MEETING STATUS: PUBLIC

LEGISLATIVE ASSEMBLY SESSION: 1/62Motion No: 1

PRINCE EDWARD ISLAND Year: 2004

VERBATIM TRANSCRIPT OF HOUSE COMMITTEE PROCEEDINGS

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMMITTEE: STANDING COMMITTEE ON AGRICULTURE, FORESTRY &ENVIRONMENT

Thursday, April 1st, 2004

SUBJECT(S) BEFORE THE COMMITTEE:

Impact of the BSE Crisis and Hog Crisis on Prince Edward Island

NOTE:This Transcription has NOT been edited nor subsequently comparedwith the original tape. It is intended to provide an indication of Committee discussion only and is NOT certified by the Legislative Assemblyto be a true copy of the discussion.

COMMITTEE Wilbur MacDonald, ChairMEMBERS PRESENT: Wayne Collins replacing Hon. Mitch Murphy

Wilfred ArsenaultAndy MooneyEva RodgersonFred McCardleRichard BrownCarolyn Bertram replacing Ron MacKinley

STAFF: Marian Johnston, Clerk of Committees.Wayne MacKinnon, Department of Agriculure

1

STANDING COMMITTEE ON AGRICULTURE, FORESTRY AND ENVIRONMENTThursday, April 1, 2004

10:00 a.m.

Tape No. 1

Part I - Garden Province Meats: Steve Gordon and Carl LarsenPart II - Prince Edward Island Marketing Council: Murray Myles and Kenneth MacLellan

Wilbur MacDonald (PC) Chair: We do havequorum and no more than so. I know that AndyMooney is going to be 20 minutes late. He’s goingto be tied up. Well, welcome everybody. We’ll firstof all approve the agenda. We have one additionthere. Last week we talked about beef pricing andMr. MacKinnon is going to tell us a little about whathe found so we’ll add that as No. 6 or No. 5(a) orsomething like that. Is the rest okay? Could wehave somebody’s motion to approve the agenda?

Unidentified Committee Member: So moved.

Wilbur MacDonald (PC) Chair: All those in favoursignify by saying aye.

Committee Members: Aye.

Wilbur MacDonald (PC) Chair: Contrary nay.Motion carried. Today we will have, the firstpresenter is Mr. Steve Gordon.

Wayne Collins (PC): Before that, Mr. Chairman,may I move a motion here. This motion wouldcongratulate our Clerk of Committees for againgoing through that cycle called 29 years of age. Itis her birthday today, Mr. Chair, and I think it wouldbe appropriate if members of this committee inappreciation of that would sing together inharmony a happy birthday wish to our Clerk.

Wilbur MacDonald (PC) Chair: I think he’d betterlead us then.

Marian Johnston (Committee Clerk): It’s notnecessary, Mr. Chairman.

Wayne Collins (PC): That’s a motion.

(Committee sang Happy Birthday to Clerk ofCommittees)

Marian Johnston (Committee Clerk): Thankyou.

Wayne MacKinnon: That’s the first time in 200years that the House has been in harmony.

Wilbur MacDonald (PC) Chair: She may notforgive you, Wayne.

Wayne Collins (PC): There you go. It shouldappear somewhere in the minutes there.

Marian Johnston (Committee Clerk): Thankyou.

Wilbur MacDonald (PC) Chair: Okay, You’re Mr.Gordon. You have somebody with you, sir.

Steve Gordon: Yes, this is Carl Larsen. He isthe president of Larsen Packers of which GardenProvince is part owner.

Wilbur MacDonald (PC) Chair: Okay, from NovaScotia. So Sir, you have a presentation to us.

Steve Gordon: Yes, I do. It’s a short fact sheet.

Wilbur MacDonald (PC) Chair: That’s fine. Andthen you’ll be open for questions, either one ofyou? You’d be open too, Sir? Okay, fine.

Fred McCardle (PC): Mr. Larsen is from where?

Carl Larsen: I’m the president of LarsenPackers.

Fred McCardle (PC): From Nova Scotia.

Carl Larsen: Owned by Maple Leaf Foods andI’m responsible for Maple Leaf for GardenProvince Meats.

Fred McCardle (PC): You’re in Berwick, NovaScotia?

Carl Larsen: Yes, that’s correct.

2

Wilbur MacDonald (PC) Chair: Go ahead, Sir.

Steve Gordon: Just to provide some facts fromGarden Province Meats here in Charlottetown - theplant on MacAleer Drive opened up in July of1986. The ownership of the plant, there’s threeowners–Maple Leaf Foods Inc. Is 51 per centowner in the plant; the hog producers on the Islandown 41 per cent and the beef producers at 8 percent.

The management - it is operated as part of LarsenPackers which is an independent operatingcompany of Maple Leaf Foods Inc. It’s a federallyinspected plant of 65,000 square feet. Theslaughter capacity of the plant is 5,000 hog perweek and we’re presently slaughtering anywherefrom 4200 to 4300 on average per week right now.We have annual sales of approximately $36 millionand an annual sales volume of approximately 17.7million kgs. Some of the countries we distributeto, of course we distribute a lot of our product inAtlantic Canada, Quebec, Ontario, USA, Australia,New Zealand, Hong Kong, Mexico, the Carribean,Russia, the Philippines, Barbados, Macedonia,Azerbijian, Taiwan, Korea, Cuba and Porta Rica.

We employ about 110 people at the plant andthat’s including the federal inspection staff. Wehave an annual payroll at the plant ofapproximately three and a half million dollars andthrough the producer loan program, GardenProvince Meats has loaned producers in excess of$9 million to help increase hog production onPrince Edward Island. And just some of the otherthings we do there in addition to the slaughteringof hogs, we operate a sausage line and we’re inthe process now of adding a boning line to theoperation and that should be place within the nextcouple of months.

Wilbur MacDonald (PC) Chair: What was thatlast one you’re going to add to it?

Steve Gordon: We’re adding a boning line tothe operation and it’s in the process now of beingfabricated and we hope to have that installed andup and running within a couple of months.

Wilbur MacDonald (PC) Chair: You’re open forquestions. I guess the first question would bewhat would that mean to your plant to add theboning line?

Steve Gordon: It’s going to give us anopportunity to do some value-added product. Themore we can do with the product the better returnsthat hopefully we’ll get from that operation.

Wilbur MacDonald (PC) Chair: I open thequestions then to all members. Go ahead, Fred.

Fred McCardle (PC): How is your businessdoing? Are you optimistic about the future? Got agood plan, business plan?

Steve Gordon: We’re optimistic about the thingswe’re doing at the plant to improve the efficienciesand things that we can control, we’re doing ourbest to control them, you know, our costs andmaintenance have been very good. Ouroverheads are doing well. The hog market issomething that we really don’t have a control overand being the type of operation that we are wherewe mainly, you know, kill–it’s a kill/cutoperation–that kind of puts us at the mercy of thecommodity markets right now. So that’s why we’retrying to do some value add. You know, thesausage is a positive and we’re hoping that theboning line is going to provide some improvementsto the results as well.

Fred McCardle (PC): How competitive is youroperation in the big world?

Steve Gordon: In the big world we’re a verysmall player. We slaughter, as I said, on average,you know, 4300 hogs a week - at Berwick,probably 1,000 or more hogs a week at 5300,5400. And I think if you look at some of the largerplants they would slaughter in a day what our twoplants would do in a week. So we’re smallcompared to the scale of the rest of the industry. Fred McCardle (PC): But you’re optimistic aboutthe future?

Steve Gordon: Yes.

Wilbur MacDonald (PC) Chair: Carol and thenWayne.

Carolyn Bertram (L): I just have a questionabout capacity. You mentioned that you couldhave the capacity of 5,000 per week. Is there areason why we’re not running?

Steve Gordon: We don’t the hogs. Weslaughter 100 per cent of the hogs on the Island

3

and that’s where we’re at right now. It willfluctuate, some weeks we’ll be at 4,000. We didhave one week where we did get the 5,000.

Wilbur MacDonald (PC) Chair: Wayne?

Wayne Collins (PC): What is the magic figure?Is there a magic figure of minimum weekly, youknow, throughput in terms of number of hogsbelow which the plant starts losing money,becomes not viable?

Steve Gordon: That’s a tough one basically. AsI mentioned earlier we’re at the mercy of thecommodity markets. So we could kill 6,000 hogsin a week and lose money on every one of thehogs or there could be a week where we kill 3500and do well and it could go vice-versa. So we’rereally at the mercy of the hog market and thecommodity as well.

Wayne Collins (PC): Because we’ve often heardin the past here, you know, it’s important that wesupport hog producers to the extent that theproduction doesn’t fall below a certain weeklyaverage. We’ve heard the figure of 40, you say 42to 4300 a week.

Steve Gordon: That’s where we’re at, yes.

Wayne Collins (PC): Is that the safe zone then,if I could term it that way?

Steve Gordon: I think that’s a healthyproduction number. We would like to see it getcloser to the 5,000. Basically at the 4200, how ouroperation works is that we’ll normally cut in themorning and kill in the afternoon. So, you know,without . . . we can go 42, 43, you know, closer to5,000 and not run into having to work theweekends, put a number of shifts on.

Wayne Collins (PC): Maple Leaf Foods, whichowns - is it 51 per cent did you say - of the plant,they have a program of premium pork product.What is the name of that program again?

Steve Gordon: Medallion Program.

Wayne Collins (PC): The Medallion Programand that is where Maple Leaf Foods pays premiumdollar for meat, under that program, is that correct?

Steve Gordon: The Medallion Program is

something I really couldn’t comment on and youwould probably have to have someone from one ofthose operations that could better explain that toyou.

Wayne Collins (PC): Well, can you tell methough if the product coming out of the GardenProvince Meats Plant is of the quality that wouldrate the Medallion Program?

Steve Gordon: I’m not 100 per cent sure if wewould meet the specs for the Medallion Program.I do know that the product coming out of GardenProvince Meats is very good quality and it meetswhat we’re doing here in Atlantic Canada.

Wayne Collins (PC): So the producers, whether- I take it there are no producers on Prince EdwardIsland who are signed onto the Medallion Program.Is that correct?

Steve Gordon: I would say that, yes.

Wayne Collins (PC): In other places though, Mr.Larsen, over in Berwick, are there producers overthere who are producing for the MedallionProgram?

Carl Larsen: No, we haven’t moved that to theAtlantic Provinces as yet.

Wayne Collins (PC): So where is Maple LeafFoods getting their product for the MedallionProgram?

Carl Larsen: They have put that program intothe major markets in Ontario and WesternCanada. Relatively new and it’s something thatwould be evaluating going forward.

Wayne Collins (PC): Do producers there actuallyget a premium price or a better price for theirproduct because they’re part of the MedallionProgram?

Carl Larsen: I can’t answer the question. I don’tknow. I’m not familiar with the program. It wouldbe part of the Signature Pork Program that hasbeen introduced in those provinces.

Wayne Collins (PC): Like the Signature PorkProgram, there’s another term that I’ve heard,that’s the same as the Medallion Program, is it orpart of?

4

Carl Larsen: No, it would a supply contract thatwould be signed directly with the producers.

Wayne Collins (PC): But producers have tomeet certain standards I take it, of feed and acertain index on their hogs that qualifies them,right, to be under that program.

Carl Larsen: To support the Medallion Program,which is really a marketing program.

Wayne Collins (PC): Alright. But no Islanders,no Island hog producers are right now members ofthat program.

Carl Larsen: That’s correct.

Wayne Collins (PC): There has been suspicionthough that the product from the plant, and yousaid that the product from the plant gets sold fromKorea to Azerbaijian. That the product from theplant is of such a high quality that it can indeed, orthere’s a suspicion it is being marketed underpremium brands but the hog producers are notgetting the premium price for it. Could youcomment on that?

Steve Gordon: I would say that our product isnot being marketed as a Medallion in the marketplace. I can tell you that for sure.

Wayne Collins (PC): You’re 100 per cent certainof that. Alright. Thank you.

Wilbur MacDonald (PC) Chair: Eva?

Eva Rodgerson (PC): Okay, I apologize forgetting here a few minutes late. I may havemissed some of this that I’m asking. I guessWayne just had asked some of the questions I hadbut how much of your product stays here in theprovince, a percentage?

Steve Gordon: You might be better to answerthat. Most of our product, as I said, we’re a kill andcut and operation, so most of our product leaveshere and goes to some further processing beforeit comes back into a new location. But I know theproduct is within the stores on the Islands but theexact number, if you could provide that?

Carl Larsen: Steve, I’m not sure what thenumber would be. I would suggest that about a

third of the total production.

Eva Rodgerson (PC): Do you sell to theSuperstores? Does your product go into thosechains?

Steve Gordon: Yes.

Eva Rodgerson (PC): We talked there earlierabout, you know, the amount of hogs you kill andwhat’s sustainable. Like, if you dropped say below4200 do you have to lay off people at that point?

