STANDING COMMITTEE ON RESOURCES
Mr. James DeWolfe
MR. CHAIRMAN: Good morning, ladies and gentlemen. I would like to call this meeting of the Resources Committee to order on this beautiful fall morning. Before we start, I want to welcome our presenters. We have with us from the Chicken Farmers of Nova Scotia Mr. Paul Cook, who is the Chairman; Mr. David Fuller, who is Director/Chairman of the Chicken Farmers of Canada; Mr. Ron te Stroete, Director; and Ms. Catharine Bielak. Catharine is sitting to the back there, and Catharine, if you are fielding any questions or making any comments, please proceed to the microphone for the purpose of recording.
Before we move any further, we will start to introduce our members, two of which aren't here yet. As they come we will introduce them, but starting with Barry.
[The committee members introduced themselves.]
MR. CHAIRMAN: Thank you. Gentlemen, what we normally do is proceed with a presentation and then allow time for questions. Most of us here around this table are from rural Nova Scotia, so we can certainly relate and appreciate having you here today. Paul, were you going to start out the presentation?
MR. PAUL COOK: Yes I am, Mr. Chairman.
MR. CHAIRMAN: All right, Mr. Cook, then you have the floor.
MR. COOK: And it is Paul, thank you.
MR. CHAIRMAN: It is Paul.
MR. COOK: Good morning, ladies and gentlemen, my name is Paul Cook and I am the Chairman of Chicken Farmers of Nova Scotia, as previously mentioned. On behalf of the chicken producers, we thank you for the opportunity to make our presentation to you this morning.
Before addressing the current state of the industry in Nova Scotia, I thought it would be worthwhile to look at the industry's successful past to develop an understanding of how we got to where we are today. The board was formed in 1966 as a response to the pressures facing chicken producers. At that time, the broiler industry was in shambles, with processors and feed manufacturers competing for a greater share of the market, causing unwarranted increases in production and widely-fluctuating live-paying prices to the producer. Within a few short years following the formation of the board, production levels came in line with market demand, the live-paying price gradually increased to reflect the farmers' actual costs, and process or wholesale prices stabilized. This structural change in the industry gave retailers the confidence to aggressively plan and promote chicken products within their stores, all in all, a success story that continues to this day with steady growth while remaining profitable.
The growth of the chicken industry in Canada has been phenomenal. In 1980, Canadians ate 17.2 kilograms of chicken per year. In 2000, the per capita consumption was 29.3 kilograms per year. The producers in Nova Scotia have kept pace with the rest of the country in both production and consumption. Although the price of feed is substantially higher here than in the rest of Canada, by focusing on farm management we have been able to maintain a viable, growing industry in which 62 per cent of the producers are under the age of 44. That is the highest percentage of anywhere in Canada.
I am sure you are well aware of the contribution the chicken industry makes to the economy of Nova Scotia. In 2000, our farm gate value was over $47 million, a growth of over 24 per cent during the past five years, and over the past 20 years, chicken production in Nova Scotia has increased 124 per cent. Additionally, in 2000, Nova Scotia produced over 41.5 million kilograms of chicken. This represents 3.5 per cent of Canadian chicken production as compared to Nova Scotia's 3.1 per cent of the population.
The local chicken industry is an impressive nest egg, since the average chicken producer creates several direct and a multiple of indirect jobs. Hence, the chicken producers of this province are a significant employer in the Nova Scotia economy. In addition to the 83 chicken producers who I am representing here today, there are two processing plants and one further processing plant which employ in excess of 650 people. There are also four registered hatcheries, five major feed manufacturers, two feed supplement suppliers and one drug supplier. Therefore, you can see that the positive spinoff effects of the Nova Scotia chicken industry are wide and far-reaching.
The Nova Scotia chicken industry is looking optimistically to the future. Chicken production has increased yearly and continues to expand into new convenience areas of
further processing. Consumer health considerations, demonstrating preference for lean, high protein food, further brighten the industry's outlook. Although we believe the future is promising, we also believe that in order to succeed, we must be proactive and address issues, challenges and opportunities on a regular basis.
At the Federal-Provincial-Territorial Agriculture Ministers' meeting in Whitehorse this past summer, the ministers committed to strengthening food safety, enhancing environmental performance, improving risk management through safety nets, using science to help the sector create innovative new products, and renewing the sector by building on programming that addresses the needs of farmers.
We agree that it is time for a comprehensive Canadian, and also a Nova Scotian, agriculture policy, one that sets clear direction for the future. Regardless of our commitment, no sector can prosper unless Nova Scotia agriculture is sustainable in the long term.
Opportunities for chicken producers. Food safety. The chicken producers of Canada are at the forefront of food safety. The national On-Farm Food Safety Assurance Program has been designed by and for Canadian chicken producers. The main objective is to promote the production of safe, quality food. While designed and introduced at the national level, each provincial board is responsible for the promotion and delivery of the program. A manual has been developed and distributed to all producers and an audit/validation checklist has recently been finalized. Farm validation should begin shortly.
While the chicken producers of Nova Scotia are committed to producing a safe product, our resources are being stretched to the limit to fund both the education of our producers as well as engage staff to implement the validation process. It is difficult for such a small province as Nova Scotia, with limited resources, to find the funding which is more readily available in larger provinces.
The environment. When it comes to sustainable development, producers are usually caught in the middle, and I believe we are justified in feeling just a little bit abandoned. On the one side there are competitive pressures brought on by globalization, achieving economies of scale, and driving down per-unit costs; on the other side we face pressure from both environmental and social issues. Therefore, the challenge will be to integrate all the available information instead of treating economic, environmental, and social issues as separate considerations.
The chicken producers of Nova Scotia see developing environmental and nutrient waste management plans and water resource management strategy both as a challenge and an opportunity. In addressing the challenges in developing such plans, it is important not to forget that farming must remain economically viable, while at the same time secure sustainable development by using our natural resources in a way that will allow our future generations to use them as well. The opportunity is to continue to contribute to a healthy environment and
display that producers take their stewardship responsibilities seriously. However, any broad scope legislation must be developed in consultation with the producers and create a level playing field among municipalities so that certain farmers are not disadvantaged.
Additionally, legislation must be based on scientific information and not as a response to unfounded misconceptions as urban expectations are passed to legitimate farmers. The rural reality must not be forgotten, and we believe that a healthy environment is one of the largest building blocks for a strong industry.
Consolidation of retailers. Given the fact that most major retailers service their consumers from distribution centres, it becomes much easier for out-of-province suppliers to service the Nova Scotia market. With Ontario and Quebec's advantages with respect to size and volume, lower input costs, and the loss of local support, it is understandable why chicken producers feel, at the very least, the viability of the industry may be at stake. With the continued amalgamation of the food retail industry, the number of buyers continues to decrease, placing pressure on all stakeholders with no benefit being realized by the consumer in lower food costs.
As previously stated, the chicken producers of Nova Scotia face the highest feed costs in the country. We have proposed to the Prime Minister's Task Force on Agriculture that consideration be given to changing the Coasting Trade Exemption Regulation to allow for the lessening of restriction on the use of foreign, ocean-capable vessels to tidewater locations in prescribed circumstances. Without water competition, the high rail rates for feed grain shipments to Nova Scotia farms and feed mills places our producers at a comparative disadvantage.
By focusing on specific changes, the long-term viability of the grain elevator in Halifax, which is the only Canadian ice-free grain export facility on the East Coast, could not only be maintained but increased. The benefits could be far-reaching throughout the entire agricultural community. We are not suggesting that the regulation be revised in its entirety, we believe that specific and limited regulatory loosening, such as speeding up the process for obtaining waivers when domestic shipping is temporarily unavailable, the elimination or refund of duties when special waivers are needed, and allowing for consideration of economic factors and circumstance in the granting of seasonal waivers, would all maximize the grain elevators' long-term potential.
[9:15 a.m.]
In discussion with Dave Robinson, we recommend that this committee review his reports, as well as speak with officials of the Halifax grain elevator in a forum similar to today, and forward a letter to the task force supporting our position.
Multilateral and bilateral trade agreements. The demand for chicken is alive and still growing. Product selection and variety are important factors as further-processed chicken products continue to deliver value and convenience to the consumer. As chicken producers, we see ourselves as an integral part of a synchronized chain of production. Chickens are hatched, grown, processed, further processed, packed and distributed throughout this province. Therefore, well thought out multilateral and bilateral trade agreements are integral to maintaining our position. Our government must give us the ability to maintain our orderly marketing system.
As stated, the chicken industry has been a success story whereby production has steadily increased while remaining profitable without any government financial support. It is critical that the government make a firm commitment to support the orderly marketing system. This is especially important in Nova Scotia, for if the national supply management systems for chicken, turkey, eggs and milk were to disappear, it is questionable whether these farmers would be able to compete with central Canada and the world.
The government must ensure that the WTO and the other international agreements will allow us to maintain our domestic supply systems. Supply management has given chicken farmers and other sectors the chance to build a strong, profitable, sound industry, an agriculture industry that does not rely on the government for financial aid. The benefits of supply management are far-reaching in Nova Scotia and directly impact numerous sectors. As such, the essential tools that bring stability to our industry, such as the controlled level of market access and the maintenance of our effective over-tariff quotas, will ensure no more access in the committed level of tariff rate quota must be guaranteed.
