Agriculture Committee on Dec. 5th, 2007

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

We, including the farmers, agree that that is where the future of agriculture is. It's in the non-BRM, in technology and science, etc.

Thank you very much, Mr. Chair.

[The Chair, Conservative, James Bezan]

Thank you.

Madame Thaï Thi Lac, s'il vous plaît.

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

Good afternoon to everyone.

I am pleased to be here with you today. As you know, I am the newly elected member for the riding of Saint-Hyacinthe—Bagot, a riding which has at its heart a own which is an agrifood technopolis. At one time, the agrifood business was my livelihood. I operated a hog farm for over seven years in the 1990s. In fact, I am the grand-daughter of an agronomist. So it goes without saying that this sector is dear to my heart.

I would be very pleased to welcome my colleague Mr. Lauzon in my riding of Saint-Hyacinthe—Bagot. As for what you heard on Prince Edward Island, let me show you that it is not what I am hearing on the ground in my riding. Indeed, 25% of the jobs in my riding are directly related to the agrifood sector, and, as we speak, producers are being squeezed out. You said that producers told you that they were happy with the money provided under these programs. However, it is as if you were giving five dollars to someone who needed ten. Of course, producers will take the money. But the fact remains that it is not enough. Much more money must be made available. We need more than answers: we need concrete measures to support the agrifood industry.

How do you explain that the AgriStability program is still using an olympic average, despite the fact that it was one of the most criticized measures under CAIS. Why has this flaw in the program not been corrected yet, and when will it be?

[The Chair, Conservative, James Bezan]

Mr. Foster.

[Danny Foster]

With respect to the AgriStability program, you're right. The reference period, if you will, is based on what we call the Olympic average. So we look at our producers' margins for the previous five years, drop the high and low, and average the remaining three.

We had an option to do that or to look at just the previous three years. We are bound by WTO rules, so we can report the dollars under the disaster portion of AgriStability as green for WTO purposes so that we can stay within the $4.3 billion that Mr. Miller referred to and meet our WTO obligations.

If we had our druthers, we'd probably be looking at a five-year reference period, looking at the previous five years, because when we've consulted with producers in the past, they said that's probably the best reference period you could use.

You don't want to go too far back because then you're not reflecting what the current reality is in the market, but you don't want to have it too short because then you have too much variation in your level of support.

So we said five years, and then we were bound by what the WTO requires so that we can report this money as green for trade purposes and not amber. Based on our analysis at that time, the Olympic average was found to be the best. We are staying with the Olympic average going forward under the AgriStability program.

There have been suggestions from both the hog and the beef industry to give producers the higher of the previous three years or the Olympic average. We are looking at that. It wouldn't benefit all producers, but we need to assess that from a cost and a principle standpoint. That's part of what the industry has proposed going forward.

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

However, we cannot minimize the fact that farmers need these programs more than ever. There is a crisis in the farm sector as we speak. I believe that these new programs must be implemented to give farmers a boost, to help them thrive, and to help younger farmers take over from the older ones. As I said, farmers are being squeezed out. It's no secret that a number of farms declare bankruptcy every week.

[The Chair, Conservative, James Bezan]

Mr. Marsland.

[Andrew Marsland]

In respect of the crisis in the livestock industry, it has been clear when we discuss this with the industry, as we have over the last couple of weeks and before, that while they would like programs—the existing programs or additional programs—to address the liquidity issue, they were cognizant of the principles and accept the principles that federal and provincial ministers laid out.

Important among that is the issue of consistency with trade obligations. And I think we have to be very careful, and that's acknowledged by the industry as we move forward in assisting them address these difficult circumstances, that whatever we do is consistent with our trade obligations. I think that's one of the principles that we take fully into account and is accepted by industry.

I think the second part of your question referred specifically to programs that will attract people into the industry. As we look at the non-business-risk-management aspects of Growing Forward, we heard that in consultations, that we need to help people enter the industry and bring on the next generation of producers. So that's something we need to develop with the provinces and with industry.

[The Chair, Conservative, James Bezan]

Merci.

Mr. Storseth, five minutes please.

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

Thank you very much, Mr. Chair.

First of all, I have to say, once again, that as a new committee member I'm learning new things every week, Mr. Chair. Last week I learned that the NDP doesn't always speak for the National Farmers Union, and this week I was actually surprised, as I've been—I wouldn't say a fan—an individual who has read a lot of Mr. Easter's writings, and I would think that he would be looking forward to helping create a new suite of business products that can help farmers, rather than being rutted in things that have failed in the past.

You talked a little bit about targeted advances. Is this one of the things that you foresee helping our cattle industry in the short term?

[Danny Foster]

We're using it for the hog industry. So far, for the cattle industry—

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

Sorry—you're using that right now for the hog industry?

[Danny Foster]

Yes. In fact, just so people know, with the targeted advance the administration estimates what a producer's payment is under the AgriStability program. It actually gives them a letter that has the amount on it and says, “Here are the terms and conditions; if you agree, sign below and send it in to the administration”, and they get a cheque. It's basically almost money in the bank. In fact, I've talked to bankers who have said that with a letter like that, they would put it in the file and use it in terms of supporting operating credit. So it is quite unique, and it was evolved over the last couple of years.

So we're using it for the hog industry. The way it works is the provincial associations, the industries, work with their provincial government and ask us to implement a targeted advance. To date, we haven't had that. The focus seems to be, for the cattle industry, on interim payments, where it's basically a short application form. The producer fills in the numbers and sends it in, and within 30 days of receiving that interim application a payment is issued.

The targeted advance is a little bit more producer friendly. We can give producers a higher percentage of their estimated entitlement, but we have to be careful because it's only in certain circumstances that we actually invoke that, where the crisis is deep enough—like in the hog industry—that we're comfortable issuing a letter to a producer saying you can get a—

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

So this is a new tool that's coming under this framework?

[Danny Foster]

Yes.

Basically, with this hog crisis, this is the first time we've used the tool.

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

It's far more bankable and predictable?

[Danny Foster]

That's exactly what the bankers said. You have a letter from the administration with an amount on it. The producer can sign and get a payment in that amount.

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

Can you tell me in which provinces this is being utilized right now?

[Danny Foster]

Alberta has done it already. The letters went out about a week and a half ago in Manitoba. Saskatchewan and B.C. are currently considering. I believe Nova Scotia has it in place and New Brunswick should be in place very soon. Ontario is going with interim payments. Quebec...largely they have their advances through the provincial ASRA program. P.E.I. is using interim payments as well.

So a number of provinces have put it in place, and it depends on the provincial industry circumstances as to whether—

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

I understand this is a new program, but one of the major problems we had under the old program was the clawbacks that would come after something like this. Do you foresee these issues resulting in this new program?

[Danny Foster]

There is always a risk. When we developed this, we consulted extensively with the national CAIS committee at that time, and actually provincial industry organizations, and that was a concern. There's always a risk of an overpayment when you're estimating what producers' final entitlement will be. So they cautioned us to make sure that when we use the mechanism, we're very transparent and upfront that if there is an overpayment, at the end of the day the producer will have to repay.

We've taken steps to try to minimize that risk, but there's always that risk and it's clearly communicated with the producer.

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

Outside of that risk, it has been mitigated as much as you can?

[Danny Foster]

Yes, as best as we can. We work with the province very much on assessing that risk, and with the provincial industry as well.

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

It's my understanding—and correct me if I'm wrong on this—that right now, because the new framework has not been agreed to, it's being distributed through the CAIS program.

[Danny Foster]

Excuse me?