Evidence of meeting #9 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 meeting.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Rick Bergmann  President of the Board of Directors, Canadian Pork Council
René Roy  First Vice-Chair of the Board of Directors, Canadian Pork Council
Marcel Groleau  Chair, Union des producteurs agricoles
Michel Daigle  Chair of the Board of Directors, National Cattle Feeders' Association
Janice Tranberg  President and Chief Executive Officer, National Cattle Feeders' Association

May 12th, 2020 / 5:55 p.m.


Lyne Bessette Liberal Brome—Missisquoi, QC

Perfect, thank you.

Tim, it's all yours.

5:55 p.m.


Tim Louis Liberal Kitchener—Conestoga, ON

Madam Minister, thank you for being here today and for all of your work with the industry, provincial leaders and local health authorities, providing us with the best-informed measures we can have to protect our food supply and support our producers.

We have a vibrant agriculture and agri-food industry here in Kitchener—Conestoga, including the Waterloo Cattlemen's Association, the Waterloo Federation of Agriculture, the Waterloo dairy producer community and the Waterloo-Wellington chapter of Ontario Maple Producers. I've had the privilege of meeting with most of these groups, as well as with local farmers and board members from the Ontario Pork Producers; local organic farmers, as mentioned before, from Pfenning's Organic Farms; the largest live poultry service in Canada, which is Riverdale Poultry; and the president of Conestoga Meat Packers, which processes 40% of Ontario's pork.

Madam Minister, my question is about balance, the solution for our agriculture sector. A sector this large can't be one-size-fits-all. Could you expand on some of the measures that our government is taking to address food security and help producers, from small farms to large companies?

5:55 p.m.


Marie-Claude Bibeau Liberal Compton—Stanstead, QC

Thank you.

I will not expand on all the measures that we have put in place for businesses, because the agriculture sector is also eligible for these programs. What we have announced recently is really focused on pork producers, beef producers, processors, those who have surpluses and the dairy sector. All these sectors have had recent announcements to support them better.

I have to encourage the producers to apply to AgriStability and to take the money that is in their AgriInvest account. There is money there. This is why we have business management programs: to be there quickly when they face challenges. We have to use it first. We are hoping to fill the gaps as we continue the conversation with the different sectors to see who needs more help, and we'll be there for them.

5:55 p.m.


The Chair Liberal Pat Finnigan

Sorry, Mr. Louis; that's all the time we have.

I am sorry. That is all the time we had to hear from the witnesses.

I would like to thank Minister Bibeau for being here today.

At the beginning of the meeting, I forgot to thank Annette Gibbons, associate deputy minister of the Department of Agriculture and Agri-Food, and Colleen Barnes, from the Canadian Food Inspection Agency, for being here today.

5:55 p.m.


Lianne Rood Conservative Lambton—Kent—Middlesex, ON

Mr. Chair, may I have a point of order, please? We started the meeting late, so I believe there are five minutes left, which is enough time for another round of questions.

5:55 p.m.


The Chair Liberal Pat Finnigan

Unfortunately we are restricted in time, and for the first hour, that's unfortunately all the time we have. These technicalities happen. It might happen in the second hour also, but we try to divide it halfway. That's basically all the time we have. I apologize for that, but as we get on with this process, we will get better at it also.

Again, thank you all. We will take a five-minute break. Please be back in five minutes for our second panel.

Thank you very much.

6:05 p.m.

Rick Bergmann President of the Board of Directors, Canadian Pork Council

Good afternoon, Mr. Chair. Thank you for the invitation to appear before the committee and for seeing Canadian pork producers as an important part of Canada's economy.

I'm Rick Bergmann, Canadian Pork Council chair and a producer from Manitoba. I will be sharing my time today with René Roy. He's a Canadian Pork Council vice-chair and a producer from Quebec.

