, though, we do believe that diversification to other less mature markets does offer potential for growth going forward and at a higher rate.
I believe you are going to see Cavendish Farms maybe tomorrow, so from here on I will talk mostly about seed potatoes and fresh potatoes. Again, when I say "fresh,'' it includes the table stock but also includes a growing part for us, which is fresh potatoes shipped to processing facilities around the world. We ship fresh potatoes that will go to Indonesia, right into a potato chip plant in Indonesia. It is quite specialized to be able to grow and store them, and then put those potatoes on the water for 40-plus days, and to have them arrive in peak condition to go through a processing plant in those other countries when they are not in local production.
In terms of other important markets outside the United States for us, they are diverse. They include places like Venezuela, which is an important seed market for us, Indonesia, Thailand, Trinidad and Tobago. We have lots of interest in lots of areas.
We can ship cost effectively to many markets around the world, including Asia, North Africa and the Middle East. A lot of the reason for that is that we have containers coming in from those areas of the world to North America. We are a backhaul basically to Asia and so on from here.
In terms of market access potatoes are a very political commodity as many countries have some level of domestic production themselves. They are quite interested in protecting that of course as we are here. That can cause some issues in terms of market access. As a couple of examples, in Russia we sold $6.8 million of Prince Edward Island potatoes in 2010-11 and another $2.4 million in 2013-14. Of course that market closed to Prince Edward Island potatoes as it did with most agricultural commodities once the situation developed with Ukraine. So we lost that.
Costa Rica also was a growing market for us, again for fresh potatoes to go in for use in potato chip production, but phytosanitary restrictions there last year severely limited our access. Those restrictions came into place after we had grown the crop and just as we had the first two containers on the water. We were not able to ship anymore for the rest of that season, even though it had been a multi-million dollar market for us until CFIA was able to try to get a bit of clarity from Costa Rica in terms of its new requirements. We then had to have a new growing season with certain restrictions in place to be able to meet those new requirements. We can go up and down even though our best efforts are there to develop markets.
In terms of free trade agreements, they are very important. We welcome negotiation of new agreements but it is very important in our world to note that additional work is needed by the federal government to secure access for Canadian potato exports either with or without free trade agreements.
In some cases free trade agreements have been signed by Canada but then there is still no access for Canadian potato products because of either phytosanitary concerns by those countries or just some extra work that needs to be done. I think that is not always recognized.
We say that bilateral agreements are needed to secure access in some cases for potatoes. In other cases, it is things like survey work that has to be done to assure those new markets of the status of a particular pest they may have of concern in their country. They may need to know that we do not have a certain issue but the only way that CFIA can do that is to actually do surveys across the country. Basically CFIA has encountered major reductions in its budget on the plant health side. A lot of emphasis has been put into food safety for good reasons but at the detriment of the plant health side. On the plant health side, CFIA does not have the budget either for personnel or operating costs to do the work that is needed. We hope that can be reversed going forward.
With respect to free trade agreements, we have been losing ground to U.S. potatoes due to a lack of tariff rate quotas for Canadian potatoes in some cases. Panama is a good example of this. We had a lot of interest from Panama and we were shipping there, but then the United States was able to negotiate a free trade agreement. I believe it was after Canada did, but we face 81 per cent duties going into Panama for Canadian potatoes and the U.S. has zero duties on a tariff rate quota. They have a quota that gives them duty-free access. It is a relatively small quota but it does grow over time. They have made a good impression in the buyers' minds in Panama to think that they are duty-free, so they are the preferred supplier, initially at least.
A free trade agreement between Canada and the Dominican Republic is being negotiated. We welcome this but we also urgently need a tariff rate quota to be part of this negotiation as well. The Dominican Republic was a major market for Canada, for Prince Edward Island and for New Brunswick in particular, but we have fallen behind due to the lack of a free trade agreement. Our potatoes face a 20 per cent duty going into the Dominican Republic while the United States has a 3.3 per cent duty and will be duty-free by the year 2020.
As I said, we used to be the major supplier to Dominican Republic but in 2015 we shipped just under $300,000 in fresh potatoes and the United States shipped $3.5 million. That is a complete reversal of how it used to be in terms of potatoes from Atlantic Canada into that market.
Other countries could be strong markets for us as well and could be an important part of a diversification strategy if we can achieve access. South Korea is a very good example. We do have a free trade agreement with South Korea, as does the United States, but Canada does not have access for our potatoes unlike the United States. In 2015, the United States shipped $10.8 million in fresh potatoes to South Korea and Canada shipped zero. Another example is Taiwan. The United States shipped $9.8 million and Canada shipped none.
These are markets that we have as good or much better phytosanitary status than the United States, so it is not for that reason that we cannot ship there. It is just that access has not been negotiated.
We are quite concerned about the initiative to review cost recovery on the part of the Canadian Food Inspection Agency in particular but I guess it is right across the federal government. We feel that could severely impact our growers going forward. One example is potato cyst nematode. It is a pest that was found in a small area of Quebec. It is not in any other part of Canada yet our growers need to test all of their seed acres before they can ship across the U.S. border for seed markets. That one test alone costs $100 an acre and for a 40-acre field it is $4,000. Your field must be tested in the fall before the markets are really known so you incur that cost and may never get to ship there. That is at the current cost recovery rates. Those are all being reviewed. If that was to go much higher it would basically stop us from being able to even access the markets.
The second point I would just like to bring to your attention is that we do need a strong potato breeding program in Canada so that we have varieties that are in demand in export markets. A lot of the varieties that we ship now are old varieties. They are 40 or 50 years old or more. They work quite well in some export markets, but we run into new varieties that have been developed by the Dutch or Scotland, and so on, and we can't grow some of those varieties in Canada. The plant breeders' rights change that happened recently is a help with that but what we find is that the Dutch breeding companies will give us access to grow in North America. They will not give us access to grow those potatoes and ship them to other parts of the world because they want to do it themselves from Holland. Without Canadian varieties that we can offer as exclusive or as tailored to some of the export markets, we run the risk of being shut out. We have run into that as well.
Basically I just want to finish up by saying that export markets are very important to our potato farms. Our guys know how to grow potatoes to very tight specifications. We do have a good plant health status and we are very interested in developing that further. As I noted in my first couple of slides it is very important to our economy in Prince Edward Island.
I will stop there and thank you very much for your interest.
The Chair: Thank you very much, Ms. Simmons.
Janice Ruddock, Executive Director, Taste of Nova Scotia: Good morning everyone. It is an absolute pleasure to be here this morning and to have the opportunity to introduce Taste of Nova Scotia to you and then provide a global overview on some strengths, weaknesses and opportunities for international market access.
I will go into a brief description and the objectives of Taste of Nova Scotia because we are not a sector specific association. We have many different sectors in our membership. To dwell on one of them or focus in on one of them would not be appropriate at this time. It will be a top level presentation.
We are a non-profit association of 184 food and beverage producers, processors and restaurant members who ensure quality standards and dedication to Nova Scotia is the centrepiece of their business models. The key mandate of this association is to assist in the growth of our members' businesses. This mandate is achieved by focusing on sourcing and participating in marketing initiatives largely outside Nova Scotia as well as product development in Nova Scotia to attract visitors. We are a tourism association and a food, agri-food and seafood association. All initiatives are in joint partnership with our members.
Our other strategic initiatives include lead in having Nova Scotia recognized globally as a culinary destination, reinforce and strengthen the Taste of Nova Scotia brand, ensure quality standards for producers and processors is assessed and monitored on an ongoing basis, and encourage and facilitate opportunities for members to purchase and support other members' businesses.
In our membership we have currently 70 Nova Scotia food producers. These producers pay a membership fee ranging from $500 to $2,000-plus per year to be a part of the association. We have members such as Clearwater Seafoods, Valley Flax Flour and Benjamin Bridge wineries. You can see the range of the categories that we deal with in our membership.
All these companies see membership in Taste of Nova Scotia as one of the cornerstones of their business development programs. In 2016 alone we saw a 20 per cent rise in membership during a challenging economic time for Atlantic Canada businesses. Additionally members cannot apply for membership. They must qualify for membership based on their above average industry quality standards and adherence to purchasing and supporting Nova Scotia products and businesses. Taste of Nova Scotia is not a buy local awareness program. It is an economic development program for the Nova Scotia food, agri-food and seafood sectors.
Taste of Nova Scotia generates its operating funds through membership fees, sales of gift baskets featuring our members' products, provincial and federal government support, third party event management fees and project proponent fees. Basically the association generates all of its own administration funding requirements and uses public money to fund marketing activities to build the businesses of 184 members. Our members contribute $25 million in tax revenues each year to the Nova Scotia economy.
The Taste of Nova Scotia model is unique in Canada and very few agencies around the world compare to Taste of Nova Scotia. I reference this information from numerous conversations with senior trade commissioners throughout Canada's Department of Foreign Affairs and International Trade. The model is built on Taste of Nova Scotia being a hub facilitating and creating economic opportunities for Nova Scotia companies by working daily with industry, industry associations, government stakeholders and business partners. It has been proven for 27 years this partnership model is an efficient, effective and economic vehicle to successfully grow the businesses of Nova Scotia companies in the food, seafood and agri-food sectors. In the last decade Taste has only lost two members to its businesses no longer being viable.
I believe it is the second day of these hearings. I am sure the committee has heard from many different groups by now and a multitude of statistics. Going forward this presentation will focus on a top level review only of the strengths, weaknesses, opportunities and threats to assist the Senate committee in its study on international market access priorities for the Canadian agriculture and agri-food sectors. This review has been developed in conjunction with Taste members through solicitation of feedback from industry participants in over 15 international business building initiatives in addition to one-on-one meetings with our Taste membership.
When we looked at international market access programs currently in Canada we identified some of the strengths. There is certainly ample opportunity to provide feedback through event follow-up and questionnaires. Companies and industry are continually being asked for their follow-up and they are more than pleased to give it and have the opportunity to do so.
We have provincial and federal recognition that international market access is important for Canadian businesses to grow and develop. It is reassuring for industry to know there is support there.
Federal economic development agencies are working in partnership with provinces to support provincial export objectives. They are working together. It is a strength.
Weaknesses are always difficult but we look at top line weaknesses as an opportunity to improve. There is certainly a multitude of publicly funded international market access programs available making it absolutely overwhelming for exporters to determine which programs suit them best.
As well buy local programs are creating a false sense of security for small companies but the perception of international market access programs, they believe, seem to be designed for large companies only. Product development and implementation processes are laborious for SMEs that just want to sell their product.
With our opportunities we see that there would be an opportunity for one central database of both federal and provincial programs to support international market access for SMEs. There are databases and there are different programs, but to combine them together they have to be updated daily because this information changes daily. There has to be a very strict timing on this.
The creation of key industry initiatives in international market access programs or opportunities would include defining the roles of each public partner that will undertake to assist the international market access for Canadian companies. A lot of people and a lot of agencies are working on this, but what is the role of each one in clearly identifying it. We need collaboration with public partners and industry associations for more action oriented initiatives and a pay-to-play model which is fair and equitable for all companies. We really need to have companies' skin in the game to appreciate the opportunities. A lot of opportunities are out there right now for companies but I am not sure they appreciate all that there is there for them.
We also need to view interprovincial trade as an export opportunity for each province. We know that Ontario, probably our largest purchaser of food and agri-food in Canada along with Quebec, has to purchase from outside the province to meet its needs. We want to see this opportunity being in other provinces that could supply the larger markets of Ontario, Quebec and British Columbia, and not to have barriers put up for that interprovincial trade.
We also look at less education and more training. There is a differentiation between education and training. Training denotes that you are going to be engaged; education means that you are going to be talked to. It is hard to create international market access opportunities.
Ending off with what has been identified as a few threats, number one is — and pardon the word — a word that says it in this day and age more aptly. Food, agri-food and seafood are not sexy enough for public spending. Atlantic seafood is a world-wide best in class and should not be discounted for other emerging yet to be proven industries. I stress "yet to be proven industries''.
Larger companies lobby right now for less public support, less funding and less opportunities as they are able to afford international market access initiatives on their own. These large Canadian companies see public support as an invitation to free market competition. It is simply not true.
The third weakness is investment capital right now is difficult to attain for smaller entities but easier than ever for large companies to secure. This will stymie the development of innovation in small business.
To summarize and to go forward, I know in the last few days the witnesses for the Senate Standing Committee on Agriculture and Forestry have raised without a doubt many recommendations, data, ideas, issues and opportunities. I would daresay they would be most similar across Canada. Going forward, though, there is one key message it is hoped that was conveyed. Industries in the agriculture and forestry sectors are passionate and are dedicated to the building of exports. We must next forget that. Most companies understand moving product outside their provincial border is the key to sustainability. This industry is looking to public partners who are focused, knowledgeable and understand their role in international market access. When focused there is maximum output value from each initiative including less resources spent dissecting public programs and a clearer path to international market access strategies.
I thank you very much for the opportunity to express the top-line views of Taste of Nova Scotia in regard to one of the most important export industries in Canada.
The Chair: Thank you very much, Ms. Ruddock. You are a great witness for us.
For the first round of questions we will begin with the deputy chair of this committee, Senator Terry Mercer.
Senator Mercer: Ladies, thank you very much for being here. I was expecting Ms. Simmons to break into song as the new ads from Prince Edward Island have some very bad singers singing about Prince Edward Island potatoes. However, maybe that will be at the break.
First of all, Ms. Ruddock, the central database issue that you brought up is an interesting one because I think it doesn't just touch on agriculture, agri-foods and fisheries. It touches on all industries that want to export and want to coordinate their activities with either the federal or the provincial government of their jurisdiction.
You talked about it, but what is the status now? Are there ongoing discussions on this issue or is it stagnant?
Ms. Ruddock: We have been working on this for a few years and just most recently with one of your witnesses yesterday, the Atlantic Canada Food Producers and Processors. We had an open forum that day and it was brought up again. There is a lot of information when you go on the Government of Canada and the Nova Scotia government sites on different programs, but they are very flat and they are not query based so you cannot get something that suits what you are looking for. It could be a very dynamic moving database.
Companies are telling us that information is sitting there but when I look at it, it is not in a very manageable format. It is not in a very user friendly format as technology and programming improve daily. The fact is you could build a multi-faceted database that would be able to be accessed, queried and used, and also create awareness for the companies that this is available.
Senator Mercer: You talk about your membership having skin in the game. I think one of the values of the program is that you just do not join and sit back. You actually have something going on.
Ms. Ruddock: Exactly.
Senator Mercer: But you also said that membership was not easy to obtain. What is the biggest restriction for membership?
Ms. Ruddock: Our restrictions for our producer and processor members all go around the quality and their processes for production. When they are going under the Taste of Nova Scotia brand and you have Clearwater Seafoods along with Valley Flax Flour you want to make sure that the quality standards apply to all these companies and that they are assessed separately because once they go under the brand and something happens with one of these companies it would take everybody down.
The most important criterion for Canadian products being exported is its quality. We are known abroad for our quality products and we need that to continue.
Senator Mercer: I knew the answer. I wanted the others to hear it.
Ms. Ruddock: Of course you did.
Senator Mercer: I did not want people to think I had not been paying attention for the past 67 years. I didn't get this size by not being part of the Taste of Nova Scotia.
Ms. Simmons, shipping is an important part of what you do now. Many times we look at farms particularly in Atlantic Canada because we look at smaller farms. In the case of Prince Edward Island potatoes are big business and Islanders could not consume all the potatoes that you produce. When you talk about access to the American markets you are talking about trucking.
Ms. Simmons: Mostly.
Senator Mercer: When you are talking about many of the other markets that you talked about you are talking about shipping.
Ms. Simmons: Correct.
Senator Mercer: And this is a paid political announcement on behalf of the Port of Halifax. How are you shipping? Are you shipping out of the Island or are you moving the product from the Island to Halifax or Saint John to be put on ships? I notice you are shipping to Indonesia. I was quite impressed and a bit surprised at that because it is a difficult product to keep fresh for that long a trip.
Ms. Simmons: It is, yes. I appreciate your questions. We do all of those things. For the United States market most of it is trucks. You are right. For Puerto Rico is a very important market for us. We include Puerto Rico in the U.S. for our statistics. It goes by container mostly from Saint John. The Port of Halifax is hugely important to us in terms of Indonesia and Thailand. Most of those other types of potato shipments now go by container. Back in maybe the seventies and eighties, we did a lot of break bulk vessels right out of Summerside and Charlottetown. We still do a few ships a year. Earlier this year we had a ship to Venezuela and we have Venezuelan inspectors in Prince Edward Island right now inspecting the seed potatoes. There is a second ship that we hope to see soon and that would be either Summerside or Charlottetown, but the vast majority is containers and they would go through mostly the Port of Halifax.
Those are actual P.E.I. potato farmers who are singing that song.
Senator Mercer: I understand that. Some of them obviously missed singing class in school. However that is what makes the commercial interesting.
Ms. Simmons: Yes, it is.
Senator Mercer: It is obvious that they are actual farmers singing about potatoes. I am sure that they take a ribbing from their colleagues in the industry, but they are selling potatoes and that is what it is all about.
Ms. Simmons: Exactly.
You mentioned Indonesia. I find it very interesting, too, that we can go off East Coast ports and get to Indonesia, Thailand and those places with high-quality potatoes in the right condition to actually go right through a chip plant. It is a pretty tight set of quality criteria for nice, light-coloured chips. It is a specialty that people have developed in our province.
Senator Mercer: You mentioned a potato breeding program. One of the last times I was here in New Brunswick on an agriculture committee we visited the Agriculture Canada research station in Fredericton. We were very impressed. We saw different kinds of potatoes that were being experimented with. There was a purple potato, if I recall, that was interesting to look at. Have you been working closely with Agriculture and Agri-Food Canada and with the Research Council people who are actually doing some of this research? I know they do a lot of research into fruit at the station in Kentville but they do some potato research in Fredericton. Have you been working closely with them?
Ms. Simmons: We have and actually even more so in the last couple of years. You are right: Fredericton is the potato breeding specialization facility for Ag Canada right across the country. Most of the expertise is right there in Fredericton. We have colleagues right across the country that are part of the potato industry. They are interested in what is happening in Fredericton.
Not that we hadn't realized the importance before, but in the last couple of years we have realized the importance of trying to work more closely with Ag Canada so that our guys who are in the export markets and the people who deal with the retailers can advise those AAFC folks on what consumers need. It is important for us to be able to relay that more closely with the breeders so that there is a better line of communication there between needs and capabilities.
Fredericton has a tremendous amount of capacity, and we just need to get ourselves a little better aligned. In the past year there has been some initiative to get the processing companies more directly involved with the Fredericton breeding program in terms of feedback and that type of thing because they take probably 50 to 60 per cent of the potatoes right across Canada.
Senator Mercer: Yes, indeed. In the same trip I referred to we spent time with McCain Foods and Cavendish Farms looking at some of their research and processing. Both of them had very impressive operations, but one of the things that was missing at that point was research into the growing side. Everybody has skin in the game so this is important.
Do you see that the major players, the McCains and Irvings, have been paying attention to the production side as opposed to the processing side?
Ms. Simmons: They have. Actually, in the last couple of years there has been more directed research toward that type of thing. A couple of years ago, McCain started up what they call their New Brunswick potato industry transition initiative. They are working with the growers in New Brunswick and with Ag Canada to try to address yield and productivity issues because that affects the cost they pay on their contract to the growers for the raw, as they call it, or the potatoes that go into the processing plants. Our processors are competing with Western U.S. where they can get 400 to 600 hundredweight per acre and we are at 300 to 350 hundredweight per acre.
There has been a new initiative with the growers, the potato agency in New Brunswick, our board in Prince Edward Island and the processors to try to improve yields of quality. New Brunswick started it probably 18 months to two years ago. We have been fortunate to be watching what they are doing and learning a bit. We have just initiated that as well in Prince Edward Island. We also put some money from our board and our growers into an initiative with McCain, with Potatoes New Brunswick, with the Manitoba growers and with Ag Canada to improve quality and yield. That started about a year ago and we're very excited about that.
Senator Mercer: My final question is with respect to capacity. You talked about 89,000 acres harvested on 200-plus farm operations. Prince Edward Island is not that big a place. Is there potential to expand the industry in Prince Edward Island without taking existing farms out of other production? Is there room to create more arable land for potato production?
Ms. Simmons: That is an excellent question. Rotation is an important part of quality too in soil health and so on. We share that concern as well. At one point we had 113,000 acres of potatoes in the ground in 1999. I did not share those statistics with you. Quite frankly there was land in production at that time that was probably less than ideal. Anyway, we do not want to go back to 113,000 acres, but we think that somewhere in the 90,000 to 95,000 acres is a sustainable level for us. I mentioned that there are about 600,000 acres of arable land in Prince Edward Island suitable for potato production. Right now we are at about 15 per cent every year so we could still grow some more but make sure we maintain our three-year rotation.
Senator Mercer: Many of them are covered with golf courses, aren't they?
Ms. Simmons: That is certainly a value add as well.
Senator Mercer: Thank you, Ms. Simmons and Ms. Ruddock.
Senator McIntyre: Thank you both for your presentations.
Ms. Simmons, my question has to do with nutrient and pest management. In the market access section of your brief you mentioned that survey work has been done to assure new markets of the pest status in Canada. There is no question that nutrient management and pest management are important parts of the growers' crop management plan.
Are the pest control tools, both chemical and non-chemical, available to Atlantic Canada growers adequate? What can the Government of Canada and provincial governments do to help mitigate pest and disease control challenges?
Ms. Simmons: Another really good question. First of all in terms of what the Government of Canada can do, we certainly support initiatives to look at things like invasive species to try to protect the quality or the pest status of things that are coming into Canada.
On that note, we were in Ottawa last week for the Canadian Horticultural Council's annual meeting, and we learned about the development of a new emergency response plan for animal and plant health. We want to be part of that and that is what the consultations are about.
