Our November / December issue by Meat Business Pro

November/December 2018

MCDONALD’S = SUSTAINABLE BEEF CPTPP GOES INTO EFFECT DECEMBER 30 PROTEIN WARS ARE HERE AS DIETS ARE CHANGING SEEING IS NOT ONLY BELIEVING... IT’S ALSO EATING FCC DRIVE AWAY HUNGER PROVIDES OVER 9.5 MILLION MEALS TIME TO CELEBRATE, NOT SLIGHT, CANADIAN FARM FAMILIES

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November/December 2018

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November/December 2018

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Maple Leaf to build new $660 million London plant, close 3 others in Ontario McDonald’s = Sustainable Beef

By Scott Taylor

Canadian meat mission to the EU CPTPP Goes Into Effect December 30 Source says Canada at odds with U.S. changes to text of USMCA Protein wars are here as diets are changing By Dr. Sylvain Charlebois

CAHRC predicts ag labour gap of 114,000 workers by 2025 Canada, Mexico and U.S. set to sign USMCA FCC: Canadian producers weathering market volatility

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Seeing is not only believing… It’s also Eating NSF International Announces 2018 Canadian Food Safety Recognition Award Winners UFA Supports Olds College with $500,000 New Working Group for Poultry and Egg Sectors FCC Drive Away Hunger provides over 9.5 million meals MacAulay Concludes Successful Agricultural Mission to China Safe Food for Canadians Regulations coming into force Maple Leaf Completes Acquisition of VIAU Foods Time to celebrate, not slight, Canadian farm families

The cost of convenience By Dr. Sylvain Charlebois

November/December 2018

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November/December 2018 Volume 17 Number 6

PUBLISHER Ray Blumenfeld ray@meatbusiness.ca MANAGING EDITOR Scott Taylor publishing@meatbusiness.ca DIGITAL MEDIA EDITOR Cam Patterson cam@meatbusiness.ca CONTRIBUTING WRITERS Dr. Sylvain Charlebois, Ronnie P. Cons CREATIVE DIRECTOR Christian Kent

Canadian Meat Business is published six times a year by We Communications West Inc.

MAPLE LEAF TO BUILD NEW $660 MILLION LONDON PLANT, CLOSE 3 OTHERS IN ONTARIO Maple Leaf Foods Inc. has announced it is building a $660 million fresh poultry facility in London, Ont., which will enhance its ability to process higher-margin products by closing three aging plants in the province. The protein company will invest an initial $605.5 million into the plant that will serve Eastern Canada and an additional $5 million into related projects over the next five years, while $34.5 million will come from the Ontario government and an additional $28 million from the Canadian government. These plans will ultimately lead to a net reduction of about 300 jobs. The new facility will span nearly 60,000 square metres and employ 1,450 fulland part-time workers once operations begin, which is expected in the second quarter of 2021. Construction will begin this spring. “It will solidify and strengthen the poultry industry in Canada for the next many, many decades,” Maple Leaf CEO Michael McCain said in a recent conference call. Chicken is the most consumed and fastest growing meat protein in Canada. McCain said the plant is the largest single-site investment ever made in the Canadian food sector. Production from three of Maple Leaf’s other plants will eventually be consolidated into the new facility, the company said. Its St. Marys plant is expected to close by late 2021 and its Toronto and Brampton facilities will close by in mid- to late-2022. “These plants have served us well but they’re now 50 to 60 years old and severely growth constrained because of location, footprint or infrastructure and nearing the end of their productive capacity,” McCain told analysts.

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. The contents of this publication may not be reproduced by any means in whole or in part, without prior written consent from the publisher. Printed in Canada. ISSN 1715-6726

McCain said he “deeply” regrets the impact on existing employees, but the plant will allow it to earn an extra $105 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) annually by delivering higher margin valued-added air-chilled, tray-packed boneless and ground poultry. It will also help to expand its retail brand and supply fresh chicken to two other facilities that make cooked and sliced meat. The new plant, to be located near Highway 401, will deliver more than 30 per cent cost savings from lower labour, overhead and distribution and a one-third increase in capacity that can expand to meet growing demand. “This is going to be, to the very best of our knowledge, the single most technologically advanced facility of its kind in the world.” The company plans to provide affected employees with job opportunities at the new facility or other plants it operates, he said, as well as services to help them eventually find new employment. Ontario Premier Doug Ford and federal ministers praised the project. “This innovative new plant will modernize processing, and help make Ontario’s chicken farmers more competitive,” said Premier Ford. Federal Economic Development Minister Navdeep Bains said the project will “keep Canada competitive in the global market and create new middle class jobs in Ontario.” “Canada’s agri-food industry is a key driver of innovation and well-paying jobs across the country,” added Agriculture and Agri-Food Minister Lawrence MacAulay. London is a significant food and beverage processing hub, with more than 60 companies employing more than 7,000 people at businesses including Labatt, McCormick, Dr. Oetker and Nestle. Established in 1991, Maple Leaf Foods employs more than 11,000 people across Canada and exports to more than 20 global markets. November/December 2018

MCDONALD’S = SUSTAINABLE BEEF By Scott Taylor

If you ask the folks at Cargill and McDonald’s, Canada’s national sustainable beef program is working. And it’s working exactly as planned.

the world.

Earlier this fall, McDonald’s Canada became the first Canadian food company to acquire beef that is “certified sustainable,” according to the standards set by the Canadian Roundtable for Sustainable Beef. In addition, McDonald’s said that more than 20 million of its Angus burgers will be sourced according to CRSB standards during the next 12 months.

“We will continue to collaborate within the industry to help find solutions to produce beef with less impact. Demand for meat is expected to grow substantially in the coming decades, meaning we need to find solutions to produce more with less impact. Our work on climate change mitigation and conserving forests are examples of how we’re helping to drive change.”

“Our burgers are some of our most iconic menu items, made from 100 per cent ground beef,” McDonald’s said in a written statement earlier this fall. “We’re one of the world’s biggest buyers of beef, so although we don’t own farms or rear animals directly, it’s no surprise that we take seriously our responsibility to help lead the industry toward more sustainable production practices.

McDonald’s Canada is this nation’s largest quick-service restaurant purchaser of beef, and by sourcing its burgers according to the Canadian Roundtable for Sustainable Beef’s standards means the chain is living up to the commitment it made to the CRSB, an environmentally sound, sociably responsible and economically viable forum for beef production.

“We support beef production that’s environmentally sound, protects animal health and welfare, and improves farmer and community livelihoods, and we have done so for more than a decade. This global movement is gaining extensive momentum through conversations, collaborations, pilot programs, and global and local roundtables, and is helping influence not just beef in McDonald’s supply chain, but beef production around

In the meantime, McDonald’s decision is a step forward for Canada’s beef industry, which worked together with McDonald’s — and other partners such as beef processor Cargill and environmental groups such as the Nature Conservancy of Canada — during an almost five-year period to help develop standards for beef sustainability.

November/December 2018

McDonald’s decision to help create the CRSB and then commit to working closely with producers, is a departure from the philosophies of some of its competitors, which have made their own attempts to capture changing consumer demands, but also angered both farmers and ranchers in the process. For example, the Western Canada-based Earls Restaurant chain upset the Canadian Beef Industry two years ago when it demanded beef raised without the use of growth hormones or antibiotics and began sourcing beef in the United States. Another quick-service chain, A&W, also introduced “beef produced without hormones or steroids.” The television commercials helped A&W reach sales records, but it was criticized by ranchers who told the Canadian Press that they “resented the implication that beef produced using mainstream agricultural practices is unhealthy.” For Cargill -- the major processor on the Roundtable and a partner with McDonald’s as it prepares to source 20 million sustainable burgers -- the payoff for this program has exceeded market expectations. “The Certified Sustainable Beef Framework was developed by the Canadian Roundtable for Sustainable Beef,” explained Gurneesh Bhandal, Sustainability

Manager at Cargill. “Cargill and McDonald’s are CRSB members. In 2014, McDonald’s took a leadership role in Canadian beef sustainability by launching a pilot that concluded in 2016. The initiative allowed us to test theories around developing a long-term program for certified sustainable beef. CRSB subsequently developed its framework and Cargill launched the Canadian Beef Sustainability Acceleration Pilot in the fall of 2017 to further test the viability of the framework and begin building a supply of beef from certified sustainable sources. The pilot has allowed us to create the infrastructure required to track cattle and the beef chain of custody.” And the industry is definitely on board. “There has been a positive response from the industry and the number of involved producers has increased,” said Bhandal. “Currently, the demand for beef from certified sustainable sources is greater than the supply and we are encouraging more producers to become certified with the goal of continually building the supply. “Given the overall complexity of the industry, and corresponding farm-to-plate beef traceability, we are encouraged by the results achieved to date.” To give you a quick, Coles’ Notes version of the CRSB’s continued on page 8

