Agriculture Committee on April 17th, 2007

[The Chair, Conservative, James Bezan]

I call this meeting to order. I want to welcome everybody to Olds. I know that Myron will want to do that, since this is his riding, but I do feel some affinity to Olds College, since I'm a grad of Olds College. So it's good to be back.

I would like to welcome to the table today Leona Dargis, a member of the Canadian Young Farmers' Association. Actually she was at our committee meeting in Ottawa about a month or six weeks ago. From the Western Barley Growers Association, we have Douglas McBain. From Agri-Trend, we have Robert Saik, who is going to speak first. From the Alberta Beef Producers, we have Erik Butters, and we also have the general manager, Rich Smith.

You can join us at the table, if you want, Rich, if you want to help Erik with any of the answers.

So we'll kick this off. Robert says he's in a hurry, so we're going to let him go first. Hopefully you can stick around and answer some questions before you have to rush off to your next meeting.

[Robert Saik, President and Chief Executive Officer, Agri-Trend]

Thanks for accommodating me. I've got an 11 o'clock meeting in Calgary, so I appreciate the committee making time for me. Also, I appreciate the opportunity to address the committee on the agricultural policy framework.

As a quick overview, I'm the founder and CEO and president of Agri-Trend Agrology. We're one of Canada's largest independent agronomic consulting firms, and we work in the area of business management, risk management, environmental compliance, and production with farmers. Our mission is to help farmers allocate resources to produce a safe, reliable, and profitable food supply in an environmentally responsible manner. We have a network of independent agents who work together under an umbrella and a business architecture. We work from Vancouver Island all the way to the Ottawa Valley, and from the Yukon right to the U.S. border. We work with vegetable growers, we work with large feedlot operators, we work with Hutterite colonies, we work with mixed farms, and we work with anything in-between. We have eight PhDs and 14 masters' degrees on our roster providing some of the scientific underpinning.

Today I'd like to address the opportunity that exists for the government to utilize a new sector of the economy, the consulting sector, to help deliver the mandate of the agricultural policy framework. I'd like to talk about three things under the APF, and those are the EFP, the NFSP, and the SBPS: the environmental farm plan, the national farm stewardship program, and specialized business planning services. Those are what I want to talk about.

I believe society is increasingly going to resist red box funding to agriculture, meaning direct subsidies to agriculture. I believe we're increasingly going to see an expansion of green box funding to agriculture, or funding that would provide support in the ecological and environmental areas to farmers.

[The Chair, Conservative, James Bezan]

Robert, if I can just interrupt you for a minute, please speak a little slower for our translators.

[Robert Saik]

I apologize to the translators and to our francophone members. I speak two languages, English and Ukrainian, but that wouldn't do us much good in Quebec.

Most of that was preamble anyway. We'll get into the meat of the matter right now.

As an independent consulting firm delivering services to farmers, our experience has been that we have been very frustrated with our ability to tap into and to facilitate programming to farmers. I do not believe that either the provincial or the federal government has the resources to deliver these programs en masse to farmers. I believe it's essential for government to look to the private sector as a vehicle for delivering some of these programs. I'll give you three concrete examples in the short time I have with you.

The first is environmental farm plans. Many of the farmers and growers I work with personally are very busy people—and in our organization we work with hundreds of farmers, if not thousands. They have neither the patience nor the time to sit through some of the processes involved in the environmental farm plan.

We had put forward a process whereby we would train our people and qualify them for delivery of environmental farm plans with our clients. We're intimately aware of our clients' operations, and we could facilitate this work in a very pragmatic fashion. Last year we hired a gal from RBC. She joined Agri-Trend, and we put her into training with the Alberta Environmental Farm Plan Company.

We delivered two farm plans to our clients. We had another 26 binders that were going to be delivered to her. At the last minute they changed their mind and pulled the program. That young lady was out of a job, and she subsequently had to take a job with Agricore United. We were out about $15,000 to $20,000 in investment and training. Needless to say, I was very upset, because many of the farmers we had targeted for delivery of that program still have not gotten their environmental farm plan numbers, and it's doubtful when they will.

