Agriculture Committee on Nov. 22nd, 2016

[The Chair, Liberal, Pat Finnigan]

I call the meeting to order.

I want to welcome everyone to our Standing Committee on Agriculture and Agri-Food. We are doing the APF program. I want to welcome our guests and our viewers, as we are on camera.

With us today we have Mr. Ray Orb, president of the Saskatchewan Association of Rural Municipalities. Welcome, Mr. Orb. We also have, from Ducks Unlimited Canada, Mr. James Brennan, director of government affairs, and Mr. Paul Thoroughgood, regional agrologist, Prairie Canada. Welcome to both of you.

Also, from Grain Farmers of Ontario, we have Mr. Mark Brock, who is the chairman. Welcome.

You have up to eight minutes for introductory statements, and then we will proceed to questions.

We will start with you, Mr. Orb.

[Ray Orb, President, Saskatchewan Association of Rural Municipalities]

Good morning, and thank you for the opportunity to present to you today.

My name is Ray Orb, and I am president of the Saskatchewan Association of Rural Municipalities, or SARM.

SARM was incorporated in 1905, and we represent all of the 296 rural municipalities in the province. As part of our act of incorporation, we must engage in any activity that furthers the interests of agriculture.

Historically, agriculture has been the backbone of our Saskatchewan economy, and today it continues to be a major contributing force.

Saskatchewan harvested 32 million tonnes of crops in 2015, livestock revenues reached $2.6 billion in 2015, and Saskatchewan exports of agri-food products reached $15.3 billion, so the agriculture sector in our province is strong and will continue growing in order to continue feeding the world.

The agriculture policy framework has been an important program that provides support to the agriculture sector. It is this support that ensures that the agriculture sector is able to continue developing at efficient and sustainable levels.

As Growing Forward 2begins to wind down, we are now starting to look forward to the next agricultural policy framework. SARM would like to see specifically AgriStability returned to its previous version, as was seen in Growing Forward 1. When the coverage decreased from 85% to 70%, AgriStability decreased in its ability to help the middle class.

We are finding that producer uptake at AgriStability has been decreasing, as the program is not as beneficial as it once was. SARM believes that the middle class in Saskatchewan would benefit greatly from restoring the old coverage. This would provide relief to thousands of middle-class families and would make a difference as they work to balance their family budgets.

AgriInvest is another program SARM would like to see amended. At 1% contribution rates, AgriInvest funds are likely to be inadequate to provide meaningful support during periods of severe income declines.

Matched producer contribution rates should be increased to allow for greater funds access, and SARM believes there should be increased federal investments in production insurance through increasing its contributions to the premium and improving coverage options.

Where possible, simplification of the administration of these programs should be implemented in order to ensure that funding flows faster to producers and that less is spent on administration.

Access to non-potable water in rural Saskatchewan is also an issue for producers, as they require water for their operations.

The farm and ranch water infrastructure program provides valuable funding to support the development of water resources in rural areas. Developing water sources is integral to the well-being of a community and essential to the agriculture industry. Enhancing water resources in a community is an important economic driver, and SARM wants to ensure that the funding remains in place for the development of non-potable water resources for rural areas.

Another area that SARM would like given consideration is in regard to climate change mitigation and the environment. As producers adopt the latest technologies and machinery to reduce their carbon footprint, support in the form of rebates or grants would provide an incentive for all producers to continue being environmental stewards and reducing climate change.

Building further on the environment, the importance of the agri-environmental group plans will likely grow in importance.

Providing education and awareness on environmental issues is important as we fight to reduce climate change and as Canada enters into new trade agreements under which new requirements may be expected of producers. It is important that producers have readily available access to this information to ensure that they are in compliance with any requirements that may result from these trade agreements.

SARM has been very vocal in opposition to a federally imposed carbon tax, as it would have negative consequences for the agriculture sector. A carbon tax would not just affect a farmer's use of fuel; it would also affect other inputs, such as farm fertilizers and farm chemicals. Producers are unable to pass these costs on to the consumers, as they are price-takers. This means that as the cost of all inputs rises because of a carbon tax, producers are left absorbing that into their bottom lines.

