HALIFAX, TUESDAY, MARCH 21, 2006

STANDING COMMITTEE ON RESOURCES

1:00 P.M.

CHAIRMAN

Mr. John MacDonell

MR. CHAIRMAN: We have a couple other members we're waiting for, but I think we'll just let them wander in when they get here, in the interest of our time and of yours for coming all this way to make a presentation to us. We really appreciate it, and we're glad to have the Nova Scotia Cattle Producers. I'm not going to OD on cattle producers. It was nice to see you on the weekend. Also, I want to thank two of our former members who are not on the committee anymore, Mr. Dooks and Mr. Hines, who have moved on to better things, I guess. I want to welcome Mr. O'Donnell and Mr. Fage, when he gets here. Usually we start with the introduction of the committee, and then, when that's done, you gentlemen can start your presentation in whichever way you want.

[The committee members introduced themselves.]

MR. CHAIRMAN: Jim, go right ahead.

MR. JAMES BREMNER: We have a written presentation, and we certainly would enjoy answering some questions after it. I think sometimes that's the best way to get information, just in a two-way question period. We would enjoy that.

MR. CHAIRMAN: For our records, could you introduce yourselves.

[The committee witnesses introduced themselves.]

MR. BREMNER: We'd like to thank the committee and bring greetings from the Nova Scotia Cattle Producers. Our industry last made a presentation to this committee in 2002. Since that time our industry, both provincially and nationally, has gone through a significant evolution, and some might call it a revolution.

The Nova Scotia Cattle Producers currently represents all primary beef producers, 1,200 at last count. We haven't really gotten all our producers registered yet, and that's one of the problems with our industry. That 1,200 number is very vague at times. We also represent 300 dairy producers, who are also beef producers. When they're finished milking the old cow, well, she becomes beef, and then they sell a fair amount of veal calves and that kind of thing.

Our members farm in all counties in the province. Our industry has the single largest number of farms. We consider our industry to be integral to the health of the rural community. Rural health has been discussed at great length in this province, recently and in the past as well. We think of it as the ability to maintain a healthy, prosperous rural population in sufficient numbers to justify modern infrastructure: schools, hospitals, roads, et cetera.

When you drive by a grazing cow and a calf or a feeder calf this Summer, think of that calf as a revenue generator for the province. Every $30,000 of beef sales - and that's about a mid-sized beef farm in this province - means about one full-time equivalent job for the province. Currently 675 people are fully, gainfully employed in the beef industry in this province. Our industry generates over $100 million in economic activity in the province, primarily on homegrown forage, with very minimal grain. The Nova Scotia beef cow is really just a fancy solar converter: the sun grows the grass, the cow eats the grass and produces nature's perfect protein food.

And that's enough propaganda. I would like to briefly tell you about the Nova Scotia Cattle Producers, because we understand there's a bit of confusion between the Nova Scotia Cattlemen's Association and the Nova Scotia Cattle Producers . The last time we presented to you, we were the Nova Scotia Cattlemen's Association. In 2002, we began a provincial effort to become a participant in the National Check-off program. The National Check-off program began so that the issue of applying a levy to imported products could be addressed, in an effort to end the free ride of imported products benefiting from our promotion and R&D programs. The National Check-off program is collected by provincial organizations on behalf of the national agency. This is a downloaded responsibility to the provinces, but it's a responsibility that we have taken very seriously. Our old organization, the Nova Scotia Cattlemen's Association, had a levy but no legislative capability to collect or enforce. The Nova Scotia Cattlemen's Association resided under the Agriculture and Marketing Act.

We quickly realized that to design and deliver an effective and equitable levy program, we needed to completely reorganize our industry under a new Act, the provincial Natural Products Act. This Act provided the necessary legislative underpinnings to enable our industry to be a participant in the national program. This realization began a three-year process to design a marketing plan and regulations, communicate with the industry, hold an industry plebiscite and elect a new board of directors.

The new Nova Scotia Cattle Producers is a commodity board under the Natural Products Act, with the authority to annually register all beef producers in the province, and impose and collect a $2 per head per sale levy within the province. We can discuss the details of that later, if you have a question on just how that works. Suffice to say that the formation of the Nova Scotia Cattle Producers has been a huge effort for our industry. We now have the capability to select from the Natural Products a broad range of abilities that could have significant impact on our industry's ability to survive. We hope to officially sign on to the National Check-off system later this month in Ottawa.

We have also begun, as a region, to explore areas of mutual interest between boards. We realize that our industry is small. As a Maritime Region we have 1.5 per cent of the national beef cow population. Despite this, we have traditionally attempted to fund our organizations separately, develop policy separately, and in many cases duplicate efforts unnecessarily. In late 2005, all three Maritime boards met and discussed areas of mutual co-operation and agreed to form the Maritime Beef Council. This council will address three issues this year that will hopefully have regional impact. We can envisage this council someday growing into a regional organization, effectively removing the policy borders to an already integrated regional industry.

We, along with many others in our industry, strongly opposed the planned shutdown of the Nappan Research Farm last year. We are hopeful that the efforts of Mr. Bill Casey, member for Cumberland-Colchester-Musquodoboit Valley, and others will result in a long-term commitment by governments to make the farm a centre for beef research excellence for this region of the country. We will be contacting the federal and provincial governments shortly with a request to bring the research complement at the facility to a sustainable and meaningful level. We feel that a strong regionally-applicable research program is central to industry development.

You will no doubt have heard of the recent and continuing effects of BSE and the resulting U.S. trade ban on our feeder and mature cattle. This situation is slowly resolving itself, and we continue to struggle to adjust to the fallout from the two years of market disruption and price depression. Like other regions of the country, our prices plummeted to below the cost of production after the May 20^th ban. Our efforts as a board for the last two and a half years have centred on ensuring that as many of our members as possible survive a disaster that was not of their making.

We are grateful for the support shown by the Canadian public through federal and provincial ad hoc programs designed to cushion the impact of BSE. We remember back in 2003 when the CAIS program was being touted as the next best thing for agriculture, combining stabilization and disaster coverage, using an Olympic average production margin against the current production margin.

The Nova Scotia Government contributes 40 per cent of the funding requirements to this program, and the federal government the other 60 per cent. We were hopeful that this program would be timely, administratively simple and, above all, effective. There can have been no better litmus test for this program than the past two-plus years in the Canadian beef industry. From our perspective in Nova Scotia, our members are telling us clearly that CAIS has not done any of the above.

[1:15 p.m.]

The very limited amount of information that we have been able to garner has shown us that the 2004 year, which was exclusively a BSE market-depressed year, paid out only $953,437 to 93 of our members. The number of producers receiving no payment, of those who applied, was 76 or 45 per cent of the total applications from beef farmers in this province. This occurred despite our estimates in this province of BSE industry losses approaching $6 million for 2004. Put another way, the CAIS program paid the equivalent of $36 per cow in Nova Scotia, despite our members incurring revenue loss of over $230 per cow.

The difficulty in producers accessing those limited funds was yet another problem. You may be aware of the study done by the Canadian Federation of Independent Business, released last week, stating that the CAIS program required an average $1,000 per producer cost to hire a professional to assist in correctly filling the CAIS documents. In our case that meant about another 10 per cent that was desperately needed.

We are also frustrated as a board in our inability to effectively identify the needed changes to CAIS to make it more effective for our members. We would like to help to redesign CAIS, but we find that hard to do. While our members tell us that it is ineffective, we are unable, despite repeated attempts, to access even the most basic of industry-level information on the CAIS program. We find it impossible to develop policy without information. We cannot, for instance, determine the provincial beef reference margin, production margin, inventory numbers and the values for any of the program years.

We can surmise that issues surrounding inventory, structural change, margin calculation, et cetera, are contributing factors to the lack of effectiveness, but we simply do not know. It is also frustrating that the basic information that we have received on the 2004 year was only released to provincial officials on March 7, 2006. We urge both levels of government to make pooled commodity-specific information available to industry in a timely manner, so that we may better analyze and suggest changes to the program. The current level of industry access to CAIS information, in our minds, is totally unacceptable.

Finally, we would like to finish with a summation of our industry. We have producers who are in very grave financial condition. Many producers struggled with profitability before BSE. This was due to many factors including weather, cattle cycle issues, lack of critical

farm size and, yes, even management. With the severe market depression of BSE, producers already financially stressed have not been able to recover to a position of solvency. For many, credit extensions, whether through trade accounts or through bank operating loans, are no longer possible. Ability to borrow has been heavily impacted by BSE. Operating loans are generally secured by inventory. With BSE, farm livestock inventories were devalued by up to 60 per cent, particularly beef cows.

Nova Scotia is particularly reliant on cow calf inventory values, as we are primarily a cow calf producing province. With the continuing trade ban on the over 30 month cattle, prices for culls and breeding stock have not recovered. This has translated into depressed inventory values and a reduced ability to provide security to lenders. The ability of producers to liquidate is also limited; it is a classic Catch-22. For many, financial liquidation is necessary; however, there is not adequate market strength to allow for the sale of livestock at sufficient prices to cover the debts they have.

It is not all bleak, however, BSE did force many producers to examine their marketing process and move to a direct sale model in which the value of the retail product is captured as much as possible by the producer. We now have a significant number of producers who control the entire supply chain. It is this concept that has driven the development of the new Atlantic Beef Products plant in Borden. We have high hopes that this plant will enable our industry to grow through the use of innovative marketing and a payment grid that will reward for quality cattle.

