Agriculture Committee on June 12th, 2020

[The Chair, Liberal, Pat Finnigan]

Welcome everyone.

I'm going to call the meeting to order.

Welcome to meeting number 17 of the House of Commons Standing Committee on Agriculture and Agri-Food. We are resuming our study on business risk management programs.

I would like to outline a few rules to follow.

Interpretation in this video conference will work very much like in a regular committee meeting. You have the choice at the bottom of your screen of “Floor”, “English” or “French”.

When you do intervene, please make sure that the language channel is set to the language that you intend to speak, not the floor channel. This is very important. It will reduce the number of times we need to stop because the interpretation is inaudible for our participants. It will maximize the time we spend exchanging with each other.

To the witnesses we have in today, are there any issues? Do you understand how that all works? Is everybody okay with that? Mr. Haerle and Mr. Brock, are you good?

[Markus Haerle, Chair, Grain Farmers of Ontario]

Yes.

[The Chair, Liberal, Pat Finnigan]

Also, before speaking, please wait until I recognize you by name. When you are ready to speak, you can click on the microphone icon to activate your mike.

Lastly, please make sure your microphone is on mute when you are not speaking.

We are now ready to get going.

I'd like to welcome our witnesses for today's meeting.

From the Grain Farmers of Ontario, we have Markus Haerle, chair. Mr. Haerle, welcome to our meeting. From the Department of Agriculture and Agri-Food, we have Mark Brock, co-chair of the National Program Advisory Committee. Mr. Brock, welcome to our committee.

We will start with the opening statements of seven minutes each.

Mr. Haerle from the Grain Farmers, you can start.

[Markus Haerle]

Thank you to the committee for letting me make a few remarks today. I'm very happy to accept the invitation to present to you today. I have an important message from Grain Farmers of Ontario and the farmer members we represent.

My name is Markus Haerle. I am the chair of Grain Farmers of Ontario, and I farm just 45 minutes east of Ottawa, in St. Isidore.

Grain Farmers of Ontario is Ontario's largest commodity organization, representing 28,000 grain farmers who produce grain and oilseeds. The grain business in Ontario represents roughly $18 billion in economic output and is responsible for 75,000 jobs.

I'm here today to talk to you about the impact of COVID on Ontario grain farms and farmer members and the need to fix business risk management programming immediately.

Farmers take pride in their job of growing food for the Canadian consumer. We grow crops that are used for animal feed. We also grow those crops that are directly consumed when made into bread, tofu and ethanol that people in this country and around the world rely on.

Farm businesses are the backbone of the rural communities in which we live and operate our farm businesses. People and businesses in rural communities rely on the economics that the farms create.

I have some data in the backgrounder for you that outlines the situation facing our members in terms of numbers. I'm not going to get into the numbers, but the document is a good reference.

These current times of COVID are presenting risks that are bigger and more uncertain than I have ever experienced in my farming career. The acute issues are that demand is down for last year’s crops and the prices are at a point where we cannot even break even. I've heard lately from some of my members a demand that we take action. I've also heard from consumers and the public that the general public is still eating, so that means we as farmers are still relied upon to produce the food they require every day, but in reality, demand is down. That is not only with food, but also with ethanol.

I'll give you a few examples. Restaurants, university cafeterias and other commercial distributors of food are closed, which has meant that for beef, chicken, pork and products that rely on the grains we grow, production capacity has had to be reduced. Ethanol production in the U.S. actually came to a halt in response to people not driving their cars. Here in Ontario, our ethanol industry is producing only at 50% capacity.

We cannot seem to get the government to listen to those concerns and take action.

What's happening is that the U.S. government is providing support for its farmers as we speak. President Trump established a coronavirus aid, relief and economic security program right away, and what farmers are facing because of the drop in price, they are getting compensated for. We cannot compete on the world stage, and everyone expects that there will be another payment before the fall election in the U.S.

Grain farmers cannot compete with farmers who are able to survive these low prices with support from their government. The U.S. farmer is our direct competitor.

It was Prime Minister Harper's government that cut the programs. As we speak about AgriStability, that was one of the programs that was reduced back in those days. At that time, the prices the farmers got for their commodities were good, but we knew that those times would be very short-lived and these programs only pay out whenever times are bad and the existence of these programs give farmers the security to reinvest in their businesses.

Now we are in crisis. Prices of all our commodities are below the amount of money that we have spent to grow those crops. This is particularly bad for corn. Experts are saying the recovery will be slow. No matter whether or not the economy opens back up and things get back to normal, it takes time for commodity markets to rebound. History tells us that prices drop fast and only return slowly. The government platform promised to address AgriStability in the election. The platform specifically named this program AgriStability, and yet we have seen no action from this going forward.

