Agriculture Committee on Jan. 31st, 2008

[Clare Schlegel]

They would be security tied to inventory, and a delinking with CAIS, or at least based on future CAIS payments as opposed to the immediate ones. Third is the issue of the definition of “$400,000 per unit” as opposed to “producer”. Fourth, it would also be helpful if the repayment schedule could be adjusted.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

So is that a change to the cap? Is that what you are saying?

[Clare Schlegel]

That's one way of addressing it, through APP. It's not the only solution.

We did meet with the minister this morning at 8 o'clock. We think there are some opportunities and possibilities, but the issue is about timing. It's time to deliver. We have to get it done. We have to stop talking. If legislative changes are necessary, we urge all of you to consider that and to perhaps look for a meeting with each of your ag critics in the next days.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Can I have the cattle industry's comments on that, please?

[Brad Wildeman]

For some people, particularly the cow-calf sector, I think there is some need for the loans. I think our bigger issues are not on the loan side; they are in trying to get these programs to actually work. I've heard from most producers that if they're not going to get anything, at least say so. This idea that we're coming up with these announcements that don't give any help and telling people it is being worked on but nothing happens is really starting to make the industry very bitter. They are not only bitter at governments but bitter at associations and others, because they're not getting it done. People don't believe that anybody cares about them.

Your report clearly identifies the key things that need to be done. If we could get those things done, we'd be in good shape.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

You mentioned something interesting about the cow-calf producers. Can you tell me a bit more about that, please?

[Brad Wildeman]

As grain prices have gone up, the feeder calf prices have dropped. Cow-calf producers, who have feed at home and are able to feed these calves to higher weights, have a way to improve the value of those animals. The problem for many is that the calves are worth less, so their cashflow is down. They don't have the financing capability to feed these animals longer because they need some sort of financing arrangements.

In this market the bank isn't the friendliest place to go right now if you're in the livestock industry. To be able to maintain these animals, raise them to higher weights, or maybe sell some cows and restructure their farm--all this needs cash, and they need it in a hurry.

I think the loan program is particularly helpful for the smaller cow-calf producers and not very helpful for the feeding sector.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Since the border opened in November, what has that done to help your industry?

[Brad Wildeman]

Again, we're still struggling with some regulations. The other thing is that the trucking industry hasn't grown back from the losses that occurred when the border was shut. We lost a lot of that transportation infrastructure.

But it has helped. We're seeing basis levels narrow. If our dollar was back to anything we used to be, we'd be in pretty good shape. We said at the last meeting that a 90- or 95-cent dollar would do wonders for our business. I'm glad you raised that.

I want to remind this committee that there's a court hearing on February 19 on the preliminary injunction from R-CALF. We could be here in a few weeks talking about the fact that those markets are lost to us. We'll be in another very critical situation given that we built this packing capacity but they don't have enough labour to run it. We see that as another threat that we're pretty concerned about. It could change the dynamics of the industry significantly.

[The Chair, Conservative, James Bezan]

Thank you.

Our time has expired, but we started 10 minutes late and I'm going to add 10 minutes to the clock so we'll have two more rounds of questioning.

Ms. Thi Lac, the floor is yours.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Good day. I will be splitting my time with Mr. Bellavance.

Mr. Schlegel, you said you wrote to Mr. Harper? Has he responded to you?

[Clare Schlegel]

To date we haven't had a response.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Do you feel that the government is abandoning you?

[Clare Schlegel]

Do you want to respond, Stephen?

[Stephen Moffett]

I indicated at the very start that we're very disappointed in the response of the government. I'm not sure whether “abandoning” is the right word. We worked with the bureaucrats to find ways to speed up payments and to get the TAP payments out quicker than they might normally have been. Those things certainly have been very helpful. I would say I have nothing but praise for the people we've worked with. Maybe I wouldn't say “abandoning us”, but certainly they have not come through with what we asked for.

The specific request was for something over and above existing programs to deal with the liquidity issue, and that has not happened. We can't stress enough that it needs to happen, and it needs to happen very soon. Or at least it needs to be announced very soon.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

The Advance Payments Program is expected to kick in at the end of April, but until then, how are you going to manage? Some producers are barely hanging on as it is. Banks have been patient, but their patience is beginning to wear thin.

Earlier, Mr. Schlegel, you talked about the number of producers on the verge of bankruptcy. The beef industry is facing a similar situation. In your opinion, is the situation growing increasingly desperate?

[Clare Schlegel]

The help lines have been re-established in rural Canada for a reason. This is not just an economic situation. This is a family situation; this is a community situation.

If Canada lets our producers fall, there are going to be equipment dealers, there are going to be veterinarians, there is going to be a whole down-spiralling of the very fabric of rural Canada, and that's beginning to take place.

To expect us to come to the public and cry on a continuing basis, that's not what our producers do. The unfortunate reality is that family violence, etc., happens in these situations, and it's starting to happen in an increasing way. It's because there's no hope for the future. We don't see the support, the community.

Things that have happened to us in this downturn are way beyond our control. We have no control over the Canadian dollar. We have no control over feed prices. We do have control over how we operate our barns, and damn it, we're one of the best producers in the world and there's no reason this industry should go down.

I've got a lot of good things to say about the Government of Canada and their responses. You're trying to help us get into Russia. The minister is working hard at that. It's absolutely needed.

