Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 29 - Evidence - Meeting of May 11, 2017
OTTAWA, Thursday, May 11, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Good morning, everybody. The Standing Senate Committee on Agriculture and Forestry is continuing its study of the potential impacts of the effects of climate change on the agriculture, agri-food and forestry sector.
Today, we will hear from the Turkey Farmers of Canada, Mr. Mark Davies, Chair; and Mr. Phil Boyd, Executive Director. From the Chicken Farmers of Canada, we will hear from Mr. Mike Dungate, Executive Director; and Ms. Jessica Heyerhoff, Communication and Policy Coordinator.
Before continuing, I will ask senators to introduce themselves. My name is Ghislain Maltais, chair of this committee.
Senator Tardif: Claudette Tardif from Alberta.
Senator Gagné: Raymonde Gagné from Manitoba.
Senator Woo: Good morning. Yuen Pau Woo, British Columbia.
Senator Bernard: Welcome. Wanda Thomas Bernard, Nova Scotia.
[Translation]
Senator Petitclerc: Hello. Chantal Petitclerc from Quebec.
[English]
Senator Doyle: Norman Doyle, Newfoundland.
[Translation]
Senator Pratte: André Pratte from Quebec.
[English]
Senator Beyak: Lynn Beyak, Ontario.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Thank you very much.
Mr. Davies, go ahead with your presentation, please.
Mark Davies, Chair, Turkey Farmers of Canada: Good morning, everyone. I'm the Chair of Turkey Farmers of Canada, and I'm here with Phil Boyd. It's always a pleasure to have the chance to come here and give our views on the subject of the day. Today I'm here on behalf of our national organization, Turkey Farmers of Canada, but I'm also speaking as an active farmer. I'm a second-generation producer with a farm in Nova Scotia, which was actually established in 1974, where I have raised turkeys for the last 25 years.
TFC is a national organization representing Canada's turkey farmers for over 40 years, and we've encouraged cooperation throughout our sector, promoted the consumption of turkey as well as overseeing our supply-managed system. TFC represents 535 farmers in eight provinces, from Nova Scotia to British Columbia. These farmers have generated farm cash receipts of just about $400 million a year. Across the chain, our sector generates 14,000 jobs and adds economic activity in the amount of $3.3 billion per year. Through our supply-managed system, we provide Canadians with 95 per cent of their demand for turkey meat and related products. The sector imports $37 million in turkey meat, and exports are valued at just over $32 million per year.
We care for our birds, our environment and our fellow Canadians. Food safety, security, animal welfare and environmental protection are at the core of what we do and what we stand for. We are farm families first, and that means we feed our fellow Canadians, and we care for our birds and environments above all else. Some would say it's part of our DNA.
In Canada, most turkeys are raised in specifically designed barns that provide protection from predators, disease and bad weather. As per our Flock Care Program, barns are monitored for temperature and climate, light, space and access to food and water.
Farmers must follow the national standards outlined in the new code established under the National Farm Animal Care Council's code of practice for the care and handling of hatching eggs, breeders, chickens and turkeys. This promotes sound management and welfare practices that promote bird health and well-being.
Our farmers also implement the On-Farm Food Safety Program, which outlines extensive measures, including biosecurity, aimed at keeping birds healthy. This is mandatory in all provinces, in conjunction with our Flock Care Program, so we think that's an important step in today's climate.
Adherence to these programs ensures that Canadian turkey farmers continue to raise safe, high-quality turkey, while ensuring the highest regard for bird health as well as welfare.
We also have an extensive consumer engagement program to ensure Canadians understand the value proposition of Canadian turkey from the health benefits, taste, quality and how their birds are raised. Canadians want Canadian- produced food, and they support and trust farmers. Part of that trust is due to our ongoing commitment to the environment. Whether it's how we raise our birds, how we grow our farms, how we protect the environment or how we engage Canadians as farmers, we do not take our responsibilities lightly.
As you continue to examine climate change, I'm pleased to share a perspective on behalf of our sector. This is also fundamental to building the Canadian brand, which was addressed in your just-released report under recommendation five, the importance of the "Canada Brand'' domestically and how it cannot be underestimated.
In 2014, we reached out to our farmers to gain further insight on the current state of their operations, as well as the actions that our farmers are taking. In 2017, we will once again undertake that initiative.
When it comes to environmental considerations, our farmers indicated that weather, heating costs, controlling the barn environment and the costs of upgrades were some of the greatest challenges facing those who raise their birds.
Energy efficiency is a priority for our farmers. There are significant costs facing farmers when it comes to fuel, transportation, heating and electricity costs for the barns. Eighty-four per cent of our respondents had either made changes or were planning to make changes to address environmental issues, including improving electricity usage, improving heating efficiency, examining alternative energy sources and the like.
Another key improvement area has been on increasing the efficiency of production. It takes 30 per cent less feed today to produce the same amount of turkey meat compared to 30 years ago. This is a direct result of improvements in genetics, enhanced feeding programs and formulations, as well as improved management practices on-farm. These improvements offer benefits across the value chain. This efficiency allows the production of feed that relies on less diesel fuel for production, less fertilizers to grow crops, fewer trucks on the road to ship, and the list of benefits goes on and on that are related to these initiatives.
We are currently modelling to understand how the carbon pricing and related taxation models impact our farmers. This impact would vary based on individual farm usages, their source of electricity, as well as provincial policies, which we think play a large part in that.
The highest cost facing our farmers in producing turkeys is the feed, and it currently accounts for approximately 50 per cent of our production costs. As we have heard, carbon pricing is expected to increase the cost of transportation, fuel and fertilizer. With the implementation of carbon pricing, it is anticipated that we may see feed costs rise, and that may have a direct impact on our operations.
We agree that action for meeting the greenhouse gas targets requires joint effort from across all levels of government. By working together with industry, government can help the sector with continual environmental improvements.
As the Calgary Statement — Towards the Next Policy Framework indicates, collaborative federal, provincial and territorial action related to environmental sustainability, and climate change adaptation and mitigation "improves the sector's ability to manage risks, enhances productivity and contributes to economic growth.''
One of the key areas where we can work together is through the implementation of poultry-specific research. Research is a vital factor for our sector in terms of productivity, efficiency, competitiveness and the environment. We support research initiatives completed in cooperation with governments to understand how to improve the overall environmental priorities, including energy efficiency and, of course, emission reductions. The report on market access speaks to this in recommendation nine with respect to Agriculture and Agri-Food Canada making every effort to offer capacity, infrastructure, personnel and funding. That's something worth noting.
Our farmers have indicated that research examining barn emissions, improving efficiency and feed conversions were necessary. We need to understand, from a poultry producer perspective, what potential emission-reduction tactics can be undertaken, what technologies exist for further improvements on the farm and what actions poultry producers can take to further minimize their environmental footprint — all valid questions. Research would help us answer these and many other questions.
Although we have much in common, different sectors have different challenges, and there are different potential options for improvement. There is no one-size-fits-all model to address this. Research and further support is required to help different segments of agriculture address the potential impacts of climate change and to help clearly identify how a reduction in greenhouse gas emissions can be achieved.
Our farmers and our agricultural community are and have always been proud stewards of our environment. Through continual action and improvement, we have helped to become more efficient, productive and sustainable. It is who we are, and that commitment will continue to grow as we look to feed a growing population looking for nutritious, safe and affordable Canadian food.
Once again, I'd like to thank you for your time and, whatever questions you may have, we'll certainly answer.
The Chair: Thank you very much, Mr. Davies.
Now, from the Chicken Farmers of Canada, Mr. Dungate.
Mike Dungate, Executive Director, Chicken Farmers of Canada: Thank you very much, Mr. Chair. Welcome to the new senators to the committee.
I'd like to start off and congratulate you on your report on market access priorities. I particularly like recommendation four, to encourage DNA testing. We've worked hard to get the government to use that DNA testing to make sure there are no illegal imports coming in, so I appreciate that very much.
For today's presentation, I would like my colleague Jessica Heyerhoff, who is our expert in terms of sustainability issues and environment to provide our views to you in terms of this committee hearing.
Jessica Heyerhoff, Communication and Policy Coordinator, Chicken Farmers of Canada: Thank you, Mike.
Chicken Farmers of Canada is a national organization that represents Canada's 2,800 chicken farmers. The chicken industry in Canada is a growth and value-addition success story. In addition to this story, like all Canadian farmers, chicken farmers are great stewards of our land, implementing on-farm practices every day that are not only safe for chickens and consumers but safe for our environment and natural resources as well.
