THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Monday, February 18, 2019
The Standing Senate Committee on Agriculture and Forestry met this day at 9:30 a.m., in camera, to study how the value-added food sector can be more competitive in global markets (consideration of a draft report); and, in camera, for the consideration of a draft agenda (future business); and, in public, to examine and report on issues relating to agriculture and forestry generally (topic: support and compensation for supply managed agricultural sectors in relation to the USMCA, CPTPP and CETA Trade Agreements).
Senator Diane F. Griffin (Chair) in the chair.
(The committee continued in camera.)
(The committee resumed in public.)
The Chair: I’m Senator Diane F. Griffin from Prince Edward Island. Today, we have a number of guests with us. Before we move to introductions, I would ask the senators around the table to introduce themselves.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
Senator Oh: Victor Oh, Ontario.
Senator Bernard: Wanda Thomas Bernard, Nova Scotia.
Senator Miville-Dechêne: Julie Miville-Dechêne, Quebec.
Senator R. Black: Rob Black, Ontario.
Senator Gagné: Raymonde Gagné, Manitoba.
Senator Mercer: Terry Mercer, Nova Scotia.
The Chair: As you can see, we have a lot of people here from various provinces who are very interested in this topic.
Today, the committee is looking at support and compensation for supply-managed agricultural sectors in relation to the Canada-United States-Mexico Agreement, or CUSMA; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP; and the Comprehensive Economic and Trade Agreements, or CETA. I wish somebody would come up with an easy acronym for all of those agreements.
This is our first panel on the topic. We have with us from the Chicken Farmers of Canada, Mr. Tim Klompmaker, Board Director, Ontario, and Mr. Yves Ruel, Director of Trade and Policy. From the Canadian Hatching Egg Producers, we have Mr. Jack Greydanus, Chair, and Salomon Compaoré, Economist.
I understand the chicken producers are going first. That answers our question of what comes first, the chicken or the egg. Now we know the answer.
With that, I invite Mr. Klompmaker to make his presentation.
Tim Klompmaker, Board Director, Ontario, Chicken Farmers of Canada: Good morning, senators. My name is Tim Klompmaker, a third-generation chicken farmer from Norwood, Ontario. The fourth generation of our family is also farming as our three sons are running farms of their own.
I’d like to thank the Standing Senate Committee on Agriculture and Forestry for inviting me today to speak to you about the impacts of the CPTPP and the CUSMA on Canada’s 2,800 chicken farmers. Our sector contributes $6.8 billion to Canada’s GDP sustaining 87,200 jobs and paying $2.2 billion in taxes. We want to keep growing our sector but, unfortunately, the market-access concessions granted in Canada’s two recently concluded free trade agreements compromise our ability to continue our work growing Canada’s economy.
Regarding the CPTPP, throughout the negotiations and the original conclusion in October 2015, the United States was the only demandeur for access into the Canadian chicken market. Despite their absence in the final deal as concluded in early 2018, the concessions made in the original agreement remained unadjusted in the CPTPP. Once fully implemented, Canada will be providing an additional 26.7 million kilograms of annual market access to the CPTPP members.
Through the CUSMA, the CPTPP and previous WTO commitments, Canada’s total chicken market access has increased from 90.1 million kilograms, or 7.5 per cent of Canadian production, to 129.6 million kilograms, which represents 10.8 per cent of the Canadian production. On an annual basis, this increase in access will translate into $240 million in fewer contributions to the Canadian economy, as well as the loss of 3,100 jobs nationwide. Overwhelmingly, these impacts will be felt in our rural communities.
When the original TPP negotiations concluded in October 2015, the Government of Canada committed to providing the supply management sector with $4.3 billion for programs to help adjust to the market-access increases and to resolving outstanding import-control issues affecting the dairy and poultry sectors. For chicken, this included specially defined mixtures, the Duties Relief Program, or DRP, and the fraudulent importation of mislabeled broiler meat.
Given that the impact of the CPTPP remains the same as it was for the TPP and that there will now be an additional impact from the CUSMA, Canada’s chicken farmers are looking to the Government of Canada for a commitment that goes above and beyond what was announced in 2015.
CFC is pleased to participate in the ongoing Agriculture and Agri-Food Canada poultry and egg working group established by Minister MacAulay following the conclusion of the CUSMA. We hope it will result in effective and meaningful programs that will allow farmers and the chicken sector to receive support corresponding to their needs. We have presented the government with recommendations for initiatives that would help address the needs of farmers who will be impacted by the increased market access. We strongly recommend that the following are included: an investment tax credit program to support farmers for their investment and further improvement in their operations; a market development fund to promote Canadian-raised chicken; a TRQ allocation methodology that is designed to ensure minimal market distortions; the enforcement of Canadian production standards on imports; and the resolution of two major import-control loopholes — the misuse of the Duties Relief Program and the fraudulent importation of mislabeled broiler meat. The Government of Canada must also commit to ensuring that no further access to the Canadian chicken market is conceded in any future agreements, such as the ongoing discussions within the Mercosur free trade talks, nor in any future WTO negotiations.
Canada’s 2,803 chicken farmers are continually improving the efficiency of their sector, contributing to our economy and ensuring the chicken Canadians eat is safe and raised to the highest of standards. We are proud of our supply management system which ensures that we are able to receive a fair return for our products directly from the marketplace. The Canadian chicken sector has never stood in the way of trade deals; however, new trade agreements cannot be made to the detriment of our farmers.
By helping to mitigate the impacts of the CPTPP and CUSMA and by fixing the import control loopholes that are impeding our production, the Government of Canada can help our farmers continue to grow the economy while ensuring chicken remains Canada’s number one meat protein. Thank you.
The Chair: Thank you for your presentation. We’ll now hear from the Canadian Hatching Egg Producers. I understand Mr. Jack Greydanus is going to make the presentation.
Jack Greydanus, Chair, Canadian Hatching Egg Producers: Good morning, ladies and gentlemen. I’m a hatching egg producer from the province of Ontario. Beside me, Salomon Compaoré is our economist within the Hatching Egg Producers nationally. We are glad to be the first people apparently making a presentation in this room. And a first presentation in this facility is an honour.
I thank you for the opportunity to talk and also we’re chatting about certainly what the impact of these two agreements has on hatching egg producers across Canada and how it also impacts supply management as a whole within the industry across Canada. Certainly we are proud suppliers of hatching eggs to this individual to my left, to the Chicken Farmers of Canada. I do really question who does come first, the chicken or the egg? We do sell them to these people, the chicks, and I do get my product from other countries. I honestly believe eggs come first. That’s still up for discussion. I’m sure you will have an answer when we are done here today.
We have concern and certainly some disappointment in this whole process of access being given away. It’s because it whittles away at what we have. It undermines supply management. That’s really what it is, giving access away.
The most recent access was given under the NAFTA — I’ll steal the chair’s position in maintaining NAFTA and NAFTA 2.0. We had granted 21 per cent of our market access a long time ago. We give a lot already to the U.S. marketplace. That was the same as it was when supply management was opened up for our industry back in the mid-1980s. That hasn’t changed. Under the new NAFTA 2.0, CUSMA, that hasn’t changed. But the agreement does allow for TRQ to our friends to my left, the chicken producers. Naturally that alters what — because if they don’t have TRQs given away in chicken, naturally we can’t produce the eggs for that.
