Agriculture Committee on March 7th, 2016

[Pierre Corriveau]

I would like to add something for the new members of the committee.

In many cases, statutory programs are not discussed in detail. The funds are not subject to votes. For instance, in the list of the supplementary estimates, we see an amount of $1.3 billion. That explains why the discussion here is not focused on that point. Most of those programs are implemented by the provinces. There are four main risk management programs. Apart from the AgriInvest program, which is implemented by the feds, except in Quebec, most of the other programs are implemented by the provinces.

I just wanted to put things into perspective.

[The Chair, Liberal, Pat Finnigan]

Merci.

Alaina.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

I am wondering if you could explain to us the cost-shared funding under Growing Forward 2 and how it supports the Atlantic provinces, specifically, in meeting their local and regional needs. Do you have any programs there that are working well, or that are included?

[Tina Namiesniowski]

Not that I want to correct my colleague, but maybe I want to correct my colleague a little in the context of the business risk management suite of programs. There are five programs that we capture as part of that suite. They are all cost-shared sixty-forty with the federal government, and a lot of them are delivered by provinces and territories, but there are some that continue to be delivered by the federal government as well. AgriStability is an example of shared delivery. We deliver for four provinces federally, and all the other provinces deliver that program on their own behalf.

Let me talk to the question that was just raised about cost-shared programming in the Atlantic provinces. Like all other provinces and territories, the Atlantic provinces also receive funding through the cost-shared strategic initiatives allocation under the Growing Forward 2 framework. Like every other province and territory, they have the flexibility to establish programs that work to meet their regional and local needs. In that context, they all have programming that delivers support to the industry that relates to innovation, competitiveness, and market development, as well as industry, sustainability, and capacity. I don't have specific examples of those programs, but in the context of each of the respective agriculture ministries in provinces and territories you'd be able to find information about those programs that are delivered locally. Federally, we have created, with the provinces and territories, an electronic tool called AgPal. This tool provides a listing of all the programming that is supported for the industry by both provinces and territories, with a few exceptions, because not all provinces are participants in AgPal.

Pierre made reference to the fact that under the statutory business risk management programming we spend a considerable amount of money on an annual basis. Federally, we provision for about $1.5 billion annually for business risk management programming, and an additional 40% is put on the table by provinces and territories.

Of all the other programming, including the cost-shared programming and our federal-only programming, probably one third is spent on the other programming that directly supports industry. The business risk management programming consumes the most amount of money on an annual basis in support of the industry, and that is programming directed at individual farmers.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

We're looking at $35.5 million additional for programming, so I'm trying to establish where we are seeing growth in innovation and where these programs are working the best. I think we asked the question and we couldn't break it down by province, but is Atlantic Canada participating in these programs? Are we seeing successes there? Are there some examples you could give us?

[Tina Namiesniowski]

I can't give you examples at a provincial level. We'd have to go to the province and ask for some specific examples of projects that they've supported that fall under their broad pillar of innovation programming, but in addition to programming that is supported at the regional and local levels, we federally also deliver innovation programming, and through that programming we support what we refer to as science clusters, for example.

We have 14 science clusters, many of them commodity based, where we expend a significant amount of our innovation programming around research and development for the industry in relation to those different commodities. On top of that, we also have an element of programming that supports specific projects as well as an element of programming that supports the commercialization of innovation. Federally we could provide you with many examples of the projects that we support and we potentially can solicit input from provinces and territories to give us some examples.

[Pierre Corriveau]

To add clarification, for the funding that has been put in place, there's a formula all the provinces have agreed to, so every province receives its fair share. It's usually based on the science of the agriculture industry in the respective provinces.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Does that equation that has been agreed upon also apply to this amount as well?

[Pierre Corriveau]

Yes, that's the heart of that negotiation, in fact.

[Tina Namiesniowski]

And there's a linkage. That formula links to the share of farm cash receipts across the country. It's a long-standing formula that has been used around the cost-shared programming in terms of how much of that overall amount of money.... I think we mentioned at the outset that there's $2 billion. We referred to our Growing Forward 2 framework as a $3-billion framework, but that does not include the business risk management expenditures. As I said, that $3 billion is over five years, and under the business risk management suite of programming we expend federally approximately $1.2 billion each year. It's a big amount of money, but of that $3 billion that's earmarked for the framework, $2 billion is for cost-shared strategic initiatives, and that $2 billion is shared, $1.2 billion by the federal government and $800 million by provinces and territories, and that's distributed over a five-year period.

Every province and territory provides us with what they expect to spend on an annual basis against the amount of money that's allocated for them. If they're unable to spend it, as Pierre mentioned, there is provision in the agreement for us to re-profile up to 25% of what they haven't spent against their planned expenditures.

We had a problem at the outset of the framework because some provinces took longer than others to set up their programs. In the first year there definitely was greater slippage in terms of the amount of money they were able to spend, but that re-profile provision gives them flexibility to continue to access that money in the next fiscal year, up to 25% of their planned spending. They really like it.

[The Chair, Liberal, Pat Finnigan]

Thank you very much.

