Agriculture Committee on Dec. 6th, 2011

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I also have another question, Connie. We talk about business risk management, but another side of that is attrition. We're seeing, and you had mentioned it too, that farmers are leaving the industry for whatever reason; they're retiring and moving on, but we're not getting new blood, so to speak, into the system. I know of one guy I met up in Montney, Frank Wiebe, a good cattle feeder guy who was aggressive—he really wanted to get this thing going.

What suggestions would you have to address that side of BRM?

[Connie Patterson]

I think the biggest thing is to have the programs readily available. Again, what we at B.C. Breeder and Feeder have done is taken it on for the province, for the whole cattle industry, so that these people can have a chance to get a cash advance. A lot of the eligible ones who have come through BSE and some of the other troubles are having trouble with an operating loan. So, cash advance is one of the great programs. Once your calves have hit the ground, we can get that cash advance to help sustain you in your farming operation for the year, whether it be in grain or cattle or a combination of both. I would have to say that's one of the really good ones.

One of the other ones that works well in the cattle industry, especially in British Columbia, is the interest relief program. The federal government pays a portion of the interest on the loan for feeder cattle, and that's administered through the feeder associations. Those are the kinds of things that will enhance young people, and that's what we need to do. We need to make sure that the programs we're putting forward and adjusting and tweaking always have those young people in mind because we are definitely in the rebuilding process in our country.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Right, do I still have time?

[The Chair, Conservative, Larry Miller]

You have about one minute.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

One last question, Connie. Based on your experience, if you could list the top three issues and you could fix them today, what would those issues be, especially with regard to the feeder industry? I know the feeder industry is in a unique position. You're not dealing with finished cattle specifically, but it's a unique position in the cattle industry. What would you name as those three concerns and how would you fix them?

[Connie Patterson]

In the feeder industry, the first thing would be to have money available so you could buy your feeder cattle. Having a decent interest rate would be one. The other one is markets, to be able to have access to market and feed stocks. Those would be the main things to enhance the feeder cattle in our part of the world.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Okay, good. Thanks for coming, Connie.

That's it for me.

[Connie Patterson]

Thank you.

[The Chair, Conservative, Larry Miller]

We'll now move to Mr. Allen, for five minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you, folks, for being here.

Let me put on my other hat as a member of a different committee. This will be no shock to my friends, I don't think, but let me talk to you about what the Auditor General found about BRM:

Another long-standing problem is understanding program objectives and responsibilities for managing farm income risks. From 2008 to 2010, the Department conducted a strategic review to address pressures from producers and industry for program improvements. The review found a lack of clarity in the roles and responsibilities for producers, industry, and government relative to farm income risk management. It also found that objectives for income support programs needed to be clarified.

That comes from the Auditor General. Of course, there's a recommendation to Agri-Food Canada from the Auditor General that says:

Agriculture and Agri-Food Canada should work with service delivery partners to understand their challenges and develop and monitor realistic implementation timelines for future income support programs.

The department said, of course, that would be done in Growing Forward 2 in 2013. I know we're almost at the end of 2011, but the reality is that the Auditor General and the department concur with you on the things you've identified and commented on numerous times today, but the fix is down the road.

So I guess my question would be this. On the ground in your areas—whether in Quebec, Mr. Béland, or in New Brunswick, Mr. Brennan, or in B.C., Ms. Patterson, or in Saskatchewan, Mr. Orb—do you sense that we will lose farmers between then and now? I don't mean just because we will lose some anyway, when they go out of business, but losing farmers because these programs aren't going to get fixed until 2013, even though the Auditor General says—and this is no longer anecdotal—that the programs aren't doing what they're intended to do and folks are waiting up to two years for money. I don't want to read the quote because it takes too long.

Whoever would like to start, go right ahead.

