Agriculture Committee on March 15th, 2010

[The Chair, Conservative, Larry Miller]

We'll call the meeting to order.

I'd like to thank our witnesses for coming here today at reasonably short notice. All of us recognize some of the issues that have been affecting the pork industry, and I thank all of you for coming. If you could keep your opening remarks to 10 minutes or less, it would leave more time for questioning, but I also understand the importance of your remarks.

We are going to start with Mr. Jim Laws of the Canadian Meat Council.

[James M. Laws, Executive Director, Canadian Meat Council]

Thank you very much.

Good afternoon. Thank you for inviting me to speak today on the situation in the hog sector. My name is Jim Laws and I'm the executive director of the Canadian Meat Council here in Ottawa.

Despite the numerous challenges faced by the hog sector in 2009, including a world outbreak of H1N1, Canada's pork export business was double the value of Canada's beef business in 2009, with exports of 1,075,000 tonnes of pork, valued at over $2.6 billion, to 114 countries in 2009.

We were pleased with the announcement on February 25 that Canadian pork products will be back on Chinese grocery store shelves after Canada secured the first certification agreement to allow pork imports into China. We are also very grateful for the work of the Government of Canada and the various trade missions that have been undertaken. China is a very important market to us, as it consists of 1.3 billion people. It's a huge market for Canadian pork. It's essential that we stay in that market.

On behalf of Canada Pork International, we're very grateful for the $17 million fund for market research for Canadian pork products.

We're also very grateful for the creation of the recent agricultural market access secretariat, under Mr. Fred Gorrell. That will work quite well.

We continue to be challenged with our competitiveness, of course. The Canadian dollar just shot past 98¢, reaching its highest level since July 2008, spelling good news for guys like me who are heading down to Florida tomorrow morning for March break, but it's not good news for Canada's pork industry and meat exporters that have relied in the past on a weak Canadian dollar to compete.

Budget 2010 actually helps our industry by eliminating a wide range of tariffs on machinery and equipment. That's very much appreciated. As well, the Government of Canada's slaughter improvement program is designed to strengthen the competitiveness of the red meat industry by providing interest-free conditional repayable loans. We appreciate the additional $10 million allocated to this year's budget for that.

Getting enough hogs for slaughter in Canada is becoming very challenging, particularly in Ontario, where capacity now far exceeds supply. Most recently, in Nova Scotia, Larsen Packers announced it will stop processing fresh pork at its plant in Berwick, Nova Scotia, resulting in the loss of about 40 jobs. The decision is the result of a reduction in maritime hog production. It was reported that the numbers had dropped so low that it was no longer possible to operate the facility profitably.

It would be wrong for me to sit here and speculate on whether or not other Canadian hog processing facilities will close their doors. That would be bad news for Canadian jobs and bad news for Canadian farmers who rely on the processors to purchase their animals.

What I can tell you is that Canada's pork slaughter industry currently processes only live Canadian hogs. The Canadian Meat Council had requested an updated animal health risk assessment on the importation of live American hogs for slaughter into Canada, but the draft new risk assessment is indicating no changes to the current protocols. Those changes would have ensured that requirements for importing hogs for immediate slaughter into Canada were comparable to those for hogs exported to the United States for immediate slaughter.

However, one big cost involved with the current protocol is having a veterinarian visit on-farm. In addition, there are the segregation costs and, of course, the cost of trucking the animals up. We do need to operate our facilities at full capacity to remain competitive with the United States.

On the human resources front, we've spoken to you in the past; it has certainly been to our benefit that Canada's temporary foreign worker program has helped the Canadian meat industry fill in the extra workers it needs. Right now, for instance, we're very pleased that the Province of Quebec has finally allowed the use of this temporary foreign worker program.

I can tell you that one company in particular, Lucyporc, from Yamachiche near Trois-Rivières, recently began selling high-quality pork to the European Union. They have hired several French-speaking people from the island of Mauritius, which is an island north of Madagascar, off the east coast of Africa. They are now all working hard in that facility. Other companies in Quebec, like Olymel, are taking advantage of that program.

Another issue in the area of competitiveness is Canada's system of pre-market label registration. We've talked about this in the past. With the new rules for declarations of additional allergens that are coming down and the work of companies in Canada to reduce the sodium in their processed meat products, we need more flexibility in changing and updating our labels so we don't have to pay for a new registration every time we want to make a change.

