Agriculture Committee on April 26th, 2007

[The Chair, Conservative, James Bezan]

I call this meeting to order.

We're glad to be in Stratford. This is the last day of our cross-Canada tour as an agriculture committee doing our study on the APF.

I'm going to welcome to the table this morning Brian Edwards and Mark Bannister--no strangers to our committee--with Tobacco Farmers In Crisis. From the Dairy Farmers of Ontario we have David Murray. Welcome, David. From the Perth Federation of Agriculture we have Ed Danen. From Ontario Pork we have Mary-Ann Hendrikx. From the Chicken Farmers of Ontario we have Bill Woods. And from Huron Commodities Inc. we have Martin VanderLoo and David Kohl. Welcome, everybody.

In the limited amount of time we have with you this morning, we ask that you keep your opening comments to ten minutes or less. I will signal when you have one minute left, and we'll cut you off so we can have enough time for questions and answers.

With that, Mr. Edwards, perhaps you could kick us off.

[Brian Edwards, President, Tobacco Farmers In Crisis]

Thank you, Mr. Chairman.

It's nice to be here this morning to address the situation.

We represent tobacco farmers. Our name is Tobacco Farmers in Crisis. We've been lobbying for an exit program for tobacco farmers to exit tobacco production, and that means that if we can, we would like to put a program in place that allows the tobacco quota system to be exited totally--100%. In the present situation, we are no longer viable.

We have 272 million pounds of quota. The present crop size being talked about is in the range of 32 million to 38 million pounds. That means that under the quota system we will be operating under, we're looking to operate with 10% to 12% of our quota base. That is no longer viable.

We have 1,559 individuals who own these quotas. There are 1,068 individual master quotas and 1,559 individuals who own them.

For two and a half years we have been presenting to the various levels of government that this exit is needed, and it is needed immediately.

Last Thursday we conducted a mass meeting of our members and asked their opinions. We sprung on them a membership expression of opinion, with no advance notice. We wanted to know exactly what they thought. They were asked whether, if a buyout were open over a period of time, they would exit immediately, and 66% indicated that they would exit immediately. Asked whether they could be viable at 10% to 12% of their basic production quota, 98% indicated no. If they were unable to grow in a scenario of 10% to 12%, would they feel that the board would be representing their best interests in negotiating a 2007 crop? Sixty-five percent indicated no. On whether the board should keep the buyout as a priority before the 2007 crop is negotiated, 91% indicated yes.

We are in a crisis. There's no doubt about it. Tobacco companies themselves have indicated that they need approximately 150 to 200 growers into the future. How do you operate with 1,068 quota holders? It won't work. We are supposedly a supply management commodity, but unfortunately we don't have border controls. We went after a national agency. That didn't happen. So unfortunately we have a quota system that at the present time is no longer sustainable.

The financial institutions loaned the farmers money in good faith. A number of growers have letters demanding payment, because this is no longer payable. In 2001 and 2002 a burner conversion to eliminate nitrosamines, a carcinogen, was undertaken. We were given stable crop sizes for the future of 108 million pounds, 108 million pounds, and 109 million pounds for the years 2002, 2003, and 2004. It cost a lot of money to retrofit our operations. A lot of farmers looked at the situation of having a stable crop future and they modernized. They believed in the principle that if you became bigger and more modern, you would be more viable and you would be able to make money. That dream is gone.

We are under severe financial and emotional stress. At this point in time, there's been a quota moratorium in place for a year waiting for a buyout program. Unfortunately, we don't have that program today. Our tobacco board is in discussions with the minister, presently. For a year we've been looking at a $3.30 buyout program for the basic production quota. The minister has said, unfortunately, that the program is too expensive for the Department of Agriculture and Agri-Food, and we agree with him.

This is not an agricultural tobacco issue. It is government health policy to deter adult and youth smoking. It's government taxation policy that we're going to deter adult and youth smoking. This is not a disaster that has taken place because of Mother Nature; this is social engineering. We've decided that tobacco use is no longer acceptable, that we're going to deter it, we're going to denormalize it. Five years ago, the federal tobacco control strategy was put in place, $450 million. The aim of that policy was deter adult and youth smoking. On top of that, our provincial governments have decided also that they're going to eliminate, at some time in the future, tobacco smoking.

