Agriculture Committee on March 22nd, 2007

[Clare Schlegel]

I think there are some pretty simple suggestions. I would have two for you, very simple ones, and maybe we'd want to look more closely at those.

In Canada, we have a cost-recovery program. CFIA is trying to recover cost fees. Our meat packing competitors in the United States are not exposed to that. We think there is $20 million to $30 million on the table there. We should probably do more work to see exactly what those are. So we're in a cost-recovery mode on the north side of the border and they're not on the south, and that clearly wouldn't have a trade impact.

The other is a general comment, but we think CFIA needs to be in favour of Canadian business. We deeply appreciate the work that CFIA does for us, but we could cite a few different examples where it feels like they've been restricting trade and putting up barriers to helping us access world markets, instead of working on our behalf.

[Wayne Easter, Liberal, Malpeque, PE]

Thanks, Clare. It's the same thing in the potato industry, for instance, with cost recovery. It costs more to inspect a load of potatoes now, which our competitors don't have to pay, than it does to transport them. You pull three bags off the truck and it costs you about $200, and more if you're paying overtime. So that is an area.

Canada is a big country. There are different regions and considerably different diversity within the regions, so I think it's hard to have a blanket program under business risk management. What's your view on companion programs attached to business risk management in one form or another?

There's some opposition among the provinces because they think it will cost them money, but there is a lot of diversity out there and there may be the need. What's your view on companion programs?

[Stephen Moffett]

We would not be opposed to companion programs. The biggest problem with companion programs, from our point of view, is that they tend to vary from province to province. The biggest issue, of course, is that wealthy provinces are better able to support their producers than a less wealthy province.

In the days when there was federal money that went to provinces, which they could use to develop companion programs, that sometimes was very, very helpful, because you're right, they could be targeted to that particular province and the situation in that particular region. But from our point of view, companion programs or provincial programs can be very much of a risk because they are in fact different from one province to the other. As you know, our biggest thrust normally is that programs be similar across the country and generally available.

So that's the issue. The issue is very much a trade issue and very much, from province to province, a fairness issue, an equity issue.

[Travis Toews]

I would really echo Stephen's comments. I think one danger as well with companion programs or provincial programs is that cumulatively they can increase our countervail risk. Depending on how the programs are designed—and at times there have been provincial programs that have not been designed well, from the standpoint of trade vulnerability; consequently, a provincial program can actually put a national industry at risk.

That is one concern we have with provincial companion programs, recognizing that at times they may seem to be the best fit of the day, but we do have a concern about trade in those types of programs.

[The Chair, Conservative, James Bezan]

Madame Fleming, do you have anything to say?

[Jennifer Fleming]

I have nothing further to add.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Easter.

Mr. Miller, you have five minutes, please.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thanks, Mr. Chairman, and thanks to all of you for being here today.

I want to touch on a couple of things that have been discussed a little bit, but I would like a little more detail.

First of all, Mr. Toews, being a beef farmer, I know back with the BSE, when we were short of slaughter capacity—which Mr. Steckle touched on—I made the comment at the time that if we want the government to help increase slaughter capacity, which of course I was all in favour of, and I made the statement many times here at the committee and at home, we as producers have to stay loyal. Of course, I knew what would happen the minute higher prices were offered: we'd go to it. That's human nature. It's in all of us.

The industry has a responsibility here, and government as well, but it goes against my grain as a taxpayer, whether I'm a beef farmer or not, to keep going back to the well, to the government, to say, basically, every time we get in trouble, “Let's get them in there and we'll build up the capacity.”

Is there an easy answer to how we get the industry involved, to try to stay a little bit more loyal, to keep the packing facilities going? Government has a role as well, I know, but what could the industry do?

[Travis Toews]

That's a tough question, because the minute we start to prescribe what the industry does, we begin to suggest or, maybe beyond suggestion, tell producers who they can sell to and who they can't. I do expect that there has been some increase to loyalty of Canadian plants since 2003. In fact, I know that for a fact. But Canadian producers also have to remain competitive. If they can sell their cattle to an American plant for even a small margin higher than the Canadian plant, they really need to do that to remain competitive with their American counterparts. So it really comes down to the competitiveness of our plants. That's really the answer. We recognize there is an ebb and flow there. At certain times the U.S. plants are more competitive and historically there have been times when Canadian plants have been quite competitive. I see that as the key.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

There are a couple of other things we touched on, and I'll get Mr. Schlegel and maybe Ms. Fleming to comment on this.