Today, I'd like to talk about the improvements that Canadian chicken farmers are making to their operations, their barns and genetics to improve efficiency and enhance the environment. I would also like to share some views on carbon pricing.
First and foremost, our farmers have made substantial changes to their operations to improve their environmental stewardship and sustainability. No one depends more on the land, soil and water than our farmers. Through the implementation of sustainable, good production practices, chicken farmers are taking steps to ensure that our industry is environmentally sustainable. For example, approximately 60 per cent of our farmers have implemented environmental farm plans, and these have included interventions to reduce phosphorus in the manure and installation of covered manure storage, for example, with impermeable liners to prevent groundwater contamination. The proper use and storage of chicken manure improves our land and protects our water.
Second, we know through our most recent farmer survey in 2014 that 74 per cent of Canadian chicken farmers have made, or are planning to make, improvements to their barns regarding environmental issues. For example, these farmers already have planned, or are planning, to improve electricity usage, improve heating efficiency or improve ventilation. The innovative practices that farmers have adopted to reduce environmental impacts of their barns include computer-controlled heating and ventilation systems, renewable geothermal and biomass heating, high-efficiency lighting, insulated and heated floors and solar walls to preheat the incoming air. As the industry has grown 12 per cent in the past four years, there has been significant construction of new efficient barns and upgrading of older barns.
Third, due to improvements in nutrition and genetics, today's breeds are very efficient at converting feed to meat. Over the past 25 years, feed conversion has improved by about more than 15 per cent. Considering that chicken farmers buy approximately 2.7 million tonnes of feed a year, this efficiency represents over 400,000 tonnes of feed that was saved, along with the emissions and environmental impacts that would have otherwise been created.
We know from Canadian research that per unit of protein, the Canadian chicken industry has the lowest greenhouse gas emission intensity, at 10.6 kilos of CO2 equivalent, among all the livestock commodities.
In addition to these innovations on individual farms, Chicken Farmers of Canada is now conducting an environmental lifecycle assessment for the entire Canadian chicken industry. This is an internationally recognized approach to assess the impacts associated with all the stages of production, and it will help our industry determine which aspects of production are efficient and where improvements can be made to reduce environmental impacts. Inputs and resource usage will be evaluated at all stages of the supply chain, from the broiler hatching egg farms to hatcheries, feed, chicken farms and transport, right through to processing.
Carbon pricing presents a significant cost to Canadian chicken farmers. For example, in Alberta alone, the estimated impact of the carbon price on the cost of natural gas for chicken farms is $1.4 million annually. As our industry is a leader in implementing a mandatory animal care program for all chicken farms, using natural gas, propane or other fuels is essential and critical for maintaining proper temperature and humidity levels in the barn and for maintaining optimum bird comfort. We need to ensure that provincial and federal regulations do not unfairly burden farmers who are committed to doing the right thing when it comes to animal care and the environment.
The chicken industry also has two major concerns when it comes to carbon pricing, and those are cost and competitiveness.
The chicken industry cannot pass on the costs of the carbon price. Due to the nature of national purchasing contracts, costs unique to a province cannot be added to the price paid by our customers, and it is therefore critical that if a carbon price is implemented, it's done so at a federal level. A provincial patchwork of programs will create inequity between our farmers because we have production in all provinces.
Farmers will also bear the rising costs of feed as a result of the carbon pricing's impact on crop prices. Therefore, the impact of a carbon price is borne by our family farms.
Chicken farmers must also remain competitive, and a carbon price needs to ensure consistency across all agricultural commodities.
In closing, Canada's chicken farmers are doing the right thing when it comes to raising high-quality, safe chicken with care and in an environmentally sustainable way. In determining how provinces will roll out carbon pricing, it is our recommendation that a strong national policy is adhered to in order to address competitiveness issues that have arisen and will continue to arise. We look forward to continuing to work with the Canadian government in ensuring the chicken industry in Canada is capable of feeding future generations while still being respectful of our environment and natural resources.
Thanks very much, and we're happy to take any questions you may have.
Senator Tardif: Thank you for being here this morning and for a very informative presentation.
It is my understanding from both of your presentations that energy efficiency is a key priority for you and is also seen as a means of reducing your costs and reducing the impact of environmental changes. I understand from the chicken farmers that you are now looking at lifecycle assessments. What impact do you think this will have on how you go forward, and are the turkey farmers looking at that approach?
Ms. Heyerhoff: Right now, we are in the beginning stages of conducting an environmental assessment, as well as a social lifecycle assessment. As I mentioned, it's an entire supply chain approach. It allows us to look at where efficiencies are in our supply chain, whether that's at the farm, at transport or at processing, and where impacts are coming from and how we can address those. It will give our industry a very good benchmark overall of where we are today and how we can make improvements going forward with education and different resources that can be developed out of the results that we'll gain from that study.
Senator Tardif: Are the turkey farmers looking at doing the same thing?
Phil Boyd, Executive Director, Turkey Farmers of Canada: We're in the processing of evaluating a couple of different proposals for a lifecycle assessment. It's our view that that becomes important information for our farmers in terms of helping everybody understand the implications that they may be confronted with and steps they can take to address those particular implications.
As our chairman said, we have an efficient bird in terms of feed conversion and feed use, but we think the lifecycle assessment will be valuable in the way forward. It's also going to be important from a turkey grower perspective.
We have a lot of shared producers who also raise other poultry species, so it becomes a good, congruent step and study for us to undertake, along with our colleagues in the other sectors.
Senator Tardif: Thank you. You've mentioned that poultry production has lower greenhouse gas emissions than the production of other agricultural products, such as beef or pork. Is that so, and if so, why is that?
Mr. Dungate: One of the things is in the conversion of feed to meat. We've probably moved that feed efficiency down from 2.1 kilograms of feed to get one kilogram of meat to about 1.7 or maybe even a bit lower. That is putting enzymes in the feed. There are two benefits here. One, you convert better to meat, and second, you have less manure because they're taking as much of the feed, putting it in, using it and absorbing it in the body, and it's not going through. That's where we're most efficient in terms of this.
Mr. Davies: I would mirror that. Even though it's not a one-size-fits-all, we share a lot of commonalities when it comes to barn structure and ventilation systems, as well as when it comes to feed conversion.
On my own farm, I've seen huge gains in the last three to five years from 2.2, 2.5, to 1.8, 1.85 and sometimes a little lower, as Mike indicated. There have been phenomenal gains, for all the reasons he's outlined.
Senator Tardif: So I understand correctly: The ability to better convert the feed to meat —
Mr. Davies: Yes.
Senator Tardif: — or to protein is because you're changing the types of fertilizers?
Mr. Davies: The feed stuffs and the ingredients that go into the feed.
Mr. Dungate: It's also the bird genetics. It's classical breeding. You keep on breeding for characteristics. Just like you would a purebred dog or whatever, you keep on breeding in that strain, and you have ones that convert meat efficiently in terms of that.It's both the feed and the genetics together.
Senator Tardif: How does climate change affect your industries?
Mr. Davies: In the costing end or overall?
Senator Tardif: Let's say, for example, in the care of the animals. Would there be an impact?
Mr. Davies: Because of the environment that most birds are housed in, part of the issue is to control that: Provide the best environment you can for your bird at the most efficient cost.
I'll be frank. When we started this process for this presentation, this is just inherent. This is something we've always done; this is not new to us at all. It's more in the public eye now, as it should be. It's become more of an issue as it touches people's lives. But as far as poultry producers go, this has been part of the game for as long as I've been involved. There have been gains made every year in genetics, breeding, feed stuffs, efficiency of equipment, barn structure — all the things we've listed. It's just something we do.
When we go out with these studies, it's really gauging what improvements we've made and how we can continue that. But it's not something new to any of our industries where it's like, "Boy, we had better do something now''; it's just been there.
So we won't see as much of a drastic change as we improve. It's gradual. It's what we do. I always say it's part of our DNA. It's just second nature.
Mr. Dungate: It can go two ways. One, we have to have climate-controlled barns in Canada where they may not have to in other parts of the world. We have to go through winter and high heat in summer. It depends on those weather variables. If we have milder winters, we would have less heating costs and use less energy in terms of heating the barns. If it became warmer, because birds are susceptible to humidity, you might have to spend more money from that side.
The other impact is on grains. Our highest input cost is feed. There can be a beneficial impact on growing grains in Canada due to climate change based on a northern climate. If it goes the other way and we don't have as good access, it can be detrimental from an economic perspective.
