Agriculture Committee on Nov. 7th, 2006

[Clair Gartley]

There isn't. But I would assume the corporation would benefit if they've applied to the programs that are available to help with income. The CAIS program and things you're going to be talking about next, I think, would apply. This program is looking at family income, so if they did draw down income from a corporation on- or off-farm, and that income was above the $25,000 per family, then they wouldn't qualify.

[James Bezan, Conservative, Selkirk—Interlake, MB]

But there isn't a policy that a farm corporation.... If the income level for the family is down, even if they're incorporated, they still would qualify if they hit the other parameters.

[Clair Gartley]

If the corporation doesn't qualify—

[James Bezan, Conservative, Selkirk—Interlake, MB]

The family does.

[Clair Gartley]

The family does, if they own 20% or more of the corporation.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Bezan.

We're back to Mr. Boshcoff for five minutes, please.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much.

When we have a chance to decide in terms of whether we're going to go for support programs or disaster programs, what is it within the public service that decides those priorities?

[Clair Gartley]

It's certainly driven by government policies. Our role is to provide all the information, the best information we can, and make the situation as clear as we can, and then policy decisions will drive what the approach may be.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

We have these questions coming up about CAIS next. You have the Canadian Federation of Agriculture, the Ontario Federation of Agriculture--you name the organization. They're all saying, okay, one of the shortcomings is it's either disaster or it's adapting the CAIS so that you don't have to be a chartered accountant to be able to fill out the forms. Why wouldn't we go that way if we had to do something, as opposed to the brochure and all that kind of thing?

Why couldn't we adapt...? If the Americans in Minnesota have already paid all of the people who've suffered from the drought, and it's just across the border--it is essentially the same geography--surely there has to be.... I'm only using one example, but anybody in this room can use any part of their own riding or constituency, to use an example. Where should our priorities be? Clearly our priorities should be in addressing that.

My concern also is that you see the low uptake. You see exactly the same questions coming from at least three of the four parties, saying that they've heard from people that it isn't working and it's still in its pilot stage. Can't we be flexible enough, even as a public service, to say, okay, with a 10% uptake, clearly it's not working? If we have to extend it and we're only going to get a marginal increase, why don't we re-examine the criteria? Why don't we re-examine what we're trying to do here? And, above all, does the farming community need a lesson in business management to do business plans now when they're thinking about surely just getting through the year?

[Clair Gartley]

Our view would be that the uptake isn't low. On the uptake, we're looking at almost 13,500 applications, as of November 5. We actually budgeted based around having about 19,000, at an average of $10,000 payments. So we're getting quite a good uptake on the program.

Again, I think the intent was to address the family income issue and to provide all the services and to encourage people who we're going to participate in the program to use those services, on the basis that things are difficult and that it is beneficial to have as much advice as you can get when you're in that kind of situation.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

From a public service standpoint, is it your duty to alert the minister that there are...? And what is that relationship, where you could actually get him to act?

[Clair Gartley]

Our role is to report to the minister on the implementation of the program and the results that we've received so far. I'm in the program branch of the department, not the policy branch, so I couldn't address it any more than to say that.

[The Chair, Conservative, Gerry Ritz]

Ken, I'm sorry to cut you off, but you've finished again.

Monsieur Roy, a final point. You have two minutes left.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

I only have one question and it pertains to the program results, since that is the part that interests me.

If you find that 90 per cent of the 26,000 farms in question are well run and that the problem lies instead with the income they draw from their production, what will you recommend?

[Clair Gartley]

Again, I think all we can do is provide those results, and the strategic policy people in the department will look at that and provide whatever advice and recommendations to the minister. I couldn't say what that may be at this point.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

In your view, how many of the 26,000 farms will do the business assessment and what percentage will do the training?

[Clair Gartley]

Roughly, we anticipate something like 60% will do the farm business assessment, and 40% the training.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Personally, do you think that these 26,000 farming operations are poorly run?

That is my last question.

[The Chair, Conservative, Gerry Ritz]

Go ahead, Mr. Gartley.

[Clair Gartley]

I don't think that was ever the view. Again, with the challenges they face, the idea was always to provide every bit of service that we could provide with the program to help them in whatever way they wanted, either with their operation or off the farm.

[The Chair, Conservative, Gerry Ritz]

Thank you, ladies and gentlemen, for your appearances here today. It's certainly a controversial issue. There has been a lot of input from this. We'll try to distill that down and make some recommendations to the minister.

This meeting will suspend for a couple of minutes while we make the necessary changes to bring our next panel up.

[The Chair, Conservative, Gerry Ritz]

Welcome back, everyone, to the second hour.

We have before us, from the Department of Agriculture and Agri-Food, Danny Foster, director general, business risk management program development--no stranger to the committee--and Rosser Lloyd, director, income stabilization program development.

Welcome, gentlemen.

You have a short presentation for us; then we'll move into questions.

Danny, could you lead off, please?

[Danny Foster, Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food]

Thank you, Mr. Chair, and good afternoon. I guess we just made it. Good afternoon to the committee, and thank you for the invitation to meet with you once again on the CAIS program.