It is important to keep pests out that we do not have. For the pests that we do have, growers will always say that there is access to other protectants in other countries that we may not have in Canada. We always seek harmonization, particularly with the United States in terms of access to crop protectant. That is important to us but we must also note that PMRA, the Pest Management Regulatory Agency, has been doing a pretty good job of trying to get more in line with other countries, with their speed of actually reviewing and allowing new products, and so on.
Wireworm is a major issue in Prince Edward Island. It caused about $7 million in losses about four years ago. We have been doing a lot of work with Ag Canada again and with growers to look at things besides crop protectants that we could use. You will see mustard growing now in Prince Edward. A rotation of buckwheat and those types of crops can help with soil health and can help suppress the wireworm issues.
There is a product in the United States called fipronil. We had an Ag Canada researcher from British Columbia with us yesterday. There were 200 growers in the room looking for solutions and wanting updates on the research that is under way. The researcher said that Fipronil would absolutely do away with wireworm in very small quantities of product but was not registered for use in Canada. There are still some inequities in that way.
In terms of nutrient management, most of our growers are very interested in doing a good job and are doing a good job on that. We also have research on that area too. It is a program called Four Rs, which is the right rate, the right place, the right time and the right product. It is something we started a couple of years ago. We really just want to make sure that there is not excess fertilizer going on and ending up in waterways and so on. That part of it is good.
We also have an integrated pest management sustainability initiative that started with McDonalds in the United States. It was a shareholder initiative. Now all of the processors that supply McDonald's are part of that and our growers feed into that. They do a sustainability survey every year and it is about to be audited this year for the first time. It is to look at all of the practices — nutrient management, pest management, water management and all that type of thing — that help them to move along a continuum there too.
I don't know if I have hit your question but there are a lot of initiatives under way. Most of the export markets do not demand too much of that type of thing, but it is important to suppliers in North America, and it is important from a sustainability point of view.
Senator McIntyre: Ms. Ruddock, I also found your presentation very interesting. There is no question that some provinces have developed marketing programs. Taste of Nova Scotia is an example of this kind of marketing program. On top of that I note that it has an export market development component. As you have explained this is a program oriented toward the promotion of local food products. On top of that it can benefit from the development of international markets. I know you have touched a bit upon this issue of accessibility to export markets, but I would like you to elaborate a little further on what challenges you are facing in accessing international markets.
Ms. Ruddock: The key challenge right now in Nova Scotia we are facing in the agri-food sector is for the companies to understand that export is very important for the sustainability of their products and for the growth of their companies. That is why I mentioned in my presentation that the buy local movement is certainly giving a lot of companies a false sense of security that it will be that easy everywhere in the world. For example, it written in the core mandate of NSLC, Nova Scotia Liquor Corporation, that it will support the Nova Scotia beverage alcohol industry. Basically you walk into NSLC and you have a local distilled product and it pretty much will go on the shelf in one store for sure if not 115 stores.
That is a real false sense of security because that is not the way the world works. I think the companies need to understand right now the assets that are available to assist them in their growth and that they need to pursue that because NSLC will never be able to buy enough wine or spirits or any of it to justify these multi-million dollar investments in distilleries and wineries.
I would say the number one challenge would be certainly for the companies themselves or the industries themselves to access these opportunities being presented through agencies, through Agri-Food Canada and through Atlantic Canada Opportunities Agency. We recruited this year for five international initiatives and I have companies saying "Oh, not this year. I am just not ready.'' They have to understand that it is a two-year selling cycle when you are going abroad as well. It is not NSLC where you walk in and you have an order in six weeks and it is shipping into the warehouse. If they are not ready today and they are saying they will be ready in maybe a year, today is the day they have to start going overseas or into the United States depending on their business plan. I really think that there is opportunity with SMEs, the small ones, and not Clearwater and not McCain. That next level down really truly believes the world works like it does in Nova Scotia which it doesn't.
Senator McIntyre: Your membership is made up of stakeholders from the production, processing and retail sectors. As I understand your presentation we need a better coordination of the supply chain and therefore it will be an advantage for export market development. Is that correct?
Ms. Ruddock: That is correct, exactly. They really do. Right now what you are seeing is a bit of layering on top of layers. That is not effective. It is not efficient. It is more working together and understanding what the core common goal. Everybody has a piece to play in that.
There is enormous amount of insecurity when you come out into challenging economic times which is what we are into right now. There is not an enormous amount of good news being put out by our wonderful Canadian media. There is insecurity on part of everybody. If I work with them, then somebody is going to look at me and think, "What do I need them for?'' When you clearly identify the roles of everyone and what they are doing that goes away because everybody knows they have a piece.
Senator McIntyre: Is the Canada brand strategy useful to the marketing of your products abroad?
Ms. Ruddock: When you come out of North America it is. Yes, very much so. I don't know where New Mexico is in the United States or I don't know the seven cantons of Switzerland. When you come out of North America it is important to go out with the Canada brand. We do everything outside North America with Nova Scotia, Canada, and of course Nova Scotia is in our name. It is Taste of Nova Scotia, Canada. We never leave Halifax International without Canada.
Senator McIntyre: Congratulations on the good work with your marketing program.
Ms. Ruddock: Thank you very much.
Senator Hubley: Thank you for being with us today. It has been a lot of new information and that is important to us.
I am going to speak to Brenda because I am very close to the potato industry coming from Prince Edward Island. I would like to follow up on one of Senator Mercer's questions when he mentioned the seed potato industry.
Could you elaborate on the strength of that industry? When I go back a few years on Prince Edward Island I remember the plant breeders from Prince Edward Island that worked closely with Cavendish Farms at that time. I believe we did have some strains that were identified as Canadian such as the Yukon Gold. I do not know if Fredericton developed the Yukon Gold or not. There certainly have been developments within the potato industry that will satisfy marketing demands. I think now we have gone on to small red potatoes, small white potatoes and small yellow potatoes. They may have a timeline to them but they are also probably demands on the industry to produce that particular consumer-driven need.
First of all, would share with me the types of potatoes that the industry is asking for these days, including the potato industry, especially for the french fry market? I was a little concerned when you mentioned that Scotland and Holland have seed potatoes and they will share those with us as long as we do not market them. I am wondering if that Catch-22 situation arises with most other countries that are in the seed market industries. I would like to have a sense of the strength of the seed market industry in Canada and the work that they would be doing for us.
Ms. Simmons: I will start in Prince Edward Island in terms of the seed farms. In Prince Edward Island we have the most seed acres in Canada in terms of potatoes. We have 20 to 24 per cent of seed potato acres in Canada. A lot of our market in Prince Edward Island is for our next crop to grow potatoes for french fries, to grow potatoes for table stock and so on. That is a big market for us at home and it is a captive market relatively which is important.
I mentioned cost recovery. There used to be a time when 100 per cent of the acres in Prince Edward Island were grown to seed status. The whole plant health implications of having all your acres grown to that high-quality status was very positive, and then the growers still took the larger size ones and went to table stock with them and kept the seed for their next crop. When cost recovery came in, it was a big bill, so people said, "Well, I don't really need all those acres for seed, so I'll cut back,'' which has some bio-security and plant health risks too. We still have quite a few seed farms and growers that have a long history in that sector. We see seed markets as a big potential for Canada.
We work closely with growers in New Brunswick and in Alberta because those are the three biggest seed areas. Together we are working as Potatoes Canada. You mentioned the Canada brand. It is very important in potatoes as well. We work together as Potatoes Canada to try to identify export markets and work as a Canadian industry for seed. We do run into that issue I mentioned of not having Canadian varieties that work well in export and are Canadian varieties. We need those varieties so people will say, "I can only get them if I go to Canada.''
It is not just Holland and Scotland. It is Germany. Most of the major European countries have a history of potato breeding. They do allow varieties to be grown in Canada, but they also restrict where in the export market you can go with those protected varieties. They are very happy to have them grown in North America for the North American market. A good example is Rooster. I don't know if you have seen that one. It is a British variety. Griffin grows it in Prince Edward Island and ships it across North America. There are growers in Idaho that grow it as well. It is a neat variety. It has had all kinds of promotion in the U.K. market. We can grow it for domestic consumption here but I do not think we could turn around and ship it to another country. It is important to have that access within this country, but when we talk about international market access, it is often a barrier to us.
In terms of the types of potatoes that are grown, you are right that things like fingerling potatoes and the creamers, the small potatoes, are a huge part of the market now and a high-value part of the market too. It is funny that 15 or 20 years ago we used to go to meetings in Ottawa and fight about small potatoes. You probably remember that, Senator Mockler. We didn't want to have them on the market because they were seen as kind of cheapening the Canada grade. What a change there has been. Now these creamers are smaller than the ones we used to argue over but are a very important part of the market. We have growers, again in Prince Edward Island and Alberta in particular, that have really worked on the small creamers and fingerlings. I think that is great. It is a product that can be cooked much more quickly so it is convenience that appeals. There is quite a diverse bunch of varieties in that category. It again works.
Reds and yellows have become much more popular in the North American diet and that has also been something for which we have expanded our acres in Canada. I think the processing varieties are the bread and butter. They are 60 per cent of the market.
In terms of replacing some of those, Russet Burbank is still the number one variety in Canada. It is an old variety that has held up so well but it is a long season variety. In terms of environmental issues, you are not getting those potatoes out of the ground until late October. You cannot get a cover crop on that late in the season. Your land is therefore vulnerable to blowing, and soil erosion. We would like a replacement for Russet Burbank. I think the processors would like that too.
Fredericton can help us out a lot on those types of things from a breeding perspective if we are all working more closely than we have in the past.
Senator Hubley: We did have Minister McIsaac with us yesterday morning and we did talk a bit about crop rotation. His concern was that maybe the crops that go in after the potatoes do not have the cash value back to the farmer that he would like to see. I am wondering if there is work being done on crop rotation. He even suggested that a three-year rotation might be expanded to a four-year rotation which is major. I can understand why there might be some reluctance to do that.
When we are looking at the quality of the soil and maintaining that quality we are going to have to make some tough decisions along the way. On the crops that are now used for rotation is there work being done to develop a different crop, a crop that has more value? Could you give your estimate on that?
Ms. Simmons: The value part is very difficult. We have grown soy beans, as you likely know, and corn has become a bigger part of our rotation. We have had such a change in terms of the beef industry. The livestock industry on Prince Edward Island really declined through BSE and through the closure of the hog plant. We have a lot less manure. We have a lot less need for forages in our rotation to feed the livestock industry. Dairy is still very important, thank heavens. There has been a big change in our production system in Prince Edward Island in a fairly short time and it has been a challenge for growers. They cannot get the manure they used to have which helps with soil health and stuff.
There is work on new crops but those crops bring challenges too. Soy beans are an export market that is growing. We ship from Prince Edward Island to Taiwan in particular, but soy beans may increase sclerotinia, which is a disease issue. They may also be harder on organic matter than forages. Forages are a great host for wireworms so then we are back into the perfect feeding grounds for wireworm because we do forages which are good for soil health.
There is research in new crops, but they are basically crops for a soil health reason, not necessarily to contribute economically to the farm. Yes, mustard is going to help with wireworm. It may help with verticillium wilt and nematodes, but it is not going to give you money. However if you get 15 to 20 more hundredweight per acre because that is in your rotation then that is something we have to take into account as well.
Right now we are more focused on the soil health and trying to see how that impacts the productivity of the potato crop and keeping our eyes open for something that might be a good economic rotation crop too, but it is a challenge. Some farms are on four-year rotations but I think the farms have to do it themselves when they see the benefit. We do have rotation legislation that is one in three. It works well in some areas, and in some other areas growers feel like they can look after the soil on a two in five or something like that. We looked at rotation studies yesterday from Maine. They are on a two-year rotation for many farms. Michigan is on a two-year rotation. We are competing against areas that are in tighter rotation but we have to look after our own soil conditions so three is where we are now mostly.
Senator Hubley: Thank you very much.
Senator Oh: Do you think the Canadian media helps and supports your food industries? We do not get too much good news these days in the media. Are they supporting you so far or has the situation improved?
Ms. Ruddock: The media right now in the world is faced with many different challenges and everything is coming down to 141 bytes and you have to get the message out. I would not say they are an asset at this point in time for business in Canada, for economics in Canada. They could be. They very much could be. I have seen it improve slightly. I really have to say it has improved somewhat but what has overtaken it is the social media component. In social media people are just waiting for negativity to come up so they can give their input and view on it. Sadly that takes off and it takes off faster than it used to when it was a traditional paper and if I didn't like the comment I wrote my letter to the editor and it was published three days later. Now it is 30 seconds and people feel they are all entitled to their opinion. We make ourselves look very intelligent when we have these counter opinions.
It is very complex right now with media for sure. As a strictly personal observation I do not see them at this point as the asset that they maybe could be. There is a political answer.
Ms. Simmons: I agree with what you say as well. It is interesting from my perspective. The media on a local basis tend to be relatively negative to the bigger industries in the province. For us it is potatoes. Because of social media and a few activist groups, in the local news you can get a pretty negative view of what is happening on farms. I watched the national news last night, and from our little wireworm workshop yesterday there was a national news story about a new trap to capture adult click beetles. That actually made the national news in a positive way. It showed the things that we are trying to do from a more holistic point of view and not just look toward a chemical as a solution. This is going to sound unfair, but outside of Prince Edward Island the media are generally more kind to us in P.E.I., but when we are home we tend to focus on the smaller issues and that makes it difficult.
I do not know if you are aware but we had a terrible tampering attack on our industry in 2014 where somebody put needles in potatoes. Six or seven farms found needles. The media was quite good to us in that situation in terms of fairly responsibly reporting but then they got on a bit of a frenzy where people were reporting they found things in potatoes that were not related to either Prince Edward Island. I do not even know where they happened but they seemed to build on that. I must say in that situation the media coverage was decent and it was sensitive to the farms that were involved.
Senator Oh: Are you both using a lot of social media to create and promote a better image of your industry?
Ms. Ruddock: Yes, we definitely are. We are using it in a very positive way. All our Taste social media are trumpeting our business successes and our individual member successes in trying to get that awareness. We will put out quite a few press releases. We have one media outlet in Nova Scotia that picks it up and rewrites it. I do not even know if it is the same. It has our name on it but it really is not what we sent them. It is just a complete deep dive into seeing how they can make it out to be more of a sensational and negative story than what it actually was meant to be.
We are trying to do that. We are trying to manage the message. They are digging and they are going for a deep dive to find out. They are thinking that we are trying to say something positive when something is not positive and it is not true at all.
Ms. Simmons: I would agree. We are using more social media too, mostly targeted toward the consumers in North America, not outside North America. I do not do Facebook. I am quite a dinosaur that way but we do have a Facebook page. We are shipping more to Western Canada, for example. Now on our Facebook page we post where you can buy Prince Edward Island potatoes when they are at the Calgary Co-op, et cetera. We will put that up. It is incredible to me the amount of uptake there is from it and the retweeting and redoing of all this stuff and it translates into sales.
On environmental issues and closer to home issues we have to try harder. We have to do a better job ourselves on that stuff. We are trying to learn that as we go. I think the media can be helpful, but like Janice's experience there is an angle we do not necessarily always appreciate.
Senator Oh: Earlier you mentioned you ship potatoes 40 days to Indonesia. There is a huge potato chip plant in northeast China. Do you ship anything over there from here?
Ms. Simmons: We do not ship to China. Canada was the first country to sign an access agreement for potatoes with China, but it is only for the mini tubers, basically lab and green house produced. It is soil-less production, so there is no access at this point for fresh potatoes into China.
We have shipped chip stock to Hong Kong for processing but not into mainland China.
Senator Oh: It is not directly into mainland China.
Ms. Simmons: No, we can't at all into China itself.
Senator Oh: Do you know if it there are ongoing negotiations to get in?
Ms. Simmons: Not that I am aware of. It is such a huge market. We have participated at the World Potato Congress in China this past summer and so on. The amount of work they are doing on potato-based products for consumers was amazing apparently. I was not there but our general manager was. We would love to go to Harbin and those places with fresh potatoes.
Senator Oh: That is interesting. I have one more question.
Should the TPP text be ratified, Global Affairs Canada notes that there will be "tariff elimination and improved market access for Canadian agriculture in the TPP . . . .'' Are you all ready to move into markets besides Japan, Malaysia and Vietnam?
Ms. Simmons: We had a presentation last week in Ottawa on the TPP as it pertained to potatoes. You are right that there is duty reduction, but it comes back again to the fact that we somehow need to have an access agreement that addresses any phytosanitary concerns too that those countries may have on potatoes before we can ship. We will wait to see the text as soon as we can, but there is still going to be another step before we can access some of those markets. I think we can go to Malaysia right now. We are trying to get some sales there already. I think it is a good thing.
Senator Oh: Good. Thank you.
Senator Mockler: Congratulations to both of you. It is refreshing to get the information you have shared with us. I have four or five questions.
Our biggest competition in seed potatoes would be probably the Dutch and they are still hammering across the world.
Ms. Simmons: They are, yes.
Senator Mockler: That said, I want to pick up on what Senator Oh just mentioned. It is vis-à-vis the growing industry of mini tubers. Who is leading now? Could you explain for the benefit of the audience and the committee what are mini tubers and what are their growth process? I think if we want to penetrate China or even the TPP countries, Canada is still well regarded as a mini tuber lab producer.
Ms. Simmons: The production of high-generation seed is not my area of expertise. We have people in our office that do that. The P.E.I. Potato Board owns a farm on Fox Island in western Prince Edward Island. It is a closed system. We start off with plantlets of a particular variety and we multiply the plantlets. Then we take the plantlets out to a screen- house or a greenhouse facility and we will grow those into mini tubers. They are almost like the creamers you would see in the market but they are high-quality seed potatoes grown in that protected environment. We grow them in Prince Edward Island mostly for our own use. It is the start of our seed production system.
In New Brunswick there is quite a large mini tuber production facility. China allows the importation of mini tubers. I do not think any other country actually has accessed China for fresh potatoes. It is an area of great opportunity but we need that access to be able to do it.
Senator Terry Mercer (Deputy Chair) in the chair.
Senator Mockler: If I look at your mini tuber and then go to the fields, how are we faring? Senator Mercer hit on it a bit, but where do we classify ourselves with the other potato regions of Canada by way of sharing, best practices or best usage of technology or best technology?
Ms. Simmons: We work quite closely across the country through the Canadian Potato Council. We have representatives of almost every potato producing area except Newfoundland as part of that group. We actually are co- operating together on research on a national basis.
About five years ago we developed a Canadian potato research strategy for the first time. We did it as potato grower organizations but we also had companies like McCain at the table. That really helped us. Dollars are restricted or tighter and harder to come by all the time so we put our dollars together on the areas we feel are national priorities. We also do things like share what we are doing within our own provinces. If Manitoba has an issue and it is something we have already encountered in Prince Edward Island, they can give us a call and we will share with them. They may then not need to start way back where they were. They can take what we have and then kind of tailor it to themselves or vice versa. The same with Alberta. If Alberta has done something that we are going to run into as a pest or issues, then we want to be able to share that. There is quite a lot of openness across the country in terms of sharing that potato research capacity and knowledge. I think that has been a very positive development in the last five or six years, and the cluster program of Ag Canada helps.
Senator Mockler: When we talk about the cluster program can you give us all the regions, starting with number one, number two, number three and number four, where we produce the biggest acreage going down to the lowest acreage?
Ms. Simmons: Prince Edward Island has 24 or 25 per cent of Canadian potato production. I will probably flunk this test but I think the next biggest would be Manitoba. Then it would be Alberta, New Brunswick, Quebec, Ontario and British Columbia.
Senator Mockler: I know what I do when I travel, and I did it this morning at the restaurant. If they are not New Brunswick potatoes I go to Prince Edward Island rather than going to Idaho.
Ms. Simmons: We appreciate that.
Senator Mockler: I am coming to Nova Scotia, Janice. I am coming to Nova Scotia.
Senator Hubley: I would like to speak to Janice for a moment. In our discussions yesterday we asked several questions on organic farms and organic products. There was some response or some feeling that the public may be moving toward farmers' markets to get fresh produce and to know the producer and that organic was perhaps not as required or the demand was perhaps not there as it once was. I was taken aback a bit when you mentioned that the buy local programs created a false sense of security.
I would like you to elaborate on that. Is there an avenue in what you do for small companies that have reached their comfort level in production or should they continue with their farmers' market style of selling to the public?
Ms. Ruddock: The comment about a false sense of security was more in regard to wanting to grow their business. I won't say efficient but buy local awareness programs such as Select Nova Scotia are certainly a much friendlier environment to buy local through farmers' markets and to grow your business. It is really not the way the world works though you are being successful in your own market and you are growing your business. I think of one company, the comments they make and the way they are looking at their business development. They honestly think the sale cycle will be as short in Nova Scotia as it will be in Sweden. So buy local gives them a false sense that this is how the world works: I have a great product. I have a great story with it and I am going to sell it in Stockholm. They have to realize that it is a great story and a great product in the province of Nova Scotia, but Stockholm sees thousands of great stories and great products. You need certainly to advance your skills. It is not going to be that easy. That is why it is creating a false sense of security. What was the other half of your question?
Senator Hubley: No, that was basically it. I just wanted to clarify because I think most provinces have had a buy local. I think it is really important because now I think the consumer is aware that we do look for it. We have been educated to the degree that we want to buy local, then from New Brunswick if need be and then Canadian. We go right down the line. I think there has been some success in those programs.
Ms. Ruddock: For sure. Just to go forward I think the other half of your question was do we do anything once a business grows. They are growing through the farmer market system. Their product is growing. I think of one situated in Mahone Bay that started through farmer markets. They have a beautiful product, great packaging and great labelling.