Another issue we have is that TRQ comes into the country as one block. It comes into Canada, and it does not have provincial borders. That is distorting. Is there something we can do on the TRQ side in an effort to get TRQ spread based on production across the country in each province, or something like that, to prevent distortion? This is something we think would be a benefit over time. We wouldn’t want this to worsen because of the additional TRQ access given.
Under the CPTPP, access was granted. In our case it was a set number of hatching eggs. It happens to be 12 million eggs over the term of the agreement plus naturally there’s more given over time. Over a 19-year phase-in period, total eggs that will be granted to Canada over this whole program are just shy of 680 million eggs. If you do that math, that 680 million eggs over the 19-year program, based on the average farm in Canada, that would be 18 new farms across Canada just on that access given. I think we know as Canadians that the success of this country is based on small independent businesses, and small farms are small independent businesses. That’s a crucial number we want to take care of.
In this agreement, please understand that we take a double hit. We granted access under TRQ for hatching eggs. That’s a number I mentioned, 12 million, or 670 million over the whole period. Also, we give access — as I mentioned earlier, when chicken loses TRQ or access on the chicken side, we don’t produce the eggs for those. That again takes money away from fellow Canadians, hatching egg producers across Canada.
That is just unique to us, by the way. No other supply management commodity has that issue. Access given away under any trade negotiations is a double hit to us and something we take very seriously.
Something else that wasn’t part of the negotiation process within the CPTPP was the idea that it should — it was supposed to come in force and it would generate access over a period of time. Because CPTPP came into force on the second last day of the year, December 30, 2018, that’s one year. All of a sudden, 2019, we’ve got to allow two years of access in one year. That’s not something we take lightly. That’s a big hit. We didn’t program for it and it’s outside the agreement. That’s something we would like to voice at this time.
As you are aware, Agriculture and Agri-Food Canada is chairing a working group — which we are very much part of —with the chicken, turkey and egg farmers. As you well know, they are looking at a strategy, full and fair adjustment process, to deal with the outcomes of these two particular agreements. We understand from the statement of the Prime Minister and the Minister of Global Affairs that they are committed to full mitigation with the working group. I think the working group is looking too inward. It’s focusing certainly on the agricultural file. We believe there are other government departments that could be part of this mitigation mechanism that would benefit us. That’s something that should be entertained. I think that’s something that could be suggested by this chamber.
We are working closely with our chicken farmer friends, eggs and turkeys to advance similar proposals in this file, and we have already communicated those to the government. I will reiterate again that certainly Hatching Eggs is not looking for a direct payment to producers. That’s not the game we want to play. There are better ideas in investment and growth, in ways of investing and in growing poultry production across Canada.
The ideas that were mentioned previously are worth reiterating. Investment in tax credits is a good strategy. A donation to a domestic market development fund, a fund that could be supported, would be a great idea. On the chicken side, stricter border enforcement is a mandatory approach in my view. Consider a review of the TRQ administration and allocation process, as I mentioned earlier, and ensure import products adhere to the same kinds of standards that we do on the domestic side.
I would like to explain the domestic side. We have requirements on my farm on the food safety side. I’m not sure the imported product has that. On the animal care side, I have requirements that I must do, recognizing new realities, animal care, and those kinds of things. We have policies and rules within our jurisdiction at the national level that we implement to our producer base that I’m not sure the imported product would have.
Also, we have antibiotic use regulations or stipulations within the country that not necessarily are adhered to by other countries that would have to import. Is there something we could do there that would make standard domestic product a new standard for all product?
It’s our hope that over the time the working group is going to make a recommendation that would benefit certainly all hatching egg producers and poultry producers across Canada. That’s our goal.
In closing, the best mitigation strategy is for the Government of Canada to avoid giving up any additional access in the first place. That is the biggest strategy in this, rather than trying to mitigate that strategy in an effort to stop it.
The next biggest worry, naturally, is the next negotiation process. It’s between Canada and the Mercosur bloc, which includes a major chicken exporter. That exporter happens to be Brazil. Certainly, it is an issue we want to take care of. There is no doubt there will be further rounds of negotiations that we have to deal with. In our mind, take supply management off negotiation, period. I think that’s really the good strategy that should be echoed from this chamber to the government. No new access is the most fundamental support that government can give to our sectors.
Thanks very much for your time.
The Chair: Thank you. Those were two excellent presentations.
Senator Mercer: I appreciate you being here.
I have a long-standing reputation of being a supporter of supply management. I have defended supply management wherever it needed defending.
I have a little problem now, though. I’m disappointed that the government has allowed greater access, but it’s done. We can’t put the toothpaste back in the tube. But I hear supply-managed industries talking about what they will get from government now that these agreements are going to be in place.
You’ve mentioned the challenges you have. You haven’t mentioned the opportunities. The agreement is supposed to have some opportunities. Are there things that we can learn that will help us in producing more chickens and, obviously, more egg hatchery activities as well? I will put my frustration out there so you can address that.
In the 15-plus years that I’ve been here, I have never found a reference to supply management in the budget of the Government of Canada. That’s going to change. Somehow someone will be able to appoint. They may find a new name for it. They may try to mask it as governments sometimes do when they don’t want the people to actually use the same wording, but now there will be a budget line in there of money for supply management groups in agriculture. How do we defend that? Are there opportunities for us to change the attitudes?
Someone mentioned the fact that maybe it shouldn’t be money, it should be other programs. But you’re playing into the Finance Minister’s hand, because that’s what he will do. He will come up with wording that will not say, “I’m going to give the hatchery people and the chicken producers money. We will create a program.” The program will have money attached to it.
There are many opponents of supply management, some who are members of the Senate and some who are Members of the House of Commons. The criticism of supply management will not go away, but this government, on purpose or by accident, by joining the negotiations have given them a weapon to attack supply management. Could I have your comments, please?
Mr. Greydanus: There’s a cost to giving away access. That’s the real piece on this. You’re taking away revenue streams, money, from producers across Canada. That’s not just producers. There’s infrastructure, vibrant communities because of the success of supply management across every province in this country. There’s a cost attached to that.
If they continue to give access, if you don’t attach a cost to it, is that something we should deal with?
Senator Mercer: If my defence of supply management was the fact that there was no budget line that gave money to the industry, now there’s going to be a budget line, whatever it might be called. How do I defend that now?
Mr. Greydanus: I would have to call it the cost of access. I don’t know if it’s money directed to supply management. That’s the price you pay because you gave access away.
Senator Mercer: The other problem is if you talk about supply management, their eyes glaze over because they don’t understand what it is. It took me a few years to entirely get my head around it. How do we explain that to Canadians? Those Canadians are going to be verbally attacked by opponents of supply management looking for the support, perhaps politically. The support of supply management will become an unpopular thing, whereas now it’s a popular political thing.
Mr. Klompmaker: In a sense, this is an expropriation of products from farmers. That is what ends up happening.
First of all, thank you for your support of supply management. It is individuals like you who help us maintain our system in Canada. That’s greatly appreciated.
You asked what the opportunities are at this time. Some of the ideas Jack and I have laid out here as far as some of the mitigation measures, there are some loopholes at the borders that the government has an opportunity to address.
The one thing we heard at the conclusion of several trade agreements was that now we’re at the end, we have an opportunity to fix some of the issues that you had, and then another trade agreement would end up cropping up and the government would say the timing is not right to address these. Right now is a good time. There is an opportunity to address some of these loopholes. These are not things that we are looking for the government to implement new rules around. You need to enforce the rules that are in place today. That’s what we’re looking for. Those are some of the opportunities. I don’t see them as being a direct cost to the budget.
