Agriculture Committee on March 17th, 2010

[Greg Meredith]

I'll let my colleague Ms. Moritz answer some of the specifics on the investments, but I think you're referring to some investments under AgriFlex. These helped the pulse sector and other sectors respond to emerging challenges in the market and adapt with their growers to some of the emerging consumer trends that they see and take advantage of them.

The pulse crop is growing, as you know, in terms of acres planted. In terms of market penetration, our growers are doing extremely well.

Rita, do you have some of the specifics on pulse investments?

[Rita Moritz, Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food]

Yes. I can speak to the industry-led projects that have been announced to date out of AgriFlex. There are two projects with the Canola Council of Canada that would address some of the innovation and competitiveness of that sector. They have a value of $9.4 million. Also, three projects have been approved for Pulse Canada. Those projects also leverage funding from the industry. The value of those Pulse Canada projects is $4.1 million.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm just curious: are we getting any requests for funding from the barley or wheat industry? No?

[Greg Meredith]

In AgriFlex alone we've received some 450 proposals, so we'd have to get back to the committee to be precise about the source.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. I'm going to be a little shameless here. Coming up in March, the pulse industry is going to be here on the Hill, on March 29, I believe, in Room 200, West Block. Of course, everybody should be there to support our industry, and I extend that invitation to everybody here in the room, of course. It's a little shameless, but I'm going to do it anyway.

One thing we're seeing in the canola industry, which has been a challenge in this last year, has been trade restrictions or non-tariff trade barriers on both the meal and the seed. For example, on the meal going into the U.S., we've had some issues there, and also with the seed going into China. Can you just give us an update on where we're at in resolving those issues? Or is there an update to be had?

[Greg Meredith]

Yes, you're quite right. With respect to China, there have been some blackleg problems. That's very top of mind for the minister and, in fact, for the Prime Minister. We've had a number of delegations to China. At this point, there are two plants that will accept positive tests for blackleg to do crushing and five that will accept negative.

CFIA continues to participate with Agriculture Canada in efforts to move the Chinese towards a more open market. As you know, blackleg is not uncommon in the seed, and it doesn't affect either the healthiness or the physical appearance of the oil after crushing. We think we can work with the Chinese to continue to open up. In fact, the Chinese are signalling to us that they expect a very significant increase, in the area of $180 million, I believe, in canola seed exports--or imports, from their point of view--in the coming year.

On the meal side, the issue there is salmonella in meal, meal that is destined not for human consumption but for animals. Again, we're working with United States officials and with the plants involved to make sure they can get off the restriction list that they're put on if there's a salmonella test. These are routine tests. If there is a finding, they go on an import restriction list until they demonstrate to the USDA that they've cleaned up the problem. We expect that we'll clean up and get the companies off the list fairly quickly.

[The Chair, Conservative, Larry Miller]

Thanks.

Your time has expired.

Mr. Eyking, you have five minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chair.

Mr. Prince, there might be a solution to your shortage of inspectors, because we've lost three plants in Atlantic Canada and two more are kind of looking desperate, so there will be extra inspectors coming out of those places that are shut down.

As a farmer, I guess it's hard for me to believe the rosy picture the minister is portraying of the agriculture industry. The reality is that out of all the industries in Canada, I think, agriculture has the lowest uptake of young people getting in.

I have three questions. My first question is on that. What is the average age of a farmer in Canada now and is the trend going up, meaning that fewer people are going into it? That's my first question.

Second, is it true that safety net payouts are down $900 million last year from the previous year?

Third, I want you to comment on Mr. Littlejohn's statements to the committee here this week. I'll quote Mr. Littlejohn's statements. He said that they are selling at less than it costs to produce a hog, that the government programs are not doing the job they're intended to do, and that they need some changes.

He also said:

I have been quoted by the minister seven times in the House as supporting that program...

As a producer who participated in this, I'll say to my MP, and I'll say to you as members of Parliament, we should be ashamed of ourselves that we would allow a program to be that ineffective, to be that ineffectual in assisting our producers.

I'd like to have your comments on that third one.

There might be different people answering these questions, but there are my three questions.

[Greg Meredith]

I think I'm the lucky one to answer all three. Those are important questions, so thank you.