Once you get your environmental farm plan number, you can qualify for national farm stewardship funding under 26 different programs that the government has laid out. The problem is the time lag. This morning I was on a phone call with one of our agri-coaches in Manitoba, Nelson Moorhead, of Hamiota, Manitoba. Nelson has informed me that several of his farm clients have been waiting eight to ten months to get their approval numbers on the projects that would qualify under national farm stewardship funding.

You only have to look outside to know that we deal in a biological business. Farmers cannot proceed with the expenditure of money under their proposed plans until they receive their numbers. If they don't receive their numbers, they can't proceed with the program, because you can't have an invoice that's generated before you receive your approval numbers on the application for national farm stewardship programming. But the program is simply taking too long.

The lag time is unacceptable. Once a farmer has his environmental farm plan number, it shouldn't take that long to go through and figure out whether he qualifies for a GPS guidance on his sprayer, support with nutrient management planning or pesticide planning, or work on manure management changes on his operation. It has just been taking too long.

Right now, we estimate that there are well over $200,000 worth of plans just in our own organization, waiting for approval. They're all just jammed up and waiting to get through the system.

The last area I'd like to spend time on is specialized business planning services. I have provided for you documentation that will be made available later. I apologize that I didn't have both English and French ready to go.

An example of specialized business planning services is the agriculture policy framework. Last year, in 2006, we began to work with a pilot to deliver specialized business planning services to our clients across Canada. We worked with the Regina office of renewal. We sent them six pilot forms that were accepted under the specialized business planning services. We developed a process that we were going to take the rest of our farm clients through.

We visited Regina several times. Regina had indicated to us that they had briefed the rest of the country on our willingness to take specialized business planning services through to our clients. I asked if we had to fly to Ottawa. They said no, they had briefed everybody. We turned on the switch. Two hundred and fifty farmers began moving through the process. One hundred and fifty applications were prepared and submitted. They began hitting desks across the country. They began hitting renewal desks across this country, and everything ground to a halt.

Edmonton felt that there weren't enough details. Regina said these were the best they'd ever seen. Ottawa was caught in the middle somewhere, not knowing which way to provide leadership. It was nothing short of a disaster.

We had invested over $250,000 getting our team ready and programming our systems and providing for that to move forward. Not only did we lose capital, we lost a tremendous amount of face with our clients and throughout our network of agri-coaches.

Right now, I understand those original six applications have indeed been approved for funding under the specialized business planning services. I was in conversation with Ottawa and asked them to please provide us with a template of what they would like us to deliver under specialized business planning services. They told us to refer to appendix C. Well, I know appendix C. Appendix C is ambiguous. It's open to interpretation. I asked for the template, which you will see in the documentation I am still waiting for today.

It's clear to me that there are inconsistencies in the interpretation of these programs across this country. These programs can be very well delivered by the private sector, but there has to be consistency and clarity so we know what to do. Some of the ideas in the agricultural policy framework I have to applaud. I believe that many of the initiatives under the pillars are exactly where this country should be going. I don't think the agricultural policy framework should interfere with the farmers' business. But you know, if society wants to prevent cows from walking in a river or a stream and it wants farmers to fence off that river or stream, and the farmer has to put up a fence or drill a well, it will come with some costs. Farmers are more than willing to do this work, provided they're supported in the work society wants them to do.

As members of a private consulting firm, we stand behind the agricultural policy framework, ready to support it. But I have to say that up to this point in time, our experience has been extremely frustrating and very costly. And I would say that the progress we have made as an organization to help the government move it forward has been very, very poor because of lack of clarity.

[The Chair, Conservative, James Bezan]

Thank you. You are right on time as well.

Mr. Butters, you have ten minutes or less.

[Erik Butters, Chairman, Alberta Beef Producers]

Thank you very much, Mr. Chairman.

My name is Eric Butters. I ranch with my family about an hour and a half from here, west of Cochrane.

I appreciate the opportunity to visit with you this close to home, and thank you for the opportunity.

