Agriculture Committee on March 15th, 2010

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

We asked for it to be 85%. Do you think that is enough to warrant the “product of Canada” label?

[Bob Reid]

I don't see a problem with that. But perhaps the best person to answer that question is Jim.

Is that attainable?

[James M. Laws]

I'm not sure I'm exactly the best person to answer that question.

I am not the best person to answer that question, but I can still say that some are able to meet the 98% standard. However, others would like more flexibility because some ingredients are not available here. Anyway, we also asked for more flexibility so that we can change our labels more quickly.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Laws.

Mrs. Bonsant, I'm surprised that you want to allow 15% foreign content in that versus 2%.

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

Mr. Chair, sugar cane does not grow in Canada.

[The Chair, Conservative, Larry Miller]

Mr. Richards, you have five minutes.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

First of all, I want to thank you all for being here today. I believe five of the six of you up there are actual hog producers, and we certainly appreciate you guys coming here today and sharing your personal stories, and also, of course, speaking on behalf of the organizations you're representing. Particularly, Mr. Littlejohn and Mr. Reid, you have shared very clearly your personal stories and some of the challenges and struggles you've personally faced.

I can understand and sympathize with those because I come from a hog farming background myself. My two brothers and I, so three boys all told, were all working the farm at one time, but, for better opportunities elsewhere, left the farm, much as you've indicated has been the case in your personal situation, Mr. Littlejohn, with your two sons. My dad, fortunately enough for his sake, was able to get out of the industry. Things weren't good at the time, but it was before things got really bad in the last few years. So I do sympathize and understand the situations you're facing and what you're dealing with right now. I do appreciate you coming here to share that with us.

I certainly have heard, I think pretty much unanimously from all of you, how you support some of the things our government is doing to try to help. There were some very kind words from all of you about some of the programs, but also particularly on market access and our attempts there to work towards providing that market access to deal with the future, to help improve markets and opportunities for farmers, really across the board and certainly with hog farmers included among those.

I heard some comments about the market access secretariat and the work it is doing. Of course, we have a minister who, it amazes me, invests so much personal time in working on opening up the markets. When he's not here, he's travelling all over the world to try to help open those markets, and we certainly appreciate the recognition of that. I heard China mentioned, and some of the work there, and some of the work in Korea. Hopefully, our friends across the table in a couple of the parties over there heard the urging to see the Colombia deal passed through Parliament. We heard some talk about the slaughter improvement funding, and we might want to hear a bit more from you about what that might mean, but we heard some positive words about that.

I know there's reluctant support for the transition program itself among producers, but I think we all recognize the need for it. I think we've done a fairly good job to combat and fight COOL in the United States. So there are a lot of positive things we're doing as a government.

We talked about the loan programs. Despite the fact that we worked with producers and we worked with the Canadian Pork Council on this, and I know it was felt by all that the program was well designed and should work, clearly, unfortunately, it hasn't worked. I believe it was Mr. Reid who commented, speaking about the program, that bankers don't like it, and producers don't like it. I would say the reason producers don't like it is that bankers don't like it. They're very related. We've gone over that a little bit today. I've heard some questions on that, and I've heard some of the answers you've given regarding what might be done to try to make that happen to a better degree.

I've heard you talk about the need to look at the money that won't be given out under that program, unfortunately, and that's not for a lack of trying by any means. I know I've had conversations, particularly with you, Jurgen, about the changes we've made and the fact that some of the changes we brought forward have helped to some degree, but we'll still see some money left in that program without a doubt.

I did hear you talk a bit today about some of the things that can be done to maybe see more money come out of that program. I'm looking for some ideas and some thoughts on what we can do to help, because, going forward, we do want to try to deal with making sure the program works, although this one didn't work out the way it sure appeared it would. It's been briefly touched on that there might be ways we could see the money left over be reinvested or spent to help producers.

Do any of you have any ideas of how that money might be utilized to help the industry?