In closing, I would just like to summarize a few of the highlights of our presentation. We are an industry which hard-working people built while maintaining a vision for the future. It is our goal to continue this vision by providing the necessary leadership on issues that face our industry both today and in the future. Our industry is dynamic and facing ever- increasing, complex issues, from issues that directly impact us at the provincial level to issues with broad-reaching implications both at the national and global levels. Today, the Chicken Farmers of Nova Scotia must contend with food safety, the environment and the consolidation of the retail industry. Looking forward to the future, we face world trade and securing an economical supply of feed grains for all farmers in Nova Scotia. The Chicken Farmers of Nova Scotia Board is up to the challenges that face us so this industry can remain strong and vibrant.
I would like to conclude my presentation this morning by posing the following question, does this government see a role for agriculture in Nova Scotia's future? Thank you. We would be more than happy to answer any questions. I have, as you have met, Dave Fuller, who is chairman of the national agency and very well-versed in trade. I have Ron te Stroete, who is chairman of our pricing committee for live chicken, and we have our general manager here as well.
MR. CHAIRMAN: Thank you, Paul. I want to introduce two of our members who came in just after you started your presentation: David Hendsbee, on my left, for Preston; and John MacDonell for Hants East. So welcome to you boys as well.
We will start the questioning off with our in-house chicken producer, Don Downe. You have the floor, sir.
MR. DONALD DOWNE: Mr. Chairman, some thought I might be in a conflict of interest, but I am very honoured to be here with my colleagues in the chicken industry. Sometimes I am referred to as, a.k.a., chicken farmer, or something like that, in the media but they all know how important the chicken industry is in the province.
I just want to cover off quickly on a couple of points. To begin with, Paul, it was an excellent presentation. I can say, on behalf of our Liberal caucus, we are 100 per cent behind supply management in the Province of Nova Scotia. I can't speak for others. They will say their own views but from a caucus point of view, provincially we are 100 per cent in favour of supporting the retention of supply management, because without supply management Atlantic Canada and Nova Scotia would be dramatically affected in a negative way, and it has been an economic development arm throughout all of Canada with the introduction of supply management, but also it has been able to provide quality food and food security for Nova Scotians at competitive prices.
In the area of cost of production you mentioned that feed is about 50 per cent of our cost of production - and Ron is very much aware of the negotiations that are going on with the processors - currently the producers are below the cost of production formula or are at the cost of production formula that has been set out at a national basis?
MR. COOK: Dave, do you want to comment on the national COP?
MR. DAVID FULLER: There is no national COP.
MR. DOWNE: There is none left anymore, so we are just based on competitive pricing between whatever the market will bear . . .
MR. FULLER: Pricing is determined by what it is like in the marketplace, time of year, storage stocks, there are many factors that come into the pricing.
MR. DOWNE: I wanted to bring that out because I think that is important.
MR. DAVID HENDSBEE: A point of clarification. Can I ask what the acronym stands for?
MR. DOWNE: Cost of production - COP. The reason I wanted to bring that out was that we don't necessarily set the price in Nova Scotia. We negotiate a price with a processor; it is based on a competitive across-the-board competition with what is happening in Canada. So unlike some other supply managed commodities, ours is a negotiated price based on competition that comes into the marketplace. So whatever the Ontario price is, we have to compete with Ontario, Quebec, and other areas. Is that accurate?
MR. COOK: Yes, our pricing committee actually consists of two directors from our board and a representative from each of the two processors in our province. They sit down every eight weeks and negotiate the live price of chicken. Factors such as feed, storage stocks, and what central Canada has done all play into our negotiations, so it is a negotiated price.
MR. DOWNE: Under the COP, cost of production formula, our cost of production model, whether it is formula now or model, 25 per cent of that is the cost of the chick, approximately, at least on my farm and 50 per cent is the cost of feed. As you mentioned here, access to offshore products for supplements in the feed to be used to reduce our costs would be a major component, because if 50 per cent of my cost of production is feed and I am at the mercy of western Canada and there is no feed freight assistance anymore, there is no subsidy in transporting that product down, we need to be able to access it more and in turn would end up providing lower cost feed for consumers in the Province of Nova Scotia.
MR. COOK: That is correct. What happened about seven or eight years ago was the federal government dropped their Feed Freight Assistance subsidy on the farmers. I never really saw any of that, it was absorbed by the feed mills and passed on to us as a supposedly lower cost feed. Seven or eight years ago the federal government abolished the federal Feed Freight Assistance program but - I am not going to say never put anything in place to replace it - they didn't loosen up any of the regulations that could possibly keep us competitive. I mentioned that the Coasting Trade Exemption and there is the federal Shipping Act and there are a couple of other federal things that could be loosened to allow us to bring in offshore grains into this elevator here in Halifax.
MR. DOWNE: You mentioned in your presentation, Paul, about the need for a motion from this committee, or you would like to have some direction from this committee, an all-Party committee, with regard to Dave Robinson, who is an economist with the Department of Agriculture and Fisheries, in support of being able to access either through less restriction in the Coasting Trade Exemption or other policies. The detail of that motion would
be principally that the all-Party committee would write a letter to the federal government in support of . .
MR. COOK: Yes, we made a position to the . . .
MR. DOWNE: . . . the position of the chicken farmers of Nova Scotia relative to accessing foreign grains through the Coasting Trade Exemption policy. Would that be . . .
MR. COOK: It would be foreign vessels, but if we need some loosening in the Coasting Trade Act in order to allow these foreign vessels to come in here under special circumstances - we don't need the whole Act thrown out, we just need some special waivers put in there that will allow a grain boat to come in here and drop off half its load before it heads into central Canada.
MR. DOWNE: That wouldn't have any negative impact on the grain production in P.E.I. or New Brunswick or Nova Scotia?
MR. COOK: I don't think. David's a grain producer, maybe he could address that more accurately than I could.
MR. FULLER: The amount of grain that is produced in, I'll say the Maritimes, because there is very little grown in Atlantic Canada, this would affect none of that because we're nowhere near self-sufficient in grains. The big topic is the foreign vessel. Even if we haul grain from western Canada, we have to use the Canadian fleet; we have to use Canadian crew. There's significant cost in that. If we could go to a foreign vessel, there are some savings that producers in this province would benefit from which would ultimately benefit all the way down the line to the consumer.
MR. DOWNE: So instead of bringing the grain down through the St. Lawrence, it would be able to access up through the Eastern Seaboard.
MR. FULLER: You can either do that, but even the access to use a foreign vessel through the Great Lakes - which you can't now, to move grain in Canada. There are opportunities for us to now buy wheat and barley out of the U.S., but of course, where our dollar is right now, it makes it a little uncompetitive. The foreign vessel, the shipping through the Great Lakes, is what would really benefit us the most. We support our Canadian colleagues in agriculture, whether it be grain producers in western Canada, but the access is that we need to have access to foreign vessels because there are some cost savings, as a producer, that we would see in Nova Scotia if we could have access to foreign vessels.
MR. DOWNE: Which ultimately also would be passed on to consumers with a more reasonable price.
MR. FULLER: Exactly.
MR. DOWNE: If the chairman is willing to allow a motion of support for the chicken producers, chicken farmers in Nova Scotia, a request of a motion by the all-Party committee and supported by the Department of Agriculture and Fisheries as well, I assume.
MR. COOK: We have made this request to the Prime Minister's Task Force on Agriculture and I think we'd like a motion of support to back our position with that Task Force.
MR. DOWNE: I so move, Mr. Chairman. I think there's enough information there on the detail of the motion. If it's in order, I would move that motion.
MR. WILLIAM LANGILLE: I would just like to say a couple of words before the motion. This is going pretty fast. Obviously you're a chicken farmer and you know what you're talking about; I think it looks like it's been discussed before.
A couple of things. You said that you'd like to see the foreign vessel drop off half its load prior to going into central Canada. Are you telling me that foreign vessels ship grain into central Canada?
MR. COOK: As far as I know.
MR. LANGILLE: And yet we have to have a Canadian shipping company to ship grain here that we cannot access foreign vessels?
MR. COOK: What I am saying is it could benefit all producers. Right now I am not saying there's grain going into central Canada from Europe that's not available to us. What I am saying is if we could get access to these vessels, central Canada could get cheaper grain as well. We probably could not use a whole boatload of grain.
MR. LANGILLE: At the present state, what I am asking, is there grain from other countries being shipped into central Canada as I speak?
MR. FULLER: Yes, U.S. corn.
MR. LANGILLE: And you say that you're not allowed to ship that here?
MR. FULLER: No, what we're saying is it can't be transported here through the Great Lakes unless it's on a Canadian vessel.
MR. LANGILLE: You're talking about the Great Lakes to the Atlantic Ocean?
MR. FULLER: Correct.
MR. LANGILLE: This Act that you're talking about, Canada Shipping Act?
MR. COOK: No, it's the Coasting Trade Exemption Regulations.
MR. LANGILLE: Now, you cannot grow enough grain here in Nova Scotia to meet the supply? Okay. What is the reason for that?
MR. COOK: There's just not the land base to support it.
MR. LANGILLE: You don't have the land base to grow the grain.
MR. CHAIRMAN: I will have to rein you in there, sir. There is a motion on the floor.
MR. DOWNE: We need a seconder to the motion and then they can speak to the motion.
MR. JOHN MACDONELL: I will second the motion. (Interruptions)
MR. CHAIRMAN: Perhaps you could put your motion forward first?
MR. DOWNE: I thought I did. I understood that the secretary understood very well that I had made the motion.
MR. CHAIRMAN: Then I will ask the secretary to read the motion as she has it at this point.