We then had an initiative going forward in Central Canada where they could participate in a trade show at a very nominal cost. They could see what it would look like when they would go into a bigger market. They could talk to bigger buyers about what those buyers wanted. They came out of that with thank you so much because now I see what I need to do to build my business
We do have mechanisms for them to come forward. We always see it as they start their business. They see if they have a viable idea through the farm market system or through little market stores. If they do then there is Taste of Nova Scotia where they can come, pay a membership and start to take advantage of larger export opportunities or outside Nova Scotia opportunities.
Senator Hubley: I just wanted to say that the singers on Prince Edward Island are wonderful. I want to let everyone know that I did take offence to that remark. I know most of them and they may be disappointed.
The Deputy Chair: But they are much better when you are playing your fiddle with them, Senator Hubley.
Senator Hubley: This is true.
The Deputy Chair: We have time for a couple more questions.
[Translation]
Senator Maltais: Ms. Simmons, in your presentation, you mentioned a small export volume to Russia, somewhere in the neighbourhood of $7 million. Is that amount recurring or was it a one-off?
[English]
Ms. Simmons: Russia for us is an opportunity market. It is one where sometimes there is a potential and we do have extra capacity to do it. In 2010-11 they had a terrible situation with drought and so on. That year they were bringing potatoes in from all around the world. We shipped about $7 million. The last number of years we have been shipping there. They are smaller amounts in some years. In 2013-14 we went up to a couple million dollars. It can be an up and down market, but it closed completely due to the Ukraine situation.
[Translation]
Senator Maltais: Something you said in your remarks surprised me, and I'd like to ask you about it. We have a Canadian cow, a Canadian horse and a Canadian chicken, but we don't have a Canadian potato. Where did the first Canadian potato come from?
[English]
Ms. Simmons: We do have an organization called Potatoes Canada, if that is what you mean, and we do promote Canadian potatoes internationally. It is a very small group. We did have some funding from Agriculture and Agri- Food Canada to help us. It was a couple hundred thousand dollars over three years. It is unfortunate but there was a year where we had no funding. We were waiting for nine or ten months to have our project reviewed and we found out last week that it was approved. We are going to go again for three more years. Is that what you mean?
[Translation]
Senator Maltais: I was pointing out that, historically speaking, the potato originated in the Americas, not in Europe or elsewhere. It originated in South and North America. So the Canadian potato must have features that are specific to the Americas.
[English]
Ms. Simmons: Potatoes originated in Peru actually, and then they were moved from Peru over to Europe and that's where they were more widely cultivated, and then from Europe back over to North America.
We do have a lot history in potato production and we've been shipping to countries around the world for 80 plus years: West Indies in exchange for rum, so that was a good deal. We do have a history of producing potatoes in Canada.
We do have cold winters most of the time, which is a very good thing from a health perspective because frost kills a number of pests; it breaks disease cycles.
I think Canada has advantages. Our friends in Alberta sometimes market under "Northern Vigor.'' That's their brand. I think Canada absolutely has things to offer around the world in terms of our potato trade. We need to capitalize on those things.
We bring delegations into Prince Edward Island, and they like to come in the summer because they like to see the growing crops and see what they might actually be importing back into their countries. But when we show them the video that shows wintertime in Canada, it's quite a novelty. They respect that cold temperature and how that can break disease cycles. It is an advantage.
Senator Maltais: Thank you very much.
The Deputy Chair: They don't come to see it grow. They're coming for the beaches and the golf courses; it just happens to be potato time, too.
Ms. Simmons: We try to give them a little time for that too.
The Deputy Chair: Senator Mockler, the past chairman of this committee, is going close out our debate this morning with a couple of small questions.
Senator Mockler: I have three little questions.
I notice you did not talk about amigo number three, Mexico.
I'd also like both of you to share your experience and your challenges that we have with TFWs, temporary foreign workers.
The third item is how is our industry adapting to consumer diversified foods especially with our new Canadian immigrants?
Ms. Simmons: I will take Mexico first. Mexico used to be a great market for our seed potatoes. From Prince Edward Island and New Brunswick, we were the largest area to export seed potatoes to Mexico, probably, I'm going to guess, back in the 2006-07 time period. It was quite a good market for us. We were big, and it seemed like because we were big they wanted to limit those imports, quite frankly. The inspection became tougher.
Western Canada took over that market, and they had a good go at it for a number of years. For the last two years, no one from Canada has shipped to Mexico, even though we still have the same conditions in place to allow us to. They've been extremely difficult to deal with, to be quite honest. It's unfortunate.
We also see potential for table stock into Mexico. We can do that cost effectively using ports, but again we can't get access at this time.
We're watching Mexico. It's a big market. They take a lot of U.S. potatoes. They only allow importation to a 50- kilometre border zone across into Mexico. That's as far as you can ship table stock potatoes.
The U.S. has obviously closer access and it's a good market for them, but we would like to do more with Mexico. It's just become cost prohibitive. They have to come here three times. They send their inspection staff and the Canadian exporter has to pay for that and the testing, and again, there is no guarantee.
Temporary foreign workers is not my area of expertise. It generated a lot of discussion at the Canadian Horticultural Council last week. We do have more and more farms using foreign workers. I know Nova Scotia has a longer history of that. I guess there's a sub program, a seasonal agricultural workers program, or SAWP, and that seems to be facing fewer restrictions than with the temporary foreign workers that the fish plants are trying to bring in. But it is a challenge to get labour. The unfortunate flip side of the oil situation in Alberta is we have a lot more labour available to us right now. Trucking companies were bringing in foreign workers, foreign drivers. We were at a meeting a couple weeks ago and they've never had so many drivers because, again, folks from Atlantic Canada are coming back from the West, very qualified skilled drivers. So temporarily it's not so much of an issue. But the seasonal agricultural workers are a growing part of what's needed on farms.
Ms. Ruddock: And the consumer diversified foods for immigrants.
Ms. Simmons: Oh, thank you very much. That is a big opportunity.
Potatoes are part of a diet in a lot of countries. There's a grocery chain in central Ontario, T&T, that Loblaws bought. We've actually approached them to see if we can do some promotion on potatoes, to do up some signage in the right languages. We see there's quite a bit of potential. We're looking at doing more on that one for sure.
Ms. Ruddock: I will defer on Mexico because Taste of Nova Scotia's members were really looking at Mexico about 12 years ago and didn't stick. For a variety of reasons it just wasn't a trading partner that much developed. None of our members ask "Are we doing anything in Mexico?'' "Let's do something there.'' "We want to go there.'' They're not asking for that market.
The temporary foreign workers program, one of the big issues I would say every member of ours has is availability of labour, low skilled labour, labour that will do and will get the job done. We need to look at any mechanism that we can use to assist in that because it will inhibit their growth and will inhibit their success without the proper amount of labour. We know that the TFW program got under the microscope because of what happened out west in one of the instances where temporary foreign workers were being used in a McDonald's. The fact remains that there is a scarcity of this low-skilled labour. We have to figure out how to address that.
Senator Mockler: Can you share with the committee when we talk about TFWs in Atlantic Canada how many weeks they work here or how many hours they work during the week?
Ms. Ruddock: I'm not privy to those types of discussions.
The Deputy Chair: Ms. Ruddock, thank you very much.
Ms. Simmons, thank you very much. I'm always thanking a Simmons woman. I'm married to a woman whose maiden name is Simmons, so it is my lot in life. Thank you both for being here and for very good presentations.
Senator Ghislain Maltais (Chair) in the chair.
The Chair: For the second part of our meeting, we have great witnesses with us. We will be discussing the blueberry market.
We have with us, from the Wild Blueberry Association of North America, Mr. Homer Woodward, Director; from the Wild Blueberry Producers Association of Nova Scotia, Jim Baillie, Director; and from New Brunswick Blueberries, Murray Tweedie, Chairman.
We also have with us, from the New Brunswick Cranberry Growers Agency, Gerald Richard, President; Graeme Jones, Vice-President; and Melvin Goodland, Board Member.
Welcome, gentlemen.
Who will begin? Mr. Woodward?
Homer Woodward, Director on the Board of Directors, Wild Blueberry Association of North America: Yes, thank you. I would like to thank this group of honourable senators for taking the time to learn a little bit about our wild blueberry industry in Canada.
The growing region for wild blueberries is in the northeastern part of North America, primarily New Brunswick, Nova Scotia, Prince Edward Island, Quebec, Newfoundland, and the State of Maine.
There's a 10,000 year history. Vaccinium angustifolium is a native species of northeast North America. The use of blueberries first started back with a traditional gathering by the First Nations Peoples, and then when the European settlers came along they started utilizing the wild blueberries in their diets.
In Maine, they started preserving blueberries by canning it back in the 1800s, and buying agents started buying blueberries throughout Canada in the 1900s; wild blueberries.
In the 1950s, frozen foods became the way to preserve fruits and vegetables for the consumers. The 1950s is also when the blueberry producers started using modern management methods, farming their lands.
The first overseas sales were back in the 1970s, and it went to Germany. Wild blueberry production has increased tremendously over the last 30 years. In 1980, it was at 40 million pounds, the entire industry. In 2014, we were at 325 million pounds of wild blueberries to market.
Over 98 per cent of the wild blueberries are frozen at the time of harvest, focusing mostly on food manufacturing and developing a retail market. Over 90 per cent of Canadian wild blueberries go to the export market in 28 different countries.
In Maine, the majority of the industry is in the U.S. domestic market, with some overseas market, but Canada is the king when it comes to exporting blueberries overseas.
The wild blueberry crop over the last three years —- I'm not going to go through and tell you what each province produced — but the total crop in 2013 was 213.5 million pounds. In 2014, it grew to 326.1 million pounds. In 2015, it was 302 million. So basically in the last two years we've grown three crops, which has given our sales marketing people quite a challenge.
The Wild Blueberry Association of North America was founded in 1981 by processors, producers, and supported by government agencies. We have parallel organizations in the U.S. and Canada that cooperate in the marketing efforts to promote wild blueberries globally, and they also administer some international marketing programs.
The role of WBANA is to promote global awareness and use of wild blueberries, and communication forum for producers; it acts as a way for the producers to compare notes. It helps develop and manage global marketing and promotional strategies, and encourages the support of health research, which is critical to our promotional efforts in supporting health research.
The main focus is on premium ingredients and distinction of wild blueberries from our competition, with health benefits in the specialty ingredient that it is today.
We focus on trade relations and targeted activities such as food shows, health food shows, health research, research symposiums. We pay attention to the customer base, appoint promotional agencies in other countries to represent us in promoting the use of wild blueberries, and we listen to the experts and their feedback to help us on how to present our product to the consumers in the best way. We evaluate new markets, and we are always helping to support the health message.
One example of our success over the years: In 2010, in Germany, we had 64 different products that use wild blueberries. In 2014, we had 357 different products in Germany using wild blueberries.
We have 10 top export markets — number one being the United States — Germany, Japan, the Netherlands, France, China, the U.K., Belgium, and South Korea most recently. In 2014, Canadian exports of 130 million pounds went to those top 10 countries.
Up to 90 per cent of the Canadian wild crop is exported annually. The domestic market is frozen retail, bakery and food service. So we don't ignore the domestic market, but we know we have to expand it beyond that to take care of the crops we're producing.
Our strategic plan for the next three years is: One, farming our land better by emphasizing on maximum productivity of the existing land base; precision agriculture development and adaptation to our fields; enhanced training on optimum use of pest control products through IPM programs; intensive analysis at the field level due to wide variation of soils, topography and microclimates that we have to contend with. And we're always looking at new approaches to land development, how best to develop new lands, acres, for production.
Two, support farm profitability by enhancing grow education programs in field management; new industry benchmark cost of production data and training for on-farm COP analysis, which is critical to make sure the growers understand what their cost of production is; new initiatives in business and farm financial management, strategic plan expansion and growth.
Three, regional relations and cooperation: Regional industry competitiveness and profitability are enhanced by coordinated programs; expanded coordination of production, pest management, field management and research and information; maintain strong regional support for global marketing programs and health research.
Four, while in healthy production, focus on sustainable production and management of wild stands of blueberries; clear, factual messaging for consumers on the unique management methods used in bringing in a wild product to market in a safe and sustainable manner; increase use of IPM concepts adapted to wild blueberry production and expand development of traceability protocols.
Five, promote processor relations, making sure that producers understand necessary fruit quality assurance and reduced shrinkage; traceability initiatives; communications and ensuring value chain equity; strong partnering in WBANA-led market promotion and health research.
Six, understanding who we are: Industrial profile and benchmark data; clear direction and vision for industry growth and development; commitment to farm profitability and industry stability, and understanding how our role in rural economic growth with public and private sector partners.
Our key points are we are export driven, now and in the foreseeable future. Government's role in trade promotion and trade access is crucial, and the assistance has been valuable to our organizations.
Research is vital to competitiveness and sustainability, and it must be done here. Government programs help mitigate business risk and ensure competitiveness with a net return to the economy.
I think that concludes my presentation. I had some pictures and stuff here, but thank you very much for your time, and I appreciate the opportunity to speak to you here.
The Chair: Thank you very much, Mr. Woodward.
Murray Tweedie, Chairman, New Brunswick Blueberries: Honourable Senators, ladies and gentlemen, my name is Murray Tweedie. I am chair of Bleuets New Brunswick Blueberries, the provincial organization that represents the blueberry growers in New Brunswick.
BNBB was established in the summer of 2006 as an agency under the New Brunswick Natural Products Act following two rounds of regional consultations and a plebiscite conducted by the New Brunswick Products Commission.
BNBB represents and serves New Brunswick blueberry growers and works closely with blueberry producers and other industry stakeholders, other agricultural organizations and government agencies to address the needs and priorities of blueberry producers and to support market promotion and research that contribute to improved profitability in the industry.
The BNBB mandate is as follows: One, to provide services to NB blueberry producers, including improved access to information and training opportunities, representation in industry organizations and working groups, development and promotion of policies in the best interest of producers, and program development and delivery that meet the needs of industry.
Two, to support and facilitate research that encourages good cultural practices, improves management and sustainability of blueberry production and improves productivity and profitability in the industry.
Three, to support and implement market development and promotion programs that result in increased marketing opportunities and strong market returns for NB producers.
Under the Natural Products Act, BNBB has authority to collect levies on all blueberries produced in New Brunswick. The Levy Order passed in 2006 establishes a levy of eight cents per pound to carry out its mandate.
Taking a look back to where we were in terms of production when BNBB was created in 2006 in comparison to today is quite astonishing. In 2006, we produced 21 million pounds of wild blueberries in New Brunswick, on 25,500 acres of land which is half harvested every year, with an average yield of 1,640 pounds per acre. In 2015, we produced 78 million pounds of wild blueberries on 39,000 acres of land, with an average yield of 4,000 pounds per acre.
This exponential increase in production, acreage and yield has placed New Brunswick in the number one position for wild blueberry production in Canada for 2015. Given the uniqueness of the product we grow, it is important to increase collaboration with other producing provinces, as well as Maine, and work together as a region in order to maintain competitiveness on the global stage.
It is important to highlight the good work of the growers who are adopting research results on their farms in order to increase yields and develop efficiencies — for example, pollination, IPM, fertilization, adapting new technologies. It is just as important to look to the future to see what is coming and prepare for it. In fact, the increase of production is just beginning.
It is interesting, but not surprising, that many of the pressing issues from 2006 still remain challenging issues today. On the research front, 10 years ago, we were discussing issues still relevant today; issues such as the availability of pollinators, or lack of, the need to develop standards to determine the quality of the fruit, cost of production, and the need for more monitoring and modelling around various blueberry pests.
We still have so much to learn and research must be fostered and encouraged both financially and in collaboration with every stakeholder in the industry. BNBB is well positioned to be a significant part of the research effort and to ensure producers are at the table to identify research priorities. In that regard, we are working with the New Brunswick Department of Agriculture, Aquaculture and Fisheries on the five working groups put together to develop action plans for each priority identified in the latest provincial wild blueberry sector strategy.
We are on the Blueberry Committee with Canadian Horticulture Council, and have applied for funding via a national program to develop research priorities and to make sure we have access to federal programs. We are also participating in a Maritime and Quebec effort to streamline research projects in order to optimize the funding and leverage industry funds with government funding.
We participate in health research as well, via the Wild Blueberry Association of North America, or WBANA, our sister organization responsible for the promotion of the wild blueberry in our existing markets, as well as identifying potential new markets. We are also very proud to contribute to WBANA and to participate on their boards so producers are at the table, not only for health research but also in the international promotion of the wild blueberry, the product we grow.
BNBB has been very active, but we must evolve and become stronger, more unified, and speak as one voice if we are to stay at the table and have an impact on research direction and promotional efforts. To do that, we need to restructure and redefine ourselves. In that sense, we have received funding from ACOA as well as from Growing Forward 2 to develop new strategic and operational plans for our provincial organization, plans that are more in line with the issues of 2016, Phase 1.
Over the fall and winter of 2015-16, BNBB held consultation sessions in the three districts throughout the province to seek advice from membership in the development of these strategic and operational plans. Phase 2 of the ACOA funding is to work on a new governance model, scheduled to commence in 2016.
Moving Forward; Price Stability and Farm Succession: Despite the success that we have experienced over the past 10 years, one critical move forward has eluded the independent producer, and that is to be recognized as a partner in the value chain that is wild blueberries. This recognition within the value chain would ensure fair compensation to the producer based on investment, cost and risk. The issue common to all producers continues to be that of the absence of a fair and transparent pricing system.
At the present time, producers are simply price takers and have little to no say in the determined price. Studies conducted by consultant Forest Lavoie Conseil from the Province of Quebec indicated that the prices received by Maritime growers during the last four years are lagging behind the prices received by growers from both Quebec and Maine.
A true value chain is one which customers receive a quality product at a fair price, while returning a fair price to all partners within that value chain based on cost, investment and risk. Non-inclusion of producers in the value chain will ultimately produce obstacles towards their future in the wild blueberry industry. If independent producers are to survive and move their operations into the next generation, industry must transform from a producer-processor relationship that is fragmented and adversarial into a transparent, inclusive, collaborative value chain.
This concept will ultimately bring greater price stability, greater savings for the consumer by reduction of product waste throughout the value chain, and a net increase in profits for all concerned. This move forward will in itself help the wild blueberry industry compete favourably in the world marketplace.
Quality-based Pricing: Unlike most other agricultural commodities in Canada, the present wild blueberry pricing arrangement in the Maritimes does not reflect a standard of quality. This results in producers who ship high-quality berries being paid the same price as those who ship inferior quality berries. This system must be changed if we are to provide a higher volume of high-quality wild blueberries into the world market. Even if berries are grown to a high- quality standard, degradation can occur during harvesting, handling and transportation of the product to the processing facility. Care must be taken to ensure the highest quality product arrives to the processor. This in itself will need funding to improve harvesting technology and handling practices. Loss of quality and increased food waste equates to loss of profits.
Pollinators: Pollination is considered by many in the industry — and I should change that to 'most' in the industry — to be the single most important factor in the production of wild blueberries. With the projected increase in this province alone in the next 10 years of between 25,000 acres to 30,000 acres in wild blueberries the requirement for pollinators will be enormous. In order to service this increased acreage, an additional 40,000 hives to 60,000 hives of high-quality pollinators will be required. To keep abreast, there must be a concerted and rapid promotional effort in this direction.
Research: With the ever-changing climate, there are increasing challenges in terms of the pests and diseases that are appearing on the scene. To cope with this change, increased research activities must be conducted if we are to move our production forward. This amounts to a greater number of researchers and greater funding in that direction. Greater emphasis must be placed as well on the fertility requirements needed to maximize production. Fertility requirements for wild blueberries are unique in that, unlike other agricultural crops, they grow in very acidic soils,
Promotion: With the rapid global increase in cultivated blueberry production, our industry requires continued government support toward the promotion of our wild blueberry, and to promote the greater nutritional qualities and flavours that differentiate us from our cultivated cousins. WBANA has done an exceptional service to our industry in promoting the wild blueberry as a unique and healthy product. A continued effort by WBANA is essential if we are to compete with other small fruits in the world market. Only with continued government funding can this effort be sustained.
Tariffs: There continues to be high tariffs imposed on wild blueberries by foreign countries, particularly in Asia, where they do not even grow this fruit. A concerted effort by our government is needed to reduce or eliminate these tariffs in order that we can more aggressively penetrate these markets to support our increased production.
Human Resources: Access to seasonal labour is a continuing issue facing the wild blueberry industry, and will become one of increasing concern as acreage and production increases. Much work needs to be done, with the help of government, if we are to address this issue.
Processing Facilities: In New Brunswick, the addition of 30,000 acres of wild blueberries in this province in the next 10 years will result in an increase in production of 60 million pounds per year on those acres alone considering the present production rate per acre. A projected increase to 6,000 pounds per acre from the present 4,000 pounds per acre within 10 years will result in an overall combined increase in this province alone of an additional 70 million pounds. This could bring the overall annual production in New Brunswick to 210 million pounds per year. Immediate steps must be undertaken to provide the processing facilities to compensate for this dramatic increase in production,
In conclusion, with producers and processors working together, and with the help of federal and provincial governments, our wild blueberry industry will grow strong and contribute towards building strong rural communities and in contributing economically and culturally towards a strong, vibrant province, within a strong and vibrant country, Canada.
The Chair: Thank you very much, Mr. Tweedie and Mr. Woodward, for your very interesting presentations. It's very important to have people like you appear before our committee.
Mr. Richard.
Gerald Richard, President, New Brunswick Cranberry Growers Association: Thank you, honourable senators, for inviting us to speak here today. My name is Gerald Richard. I'm the chairman of New Brunswick Cranberry Growers Agency. With me today are Graeme Jones, vice-chair, and Melvin Goodland, another member of our board. All three of us are growers in New Brunswick and we represent approximately 25 per cent of the cranberry acreage in New Brunswick.
