Meat & Greet!

Looking after a major industry’s well-being for over 100 years is a milestone feat that very few professional organizations manage to achieve, but the Canadian Meat Council (CMC) is certainly a very special association that genuinely merits all the praise and accolades for all the hard work it does on behalf of its member companies.

And as the venerable industry group prepares for its upcoming annual CMC Conference and AGM (Annual General Meeting) next month (June 5-7, 2023) at the landmark Omni Hotel Mont-Royal in downtown Montreal, Canadian Packaging magazine caught up with its top two executives to assess the current state of the country’s critically vital red-meat-processing industry, which is facing some serious new economic and trade challenges that can only be resolved through concerted efforts of all of the industry’s stakeholders to make sure it remains a robust engine of economic growth and product innovation.

Here is the two-part interview recently conducted by the magazine’s editor, George Guidoni, with Kerry Towle, CMC Board Chair and Vice President of Industry and Government Relations for Sofina Foods Inc., and Russ Mallard, Vice Chair, CMC Board, and President of Atlantic Beef Products Inc.

KERRY TOWLE Q&A

Q: Last year marked CMC’s 100th anniversary, and you were named CMC’s first woman as Chair of the Board of Directors. As you reflect on one year in the position, which of the major milestones/initiatives that the Canadian Meat Council has carried out are you most proud of? How have they benefited the industry and the Canadian consumers?

A: As Chair, I am most proud of the hard work and information our dedicated staff provides to both industry and government.

Our staff works diligently to engage with membership to understand their opportunities and challenges. Using fact-based data and best practices ensures our members have the information they need.

This allows for industry and government to work collaboratively and provide resolutions rather than barriers. This has benefited industry and regulators.

CMC has long been the voice for the meat industry, and it continually strives to provide solutions to address the challenges facing our members.

The regained access for pork into China has been critical for our pork members.

We have more work to do on access for beef, but I am confident in the collaboration between CMC and international trade offices that this will be resolved.

Q: Please explain CMC’s success in longevity, staying power, relevance, and healthy membership base. What would you like to see the Council initiate, address, and accomplish going forward?

A: The longevity is based on our approach to and with government. The tone the Board and staff have in all their interactions with government is to be constructive and solutions-based. Government wants to work with us because they see us as a credible partner.

In terms of going forward, I want to see more cohesion amongst the various trade associations in the industry.

We work well together, but there are at times to much light separating our positions, and that affords government the chance to do what is easier, as opposed to what we need, because we are not fully aligned.

Alignment and approaching challenges and opportunities aligned is critical to the success of our industry as a whole.

Q: Please provide a macroeconomic snapshot of the state of the Canadian meat processing industry now – revenues, employment, GOP contribution, R&D activity, trade and exports, and spin-off economic activity.

A: Our members directly employ over 64,000 people in rural and urban locations nationwide and additionally support 300,000 jobs along the supply chain.

Our sector offers highly-skilled, well-paying jobs that support all Canadians. The meat-processing sector strengthens communities where it operates, while significantly contributing to the GDP (Gross Domestic Product).

Canada is the world’s fifth-largest exporter of agricultural and agri-food products, and Canada’s consumption of red meat was estimated at $13.8 billion in 2019, accounting for all the fresh, frozen and processed red meat products purchased from stores and restaurants.

Trade enables an economic and environmentally sustainable sector. Different markets demand different products; cuts that may not be popular in Canada are sought-after elsewhere in the world.

This permits our members to obtain a higher value for our product overall and reduce waste.

Q: What would CMC like to see the Canadian governments do to help ensure a healthy and viable meat processing industry in Canada – regulations, guidance, new market development, investment funding, tax breaks, other incentives, etc.? What are the specific industry challenges and concerns that the Council is addressing/advocating on their behalf?

A: The key factor for us is communication. When government is looking at new regulations/standards we need them to bring us into the conversation at the beginning of the process, rather than mid-way through or at the tail end, when it becomes very difficult to undo what they have decided to do.

The biggest issues right now are market access and equitable trade agreements stemming from the government’s trade program.

Naturally, access into China is always top-of-mind and, increasingly, the issue of ESG (environmental social governance) for the members-companies.

Q: Please describe the significance/intent/impact of the upcoming CMC Conference & AGM in Montreal on June 5, 2023, and why the meat companies in Canada should try to attend the event. What are some of the most important industry trends and issues to be highlighted at the event?

A: Having the new president of the Canadian Food Inspection Agency (CFIA) speaking at our event allows for insight and feedback into this agency’s critical role for our industry, so hearing it all directly is a fantastic learning opportunity.

Companies who attend will have the opportunity to engage with a variety of industry partners, government officials and vendors. Bringing these groups together in one environment provides an exceptionally cohesive and efficient option for engagement.

This is a key factor in the value of CMC’s AGMs and our organization.

Of course, there will be many additional topics of interest to our members and others.

These include issues such as the environment, AI and market access—all the critical issues that permeate the day-to-day activities of all our members.

RUSS MALLARD Q&A

Q: What are biggest challenges and hot-button issues and talking points for the beef industry at the moment?

A: The biggest challenge and the hot-button issue is the Specified Risk Material (SRM) removal policy, and the need to harmonize it with the United States.

While Canada and the U.S. have both been recognized as having “negligible risk status” for BSE (bovine spongiform encephalopathy), the costs associated with the different policies put Canada at a competitive disadvantage.

Canadian abattoirs must remove an average of 57 kilograms of SRM material, whereas their U.S. counterparts must only remove three kilograms from animals over 30 months of age.