Steve Gordon: I’ve just been there since Aprilmyself of last year and we haven’t run into asituation and we’ve had weeks where we’vedropped below 4,000 but typically, you know,we’ve averaged, as I said, about 4200 straightthrough. So it averages out through the year. AndI’d say this year we’re probably closer to 4300 sowe seem to be doing a little better this year. I don’tanticipate, you know, having to lay off people dueto, looking at the hog numbers that we havecoming through. And we’re looking at doingeverything we can and the boning line is one wayto, there’s ten jobs in that room and there’s thingsthat we’re looking at doing to ensure that it’s aviable operation.

Eva Rodgerson (PC): Okay. So do you see thepotential here from the producers that you’redealing with for more hogs, say in the currentyear? Or do you figure it would stay just about thesame?

Steve Gordon: Well, we anticipated that ourlevels were going to be about the same as theywere last year. As I mentioned earlier we’reactually running a little bit higher than what we hadanticipated and being relatively new to the hogindustry, I hope that’s a trend that’s going tocontinue. I’m not really sure why we’re a little bithigher.

Eva Rodgerson (PC): Okay, thank you.

Wilbur MacDonald (PC) Chair: Fred?

Fred McCardle (PC): So I’ve heard we have ahigh herd health standard here. Is that amarketing advantage to us?

Steve Gordon: My thought on that is that’s justpart of the business. If you’re going to be in the

5

business you have to have standards in place inorder to just be part of it and you’ve got to look forsome other things to kind of bring you to the headof the pack.

Fred McCardle (PC): So that’s an industrystandard. Everyone’s got that. As an Atlanticregion, are we self-sufficient in pork and porkproducts?

Carl Larsen: Essentially we are, yes. You haveto understand the industry, we’re not self-sufficientin certain primal cuts. We are more than self-sufficient in some primal cuts so there’s trade inand out of the region. But essentially we are self-sufficient.

Fred McCardle (PC): So part of your plant,some of your hogs go on to other plants for furtherprocessing. Is that to Berwick?

Carl Larsen: Yes.

Fred McCardle (PC): So I go to the supermarketand get those, sliced ham for example, does thatcome from your plant?

Steve Gordon: We don’t do any of the(indistinct) processing. Any processed meatswould come from the Berwick location or fromMoncton or from other locations across thecountry.

Carl Larsen: There’s a substantial volume ofyour production going to Moncton for furtherprocessing as well.

Fred McCardle (PC): At the old HubMeatpackers Plant.

Carl Larsen: Correct.

Fred McCardle (PC): So there’s just the three ofyou handling hogs in Atlantic Canada, is there?Just those three plants?

Steve Gordon: There’s only two plants that arekilling hogs. The Hub Plant does not slaughter.

Fred McCardle (PC): Just processing.

Steve Gordon: That’s right.

Carl Larsen: There are two other smallindependent operations in Nova Scotia as well,slaughtering two to 400 hogs a week. One wouldbe under federal inspection, one would be underprovincial inspection.

Fred McCardle (PC): Does your plant take theolder animals, like we all think of the prime, 220pound hog, like do you take the older, the sows?

Steve Gordon: Sows, yes we do. We probablykill about anywhere from 100 to 150 sow a week.

Wilbur MacDonald (PC) Chair: Wilfred?

Wilfred Arsenault (PC): You’ve mentioned thatyou had a workforce of approximately 110 people.Two questions - is this full-time permanent and hasthat number been fairly stable over the last four orfive years?

Steve Gordon: Yes, that’s number’s actually, Idon’t think it’s changed since - I see numbers from‘96 here, it was holding steady from there. Therehasn’t been a whole lot of . . . we have a lot oflong-term employees at the plant as well which Ithink realizes some advantage as well.

Wilfred Arsenault (PC): Those employmentsare like . . .

Steve Gordon: They’re full time.

Wilfred Arsenault (PC): They’re full timepermanent.

Steve Gordon: Yes, we work year round. We’realways looking to hire some part time people tocover off some stuff in the summer as people takevacation because when you have long termemployees of course they accumulate morevacation and we need to cover those off.

Wilfred Arsenault (PC): Thank you.

Wilbur MacDonald (PC) Chair: Richard?

Richard Brown (L): Thank you, Mr. Chairman.You said your share structure is 8 per cent to thebeef producers, 41 per cent to the Hog Board and51 to McCains.

Steve Gordon: That’s correct - Maple Leaf

6

Foods.

Richard Brown (L): Maple Leaf. And who ownsMaple Leaf?

Steve Gordon: It’s a publicly traded companywith major shareholders being the McCain family,Wallace McCain.

Richard Brown (L): So it’s not a wholly ownedsubsidiary of the McCains. So your financialstatements, they go to the Hog Board and they goto the beef people also. It’s a separatecorporation, Garden Province Meats, altogether.What is the board structure, like how many boardof directors is on Garden Province Meats?

Carl Larsen: Six directors.

Richard Brown (L): Six directors and what’s that- so three for McCains and . . .

Carl Larsen: Sorry. There are seven directors intotal and four of those would be Maple Leafrepresentative, two Hog Board representatives andone beef industry representative.

Richard Brown (L): Okay. So when you declaredividends, and how many times have you declareddividends?

Steve Gordon: I would have to defer that.

Carl Larsen: I’m not sure there’s ever been adividend declared. Certainly not in my time on theBoard.

Richard Brown (L): So where is the price set foryou to the farmer?

Steve Gordon: That’s set every Thursday andit’s based on the Ontario pork.

Richard Brown (L): Who sets the price betweenyou and Berwick?

Steve Gordon: Our price is off the Bonaventuremarkets.

Richard Brown (L): So everybody can see yourpricing structure like, you know, coming out of yourpackers into the other McCain operation. Is therea big margin, well, no, quite obviously there is no

margin there then?

Steve Gordon: Well, it’s falling, as thecommodity markets go. We’re at the mercy of thecommodity markets and we sell into Berwick andMoncton and as I said we sell through some otherlocations as well and we’re constantly looking atmaximizing our return on the products that we domove.

Richard Brown (L): So there’s, like it’s a publicprice between you and the further processor.

Steve Gordon: On the primal cuts they’regenerally sold based on the Bonaventure market.

Richard Brown (L): So is 100 per cent of yourproduction gone to the Berwick Plant and the HubPlant?

Steve Gordon: No. We would send a portion ofour product to Berwick, a portion would go toMoncton. It depends on the cuts and what they’rebeing used for.

Richard Brown (L): Okay, but Berwick and Hubare still owned by McCains or Maple Leaf?

Steve Gordon: That’s correct.

Carl Larsen: Owned by Maple Leaf Foods. Ithink that’s important to make that statement.

Richard Brown (L): Maple Leaf Foods, yes. But,you know, if 100 per cent of your production goesto those others.

7

Steve Gordon: Probably I think it’s more around50 per cent would go to those locations. And therest we sell into Quebec, as I mentioned and someinto the US and some other countries as well.

Richard Brown (L): So what do I tell somebodythat says to me, the farmer is getting so little fortheir product and the consumer is paying so much.And you’re saying if the packer is not making anymoney and we have the stores in here sayingthey’re only making a 1 and 2 per cent margin, sodo you have any insight for us to say, okay, whereit may be going?

Steve Gordon: The best I could tell you, as Isaid, our hog price is set weekly. It’s notsomething that we set at the plant. That’ssomething that’s set, you know, it follows theOntario Hog Board average through the week. Wehave no control over that and as I said, we’reselling a commodity so we’re at the mercy of thecommodity market on the other side. It’s really,you know, the price that we pay the producershere on the Island is set through the Ontario porkand what our return that we’re getting for ourproducts going out the door is at the mercy of thecommodity market, the Bonaventure.

Richard Brown (L): So coming out of Berwickit’s sold to the big chain stores right from there, isit?

Steve Gordon: That’s correct.

Richard Brown (L): And Maple Leaf Foods,which is a subsidiary of McCains, Maple LeafFoods has no shares or no shares in the grocerychains or the McCain group, do they?

Carl Larsen: None to my knowledge. I think it’simportant to understand that we’re involved in avery cyclical industry and to say that the farmersare not making any money, to say that the packinghouses are not making money, to say that theretailers are not making money, it’s really not thecase. It’s a very cyclical industry and, you know,we’ve gone through a year where farmers certainlydidn’t make any money. We’ve gone through ayear, because of factors that have affected theindustry from outside the region, where thepacking houses probably have lost more moneyslaughtering pork in the last year than they haveany time in history. The biggest single factor is thechange in the value of the American dollar. There

are other extraneous factors as well so certainlyfarmers haven’t made any money in the last year.I think the important thing is to look at a five or aten year average and say have they made enoughmoney to sustain farming. The same way with thepacking houses and the retailers will have toanswer the question for themselves.

Richard Brown (L): Okay, you guys neverdeclared a dividend since you opened so quiteobviously you made no money in the last five or sixyears.

Steve Gordon: Yes, to the point I think our porkoperation last year, if you look on a per headbasis, we lost $3.12 for every hog we slaughteredlast year.

Richard Brown (L): And we had the hog farmersin here saying, you know, they’ve had a five yearbad run. So are you saying they may have not. Itwas just one bad year and the others were good.

Carl Larsen: You would have to take a look atthe average return over that five year periodrelated to the cost of production.

Richard Brown (L): But your average return overthe last five years has been zero if you haven’tdeclared dividends.

Carl Larsen: At Garden Province Meats.

Richard Brown (L): Is that right?

Steve Gordon: That’s right.

Richard Brown (L): Okay. The Loan Program,you just indicated - and if someone else, they canjump in any time - the Loan Program you indicateda few minutes ago that $9 million is outstanding. Is that your loan program?

Steve Gordon: That’s what we’ve loaned. Notall of that would be outstanding. It’s a programthat was created back when the plant opened toachieve certain numbers of hogs and it’s beenongoing through the years and the loans areoffered for production and expansions as well assome capital expenditures for operating.

Richard Brown (L): What would the outstandingamount be? Is this the provincial loan, you knowthe $1.40 to $1.60?

8

Steve Gordon: Yes, it’s involved through thePEI Lending Agency.

Richard Brown (L): So this is the $1.40, $1.60.So we have a recommendation or a comment fromthe hog people saying that ceiling should go to$1.90. Right now I guess if it’s under $1.60 theloan program cuts in. Once it’s over $1.60 thenthe farmer starts paying back.

Steve Gordon: I believe that’s before theLending. I think the Lending Agency hassomething going forward on that or there’ssomething to be determined on that. That’s not adecision that we can make as Garden ProvinceMeats.

Richard Brown (L): At one time you guys didcattle too, didn’t you?

Steve Gordon: That’s correct.

Richard Brown (L): And what was yourproduction on that like?

Steve Gordon: We probably averaged, the lastyear it was probably anywhere from 25 to 30. Itwas mostly cows there.

Richard Brown (L): So the province, you know,there’s new facilities being built in Borden. Haveyou guys been approached in the past to say, look,why can’t we expand your plant and bring cattleback into your plant? Have you guys ever beencontacted? We seem to have gone off and built anew plant. Have you guys been contacted the lasttwo or three years to say, can we encourage youguys to get back into this business?

Carl Larsen: We had actually put forward aproposal that would have turned Garden ProvinceMeats into a beef plant.

Richard Brown (L): Oh, is that right? When didyou put that proposal through?

Carl Larsen: The proposal would havetransferred all the hogs off the Island to Berwickand utilized that plant as a beef operation. And itcertainly was opposed, I think by producers, andgovernment supported that. They would havepreferred to have their own plant here on theIsland. But it was certainly given consideration.

Richard Brown (L): But you were notentertaining to double the size of the plant to getback into the cattle business? Like it seems thatwe spent $10 million to $20 million up in the newplant.

Carl Larsen: It certainly would have requiredsome renovations at the plant. I think it wouldhave required a boxing operation to be addedthere as well. It would have required some capitalexpenditures to remodel the plant.

Richard Brown (L): How much do you figure?But that was never off the table. Like you guys had. . .

Carl Larsen: The proposal that was put forwardwas turned down.

Richard Brown (L): Your proposal.

Carl Larsen: Correct.

Richard Brown (L): And they didn’t come backwith a counter-proposal to say, look, if we can getsome financing here and double the, you know?

Carl Larsen: No.

Richard Brown (L): Okay, thank you.

Wilbur MacDonald (PC) Chair: Fred?

Fred McCardle (PC): Mr. Gordon, you saidinitially that you were optimistic for the future,rolling ahead and then you told Richard that youlost $3.12 a hog.

Steve Gordon: Yes, last year. That’s lookingback. Looking forward I’m optimistic. As I said,we’re at the mercy of the commodity market andthe hog price is something that’s out of our controlas well but we’re addressing all the areas that wecan control at the plant and making some progressin those areas and with adding a boning line we’rehoping that that’s going to help as well and we’relooking at increasing our sausage business. Allthese things can only add to the operation.

Tape No. 2

Fred McCardle (PC): So it’s economies ofscales business, right? Big is where you have to

9

be, to be competitive. Is that correct?

Steve Gordon: Yes, I agree with that, but alsotoo, if there’s an opportunity for us to–being asmaller operation or being on the Island, it mayallow us to do some things down the road thatsome larger scale operations can’t do as well.

