Thank you, Mr. Chairman, and good morning.
Thank you to all members of the committee for the opportunity to appear today and comment on the next agricultural policy framework.
The Grain Growers of Canada acts as a national voice for more than 50,000 farmers across the country who actively grow and care for a variety of crops, including wheat, durum, barley, canola, oats, corn, soybeans, and peas and lentils.
GGC is led by dedicated farmer directors who work with government and stakeholders to achieve our goals. Our primary areas of focus include transportation, sustainability, trade and marketing, research, and safety nets.
Our organization has participated and continues to actively participate in the ongoing consultations for the next iteration of the national agricultural policy framework. We believe there is now a unique alignment of timing and interests in which the current suite of programs, initiatives, and platforms can be better aligned with challenges and opportunities to support business success and economic growth. Specifically, we are working with other groups to examine options for the reform of business risk management programming to support the vision of creating the most modern, sustainable, and prosperous agricultural sector in the world.
My remarks this morning will be quite focused. They will concentrate on BRM, because that is where we feel there is a need for improvement. I would like to emphasize that we consider other priority areas such as research and market development to be as vital for the success of the sector and we encourage continued funding for those programs. These will be particularly important in helping the sector strengthen its competitive advantage through science and innovation capacity, respond to growing concerns around public trust, and adapt to carbon pricing initiatives.
The BRM suite of programs is highly valued by Canadian grain and oilseed farmers. However, there is concern that programs, in particular AgriStability, are not working as well as they used to. Participation rates in AgriStability have seen a steady decline from 60% in 2007 down to 36% in 2013, and they are continuing to decline. Reduced participation combined with unpredictable coverage has rendered it an unreliable program, which offers little stabilizing security in the event of a market shock. Farmers don't know when and how much they will be paid. This leads to risk aversion, less desire to innovate, and in particular does not help young farmers who face the greatest risks and financial exposure in the early part of their farming careers. The overlying issue is that farmers do not have faith in the program, and as participation rates fall as a result, that becomes a self-fulfilling prophecy.
This should be a big concern to government at all levels, because in the event of a major market shock we can expect the agricultural sector's exposure to be greater and far deeper than in the last 10 years. Despite and perhaps because of strong market conditions, farmers are currently carrying record levels of debt as they invest in their operations. Grain operations are currently being bolstered by the weak Canadian dollar and low oil prices. If this situation should change, farmers will be even more vulnerable in the event of a disruption.
Governments have indicated that they have no desire to return to the days of ad hoc programs, but the call for these is a certainty, should a major market shock happen.
For AgriStability, given that the drop-off in participation rates has occurred steadily in the last 10 years we believe that a simple return to the 85% coverage rate and margins included in GF1 may not be the optimal solution. We're suggesting a deeper dive to figure out where the issues are and propose workable solutions.
It is hard for one program to meet the needs and risk profiles of every farm in today's environment. For example, it would be useful to have an AgriStability program that encourages rather than discourages diversification of operations, because many growers, as you know, are involved in several elements of agriculture, but the AgriStability program as it currently stands is organized in such a way that diversified operations often do not meet the threshold for compensation when one element of their operation fails.
For example, a farmer may have a hog and a grain operation. If the grain crops fail, the income from the hog operation might keep the farm over the threshold, while they still need the support of BRM programs, which have been already paid for, to overcome losses.
Participation rates in programs such as AgriInvest and AgriInsurance—these are the remaining pillars in the suite—are solid, even though those programs require considerable investment in dollars by farmers.
That is perhaps because they are predictable and bankable. They provide peace of mind to farmers and seem to be working well, although there is a desire to see a return to previous levels of funding for Agrilnvest, and a reconsideration of the cap that was lowered in GF2.
Given the importance of BRM programming, we feel there needs to be a separate consultation-discussion mechanism for the next policy framework. We have recommended the formation of an advisory committee made up of national commodity association representatives, including relevant provincial associations to address any regional gaps.
This group would work to assess the effectiveness of the current suite of programs and make recommendations to the minister and government. We have already begun outreach and informal discussions with other groups to consider options for increasing flexibility within the AgriStability program. We look forward to bringing those proposals to government once they are developed.
In conclusion, I would like to reiterate that support from the provinces and the federal government for adequate safety net programs has always been appreciated by grain farmers across Canada, but we feel the time is right to review, and modernize the existing suite of programs to address the needs and risks of today's farmer, and achieve broader public interest outcomes.
Thank you, and I look forward to your questions.