The current New Brunswick cranberry industry began its journey in the early 1990s, following a government-funded feasibility study to establish a cranberry industry in New Brunswick. From this study, guidelines were established and funding was made available through the provincial Perennial Crop Loan Program, which allowed proponents to establish a cranberry operation and to grow the crop to maturity. After the fifth year, farms would refinance their loans through traditional lenders. The reimbursed funds could be reused to establish further farms, until the industry reached a critical mass to justify value-added production in New Brunswick.
Before the end of the decade there were approximately 460 acres planted in New Brunswick. That was when we experienced our first downturn in price, which eliminated the ability to reimburse our loans to the Perennial Crop Loan Program. And the outside lenders were unwilling to refinance our farms.
The newly formed NB Cranberry Growers Association, at the time, had to collectively propose a settlement with the Province of New Brunswick, reducing the debt of the participating growers to a level which lenders could feel secure. It only took a couple of years for the price paid to growers to adjust to profitable levels, and the industry rebounded. In fact, the price paid for fruit went as high as 90 cents per pound in 2008. This made cranberries as a primary ingredient in processed foods very expensive and it, therefore, priced itself out of the market.
At the same time, Ocean Spray, the largest fruit handler in the world, claimed that they required an additional 5,000 acres of new plantings to meet their expected 2012 and beyond market demands. The result was Ocean Spray growers planted 5,000 acres and independent growers planted 5,000 acres. This resulted in the largest surplus inventory in history, which plunged cranberry farm returns to historical low levels. Along with historic yields, the Ocean Spray projected increase in demand failed to happen according to the Cranberry Marketing Committee's statistical information. The excess was turned into juice concentrate, and although during the following years handlers' claims of excess fruit caused prices to remain historically low, there was no glut of whole fruit held by handlers.
Today, our industry is in a difficult position. The planted acreage in New Brunswick rose to 883 acres, while the price remained below the cost of production. In recent years, new hybrid varieties have been developed that produce two and three times more fruit per acre than the traditional varieties grown here in New Brunswick.
We have developed a strategic plan for our industry which identifies three key points of improvement. We would like to improve our productivity, profitability, and to promote the use of cranberries. The problem is availability of funds.
Due to the low price of fruit, the farms have lost equity value, and the provincial programs lack sufficient funds to have an impact. The cost to plant an acre of cranberries is at least $40,000 per acre. Today, we would like to renovate some acreage to the new varieties, but the cost per acre can reach $20,000 for the vines alone, per acre. What we need now is to have funds available to our growers to improve their profitability by investing in new varieties, technology and expertise. We need programs to have sufficient funds that are adapted to the nature of new plantings which take three to five years to reach full production. Programs that require the farms to have 50 per cent of costs available are not of value to the farmers because the depressed prices have used all of available savings just to keep the farms producing.
That concludes my talk, and we welcome questions from the panel.
The Chair: Thank you very much, Mr. Richard. The cranberry is a very important fruit in Canada.
The first senator to ask a question is the deputy chair of this committee, Terry Mercer.
Senator Mercer: Gentlemen, thank you very much for being here. Blueberries and cranberries are two very important products.
I want to go back to the Canadian wild blueberry industry presentation. I was looking at the statistics that you provided — very helpful, by the way — telling us where you're marketing your blueberries. I was curious about the South Korea numbers: 2015, 454,872 kilograms of frozen blueberries. That's an impressive number, except when you go back and you look at 2013 and 2012, when the sales were a 1,014,831 kilograms of frozen blueberries to South Korea, and even higher back in 2012. What's happened to that market?
Mr. Woodward: It's easy to explain. As you know, South Korea has a tariff on wild blueberries going into the country. The Canadian government was very proactive in getting a tariff, and it's being reduced over the next seven years. The only bad thing is the United States government was three years ahead of us and so their tariff is reduced —- I can't remember if it's two or three years advance reduction in their tariff — and so the Korean buyers are buying U.S. wild blueberries instead of the Canadian wild blueberries because the tariff is less.
Senator Mercer: So they're buying Maine blueberries as opposed to —
Mr. Woodward: Correct.
Senator Mercer: — New Brunswick, Quebec or Nova Scotia blueberries?
Mr. Woodward: Correct. Before when the tariffs were equal —
Senator Mercer: It's on the price. I mean, that's what it's all about.
Mr. Woodward: Yes. They don't have to pay as much. I think it's down at a 40 per cent tariff, and it's being reduced over the next seven years until it goes away.
Senator Mercer: Yes.
Mr. Woodward: The only bad thing is that the U.S. government got their tariff program, started the reduction, a couple of years before we did in Canada. So in five more years we'll be at even playing field again; it'll be zero for both countries.
Senator Mercer: So it's important we stay in the market so that we can grab back —
Mr. Woodward: It's important to stay in the market. We can't encourage the Canadian government more than to try to get these tariffs to disappear.
China is another instance. We could really increase our exports to China. There's a 50 per cent tariff on that, whereas cultivated blueberries going in from Chile, zero. So to keep us in the playing field it's very important that our government does the best they can do to get these tariffs reduced so we can stay competitive.
Senator Mercer: The blueberry production has expanded significantly in Eastern Canada, in Nova Scotia, New Brunswick and Quebec in particular. I know in my travels throughout Nova Scotia I'm always surprised when I go to a community I haven't been to for a while, suddenly there are blueberry fields where there weren't blueberry fields before. That's a good thing because it is land that's not really acceptable to a lot of other products to be produced other than blueberries. That's good news.
The marketing of blueberries though becomes the issue, as some of the comments have been made. We're producing a lot more, but we've got to become more aggressive. Is there a single thing that the Government of Canada could do to help in the marketing of blueberries? Mr. Baillie —
Mr. Woodward: I see he's eager.
Senator Mercer: Mr. Baillie almost jumped out of his chair, so I think I want to hear what his answer is. He may have the answer to our problem.
Jim Baillie, Director, Wild Blueberry Producers Association of Nova Scotia: Thank you for the opportunity. I came representing our blueberry growers association in Nova Scotia, WBPANS. And WBPANS took the position that I would help reinforce some things that these two gentlemen, partners, have said.
Senator Mercer: Well, they probably need the help. I understand that.
Mr. Woodward: We need all the help we can get.
Senator Mercer: That's what we Nova Scotians are for.
Mr. Baillie: As a grower, I chair WBPANS' Industry and Sustainability Committee, and we really have a lot of opportunities right now to pursue. As has been said here this morning, research focused on quality production is also important. The quality is a nice product to market. We want to help people like Homer move that product to these other markets.
The other thing is that we feel we need to work on a regional basis. So it's not only Nova Scotia but New Brunswick, P.E.I. and Quebec. Marketing, as I've alluded to and we've heard about this morning through WBANA, is essential. And that program, I believe it's called the AgriMarketing Program —
Mr. Woodward: Yes, you are correct.
Mr. Baillie: — is essential, more so than ever, so that we can access those markets elsewhere.
Senator Mercer: Okay.
Mr. Baillie: We all pay a duty — I would say we have a check off system — and we work in conjunction with people and government who all pull our resources to make a stronger marketing effort.
And the issue of tariffs, we do recognize it, and it's been well said here. So I just wanted a few comments.
Senator Mercer: Mr. Woodward, you had something to add?
Mr. Woodward: Yes, I just wanted to expand on that a little bit. The AgriMarketing Program has been essential to the WBANA efforts in trying to promote wild blueberries on a global scale to new markets, and to expand our existing markets. And what Jim was talking about was that all the producers in the Maritimes contribute a half a cent a pound, approximately, to WBANA. And the processors do the same thing with every pound of fruit that they process; we contribute half a cent a pound.
Senator Mercer: So that's a cent a pound on the same pound of blueberries? Okay.
Mr. Woodward: Right. For a pound that a processor raises — because most processors are also producers — it's a cent a pound for every pound they produce.
That goes into a fund for WBANA to distribute to different marketing agencies. And in the past, and hopefully for years to come in the future, the Agri-Food Program has been giving us matching funds to help us with our promotional efforts for export markets. And that's going to be critical if Nova Scotia, New Brunswick, and the rest are going to reach the capabilities that Murray was alluding to, of these large pounds. That's only if we can develop the markets fast enough to encourage their production in the reclaiming of the lands to put in blueberry production.
Senator Mercer: Okay, thank you.
And speaking of marketing; cranberries. I'm the principal cook in my family. I'm also the principal grocery shopper in my family. And it's a job that I took on years ago when my wife was unavailable to do this for various reasons. And she's retired now, is available, but I've kept the job because I enjoy it, and it really adds to my knowledge as I sit around this table — the Agriculture and Forestry Committee — to do it.
I want to talk about cranberries for a moment with respect to marketing. I just recently bought some cranberries, and when I buy the cranberries I always look at the source of the cranberries. I'm having a hard time because I'm buying my cranberries in Sackville, Nova Scotia. I'm buying my cranberries that are not produced anywhere near Sackville, Nova Scotia. They're not produced anywhere near Sackville, New Brunswick either. I ended up with cranberries from British Columbia and other areas.
It's a bit of a contradiction for us. We want to talk about the origin of the cranberries but we then put on our other hat and we want to talk about being against the country of origin labelling in the United States with respect to beef. But that's for another day, that discussion.
Why are we not doing a better job in labelling cranberries that are produced in Atlantic Canada as being local? If I'm going to go into Sobeys or a Superstore to buy my cranberries, I'm going to buy cranberries that are produced locally. I'd prefer them produced in Nova Scotia, but if I can't have them from Nova Scotia I'll take them from New Brunswick.
Mr. Woodward: That's a very good question, because we get that a lot. We have friends all the time, family will ask, how can I get your cranberries?
The majority of our cranberries are processed and handled by others outside of the region, and the largest cranberry handler in the world is Ocean Spray. They're based out of Massachusetts. They control probably 70 per cent of the cranberries on the planet.
Depending on which product that you purchase, if it's a fresh product then you can get that product locally; some of the frozen products you can get them locally as well. But the issue is that Ocean Spray is not the only company, but they're the biggest company with private label product. So everybody else, the independents, the markets that we're in, mostly sell industrial fruit. So they will sell to General Mills, they'll sell to somebody else to put in their products, so our name doesn't appear on the package. So if you're going to look for a local product, there is actually one in Lunenburg that produces sweet and dried cranberry products, and some juices as well. I don't know if I answered your question or not, but mostly our fruit are not produced here locally in New Brunswick, they're not processed.
We have a first stage cleaning facility — we have two first stage cleaning facilities actually — from then on it goes to another handler elsewhere to be processed into another form and then come back to us either with an Ocean Spray label on it or another cereal product or another product that holds our product.
Senator Mercer: I was just looking at my granola bar that I was eating earlier, which has fruits and nuts in it, and cranberries. It, of course, doesn't tell me where my cranberries are from, but it goes to the fact that we're diversifying how we use berries. I suspect that if I were to ask where nine million kilograms of frozen blueberries are going in Germany that we would find that they're being processed into various other products such as muffins, granola bars, et cetera.
Thank you.
Senator McIntyre: Thank you, gentlemen, for your fine presentations, which I found rather interesting.
One group has addressed the issue of blueberries; the other group has addressed the issue of cranberries. What about the haskap berry?
As you know, the haskap berry is new to the Canadian market. The plant seems to thrive in cold weather, high latitudes, and can grow well in wet, oxygen-deprived soils. My understanding is that it is high in antioxidants, even higher than blueberries. And berries ripen in June, so blueberry growers could farm both crops.
Could new fruits, such as the haskap berry or others, help blueberry growers diversify their crops and markets? What could the Government of Canada and provincial governments do to help growers with this kind of market diversification endeavour? Mr. Woodward, do you care to answer?
Mr. Woodward: We have looked into the haskap berry and there's really not a large commercial market established at this time for haskap.
We're very interested in looking at other fruits, because Wyman's is a fruit company; we're a wild blueberry company, but we've grown into a fruit company. And any way that we can utilize the millions of dollars of equipment that we have sitting waiting for a blueberry harvest to come — so we could process something besides blueberries — would be a big help as far as reducing our overhead.
We are looking at haskap. We're looking at several other berries right now. I have an agronomist and a new vice- president of marketing that's trying to feel out their marketplace to find out if there is another berry that we could be involved in. And it wouldn't just be Wyman's, it'd be any blueberry grower could grow haskap berries because, as you mentioned, they become mature in late June, early July, I believe.
Senator McIntyre: Yes.
Mr. Woodward: And it would be a great accompaniment if there was a demand for that product. But it's hard for anybody to stick their neck out and grow a product and hopefully they could build a market.
Senator McIntyre: They seem to thrive in cold weather.
Mr. Woodward: Yes, they do.
Senator McIntyre: And in Atlantic Canada we have cold weather for at least four months.
Mr. Woodward: The other issue, I think they're working trying to develop a way to mechanically harvest the haskap berry. I think they have some harvesters but they're not very efficient. Labourers are a big problem for blueberry growers. That's why most of our growing regions are converted over to mechanical harvesting. And it would be the same thing with the haskap if you had to pick those by hand.
Senator McIntyre: My next question has to do with pest controls. Mr. Woodward, you do raise this issue in your brief. Are pest control tools, both chemical and non-chemical, available to Atlantic Canada growers adequate? What can both the federal and provincial governments do to address this issue? In other words, to help mitigate pest and disease control challenges?
Mr. Woodward: I think it would be a big step forward for Canada if we had a standard that was the same throughout Canada; so it wasn't a provincially specified issue.
The PMRA is the federal government's branch of chemical control, but the provincial governments keep trying to pass legislation to modify what the PMRA is passing down. A lot of this is, I think, not so much science but more political correctness for the different regions.
I think the government is doing a great job as far as minimizing pests coming in. When we talk about pests we're not talking just about insects, we're talking about, as you said, disease control; you know, just making sure we have the tools to use and everybody is actively working to find a milder solution to the solutions that we have. But the chemicals that we're using today are the best we have. The more tools we have in our farming holster the better off we are, and just because we have one chemical to do a job, we find it's much better to have two or three solutions to a problem so we don't have to use the same thing over and over again.
Senator McIntyre: Pest control is particularly important to blueberry producers.
Mr. Woodward: Oh, yes.
Senator McIntyre: I don't know how important it is to the cranberry people, but I know it's very important to the blueberry industry. Mr. Richard, you wish to comment on that?
Mr. Richard: Sure. It's definitely very important with us as well. To add on, blueberries and cranberries are both vacciniums, so we do have some of the same cultural problems or similarities, if you will. But we also would like to see the same standard established across the province and the U.S. where, like I stated before, Ocean Spray is the major purchaser, handler of cranberries. Where they ship from all over the planet, I guess, some of the regulations are not the same for here and there. So where we're using a lighter rate and maybe not being as effective to control a particular pest, they're rates are much higher and they're able to perhaps mitigate the problems easier than we are.
Some of the broad spectrum products that we used to use are being discontinued, and I think there's a reason for that. The new products that are coming out are maybe where we're going to have four or five different products to control the same pests, but instead of applying one product that'll control multiple pests we're going to have four or five different products to control four or five different pests. So our visits into the field might be more often, more frequent, than they used to be, but we have very little control on that. That's what the regulators feel that's the safest way to go.
Senator McIntyre: Mr. Tweedie and Mr. Woodward, you have both touched upon this topic of blueberry producing countries. I noticed that blueberry producing countries are increasing all the time. For example, I note that Chile alone increased its production by 20 per cent in recent years, creating a more competitive global market.
How have these market changes affected Atlantic Canadian blueberry growers, and how do Canadian blueberry producers deal with competition from producers from Chile and, of course, the United States, which is where we have our biggest competition?
Mr. Woodward: The pressure from the highbush cultivated blueberry has been tremendous for the wild. We have the best product, we figure. Our blueberries are good; wild blueberries are better. But the pressure we're getting from the cultivated industry is certainly becoming very real. They can grow blueberries anywhere where you can grow potatoes, tomatoes; they grow cultivated blueberries anywhere. They have many different varieties for different climates, so they're tough competition.
We have some health benefits that are exaggerated in wild that are there in cultivated but they're not as pronounced as they are in wild blueberries. And we do have certain areas that our blueberries are preferred as far as piece count per pound because they're smaller, and because we have more skin per pound we have higher antioxidant levels. So we're doing very well. But the price differential is what we do not have a lot of control over in the marketplace.
Traditionally, we can demand anywhere from a 10 cent to a 25 cent per pound price differential, wild versus cultivated. When that price differential gets too wide then we find our industrial customers switching their formulation over to use cultivated, and the only way we can get those customers back is to bring our prices back down. So it certainly has a big impact on what we're able to demand for a price out in the market place.
Mr. Tweedie: Could I just add to what you have said, Homer?
Traditionally, highbush blueberries, or cultivated blueberries if you would, were a fresh commodity. They have a tough skin and are able to withstand transportation issues. So highbush blueberries were, as I say, traditionally for the fresh market and they weren't introduced into the frozen market.
As highbush blueberry production increased, those that were left over from the fresh market were frozen. The highbush blueberry producers get their premium price from the fresh market and basically what is put into the frozen market is dumped. So we are at an unfair disadvantage in that respect.
With higher and higher production of highbush cultivated blueberries there is becoming an increasing volume put into the frozen market. So they are competing directly with the wild blueberries sales and it is making it very difficult for us because of their volume into the frozen market.
Senator McIntyre: Mr. Richard, in your presentation, both oral and written, you bring to our attention Ocean Spray, which is the largest fruit handler in the world. As I recall reading in the newspapers — I believe it was sometime a few years ago — there was a dispute between the Ocean Spray people and some local cranberry producers in your area. Has this dispute been settled or is it still ongoing?
Mr. Richard: I know that the media tried to put it like we opposed their presence in New Brunswick. This is the story that you're referring to, in New Brunswick?
Senator McIntyre: Yes.
Mr. Richard: If I had a complaint, being the president at the time again, I found out about Ocean Spray's establishment in New Brunswick through the media, because they called and asked, what do you think of Ocean Spray coming here? They're going to shut you down. What are your points? And they were looking for a story to tell. And I said, look, Ocean Spray being here — though you're telling me for the first time — is the greatest thing, because you called me. We've been here 12 years and this is the first time the media calls and finds out how we're doing.
There was never a dispute with Ocean Spray amongst the growers. They're an independent company. They grow a lot of fruit. They promote fruit all over the planet. We love Ocean Spray. It's because of them why we're here today.
Sometimes it may appear that Ocean Spray is bad for us, and actually they're very good for us. I mean, they are the industry and we're participating in this industry. But the thing is, if there was a downside with Ocean Spray, my critique to them is that they are very, very powerful. If they have excess fruit, they can dump it into the fresh market. Now they're doing IQF, which was mostly left to the blueberry handlers with their IQF tunnels. They do some cranberries, but when they have excess fruit they go and dump a whole bunch of fruit in the IQF market.
So personally, no, I wouldn't say that there is a dispute with Ocean Spray, and I welcome their presence. It's too bad that they couldn't reach a critical mass to have value added in the province, but it's a business decision and that's where we are today. I believe they have 125 acres. And I don't know personally but, no, I wouldn't say that there is animosity towards Ocean Spray amongst the growers.
Senator McIntyre: So things have quieted down?
Mr. Richard: Absolutely, yes.
Senator McIntyre: Okay.
Melvin Goodland, Board Member, New Brunswick Cranberry Growers Association: Can I add something to that?
Mr. Richard: Yes.
Mr. Goodland: Even though Ocean Spray is welcome here and we work very well with them, in the world market there is a problem with the fact that they've been doing what was considered to be not good practice, not good business practice, in lowering the price of the cranberries on the market.
I think that this was done as a way to hurt the independent, like Decas Cranberries and others. A few years ago, I guess Northland was put out of business and was actually bought by Ocean Spray back in 2014, I think it was. Anyway, that's been a problem for the independent cranberry growers.
For the farms right now, our prices are at the lowest price ever and have been for several years. This mostly, I think, has been caused by Ocean Spray's practice of underselling the cranberries on the world market, thus forcing the prices down that are being paid to the farms.
So although we work very well with the farm itself, with the Ocean Spray farm itself, it's their practice of trying to hurt the independent growers, I think to return themselves back to the prominent position that they used to have. At one time they were about 85 per cent, and now you say they're about 60 per cent to 70 per cent of the market, and that's a part of the problem.
There is a lawsuit right now that is outstanding in the U.S. courts, and it'll probably be a couple more years before that is settled. But it is ongoing and it has been accepted by the court system in their preliminary hearings that there are justifications for the lawsuit.
[Translation]
The Chair: Mr. Goodland, the Senate just submitted a report on obesity in Canada, among young people, in particular. Blueberry juice and cranberry juice are well-known to diabetics as substitutes for sugary soft drinks in Canada. I, myself, have type 2 diabetes. Of course, I buy unsweetened cranberry juice and blueberry juice, but I unfortunately have to buy the juice in bulk-size containers. As someone who spends their life on the road, I haven't been able to find them in serving-size containers. You might want to consider competing with Coke, Pepsi and 7-Up by making your healthy beverage alternative available in serving-size portions in vending machines. I'm convinced that the customer base in Canada is a sizable enough incentive for these berry companies and producers. What do you think?
[English]
Mr. Goodland: That's a very good idea. Actually, in Atlantic Canada right now we have one processor who is working to that and has products that have been introduced into the market via a Sobeys store and also the Co-op stores, in which he is actually selling for diabetics the non-sugar product in single serve juice and in smaller containers. So that is happening actually here in Atlantic Canada. He is attempting to expand beyond the Atlantic Canada borders, and I believe this year is going into Quebec and Ontario markets with his product. So it is happening with the single serve juices for diabetics.
I also am a diabetic — I think it has something to do with our bulk — but it is happening, and there is a product that is being put into the market from Atlantic Canada as we speak.