We recognize the value of the standing committee in providing input to the rest of government concerning our issues.

I would also like to take this opportunity to thank you for your stance some time ago on the supplemental import permits. It has always been a trade irritant for us. We recognize that we have the negotiated access, with something like 67,000 metric tonnes. That figure had nearly doubled for a number of years, causing us all kinds of grief and aggravating some of our other trading partners.

We have an issue now where we expanded slaughter capacity, as a result of the BSE situation. This highlighted how vulnerable we were with respect to slaughter capacity. Now we have that capacity, but we're running at under 70% utilization rates. So to allow supplementary imports in again would exacerbate this problem even more.

With respect to business risk management, we realize that risk is an inherent part of agriculture, including the cattle industry. We're able to manage a number of risks through diversification, private insurance, and other means. But we acknowledge that government programs play a role in risk management, particularly in exceptional circumstances.

We've just been through and are sort of clawing our way out of the last of the particularly exceptional circumstances with respect to BSE. We believe that normal income fluctuations are the responsibility of producers and that the normal ups and downs in the marketplace are something we accept and realize we have to deal with.

Any program should be as market neutral as possible and thereby minimize the influence on business decisions. Programs should not alter the competitive balance within industry regions or sectors and should allow industry to be driven by clear market signals. Programs must be structured to minimize the risk of foreign trade and should be as transparent and predictable as possible.

So these are the principles that the Alberta Beef Producers and our national affiliate, the Canadian Cattlemen's Association, feel are appropriate for managing these sorts of situations. However, we think a top priority in ag policy should be developing a national disaster program framework, which would be timely, consistent, and assist producers facing major disasters, such as floods, huge droughts, and border closures. The programs should define the disasters to be covered, set out funding parameters, establish governance for the program, and provide as many program details specific to the disasters as possible.

We recognize the improvements to CAIS that have come our way in the last while. There's probably still a ways to go. We don't want CAIS to provide a disincentive to producer risk management, and we don't want it to lead to trade reactions, if it's too far into the red box, as was mentioned earlier today.

With respect to the enhanced feed ban, we support its objectives: to speed the eradication of BSE and to open trade with our international customers. The feed ban, the infrastructure and operational costs associated with the implementation, and the competitive disadvantage that our producers and processors will face with respect to the U.S. industry as a result of the enhanced feed ban—

We welcome the federal and provincial funding that was provided to address these issues. We also applaud the Alberta government for being one of the first provinces to sign the specified risk material disposal funding program with the federal government. We believe the funding should be directed towards offsetting infrastructure and operating costs for processors and renderers. That appears to be the way it's going.

Regarding trade, in my notes I have what I think you've been provided, in which we talk about the situation with Korea.

The trade implications are far broader than just the Korean situation. We're continually faced with barriers to trade in the form of tariff barriers and non-tariff barriers. We really feel it's important that the federal government do everything it can to reduce trade barriers and allow us access to marketplaces all over the world.

Competitiveness issues. The Canadian beef industry faces tremendous challenges in trying to remain competitive with our counterparts in the U.S. Our producers are challenged by the productivity of feed grains, and I want to talk about that one and highlight that one for a minute. We see, in the U.S. particularly, a continual increase in the yield of corn. There's a huge amount of research, private and public, that goes into corn yields, and we've seen corn just take off. I think they've doubled the yields in the last 12 or 15 years. We have seen no such response in Canada. In western Canada, where barley particularly and to some extent feed wheat are our important feed components for the livestock sector, the yield on barley and feed wheat has just flatlined, and it has been flatlined for the last 20 years.

So our competitors in the States are benefiting from this surge in production, and we're missing out on that. We're fearful that part of that has to do with just basic research, and part of it probably has to do with regulatory burdens and bureaucracy that's slow to allow the implementation of better varieties.

Biofuel policies and incentives are creating a government-supported competitor for acres. We realize that with the technology that exists today, for every three acres or every three bushels of feed wheat that goes into ethanol, one acre or one bushel comes back out as a byproduct that's useful to the livestock sector, particularly the cattle sector. However, that is cold comfort for many of us.