Nor should we have to wait for approvals. Many companies still report to me that this process causes delays, and compromises their ability to launch new products.

We have also recently requested that the Government of Canada--and they have agreed--start to review, to repeal, what's called “meat inspection regulation 92”, which requires all the meat-packing and labelling materials that come into contact with meat to be registered. I want to show you an example.

I'm first going to pass around this example of a Canadian canned product. As you know, this is the good old can that you put on its side and unscrew to get open. A Canadian company tried for over six months to get approval to use this new, more modern can made in Denmark, which is 30% cheaper than something available in Canada. It took them six months to get this can approved, but I walked into the store here in Ottawa, and here was a U.S. product and another U.S. product that I saw. You can see that the can is lighter and newer.

These products were on the shelf here in Canada, so it makes absolutely no sense to us that meat is the only food in Canada that requires its packaging material to get pre-approved, which sometimes takes from six months to two years. The Government of Canada agrees. They're going to start to review it; they will be starting information on it. For imports into this country, their packaging material doesn't have to be approved, so that's why we're asking for this to be reviewed. It makes no sense. We're pleased that the government is going to review this.

We've also spoken about meat inspection fees in the past. There was a report prepared. We're looking forward to working with the government on that. The Americans don't pay for any regular time inspection fees, while we do. We've asked for a fee structure similar to the American one.

Finally, there is the U.S. mandatory country-of-origin labelling. We fully supported the Government of Canada's submission to the Government of the United States in protest of the mandatory country-of-origin labelling, and its subsequent notice of WTO challenge. The final rule did provide some added workable flexibility that much improved the fate of the Canadian meat industry in the interim final rule. In the meat industry, we are less affected by the livestock sector because we can still sell into restaurant and food service and to further processing. They're exempt from the mandatory country-of-origin labelling.

However, for any opportunities to grow the market, the retail sectors are definitely seriously affected by the rule. And again, we fully understand the incredible impact that country-of-origin labelling has had on the producers.

We look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thanks very much, Jim.

I have one question that maybe you can deliver a response to later. I know that the last time you were here you talked about this same labelling issue. I'm not sure how many months have expired since then, but I'm surprised there hasn't been some kind of action on that.

We'll now move to Mr. Bob Reid. Bob is a producer and also the president of the Grey-Bruce Pork Producers.

Thanks for coming, Bob.

[Bob Reid, Producer, As an Individual]

I would also like to thank Larry for the invitation and the opportunity to speak to you today.

I come from western Ontario, actually right out of Larry's home riding.

We finish approximately 10,000 hogs every year in our facilities.

From a producer's perspective, obviously I hope that all of you are aware of the pain that we suffer through on a daily basis. There are several issues that I would like to highlight here today, but I would like to wind up by having you understand the problems we face on a daily basis.

I'll start off and just touch a little bit on business risk management. In Ontario there has been quite an interest generated recently in trying to develop a program whereby producers could at least get something closer to an insurance scheme based on the cost of production, which we would be willing to pay premiums on. Something we have to bring to the attention of federal members of Parliament is that we would like to see the federal government at least agree to the idea of contributing its traditional 60% share to that type of program for domestically processed pork.

In Ontario another issue we feel is very important is the problem of regional disparity among programs that have been developed across different provinces. While we certainly understand and support the idea that other regions of the country have decided to support their agricultural primary production at a higher level, I can openly say that ASRA, for example, in Quebec, is viewed by our province with nothing but envy. One of the things we would look at is whether federal funds need to be distributed with more flexibility to the provinces to allow for specific area priorities. We are not trying to pit one against the other or anything like that, but the goal would be to try to attain a more level playing field across the entire country.

Obviously your committee is looking at the programs that have been introduced recently, within the last year, by the federal government. I would like to say thank you for the ideas that have been brought forward. We recognize that at least there has been an attempt to do something to help us at the primary production level.

Regarding the transition program, which is an exit program for producers who feel they cannot survive in the industry any longer, I could say that from a producer's perspective it has been acceptable though definitely not popular. One of the things that producers have not liked is the idea of a reverse-auction process. There was a feeling that a lot of producers had been pitted against each other, and that made it very unpopular.

