Agriculture Committee on Dec. 5th, 2007

[Roger Gaudet, Bloc, Montcalm, QC]

So then, explain to me why so many producers are unhappy with the programs. As my colleague said earlier, if a man needs $10, but you give him $5, he'll take the money, of course.

You may continue.

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

I also have another question for you.

[The Chair, Conservative, James Bezan]

Time has expired. We said five minutes. Sorry.

[Roger Gaudet, Bloc, Montcalm, QC]

Your five minutes are up.

[The Chair, Conservative, James Bezan]

Mr. Atamanenko.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

Before continuing, my colleague across the way is gone, but I wanted to remind him that in the past, at least since I've been with this committee, we've worked quite well together in spite of our differences, and we were here for farmers. I don't think cheap political shots are appropriate.

I thought I'd record that for the record. In a hundred years, when somebody reads this, they'll hear my words.

I would like to continue with this. We've seen a report. We've seen your response to the report. There are a number of items, food security or other areas, and you folks have mentioned it, this whole idea of trade obligations. It seems like a black cloud hanging over Canada that we have trade obligations.

Other countries don't seem to worry about that. Europe has put a quota of 0.5% for pork coming in, and we're being asked to increase our quota from 5% in Canada. Americans always slap something on us, and we're always worried about trade obligations.

Can we not move forward and get to the bottom of what's happening in our agricultural sector and worry about our path, our farmers, and our primary producers without always having this hanging over us?

What happens if we move into this area in a little bit? That's the first question, and I would like to get some feedback on this.

[Andrew Marsland]

I'll begin.

I think you know when we talk about the sector we sometimes talk about it as one, but it is a multi-faceted sector and various parts of the sector depend to a greater or lesser extent on exports.

In the supply-managed area we have a made-in-Canada system, which is very much focused on the domestic market, that works well for the country.

In other parts of the sector they rely on exporting more than 50% of what they produce, but overall, trade is very important for the country. As I mentioned, I believe 43% of production is exported, so it's important that we have a world trading system that serves us well. We have been pressuring for improvements in that system, as you know.

For other countries, we have been firm in insisting other countries respect their trade obligations. As you recall, we have requested a panel to look into subsidy practices in the United States.

So I think trade is critically important for the sector, and we need to look at it both in terms of respecting our obligations in a defensive way but also making sure other countries respect theirs.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I'd like to pursue that. In the report we recommended that we have institutional buying, a policy for our Canadian institutions to buy Canadian. The answer from the department or the minister was, well, there's Chile and others and we've got these agreements and we have to be careful. Once again trade obligations are preventing us in Canada from supplying our federal institutions with locally grown Canadian produce.

Surely something's gone wrong here. Surely we can start turning this around a little bit and tie it in with supporting our farmers, because maybe the essence of the problem in farming is the fact that we've been overly conciliatory in our trade obligations and forgetting about the primary producer on the land.

[Andrew Marsland]

I think obviously there are two ways of looking at this. There is the prescriptive approach, which would require, to the extent that it's consistent with our international obligations, certain percentages of inputs being sourced locally. The other approach is where you promote the attributes of buying domestically in terms of growing the domestic market. As we went through the consultations there was a lot of support for this kind of domestic marketing effort.

In the APF we did a brand counter-exercise. We did a lot of research in our major markets, and without exception, in every market in the world, we found a huge preference for local or domestic products. So if you asked a Japanese purchaser, they'd prefer Japanese products above any others, and the same was true in every market.

I suspect if we did the same kind of study in Canada, we'd find the same preference. So the question is how you make consumers aware of the benefits of buying Canadian products and how you help the sector leverage that kind of perception in the domestic marketplace. That issue came up in the consultations, and that's something we're discussing with industry and the provinces.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

But it's one thing making consumers aware; it's like asking industry to regulate itself in regard to pollution.

Can we not show leadership? Can our federal and provincial governments not show leadership and say that in our sphere of influence, we're going to support and buy Canadian? This is the essence of the question.

It's one thing to have this nice big campaign, but are we so limited? Have we gone to such an extent that we can't do this any more? That is my question.

[Andrew Marsland]

The response to the report pointed out the approach of Correctional Service Canada. Again, I think it's an issue of availability and obligations. Typically, trade agreements do control the extent to which government procurement can favour domestic, as opposed to the partners. And it's a question of value for money.

I think there are ways that governments can show leadership by helping industry to develop markets domestically, but at the end of the day, it's not governments that sell products, but producers and other members of the value chain. And the question is—and it was a good question raised in the consultations—what can government do to assist them in doing that?

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

Thank you to the witnesses for coming in.

The reality, Mr. Atamanenko—and this is not a cheap shot, quite honestly—is that we would be missing many of these discussions if the former programs were still in place, the NISA program and provincial programs that were its counterparts. Since we lost those, we've now ended up with a CAIS program, which is a terrible program that is not fair.

