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.
12:35 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Okay.
I have another question. Nurseries that provide seedlings for reforestation are not eligible now to receive CAIS program payments. Why is it that nurseries under CAIS are eligible if they provide seedlings to an orchard business and ineligible if they supply the reforestation sector, when they perform nearly the same production operation? The grain farmer still qualifies for CAIS if they supply biofuel, for example.
12:35 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
It basically comes down to the rules in terms of what's defined as farming income for income tax purposes. Nurseries providing seedlings for reforestation--woodlots, that type of thing--are not eligible. It all involves the care and nurturing of the seedling. As an example, Christmas trees, ornamentals, and fruit trees are eligible for CAIS.
So it's basically a distinction in terms of what's defined as farming income for tax purposes.
12:35 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Has this always been non-allowable, going back to the inception of the program in 2003? Referring back to my previous question, there was some—
12:35 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
Yes, it's always been that way for 2003. I understand that maybe the guidelines at some point, early in 2003, weren't as clear as they should have been. I think they used an “or” when they should have used an “and”, perhaps, if you know what I mean. But the guidelines and the rules have always been clear that it has to be reportable as farming income for tax purposes.
12:35 p.m.
NDP
12:35 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
Basically because it isn't a farming activity as defined by the Income Tax Act.
12:35 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Just to understand this procedure, you've obviously had similar situations before. Money has been paid out, and then all of a sudden people owe a whole bunch of money. Have there been cases in the past when that has been forgiven because of certain errors maybe by some officials?
In this case, in reading the information, it seems they have a pretty good case. It says they were led to believe everything was fine. Obviously you haven't studied it in detail, but what's the procedure here?
12:35 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
As with any issue, we look at it on a case-by-case basis and we have to assess the facts. In terms of this case or these cases, my belief is that it is a debt to the Crown. We haven't changed the policy from the first day, so it's not reversing a decision that we made earlier, saying you're now ineligible and have to repay the money. It's basically either through audit or discussion with the client, in review of the file, to say this entity, this producer wasn't actually eligible for the assistance provided. It wasn't that we've said we changed our minds, if you will.
12:35 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
I'm still not quite sure. If they're ineligible but they were led to believe they were, back and forth, through conversations and the money actually being paid out, do they have a case?
12:35 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
I'd have to look at it on a case-by-case basis.
12:35 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
For the CAIS, have all the calculations have been completed with respect to who gets what and how much? According to the website, the delivery date is possibly December, which means no one can do their year-end. Am I right in saying that?
12:40 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
For the 2006 program year, the sign-up deadline for producers to actually participate in the program was September 30, 2006. They had until September 30 to actually sign up for the program. They could have signed up back in June. If they recognize, through a bad harvest or what not, that they're losing their shirt, they can apply to the CAIS program for an interim payment and get 50% of their estimated final payment under CAIS.
You don't have to wait to file your taxes for 2006, which would be done in the spring of 2007, to access assistance under the program. There is an interim payment process. In fact, that's what we're talking about in the case of potato nematode in Quebec. Many producers are still in their 2006 tax year. They can access that assistance—in this case, up to 75%—through the interim advance process.
12:40 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
I have one more question. Does this basically outline the moneys that have been released?
12:40 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
Yes. Those are the actual payments out the door. I've also thrown in some estimates or forecasts of payments that we expect to be out the door for the 2005 program year, for example, as well.
12:40 p.m.
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Atamanenko.
Following up on Alex's point on reforestation and the nurseries, if they could somehow prove to you that the reforestation was leading into a biomass cellulose ethanol facility twenty years down the road, they would qualify. It's all in the way they make their application.
12:40 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
It's whether what they're doing fits the definition of farming income. I don't want to oversimplify it, because obviously it's not a simple issue, but I will go back to how Revenue Canada rules on the definition of farming income.
12:40 p.m.
Conservative
The Chair Conservative Gerry Ritz
That doesn't really help me a whole bunch. There are a lot of inconsistencies there too.
Thank you.
We have Mr. Thibault, for five minutes, please.
November 7th, 2006 / 12:40 p.m.
Liberal
Robert Thibault Liberal West Nova, NS
Thank you very much.