When you think, Mr. Thompson, that if you give me $3 and I give you $1 back, and you keep giving me $3 and I'll keep giving you $1 back until you get tired of it, that sort of explains how we feel about this thing. We certainly don't want to rain on the parade of the grain sector. The grain sector has struggled for a long time, and I'm surprised they're as vibrant as they still are. So clearly the grain sector needed a boost. But in the long term, we're very fearful of having to compete with the taxpayers to buy inputs for our sector.

Mr. Chairman, I don't know if I've used up my 10 minutes.

Thank you, and I'd be happy to answer questions as things proceed.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Butters.

Mr. McBain, for the Western Barley Growers Association, you have 10 minutes.

[Douglas McBain, Past President and Director, Western Barley Growers Association]

Thank you, Mr. Chairman.

I'm also a graduate of Olds College. I farm about 40 minutes southwest of here in the foothills of Alberta.

I'd like to thank the committee for taking the time to come on a road trip. I know it's a big job to get organized and get the committee on the road. It certainly makes our job easier coming here to talk to you rather than having to go to Ottawa to speak to you. Again, I appreciate your time and effort in being here today.

On behalf of the Western Barley Growers, I thank you for the invitation to speak to you today under the ag policy framework.

Of the five pillars of the ag policy framework, business risk management is certainly the major pillar that has had the most attention. This is what the Western Barley Growers have spent the majority of our time addressing. On the other four pillars, I'll make the same comments that I did in 2003 when we appeared before the standing committee, and that is, the other four were significantly underfunded to the point where some of them had no impact whatsoever.

The Western Barley Growers Association has used the private sector risk management partnerships program under the APF for a very successful program that we've been working on, which is the ag commodity clearing house. We'd like to see that the PSRMP program continue, as it has worked very well for us and we have seen significant benefits from that program. It has provided stable funding for the development of private sector risk management tools in a number of areas, and we encourage the committee to continue this program under APF2.

We've done a lot of work in developing the first CAIS program and how it came together as the combination of NISA and CPIP programs. We'd like to see CAIS remain as a whole farm margin-based program that is used in low-price, low-production years. We'd like to see it remain as a needs-based program rather than an entitlement.

CAIS has worked for my farm. The first time was probably when my otherwise inaccessible NISA account was accessed because of the change to the CAIS program. I may be fortunate in that I had high margin years that provided the payment base for the drought years. The change that would result in the program reverting back to a NISA-type program would change it to an entitlement program rather than needs-based.

The problem in grain farming is the dependence on the Canadian Wheat Board for marketing. Grain producers who rely on the Wheat Board to market their grain are in a very disadvantaged position. The CWB has refused to accept all grain that producers have offered to the board for marketing in the past three years. This has had a disastrous affect on the CAIS calculation. When there is at best a 10% margin in grain farming, and more likely zero or less, then the last few tonnes sold represent the margin. When the Wheat Board refuses up to 50% of the contracted bushels, as in the case of durum, this distorts the CAIS program payments. Farmers are left with no cash and no CAIS payment. They could not sell their grain, but the inventory was counted as a receivable and valued at the PRO, so there would be no CAIS payment. The program is blamed for not being responsive to farmers needs, but it is CWB mismanagement and refusal to follow one of the few actual requirements under the CWB Act.

To comment on Eric's public funding for R and D, this has virtually dried up completely as far as public money going into variety research for western grain and oil seed commodities. It's been shifted completely to the private sector, which may have some advantages, but there are certainly disadvantages in the long run.

I look forward to any questions or comments you have.

[The Chair, Conservative, James Bezan]

Thank you, Mr. McBain.

Ms. Dargis, please.

[Leona Dargis, Member, Canadian Young Farmers' Association]

Thank you very much, Mr. Chairman. I am delighted to be here this morning presenting in front of you and having the opportunity to discuss the questions that will arise in the next hour or so.

