Our July/August issue

July/August 2017

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THE EFFECT OF CLIMATE CHANGE ON THE CANADIAN MEAT INDUSTRY

WILL THE NEW NAFTA BE A THING OF BEAUTY? CANADA’S FOOD PRICE REPORT: MEAT PRICES SET TO JUMP IN 2017 WILL CHINA REMAIN A MAJOR OPPORTUNITY FOR CANADIAN PORK? OLYMEL INVESTS $2 MILLION IN RED DEER PLANT m e a t b u s i n e s s .c a

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IN THIS ISSUE July/August 2017

5 6 11 14 15 18 20 21 22

Governments plough ahead with agricultural labour changes: Sowing the seeds of discontent

By Amber Ruddy

The Effect of Climate Change on the Canadian Meat Industry

By Scott Taylor

Fact Sheet on Climate Change and Canada’s Meat Industry Skeptical Sscience Debunks the Climate Change Myths Canada’s Food Price Report: Meat prices set to jump in 2017

By Ryan McNutt

Government Investments in Beef Research Will Help Ontario Beef Farmers Remain Competitive Spam Turns 80 and It’s Still Here

By Cam Patterson

Canada and Mexico Ag Ministers Issue Statement Will the New NAFTA be a Thing of Beauty?

By Chuck Jolley

23 24 25 26 27 29 30 31 33

Meat Snacks Market expected to grow over next 5 years

Reducing Food Waste

By Tom Lynch-Staunton

Will China remain a major opportunity for Canadian pork?

By Emily Liu

Canadian Agri-Food Exporters Urge Canada to Push Ahead with TPP Canada and European Union to apply CETA this September

Canadians have increased their protein consumption Olymel invests $2 million in Red Deer plant

Cargill profits rise on strong global protein demand The Manitoba PEDv Outbreak: Is Bio-Security Really Working

By Cam Patterson

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GUEST EDITORIAL

July/August 2017 Volume 16 Number 4

PUBLISHER Ray Blumenfeld ray@meatbusiness.ca MANAGING EDITOR Scott Taylor publishing@meatbusiness.ca DIGITAL MEDIA EDITOR Cam Patterson cam@meatbusiness.ca CONTRIBUTING WRITERS Chuck Jolley, Amber Ruddy, Scott Taylor, Ryan McNutt, Tom Lynch-Staunton, Emily Liu CREATIVE DIRECTOR Christian Kent Canadian Meat Business is published six times a year by We Communications West Inc.

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GOVERNMENTS PLOUGH AHEAD WITH AGRICULTURAL LABOUR CHANGES: SOWING THE SEEDS OF DISCONTENT Thorough policy consultation hasn’t been a strong suit for the governments of Alberta or Ontario, especially on issues affecting small business owners.

Both jurisdictions are drastically changing labour rules – in Alberta, the government has already removed its long standing agricultural exemptions, and they’re on the chopping block in Ontario just as soon as the Ontario government joins in Alberta’s disastrous $15 minimum wage experiment.

These governments are using the guise of supporting “family friendly” workplaces.

But what is more family friendly than inter-generational businesses that pass the baton down to their children?

Overhauling the regulatory environment has been rightfully met with strong opposition from farmers and ranchers, as this industry already faces high levels of red tape and paper burden. Farmers say imposing stringent new requirements is the least effective way to promote safe and vibrant workplaces. New legislation in Alberta broadens and extends the labour relations code, and employment standards provisions onto the agricultural sector, failing to recognize the unique realities within the industry.

Opening the door for the unionization of waged farm workers would put livestock and crops at risk. As we all know, farmers have time-and weather-sensitive peak periods when they can lose (hundreds of) thousands of dollars, if all hands are not on deck during harvest or calving. For example, if a frost is expected overnight, farmers must work twice as hard to finish combining in order not to lose their crop.

Following mass protests across Alberta, the government did make some amendments to protect family farms operations but this amendment isn’t a silver bullet solution, in fact it’s fraught with problems. Trying to define the difference between a family farm and an industrialized operation is not easy. Some farmers report this has put a chill on hiring, causing further strain on their workload.

Ontario hasn’t gotten quite as far just yet, but it’s clear they’re headed down the same path. Their recent Changing Workplaces Review final report recommends that agricultural and horticultural employees have their labour exemptions eliminated; and while the reviewers note some exemptions could remain intact for the family farm, they also tell the government to consider whether the protection of the family farm is a “pressing and substantial objective” that warrants labour exemptions at all.

Agriculture is not a “9-5” business, especially during periods of peak production (e.g. harvest, calving season).Laws like the Employment Standards Act that apply to workplaces in urban settings cannot be easily applied to agricultural firms.

Agricultural businesses should continue to be exempt.

Governments should be working to keep agriculture competitive and create an environment that is attractive to the next generation of farmers – moves in Alberta and Ontario do the opposite.

Farmers are resilient and will adapt to changing work environments where necessary, but governments need to revisit ill-conceived “one-size-fits-all” legislation designed for entirely different work environments that will do nothing but hurt the people that bring food to Canada’s tables.

Amber Ruddy is the Director of Provincial Affairs and for the Canadian Federation of Independent Business. She can be reached at amber.ruddy@cfib.ca.

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July/August 2017 CANADIAN MEAT BUSINESS 5

THE EFFECT OF CLIMATE CHANGE ON THE CANADIAN MEAT INDUSTRY

By Scott Taylor

When Brian Lemon looks across a field in Southern Manitoba these days, he sees corn.

For many years, the general manager of Manitoba Beef didn’t see a lot of feed corn growing in this province, but things have changed in recent years. Lemon will admit that he’s not sure whether its Climate Change, a cyclical altering of the seasons or a combination of both, but he does know things are different.

And if the reason happens to be Climate Change, he can see a changing Manitoba beef industry over the next 30100 years.

“Climate Change will offer different opportunities and a number of challenges,” Lemon said, speaking on his hands-free car phone as he drove across Southern Manitoba in late June.

“For instance, 15 years ago, there wasn’t much corn in Southern Manitoba. But as the growing seasons gets longer, and it has become longer in the last few years, corn has now become a major part of our feeding strategy.

“With seasons changing, we can now rely on a longer growing season and grow more and much better feed corn,” Lemon continued. “This offers up all kinds of 6 CANADIAN MEAT BUSINESS July/August 2017

different feeding strategies and options for our producers.”

The Earth’s climate is changing on a constant basis as a result of natural processes. However, 97 per cent of the scientists (almost every scientist who isn’t paid by the fossil fuels industry) who study this topic and the Intergovernmental Panel on Climate Change point out that the current rate of climate change appears to be happening faster than at any time in the last 10,000 years.

The definition of Climate Change is now pretty much in our daily lexicon: “Greenhouse gases (GHG) in the atmosphere act as a thermostat controlling the earth’s climate.

Concentrations of GHGs have been increasing steadily and this has been linked to human activities including industrialization and release of natural carbon sinks by cultivation and deforestation.”

When it comes to a high-latitude country like Canada, scientists suggest that the warming is expected to be more pronounced than the global average. Over the next 30-50 years, the North, along with the Southern and Central Prairies will probably experience more warming meatbusiness.ca

than other regions in North America. We’re actually experiencing it now.

This change in climate (not weather, climate) is expected to have substantial impacts on all aspects of the environment. Regional climate changes, particularly temperature increases, seem to be affecting natural systems on all continents as well as in the oceans.

However, it should be noted that scientists have long predicted that Climate Change is increasing the frequency of extreme weather and Lemon has even noticed it in recent years, affecting the way cattle are raised in Manitoba.

“As Climate Change creates a variability in the seasons, we’ve seen an increased amount of rain in this area,” said Lemon, who works daily with farmers and ranchers in the third largest beef-producing province in Canada.

“Its Climate Change issues like that which create challenges. We’re in the midst of an extremely wet cycle.

In the last few years, we’ve had more severe rain. Is it something that’s just cyclical or is it Climate Change and will it be with us for a long time? Regardless, all this rain causes issues in regards to water damage and flooding.”

Agriculture and Agri-Food Canada (AAFC) scientists predicted in 2004 that under a future climate, on average, high temperatures would increase by 2ºC to 3ºC and low

temperatures increase by about 3ºC. When compared to the current climate, the model also predicted that precipitation was to increase by three to seven per cent.

However, one of the concerns is that climate change could have significant negative impacts in terms of violent weather patterns. That would include the increased intensity and frequency of droughts and intensely damaging storms.

According to the AAFC: “As the frequency of events like droughts increases under climate change, crop yields would decrease. This would increase the vulnerability of producers to climate change, particularly in semi-arid regions of Canada. Extreme events like the 2001 and 2002 droughts and floods of 2010 and 2011 can have a devastating impact on crop yields where yields could be reduced by as much as 50 per cent of the average yields during normal or more suitable growing conditions. That would increase feed costs for meat producers.”

“It used to be that we’d get rain in late April and early May and the producers could get their cattle out into a nice green pasture by mid-May,” Lemon explained.

“They could calve in the spring and get the cattle out to pasture in the spring. Now, we’re getting heavy rain in June. We’re playing with the seasons. We can graze until November, but it in the spring we’re getting a deluge of Continued on page 8

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June rain. Naturally, this will create both problems and opportunities.”