All our farm groups across the country have talked to government, provided the data and shown the issues from COVID, and we have seen no action. For our farmer members and the organization, food security and domestic policy that provide support for farmers to survive downturns that are outside of our control are not partisan issues.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Haerle. Unfortunately, time is up but you'll have a chance to answer questions.

[Markus Haerle]

Great.

[The Chair, Liberal, Pat Finnigan]

We'll go to Mark Brock from the Department of Agriculture and Agri-Food.

You have up to seven minutes.

[Mark Brock, Co-chair, National Program Advisory Committee, Department of Agriculture and Agri-Food]

Thank you.

My name is Mark Brock and I'm the producer co-chair for the National Program Advisory Committee. I farm just outside of Hensall, Ontario, with my wife Sandi. We have a grain and oilseed operation and we also have sheep. I've had extensive industry involvement, but right now I'm just a farmer doing some stuff and some work with BRMs on the National Program Advisory Committee.

I'm not sure how well informed this committee is about it, but that committee is made up of two individuals from every province and territory who meet twice a year to discuss issues around business risk management programs. We talk a lot about AgriStability. We talk a lot about AgriInvest, AgriInsurance and AgriRecovery, but lately a lot of the time has been spent on AgriStability in highlighting some of the issues that Markus highlighted in his presentation.

My apologies to the interpreters, because we're so busy on the farm right now I wasn't able to prepare a statement for them to use, so they're going to have to go as I go. My apologies for that, but I didn't want to miss an opportunity to present to the committee, because I think the business risk management programming is a very important component of a larger issue that I want to talk about, and I'll get to that.

My involvement with business risk management programs started way back in 2018 out of an FPT meeting of agriculture ministers when they decided, under industry pressure from different commodities groups, to create an external advisory panel to kind of blue-sky ideas around business risk management programming. That happened when Lawrence MacAulay was the minister of agriculture and agri-food. I was part of that process. I was one of the producers involved in that. There were other industry members as well.

For about 18 months, we kicked around ideas and looked at some issues around business risk management and AgriStability and at some of the issues around producers losing confidence in these programs and why enrolment was so low, along with other issues around that. I did pass on the recommendations that came out of that external advisory panel to your clerk. Hopefully, you can see some of those.

I want to highlight those seven things. What happened in that external advisory panel was that as these ideas came forward, three other members of the external advisory panel and I presented to ministers at an FPT meeting in Vancouver. I can't remember the year, but we provided these recommendations to them and answered any questions the ministers had.

I think it was out of that FPT meeting it was decided the further work of this external group looking at these business risk management programs should really go to NPAC, because that was a formal process which was created through the Canadian agricultural partnership, and the formal area in which provinces, territories and the federal government decided to look at business risk management programming. Those seven recommendations went to NPAC. I'm going to read out the seven that came out of the external advisory panel.

The first one is to develop and evaluate risk management tools that cover gaps in the current business risk management suite of programs. That was even to the point of looking at how government assists or facilitates producer-paid options or even producer-paid top-up programs. As Markus highlighted, I think, in some of the risks within the world that we operate in as farmers in agriculture we are willing to participate in some of these tools, but the tools need to be created and there needs to be some assistance, I believe, from government to help facilitate some of those creations.

Number two is to explore approaches to address the lack of confidence in the core business risk management program, which is AgriStability, including its complexity, timeliness and predictability challenges. I think that's a lot of the uncertainty we see right now within the current agricultural community now that we're in this COVID-19 world. It's just the unpredictability of it and trying to assess how we manage our risks. It's hard to calculate some of those opportunities to protect against risks on farms due to some of the challenges with the program design of AgriStability.

Number three is to examine approaches to improve program equality.

Number four is that AgriInvest should be maintained until some better options might be available in the future.

Number five is to modernize premium setting for AgriInsurance. If there are opportunities to do a better job pricing it, then we should look at that.

Number six, there is a role in trying to educate producers more around managing risk.

Number seven is that this work should continue.

That leads into my involvement with NPAC. NPAC is a great group of producers. As I said, two from every province and territory are looking at some of our challenges. We meet twice a year. This year our March meeting was disrupted by COVID-19, and rightly so. We're living off the work we did in December.

We sent a letter to ministers at their FPT meeting on, I believe, December 13, 2019, on behalf of the producer members of the National Program Advisory Committee. It explains how tough the current situation was for farmers, and the impacts we're seeing around all industries, whether it's grain, oilseeds or livestock. At that time we were seeing African swine fever as an issue, and disclosing some of the challenges with China and market access, and how it was impacting farmers' mental health. I think all the members on that committee agreed that the suite wasn't meeting the needs of farmers. It's not responding to some of the challenges we're seeing. I think those challenges are highlighted even more now with COVID-19.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Brock. We'll stop there.

