I would like to thank you for the invitation for coming before the committee.
Also, I'd have to say that the New Brunswick Egg Producers, the board itself, was not notified that this meeting was even taking place. Somebody had given you my name; that's how I wound up here. I'm not on the New Brunswick Egg board or CEMA or any of those organizations; I'm just an egg producer myself, so I'm not into a whole lot of this information. I had contacted them and tried to get them to send somebody, but everybody was tied up because we got the message just last week. So I'm going to read a little bit about what they gave me, and then talk a little bit.
When I think about risk management, I think of two major kinds. There's the loss of income due to price changes, and a loss of income due to production challenges such as animal disease, weather, and crop problems. Farmers face many exceptional challenges that are beyond their control. A farm business is a unique business, and the government's program should help farmers when they're hurt by factors beyond their control. Among the more obvious examples in our industry is avian influenza, which I'll talk a little bit more about.
Our industry had significant discussions with officials in the Canadian Food Inspection Agency and with the Honourable Chuck Strahl regarding the inadequacy of compensation available under the Health of Animals Act. When flocks are ordered destroyed, the compensation is inadequate, because government interprets market value to mean replacement value. So what this actually means, to give you an example, is if you have a chicken in production, they'll say, well, it will cost $7 to replace it. So if I have 35,000 chickens on my farm, and there's an avian flu within five kilometres—my birds don't even have to be diagnosed with it—if it's within five kilometres, all my birds would be killed. I have 17,500 at one age; 17,500 at another age; and another 17,500 replacement flock. So all those birds would be destroyed, and they'd tell me they're worth $7 apiece. And that's just for the 35,000; the other ones are worth only about $1.50 because they're young. So if I were to get paid out compensation, you'd be looking at about roughly $300,000 under the present program that they're trying to implement.
Now, if my barns are empty for six months before they decide they're going to allow birds back, I'd have to come up with birds that age to come in, which is hard to do. Then I'd have to wait another six months to get another age flock in there. I mean, the actual value of those birds within that year's period.... I'd lose a complete half-year production, and then half my production for another fall and half year.
Roughly, in a year I produce 11 million eggs. Now, if you break that down into dozens, you have 920,000 dozen. At a $1 a dozen, we'll say, that's $920,000 in the run of a year that I'm going to be out, and you're going to compensate me $300,000 to come in and destroy my birds, even if they're not even diagnosed with this disease. That's a hard hit to take. We need some type of program that's going to address that, if they're going to do that.
As it stands now, the Canadian Food Inspection Agency is planning to conduct surveillance for avian influenza in commercial flocks. This is a disease that was found in New Brunswick probably 30 or 40 years ago. It's in wild birds. It's just the common flu. If you go over to Asia, where it's developed into a high-path flu that can actually affect humans, then that's different. Here it's still totally low path. I mean, if they go into a barn of mine, and then they destroy.... There has to be some form of compensation for that.
Moving on, we'll go to the other half of risk management, which is price decline. Fortunately, under supply management, which egg production is under, we don't have to worry about that. For more than 30 years the Canadian egg farmers have been operating in the supply-managed system where farmers produce eggs to meet the demand of Canadian consumers. Supply management promotes a steady production of high-quality egg products, which is widely recognized as a sustainable system. It's one that allows farmers to earn a reasonable living under most circumstances.
Talking about high-quality food, I was down in Florida a couple of months ago, and they had a dozen eggs there for $2.80, and two and a half dozen eggs for $1.50. The difference was that the eggs for $2.80 had no medications, hormones, or chemicals put into the chickens. The other ones—well, who knows what was in them. Fortunately in Canada we don't have to worry about that. Everything is strictly regulated. You have different programs, like Start Clean—Stay Clean, and HACCP, that ensure we have proper safety with our food.
When the Start Clean—Stay Clean program came out about 10 years ago, we spent thousands of dollars on our farm to meet the criteria—to do the bio-security, have the step pans, change clothes every time you walk into a barn, wash your hands, and all that stuff—just so we would be qualified for the compensation. We continue to do that.
Right now, all the eggs produced in southern New Brunswick go to Amherst, Nova Scotia, to one central grain station. The main reason behind that is regulations and cost. We shut down our grain station last year because of two things. One was the regulations coming in and the high cost of machinery and meeting the HACCP conditions. As for the other one, as was already pointed out, there are two major sellers of groceries in Canada right now. They just up and said, we want to buy from one person; we don't want to buy from a bunch of people. Either get together or we'll buy our eggs someplace else. There'll be three sellers of groceries soon, because Wal-Mart is creeping up into Canada. It became number one in the United States over a 10-year period, so there's a good chance it could do quite a bit of damage here if we don't have the proper regulations put in place by government for things like this.
The next agriculture and agrifood policy should include all components of Canadian agriculture, with the primary objective of achieving growth and profitability for every sector. As a result, it needs to go beyond identifying solutions to problems. It must also recognize and strengthen very successful components of Canadian agriculture, such as supply management. It's a system that's proven to work, but you can't have it in all sectors. In the potato sector, for example, most of the potatoes are exported, so it's difficult. But there are some sectors where you could bring in regulations that would help.
Stores call food “local” now if it gets there in 24 hours. If you put food on an airplane it can be there in 24 hours, and it's called local. Maybe regulations should be brought in so the stores have to buy so much local food to actually be called local. Maybe food should have to be labelled to show where it came from—this came from Africa, or wherever.
You look at food safety too. People who grow some vegetables can't get certain pesticides and insecticides, even safe ones that are used in other countries—and we buy food that has been sprayed with these. Some countries like Argentina are still using chemicals that we banned ten years ago. They're spraying them on the food, shipping it up here, and we're buying it and eating it. That's not good food safety or good sense.
It should be noted that in the implementation agreements for the current agricultural policy framework, some provinces include very strong language in support of supply management—going as far as recognizing it as a cornerstone of Canadian agriculture policy. Supply management systems are federal-provincial agreements authorized by legislation. As such, the pillars that allow for the effective functioning of supply management need to be supported. That is why we are also asking that these three pillars—producer pricing, import controls, and production discipline—be explicitly named in the next policy framework.
Turning to general disaster risk or risk management, if a farmer gets hit with drought or heavy rains, or loses a crop due to disease or bugs, in order to get compensation, he has to go through two levels of government, and there's private insurance and this and that. But you still have to pay the bills as time goes on. Banks aren't the types to wait around for that. That's how they make their money. If you don't make your payments, they say, okay, you paid all this money, and now we want the farm.
I feel that if farmers can show that they're in financial distress due to conditions beyond their control, due to government program changes or government rules that changed, for example, or due to weather, disease, or whatever, as long as they can show what they were making, there should be financial aid for them immediately, under some type of program. If you can show the paperwork for it, then they should say they'll make your payments and keep you afloat.
In my own case, taking income out for six months is half a million dollars. And I still have to pay my bills. I still have all my costs. The only cost I don't have is feeding my birds, basically. I still have everything else there.
Even to feed my birds, I don't buy my feed from a feed mill; I have my own feed mill, so I still have costs there. I could have anywhere from $10,000 to $50,000 worth of grain sitting there. If it's going to be shut down for six months, what am I supposed to do with it? Even to resell it would be costly, to take it out. I'm talking about things like that.