I'll give you a little bit of background. I am from northeastern Alberta, north of St. Paul, from a mixed farm. We have a 4,000-head feedlot and 6,000—last year we seeded 7,000—acres of crop. I work with my four younger sisters, and we pretty much run the farm. In a few weeks' time, I'll be going back home to run the tractor 24/7.

As far as my educational background goes, I have been a student here at Olds College for the past four years. Actually, at the end of this month, I will be happy to complete my applied agriculture business degree. The applied degree gave me the opportunity for the last 10 months or so to work with Meyers Norris Penny, which is an accounting business advisory group, and with that, to be involved in the ag sector and take the initiative to find out how many of our clients did apply for the Canadian farm family options program or were eligible to apply. As I said in Ottawa, having 120 applicants who collected over $1 million, and 85% of them didn't know about it, kind of puts the whole education and knowing about the utilization of these programs behind.

Some of the other industry involvement I have and am currently involved in is the Agriculture and Food Council. I guess I am sitting here in front of you today representing the Canadian Young Farmers, where I was recently elected a member-at-large.

When we think about different problems or issues we face in the industry as young farmers, the number one thing, of course, is how we get into the farm. How do we do the farm transition? What it comes down to is cash. We don't have the cashflow. To transition those assets on our side is our number one biggest problem, because of industry constraints and the fluctuations in markets today—just the main challenges.

I do appreciate and very much recognize the importance and the potential impact that a lot of these government programs can have on any farmer. The farm family options program is a wonderful program. The CASS program—the Canadian agricultural skills service program—is a wonderful program. The only challenge is that the farmers don't know. And it's not like they don't have time to know. It's up to them to step up and say, “Hey”.

I very much agree with Mr. Robert Saik's comments on the process with the environmental farm plan. I've done it for numerous clients of Meyers Norris Penny as well as for our own personal farm. The process is very timely. We're very willing to pay, willing to put up the money, willing to do the additional record keeping. As young farmers, we definitely realize that management, running your farm as a business, is becoming of increasingly important value to your farm. It's not just producing a commodity anymore, and the more you produce the more you make. It's the exact opposite. It's how efficient you can be and the people you know and the connections you're able to make.

I'd just like to reiterate what I said in Ottawa. I think one of the most important things we can work on is making partnerships between the government and Agri-Trends and Meyers Norris Penny, because we have the access, we have the connection to all the producers located Canada-wide. I think it's partnership that can definitely add value and add awareness and education to these programs.

I'm definitely looking forward to seeing what this APF2 is going to bring us in the next few years.

As a young farmer I am very excited. We're definitely trying to be as innovative and efficient as we can. It's our passion to produce food for the world and be involved with different commodity groups and whatnot.

I look forward to spending the next time with you.

Thanks very much.

[The Chair, Conservative, James Bezan]

Thank you.

Yesterday we made the decision to stick with five-minute questioning rounds. If everybody is okay with that we'll stick to it, especially in light of having only hour-and-a-half sessions at a time.

Mr. Easter, you have the first five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Everyone appreciates your coming out to outline your point of view.

It's good to be in your riding, Myron. We want to see you down in P.E.I. some time.

The proposal by Robert of Agri-Trend talks about the difficulty of getting results on the ground in a timely fashion while trying to deal with the bureaucracy at various levels. Whether it's in Ottawa, Regina, or Edmonton, it doesn't matter. It's the same with the CAIS program. One of the problems with the CAIS program is the complexity of it. Doug said it worked for him, and it does work some. It works reasonably well in the potato industry in our province. But a lot of it comes down to different accountants doing the applications too. It's overly cumbersome.

What has to be done to overcome that, Robert, or anyone else for that matter? Politically we will have some ideas on programming—some good, some bad—but getting the results out the other end sometimes seems possible.

On the disaster assistance you mentioned, Doug, the disaster program, can people be a little more specific on that? Disaster includes drought and flood, but do you see disaster including issues like avian influenza, potato wart in potatoes, and border issues with the United States or others as a result of BSE? Just how far do you go with disaster assistance, and should the lion's share of disaster assistance be funded by the federal government at 90%?

[Robert Saik]

Thank you.