Thank you for the opportunity to discuss this with you today, and we certainly would enjoy answering questions, in a two-way conversation.

MR. CHAIRMAN: Thank you very much, Jim. Before I go to the members for questions, I want to welcome the member for Cumberland North. It's nice to have you on the committee.

[The committee members introduced themselves.]

MR. CHAIRMAN: Mr. Langille.

MR. WILLIAM LANGILLE: Mr. Chairman, I come from a rural area of Nova Scotia, in fact I don't even have a town in my riding. So I'm well aware of rural Nova Scotia, especially in my riding. I just want to say that as an individual MLA, all my advertising, no matter where it is, I always have on it, at the bottom or within that block of advertising, please support our farmers, buy Nova Scotia products. I don't know if there's any other MLA - I've been doing it for two years now. I would encourage other MLAs to think about that, especially the rural ones.

Having said that, we know that the big chains carry western beef, can we compete, with the quality of Nova Scotia beef such as Tender and so on? Can we compete?

MR. BREMNER: Most definitely so. Where we probably can't compete is in volume. One of our problems is we just don't have the volume to capture the whole market. In quality, tenderness, whatever you want to call it, we certainly can. In fact we have proven that. The branded product Atlantic Tender Beef Classic, which is marketed through the new plant in P.E.I., actually was involved in a competition at the Calgary Stampede, probably a number of years ago, three or four years ago, where they do have a group of renowned chefs who prepare steak or beef cuts. Then they judge them as to flavour, tenderness and all the eating pleasures, and that particular entry won. It won in Calgary, so there were some red faces in Calgary for awhile.

MR. LANGILLE: When they do that, do they know where that particular beef came from at the time?

MR. BREMNER: They sure do after it has been judged.

MR. LANGILLE: After, but not at the time. That's good.

MR. BREMNER: After it has been judged, and we've been flaunting that now for quite a little while, every time somebody goes to Calgary as a matter of fact.

MR. LANGILLE: I know that particular program was very successful, or is successful. I know the Co-op carries it. My hat goes off to them on that. Now, what about export? What do you export?

MR. BREMNER: Sean can maybe correct me if I'm wrong. I don't think we really have export of any significance at all from the Maritimes, do we, Sean?

MR. SEAN FIRTH: Our exports would primarily be, from this province, in the form of feeder cattle. So we would produce feeder cattle here that we would export outside the province, primarily to P.E.I. for finishing. We also export a significant number of cull cows, both dairy and beef, to Quebec for processing.

MR. LANGILLE: The BSE and the United States not taking cattle over 30 months - is there any other country that still has the ban in effect on Canadian cattle at this time?

MR. BREMNER: I think most countries that are involved do still have the 30-month ban. I think - again, Sean, correct me if I'm wrong - we could trade somewhat with Mexico again in breeding stock but the problem with Mexico is that you've got to go through the United States to get there. You still can't take those over 30-month cattle through American territory to get to Mexico.

They're very strict on the under 30-month cattle that are going in. If there's any indication that they are anywhere near 30 months or over 30 months, they certainly reject them. Even females that may be pregnant are not allowed to cross the border because they feel that they will be put into the breeding herd down there.

MR. LANGILLE: Just as a last question. I know there will be a lot of questions. The Americans - I just want to reverse the roles, about shipping to Canada. Now, there has been, in the news the last while, about a couple of their cattle getting BSE. What are the rules in Canada, accepting American beef?

MR. BREMNER: As far as the under 30-month category, I think they're the same. I'm not sure what it is on the over 30-month, whether we're restricting American cattle over 30 months or not, are we, Sean?

MR. FIRTH: I don't believe we are but there has never been a significant movement of cattle north of the border. It has usually been us exporting cattle south. I don't know if you want me to carry on with that now but the Canadian Cattlemen's Association certainly view the American trade position on cattle over 30 months of age as extremely hypocritical, given the latest case of BSE within the last couple of weeks in the U.S. The risk for BSE to the public is virtually the same in both countries. It's kind of an untenable position in the U.S. right now to be banning the Canadian over 30-month cattle.

MR. LANGILLE: A last question?

MR. CHAIRMAN: Sure.

MR. LANGILLE: My last question, at your cattle sale, what's the average price per pound on the hoof? What are they going for now?

MR. BREMNER: I guess it depends on what kind of category of cattle you're talking about. Like, live cattle, feeder-type cattle, 500- to 600-pound live weight cattle, it's a struggle to get them up close to $1 at the last feeder sale. Fat cattle, it may be going into, say, the plant in P.E.I., the quote on those would not be on a live basis, it would be on a dressed basis, but it's around - I think this week's price is around $1.54, $1.55. Now, it's not too far out of line from, say, Ontario. It is, in Ontario, minus 7, but our live price, our live feeder price is discounted by way more than that, probably 25 cents.

MR. LANGILLE: Yes, okay. Thanks. Right now, my question, what is your break-even point?

MR. BREMNER: Everybody's is a bit different. We have to look at a break-even point so it's kind of competitive with the rest of Canada. I guess it would probably be a break-even point in the industry, Canada-wide, Sean, would be what, $1.25?

MR. FIRTH: Yes, generally, in this province we would consider right around $1.25 for a 600-pound feeder cow. The finished cattle industry right now is about at break-even, at $1.55, where Jim said it was, that's about break-even for them, yes.

MR. LANGILLE: Thank you.

MR. FIRTH: You're welcome.

MR. CHAIRMAN: Mr. Parker.

MR. CHARLES PARKER: Thank you, Mr. Chairman. Gentlemen, I come from Pictou County where we have lots of beef farmers, quite a number, and some dairy producers. It's certainly an important industry in our area of the province, as it is throughout Nova Scotia. It has certainly been a struggle, as we all know. I talked to a good number of farmers who are debating whether they should continue, or can they. Often it's off-farm income that's letting them survive over the last few years.

One of your new directors, actually, lives not far from me, David Lavers. I know he's involved with your group.

I want to ask about your levy, I guess, is really what I'm coming around to. It's something new. How well has it been received, first of all? Are you getting 100 per cent buy-in, or are you getting half the producers, or what?

[1:30 p.m.]

MR. BREMNER: We actually have just begun to work on sort of an overall educational, information delivery system that will explain - we certainly did explain it during our process of getting up and reorganized but a lot of it, probably, wasn't fully understood at that time. So we have to go through another educational process to do that. It would be fair to say that, no, you wouldn't have 100 per cent buy-in at this time because I don't think they fully understand what it's really all about. If I could, for a minute, maybe I could explain really what it is about.

MR. PARKER: Sure, how it works, yes.

MR. BREMNER: We have actually had a levy system for years. I don't know how far back it goes because I've really only been involved in this organization for three, or perhaps four, years. But we have had a levy system that goes back, as Mr. Fage and Mr. Gaudet, as well, would know, it goes back many years. It was in place to support the organization within the province. It was, at one point, $1 and then $1.50, and then $2.

A few years ago, on the national levy, there was a move to create a national levy on beef or the equivalent of a beef animal coming into Canada. Since about 1988, the Americans have levied all beef products going into the United States on that basis. When you think of the hundreds of thousands of heads of animals that go across the border, since 1988, the Americans have been taking a levy on that and then they turn around and use that levy that they check off from us to do advertisement, research, development and stuff to support their beef industry.

In Canada, we thought it was time that we did something similar so they introduced a national levy system that would attach $1 to every time an animal changed hands. The way it was developed was, it made it the responsibility of each provincial organization to do that, to comply and to collect their own levies along with it. That's what really led to the movement to have a compulsory levy that we could effectively collect because we have to be the same as the rest of Canada.

The thing that's always in the background there is, if you don't do unto yourself as you do unto others, then some American trade lawyer will challenge what you're trying to do on imports. That's why it's important that every province is part of this national system.

MR. PARKER: Okay. I'm just curious how it actually works. Now, the $2 per head is collected at, like, the Maritime Cattle Sale, or is it collected, otherwise, in the . . .

MR. BREMNER: Yes. If I sell one to you, it's supposed to be collected at that time as well.

MR. PARKER: Some producers are selling direct now from the farm, which is great.

MR. BREMNER: Yes.

MR. PARKER: Is a levy being paid in that case?

MR. BREMNER: A levy would be collectible at the custom kill end of it. The consumer doesn't have anything to do with it but in the processing end of it, the levy would be collected there by the custom slaughter plant.

MR. PARKER: Okay, and is it on all cattle, like veal, dairy cattle, calves, whatever?

MR. BREMNER: The way that this one is worded, there are no exemptions. There are a couple of reasons. One reason for that, I guess, is that we know that in time, because of BSE and other animal health-related things, we will probably be required to track and identify every time an animal moves. So we thought, while we're doing this we might as well create it so there aren't any exemptions, so that we don't have to deal with that afterwards.

MR. PARKER: So it's on calves, as well as older cattle and everything in between?

MR. BREMNER: Yes.

MR. PARKER: Okay. Now, the majority of beef that's consumed in this province, as we know, comes from out West. I don't know, it's 85 per cent, 90 per cent, or something is it? Somewhere in that range.

MR. BREMNER: Yes, it's pretty close to it.

MR. PARKER: So is there any allowance for all that beef that's being produced, you know, coming into the province here? It's not produced here but it's - or it's being produced in Alberta or somewhere, but do you get any levy or check-off on that?

