Agriculture Committee on May 13th, 2010

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Hoback, five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you all for coming out this morning. I know you're all very busy this time of year, and it's appreciated. I hope you understand that in Saskatchewan calving season starts in February, and last year harvest went to the end of November. It's hard for a committee to figure out the best time to travel, so that's how we ended up here today.

There's one thing I was going to maybe touch on a little bit. A lot of you talked about some sort of risk or cost protection program. In the 1980s we had a program called GRIP.

Wayne, you'll remember GRIP.

I was farming. I still have a farm, but at the time I was starting in farming, and it was there. I thought it was great that I could predict that next year I was going to make this much money, and the year after that I was guaranteed to make this. There was bank flow, and I could see it.

The problem was that four years later we had a government change in Saskatchewan, and all of a sudden it was all gone. In the meantime, based on our projections of what GRIP was going to pay us for the next ten years, we hadn't expanded our farm, and we just kind of stayed put. But a lot of our neighbours did expand, and we saw the land values go up dramatically during that period--probably artificially--and all of a sudden these guys, four years later, were sitting there saying, “Okay, now what?” because all of a sudden that revenue stream, which they had forecasted on, wasn't there.

That's the problem I have with any type of program in which you say we should have government contributing here and contributing there. Governments change, and priorities of governments change, and all of a sudden you could be in a situation like that again where all of a sudden it's not good for anybody.

I know you referred to the ASRA program, but I think the ASRA program in Quebec--a lot of people don't remember this--has about a $5 billion deficit right now. So sooner or later something is going to happen there, and that's going to change, and where those Quebec farmers will be, I don't know.

That's the caution I have there.

The other thing that Mike mentioned was that there should have been an Atlantic solution or a western Canada solution. It's really tough for a national government to pick winners and losers on regions. Basically all we can do is say, “Okay, across Canada we can do this”. That doesn't prevent your provincial government from stepping in and saying, “We're going to top this up to make sure that in P.E.I. we're going to do this”.

Alberta did that. I know that the guys in Saskatchewan complained about it, because--and I'll use the beef industry--Alberta came out with a hundred bucks a head, and Saskatchewan came in with forty bucks a head, and the guys in Saskatchewan felt they were out by sixty bucks a head.

So when you look at it at the federal level, you try to be fair and balanced right across Canada. But then if the market is going to dictate what happens....

You said you didn't contribute to the hog problem, and that could possibly be true. But in the macro sense, there were too many hogs throughout the world, and that contributed to the hog problem. So how do you say “they didn't contribute, but how do we federally give them more money or more sustainability?” versus the situation in a province like Saskatchewan, where I come from, where the cost of production could be substantially less? Those are the issues you face at the macro level.

Five years ago I was sitting at the table with the farm association, just like you guys, trying to figure out how we could get more money into farmers' pockets. And that's the thing I want to learn from these committee meetings. I'm looking at things that will give you more money in your pocket from the marketplace, or reduce your costs, because there are two sides to the equation: either you increase your revenue or you decrease your costs.

I really like the idea about the imports. There is no reason, to my mind, if we're going to import beef from Brazil or Argentina, that the producers there shouldn't meet the same standards or requirements we have for our beef producers here. That's a no-brainer. That should be fairly simple. I think everybody around this table agrees with that.

But are there other things we can do on the regulatory side or the cost side for young farmers, to get them started, that will make them a stable entity at the start until they get their equity base to a level at which they can survive in the marketplace? Those are the types of solutions I'm looking at.

Raymond, you did some great stuff in going overseas. I did a lot of that too. It's great. I'd like to know the name of that company you said Dave had a problem with, the Canadian brand. If you wouldn't mind giving that to me later, I'd appreciate it.

[Raymond Loo]

I can get it for you. It's a Danish company. I have the information at home, so I'll pass it on.

One of the things I would say, though, is what drove me to going overseas or going somewhere.... I just went down to Wayne's office; he's got the book on embassies. I didn't know that you had to dial 011 to get out, because I had never dialed more than one, so it was quite a stretch. But one of the ways of getting extra money out of the marketplace is finding partners. Value chain is an overused term sometimes, but a value chain marketing system if you can find partners...and there are people, there are companies around the world who are willing to actually work directly with farmers, who are concerned.