On the regulatory front, we're aware that the environment is changing and that we've got to respond. We've got to be competitive with the U.S. Our government is working on that.

But the current reality is this cashflow issue. If it's going to be April 30 when APP is available to us, don't bother. Maybe I'm overstating it, but don't bother. It's not helping the immediate situation. We weren't kidding when we said “cash before Christmas”, and now it's a month later. A lot of us are paying bills every other month. We're trying to figure out what we can do. We've got people calling us. This is not a fun scenario.

I gave a report in Huron county. I was at their annual meeting. People want to know what's happening so you report what's happening and you try to give a balanced approach. Where is the optimism, where is the pessimism, and what's the realism?

I had a person call me the day after, and after hearing my comments, he pulled the plug on 28 finishing barns and an entire loop in southwestern Ontario. He decided that was it. Paul was there. You heard....

So we're struggling. At the farm level we're trying to figure out what we should do. We know liquidation is happening.

Finally, since Christmas, we can clearly see there's an opportunity, there's light at the end of the tunnel, this industry can survive, but it needs some help. It needs a bit of help to get through the hollow, and we can continue to add to the balance of trade for this country.

The time to talk is over. We either deliver or we don't, and if we're not going to deliver, then we need to tell our producers, “These are the tools you have available. Get together with your bank, your supply community, and figure out what you want to do.”

What this downturn is requiring of me--and I can speak personally here--is it's just like building another barn. I either reinvest equity and choose to stay in it--that means I've got to be committed to farm until I'm 55 or 60, and you can see the grey hair on my head--or get out. In the best of times, I've got to reinvest. So when we call for loans, we are calling for a reinvestment, a commitment to the future. That's different from a cash payout where you take it and you run.

I think we are very realistic in what we have put forward. I'm sorry I got a little emotional here, but I can't put up with the delay. It just can't happen any more. That's not where we are in rural Canada.

And it's more than money. It's families that are involved here.

[The Chair, Conservative, James Bezan]

Thank you. Time has expired.

Mr. Storseth, the floor is yours.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair.

First I want to start out by saying that I may be the only one here who thinks this, but I think it's a mistake having both you guys here at the same time. These are two separate industries with two very different issues and they need to be addressed as such. That's the first time I've heard that said.

The second thing is, I'm going to direct my questions to the Canadian Cattlemen's Association, simply because that's the biggest industry in my riding. But I do recognize that there are some significant problems going on in the hog sector and in the pork sector, and we need to look after that.

Mr. Wildeman, I've got some questions. I did about eight or nine consultations with agriculture producers in my riding since we last met. You came before this committee on November 26. On December 15 this committee released its report. On December 19 there was an announcement, and it's a horrible thing to say, but the money is in the system. It does take a little bit of time.

Can you tell me the last time you remember a minister acting this decisively?

[Brad Wildeman]

Obviously we had some very quick actions back in 2003, so we appreciate that again from this committee and others. There has been some precedence, but not on this issue.

There has been lots of discussion. I think we both said that. But really, if we look at the key acts that could really make a difference, I would argue that very little has been done.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Wildeman, I read your recommendations from the last time you came before committee. You had one recommendation on monetary policy, two recommendations on trade policy, one on labour, one on industry, and only one recommendation dealing with cash, which was a loan recommendation.

This isn't what I'm hearing and this isn't what Mr. Easter is hearing from his constituents. The people I'm talking to aren't worried near as much about countervail as you seem to be worried about it. And now I'm confused, because you come before us today and you're very clearly wishy-washy on whether or not you believe we need to stay out of the countervailable situation or not.

[Brad Wildeman]

I think there was another whole document tabled at this committee that talked about short-term options all related to business risk management.

Let me be clear that certainly we're very worried about countervail. Again, we're traders, and we've said that. We think the existing foundation of business risk management programs can meet both the requirements to support our industry in this time and keep us in a trade-neutral position. So I think that's where we've been.

My comment was simply that when things get desperate enough, the long-term goals that we have for our industry tend to get compromised. If you can't make your payroll, you're not worried about the long-term things.

So the CCA's position is that we've always been very sensitive towards the countervail issue, but we think there are some ways we can change the existing business risk management programs to meet both the needs of the producers and the countervail risk.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you, Mr. Wildeman.

As I sit here and listen to you today, I have to once again ask you this question. And we have more than enough politicians around the room, so I need a straight answer out of you. Do you or do you not believe that staying out of countervailable situations should be one of the key priorities for this industry?

Today I heard you mention feedlots five times. The only time I heard you mention cow-calf producers was when my colleague asked that question.

[Brad Wildeman]

Fair enough.

To the first question, yes, we're worried about countervail risk, no question. I think we've been one of the stronger proponents of that.

Secondly, the reason the feedlot industry is getting mentioned most is that they're going to be most directly impacted first, and then that's going to bleed down into the cow-calf sector. As these feed yards start to crumble financially, they'll start to have an impact on the cow-calf industry more and more.

If you look at, for example, what's happening to feeder prices now, there's certainly been a delayed response compared to what we've seen in the finished market, but these things will bleed down. We're not an integrated market. We have a number of stakeholders, so it takes longer. And we've mentioned that before.

[The Chair, Conservative, James Bezan]

Mr. Laycraft.