CMB July/August Issue by Meat Business Pro

July/August 2016

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WHERE’S THE BEEF… COME FROM? CFIA GETS SERIOUS ABOUT PROSECUTING FOOD FRAUD R-CALF USA ‘DISSES’ CANADIAN BEEF m e a t b u s i n e s s .c a

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IN THIS ISSUE July/August 2016

5 6 12 15 16 18

meatbusiness.ca

Canada Beef Receives Funding to Grow Global Markets Where’s the beef… come from? By Scott Taylor

R-CALF USA ‘Disses’ Canadian Beef By Chuck Jolley

CPC Introduces Excellence Program CFIA Gets Serious About Prosecuting Food Fraud By Glenford Jameson and Shannon Paine, food lawyers at GSJ & Co.

Beretta’s Frozen Butcher Setting the Online Bar

22 23 24 26 28

Nutritional Consulting at the Meat Counter By Ronnie P. Cons

CSB-System Announces New Director of Sales in Canada Survey Says: Americans are now spending more eating out than on groceries Canada after the Brexit Vote

Cloudy with a chance of rain: an update on agri-business outlook

July/August 2016 CANADIAN MEAT BUSINESS 3

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2014

meatbusiness.ca

GUEST EDITORIAL

July/August 2016 Volume 15 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, Glenford Jameson + Shannon Paine, Ronnie P. Cons, J.P. Gervais, Mandy D`Autremont CREATIVE DIRECTOR Christian Kent Canadian Meat Business is published six times a year by We Communications West Inc.

CANADA BEEF RECEIVES FUNDING TO GROW GLOBAL MARKETS The federal government has announced that Canada Beef will be receiving $6.4 million in funding over the next three years to increase global consumer demand and loyalty for Canadian beef. Jack Hextall, Canada Beef Chair said, “Canada Beef is very pleased to partner with the federal government to drive, enhance and sustain loyalty to Canadian beef with customers from around the world through the Growing Forward 2 initiative. The industry development funding Canadian cattle producers are able to leverage with their own investment is critical to positioning the industry for long term growth and success in these lucrative markets.” This initiative will support Canadian Beef’s three-year market development and promotion plan targeting key regional hubs in Asia, Europe, North America and Latin America. It will also enhance consumer trust and appreciation for the value and desirability of Canadian Beef through activities that aim to understand and meet consumer needs. This investment builds on the achievements made by the Canadian government to develop international markets for Canadian beef. Beef export markets have been re-established or expanded in Mexico, Ukraine, South Korea and Taiwan, while the Country of Origin Labelling law was successfully repealed giving Canadian Beef full access to the United States. The Value of the Canadian Beef Brand to the Global Consumer In 2015, the Canadian beef industry exported to 58 countries with a value of $2.2 billion. Based on those numbers, Canada Beef set out to establish benchmarks for measuring the awareness of the Canadian beef brand to global consumers and stakeholders like producers, brand partners, packers and more. Two thousand consumers from Canada, China, Japan and Mexico were included in the research.

We Communications West Inc. 106-530 Kenaston Boulevard Winnipeg, MB, Canada R3N 1Z4 Phone: 204.985.9502 Fax: 204.582.9800 Toll Free: 1.800.344.7055 E-mail: publishing@meatbusiness.ca Website: www.meatbusiness.ca Canadian Meat Business subscriptions are available for $28.00/year or $46.00/two years and includes the annual Buyers Guide issue. ©2015 We Communications West Inc. All rights reserved. The contents of this publication may not be reproduced by any means in whole or in part, without prior written consent from the publisher. Printed in Canada. ISSN 1715-6726

Consumers were surveyed on a variety of statements, including perceptions of Canada, Canadians, beef, and beef producers. It was evident that consumers felt Canada was a safe, friendly and successful country, and they felt Canadian beef producers were dedicated and honest people. It also showed that generally, they perceived Canadian beef as high quality, delicious and safe. It was interesting to note that consumers, generally, ranked statements around environment, water use, health risks and animal welfare were low priority when referencing Canadian beef as a brand. The research suggested that consumers already understand Canadian beef to be raised in safe, sustainable conditions, and was already an expectation of the Canadian beef brand. This means that generally, consumers felt that these areas were already well represented. Following the survey of both consumers and industry stakeholders, all of the statements were arranged into high and low priority based on the group, and some interesting findings came to light. It was noticed that there were quite a few instances where statements that industry stakeholders felt were important, actually ranked quite low priority for consumers, and vice versa. This proved that when making important consumer decisions, Canada Beef needs to find ways of communicating with and engaging consumers directly. The findings of the research are currently influencing much of the strategic brand direction for Canada Beef. Both producers and consumers will notice a stronger direct to consumer approach, and engaging the consumer in conversation in areas that are important to them as they make purchasing decisions. Canada’s beef industry contributes $33 billion worth of sales of goods and services either directly or indirectly to the economy.

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July/August 2016 CANADIAN MEAT BUSINESS 5

WHERE’S THE BEEF… COME FROM? MARKETING TO THE DISCERNING CANADIAN CONSUMER By Scott Taylor

Let’s just say that most of it is talk, not snake-oil salesman talk, but good old fashioned Madison Avenue-public relations talk. When A&W goes on about, “raised without the use of hormones or steroids,” or McDonald’s says it will be using “sustainable beef,” or Earl’s talks about dumping Canadian beef or A&W calls its product, “Better Beef,” always keep one thing in mind - this is the public relations and marketing arm of a major international conglomerate talking. It’s not your corner diner. And whatever these big conglomerates say, there is always a chance, they just might offend somebody. Right or wrong – and Earls decision to take a shot at Canada’s beef market was obviously wrong – it’s all P.R. You’ve all seen the TV commercials where the actor walks around a Canadian town or city telling folks that A&W’s beef “is raised without the use of hormones or steroids.”

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Hey, he seems like a decent guy and I don’t know what that means but people seem to like the burger so that kind of sounds right. True enough, but cattle producers in Canada have been calling, “BS” for almost two years. And while Susan Senecal, the chief marketing officer of A&W is proud of the “Raised Without,” slogan, not everyone thinks the chain is going in the right direction. “We were hoping that we’d be able to deliver on the product that most of our customers were asking about, which is beef without any added hormones or steroids,” Senecal recently told Agriculture Canada. “While sourcing beef that has been raised without any added hormones and steroids, we have talked with many Canadian meatbusiness.ca

ranchers and will continue to do so. In advance of launching we let the Canadian Cattlemen’s Association know of our decision and we have an ongoing dialogue with them and we highly value and respect their work to promote the Canadian beef industry.”

in Alberta, but right across Canada – would prefer that A&W, like McDonald’s Canada, bought all its beef from Canadian producers. Granted A&W is still high on the list of Canadian beef purchasers, it’s nowhere near McDonald’s in terms of volume.

Interesting. Canadian ranchers have spent much of the past two years criticizing A&W’s campaign, a campaign that seems to promise healthier burgers to its customers.

THE LEADERS

However, Rich Smith, the executive director of the Alberta Beef Producers, is still not convinced. While he admitted there is some consumer demand for beef with fewer hormones and no steroids, he says calling it “better” is misleading because the beef hormones that ranchers in Canada use are miniscule and are completely safe to human health.

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McDonalds

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A&W

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Burger King

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Wendy’s

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The Keg

He also said, “The use of hormones has environmental benefits because more cattle can be raised on less land.”

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Moxies

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Earls

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Boston Pizza

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Harvey’s

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Smittys

“We don’t think it is better beef,” Smith told CBC News recently. “We think its beef from cattle that are raised differently than the vast majority of cattle in Canada and the United States.”

