I now declare the 27th meeting of the Standing Committee on Public Accounts in order.
Colleagues, we're here with our Auditor General again and his staff to review Chapter 8, “Disaster Relief for Producers—Agriculture and Agri-Food Canada” of the fall 2013 report of the Auditor General of Canada.
Just before we do that, though, I would like to ask the committee if we can do some quick committee business afterwards. I can tell you the nature of it. First, one of the hearings that we scheduled in our business meeting can't work because the chosen dates just don't work, and so we need to look at an alternative.
Second, we had deferred at our last business meeting the question of the public accounts conference and there are timeframes involved now, so in my view it's important that we deal with that today.
There likely will be time for that, unless the committee wishes to extend longer than normal. I would be looking for about 10, 15 minutes of committee business at the end. It should be pretty quick, and they are timely matters that I do need to put before you. We'll get to that at the end of the meeting.
Unless there are any other interventions, I am ready to begin this public hearing. Seeing none, we will begin as we usually do by asking our Auditor General, Mr. Michael Ferguson, to please read his opening remarks.
You, sir, now have the floor.
Mr. Chair, thank you for this opportunity to discuss chapter 8, Disaster Relief for Producers, from our 2013 fall report.
Joining me at the table are Dale Shier, Principal, and Dawn Campbell, Director, who were responsible for the audit.
AgriRecovery is a joint federal-provincial initiative that was established to fill gaps in existing programming and provide quick and targeted assistance to producers affected by disaster events.
We examined Agriculture and Agri-Foods assessment and payment processes for disaster events, from the start of AgriRecovery in 2007 to the end of 2012. This included whether the department assessed disasters according to program criteria and whether it communicated with stakeholders and applied lessons learned since the program's inception. We did not audit AgriRecovery activities beyond 2012 and we did not audit the provincial role in this initiative. Our audit was completed in September 2013.
Overall we found that AgriRecovery had significant timeliness issues. We noted that the department had developed two performance indicators related to timeliness: assessing disaster events with 45 days of a provincial request 90% of the time, and processing 75% of payments within nine months of an approved assessment.
While the department does not have a performance indicator for total processing time, the assessment and payment standards add up to 10 and a half months. We found that 67% of initiatives met this combined timeline, while the remaining third exceeded it by 5 months on average.
In these cases the delay occurred because the department seldom met its own 45-day target for the assessment component of the program. Only 16% of initiatives met this target.
On the other hand, the department achieved its target for the payment component of the program, processing payments for 84% of initiatives within nine months of the approved assessment.
Exhibit 8.4 of our report provides examples of the consequences of not receiving financial assistance on a timely basis. For example, some producers had to sell livestock, and some were unable to purchase feed when they needed to.
We also found that although the department has established and documented a process for assessing formal AgriRecovery requests, it does not streamline its processing for smaller, lower-risk initiatives. For example, we found that a small initiative of $44,000 took 228 days, while a large initiative of $150 million was delivered in less than half that time. Both initiatives were responses to excess moisture events for which assessment information is usually promptly available.
The department has not improved the timeliness of payments over the life of the program. The department needs to streamline its processing of smaller initiatives, actively track against the timeliness targets it has set, and publicly report this information.
In one of our previous audits—the Payments to Producers chapter in our 2011 fall report—we found timeliness issues related to two other programs. In our audit on disaster recovery, the subject of today's hearing, we found that the department continues to struggle with timely program delivery.
Agriculture and Agri-Food Canada has agreed with our four recommendations and has set implementation deadlines ranging from March 2014 to March 2018.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you, Mr. Chairman.
And good afternoon everyone.
I'm Tina Namiesniowski, and I'm the assistant deputy minister of the programs branch at Agriculture and Agri-Food Canada. Within my organization, we have responsibility for the AgriRecovery program.
Thank you for the opportunity to speak before this committee this afternoon. Joining me is my colleague, Rosser Lloyd, Director General of our Business Risk Management Program Directorate.
We certainly appreciate your focus on Canadian agriculture and food.