Mr. Boyd: One piece Mr. Dungate mentioned was the difference between raising poultry in Canada and other parts of the world. One point is important, and it underscores the point Jessica made in terms of a national policy: Three years ago, Mr. Davies had 16 feet of snow in his farmyard. They didn't have the same 16 feet of snow in the Fraser Valley in B.C. You have dramatically different conditions across the country, almost by province, in a sense. Our growers need to be nimble in terms of equipment, barn and what ventilation system will work best in their particular area on a year-round basis. That underscores the point Jessica made earlier about the idea that a national policy will perhaps make more sense than the piecemeal work across provinces.
Senator Doyle: Animal health is obviously a very important issue when raising chickens, turkeys or any animal. What's the investment today, say, from the average producer in maintaining animal health in your industry? What's involved in it? Could you expand on what you mean by animal health and how you maintain it?
Mr. Davies: Again, as we go down the road of efficiencies — some of the things we've just mentioned here — there's less and less reliance on sources other than good management, good-quality ingredients in your feed, and the breeding and genetics. It's more preventative than it ever was.
We have determination that the companies that supply us with our chicks or poults have made great advances in curtailing some of the issues that would be inherent in the growing of the bird. Again, through the genetic cycle, there's very little reliance on chemicals, other than maintaining the cleanliness of your barn between flocks. You don't have a big reliance on medications. We're all well into the antibiotic elimination game at this point in time. It really comes down to good management practices.
Costing has dropped dramatically, if that's really what you're getting at. That has not become as big a part of maintaining the bird. Management has become paramount.
Senator Doyle: I'm just looking at the briefing notes that say agriculture is responsible for about 10 per cent of Canadian greenhouse gas emissions but for 27 per cent of methane emissions. Are organic farming practices less likely to cause emissions? Do these farms, for instance, use animal manure, or do they make more use of vegetative kinds of waste? Is that something that concerns the industry — organic farming versus conventional farming?
Mr. Dungate: Our members would include organic farmers, free-range farmers and free roam in a barn.
Senator Doyle: What are the comparisons that you make between organic farming and the conventional way of raising a turkey? Do you do it in two different ways?
Mr. Dungate: They would have to meet certification. An organic farmer would have to meet a standard; I'm not sure who sets it, but it's not our standard in terms of organic. It's a national standard in terms of that and in terms of what feed they would suggest. They have to be free range and have access to outdoors. There are different requirements from that perspective. That would be it.
In terms of the methane part, I think the only aspect for us would come from manure, and that's why Jessica was talking about proper manure storage. We have a drier manure in poultry production than you would have in other animal productions. You want to make sure there's no runoff, and you need to spread it at an appropriate time and have it covered so you're not releasing methane gases.
Senator Doyle: I'm wondering about the carbon footprint from each way of raising animals. Is there any research to determine what the real difference is with respect to the carbon footprint for conventional farming versus organic farming in your industry?
Ms. Heyerhoff: Today, I think some has been some done. I'm not too familiar with the research specifically looking at the difference between organic and conventional in terms of greenhouse gas emissions or efficiency.
That will be something we might be able to tease out, depending on sample sizes we're able to achieve from our lifecycle assessment. As you know, organic is a much smaller percentage of our production, but if we have a decent enough sample that we can make comparisons, that's something we will be able to look at through the lifecycle assessment.
However, as Mike indicated, there are a number of differences in the production and requirements of an organic farm versus a conventional farm. You can foresee that potentially those would have impacts on their efficiencies overall.
Senator Doyle: If my questions seem a little bit naive, it is my first meeting.
In your business, what is the economic impact of carbon pricing on Canadian producers?
Mr. Dungate: We need a consistent application across the country. B.C. has put carbon pricing in place, and they said they will exempt farmers. They exempt propane used for heating barns. In Alberta, they have exempted farm machinery from that, but not the propane and gas used to heat barns. Now you have an inconsistency between crops that you are providing the exemption on and chicken farming or livestock operations overall in Alberta in terms of it, but then you have a difference between B.C. and Alberta. You are already going to have a difference because of climate. You will use more in Alberta than you might in B.C. in terms of that. What we need is consistency. That is the most important aspect.
If there is additional cost, we think it is difficult for us to pass that on. It will be incorporated somehow into how we do things. But we need it from a competitively neutral perspective.
Mr. Davies: As another example from my own farm, it has been indicated — and I have not heard anything to the contrary — that in Nova Scotia, most likely egg and forestry will be eliminated from the carbon tax pricing, yet I get my propane from out west, which is Mike's point. I am not sure what the implication will be, as a real-world example. Even though I am in the province of Nova Scotia, the heat cost for the carbon pricing would be my number one cost. Even though I am three quarters of a country away, it could still impact me.
Mr. Boyd: As Mark mentioned in his submission, we are in the process of trying to do some modelling about the various policies across the provinces with the overlay of the announcement of the Prime Minister and trying to understand what those differences would be across the provinces.When we are done that particular work and are satisfied that it is accurate, we will be happy to provide some results to Mr. Pittman, if that would help the committee.
Senator Doyle: Thank you.
[Translation]
The Chair: Before giving the floor to Senator Eggleton, I want to point out that we have just 30 minutes left. Nine senators have asked to speak, so I would ask the senators to keep their questions brief and the witnesses to be succinct and to the point in their answers.
[English]
Senator Ogilvie: First, on your comments with regard to the issue of applying carbon tax, I sympathize with anyone trying to do business across this country in any sector. Studies indicate it is far more difficult to trade within Canada than with any other country in the world. We have to finally grow up. Either we have a country or we have a collection of 10 different countries. We have to get beyond that.
Mr. Davies, in your numbers on the value of the turkey industry, you indicate that cash receipts are approximately $400 million, and you indicate that that covers about 95 per cent of Canadians' needs. In the next paragraph, you indicate the sector imports $37 million. I realize the numbers are close. That is about 9 per cent of $400 million. I am trying to understand what the numbers mean. Could you clarify in terms of the total value of the Canadian turkey market in Canada and the role of the $37 million in imports?
Mr. Davies: I will let Mr. Boyd do that. He will have the figures more exact than I do.
Mr. Boyd: The $400 million is farm cash receipts. That's paid to Canadian farmers for their output.The $37 million is the approximate value of the imported product coming into the country.
Senator Ogilvie: Right. I have that.
Mr. Boyd: Canadian farmers produce 95 per cent of Canadian market requirements. The other 5 per cent, the $37 million, are under the tariff rate quota mechanism for import access under the rules of the NAFTA.
The total value generated is $3.3 billion per year. That includes the farm cash receipts and all the economic activity, processing, all the labour and value-added that finally reaches the consumer, whether through food service or retail. That would be the total benefit to the Canadian economy from Canadian turkey production.
Senator Ogilvie: I wanted to compare apples to oranges. It is the way in which it goes on the balance sheet in terms of imports.
I think you answered my second question. The $37 million constitutes the maximum allowed under our various trade agreements for entering Canada.
Mr. Boyd: Yes. The $37 million would include that. There are imports not subject to the import control list. They are value-added products in certain chapters of the harmonized system, but the bulk of it would be that 5 per cent minimum access by trade treaty.
Senator Pratte: I am relatively new here. If there is a carbon tax or carbon pricing system, you have explained your reasoning for having a national or federal one by the existence of what you call "national purchasing contracts.'' Would you explain to me what this is?
Mr. Dungate: If you eat at McDonald's, all your chicken came through a plant in London, Ontario. It will be different from a fresh market. If you are in Ottawa and you are shopping at Costco, Costco is supplied from Exceldor in Lévis, Quebec. There are no barriers to moving chicken across the country. It goes wherever the market is. Therefore, depending on the markets, if you are hitting the price in one place of production, you are affecting the price of chicken across the country.
Senator Pratte: The price of chicken is set at the national level, is that it?
Mr. Dungate: The price of chicken is set provincially, but it is based on input costs. It is higher in Atlantic Canada because feed is the biggest cost part, and feed is a lot higher because it is not in abundance in Atlantic Canada. They price off each other.
Senator Pratte: If I understand correctly, you would not object to a carbon pricing system if it was at the national level. Would there not be a risk, though, for your industry compared to other products, like beef or whatever, against which you are competing as an industry; right?
Mr. Dungate: Right.
Senator Pratte: Your prices would increase. Obviously theirs could also increase, but wouldn't there be a risk there?
