Agriculture Committee on July 8th, 2020

[Janice Tranberg]

Michel, I can start on this.

As we've said, right now, we're already backlogged by about 130,000 cattle in western Canada. As I just mentioned, the loss that's going to cause for the cattle feeders in a best-case scenario for that 25,000 head is around $6.5 million. The set-aside programs that are up and running have just started now. They do appear to be moving cattle fairly well, but I think the biggest issue for cattle feeders is the price volatility they're looking at and, like we've said, with drops of $300 to $450 per head, that's quite significant.

Michel, maybe I'll let you fill in.

[Michel Daigle]

There are really two significant effects. First, as long as the fed cattle remain in the feedlots, there isn't any room for calves. This specifically answers the question about the fall.

Second, as Ms. Tranberg just said, when there's a $350 or $400 price drop per head, the cash flow really isn't enough. We're short on money to fill up the feedlots. That's why we need support, and not in a year and a half. We need a program that supports us now.

[John Barlow, Conservative, Foothills, AB]

Yes, that does, and I think it pushes on the fact that the $50 million for the set-aside is not going to address the fall calf run, when you're going to have to look at making some hard decisions on whether you sell your calves or try to put them on some sort of maintenance diet if there's no buyer. When you're losing that $400 per head, I'm very concerned that it's going to get worse in the fall.

I want to pass the rest of my time to Mr. Ruff. Thank you very much, Mr. Chair.

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Chair, does everybody hear me? Super.

First off, thanks for allowing me to participate in the committee today. My questions will be for the Beef Farmers of Ontario.

Mr. Lipsett, it's always good to see you and Mr. Horne.

I agree a hundred per cent with some of your comments to start. Things have fundamentally changed in the last decade, not only in the difference with where the market is, specifically within the beef sector, and the inequality that exists within the different risk management programs. Bottom line, it needs updating.

For those who aren't aware, I'm an ex-military officer. The last step of mission analysis is, has the situation changed? If it has, it means that you go back and you re-evaluate the whole program. That's ultimately what I think has currently been laid out already today in the testimony. The programs need to be updated.

The other statement I'd agree with is that I'm a big believer that our ag sector is fundamental in our economic recovery coming out of COVID-19, so I have some quick questions for you, Mr. Lipsett and Mr. Horne.

Why are farmers facing such difficulty triggering payments through the AgriStability program? Also, what benefits would come from changing it from the current 70% back up to the 85%? What would be the benefit, really, in growth, development and income for our beef farmers?

[Rob Lipsett]

Thanks for the question, Alex.

I guess the best description I could give is that at the 70% trigger level, using the Olympic averages for our income reference, over the past four years our beef income levels have been so low that our high and low are almost identically the same thing. We're in a position where our trigger levels have dropped low enough that by the time we get down to 70% of our reference margin, we are so close to bankruptcy that the program is not effective at all.

Part of that plays into why there is not a participation rate as high as the government would like to see, but bringing that level back up to 85% will entice people to get back into the beef business, knowing that we have some kind of cost recovery and cost protection moving forward.

Maybe Richard wants to add a bit to that.

[Richard Horne, Executive Director, Beef Farmers of Ontario]

Yes. Thanks, Mr. Ruff.

I think Paul touched on it. Janice did as well.

I don't proclaim to be an expert in the intricacies of the AgriStability program. Paul's “70% of 70%” when discussing the reference margin limit is one of the reasons why the program is so complicated, but the work that Janice from the National Cattle Feeders pointed out, which MNP has done, clearly shows that producers would receive far greater benefit by putting that trigger back to 85%. When you combine that with the RML, it would allow the program to trigger more frequently and at a greater extent, so it would be—

[The Chair, Liberal, Pat Finnigan]

Thank you. Unfortunately, we're out of time on that one.

We'll go to Mr. Blois for six minutes.

Go ahead, Mr. Blois.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

Thank you to all of the witnesses for their testimony here today.

As one of the youngest members of the House of Commons, I'd like to direct my questions today to the Canadian Young Farmers' Forum. I'll start with Mr. Glenn.

You mentioned some of the Olympic averages, the thresholds, as part of AgriStability. For new entrants into agriculture, the young farmers, particularly around AgriStability, can you give us a sense how that five-year average is established if you haven't been in the industry for five years? This also applies to programs like the advance payments program, which I understand takes averages to decide how much money might be available. Do you have any thoughts on how that might impact young farmers and any thoughts on how those programs work for you?