[Translation]
The Chair: It's important, because it affects many young people's future, as far as tackling obesity is concerned. I know that Quebec has a cranberry company that does a lot of marketing to elementary and high schools. It offers small containers, but they are unfortunately drinking boxes, which isn't ideal. As you know, vending machines are everywhere. If it were possible to sell these juices in cans or small bottles and add only the amount of sugar needed to preserve the juice, I think the market for those products would be quite large, given that younger generations are more and more health-conscious and older generations want to live as long as they can. We're talking about a tremendous number of consumers. That's my suggestion to you and your colleagues, to get companies thinking about serving-size distribution. That's all. Thank you.
We now move on to Senator Oh.
[English]
Senator Oh: Thank you, gentlemen, for coming in.
In November 2014 Canada allowed fresh blueberries to enter into the Chinese market. How is that going?
Mr. Tweedie: That was fresh highbush blueberries. Up to that point I believe that highbush blueberries had no market in China, but I think that there was an agreement between the Chinese and Canadian governments to allow fresh highbush blueberries into China.
Senator Oh: Yes, but before that, you were only allowed to export frozen blueberries into the China market.
Mr. Tweedie: Yes. The only reason I'm aware of this is I spent last week in Ottawa at the CHC meetings, and B.C. is the main province that was working with the Chinese government to pass the final sanitary requirements for them to import fresh blueberries from B.C. into China. They started the process too late in 2015 and they really only got, I think, maybe 100,000 pounds into the Chinese market.
So going forward the B.C. Blueberry Growers Association is planning to start the process, I think, in June of 2016, with the anticipation that they'll be exporting a lot more of their product into China on the fresh market, which is going to be a great help. It helps everybody because every pound that they sell fresh is a pound that doesn't end up in the frozen market competing with our customers.
Senator Oh: Yes, because when I was in China, I went to the supermarket and checked it out. They are coming in from Australia and from the U.S.
Mr. Tweedie: Chile, I think, sends a lot of fresh blueberries to China.
Senator Oh: Yes.
In exporting to China, is there a difference between the wild blueberry and the cultivated wild blueberry? Is there a difference, or is it just a regular blueberry?
Mr. Tweedie: The wild blueberry would not have sufficient shelf life to sell fresh into China; we only can sell frozen. The frozen we have started opening up the market as an industry into China, but we're still restricted with a 50 per cent duty on everything going into China.
Senator Oh: So you are not capable of exporting wild blueberries to Asia?
Mr. Tweedie: Not fresh, no.
Senator Oh: Not fresh?
Mr. Tweedie: No.
Graeme Jones, Vice-President, New Brunswick Cranberry Growers Agency: The skins are so much thinner on the wild blueberry in comparison to the highbush blueberry. The skin is much thicker and it stands the transportation, and the shelf life is extended because of that.
Senator Oh: So on the wild blueberry, I understand, you have the highbush, which grows wild, and then you have the cultivated one.
Mr. Woodward: No, no. To make it a little simpler, I'd like to invite anybody on this committee to visit the wild blueberry region during the harvest season or during pollination so you can see the difference.
Wild blueberries grow within 10 inches of the ground. The highbush blueberries are highbush; they're actually 6 feet to 10 feet tall. It's completely different. The wild blueberry is propagated through rhizomes under the ground. It's like an iceberg; two-thirds of the plant you can't see, it's under the ground. Whereas cultivated blueberries, there's different varieties that are created for different growing regions and for different purposes. So it's altogether a different product.
That's one thing we try to make sure people understand. Even though they're cousins to us we have to market them and use them in completely different ways. We don't have the shelf life on fresh wild blueberries. . .
Senator Mercer: The quality and the taste are different.
Mr. Woodward: Correct.
Senator Mercer: Wild blueberries, lowbush blueberries, are much better quality.
Mr. Woodward: I agree 100 per cent with you, senator.
Senator Oh: Yes, because for the normal consumer, a lot of my friends, the doctors say they're good for you: "Eat wild blueberries; they're good for your eyesight.''
Mr. Woodward: They're good for everything.
Senator Oh: Yes.
So you look at a brand and it says wild blueberries. A lot of people do not know wild blueberries have different types.
Mr. Woodward: Any field you go into that have wild blueberries, we don't have types; we have different clones in a field. There may be 30 different clones in one field with different properties, different flavour profiles, and when we harvest them we harvest them all at once. We don't harvest just one clone, we harvest them all. So a wild blueberry is a blend of different clones, whereas your highbush blueberries, those clones become varieties and they harvest all of one variety and all of another variety. So it's a completely different product. It's the same, but different.
Senator Oh: Okay.
Mr. Woodward: Very different.
I'd love to be able set up through WBANA a tour for anybody on this committee that would like to visit the region during the growing season so you can see the difference between what they're growing for highbush blueberries in B.C. versus wild blueberries in the region.
Senator Oh: Somebody gave me a bottle of concentrated wild blueberry, like a wine bottle.
Mr. Woodward: Juice?
Senator Oh: Juice, but they did not mention whether it was wild blueberry or cultivated.
Mr. Woodward: If it's wild, it says "wild.'' This is the main theme that WBANA is working towards, to keep the difference between the wild and the cultivated so people understand the benefits of the wild and how it's grown, and how wild is wild and cultivated is farmed.
Senator Oh: With regard to interprovincial trading, are you allowed to ship to Ontario or to any other provinces?
Mr. Woodward: Frozen we do. Canada has a great story. The per capita consumption of blueberries in general in Canada has doubled in the last 15 years, from a little over a pound to over two pounds now.
The operations in Canada and the Maritimes, they're servicing the Tim Hortons for the Tim Hortons blueberry muffins, they're serving the food service industry, the bakeries. A lot of blueberries are shipped to Toronto for the different bakeries and dessert pies and cakes that they make.
We have two ad agencies actually working with WBANA promoting wild blueberries in Canada. We have one that does specifically Quebec and the French speaking area of Canada, and then we have a national agency that represents us in Canada.
Senator Oh: So do you think with the TPP coming in it would help your market for both blueberries and cranberries?
Mr. Tweedie: Absolutely.
Mr. Woodward: It's a huge market that we have just started to tap.
Mr. Tweedie: But it is vitally important that we fund WBANA as growers, and for WBANA to receive funding from the federal government to promote the wild blueberry, and to make that distinction, that difference, between wild and cultivated.
Senator Oh: I think I've got to pay a visit to your farm so I can promote it properly.
Mr. Woodward: Yes, please do.
Mr. Tweedie: Yes, and we do make wild blueberry juice. We only sell on a local market, but there is a company in Nova Scotia that makes wild blueberry juice in half litre bottles and sells worldwide.
Senator Oh: Any comment from you, Mr. Richard?
Mr. Richard: As far as cranberries being an ingredient, it's shipped to other places in another form. As far as concentrate goes, our competition — you talk about competition — for us, substitution is the issue. When we talk about cranberries becoming an expensive ingredient, the problem that occurred, and why we have so much oversupply is because at a certain point there was substitution. They'll add pomegranate juice or concentrated apple juice in our products and create a blend that doesn't necessarily have the cranberry content desired for the health benefits. That's our difficulty, I guess.
With all this inventory, we suggest to the handlers, put the percentage back in since you have the inventory. But now they've developed these markets, and they will have a 27 per cent, but they'll call it another name. So they don't necessarily develop a new market, it's more the consumer that just went to another product. So it's basically the same amount of cranberries being used. But, then again, you mentioned the TPP and that, of course, is going to be a huge advantage to cranberries, of course, to ship there.
Another point as far as diversifying cranberries that we can mention —- it's not in New Brunswick — but certainly, opportunities. Quebec is currently in transition or certified organic on a third of their production; that's over 3,000 acres. And my assumption, I think instead of shipping their fruit to the U.S., perhaps they're looking at Europe more, because Europe favours an organic product. So there's certainly a lot going on right now.
As far as our productivity goes, the supply of cranberries in storage is huge, but we participate in the independent market. Our buyers say, grow as much as you can because they do not have an oversupply of fruit. It's in the hands of Ocean Spray. The Cranberry Marketing Committee, their statistics hold a high inventory carryover, but it's mostly in the hands of Ocean Spray.
So there's a tremendous opportunity there's a tremendous opportunity for us in New Brunswick, being a different geographical area than Quebec, to grow a lot of cranberries here. So I think there are plenty of opportunities. Of course, the trade agreements bring them on; I think they're very beneficial to us.
Senator Oh: Every time I travel overseas I go to Costco and pick up and some Ocean Spray, and people love it.
Mr. Richard: Yes.
Senator Oh: Thank you.
Senator Terry Mercer (Deputy Chair) in the chair.
The Deputy Chair: Thank you, Senator Oh.
Senator Hubley?
Senator Hubley: Thank you very much, Mr. Chair, and thanks to each of you for your presentations today and taking the time to join us.
I'd like to speak to the cranberry growers first. I believe you mentioned that the three who are represented here today are 25 per cent of the New Brunswick acreage. Ocean Spray is then the remainder? Or how many other cranberry farmers do you have in New Brunswick?
Mr. Richard: We currently have 27 growers in New Brunswick, and the farms range from six acres to 135 acres.
Senator Hubley: We're looking at marketing and how effective we are in marketing our Canadian products. We've heard this morning from the taste of Nova Scotia, and they've developed a marketing program to promote provincially grown products, sometimes worldwide. It is an example of a kind of marketing program and has an export development component to it.
I'm wondering if you would comment on that type of a program, but I'm also interested in what you do to promote the fresh product as well. I think of Christmas and Thanksgiving, and I'm wondering if programs such as Buy Locally have helped you or whether farmers' markets have helped you and to what extent?
Mr. Richard: Yes, certainly. Maybe I'll pass this onto Melvin or Graeme. They are in the fresh market in our industry, so I'll pass it on to Melvin.
Mr. Goodland: We do actually control just about all of the fresh market picking that's done in New Brunswick, but we don't have a fresh fruit processing facility in New Brunswick. It's something we would like to see established but right now we just don't have the funding available to do that.
All of our fresh fruit goes into Nova Scotia, and there's one handler there who packages and ships worldwide for fresh fruit. But we would like to see, at some point, a facility here in New Brunswick where we can do our own fresh fruit. But we do pick, between our two farms, I guess, just about all of the fresh fruit that comes out of New Brunswick.
There are farmers in each city and community that put cranberries into the farmers' markets, so that is happening, but those are small volumes in a marketplace like Moncton or Fredericton or anywhere else. They are not huge markets. They'll keep a small farm assisted in their sales but certainly won't use a lot of product.
Senator Hubley: Yes. There's also been a suggestion of using Canada as a promotional label, in other words a product of Canada, not necessarily a product of New Brunswick or Nova Scotia, Newfoundland. Does Ocean Spray take any other marketing processes out of the picture because they're such a high volume?
Mr. Goodland: There are a couple of other growers but they're all in Massachusetts or Wisconsin, and they do come into the Canadian market. You do see fruit from Ocean Spray and fruit from Decas Cranberry in the Canadian market because these chain stores buy volume. It used to be that we could sell direct. This is a problem that I've run into; you could go to the grocery stores and you could sell your product directly to them. That's pretty much disappeared.
Senator Hubley: Yes.
Mr. Goodland: You have to go through their warehouse, and their warehouse wants to deal with one farm, one seller, one group. So Ocean Spray is able to get in there, in places that we can't go because they won't allow the farms to sell directly to the stores anymore. And that's become a serious problem.
I used to move a lot of product into Moncton, Fredericton areas, and I would take it right to the stores and sell it. But you can't do that anymore. You have a product that you have to send to Stellarton, Nova Scotia, because that's the warehouse for Sobeys. And a couple of days later it's back in Sackville, New Brunswick, and you've lost two or three days of the freshness of your product.
Senator Hubley: True.
Mr. Goodland: I don't know what the answer to that is but we have to do something to keep our product local.
Senator Hubley: Yes.
Mr. Goodland: We did have a really local program going for a while but, again, you cannot sell directly to the stores so that really stops you from participating in the really local programs.
The Deputy Chair: It's not the selling that's frustrating; the shipping that's even more frustrating. If you could sell centrally and ship locally —
Mr. Goodland: Yes.
The Deputy Chair: Mark Eyking, a member of Parliament from Cape Breton, is a farmer. They grow lots of lettuce and they sell to Sobeys, for the Cape Breton Sobeys stores. They ship lettuce to Stellarton so they can ship it back to Cape Breton. Lettuce is a pretty time sensitive-product, as most of us know. Mark Eyking is a spokesperson for the industry on this because it affects his family. Mark doesn't farm anymore but his brothers still do and it's an issue.
Senator Hubley, are you finished?
Senator Hubley: I would just like to have a comment from the blueberry growers, if I could. If the TPP text is ratified, how do you feel that it will benefit you?
Mr. Woodward: The Trans-Pacific Partnership agreement?
Senator Hubley: Yes.
Mr. Woodward: I think it's going to be a big benefit to us. It's going to open up some new markets. It's going to give us the tools that we need to expand our existing markets in that area, so I'm very much in support of that.
Our industry is mainly an export industry in Canada. We do market our fruit in Canada, but 90 per cent of this fruit is exported out of Canada to sell in other countries so it's a plus-plus for us.
Senator Hubley: Thank you very much.
The Deputy Chair: Senator Mockler.
Senator Mockler: You people would not be here if we would not have the bees, the pollinators. This committee has presented a report to the Senate of Canada after receiving an order of reference to look at bee health, the biggest challenge. On bee health there's a recommendation and I just want to know if you've been involved. Recommendation 8 of the committee's report on bee health presented to the Senate of Canada and to all governments as a matter of fact, states:
The Committee recommends that Agriculture and Agri-Food Canada, through the Bee Health Forum, and in collaboration with the provinces and territories, adopt initiatives aiming to improve management practices of hobbyist beekeepers and growers while minimizing the use of chemical products and ensuring the availability of untreated seeds.
My question is this: Have you been involved in that process and if not, why?
Mr. Woodward: I'm actively involved in the beekeeping issues. As a matter of fact the company I work for and where I make my money so I can come to these meetings, where I really like to be, maintain our own bees. It is an issue. Be health is an issue.
Keeping bees in Canada is a challenge. We're still learning the best way to do that. The beekeeper and the blueberry associations work very closely together to be sure that we have an adequate supply of pollinators. We supplement honeybee pollination with bumblebee pollination throughout Canada and in Maine.
There have been a lot of misconceptions on bee health. I think you hit on it directly, Senator Mockler. There is a lot to be learned and a lot to be standardized in the management of bees.
I partake on both side of the border, in the U.S. and in Canada, as far as different bee studies on bee habitat and how to improve their habitat. It's an ongoing process and, yes, we're very much involved in working with the beekeepers.
The Deputy Chair: I was at a conference a couple of weeks ago in Truro, Nova Scotia, which was on innovation in the agriculture sector. There was a gentleman there who just developed a new bee habitat. He thinks it's a solution. We'll see.
Mr. Woodward: We'll see how it works.
The Deputy Chair: It's a work in progress, as always.
Mr. Baillie: I'd just like to say that on any issue I think it's very important to consider good sound science, first and last.
The Deputy Chair: Thank you. We're hearing that more and more, and I think this government, we hope, is going to be listening to that.
Mr. Baillie: I'd just like to say that sometimes we as farmers are not perhaps as vocal for various reasons as we could be. Other groups are using other means to communicate messages that we cannot agree with often.
The Deputy Chair: Thank you. Usually you're not very vocal because you're too darn busy doing what you do. It's hard work.
On behalf of the committee I'd like to thank all of you for being here. It has been very informative. We appreciate your taking time from your busy schedules to come and be with us. I think you will see some of your presentation reflected in our final report when it does come out.
I would encourage you, if after you've left you think "I wish I had told them that'' not to hesitate to put it in writing, send it to the clerk, and we will make sure that it becomes part of our study. Thank you.
Senator Ghislain Maltais (Chair) in the chair.
The Chair: Welcome, ladies and gentlemen. Thank you for accepting our invitation to appear as a witness to this committee. It's very important for us to know the orientation of the market now and in the future.
We will begin with Mr. Marc Cormier.
Marc Cormier, President, Chicken Farmers of New Brunswick: I would like to thank you for inviting us and for giving Chicken Farmers of New Brunswick the opportunity to talk about our industry.
I'll let Kevin go through the documents and then after that, if you have any questions to be answered I'll be happy to answer.
The Chair: Mr. Godin.
Kevin Godin, Assistant Manager and On Farm Programs Inspector/Auditor, Chicken Farmers of Canada: Thank you for allowing the Chicken Farmers of New Brunswick to appear here today in front of you to talk about our industry.
Chicken Farmers of New Brunswick consists of 37 commercial quota holders. They're located in several areas of the province. About 80 per cent of our production is in the northwest part of the province. We also have production in the Moncton, Rogersville and the Gagetown areas. Our farm ranges from sizes of less than 15,000 kilograms a year all the way up to several million kilograms per year. We have a wide range of types of productions.
I have a few facts about chicken farming in New Brunswick. Our producers will grow over 40 million kilograms of live chicken this year. All this is under the supply management system. This will generate approximately $64 million in farm cash receipts. N.B. chicken is grown following strict food safety and animal care guidelines based on national programs. We have two fairly inspected processing plants in New Brunswick. They're both located in the northwest Madawaska area. We also have two hatcheries in New Brunswick located in the Fredericton area as well as the Madawaska area. This year, 2016, marks the 50th anniversary of the Chicken Farmers of New Brunswick so I think we'll be having a little party at our next annual meeting. Our board office is located in Fredericton.
Supply management in chicken has allowed for a steady growth in production. It has been benefiting a wide range of closely related spinoff sectors in rural New Brunswick. Businesses such as processing, feed mills and hatcheries all create many jobs and contribute to the New Brunswick economy. For example, in the Saint-François-de-Madawaska area we have about 80 per cent of our production and our two federal plants. There's a very low unemployment rate, probably the lowest in the province. It's the chicken sector that creates a lot of labour demands in those areas. Unemployment is almost non-existent in those areas of the province. We are proud to say that our industry is a big contributor to employment and helps create vibrant communities in rural New Brunswick.
While domestic production in the chicken industry has allowed New Brunswick chicken farmers to continue to contribute to the Canadian and the New Brunswick economies by buying feed and chicks, creating jobs and paying taxes, it also allowed producers to reinvest in their operations, ensuring efficient viable businesses that provide the public with continued high-quality products. New Brunswick chicken producers are proud to be certified under both the animal care and food safety national programs.
Growth in the Canadian chicken industry has also allowed New Brunswick to introduce a new entrant program. This program gives young farmers the opportunity to invest in the industry and set up new farms. To date under this program we have one new farm in operation and a second farm is slated to start production in the late summer of this year. We also have the potential for a third new entrant in the near future that might be coming up.
Maintaining and keeping our domestic market is of great importance to New Brunswick chicken producers. As you've heard from the Chicken Farmers of Canada excessive access to our domestic market is a major concern of chicken farmers. This existing WTO and TPP access will equate to more than 9.5 per cent of our Canadian productions, totalling over 105 million kilograms a year. Above this access are additional products sent to the Canadian market from import control circumventions to further disrupt the domestic markets. It is critical that the government implement as soon as possible the import control measures announced as part of the TPP agreement to negate unnecessary market access.
These matters include the inclusion of chicken under the duty relief and drawback programs of CBSA, implementation of mandatory certification for all spent fowl imports and the modification of the specified defined mixture rule, the 13 per cent rule, to ensure sauce does not make chicken products qualify as not import controlled. These matters will allow more Canadian chicken to be produced benefiting local economies across Canada. Our goal is to continue to meet domestic growth and demand for top quality chicken for Canadian consumers.
In conclusion, our sector sees more demand for chicken products as we welcome the opportunity to grow the industry. Supply management creates industry stability and allows growers to invest in their operations.
I have with me here Marc Cormier, a third generation farmer. His family has been producing quality products for over 50 years. We were just talking at lunch, and the fourth generation is now involved in the family business of producing chickens. They're hoping to continue to be able to invest in this industry for many years to come, as do all New Brunswick chicken farmers. We're proud to be Canadian chicken farmers and part of a national system.
Thank you very much.
The Chair: Thank you very much, Mr. Godin.
Now we will hear Mr. Matthew Harvie from Nova Scotia.
Matthew Harvie, Director on the Board of Directors and Delegate to Chicken Farmers of Canada: I'm a second generation chicken farmer from beautiful Annapolis Valley and probably more accustomed to talking to my chickens in the chicken barn than giving evidence at a Senate table like this. If you have some patience and bear with me I'll make my way through it.
Thank you for the invitation to appear before you today. We appreciate the opportunity to provide a perspective on international market access and priorities for the chicken agricultural sector. I would like to start with a bit of background of our organization, our industry, and how it fits in the overall Canadian chicken industry. I will move into a description of how our industry benefits Nova Scotia and Canadian agriculture. We will have opportunity to move forward despite the TPP agreement.
Our organization, Chicken Farmers of Nova Scotia, is a regulatory supply management board which represents 88 registered chicken quota holders and 50 free-range producers. The six-members of the board of directors are chicken farmers. They are elected and manage the regulatory system to ensure the industry's sustainability. The chicken industry is easily one of the top four agriculture commodities in Nova Scotia. Supply management commodities of chicken, turkey, eggs and dairy account for nearly half of the province's annual farm gate revenue.
In 2015 the chicken farm gate revenue was just shy of $83 million on 50 million kilograms of chicken production. That is only part of the story. The production of chicken helps to sustain the industry's stakeholders and their employees. Feed companies, hatcheries, transportation providers, grain producers, equipment suppliers, barn builders and financial lenders all benefit from the existence of our industry.
On provincial versus national, chicken is raised in Nova Scotia. They are processed in Nova Scotia and New Brunswick. Chicken moves freely across the country with the possibility of chicken from any province finding its way on to store shelves almost anywhere in Canada and into a wide selection of chicken products. We know chicken farmers of Canada have made a presentation to this committee early in February. Many of the messages provided by them are equally applicable to our provincial level because of the nature of supply management system which affects the industry on a national basis and also the provincial industry.