Wilbur MacDonald (PC) (Chair): Anymorequestions?

Fred McCardle (PC): Mr. Larsen is going tospeak too.

Wilbur MacDonald (PC) (Chair): Oh, go ahead,sir.

Carl Larsen: I was just going to add a commentto that, that in support of what Steve is saying,we’re attempting to align the two operations and bydoing that, by putting a boning operation at GardenProvince, we’re giving that plant an opportunity todo some value added production and this simplywill return more to the primal cuts by trimmingthem to market spec and taking the bones out ofthem here in Prince Edward Island rather thantransporting that product to Berwick to do thatfunction over there.

So the objective would be to give Garden Provincemore revenue but it would also decrease theexpense in Berwick. So that’s the type of thingthat we’re trying to do between the two plants. Wehave gone through a process in our entireoperation last year of reviewing all of the specs.We had a Danish consultant come in to look at allthree operations, the one in Moncton included.And I think, Steve, we identified something in thearea of $240,000 in direct savings last year. Andthat’s what we’re trying to do in this plant is take asmuch cost out of it and enhance the revenue asmuch as we can.

Wilbur MacDonald (PC) (Chair): Could I just goback on the pricing because that’s what we’re herefor because of the pricing. Now the Ontario porkprice is set from Chicago, is that right? Or is it setseparate now? We’ve been told it’s set fromChicago.

Carl Larsen: It certainly has an influence. I’mnot sure how that market in Ontario is settled. Theissue that we have with that is that it doesn’t settlethe price for the majority of hogs. I think the

majority of hogs are settled by direct contractwhich is related to U.S.D.A. prices so certainly theU.S.D.A. pricing has an influence.

Wilbur MacDonald (PC) (Chair): Has aninfluence on Ontario? Now the PEI price is–incompared to Ontario, is that 2¢ less or is it thesame price?

Steve Gordon: It’s when the price comes out onThursday, we receive our pricings from the HogCommodity Marketing Board here on the Island.

Wilbur MacDonald (PC) (Chair): On the Island.

Steve Gordon: That sets our price for the weekthat we’re presently in.

Carl Larsen: That’s set on the prior weeks,Ontario average.

Steve Gordon: It’s set on the current week,Thursday, to (Indistinct).

Wilbur MacDonald (PC) (Chair): So Monday toThursday average price sets the Island price.

Steve Gordon: That’s right.

Wilbur MacDonald (PC) (Chair): And it’s thesame price as Ontario, generally.

Steve Gordon: Yes.

Wilbur MacDonald (PC) (Chair): I see, so Iguess the question that I’d like to ask you is we didhave the Hog Commodity Board involved here andthey indicated that the last five years, they’ve lostmoney. Yet, we do have a continuing of 4,300, didyou say. . .

Steve Gordon: Yes.

Wilbur MacDonald (PC) (Chair): . . . hogs perweek. I was involved. I was the person whosigned in Garden Province Meats for thegovernment and one of our major problems thenwas to get the hog numbers up. They wererunning about 3,000, I think at that time. We gotthem up and they seem to have stayed up so howthen are, I know you people seem to be tied upwith the price here. You have nothing to do withthe price to farmers. The plant hasn’t paid any

10

dividends since, to my knowledge, since it started.Is that true?

Steve Gordon: That’s correct.

Wilbur MacDonald (PC) (Chair): As a beef farmerwho is involved, got shares in the plant, I’ve neverseen, not even a penny, I don’t think backfrom–although it’s certainly a great plant to have inthe province. There’s no question about that. Iwould certainly be against changing it to beef too.I think the government made the right decision. Iguess we’re at a dilemma then. Our dilemma ishow we do help the hog farmers? You’veindicated today that the price is set from Ontario bythe Hog Commodity Board here which has to setit. It can’t raise it above and so on. It’s restrictedto what is set.

So I don’t know where this committee can possiblycome up with something to help the hog farmersexcept a direct subsidy, which to my mind is thewrong end. We should be–hog farmers should bereceiving a living from the product that heproduces and sells to the market and yet, exceptfor Maple Leaf Foods maybe in the long term is theonly person here who seems to be able to–and Iknow that you people are not able to do that.

So I guess I’d ask for a comment knowing that thiscommittee has been approached by the hog--people who are saying they haven’t lost anymoney. What is your advice to us as to how wecan improve the hog price to the farmer on PrinceEdward Island?

Steve Gordon: That’s probably out of my realmto be able to provide some advice on that one.

Wilbur MacDonald (PC) (Chair): I don’t want youto say that though. I want you to give us someadvice.

Steve Gordon: I know one of the things thatwe’re working on with the Hog Board is we’relooking for ways that we could help on theefficiencies on the farming side and we’reconstantly working on efficiencies in the plant andwe’re looking for ways that we can have–you knowif there’s things that we can do with the genetics orwith the hogs that are coming through, that canhelp us whether it’s a different grid size or what-have-you. We’re looking at those items if theycan, in turn, possibly put some more return for our

product, then that can go back through on someincentives to the producer too. To be able to reachthose things, it would give them some controlover–they would not be at the mercy of the postedprice. They would on the initial but for somebonuses or some incentives that they would beable to, I guess, produce a hog to a certain spec tohopefully, receive a little more return for that.

Wilbur MacDonald (PC) (Chair): So in your–I’mpleased to hear that because I think that’s the rightstep. In your changing into a boning line and I canunderstand by taking, you know, you’re shippingbones away and you’re paying for the freight andyou’re shipping the meat back and so on. Is thepossibility there of any further, like through the HogCommodity Board of raising that price even if it’svery little, it ‘s a help because of the boning line ordoes that–is that necessary for the plant to keepoperating? Which way do you see that going?

Steve Gordon: I think it’s necessary for the plantto keep operating but I think it also provides theopportunity that we’re doing some value addedthat if we can identify, maybe it’s a larger loin, let’ssay that we can bone at the plant, then we mightbe able to provide some incentive to the farmer toproduce a hog that would have a larger loincoming through. Those are the things that we’relooking at and a boning line and those kind ofthings will enable us to help things down the line.

Wilbur MacDonald (PC) (Chair): The other thingthat I’m wondering if it might be of help, geneticmodified, am I saying that right? Geneticallymodified, what’s the other word, GMO? Is it,GMO? If the province was to shift to that and wewere–I know that Europe, for example, will notaccept any grain or any soybeans or anything.Would that be any advantage, like we’re an Islandand we can do things that other places can’t. Forexample, I understand that Argentina is really intothis stuff and it’s drifting over into Brazil now andBrazil doesn’t want it and they can’t do anythingabout it. Would that help in any–we got to look forsomething to help us out. Is that any advantage toPEI?

Carl Larsen: Mr. MacDonald, I would like totouch on that because I think it’s something thatwe actually discussed last week at a meeting overin Nova Scotia. I think you’re exactly right whenyou say that our future is to identify somecompetitive advantage that we can have for the

11

Maritime Provinces. When we take a look atPrince Edward Island; when you take a look at4,000 hogs a week, you know, one of the thingsthat we have considered is developing anantibiotic-free product. We’ve actually hadconversations with one of the major chain storeswith respect to that. Now there are some logisticsto work through to say that, yes, it is possible,possible to do it on the farm; possible to get thatproduct through the plant and into themarketplace. But it’s something that we are givingdue consideration to. That’s something thatobviously would cost a producer more money toraise but that premium has to come out of themarketplace and will come out of the marketplace.So that’s the kind of things that we are looking forthat we can do here that someone else can’t.

Wilbur MacDonald (PC) (Chair): Any other ideasalong that line? Everybody wants to get aquestion in here and I’m going to let you in.Anything else that you might be able to pass ontous? I think the two suggestions are very good. Ifnot, I’ll go to Wayne and then Andy and then, wasit, Richard, you had your hand up? Okay.

Wayne Collins (PC): I want to come back to theissue of the Signature Pork Program. We’ve beentalking here about concerns of trying to get moremoney into the pockets of Island hog farmers andwe can certainly hope that the price continues toincrease. It seems to be on the rebound at thepresent time, I understand. But in terms of whatyou spoke about earlier, being able to offerincentives or bonuses to Island hog farmers, theSignature Program, as I understand it, it’s basicallyan agreement where a hog farmer agrees tosupply a certain amount and you agree to buy acertain amount, right? With bonuses attached interms of the quality of the meat, is that correct? Ithink it can have various types of contracts, it isn’tone contract fits all, right?

Carl Larsen: That’s correct.

Wayne Collins (PC): Alright, so it could be amultifaceted type of contract. A different farmercan have a different contract from another, yetthey can all be in the Signature Pork Program?

Carl Larsen: Well I think it’s fair to say thatfarmers would be free to choose between one gridand another grid which would be best suited totheir particular farm. But they have the same

opportunities to make that choice so the fact thatyou would have a different program than I have,it’s only because I chose different segments of theSignature Program.

Wayne Collins (PC): And when you saysegments of the Signature Program, could youexplain that a little bit? Does that mean that yougot to feed your hogs a certain type of feed orwhatever it maybe or do they have to come up witha certain type of criteria that satisfies the plant andsatisfies the contract?

Carl Larsen: The program that’s laid out is notfeeds specific. In other words, it doesn’t requirefeeding Shur Gain, or Purina or Co-op or anyspecific type of feed. But if we got to a situationwhere we were catering to a particular exportmarket that required that meat meal be removedfrom the feed, for instance, then there’s a provisionin the Signature contract that would say that couldbe done. That would be a requirement ofsupplying that hog.

Wayne Collins (PC): Now in the situation herein Prince Edward Island, through Maple LeafFoods who run the Signature Pork Programcorrect, have they--is there a standing offer toIsland hog producers to become part of theSignature Pork Program?

Carl Larsen: There’s an offer, what we refer toas a Block Contract that’s been offered to the HogCommodity Marketing Board.

Wayne Collins (PC): So it’s everyone in or noone in?

Carl Larsen: At this time, that’s correct.

Wayne Collins (PC): So an individual hogfarmer who thinks he’s got some really goodgenetic stock and is producing a really fine productand is able to meet the criteria of the SignaturePork Program cannot sign a Signature Porkcontract today?

Carl Larsen: At this time, that’s correct.

Wayne Collins (PC): Is that only on PrinceEdward Island the way we’re structured with ourindustry or is it–what’s the case in otherprovinces? Is it everyone in or no one in or can anindividual choose?

12

Carl Larsen: No, in other areas, the contractsare direct with the producer and I think it’s fair tosay that the other provinces went through thesame issues with the respect of marketing boardsin those provinces and the program has evolvedso they–I think the boards are signatories to thecontract in that they get copies of the contract andthey’re completely transparent.

Wayne Collins (PC): But that’s not the case onPrince Edward Island today?

Carl Larsen: Not today.

Wayne Collins (PC): The way it’s structured.Have you ever come close to a signing of aSignature Pork contract with the Island hogindustry?

Carl Larsen: I think it’s fair to say that there areproducers who are quite interested in Signature.One of the features of the Signature Program isthat it offers various Risk Management Programsby allowing farmers to forward contract hogs.Basically, the contracts are related to futuresmarkets and allows them an opportunity to lock inproduction. It would also give them an opportunityat the same time they lock in their hog price to lockin a feed contract with the supplier. And I thinkthat’s something else that I think I would just like totouch on as well in terms of going forward.

One of the major issues that has affected the hogindustry in Canada over the course of last year isthe effects of the Farm Bill in the United States andthat, in fact, has put subsidies in the industry thathas turned what was a $15 a hog feed advantagethat Canada had to a $5 deficit. One of the thingsthat’s ongoing at the present time, Maple Leafhave recognized an obligation to try and take costsout of the feed industry. It’s one of the majorcomponents of hog production costs and they arein the process at the present time of building a newultramodern $15 million mill in Moncton that, we’repretty confident, will put a new economic baseunder feed costs. It will certainly take some of thecosts out of the industry so that will be a majorbenefit that hog producers will be recognizing overthe course of the next year.

Wayne Collins (PC): One final question, Mr.Larsen, if I could beg indulgence of the Chair,when it came close to the signing, do you knowwhy the Island hog industry, from your perspective,

is reluctant to sign on to the Signature PorkProgram?

Carl Larsen: Nova Scotia has been reluctant aswell. Steve, can you add insight?

Steve Gordon: I believe it came down to–whenit came down for a vote, there was someinformation presented and I’m not sure whetherthere was a complete understanding of what wasbeing offered or the exact reasons behind it butsuffice to say, that it hasn’t fallen off the table, thatit is something we continue to pursue and we’re tothe point now again where there’s a contractbefore the Hog Board that they’re going to bebringing to the producers, I understand, within thenext week.

Wayne Collins (PC): I see, within a week?

Steve Gordon: Yes.

Wayne Collins (PC): Really, so it’s really backon the table again?

Steve Gordon: Yes.

Wayne Collins (PC): Alright, thank you verymuch.

