Agriculture Committee on Dec. 15th, 2011

[Humphrey Banack]

As far as natural disasters are concerned, like I said, it's very hard to buy insurance on anything for natural disasters. That's where I guess we all have to manage our risk. It's very important for us to have.

Risk management is different for me as a 30-year producer of grains and oilseeds than it is for the guy who has been in it for five years. Risk management is an entirely different business for me. I have some capital to manage that risk, but for the guy who's been out there for five years and is carrying a huge amount of mortgages and stuff, he has to be able to manage that stuff. That's where those bottom-line programs come in for him. They're very important to him.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Lemieux for five minutes.

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

Thanks, Chair.

I just want to follow up on some of this interesting discussion.

The first thing I'd like to do is to address Kevin's question of what the aim is of business risk management. Certainly, from a government perspective, I think it's to get farmers through a difficult time, but it's not meant to mask market signals.

So, what does that mean? That means that if prices of a particular commodity drop for a certain amount of time, usually for reasons beyond the control of the farmer, it's nice to have a safety net in place. However, if the market has fundamentally changed, you do not want a government program masking what the market is telling you, which is that the ground has shifted and therefore that sector must shift in order to be better acclimatized to the new reality.

That's always a juggling act, in a sense. It's always difficult to find that median. But I think we saw that a bit with the pork crisis, in that the pork sector knew that the sector was too big for reasons beyond its control. There were a number of factors, including H1N1, and the COOL legislation in the U.S. There was a program that we launched to help reduce the pork herd. The pork herd was reduced and prices are going up, so our program did not mask the market reality. I think that's always the risk.

I think the second thing, just to go back to what Travis was saying, is that everyone has a role to play in risk management. The farmer himself on the ground has a vital role to play, but so do governments. International trade plays a key role. When the marketplace is bigger for farmers, it is better for farmers. Certainly, opening external markets for farmers is a good thing, because it's just a bigger marketplace in which to sell your product.

Anyway, a few comments on that.

The other thing I wanted to comment on was this business that federal programming is meant to provide a level playing field. From the federal perspective, I think it would not be good policy for the federal government to dictate to the provinces, “You cannot have a regional program”. Certainly in my riding I hear two messages: we want a level playing field, and we want regional flexibility. It's very hard to have both. As soon as you have regional flexibility, you don't have a level playing field.

So the way it's normally handled—the way I see it, at least—is that federal programming applies equally to farmers across the country. That's where the level playing field comes in. However, the regional flexibility comes in with Alberta saying, “We're going to launch a program for this commodity because this is very important to us.” The federal government can't really shut that down. The province can spend money on what it likes. In Ontario, it's something else, and in Quebec it's something else. That's where the regional flexibility comes in.

Now I've chewed through a lot of my time, but I wanted to comment on that because I think this is an interesting discussion that helps clarify what business risk management is all about.

In past meetings—because we've had a number of meetings on business risk management—one of the things that I've been putting out there for discussion is that, just given the economic reality, there's a pie of funding that is now being made available to business risk management. It's shared by the federal government and the provinces. It is unlikely that this pie is going to grow, and so there are many suggestions to improve AgriInvest. Oh, let's improve AgriStability, while we're at it. AgriRecovery should be more responsive. But all of these things, if you were to do them all at once, grow the pie.

What I'm very interested in knowing is what your opinions are on which programs work best for farmers. If you had to move some resources from one program to another, which ones would you be looking at? I've heard positive things about AgriInvest, and more negative things about AgriStability. Not to shut down AgriStability, but are you comfortable saying that more of the resources that might be spent in AgriStability should actually move over to AgriInvest, maybe to increase the cap or to increase the amount of coverage a farmer can provide on his commodities through AgriInvest? So I'd like to know your feelings on what programs actually work, if you had to actually say, “Let's diminish one to enhance another”.

I guess I'll start with Travis.

[The Chair, Conservative, Larry Miller]

I think Mr. Ling looked like he wanted to jump in there.

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

By all means, yes.

[The Chair, Conservative, Larry Miller]

Any time, Mr. Ling, or Mr. Delaney, just jump in and we will recognize you. We certainly don't want to ignore you.

[Allan Ling]

Okay.

Thank you very much for that. It's a good question.

Of the programs that we have, I do believe you have to keep the AgriInsurance because that's your first line of defence. The AgriInvest is a sure thing. It's bankable, and it's predictable. I guess those two are the key ones. AgriStability is really good if you have a total wreck; but again, it's a slower moving line of defence. It takes a considerable amount of time before you know if you're going to get a payment or not, and it takes longer to get that. I guess you're only really finding out in a lot of cases now about 2010, so it's far behind. But it's still important to keep it there.

Do we want to give up something for something else? Probably not, but AgriRecovery is not well used, particularly in the livestock, and grain and oilseed sectors in the Atlantic region. It probably has been used in the potato sector more than anything, but not as much as in some of the rest of the country. So I think those other three are key—the insurance, the AgriStability, and the AgriInvest—and again, we would like to see the AgriInvest raised from 1.5% to 3%.

Thank you.

[The Chair, Conservative, Larry Miller]

Okay.

In just a couple of other comments, could you just mention the programs without the detail because we are out of time here.

Travis, you go ahead.

[Travis Toews]

I think we're ultimately less interested in income stability, so if there have to be trade-offs, I think moving AgriStability out of those stabilization tiers would make sense to me—again recognizing there are trade-offs.