For animals under 30 months of age, Canada must remove 7.2 kilograms, compared to three kilograms in the U.S. As a result, the disposal cost to Canada averages $167 per metric tonne, and the cost to the industry is about $31 million per year.

To put it in perspective: if you look at 500,000 head of cattle in both countries, disposal costs in Canada are $6.5 million, whereas for the same number in the U.S., it is only $514,000.

It should be noted that about one million head of Canadian cattle that are exported to the U.S. for slaughter are subject to the U.S. policy.

Our industry is working with the government to address this issue, and a comprehensive risk assessment is being performed to justify the change to harmonize with U.S. policy.

Regarding market access issues, now that Canada has received negligible risk status, there are still some countries that have not removed the BSE restrictions that were put in place after the first case of BSE was discovered in Canada in 2003.

The Canadian Government Market Access team—consisting of Agriculture and Agri-Food Canada, Global Affairs and the Canadian Food Inspection Agency—is working with international counterparts to negotiate the removal of these outstanding restrictions, which include such things as only access for animals under 30 months of age, limits for bone-in beef and offal, and meat and bone meal.

Moreover, there are other important issues that affect the beef industry, such as the challenges we face in the European Union.

The Canada-EU Trade Agreement (CETA) has had a very unbalanced effect on beef and pork trade to date. While exports of beef and pork from the EU to Canada have risen significantly, Canadian exports to the EU have been very limited.

The strict measures we must face, such as hormone-free beef and various restriction on processing methods, will be further complicated by more new barriers coming in connection with the New Green Deal, which will further limit our access.

Moreover, China remains a very challenging market for our industry. We are working with our Embassy in China, we met recently with the Chinese Ambassador to Canada, and we have CMC staff back meeting on the issue in China.

We are very focused on finding a solution, not just for the short term but a longer term. We want and need stable and reliable access.

Q: How does Canada’s beef industry rank on the world stage and in the context of global economy? Are there any particular areas of strength or weakness that stand out?

A: Canada is the fifth-largest exporter of agricultural and agri-food products, and meat processing is the largest component of Canada’s food-processing industry. It represents about 12 per cent of Canada’s agri-food exports, and it employs more than 68,500 Canadians.

On average 46 per cent of Canada’s beef production and 69 per cent of pork production is exported, excluding the live animals exported to the U.S. for feeding and slaughter.

Canada is an efficient producer of high-quality beef, and we export it to 80 countries around the world.

Our biggest trading partner is the U.S., accounting for 70 per cent of our exports, followed by Japan, Mexico and South Korea.

Until recently, China was our second most important market.

Canadian consumption of beef is growing. We consume an average of 18 kilograms of beef per person annually, but, since our population is relatively small, we export almost 50 per cent of total beef and cattle produced in Canada.

Beef exports were valued at $4.7 billion in 2022, as our export numbers have doubled in the past five years.

Notably, 95 per cent of Canada’s cattle and hogs are processed in a federally inspected facility.

Q: What are the companies in your sector doing to lower their environmental and packaging footprint?

A: At the plant level, many CMC members have up-to-date sustainability plans that address the primary environmental impacts of meat processing: water usage, energy consumption and waste reduction.

Activities such as metering incoming and out-flowing water, and using the data to evaluate progress towards conservation targets and planning for upgrades, as well as retrofitting existing facilities to incorporate solar and thermal power sources, are clear examples of concerted efforts being made to minimize our plants’ overall environmental footprint.

Individual companies do seek ways to reduce plastics usage. However, it is only one piece of the environmental puzzle, and we must always keep food safety considerations in mind as we explore ways to minimize our packaging use.

Positively, innovation and research has introduced cost-effective alternatives, which some of our members have incorporated.

In terms of future improvements, there are discussions underway to explore an industry-wide target-setting initiative. It would be useful to define some useful benchmarks for the industry, against which individual companies can measure themselves.

Q: What are some of the most significant meat packaging/labeling trends that you have witnessed in your industry in recent years?

A: The use of plastic packaging is important to preserve the meat products’ safety, as Canada’s federal government is looking to reduce plastic waste and promote sustainable procurement in all sectors.

A regulatory framework has been created to achieve the plastic reduction objectives, but the government understands the role of plastics to comply with the high food safety standards of meat products manufactured in Canada.

The meat industry keeps searching for innovating packaging which is more friendly for the environment, and it is conscious about the plastic pollution.

The Canadian meat industry is monitoring these development closely, and we will continue to underscore the importance of the ongoing engagement of Canada in an ambitious global treaty on plastic.

On the labeling initiatives, on July 20, 2022, Health Canada published the Regulations Amending the Food and Drug Regulations to add a new requirement for front-of-package (FOP) nutrition symbol labelling for most pre-packaged products containing nutrients of public health concern—including saturated fat, sugars and/or sodium—at or above specified thresholds. The FOP nutrition symbol will help Canadians to more easily identify foods high in these nutrients.

On May 1st, 2023, the guide for stakeholders in the Canadian food industry was released. This guide should be followed by Canadian manufacturers, retailers and importers of foods for sale in Canada. Prepackaged raw single-ingredient meat, meat by-products, poultry meat or poultry meat by-products that are not ground products are conditionally exempt from the symbol requirements.

Likewise, raw single ingredient meat, meat by-products, poultry meat or poultry meat by-products that are ground are conditionally exempt from the FOP requirement.

However, they are required to carry the Nutrition Facts table.

Regulated parties must comply with the requirements for all components of these amendments as of January 1, 2026, so there is still a lot of work to be done in the months and years ahead.