MR. BREMNER: The benefit, I guess, that you could see from that is that the levy, where it was collected, that portion of the national levy that everybody contributes to is spent nationally, either on advertising, research, development or promotion. So I guess that would benefit our area somewhat, from those dollars. But, directly, we don't get any dollars from that.

MR. PARKER: And the money that's collected here in the province, from the 10 per cent or 15 per cent that is actually consumed here by your own producers, how are you going to be using that money?

MR. BREMNER: Half of that levy stays within the province to run our provincial organization. The other half is really the portion of our national levy, but we have an agreement with the national agency that allows us to direct what we do with that. We have to direct it into research, market development and advertising. We can direct that within our own province. We have a different agreement than some of the other provinces, that if we send $50,000, or whatever, to the national agency, we can direct that that $50,000 be spent back here in Nova Scotia in any of those categories, research, development and advertising. Am I telling the truth here, guys?

MR. PARKER: So far, so good, is it? Can you tell us a little bit about how the money might be spent or is planned to be spent on marketing, on reaching Nova Scotian consumers, on buying local, or is there some earmarked for that?

MR. BREMNER: We certainly could do things. We have done some of that. Our organization has done some small - we did a Buy Nova Scotia Beef promotion here a year or so ago. We could do those kinds of things. Maybe there's some research that needs to be done, and maybe we could target the research at the Nappan Research Station, and maybe we could use our few dollars to lever some other dollars from other programs to do some significant research. Those are the kinds of things we would think about doing.

MR. PARKER: Okay. I guess that answers my questions for now, Mr. Chairman. I may have some further questions later, but I'll share with someone else.

MR. CHAIRMAN: Thank you, Mr. Parker. That's very nice of you, actually.

Mr. O'Donnell.

MR. CECIL O'DONNELL: Mr. Chairman, I don't know a whole lot about the beef industry, coming from Shelburne County. I do notice in your remarks you say our members farm in all counties in the province, so I take it that's Shelburne County, too. Is there a certain number of head of cattle that a farmer has to have before he can become a member of the Nova Scotia Cattle Producers? So if you have one, you can become a member?

MR. BREMNER: It's sort of based on the sale of animals. You could probably raise animals somewhere, and if you ate them all yourselves and they all stayed home, then you would probably never enter into a transaction that would make you a member, but you could become a member by choice. It's sort of, any animals that are raised for sale and do trade, then they are automatically covered by our board.

MR. O'DONNELL: I have just one other remark. Bill mentioned about the quality of our Nova Scotia beef compared to western beef. I had a store in the Barrington area for many years, and I used to service the Baccaro base. Of course they were always AAA, the western beef and stuff. But I sold them beef for a number of years, and I always bought my beef from O.H. Armstrong, and I never had any complaints. So Nova Scotia beef is comparable.

Just one other question. Coming from Shelburne County, I know what a cull for a lobster is or cull of a fish, but I hear cull cattle. What is that? Is it that it just doesn't meet a certain standard?

MR. BREMNER: Well, that's a term that we should have retired, I think. Some people say we should call them spent cows. They're animals - in most cases they're our brood stock, our brood animal that has kind of outlived its usefulness for one reason or another. They're mostly older animals that have kind of reached the point where they're not economical to keep any longer, and they have to go to market. That's really where our biggest depressed market is. I might add that we do have a board member from Shelburne County.

MR. O'DONNELL: Sutherland or Ryer?

MR. BREMNER: No, Greg Sheppard.

MR. FIRTH: He's in Queens County actually.

MR. BREMNER: Sorry.

MR. O'DONNELL: Next door, that's close.

MR. BREMNER: That's close enough, is it?

MR. CHAIRMAN: Mr. Colwell.

MR. KEITH COLWELL: I want to go back to this CAIS program that you touched on. I'd like a little bit more elaboration on that. It's 40 per cent funded by the provincial and 60 per cent funded by the federal. Then you go through and it said that the Canadian Federation of Independent Business last week stated that CAIS required an average of $1,000 per producer to hire a professional to help fill out papers?

MR. BREMNER: Yes.

MR. COLWELL: That sounds sort of strange. Can you tell me about that?

MR. BREMNER: Well, don't feel bad about not understanding CAIS, because we've been trying to figure it out for quite a long while. The forms are complicated, there's a series of adjustments and calculations that they make after the forms go in and come back out again. It actually has probably generated more money for the accounting profession than it has for the agricultural sector, all across Canada. It just simply seems to be a nightmare to process or to apply for. A lot of us should certainly have the capability of doing it ourselves, but it just seems that it's just too complicated to handle. Maybe Mike can elaborate on that.

MR. MIKE HORSNELL: Before CAIS, they had NISA, the Net Income Stabilization Account. NISA, the average farmer could fill it out. Everything was very straightforward.

MR. CHAIRMAN: Farmer friendly.

MR. HORSNELL: Yes. But when CAIS came out, it was the total opposite. Not only do you have to hire an accountant to do it, you also have to spend a lot of time with the accountant to make sure everything is being done right, because of your inventories and all your categories and your different farm commodities - like we have beef and apples - and some people are corporations and some people aren't. We're a corporation, so that's different. It's an accountant's dream, I think.

MR. COLWELL: And meanwhile farmers aren't getting the help they need. That's basically it.

MR. BREMNER: It doesn't seem to work even when you have the best accountant in the world. It still doesn't seem to work. The concept, I think, in the beginning seemed to

be quite simple to us. You figure out kind of what margin you had in the past, and it looked to us that we were buying some type of security that would kind of fill in the low spots. Theoretically, down here there should be a line in here. It just doesn't seem to work that way. We can't even get the information on what has happened, and we can't help anybody. We'd like to help.

The new federal government is looking at trying to redesign the thing so it works, and they talk about consulting industry for help, but I'm afraid that unless we can get some information on what has happened, it's hard for us to help. Sean knows that program better than we do. Do you have anything more to add?

MR. FIRTH: I guess I would certainly emphasize what Jim is saying. From my standpoint I do try to provide resources for the cattle producers. So they do come to me and ask me to do projections and modelling and help them out on policy decisions related to CAIS. It's extremely difficult to get information to base good policy on. For lack of a better word, it's a strange situation not to be able to access pooled provincial commodity level information on this program. It is a public program. The province pays 40 per cent of the bill on the program. We really cannot access information on it. It's not just us, the Federation of Agriculture is in the same boat, and other commodities as well.

MR. COLWELL: Who administers it here in Nova Scotia, the federal government or the provincial government?

MR. FIRTH: The federal government administers on behalf of the province in this province.

MR. COLWELL: You're saying the federal government is now looking at redesigning this? Like you said, how are you going to help redesign it if you don't understand how the first one works?

[1:45 p.m.]

MR. BREMNER: The other alternative is to throw it out and start over again, and we're a bit cautious about that because when you do those kinds of things, there's a big hole that happens where there isn't anything. There are a few commodities that it has worked a little bit for. If you say, well, throw it out and start all over again, you're going to impact somebody negatively that way too. We kind of think that maybe a rework of the thing might be satisfactory.

MR. COLWELL: Yes, it seems like it's a desperate situation.

You say here, also, that there was $953,000, approximately, paid out to 93 members, which is about $1,000 a member. But 76 other producers applied and didn't get assistance

under the program. Then you go on to say that the loss is $6 million. That's just in the beef industry, right?

MR. BREMNER: Yes.

MR. COLWELL: The 93 members that did get assistance, was that just in the beef industry or was that all the industry?

MR. BREMNER: No, we're just talking the beef industry and those 93 members.

MR. COLWELL: So, basically, you've got one-sixth of all your losses covered.

MR. BREMNER: Yes. The vision we had of the program was that when it started, that $6 million or so loss, we certainly wouldn't expect to be getting all that back but we thought that it should be coming somewhere in between there, just to hold us in there. But those figures, what we have there, it's nowhere near close.

MR. COLWELL: How many producers do you figure in the province are actually commercial producers - I don't know how many head of cattle you would have to have to do that - are at risk of probably shutting down because of this sort of thing or depressed prices and all the other factors?

MR. BREMNER: There's a lot. It's hard to put a number to that because some people are very open with their situation; others, you know, you don't know until the day they're gone. Some, certainly, are making no secrets about getting out; some can't get out because of what we said there. Even to downsize, if you're stuck with a bunch of older animals and you've got debt, which we all have - I mean, we're all in business, we all have debt .

Because of that tremendous loss in value of our inventories, you have to be sitting there saying, well, am I going to go now and just take less money than I've got owing on these cows, or am I going to - as long as you can keep that cow productive, then you can generate a little bit of cash flow from her and hold in there. But at some point in time you get to the end of the rope and you just can't do that any longer. A lot of guys are at the end of the rope, I'm afraid, and are just going to have to take - you know, maybe they owe a couple hundred thousand and maybe when they're done they'll get $100,000 out of what they sell, so they're short $100,000 to make up out of their Old Age Pension and Canada Pension, I guess. I don't know where it's going to come from.

MR. COLWELL: It's not a good situation.

MR. BREMNER: It isn't a good situation and from an organizational standpoint and from a chairman's standpoint, it's like I've always said, it's one thing to worry about your

own business but when you know and understand a lot of other people's plight, it's that much harder.

MR. CHAIRMAN: Mike.

MR. HORSNELL: You should touch on the CAIS advance.

