Thank you very much, Mr. Chairman, and thank you again for the opportunity to appear before you.
With me are the vice-president of the Canadian Pork Council, Jean-Guy Vincent, from Quebec, and Stephen Moffett from New Brunswick. Stephen is chair of our safety nets committee, and he has been here before as well.
I'm going to try to go through fairly quickly here. Many of the topics I was going to discuss have been talked about already by Bob and Curtiss. But certainly the fact that our industry has had negative returns since 2006 is one of the reasons we keep coming back here.
We are seeing a small sign of improvement right now. This summer producers will have the ability to lock in break-even or very small profits. So there is a little bit of bright light on the horizon, and part of it is due to the low inventory of animals coming to market, both in Canada and the U.S. We are a little bit hesitant to be too optimistic about the future right now, as prices are shown to be falling next winter again.
As you've heard, our industry in Canada is a very efficient industry. In terms of efficiency, we can compete with anyone in the world. We have some of the highest health standards in the world. We've got breeding stock that we supply to other parts of the globe. Those countries come to us. And one of the reasons is the very top-notch genetics we have, but also the very high health standard this country has. In fact, we are getting more and more international companies wanting to establish in Canada so that they can spread their genetics around the world.
It is important that we keep our industry and that we keep it a strong industry, in addition to what we discussed before. Our industry represents some 75,000 jobs in this country, and we certainly would like to keep most of them here. Some of them are falling by the wayside, as we've heard already, with plant closures and the risk of further plant closures with the reduction in production that we're seeing.
We've certainly been adjusting to it in Canada through the losses we've incurred. Our production numbers now have reduced by over 20% in the last five years. In fact, the hog farms have reduced from the January 2006 survey of 12,320 farms down to 7,360 farms this January. This means we've lost some 5,000 producers in this four-year period--quite devastating for our industry. And I think we see a risk of many more closing down. It doesn't include the ones on the hog farm transition program, or most of them, and it also includes the risk of many foreclosures that are happening as we speak and guys just not being able to continue because of cashflow.
Certainly the programs the government has put in place have helped. We're appreciative of AgriStability. The emergency advance payment program was definitely quite helpful, which you have heard as well, even though... The difficulties with the cull breeding swine program and the hog farm transition program--paying people to get out--are always a challenge, and we fight with this in principle internally as well. But they did help some of our producers transition out. Then there's the hog industry loan loss reserve program, and I'll talk a little bit about this later.
Let's take the hog farm transition program. About 430 producers took advantage of that, and it will pay out about $75 million. Those producers are required to stay out of production for three years. We had our last tender last week.
It represents some 137,000 sows that are being taken out of production, and that's out of a sow inventory of about 1.3 million. So a little over 10% of our sows have been taken out of production by that program. This is in addition to nearly 130,000 sows from the cull breeding swine program. So the government has helped the industry transition out of about 20% of the Canadian sow herd.
The results of HILLRP have certainly been less positive and you heard it very well from Curtiss already. So far there have only been 207 applications approved for that program. We know a lot of time and effort was put into it by the government and we appreciate it. We felt it was a program that was well designed. Unfortunately, the results are not showing that. The lending institutions have been a little bit reluctant, to put it mildly, to lend out the money that is available.
We had evaluated that we probably needed about $1 billion for this and that's how the program was initially designed. It appears that we're only going to be in that $300 million or $400 million that's actually going to be lent out under that program. It's just a fraction of what we expected and therefore we are disappointed in the results of the HILLRP.
What are some of our future challenges for our industry? I talked about AgriStability. It has been good for the hog farmers in this country, but the danger now is that because of the viability test and the three years of negative margins--which then says your farm is not viable--as of this year our hog producers will get nothing more from AgriStability because of the viability test. It's through no fault of their own. This is something that needs to be addressed. I know I've talked to you about that before, but it's money that certainly the government's going to save because that will be money that won't be paid out. But it will kill our producers because their negative margins make it that they're not viable.
As well, the AgriInvest fund has not helped hog farmers at all because of a timing issue. It actually took money away from hog farmers and gave it to others, because we did not have those margins to get it. It's something that was detrimental to the hog industry because of a timing issue. Certainly the difficulty to access credit is still...and that's proven by the lack of success of HILLRP. Even with government guaranteed loans we can't access credit, so it is really, really tough.
The feed companies have been extremely patient with our producers this past year, but what's happening now, with the failure of HILLRP, is that the feed companies are now saying to our producers, “Guys, you've got to pay up.” Well, we don't have money. The producers don't have money. So what are they saying? They're saying, “Okay, you're now on cash. Try to term out or do something with your debt that you have right now, and we'll charge you high interest rates on it, but your feed is now on a cash basis only.” Without access to credit, that is becoming very difficult and is putting quite a number of producers into bankruptcy proceedings.
So what are we looking at to move ahead? With the HILLRP money--I think that's one of reasons we were here--if that money isn't all used, which it appears it is not going to be, and we are left with $150 million or so... As Curtiss said, that money was earmarked for the hog industry. We would ask that you take a serious look at how the money that is left over can be reprofiled and used for the hog industry.
Our suggestion would be that it be used--we've handed this out before--to implement our strategic transition plan that we have been working from this past year. If that money were put in there, it could be put to use for all the hog producers in this country for the future, hopefully a brighter future.
With that, I'll finish my remarks.