All four of us within that working group have agreed that we’re not looking for direct compensation to our farmers. We’re looking at mitigation measures that will, in fact, give farmers the opportunity to invest in their farms. In the tax credit example, if those are made available to those farmers on a 10-year basis, even our young farmers who just got in, have a lot of debt and don’t have the cash flow to make investments, they do have an opportunity later on that they can make those kinds of investments, which in turn end up creating economic activity within the country.
I don’t see there is a need, necessarily, for a direct, big impact to the budget as far as the cost. We’re not looking for direct compensation to our farmers.
Senator Doyle: Thank you for your presentation. Just playing devil’s advocate for a moment, is there a contradiction in maintaining a supply management system in tandem with the growing number of free trade agreements we have on the go today? Can we maintain that system forever with all of the free trade agreements that we have?
Mr. Greydanus: Free trade is not necessarily as free as we think it is. Free trade with the auto parts industry is a very fluid and changing thing at all times.
We want to look at this through the lens of stability and predictability. If a free trade agreement was the outcome ultimately, I think we wouldn’t all be happy. I don’t see that ever happening in a free trade agreement. The idea is that supply management maintain that goal of predictability and stability for producers naturally, for the processors, for the communities and the provinces we live in. I don’t see it as a contradiction. I really don’t. I think it’s two different strategies of how we produce food for the Canadian people.
Senator Doyle: You talked a little bit about the implications of the U.S. having greater access to Canadian markets. Can you talk a little bit more about what the full implications are if the U.S. could get greater access to our markets?
Mr. Klompmaker: If I may just go back and comment on your earlier statement, first of all, I’m not sure the point where supply management can continue to operate as it presently does when we continue to give up access.
Right now, once these two agreements are completely implemented, we’re looking at about 10.8 per cent of our production. We believe, at this point, we can probably still function with that kind of access, providing we have a disciplined approach to the TRQ. If the TRQ is not administered with some discipline in that it’s not able to enter in such a fashion that it can distort the markets, I think we can still function. But it comes down to at what point and what level of access does the industry give up before the supply management system can no longer function?
I don’t know what that number is. I don’t want to ever find out, but what it comes down to is every time we get into a trade agreement, if the supply management sectors are treated as trade currency and it’s kind of a top-up for the end of the deal, it’s kind of like supply management dies by a thousand cuts. That’s always the concern we have, that we give up a little bit every time. That is very concerning.
Senator Doyle: Is the time fast approaching when you’ll need greater compensation in your industry to keep up with the pressures of maintaining supply management?
Mr. Klompmaker: Will we need greater compensation in the future?
Senator Doyle: Yes.
Mr. Klompmaker: I’m hoping we don’t need any future compensation or any mitigation measures, that the government will start to recognize the fact that in order for the supply management system to continue to thrive, we cannot go into trade agreements and give up more access to our supply management sectors.
Yves Ruel, Director of Trade and Policy, Chicken Farmers of Canada: I would add as a complement to what Mr. Klompmaker said that we currently provide 7.5 per cent of chicken production in Canada that gets imported, and it will increase, as mentioned, up to 10.8 per cent. It’s not completely incompatible with trade negotiations because we give a fair share of access through the tariff-rate quota, so we offer significant access to our country. Often we import much more than countries that claim to be free traders, but they don’t have imports close to what we do in Canada.
Senator Oh: Thank you for being here, panel.
According to the Government of Canada, the CPTPP would secure new market access for Canadian dairy, poultry and egg product exports. To what extent would the CPTPP increase the value of Canadian dairy, poultry and egg exports to the CPTPP countries? Have you been taking advantage of that? What’s going on?
Mr. Klompmaker: Personally, I don’t think there are any opportunities for the Canadian chicken industry to export to any of the CPTPP members. We’re just not an exporting country of chicken, and as I said, I don’t see that there is opportunity for us.
Mr. Greydanus: There was mention with the CPTPP that agriculture had opportunities, not strictly dairy, poultry and eggs. It was an agricultural thing, which was actually beef, pork, grains and pulses and those kinds of things. I think that’s where it was. I don’t know if the agreement really stated it was in that area.
Our biggest trading partner, naturally, is the United States. The way I look at it, the cost of doing business in a country where winter isn’t really an issue — the cost of doing a building in Ontario, where I live, to Georgia, where I was last week, is a difference of 28 per cent because of our winter and heat and things like that.
Can we honestly say we can compete in an area like that? We know of those differences. In our humble opinion, our strategy is a domestic strategy. I think the TPP agreement was focused on our fellow farmers and other commodities when it came to exports.
Senator Oh: Are our prices on both poultry and eggs competitive on the international market?
Mr. Greydanus: We tend to always market ourselves with the biggest player in the pond, and that happens to be the U.S. We are very competitive with other countries in Europe. We don’t tend to ship there because we have an egg that’s very — a live egg is an embryo egg, and it’s something that doesn’t travel well. Our biggest marketplace tends to be the U.S. And again, we have the opportunity to ship there but we don’t tend to because of the cost barriers.
The bigger play is what’s the benefit to all Canadians? You’re right, I think these agreements are made for a reason, but the benefits under supply management I think far outweigh the potential benefit of export because what we provide to our producers, to the banks and all of that, is stability and predictability. I think in this that’s the bigger play.
Senator Oh: Do you see competitors in national markets coming in and affecting your market domestically?
Mr. Greydanus: Talking about TPP, I don’t see hatching eggs coming from Vietnam in that area. I just don’t see it. We did see it coming from the United States when they were part of it. They’re not part of it right now. We don’t see a lot of opportunities because it’s such a sensitive product. I can’t answer that with respect to chicken.
Mr. Ruel: First, in the chicken sector, you have to understand that Brazil and the U.S. are the two largest players in the world with cost of production mainly due to weather conditions that are way lower than in Canada. It’s a completely different structure.
U.S. production is about 16 or 17 times larger than Canadian production. Of course, their cost of production is lower, being located in the southern part of the U.S. Brazil’s production is 10 to 11 times larger than Canada. Brazil is the largest exporter in the world. Their exports alone are three times larger than Canada’s total production. The cost structure is very different. Those two countries alone most years usually export about 75 per cent of the chicken around the world. There is a very strong dominance in the market of those two countries. Canada will not compete against those two powerhouses. We do have some exports of niche products, but you’re talking about a completely different scale.
In terms of imports from CPTPP countries, going to the latter part of your question, we understand imports will come in from Chile. It could be other countries later on but currently from Chile. They already export a small volume of chicken to Canada because the CPTPP was not in place. As soon as they ratify, they’ll be in a position to benefit from the new agreement, and the TRQ will come from this country.
[Translation]
Senator Miville-Dechêne: My question is for Mr. Ruel. First, could you tell me Quebec’s percentage in the poultry industry? Pardon my ignorance, but I don’t know.
Second, has your industry already been compensated as a result of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership?
Third, you are saying that Canadian production standards should be imposed on the U.S. In the current context, is it realistic to think that this scenario is plausible?
Mr. Ruel: Thank you. I don’t have the exact percentage for Quebec.
[English]
Mr. Klompmaker: The exact percentage for Quebec is about 27 per cent.