MR. BREMNER: Wrapped up in that CAIS program, the feds decided in 2004 that they would make a special advance to beef producers, anticipating that every beef producer would have a claim. I think they thought the program was the same as we did. Anyway, they were anticipating that because of 2004 being a completely BSE-affected year, that we would all be in a claim position.

They said - and their idea was - to save these guys waiting, we'll allow them a special advance of $100 a cow, was it? I guess we had to kind of apply for it but they already had our numbers, so all we really had to do was say, yes, we wanted the money. Of course, yes, we wanted the money. So most producers took that special advance, and then, when they finally got through whatever happened in the CAIS calculations, those 74 that didn't get a payment have probably been asked to pay the special advance back.

MR. COLWELL: So it makes the situation even worse.

MR. BREMNER: Yes.

MR. COLWELL: I've got a real concern with primary producers such as yourself in the province disappearing. I think it's important that our province and our country maintain the level of production - especially in food - that we can rely on our own internal abilities to feed Canadians and Nova Scotians. At this rate, unless something changes - it's like the pork industry and a lot of other industries that you see - the prime industries in the province are going to be faced with some pretty serious decisions that aren't going to be good for Nova Scotia long term, never mind the country. I admire the efforts that you put forward to try to save all this. I ran a business for a long time - although I was born on a farm and it's very difficult to do on the best days. I know you work seven days a week and hope at the end of the week that you've got enough to pay for the groceries. It's a battle.

Is there anything in this CAIS program that you can see that should be done right away to help resolve this?

MR. CHAIRMAN: Mr. Colwell, I'm going to make this your last question.

MR. COLWELL: Okay.

MR. BREMNER: One of the things we did ask for the other day when federal Minister Strahl was here, we asked him if they would at least have some type of moratorium on that stressful situation that people are in, asking for that special advance back. Maybe some of them do owe that back when we finally get the thing sifted out but we would like them to sort of just set that aside for now. Basically what they've told us is, we want it back, we won't charge any interest until about December of this year, and then we'll charge you interest and if you haven't made arrangements to pay it back or can pay it back, we will collect it from any other federal payment or federal-provincial payment. I don't know where that stops, whether some guy that's getting his Canada Pension, or whatever, is going to have it taken out of that, or what.

MR. HORSNELL: The lady said they can take it out of everything but baby bonus.

MR. BREMNER: Most of us are too old to start having babies. (Laughter)

MR. CHAIRMAN: Mr. Gaudet.

MR. WAYNE GAUDET: Thank you, Mr. Chairman. I'm from Digby County. I will continue with Keith's line of questions.

Looking back, I have two uncles that have been beef producers for years and years. Many people at home in Digby County were in the beef industry as part-time to try to supplement their income. When I look at the last five years, when I look at the last 10 years, and I look at going down the road, the barns are disappearing. The part-time and the beef producers in Digby County are disappearing as well. I'm just curious, in terms of province-wide, what do those numbers look like today? I suspect many people have left the industry. Do you have any numbers?

MR. BREMNER: I don't think we would have any numbers, other than it's just really apparent.

MR. FIRTH: It's a census year this year and if you go back and look at the historical census figures, not just in beef but right across agriculture - and certainly beef has been fairly typical - it has been about 10 per cent to 12 per cent, every census, so every four years, of decline in farm numbers.

It wasn't all that long ago that there were 500 dairy farms and there are 290 of them now. There were 3,000 beef farms and there are 1,200 of them now, so certainly your comment about the disappearing barns is fairly typical of what the census figures will show you as well. It's about 10 per cent every four years.

MR. GAUDET: I want to go back to the stabilization program. If I understood, the federal government is putting in 60 per cent of the costs and the province is putting how much?

MR. BREMNER: The provincial government, 40 per cent.

MR. GAUDET: So how much are the producers putting in, or how is that working out?

MR. BREMNER: In the beginning, I guess, the CAIS program required a deposit based on your margin. Until BSE kind of got thrown in there, the way it would have worked was if I had - just pick a figure - a margin between my input costs and my outgo of $50,000, then I could choose a level of protection. I could choose - I forget what they were now - anywhere up to 90 per cent of that to be protected. You made a deposit based on that level of protection. I think if you were trying to protect a $50,000 margin, you simply had to make a deposit every year of whatever that margin reflected. But it wasn't a lot of money, it was probably in the $4,000 or $5,000 range that we would have had to make as a deposit.

Now, as you got into the disaster of CAIS, nobody had any money to deposit even. They did waive the deposit. They figured that the producer was making a contribution by the amount of money that he couldn't get covered anyway. So if you were going to lose 10 per cent, they would kind of consider that as the producer's share until they figured out some other way to account for that missing deposit. Right now, as it is, we don't really have to make any deposit. It was considered, sort of, that your deposit is deemed out of your payment. I don't know whether that makes any sense to you or not. That's the only way I could explain it.

MR. GAUDET: Coming back to what the factors are that would trigger a payment, of course if there's a drop in your income, and the crisis that the industry has seen, especially in the last couple of years. In your presentation you indicated that 66 producers had applied and were turned down. Those producers certainly had some difficulties in making ends meet. They applied under CAIS for assistance and they were denied.

MR. BREMNER: Just to give you an example, if you could bear with me, I spoke about our inventory values - my old cows at home or Mike's old cows at home were worth so many thousands of dollars prior to BSE; after BSE, 60 per cent of the value of them is gone. Under CAIS, they value everything, not just our cash income. Maybe we didn't have much cash income, so maybe we didn't sell very many animals. If we have those animals on inventory, CAIS assigns you a value for those animals. For example, if I wasn't able to keep up my ordinary cull rate in my cows because I just couldn't get rid of them, my cow number has increased. CAIS looked at that as actually an increase in my income. They assigned a value of $600, $700, $800 a cow that I went up, by 10 cows. Well, in the real world any cow I had to put to market was probably only worth $150 or $200.

So those are some of the reasons why these guys were declined a payment, after the calculations. They accepted the application, but after the calculations were all done based on things like inventory, and then they might have taken into consideration some kind of structural change, you were either downsizing or upsizing or whatever. After you get all that done, then a lot of people who actually didn't have any cash got a letter back saying you're okay, you don't need any of this money.

MR. GAUDET: Looking at the last few years, especially with the BSE, is the beef industry in Nova Scotia bouncing back and to what level, compared to before the BSE came to light? How is the industry in Nova Scotia compared to in those days before BSE came about?

MR. BREMNER: Oh my.

MR. GAUDET: Would you say we're certainly moving in the right direction but still have a way to go?

MR. HORSNELL: But we're way behind the rest of the country. In the Maritimes - what would you say, Sean? - we're at 25 per cent less than the rest of the country?

MR. FIRTH: On feeder cattle.

MR. GAUDET: And why is that?

[2:00 p.m.]

MR. BREMNER: I think through all of this we've lost some things, too. We've lost some volume, we've lost some market access. We've just lost some confidence in the whole industry, whether they be buyers or feeders or whatever. We are very small compared to the rest of the country. Nova Scotia is one-sixth of 1 per cent. So we don't really have any impact on anywhere else, and everywhere else has a big impact on us. For some reason or another we haven't been able to crawl back.

Now I think the industry has to take a good look at itself and find some ways to get that back again. Maybe we have to do some things in the industry that get the attention of the buyers and the marketers of product. I think those are the things we're going to have to do.

MR. GAUDET: My last question, I was looking for an update on the plant in Borden. Where does it stand today? How advanced are we on that file?

MR. BREMNER: The plant was kind of built and designed with a capacity of - and you've heard the figure - 500 a week. The 500 a week is limited, really only by the storage, by the freezer capacity. The plant itself can process, I'm not sure how many an hour but the

true capacity of the plant is larger than that, if you double shift and you would have to add on cooler space and whatever. I think last week they were up to about 470, 480, or something like that. They have to sort of develop the expertise of the people who work there and the cattle also coming in the front door. It's basically on target.

They've had a lot of interest from their major retail outlet or wholesale outlet, however you want to look at it - of course it's Co-op Atlantic. They have had - and I don't think I'm telling stories out of school - interest and acceptance by the other two chains. Sobeys and Superstore have been in the plant. Everything there qualifies for the criteria they want. In fact they are buying some product. There is some product in Sobeys and Superstore. Right now they won't label it, they just put it in with the rest. Their reasoning for doing that is that they can't get enough volume. They may have enough for one store, but if they feature it at that store - see, it's such a good product, they wouldn't want to disadvantage all the rest of the stores. (Laughter)

MR. CHAIRMAN: Mr. Fage.

MR. ERNEST FAGE: Welcome everyone. First of all I want to thank you for a good presentation. It lays out the reality of the industry and some of the challenges that the industry faces. I know my colleagues have asked some important and insightful questions. Coming from an agricultural background and growing up on a farm that raised beef - many of you knew my uncle. He ran the Maritime Beef Cattle Test Station for 30-odd years. I've been a beef producer myself through the years, at times, as well as other commodities.

The issue that I wanted to talk about first of all was traceability. One of the challenges in marketing here in Canada with the new restrictions, as well as exporting, is traceability. Is that fully implemented at this time? Is there a tagging program? Or is there still a way to go on that?

