Agriculture Committee on April 18th, 2007

[The Chair, Conservative, James Bezan]

Please ask just a short question.

[Charles Hubbard, Liberal, Miramichi, NB]

Okay.

The cooperatives in Saskatchewan have been the home of the cooperative movement, except for what's come out of Nova Scotia and Atlantic Canada. Cooperatively, is there a program in Saskatchewan that would assist your farm groups to get out there and be major players?

[Wayne Bacon]

No, not right now. We're working with the provincial government in trying to set up something that would work, but again I think the problem with the biodiesel industry is...we are concerned about hydrocracking and where that's going to fall in. If hydrocracking comes in, and it can only be done by the petroleum industry, the producers won't have the opportunity to be part of that. Then it's going to be between the crushing industry, which will supply the oil too, and as producers we'll just be supplying a raw commodity. We'd not like to see that happen, of course, so it again comes to the policy that the government comes up with moving forward and whether we're going to use the word “biodiesel” or the word “biofuel”, which is the big difference.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Hubbard.

Mr. Gaudet for five minutes.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

My first question is directed to Mr. Silzer.

What do you expect the federal government to do to help you promote bison meat? I know that bison meat is very tasty. When you last came to Ottawa, I met you for a meal at Le Parlementaire and found this dish to be quite delicious. What kind of assistance do you want from us to help you market your product?

[Mark Silzer]

As I mentioned earlier, I think the government has a role to play in assisting developing industries such as ours. Certainly they've done that through some of the programs that are currently available, like the CAFI program and the other ruminant development program, but I think they can be of major assistance to us when it comes to some of the regulatory changes that we need, not only within Canada but also with some of our trading partners. Back when we did make that trip to Ottawa, we also raised an issue about a trade irritant that we currently have with the U.S. that prevents bison trim from going from this country into the U.S. To date, nothing has been done on that. We raised that issue back in February 2003. With BSE and the further trade disruptions, we realized nothing could be done, but certainly in that regard, assisting us in getting market access would be a definite benefit. But a lot of times we realize that as a small and developing industry, maybe we're not as important and don't fit as high up on the schedule as some of the other ones.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

Mr. Bacon, I was listening to you earlier and you seemed to be a happy individual. It seems that you are asking a great deal of the federal government in terms of protection: production insurance, revenue insurance, income insurance, insurance for this and insurance for that, biofuel and biodiesel. Quite frankly, I think I'll take up your kind of farming because things seem to be going well. Your risk level is zero. You want the government to assume all of the risk for you.

Before I became a Member of Parliament, I carried wage-loss insurance. I didn't cancel my insurance because I was elected to Parliament. I continue to pay my premiums. After listening to you speak, I'm tempted to get into the same line of work as you after my political career is over. You seem to be happy with what you're doing.

Could you explain something to me in less than two minutes? What type of risk do you face? None that I can see. You benefit from production and crop insurance, from revenue insurance and from wage-loss insurance. What more do you have to be afraid of?

[The Chair, Conservative, James Bezan]

Mr. Bacon.

[Wayne Bacon]

Well, I think the biggest risks on my farm are the weather concerns. I mentioned that in my presentation. To put in an acre of canola basically costs us somewhere between $160 and $200 an acre. We have to have about a 30-bushel crop just to break even, and that can be a major problem.

Right now, crop insurance on my particular farm covers me for $105 an acre. If we have a disaster like the one in 2002, when basically in that year we didn't harvest our crop at all—we didn't even pull the combines out.... Under crop insurance that year, I was covered at $125 an acre, so I had a loss on my farm of $50 an acre.

Those kinds of losses nowadays, and especially when farms have grown and the cost of production is increasing, whether it's for power, or telephone, or communications—all those types of things that cost a lot more than in my father's and grandfather's.... Our farm is over 100 years old now, and farming is really getting tough.

To me, the risks are tremendous out there just to seed an acre, when you look at the seed costs. They're basically $5 a pound. If you seed five pounds to the acre, there's $25 guaranteed as cost there. For any kinds of weather problems at all out there, there's a huge cost and a huge risk to putting it in. The banks don't want to risk lending us money if we have no way of paying it back.

The CAIS program people are not interested in talking to us in those kinds of terms, because they don't know what we're going to get by way of crop production. I can take my crop insurance and say, “I'm covered for this many dollars”, and they can take a look at what I potentially could lose on that farm, if I have something like a 2002 year, when we had no crop.

Again, if you go to 2004, we had frost and tremendous losses again in 2004. If you go into 2005, a number of acres did not get seeded. As well, a number of acres did not come off that year, because it was too wet. So in Saskatchewan we've had tremendous losses because of weather-related problems—not because of poor farming; it's strictly weather. I think that's where the governments can play a tremendous role in working with farmers.

The cost on my premium for crop insurance is 40%. Between the federal and provincial it's 60%, and the federal government has basically taken up 60% of that.

To me, one of the areas that you really have to take a serious look at is our production insurance, whether it's on crops or animals. It's very important to producers to have some kind of security out there. It's just like taking insurance on your house. You hope you never have to use it, but if it's there we would like to have it.

[The Chair, Conservative, James Bezan]

Thank you very much. That's all.

Mr. Miller, you'll have five minutes, please.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Mr. Chairman.

Ladies and gentlemen, thanks for being here today.