Canadian farmers are at the heart of a sector that's key to the Canadian economy and the lives of Canadians. It generates one in eight jobs, almost 7% of Canada's gross domestic product, over $50 billion in exports, and as you referred to, Mr. Chair, nutritious, high-quality food products for Canadians.
To help advance the core economic sector, Canadian farmers need access to effective programming to help them manage the various business risks they face on a daily basis. Weather, disease, insects, markets, and other risks all generate considerable volatility for Canadian farm businesses.
That is why the five-year federal-provincial-territorial “Growing Forward 2” framework includes a comprehensive suite of business risk management programs.
Also, the BRM, the business risk management suite, has three core programs: AgriInsurance, which assists producers experiencing production losses due to perils, including weather and disease-related events; AgriStability, which helps producers suffering severe income losses resulting from risks, such as low prices, rising input costs, and drops in production; and AgriInvest, which helps producers offset losses, strengthen cashflow, or make investments by drawing from a savings account of producer deposits matched by governments.
Together, these three programs position Canadian farmers well to deal with their business risks and the impact on their outcomes.
But when extreme natural events occur, producers may need additional support, beyond existing programs, to help them with the cost of actions necessary to recover and get back to business.
It's in these situations that we use the AgriRecovery framework, which is the focus of today's discussion.
In 2007, AgriRecovery was a new approach to how we manage ad hoc initiatives in response to disaster events. It's essentially a protocol and guidelines that assist F/P/T governments in determining, in those types of situations, if further assistance is required and the nature of that assistance.
Since its implementation in 2007, we've learned a lot about its use and implemented a number of changes. It brings F/P/T governments together to do the following.
They assess the impacts of natural disasters on agricultural producers; and, where there is need, offer assistance beyond the assistance already available through the existing program. They then respond with timely, targeted initiatives to help with the extraordinary costs of recovery.
The core BRM programs and AgriRecovery work together to provide Canadian farmers with the financial support that they need when natural disasters occur. We work with provinces or a territory to assess whether or not to trigger a response and in that context we take into account the scope and severity of the disaster, the extent of any extraordinary costs that must be incurred by a producer to recover, as well as the assistance farmers have through those core BRM programs.
I want to reiterate that AgriRecovery is a framework for developing a response to a natural disaster. It's not a program to which producers can apply as soon as a disaster occurs. When we reach agreement with a province or a territory that an AgriRecovery response is warranted, both levels of government must then obtain the required authorities for the response and negotiate the terms of the initiatives. AgriRecovery continues to help Canadian farmers get their businesses up and running after droughts, floods, and other disasters. Over the past six years governments have committed about $1 billion through almost 40 initiatives.
In relation to today's focus on the recent audit undertaken by the Office of the Auditor General, Agriculture and Agri-Food Canada was pleased to see that the AG's report recognizes that the department properly apply the AgriRecovery criteria in assessing disasters to determine whether a response is needed, co-ordinated communications efforts with provinces once initiatives were approved, and met the combined ten and a half month timeline for two-thirds of the initiatives examined through the audit process.
That said, we fully recognize that there are opportunities to improve the timeliness of the AgriRecovery processes and payments particularly as mentioned by our Auditor General for low-value, less risky initiatives. We fully agree with the recommendations that were put forward in the audit report and are taking action on all four of them.
To address the first recommendation we've committed to analyze our recovery processes and the timeliness targets with provinces. We've also committed to identify impediments to timeliness and to take corrective action to meet these timelines, including process improvements on impediments identified with the provinces, strengthening assessments and agreements, and better tracking to flag problem assessments.
We have already taken steps to address the second recommendation by enhancing our electronic financial and reporting system so we can better track and report on AgriRecovery timelines on a real-time basis. This will help us track our progress in real time and make course corrections when needed on individual assessments.
We will assess risk for each AgriRecovery initiative and streamline administrative efforts based on the level of risk.
Finally, we will publicly communicate AgriRecovery's performance against our timeliness targets through the departmental performance report starting this year.
In conclusion, we're taking action to improve our service to farmers and our accountability to taxpayers. Once again, we thank the committee for focusing on the framework and look forward to today's discussions.
Thank you, Mr. Chair.