MR. BREMNER: There's certainly still a way to go on that. Maybe for the rest of you who aren't familiar with the tagging program that Mr. Fage refers to, there is actually a tag that's supposed to go on every animal when it leaves the farm. That tag carries a unique number whether it be a bar-coded number, or now the new ones are radio-frequency numbers which will trace that animal back to the owner. So if it goes down the line and it goes through two or three hands and it ends up at the plant and there's something wrong with that animal or there's something of significance there, they can actually go to the central desk and find out that that animal came from Jim Bremner.

What there isn't right now, and the nation is in the process of moving that way, is on live animals there isn't any real tracking system that tracks from me to you to wherever. That's something that's in the works, and it's being somewhat explored by the federal government. They have looked at what goes on in Quebec, and they are very favourable to

that type of program that Quebec has. Quebec actually identifies everywhere that animal goes. It can be tracked from the gate right through to the plate.

The tracking system that's in the plant in P.E.I., you've probably heard some about that, that's supposed to be a state-of-the-art tracking system that will actually trace every cut from out in the supermarket shelf right back through the plant, through to the animal, through to the shift it was killed on, and as they get producers to buy into this system, those producers who are involved in that plant will have to provide that kind of traceability right straight back through. So they'll know the shift it was processed on, the truck that trucked it, the sales yard that sold it, the dealer who bought it and the producer who raised it.

As far as the general livestock population, there isn't a complete tracing system yet, but we think it's coming. I don't know if that answers your question or not.

MR. FAGE: Yes. I think that's key in being able to say to consumers, we know we have the best quality beef here in Nova Scotia, in Atlantic Canada, and we have to be in the business of being able to trace it so we can get it to the marketplace. The other thing I wanted to touch upon, there have been a lot of insightful questions around the CAIS and NISA programs, and certainly from my involvement at the time the federal government was determined that it was going to be a whole farm approach. When I say whole farm, for the benefit of the committee members, whole farm means if you grew six commodities on your farm, if I was going to do a boiled-down analysis of it, it's a combination between your income tax and an RRSP program. So there was an account there at the end of the day so that farmers would have funds they could draw on when they sold their operation or left.

BSE has really turned that inside out and made a nightmare for the farming industry with its onset, because it made a situation where the whole farm approach was designed to balance, if you made money on your grain account, it was deducted from your beef account, deducted from another account added to it. Traditional farm programs, as we knew them, would send so much money per head or per pound when there was a crisis, and away it went. This was an attempt by the federal government, with the support of the provinces working with them, but it was certainly a federal initiative that there's a level playing field across the country, and this was how it was supposed to work.

BSE really turned the whole thing on end. There were a lot of complications that happened at that point, because instead of being focused on an account where producers were able to have money put in in the good years, draw from on the bad years with the $1, the 60/40 split coming from government to support that account, it has been a negative draw, draw, draw with no balance to begin with, really. So what is forced on the producers is - there are various strategies when your inventory value drops by 60 per cent, your operating dollars drop by probably 50 per cent. With BSE that's what it has really done to a beef farmer.

When you are faced with those things, do you sell into a market that's totally depressed and take 50 per cent of the value for it? If you strictly look at your account - we have many multiple operations or different operations in Nova Scotia, most are mixed operations, beef farmers are involved. So that caused, in a lot of cases, like you identified, that leads to no payment and a major cause of it.

You also end up in the situation where if you are a monoculture in owning the beef and you look at the strategies some of the provinces and producers employed, the quicker you could sell those cattle every time, then you actually got a payment, because it was cash against cash, not an inventory value adjustment.

MR. BREMNER: That's right, you get rid of that inventory.

MR. FAGE: That's extremely complicated, if it's a numbers game instead of raising beef. I know every producer in Nova Scotia is in the business of raising beef not playing a numbers game through a federal program.

That being said, I would like to know your comments - I know in this province, the government here wanted to support beef farmers, and members of the Opposition as well. This is one of the few provinces where there were three payments made through that time, two of them significant payments, $3.5 million, and that was equated to the old traditional system and it was simple. It you had x amount of heads of cows, you received x amount of dollars for them. The second one was more - and that amounted to $3.5 million in November 2003.

As you've identified, 2004 was a really tough year, and $10 million was appropriated in that year. That dealt with things related to loan payments, relief at the Farm Loan Board, so that many farmers weren't in a situation where they were forced off their land. It didn't put a lot of cash in their pockets, but it was significant support from the taxpayers. Finally, the $500,000 for the BSE and the marketing initiative. Were those three programs helpful? Many other jurisdictions in Canada didn't receive anything like that.

MR. BREMNER: They certainly were helpful. I think we were able to maintain a good many producers that we would have lost if we didn't have those. They certainly weren't, especially in our neighbouring provinces. If you live close to the New Brunswick-Nova Scotia border you almost want to kind of pull your farm across, because . . .

MR. FAGE: I live five minutes away, I know what that feels like. (Laughter)

MR. BREMNER: Yes, they certainly were a help. Your description of the CAIS program is certainly bang-on. If we had just decided to give up long ago and had thrown in the towel and sold these animals, we wouldn't have that inventory adjustment that wasn't

calculated very fairly, and we probably would have had a CAIS payment, but you wouldn't have any producers either. You're right.

MR. FAGE: The other issue, just . . .

MR. CHAIRMAN: Mr. Fage, if you could do a short snapper or shorten the preamble, that would be . . .

MR. FAGE: I'll attempt to do my best, Mr. Chairman. I apologize to the committee and to the people here. One last question, and it deals with the opportunities for the industry. You identified that the industry needs to look at some things on their own. Given the size of our production, I guess I'm a firm believer in branding, identifying yourself, whether the industry is totally organic, whether you employ a marketing strategy of single-desk selling, all those types of things.

Here in the province, one of the things I've worked closely on, with your industry and all agriculture industries for the last couple of years, is through the supplier-development, ensuring that Nova Scotia agriculture products are in all Nova Scotia institutions. The beef, I can tell you, was the most difficult because of volumes and suppliers. But the new plant is now up and running in Borden, and we've been able to achieve that through commercial contracts to government institutions. I want to acknowledge that to you. Obviously we're very pleased that was achieved.

Do you see the industry being able to sit down and look acutely at opportunities of how we can market our product, and that's everything from the opportunities of a cull cow to finishing cattle, more strategically? Because of our relative small size as an industry, it appears to me that one of the things we have to do is really focus how we market what volume we have so we can target it.

[2:15 p.m.]

MR. BREMNER: We certainly have identified, or think there are some opportunities there. We have to explore a lot of levels. One of the things we're going to do and one of the things - through our joint, three provinces - that Nova Scotia was going to undertake, was to try to develop some modelling. Through Sean, we were going to do some of that, try to develop some modelling so that producers can understand - maybe they're not all profitable but at least you'll understand what your level of profitability or loss is and a part-time farmer can decide that, you know, if I go this route, if I use these marketing strategies and this type of production model, then this is what my expectations should be. We're going to do some things like that.

Sean, maybe you want to speak on some other stuff. People are exploring a lot more direct marketing. Because the plant in P.E.I. is producer-owned, it's not to say that it does

the right thing every day. A lot of us have a vision that in order for that plant to really be meaningful to the producers, we have to have some kind of program in place that we market animals through that plant, that our prices - and really determined by Ontario, minus something - are actually determined by what that animal yields in the end, what it sells at wholesale for, based on the quality and the yield of that animal.

So the producer, because they own the whole chain, they've got to get a fair share all the way back to the guy on the ground. In order to do that, you have to have producer participation in that plant and the producers have to bring that to the forefront all the time, to the management and the board of that plant, that that's the route we want to go. I'm talking all around in circles, but those are the kinds of things that we see.

Because we're small, that has a bit of an advantage. Once we get so we can really kind of identify our producers and those that want to be involved in different aspects of this industry, we can find them and start down those roads.

MR. FAGE: Because Co-op now - I think about 2 per cent of the retail grocery chain in Nova Scotia, double that in Atlantic Canada - the market access is obviously limited.

MR. BREMNER: Yes.

MR. FAGE: The two other big chains are key. I mean, if we can identify Nova Scotia or Atlantic beef as an extra and a positive, whether it's organic or through a branding program, it's a huge opportunity. Then it becomes an asset, having a small slice that can get a high return for them.

MR. BREMNER: That's right. Our vision, I don't think, is that far out of whack. I don't think we expect to have a full case in Sobeys and Superstore in every province, every town or every store. But what we would like to see or hope we see someday, that there is a product in every case - and maybe it's a limited product and maybe you're prepared to pay a little more for it because there's only so much of it there and it's the best product in the case. I guess that's our vision, that someday we can brand things to that extent, that when you hear the truck came in from P.E.I., you'll all be lined up at the door. (Laughter)

MR. FAGE: Thank you, Jim. Thank you, Mr. Chairman.

MR. CHAIRMAN: Ms. Raymond.

MS. MICHELE RAYMOND: Thank you very much for coming in to present. I have to say that, like Mr. O'Donnell, I come from what's more of a fishing area than beef-producing area, so I hope you'll forgive some questions that you may have heard before.

I'm still interested in the degree to which you're talking about the integrity of the producer marketing chain within the province. I'm wondering what the general trend is. I know when the cattlemen were in here - I see by the transcripts in 2002 - you said that less than 25 per cent of the beef consumed in Nova Scotia was, in fact, Nova Scotia beef. Now, is that percentage holding, rising, falling?

MR. BREMNER: Probably less than that now.