An agricultural policy framework doesn't fit our commodity. We're falling through the cracks. Our charter of rights doesn't protect us. What has happened is that we've lost our ability to make a choice. We're here to ask our government to give us a choice to leave, to leave with dignity, to allow us to pay our debts, and not take from our other agricultural commodities one penny. Finance this program through tobacco itself. Tobacco pays for its own bioprogram. Our other agricultural farmers and commodities are having a tough enough time themselves. We need a program that identifies to a situation that hasn't happened in Canada before: we have decided that we're going to eliminate tobacco production.

Canada signed the framework convention on tobacco control treaty. There are two articles in that treaty, articles 17 and 22, that state that there will be a viable alternative to tobacco provided to tobacco farmers, tobacco workers, and individual sellers. Right now, there isn't a tobacco-specific program available to us.

We've had examples of tobacco exit programs in other countries. We've looked at the United States. We've looked at Australia. There are programs in Europe taking place where farmers will be getting out of tobacco production. The framework convention on tobacco control treaty through the World Health Organization is to deter and stop tobacco consumption.

At this point in time, we are faced with growing another crop. We have what is called the tobacco advisory committee, which is run by the Ontario government through the Farm Products Marketing Commission, and we have a federal observer who observes the negotiations. The mandate of that committee is to make sure that if a crop is offered, of any size, that it's grown, and right now it's unviable for the number of growers who are left trying to produce.

We need help and we need it soon. The financial institutions, as I have said, are demanding payment. We were fortunate enough to be at this committee one other time, in the fall, when Quebec was with us, our producers from Quebec who exited in the previous program. They are having a tough time after tobacco, trying to survive growing alternative crops.

In Ontario, our farm sizes are not large. They are from 50 to 100 to 150 acres in size. To grow an alternative crop is difficult. What are we going to do? Are we going to move into other commodities that are struggling themselves? There's no magic bullet. There's no magic crop. Alternative fuels and energy may be another source, but right now those are not available.

We need special consideration given to our commodity, unfortunately.

We will be answering questions that of course the committee will have, and I thank you for the time to present here today.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Edwards.

Mr. Murray, it's your turn.

[David Murray, Board Member, Dairy Farmers of Ontario]

Bonjour, tout le monde. Thank you for allowing me to present to this committee, which is doing such important work for the agriculture sector in Canada.

My name is David Murray. My wife Annamarie and I operate a dairy farm just west of here, near Mitchell. I also sit on the board of directors of the Dairy Farmers of Ontario, representing the producers of Huron and Perth counties, 600 of the 4,600 dairy producers in Ontario.

My MP Gary Schellenberger and MPP John Wilkinson proudly state that they represent the most agriculturally productive riding in the country. I am very proud that I live and work in this important rural community. I am also very proud that I derive 100% of my dairy income from the marketplace.

Ontario's 4,600 dairy farms produce nearly 2.4 billion litres of milk annually, worth approximately $1.6 billion at the farm gate, and employ a total of about 40,000 people in the farm, processing, service, and retail sectors.

Agriculture is the second-largest sector of the Ontario economy after auto assembly, and dairy is the largest sector of Ontario agriculture, at 20% of this total.

I would like to comment on three areas of the next generation of agriculture and agrifood policy, namely business risk management, renewal, and food safety.

Regarding business risk management, we believe that supply management needs to be clearly defined as a program under the business risk management pillar. More emphasis should be put on programs that work to maintain farm incomes and producer bargaining power in the marketplace--programs such as Canada's collective and orderly marketing systems, including supply management and its three pillars: production discipline, import controls, and fair farm pricing.

Although Dairy Farmers of Ontario recognizes the objectives of the renewal theme consultation, it notes that the discussion paper does not recognize the distinctiveness of supply management and its components and the realities of the system within a competitive and profitable Canadian agriculture sector.

Dairy is a regulated industry safeguarded by the three pillars: production discipline, import controls, and fair farm pricing. Supply management is designed to protect producers to a certain extent from international market forces. As such, dairy producers are not faced with the same industry challenges, international pressures, and competitiveness difficulties faced by non-supply-management producers, which are clearly the subject of the discussion paper.