The chicken industry is a key component to the country's agricultural landscape. It provides farmers with steady and stable revenue. The farmers know that a strong and sustainable agriculture portfolio is best when diversified. On a national level 40 per cent of chicken farmers grow corn, wheat and soya bean, 20 per cent raise cattle and 15 per cent have canola. An amazing 34 per cent of household income on a chicken farm is off-farm income.
On trade access, the chicken industry respects and supports Canada's trade commitments and provides significant access to our markets. Much of this activity happens quietly, consistently and rarely if ever makes the news. In 2015 Canada imported 214 million kilograms of chicken.
I have some important facts from Chicken Farmers of Canada. Canada is the 17th largest importer of chicken in the world. Canada is the third most important market of the U.S. chicken export. Among the 12 Trans-Pacific Partnership member countries, Canada imports more chicken than the U.S., Peru, New Zealand, Australia and Brunei combined. Only 10 per cent of the world's chicken production is traded globally. The U.S. and Brazil export approximately 75 per cent of chicken traded in the world.
As statistics show there is a very high level of concentration in the world chicken market. Concentration provides the most benefit to the U.S. and Brazil. However, because of our northern climate and cold winters and warm summers as compared to Brazil especially, we cannot compete on the level of international chicken in trade markets. A realistic expectation is that it puts us on a level playing field with the world trading environment. The access granted under the TPP agreement will bring imports into Canada to more than 9.5 per cent of the domestic production. This is right in line with the 10 per cent trading benchmark that I mentioned earlier.
Our industry already contributes to the Canadian economy with continued stability and steady growth of the domestic market. While imports are inevitable they do not need to expand to the point where they are detrimental to our vital capable industry. The circumventions of import control resulting in imports beyond that which can be managed are putting our industry at risk. They disrupt our ability to manage the domestic supply properly and are costly not only to the chicken industry but the existing Canadian economy.
Termination of import control circumvention is the big title. Chicken Farmers of Canada experts and the details of the trade file are invaluable to our industry. Rather than trying to reinvent the message I am going to borrow straight from the Chicken Farmers of Canada explanation of how we can increase our contribution to the Canadian economy despite the concessions provided for chicken farmers' access under the TPP. At the end of the TPP implementation period we will be implementing pretty nearly 27 million kilograms of new access to the existing WTO 7.5, which is 80 million kilograms. As I mentioned earlier this will bring us to the 9.5 per cent of our production in imports. Displacement of our production results from additional TPP access can be mitigated by the elimination of the import control circumventions.
Three circumvention measures were announced by the government on October 5, 2015, at the conclusion of the TPP negotiations. It is critical that the government implement these as soon as possible.
The exclusion of chicken under the duty relief and duty drawback programs of the CBSA. The CBSA programs permit Canadian processors to import, process and re-export chicken within four years. Some 96 million kilograms were imported in 2015, representing 9 per cent of the total Canadian production. Companies should have to use the Global Affairs Canada's Import to Re-Export program, IREP. The government needs to make chicken ineligible under the Duty Relief program and there will be no impact on legitimate companies.
Number two, implement the mandatory certification of spent fowl imports. Old laying hens that are not subject to Canadian TRQ can be imported at an unlimited quantity. Imports of 100 million kilograms, representing another 9 per cent of the Canadian production, are robbing Canadians of 8,900 jobs and nearly 600 million in GDP. In fact, we are importing more spent fowl breast meat than is produced in the U.S. This speaks outright fraud. The government needs to implement mandatory certification of spent fowl and start using a DNA test developed by Trenton University to distinguish chicken from spent fowl.
Thirdly, modification of the specially defined mixture rule, 13 per cent. Ensure that chicken production with sauce is 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 custom's tariff. This is fully within Canada's international trading rights and obligation. In addition to termination of the import control circumventions, indemnification programs were also announced to help the industry face new TPP access. We believe these measures recognize difficulty in the concessions Canada had to make to gain access to other markets. They will be provide some relief to farmers and processors, albeit temporary.
As per the October announcement, the income guarantee program should provide approximately $225 million to the chicken industry over 15 years. This represents $5,600 per farm annually. This will help cover some of the losses for the displacement of production resulting in the TPP imports. The new government has to approve these compensations.
The Quota Value Guarantee program is there to provide confidence in the financial institutions. Based on government projections, a decline in quota values is not expected.
Lastly, a processor's modernization program to market and develop fund will help to promote our products in domestic and international markets.
In conclusion, the Canadian chicken industry, and its evolving supply-management system, continues to significantly contribute to the overall health and strength of the Canadian chicken agriculture industry. We are innovating and investing in our industry, and evolving our system to meet the changing market requirements and consumer demands. We support rule based trading systems and rely on government to implement, as soon as possible, the termination of the import circumvention measures so we can fully seize the opportunity of the Canadian market.
Thank you for your time and interest.
The Chair: Thank you very much, Mr. Harvie. You have a good presentation. Very important. You find the real problem for the importation we come from to U.S.A. Now from the first senator, Deputy Chair, Mr. Terry Mercer, from Nova Scotia.
Senator Mercer: Thank you both for your presentations. We do appreciate you being here.
Before I start, I want to relieve Shelly of some worries. I told her about a story I read in the Halifax paper this morning about chicken farmers, but I double checked; it was egg farmers so you're off the hook. Somebody else has got a problem though.
Anyway, your presentations were both excellent and thank you for that.
Matthew, your chickens will be the best educated chickens in the East, I'm sure, if you're in there talking to them about these issues. I have a number of questions and I'll try to be quick.
You said that a processor modernization program and a market development fund will help in the promotion of our products on a domestic and international market. It sounded pretty good to me, but I don't know what it means. What does it mean?
Mr. Harvie: It was announced as one of the mitigations for bringing in the TPP that they realized that the processing industry would be a hit, a loss of opportunity. When they made the announcement, they also said that they would allow for the ability for a processor to modernize under a program. They had put aside some dollars for it. I don't remember the total number of dollars but they were mentioned when they originally did the TPP announcements from Atlanta.
Senator Mercer: You also said that as per the October 5 announcement, income guarantee programs should provide approximately $225 million to the chicken industry over 15 years, representing approximately $5,600 per farm annually. You got the math right. However, I look at that and say — and my colleagues have heard me say this so many times, they could probably say it for me — that I'm concerned that we're having this money go directly to farmers, because as you know, the most important piece of equipment on an American farm is the mailbox as the cheques come in from the federal government. One of the reasons that supply management works and one of the reasons that Canadians are the good guys in the World Trade is that we don't have the subsidies. How do we justify sending $5,600 per farm annually over 15 years and not call it a subsidy? Recognizing that it's part of the TPP, but are we not going down that slippery slope of elevating the importance of the mailbox on Canadian farms?
Mr. Harvie: First, I guess I will have to agree with you 100 per cent. It was one of the selling points that I've done any time I speak about supply management, that there are no subsidies coming to the farm. In saying that, it has been recognized that there's going to be a loss of economic value to every farm in Canada and the processing industry in Canada by the fact that we're going to be missing out on the opportunity of growing this chicken. I'm thinking that probably if we leave these insurance programs, if you want to call it, in the hands of government, that they can think of a way that it can be beneficial to farmers to help them get over the loss of income based on these programs.
Senator Mercer: I'm not against it, by the way. Don't misinterpret what I'm saying as being against it. I just think we need to find a way to phrase this, to word it, to market it, if you will, that it doesn't come across as a subsidy. Americans have been doing this for years. They say there are no subsidies, but there's a foot race every morning to the mailbox on every U.S. farm to see if the cheque finally came in from the U.S. Department of Agriculture. We need to find a way to market that because that's where the criticism will come in; not in the first couple of years of the TPP, but you know supply management has enemies. They're not that far away, those people. I give concern when we use phrases like this that could be interpreted by those people who are not as supportive of supply management as I am. I don't know what the answer is. I kick it back to you and say let's get a better explanation than that. Mr. Cormier, perhaps you want to make a comment here?
Mr. Cormier: Just a comment. If the government need to address the three points that we just said on the trade program, the chickens is coming in like fraudulent. The impact would be lessened on the compensation side. That's one thing.
Senator Mercer: Okay.
I have two more quick questions. One is if we were able to implement the supply management and the full concept that we have no imports of chickens, and we know the Americans lie, and that's on the record, by the way. I don't mind saying it on the record, because you pointed it out about the percentage of spent fowl. If we were able to strictly adhere to the rules, do we have the capacity to produce the chickens to offset that? If all of the rules are followed, would the current system be able to respond?
Mr. Harvie: Yes, I would say so. I'd also like to say that I think not all of that spent fowl being brought into the country is illegal and being snuck into the country. I also would like to make the point that I know there's the American side of this who are shipping it over the border, but there are also Canadian companies which are buying it and selling it, knowing full well that it's a fraudulent act and trying to get around their import controls in the country.
Senator Mercer: I think that's the point where government comes in and government should be much more forceful in implementing the rules as they exist. They can tell the difference between spent fowl and chickens and should be doing so.
I was a little surprised at the statistic in your presentation. I should never be surprised at any reference to off-farm income in Canadian farms. I understand that. But I was really quite surprised that in a supply-management operation of chicken farmers, that 34 per cent of household income on Canadian chicken farms comes from off-farm income. I'm not questioning your numbers, because this is your industry. I would again suggest that the Canadian public don't understand this. I think that's another point in another defence of supply management. I don't think we're going to have a problem with supply management for the next four to ten years, depending on the politics of the country.
Right now, without being too political here, I think in the next four years, five years, supply management is okay. There are no guarantees in the future. You need to find a way to tell that story. I've been on this committee since 2004. I'm not a new guy around the table, and I'm surprised at that number in the supply-management sector. I'm never surprised at a high number on an off-farm household income when I talk to farmers generally. When I talk to supply- management people, I anticipated that that number would be very low or almost nonexistent because of the image of supply management. I think that's a problem in terms of the defence of supply management.
Mr. Harvie: What I'd like to do is, if I can, I'll find out exactly where those numbers came from and get you a little more background and have it sent to you so there will be some more information.
Senator Mercer: That would be appreciated and helpful. Not necessarily for this particular study, but for future reference. I continue to be a bit of a nuisance here, talking about how to defend supply management. I'm not worried, as I said, for the next four years, but I do worry about other people who've been around this table before, who continue to misrepresent supply management. I think you've got good numbers, you've got good defences, but you've got to get your act together in terms of how you're going to present it. It has to be in a marketable format so that John Q. Citizen understands that buying Canadian chickens and Canadian eggs and Canadian dairy products is a lot better than buying stuff from across a border, whether it be the one not too far from here or other borders.
Thank you.
The Chair: Thank you very much, Senator Mercer.
[Translation]
Before I hand the floor over to Senator Mockler, I'd like to ask you two short questions.
My first question is this. Is it necessary to import so much spent fowl from the United States? What happens to that chicken, Mr. Cormier?
Mr. Cormier: Part of that chicken coming into Canada is used to make chicken nuggets. The label is misleading, however, because it's also used for boiling chicken.
The Chair: Yes.
Mr. Cormier: Once it hits store shelves, it's called something else: broiler chicken. That's what affects our market; far too many fraudulent claims are made in Canada that way.
The Chair: Do you think big companies like Campbell's, Aylmer, Habitant and Compliments make their soups using that type of chicken?
Mr. Cormier: They would certainly use it for that. Personally, I can tell you that type of chicken is also used for that purpose, although I can't speak for those companies specifically.
The Chair: Like Senator Mercer, I do my family's groceries from time to time, and I often look at the products in the chicken section. For example, when I see a product in one part of the cooler that is labelled fresh Canadian chicken, that's the one I choose. What type of chicken is sold in the other part of the cooler? Is it Canadian chicken that isn't fresh or is it spent chicken or what have you? Why are there two types of chicken? One type is fresh, but isn't the other, as well? Is it safe to eat?
[English]
Mr. Harvie: Mostly what you see, especially if by chance you can see "Raised by a Canadian Chicken Farmer,'' which is the new brand that we are promoting in Canada and we're trying to get all the processing industry to put that on, because I think as a consumer, you would rather have a choice and know what it is. We are promoting and have a brand, Raised by a Canadian Chicken Farmer. It's an important brand for us and it's one that we are spending a lot of money as an industry and investing so it will help the consumer know what's there in front of them. I think most of the issue with the spent fowl is it comes across the border as spent fowl, but the box is actually full of chicken. You would never be eating regular chicken and actually be eating a spent fowl. It's like we said, it can be out and out fraud.
I think we mentioned here in my report about a DNA test that was developed by Trenton University. When we first developed that test and said it was going to be on the market and it was going to be used, the importation of fowl dropped almost immediately. Now it's returned to its original position because we are not using that DNA test, which we should be using. CFC and the University of Trenton developed the DNA test. We can't use the test because all we would do is find the product in the store. It needs to be used by import companies like CBSA, and they have to be able to do that on our behalf. Right now, we seem to be getting some resistance for using that.
Senator Mercer: So the resistance is not from Agri-food Canada or Agriculture Canada; it's from the Canada Border Services Agency?
Mr. Harvie: As near as I know. I can again find you some more information.
Senator Mercer: Ms. Acker?
Shelly Acker, Manager, Chicken Farmers of Nova Scotia: As I understand it, there's a need to clarify or fully understand the respective roles. Canada Border Services versus CFIA; one can do the test, one can check the product. They aren't the same. CBSA, as a product comes across the border, can inspect it but I believe they're not in the position either, whether it's a regulatory restriction or whether it is technical, they aren't able to do the testing. CFIA would be the body to do the actual DNA testing. They're not working together quite yet on that process.
Senator Mercer: Amazing; the government agencies not working together. That's surprising.
[Translation]
The Chair: I'm speaking as a Canadian consumer. If we go to a grocery store to buy chicken labelled as Canadian, that's great; I think 95 per cent of consumers would choose the Canadian chicken. But, as far as the chicken that isn't labelled is concerned, it may be necessary to compel the big retail chains to label it as "spent chicken''.
[English]
It comes from the U.S.A.
[Translation]
We'll see how long that chicken stays on store shelves. It's really important to Canadian consumers for Canadian products to be labelled as Canadian. We know that Canadians eat a lot of chicken, so it's entirely in the interest of Canada's chicken farmers, who produce high-quality chicken. But no one should be given the opportunity to mislead people. Large retailers will always try to tempt consumers. There's no doubt that, if a chicken product on one side of the cooler costs $10 and a spent chicken product on the other side of the cooler costs $7, the consumer will opt for the $7 chicken. The consumer won't see the Canadian chicken label. Products therefore need to be clearly labelled as either Canadian chicken or spent chicken. The consumer won't know where the spent chicken came from, but it should be labelled as such so that the consumer can make an informed decision; your livelihood does, after all, depend on consumers. They are the ones eating your chicken and they need to be able to identify the source of that chicken.
Senator Mockler: Thank you, Mr. Chair.
I have worked on domestic market issues, and what you're telling us here certainly highlights your concerns. But when you look at big-box stores like the Costcos —
[English]
— or the Walmarts, and when we see the Walmarts the way they're moving into food —
[Translation]
— is that type of distribution good for production? If so, could you provide some examples? If that type of distribution is not good for domestic production, what recommendations could we give those people? Mr. Chair, when we were studying innovation in agriculture in relation to maple syrup, we saw that our recommendations do matter. Because of them, Walmart Canada now buys all of its maple syrup from New Brunswick and Quebec. Are there, then, any examples you can provide to help us understand the distribution process as it relates to poultry products?
Mr. Cormier: Yes. I think Canadian companies buy a lot of our chicken. We could make our products a bit more appealing import-wise, but I think we need to promote the Canadian dimension and keep working to that end.
Senator Mockler: Thank you.
[English]
Mr. Harvie: As far as your question is concerned, is the big box stores I guess good for our industry, I think we sell our chicken pretty much everywhere. You can see it in farmer's markets as well as butcher shops and in the big box stores. I think for the most part, you know, these are all our customers and we support them strongly in the chicken industry. Of course, from our point of view, we would want to make sure that it's Canadian chicken that's being sold. Sometimes somebody who is buying larger amounts can create some types of pressure on us at certain times. For the most part, these are our customers and we're happy to have them. We don't see a big difference in where the chicken is purchased.
Senator Mockler: Okay.
We see the arrival of new Canadians, and not just the arrival; if I consider Senator Oh, he's been here for many years. He's a Canadian. When we look at their food habits, and we know that they have their preferential consumer diversified food, what role can government or stakeholders play in order to enhance your production for more value added?
Mr. Harvie: I guess first as far as immigrants coming into Canada, we find, especially from the countries that seem to be coming here, that chicken is a very strong part of their diet. Probably more so than the Canadian diet. We see increases in demand for chicken going up more than the increase in the population. It would sort of match the desire of the ethnic food that they use. Very strong supporter of chicken grown in Canada.
Senator Mockler: If you permit me, Mr. Chair, Senator Oh and I just went to the Moncton flight college here, and a lot of Chinese students were there. As a matter of fact, just for the record, New Brunswick — and Canada — is one of the biggest areas in the world to train the Chinese to become pilots. We went there today, and what did we see on their table? It was all Chinese food. There were 17 around those classrooms. We acknowledged that.
My next question is, and it seems to be a concern — Senator Mercer touched on it — that if we want to increase our production and try to control our imports that — I will not use the word "fraudulent,'' but I'll say to some extent questionable — can you inform the committee about temporary foreign workers? What impact do they have on your industry, if any?
Mr. Harvie: In some cases, I've been told that in the processing industry it's not necessarily one of the nicest places to work and there has been an approach that there may be some. I think in Alberta, they actually got in a little bit of trouble there. Also, as well, chicken catchers, which is people who work at night that come in. There are some import workers that are doing that. I don't know really a lot to say on that. Now I come from a community in agriculture where there are a lot of labour intensive apple pickers and they work in the fields picking cauliflower and stuff. We live in a community of a lot of Mexican and Jamaicans and people that shop and live amongst us during the summer, and then they go home in the winter. I'm quite familiar with that part of it, but I'm not sure how it affects the chicken industry.
Senator Mockler: Thank you.
Senator Oh: Thank you, gentlemen.
Senator Mercer and the chair raised the question of spent fowl. If the Government of Canada were to ratify the text of the TPP, what would you be more concerned about: the TPP programs to be implemented or spent fowl coming in from the States? Which would you consider to have more impact on the chicken farming business?
Mr. Cormier: Well, we would like to have them resolved before they are implemented, that program, like the three things resolved. Import controls coming in on the spent fowl, like Matthew said, there's more spent fowl used in Canada than they produce in the U.S., so it's hurting our market.
Senator Oh: You claim 8,900 jobs and $600 million in GDP will be affected. How much spent fowl do we produce? Do we export south?
Mr. Harvie: There was a time when most of the spent fowl that came into Canada would come in live and be processed in our process facilities. Then it does end up in places like chicken pot pie and nuggets. The fact that it's coming in as breast meat, where you can't tell the difference between the breast meat of a spent fowl and a chicken in a box, or it's very hard, makes it a lot harder to control.
I would also say, on your first comment, that we've approached government and lobbied as producers to try to talk to government about most of these trade-distorting measures that come into our country. It would almost completely eliminate the effect of the TPP if these could be put in place and dealt with, as far as chicken is concerned. I can't speak to egg and dairy and the others. As far as chicken is concerned, if we implemented or fixed these three loopholes in the imports it would almost make up for the amount of chicken that comes in through the TPP agreement.
Mr. Godin: Further to what Matthew just spoke of, those three issues have been ongoing for a long time in my understanding. Now with the new TPP agreement and the difference in access that's being given it would balance out or negate the effects of the TPP if those measures weren't looked after. They have been issues for a long time in the industry.
Ms. Acker: Senator, have you had your question answered? I am not sure. We are passionate about this issue and so we tend to dive right into a lot of the details. If you had to choose one over the other it would to deal with the spent fowl issue first.
Senator Oh: Yes, because you are not the first group that came to us to talk about a concern over spent fowl.
Chair, I think we just ordered the spent fowl chicken pot pie.
Senator Mercer: We did have chicken pot pie for lunch.
Senator Oh: Do you have a comment?
Ms. Acker: With the permission of the Chair I might add a little more on the question of spent fowl and imports, if it be appropriate that I do that at this time. It is confusing. It's an industry I've been involved in now for 10 years. I know that it does take a long time to figure some of these things out and walk through them in a rational way.
One of the things about the spent fowl imports is that it is legal certainly to import spent fowl into Canada. What isn't legal is to do that by labelling a chicken as spent fowl in order to avoid a duty. This is where the concern comes in. As I've said you've been through this before. Just to reiterate that fact, it is not about an absence of spent fowl in the marketplace because it has its place.
The real concern is about bringing in chicken as spent fowl. Those are the measures that have been identified. They are key to making sure that they are implemented to avoid that kind of practice so that we can protect the hard work of these producers that I work for and get my living from and make sure that they can maximize the production that is possible for them and maximize the value from that marketplace. Thank you for the time to say a bit more on that.
Senator Mercer: Let's say that tomorrow we could start implementing the rules as they're written. It would seem to me, Shelly, that if the first shipment of chicken labelled spent fowl coming across the border is DNA tested and is found to be chicken, (1) it would be refused at the border and (2) we cannot assume that the importer on the Canadian side would know that. Yes, we know that certain people would know it but this is not going to have an effect unless it becomes a public issue. I suspect it is more in the production side than it is in the retail side. Correct me if I'm wrong, but I suspect the stuff coming across illegally is ending up going through the processing as opposed to ending up in a package in the grocery store that I'm going to buy to barbecue. I think I am right there.
Somebody has to suffer some pain here. If you turn back one truckload of "spent fowl'' at any border crossing across the country it doesn't work and doesn't have an effect unless everybody knows. When everybody knows that company X is the bad guy when the political side of this appears because even though this is not political it really is political. If company X happens to be a very major employer in community Y it becomes a huge political problem for somebody, whichever government does it at the time.
