The September / October Issue

September/October 2018

THE USMCA’S WINNERS AND LOSERS

WANT A HEALTHIER HEART? EAT A STEAK CONSUMERS GOING ‘MEATLESS’ PHENOMENON TIED TO ECONOMY MONUMENTAL CHANGES COMING TO CANADIAN SHEEP INDUSTRY VIA NEW PARTNERSHIPS MCDONALD’S SERVES UP THEIR FIRST SUSTAINABLY RAISED MIGHTY ANGUS BURGERS

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September/October 2018

5 6 10 12 18 19 20

Canadian Grocery Prices are Headed Up

By Aleksandra Sagan

The USMCA’s Winners and Losers

By Scott Taylor

Government anxious to pass CPTPP bill amid NAFTA uncertainty Monumental changes coming to Canadian sheep industry via Alberta, Manitoba and New Zealand partnerships

By Will Verboven

Maximizing Your Online Meat Marketing Campaign

By Ronnie P. Cons

McDonald’s Serves Up Their First Sustainably Raised Mighty Angus Burgers

22 23 25 26 26 29

Canada’s Dry Weather May Stem U.S. Cattle Stampede Across Border Consumers Going ‘Meatless Phenomenon Tied to Economy

By Dr. Sylvain Charlebois

Julie Anna Potts Named President and CEO of the North American Meat Institute Manitoba backs expansion of HyLife Foods We asked beef farmers what they think of supply management

By Tristin Hopper, National Post

The 2017 federal small business tax fight created a lot of anger and disappointment

By Dan Kelly

Want a healthier heart?

Eat a steak

By Dr. Bret Scher

assurance program.

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September/October 2018

September/October 2018

3

CANADIAN GROCERY PRICES ARE HEADED UP September/October 2018 Volume 17 Number 5

By Aleksandra Sagan, Canadian Press

PUBLISHER

The CEOs of three of Canada’s major grocery chains doubled down on their expectation that food prices will soon rise at their stores.

MANAGING EDITOR

Recent cost pressures on the industry, including rising minimum wages in some provinces, increased fuel and transportation costs and an ongoing trade war with the U.S., will soon result in some price inflation, said the chief executives of Metro Inc., Loblaw Companies Ltd. and Empire Co. Tuesday at Scotiabank’s back-to-school conference in Toronto.

Scott Taylor publishing@meatbusiness.ca

Metro CEO Eric La Fleche said consumers should eventually see a return to more normal inflation levels.

DIGITAL MEDIA EDITOR

“Exactly when and how — it’s all about competitive dynamics. Everybody is competitive.

Nobody wants to lose any share. So, let’s see how things play out,” he said.

Cam Patterson cam@meatbusiness.ca

Metro is starting to see some price inflation already, La Fleche said.

CONTRIBUTING WRITERS

He explained that the cost pressures have been building over the past year, beginning with Ontario’s minimum wage hike from $11.60 to $14 an hour on Jan. 1, followed by rising fuel and transportation costs.

Ray Blumenfeld ray@meatbusiness.ca

Aleksandra Sagan, Will Verboven, Ronnie P. Cons, Dr. Bret Scher, Dr. Sylvain Charlebois, Tristin Hopper, Dan Kelly CREATIVE DIRECTOR Christian Kent Canadian Meat Business is published six times a year by We Communications West Inc.

Then came the Canadian government’s retaliatory tariffs on July 1 on a wide range of American products, including coffee, maple syrup, salad dressing and other foods.

“Now, we’re having a — what I would describe it as — a tsunami of tariff-related request for cost increases from our supplier partners,” said Michael Medline, Empire’s CEO. The company, which is the parent to grocery chain Sobeys Inc., held off on raising prices for some time, he said, but is now reviewing these tariff-related costs.

Empire will pass the extra costs on to consumers where it makes sense in the market, he said, adding it will be careful not to give away any market share.

“We don’t like to pass on cost, but there’s no way you can avoid it with the inflationary pressures that we are now seeing.”

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Price increases are likely to be moderate in a historical sense, said Loblaw CEO Galen Weston.

He predicted food inflation of one- to 1.5-per cent, which he said is in the normal range as opposed to higher range in the five to six per cent level.

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. ©2018 We Communications West Inc. All rights reserved.

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“We don’t yet see it moving into the mid-single digit levels... We don’t think it is likely to do that.”

Expanded home delivery in the works The chief executives also outlined their respective plans to grow their e-commerce business, specifically home delivery. Canada’s grocers have been slow to offer delivery, but ramped up their efforts after Amazon acquired Whole Foods Market last year.

Metro already offers home delivery from seven stores in Quebec, which serves about 60 per cent of the province’s population, said La Fleche.

It will start offering the service in Ontario in 2019, he said, but did not provide details on specific locations.

The company relies on its existing assets to fulfil orders rather than partnering with a thirdparty like its competitors have chosen to do.

“We’re going to e-commerce with a prudent approach,” said La Fleche, adding the company is scaling up and the company may consider using a dedicated facility if it reaches a certain level — but it’s not there yet.

Empire, on the other hand, decided to partner with British firm Ocado to build a fulfillment centre in the Greater Toronto Area that will be fully operational by the spring of 2020. The centre will house Ocado’s signature robotics that can fulfil customer orders within minutes.

Empire offers home delivery in Quebec and learned that their solution there is not scalable, Medline said, adding the company is excited that Ocado’s solution eliminates some logistical issues and is profitable.

Loblaw also partnered with another company to offer home delivery, opting for Californiabased Instacart, but chose to do so in a quicker fashion. Customers in 17 cities can now use the Instacart app to order groceries for delivery from Loblaw.

“Our view today is that rapid expansion and customer acquisition is the second most important thing to do in the first innings of the e-commerce online grocery world,” Weston said.

September/October 2018

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The revamped deal has 34 chapters and governs more than $1 trillion in trade between the three countries (it was just $25 billion when the original NAFTA deal was ratified). It must still win approval from the U.S. Congress, which is unlikely to happen until next year and is still not a guarantee by any stretch.

well as Agriculture Minister MacAulay.

However, what was signed this month has been greeted with both pleasure and pain. For the Beef and Pork Industries, it’s all smiles and full speed ahead. For the Dairy and Poultry Industries, it’s an all-out assault on Ottawa.

The Canadian Cattleman’s Association (CCA) was on board as well.

Let’s start with the winners.

The Canadian Meat Council (CMC) called it, “an important step in maintaining competitiveness and continuing to grow the meat industry in Canada.”

The CMC applauded Freeland and her team and said bluntly, “The importance of this deal to the meat industry cannot be understated.”

“The North American meat industry is fully integrated, and having uninterrupted access across the three countries is critical”, said David Colwell, Chairman of the Board for CMC. “The ability of Canadian meat companies to compete on a global scale depends on their ability to also maintain and grow the North American market.”

THE USMCA’S WINNERS AND LOSERS

By Scott Taylor

It will be called the USMCA (The Village People are not likely to sing the official song, but we’re told the new dance moves will be released soon), and while it looks a lot like NAFTA, it isn’t.

Especially if it’s your ox, or in this case, your supply management system, that is being gored.

interested in reading the entire text, it is available at www.ustr.gov.

It is no longer news, but the United States, Canada and Mexico have reached a deal to revamp the North American Free Trade Agreement (NAFTA). The new deal, which will be called the U.S.-Mexico-Canada Agreement, or USMCA, keeps the framework of NAFTA largely intact and maintains the status quo of free trade between the three countries.

However, suffice it to say that while the deal makes major changes to the automobile trade -- agreements that will help both Canadian manufacturers and Mexican workers -- and it certainly provides businesses in all three countries with what U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland called, “a new, modernized trade agreement.”

Once ratified via the legislative processes of the three countries USMCA will update, modernize and replace NAFTA. In the meantime, the existing NAFTA remains in place so there is now some stability to a situation that was made chaotic by United States President Donald Trump’s apparent desire to make all things chaotic.

The new agreement covers a lot of ground, much of which was already covered by NAFTA, but if you are 6

September/October 2018

“USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” the statement read. “It will strengthen the middle class, and create good, wellpaying jobs and new opportunities for the nearly half billion people who call North America home.”

While the CMC lauded the deal, so too did the Canadian Pork Council (CPC).

“We look forward to a stabilized pork market that will allow pork producers in Canada, the United States and Mexico to support one another in producing high quality pork and contributing to growing the economy in their respective countries.”

“The CCA congratulates Prime Minister Justin Trudeau and Foreign Minister Chrystia Freeland on reaching an agreement that preserves and secures the duty-free access upon which the Canadian beef cattle sector has been built over the past 25 years,” the CCA said in a written statement.

“This is particularly important as we enter the time of year when the majority of beef calves in Canada are marketed. Cattle buyers can feel confident about the long-term stability of the market and compete aggressively to acquire calves.

“In addition to preserving duty-free trade in live cattle and beef, producers are pleased that the existing rules of origin and the most important dispute settlement provisions remain intact: There is nothing in the agreement on country of origin labelling for meat or livestock.”

The deal is not just a big win for beef and pork producers, but it’s also important in order to stabilize continued on page 8

“This news comes as Canadian pork producers are grappling with very low prices made worse by the uncertainty in global pork markets,” the CPC said in a written statement. “The trade relationship between Canada and its American and Mexican neighbours is an important one. An integrated North American market is not only economically advantageous, but it serves to encourage producers to work together to address issues of common concern such as animal health.”

The CPC also stated that it was pleased to learn that the new agreement, “will not include new tariffs and that it contains dispute mechanisms.”

“A new trilateral trade agreement is great news for Canadian pork producers,” said Rick Bergmann, the chair of the Canadian Pork Council.