The key to renewal is profitability. Profitability is first and foremost facilitated by supporting programs like supply management that provide stable and profitable farming opportunities. Profitability is enhanced within the renewal context through policies that allow producers to acquire and retain the diverse set of skills they need to meet market challenges.

There is a need for continual dissemination of knowledge, new markets, and innovation opportunities to all industry partners. There is also a need to provide producers with the knowledge and tools they need to apply acquired marketing technological and regulatory expertise in a way that allows them to maintain and improve income derived from the marketplace.

Food safety is a public good. The safety of the milk supply and the perception of safety are essential elements allowing Canadian dairy producers to market milk and dairy products in Canada. Dairy-producer participation in the Canadian on-farm food safety program contributes to the public good and is increasingly becoming an expected part of agricultural production. It is critical that Agriculture and Agri-Food Canada realize that the market is not providing any extra return to producers in recognition of food safety, despite producers' making long-term commitments and incurring extra costs to implement and maintain programs that allow them to demonstrate that all necessary steps are taken to demonstrate the commitment to food safety.

Canadian farmers have long been providing safe foods to their customers. On-farm food safety programs do not introduce new, safer practices for producing food. They introduce systems of recording, documenting, and verifying that the production practices are being followed and are effective in controlling potential hazards. In short, the programs provide structure and demonstrate due diligence by dairy producers. Dairy farmers need incentives from Agriculture and Agri-Food Canada and premium prices from the market to recover the costs incurred through the implementation of the on-farm food safety program.

Under this area of food safety, I do have a few recommendations from Dairy Farmers of Ontario.

On-farm food safety and food quality programs contribute to the public good. Producers are making long-term commitments to the programs, but are struggling to justify costs. Recognition of the green nature of the programs is important, along with mechanisms to recuperate the extra costs from the marketplace.

Secondly, current on-farm food safety funding programs should continue with modifications to help producers develop, implement, and improve on-farm programs that contribute to the public good.

Thirdly, transition from the APF-1 to the next generation of agriculture and agrifood policy must be seamless.

And number four, the farm animal sectors are committed to work with the provincial and federal governments in a true partnership toward the development and implementation of a national farm animal health strategy. In this regard, the next generation of agriculture and agrifood policy must recognize the interrelationship of the numerous components of such strategy by conglomerating relevant programs and tools under a single pillar.

Those are my comments. Thank you.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Murray.

Mr. Danen, you're on.

[Ed Danen, President, Perth Federation of Agriculture]

Good morning, ladies and gentlemen. Thank you for the opportunity to participate in this forum.

Welcome to Perth County, one of the most productive counties in Ontario. Perth County has gross farm receipts of $560 million, more than the provinces of Newfoundland, P.E.I., New Brunswick, or Nova Scotia.

Agriculture employs close to 30% of the county's workforce, with 1.26 people employed in related industries for every person on the farm. This generates $1.52 in sales to agriculture-related businesses for every dollar earned at the farm gate.

My wife and I have a partnership with my brother and sister-in-law in which we milk 150 cows, raise all the young stock, including the veal, and crop approximately 500 acres.

As president of the Perth County Federation, I represent 1,700 farm business members. I will focus on the business risk management pillar, but would also like to touch on the others as well. For business risk management, my presentation will be conceptual in nature, as opposed to being focused on details.

There has been much discussion on what has and hasn't work in the current suite of programming. In order to develop a comprehensive set of programs for the future that will be agreeable to producers as well as to government, we need to first determine what we want to accomplish. Producers are looking for programs they can count on when they need them. “Predictable” and “bankable” are terms often heard in this regard. They do not want to have to lobby for improvements after the programs have not lived up to expectations. Producers do not deserve to have to live with the anxiety and uncertainty that comes with not getting what they felt they should have from a program.

By the same token, I doubt government deliberately attempts to put forth programs that put producers in positions of hardship, thereby forcing them to be on the government's doorstep on a continual basis looking for upgrades and improvements to programs that were developed to be comprehensive and all-encompassing. Maybe I'm not cynical enough, but I would think that government develops programs to solve problems, not create them.

