Evidence of meeting #20 for Agriculture and Agri-Food in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was producers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

René Roy  Administrator, Les Éleveurs de porcs du Québec
Stuart Person  Senior Vice-President, Agriculture, MNP LLP
Steve Funk  Director, Ag Risk Management Resources, MNP LLP
Jake Ayre  Farmer, Southern Seed Ltd.
Clerk of the Committee  Mr. Marc-Olivier Girard
Mario Rodrigue  Acting Director General , Les Éleveurs de porcs du Québec
Charlie Christie  Chair, Domestic Agriculture Policy and Regulations Committee, Canadian Cattlemen's Association
Sylvain Terrault  President, Quebec Produce Growers Association
Jocelyn St-Denis  Director General, Quebec Produce Growers Association
Justin Jenner  Beef and Grain Producer, As an Individual
Brady Stadnicki  Manager, Policy and Programs, Canadian Cattlemen's Association

11:55 a.m.

Senior Vice-President, Agriculture, MNP LLP

Stuart Person

Yes, I would suggest that would be a fair statement. We're seeing debt levels rise to unprecedented levels. We're also seeing the cost of production in various sectors increase and in some cases outpace the rising revenues. We're seeing a shrinking margin that increases the risks significantly, which makes programs like AgriStability and other business risk management programs more critical than they've ever been.

Yes, we will see producers go out of business if these safeguards are not in place. Some sectors have other options, such as private insurance, but many sectors do not, so we need to look at protecting those sectors by any means possible.

11:55 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Thank you for that contribution.

Mr. Ayre, I'll turn to you for my last question. I think it would be helpful, in the time I have remaining, if you could detail your personal circumstances and maybe go into a bit more detail on how.... After that harvest from hell, what was your personal experience like with AgriRecovery and AgriStability?

I think these specific examples will help us when we produce our report and issue our recommendations.

11:55 a.m.

Farmer, Southern Seed Ltd.

Jake Ayre

Thank you for your question, Mr. MacGregor.

In my personal experience with AgriStability and AgriRecovery after 2019, we met with our accountant to go over our year-end situation. After looking at both programs, we were not in a claim position.

In my submission, I tried to emphasize that if these two programs did not get triggered after all these unexpected accrued costs, there need to be some serious revisions to the programs. That's what I was trying to emphasize: that after the harvest from hell and all these accrued costs, if the programs did not account for that situation, then there definitely needs to be some work done there.

11:55 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

I wanted to give you the opportunity to underline those two key points. Thank you for repeating that.

11:55 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. MacGregor. Thank you, Mr. Ayre.

I want to thank all our witnesses. This is all the time we have for our first hour of panels.

Go ahead, Mr. Barlow.

11:55 a.m.

Conservative

John Barlow Conservative Foothills, AB

We didn't have time for a second round, so I'm just wondering if I could ask MNP to submit their assessment of the online calculator for AgriStability, which was put forward to help explain the AgriStability program.

I'm just curious about MNP's assessment of how the online calculator works and if they could submit that assessment.

11:55 a.m.

Liberal

The Chair Liberal Pat Finnigan

Is that possible, Mr. Person? Can you submit that?

11:55 a.m.

Senior Vice-President, Agriculture, MNP LLP

Stuart Person

We will get in touch and try to submit it, yes.

11:55 a.m.

Liberal

The Chair Liberal Pat Finnigan

Okay. We will distribute it to our committee members.

Thank you, Mr. Barlow and Mr. Person.

I would like to thank the representatives of Les Éleveurs de porcs du Québec, Mr. Rodrigue and Mr. Roy.

Thank you to Stuart Person and Mr. Funk from MNP, and thank you to Mr. Ayre from Southern Seed Ltd. We apologize for the sound, but thanks for being here.

We'll suspend the meeting for five minutes to get the next panel on.

12:10 p.m.

Liberal

The Chair Liberal Pat Finnigan

We shall continue our meeting.

For our second hour, I'd like to welcome, from the Canadian Cattlemen's Association, Mr. Brady Stadnicki, manager of policy and programs; and Mr. Charlie Christie, chair of the Domestic Agriculture Policy and Regulations Committee.

From the Quebec Produce Growers Association, we have Mr. Sylvain Terrault, president; and Mr. Jocelyn St-Denis, director general.

As an individual, we have Mr. Justin Jenner, beef and grain producer.

Welcome, all, to our committee. We'll start with opening statements, seven minutes max.

The Canadian Cattlemen's Association, you have seven minutes between the two representatives.