“Lots of hard work has been put into reaching this important milestone and we congratulate all those involved in reaching this agreement, especially Prime Minister Justin Trudeau, Minister Chrystia Freeland and her team and

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supply chains and serve as a platform for continued economic growth for the three countries.

“We are absolutely thrilled that an agreement has been achieved,” said Peter Hall, Chief Economist at Export Development Canada (EDC). “This is excellent news for Canadian exporters. Having an updated playbook with 21st century trade rules will undoubtedly benefit Canadian companies and consumers.

“Moreover, the successful conclusion of the formal negotiation process will reduce a key source of uncertainty that has been a preoccupation for many Canadian businesses over the past year.”

Canadian firms have expressed “investment hesitation,” with 6 per cent reporting to the EDC that they were considering delaying investments in light of the elevated uncertainty around NAFTA. “We expect this positive resolution to the talks will provide a material boost to investment and economic activity in Canada in the coming quarters,” said Hall who pointed out that Canada is the only G7 country that has free trade agreements with every other G7 country. The USMCA, CETA and CPTPP open up Canadian business to 1.5 billion consumers.

But the U.S. and Mexico, as part of the North American supply chain, remain top trade partners for Canadian firms that sell both here and internationally and for its part, the EDC has maintained and even expanded its distinct regional presence in both the U.S. and Mexico this year, which continue to represent key markets for Canada.

“During the renegotiation process and the resulting uncertainty, many Mexican companies realized the importance of Canadian suppliers as strategic trade partners,” says Arturo Garduno, EDC’s Chief Representative to Mexico. “The signing of this agreement not only benefits the vibrant supply chain, which already exists, but also helps to build on additional opportunities to come.”

However, not every sector is a winner. This agreement is a blow to the Canadian dairy industry and it has not made Canada’s poultry farmers particularly happy.

In fact, one Manitoba dairy farmer told the CBC that the USMCA is “extremely disappointing and will be devastating to my industry.”

One dairy analyst did say the deal could be good for consumers.

USMCA provides greater access to the Canadian market from U.S. dairy producers. In the past, Canadian dairy farmers were heavily protected by a supply management system.

David Wiens, a producer near Grunthal, Man., and chair of the Dairy Producers of Manitoba, told the CBC that the new deal “is a death by 1,000 cuts.”

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September/October 2018

“We’re extremely disappointed with what we understand has been agreed to,” he said. “With the almost 3.6 per cent access — dairy market access — being given to the U.S., as well as eliminating some of our competitive dairy class, so that will obviously have a majorly negative impact on our industry.”

Canada has agreed to put an end to what’s called Class 7 pricing, a clause created in March 2017 that slashed prices on some Canadian dairy production, things such as protein concentrates, skim milk and whole milk powder, used to make cheese and yogurt.

The coordinated price cut had made the American equivalents uncompetitive.

U.S. dairy officials were thrilled with that changed, calling it a major breakthrough for American farmers, especially in Wisconsin and New York, where dairy farmers are eager to offload some of their product on Canada as they grapple with severe oversupply.

“Every time there’s a trade deal, they’re giving another portion of our markets away,” Wiens told the CBC. “It seems as though they wait until the 11th hour and then they give away a portion of it and it simply is devastating for the industry.”

While American dairy producers get more access to the Canadian market, USMCA cuts Canada’s access to the U.S. market, something Wiens told CBC “is a double impact.”

“The Canadian chicken sector is a leader in food safety and animal care,” says Benoît Fontaine, Chair of the Chicken Farmers of Canada. “It sustains more than 87,000 jobs, and contributes $6.8 billion to Canada’s Gross Domestic Product. That’s all thanks to the stability provided by supply management. While there is more being given to the already substantial market access in our sector, we look forward to working with the Government of Canada in order to implement changes that are in the best interest of Canada’s chicken farmers.”

unprecedented additional access that Canada had to concede for dairy products and shares the concerns that these changes will impact the overall supply management system in Canada.

The CFC also wants the Canadian government to end a number of practices that hurt the poultry industry.

“Without a predictable level of imports, and when more access is given, production decreases in Canada,” Fontaine said. “This results in lost jobs, lost production and decreased consumer access to Canadianraised products, not to mention the reduction in the contribution to Canada’s economy.”

“It will be more important now than ever for the government to ensure that it maintains its commitment to ending existing practices that currently cost the Canadian chicken industry thousands of jobs, millions of kilograms in production, millions of dollars in revenues and millions of dollars in GDP contributions to the Canadian economy,” the CFC wrote. “These current practices include being able to import unlimited quantities of chicken by importing broiler chicken and falsely declaring it as spent fowl, and allowing companies to substitute high-value imported cuts with low-value domestic cuts for re-export.”

According to its statement: “Chicken Farmers of Canada was also very disappointed to learn about the

“When increased levels of market access are granted to supply management sectors, it weakens the import control pillar of the system, which allows farmers to safely predict imports and ensure that they produce enough to satisfy our country’s needs.”

Fontaine elaborated on his association’s position.

As in any trade negotiation, there are winners and losers. In the case of Canadian protein production and USMCA, it appears there are some big winners and big losers.

Of course, USMCA still hasn’t been ratified by all three country’s legislatures and until there is an actual inspection mechanism in effect, some of the issues might not be as serious as expected.

In the meantime, while some will fare well, others might not. The devil, of course, is in the details.

Meanwhile, the Chicken Farmers of Canada (CFC) were both happy to see an agreement and disappointed that its members had to give up more access to American products. Like the dairy farmers, they are also concerned about losing their own supply management system.

“With negotiations under the new United StatesMexico-Canada Agreement (USMCA) complete, and despite the fact Canada’s chicken sector is giving up additional access, chicken farmers are relieved that over a year of uncertainty over the future of the agricultural landscape in Canada is over,” the CFC said in a written statement.

“The USMCA makes fundamental changes to how imports are administered, and ensures continued stability for farmers, while guaranteeing the United States access to our market. This will result in an increased market access of over 12 million kilograms.

This comes on top of the additional access granted under the CPTPP agreement and the existing WTO access, representing more than 10.7 per cent of our existing production.”

The CFC wanted to make one thing very clear: “It is important to note that the Canadian chicken sector has always been a strong presence within international trade. As the 14th largest importer of chicken in the world, our imports enter Canada duty-free or at a very low tariff.”

September/October 2018

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Opposition parties, meanwhile are planning to use the Canadian Federation of Independent Business (CFIB), the Ifall session as the unofficial launch of the six October figured I needed to share with our government ways 2019 election campaign, with plans to highlight small business owners (and their income) are different from employees. political and policy files they believe will erode support for 1. theRisk. governing Liberals.

Business owners take on huge risks in order to earn aofliving, and when they do, the entire is A number hot button political issues thatfamily simmered involved.

Many business owners empty their savings, reover the summer months will be marched out by mortgage their homes and borrow from friends, family Opposition MPs hoping to capitalize on renewed and banks to get their business going. Once it does, attention from voters who may have unplugged from they often rely on family members not only for support, politics while at the beach or the cottage.

election in 12 months.” me differently.

In fact, Statistics Canada data shows that employers areLiberals about four times to be The Trudeau have 11more bills likely left on theearning order less than $40,000 than more than $250,000. paper from previous sittings, including a massive bill fight these latest proposals, CFIBas is awell proud toTooverhaul federal election laws as member firearms of the Coalition for Small Fairness, a unified legislation to widen the Business scope ofTax background checks voice of 50 organizations representing hundreds of for gun purchasers. thousands of businesses from all sectors of the economy.

Government indicated it will Minister call the Bill CPTPP bill The Coalition has recently sent Finance Morneau asa letter its first order of business for the opening day of asking the government to take the proposals off Parliament, the with importance of this bill amid the table andsignalling instead meet the business community uncertainty over the future of affecting NAFTA. private to address the shortcomings in tax policy but to actively contribute to the business’s success. This ongoing corporations.

The controversial purchase of thefarms, $4.5 billion Transfamily Liberal is particularly true on Canadian where each strategist Greg MacEachern says the member plays athe vitalinability role, often a young age. If the Mountain pipeline, to from reach an agreement There’s still time for you to have your tried say. Consultations government wants to show it has everything inonits business fails,Mexico and many the whole is often set with the U.S. and ondo, a new Northfamily American the proposal remain open until October 2nd, 2017. Contact power to make NAFTA work, but will be looking for a back for years.

Free Trade Agreement (NAFTA) and concerns your local MP and let them know what the reality is for win on another important trade file. about borderpaid security among the owner top issues Canadian small business owners.

2. Getting last. Aare small business gets paid “They realize that they need to have something AFTER everyone including suppliers, Conservatives plan toelse, highlight as employees, part of a new Here’s hoping the federal government recognizes the besides North American trade as a strength, and and of course, governments.

I’ve heard thousands message campaign they will launch Monday calledof important differences between the income of business post-Brexit we will probably start to see negotiations of business owners taking home next to nothing “Justinstories Trudeau’s summer of failure.” owners and employees and abandons these proposals that start with the U.K. about a trade arrangement in tough times in order to ensure they could pay and will harm our entrepreneurs and our economy.

An internal caucus plantheir states the hang onto their communications valued employees and business. between Canada and the U.K.,” he said. focus of this campaign will be to paint the prime This column was first published in the Huffington 3. Working hours. Any agri-business owner will tell you “I think the prime minister wants to be able to say, Post on August 25, 2017. minister as “incompetent” by not taking advantage that the nine-to-five doesn’t apply to the farm. More than going into the next election, that he’s a businessDan Kelly is President of the Canadian Federation of of the summer to make more positive progress on a 40 per cent of Canada’s small business owners work 50 minded prime minister that Business tried to(CFIB). create forDan Independent In thisjobs capacity, number of important files. hours or more per week – compared to only six per cent Canadians, which iswill the lead spokesman and into advocate for the views dovetail back their message of CFIB’s 109,000 small-and medium-sized member employees.