The agriculture sector cannot afford a carbon tax, which doesn't support the sector's goal of feeding the world as global demand and the populations continue to increase.

These are the areas that SARM would like taken into consideration as the next agricultural policy framework is made.

SARM is willing to examine areas of interest and need. Examples include labour shortages in agriculture and the temporary foreign worker program.

Thank you for the opportunity to present today. I would be pleased to answer questions.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Orb.

We'll move to Ducks Unlimited. Go ahead, Mr. Brennan.

[James Brennan, Director, Government Affairs, Ducks Unlimited Canada]

Good morning, Mr. Chair and members of the committee. Thank you for inviting Ducks Unlimited Canada to contribute to this very important study as the government develops the next agricultural policy framework for Canada.

We believe that the next framework should continue to support the growth of an environmentally sustainable agricultural sector while helping Canadians respond to global market demands.

My name is Jim Brennan. I am the director of government affairs at Ducks Unlimited, and I'm also the co-chair of the Green Budget Coalition. Joining me today is Paul Thoroughgood. Paul is Ducks' regional agrologist in prairie Canada, and our primary liaison with the agriculture industry. A farmer himself, Paul has been highly engaged in national discussions on agricultural sustainability, including the Canadian Roundtable for Sustainable Crops.

As the country's leading conservation organization, Ducks Unlimited Canada has been working for nearly eight decades to conserve, restore, and manage wetlands and associated habitats for North America's waterfowl. Our work and achievements are largely the result of strong partnerships with private landowners. Thanks to the environmental commitment of 18,000 landowner partners, Ducks Unlimited has been able to conserve nearly 6.4 million acres of habitat to date.

Despite our combined efforts, wetland and other habitat loss in North America continues to increase at an alarming rate. Since European settlement began, Canada has lost nearly 70% of wetlands found on its southern working landscapes. We continue to lose more than 29,000 acres of wetlands each and every year. The consequences of this ecological loss are significant and can have long-term ramifications, not only for Canada's finances and climate resiliency but also for our agricultural sector's growth, competitiveness, and public trust.

As a society, we are already paying for many of the lost ecosystem goods and services, or EGS, that are the result of land conversion, including carbon capture and storage, water filtration services, flood attenuation, and groundwater recharge. Producers are also experiencing a number of environmental challenges that affect their bottom line, including more frequent flooding, soil erosion, and population declines of important pollinators and insects. These challenges will only be magnified by a changing climate.

We believe that the next agricultural policy framework presents a great opportunity to help grow a competitive and environmentally sustainable agriculture and agrifood sector, and at the same time take steps to reverse the negative habitat loss trajectory, impacts of which are already being felt by the Canadian economy.

Having environmental sustainability and climate change resiliency as key policy outcomes is an important start, especially because Canada is still playing catch-up in the sustainable sourcing market. Sustainability metrics like “no new land being brought into production” are being developed by domestic and international purchasers of agricultural products. These metrics measure impacts of native land conversion—for example, wetlands and grasslands—into agricultural production in terms of GHG emissions, biodiversity, and water quality.

The concern is that current government policies and programming under Growing Forward 2 do not provide the much-needed market signals or incentives to keep Canadian agriculture ahead of global trends like climate change adaptability or on-farm sustainability, both of which are significantly influencing global market demand, sector growth, and Canada's competitiveness.

As a result, many producers continue to make land use decisions today that have the potential to limit their foreign market access in the future. For example, when we examined three subwatersheds in Saskatchewan using the “no new land brought into production” measure, we found that two-thirds of land parcels would have failed their audit within the past decade.

The issue of newly cultivated land is closely linked to the sector's ability to address the impacts that climate mitigation measures will have on agriculture. While we recognize some of the industry's concerns, we also believe that Canadian agriculture is uniquely positioned to capitalize on some of the opportunities afforded by a low-carbon economy, provided that the right tools, programs, and policies are in place.