I think we all understand that when a program is in place, it is much easier to leave it in place and work within the parameters of that program, to keep it in the green box, or as an acceptable and unchallengeable program in terms of trade barriers. We've lost that. That's a fact.

So now we're dealing with a new program that was CAIS and now we're working with a target of business risk management programs that will take us in some direction, even though they still have a margin-based program.

So one of my questions to the panel would be, in terms of the margin-based program, how much of the fact that those programs are staying in place with a margin base is provincially driven?

[The Chair, Conservative, James Bezan]

Mr. Foster.

[Danny Foster]

We've worked hand-in-hand with industry and the provinces in developing the margin-based program. Basically what we have today is that the whole farm concept is margin-based with this program, but we've made a number of improvements to that margin-based concept. On top of that, we've added the AgriInvest program, which is an entitlement-based program.

So in terms of the influence of the provinces, they've been there every step of the way with us—and with industry, actually—in developing what we have.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Under the AgriStability program, somebody mentioned earlier how it was working. Under beef, there is the interim payment that they're getting. Could you just help me a little bit with that?

And concerning the targeted advances for hogs, you listed a number of the provinces that were going into that. This program advances the money and you can basically take it to the bank. Why is Ontario not in on it?

[Danny Foster]

What I've been told is that they want to focus on the interim payment. The interim payment process is fairly straightforward as well. Basically, I think it's a two-page application, except that the producer has to provide the numbers, rather than the administration providing the numbers.

What I've been told is that in terms of actual delivery, this is the best mechanism for them. They're not in a position to offer the targeted advance, so they've gone with focusing on and promoting interim payments. And they are prioritizing the files for 2006 CAIS and 2007 interim payments under the AgriStability program for hog producers.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

When I'm talking to my hog producers in Ontario, can I assure them they're going to have the same treatment under the targeted advances as other provinces will have?

[Danny Foster]

Ontario still has the opportunity to ask us to put in place a target advance. Because they deliver it, basically we just agree to put in place a target advance.

They haven't asked. We've asked them why. They said that based on where they are in terms of delivery of all their programs, the interim payment is the best vehicle. They think they can do the best job with interim payments to hog producers. They are working with their hog producers to promote the interim payment mechanism.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In terms of the new fleet of programs, one of the things that was always a big issue around CAIS was the cost of production of the program. Can you talk to me a little about the efficient delivery and the cost of the new fleet of programs? When money goes out, if it's $1 billion, how much of that $1 billion is actually kept within the government coffers, and how much does the farmer actually get?

There's been all kinds of speculation that it costs about 30% or 40% to run out this CAIS program. I'd like to have some answer about the new fleet. I don't know whether that was right or not. I'm just repeating what I've been told. I would like to have some assurance that we're putting out a program that is fairly efficient and direct to the farmers.

[Danny Foster]

Especially with the AgriInvest program, we want to be in a position that in a year's time it will be delivered primarily through the financial institutions. We're going to need a year of transition in which we will deliver the program, but we're working and negotiating with the financial institutions today to actually see those accounts administered through the financial institutions. A lot of that cost will be borne by the financial institutions holding the AgriInvest accounts.

Historically, in terms of our cost administration, we have probably been in the 5% to 7% range of total dollars.

[The Chair, Conservative, James Bezan]

Mr. Shipley, your time has expired. Thank you.

Mr. Boshcoff.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much. I'll be sharing my time with the honourable member for Malpeque.

Earlier you had mentioned that you recognized the hog industry crisis. I'm wondering, because all the overtures that have been made to me and my colleagues have been on hog producers and beef producers, but you mentioned only hogs. Understanding everything—the lowering prices, SRMs, and all these kinds of things—is there a direct acknowledgement of the beef industry crisis right now and financially?

[The Chair, Conservative, James Bezan]

Ms. Mountjoy.

[Krista Mountjoy, Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food]

Perhaps I can speak generally. If there are specific questions on the BRM side, then Mr. Foster can respond.

We have been in discussion with both the hog and the cattle sector. We have been discussing at length with the Canadian Cattlemen's Association as well as the Canadian Pork Council the short-term and medium-term challenges that confront us. We absolutely take the point that there are some immediate short-term issues that need consideration and need to be addressed. That goes to the discussions we've had around liquidity, how the existing programs can respond, and if there are measures that need to be looked at beyond the existing programs in terms of adjustment.

In the medium term, both sectors have been very clear in telling us that competitiveness is key. They see themselves as having tremendous opportunity in the export markets around the world. They want to partner with the government more assertively in going after those export markets. They see science and innovation as bringing new feed and forage grains to the table so they will be able to increase rates of gain and improve performance. They want to see the regulatory questions that form, in their view, some burden on the processing and producer industries here in Canada addressed. We're working very hard on how we can look at that suite of competitiveness measures to help these sectors going forward.