Dr. Kim Ominski, an associate professor in the department of animal sciences at the University of Manitoba, indicated that some producers in Alberta are working to extend their grazing seasons to 12 months a year. With warner weather and an increase in precipitation, it’s not out of the question.

For most experts in the meat industry, there is a growing confidence that Canada could fare well if global temperatures continue to rise. In fact, as Lemon pointed out, there could be a reduced demand for feed, a longer (but different) grazing season and much higher forage. As well, there is a good chance there will increased survival rates in calving and even lower energy costs.

But Lemon was more concerned about the challenges than the opportunities and believes producers must be prepared for some difficult changes, as well.

There will, obviously, be more extreme weather and changes to weather patterns; bigger, uglier and more deadly pests; and even transportation and shipping problems.

“We know the future of our industry will include change,” said Dr. Ominski during a recent Beef Cattle Research Council webinar.

“Scientists are looking at a number of possible shifts.

Warmer winters mean cattle don’t need as much feed to maintain body weight, so producers would see lower feed bills. Many have already stopped confinement over the winter and moved to extended grazing.

“Higher temperatures could also result in a longer growing season and higher forage yields. But more spells above 0 C during the winter mean more crusted snow that makes it more difficult for cattle to get at swaths or other stockpiled feed.”

Changes in weather patterns could, and probably will, mean a number of things are going to change dramatically.

According to Dr. Ominski, more intense summer heat waves, which will increase water consumption and the risk of heat stress and stroke, will have to be dealt with as will quick warm snaps in the dead of winter.

June — a six-week difference.”

Dr. Ominski agreed with Lemon when it came to the issue of precipitation.

“In addition to the variability we see in spring frost, we also see high variability in precipitation,” Dr. Ominski said.

“If we look at climate trends across the Prairies, we can say that production is limited by heat and by water. We see small increases in frost-free periods and heat units, but there is high year-to-year variability, which masks a very obvious trend.

“By 2050, temperatures will have increased between 1 C and 4 C, with the extra heat units increasing the length of the growing season and extending the range of crops toward the north. But that also means more evapotranspiration in plants in a landscape susceptible to drought. We have to think about opportunities to capture run-off, and then store and use water for periods of deficit.”

Because of this obvious change in weather over the last 50 years, there is also a concern for the health of the nation’s pastures.

“Pasture health and animal health will definitely be a challenge,” said Lemon. “We are already seeing species of weeds that used to grow only in the north, invade pastures in the southern parts of the country. These weeds are finding their way into our pastures and so we have new enemies that must be controlled.

“You then look at the growth of these new species and cross-reference to the increased number of new diseases – granted, these are diseases that are all treatable – and it puts pressure on our regulators to make the drugs available to the producers to treat these diseases.

“Take for example River Fluckes,” Lemon continued. “It’s a disease that’s never been an issue in southern Manitoba.

“It’s caused by something in the soil and the drug manufacturers in the United States have the antimicrobial drugs to treat the disease successfully. However, we’ve seldom had the problem here so drug companies don’t sell the AMRs here. They just can’t make any money doing it.

If the disease ever cropped up in the past, farmers would just cross the border, buy the drug and bring it home.

“Climate change can impact transportation as greater variability in temperature and precipitation can cause frequent freeze-thaw cycles and cause deterioration in road infrastructure,” said Dr. Ominski during her webinar.

“But now, our producers are starting to need the drugs in greater numbers. If it is indeed Climate Change that is creating this new situation, it’s important for the regulators to approve the drugs and make them available in Canada and that’s going to be a challenge.”

“Extreme weather with road closures could cause costly interruptions in transport. In Western Canada, there has been a trend to warmer temperatures in winter, along with less snowfall. Over a 50-year time frame, the date of the last spring frost has varied from May 1 until the middle of

A 2016 report by the AAFC paints a dire picture of what “could” happen if Climate Change is not confronted and dealt with in at least a reasonable manner. It might not be able to turn things around, but government should do whatever it can to slow the process.

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According to the AAFC: “Warmer temperatures also mean warmer summers, which could be problematic for livestock producers who have to deal with heat-wave deaths. Reduced milk production and reproduction are other impacts in the dairy industry, as well as reduced weight gain amongst beef cattle. Higher levels of atmospheric carbon dioxide (CO2) and an increase in the use of pesticides and pathogens in livestock and crops can lead to increased weed growth. The manufacturing, transportation and application of pesticides could contribute to higher energy costs for farmers.

“What’s more concerning is that as of April 2015, the Great Lakes have already lost about 30 cm of their navigation depth, putting a strain on vessels and the future availability of water resources.

“While there’s a lot of uncertainty surrounding the future of Canada’s agriculture industry, one thing is clear: we are likely to see more extreme weather events, soil erosion and higher average temperatures. Farmers must look at environmentally-friendly farming practices to adapt to the effects of climate change and stay in business.”

Meanwhile, Dr. Ominski agrees with Lemon when it comes to the changing of crops in the southern part of the country. During her webinar, she noted that more soybeans and corn were being grown in Manitoba and Alberta and there is a reasonable chance that those crops could become common in the West.

According to Dr. Ominski, between 1950 and 2010, Canada has enjoyed warmer weather in the winter with less snowfall and most of the warming has taken place in the West.

“However, all crops will face more challenges,” she said. “Warmer winters allow insects, fungi, weeds, and bacteria to more easily overwinter and also expand their range. And increased global trade also gives pests and disease the opportunity to spread. Certainly meatbusiness.ca

it will require increased vigilance and possible new vaccination strategies.”

Both Lemon and Dr. Ominski believe Canada will be able to handle the challenges that Climate Change will inevitably bring. However, there might be as much as compared to bad for our country.

Despite what the Donald Trump administration is doing (or at least announcing it will do) in the United States to make trade more difficult for all countries (Canada has started dealing directly with the individual States and if necessary, will bypass Trump’s federal government), there is still a Continued on page 10

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belief that there will be considerably more global trade and an increased need for protein in Asia. Lemon is excited about that prospect.

As well, Canada’s livestock producers have done a good job lowering their own carbon emissions. In fact, Dr. Ominski says that from 1981 to 2011, livestock producers have lowered their carbon footprint by 15 per cent. She also believes the industry can “move that number along faster.”

“As Climate Change covers the globe, it is going to be more difficult for some countries to raise their own food,” Lemon said. “And there is a greater trend in two of the world’s largest emerging markets – India and China. The growing middle class in both of those countries means that people will be looking for more protein in their diets.

That’s what Canada should be gearing up to do. Trading with nations that will need more and more protein from our producers.”

During her webinar, Dr. Ominski agreed.

“Improvements in production efficiencies, growthpromoting technologies, and cattle genomics as well as 10 CANADIAN MEAT BUSINESS July/August 2017

improvements in field crop yields are all good signs for the sustainability of the sector,” she said. “The industry has made gradual shifts to better feed efficiency, and society is showing preference for certain production practices. But the industry still needs to think about big shift changes.

“One example is the use of perennial grains, which could be used in food products, but also present an opportunity for feed. In order to safeguard its position, the sector needs more investment throughout the entire value chain. The industry also needs to communicate better — both with the public and between its various sectors.

Information management and education will be the keys to successful adaptation.

“We need visionary leaders who can engage stakeholders, who can instill public trust, and support policies for successful adaptation,” Dr. Ominski added.

“Successful adaptation for our industry will be about more than conserving what once was — it will be about surviving change. The industry has already demonstrated its capacity for adaptation and I think we need to be mindful that adaptation, innovation, and sound policy are key to successful adaptation for the future.” meatbusiness.ca

FROM THE CANADIAN MEAT COUNCIL:

FACT SHEET ON CLIMATE CHANGE AND CANADA’S MEAT INDUSTRY BACKGROUND: As a signatory to the United Nations Framework Convention on Climate Change (UNFCCC), Canada is obliged to submit an inventory of its greenhouse gas (GHG) emissions on an annual basis.

Environment Canada, in consultation with a range of stakeholders, is responsible for preparing Canada’s official national inventory.

Using an internationally agreedupon format, Canada’s Greenhouse Gas Inventory monitors six gases: carbon dioxide (CO2) methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons (PFCs), and hydrofluorocarbons (HFCs). It also provides an analysis of the factors underlying the trends in emissions since 1990. Emissions and removals are grouped into six sectors: Energy; Industrial Processes; Solvent and Other Product Use; Agriculture; Land Use, Land-Use Change and Forestry and Waste.

In 2006 the Food and Agriculture Organization of the United Nations published a report entitled “Livestock’s Long Shadow, Environmental Issues and Options”.

The report concluded that the global livestock sector is a major player, responsible for 18 percent of greenhouse gas emissions measured in COequivalent- a higher share than global transport.