“JustinofTrudeau has had a rough summer,” said Brock that we’ve heard so many times around the middle businesses across Canada, including 7,200 agriHarrison, director media relations for Conservative 4. Benefits.

Manyofemployees—particularly those in class.” business members. Follow Dan on Twitter @CFIB Leader Andrew Scheer.health, dental and other benefits government—enjoy and learn more about CFIB at www.cfib.ca.

GOVERNMENT ANXIOUS TO PASS CPTPP BILL AMID NAFTA UNCERTAINTY Federal Opposition parties are preparing their ammunition for a fall session of Parliament aimed at attacking the Trudeau government’s record on pipelines, trade and promises to raise fortunes of the middle class as the opening act in the year-long countdown to the 2019 election.

Government House Leader Bardish Chagger says government is focused on getting key pieces of legislation passed before heading to the polls. The Liberals are particularly keen to move quickly on bill C-79 — a bill to implement the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP).

Finalizing this trade deal with the Pacific Rim is 10

September/October 2018

necessary to help open new markets for Canadian exports, Chagger said. This has become particularly important in light of ongoing tense negotiations on NAFTA in Washington.

“We need to diversify our economy and our markets.

We need to open up these markets so that businesses can grow,” she said of the CPTPP bill, adding that she would “like to see it move as quickly as possible.”

courtesy of their employers. owner “The Trans Mountain Pipeline isAgain, stuckthe inbusiness limbo, the depends on the success of the business to fund any crisis at the border continues to cause delays and benefits they or their own family may need. cost millions, his carbon tax coalition is in shambles Paperwork redstop tape.breaking Think youethics have struggles and5.his ministersand can’t laws. We the Canada Revenue Agency or other will bewith focused on reminding Canadians that Justin government departments? the making massive sure Trudeau has failed on the big Consider issues and number of rules, regulations and agencies a small he is held accountable for it.”

Courtesy of Canadian Press

business has to deal with. Want to start a bicycle

NDP MP Alexandre BoulericeYou says party plans repair shop in Winnipeg? willhis need to register to focus areas — the Trans Mountain withon upthree to 44 main different agencies before you start.

A Halifax dentist needs to 45 permitswith to earn pipeline purchase and howupthis squares Liberal plans atoliving. tackle climate change, tax fairness and why rich6.corporations continue take advantage of tax Retirement. This is a bigto one.

While government loopholes andhave thegold-plated growing difficulty Canadians workers pensionsmany often starting at 55, and employed face inage paying formany basic needs. Canadians have employer-matched RRSPs, the small business owner

The idea is to use these issues as a framework to is counting on the value of the business—including show that the NDP is focused on issues that matter any investments owned by the corporation—for his or not only the political realm, planning but those that affect her in retirement.

Succession is already major people’s daily lives. issue for small business owners, especially when it comes to the When it will is “There’s going to agri-business be a buildupcommunity. … all the parties easier and more lucrative to sell to a third party than it want to identify themselves with issues that are at the is to pass your business down to the next generation, heart of the concerns of people in real life in Quebec it threatens the livelihood and very existence of and the rest of Canada,” said Boulerice, who serves Canada’s family farms, something is seriously wrong. as the NDP’s Quebec lieutenant.

Sadly, there are lots of Canadians (and, it appears, many

“This is a game who we and how will do politicians) whoofbelieve thatare hanging out awe shingle to say things differently than a Liberal or a Conservative you’re in business is a licence to print money. I represent government, so it’s a buildup thesector, next who federal 109,000 entrepreneurs across for every tell meatbusiness.ca

September/October 2018

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September/October 2017 CANADIAN MEAT BUSINESS 21

MONUMENTAL CHANGES COMING TO CANADIAN SHEEP INDUSTRY VIA ALBERTA, MANITOBA AND NEW ZEALAND PARTNERSHIPS

By Will Verboven

The recent merger announcement of Canadian lamb industry-related companies has shaken the foundation of how lamb will be raised, fed, and processed in North America.

The merger involves a lamb production company in Manitoba with a breeding flock of 35,000 ewes, a New Zealand lamb production and meat marketing company, and Albertabased Canada Gold Beef Inc., the owners and operators of Canada’s largest lamb feedlot near Iron Springs, and the country’s largest federally-inspected lamb processing plant in Innisfail.

It’s a merger made in heaven – amalgamating lamb production from birth to plate – vertical integration at its most beneficial. It will drag the Canadian sheep industry into the mainstream of commercial livestock production comparable to what began in the hog industry about 40 years ago. Like the hog 12

September/October 2018

industry development precedent, this new Canadian lamb endeavour is based on hybrid genetics, state of the art intensive primary production and finishing facilities, and sophisticated and integrated processing and marketing systems. The reality is only this type of continued on page 14

September/October 2018

13

high tech approach to lamb production, feeding and processing will see the industry come out of its years of stagnation.

As a former lamb producer, wool buyer, Alberta sheep commission manager and industry lobbyist, I recall trying to encourage the establishment of benchmark production cost standards to promote the profitability potential of sheep production. However, resistance to even such modest benchmarking programs from Alberta government sheep production experts at the time was formidable. In my view that type of reactionary approach set back the sheep industry for years. High-tech lamb production was a feasibility back then, but the lamb industry itself lacked the needed expertise. To be fair, low-pricing structures back then made adequate capitalization for this type of production impossible.

NO ONE SHOULD EVER UNDERESTIMATE MANITOBA. IT IS THE CENTRE OF MAJOR INTENSIVE AG PRODUCTION IN HOGS, POULTRY, EGGS AND DAIRY. IT IS HOME TO MAJOR PORK AND POULTRY PROCESSING PLANTS AND THEY ARE FAMILIAR WITH VERTICAL INTEGRATION WITHIN THOSE INDUSTRIES. WE EXPECT THE GOVERNMENT THERE LONG-AGO ESTABLISHED A PRODUCTION-FRIENDLY APPROACH TO ENCOURAGING MORE INTENSIVE AGRICULTURE. It is ironic that it is prominent leaders from the Alberta beef industry that saw a future for Alberta sheep production. It was the Canada Gold Beef group that acquired the lamb plant in Innisfail and built a hightech state-of-the-art lamb feedlot to supply some of its needs. The folks involved with Canada Gold Beef are successful livestock and cattle feedlot operators and clearly visionaries, so their decision to merge with the Manitoba and New Zealand lamb entities in this endeavour is no surprise.

There is no precedent for this bold production and marketing enterprise for the lamb industry anywhere in North America. I expect this more commercialized approach to lamb production will shock the industry which outside of Hutterite Colonies, and a handful of commercial operators, is based on small-scale hobby farmers. The genesis of all this originated with one visionary, Patrick Smith the owner of Sarto Farms in Manitoba (later Canada Sheep & Lamb Farms) which was subsequently merged into the birth-to14

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plate vision now known as the North American Lamb Company. Smith was somehow able to take the concept of intensive lamb production into a feasible operation that involves 35,000 ewes. Along the way that astonishing success interested a New Zealand company to invest in his endeavour. I suspect the investment of that New Zealand company called Integrated Foods gave the whole idea legitimacy and capitalization back up.

Why did this intensive-style of lamb production not evolve in Alberta – being it is the historical and natural centre of the sheep industry in western Canada? After all, major lamb feeding and processing facilities are located in this province.

And no one should ever underestimate Manitoba.

It is the centre of major intensive ag production in hogs, poultry, eggs and dairy. It is home to major pork and poultry processing plants and they are familiar with vertical integration within those industries. We expect the government there long-ago established a production-friendly approach to encouraging more intensive agriculture.

It seems Alberta agriculture department livestock industry planners have taken notice of this development in Manitoba. I would hope they are taking the appropriate steps to provide incentives to increase high-tech intensive lamb production in this province.

There is no reason why this type of production system as being carried out by Sarto Farms in Manitoba can’t be replicated in Alberta. With this lamb industry amalgamation announcement, it would make perfect sense to establish similar operations in Alberta and the cost saving in hauling countless thousands of lambs from Manitoba to Alberta would seemingly offer some advantage.

Turning sheep into hogs – at the production level A game-changing merger within the production/ feeding/processing sector of the sheep industry in western Canada has highlighted the feasibility of lamb production intensification on a very large scale.

That will involve hybrid genetics, high tech confined facilities and first-class production management.

The reality is if the moribund Canadian sheep industry is ever going to take off it would have to seriously intensify it’s per ewe productivity on a year-around basis. That was not going to happen in Canada under the traditional pastoral system of grazing animals until they were ready for market.

That system works in Australia and New Zealand

which has the climate, geography and lack of predators to facilitate low cost production based on extensive grazing. It worked in southern Alberta until about the 1940s when sheep production began its long decline. It faded due to wintering costs, lack of skilled labour, land access and ever-increasing predation. Besides, it was a lot easier and more profitable to raise cattle. Way back then in the west, wool was the main source of income for sheep producers with lamb meat a secondary resource. But then the development of synthetic textiles destroyed Global public health organization the price of wool forever in Canada.

It mustshowcases be noted food industry the price of raw wool today is about the same as it was in International 1917. Fortunes were made thenaand NSF in Canada recentlyback launched new flocks of 5,000 to 20,000 head- were in southern website - www.nsfcanada.ca to giveseen Canada’s growing and complex food and age beverage industrysheep easy access Alberta.

