Agriculture Committee on March 7th, 2016

[The Chair, Liberal, Pat Finnigan]

Welcome, everyone, to our committee meeting today. We will get right to work. We have the assistant deputy minister of the programs branch and the assistant deputy minister of corporate management branch with us, Tina Namiesniowski and Pierre Corriveau.

Welcome to you, and welcome to all the members. We shall begin.

The floor is yours.

[Pierre Corriveau, Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food]

Thank you, Mr. Chair.

I appreciate the opportunity to open this discussion around the supplementary estimates (C) for Agriculture and Agri-Food Canada for 2015-2016. This afternoon, I am joined by my colleague Tina Namiesniowski, Assistant Deputy Minister, Programs Branch, for which the funds related to the appropriations under discussion today are mainly intended. We are here to discuss the department's financial picture in relation to supplementary estimates (C).

To provide a bit of background, supplementary estimates are part of the normal parliamentary approval process to ensure that previously planned government initiatives receive the necessary funding to move them forward, to meet the needs of Canadians. The estimates present information to Parliament on the Government of Canada's spending requirements that were not sufficiently developed in time for inclusion in the main estimates. That is what was done last year around the same time. The supplementary estimates may from time to time include funding for urgent but unforseen expenditures.

Supplementary estimates, which directly support an appropriation act, are published throughout the year; each release is identified alphabetically—A, B or C. In a routine year, supplementary estimates (A) are tabled in May. The associated appropriation act is tabled in Parliament and normally granted royal assent and becomes law in late June. These provide federal organizations with the funding they need early in the fiscal year. Supplementary estimates (B) are normally tabled in late October or early November, and the associated appropriation act is granted royal assent in December. Supplementary estimates (C), such as these, we are discussing today, are tabled in February, and the associated appropriation act is granted royal assent in March.

The supplementary estimates (C) you have before you for Agriculture and Agri-Food Canada total $47.8 million. Agriculture and Agri-Food Canada's spending authorities for 2015-2016, up to the end of March 2016, total approximately $2.4 billion. That reflects the total of these supplementary estimates, the main estimates from the start of the fiscal year, supplementary estimates (A) that were approved last June, and the funding carried over from last fiscal year.

Since supplementary estimates (B) are limited to essential authorities for the government's urgent obligations, and due to the election, Agriculture and Agri-Food Canada did not have any items included in that fiscal year.

The majority of the funding in the supplementary estimates (C) is for cost-shared programming with provinces and territories, under Growing Forward 2. The funds target innovation, competitiveness and market development.

Let's briefly put Growing Forward 2 into context. This is the third year of the five-year Growing Forward 2 framework. Federal, provincial and territorial governments are investing $3 billion over five years—or $600 million a year—to support innovation, competitiveness and market development in Canada's agriculture and agri-food sector. Funding of $2 billion is for cost-shared programming with the provinces and territories, and $1 billion is for federal strategic initiatives.

To get back to the 2015-2016 supplementary estimates (C), $35 million is related to cost-shared programming with the provinces and territories under Growing Forward 2.

To break down that $35 million, it is cost-shared with the provinces, and it's divided into three major themes.

The first element is $17.4 million for cost-shared programming in competitiveness and market development.

The second element is $14.8 million for cost-shared programming in innovation.

The third element is $3.3 million for cost-shared programming in adaptability and industry capacity.

As well, the department received revenue royalties for intellectual property. There's an amount of $6.6 million related to licences and royalties from crown-owned intellectual property, which Agriculture and Agri-Food Canada collected and deposited in the CRF in the previous fiscal year 2014-15. This amount is available this year to reinvest in our operation in science and technology.

Royalties are collected for numerous agriculture commodities that have been developed by our scientists. These commodities range from grains and oilseeds to fruits and flowers.

Another element of revenue is from the sale of real property. There is $5.5 million in funding related to revenues from the sale of six real properties in fiscal year 2014-15 and some in 2015-16. These revenues are reinvested into the capital budget of the department.

We also have revenues of $340,000 from sales and services related to research, equipment rental, and facilities rentals, earned in 2014-15 and again deposited in the CRF. The department is now accessing these funds for use in this fiscal year. Again, it's in support of our research function and to maintain our facilities and equipment.

