Mr. Chairman, committee members, good morning.
Less than 10 minutes is very little time to tell you about certain aspects of Canada's competitive position in agriculture. So I will try to get right to the point and bring a number of considerations to your attention today.
First of all, the problems faced by Canadian agriculture and its lack of competitiveness stem partly from the fact that for more than 25 years, Canadian government support to farmers has been far less substantial than the support that European and American have received. No doubt farm debt must be much higher in Canada, because the Canadian government's support is not at all comparable to the assistance provided by the American and European governments when times are tough, as they currently are for the cattle industry. These difficulties do not allow farmers in these sectors to have a lot of leeway.
I would like to make a few comments about the cattle industry, both beef and pork. With regard to the BSE crisis, the inspection and processing of carcasses, as well as the removal of residual materials, are much more expensive in Canada than in the United States. These costs represent a very important factor in terms of our competitiveness as compared with American farmers. This reality must be taken into account; it's a question of Canadian regulations.
Country of origin labelling, which has been in place in the United States since March, is also a factor that will affect the competitiveness of Canada's beef and pork industries. We are already feeling the impact of this move and we would like to draw your attention to this issue.
The most recent events related to what is now called influenza A (H1N1) have certainly harmed the pork industry, and we do not know when the damage will end. Every day, the media is talking about this issue, which up until now, has caused certain importing countries to close their borders. Approximately a dozen countries have imposed trade restrictions. Fortunately, the World Health Organization has sent out press releases and notices throughout the world specifying that there is absolutely no link between this strain of influenza and the consumption of pork. Eating pork remains completely safe everywhere in the world. Unfortunately, the crisis has had a negative impact in some countries that purchase pork, even though everyone in Canada is trying as hard as possible to minimize these negative impacts.
In the grain and oilseed sector, market prices are currently slightly better than what we have seen over the past 25 years. Unfortunately, the price of inputs has also risen quite substantially. Now let us turn our attention to the price of fuel and fertilizers; there is a link between fuel and fertilizers. The prices of the two have also risen significantly, which makes it difficult to compete in the Canadian grain and oilseed industry. As for the price of fertilizers, the price of potash, in particular, is kept artificially high. Potash production declined because inventory levels were rather high. Furthermore, the suppliers, the retailers who sell fertilizers to farmers, purchased stock at very high prices in 2008. Even though the prices of goods and commodities dropped in 2009, they are still selling fertilizer at very high prices compared to what the daily price should be, because they paid so much for their stocks in 2008.
I'd like to say a few words about the GO5 coalition and the Canadian Wheat Board. If any sectors are managing better in this time of tremendous price volatility, it's certainly the sectors that have supply management. Actually, they are managing to do much better than other sectors within the industry in Canada.
I would also like to point out that thanks to the work of the Canadian Wheat Board, particularly during the last period when grain prices were better, grain producers in western Canada have enjoyed much better financial yields thanks to this organization which helps them market their commodity jointly.
I would like to draw your attention to one particular aspect of competitiveness. I am speaking of the availability of credit. First of all, I would like to salute the Canadian government for the announcements it ran last week regarding additional access to credit for young farmers and cooperatives. In my opinion, this is a very useful measure that we have stressed and that we will also celebrate. The extension of credit lines until the fall of 2010 through the livestock advance cash payment mechanism is also very good news. I think that many farmers would not have been able to meet their commitments this September. We salute this measure, and we think it is a very good initiative.
There are still a number of ongoing problems. Generally speaking, we cannot say that the agricultural sector has a problem with access to credit. However, if we consider each good, we have to concede that certain types of farming operations have a harder time gaining access to credit. Livestock operations, particularly those that produce beef and pork, are certainly having a hard time of it.
Everywhere I go in Canada, I hear one comment in particular: the additional premiums that are billed on short-term credit margins—we are talking about an interest rate that was increased by 2% over last year or a few years ago—can be explained only by the fact that suppliers of credit say that this sector represents greater risk. On the other hand, this sector is at no greater risk than it was two years ago. And yet, we are seeing these 2% increases on short-term credit. It is not that the credit is not available; but rather, it is more expensive than it should be. If we consider the base rate, which is now at .25%, we should be able to borrow money at very good interest rates.
With respect to competitiveness, I would like to make one last remark about the AgriFlex program. You may recall that the Canadian Federation of Agriculture had made a proposal that was very similar to the arrangement the government has put in place, except that we were suggesting that AgriFlex be available for all non-business risk management programs as well as for business risk management. Ultimately a different choice was made. We are putting forward the same arguments as before, that is we are saying that because of the diversity of agriculture in the various regions of Canada, it would be a good idea to make this program more flexible and extend it to all programs within the Growing Forward Strategic Framework.
Thank you.