MS. RAYMOND: That's a matter of concern, very definitely. Some of it, of course, is branding and identification, obviously, and some of it is needing to go abroad as well for the further steps along the way. Something that you might be able to tell me more about, and it might be self-evident to other people, is about the finishing of beef in Prince Edward Island. I realize it's processed there. You've talked about homegrown forage and so on for the majority of that. Now, is that a function of the quality of forage that's available in Nova Scotia, the quantity, the location of the plant? What is it that makes this cattle go to P.E.I. for finishing?

MR. BREMNER: To me it's quite simple, it's the potato industry. The potato industry in P.E.I. requires, I guess, even a legislated rotation, where you can only grow potatoes - I don't know what it is - one year or two years. Because of erosion and all the environmental issues that go with that, you have to take that land out of potatoes. So to take that land out of potatoes, you put it into either grain or forage. Now you've got all kinds of it because these guys really just want to grow potatoes, most of them. Now you've got all kinds of grain and forage so what are you going to do with that? It makes sense to feed cattle. Is that . . .

MR. FIRTH: Yes, and coupled with that is there is significant potato processing on P.E.I. so there's a very large amount of by-product feed that goes into the cattle industry.

MS. RAYMOND: Okay, presumably fertilizer as well.

MR. BREMNER: Yes. These cattle like to eat chips. (Laughter)

MS. RAYMOND: That's good to know, okay. I mean, that hasn't been historically the case then, this is something that has developed.

MR. BREMNER: It has probably evolved over the last, what, 20 years or so?

MR. FIRTH: It has been the case, certainly, for a number of decades, yes. It's not anything that has happened in the past few years.

MS. RAYMOND: Okay. You don't have any idea of what the impact is on the amount of grain land in Nova Scotia, land that's being kept in grain in the province, do you?

MR. BREMNER: No.

MR. FIRTH: Grain, generally, in Nova Scotia would be . . .

MS. RAYMOND: And forage, sorry.

MR. FIRTH: For forage?

MS. RAYMOND: Both, yes.

MR. FIRTH: Okay. Forage very definitely is grown specifically for ruminants, obviously, for dairy cattle, beef and sheep. The forage acreage in this province probably has not changed significantly. The grain acreage has probably declined.

MS. RAYMOND: Yes, okay, but the forage, at least, is pretty stable.

MR. FIRTH: Yes.

MS. RAYMOND: Another question that I had - a couple of really quick questions, if this is okay.

MR. CHAIRMAN: Sure, yes.

MS. RAYMOND: The CAIS program is very confusing, I would agree. Do you have any idea what the average producer contribution to the CAIS program has been?

MR. BREMNER: No. I guess, like I said before, when it first was set up we were required to make a deposit. The way it worked, we had to prove that we had a certain percentage - if I wanted to protect, say, a $50,000 margin, or whatever, I would have to prove that I had deposited somewhere in a registered account something like $4,000 or $5,000. All that really meant was that the first $4,000 or $5,000 of the loss was mine. I could take it out of my account. If that's all I lost, then that's all I was eligible for, was my own money. Once the thing got below that, then you started to dip into the program money from the province and the feds.

Like I said, BSE changed all that because producers didn't even have the deposit money. So the contribution of the producers now is just simply that first . . .

MS. RAYMOND: It's sort of been forgiven, that money.

MR. BREMNER: . . . portion of the loss, which you can't cover. They've agreed that, for the short term, if you ever do trigger a payment, then your contribution is considered that first 10 per cent of your loss that's not covered anyway.

MS. RAYMOND: So in the early days your premium, in effect, was about 10 per cent of your potential recovery?

MR. BREMNER: That's right, yes, no matter how you looked at it.

MS. RAYMOND: Yes, okay. Just out of curiosity, is there private insurance against market losses? I know there is in the fisheries and so on.

MR. BREMNER: Not that I'm aware of, no.

MS. RAYMOND: Yes, okay. One last question I had. You keep talking about branding which is obviously a very significant thing. I was in the United States recently, looking at some things, and was really struck by the strength of the Taste of Nova Scotia brand. I know that there are individual producers who have the Taste of Nova Scotia brand label and there is already some strong consumer recognition. Is it possible, as a commodity board, to negotiate any kind of overall affiliation with it, do you know?

MR. BREMNER: I'm not sure. Sean, do you . . .

MR. FIRTH: Oh, I think so, sure, yes. I think that's certainly a possibility.

MS. RAYMOND: It might be a way to get some of your work done early. Thanks very much.

MR. CHAIRMAN: Thank you. I'd like to ask a few questions, myself. I'm really interested in what you have had to say. I'm curious by the term "Olympic average". When you say you're using an Olympic average, I didn't know if that meant stronger, higher or farther. What was the meaning for that?

MR. BREMNER: They took a - I'm kind of hogging all the answers here.

MR. HORSNELL: You're doing a great job.

MR. BREMNER: To establish this magic production model, we didn't look at just last year's, they would look at the five previous years, throw out the highest and throw out the lowest - that must be the way they judge diving or figure skating or something - I guess that's what's called an Olympic average. If I had a really good year somewhere in the last five, they didn't take that into consideration, and if I had a really poor year, they didn't take that into consideration. So they took the mediocre years for your Olympic average. Hopefully somewhere in there, if you're trying to build this average, you would get a couple of years in there that they couldn't throw out. Basically that's what it was.

MR. CHAIRMAN: So if you had five poor years, you were averaged on the five years - well, they threw out the highest and the lowest.

MR. BREMNER: The best of the poor years.

MR. CHAIRMAN: And then you got nothing. Basically you had three years that were the same, so you didn't trigger any payment.

MR. BREMNER: When you get a program that's introduced following a couple of years of drought and some other things that we went through, then that situation really did occur.

MR. FIRTH: Could I just say one thing to add to that? It's a very good point in that not only is it an Olympic average but it's a moving Olympic average. It's your past five years, so every year you drop the last year off. From a BSE standpoint, from the beef industry standpoint, as we move forward with this program, our reference margin is going to be including some very poor years, and that of course decreases the chance of ever getting a future payment, as well. That's a concern as well.

MR. CHAIRMAN: A couple of things, and then I'm going to kind of hit my main topic here. Mr. Parker, the Ferguson slaughter plant there in Pictou, what's the name of it?

MR. PARKER: Ferguson's slaughter plant in Bayview.

MR. BREMNER: Harold Ferguson.

MR. CHAIRMAN: I was picking up a side of pork a year or so ago there. He was picking my brain when he realized I was the Agriculture Critic for the New Democratic Party. One thing he showed me was cattle - if we're talking about the under 30 months of age, and I'm trying to think if I got this straight, but I'm assuming what he tried to show me was 36-month-old teeth, three-year-old teeth coming in ahead of the 30 months, and that animal would be considered older than the 30 months. So, therefore, basically, I don't know what you would call it, an old beef, an old cow, but it didn't have the same value, obviously.

I was thinking that from the discussion on the weekend, and we were talking about birth identification, that would eliminate that problem. So if you had some way to say this animal was born on such and such a date, you would actually have your 30-month date and it wouldn't matter whether those teeth showed up.

MR. BREMNER: That's right, that's what they encourage now. There's a program that we can register those numbers, those tag numbers that I talked about. We can register those into a central database that identifies that tag on that animal when that animal was born. Japan has even agreed to accept that as proof of age, as long as it's done - and I think

they are even encouraging third-party participation in that somewhere, to give it a little more security.

MR. CHAIRMAN: I want to move away from CAIS. I'm a supporter of safety nets, a real supporter of ones that work, but you mentioned about the volume being low, the quality was high but the volume was down. I'm curious - and, Mike, you could maybe answer this for me - if you were making money, how much different would your farm be? How many more animals would you have? What would your plan be - I'm not asking for a Plan B, I'm just asking, what would be the difference in your operation today if you were making money? Would you be 10 per cent bigger?

[2:30 p.m.]

MR. HORSNELL: Maybe I would have last year's fertilizer bill paid. We run a fifth-generation farm. It didn't have a lot of debt on it. It has incurred a lot of debt since BSE. In order to move - I've talked to Sean for hours on end about where to go. Our vision was to go to the 250 to 300 cow range; we're at 170. We were gaining a little ground. We've gone the other way now, we're losing ground, we're not able to pay all our bills and stuff like that. You can't grow when you're in that condition. That's the way most farms - I'm not saying all - most commodity-specific beef farms in this province are, they're stalled.

If we were making money, selling stuff at least at the cost of production, we would be growing. But at this point now, you're kind of . . .

MR. CHAIRMAN: Treading water.

MR. HORSNELL: The average farmer today, and especially if you're in beef, it actually would be a good time to grow. Prices are down, the plant on the Island, I think, will work eventually, it's going to be good. If you went to a bank manager today and said you want to buy some beef cattle, you wouldn't want to owe him too much because he would call your loan anyway because he thinks you need to go down the street somewhere. It's a shame. And unless something really changes with CAIS and with the way the things are done, there is going to be less cattle and we'll get to the threshold where we'll . . .

MR. CHAIRMAN: I'm worried about CAIS, I'm worried about even depending on CAIS or anything like CAIS, even if you improved CAIS. What I'm concerned about is getting you the price that you need out of the display case, because it's already being paid as far as I can see. The retail sector takes up 48 per cent of the consumer dollar, so that means the other 52 per cent is shared between the producer and the processor. I forget what that number was, but that has increased significantly. That 48 per cent is a big number now.