The largest share of this derives from land-use changes - especially deforestation - caused by expansion of pastures and arable land for feed crops

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July/August 2017 CANADIAN MEAT BUSINESS 11

Canadian Animal Agriculture’s Role in Green House Gas Emissions: This United Nations Report of 2006 does not represent the reality in of what happens in Canada. According to Environment Canada’s November 2008 Report on Green House Gas Emissions, Canada’s animal production industry was responsible for the production of 42.2 metric tonnes of carbon dioxide CO2 of the total Canadian production of 721 metric tonnes. That means that animal production in Canada represents only 5.9% of Canada’s the total Green House Gas production and significantly less than the 159 metric tonnes from the transportation section in Canada that represents 22% of the total.

CANADA’S AGRICULTURE LAND PRODUCTION: Unlike the claims made in the 2006 United Nations Report especially deforestation caused by expansion of pastures and arable land for feed crops is not happening in Canada.

According to Statistics Canada’s 2006 Agriculture Census, the total agricultural land area reported to the census was stable between the two censuses (2001 versus 2006), at 167 million acres. Agriculture land in Canada represents just 7.3 percent of our total land area. As farm numbers dropped from 246,923 in 2001 to 229,373 in 2006, the average size of a Canadian farm has increased from 676 acres to 728 acres.

ANIMALS IN CANADA According to the Canadian Museum of Nature, between 30 and 70 million bison inhabited North America on the Great Plains before the arrival of the Europeans. Bison were ruminants, just like the 15.7 million cattle now on farms in Canada.

The 2006 Census of Agriculture also reports that there are 15 million pigs, 1.1 million sheep and 125 million chickens on Canadian farms.

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MEAT IN THE HUMAN DIET Meat has been a part of the human diet for thousands of years. Meat drying and preservation allowed humans to survive in many continents over the years.

Meat is often the centre of plate focus of a meal. Meat is delicious and highly regarded by most people in the world.

Farmers around the world have relied on raising ruminants such as cattle, sheep and goats to convert grasses -which humans cannot digest- to meat and milk that humans can thrive on.

Canada’s new Food Guide, released in 2006, continues to recognize meat in the diet. The Food Guide recommends 1 to 3 servings of Meat & Alternatives per day (75 grams per serving). Meat meatbusiness.ca

combined with the recommended daily minimum servings of vegetables and fruit is an essential part of our diet. The World Health Organization recognizes meat as an important part of a balanced diet.

Canadian meat is lean and nutritious. Several cuts of beef and pork meet the criteria of the Heart and Stroke Foundation of Canada’s Health CheckTM program. Meat is nutrient rich with 14 essential nutrients making it an important part of a balanced diet. Meat is an excellent source of protein, zinc, vitamin Band selenium. The Atkins and South Beach Diets both focus on meat consumption as a critical component of weight loss and control.

What is Canada’s animal agriculture and meat industry doing about Climate Change?

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FEEDING THE WORLD Canada has the capacity to feed many more people than our 33 million Canadians and exports meat and many other food products to over 150 countries worldwide.

According to the United Nations, from the year 1900 to the year 2000 the world population increased from 1.65 billion to 6 billion. They predict that the world’s population will climb to 9 billion by the year 2050.

Canada’s meat industry will continue to make improvements to the efficiencies in food production to help feed the world’s hungry growing population while reducing the overall impact on our environment.

The number of dairy cattle in Canada has fallen from over 2 million in 1976 to just over 996,000 in 2006. During that time milk production per cow has doubled through better animal nutrition, genetics and know-how.

Feed conversion rates have also continued to improve over the years. For instance, it now takes only 1.3 kilograms of feed to get 1 kilogram of weight gain for poultry; 3 kilograms of feed to get 1 kilogram of weight gain for hogs and 6 kilograms of feed to get 1 kilogram of weight gain for cattle.

Farmers in Canada have made great strides in energy efficiency improvements on the farm, from low watt fluorescent lighting in barns, to new barn design that allows large sections of barn walls to open for natural ventilation; to computer controlled tractors with newer fuel efficient engines and tires. Major environmental improvements include new manure handling equipment that allows for direct injection into soils along with GPS computer controlled guidance systems on tractors allowing for optimal fertilizer application on fields. Farmers grow feed crops for their animals that capture CO2 from the atmosphere.

Meat processors have added waste water treatment facilities to their operations along with energy saving equipment such as modern refrigeration equipment and heat recovery systems, high efficiency lighting; and newer fuel efficient meatbusiness.ca

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SKEPTICAL SCIENCE DEBUNKS THE CLIMATE CHANGE MYTHS The subject of climate change may or may not come up at a family gathering or a cocktail party. If it does, you might hear people debating some of the finer points of science, perhaps with little or no climate science background.

Skeptical Science is a science education group run by a global team of volunteers. It’s based on scientific literature that’s gone through the peer-review process, meaning the research has been subjected to scrutiny by other experts in the same field.

MYTH: Computer models are unreliable.

On its website, skepticalscience.com debunks many of the most common climate change myths, including these:

MYTH: It’s not so bad.

MYTH: Sure the climate’s changing. It’s always changing and it’s changed before.

MYTHBUSTER: Climate reacts to whatever forces it to change at the time; humans are now the dominant force.

In the past when the Earth’s temperature jumped abruptly, much as is happening today, it was caused by large and rapid greenhouse gas emissions, just like humans are causing today.

MYTH: Humans are too insignificant to affect global climate.

MYTHBUSTER: When we experience weather events like hurricanes and floods, it’s very easy for us to feel insignificant and powerless in the face of such massive natural forces. But since the industrial revolution, with ever-increasing supplies of fossil fuels, the activities of a dramatically expanding world population have made significant alterations to the makeup of our atmosphere. This is resulting in a change in weather patterns and ocean currents; the melting of global ice formations; and an increase in extreme weather events.

MYTH: It’s the sun.

MYTHBUSTER: Over the last 35 years the sun has shown a cooling trend. However global temperatures continue to increase. If the sun’s energy is decreasing while the Earth is warming, then the sun can’t be the main control of the temperature.

MYTH: It hasn’t warmed since 1998.

MYTHBUSTER: Every part of the Earth’s climate system has continued warming since 1998, with 2014, 2015 and 2016 breaking temperature records.

14 CANADIAN MEAT BUSINESS July/August 2017

MYTHBUSTER: Climate models have already predicted many of the phenomena for which we now have empirical evidence. Climate models form a reliable guide to potential climate change.

MYTHBUSTER: Negative impacts of global warming on agriculture, health and environment far outweigh any positives.

MYTH: Carbon dioxide is not a pollutant.

MYTHBUSTER: We commonly think of pollutants as contaminants that make the environment dirty or impure.

A broader definition of pollutant is a substance that causes instability or discomfort to an ecosystem, such as the rising levels of human-caused CO2 are doing now.Top of Form MYTH: There’s no consensus.

MYTHBUSTER: There isn’t a political consensus, but there’s a scientific consensus. Authors of seven climate consensus studied have, depending on how exactly consensus is measured, found that somewhere between 90% and 100% agree humans are responsible for climate change, with most of the studies finding of 97% consensus among publishing climate scientists.

MYTH: Scientists can’t even predict the weather.

MYTHBUSTER: Weather and climate are different; climate predictions do not need the detail of a weather report.

Climate models are not predicting day-to-day weather systems. Instead, they are predicting climate averages.

MYTH: Mars is warming, too, and there are no humans there.

MYTHBUSTER: There is little actual evidence that Mars is warming. We know the sun is not heating up all the planets in our solar system because we can accurately measure the sun’s output on Earth.

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CANADA’S FOOD PRICE REPORT: MEAT PRICES SET TO JUMP IN 2017

By Ryan McNutt

Canadians can expect to pay 3-5 per cent more for food in 2017, an increase of as much as $420 for an average family.

That’s the conclusion of the seventh edition of Canada’s Food Price Report, published for the first time this year at Dalhousie.

Built on the expertise of authors and advisors from four different Dal faculties — Management, Computer Science, Science and Agriculture — the Food Price Report is led

by Sylvain Charlebois, dean of the Faculty of Management. The popular annual report forecasts food prices for the upcoming year across different sectors and analyzes trends in Canada’s food industries.

“Food pricing affects all Canadians,” says Dr. Charlebois, who previously led the project out of the University of Guelph. “It affects our quality of life.

It’s top of mind for everyone every single day when we go out to buy food, whether at a restaurant or at a grocery store. And many Canadians struggle to cope with fluctuating food prices.”

SO WHAT DOES 2017 HOLD FOR FOOD PRICES? “Unfortunately, it’s not great news for families with less means,” says Dr. Charlebois.

An increase of 3-5 per cent in food prices would be considerably higher than the rate of inflation (typically 1-2 per cent), and larger than 2016 (about 2.5 per cent). While dairy/eggs and bakery/cereal are expected to remain stable and within acceptable inflation rates, other foods could see much higher increases: fruits and nuts by 3-5 per cent; vegetables, meats and other food items by upwards of 4-6 per cent.

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July/August 2017 CANADIAN MEAT BUSINESS 15

“The biggest factor will be the falling Canadian dollar,” explains Dr. Charlebois. “Given how many food products we import from abroad, our food economy is vulnerable to currency fluctuations.”