November/December 2018

standards, the Roundtable wants to ensure that animals have adequate feed as well as access to drinking water and that they endure minimum of stress and pain. The standards under the new program include more than 40 on-farm and processing indicators that must be upheld by on-site certification audits. Farmers and ranchers are also directed to manage grasslands and grazing in a way that either maintains or, at its best, improves soil health and protects watersheds. However, these CRSB standards don’t forbid producers from using antibiotics or growth hormones. In fact, Cherie Copithorne-Barnes, a Calgary-area rancher and chairwoman of the CRSB, told reporters in Calgary recently that “with the quantity of beef McDonald’s uses, it doesn’t have the luxury to ask for a niche product.” The vast majority of cattle production in Western Canada is still done with the use of antibiotics for preventive health and growth hormones for efficiency. McDonald’s Canada CEO John Betts, who was in Calgary with the CRSB for the official announcement of McDonald’s sourcing plans, told reporters that his company “has gone the antibiotic-free route with its chicken menu items, in response to consumer demand.” “But in this case, the decision was made after listening to both customers and producers,” he added. “You can’t be everything all at once, and I think what you’re seeing is an evolution across the industries. These CRSB standards have the potential to become the gold standard for beef production around the world. “When we first got together with the producers and ranchers, they were somewhat wary. But as the team developed the standards and did the work around this, it made us all better. It made the ranchers better and they got more enthusiastic about it. Some of the ranchers who were doing some of the components of what we consider beef sustainability already are now doing more because they shared with each other.” Betts added that McDonald’s acquires 100 per cent of the beef for its hamburgers from Canadian ranches and farms, primarily in Alberta, Saskatchewan and Western Manitoba. “Consumers are increasingly inquisitive about the food they’re eating and want to know it was produced in a socially responsible, economically viable and environmentally sound manner,” Copithorne-Barnes told the Globe and Mail. “As we all strive to make continuous improvements, it’s important to recognize achievements made along the way. “We need to thank McDonald’s. Thank them for having the faith and the confidence and the flexibility in letting us, as an industry, design what we need, but something 8

November/December 2018

which they’re still comfortable to use. “I also hope this will get to a point where a processor like Cargill will actually have a whole line of beef that is certified sustainable. The momentum’s definitely there right now for us to build on this and grow.” It certainly appears that the program is working for Cargill. “Absolutely, it’s working,” said Bhandal enthusiastically. “We launched the Canadian Beef Sustainability Acceleration Pilot to test CRSB’s framework and to begin building a supply of beef from certified sustainable sources to help deliver this beef to our customers and it is working. “Yet, there are areas where we can improve. We need more ranchers to become certified and we need better data entry by beef producers so cattle movement can be tracked for the purpose of sustainable sourcing claims. We also want to determine live cattle eligibility for the program instead of doing so post mortem at the packing plant. The pilot helped us identify these opportunities. Overall, the program works and is creating opportunities to better inform consumers about the Canadian beef industry and its sustainability efforts.” The program is a source of pride for Canadian ranchers, but it isn’t a program that will have a global reach anytime soon. “The CRSB’s Certified Sustainable Beef Framework is intended for Canadian producers only,” said Bhandal. “There are no plans to deploy this globally but, ultimately, that would be a decision of the CRSB and its partner roundtables around the world.” To date there is no consumer reaction to the program but Bhandal believes consumers will quickly become accustomed and will soon begin to demand beef that is sustainable. “The logo and claims portion of the CRSB’s Certified Sustainable Beef Framework was launched a few weeks ago at the CRSB’s Calgary meeting, so it is too early to have data,” Bhandal added. “As more foodservice and retail customers begin to use the Certified Sustainable Beef Framework as a sourcing tool, and we see the certification mark in more places – restaurants, menu boards, TV commercials, websites, etc. -- we are hopeful consumers will become familiar with the program. “It is a way for the Canadian beef industry to share information with consumers about sustainably and responsibly produced Canadian beef.” And what could be better than that?

CANADIAN MEAT FAO AFFIRMS MISSION TO THE EU

CATTLE’S CRITICAL ROLE AS UPCYCLER

Representatives from the Canadian Cattlemen’s Association (CCA) and Canadian Pork Council (CPC) undertook a mission to Germany, Poland and Spain this November. The objectives of this latest in a series of missions to EU countries were to continue to build cooperation and collaboration for commercially viable two-way trade of meat products between Canada and the EU as envisaged by the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). By Sara Place, Ph.D., National Cattlemen’s Beef Association

As example of this nascent reciprocal two-way trade relationship under CETA, in 2018, from January to September, 241 tonnes of veal from the EU was imported into In the versus human food debate, haven’t Canada, withlivestock the majorityfeed coming from the Netherlands, along withwe 2,255 tonnesbeen of right numbers. beingto the a drain on same global beef using valued atthe $13.2 million. Exports ofRather Canadianthan beef alone EU for the period reached 520 tonnes valued at with $8.2 million, representing a 45 per increase resources and competing human food supplies bycent eating lots in volume and a 45 per cent increase in value compared to a year earlier.

of grain, livestock are often net contributors to the global protein

Building relationships with EU contacts will also help pave the way for future supply. That’s the conclusion of aofnew study from scientists technical and business exchanges in support commercially viable two-way at the tradeUnited of meat Nations products. Food It also helps to clarify various aspects of the technical and and Agriculture Organization (FAO). regulatory review and approval processes to maximize the potential for Canada’s applications for approval of citric acid and peroxyacetic acid (PAA)-based solutions, The FAO researchers developed a global database of what livestock eat and found both commonly used interventions approved in Canada, in beef and pork production percent ofand the succeed feed is human inedible. Mostly, livestock eat grasses grown on to be86 considered in a timely manner. marginal lands and other forage crops, like alfalfa. Marginal lands are those that In Germany, CCA and CPC visited with the Ministry of Agriculture and officials with are too rocky, steep and/or arid to support cultivated agriculture, such as fruit or the Canadian Embassy as well as the Association of German Meat Industry and vegetable production. Globally, livestockdiscussion also eat over 1.9 billionchallenges metric tonsfor of the German Farmers Association. Excellent on common leftovers from human food, fiber and biofuel production. German and Canadian beef and pork producers plus positive trade opportunities for both CETA were entertained. In theofcontext of these discussions, it was For under example, livestock eat the residues grain harvest (the stalks and leaves apparent that Canada Beef efforts at the SIAL Food Show in Paris a month earlier left in the field after corn harvest), the byproducts from milling grains for flour were noticed by German meat importers and sparked interest. production (wheat midds), cottonseed that is a leftover of cotton production, and In Warsaw, team was supported Embassy officials, and ethanol met glycerolthe and distillers grains thatby areCanadian byproducts of soy trade biodiesel and corn with the Polish Meat Association, Polish Associations for Beef Cattle and Swine/ production, respectively. If livestock didn’t consume these plant-derived leftovers Pork Breeders and Federation of Agricultural Producers Union. The meetings were and Polish byproducts, their disposal would result in an environmental positive. farm leaders admitted theylikely did not originally support CETAburden. as they By being a part of the global food system, livestock enhance sustainability had been concerned about a large and sudden influx of Canadianthe beef. Following of other food production and industries. discussions, they acknowledged that their fears had been unfounded and they have realized that there is opportunity for both sides. Considering that most of what cattle eat is not human edible, the FAO researchers The Polish also expressed theirkgvision of wanting found Beef that 1Cattle kg of Breeders protein in Association meat and milk only requires 0.6 of protein from to reverse the current situation where most Polish beef is produced from dairy cattle. human food. Additionally, the protein in meat and milk is of higher nutritional They noted that as Poland grows economically, the Polish people are eating more quality compared to the protein in grain that cattle eat. beef. In the past few years, Polish per capita consumption of beef has increased global averages, butisbeef in the U.S. from The lessFAO thanresearch 2kg/yearrepresents to approximately 3.4kgs. This still production small, but the trend is promising and theyless believe the food. qualityInofa Polish geneticsby and competes even with improving human edible recent beef reportvia published the knowledge inflow from Canada is a path to future success. National Academies of Sciences, Engineering and Medicine, it was estimated that on average than 90 Provacuno, percent of what grain-finished beef cattle eatthe in In Madrid, Spain, the greater team met with the organization that represents Spanish industry, and inedible a number of trading and investors whothan have theirbeef lifetime is human forages and companies plant-derived leftovers. Less 10 interest in determining the potential of beef trade with Canada. For these meetings percent of their lifetime feed consumption is grain that could potentially be eaten it wasbyvaluable people.to have the newly hired consultant for Canada Beef in Madrid accompany the team and it is anticipated there will be some rewarding follow-up in a report published by the Agricultural Science from Further, those commercial connections. TheCouncil missionfor wrapped up with a dayand trip to Barcelona to meet withgrain-finished ANAFRIC and FECIC, the two that represent Technology, U.S. beef systems wereorganizations found to contribute 19 percent the Spanish meat business. more human edible protein than they consumed. The more meetings organizations haveProduction in Europe, the more evident Sara Place, Ph.D., isCanadian a Senior Director, Sustainable Beef Research, with the Nationalit is that the demand and incentive for increased EU-eligible beef production in Canada. Cattlemen’s Beef Association. As production and shipments to the EU do in fact grow, it is vital that to have positive View the FAO study at: http://www.sciencedirect.com/science/article/pii/ relationships with European producers who also value their opportunities to do S2211912416300013?via%3Dihub business in Canada. For more information, visit: http://www.cattle.ca/market-access/market-access-requirements/eu/

meatbusiness.ca

November/December 9 September/October 2018 2017 CANADIAN MEAT BUSINESS 27

CPTPP GOES INTO EFFECT DECEMBER 30 U.S. President Donald Trump may have tried to kill it but the Trans-Pacific Partnership (TPP) wouldn’t stay dead. Now less than two years after the U.S. withdrew from the landmark trade deal, six of the remaining countries have ratified the revised Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) into force on December 30. The Government of Canada ratified the CPTPP, securing Canada a coveted spot amongst the first tranche of countries in the historic trade accord. International Trade Diversification Minister Jim Carr announced in late October that Canada notified the CPTPP Secretariat in New Zealand that the formal process to ratify is complete. Canada takes its place alongside CPTPP ratified countries Japan, Mexico, Singapore, and New Zealand. Just one more country needs to ratify the Agreement domestically to trigger the CPTPP, which will then come into effect 60 days later. The Canadian Cattlemen’s Association (CCA) noted their appreciation as the federal government moved swiftly to ratify the Agreement and ensure Canada’s exporters will benefit from day one. On Thursday, October 25, the Senate of Canada passed Bill C-79 to implement the CPTPP. The bill then immediately received Royal Assent. The Government deployed a rarely used “walk-around” process over the weekend to pass some 14 Orders in Council required to complete the domestic process and notification was delivered to New Zealand on Monday October 29. CCA President David Haywood-Farmer said it is a huge relief for beef producers to know that competitive access to lucrative and diverse markets in Japan and Asia Pacific is finally within reach after years of working diligently to bring the sometimes tenuous blockbuster trade deal to fruition. “Since 2011, the CCA has advocated for the TransPacific Partnership and then the CPTPP, seeing it as the best path forward to address Japan’s 38.5 per cent tariff and threat of 50 per cent safeguard tariff on Canadian beef. Our position remained steadfast through two federal governments, two iterations of the Agreement itself, and five CCA Presidents. That history should tell you how strongly CCA feels about the potential of the market diversification and lower Japanese tariff for Canadian beef producers under the CPTPP,” he said. Once the CPTPP comes into force, the prohibitive Japanese tariff of 38.5 per cent will immediately drop to 27.5 per cent on Canadian fresh beef and to 26.9 per cent on frozen beef. Those are just the first of many cuts scheduled; on April 1, 2019 Canada will enjoy a second 10