It was the glory of pastoral to the global public health organization’s expertise ranching in the Canadian west, but it was soon toand be services in Canada. The website combines information over.

traditional lamb production it was nowhere near hog production levels. As high as production was with these new hybrid sheep breeds, it couldn’t cover the cost of the required confined housing and feeding facilities. In 1989 the three hybrid sheep breeds were released to the Canadian sheep industry – all three continued to exist to this day with RA being the more dominant. Attempts were made to recreate the intensification side of lamb production but success was limited. The old Fairview Agriculture College had some success raising sheep on slatted floors and services Canada’s feeding afor pelleted ration growing based on and urea fast-changing as a protein source.

NSF INTERNATIONAL FOCUSES ON CANADIAN FOOD INDUSTRY WITH NEW WEBSITE FOR SERVICES IN CANADA

accredited International Continuing Part of the problem wasAssociation expertise,for long-term Education and Training (IACET) site.

Topics include HACCP, capitalization along with some sort of vertical food safety and quality, GFSI benchmarked standards, integration to provide stability. Much of that existed regulations (including FSMA), food science, food packaging, in food the hog industryand as well as the poultry and egg microbiology ISO standards.

Training modalities sectors. the reality was more a part thatenrolment. old on the depth, experience and capabilities of the NSF include But eLearning, on-site, customized and of open International Canadian office access to NSF By the 1960s visionaries in thewith federal department of saying – any old shepherd can become a cattleman, Additionally, the website includes information about International’s global services dedicated of to food safety agriculture research division conceived the idea butmanagement few shepherds can or want toforbecome system registrations the food,hog automotive, environmental, security, medical devices, that and the quality. only way the sheep industry could survive producers.

It’s ainformation big leap from leisurely moving regulations across confined countries and increasingusing a few aerospace andsheep chemical industries, as well as for was Evolving if it shifted to high-tech production hundred with dogs and horses in Ontario a complexities associated with a globalized food supply drinking water programs. very prolific hybrid breeds. The goal was to produce traditional grazing system to 24/7 intense production network present challenges for NSF International clients in Visit the new Canadian website at www.nsfcanada.ca to reviewhigh the food lamb meat on a massive scale year around – it management of thousands of animals under tech Canada and around the world. The new Canadian website safety services capabilities video, find a list of Canadian food experts, learn resembled what was occurring in the hog production facilities.

Other livestock sectors have shown it can be about upcoming events and global news releases, a question offers expertise and services to help companies navigate YesGroup_CanadianMeatBusiness-Qtr-pg.pdf 1 submit 2014-05-16 1:20:17 PMor read continued on page 16 an FAQ. business.

But turning a sheep into a hog had some these challenges, including certification and auditing, consulting, technical services, training and education, problems. food and label compliance, packaging, and product and

Firstly, sheep are essentially grazing animals that process development. reproduce once a year at a 1.2 rate if luck holds. To NSF International’s Canadian website provides information overcome that basic problem researchers in 1965 on the following services: developed a sheep genetic development program Certification & auditing: Third-party food safety audits that would create a synthetic hybrid sheep breed that and certifications, which are integral components of would lamb selection year-round a reproduction of supplier and with regulatory compliance.rate Accurate around 180% or first more. audits are the step toward successful verification of a company’s food safety system, providing improved

They created three hybrid breeds to intensify lamb brand protection and customer confidence. Certifications production and them Rideau Arcott (RA), and audits arenamed available for animal and produce in the Canadian Arcott (CA), and Outaouais Arcott (OA). The agriculture industry, GFSI certification and management name Arcott comes from the facility where they were system registration. developed the Research Centre inproviding Ottawa.

Consulting:Animal A full-service team approach Researchers used crossing breeds from Finland, technical resources, expertise and insight for a wide range of food andalong quality services.

NSF International the UK andsafety France with established breeds in provides finished product inspection testing for food, Canada. At the end of the program they created two packaging and non-food testing for rapid analysis and highly productive breeds, the RA and OA that bred insight to protect the brand, technical support services and from lambed year-around, excellent milking ability on-site temporary orhad permanent technical staffing and placements, were highlyand prolific.

These two breeds started to various types of consulting. haveTechnical the production characteristics of hogs. The CA services: A one-stop solution for food product was compliance more of terminal meat breed. and formulation, from concept to finished and labelofcompliance, packaging, The product, only wayincluding to take food advantage this production product and process development, and shelf-life and bonanza was to keep the sheep in closed confined product evaluation. conditions just like hogs. But the problem back then Training and education: Training for the global food was even though production easily doubled over and beverage industry across the supply chain as an meatbusiness.ca

September/October 2017 CANADIAN MEAT BUSINESS 23 September/October 2018 15

done successfully, but the traditional mindset within the sheep industry just couldn’t get on board – until recently.

New age of sheep production may be here The Alberta sheep industry has always been seen as having tremendous potential – but short of any ability to achieve it. It’s not that opportunities haven’t existed in the past with the Alberta government having poured millions into its development and preservation particularly in the 1970s. But alas except for a few spikes, the sheep population has remained fairly constant in Alberta for the past 50 years despite all expansion incentives. In actuality if it wasn’t for Hutterite colony flocks the sheep industry in this province would be almost non-existent at a commercial level.

That’s all quite different from its glory days between 1880 and 1940 when flocks of up to 20,000 head roamed southern Alberta. The largest flock numbered 40,000 and was owned by the Knight Sugar Company.

The early industry moved up from the U.S. down the same trails blazed by early cattlemen. Back then Mormon settlers brought sheep production with them into southern Alberta. But unlike today, wool was the main source of income with meat a secondary consideration. That type of sheep production started to fade in the 1930s.

By the 1960s the industry was a ghost of its former self and was treated as an inconvenience by the meat packing industry of the day. Lamb meat prices were very low due to large imports of cheap lamb from New Zealand. But then in the 1970s Alberta became a hotbed of diversification schemes instigated by the newly installed PC government of Peter Lougheed.

Leading that charge was the formidable Dr Hugh Horner, then Agriculture Minister. He was determined to expand all kinds of ag production in the province no matter the cost. The sheep industry seemed favoured by the PC government of the day – in short order the largest lamb processing plant in the country was built in Innisfail. A dozen government sheep specialists and production technicians were hired, the Alberta Sheep and Wool Commission was created, ewe lamb retention subsidies were handed out and money and resources were poured into lamb promotion and market development.

Production spiked as new primary producers joined the industry and a nascent lamb feedlot business developed. But outside the Hutterite colonies, big producers were not to be found. The industry needed to create flocks of 5,000 breeding ewes, but that 16

September/October 2018

never happened. Part of it was a lack of large flock expertise, part sheep extension incompetence, part lack of capitalization, and finally a marketing system that did not favour primary producers. The latter was the usual livestock buyer approach of buying as low as possible and in addition treating sheep as a nuisance from a packer perspective.

After a number of re-inventions, the Innisfail lamb processing plant came under the control of the Canada Gold Beef organization and they tried to create an atmosphere of cooperative marketing with primary producers. They established contractual opportunities and even built their own feedlot to better control the flow of slaughter lambs into the plant.

They are certainly to be commended for their efforts to increase more sophisticated and reliable marketing and price incentives for sheep producers. The idea was to encourage production to fully utilize the plant.

But alas the impact on provincial lamb production was minimal. Producers and colonies stuck to the traditional mindset. But potential was on the horizon.

Although the concept of intensive lamb production was nothing new, it never gained traction in Alberta mostly due to the traditional mindset of producers and the lack of a visionary entrepreneur. That person arrived on the scene in Manitoba and he has completely changed the game in western Canada sheep production.

Patrick Smith created Sarto Farms and boldly went where no sheep producer had gone before – high tech intensive sheep production using prolific hybrid sheep. At 35,000 head he has turned the future of the industry upside down. The owners of the lamb plant quickly realized that after years of frustratingly trying to expand the industry real hope sprung up in Manitoba and their recent merger suggests that the future of the industry will lie in this type of vertical integration. If successful it will be a new age for largescale sheep production.

Hopefully, that production success will see similar operations set up in Alberta also connected to the newly created North American Lamb production, processing and marketing entity. That should diminish the traditional sheep production mindset that has stifled commercial sheep production for so long in Alberta.

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These are exciting times for the sheep industry – at long last!

Will Verboven is an agriculture opinion writer and agriculture policy consultant and he can beached at willverboven@hotmail.com

September/October 2018

17

MAXIMIZING YOUR ONLINE MEAT MARKETING CAMPAIGN ‘IF YOU CAN MEASURE IT, YOU CAN MANAGE IT’

By Ronnie P. Cons

In two our most recent articles, we discussed online strategies to drive a grocery departments meat and poultry sales. Several strategies and platforms considered included: Facebook, an AdWords ad campaign, a YouTube video campaign and emailing.

In this article we will discuss the importance of measuring the results of these efforts in order to gauge their success and to make the appropriate changes to increase their effectiveness and bottom line profitability. Information is truly power here because otherwise the manager will be in the dark as to what is working and what is not working.

Let’s look at an example.

John B., the manager of a large grocery store, launched an AdWords ad campaign to target digitally savvy men and women between the ages of 25-50 who might prefer making their meat and poultry purchases online. The campaign entailed launching a batch of several small AdWords ads that promoted the benefits of online meat and poultry shopping. The ads would appear when a person did a Google search using one of the keywords that were set for the campaign. The ads encouraged the user to click it to test try a discounted first order. The link goes to a landing page on the store’s web site that encourages the visitor to make their first order.

The AdWords campaign was initially set up by deciding several parameters including: the list of key words that when entered would cause the ad to appear; the geographic zone where the ad would appear; the types of digital devices that the ad would appear on (computer, tablet, smart phone) and the time of day that the ad would appear on.

In this example the manager tested five versions of his ads with 20 different keywords to be seen day or night within 5 km of his place of business. Some of his ads mentioned free delivery while others did not. The idea is to test several ad versions and the keyword choices.