[Jurgen Preugschas]

Thank you, Brian.

I believe what we need to do is take a look at what we've put together as the strategic plan. Once we find out how much money there is and where we can best use it, I think that becomes the key issue. So I think it's too early to get too specific right now--number one, because we don't know what the dollar value is and generally we want to look at the whole picture. We do need to work together on that and I think take some direction from the Pork Value Chain Roundtable on it, which does include packers, processors, feed companies, veterinarians, provincial and federal governments, as well as certainly the primary producers. Actually at the last meeting we had a retailer there as well.

So we do need to take a look at that and then make a really good decision on where to spend it, not just come up with ideas here right now.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Preugschas and Mr. Richards.

Mr. Easter, five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Almost, but not quite, I'm going to resist the challenge of questioning the commercial that Mr. Richards gave the minister. My own personal view--and I've said it in the House--is that I think this minister has one of the worse records of failure this country has ever seen when it comes to this file. And that's proven in this last budget.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's mean-spirited, Wayne.

[Wayne Easter, Liberal, Malpeque, PE]

The reality is that this is the first budget in at least thirty years, when we've got the industry going through a crisis in hogs, a crisis in beef, and some of the potato industry is in serious trouble... Our debt is four and a half times that of the United States. Debt increased $9 billion since this government came to power at the farm level. And yet not one new dime--not one new dime--is in this budget for agriculture. That's the first time we've seen that, guys, in thirty years.

So never mind your commercial for the minister.

I have a couple of questions. According to previous testimony, Jurgen, I think you suggested that about 25% of the pork consumed in Canada was U.S. pork. Is that number remaining constant? Is it increasing? Is it decreasing since last fall? Where are we at in terms of perhaps the most up-to-date numbers?

I do know that in my area, when you go into Superstore, it's hard to buy Canadian pork sometimes. I went in the back room and it's stamped USDA.

[Jurgen Preugschas]

Thank you, Wayne.

You know, what's really disturbing... I don't have updated numbers of where it's at, except that the trend line is upwards--and that's disturbing--of imports.

The other part is that the U.S., in their discussions with their U.S. trade organization, has targeted Canada as a lucrative market to move even more product into. So that concerns us for sure.

[Wayne Easter, Liberal, Malpeque, PE]

Maybe we can talk a little further to that at a later time.

Curtiss, you indicated in your remarks that on the loan loss reserve program, you had hoped that there would be 75% uptake. I think that's what you said.

[Curtiss Littlejohn]

Correct.

[Wayne Easter, Liberal, Malpeque, PE]

And only 3% of producers are benefiting from the program. Why is that?

[Curtiss Littlejohn]

A lot of the uptake in the program is, as I think Stephen commented earlier, the attitude that the banks have taken.

I'll give you an example of the chartered bank that I deal with. When we approached them and said we wanted to submit an application, they said, fine, you're perfectly entitled to do that, but there are a couple of things you have to do. First of all, you have to have your accountant prepare the business plan.

Well, accountants are great at figuring out how to keep tax dollars from the government, but they really don't do a lot of good work when it comes to business planning. And that was going to be a $3,000 bill in my case.

Second, they said, you have to prove that you're viable for the next two years.

I asked what that meant. They said I had to prove that I was going to make money.

Well, back in November, that was a pretty hard thing to prove.

Third, he said, by the way; if you get this loan, we immediately will place you in special risk, because you're a high-risk loan.

[Wayne Easter, Liberal, Malpeque, PE]

Does that mean you pay a higher interest rate?

[Curtiss Littlejohn]

You will pay higher interest rates and you will be subject to a lot different day-to-day interpretation. If you happen to put a cheque in and your paycheque doesn't hit the bank, there is no leniency. It's done. It's not picking up the phone to the bank manager and saying the electronic deposit didn't make it in last night, but it will be there this morning.

Well, we're sorry; that cheque is getting bounced back, because you are outside your convenants. There's a lot more expense involved. And that is what we've heard across the board.

