Thank you, Mr. Chairman, and thanks again for the opportunity to be here to visit with you today and present our position.
We were here two months ago, and unfortunately I think there are very few bankable results that we can report on. We'd hoped to give you a progress report; I think the progress report is pretty thin, and that's unfortunate.
The industry continues to struggle under these current conditions. Obviously with the difference in prices and exchange rates, losses continue to occur in the feedlot sector in the $200-per-head range. We've seen a loss in the value of calves. The feeder cattle prices continue to drop, so now feeder cattle are bringing about two-thirds of what they were bringing last year. These losses are real and sustained and have carried on for some time. Unfortunately, we've had very little to help offset that.
Producers were somewhat disappointed after the current round of federal-provincial meetings and the minister's announcement that there would be some help on the way and that there were some loans available. Certainly we appreciate that, but I think producers were expecting a lot more, and I think it has fallen far short of what was expected.
On these business risk issues, we continue to meet with officials to help identify some useful changes that were needed. Certainly we tabled a document here last time, talking about short-term options and changes to the BRM program.
We appreciate the report on the beef and pork sector crisis, Mr. Chairman, that the committee came out with. We agree with that. We think that was bang on with the recommendations we were making, so we continue to support those as well.
I'd like to take you back and ask you to remember that when we were here we said CCA's role is to come with a national approach, so that producers across the country are treated fairly and equitably. And the existing business risk management programs were designed and promoted to do that. Unfortunately because of this absence of action, we've seen both Alberta and Ontario move out on their own. We've seen Saskatchewan coming out with some limited assistance programs. We have some different programs in Quebec to help offset theirs, so here we are again with some balkanization through our country and producers in different parts of the country being treated differently. I think that's a very sad statement to make when we have programs in place that were designed to work nationally. And unfortunately, because of inaction and inflexibility, it simply hasn't got the job done.
I'd like to go very quickly, Mr. Chair, in a minute or so, to just recap some of the things we asked for. First, we wanted to remove the caps. Again I tell you that if you look at the state of both the pork and cattle industries--35 feedlots in western Canada feed almost 60% of the production--these caps are hugely harmful. If these losses continue--and I would say feedlots of that size are going to lose between $10 million and $12 million worth of equity this year--the cap simply isn't sufficient to keep that infrastructure in place. So we need to remove this cap.
I think there is some perception that these larger places are not family farms, but I can tell you that many of these are family owned and operated. Every member of the family works in these operations. So I just think it's grossly unfair for a program to come out and start to discriminate against family farms that have put all their equity in and built their business and now find out that the business risk programs the government told them would help them simply aren't sufficient to get them through.
Secondly, we talked about a viability test and allowing some flexibility on how we calculate the reference margin. We continue to stand by that.
The federal-provincial ministers said in their meeting in December that they were coming out with some short-term relief but that more would have to be done, and if they didn't address the declining reference margin issue, there wouldn't be sufficient assistance for the industry. We continue to wait for that. We don't hear anything about that. We think that without that, very little help is going to come to those producers who need it most.
We've had some interim advances. We appreciate that. We think there are problems with a couple of calculations, particularly calculating the annual net sales for custom feedlots where there are a lot of them and a lot of these feedlot owner managements are dependent on that. The fact that they're not allowed to use custom feed expenses to calculate some of their annual net sales is hugely harmful. And using only 50%, we think, is much too low in this day and age when feed costs are where they are.
Finally, we talk about allowing producers the choice of using either a cash or accrual basis so that those people who are growing their enterprises don't get hurt through these programs.
Those are the short-term things, but we talk about some long-term things that we think are equally important, and that includes dealing with the problems of regulations and regulatory reform. We talk about the transition funding for SRM removal, and we continue to stand by that again. There's been some movement by CFIA in a positive way. That's helped somewhat, but it's not getting the job done, and there's still a significant disadvantage in that sector.
Finally, we need to have a new, refreshed, invigorated, and reorganized look at how we deal with international trade. Our industry continues to promote the idea of an international trade directorate to try to bring all the resources of the Government of Canada--Ag Canada, International Trade, and CFIA--together in a very coordinated, targeted, measurable, accountable approach to get this trade thing working on our behalf.
Thanks for the opportunity.