There has to be a mechanism to get you your price because all through BSE the price in the store didn't change. Farmers actually subsidized everybody else, as far as I can see,

because there was no way for them to actually get their price. Now in the case of cargo, do they kill cull cows, number one, and if they do kill them, do they ship that hamburger - I'm assuming that's what it would be, I don't know what other cuts they might make of it - that meat across the border from any cull cows they do?

MR. BREMNER: I don't know. I don't think it does.

MR. CHAIRMAN: On the 30 month and younger, is it still a concern about the specified risk material? Does that still have to come out?

MR. BREMNER: Yes. It still has to come out. Your comment about the price in the chain stores, or any of the stores, not reducing during BSE is a question that I get all the time if I happen to be around a fair or an exhibition or at a booth. The average consumer comes along, and we're whining, as we've been known to do a time or two, about not getting any money, and they're saying, well, I certainly am paying the same price. I explain that to them by the fact that they're still competing with the American consumer on that product. There was only a matter of a few days or a few weeks that product from animals was shut out of the United States. Once they got that changed, then they went right back to work selling beef from under 30-month cattle with the risk material removed back into the American market.

So what was happening was that we in Canada had come to rely on exporting of live cattle, and now we couldn't export live cattle. They're all lined up at these packing plants, and they're still selling out the door at pretty well the same price as always. But now we're so anxious to get in the door, all you have to do is hold up a few dollars and we're in the door because we can't hold onto them. Margins went crazy in the packing industry, from whatever they would be to an animal to about two and a half times what it was because they were simply in that position.

Now we've grown somewhat in Canada where we're up to pretty near 90 per cent of what we produce or more, and we have processing facilities to do that. But we still are not sharing - that price has come back somewhat, but we're still not sharing in that retail price like we should be.

MR. CHAIRMAN: I'm still going to hand this back to my colleagues around the table. We finish about 8,000 head of cattle a year in this province. We bring in the equivalent of about 9,000 a month. I'm not sure if the industry is purely thinking that - I see it more difficult in the basis of cow calf - you assume that if the industry is healthy and we're a cow calf operation and those feeders basically go to Prince Edward Island that in the chain - in other words if the producer who is finishing them gets his return on them at the plant, then that makes it worth it for him to pay you for your feeders. I'm not sure - it seems like in this world that doesn't . . .

MR. BREMNER: It doesn't always happen.

MR. CHAIRMAN: It doesn't always happen. I wonder if producers here ever think about having their own plant. You might say, well, we don't have the volume to supply any particular market. But you're going to have to make the "which came first, the chicken or the egg" scenario, because I think if you had control of your own processing, which you say you do on the Island - and I spoke with people setting that up. I spoke with John Harvey, and they said they were just going to pay whatever the market would stand, they weren't paying any more for beef. I said, well, you won't have any beef. Even though that's supposed to be producer-owned, I'm a little concerned about what producers are going to get out of that.

I'm looking for a mechanism whereby you could actually have more control, and even if it was a small facility to take care of whatever volume you have now, but if producers could make money, they would grow the industry. Then you could grow your facilities. At some point you have to step in to do something differently. I'm just wondering what your thoughts are on that.

MR. BREMNER: I'll agree with that somewhat. I think you have to be a little bit careful in the size. I think there are actually opportunities to do that on a very small scale, if a group of producers wants to develop a brand or a niche market and they can find a market and market those animals and control that right straight through, and they may not necessarily need to own the plant but they need to own the animals all the way through.

When you talk about the large capital investment and the problems that go with big-kill plants and disposing of risk material and all that kind of stuff, I'm not so sure we have room for too many of those. (Interruptions) These guys may have a different opinion than I do.

MR. HORSNELL: We have some small plants now that are provincially inspected. Through BSE those plants were killing a lot of cattle, but cattle were cheap and they were able to make some money on them. Since cattle prices have come back up, there's such a large amount of product on the market throughout Canada, there are deals every week, and some of the plants now bring that meat in and are selling more western beef, actually now more so than they were while BSE was in full swing. It's even worse than it was before. Before BSE we could sell cattle to O.H. Armstrong's, Bowlby's plants throughout the province, smaller plants, and now they don't kill near the capacity they were, just on account of there being more money to be made out of something out of the box than there is - because of the SRMs and all the costs incurred.

MR. CHAIRMAN: Mr. Colwell.

MR. COLWELL: I have just a couple of quick questions. You talked a little bit about tracking age with this new device they have. Is that being accepted by industry and promoted by the industry itself, from within?

MR. BREMNER: It has been promoted, and it's accepted by those in the industry who are really fully aware that everything we do here, even though we don't export very many cattle directly to the United States, or ever export directly to Japan, there is always a case to be made, there's an animal from Nova Scotia, it could be bought by a feed lot in Ontario and that animal could jeopardize trade with Japan. Those who are aware of that fully support that we have to track these animals, we have to register their birth dates, or we'll be shut out of another market.

Yes, there are also those who don't realize how important that is. The tagging regulation has been in effect for two or three years, where you actually had to have at least a tag on their ear that could be traced back to the owner. At that time a lot of people said, well, I'll never tag an animal. A few $500 or $600 fines later, most of those tags are in cattle now when they go down the road. Yes, it's being promoted, and we take it very seriously.

MR. COLWELL: One other question, sort of a little different approach here. I know some of the producers who operated greenhouses and stuff have had big problems with Sobeys and Superstore. Basically they were told that if you can't deliver year-round, don't talk to us anymore, we're not buying anything. Has the beef industry - of course it's a little bit different, because you can supply year-round - had that kind of problem with those two major chains?

MR. BREMNER: It's really kind of the same thing, only how it works in the beef industry - or it used to be, and they've softened a little bit on it - well, if you can't supply all I want next week, then we really - it's so convenient for them. Their order desk just calls Cargill or Lakeside, they want 15 tractor-trailer loads and it's there. They use the approach with the beef industry, well, you're not a significant enough supplier, well, we could supply them for a day, but then what do they do? So there was some justification there.

But now, as everywhere, they're getting a little more push from consumers who want to buy local and they want to know where the beef came from or they want to know where the carrots came from or whatever. So that has created a bit of an opportunity. We do see, I'm sure, a little bit of softening from both Sobeys and Superstore, to that extent.

MR. COLWELL: I'm just concerned about that, because if you get large chains - I'm not against large chains, don't get me wrong - that buy like that, that really has a negative impact on our economy. People like myself who go to the grocery store and buy beef - and a lot of people don't realize that they're actually paying to eliminate our own farmers.

MR. BREMNER: That's right. Like I said, around fairs or somewhere, I've been at a booth and I'll ask the guy or girl whether they buy local. Yes, they buy local, they buy just down the street at Sobeys and Superstore. They don't really realize - and why should they? - any more than that. They're supporting those local people who work in the store, but the product they're buying certainly isn't local. When you point that out to them, they're very

receptive, and say, hey, maybe if you did identify your product I'd go look for it. So we have a job to do.

MR. COLWELL: Maybe we do as provincial legislators too. Legislators could come along and make these big chains and all the people identify where the products come from, right on the product.

MR. HORSNELL: Just yesterday I was listening to CBC Radio, they were talking about coffee. Tim Horton's doesn't buy anything from farmers in the coffee business who have to make a profit in order to stay in business, too, and now these chains of coffee are being bought from farms that are actually sustainable. That's what we need. If it takes legislation, so be it. I'm in the apple business, too. Who I work through sells those apples into Sobeys and Superstore, but the price is the price and if they don't want to supply it, somebody else in the world will. You're a price taker, and it has to change, or there will be no agriculture.

MR. COLWELL: I'm afraid that's underway under the present conditions. That's what it appears to be anyway, from an outsider.

MR. BREMNER: That's really where we want to get out dollars. We don't want them out of CAIS or ad hoc government programs. We would like to get our dollars out of the marketplace.

MR. COLWELL: But you have to survive until that can happen, because if you don't, it's all immaterial.

MR. BREMNER: Yes, that's right.

MR. CHAIRMAN: Do any of the other members have any questions? I have one.

MR. PARKER: I'll ask one. I just thought, I've heard the term organic beef. It seems like a good thing to promote. What is organic beef? Are you able to use chemical fertilizers on your land or chemical injections in the animal in any respect? How pure is organic?

MR. BREMNER: There's a standard, and they're developing standards all the time. Sean, maybe you could address that.

MR. FIRTH: There are three main issues surrounding organic farms. One is that you have to go through a certifying body. That certifying body will actually ensure that you comply with their standards, and no, you cannot use any chemical fertilizers, you can't use antibiotics or implants or anything extraneous to what an animal would normally grow on. Your feed has to be grown organically. You have to undergo regular audits, and you also

have to keep records on everything you do. So it's a fairly stringent set of guidelines that you have to adhere to if you're going to be labelled and certified organic.

MR. BREMNER: Saying that, our everyday beef industry is not very far off being organic, just because of the way we do business in this province. Most beef farmers maybe use a little bit of fertilizer, but most of the time they're just grass and forage-based animals. You hear talk of hormones and implants. There's very little or next to no hormones or implants used in beef production in Atlantic Canada, compared to the Alberta feedlots where they use a fair amount of that.

[2:45 p.m.]

MR. PARKER: Okay. So it's really 6-12-12, or Triple 10, whatever, that really prevents you from saying you're organic at this point?

