Ladies and gentlemen, we thank the members of the Standing Committee on Agriculture and Agri-food for receiving us.
Let us speak of the role of the Fédération des producteurs de pommes de terre du Québec. The Fédération des producteurs de pommes de terre du Québec (FPPTQ), an affiliate of the Union des producteurs agricoles (UPA), represents Quebec's 392 potato producers. Producers are grouped into four categories, according to their principal market, notably the fresh or table market, pre-peeled (French fry) processing, potato chip processing and seed potatoes.
The role of the Fédération is to promote potatoes, to defend members' interests and to develop the production. In addition, as a producers' marketing board, the Fédération manages and administers the Quebec potato producers' Joint Plan, by virtue of the powers conferred by the Act respecting the marketing of agricultural, food and fish products.
What are the major issues?
The discovery of golden nematodes in the municipality of Saint-Amable, along with the subsequent creation of a regulated area and a listing of conditions for the movement of regulated products, have caused an increase in production costs not covered by existing programs and the loss (or even the absence) of income for 20 farms in the municipality, on an area of approximately 1,250 hectares under potato production.
Although all the parties involved agree that these farm businesses should be compensated through a disaster assistance program, which would be better adapted and separate from the income stabilization program, no one is able to respond rapidly and immediately, within the framework of existing programs, to the urgent cash-flow problem.
What are the facts?
The golden nematode is a quarantine pest requiring compulsory disclosure under the Plant Protection Act. The golden nematode is of no risk to the safety and wholesomeness of potatoes but its presence can cause yield losses in the order of 80%. Furthermore, it can remain dormant in the soil for many years while waiting for a host plant such as potatoes, tomatoes or eggplant in order to reproduce.
The efforts of the Canadian Food Inspection Agency (CFIA) resulted in the rapid designation of a regulated area and the re-opening of the borders to international trade. Officially, trade resumed this morning. In fact, we have been informed that the first delivery truck arrived in the United States this morning. As a result of its work, losses to producers and exporters located outside the regulated area were limited.
In Saint-Amable, producers' efforts and cooperation facilitated the task of the CFIA agents. In total, 20 farms are affected by the restrictions. However, these farms specializing in potato production will no longer be able to grow potatoes in the regulated area without authorization of the CFIA.
There is an urgent need for short-term cash flow.
For some farms, their last potato sales date back to March 2006. Since then, they planted their crops in the spring managed them over the whole summer. Some of the affected producers are young farmers dealing with high debt loads. For all of these farmers, the discovery of the golden nematode constitutes, in itself, a cause of great stress.
Because of pressures by suppliers and financial institutions, the refusal of buyers to take their products and the strain of providing for their basic needs, the situation has become intolerable for the affected families. The region's agricultural producers have grouped together to request immediate assistance to at least pay bills that are over 90 days overdue and to cover the cost of groceries.
None of the existing programs can provide immediate aid. Some producers are in a state of despair. Industry representatives fear the worst and are requesting immediate support before irreversible actions are taken. in this regard, a psychologist is meeting regularly with the producers to give moral support and to counsel them through this crisis.
For the moment, representatives of different levels of government admit their helplessness to support these producers through the existing programs such as the CAlS program, the advance payment program and the various financing programs that require loan guarantees.
The producers of the regulated area have grouped together under the name AMA-Terre Inc. The group is calling for immediate assistance white waiting for a disaster assistance program to be put into place; assistance which it evaluates at $50,000 for farms with less than 60 hectares (150 acres) and $75,000 for the others.
As an example, a farm with 60 hectares of potatoes would generate sales in the order of $250,000 to $450,000. This advance should suffice as long as an ad hoc program is implemented within one month.
If more time is required to put a program in place, the advance should be adjusted accordingly, to include direct costs related to the production, which are about $4,000 per hectare. On the average, this amount represents approximately $240,000 per farm, as shown in the table on the following page.
As the table shows, total direct costs amount to $3,991 a hectare. This represents the total production costs. For a 60-hectare farm, this represents an average total cost of $239,000, almost $240,000. It should not be forgotten that most of these farms did not make any sales in spring 2006.
