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Eggs
Chicken
CHF
POTC
Canada Shelves Trade Complaint over U.S. Meat Rule Workshop on Animal Welfare and Canadian Egg Production National Farm Products Council New Website Diamond and Moba Join Forces in the Americas Merial Becomes Exclusive Distributor of AviTech in ovo Injection Systems Conferences, Courses and Workshops
2008 was quite a year! The Canadian dollar, which the world views as largely commodity based (oil, grain, etc.), made an amazing run and by summer was above par with the US greenback…only to lose what it had gained just as dramatically so that by year end it was back in the 80¢ range again. Feed prices climbed steadily throughout the year, pushing the farm gate cost of Canadian supply managed poultry products up by nearly 20% in some cases. Despite a cooling of some new construction in the ethanol business, an increasing amount of grain continues to be destined toward biofuels. The WTO trade negotiations likely came closer to agreement at the July Ministerial meeting in Geneva, than at any time earlier in the Doha Round. The Canadian poultry industry finally embarked on a surveillance program for AI in commercial flocks. After a lot of effort behind the scenes the program tests commercial roaster, spent hen and turkey flocks pre-slaughter and has required the cooperation of all CPEPC chicken and turkey processors and Canadian farmers with CFIA. The Canadian pork and beef markets were very difficult in 2008 as the combination of increased feed costs, the higher loonie and the US COOL legislation all conspired against these export oriented industries. Add to this the listeria incident in the last quarter of the year, which continues to affect not only beef and pork ready to eat products, but chicken and turkey deli product sales as well. In the latter half of the year a world economic downturn hit fast and hard, resulting in huge loss of value in stock markets around the world, significant loss of jobs and business bankruptcies. Both Canada and the US held elections and each produced novel if not unprecedented results – the Canadian parliament was prorogued in order to avoid a coalition government and Barrack Obama was elected the first black president of the USA. As we look toward 2009 it appears that: we are set to experience the worst recession since the 1930’s; the Canadian dollar will settle into its current range; world grain markets will continue to be influenced by US supply and demand – the expected growth in ethanol production influencing the latter; the Canadian pork and beef industries should improve due to lower production. Canada’s supply managed poultry farm gate prices showed a decline based on feed costs in the first part of 2009, but futures are already showing increases again in feed costs and we expect that in the mid to longer term feed prices will continue to be historically high. Millions will watch President Obama’s inauguration and are hopeful that the new American president can live up to the huge challenges that face us in the coming year. In Canada, we will wait to see if the Harper government’s budget will convince opposition parties to work collaboratively to address the financial issues which threaten many Canadians.
No doubt many are glad to see 2008 done, but are apprehensive as to what 2009 will hold. It is hard to forecast what to expect in the
next 12 months, unprecedented events seem to be increasingly common. Similar to chicken, 2008 was a bad year for turkey processors. It was mitigated by a co-operative pricing agreement that saw processors and producers share the increased cost due to feed (an agreement that will also see any reductions shared in the same manner). In addition, the new turkey allocation system allows for processors to reduce FP allocation and there is the likelihood of a reduction in whole bird allocation through the Turkey Market Advisory Committee process as well. The relationship between processors and producers on allocation is much better than in the chicken industry, with the biggest hitch being the length of the cycle – which means that almost all the decrease in allocation will not occur until 2009. In turkey, the allocation system is not perfect yet. There are issues of regulation, penalty and audit which have been delayed too long and are under challenge from one province. In addition, dealing with new requirements for bagged production is a major issue being dealt with by a sub-committee of CTMA (that sub-committee includes representation from processors and further processors). For the third year in a row there is more demand than there is TRQ to fill the demand. This year, processors of FTA products that compete with finished product that can come across the border tariff free, only received 84% of their requirements. CTMA and CPEPC (along with FPPAC) have been cooperative in their recommendations to DFAIT for how to deal with the issues that this creates, but DFAIT has not fully followed industry recommendations. There will likely be a new, separate turkey TQAC established next year to deal with these growing issues. CPEPC enjoys a good working relationship with CTMA on a number of issues – which will be critical as we deal with WTO, TRQ shortfall, outstanding allocation system issues, animal welfare etc, in 2009.