Senator Miville-Dechêne: Thank you.
Mr. Klompmaker: To answer your other question about whether compensation has already been given after the CPTPP, in our sector we did not receive any compensation.
As to the other piece around standards, maybe I’ll give you some examples of what we’re talking about when we get into standards and what we would like to see. If you look at vaccines, we administer them on the farm or at the hatchery level, and there is a 21-day withdrawal time for all vaccines administered either at the hatchery or at the farm level. You can’t market that product for 21 days after. In some countries, it’s zero.
The other piece is around the classification of antibiotics. In certain countries, their scaling of how the antibiotics are classified is different from what we have in Canada. What can end up happening is, if you look at a specific product that was raised without antibiotics, raised without antibiotics in one country would be different than in another country, but that product would be able to come into Canada with the product we are not able to use because that does not meet the definition of “raised without antibiotics.”
Other areas are around feed additives. Some of the probiotics they’re able to use in the United States are not available to our farmers in Canada. We would like to see that we have a quicker way of accessing these and getting these products approved so our farmers can use them. What ends up happening with those three different standards in other countries that I’ve identified is it actually disadvantages our farmers because we’re having to compete against that product that’s coming in.
[Translation]
Mr. Ruel: I have something to add. We don’t really need to demand or ask that American standards be changed, but we must nevertheless realize that the trade of goods is going global whereas the rules are not. We fully agree that Canada should have certain standards to maintain high quality, but we must also ensure that our industry remains competitive with the countries with which we have trade relations and free trade agreements.
We must therefore ensure that, if the goods are liberalized, the same happens with the rules.
Senator Miville-Dechêne: Unfortunately, experience shows that the rules for wage levels and working conditions do not change once free trade is in place. So it’s not specific to the poultry industry.
I’m really intrigued, so could you explain to me what the fraudulent importation of mislabelled broiler meat is?
Mr. Ruel: Broiler chickens are subject to import controls, and therefore to a tariff quota, with the volume of imports negotiated under the trade agreements we are discussing today. Spent fowl is not subject to any import controls, and therefore to no tariff quotas, and can be imported in unlimited quantities. For some cuts, such as boneless chicken breast or boneless spent hen breast, there is virtually no visual difference for an inspector. An inspector cannot see the difference between the two.
In recent years, we have often seen Canadian importers import chicken, but declare it as spent fowl to avoid customs controls. So they were importing chicken into Canada by falsely declaring it as spent fowl, and the illegal imports into Canada created market distortions. This reached such a point that imports represented a level equivalent to 100 per cent of the slaughter volume in the United States, which was virtually impossible.
This issue has been on the radar for many years, and we have been working with Trent University in Ontario to develop a DNA test that differentiates between the two types of meat, so that there are no longer any fraudulent imports at customs into Canada.
Senator Miville-Dechêne: Thank you.
[English]
Senator R. Black: Thank you very much. Mr. Klompmaker, you talked about requesting from the Government of Canada a commitment that goes above and beyond what was announced in 2015. Are you sensing an appetite for that commitment? You listed a number of things. Are we getting there in your discussions at the committee level?
Mr. Klompmaker: Within the committee, I believe we are making progress. At this point, we can’t really divulge what’s been discussed within that committee. But I think we will meet the deadline that is required. There needs to be a willingness from the government’s side to make sure we get what we’re asking.
Senator R. Black: Is there a second committee you’re working on, visioning, as the dairy sector has? Do you have two committees on your side too?
Mr. Klompmaker: No, we don’t.
Senator R. Black: Mr. Greydanus, you talked about other departments and you recommended that other departments should be involved. Could you expand on that, please?
Mr. Greydanus: If we’re entertaining a tax credit, which is one of the strategies I think we were focusing on, my understanding is that the AAFC would probably not have that jurisdiction. That’s where our thought process is, that it would naturally encompass treasury, I think. That is the rationale.
Senator R. Black: In last week’s Ontario Farmer, on the third page, it says that dairy farmers are advised to prepare for the Nairobi declaration. That’s the first I read about that. Is there any concern on the hatching egg or chicken side of the supply management sector? Should you be concerned?
Mr. Greydanus: I’ll let Yves answer that one.
Mr. Ruel: I haven’t read the article. It probably refers to the agreement in Nairobi that eliminates export subsidies. We don’t have export subsidies in the egg and poultry sector.
Senator R. Black: So no worries there.
Mr. Ruel: No.
Senator R. Black: Thank you. Those are my questions.
Senator C. Deacon: I think with respect to the explanations about the short shelf life and the hatching egg business it is important to explain to Canadians and others the reasons why there should be protection in your sector. That was a nuance that I didn’t appreciate.
When it comes to the poultry side of things, I’ve had a business where I was trying to export to Brazil. The non-tariff trade barriers were tougher than any tariff in trying to get products in. We need rules that are fair. It concerns me greatly that Canadian rules that you have to adhere to do not apply to or are not being used on products that we import. I think Canadians would expect the same standards to exist.
If there is a reason based in evidence for those rules in the Canadian market, how do we make sure that product that is imported has to follow those same standards? Do the trade agreements allow for that? Because it’s an apples and apples marketplace that we want. When you’re looking for help to access global markets, can you be quite specific? I’m a real believer that we should never have a defensive strategy. We have to have an aggressive strategy to dominate and be the most competitive globally. Those are the two sides.
Mr. Ruel: There are a few elements here.
First, in terms of the rules, some rules on imported products are enforced by CFIA and other authorities in Canada. Over time, we’re also asked to develop more and more standards, for example, as Tim mentioned earlier, the withdrawal of vaccines, which in other countries they don’t have to. It doesn’t make the product necessarily unsafe, but we want to adhere to those high standards in Canada. It doesn’t mean that the product coming from other countries is unsafe, but it doesn’t meet those same standards that we put in.
For example, we’ve developed on-farm biosecurity practices, on-farm food safety programs and animal care programs that are obligatory for all Canadian farms. They don’t necessarily have that in all countries. This is not the concern from the importing agent or CFIA to make sure they have animal care programs.
Those are the kinds of things we are talking about. It is not necessarily things mandated by government, but it makes sense and that’s what Canadians want.
Senator C. Deacon: That could be more of a branding and customer-value issue in your industry, that the customers don’t appreciate the superior quality of the Canadian product and they just look at chicken breasts on the shelf and think they are all the same. That is a great area of opportunity for you in the Canadian market, I would expect.
Mr. Ruel: We’ve developed a brand raised by a Canadian farmer with a little red circle with the chicken logo in the middle. We’re trying to promote that as much as possible. That’s why also as part of the mitigation measures we’re asking, one important one, and that’s a market development initiative so we can promote. Because we’ve seen, especially after the conclusion of the CUSMA, Canada-U.S.-Mexico Agreement, lots of requests for: How do I know if my chicken is Canadian? We have this brand now with more and more partners.
Senator C. Deacon: It sounds like that could be a great opportunity from an export standpoint as well in selling a superior quality product globally. That sounds like a very important initiative.
Mr. Ruel: It’s definitely something we’re working on, a big need for domestic, and could be an opportunity on the export later on.
Currently, world exports of poultry or chicken is definitely a commodity product. There’s not much of other products. We do export some niche products of higher quality or specific needs but that’s very small volume.
