Mr. Speaker, I am glad to have this opportunity to explain why I support the agricultural growth act, Bill C-18.
We heard a lot of excellent, positive feedback at the Standing Committee on Agriculture and Agri-Food about this legislation. The further amendments that we already put forward have made it even stronger and more necessary.
The key factor in my decision to endorse the proposed legislation has more to do with the financial realities of many Canadian producers. The legislation proposes to make it easier for farmers to finance their operations and to make the most of existing and emerging opportunities in domestic and foreign markets.
To fully appreciate the potential impact of Bill C-18 on farm finances, one must first understand the dramatic changes that have occurred in recent years.
Today, Canadian farms must operate like big businesses. While many farmers see their career as a calling, because they love to be out on the land and produce food for people around the world, if they hope to succeed they must also be savvy entrepreneurs. They must constantly keep an eye on the bottom line to make sure that today's expenses do not exceed tomorrow's revenues.
This can be quite a challenge because most expenses are incurred long before revenues start to flow. It costs quite a bit of money to plant and to grow and harvest a crop and then get it to market. In most cases, however, farmers do not receive any revenue until they sell that crop and the prices farmers get are not guaranteed, as they usually vary from year to year.
To meet these challenges many producers take out loans that they repay when they sell their crops. This means that along with other expenses such as the cost of seed, feed, fertilizer and fuel, producers must also consider the cost of borrowing money. They must try to get the best terms possible, including the most favourable interest rates.
Given that farmers' ability to feed Canadians is in the national interest, the Government of Canada has long administered programs that help farmers gain access to the capital they need to operate successfully. One of these programs is the advance payment program, or the APP.
The APP enables eligible producers to borrow the cash they need to grow agricultural products at a reasonable interest rate. Once their crops sell, they repay these loans. Each year, more than 23,000 Canadian producers access approximately $2 billion of cash advances under the program to help them finance their operations, and this number continues to grow. The advance payments program is a critical risk management tool to help bridge farmers through high cashflow periods like planting and harvesting until they market their products.
Third-party organizations, usually producer groups, play a central role in the APP. These groups essentially administer the program. They distribute capital and collect loan repayments through agreements involving financial institutions, farmers, and Agriculture and Agri-Food Canada.
The Government of Canada guarantees the loans. The guarantee promotes the lowest possible interest rates, which helps keep costs down for everyone. As a result, all Canadians benefit because they gain steady access to Canadian food at reasonable prices. The APP helps crop and livestock producers meet their short-term financial obligations by providing them with cash advances to a pre-set maximum.
Mr. Rick Bergmann, vice-chair of the Canadian Pork Council, said at our SCAA meetings:
Canadian hog producers see value in the advance payments program and view the changes to the Agricultural Marketing Programs Act as an improvement. Steps that can reduce the administrative burden and cut costs for participating can make a difference, and we encourage that to continue. The availability of the program assisted many producers with their cashflow during a very difficult period in the industry.
Mr. Bergmann also said that his organization encourages a review of the loan limits. The maximum amount is $400,000. The first $100,000 is interest-free for eligible producers. Those amounts remain. If in future the amounts ever needed to be raised, this could be done by the Governor in Council through the regulations.
The legislation now before us proposes to improve the APP and make it even more effective. Many of the improvements came to light in November 2012, when a review of the program was tabled in this House. Under the terms of the legislation that governs the APP, the Minister of Agriculture and Agri-Food, in consultation with the Minister of Finance, must review the program every five years. The last review covered the five-year period of 2006-2011.
The review found that the APP did help producers access low-cost financing, particularly producers who did not qualify for conventional financing at affordable rates. In fact, about two-thirds of Canadian producers under the age of 35 participated in the program during the period studied. Further, loans obtained through the APP typically had more favourable terms and conditions than those offered through the private sector, which contributed to the program's objectives.
The review also found that the APP helped participating producers negotiate better prices. In fact, 74% of those surveyed as part of the review process agreed that the program helped them market their products. In some cases, this is because the loans enabled farmers to hold off on selling their products until prices improved.
However, the review also identified several specific weaknesses in the APP that Bill C-18 proposes to address. Overall, the proposed improvements would reduce red tape and make the program more flexible and accessible. One of the key improvements proposed in the legislation before us would foster multi-year advance guarantees and repayment agreements with administrators. What this would really mean is a reduced administrative burden for producers, making the application process simpler and less time-consuming.
Another proposed change would provide additional ways for producers to secure the loans, which would give producers much more flexibility. They would be better able to access the capital they needed to take advantage of current market conditions.
Bill C-18 also proposes to adjust the rules related to the repayment of advances, producers in default, default penalties, and stays of default. The proposed legislation would also streamline the process between the APP and the Farm Debt Mediation Act and help farmers reach agreements with their creditors and resolve their financial difficulties.
The changes proposed in Bill C-18 are the result of extensive consultation with producers and industry representatives across Canada. The changes would help our agricultural entrepreneurs harness innovation, add value, and create jobs and growth right across Canada. Canadian producers operate in an increasingly complex and competitive global industry. To continue to grow and succeed, they must have access to the modern tools and methods that many other businesses already have used. Canada must continue to support the strong, stable agricultural sector. The agricultural growth act proposes to help producers manage their business risks proactively. There is no doubt that all Canadians stand to benefit.
Now let me address the amendments proposed by the opposition at report stage. As indicated earlier, our committee did a very thorough job and made well-reasoned amendments to Bill C-18. I am afraid that what the opposition is doing here is trying to undo all that great work and certainly the discussion on UPOV '91. Earlier the minister of state indicated the situation as far as Quebec farmers are concerned and the great support they have given. It is significant to recognize that there is great support for UPOV '91. There is also great support for issues such as the advance payments program.
I am hoping that we will be able to move forward and recognize the situation that is in front of us and that all parliamentarians can support Bill C-18 as it stands.