Mr. Dungate: This is why we want to measure it on what your impact on climate change is. We have one of the lowest impacts on climate change, even though we are using propane and heating in barns. Because of their production, others may not be purchasing fuels, but they are creating CO2 by their production in terms of that.
That was our point about competitiveness between commodities. The pricing has to be such that you are trying to achieve an end result as opposed to what input you are using. Don't tax the inputs; tax the impact. If we have a low impact, we would suggest that carbon pricing, to us, should be lower per se because that is our impact. You are trying to get an environmental benefit as opposed to whether you are purchasing fuel. It's complex, I get it, but it is important.
Senator Pratte: It is going against the current policy of the government, which has decided that there would not be a national carbon pricing system; the systems would be provincial.
Mr. Dungate: If you could get every province to agree to do it provincially but do it the same, fine.
[Translation]
Senator Dagenais: My question is for Ms. Heyerhoff and pertains to the improvement of electrical and heating facilities. There is a special rate for aluminum plants. Are farmers who improve their energy efficiency eligible for provincial assistance or special rates from electricity suppliers?
[English]
Ms. Heyerhoff: I'm not sure if that is the case. I don't know how it works at the provincial level for electricity benefits or rebates. That is a bit more detailed than I know at the individual farm level for that.
[Translation]
Senator Dagenais: Governments are implementing carbon taxes, but aluminum plants in Quebec get special rates. I assume that poultry farmers should also get those rates, but you are saying you are not sure. Thank you, Ms. Heyerhoff.
[English]
Senator Woo: Thank you for your testimony. I want to continue the questioning on pricing and national purchasing cost contracts. You say that the industry cannot pass on the costs of the carbon price, and then I think you made the connection to the nature of national purchasing contracts.I still don't understand the connection. Is it that the industry cannot pass on the cost of the carbon price because of competitiveness measures issues, or is it because of contractual issues?
Mr. Dungate: I think it is because we are in a competitive environment. It depends on what happens across other commodities. For us, in a meat protein environment, if every meat protein was hit similarly, then there is the potential for some of those costs to pass on.
I will say that, for example, putting in our on-farm food safety and animal care programs costs us $3.5 million a year just to audit those farms and manage the system. We don't pass that on. We have to take it up. Our farmers would say we are providing a better benefit and we should be able to get more. It's becoming the price of entry. If it becomes the norm, then it is what the consumer is willing to pay at the end for something that isn't differentiated, and therefore your ability for everyone on the chain to pass it on is limited. It isn't a contract, per se.
Senator Woo: One would expect that a national carbon pricing policy would apply to all your competitors in the other protein-based meats. Would there not be a possibility that all of them would have to face the same pressures and therefore that would allow for you to pass on some of these cost increases?
Mr. Dungate: If I look at how that has gone and we are all doing on-farm food safety, you may be able to pass on part of the cost but you will never recoup 100 per cent of those costs. It will add to the consumer at a certain bit, but only each level of the value chain will be able to pass on part.
Senator Woo: Okay. So it has to do, really, with competitiveness vis-à-vis other protein-based meats rather than national purchasing contracts as such.
Mr. Dungate: Right, but that was more in terms of if it was only applied in one province. Because of national contracts and all of that. You're not going to be able to pass that on because they will just switch that national contract to another province and another supplier.
Senator Woo: Isn't that the nature of business? Don't you already compete amongst yourselves?
Mr. Dungate: We absolutely do, but what we are saying is if you put in a carbon tax and it only applies in one province, then you are disadvantaging that province. Now, because you are pricing carbon, even if it was across all commodities, you will affect agriculture in that province and, perhaps, force agriculture to relocate to someplace else.
Senator Woo: You are trying to create some level playing field among your membership across the country.
Mr. Dungate: Right.
Senator Woo: I get it.
What is the share of energy inputs in your direct costs? Not indirect costs like transportation and shipping, feed and so on, but the direct costs of energy inputs into the farming and raising of chickens and turkeys?
Mr. Dungate: I don't know it exactly. We can find out something that approximates that and provide it to the committee.
Senator Woo: That would be very helpful.
Mr. Dungate: Feed and purchasing the chick account for about 65 to 70 per cent of a farmer's direct input costs. Energy is certainly lower; it is not one of the top two.
Mr. Davies: If I could add, as Mr. Boyd indicated earlier, it can vary greatly across the country, from B.C. to Alberta or Nova Scotia, for example, where we tend to like the snow a lot. It's anywhere from 10 to 20 per cent, somewhere in there, depending on your fuel source and how you efficient you are. Again, we will provide that same information as we go through it.
I want to clarify that, as I said, this is second nature to us. We have been going through this. However, it doesn't mean we have all the numbers. This is what we're gathering now, but we have been doing it. It is second nature to us, but understanding what the impact is and some of the exacting costs are what we have to get to the root of now.
Senator Oh: Gentlemen, the agri-greenhouse gas program provides $27 million to help create technology practices and processes to help the agriculture sector on climate change. Can your production sector access this funding? Do you find it is helpful for the industry with climate change?
Mr. Davies: I see no reason why it couldn't, because of all the new technology out there, solar panels, for example. You will find people now starting with that type of initiative on their roofs for barns. They have the spaces there. There are farmers looking at wind power to offset their costs and purchasing these energy-efficient ventilation and computerized systems for heating and cooling. Programs like that are more than welcome.
Again, in my instance, I am a small farm. I have done a lot of this on my own over the last eight to ten years with new lighting and heating, so I am already there. The opportunities are there for the new and upcoming farmers and those that are at the stage to make that transition. I can see it as being something that they can take advantage of.
Senator Oh: But do you find this program effective?
Mr. Davies: I'm not sure of the exact program, so I don't want to comment on that, but they are always looking for what is available. I don't know if anyone else is familiar with the program specifically, though.
Mr. Dungate: The challenge for us, Senator Oh, is that we look at trying broad policies across, so this would apply to an individual farmer applying to a program, and we don't get involved in that so I am not sure. Once again, I can ask some of your provincial organizations if they are more aware of whether people have accessed it. I suspect if it comes under Agriculture and Agri-Food Canada, they should have an understanding of what types of farmers have applied for the program, as well.
Senator Oh: Maybe for marketing, you might want to label your chicken "climate change chicken.'' That might help. They already have organic chicken.
Mr. Dungate: Got it.
Senator Gagné: The industry has made tremendous adjustments to meet the demand for relatively low and safe meat, but there have also been structural changes to poultry and turkey production. The sector has moved to industrial farming. I'd say you are much more land independent. The large facilities focus on producing animals. You purchase your feed, and you have limited access to land.
My question is about waste management. How do you manage waste so you reduce emissions?
Mr. Davies: Again, the best way is to provide some real-world examples. Although they are not land dependent, they are in an agricultural area 99 per cent of the time so they have access to that land. It is not uncommon for farmers to own large parcels of land just for that, or they do grow crops; they're not just poultry farmers.
In my case, I am just a poultry farmer. I have partnered with a dairy operation that also grows crops, so we have the cycle. It works perfectly for both of us. And we have been doing that for 20 years. Again, that is just what we do.
In my area, it is agricultural intensive. We have varying producers. Some have large crops and poultry production, and it's their model. Within that structure, you are dealing with provincial limitations on what you can apply to the land, but it works quite well. It's not an issue that I'm aware of, so it's a good balance.
Mr. Dungate: I don't believe we are industrial farming. We are farming. Our point would be our barns have changed, but our values haven't, and it's the same people who are running it. We have an industry that is spread across the country. That is a difference from the United States, where in the chicken industry and in many countries in the chicken industry, it's the processor that establishes a plant and then builds farms and contracts farms close by that create a concentrated feeding system. Now you have a concentration of manure and having to deal with that.
We are spread across the whole country. We have a large land mass here. In terms of concentration, we've gone from 2,200 farmers in 1985 to 2,800 farmers now. We're not shrinking in terms of size. We are expanding the number of farms and causing those farms to grow.
Only 37 per cent of our farmers are chicken only. They are in other agriculture production. Farmers understand diversification, that you can't be in just one commodity. They diversify on their operations to do that, and many of them will grow cash crops. Corn and soybeans, wheat and barley are the biggest input costs. If you can grow them, provide them to a feed mill and they provide you back with feed, now you have a system and now you can use your manure coming back on the fields.
Part of our biggest challenge is expansion and encroachment on agriculture land from cities trying to get out. In Manitoba, Steinbeck right now is trying to expand its size by two thirds the size, which is taking up all the prime farmland. Now you don't have an ability, and as soon as someone moves in close to agriculture land, they don't like you spreading the manure because they don't like the smell. I would say we do have a challenge there from encroachment.