Steve Gordon: We felt that there wasn’t a clearno, that there might be some things that need tobe worked on and so we’re optimistic that we’llhave something come forth in the next. . .

Wilbur MacDonald (PC) (Chair): Okay, Andy,then followed by Richard.

Andy Mooney (PC): Okay, just a couple ofquestions, when you mentioned a niche marketsuch as antibiotic-free, basically, I’ve farmed all mylife myself and had livestock up to a couple ofyears ago–antibiotic-free, is this basically justensuring that an animal is free of antibiotics for somany days before they head to a kill plant or is thisantibiotic-free as in a farm trying to get alongwithout antibiotics which I think is near impossible?

Carl Larsen: Maple Leaf Foods, on the researchside of it, are doing some research to thatparticular issue. You know, it will require adefinition of exactly what antibiotic-free is, is itantibiotic-free beyond the nursery? Then I wouldsuggest that would be a minimum. It’s not a

13

matter of a withdrawal period of 30 days prior tomarket. It would be basically over the majority oflifetime of the carcass.

Andy Mooney (PC): That would be quite a featif that’s possible.

Carl Larsen: When you look at Prince EdwardIsland, you look at the logistics, the fact it is whereit is and is an Island and it would be an ideal placeto look at a program such as that.

Andy Mooney (PC): And the other thing youmentioned as far as a bone line (Indistinct), itwould be probably ten jobs on a bone line at theplant here. Would that be ten additional jobs orwould that be people from within the plant?

Steve Gordon: That would all be people that arewithin the plant that would be getting those–we didoperate a beef line that had some people workingin that department as well. We had some peoplewho were working on some various jobsthroughout the plant. It will probably add someadditional part-time people which we would hopethat would lead into full time positions. We’reconstantly working at, I guess, upgrading the skillsin the plant to have the people that can go fromone job to another and perform some differentduties to allow us to maintain the qualitythroughout the year when we have a large numberof people off, we would have some people that canstep in. And by putting some other people in parttime and as new employees are placed, it allowsus to cross train people that we have there on thehigher skilled jobs to cover that void when we havea vacancy in the plant.

Andy Mooney (PC): Is there any look at doingany curing or any further value adding at the planthere?

Steve Gordon: At this point in time, we’refocusing on the boning line and getting thatworking and then once we get that going, thenwe’ll look at other opportunities. I think wewouldn’t want to take on too many things at onceand have them all suffer so we’re going to focus onthat and hopefully, be able to put that through. Butwe are looking at increasing our sausage(Indistinct) as well.

Wilbur MacDonald (PC) (Chair): Richard.

Richard Brown (L): Thank you Mr. Chairman. Do you have a model or a formula, I guess, interms of the effects of the US dollar? Like forevery penny, the currency changes, I guess, theeffect on our pricing here. Like is this a graph(Indistinct) proportional?

Carl Larsen: Certainly Maple Leaf Foods wouldhave worked through that equation, yes.

Richard Brown (L): So at what point do you saythat it’s not economically feasible to be in Canada?At what–do you have an exchange rate that saysif the exchange rate hits this, we’re done?

Carl Larsen: I can’t comment on it, I don’t knowwhat that point is. You know, if that is one of theissues over the course of the last year that hashad a devastating effect on the pork industry. Ithink most of the models that were set up were(Indistinct) from 62 to 65¢ and the 75¢ dollarseems to be a fact of life. It touched 80 at onepoint in time.

Richard Brown (L): Yeah, because off theChicago trading, we adjust to the exchange rate inCanada.

Carl Larsen: Yeah, the think that has happenedis that dollar has allowed the United States tobecome very, very competitive in markets such asJapan. The United States this year is projected tokill 100 million pigs. Canada is projected to kill 10million pigs. Prince Edward Island and NovaScotia are projected to kill a quarter of a millionpigs.

Richard Brown (L): Yeah, I’d agree, like theU.S. is using its exchange rate for its balance oftrade. It’s saying we can adjust to our exchangerate because they control the exchange rate. Andthey can say, if we put her here, here’s ourbalance of trade. If we put it here, here’s ourbalance of trade. That’s exactly what they’re doingthere.

A couple of more questions, your electric bill andwater bill, I know when the old plant was running inCharlottetown here, the old Canada Packers plant,the water bill was about 10 per cent of the totalrevenue for the water revenues in the City ofCharlottetown. What’s your. . .?

Steve Gordon: I’d have to check that. I know

14

that it’s going to increase very shortly, but Icouldn’t comment as to what percentage of.

Richard Brown (L): And your electric bill? Whatwould that be running a year?

Steve Gordon: I’d have to check that as well.

Richard Brown (L): Okay, I guess just one otherquestion, you said you proposed a deal to theprovince. Would that deal, if it went through,would that of meant more money in the pockets offarmers in Prince Edward Island?

Steve Gordon: Which are we talking about?

Richard Brown (L): You were going to say, youwere going to use this as a cattle killing and thenmove to Berwick. Would it have resulted in moremoney for cattle farmers on PEI, or for hog farmersin PEI?

Steve Gordon: I’m going to suggest, no, but itwouldn’t have cost them money. The proposalwould have provided transportation off the Island.That would have been paid for. It wouldn’t haveadded substantially to the return.

Richard Brown (L): Thank you.

Wilbur MacDonald (PC) (Chair): Eva.

Eva Rodgerson (PC): I just have one question.Going back again and I’m (Indistinct) on thisSignature Pork, for example, would it be hard hereto do it unless everybody bought in? I keepthinking if the Signature Pork Program, would it bereally hard for you as a packing plant to separatethe varieties if it was me and the rest of themdidn’t, kind of thing? Is that one of the things why.. .

Steve Gordon: I think right now with the contractthat’s being offered, it’s really they’re all buying inor they’re not in at all, an agreement but in thatcircumstances, they’re all being in it or they’d beout but we do have–there is a number of hogs thatcome through that are doing some different things,different groups of producers may be doingsomething different that we were maybe managingto put them through the plant. It would be certainlymuch more advantageous to have a consistenthog coming through and I think that’s some of thethings that we’re working on through the CQA

Program here on the Island where the producersthat are shipping to Garden Province will be part ofthat program. And what we’re trying to do is, we’retrying to get a consistent product going throughand hopefully, that will give us a consistent productgoing out the door as well. So I think we’d like tosee a consistent product come through. If there’stwo types coming through, we can deal with that.

Eva Rodgerson (PC): Because I was wonderingif that would be an added cost to your plant if weweren’t all in the same. . .

Carl Larsen: Well I think to answer the questiondirectly, all of the plants accommodate hogs eitheron a signature program or not on a signatureprogram.

Eva Rodgerson (PC): So it wouldn’t be moredifficult or more costly for you fellows if it was . . .

Carl Larsen: No, I think the point Steve toucheson is that the Signature Program is allowing moreuniform carcass and it would be better for the plantcertainly if everyone was on Signature because Ithink the Japanese developed the term “cookiecutter hog”. They want specific hogs, specificgenetics, specific size, specific loin line and thatprogram really is what generated that in bothBrandon and Burlington.

Eva Rodgerson (PC): Thank you.

Wilbur MacDonald (PC) (Chair): Fred.

Fred McCardle (PC): Does the offal from yourplant, is it rendered for livestock feed? Can youstill feed that product to hogs legally? It wasn’taffected?

Steve Gordon: (Indistinct) can still be fed tohogs, yes.

Fred McCardle (PC): So that product goes towhere, Moncton?

Steve Gordon: Our product goes to Truro. Ouroffal goes to Truro, yes.

Fred McCardle (PC): So it hasn’t affected yourbottom line in terms of that product?

Steve Gordon: It certainly has. The cost–at one

15

point in time, the offal ongoing at the door was asource of revenue to the plant. Throughout thelast year, it’s been a tremendous cost to the plant.

Fred McCardle (PC): It’s cost you a lot ofmoney?

Steve Gordon: Yes.

Fred McCardle (PC): That product is still beingrendered and used as it was before BSE?

Steve Gordon: That is correct.

Fred McCardle (PC): Who’s getting the money?

Steve Gordon: That I couldn’t answer.(Laughter) I’m not sure where the pricing and thathas gone. There maybe some back there.

Wilbur MacDonald (PC) (Chair): Could I justbefore we close, just go back to the contract priceon the Signature Pork. Once a farmer makes thecontract, is there a price involved there?

Carl Larsen: There’s a formula involved thatwould set the price weekly.

Wilbur MacDonald (PC) (Chair): Set the priceweekly so he could be then involved into lose anoperation if the price went down?

Carl Larsen: Yeah, there’s nothing thatguarantees a price.

Wilbur MacDonald (PC) (Chair): A price in that.

Carl Larsen: There’s nothing that guarantees aprice. There are risk management mechanismsavailable that I referred to earlier that would allowhim to lock in a certain portion of his productionand a certain portion of his cost if he chose to dothat.

Wilbur MacDonald (PC) (Chair): Now the newfeed mill in Moncton that you indicated, the $15million, will that be a cost-saving to hog producers,only those who buy from that mill? Or is that goingto have something to do with the whole Maritimes?

Carl Larsen: I would guess that that will be avery competitive mill that other producers will have

to match the cost or they simply would losebusiness to that mill. That’s what I meant bysaying it just simply sets a new economic baseunder the industry.

Wilbur MacDonald (PC) (Chair): Okay.

Fred McCardle (PC): Who’s building it?

Carl Larsen: That’s a Maple Leaf Foods, a ShurGain mill.

Wilbur MacDonald (PC) (Chair): Oh it’s ShurGain?

Carl Larsen: It is Shur Gain, yes.

Wilbur MacDonald (PC) (Chair): Shur Gain is onthe Island now, right? Not as big as they were atone time, are they? They used to have a ShurGain in Vernon. Where is it now? Summerside?

Fred McCardle (PC): Would that affect theSummerside mill?

Carl Larsen: I think the Summerside mill isgoing to be shut down. There’s one in NewBrunswick and one in Nova Scotia that will be shutdown as well.

Wilbur MacDonald (PC) (Chair): Everything willcome out of Moncton then?

Carl Larsen: There’s another mill in Truro that Ithink is milling fish feed that probably will remainopen, I’m not sure.

Wilbur MacDonald (PC) (Chair): I see, so will theSummerside mill be a holding place for the Islandor will it come directly from Moncton?

Carl Larsen: We’re not directly related to ShurGain. I’m not sure what their plans are, other thanthe fact that construction is underway in Moncton.

Wilbur MacDonald (PC) (Chair): I see. Anymorequestions? Eva has one, Eva, go ahead.

Eva Rodgerson (PC): Every question begsanother one. Getting back to Fred’s commentthere about the offal that–you’re saying it’s stillgoing to Truro? It’s still being rendered and goinginto the feed. Before it seemed like you were

16

generating some revenue and now you’re not.

Steve Gordon: I think one of the big things thatprobably happened on the revenue side is thatthey lost a lot of export business, I think with thewhole BSE. I think that was one of the majorthings that they were hit; I’m not sure what it did tothe cost. I just know from reading of the mediathat’s some of the things that have happened, butthe offal products still goes out the door the sameway of the plant as it had in the past.

Eva Rodgerson (PC): Do you have any indicationthat that’s going to revert back to what it wasbefore? If this is an extra cost to the plant do yousee?

Steve Gordon: I don’t see it coming back to arevenue generator for the plant.

Eva Rodgerson (PC): That’s hard to understandthat the same thing is still happening.

Steve Gordon: I think it’s kind of like otherservices that people pay for now that at one time,and I think the rendered industry has becomemore of a service industry than the. . .

Wilbur MacDonald (PC) (Chair): But it’s not goinginto cattle feed, right?

Steve Gordon: No, that’s correct.

Wilbur MacDonald (PC) (Chair): It’s going intohog feed?

Steve Gordon: It would be.

Carl Larsen: There was a ruminant ban backeight years ago.

Steve Gordon: On chickens.

Wilbur MacDonald (PC) (Chair): I see, forchickens.

Carl Larsen: So the poultry meal would still be(Indistinct) in the feed.

Tape No. 3

Carl Larsen: The reason it’s going into hog feedat the present time is because we’re not catering

to export markets that would require that beremoved. Maple Leaf, for instance, from bothBurlington and Brandon, I think, have had itremoved because of the amount of product thatthey put into Japan. Japan requires that it beremoved. That’s why it hasn’t been removed here.

Eva Rodgerson (PC): So what would be thedifference? Why are they requiring that it beremoved? What is the rationale behind that? Ifhere it’s okay to be in it and there they want it out.What’s the rationale behind that?

Carl Larsen: Just a preference in the Japanesemarketplace that because of the BSEconsideration, they decided someplace sayingthey required that their product have that removed.

Eva Rodgerson (PC): Okay, so with the beef,there’s certain parts of it now that can’t be used.Has anything changed in the way the offal of thepork industry. . .

Carl Larsen: With hogs going out? Offal wise?

Eva Rodgerson (PC): Yes.