After one full month of the campaign, it’s time to analyze the success. The manager needs metrics to measure this - the more specific the better - so they can properly adjust the campaign. This is where Google Analytics comes in. This is a software application that tracks web site traffic according to many metrics including: where traffic came from including the AdWords ads; the behavior of each visitor through the site; how much time visitors spend on the site; how many pages they visit to the number of returning visitors. It is important that the manager understand these metrics and be presented 18

September/October 2018

with them by the webmaster in a simple report format.

The manager can use Google Analytics combined with the Google AdWords metrics to get useful information on his campaign including: • How many persons clicked each of the Google ads; • The average and total costs of those clicks; • Which digital devices that saw the ads had the highest conversation ratio and total clicks; • Important information on the keywords such as clicks, conversation ratio and money spent from each keyword; • The behavior flow of each visitor - including the paged he visited and if he actually shopped and made an order.

By reviewing the this information, the manager can learn which keywords and ads were the most profitable from a cost benefit point of view – that is, that led to the key campaign action objective of actual online purchases.

For instance, it may be revealed that test ad number which four promotes free delivery is more successful than the ad that does not specify free delivery. They may also similarly learn that the keywords “free meat delivery” was more successful in terms of leading to an actual order than the keywords “shop for meat online”.

As a result of learning all this information the manager will now know which ads and keywords works best so he will now focus more of his budget on these very ones and delete certain keywords that are leading to paid wasted clicks but not to any orders. The manager can also use this information to tweak the landing page of the web site to make it match the real key word revealed interests of Google searchers that lead to actual online orders.

MCDONALD’S FAO AFFIRMS SERVES UP THEIR CATTLE’S FIRST SUSTAINABLY CRITICAL ROLE RAISED MIGHTY AS UPCYCLER ANGUS BURGERS

By Sara Place, Ph.D., National Cattlemen’s Beef Association

As promised earlier this summer, McDonald’s Canada has In the livestock feed human food debate, haven’t been officially rolled out itsversus Mighty Angus burger linewe made with using theverified right numbers.

Rather thanbeef being a drain on global Canadian sustainably-raised resources and competing with human food supplies by eating lots

Complete with a new advertising campaign and sporting the Canadian of grain,onlivestock areBeef often net Certified contributors to the global protein Roundtable Sustainable (CRSB) logo, McDonald’s Mighty supply. conclusion of a new study from scientists at the Angus line isThat’s the firstthe major product offering with a completely verified beef supply chain behind it.

United Nations Food and Agriculture Organization (FAO).

Cargill recently announced the CRSB pilot project, initiated in fall of 2017, hadThe produced more than one million pounds of beef FAO researchers developed a global database of from what certified livestock sustainable eat and found sources in the third quarter alone, which nearly doubled the total 86 percent of the feed is human inedible. Mostly, livestock eatpilot’s grasses grown on production first and crops, secondlike quarter. marginal between lands andthe other forage alfalfa. Marginal lands are those that too rocky, steep and/or to supportBeef cultivated agriculture, such Theare Canadian Roundtable forarid Sustainable tweeted, “Way to go as @ fruit or vegetable production. livestock also eat over 1.9from billion#CRSBcertified metric tons of McDonaldsCanada – theGlobally, first to serve @CdnAgnus beef leftovers from food, fiber and biofuel production. sustainable farmshuman & ranches.”

TheFor restaurant will eat introduce the sustainability claim itsand Angus example,chain livestock the residues of grain harvest (thewith stalks leaves burger lineup, and is expecting to sell more than 20 million Angus burgers left in the field after corn harvest), the byproducts from milling grains for flour sourced according these cottonseed standards in theis next 12 months. production (wheattomidds), that a leftover of cotton production, and and distillers grains that are standard byproducts soy biodiesel and corn ethanol Theglycerol introduction of the sustainability atofthe company’s 1,400 production, respectively.

If livestock consume theseinplant-derived leftovers restaurants across the country marksdidn’t a major milestone a process that and four byproducts, their disposal would likely result in an environmental burden.for began years ago with the establishment of the Canadian Roundtable By being aBeef part (CRSB). of the global food system, livestock enhance the sustainability of Sustainable other food production and industries.

“Consumers are increasingly inquisitive about the food they’re eating and want Considering most ofinwhat cattle eat is not human edible, the FAO researchers to know it was that produced a socially responsible, economically viable and environmentally manner,” noted Cherie rancher found that 1 kgsound of protein in meat and milk onlyCopithorne-Barnes, requires 0.6 kg of protein fromand chair of thefood.

CRSB. “As we all toinmake improvements, it’s human Additionally, thestrive protein meatcontinuous and milk is of higher nutritional important to recognize achievements made the way. We celebrate with quality compared to the protein in grain that along cattle eat.

McDonald’s Canada on their significant progress and acknowledge their role in The FAO research represents global averages, but beef production in the U.S. supporting the establishment of a clear vision for beef sustainably.” competes even less with human edible food. In a recent report published by the

McDonald’s says customers will also see a new CRSB certification logo National Academies of Sciences, Engineering and Medicine, it was estimated alongside its Mighty Angus line-up on restaurant menus. that on average greater than 90 percent of what grain-finished beef cattle eat in

Because the famous management dictum of “If you can measure it you can manage it” also applies to a successful online meat and poultry campaign.

their is human forages– and plant-derived leftovers.

Less than 10 “This is lifetime a big step in ourinedible beef journey not just for McDonald’s Canada of their lifetime feed consumption grain that could be eaten andpercent the Canadian beef industry, but aroundis the world,” saidpotentially John Betts, president and CEO, McDonald’s Canada, in the announcement on Thursday. by people.

“Without the support from the industry and the incredible work Canadian Further, in a report published by the Council for Agricultural Science and ranchers do every day, beef sustainability in Canada would not be possible.

Technology, U.S. grain-finished beef systems were found to contribute 19 percent This partnership, combined with McDonald’s scale, is creating change and more human edible protein than they consumed. encouraging responsible beef production for years to come that will benefit all Sara Place, Ph.D., is a Senior Director, Sustainable Beef Production Research, with the National Canadians.”

Ronnie P. Cons is CEO of C&C Packing Inc., a leading Canadian distributor of meat and poultry. He can be reached at Rcons@ ccpacking.com or visit www.ccpacking.com

TheView company says it looks forward to growing the volume of available beef the FAO study at: http://www.sciencedirect.com/science/article/pii/ sourced from CRSB-certified sustainable operations, as more producers and S2211912416300013?via%3Dihub other companies join the program.

The net result is a more profitable campaign with more meat and poultry sales and profits.

Cattlemen’s Beef Association.

meatbusiness.ca

September/October2018 2017 CANADIAN MEAT BUSINESS 2719 September/October

daily calories come from saturated fats, while the AHA recommends even less.

These recommendations have never been supported by rigorous research. The idea that saturated fats cause heart disease stems from decades-old observational studies. Researchers asked participants to complete lengthy questionnaires about their eating habits and then tracked their health over time.

Researchers noticed that people who ate lots of saturated fats were more likely to contract heart disease. They concluded that meat and dairy were the root of all our chronic diseases, especially heart disease. Yet subsequent researchers found that in many cases, scientists’ cherry-picked data to support that conclusion.

More importantly, these kinds of observational claims are weak science. In 2011, a comprehensive analysis of 52 separate claims made in observational studies concluded that none — that’s right, zero — could be confirmed in a clinical trial — a more rigorous type of science.

Observational studies can only show correlation, not prove causation. Vegetarians, for example, have lower rates of heart disease. Is this due to their meatless diet? Or because they smoke less and exercise more regularly than people who eat large amounts of meat?

Observational studies cannot sort out these kinds of issues.

In recent years, numerous teams of researchers worldwide have reviewed all the data on saturated fats — and concluded that these fats do not have any effect on cardiovascular mortality.

WANT A HEALTHIER HEART? EAT A STEAK

By Dr. Bret Scher

I’m a cardiologist — and I encourage patients to eat red meat.

This advice defies conventional wisdom. For decades, nutritionists and physicians have urged people to limit consumption of red meat and other fatty foods, which were thought to cause heart disease.

But new studies debunk this conventional wisdom.

Indeed, it now looks like low-quality carbohydrates — not saturated fats — are driving America’s heart disease 20

September/October 2018

epidemic. It’s time to stop demonizing steak.

The medical community frowns upon the kinds of saturated fats found in meat, dairy and coconut oil. The American Heart Association recommends avoiding red meat — and if people insist on eating it, they should “select the leanest cuts available.” Federal nutritional guidelines suggest that less than 10 percent of one’s

A recent, comprehensive review of two dozen highquality studies conducted by Purdue University researchers found no link between red meat intake and any negative cardiovascular outcome. In a separate 2014 analysis that examined 72 different observational and clinical trials involving more than 650,000 people, the lead researcher concluded that “[I]t’s not saturated fat that we should worry about.”

THE BEST DEFE A STRONG OFFE

because Americans replaced saturated fats with carbohydrate-rich grains. From 1970 to 2014, grain availability surged 28 percent. The body converts these carbohydrates to glucose, thereby raising blood sugar levels which — over time — can contribute to obesity, diabetes and heart disease.

PROMOTING THE HEALTH BENEFITS

New research supports this idea. The largest-ever analysis of diet, which included 135,000 people in 18

By Ronnie P. Cons countries, revealed that people who consumed highcarb were 28 percent more likely to die during Reddiets meat is often wrongly portrayed as beingthe unhealthy. study than people with lower carbohydrate intake.

By some in the media as unhealthy or not environmentally fr contrast, those who consumed the highest amounts ofVegan, saturated fatsother hadnon-meat the lowest rates stroke.

Whileas liver, 62 fish and diets haveofbeen proposed this is observational it’s not alone in contradicting spinach healthier alternatives. data, The result of this onslaught of negative meat messages has influenced many families to cut back on government recommendations.

