First of all, I'd like to say thank you for giving me the opportunity today to speak to you via video conference.
I'm representing the B.C. Breeder and Feeder Association, which is a provincial organization. We represent all the feeder associations and breeder associations in British Columbia.
We operate under a provincial government loan guarantee program and provide financing for association members to purchase cattle. We also administer the advance payments program for all British Columbia cattle producers. We have an administrator in our provincial office and a regional administrator, so we actually work very closely with our beef producers to access the Growing Forward program because, for many of them, unless you're an accountant or you have someone with some expertise, it's very difficult to wade through the pages of information.
Our producers access the Growing Forward programs AgriInvest, AgriStability, and AgriInsurance. It's mandatory for any producer applying for APP to be enrolled with AgriStability, of course. Producers submit their applications for AgriInvest and AgriStability each year with their income tax returns, so individuals have to go to Surrey, British Columbia, to the Canada Revenue Agency office, and corporations go all the way to Winnipeg to the office there. In most cases, again, accountants are preparing the schedule A's.
Beef producers across Canada have faced extreme financial hardships over the last eight years, starting with BSE in 2003. This was a major disaster for the cattle industry. We have lost a lot of our producers in British Columbia—B.C.'s cattle herd has been reduced by 35%, the highest percentage in any part of Canada—and our cattle numbers have decreased by 15% across the country.
The Growing Forward program was designed to provide financial assistance to producers in years when their income declined. The producers' reference margin was determined by an Olympic average of the previous five years—drop the high and the low and average the remaining three. Negative margin coverage is available up to 60% if the producer had two of three positive years under reference margin calculations. After year after year of declining incomes, a lot of our B.C. producers are receiving no financial assistance, as they now have only negative margins in their reference margin calculation. Changes need to be made to this program to provide protection for producers if this type of catastrophe were to happen again in the future, or producers were to margin declines in excess of three years.
Producers make annual contributions to their AgriInvest account based on 1.5% of their allowable net sales, with a matching contribution from the provincial and federal governments. They calculate it from the their AgriInvest and AgriStability applications. Producers who have negative net sales due to an income decline are not eligible to make an investment in their AgriInvest account and receive no matching funds.
In 2011, cattle prices have increased substantially for our producers. If these prices continue for the next few years, producers will once again have positive reference year margins. However, to protect these producers from future margin declines, changes need to be made to the program structure of AgriInvest and AgriStability.
We have some suggestions to increase the percentage of ANS in the AgriInvest program to at least 3%. Any negative reference year margin calculation should be changed to zero, with the zero figure being used in the calculation. This would ensure a positive reference margin for producers.
During the good years, with a strong market, producers do not need the program. It's for the years of poor consecutive markets for cattle producers that we need access to the program with the assurance of a positive reference year margin.
BRM program payments should be allocated to the program year in which they occur in AgriStability. For example, if a producer receives an AgriStability payment for the 2008 year and receives it in 2010, the payment is added to allowable income in the AgriStability program for the year 2010. In all cases, program assistance needs to be allocated to the year that triggered the payment. This works best for us. If producers suffered a margin decline in 2010, this 2008 AgriStability payment would effectively reduce or eliminate any potential payment they may have received in 2010, the net result being that the producer may only receive a one-year payment when there were two years of poor margins.
AgriInsurance crop insurance is another BRM program that is used by our B.C. producers. The program provides producers protection for their crop yield. In B.C., we have had several drought years in the last 10 years. In addition, many areas of B.C. face severe wildlife damage to their crops, which can drastically reduce their crop yield. The probable crop yield offered to a producer on his or her crops through AgriInsurance is based on a producer's 10-year average production. With drought and wildlife damage, a producer's average production is seriously affected. In B.C., this program is not very well subscribed to, with only 15% of the producers who are raising crops accessing it. A lot of our producers are saying it's just not worth it any more, that their production yields on AgriInsurance have been reduced so much.
If a producer has continued drought or wildlife damage, they will claim themselves right out of the program. Positive changes that could help producers with this program are a producer-based production level, as opposed to a 10-year producer production average needing to be established on an individual producer level. This type of change would provide protection to producers who find themselves in a claim situation for drought, flooding, or wildlife damage, without adversely affecting their future production guarantee.
The federal-provincial BRM programs play a very important part in agriculture, and for the stability of our cattle ranchers when we have a tough year with cattle markets and the weather. The program needs to be structured in such a way to ensure protection in the year needed and that any payments be allocated to the year applied for.
The cattle industry in B.C. and in our country took a huge hit due to BSE in 2003. We are now rebuilding a mother cow herd, with the first real retention of heifer cows this fall. The BRM programs aid in the rebuilding process and encourage young people to enter our industry. We need to protect our cattle producers for the raising of forage cattle and the ability to market our product at fair market value.
Thanks so much for listening to me, and I welcome your questions.