Agriculture Committee on April 19th, 2007

[The Chair, Conservative, James Bezan]

I have a question on what Wayne is talking about. Do you belong to the Renewable Fuels Association? They're the ones who lobbied hard to change the policy from the 4¢ a litre excise tax waiver to a production subsidy over the three years.

[Roy Eyjolfson]

We haven't joined that organization yet, but we anticipate participating with them once we're hopefully up and running.

[The Chair, Conservative, James Bezan]

That's where that push came from. It was supported by the Canola Growers, and the Canola Council of Canada. It was an intense lobby on all political parties over the last six months.

Mr. Anderson, the floor is yours.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Miller had one question he was interested in following up on.

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

I don't want to waste much time, but Martin, you touched on something I'm interested in and I think maybe the committee would be too. You mentioned lagoons and creating ethanol in New Zealand. If you have any information or know how we can get hold of more information on that, I'd like to get it. I'll give you a card afterwards.

I'll turn it back to Mr. Anderson. Thank you.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Dickson, I wanted to come back to a couple of things you said.

I wondered if you want to say anything more about the phytate barley and the situation with that, or do you feel you've informed us enough about that issue?

[Andrew Dickson]

I was contacted by some researchers from Saskatoon who were in the process of trying to register a new variety of barley that's low in phytate, and they've run into a roadblock with CFIA on the issue of novel characteristics. Apparently, because of the phytate-low characteristic, they're saying this is a novel thing, and therefore a further study needs to be done.

The phytate issue's been around for 15 years. American corn producers brought out low-phytate corn 10 years ago. Various companies have brought out various varieties of this thing. We were hoping we could get this barley thing resolved fairly quickly. We consume a lot of barley in the hog industry, and it's one tool that would help us, because if you have low phytate, you don't have to use the enzyme phytate, which is a cost in the feed itself. So anything we can use to reduce costs on the primary ingredient is a key item for us.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Okay. I think there's an interest here in finding out what's going on with that product.

I would like to come back to something else you said earlier. You were talking about the four-year cycle, and it sounded as if you'd done a fair amount of work on price insurance and that kind of thing. Is it possible for the hog industry to self-insure over a four-year cycle, and if not, have you any figures on what kind of money it would take from government to make that sustainable over the four-year cycle?

[Andrew Dickson]

We worked with the federal government in terms of a number of studies to look at how we could set up a private four-year price insurance program an individual could buy from an insurance agent.

Part of the problem is we would have to get reinsurance, and the reinsurers are very concerned about the lack of things like catastrophic insurance. So they need some floor in there, because otherwise they can't make this thing work.

We're having discussions right now with some insurance companies as to how we could try to make this work. The model looks feasible. A similar sort of thing has been tried in the United States and has run into all kinds of problems. I'm not an expert on the insurance business, so we want to learn from the American experience and see if we can make a program work across Canada. We're fairly confident this thing would work.

Essentially, what it would do is guarantee a price within a range. If the price falls below it, you'd have a separate account at your local credit union or bank or something like this, and money would go into it if the price went over a certain amount and form a positive on your account. If the price went below a certain level, the insurance company would kick in some money and keep the account positive, and at the end of the four or five years you would come out in a zero position, we hope.

The insurance company would have administrative fees and so forth in between, and that's how they would make their money. They would get their money back out of it and you would get your money back out of it, but essentially you'd arrive at a zero position. But it would guarantee you a price within a certain range, and that's what we're looking at.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Their definition of catastrophic then isn't the typical lows. It would be disease problems or--

[Andrew Dickson]

A massive disease outbreak or something like this, where barns all but shut down and you couldn't do business and animals would be slaughtered for welfare reasons, not because they're diseased.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Hamilton, you suggested that maybe production insurance isn't the most effective way of insuring cattle. I'm wondering what you would suggest would be a better way of bringing in an insurance program for them, and I'd like Mr. Unrau's comment on that as well.

A second question is, do you know or have you explored whether you would qualify as an administrator under the new AMPA provisions, just as a matter of interest?