I will go back to that profitability, which you just touched on. It can happen in all industries. For example, when grain prices are up again like they are, it hurts all sectors, any livestock industry. So it's a catch-22.

I guess as a general question...a comment from all of you. We've almost become so one dimensional in agriculture. Should we be more diverse? Instead of my owning 250 or 300 cows, should I own 100 cows and 100 sows and cast off a bit more? I realize you lose some efficiencies in there in numbers and other things. I know this is like a mother and apple pie question. Are there any comments towards that from any of the industries?

[Jennifer Fleming]

If Mother Nature has taught us anything, it's that if you try to homogenize you put yourself at risk. I think anybody who can diversify and has the ability to—this is my personal opinion; I'm sure there are producers out there who might disagree. It's not a bad idea to encourage producers to focus on different areas of production or different commodities to produce. The risk, though, is that if you take the focus away from what you're trying to do really well, then you may influence the quality of products you're producing. I'm not sure it's something we can prescribe to people, but it's an idea.

[Clare Schlegel]

I believe 2006 was either the first or second year that Canadian agriculture actually had a negative net income. That's a concern. The same issue that's hurting grain producers is hurting livestock producers. And the issue is not high grain prices. It's the relative value of the Canadian dollar to the American currency, and the ability of the Americans, due to the weakness of the American currency, to out-compete us in markets around the world. Don't forget that for the first time ever the Brazilian government paid subsidies to their farmers in 2003-04. There's something going on here. We in Canada have to recognize we're in an integrated marketplace. While grain prices seem high in Canada now, they should be a whole lot higher relative to where they are. On the hog cycle we're above break-even in U.S. terms, but we're below break-even in Canadian terms.

We're in trouble and we have to find a way to respond to that. The Canadian government has to think about monetary policy and other ways to reduce risk, because we have to have a profitable sector.

[The Chair, Conservative, James Bezan]

Thank you.

Monsieur Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

I'm curious, Mr. Toews. What does the word “yearling” mean? In your document, you state:

My family and I ranch west of Grand Prairie, Alberta and operate a cow calf, backgrounding and yearling operation.

What does that mean? I didn't understand your sentence, and I want to know what it means. I don't know whether anyone here knows, but I would like someone to explain it to me.

[Travis Toews]

A yearling is an animal that is between one year and two years of age. We have a sector of the cattle industry that backgrounds yearlings. They take those yearlings to grass and they grow them on grass, and then they go into a feedlot, at about 900 to 1,000 pounds. That's what a yearling is. It's an important segment of the industry.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you very much. That had troubled me from the start.

Earlier Mr. Schlegel or Mr. Moffett said that he would like the CAIS program to be equal across Canada, that is to say to be a national program. Are you really in favour of the CAIS program being a national program that would serve all 10 provinces and three territories?

[Stephen Moffett]

We do want to see a national CAIS program, and we do want to see it similar all across the country. The CAIS program is a margin-based, whole farm program, and there are a lot of problems around it. It's complex and hard to predict. But if it's whole farm and generally available, then it's trade friendly. Trade is probably one of our biggest paranoias. We're really concerned about trade.

There are all kinds of programs that would be simpler. If you just wrote cheques and sent them out to producers, that would be a lot nicer, but it would be a trade issue.

But in answer to your question, we want it to be similar from province to province and we want it to be national.

[Roger Gaudet, Bloc, Montcalm, QC]

Ms. Fleming, do you agree with that?

[Jennifer Fleming]

Yes.

[Roger Gaudet, Bloc, Montcalm, QC]

Mr. Toews, do you agree as well?

[Travis Toews]

We certainly agree with the need for a safety net program that applies to producers on a national basis, versus one-off provinces going in different directions.