Senator C. Deacon: Specifically, how do we protect against practices that we don’t want to see happen, that are happening in a farm, in a building in Brazil or — I shouldn’t have named a country — in another country? And that can’t be seen here. What would you recommend that the Canadian government put in place to make sure that Canadians are getting the same type of product or know that it’s a different product and that’s very clear?
Mr. Klompmaker: There are agreements that are put into place between countries. Canada would have to have a veterinary agreement with Brazil. I’m not sure how certain on-farm food safety standards or animal care practices could be incorporated within that veterinary agreement. I would think that we could encourage government to try to address some of those issues.
Senator C. Deacon: Or note the difference in the product —
Mr. Klompmaker: At least note the difference, yes.
Senator C. Deacon: — on the shelf.
[Translation]
Senator Gagné: I understand that the various free trade agreements open up the Canadian market to international producers, which is not very favourable for Canada’s egg and poultry farmers, among others, because of various factors that you have already mentioned.
In light of that, should we not focus on developing products that are suitable for export? Shouldn’t the federal government be encouraging the development of specific products for international markets?
[English]
Mr. Klompmaker: We do export some product, as you said. Some of the products we are exporting are around organic, some kosher products come in out of Ontario; but other than that, we’re not a big exporter of product.
As was indicated before, as in most cases, any of the product that gets exported and that’s in the world, it’s all commodity chicken. It’s not a very lucrative business to be in. In a lot of cases it’s where countries are just moving product out of their own country. I don’t see that there is much of an opportunity for us. We might be able to expand those markets that we do touch on now that are a niche market, but there again those markets are very limited in their size.
Senator Gagné: Even with the Canadian brand?
Mr. Klompmaker: The Canadian brand does seem to gain some recognition on some of the export product. We’ve heard that from some of the people who are doing these products. Whether that could be expanded out to commodity, I don’t see it as being a big value to those countries that are actually bringing that product in.
The Chair: Thank you. My brilliant questions have already been asked by everybody else.
That brings us to the end of this panel. We’ve gone a little over time, but that’s okay because it has been a fantastic discussion. I’d like to thank our panellists for having been here today. Excellent recommendations, very specific recommendations in your presentations, and I think some more detail regarding those came out as a result of the questions here today. That’s very much appreciated.
For our next panel, with us here today we have the Turkey Farmers of Canada, represented by Mr. Phil Boyd; and from the Egg Farmers of Canada we have Mr. Emmanuel Destrijker and Ms. Judi Bundrock. Mr. Destrijker is the executive member and Ms. Bundrock is the director of international trade policy.
Thank you very much for accepting our invitation to appear today. We’d like you to make your presentation. As you know the drill, it will be followed by questions from the senators.
We will start off with Mr. Boyd.
Phil Boyd, Executive Director, Turkey Farmers of Canada: Thank you, chair, and honourable senators. It’s good to be with you today. We appreciate the invitation to talk to you about the issues that are confronted by our farmers and industry as a result of the CPTPP and the new NAFTA, the CUSMA.
There are some details on our sector in the submission we made in writing a week or so ago. I’m not going to repeat that, in the interests of time.
It’s not our first time in front of the Senate Committee on Agriculture and Forestry. Over the years we’ve been here three or four times, once on research and once on the pending TPP and the concerns our sector had about how that agreement was unfolding and where it was going to land.
We were clear about our concerns then, and here we are today; those concerns have been realized. That increased market access under both agreements is at a cost to our sector and our farmers. With that, we welcome this chance to be with you today to speak to you about some of those particulars.
In summary, we’ll look at the aggregate impact of the CPTPP and the CUSMA. The details on both are in our submissions. The CPTPP had a larger negative impact on our sector than did the new NAFTA.
We’ve learned that successive governments have actually increased market access through trade negotiation, for our sector and for the others you will be hearing from and have heard from so far. Our point is that this cannot be allowed to happen further. This is eroding the strength of our sector, it’s eroding the production of our farms and plant throughput, and it puts us in a position where we’re now talking about mitigation for lost markets. That’s not where our group wants to be, by a long shot.
Combined, the two agreements will put on our industry a lift of about 90 per cent in terms of market access, so almost a doubling of our historical market access that’s been coming in as a consequence of the WTO and the previous NAFTA agreement.
In six years, we’ll be looking at a 8.6-million-kilogram hit on Canadian farms. That’s as a result of the CPTPP. It’s front-loaded on 6 years and then continues on over 19. There’s another million from the Canada-United States-Mexico Agreement. At the end of 19 years, we’re looking at about a 10.5-million-kilogram hit on our marketplace and reduction on our farm output and plant throughput.
Mr. Greydanus earlier expressed it as an opportunity cost in numbers of new farms. In our case, we figure we’re somewhere between 20 and 25 new farms, is what this increased access amounts to. Taken to the negative, that cost is about 20 to 25 farms. How we choose to look at that will affect how we go forward.
We’re pleased that the government has followed through on its commitment to look at mitigation programs and packages. The working group announced late last fall has been under way. Its focus is on the combination of the two agreements, to our relief, because they’re both very important. We’re absolutely pleased to be part of that process. We welcome the opportunity to have serious input on the way through. We’re confident that, at this point, the input we’ve had as we go through the working groups has been heard clearly and that we’re having what we would say are meaningful conversations at the working group level about what the future looks like.
Technically, there’s still some work to fine-tune and resolve. That’s well under way and we’re in good shape on that. As good as the working group result is, we understand that it’s the political masters that will ultimately decide on the package and the elements of that package as we get to the end result.
We’re looking to the government to be honouring their commitments that have been made over time and working with our sectors to put into place the elements of a mitigation mechanism that will solve short-term and, more importantly, medium-term and long-term issues that will be confronted.
You heard earlier about the five elements of the principles of a mitigation system program package — whatever you like to call it — that we’ve spoken about. They are: market development, some investment incentive — perhaps through a tax credit — TRQ allocation, administration needs to be supportive of the domestic industry, and in circumvention of import measures in place now and then upholding Canadian production and processing practices, which was discussed at length in the previous panel.
The one piece that’s really important is a turkey is not an egg, a turkey is not a chicken, a chicken is not an egg, a table egg is not a hatching egg. We all have different nuances in our markets. As we look at these five core principles, which make perfect sense, we’re looking for flexibility within those that meet the specific needs of the market that’s being talked about.
Our needs in the turkey sector are really focused on market development. Perhaps it’s a lesser issue in the chicken industry in some respects, as you’ve heard today. It’s an order of magnitude and just where our markets are situated in terms of Canadian consumers.
We fully expected that in the announcement of any of these agreements the government would not only talk about concessions made in market access, but also the opportunities that are presented for our sectors as a result of these negotiations. That was discussed at some length in the previous panel. We would expect any government to say that. How that actually manifests itself day to day is a whole different question and presents us with a number of challenges. Perhaps during the question and answer session we can talk more about where we see opportunities or lack thereof.
We really appreciate the chance to be here. In quick summary, our sector was negatively affected by both agreements. I remind you it’s a 90 per cent increase in market access. That’s a shock to any marketing system, no matter the time frame. The CPTPP is to be implemented over a 19-year time frame. We would be looking for any of the damage that accrued over that 19-year time frame to be built into a mitigation package along the lines of the five components that we’ve discussed. And we underline the need for sector-specific flexibility on how that all manifests itself.