Secondly, AgriInvest at this point in time discriminates against high volume, low margin businesses such as the cattle feeding business, and I expect the hog business too. If that program is going to be adjusted, it needs to be adjusted to provide a level playing field. Right now it discriminates between the cattle feeder who purchases feed grain as opposed to the cattle feeder who grows his feed grain. I'll throw that out as well.

[The Chair, Conservative, Larry Miller]

Mr. Banack, be quick.

[Humphrey Banack]

I guess when we discuss how much of the pie is there, we have to remember that as we add these private insurance products up top, they're all stackable against, or are going to come off, the payments from AgriStability. So remember that as we add these private things on top, they are going to reduce the AgriStability payments.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Atamanenko for five minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank all of you for being here.

Maybe I'll start with some comments that you made, Kevin. You mentioned something to the effect that we should have a discussion on income and on why we're not able to make money from the market, and on the programs and policies needed to tackle this problem, and how we can address the bigger problem. We were talking about Growing Forward 2, so I'm wondering if we should be cranking up this discussion to a higher level.

Here I'll address this to the National Farmers Union and the Canadian Federation of Agriculture primarily. Both of you have talked of a national food strategy or policy. The fact is that we are a trading nation and we need to get more markets, and we're doing that. But at the same time we may be losing control over our food supply and being able to feed ourselves.

How do we combine the two to continue trading and at the same time increase control of our food supply within a strategy? In parallel with opening up new markets, should we have local procurement policies by the federal government, for example, or provincial governments?

Could that be a way of tackling this problem, Kevin, given that you mentioned that we need to ensure more of a market for farmers than just relying strictly on trade? Maybe we'll zero in on that and maybe if you and Humphrey wouldn't mind starting off, then we'll pull in the other folks for a few comments.

[Humphrey Banack]

The Canadian Federation of Agriculture has developed a national food strategy, and part of that strategy looks at both the exported food we produce and the domestically used food. It's very hard for us to balance, even as an organization, those two sides of our food production in Canada. I believe our national food strategy looks at this. The national food strategy is meant to make policies, much as as this discussion that we're having today is about business management programs, market access, and all of these things. Let's move this beyond the five-year window we're looking at in Growing Forward 2. Let's move this to a ten-year window, let's move this further out so we have a better view of where we want to be further out. That's what the national food strategy is about. We as a country have to realize that we have both domestic and export markets to meet, and that strategy has to address both of them.

[Kevin Wipf]

We have members involved in the people's food policy project, and we very strongly believe that local control over food and a food policy that puts people first and really connects farmers with eaters is really important. I think that would solve a lot of the problem. One of the things that is coming—again, in trying to look at the big picture, because we really think that's where we should be looking—is rising fuel prices. We're moving food over great distances. We don't dispute that trade is very important, but how long are we going to be able to keep doing that and is it sustainable?

Those of us interested in food and agriculture are really going to have to think about these questions when considering how we're going to tackle this moving forward, because it's just not going to be able to keep going that way.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Ling, do you have any comments?

[Allan Ling]

No, not on this one.

I would just say that in the grain and oil seeds business, trade is very important to us.

Thank you.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thanks.

Travis.

[Michael Delaney]

I could make a comment on that.

[The Chair, Conservative, Larry Miller]

Just a second, Travis, I'll come back to you.

Mr. Delaney, go ahead.

[Michael Delaney]

I was just going to make a couple of comments.

Certainly Atlantic Canada understands that there are national principles. A lot of people have talked about them: equity and fairness across provinces and in international trade.

Just remember where we're coming from. We understand that we're affected by global trade and that growth means good economic activity for all Canadian farmers. We understand that. We're in a domestic market here. We think we have good farmers. We have good land. From a competitiveness point of view, our biggest threat is Canadian producers, not international producers. It's pretty easy to move product down here, especially when you don't have processing. I'd make that comment.

The other comment I'd try to make is on the R and D side and innovation. It's difficult when you're small to capture revenues to do good innovation. If innovation means genetic modification and things like that, and all that development is taking place in other parts of the country, then we try to make the argument that we need support to take these genes that are introduced into these crops and fit them into our farming system, which essentially has had to change since we got out of livestock.

I'd just like to put that on the table, too. We want to see that pot maintained, because part of our success is going to be based on R and D and innovation, in addition to safety nets.

[The Chair, Conservative, Larry Miller]

Okay. Thank you.

Mr. Toews, briefly.

[Travis Toews]

Thanks for that question.

Certainly we recognize that there's a growing but still very small group of consumers willing to pay more for local food products. Our point would be this: “Excellent. Let the market decide who's going to buy those products and let the industry the flourish around those large centres where farmers can provide those products”. Input costs and fuel costs will have something to say about that, but again, let the market decide that. Let's not try to outguess it ahead of time.

The one thing that we would be fundamentally opposed to is policies that would restrict trade domestically within our country and internationally. Trade ultimately optimizes the use of resources at their purest fundamental point. We need to ensure that those regions in Canada that can do something very well and efficiently are allowed to do it and to then compete across the country and across the world for that production.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Payne, you have five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

Thanks to the witnesses for appearing and also to Allan and Michael in Charlottetown for coming in today. It's important that we get your input on Growing Forward 2.

We've had some interesting comments on various aspects here. In particular, I've heard some differences of opinion in terms of caps.

First of all, I can't remember if it was Allan or Michael who talked about raising the cap to 3% on AgriInvest. And, Travis, you talked about having no caps. So I'd like to get to the differences. We've also heard from a number of other farm organizations and farmers that the cap should be increased from 1.5% to 2.5%, but I haven't heard of 3%, and I don't recall hearing zero.

Let's just start off with that. I'm not sure if it's Allan or Michael who wants to make some comments on the cap.