THIS YEAR’S REPORT IS THE FIRST TO USE A MACHINE LEARNING MODEL TO SHAPE ITS FORECAST — A COMBINATION OF ALGORITHMS BUILT ON MORE THAN 20 INDEPENDENT STATISTICAL VARIABLES LIKE HOUSEHOLD INCOME, FUEL PRICES, GLOBAL AGRICULTURAL PRODUCTION AND MORE. THE MODEL WAS BUILT BY RESEARCHERS IN DAL’S FACULTY OF COMPUTER SCIENCE, LED BY MASTERS OF ELECTRONIC COMMERCE STUDENT JABEZ (JAY) HARRIS TOGETHER WITH PROFESSOR VLADO KESELJ AND PHD STUDENT COLIN CONRAD.

Other drivers that inform the report’s projections include La Nina weather patterns and the incoming Trump administration in the U.S. — which, while rife with uncertainty, suggests a forthcoming period of American protectionism that could initiate a “commodity super-cycle,” raising food prices for Canadians.

Previous editions of the report have generated significant national media attention, and this year’s is expected to be no different.

“We are dealing with a more engaged marketplace than ever before,” says Dr. Charlebois. “People want to engage with the food supply chain, and examining price is one to do it.

“And it’s also that the report is not just about price: it’s about the future of food. It’s about the quality of the food we eat, it’s about food cultures; it’s a multidimensional report around food.”

The report also considers possible trends in food and food policy for the year ahead. For 2017, its authors discuss celebration of Canadian food (in honour of Canada’s 150th), food science fears and food fraud awareness.

BUILT ON DAL DATA SCIENCE One reason Dr. Charlebois was keen to bring the report with him to Dalhousie when he arrived as dean earlier this year was the opportunity to work with the university’s data scientists.

This year’s report is the first to use a machine learning model to shape its forecast — a combination of algorithms built on more than 20 independent statistical variables like household income, fuel prices, global agricultural production and more. The model was built by researchers in Dal’s Faculty of Computer Science, led by Masters of Electronic Commerce student Jabez (Jay) Harris together with Professor Vlado Keselj and PhD student Colin Conrad.

Harris, an international student from the Caribbean, has spent about 20 hours a week on the project over the past couple of months, building and running the “black box” that crunches the report’s numbers.

“Part of data science is finding the anomalies, and so part of my role was to poke into the data, find and filter out the variables that just don’t make sense with the rest of the model,” explains Harris.

LEVERAGING CROSS-UNIVERSITY EXPERTISE But the process doesn’t start and end with a computer model.

“We allow the model to be the conversation starter amongst ourselves as advisors,” explains Dr. Charlebois. “We run it, then assess whether that makes sense for what could happen over the next 12 months with food prices. That’s how we come up with our forecasts.”

The advisors on this year’s report included: Peter Tyedmers, director of Dal’s School for Research and Environmental Studies, who studies the sustainability of food systems; Megan Bailey of Dal’s Marine Affairs Program, Canada Research Chair in Integrated Ocean and Coastal Governance, who researches fisheries management; Two researchers from Dal’s Faculty of Agriculture: Gary Grant and Simon Somogyi, both experts in agricultural economics from Department of Business & Social Sciences.

“Everyone had a really open mind about the report,” says Dr. Charlebois. “It’s a very populist report — not your ordinary scientific paper. But everyone got what we were trying to achieve. It was a really great team.”

Dr. Charlebois says now that the report is established at Dalhousie, he may look to expand its authorship even further next year, possibly to experts at other universities.

As for grad student Harris, he says it’s been an incredible experience working on his first Food Price Report — so much so that he’s considering shifting his thesis project to focus on it.

“What I got out of it is that data science is really about communication,” says Harris. “It’s about storytelling, finding the data and the new way to relate it to people.”

Read the full report: Canada’s Food Price Report 2017

“I knew we’d have access to different kinds of expertise, and Dalhousie is one of the stronger schools in the country around data analytics and predictive analytics, if not the strongest,” he says.

16 CANADIAN MEAT BUSINESS July/August 2017

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July/August 2017 CANADIAN MEAT BUSINESS 17

L to R Daniel Atlin, Vice President External, University of Guelph; Michael Chong, MP Wellington-Halton Hills; Minister Lawrence MacAulay; Minister Jeff Leal; Joe HIll, BFO Vice President; Malcolm Campbell, Vice President of Research, University of Guelph; Ted Arnott, MPP Wellington-Halton Hills

GOVERNMENT INVESTMENTS IN BEEF RESEARCH WILL HELP ONTARIO BEEF FARMERS REMAIN COMPETITIVE The Beef Farmers of Ontario (BFO) has announced the investments made by both the provincial and federal governments to support beef research in the province. In early July, the Ontario government announced a capital investment of $12.4 million which will be used in the construction of a new beef cattle research centre in Elora, and the Canadian government announced a $2 million AgriInnovation investment which will be used to support valuable genetic, environmental and sustainability research to be conducted at the new facility.

“The federal government is proud to partner with the Province of Ontario to support research at a state-of-the-art beef research centre serving all of eastern Canada” stated Agriculture and Agri-Food Minister Lawrence MacAulay.

“This investment will make the beef industry even stronger and more competitive, supporting jobs and economic growth in Ontario and across Canada.”

For several years, BFO has been collaborating with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and the University of Guelph (UofG) on modernizing the Elora Beef Cattle Research Centre into a world-class research and innovation facility.

“The advancement of beef research is integral to providing science-based information to maintain consumer confidence, and to ensure that the beef industry is globally competitive and ready to take advantage of current and emerging trade opportunities,” explains Joe Hill, BFO Vice President.

In addition to government support, Ontario beef famers through their check-off investment will also be contributing significant dollars towards the creation of the new facility which is expected to break ground later this year and to be completed sometime in 2018.

“The Elora Beef Cattle Research Center is the only remaining facility in Eastern Canada that has the capacity to conduct beef production research on a meaningful and integrated scale,” states Hill. “A new facility will support and attract researchers who are interested in advancing livestock research in various areas from forage production to genetics, cattle production and feeding, food safety and beef quality.”

A special thanks to The Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food, and The Honourable Jeff Leal, Minister of Agriculture, Food and Rural Affairs for their leadership and collaboration on this file.

For more information, visit Beef Farmers of Ontario at http://www.ontariobeef.com/

18 CANADIAN MEAT BUSINESS July/August 2017

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July/August 2017 CANADIAN MEAT BUSINESS 19

SPAM TURNS 80 AND IT’S STILL HERE

By Cam Patterson

Here is a tale of a product that has turned 80 years old and in that time, has managed to become more than a household name but a pop icon, Spam.

Whether you loved it or hated it or had to lug it to school in your lunch box back in the 1940s right up to the new millennium,YesGroup_CanadianMeatBusiness-Qtr-pg.pdf you can’t ignore that fact that Spam is here to stay 1 2014-05-16 1:20:17 PM and has earned that spot in our popular culture.

I’ve seen it all when it came to Spam. Kids in the lunchroom, most scrunching their noses when they opened their sandwiches and realized mom packed the ungodly meat substance and not peanut butter. I’ve seen touring bands fry it up in the pan and woof it down with that other food group staple, Kraft Dinner. There was nothing like a giant helping of Spam and KD out on the open road to satisfy your appetite.

Or the real Spam lovers who spoon it right out of the can like an after dinner dessert – you can almost hear the theme music that made Spam even more famous during the 1950s.

Since its turning 80, let’s look back at the history of Spam.

It came about during the Great Depression, a solution that was need for the surplus of pork shoulder meat since few could afford to buy the prime cuts. The Hormel Company in Minnesota was the birthplace, straight from the inventive mind of Jay Hormel, son of George. Hormel was known the forerunner of canned pork products but with Spam the mold was broken. Made with pork, water, sugar, potato starch and sodium nitrate, it quickly became a favorite.

It would be World War II that would really set Spam’s place in pop icon status. With soldiers living in the trenches on rations barely edible, Spam was a treat that did not have to be refrigerated, and many veterans will tell you, nothing boosted morale like a box of those Spam tin cans getting passed around.

By the mid-1950s, Spam had sold a billion cans worldwide, even had a radio show named after it, and in the 1970s Monty Python made a famous skit about it.

For us in the meat industry, we owe a good ole’ “Happy Birthday” to that can of Spam.

And for the record, I was that kid scrunching his nose every time I opened my Batman lunchbox.

20 CANADIAN MEAT BUSINESS July/August 2017

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CANADA AND MEXICO AG MINISTERS ISSUE STATEMENT Canadian Minister of Agriculture and Agri-Food, Lawrence MacAulay, and Mexican Secretary of Agriculture, Livestock, Rural Development, Fisheries and Food, José Calzada, met recently in Calgary and issued the following statement at the conclusion of their bilateral meeting: Canada and Mexico are committed to creating a more integrated North American market for agriculture to help our respective sectors grow their businesses and remain globally competitive. Together, we have cultivated a robust bilateral agricultural trade relationship that is mature, balanced, and complementary.

trilateral agriculture meetings held in Savannah, Georgia, in June 2017.

Our countries will continue to work together to show the world the benefits of an open-trade relationship that grows the economy and supports millions of jobs in North America.