I'm quite honoured to be part of the pork sector. I see my farm contributing to the rural community and the wider Canadian economy by providing food to Canadians and people around the world. With $4 billion in exports and a positive trade balance, Canada’s pork sector could play a key role in restarting the economy.

We have a great story to tell, but instead, I am here today because producers are not confident of the future they have in helping with the rebuild after COVID-19.

As René and I go through this presentation, remember this quote from William Jennings Bryan: “Burn down our cities and leave the farms, and your cities will spring up again, as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country.”

This gentleman lived about a hundred years ago, and it's unfortunate that his wise words have become forgotten in many circles.

The Canadian Pork Council represents 7,000 producers from coast to coast. Combined, producers bring a GDP value of $24 billion to our great country of Canada, and we are a major employer.

Pork production is a diversified agricultural sector. All of that diversity has not been enough, though, to protect pork producers from being pushed into a crisis by COVID-19. Really, because of the current government program, producers are at their wits' end in this time when we are seeking meaningful help, help that will make a difference.

First and foremost, our current crisis is a cash crisis. That means farmers do not have the income they need to pay their bills, feed their animals and keep the lights on. We are trying to navigate market conditions, and they are incredibly volatile right now. The drop in our market price has been incredibly steep and the recovery is quite slow.

Our conservative estimates are that pork producers will lose, on average, about $30 a hog for every pig they sell in 2020. In some regions, that loss may be $50 an animal. This doesn't mean that pork producers will lose $30 on every animal they sell since the beginning of the crisis in April: It means that because of the damage done to the pork market, for every market hog that is sold in 2020 from January to December, farmers have lost or will lose about $30 a hog on average.

These losses are not sustainable at all. They will force farmers out of business. Unfortunately, the hardest hit will be the mid-sized family farm, the young farmer and those farms that have been struggling through the years of depressed prices as a result of the global trade war between China and the United States.

The U.S. government has recognized the hurt their producers have experienced over the past few years due to the trade war and, most recently, the impact of COVID-19. Canadian pork producers, forced to compete against this support, continue to remain at a disadvantage.

As farmers, to us the answer is extremely clear. Over 90 countries around the world knock on our door for valued Canadian pork, so it seems as though our government should do the same. Our food security is too important to leave in the hands of the rest of the world, and we have a good story to tell here. We've just got to get back at it.

I want to take a moment to clarify where COVID-19 has hit the farmers so hard and why we need your help.

Pork production in Canada is a just-in-time business. There are several business models, but for the most part, barns are built so that the sows are housed in a farrowing barn, where the piglets are born. When the piglets are weaned, they are moved to a different barn, and a new group of sows goes into that farrowing area after it is washed and disinfected.

The piglets are then moved through different facilities as they continue to grow. In some operations they will be sold at 15 pounds or at 50 pounds, as in my operation. These feeder pigs are then transferred to another facility where they're grown into 260- or 270-pound market animals, and away they go to the processing plants.

However, regardless of where you farm or what your business model is, these operations do not have the extra capacity to hold the animals. Barns are designed to refill as soon as a group of pigs is sold. COVID-19-related reductions in slaughter plants and slaughter plant capacity have meant that market-ready hogs aren't able to move out of the barn. This, in turn, means that the next batch of pigs cannot move forward, so you can understand the just-in-time philosophy that I just mentioned.

The backlog in the U.S. has been particularly bad. There they have seen processing plants close for extended periods. Given how connected our two industries are, the impact on U.S. prices has hit Canada hard for producers who export weaned pigs into the U.S. My farm, for example, has needed to give piglets away because we were not able to sell them and we needed to make room. It's a considerably important part of our marketplace. In 2019, the export of animals was valued at $250 million.

I'd like to invite my colleague René to carry on with the story.

6:10 p.m.

René Roy First Vice-Chair of the Board of Directors, Canadian Pork Council

Thank you, Mr. Bergmann.