Senator Gagné: That's a question of perception. Thank you for that.
Has climate change affected the genetics of the animal?
Ms. Heyerhoff: That is an interesting question. I don't know that anyone has looked at that or measured that. I am curious about that now. I will definitely go back and look into it a bit more. We have a complicated genetic structure in poultry. We have our chicken barns and broiler breeder barns and going back we have parents and a long genetic line that results in the final bird that we raise, but impacts from climate change I haven't yet come across.
Mr. Davies: That is a very good question. That is something we will be looking into and getting back to you. We have one of the leaders in turkey genetics in Canada. That is an answer they could provide us with and we will get back to you on that.
Mr. Boyd: The process of poultry breeding is time. It takes time to breed for the traits in the birds that are desired. My initial answer would be that as the breeding programs move through time, they will account for a number of factors. The climate change piece is probably somewhat inherent in the breeding programs of the primary breeders globally, not just in Canada.
Senator Bernard: I heard a couple of you mention that feed is more expensive in Atlantic Canada. It seems to me like it doesn't matter where you live, you could be actually getting your chicken from anywhere. If the cost of poultry, chicken and turkey in Atlantic Canada is higher than in other parts of the country, why is that the case?
Mr. Davies: The simple answer is the costs are higher, as they would be in everyday life. A lot of it is because of transportation, because we don't have the buying power with the population. The climate also has an effect. Interestingly enough, our feed in the turkey industry, the grain and input costs, are almost identical with that of British Columbia for the same reasons. It's transportation and access to that grain. That's an interesting dynamic right there.
Yes, it costs a little more, but a lot of it is borne by the industry. We realize that because you're still competing with the national markets. We recognize that our market is Central Canada. You have to adjust your costs and your practices according to that.
One of the things we've done in Atlantic Canada relates to both the chicken and the turkey producers, who share a lot of common production. We own a lot of the input costs through companies we have established as a group. We've built a plant. We're doing what we can. And that would address the earlier comments of Senator Gagné. This is a different model from what we've seen in the past. We're trying to adapt to what the future holds, to the competitive nature, to the added costs in our area. I personally think it's the model for the future that a lot of people should be looking at. The processor and the producer are becoming one and the same.
I want to touch on what Mr. Dungate said. It's producer driven. It's not top down where it's an entity contracting out. In my mind, we are in control of how it's processed. We maintain that quality control and that costing structure.
Mr. Dungate: There is an impact on the feeds on the farmer in Atlantic Canada. Our largest farms are in Atlantic Canada for that reason. Because their margins are lower, they need a slightly bigger farm on average in order to stay in business and do that. There is that impact.
From a cost for chicken in a grocery store, the bulk of the costs that you pay are well past the farm gate. It's the distribution costs. I'm from Vancouver, but any time I go in a grocery store there, the costs are way higher than they are in Ottawa. Why? We have a bigger population base, distribution costs are down, and that is the biggest driver in terms of what it is.
We say where and when you shop is what determines the same price. We've shopped in Ottawa. I will give this to the Rotary Club next week: Maple Leaf prime boneless, skinless chicken breasts from eight different stores from $11.50 per kilogram to $26.43 per kilogram on the same day, the exact same product in eight different stores within Ottawa. Where and when you shop is the key driver.
No matter what you pay, the farmer gets paid $1.56 per kilogram. That live price has come down 7.3 per cent in the last four years. We're becoming more efficient, and we're passing that on, but the bulk of the costs on food are beyond the farm gate.
Senator Bernard: Thank you for highlighting that.
This is directly for you, Mr. Davies. In your report, you talked about the fact that farmers have indicated that more research is needed. Could you tell us a bit more? Are you doing that research? Are you doing it in-house? Are you connected to universities, perhaps, that are doing this research? How are you driving that research arm that you've so clearly indicated is needed?
Mr. Davies: I'll let Mr. Boyd speak to that. He's more directly involved in that, so he would have the details.
Mr. Boyd: TFC has a strong research strategy driven by a research committee. We're a founding member of the Canadian Poultry Research Council, along with our colleagues who are in the room today. That organization has been successful in applying for and receiving cluster funding under the agriculture policy frameworks the last two times and are anticipating being successful in the new one that's coming.With the focus on climate and all of those kinds of related issues in the next agriculture policy framework, through the CPRC, we'll be engaging in that.
Second, we connect with the universities to varying degrees. Bad pun, I'm sorry. It depends on what the issues of the day are. Regarding the lifecycle assessment that we're contemplating, we're in touch with the FC chair of sustainability at UBC, and we anticipate we'll be able to work with that team on our lifecycle assessment.
The piece that's important from a poultry perspective is that the federal poultry research infrastructure and personnel, and the funding associated with that, was removed from our sector several years ago. That was why we were really pleased to see the recommendation from this committee in terms of insisting Agriculture and Agri-Food Canada make everything available in terms of infrastructure, personnel and resources across agriculture and the food system. We wanted to underline that recommendation, because it's really important for our sectors that we don't get overlooked in that process, because we don't have those basics intact anymore, as other sectors do.
Senator Beyak: Thank you. You're all stellar examples of why Canadian agriculture and poultry are so valued and respected worldwide. Thank you for all the decades you've done it.
I'm always involved with taxes, and fewer taxes of any kind. Until we get rid of waste and duplication across all of government, I don't believe in any new taxes, CO2 or otherwise.
The climate change debate is real, but there are still mixed opinions about the CO2 part and whether humans are responsible in any way. When one volcano hiccups, as Dr. Ian Plimber in Australia tells us, it puts more CO2 into the atmosphere than we will in five generations.
Do you have a research and development arm that challenges the impacts of CO2, especially in the agriculture field, where you've already done so much — sequestering, animal care, emissions?
Mr. Dungate: I wouldn't say that we've got it well enough in that regard, but I'll just make the comparison to the use of antibiotics. As Mr. Davies said, we've already eliminated in the poultry industry the preventative use of category 1 antibiotics. We now have made a decision, or are in the process, of eliminating preventative use of category 2 by 2018. We're going down that part.
Do we have full research knowledge of the direct connection between what we're doing on a farm and antibiotic resistance? I would say "no.'' But we want to eliminate ourselves from that equation so that, without a doubt, we will be there and do our part going ahead. It's preventative — chicken and egg. Do you go beforehand, or do you wait until you have conclusive proof? We're going to hedge our bets both ways.
Senator Beyak: Thank you.
[Translation]
The Chair: I have two questions, the first for Mr. Dungate and the second for Mr. Davies. In recent years, the term "Canadian chicken'' is being used more and more, in restaurants, for example. I congratulate you on your offensive. As to the restaurants that do not use that term, where do they get their chicken?
Mr. Dungate: That is not clear. We want everyone to use the term "Canadian chicken.'' We promote our brand. The fresh market, on the other hand, probably sells close to 100 per cent Canadian chicken. The issue is transportation. Fresh chicken is not transported across the country. There is a distribution block for the Great Lakes and for Newfoundland and Labrador. As to frozen products, Canada ranks thirteenth internationally as an importer of chicken wings, which come mostly from Brazil and the United States, and of chicken breasts from the United States. That is a processed, packaged product found in grocery store freezers.
The Chair: In Canada, turkey consumption is the highest at two times of the year, at Thanksgiving and during the holiday season at the end of the year. I am sure you sell a lot of turkey at those two times of the year. Turkey is excellent meat with good protein. What about the rest of the year? It would be in your interest to promote the nutritional profile of turkey, including ways of preparing it. What we get at the grocery store is just turkey roll, which is only good for sandwiches. You should do some promotional work about ways of preparing it and highlight its nutritional profile in order to boost sales.
[English]
Mr. Davies: Thank you for your comment. That has been our biggest challenge over the last few decades, but we are making strides. We have programs in place. We're active on social media. Our new websites and new branding with Canadian turkey has just been up and running now, so we'll see that more in the public eye.
That is our main push. We've just done a usage and attitudes study for which we've just got the preliminary results on now to help us better understand the attitudes and usage by Canadians, what their thoughts are around turkey and how we can have the information to help us move forward on that.
But you're exactly right; it's good-tasting, it's good protein, and it is something we're working hard on.
Mr. Boyd: Just one point on the marketplace: About half of our market is in value added and further processed, and the other half is in the whole bird. The skew in the marketplace seasonally is largely whole bird. The consumption of turkey meat across the year on the value-added processed deli meats and fresh parts is much more evenly distributed.