Finally, in the estimates section, you will see that there are transfers between departments. Some of those amounts relate to our activities with other federal departments. We're receiving from Shared Services Canada an amount of $5,000, and we're transferring to the Department of Foreign Affairs, Trade and Development an amount of $81,000, primarily to support our staff located at missions abroad.

You'll also see that I've provided information on the estimates process if you want to go into further details later on. It's a document that has been prepared by Treasury Board, which I personally find very helpful in terms of a picture of where we are. I would refer you to either page 7 or page 9 of this document, as it gives a good picture of the estimates process.

Mr. Chair, thank you very much. My colleague Tina and I would be more than happy to answer any questions you may have.

[The Chair, Liberal, Pat Finnigan]

Thank you, Monsieur Corriveau.

We're open for questions.

Mr. Shipley, please.

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

I want to thank our witnesses for coming today and helping us walk through the final part of the supplementary estimates (C). It's always an interesting time because it wraps up what we need to spend in terms of our last financial outlook. It's really about showing where we're going to be spending, and maybe in some cases it's about trying to understand where the dollars are used.

For example, under your “Revenue—research sales and services”, there's funding from sales and services related to research facilities and equipment, deposited in the consolidated revenue fund. If you would, please explain for everybody a bit about those revenues that come in for research and how those revenues get developed in terms of partnerships.

[Pierre Corriveau]

For the vast majority of those revenues, I'll use the example of our research centre in Quebec. It's at Saint-Hyacinthe and it's a food research centre. A lot of private sector industries use our facilities to develop different types of products. They rent our space at market value. They use our equipment or facilities, and sometimes, the time of our scientists.

For some of the revenues that are generated, the department cannot re-spend those revenues if they are generated in the same fiscal year; these are deposited in the CRF. Under an MOU we have with the Treasury Board, we can re-spend those funds earned the previous year in the current year. That, again, is to reinvest in the science that's developed in the department.

Not all revenues are the same, but I would say that this is for our science group; if it's in that branch, it gets cut.... We have other organizations, like that of my colleague here, where the revenues are called “vote-netted revenue” and can be spent in the same fiscal year, but that's not the nature of the revenues that are listed here.

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

When you get to Growing Forward 2, where we're getting prepared for developing the next program, which is likely Growing Forward 3, I wonder if you could talk to us about the cost-sharing amount of $35 million, as related to the cost-sharing program of provinces and territories in Growing Forward 2.

In terms of those dollars that have been going out, when you look at the markets or the commodities and at the interest in going into these programs, you can see that the uptake dropped, in some cases because of high commodity prices. Those commodity prices now are not as high, so I'm wondering about your thoughts as you go through the analysis of what is affecting that.

On the other side of it, we also have a number of inputs that are obviously dropping. If you're in livestock or in cropping, we see pesticide prices stabilizing, if not dropping. Certainly, the inputs in terms of fertilizer have come down. As for seed prices, well, they don't tend to ever come down, but once in a while they stabilize.

I wonder if you could help understand that transfer of those dollars and how it works in terms of that part of Growing Forward 2.

[Pierre Corriveau]

I'll try to explain the difference between the two sets of money, and I'll leave the experts to talk about the sector.

In Growing Forward 2 there are voted programs. We have talked about innovation and competitiveness, and all of that. In that programming, for every dollar that's spent, 60 cents comes from the federal government, and 40 cents comes from the provincial or territorial government.

We have a provision that says when all of the money is not spent in the current fiscal year then up to 25% of that fund can come back in the following year. The $35 million you see in the estimates is lapsed money from last year. Sometimes people say lapsed money is a bad thing. In this case we have a provision to bring it over from the current year so that the money is not lost and we can maximize it. This year it's about 15%. That money is reinvested in innovation and competitiveness programming.

On the issue of price in the market, that would probably affect the business risk management side of the House more. I will let my colleague, Tina, talk about that.

[Tina Namiesniowski, Assistant Deputy Minister, Programs Branch, Department of Agriculture and Agri-Food]

Further to Pierre's explanation, under the Growing Forward 2 framework, we have $3 billion that is invested for voted programs. Of that $3 billion, $2 billion is in what we refer to as cost-shared strategic initiatives. It's the carry-forward from last year, the $35 million, that is in relation to the cost-shared strategic initiatives, which are programs designed and developed by provinces and territories under the Growing Forward 2 framework. Those programs are designed and delivered by provinces and territories. As Pierre mentioned, federally we provide 60 cents on every dollar in relation to those programs.

