Maple Leaf profits continue decline

Maple Leaf Foods Inc. continues to lose money, but president and chief executive officer Michael McCain continues to be optimistic that things are going well.

The loss for the second quarter was $39.5 million compared with $38.4 million for the parts of the business that were not sold or closed.

The company has sold its stake in Canada Bread to Bimbo Bakery of Mexico and has begun to close some meat-processing plants in preparation for full-scale operations at a new plant at Hamilton.

McCain blamed the cost of running two supply lines for the losses, apparently referring to the closing months of business at the Schneider plant in Kitchener. That plant, which once employed more than 2,000 people, is scheduled to close before the end of the year.

McCain said the Hamilton plant is in the process of being commissioned.

The company announced an “adjusted earnings loss” of  $12.1 million compared with $32.3 million for the second quarter last year, but in the detailed report, says the losses from ongoing operations were $39.5 million this year and $38.4 million last year.

The losses so far this year total $164.2 million compared with $69 million last year.

The company has increased product prices to offset higher raw material costs, so its revenues increased even though volumes sold declined.

Sales totals for the second quarter were $831.8 million this year compared with $759.3 million last year.

U.S. politicians intensify pressure on supply management

A letter from 140 members of the United States Congress is urging President Barrack Obama to leave Canada and Japan out of a Trans-Pacific Partnership trade deal if they continue to refuse access to agriculture markets.

In Canada’s case, that’s a clear reference to high tariffs designed to preserve the market for Canadian dairy and poultry farmers and their marketing boards.

In Japan’s case, it is tariffs that increase whenever imports surge or domestic prices decline.

The letter warns Obama that “congressional support for the TPP would be jeopardized” if trade negotiators do not “hold Japan and Canada to the same high standards as other TPP partners.

“Indeed, we urge you to pursue the TPP negotiations without any country, including Japan, Canada, or others, that proves unwilling to open its market in accordance with these high standards,” the letter says.

The letter was immediately praised by the main organization representing U.S. hog producers.

M&M Meat Shops sold

M&M Meat Shops of Kitchener has been sold to Searchlight Capital Partners LP of Toronto.

Searchlight intends to “stabilize” the business, then resume expansion of the business which has more than 450 franchised outlets, according to Searchlight’s chief executive officer, Andy O”Brien.

M&M was founded in 1980 by brothers-in-law Mac Voisin and Mark Nowak and their wives. They started with 62 frozen-food items featuring restaurant-quality meat.

It expanded to annual sales of about $475 million, launched a failed expansion into the United States as MyMenu, and now has annual sales of about $400 million.

O’Brien said he plans to cash in on the loyalty of the chain’s 3.5 million customers via personalized e-mails backed with more advertising in print, broadcast and digital formats.

Antibiotic ban queried

Three United States senators think the ban on antibiotics as growth promotants does not go far enough in limiting their use in the livestock and poultry industries.

Sens. Elizabeth Warren, Dianne Feinstein and Kirsten Gillibrand are asking the Food and Drug Administration for more information, indicating that what they really want is a major reduction in the on-farm use of antibiotics.

In Canada, Ron Doering, the first person to serve as president of the Canadian Food Inspection Agency, has written that the ban will likely do little to reduce antibiotic use because veterinarians will still be able to prescribe them for disease-prevention purposes.

All that will change in the words “growth promotant” to “disease prevention”.

That’s the nub of what the three senators are asking of the Food and Drug Administration.

It grappled with the issue for decades and finally announced a ban days after the major pharmaceutical companies announced they would voluntarily remove growth promotion from their antibiotic-product labels.

What's up with kosher chicken

When they testified during an appeals tribunal hearing in Guelph in mid-July, officials from the Chicken Farmers of Ontario marketing board said the directors would meet July 22 and decide how to deal with five applications to serve the Ontario market for kosher chicken.

I have been asking the board's officials what happened.

They do not answer.

So if you know if or when the public may be able to buy grown-in-Ontario, processed-in-Ontario kosher chicken, there's a lot of people who would like to hear from you.

Court dismisses COOL appeal

A court in Washington, D.C., has dismissed an attempt by Canadians, Mexicans and many in the U.S. pork industry to block the government’s Country of Origin Labeling (COOL) regulations.

That moves the focus back to the World Trade Organization where Canada is seeking another ruling that the regulations amount to an illegal trade barrier.