Steve Gordon: No, everything goes out the dooras it has in the past. I think one of the big things isin Europe, for instance, where once again it was arevenue generated for them there but the fact thatthey cannot utilize the meat bone, they’re actuallypaying to have that product incinerated. So whatused to be a revenue generator for the renderingplants has now become a cost as well in Europeand other places. It’s all on the-it’s a huge thingthat the customer that you’re dealing with on allends and it’s what their perception is, is whereyou’ve got to be.

Wilbur MacDonald (PC) (Chair): Is it not anegative to have it being put into hog feed in the(Indistinct)? To me it’s a negative.

Steve Gordon: To have meat bone go into hogfeed?

Wilbur MacDonald (PC) (Chair): I think we’re. . .

Steve Gordon: The science surround meatbone meal says that it’s a very good source ofprotein at a fair cost.

Wilbur MacDonald (PC) (Chair): But when we’re

17

in, when there’s stages of food health, it justseems to me to be a negative that shouldn’t bethere.

Steve Gordon: Like I say, it’s something thatperception is driving more so than science.

Wilbur MacDonald (PC) (Chair): Okay, I see, theperception is driving, you say the science is okay.

Steve Gordon: Yes.

Wilbur MacDonald (PC) (Chair): But theperception is that it’s not. I see.

Carl Larsen: I would suggest the reason is stillthere, it’s just, it’s simply a cost advantage ofutilizing.

Wilbur MacDonald (PC) (Chair): It would be verylittle used into feed though, would it not, per ton?

Steve Gordon: I’m not sure what the inclusionwould be.

Wilbur MacDonald (PC) (Chair): Well so we. . . Go ahead, Richard.

Richard Brown (L): One question. I want tothank you for coming. I learned quite a bit todayfrom you two guys. You’ve been quite up front, Ithink. (Laughter) I think. Your answers have beenpretty straight forward. Like we had the meatpackers here. They were, them big guys fromOntario, they were skating all around. They werepretty good hockey players.

My question is like we have long term contracts,you see at the beginning of every year, all thepotato farmers on the Island negotiating theiryearly contract with Cavendish and McCain Frenchfry plants. Why can’t we take that model and putit in your plant’s model?

Steve Gordon: I think we’re working towardsthat with the block agreement that we have for theHog Board now to put some things in place thatcan be offered to the producers so that they havea better idea of where they’re going to be throughthe year. They’ll still have some fluctuation in themarkets with a forward contracting and that kind ofstuff. It kind of gives them a little more control tounderstand where their costs are going to be goingforward. This is what we’re trying to bring forward.

Carl Larsen: I think to answer the question moredirectly, you’re looking for a price that would beconsistent through the year that would guaranteea return. There’s one party missing in thatequation. You’d have to tie a retailer into thatcontract as well.

Richard Brown (L): But the French frycompanies seem to be doing it.

Carl Larsen: I would suggest that that marketisn’t nearly as volatile as the red meat markets.Markets are set weekly for most of the primal cuts,for processed product with retailers, the pricewould be subject to change every two months. Soactually I think there was some discussion in theindustry in Alberta exploring that concept but it felloff the table. It really would require all threeparties.

Richard Brown (L): I just see it in the French frybusiness and it’s working quite well, I think, fromwhat I see. For us to say well, you can sign acontract at the beginning of the year but itfluctuates on a weekly basis, that’s not much of acontract, is it? Would you say?

Carl Larsen: Well if you take a look at it, I thinkone. . .

Richard Brown (L): Like would there be aguarantee upper and lower level or it’s just, we’llsign that you supply hogs based on this weeklyprice.

Carl Larsen: You know there are provisions inthe contract that would make it advantageous. Ithink the risk management provisions would beone of the big things that would take some of therisk, some of that risk out of the market over acourse of 52 weeks.

Richard Brown (L): And so would the new plantin New Brunswick or the new feed plant, wouldthey sign long term contracts too, that say, okay,we guarantee you this price for the input cost?

Carl Larsen: I’m pretty sure that they formcontract six months in advance now.

Richard Brown (L): Thanks again, guys.

Wilbur MacDonald (PC) (Chair): Go ahead, Fred.

18

Fred McCardle (PC): What’s the price of porktoday?

Steve Gordon: I think it’s $1.65.

Richard Brown (L): So they’re paying 5¢ backtoday, that’s good.

Wilbur MacDonald (PC) (Chair): I want to thankyou both for coming. I think, as Richard has said,you’ve certainly given us some information today.I thought you hit on it there, Sir, when you said, thefarmer, the processor, and the retailer, no questionthat three of them are involved in, not only in thehogs but in beef. But it seems to now that it’s thefarmer who doesn’t have the privilege or anythingto set the price. I know the processor probablysets the price and so most certainly the retailerdoes. So if some system could be worked out withthe farmer, the processor and the retailer, andeverybody making a bit of profit, it would certainlybe the ideal solution to everything that we’retalking about.

I know you’re not in that area to do that but that’sone of the things that we, as a committee, mayhave to examine how that is and it hasn’t–andyou’re indicating that that may happen by havingthe contract price. That may indeed be the way ofgoing. I don’t know. Maybe what this committeeshould do is ask Bob Harding, he’s sitting out here,to come back. I don’t think we should put him onthe spot today, to come back in a couple of weeksand maybe evaluate with the contractor orwhatever, so I certainly thank you. It’s a pleasure.I also say that Garden Province Meats has beenone of my favourite because of the fact that Isigned it on for government. I’ve been keeping aclose eye although I’ve never seen, as I said, any--from that little bit of shares we have in it, I’ve neverseen anything (Indistinct).

Richard Brown (L): It’s not Maritime Electric.

Wilbur MacDonald (PC) (Chair): No, not quite.So thank you very much again. We certainlyappreciate it and all the best to both of you.

Carl Larsen: Thank you for having us.

Steve Gordon: Thank you.

Wilbur MacDonald (PC) (Chair): Our next peoplewill be Murray Myles and Kenny MacLellan from

the P.E.I. Marketing Council. It doesn’t matterwherever you feel comfortable.

Part II - P.E.I. Marketing Council: Murray Mylesand Kenneth MacLellan

Wilbur MacDonald (PC) (Chair): Okay, I guesswe’re all set to go again. I certainly welcome youMurray and Kenneth, both of you, to–do you havea presentation for us? Were you made aware ofwhy we asked you to come?

Kenneth MacLellan: Yes, we were made awarewhy, I guess and we do have a presentation.

Wilbur MacDonald (PC) (Chair): Okay, that’sfine.

Kenneth MacLellan: And we would like to gothrough the presentation, and we do have copiesthat can be passed out at the end.

Wilbur MacDonald (PC) (Chair): And then wecan ask some questions, okay.

Kenneth MacLellan: I’ll do the first part of thepresentation. Murray’s going to do the middle andI have a little summary at the end.

Wilbur MacDonald (PC) (Chair): Do you havecopies of your presentation?

Kenneth MacLellan: We prefer to pass them outafter. We’ll pass them out later.

Richard Brown (L): You don’t want us readingthem, Murray.

Kenneth MacLellan: We didn’t say that though.You said that. I know that’s what I would do.

The Marketing Council welcomes this opportunityto appear before the Committee to discuss theNatural Products Marketing Act, and to addresssome of the comments made by Gordon Lank, ahog producer, during a presentation he made tothe Committee on Thursday, March 4, ‘04 withrespect to the currency of the Act and MarketingCouncil’s administration of the Act. Unfortunately,because of possible litigation by Mr. Lank andLank Farms Inc. against Marketing Council, we willnot be in a position to comment on all of Mr. Lank’sallegations.

19

First, we would like to give the Committee a briefoverview of Marketing Council, and its roles andresponsibilities under the Act. We will thenaddress some of the comments attributed toGordon Lank during the presentation he made tothe Committee on march 4th. More importantly, wewill outline some of the initiatives Council hastaken or will be taking to ensure that the Act andregulations reflect the needs of primary producers.

The Marketing Council is a body corporate createdpursuant to section 2(1) of the Act. Council has,among other things, responsibility for generalsupervision of all commodity boards, marketingcommissions and commodity groups formed underthe Act.

The current composition of Council is eightmembers. Members are appointed by theLieutenant-Governor in Council. The currentmembers are myself as Chair, Gordon Ching,Murray Cook, Edgar Dennis, Fred Dollar, AxelIrving, Ron Myers and Rena Thompson. If I may,I might say that these people represent differentsectors of agriculture at where they have beeninvolved in the past. Gordon Ching is a potatoproducer. Murray Cook is involved in hogs. EdgarDennis is involved in eggs and dairy. Fred Dollarhas experience in dairy and potatoes. Axel Irvingis in hogs. Ron Myers, potatoes and RenaThompson is dairy. Myself, I have been a dairyproducer and currently also in beef and inpotatoes.

For support services, Murray Myles providesCouncil with management services under aProfessional Services Contract negotiated with theMinister of Agriculture, Fisheries, Aquaculture andForestry early in 2003. Under the Contract,Murray Myles provides management services toCouncil and representative service to theDepartment with respect to supply managedFederal-Provincial Agreements. The Contract is a60 per cent position for Mr. Myles to carry out all ofhis responsibilities. Administrative supportservices are provided by Eleanor Palmer. Fifty percent of Ms. Palmer’s time is allotted to Council withthe remaining 50 per cent allotted to other sectors.

Legal support for Council is primarily obtained froma Departmental Solicitor assigned to adviseCouncil on legal matters. Occasionally, where aconflict of interest may arise, Council obtains

outside legal advice. Now, I’ll turn it over toMurray now to take us through to the summary.

Murray Miles: Thank you, Kenny. There arecurrently five commodity boards, one marketingcommission and three commodity groups formedunder the Act. Commodity boards include theEgg Producers of Prince Edward Island, the HogCommodity Marketing Board which I believeappeared before you earlier, the Milk MarketingBoard, the Potato Board and the Poultry MeatCommodity Marketing Board. A Turkey MarketingCommission formed under the Act is inactive. ThePEI Cattlemen’s Association Incorporated, the PEIOyster Commodity Group and the PEI WildBlueberry Association are commodity groupsformed under the Act. And I believe that theMinister will be tabling in the Legislature or maybealready has, I’m not sure, an Annual Report thatCouncil is required to submit each year and thatreport also includes activity reports on all thosevarious commodity boards, commissions andcommodity groups.

And as for the Natural Products Marketing Act, thecurrent Act which was referred to as R.S.P.E.I.1988 Cap N–3 was passed in1988 after somerelatively minor amendments were made to theMarketing Act of 1974. The Act is designed toprovide the Lieutenant Governor in Council with avery broad framework for the creation andmaintenance of commodity boards, marketingcommissions and commodity groups.

The Act allows producers of any natural product anopportunity to organize, and depending on thewishes of the producers of that product to obtaincertain powers vested by the Lieutenant Governorin Council. The powers the Lieutenant Governorin Council can confer on commodity boards arefound at section 4 of the Act and we havereproduced that as Annex “A” to our submissionbut I’m not going to go through that because youwill be bored completely.

A substantial number of producers of a commoditymay also petition Marketing Council to hold aplebiscite to determine if the producers of thatcommodity want the marketing plan amended orrevoked, and following a mail-in ballot plebiscite,Council may recommend to the LieutenantGovernor in Council that the marketing plan beamended or revoked.

20

The creation of specific commodity boards andmarketing commissions is achieved throughenactment of regulations made by the LieutenantGovernor in Council on the recommendation ofMarketing Council. So you can see that MarketingCouncil certainly has a role to play in this wholeprocess. Except in very unusual circumstances,Marketing Council requires a mail-in ballotplebiscite to be conducted to measure producersupport for the formation, amendment orrevocation of any marketing plan before it isrecommended to the Lieutenant Governor inCouncil.

I think we had a situation a couple of years agowhen the dairy industry through a strategicplanning process and the merger of twoorganizations, held a great number of producermeetings that it wasn’t felt necessary, I think, tohold a plebiscite in that case. But generallyspeaking, there is a mail-in ballot.

Section 2 of the Act outlines the generalsupervision responsibilities of Marketing Councilwith respect to the activities of commodity boards,marketing commissions and commodity groups.Subsections (6) and (7) describes, morespecifically, the powers of Council in that respect.And I haven’t reproduced them in this submission.

Regulations - We will not address the formation ofmarketing commissions or commodity groups inthis presentation since the formation of theseentities do not appear to be an issue.

Regulations passed by the Lieutenant-Governor inCouncil made pursuant to the Act confers specificpowers to a commodity board of marketingcommission. There are also regulations called thePrince Edward Island Marketing CouncilRegulations that describe the powers of Council,and the process that must be followed with respectto the establishment, amendment and revocationof marketing plans.

The powers granted to a specific commodity boardare based on a marketing board developed byproducers of a commodity for presentation to allproducers of that commodity prior to Councilconducting a mail-in ballot plebiscite to determinethe level of producer support.

The Committee should note that it is the producersof each commodity that decide which powers

contained Section 4 of the Act producers of acommodity want the commodity board to receiveunder their marketing plan, in other words, theirregulations. It is also the producers of acommodity that decide what restrictions, if any,they wish to have placed on the commodity board.For example, producers could recommend that amarketing plan not allow or could restrict, theinvestment of producer funds in other ventures orother companies.

