Good evening, Mr. Chairman, committee members, and ladies and gentlemen. We do have another meeting after this one, but we'll do our best to go through this presentation to you.
We appreciate your invitation this evening. My name is Kevin MacIsaac, and I'm the chairman of the P.E.I. Potato Board. Ivan Noonan is with me this evening; he's our general manager.
In the short time we have, we'd like to share with you that P.E.I. certainly is the largest potato producing region in Canada. We produce over 25% of the potatoes in the country and approximately 35% of the total seed production. About half of all the seed potato growers in Canada farm in P.E.I. Our potato acreage peaked at 113,000 acres in 1999 and has decreased by 14%; it is down now to 97,000 acres for 2006.
Our seed potatoes and fresh potatoes for processing are shipped to over 30 countries around the world, and that includes markets as diverse at Thailand, Turkey, and Uruguay. Close to 60% of our crop now is produced specifically for processing into french fries, potato chips, dehy, and other value-added products. The value of seed, table, and processed potato exports from P.E.I. over the past five years was over $1.2 billion, and this doesn't include the value of shipments to Canadian markets.
We realize there have been many consultation sessions over the past few years on the APF, and we participated in them, including the session in P.E.I. on February 19. To be blunt, we do not feel that the first APF has done much to assist with the stated goal of helping “the sector chart a course to continued prosperity and profitability”. We should qualify that statement: perhaps the sector is more prosperous and profitable, but we as farmers definitely are not.
In terms of business risk management, we went backwards when we lost NISA and ended up with CAIS. I know some politicians and government employees felt that NISA was simply a retirement program, but here in P.E.I. it was working as intended, and in good or relatively reasonable years, we built up our NISA accounts. When we hit bad years, either as individual farmers or as an industry, we withdrew funds from our accounts to stabilize our farms, and that's the way the program was intended to work. CAIS does not do the same, and many of you know the problems with that program.
In terms of the other APF elements, in terms of food quality and safety we worked through the Canadian Horticultural Council to develop an on-farm food safety program for potatoes. It was a very long process. It received technical approval from CFIA; however, not a cent of the millions of dollars of national funding that has been repeatedly announced by the government has been made available to potato farmers to implement this program. We are implementing it now because our buyers are demanding it; they will not pay extra for it, but they are demanding it, and we will have to do it. We've been told that eventually, after another long approval process, our growers will be eligible to receive $750 per farm to assist with implementing these costs. Really, that amount is an insult.
The food produced by Canadian farmers is safe and was safe before APF made it a priority. Nonetheless, in this country imported produce that does not have to meet on-farm food safety program requirements is sold to Canadians, and we see this as very unfair.
In terms of science and innovation, we're not really sure where these funds or resources from the APF are directed, but we see cutbacks in terms of the research that we need to help us remain competitive as producers. Most of the researchers who work on potato issues on P.E.I. have retired or are retiring soon. They have not been replaced, and we've lost touch with our research people: for the most part, the work they're doing is not relevant to our needs. It's a very sad situation indeed.
In terms of the environment, one would think that the efforts in this area of the APF framework would be designed to assist farmers in addressing environmental issues. This definitely has not been our experience in the province; instead, dollars from the agriculture budget have been provided to Environment Canada to do research that actually has blackened our image in this province in agriculture, and in the potato industry in particular. When Environment Canada provides the environmental extremists, as I call them, with copies of its potato research first and does not discuss the results with our industry, we think there's a major problem. The public, however, trusts Environment Canada to provide good science-based information to Canadians. We did, as well, before our eyes were opened by some of this kind of work.
In terms of renewal, again we haven't seen a lot of evidence here in the province. I'm sorry to sound pessimistic, but it appears that while we try to convey our concerns through the regular consultation process, they're not necessarily reflected in the decisions that are made in Ottawa in the very end. We're being honest with you, and we hope you will hear our concerns and know that they are real.
Rather than talk in the language of the APF 2 elements being used in Ottawa, we'd like to now tell you about some of the things we feel must be addressed if we are to have a chance at a prosperous and profitable farm sector.
We need a business risk management program that really does stabilize the industry at a level where there is a hope of recovery from whatever shock that causes farm income to fall.
We also need a compensation program for the potato industry that will help us deal with a disease or pest detection of quarantine significance. As you know, we've been through the potato wart crisis, which devastated our producers, and a much smaller number of potato producers in Quebec are now going through the potato cyst nematode crisis.
