Thank you, Mr. Chairman.
It's certainly a pleasure to be able to attend this session. For a small industry with not a lot of financial resources, the ability to make this presentation in our own backyard is very welcome.
Just as a little bit of background on the bison industry, although bison are certainly not new to North America, the commercial industry is less than 20 years old. The first census, in 1996, estimated there were around 45,000 head on approximately 750 farms in Canada. Right now, our estimates peg us at around 275,000 bison on fewer than 1,900 farms. That represents a 20% growth rate over the past 10 years. We have provided additional information for you on that.
Of the bison in Canada, 90% are raised in the four western provinces. To represent the interests of the bison industry in Canada, the Canadian Bison Association was established in 1983. We currently have six active regional associations, representing Quebec, Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia, with around 800 members, and we feel we represent about 80% of the actual herd numbers in Canada.
When it comes to business risk management, we feel risk management is important to the bison industry. Being a start-up animal industry sector, it has an income volatility that tends to be more dramatic than that in more mature agriculture sectors. The issues faced by the industry are not unlike those faced by a start-up business, where the supporting infrastructure and risk management tools must be adequate to attract capital if the industry is to grow.
Risk management tools should provide a measure of assistance when cash flow disruptions occur outside normal market cycles.
Programs must facilitate commerce. They should assist producers in achieving their business goals, while allowing them to respond to market signals.
Producers should have access to a suite of private- and public-sector risk management programs to manage their businesses. Knowing the program impacts on individual businesses and the consequences of participating or not participating, producers can more effectively plan their business strategies.
This also means timely program payments. Programs should be structured so that they support producer cashflows in a manner that closely matches business cash flow needs. Having a mechanism that offers program advances that, on final filing, are clawed back reflects a fundamental flaw in the program design and should be prevented. I think you've heard that already this morning.
Administrative simplicity is important to ensure maximum program participation as well as program cost effectiveness. The regulatory infrastructure contributes to managing risk and creating opportunities. An example often cited is the need for regulations that facilitate interprovincial trade in meat from provincially inspected plants. This is important for developing industries such as ours, where producers are creatively developing products and niche markets for bison that require interprovincial movement of their products.
While it is important to have an effective regulatory framework, care must be taken to ensure that regulations do not create excessive costs that make Canadian industries and products less competitive in the world marketplace. If such regulations are required, it may be necessary to provide assistance to protect the industry and infrastructure until such time as the industry has been able to make the required adjustments, in order for it to be competitive.
Timeliness of regulatory changes is also very important. In some circumstances, regulations were established many years ago, when the bison industry was not considered in the process.
Certain regulatory changes are straightforward and are supported by all stakeholders, and such changes should be fast-tracked, rather than take two years to complete. If fast-tracked, very likely the regulatory change would allow producers to obtain greater returns from the marketplace.
We feel that programs must also be flexible to address commodity needs. In the bison industry in 2006, an estimated 40,000 animals were marketed. Of these, approximately one-third were shipped to the U.S. for slaughter, with the remaining being slaughtered in Canada, and the meat is marketed both domestically and internationally.
Since this is a small industry, the marketing and price discovery systems do not have the breadth and depth of sectors that have developed over the past 100 years, where millions of animals are marketed annually. Programs tend to be developed for major commodity sectors.
The major commodities have a history of data and information and are able to develop program scenarios under different industry conditions. A new industry such as bison does not have the comfort of such information infrastructure. Resources to invest in data collection and analysis are limited, and consequently, it appears to be easier to include smaller commodities within programs for larger commodities.
Although this strategy may work in some circumstances, in others it does not. A more effective strategy may be to provide small developing industry sectors with core funding so that they can develop the infrastructure to collect data and contribute to policy development and process.
We believe that programs must diversify markets and re-establish markets lost. The bison is indigenous to North America, making it a unique product for international markets, and based on its nutritional profile and growing consumer awareness of the product and consumer demands, we think it has a tremendous fit for international markets. But the loss of international markets creates significant risks for the bison industry, and trade interruptions not only have an impact on the international marketplace but also on the domestic marketplace. We certainly saw that during BSE.
As a result, the “other ruminant” market development program was established where $550,000 was given to the bison industry to deal with the consequences of BSE. We believe that program was very beneficial in helping some of our local farm-direct marketers as well as increasing some of the domestic markets within Canada and helping us to try to recapture our share of the U.S. market that was lost. Working with industry, this program, which is near completion, has shown beneficial results and should be considered as a long-term program to support growth in domestic market development until such time that the industry can bear such costs on its own.
The bison industry is also participating in the Canadian agriculture and food international program, and we feel that this is a very beneficial program in helping us to establish international markets.
For developing industries, trade regulations are continually evolving, and in some circumstances access is not as well developed for bison as it is for mature agriculture sectors. In these circumstances, government support is critical to obtain market access where barriers exist. Improved market access contributes to business risk management.
Government support through the Canadian food safety and quality program has assisted the industry in responding to trends by continuing with the development of an on-farm food safety program and developing a traceability strategy and policies that are beneficial to society. However, in such programs there are significant in-kind contributions by producers that go unrecognized and an inability to recapture these contributions in the marketplace. Partnerships with government on such programs are important. Recognizing the public good created through in-kind contributions by producers, producers should not be asked to share program costs beyond their significant in-kind contribution.
The disaster assistance program option—I think disasters normally do not fit into program structures. Because events such as natural disasters, disease, and government-imposed trade restrictions are unpredictable, it is important to have a program flexibility to respond and ensure that producers can return to business as soon as possible. Such a program should have an established framework that defines funding parameters, response times, and other details to the extent that this is possible. Because these are unusual events, they should be funded by government resources incremental to those committed to business risk management programs.
With that, I would like to thank you once again, Mr. Chairman, for allowing us to make that presentation.