As you are aware, federal, provincial, and territorial ministers agreed this past June in St. John's to take the steps necessary to implement a new margin-based program and to create a new disaster assistance framework, something separate from income stabilization.

Ministers also tasked officials with reviewing production insurance and reporting back in the fall with options on expanding production insurance to better include livestock and other commodities such as fresh horticulture. As Minister Strahl indicated about a week ago in front of this very committee, he will be meeting with his provincial and territorial colleagues next week in Calgary to discuss the work of officials and industry on these three fronts, those being the new income stabilization program, production insurance, and disaster relief.

In the meantime, the CAIS program. I made sure this was the topic of discussion for the committee before I made up my presentation. The CAIS program continues to operate and pay out significant assistance to producers. The deadline for information for the 2005 stabilization tax year was September 30, and as I have mentioned to the committee many times before, this is the busiest time for program administrators as the bulk of applications received are received close to the application deadline.

To date, over 31,000 producers have received close to $600 million in payments for the 2005 program year, and we are forecasting that once all processing is complete, some $1.6 billion will be paid out, bringing total payments for the first three years under the program to well over $4.5 billion. That's just under the CAIS program, and these numbers do not include the $900 million federal inventory payment announced this past spring to help producers transition to a better method of measuring their income, or the $755 million grains and oilseeds payment program, which was paid out earlier this year.

Now under the inventory initiative, CAIS participants for the 2003, 2004, and 2005 program years are having their CAIS program benefits automatically recalculated using the better method of inventory valuation commonly referred to as the P1-P2 hybrid method. If the numbers show that the producer would have received a higher payment using the new method of inventory valuation, then the producer will get an additional benefit. To stay within the $900 million funding, inventory payments for 2003 and 2004 are being pro-rated at 50%, with payments for 2005 pro-rated at a percentage to be determined once the 2003 and 2004 processing is complete.

Payments under the inventory initiative are currently being processed where Canada delivers the CAIS program, which you may recall is B.C., Saskatchewan, Manitoba, Nova Scotia, New Brunswick, and Newfoundland, as well as Alberta and P.E.I. Ontario is expecting to begin within the next month, and we are finalizing the agreement with Quebec for the transfer of funds to La Financière agricole du Québec. We expect the bulk of payments related to the 2003 and 2004 program years to be completed by the end of this year for all jurisdictions, and payments for 2005 will go out early in the new year.

While the special inventory payment is separate but related to the CAIS program, the improvements to the rules around the eligibility for negative margin coverage that were announced at the same time as the inventory payment announcement require an amendment to the CAIS program agreement with provinces and territories. This change will see more producers qualify for negative margin coverage under CAIS and it is estimated the cost will be some $80 million, cost-shared on a 60-40 basis with provinces, for the 2005 and 2006 program years. So approximately $50 million of that $80 million would be from the federal government for just those two program years.

This assistance will flow to producers as their 2005 and 2006 CAIS applications are processed. So once again, there's not a separate process or separate application for that additional assistance. These federal budget initiatives are initial investments to facilitate the transition to the new income stabilization program agreed to by ministers, and that's, again, federal, provincial, and territorial ministers, at their June meeting in St. John's.

For the 2006 stabilization year, the sign-up deadline--that's the year we're in right now obviously--for CAIS was September 30, 2006, and we are estimating, based on our preliminary numbers, that over 140,000 producers will be in the program protecting over $11 billion in margins.

As you may recall, effective for the 2006 program year, the deposit requirement under CAIS has also been replaced by a fee of $4.50 per $1,000 of coverage. The deadline for the payment of the fee is December 31, 2006.

As far as payments to producers for 2006 go, to date over $32 million has been paid out to over 500 producers, primarily in the form of interim payments. There may be some producers who have already received their final payment because their tax year-end has finished for 2006. They could have a June 30, 2006, tax year-end and they would be eligible for a final 2006 payment.

I realize I've thrown a lot of numbers at you in the last few minutes, and trust you've been provided with the latest summary of program payments. Many of the numbers I've mentioned in my opening remarks are reflected in that document. But if there are any questions for clarification, I'd obviously be pleased to provide them.

I'll leave it there. Along with my colleague Rosser Lloyd, I'm prepared to take your questions. Thank you.

[The Chair, Conservative, Gerry Ritz]

Thank you, Danny.

We'll move to our opening round, with Mr. Easter for seven minutes, please.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair, a.

And thank you, Danny. I know you really work hard at this program and sometimes I think you're the only guy in the country who really understands it.

First, on the inventory initiative, I'm getting a number of calls from producers who are confused over that, especially from the livestock industry. I guess one simple question would relate to the inventory initiative. Where are most of the payments going? Are they going to the livestock industry versus the grain cash crop industry? Do you have any breakdown on that?

I'm also told by some producers that a payment came out recently. One individual who called me received a statement saying that on re-evaluation the individual owed money to the CAIS program . When he called, they said, “Don't worry, out of the next program there may be money owing to you.” That's the January one, I assume. If that's the case, I don't think it's wise to send out those letters. The producers are already under enough stress and if they're wondering how in the heck they are going to come up with $30,000 or so.... Why not leave it until the final calculation is in and then do what you have to do then?

Could you respond on that point first?