Evidence of meeting #27 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was producers.
A recording is available from Parliament.
12:15 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
On the first question, we've looked at the payment distribution by farm type. The vast majority of these payments will go to grains and oilseeds producers, followed by cattle producers, in that order.
12:15 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
On inventory evaluation, which I know is quite surprising because everybody thought this was really going to benefit the cattle sector, it's clear it does. But it also reflects the fact that grain prices were declining over those three years, so the vast majority--and I'm talking upwards of 80% of those payments--will be going to those two sectors.
We don't like to give the sector breakdown, because we always try to protect ourselves from a trade standpoint, but that is the order. Those two sectors clearly are getting the vast majority of payments.
With respect to the actual payments going out to producers, as I mentioned in my opening remarks, we have started processing payments in all jurisdictions except Ontario, and there will be a transfer of funds to Quebec. If you recall, the minister placed a moratorium on where we deliver the CAIS program, placed a moratorium on the collection of overpayments under the CAIS program against other program payments. The grains and oilseeds payment program is an example. He placed a moratorium on that until the CITI payment started to go out to producers. That moratorium is basically on until January 2007, but if a producer is eligible for a CITI payment, then the overpayment will be clawed back against that CITI payment.
That was made clear in terms of the original announcement. The idea here was that the minister didn't want to be giving money with one hand then taking it back with the other. He said to wait until the CITI payment comes out, then do the offset against the CITI payment.
I don't know the specifics, Mr. Chair, but it could be a situation where the producer still has an overpayment remaining after the offset against the CITI payment. When I say “CITI”, I'm referring to the inventory payment.
12:15 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Is it the intention to move in the reference margin for 2007 to the accrual Olympic average and not offer a choice of cash versus accrual Olympic?
12:15 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
That's correct. We will be moving to an accrual reference margin. We had extensive discussion with the National CAIS Committee on this. The idea is that you need to be comparing apples to apples. To measure your margin in the program year on one basis, an accrual basis, and use a reference margin on a cash basis--there's a significant gap there.
12:15 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
The difficulty, though, Danny...and you have a paper before you or in your office that came from one of the advisers on that committee. He compared his farm on the accrual Olympic average versus the cash Olympic average, and his reference margin drops from $88,000 to a negative of $7,700. I'm told that with a number of farms that have done that comparison, the margin would basically drop by about 40%. It could be a 40% to 60% decline, according to that individual.
Is that correct? Will we see a decline in margins, ending up basically saving money for the government--in particular the federal and provincial governments--but at the end of the day the losers being the farmers? Is that what's going to happen?
12:15 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
There may be situations where an individual producer may have a lower reference margin, but we went through extensive analysis, through over 50,000 files, took this to the National CAIS Committee, and on average, grains and oilseeds producers will have higher reference margins because we're moving to the accrual basis.
We went through at least two meetings with the National CAIS Committee and all of the producers around the table on this issue. What the accrual reference margin also does, when producers are coming out of a disaster, is build up their reference margin quicker in terms of recovery because we are doing it on the accrual basis. We're taking into account the value of those inventories that they've been building up as they come out of a disaster situation.
I know the specific instance that you're looking at, and we're actually looking at that file right now in terms of understanding the numbers to make sure, first of all, we've got it right, and then to do further analysis.
But we did do extensive analysis on this issue.
12:20 p.m.
Conservative
12:20 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Mr. Foster, my question is to be a topic for discussion at the next federal-provincial ministers’ meeting. In fact, they devoted quite a bit of time to it at their last meeting. I am referring to the creation of separate programs.
In your opening remarks, you indicated that the CAIS program would be divided into several different programs: one focused on insurance, another on disasters, and so forth. There is a gap in this regard at the moment. Just take the situation with the Saint-Amable potato producers, and their recent disaster.
In your opinion, would the Saint-Amable potato producers and the other horticultural producers affected by the golden nematode qualify for this program by virtue of the fact that this is a devastating situation for them? Or does there actually have to be a disaster per se, like a flood, for example, before they are entitled to help under the program?
12:20 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
It's a very good question.
Clearly what ministers have agreed to is to separate out disaster relief programming from income stabilization programming, and looking at CAIS, or a margin-based program, as dealing with the income stabilization component.
In terms of disaster relief, whether it's a disease situation or whether it's flooding—and potato nematode would fit the circumstances of a disaster because it is a disease situation—really what we're looking at is providing assistance to help producers resume their business operations or mitigate the impact of the disaster as quickly as possible. But when we're looking at what needs to be done under a disaster relief framework, we also have to look at what existing programs are there. We're not there to try to substitute for what's available under existing programs, and of course, our two major programs are production insurance and, currently, the CAIS program.