MS. MORA STEVENS (Legislative Committee Clerk): What I have, and I will certainly ask for clarification if I have written it down wrong, was to write a letter to the federal government in support of the chicken farmers of Nova Scotia for the need for access to foreign vessels through the Coasting Trade Exemption Regulations.
[9:30 a.m.]
MR. DOWNE: I want to clarify one point. Just for the record, because this is an official record-taking process, I haven't talked to any one of these individuals, the executive director and/or the presenters today, about this presentation whatsoever. Although Paul only lives a few kilometres away and I haven't seen Ron for quite awhile and I see this gentleman in the newspaper all the time, there has been no discussion about this whatsoever and I want to clarify that.
MR. LANGILLE: What would make you think that we thought that?
MR. DOWNE: Well, you said it. (Interruptions)
MR. CHAIRMAN: The motion is on the floor. Does anyone want to speak to the motion? Mr. Barnet.
MR. BARRY BARNET: Through you, Mr. Chairman. You may not have the answer to this, but are there any other economic sectors that would have a similar type of exemption in terms of poultry producers and that?
MR. COOK: I am not really sure. Are you talking agricultural or any shipping business, import or whatever?
MR. BARNET: At all.
MR. COOK: I am not really sure.
MR. CHAIRMAN: Mr. Boudreau, you wanted to speak about this?
MR. BRIAN BOUDREAU: Mr. Chairman, if I may, is this problem unique to Nova Scotia? For instance, the corn that is coming from the United States to central Canada, does that require a Canadian ship with a Canadian crew?
MR. FULLER: Anything that moves through the Great Lakes has to be a Canadian vessel.
MR. BOUDREAU: So the farmers in western Canada or central Canada, this issue is important to them as well.
MR. FULLER: You remember, they are not paying the additional costs, we are. There is no cost to them. Whether that grain moves by Canadian or foreign vessel from the Great Lakes east, they don't get any more for their product. The ones who are receiving the product are paying the additional costs.
MR. BOUDREAU: So this is a unique issue for Nova Scotia.
MR. FULLER: For Atlantic Canada. I wouldn't say for Nova Scotia, but for Atlantic Canada.
MR. COOK: I think it is more of an amplified problem in Nova Scotia where we are further east.
MR. CHAIRMAN: Mr. MacDonell, you have a question?
MR. MACDONELL: Yes, I just wanted to say that I support the motion. I want to say to Mr. Barnet, I think, if I understand Mr. Barnet's question, it may be that the committee will be doing something or supporting something that is giving an advantage to the Nova Scotia chicken farmers that some other organizations aren't getting. I would like him to consider. I would like him to consider things like the auto pact during the Free Trade Agreement that benefitted central Canada, subsidization to the St. Lawrence Seaway. We are always hearing about how much money is spent in Atlantic Canada or the welfare state in Atlantic Canada, but we never talk about money that goes to central Canada. So I would say that we can spend time looking at where advantages are and who seems to get the least of them, and I think Atlantic Canada is one place that gets the least.
Certainly I would say that the member for Lunenburg West is pointing to an inequity, I think. It doesn't seem to be a fair system. I think if the federal government would act on our motion and act on the request of the Nova Scotia chicken farmers, then I think they would remove an inequity and kind of level the playing field a bit for farmers here.
I want to say to the member for Lunenburg West, why didn't you talk to these guys before you got here? I don't think you should worry about saying that I never spoke to these gentlemen before that.
MR. DOWNE: I think I need to, I know some colleague referred to collusion.
MR. CHAIRMAN: On the question then, Mr. Barnet.
MR. BARNET: I guess it is more of a point of clarification. I was simply looking for evidence to support the motion, not looking for opportunities to not support it; in fact, it is my belief that if there are others in other economic sectors who are receiving similar benefits, then it should apply to all.
MR. RON TE STROETE: I would like to point out, if I could, that this is not only going to potentially help the farmers in the province, but it will also help the processors by the way we price in this province because we do negotiate price here. If the farmers come out with a lower grain price, it is going to give the processors means to lower their major input costs, which is the meat.
MR. CHAIRMAN: Mr. Hendsbee on the question.
MR. HENDSBEE: Yes, I have some related issues to the motion on the floor. In regard to access to grains by carriers other than Canadian, could you tell me, right now trade between the countries, north and south, can it go by any carrier? Do the grains go from Canada to the United States by any carrier or is it by just one particular line? Not one particular line, but one particular nation, does the U.S. carry grains out of Canada or do
foreign carriers? I want to know if we are having a trade barrier interprovincially versus internationally.
MR. FULLER: To my knowledge - and again I am not right up to this - I don't think there is any specific carrier. Grain can be moved by many different ways between the two countries, and you are talking Canada-U.S.?
MR. HENDSBEE: Yes.
MR. FULLER: It can be moved by many different ways.
MR. HENDSBEE: So we are basically having an interprovincial trade barrier here in regard to saying that any western grains have to come by Canadian carrier to Atlantic Canada. In regard to the current situation, I understand the Crow's Pass subsidy that used to be there for the grain farmers out west is going to be losing that opportunity. I am not sure where the status of that subsidy presently is, but the western producers have to send the grains to the west coast through the Crow's Pass and stuff. I understand that the railway subsidy was going to be eliminated; I don't know what the status of that is. I was kind of wondering if that subsidy has been eliminated, why is there still a restriction coming eastward instead of westward. My only other concern would be that your current access to grain, is it by trucks or by rail, the majority of it, or does it still come in by boat?
MR. COOK: Generally by rail, but there is some in the elevator here in Halifax as well.
MR. FULLER: In all honesty, the opportunity to bring it by water keeps the railway very competitive in the rates. Without that other option, the rail companies would be able to put up their rates to whatever figure they want because there is no other option available to you.
MR. HENDSBEE: If it came in by rail, the only storage spot for it would be here on the Halifax waterfront?
MR. FULLER: No.
MR. HENDSBEE: Is there a spot in Truro?
MR. FULLER: No. They can haul it into New Minas and there are facilities in the Annapolis Valley that can store a fair amount of grain.
MR. HENDSBEE: By rail though, is there still rail access available to the grain silos for storage?
MR. FULLER: No, not to the grain silos. Just to a certain point, it only runs so far in the Annapolis Valley now and then it is trucked from there to the grain centres.
MR. HENDSBEE: Okay, thank you.
MR. CHAIRMAN: Are you ready for the question? The question has been called. Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
MR. COOK: I thank you, Mr. Chairman. I think it might be prudent for you to also possibly meet with Dave Robinson and maybe the elevator people as well.
MR. CHAIRMAN: I was wondering if it would be prudent to send this letter, just for information purposes, to the Prime Minister's task force on agriculture. Is that correct?
MR. COOK: Yes.
MR. CHAIRMAN: Would it be advisable to just put in another clause there that they explore any opportunity that may be available to lower the feed costs for the producers in Nova Scotia?
MR. COOK: The producers would certainly appreciate it.
MR. CHAIRMAN: To explore it, not just zone in on one. So is everyone in agreement to that, to put in a paragraph to explore any other opportunity?
MR. HENDSBEE: Mr. Chairman, I hope that a copy of the letter will be sent also to Intergovernmental Affairs, because I think this is an interprovincial trade barrier issue and perhaps it could also be dealt with at that level.
MR. CHAIRMAN: Okay, thank you. We will just move right along then. Who do we have next on our speaking list? Mr. Epstein.
MR. HOWARD EPSTEIN: I was very interested in the presentation. It would be good to have copies of the presentation, if they're available. That would be a big help.
MR. COOK: Actually we passed in some copies of the presentation to Mora, and they will be distributed.
MR. EPSTEIN: That's great, thank you. I wonder if you could tell us a bit more about the position of your industry under the World Trade Organization and the negotiation framework that is now in place. I see some information in the materials that we have in front
of us, but I am particularly interested in knowing how you see the situation following what's just taken place in the talks in Qatar. What I wonder particularly is what opportunity you are going to have for input into the national stance. I take it Mr. Fuller is going to deal with it.
MR. COOK: Yes, we are very fortunate to have Mr. Fuller as chairman of our national agency and as a member from Nova Scotia. He is very well versed in trade, and I will pass it over to him.
MR. FULLER: First off, I guess we want to make it perfectly clear that we fully support the launch of a new round of negotiations under the WTO. We believe it is an essential step that must move forward. There are several reasons for that. In the last round of the WTO that was negotiated, there were many guidelines set down. In Canada we feel that guidelines are not the answer. We need a rules-based system. It is imperative that it must be rules-based. Guidelines are guidelines; they are not necessarily followed.
We must continue to improve the trade environment throughout the world, and one of the important, key messages that we are selling is that it is, first off, fair trade, not free trade. Free trade agreements are fine, but unless it's fair trade there are many losers in a fair trade system. I will tell you that we have a very solid position, and our federal government is extremely supportive of our position.
I do have some issues that do raise a little bit of concern with me. I had the privilege, in the month of October, to travel in Europe a little bit and get into Geneva, Switzerland, which is the headquarters for the WTO, and I met with a number of countries while I was in Geneva. It is very evident and very clear to me that the United States and the E.U., who have been using their bank accounts to continue to keep their farmers in business, are going to remove their funds from their trade-distorting measures and put them into - what we talk about is a blue box and a green box. The blue box is trade-distorting measures, and that is where the E.U. and the U.S. have been putting most of their money through to their farmers. Their intent now is to move that money from the blue box into a green box. The green box is non-trade distorting measures, and that gives us some real concern.