Certain agricultural industries have already made significant strides in reducing environmental footprint through such conservation and land management practices as no tillage. Another example is the 4R nutrient initiative led by Canada's fertilizer manufacturers, which helped reduce runoff of nutrient known to cause GHG emissions, algal blooms, and related declines in drinking water quality.

While these initiatives and practices are important, habitat conservation and restoration is still the best mechanism for delivering ecosystem services at watershed scale, which is critical to effective climate adaptation and resiliency.

At this time, I'd like to hand the mike over to my colleague Paul, who will offer you some ideas and suggestions on how the next APF can support the growth of an environmentally sustainable agricultural sector and help advance other important policy priorities.

[Paul Thoroughgood, Regional Agrologist, Prairie Canada, Ducks Unlimited Canada]

Thank you, Jim.

Good morning.

Considering the environmental challenges and market pressures facing the sector, we believe there is a compelling need for an agri-environmental vision supported by policy leadership and intergovernmental collaboration.

The next APF should be supported by sound legislative frameworks and consistent across other provincial and federal policy objectives, including the one on wetlands. In this spirit, Ducks Unlimited Canada recommends that programs and tools of the next framework fully support the current federal wetland policy.

At a minimum, these programs should not encourage or enable land use decisions that conflict with that policy. Without this alignment, it will be very difficult to achieve tangible landscape-scale results on issues such as habitat loss, water quality, climate change, and biodiversity.

In our experience with Growing Forward 2, the impact of beneficial management practices, or BMPs, is highest in jurisdictions that have strong wetland policies and other environmental legislative frameworks. A good example of this would be Atlantic Canada. Conversely, in areas without these supporting frameworks, habitat and associated EGS losses from unregulated or unlawful habitat destruction dwarfed the perennial cover and wetlands that were restored via BMPs.

In terms of direct programming, we believe that the next APF should build on Growing Forward 2 by developing and enhancing programs that incentivize and reward environmental stewardship and BMPs on agricultural land.

Currently there is a suite of programs that provide producers with cost-shared funding to implement a variety of BMPs that can help farms become more environmentally sustainable while increasing profitability. While cost-sharing may be an appropriate mechanism to encourage on-farm improvements that generate high benefits to the producer relative to cost—an example of this would be improving fertilizer storage on-farm—this type of program has not been as effective at incentivizing BMPs of high environmental value, such as wetland restoration. To increase uptake of such BMPs, we recommend that the next APF facilitate the development and implementation of programs that compensate producers for the habitat and EGS they restore.

Further to this, DU recommends that the principle of additionality be firmly embedded in the new APF and corresponding BMP programming. Under this principle, incentives and compensation would only be provided for activities that deliver environmental gains over and above what's occurring under the status quo, or business as usual.

With respect to the actual BMP program implementation, we encourage government to leverage and maximize delivery partnerships and badly needed resources so that they appeal to farms of all sizes. We believe that simplifying the application process and providing increased support to producers should help increase program uptake.

We also recommend the re-establishment of a landscape-scale perennial cover restoration program like Greencover Canada, which ran from 2003 to 2008. Under that program, producers received financial assistance to establish hay and pasture on marginal land. This land use change generated many benefits, including reduced soil erosion, water quality protection, carbon capture and storage, and enhanced biodiversity.

Another tool that can help expand the environmental awareness and conservation ethic among producers is the environmental farm plan, or EFP. We fully support ongoing discussions on how the EFP can be used to help producers respond to domestic and international sustainability demands. To accomplish this, the EFP has to be strengthened by placing greater focus and support on areas of the farm that are not directly under production.

[The Chair, Liberal, Pat Finnigan]

Mr. Thoroughgood, I'm going to have to ask you to conclude.

[Paul Thoroughgood]

Okay.

[The Chair, Liberal, Pat Finnigan]

You can go ahead with your conclusion if you wish.

[Paul Thoroughgood]

Thank you.

Ultimately, programming under the APF should send signals to farmers that the ecologically important areas on their farm are assets, not liabilities.