When you were reconsidering the program and doing your analysis of the program—and now you're looking at a disaster relief component—did you consider the position of the Canadian Federation of Agriculture, where the top of part of it would be NISA-type programming and permit companion programs, so that you can look at regional differentiation or provincial differentiation using the 60% component of the federal contribution?
12:40 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
We're certainly fully aware of the CFA's proposal with respect to a NISA-like, contributory-style savings program as a top-up companion program to deal with regional flexibility, etc. When ministers tasked officials to come up with addressing the issue of a separate income stabilization program and disaster relief program, they did form a task team of producers and officials to look at what the options were to have a better income stabilization program. One of the options considered was a NISA-style program. The task team concluded that a better margin-based program was the way to go.
So NISA was considered, and we're very aware that the industry still very much wants to have a NISA-style program on top, if you will, of a margin-based program. But in terms of the process that we went through, we worked with producers to actually build the program options that we're now taking to ministers next week.
So we started with producers right from the ground floor. It was a small set of producers, mind you, but they were all recognized, well-respected producers who actually worked with officials to say, here's the program, here are the options, and here's our recommended program. We took those recommendations through the various consulting bodies, like the National CAIS Committee, the National Safety Nets Advisory Committee, and the national organizations, and said, this is what's being recommended. They actually supported the direction on all three fronts—disaster relief, production insurance, and margin-based. But as you have alluded to, they've said there's still more that needs to be done, and the NISA-style program is an option.
12:40 p.m.
Liberal
Robert Thibault Liberal West Nova, NS
The problem seems to come in regional applications in a lot of cases, and in different markets. When the whole framework of the first CAIS program was being established, I remember what they suggested in Nova Scotia at the time: that if you could make a couple of changes to it, it would be fine. Those changes were made, but it's still very difficult at the application level.
I have small pork producers and they're in declining margins, but it doesn't work. They really are not interested, because supply management keeps them profitable and they seem to be doing quite fine. A lot of my farmers who are a little bit more aggressive or entrepreneurial are in dairy plus mixed, and if they're in mixed and have trouble with one or two crops, then they have the stability of their dairy.
The only people I found left who really like the program are the mink farmers, who are experiencing probably their tenth consecutive successful year in growing margins. They see this program as useful when there is that individual cyclical decline, but for the others, it seems to be inappropriate, or there could be some changes made to make it regionally specific.
12:45 p.m.
Director General, Business Risk Management Program Development, Department of Agriculture and Agri-Food
In terms of regional flexibility, there are a couple things. One, we're putting in a lot of money federally under our programs. The provinces still have the flexibility to offer regional programs to deal with regional issues.
In terms of the disaster relief framework, that actually responds to the regional issues. If we look at the disasters that have taken place over the last ten to fifteen years, aside from maybe BSE, most of them have been regional. The disaster relief framework that ministers will be discussing next week in Calgary allows a regional response to a disaster. Whether it's potato nematode or whether it's avian influenza in B.C., that framework allows the provincial and federal governments to get together to discuss the appropriate response. We still have our national programming, but they can determine the appropriate response to deal with that regional disaster. So there is regional flexibility being built into this new suite of programs in terms of, certainly, disaster relief.
I acknowledge the issue that you've raised about how a margin-based program disadvantages producers who are diversified, because if they have a good year in hogs and a bad year on grains, they're not going to get a CAIS payment, versus somebody who's actually single commodity. But that single-commodity producer is still losing money, because CAIS will only cover 70% of the loss. So the diversified farmer is still better off in that example.
12:45 p.m.
Liberal
Robert Thibault Liberal West Nova, NS
Mr. Chairman, I was going to give the last ten seconds of my spot to Ken.
12:45 p.m.
Conservative
The Chair Conservative Gerry Ritz
That's unfortunate. I wish you'd told me that up front, sir. Mr. Easter had a three-second spot open and he figured he could fix the world with that, so I'll get back to him and give him six seconds.
Mr. Devolin.
12:45 p.m.
Conservative
Barry Devolin Conservative Haliburton—Kawartha Lakes—Brock, ON
Thank you, Mr. Chair.
I have a couple of questions about the changes that have been made to CAIS going back to 2003-04. Are the numbers on page 2 just the numbers from those previous years, or do they include the changes that have recently been made?