Agriculture Committee on April 19th, 2007

[Tammy Jones]

For the same reason that we've lobbied very effectively as a nation to have three dry edible bean breeders in Canada to support various types of production for dry beans—whether it's irrigated in Alberta, whether it's dry land in Manitoba in a short season, or whether it's long season in Ontario—I think we would find the same challenges if we were to try to make an interprovincial crop insurance system, just because of the production differences. It would be the same concern if private companies were in there. I think there's less likelihood that you're going to see a level playing field or equal opportunity for everyone. Certainly for some it may benefit, but for others it may lose.

I don't think we want to go into that uncertain, uncharted area at this point in time as a pulse grower association.

[The Chair, Conservative, James Bezan]

Mr. Wolfe.

[Lincoln Wolfe]

Mr. Steckle brought up the idea of each operation discovering a price level that's reasonable for their production for certain operations. For instance, our operation specializes in large, high-quality, coloured beans, and what a fair price is on particular edible beans in any given year can differ substantially from the price discovery that has come from Agriculture Canada's current price discovery determination.

[The Chair, Conservative, James Bezan]

You're out of time, Mr. Anderson.

To follow up on what David was saying on interprovincial, the one issue that has come up in some of the other provinces is that crop insurance is different in every province. Even though it's a tripartite program, and the federal government participates in the premiums and payouts and the administration, should there not be more of a national standard in what crops are covered and the levels they're covered at? I'm just wondering--yes or no?

[Tammy Jones]

I think with my reference earlier to the contract insurance that's happening in Saskatchewan, the grass is always greener on the other side, and you always look at opportunities that other provinces are providing to you. In that respect, as long as you're individualizing coverage based on differences in regions as far as production goes, maybe standardizing some of the options as to what kind of coverage can be provided to producers would be helpful.

[The Chair, Conservative, James Bezan]

Thank you.

Keith.

[Keith Kuhl]

Certainly for many parts of horticulture it would be a great advantage to look at that. One of the fears that you will find within Canada—and again, it's a divide between eastern and western Canada—is the fear that if we go to a total national program, it is going to be largely geared for eastern Canada. That is not to say that people are biased, but it is a sheer numbers game. We would want to try to find a way to ensure there was fairness for all.

[The Chair, Conservative, James Bezan]

Mr. Chorney, and then Mr. Bartley.

[Brian Chorney]

As I said, it is worth investigating. One of the challenges that may arise, because it's a cost-shared program with the provinces, is that richer provinces might be able to support a program more than others. That's what we're seeing in the regional disparity right now. If we could equalize that, it would be good for canola growers across the growing area.

[The Chair, Conservative, James Bezan]

Mr. Bartley.

[Bob Bartley]

Manitoba may have a premier crop insurance program in place already. Maybe we are on the other side of the fence already.

[The Chair, Conservative, James Bezan]

Participation rates actually prove that out, that we have the highest participation rates, definitely in western Canada.

Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

Thanks, Mr. Chair.

It seems that a reduction in crop insurance is one of the main themes we hear as we cross the country, and that most groups are strongly in favour of a good program, or what might be a better program.

When we go from province to province, we look at the information we have on farm cash receipts and so forth, and we have heard of many programs this morning, and we hear the same in every area. But the basic fact is that in terms of most provinces, if there weren't governmental programs, most farms, as a whole, wouldn't be making any money. In fact, the real net cash receipts for farmers generally pretty well balance out with what government has put in. It is rather a peculiar enterprise that we're into. Really, the groups that benefit the most from all your activities probably are the people who supply you with the inputs and work with the outputs from your industry.

In terms of futures, we haven't heard much on that, Mr. Chair. For many of your crops, most of you are buying, for example, fertilizer you pegged in hopefully some months ago and you know you're going to get your fertilizer when you need it, but you went in at a quantity and a price that I hope is good for you. In terms of your planting, whether that be potatoes or other crops, can you sell your product? Mr. Chair, we hear some areas say “Get the government out of our face. We don't want the government involved with the sale of our commodity.” In fact, I've been to farming areas in Ontario where there are signs saying “Keep government people out”. But government has to be in if we want to have a successful agricultural industry.

With futures, what role would it play, or could it play, in terms of your success in your industry? If you're planting corn, what price can you expect next September for your corn? Are you involved with that as managers of your operations and looking after your groups? Are you building a future into what you can expect for the quantity you can produce, and only have governments worry about insurance?

Brian.

[Brian Chorney]

I will speak on that personally first and then for our organization.

If I look at this particular crop year, I would estimate that 40% of my production is marketed using futures already, before I plant it. I have pegged in some good prices because of some rallies that happened over the winter season. So yes, I do use them. From the canola growers' perspective, it's something that growers check every day, and during the trading day it is hourly. We are very much tied to what the markets are doing for current and new crops.

[Charles Hubbard, Liberal, Miramichi, NB]

And for potatoes? I'm sure that some of the plants are looking for how many potatoes you're going to have in August. Do you know how much per pound you're going to get?

[Keith Kuhl]

Certainly within the community a large portion of the production is protected by contract and the contractual agreements between a producer and the processor to purchase the product.

On the commodity input side, one of the risks that many agricultural producers take at this point is—Take, for example, fertilizer, because many producers will rely on the person from whom they're purchasing the fertilizer to apply that fertilizer on their fields in various blends. But in order to protect themselves, they've probably pre-purchased that fertilizer. So depending on the size of the farm, they'll have anywhere from $50,000 to $500,000 tied up in somebody else's investment; it's not physically on their property.

One of the things we do need to look at is how we ensure that as we purchase inputs like those, we can provide assurance that we will actually receive them, because there's a huge trust relationship within the industry at this point.

[The Chair, Conservative, James Bezan]

Mr. Wolfe wants in.

[Lincoln Wolfe]

In the Pulse Growers Association, as well as in my personal operation, there is a lot of forward contracting. With edible beans, as well as with soybeans, there are futures and options and calls and stuff. So there is a lot of that done for price determination, as long as there are act-of-God clauses in them. That is a concern for the percentage of production that is forward-priced, in case of a disaster, when we can't provide the physicals to the end-users. That is always a concern for both the producer and the processor or the end-users.

You spoke about the focus on production insurance. We truly believe that CAIS is an important part of business risk management, if we could just tweak it a little bit to make the processing of claims a little more timely and a little more predictable and bankable. We feel that it would be a positive program if we could do that.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Hubbard.

Just to follow up on that, though, Mr. Wolfe, there has been some tweaking of CAIS in the last year, and now we're talking, in the APF consultations, about a 15% top-up, a NISA-style savings account. Does that sound like the way we should be going? Does it make sense?

[Lincoln Wolfe]

Yes, I believe that tweaking NISA is a positive move. We're just hoping that it's not moving focus away from the CAIS perspective, which is disasters, and putting excessive weight on NISA. We certainly agree with the NISA portion of it, as well.

[The Chair, Conservative, James Bezan]

Do the rest of you feel the same way? Is the way it seems to be evolving—with disaster assistance on this side and a margin-based program with a producer's savings account on top for the top 15%—the right approach?

Mr. Bartley.

[Bob Bartley]

I haven't seen any details on it.

[The Chair, Conservative, James Bezan]

It's being promoted by CFIA and some of the other organizations.

[Wayne Easter, Liberal, Malpeque, PE]

We haven't seen details from the government.

[The Chair, Conservative, James Bezan]

No, no. We haven't seen any details from government. It's one of the things that's been talked about at the APF consultations.