Thank you very much, Mr. Chair.
Let me begin by saying that I would like to applaud you as chair and this committee for engaging in this very important discussion.
I would also like to preface my comments by saying first that the discussion on business risk management doesn't always have to be about more money. It also has a lot to do with how strategic we are with the money we flow. Are we being strategic with the way we flow the money? Are we being effective in the way we flow money? Are we being as effective as we can be in using taxpayers' money to help sustain farmers through periods of crisis?
Business risk management programs were never meant to be programs that create profitability. They are meant to sustain farmers through a period of crisis. When we talk about profitability, of course, there are all kinds of other things that we can include in the discussion.
The other thing I would like to say is that business risk management programs don't always have to be what we refer to as traditional safety net programs. They could also be such things as a biofuel initiative, or incentive-based environmental programs like, say, the ALUS program. Those can be initiatives that also help the income crisis and help move farmers towards a more profitable stage.
I would like to also say that some of the changes that have been made to what we have in our current suite of safety net programs have been very positive. You will know about the inventory evaluation change, the improvement in negative margin coverage, and of course the announcement we had a couple of weeks ago with regard to changing the top tier of CAIS to a contributory tier, which we believe is very positive. We're looking forward to working out the details of that top contributory tier.
Of course, on that one we certainly hope the provinces are going to support that leadership. We hope they will support the concept of the top tier as well. We would like them to contribute some money, of course.
We believe the cost-of-production approach that was announced is positive also. It will draw attention to one of the biggest impacts of farm profitability, and that is escalating input costs.
So there are a lot of positive things that have already happened.
We circulated a handout. I'm going to focus my comments on a few of the components in that handout.
We certainly support the work that's being done on production insurance for other commodities, aside from grains and oilseeds. We hope the production insurance development for those commodities is going to result in an insurance product that works for farmers. We want to make sure the product does work well and that farmers will want to use it: otherwise, it will end up being simply a premium for a CAIS offset. We have to make sure it's effective.
We of course also support the work on the catastrophic disaster component that's been talked about.
Having said that, I'd like to focus on a few of the other components. One, of course, and you will read it in the handout, is that we believe supply management should be defined as a business risk management program. They don't want to be part of the top tiers of our safety net program. They of course want to be eligible for disaster, because you can have disasters there, but they feel their policy is a business risk management program and that it simply needs to be defined as that.
The other thing I would like to focus on is companion programs. You may recall that the industry was dragged kicking and screaming to the table in the first development of the agricultural policy framework. We had a provision there that provinces could use some of the federal 60¢ if they contributed their 40¢ to help in the development of regional-specific or commodity-specific companion programs.
One of the things that's been talked about is that while our problems across Canada may be the same, the solutions aren't always the same. We sometimes have different solutions for different regions, different provinces, or different commodities. We would really like that provision back, so that the needs that can't be addressed by one national program can then be addressed by developing a companion program to fill the gaps.
And there are some examples of why that is necessary.
If you compare the agricultural industry in Prince Edward Island to the agricultural industry in Saskatchewan, they may have different needs that aren't addressed by a national program, and in that event we would like them to have the ability to be able to address those provincial-specific needs that crop up.
Saskatchewan might decide to develop something around improving their production insurance for grains and oilseeds. Prince Edward Island might develop something that's unique to their industry and that would better address a need in their industry.
If you talk commodity-specific, you will recall that prior to the APF, the horticulture industry had an SDRM, a self-directed risk management program, which was basically a NISA top-up at the time. That was meant to address the fact that they didn't have effective crop insurance programs for that industry, so the commodity had the ability to develop something specific to that industry that wasn't addressed by a national safety net program.
Those are some of the examples we've got whereby provinces could tailor something and be more effective in the way we flow money and in addressing some of those specific needs.
Another good example is the fact that the Ontario grains and oilseeds and the Quebec grains and oilseeds sectors have come up with a risk management program for their industry. That might work in Quebec and Ontario, because they don't export a lot of grains and oilseeds. Saskatchewan, on the other hand, is more sensitive to trade action because they export probably 85% to 90% of their production and might want to use something else to address something specific in declining margins in that industry, so we would really like to see the provision for companion programs to come back and allow that flexibility.
Now there are those that have told us they can't afford a provincial-specific companion program, and our answer to that is simply that we already have provinces that are tailoring certain components around the CAIS program. Alberta has done some things for the grains and oilseeds sector. Quebec of course has an ASRA program that is effective in their province.
So we're saying if those provinces that don't have enough of their own money could use some of the 60¢ coming from the federal government and contribute their 40¢, that would at least provide them with some seed money to develop something they could use in their own province.
I'll leave it at that, Mr. Chair. I'm not going to go into any more detail. I'd be happy to answer more detailed questions if you have them, but I'll leave it at that for now.