Thank you, Mr. Chair and committee members, for this opportunity to address you this afternoon.
My name is Andy Kuyvenhoven. I own and operate a flower greenhouse farm in Ontario. I serve as a director on the board of the Canadian Ornamental Horticulture Alliance and I am a past president of the organization.
As a citizen of this great country, we are thankful for the work our elected officials and public servants continue to do during these extraordinary times in keeping us safe and doing their best to improve what is happening in our economy.
I would like to address what ornamental horticulture is. Our products include trees, shrubs, turf, potted plants and cut flowers. You can buy our products in garden centres, at florists and large retail stores across Canada.
How important is our sector to the Canadian economy? Let's review key facts about the vital role ornamentals play in Canadian agriculture. The figures I am citing are taken from a publication of Agriculture and Agri-Food Canada entitled “Statistical Overview of the Canadian Ornamental Industry, 2018”.
Our sector had a farm gate value of $2.3 billion across Canada. Every province in Canada contributes to our sector. Our sector had exports valued at $543 million, primarily to the U.S.A. Our sector directly employs over 26,000 people at the farm gate level, and as many as four times that in the activities after farm gate, such as roles in retail and landscaping services.
Why should we care about ornamental horticulture in Canada? Its value has been particularly shown during the past two months when millions of Canadians were confined to their homes due to the risk of the spread of COVID-19. One activity that Canadians could safely pursue was gardening. Gardening is healthy for the soul and is food for the soul. Not only is it recreational, but it also allows amazing expressions of creativity. After early setbacks at Easter in April, when product had to be dumped and when market channels were closed, the demand for our products has been strong in May and in the beginning of June when Canadians needed and valued the great diversity of the plants we produce.
In addition to enhancing the aesthetic appeal of homes and workplaces, plants give us great value. Plants improve the quality of soil, air, water, help manage greenhouse emissions by taking carbon dioxide from the air, reduce soil erosion, provide living green infrastructure to manage heat waves in urban centres and reduce flood risk. They are essential to preserving and increasing biodiversity, providing a habitat for birds and insects.
Now that we have explained our sector of agriculture and why it matters, let's talk about the business risk management programs.
First of all, our sector is grateful to be in an advanced country like Canada where the government provides business risk management to our farmers. We operate a business that has unique risks—risks that our entire crop could be wiped out, or that an entire market might collapse. We appreciate the fact that the government has put in place programs to support us during such times of distress and crisis.
How could the current suite of programs be more responsive to our needs?
Let's first talk about AgriStability. As the scale of agriculture has increased, the fact that this program has a cap of $3 million as a maximum payout for losses incurred in a year is an issue. Our sector supports the recommendation made by the Canadian Federation of Agriculture to raise this cap to at least $5 million. Many of the producers in our sector, both nursery and floriculture farmers, have a highly seasonal crop that comes to market in the spring, the optimal time for planting for most ornamental plants. There's also a window for nursery in the fall. If product cannot be sold during this window, as happened at Easter, the losses to our sector are catastrophic. We threw out a large percentage of our Easter crop.
When COVID-19 hit our sector, we retained four CPA firms to analyze the worst-case scenario. If our highly seasonal product inventory had not been moved to market in April and May, what would the impact have been? Based on the sample of 12 farms, four nurseries and eight floriculture farms, five of the 12 operations would have capped under the current structure. The losses not covered by the program would have been so significant as to have caused major liquidity challenges leading to insolvency.
The loss of the largest farms in our sector would be devastating as they tend to be the most advanced in terms of technology deployment and export savvy. They are also the largest employers, another aspect of the program design that is crucial to ensure that the funds needed by growers flow to them when they are needed. For this reason, the interim payout needs to be raised to 75% permanently as part of the program design rather than being at the discretion of program managers.
Finally, with regard to AgriStability, the reference margin of 70% needs to be examined. In B.C. it's 80%, as a result of provincial government intervention. While our growers in B.C. appreciate the province's support, it would be good to get it to 85% across the entire country. A grower who lost 25% of the expected business would receive nothing when the trigger point is set at 70%. We request that the reference margin be raised to 85%.
On AgriRecovery, I will echo the comments of a previous speaker who said that under AgriRecovery, he would be paid to throw his product out, but that's the minor cost. The real cost would be the loss of product we have produced and that we need to throw away. That issue needs to be solved because that is our biggest cost.
In summary, our sector is composed of hundreds of small farm entrepreneurs who go about their business day to day. Our farmers have grown substantially over the years through generations. Our sector is not a major user of business risk management. However, during the COVID-19 time frame, we've learned that we do need it, and we've identified the aforesaid issues inside of the program.
We ask you to please re-examine all of that.