Good morning. It's my pleasure to have been invited to this round of talks. I'm from Pork Nova Scotia. I'm the vice-chairman. I have my executive manager, Henry Vissers, here with me.
The Nova Scotia pork industry is an integral part of the rural economy of Nova Scotia. In the recent economic report commissioned by Pork Nova Scotia, Kelco Consulting concluded that, based on their review of data for the past five years, a healthy Nova Scotia pork industry spends about $36 million a year on goods and services necessary for farming activities. The resulting activities, through transportation and processing, provided an additional $86 million in direct annual spending. The total direct spending by the sector is $124 million annually. This expenditure supports 1,300 person years of employment, $84 million to the Nova Scotia gross domestic product, and it also provides $8 million in provincial government revenue and $10 million in federal government revenue through taxation.
The pork industry in Nova Scotia is mainly domestic. Nova Scotia produces approximately 50% of the pork consumed in this province. Production has fluctuated to a high of 250,000 hogs to our current production of 170,000. This decline in production is expected to continue and is attributed to a number of factors. The cost of production is higher in Nova Scotia, mainly due to the cost of transporting grain into this province. The export sector has grown in Canada—50% of the national production is exported. This has meant that Nova Scotia producers now share the risk of these national exports. We are open to currency and trade risks without enjoying any of the benefits. Our price is set in Iowa and our costs are established in Nova Scotia.
Some of these items can be addressed nationally as competitiveness issues. For example, we need a competitive regulatory system with respect to licensing of veterinary drugs. Also we'd like to have conditions that will permit farmers to access vaccines at prices competitive with our U.S. counterparts. We also need competitively priced feed grains. We are in a grain-deficient area, and since the loss of freight assistance, the Nova Scotia feeder livestock industry has been at a feed cost disadvantage with other parts of Canada.
Under business risk management, the suite of programs developed in APF I did not meet the needs of the Nova Scotia pork industry. We need an APF agreement that recognizes regional differences. For example, the CAIS program has worked in the past for a single-commodity farm but has caused financial difficulties for farms that have diversified in order to survive. With the extended period of low profitability, the current CAIS program has little value to the hog producers. If the CAIS program is to continue, improvements should be made, including improved timeliness of payments, clarity of process, improved negative margins covered, improved reference margin calculations, and it should include a provincial COP portion in these calculations.
The recently announced NISA-type programming might be of benefit as long as it can help to sustain our industry here in Nova Scotia and be only a part of a revised business risk management program. This program has the potential of putting money where there isn't bad financial hurt. The program needs to be reassessed as to how they put these funds in place. Whereas the hog industry has a huge expense side to the equation, if calculations were based on ENS, hog farmers would be at a disadvantage compared to other sectors such as grains or beef, for example. The program calculations must be fair across all commodities. The Nova Scotia hog industry needs a COP formula to keep farmers alive and therefore rural economies vibrant.
Nova Scotia pork producers need the flexibility of provincial programs in order to address the issues that are unique to our province. The vision of APF II is an industry that is innovative in seizing evolving markets for food and non-food products and services within an environment that fosters prosperity and opportunities for the entire value chain, creating benefits for all Canadians. Producers are not able to buy into this vision on their own. They simply do not have the financial resources. We need a Nova Scotia companion program that supports the innovation required to evolve to this new model.
Production insurance for livestock has been promised in APF agreements, but the government has not delivered. Production insurance for livestock must continue to be developed and suitable options provided for the industry. In the absence of production insurance, there should be a means of compensating producers for disease or other loss of production assets beyond their control.
The pork industry has used their CAIS reference margins to help on losses due to circovirus disease, thus reducing those margins if needed later to address farm losses. With production insurance in place, the disease loss would have been compensated and the original CAIS margin left intact. This has driven Nova Scotia hog farms very near to bankruptcy. The production insurance program should be developed and delivered across Canada with a consistent base to work from. This would help create fairness and accessibility across Canada.
Pork Nova Scotia supports the creation of a framework for disaster relief. Governments will not be able to provide a suite of business risk management programs that can address all eventualities. Therefore, having a framework to guide special situations will be valuable and provide producers with confidence that assistance will be available in these extreme circumstances.
On the cash advance program, Pork Nova Scotia appreciates the work done by Agriculture and Agri-Food Canada for the cash advance program. However, we still find that access to the cash advance for hog producers is not as favourable as that offered to crop producers. The extension to livestock for programs that are currently available to crops must be workable for livestock producers. Due to the short production cycle of hog farms, hog producers have access to the cash advances only for six months. In fact, we have only 50% of the benefits offered to crop producers. In addition, livestock producers that grow grain to feed their livestock will now be at a disadvantage as farm-fed grains will no longer be eligible for a cash advance. How a producer uses grain should not be a criterion for eligibility.
While the environmental policy and regulations fall primarily under provincial jurisdiction, government and industry must work together in developing a strategic approach and define those for enhancing the environmental performance and sustainability of the agriculture sector. Producers require support and incentive to economically achieve enhanced environmental performance. Our feed costs are already higher than those in other jurisdictions. The addition of corn for ethanol programs simply makes the impact worse. Government programs to enhance biofuel or bioenergy production must not be to the detriment of the raw material in livestock feeds. Energy efficiency must be granted increasing attention in all sectors, and outreach and incentive programs should be structured to achieve an effective reduction in societal energy use.
The renewal pillar must focus on sectors, such as the Nova Scotia pork industry, that are in transition. This pillar can help us work on underlying factors surrounding profitability.
Our producers need the means to move the industry forward. Efforts such as moving to higher-value markets and moving of the value trains do not come without cost. Consider a producer who wishes to raise hogs for natural markets. This would require him to remove antibiotics and meat and bone meal from feeds. Some farms may have disease challenges within their herd and they may have to depopulate the herd and purchase breeding stock. A similar situation will arise if a producer wishes to take advantage of the heritage breed market.
All of these changes require a period of time when there is no cashflow on the farm, plus farmers must learn new production methods. We do not have the equity left in our farms to make these changes without support. This role could be filled by renewal.