Due to the temporary shutdown of processing plants in Quebec and Ontario, more than 100,000 pigs that should have been processed are instead stuck on farms. It is costing farmers money to feed those pigs. Their welfare is at risk and, adding insult to injury, they are losing value as they get further from the target market weight requirements.

This backlog of hogs and the COVID-19 market disruptions are being felt on two major fronts.

First, it has driven prices down and pushed many farmers into a cash crisis. While the price has recently strengthened, it is still seasonally low and still well below the cost of production. Farmers are unable to sell their hogs and must continue to feed them to avoid euthanizing them. For some, such as my colleague Mr. Bergmann, who specializes in early weaned piglets, it is hard to find a market.

Second, it has forced some producers to take more drastic actions as their losses become even more unsustainable. We know that farmers across the country have been forced to dispose of animals because they have not found a market for them. For a farmer, that means a lost income and added costs. For Canadian families, it means that good food has gone to waste.

Other farmers have taken steps to reduce their production. For some this means not breeding sows and for others it means aborting sows that were close to farrowing. Both situations result in reduced incomes and put an increased psychological strain on farmers, a situation made even worse because food is being taken out of the supply chain.

Should it continue, Canada will see reduced exports and a greater reliance on imports, and in extreme cases the reduction in production will contribute to a food shortage. Producers have been calling for emergency actions to help us get through the crisis. Based on losses of $30 to $50 per pig, we've asked the government for crisis payments of $20 per hog.

We have said from the beginning that it's up to the government to figure out the most efficient and effective means to get the money to pork producers as quickly as possible. Pork producers have long called for changes to the programs. We also strongly urge the government to make the changes necessary so that payments, including interim payments, can flow more quickly. Without these changes, the program will offer little support.

We heard that the business risk management suite offers farmers $1.6 billion in support. However, our focus is on pork production, not on all agriculture. Based on decades of experience with farm programs, we know this level of support is not available to pork producers—

6:15 p.m.


The Chair Liberal Pat Finnigan

Thank you, Mr. Roy.

Unfortunately, your time is up.

I will now go to Mr. Groleau, of the Union des producteurs agricoles.

Mr. Groleau, you have the floor for 10 minutes.

6:15 p.m.

Marcel Groleau Chair, Union des producteurs agricoles

Good evening.

I will be fairly brief, because I want to take a few minutes at the end of my presentation to explain to the members of the Standing Committee on Agriculture and Agri-Food how the AgriStability program works. A lot was said about the program during the minister's presentation. There are a number of different opinions.

First of all, I feel there is a general misunderstanding of how the program works. We are going to try to do an exercise with you to explain how it works.

In Canada, agriculture accounts for $112 billion in revenue, $60 billion in exports and $68 billion in farm gate revenue. It is one of the biggest economic sectors in our regions.

This sector has been hit by the COVID-19 crisis. Meat packing plants have been shut down, the consequences of which have just been explained to us, and there is a labour shortage. A number of things have been done to address this. Markets have been lost and disrupted. In addition, producers have had to dispose of products, resulting in net losses for them.

We are starting to be able to quantify the losses. In poultry alone, nationally, the losses are $115 million, and in beef, according to the Canadian Cattlemen's Association, it is $500 million. Quebec grain producers have estimated losses in value, taking into account the advances on the American market, to the tune of $86 million in Canada for two grains alone, corn and soy.

The processing sector, especially meat packing plants, has sustained heavy losses. The sector has also had to put in place the safety measures required to protect employees. In Quebec alone, losses amount to $100 million or more.

The assistance measures announced last week fall far short of our expectations. However, the program to support temporary foreign workers when they arrive is a substantial effort that I would like to highlight.

As for the other programs, the aid is insufficient compared to the $19 billion provided by the United States to address the COVID-19 crisis. That is 10 to 12 times more than was announced last week here in Canada.