I think the government needs to be more deliberate in its approach. There needs to be a clear understanding by all parties of what the program is designed to accomplish. I foresee a tiered approach to programming, with each tier addressing different timelines and severities of impacts. There needs to be a disaster program that deals with sharp and immediate impacts, such as BSE or floods, for example. Although funding of these events is hard to forecast, contingency funds need to be in place so that reaction is fast and unquestioned in their support of agriculture.

Business risk management, by definition, would be protecting your business from unforeseen circumstances. In doing this, most producers use insurance diversification and other mechanisms to protect themselves. However, there is still the necessity for government to assist with circumstances that are not covered.

Production insurance has long been a part of our toolbox and I think producers have traditionally made good use of it. There is opportunity to expand production insurance to cover more commodities and to cover more perils, such as disease. As far as government investment, I believe this returns good protection for the dollars invested.

The goal of an income stabilization program should be to assist a producer to move from one reality to another. By this I mean that as a producer encounters an event, then learns to deal with it and attempts to overcome it, there needs to be support available to assist them. However, after a number of years there needs to be an adjustment to the new market forces at play.

I'll use BSE as an example. Initially there was a massive and immediate reduction in income. An adequate disaster program would assist this radical adjustment. Then, as time moved on, we have seen varying degrees of recovery in the market. We are now almost to the point where we can say that we are dealing with a new market reality where producers can and must fully evaluate their options for the future. To be effective, an income stabilization program must assist producers in reaching this point.

The final tier of support comes into play if this new reality is unsustainable for an entire sector, either because of a dysfunctional market, distortion of the market by foreign subsidies, or whatever the case may be. The income support tier would support producers for the longer term. In this tier there needs to be a clear decision and commitment by government to support a sector that is not in a sustainable net income trend.

Whether the justification is a whole farm support policy or a national food sovereignty policy, or just a long-term bridge for a market that will return to sustainability, the support needs to be clear and unwavering.

If the government decides that support for this particular sector or commodity is not in the best interests of Canadians, then that too needs to be clearly communicated so that those involved can make the required decisions on their operations, as opposed to reducing their equity with the hope that the government will some day come through for them.

Within this whole suite of programming, there need to be some underlying parameters. The potential for profitability must be ingrained in the suite of programs. The programs need to be clear. They need to be reasonably uncomplicated so that they are both easily understood by producers, and so they are easy to administer, so as not to lose valuable resources in administration costs.

Producers need to be informed as to why they did or did not qualify for assistance under any or all tiers. If there is some form of interconnection between programs, there should never be a clawback of funding. There should be an opportunity for provincial governments to enact companion programming to address regional needs. There may be opportunity at times to mimic foreign policy to avoid the threat of trade action, even if there isn't the capacity to match the commitment.

Producers in all sectors have been dealing with tight, and sometimes negative, margins. The morale and enthusiasm in the entire sector has taken a beating. I think government has a real opportunity to bring that back with programming that producers can trust and rely on.

In Ontario, the environmental farm plan has been in existence for close to 15 years. It has been instrumental in improving agriculture's impact on the environment and water sources. Updated versions have addressed changes in what are considered new standards, for instance, in hydro usage and conservation, and sound and smell awareness. Having just completed an EFP workbook on Tuesday, I can say first-hand that it is a very in-depth look at how we and our farm interact with the environment, water supply, and indeed all of society around us.

I think the environmental farm plan needs to be a permanent part of agricultural programming at the federal level. Commitment for this program needs to be clear through an entire transition from one APF to the next version of the APF, with no gaps. This program has, in my mind, the capability of being the vehicle for a broad range of public investment towards land stewardship initiatives, source water protection demands, and a whole host of things that agriculture can assist all of society with in our attempt to reduce our collective impact on the world around us.

I must emphasize the fact that any service or improvement that benefits all of society must be significantly cost-shared by all of society. I would also like to stress that if you want producers to be willing participants and truly forthcoming in some of their shortcomings, then the workbook must be kept confidential once it's completed.

Innovation and renewal: If you look up innovation in the dictionary, I'm sure you'll see “farmer” listed as one of the synonyms. I find so often that in an attempt to assist in innovation, governments tend to re-study what some are already doing. Instead of reinventing the wheel, I think removing the chocks and allowing farmers to help direct where they need assistance would better foster innovation. There are some really astute individuals in agriculture who, given the chance, could really excel in driving innovation forward.