I will conclude my comments, Mr. Chair, and I thank you very much for the opportunity to present.

[The Chair, Liberal, Pat Finnigan]

Thank you so much.

Now, from the Grain Farmers of Ontario, we have Mr. Mark Brock.

[Mark Brock, Chairman, Grain Farmers of Ontario]

I am Mark Brock. I farm around Hensall, Ontario, and I am chairman of the Grain Farmers of Ontario.

On behalf of our 28,000 grain and oilseed members, I want to thank you, Mr. Chairman and the committee, for the opportunity to provide our perspective on Canada's suite of business risk management programming.

The Government of Canada and the Government of Ontario's support for business risk management programs has always been appreciated by grain and oilseed producers in Ontario, but currently there are inherent problems with the suite of BRM programs. Participation rates in AgriStability have seen a steady decline. There were changes to the program made for GF2 that made it less attractive, but even before these changes, it was not a popular program. It is clear that farmers have lost confidence in the program.

This is a big concern for our organization, as it leaves our farmer members exposed in the event of a market shock. We are very close to a market shock. For example, if the Canadian dollar weren't low, we would have been in a significant price slump.

That said, we are at a time of great opportunity for growth, and at the same time we are also facing increased responsibility to society. According to the FAO, food production must increase by 70% by the year 2050 to feed the growing world population. We all know that arable land is a limited resource and that our air, land, and water are increasingly becoming precious resources. As farmers, we take very seriously our responsibility to sustainably feed a growing population.

Farm operations are very different from what they have been in the past. Today the Canadian farmer is choosing to farm smarter. We find efficiencies in our operations by employing precision agricultural techniques. I rely on GPS maps on my iPad that detail every inch of my farm. I download these maps to the computer on my tractor to control the sprayer to release only the precise droplets of pesticides in the areas that are required. This saves me money and ensures that there is no unnecessary product left on the field. I do the same for my fertilizer applications.

Farmers are managing risks through diversification. My wife Sandi and I co-manage our farm. We have livestock and a grain operation, and we also have our own grain storage. We use marketing and hedging to manage our financial risks, and we rely on the crop insurance program to manage our production risks.

Farmers put a priority on the environment in their practices. My farm buildings are heated with geothermal, for instance. I have employed measures to protect honeybees on my farm, and I plant cover crops to help maintain a healthy soil. These are just examples from my own farm. Every farm across Canada has taken a unique approach to farming smart. Today, the landscape of farms is a spectrum of diverse farming operations across this country.

The current suite of business risk management programs is not addressing the unique diversity of farm businesses we see today, and that's why enrolment is down. A one-size-fits-all approach to BRM isn't working any longer. What may work for my farm won't work for my 30-year-old neighbour down the road, or the pork farmer the line over. Not only are the farms different because of the crops they grow or the livestock they raise, but we have different business models.

If Canadian agriculture is going to be in a position to capture the opportunities that a 70% production increase in the next 30 years gives us, we need to be smart about it. Smart farms need smart business risk management programs to choose from.

Our members are committed to increasing production sustainably, but we can do this only if we have smart BRM programming that helps us to invest in our farm operations and employ innovations.

What do I mean when I say “smart BRM programming”? Farmers need a choice of BRM programs that are tailored to meet the needs of the diverse array of farm operations that exist today. Farmers need to be able to choose a product that works for their farm operation, as farmers are able to do in the United States.

This is what we think the new suite should look like.

AgriInsurance should remain the same. This program works, and grain farmers rely on it not only to protect against unexpected production losses, but also to access credit they need to build their operations. AgriInsurance is an excellent example of a program that works. Enrolment numbers are steady and representative. Farmers pay significant premiums to the AgriInsurance program because they know they can rely on the coverage it provides. Farmer premiums also significantly offset payments from government.

We need more options for coverage fashioned after the crop insurance model. We need a flexible approach that provides risk management options—similar to what the U.S. Farm Bill provides—for farmers to identify their own risk and choose a program that works for their farm operation.

We believe the risk management suite should include the following options, in addition to crop insurance.