The future remains very uncertain and market fluctuations are highly unpredictable. The AgriStability program, which should be helping us cope with the situation, is not working. That is why only 31% of producers in Canada are participating in it. Producers are not fools. If the program worked, they would enrol. The reason producers are not enrolling is not because they do not understand it, but because it is not working.

I find it hard to hear the minister tell us that we should use the $2.2 billion in the AgriInvest program that we have in our accounts. That money is not necessarily in the accounts of the producers who are struggling right now. Quebec pork producers only have $40 million in their AgriInvest accounts, with a production value of $1.4 billion. We are being asked to use that $2.2 billion, but it is not available directly. It is like asking people to make sure they empty their bank accounts before applying for employment insurance. It is like telling the students who have just been offered $9.5 billion that only those with nothing in their accounts are entitled to it. That argument does not hold water.

With regard to the $1.6 billion theoretically available to producers that Ms. Bibeau is urging us to use, let me point out that last year more than $1.1 billion of that $1.6 billion was paid out in crop insurance in Canada. So it has nothing to do with AgriInvest or AgriStability.

So, naturally, we are asking for emergency funding to meet the current needs of businesses in the meat sector, for example, which are experiencing particular difficulties. This is mainly to improve risk management programs. The repercussions of the crisis are more than just immediate. They will be felt this year, but undoubtedly next year as well. If our risk management programs in Canada are inadequate, producers are going to be in trouble now and even more so in the coming years.

Now, I would like us to look at the AgriStability table. I don't know if you have had a chance to look at it, but I am going to do a little exercise with you. Ms. Bouffard will be able to help me if I need it. As an example, we took an average farm in Quebec with $250,000 in annual revenue and $100,000 per year in historical allowable expenses. Under the current program, allowable expenses are capped and family labour is not an allowable expense. Therefore, small operations in particular are penalized.

This operation has a historical reference margin of $150,000, that is, $250,000 less allowable expenses. This year, due to COVID-19, it will have a reference margin of $70,000. So, this operation lost $80,000 this year on a gross income of $250,000. That is huge. This year, because this operation has a reference margin of $70,000 and compensation starts at 70% of $100,000, or $70,000, AgriStability will pay it nothing at all. So, even if the operation wanted access to 75% of what the AgriStability program would pay it, it would not receive a penny. Yet this operation lost $80,000 compared to a reference margin of $150,000. That's more than half.

We have proposed enhancements to some of the AgriStability program criteria. For example, the historical margin should no longer be capped. In the second column, the historical margin is not capped at $100,000; it is $150,000. If we do the calculation, 70% of $150,000 is $105,000. That is $35,000 more than the $70,000 reference margin. If we multiply it by 70%, this operation would get $24,500. If we increase reference margin coverage to 85%, the operation would get $40,250.

The third column represents how the program was before the 2013 budget cuts. In 2013, when the program was said to be working, an operation whose margin declined by $80,000 would have been compensated with an amount equivalent to 50% of its reference margin. As Mr. Blois was saying earlier, to get 50% loss coverage, we would have to go back to the program as it was before 2013.

We may send you a more detailed table, but what we are trying to tell you is that, no matter what party you represent, AgriStability is not working. That is why producers are not participating. AgriStability works even less for small farming operations because it does not cover participant opt-out and family wages as allowable expenses.

So, I ask you all to work in a non-partisan manner to improve this program. If you really want to support Canadian agriculture, it is essential that you do.

6:25 p.m.


The Chair Liberal Pat Finnigan

Thank you, Mr. Groleau.

Janice Tranberg and Michel Daigle, you have the floor for 10 minutes.

6:25 p.m.

Michel Daigle Chair of the Board of Directors, National Cattle Feeders' Association

Mr. Chair and honourable committee members, thank you for having us here today. On behalf of the National Cattle Feeders' Association, or NCFA, thank you for the opportunity to outline the economic impacts of COVID-19 on cattle feeders across Canada.