I am not suggesting it's not worth the expense or the risk of doing that. I am just again trying to educate all of us in knowing what we're doing. I fully agree that the rules are there to protect Canadian chicken farmers and Canadian producers, and I think we should implement the rules. When we do that we have to be doing it pretty loud so that everybody knows not to do it in the future.
Mr. Harvie: We've talked to some of the exporters or importers in the United States that ship fowl into Canada legitimately. They're very concerned about this. It is a very beneficial place to put their fowl meat legitimately into the industry because there's a need for it and the price in Canada is way higher than the price in the States. They would like to have this solved too. On the other side of the border the people that are doing it legitimately would like to have this solved.
I don't know all the rules so I'm going to make a statement that may not have a lot of fact here. I've been told if you were caught fraudulently trying to get around imports in Canada you may lose your licence to import into Canada. I am not sure if that's the case if somebody got caught trying to fraudulently do something or not.
Senator Mercer: It doesn't matter whether you lose your licence or not. If your name is on the front page of The Globe and Mail that's worse than losing your licence because everybody that wants to do business with you reads the front page of The Globe and Mail. I think that's what we're talking about here. It is really an interesting sidestep to our study but I really think somebody has to come up with a plan. Somebody has to meet with the Minister of Revenue who is responsible for the Canada Border Services Agency and for the implementation of import restrictions, and of course to meet with Minister MacAulay to talk about it from an agricultural point of view.
Now is not a bad time while the TPP is being talked about. Again from a political point of view it's a pretty good distraction. I would say we're going to take some flack over the TPP but if we do this we're going to get all kinds of credit for it. It's a win to cover off perhaps a bit of flack but I am not running in anymore so it doesn't matter.
The Chair: Good suggestion.
[Translation]
I have a small recommendation for Ontario's and Quebec's chicken producers. As you know, many restaurants serve chicken, including fast food chains and specialty rotisserie establishments. I told them that it might be bad for business if they did not brand their chicken as being Canadian chicken and I suggested that they adopt the use of a statement to the effect of, "we serve only Canadian chicken,'' like St-Hubert restaurants, which source all their chicken in Quebec. If getting restaurants to affix these labels to their products is too much work or if you're simply tossed out the door, use your producer associations to post the names of restaurants and stores that sell Canadian chicken on their respective websites. Eventually, when other restaurants realize they are not on the list, it may worry them and they might just come knocking on your door.
That would be one way to counter the use of spent chicken. No one's fooling anyone, we know that the fast food sector does not use fresh Canadian chicken from New Brunswick or Nova Scotia. It uses strictly spent chicken of abysmal quality. So the only way to fight the use of such chicken is by employing similar tactics. Use your websites to post the restaurants and grocery stores that carry your chicken, and I guarantee you it will make a difference. Perhaps not right away, but a year or a year and a half down the line, you will see a big difference because consumers check websites more and more.
[English]
Thank you very much for your presentations. It's very important for our committee to have a good distinction between the producers of New Brunswick and Nova Scotia.
The second panel this afternoon is from Pork Nova Scotia, Mr. Brad McCallum, Executive Director; from the Prince Edward Island Hog Commodity Marketing Board, Tim Seeber, Executive Director and Scott Dingwell, Vice- Chair; and from Egg Farmers of New Brunswick, April Sexsmith, General Manager and George MacLeod, Chairman.
Welcome, ladies and gentlemen. We will begin with Mr. McCallum.
Brad McCallum, Executive Director, Pork Nova Scotia: Thank you, Senator Maltais, and thank you for the invitation to speak to your committee today on behalf of Pork Nova Scotia. My name is Brad McCallum and I am the Executive Director of the Agri-Commodity Management Association. We manage five different agricultural commodity groups in Nova Scotia. Pork Nova Scotia is one of those so I act as their managing director. I've provided some of my speaking points in advance to you so I will go through those rather quickly in the interest of time this afternoon.
Pork Nova Scotia is the marketing board in charge of marketing hogs, both market hogs and weaners, and feeder pigs in Nova Scotia. We fall under the National Products Act and as such we have a much different mandate than we would if we were a producer organization with the main objectives of lobbying.
The pork industry in Nova Scotia has seen a dramatic decline over the past 15 years, particularly since the early 2000s. We've seen our production drop by close to 90 per cent. At our peak in around 2006 we produced about 220,000 market hogs. Just last year in 2015 we were down around 9,000. On the other side of that coin we do produce weaner hogs. We produced about 55,000 of those in the run of the year to export mainly to central Canada as feeder pigs to be finished.
To go along with the loss of production it coincides a lot with our loss or lack of ability to process and market hogs within our province. We've lost two federally inspected slaughter facilities within that time period and we've lost close to about 140 of our producers. Having said that, things over the past four years seem to have stabilized and our industry is looking toward opportunities that we can focus on both provincially, regionally, nationally and internationally. One of the big challenges we face along with some of our other red meat friends in beef and in lamb, but not so much on the lamb side, is that consumption of pork has decreased dramatically since the mid to late 1990s. It's down about 30 per cent. The average Canadian consumer is eating just around 9 kilograms of pork per person as of 2014. That's one of the challenges we face as well.
Going back to the slaughter and process side of it, we rely heavily on markets outside our own province to market our finished animals. The majority of our animals, probably 90 to 95 per cent of them, are heading to the Quebec market to be processed by one of the larger slaughter and processing facilities there. The other 10 per cent that we're still producing and marketing within the province are being direct marketed from the farmer directly to consumers, either through farmer's markets, through their own farm retail or some small grocers.
As far as market access goes it's not something that's always at the front of our agenda as we are a very small hog producing part of the country. However, there are lots of things that we as a national industry can do to access markets. With the two most recent trade agreements in TPP and CETA there are some opportunities nationally. Particularly with our production cycle here in the Maritimes there are some opportunities that we feel we may be able to access as well.
One of the things our industry has done over the past two years since 2014 is ensured mandatory traceability. We believe it is a key component to ensuring the consuming public that we produce a safe product and we can track that animal from the time it is born to the time it is slaughtered. We're doing our part as well.
We focus a lot on the regulatory environment. It's a particular issue in Nova Scotia. I'm not sure what it's like across the rest of Canada but especially on the ability to get animals to market we feel there are really three levels of meat inspection. The first is federal inspection which allows us to market across provincial borders and across international borders. The second is provincial inspection which allows us to market our animals within our province. The third one is actually the most concerning of all of them, and it's non-inspected meat that is getting into the local markets mostly. We feel that there's a really strong need to converge the meat inspection system. It puts a lot of our producers that are 15 kilometres away from a provincial border at a disadvantage that they can sell on one side of the bridge but not on the other side of the bridge. It's a major hindrance. We get a lot of requests particularly from Newfoundland for selling products there. Because we don't have access to a federal slaughter facility it means that we can only ship them live animals.
Maybe the last point that I'll make before I finish up is around swine health and biosecurity. Obviously this is something that the Canadian pork industry takes very seriously. Swine are very intensively raised livestock and thus lend themselves to being more susceptible to disease and outbreaks. We do work very hard. We have the small core of around 10 commercial producers left in Nova Scotia. We all participate in the national biosecurity protocol and the other on-farm food safety program. We feel that we're a small but stabilized if not growing industry. We think that there are many opportunities within our province as well within our region and some domestic and international opportunities if we can work together.
The Chair: Thank you very much, Mr. McCallum.
Scott Dingwell, Vice-Chair, Prince Edward Island Hog Commodity Marketing Board: Mr. Chair, I'm Scott Dingwell and I represent Hometown Pork. I'm a hog producer from Mount Stewart, Prince Edward Island, and I am secretary of the board of directors of the P.E.I. Hog Commodity Marketing Board. I would first like to thank the members of the Standing Committee on Agriculture and Forestry for the invitation to appear before you this afternoon and discuss the study on international market access priorities for Canadian agriculture and the agri-food sector.
As you are aware the hog sector in Canada is very dependent on exports with more than 60 per cent of the hogs produced in Canada leaving the country in the form of either live hogs or pork products. Market access is vital to our industry and only through the co-operation of government and industry have we been successfully maintaining our trade markets but also in opening up new opportunities through the recent trade agreements. That being said it's very imperative that governments follow through with the ratifications of these agreements. They are critical to our success. We perhaps more than anybody else in the world are dependent on export markets.
The competitiveness of the Canadian hog sector on international markets is very much tied to the ability of our business risk management tools to work for each sector. For several years now the hog industry has not been a benefactor of the AgriStability program and it has never been able to participate in production insurance programs that most other sectors have access to. It is a key problem within our hog sector.
To this end it's imperative that with the five-year Growing Forward 2 programs expiring in 2018 both the provincial and federal governments need to improve the programs and seek new and novel approaches to risk management. Producers need a variety of tools like mortality insurance and hedging to find the best options for their operations.
Access to credit has also become a huge issue in our sector as a result of successive years of difficulty in the hog industry. Also in Prince Edward Island and other places in the country the repayment of the 2008 and 2009 severe economic hardship loans under the advance payment program have resulted in the demise of a number of operations due to very negatively impacted cash flows.
Building structures are aging in our industry and is in need of significant reinvestment to ensure continued efficiencies. One of the key factors from a national level is the age of our infrastructure and our ability to provide. We are at a natural renewal point and frankly access to capital is a key impediment to that happening.
Though the livestock sector has experienced a significant decline here in Atlantic Canada in the last 10 years it still plays a significant role and is integral in the spoke that we call the agricultural wheel of this region. It has the potential for a much bigger role when the right pieces are in place. A significant concern to P.E.I. and other maritime hog producers is the fact that they have no longer access to federal slaughter within our region as our friends from Nova Scotia have already talked about. This has impacted our ability to access markets economically. The health status of Canada's herd is a strength in our industry. Due to its size on Prince Edward Island and its natural biosecurity of farms we have a basis to produce value added hogs for higher end markets in the United States and elsewhere. Again, hough, these are being hindered by a loss of infrastructure and an ability to access capital to expand. It is a critical concern throughout the entire value chain.
In conclusion I'd like to thank you for the opportunity to appear here today.
The Chair: Thank you very much, Mr. Dingwell.
George MacLeod, Chairman, Egg Farmers of New Brunswick: Good afternoon. My name is George MacLeod and I am an egg framer from New Meadow Farm, a fifth generation egg farm inTower Hill, New Brunswick, just outside St. Stephen. I am currently Chair of Egg Farmers of New Brunswick.
Egg Farmers of New Brunswick was established in 1970 and represents 16 egg farmers and farm families in the province of New Brunswick. At 2 per cent of the Canadian production New Brunswick has one of the smaller egg quotas in Canada and currently houses approximately 492,000 hens on an annual basis. As producers we provide more than 12 million dozen eggs each year with recent farm gate sales in the range of $22 million.
I'd like to take this opportunity to thank you for inviting April and me to be part of your study on the international market access priorities for the Canadian agriculture and agri-food sector.
Some of you may wonder how eggs which operate under supply management fit into the government's trade agenda as articulated in documents like the Global Markets Action Plan. We believe that supply management, a solid domestic market focus policy, allows us to produce eggs for Canadians that are among the best in the world in terms of freshness and quality. In doing so we provide stability at home while agriculture industries with greater export potential pursue opportunities in international markets. The strength and stability of supply management can help us as egg producers with inevitable ups and downs in the global trade environment such as global volatility in agricultural prices, a possibility of export market declines and the difficulty farmers outside supply management have ensuring sustainability of their operations.
Further, it is essential in the case of eggs which are perishable and have limited transport or storage potential that they are produced and consumed locally. Supply management has allowed egg farmers to reinvest in their own farming operations and in world class animal care and on-farm food safety programs. Working together under a common umbrella we as egg farmers invest in research and development in disciplines like human and animal nutrition, public policy, animal welfare, economics, the environment and the sustainability of food systems. Egg farmers also share their knowledge and expertise abroad and we are helping fight malnutrition and hunger in developing nations.
In Canada we have a vibrant downstream supply chain of egg graders, egg processors, food manufacturers and retailers, all creating value and adding jobs and economic returns in Canada. Further, more and more young Canadians are building a rewarding career in egg farming due to the stability and the opportunities afforded by the system of supply management. We now have a fifth generation egg farmer on our family farm in Tower Hill. These trends and achievements are occurring in an industry that has realized 21 per cent growth in the past seven years. We also have more aggressive plans for growth domestically, with the increasing ethnic population in Canada and on the wave of global trends for local, whole, wholesome and high protein, nutrient dense foods.
I offer the following quote from the Conference Board of Canada 2013 report entitled Canada's Growing Appetite for Local Food:
The increasing interest in local food in Canada has been driven by concerns about food quality, health and nutrition, food safety, local economies and farmers, and the environment.
Local food systems have a significant economic impact in Canada. Canadian egg farmers provide consumers year round access to fresh, local, safe and high-quality Canada grade A eggs at reasonable and stable prices. Let's be clear on the issue of price. The price paid to the producer recognizes independent cost of production formulas that return costs to the producer and is relatively stable over the years. However, retailers set what the Canadian consumer will pay in the store. A case in point is that the price of eggs at the producer level dropped by 9 cents per dozen at the end of January of this year but no proportional price drop was seen at the retail level. Still eggs are simply the lowest priced high protein food available. You can feed many or have multiple meals with a dozen of eggs for less than the cost of a latte.
We truly appreciate that Canada has successfully concluded many free trade agreements all the while maintaining supply management. The goals of supply managed industries and those of export oriented industries are not mutually exclusive as has been shown in the recently concluded Trans-Pacific Partnership. We recognize the opportunity that the TPP brings to Canada and the economy as a whole.
With that said, it came with an impact for us in the Canadian egg industry. Canada will need to import a total of an additional 19 million dozen eggs per year once the agreement is ratified and fully implemented. To put that into context that's almost as much as we are already obligated to import under the current trade rules. This means Canadians will be purchasing more imported products than they prefer. However, we as egg producers remain confident that our industry's resiliency and growth will lessen the impact. The TPP compensation removes much of the uncertainty that we've faced for years. The industry can now continue to plan domestic production and to meet the growing needs of Canadians, knowing the volume of imported eggs as a result of the trade agreement. We will however be continually vigilant in monitoring the deal's impact over its implementation period.
We understand that to get something in some areas somebody else had to give something up. When we look at the overall deal, the access granted in eggs, the provision of compensation and growth as an industry, we remain supportive. This of course assumes that an appropriate result of compensation is reached. In light of this we continue to work with government and to investigate the mix of compensation programs for the supply managed sector announced in conjunction with the trade deal.
As the government moves its international trade agenda forward the Canadian egg industry will continue to build its domestic footing. We will keep our social licence and trust with consumers first and foremost. We will continue to invest in our farms and in research and develop better housing and production practices. We will continue to donate to important causes, sharing our success by giving our knowledge, our expertise and our products where they are needed. We trust the government values the contribution our domestic stability gives to the greater agricultural arena including those who wish to build their export markets. Supply management is like a blue chip investment as the government seeks additional opportunities through international trade. Mr. Chair, I look forward to your questions.
Mr. Chair: Thank you very much, Mr. MacLeod for the presentation.
The Deputy Chair of this committee, Senator Mercer.
Senator Mercer: Thank you, chair.
Gentlemen and lady, thank you for being here. I appreciate your attendance. The irony has not skipped by me. It is as if we are talking about ham and eggs here this afternoon. It makes my mouth water. I think it's breakfast-time already.
We've some problems. Let's talk about hogs for a moment. We continue to have this problem. A significant concern to P.E.I. and other maritime producers is the fact that we no longer have access to federal slaughter within the region. This is a frustrating problem that has been haunting us for years. Does anybody have a suggested solution to the problem?
The subject of this study is international trade. We know that hogs in particular are an export product. If we are going to be involved to maximize our benefits of trade agreements we have to be prepared to export. That means we have to be prepared to produce. We know that the hog farmers or farmers in general in Atlantic Canada are good producers. They know what they're doing but if they don't have the infrastructures to support them, such as in this case a federal slaughterhouse, then they're working at a disadvantage. Does anybody have an idea or a suggestion on how we fix this?
Tim Seeber, Executive Director, Prince Edward Island Hog Commodity Marketing Board: There's another issue associated with not having slaughter too and maybe I'll just touch on that firstly. If we have a disease outbreak within Canada we don't have the ability to regionalize our production, to isolate as a region that has a disease so that we can continue to export to other countries from the other regions of Canada.
Another problem that happened within the last two years was the PED outbreak in Canada. We had a break in Prince Edward Island, but because we had no control over slaughter facilities in Atlantic Canada our hogs that were going to Quebec all of a sudden couldn't go to Quebec anymore either. They wanted nothing to do with it. They had to go to Ontario. We ran into a humane handling issue and a producer distress issue.
To get to your point there have been discussions about one slaughterhouse. I think that the three Maritime provinces are very receptive. There was a time when everybody wanted a slaughterhouse in their own backyard. We're very cognitive of the fact that we don't have the hogs to do that anymore, but we do have enough hogs to run a smaller slaughter facility centralized for the three Maritime provinces. We've tried to bring that up on a number of occasions but the pushback has usually been that there's no federal money available and the provinces aren't willing to put money on the table to do it.
Our thinking, and maybe Brad wants to comment on this too, is that it would be very acceptable to the industry if the federal government were to come forward with some sort of assistance to facilitate the building of a federal slaughter facility in the Amherst toTruro region or Moncton or wherever it may be. I think the provincial governments would be very receptive to that, but as you know the provincial governments are not on a financial footing for anybody to go it alone at this point in time.
Maybe, Brad, you want to add to that because Nova Scotia has spearheaded more of this discussion in the last 12 to 18 months because of two individuals there that seemws to be preoccupied in that prospect.
Senator Mercer: Brad.
Mr. McCallum: Thank you, Senator Mercer.
We need to focus on is coordination and co-operation within the industry. It is true that we are three very small provinces with limited production. The way forward for us is to try to access markets together and work together to make those opportunities reality.
It is true we have met with our provincial government. We have gone through probably a 24-month process on the slaughter feasibility side. As Tim says we don't need multiple facilities. We need a facility that can manage, process and market the number of hogs we can produce. With our current market hog production and with our current weaner hog production in the Maritimes we're talking of probably a $12 million to $14 million investment to be at the scale and the size that we feel we can make it sustainable. That's somewhere around the 750 to 1,000 hogs a week which is very doable based on current production. One of our limiting factors is getting those baby pigs to market weight or to marketable size.
Going back to the slaughter, we had a meeting with our Nova Scotia pork producers on December 8, 2015. One of our producers made it very clear that no matter where you were able to put a federally inspected slaughter facility in the Maritimes it was still going to be closer than the closest one we go to now in Quebec. We could put it in Meat Cove in Cape Breton, Edmundston,Yarmouth or Montague and we're going to be in a better spot than we are now. A lot of that goes back to humane handling.
We see now with retailers and particularly with a couple of the fast food chains consumers are interested in how their food is produced and where it is produced. It goes back to the social licence that Mr. MacLeod mentioned earlier. As far as a federally inspected plant here in the Maritimes, yes, $14 million or $16 million is a lot of money but it's not so much that it's out of reach.
Senator Mercer: You talked about the need for the federal and the provincial governments to be involved. The current Government of Nova Scotia has said that they're not interested in getting involved in grants to industry, loans to industry in general. They've made that general statement.
The Council of the Maritime Premiers seems to be a place where you could find three premiers and for the first time in many years all three come from the political party. That shouldn't make any difference any way but at least they all know each other which is helpful.
It seems to me we have to find a way to get people to the table to talk about this because we could meet the deadlines for production and bringing animals to size for slaughter. At the time you make a decision to start building a facility then people are starting to grow hogs.
Has any one of the three premiers been urging you to get this on the agenda of the Council of the Maritime Premiers?
Mr. Dingwell: Yes, it's being talked about.
My own company has an existing supply agreement with the U.S. market for 1,000 hogs a week raised in an antibiotic-free and higher humane standard. One of the humane standards that this particular marketplace is looking for is the travel time to slaughter. Now we can reach that travelling to Quebec but only by the skin of our teeth and in a bare minimum basis. We have established markets that are looking for market hogs which need access to federal slaughter so that it's suitable for export right now. The time is right to pursue and to continue to push this idea because of established markets that are willing to pay a premium and a guaranteed price on a total slaughter basis. It also would be very wise to build to a standard of production that meets both the TPP and the EU standards. We have a unique opportunity within our region because of our pastoral image or our tourism value of Newfoundland, Nova Scotia and P.E.I. A lot of world consumers have an idea of what a small farm would look like. Frankly, senators, it is the Maritimes. When they see a smaller field, a smaller outport or a harbor, that's the image these consumers want to relate to their foods. When I bring my retail partners into this region this is exactly the image they want to portray to their customers who are paying significant premiums for our products based on our quality and based on our location.
I think it is time to build scalable models. We will not build a meat plant that produces 100,000 hogs a week and compete with the Cargills, the Tysons and even the Maple Leafs, but we can build scalable, right sized plants for our region to meet existing markets. It will take multi-levels of involvement and partnership among federal, provincial governments and industry. I think those partners are there but it may require some push from a level such as yours.
Senator Mercer: I ask this question of you because I certainly don't know the answer. Does it make sense that the plant process more than hogs? We have a very small beef business in Atlantic Canada but they too have to ship to Quebec and to Ontario for slaughter and processing. Does it make any sense economically and financially to combine this operation to be more than hogs?
Mr. Seeber: That's a good question. If we had maintained the plants we had that have all closed we could have grandfathered them in to a multi-species facility. What we're faced with now is we cannot run common coolers, slaughter lines and storage. What we can do is capitalize on the supply chain, the market chain, as well as the infrastructure of wastewater treatments and whatever else can be incorporated. To build two facilities within close proximity is very good. Then you can capitalize on your management as well.
