Evidence of meeting #18 for Agriculture and Agri-Food in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was producers.
A recording is available from Parliament.
4:40 p.m.
Conservative
4:40 p.m.
Catherine Scovil Associate Executive Director, Canadian Pork Council
Further to what Monsieur Vincent said, there is no question that the hog industry has small, medium, and large operations. It's a philosophy of ours that regardless of size you should have the same access to government programming. The caps in AgriStability, AgriInvest, and our APP program limit access. So if you're a certain size, you're penalized, because you're too big for the programs. Our philosophy has always been that farmers should be treated equally regardless of their location or their size.
4:40 p.m.
NDP
Jean Rousseau NDP Compton—Stanstead, QC
Thank you, Mr. Chairman.
Mr. Vincent, you've made me think once again about the need to invest more in the agricultural sector. A number of markets are opening up to us, given the multi-ethnic character of many communities across the country and the growing demand for organic products, a demand that is both domestic and international.
What aspect of the Growing Forward initiative has the most harmful administrative red tape regarding the growth of these new markets?
4:40 p.m.
Vice-President, Board of Directors, Canadian Pork Council
First of all, organic products are important. As you say, there is a market. Consumers want access to those products. It's important to have access to them.
I'm going to ask Ms. Scovil to describe those matters in detail. She is in a better position than I am to explain the specific characteristics of those programs. They're part of her everyday life.
The current problem isn't necessarily accessing the products as such. The problem is that there are no programs enabling producers to develop those markets and thus meet consumer needs. During the period just elapsed, the margins of the AgriStability program shrank so much they blocked access to assistance. That's why the AgriStability program, which initially did the job, has to be revised. It has to be readapted so that we go back to the basis on which that program was built.
At the same time, we need tools such as hedging. That type of tool makes it possible to work with the market, but we don't have the financial capability to support margins when we accept contracts. This is a program that would cost the government virtually nothing. It's not something that costs money; instead, it provides assistance to producers enabling them to access markets and contracts.
I didn't talk about livestock mortality insurance. It's also important for our sector and for the other agricultural sectors, not only for the hog sector. Some pilot projects are currently underway, although producers can't bear all the risk on their own.
So we need government programs that will help us lower our production costs so that we can be competitive.
Now I'll hand over to Ms. Scovil.
4:45 p.m.
Associate Executive Director, Canadian Pork Council
To follow up on what Monsieur Vincent has said, what's really needed to help us—whether it's just for biological production or regular production—is government assistance to help us, not just develop and implement new programs, but to maintain them.
Most of the commodity groups have solid programs in food safety, in biosecurity, in traceability research, and in animal welfare. The government has been very good at helping us get these programs off the ground, but what we don't have is an ongoing commitment to them. These are the programs that help us interface directly with consumers, and that is where I see we need to work together—government and industry—to help agriculture become much more aligned with what consumer expectations are.
Certainly we are looking at increasing pressures from groups who want to have more influence in the way we raise animals, and we need to enhance that interface to better understand it. But we also need some help with government to help us adapt to those consumer expectations, whether they're for biological production or any other kind of production that consumers are looking for on Canadian farms.
4:45 p.m.
Chair, Chicken Farmers of Canada
To start with, on the development of these different kinds of products, we are already developing those now. There are a number of these products that are already being produced in Canada, and what we all need to recognize is that when you produce outside of the norm—whether it be antibiotic-free, free range, or organic—there is a cost to doing that.
What we've been able to do is to look at and capture that cost at the end of the marketplace. To me, it is critical that you have a program that allows you to capture that, because it is a more expensive product to produce. We have been able to gather that from the marketplace at this present time, and we continue to develop those programs to what consumers need in this country with Canadian chicken.
4:45 p.m.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
Thank you very much.
The first question is for Ms. Holowath.
With the advanced payment program, there's no doubt it's worked well, but we know that the deadline to repay the beef is next year, and for pork it's in 2013. We've heard numerous presentations that it should be expanded and it should be this, that, and the other thing.