Under the current framework the amount of funding that's been earmarked for those cost-shared strategic initiatives was increased relative to the previous framework. It's up to the provinces and territories to decide how to design and determine the nature of those programs. They have the flexibility to determine the programming that will meet their local and regional needs.

In that context under the framework, together with provinces and territories, we agree there are some specific objectives we're trying to achieve further to that framework. While they can design and deliver to meet local and regional needs, they have to focus on three areas. The first objective is competitiveness and market development in terms of supporting our industry and making it more competitive, and in that context supporting them in terms of maintaining or expanding market share. The second objective relates to innovation and helping our industry to remain innovative. The third objective is programming that links to adaptability and industry capacity.

The cost-shared strategic initiatives are the three broad program areas that are supported by the funding under that set of programs. The provinces and territories have the flexibility to decide exactly what they deliver under those broad objectives.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair. Through you to Pierre and Tina, thank you very much for the presentation.

I'm a new member of Parliament, so I'm trying to come up to speed with a program that's already been running. I see the $35 million coming back in. It's helpful to know that it's carried forward from a previous year.

I wonder whether the programs that would be drawing from this money have been identified. Maybe you could describe by region, by province, or by type of program how these funds are being earmarked for some specific things already.

[Pierre Corriveau]

This total is a summary of money from every single province and territory. I don't have that breakdown with me, but each province has a maximum of 25%, and we have to make sure that at the end of the five years the money has been spent. It may vary between provinces, but this is the net representing all of the provinces and territories. That amount is divided by strategic outcome. For adaptability and industry there's $3.2 million, for competitiveness it's $17.4 million, and for innovation it's $14.8 million.

This is a planned expenditure. The provinces, as my colleague can explain, have the flexibility to move money between the various buckets, but in general this is the planned expectation. Maybe Tina can talk about how we manage this with the provincial governments.

[Tina Namiesniowski]

Pierre's right. There is flexibility under those broad headings for provinces and territories to decide where they're going to put their emphasis, except in the context of the Growing Forward agreement. There is a stipulation that provinces and territories, in relation to the money that is provided for those cost-shared strategic initiatives, at a minimum have to spend 25% of the money for competitiveness and market development, and 25% of the money for innovation. The reality is they spend more than that, but there is a stipulation that they must, at a minimum, spend 25% of the funding that we provide to them in those two broad areas.

In relation to examples, each province and territory has the flexibility to determine the nature and the types of programs they're going to deliver, and the eligible activities associated with those programs. For example, we know that under the market development and competitiveness pillar of programming, the type of support provinces and territories would provide would focus on helping our industry differentiate Canadian products both at home and abroad from those of competitors. Again at the provincial and territorial level, we would provide funding through that programming that would help in the development of market information, and help exporters get ready, building their capacity to export to specific markets. We would help support firms in identifying and capturing new market activities.

There would also be support for implementation and adoption of food safety, biosecurity, and traceability systems, which is very much part of Canada's brand internationally. We very much help underscore the importance to Canada of making sure that we produce safe food, and that we're able to trace that food from the farm to the plate.

For example, I can tell you that in Ontario they've set up a market development program that supports industry's efforts to access new and emerging markets and expand existing markets. They also support projects related to market assessments or audits: planning, training, skills development, meeting industry standards or practices, and implementation of marketing plans. That's an example, and every province, again, has a slightly different type of program, but they all have to have programming in those three areas. They structure those programs to meet their local and regional needs.

[Lloyd Longfield, Liberal, Guelph, ON]

Have these funds been applied for, or do we now go to market to say you have 90 days to apply for funds? Is that what you're doing at this point?

[Tina Namiesniowski]

Under the Growing Forward framework, every year an amount of money is earmarked for the strategic initiatives programming. For us federally, it's roughly in the order of $240 million, which is the amount of money that's provided to the provinces and territories on an annual basis to support the programming they deliver. Like us federally, when we have programs, an interested party will apply to a program and put in a program proposal seeking funding to support their project. Provinces and territories accept those applications in relation to their own programs. We don't see them federally.

There's one exception whereby if costs are associated with capital expenditures, then those costs have to be approved by us. Otherwise they have the flexibility to spend that money, so long as it's in those three broad areas.