That was the ruling on the original U.S. regulations and since then the U.S. has amended them, but in the opinion of Canadians, has made them an even bigger impediment to fair trade.

The American Meat Institute and eight other industry organizations, including representative groups from Canada and Mexico, had asked for the court for an en banc review of an earlier appellate decision denying an injunction (i.e. barring implementation of the COOL regulations).

In a statement, AMI interim president and chief executive James H. Hodges said “the court’s decision today is disappointing. 

“We have maintained all along that the country of origin rule harms livestock producers and the industry and affords little benefit to consumers.

“This decision will perpetuate those harms.”

Hodges said “We will evaluate our options moving forward.”

Economic studies in Canada indicate the COOL regulations depress prices for Canadian hogs and have cost hog farmers more than $1 billion.

Wheat researchers compile genome

An international team of researchers has mapped the wheat genome, opening the door to improved wheat breeding.

“The release of the chromosomal draft of the wheat genome sequence will accelerate gene discovery in wheat, and pave the way for development of tools to improve breeding of complex traits such as yield, insect and disease resistance, and end-use quality,” said Curtis Pozniak of the University of Saskatchewan.

“The chromosome-based draft is a technical tour de force and highlights improvements in sequencing and bioinformatics over the last few years,” said Andrew Sharpe, co-principal investigator for CTAG (Canadian Triticum Advancement through Genomics) and research officer at the Saskatoon labs of the National Research Council.

“The work has provided a fascinating glimpse into the evolution of the wheat genome. However, the full story will only be established with the development of a reference genome sequence,” he said.

The team’s work is published in the current issue of Science.

Fallout continues as Chinese recall meat

The fallout continues from an undercover television reporter’s exposé of cheating at an American-owned meat-processing plant in China.

Shanghai Husi, owned by OSI Group of Aurora, Illinois, has now announced that it is recalling all of its products from the marketplace.

The television reporter, who worked undercover in the plant for two months, recorded meat that was 12 days old and some of it mouldy being processed into products sold to fast-food chains including McDonald’s, Kentucky Fried Chicken, Taco Bell and Pizza Hut.

Some of the facility’s products were exported, including to Australia and North America.

“To help rebuild the trust of our customers and consumers, as well as to cooperate with the official investigatory process, we are compelled to withdraw all products manufactured by Shanghai Husi from the marketplace,” OSI Group said in a prepared statement released over the weekend.

“We are also conducting a thorough internal investigation into any possible failures on the part of current and former senior management. Should any misconduct be uncovered, we will take swift and decisive action against those responsible, including all relevant disciplinary and/or legal measures.

“In addition, a new management team has been brought in to China to ensure that operations run effectively,” the company statement says.

Shanghai Husi is believed to have produced 5,108 crates of meat products, including McNuggets, pork patties and beef steaks, using out-of-date or mouldy materials, according to the bureau and Shanghai's food and drug administration, which are jointly investigating the case.

About 100 tonnes of products are under detention.

Regulators in Shanghai found that Shanghai Husi forged production dates on some of its products and sold them after their expiry, the official Xinhua news agency reported on Saturday.

Shanghai police shut down the Shanghai Husi factory and detained five company employees following the television report, which showed workers using expired meat and meat that had fallen to the floor to make products including chicken nuggets.

Last week OSI Group owner Sheldon Lavin issued a public apology, saying, “I am appalled that something so completely unacceptable has happened in a company that I own. I will not try and defend it or explain it. It was just terribly wrong."

                       

Farm, consumer groups oppose Tyson-Hillshire deal

A coalition of 82 farm, ranch, consumer and faith-based groups has sent a letter to the U.S. Department of Justice demanding it extend its anti-trust review of the proposed Tyson Foods takeover of Hillshire Brands Co.

The groups argue the merger would substantially undermine competition in the pork processing and hog purchasing sectors, hurting farmers and consumers and undermining rural communities.

“The rapid consolidation of market power in the hands of just a few pork processors resulted in the loss of more than 90 percent of all hog farms since 1980,” said Roger Johnson, president of the National Farmers Union by way of a news release.

“Tyson’s takeover of Hillshire certainly warrants further investigation by the Department of Justice and should be stopped,” Johnson says.

“It’s time for the Justice Department to enforce our anti-trust laws,” he said.     