So when we look at the disaster situation, we'll be looking at what programming is available, and then we'll look at what are the losses and costs that producers are incurring to deal with the disaster. If the existing programming is not responding, or can't respond, in dealing with those disasters, then that's what we envisage the disaster relief program will help producers with, to fill those gaps with the existing programs, to help them resume their operations, and also to mitigate the impact of the disaster. So if they're incurring, as an example, extraordinary costs because of the disaster that aren't covered under existing programming, then that's a potential area where we can provide assistance under our disaster relief program.
These are concepts that we've talked about with the National Safety Nets Advisory Committee, several national organizations, and it's the type of thing that ministers are going to be talking about next week in Calgary, in terms of a recommended disaster relief framework to deal with gaps in the current programming to help producers get back up on their feet.
12:20 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
This is what we have been asking for for ages. This is probably why the provinces agree with the suggested division. As the current program stands, people like the Saint-Amable potato producers might apply for assistance under the CAIS program, but they would probably not get it. They do not qualify for anything at the moment.
12:20 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
In fact, the potato producers in Saint-Amable are eligible for significant assistance, well over $3 million, under the CAIS program right now. They just have to submit their applications and La Financière agricole du Québec is ready to respond right now.
I can go back to the last potato disaster that we had in New Brunswick in 2004. It was called pink rot. Producers took their potatoes and put them in storage. They lost their crop over a weekend. CAIS responded extremely quickly. We moved people out from Winnipeg to New Brunswick to help the producers fill in their CAIS applications. We paid out over $20 million to 100 producers affected by pink rot around the Grand Falls area.
CAIS, in the case of the potato nematode, will also provide significant assistance to those producers. I'm not saying it's necessarily everything that they need to help them in terms of resuming their operations or even in terms of the long-term impact of the disaster, but there's financial assistance there right now for producers in that area.
12:25 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
How do they calculate the value of the production they had to put in storage, which will have to be destroyed in any event? That is the problem.
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
Maybe I'll just use a simple example. An average producer—and most potato producers have what we call “healthy margins”, they've made some decent money in terms of their potato operation—who has a reference margin or an historical margin, average historical income, of $280,000, would be eligible for $190,000 under the CAIS program. They could access 75% of that within the next two weeks by contacting La Financière agricole, providing the information, and they will do the calculation.
There's significant assistance available to those producers, and we've actually looked at some numbers that will give the producers the assistance they need under the program.
12:25 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Have you spoken to the Fédération des producteurs de pommes de terre du Québec (Quebec federation of potato producers) in this regard? Do you intend to act as a facilitator in this matter?
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
As a matter of fact, I haven't, but several of my colleagues in the department have. They've been part of a task force. We've been working with the Province of Quebec very closely, and certainly have had a lot of contact with the federation in Quebec. As a matter of fact, I think even the minister and Mr. Pellerin are meeting with our minister today, and probably one of those topics will be the potato nematode situation.
We've had a lot of contact with the federation in Quebec. They're fully aware of the assistance that's available under the CAIS program and, as well, fully aware that La Financière agricole has assigned somebody specifically to help producers with meeting the CAIS information requirement, so that they can get that money out as quickly as possible. And they've committed to doing that within two weeks of receiving the information.
12:25 p.m.
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Bellavance.
Mr. Anderson, for seven minutes, please.
12:25 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Mr. Foster, I would like to ask a couple of questions about the numbers on page 2. Is the 2005 program year finalized?
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
No. It probably wasn't clear in my opening remarks. It's finalized in the sense that the information for 2005 was due on September 30. We're in the process now of doing all the application processing. As I indicated, the bulk of the information usually comes in around the deadline. No matter where you set the deadline, that's when you're going to get the majority of your applications. So it's certainly not finalized.
We've paid out about $500 million or $600 million to 31,000 producers. We're projecting that when we're all done, it will be in the neighbourhood of $1.6 billion that will have been paid out for the 2005 program year.
12:25 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Could you tell me why Manitoba, then, would be at 110% of the year before?
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
That's a very good question. That was because of their moisture conditions in 2005. Manitoba's projected expenditure for 2005 is going to be about 150% above what they had for 2004. Certainly as a result, the provinces have raised the affordability issue as a concern.
That reflects the demand-driven nature of the program. It's targeted to need. Manitoba suffered significant losses in 2005, and the numbers are reflecting that.
12:25 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
How many more producers do you expect to apply for 2005, then? You had a decline from 75,000 to 66,000, down to 27,000 in 2005. You said you expected there were going to be 140,000 producers in the program. It looks to me like the numbers are going the other way.
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
Sorry?
12:25 p.m.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
The number of producers. In 2003 you had 75,000, in 2004—
12:25 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
That's the number of producers who have received payment. We're averaging around 140,000 to 150,000 producers in total in the program. What you're looking at is the number of producers who have received payment to date. We're virtually complete for 2003-04. We're processing the 2005 applications, and we've paid a total of 27,000 producers.
We expect that number will be close to previous years, and that probably in the neighbourhood of 60,000 to 70,000 producers will receive payments.