Welcome to Penticton. Instead of going to Ottawa to meet you all, it's nice to see you here in B.C.
Thank you, Mr. Chairman, for holding this hearing on business risk management, and inviting us to advise the committee on policy views of the B.C. Cattlemen's Association, an organization that represents over 1,200 cattle producers.
I'm an elected director of the B.C. Cattlemen's Association as well as the Canadian Cattlemen's Association, and I serve as chair of a domestic agriculture policy regulation committee. My family and I ranch in the Princeton and Williams Lake area. We operate a cow-calf, backgrounding, and yearling operation.
Canadian agriculture is exposed to many risks, and the cattle industry is no exception. While many of these risks are difficult to mitigate, some could be managed with reasonable effectiveness. Risk management options include diversification, private insurance, stockpiling feed, and a robust vaccination program.
The B.C. Cattlemen's Association sees these and other private sector means as the preferred tools for business risk management in Canadian agriculture. B.C. is unique from other provinces, as we have a very small feedlot sector and no large abattoirs, and most of our yearlings and calves are shipped to either Alberta or Washington state.
Some of the options available to other parts of the country, such as commodity hedging and forward contracting, are not practical in areas of B.C. where there are limited amounts of grain and corn grown for the finishing sector.
We acknowledge that government programs play a role in agriculture risk management, and we believe that in exceptional circumstances this role is legitimate. There are a large number of producers who believe that the current CAIS program is ineffective and unresponsive in times of disaster, and are currently in opposition to our stated principles. These are: normal income fluctuation risk should be the responsibility of the producers; programs must be as market-neutral as possible and structured to minimize influence on business decisions; programs should not alter the competitive balance within industry between regions, sectors, and operation structures, including operation size; programs must allow industry to be driven by clear market signals; programs must be structured to minimize risk of foreign trade action; and programs must be transparent and predictable.
The B.C. Cattlemen's Association's first priority regarding government's involvement in business risk management is that Canada develop a national disaster program framework with federal-provincial agreement in place for funding of the program.
When Canada experienced its first case of BSE, the industry struggled in the following weeks and months to avoid a complete shutdown, and worked with government in attempting to address the issues. If a predictable disaster framework had been in place, solutions to the issues would have been more timely and the industry would have functioned with more certainty.
A national disaster program would address both natural disasters, such as floods and massive droughts, and “like natural” disasters, such as border closures. This framework would pre-emtively define a disaster setting and set out funding parameters, governance, and, to the extent possible, program details specific to the disaster.
Producer groups and organizations could work with government to proactively develop plans that could fit into this framework. The predictability created by this type of framework would reduce industry's uncertainty and encourage investment in Canadian agriculture. Without a disaster program framework in place, some disasters receive ad hoc support while others do not. Just last spring, in areas of Saskatchewan and Manitoba, farmland was flooded out. It was not seeded, and a disaster that nobody could plan for occurred. The government stepped in with a program to partially offset the producers' losses incurred as a result of the disaster.
This type of program is something that cattle producers in the Peace River region and the Bulkley Valley of B.C., as well as other parts of the country, look at now when they consider the drought they have experienced for up to three years. They wonder why one disaster qualifies for aid while the other one does not. Without a framework in place, governments do not treat events consistently, and tensions and competitive imbalances occur.
The CAIS program is the government's cornerstone income disaster and stabilization program. While it has undergone some recent improvements, it fails to comply with a number of the principles I outlined earlier, particularly as the program applies to income stabilization. The CAIS program can be intrusive on business decisions, including organizational structure, breeding herd buy-and-sell decisions, and crop rotations.
CAIS is complicated, unpredictable, and non-transparent. While efforts are being made to improve the program in this regard, margin-based, targeted programs that adjust to structural change will tend to be complex, poorly understood, and difficult to access on a timely basis.
The support in the stabilization tiers of CAIS is amber, which is always a concern for trade action.
It is our opinion that sound industry planning and innovation, along with other private sector tools, will provide a viable cattle industry. Government programs will continue to play an important role in the stabilization of the cattle industry, especially through a national disaster program. The recent announcement made by the Prime Minister and the federal agriculture minister on contributory-style producer savings accounts appears to be a step in the right direction.
Thank you for the opportunity.