Agriculture Committee on Dec. 8th, 2011

[Russell Evans]

I would add that I think the bigger operators manage their risk very well, that is, the very large-scale operators, using market tools. The smaller operators can't cashflow that, and I think we heard that from the pork and chicken guys. They need some help with being able to cashflow the futures markets.

[Francine Raynault, NDP, Joliette, QC]

On page 4 of your document, you recommend that the government redirect AgriInvest funds to programs that reflect the changes taking place in agriculture in Canada.

Would you please elaborate on your thinking there?

[Russell Evans]

I think what we see is farms getting bigger. Generally, the whole small farm existence is diminishing. Rather than spreading out those little bits of dollars, which for most real farm operations that are producing the bulk of our food is really insignificant, it would be better spent investing in something that would create better markets for them.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

Do I have any time left? Yes.

Mr. Vincent, it seems important from your presentation that your producers be able to invest in infrastructure in order to increase their production. How can we promote that investment?

[Jean-Guy Vincent]

When agricultural infrastructure and investment come up, there is too much talk about subsidies. In fact, the issue here is not subsidies for farmers, but rather subsidies to support the processors, retailers and all the other sectors surrounding producers. So when we ask the government to continue investing in infrastructure and investment programs, that's also to help us restructure. We have not been able to reinvest in our buildings in recent years.

If we want agriculture to be profitable, if we want to have low production costs, to be a competitive market relative to our American friends, who are our main competitors, we need infrastructure programs in order to invest in farms. We invest in roads, bridges, public transit: so let's invest in the agricultural sector, in farm buildings so that we can be competitive.

[The Vice-Chair, NDP, Malcolm Allen]

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you very much, Mr. Chair.

Thank you, everyone, for being here.

Certainly I'll say from the government side that we too think that farmers want to make their living from the marketplace. There was certainly comment about opening foreign markets to our producers, and that does play a key role, particularly in today's economy. The larger the marketplace our farmers can sell into, the better.

When it comes to business risk management programming, just the reality of today is that the pie is not going to be getting larger any time soon. We had some witnesses here at the last meeting. I was listening to what was being recommended for each of the programs. In each of the four main categories of AgriInvest and AgriStability, the changes, of course, all meant a bigger pie. There were really no trade-offs proposed. That's really what I'm interested in hearing.

For example, with AgriStability, I understand it's frustrating to get the payments so late. But it makes intellectual sense when you look at the way it's managed. You have to finish your year. You then have to file your taxes and your other documentation. It then has to be reviewed. Then a payment is made. Of course, that's long after the difficult times.

Some of the changes in AgriStability will not correct that. They will allow greater coverage, perhaps, or they might allow better access to the program, but they won't necessarily circumvent that problem of getting a payment long after the difficult times. What I'm interested in knowing is which programs are of more benefit to your commodity groups versus one of the others in that category of four? Again, we're not talking about just a larger pie when we know that the financial realities of today probably won't allow that.

I'm also interested in knowing your thoughts on perhaps some new programming initiatives. I've had conversations, for example. Livestock insurance has been proposed that's based not on cost of production but on market price. When you actually go to sell your livestock, are you close to the market price at which you insured? It has nothing to do with cost of production. I'm interested in knowing your thoughts on that, too. It's rather broad and I know time is always limited. We might have time at the end to come back on this; we'll see.

I'll start perhaps with the pork farmers, and then we can work our way into the other commodities as well.

[Jean-Guy Vincent]

Your analysis is important. Like you, we believe that the pie can't be made any bigger.

Consequently, how do we generate more revenue for producers? Through the markets. The more access we have to lucrative markets in the pork industry, the more revenues will increase and the less government intervention there will be, hence the importance of markets such as Korea and the European Union—lucrative markets—and the domestic market. We are making a major effort to improve our domestic market.

There are other, low-cost programs. For example, the Canadian Swine Health Board doesn't have an enormous budget, but it is important for producers. Health is the key to our production and the revenues it generates.

A program like the AgriStability program is important and has proven itself. However, it must be redefined and improved.

Access to markets, access to lucrative markets, assistance for structural programs that lower our production costs, that's the vision of the Canadian Pork Council.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Chicken farmers tend not to fall into these mean risk management programs.

[Mike Dungate, Executive Director, Chicken Farmers of Canada]

Can I comment?