The structural changes within the egg sectors experienced throughout 2007 stabilized considerably in 2008. The table egg and processed egg markets showed moderate growth over the year. Graders participated in an on-carton promotion early in 2008 and it was deemed to be a success in boosting sales in a traditionally slow sales period. The promotion is being repeated for 2009 and similar results are expected. The Egg Farmers of Canada (EFC) National Egg Supply Team (NEST) continued its work on specific supply related issues throughout the year. CPEPC members on the committee are encouraging the group to actively pursue ways and means of leveling out the supply of eggs by better managing the placement of layers. This is crucial to both graders and processors. EFC has planned to schedule a workshop in January, 2009 for retailers on animal welfare and Canadian egg production. Some CPEPC members will also participate in that initiative. It is intended to provide retailers with a better understanding of the egg system and on-farm activities in Canada. EFC and egg processors have had a number of meetings over the past year in an attempt to come to agreement on a new contract. The last contract expired October 31, 2007. EFC recommended a new approach to the negotiations whereby each side would submit a list of issues and then work jointly to resolve them. Processors agreed with the process and it initially worked well but when the key issues on pricing were addressed, the initiative broke down. At that time, it was agreed to suspend negotiations for a period of time to allow the development of a new negotiating process. The terms of sale of the expired contract are being followed until a new agreement is reached. Industrial Product pricing has remained strong throughout the year due to higher U.S. prices and a weaker CDN $. This allowed the EFC to lower the national levy and still end the year with $60 million in the Pooled Income Fund. All in all, it was a solid year for the egg industry in Canada. As we noted in last year’s “Year in Review” article, 2007 ended much poorer than it began as members felt pressure on the cost side of their business and on the sales side, both for exports and domestically, as all proteins deal with a new cost reality and compete for share of consumers’ stomachs. Things moved from bad to worse for chicken processors as live cost increased by 20% year over year (end of 2007 vs. end of 2008) – which equaled 33¢/kilogram on an eviscerated basis. The wholesale market was basically flat comparing the same two points in time. Demand is also basically flat as per capita consumption has not increased. Primary chicken processors have suffered through an entire year with the worst sustained gross margins for many years. One result has been 4 written complaints in the last 7 periods! The patience of our chicken sector members regarding fixing the allocation system has worn thin. CPEPC & CFC work cooperatively and productively on a myriad of issues, but our ongoing inability to agree on allocation system issues threatens the relationship on every level. As we head into 2009, processors are hopeful that an NFPC Oversight Committee will help facilitate the much needed changes to the allocation system that will ensure profitability for all sectors of the supply chain. The Market Development Program is under scrutiny and perceived issues with this program have resulted in some stakeholders wanting a full review of the program and its underlying principles. Meanwhile, the trial period for use of product from outside of a province to fulfill MDP commitments passed and CFC decided to extend it temporarily while they review what, if any effect, the amendment had on the program. For Chicken TRQ the issue of more demand than supply has been ongoing for 6 years and the “shortfall” in 2008 was 7 million kilograms. The downstream members of the Tariff Quota Advisory Committee have agreed on recommendations to the International Trade Minister that could form the basis of a long term allocation method for 2009 and beyond. CFC continues to oppose some of these recommendations and the process continues to be one that industry works through. Looking ahead, the key issues of allocation system reform and pressure for differential growth will join the outstanding cross cutting issues of: managing cost, WTO and CFIA inspection reform items as critical for 2009.