You know, the average age is increasing in the farming community, in line with the average age of the workforce in the rest of Canada. But it's a great concern in terms of renewal.

Minister Blackburn has just completed a series of consultations with young farmers across the country to try to look at how we address some of the issues that are peculiar to new or beginning farmers, to look at breaking down the barriers to bringing young people back into farming.

So it is a top-of-mind issue. We made some changes recently. We were here at committee, and I believe the committee supported unanimously the changes that we brought into the Canadian Agricultural Loans Act, which made new farmers, who before weren't eligible, now eligible for loans. A number of the new loans going out are for beginning farmers. In fact, the number of loans has increased by some 60%. I believe the value has almost doubled as a result of the changes to that act.

There are supports that go out to the Young Farmers Forum and to the 4-H clubs to ensure that they can continue to attract young people and foster interest in this sector. It's something that's very significant as far as the department is concerned.

In terms of the safety net payouts, I just want to clarify that there is no missing money. In our budgetary estimates from the 2007-08 fiscal year to 2008-09, there is a drop in BRM expenditures, but that's because of the very large injection of funds, largely through the AgriInvest Kickstart that occurred in 2007-08.

There is an apparent shift in money between our planned payouts in 2008-09 versus our probables, or actuals. The source of that difference is that the grains and oilseeds sector is doing extremely well, and therefore drawing much less on the programs. In other words, they're making money from the market as opposed to, as the minister say, the mailbox.

On your last question, you know that we've worked very hard on problems facing the hog sector, going back now two or three years, including looking at changes in the business risk management, or BRM, parameters. The minister did announce emergency advances in 2008 for the hog sector. There was a $300-plus million take-up on that. In 2009 he announced a stay of default so that the farmers wouldn't have to repay. Now they have until September 2010 to repay.

The other initiatives more recently, that you're aware of, are the transition program...which was a direct result of consultations with the Canadian Pork Council and came out their strategic plan, which recognized that the production in Canada is too high to be sustainable. They set a strategic target to reduce the production from an annual of 31 million hogs to 25.5 million--a roughly 5.5 million annual reduction.

The transition program that we put in place has helped meet that target considerably. I think, at the end of the day, a reduction of probably some 2.8 million hogs will occur in hog production as a result of the transition program, which was, again, designed and delivered with the Canadian Pork Council--in fact, delivered by the Canadian Pork Council--as a way to help farmers exit the business without losing all their equity.

Lastly, the hog loan loss reserve program is really what Mr. Littlejohn I think was referring to. That program may not be paying out as much as some of the producers would have wanted. As the minister said, one of the issues there is making sure that people are aware of the program, and make an aggressive effort to demonstrate viability with their banks and do some competitive shopping, if possible.

At the same time, we do see a fair number of loans going out, and we do see a fair bit of money going out, under that program. As the minister said, in order to give producers a little bit of extra time, we've extended the deadline and we've enhanced the guarantee rate to banks to make sure there's no blockage in loans going out.

As the minister said, too, the question that we'll have to investigate with CPC, the Canadian Pork Council, is what were the barriers in this program? Was it people not walking in the door or was it people getting turned down? FCC indicates to us that by a ratio of three to one, people coming in the door with viable plans are getting approved.

So we'll have to sit--

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I'm sorry. I don't want to cut you off, but I don't know how much time is left.

[The Chair, Conservative, Larry Miller]

Your time has actually expired. When he's done, you're done anyway.

[Greg Meredith]

I'll leave the time to the members.

[The Chair, Conservative, Larry Miller]

Mr. Preston.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Thank you very much, Mr. Chair.

I've certainly been having lots of discussions on the point you made about the grains and oilseeds sector actually getting their money from the market. It's a really great point. I've also been talking to producers from most commodities, and they continue to have discussions with us.

I don't want to keep sending raw goods to other places. I would like to prepare, produce, or do something else for what I grow, closer to home. I know there've been a couple of things going in that direction. But part of putting young people back into the industry is to also involve them in agrifood, whether it is on the farm or off the farm, into the next industry of growing.

What do we have going on in the sense of producing goods closer to home and helping at a time when there's a bit of a credit crunch and people are trying to start industries where they could make goods closer to home? What are we doing to help with that?

[Greg Meredith]

You're quite right, the food processing industry is currently the largest manufacturing sector in Canada. Therefore it is a priority to ensure that it remains competitive.

