Agriculture Committee on Nov. 7th, 2006

[Danny Foster]

No, those numbers are strictly for the CAIS program as we know it; they do not include the inventory payment and the negative margin changes, which only came into.... Actually, let me correct myself. The 2005 program year would include the changes to negative margins, to the extent we've processed any applications that would benefit from those changes. So in terms of improving the eligibility rules for negative margins, the 2005 numbers may include some of the benefit there, but the inventory—the $900 million—is not in this. It's actually on a separate page in the document.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay. You said that the payments for 2003-04 will be out the door and received by farmers before the end of the year?

[Danny Foster]

That's the target, yes.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

That's the target?

[Danny Foster]

Yes. We're processing. There's nothing to lead us to believe that we won't meet that target. We're processing, I think the minister said in committee last week, approximately 3,000 cheques a week on the inventory. Alberta has just got under way; obviously there's a lot of money to go out in that province. They're administering it separately, but they're also on target. Ontario has had a bit of a delay, but the last time I talked to them, they said they should have 2003-04 out by the end of the year, even though they're probably starting about a month from now.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay, you anticipated my next question. I'm from Ontario and was going to ask that, because you can't control that from Ottawa, in terms of whether they do it quickly or slowly.

[Danny Foster]

They want to do it too. Keep in mind that Ontario has agreed to match the federal inventory payment on a 60-40 basis, so they want to move that money as quickly as possible, because producers in Ontario are not only getting the federal payment, but they're also getting a matching provincial payment at the same time. As of my last discussion with the officials there, they're looking at the first and second week, I guess it is, of December to have 2003 go out in a batch, or all at once, and for 2004 it will be the same process for the second week of December.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

So farmers in Ontario, if they're eligible, will be receiving two cheques in the month of December?

[Danny Foster]

Yes, or in early January.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I'm not a farmer, and I've been trying to learn this file over the last two years, but one of the complaints I've heard so many times about CAIS is that it's totally unpredictable. You fill in all the applications and send them in, and the comparison that was used is that when you do your personal income taxes, so long as you fill in all the correct information, it spits out a number on the bottom that you either owe so much or you're going to get back so much. And that's subject to some adjustment, once you send it in to Revenue Canada. But the bottom line is that you can pretty well predict.... With CAIS, unfortunately, because some of the variables are out of your own control, no matter how good a job you do or how smart an accountant you are, it is actually impossible.

I had a farmer recently tell me that in 2004 he had what he felt was a very good accountant and the accountant told him he would be getting back somewhere between $13,000 and $42,000, and it turned out he got a cheque for $8,000. So that's very frustrating.

Can you tell me whether the changes being discussed for CAIS or the new program are going to address that issue, that the concern I'm raising is being addressed? Are they going to try to come up with something that is more predictable, so that when a farmer is partway through the year...? You're even talking about interim payments, but I don't understand how you would have any idea what your interim payment is going to be if you have no way of calculating what your final payment would be.

[Danny Foster]

The simple answer for the last example you used is that it would be producers who have basically lost their whole crop. They know their revenue is zero and they know what their expenses are; they can very quickly calculate what their margin is for the current year. They know what their historical margin is and can calculate a payment.

That's a very simple example. The producer in that situation would say he has no revenue, that he knows what this number is, and he would probably be pretty close to being able to estimate what his payment is.

Predictability, bankability has been the issue with the program. A number of things we're doing will help address that.

I don't want to underestimate the impact of that inventory change, in terms of producers being able to say they are getting money when they should be getting money for a drop in price on their inventory. That's a major change.

As well, with the online calculators and all the service improvements we're making to the program to help producers and—more important—accountants actually calculate the payments, there is a lot of work going on with the administrators.

In fact, today in Calgary we have the subcommittee of the National CAIS Committee meeting to deal with another issue that really drives the predictability and bankability issue, and that's called structural change. When farms change the operation, whether it's the commodity mix or the size, we have to adjust their reference margins. That was a major challenge in predictability terms under the program. The National CAIS Committee has formed a subcommittee, and they're looking at this. We'll be coming back with recommendations on how we can better do the structure change calculations for producers so that they can have a more predictable and bankable program.

So we are making a number of changes. I met with the minister the first week, and the example you used is the example we discussed: why can't you fill in your form like income tax, put in a bottom line number of $10,000 and know that, plus or minus 10%, you are going to get that number? That's where we're going with the new margin-based program.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Devolin.