The Canadian Hatchery Federation (CHF) efforts continued throughout the year on a number of different issues with CFIA. CHF members pursued CFIA to commence the scientific subcommittee to help deal with a number of issues that continue to arise in the hatchery industry. The scientific subcommittee discussions began back in 2006 and was expected to help resolve some of the issues arising from the hatchery regulations discussions and hatchery HACCP issues, specifically from a science perspective, however, this subcommittee has yet to hold its first meeting. The AI outbreak in Saskatchewan, which involved a broiler breeder operation, continued to impact the industry in Saskatchewan. The National and Saskatchewan industries worked together to develop solutions to ensure the hatcheries in Saskatchewan were able to meet their requirements. This also gave the industry the opportunity to meet and discuss and be better prepared for any future outbreaks. Although there were large swings in periodic allocations from Chicken Farmers of Canada (CFC), Canadian Hatching Egg Producers (CHEP) dealt with their 2008 allocation quite well, which allowed for use of the domestic product and almost 100% usage of both the hatching egg and chick TRQ’s. There is not expected to be any redistribution of TRQ in 2009, which will relieve concerns CHEP has expressed over the last few years. As a result of the new CHEP Proclamation, the CHF was able to elect their first Director, Tom Fleming from Maple Lodge Farms in Ontario, to represent the hatcheries across Canada. CHEP began the year with four member provinces (Ontario, Quebec, British Columbia and Manitoba), however, by the end of 2008, both Saskatchewan and Alberta signed contracts with the Agency with hopes of being full members in the near future. Once CHEP has 5 or more member provinces, CHF will have the ability to elect two Directors to the CHEP Board, one from the West of the Manitoba/Ontario border and one from the East. CHF and CHEP continue to meet and work together on a number of issues that involve both parties. Some of these issues include the broiler hatching egg and chick TRQ, Approved Hatchery Supply Flocks, AI in Saskatchewan, etc. CHEP has also formed a subcommittee to review their allocation system where CHF has been invited to participate. The CHF leghorn hatcheries continue to be involved with and support the Leghorn Breeder and Pullet Flock insurance initiative that will insure the leghorn industry for Se. This initiative continued to move forward throughout the year with funding and implementation expected in March 2009. The CHF leghorn hatcheries working group continues to work with the L-CHEQ (leghorn breeder on farm food safety) program that was developed by CHF and expects to have members participating in this insurance program. 2008 has been an active year for technical issues and the POTC committee continues to grow in numbers and strengthen with knowledge and experience. The October meeting was the last for Ms. Nyla Dubiel of Lilydale in the role of Chair and we thank her for the frank perspective and open discussions she brought to the committee. Dr. Eloualid Benabid will assume the role beginning at our February meeting. As a veterinarian for Olymel with involvement in the quality department and animal welfare Eloualid will be a great source of knowledge for POTC. The Vice Chair role has been assumed by Mr. Wayne Sprung of Maple Leaf. After a stint in the egg business, Wayne is back to meat processing and is an active contributor to POTC discussions. Poultry Rejection Policy - The PRP has been operating in 3 pilot plants for most of 2008 and results are very favourable. Once the industry rejecters are trained by CFIA inspectors in phase 3 of implementation, the analysis shows that the accuracy of industry rejecters is so accurate it’s virtually immeasurable. Full implementation of the PRP appears to result in less condemned carcasses. CFIA reportedly intended to implement in all Quebec slaughter facilities by the end of 2008 and then across the country in all MPIP plants as CFIA training resources would allow. CVS - CFIA’s Compliance Verification System rolled out in meat processing facilities throughout the spring of 2008. It is a method by which CFIA inspectors can verify that regulatory compliance is being met. As with any new system, there has been a period of adjustment along the way. The program was introduced through cross country Industry Days in the fall of 2007 which proved very useful given the attendance. Now that CVS has been in use for several months CPEPC, the Canadian Meat Council and CFIA will host another series of national Industry Days in February/March 2009. Industry/CFIA discussions will help to identify areas for improvement such as clarified wording in tasks and what is