My name is Michel Daigle, and I am the chair of the board of directors at NCFA. The first part of our presentation will be in French, and my colleague Janice Tranberg will finish the presentation in English.

NCFA is the national voice of Canada's cattle feeders. Our focus is to improve the growth, sustainability and competitiveness of our industry. The challenges of COVID-19 to the beef industry...

6:25 p.m.


Neil Ellis Liberal Bay of Quinte, ON

Mr. Chair, on a point of order, I don't think he has his translation on correctly. We are hearing both languages at the same time on the English channel.

6:25 p.m.


The Chair Liberal Pat Finnigan

I am going to ask the technicians to give Mr. Daigle a hand.

6:35 p.m.

Janice Tranberg President and Chief Executive Officer, National Cattle Feeders' Association

Thank you very much, and I apologize for the problems. Maybe I'll just take over where Michel left off and talk a little bit about the challenges of COVID-19 that have hit the beef industry.

There has been a dramatic reduction in beef processing capacity in both Canada and the U.S., and this has caused cattle to back up along the entire beef chain. The current backlog is around 130,000 animals and it's growing by 6,000 to 9,000 head per day. The additional costs of feeding these backed-up cattle is around $3.50 to $4.00 per head per day. Right now this is costing cattle feeders in Canada around half a million dollars.

Fed cattle prices have also collapsed, generating a severe cash flow issue and liquidity problems. Markets have been severely impacted by uncertainty, volatility and even panic selling. Current losses are up to $600 per head. An average feedlot with 15,000 head capacity is thus seeing additional feeding costs of some $50,000 per day and a loss of $7.5 million in revenue when the cattle are brought to market.

The priority issue for NCFA is to ensure that processing facilities get up and running as soon as possible, that they can move forward and that prices can stabilize, but there are many challenges to overcome before processing capacity can return to normal. Until such time, cattle feeders need the support of the government to remain viable.

We have been monitoring the supports for cattle producers in the U.S., and whatever happens south of the border has a competitive impact on the industry north of the border. The U.S. is providing direct payments to cattle producers of $5.1 billion U.S. An investment in the Canadian cattle industry of $600 million would be roughly equivalent to the U.S. investment.

We appreciate the open and transparent communication that's been happening between the government and the sector throughout the pandemic, and we share a common goal around the table of having a reliable and safe beef supply for Canadians and a competitive Canadian beef sector. We thank the government for the support announced last week. However, it falls significantly short of what is required, and we would like to respectfully outline some of the reasons why today.

The government noted in its announcement that the agriculture sector already has $1.6 billion available through current business risk management programs. The government has also noted that there's $2.3 billion sitting in the AgriInvest accounts of producers, but these funds are not always accessible to farmers, and this is especially so with Canada's cattle feeders. AgriInvest is a producer government savings account that helps farmers manage small income declines and makes investment to manage risk and improve market income. However, given the collapse in market prices for cattle, approximately 85% of all beef processing is currently at risk, so it's quite likely that beef producers have already drawn what they can from their AgriInvest accounts.

Of the $1.6 billion paid out in AgriStability, AgriInsurance and AgriInvest, $1 billion comes out in the form of insurance payments for producers for production failures, primarily for crops. Then of the remaining $600 million, about $300 million is allocated to AgriInvest, and matching programs, which I previously mentioned, can help only those who are able to put savings into their accounts. The remaining $300 million is largely used in AgriStability for direct payments to producers experiencing severe income decline. This is allocated to all agricultural producers.

The COVID pandemic is not a normal business occurrence and it cannot be addressed by the business risk management programs in the current format. The government announcement last week of $50 million for the fed cattle set-aside program is certainly appreciated, but the reality is that the current backup at the farm gate is 130,000 cattle, which are costing producers around $500,000 per day to maintain, and their value has fallen from $250 million to $165 million. The backup at the farm gate will continue to grow in the coming weeks, and the sector needs a more significant financial commitment.

