Agriculture Committee on April 30th, 2015

[John McKay, Liberal, Scarborough—Guildwood, ON]

I may be joining you today, but it won't be permanent.

Mr. Eyking has been talking to quite a number of farmers over the last few months. One issue that keeps coming up is the business risk management program, which many farmers are describing as complicated, unpredictable, and inadequate. When I look at the Library of Parliament's breakdown of your various programs, I take note that in 2009-10 it was $1.5 billion, and now it's down to $1.280 billion, about a 15% cut.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

I'm scratching my head, John; these are demand-drive programs, so there's no cut. If the demand is there, the programs balloon. They could go north of $2 billion if it were required. There's a line item that has agri-stability, and as the demand increases so does the dollar. If the demand isn't there, as it hasn't been in the last couple of years with the markets delivering, then, of course, the payments go down.

[John McKay, Liberal, Scarborough—Guildwood, ON]

It's a curious juxtaposition, then. You started at $1.5 billion, you're down to $1.28 billion, and you're saying the market's in effect taking care of the risk—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Right.

[John McKay, Liberal, Scarborough—Guildwood, ON]

—which can only be to the good.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Right.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Having said that, why would Mr. Eyking be hearing about a program that is complicated, unpredictable, and inadequate? Those two thoughts don't live in the same universe.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Most of the provinces deliver the programming themselves, so the administration is theirs. As a department, we deliver Manitoba and Atlantic Canada. Every other province delivers their own and they all have little tweaks and twists. At the end of the day there's more work being done, as I said, on agri-insurance because it's more bankable and predictable than agri-stabiity or agri-recovery, which is the disaster component.

The problem that we always heard from farm groups on agri-stability was, as you rightly point out, the twists and turns, and how to make it work. It's not a bankable and predictable as insurance is. That's why, as a government, we've been working with the provinces—it's shared jurisdiction—to move more and more programming to an insurance risk base. That way it's bankable and predictable. At the end of the day, we're now seeing that happening in the livestock sector, which is much better. We're also seeing our crop insurance programming starting to cover things like unseeded acres and other issues that weren't covered before that agri-stability had to pick up. We're trying to make this as predictable as we possibly can for farmers so they know what they're up against every year.

[John McKay, Liberal, Scarborough—Guildwood, ON]

If you're moving it to an insurance-based model, as a farmer who wishes to draw, how will that be different than what business risk management looks like? What would be the difference in the program form?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

I would start out by saying that a farmer doesn't wish to draw catastrophe, but certainly if something like that happens, whether it's market driven or weather driven, they want to know that they have coverage. They want to know what the parameters are of that coverage so they can fill it into their business line to get lines of credit at the bank and so on. We're doing that. We're trying to keep things as bankable as we possibly can so that the lending institutions understand that this farmer has coverage to this level and the line of credit can be applied to it.

The most significant change that was made to agri-stability was farmers coming to us and saying they are using this global average where the high and the low year are left out of the five year and then the middle term is the average. The folks that need this year after year have hailstorms two years in a row and are losing out. What we did we made the adjustment to draw down the overall coverage of agri-stability from 85% coverage to 70% and at the same time bring up the negative margin coverage into that same vein. The people that needed it more got coverage and those that weren't claiming it didn't lose anything, because whether they got 70% or 85% of a non-claim didn't really matter.

[John McKay, Liberal, Scarborough—Guildwood, ON]

No.

For the interest of members who are going to be asked to vote shortly, where is the...? I was going to say it's a replacement program. It's not really a replacement program, it's a—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

It's a companion program.

There are several fronts in the business risk management, or BRM, suite of programming. Agri-invest, where farmers put in 1% of their net and we match it—they can put in any amount they want, but we only match the first 1%—gives them money for a rainy day to take out the small bumps and hurdles as they move forward. Most farmers look at that as a retirement program as opposed to levelling out the small bumps. The trick with that is we've changed the trigger. It's much more user friendly than it used be. Then you have agri-stability, which is one of the major programs. It's driven by market interruptions or weather-related issues that aren't covered by crop insurance. Crop insurance is the mainstay for most people. There never was an insuranced-based product for livestock, but now we have one under the agri-insurance envelope. Saskatchewan, Alberta, and British Columbia have endorsed, as I said, about a million head covered to a value of about $1.7 billion. Manitoba is looking at one for hogs, based more on a hedging guarantee, and we're looking at how we implement that as well. So everybody's—

[John McKay, Liberal, Scarborough—Guildwood, ON]

The disadvantage—

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. McKay. We're well over time.

I'll go to Mr. Maguire, please, for five minutes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you very much, Mr. Chair.

I want to be the second one on this side to congratulate the minister on the changes that he just was talking about in regard to the Wheat Board. The changes will lead to more marketing options and choices for farmers across the Prairies, at least, anyway. With that, there are growing market opportunities. That's more important than ever. There are some main items in the estimates here such as $194 million that I see under the lines of market access, negotiations, sector competitiveness, and assurance systems.

A portion of that funding is going to open up new markets in the world. We've signed 38 new trade agreements, more than any government in history. I wanted to ask you how these agreements are going to benefit the multiple industries, particularly in agriculture, that will be affected by it and can you inform our committee how the access to these new markets will impact our Canadian agriculture sectors?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Trade is the mainstay of Canada. We have a large ability to produce and a small population to consume, so we export between 50% and 90% of commodities, depending on what they are. For pork 50% goes out, and for canola, 85% to 90% goes out, and that varies.

