Agriculture Committee on March 15th, 2010

[The Chair, Conservative, Larry Miller]

Thanks, Mr. Hoback. Your time has expired.

Mr. Easter, you have five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

To be honest, I hardly know where to start, but first of all, thank you for coming here on short notice. Given the situation this industry's in and the fact that the loan program is coming near the end of its time, I think we felt that we needed to have you in to get some recommendations from you folks.

I will say that I'm extremely frustrated, and not just with the government. I have never been so disgusted at a meeting of ministers of agriculture--and I'll put this on the record--of all political parties and all governments in Canada as I was at this last Toronto meeting. Whether it was NDP, Liberal, or Conservative, they were all there.

The only one who wasn't there was the Bloc, guys, or the Parti Québécois.

I mean, to come out of that meeting with the crisis this industry's in... Canadians would just think, “Oh, well, everything's fine, and everything's going along”. So I'll just put it on the record: I'm damned disgusted at every federal and provincial minister related to agriculture in this country.

I've been listening to what you've been saying. I want to go through a list here to see if this is what you're saying.

First, you're saying to rededicate any money left in HILLRP to producers somehow, maybe in a strategic plan. Is that what I'm hearing?

Second, for AgriStability, allow it to work. Change the viability test and change the reference margins. There was $900 million left in that program or $900 million less spent in that program last year. It wouldn't be a trade violation if we in fact did that. We could actually get cash out to the industry.

You can tell me if I'm wrong on these things.

Third, re-establish the emergency advance payments program.

Curtiss, I think you're saying to up it to a higher level.

I just get the feeling from listening to you that you don't think Farm Credit is doing its job as a lender to the farm community. You can respond on that if you like.

I need a response on those points.

I have a couple of questions as well. I'm really concerned.

Curtiss, do you folks know how much of the money that went out in HILLRP actually went to pay back the advance payments program? I'll be honest: I don't know where Ritz was in this and I don't know where the officials in Agriculture Canada were, but I sincerely feel that Agriculture Canada had the wool pulled over its eyes by Finance and Treasury Board.

As you know, adding more debt isn't going to solve our problem, but the government got paid off and you're carrying more debt. I think that's wrong and I think Finance pulled the wool over Agriculture Canada's eyes. We have to find a way to reduce debt.

What are your thoughts on those points? Is that where you want to go?

I guess the bottom line here is that, yes, we're losing part of our industry. If I went into the figures in Atlantic Canada, you'd be shocked. We're down 66% in production and down 70% in breeding stock in P.E.I. Even barley's not going to have a market. It's an absolute disaster in Atlantic Canada. And what it's being replaced with is American product. That worries me too.

What are your thoughts, Jurgen?

[Jurgen Preugschas]

I'll give you just a quick answer.

On the APP repayment, there's about $312 million out in APP loans, and the HILLRP program has paid back somewhere around $30 million. So it's not a huge percentage of that at all.

On your questions concerning rededicating the money that is left over, absolutely; we feel that is a critical question, and something that we would ask you to consider here.

As we've stated before, AgriStability does need some fixing. That is a priority for us without question. If we could have a second round of the emergency advance payment program, certainly we feel that would be critical to helping those producers who didn't take full advantage of it, or who didn't take advantage of that program at all. So yes, those would be three key questions.

In addition, concerning structural change and what we can do long term, I think it's very critical that we take a look at that. We tend to be very critical of programs because they don't always work for everyone. I think we need to have a full and complete discussion on what we can do, where government can maybe help us, for a transitional period of time. Then we can get the money out of that fund, if you will, in the future so that we don't continue paying in year after year where government is unhappy, opposition is unhappy, producers are unhappy, and the general public is unhappy.

I do think we do need to get our heads around that. That is part of our thinking in our strategic transition plan, to look at that and at how we can make those structural changes.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Storseth, for five minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chairman.

First of all, I want to thank everybody for coming today. Some of you we have seen many times. It is a very important issue. I know you had short notice, so I appreciate the discussion.

There have been so many numbers thrown out there today. There has been much talk about programs. You are here because we as a committee want to come to some kind of consensus after you leave on the recommendations that we will forward on to the minister. I am going to try to stay out of some of the stuff and get into more detail on a couple of things.

Jurgen, I will start with you. One of the things I keep hearing is that cashflow is a major problem. What is your recommendation on how we address that? Obviously there are concerns that the program that's in place isn't doing the job that needs to be done. What is your position on how we address cashflow?

[Jurgen Preugschas]

One of the answers would be a second issuance of any emergency advance payment program. We had hoped that the HILLRP would work. It hasn't worked. That would be a key aspect, and the one single thing. But secondly, and as important, is addressing AgriStability for those producers who for 2009 won't be eligible.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Yes.

In terms of market access, what is the most important market that you need us to open up, or that we need to open together?

[Jurgen Preugschas]

We need to pass the bilateral free trade agreements that are in there right now, such as with Colombia. Korea's hasn't been negotiated yet, but that is a critical one. Korea is critical and the EU is very critical. The last time I was here, I mentioned that a small country like Chile has more bilateral trade agreements than we do. We need that.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

You mentioned Colombia. Why is it so important?

[Jurgen Preugschas]

Colombia is one of the ones that have already been negotiated. It's not a huge market. I don't remember the exact amount, but they buy some products for which we don't have good markets. That's why it's critical that it gets approved, not only for us but for the beef sector as well.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Littlejohn, do you have a comment on both cashflow and market access?