Go ahead.

12:10 p.m.

Charlie Christie Chair, Domestic Agriculture Policy and Regulations Committee, Canadian Cattlemen's Association

Thank you for the invitation to speak with you today. My name is Charlie Christie. My family and I run a cow-calf and feedlot operation near Trochu, Alberta. I am currently a director with CCA and co-chair of the domestic ag committee. I'm here with Brady Stadnicki, who is CCA staff based out of Calgary.

A robust suite of business risk management programs is key for the economic sustainability and competitiveness of the Canadian beef sector. CCA believes there is a need for sufficiently funded national agriculture risk management programs that are delivered consistently across all jurisdictions without creating an imbalance between agriculture sectors or regions. Programs should minimize the risk of adverse impacts on trade, distortion of market signals and influence on business decisions.

CCA also supports some flexibility in government supporting regional or provincial livestock insurance programs, such as the RMP and ASRA programs, assuming the overall level of support is even across the country and the programs are market-neutral.

Since 2018, federal, provincial and territorial governments have been conducting a BRM review. One key area of focus under the review is program equity among sectors and regions. CCA believes that aspects of BRM programs, ranging from program spending to design and availability, provide inequitable coverage among agriculture sectors and regions at this time. We are keen to work with governments to quickly address these equity challenges by implementing the following program-specific recommendations.

CCA strongly recommends a number of changes to AgriStability to improve program equitability and effectiveness to the beef cattle sector. This includes removing the reference margin limit and payment caps, and enhancing the trigger to 85% of the reference margin.

I would like to place additional emphasis on the reference margin limit. Operations that have reference margin limiting applied require an extensive, if not devastating, drop in their program year revenue in order to trigger benefits. This significantly decreases the value of AgriStability to many producers, especially those with low-cost structures, such as cow-calf producers, who typically produce their own feed and have minimal eligible labour expenses. The removal of the reference margin limit would make the program predictable, bankable and ultimately more equitable for Canadian cattle producers, especially the cow-calf sector.

Another program we'd like to focus on is the western—

12:10 p.m.

Liberal

The Chair Liberal Pat Finnigan

Mr. Christie, could you just move your paper a little bit?

12:10 p.m.

Chair, Domestic Agriculture Policy and Regulations Committee, Canadian Cattlemen's Association

Charlie Christie

Oh, I'm sorry. I didn't realize—

12:10 p.m.

Liberal

The Chair Liberal Pat Finnigan

We want to be able to see you.

Go ahead.

12:10 p.m.

Chair, Domestic Agriculture Policy and Regulations Committee, Canadian Cattlemen's Association

Charlie Christie

Another program we would like to focus on is the western livestock price insurance program, WLPIP. This a forward market-based insurance-style program that allows producers to manage risk within their own operation. CCA's position is that the tool should become a permanent risk management tool, not dependent on renewal under each agricultural policy framework. We know that youth in the cattle industry benefit greatly from the utilization of this program. The ability to ensure a floor price on cattle has supported young producers to secure financing for their beef operators. Furthermore, they are typically highly leveraged and don't have equity to fall back on in a downturn in the market. This underscores the importance of managed price risk with a timely and bankable program, which livestock price insurance provides.

Currently in maritime Canada, they still operate without a program that manages price risk in a timely fashion. The Maritime Beef Council, covering New Brunswick, Nova Scotia and Prince Edward Island, has a strategy to expand cattle inventories and beef production. Having access to an insurance program is key to achieving their objectives. Canadian and maritime beef producers are eager to see the creation of an eastern settlement index pilot under WLPIP, which would contribute to national price insurance coverage across Canada. CCA believes the eastern settlement index should receive federal backstopping and administrative cost support as provided under the WLPIP.

Improved hay and forage insurance across the country is also needed. Forage insurance products are often distinct from annual crops, in that coverage and settlements are based on areas rather than on the actual production on an individual farm. The lack of individual farm insurance coverage for forages may act as a deterrent to participation and represents a source of inequity between perennial and annual crops. Pasture and forage insurance programs should also be equipped with a mechanism that helps producers account for increased feed prices during these times.

Last, I'd like to talk about improving the livestock tax deferral provision. Extreme weather challenges such as drought, flooding and fires can all impact producers' ability to maintain or sustain their herds. These events often force producers to sell animals such as calves or breeding stock earlier than anticipated, resulting in more than one sale per fiscal year. While the livestock tax deferral tool is available to producers, uptake is low and significant herd reduction must take place before the program provides benefit. Delays or regions deemed ineligible by Finance Canada in determining when income deferral can be applied to drought situations have made that mechanism not always useful for management decisions. CCA believes that amendments to the deferral are needed to make the tool more functional, including the option to self-elect when the tool can be utilized, and ensuring that all classes of cattle are eligible under the deferral.