expected in Corrective Action Reports. The day’s content and materials are in development with CFIA and the Councils. Watch for the official announcement and workshop dates coming from CPEPC early in the New Year. HACCP Generic Model - The HACCP Generic Model for poultry was virtually complete and acceptable mid-way through 2007 until there was a last minute edit by CFIA related to the deviation procedure for product chilling time/temperature. Industry felt it resulted in unnecessary waste of perfectly safe and wholesome product and so refused to accept the model until CFIA’s position could be backed by science. This spring an industry/ CFIA/ Health Canada subcommittee used actual product chilling curves and bacterial growth curves to redesign the product chilling time/ temperature table in MOP Chapter 19. We now have a HACCP model based on sound science that does not compromise food safety. There is one outstanding issue for which industry requests consultation before the model is completely acceptable to stakeholders. Animal Welfare, MOP Ch 12 - The rewrite of Chapter 12 has taken months and months of consultation between CFIA and stakeholders and the first complete draft was anticipated from CFIA by the end of 2008. With involvement of representatives from all points in the supply chain we have been able to contribute to what promises to be a clear and comprehensive document that defines animal welfare responsibilities for each including measurable audit criteria for welfare at slaughter. Avian Influenza Surveillance - To meet EU requirements for active Avian Influenza surveillance programs to be in place in exporting countries, or countries whose product transits through the EU by January 2009, Canada needed to design, approve, launch and virtually complete a surveillance program in 2008. A large group of CFIA officials and contacts from the feather boards and Council have collaborated continuously to launch the on-farm testing program with co-operation from producers, processors and private veterinarians. Results to date are negative for presence of low path avian influenza. Testing will run a little into January of 2009, which is acceptable to the EU and will not compromise Canada’s meeting their requirements. This is the first year of an ongoing surveillance program and the 2009 version will begin following discussions on the technical aspects, projected sample size, and other points which will improve the process. Canada Shelves Trade Complaint over U.S. Meat Rule Canada will shelve, for now, its World Trade Organization complaint about U.S. rules that require a country-of-origin label on meat sold in American grocery stores, Canadian Agriculture Minister Gerry Ritz said on Jan 13. Revisions to U.S. rules that allow greater labeling flexibility now meet Canadian needs and amount to "tremendous good news" for the Canadian livestock sector, he said. Ritz said the U.S. changes should boost export volumes and prices. "We've gotten what we've asked them to do," Ritz told a conference call from India, where he is promoting Canadian food products. "We should start to see live animals moving south." The United States agreed to allow a label showing a mixed origin, for example saying beef was of U.S. and Canadian origin. This means meat packers and producers will not have to incur the extra cost of segregating Canadian animals. He said that the price spread of U.S. meat over Canadian meat in the U.S. market had gone to "wonky" levels as the country-of-origin regulations were phased in but that this should now return to more normal levels. Canada traditionally exports C$4 billion ($3.3 billion) a year in livestock, beef and pork to the United States. Ritz said Canadian exports were hit by the labeling requirement but he said it was difficult to say by how much. Technically, the Canadian complaint at the World Trade Organization will not be withdrawn in case it needs to be revived as the government monitors how the revised rules are applied. "We will shelve our concerns at this point but we will continue to assess the impact of COOL (country-of-origin labeling) as it moves along," Ritz said. "We hold it in abeyance." Prime Minister Stephen Harper had raised the issue with President George W. Bush and Canadian ministers had raised it with their U.S. counterparts. Under the interim rule that had taken effect on Sept 30, some U.S. pork producers fattening young Canadian pigs had incurred higher transportation costs because some packing plants were only processing U.S.-origin pigs. Packers had directed Canadian-born pigs to other plants and the demand for Canadian "weanlings" weakened. Ritz said that he thought contracts for young Canadian pigs would now be honored again. The Canadian Pork Council said it was cautiously optimistic the new rule would allow the market to stabilize but it remained opposed to the labeling rule overall, and still considered it a barrier to trade. A U.S. Agriculture Department spokesman was not immediately available for comment on Ritz's decision. By Randall Palmer ($1=$1.23 Canadian) (Additional reporting by Chuck Abbott in Washington; editing by Peter Galloway) Thomson Reuters