The NCFA is also calling for a number of supports that were not part of the recent announcement and will help to provide cattle producers the support they drastically need. We're requesting changes to the current business risk management programming to benefit cattle ranchers and feeders.

Under AgriStability, we're asking for the $3-million cap to be removed. For an average feedlot, this cap already removes them from being able to access these dollars. We're also asking for other AgriStability changes, such as increasing the trigger from 75% to 85% for the remainder of CAP, the partnership agreement; invoking the late participation clause, to allow producers access to the needed support; and removing the reference margin limiting, for meaningful and longer-term support.

A serious issue for cattle feeders managing this pandemic is business liquidity. The spring is a very busy time of the year for farmers and the need to purchase inputs is acute. With significant losses due to falling market prices and with not being able to move their cattle, feeders need access to financing.

We've asked the government to issue a stay of defaults under the advance payments program used to finance the purchase of cattle. This would increase liquidity by extending the repayment further down the road. The interest-free portion of the program should also be increased, as this is particularly useful for younger cattle producers with less liquidity in their business operations.

We call for the government to increase federal financial backstops and loan guarantees to banks and financial institutions, allowing producers access to expanded operating credit limits and increased liquidity. We also request that the government ensure that chartered banks and financial institutions pass on the interest rate reductions. This is key to maintaining liquidity in the cattle industry.

We recognize that all sectors are calling upon the federal government for support through this pandemic, but besides health care, there can be no more critical sector than food, and we ask that additional federal supports be provided accordingly.

Thank you for your consideration.

6:40 p.m.


The Chair Liberal Pat Finnigan

Thank you, National Cattle Feeders' Association.

We'll start the questioning round.

If everyone agrees, because we are short in time, we'll go through round one, but we'll probably have to shorten it to four minutes each to be able to get everybody in.

Is anyone opposed to that, or are we good with four minutes each for the first round?

6:40 p.m.


Yves Perron Bloc Berthier—Maskinongé, QC

Could we discuss it at the end of the meeting? We should establish a system for future meetings. I see we are running out of time, so we can continue.

6:40 p.m.


The Chair Liberal Pat Finnigan

We had also planned to hold a meeting afterwards. It will be possible if the people on the team around us agree to give us some time.

We are going to have only four minutes each. That is all that is possible given the time constraints.

6:40 p.m.


Yves Perron Bloc Berthier—Maskinongé, QC

All right.

So, let us move on, so we do not lose any witness time.

6:45 p.m.


The Chair Liberal Pat Finnigan

Does everyone agree to that?

6:45 p.m.


John Barlow Conservative Foothills, AB

Mr. Chair, you're saying we cannot go past seven o'clock.

6:45 p.m.


The Chair Liberal Pat Finnigan

We can perhaps go past by a few minutes, but generally they want us to stick with the time we have. That's how it works. We have no control over that. We'll try to stretch it as much as we can, but I think that's all we can do with the shortening of time for everyone at this stage.

Mr. Lehoux, you have four minutes.

6:45 p.m.


Richard Lehoux Conservative Beauce, QC

Thank you, Mr. Chair.

I will be sharing my four minutes with my colleague Mr. Soroka.

My first question is for Mr. Roy.

You are asking for emergency assistance at $20 per hog. Will this help keep producers from euthanizing the 100,000 hogs in Quebec and the 140,000 hogs in Canada?

6:45 p.m.

First Vice-Chair of the Board of Directors, Canadian Pork Council

René Roy

It would help producers get through the crisis. At the moment, there is assistance for processors. The $70 million that was announced is actually for processors, which is very good news. However, for producers to get through the crisis, they need cash flow immediately. This $20 will make it possible to continue producing quality food.

6:45 p.m.


Richard Lehoux Conservative Beauce, QC

As I understand it, the programs currently available will not be able to provide producers with the assistance they need to get through the COVID-19 crisis. Is that correct?