Agriculture Committee on Nov. 30th, 2010

[Ernie Mutch]

That's the real concern we have. Ten months is not a reasonable timeframe to pay your money back. You commented that you were concerned about the other taxpayers in Canada, about subsidizing agriculture, but when you think about it, I think the government is going to lose more under this present arrangement, what they're saying they're going to do—a ten-month prepayment period.

[Randy Hoback, Conservative, Prince Albert, SK]

So what would you suggest? Two years? Should it be termed over five years? Should it be rolled into a straight equity loan?

[Ernie Mutch]

I would think a minimum of five years.

[Randy Hoback, Conservative, Prince Albert, SK]

If that were the case, how would you secure that? How would we as the government secure that asset? If the bank isn't willing to give up any priority...I'm assuming that in a situation like this you're going to see the bank put priority on the land, on the tractor, and on whatever machinery, and now you've given away priority to the bank on the actual asset, the livestock itself. How does the government secure priority? How does the government ensure it gets repaid? Again, being responsible to taxpayers--if I'm going to lend you money, I have to see the ability of repayment down the road. How do I see that?

[Ernie Mutch]

Under the present program, the only security the program has is on your livestock. That's the only security the government has.

[Randy Hoback, Conservative, Prince Albert, SK]

As you sell the livestock, you pay it back.

[Ernie Mutch]

You pay it back.

[Randy Hoback, Conservative, Prince Albert, SK]

You just need more time to sell more livestock and more calves to pay it back?

[Ernie Mutch]

If the producer has enough livestock, he can roll it over for another loan. If he only has a portion of the livestock he had in 2008, he can roll some of it over, but he's required to pay it back.

[Randy Hoback, Conservative, Prince Albert, SK]

If he only has a portion, that means he sold some of the existing livestock. He should have been paying back either the existing advance he took out or the unsecured advance.

[Ernie Mutch]

He should have been, just because of the industry. When you're producing to lower the cost to production, it's pretty difficult to pay everything back.

[Randy Hoback, Conservative, Prince Albert, SK]

They're out of scope with the program, and that's why it's going to affect them. It's dominoes when you get into that situation; it's not a good situation for that farmer, but it also tells me the cashflow on that farm is going to be very tough, no matter what you do.

[Ernie Mutch]

That's why we're saying 10 months is not realistic. If it's over a longer period of time, the program has a better chance of recouping this money than in such a short timeframe.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. What would you say would be a fair timeframe?

[Ernie Mutch]

I would think five years, or tie it to your profitability in the commodity or whatever.

[Randy Hoback, Conservative, Prince Albert, SK]

So say five years--let's use that as a number. If we come here five years in the future and you're back here to say you still can't pay it back, what should we do then?

[Ernie Mutch]

I don't know. You can only go so long.

[Randy Hoback, Conservative, Prince Albert, SK]

You can see the dilemma we face here. It's hard. I don't want to sound mean or cruel, but that's the dilemma we always face as legislators. Sooner or later we have to tell somebody something we don't want to tell them, that it's time to change.

[Ernie Mutch]

Nothing has changed in the industry since that program was announced--severe economic hardship--in 2008. Actually, it's probably gotten worse since then.

[Randy Hoback, Conservative, Prince Albert, SK]

I talked to farmers from Alberta who were in the office this week. They were saying things are looking good. They're actually feeling very confident about the industry. So again, one part of Canada is saying it's good and the other part is saying it's bad.

[Ernie Mutch]

They're very fortunate in Alberta that they have a government that has deep pockets.

[Randy Hoback, Conservative, Prince Albert, SK]

Then there's the other issue of provincial governments providing subsidies.

[Ernie Mutch]

Yes, exactly. That comes into play big time.

[Randy Hoback, Conservative, Prince Albert, SK]

Brian, you talked a little bit about a disaster, a tornado that came through on a neighbour's operation. You stepped through the process. I understand the process is that the province basically is the first person to the door. It's a per capita formula they use. Once it hits a certain dollar value based on the per capita number, the feds kick in.

In that situation, how is the farmer doing now? How does it look for him right now?

[Brian Gilroy]

Generally speaking, right from the beginning people were told that all the assistance will not make them whole again, but it will help them get back on their feet. That's what it has done. It's helped people replant, where possible. It's helped them move on, and it has prevented them from basically going out of business. That's the success part of that story.