The program the Mark has just outlined, if they were honest, has Chicken Farmers of Canada nervous in terms of their market share.
Senator Woo: You get three days a year.
[Translation]
The Chair: Thank you, ladies and gentlemen, for your very informative testimony. No doubt we will be seeing you again in the coming months.
We will now welcome our second group of witnesses, representing the Egg Farmers of Canada: Chief Executive Officer Tim Lambert and Chair Roger Pelissero. You have the floor, gentlemen.
[English]
Roger Pelissero, Chair, Egg Farmers of Canada: Good morning. Thank you for inviting us to be part of your study on the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors. It's our pleasure to be here today and have a discussion with you.
My name is Roger Pelissero. I'm a third-generation egg farmer from St. Ann's, Ontario. My son is a fourth- generation egg farmer back on the farm working today. I'm also chairman of the board of directors of Egg Farmers of Canada. Here with me today is Tim Lambert, CEO of Egg Farmers of Canada.
There is no doubt that climate change has become one of the biggest challenges of our era. As such, sustainability is a top priority for egg farmers across the country and a core business principle for Egg Farmers of Canada. We understand that in order to reduce our environmental footprint while creating jobs for this generation and the next, we need to make more while using less.
Part of the vision is to further our own understanding of the environmental implications of our industry, so we are funding research. In 2016, Egg Farmers of Canada released a study conducted by Global Ecologic Environmental Consulting and Management Services, which found that the environmental footprint of Canada's egg production supply chain declined by almost 50 per cent between 1962 and 2012, while egg production increased by 50 per cent.
This comprehensive study, conducted by Nathan Pelletier, looked at the entire supply chain and found that the cradle-to-farm gate impact for eggs produced in conventional housing systems in 2012 significantly decreased since 1962. The sector's overall environmental impact decreased in all emissions and resource use, with a significant reduction in energy, land and water use in the amounts of 41 per cent, 81 per cent and 69 per cent, respectively.
The study attributed the increase in environmental sustainability to several factors, including changes to feed composition, significant changes in fertilizers, better animal health and higher productivity in pullet and egg production. These incredible results exemplify how our industry is leading the charge toward a sustainable future.
We believe that research is an essential component of understanding climate change and sustainability. This is why we work with research chairs across the country, like Dr. Pelletier, who was recently appointed as a Research Chair in Sustainability. In his role, Dr. Pelletier directs and manages research programs to support sustainability measurement and management for the egg industry and for the broader food sector. This investment in research is far-reaching, as we also support research chairs in public policy, animal welfare and economics at universities across the country.
Tim Lambert, Chief Executive Officer, Egg Farmers of Canada: Thank you very much. As Roger has rightly pointed out, we're really proud of the proactive investment we're making in research in a variety of disciplines, including environmental sustainability.
We look at this in a very holistic way. We think that, through supply management, we have a social contract and a social licence with Canadian consumers, and we see this shifting and growing interest in people wanting to know more about where their food comes from. They want to know more about the farming practices used to produce it and the impact on the environment. We see this as all part of the need to be proactive about building public trust in the food system.
Our engagement in environmental sustainability extends not only to national initiatives, but we're involved in a number of global initiatives as well. For example, one national program we're starting is a Poultry Sustainability Value Chain Roundtable. The roundtable includes a variety of commodity groups. Each of their chairs form an all-chairs group, and I've been appointed through the federal government to be part of this sustainability and climate change working group, advising that group of chairs.
Roger is representing Canada through the Egg Farmers of Canada at the International Egg Commission, and at that body we have started a Global Roundtable on Sustainable Eggs. Roger has already referenced the work we've done on both lifecycle analysis and a 50-year research study. We partnered in that through the UN Food and Agriculture Organization, again, through the International Egg Commission, contributing to a lifecycle assessment of egg production around the world.
There is a connection between economic certainty for Canada's farmers and environmental sustainability, so we're constantly looking for new ways to make egg production more efficient and environmentally sound.
Here are just a couple of examples: One of our family farms in Nova Scotia, the Jennings family, is near the Bay of Fundy, so they have a fantastic source of wind power. They have set up a number of wind turbines, and they're actually feeding back in energy that's surplus to their needs on the farm. We have a number of farmers using solar panels as well and, again, part of the feed-in tariff program.
We see people embracing this as part of public trust and social licence, not only at an organizational level nationally and internationally, but right down to the farm level. Really, for us, we've built it into the core of our business plan.
Innovations like this and many others are actually a point we have to make, really, due to the stability supply management provides to us, because when farmers are able to receive a fair return for their work and labour, with that comes reinvestment. So we don't hesitate to reinvest in either the farms individually or in research. We do this around the world, and we're involved in a number of things, such as supporting food banks and breakfast clubs. We even went so far as trying to help support the value of our product globally, and we've built an egg farm that supplies over 4,000 hard-cooked eggs to orphans in Swaziland, South Africa every day.
I want to pick up on one point that was made earlier that relates back to this notion of supply management. We have, through supply management, farms in every province, plus the Northwest Territories. They provide jobs and rural stability right across this country. If you contrast with the U.S., the average flock size in Canada is about 20,000 birds and every one of them — 100 per cent — are family owned. The average flock size in the U.S. is 1.5 million. There's one publicly traded company in the U.S. called Cal-Maine Foods with approximately 30 million birds in production; we have about 25 million in all of Canada. You see this connection between what we build as public trust and environmental sustainability, because the farmers are stable in terms of their incomes, and it allows us to stay away from those massive types of farms.
To conclude our comments, Egg Farmers of Canada really is a global leader in agriculture for its commitment to sustainability initiatives and dedication to social licence and public trust. Our 50-year study provides a firm foundation to build initiatives that fight climate change, setting out benchmarks by which we can continue to measure progress. Understanding the industry's environmental footprint ensures that we can work with our producers and stakeholders to make sound, sustainable choices now and into the future.
Thank you very much for your time and attention. Roger and I look forward to taking your questions.
[Translation]
The Chair: Thank you, Mr. Lambert. Before we begin the question period, I would like to say the following.
The members of the Standing Senate Committee on Agriculture and Forestry visited the Jennings farm, in Nova Scotia. There we met the three generations of farmers who have worked on this farm, including the youngest, aged 18 or 19, who is taking over. We were amazed by their production of wind power electricity. They had an agreement with Nova Scotia Power to sell it their surplus electricity and purchase it from Nova Scotia Power if they were short. In the end, their cost was zero.
We were also very impressed by the quality of the henhouse, if I may say. I wanted to point that out because, in the food chain in Canada, you are the only producers who do not receive negative comments. The feedback on the quality of eggs is always very positive. This must be said. If the quality is lacking, that must also be said, but in your case, the feedback is always positive.
[English]
Senator Tardif: Thank you for being here this morning. I was really impressed by the proactive role that you play in investment in research. That's very impressive. You indicate that you support research chairs in public policy, animal welfare and economics at universities across the country. Could you elaborate? Are you investing with many universities, or is it one research chair that you funded? How are you doing it?
Mr. Lambert: We have established a network of four research chairs. The first one was in agriculture economics at Laval University, with Dr. Maurice Doyon. The next one we established was at the University of Guelph, in animal welfare, with Dr. Tina Widowski, who is a well-known scientist globally. The third one was at Waterloo University, in public policy, and Dr. Bruce Muirhead holds that chair. The fourth and most recent one is Dr. Nathan Pelletier, who Roger talked about, at the Kelowna campus of the University of British Columbia.
There are a couple of important spinoffs of this. Not only is it the research we get, but it literally creates an infrastructure of young people engaged in research in our commodity. Because the seed money we provide can be used to go to NSERC or other granting agencies, we've been able to double or even triple the money, and they can bring in graduate students and postdocs. It creates this little infrastructure.
We've taken this far enough now that a couple of times a year we get the researchers and all of their graduate students together and talk about the challenges we face, so you get cross-collaboration.
I'll give one specific example. Tina Widowski, working in animal welfare, working with Dr. Maurice Doyon, who is trying to assess the economics of whether consumers will pay more for eggs that come from, say, a higher-cost structure or will they pay more for different housing systems. They've started research projects together, so it creates this phenomenal synergy that we're excited about.
Senator Tardif: I think that's absolutely great. As a former university professor and dean, I'm sure the universities thoroughly appreciate the seed money you're providing for the research chairs.
You've indicated, through Dr. Pelletier's study, that you've been very effective in decreasing your emissions and improving your environmental footprint over the years. How do you manage water consumption in your business?