In fact, here is the Top 10 (2015) Canadian restaurant beef purchasers, courtesy of Canfax:

And there, my fellow burger-lovers, is the rub. It is one thing to say the beef is better. It’s another thing to say that because we want our beef to be raised via one method or another, we have to go to Australia and the U.S. to buy the beef.

It’s not a surprising list but it’s one that has also had its hiccups. Take our friends at Earls.

Smith and his cattle producers – and not just the producers

Continued on page 8

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Recently, Earls president Mo Jessa announced that 27 of its 66 restaurants will once again serve Canadian-raised,

July/August 2016 CANADIAN MEAT BUSINESS 7

ethically treated beef that is free of antibiotics and growth hormones. According to Jessa, “The rest of the restaurants will follow suit over the next couple of years.” This all happened because Earls really screwed up. Not only did it come under fire from Canadian producers when it announced that it would source its beef from a Kansas ranch that is accredited by a non-profit group called, “Humane Farm Animal Care,” but it nearly watched its business collapse under the weight of slighted Canadian beef producers.

“ WE DON’T THINK IT IS BETTER BEEF,” SMITH TOLD CBC NEWS RECENTLY. “WE THINK ITS BEEF FROM CATTLE THAT ARE RAISED DIFFERENTLY THAN THE VAST MAJORITY OF CATTLE IN CANADA AND THE UNITED STATES.” “I learned something from this whole process and it was a good lesson,” Jessa told reporters, speaking outside an Earls location in downtown Edmonton. “We wanted to serve beef without antibiotics, hormones and had certification for ethical treatment. “While Canadian beef raised under those conditions exists, no single supplier was big enough to supply all 66 restaurants. Still, I realized the company made a huge mistake. We’ve had to listen to our consumers. The way we were running our business, we just went to our suppliers when we needed product and we weren’t working with the industry. “We have changed the way we do things. Instead of looking for a single-source supply, we are now working with multiple partners.” For Jessa, this entire avoidable controversy has taught him a lot about the beef industry in Canada. In fact, he went out and visited a number of Canadian cattle ranches is now working closely with Ontario’s Beretta Farms along with Spring Creek Ranch in Vegreville, Alberta. There will be no sympathy for Jessa, whose company could have just kept its collective mouth shut and gone about its business. Instead, he and his PR department decided they’d jump on A&W’s bandwagon and try to convince Canadians that purchasing beef from a farm in Kansas was a better idea than purchasing beef from farms in Alberta, Saskatchewan, Manitoba and Ontario, simply because somebody said the cattle was “raised more humanely.” Big mistake. MCDONALD’S IS ON TOP Some Canadians might not like this because there are definitely a number of vocal Canadians who would prefer that people in their neighborhoods not know they eat at McDonald’s. However, because of the Canadian Roundtable for Sustainable Beef and its close working relationship with 8 CANADIAN MEAT BUSINESS July/August 2016

Alberta ranchers, nobody in in the restaurant industry in Canada is more Canadian than McDonald’s Canada. In fact, shortly after A&W started talking about “Better Beef,” McDonald’s came up with its “Not Without Canadian Farmers,” slogan. “The Big Mac? Not Without Canadian Farmers,” said the McDonald’s Canada website. Prof. Sylvain Charlebois at the University of Guelph’s Food Institute told CBC News that he thought A&W’s campaign was “brilliant,” but he also admitted that it is never clear where its meat is sourced. “They’re not forthcoming about their procurement strategy at A&W,” Charlebois said. “They’re mostly focusing on the naturalization of food. There’s a lot of momentum around that and people are more concerned about farming practices. A&W is making their supply chain more transparent, not in terms of origin, but in terms of specific production practices.” A&W claims it gets some beef from Canada but also brings it in from the United States and Australia in order to meet its “hormone-free guarantee.” McDonald’s, meanwhile, buys 100 per cent of its beef from Canadian producers. According to the Canadian Cattleman’s Association’s Fawn Jackson that amounted to about 64 million pounds in 2014 alone (source: Canfax). “Generally, consumer awareness is continuing to grow around sourcing and where things are coming from,” said Sherry MacLauchlan of McDonald’s Canada. “All those things tie together and are the reason for that campaign.” PERCEPTION UNFAIR In the meantime, Canadian ranchers have clearly suggested, especially on social media, that there’s some hint that Canadian beef isn’t as healthy as American or Australian beef. “That perception is unfair,” said Doug Gillespie, president of the Saskatchewan Stockgrowers Association. “There are more hormones in cabbage than beef.” The Beef Cattle Research Council notes on its website that producing the same amount of beef without hormones would require 12 per cent more cattle and 10 per cent more land, as well as more feed, water and fertilizer. As well, the website also indicates to consumers that those added production costs would mean more expensive meat. And all Canadians know that in the past few years, beef has been about as expensive as anyone wants it to get. Gillespie, who ranches near Neville, Sask., says he hopes the position that McDonald’s has taken becomes the restaurant industry’s mantra. Continued on page 10 meatbusiness.ca

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“I hope McDonald’s continues to have a great belief in our standards and our way of doing things,” he told CBC Saskatoon. “We’re very open about it. None of it is hidden and we need to convey the message that we have a very, very safe product. We’re proud of what we’re doing and we have consumers foremost in our mind.” THE CANADIAN ROUNDTABLE FOR SUSTAINABLE BEEF It might be a good idea if every restaurant chain in Canada took into account the ideas, goals, mission statements and vision of the recently-formed Canadian Roundtable for Sustainable Beef before embarking on some crazy PR deal that just might be more trouble than necessary. The roundtable was an idea initiated by the Canadian Cattlemen’s Association and McDonald’s was the first

“ WE’RE

DISAPPOINTED THAT A LARGE CANADIAN FOOD-SERVICE CHAIN WOULD LAUNCH A MARKETING CAMPAIGN THAT HAS THEM SERVING SIGNIFICANT AMOUNTS OF IMPORTED BEEF TO CANADIANS,” SMITH SAID WHILE AGREEING WITH A&W’S CLAIM THAT THERE ARE NOT ENOUGH PRODUCERS IN CANADA TO MEET THE NEEDS OF THE CHAIN, WHICH HAS MORE THAN 750 LOCATIONS ACROSS THE COUNTRY.

restaurant chain to join. In fact, McDonald’s was one of the first organizations to arrive at the table. The concept was simple: To help develop a list of criteria that would define a new label called Sustainable Beef. The multi-stakeholder group is now made up of beef processors and retailers as well as NGOs like the World Wildlife Fund and the Nature Conservancy of Canada. It might be one of Canada’s best ideas. Too bad Earls didn’t realize it until the chain took a national whipping. In fact, not only did Earls ask the Roundtable for guidance (after the fact), five other chains did, as well. “It’s exactly what we’re hoping for because what we’re looking for is to be able to inform our consumer, and in this case it’s the retailers and the restaurants who are buying and purchasing our meat products from our processors,” said Roundtable chair and Alberta rancher Cherie Copithorne-Barnes. “They had no idea how to connect to our industry to find out really, truly what was here and what was available and this roundtable is now offering them that platform to be able to do just that.” Restaurants Canada, a national not-for-profit association that represents Canada’s restaurant and food service industry, believes the anger directed at Earls by the beef industry opened some eyes. In fact, Restaurants Canada vicepresident Mark von Schellwitz said the dispute “showed us the delicate balancing act that restaurateurs are subject to, in both meeting consumer demand and trying to buy local whenever possible.” “I think these restaurant chains getting together to work with the Alberta beef industry is a great sign,” von Schellwitz told the Calgary Herald. “It helps us listen to our consumer’s needs and also find a way to buy local.” A NEED TO BE CAREFUL As Earls found out, even when successful companies have research that says, “This is the way we need to go,” those companies still have to be very careful. Even Saskatchewan’s Minister of Agriculture, Lyle Stewart, was shocked when A&W and Earls didn’t really have any idea how Canadian beef producers operate. “The code of practice governs how we look after livestock from birth, through availability of water, nutrition, shelter, transportation and finally humane slaughter practices,” Stewart told CBC. “It’s all in the code of practices in this country and every producer is expected to be compliant.” Which brings us back to A&W. It’s a big chain that still buys large amounts of its beef in Canada, but because of its marketing campaign – a very successful marketing campaign

10 CANADIAN MEAT BUSINESS July/August 2016

meatbusiness.ca

– it’s been forced to go to the United States and abroad. “We’re disappointed that a large Canadian food-service chain would launch a marketing campaign that has them serving significant amounts of imported beef to Canadians,” Smith said while agreeing with A&W’s claim that there are not enough producers in Canada to meet the needs of the chain, which has more than 750 locations across the country.