The idea of the renewal pillar was very forward thinking when it was first developed. However, I think some serious issues need to be addressed. Having just completed a succession in our business, I have some first-hand experience with how some of the programming works, or, more specifically, doesn't work. I think our accountant benefited most from the CFBAS grant, the Canadian farm business advisory services grant. If you have advisers who are accredited under the program, then it should not be necessary for bureaucrats to pre-approve what you are trying to accomplish. It definitely shouldn't be a requirement that the entire plan be completed and approved before you start on implementation. Often the two are intertwined, and this resulted in a lot of positioning in order to stay compliant with the funding criteria. This wasted valuable time--and when dealing with a chartered accountant, I do mean valuable. The delays also created opportunity for other issues to fester and create problems and anxiety that still exist, and will for some time, making family relations difficult.

If you have accredited individuals, you need to let them run with it and deal with every situation individually. When the process is complete, you can have the opportunity to assess whether all aspects comply, but every attempt must be made not to delay the process for each operation.

[The Chair, Conservative, James Bezan]

Mr. Danen, your time has expired. I was trying to signal to you. You have to look at the chair every now and then when you make a presentation.

[Ed Danen]

I'm sorry.

[The Chair, Conservative, James Bezan]

Madame Hendrikx, you're up.

[Mary Ann Hendrikx, Ontario Pork]

Good morning.

I am Mary Ann Hendrikx. I'm pleased to have the opportunity to speak to you today about business risk management on behalf of Ontario Pork.

I'm a member of the provincial pork board, representing 3,100 producers in Ontario. I also sit on the pork safety net committee and act as the vice-chair of Ontario's Agricultural Commodity Council.

My family farms in southwestern Ontario, raising hogs, corn, soybeans, and wheat.

In 2006, 30.8 million hogs were produced in Canada, and over 7.4 million of these in Ontario. Eight and a half million Canadian hogs were exported to the U.S., either as weaners or as market hogs. Ontario exports a similar proportion. Of those hogs processed inside our borders, over half of them are exported as pork to 88 countries around the world.

We are part of an integrated North American market because of the large number of hogs we export into the U.S. And we purchase many inputs from the U.S., including feed, pharmaceuticals, and equipment.

Competitiveness is key to our success. Managing our business while trying to compete on a level playing field with our neighbours is the largest risk we manage as producers. Various risks affect our competitiveness and are completely beyond the control of producers. For example, things like currency fluctuations and interest rate changes affect our input costs.

Government policy and action must take into account the resulting effects. Thoughtful handling of labour issues or enabling product availability to deal with management challenges like disease are legislative things that our government can do to assist competitiveness as we struggle to meet increasingly sophisticated consumer demands. Even in an ideal competitive environment, producers require a safety net to deal with market downturns as a way to stabilize our income. Pork producers have found real value in the CAIS program and support the continuation of a margin-based program.

Of course there is always room for improvements. Timeliness of payments and predictability would lessen some of the criticisms from the grassroots producers. Also, the design principle that requires producers to finance program costs is in most cases unnecessary. Producers already assume considerable risk in production, and participating in this program has an administrative burden. Sharing in the program costs is simply an added expense. Also, many producers feel that government pro-ration would be a breach of trust if it would actually occur. In order to be effective in assisting producers during times of crisis, claims and payouts need to be considered income in the year to which they pertain, rather than when they're received.

The newly announced stabilization program sounds very promising and, in essence, what many producers have been asking the government for. A real concern exists for the maximum contribution being high enough to be of value. The previous NISA limits are too low for the size and scope of today's commercial family farms, especially in the pork sector.

There are simple ways to prevent the issues that brought the NISA program into disfavour. Mandatory withdrawal of the government portion in year of a claim is a simple solution that would do that job, as well as other suggestions mentioned earlier, like higher deposit caps and allocation of income into the year of hurt.

As I stated earlier, the pork industry is very export-dependent. We agree that programming must conform to international trade obligations and minimize the threat of trade action. We will not willingly endure another trade challenge. But being able to win these challenges is essential to our survival. One very important principle is equity across commodities and regions. All Canadian producers should be given the same opportunities and risk management programs so as to bring our industry forward together rather than spending energies trying to compete with each other.