November/December 2018

cut in Japan down to 26.6 per cent on both fresh and frozen and eventually down to 9 per cent over several years. With CPTPP, Canadian beef will also be exempt from the Japanese safeguard tariff of 50 per cent on frozen beef. “This Agreement is a game-changer for the Canadian beef industry,” said Haywood-Farmer. “I’d like to thank the Government of Canada for securing our seat at the table, and we encourage at least one other CPTPP member country to speed through its domestic ratification processes and take the sixth spot so we can get this CPTPP moving and benefit from the initial round of tariff cuts.” The CCA expects countries seven through 11 to continue their own processes so that the CPTPP will be in force amongst all 11 signatories sometime in 2019. Bill C-79 was introduced in the Senate on October 16 where it passed first and second reading before being sent to the Standing Senate Committee on Foreign Affairs and International Trade for review. The committee reviewed C-79 and on October 25 passed the bill. The CCA and the Canadian Agri-Food Trade Alliance (CAFTA) worked diligently throughout the entire process to ensure the federal government understood the need for urgency so Canada could be among the first six countries to launch CPTPP and gain a leg up on the competition. The CCA, together with the Canadian Pork Council (CPC), Canadian Meat Council (CMC) and the National Cattle Feeders’ Association (NCFA), representing the Canadian value chain of beef and pork producers and processors, had requested that the Senate pursue the objective of reviewing and approving the legislation to implement the CPTPP on a timeline that will enable Canada to be one of the first six nations to ratify the agreement and bring the agreement into force before December 31, 2018. Such a timeline would benefit Canadian beef and pork exporters greatly as it would enable the first tariff cut on red meat products before the end of 2018. If Canada achieves the first cut in 2018, even if it is the last day of the year, a second tariff cut will be implemented on January 1, 2019.

SOURCE SAYS CANADA AT ODDS WITH U.S. CHANGES TO NSF INTERNATIONAL FOCUSES ON TEXT OF USMCA CANADIAN FOOD INDUSTRY WITH NEW

Canada is pushing back against U.S. attempts to change the text of their September trade pact and the issue may have to be referred to ministers to settle, a Canadian source with direct knowledge of the matter said in early November.

WEBSITE FOR SERVICES IN CANADA

Global public health organization showcases services for Canada’s growing and fast-changing

“Some of the stuff they (the Americans) have been food industry putting forward is not at all what we agreed to,” said the source, who requested anonymity given thea new NSF International in Canada recently launched websiteof- the www.nsfcanada.ca - to give Canada’s growing sensitivity situation. and complex food and beverage industry easy access

Although the source said Ottawa did not feel the to the global public health organization’s expertise and problem would wreck the U.S.-Mexico-Canada services in Canada. The new website combines information (USMCA) affair shows that tensions remain on thedeal, depth,the experience and capabilities of the NSF afterInternational a stressful Canadian 13-monthoffice negotiation. with access to NSF International’s global services dedicated to food safety The United States and Canada reached a last-gasp and quality.

deal on USMCA at the end of September, guaranteeing regulations countries andwould increasing that Evolving free trade betweenacross the three nations complexities associated with a globalized food supply continue. Officials are now fine-tuning the wording on network present challenges for NSF International clients in the deal intended to replace the The North American Canada and around the world. new Canadian Free website Trade Agreement offers expertise(NAFTA). and services to help companies navigate challenges, includingaround certification and auditing, of “We these are having discussions the interpretation consulting, technical services, training and education, a variety of things,” said the Canadian source.

THE UNITED STATES AND CANADA REACHED

accredited International Association for Continuing A LAST-GASP DEAL ON USMCA AT THE END Education and Training (IACET) site. Topics include HACCP, OF SEPTEMBER, THAT food safety and quality,GUARANTEEING GFSI benchmarked standards, regulations (including FSMA), food science, foodNATIONS packaging, FREE TRADE BETWEEN THE THREE food microbiology and ISO standards. Training modalities WOULD CONTINUE. include eLearning, on-site, customized and open enrolment. Additionally, the website includes information about

Ontario that she would be meeting in the management system registrations forLighthizer the food, automotive, next few weeks information to discuss security, the matter. Shedevices, reiterated environmental, medical aerospace chemical industries, as well Ontario that Ottawa and does not think the tariffs and as theforUSMCA water programs. aredrinking connected. Visit theof new Canadian website at www.nsfcanada.ca to review the food Courtesy Reuters.com

safety services capabilities video, find a list of Canadian food experts, learn about upcoming events and global news releases, a question YesGroup_CanadianMeatBusiness-Qtr-pg.pdf 1 submit 2014-05-16 1:20:17 PMor read an FAQ.

food and label compliance, packaging, and product and

Adam Austen, a spokesman for Canadian Foreign process development. Minister Chrystia Freeland, saidwebsite it “is normal after an NSF International’s Canadian provides information agreement-in-principle is concluded for all countries to on the following services: work together to ensure the text is accurate.” Certification & auditing: Third-party food safety audits

and of certifications, which are integral components As part the USMCA, Canada agreed that the of supplier selection and regulatory Accurate province of British Columbia wouldcompliance. stop its practice audits are thelocal first step toward verification of only allowing wines to besuccessful stocked in of a company’s food safety system, providing improved supermarkets.

brand protection and customer confidence. Certifications

The and source said UnitedforStates toin the audits arethe available animalwas and trying produce agriculture industry, certification and broaden that clause toGFSI cover wine sales in management the systemof registration. provinces Ontario and Quebec. The two sides are also Consulting: at odds over elements of Ottawa’s promise to offer A full-service team approach providing expertise and insight for a wide range moretechnical accessresources, to U.S. dairy producers. of food safety and quality services. NSF International

The provides source said it was not abnormal nations would finished product inspection that testing for food, seekpackaging to “push and a little bit further in for terms the text” non-food testing rapidofanalysis andat this stage trade the negotiation. insight of to aprotect brand, technical support services on-site temporary or permanent technical staffing The from USMCA must be ratified by all three nations before placements, and various types of consulting. it comes into force. U.S. President Donald Trump had Technical A one-stop solution for food product threatened to services: walk away from NAFTA unless major compliance and formulation, from concept to finished changes were made.

product, including food and label compliance, packaging,

Another areaand of process contention are the tariffs on Canadian product development, and shelf-life and product evaluation. steel and aluminum that Trump imposed in June. Training education: for the food Freeland toldand reporters at aTraining steel plant in global Hamilton,

and beverage industry across the supply chain as an meatbusiness.ca

November/December 11 September/October 2018 2017 CANADIAN MEAT BUSINESS 23

PROTEIN WARS ARE HERE AS DIETS ARE CHANGING CONSUMERS ARE GIVING IN TO THE OVERPOWERING PLANT-BASED PROTEIN NARRATIVE, WHICH IS WHY THE LIVESTOCK INDUSTRY IS FIGHTING THE PROTEIN WARS. By Dr. Sylvain Charlebois

Apparently, Canada is going meatless, unless you are a white older male, that is. \Well, that may be a slight exaggeration, as many Canadians still need a regular meat fix. In fact, many see meat consumption as one of the pleasures in life, as well as a necessary part of a balanced diet. Some even believe meat consumption to be a fundamental right. According to a recent study from Dalhousie University, more than 82 per cent of Canadians remain committed to meat consumption. But for the meat industry, and especially beef producers, the study also gives us some troubling news for the future. The study indicates that 6.4 million Canadians, a number equal to the population of Toronto, have either adopted a meatless diet or are limiting the amount of meat they eat every week. But it gets more serious, as reduced meat consumption spreads across the generation gap. While a total of 63 per cent of vegans are under the age of 38, which includes both Generation Y and Millennials, the older crowd are participating in the meatless trend as well. More than 42 per cent of flexitarians are Boomers. In other words, many Boomers like meat but are struggling against their guilt-inducing eating habits. This could lead to what is known as a rebound effect. For example, after a day when meat is purposely not consumed, the effect is nullified the following day, by a lavish meatbased meal. Still, the intention is there. Looking at these numbers, the overpowering plant-based narrative has clearly made a dent in the average consumer’s perception of a healthy diet. Different sources of proteins are getting some attention. By now, most Canadians have already thought about reducing their meat consumption, and 32.2 per cent of respondents intend to do so within the next six months. As the beef industry tries to find ways to demonstrate sustainability, consumers appear to have already moved on, and the concept of meat avoidance isn’t going to disappear any time soon. Concern for the environment and animal welfare are some of the factors that are slowly pushing consumers away from certain meat products. But health concerns seem to be the biggest motivator. A diet which promotes reducing meat consumption is being increasingly recognized as a healthy choice. But despite negative press reports on the effects of meat on human health and a vocal minority who argue that humans evolved as vegetarians, some scientific evidence contradicts these views. History has shown that humans relied heavily on meat as a source of energy and critical substrates such as 12