We question whether more dollars are needed to reach the target reduction numbers that originally came forward with the Canadian Pork Council's strategic plan.

I have one other quick comment on that. There are instances of contract producers, who follow a relatively new type of production model in our industry Canada-wide, being forced to leave the industry because of herd downsizing. I understand and accept the idea that animals have to be attached, and that this is the primary reduction goal.

On the other hand, if someone loses their contract because a large producer decides to downsize his own herd, for example, and cancels contracts, due to the fact that they have no opportunity to get another contract from another producer because the provincial and national herds are shrinking, they're left out in the cold. They have no option.

If you were to understand the level of the investment these people have made, oftentimes in excess of $1 million for a state-of-the-art, modern hog facility... To be forced to just eat that when someone down the road who may own his hogs has a smaller herd, and a roughly equal investment, and has an opportunity to access some exit funds, I guess I just question whether or not that is exactly fair. I'm not saying that it should be opened up to all contract producers, but I am saying that perhaps there are some instances where some of those transition funds should be considered.

On the loan program, I'll shoot straight from the hip. Quite frankly, the loan program is very unpopular and is lowly subscribed to. Bankers don't like it. Producers don't like it. I hate to be negative, but it has been somewhat of a failure. I hope that together we can come up with ideas that can work more effectively to get badly needed liquidity back into our industry.

In closing, I'd just like to say that we all have to realize there are some fundamental changes going on in our industry at the primary production level. I'd challenge all of you, as members, as knowledgeable people about agriculture, on what your vision is for food production in Canada. There is some push to develop a national food strategy, and it's coming from right across Canada.

I guess the question is this: what would you like to see 5, 10, or 25 years down the road? Right now, we tend to lurch from crisis to crisis. It would be nice to know where we're all going. I will acknowledge that it wouldn't be very popular, but the government, either provincially or nationally, really doesn't have to do anything. I don't think food production will disappear in this country, but it will evolve. I guess I question whether we should try to guide that evolution. Or is it okay with you folks to just let it happen?

This is just my opinion, but quite frankly, the fundamental changes you would see at the primary production level would involve the power falling into far fewer hands. All of the supporting industries around us, whether they're processors or input suppliers, right down to farm equipment dealers, have consolidated. I understand the reason for that. It's to gain market power.

But the fact is that the process on the primary production side is already well under way. Consolidation will take place. If you want an American-style industry, please tell us, and we'll let it happen. If you don't, I think we are badly in need of some help very quickly.

My question is can long-term policies be put in place that will create the environment where we can see profitability from the bottom of the chain right to the top? We have nothing against the meat processors making a profit. We have nothing against processors making a profit. All we ask is that we be able to make a fair living too. None of us have to be rich, but right now we can't even feed our own families.

With that, I'll close my comments and look forward to any questions you may have.

[The Chair, Conservative, Larry Miller]

Thanks, Bob.

We'll now move to Curtiss Littlejohn, who is also a producer.

Curtiss, 10 minutes or less, please.

[Curtiss Littlejohn, Producer, As an Individual]

Thank you, Chairman Miller.

Thank you for inviting me back here to speak. I've been here before.

For those of you who don't know me, my name is Curtiss Littlejohn. I am a producer from southwestern Ontario. My family and I farm just north of Paris, Ontario.

When I speak of my family, I speak of my wife, Tonny, and I speak of my children--David, Jackie, Christine, and Patricia.

These are kids who have a father who was a city kid. I grew up on Main Street in Cambridge. Agriculture was about the furthest thing from my mind. As I got married and my life evolved, I found that agriculture was a business opportunity for me like any other business opportunity, and if I applied business practices to it, I could succeed and I could flourish.

And indeed I did flourish. We were very fortunate. This industry has treated us well. We've come now to where we have a second generation. I have two children who are in university, both studying agriculture, both wanting to be the next generation that feeds this great nation of ours.

Unfortunately, circumstances beyond their control and beyond my control, and in fact beyond control of the Government of Canada, have made that almost a certain impossibility. The industry in Ontario and across this country of ours has been rocked by such things as circovirus. Four years ago we had this disease called circovirus. At that time there was no vaccine for it. Producers were hauling up to 50% of their livestock out of the barn dead and dying from this disease.