One example of cross-commodity inequity is in production insurance. It was promised but never delivered or budgeted for. The lack of production insurance hits livestock producers in two ways. First, production losses are not fully covered. An effective production insurance program would have saved many producers who suffered extreme consequences due to outbreaks of circovirus and PRRS, two devastating pork diseases.

Secondly, the CAIS reference margin is not supported by production loss coverage. We appreciate the work to make the cash advance program more useful to livestock producers; however, only 50% of the benefit offered to crop producers is available to pork producers. A crop producer can access the advance for a crop year, which is 12 months or maybe even longer. A hog cycle is only six months. A workable solution that brings equity needs to be found.

Treating crops that are utilized differently is inherently unfair and needs to be addressed. The cost of producing either cash or farm-fed crops is equal. Farmers who diversify should not be penalized. These programs that go to non-farm-fed grains will result in either more paper sales from farmer to farmer, or in livestock farmers separating their business, with a spouse or other family member taking on the livestock or the crop portion. This is not efficient and cannot be accomplished by smaller farmers. The added bookkeeping expense is not a competitive practice.

One program that was well appreciated in the previous APF program was the Canada-Ontario research and development program, affectionately know as CORD. It was funded from transition money and administered by the Agricultural Adaptation Council. This was the fourth time we had access to CORD, and we found it to be a useful and well-used program that funded a host of valuable projects for all of agriculture. Although there were some challenges in its initial development, the conditions and parameters were successful.

Our one recommendation is to run the program from a grant rather than a contribution agreement. This would allow commodity groups to ensure that the moneys are spent as wisely as possible, rather than rushing projects to get them done by an arbitrary date.

In conclusion, I appreciate the opportunity to discuss these important issues with you today. I look forward to a promising future with the assistance of the government, and recognition of the positive influence that agriculture plays in our economy.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. VanderLoo.

[Martin VanderLoo, President, Huron Commodities Inc.]

Thank you for inviting us to present here today.

My name is Martin VanderLoo and my associate with me here today is David Kohl.

Huron Commodities is a grain processing and marketing company selling Canadian grains and oilseeds domestically as well as to the U.S. and Asia over the past 18 years. The reason we are here is due to complaints I had logged to our local member of Parliament regarding the reduced level of rail transportation service, to the point of Canada being an unreliable and uncompetitive supplier of Canadian grains and oilseeds.

Huron Commodities moves oats from western Canada to Ontario for processing and further export to the United States. We ship oats from Ontario and Quebec to the U.S. via rail. We ship rye from Ontario and western Canada to major distillers and flour millers in the United States via rail. We ship food-grade soybeans to Japan and Southeast Asia via rail to the west coast and ocean freight further on.

Over the years, we've seen increasing rail transportation costs with severely declining rail service. All the while, Canadian railroads are posting consistent record profits. Although we're not opposed to supporting a profitable railroad, we don't agree that it should be done at the expense of the farmer. For example, as mentioned earlier, we ship oats from western Canada to Ontario for further export to the United States. Unless we are a mainline shipper in western Canada, willing to ship 100-car-unit trains to the west coast, we are just denied service. The same situation is the case with our rye shipments out of western Canada. Unless we can provide 100-car shipments to the railroads for export to the U.S., they are simply not interested.

The railroads have consistently refused to spot cars for any of our shipments, jeopardizing our reliability as a shipper to our customers.

About a year ago, we were working on a project with a local elevator to facilitate a multiple railcar shipment facility for local corn and wheat exports to U.S. markets. This project would require a sizable capital investment. CN Rail advised us they could not guarantee equipment and power to make this project feasible. This project was scrapped.

As mentioned earlier as well, we ship food-grade soybeans to Japan and Southeast Asia. That move is facilitated by containers from Toronto and then rail to Vancouver and a vessel to the country of destination. The railroads have recently imposed an inland fuel surcharge of $174 per 20-foot container, U.S. funds, which is increasing our rates here, of course, and our cost of shipment. On May 1 they plan to increase that further, to a total of $195. There have been threats by the Port of Vancouver to impose a $40 per container port congestion charge--that's what they're calling it. All of these extra charges are just making us uncompetitive.