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protein and long-chain omega-3 fatty acids. Although highly criticized at the time, the report released by the World Health Organization in 2015 — which condemned processed meat consumption — has affected how meat in general is perceived around the world, including here in Canada. In the report, it is claimed that consumers who ate the most processed meats — such as hot dogs, bacon, or ham — had an increased risk of cancer compared to those who ate such foods infrequently. Three years later, several countries have altered their food guide to encourage consumers to look for vegetable proteins or even fish. Canada will soon join this group with its new food guide. But simply asking consumers to eat less meat may trigger not only resistance to change, but also confusion regarding amounts and sources of protein. Some consumers are resisting the notion of plant-based diets as a viable alternative or a means to a healthy lifestyle. Indeed, conversations on proteins these days are divisive and utterly polarized. Interestingly, when looking at Dalhousie’s report, the blockade effect seems to be linked to masculinity, traditionalism, and hierarchies, all of which resemble and maintain the conventional structures of power in the western world. Meat is often inherently linked to manhood. There’s no other way to put it. Such influences also resemble the symbolic and social history of meat consumption. Conversely, urbanization, the collective will to live in a more diverse society, increased access to education for all, and a rising female voice are distinctive products of modern society and thus represent a push for culinary changes, affecting what we put on our plates. Proteins are becoming more pluralist. For the beef industry, the journey has not been easy. Compared to 2010, Canadians are eating 16 per cent less beef annually, which equates to 94 million kilos. The one lesson that can be learned, however, is that commodity groups should not look at their product in isolation. Beef, as an example, needs to co-exist with lentils, fish, or other, more affordable sources of proteins. To befriend other commodity groups would be a novel approach, but it would also be a refreshing change. It certainly would be an effective way to fight the protein wars. Dr. Sylvain Charlebois is professor in food distribution and policy at Dalhousie University.

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CAHRC PREDICTS AG LABOUR GAP OF 114,000 WORKERS BY 2025 The Canadian Agricultural Human Resource Council (CAHRC) is in the midst of a Labour Market Information survey. According to results from the 2014 survey, Canadian agriculture had 26,400 unfilled jobs, which cost the industry $1.5 billion. CAHRC projections indicate the labour gap could increase to 114,000 jobs by 2025. The 2014 LMI research showed a labour gap in Canadian agriculture workers of 59,000, and industry filled three-quarters of those positions with temporary foreign workers.

SEVENTY-FIVE PER CENT OF OUR WORKERS ARE CANADIAN, BUT WE STILL NEED OTHER POSITIONS FILLED. WE NEED A SYSTEM IN PLACE TO HAVE THOSE POSITIONS FILLED; IT’S NOT BECAUSE WE AREN’T PAYING ENOUGH. DATA SHOWED THAT.

UPDATING RESEARCH The Canadian Agricultural Human Resource Council launched a comprehensive LMI survey to examine Canada’s agricultural workforce in October. “This survey will augment the previous LMI research and will provide valuable data to track ongoing employment needs of farmers and farm workers so that policies, programs, tools and resources can be developed to meet those needs,” says Debra Hauer, AgriLMI project manager. She explains that the new data will be used to update their 10-year labour market forecasts for each province and type of production. CAHRC will also use the data to update its on-line employee turnover calculator. This tool allows employers to input their information and benchmark themselves against others in the industry to see if there are HR actions they can take to retain employees. HELPFUL INFO Scott Ross, assistant executive director of the Canadian Federation of Agriculture (CFA), says the CAHRC labour market information provides valuable 14

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insights into labour market conditions, quantifying what they’ve known anecdotally. Ross says the information helps with the CFA’s policy development, as well as when they advocate on behalf of members to government. “We have evidence in the data and, as a result, have more involved discussions on what’s needed,” Ross says. “It also helps our members to better understand these are challenges facing the entire industry, not just their farm, and it helps them identify best practices in recruitment and retention.” The information has certainly been valuable for the mushroom sector. Ryan Koeslag, executive vicepresident and CEO of Mushrooms Canada, gives the data validating what the industry knew about wages as one example of how. “The perception is that we don’t pay enough for these positions and therefore need cheaper temporary foreign workers,” Koeslag says. “However, not only are temporary foreign workers much more expensive, our farms pay their workers a very competitive wage, on par or higher than the average wage in the rural areas they reside.” “Seventy-five per cent of our workers are Canadian, but we still need other positions filled,” he continues. “We need a system in place to have those positions filled; it’s not because we aren’t paying enough. Data showed that.” BOTTOM LINE Farmers, stakeholders and farm workers have until November 30 to answer the 2018 Agricultural LMI Survey. The data collected can help industry, governments and educators come up with labour shortage solutions. Completed LMI research findings are on the CAHRC website at https://cahrc-ccrha.ca/

CANADA, MEXICO AND DF: U.S. TO I don’tSET think being on the island has really impacted us negatively one SIGNwayUSMCA or the other. We’ve traveled a lot,

Canada, Mexico the farmers U.S. areand setlivestock to sign met a lot and of other their newproducers trade deal in Buenos Aires at the in other parts of Canada, and start of the Group of 20 summit, following we all seem to have the same issues a year of and roller coaster negotiations to same concerns. revamp the continent’s free trade zone after I understand yourto farm PresidentCMB: Donald Trump’s that threats kill it.

was the first in Atlantic Canada to be Putting pen to paper would bring some certainty involved in the TESA program. at a time of unease over global trade tensions, and be held upDF: as an example of Trump-era deals as Yes, I think we were the first farm he prepares to of meet China’s Xi Jinping at the G20. east Ontario as far as I understand. The world’s two economies are embroiled I’m notbiggest sure why the eastern in an escalating trade war. associations wouldn’t have previously Several hurdles remain as the agreement needs nominated anybody because there are ratificationmany to take effect, almost certainly by the farms here on PEI doing every next U.S. Congress in January. pact would bit as much as we areThe as to attain a update a 1994 deal between the countries, which high level of sustainability. Anyway, trade more than US$1 trillion annually. we were very surprised when the PEI Canada struck a deal with the U.S. nominated on Sept. 30our Cattleman’s Association to avoid the U.S. and Mexico proceeding without farm. it. It overhauls rules affecting wide swaths of the CMB: And then were attending economy -requiring moreyou high-wage contentthe in Canadian Beef conference in protected Calgary auto manufacturing, opening Canada’s dairy market andand youallowing won. more duty-free shipments into Canada and Mexico. DF: Yeah! That was a very nice moment Two Canadian officials, speaking onuse condition of for us. But I don’t like to the anonymity, said it’s normal at this stage for that word win actually. However, being process to be ongoing. One said it could continue recognized for our commitment was for weeks after the signing. Under U.S. trade a realadministration honour. If you has want know the law, the Trump toto submit a prettyathumbling final text ofthe thetruth, deal ittowas Congress least 30 days experience. As I said to U.S. CBClawmakers when they before it can send legislation that phoned the USMCA. conference, I was would need to voteme on after to ratify just floored, believe it. The tariff fight remains really a key couldn’t nuisance. The U.S. imposed tariffs 25now percent on steel CMB:ofSo that you haveimports, been and 10 percent on aluminum imports, from recognized, do you think that will both countries earlier this year as part of Trump’s draw more attention and garner more trade agenda. Canada and Mexico retaliated with nominations out of Atlantic Canada penalties of their own on billions of dollars’ worth going forward? of U.S. products. DF:been Absolutely. a lot The U.S. has pushingWe’ve both gotten countries to of good press highlighting accept a quota in exchange for liftingthe theisland tariffs; Mexico, which a smallerI’m supplier of you’ll the metals cattleisindustry. positive see to the U.S.,more might be willing agree to quotas farms in ourto neck of the woods like those applied to South Korea, though nominated next year. And I havethat to give decision looks likely to fall to the new government, the Canadian Cattleman’s Association one person said. Canada has demanded the recognition for choosing a farm from removal of all tariffs the nations have placed on Prince Edward Island. We are small each other. players in the national beef industry Failing to remove the tariffs significantly and I think it was “will a real credit to their dampen enthusiasm for this deal, and could organization to recognize us. They lead to opposition from many agricultural and treated all the nominees manufacturing interests, said Rufusroyally Yerxa,and it was a real class act. It was wonderful president of the National Foreign Tradea Council in experience. the U.S. “For sectors like autos, dairy and pork, the costs of the steel and aluminum tariffs and the retaliation far outweigh the benefits of this new deal.” November/December 2018

FCC: CANADIAN PRODUCERS WEATHERING MARKET VOLATILITY Canadian producers are experiencing commodity price volatility due to an evolving and uncertain international trade environment, but that shouldn’t significantly impact Canada’s long-term export growth potential, according to a new Farm Credit Canada (FCC) trade report. “The past has shown that as market volatility diminishes, Canadian commodity prices revert to levels more in line with their averages and growth in Canadian exports flourishes,” said JP Gervais, FCC’s chief agricultural economist in releasing the report, Navigating Trade Disruptions and Volatility.

CANADA HAS RANKED AS THE WORLD’S FIFTH-LARGEST EXPORTER OF AGRICULTURE COMMODITIES SINCE 2011. BETWEEN 2007 AND 2014, CANADA ALSO RANKED 12TH OR 13TH IN WORLD EXPORTS OF FOOD PRODUCTS, A RANKING THAT HAS SINCE IMPROVED TO 11TH.