The thing about the beef plant right now is they're looking at ability to ship into the halal markets which would restrict their exposure to pork. At the time same time you can get around that. We do have an empty potato plant right next to the beef plant that is waiting for an owner. We are in danger of losing that beef plant in P.E.I. at this very moment just because provincial governments are no longer standing together on that plant and the P.E.I. government is totally footing the bill for any losses there.
If there were some sort of joint federal/provincial agreement we could incorporate it into that existing facility but it would have to have separate lines, separate processing and separate coolers. Further added processing is a big aspect of profitability too and we don't have that at all now.
Senator Mercer: None of the old plants are recoverable, are they? They have all deteriorated now. It has been too long.
Mr. Seeber: Not now.
Senator Mercer: Brad, you had a comment.
Mr. McCallum: Yes. To back up a bit we have had considerable conversations with our provincial government mainly at the ministerial level regarding investment into this type of facility. We also have to recognize, as you said, that we can have a business plan and financing in place today but we're probably still three to four years from our first day of slaughter. It's also important to support those other provincial parts of the infrastructure as we build through our federal plant.
What we've had a lot of conversation with our minister on is that it doesn't necessarily need to be a direct grant or a direct contribution from the government. What we do need is preferred financing terms. In our province we have a provincial institution in the business of financing farm operations as well as processing operations. There is that opportunity there.
If I could build on something that Tim said around the multi-species plant, just down the street from my office the abattoir in Northumberland is a plant that has gone from provincial certification to federal certification. We've approached them on multiple occasions saying that we only need to add a couple of pieces of equipment to the infrastructure that's in place to make it very suitable for a hog plant. It comes back to the separation of coolers and storage. They're a lamb marketing co-op, not a pork marketing co-op. There are opportunities with a couple of the existing federal plants in the Maritimes but it does make it very challenged when you get into multiple species.
Senator Mercer: I have a few more questions but I want to hear from my colleagues so I'll pass and come back later.
Senator Oh: A lot of interesting information has been given. How much does it cost to invest in a processing plant?
Mr. McCallum: The feasibility study we commissioned from a group of professors at Saint Mary's University in Halifax was for a plant between 750 and 1,000 hogs per week with further processing or the ability to smoke and make sausage. The cost is in the range of $14 million to $16 million of initial capital without taking into consideration operational costs.
Senator Oh: Can you guarantee that you have that 750 to 1,000 hogs every week? Is that the normal consumption of the three provinces?
Mr. McCallum: I'm not sure exactly what the consumption would be within the three provinces. I know it would be much greater than 750 or 1,000 hogs a week. We only produce about 6 per cent of the pork in Nova Scotia that Nova Scotians consume, so I would assume that P.E.I. and New Brunswick would be in a very similar situation.
To answer your question of whether or not we could put that number of hogs through the plant, yes, we could. It would be very easy. In Nova Scotia we're already at 250 hogs a week just in our own production of market hogs. There are still about 55,000 hogs that we export out of the province as weaners into the Ontario and Quebec markets for finishing.
Senator Oh: The numbers you gave are very conservative. You can hit the target with no problem.
Mr. McCallum: Yes, that's correct.
Senator Oh: You're having some problems with the credit facilities. What do you propose? How can the government help with that?
Mr. Dingwell: You're probably speaking about access to credit for reinvestment and building. I think there is a definite need for perhaps FCC. Although I do realize it is an independent Crown corporation there is some need for leadership. Our traditional chartered banks have a long history of looking backward to where an industry has been instead of looking to where an industry is going. With your permission I'll tell you a quick story.
As a young hog farmer at an industry meeting one of the major chartered banks was incenting us to build barns. Hogs was the place to be. An old hog farmer at the back of the room pulled me aside and said, "Young fella, when the banks want to give you money run like heck. When you can't get any, beg, borrow and steal because it's going to be good.'' That has been some of the best advice I've ever received. Frankly that's the situation we're in right now. Chartered banks have what they call closed their hog book. They have experienced seven years of negative margins and multi-million dollar losses in the hog industry because of situations frankly of global oversupply and reasons out of our control.
The hog farms that have exited production in the Maritimes and the rest of Canada have not done so because of lack of quality, lack of skill or lack of ability. It has been because of global prices that have been below the cost of production. Frankly the market had corrected to the point now where we are looking at significant profitability potential. Last year was very good. The year before was good and I think going forward it is going to be good.
It's time to beg, borrow and steal. There may be an opportunity for our federal partners to lead the way in reopening the hog book. There is a role there to lead the reinvestment in the industry. A lot of the Canadian industry and certainly the maritime industrial complex are at the point of needing replacement and it will require access to capital.
Senator Oh: What about a labour shortage? Is there a labour shortage in the hog industries in the three provinces?
Mr. Dingwell: Local labour can be difficult to find but we have access to permanent immigrant labour within agriculture that I would encourage you to continue. Very highly skilled labour is being accessed now. There is access to immigrant labour. Correct me if I'm wrong but it is being done on the basis of seeking full-time citizenship. That has been successful. I know it is being utilized more and more on Prince Edward Island. Labour is available.
Senator Oh: Thank you.
Senator Mockler: Just to follow up on Senator Oh, the Temporary Foreign Workers Program is being administered or was administered in both your industries. How does that impact? Can you give us some figures? What percentage do you need or have you used in the last two years, let's say? We understand it depends on the type of products or the industry that is being impacted, be it apples, cauliflower or whatnot.
Mr. Seeber: I don't think the hog industry has been as heavily impacted as potatoes and fruit picking. Seasonal industries have really had an issue with that but in the hog industry we've been able to work through it for the most part. That could be because of the collapse of the industry in Atlantic Canada. Available labourers are available are able to find job. It's not that we have a surplus of barns looking for help.
Senator Mockler: Does the egg industry have that challenge of finding workers?
Mr. MacLeod: No, not for workers in the egg industry in Atlantic Canada.
Senator Mockler: That brings me to a subject matter I've asked previous witnesses about, Mexico and the three amigos. How are we doing with Mexico? We're looking at the TPP and CETA. We have approximately 90 million people south of our border or south number two. At this stage of the game how does it impact your industry?
Mr. MacLeod: Because the egg industry is not an exporting industry it only impacts us on the price of what eggs we have to import from the U.S. Mexico is a huge trading partner with the U.S. and they import a lot of eggs from the U.S. If they're in demand in Mexico then that increases the price we have to pay for those imported eggs into Canada because we have to import under the current regulations and when the TPP is ratified there will be a higher level of import that we have to bring into Canada.
Mr. Seeber: From the pork side of it Mexico's not a real big player in our export markets, not when you compare some of the major countries that we're dealing with. They have marginal purchases but it's nothing that would impact.
Senator Mockler: Are you talking for the Atlantic region or are you talking about Canada?
Mr. Seeber: Canada as a whole.
Senator Mockler: Canada as a whole.
Mr. Seeber: Because we don't have federal slaughter we're not exporting anything.
Senator Mockler: I say "Canada as a whole'' because we've visited some infrastructures in other parts of the country that do some select cuts for niche markets. Those niche markets are pretty good on the profit side.
Mr. Seeber: That's right. Going back to the idea of building a slaughter facility here it Atlantic Canada you would be looking at a niche market. You would be slaughtering for a niche market because there's no way on economies of scale that you could be profitable in a commodity market.
The question was asked about how many hogs we could supply to this plant. That 750 to 1,000 would likely be about 50 per cent or less of the hogs that go to market as finished hogs out of Atlantic Canada. There are a lot of producers that are not prepared to switch over to the requirements of a specialty market that Scott referred to earlier. They would continue to ship into commodity markets in Quebec.
You're not going to win everybody 100 per cent but we have a lot of small producers that want to continue to produce hogs and are willing to ship into a specialty market. Those are the type of producers that would supply a plant.
Senator Mockler: This will be my last comment and question. If we do have this infrastructure of a slaughter facility in Atlantic Canada how would that encourage increasing the production and/or looking at niche markets? Would we have a return on our investment?
Mr. Dingwell: Yes. The travel time to slaughter is a key consideration for the market I spoke of a signed contract now for 1,000 hogs a week. One of the animal care components is travel time to slaughter. That would be a key responsibility.
The market I spoke about is completely independent of the commodity market. We in the hog industry talk about a Chicago price or an Ontario price, which is the price that goes up and down. That's the price that's given us big windfalls and more often has given us great losses. I hate to say a niche market because this market is much smaller than a niche. This is a specialty market that is well established. It has been in existence and has grown at a rate of 20 per cent per year for at least the last 15 years that I have directly watched it. It is established for 1,000 a week and frankly if we find 2,000 to 3,000 hogs a week that is not an issue.
The market demand is there that can support this type of initiative. The key point would be the willingness of producers that do not want to produce to that standard. They have the option to direct market. Right now Nova Scotia producers may have markets in New Brunswick but without access to federal slaughter they cannot fill those markets. I have received countless calls from Newfoundland asking if I can ship pork and I say that I can't because I don't have access to federal slaughter. Those types of markets could grow, develop and be encouraged with access to federal slaughter.
Senator Mockler: If we look at those niche markets or, to use your nomenclature of those specialty markets, that could encourage production in Atlantic Canada. Have you ever done a feasibility study?
When this committee was in Toronto and visited Maple Leaf we raised the importance of a federal slaughterhouse facility in Atlantic Canada. Have you ever made a feasibility study in the last five years to bring that to the attention of governments so they could make decisions on that?
Mr. Dingwell: Directly related to a federal slaughter facility?
Senator Mockler: Yes.
Mr. Dingwell: Absolutely, yes, I mentioned the very recent study we commissioned in 2014. That is the document we use when we talk to our provincial government about the opportunities of this type of facility moving forward.
We actually have our annual general meeting tomorrow as Pork Nova Scotia and our entire afternoon is devoted around market development, industry development and how they relate to a federally inspected slaughter facility. We've engaged a plant engineer. We've engaged a marketing consultant. Our focus right now is on industry.
Senator Mockler: I will not make a comment like my partner, Senator Mercer, where you should go on this. I'll let you people decide tomorrow.
When you see the way Walmart and Costco are marketing all kinds of food products is local production, local produce, Atlantic Canada or the Canada brand of any help?
Mr. McCallum: Maybe I'll answer that from a beef perspective because I do work the beef industry as well.
Costco is one of the biggest purchasers of beef in Canada. They work very hard and very diligently with Canada Beef Inc., our national marketing organization. Everybody's definition of local is different. For some folks it might be the guy at the end of the street that grows a few carrots. For somebody else it might be anywhere within 50 or 100 kilometres, wherever you want to draw the radius. When you talk to the retailers it's whether or not it can be in their warehouse within 24 hours of it being processed or picked.
We prefer not to use local because it is kind of confusing in that nature. There are some major fast food chains now that are taking local out of it and talking more about the social licence, no antibiotics, no this or no that and free range. Jamie Oliver with Sobeys is a really great example with his Blue Goose products. It all revolves around humane handling and animal care while the animal is alive. Yes, local is important but everybody's definition is different.
Senator Mockler: If you define it the way you just explained it, does that have a better consumer advantage?
Mr. McCallum: It really depends on who and how you look at it. I was part of a major initiative in 2008 or 2009 with some researchers from Australia. They were very quick to point out that provenance is not actually an attribute of food. It has an effect on the taste but at the end of the day it has more to do with in the way it was raised or the way it was grown more so than where it comes from. The local connection is more of an emotional connection than it is an attribute of the food itself.
Senator Mockler: A good comment.
The Chair: Mr. McCallum, is it possible for you to send us your study?
Mr. McCallum: Absolutely, I'll send that directly to Mr. Pittman.
The Chair: Thank you
[Translation]
Mr. MacLeod, how many dozens of eggs do we produce in Canada? Are you able to give us an estimate?
[English]
Mr. MacLeod: Currently in Canada we have a total of around 2.5 million hens. Our cost of production that we calculate every five years says right now that it amounts to 25 and a half dozen of eggs per hen. With QuickMath we could figure that one out.
[Translation]
The Chair: What do you do with spent fowl? Once hens have exceeded their egg-laying cycle, what do you do with them?
[English]
Mr. MacLeod: There are various markets in Central Canada. They are further processed for sandwich meats and that sort of thing. In Atlantic Canada currently the mink industry takes a very large portion of our spent fowl. They go as feed for mink ranchers. They have no value to us as egg producers but the mink industry in most cases will take them at no cost to the egg producers.
[Translation]
The Chair: Pardon me. Is there a slaughterhouse for spent fowl in Atlantic Canada? No?
[English]
Mr. MacLeod: Yes, there is one in New Brunswick in the Edmundston area right on the border with Quebec. Within the last year they have added facilities so they can do spent fowl at times, yes.
[Translation]
The Chair: A few years ago, when Senator Mockler was chair, the committee visited New Brunswick, Nova Scotia and even Newfoundland and Prince Edward Island. We had the opportunity to visit an egg farm in Nova Scotia that had been in the family for three generations. It was an incredible farm. In terms of cleanliness and quality, it was truly the ideal farm. If ever a university or college wanted to show students the right way to run a farm in Canada, this farming family would be the perfect people to talk to — the grandfather, the father, the grandson and, of course, the mother, who does the bookkeeping. The facility had been optimized, producing its own electricity with the family selling surplus power back to Nova Scotia Energy. What's more, the brother produced the grain for the chicken feed at a farm across the road. So it was quite the complementary farming operation.
I would call that the model egg farm for the future. Is there any part of your association dedicated to succession and young egg farmers? Is that something you work on or do you leave that in the hands of the market and families? Do you have a section that works to promote the transfer of farms? I know that yours is a third- or fourth-generation farm, but does your association do any work to ensure that farms are passed on to a member of the same family?
[English]
Mr. MacLeod: Thank you for your question. In the last two years on the national level we've introduced a Canadian young farmer program, an egg farmer program. All of the provincial associations partake in that as well. We have a two-year program that has four segments per year. Young egg farmers from across Canada get together in the different regions. We offer them advice and knowledge on how the egg supply management system works and the advantages it offers to them. On a national level we sponsor one individual from each province. In most cases at the provincial level they have taken the opportunity and sponsored an additional individual. We have a total of 22 young farmers each year that participate in this program. It's a two-year program. They find great value in it. They've all given us comments that they find great value in it. They encourage the other generation or their brothers and sisters behind them to participate in the program as well.
The Chair: Thank you very much, Mr. MacLeod. I hope this program is continued for a long time.
Senator Mercer: I was sitting here thinking about the problems we were talking about when we talk about the opportunity to increase production. It's predicted that by the year 2050 there will be 9 billion people in this world. There's some irony that we're sitting here talking about not being able to build a plant that could process tens of thousands of hogs over a year that would feed tens of thousands of people. Someplace else in the world there's somebody sitting down, ripping their hair out and saying "How are we going to feed 9 billion people in 2050?'' There's some irony in all of that. It strikes me as kind of funny.
I do want to go back to Mr. MacLeod because he raised an issue that struck both Kevin and me. Why does the spent fowl that you send off to the mink rancher not have any value to the producer?
Mr. MacLeod: Because by the time they transport the bird and process it into meat feed, and if they had to pay us for it, it would make it so it wasn't commercially viable for them to do that.
The Chair: It's a convenient way of getting rid of your spent fowl.
Mr. MacLeod: Yes. Our only other alternative would be to ship it either to the northern part of New Brunswick or into Ontario because they are the only other two facilities. In most cases if we tried to do that after they processed the birds they would send us a bill for the cost of the process.
April Sexsmith, General Manager, Egg Farmers of New Brunswick: It has also changed a lot in 20 years. I started with this industry 25 years ago and people would call us asking when the next flock was going out because they had slaughter space and needed to keep the slaughter chains full. As meat chicken has grown we've lost the space. It has really devalued our meat product.
Senator Mercer: But it's a convenient, efficient way of disposing of spent fowl.
Mr. MacLeod: That's correct. Our only other alternative is compost.
Senator Mercer: That's interesting.
You made reference to the FCC but it is interesting nobody has mentioned ACOA in the last couple of days we have been here. For the first time in a long time ACOA does not have a separate minister but it's under Minister Bains who I happen to know. He's a very good guy. I can't remember the last time the federal agricultural minister was an Atlantic Canadian. He's also a former farmer so he's got some understanding of the industry.
We should capitalize on Minister MacAulay's presence there and try to figure out if there's a way of doing it. ACOA has a mixed reputation. I'm going to be as generous as I can. This may be a source of the funding not in the sense of a grant but in the sense of a loan to someone. The issue is finding that brave soul or that brave group who wants to venture into building a slaughterhouse and sees the profitability. With the two free trade agreements we have before us it seems to me we must be able to make a better economic case for doing it so that we can get back in the business, back to taking care of our domestic supply, and back into the export market. There is a market out there for good quality hogs and we only produce good quality.
You talked about the problem in a plant out west that had some issues. We have no other place to produce things. As I brought up yesterday, we in this country don't talk about food safety and the security of being able to feed ourselves. We think we can feed ourselves but we know currently we can't feed ourselves with fresh vegetables, et cetera, 12 months a year because of our environment. There is a possibility we could if we got creative and when there are 9 billion people in this world we may have to get creative. You can't prepare for 2050 in 2049. You have to start planning for it in 2016.
I have so many questions here I don't know which one to start with. The use of provincial slaughter for hogs is what you're forced to do now because that's all that is available. Have we talked about retraining provincial inspectors to be able to do federal inspection at the same time? If we're not going to be able to find $15 million to build a stand-alone slaughterhouse which will process these tens of thousands of hogs, could we at least look at adapting some of our provincial facilities by retraining provincial inspectors and obviously making some minor adjustments to provincial slaughter facilities? I didn't want to give you an easy question.
Mr. McCallum: This is a softball for me because one of the things I mentioned was our local lamb abattoir that went through the federal meat hygiene project over the last number of years in which they have transitioned from a provincially inspected to a federally inspected abattoir. The issue is not with the inspectors themselves. It's that the federal CFIA meat inspection standards are very prescriptive in that thou shall have a six-inch drain that is 4.2 feet away from the wall and has a slope of 6.3 degree as an example.
Senator Mercer: Of course. Don't we all have one of those?
Mr. McCallum: Yes. It's not necessarily in the inspection process itself but in the physical requirements of the building that the slaughter takes place in. From talking to the folks that went through the federal meat hygiene project at Northumberland they would be very quick to say they would have been better off starting from scratch rather than modifying their existing facility.
We did have another location in Nova Scotia that had started along the road. It was a multi-species plant to begin with. They bowed out very quickly because they realized that it's a lot more difficult to retrofit than it is to rebuild.
Senator Mercer: Maybe the answer is changing the regulations.
Mr. McCallum: From my understanding there are some changes coming to the federal meat inspection regulations in that they're going to be outcome based versus prescription based in that your outflow or how you manage your waste will be more important than how you get it there.
Senator Mercer: I'm sorry I didn't bring this up yesterday with others. I would encourage everybody to make sure to try and engage Minister MacAulay. You are having your annual meeting tomorrow. I don't know who will be coming to your annual meeting but I hope Minister MacAulay was on your invitation list. I think it's very important to engage Minister MacAulay in this issue. We have a minister now who is an Atlantic farmer. He understands the problems of smaller farms, et cetera. I'm not suggesting he's going to be able to solve our problems. He's a good guy. He's not a miracle worker but he can't help us if we're not talking to him and not getting the problem on the table.
The other issue in what we're talking about here is the potential markets and the potential jobs that we're missing in Atlantic Canada. We can produce a lot of hogs in Atlantic Canada but there is no sense in producing hogs if we're not going to have a method of slaughtering and exporting them. Exporting is the easy part. We have two ports. We have Halifax and that other little port down the street here in New Brunswick but Halifax is the place we want to go. I get paid to say that by the way. It says on my business card that I am a senator of Nova Scotia.
It is important that we try to maximize the benefit involved. This is not a problem we're solving tomorrow. It's a long-range problem which requires a long-range plan.
Mr. McCallum: A lot of the things that some of the export markets, especially when we're talking European Union and some of the Caribbean countries, are looking for are already incorporated in our production practices. We're talking antibiotic-free and hormone-free in a lot of cases. That's what we do. We do not have 60,000 market hog units like in Quebec and in the West. We are fairly specialized in our production practices now and that is an opportunity.
As far as geography goes we're the closest port to the European market. We're on all the major shipping routes to Central America and to the U.S. East Coast. We're the last port of call before we hit Europe. Those are some huge opportunities for us. We only need to reach a few of those small specialty markets that Scott mentioned either on the eastern seaboard of the U.S. or in the European Union to make a big impact on our rural communities in the Maritimes.
Senator Mercer: I remind you that Port of Halifax is also closer.
Mr. McCallum: Ice-free.
Senator Mercer: Well that's true but it is also closer to the Indian and the South China market. Now that I have solved all the problems by passing them off to you, thank you, gentlemen. I really do appreciate it.
Mr. McCallum: Thank you very much, Senator Mercer.
The Chair: Mr. Dingwell, do you have something to say?
Mr. Dingwell: To follow up on your question about ACOA our history has told us that ACOA does not get involved at the primary production level. Certainly they would be an excellent partner in the further processing, in the plant, in the export and in the marketing. It may also be a challenge for the new minister as he looks at regional economic development to look again at primary agriculture because of the critical access.
You were quite correct. When I mentioned FCC I should have talked about ACOA as well because there is a challenge that could be brought forward that development in support of the primary production is only to further the export and the development of the higher value product.
Senator Mercer: You're not selling for primary production.
Mr. Dingwell: Exactly.
Senator Mercer: You selling for export.
Mr. Dingwell: We're exporting a high value product.
The Chair: Thank you very much, Ms. Sexsmith, Mr. MacLeod, Mr. McCallum, Mr. Dingwell and Mr. Seeber for your very interesting presentations. The Agriculture and Forestry Committee was pleased to come to the Maritimes to see you. We will be tabling our final report in June. Good luck in the future with your projects.
(The committee adjourned.)