We would like to see a program that provides a farmer with revenue risk insurance support based on a five- or 10-year rolling average of price and yield in their region. Different levels of coverage could be purchased by the producer.

We would like to see an AgriInvest style of program with additional coverage over what exists today that will allow farmers the flexibility to manage their own risk on their own terms. For instance, these funds could be used to purchase private insurance products that work for their operations. We believe that for this program to work effectively as a single choice for farmers, additional coverage at two to three times the current rate would be required. We support a design that encourages farmers to utilize their AgriInvest accounts to manage the risk.

AgriStability should remain as a third option, but it needs to be improved. Even though AgriStability doesn't work very well for gain farmers, it can work for certain farms that are diversified in the livestock business. Recent changes to AgriStability have decreased the program's ability to deliver, and should be addressed.

We realize that what we're recommending is not just a tweak to the current suite of programs, but we believe it is important that we get this right if Canada is to be able to take advantage of the growing opportunity for growth to meet the demand of feeding a growing world.

To get them right, we should test the products with farmers in the industry by rolling them out as pilots in a region first. Eastern Canada is a great place to start. In Ontario, our province has long recognized the inadequacies in the federal suite of programming and has provided a risk management product to address some of the gap. A pilot will allow us to develop a program solely to build up momentum and interest by testing it out with farmers in a real-life scenario. This will provide experience to show that increased enrolment and cross-compliance can be achieved through a program that meets farmers' needs.

Once these programs are in place, we think that, just like what the U.S. has provided for its farmers, there needs to be some risk management and financial planning education for farmers. Education is an important part of making these revised programs work for farmers and for the economy, and it should be included in the next policy framework.

In the Calgary Statement, agricultural ministers laid out the path forward and an opportunity for alignment. We believe now is an ideal time for the alignment of timing, interests, and opportunities in the current suite of programs, initiatives, and platforms so they can be better aligned with the challenges and opportunities to support business success and economic growth. We believe that it's important to examine options for the reform of the BRM program to support the vision of creating the most modern, sustainable, and prosperous sector in the world.

Governments have indicated that they have no desire to return to the days of ad hoc programs, but a call for these is highly likely if a major market shock should happen.

There are opportunities to achieve objectives of broader public interest outcomes. Grain Farmers of Ontario are open to cross-compliance mechanisms to help government achieve its broader public interest outcomes regarding water and soil health, climate change, economic development and growth, market development, and innovation, but we need to make sure we have a meaningful suite of programs to choose from that work for today's complex array of diverse farm businesses.

Thank you for the opportunity to speak with you today.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Brock.

We will now start our first six-minute round of questions.

Mr. Shipley, you are first.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, witnesses, for coming.

First of all, Mark, I'm from Ontario, so I'm going to focus most of my questions on Ontario right now.

We talk about environmental sustainability, and obviously your sector has been involved with pollinators for a number of years. Can you help us to understand what sustainable environmental practices your industry, grain farmers, follows that not only are not detrimental to pollinators but also have other effects in the agricultural sector?

[Mark Brock]

Sure. I think really you're speaking to that conversation around public trust and having to ensure that our consumers and society as a whole are comfortable with the farming practices that we're following specifically within the grain and oilseeds sector in Ontario.

We really focus on sustainability and on ensuring that our practices are environmentally sustainable and that we can achieve some of these goals and targets effectively, efficiently, and with less environmental impact than we've had historically.

It's a message we're trying to communicate to the public as a whole through consumer outreach and different communication strategies, and talking about some of these sustainability projects that we're a part of in order to help the consumer feel better about the product they're purchasing.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I'm going to be honest with you. When we're talking about the APF and as we're going forward, I really believe that at the end of the day, we need to focus on the public trust issue.

In terms of the innovation and technology research that has happened.... For example, the issue around the pollinators became a national issue, even though it seemed to be focused mostly on some of the producers in Ontario. You talked about your own farm business and what you've been able to do. I have to admit that if you went to a school or if you went to most of the people in your neighbourhood, they would have absolutely no idea what you've done, but they would be overwhelmed to know what you have done in terms of using that technology.