This concludes the first round, and we will now move to the second round.

Mr. Breton, you have the floor for six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair.

Mr. Corriveau, thank you for all those clarifications. My understanding is that most of the amounts requested under the supplementary estimates are for cost-shared programming under Growing Forward 2.

Could you tell us how you evaluate the amounts invested in those programs, in relation to the needs assessment, of course.

[Pierre Corriveau]

The Treasury Board has a policy that indicates that all programs of all departments must be evaluated once every five years. Our department has undertaken this process so that the next policy framework is developed according to that evaluation. If sectors had success, we build on that success. But if they did not have a lot of success, we change course.

I will give the floor to my colleague who can give you more details about this.

[Tina Namiesniowski]

That's right. The Treasury Board has a policy that we follow to evaluate our programs.

Furthermore, the provinces and territories are responsible for evaluating their own programs.

As part of the Growing Forward 2 policy framework, we have set very clear objectives with performance indicators for all the cost-shared strategic initiatives with the provinces and territories. Right now, we are gathering information through a survey.

We're going to write to producers and industry to get feedback on the cost-shared strategic initiatives programming. We're going to use that as a mechanism and as a part of our evaluation. We're going to do the survey now and near the end of the framework.

We're establishing a baseline and really seeing, by the end of the framework, what kind of impact that level of investment has had on the industry and how successful we have been relative to our strategic objectives in relation to the programming that's delivered by the provinces and territories.

[Pierre Breton, Liberal, Shefford, QC]

That's interesting, thank you.

Mr. Corriveau, my understanding is that the evaluation will be done this year.

[Pierre Corriveau]

Yes, it is under way.

[Pierre Breton, Liberal, Shefford, QC]

It is under way.

[Pierre Corriveau]

We are already planning the next policy framework.

[Pierre Breton, Liberal, Shefford, QC]

Okay.

How does accountability work with the people who receive those amounts of money or who benefit from the programs?

[Pierre Corriveau]

As Ms. Namiesniowski explained, for the cost-shared programs, the provinces are required to be accountable. Since they provide the funding, an evaluation is carried out every year for all those who receive funding in the provinces. Audits are conducted locally, with the provinces, to ensure that the funds are used wisely and in compliance with the agreement signed with the provinces. An audit is carried out for each program.

Right now, we are evaluating the public accounts. When the Auditor General comes to see us to check our financial data, he also sometimes communicates with the provinces to ensure that our numbers match theirs. That's usually the case for the more substantial amounts. Officials from the Office of the Auditor General of Canada will communicate with each province in turn for a period of five years.

[Pierre Breton, Liberal, Shefford, QC]

Mr. Chair, I have one last question.

Mr. Corriveau, a little earlier you talked about the expectations for performance. Are the indicators in place already or are they still to come?

[Tina Namiesniowski]

No.

They are already in place. When we prepared Growing Forward 2, we negotiated with the provinces a performance framework for this policy. We had to choose very specific indicators. Everything is relative. We identified indicators and a performance framework.

That's the basis on which we're undertaking a survey right now on the cost-shared programming. It's relative to that performance framework.

When you think about evaluations, there are different levels of evaluation. There is an evaluation for the program itself and that is an obligation we have further to the Treasury Board policy on evaluations where we're required, every five years, to evaluate a program. Every single project has expected performance measures where we're providing money to a proponent on the understanding that there will be specific deliverables, so we are assessing every single project relative to what is expected to be achieved.

We don't necessarily give out all the money up front. We expect to see progress relative to those deliverables and that's the basis on which we provide funding to a proponent. Some of those projects last five years, some are shorter, and some are only one year, but each of them has a level of performance that we also evaluate.

On top of that we also perform audits as well as recipient audits where we will visit a proponent to make a determination as to whether or not the funding has been used for the activities that were approved. We carry out a level of due diligence in relation to approving a project but also afterward, as we're assessing the impacts of that project.

[Pierre Corriveau]

I would just like to add a few points.

The question is very timely, since today the President of the Treasury Board presented to the House the blue book, the plans and priorities for 2016-17. In that document, you will see the performance indicators for some of the department's activities. That is what we will use for next year. That actually reflects our federal-provincial agreements.

[The Chair, Liberal, Pat Finnigan]

Thank you very much.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Let me turn to the risk management programs. Every year, farms must provide their financial statements. Then a reference margin is established, making the math possible over five years. There are all sorts of ways to account for both good and bad years.

What worries me is that, in agriculture, you can have five bad years in a row. For instance, corn may sell for $50 or $70 below the production cost for five years. Corn may sell for $150 per tonne for five years. In that case, the risk management program basically becomes obsolete, because there are no fluctuations or points of reference.

However, agriculture had some good years, such as 2014-15 and 2015-16, for both grain and meat. Yet I am told that the program considers the reference for the production cost rather than the real reference. So say the price of corn reaches $300 one year, then drops to $295 the second year, and stabilizes at $150 the following years. The amounts of $300 and $295 are then brought down to $225.

Is it true that the reference is for the production cost or is the actual cost of the commodities really taken into account?