But here in Canada, authorities apparently see nothing wrong with L.H. Gray and Son Ltd. colluding with Burnbrae Farms Ltd. on egg pricing and who gets which stores as customers. The two hold about 90 per cent of the egg grading business in Ontario, and both routinely pack cracks into their Grade A cartons.

And who stood up to blow the whistle when Loblaws bought Shoppers Drug Mart and Sobeys bought the Safeway chain's supermarkets across Western Canada?

Or did any church or consumer group say anything as Agropur and Saputo bought more and more competitors?

Canadians apparently can't be bothered to stir themselves to speak up for justice, fairness in the food business.       

Hong Kong bans food from Husi Foods

Hong Kong has banned imports from OSI Group’s Shanghai Husi Food subsidiary following a food safety scare involving several global brands, according to the Reuters news agency.

The South China Morning Post reports that Hong Kong authorities said they will investigate McDonald’s Hong Kong unit for initially failing to disclose its imports of meat products from Shanghai Husi.

McDonald’s Hong Kong has since apologized to its customers and said it would stop selling several items including McSpicy chicken filets, the Chinese newspaper reports.

Shanghai police shut down the Shanghai Husi factory and detained five company employees following a TV report that showed workers using expired meat and meat that had fallen to the floor to make products including chicken nuggets.

McDonald’s said it would retain OSI as a supplier in China, while Yum Brands and Starbucks said they would no longer buy from the Shanghai Husi unit.

China’s food regulator has visited nearly 600 restaurants, food distributors and businesses so far in its investigation of the case, according to Reuters.

OSI Chief Executive Sheldon Lavin based in Aurora, Illinois, has apologized for the problems at the China unit.

A long list of imports of dairy blends

There are far more imports of dairy blends than the highly-publicized case of pizza kits for Pizza Pizza.

An information officer for Agriculture and Agri-Food Canada did me a big favour this week in answering my query with a complete listing of imports of dairy blends.

Prominent on the list are milk powders blended into livestock and poultry feeds. I guess supplies for farmers are treated differently from supplies for consumers.

The Pizza Pizza case was in the news again this week with the release of a report prepared for the United States embassy in Ottawa putting the sales loss for American suppliers at $30 million a year.

The report also indicated the Americans are angry that Canada acted without prior consultation when it brought the pizza kits under its tariff of 246 per cent. That effectively shut off those imports.

What’s not as well known is that other pizza toppings with dairy ingredients continue to come into Canada from the U.S. without facing the high tariff.

 Apparently these toppings are cooked in the U.S. prior to shipping whereas those for Pizza Pizza were to be cooked in Canada.

So why did the Dairy Farmers of Canada go after Pizza Pizza and not the others? Maybe you'll have better luck getting an answer to that question from them than curious reporters.

This is the listing (TRQ means tariff rate quota which is little or nothing):

