Thank you. Welcome to the standing committee to my beautiful part of Manitoba. I live just north of here at Arnes on the shores of Lake Winnipeg on my great grandfather's homestead. Welcome.
I plan to speak on three separate areas related to the APF: the broad agreement itself, business risk management, BRM, and the next generation of agriculture and agrifood policy, called APF II by a lot of people.
The agricultural policy framework represented an important advancement for agricultural policy in that it moved to a more integrated, broadened approach to federal-provincial policy development beyond BRM, or safety nets as they were called then.
There was also recognition of the substantial provincial contributions in other areas of policy and programming in developing the APF. Other areas of importance to the industry and to Canadians were explicitly included, such as environment, food safety and quality, renewal, and science and innovation under the tag line of non-BRM.
The predominance of funding was in BRM programming, originally identified at $1.8 billion per year in federal-provincial funding, with about $200 million across Canada for all the non-BRM elements.
Finally, there was a smaller federal funding component called wedge funding that was identified to assist provinces to provide province-specific programming. This was an important tool to allow programming in areas of importance to each province.
The national programming approach of the APF provided significant consistency across Canada but lacked the ability to deal with the regional issues faced by provinces. Some of the biggest challenges with the APF came in the implementation of non-BRM programming. It took substantial time both to develop and to negotiate and implement agreements for the many new programs. This was complicated by new federal rules being introduced and enforced after unrelated situations—I don't think I have to explain that—challenged the accountability of the federal government.
Under BRM programming, in the APF, provinces and the federal government moved to a so-called two-program set; that is, production insurance and the Canadian agricultural income stabilization, CAIS, program that began in 2003. The CAIS program tried to combine many of the stabilization features of the net income stabilization account, NISA, program with the disaster income support of the Canadian farm income program, CFIP.
Based on payments being made when current incomes fell below historical incomes, CAIS was WTO compatible and focused on payments to producers based upon need. However, even before the program was implemented, we had challenges when the BSE crisis meant that CAIS payments may have been insufficient to meet the income drops faced by beef producers. The result was that changes were made to CAIS even before it was implemented, with higher payment caps and payments on negative margins being added.
Throughout the period of the APF, we have seen some significant challenges in farm income. This has increased Manitoba's CAIS costs far beyond that anticipated at the start of the APF. In 2005, our recorded costs were 148% above this anticipated cost. In fact, overall farm program spending by the province is at a higher level than it ever has been in history.
CAIS costs incurred by the province would have been much higher in each of those years except for high levels of ad hoc spending by both governments that reduced CAIS payments to producers. Manitoba has made it clear to the federal government that affordability of BRM programming is a substantial issue for provinces like ours with a large agricultural sector and a small population. Interestingly, even with CAIS payments at very high levels, there has been significant dissatisfaction among producers with the program. Changes to CAIS in the past two years have made the program more responsive to producers, but it remains to be seen if this translates into more support for the program.
I'm going to turn to the next generation of agriculture and agrifood policy.
As the APF ends in 2008, governments are now looking to develop the next generation of agriculture and agrifood policy. In this framework, we are borrowing a page from stakeholders in moving away from the pillars of the APF to broader and more integrated policy outcome areas such as being a competitive and innovative sector, being a sector that responds to society's objectives, and being a sector that is proactive in managing risks.
Under these policy outcome areas are specific undertakings that relate to what was previously called the BRM and non-BRM areas. While BRM is still considered very important in this framework, there is a significant recognition that we need a strong focus on the other areas to position the sector to capture the long-term opportunities.
We are discussing a BRM approach that could include enhanced production insurance, a modified CAIS with the top 15% tier not eligible for producer payments, a producer's savings account program, and a possible agricultural disaster assistance framework that could allow disaster funding when other programming does not deal with the impacts to producers.
Of substantial importance to many provinces, including Manitoba, is regional flexibility, moving away from the rigid national approach used under the APF. The big question here is the degree of flexibility that is appropriate versus a still significant need for national consistency.
Governments have also recognized that the full range of policy tools--program spending, regulatory regimes, and tax-related tools--must be considered and used to address key issues where appropriate.
We must also explicitly take into account the WTO and potential for a new agreement in designing the next generation of agriculture and agrifood policy. It has become clear that our major international trading partners are positioning themselves to take advantage of a new deal, and Canada must do likewise or face major challenges.
We need to do this to assist our industry to capture new international opportunities that result, to allow our sector to adapt to new international trading rules, and to ensure that Canada can meet our trade obligations.
I would be remiss if I didn't identify two key priorities for Manitoba in the next generation: rural development and infrastructure improvements. It has become abundantly clear to us that agriculture and agrifood and rural development are inextricably linked. Agriculture depends upon healthy rural communities, and rural communities depend upon a healthy agricultural industry.
Similarly, improvements in rural- and agricultural-based infrastructure are essential to allowing the agriculture industry and rural developments to move ahead. To ignore these two issues would be to ignore a key opportunity to assist the agriculture and agrifood industry to move forward.
In conclusion, I believe we have an exciting opportunity to assist Canada's and Manitoba's agriculture and agrifood sector to prosper and to realize substantial opportunities in a dynamic and changing world environment. We will continue to work closely with stakeholders to ensure that we get the next generation of policy framework right.
Thank you, Mr. Chair.