Agriculture Committee on March 4th, 2008

[The Chair, Conservative, James Bezan]

I call this meeting to order.

Today we're breaking from our regular business to deal with the supplementary estimates, and today was the only day that worked to bring in officials from the department.

I want to welcome to the table--no strangers here--Pierre Corriveau, assistant deputy minister of corporate management; Andrew Marsland, assistant deputy minister, strategic policy; Nada Semaan, assistant deputy minister, farm financial programs; and Susie Miller, director general of the food value chain bureau.

Welcome to all of you.

I understand Mr. Corriveau has some opening comments, and then we'll open it up to questions. We're going to spend an hour with them; then CFIA will be up for the next round, and we'll deal with our motions at the end of the meeting.

Please go ahead, Pierre.

[Pierre Corriveau, Assistant Deputy Minister, Corporate Management, Department of Agriculture and Agri-Food]

Thank you, Mr. Chair.

Good morning to the committee, and thank you for the invitation to come and meet with you today on the supplementary estimates (B) for 2007-08.

The supplementary estimates (B) for 2007-08 were tabled in the House on February 14 for Agriculture and Agri-Food Canada. The department represents $665 million. I understand the officials from CFIA will be here for the second hour.

Of the $665 million for Agriculture and Agri-Food, the bulk of the funding is related to the AgriInvest Kickstart programs, the agriculture disaster relief framework, an increase in our spending on CAIS, the BRM suite delivery, an increase in our Canadian Cattlemen's Association legacy fund, and the orchard and vineyards transition program. The remaining amount represents a transfer to and from other departments, and is offset by currently available program funding related to amounts being reprofiled to use in future years.

Including these authorizations and Supplementary Estimates, the total budget of Agriculture and Agri-Food Canada for the 2007-2008 fiscal year increases to approximately $3.7 billion, which approximately corresponds to the actual spending of $3.6 billion from 2006-2007.

This morning, I'm accompanied by Andrew Marsland, Nada Semaan and Susie Miller. We are prepared to answer your questions. Thank you.

[The Chair, Conservative, James Bezan]

Thank you.

Who wants to go first?

Go ahead, Mr. Easter. I think we'll go to five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

We were thinking of seven, Mr. Chair, but we'll go with what you have.

Although we're looking ahead at the estimates, I've had a lot of concerns from producers on the family farm options program. That program was announced late. Then when producers, through their accountants, effective a year ago December 31, wanted to take advantage of that program and felt they would have at that time $18,000 available to them, the program was cancelled in midstream. In fact, I'm told--and you can tell me if I'm correct or not--that the payout to those who did qualify--those being only the ones, as you know, who qualified the year before--was only 50 cents on the dollar.

That program was a commitment made in good faith by the Minister of Agriculture and Agri-Food to producers who were in financial trouble. They basically were left miserably waving in the wind. It was a Government of Canada commitment that died on the vine, for whatever reason. What are the financial aspects around that?

I'll ask you a couple of other questions as well. I'll move into this particular budget and the announcement of $3.3 billion in loans to the beef and hog industry.

The government often fails to mention that it's basically the farmers' own money. Can you tell me what the cost of that program will be to the Government of Canada? The only real cost to the government, as I understand it, is the interest relief on the $100,000.

Finally, I'm sure you are aware that the minister introduced legislation yesterday on the Canadian Wheat Board--illegally, I might add. It is dangerous for one to make assumptions, but if the minister is making a major announcement that will change the structure of an industry, I would assume that the department, if it's being professional at all, has done the proper economic background work on the economic impact on the industry as a whole, the impact on farm incomes, and the impact on the Canadian Wheat Board.

Could the department provide to this committee the economic impact analysis that you did prior to that legislation being brought forward?

[The Chair, Conservative, James Bezan]

We are here to talk about the supplemental estimates, not the main estimates for next year's budget. We have to keep the questions directed towards the issue at hand, which is the line votes on the supplementals that we have before us.

Does anybody want to answer those questions?

[Pierre Corriveau]

Nada will be answering the first two, and Andrew will take the last one.

[Nada Semaan, Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food]

On the farm families options program, as you know, it is a two-year pilot program. We are in the second year of the pilot. The decision to limit it in the second year was actually not made very lightly at all and was made with a lot of stakeholder input. A lot of producers, actually, were questioning the program.

The program was designed as a two-year pilot to test it out. With the second year, and by limiting the second year to the same participants, we are still going to be able to do exactly what we had intended to do, which is to evaluate the intent of the pilot and see if it does work in terms of allowing producers with that additional money to be able to take advantage of some of the renewal programming to supplement their income in future years. So we will still be monitoring the results after the second year of the program to see if it did help, and we will be providing an analysis. We are also bringing in an external board to review all of this, so it won't be done just in-house.

In terms of the second year and the pro-rating, basically in the first year, in the Treasury Board submission and when it went through, it was already identified that the second year would be reduced by 25%. But in the letter that we sent to producers, we also told them that the second year would be reduced and that would be defined at a further date. That was at the very first point.

The 50% went out because it's a voted amount of money, so we can't exceed that amount. We have received all of our applications and we've processed 99%, so we do have some money now to go back and do the second payment. So the producers will get more than the 50%, and we will start that second payment shortly.