Then there were the outbreaks of PRRS. We had this normal crash of the hog cycle. We had the rapid appreciation of the Canadian dollar. We had record high grain prices. We had record high oil prices. I'm not saying these have impacted our industry any worse or any greater than any other industry, but I ask you this: what other industry in Canada, that feeds the country, that feeds the people who produce the GDP that we all live for, that we all strive for, has been hammered as hard as the hog industry? I think if you did a statistical analysis, you would find that in the last four years, the hurt in the hog industry far exceeds the impact of BSE to the cattle industry and the impact to our national economy.

Let me give you an example of that. In Ontario, in fact across the nation, hog losses for the last four years have averaged in excess of $30 a hog. That sounds like a pretty simple number, but if you look at the average hog farm in Ontario being about 350 sows farrow to finish, or birth to market, each farm has lost in excess of $1 million in equity. That's if they're still in business, if they could find a bank that would lend them money.

On top of that, we've seen that property values have now plummeted. We're in the middle of trying to negotiate settlements with some of our creditors. We just recently had an appraisal done. A barn that two and a half years ago I spent a million and a half dollars on has a contributory value on my property today of less than $200,000. That is the market reality. And I'm an efficient producer. In 2008 I produced almost 1.7 million kilograms of pork. We benchmark ourselves against herds around the world, because we compete with and participate with a genetic supplier that insists that we do that. We ranked in the top 10% of their herds around the globe--the top 10%--and I lost $400,000 that year. I am an efficient producer. I believe in sustainable agriculture. We're very productive. Yet I can't make enough money to feed my family.

The Government of Canada has done some wonderful things. We have some great programs here. We have AgriInvest, we have AgriStability, and we have AgriRecovery, which actually, I believe, should have been used to help us with the circovirus problem. But these programs were not designed, nor was it even considered when they were designed, that we could have what we've gone through. If you asked Stephen King to write a horror story, he couldn't come up with something like this. Unfortunately, I've had friends in Ontario who have chosen to take their own lives over this issue. It's a sad state of affairs.

I'll move on now to the programs that the government and the Canadian Pork Council have consulted on and put in place. For the most part, these programs were well thought out. They were put in place with good intentions. As my grandmother used to always laughingly tell me, when I'd be out boozing with the boys on Friday night and would say that we had good intentions and wouldn't do anything crazy, “The road to hell is paved with good intentions.”

The hog farm transition program has been a hated, wanted thing in this country. At what time have we ever paid people to stop producing food in a world that goes hungry? I agreed it had to be done. I supported the program. As a matter of fact, I sit on the management committee and I help administer the funds.

But when you look at what that does and what that says to the world, it says that this country is not prepared to support sustainable agriculture. It says that this country is not prepared to help send aid around the world when it's needed, because we're letting our national hog herd get to a point where we can't even support our own processors. What does that say?

Fifty percent of the livestock in the transition program will come out of the province of Ontario, the province with the largest population. I was going to say the largest GDP, but I guess that's not true anymore. We're now a have-not instead of a have province, but we have the largest population and we have the largest segment of further processing. Work done by the Ontario pork marketing board shows that in Ontario we probably have an economic advantage in terms of the way we feed our hogs. Most of our farms are small family farms. The transition program is decimating that. Farms that have been producing hogs for generations are going out of business.

We have the hog industry loan loss reserve program. I will compliment the government, and I will compliment this committee, which I am sure put forward some good comments on it.

The best part of that program is that there were no caps. For once, the Government of Canada and Agriculture Canada recognized that we have large farms in this country, and they were not penalized.

[Randy Hoback, Conservative, Prince Albert, SK]

Please say that again.

[Voices]

Oh, oh!

[Curtiss Littlejohn]

This is supposed to be non-partisan, Mr. Hoback. I hope we keep it that way.

[Randy Hoback, Conservative, Prince Albert, SK]

I mean it. That's why I'm saying, “Say it again”.

[Curtiss Littlejohn]

Everybody was here.

The CPC supported that program. I have been quoted by the minister seven times in the House as supporting that program. I did support the program on the basis that 75% of the hog farmers in this country could access it. To date we have three percent: three percent.