[Curtiss Littlejohn]

Cashflow is a significant issue in a lot of operations. Weaner pig prices picked up about three months ago. A lot of people in farrow-to-finish operations sold off little pigs to provide cashflow. Now they're getting into a cash crunch. So cashflow is huge.

In terms of the emergency advance payment program, a second round of that, especially if you take whatever that $400,000 is, at 275 or 280 sows... Take it up to the 600-sow model that Agriculture Canada uses; that would be great.

As far as access into markets, the EU is a major market. It's a market that people have said could add $5 to $10 a hog to the price that we could receive on hogs, because they use a part of the pig--the ham--that is not widely used in North America. That is very critical.

The other thing I would comment on is getting our meat processors on an equal footing--paid inspection, give them accelerated depreciation so they can reinvest in tools, and equal application of the law, as Jim said, on things as simple as a can--things that have put our guys at a disadvantage for years.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Would anybody else like to answer those two questions?

[Bob Reid]

The only comment I would make is that I'd like to see perhaps some help from government in re-establishing our own market.

Wayne, you brought up the idea that there is product that's flowing fairly easily across the border from the United States. It would be nice to be able to convey the message to our own consumers here at home that we can more than supply your market, and we want to. So make the connection that if they demand and buy our product, a product of Canada...

I would like to see the cans that Jim passed around here have a great big label right across the front that this is a product of Canada, because there are far too many people who go to the local supermarket and don't know; they assume that it's a product of Canada, but they don't know. It's not clear enough.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I have just a quick question, because he's going to cut me off soon.

There are 207 applicants who have been approved on the program. Does anybody have any idea how many applicants there were, or there currently are?

[Jurgen Preugschas]

It's virtually impossible to tell. A lot of people would go to their bank or their financial institution to talk about it and they were discouraged from applying, saying, “Oh, you're not going to apply”. We have no indication of exactly how many people have applied.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Okay.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Storseth.

Ms. Bonsant, five minutes, please.

[France Bonsant, Bloc, Compton—Stanstead, QC]

I always find it absurd that honourable members around this table who have farms say that things are going very well. They say that because they have a salary. But you do not have a second job to make up for the salary you are losing.

How is it that the government guarantees $400 million to banks, which then lack the courage to give you loans? Something is wrong here.

Do you think that the government should be tougher on banks so that they lend you money from the $400 million they received? I do not think you will be going to Disneyland with the $400 million, will you?

[Stephen Moffett]

Yes, I'll comment on that. That's probably one of the biggest frustrations, and quite frankly, I've heard it from the government as well, just how willing banks are to lend money. It's a real challenge.

From our point of view, we get into this recession that we have, which has been very much brought on by some of the issues that banks got into, so credit just tightened right up. That's one issue.

As Jurgen said, there certainly was a lot of effort put into this. We certainly had some input into the HILLRP program. They're very disappointed at how much the financial institutions were willing to lend. In many cases they would say to producers, “Look, you don't have a good enough business plan. That's part of the criteria, therefore don't even bother applying.”

How do you get banks to free up credit? That's definitely one of the messages we want to bring, that getting credit is hard and that's why we say that the APP program is good for us because it is accessible. It has worked really well. To get banks to lend is a real challenge. I've talked to banks and even with a loan guarantee, they won't lend to you. So what do you do?

One of the comments I would make is that certainly Farm Credit also were pretty hesitant at the start. Quite frankly, Farm Credit were opening up toward the end of the program and were more approachable. I work with a lot of people at Farm Credit, and I think they're very good people and I think they're doing a great job at what they're doing. But you'll realize that they certainly have the direction that they need to operate similar to a bank, and they need to make money and not lose money. If we want them to make loans that wouldn't be otherwise made by a charter bank, for example, the government would need to give them that direction and to develop other programs that would make credit more accessible to hog farmers and other parts of the agricultural industry.

[Curtiss Littlejohn]

I'll raise one issue.

Back in the eighties, with Farm Credit, there were points when farmers were in the same situation they're in today. The values of their properties were down. They were out of cash. They couldn't operate. It was no real fault of their own; it was due to the circumstances that came together. Since that time Farm Credit has taken on the role where they're not a lender of last resort anymore; they're now more of a commercial lender and thereby living by those rules. One of the rules of commercial lending is, “We'll do an accommodation, but please take your piss-ass business somewhere else.”

Why are we willing to sell Alex's property to Jean-Guy at 50¢ on the dollar and take the loss, yet we're unwilling to negotiate down and have Jean-Guy keep that property at 65¢ on the dollar so there's a win-win? It's not a crippling debt for Jean-Guy, but Alex is also not losing half of what he has invested. That type of mentality requires direction from government through Farm Credit to enact that type of policy. It doesn't matter who the government of the day is, they need to do that.

One of the comments that will quickly come back from people in government is that although Farm Credit is a crown corporation, it is stand-alone and has to operate like a bank. Oh, poppycock; if the minister can phone up Farm Credit and get into salary and bonuses for employers, he can sure as heck phone them up and say that with the help of the government they're going to assist this industry to transition.

[France Bonsant, Bloc, Compton—Stanstead, QC]

That will cut to the chase.

[The Chair, Conservative, Larry Miller]

You have about 30 seconds left if you want it.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Fine.

I do not want to upset you, Mr. Reid, but the new government regulation requires the content of a product to be 98% Canadian before it can be labelled “product of Canada”. What do you think?

[Bob Reid]

I do not believe that is unattainable. It's something we should strive for and give our consumers an informed choice.