On our canola oil now in Japan, we've got pictures of us on the bottles. I'm selling dandelion roots. When they asked me if I could grow dandelions, I thought holy crow, where do I find seed? And I had to find something to plant them in. But we're growing dandelions and we're making dandelion coffee and sending it over, and they've got a picture of me in the field holding the dandelions.

So there are ways of taking something that as farmers we have absolutely no idea we can make money from. We're asking the marketplace if there's something we can grow instead of us growing something and trying to sell it and then if it fails, asking the government....

I had a guy ask me one time what I was farming on our farm. I said we had beef cattle, and he asked me why. I said, well, because we chose to buy beef cattle years ago and get out of the dairy. He said did you do a market study, and I said no. He asked what breed we had, and I said Angus. He asked if we would do something different, and I said no, and so on. At the end of the day he said, “You just described a hobby. You're doing what you want to do because you want to do it and you've never done any research into the marketplace.”

I do feel that as farmers we have to be more proactive in finding markets, but we need to have the support sometimes to get us there.

[Randy Hoback, Conservative, Prince Albert, SK]

Would that support be on the research side, or the export development side?

[Raymond Loo]

Well, on the research side--different things. But I even see support for flying.... A few years ago I could get assistance through different programs to go to conferences or go to different places. That seems to have stopped to a large extent. They don't want to send people somewhere. Well, sometimes we have to go somewhere else to see what someone else is doing so we can get the ideas to bring back home. So there are different issues.

I think there are other people who want to talk.

[Gerard Mol]

We export canola to Japan, but the trouble is what we have there. I mean, the nice thing is that Japan is an importing country; they only produce about 30% to 40% of their own food. We were approached by a company in Japan to grow adzuki beans. Farmers there are getting approximately $4,000 a tonne for the beans, and they are protecting their own market very well.

What that means is that before we even can grow these things, the company that buys these adzuki beans has to get a permit and they have to pay for this permit. Let's say it costs $100 a tonne--I'm just saying some number, I don't know what the number is. What happens is this company has to buy a permit to import adzuki beans to the country, and that way they regulate exactly what kind of tonnage is coming into the country so the farmers in Japan are protected and they still get this high price. We will not get $4,000 a tonne for these beans going in there, but at least it's regulated. And that is something that we.... Except for bananas and oranges maybe, we basically have 100% food supply in Canada to supply our own people. This is just another market, this 30% to 40%, and that's the issue, I think.

[The Chair, Conservative, Larry Miller]

Thanks, Gerard.

We're out of time. It always goes so fast.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

I just want to make one little point of clarification on Gerard's point on the Venezuelan potato deal, because I think it's something we will all agree on at this committee eventually.

What really happened is that the P.E.I. potato exporters were left at the mercy of Venezuelan politics. Whereas Holland will send in a team of people with the backing of the government to take on the country and support their exporters, Canada fails to do that. That's something I want to put on the record. We need it on the record, that we need a quick response team who would back up Canadian exporters, from wherever they are in the country, and take on another country's political system if necessary.

[The Chair, Conservative, Larry Miller]

Okay, thanks.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Chair, I just want to put on the record that we do have a team in China right now, on canola, for example, that was quickly over there within a week. So there is work being done to expedite that process.

Wayne is right, though. When we see those types of issues, we need to be able to react fairly quickly.

[The Chair, Conservative, Larry Miller]

Thank you very much. We'd had some great comments today. I wish we had more time, but we've actually extended over.

I have just a couple of things to add.

Mike, in terms of your comment about the industry basically having the lead role, I know as a producer I came through the BSE crisis in 2003 and it kicked the daylights out of me and a lot of other people. Sometimes when you get frustrated, you want to blame somebody or put all the blame on the government. Government has a role in this, but so does the industry and so does society in getting this mindset.