We see no benefit if the U.S. and the EU are allowed to do this, no benefit to the Canadian farmer, whether you are supply management or whether you are an exporter. There will be no benefit. Farmers in the EU and the U.S. will still continue to farm the mailbox, and that is not what agriculture is about. If the government is prepared to give me 50 per cent of what my revenue is for a year through the mailbox, I will definitely reduce my costs 50 per cent. That's what's happening in other countries.
What is extremely important for supply management in Canada is that over-quota tariffs must be maintained at the level they are at. We have made that perfectly clear. We cannot look at the opportunity of reducing these over-quota tariffs. There are countries in the world today, and I will use Brazil as the country that I like to talk about, that have a very
modern poultry industry, probably as modern as or more modern than Canada and the U.S., and yet they are deemed to be developing countries. We have some severe problems with the definition of what a developing country is. That needs to be defined much clearer. We should be looking at sectors, not countries as a whole.
[9:45 a.m.]
We have some concerns in some of these developing countries that standards they use will not be acceptable in Canada. Again, we talk about fair trade, not free trade. So it's extremely important that we work with our federal government as we have been and continue to pursue what we believe is a rules-based system, where everyone follows the rules and we continue to support what is essential in Canada in their domestic policies.
MR. EPSTEIN: This is very interesting, Mr. Fuller. I find it hard to imagine that any nation would want to enter into any kind of international arrangement that would threaten its own ability to be self-sufficient in food if it's in that happy position. It seems to me to be pretty basic that a nation wants to be able to feed itself if it possibly can. I am wondering how your sector has experienced, the last decade or so, since the first free trade agreement was entered into with the United States, has it impacted on you at all?
MR. FULLER: It has had an impact on Canada. I can speak specifically about the chicken industry, supply management has been deemed as a closed shop. That perception is really misleading. To give you a prime example, the U.S. has an understanding with Canada under the NAFTA deal that they will be allowed to ship into Canada 7.5 per cent of Canada's previous year's chicken production without any tariffs. That amount of production is more than Atlantic Canada plus Saskatchewan growth, to give you a magnitude of the size of product that comes in.
MR. EPSTEIN: Does that actually happen?
MR. FULLER: Yes.
MR. EPSTEIN: It does.
MR. FULLER: Most definitely. Our fill rates are over 100 per cent.
MR. EPSTEIN: Is it produced more cheaply in the United States?
MR. FULLER: They have a different marketing system than we have in Canada. What we like to believe in Canada is the supply management system provides the farmer with a larger share of the consumer's dollar compared to the U.S. farmer. It is not that the product is cheaper or more expensive, it's that the farmer in Canada gets a larger share of that consumer dollar.
MR. EPSTEIN: There have been imports from the United States, but they are capped in terms of total percentage, is that it?
MR. FULLER: It is 7.5 per cent of our previous year's production. If there is a shortfall in the Canadian market, then they can go to the government, to External Affairs, and ask for supplemental imports, which will again come in to keep the market full without any tariffs.
MR. EPSTEIN: What do you expect will happen in the next round of negotiations with the WTO?
MR. FULLER: We are expecting that our government will implement or try to implement a rules-based system, that over-quota tariffs will be maintained. We are prepared to give on our simple tariffs that come into this country. Our organization has shown flexibility, and we are prepared to give up on areas where we have had support in the past. It is a give-and-take situation and we are prepared to work on both sides.
MR. EPSTEIN: Is there any sign that either the U.S. or the EU are prepared to abandon their extensive subsidies?
MR. FULLER: In my opinion, I have not seen that sign. They had to go an extra day in Qatar to try to come up with an agreement. One of the reasons was the European Union was dead against the elimination of export subsidies.
MR. EPSTEIN: For Canada, in the poultry sector, is the issue really protecting the dominance of the domestic market, or are you looking internationally in terms of your ability to export more extensively?
MR. FULLER: We are mainly a domestic market. We do export. As we import 7.5 per cent of our previous year's production, until we export that same amount we are really just balancing the market. Yes, we do look to export. To give you an example, we are the seventh largest exporter in the world, but we are also the seventh largest importer of product in the world.
MR. EPSTEIN: I saw those tables, but our exports, it seems to me, are relatively small compared to our total production. Who do we export to?
MR. FULLER: Mainly to Cuba. I would say 98 per cent of our products go to Cuba. What is important for you to understand is that the Canadian market is mainly a white meat market, so what we do is we export dark meat. That part that comes in from the U.S. is white meat, so it's more to balance the market. The reason we can go to Cuba is because the U.S. does not go there.
MR. EPSTEIN: I think the only other point I would ask about was your opportunity for input into the Canadian negotiating position.
MR. FULLER: There is no question that the government has an open-door policy with us. We meet regularly with both the Minister of Agriculture, the Minister of Trade, and as well the chief negotiator for Canada.
MR. EPSTEIN: Thank you very much.
MR. CHAIRMAN: Thank you, Mr. Fuller. I have on my list Mr. MacDonell, Mr. Boudreau and Mr. Hendsbee, in that order. So, Mr. MacDonell.
MR. MACDONELL: Mr. Chairman, my apologies for showing up late. I have to say that I am a big fan of supply management. If I could talk other commodity groups into entering some forms that would work, mostly on the idea that you get your cost of production plus to make a living, and if we're not talking about agriculture for the benefit of communities and the province generally, then there's no point in discussing it, as far as I am concerned.
I am curious about a few things that have been said, so I will try to see if I can get some sensible flow to my questions here. You were mentioning about 50 per cent of the cost is feed?
MR. COOK: Roughly.
MR. MACDONELL: Roughly, and roughly 25 per cent is the cost of the chick. So there's another 25 per cent of your costs and what's that?
MR. COOK: Oil, labour, taxes, just general business expenses.
MR. MACDONELL: Electricity.
MR. COOK: Yes, and reinvestment along with that.
MR. MACDONELL: I want to thank Mr. Fuller, although I don't know if I have the full picture when you spoke about the blue box and the green box. I think you lost me.
MR. FULLER: It's three boxes, actually. I didn't want to throw the amber one in there.
MR. MACDONELL: That's probably a good thing. (Interruption) Yes, I had them boxed into a corner. I am wondering if you could explain again, please, the trade-distorting measures and non-trade-distorting measures. I didn't understand those two terms or how you differentiated them.
MR. FULLER: At the last round of the WTO, the Uruguay round, when they started, and this was the first opportunity where they negotiated agriculture, there were many different things out in the agenda, if you want to call it that, that they had to deal with and there were subsidies of many different sorts. What was decided was in the first, initial negotiating, they would define these subsidies and put them in three boxes: the amber box, the blue box and the green box. The amber box is trade distorting, no question. The blue box, there was kind of a question mark around it, whether it was or whether it wasn't. The green box was definitely not trade distorting.
The intent, what they're trying to do at this round, is first to eliminate the yellow box. Canada would like to see the blue box eliminated, but Canada, it looks like they're pretty well standing alone on this issue. The blue box, again we get back to it's questionable whether it's trade distorting or not, but the green box being non-trade distorting, that's crystal clear. So what the European Union and the U.S. have been doing over the past number of years, if they have been paying some dollars, let's say, for yields on certain crops, on the grain crops, what they're now going to do is instead of paying the farmer on, let's say, his yield side or his acreage, they're now going to take that money and pay it through the green box. Maybe it's for environmental reasons or maybe it's to put fences up or some other aspects, but it will not be direct payments on a commodity.
MR. MACDONELL: They're trying to hide it?
MR. FULLER: Exactly.
MR. MACDONELL: That's clear.
MR. FULLER: Now, this is what I am hearing. So our concern in Canada is that these countries are still going to be paying the farmers, whether it's in the front door or out the back door, that Canadian farmers have to compete on, it's supposed to be on a level playing field.
MR. MACDONELL: Yes.
MR. FULLER: Well, how can the level playing field be level if one source of farmers is getting 30 per cent more income through the mailbox?
MR. MACDONELL: Yes, and I am assuming that the Canadian Government is not playing that game with its farmers?
MR. FULLER: No, it's not.
MR. MACDONELL: No, okay. The 7 per cent that the Americans can ship into Canada, 7 per cent of the previous year?
MR. FULLER: It's 7.5 per cent.
MR. MACDONELL: So is that tied in in a way that it can never be reduced?
MR. FULLER: No, it's 7.5 per cent of our production for the previous year. So if our production falls, in the following year they fall.
MR. MACDONELL: Right. Is there any mechanism under the supply management system for chicken similar to contract production in the sense in the dairy industry that farmers can enter? I am not sure how they enter into it, but there's industrial, fluid and contract milk. Let's say Nestlé puts out a contract at 26 cents a litre, or some such thing they'll pay for milk, where industrial is paying 36 cents and fluid is 56 cents. So farmers have to opt to contribute to that contract and they will take that lower price, but they will sell milk.
My concern over that mechanism is that if I was one of these companies, or anybody saying, well, gee, if I can get milk at 26 cents a litre, why would I pay the industrial price of 36 cents. Is there a mechanism within the chicken industry under supply management, is there a difference in the silos - for trying to export, that something would be similar to that contract situation for dairy production?
MR. COOK: We do export a product, as the charts will show you. In some provinces there are some policies between the processors and the producers which allow processors to actually buy some product destined for export at a reduced price but, again, that is entirely up to the producer. There is nothing nationally that tells you that this is the way it has to work. There are policies in provinces that work in this way and there are different formats to say this one works, they are different policies.