SUBJECT TO TRQs
1901.90.33.90	Food prep,nes,exc ret,of hds 04.01 to 04.04 >10%<50% wt of dry milk solids, w/a
1901.90.34.90	Food prep,nes,exc ret,of hds 04.01 to 04.04 >10% <50% wt of dry milk solids, o/a
2106.90.33.00	Preparations, > 15% milk fat, < 50% dairy, as butter subst, w/a
2106.90.34.00	Preparations, > 15% milk fat, < 50% dairy, as butter subst, o/a
NOT SUBJECT TO TRQs
1901.90.39.90	Food prep,nes,of goods of hds 04.01 to 04.04, >10% <50% of dry milk solids
2106.90.95.00	Food prep ,nes cntg in dry state >10% wt milk solids <50% wt dairy content
2106.90.95.10	Butteroil and Sugar Blends
2106.90.95.90	Other food prep, nes cntg in dry state>10% wt milk solids <50% wt dairy content
2309.90.33.11	Calf feed, complete, cntg >10% <50% wt of dried non-fat milk solids
2309.90.33.12	Dairy cattle feed, complete, ctng >10% <50% wt of dried non-fat milk solids
2309.90.33.19	Bovine feed, complete, nes, ctng >10% <50% wt of dried non-fat milk solids
2309.90.33.20	Poultry feed, complete, cntg >10% <50% wt of dried non-fat milk solids
2309.90.33.30	Bird feed, complete, ctng >10% <50% wt of dried non-fat milk solids
2309.90.33.41	Feed suppl,incl conc, w multivitamin, ctng >10% <50% wt of dried non-fat mlk sld
2309.90.33.49	Feed suppl,incl conc, w a vitamin, nes, ctng >10% <50% wt dried non-fat mlk sld
2309.90.33.90	Feed prep for animals, nes, cntg >10% <50% wt of dried non-fat milk solids
2309.90.34.11	Mink feed, complete, ctng <=10% of dried non-fat milk solids
2309.90.34.19	Complete feed, fur farm, nes, cntg  <=10% wt of dried non-fat milk solids
2309.90.34.21	Calf feed, complete, cntg <=10% wt of dried non-fat milk solids
2309.90.34.22	Dairy cattle feed, complete, cntg <=10% wt of dried non-fat milk solids
2309.90.34.29	Bovine feed, complete, nes, cntg <=10% wt of dried non-fat milk solids
2309.90.34.31	Poultry feed, complete, cntg <=10% wt of dried non-fat milk solids
2309.90.34.32	Swine feed, complete, cntg <=10% wt of dried non-fat milk solids
2309.90.34.33	Horse feed, complete, cntg <=10% wt of dried non-fat milk solids
2309.90.34.34	Bird feed, complete, ctng <=10% wt of dried non-fat milk solids
2309.90.34.35	Fish feed, complete, ctng <=10% wt of dried non-fat milk solids
2309.90.34.39	Feeds complete, nes, ctng <=10% wt of dried non-fat milk solids
2309.90.34.41	Feed suppl, incl conc, w bacitracin, ctng <=10% wt of dried non-fat milk solids
2309.90.34.42	Feed suppl, incl conc, w chlortetracycline, cntg <=10% dried non-fat milk solids
2309.90.34.43	Feed suppl, incl conc, w tylosin, cntg <=10% wt of dried non-fat milk solids
2309.90.34.49	Feed suppl, incl conc, w an antibiotic,nes, ctng <=10% wt dried non-fat milk sld
2309.90.34.51	Feed suppl, incl conc, w vitamin A, cntg <=10% wt of dried non-fat milk solids
2309.90.34.52	Feed suppl, incl conc, w vitamin E, cntg <=10% wt of dried non-fat milk solids
2309.90.34.53	Feed suppl, incl conc, w multivitamins, cntg <=10% wt of dried non-fat milk sld
2309.90.34.59	Feed suppl, incl conc, w a vitamin, nes,ctng <=10% wt of dried non-fat milk sld
2309.90.34.60	Feed suppl,conc, w an antibiotic & vit, cntg <=10% wt dried non-fat mlk sld
2309.90.34.90	Feed prep for animals, nes, cntg <=10% wt of dried  non-fat milk solids
2309.90.36.11	Calf feed, complete, cntg >10% <50% wt dry milk solids, cntg butterfat
2309.90.36.12	Dairy cattle feed, complete, cntg >10% <50% wt dry milk solids,cntg butterfat
2309.90.36.19	Bovine feed, complete, nes, cntg >10% <50% wt dry milk solids, cntg butterfat
2309.90.36.20	Poultry feed, complete, cntg >10% <50% wt dry milk solids, cntg butterfat
2309.90.36.90	Feed prep, for animal, nes, cntg >10% <50% wt dry mlk sld, with butterfat

You can find specific information on Canada’s customs tariffs for these codes here:

http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2014/html/tblmod-03-eng.html#s1.

2) Are these products taxed at a different rate than dairy products containing 50 per cent or more dairy?

Within the list of products (containing less than 50 per cent dairy) above, some of the products are restricted by tariff rate quotas (TRQs), as labelled in the chart, however most have no TRQs. For those that have a TRQ, there is a within access level where a lower rate of duty is charged (in some cases 0%, depending on the country), and there is an over access level where a higher rate of duty is applied (212% - 250.5%). Food preparations (1901.90.33) have a TRQ of 70 tonnes and preparations (2106.90.33)have a TRQ of 0 (meaning, imports would be subject to over access tariff).

Compared to products containing 50% or more dairy (listed below), the tariff treatment is very similar. Most products have a TRQ of 0 with a higher over-access duty (upward of 250%). There are also some products that are not subject to a TRQ.