There is no specific cheap food policy in this country. No provincial or federal government has that. But it's artificially there, and society puts it there. Society needs to start to walk the talk. If they say they want to support agriculture, they have to do it when they walk into the grocery store or the local market, or whatever.

There's one other thing I'd like some comments on—and we don't have time to hear any answers on this, but I sent a card around, or you can send your comments to our clerk. We've had a bit of a theme here about the Competition Bureau, and there seems to be some opinion out there that it's maybe not using the tools it has to the full degree. There's even some other play out there, including from myself, wondering if we should give them some more power. So I'd like to hear some comments on that.

There's something that we always have to keep in mind. I fully support, as do most people in this room—in fact, probably all the people here—somehow protecting our domestic food supply. But as a taxpayer, just using my taxpayer's hat and throwing my farmer's hat and my politician's hat away—I cannot support subsidizing exports. Somehow we have to come up with a way to separate the two, and if any of you have some comments on that, I would be very happy to hear them and I think the rest of the committee would.

Thank you very much for being here on a nice day.

We would ask you to please vacate the tables as quickly as possible and for next round of witnesses to please come to the table right away—and again I urge our members to take a leading role and get back to the table in five minutes.

Thank you.

[The Chair, Conservative, Larry Miller]

I call the meeting to order. We'll begin our second session.

I'd like to thank our witnesses for taking time out their busy days to be here, especially on a nice day. It's nice to be here in P.E.I.

If you can keep your presentations to five to seven minutes, I'll give you a two-minute warning, so to speak. I'll be as flexible as I can.

Mathieu Gallant, you're up first, for five to seven minutes, please.

[Mathieu Gallant, As an Individual]

I'll be talking in French, I guess.

Good morning, my name is Mathieu Gallant. I have a dairy business. We milk about 40 dairy cows. The company has been certified organic for five years. I have a degree in farm management and operations. Our farm is a small family farm and we all work on it. I decided to settle there because it is something I wanted to do, but there is also the fact that when you are working at home...

When you're working at home, you're working for the family heritage. It just goes to show that you want to stay home but there's no money to be made. We're in the dairy industry. We'll say that I'm sacrificing my revenue and my time for the family farm.

What I've been looking at is value-adding the products. I went along and I took a cheese-making course. I went to France for five months, learned how to make cheese, and I've come back just to get stuff rolling. I find it's so hard just to be making a living off of agriculture in general. Once you hit the value-adding stage, it's a whole different ball game where there's no kind of producer/processor kind of link.

Right now I'm at the stage where we're doing business plans and looking at different locations and stuff like that. It's just you're working, say, a minimum of 50 hours a week, and you still have to do all your running around. You're working on the family farm 50 hours a week, and then you're trying to set up your other business as well, but you need to have some income coming in because everybody wants to try to have a normal life. I know quite frankly that in agriculture it's not always easy.

What I find, really, is there's a big void between the producer and the processor stages. Lots of people say, “We're farmers. We know how to sow. We know how to milk cows, and that's what we do best.” But there is, quite frankly, a lot of money to be made on the processing side. I did a few market studies, and I said, “Well, I can work 60 hours a week and get, say, 75¢ a litre, or I can work, say, 20 hours a week, and for that same litre of milk I can get $3.50.”

I love farming and everything, but you have to be able to make a living off of it. Lots of sacrifices were made. It's just to say that if we want to keep farming viable here, especially in rural P.E.I., we're going to have to look at different ways of keeping the young farmers here, to make sure that it can be fun, it can be profitable for everybody to make a living off of.

I know it's pretty basic. I'm just a 25-year-old farm kid working at home and trying to start my own business on the side. I know that I don't want to take anything away from the family farm. I am working in conjunction with it, because hopefully there will be a succession plan and I will be the fourth generation to take it over. But in the meanwhile I can't just sit around kicking boats and waiting for a paycheque. Everybody has to do something and make a living off of it.

Thank you.

[The Chair, Conservative, Larry Miller]

Thanks, Mathieu. It's people your age who are the future of agriculture, so I thank you.

I'll move to Matthew Ramsay.

[Matthew Ramsay, As an Individual]

Good morning, folks. We'd like to thank you for having us here.