MR. MACDONELL: I am surprised that you could have supply management but not have a price connected to the cost of production. How did you manage that?
MR. COOK: Well, just a little bit of a history, we used to have a cost of production. A number of years ago our agency decided that we would spend in excess of a few million dollars to redo an update of the COP. We went through the process on the COP committee which had to present its findings to our National Farm Products Council in Ottawa. On that committee were all different aspects of the industry, not just farmers. When we came down to making that presentation to the National Farm Products Council, everyone besides farmers felt that chicken farming was a part-time job and the labour component was the argument and because there was never an agreement on it, there was never a COP fee that was actually
approved by the National Farm Products Council. The strict argument was the labour component because they felt that chicken farming is a part-time job.
MR. MACDONELL: So what plan had they been on for the past . . .
MR. COOK: My personal perception is they look to the south, to the U.S. system, in which chicken farming is a part-time job.
MR. MACDONELL: Well, there's a reason for that.
MR. COOK: Exactly, because they don't make any return on their investment . . .
MR. MACDONELL: Right. I am always amazed that there are people who think we should go down that road, but there are a lot of roads people think we should go down. I am amazed at that. One, well, I guess two questions and I will try to be brief. One is what's the cost, I am not sure about the quota now, if it's so much a bird or what, can you tell me?
MR. COOK: Kg., so much a kilo.
MR. MACDONELL: Kg., okay, so much a kilo. What's the cost per kilo per quota now?
MR. COOK: It varies depending on what would go with that quota. You might buy a quota separately or you might buy buildings and the quota. You might buy a house with that building and quota. It would vary in the range - gee, I don't know - anywhere from $1.50 to $3.00, I would imagine, depending on the situation.
MR. MACDONELL: One of your last comments, which I thought was a pretty good one, was around, is this government interested in farming in this province. I am glad if things seem to be going well federally, I think that's a good thing because sometimes I have my doubts at both levels. I think when the federal minister made the comment about the widgets and the P.E.I. farmers - you know, if you can't sell your widgets - so I am wondering, provincially, what kind of support has your industry had from this government?
[10:00 a.m.]
MR. COOK: Well, that's the same question we want to ask. I mean, we see continued cuts in the department and in budgets and stuff. We're just wondering what the future direction is. We took a cut two years ago, or last year, and we hear more cuts predicted. So I am just wondering where it's going to stop, where it's going to end and what the future is. Agriculture is a major employer in Nova Scotia, and you're probably talking 10,000 to 12,000 jobs in spinoffs through trucking companies and everything, farm supply stores and stuff like that. It's probably because we're spread all over the province and we're not concentrated in
a town where it's a major-industry employer. Sixty per cent of the cash receipts from agriculture today come from the supply management sectors, and I am just kind of wondering where we are headed down the road.
MR. MACDONELL: I am wondering the same thing. Thank you.
MR. CHAIRMAN: Just before I recognize Mr. Boudreau, I am just wondering, can I ask a Gordon Sinclair-type question? You know, we talked about the cost of feeding the chicks and the operating costs. We didn't talk a whole lot on the return on the investments. Now, I was just doing some calculating here. If you have 50,000 broilers times seven lots a year, you're looking at 640 tons of meat a year. What kind of return on the investment would one expect a good operation, an established operation, to get on that type of production?
MR. COOK: A couple of per cent.
MR. CHAIRMAN: Like 2 per cent?
MR. COOK: Again, it's a business of sheer volume, actually.
MR. CHAIRMAN: And 2 per cent would represent how many dollars on that type of a production roughly? If there's 640 tons of product, 50,000 broilers times seven lots, six lots a year?
MR. COOK: There's usually six or 6.5 lots a year, or six one year, seven the next.
MR. CHAIRMAN: Okay, seven lots on a good year.
MR. COOK: On a return on investment, I mean, it would depend on your state of capitalization as well. If you're a new farmer just getting into the business, . . .
MR. CHAIRMAN: No, I said established, an established operation.
MR. COOK: We represent all the growers here, and we're a mix and a multitude of all. We have growers who have been in the industry since 1959 and we have growers who have been in since last month.
MR. CHAIRMAN: That's right, but I am using the example of an established operation.
MR. COOK: It's just that there are different stages, and when I say a 2 per cent return on investment, you know, it might be 5 per cent for one guy and then negative for another guy for a couple of years. That was an extremely difficult question to answer because so many factors play into it.
MR. CHAIRMAN: So we can use an average, then, of 2.5 per cent if there's 5 per cent for one and 1 per cent for another. What's the average of the good operation, the established operation?
MR. COOK: I would say probably 2 per cent to 3 per cent, in that range. I don't think you would be far off.
MR. CHAIRMAN: Which represents how many dollars? Let's put it in layman's terms, just approximately.
MR. FULLER: I think the point that we're trying to make is no other business would even try to continue to stay in a business like this.
MR. CHAIRMAN: I understand the hardships in farming of any type. I was brought up on a dairy operation so, you know, I've been down the road.
MR. COOK: Just in rough calculations we were doing here, between $50,000 and $60,000 a year and that is a fair-sized operation as well.
MR. CHAIRMAN: The example I used is a fair-sized operation; the example I used would be considered a fair size.
MR. DOWNE: In a $50,000 to $60,000, what would the capitalization cost be?
MR. COOKE: Again, it varies with the grower. I mean, an investment of that type, if you had to start out, you're probably looking at between $1 million and $2 million worth of investment as well.
MR. CHAIRMAN: That's right. Okay, thank you for that. I was just curious. Like if you ask a fisherman how his season was, aw, just fair, but they seem to survive quite nicely. I live in a fishing village and I was just using that for an example. I thank you for your thoughts on that. It just gives us a better perspective on it.
MR. COOK: In all fairness, Mr. Chairman, we're not here pleading poverty today. The industry is making money . . .
MR. CHAIRMAN: I know and I understand that, and if we can find ways to improve the bottom line, then that's a good thing, too, for the Province of Nova Scotia.
MR. BOUDREAU: I was just wondering, how many chicken producers do you have in the province?
MR. COOK: It's 83.
MR. BOUDREAU: Are they all a member of your association? Do you represent all chicken farmers?
MR. COOK: Yes.
MR. BOUDREAU: It's important to put forth good food, that's for sure, so you have to have quality processing. Has the recent cutbacks in the provincial government, is that causing some concern with regard to food safety?
MR. COOK: I would have to say no. So far it's been an industry-funded situation.
MR. BOUDREAU: So your association doesn't rely on such specialists who visit or anything like that?
MR. COOK: We have lost our poultry specialist who came to the farm. They are now currently available through the ADI, under contract. I am sure there's consulting fees involved there, as well costs to the industry.
MR. BOUDREAU: You regard that as perhaps a black eye towards the industry?
MR. COOK: It's a service cut.
MR. BOUDREAU: So it is having an effect?
MR. COOK: Yes.
MR. BOUDREAU: Do you have a good relationship with the provincial minister?
MR. COOK: Yes.
MR. BOUDREAU: You do? I know the Christmas tree growers were in here and they spoke very highly of the minister. Have you brought those concerns to the minister?
MR. COOK: We've had meetings with the minister, you met with him in February and we met with him in late May, early June, when he signed the federal-provincial agreement for chicken here in Halifax. He has been nothing but helpful to us when we require it.
MR. BOUDREAU: I noticed in your presentation, you speak of the marketing system?
MR. COOK: Yes.
MR. BOUDREAU: Are you currently experiencing difficulties in that system?
MR. COOK: Can you clarify a little further?
MR. BOUDREAU: You indicate that it's critical that the government make a firm commitment to support the orderly marketing system.
MR. COOK: Yes, that's more to do with world trade and bilateral and multilateral agreements.
MR. BOUDREAU: So are you experiencing difficulties in that particular system now?
MR. COOK: Not really, no.
MR. BOUDREAU: You just don't want them to tinker with it?
MR. COOK: We just don't want to lose what we have.
MR. BOUDREAU: It works, so leave it alone. You don't want it broken.
MR. COOK: Pardon me?
MR. BOUDREAU: It's not broken, so you don't want them to tinker with it.
MR. COOK: Exactly.
MR. BOUDREAU: When we get back into the food, does the quality of food rely on the type of food that you provide to the chickens?
MR. COOK: It relies on quality in management issues, quality of your inputs as well - your feed and your chick. It's a total package right from gate to plate, as the acronym is. Everywhere it's handled, right through the processing plants and the retailers as well. It's an entire industry package.
MR. BOUDREAU: But the quality of food is very important to your industry, that's obvious.
MR. COOK: Certainly.
MR. BOUDREAU: Are the number of new farmers getting into your industry, is that limited or are there any new people?
MR. COOK: Yes, there are people buying in all the time.
MR. BOUDREAU: So your industry obviously is set, it's established and people are investing.
MR. COOK: As I say, it is a vibrant industry. It's one of the few industries in agriculture that is actually making a little money without government support. It's an extremely high cost to get into it, but there are still people buying farms today.
MR. BOUDREAU: Does competition exist within the members?
MR. COOK: Not between the growers, no. We are all licensed a certain amount of kilograms to produce through our - our quotas entitle us to a certain amount of the provincial pie, per se. So, no, there is no competition. It's more competition between the provinces, when we get into trouble with the consolidation amongst the retailers, when we get a buyer sitting in Ontario with the phone in one ear with Ontario and a phone to the other ear with Nova Scotia, all of a sudden our best wholesale price becomes central Canada's worst wholesale. They get an end-of-the-day load up there, and that's what we have to compete with; that's our problem here in Nova Scotia.