At Your Fingertips:

“Still, he added, “ranchers could have adjusted their procedures had the chain worked with them earlier. “Producers will produce to serve market needs. And if there is a demand for beef from cattle who are raised this way, they would meet that demand.” Not surprisingly, it’s one of the tenets of the Roundtable. THE NEXT CAMPAIGN In many ways this is a rock-and-a-hard-place situation. There are procedures for producing beef in Canada and it would be unfair to suggest that Canadian producers are not compliant. On the other hand, the public relations departments of large corporate restaurant chains have decided that consumers want healthy, organic and, yes, easily-promoted products that sound like they’re better than the competitions’ products. There is also the question of Country of Origin. In Canada, the red-meat industry worked hard to get Country of Origin Labelling removed from its products in the United States. We want to sell our beef abroad and we want to open new markets. After all, according to Statistics Canada, Canadian beef exports were valued at $2.23 billion in 2015 versus $1.94 billion the year before. We’re growing on the international at an incredible rate. So it would be somewhat hypocritical if we criticized the purchase of U.S. and Australian, even Japanese and Kiwi beef, in Canada, and then we went out and promote our beef – and have it sold in large quantities -- in various international markets.

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The Better Beef promotion worked for A&W. McDonald’s Canada still buys 100 per cent of its beef from within the country. In the end, even Earls went out of its way to start sourcing beef in Canada once again. However, while all of these marketing plans, slogans and campaigns start with what appears to be a good idea, there are always speed bumps in every restaurant’s parking lot. Ultimately, before embarking on all the talk, the smart people who sell burgers and steaks to the consumer, might want to have a chat with the people at The Canadian Roundtable for Sustainable Beef. That way, the entire supply chain will, at least, be alerted to the next controversial ad campaign. Whatever and whenever that may be.

meatbusiness.ca

Join Today! www.cfib.ca/agri July/August 2016 CANADIAN MEAT BUSINESS 11

R-CALF USA ‘DISSES’ CANADIAN BEEF By Chuck Jolley

One of the loudest voices impugning the quality of meat imported into the U.S. from Canada as well as the rest of the world has been that of Bill Bullard, CEO of R-CALF-USA. His protectionist tendencies have won him accolades by many of his nation’s cattlemen and condemnation by a larger contingent of people and trade organizations. Certainly R-CALF’s position on international trade can be outlined by a comment he made protesting the Trans-Pacific Partnership a few months ago. “My contention is that the TPP adopts the anticompetitive mantra of the National Cattlemen’s Beef Association (NCBA) who argued in federal district court that “beef is beef, whether the cattle were born in Montana, Manitoba, or Mazatlán.”

Bullard doubled down on the defensive position he took with his objection to the TPP when he announced R-CALF’s impending law suit challenging the legality of the U.S. beef checkoff program. A press release stated “The checkoff’s implied message that all beef is equal, regardless of where the cattle are born or how they are raised, harms U.S. farmers and ranchers and deceives U.S. citizens”.

To his way of thinking, beef from the U.S. is far superior to beef from any other part of the world and its reputation must be defended at all costs. The market Bullard wants to protect is substantial, too. In 2015, the U.S. imported $9.1 billion worth of beef with $7 billion from just three countries: Australia ($2.6 billion), Canada ($2.5 billion), and Mexico ($1.9 billion). Canada sent $1.3 billion worth of cattle and $1 billion worth of fresh or chilled beef to the U.S. last year.

Asked for clarification of what appeared to be a direct attack on the quality of Canadian beef, he replied, “In the June 1, 2015 Global News article, ‘Tainted lunch: Navigating gaps in Canada’s food safety system,’ the author references a U.S. audit report that gave Canada’s meat inspection system the “lowest possible passing grade (“Adequate”) and found multiple instances where processing plants weren’t in compliance with safety regulations.” In a more recent audit report of Canadian meat plants, the U.S. found several weaknesses related to government oversight, sanitation Continued on page 14

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July/August 2016 CANADIAN MEAT BUSINESS 13

and microbiological testing that “raise significant questions” about Canada’s meat safety system that will need to be addressed if Canada is to maintain equivalency with the U.S. system.” He emphasized one point about Canadian beef, saying “Importantly, U.S. law no longer requires Canada or any other country to have meat safety inspection systems that are at least equal to the U.S. system. This is because the U.S. lowered its food safety bar when it entered the World Trade Organization (WTO). Today, the food safety systems of Canada and other exporting countries need only be “close enough,” under the WTO-relaxed standard of equivalency. Thus, imported beef is allowed into the United States without being subjected to food safety standards that are at least equal to U.S. standards.”

“ IMPORTANTLY, U.S. LAW NO LONGER REQUIRES CANADA OR ANY OTHER COUNTRY TO HAVE MEAT SAFETY INSPECTION SYSTEMS THAT ARE AT LEAST EQUAL TO THE U.S. SYSTEM. THIS IS BECAUSE THE U.S. LOWERED ITS FOOD SAFETY BAR WHEN IT ENTERED THE WORLD TRADE ORGANIZATION (WTO). TODAY, THE FOOD SAFETY SYSTEMS OF CANADA AND OTHER EXPORTING COUNTRIES NEED ONLY BE “CLOSE ENOUGH,” UNDER THE WTO-RELAXED STANDARD OF EQUIVALENCY Making a broad overstatement not backed by facts but possibly designed to set the stage for the lawsuit, David Muraskin, one of the lawyers representing R-CALF, said, “At a time of alarming food recalls and concerns about the health and safety of the food we eat, that’s both irresponsible and troubling.” Rich Smith, executive director of Alberta Beef Producers, in an article published by Alberta Farmer, said “The description in the lawsuit is a gross misrepresentation of what the United States is doing with its checkoff funds, and it unfairly maligns production practices and standards in other countries, including Canada.” He dismissed Bullard’s group as extremely anti-competitive, saying “R-CALF is an organization that opposes international trade, and it believes that international trade is bad for the cattle industry. That’s the perspective it’s taking in this action and that it’s consistently taken as an organization.” North American Meat Institute President and CEO Barry Carpenter agreed with Smith, stating “For years, RCALF has demonized imported meat, the facts be damned. Their most recent lawsuit is a continuation of that xenophobia.” Bullard’s prepared statement went well beyond questioning the quality of Canadian beef. He talked about an ESPN.com news report that warned NFL players that meat produced in China and Mexico may be contaminated with the banned 14 CANADIAN MEAT BUSINESS July/August 2016