Mr. Pelissero: I can speak to water consumption as we move forward. I remember, growing up as a child, we had these drinker systems that were not efficient and the chickens could waste a lot of water. They could splash it around. Today, we have a very efficient drinking-style system. It's a pipeline that has a nipple drinker on it, so there's a droplet of water there. When they want to drink, they can trigger it and they can get fresh water at any time they want, so there's not that wastage that way.That would be a big difference that I have seen in my lifetime growing up on the farm.We also take a look at how we use it for washing and cleaning. There are ways to recover some of that water and make sure we can use it again, if possible.
Senator Pratte: Welcome to the committee. I was reading a summary of the study you mentioned, and I was intrigued at all the results that are obviously positive. There was a mention that less positive of all the positives was energy use, where the results were positive but less positive than the others. I could not really understand why this was so. Would you elaborate on that, please?
Mr. Pelissero: Part of it could be regarding the costs of the electricity and energy. On my farm, we built a new housing facility four years ago. In 2013, we put it into production. In that facility, we use the most up-to-date LED lighting and high-efficiency motors. Our new housing system has seen a big reduction in energy costs compared to the conventional housing system to the point where it is probably two thirds of the costs. As we move forward, there are always new and innovative products that will come out to help us reduce these costs. From 2012 to 2017, there has been a big change in technology.
If we were to do that study again in the next 10 or 15 years, you would see that probably would reduce and show energy as increasing as far as efficiencies.
Mr. Lambert: What we envision for the next part, now that we have done the lifecycle analysis already, this 50-year study, energy being a good example, to be able to benchmark our farmers as to where they are on some of these measures. Energy use is perfect. They can say, "Okay, I see I am below average or average or way above on energy use. If I am below average, what are other farmers doing differently that I am not? What can I learn?'' We want to be able to take the work we have done not just as a moment in time but as a start of continued evolution of efficiency and sustainability in our industry.
Senator Pratte: One of the main topics of our study was the plan on carbon pricing, which you did not mention in your brief. Do you have any stand on carbon pricing?
Mr. Lambert: We didn't speak to it directly because we still want to be able to understand how it will work and the impacts.
One of the things that we do have the ability to do — again, through supply management — is set the wholesale price for eggs. We do not set the retail price. To be clear, the price to consumers is free market. We do set a wholesale price. If there is an impact economically, the farmers will be able to deal with that.
How it impacts us, we have to see. We share some of the concerns. We understand that it won't be a national program. There is a lot of variability, so I don't need to repeat what was said by the presenters from chicken and turkey. That would be something we would be a little concerned about. We certainly want to watch and understand it.
As well, another big subject these days is trade and the North American Free Trade Agreement. If the U.S. is not similarly embracing proactive or different ways to deal with cost and energy use, we end up with a bigger and bigger differential between our cost to produce a product and theirs. As long as we are able to manage that through trade agreements, I think we can work with it within our country. It is when you get disadvantaged on costs on one side and pressured on imports on another that it can create an unequal playing field.
Senator Oh: Thank you, witnesses. I saw that you have more eggs and a smaller footprint. You have done a marvellous job in 50 years, from 1962 to 2012. The most interesting is using fewer resources, 81 per cent — that caught my eye — and using less land to produce chickens. How do you do that, 81 per cent?
Mr. Pelissero: Back in 1962, we had a lot of hens out on the ground, and today we house them indoors.
We produce free-range eggs because we produce whatever consumers want. When you go to the grocery store, you will see a variety of eggs there. It is a consumer choice, which is fantastic. As we move forward, we realize that bringing the hens indoors is less risk of disease and other factors, and we can care for them better. The environment we have inside helps us reduce land use. The housing systems have made a great reduction in how we care for our hens today.
Senator Oh: I buy a lot of your omega 3 eggs. What is next after that?
Mr. Pelissero: There are vitamin D eggs, right? All eggs are a great source of protein.
Senator Petitclerc: Before I ask my question, I want to ask a follow up question triggered by your answer. When you say less land and more indoor hens, can you assure me that their welfare is still okay?
Mr. Pelissero: The welfare for our hens has always been our top priority. Because I have been in the business my whole life, I have seen where those hens came from and where we are today. I have seen the evolution from outdoor caring for hens, going to conventional housing. This year, the Egg Farmers of Canada passed a motion that we would move away from conventional housing to enriched housing and other alternative systems. The new housing system I built three years ago is an enriched housing system that allows the hen to perch, has a scratch pad area and nesting box. Our top priority is the welfare of our hens.
Senator Petitclerc: My question is on climate and the environment. I heard your example. I know this is completely different, but organizations from the turkey and chicken producers talked about individual initiatives when it comes to going with solar energy or even wind power. I am curious. Are those initiatives always driven by the farmer, by the individual, or are they encouraged by your organization? Is it driven because of the environment or lower costs? When they go that way, how does it work? What kind of help do they get? Is it funded? Is there a structure? Do they get tools and how-tos? I am trying to know how it works.
Mr. Lambert: I can start. As an industry organization, someone mentioned that we try to be proactive around these things, and we do. When you do the lifecycle analysis and a 50-year study, you create awareness. Through that awareness, our farmers have always embraced this notion that we will be a proactive industry around these issues. Individually, they will start to look at how they can do better.
We don't have specific national programs for solar or wind. Of course, there are a lot of different provincial programs that they can tie into. Back to the Jennings family example, living on the shores of the Bay of Fundy is the perfect place to tackle wind power. There is a farm not far outside of Ottawa, a large pullet facility where they have decided to use solar, so they are part of the provincial program. It is a bit of national awareness, then provincial engagement and then individual farmers looking for ways to become more efficient.
Mr. Pelissero: I would add to that. As egg farmers, we consider ourselves as one large family. When we get together at annual meetings, we will have conversations with each other regarding our latest technologies that we may be applying to our farms. That builds on that area, because as family farms, we will go back and do a little evaluation about what might suit our farm the best. In some areas, it might be wind; in some areas, it might be solar. There are more and more initiatives taking place, and there is a mix between finding provincial funding to help farmers get in that, but it comes down to an individual family making the decision about what will suit them the best.
Mr. Lambert: This is a bit off point, but I can't help but come back to your comment about the three generations. Blake Jennings is the young fellow you are referring to. One in five of our farmers, 20 per cent, are young people. Roger's son is back on the farm. In our industry, we're seeing a huge number of our young people coming into the farm to take over the family business. Every province has a new-entrants program to draw new people into the egg production sector. We have a pretty young average age. It is neat at our meetings to see all these young families around.
Senator Bernard: Thank you for your presentations. One question I have is in relation to the research chairs, following up on my colleague who asked, "Where are they?'' I noticed there are none in Atlantic Canada. Is there room to expand and include a research chair in Nova Scotia, possibly at Dalhousie University?
Mr. Lambert: It is interesting that you bring that up. We have had several conversations with Dalhousie about that; we are actively looking at that.
As you can imagine, each chair is roughly $125,000 to $140,000 a year, and we'll typically make a seven-year commitment per chair. It ends up being a huge investment. We have to figure out how to fund more chairs before we move on, but absolutely. It is not by coincidence that we do have them spread out across the country. We are trying to do that.
Senator Bernard: Yes, that is good; that is encouraging.
My other question concerns your report on your social responsibilities. I thank you for including that in your testimony this morning. Could you say more about the project you have in Swaziland? How does that work?
Mr. Lambert: I am happy to talk about that. Roger and I are both involved in the project team that did that.
It is a Canadian couple that started this orphanage. It is very unique. They take in abandoned children. It's not children who might be orphaned in a literal sense but have other extended family. These are children who have literally been abandoned in pit latrines or dropped at the side of the road. They have established an orphanage on a 2,500-acre farm. They have about 280 workers and 156 children. They do not adopt the children out. They will raise these children from literally days of age right through to adulthood. They will educate them and love them, but they are raised in Swazi culture. Within that, they also support a network of some 30 churches and schools in Swaziland with food. Malnutrition is a massive problem in much of sub-Saharan Africa, but protein deficiency and diseases like kwashiorkor are prevalent. For a developing child and brain, if you don't have adequate protein, you will never have the potential to learn.
We came alongside this couple and looked at what we have benefited from here in Canada and decided we could make a difference. We were part of setting up the International Egg Foundation. We went over, and Roger was part of that team that literally from the ground up built two 2,500 bird units. We trained the people. Roger has gone over; his son has gone over and volunteered. They worked to do the training. You want to teach people to raise the birds themselves. We had a company donate the equipment to hard-cook the eggs, and on a daily basis we now distribute 4,300 eggs through this network of churches and schools, plus supply the children, plus supply eggs to the local paediatric hospital.