As noted early on in my comments successive governments have elected to find solutions to trade negotiations by increasing TRQ not only for the turkey sector but for the other four that function within supply management. It’s a terrible cost to be borne by a handful of producers in terms of getting an agreement into place. We understand the dynamic of trade negotiation. We understand why all that happens. We also understand that it need not necessarily happen in the future as we get into negotiations either in Mercosur, for example, or perhaps even in the WTO, as we are concerned it is picking up a certain amount of momentum.
The mitigation package we land on is really important to the short and medium term for our farmers. We look forward to seeing your recommendations and thoughts and your influence as you go forward through the completion of this and take your advice forward to the government in the interests of our farmers.
Again, thank you very much for your time. I’ve gone rather quickly just so we’re not repeating what you already have in front of you in writing and what you may have heard earlier.
The Chair: Thank you very much for your presentation. We’ll now hear from the egg producers.
[Translation]
Emmanuel Destrijker, Executive Member, Egg Farmers of Canada: Thank you. I’ll be making my presentation in French.
Thank you, Madam Chair. Thank you for having us here today.
Canada’s egg farmers welcome the opportunity to provide their views on support and compensation for supply-managed agricultural sectors in relation to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Canada-United States-Mexico Agreement, as well as other initiatives related to international trade negotiations and their potential impact on our sector.
My name is Emmanuel Destrijker, and I have been an egg farmer for two generations in the Plessisville area of Quebec. I am a member of the executive committee of Egg Farmers of Canada. Joining me today is Judi Bundrock, the director of international trade policy for Egg Farmers of Canada. We will be happy to answer any questions you may have following our presentations.
We are pleased to be here today with our fellow poultry farmers representing Canada’s egg, chicken, turkey and hatching egg producers.
Egg Farmers of Canada manages the national egg supply and promotes egg consumption while representing the interests of regulated egg producers from coast to coast.
There are over 1,000 egg farms across Canada, located in every province and in the Northwest Territories, dedicated to producing the fresh, local eggs that Canadians want and enjoy. In fact, a survey conducted by one of Canada’s top polling firms confirmed that over 88 per cent of Canadians say it is important that the eggs they purchase come from Canada.
We understand the importance of the Trans-Pacific Partnership and the Canada-United States-Mexico Agreement to Canada and the economy. However, our members are disappointed and concerned with the outcome.
While Canada’s system of supply management remains in place, both deals further open our domestic market to egg imports. The trade agreements will have a lasting impact, particularly on young farmers who are making a start in our industry and on Canadian consumers who prefer to purchase Canadian eggs. Our primary concern is the increased market access for eggs.
Under CPTPP, the government did not suspend market access concessions agreed to for eggs in the original TPP agreement. These were mainly in response to demands made by the U.S. who is no longer part of the agreement. As a result, the CPTPP agreement unnecessarily grants access to the Canadian egg market in the order of 19 million dozen eggs per year at the end of an 18-year implementation period. The outcome of the CPTPP placed greater pressure on the CUSMA agreement, which grants the U.S. just over an additional 11 million dozen eggs per year at the end of a 16-year implementation period. The combination of CPTPP and CUSMA market access, in addition to requirements under World Trade Organizations rules, means foreign eggs can fill a total of 7 per cent of current domestic production, or 51.4 million dozen eggs.
I know that’s a lot of numbers, and you heard numbers from our colleagues as well. That is the equivalent of the annual production of nearly 85 average-sized egg farms in Canada. Is that a lot of farms? For our sector, 85 farms means the production from New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. It represents the production of those four provinces. That’s the impact on our sector. This will affect generations of egg farmers forever, resulting in billions of eggs that my fellow farmers and our children will never be able to produce. This will also affect the health and continued viability of rural communities across Canada who rely on our farms for much needed rural jobs and for support to other businesses in our communities.
Our focus is on working with our government to ensure we have the tools we need to manage our industry in the context of these new trade agreements, with the next generation of egg farmers in mind.
As our colleagues said, five mitigation strategies have been put forward to address the needs of producers affected by the open market access under the trade deals. The strategies include: an investment tax credit program, a market development fund, an action plan to allocate tariff rate quotas in the manner that is least distorting to the domestic market, a stronger import control pillar, and assurance that all imported egg and poultry products meet the same high standards as our made-in-Canada products.
Some of this work has already begun and we look forward to continuing our work with the government, including Agriculture and Agri-Food Canada and Global Affairs Canada. We believe it is essential to hold extensive consultations and we are pleased to be engaged in the process.
I would like to close by emphasizing the importance of a real outcome at the conclusion of the consultation and of finding a solution that is flexible enough to deal with the realities of each sector in a meaningful way, while fairly and fully compensating our industries for these losses. We have a long-term problem on our hands, so we will need a long-term solution.
I would also like to point out that we are following the WTO activities as well as the Canada-Mercosur Free Trade Agreement and anticipate that those talks will intensify in 2019.
Throughout these discussions, it is our intention to remind our government that supply management and the food security of our communities cannot yet again be used as a bargaining chip in future trade negotiations. It is not just the stability of our farms that is at stake, but also the ability of rural communities to thrive.
Thank you for the opportunity to offer our views. We look forward to your questions and to continuing the discussion on support for supply-managed agricultural sectors in relation to the recent international trade agreements. Thank you.
[English]
The Chair: Thank you for your presentation.
[Translation]
Senator Dagenais: My thanks to our guests. I find the subject very interesting. I just spent a few weeks in the United States. I had the pleasure of hearing Mr. Trump’s speech to the nation, who boasted that the Canada-United States-Mexico Agreement was the best agreement for the United States and for all countries, and that they had been influenced by Canada, which was not necessarily good for their country. We do not have to agree with him.
That being said, I would like to discuss compensatory measures. The current government has announced compensatory measures. Have you received any money for those measures? There were some with the agreement on the Trans-Pacific Partnership. What do you estimate the damage at? The fact that the U.S. or other countries are exporting more products to Canada will put you at a disadvantage. Have you received any compensation? If so, how much? How much will you receive when future agreements are signed?
[English]
Mr. Boyd: Thank you very much for your question, Senator Dagenais. No, there has been no money received either directly to farmers or to an industry sector in terms of mitigation funds in the wake of the CPTPP agreement. Rather, the working group is focused on both agreements together and the cumulative impact of the CPTPP and the CUSMA. We’re at a working group stage and into the technical details of what that harm can be quantified at. That has yet been completed. We’ll work along with the working group and prepare industry recommendations to the Minister of Agriculture and Agri-food in due course. We have a meeting scheduled with the working group on March 18, and we’ll move to final details and refining our collective recommendations to the minister. The short answer is no, we have received no monies either directly or in any kind of market development fund or indications of tax incentive for investment.
[Translation]
Senator Dagenais: I understand that no compensation has been paid and that you are assessing the damage. To receive compensation, you must be able to assess the damage done to you. Mr. Destrijker, have you received any compensation? Have you assessed the damage in order to provide the government with your losses and the compensation you believe you can receive?
Mr. Destrijker: Thank you, senator. We are in the same situation as our turkey farmer colleagues. To date, we have not received anything, directly or indirectly, as a result of this agreement or even as a result of previous agreements. We are members of the working committee. We are all on the committee together and we are assessing the damage that will affect our industry.
Senator Dagenais: Thank you very much.
Senator Miville-Dechêne: I will continue along the same lines as my colleague, Senator Dagenais. The dairy producers who appeared before us said that they estimated the damage at $450 million in losses per year. Are you uncomfortable providing us with the amount of your losses because you are in negotiations, or are you having difficulty estimating the cost of those agreements to the industry?