Iron fou their meat and poultry purchases. Perceptions may reality but

Even is a recent controlled truth more trumpsrevealing misinformation.

Parents and otherclinical consumers study on people Type 2 diabetes want what is bestwith for their health and that conducted of their families.

Theyhigh-quality are also aware that a lot Researchers of false information out there with evidence. fromisIndiana and as such, are open to scientific facts that can correct their University found that minimizing carbohydrates while misconceptions. encouraging fat — including saturated fat — actually This provides an opportunity for retail departments reversed diabetes in 60 percent of meat patients after 1 year. to implement an instore ‘Healthy Meat Facts’ nutritional The diet also reduced inflammation and triglycerides, campaign to set the record straight and convince their and increased HDL — so-called good cholesterol — all customers that meat and poultry are actually good for one’s strong ofshould improving cardiac health indicators and that they increase ratherand thanmetabolic decrease health. their purchases of it. The campaign outlined below can have a direct impact on sales:

Additional research points specifically to the potential Start by of displaying instore posters the nutritional benefits eating red meat whilepromoting decreasing carbs. Two value of meat. They should be innovative, eye catching and studies led by researchers at the University of Western be designed to specifically contradict any meat myths. The Australia found that substituting carbohydrate-rich comments should all be literature based quoting research foods with red meat reduced inflammation and should blood papers or MDs for maximum effect.

Various posters be made - each with a brief but powerful message covering pressure. one theme.

Medical experts have long dispensed unproven advice Posters can convey the following healthy meat fact about meat.

But newer, better research indicates messages: that red meat and saturated fats aren’t harmful when 1. Let’s IRON the Truth on Meat! diet. combined without a lower carbohydrate “You would need to eat a massive amount of spinach to

So if you’re looking to in safeguard yourChristopher heart, fire Golden, up the equal (the iron content) a steak,” says an ecologist epidemiologist at Harvard grill and cookand that burger — but skip theUniversity bun andinthe Cambridge, pasta salad.Massachusetts. (As quoted by nature.com in the article ‘Brain food- clever eating’.)

Dr. Bret Scher is a cardiologist based in San Diego. For more For a woman receive her recommended daily intake of 18 information, visit to https://lowcarbcardiologist.com/

mg of iron, she would need just 300 grams of cooked bovine

So what should we worry about? Carbohydrates.

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5. Mea Meat c body c isoleuc threonin protein

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Consider how the American diet has evolved. The most recent government data reveals that from 1970 to 2014, the availability of red meat fell 28 percent. Whole milk availability declined 79 percent. And animal fats — like butter and lard — dropped 27 percent.

The line only ap meat h Facts’ n and po educat

If saturated fats were truly unhealthy, then obesity, diabetes and heart disease rates should have plummeted alongside this drop in saturated fat consumption.

Ronnie P. meat and

Instead, disease rates have skyrocketed — largely 22 CANADIAN MEAT BUSINESS September/October 2017 September/October 2018

21

CONSUMERS GOING ‘MEATLESS’ PHENOMENON TIED TO ECONOMY

DF: I don’t think being on the island has really impacted us negatively one way or the other. We’ve traveled a lot, met a lot of other farmers and livestock producers in other parts of Canada, and we all seem to have the same issues and same concerns.

CMB: I understand that your farm was the first in Atlantic Canada to be involved in the TESA program.

CANADA’S DRY WEATHER MAY STEM U.S. CATTLE STAMPEDE ACROSS BORDER Parched pastures and crops in Western Canada are driving up cattle-feeding costs, and farmers and analysts expect the changing economics to stem a recent stampede of U.S. cattle being brought over the border.

Canada imported 65,035 head of cattle from the United States from January through June, nearly double the pace of a year earlier when imports of U.S. cattle were at their highest level in 16 years, according to Statistics Canada. Most were young cattle to be fattened on feedlots.

CANADA, THE SIXTH-LARGEST BEEF EXPORTER, HAD 11 MILLION HEAD OF BEEF CATTLE AS OF JULY 1 But dry Canadian conditions that have curtailed hay supplies are making it cheaper to fatten cattle in the United States. A drop-off in the supply of Canadian cattle would amplify concerns for feedlots and packers in Canada, where the country’s herd has declined steadily.

Canadian government data on cattle imports lags about two months, so a reduction in U.S. supplies may not be publicly reported until well into autumn.

Rainfall in the past two months has fallen well below normal on the Canadian Prairies, with southern Alberta collecting less than 40 percent of average amounts, according to the federal agriculture department.

With limited supplies of feed grains in Western Canada, and a big U.S. corn crop on the way, it will soon make more sense to fatten cattle in the United States, said Rick Paskal, president of Van Raay Paskal Farms in southern Alberta.

22

September/October 2018

“There’s an old farmer’s tale, that you don’t haul the feed to the cattle, you haul the cattle to the feed. It’s going to be tough to hold these cattle in Canada.”

Charlie Christie, who runs a 400-cow ranch and feedlot near Trochu, Alberta, said he expects dry conditions to curb numbers of U.S. cattle being moved to Canada and also cause more Canadian calves to be sent to the United States.

An early surge of Canadian calves sold to feedlots this fall, as ranchers limit exposure to soaring feed costs, may leave supplies ample for now, said Brian Perillat, senior analyst at Canfax, a market analysis firm. Some ranchers are also culling their herds more than usual, putting more cattle on the market this year.

But longer-term, the Canadian herd’s decline raises concerns about how to compete with the expanding United States numbers, Perillat said.

Canada, the sixth-largest beef exporter, had 11 million head of beef cattle as of July 1, a number that fell for the 13th straight year, according to Statistics Canada.

But Canada will likely slaughter the most cattle in eight years in 2018, Perillat said, as the larger numbers of U.S. imports work through the supply chain.

A new plant, Harmony Beef, opened in Alberta last year, while Cargill Ltd and JBS USA operate larger plants.

Montana and Wyoming feedlots face similar high feed costs due to dry weather as Canada, so more cattle may end up further south in Texas, Kansas and Nebraska, said John Ginzel, analyst at The Linn Group in Chicago.

DF: Yes, I think we were the first farm east of Ontario as far as I understand.

I’m not sure why the eastern associations wouldn’t have previously nominated anybody because there are many farms here on PEI doing every bit as much as we are as to attain a high level of sustainability. Anyway,

By Dr. Sylvain Charlebois we were very surprised when the PEI Cattleman’s Association nominated our farm. in an era in We seem to be living CMB:of Andeating then you is were attending the which the pleasure quite Canadian Beef conference in Calgary simply overpowered by values-based and you won. narratives in food consumption. And DF: Yeah! That was a very nice moment this is happening for at us. an But astonishing I don’t like to use the word win actually. However, being pace. Vegetarianism and veganism are recognized for our commitment was both coming into their own, allowing a real honour. If you want to know more people to the “come thehumbling truth, it out was aof pretty experience.

As I said to CBCand when they cupboard” to speak openly about phoned me after the conference, I was affirm their commitment to a selfjust floored, really couldn’t believe it. imposed diet. They’re doing it for animal CMB: So now that you have been welfare, the environment, health -- will recognized, do you think that more attention and garner more whatever factordraw is deemed personally nominations out of Atlantic Canada important. But make no mistake: this going forward? trend is an indication that the current DF: Absolutely. We’ve gotten a lot economy is strong. of good press highlighting the island industry.us I’mthat positive you’ll see Human psychology cattle has shown consumers more farms in our neck of the woods traditionally indulge, ironically perhaps, in times nominated next year. And I have to give of uncertainty. The fear of food insecurity is a very the Canadian Cattleman’s Association powerful force. Consumers who may lose their recognition for choosing a farm from professional situation will often treat themselves Prince Edward Island. We are small with sweets and other often unhealthy offerings, players in the national beef industryjust to forget about theirand own reality foraareal while.

I think it was credit to their organization recognize us. They It appears, though, that healthytoeating habits are treated all the nominees royally and it winning over indulgence these days. Once food was a real class act.

It was a wonderful security is achieved for a foreseeable future, or even if it is based onexperience. pure optics, many things can change. Science serves as a reminder that the food security concept must recognize the importance of food quality in a general sense, which includes considerations of food safety, nutrition and health as well as the experiential aspects of food shopping meatbusiness.ca and consumption. This is likely where we are at in our present economic cycle.

September/October 2017 CANADIAN MEAT BUSINESS 17

continued on page 24

September/October 2018

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JULIE ANNA POTTS NAMED PRESIDENT AND CEO OF THE NORTH AMERICAN NEW SURREY MEAT INSTITUTE SLAUGHTERHOUSE The North American Meat Institute (NAMI) has announced Julie Anna Potts as its next president and CEO effective September 24, 2018. Potts succeeds retiring President and CEO Barry Carpenter.

‘WOULD OPEN DOOR’ TO NEW BEEF MARKETS

Many years ago, conversations about food were about flavours, tastes and traditions. Today, we talk more about morals and values linked to how we consume food, simply because we can afford to do so. Stock markets are on a tear, and the unemployment rate is almost at an all-time low. Food is not just about survival, but rather more about making a socio-economic statement as much as a moral one. At social gatherings, some are now made to feel as though eating meat is a crime. In the past, consumers recognised the limitations on their ability to influence the choices made available to them, and they often seemed doubtful about the potential for collective action to work. They made little connection between threats to global food supply and their own daily consumption practices. That has all changed, due to the abundance of time we now have.

Most of our time is spent looking at a screen, a computer, phone, television, or other portable device we have at hand. Technological advances coupled with our pursuit of convenience, have given us a lot more time to think about food in a different way. Grocery shopping and cooking at home takes less time than the pre-industrial practices of hunting or harvesting. With ready-to-eat food, or even ready to cook solutions we save even more time -- time now spent on developing a philosophical attitude toward food consumption.