[Joe Brennan]

I will start. That is exactly where we are in New Brunswick, coming out of four not great years out of five. With the situation we face this year, some farmers who will not survive because they can't afford to wait for the system that's probably going to come. I do think there are some farmers in that critical situation. So to answer your question, yes, I do think we're in that situation as we speak.

[Malcolm Allen, NDP, Welland, ON]

Does anyone else have an opinion on that? Ms. Patterson or Mr. Orb?

Nil Béland.

[Nil Béland]

More in Quebec, but not necessarily within supply management. Thanks to FISI, the Farm Income Stabilization Insurance program in Quebec, pork producers who often need government aid receive it very fast thanks to advance payments. The government has found a method that does not require people to wait two years, even though there will never be a perfect method.

Regarding our supply management system, we cover production costs using a very efficient method. When the price of mash increases, since that is the biggest cost in the production of both eggs and poultry, the increase does not take a year, but rather three or four months. As a result, our risk management system and our calculation principle make us react very quickly. Two years is certainly too long. I know that pork producers have received aid. For beef producers, the situation is different, but the same calculation principle and the same approach apply to speed up the process.

[Ray Orb]

I'd also like to comment on that.

I think that's a good observation and that the timing is probably not that bad to be looking at new programming, because, coincidentally, we are looking at some fairly good grain prices right now. Farmers in Saskatchewan are producing an awful lot of canola and flax, which are fetching good prices around the world.

As far as livestock producers are concerned, those prices haven't been good for cattle since 2003. They're finally getting back to what is more normal. I'm not going to say they're great, but I would say they're good. That's likely because of the BSE that happened in 2003, because it caused a sell-off in both Canada and the U.S.

I think it gives us a little bit of breathing room for the next couple of years to be able to look at other programs. Programs like this should be designed to deal with the problems in the bad years. In the good years, most farmers don't need help. It's for the bad years that you have to be able to design programs that kick in, and they have to be effective. I think the timing is actually good now to be looking at this, to be looking forward.

[Connie Patterson]

I agree with Mr. Orb on that one. We definitely are in better times now for the grain and cattle industries. We're definitely on an upswing with cattle, where the demand is much greater than the supply. So this is the time that we need to take the time to look at new programs or fix the other ones that we have, so that when we do come to the next problem, we're ready for it.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Lobb for five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

I wonder if Mr. Béland could kind of take us a step back forty-plus years ago and express to the committee why the feather industry, the poultry industry in Canada, adopted a supply-managed model, and maybe comment about some of the issues that were happening, say, in Michigan and northern New York in the feather industry and how they moved to the southern U.S., to Georgia and Alabama.

Could you enlighten us with a little history lesson about why supply management came into the country?

[Nil Béland]

In fact, supply management has existed in Canada for 40 years, in almost all areas of production, including poultry and eggs. Production was moved around on the American side in areas where it was cheaper, where salaries were lower and where agriculture was perhaps easier in the short term. However, when one type of production is concentrated entirely in certain states—there is a lot of production in certain sectors and very little in others—there are recurrent risks of disease.

In Canada, since supply management was established 40 years ago or so, the risk has been controlled throughout the whole country and we have had significantly fewer problems related to disease than the United States has. In Canada, we do not see Salmonella Enteritidis or mycoplasmosis problems often. There are only a few cases, and usually, they are brought under control very quickly. But in the United States, when there are outbreaks of these diseases, there are entire sectors, municipalities, entire areas of 100 kilometres where production must be completely destroyed to resume from scratch. Supply management enables us to spread risk management nationwide and keep villages alive throughout the country.

[Ben Lobb, Conservative, Huron—Bruce, ON]

In addition to that, while we all love our U.S. consumers, our American counterparts believe they're the world of free traders, the freest of free marketers. Yet we know that their U.S. Farm Bill is one of the most significant expenses in their budget. Over 15 years, more than $5 billion has gone into the dairy industry in the United States. It was $1 billion that went to the dairy farmers there in 2009, and over $300 million last year went to the feather industry in the United States.