We have some concerns about the targeted-margin CAIS approach within the income stabilization tiers, for reasons I've already mentioned. But we certainly believe in a national safety net program that doesn't advantage one region over another.

[Roger Gaudet, Bloc, Montcalm, QC]

I'm going to give you two examples. On March 9, the federal government gave out $1 billion, $400 million of which was paid to farmers, to Canadian producers. If my memory serves me, 20% of farmers are in Quebec. It was said that Quebec would only have 10% of that $400 million. The former government had given $750 million for field crops, and Quebec received on $42 million. That's why Quebec farmers asked that Quebec's share be for a certain amount. Otherwise, we are always short. May I have your opinion on that subject?

In both cases—the one concerning the $750 million, and the other the $400 million—Quebec received only 10%, even though its production represents 20%. Field crops received $42 million out of $755 million. Quebec definitely cannot agree with that. At least I don't. I'd like to know your opinion on that subject, since the same will be true for all crops, for livestock, both sheep and hogs.

I'd like to know your opinion on the subject.

[Stephen Moffett]

I'm glad you asked that question. That's one of the issues we're also very concerned about. We have talked often about this concept of equity. I mentioned earlier that we don't know exactly how some of this money is going to be given out. We think the $600 million will be used to kickstart the NISA-type program, and we're not exactly sure about the rest. We assume it will be some form of eligible net sales, or something like that.

I indicated earlier that we have some concerns about eligible net sales for exactly the reason you mentioned. Without getting into issues from province to province, from our point of view it needs to be equitable from producer to producer. So whatever they decide on for that formula, it needs to be equitable so that crop producers get their fair share, as well as hog, beef, and sheep producers. We're really concerned about that.

I neglected to mention that we are also a little concerned about how it goes to individual producers. It's a little different from your question, but large producers versus small producers is a bit of an issue. There has been a tremendous change since we had the NISA program before. There are some structure issues around ownership and the structure of farms that prevented producers from participating in the program. I can't get into more specifics because we don't know them, but that's definitely an issue from our point of view. We agree it needs to be equitable.

[The Chair, Conservative, James Bezan]

Merci beaucoup.

We'll go to Mr. Devolin for five minutes, please.

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

Thanks.

Thanks for being here today.

Before I get to my question, I just wanted to point out something that's relevant to this discussion.

Earlier this morning, a group of parliamentarians—today it was Conservatives and Liberals, but sometimes it includes Bloc and NDP members—who are members of the Canada-Korea interparliamentary group, met with a group of Korean legislators who were here in Canada. We had a nice discussion with them, and as always, our lead issue was to try to get the borders opened for Canadian beef. We were teasing them that probably last night they had beef here somewhere in Ottawa and they all looked fine today. So we told them that at least between those four walls we could all agree that Canadian beef was safe and that now we just needed to solve the political problems.

In terms of risk management, as I sit at this committee and I learn about agriculture at the national level, we hear from groups such as yours that represent large numbers of commodity producers. And we hear about all the challenges of the international market in terms of the prices we can get in the market being determined by forces beyond your control or our control.

In my own riding, which is about an hour north of Toronto, I have a very mixed bag of farming in that area. I've had young people come to me and say they want a future in agriculture. I don't present myself as an expert, but I tell them to avoid producing commodities and to maybe find some other product that's a value-added product or something so they can have a little more control over their lives.

I can tell you that for lamb producers, in particular organic lamb producers—we're less than an hour from Toronto—there's a huge market there to be filled.

I'm not suggesting that this would apply across the country. It wouldn't apply to a grain producer in Saskatchewan, but certainly it would in parts of Ontario and Quebec. Risk management isn't just about diversifying the different things you produce. Isn't risk management also about maybe controlling a little more of the value chain and getting more involved so you're selling a product for which you're not at the mercy of a market in Chicago or some trade decision in another country?

I have a goat cheese producer in my riding. They can't make the stuff fast enough. They consume 4,000 goats' worth of milk every day to make their cheese, and they need more.

As national organizations, have you looked at that in terms of how your members may actually look at controlling the value chain? We need to fight for fairness in international markets. But is there another way to look at business risk management?