Industry Committee on May 4th, 2020

[Fawn Jackson, Director, International and Government Relations, Canadian Cattlemen's Association]

Maybe I can start and then hand it over to Bob.

I think that history taught us a very important lesson with BSE. Following BSE in the early 2000s, we lost 27,000 farmers throughout the Canadian beef sector, and that certainly had the largest impact on our young producers. Therefore, for many reasons, we know what programs work. We know a set-aside program works, and that's why we want it implemented as soon as possible. It essentially puts some animals in the supply chain on a maintenance diet and helps us manage our inventory so that we don't have a ton of cattle coming onto the market and essentially creating a race to the bottom and seeing a complete market collapse.

We know what happens. We also know the tools that work, and that's why we're urgently asking the government for the set-aside program and for the livestock price insurance, at premiums to be cost-shared, and that's particularly important for our young producers. Also, we're asking for changes to the advance payments program, similar to what was done last year for canola.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Bob, do you have any thoughts here, especially on BRM?

[Bob Lowe]

The basic suite of BRMs don't work for the cattle industry. They never have. Now there's an opportunity to fix it so it does.

What we're looking for is the government to do something to carry us into the future, so when this happens again, everything's on the shelf and we just pull things off the shelf as we need them.

Further to Fawn's comments, with BSE we not only lost 27,000 producers, but that directly was the reason we also lost five million acres of native pasture. As we move forward in science, what science tells us is that native grasslands are fairly critical to almost everything that we have.

I'll just finish with that.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thanks very much, Bob.

I think one of the other aspects is the advance payments program, and of course, what was done as far as canola was concerned was tied specifically to the fact that we were having issues with canola exports.

How do you see the advance payments program working? Will there be any nuances to this that you think we should be aware of?

[Fawn Jackson]

Our recommendations with the APP is to increase the interest-free portion for beef cattle to half a million, to increase the overall cash advance limit to $3 million and to extend the repayment terms for beef cattle to 36 months. Essentially, this will enable producers to invest in their beef herds and also not have to sell at the bottom of the market. They can hold the cattle for a longer period of time, not putting this continual downward pressure on the market. It's about enabling producers to make the best financial decisions they can, so it gives them flexibility.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Under those circumstances, whether it be the cow-calf operator or the feedlot operator, in the way you see this advance payments program they both would have access.

[Fawn Jackson]

Yes, and I think the key thing here is that, right now, we're at a 30-year low for the total beef-cow herd here in Canada. We see opportunity for growth, and we see we can be one of the engines for the Canadian economy. Last year, we saw just under a 20% increase in the value of our exports, so if we can get this managed correctly, we'll be able to grow the Canadian economy.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you.

I know you're not directly associated with the food processing sector, but certainly it's important to your organization. Effectively, 80% of cattle destined for processing plants are backed up in the system. According to the Western Stock Growers' Association, revenues are down by 90%, and the cost to producers—

[The Chair, Liberal, Sherry Romanado]

MP Dreeshen, unfortunately that's your time for this round.

Our next round of questions goes to MP Lloyd Longfield. You have six minutes.

Mr. Longfield, you're still on mute.

[Lloyd Longfield, Liberal, Guelph, ON]

That's going to be the quote of the COVID crisis.

Thank you to all the witnesses for coming and representing the groups as well as the individuals who are facing the crisis we're all facing right now.

I'm going to start my questioning—and possibly Mr. Currie or others might want to join in—on the industry-government panels that are discussing this, working with the provincial governments, the federal government and the industry. Can we have a quick status report on how that's going? So far, we've been talking a lot about the federal government, but we know that the business risk management programs all share jurisdiction with provinces. Where are those discussions right now?

[Keith Currie]

With respect to Ontario—that's what I can speak to more easily, compared to the rest of the provinces, because that's where I'm from—there's a little frustration with the province and the discussions with the federal government. They've been desperately trying to maintain that communication, not just with BRM but with all the things going on in agriculture, and there is some frustration that it is not happening.

As for some early intakes of CAP and things like that, they have managed to secure some small amounts of funding, to help with things like online e-commerce for farms and things like job matching, but nothing specific that's really going to help us survive this tidal wave that's coming into the primary agriculture sector.

[Lloyd Longfield, Liberal, Guelph, ON]

We know time is ticking. Is it a similar experience in Alberta? Possibly one of the Alberta reps can answer. Is there frustration with the province or the federal...? What part of the system isn't working in the business risk management program that we developed in our ag policy framework? Mr. Dreeshen and I were on the ag committee when that was being developed. The triggers were changed in 2016 from 85% to 70%, and we're still in that area. Where's the province at in these discussions?

[Fawn Jackson]

I can't speak for the province of Alberta, but perhaps I could give some insight into the business risk management programs.

Certainly, we see that they're not the right tool for us to be managing right now, or they need to be triggered. For example, if we look at AgriStability, we find it to be a reactive program, but our producers aren't generally utilizing it anyhow. We have to match the problem with the right solution, and that's like trying to put a round peg in a square hole.