With significant volatility in the world markets due to COVID, along with typical risks from weather and production, access to well-designed and sufficiently funded business risk management tools has never been more critical for the cattle producers. With these tools in place, the Canadian beef industry is well positioned to keep growing the economy and support strong rural communities and conservation outcomes from the agricultural landscape.

We look forward to answering your questions.

12:15 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Christie.

Now we will hear from the Quebec Produce Growers Association.

We will now move on to Mr. Terrault or Mr. St-Denis.

You have the floor for seven minutes.

June 23rd, 2020 / 12:15 p.m.

Sylvain Terrault President, Quebec Produce Growers Association

Good afternoon.

The Quebec Produce Growers Association is a voluntary association of Quebec's main produce growers and horticultural producers. The association is a significant force, since nearly 80% of Quebec's produce comes from its members.

Fruit and vegetable production in Quebec generated just over $1 billion in farm gate receipts in 2018. From 2008 to 2017, growth in Quebec's edible horticultural production was nearly 1.4 times higher than for agriculture as a whole. The economic contribution of the entire sector is not negligible: its contribution to Quebec's gross domestic product is $4.1 billion. Overall, the sector generates some 62,000 jobs.

Our sector has different characteristics from those of other agricultural sectors. We use labour intensively and we have a limited capacity for short-term mechanization. Crop fragility, coupled with high value per hectare, increases the financial risks in the event of damage. Also, production is very diversified in terms of the number and variety of products. We have businesses of all sizes, mostly small, and members across Quebec. Fruit and vegetable producers provide an essential service to the public.

Our businesses are faced with many production risks beyond their control that make financial stability difficult, such as the risks associated with unstable and unpredictable weather, risks from pests, which are increasing due to climate change, and a workforce that comes from outside.

The business environment also brings its share of risks. We face fierce competition from imports, which very often come from countries that do not have the same rules as we do, whether it is in terms of labour, regulations or other factors. Canada's increasingly burdensome regulatory environment meets Canadians' expectations, but it imposes an additional cost that consumers are not prepared to pay. Some countries also have non-tariff barriers to imports, which are found in negotiated trade agreements as well. Finally, a tense political climate can upset the market from one day to the next.

To deal with these many production and business risks, producers need a suite of risk management programs that is up to the task. Currently, businesspeople are being asked to seed and plant to feed Canadians and to take on a large part of the risk.

This year, with the pandemic, fruit and vegetable growers have repeatedly asked the government for clear support and the announcement of revised risk management programs so that they can launch their season with confidence, despite all the uncertainties. To date, nothing has happened. We are on our own. They have told us to use existing programs and enrol in AgriStability, while acknowledging that the program is not adequate or up to par. Produce growers who have decided to answer the call to feed Canada have put the financial security of their businesses and their family assets at risk. This is simply not acceptable.

The main program, AgriStability, no longer meets our needs since the major cuts in 2013. This is evidenced by the fact that only 31% of producers have enrolled in AgriStability, despite the fact that the need for risk management mechanisms has never been greater. Although all stakeholders, both government and producers, agree on this point, nothing is being done to improve it. In the meantime, producers are bearing the brunt of the risk. In Quebec we do have the Agri-Québec Plus program, but it is very limited in terms of insurable amounts and does not make up for the weaknesses in AgriStability.

The AgriInsurance program is not available for all crops. In addition, it is not the same across Canada, as it is administered by each province. For example, in Quebec, we have the concept of “normal loss,” which the other provinces don't have and which penalizes producers.

Let me give you another example. On May 12, Ottawa asked the provinces to include labour shortages as an eligible risk for the horticultural industry. To date, no province has responded, preferring to rely on AgriStability.

We are being told to use the money from the AgriInvest accounts, which is part of the equity of the company. The money is used for investments for growth, new equipment and adaptation to various regulations. It's a kind of nest egg for our producers.

“One-size-fits-all” programs do not adequately address all sectors of agriculture. It is essential that the needs of each production be taken into account when designing programs, regardless of the size or type of business.

Fruit and vegetable production is essential to feeding Canadians. Producers must keep their selling prices at levels that allow Canadian consumers to eat fresh fruit and vegetables while also assuming ever-increasing production costs. Furthermore, all this is happening at a time when the financial risks are not adequately covered.