Mr. Destrijker: We are not uncomfortable because of discussions or negotiations. We are uncomfortable because we have not finished the work yet. We want to ensure that we have a positive long-term impact on our industry. That’s really why.
Senator Miville-Dechêne: I have another question about market development. I was pleasantly surprised to learn that, in the case of turkey and eggs, you felt that developing markets outside Canada would be a solution or a way to limit the damage. For chickens, we were told that it was impossible to be competitive abroad because of heating costs. Isn’t that the case for turkey or eggs?
Mr. Destrijker: I don’t know where that comes from, but we are in the same situation as our colleagues. The average farm in Canada has about 24,000 laying hens. The average farm in the United States has 1 million laying hens. We want to be able to fight these multinationals, which in most cases are fully integrated companies. However, to do so, we need weapons and we do not have any.
Senator Miville-Dechêne: How can you develop markets under those conditions?
Mr. Destrijker: In the short term, we do not intend to develop markets. We want to ensure that we respect the Canadian market and meet the needs of our consumers. We need long-term strategies to be able to develop markets.
Senator Miville-Dechêne: Thank you.
[English]
The Chair: Mr. Boyd, do you wish to comment?
Mr. Boyd: I apologize. I may not have been clear in our remarks. Our market development initiatives are domestic market development initiatives. My apologies for being less than clear on that.
Senator Miville-Dechêne: It may be me.
Mr. Boyd: In terms of external markets, in terms of looking at export markets, there are not a lot of opportunities in export markets as a result of these agreements. The two largest turkey meat exporters in the world are the U.S. and then Brazil, who is a partner in Mercosur, so we have some concern about how that will unfold.
Chile is the one country under the CPTPP that will export meat to Canada. In the past, we have had Chilean turkey meat come in using a significant proportion of the market access supplied out of Chilean suppliers through Canadian importers.
We’ve heard that maybe the TPP provides an opportunity in Mexico. Well, not so much. The U.S. is the number one supplier in Mexico. Mexico is probably their single biggest market. Their focus is on the Mexican market and the new CUSMA will keep those doors open for U.S. product flow to Mexico.
As a matter of scale, the U.S. industry is about 15 times the Canadian industry, so our focus is developing our domestic market. We have really positive protein for Canadians’ diets and that’s really our focus. When we talk about market development, we’re very focused on having Canadians eat more Canadian turkey.
Senator Mercer: There was reference to programs that might help mitigate the damage caused. The egg farmers talked about the tax credit program and fully compensating the losses. I go back to my original concern that there will be a line in future budgets that will show direct payments to either farmers or to farmer groups in supply management, thus removing one of the primary defences of supply management against the opponents. There are many opponents to supply management in Canada. More importantly, there are many in this city who are members of Parliament or members of the Senate. We’ve now given them some ammunition.
As a supply management defender, what is my message now when I used to say, “There is no line in any budget that shows money going from the Government of Canada to farmers in the supply management sector”? How do I do that?
[Translation]
Mr. Destrijker: I will answer your question as best I can. Supply management is a social contract between the government, Canadians and the egg farmers who are under the supply management system in Canada.
In my opinion, in the last trade negotiations, part of the contract, part of the agreement, was broken because of the holes that were created in the supply management system. Supply management is designed to meet Canada’s needs for eggs, chicken, turkey and hatching eggs. However, in my opinion, with these new agreements, part of the contract has been breached.
I understand that your role is to defend this line that you do not like in the budget. I don’t like it either, and I would rather not see this line in it. I would rather be able to continue to produce eggs for my fellow Canadians than have a line for it in the budget.
[English]
The Chair: Mr. Boyd may want to comment on that.
Mr. Boyd: In addition to the social contract piece that Emmanuel spoke of, there are a number of things. There is a strong difference between compensation and ongoing subsidy. Compensation for confiscation of a part of a market is a logical explanation in terms of the mitigation. The Turkey Farmers of Canada is not looking for direct compensatory payments to farmers largely for that reason. We want to use our money to invest in the medium- and long-term health of the sector.
Also at risk in terms of chipping away at supply management is the national property. The social contract was mentioned, but there is a federal-provincial agreement that binds the provinces into a national marketing scheme and permits the ongoing production of poultry and egg products in virtually every province in the country. In our case, it’s eight provinces, not including Newfoundland and Prince Edward Island. That adds to rural economic health.
There are a lot of good reasons why your question is valid. We think there are valid answers to it. Our members don’t want to be in the budget either.
My final point, there has been a lot of development monies promised by governments over time to many agricultural sectors totalling millions of dollars. Our groups have not particularly been part of that, but with this definite trade away of our market, I guess we are kind of at that point where we have some development work to do to offset the damage. That’s why I think we’re working sincerely with the working group to come up with the right amount.
Finally, we wholeheartedly agree, senator, there are a lot of critics of supply management. I think you raise a valid point. But just because they’re critical doesn’t mean they’re right. We will continue down the road to defend supply management for the long term and work this through in a way that reduces the implications for our farmers.
Senator Mercer: I know they’re not right. I would encourage all of the groups in supply management to redouble their efforts because these people will be coming and they will be demanding changes that those of us who support supply management don’t want to see. I think one of the answers to the question is the innovation that can happen in the sector. Let’s see if we can make the export side of this thing work.
I know how difficult it is for certain products, but we produce quality products. I think that Canadian farmers, whether in supply management or otherwise, are some of the most innovative people in this country. I wish you well.
The Chair: Ms. Bundrock, did you have a comment?
Judi Bundrock, Director of International Trade Policy, Egg Farmers of Canada: Yes, I have a short comment to add to what has already been said by my colleagues.
I think there are a lot of critics of supply management, but there is also a good-news story in that recent polling shows that 88 per cent of Canadians support supply management. That’s important to keep in mind as well when you’re talking about supply management and defending the system.
Senator Mercer: You keep reminding politicians about that number, that it moves votes for them.
Senator R. Black: Quickly to Mr. Boyd and the Turkey Farmers of Canada submission, there are three different percentages floating around on page 3 of your documentation. The first one speaks to the fact that the two agreements will increase import access by almost 90 per cent. A couple lines down, it talks about the national annual farm output loss of close to 6 per cent. And further down, under “Federal Government Announced Support,” it speaks to the access and that what we will be granted amounts to 2 per cent. Can you just explain those three numbers again, for my sake?
Mr. Boyd: Sure. Thank you for the question, Senator Black. We’re going from about 5.6 million kilograms of access currently to about 10. That’s the 90 per cent lift. It’s a doubling of that access.
Senator R. Black: That can come in?
Mr. Boyd: That will be coming in. That’s from the import side.
We’re looking at a loss of about 6 per cent. That equals 10.5 million kilograms of live-weight turkey, so that’s the replacement piece there.
The 2 per cent number is largely in the context of the CPTPP. We were looking at an increase in access that the government said was about 2 per cent of our production, I think, in 2014-15. That doesn’t sound like very much, but what it fails to acknowledge is what will come into our market will be boneless skinless breast meat. One kilogram of that replaces 4 kilograms of live-weight turkey, and that’s just the carcass yield. White meat is the driver in the North American market in terms of the turkey meat market. That 2 per cent is one figure; the real impact is significantly larger. That’s just the math.
