Agriculture Committee on March 22nd, 2007

[Travis Toews]

Well, that's a good question, and becoming a participant up the value chain is an option for producers for risk mitigation. Obviously, there are some challenges, depending on what type of value chain they're trying to establish and what type of process they're trying to get into. There can be capital challenges and investment challenges.

In the cattle industry we are seeing an increase in supply chains—n targeted beef production, in branded beef production—where producers basically control that product right into the retail store. Typically, that type of product is differentiated in one way, shape, or form. It is an opportunity for producers, a niche opportunity, and it's a sector of our industry that we will see expansion in.

There are challenges, however, in receiving the labelling approvals. I know of one value chain in particular that had a very difficult time working with CFIA on that issue, and they were set back time and time again regarding the labelling requirement. To echo Clare's and Stephen's comments, while the CFIA has a duty to protect and provide regulatory protection of the food industry in Canada, it has to recognize that its decisions and attitudes impact trade and competitiveness. And we need that attitude from CFIA.

[Jennifer Fleming]

I would just echo what Travis has said. In the sheep industry, especially in Ontario, you are seeing more producers becoming more active in the value chain. We have some issues around supply and getting a consistent supply of product. We also have issues around kill capacity. We're losing kill capacity. A lot of that has to do with waste disposal issues.

So we have some roadblocks that we definitely need to overcome in the value chain in order to meet the growing demand for lamb in the country, for sure.

[Clare Schlegel]

It's one of the solutions, but by definition, Canada exports over 50% of its beef and 50% of its pork, and that's going to be a high-quality commodity that competes around the world. So it won't take care of our business risk management issues completely.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Devolin.

Mr. Hubbard, five minutes please.

[Charles Hubbard, Liberal, Miramichi, NB]

Thank you, Mr. Chair.

I guess all of us argue over how much money is being put into agriculture. Somebody mentioned $1 billion last week, $3 billion, and all of this. Does it really get down to the good that we think it should do? In terms of each of your sectors, how do you benefit from the money that somebody puts on the table? Does it really do what it should do? We hear so much about working with government, in terms of the farmers of this country. There's so darned much red tape that some just get so frustrated, they throw it out. Others have to hire all types of accountants to try to meet the demands of our public servants. Are we really doing what we should do?

Statistics Canada is involved in a big way, too. They're doing all these surveys. Every month you get something. They're checking to see how many calves you have, or how many steers are going to have calves next spring, Larry—some of them ask. But do you have good access? Does the government give you the infrastructure you need to make good decisions?

The hog industry is one that's really so volatile, because you can get into a mess so quickly, and such a mess that it's difficult to get out of. I read the Nova Scotia paper about a month ago, and their people were after the minister for more and more money. You get a big barn full of hogs, and they all demand grain, and the farmers have no money. How do you get in? How do you get out?

Stephen was all ready to give some reaction to those comments, but what could we do better? Because the minister is saying to the public—and he announces all these things. Does it get to where it should go in order to make your industry more viable?

[Stephen Moffett]

Thanks, Charlie for asking that. I can't wait to respond.

[Clare Schlegel]

And I wanted to respond.

[Stephen Moffett]

First of all, I certainly echo Travis' comment. We don't want to have programs that influence producers' decision-making. We talk about all the things we can do in the supply chain. Can we go after niche markets? Can we specialize, or should we diversify? There's no question that we think, and I expect you people also think, that the producers should be the ones to make those decisions.

But whatever the producers decide to do, one of the biggest factors in our industry now is that we're tremendously capital intensive. We need money to operate, and you know what that means. We borrow it from the bank or from a farm credit corporation, or from wherever else we can borrow it. There's no question that when I sit down and talk to my banker, it has an impact. I need my banker to have confidence in me. If I say, “Jonathan, I need this much money to build a barn and fill it full of pigs,” he needs to be confident that I'm going to pay him back. He knows that agriculture is one of the higher-risk businesses that he could lend to. Why would he lend to farmers? There are all kinds of other people to lend to. The fact that I have a good business plan and I have a good place to sell my pigs, that it looks like I can probably pay him back and that I also have a good risk management program that I can rely on makes him a little bit more confident, and he'll lend me that money. Otherwise, I just couldn't do the things I do.

So to answer your question, there's no question that the risk management programs we have do help. We're all farmers here and we all hopefully have collected from these programs in the past. There's no question that they help.

I've often thought that if I had gone into some other form of business and worked as hard as I've worked in agriculture, I probably would have been a little bit better off. We farm because we love to farm, but we need to have that security, we need to have that backdrop. Obviously, the more money that is in these programs, the better. That's a very general statement, but we know we have to be very careful with these programs.

The answer to your question also is that it's very easy for the money to go in the wrong direction, you're right. We need to be very careful about how they're designed.

I'm going on too long, but yes, the answer to your question is they do help.

[The Chair, Conservative, James Bezan]

Does anyone else want to comment on that?

Travis.

[Travis Toews]

That is a good question. We would contend that it is usually in the public's best interest to underpin a sector, an agriculture sector, in times of short-term disaster. Our industry, the cattle industry, has been a recipient of some of that support during our recent disaster, and there's no doubt that the infrastructure within our industry would not have remained as intact as it has except for some assistance from governments during that time.

So I do see a role when it comes to a disaster program framework and potential funding to fall out of that.

I also see a danger in ongoing support of a sector, regardless of which agriculture sector it may be, to prop up a sector or producers that really aren't viable. That tends to create uncompetitive participants within the industry, and as they become less competitive, the cry for more will just become louder.

So we see a role from a disaster standpoint and a much lesser role as far as ongoing support is concerned.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Hubbard.

I want to give you guys a bit of a homework assignment. We're almost out of time here, but the one thing we heard today in your presentations and in some of the discussions is we're talking about business risk management. We heard from Canadian Pork that they like margin-based programs. We heard from all of you that you want trade-neutral programs and a whole farm approach, if possible.

We never heard about exactly how we do that. How do we structure this NISA program? We aren't hearing it from CCA or from the Canadian Sheep Federation. What is the ideal program? We're talking about companion programs, and I believe in the past that we've had companion programs that have been calculated in trade injury, especially with the United States. The preliminary duties they charged against us during the nineties in cattle and hogs included some of those provincial companion programs.

Some advice to the committee here, in writing, on how to move ahead with the whole business risk management programming would be very useful for us. So I do ask that you do that as homework and submit that back to the committee.

With that, we're going to suspend for a couple of minutes. I ask that the room be cleared. We will be going in camera to quickly do some committee business before the bells ring.

[Proceedings continue in camera]