Sure. I'll try to make up for the time he went over and make mine really brief.
First of all, I'd like to thank you for the opportunity to speak to you today. The Canadian sheep industry definitely appreciates the opportunity to be here to present our thoughts on business risk management.
The Canadian Sheep Federation represents all 13,000 producers in Canada. We have nine provincial members and two associate members.
The national sheep producer organizations—the Canadian Sheep Federation, the Canadian Sheep Breeders' Association, and the Canadian Co-operative Wool Growers—have all accessed the programs provided to the agricultural industry through the APF programs. We've used these programs to address some of the risks that sheep producers face and to increase our industry's viability and sustainability.
In particular, these programs were beneficial to us as we navigated our way through the May 2003 border closure that had a devastating effect on our industry. Our imports had been set to increase in 2003 by 71% over our 2002 exports. To have that border closed to the U.S. and subsequently to Mexico really devastated our purebred sector in particular.
While we have benefited from the programs that were available to us, we do have concerns over their effectiveness and their ability to meet the immediate needs of producers.
Just by way of some overall comments, any effective business risk management program has to be easy to understand and simple to use in order to facilitate producers' access to the program and the speed with which assistance can be provided.
In addition, the programs must also be flexible not only on a national basis for each commodity but also on a regional basis. For example, the OIE is moving away from zoning countries as free of a disease and moving towards declaring regions as free of a disease. We may see an increase in the need to have programs available for certain areas of Canada, not necessarily to the country as a whole. So any kind of program that's implemented needs to be adaptable and flexible, but it also needs to minimize any kind of interprovincial competition.
The sheep industry recognizes the importance these programs have in mitigating risks to producer organizations that rely largely on exports. We also, however, have a need for the programs to focus on our ability to expand our production and meet our domestic needs. Currently we fill only 50% of the demand for lamb in the country.
In order for programs to be effective at supporting both international and domestic needs, they have to be comprehensive in nature, encompassing all aspects of the value chain.
I'll now just make a few other more specific comments.
In terms of farm income, the sheep industry would like to see a long-term strategy dedicated to addressing the declining farm incomes. Despite government intervention during crises such as the BSE border closure, incomes dropped. We feel this can be partially attributed to the fact that assistance programs do not react readily enough to producer needs and they don't generally provide business interruption assistance. So producers are often left accumulating debt while awaiting assistance.
In terms of business interruption assistance, there can be issues such as loss in production, cost of feeding animals that don't have a market, welfare slaughter, carcass disposal, and cleanup.
We'd also like to see expanding agricultural lending capabilities for organizations such as FCC, for production issues and programs for producers, which can result in positive changes to farm incomes. Additional benefits of these would be an increase in the understanding and transparency of business risk management programs.
In terms of production insurance, as does the pork industry, we do appreciate the fact that this issue is being expanded to incorporate livestock. However, as it's currently proposed, it doesn't adequately address the needs of producers.
The current model covers only mortality caused by insurable disease, mandatory slaughters, and preventive elimination ordered by a vet. It does not cover losses due to accidents, weather, production, or predation, which is a large reason we're not having as much flock expansion as we'd like.
The production insurance programs need to be developed in full partnership with the commodity organizations to ensure they're meeting the commodities' specific needs.
In regard to CAIS, this program was ineffective for many sheep producers and was complex in nature. It was ineffective primarily because the inventory date was set to be at a time of year when the majority of market lambs had already been sold.
In addition, some producers were asked to pay back the money as their margin values were not adequate in a downturning market. In short, producers invested time, deposits, fees, and accounting costs into a program that they felt was unpredictable and slow and to which they are now indebted.
To wrap up that brief presentation, I'd like to express our thanks for the March 9 announcement of the $1 billion investment in agriculture to improve farmer incomes. We welcome any and all support to agriculture. However, we do realize that the funding will not be available until after the budget is approved and that further details are required. And again, I would like to thank you for the opportunity to give this presentation today.