MR. BOUDREAU: You basically have a growing industry, and you have a good relationship with the minister. Why ask the question, does this government see a role for agriculture in Nova Scotia?
MR. COOK: Because agriculture all has to work together. It's not just the chicken farmers in this province, it's the dairy farmers, it's the beef farmers, it's the grain farmers, and none of us are going to survive if some of the rest of us are gone. If you take supply and management out of this province, why just keeping the feed mills open alone would be a major impact on agriculture in Nova Scotia, so it's an entire package. Yes, we do have a good relationship with the minister, and no we don't require a lot from the government as a chicken industry, but as a whole agricultural package we keep seeing dwindling and dwindling funds going into our federal farmers or in terms of programs and such like that.
MR. BOUDREAU: You must be concerned about the previous policies of the present government. When you look at the agriculture picture overall in the province, that brings concern when you see the cutbacks and the rumours of future cutbacks. Do you feel that your industry is - I don't know if this is the proper word - "threatened"?
MR. COOK: It comes in question, I think. As I mentioned, none of us are going to survive without the other. We need our local grain farmers, we need our local beef farmers, just to keep the farm supply stores open and stuff like that. It's an entire package. I find it difficult to sit here today and speak for the agricultural industry as a whole, just being requested to be here as a chicken producer.
MR. BOUDREAU: But it does raise concerns.
MR. COOK: It does raise concerns, yes.
MR. FULLER: Could I make one comment? I think it's important to understand that agriculture is the backbone of the rural economies of this province, and not just in this province, but this country. If the government doesn't see a future in agriculture, does that mean they don't see a future in rural Canada? Without the agriculture and the infrastructure that agriculture puts in rural Canada or rural Nova Scotia, I mean, do we all believe we are all going to live in urban Canada? We have a responsibility to the rural people in Canada and the structures that need to be maintained. We ask questions, why we see certain things being downgraded or running down, because we don't see money being reinvested in rural Canada.
MR. CHAIRMAN: Thank you. Gentlemen, in reviewing Hansard from previous governments, I see the same type of remarks made to previous governments as we hear here today. What do you see this government doing that creates this fright that you have? Do you really feel that this government is not aware of the concerns of agriculture and of the importance of agriculture in rural Nova Scotia?
MR. COOK: I wouldn't say that they are not aware of it, and it is not an immediate fright, it just seems to be a gradual dwindling. If you wait until it's too late to speak and voice your concerns, then generally it is too late. If we see a gradual dwindling as we are going along and we raise issues with committees such as this, or the next time we meet with the minister we just say so, we just keep our concerns forward.
MR. CHAIRMAN: It's a lot tougher now to make a dollar in your industry than it was five years ago, say . . .
MR. COOK: Definitely.
MR. CHAIRMAN: . . . and it's mainly because of the feed grain prices.
MR. COOK: Many things, yes, feed grain is the major one. Nova Scotia is one of the few provinces in Canada that didn't seem to recover after the loss of the Feed Freight Assistance. I don't know if it's because of our isolation down here that our feed mills maybe didn't have to be as competitive. They have to be competitive with each other, but do they have to be competitive with central Canada? It just raises a few questions.
MR. FULLER: I think it is important, and fortunately for me I have had the opportunity to travel this country an awful lot. I have been into rural Canada and I have seen what is happening in some of the other provinces where the governments are walking away from rural Canada. It is not very pleasant when you drive into a town and there is nothing left. We have some real concerns in that we want to make sure those kinds of things don't happen in Nova Scotia. So we will continue to push for a government commitment to rural Canada, the main part of which is agriculture.
[10:15 a.m.]
MR. CHAIRMAN: Absolutely and that is what this committee is all about and I can tell that is what this government is all about because many of us in this government are from rural Nova Scotia. Having said that, I will move on to Mr. Hendsbee.
MR. BOUDREAU: On a point of order, Mr. Chairman. I would just like to indicate that my line of questioning was not to embarrass the government, but rather to provide an avenue for the backbenchers. With budget time coming along, the agricultural industry is concerned about rumours of cutbacks in their industry. My questions were not intended to embarrass either you or any of your colleagues.
MR. CHAIRMAN: No, I just wanted some clarification on it and thank you, Mr. Boudreau, for those kind thoughts. Mr. Hendsbee.
MR. HENDSBEE: Mr. Chairman, I have a series of questions I would like to ask. First of all, in your industry, is there any movement afoot for free-range or organic poultry?
MR. COOK: Yes.
MR. HENDSBEE: What kind of market is that presently and what kind of volume would that be?
MR. COOK: Our volume is over 41.7 million kilos and their volume is 40,000 birds, or 80,000 kilos, roughly . . .
MR. HENDSBEE: So, 80,000 kilos.
MR. COOK: . . . and that would be registered, free-range producers (Interruption) 140,000 or 150,000 kilos.
MR. HENDSBEE: In regard to rural Nova Scotia or even suburban areas, for instance, I know in my particular riding, the south side through the greater part of metro, I have a lot more instances of people at home keeping their own chickens and stuff. What kind of impact does this have on the chicken producers where we have this at-home industry kind of starting up?
MR. COOK: I am not sure it is just starting up. I think it has always been there. Our industry continues to grow. One of the things we do have concerns about is the advertising of the free-range chickens. Not all chickens that are sold as free-range or grown are actually free-range. There are a certain set of specifications that have to be met through the free range growers association in order to qualify a chicken as free-range. Organic is even more defined than what free-range is, it is very difficult.
What effect it has on our industry? We are, as a board, through the Natural Farm Products Marketing Act, responsible for all chicken production in the province. There are exemptions within the Act and the regulations that allow for people to grow 50 birds for themselves for their own personal use and a lot of those people in your riding would probably fall under that. There are a bunch of registered free-range producers and they are trying to organize and we are working with them to help them get organized because, ultimately, we are responsible for the chicken.
MR. HENDSBEE: Also with these little cottage industry things, what about the eggs you see at the local farm markets, that are not graded like the normal eggs are in grocery stores, but you see these on the local markets. Does that have any impact on your industry reputation?
MR. COOK: It doesn't have any effect on the broiler meat industry that we are in.
The egg producers, I am sure, would have concerns about it because what it is going to boil down to is food safety again. If one person goes in and buys some of these ungraded eggs or uninspected eggs and they get sick, it is going to ruin the entire industry. In chickens, it is exactly the same way. If somebody gets sick from a free-range bird, it is going to tarnish us as well. All the food safety measures in the world that we want to take aren't going to change that.
MR. HENDSBEE: In regard to another nuisance problem - some people consider it - you talk about rural Nova Scotia and suburban pressures and urban sprawl and everything else and the impact it has on producers and farmers. Our government recently passed some legislation about protection of farm practices. From time to time, you are going to have a situation with manure disposal. It is a very aromatic problem for some. For some it is spread on fields as a traditional fertilizer, along with cow and pig manure. Now we have situations where we are worried about run-off contamination for rural water supplies. How are the chicken producers dealing with your manure disposal?
MR. COOK: We are currently dealing with it the same as we always have, I guess, whether we are working with the provincial Federation of Agriculture on nutrient waste management plans for our farms as well. I would list it as one of the challenges facing our industry today and it is one that is just starting to crop up, really. I have just recently acquired a seat on the nutrient committee with the NSFA.
MR. HENDSBEE: So are there adequate facilities, be they compost operations or landfill facilities, for such disposal or treatment of this stuff to be compostable, to be used for a usable end product, versus just as a waste product?
MR. COOK: It can be compostable, but I guess I don't view it as a waste product. On my own particular farm, I use 65 per cent of it on my land. My remainder is purchased by other farmers. I don't consider it a waste product. It is actually a salable product on farms in
our area. Do any of my fellow members here want to comment on what is happening in the Annapolis Valley, where it is a little more intensive agriculture?
MR. TE STROETE: In my area we sell all of our manure to the vegetable farmers in the area. There is a lineup. If I turn one down, there will be somebody behind him to pick it up.
MR. HENDSBEE: Okay, but there hasn't been any real concern yet about water contamination? That hasn't really hit home here, has it?
MR. TE STROETE: We follow some practices now. Nobody spreads in the winter time. There are certain times of year when you should spread your manure, and that is being followed now. So I think those issues are not issues at this point.
MR. HENDSBEE: My last series of questions is in regard to markets and stuff. I know you are competing as pork bellies and beef, but I want to know in regard to your domestic versus export markets, you say you produce 41.7 million kilograms of chicken. You say 7.5 per cent of that is for export and the other 92.5 per cent is for local?
MR. FULLER: No, no, no. Where the 7.5 per cent comes in is under the North American Free Trade Agreement, the United States is allowed to import into Canada - tariff free - 7.5 per cent of Canada's previous year's total production.
MR. HENDSBEE: Okay, so that is an import.
MR. COOK: That is an import. It doesn't necessarily come into this province. Generally it comes into the Windsor-Montreal corridor, where the population is.
MR. HENDSBEE: So out of the 41.7 million kilograms of chicken that you produced in 2000, last year, how much of that was for domestic market versus for export, percentage-wise?
MR. COOK: You realize that the 7.5 per cent that we are talking about is national. When you are talking provincial . . .
MR. HENDSBEE: Yes, that is why I want to get to provincial numbers now.
MR. COOK: There was nothing exported out of this province last year, so the entire 41.7 million kilograms was domestic product. Occasionally, one or two of our processors will ask for an export licence from us.