As several of the world’s largest trading nations redefine their trade relationships through the negotiations or the imposition of tariffs, many smaller exporting countries are getting caught in the crossfire. Canada has ranked as the world’s fifth-largest exporter of agriculture commodities since 2011. Between 2007 and 2014, Canada also ranked 12th or 13th in world exports of food products, a ranking that has since improved to 11th. The report looks at five commodities within three major export categories: oilseeds, cereals and meats. These categories represented 41 per cent of Canada’s agricultural commodity and food product exports, worth a total of US$46.2 billion in 2017. 16

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By analyzing periods of high volatility, the report shows that most large importers of Canadian canola and wheat tend to make smaller changes to their purchases than do importers of our soy, pork and beef. “We found that short-term price volatility cuts both ways,” Gervais said. “While trade uncertainty produces hesitation among some buyers, it also opens new markets and causes buying sprees among countries hedging against higher prices in the future.” Price volatility can also cause buyers to seek alternative sources for various commodities that may remain in place even after prices have normalized, so Canada needs to be aware of these opportunities and prepared to take advantage of them. “Our large export markets – the U.S., China and Japan – will always be central to our success, but developing new markets can help diversify our trade performance when disruptions occur,” Gervais said. Market volatility has an overall detrimental impact on the world economy, with the International Monetary Fund recently downgrading its world Gross Domestic Product projection from 3.9 per cent to 3.7 per cent expansion for 2018. Despite that reduction, the world’s appetite for Canadian agricultural commodities and food continues to grow, the report concludes. By sharing agriculture economic knowledge and forecasts, FCC provides solid insights and expertise to help those in the business of agriculture achieve their goals. For more information and insights on trade and its impact on Canadian agriculture, visit the FCC Ag Economics blog post at fcc.ca/ AgEconomics.

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November/December 17 July/August 2018 2017 CANADIAN MEAT BUSINESS 19

THE BEST DEFENSE IS A STRONG OFFENSE PROMOTING THE HEALTH BENEFITS OF MEAT AND POULTRY By Ronnie P. Cons

Red meat is often wrongly portrayed as being unhealthy. Even chicken has been getting attacked by some in the media as unhealthy or not environmentally friendly. Vegan, fish and other non-meat diets have been proposed as healthier alternatives. The result of this onslaught of negative meat messages has influenced many families to cut back on their meat and poultry purchases. Perceptions may reality but truth trumps misinformation. Parents and other consumers want what is best for their health and that of their families. They are also aware that a lot of false information is out there and as such, are open to scientific facts that can correct their misconceptions.

liver, 625 grams of cooked beef or an astounding 2.4 kg of spinach. Iron found in vegetables is harder to absorb than the iron found in meat as it is attached to fibre which inhibits its absorption.

THE COST OF CONVENIENCE

2. Eat Meat for a Healthier Brain! Being deficient in the micronutrients found in meat have been linked with low IQ, autism, depression and dementia says Dr. Charlotte Neumann, a paediatrician the University of “Canadians are spending more on food consumed outside the home; they’reatdining out more. This provides an opportunity for retail meat departments California, as quoted in the article ‘Brain food- clever eating’. to implement an instore ‘Healthy Meat Facts’than nutritional One consequence of this, other paying extra for tips, is that farmers are seeing less of Zinc is crucial for learning and memory. Vitamin B12 campaign to set the record straight and convince their each consumer’s food dollar. In other words, our pursuit convenience may be costing preserves thefor sheaths that protect nerves. customers that meat and poultry are actually good for one’s farmers.” health and that they should increase rather than decrease 3. Boost Your Immunity with Meat! their purchases of it. The campaign outlined below can have Due to its antioxidant powers, zinc is involved in creating By Dr. Sylvain Charlebois a direct impact on sales: antibodies to fight free radicals that increase our risk for Morediseases. Canadians are eating out. In fact, according to chronic Start by displaying instore posters promoting the nutritional some surveys, about 35% of the average Canadian’s value of meat. They should be innovative, eye catching and 4. Power Your Muscle Growth with Meat! CANADIANS ARE ALSO INCREASINGLY food budget is spent on food outside the be designed to specifically contradict any meat myths. The The protein in meat helps build and consumed repair body tissues. “EATING OUT AT HOME”, SO TO SPEAK. home. This would include restaurants, grab-and-go’s, comments should all be literature based quoting research Muscles are made of protein. That is why athletes who are papers MEAL or MDs for maximum effect. Various posters should and other portable food offerings. This is nowhere WITH KITS, AS AN EXAMPLE, YOUNG building muscle strength increase their meat consumption. be made - each with a brief but powerful message covering near what Americans food GENERATIONS ARE GRAVITATING TO QUICK The protein and zinc foundspend in meaton areout-of-household important for muscle one theme. consumption, which is now estimated at 55%, but growth and repair. SOLUTIONS FOR THEMSELVES AND THEIR Posters can convey the following healthy meat fact some studies suggest that by 2030, or perhaps even LOVED ONES. MEAL KITS OFFER HASSLE5. Meat is the Complete Protein! messages: sooner, Canadians spend as acids muchthat on your food Meat contains all of the will ninelikely essential amino FREE SOLUTIONS FOR CONSUMERS IN 1. Let’s IRON out the Truth on Meat! outside the home that bought in histidine, a groceryleucine, store. But body cannot make by as itself. Say ‘hello’ to A HURRY, OR to FOR WHO LACK “You would need eat aTHOSE massive amount of spinach to isoleucine, lycine, whether methionine, phenylalanine, tryptophan, some wonder this significant trend is good for IMAGINATION WITH PLANNING. equal (the iron content) in aMENU steak,” says Christopher Golden, threonine, valine. is why meat is called complete farmers.and And, if weThat look at production anda distribution an ecologist and epidemiologist at Harvard APPEAR University inTO protein. AGAIN, YOUNGER CONSUMERS costs, it isn’t. Cambridge, Massachusetts. (As quoted by nature.com in the BE ATTRACTED TO MEAL KITS, MORE SO 6. Eat Meat for a Healthy Heart! article ‘Brain food- clever eating’.) According to the USDA, farmers receive on average Meat contains lots of the B vitamins needed for the THAN OTHERS. anywhere 25 cells percent of the total cost For a woman to receive her recommended daily intake of 18 production of between hormones,20 redand blood and for the proper mg of iron, she would need just 300 grams of cooked bovine of a foodofproduct at retail. That percentage will vary, functioning your nervous system.

depending on how prices fluctuate. Back Say ‘hello’ to niacin, foliccommodity acid, thiamine, biotin, panthothenic in 2007, for example, when the prices of wheat, soya acid, vitamin B12 and vitamin B6. They are all found in meat.

and many agricultural commodities were soaring, that

The line that ‘the best defense is a good offense’ does not threshold 25%. Withtocommodity prices being only apply to exceeded sports. It also applies countering negative more stable these days, this an percentage has gone meat health myths. Implementing instore ‘Healthy Meat down somewhat. This rule would applystraight to Canadian Facts’ nutritional campaign to setlikely the record on meat and poultry.asIt well. is a good way to go on the offensive by using farmers education your customers and increasing your sales..

Some may believe such an amount to be much too low

Ronnie P. Cons is CEO of C&C Packing Inc., a leading Canadian distributor of and to can farmers, but transactional costs and the meat andunfair poultry. He be reached at RCons@CCpacking.com.

impact of distribution levies lessen the retail value of ingredients used to make a food product. Packaging, labour costs, assortment processes, all of these things

22 CANADIAN MEAT BUSINESS September/October 20172018 November/December 18

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add up -- it’s simple economics. But the same report by the USDA also claimed that farmers will typically receive about 4 percent of the food dollar spent away from home, at the restaurant. That is a significantly lower percentage, compared to the rate on the food we buy at the grocery store to cook at home. The economics of food distribution and the effects of omni channels, offering food through different retail points, do not appear to be helping farmers. Given how highly consolidated the food service industry is, companies like Sysco, Aramark, Cara, McDonald’s and Tim Horton’s will negotiate the best they can to increase margins. The actual portion of ingredient cost can only shrink as the commodity gets closer to the consumer’s dinner plate. And it’s going to get worse. A recent survey from Dalhousie University suggests that younger generations are going out more for dinner. Almost 40% of Canadian consumers aged 38 and under dine out at least once or twice a week. The number of consumers enjoying food outside the home likely has never been that high. In some metropolitan areas, certain condos are now sold without a kitchen. Without a kitchen! Kitchens are now part of the shared economy. Just like the principle of the Airbnb, owners will rent their kitchen to those wanting to cook dinner and host family and friends. It’s a new world out there. Canadians are also increasingly “eating out at home”, so to speak. With meal kits, as an example, young generations are gravitating to quick solutions for themselves and their loved ones. Meal kits offer hasslefree solutions for consumers in a hurry, or for those who lack imagination with menu planning. Again, younger consumers appear to be attracted to meal kits, more so than others.

The most significant drivers for higher food costs are service and convenience, and farmers appear to get little financial benefit from this shift. Spending less time cooking and washing dishes and more time ordering ready-to-eat food products will cost more, but the money spent will be used to cover other costs, not including the ingredients our farmers produce. These numbers are likely stating the obvious, but as food gains more market currency and consumers long for new culinary experiences and new tastes, it doesn’t necessarily mean farmers will get a bigger portion of our food bill. This is the nature of primary production and being price takers within the entire food chain. But there is hope for farmers. With improved distribution technologies and methods through which anyone can transact, farmers can connect with consumers and increase margins by offering ready-to-eat solutions themselves. More farmers are doing it. They not only increase margins, but they can also assess consumer preferences daily and improve what they do. The pursuit of convenience can also profit farmers, but they need to seize the day. 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.