Our meeting in Calgary provided a valuable opportunity to reaffirm our commitment to continue collaborating in areas of common interest such as science and technology, which is helping to advance key areas of research including climate change, and developing more disease resistant wheat and potato varieties. As a region and bilaterally, we have also coordinated in the areas of plant and animal health, trade of biotechnology products and improved regulatory cooperation.

We recognized the importance of expanding this type of collaboration, including through the Canada-Mexico Consultative Committee on Agriculture and the Canada-Mexico Agri-Business Working Group, to help ensure favourable market access conditions and increased trade of our agri-food products within North America and globally.

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Canadian agri-food imports from Mexico (CAD$2.4 billion) and Mexican agri-food imports from Canada (CAD$2.1 billion) are balanced and complementary. For example, 95 per cent of all the avocados consumed in Canada are from Mexico. And over 90 per cent of canola seed imported by Mexico is from Canada.

We are stronger together. Working with the United States, we have created a trading relationship that is the envy of the world. The North American Free Trade Agreement (NAFTA) has created a more competitive, prosperous and integrated agriculture and food industry across North America.

Canada, Mexico and the United States recently affirmed their shared commitment to collaboration and open and transparent markets during meatbusiness.ca

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July/August 2017 CANADIAN MEAT BUSINESS 21

WILL THE NEW NAFTA BE A THING OF BEAUTY?

By Chuck Jolley

One thing U.S. President Donald J. Trump has made perfectly clear is that NAFTA will be renegotiated.

It’s one of the few promises he has kept and Sonny Perdue, his hand-picked Ag Secretary, is one of the few men he’s chosen for his cabinet who has verifiable expertise in what he’s been asked to do.

Perdue opened the negotiations by asking his Canadian and Mexican counterparts to a ‘meet and greet’ in Savannah, Georgia. You might call it a back yard cookout, just a few shared beers among friends. Indeed, the comments were cozy, good-feel, good ol’ boy statements.

“Southern culture, southern hospitality, we have certainly a great feel of that in the first 24 hours.” Canadian Agriculture Minister Lawrence MacAulay.

“The only way to build trust is to be face to face, to shake hands.” Mexican Secretary of Agriculture José Calzada Rovirosa.

“It’s important in Georgia, it’s important in Canada, important in the U.S., and important in Mexico that we develop personal relationships of trust and candor with one another discussing the issues we will have before us.”

USDA Secretary Sonny Perdue.

Makes you feel like there will be plenty of handshakes all around followed by a super agreement that all three nations would be proud to sign. But wait, as the late night TV hucksters say, there’s more!

“Clinton is the one that approved NAFTA ... NAFTA is the worst deal, one of the worst deals our country has ever made, from an economic standpoint … one of the worst deals, ever.” President Donald J. Trump, speaking May 9, 2016 on CNN’s ‘New Day.’ Like many other major international issues, Trump didn’t exactly understand the facts. NAFTA was actually negotiated and signed in 1992 by George H. W. Bush, Clinton’s Republican predecessor. It came into effect, though, in 1994, the year after Clinton assumed office.

Trump sang that anti-NAFTA tune with all the heartfelt fervor of a rural Baptist Church choir throughout his campaign, making Perdue’s job one of healing the wounded, first, negotiating terms afterwards. It will be akin to tap dancing on a floor covered with marbles and studded with needles and pins. One slip and. . .

But Perdue is a silver-tongued devil, in the best sense of the term. More than any man in the Trump hierarchy, he knows how to pat backs, press the flesh and schmooze even the most irate. He knows agriculture well and understands the absolute importance of export markets to the financial success of American farmers and ranchers.

Losing the huge sales opportunities afforded by becoming the leader of the TPP was a blow to an industry that has lost almost half of its net income since 2013. Walking away from NAFTA would encourage Mexico and Canada to become even more aggressive at opening new markets in Asia and Europe, a region that has been historically unfriendly to American farm practices. China, which had been blocked out of the TPP, is grabbing the opportunity with plenty of cash and expertise to fill the sudden American void. They badly want the Pacific basin to be their sphere of unparalleled influence.

Left alone, I have no doubt that Perdue can work with his new North American BFFs to craft a NAFTA that will be even more appealing to all three partners. The bigger question: Is Trump savvy enough to leave it in the hands of Perdue, MacAulay and Calzada Rovirosa, the people who know what they’re talking about? Probably not.

Chuck Jolley is the President of Jolley & Associates and is a respected writer, editor, publisher and public relations expert with more than 25 years experience in the meat and poultry industry

22 CANADIAN MEAT BUSINESS July/August 2017

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MEAT SNACKS MARKET EXPECTED TO GROW OVER NEXT 5 YEARS ReportsWeb, an international market research company, has recently released its new report entitled Meat Snacks Market 2017 Trend, Analysis and Forecast to 2021.

In its report, analysts forecast the global meat snacks market to grow at a Compound annual growth rate (CAGR) of 8.60% during the period 2017-2021.

Meat snacks like jerkies, sticks and steaks continue to be a growth market segment based on a number of factors such as providing an important source of protein with low-calorie content as well as coming in an array of different flavors such as teriyaki, peppered, hickory, and barbeque.

Snacks have become an indispensable component of today’s consumers’ diet, and the consumption of snacks is increasing on a year-over-year basis. A transition can be observed in consumers’ snacking habits as more consumers are getting inclined toward snack bars. The meat snacks market is expected to experience steady growth during the forecast period. Consumers have started considering these snacks as affordable comfort food. With increasing awareness of healthy eating, these snacks are becoming immensely popular.

The ReportsWeb analysis covers the entire global market and is divided into three segments based on geography including the Americas, Asia-Pacific and Europe-Middle East-Africa.

Oberto Sausage Company Old Wisconsin Sausage Wild Ride Beef Jerky Winterbotham Darby For more information about this report and its findings, visit http://www. reportsweb.com/global-meat-snacks-market-2017-2021

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This report was researched and prepared based on in-depth market analysis with input from industry experts. The report covers the market landscape and its growth prospects over the coming years.

The report also includes a discussion of the key vendors operating in this market including: • Conagra Brands Hormel Foods Jack Link’s Kings Elite Snacks • Marfood USA The Meatsnacks Group Tyson Foods • Bridgford Foods Duke’s Smoked Meats Golden Valley Natural Kepak Group Klements Monogram Food Solutions Nestle USA meatbusiness.ca

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July/August 2017 CANADIAN MEAT BUSINESS 23

REDUCING FOOD WASTE

By Tom Lynch-Staunton, Canadian Cattlemen’s Association

The concept of sustainability, which includes environmental stewardship and raising cattle with care, is a focal point of the Canadian beef industry. When beef producers manage grasslands and riparian areas responsibly, they also provide ecosystem services, like protecting water resources and wildlife habitat for the benefit of society. Well managed grazing of rangelands also ensures a long term sustainable healthy environment by maximizing the grasses cattle graze while minimizing wastage of the resources and inputs required to produce healthy and nutritious beef.

One of the ways to further reduce the beef industry’s environmental footprint is to reduce food waste after the primary processing stage. The National Beef Sustainability Assessment found that 19% of all meat (not just beef) is wasted after primary processing, and 10% of the waste is at the consumer level (CRSB, 2016). As both a producer and a consumer, it bothers me to throw away food, especially meat, as I know very well how much energy and effort it takes to get that meat to my plate. It’s also about respect for the life of an animal, and that the animal provides food for us to live. It bothers me that a part of the animal itself is wasted, along with the inputs and energy and care it took to raise the animal, when we throw away that food.

THE BEEF INDUSTRY, FROM THE COW-CALF LEVEL TO THE PROCESSING LEVEL HAS LONG RECOGNIZED THE VALUE OF THE ENTIRE ANIMAL, AND USES IT EXTREMELY EFFICIENTLY. IN FACT, ASIDE FROM SPECIFIED RISK MATERIAL (SRM), PRETTY MUCH EVERYTHING IS USED FROM THE ANIMAL, WHICH DEMONSTRATES RESPECT FOR THE LIFE OF THAT ANIMAL AND EVERYTHING THAT WENT INTO RAISING IT. As consumers, I would argue that we need to be more conscious about how beef is raised and of the inputs required to provide that food. Perhaps heightened awareness would encourage consumers to get a take-out box at a restaurant, or use leftover steak in a steak salad for lunch the next day, or simply plan out how they will use the meat they purchase, for example. Perhaps at the retail level, we can offer a greater selection of portion sizes. I’m a steak lover --I’ll even sacrifice dessert for more steak -- and on occasion even I’ve had a hard time finishing some larger steaks at a restaurant. By reducing consumer food waste, we can all play a part in reducing the beef industry’s water and GHG footprints.

The beef industry, from the cow-calf level to the processing level has long recognized the value of the entire animal, and uses it extremely efficiently. In fact, aside from Specified 24 CANADIAN MEAT BUSINESS July/August 2017

Risk Material (SRM), pretty much everything is used from the animal, which demonstrates respect for the life of that animal and everything that went into raising it. There are even some industrial uses emerging for SRMs as they can be used to generate heat/electricity, or even made into plastics through new technologies such as those developed at the University of Alberta.