substance clenbuterol. He was also concerned that the pesticide DDT, classified as a B2 carcinogen and banned in the U.S. since 1972, “is still used in certain cattle-producing regions around the world to control such diseases as malaria, including in South America, Africa and Asia.” “Thus” he warned, “as with clenbuterol, there is a higher risk that imported meat is derived from animals that have ingested this banned substance. Adding another warning about the potential dangers of imported meat, Bullard said “In 2013, several U.S. consumer groups explained that nine veterinary drugs banned in the U.S. “due to human health concerns, particularly carcinogenicity and mutagenicity” were nevertheless being used elsewhere around the world. “Thus there is a higher risk that imported meat may contain residue from one or more of these banned substances,” he claimed. The problem as he described it was a general lack of oversight by U.S. authorities leading to the possible importing of unsafe foods. Singling out two South American countries, he said “Although Brazil and Argentina are now eligible to export fresh beef to the U.S., United States auditors have yet to certify any meat processing plants in either country as having food safety systems that are equivalent to those in the United States. Auditors found weaknesses in BSE mitigation procedures practiced by those countries as recently as 2014 and in 2016 they continue to find weaknesses with Brazil’s residue detection procedures. Nevertheless, in 2015 the U.S. imported 149.6 million pounds of pre-cooked beef from Brazil and 1.3 million pounds from Argentina. This suggests that beef imported from Brazil and Argentina is inherently less safe than U.S.-produced beef.” Carpenter strongly disagreed with Bullard’s assertions and was adamant at sitting the record straight. “Here are the facts,” he said. “The U.S. has strict border controls for imported meat products and to help ensure safety USDA conducts pathogen and residue testing. Countries that export meat to the U.S. must have equivalent inspection systems. The United States benefits from these equivalency agreements because they enable U.S. meat producers to export our products to other countries that treat our food safety and inspection system as equivalent.” In fact, Carpenter was speaking with direct knowledge of that equivalency. The North American Meat Processors Association, one of the integral groups that united to form NAMI recently, had spent much of the past decade working with both the U.S. and Canadian governments to insure equivalency of the rules and regs governing meat production and processing in both countries. Carpenter accused R-CALF of relying on “half-truths and distortions” when talking about the quality of imported meat. “Some of the most egregiously false statement made by RCALF,: he said, are: •

RCALF claims that somehow the United States entry into the WTO affected the food safety standards applied meatbusiness.ca

to meat from countries that export here. That assertion is simply untrue. The U.S. food safety requirements for imported meat have not changed since the United States entered the WTO. The same rigorous rules imposed by federal statute remain in effect. •

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CALF claims that Brazil and Argentina are now eligible to export fresh beef to the U.S., but that auditors haven’t certified their plants as having equivalent food safety systems. Again, RCALF is flat out wrong. APHIS has approved both Brazil and Argentina to export fresh beef, but FSIS has not completed their equivalence audit. As a result, Brazil and Argentina may presently export cooked beef only to the United States.

Carpenter said, ”We remain confident in the federal meat inspection system and its ability to ensure meat imported into the United States has been processed under equivalent food safety standards. It is an affront to thousands of dedicated, highly trained FSIS veterinarians and food inspectors to suggest they are somehow negligent in their duties to assure a safe meat supply. 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.

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The Canadian Pork Council’s (CPC) Executive Director, John Ross, joined Canada Pork International’s (CPI) Chair, Neil Ketilson in Tokyo Japan in early July to introduce the Canadian Pork Excellence program (CPE) to Japanese industry and government representatives. Japan is Canada’s second-largest pork market with close to $1 billion in sales. “The Canadian pork industry is committed to the continuous improvement to industry on-farm programs and the CPE will help keep Canadian pork in a very competitive Japanese marketplace,” stated Ross. “The revised programs provide additional transparency while presenting the same proven content that has garnered respect and benefitted the Canadian pork industry in gaining market access internationally and domestically.” Ross introduced the Canada Pork Excellence platform (CPE) to over three hundred seminar attendees and outlined how the revised program serves as the foundation for the Verified Canadian Pork (VCP) initiative launched by CPI earlier this year. CPE brings together the on farm food safety, biosecurity, animal care and traceability programs under one platform.

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Flexibility

Quality

Minimize: Costs

Energy

Errors

Rejects

While in Japan, the team celebrated CPI’s presence in Japan for over 25 years and the retirement of CPI’s long serving President, Jacques Pomerleau, who was responsible for CPI’s involvement in the Japanese market from the very beginning. “Japan is a great market for Canadian pork and has grown rapidly over the past twenty five years that CPI has been engaged in promoting the merits of our product,” stated Ross. “The Japanese market recognizes that Canadian hog farmers are dedicated to the highest quality standards and that the CPE beings value to Canadian pork as the basis of VCP.” For more information, visit www.cpc-ccp.com meatbusiness.ca

CSB-System International Inc. 10 Duke Street West, Suite 103 Kitchener, ON, N2H 3W4 Phone: 1-519-579-7272 contactus@csb.com www.csb.com

July/August 2016 CANADIAN MEAT BUSINESS 15 CSB_Canadian Meat Business_2,125X10_2016-07.indd 06.07.2016 1 09:56:29

CFIA GETS SERIOUS ABOUT PROSECUTING FOOD FRAUD By Glenford Jameson and Shannon Paine, food lawyers at GSJ & Co.

Canadians seem to becoming more aware about counterfeit food and food fraud. Legislation such as the Food and Drugs Act, the Consumer Packaging and Labelling Act, and the Canada Agricultural Products Act are in place to protect the standards and quality of products consumed everyday by Canadians. Understandably, our government has legislated that a breach of these statutes should lead to massive penalties for companies and executives alike. The Canadian Food Inspection Agency (CFIA), which is tasked with enforcing these laws, has not historically punished violators to the full extent of its powers, instead frequently choosing to work alongside Canadian food businesses to help them get back into compliance. But, a recent high-profile prosecution involving food fraud has demonstrated that this permissive and reconciliatory approach to regulatory breaches may have come to an end. In July 2014, a three-year investigation by the CFIA into the operations of Mucci International Marketing Inc. and Mucci Pac Ltd. (Mucci Farms) found that $1 Million worth of tomatoes labeled as a “Product of Canada” were, in fact, imported from Mexico. The investigation resulted in charges being laid against these companies as well as two Mucci Farms executives. To perform the prosecutions, the CFIA hired an external criminal attorney from private practice, bringing in expertise from outside of the Public Prosecutor Service, while 16 CANADIAN MEAT BUSINESS July/August 2016

avoiding its administrative challenges and limited resources. Before a trial could take place, all of the defendants entered guilty pleas. The CFIA issued a celebratory press release, while a statement by Mucci Farms effectively said «Our mistake: we sell a lot of tomatoes here.» The Ontario Superior Court of Justice was then put into the unique position of determining how to fine or sentence for such an offence. Notwithstanding the lack of effective guidance for the Court - little relevant case law or precedent to draw from - on June 6, 2016, it issued massive penalties against Mucci Farms: the corporations were convicted and fined $1.2 million and sentenced to three years of probation and the executives were fined $150,000 each and sentenced to three months of probation. With victim fine surcharges, the total fine meted out could eclipse $1.9 million. The Mucci Farms case is unique because, unlike massive health cases with XL Foods in 2012 or the Listeria outbreak in 2008, there was never a direct risk to individual consumers meatbusiness.ca

or public health. The indictment alleged only that the produce was mislabelled as to its origin - Mexico as opposed to Canada. So why, then, did the CFIA take such an immediate and punitive approach in this instance as opposed to infractions that resulted in risks to the public? The answer is two-fold: the CFIA is seeking to deter others from engaging in counterfeit or fraudulent activities under its watch, and this style of prosecution is generally becoming more common in Canadian regulatory prosecutions. The CFIA’s mission is philosophically about creating and maintaining faith in the food system - safeguarding food, animals and plants, enhancing the health and well-being of Canadians, the environment, and the economy - typically centred around food safety. In order to maintain trust, the CFIA must also place importance on the ability of the consumer to rely on the labels they read. Canadian food law is filled with complex regulations where rules are notoriously vague and difficult to decipher, and the CFIA generally takes a corrective and conciliatory approach with offenders -- actions aligned with the enhancement of the food economy. However, the CFIA decided to enforce on the basis that incorrect country of origin labeling is not merely an errant turn in a maze of tricky regulation, it’s flat out deception and food fraud. The Mucci Farms case endangered Canadians’ faith in a safeguarded food economy enough for the CFIA to depart from its central concern of food safety and prosecute aggressively.