Across the country, meal kits are priced anywhere between $9 and $12 a meal right now. Expensive for many. Even if tips are not necessary with meal kits, costs for ingredients represent a small portion of the total retail price. Meal kits require significant overhead and the nature of meal-kitting makes for a very labour-intensive endeavour. But the reality is this: In time, the economic influence of the younger crowd will only increase, and less of our food bill will go to farmers. Let’s do the math. The average Canadian family will likely spend about $11,700 on food by the time the year is over. In 2018, that same family will likely spend about $100 more on products offered by the food service sector like meal kits, restaurants and food trucks. If the USDA rule applies, farmers will get 4 percent of that $100. In other words, even if our food bill increases every year, the conversion rate of our food dollars, going from food retail to service, offsets gains made by increased sales in retail stores. November/December 2018

SEEING IS NOT ONLY BELIEVING … IT’S ALSO EATING Leveraging the Science on Viewing Food images to Drive Meat and Poultry Sales By Ronnie P. Cons Can the latest scientific research on the topic of viewing images of food – particularly those of meat and poultry help the meat department manager to develop strategies to drive an increase in their sales? The answer is a resounding yes.

At the physiological level, research has shown that viewing food images leads to an increase in salivation, phase release of insulin, and a heart rate change in expectation of food that is likely to come (Drobes et al.2001).

The fields of behavioural sciences, cognitive recognition and physiology have looked at the effects that viewing images of food have on our brains, emotions and our behavior. To start, humans have a natural desire to view appetizing foods. We actually enjoy the process of viewing them. This could be because our brains are wired to do so as a positive viewing experience will motivate consumption which is necessary for survival. This visual drive or satiation/pleasure is sometimes called ‘visual hunger’. Some research on this topic and subsequently related marketing advice is discussed in this article.

From this research we can make the following marketing suggestions to the meat department manager to drive more meat and poultry sales:

Let’s first discuss some brain research. Using visual evoked potentials (VEPs), scientists have learned that images of high-fat foods are processed differently and actually better motivate behavior than do low fat images. Brain PET scan studies have additionally shown that the sight and smell of appetizing food led to a 24% increase in brain metabolism (wang et al., 2004), (Charles Spence et al., 2016). Furthermore, brain scan studies showed that just looking at a static image of a desirable food leads to a significant change in neural activity (Wenk 2015). Other studies have also shown that looking at food images, especially high calorie or fatty foods, increase neural activity in the parts of the brain that deal with reward processing, learning, emotions, motor learning and coordination. In addition, EEG studies have shown that high calorie and fatty images even increase taste evaluation of a neutral substance placed on the tongue. That is, just looking at images of fatty foods will make the taste of a neutral item seem better than if one had just looked at an image of a less fatty food and then tasted the same neutral food. At the behavioral level, research has shown that food ads increase the desire to consume the foods that happen to be within reach. In addition, psychology studies have shown that viewing food images can lead to an inhibitory response of self restraint – possibly a built-in mechanism so that one does not attempt to eat everything one sees – which is unhealthy of course. 20

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Place high-quality photos of cooked meat and poultry products in the fridge section in order to stimulate a better neural response that can just be elicited by one viewing the actual raw product. Place high-quality photos of the take-out food items located in the take-out section in order to motivate their purchase. A nice photo of a succulent turkey sandwich or juicy turkey slices will motivate the purchase of the wrapped turkey product which is only moderately visually appealing behind the counter window. Some of the photos should be those of fatty or high calorie cuts and pieces to generate the most effective neural and salivation response. This can lead to sales of both fatty and non-fatty cuts. To overcome the inhibitory response that is sometimes elicited upon seeing food or a food photo, the manager should try to shorten the time bridge between when a consumer sees the photo and when he actually consumes the item depicted in the photo. This can be done by setting up personnel in the above-mentioned fridge and take out sections – next to the large meat posters-offering free samples of the depicted foods. Thus, seeing the food pictures and food will immediately lead to its consumption which will then increase the probability of a purchase behavior as the consumer’s salivation and eating response will be in full swing. Lastly, have only a professional food photographer take all meat photos. This photographer will understand some of the above facts to elicit the best neural and behavioral result. So, let’s leverage the science on viewing food images to drive meat and poultry sales. Afterall, ‘Seeing is not only believing …. It’s also Eating.’ Ronnie P. Cons is the CEO of C&C packing Inc., a leading Canadian Meat and Poultry distributor. He can be contacted at rcons@ ccpacking.com.

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November/December 2018

NSF INTERNATIONAL ANNOUNCES 2018 CANADIAN FOOD SAFETY RECOGNITION AWARD WINNERS Awards presented annually to Canadian food and beverage companies and individuals making contributions to food safety NSF International, a global public health organization, have announced the winners of the NSF International 2018 Food Safety Recognition Awards. The awards recognize Canadian food and beverage companies and individuals that have made great contributions to food safety, whether by leading food safety efforts within an organization, contributing to advances in food safety science or engaging in food safety public education and action.

food safety efforts and the team responsible for Trophy Foods’ AA+ BRC rating at its Mississauga and Calgary facilities. He is being recognized not only for his contributions and leadership at Trophy Foods, but for his contributions to the broader food industry. Gordon’s commitment to food safety is demonstrated through his academic involvement, regular speaking engagement at conferences across the globe and his work as an approved BRC trainer.

This year’s winners are:

Food Safety Excellence Award – Maple Lodge Farms, Brampton, Ontario

Food Safety Leadership Award – Gordon Hayburn, Vice President, Food Safety and Quality, Trophy Foods, Mississauga, Ontario In his current role, Hayburn leads the company’s 22

November/December 2018

Maple Lodge Farms is Canada’s largest independently owned poultry processor. Maple Lodge Farms is being recognized for its positive food safety culture and the leadership role it’s taking on influencing food safety policy and issues. Healthcare Food Services in Ottawa, Ontario was a runner-up for the Food Safety Excellence Award. There are many food safety success stories in Canada and we created these awards as a mechanism for sharing and celebrating those achievements,” said Paul Medeiros, Managing Director of NSF International’s Food Safety Consulting and Technical Services in

North America. “The NSF International Canadian Food Safety Recognition Awards recognize and encourage excellence and innovation in management practices, leadership, processes and technologies that advance food safety in Canada.”

About NSF International: NSF International (nsf.org) is an independent, global organization that facilitates standards development, and tests and certifies products for the food, water and consumer goods industries to minimize adverse health effects and protect the environment. Founded in 1944, NSF is committed to protecting human health and safety worldwide.

NEW SURREY SLAUGHTERHOUSE ‘WOULD OPEN DOOR’ TO NEW BEEF MARKETS

Each year, an independent panel of food safety experts from academia, industry and the regulatory community reviews nominations from across Canada to select the recipients. Nominations are evaluated on the basis of excellence and leadership in the advancement of food safety.

To learn more about the awards criteria and view this year’s winners, visit nsfcandada.ca

Proposed 30,000-square-foot beef abattoir in Cloverdale would be B.C.’s largest such facility By Amy Reid, Peace Arch News A federally licensed beef processing facility is in the works in Surrey, BC. “There’s a new building coming forward, a new abattoir, I think that’s the French pronunciation of slaughterhouse,” said Councillor Mike Starchuk. “So Surrey will have a newer facility with a better capacity so people will have the ability to not have to ship an animal to Alberta to have it processed. The applications have gone through the Agricultural and Food Sustainability Advisory Committee.” The facility is proposed on a 25-acre property within the Agricultural Land Reserve at 5175 184th St. The planned 30,000-square foot abattoir in Cloverdale would process up to 100 head of cattle per day. According to a city report, that would make it larger than any other processing facility in B.C.. But it would still be small by industry standards, compared to the largest meat processing plants in Alberta that process 3,000 heads of cattle per day. The proposed facility would be fully enclosed and designed

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so as to not emit odours. And while there is an operational 6,000-square-foot abattoir on the property now, it’s can only process a limited number of cattle. Chris Les is general manager of Meadow Valley Meats, the company behind the project. Meadow Valley Meats is seeking a Canadian Food Inspection Agency license for the proposed abattoir, to become a federally registered meat establishment and expand the operation. This would allow the meat products to be transported beyond B.C.’s boundaries. “Our focus is on trying to bring a more efficient, sustainable local product to the market, realizing we can do that now in a very limited sense,” said Les. “I caution people when talking to them and they say, ‘What a big plant, that’s going to go allow you to go mainstream.’ Well, yes, if you look in the context of B.C., but this is still a very niche plant and we’ll serve a niche industry for producers and for the market. It’s certainly not going to be a monstrosity of a plant but it’ll be a big upgrade from the site currently.” Continued on page 32

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UFA SUPPORTS OLDS COLLEGE WITH $500,000 United Farmers of Alberta Co-operative Limited (UFA) has announced a $500,000 commitment to Olds College and its focus on agriculture innovation and technology. The five-year financial commitment enables Olds College to create the UFA Innovation Lab, located on campus inside the Smart Ag Innovation Centre. Construction is expected to be complete in December 2018. The lab will be “a dedicated technological hub on campus where students and faculty can gain and share knowledge, build networks and turn innovative ideas into technological solutions that can benefit the agricultural industry,” says Olds College President, Stuart Cullum. “Not only is the donation from UFA an investment in the student experience but it’s an investment in the future of agriculture,” says Cullum. “Students who have a keen interest on solving issues in the industry, now have a place to go. They’ll be able to explore new ideas, test innovative products and processes, and ultimately express their entrepreneurial creativity in ways that will make a positive impact on Alberta’s agriculture sector.” UFA President & CEO, Carol Kitchen says the donation makes sense from a business perspective. “At UFA we are committed to investing and supporting technology and innovation especially as it pertains to new solutions for agricultural industries. The investment at Olds College is another example of how as a forwardthinking co-operative, we are focused on collaborating with our agricultural partners to actively engage, learn from and work with young minds in our community. Ultimately, our goal is to support the success of our members and their operations. We are confident that the investment at Olds College will help to do just that today and well into the future.” In addition to the creation of the UFA Innovation Lab, the donation will help fund the Olds College Smart Farm. The Smart Farm uses cutting edge technology to provide a hands-on learning environment for students of the College and an opportunity for industry to develop, integrate and test new agriculture technology and practices. “The impact of this donation reaches further than the College or even Alberta for that matter,” adds Cullum. “ The UFA Innovation Lab and the Olds College Smart Farm create an open environment for collaboration and research among industry and other post-secondary 24

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institutions to work together to advance the agriculture industry. Together we are facilitating engagement to address the issues and challenges facing agriculture, in order for our ag sector to produce more while using less.”