I'm going to ask Mr. St-Denis to take over.

12:25 p.m.

Jocelyn St-Denis Director General, Quebec Produce Growers Association

So here are a few recommendations.

Potential changes to AgriStability would have the most significant impact on the situation of fruit and vegetable producers. Like many other partners, we are asking that the program parameters be restored to the levels before the 2013 cuts, meaning 85% coverage of the reference margin and payment of the loss of margin covered at 85%. We also recommend the elimination of the margin caps and the amounts paid so that larger companies have the same coverage as smaller ones.

For AgriInvest, we recommend an increase in the government share and an increase in the amount of eligible net sales.

12:25 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. St-Denis. Unfortunately, your time is up. You can come back to those points later, when you answer questions.

Now we go to Mr. Justin Jenner, for seven minutes.

12:25 p.m.

Justin Jenner Beef and Grain Producer, As an Individual

Hello, and thank you for inviting me to participate in the committee meeting today.

My name is Justin Jenner, and I am a third-generation farmer in western Manitoba, located north of the city of Brandon. I have been farming since I graduated from university in 2002, and I will call myself a young farmer today, as I won't have many more opportunities to do so.

I have been involved in farm policy for many years, mostly with Keystone Agricultural Producers, the main farm lobby organization in Manitoba. I am the former vice-president and chair of the young farmers committee, and currently sit on the board of and chair the business risk management committee. In my time serving with KAP, I have seen many instances where current BRM programming is not adequate or not serving its intended purpose.

My parents are still involved in the farm, and I've learned many valuable lessons from them, the most important of which is to pay close attention to the economics of the farm and find ways to reduce risk.

We have an integrated farm with cash crops, forages and beef cattle. We have felt that by having multiple enterprises on the farm, we would be better able to mitigate the risk of disasters on the farm. I have seen, through the years, that when one commodity is not profitable, then another will be and the farm can continue. We were able to weather the storm during BSE and continue operating in the face of severe weather and depressed prices in crops. Growing our own feed for our cattle, for instance, has stabilized our feed costs and ensured our feed supply.

We are strong believers in risk mitigation, and we feel that the AgriInsurance program is the best tool we have to control risk in the crops we grow. Insurance is a large cost on our farm, but it is important. The program, as it is administered in Manitoba, is not perfect, but is willing to change and adapt to new systems. It is sometimes more difficult to get producers to subscribe to new and different programs.

However, our farm's integrated approach has led to a problem with other BRM programs, particularly AgriStability. We would be far better off buying all of our feed from a third party, even at high prices, in order to increase the line item for expenses. This is where the reference margin limit is discouraging farms like ours from making investments in self-risk mitigation. Ignoring the risk mitigation that we have undertaken leads us to being at a competitive disadvantage to operations that specialize and have wild swings in income and costs, which are more likely to trigger payment in bad years and have very high profits in good years.

AgriInvest has also been—

12:25 p.m.

Bloc

Yves Perron Bloc Berthier—Maskinongé, QC

Mr. Chair, I apologize for interrupting the witness, but the interpreter cannot hear him.

12:25 p.m.

Liberal

The Chair Liberal Pat Finnigan

Okay. Can you bring your mike closer?

12:25 p.m.

Beef and Grain Producer, As an Individual

Justin Jenner

I apologize. Is that better?

12:25 p.m.

Liberal

The Chair Liberal Pat Finnigan

Give it a try. Go ahead.

12:25 p.m.

Beef and Grain Producer, As an Individual

Justin Jenner

Okay.

AgriInvest has also been a popular program, and we have used it. It is appreciated, due to its simplicity and transparency. However, in talks with government, I have often heard that farmers don't need more BRM programming, due to a large amount of money sitting in AgriInvest accounts. This is akin to making arguments for cutting social programs due to Canadians' having money in RRSP accounts. Just because some people have money in an account, that doesn't mean it's in the hands of those who need it. Saving money for bad times should not be discouraged, and it will be used when it is needed.

It is also common in government decision-making that when budgeted money is not used, it is redirected somewhere else in the future. A “use it or lose it” type of budgeting does not work for disaster assistance programs. Reducing coverage in good times leads to inadequate coverage when it is needed.

Risk management programs should be used to mitigate the risks in the agricultural industry that are out of the control of the industry itself. Weather is a big driver of profitability on the farm, but trade disputes have also proven to be major influences on profitability in recent years. Some of the current programs do not adequately address that, particularly trade disputes.

Thank you for your time and interest in this today.