Recently there has been an increase in yield grade 3’s at the packing plants, which means that more back fat needs to be trimmed off the animals; this is different fat from the fat or marbling running through the meat that creates flavourful tender steaks. While producing back fat rather than muscle isn’t a very efficient use of grain, the fat itself isn’t wasted either, and is rendered into many different consumer products including glycerine and collagens. Using every part of the animal demonstrates responsible use of both the animal and the environment in which the animal was raised.

As an aside, a recent article in the Guardian questions whether the GHG allocations attributed to cattle by the UN may have been overstated, because no credit was given for all the by-products that cattle provide. For example, how many GHG’s would be emitted if we had to produce more pleather (vinyl and polyurethane, both made from fossil fuels) to replace leather? Or how many GHGs would be produced in North America if we replaced all the cattle with bison, deer, elk and moose? Would it be the same, and if so, is it fair to hold the beef industry accountable for emissions that would still exist through another species if cattle weren’t producing them?

Much like encouraging people to use less energy in their homes by turning off the lights when they leave a room, or recycling to reduce waste at the landfill, we can encourage people to utilize beef for a variety of meals. If people are conscious about what goes into their food, and appreciate how valuable those inputs are, then perhaps they will try harder to use it a little bit better and reduce their food waste. When people understand how their food is produced and what it takes to get it to their plate, not only does it give them a greater appreciation for that food, but also creates a stronger connection back to our environment, animals, and our industry. Perhaps this is another avenue to build stronger public confidence in the beef industry.

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WILL CHINA REMAIN A MAJOR OPPORTUNITY FOR CANADIAN PORK?

By Emily Liu, Farm Credit Canada

China’s booming demand for pork creates opportunities for Canadian producers. In 2016, Canadian pork exports to China made up 15% of its total pork export valued at a record CA$590 million, up 160% from a year earlier. So it’s not a surprise to find that the discovery of ractopamine in a Canadian shipment raised concerns about the stability of this export market.

Beyond those possible short-term trade disruptions, will the strength in China’s demand for pork offer lasting opportunities to Canadian producers and processors?

CHINESE HOG HERD LIQUIDATION BEHIND THE SURGE IN IMPORTS Hog production has declined rapidly in China over the last three years. The Chinese sow herd declined 20% between 2013 and 2016, mostly due to high corn and soybean meal prices. The decline in pig production wasn’t as steep, as gains in productivity made up some of the shortfall.

Chinese farm consolidation led to the expansion of the country’s trade. In 2013, China imported 12% of all traded pork in world markets.

This jumped to 27% in 2016 and China’s forecast to import 28% of 2017’s global pork imports. By producing and consuming nearly half of the world’s pork, even a small change in Chinese domestic demand significantly impacts the Canadian hog market.

China dominates the global pork trade, yet its total pork imports only account for a small portion of Chinese consumption. That’s growing, but slowly: Chinese pork imports represented 1.4% of its domestic needs in 2013, increasing to 4.0% in 2016.

RISING DEMAND AMPLIFIES THE SUPPLY SHORTFALL IN CHINA China’s demand for pork has risen significantly with the last decade’s rapid growth of China’s middle class. The USDA estimates China consumed 55 million tons of pork in 2016, the lowest figure in 3 years,

with the decline in consumption a result of the shortage Continued on page 26

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Continued on page 26 meatbusiness.ca

July/August 2017 CANADIAN MEAT BUSINESS 25

of pork in the domestic market. The OECD-FAO projects Chinese pork consumption to total 63 million tons by 2025.

The competitiveness of the Chinese hog industry has long been constrained compared to that of developed countries, due to their relatively high production costs and shrinking arable land resources. Ongoing environmental policy reforms have forced millions of backyard farmers out of business in recent years. With Chinese hog prices often below the costs of production, the recent price decline resulted from a small production surge in 2016 and a stagnating seasonal demand after the Chinese Spring

Festival (a major national holiday).

OUTLOOK FOR THE NEXT 12 MONTHS IS POSITIVE Medium and large-sized farms have been expanding their production in response to better hog prices lately. China’s growing production capacity may result in lower pork imports in 2018. Yet production growth should not entirely erase market opportunities in China. China’s domestic consumption for pork is expected to continue trending up, leaving room for Canadian exporters to fill the gap between demand and supply.

CANADIAN AGRI-FOOD EXPORTERS URGE CANADA TO PUSH AHEAD WITH TPP As negotiators from eleven Trans-Pacific Partnership (TPP) countries met in Japan in early July, the Canadian Agri-Food Trade Alliance (CAFTA) is urging the Government of Canada to make every possible effort to implement the TPP as soon as possible. It is a necessary step for agri-food exports to meet the $75 billion annual target set in the 2017 Federal Budget.

“Export driven agri-food can deliver growth and jobs by increasing our exports to $75 billion by 2025,” said Brian Innes, President of CAFTA. “But there’s no way we can deliver growth if we don’t have competitive access to the markets that matter. The TPP is critical because it includes Japan, a market that demands $4 billion of our agri-food exports every year.”

Canadian agri-food exporters have built a high-value and stable market in Japan, based on competitive access with other exporters. It is an important market for many agri-food exports, especially for canola, pork, wheat, soybeans, beef, malt, and barley. Key competitors for Canada’s agri-food exports to Japan already have, or will have, preferred access to the Japanese market – putting the existing $4 billion in Canadian agri-food exports at risk and limiting further growth. Australia has had preferred access since 2015 when their agreement was implemented and the EU recently announced that they have concluded their negotiations with Japan.

“We’re witnessing the start of a train wreck,” says Innes.

“There’s still time, but watching other countries implement trade agreements with a key market like Japan while Canada has no agreement will cost us jobs and limit our growth.”

This week’s meeting in Hakone, Japan, offers the opportunity for government officials to work on how the agreement can come into force without the United States.

Several TPP countries such as Japan and New Zealand have already passed legislation to implement the agreement.

A productive meeting in Japan this week will pave the way for trade ministers of the TPP-11 to sign off on a revised agreement at their scheduled meeting in November. There’s increasing evidence that this will be good for Canada.

26 CANADIAN MEAT BUSINESS July/August 2017

A recent report by the Canada West Foundation affirms what CAFTA has been urging for some time: the TPP will be positive for all member countries, even if the United States does not participate. The Art of the Trade Deal: Quantifying the Benefits of a TPP without the United States predicts trade expansion and economic growth across the 11 countries. In fact, in many cases the net benefits of implementing the TPP – including for Canada – will actually be greater than the original TPP with the United States.

Negotiations of the TPP, with the benefit of strong U.S. leadership, were completed in 2015. CAFTA was an active and strong supporter of Canadian participation and has always recommended its adoption by Canada. Innes noted that the TPP also secures favourable access to markets with growth potential such as Vietnam and Malaysia, while also setting a framework for open and stable trade in the Asia Pacific that other countries can join in the future.

CAFTA enthusiastically supports the ambitious trade negotiation agenda of the federal government, including a Canada-China free trade agreement and modernized NAFTA. It is important that Canada seize all available opportunities to enable growth.

“Implementing the TPP will take much less time compared to pursuing a multitude of bilateral deals which have not yet begun”, said Innes.

Innes adds that the TPP is a trade agreement designed to expand in membership. Shortly following the completion of the deal, other Pacific nations indicated interest in joining the TPP, including Korea and several ASEAN members such as Philippines and Thailand.

For more information, visit www.cafta.org meatbusiness.ca

CANADA AND EUROPEAN UNION TO APPLY CETA THIS SEPTEMBER Canada and the European Union have finally agreed on a date for provisional application of the oftdelayed Comprehensive Economic and Trade Agreement (CETA).

The provisional application of the massive deal will come into effect on September 21st, according to a jointstatement from Prime Minister Justin Trudeau and JeanClaude Juncker, president of the European Commission, issued at the recent G20 summit meeting in Hamburg, Germany.

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Speaking to reporters before leaving Germany, Trudeau said 98 per cent of the deal will come into effect on the September date.

“It’s good news for the globe to look at examples of progressive trade deals that take into account a Continued on page 28

July/August 2017 CANADIAN MEAT BUSINESS 27

government’s responsibility to be able to protect its citizens, protect labour standards, protect the environment, while at the same time sharing and promoting the values that we share, Canada and Europe,” said the Canadian Prime Minister.

agreements. “It has experienced delays, but it continues to move forward. Canada and Europe are growing closer.”

“I certainly am looking forward to seeing the impact that CETA will have on future trade deals between other countries where they realize that we have raised the bar in demonstrating that trade can and must work for everyone.

And that is something very much reflected in the G20 communiqué.”

The European Parliament ratified CETA in February.

Canada’s cabinet has also ratified the agreement, and the bill to implement it by changing the necessary federal laws and regulations received royal assent in May.

JULY 1 DEADLINES PASSED The joint statement from the two leaders says the agreement “will enter definitively into force once the parliaments in all member states of the EU ratify the text according to their respective domestic constitutional requirements.”

Four EU countries have held ratification votes and approved CETA to date: Latvia, Denmark, Spain and Croatia.