I'd like to cite some other instances in western Canada. On March 8, Great Northern Grain Terminals filed a major level-of-service complaint against CN Rail, and this filing has been supported by the Canadian Wheat Board as well as ten other grain companies in western Canada. Last year the Western Grain Elevator Association met with the Ministry of Transport and agreed on May 5, 2006, that the department would attempt to make changes to the Canada Transportation Act. The Western Grain Elevator Association is looking for reform in the Western Grain Transportation Act.

Huron Commodities, as well as many other grain-handling and marketing firms, has become increasingly discouraged with the lack of rail service and our ability to facilitate movement of Canadian grains and oilseeds to the marketplace.

What does this mean for agriculture? The federal and provincial governments have for years encouraged farmers to consider value-added marketing of their production. Farmers have answered that call by producing variety-specific crops and handling processes for these crops to secure a better price and a premium. Both the grains and oilseeds as well as the livestock sectors have pursued organic markets to realize a better return on their production.

Our inability to move farmers' produce to the marketplace negates any efforts growers have made to realize any value-added premiums they may have earned. Currently, our customers in the U.S. and Asia are telling us that they are seeking suppliers other than Canada because of our inability to be a reliable, competitive supplier. We ask you to push for immediate regulatory reform to the Canada Transportation Act, before we lose further markets we currently hold.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. Woods, you're going to wrap things up for us.

[Bill Woods, Chair of Board of Directors , District 7, Chicken Farmers of Ontario]

Thank you, Mr. Chairman. I thought you'd forgotten about me there, for a minute.

[The Chair, Conservative, James Bezan]

I just went in the order of the agenda.

[Bill Woods]

Yes, thanks.

Thank you, Mr. Chairman, members of the standing committee, members of the community.

My name is Bill Woods, and I'm here today as chair of Chicken Farmers of Ontario, representing Ontario's 1,100 chicken farmers.

Our industry is valued at over half a billion dollars at the farm gate, is a strong contributor to Ontario's rural economy, and is also directly responsible for over 5,000 jobs and for thousands of additional spinoff jobs.

Similar to what my colleague at the table said about the dairy industry, eggs and turkey and chicken are produced under a marketing system known as supply management, a system that ensures an efficient and secure food supply that respects Canada's high standards for sanitation and health while benefiting both consumers and producers. Nationally worth more than $7 billion of Canada's $36 billion in agriculture revenue, supply-managed agriculture is a major contributor to our economy, employing 215,000 Canadians and totalling over 20% of Canada's agriculture sector. In Ontario, the supply-managed sector generates $2.2 billion in farm cash receipts, or 28% of the province's total. There are many additional benefits. Consumers eat safe, high-quality, grown-in-Ontario food. Producers enjoy a stable income. Processors have an assured and stable supply. And government shares in our success, through income tax and consumption tax revenues.

Our message today is simple: supply management is an important component of Canadian agriculture. Therefore, chicken farmers of Ontario, along with dairy, poultry, and egg industries, are seeking proper recognition of supply management and its three pillars, as a program within the APF business risk management pillar and as a focus of domestic policy development under the market development trade pillar.

Under business risk management, Mr. Chairman, we believe that supply management, including its three pillars of producer pricing, production discipline, and import controls, must be clearly defined as a program, as it is in fact an effective system of business risk management, one that fosters prosperity and renewal.

Under market development and trade, most of Canada's food production is actually produced and consumed domestically. Three-quarters of what our farmers produce, whether within the supply management system or not, is sold within the country's borders. Ninety-seven percent of the output of the five supply-managed sectors is sold domestically, which means that both Canada's consumers and its producers are the beneficiaries, as prices are stable and the quality of food on Canadian tables is the highest possible. Further, the bulk of revenue from Canada's agriculture and agrifood production, over 70%, comes from the domestic market.

Therefore, we respectfully suggest that the APF recognize the importance of our domestic market, including supply-managed industries, for the long-term health of Canada's agriculture and our agrifood sector. Doing so could and should be done within the framework of international trade agreements, which, while they give us certain obligations, also afford us certain rights, which we should not be shy about exercising in support of our domestic policy objectives. For example, while Canada has the right to use safeguard measures such as article 28 under the General Agreement on Tariffs and Trade, unlike the European Union, Canada has chosen not to do so.