Comments made by Gordon Lank - During hissubmission to the Committee on Thursday, March4th, the transcript of proceedings, among otherthings, record the following comments attributed toMr. Lank, and I quote:

“The Natural Products MarketingAct in this province has beenpoorly administered back to 1993.In my view”, that’s Mr. Lank’sview, “the Hog Board has beenacting outside the scope of theAct, got in debt, was up to”, notsure, “–if they had carried on, itwould have been 750,000 a yearindustry check offs, the highestcheck offs in Canada. There isno way our industry could haveafforded that.” End of that quote.

The transcript also shows Mr. Lank as saying, andI quote:

“I think the Act is terriblyoutdated. I think you should talkto Marketing Council, you shouldhave them in. . . .” And tocontinue with a different sectionof that quote, “I think it needs tobe rewritten, modernized, it’s anAct that was set up when we hadhundreds and hundreds andhundreds of producers. I think itnever, again should be allowednot to be administered in a propermanner. . . “ End of quote.

Marketing Council’s response to Mr. Lank’sComments - with respect to Marketing Council’sadministration of the Act back to 1993 - in hisstatement to the Committee on March 4th, Mr. Lankalleges that Marketing Council has poorlyadministrated the Act from 1993.

21

Since legal counsel for Mr. Lank and Lank FarmsIncorporated has indicated that these producersmay seek to recover damages from MarketingCouncil that they may suffer as a result ofMarketing Council’s failure to supervise andoversee the activities of the Hog CommodityMarketing Board in accordance with subsection2(4) of the Natural Products Marketing Act, Councilis not able to comment on these allegations. Thematter has been referred to legal services and riskmanagement, and any comment on this matter willhave to come from one of these two sources.

The Act is outdated and needs to be modernized -Marketing Council agrees that the Act needs to bereviewed and updated. In fact, Council hasidentified a review of the Act as one of its actionplan priorities during 2004.

As noted earlier in this presentation, the Act waslast amended in 1988, and since that time manyfactors have changed the marketing of naturalproducts. While Council recognizes that thesefactors will have to be considered in a review ofthe ‘Act, it is very important not to lose sight of thefact that the Act has served primary producers wellsince the early 1970's, and that change for thesake of change may not be necessary.

Council Initiatives - Development of a strategicplan - late in 2003, Marketing Council made adecision to prepare a strategic plan that it coulduse as a work plan to focus its limited resources.The plan, the first for Council, was adapted early in2004.

During the planning process, the following sevencritical result areas were identified: mandate,governance, resources, policies and procedures,operations, supervision and communications andrelationships.

Action Plan - Council developed an action planand time lines for implementing the critical resultareas identified during the strategic planningprocess. The implementation time varies fromimmediately to the fall of 2005. Some of the majorprojects identified in the action plan include, and Idon’t want to go through all of these but I’ll justhighlight quickly.

First of all, our plan was to present the Action Planto the Minister in March of this year. The Ministerhas the Strategic Plan and Action Plan in his

hands. We hope to be meeting with the Minister,I believe, on the 14th of April. The second thing todo early this year is to assess the makeup ofCouncil, to see if the structure is proper. Developand implement a Governance Model that includessome sub-committees that we can focus ourCouncil resources better. Develop a three-yearBusiness Plan and a stand alone operating budgetbecause currently, our budget is kind of intertwinedwith some sections of the Department ofAgriculture and there’s some feeling of Councilthat our budget should reflect the true cost ofoperating Council and that government shouldrecognize that.

August of ‘04, conduct a review of the NaturalProducts Marketing Act. Conduct a review ofmarketing legislation in other provinces becausethose two go hand in hand. We want to, thissummer, consult boards, commissions andproducers on the consultation process to be surethat we have the grassroots input of those that arereally affected by the legislation and theregulations. We plan to present our results to theMinister in the fall of this year and in November ofthis year, we hope to be able to start draftinglegislative changes if, in fact, any are necessary.

Also in the fall of ‘04, we want to conduct a reviewof Marketing Council policies, our current policies,our procedures and past practices. In fact, we’vealready begun to update our standing policies andwe will continue to do that throughout the year.We plan to consult with boards regarding neededimprovements in supervision because I think thisis a two-way street. We don’t want to be seen asover supervising but we do have obligations underthe Act that we feel we must carry out ourresponsibilities properly so we want to be surewe’re doing that.

Develop and communicate clear operatingguidelines and expectations to boards - I think thatwe see an opportunity to improve that and we’retaking steps to do that and we will describe that abit in a minute. In the spring of ‘05, to assist theMinister with a legislative review process. In thefall of ‘05, assist with drafting of regulations if somemust be changed. And then in the fall of ‘05,present the Natural Products Marketing ActRegulatory Changes to the various boards.

Current and recent regulatory reviews - It is truethat the Natural Products Marketing Act has not

22

undergone a major revision since 1974, althoughthere was in ‘88. It is also true that regulationsestablishing some commodity boards have notbeen reviewed or amended for some time.However, regulations of three of the fivecommodity boards formed pursuant to the Acthave been recently reviewed or are in the processof being reviewed.

The Egg Commodity Marketing Regulations werelast amended in 2001, following a request receivedfrom the Egg Marketing Board and from eggproducers. Drafting of Dairy Farmers of PrinceEdward Island Regulations that will replace theMilk Marketing Regulations was completed early in2004, following a request received from the MilkMarketing Board and the Dairy ProducersAssociation. And those two organizations whenthey merged, there are two functions.

The Dairy Farmers of Prince Edward IslandRegulations have recently been approved by theLegislative Review Committee, and they areexpected to be considered by the LieutenantGovernor in Council in the very near future, maybeas we speak, I don’t know.

The Poultry Meat Commodity MarketingRegulations are currently under review andamendments are expected to be recommended tothe Lieutenant Governor in Council by MarketingCouncil later this year.

The only two commodity regulations that still mustbe reviewed are the Hog Commodity MarketingRegulations and the Potato Marketing PlanRegulations. Council recently agreed to assist theHog Commodity Marketing Board with a review ofits regulations. During the review process, hogproducers will have an ample opportunity to haveinput into the various powers conferred on theBoard, prior to voting on an amended marketingplan.

The Potato Board recently completed a newStrategic Plan that may require regulatorychanges. Marketing Council is prepared to assistthe Potato Board with a review of its regulations ifasked to do so.

Directives and Advisories - To improvegovernance and accountability of commodityboards and to ensure that all boards meetminimum governance standards acceptable to

council, a series of Directives and Advisories willbe issued to all commodity boards. In addition,Council will, on occasion, issue a Directive to aspecific commodity board where Council feels anaction of a board is not consistent with itsregulations. In fact, Council has already issuedsome specific Directives to boards.

Section 2(6) of the Act provides authority forCouncil to issue directions to Boards. And I’mgoing to give you a little background on what weseed as Directives. Directives contain specificinstructions to a board on how it must conductcertain activities. For example, Council recentlyissued a Directive to all commodity boards thatrequires the boards to review their balance sheets,income statements, and significant budgetvariances, at least every quarter, that is everythree months, during the fiscal year. This Directivewas issued after Council determined that mostboards were not routinely reviewing financialinformation at board meetings. The Directive willensure that members of all boards are apprised ofthe financial condition of the board in a timelymanner.

Advisories - While not mandatory, Advisories willprovide boards with guidance or recommendationson specific issues that will help improve theirgovernance and accountability. For example, anAdvisory may recommend that a board developand maintain a Policy Manual or it mayrecommend a certain process for dealing withproducer concerns or issues.

Opportunities for producers to question boarddecisions - Questions have been raised by someproducers about Marketing Council’s failure to takedecisive action against boards that do not strictlycomply or appear to comply with their regulations.The Natural Products Marketing Act and theregulations of each commodity board containprovisions for producers to question a board on itsactivities and decisions.

It is Council’s view that, before Council is asked tointervene, producers have a responsibility andobligation to pursue all remedies available to themunder the Act and regulations where they feelaggrieved by a decision or action of a board.

Section 19 of Part IV of the Act allows anyaggrieved party to appeal a decision of a board to

23

the Board, and if the aggrieved party is notsatisfied with the board’s appeal decision, thatperson may appeal the decision to the NationalProducts Appeals Tribunal.

The Appeals Tribunal is an independent bodyestablished pursuant to Section V of the Act. Theappeal process is relatively informal, and it allowsproducers to present their grievances in aninformal setting at minimal cost. In other words,they’re not expected to engage legal counsel ifthey wish not to. The venue is there and it’s keptrelatively simple for them to take advantage of.

All commodity board regulations contain a clausethat allows a significant number of producers topetition a board to hold a special general meetingof producers to discuss a specific subject ordecision.

Tape No. 4

Murray Myles: (Cont’d) For example, the HogCommodity Marketing Regulations at Section 33state where the Board receives a petition orrequest signed by at least 10 per cent of theregistered producers requesting that a specialmeeting of producers be held for discussion ofmatters respecting the operation of the plan or ofthe board the board shall call a special meeting ofproducers within 30 days of the receipt of suchpetition or request.

So you can see, and that clause is, I think,contained in all the Commodity Board regulations.Section 26 (a) of the Act allows Marketing Councilto investigate, arbitrate, adjudicate upon, adjust orotherwise settle any dispute between producersand it goes on, processors and boards. It isCouncil’s view that this section is only intended tobe used where a producer or group of producersare not satisfied with an action taken by a board inresponse to complaints raised under section 19 ofthe Act or raised under the appropriate section ofthe Commodity Board’s regulations. In otherwords the producers have a responsibility to followthe process.

Marketing Council PowersSome concern has been expressed that Councildoes not have enough teeth in the Act orregulations to allow it to effectively enforce itsdecision on Commodity Boards. Council agreesthat this issue needs to be visited during the

review of the Act and the various regulations andthat additional powers or clarification of powersmay be required to ensure that appropriate actioncan be taken against a board that disregards theAct, regulations or directions issued by Council.

And if you look at the Act, essentially today the Actrefers to “on summary conviction” you can fine theBoard $5,000 I think, or $1,000 and that impliesthat you must go through court. There’s anothersection of the Act that says Council can requestthat a board reconsider an order or a decision butif the board decides not to change its decision orits order really the only avenue that Council cantake is to make a recommendation to theLieutenant Governor in Council and it’s a yes, no,type of situation. And we think that there may beother ways that we can have a little more power, alittle more clarity that will allow us to enforce a fewmore decisions on some boards.

With that I’m going to turn it back to the Chair.

Kenneth MacLellan: We’ll give you a little bit ofa summary here. Marketing Council has a greatdeal of responsibility for general supervision ofcommodity boards, marketing commissions andcommodity groups. Council takes its responsibilityvery seriously. Through the adoption of itsstrategic plan and action plan Council hasdemonstrated that it is taking steps to improve andstrengthen its supervision and monitoringactivities. Having said that Council is convincedthat producers have a responsibility to activelyserve on boards when asked to do so and toclosely monitor activities of their own organizationsto ensure that the general direction given to theBoard by producers is respected. There are ampleopportunities under the Act and regulations forproducers to seek redress where they feel a boardis not respecting the wishes of producers andproducers must follow the process outlined in theAct and regulations before asking Council tointervene. Marketing Council can and is preparedto play a key role in identifying the processesavailable to producers where the producers feel aboard does not appear to be respecting the Act orthe Commodity Board’s regulations.

As stated earlier Council had identified a numberof areas where Council supervision activities canand will be improved and Council intends to makethese improvements as soon as is practical. Giventhe scarce resources available Council also

24

believes that the issuance of directives andadvisories will make the board stronger and moreaccountable to producers. Council has alsoinitiated a process that will lead to a review of theAct and has offered to assist any board thatwishes to review its regulations.

Thank you and I guess we’re open for questionsnow.

Wilbur MacDonald (PC) Chair: I’ll go with Evaand then Wayne, okay.

Eva Rodgerson (PC): I appreciate you comingout today because this is something we heardiscussed a lot about. And you give me a lot ofinformation but I’m just wondering because thistopic has come up even recently in regards to, I’llsay the Potato Board. Remember they hadpresented I guess to government about, forexample, more processing line and one of thethings we’re controlling - acreage, and they said,well under your Natural Products Marketing Act,they could control the acreage. You know, this islike kind of like back and forth, just discussions. Isthat, in your interpretation, is that something thatyou fellows now today would have the power over?

Murray Myles: This is, it’s not really us. Keep inmind that it’s the Potato Board that has thepowers. Council doesn’t have the powers. Powerswere conferred to the Board from the LieutenantGovernor in Council. It is one thing that we hadidentified prior to coming down here today that it’sa question you could have–we were trying topreemptive here so we did have a few things thatwe wanted to look at ourselves first.