MR. BREMNER: That's right, yes. You would have to have a period of years, three years or something - like if I wanted to be totally organic. They have actually talked about that in the plant in P.E.I. They actually have another branded product that was, say, organic. Those producers would have to be verified and all that kind of stuff. But in order to qualify you would have to, I think, abstain from using chemical fertilizers for three years. There's a whole list of things you have to do.

MR. FIRTH: One of the biggest issues, to be honest with you, on the organic front in this area of the country is that you can't use parasiticides. Animals pick up worms on pasture and it's a huge problem for production if you can't get rid of them. Organic standards do not allow you to treat for that. So that has really been, more than anything, at the end of the day, a huge issue for a lot of farmers to go organic because it takes your cost of production up significantly if you can't use those.

MR. BREMNER: Right. There used to be an old home remedy where they used chewing tobacco but I guess that wouldn't qualify either. (Laughter)

MR. HORSNELL: The natural beef thing is booming in parts of the world and it's a little bit in between the organic and the regular. Really, in the Maritimes, we fall into the natural beef more so than we do the organic. The other thing is, a lot of the cattle are fed on rotational farms which grow potatoes, maybe grain and corn, different things. So in the rotation, I think that it would pretty well eliminate - if you try to go totally organic, 75 per cent of the fats are finished in P.E.I. and very few of them qualify. I think a natural branded product would work better.

MR. PARKER: It sounds like a good way to go. The consumer wants that product and it's worth pursuing, I'm sure. Okay, thank you.

MR. CHAIRMAN: Mr. Fage.

MR. FAGE: Thank you, Mr. Chairman. Just a couple more quick issues. When you look at the kill facilities or slaughter facilities in Nova Scotia, Atlantic Canada, and the issues related to that, I guess from my perspective through the years - and I know the industry looks hard at that too - the balanced approach is one that I think is always important. We have quite a number of provincial facilities in this province and they, in many cases, have been long-established facilities, some of them multi-generations. With the establishment of the plant in P.E.I., those plants primarily process, in many cases, the cow beef and some of the utility. There is some finished beef, obviously, slaughtered in those plants.

How does the industry feel when you look at opportunities of the future and where you would like to go? I guess my perspective is, you have to be mindful of the private industry and the slaughter facilities that we have that are successful. A large investment by producers or government to endanger all those has to be part of, I think, an overall strategy thinking, doesn't it, or does it?

MR. BREMNER: Yes. That has certainly been our thinking right along. Mike has spoken a lot with us about that, that those provincial plants that we have in this province are really a very high standard. There isn't a lot of difference, if any, between the standards of a provincially-inspected plant in Nova Scotia and a federally-inspected plant. There's just a few things that cost a lot of money: lights, stainless steel and that kind of thing.

A lot of those provincially-inspected plants could do the job that we want done if we weren't excluded from trading across provincial boundaries. One of the problems we have with trading across provincial boundaries is that the other two provinces that it would be kind of natural for us to trade with don't have quite as high standards in their provincially-inspected plants.

Now, if everything could all be brought up to the same level some way or other so we could trade across those boundaries, then, actually, our provincial plants could fill that void that we need filled so bad for extra kill capacity. You're right. I wouldn't want to do anything that would endanger those provincially-inspected plants because they're good, they are good and they have done a good job for us. That would be something that we would have to consider.

MR. CHAIRMAN: I'm going to cut you off, Mr. Fage.

MR. FAGE: I think it's so critical as we move forward into the future that those things are carefully planned out. I mean, whether it's trucking or whether it's phylosan regulations such as we're dealing with, huge investments could be made and an agreement achieved that would have taken care of - and then you have the industry's large investment, the provinces with a large investment and nothing to process. That leads to the financial ruin

and collapse of what we have and what might be there in the future. I guess, obviously, I always urge the balanced approach in looking at all the players on the field.

That leads to, sort of, the dichotomy since BSE. I meet with beef producers on a regular basis and a number of the ones that I represent trade all over eastern Canada. They're people you've known all your life and your neighbours. But the one class out there that, to me, since BSE, feeder prices are lagging, there's no question and that's part of marketing strategies and volumes, and how people market.

The cull cows, the price is still extremely low. Most producers tell me it's in the 20 cent range, in the low 20 cent range . . .

MR. CHAIRMAN: Mr. Fage . . .

MR. FAGE: Does industry . . .

MR. CHAIRMAN: Can you bring this to a close, please?

MR. BREMNER: I didn't catch the last . . .

MR. FAGE: How is the industry looking upon the cow beef industry or the cull cow and the pricing? Any strategies that you're looking to employ to bolster that price?

MR. BREMNER: Well, we have explored some ideas of things like cow plants - you know, spent cow plants, or whatever we're going to call them - but they're hard to get off the ground because once you start to get into it and everybody realizes the costs involved, and then you have to really - in order to go out there and get the market for this product, you've got to make sure you've got a sustainable amount of cows coming in the door. It's awfully hard to get those things to balance and we really haven't got anywhere on that. We're still subject to those low, low prices.

MR. FAGE: It's at the stage right now where it's hurting all producers.

MR. CHAIRMAN: Thank you. I guess my thought would be that any new killing capacity shouldn't affect the provincial slaughter houses because they're not filling that market anyway. They're not supplying a big supply to the chain stores.

MR. BREMNER: No.

MR. CHAIRMAN: So if you were to enter into that, I don't think you're going to affect the provincial plants.

MR. HORSNELL: Some of those provincial plants, actually, are supplying into it. They're supplying a federal product.

MR. CHAIRMAN: Yes, not big supplies.

MR. BREMNER: They're getting them from somewhere else.

MR. CHAIRMAN: I want to say thanks very much. We really appreciate you coming in to see us, for sure. I guess I would like to say, in whatever capacities for all members, to certainly make use of us. We appreciate it very much.

MR. BREMNER: Thank you very much.

MR. CHAIRMAN: For the members of the committee, there is one item for us to deal with before you leave. We have to elect a vice-chairman. I'm not sure if we need nominations for this. It would be, I guess, appropriate, so the floor is open. Does anybody want to nominate somebody else?

MR. FAGE: I nominate Cecil O'Donnell.

MR. O'DONNELL: Decline.

MR. LANGILLE: I nominate Wayne Gaudet.

MR. CHAIRMAN: One nomination for Wayne Gaudet.

Any other nominations? I guess we're fine with Mr. Gaudet?

MR. LANGILLE: Sure.

MR. CHAIRMAN: All right, well, the job is yours. Grey Seal Research Development Society, that has been changed to April 18^th, so if you want to check that in your calendar.

MR. LANGILLE: I wonder, Mr. Chairman, is Junior Theriault coming in?

MR. CHAIRMAN: I can't answer that.

MR. LANGILLE: Is he on the committee?

MS. MORA STEVENS (Legislative Committee Clerk): Well, he's not a regular.

MR. CHAIRMAN: He's a substitute.

MR. LANGILLE: Oh, is he?

MR. PARKER: He'll be in for that one.

MR. LANGILLE: I would hope so, yes. (Laughter) We want to have some fun.

MR. CHAIRMAN: Mr. Langille.

MR. LANGILLE: I have a letter from a constituent of mine. I really don't know him. He wrote me a letter and is very concerned about silviculture. He's working in the industry and he works for a company but there has been no raise there for years. I think he said since somewhere around 1992, or whatever. He's going further and further behind, as a worker, because they get paid for what they do, so much acreage.

MR. CHAIRMAN: Yes, piece work.

MR. LANGILLE: Piece work. I have a copy of that I would like to forward on and maybe get somebody in the industry to come down, just to explain it to us.

MR. CHAIRMAN: Okay.

MR. LANGILLE: I think these are very hard-working individuals. I mean, I'm saying about people across the province that do this. There's a lot to it.

MR. PARKER: Are we going to have DNR come in to explain this program?

MR. CHAIRMAN: There is a silviculture operators group.

MR. LANGILLE: Yes, this is it, but along with an individual who actually works for the group.

MR. CHAIRMAN: So you would like to have that group added to our list for presenters.

MR. LANGILLE: What I'll do, I'll forward the letter and see if we can . . .

MR. CHAIRMAN: Okay, well, you send it to Mora and then we'll discuss it the next time we meet.

MR. LANGILLE: Okay.

MR. FAGE: Then you can contact the silviculture association, the people who do the work that have their own organization, to see if they want to do a presentation.

MR. CHAIRMAN: Sure, okay.

MR. COLWELL: Could I ask something on another topic?

MR. CHAIRMAN: Sure.

MR. COLWELL: We talked one time about the committee travelling. Whatever happened to that?

MR. CHAIRMAN: I sent that request to the former Speaker, spoke to him about it in December, he sent a note to his staff just to see about funding because, at first blush, he didn't turn it down, and I haven't received a thing yet on that, so . . .

MS. STEVENS: It's the budget. It would be a matter of whether it has been determined and been approved within the budgeting process. It is a budget item so it is sitting there.

MR. COLWELL: I just wondered what happened. I don't care one way or the other.

MR. CHAIRMAN: No, I haven't heard, other than him saying - his last comment was, we might be into an election before that. (Laughter)

MS. STEVENS: It has been submitted.

MR. CHAIRMAN: It was submitted, we just haven't heard.

The meeting is adjourned.

[The committee adjourned at 2:59 p.m.]