[The Chair, Liberal, Pat Finnigan]

You have time for a short question.

[Lloyd Longfield, Liberal, Guelph, ON]

AAFC and OMAFRA are in Guelph. We quite often have joint meetings.

We have a farmer who will be presenting on The Agenda tonight, on Steve Paikin's show. He has corn-fed beef. He has a case for differentiating corn-fed beef from western beef that's not corn-fed. If he wanted to run that program, try to differentiate, and export corn-fed beef, then he would approach OMAFRA, and then OMAFRA would work with AAFC?

[Tina Namiesniowski]

In relation to something that would be so local and specific, typically you would have those kinds of applications going to a provincial or territorial program. We also support market development activities federally, on a national scale.

In relation to that particular example, it would be up to OMAFRA to decide whether or not that farmer is eligible for their program, whether they have the right kind of proposal that they would be prepared to support, if its meets the terms and conditions of their programs. Typically, we work with the provinces to make sure that as Canada's exporting internationally, we work really hard not to undercut one province relative to another. We're really out there trying to sell the Canada brand and the Canada product. As part of that approach, it would be a message around supporting the Canadian beef industry, and that in Canada there's the diversity of product.

Those are some of the considerations that I'm sure the Ontario government would take into account in considering that type of proposal.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Madame Brosseau.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

My thanks to the witnesses for being here with us today. I am pleased to see you again at the Standing Committee on Agriculture and Agri-Food.

During the election campaign, we had the opportunity to talk to our constituents and producers. One issue that came up over and over again is business risk management programs. If I'm not mistaken, changes were made in 2013. The government slashed those risk management programs. A few weeks ago, producers from Manitoba brought to my attention the fact that the number of people using those programs has dropped from 13,000 to 8,000.

On your side, have you noticed whether the number of people using those programs has dropped since those changes? Could you tell us why the use of the risk management programs has decreased?

[Tina Namiesniowski]

I would first like to clarify that there have not been cuts as such. The federal government, together with all the provinces and territories, decided to change the parameters of our business risk management programs.

Since I want to provide you with details, I would like to make sure I don't make mistakes, so I will continue in English.

The governments together decided to change les paramètres de ses programmes since there was a conscious decision in the context of Growing Forward 2 to rebalance the emphasis between business risk management and other programming offered through the Growing Forward 2 national policy framework. In that context, in the case of both AgriStability and AgriInvest, two key programs within the business risk management suite of programs, there was a decision to change the parameters of the programs. Again, that decision was made not solely by the federal government but by all of the governments implicated in Growing Forward 2. In that context, there was also a decision to make sure the business risk management suite of programs continued to move away from what we had previously or historically referred to as pure income support to programs that were really focused on helping producers deal with risks that were beyond their ability to manage.

In that context it was recognized that governments really had a role to play when there was extreme market volatility and the industry faced significant risks, and therefore some of the parameters were changed. Those parameter changes allowed for increased investment, for example, in the cost-shared strategic initiatives programming.

I am not sure which program the numbers you're quoting would relate to.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Is it possible to get information? Do you have numbers? There has been a reduction in people's use of these risk management programs, right?

[Tina Namiesniowski]

In relation to a question that was asked earlier, I think it's also important to recognize that the business risk management programming is statutory in nature, and it's what we refer to as demand-driven.

There were references earlier to commodity prices being quite good and some of the input costs and other costs potentially associated with a farm operation decreasing. Good prices reduce costs, so naturally there would be less of a demand for some of those programs.

You wouldn't necessarily want to say that changing the parameters led to reductions. I think part of the reduction in the number of people applying to programs could be attributed to that, but part of it also has to do with the reason for the existence of the programs. When things are good in the agricultural industry, you will, for example, see a reduction in the draw against those programs.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

When I've had a chance to speak to farmers in my riding and across Canada, they've said that the changes to those programs have not been very beneficial and they are hoping that these programs are going to be brought forward again through Growing Forward 3, or whatever it will be called, and that they do actually work for the needs of farmers. I know that certain organizations in Quebec, and across Canada the Federation of Agriculture, have worked hard. They have submitted and passed resolutions asking for the programs to be looked at and reworked so that they do fit the needs of farmers every day.

Mr. Chair, do I have enough time left to ask another question?

[The Chair, Liberal, Pat Finnigan]

You can finish your question.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

That's fine. Thank you.