THE FIVE-YEAR FINANCIAL COMMITMENT ENABLES OLDS COLLEGE TO CREATE THE UFA INNOVATION LAB, LOCATED ON CAMPUS INSIDE THE SMART AG INNOVATION CENTRE. CONSTRUCTION IS EXPECTED TO BE COMPLETE IN DECEMBER 2018.

The signing of the agreement brings together two longstanding advocates with rich agricultural history in the province. Founded as an agricultural co-operative in 1909, UFA works to improve the economic and social well-being of its member-owners and their communities. Olds College opened its doors in 1913 as an educational institution and today is one of Canada’s premier integrated learning and applied research communities specializing in agriculture, horticulture, land and environmental management. Both organizations are excited about this unique partnership and the promise it holds for Alberta’s agriculture industry. Current Olds College student, Delanie Knull is excited about the investment. “The UFA Innovation Lab and Smart Farm are exciting opportunities for students like me who want to explore technology and try new things. Being able to learn by doing and by experimenting in a hands-on setting is what I’m most excited about. I’m eager to share my ideas and to bring them to life! As an agriculture student, you sometimes wonder what the future of farming looks like. It’s encouraging to know that organizations like UFA place value in investing into my future, which I think looks very bright.” Founded in 1909, UFA Co-operative Limited is an Alberta-based agricultural co-operative with more than 120,000 member-owners. For more information, visit www.UFA.com.

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November/December 2018

NEW WORKING GROUP FOR POULTRY AND EGG SECTORS Canadian farmers and food businesses are vital to Canada’s prosperity, creating good jobs, growing the middle class, supporting rural communities, and bringing high-quality products to the tables of Canadian consumers. Minister of Agriculture and Agri-Food, Lawrence MacAulay, has announced a new working group comprised of poultry and egg farmers and processors. “This working group will ensure the voices of the hardworking men and women who are building and growing our farm businesses are heard and reflected, as we develop a path forward to ensure our poultry and egg sectors remain strong and competitive well into the future,” MacAulay stated. “Together, we will make sure our industries are well-positioned to thrive. We will engage with provincial and territorial governments on an ongoing basis throughout the collaboration process” While informal engagement has already begun with the poultry and egg sector, the working group brings together officials from Agriculture and Agri-Food Canada, representatives from national poultry and egg organizations and associations, as well as regional representatives.

The working group will collaborate to develop strategies to fully and fairly support farmers and processors to help them adjust to the United States-Mexico-Canada Agreement (USMCA). It will also discuss support to reflect the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In addition to discussing impacts of the trade agreements in the short term, the working group will also chart a path forward to help the poultry and egg sectors innovate and remain an important source of jobs and economic growth for future generations. Supporting expertise to the working group may also include academic leaders, as well as industry and financial experts, as necessary. The federal government will engage with provincial and territorial governments on an ongoing basis throughout the collaboration process.

FCC DRIVE AWAY HUNGER PROVIDES OVER 9.5 MILLION MEALS Farm Credit Canada (FCC), along with its industry partners, participating schools and volunteers, have provided over 9.5 million meals for food banks and feeding programs nationwide, surpassing this year’s goal for FCC Drive Away Hunger. “FCC Drive Away Hunger goes a long way toward replenishing the shelves at food banks and supporting school feeding programs across the country and this year was no different,” said Michael Hoffort, FCC president and CEO, in announcing the results of this year’s collection in support of Canada’s food banks. “We know that reducing hunger in Canada is a year-round effort, so we hope we’ve inspired many to continue donating to food banks throughout the year to help those most in need.” To mark the 15th anniversary of FCC Drive Away Hunger, FCC teams drove tractors through various communities to collect food and donations for 15 days, beginning on October 4. Tractor tours were held in almost every province in cooperation with industry partners and schools. “We are proud to serve those who work every day to produce food and thankful for our partners, food bank volunteers, as well as the teachers and students who took the time to organize and participate in food drives,” Hoffort said. “It’s truly inspiring to see countless volunteers working together to help make a difference in so many lives.” 26

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Partners are a major contributor to the success of FCC Drive Away Hunger. Platinum partners were BDO Canada LLP, The Meat Factory Limited, Courchesne Larose, Chenail Fruits & Legumes and Dedicated Harvesters. They have committed to provide food and funds to feed the hungry through FCC Drive Away Hunger. Parrish & Heimbecker Limited, Windset Farms, Co-op, Ray-Mont Logistics International, Nutrigroupe, Groupe Vegco Inc, VegPro International Inc., Paysan and duBreton have also joined as national partners. In addition to its annual food collection tractor tour, FCC contributed a total of $100,000 in support of food programs offered at 100 schools across Canada. In September, each school received $1,000 to feed hungry children at school. FCC Drive Away Hunger is FCC’s flagship community investment program. Since 2004, FCC employees, customers and community partners have provided over 50 million meals to food banks in Canada. To learn more, visit fccdriveawayhunger.ca.

MACAULAY CONCLUDES SUCCESSFUL AGRICULTURAL MISSION TO CHINA Advancing market access opportunities in China for our farmers, processors and exporters is key to the continued growth of the Canadian economy, and to achieving the Government of Canada’s target of increasing global agricultural exports to $75 billion by 2025.

INOTEC LINK CUTTER HONORED

over $285 million in new sales for Canada’s innovative and worldMinister of Agriculture and Agri-Food, the Honourable Lawrence class agriculture, food and seafood sectors. MacAulay, today wrapped up a successful 10-day visit to China, which included Canada and China signing 18 agriculture and Minister MacAulay also took the opportunity to meet with his agri-food agreements worth over $353 million. Throughout the counterpart, China’s Minister of Agriculture and Rural Affairs, mission, Minister MacAulay strengthened Canada’s position as Han Changfu to discuss key trade issues including canola, a strong trading partner showcased Canadian Tom,agricultural Kittle, president ofand the Handtmann US and Canadianand operations that represent INOTEC, biotechnology science cooperation. Like Canada, China agriculture, agri-food and seafood products, building upon and understands the critical importance of science and technology has announced that the new generation INOTEC WT99-iT Link Cutter was recently honoured with expanding relationships with China’s growing e-commerce to food security and economic growth. theThese highest equipment design award byin deals Germany’s oldest independent design institution, the sector. agreements contributed to the $1.67 billion Fast Facts struck by all Canadian companies over the 10-day located period. in Hannover. International Forum Design GmbH, • China is Canada’s second-largest trading partner in Minister MacAulay led Canada’s delegation at the Canada Selected from more than 5,000 applicants from 59 processors. In fact, agriculture and food. the iT series is a model for modern Pavilion at the China International Import countries, the INOTEC WT99-iT link Expo cutter(CIIE) was in noted for food processing equipment design with simple controls, • rounded Close toedges, 100 participants, representing 65 agricultural Shanghai. Over 100,000 people visited Canada’s its outstanding hygienic design and dynamicnational precision many ergonomic features, free access to all organizations/companies from across Canada were part of pavilion, while approximately thousandthat toured performance with provennine technology has Canada’s been elements for maintenance and cleaning, and faster speeds this agricultural mission including representatives from the virtual pavilion from online. In addition, over 60 Canadian companies upgraded previous generations in every critical area made possible by even more precise cutting. livestock, pork, beef, processed food and horticulture sectors. participated part of theperformance, Business Exhibition, which also affectingas sanitation, reliability and simplicity INOTEC iT series link cutters work with all sausage types attracted • In 2017, two-way merchandise trade between the countries of use.thousands of visitors. with extremely high precision at speeds up to 1800 cuts reached nearly $94.5 billion in value, accounting for 8.4% of As in past years, Minister MacAulay attended the Chinawith Fisheries The new iT generation link cutters are complying all per minute for very efficient pairing with high performance Canada’s total merchandise trade. andof Seafood Expo (CFSE) andand Food and Hotel China (FHC) the hygiene, sanitation ergonomics requirements packaging machines. to promote Canadian agriculture. These two tradeshows were • For In more 2017,information, two-way visit trade in services between Canada and China and are meeting all of the demands for efficiency and http://www.Handtmann.us/Inotec or attended by over 120,000 people and are anticipated to generate reached $6.2 billion in value. reliability in the heavy duty working environments of modern http://www.Handtmann.ca/inotec

November/December 2018 meatbusiness.ca

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SAFE FOOD FOR CANADIANS REGULATIONS COMING INTO FORCE In June 2018, the Government of Canada announced the Safe Food for Canadians Regulations, which will protect Canadian families by making the food system even safer by focusing on prevention and allowing for faster removal of unsafe food from the marketplace. Speaking at the recent Food Safety Forum in Gatineau, Quebec, Jean-Claude Poissant, Parliamentary Secretary to the Minister of Agriculture and Agri-Food, highlighted that the new regulations will come into effect in two months. In his speech, Poissant emphasized that the Safe Food for Canadians Regulations will reduce unnecessary administrative burden on businesses by replacing 14 sets of regulations with one, and will help maintain and grow market access for Canada’s agri-food and agricultural sector.