Senator Bernard: That is very exciting. Could you see a similar model being used in some of the more disenfranchised communities in Canada? In Nova Scotia, I am thinking about the African-Nova Scotian communities. There are some communities that are very large allies. Could a model like that work?
Mr. Lambert: Potentially. We are involved nationally with school breakfast programs. Even in a country as wealthy as ours, it is something like 20 per cent of children who will go to school without a proper breakfast. There is huge value, as we know, in adequate protein in breakfasts. Expanding that program is an idea.
One thing we have been trying to look at is we have one farm in the Northwest Territories. We are trying to see if there is a way that we can be involved in more remote First Nations communities. Is there a way that the egg industry can contribute to that? I haven't specifically thought of the question you have raised. Hopefully, we touch on that through our school breakfast programs.
Senator Bernard: In the model you are using in Swaziland, you have built a farm and trained people to work that farm, so it is becoming self-sustaining, self-supporting and also supporting others. That is a model that transcends this work in a powerful way and would move us away from a reliance on breakfast programs to people being able to rely more on themselves.
Mr. Lambert: That is a good point.
Senator Bernard: Maybe some research might be helpful to look at how that model might be used.
Mr. Lambert: That is helpful. Thank you.
Senator Woo: Good morning. I asked the same question to the chicken and turkey colleagues. What is the share of energy in your direct input costs?
Mr. Pelissero: I can answer that one because we had our meeting with our accountant about a month ago. My energy costs are about 10 per cent of what it costs me to produce a dozen eggs.
Senator Woo: What energy source do you use?
Mr. Pelissero: In our growing facilities for our day-old chicks until 19 weeks, when they lay eggs, we use propane; and then our other costs after that would be electricity for lighting, running feeders, ventilation for fans.
In our laying facilities, we don't have any heat. The barn is designed to maintain 74 degrees throughout the winter. There is no problem; it doesn't matter how cold it gets outside. Our efficiency as far as building that new barn, we used insulated concrete walls and the latest material to combat against the cold, and the latest technology in ventilation to help keep the birds cool and comfortable in the summertime.
Senator Woo: Would you be relatively on the low end, compared to your colleagues in the industry?
Mr. Pelissero: Yes. As we look at it, I can look at the difference between our conventional housing barn that my father built back in 1976 and this barn we built in 2012, when we started the construction, and the efficiencies, wow, it doesn't take long for it to pay back. You can see the reduction for input costs.
Senator Woo: To the extent that a carbon price would impact on energy costs most significantly, my take from your answer is that it's a relatively small share of your input costs. I'm not trivializing it. And for other producers in the industry who are less efficient than you, there is some ability for them to increase their efficiencies by doing what you are as well.
Mr. Pelissero: Yes. As farmers, we are always looking to be efficient, but to help you understand, once you decide to build a barn and a housing type, it's not something you are changing quickly. You will stay with that for 20 to 25 years because the capital cost is quite large. During that time, you may look at upgrading lighting and ventilation, but your physical structure is your major cost, and you will not move away from that.
Senator Woo: You are committed?
Mr. Pelissero: You are committed.
Senator Woo: A related question is on the transportation costs for eggs after they leave the farm, so post-farm gate. I was struck by your point that there are egg farmers all over the country. It seems like a fairly decentralized industry. Typically, how far does an egg travel from the farm to the fork? Do eggs travel a long way? Within Canada, I mean.
Mr. Lambert: There are exceptions, because if a grader or a processing company is short of eggs, they will come to us as part of our role to see if we have eggs for them that we can move. I don't want to trivialize the fact that eggs will move, but typically, because we have production in every province and in the Northwest Territories, you are mostly getting local product. In Ottawa, you will go to the grocery stores here and see Burnbrae Farms, and they are in Brockville. They are the largest egg-producer family in the country.
Senator Woo: Not to trivialize any of this, but the challenge of additional transportation cost burdened by a carbon tax because of long-distance shipping is not as significant in your industry as, say, for grain producers, who have to ship their product for thousands of miles.
Mr. Pelissero: Yes. I would agree it is probably not as significant. We are still too early to understand how it may impact our industry.
To build on Tim's comments when he talks about being local, I was almost going to use the example that it would be like 100-mile diet. Have you ever heard about that? It's about only eating things from within 100 miles. I wouldn't say too many eggs travel farther than 100 miles to get from our farms to your table.
[Translation]
Senator Gagné: I would like to congratulate you on your work, and above all thank you for supporting research. I am from Manitoba, and I noticed that there is still no research chair in my province. I would also like to thank you for your commitment to the social development of our communities, and for your international commitment. It is very commendable and I thank you for it.
[English]
Our committee will be reporting to the Senate. Would you have any suggestions as to what recommendations we could bring forward?
Mr. Lambert: That is an outstanding question.
The way we look at food production is really an extension of how Canadians see themselves. That's about being socially aware, paying attention to the bottom line but also the impact on the environment and on people. The degree to which government writ large is fostering and supporting the use of those technologies — our colleagues earlier referenced that we have lost a lot of research capacity in this country.
Sometimes different policy pressures can either contribute or shift us away from our ability as a group of people who are either farmers or represent farmers to be part of building on that solution. It's a very generic comment, but evaluating policy choices through that lens is an important thing that can help food production.
Selfishly, I worked for a decade in the pork industry, and I worked for close to a decade in the beef industry, neither of which are supply managed. What you see there, by default, are the same kinds of farm families and local infrastructure. The challenge is they are totally price takers. When you are a price taker, you are always trying to find ways not to necessarily reinvest in additional advancements, technology or quality; you keep trying to take costs out. Supply management in Canada allows farmers to get a fair return and, therefore, they are constantly reinvesting. We are proactive, bluntly, because we can afford to be. To the degree to which the government continues to support public policies like supply management, that strengthens rural economies; it just does.
Those are a couple of thoughts off the top of my head.
Mr. Pelissero: I will build on Tim's comments about the privilege we have with supply management to have a fair return for what we are doing.
I was a hog producer for a while. When you have 1,000 hogs you are shipping, and you are attaching anywhere between a $40 and a $50 bill to that hog as it is leaving, because that's what you know you are losing on each hog as it goes out the door, 1,000 times $50 is a $50,000 loss. It doesn't take a businessman long to decide, "I love hog farming but I can't sustain.'' I have a friend who was in hog farming. His son said, "Dad, there is no future for me here.''
That is what supply management does: It allows a future for our next generations and for small communities in rural Canada. They will go and spend their money in the local hardware stores, local feed companies and local equipment dealerships.
You have so many more young people looking for jobs. They start out on the farm and go to university, but their passion is the farm. As a father, no matter what business you are in, if your business isn't sustainable, you will encourage your children to pursue something else. We have a privilege with our system here in Canada that allows our sons and daughters to come back and continue farming. That would be part of the message.
[Translation]
The Chair: I have two quick questions. When we went to Moncton, in the Maritimes, we met with egg and poultry producers. The egg producers told us about the lack of slaughterhouses in the region and the high cost of transporting spent hens to slaughterhouses in Quebec. Has this situation been resolved or is it the same as it was two years ago?
[English]
Mr. Pelissero: You are talking about when an egg farmer is done with the hen and they need to go to market. There is one few facility just out of Saint-Hyacinthe that is taking some hens, but in Eastern Canada it is still an issue. Our industry must take a look at it and see how we can help them in that manner.
[Translation]
The Chair: The main problem identified at the time was that it was too expensive to transport spent hens to slaughterhouses in Quebec. There is no profit for the sellers of spent hens. Perhaps you could look into this in the coming months, since these are substantial losses for producers. In short, what is the best chicken?
[English]
Mr. Pelissero: For egg production?
The Chair: Yes.
Mr. Pelissero: For egg production, we use leghorn hens, which is a hen that is efficient with its intake on feed and produces about 330 eggs in 365 days, in a yearly cycle. She is an amazing animal, and I love walking in the barn when I am home; my wife loves walking in the barn; my grandson enjoys walking in the barn. It is a thrill to be an egg producer and watch these amazing hens give us a perfect protein every day that we can supply to Canadian consumers.
[Translation]
The Chair: Thank you very much for your testimony, Mr. Pelissero and Mr. Lambert. We hope to see you again.
(The committee adjourned.)