The interesting part about that potato questionand the best thing I can do is just read what I havehere. “Section 45 (v) of the regulations empowersthe Board to establish and operate a quotasystem”. And I could read it for you but it’s quiteclear that it does. However, Section 46 mayqualify this power. And Section 46 I would read foryou. I love these notwithstanding clauses.“Notwithstanding Clause 45 (v) the Board” and Ihave in bold here, “shall not have the power toimplement a supply/management system withoutthere first being a producer plebiscite in which themajority of those voting indicate their support forsuch a system.” And I was asked that questionby one of the members of the committee sometime ago and I think I said that, maybe I gave a

political answer. Well, I’m not a lawyer, I’m not ajudge. I’m not sure what the answer would be.The real question is whether or not it wascontemplated when the regulations were written asto whether supply/management referred to aprovincial quota system or whether it was inreference to what’s normally seen assupply/management and that is a national quotasystem. And I don’t know. It’s subject tointerpretation. It’s a very vague situation. Mypersonal view is probably it’s implied that, youcould imply it as well as any to say look, therewould have to be a plebiscite to have a provincialone because what is supply/management andthere’s no reference to a nationalsupply/management there. But that’s a personalopinion that is certainly subject to debate by lawyerand judges I’m sure.

Eva Rodgerson (PC): So it’s not as simple asjust saying . . .

Murray Myles: Nothing ever is.

Kenneth MacLellan: I guess on the other handis all supply and management systems that weknow are all national in scope. So this is the . . .

Wilbur MacDonald (PC) Chair: Wayne?

Wayne Collins (PC): Yes, thank you, Mr. Chair,and I thank you both for an excellent presentationand just to add one other quotation to Mr. Lank’spresentation on the 4th of March, he did also say,I quote, “I think you should talk to MarketingCouncil. You should have them in. They have anexcellent new person looking after it in MurrayMyles there”. But my question is very simple andI know this has been the year, I don’t know wherewe came up with that term, but “the perfect stormin agriculture”. Everything seemed to go wrong atthe same time in all our major commodities asyou’re well aware.

My question, I don’t know if there’s an answer to itbut I’ll pose it anyway to both of you. Is thereanything that the Natural Products MarketingCouncil could have or should have done any timein the last six to 12 months to have averted thisstorm or to have mitigated the results of it in someway?

Kenneth MacLellan: I guess underneath theNatural Products Marketing Act, producers,

25

primary producers have their own marketingboards or commissions. It is those boards that areactively involved in the day to day operations ofhow the boards run. We supervise and I don’tthink it’s our job to intervene in market places oranything like that. We don’t have those powers oranything. Murray might want to comment more onit. He’s the regulation expert when it comes to theMarketing Council. He’s deals with the regulationsevery day. But we do not have the jurisdiction ofpowers to do anything like that. The marketingboards are set up underneath us. They have theirown powers and regulations as seen fit at the timethey were put in place by the producers and if theyneed to have changes or anything made then weare here to facilitate that and producers have to, ithas to come from the producers themselves so tosay.

Murray Myles: Yes, I think just to agree, I’mcertainly agreeing with Kenny. The legislation andthe regulations provide producers with the tools todo what’s necessary. Some of the things thathave happened in the last year or two years withvirtually all commodities, I mean it’s certainlyoutside anything we ever would havecontemplated on PEI or anything we would everhad control over. I mean the price of pork being at$1.15 or $1.12. The board has the power to pricebut I mean it’s a partnership. I mean you have tohave the producer, you have to have the processorand you have to have the consumer and they allmust be willing to pay the going price. So to say isthere anything that would have been, we couldhave changed under the Act, I don’t believe so. Idon’t know what it would have been. What wehave to be, in my view, is supportive of theproducers. Like I say, give them the tools, workwith them and after that it’s (indistinct).

Wayne Collins (PC): It’s fair to say thoughgentlemen that, you know, Mr. Lank was right onwanting or desiring that the Act be updatedbecause obviously you’re very much on track tosee this Act updated is in the very near future,hopefully by 2005, right?

Murray Myles: I’d rather say reviewed. I’m notsure, and again we need to go out there and findout, the first thing we’re going to have to do - infact I’ve started some of that work - is to look atlegislation in other provinces. Compare and seewhere we can build on what we have. The Act isextremely broad and extremely powerful and

whether or not the Act needs to have a major,major revision or not remains to be seen. Theremay be wishes of individual, producers ofindividual commodities that may want to changethe powers of their boards and if they want to dothat then we’re more than willing to work with themto facilitate it.

Wilbur MacDonald (PC) Chair: Fred?

Fred McCardle (PC): Getting back to Eva’squestion, I was the person who called them . . .

Murray Myles: I didn’t want to say that.

Fred McCardle (PC): . . . last winter when wegot those briefing notes from government who saidthat there are too many potatoes grown on PEIand the Marketing Board has the power to limitacres. Now this legislation all came into being inthe late nineties by Eugene Whalen when hebrought in the National Farm Products MarketingAct with the Milk Act when he brought in supplyand management for milk. And every province inthe country got similar legislation that’s calleddovetailing legislation. And when the nationalquota is established then each province candovetail their legislation to compliment that centralCanadian legislation. Correct?

Murray Myles: That’s correct.

Fred McCardle (PC): Well, we have thatlegislation but as Murray indicated, Section 45 (v)gives you the quota but then Section 46 takes itaway by you have to have a plebiscite on a quota.And this is a long story. From 1978 to 1983 Irepresented the PEI potato industry in Ottawadiscussing quota and it took us five years to agreewhere to start. And Manitoba weren’t in then.They were upset with it. Anyway it never did goanywhere because potatoes were never namedunder the National Farm Products Marketing Actthe way that eggs and milk are. But that’s what wewere attempting to do then. But those powers arein that Act because of the dovetailing legislationput to compliment the National Farm ProductsMarketing Act. It’s got nothing to do with what wecan do on PEI. If we would have set up quotas onPEI for PEI then we could do that but we wouldn’tbe able to sell our potatoes internationally, orinter-provincially. The only market we would havewould be PEI potatoes, would be Prince EdwardIsland which is irrelevant.

26

So the notes that you were given were not correctand it shows the people that are writing don’t knowwhat they’re talking about when they tell you thatthey can supply, we can set quotas on PEI tocontrol acreage. We can’t. And it’s too bad thatthere’s a proponent out there but that’s the way itworks.

Murray Myles: Well, if you want me to respondto Mr. McCardle there, he’s correct in that theprovincial legislation, Natural Products MarketingAct only provides or confers power forinterprovincial trade, trade within the province.Once you get into intro- provincial and export tradethen you get into federal jurisdiction and that’s whyour supply manage commodities have what yourefer to as dovetailing. The feds confer the powerto the province and the province confers power tothe federal government so that the two markets -the intro-provincial and the interprovincial or thethree markets–there is exports–are integrated. Sothe authorities flow smoothly and are not subject tochallenge. Oh, you’re absolutely correct.

Wilbur MacDonald (PC) Chair: Richard?

Richard Brown (L): Mr. Lank’s comments at thelast meeting about your Council, at the end of thepresentation you said there’s mechanisms in yourAct for him to appeal to your council and things likethat, to bring his concerns to you.

Murray Myles: Not to the Council. Oh, there is. There is. There’s a . . . the first provision underthe . . . our view is that the first provision under theAct that would apply if an aggrieved person wantsto pursue a decision of a board their first right is toappeal that decision to the board. Again, arelatively informal process, go to the board, speakto your peers, say look, I don’t think you did theright thing. You might change your mind. If theaggrieved party does not get the decision that heor she wants then that person has a right to appealthat decision to an independent tribunal. It is notMarketing Council, it’s a separate three personbody that’s established to make sure there’sindependence and that producer can take thatappeal there. If a group of - Council has under theAct the authority to investigate, arbitrate disputesamong producers and processors and everyoneelse. But we don’t really see that role as being theprimary step. It should be a step after other stepsare followed. The regulations, each commodityregulation does have a section that says if 10 or

more or 10 per cent, whatever, feel that they wantto have a special meeting of producers and reallychallenge the Board as to what they’re doing, theprocess is there. They can follow that process andthey should follow that process and we’re morethan willing to identify for anyone what processthey should follow. We won’t advise them onwhich they should take but we’ll refer them andexplain the Act in layman’s terms and theregulations and what they should do or what’savailable to them I should say instead of what theyshould do.

Richard Brown (L): So did Mr. Lank go throughthose appeals processes and work within hisgroup first?

Murray Myles: You would have to really referthat back to the Hog Commodity Marketing Board.My understanding was that Mr. Lank did initiatesome appeals in the fall but that was really the firsttime I think that he had appealed any decisions ofthe Board. I could be incorrect on that but I thinkthat’s probably right.

Richard Brown (L): What do you think is good?You’re like the Council over all the other boards. Murray Myles: Yes.

Richard Brown (L): Fish or lobsters or anythinglike that is not included. That’s not a naturalproduct.

Murray Myles: It is a natural product. They arenot organized under our Act. Oysters areorganized. And they’re what’s called a commoditygroup and they have rather limited powers. Theydon’t have regulations. They’re not required tohave a regulation through an Order in Council butthey must provide us with bylaws that Councilapproves. They can impose a refundable levy ontheir members for promoting their product, fordoing some research, but they’re restricted in whatthey can do.

Richard Brown (L): So you guys are intopromotion too then.

Murray Myles: Not us.

Kenneth MacLellan: No, not us.

Murray Myles: The boards.

27

Kenneth MacLellan: The boards, like this is likecommodity groups can levy producers forpromotion and research and the levy has to berefundable. It’s not us that does the promotion andresearch. It’s just they indirectly do thatunderneath the Act and regulations.

Richard Brown (L): But we have all these littledifferent boards levying and doing their ownpromotion. Do you guys think wouldn’t it be betterif the market, like all these boards give you guysthe money and do one central marketing forproducts, PEI products in general? Why not?

Fred McCardle (PC): They can’t even get alongthemselves.

Richard Brown (L): No, but we’ve got a FoodTrust. We set up Food Trust. So are you sayingFood Trust is not going to work?

Fred McCardle (PC): I don’t know what youmean.

Richard Brown (L): No, but the government, wehave this big Food Trust thing in PEI, we’re goingto market PEI as a pristine placed and, you know,our animals and our food . . .

Fred McCardle (PC): There’s four calls waitingto talk to Murray, the one from the Chicken Board,one from the Hog Board, one from the PotatoBoard, which one is he going to pick up? What arethe other three fellows going to think? I wouldn’twant the job.

Richard Brown (L): All I’m saying, you know,wouldn’t it be a better idea to market all ourproducts as one? You guys must knoweverything. That’s why every industry’s in trouble,I guess.

Wilbur MacDonald (PC) Chair: Do you want torespond to Mr. Brown?

Murray Myles: I don’t know what response Icould give to that, Mr. Chairman. The fact is wedon’t have the authority under the Act.

Richard Brown (L): But if you had the authorityand the leadership.

Murray Myles: I think that what would have to

happen for that to occur would be that all theproducers of PEI would have to agree and I thinkthat Mr. McCardle probably expressed that. That’snot likely to happen because some of them can’tagree with each other.

Richard Brown (L): But if the majority agrees.If the vast majority votes in favour then welegislate it. I know everybody is going to jump upand say oh, that’s terrible. But at some point intime . . . the potato industry is forever in crisis, youknow, with the hogs and the beef and everythingand at some point in time we’ve got to say whydon’t we just all work together here and make itbetter for all of us than us all being separated inour own little silos and trying to do our own littlething. We’re not a big, big province here. We’re atiny little province. We’ve got to at some point intime say to ourselves, this ain’t working. And whydon’t we start working together instead of allfighting with each other and maybe we can . . .sure one group may lose one year or have someproblems one year but at the end of the day if weall work together, because we’re not Ontario,we’re not Alberta. You know, we have a limitedresources, we have a limited budget.

Murray Myles: Mr. Chairman, if I just mightrespond to that, I think the committee should keepin mind that the Act and the regulations are muchbroader than just promotion. That’s a very smallfactor, okay. There’s the establishment of quota,the controls of production and pricing and all thisand to segregate one segment out and expectMarketing Council to do that under the Act I thinkwould be quite an onerous task to be honest. Ithink it’s probably better left with the producers thathave a vested interest in the commodity and theyknow where to focus their dollars because they arelimited dollars.

Kenneth MacLellan: I think also it would be fairto say that, to add on to what Murray said, is thatthese boards and commodity groups, that is onlyone thing that they do, is promotion of theirproduct. The dairy producers promote dairyproducts and that’s tied into national programs.These boards tie stuff into national programs withtheir counterparts nationally and with otherprovinces. So to lump everything all together inPEI, I doubt if that would work very good.

Richard Brown (L): I guess I’m just thinking wespend millions of dollars in tourism campaign, you

28

know. We put all the money into one tourismcampaign sort of thing and tourists. You know,market PEI tourists to the rest of the nation andthen, PEI, you know, it looks pretty good. Theycome to PEI and there’s not the hotel associationor any. All them associations aren’t going off andadvertising separately or the beaches or anything. They seem to have got together and said let’smarket ourselves together. And I’m saying in thetourism commercials why don’t we try to market alittle of our products too, what our food is andthings like that. I’m just saying we don’t have $25billion like Ontario’s budget and other big budgetsto do all that kind of stuff. We’ve got toconcentrate our efforts and if we can put it in ourmarketing, our tourism marketing ad that, youknow, Coca Cola and all these guys buy movies.They spend big money to have their can of pop ina movie. Anyway.