You've seen the books of your clients and you'd know best—it's supposed to be due this year and next year—when is it reasonable to actually assume that it should be repaid? Before we would expand these programs or even consider that, we'd probably want to see some repayments to some of these accounts.
4:45 p.m.
Partner, Assurance and Accounting, Catalyst
Speaking on behalf of my clients, I know they would like it to be an indefinite, forgivable loan.
If you're speaking from the perspective of the money they're making and their ability to repay it, from the perspective of cattle feeders, not many of those producers have applied for advance payments, because of the caps and what's involved. So for them it's not really an issue.
If I'm speaking on behalf of my cow-calf producers, they have gone through a good year in 2010-11, because of market prices.
4:50 p.m.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
My next question is for Mr. Evans and Mr. Vincent.
With the advance payment program, price insurance dealing with futures is a way to create some certainty. I can understand the need for putting money in a margin account to cover your forward contracts.
Do you think it's reasonable to have funds available in addition to the advance payment program to use for your margin accounts on your forward sales? Is that something that would help producers out?
4:50 p.m.
Manager, Policy and Research, National Cattle Feeders Association
Yes, that would help. It would be especially good for our smaller operators. The limitation for them is being able to cover those calls on the forward contracts.
4:50 p.m.
Vice-President, Board of Directors, Canadian Pork Council
Hedging is another tool that enables producers to secure their incomes for the year. For example, it can cover their grain purchases and pork sales. They have a margin.
A problem arises when a producer works on contract. For example, when the price is $1.70 and the market forces it up to $1.80, the producer has to pay the difference. The producer doesn't necessarily have the funds to cover that difference. When he sells a product, he covers his margin and repays his guarantees from his pork sales. Backing the margin entails no risk.
The Advanced Payments Program has been beneficial for producers, who have very much appreciated it. That's something we acknowledge.
However, the established time periods assume that producers will have adequate margins enabling them to repay. Producers want to repay, but they want acceptable conditions so they can repay the Advanced Payments Program.
Grain prices have increased in the past year and a half, as have pork prices. It is reported in the newspapers that the price of pork is higher than ever, which is true. However, grain prices are also at their highest. Producers therefore don't have the necessary margin enabling them to repay.
The program is in existence and they have to start repaying on April 1. For some producers, that will be fine, but others are very concerned. I know what producers want. They need the guarantees on those loans to be more personal guarantees because this very much affects the producers.
4:50 p.m.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
At the last meeting we had at least one producer who came in...when we were talking about the Olympic averages, they said we should go to seven years, because seven years is better than five.
Is it your opinion that seven is better? Your presentation said three. What's wrong with seven, or should it be three? What are the arguments for and against?
4:50 p.m.
Partner, Assurance and Accounting, Catalyst
I've had many claims kicked out because of the Olympic average calculation. I believe there is a recommendation from one of the groups that we move to the better of a simple average and an Olympic average. If you think of a ten-year cycle for typical commodity prices, the seven-year average better reflects the ten-year cycle than a five-year average, which basically cuts it in half. If you're at the end of a bad cycle, then you're at the mercy of your reference margins. So seven would better reflect the ten-year cycle for commodity prices.
4:50 p.m.
NDP
4:50 p.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Thank you. Merci.
And thanks to all of you for being here.
My first question is for David. When I was first elected, I recall that evening we spent at one of the receptions where you gave me my first lesson on supply management.
I think those figures have stuck in my mind, but I would like to make sure I'm correct. I believe the quota is either 5% or 7.5%. I believe it's 5% for all countries and 7.5% for our trading partners.
Could you clarify that for me, please? Or are we not sure?
4:55 p.m.
Chair, Chicken Farmers of Canada
It's 7.5% of our previous year's production. The United States and Mexico come in tariff free. Everyone else has a 5.4% tariff for that percentage. Beyond that is the higher tariff.
4:55 p.m.
NDP
