Agriculture Committee on Nov. 25th, 2010

[Jody Aylard]

On the previous interest-free portion?

[Wayne Easter, Liberal, Malpeque, PE]

Yes.

[Jody Aylard]

Going back to the date of the advance to the date of default, he will be charged a quarter of 1%.

[Wayne Easter, Liberal, Malpeque, PE]

Okay. So he or she is paying interest on what was the previous interest-free portion back to the day of the default.

[Jody Aylard]

A quarter of 1%.

[Wayne Easter, Liberal, Malpeque, PE]

But if you can't pay zero, if you can't pay the money, a quarter of 1% is just going to put you in more difficulty.

[Jody Aylard]

This is the requirement under the act we have, the legislative rules to follow--

[Wayne Easter, Liberal, Malpeque, PE]

Okay. That's fine. I just want to be clear on the facts.

So there is a rumour out there, though, that the interest would be charged back to the origination of the loan. What's the story there?

[Jody Aylard]

The advances are in two parts. There's an interest-free portion and an interest-bearing portion. In the case of a default, the producer would pay 0.25% on the interest-free portion back to the date of the advance to the date of the default.

[Wayne Easter, Liberal, Malpeque, PE]

Back to the day of the original advance--

[Jody Aylard]

Yes, and then--

[Wayne Easter, Liberal, Malpeque, PE]

Okay, that's pretty serious--

[Jody Aylard]

He or she owes the interest that was charged for the interest-bearing portion over that same time period, and then from the day of default to the day they pay the full balance, it's prime plus 1.5%.

[Wayne Easter, Liberal, Malpeque, PE]

Okay. Thank you.

The last point on that, for clarification, is this: the producer, if he is in dual commodities, would lose the rights to advance payments on other commodities that he is producing. Is that correct?

[Jody Aylard]

That is correct. Again, that is a legislative rule.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

Frank.

[Frank Valeriote, Liberal, Guelph, ON]

Greg, you spoke of innovation, of developing characteristics to improve yield and health attributes, and I appreciate that, especially, as you say, while we're in competition with Ukraine, Kazakhstan, Brazil, and Russia--and frankly, in the face of global warming.

Two days ago, we had a group of people here talking about the need for public research, not private research. I understand that only $125 million of your entire yearly budget is put into research, based on numbers that I've read. I could be wrong. Can you tell us what--if any--plans you have to expand public research and increase investment, and what suite of programs you might be looking at? Because clearly it's very important.

[Greg Meredith]

First, on your introduction, the development of attributes to serve market needs is really becoming quite a competitive advantage. Just as an example, with canola we're looking at things like introducing more omega-3s, enhancing ultra-low saturated fat traits, and building into the crops some attributes that perform better at the retail level for frying and things like that, so you have a leg-up on your competition.

In terms of the research in plant varieties and other public research, we've increased our research branch budget fairly significantly since 2006. It's now $266 million. It was considerably lower, at around $190 million, four years ago.

In the course of Growing Forward, we've also developed a number of collaborations with industry and not-for-profit organizations. I'll just take you through some examples. We've partnered with the Western Grains Research Foundation to look at wheat varieties specifically. We've invested $8.2 million in that, and another $2.8 million in the same organization in an association of partners for barley breeding, along with $4 million in the Field Crops Research Alliance to look at drought resistance and disease resistance in field crops.

We have added three new breeders to our research branch who will do strictly public wheat breeding and we are hiring another four. Just as a small plug for our research branch, the committee might not be aware that over 70% of the wheat varieties planted in Canada came from our research branch. It is highly effective in producing new varieties that work for farmers.

[The Chair, Conservative, Larry Miller]

I'll move to Mr. Hoback, for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

I want to go back to what Mr. Easter said, because there are a couple of things that have made it kind of interesting for me. Under the AMPA program, all the advances are guaranteed by inventories. Is that correct?

[Jody Aylard]

Yes. Advances are made--

[Randy Hoback, Conservative, Prince Albert, SK]

Either inventories or--

[Jody Aylard]

--against inventory, either planned production or actual production, but they are secured by BRM programs in the case of crops that are in production and not yet harvested.

[Randy Hoback, Conservative, Prince Albert, SK]

So if a farmer is going into default, basically he's telling us that he no longer has the inventory, so he has either sold the product and not paid back the advance, or, in the case of a crop failure, let's say, he would need to have either a BRM program or crop insurance to offset that security. Is that correct?

[Jody Aylard]

Yes. Where they've used those as security, those offset the advance.