Mr. Boshcoff, you may have five minutes, please.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much.

When we talk about participation and cooperation, how many provinces and territories are in?

[Danny Foster]

All the provinces are in, and one territory, Yukon.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

The other two are not so significant in terms of this, so we have some support.

When you design your program, or when you look at adapting these features, what balancing is there through either involvement with World Trade Organization or through some of these things in this program. Are they modelled? Are they cookie-cuttered? And if so, if we were going to attempt to do that, why would we not have emulated things they do in the United States for disaster relief? I get back to that.

I'll let you answer that first, please.

[Danny Foster]

Definitely, one of the key principles in the design of the program is the trade issue, minimizing the risk of countervail for our programming, because clearly making payments just to have that clawed back—I'll use that term—by countervailing duties is not going to get us anywhere because of the size of our agricultural export industry. That continues to be one of the key principles in terms of designing new programming.

As far as disaster relief goes, and disaster programming, basically we've looked at all the disasters that have taken place in the country over the last 10 to 15 years at least, and we did the analysis of those and asked, where are the gaps with our existing programming and what do we need to do to better respond to disasters? We came up with a framework. It's a framework; it's not a program. It's not prescriptive in terms of saying that if you declare a disaster, producers are going to get $1,000 an acre. You have to design the program on a case-by-case basis so it's event specific.

The industry groups have been very supportive of this framework approach. What they've said to us is that they agree with the framework, they agree with the guidelines, they agree with the principles that we've come up with, but we're going to need to be clearer on what the process is, what actually happens--steps one, two, and three--so that we can put the disaster response in as quickly as possible. That's something we'll have to do if ministers agree next week in terms of the disaster framework.

So in terms of disaster relief, we looked at what has happened over the last number of years and asked, what would be the best possible response mechanism to those types of things?

We've certainly looked at the U.S. style of programming. There's lots of money there going to five commodities, but there are lots of downfalls on that. Do you want to be paying producers who are no longer producers? It's simply because they own the land that they're getting assistance payments. So there are those types of things, and we do look at other country models as well, on all types of programming, not just disaster relief.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

I guess my concern is that if we could see it working, when our farmers can actually see across the border that it's working, clearly it wouldn't be countervailable in contravention of any international trade treaty, and you can see how they feel hard done by in terms of our response. Is that the type of thing you will be bringing to the agricultural ministers, the fact that these things do exist and they seem to work in other jurisdictions?

I've been very frustrated by this, even trying to get answers and responses, especially from the minister. He has put a wall up, actually.

[Danny Foster]

Certainly in terms of the minister's direction coming out of, first, Harrison Hot Springs, and then again St. John's, when we created these task teams, both on the CAIS program and production insurance enhancements, we were looking at models from all over the world and homegrown models in terms of program options, whether it's income stabilization or production insurance. Program options within the context of key principles, for example, minimize the risk of countervail.

I think it's fair to say that the producers--there were two government officials, but there were a lot more producer members on these task teams--basically said no, this is the way we think you need to go to address the various objectives, whether it's income stabilization, or production insurance, or creating a new disaster relief program.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Boshcoff.

Mr. Bellavance, I have one minute left for you. Do you have a final point?

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

It would take more than an hour to raise all the problems associated with CAIS, but in one minute, I can tell you that the delays are over and above the other problems raised by my colleagues.

In response to Mr. Thibault, you referred to the golden nematode again, saying that potato producers could access 75% of the financial assistance they are looking for.

Is this correct?

[Danny Foster]

Producers in the CAIS program are eligible for up to 75% of their estimated payment on their estimated loss for 2006, and La Financière agricole du Québec is prepared to sit down with those producers and work on the numbers to provide that assistance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Do I have any time left?

[The Chair, Conservative, Gerry Ritz]

Thank you.

Thank you, Mr. Lloyd and Mr. Foster, for your presentation before us here today. I'm sure we'll have you back again in the near future.

Gentlemen, you have a motion before you. I need a motion from the floor to pay some of the witnesses, the roughly 20 of them who have appeared before us on the Canadian Wheat Board issue. Could I have a motion from the floor to pay that bill?

[Paul Steckle, Liberal, Huron—Bruce, ON]

I so move.

[The Chair, Conservative, Gerry Ritz]

Mr. Steckle, thank you.

(Motion agreed to)

Thank you.

This meeting stands adjourned.