Technology makes our lives simple, and with simplicity also comes greater coherent thought and enhanced self-awareness as a consumer and particularly, as a food consumer.

In the meantime, the industry is coping, and adapting quickly. A few stunning examples: McDonald’s is offering Big Macs without the meat, and according to some sources, the Beyond Burger campaign at A&W is having great success. We also have seen changes in packaging and labels to appeal to the increasing 24

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number of consumers who are rejecting the status quo, or anything that appears disconnected with a holistic view of the world.

But it all really comes down to how the economy is doing. The current unemployment rate is incredibly low, and according to Morneau Shepell, salaries should be going up by 2.6% on average over the next 12 months.

More money in the consumer’s pocket will allow them to believe they can trade up, or perhaps sideways, when making food choices. It also gives families much needed financial help. What is also enticing consumers is a weaker than expected food inflation rate across the country. Food inflation remains more than 1% lower than the general inflation rate. So, prices have been less of an issue this year, although this is about to change.

Grocers are indicating that prices will increase due to tariffs. While the rationale of raising prices due to tariffs is highly disputable, when grocers use financial updates to let consumers know prices may go up, it is a sign. Loblaw and Metro have done it, and it would not be surprising if Sobeys follows suit. Food inflation should reach anywhere from 2% to 2.5% by year’s end.

Bryn Mawr, Pennsylvania. She is a trustee of The An agriculture veteran, Potts has served the American Pennsylvania State University and chair of the American Farm Bureau Federation (AFBF) since 2011 as its Proposed 30,000-square-foot beef abattoir in Cloverdale would be B.C.’s largest such facility Enterprise Agriculture Sector Committee at the executive vice president and treasurer. In her role, By Amy Reid, Peace Arch News Smithsonian American History Museum.

Potts led the AFBF staff in its implementation of all programs and activities for the organization, as well so as to not emit odours. whilelegislative there is an operational A federally licensed beef processing facility is in the works “Julie Anna Potts’ deepAnd legal, and 6,000-square-foot abattoir on the property now, it’s can in Surrey, BC. between AFBF and its affiliated as the coordination association experience and her passion for agriculture only process a limited number of cattle.

“There’s a new building coming forward, a new abattoir, I companies. will serve the Institute and its members well as we think that’s the French pronunciation of slaughterhouse,”

Chris Les is general manager of Meadow Valley Meats,

embark on the nextthe chapter our Institute’s history,” the company behind project.in Meadow Valley Meats is said Meat InstituteFood Chair John Vatri, vice president of seeking a Canadian Inspection Agency license for the proposed to become a federally registered operations atabattoir, Cardinal Meat Specialists Limited. “We meat establishment and expand the operation. This would look forward to having her join our historic Institute and allow the meat products to be transported beyond B.C.’s Agricultural and Food Sustainability Advisory Committee.” our meat industry family and we are confident that her boundaries.

Earlier in her career, Potts was an associate in the The facility is proposed on a 25-acre property within the skills and experience will help us continue to serve our “Our focus is on trying to bring a more efficient, sustainable Agricultural Reserve at 5175 184th St. The planned environmental lawLand groups of the Washington, DC, law members’ needs.” local product to the market, realizing we can do that now 30,000-square foot abattoir in Cloverdale would process up firms Mayer Brown, LLP, and Sonnenschein, Nath & Potts first AFBF inStarchuk.

2004, serving as general saidjoined Councillor Mike “So Surrey will have a counselnewer until facility 2009.with In late 2009, she was named a better capacity so people will chief have to not have to ship anCommittee, animal to Alberta to have counselthe ofability the Senate Agriculture serving it processed. The applications have gone through the under then-Chairman Blanche Lincoln of Arkansas.

to 100 head of cattle per day.

Rosenthal. She also clerked for U.S. Magistrate Judge that would make it larger than John M.According Facciolatoina city the report, U.S. District Court for the any other processing facility in B.C.. But it would still be District small of Columbia 1997-1998. by industryfrom standards, compared to the largest meat processing in Alberta 3,000 heads of Potts earned her plants law degree at that Theprocess George Washington cattle per day.

University Law School in Washington, DC, and her The proposed facility would be fully enclosed and designed bachelor of arts in English at Bryn Mawr College in

in aNorth very American limited sense,” said Les. caution people The Meat Institute is “I the nation’s oldestwhen and largest talking to them and they say, ‘What a big plant, that’s trade association representing packers and processors of going beef, pork, to goveal, allow you to goprocessed mainstream.’ yes, ifand youNAMI look member lamb, turkey, and meatWell, products in the context of B.C., but this a veryofniche plant companies account for more thanis95still percent United States output we’ll serve aThe niche industry forprovides producers and for scientific, the ofand these products.

Meat Institute regulatory, market.

It’s certainly not going to be a monstrosity of a plantand legislative, public relations and educational services to the meat but it’llpacking be a big upgrade fromindustry. the site currently.” poultry and processing Continued on page 32

Yet, even with higher food prices, the buoyant economy allows more of us to think about the ethical, environmental and moral implications of our food choices. And we can afford to -- for now.

Dr. Sylvain Charlebois is Dean of the Faculty of Management at Dalhousie University in Halifax. His current research interest lies in the broad area of food distribution, security and safety, and has published four books and many peer-reviewed journal articles in several publications. His research has been featured in a number of newspapers, including The Economist, the New York Times, the Boston Globe, the Wall Street Journal, Foreign Affairs, the Globe & Mail, the National Post and the Toronto Star.

Courtesy of Retail Insider - https://www.retail-insider.com/

meatbusiness.ca

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MANITOBA BACKS EXPANSION OF HYLIFE FOODS

F O U N D AT I O N F O R M E AT P O U LT R Y RESEARCH E D U C AT I O N

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The Manitoba government has announced that it is supporting an expansion project at HyLife Foods Ltd. in Neepawa, Manitoba.

The province is supporting the expansion in Neepawa and a new feed mill in the R.M. of Killarney-Turtle Mountain through tax increment financing (TIF) estimated at $9.5 million over 22 years. Manitoba and the Government of Canada provided an additional $2 million to the expansion through Growing Forward 2, a joint-funding program that ensures Canadian producers and processors are able to innovate and capitalize on emerging market opportunities.

“Our economy is growing here in Neepawa and throughout Manitoba, thanks to record levels of private-sector investment,” said Premier Brian Pallister. “Support for the expansion aligns with our priority of building on Manitoba’s industrial strengths. The growth we are seeing at HyLife helps position Manitoba pork as a high-quality, high-value commodity in a growing global market.”

“HyLife’s expansion is strengthening our rural economy, creating jobs in the agri-food industry and enhancing Manitoba’s position as a leader in pork and protein processing,” said Municipal Relations Minister Jeff Wharton, who attended today’s announcement along with Agriculture Minister Ralph Eichler, and Indigenous and Northern Relations Minister Eileen Clarke.

Wharton noted the support for HyLife’s expansion aligns with Manitoba’s new TIF framework currently in development.

“We thank the Manitoba government for their support enabling us to provide premium pork product and create

October 18-19, 2018, KANSAS CITY, MO

jobs and economic activity locally here in Neepawa and in the province of Manitoba,” said Claude Vielfaure, CEO, HyLife. “Our products continue to be exported to countries around the world, with hogs raised in Manitoba and processed in Neepawa. We pride ourselves in being community partners, and are proud of our employees and their contributions to the community.”

Vielfaure noted HyLife’s expansion focuses on optimizing its integrated pork production system. It will expand the plant to enable a full double shift, improve process flows, allow investments into equipment, grow additional hog supply and integrate incremental feed supply, he said.

Headquartered in La Broquerie, HyLife is the largest hog production company in Canada and among the top 15 in North America. Together with its affiliates, it has business holdings in Canada, the United States, Mexico and China.

In 2011, HyLife achieved platinum status in Canada’s list of best managed companies. HyLife exports 75 per cent of its products to 23 countries around the world including Japan, China, Mexico and Russia.

Tax increment financing is a financing tool that governments use to encourage economic growth and development through incremental taxes created by significant new development. Manitoba is currently working on a new TIF framework focusing on economic growth, value for money and limiting risk, which will benefit municipalities and communities across Manitoba.

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WE ASKED BEEF FARMERS WHAT THEY THINK OF SUPPLY MANAGEMENT

By Tristin Hopper, National Post

From in-depth instruction by species to “big picture” sessions

Whenever the phrase “Canadian farmers” makes it into a headline, it’s almost always referring to the Dairy Farmers of Canada, the extremely powerful lobby group charged with defending Canada’s system of supply management.

changing needs, including the impact of consumer expectations on animal welfare and information on regulatory

With supply management once again at the centre of major trade negotiations, the National Post called up a different kind of cow farmer to get their view.

Canada’s beef producers do not operate under any form of supply management, and it turns out they’re a little miffed about the sector that is.

Beef farmers will be damned if NAFTA falls apart over cheese No beef farmers contacted by the National Post had any contempt in their hearts for dairy farmers. Like any farmer, they get up early, they work hard and they drive trucks with September/October 2018

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bumper stickers reading “NO FARMERS, NO FOOD.” While the beef sector has never been a fan of supply management, opposition crystallized when the dairy quota system held up TPP negotiations — and it’s now a major block to a renegotiation of NAFTA. Of the roughly 620,000 tonnes of Canadian cow exported every year, threequarters of it go to the United States.

“If we were to have any tariffs being placed on our product, we are a very low margin business; it would be devastating to the industry,” said Karen Gregory with Alberta’s Cattleland Feedyards. And beef is not alone; continued on page 28

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dairy is a small portion of a Canadian agricultural industry that relies on exports and free trade.