We'll start our questions with Lianne Rood for six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Mr. Brock, along the same lines you were talking about, what were some of the suggestions you've heard from farmers with regard to improving the suite of BRM programs? What is the biggest ask from AgriStability, for instance?

[Mark Brock]

In the letter we sent to ministers we asked to remove the reference margin limit in AgriStability. That was one thing that was brought forward. We understand the reason it was brought in, in the first place. There was no reason to protect profitability, but now that we're in a different world I'm not sure that reference margin limits should be in there.

A lot of the producers right now are asking to see that level brought back up to 85% because there's a lack of a better option. I think that long term, every producer would like to see a better program and that there needs to be a long-term strategy to look at how that program is developed and designed. That fundamentally is backed by government's vision of a national food policy or a national agricultural policy and how business risk management programs play a role in that.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I'm wondering what feedback you've heard from farmers with regard to AgriInvest. We know some changes were made to it in recent years. Do you know how many farmers are participating in this program? Are they finding it useful?

[Mark Brock]

I can speak to my own experience. I use AgriInvest as a tool on our farm. I think we have seen some concerns around the account balances. We are using that as working capital on our farm. As soon as we get our matching deposit, we do a withdrawal. Right now my account balance in AgriInvest is two dollars, I think. It helps us manage working capital. It's a great tool; it's not a big amount. When I talk with farmers, the biggest struggle right now is working capital. The cap has especially impacted large farm operations.

We need to understand the need to take some of those funds from AgriInvest to fund some of the changes in affording AgriStability, and why there's a change there. The program works right now. It could be used more effectively if some more viable options were out there.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you. I'm going to switch gears and go over to Mr. Haerle.

Mr. Haerle, I've heard from some farmers in my own riding of Lambton—Kent—Middlesex. There are a lot of grain farmers in my area, and a lot of farmers are planting corn. We do grow a lot of corn in my area, especially for the ethanol plants that are around.

You alluded to food security being an issue, and just the demand being down for feed corn. I know the feed is impacted by the amount of ethanol that's produced.

I'm wondering what you've heard from farmers as of late with regard to their planting. Have they cut back on their production of corn? Have they invested more in soy? That's what I was hearing on the ground.

Where are we right now as far as production levels are concerned?

[Markus Haerle]

There have been quite a few acres being shifted away from corn this spring, especially in southern Ontario and eastern Ontario, where we're close to ethanol plants. Those are our main avenues of getting the crop to market.

What that's actually doing is there's going to be a recovery stage into the ethanol production that's going to be demanding corn at certain times. The fear behind this is that there's going to be large amounts of imported corn coming in from the U.S., that, first of all, the Canadian producer hasn't produced because every acre—

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Pardon me, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Go ahead, Mr. Perron.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

The interpreters are asking that the witness move the microphone a bit further away from his mouth, because it's causing some noise and they can't hear what's being said.

[The Chair, Liberal, Pat Finnigan]

Yes, you need a little more space there.

[Markus Haerle]

Okay, sounds good.

The corn imports are actually going to be a real problem for us because, first of all, every acre of corn that the farmer was anticipating to plant and has planted is at the moment going to be losing money.

That's why we sent you that backgrounder that's showing $170 an acre of loss.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Can I ask a question about that loss, Mr. Haerle?

[Markus Haerle]

Yes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I've heard a lot from my farmers with the impact of the carbon tax and the increase in the drying costs for them. Does that have something to do with that as well?

[Markus Haerle]

Indirectly, yes it does because it is a cost that's being downloaded to us as farmers. There's no way we can offset that in any way into the marketplace.

That $170 loss is because, first of all, the markets are not there that are going to pay us for the cost of producing it. Also, the opportunities to sell it into the marketplaces that we have established not only domestically but also for export have degraded. Around the world there's less consumption for feed, food and other uses for those grains. It's not only corn; it's also soybean.

Mr. Brock alluded to it. We have lost significant market share into the Chinese market for our soybeans. That was created by some geopolitical environments that were created by the Canadian government.

Those are the hard-sell issues that farmers have to cope with and we don't have any way out to even get anything else. There are still bins of beans out there that farmers don't even know how to sell because they're losing money on them. Every time they send a truck away they know they're not recovering their costs.

It is a big problem and it creates a cash flow issue. It's now the second year in a row that farmers are facing that at a high level. That's why there's that ask of some programs that cover the issue of today, not only around COVID, but bigger than that.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Haerle. Thank you, Ms. Rood.

We'll move to Mr. Ellis for six minutes.