Wilbur MacDonald (PC) Chair: Okay, I’m going togo to Wilfred, Eva and then Fred and I’m going toask you - Andy, do you want to? I’m going to askyou to be very quick. We’re running close to 12:00o’clock. Wilfred first.

Wilfred Arsenault (PC): I heard you say you hadan action plan, you’re meeting with the minister ina couple of weeks. What’s your major challengeover the next three or four years?

Murray Myles: Getting all the work done withinthe time frame. Part of it’s resources. As youprobably could tell from our presentation I probablyspend 50 per cent or 40 per cent of my time onMarketing Council issues. Part of it is done withthe supply/manage commodities (indistinct). Youknow, we have half of clerical support type person.We rely on departmental solicitors for legal advice.So part of it is resource based. It will be achallenge to do that. We find that it’s a challengeto try to get regulations drafted quickly. Primeexample, the dairy regs that I referred to in thepresentation, I think we went through 30 draftsover the last two and a half years before theyfinally reached the legislative review process.Wheels move very slowly sometimes and it’s a lotdue to resources of other people too, othersections. I think they’ve gone a good job for us butthey have a lot of other priorities too.

So I think the challenge is really to, just with theresources we have, to implement all the thingswe’re trying to do. But we, in my view, I think

Council did a good job. This is - I’m not going tocirculate that but it would be available if you’d liketo see it - I think you need to have targets and youneed to make those targets a little beyond whatyou expect that you can do to make sure thatyou’re driven a bit to accomplish. But it will be achallenge.

Wilbur MacDonald (PC) Chair: Andy?

Andy Mooney (PC): Actually a couple of thequestions I was going to ask Fred had touched onalready, on the quota system, the whole nineyards. But I guess basically in a nutshell youfellows are basically the watchdogs to ensure thatall the different commodity groups under you aregeared to the legislation that they work under.

Murray Myles: That’s correct.

Andy Mooney (PC): And as far as, I basically ama potato farmer myself and it’s not as simple assaying all these different groups should marketunder one. Like even in the potato industryourselves there is processing growers that areupset with levies taken off processing potatoesthat go towards marketing fresh. So even withincertain industries it’s a pure devil. So if you put allthe different commodities in the sameroom–mercy.

Richard Brown (L): Well, if they’re all losing(indistinct) got to say boys, we’ve got to worktogether.

Andy Mooney (PC): I know that but it’s just. Theother question I would have and I know this willprobably raise the eyebrows of a few of theindustries but one thing that always concerns me,even we grow processing potatoes and we growon the open market, I’ve been a dairy farmer foryears as everybody knows, we have, whether it bephysicians or nurses on Prince Edward Island,when it comes to salary negotiations basically takein top notch, well-paid, hard-nosed negotiators tonegotiate on behalf of their unions and we have inthe potato industry, we’re negotiating with, youknow, multinational companies that have hard-nosed cats at the negotiating tables and basicallyour farmers are tremendously talented, there’s anawful lot of them, they’re very on the ball, but if Iwas on the Processing Council and I was one ofthe ones doing the negotiating, as an example,hypothetically speaking, if our farm was in tough

29

financial straits and I was one of the negotiatorswhen it came right down to sharpening my teethand going at it, I’d be wondering whatrepercussions I could have at the end of the day.

I’ve talked to different producers, I asked thequestion. I don’t know why the devil that some ofthese boards don’t have, you know with the leviesthat’s taken off, why don’t we just pay hard-nosednegotiators to negotiate on behalf of these boardsinstead of farmers going. I think farmers are verycapable but the only thing that concerns me is Ijust wonder on individual farms, like everyone is ina different financial situation and everything and,I’m not saying that (indistinct) companies areruthless enough to take repercussions but I justlike things being awful safe. That’s just somethingI’ll throw out. I know I’ll get badgered about thatbut it’s something that I just don’t understand whyit doesn’t take place. Every other industry,whether you’re a nurse or doctor, somebodycomes in because they want the very most theycan get out of the contract.

Wilbur MacDonald (PC) Chair: Any comment?

Kenneth MacLellan: The legislation provides theboards, the only comment I would make is that thelegislation provides boards with powers and stuffto do things in the common good for all. Theyhave the power to do that if they so wish.

Wilbur MacDonald (PC) Chair: Alright. Eva?

Eva Rodgerson (PC): All boards are set upbasically with the same structure, the samelegislation on how to function.

Kenneth MacLellan: Each board has their ownset of regulations. Like the regulations for theboard might be a little bit different, each board mayhave a few regulations that aren’t quite the sameas another board but in principal basically all thesame.

Eva Rodgerson (PC): The other question, theone that keeps coming back to me is, for examplein the potato industry. You got a group of seedguys that say we want our own board because wedon’t feel we’re represented by the bigger boardand we were talking about this earlier. Like, canany group, like say if I’m in the seed growing andI don’t think I’m being treated in a (indistinct)manner because I feel most of the guys that are on

my board are producers or whatever. Can we justgo off by ourselves and set up a board?

Murray Myles: Not quite that simple. I think aswe explained earlier and it’s one of the questionswe had identified that could be raised here today.What can happen is that a group of producers,again if those producers are not satisfied with theboard where they should go first is back to theboard and they should appeal a decision; theyshould be heard; they should go to the tribunal;they should petition the board to hold a specialmeeting to discuss the issues before they getblown out of proportion. Go through thoseprocesses. Council is there at the end of the dayif a significant group of producers feels strongenough that they haven’t been able to have theirconcerns addressed through the other processes,they can come to Council and Council has in itsdiscretion to hold a plebiscite among thoseproducers to determine whether or not they shouldform their separate board.

And what Council has done, in the case of apotato dispute, Council closed a file I think the firstpart of December after the Board, after all theproducers present in a special meetingoverwhelming said, yes, we support that strategicplan and that should address our concerns. So weclosed the file. But going forward, if anothergroup of producers came forward with a petition,after following other processes, and said look wewant you to hold a plebiscite then Council wouldcertainly want to look at it on the understandingthat Council, there are other ways that Councilmight defuse the situation. As Council did with thepotato one was to try to recommend and gothrough mediation process and then torecommend that there be a strategic plan to try tobring the parties together rather than letting themgo your separate ways.

Eva Rodgerson (PC): This group, I think theywent . . . I don’t know if they finished the wholeprocess. But anyway, I’ll be able to direct themthrough to you.

Kenneth MacLellan: I’d like to comment furtheron what Murray had said about producers comingand getting producers to discuss. They just can’tsimply come to Council and say we want to go offby ourselves. Another group, if any group or groupof producers want to be formed for any commoditywhether it’s one that’s existing and try to change or

30

some other commodity, let’s say the widgetmanufacturing group want to come and widgetswas their natural commodity, their natural product,they would have to come and they’d have topresent, in order for to hold a plebiscite they haveto have a plan laid out. Laying out a plan is notexactly a simple procedure either. You have to doyour homework and get everything laid out andthen you have to have support.

Eva Rodgerson (PC): Thank you.

Wilbur MacDonald (PC) Chair: Fred?

Fred McCardle (PC): I have two issues. I wantto address Andy’s question and then I have myown comment. In 1983, this is about theprocessing, Andy, in 1983 I was chairman of aproducer’s association and there was this youngcollege professor at UPEI who had just come backfrom Ontario who was negotiating commodityprices for 23 different commodity groups in Ontarioand at that time the Producer’s Association wasgoing to set the world straight. So we called ameeting of the Processing Council and weintroduced Mr. Tim Carroll who was this lad backfrom Ontario.

Richard Brown (L): He came from the Premier’sprovince. He educated the Premier’s province.

Fred McCardle (PC): We wanted Tim Carol toact as the negotiator for arm’s length so that theguy across the table doesn’t have a . . .

Andy Mooney (PC): You got the wrong person.

Fred McCardle (PC): Well, the ProcessingCouncil said they were capable of running theirown negotiations and that hasn’t changed one bit.

But anyway, getting back to the potato thing. WhenI got John Eldon Green’s report last December Ireally had to chuckle because in one of therecommendations he mentioned putting dealers onthe marketing committee of the Marketing Board.Now I’m sure John Jeffrey will remember the oldMarketing Board was thrown out by the same TimCarroll in December, 1987. But this board haddefended two plebiscites. It was unique in acouple of aspects. One was it was answerabledirectly to the minister and the other one, it alloweddealers to sit on the board. And that Act waswritten in 1956 and it is still one of the most

genuine pieces of farm legislation that existsanywhere. But anyway the dealers were on theboard and the Marketing Board, the NFU had twoplebiscites against the Board to get the dealers offthe Board and they didn’t win. The dealersmaintained the positions.

So then Tim Carroll in 1987, he and Joe Ghiz hadthis dream that they were going to bring us all intothe new millennium with this 1969 legislation, asit was called then, and it left the dealers off theBoard. So for 16 years the dealers which are anintegral, important part of the industry had no sayin the industry at all and it’s been to the detrimentof the industry. And finally John Eldon Greenrecommends last December that the dealers nowbe given a seat on the marketing committee of theMarketing Board. But you should amend thatlegislation to have the dealers full partners at thetable. That’s the way . . . it worked good for 25years and our industry has suffered because theyhaven’t been at the table.

Wilbur MacDonald (PC) Chair: Carolyn?

Carolyn Bertram (L): Why isn’t the Fishermen’sAssociation part of this organization?

Murray Myles: We can’t speak to that. If wewere approached by the fishermen, by the fishersand they presented a plan to us that they wouldwant us to hold a plebiscite among their members,then we would certainly consider that.

Carolyn Bertram (L): But they’ve neverapproached you on that.

Murray Myles: Not to my knowledge.

Kenneth MacLellan: Well it was up until justwhat, a year and half ago or two years ago that wedidn’t have oysters. We were approached byoyster fishers to form their own group. It’s acommodity group. If they get the support then theydemonstrated the support and so they got theirgroup. It’s up to the people that are producing theproduct.

Carolyn Bertram (L): You never go out andapproach them. They have to come to you.

Murray Myles: No, they have to approach us.

Carolyn Bertram (L): Because we just see the

31

current situation right now. You know, if they wereorganized and together maybe that could help thecurrent situation.

Murray Myles: It could make a difference. We’rehere to foster the process but not to takeleadership in promoting organization of any type ofcommodity group.

Wilbur MacDonald (PC) Chair: Okay, thank you. We thank you both very much for coming today.You certainly gave us a lot of incite into themarketing council, I’ve got to say this right, PrinceEdward Island Marketing Council. That’s thename, it’s not called producer’s market.

Murray Myles: No.

Wilbur MacDonald (PC) Chair: I guess one finalquestion. On the review of the Act, are you goingto review that before you present it to governmentor are you going to ask government to be involvedin that review?

Murray Myles: I think what we want to do first isgo out and find, well first of all we’d like to look atthe other legislation, legislation in other provincesand also ask producers their views before weapproach government and then we’ll follow theprocess from there.

Wilbur MacDonald (PC) Chair: Thank you verymuch. We appreciate it very much you taking thetime out to come today and it’s very informative.We do have a couple of in-house things just todecide here. We received the Ten Reasons toWorry About Food Production. I think that’s beenpassed around. We’ll ask our agriculture person tobring us up to date on beef pricing, which wementioned as part of our agenda today. He didsome research, right?

Wayne MacKinnon: It might be a little lengthy.Maybe you want to do it another time.

Wilbur MacDonald (PC) Chair: Maybe what weshould do is have the Clerk photocopy it and sendit to everybody if it’s lengthy. It’s quite informative,I’m sure. So maybe we should do that. We’ll haveit photocopied. Should we do that? And thenwe’ll have it for, we’ll bring it up at the next meetingthough at the same time. So that should be on theagenda for the next meeting.

When is the next meeting and where do we gofrom here?

Marian Johnston (Committee Clerk): We havethat motion to have Leza Matheson-Wolters andBob Harding in. What should we do with that?

Wilbur MacDonald (PC) Chair: We did have amotion to have Leza Matheson and Bob Harding inincamera so maybe we should proceed with that,should we? Is next Thursday okay, next Thursdaymorning? It’s Holy Thursday, we’re not meetingthat day. Two week from today okay.

Marian Johnston (Committee Clerk): Thatwould be the 15th.

Wilbur MacDonald (PC) Chair: By having it intwo weeks time, we may hear from Bob Hardingon the contract pricing, okay. I thought that was avery informative morning all the way around

Richard Brown (L): Mr. Chairman, when are wegoing to get this report?

Wilbur MacDonald (PC) Chair: Well, we’ve gotto, I think we’ve got to meet with those two beforewe do that and then we should be able to sit downand do the report.

Okay, thank you very much for coming and we’llsee you in two weeks time if we don’t see you inthe meantime.

Meeting Adjourned.

32