As a producer who participated in this, I'll say to my MP, and I'll say to you as members of Parliament, we should be ashamed of ourselves that we would allow a program to be that ineffective, to be that ineffectual in assisting producers. If they keep going, there will be 220 producers on that program by the end of the month when the program expires, and not all of the funds will have been used. There will be a surplus in that of somewhere between $150 million and $200 million, depending on what the final loans come in at.

I challenge you to get to the minister, to get to the government, and to make sure those funds stay where they were intended to be, in primary hog production. Do not let them just be recaptured and recapitalized somewhere else in the budget as found money. Those dollars were put here for the hog industry. Let's use them for the hog industry. They need to be rededicated.

Somebody up here in Ottawa told me many months ago that if all the dollars in the program were used, the program would be a success. If we have three percent of producers accessing money, I would suggest then that the gun registry was a blazing success because it spent a billion dollars. We have the emergency advance payment program. Thank you for the money. It kept me in business. It kept my farm afloat, but we have some issues with that, and I think we need to address them, and I'm sure that my friends here on the Canadian Pork Council will do that.

I have one final issue that falls a little close to home, and on behalf of a number of producers who have contacted me as their Ontario representative on the Canadian Pork Council, I'm going to bring it forward. In the 1980s, Farm Credit Canada was very innovative in how it dealt with the crisis that this industry went through. They used things like debt set-aside, and they used trailer mortgages because everybody finally stood up to the plate and recognized that property values and equity were gone. There's nothing we can do to change that. We have a dollar at par. We have an industry that has changed.

As for that barn that is worth 25¢ on the dollar today, or less than 25¢, I will never recover that money and neither will the bank. Neither will Farm Credit, but they will move that debt on to somebody else who will be allowed to compete with the investment that I made at 20¢ on the dollar. Now I realize that Shylock has to have his pound of flesh every once in a while, but I suggest to you that there are other ways we could deal with this.

The larger issue I have--and it's an issue directly with Farm Credit Canada--is their unwillingness to disclose public information. When Farm Credit gets into negotiations with farmers, they do an internal appraisal. They use comparable sales, which are a matter of public record. I've had at least half a dozen farmers contact me and suggest that Farm Credit will not release to them even the lot and concession of those sales. So these farmers are told to go refinance and come back and pay off their debt, but in the meantime Farm Credit is using sales and sales comparables that the appraiser I used can't find.

It's public information. I'm not asking for these producers. I'm not asking for Farm Credit to show us their analysis. I'm not asking for Farm Credit to release their internal documents. I'm saying that the sales are a matter of public record and Farm Credit Canada, when asked, should release the lots, concessions, and rural numbers of those farms so that farmers don't have to spend thousands of dollars on appraisals, they can spend hundreds of dollars.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you, Curtiss.

Now we'll go to the Canadian Pork Council.

Jurgen.

[Jurgen Preugschas, Chair, Canadian Pork Council]

Thank you very much, Mr. Chairman, and thank you again for the opportunity to appear before you.

With me are the vice-president of the Canadian Pork Council, Jean-Guy Vincent, from Quebec, and Stephen Moffett from New Brunswick. Stephen is chair of our safety nets committee, and he has been here before as well.

I'm going to try to go through fairly quickly here. Many of the topics I was going to discuss have been talked about already by Bob and Curtiss. But certainly the fact that our industry has had negative returns since 2006 is one of the reasons we keep coming back here.

We are seeing a small sign of improvement right now. This summer producers will have the ability to lock in break-even or very small profits. So there is a little bit of bright light on the horizon, and part of it is due to the low inventory of animals coming to market, both in Canada and the U.S. We are a little bit hesitant to be too optimistic about the future right now, as prices are shown to be falling next winter again.

As you've heard, our industry in Canada is a very efficient industry. In terms of efficiency, we can compete with anyone in the world. We have some of the highest health standards in the world. We've got breeding stock that we supply to other parts of the globe. Those countries come to us. And one of the reasons is the very top-notch genetics we have, but also the very high health standard this country has. In fact, we are getting more and more international companies wanting to establish in Canada so that they can spread their genetics around the world.