To be fair, you didn't quite say it in your timelines. You actually said something that approximated that, but I'm really happy to hear that you are. It's very important, obviously, to farmers.
Mr. Ferguson, I'll take you back to your report around timeliness issues, because that's really where this report strikes a chord with me.
There are two issues.
First, when it comes to producers, timeliness is an extremely important piece. I would draw your attention to your exhibit 8.4, which talked about farmers who suffered greatly because of the program's lack of timeliness.
The other piece, of course, is this. When we start to look at things we've done in the past, and for which the department is responsible, i.e., as mentioned in your report in 2011 about timeliness and another program falling under the department's domain, the department said that they would learn lessons from that previous report. Was that true?
Welcome to our committee.
I have a couple of questions to the agricultural officials.
We're given to believe that this AgriRecovery program is a federal/provincial/territorial business risk management tool under Growing Forward 2. We're told it's a cost-shared—I believe it's 60:40—disaster relief framework intended to help agricultural producers recover from such natural disasters as flooding, drought, or disease, obviously to help producers in their plight.
Basically, so that I can get some feel for this, perhaps you can give me some examples of how, when, and where AgriRecovery has been successful in helping producers recover from these natural disasters.
Perhaps Mr. Lloyd can respond.
Three categories have been already cast there. I would say we've had success in each one of those situations.
The two that come to mind are the initiatives with respect to the 2010 and 2011 flooding situations that we had in western Canada, when we had an unprecedented inundation of water in those provinces. We quickly went in and delivered assistance to help the producers in preparing the land for the next round, making sure that action was taken such that they were ready to plant a crop in the next crop year.
Having said that, we also end up in situations of drought. Often, as I say, drought equates to livestock and feed shortage issues. What we tend to do in those situations is offer the transportation types of program: helping the producer with the extra cost of getting feed from the areas that have it into those areas. They tend to be for a longer period of time, but the actions can be taken. The time needs to unfold so that the producer can take the actions necessary to bring the feed in and make the application and have the payment.
There are other examples, such as a tornado in Ontario whereby fruit trees were ripped out. We provided assistance for the producer once we recognized what the damage to those trees was. Some trees looked damaged, but it wasn't until the next year that one could really understood whether a tree was actually dead and was not going to be able to produce. In those situations, we assisted the producer with the costs of putting a new tree in the ground and with some of the maintenance costs to get it up and running.
I find it quite interesting when reading the report that the department is being held accountable for the performance not only of itself, but also of the provinces as they participate together with you in this program. Yet, in the Auditor General's opening statements, and I believe in yours as well, the comment was made that there was no audit done of the performance of the provinces that were involved in any of this AgriRecovery program.
But I do find several statements in the report interesting. In paragraph 8.31 it says, to quote from your department:
...it is reasonable to assume that all producers that received assistance found it helped their recovery.
Also, two paragraphs later, there's a similar comment, which comes as a result of the audit team's survey:
Our overall survey response indicated general satisfaction with the amount of financial assistance received through AgriRecovery....
Further on in the report, the Office of the Auditor General indicates that the department does not have appropriate performance measurements, and yet two paragraphs later I see that there are actually performance measurements that the department has. Those performance measurements, which are your current ones, I believe, are whether producers find the program helpful, whether producers stay in business after a disaster, and whether producers get assistance when they apply.
Perhaps I can start and then turn it over to my colleague.
Mr. Chairman, the comment that was just raised is absolutely correct: we do have performance indicators that are linked directly to the AgriRecovery program, and those include the percentage of effective producers who apply for assistance once a disaster is designated. We have a target that 80% of producers expected to have been impacted directly by the disaster would have applied.
For the percentage of producers who believe that the financial assistance provided under the program played a role in the recovery, our target is that 75% of the producers surveyed would have indicated that in participating in the program.
We also have an indicator around response time to process applications from eligible producers in the affected areas. The target is that 90% of disaster situations be evaluated, as you well know, in this 45-day period and that 75% of the applications be processed within the nine months, which has really been the focus of our conversation today.
Then there is the percentage of producers still farming one year after the disaster payment. In that respect, the measurement target is that 70% of producers surveyed are still farming one year after the disaster payment.