With regard to the 2006 crop, as a first step, the Fédération, the UPA, Agriculture and Agri-food Canada (AAC),the ministère de l'Agriculture, des Pêcheries et de l'Alimentation du Québec (MAPAQ), the CFIA, the Financière agricole du Québec and other producer and distributor associations have all committed to solve the 2006 dilemma.
Over the years, potato producers have become specialized into four different market categories and produce varieties that correspond to industry needs. Using the powers of the Joint Plan, the Fédération, along with committees for each category, have negotiated marketing agreements with the Association des emballeurs de pommes de terre, the Association des transformateurs de légumes frais ( (ATLF) and with the chip processors. The ATLF agreement, in particular, makes provisions for supplying a minimum of 60% of the processing plants' needs, the balance being left for speculation on the open market.
Over and above the seed category, which represents about 9% of Quebec's potato production area, Table 2 shows details of the various potato market categories. Potatoes for in-store sales represent 53% of the market, potato chips account for 20% and pre-peeled account for 18%, while seed crops account for 9%. This is shown in Table 2, in addition to the market and varieties.
In addition, the Canadian Food Inspection Agency (CFIA) and the American Department of Agriculture (USDA) have come to an agreement on a protocol to reduce the commercial repercussions of the potato cyst nematode discovery to a minimum. This protocol provides for the creation of regulated areas and the setting of conditions for domestic and international movement of regulated products coming from these areas.
According to this agreement, only potatoes coming from a field declared “uncontaminated" from nematodes may be marketed to the fresh or table market. Potatoes coming from contaminated fields must be processed in approved facilities. Presently, analyses have confirmed the presence of nematodes in most parts of the fields, notably on 304 hectares out of a total of 404 hectares.
The potato farms in the municipality of Saint-Amable are mainly specialized in the fresh (table) market, with 62% of their potato production area devoted to this market, as shown in Table 3.
The application of this agreement would cause a significant increase in potato supply to the processing market with varieties that do not correspond to the strict requirements for cooking and size, inevitably resulting in a drastic price reduction, which would compromise the profit-earning capacity of Canadian farms specialized in this market sector.
Consequently, the advisory committee created for the management of this crisis and chaired by MAPAQ unanimously recommends the destruction of the crop in the field and in storage and to compensate the farmers at fair market value.
Regarding the limits of existing programs and the need for an ad hoc program, the CFIA offers financial compensation to producers where their herd or flock are condemned and ordered destroyed under the Health of Animals Act.
As pertains to the Plant Protection Act, although it does hot stipulate a specific amount to cover crop losses natural disasters such as the golden nematode, Article 39 of this Act allows the Minister to issue payments to cover losses suffered by producers in the designated zone. The Minister has already passed regulations authorizing compensation to agricultural producers who are faced with quarantine pests in Canada.
Consequently, the Fédération, the UPA and the other producers' associations are asking for the implementation, in cooperation with the affected groups, of an ad hoc program that will compensate the farms, while considering the following criteria: payment to cover the extra work required by the farm labour force to clean and disinfect machinery, equipment and vehicles within the regulated area, payment of 75% of the purchase price of equipment required to comply with conditions for the movement of regulated products, and compensation for the loss of value of assets, of production losses and loss of markets.
In conclusion, the Hon. Chuck Strahl (Minister of Agriculture and Agri-Food) has enacted a Ministerial Order under the Plant Protection Act. This Order established a regulated area of approximately 4,500 hectares, of which about 1,250 hectares are in potatoes, as well as restrictions and prohibitions on the movement of certain items, in order to combat the golden nematode infection in Quebec.
Work done over the 2007 winter will permit the evaluation of medium and long-term losses for farms located inside the regulated area and the identification of possible solutions on a case-by-case basis for each of them.
We ask that the calculation of losses be conducted by an external agency, as was the case with Quebec tobacco producers. In the very short term, the industry is urging the minister to order the destruction of the crops in the field and in storage in the regulated area, so as not to upset markets for Canadian producers specialized in processed potato production, to rectify prices above the cost of production and to ensure that affected producers, who are unable to find buyers for their produce, receive compensation.
Finally, and most urgently, the minister must intervene to send immediate cash advances to producers who are short of liquid assets. This advance should be adjusted according to the size of the farm operation and according to the anticipated timeframe for implementing an ad hoc program.