[Neil Hamilton]

I think we can devise a production insurance program based on pounds of production, say, for a cow-calf operator. In order to do that, we have to get over our own issues as insurers wanting to relate losses to particular perils. We always want to say drought caused this loss, and I think the problem in livestock is that often it is very hard to determine what exactly caused not achieving certain pounds of production. I think it's feasible. I think provinces will try it on a pilot basis, but time will tell.

On advanced payments or the cash advance, what was the question? Would we qualify?

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'm just wondering if you know whether you would qualify as a potential administrator of the program.

[Neil Hamilton]

My understanding of that is that the first right of refusal would go to producer organizations. But we would potentially qualify as a lender. As a financial institution, because we do agricultural lending, we would technically qualify to administer cash advances.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you.

Mr. Unrau, did you have any response?

[The Chair, Conservative, James Bezan]

It can be a quick response. You're out of time.

[Martin Unrau]

I'd just like to say something about the concern we have with insurance for the cattle industry. Right after the BSE situation, the feedlots were getting $320 for an animal that cost $1,400 to produce, and this type of thing. There has to be some type of insurance that would look after those situations.

That is probably one of the aspects with which the cattle industry is really concerned: that when those cattle were finished they'd still be worth what they'd have been worth without the disaster. To us, the BSE situation has been a disaster. It's been huge.

In our industry, if the feedlot industry is healthy, the cow-calf industry is healthy. That's how it works in the cattle industry. That would just be my comment.

Thanks.

[The Chair, Conservative, James Bezan]

Mr. Steckle.

[Paul Steckle, Liberal, Huron—Bruce, ON]

I want to direct my questions to Martin.

You've been kind of an easy ride here this morning, and I think you've got some things you want to say to us.

The BSE issue probably demanded more time than any single issue in my 14 years around this table. We've given a lot of time to that issue. This committee and the government tried to respond. I'm wondering what lessons the beef industry learned from that experience. That's one of the questions.

We're talking about the disaster component to the APF as we move forward. How can that be delivered in a meaningful way so that we don't make some of the mistakes we made in the delivery of the previous programs? As you understand, we know now, because there is a report indicating that the profiteering that took place on the part of the packers was enormous.

This committee undertook to go after the packers. At least there were three parties that felt very strongly about that. One party didn't feel so strongly about it. But we did finally procure a report that gave us a pretty good indication of what went on, and it was less than complimentary to the beef industry. And certainly Canadians paid for that.

I'm wondering what we have learned, moving forward and as we prepare a disaster component as it would relate to the beef industry.

[Martin Unrau]

I think I alluded to it in my statements, that if there is a disaster component, it has to be something that can be done within months, not six months later or a year later, in order to keep the confidence in the industry. As you well know, in the feedlot industry—and that really is the driving force in our industry, the feedlots—massive amounts of money are borrowed every day, and lost, and made every day. So they're kind of used to losing some money. But the important fact is that there has to be some confidence in the banking industry and in the feeding industry in order to keep our industry on its feet.

We are an exporting industry—60% of everything we produce has to be sent out of our country—so markets are also extremely important to us.

[Paul Steckle, Liberal, Huron—Bruce, ON]

But we also know that as we are moving towards the elimination of all SRM product in the beef industry—we're doing it here in Canada—the U.S. is not following suit. Is that giving us an advantage? I hope it is, and I think we're moving in the right direction. We need to do that, but are we going to have an advantage in Taiwan and Japan and China and some of these countries because we've moved in this direction? Is the confidence level any greater because of that, or are we simply playing to the demands of consumerism today around the world, at the expense of farmers, the primary producers, again?

What really manifested itself in the report that was done was the way the farmers received money, and the packers ultimately got it because the packers were the beneficiaries of many of those programs. You said that it has to be delivered early. How can we rationalize giving early payment when in fact it sets the precedent for packers to understand what farmers are getting and therefore price downward so that they can recapture some of that money? That happened; you know it, I know it, and the industry knows it. So how can we get beyond that?

[Martin Unrau]

Going back to the question on SRM removals, the perception is that it will help us.

[Paul Steckle, Liberal, Huron—Bruce, ON]

The perception, yes.

[Martin Unrau]

The fact is that we aren't sure if it will. It's one of those things where if you don't try it, you won't know. There are many people who think it will, and it should—