MR. HENDSBEE: What about your egg producers? Is it all domestic market or is any of that exported?
MR. COOK: I don't represent the egg producers here today. I am sorry.
MR. HENDSBEE: In regard to that 100 per cent domestic market, how much would you say is broken down between restaurant and raw retail, the grocery stores where people buy?
MR. FULLER: Retail would be around 60 per cent, I would expect.
MR. HENDSBEE: When you say retail, do you mean the grocery store chains?
MR. FULLER: Correct. Grocery stores, little cooking things they have in the corners, would be just over 60 per cent.
MR. HENDSBEE: So 40 per cent would be the restaurants, the bars and everything else. In regard to how much of that market would be whole chickens versus part chickens, be it bone-in or boneless.
MR. FULLER: Okay, very little would be whole bird; less than 10 per cent, I would say. The rest would be in other forms.
MR. HENDSBEE: In regard to processing the stuff, there is a television commercial on now about cooking chicken or whatever - you see a person dumping water on a freshly cooked meal or just recently cooked meal - about processing of chicken and stuff. Is it water-chilled, is it fresh or has it recently been frozen? What problems do you find as an industry is "fresh" in regard to the definition. Do you find that your chicken here is produced and brought here fresh or is it partially frozen or is it water-chilled?
MR. FULLER: Most of the Canadian market is all fresh. There is very little in the frozen market. The only things that would be frozen would be further processed products, and the only reason they would be frozen is if they are starting to build now for next summer so they have to start putting away supplies to meet the demand for next summer. That is where you get a lot of your frozen stocks from. Their frozen stocks would be export product that's going out of the country. We have what we call a national storage stock number and we are always keeping an eye on that number.
MR. HENDSBEE: My last question with regard to 100 per cent of your chicken produce for domestic use here in Nova Scotia, basically self-sufficient; it has some excess for export from time to time. Where is your greatest threat or your greatest source of imported supply?
MR. COOK: The greatest source would come from central Canada, either Quebec or Ontario.
MR. HENDSBEE: In what form is it, frozen chicken, live chicken, or broilers, or eggs?
MR. COOK: There is some live that comes out of Quebec here to be processed to fill slots. Keep in mind, in Nova Scotia we have one processor that only kills chicken and it's Maple Leaf and they only kill one-sized chicken. You still see Maple Leaf turkeys in the store, Maple Leaf roasting chickens, Maple Leaf Cornish, so we have chicken going to central Canada all the time as well because 50 per cent of our production in Nova Scotia is growing this air-chilled product that you're saying about pouring the water on. So, there are only three plants in Canada actually processing product like that. In order to balance it out, we send some up, but we bring their Cornish hens back in. So trucks are meeting on the road all the time. It's a national market, there are no provincial borders on chicken.
MR. FULLER: A great example would be the McDonald's McNugget. That is all made in a plant in Ontario; they service the whole Canadian market.
MR. CHAIRMAN: Thank you. We're going to have to move on. Mr. Barnet, you're scheduled next, and then Mr. Downe.
MR. BARNET: I am going to ask the age-old question of the experts here: Which came first? (Laughter) First of all, let me start off by saying that although my riding is considered by most in this province as an urban or suburban riding, if you actually had a look around you'd see that most of the land is divided into 60 X 100 lots. I do represent the fringe of Halifax Regional Municipality and we have a chicken producer in my riding, Valleyfield Farms. Although I think it's safe and fair to say that agriculture is the backbone to the rural economy, it also supports some of the suburban areas of metro. It also is important to the urban areas and the suburban areas because without the backbone of the rural economy, we'd have no food to eat. All of Nova Scotia is obviously concerned about having a healthy farm economy.
I had a small, sort-of-side experience with chickens. I was convinced by a friend to go splits on a number of chicks and raise the chicks from small to a size that we could actually eat. Frankly, I wondered after having had that experience why anyone would get in the chicken business, because it's certainly not for economics because we lost. We could have gone to the store and made incredible savings by buying the chicken at Sobeys or the Super Store. Having had that experience and seeing your formula of 50-25-25 and having heard the dialogue between you and the chairman about the fact that there is some profit made there, I wonder where it comes from, because frankly if you're spending so much of your money on food and chicks, that last 25 per cent doesn't leave a great deal of margin.
MR. COOK: Again, it's a business of volume. You take a small percentage return on a huge volume, you've got money left over to live.
MR. BARNET: Well, you can't do it on 20 chickens, I can tell you that.
MR. COOK: No, I know you can't do it on 20.
MR. BARNET: I guess the one area of concern that I would like to go down - two areas - one is environmental. Obviously, there have been some issues raised to me as the member for Sackville-Beaver Bank, I guess in a polite way, from abutters to Valleyfield Farms. They've been there forever - they are probably a 1959 member - they've been in the chicken business as long as I can remember and they have had the unfortunate circumstance of having an urban area grow up around them. Is that an issue with your members in terms of encroachment of non-farms surrounding the farm?
[10:30 a.m.]
MR. COOK: Most definitely, and I don't think it's a problem of having neighbours, I think it's the problem that is generated from the noise and the smell of agriculture. You are dealing with a living product here.
MR. BARNET: How do you counsel your members in terms of dealing with the concerns that some of their neighbours raise?
MR. COOK: You try to be good stewards of your land. You don't spread manure on a Friday afternoon when you know somebody is having a party on Saturday night. I live in an urban neighbourhood as well, I have a farm right smack in the middle of it. I try to spread manure Mondays and Tuesdays before it rains on Wednesday. It is just something along that line; you try to be a good neighbour as well. If you are going to spread manure, you notify your neighbours that this is taking place and they don't hang laundry out that morning. It's the simple little things.
MR. BARNET: Having said that, I will say that Valleyfield Farms have certainly been good neighbours and they have shown good practices with respect to their neighbours. They have been very supportive of issues and concerns and try to resolve things, but not always 100 per cent to the satisfaction of people who moved in last week.
My biggest concern is with food safety. Having witnessed in the past four or five years the destruction of the beef industry in the U.K., how do your members combat the issue of more or less a perception of food safety? I know things like salmonella are more likely to be passed on by cooking utensils and improper cooking, using the same knife that you cut chicken with to cut your vegetables with. How do you provide a level of comfort to the consumer and inform them that these are issues that are resolvable by their own actions?
MR. COOK: I'll let Dave handle that, he was former Chairman of the National Farm Food Safety Program, one of the designers actually.
MR. FULLER: What we have done at the national level is we have worked with scientists to develop an On-Farm Food Safety Program using the HACCP principles, that will be all producers of our product from coast to coast will be on the same program, it's generic from one end of the country to the other. It will have the trace-back program that allows us that if there is a problem, to trace it to the source so we can take corrective actions. The intent of this whole program is to provide the consumer with the best quality, using the best farming practices that we can possibly use to make sure that the consumer has confidence in our product. We have learned from mistakes that have happened in the EU with the foot-and-mouth disease. We are trying to make sure that our consumers retain that confidence in our product.
MR. BARNET: Just one more question. To what level, to what extent is there value added in the poultry or the chicken business in Nova Scotia, and do you see that as an opportunity in terms of economics in terms of growth? I am not aware of a great deal of value-added industry. I know that as a consumer of products we get everything from dinosaur shaped chicken nuggets to you name it. Chicken obviously doesn't come in that shape, and there is considerable processing . . .
AN HON. MEMBER: A close relative.
MR. BARNET: Yes. A close relative. I would assume that there is considerable economic benefit to value added and to further processing of chicken. Do you see this industry in the Province of Nova Scotia as being something that can move forward in that regard?
MR. COOK: We do have a further processor in this province, Eastern Protein Foods. It is owned by ACA Co-Operative. They have a plant in Coldbrook. They do manufacture the products you were talking about.
MR. BARNET: Is there room for growth in that industry now?
MR. COOK: Any time people are eating chicken there is room for growth. We are not privy to their business and the business decisions they would make to promote their product. If ACA, as a processor, comes into our board office every eight weeks, we not only negotiate price but we also negotiate the volume of the chicken production in the province, I am sure some of the volume that ACA would ask for would include product for Eastern Protein Foods.
MR. BARNET: My final point, you mentioned this just briefly, you passed by it, is the health benefits of chicken compared to other products. Has the industry taken an active role to try to inform the public about the health benefits, the high-protein, low-fat content, of chicken in terms of trying to market it over and above - and I am not trying to disrespect other segments - pork and beef and those types of things? Have you really worked on that?
MR. COOK: We have an extensive promotion committee, and Ron heads up our committee. I will let him elaborate on some of the things that the board has done.
MR. TE STROETE: What we've been trying to do as a promotion committee is, what we do as farmers, more than promote the good health aspects of chicken. That's pretty well out there anyway. What we're doing is promoting ourselves, as farmers, and our good practices and that we do a good job as an industry in Nova Scotia. We are starting to get that message across to people. When we started, four to five years ago, it was pretty negative. We have made some inroads with that.
MR. BARNET: Like the Eden Valley boardroom, the farmers are out in the field.
MR. FULLER: I think it's important also that we do inform you that we have just recently, in the past two years, done extensive research on the fat content in chicken. We have republished those. We have done work with universities and republished the cooking times so that consumers are aware of exactly how long it takes. What we have found out nationally is that when people feel a chicken is done, they will cook it for 20 minutes more to make sure.
AN HON. MEMBER: Yeah. Would you talk to my wife and ask her to . . .