Under the food safety, food quality, and resource protection pillar, Ontario's chicken industry continues to be profitable because consumers have confidence in the safety and quality of our product. Ensuring continued consumer confidence is key, which is why we have invested in on-farm food safety, bio-security, and animal care programs.

We are part of a progressive national program called Safe, Safer, Safest. The development of national on-farm food safety, bio-security, animal care, and traceability programs is crucial to managing business risk and ensuring the long-term health of our industry. In conjunction with the federal and provincial governments, and along with the rest of the farmed-animal industries, we are seeking to develop a national animal health strategy that would encompass financial risk management, research, animal care, disease management, surveillance of the laboratory network, identification and traceability, regulated products, bio-security, and funding support for the National Farm Animal Care Council.

Chicken Farmers of Ontario believes that a comprehensive animal health strategy should be incorporated into the APF, but in order to ensure that our industry continues to enjoy customers' confidence, we also believe that governments must ensure that the same high-quality safety and animal care standards are required for products that are imported into Canada.

In conclusion, in order for the APF-2 to promote growth and strengthen the profitability of Ontario's chicken farmers, it must do the following:

First, it must recognize and protect supply management and its three pillars as a legitimate and effective business model in domestic policy development.

Second, it should balance the needs of Canada's domestic supply-managed industries with those of export producers in negotiating international agreements and in fully exercising Canada's rights under these agreements.

Third, it should ensure consumers' confidence in the integrity of our food supply through progressive food quality, safety, and animal care programs—standards that are also applied to food coming into Canada.

Thank you for your time.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Woods.

Mr. Steckle, you're going to kick us off for the first five minutes, and I'm going to make sure that we stay on time today.

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

Thank you very much. Five minutes isn't a very long time.

I just want to say how pleased I am to be in the second largest producing riding in all of Ontario. Some people in the room will defend me on that. Anyhow, that's for Gary. We have a little fun once in a while.

There have been some pretty forceful presentations made as we've listened to people from the various provinces. There are some themes that have emerged as we have travelled from province to province. Predictability and bankability are certainly terms that we've heard time and time again, and our programs have not done that.

We've also heard in Martin's presentation the need for us to look at transportation as it pertains to the movement of goods and services from Ontario. We think largely of that as being a western issue. It's not only a western issue; it's very much an Ontario issue. We take very seriously the recommendation that we meet with transportation. Believe me, I've already spoken to the clerk about this, and we will be moving in that direction.

There are a number of things that we know have worked for the sectors. Supply management has worked very well, and as we're seeking to develop meat around the pillars as we go forward, disaster is certainly something that we need to put some meat around. We know that's one of the things that's going to have to be addressed in a very real way.

But there have been some choices given by various organizations. The Ontario grain and oilseeds people, along with the Quebec people, have put forward a model. I'm wondering whether there is consensus among the other sectors that this would work, not only for those who are in the grains but for those who are in the livestock sector, because we have the on-farm fed grains being an issue, where that program could be made to work. I think we have to go to a program where there is a sharing of that cost upfront, a program that's predictable and bankable, and that would certainly be one of those programs. I'm wondering whether we could find consensus on that particular program.

[The Chair, Conservative, James Bezan]

Who wants to go first?

Please keep your responses short and to the point.

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

It's always difficult to know where to direct the questions.

[The Chair, Conservative, James Bezan]

Madam Hendrikx.

[Mary-Ann Hendrikx]

We've looked at that program, and while we agree that something needs to be done when grain is having real issues, because we're a large exporting nation we have to be really careful about the trade implications of that. In the last dumping and countervail process that we went through, grain subsidies that were not trade friendly would pass through the pork and be countervailable. So they need to be designed in a way that is trade friendly. Given the ethanol craze in the U.S., it's quite possible that we may be exporting grain at some point.

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

Are we not always known to be the good boy scouts?

[Mary-Ann Hendrikx]

Definitely.

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

We stand back and let them dictate the rules to us. Isn't it about time that Canada stands up for being what it truly can be, and that is a player among the major players, because we are?