“I understand (dairy’s) trepidation, but there are hundreds of thousands of other farmers that are being potentially hung out to dry if NAFTA fails because of supply management,” said Ryan Kasko, a cattle feeder from near Lethbridge, Alta.

Canadian beef has thrived under the free market “First and foremost we are free marketers; that’s where we’ve always been,” said Jeff Ball, a southern Alberta cattle feeder.

The beef sector did not opt in when supply management was being drawn up in the 1970s, and now the industry owes roughly half of its production to the foreign market.

It’s why Canadian beef farming has become a much larger operation than Canadian dairy.

There are 60,000 Canadian beef farms and feedlots as compared with roughly 11,300 dairy operations. Being unmoored in the waves of world trade has been a net positive, but multiple beef farmers contacted by the Post sympathized with dairy farmers who would wish to shield themselves from competitive pressures. But an Alberta ranch that pays its bills by shipping cows to Montana can also readily sympathize with a Wisconsin dairy farmer who cannot sell to Ontario. The beef industry’s fear is that if U.S. ire against supply management does result in retaliatory tariffs, the natural recourse would be to set its sights on Canadian beef.

World trade hasn’t turned beef into inedible poison A common argument from the Dairy Farmers of Canada is that if market controls are abolished, Canadian grocery stores will suddenly be flooded with low-quality American milk swimming with hormones and steroids.

At the recent Conservative convention in Halifax one of the briefing notes provided to dairy lobbyists was to remind delegates that their milk is free of rBST — a hormone banned by Health Canada.

Canadian beef producers have used forms of muscle growth hormones since the 1960s, but Ryan Thompson, owner of Living Sky Beef near Minton, Sask., laughed at the argument that food safety is tied to market controls.

“To say that monopolizing a market will ensure safety, they’re not even connected,” he said.

Free market forces can also have their own effect on agricultural practices. A few years ago A&W angered many Canadian beef producers by marketing hormone-free beef, a policy that required them to source much of their meat abroad.

St-Hubert tried something similar when it introduced “grain-fed, air-chilled” chicken. But since chicken is supply managed, St-Hubert didn’t have the option to source abroad and was forced to spend years convincing reluctant Canadian producers to change their production methods. “Consumers vote with their wallet,” said Jeff Ball, pointing to a blossoming market for grass-fed, hormone-free and other specialty beef. “I think that getting rid of the marketing boards would lead to more diversity 28

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and product selection.”

In Canada, being able to slaughter cows doesn’t mean you can milk them Plenty of Canadian beef farms run diversified operations: a pig pen here, a field of mixed grain there. For a beef farmer already well-versed in cows, the most obvious side venture would be to open up a dairy operation. But the controls around dairy farming ensure that even if a farmer could get his hands on a quota, it’s going to cost him roughly $30,000 per cow.

“It’s tough enough being a young person trying to farm as it is, try being a young person having to buy quota,” said Thompson. When one has a lot of dairy neighbours, it can also be hard to compete for land and feed with an industry that has a government-guaranteed profit. To be sure, there are some government supports for the beef sector such as AgriStability, but those programs can only compensate for partial losses.

A future without supply management need not be a bleak hellscape New Zealand abolished its own version of supply management several decades ago. After an initial shock that did indeed push some producers out of the market, the country exploded into one of the world’s most prolific exporters of milk.

“Everyone said at the time, ‘what a disaster, the sky is falling in,’ but if you stand back and look at it now after 30 years, our industry … is nearly four times the size it was then,” New Zealand dairy farmer Earl Rattray told Reuters in 2015.

It’s not just the shock of entering a competitive market after a 40-year hiatus; without supply management Canadian dairy would also be up against subsidized American dairy farms.

“I met with the Dairy Farmers of Alberta last week, and they expressed concern that the large American dairies will flood them out,” said Ryan Kasko. Without compensation dairy farms would also be left out-of-pocket for millions of dollars in quotas.

“If they decide supply management has to go, we feel they should be compensated in some fashion,” said Karen Gregory.

Despite all this, beef farmers have a lot of experience of dealing with subsidized U.S. competitors, and remain optimistic that the world need not end without supply management.

“It’s change they’re afraid of, but I firmly believe that the milk produced in Canada is the highest quality in the world, and I don’t think they need to be afraid of some other country coming in and taking their market,” said Thompson. “Canadians will pay for Canadian milk because that’s what they want to buy, and I don’t think it matters if there’s U.S. or New Zealand or European milk on the shelf.”

Follow Tristin on Twitter @TristinHopper or by email at thopper@ nationalpost.com

THE 2017 FEDERAL SMALL BUSINESS TAX FIGHT CREATED A LOT OF ANGER AND DISAPPOINTMENT MORE THAN A YEAR LATER, THE FEELINGS HAVEN’T GONE AWAY

By Dan Kelly

It has been more than a year since something big happened to small business in Canada.

After decades of governments of all stripes declaring their admiration and support for the nation’s entrepreneurs, our federal government took a very different tone.

Suddenly, the message from Ottawa was that many small business owners were not paying their “fair share” and they were exploiting “loopholes” in our taxation system. They painted an image of a bunch of wealthy fat cats, setting up corporations with the primary aim of skirting their tax obligations.

soften its language and some of its policy proposals.

Small firms were relieved when government backed off a proposal to change capital gains tax rules.

It reinstated a previously abandoned election continued on page 30

The issue boiled over during the summer of 2017, with an unprecedented response from the millions of Canadians who are self-employed or who risk their own capital every day to employ others.

Last summer and fall, the proposed changes to small business tax policy dominated the headlines from coast to coast. Business owners — on their own and through their associations like the Canadian Federation of Independent Business (CFIB) — started to fight back. In fact, 80 organizations joined to battle Ottawa’s unfair new tax rules.

The message from government appeared designed to pit small business owners’ employees against them, when the reality is employers don’t deserve their workers’ animosity. Small business owners shoulder all the risk involved in starting a business. Standard working hours and mandatory paid vacation are not part of their reality. They pay themselves last, after their employees, suppliers and governments, and their paycheques can sometimes work out to less than minimum wage when their working hours are accounted for.

Starting last October, the government seemed to

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commitment to reduce the small business tax rate to nine per cent.

Does this mean that nearly two-thirds of Canada’s small business owners are planning to close up? No.

Sadly, changes to tax policy for family businesses largely went ahead in January, with only minor concessions and a touch of additional clarity. The negative effects of this policy change will likely not be felt until audits of the 2018 tax year begin and the Canada Revenue Agency tries to interpret the mess of new rules.

But what it does say is that many business owners have seriously reflected on why they are in business in the first place, and whether their governments actually care about them and the sacrifices they make to grow the economy, create jobs and contribute to their local communities.

LAST SUMMER AND FALL, THE PROPOSED CHANGES TO SMALL BUSINESS TAX POLICY DOMINATED THE HEADLINES FROM COAST TO COAST. BUSINESS OWNERS — ON THEIR OWN AND THROUGH THEIR ASSOCIATIONS LIKE THE CANADIAN FEDERATION OF INDEPENDENT BUSINESS (CFIB) — STARTED TO FIGHT BACK. IN FACT, 80 ORGANIZATIONS JOINED TO BATTLE OTTAWA’S UNFAIR NEW TAX RULES.

A new approach to taxing passive investment income revealed in the 2018 budget, while addressing some of the worst red-tape headaches, has created an entirely new set of tax losers. CFIB has heard from many small business owners who will be taxed at the same rate as large corporations due to past decisions to sock away some money for tough times in passive investments, an increase that could mean a tax bill up to 67 per cent higher than in previous years. This new approach abandoned the government’s promise that none of the changes would have a retroactive impact on business owners.

By far the most lasting impact of the 2017 federal small business tax fight is the anger and disappointment it has left among Canada’s independent business community. More than a year later, it really hasn’t gone away.

Despite the hundreds of business owners with whom I’ve spoken and the thousands of direct comments I’ve read from entrepreneurs from across Canada, even I was shocked to see how deeply this issue has affected them. When asked if the planned tax changes have caused owners to rethink whether they wish to continue to be in business in Canada, an incredible majority strongly (35.9 per cent) or somewhat (28.1 per cent) agreed.

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It’s not just these tax changes or the federal government that have contributed to this growing sense of alienation. Many small firms are facing five years of new carbon taxes, seven years of Canada Pension Plan premiums hikes, and massive changes to minimum wages and labour laws in several provinces.

And despite the gong show south of the border, small business owners are keenly aware that the tax and regulatory environment in the U.S. is going in the opposite direction.

Do I think the damage is irreparable? No. But there is a lot of work to do. CFIB is calling on all parties — including the government — to commit to some important fixes. We need government to delay the implementation of the new income splitting rules to 2019 and provide a full exemption for spouses who play a critical role in a small business, even if an informal one. We ask government to ensure past passive investments do not mean that a small business gets taxed as a large corporation.

And we ask government to dust off the one part of the 2017 proposals that small business owners did like — the ability to sell a business to a family member without paying more taxes than one would if selling to a stranger. In fact, borrowing the Obama/Trump approach of allowing small businesses to immediately deduct important capital expenses would go a long way in narrowing the Canada/U.S. tax gap.

It isn’t impossible to soften the anger and discord among Canada’s entrepreneurs. But it sure is going to take a lot more than a soothing news release during October’s Small Business Week.

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Dan Kelly is President of the Canadian Federation of Independent Business (CFIB). In this capacity, Dan is the lead spokesman and advocate for the views of CFIB’s 110,000 small-and medium-sized member businesses across Canada, including 7,200 agri-business members. Follow Dan on Twitter @CFIB and learn more about CFIB at www.cfib.ca.

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