Neil, my first question's going to be to you. You talked about packers and the need for them. It's a problem; I understand that. We need to hear solutions for how to address it.

There's one point I think I have to make here. I'm a beef farmer in Ontario. In the history of the BSE thing, as you know, when it came down to the crunch we were very short of packing facilities. Government invested money there, which I fully supported and still do, and we got it up there. But today, beef farmers can get another cent or two, or whatever, by sending it to the States. We have product moving there.

Basically, I said at the time to my co-producers that we have to stay loyal to the packers, but of course, it's human nature: if you can get another buck, you go after it.

What solution or suggestion do you have for the packing problem that you're going to have? I think I already know the answer to it, but is there going to be any loyalty from the industry if you do get it—especially if it's taxpayers' money that goes into it?

[Neil Ketilson]

Right, thanks.

It's a big issue. This is how we've dealt with it, and it has yet to play out, so we're not full score all the way there. We're thinking of doing our own packing plant. Actually when Maple Leaf bought Schneiders, which bought the old Mitchell's plant in Saskatoon three years ago, we anticipated that they may have bought it to close it down, so we did a feasibility study at that time. We went to producers to ask whether they would invest in a plant. The response was yes, carry forward. Now we're at a closure date. They have come back and we've actually signed agreements with them and they have chipped in some money already to go to the next step. With the commitment and the contract, we're anticipating that their input into the plant will be about $28 a shackle space, so with the shackle space comes a commitment to supply the hogs here.

What they are doing is guaranteeing us a supply of hogs. They're putting up the money to do it, and that is how we're going to make sure that they remain loyal, because there will be penalties for those who decide to scurry off somewhere else for the next nickel.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

The key here is really farmer-owned or co-op-owned.

[Neil Ketilson]

You bet, so it's a partnership between producers, who are going to put up about 25% of the money. It's unique, because we have the first nations that are interested in participating as well. They're putting up a significant amount of money. The city is very supportive. The province is quite supportive. The province has a meat strategy here that basically gives a guaranteed certain percentage for every dollar of investment. That's where they're coming from. It would be very useful if the federal government had a similar program, because, as we all know, the meat business is a tough business. We're not going into this thing to lose money, so we want as much equity as we can to go in and we want as solid a business plan as we can get.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thanks, Neil.

Mark, you talked a little bit about bison trim. Just for my own information, does that include SRM products? What all is included in that bison trim? I'm just not familiar with that.

[Mark Silzer]

That would mostly be just trim for ground product. That's what it would be.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Then it is basically edible product.

[Mark Silzer]

Yes, but it all has to do with the way the U.S. treats bison. It's a complicated file, and that's probably why it's taking so long to have any changes made. Basically, what it does is bison trim out of Canada cannot go into the U.S. for further reprocessing unless it's mixed with 3% beef, pork, or chicken, and then it's no longer a pure product. As a result, we have seen significant investment in Canada, and we realized that needed to be done when BSE hit, because we didn't have the infrastructure and slaughter and processing capacity. But as a result of that issue, which has now resurfaced, we're seeing a large number of live animals being exported to be slaughtered in the U.S. because then they get around the issue.

There are some reasons why the U.S. does not want to move forward with those changes within their own country. I had recently talked to Brad about this as well on whether there was something we could do to find a resolution on imported trim from Canada that would allow them to recognize our federal slaughter.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you.

Shirley, I think it's obvious you are the youngest farmer here today. What can government do in general to try not only to have young people who grow up in agriculture stay in the industry or decide to take it on, and even going further, to approach urban people to come into the industry? As far as succession planning, we have increased capital gains. We're hoping that will help. Are there other things that come to mind that we could be doing to help?

[Shirley Volden, Vice-Chair, Saskatchewan Pork Development Board]

That's a very good question.

As a young farmer, there are a lot of those issues out there. We find having positive attitudes about agriculture is important because it is not necessarily just the people who are inheriting these farms. There's opportunity for young people in many different areas. Changing the mindset of what agriculture is about is important. I don't know how government can go about doing that, but having support for programs that encourage young farmers—mentoring programs, outstanding young farmer programs, young farmer conferences, and things like that—to bring these people together and get the positive message out there that there are successes is important. Celebrating those successes is important too, because we are out there.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Miller.

Mr. Atamanenko.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much for being here.

My first question is to Mr. Ketilson and also to Ms. Volden.

Just so I understand in my mind what you're saying, there's a roughly one million slaughter capacity here in this area. Maple Leaf is shutting down after May 31. They've said that they want a five-year exclusive contract. In other words, it sounds to me as if they want to hold you hostage. That's my immediate reaction.

At the same time, Big Sky and first nations want to build a plant and then you're talking about your own packing plant. Is that the same one you're talking about, or is that two different operations that we're planning on building here?

[Neil Ketilson]

No, it's exactly the same one. The first nations, the Big Sky Farms, and the producers at large are all participating in this plant cooperatively or collectively.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Assuming that it goes through, what's your timeline on that?

[Neil Ketilson]

We're full march on it right now. We've been working very diligently on this. There are a few pieces to the puzzle that need to be finished, but we would really like to move forward. What we're really looking for right now is the appropriate person to market the product for us, so we're pursuing some opportunities there. As soon as we have that nailed down, I think we're ready to move.