CONTAINING 50% OR MORE DAIRY
TRQ = 0
1901.20.11.11	Cereal cake mixes,cntg >25% butterfat,not put up for retail sale,<=11.34 kg,w/a
1901.20.11.19	Mixes, nes, cntg >25% butterfat, not put for retail sale, packs <=11.34 kg, w/a
1901.20.11.20	Doughs, cntg >25% wt of butterfat, not put for retail sale,packs <=11.34 kg, w/a
1901.20.12.11	Cereal cake mixes, cntg >25% butterfat,not put for ret sale,packs <=11.34 kg,o/a
1901.20.12.19	Mixes,nes,cntg >25% wt butterfat,not put up for ret sale,packs <=11.34 kg, o/a
1901.20.12.20	Doughs,cntg >25% by wt of butterfat,not put up for ret sale,pack <=11.34 kg, o/a
1901.20.21.11	Cereal cake mixes, cntg >25% wt butterfat,not put up for ret sale, >11.34 kg,w/a
1901.20.21.19	Mixes,nes,cntg >25% wt butterfat,not put up for retail sale,pack > 11.34 kg, w/a
1901.20.21.20	Doughs,cntg > 25% by wt butterfat,not put up for retail sale,pack > 11.34 kg,w/a
1901.20.22.11	Cereal cake mixes,cntg > 25% wt butterfat,not put up for ret sale,> 11.34 kg,o/a
1901.20.22.19	Mixes,nes,cntg > 25% wt butterfat,not put up for retail sale,pack > 11.34 kg,o/a
1901.20.22.20	Doughs,cntg > 25% wt of butterfat,not put up for retail sale,pack > 11.34 kg,o/a
1901.90.53.00	Food prep, nes, exc ret, of hds 04.01 to 04.04>=50% wt of dry milk solids, w/a
1901.90.54.00	Food prep, nes, exc ret, of hds 04.01 to 04.04>=50% wt of dry milk solids, o/a
2106.90.93.00	Food preparations,nes, containing 50% or more by weight of dairy content, w/a
2106.90.94.00	Food preparations,nes containing 50% or more by weight of dairy content, o/a
2309.90.31.11	Calf feed, complete, cntg >=50% wt of dried non-fat milk solids, w/a
2309.90.31.12	Dairy cattle feed, complete, cntg >=50% wt of dried non-fat milk solids, w/a
2309.90.31.19	Bovine feed, complete,nes, cntg >=50% wt of dried non-fat milk solids, w/a
2309.90.31.20	Poultry feed, complete, cntg >=50% wt of dried non-fat milk solids, w/a
2309.90.31.90	Feed prep for animals, nes, cntg >=50% wt of dried non-fat milk solids, w/a
2309.90.32.11	Calf feed, complete, ctng >=50 % wt of dried non-fat milk solids, o/a
2309.90.32.12	Dairy cattle feed, complete, ctng >=50% of dried non-fat milk solids, o/a
2309.90.32.19	Bovine feed, complete, nes, cntg >=50% wt of dried non-fat milk solids, o/a
2309.90.32.20	Poultry feed, complete, ctng >=50% wt of dried non-fat milk solids, o/a
2309.90.32.90	Feed prep for animals, nes, ctng>=50% wt of dried non-fat milk solids, o/a
NOT SUBJECT TO TRQ
1901.10.20.00	Food prep containing >10% on a dry wt basis of milk solid,infant use,retail sale
1901.10.20.10	Food prep cntg >10% dry wt basis of mlk sld,infant use,ret sale,cert organic
1901.10.20.20	Food prep cntg >10% dry wt of mlk sld,infant use,ret sale,not cert organic
1901.90.20.21	Malted milk mix, pdr, in pack exceeding 11.34kg, containing <40% cocoa
1901.90.59.00	Food prep,nes,of hds 04.01 to 04.04,>=50% of dry milk solids
2309.90.35.11	Calf feed, complete, cntg>=50% wt dry milk solids, cntg butterfat
2309.90.35.19	Bovine feed, complete, nes, cntg>=50% wt dry milk solids, cntg butterfat
2309.90.35.30	Bird feed, complete, cntg>=50% wt dry milk solids, cntg butterfat
2309.90.35.90	Feeds, complete, for animals, nes, cntg>=50% wt dry milk sld, cntg butterfat