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Hon. Steve Peters
Ontario Minister of Agriculture & Food
77 Grenville, 11th Floor
Toronto, Ontario M5S 1B3
Fax: 416-326-3083

Dear Minister Peters:

As you are well aware, the finding of a BSE infected cow in Canada followed by a further BSE positive cow discovered in the United States has left Canadian beef producers in a desperate and uncertain financial situation. Over the last seven months, there have been several compensation programs and these have been very much appreciated. The federal government, against the advice of industry, recently introduced a cull cow compensation program. At a meeting with representatives of the Ontario Cattlemen’s Association on November 24, you indicated that you wanted industry input into a strategy to begin to address the cull cow situation in Ontario. The BSE Task Force has held two meetings to develop and evaluate options that could form the basis of an Ontario program. Representatives of OCA, Dairy Farmers of Ontario (DFO), Ontario Federation of Agriculture (OFA), Ontario Livestock Auction Markets Association (OLAMA) and OMAF were involved in these meetings.

The Task Force attempted to identify key issues and then address these through potential components of an Ontario program. While we understand that provincial funds have not been committed, we were working with the premise that provincial funding of approximately ten million dollars would be available for the cull cow issue.

The first important point to be made is that there is strong support from both OCA and DFO for funding to be directed in a way other than cheques to individual producers. It was felt that a pooling of these funds would allow critical and longer-term issues to be addressed. This approach differs from previous programs that provided producer support through a payment structure based on proof of slaughter. Although this strategy did provide some assistance with marketings of fed cattle, the issue of both short and long-term cull cow management in our current industry environment is much different.

There are several issues that must be addressed including Ontario processing capacity, development of markets for the products from cull animals and the possibility of undesirable management decisions by producers faced with a product of extremely low value.

There is a critical shortage of processing capacity for cull animals in Ontario. However an opportunity has presented itself to significantly increase capacity in relatively short order with the Gencor Foods acquisition of the former MGI plant. It will be important that a proportion of the kill remains dedicated to cull animals so that the issue of cull cow slaughter capacity in Ontario begins to be addressed. While there may be concern with providing support to one particular private business interest, the producer commodity groups feel that the benefits outweigh the risks in this case. Support in the manner suggested in no way infers government ownership of a packing plant. Others in the packing sector have benefited directly and substantially from other government funding programs.

In addition, it was pointed out at our last meeting that the introduction of another bidder for cull animals is likely to result in a rise in price. This would provide producers with a longer-term benefit compared to a relatively small one-time payment. Maintaining open and fair price discovery and providing an environment for competitive bidding in the marketplace has always been central to the financial strength of our industry. As a task team we strongly support a transparent and competitive marketplace.

We understand that Gencor Foods is seeking government assistance. We feel that assistance should be provided as a grant and a loan with repayment to an organization (OCA and a new organization were both suggested) to be used in the marketing of commercial beef from cull animals. Marketing efforts would not be specific to Gencor Foods products and so would benefit all producers and all processors. There is a strong desire that a small portion of the grant be used to purchase and install a computer vision system (CVS) to be used for sorting of all carcasses toward specific markets. This would help to position Ontario product as being highly consistent, a major concern to buyers.

Also on the issue of marketing, we realize that there are a number of provincially licensed facilities that process cull animals. However, limitations such as lack of cooler space, has in some instances created too large a hurdle towards plant expansion and production increases. We believe that an amount of money should be made available to these plants to deal with such limitations and thereby increase capacity. This funding would be available only to those plants currently engaged in processing of cull animals and could be provided on a cost share basis.

Increased capacity leads to increased product, which must have a market. The Beef Information Centre is implementing a commercial beef strategy that will have a large emphasis on marketing. We feel strongly, however, that there is a good opportunity to use a portion of the funds available in Ontario for marketing specific to Ontario product in the Ontario marketplace. A fund should be established that would be open to application from processors interested in new product development or marketing initiatives.

Beef and dairy producers are facing a new reality with their cull animals being worth as little as twenty percent of their traditional value. While the potential opening of the US border holds tremendous promise for the industry, the stark reality is that value of cull animals will likely be significantly lower for years to come. This will affect production practices on farms with animals being held longer as long as a minimal level of production is being met. The average age of animals will increase and the possibility of age-related illness and disability will increase. Some producers will find it difficult to properly feed and care for these animals and so the prospect of increased animal welfare issues must be addressed. We feel that funding should be directed to an emergency feed fund, accessible based on need, with a close working relationship with both Ontario Farm Animal Council and the OSPCA.

The low value of cull animals is already being seen to cause more animals to be euthanized on farm. We want to ensure that producers have the necessary resources to dispose of carcasses either through on-farm composting or through deadstock collection. Funding should be used to provide producers with free deadstock removal as well as construction of of-farm composting facilities.

Finally, we feel that a small portion of the potential funding should be used to ensure the continuation of retirement of national identification tags. This service is currently being performed by Beef improvement Ontario (BIO) through a Healthy Futures grant. This funding is due to expire soon and the industry cannot risk the loss of this valuable service. With the assistance of OMAF meat inspectors this service retires tag data to the Canadian Cattle Identification Agency within six hours from all provincial and most federal plants in Ontario in addition to deadstock depots. As you know, all of the Ontario cull cow capacity resides at provincial plants where the service has proven its value. Retirement of national identification tags through this partnership enables rapid traceback critical to any foreign animal disease management strategy.

In summary, the task force recommends the following allocation of funds for maximum benefit to the beef and dairy industries in Ontario:

We appreciate your continued involvement in the BSE issue and your support to date. We are confident that the plan we have outlined will significantly benefit producers and the industries at large.

Yours truly,

BSE Task Force