The response from the bureaucrats is that we have safety net programs that will address the losses, but they're simply not effective, and we need to address the long-term losses of property and income that can occur under these circumstances.
We need a true commitment to dealing with trade barriers, including phytosanitary barriers to trade and negotiating market access. Over the past few years, the United States has negotiated several bilateral trade agreements with countries that are or used to be major export markets for our potatoes. Tariffs are rapidly disappearing for U.S. agriculture products into these countries, while the tariffs that apply to Canadian products remain high. When you add in aggressive market development, support, and financing terms that U.S. growers and exporters receive from their government, we lose ground very quickly.
We realize that Canada chose to focus its efforts on the WTO, but while we're doing that, the U.S. and other countries have developed bilaterals that can achieve similar results in key markets.
We need federal support to truly fight foreign governments that refuse to live by existing international trade and phytosanitary rules. For example, Venezuela used to be a very important market for P.E.I. seed and table stock potatoes. We shipped over 1 million hundredweight to that country annually. However, when the current president came to power, Venezuela refused to issue import permits for Canadian table stock potatoes anymore. Our trade officials tell us that this is illegal, but it has now been several years that we have been unable to ship our table stock potatoes there. It's not a good situation.
Another case in point is Russia. There was an extensive drought in Europe this year, and potato production was badly impacted throughout the continent. We had an abundant crop in Canada, and the European situation looked like it would lead to strong exports. To date, our export shipments are somewhat higher, but nowhere where they should be. Why? Because we have an inability to access these markets.
We've been trying to ship to Russia since early fall, and despite the assistance of Wayne Easter in raising the issue federally, we're still shut out of there. We've been told there are no phytosanitary or plant health reasons for this. Indeed, we've shipped potatoes there in the past, but no one in Agriculture Canada or the CFIA seems to be able to identify the root cause for refusal to grant import permits for Canadian potatoes.
In terms of innovation, we'd like to see the APF support an innovative approach to improving farm viability, which we have been involved with here in P.E.I. Like many sectors of agriculture, the North American potato industry is very integrated and when we have surplus production in either Canada or the United States, it results in poor returns for potato producers on either side of the border. Certainly this was evident in the 2003 and 2004 season.
United Potato Growers of America initiated potato acreage buy-down programs in its member states in the spring of 2005 to prevent surplus production. P.E.I. has worked with them and also initiated potato acreage buy-downs for the 2005 crop in our province. Through our grower-funded program, we bought down close to 9,600 acres of potatoes. We've also strongly encouraged other potato-producing provinces to plant only what is required to meet known market demand.
While this was happening, we also fostered closer ties with the United Potato Growers of America. United Potato Growers of Canada was formed in February 2006. To date, our membership represents over 96% of Canadian potato production. The members so far include almost all provinces, with the exception of Nova Scotia, which is very supportive but it is a very small province. Other than that, we have good support from the other provinces.
We've signed a North American potato cooperation memorandum of understanding, and so in addition to reducing the supply of potatoes, we're sharing some real-time information in terms of our markets and pricing in order to maximize our returns. I would have to say the level of cooperation between potato growers across the border is truly unprecedented. Your trade officials can attest to the improved relationships in discussions at the Canada-U.S. potato meetings and negotiations that have resulted from these cooperative efforts.
At home here in P.E.I., we also instituted a second grower-funded program to buy down acres for 2006. We bought down close to 8,500 acres. Yes, we're getting there. United Potato Growers of America has also reduced considerable acreage in their country as well.
A word on the environment. In our initial program to buy out acres, we were looking to reduce our acreage by 10,000 acres, and we felt this would be a reason to do it in terms of the environment in that less slope land, less marginal land, would be used; less fertilizer and crop protection would be used as well. Also, the economics, of course, would mean more returns for producers. However, in a nutshell, when potato producers tried to implement this program, we went to the provincial government and the federal government for funding assistance and we were unable to get assistance in developing this program. This was certainly a big disappointment because it was a benefit not only to our province, but the other provinces as well.
I could raise many other items, but in this short period of time, I'd just like to add two final comments. You have an important role in this committee, and we really have to try to improve the policy framework for agriculture in this country if we have any chance of a viable Canadian farm sector in the future. I would ask that you be flexible. Sometimes programs that work well in the west do not work well in the east.
Thank you very much for the opportunity.