My name is Matt Ramsay, and Trent Cousins is beside me. We're going to do this in a two-part piece.

We'd like to share our insights as they concern what we consider a necessary paradigm shift in 21st century agriculture. We're each going to outline some key points as they relate to the briefing we provided you.

I'm going to begin by outlining some socio-economic concerns, which I feel should be addressed on a higher level of agricultural reform. Trent is going to share some insights on key areas of opportunity where we think we could start making things happen.

I'll start by saying that agriculture is in need of a warm welcome, as it were, to the 21st century. Efficiency and sustainability are no longer nice things to have, but rather the demands of an increasingly globalized economy. I think we all know this. It's just the way things are going.

We can no longer allow these long-held traditions to hold us to anything. We must reconcile ecological and economic paradigms and we must fuse them into hybrid frameworks that capture the total value of agriculture. By that, I don't mean just the profitability element of it. Long-term stability cannot be restricted to profitability, yet we cannot ignore these implicit rules of a global marketplace. We need to somehow reconcile the two, which is what I think will create a holistic, long-term stability.

We need to take a fresh look at the interconnectiveness, prolific in every economy, and truly appreciate the rudimentary significance of our primary sectors. These are the sectors this country was built on. When we take a look at how it is interconnected with every other piece of our economy, there are certain warning signs popping up here and there. While we were not built on the seas of global economics, we will perish on them if we fail to stabilize our constituent industries.

What I see right now is a clear and present rift between a generation looking back and one looking for a future. The old farmer is a dying breed, yet so is the young one. With them both will go the opportunity to stabilize and to feed a nation, and we must not let this happen.

New thinking must be allowed to permeate agricultural economies. Long-term stability begins and ends in the hearts and minds of those who currently find little refuge in agriculture. We must work diligently, collaboratively, and in ways never thought of. We must give the farmer the grounds to once again roam freely as a food producer.

We expect too much insofar as we eat without thought. We need to allow the traditional farmer to reconcile his ways with these young farmers we seek to offer these opportunities to.

I'm now going to pass it to Trent. He's going to speak to some more specific key areas on where we might start looking for these opportunities for integration.

[Trent Cousins, As an Individual]

Hello, ladies and gentlemen. I'm also pleased to have a chance to speak before you.

I grew up on a large-scale potato and beef operation in the Kensington area here in P.E.I. I remain involved heavily in agriculture, both in my beef operation and my uncle's potato farm.

Several years ago I saw no future for myself and frankly for most youth in agriculture, for several reasons. Now, after doing quite a bit of research and going to university and looking at the global economy and what not, I do see a very promising future. Mind you, this future can only be achieved by streamlining efficiencies in a manner that creates sustainability for the producers in the industry. New ways of thinking must be utilized, as Matthew mentioned, in order for such a small part of the global economy as P.E.I. to become competitive and remain competitive.

I'll just touch on a few points. I'll be all over the map, but these points all deal with the same thing.

Newer, higher-skilled jobs need to be established in both the private and public sectors of agriculture, addressing new issues such as food safety, integrated pest management, and heightened levels of information sharing.

The power of information is really starting to show itself in all industries. If farmers can share their information with each other—their non-competitive information—it will really help them to create efficiencies. As well, by establishing these skilled positions, in food safety and what not, you take the weight off farmers' shoulders. They don't necessarily need to worry about the little things like that; they can farm and produce a crop to the best of their ability.

As I said, not that long ago the thought of farmers sharing any information about their operations was never even whispered. The landscape has changed now, and farmers see the need more than ever to work together, not only through existing boards and organizations for marketing and purchasing, but also at the production level. The power of information is truly beginning to show its enormous value in creating efficiencies.

I also feel that a bar needs to be set for existing operations to measure themselves against. A local industry competing in a global market must ensure that it has extracted total value from its operations. Operations repeatedly failing to live up to such standards should be considered non-viable and be made to change.

Also, the existing barriers to entry into the industry for the younger generation must be eliminated through working with the current generation to determine mutually beneficial methods of transferring these high capital farming operations without undue risk to the new generation.

