Mr. Chairman, we want to stress that the Canadian Pork Council supports the continuation of a margin-based income stabilization program. The current CAIS program has met the needs of many hog producers across the country, although there certainly can be some improvements. There have been some significant improvements made, but there still are a few more things we could do.
We would like to see a deeper negative-margin coverage, that is, 70% instead of 60%. We would like to see the historical reference margin based on the better of the past three years or the Olympic average; we think that would make the program more responsive, and it would certainly work better for a larger percentage of the producers. We would like to see eliminating the risk of government prorating of payments, and we would like to improve timeliness and reduce the administrative burden.
Program payments should be considered as income in the year of the hurt. Often we receive the money the next year or later, and of course there are tax implications related to that.
Predictability and bankability is one of the things we hear most from producers, and we would like to see improvements around that. I think there have been improvements made. I know the department is trying very hard to make the forms more simple, but there's still difficulty in predicting what you're going to receive. There is a commitment to put some calculators on the Internet, but they're not there yet. I think we need to persevere and have those available so producers are better able to calculate what they're going to receive and better able to understand the program, especially as it relates to structural change.
There have been many complaints about the current CAIS program, but the whole farm program available to all commodities is a useful approach, and we feel it should be maintained. It's whole farm, and from a trade point of view, we feel it's a good way to go.
Regarding the special disaster coverage, the Pork Council supports the creation of a framework for disaster relief. It is recognized that governments will not be able to provide a suite of business risk management programs that can address all eventualities. Therefore, having a framework to guide special situations will be valuable and will provide producers with the confidence that assistance will be available in extreme situations. Efforts must be made to see this framework finalized. That would give producers more confidence that they don't have to rely on ad hoc payments, that there is a framework there and there'll be something they can draw on, and that they won't necessarily need national publicity in order to get an ad hoc payment. I think having that framework would be very helpful.
It is in the area of production insurance that the Pork Council has the most frustration. With the launching of the first agricultural policy framework, promises were made that production insurance would be extended to other commodities, including livestock. Despite work that has been done by both industry and government, we are no closer to the implementation of a suitable production insurance program for livestock. The result is a huge gap between crop producers and livestock producers, and we feel this needs to be addressed.
This gap has been made painfully clear to the hog sector in the past several years. As you know, many producers have been hit hard by this new disease caused by a circovirus. It's very devastating. It's a disease that has actually put producers out of business. We don't feel that this needs to have happened. Had we had good production insurance, we would have addressed the losses that producers suffered.
Of course, from our point of view, it's twofold. You could say that many of those producers would receive benefits under CAIS. That's true, and they have, but the problem is that it erodes their historical margin. Then when they get into a situation where the price collapses, the CAIS isn't able to do what it was meant to do, because they've already used up that portion of their margin.
Fortunately, vaccines are now available, and that appears to be working effectively to control the disease, but the industry cannot afford another circovirus situation. We certainly appreciate the work that has been done by Agriculture and Agri-Food Canada to look at production insurance, but it is difficult to see that a viable scheme would be available in the near future, and that's our concern. As I mentioned, the second effect of the lack of production insurance is the impact it has on our CAIS reference margin.
The discussion paper notes that any perils covered by existing private insurance policies would be excluded by production insurance. That's a little bit of a concern for us, because we want assurance that the federal and provincial governments will continue to be committed to providing equitable treatment to livestock producers as they do to crop producers. The federal government is providing funding to research projects examining what private insurance would look like, and these projects could actually result in a private insurance tool. Obviously we wouldn't want to see a private insurance tool come in and then negate the need for production insurance for livestock.
I just want to stress that we're really concerned that production insurance be similar from province to province. Crop insurance, as you know, is provincial territory. We're really worried that it would be very different in each province, and that has trade implications for us. So it's a big concern from the federal government's point of view.
On the cash advance program, we're really pleased that there have been amendments made that will make a cash advance program more workable for livestock. In reality, for small producers, I think it's going to work really well, and I commend the government for that. There are some limitations on the maximums, so a significant-sized producer, in reality, will only be able to access the program half as much as he would have had he been a crop producer, because of our shorter cycle. So we encourage the government to look at that issue.
I'm running out of time here, but I have one more point. Regarding the latest announcements and the idea of the deposit-based program, as you know, we did support the federation's concept that the federal government look at the idea of a NISA-type program, which could replace the top 15% of CAIS. We feel that this idea has a lot of merit and we're interested in it, and we would like the federal government to take a look at it. We probably don't have a real position, because we don't know all the information, so our position is that we need to take a look at this and see how it works. There's a little bit of concern that there are winners and losers, but we're looking forward to working with the government on that.
Those, in a nutshell, are many of the issues we're interested in, so we look forward to answering questions.