“This is a good outcome,” said Jason Langrish, the executive director of the Canada Europe Roundtable for Business. “A firm timeline with path forward. CETA is a survivor. It’s the first of the next generation of trade

Most of CETA was supposed to be provisionally applied by July 1st of this year but it snagged on a dairy dispute.

Approval of the deal comes at a time when populist parties in Europe and U.S. President Donald Trump have been looking increasingly inward and away from globalization.

The deal will drop barriers between the EU’s economy of half a billion people and Canada’s of 35 million. Trade between the two sides amounts to more than 60 billion euros ($88 billion CDN) a year, and the EU expects CETA to boost this by 20 per cent by removing almost all tariffs.

TRUDEAU DEFENDS CANADA’S AGRICULTURE PROTECTIONS With U.S. President Donald Trump pushing his “American First” and anti-NAFTA agenda, trade was one of the heated topics of conversation heading into the summit.

European Union officials who briefed reporters on a draft final statement of the communiqué said G20 leaders agreed to keep their markets open to foreign trade. But the group’s draft statement also says trade needs to be mutually beneficial and countries can take steps to protect their markets.

The language in the communiqué around trade keeps the traditional G20 condemnation of protectionism, or keeping out foreign competitors with unfair import taxes or regulations. But countries also agreed to fight “all unfair trade practices” and recognize “legitimate trade defence instruments.”

Trudeau praised the virtues of free trade deals, but didn’t back off his defence of Canada’s dairy supply management system.

“We have signed many different free trade deals over the past decades while recognizing that we have protections in place for certain vulnerable industries, particularly in agriculture. And let’s not pretend that even with all the free trade deals around there is a global free market when it comes to agriculture.

“But what we have seen is us being able to move forward on historic free trade deals that are going to be good for our producers, good for consumers and good for international partners,” said Trudeau.

28 CANADIAN MEAT BUSINESS July/August 2017

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CANADIANS HAVE INCREASED THEIR PROTEIN CONSUMPTION

At Your Fingertips:

Results from the newest Canadian Community Health Survey (CCHS) report Canadians are consuming more of their calories from protein than they did over a decade ago. Fat consumption amongst adults increased slightly and there was a small decline in carbohydrates consumption.

According to Dr. David Ma, PhD, Department of Human Health and Nutritional Sciences at the University of Guelph: “While there are some differences in consumption since the last survey in 2004, the data shows Canadians are generally consuming carbohydrates, fats and protein within recommended ranges. We need to eat these in the right proportions of total energy to reduce risk of chronic disease and to provide enough essential nutrients.”

The report notes that for children and teenagers, the percentage of daily energy intake from protein increased one per cent (from 14.6 per cent in 2004 to 15.6 per cent in 2015).

For adults, it edged up from 16.5 per cent to 17.0 per cent.

This still lingers at the lower end of the acceptable range of 10 to 35 per cent of calories set by the Institute of Medicine.

“The data is encouraging as the previous national survey showed Canadians were consuming protein at the lower end of the acceptable distribution range,” said Dr. Stuart Phillips, PhD, Director of the Physical Activity Centre of Excellence (PACE) and McMaster Centre for Nutrition, Exercise, and Health Research. “Protein is essential for all tissues in the body, providing amino acids that are important for growth and development. Protein is particularly important for older people to help slow muscle loss.”

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“Based on my research, consuming even more than the recommended amount of high quality protein, from nutrientrich sources such as pork, beef, lamb, dairy products and eggs throughout the day, combined with regular exercise, helps prevent the loss of muscle tissue as we age,” he adds.

Many Canadians consume an abundance of foods, but many do not obtain the nutrients they require for good health.

Meat, for example, is a compact source of many nutrients that are essential for good health and life. These include: protein, phosphorus, zinc, iron, selenium, magnesium, potassium, vitamin B12, thiamin, vitamin D, niacin, and riboflavin.

“Research shows that diets with increased protein and reduced carbohydrates may help prevent type 2 diabetes by facilitating weight loss through increased satiety, increased thermogenesis, and muscle retention,” said Mary Ann Binnie of the International Meat Secretariat Nutrition Committee and a Canadian Meat Council spokesperson. “This is especially important given the number of Canadians diagnosed with diabetes has tripled in the past 20 years.” meatbusiness.ca

Join Today! www.cfib.ca/agri July/August 2017 CANADIAN MEAT BUSINESS 29

OLYMEL INVESTS $2 MILLION IN RED DEER PLANT Olymel has announced an investment of $2 million to convert a section of its pork processing plant in Red Deer, Alberta. The investment aims to equip the plant to manufacture fresh sausages for the Western Canadian market. This new processing activity will require modernized refrigeration facilities as well as new equipment in a separate section of the plant. The work will begin in mid-July and will create 20 new jobs which will be added to the current workforce of more than 1,400 employees.

“Thanks to this strategic investment, the Olymel Red Deer plant in Alberta is diversifying its local activities and enabling it, among other things, to add value to some of its raw materials. The new section for fresh sausage production at the Red Deer plant is an integral part of an investment plan directed at greater penetration in the Western Canadian market to meet growing demand for sausage products manufactured in Canada,” said Réjean Nadeau, President and CEO of Olymel.

This new activity at the Red Deer plant will reduce transport transit times for the Western Canadian market: customers will therefore benefit from product with better shelf-life. The implementation of this new activity will enable Olymel to expand its business base and serve the Western Canadian market even better in product categories such as breakfast and fresh sausages as well as bulk sausage meat.

For more information, visit www.olymel.ca 30 CANADIAN MEAT BUSINESS July/August 2017

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CARGILL PROFITS RISE ON STRONG GLOBAL PROTEIN DEMAND Cargill, the world’s largest agricultural commodities supplier, has reported its highest annual profit in six years, with increased sales bolstered by the world’s growing demand for beef, chicken and other forms of protein.

Net profit for Cargill in FY2017 was $2.84 billion, a year-onyear increase of 19 per cent. Adjusted for one-time items, earnings rose to $3.04 billion, 85 per cent higher than the prior year and the most since FY2011. In the second year of an ongoing transformation, Cargill raised earnings across all four business segments in both periods. Overall revenues grew 2 percent to $109.7 billion in FY2017.

“The past two years have seen significant work to improve performance and position the company for growth,” said David MacLennan, Cargill’s chairman and chief executive officer. “The structural improvements we’ve made, as well as favorable conditions in some markets, have yielded strong results. Although the environment continuously changes, we feel good about our underlying progress. By building a more integrated, focused and agile Cargill, we are creating the momentum for growth and success for our customers and partners.”

MacLennan noted that Cargill and its customers now operate in environments of much greater complexity.

Mixed macroeconomic trends have left customers – from

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consumer branded and foodservice companies to farmers – looking for a partner with the expertise, reliability and forward-looking perspective that Cargill provides. “We want to be their most trusted partner in agriculture, food and nutrition. We’re in a stronger position today to deliver the solutions our customers seek.”

Animal Nutrition and Protein was the largest contributor to adjusted operating earnings in the fourth quarter and full year. Segment results were up significantly from last year, lifted by exceptional performance in global protein, especially in the first half. In North America, the protein business continued to experience strong consumer demand in the fourth quarter for beef at retail and for egg products from foodservice customers. Export demand for beef also was brisk. Poultry posted higher earnings for the year, with increased exports of cooked chicken from Southeast Asia, higher fresh chicken sales in Europe and improved performance in China. Animal nutrition, which makes up the rest of the segment, saw earnings rise in the fourth quarter, as favorable trading and cost reductions offset the impact Continued on page 32

July/August 2017 CANADIAN MEAT BUSINESS 31

of environmental and market conditions that tempered feed demand in several countries. Full-year results in animal nutrition came in just above the prior year.

In animal nutrition, Cargill opened an innovation center in Chile dedicated to fish health and added feed mills in China, India and Indonesia. In protein, Cargill sold four cattle feed yards in the U.S. and an egg processing facility in Canada. It purchased Five Star Custom Foods in Fort Worth, Texas, which specializes in cooked protein products.

It also converted a major facility in Columbus, Nebraska, from fresh to cooked meats. The company formed poultry joint ventures with leading food companies in Indonesia and the Philippines, and began expanding its own poultry processing capacity in Thailand. At the start of FY2018, Cargill acquired Pollos El Bucanero, one of Colombia’s leading producers of chicken and processed meat products.

Food Ingredients and Applications was the second-largest contributor to earnings, with results up in both periods. The segment posted improved results across global ingredient portfolios in cocoa, and corn- and wheat-based products.

Throughout the year, the segment focused on strengthening its operating efficiencies and commercial capabilities, including a modernized deployment of sales, marketing and technical resources to better serve customers’ changing needs.