its full authority. Either way, this is unprecedented in scope. Notably, the CFIA chose to prosecute two individual executives in the Mucci Farms case. It has become more frequent to see directors, officers, and managers be named in more regulatory prosecutions. Both from within the food sector and more broadly, individuals can be subject to criminal prosecutions, which can lead to massive personal fines, criminal records, and jail time. Under the Foods and Drugs Act, certain offences can lead to a three-year prison term -- a term which is equivalent to a conviction for manslaughter. Most companies and directors are not insured against these types of fines. Commercial general liability and director’s liability insurance usually do not cover indictable offences and, in the case where a defendant is protected by its insurer, it would only be for the defence of the fine and not the fine itself. It’s tough to say whether the Mucci Farms case signals the beginning of a new era of frequent prosecutions and heavy penalties, or whether this case will stand as a one-off example of the CFIA demonstrating its enforcement powers, seeking to scare food producers straight. In either case, the CFIA has put the Canadian food industry on notice that it views consumer trust as central to its mandate. Glenford Jameson and Shannon Paine are food lawyers at G. S. Jameson & Company, a Toronto-based law firm dedicated to empowering its clients to navigate and innovate within the food sector. Find out more at food.gsjameson.com.

Other governmental departments regularly take on public prosecutions with significant fines and often external lawyers. With limited internal resources and increasing legal authority to seek significant monetary penalties, many enforcement agencies increasingly rely on deterrence. Most Canadians are familiar with high profile securities, occupational health and safety, and environment prosecutions in recent memory. Until now, enforcing through monetary deterrence was not an approach that Canadians had seen in the food sector. The CFIA has, for years, worked in a relatively conciliatory manner with contraveners to keep the food system safe from allergens, health risks, and adulterants, while amendments to legislation have slowly given it more authority to fine and charge entities that are in breach of Canadian food law. This prosecution against Mucci Farms and its executives could be a bellwether that there has been a change in the CFIA’s attitude towards its style of enforcement or that the CFIA considered the Mucci Farms infraction as distinct and significant enough to warrant the CFIA to exercise meatbusiness.ca

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BERETTA’S FROZEN BUTCHER SETTING THE ONLINE BAR Beretta Farms of Ontario has long been regarded for their quality, heritage and sustainable meat products but when they added the Frozen Butcher concept, guaranteeing nationwide delivery with 24 hours, it firmly established the Beretta brand in the online marketplace. Now they service customers across the country and continue their commitment to holistic and humane farming, adhering to the same principles they had when they started the farm many years ago. Canadian Meat Business (CMB) had an opportunity to speak at length with Mike and Cynthia Beretta of Beretta Farms (BF) to find out more about their philosophy and operation. CMB: How did organic farming develop into the Beretta Farms brand? 18 CANADIAN MEAT BUSINESS July/August 2016

BF: My husband Mike and I started our first farm in Huron County in 1992 out of a commitment to producing healthy alternatives for families. We spent our first few years learning the ropes of farm life, growing our own family of livestock, and experiencing everything the rural and rustic terrain had to offer. In the summer of 1999, we realized in order to continue our success we would need a farm closer to a large urban area. With this decision we were lucky enough to move our family to a beautiful farm in King Township. Once settling into our new farm, the focus was on becoming certified organic meatbusiness.ca

and branching out into local GTA retailers. Our intuition about being close to an urban area was right, and by 2006 Beretta was making regular deliveries to large banner retailers along with a growing number of independent health food stores and grocers. In 2013 Beretta did a major expansion to the product line, with the addition of antibiotic and hormone free beef, chicken, pork and turkey. This line offered health conscious shoppers a slightly lower price point, while still staying true to Beretta’s core values and beliefs. CMB: Did the Frozen Butcher concept come from that operation? BF: Well, the idea for the Frozen Butcher was born early in 2016 when the company set out to find a solution for the current home delivery service only being available to those in the GTA (Greater Toronto Area). So, naturally the result was an ‘online butcher shop’ that made finding clean and healthy proteins easy. Partnering with UPS happened all while the Frozen Butcher line stayed true to Beretta’s roots of delivering premium proteins to customers’ doors but allowed for an expanded area of service and quicker delivery times.

CMB: Let’s talk about the regime to promote animal health and bio-security on the farm and how has the certification process changed in your opinion. BF: Beretta has been certified organic since 1999. We have seen the certification process change slightly when the Canadian national regulations started, however for the most part the process has remained true to the original roots. CMB: What are some of the pros and cons you’ve experienced operating an organic farm? BF: A huge pro of farming in the GTA was in our early days when being close to an urban centre allowed us to make the needed connections to get into grocery chains and restaurants, which in turn helped spread brand awareness and grow our distribution chain. If I had to think about a con YesGroup_CanadianMeatBusiness-Qtr-pg.pdf 1 Continued 2014-05-16 1:20:17 PM on page

CMB: I’m curious how the Canada wide delivery is achieved and the network Beretta has established to meet delivery demand. BF: Canada wide delivery has been a goal of Beretta Farms for a long time now. Our original retail delivery program used our wholesale delivery trucks so there was the limitation of only being able to offer delivery to the GTA. With the launch of The Frozen Butcher we were able to restructure the program, and by using insulated shippers and the UPS same day pick up service, we are able to offer our products country wide. With Beretta available to consumers at many retailers across the country, now with a click of a button, they can have delivery direct to their doors. We’re really proud of that service. CMB: With the push for hormone free and sustainable meat programs now being in vogue, has this changed the volume and customer base drastically, or has it created more competition? BF: Well, that’s a good question. Since starting Beretta in 1992, we have seen the demand for organic and antibiotic free proteins sky rocket. It’s been within the last 5 years that we’ve seen the biggest growth in organic and antibiotic free proteins on store shelves, both in the additions of new brands and expanded product line ups of existing brands. meatbusiness.ca

July/August 2016 CANADIAN MEAT BUSINESS 19

I’d have to say running out of space. The demand for organic proteins, specifically beef, has grown substantially, and so subsequently it becomes more difficult to raise the herds in Ontario because of space. While we do still raise cattle on the original farm in King City and a few other small Ontario based ranches, we have increased our herds to meet the demand, and so now have family farms in Alberta, Manitoba, British Columbia and Saskatchewan that have partnered with us over the years. CMB: Your menu also includes seafood, which is not typical to find for a farm based company. How fish make the menu and why? BF: Seafood is something we’ve dabbled in over the years, so when the Frozen Butcher launched we decided to ‘jump in’ and run full force with it once and for all. Our mission is to deliver premium proteins to families across Canada, so having seafood options alongside our beef, chicken and pork seemed like a natural fit. When it comes to our seafood we make sure to stick to our core values and only source products that are Oceanwise certified from sustainable fisheries. CMB: Are your products flash frozen? BF: Actually we use a process slightly different from flash freezing and the difference is in the temperature the products are exposed to. All of our proteins are frozen at the peak of their freshness, locking in the natural juices, flavors and nutrients. Other than the obvious ‘cold’ temperature, we think the cool thing about freezing our products is that it is the best and easiest method for preserving them without adding preservatives or using unnatural processing methods. Nutrients, proteins, minerals and vitamins are unaffected by

