I would also like to thank Larry for the invitation and the opportunity to speak to you today.
I come from western Ontario, actually right out of Larry's home riding.
We finish approximately 10,000 hogs every year in our facilities.
From a producer's perspective, obviously I hope that all of you are aware of the pain that we suffer through on a daily basis. There are several issues that I would like to highlight here today, but I would like to wind up by having you understand the problems we face on a daily basis.
I'll start off and just touch a little bit on business risk management. In Ontario there has been quite an interest generated recently in trying to develop a program whereby producers could at least get something closer to an insurance scheme based on the cost of production, which we would be willing to pay premiums on. Something we have to bring to the attention of federal members of Parliament is that we would like to see the federal government at least agree to the idea of contributing its traditional 60% share to that type of program for domestically processed pork.
In Ontario another issue we feel is very important is the problem of regional disparity among programs that have been developed across different provinces. While we certainly understand and support the idea that other regions of the country have decided to support their agricultural primary production at a higher level, I can openly say that ASRA, for example, in Quebec, is viewed by our province with nothing but envy. One of the things we would look at is whether federal funds need to be distributed with more flexibility to the provinces to allow for specific area priorities. We are not trying to pit one against the other or anything like that, but the goal would be to try to attain a more level playing field across the entire country.
Obviously your committee is looking at the programs that have been introduced recently, within the last year, by the federal government. I would like to say thank you for the ideas that have been brought forward. We recognize that at least there has been an attempt to do something to help us at the primary production level.
Regarding the transition program, which is an exit program for producers who feel they cannot survive in the industry any longer, I could say that from a producer's perspective it has been acceptable though definitely not popular. One of the things that producers have not liked is the idea of a reverse-auction process. There was a feeling that a lot of producers had been pitted against each other, and that made it very unpopular.
We question whether more dollars are needed to reach the target reduction numbers that originally came forward with the Canadian Pork Council's strategic plan.
I have one other quick comment on that. There are instances of contract producers, who follow a relatively new type of production model in our industry Canada-wide, being forced to leave the industry because of herd downsizing. I understand and accept the idea that animals have to be attached, and that this is the primary reduction goal.
On the other hand, if someone loses their contract because a large producer decides to downsize his own herd, for example, and cancels contracts, due to the fact that they have no opportunity to get another contract from another producer because the provincial and national herds are shrinking, they're left out in the cold. They have no option.
If you were to understand the level of the investment these people have made, oftentimes in excess of $1 million for a state-of-the-art, modern hog facility... To be forced to just eat that when someone down the road who may own his hogs has a smaller herd, and a roughly equal investment, and has an opportunity to access some exit funds, I guess I just question whether or not that is exactly fair. I'm not saying that it should be opened up to all contract producers, but I am saying that perhaps there are some instances where some of those transition funds should be considered.
On the loan program, I'll shoot straight from the hip. Quite frankly, the loan program is very unpopular and is lowly subscribed to. Bankers don't like it. Producers don't like it. I hate to be negative, but it has been somewhat of a failure. I hope that together we can come up with ideas that can work more effectively to get badly needed liquidity back into our industry.
In closing, I'd just like to say that we all have to realize there are some fundamental changes going on in our industry at the primary production level. I'd challenge all of you, as members, as knowledgeable people about agriculture, on what your vision is for food production in Canada. There is some push to develop a national food strategy, and it's coming from right across Canada.
I guess the question is this: what would you like to see 5, 10, or 25 years down the road? Right now, we tend to lurch from crisis to crisis. It would be nice to know where we're all going. I will acknowledge that it wouldn't be very popular, but the government, either provincially or nationally, really doesn't have to do anything. I don't think food production will disappear in this country, but it will evolve. I guess I question whether we should try to guide that evolution. Or is it okay with you folks to just let it happen?
This is just my opinion, but quite frankly, the fundamental changes you would see at the primary production level would involve the power falling into far fewer hands. All of the supporting industries around us, whether they're processors or input suppliers, right down to farm equipment dealers, have consolidated. I understand the reason for that. It's to gain market power.
But the fact is that the process on the primary production side is already well under way. Consolidation will take place. If you want an American-style industry, please tell us, and we'll let it happen. If you don't, I think we are badly in need of some help very quickly.
My question is can long-term policies be put in place that will create the environment where we can see profitability from the bottom of the chain right to the top? We have nothing against the meat processors making a profit. We have nothing against processors making a profit. All we ask is that we be able to make a fair living too. None of us have to be rich, but right now we can't even feed our own families.
With that, I'll close my comments and look forward to any questions you may have.