In the 2006 budget, the government announced an ongoing $500 million action plan. As part of that action plan, significant investments were made in what we call the agri-opportunities program, which is designed to create new technologies and new innovations in Canada, commercialize them, bring them to market, and tie them to new market niches and new market opportunities on the selling side and also on the bringing feedstock from farmers side.

We've seen some really interesting innovations come about as a result of that. There's an extra demand for specialty crops in Canada and an extra supply of processed foods from Canada.

In the more recent Growing Forward framework, there's a significant investment of about $160 million in innovation, and a great deal of that goes to research. For example, the minister mentioned the dairy cluster, which can range from new attributes to better genetics for products. Some of the research will also be in new food development, and foods with new functional attributes or nutraceutical attributes. That, again, stimulates the processing sector.

The government has recognized that there's a significant competitive challenge that's based on being innovative, adapting, and getting ahead of new markets.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

That's exactly the point. We've pushed hard to try to help in the job crunch, which came from a recession that didn't really start in Canada, but it sure hit hard in all areas. Even in the agricultural areas, many of the manufacturing jobs are now gone. We've done a fairly good job of creating new jobs and a new economy, a food service economy or a food production economy next to the farm. We need to carry on doing that.

Randy, do you want to ask a question?

[Randy Hoback, Conservative, Prince Albert, SK]

Sure.

I would like an update on funding research. It seems there've been a lot of announcements on different types of funding for research. Could you give us an overview on funding research?

[Greg Meredith]

Yes. As I mentioned, in Growing Forward, the most recent agricultural policy framework that we've put in place with the provinces, there's significant new investment in innovation. The overall program, the Agri-Opportunities program, has $160 million over five years. The program includes clusters and developing innovative agri-products. It includes a number of facets of research to advance Canadian crops, animal genetics, or processing.

In addition, we continue to work with our partners across the country on how to organize our internal assets in order to support innovation.

[Randy Hoback, Conservative, Prince Albert, SK]

I have one more quick question with regard to the suite of programs, such as AgriStability and AgriRecovery, when changes are made to them. Just to help my colleagues across the table understand, what's the process involved--i.e., between the government and the provinces--in getting changes made to the programs?

[Greg Meredith]

As the minister mentioned, there is a very close collaboration between federal, provincial, and territorial governments. That collaboration requires us to have a significant number of provinces, representing a significant amount of production, to agree with us on any change to the nature and form of the programs we're running.

For example, ministers, as a group, have twice looked at parameter changes that include the so-called viability test that deals with negative margins. They've looked at caps and other dimensions of parameter changes proposed by various elements of the sector--primarily, and most recently, the livestock producers--and in both instances they've declined to make those changes.

Right now we are undertaking a fairly significant review of risk management programs in conjunction with the provinces and territories, and as a result the feeling is that perhaps we should be waiting to look at the outcome of that review before we make more parameter changes. But as the minister mentioned, he and his colleagues are always open to new ideas.

[The Chair, Conservative, Larry Miller]

Thank you. The time has expired.

We have a few minutes left. We have one question, Frank, if you would like to ask it.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Meredith, you said you are in discussion with the provinces about perhaps changing the viability test or that mechanism--AgriStability, etc. You said they've declined the suggestions.

Are you telling the farmers out there that this government has proposed changes to the viability test that they would favour and they've been declined by the provinces, or that the provinces have made the suggestions and the federal government has declined them? Can you be more specific?

[Greg Meredith]

I apologize if I was unclear. It's really industry that's making the proposals. When I say “they”, it's the ministers collectively who have twice looked at those proposals and not accepted them.

[Frank Valeriote, Liberal, Guelph, ON]

Could you tell us why?

[Greg Meredith]

The thinking right now, as I mentioned, is to look at those parameter changes and suggestions coming from industry within the context of the BRM strategic review. Ministers have now tasked officials to start a more detailed dialogue with producers about where they would like to see the sector go; their vision of the sector; and how risk management programing, including changes to risk management programming, might support that vision. Those consultations are going to be starting toward the end of this month with our national program advisory committee, and then there will be an extensive outreach at the provincial and national levels to find out the best ideas for a new framework and how business risk management programming can support that vision.