20 CANADIAN MEAT BUSINESS July/August 2016

this process and shelf life is extended anywhere from 3 to 12 months, depending on the protein and cut. CMB: What is the Frozen Butcher process flow for the online order system? BF: The process for ordering online is very similar to any other e-commerce website you may have used. Firstly, you must make an account on our website. After logging on, you browse and fill your cart with as many or as few products as you choose. In order to qualify for delivery a $200 minimum must be met but pick up for smaller orders is always an option. Once you’re happy with your cart you then proceed to check out. Once this is done, sit back, relax and expect to see your delivery on your doorstep within 48 hours. Because UPS does not ship on the weekends we only ship out orders Monday to Thursday. CMB: Do you sell to other markets, retailers or just direct to customers via online? BF: The Frozen Butcher is strictly home delivery and pick up, but the Beretta brand itself is available through a large number of retailers and restaurants. Some of our bigger partners are Whole Foods, Metro, Loblaws, Foodland, Fortinos, Chipotle Mexican Grill, HERO Burger and The Healthy Butcher. CMB: Since you’re online based, which is basically borderless, do you get orders from the U.S. or abroad from people searching out the service and meat quality you offer? BF: We’ve had a few orders from the U.S. for people in Canada as gifts, but that is about it so far. We are currently only servicing clients in Canada.

meatbusiness.ca

CMB: Can you tell us something about the Heifer International program? BF: Heifer International’s mission is to end hunger and poverty while caring for the Earth. For more than 70 years, Heifer has provided livestock and environmentally sound agricultural training to improve the lives of those who struggle daily for reliable sources of food and income. Heifer is currently working in more than 30 countries to help families and communities become more self-reliant. Animals are at the centre of our work which provides life-sustaining products and all participants are required to pass on the first female offspring of any livestock they receive to another family in need. CMB: With the model you’ve created with Beretta, where do you see the brand in 10 years, and what type of expansion do you foresee as a result? BF: The Beretta brand has grown from a small seed into a thriving tree with many strong branches. When Michael and I started our farm 25 years ago, we never dreamed of becoming a household name. We truly wanted to see our children grow up in a healthy and wholesome environment. Well, I guess from the growth or our business, that is what many other Canadian families want too. The future is something that happens without any of us realizing it! I would love to see us growing with more and more Canadian ranchers, converting to organic and antibiotic free rearing of their animals. One small step at a time. CMB: What is the most rewarding part of running the farm for you and why? BF: The most rewarding part for us is the day to day watching of the animals and the harvests grow. Knowing that we gave the earth and the animals the best lives and respect that we could have during their stay here. For more information, visit www.berettafamilyfarms.com

meatbusiness.ca

July/August 2016 CANADIAN MEAT BUSINESS 21

NUTRITIONAL CONSULTING AT THE MEAT COUNTER PAVING THE WAY TO HEALTHIER CLIENTS AND PROFITS By Ronnie P. Cons

Most people want to eat in a healthy manner yet the majority feel ignorant and somewhat misguided as to what is a proper nutritional plan. The average person has heard so much contradictory advice when it comes to consuming beef, pork and poultry products as to the source, quality and the cut. What are the nutrional and health benefits? How much is too much? Does organic have an advantage over traditional? And the list goes on Many consumers, concerned about their health and that of their families, want to know just how much meat protein they should be eating on a daily or weekly basis. The answers vary greatly depending on who is supplying the advice. The results of all these non-professional opinions is that the average person today is even more confused than ever before as to the levels of meat products they should be consuming. This uncertainy and angst presents an opportunity for your meat department to satisfy these concerns in a manner that will lead to enhanced sales of meat and poultry products.

22 CANADIAN MEAT BUSINESS July/August 2016

One valuable solution to this dilemma can be for your meat department to engage the services of a professional nutritionist or dietician. Here is how it works: 1. The meat department manager promotes in a flyer to all its customers and potential customers in the area that a certified nutritionist is giving a lecture at the store at a certain date on the topic of “Meat and Poultry Health Facts”. The following information should be mentioned in the flyer: it is free to attend; all persons responsible for preparing the meals at home will have the opportunity to learn real nutritional facts; they’ll have the ability to ask questions; advice will be given on meatbusiness.ca

preparing meat dishes for their children; and the ability will be given for participants to book a free appointment with the nutritionist to plan their own personal daily meal plan. The lecture will be general and informative and mostly be a lead in to motivate the participants to book a free personal consult. The personal consult will also be promoted to others that did not attend the lecture. This can be done in the grocery store flyer and in newspapers as well as through PR techniques by inviting the media to cover the lecture. The personal consultation with the professional nutritionist will be geared to planning a daily meal plan that is best suited to the nutritional requirments of the client. It will cover all aspects of his/her eating from all food groups and especially focus on the meat and poultry consumption of the client. It will be customized depending on the weight of the client, their medical history, amount of protein required for their age group and lifestyle and other facts that only a health professional can interpret properly to make a meal plan that is ideally suited to the client. This daily meal plan is then merged with the services of the meat department that is working in tandem with the nutritionist. That is, a weekly meat and poultry order is prepared by the meat department that fits the recommendations of the nutritionist. The order is shipped or picked up weekly. The order comes with the daily

recommended and labelled amounts already prepared for each daily meal. The results can mean your meat department will have obtained a long term customer that will be buying all of their meat and poultry from your store based on the premise any meat purchases done elsewhere will ruin and confuse the observance of the client’s prepared meal plan as outside purchases will not be calculated to fit the plan. Another result could be higher levels of consumption of meat and poutry products by this client as many people have reduced their consumption of red meats due to all the misinformation they are exposed to. The nutritionist will have educated the customer to the nutritional benefits of red meat (iron, vitamins, protein, etc.) that are necessary to a healthy diet. If the nutritionist’s consult is free, you should expect many new long term clients. The investment of the one time consultants’ fee paid by your store to the nutritionist will be more than returned in short order. In addition, it may be possible to get the nutritionist to offer the first consult for free in exchange for his/her possibility of getting paid follow up consults in the future. Nutritional consulting - paving the way to healthier clients and profits. Ronnie P. Cons is CEO of C&C Packing Inc.a leading Canadian Meat and Poultry distributor. He can be reached at 514-461-5202 or rcons@ ccpacking.com www.ccpacking.com

CSB-SYSTEM ANNOUNCES NEW DIRECTOR OF SALES IN CANADA Ed Wood, CEO of CSB-System, North America, had announced the appointment of Mike O’Toole as the new Director of Sales in Canada. He joins the company at a time of tremendous growth for CSB-System in North America. O’Toole started his career in the manufacturing industry where he became an ERP and MRP implementation specialist. He spent four years leading his implementation team at manufacturing plants throughout Canada, USA and Mexico.