OVER THE COURSE OF THE YEAR, CARGILL SOLD ITS U.S. CROP INPUTS BUSINESS, TWO OILSEED PROCESSING FACILITIES IN FRANCE AND THE NETHERLANDS, AND ITS 40 PERCENT SHARE IN A FLOUR MILLING JOINT VENTURE IN AUSTRALIA. IT EXPANDED CRUSH VOLUME AT ITS OILSEED PLANT IN TRÊS LAGOAS, BRAZIL. IN THE FOURTH QUARTER, CARGILL AND LOCAL PARTNERS OPENED A LARGE OILSEEDS PROCESSING PLANT AND PORT FACILITY IN NORTHERN CHINA IN HEBEI PROVINCE. During the year, the segment opened two innovation centers – in Shanghai focused on collaborative product development with food companies, and in Minneapolis for food and nutrition research and development. It completed two acquisitions in plant-based bio-industrials in Brazil and the U.S. Origination and Processing turned around last year’s fourth-quarter loss with a profit in the current period. Slow farmer selling in South America extended U.S. export opportunities, which kept profitability in North America ahead of last year’s fourth quarter. For the full fiscal year, 32 CANADIAN MEAT BUSINESS July/August 2017

segment earnings exceeded the prior period as record U.S. crops were met with brisk demand from global growth in livestock production. Global trading performance added to segment results, even though opportunities were limited by low volatility in many commodity markets.

Over the course of the year, Cargill sold its U.S. crop inputs business, two oilseed processing facilities in France and the Netherlands, and its 40 percent share in a flour milling joint venture in Australia. It expanded crush volume at its oilseed plant in Três Lagoas, Brazil. In the fourth quarter, Cargill and local partners opened a large oilseeds processing plant and port facility in northern China in Hebei Province.

Cargill achieved significant milestones with a number of global partners this year. Cargill and CARE announced a $7 million, three-year extension of their partnership, having positively impacted 300,000 lives in seven countries since 2013. The two organizations will seek to reach a total of 1 million people by 2020 through the same proven approaches that have enabled their success to date: increasing farmers’ productivity, market access and livelihoods, as well as improving food and nutrition security, community governance and education resources. Cargill and CARE have worked together for more than 50 years, with Cargill investing $18 million in their joint efforts since 2008.

Ongoing work with The Nature Conservancy and World Resources Institute helped drive progress in ending deforestation, protecting water resources and curbing greenhouse gas emissions to mitigate climate change.

And a new $3 million Cargill grant will assist Feeding America, the largest hunger relief organization in the U.S., with nutrition education, increased access to fruits and vegetables, diabetes prevention and food safety measures.

To ensure students can learn and prepare for the future, Cargill joined with World Food Program USA to launch a $1 million school meals program that will benefit 100,000 students in Honduras, Kenya and Indonesia over the next two years. In the company’s headquarters region of the Twin Cities, education and nutrition programs supported by the Cargill Foundation reached more than 300,000 schoolkids during calendar 2016. Worldwide, Cargill invested $13 million in fiscal 2017 to improve access to science, technology, engineering and math (STEM) education and agricultural leadership programs.

“We know that building a resilient food and agricultural system will require many hands and varied approaches,” MacLennan said. “Working alongside our customers, leading NGOs and academic institutions, and farmers everywhere, Cargill and our employees are accelerating our impact to help the world thrive.”

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THE MANITOBA PEDV OUTBREAK: IS BIO-SECURITY REALLY WORKING

By Cam Patterson

Andrew Dickson, Manitoba Pork’s General Manager, had been having a very busy day when we caught up with him in his office. Dickson had been fielding calls from a number of media outlets and several industry organizations as 41 barns infected with PEDv in Southern Manitoba hit the news cycle and the requests for information came quickly.

What was more profound was the Ag and Pork journals, blogs, and online forums across Canada and deep into the American Pork belt that we’re also reporting on the outbreak and keeping a close eye.

Even Minnesota Pork Producer President, Jay Moore, went on the record to say that they were watching the PEDv situation in Canada closely and he added Canadian officials were handling it properly.

“People ask if it is calamitous to the industry in terms of the numbers of animals taken out of the system,” Dickson said. “Well, at this point in time, 80% of the herd is doing just fine.

I mean its 63,000 sows out of 340,000 in the province. Even in the outbreak region only half the barns are infected.”

According to the Porcine Epidemic Diarrhea Virus (PEDv) On-Farm Cases report, updated as recently as July 7, 2017, there were four cases reported in 2014 in Manitoba, and of those they were Sow and Finisher barns. In 2015, there was one case in a Finisher barn. For 2016, five cases in Sow and Finishers. But this year reported cases spiked to 51 between May to July. On paper that is a staggering defeat in the war against PEDv, and you have to wonder if the bio-security that saved the Manitoba industry a few years ago had failed.

Continued on page 34 meatbusiness.ca

July/August 2017 CANADIAN MEAT BUSINESS 33

“We’re not sitting around on this,” Dickson states. “We are being very proactive. We have a disease management group in place. The vet group is meeting on a regular basis, and vets are testing barns daily. We’re warning farms in the area that are not infected to keep their bio-security high. For those in the infected southeastern quadrant we’re setting up an information sharing database so farmers can see if their neighbors are tested positive while transporters are setting aside trailers that only deal with PEDv. And it’s working because we haven’t had any new cases reported since July 6, so that’s encouraging.”

So how did it happen and why the sudden spike?

The pork industry was crippled in 2014 when the first PEDv pandemic spread from a barn in Ontario like wildfire across a hot prairie, wiping out piglets into a full blown North American crisis. Millions of dollars later, bio-security practices were finally showing signs of abating the outbreak – and Manitoba was one of the first to set the template.

Funding programs kicked in to help farmers grappling with the disease, including the high traffic sites like abattoirs, livestock assembly yards, and livestock transportation companies. All in all it was a marvel of synergy across an entire industry, and then the disease seemed to fade from daily headlines, the crisis under control. Many barns that were high risk in Ontario, Quebec, across the prairies and into the west, were testing negative.

Since 2015 the bio-security system in Canada was doing what it was supposed to but then in 2016, the Canadian Pork Council (CPC) and all the provincial pork councils found themselves rallying the Canadian Food Inspection Agency (CFIA) to cease a mandate to revise the regulation that would effectively cut funding for the provincial truck wash stations – the very core of the bio-security program.

The regulation stipulated all trucks delivering livestock to the U.S. for Canadian producers must wash at an American facility before re-entering Canada. If the U.S. bio-security bar was as high as Canada’s, that would be no problem, but it wasn’t then and still is not now. So the concern was valid.

During a Q&A interview with Canadian Meat Business last year, CPC Chairman Rick Bergmann even stated it would be a travesty if the regulation would pass and the proverbial door opened to all that kind of trouble.

Nonetheless the regulation passed and the onus fell on Canadian producers and processors and transporters to bear the cost if they wanted to do the extra washing once back across the border.

Is there a direct correlation to this year’s spike?

“Livestock trailers were definitely looked at as one of the vectors of the problem,” said Gary Stordy, CPC’s Manager of Public Relations. “But it’s difficult to pinpoint the outbreak this year in Southern Manitoba to one specific smoking gun per se.”

“Trailers coming back from the U.S. that are potentially infected is not helpful, but is one potential cause out of 34 CANADIAN MEAT BUSINESS July/August 2017

many,” Dickson said. “For example, the assembly yards have always been looked at as infected sites because there isn’t much the owners can do. I mean they can try to limit the amount of disease but they can’t eliminate it.”

“We’re also establishing a Trusted Trucker Program,” Stordy said. “It’s kind of like the Nexus program for airline travel. Essentially if you’re hauling live pigs into the U.S. for a Canadian producer then you have to go through a registration program so we know that those trailers are going through a recognized truck wash facility – and what I mean by recognized is a Canadian facility that has our bio-security protocols in place.”

The investigation into the outbreak is still ongoing and as a result of the cases in Manitoba, bio-security is on high alert.

“Essentially we’re looking for a return to the emergency biosecurity plan that was setup two years ago,” Stordy added.

“But you have to understand that even though the trusted true comment that bio-security first line of defense is at the farm level, the real truth is bio-security is intended to limit the spread of PEDv. It’s never 100% fool proof.”

The On-Farm Cases report also claimed that nine of the 61 premises previously confirmed in Manitoba for PEDv were flagged to be PED Presumptive Negative as determined by the Chief Veterinary Office (CVO) and the Manitoba Swine veterinarian’s negative status protocol. While on the processing side, 20 federal and provincial abattoirs, truckwash stations and livestock trailers were tested, and nine of those were positive.

What does Presumptive Negative mean? Basically farms that adhered to strict bio-security practices and confirmed virus elimination with concurrent testing still showed potential PED threat in their manure storage systems.

“We’re going to have a manure management crew sort out all the problems in these barns right through to the fall,” Dickson stated.

So the simple truth is, no matter how stringent and enforced counter measures are, outbreaks will happen – viruses are like that – and what this may actually show is Manitoba’s readiness to deal with epidemic threats, with heightened security measures, can quickly contain the spread.

“It’s always difficult to catch it (PEDv) early in a barn,” Dickson said. So you have to be alert and diligent. So we’re asking producers to slow up, get that second text before you move animals in. It’s only a $20 added step compared to the probability of an $80,000 cleanup bill.”

Stordy is confident bio-security in the Canadian pork industry is continually setting the bar.

“You have to take into account that, even with what is going on now, there are new discoveries on how this virus (PEDv) is spreading that helps us tighten our bio-security going forward. Because, when it comes to bio-security, we are always and diligently focused on continued improvement.”

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