It is important that we keep our industry and that we keep it a strong industry, in addition to what we discussed before. Our industry represents some 75,000 jobs in this country, and we certainly would like to keep most of them here. Some of them are falling by the wayside, as we've heard already, with plant closures and the risk of further plant closures with the reduction in production that we're seeing.

We've certainly been adjusting to it in Canada through the losses we've incurred. Our production numbers now have reduced by over 20% in the last five years. In fact, the hog farms have reduced from the January 2006 survey of 12,320 farms down to 7,360 farms this January. This means we've lost some 5,000 producers in this four-year period--quite devastating for our industry. And I think we see a risk of many more closing down. It doesn't include the ones on the hog farm transition program, or most of them, and it also includes the risk of many foreclosures that are happening as we speak and guys just not being able to continue because of cashflow.

Certainly the programs the government has put in place have helped. We're appreciative of AgriStability. The emergency advance payment program was definitely quite helpful, which you have heard as well, even though... The difficulties with the cull breeding swine program and the hog farm transition program--paying people to get out--are always a challenge, and we fight with this in principle internally as well. But they did help some of our producers transition out. Then there's the hog industry loan loss reserve program, and I'll talk a little bit about this later.

Let's take the hog farm transition program. About 430 producers took advantage of that, and it will pay out about $75 million. Those producers are required to stay out of production for three years. We had our last tender last week.

It represents some 137,000 sows that are being taken out of production, and that's out of a sow inventory of about 1.3 million. So a little over 10% of our sows have been taken out of production by that program. This is in addition to nearly 130,000 sows from the cull breeding swine program. So the government has helped the industry transition out of about 20% of the Canadian sow herd.

The results of HILLRP have certainly been less positive and you heard it very well from Curtiss already. So far there have only been 207 applications approved for that program. We know a lot of time and effort was put into it by the government and we appreciate it. We felt it was a program that was well designed. Unfortunately, the results are not showing that. The lending institutions have been a little bit reluctant, to put it mildly, to lend out the money that is available.

We had evaluated that we probably needed about $1 billion for this and that's how the program was initially designed. It appears that we're only going to be in that $300 million or $400 million that's actually going to be lent out under that program. It's just a fraction of what we expected and therefore we are disappointed in the results of the HILLRP.

What are some of our future challenges for our industry? I talked about AgriStability. It has been good for the hog farmers in this country, but the danger now is that because of the viability test and the three years of negative margins--which then says your farm is not viable--as of this year our hog producers will get nothing more from AgriStability because of the viability test. It's through no fault of their own. This is something that needs to be addressed. I know I've talked to you about that before, but it's money that certainly the government's going to save because that will be money that won't be paid out. But it will kill our producers because their negative margins make it that they're not viable.

As well, the AgriInvest fund has not helped hog farmers at all because of a timing issue. It actually took money away from hog farmers and gave it to others, because we did not have those margins to get it. It's something that was detrimental to the hog industry because of a timing issue. Certainly the difficulty to access credit is still...and that's proven by the lack of success of HILLRP. Even with government guaranteed loans we can't access credit, so it is really, really tough.

The feed companies have been extremely patient with our producers this past year, but what's happening now, with the failure of HILLRP, is that the feed companies are now saying to our producers, “Guys, you've got to pay up.” Well, we don't have money. The producers don't have money. So what are they saying? They're saying, “Okay, you're now on cash. Try to term out or do something with your debt that you have right now, and we'll charge you high interest rates on it, but your feed is now on a cash basis only.” Without access to credit, that is becoming very difficult and is putting quite a number of producers into bankruptcy proceedings.

So what are we looking at to move ahead? With the HILLRP money--I think that's one of reasons we were here--if that money isn't all used, which it appears it is not going to be, and we are left with $150 million or so... As Curtiss said, that money was earmarked for the hog industry. We would ask that you take a serious look at how the money that is left over can be reprofiled and used for the hog industry.

Our suggestion would be that it be used--we've handed this out before--to implement our strategic transition plan that we have been working from this past year. If that money were put in there, it could be put to use for all the hog producers in this country for the future, hopefully a brighter future.

With that, I'll finish my remarks.

[The Chair, Conservative, Larry Miller]

Thank you very much, gentlemen, for keeping close to the time.

