Public Accounts Committee on April 1st, 2008

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Laforest.

Mr. Fitzpatrick for seven minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Thank you.

I can understand why the audit was done in 2004, but I would deal with farmers in my riding in 2006, and believe it or not, some of them would be dealing with, it seems to me, the 2003 year. There was a real lag between that.... And the real problem, of course, was that a lot of these farmers were facing an immediate income crisis for that year, let alone worrying about 2003 and 2004. So I can understand why the auditor would be looking at application forms and so on that would go into 2006.

I guess we want to look at the future here, because this is an indictment of the past, a program that we're talking about from 2004, and we are looking at making things work for people rather than carrying on with things that don't work.

It's my understanding now that the CAIS program has been replaced by a number of new programs, I think under the AgriInvest and AgriIncome name. Is that correct, Deputy Minister?

I think I'll stick with Deputy Minister, if that's okay with you.

[Yaprak Baltacioglu]

Very wise.

AgriStability is the margin-based program; AgriInvest is the savings program; AgriRecovery is the disaster relief program; AgriInsurance basically is the old crop insurance, a revised production insurance now called AgriInsurance.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

The other programs all assist in helping farmers with income problems, but the program that would be most akin to the CAIS program, I take it, would be the AgriStability program.

Would it be fair to say that, by and large, the recommendations of the Auditor General on the CAIS program have good application to the AgriStability program and that, by and large, those recommendations have been adopted by the department and you've incorporated them into this new program?

[Yaprak Baltacioglu]

Yes, sir. They're very relevant, because in any program that we run it's important to have appropriate transparency. It is not fair to the producers if we send them cheques and they don't know how we calculated them.

If we don't have the right standards and make them public so that people can say “How can you not do this better?” and then we have no accountability, that's not right. So those things are applied not to only AgriStability; they apply to almost all government programs.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I've looked at some of the changes to the AgriStability program, such as the negative margin feature and so on. It seems to me there are many improvements under the AgriStability programs that go above and beyond the points that were addressed by the Auditor General. Is that correct that there are some fairly significant improvements to the old CAIS program—new ideas that improve the bottom line for farmers who run into a tough year?

[Yaprak Baltacioglu]

Absolutely. Those are policy decisions that were made by the federal-provincial-territorial ministers of agriculture, and they do go beyond what the Auditor General said. It's about administration of a program.

The whole idea of the new savings account, for example, came directly from the producers. Bob Friesen, who's in the crowd, or his organization brought forward the savings account idea so that farmers had more bankable, predictable payments that would come to them.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

These changes have been basically made in 2006, 2007, and 2008?

[Yaprak Baltacioglu]

It was in 2007 and 2008.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

So things are dramatically different from what they were back in 2004. Would that be a fair comment?

[Yaprak Baltacioglu]

I would say they are dramatically different.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I want to deal with continuous improvement. I think that was a very good point raised by the Auditor General. If I understand continuous improvement, you collect data and you use different tools--Pareto charts and other statistical measures--to try to identify clusters of errors. Then you act on errors by going back into the system to make sure you identify the root cause of the problem, and you eliminate it. Good-quality organizations in the world today that are recognized to have outstanding products and services in the marketplace are those that have a culture of continuous improvement built into their organizations.

This program, it seems to me, fits right into that. You're delivering a specific service. From what I can gather, the Auditor General reviewed this. There were a whole bunch of inspections after the fact, but the data wasn't being used to ferret out all the problems in the system.

The first thing I saw when I saw that report was that your managers and your department are not trained in this total quality management aspect. I'd like you to explain whether the department is into this culture of continuous improvement and total quality management. Are your managers trained in this? That's very important. If you're not, we have a big problem in this department.

[Yaprak Baltacioglu]

Absolutely. Maybe I'll start, and I can turn it over to the assistant deputy responsible for our programs.

Continuous improvement is the nub of this whole report for us. We have done a number of things. We now have a whole team, which cuts across the department, that works on continuous improvements. We get a lot of data. We get call centres. We know from producers what's not working. Our processors are processing, and there are a number of errors they keep making. If we can't take those things and improve our programs, we're failing.

So we have made quite a number of improvements. Our error rates have gone down. This year, to date, we are under 2%. Our internal error rates are coming down as well. One of the things the Auditor General said was to do it right the first time rather than get caught afterwards, because it's not good practice.

Nada, do you have anything else to add?