Senator R. Black: Thank you. No more questions.
Senator C. Deacon: Thank you for coming in and talking to us.
I’m shocked, just looking at the market numbers in eggs and turkey, how above the norm our house is in terms of average consumption. The market opportunity for you to grow in this country is significant, if I’m any evidence as a consumer.
I want to go back to the product differentiation element. I think it works in the domestic and global markets. I believe in Canadian farm production, I believe in Canadian food as being a superior product and I believe we have to keep striving to do that, as I think all farmers do.
I want to hear just a bit more about how you see growing the Canadian market for both of your products, because I think there’s an enormous opportunity there.
For me, I have trouble with the term “supply management.” I’m a real believer that competition is a very good thing. It brings about innovation. I was very glad to hear, Mr. Boyd, when you talked — I think the last panel did the same thing — about the need for the industry to create some structural opportunities by investing very carefully in the next period of time.
I want you to speak about, if you could, market development in Canada and globally, specifically where you see the opportunity being, because I think it has to be a lot bigger than what we’ve given up for the trade agreements. I personally believe that.
Then innovation in terms of not just how you’re delivering that value to consumers but how else can you develop new products or new ways of delivering additional value to consumers and capturing a larger portion of that for your farmers, that level of innovation. There have to be ways to improve the perception of the value you’re delivering to consumers and get more back to the farmers. To me, they’re both such foundational products.
Mr. Boyd: Thank you, Senator Deacon, not only for your question but for your ongoing support day to day. We appreciate it very much.
There are a couple of things that are kind of fundamental. In terms of product differentiation in the domestic market, our sector, in partnership with the buyers of live turkey, is on the brink of investing significant money in terms of market development in Canada. That’s a positive piece in terms of our longer-term strategy.
What we’re confronted with in our particular sector, and the others probably don’t share it quite like we do, is that we have a consumer that thinks of our product two or three times a year — whole bird, hard to cook. The demographics are suggesting that our market is changing. A big part of our strategy is to ensure consumers our protein is easy to prepare, it’s good all year round, not just three times a year, and there are products on the shelf that are starting to meet that — ground turkey, turkey roasts, marinated parts. It’s really starting to emerge.
Senator C. Deacon: Turkey bacon.
Mr. Boyd: And eggs. That’s one piece that we’re taking on, so as we take that on from investing in our own sector we’re looking for great results.
The second thing is not only the demographics, but new Canadians do not know what turkey meat is. By and large, new Canadians come from areas in the world where turkey is not known or consumed. That’s another part of the opportunity that we’re digging into, and we will hopefully be commencing this spring and getting on it with a five-year plan in mind.
In terms of the competitive nature, there is competition between meat proteins, of course, and that’s what we’re confronted with — ground turkey versus ground chicken and ground beef. How does that meld in? We have had one company put a new product line out on fresh products. It has a 28-day shelf life. That’s an innovation in packaging. That 28-day shelf life before the last several months did not exist; it was significantly shorter. That’s an important innovation in terms of our market development.
In the global market — this is going to sound like a rinse repeat and I apologize for that — it’s very much commodity driven. There are niche opportunities in the United States for kosher turkey out of Quebec. There is some organic out of southwestern Ontario. This is not enough to build an industry on. This is good for companies, no problem, but this is not enough to build a strong industry on in the long-term in the commodity market.
Over 50 per cent of Canadian exports find their way to the African continent. It is for products like turkey backs, turkey necks, mechanically separated meat, a few wings and drums, not products that are widely consumed in North America.
Over time, proportionally the exports between Canada and the U.S. were probably the same proportion of our product that’s exported in any given year and largely the same kinds of products. It’s really commodity driven and whether “Canadian-raised” or “Canadian turkey” will carry a lot in those commodity markets is a question we will have to explore.
I appreciate your question. That’s kind of where we’re situated today, and we’ll see what the future brings. Our farmers don’t like these agreements. They don’t like that access has been given away, but they are not going to walk away from a challenge, either. They’re going to address this and address it squarely, move on and hopefully come up on the right side of this. Thank you.
Senator C. Deacon: Thank you.
Ms. Bundrock: The egg industry is in the fortunate situation of being a little bit different from what you just heard. We’ve had 12 years of consecutive growth. That’s certainly good news. That’s in part driven by increased demand by consumers but also by the commitment of our farmers to produce Canadian eggs for Canadians.
I think that growth is very important because it leads to increased investment by our farmers in their communities and overall. With respect to investment, just to give you a couple of examples, Egg Farmers of Canada is quite involved in investing in research. We have four research chairs. We have one in sustainability, economics, animal welfare as well as public policy. Certainly stability equals the ability to invest in things like that but also in rural economies.
I think one of the things that is quite interesting is our farmers are actually quite innovative. They want to do better. They want to do different and interesting things. We see a lot on our farms with regard to sustainability and environment. I thought this would be a good opportunity to let Mr. Destrijker give a few examples of what he and some of his colleagues are doing from an innovation perspective.
[Translation]
Mr. Destrijker: Some producers are now using wind energy to reduce their dependence on other energy sources. We have a farm in Alberta that produces no waste; it’s the first one in Canada. Farms are using many different initiatives. We talked about innovation, and now all new farms can be controlled remotely.
However, the agricultural sector suffers from a significant labour shortage. That’s why we try to be on the cutting edge of technology. We want to ensure that our children or employees can enjoy working conditions that may not be better than elsewhere, but that are at least the same as in other sectors of Canada’s industry.
In addition, we take advantage of partnerships with “all-day breakfasts”. This is one of the ways in which we plan to increase egg consumption in Canada. For a long time, Canadians ate eggs for breakfast only. Now, our way of thinking has changed and people eat eggs at any time of the day, not only in breakfast restaurants, but also at home and elsewhere.
Canadians consume about 250 eggs per year. In Japan, every person consumes over 300 eggs. We are eating more eggs every day.
[English]
The Chair: I think we’ve come to the end of the questions. I have a couple of quick ones. You’ve given some indication why the Canadian egg industry is growing. You cited recent annual reports. What is the primary mover of this? Is it that people are indeed eating more eggs? Which province is experiencing the most growth in egg production?
[Translation]
Mr. Destrijker: The increase in egg consumption is fairly stable across Canada. No province stands out more than another. The annual consumption of each consumer is improving each year. This did not happen by chance; we have been working for years to gain consumer confidence.
Newcomers do not always have large incomes, and eggs are a considerable and very affordable source of protein for them, as well as for all Canadians.
[English]
The Chair: Thank you. I’d like to thank our panel. Again, it was a very interesting presentation from both groups with some very specific recommendations. We appreciate that.
We have one order of business to do with the committee that involves a budget for a fact-finding trip to southern Ontario.
I understand Senator Mercer wants to put a motion to the floor.
Senator Mercer: That the following special studies supplementary budget application for the committee’s study on how the value-added food sector can be more competitive in global markets, for $66,308 for the fiscal year ending March 31, 2019, be approved for submission to the Standing Committee on Internal Economy, Budgets and Administration.
All should all have a copy of that budget. So moved.
Senator R. Black: I second that if you need.
The Chair: I don’t think we need a seconder, but it’s good to know we have your support.
Any questions? All those in favour of the motion please say “yea.”
Hon. Senators: Yea.
The Chair: All those against say “nay.”
The motion is carried.
(The committee adjourned.)