CSB-System provides integrated software solutions that allows food processing companies to efficiently coordinate all aspects of their operations and increase their profitability. CSB combines industry know-how with state-of-the-art technologies in modular and scalable solutions for the meat industry. For more information, contact Mike O’Toole at michael.otoole@csb. comFor more information, visit www.cpc-ccp.com

Most recently, O’Toole spent the last eight years running his own distribution company with warehouse locations in Kitchener and Mississauga, Ontario. The success of the company stemmed in large part from his focus on sales and market development. Mike said, “I am very excited to join the CSB group and am looking forward to working with our Canadian customers to help improve their business and expand CSB’s user group.”

meatbusiness.ca

July/August 2016 CANADIAN MEAT BUSINESS 23

SURVEY SAYS:

AMERICANS ARE NOW SPENDING MORE EATING OUT THAN ON GROCERIES The American Customer Satisfaction Index (ACSI) is an economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. The ACSI uses data from interviews with roughly 70,000 customers annually as inputs to an econometric model for analyzing customer satisfaction with more than 300 companies in 43 industries and 10 economic sectors with all measures reported on a scale of 0 to 100. The ACSI recently released its 2016 Restaurant Report which indicated for the first time ever, Americans are spending more eating out than on groceries. Customer satisfaction with the Accommodation and Food Services sector is up 0.5% to 78.7 on 100-point scale. The increase is due to a 2.6% improvement for limited-service (fast food) restaurants. Full-service restaurants drop 1.2% to 81 but remain one of the top four industries with the highest customer satisfaction. Smaller restaurant chains and independent restaurants, which make up the bulk of the industry, are behind the dip in customer satisfaction for sit-down dining this year. The combined ACSI score for these restaurants falls 2% to 81, but the industry overall remains very even. Over the past 10 years, customer satisfaction with fullservice restaurants has never fallen below 80. 24 CANADIAN MEAT BUSINESS July/August 2016

A year ago, smaller restaurants led the category alongside Texas Roadhouse, but it is a restaurant-retail hybrid that shoots to the top for 2016. Cracker Barrel gains 4% to take first place with an ACSI score of 83. The company which is part restaurant and part Americana gift shop reported a sales increase and more revenue per customer during the first part of the year. Texas Roadhouse slips 1% to tie LongHorn Steakhouse (up 1%) at 82, while most of the other large chains improve. Olive Garden, part of the Darden group along with LongHorn, climbs 3% to 81, followed closely by Red Robin, up 4% to 80. Red Lobster gains 3% and ties with Applebee’s, which edges up 1% to 79. Ruby Tuesday improves the most, jumping 7% from last place to an ACSI score of 78. TGI Fridays also comes in at 78, a 3% rise from a year ago. Outback Steakhouse is one of the few large chains to move in the opposite direction, slipping 1% to 77. Chili’s Grill & Bar inches up 1% to 75 and Denny’s dips the same amount to 74, landing at the bottom of the category. meatbusiness.ca

On the fast food front, Chicken specialist Chick-fil-A leads the category, gaining 1% to an ACSI score of 87 surpassing other fast food restaurants by a wide margin.

might gain traction with customers by expanding choices to meet changing consumer palettes, especially as sweetened soft drinks continue to fall out of favor.

Papa John’s comes in a distant second at 82 even though its score is up 5% from a year ago. Among pizza makers, Papa John’s remains the most satisfying chain. Little Caesars, however, shows the biggest improvement in the entire fast food category, jumping 9% to 81 and landing just a notch below Papa John’s.

Top U.S. fast food chains by customer ranking:

Panera Bread inches up 1% to 81, tied with the combined score of smaller fast food chains. Arby’s advances 8% to 80 following a major overhaul of its menu and store layout. Last year, the company opened 60 new U.S. locations and remodeled 100 of its existing stores. Subway and Dunkin’ Donuts gain 4% and 3%, respectively, to tie with Arby’s at 80. Starbucks, which has scored below the industry average since 2014, inches up 1% to 75. Chipotle Mexican Grill takes the biggest hit, falling 6% to 78 in the wake of food-borne illness outbreaks at some of its stores. As of the first quarter of 2016, sales were down more than 20% year over year. As of June, Chipotle’s stock price was down over 45% compared to levels seen prior to the outbreak. Quality issues can be challenging, particularly for food service companies, which could elongate Chipotle’s recovery time.

Chick-fil-A

Papa John’s

Little Caesars Pizza

Panera Bread

Arby’s

Dunkin’ Donuts

Subway

Chipotle Mexican Grill

Domino’s

10. KFC 11. Pizza Hut 12. Burger King 13. Wendy’s 14. Starbucks 15. Taco Bell 16. Jack in the Box 17. McDonald’s

Two other chains tie with Chipotle at 78: Domino’s (+4%) and KFC (+7%). Despite its large gain, Yum! Brands’ KFC remains well behind direct competitor Chick-fil-A. Likewise, Taco Bell, the Mexican food offering from Yum! Brands, improves 4% to 75, but still trails Chipotle. The third Yum! chain, Pizza Hut, is the lowest-scoring pizza maker this year (down 1% to 77). Hamburger chains come in below the industry average, but all show improvement. Burger King jumps 6% to tie Wendy’s (+4%) at 76, and Jack in the Box gets a 3% boost to 74. While McDonald’s remains in last place at 69, the fast food giant gains 3% from a year ago primarily on the strength of its new all-day breakfast menu.

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Fast food restaurants receive fairly high marks for the overall dining experience, but remain well below full-service restaurants. According to customers, food orders are accurate (86) and the quality of food (83) has improved from a year ago. Fast food chains provide courteous staff (83) and layout and cleanliness have improved (83). Fast food websites (83) are above average compared to the ACSI score for all websites (80.0). Speed of checkout or delivery, a hallmark of the fast food experience, gets good marks from diners and shows slight improvement over a year ago (82). Consumers are the least satisfied with food and beverage variety. Drink options rate lowest at 79 and companies meatbusiness.ca

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July/August 2016 CANADIAN MEAT BUSINESS 25

CANADA AFTER THE BREXIT VOTE By J.P. Gervais

On June 23, British citizens voted on “Brexit” - whether Britain should remain a member of the European Union (EU), a bloc of 28 countries or withdraw. The “Leave” vote won, setting in motion a series of events with consequences for the global economy, the Canadian economy and agriculture. WHY DID IT HAPPEN? Prime Minister David Cameron called the referendum as a way to address growing concerns in Britain about its relationship to the EU. Member countries pay duties and taxes to Brussels, the EU headquarters, and have agreed to abide by a number of rules and regulations about many aspects of political and economic life. This includes rules on open borders among member states allowing the free movement of labour and trade in goods and services. In return, members receive, among other things, access to the largest and wealthiest trading bloc in the world in a single market. Nineteen of the 28 EU members also participate in the Eurozone, where the euro is the common currency. Britain doesn’t use the euro, but the pound sterling. HOW WILL BREXIT PLAY OUT? The referendum has not changed the status of trade between Canada and the EU or Britain (more to come on CETA tomorrow). All changes to regulations will take effect when the U.K. formally exits the bloc. Trade is likely to be disrupted by market forces at least in the short term as uncertainty slows economic growth around the world. Many EU leaders, including the foreign ministers of the six founding members (France, Luxembourg, Germany, Italy, the Netherlands and Belgium) are calling for a quick exit to limit the uncertainty. Nobody is sure at this point how the exit will work: No EU member has ever left the union. It will be an historic test of the rules of exit under very stressful conditions. It appears, however, that Brexit will take at least two years, with each EU country involved in the negotiations defining the terms of exit. WHAT’S AT STAKE? All sides will lose something of value: for one, the U.K. was the EU’s second largest economy in 2015, with GDP growth of 2.2% and nominal GDP of over US$28 trillion even as several other EU members struggled with growth. It helped Britain buy about 10% of EU exports. Losing that economic clout will hurt in the EU. The Leave campaign told voters their tax dollars could be better spent on a number of specifically British interests