[Paul Glenn]

I can start on the advance payments program. Initially, when we were discussing how it could be improved, even for new entrants maybe for the first five years, raising the limit to $150,000, say, rather than the $100,000 currently.... A hundred thousand dollars doesn't go a long way anymore, unfortunately, especially for young farmers when they're starting out. That's something that we talked about that would help with the advance payments program.

To be quite honest, I've been farming for longer than five years, so I don't know the direct effect of the Olympic average starting in the first five years.

I touched a bit on the crop insurance side. When you include that loss year into your Olympic average when you have multiple weather events like drought to heavy rain, it's very detrimental to your average over your five years. I think that could be improved. If it were just removed from the five years and you're just including the four years that weren't averaged, I think that would be of great benefit.

I know I didn't totally answer your question there, but—

[Kody Blois, Liberal, Kings—Hants, NS]

No, it's fine. I have to keep moving on. I'm going to switch over to French for Madame Bissonnette.

Ms. Bissonnette, how could we enable young farmers to receive subsidies so that they can access business risk management programs? Could this option be available to new farmers, or could it also be available to people who are taking over the family farm? I can think of some scenarios, such as young farmers inheriting very profitable farms and having to pay compensation.

[Julie Bissonnette]

Thank you. That's a good question.

Clearly, the most significant impact is absorbed by start-ups in the initial period, from year zero to year five. We've often talked about the increasing debt load. These farmers are really in this situation right from the start. The ideal approach would really be to focus on the farmers who are in this initial phase and who are starting from scratch.

In terms of transfers, as the value increases, it can become more complicated to transfer these businesses. It would be good to provide the rebate to these farmers as well. We started with these businesses. However, if all young people can be supported with the right tools, it will be beneficial in every way. The more assistance that young people receive, the better the agriculture sector will fare. Both situations are very good examples.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair. I'd like to turn the rest of my time over to Mr. Louis, please.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Ms. Bissonnette, would you mind continuing your line of reasoning? I was looking forward to hearing it. If you could continue it, I'd appreciate that.

[Julie Bissonnette]

I've pretty much covered everything. It's also about obtaining the cash flow. The more cash a young person starting a business has, the better off they are. Debt is like a spinning wheel. All the tools available to help them will be useful. The more cash that they have, the better things will be for them. Whether they're starting up or transferring farms, the more assistance that young people receive, the better off they will be.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

I appreciate that.

Maybe I'll keep this line of reasoning going, because I think we'd all agree that our young farmers across all sectors, as diverse as everyone is, are going to be the future of our agriculture sector.

I know from speaking to many young farmers that capital acquisition is very difficult. You mentioned helping subsidize young farmers and helping them with liquidity in the first five years. Do you have any specific ideas that could help with the first few years? I know we've mentioned increasing the advance payments for the first five years. Do you have anything else specific?

[Julie Bissonnette]

Yes, I have other ideas. For example, a rebate could be provided on the crop insurance contribution. The government could then pay the administration costs for the AgriStability program. In terms of AgriInvest, the government could ensure that farmers wouldn't need to make their contribution in order to obtain the matching contribution.

In short, anything that affects cash flow, such as rebates on the contribution or on administration costs, can work. In Quebec, we have a 25% rebate. This works, and the figure could be used as a reference. However, the government must take care of this.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

That's my time. Thank you very much.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Louis.

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

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

I want to thank the witnesses for joining us today.

Ms. Bissonnette, I'll continue with you. When you spoke about funding for the early years, you mentioned some good options. For example, you spoke about a 25% credit to cover administration costs.

Would you go so far as to suggest that full contribution credits might be feasible, or is that too much money for the government?

[Julie Bissonnette]

There are a number of programs from both governments. Perhaps the risk should be well distributed. As far as we're concerned, the more cash the company has, the better off the company is. A 100% contribution rebate would obviously be ideal.

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

I gather that any improvement would be welcome and would make a difference.

When you spoke about cash flow and the AgriInvest program, you suggested that the government advance the funding, the 1% match, without requiring the young farmer to make their core investment.

Is that what you said?

[Julie Bissonnette]

Yes, that's correct.

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

Okay.

If the matching contribution provided under AgriInvest were increased from 1% to 5%, as several stakeholders have requested, would that also help farmers a great deal?

[Julie Bissonnette]

Yes, it would.

It would help not only businesses that are zero to five years old, but also the entire next generation of farmers.

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

Okay.

You spoke about security in agricultural production. Certainly, you take a big plunge into the unknown when you take over or create a business. You said that the margin should be set at 85% in the case of AgriStability. I think that we all agree on this. However, you didn't speak about the reference margin.

Do you think that this margin should be eliminated?