We're not here to bash the U.S., of course, but I wonder if you could share your experience with the U.S. Farm Bill, and some of the hypocrisies evident when they make comments on supply management in Canada.

[Nil Béland]

Clearly, I am less familiar with the data on milk production, since I am much more involved in egg and poultry production. The production of eggs and poultry has hardly cost the government a thing; whereas the United States has had some situations where they had to intervene financially, either directly or indirectly. The Farm Bill provides an indirect form of intervention, though other producers or other types of production. That would not be in our interest. The Farm Bill made it possible for them to lower the cost of production. Help in the U.S. came in the form of assistance for large-scale producers.

Here, the assistance is provided much more directly. I do not know if that answers your question exactly, whether your question and my answer have anything in common. The Canadian position over the last 40 years has made it possible to stabilize production for all those under the supply management system. The local impact is probably underestimated. For example—and I am speaking mainly about Quebec—organic production depends a lot on the production of chickens and eggs, since they provide the main raw material for organic fields. There is no direct intervention in organic production, but since the supply management system exists almost everywhere, it allows other types of production in the vicinity to do well.

[Ben Lobb, Conservative, Huron—Bruce, ON]

In addition, because supply management certainly works in your industry, you've been able to push the bar far ahead of many of our other producers worldwide.

Could you tell the committee some of the areas that poultry farmers in Canada have excelled in, whether it's biosecurity, biohazard, or the general health of our chickens or hens and the eggs they produce?

[Nil Béland]

Absolutely. There is the health of birds, the environment. I cannot speak about other provinces, but when it comes to the environment in Quebec, we have had agri-environmental fertilization plans in place for many years. They have been easy to implement in poultry and egg production. There are new technologies. Buildings have been heated with chicken manure for quite a while in Quebec, but unfortunately these are things we do not think about. These things are done at the environmental level, since our producers benefit from fair prices in their sector and are capable of generating profits and reinvesting them in research. This is probably not accounted for directly in the federal programs since the producers do it themselves.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Is that it for time?

[The Chair, Conservative, Larry Miller]

Yes, that's it. Thank you.

Did you have a comment that you wanted to make, Mr. Brennan? No, okay.

Mr. Dreeshen, five minutes.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair.

It's a pleasure to be here.

I am a farmer from central Alberta, so a lot of the different programs you've talked about are certainly ones that I'm aware of, and I certainly hear about some of the issues associated with them.

I know many people suggest that AgriStability was designed by accountants for accountants. It's one of those types of things where people suggest that it's going to be so complicated. I think the common sense thing there is to start taking a look at where these numbers come from on your tax forms and all of your inventories. It can be made a lot simpler. That is certainly one of the things that I'm well aware of.

Also, they were talking about the lag time between triggering a payment and how long it would take you can get the money back out of it. Being close to the two years is pretty close to the same as what you would get with the grain you would sell through the Canadian Wheat Board, but that's a different point.

Mr. Allen and I were also on the public accounts committee together, so we had some opportunity to discuss what the Auditor General said with regard to those particular programs. I think it's important, too, to recognize that as a government we feel that this exercise we're going through right now is so critical in trying to get the information needed for Growing Forward 2.

I know that many people have suggested that they can come up with some written suggestions for each of the programs, and I think that's important. What Mr. Lemieux mentioned earlier in talking about maybe focusing toward the crop insurance aspect of it, with still other components that will be successful, is perhaps a way that we can look at it.

So when I go through all of these types of things, there's one question I have. I know this had to do with AgriStability. You talked about a five-year timeframe but then expanding it through to seven years, which would be dropping the same Olympic average you would be using.... I'm just wondering what the cost implications would be for something of that nature. Are people then going to say they want to have the best of the two so they can make their decisions based on that? Do you have any ideas, in each of your different commodity groups, as to how that would affect it?

Connie and Joe, I suppose, would be most closely related to that issue.