THE UNITED STATES HAS RECENTLY MADE IT A REQUIREMENT FOR ALL CANADIAN BUSINESSES THAT SHIP FOOD TO THE US TO MEET THEIR NEW FOOD SAFETY STANDARDS. THE SAFE FOOD FOR CANADIANS REGULATIONS WILL PERMIT CANADIAN FOOD BUSINESSES TO ACQUIRE A LICENCE THAT DEMONSTRATES THAT THEY MEET THE REQUIREMENTS UNDER THE U.S. FOREIGN SUPPLIER VERIFICATION PROGRAM AND CONTINUE TRADING WITH THE U.S. “The Safe Food for Canadians Regulations are the result of an unprecedented level of consultation with the agriculture sector and other stakeholders. They will enhance Canada’s reputation as a global leader in food safety, while expanding market access for Canadian food products”, stated Poissant. Depending on the food commodity, type of activity and business size, compliance with some requirements will be necessary immediately on January 15, 2019 while others will be phased in over the following 12-30 months. Chris White, President and CEO, Canadian Meat Council (CMC) said, “CMC has a long-standing relationship with the CFIA and these regulations are an essential building block of a risk-based, modern food safety system that will improve consistency and allow companies more flexibility to run their businesses.” The new regulations will require food businesses that import or prepare food for export or to be sent across provincial or territorial borders to have licences, as well as 28

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preventive controls that outline steps to address potential risks to food safety. They will also help reduce the time it takes to remove unsafe food from the marketplace by requiring businesses to trace their food back to their supplier and forward to whom they sold their products. “These new outcome-based regulations are forwardthinking and support the introduction of new, safe innovative foods in the Canadian marketplace. Food and Consumer Products of Canada (FCPC) wishes to thank the CFIA for helping our members adapt to the changes needed under the regulations and providing guidance on how to leverage new food safety requirements to support our important continued trade relationship with the U.S., stated Susan Abel, Vice President, Safety & Compliance, Food and Consumer Products Canada. “We are confident that our members will transition readily through the adaptation of existing food safety programs to meet the needs of the new Regulations.” The United States has recently made it a requirement for all Canadian businesses that ship food to the US to meet their new food safety standards. The Safe Food for Canadians Regulations will permit Canadian food businesses to acquire a licence that demonstrates that they meet the requirements under the U.S. Foreign Supplier Verification Program and continue trading with the U.S. Businesses that require a licence will have to attest that they have preventive controls in place (such as sanitation and pest control measures) and businesses with $100K or more in annual sales will have to prepare a written prevention control plan. Businesses are encouraged to enrol now in My CFIA and be prepared to apply for their licence when it becomes available. My CFIA is a convenient and secure way to do business with the Canadian Food Inspection Agency (CFIA). Businesses can manage and track service requests online, including permissions such as licences, permits, registrations and export certificates. Those who submit SFCR licence applications by email or fax will be redirected to apply using the My CFIA portal. The CFIA is sharing information with industry in face-to-face sessions across the country as well as through webinars. More webinars will be offered over the coming weeks. Details will be posted to the CFIA website as they become available. For more information, visit http://inspection.gc.ca

MAPLE LEAF COMPLETES ACQUISITION OF VIAU FOODS Builds market leadership in premium Italian, cooked and dry cured meats Maple Leaf Foods Inc. has that it has closed the acquisition of VIAU Foods, a Canadian market leader in premium Italian cooked, dry-cured and charcuterie meats, for a purchase price of $215 million, including $30 million in Maple Leaf stock. With sales of $180 million as of fiscal year ended March 31, 2018, the transaction is expected to be accretive to Maple Leaf’s earnings per share in the first year and to the Company’s margin expansion over time.

ESTABLISHED IN 1977, VIAU PRODUCES A RANGE OF VALUE-ADDED PREPARED MEAT PRODUCTS INCLUDING ITALIAN COOKED MEATS, SAUSAGES, PIZZA TOPPINGS, SHAVED STEAK AND MEATBALLS. IT ALSO PRODUCES A RANGE OF GOURMET DELI AND PREMIUM CHARCUTERIE PRODUCTS INCLUDING SALAMETTI, CAPICOLLO, PANCETTA AND SLICED CHORIZO. Established in 1977, VIAU produces a range of valueadded prepared meat products including Italian cooked meats, sausages, pizza toppings, shaved steak and meatballs. It also produces a range of gourmet deli and premium charcuterie products including salametti, capicollo, pancetta and sliced chorizo. VIAU

is a leading supplier of dried pepperoni and other pizza toppings to the North American foodservice industry and markets its products through retailers across Canada. This acquisition expands Maple Leaf’s position in the growing market for premium dry cured and pepperoni meat products and provides further production capacity in Quebec, an important strategic base to grow both Canadian and U.S. sales. It also enables VIAU to expand its portfolio to include raised without antibiotic products, leveraging Maple Leaf’s leadership in this growing market. VIAU employs 470 people at its two Hazard Analysis Critical Control Point (HACCP), United States Department of Agriculture (USDA) and Safe Quality Food (SQF) accredited facilities in Laval and Montreal. It follows leading food safety practices, supported by an on-site ISO accredited laboratory. The business will continue to be led by the current highly experienced management team. About Maple Leaf Foods Maple Leaf Foods Inc. is a leading consumer protein company, making high quality, innovative products under national brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders® Country Naturals®, Mina®, SWIFT®, Lightlife™ and Field Roast Grain Meat Co.™. Maple Leaf employs approximately 11,500 people and does business in Canada, the U.S. and Asia. The Company is headquartered in Mississauga, Ontario and its shares trade on the Toronto Stock Exchange (MFI).

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TIME TO CELEBRATE, NOT SLIGHT, CANADIAN FARM FAMILIES With an elementary school aged son, a heavy workload and an often unpredictable travel schedule, I know that I would be lost if I didn’t have a tremendously supportive and understanding spouse (who balances her own full-time work schedule). If asked, I’m sure many working Canadians would report the same. But for independent business owners, especially farmers, a spouse is more than a support; they are a business partner on many levels. In fact, agri-businesses are much more likely than other businesses to employ family members (85% compared to 68%, respectively), according to a 2016 CFIB member survey. Farmers’ spouses and family members typically become not only their biggest cheerleaders, but also their closest professional partners, in both formal and informal ways. Making the family-work life even more intertwined is the fact that farmers often live where they work and the job is rarely a typical 9 to 5. Caring for animals and harvesting late at night means family time and work time fuse together. Spouses also share the uncertainties and the sacrifices owners make for their farm–including long hours with no days off, the inability to take a family vacation, an unclear financial future, or even family bills going unpaid during bad years. And I’ve met many spouses who have had to step in and run the farm when something happened to their partner because you can’t simply put a “closed” sign up on a farm. So it was jarring when the federal government introduced new rules on income splitting late last year, severely limiting small business owners and farmers’ ability to include their family members’ contributions in their tax calculations starting on January 1, 2018. Even more so because details of the changes were announced only two and a half weeks before they were to come into effect, with next to no consultation and despite protests from business groups, tax professionals and the Senate. The government claimed the suite of new rules for sharing dividends or salaries with family members would have only a modest impact, affecting a handful of high income earners. Unfortunately, upon greater review, this will affect tens of thousands of independent family businesses. In fact, the independent Parliamentary Budget Officer estimates that the new tax revenue to government will be two to three times higher than government estimated and noted that it is extremely difficult to determine who will be affected by the new rules. One of my greatest concerns is that it remains very difficult for any business owner–even for tax professionals – to clearly understand the new rules. A confusing mix of 30

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“bright line” and “reasonableness” tests, exemptions for some, but not for others will now be passed to the Canada Revenue Agency to interpret and sort out. And this was all done essentially retroactively, before business owners were able to sort out and make changes to accommodate the new rules. Expect another round of panic among business owners when the audits of the 2018 tax year begin. What is clear is that it will be nearly impossible for the CRA to sort out all of the formal and informal ways family members are involved in a family farm or other agribusiness. Even family members who are not actively involved in the day to day operations are heavily implicated – as risk takers, extra labour, potential successors and investors. I think of my colleague’s cousin whose wife runs a ranch. In addition to his job in the oil sector he would spend mornings, evenings and weekends helping on the farm, be it branding, calving or nursing an orphaned calf. I think of the woman I know who suddenly had to quit her day job in Manitoba to lead the family auto-body shop when her husband suddenly died. Or the wife of a farmer who does the books at home while her husband focuses on running the farm. How CRA will interpret the thousands of unique and often informal roles spouses play over the life of a business is anyone’s guess. What has gotten lost in the discussion around income sprinkling is who these measures were originally designed to help. These aren’t CEOs of large corporations looking to offload some income on an uninvolved spouse so they can dodge taxes. These are typically long-running, family farms where everyone in the family lends a hand. The contribution of family members, particularly spouses, should not be erased by a government that hasn’t really tried to understand the reality of running a farm. CFIB is calling on all parties–including the current government–to commit to a full spousal exemption when business income or dividends are shared. The spouses of Canadian agribusiness owners deserve this kind of respect. Dan Kelly is president of the Canadian Federation of Independent Business and lead spokesman and advocate for the views of CFIB’s 110,000 small and medium-sized member businesses (7,200 agribusiness members) across Canada.

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