Good afternoon. My name is Jean-Guy Vincent. I am a hog producer from Sainte-Séraphine, Quebec, and first vice-chair of the Canadian Pork Council’s board of directors.
My presentation will be in French.
I would like to thank the members of the House of Commons Standing Committee on Agriculture and Agri-Food for the invitation to appear before you this afternoon to discuss the Canadian hog industry, business risk management tools and Growing Forward II.
First, let's talk about the state of the industry. The Canadian hog sector is emerging from the most challenging period in its history. Since the fall of 2006, hog producers have battled one unforeseen event after another, from increased feed costs and higher exchange rates, to impacts from H1N1 and foreign policies such as country of origin labeling. While the past few years have been difficult and the hog sector landscape has changed, the future is more optimistic. The hog sector will remain a key player in Canadian agriculture and an important exporter.
Now let's talk about the strategic plan. To recognize our changed landscape, the Canadian pork industry has recently updated its strategic plan. We identified our challenges as an industry and more importantly decided how we can maximize our opportunities and build on our strengths. A copy of the plan has been distributed to the committee.
Moving on to business risk management, the best risk management tool is a strong market. Producers would prefer to rely on the market for a return on their investment. However, there are times when the market does not work and in those times business risk management programs are needed. Strong and reliable national programming will ensure that producers receive the same treatment regardless of the province they live in or size of the sector.
AgriStability is a core program that needs to be maintained. While there will be no benefits expected from the program now or in coming years due to current low reference margins, the program has worked basically as intended. But changes need to be made, and you have heard these from industry before. Caps must be removed; the historical reference margin should be the better of the past three years or the Olympic average; the viability test must be removed; and negative margin coverage should be increased.
The Advance Payments Program and emergency advances have worked well for the hog sector. However, producers are anxious about the pending repayment schedules, and we are closely monitoring the situation as the deadline for producer plans to be submitted arrives.
Longer-term changes to the APP to keep the program viable include: raising the permitted lending limit; allowing advances to be taken on expected marketings not inventory; and removing the personal and shareholder guarantee requirements.
AgriInvest has not yet been of value to our sector, and indeed was introduced at the worst time. But it may be useful in the future with the following key changes. We suggest removing caps, increasing the percentage of allowable net sales, and examining the allowable net sales concept to ensure that contributions across commodities are equivalent in nature in terms of risks to address.
The AgriRecovery does not currently address the risk of catastrophic losses that could impact the sector.
Work needs to be done urgently in order to have a clear and transparent response to a catastrophic situation such as a disease or border closure. These core programs need to be maintained and enhanced. There is a need for governments to find new and innovative means to help producers offset the risks they face.
Hedging and price insurance initiatives must be facilitated. While currently producers have access to hedging on the futures market, there are barriers to them doing so. Initiatives to remove these barriers are key to making hedging a useful and used business risk management tool. In addition, a new price insurance program in Alberta is running offering price protection based on the futures market.
Two main actions are needed: governments need to provide loan guarantees to allow for funds to be available to cover margin calls; the Alberta Price Insurance Program offers an alternative approach for producers which needs to be supported and made available across the country with affordable premiums. AgriInsurance is not a novel program, with decades of success with crops. However, it is not available to the hog sector and should be made a priority.
With regard to infrastructure, infrastructure initiatives need to be explored in order, among other things, to facilitate on-farm investment to address emerging market demands such as welfare or environmental requirements and updating hog barns as a result of low prices in recent years, during which producers were unable to reinvest.
The free trade agreement with Korea is an important issue. For the Canadian pork industry to remain successful and viable, we need market access through free trade agreements. A critical market for us is South Korea, and yet the free trade agreement talks with that country have been stalled since 2008. Any further delay in concluding free trade agreement talks with South Korea will seriously undermine the competitiveness of the pork industry and lead to the loss of jobs and contraction in the production and processing sector in Canada, including possible decline in producer prices. Canada’s current pork trade with South Korea, which is projected to be approximately $250 million in 2011 or approximately 10% of total Canadian pork exports, will disappear to those who enjoy FTA preferences.
As for the free trade agreement with the European Union, the Canada-EU relationship holds tremendous potential for the pork industry and is one of the last high value pork markets Canada can access. With the completion of a free trade agreement between Canada and the European Union, no other nation, other than the EU countries themselves, has the potential to capture a market share.
With respect to swine innovation, the Canadian Pork Council considers the Growing Canadian AgriInnovation Program—Canadian Agri-Science Clusters Initiative a success.
The council invites the federal government to substantially increase the funds of this specific program in Growing Forward II.
In 2010, the Canadian Pork Council officially incorporated Swine Innovation Porc to facilitate research, technology transfer and commercialization initiatives to enhance the competitiveness and differentiation of the pork industry and its products.
The Canadian Swine Health Board was established to help the industry address emerging disease issues. Many structural projects are underway across Canada, with the involvement of hundreds of producers, mainly in the area of biosafety, but also in research and monitoring. But swine health infrastructure and personnel require a stable and ongoing source of funding and support in order to address important economic and One Health-related swine health problems and issues.
It is widely recognized that animal health is of increasing importance—