Only when we emancipate the farmer from the added burdens of a global economy will he or she be free to fully transition critical skills and knowledge to a generation empowered to do better.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Holmes, for up to seven minutes.

[Allan Holmes, As an Individual]

Thank you for inviting me here today.

My story is much like Mathieu Gallant's. I was raised on a family farm and have always been very passionate about it. I've exhibited cattle through 4-H for many years and I looked at a lot of the people in that as the more progressive, interested individuals. All of them have chosen other occupations as their livelihood. I was the only one who entered into farming as a full-time occupation. However, recently I have had to take off-farm employment.

Many of the challenges that face young farmers like myself are the same as for our older counterparts--things like environmental regulation, getting access to capital money, and just basically getting a business that has to make enough at the end of the day to pay for your livelihood.

One thing that is particularly important to the beef industry here on the island, I think--if we're going to have one--is maintaining a beef plant in Albany. Without the funding of federal, provincial, as well as the beef producers of the island all working together, we are bound to slip away and no longer exist.

I ask you to be patient with the plant. I know they have good management in place now. Continue your funding if it should be asked or be called upon again to give them a little more time to work out all of their problems.

Another thing that would make it a little easier for young farmers entering into the industry.... A lot of young farmers are short on money, so when they do decide to take on beneficial management practices, such as silos and bunker storage facilities, offer them a chance to contribute to the wages and things that they do. If they do the work themselves, give them credit for doing it on a decent and fair basis.

Another challenge that a lot of us face, and I know it's a hard one to address, is the value of the land. Where I live it's just outside of the city of Charlottetown. It's pretty hard for me to compete against the teacher and the accountant who want to buy ten acres to put a horse on. I know that's hard for you to influence, but just realize that is a problem we are facing.

That basically sums up my presentation in a nutshell.

[The Chair, Conservative, Larry Miller]

Thank you very much, Allan.

I live in an area where the second-largest industry is tourism, and everybody from the city wants to come there and own a cottage. So I know what you're talking about in competing land prices.

We'll now move to the Prince Edward Island Cattle Producers. We have Brian Morrison and Rinnie Bradley here. You have five to seven minutes, please.

[Brian Morrison, Director, Prince Edward Island Cattle Producers]

Good morning, ladies and gentlemen.

I'll do a quick introduction here. Our executive director, Rinnie Bradley, will read our presentation.

I'd like to welcome you all to P.E.I.. Thank you for taking the time to come to visit us. We do realize that everyone has busy seasons. We're just happy that you're here to hear our comments.

[Rinnie Bradley, Executive Director, Prince Edward Island Cattle Producers]

Good morning, and thank you again for having us here.

I just want to talk a bit about the business risk management program. AgriStability is the first one I'd like to touch on.

A decline in the number of producers participating in AgriStability shows dissatisfaction with the program. In P.E.I., the AgriStability program has declined by over 30% in participation since 2003. There are two significant factors contributing to this decline. First, many beef producers are not able to meet the requirements of the positive reference margins. Second, many find--

[The Chair, Conservative, Larry Miller]

Rinnie, would you mind slowing down just a hair for the translators?

Thank you.

[Rinnie Bradley]

Second, many find the application somewhat cumbersome. We are concerned, because we believe producers are leaving significant federal and provincial dollars on the table as a result of these challenges.

Some solutions may be possible. Production margins, which are used to calculate the reference margins, include only eligible income minus eligible expenses. The list of eligible income and expenses could be adjusted to results in a more positive reference margin.

To qualify for AgriStability, the reference margins of the historical past five years are used to calculate the Olympic average and viability test. The Olympic average could be dropped and only the best three years and the historical past five years could be used to do the calculations.

The viability test could be dropped or altered. The CCA is currently lobbying to have the total positive reference margin requirement reduced to one out of three, while the hog industry is looking to have this requirement removed altogether, therefore allowing negative reference margins to still qualify for AgriStability coverage.

Efforts should be made to simplify the application and the supplemental forms and provide training to producers so they can adequately and confidently fill them out without incurring the high cost of professional accounting services. These extra costs are often the determining factor for many in deciding if they will participate in AgriStability.