Workshop on Animal Welfare and Canadian Egg Production The Egg Farmers of Canada (EFC) sponsored workshop for the Canadian Council of Grocery Distributors (CCGD) was held on January 13 and 14 in Toronto. The group toured an egg laying operation on Day 1 and participated in a series of presentations on Day 2. EFC presented an overview of their Animal Care Program along with a summary of EFC’s research on the consumer perspective on animal care. The Ontario Farm Animal Council provided an overview on Animal Welfare and Rights, Perceptions and Realities followed by CCGD’s presentation on The Retailer’s Perspective. The final presenter of the day was Dr. Tina Widowski, professor of Applied Animal Behaviour and Welfare from the University of Guelph who provided The Scientist’s Perspective. CPEPC had representatives from our Egg Grading sector along with a staff member. National Farm Products Council New Website The National Farm Products Council has unveiled a new and improved website at www.nfpc-cnpa.gc.ca. The innovative and user friendly website was designed with the collaboration and support of Agriculture and Agri-Food Canada systems officials, NFPC staff, and website designer Antoni Gendron of 123Xplore. NFPC invites their stakeholders to visit the new site and would appreciate any comments or input to Communication Officer, Chantal Lafontaine at 613-995-9148.
Diamond and Moba Join Forces in the Americas As of January 15, 2009, the North and South American sales and service operations of Diamond and Moba, two leading manufacturers of egg grading and packing equipment, have merged. The newly combined organization is named “Diamond Moba Americas”. This organization is created to offer the most effective sales, service and spare parts network to the extensive customer base in North and South America for both brands. Diamond Moba Americas combines the operations of Diamond Automations, Inc. in Farmington Hills MI, and Moba USA, Inc. in Lancaster PA, and is headed by Douglas P. Mack, President. Support offices are located in Canada, the USA and South America and provide close proximity to the customer base in the region. Stan Drouen, Director Marketing and Sales for Diamond Moba Americas, explains: “The ongoing consolidation in the American egg industry causes egg packing stations to become more and more efficient and sophisticated, demanding ever increasing levels of service and support for their egg grading and packing equipment. Our customers will benefit from the availability and the capacity that is offered by joining the sales and service forces of our two brands. Diamond Moba Americas markets the entire combined product portfolio of both brands, a portfolio that continues to be enriched with newly developed products and technologies. We look forward to present ourselves as well as the latest equipment of Moba and Diamond at the IPE show in Atlanta, later this month”. For more information look at www.dma-group.com Merial Becomes Exclusive Distributor of AviTech in ovo Injection Systems Merial Limited, an Associate Member of CPEPC, has grown its avian business by becoming the exclusive distributor and technical service provider of the innovative in ovo injection systems of AviTech, LLC. As a result, Merial can now offer world-wide poultry customers its portfolio of avian vaccines together with the latest in ovo technology. Merial is one of the largest global avian vaccines companies. It has a long-standing commitment to the poultry industry and, through close ties with producers, has developed extensive expertise to serve customers. Merial is a leader in the production of vaccines for the treatment of prevalent diseases, such as Marek's Disease and Infectious Bursal Disease, that are especially suitable for in ovo administration. Merial already supports its vaccine operations through the development and service of administration devices; these activities are now complemented by its exclusive distribution of AviTech's IntelliJect® and ManualJectTM in ovo injection systems. See the link below for the full press release with more information about Merial, Avitech and the recent agreement. Normand Lamothe is CPEPC's key contact for Merial Canada Inc. Normand's full contact information can be found on CPEPC's website. MERIAL Takes Avian Business to New Dimension MERIAL amène une nouvelle dimension aux activités aviaires
Conferences, Courses and Workshops
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