I went to one chartered bank and I talked to the agrologist, the guy who helped prepare the application. I asked what we would have to do to get an application in. He said that if I could get my existing creditors to take 40¢ on the dollar, he'd help me build a business plan. We'd apply under HILLRP, he said, and I might have a 30% chance at getting it. He said this bank is just not lending to the hog industry. And I think you can ask any one of these gentlemen here and they will tell you the same story.

Unfortunately, the banking industry right now does not view the hog industry as a viable place to put their money, and yet as short as five years ago, Farm Credit was lending 100% to 105% of the value of a new barn to get people into the hog business.

[Wayne Easter, Liberal, Malpeque, PE]

Where's Farm Credit at in this mix?

[Curtiss Littlejohn]

Farm Credit is doing what good banks do. They're doing their due diligence. I'm not sure if that's good or not.

We were told by Farm Credit that we have too much debt. I held up the letter from two and a half years ago that said that they were happy and pleased to give me the money to put me in that debt situation. I said, “Folks, you're telling me something here that I don't understand.”

At the end of the day, you have to work with it. If there's one thing I would bring forward that you could do with Farm Credit--and I'll say it again--it would be to get them to release public information. Those lists of comparables that farmers need to help valuate their farms when they go to other lenders are public information. They're in the registry office. They don't have to release any private information or any work they've done. Just get them. I think all it would take would be a call from the minister to tell them to release that public information to those who ask for it.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Littlejohn.

Mr. Lemieux, you get the last five minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thanks very much, Chair.

As my colleagues have said, thank you so much for being with us today.

You know what? Your testimony in front of us has been excellent. It's been very cohesive, which I like. In other words, you all have the same message, and yet you represent individual producers right through to different organizations. I just want to say that it is very helpful, because it shows that you're working together as an industry to find solutions.

I just have to disagree with Mr. Easter on his strong rebuke. As you know, from living it on the ground, none of this is a science. There is something of an art to this programming, because people can't see the future. I think everybody has been trying to put in place a program, or actually a series of programs, that will work for the hog industry. Some of them have worked very well.

We spoke about APP and it being very beneficial. I hear you about the limits, and I hear you about probably needing another extension.

One of my colleagues mentioned opening foreign markets. Tremendous work has been done there. The installation of the secretariat is more good work.

Then we have these programs we're talking about. Some of them have worked better than others.

For example, with the banking, I mean, I'll just say that I'm very frustrated with the way banks have handled this, as well. You know, Mr. Littlejohn, if I were a banker, I wouldn't want to have you in front of me. You seem to be very well prepared, and you have all your information at hand.

We have tried to take measures to encourage the banks to proceed with these loans. We were backstopping 80%, and then we went to 90%, certainly on the APP portion, to reduce the risk to the banks. I think everyone recognizes that we can't tell the banks when they should loan money and when they shouldn't. But we can certainly put in place what I'll call tools to lower the risk for banks to help them in their decision-making.

Certainly it would be useful if the take-up rate were higher than 3%. I don't think anyone argues with that, and that's where fine-tuning is required in these programs. It's easy, sometimes, for the opposition to throw a dart and say that things should have been perfect right at the outset. But I think we all had high hopes at the outset, because we all worked very hard together to put in place this program.

I wanted to follow up on a question. I think Mr. Hoback was asking Mr. Moffett if he sees a light at the end of the tunnel. The answer was yes. I wanted just to get a bit more information on that. How long do you see this tunnel being, for example? Do you have any sort of feedback on when you will see things actually moving in a positive direction and can say that, yes, recovery now is much closer than it was before? What sorts of specific indicators would you be looking for?

I open the question to anyone who else who would like to add to that answer. I'm interested in knowing the industry's perception of when recovery would be starting to take hold.

[Stephen Moffett]

Well, I probably would suggest that the Canadian Pork Council doesn't have an official position on when the price will turn around.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Yes, I understand, absolutely.