Have you had good co-operation in terms of the development of innovation with equipment dealers, seed producers, manufacturers, and those types of people?

[Mark Brock]

It comes back to how you build that consumer trust and who is viewed as a trusted source of information.

Personally, I would have to say that as the chair of an organization such as Grain Farmers of Ontario, my credibility is less than my wife's would be in terms of her engagement with her social group, because she farms. She probably works harder on the farm than I do, because I'm gone all the time. She's a very trusted source.

We have to reach out and use some of those people to communicate our message and to really simplify our message so that it's understandable.

I do think there's room in the upcoming APF in terms of assisting with a communications strategy. With regard to the work done through the Canadian Roundtable for Sustainable Crops, in the current GF2 we failed to get some funding on a communications strategy to communicate what that round table is doing. The upcoming APF needs to have some opportunities to have funding access for communication around public trust because, as the government, you should be proud to stand up and showcase some of your scientific institutions. You should be proud of them because they are recognized around the world for being great institutions.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

You talked a little bit about BRM, and some of those programs. You also talked about risk management. One of the things is to get that as a national type of program, because right now it is ad hoc. In Ontario, they have their own risk management program.

In your discussions with organizations across the country, how do you sense that would come together, and is it in terms of getting a consensus across the country?

[Mark Brock]

We've been having significant conversations with our counterparts across Canada in the grains and oilseeds sector about business risk management programming from a national perspective.

Really, what we are looking for is some flexibility. I highlighted our opinion of what we look at, but we're talking about having three options and picking one of the three, not being part of all three. We have to be aware of the financial situation of not only the federal government, but of provincial governments across Canada. We have to be smart about it, because we require all the provinces to sign on to this APF as we go forward and to agree to terms of business risk management. That's why we have to have more than just a tweaking conversation; we have to have a policy conversation.

I know that time is tight, but maybe we should be looking at what the policy objectives of the BRM programming are and if there is a better way to do it.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Brock.

Thank you, Mr. Shipley.

Mr. Drouin, you now have the floor for six minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here this morning.

My first question is for Ducks Unlimited.

A few weeks ago, I had the opportunity to visit a beef producer who has worked hand in hand with your organization. What was clear to me was that Ducks Unlimited and farmers can play a role. It proved to me that climate change and farmers don't have to be in a head-on collision but can actually work together. Wetlands provide carbon sequestrations.

Can you talk to me about the environmental farm plan that you propose?

[Paul Thoroughgood]

Absolutely. I think the environmental farm plan, if properly adapted as we move forward, can satisfy a lot of the demands that Canadian farmers are getting put on them from a sustainable sourcing perspective. I think it can also be made into a more effective extension tool to help extend management techniques on areas that aren't in production. I see that as a weakness in the current environmental farm plan, because it's good for identifying issues on fertilizer storage and tillage operations and that sort of thing but maybe less so on management of non-productive acres.

I think the subliminal message in that is that those are of no value. If properly constructed, I think it could help demonstrate the values of those areas from a carbon capture perspective and from a water quality perspective, and also from the perspective of, as Mark was talking about, maintenance of pollinators and other beneficial insects.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Are there any incentives right now for farmers to adopt beneficial management practices?

[Paul Thoroughgood]

Absolutely. Of the two main motivators, one would just be purely economical benefits on a farm. I know the BMPs that I adopted on my own farm were mostly because they were financially good for my business operation.

There are also benefits of just doing the right thing. In parts of Canada, fencing out riparian areas was a very popular BMP, and that certainly provides an environmental value as well as an agricultural value. There are probably two main motivators. We'd certainly like to see the environmental value become more visible, and having markets that Canadian farmers can participate in from an ecological goods and services perspective would certainly be an increased motivator, because then you're doing a good thing but you're also receiving some sort of financial remuneration for it.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I've seen the beef operation in my riding, but are there any other types of operations that you're working with across Ontario or the country?

[James Brennan]

Are there other partnerships where we...?