In terms of AgriStability, the issue is that we'll never trigger it. We're involved, but only at tier 3. You need a 30% reduction.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's a good thing, though. You will never need the program. That's actually a strength of supply management.

[Mike Dungate]

Never needing the program is a strength. From a livestock perspective overall, though, we're not following a crop year kind of thing. Our production will, in a lot of cases, go over both calendar and financial years.

We'd have to lose three flocks in a row—half a year of production—but if it were caught halfway in between, it would never trigger it.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Does that happen?

[Mike Dungate]

It happens often.

If we have an AI outbreak, and we've had it, generally we're able to get people back in two flocks.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's a bit different, though, right? The AI outbreak involves CFIA. It involves replacement costs for birds. There's a different model that kicks in. It's not a business risk management type of program.

[Mike Dungate]

It is for the farmers who aren't getting depopulated but happen to be next door to the guy who is getting depopulated. If they can't restock because they're within the zone, they are the guys who don't get compensated under the Health of Animals Act, and they can't restock.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Is it a business decision they make, though, to simply not buy into AgriStability? They have access to it. They make a business decision. They evaluate their risk—the annual payment, the likelihood of me losing my flock, etc.—and they go through a business decision, do they not?

[Mike Dungate]

Our point is that we're better off not being in AgriStability. AgriRecovery is the key issue. You've heard the other comment here. Having some predictability with respect to what events will trigger AgriRecovery is the important aspect for us. It is having something knowable in advance so that you can say, okay, we have access to that program. Right now, it's a decision afterwards.

[The Vice-Chair, NDP, Malcolm Allen]

I recognize that you both could carry on this discussion, and hopefully perhaps someone else will pick it up.

I am looking over at this side. I believe I'm going to see a sub form. That being the case, Mr. Casey, you have five minutes.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Chairman, as you saw, I came in just at the very end of the presentation, when Mr. Valeriote left. He indicated he wouldn't be much longer. I wonder if you, Mr. Chairman, with the agreement of the committee, would consider changing up the order to allow Mr. Valeriote to ask questions of these witnesses.

[The Vice-Chair, NDP, Malcolm Allen]

I certainly don't have an issue with that. If I don't see an issue from either side, I will go to Mr. Payne, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chairman.

I want to thank all the witnesses for coming. It's very important that we hear your comments.

My colleague has certainly started down an interesting area. I was wondering if maybe the cattle feeders could talk about that and also touch a bit on the red tape.

Basically, you're saying that there are all these forms, and they're very complicated. They take a lot of time. They cost a lot of money. I was just wondering if you could make some comments on those. If you have some suggestions, maybe they could be submitted to the committee in writing to help improve the process for filing these applications.

[Terri Holowath]

Within the programs we have AgriInvest, and it's capped at $22,500. So right now, based on the size of our producers, that money doesn't make a significant difference in their operations. They go through this complicated process, and that's what they're limited to on that side.

There was a question about whether the pie needs to be bigger. The last time I looked there was $40 million set aside for BRM. I don't think the pie needs to be any bigger. We just need to make it easier to access. They're getting some sizable cheques, but it's happening 14 months, 18 months, two years after their year-end. It needs to be linked to the time at which they sell the inventory. We might submit a more streamlined application at that time, as opposed to linking it to year-end. Linking to year-end is fantastic for primary producers—farmers, ranchers, those types of operations. It doesn't work well where we're flipping inventory a lot of the time. On behalf of cattle feeders, I can tell you that we're more than happy to say where we see inefficiencies and where we can make improvements.

[LaVar Payne, Conservative, Medicine Hat, AB]

Some of you talked about raising some of the limits on AgriStability and removing caps. Do you have any further comments that you'd like to provide? It doesn't matter if we go to the hog producers, the chicken farmers, the cattle farmers, or the Keystone people. Would you like to comment on what you would recommend, and how it would affect your businesses?

[Jean-Guy Vincent]

It has to be acknowledged that businesses are growing from year to year. However, for all kinds of reasons, possibly including production costs in particular, programs are not adjusting to changes on the farms.

Programs are not adjusting to changes on the farms or to the transformation of farming businesses. Consequently, whether we like it or not, those businesses are growing and changing year after year. The programs are not adjusted to the size of the businesses. I think it would be very important for there to be family farms where a family can live.

Some businesses also produce in order to meet the needs of both domestic and foreign markets. That's why the programs have to be adjusted and ceilings have to be changed to reflect the situation of farms today.