AgriInvest: Since this program's inception, producers have been able to withdraw their money with no requirements from the federal government as to how it was to be spent. We encourage the federal government to refrain from placing restrictions on the spending of these funds until the industry improves.

AgriInsurance: We have been working with the AgriInsurance office in Charlottetown to develop a livestock insurance program for beef producers. Other provinces are also doing this, and we encourage the federal government to work with industry developing a program that provides equal coverage to producers while taking into account the different needs of the various regions of the country.

AgriRecovery: We just know of the potato industry triggering funds through AgriRecovery. But we feel unclear guidelines and unnecessary delays are experienced with this program. Some work needs to be done to clarify that and to make the next step clear once the payment has been triggered.

Then there's the cash advance program. It's been said in P.E.I. that if there was not a cash advance program, we wouldn't have a beef industry. Currently, some of our producers took out advances under severe economic hardship under the cash advance program in 2008, facing repayment of those in September. We are asking once again that the federal government defer those payments for another year until the fall of 2011.

There has been some discussion about the inventories of the cattle used as collateral for the severe economic advances, and those inventories could be released to allow the producer to take additional cash advances. However, we realize this would be a guarantee on the government's part.

I want to talk a bit about the Canada-P.E.I. agriculture stewardship program, in particular. It's available to producers in P.E.I. to address a number of environmental concerns, and they're categorized as best management practices, or BMP. For our industry, such things as manure storages, silage bunkers, fuel containment, and run-off control are areas where producers access the money. Uptake is low because of the minimal funding available. The program only covers a certain percentage of the project. However, these BMPs most beneficial to beef producers are capped between 15% and 30%.

The per capita applicant is only eligible for $50,000. One category, product and waste management, for example, includes fuel containment, improved on-farm silage storage, and others, and they are still only eligible for one project of $15,000 for four years. So that limits them to address only one area of environmental concern.

With regard to the cost of production, we face a decline in the ability to access potato waste from Cavendish Farms. That product has been diverted to a biodigester, so now our producers are faced with coming up with new feed sources.

We think that government could work with us to provide low-interest loans to producers to purchase new equipment to allow them to plant, harvest, and store these new varieties.

Loans could also be made available to do some critical repairs to existing operations and to replace barns and feed storages that in some cases are basically falling down, so there is need for capital investment there.

Quickly, we know a national price and basis insurance program is being talked about in other provinces. We're not exactly sure how this will affect us because we're not a very heavily exporting province, but we do want to make sure it's a good program if it is put in place across the country.

Brian is going to mention the Atlantic Beef Products plant, then sum it up.

[Brian Morrison]

The Atlantic Beef Products plant in Borden, after two or three years of negotiations, finally obtained their ACOA money, so there is some new equipment and some value-added equipment going in there. They'll be getting into the grind of business here in the next month or so, so that should improve returns for the plant, and then hopefully get back to farmers.

Another thing is the SRMs. Currently at the plant in Borden, livestock producers are deducted 20¢ a pound for this cost. In Ontario, I hear it's as high as 40¢ a pound. We've had a dealer on P.E.I. start shipping to the U.S. with no deductions for cattle aged over 30 months. So there are unfair requirements in Canada in our cattle business and we're leaving money on the table. Personally, I had three OTMs last week that cost me nearly $700, and it's all with CFIA red tape, basically. If those were being shipped to the U.S., I wouldn't have had any deductions on them.

In conclusion, there is no silver bullet to address the problems in the beef industry on P.E.I. The reality is that we have to keep trying to do little things and bring things around. The government needs to continue to consult with the primary industries to ensure the supplies of primary products, because we've gone from 700 producers in P.E.I. to under 400 within two years. If they continue to decline, we won't have the infrastructure to keep our plant going. This has already happened to the hog industry.

Hopefully, we can work together to look after some of this red tape, we'll call it, to get some more profitability to the farm gate.

[The Chair, Conservative, Larry Miller]

Thanks, Brian.

We'll now move into questioning. Mr. Eyking, five minutes.