On the $3.3 billion of loans—and that is referring to all the changes we made with the AMPA, the Agricultural Marketing Programs Act, thanks to all your help in processing that very quickly—what that will cost us is approximately $22 million more in terms of potential defaults or interest adjustments. That is on top of the actual cost of the AMPA, because as you know from the last committee hearing concerning the livestock, a lot of the emphasis was that the program is there, but with some modifications it could actually be more responsive. So using the dollars of the two allows us to provide a more responsive program.

[The Chair, Conservative, James Bezan]

The time has now expired.

Andrew, could you respond very briefly, please?

[Andrew Marsland, Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food]

On the question of the Wheat Board, there are, I believe, many studies that have been done in the past about the economic effects of the monopoly, but in relation to whether the government commissioned any studies before coming forward with the latest legislation, I'm not aware of any specific studies. That's my understanding, that there aren't any specific studies leading up to that, but many studies are available on the issue itself.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Bellavance, you have five minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I'd also like to ask a question about the Options Program. Mr. Corriveau, on May 8, 2007, in response to a question from Mr. Easter on this subject, you told us about the $230 million that the government had not spent when it decided to withdraw from the program. That $230 million was to be reallocated to the new program that was to be announced.

Do you have the exact breakdown of the $230 million that was not spent under the Options Program?

[Pierre Corriveau]

Part of the funding was reallocated to certain programs, such as the Orchards and Vineyards Transition Program. Pardon me, I don't have the French name of that program.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

It's the Programme fédéral de transition relatif aux vergers et aux vignobles.

[Pierre Corriveau]

Exactly.

Then there was the funding of a certain number of programs, such as the Community Pastures Program and a program to eradicate the plum pox virus.

Ms. Semaan could give you more details on that.

[Nada Semaan]

Basically, there was over $500 million announced, and some of the options might have come from that $500 million. There were a number of new programs, as my colleague identified.

There was the Orchards and Vineyards Transition Program. However, production costs will increase over the next few years. Every year when there is an increase in production costs, there's a $100 million increase in the AgriInvest account.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

So it's spread around virtually everywhere. Is it possible to provide us with a breakdown of that $230 million, so the committee knows exactly where it went and that there's an explanation for that? I'd also like to know, either for the budget or for the additional funding, whether you receive instructions from the minister or from the government to ensure that the provinces—let's take Quebec, for example, not surprisingly—receive their fair share of the budget and Supplementary Estimates.

I read the Pronovost report that was just tabled in Quebec. Recommendation 49 of that report states that Quebec should receive its fair share of federal transfers.

In the May 2006 budget, the Conservative government promised additional assistance of $2.2 billion over two years for the agricultural sector, and Quebec has only received 6.8% of that amount. According to the statistics, however, it supplies between 16% and 18% of Canada's agricultural production.

Have you received any instructions in that regard? Do billions of dollars pass, go from one place to another, without you ever having any specific instructions on the share that should go to each province?

[Nada Semaan]

As you know, the programs are primarily demand-driven; however, the total share of the business risk management assistance to Quebec farmers is actually similar to the provincial share of the farm cash receipts when you exclude supply management. When you exclude supply management, it's between 11% and 13%, and that is actually the amount of money that they get in terms of pre-business risk management programs.

Just for example, in $348 million out of the $400 million for the cost of production that has already gone out, $44 million of that was paid directly to Quebec. Out of the AgriInvest Kickstart deposits that went through, the Quebec producers are actually receiving their fair share of the $600 million as well. On top of that, in terms of the AgriInvest, it was very clear when we were negotiating with all the provinces that when we implement the AgriInvest accounts, no province would lose. It will be cost neutral. So that was ensured as well in terms of making sure Quebec and every other province remained whole.

All in all, in terms of farm cash receipts for non-supply-managed, we do monitor to make sure, and it is consistent.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

So you don't have any specific instructions. Programs are in place, and the percentage of what the provinces receive isn't necessarily allocated based on the percentage of farm income that they bring in or on their farm production relative to Canada as a whole. You don't have any instructions in that regard; you're not asked to be concerned about that.

[Nada Semaan]

It's a demand-driven program, so where the demand is required, the payments are made out. So if there is more in one province or less in a province, it goes to where the need is greatest, but it does actually end up going according to farm cash receipts.

[The Chair, Conservative, James Bezan]

The time has expired.

Andrew, do you want to make a comment?

[Andrew Marsland]

I just want, if I may, to supplement that answer.

The business risk management programs are in fact demand-driven, whereas other programs that are cost-shared with the provinces, for example for those under the Growing Forward, the Cultivons l’avenir, there is a formula that applies across the country, based on farm production. In that case, where they're not demand-driven, there is a formula that applies for the number of cost-shared programs per province based on agricultural production.

[The Chair, Conservative, James Bezan]

Merci.

Mr. Lauzon.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Thank you, Mr. Chairman.

Welcome to all our witnesses.

Maybe I can start with this. I notice the $2 million for the Canadian Cattlemen's Association legacy fund. I wonder whether someone can explain to me exactly what's involved there.

[Susie Miller, Director General, Food Value Chain Bureau, Market and Industry Services Branch, Department of Agriculture and Agri-Food]

Certainly. The legacy fund was a $50 million allocation over a period of ten years. For budgetary purposes, we have allocated it on an annual basis of $5 million. But the restriction actually is between zero and $10 million in any given year.

The Canadian cattlemen this year are in the process of ramping up their activities under the legacy fund; the first year they used very little money. So it is higher than the average, but they are investing heavily, because there are still markets that they need to get back into post-BSE.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Is it successful? Are we getting back into some of those markets as a result?