At the same time we export that volume, we also import 50% of what we consume. There are different numbers and different values, but at the end of the day we're a trading nation by design, and the whole point of a trading nation is having markets we can ship those goods to. You need more than one bidder on your product in order to keep your major trading partners. The U.S. has always been a major trading partner and it probably always will be, but at the end of the day, having the ability to ship livestock now into Japan, Korea, China, and India, and to ship different things like grains and oilseeds to more than just the American market certainly has brought the value up. We've all seen that with the price of beef as it has climbed given the growing need or demand for protein around the world.

We need to facilitate that and it takes boots on the ground for the market access secretariat, which is being added to in this budget. We need trade commissioners to work with all of the provinces now that are getting on that trade bandwagon. Ontario just got back from a trip to China. Good things are happening over there. It's all good, but you need coordination to make all of that work. We don't just need people storming the beaches in China. We actually need them doing it in an orderly way so that we don't have gaps and overlaps. That's what these trade commissioners do.

We also have the ability now to have dedicated agriculture people embedded in the embassies in the markets that are most important to us, along with a lot of Paul's colleagues at the CFIA. We found that extremely helpful with the latest BSE case. Our lead, our eminent veterinarian on BSE, is a guy named Dr. Gary Little, who is actually stationed in Tokyo. This time around we didn't have any interruption at all in the market in Japan. In fact, Japan accepted some 28 containers that were on the water headed to Korea. They said they wanted time to assess those. They were swung and purchased in Japan.

These men and women do tremendous work for us on the ground in that regard, which is why you see that reflected in the budget.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you very much.

One of the other impacts that come from these changes that I have lobbied for all my life, as have you, is the opportunity for more processing right here in western Canada to change the value of the product and change the type of product. Doing that requires a lot of heavy investment from many companies, farm organizations, or smaller groups that may not be able to just jump up and put out the cash to do it all.

The $70 million in the main estimates for the growing industry capacity in Canada will give them an opportunity to do that. I wonder if you can just explain how that funding is going to affect the processing industry here in western Canada, and it's not just in the west. This impact is going to be felt across all of Canada. I'm just wondering if you can also expand on how the accelerated capital cost program we have in the budget will affect this as well.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure. They all dovetail together. Everybody has different requirements. The biggest thing we found in travelling last year was that we need to begin to assess these markets and sell them what they want, not what we have. We enjoy a nice 10-ounce or 12-ounce sirloin or a 16-ounce T-bone. That feeds a village in Japan. But how do you cut that up properly so you're not wasting what we have and still address that marketplace? This allows processing facilities to retool to specifically address those market requests, and that's exactly what's needed. We're just starting to reinforce “sell them what they want, not what we have”, which means processing jobs here and the ability to recapture some other goods. When you crush canola here, the meal stays in our livestock sector rather than what happens when we just ship the seed and so on.

There is a tremendous amount of work being done to coordinate all of that so that we end up with the biggest benefit, whether we send over raw materials to be processed there or we can process here right through to finished goods, or we Cryovac two-inch cuts for that market in Japan.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Maguire.

Now we'll go to Madame Raynault for five minutes, please.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

Mr. Minister, in my discussions with the farmers in my region and those in Quebec, I have noticed that, for the industries where supply management is a factor, it is critical that it remain in place. As you know, the system provides the stability and predictability that allows producers to invest back into their farms and to stimulate innovation. Compared to other systems, supply management helps big and small producers alike.

As a consequence, Mr. Minister, in a constituency like mine, or like my neighbour's, Ruth Ellen Brosseau, supply management fosters economic prosperity and job creation. In Quebec, almost 9,000 farms, more than 62,000 jobs, and 37% of farm income as a minimum are affected by supply management. Supply management works, and it is vital to the well-being of agriculture in Quebec and in Canada. It also allows all Quebeckers and all Canadians to have high-quality products on their shelves while costing the public purse nothing.

In that context, Mr. Minister, can you reaffirm your unwavering support for supply management today and keep the promise made in the Speech from the Throne?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Absolutely. As a government, we have proven the value and validity of supply management as we continue to exercise free trade agreements around the world. We've done that.

I consider Marcel Groleau, the head of the UPA in Quebec, a good friend. We chat from time to time on issues such as this. We made a pledge that should there be any negativity through the producer level in any of these free trade agreements, such as the European Union free trade agreement, they will be compensated and kept whole. We continue to reinforce that.

The discussions around the TPP are heating up. Until it actually nails down on a point, there's a lot of concern, I will say, throughout the SM sector as to what will happen at the end of the day. But they all know that as a government, we have their best interests at heart. All of us agree, all political stripes agree, on the value of the SM sector to Canada.

[Francine Raynault, NDP, Joliette, QC]

According to the 2015-2016 Report on Plans and Priorities, some sub-programs are entirely funded by Growing Forward 2 while others come from departmental resources in addition to the resources from Growing Forward 2.

Could one of you tell us how much will be spent in total in 2015-2016 for Growing Forward 2?

Can that amount be broken down by sub-program?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

We can quantify some of that. We may have to get back to you on that number.

Growing Forward 2 is a five-year program. To identify one year, we'd have to work with the provinces of record, because some of the money is directed by them and some of it is directed by us. Some years there are overlaps, say, into Quebec, whereas other years aren't quite the same. It all depends on the year they access the funds.

We could seek to do that for you. You said 2015-16. We haven't done 2016 yet, and 2015 isn't finished yet. Which year would you want qualified?

[Francine Raynault, NDP, Joliette, QC]

I am talking about 2015-2016.

Can you tell us how much Growing Forward 2 will cost and can you break it down by sub-program?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

What it's going to cost? It will be delivered in the value of the envelope that's there.

As to the particular breakdown, Pierre, can you quantify some of those numbers?