MR. FULLER: And unfortunately, they ruin the product when they do that. We have done extensive work. We do usage and attitude surveys every two years, nationally. We have done extensive work with the public and we have worked with dietitians to raise with them all the new specifications that we now know regarding fat content, cooking times and that. We are selling our story out there as fast as we can.
MR. CHAIRMAN: Thank you very much. I would like to wrap up this meeting at about 10 minutes to the hour, if I might, so that the subcommittee can meet for a few minutes. In the remaining moments I would entertain some short questions, depending on how many would like to ask questions. We will start off with Don Downe.
MR. DOWNE: I would compliment the member for Sackville-Beaver Bank for his comments because he is right on line. Really, it's about Right to Farm legislation, and when you get a farm set up and people move around you, some people come for the romance of agricultural land and forget the fact that there is agriculture being produced there. Herein lie some of the challenges. I think the members expressed that very well.
In light of the air-chilled issue, it is a marketing initiative by one company. Air-chilled is by Maple Leaf Foods, and in Europe they have done air-chilled for - I was in Europe 15 years ago and they air-chilled their product then, and we're getting to that point now in Canada. They are using that as a marketing initiative, when they show the water on it. It's a company; Maple Leaf Foods is doing its promotion of its product. You don't need to add water to a chicken to chill it. You can do it through air chill. It's just a competition between processors. It has nothing to do with the producer or health or frozen or not; it's a marketing initiative, just so you know. Some companies are now moving toward - when you mentioned the whole issue of mad cow disease and hoof-and-mouth and those issues, some of the processing companies are now moving to - feed products that have no animal by-product in the feed mix so that it is all just natural grain.
These are marketing initiatives as much as anything. As well, the industry is trying to be proactive for the consumer on the issue of quality and food safety. I would just ask if Paul or Ron or David would explain the HACCP process from a farm point of view? There is a processor who has a responsibility for food safety, and they have a whole litany of things that they have to do at the processing. But when a chick comes to the farm - prior to the chick coming to the farm - until it leaves the farm, what does an average farmer do for the quality and the health and safety of that product? It's not that complicated, but I think it's important to explain that to the members of the committee.
MR. COOK: Each farmer in Canada has a manual, probably half as thick as that, that lays out good production practices for chicken. It was developed by the chicken farmers so that all growers are going to be trying to grow an equal product. What I do in my barn is going to be the same as what Ron does in his and what David does in his. From the time that the barn is cleaned out from the previous flock, there are steps you have to go through, document what you have done, which is one of the key things - the documentation aspect - so it can be traced back. If you have a problem with your chicken after it gets to market, you can trace it back, well you didn't disinfect your barn or whatever. It is the traceability aspect there, but it is mainly record keeping.
Most of the producers in Nova Scotia, I would say, follow all of the HACCP principles. However, most don't document it at this time. It's still a system that's in its growing stages. We are gradually moving towards that, and getting the producers on-line to equalize all of the production in the province, so everybody is doing the same thing at the same time.
MR. DOWNE: Last point . . .
MR. HENDSBEE: Could I ask for a clarification? The HACCP principle?
MR. COOK: HACCP is the Hazard Analysis of Critical Control Points. Most manufacturing businesses would follow some sort of HACCP principle, it's not just specific to agriculture.
MR. FULLER: You will notice with a lot of companies now, ISO 9000 or 9002, that's all based on HACCP principles.
MR. DOWNE: I just wanted to make it clear that the farm community wants that product to be quality and safe and obviously that's the marketing initiative for the industry. The codes of practice, the HACCP, the whole nine yards has been a proactive movement by the industry to its own members, so that at the end of the day you can stand up and have confidence in buying that product that you have a quality product. The processors have another role to play, and then the retailers have another role to play. I just wanted to compliment the industry, both provincially and nationally, for taking that leadership role, because I think that's a very important initiative for people to feel confident about the chicken products they are buying, especially from the farm gate side.
MR. CHAIRMAN: Okay. Anyone else? Mr. Barnet and Mr. MacDonell.
MR. BARNET: I think I know the answer to this question, but you talked about the supply-management system that you have. Would the supply-management system cover issues like the rise and fall of energy costs? I know that last year I heard from a number of people in different industries, particularly the transportation industry, about the high price of diesel fuel. Is that covered in your eight week review of pricing and stuff?
MR. COOK: Keep in mind that supply management does not guarantee anyone a living. You still have to work within the system. I could be the most inefficient producer in the world, I am going to be out of business. Supply management is not going to keep me in. Did the high energy prices of last winter hurt? Yes. Was it negotiated into the live paying prices? We try. They are high prices for everyone. Our processors also have had high oil costs as well, so did the trucking companies and everybody else. Did it elevate the price of the product? Probably.
MR. CHAIRMAN: Mr. MacDonell and then Mr. Hendsbee.
MR. MACDONELL: I have two or three short snappers here. The import amount that we bring in American, the 7.5 per cent of the previous year's production, is there an equal amount or any amount that Canadian exports can go into the U.S., non-tariff, every year based on American production?
MR. FULLER: No.
MR. MACDONELL: I thought not.
AN HON. MEMBER: I thought this was free trade.
MR. FULLER: It is free trade, not fair trade. That's the distinction.
MR. MACDONELL: You were talking about guidelines around free trade. I have always, well not always, recently come to the conclusion that protectionism in the United States is alive and well . . .
MR. FULLER: Very much so.
MR. MACDONELL: . . . and that when people say yes but now we have a mechanism to deal with these conflicts, I'm thinking, oh yeah, it can drag on forever now. I don't feel reassured by our present agreement. The comments about, if you are not going to support rural Nova Scotia, what is it that you think these people are going to do? I am not sure that people expect them to work at McDonalds only not serve McNuggets, that's probably the difference. I was listening to the radio this morning, and I wanted to get your opinion on something I heard - and I've heard it from the minister - around the Agriculture Development Institute, and it said this is a farmer-run organization. I am wondering, do you feel that it's a farmer-run organization? You are farmers. My thought is it's not, but I am just wondering what your take on it is.
[10:45 a.m.]
MR. COOK: There are farmers on the board.
MR. MACDONELL: I know that.
MR. COOK: I haven't dealt too much with the ADI. Basically, we are a pretty self-sufficient industry. If we need specialists, we know where to go for specialists; that's what we do.
MR. FULLER: If you could convince me, as a farmer, that since the Department of Agriculture removed some of their departments and ADI was formed with a government grant . . .
MR. MACDONELL: $2.2 million.
MR. FULLER: Can you convince me as a farmer that in 10 years the government will still be providing that money to that group? I believe this group was set up with government money but will become user-pay very quickly. That is not a benefit to me as a farmer.
MR. MACDONELL: I agree.
MR. DOWNE: Just so you know, it's on record that both John and I have said that in the Legislature time and time again, as critics.
MR. MACDONELL: He's always trying to take credit for what I say. (Laughter) Thank you very much, I appreciate it.
MR. CHAIRMAN: We'll finish up with Mr. Hendsbee.
MR. HENDSBEE: My last question is in regard to the supply-management program in regard to trying to control the industry in regard to how much product is out there or how much is available for making contract negotiations with suppliers and stuff. You talk about 100 per cent of our supply is used domestically. What opportunities are there for any potential production for export? I see in the legislation there are fines and levies for over-production by the producers and processors. How do you encourage an opportunity for export, when you regulate the supply?
MR. COOK: If someone finds a market and wishes to grow chicken for export, then we will find farmers to grow it. Basically, we are in one of the lowest return regions. We spoke about our 2 per cent to 3 per cent return on investment, we are in one of the lowest return regions in Canada. It is very difficult to export out of this province. However, we do have a major population base just to the south of us, and if one of our processors wished to try to service that base, we would certainly try to get the chicken to them. That would be a decision they would have to make, they would have to ask for the production.
MR. HENDSBEE: So they would go out and seek the market first, make potential contracts, then you have to come back and get permission from the industry to produce beyond their quota, or the agreement that they have with the industry now.
MR. COOK: Yes.
MR. FULLER: I think it's important that you understand that every eight weeks we are sitting down as a group to discuss what the production is for the following eight weeks. It's not like you're talking about a long period of time. If they find a market, within eight weeks they can start getting product for that market.
MR. HENDSBEE: Thank you.
MR. CHAIRMAN: Well, thank you on behalf of the committee. Thank you, Catharine, Ron, Paul and Dave. I am just wondering, before we do close, is there a closing comment you would like to leave us with a statement that you would like to hang there for eternity?
MR. HENDSBEE: Eat chicken more.
MR. COOK: I think Mr. Hendsbee said it all, eat more chicken. I thank you for the opportunity to come here today. I really appreciate it. I hope we adequately answered your questions, and if you have any further questions please don't hesitate to get in touch with our office. Thank you very much.
MR. CHAIRMAN: First of all, I want to bring to your attention that all members of this committee are present with no alternates, and that shows how we feel about your industry. We certainly hope that the chicken producers continue to receive a fair price for their product, which is over and above their incurred expenses. Sorry for digging in the Gordon Sinclair thing, but I find that interesting too.
Thank you for providing us, in Nova Scotia, with a healthy alternative. I stay away from the chicken nuggets because I don't even believe there is chicken in there half the time. I do love chicken. Thank you for such an interesting session. We wish you all the success in the future.
MR. COOK: We've also brought a few promotional products that Catharine will leave with you. (Interruptions)
MR. CHAIRMAN: Thank you.
[The committee adjourned at 10:50 a.m.]