(e.g. health and education) instead of going to Brussels. However, the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF) and the Bank of England have warned Britain will struggle to maintain economic growth, in the face of likely divestment and stock market, currency, trade and employment issues. In the face of the sudden uncertainty – the markets had expected Britain to remain – the stock market lost $2 trillion the day after the vote as investors fled to the safety of gold, the USD and Japanese yen. Fears of a U.K. recession and the uncertain future of London as a major EU financial centre led the flight out. Commodity prices also plunged following the vote. Prospects of weaker demand for oil in the future due to unrest in the world economy led the financial markets to push oil prices down. However, Bloomberg suggests that with oil’s current global oversupply, the fall in demand will have a negligible impact on long-term growth and oil may rebound to $50/barrel by Q4 2016 and $60/barrel in Q4 2017. IMPACT: Overall trade will weaken on the basis of a slowdown. Prices for ag commodities have already dropped on the basis of weaker expected demand. The economic slowdown may lead the U.S. Fed to delay plans to raise rates in 2016. Other major central banks have suggested the possibility of taking steps to ensure liquidity in the markets. All these actions impact currency values. The loonie declined as the USD continues to climb. Our currency also lost value against the Japanese yen. This should improve the competitiveness of Canadian exports in our major agri-food export markets. EUROPE, BRITAIN AND CANADIAN AGRICULTURE The Comprehensive Economic Trade Agreement (CETA), signed by Canada and the EU in 2014, is not yet ratified. Europe had plans to approve and ratify the deal in 2016, the timing of which may now be in jeopardy. It’s an important market and one that may grow. In 2015, Canadian exports to the EU accounted for 6% of Canada’s total ag and agri-food exports. Within the EU, the UK was Continued on page 28

26 CANADIAN MEAT BUSINESS July/August 2016

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the largest individual importer of Canadian ag and agri-food products in 2015 with 17% of all exports to Europe.

WHAT TO WATCH: • Both the equity and debt markets

STILL TO COME

• Impacts to oil and ag commodity prices

The EU is facing significant challenges in maintaining solidarity among members, as populist sentiment overwhelms EU policies. Britain also faces a major internal issue as Scotland and Northern Ireland discuss the possibility of separation from the U.K. Each voted to remain in the EU.

• Further threats to long-term geopolitical stability in the EU and the U.K.

How the EU decides to handle the British break-up is seen by some to be the litmus test for other countries with similar ideas. Jean-Claude Juncker, the President of the EU Commission, has stated maintaining the bloc, even at the expense of business across borders, is the goal of the EU.

• EU/UK/CA talks on CETA • USD/CAD exchange rate and other major currency markets J.P. Gervais is the Chief Agricultural Economist at Farm Credit Canada. Prior to joining FCC in 2010, J.P. was a professor of agricultural economics at North Carolina State University and Laval University. He also held the Canada Research Chair in Agri-Industries and International Trade at Laval. J.P. is Past-President of the Canadian Agricultural Economics Society. He obtained his Ph.D. in economics from Iowa State University in 1999.

CLOUDY WITH A CHANCE OF RAIN: AN UPDATE ON AGRIBUSINESS OUTLOOK OPTIMISM IS CLIMBING IN 2016, BUT FARMERS SEE SEVERAL CHALLENGES ON THE HORIZON By Mandy D’Autremont

We all know the agriculture and agri-food sector feels the ups of a bumper crop and strong market prices, and the downs of a drought or shortage of labour. Through it all, agri-business owners look for opportunities to grow their bottom line and improve their operations. Their perseverance and level of optimism about the future is important and reflects the status of agriculture in Canada – both the opportunities and the challenges. Since 1987, the Canadian Federation of Independent Business (CFIB) has been surveying its members about their expected business performance. CFIB’s Monthly Business Barometer® (MBB) reports their responses, including their optimism, using an index that is scaled between 0 and 100, where an index above 50 means owners expecting their business’ performance to be stronger next year outnumber those expecting it to be 28 CANADIAN MEAT BUSINESS July/August 2016

weaker. This May, optimism levels in agriculture were the highest they’ve been in 2016 at 52.0. However, they still trail levels recorded in May during the previous five years. Just as farmers need the right weather to grow their crops, they need the right government policies to grow their business. CFIB’s MBB numbers tell us is that agri-business operations are in a good position to continue growing, but meatbusiness.ca

they see clouds on the horizon. While governments cannot control many global market issues facing farmers; it is within their power to help by reducing the total tax burden, cutting red tape, and addressing the chronic shortage of labour affecting many agri-businesses. From July 20-22, federal, provincial and territorial (FPT) agriculture ministers will be in Calgary for their annual meeting. It will be an opportunity to kick off discussions around their priorities for the next agricultural policy framework, currently known as Growing Forward, slated to begin in 2018. Given what agribusiness owners are telling us, there are some key files the ministers should be discussing at this meeting. PROVIDE A LONG-TERM, RELIABLE SOLUTION FOR LABOUR SHORTAGES CFIB agri-business members have been frustrated with the changes to the Temporary Foreign Worker Program (TFWP) that have made it more restrictive, costly and added more red tape. With the federal government conducting a review of the TFWP there is a risk workers will become even more difficult to access for agri-businesses. Agriculture ministers should consider CFIBâ&#x20AC;&#x2122;s Introduction to Canada Visa as a solution to the continued struggle for an available and reliable workforce in agriculture and agri-food. CREATE A MORE COMPETITIVE TAX LANDSCAPE There are many tax clouds looming. Federally, agri-businesses would benefit from better access to the small business corporate tax rate (SBCTR) by increasing the full taxable capital limit from $10-million to $50-million. We also need the federal government to keep its election promise and reduce the SBCTR to nine per cent. Agri-businesses are also worried about the potential of CPP/QPP hikes, which would also hit their bottom lines. Other concerns include the meatbusiness.ca

July/August 2016 CANADIAN MEAT BUSINESS 29

JUST AS FARMERS NEED THE RIGHT WEATHER TO GROW THEIR CROPS, THEY NEED THE RIGHT GOVERNMENT POLICIES TO GROW THEIR BUSINESS. CFIB’S MBB NUMBERS TELL US IS THAT AGRI-BUSINESS OPERATIONS ARE IN A GOOD POSITION TO CONTINUE GROWING, BUT THEY SEE CLOUDS ON THE HORIZON. cancelling of the EI holiday for hiring youth and any new environmental policies, like a carbon tax. The Lifetime Capital Gains Exemption (LCGE) should also be increased to $1-million for all businesses (it is already there for farmers and fishers, but not for food processors and other businesses) and indexed to inflation so that it maintains its value over time.

Inspection Agency and the Canadian Border Services Agency. Some steps have been made, but there is still a lot of work that needs to be done and reducing red tape for agri-business owners can and should be a key focus at the FPT agriculture ministers’ meeting. This is an issue that is not easy to solve, but if overlooked or ignored will only get worse. The Ag sector is optimistic, but there are storm clouds on the horizon. FPT agriculture ministers must ensure their policy decisions help fuel optimism in the Ag sector, continue to address its competitive challenges, and drive productivity in the sector over the long-term. Mandy D’Autremont is Director, Agri-business with the Canadian Federation of Independent Business. She can be reached at mssask@ cfib.ca Established in 1971, CFIB is Canada’s largest association of small- and

REDUCE RED TAPE HEADACHES

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CFIB’s research shows that agri-businesses are among the hardest hit by red tape. Over the years we’ve worked with a number of agencies to improve their customer service, including the Canada Revenue Agency, the Canadian Food

agri-business owners) in every sector nationwide, giving independent

30 CANADIAN MEAT BUSINESS July/August 2016

takes direction from more than 109,000 members (including 7,200 business a strong and influential voice at all levels of government and helping to grow the economy.

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