COVID concerns weigh on chicken farmers, processors

Sales crashed on lack of foodservice business

Ottawa — Chicken Farmers of Canada say they’ve faced a “sharp decline” in sales as a result of a significant drop in food services, which represents roughly 40 per cent of their market.

CFC chair Benoît Fontaine warned federal MPs as much during a virtual meeting of the Commons standing committee on agriculture and agri-food on May 29.

Farmers and processors were left with a surplus in production for a short period of time at the onset of the COVID-19 crisis, he said, but the supply-managed industry was able to quickly change its production levels to avoid a “worst case scenario” that would have resulted in the depopulation of flocks.

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The industry dropped its allocations from May to July by 12.6 per cent, and plan to reduce production by 11 per cent throughout July and into early August.

“This choice was done under our own initiative in order to act responsibly and satisfy Canadian demand without too many surpluses,” Fontaine said in French, noting processing plants have reduced volumes to make way for physical distancing measures while combating absenteeism and some temporary plant closures.

Fontaine raised concern over the value of flocks not being covered under current federal financial backstops. Most government-funded programs only offer support to the industry when there is a major depopulation of flocks, he said, but only to help cover the costs of euthanasia and not the overall value of the flock.

Jean-Michel Laurin, CEO of the Canadian Poultry and Egg Processors Council, said continuing to operate has had “significant financial impact on our sector.”

More than $87 million was spent in March and April on mitigating the impact of COVID-19 within member facilities, while at the same time having to adapt to market disruptions, he said.

“Because of the severe market correction, in poultry specifically, wholesale prices have dropped significantly since the beginning of the crisis,” he said. “What we want to stress is that this perfect storm creates vulnerabilities within our supply chain.”

While a fund of $77.5 million has been created by the federal government to help processors mitigate the impacts of the pandemic within their facilities, that money is not easily accessible because of certain eligibility requirements, according to testimony at the committee.

Concerns continue to be raised that money won’t be close to enough for Canadian agri-food processors.

“We can’t ask for reimbursement on disposable masks; it has to be reusable masks, and that will add to the costs,” council chair Joel Cormier said, noting his workers require disposable masks. “We’re trying to protect workers here, masks are absolutely needed. Washable ones are not good enough in this sector.”

Laurin said many companies began installing protective devices in February, prior to when federal assistance dollars were available to do so.

“We’d like to ensure that there could be reimbursement or compensation retroactive to things done before (the federal dollars were made available),” he said.

Like others in the processing industry, Cormier raised concern over not qualifying for certain wage supplements being made available by Ottawa.

“Right now, we are not eligible to the salary supplements, the wage supplements, because the thresholds, whether it’s eggs or poultry, our production is pretty steady, but demand has dropped like crazy,” he said, noting they couldn’t drop production in time to be eligible for the supplement.

During his testimony at the same meeting, Rory McAlpine, senior vice-president of Maple Leaf Foods, called for a forensic look at food systems to be completed by an independent body after the pandemic.

“There needs to be at least one inclusive, evidence-based post mortem or lessons learned,” he said, adding federal and provincial officials should be instructed to participate fully in such a study.

Such a report, he suggested, needs to ask why Canada did not have a cross-agency business continuity plan for food in place prior to the pandemic.

Meetings of the committee will continue to take place regularly until Sept. 21.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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