It's good to see you again, Honourable Easter.

You have two questions. I'll address the first one and let my colleagues address the second one.

How can we make it workable and simple? I have a concrete example in my hand—a specialized business plan we provided to the renewal offices. One office says it's the best it has seen and the other rejects the plan. I go to Ottawa and say, “Give me a template of what you want to deliver and I'll deliver.” They tell me to go to appendix C, but appendix C is ambiguous.

If you're going to come out with a program, make it consistent across the country. Do you know that there are specialized business plans out there that were rejected because of spelling mistakes? When did these officers become grammatical coaches? I don't understand this process.

For my two bits about this, it's about consistency. Show us what you want us to deliver and the industry will respond by building the necessary components. We have an amazing online data system, as does MNP and many of the other firms in Canada. We just have to be shown what they want and we will respond and deliver it, but don't change the rules halfway through. One of the real frustrations right now is that the offices do not have similar criteria—and they can reject it. There's nobody else to go to. It's like they are God. If they reject it, you're done, period. That's a problem.

Thanks.

[The Chair, Conservative, James Bezan]

Does anybody else want to comment?

[Erik Butters]

On the disaster insurance part of it, for the cattle sector, border closures would be right up there. We saw what happened when we lost access to the U.S. border and other markets in 2003, when fat cattle dropped from $1.10 to 28¢. That's not something that's insurable in the open marketplace.

Other risks are insurable or coverable in the marketplace, and we think maybe government's involvement there could be less. But things that are absolutely outside the control of the producer are the ones that should be covered under the disaster part.

[Wayne Easter, Liberal, Malpeque, PE]

To avoid the federal-provincial quagmire, which always becomes a problem, should issues related to acts of mother nature or international consequence be the definition for what the federal government is responsible for with disaster assistance? You get into this 60-40, 90-10, 70-30 or whatever, and you're a year into it before you get a payout--like the discussions we're seeing now on the savings accounts.

What should the criteria be for what the federal government is ultimately responsible for? Personally, I believe it should be the federal government if it's an international incident such as BSE, or acts of nature.

[Erik Butters]

I agree with you about the quagmire part; it delays things.

It's a bit difficult for me to suggest whether a major drought should be 60-40 or 90-10. I don't know. Living in Alberta perhaps colours my vision a bit, because this province can afford the 40% more readily than some of the other provinces. But I agree that it's something that should be nailed down ahead of time so that people understand the rules and so we can avoid this dragging out for years in terms of acting on some of these things.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Easter.

[Douglas McBain]

I'd like to respond.

[The Chair, Conservative, James Bezan]

Very quickly. He's out of time.

[Douglas McBain]

On the specific question of disaster systems, we had originally proposed that CAIS would cover the negative margin up to 75%. Your question about whether the government should cover specific cases over individual causes gets into a huge bureaucratic problem. And then you get problems with delivering the program. Who's going to decide what an individual cause is and who's going to decide what a national cause is?

Those are considerations we discussed when we developed the first program: how you can make it simple for government to administer. The more complex it gets, the slower it gets, and the less money that actually gets to farmers.

That's why we had recommended a broad spectrum of coverage that is based on each individual's farm program. That way, if it is national, everybody has the same problem but it's covered on an individual basis. An individual case could be just as disastrous but would not be covered under a national program. That's why we maintain that we keep it an individual whole farm margin-based program where everyone gets the same coverage. It's not ad hoc: Is this a disaster? Is it local, regional, national? Those are the problems you get into.

[The Chair, Conservative, James Bezan]

Mr. Gaudet, you have five minutes.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

I see a young lady here, Ms. Dargis. The next generation is for me quite important. I should like to know what you are expecting from the government with regard to the next generation. Do you believe that the government has too many programs? What is the solution to that situation? With regard to the next generation and the transfer of farms, is the government really helping you? Tell me what you think.

[Leona Dargis]

Does anybody else want to comment? I need clarification on exactly what he said.

[Erik Butters]

He asked about the best ways to help out young farmers, transfer of farms, how to support young farmers and that sort of thing.