Thank you very much, Mr. Barlow.
Thank you for this invitation to appear before the committee on this important topic.
As mentioned, my name is Rick Bergmann. I chair the Canadian Pork Council and I'm a pork producer from Manitoba. Today I am joined by Doug Ahrens. He's a producer from Ontario, an executive member of CPC, and chairs our business risk management committee.
Producers are really hurting right now, folks. In an ideal world, we could take the next two years to figure out and fix AgriStability. That would be included in the next ag policy framework. However, with producers teetering on disaster, governments need to move quickly to fix AgriStability. This has been the message for four years. Federal leadership is required.
Here's how the Pork Council, and most other farm groups, want AgriStability fixed: first, just increase the trigger to 85%; second, remove the caps and update this program; third, eliminate reference margin limiting.
We know the FPT governments are talking about these challenges and changes, but they can't agree who should pay. Frankly, our producers don't care if costs are split sixty-forty, as usual, or, because of the COVID crisis, covered 90% by our federal government over the next three years. What matters is that the changes are made, and made sooner than later.
Again, we've been talking about this for four years now and even with these challenges farmers are still going to bear the burden of most of the loss.
I want to take a minute to remind you of the challenges pork producers face as they work to feed families in Canada and around the world.
In 2018, the China-U.S. trade war led to a 37% drop in prices from August to September. Canadian pig prices are based on those in the U.S. market, and our producers experienced losses of over $40 a pig in some regions of our country.
Since 2015, the U.S. hog herd has expanded rapidly, increasing the breeding herd by about 6% and the overall inventory by 17% as of March 2020. This incredible increase in supply drove prices down in both the U.S. and Canada.
In response, the U.S. government gifted a $16-billion—that's with a “b”—farm lifeline in May 2019. Canadian farmers got absolutely nothing.
Now the coronavirus has happened. The market prices are incredibly volatile, and no one knows what the future holds. The impact of the pandemic on the pork market is really significant. The Canadian hog industry was projected to lose $675 million this year. One of our provincial members in Quebec recently estimated that their producers alone would lose $150 million.
There is also an isowean segment of our industry, and it continues to lose $20 to $30 per piglet, with some piglets being given away or being euthanized.
According to the information from the Ontario Minister of Agriculture, Food and Rural Affairs, the market price for producers across Canada is forecasted to be well below the cost of production. Between now and the end of 2020, and well into 2021, producers are forecasted to lose $35 to $65 per hog marketed.
Over and over again, Canadian pork producers are being hurt by factors outside of our control, and the current BRM suite isn't helping. This program was built by government to help, but it's not. Despite all the hurt, the BRM is not doing much at all to help our producers.
There is a misperception that, because the government spends $1.6 billion on the BRM, the money is getting into the hands of pork producers who need it. If that were true, I would not be here today and presenting.
First of all, 55% of that support is for crop insurance premiums, which do absolutely nothing to help pork producers struggle through the COVID-19 crisis.
Secondly, AgriInvest pays farmers regardless of their need. Some farmers have positive balances while others need to withdraw the money out as soon as possible, leaving nothing for times like this. I'm one of those farms.
The average pork producer's account balance represents less than 2% of the farm cash expenses.
Thirdly, AgriRecovery hasn't really worked. Governments call it a disaster program, but COVID-19 has been a disaster, and AgriRecovery hasn't really done much.
Finally, AgriStability is a broken program. Governments of all stripes have cut the program, turning it into a meaningless risk management tool. Producers do not have confidence in the program, given its limited financial support and lack of predictability. That's primarily the only tool we have in our tool box and that tool is broken. We need to focus on fixing BRM once and for all.
None of this information is trying to fix the BRM suite. It has turned farm groups into dogs chasing their tails. It's sad to think how much time, effort and energy we have put into this, trying to fix a broken suite, only to see things getting worse, talking about that government leadership that we are needing.
Looking to the future, Canadian producers have not forgotten about the necessity to prepare for an outbreak of African swine fever. The risk remains, and it's still a significant risk. As COVID has shown, the BRM suite does not have the capacity to support producers during a market collapse. An ASF outbreak would be far worse for the pork sector, so we really need a new approach, and it's required immediately.
In conclusion, at the end of the day our message is very simple. It's been this way for numerous years, and this is our message. Farmers are hurting, and COVID-19 is making a bad situation worse. The BRM suite does little to help pork producers in their time of need. Targeted enhancements can quickly fix AgriStability, and long-term improvements to the entire BRM are required sooner rather than later.
Thank you for your time, and I'm looking forward to any questions.