[Nada Semaan, Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food]

As the deputy has stated, we have been working very hard in terms of continuous improvement. One of the things the Auditor General had noticed was that while we did collect key data, whether from our call centres or from our field audits, we would get those data and improve those processes. But it was that integration of getting it from the various areas to help introduce....

When the audit first came out, the error rate was, I believe, six point something percent. Then we reduced it last year to 3.44%. This year it's under 3%. That was exactly--

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I would point out that organizations that are really into this spend very little today on end inspections, because they don't have to. They have a system that is basically error-free, because they've used this to change the systems so that these things don't happen again. That would be a much more useful expenditure of our funds than hiring a whole bunch of people to do end inspections after the damage has been done. Use the data to fix the system so you have a good product coming out.

[Nada Semaan]

That's exactly what we've done, in addition to creating a strengthened quality assurance process right up front. Even before this, for example, we put out a payment to create all the checks and balances that potentially could go. That was identified, basically, from errors that came from the producers. When we did the information sessions with producers, they told us that they didn't quite understand this, and we actually introduced some key deliverables. The change from a six-page CAIS form to the one-page was very much based on finding out where the errors were and making sure we could eliminate them.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Fitzpatrick.

Thank you, Ms. Semaan.

Mr. Christopherson, you have seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair, and thank you all very much for your presence here today.

Let me say at the outset that while my dad was raised on a farm in Saskatchewan, I am downtown Hamilton through and through. I am not on my turf here. I want to be clear about that.

The first question I have is one that a city slicker would ask. Since the 1930s, we've been coming out with different types of assistance programs, and they keep changing. Why the constant change? One would think that after 60 or 70 years you might start to get the hang of it. Then any changes you'd need to make would be tweaking as opposed to reconstruction. If it's a political answer, because of the politics of the day, so be it. But I don't understand why we have to keep doing this over and over again.

Can you help me?

[Yaprak Baltacioglu]

First of all, agriculture faces a lot of challenges. It faces weather challenges, market challenges, competition, technology, so it's a forever evolving sector. The structure of the agriculture sector also has been changing. Since the 1930s, some of the changes have been straight-up policy decisions, when for example, governments decided to move from commodity-based support to whole-farm support. You're not paying people to grow one commodity, you're giving them a net so they can grow whatever the market demands. That was a policy shift.

Some of the changes are made because we hear from the producers. We work very closely with the agriculture industry. We consult with them on almost every program we put in place and we hear from them if it doesn't work for them. The changes we have made to the CAIS program and the replacement suite is because we heard from the producers.

So it's a combination of need, it's a combination of general wisdom the governments and the producers and the sector get together. Maybe they need different tools.

[David Christopherson, NDP, Hamilton Centre, ON]

Yes.

[Yaprak Baltacioglu]

So that's what it is. There's no simple answer.

I have worked in this department most of my career. I don't think I've ever seen a perfect business risk management program.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, thanks. I saw it in the notes and thought it was a great question.

This may have been asked when I was researching. The system allows a trigger if it looks as if there's going to be an overpayment, but if it looks as if there might be an underpayment there is no similar trigger to have that reviewed. Why?

[Yaprak Baltacioglu]

I think that's one of the things the Auditor General's report asked: why we didn't include zero payments, because they're also at risk of an error. I think we were focused on overpayments because, once the money is sent, then we have to collect it back. It's very difficult for the producers. We have to be more careful with larger payments as to what calculations are being done, because the larger the payment, the more complex the farming operation, probably in many cases. They have so many commodities, so many activities. These are big businesses in many cases. So the department chose to do that. But now we're not only checking the overpayments, we're looking at the underpayments and the zero payments. That was one of the recommendations we accepted from the AG's report.

[David Christopherson, NDP, Hamilton Centre, ON]

I know this is not proper terminology, but roughly speaking, what percentage are large operations, significant companies, as opposed to “ma and pa” farms, which is what we tend to think of when we think of the family farm and helping farmers? What percentage is really not family farming but big agribusiness?

I know we have processing farms in Ontario, and they are as much a manufacturing plant as anything else; they just happen to be processing food. But the mechanics of what's going on is no different from making a widget. I'm curious, what percentage is large business versus “ma and pa” farms--if that's still the right terminology, if it ever was?

[Yaprak Baltacioglu]

I'll get you the numbers. I don't have my binder, which I should have. I don't have the numbers, but you should know we don't discriminate among sizes of farms. These are farm businesses and—