We'll now move to questioning, with seven-minute rounds.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

Gentlemen, thank you for taking time from your day to come here. We know time is valuable to you.

First I want to validate all the concerns and emotions that you have expressed today, even your anger that may exist. I certainly sense some of that, not just today but at previous meetings.

We are somewhat conflicted. We hear--and I am trying to be non-partisan, but the fact that I'm sitting on this side asking the question I guess suggests a certain degree of partisanship--compliments about certain programs. Where I become conflicted is that I hear these programs are working and this is great, but then I hear these programs aren't necessarily working; there is either not enough money or the protocols need to be changed.

Getting directly to the question, I find the transition program rather draconian. To bid for the lowest price, in my opinion, is absolutely ridiculous. In the same instance it is lauded by many of you as being an effective program. How would you change that? Can you tell me?

I am concerned that a transition out is a transition into nothing. I mean, not all of you have farms beside the next subdivision that needs to be developed. With reducing farm values and things, how could that be improved?

Mr. Littlejohn, you were speaking vigorously about this. Could I ask you the question, and then Jurgen?

[Curtiss Littlejohn]

The program is designed in such a way that people have to make business decisions. My issue with the program is that instead of supporting viable producers to remain in business, we are helping to move producers out of business. There are examples of families who have had farms over three generations and are choosing to move on. I don't know if that's the right strategy. People are going to exit the business and move on, but it's trying to find the balance between the two. It is a very tough and emotional issue with the producers.

[Frank Valeriote, Liberal, Guelph, ON]

Bob, you spoke about whether to let it run wild in a capitalist system or introducing effective regulations to help. From what I've seen so far, the support isn't enough. Assuming that I am a person who wants to hear how we can better support you, tell me what you need.

[Bob Reid]

That's a difficult question, because obviously within our industry there is a wide range of ideas. I would like to see profitability from top to bottom. As far as how you achieve that, there may be several different answers or routes.

Right now we are suffering a bit from a market imbalance of power. There may be some dictation from parts of the supply chain further up from us as to what price they are willing to pay. There is no negotiation; there is a bit of dictation down the chain.

Personally, I like the idea of an industry round table that includes not only producers but processors and retailers. If we can explain to them exactly what it is they're doing to us... Is there a disconnect there? Do they realize, do they understand, where this may lead?

[Frank Valeriote, Liberal, Guelph, ON]

Would dealing with the government's refusal to meaningfully invest and follow up on its commitment to its 60% of the AgriStability program and helping the business risk management side of it--somebody referred to the fact that the program isn't effectively being implemented--be the best way to start?

[Bob Reid]

I believe that it is a bridge. I think business risk management is something that can be implemented over a relatively close timeframe. If government powers choose to go in that direction, it can be done relatively quickly. There again--getting back to my earlier point--as to what we want our food industry to look like, top to bottom, we need a much longer-term strategy.

Would it help if they committed to that? Certainly.

[Frank Valeriote, Liberal, Guelph, ON]

You made reference to a transition report you presented. Could you highlight again some of the main features of that report? Where would you like to see the money that hasn't been spent on the hog industry loan loss reserve program invested?

[Jurgen Preugschas]

Sure. We have to remember that the hog farm transition program was designed to deal with those who would not be eligible for the HILLRP program so that we wouldn't have a bunch of farms on the market afterwards reducing land values and property values. That was part of the reason for that program. That's one of the reasons we supported it. And I believe it was relatively successful.

The transition program is all-encompassing. It was developed not only by the Canadian Pork Council but also by the work of the Pork Value Chain Roundtable, which identified some of the areas, everything from efficiencies to marketing to innovation to production to the structure of the industry.

I think Bob brought up very clearly that we need to ensure that our structure is such that all of us end up with, let's say, a liveable allowance. Right now all the risk is carried by the hog producer. If there is money left over, they may make a profit. If not, they lose, and everybody else takes their margin. Somehow we need to develop that, and that is part of the thinking in the strategic plan as we move forward.

[Frank Valeriote, Liberal, Guelph, ON]

Have you ever asked to meet with the minister--

[The Chair, Conservative, Larry Miller]

Frank, you're out of time. You'll probably get a chance to come back.

[Frank Valeriote, Liberal, Guelph, ON]

All right.