[Lloyd Longfield, Liberal, Guelph, ON]

Right, that's understood. That point was made earlier, and I thank you for that. But in terms of maybe AgriRecovery being used, or working in conjunction with the western livestock price insurance program...we could maybe do AgriInvest.

One of the things we've been trying to do is work within frameworks, knowing we have to augment them, but we have channels that need to be opened up, and I'm trying to find out why those channels aren't working.

[Fawn Jackson]

Certainly AgriRecovery could be an option to address some of the problems. It could be a funding mechanism to get it dealt with quickly, but it hasn't been yet. Anything that anybody can do to get it implemented...the more quickly we're going to be able to deal with the problem.

[Lloyd Longfield, Liberal, Guelph, ON]

On industry partners, the industry-government working group, we've used those types of groups with canola and with other diseases that have hit. We had tuberculosis a few years back. We've had grain not moving because of the rail problems we had with cold winters and locomotives not working. These working groups have been very helpful. It doesn't look like this one is being as responsive, and I'm trying to find out why.

This is not just for you, madam, but anybody, Mr. Lowe or....

[Bob Lowe]

Like Fawn, I can't speak for the Alberta government any more than I can speak for the federal government. I think everybody will agree that all governments have been exceedingly silent, and that's bothersome to us in the industry, the lack of communication from all levels of government.

[Lloyd Longfield, Liberal, Guelph, ON]

Has anybody on the witness list been part of the discussions with the industry-government working group?

Okay, that might itself be an issue, and the composition is maybe something for us to take back to government, to say that these working groups aren't being represented by the people who are here. Maybe that's an issue that we have to look at.

Finally, on the distribution—I have 30 seconds left—it's very important to have Canadian distribution systems. Have you been able to pivot any of your distribution towards the retailers, or are you working only with restaurants?

[Robert Calcott]

I can answer that.

We just launched an e-commerce site to be able to sell directly to the public, who are tired of waiting in line at Costco and grocery stores with masks on. It's something we never thought we'd do, but we're trying to do anything and everything to keep people employed.

[Lloyd Longfield, Liberal, Guelph, ON]

Congratulations.

[Robert Calcott]

It was launched a few days ago.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

That's my time.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Mr. Lemire has the next question.

You have six minutes, Mr. Lemire.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I can see the situation is critical. I want to thank the members of the Standing Committee on Industry, Science and Technology for their flexibility in agreeing to take the agri-food sector as the first topic for in-depth study. We can see that agriculture may be the sector that's struggling the most right now and that should be at the core of the Quebec identity and the Canadian identity.

Let me elaborate. What is a Canadian? What separates us from the Americans, if not our food sovereignty and our culture? Those are two areas that are tremendously at risk of being swallowed up by the Americans, especially in the context of the COVID-19 pandemic and the repercussions of the free trade agreement that was just signed and that will come into force on April 1.

We've just heard the news that the beef industry is being hit hard right now and that prices could plummet, which would harm cattle farmers in eastern Canada, especially in Quebec. Despite the fact that they were expecting to increase the number of cattle slaughtered to more than 1,000, a case of COVID-19 in an industry can have a shattering impact, as happened in western Canada. It's always beef producers that will suffer the consequences, because collapsing prices will significantly increase their risk of going out of business, which would be a major tragedy.

We need to protect our economy, especially our SMEs, our little guys who are up against the Americans. An aid package was announced a while back, but the money isn't getting to our farmers, especially small farmers who pay themselves in dividends. Action is urgently needed in that regard. I think action will be need to be taken on federal aid.

Since we're joined by dairy processors today, I'd like to take this opportunity to talk about the impact of the coming into force of the new free trade agreement, CUSMA, in the current context of the COVID-19 pandemic. Because the agreement was signed before May 1, the dairy year will begin on July 1. There will be a reduction of nearly 40% in Canadian dairy sector exports, which translates to a loss of over $100 million in the short term and $330 million annually.

What kind of compensation are you hoping to get in order for your industry to survive, particularly in the context of the COVID-19 pandemic?

[Gilles Froment]

I can answer that question. I'm Gilles Froment, secretary of the Dairy Processors Association of Canada.

I think you're right. COVID-19 is having a very clear impact on all of our businesses. For the three agreements we've signed, namely the agreement with Europe, the Trans-Pacific Partnership, and the new agreement with the United States and Mexico, which will come into force in July, processors are calling for about $750 million a year.

Regarding the free trade agreement signed with the United States and Mexico, we were told very clearly that there was an informal understanding that it wouldn't come into force until August 1. As you said, the fact that the agreement is coming into force on July 1 and not August 1 means we're basically losing the first year of implementation, which was supposed to give us some flexibility. We're supposed to get to export 55,000 tonnes of skim milk powder and milk protein concentrates in the first year. Now, we're only getting a month to do it, which is completely ridiculous. The second year starts immediately after 30 days of implementation, and that represents a significant loss for our industry.