This is a framework that we apply in the context of the AgriRecovery framework, and it's a significant tool that we use in terms of measuring the success of the program. But that said, we are working with our provinces and territorial colleagues to look at performance measures and to make sure that they are indeed relevant for the AgriRecovery framework and that we are applying them consistently across the board.
Rosser, do you want to add to that?
Thank you, Mr. Chairman.
I thank my colleague across the way for the hockey analogy about the goaltender. The dilemma is, Mr. Lloyd, that with your timeliness you actually missed the first period and you had an empty net. You actually started at the second period. I hope the other team is not really good at shooting the puck, or there would be a lot of goals scored before you showed up.
I say this with my tongue firmly planted in my cheek, because we're actually talking about farmers who are waiting for money. It's not about pucks in the net; it's about whether I can sustain myself, and in some cases whether my farm goes bankrupt. That's what we're talking about. That's the important aspect of this, the timeliness.
This brings me back to the piece you talked about, such things as fruit trees and drought. You're right; if there's a lake on a section in Saskatchewan and Manitoba, it's a lake. If it's June, we're not planting; it's that simple. I've been out there enough and know farmers well enough—I know my friend Mr. Falk knows the area well—that if that section is a lake in June, you're not seeding.
So you're right; that is easy. Drought is more difficult for sure.
Let me use the example of last year, because you used tree fruit. I'm not talking about plum pox now. Now I'm talking about apples that bloomed, with burn-off because of a frost, that don't have apples on the tree in June. There will not be any apples in August if there are no apples in June, because when the blossoms burn off, it's exactly the same as having a lake on my section in Saskatchewan or Manitoba. There are no second blossoms on an apple tree during the season.
Yet last year we waited until, I believe, almost August before we started to figure out whether there were any apples or whether there was a disaster or not in the province of Ontario, even though we knew that 80% of the apples were gone, never mind 100% of the cherries.
You're right about how we should maybe adjust things, to look at things and how we get in. The other aspect—and you mentioned it, Mr. Lloyd—is that you have responsibility to intervene as the federal government as well, not waiting for the province.
How many times, to your knowledge, has the federal government initiated an agri-recovery program in the last two years before the province did?
Let me ask through the chair, since the witness really doesn't know, whether he could provide that to you, as chair. I would appreciate it. That's an important number to know, since by Mr. Lloyd's own words earlier, either the federal government or the provincial government can initiate AgriRecovery—either one, isn't that right?
Let me go back. I know we want to talk about this, but we're going to talk about another piece.
In the Auditor General's report, at paragraph 8.54, we talk about lessons learned. We talked about lessons learned with the payments, because that was actually the problem with AgriStability.
Mr. Lloyd, you mentioned AgriStability, and you're absolutely correct. With AgriInvest, AgriStability, and AgriRecovery, Mr. Falk's analogy is that it is the goaltender at the end. He is absolutely right; it is. The dilemma was that AgriStability couldn't pay, in some cases, for more than two years, never mind ten and a half months. That was what the Auditor General told us in 2011 about that program—the lesson to be learned with the timeliness issue.
Let me quote what the report says at the end, and then ask you to comment on it:
We concluded that Agriculture and Agri-Food Canada does not adequately manage the federal role in providing disaster relief to producers.
How did we not learn from the previous program about timeliness issues and getting money to producers, and end up where we are now, when we knew before that another program had the same dilemma this one now has as well?
Mr. Chairman, perhaps I'll start and attempt to answer that question.
In respect of the question that was asked as to whether or not the federal government...or to give the number of instances where the federal government would have instituted an AgriRecovery program, we'll come back with an answer to that question. But I suspect the answer is zero times, because at the end of the day, I think, where it's either the federal government or the province, it's around the assessment process: it's who institutes a call for the start of the framework. The framework, as I've said before, has steps to it. There's a pre-assessment phase and an assessment phase, and either the federal government or the provincial government can launch that assessment process.
In terms of the actual initiative itself, those are initiatives that are delivered by provinces. It's not the federal government that's delivering the initiative. It's the province or territory that's delivering the initiative, and it's an initiative, then, that would have been agreed to by both levels of government. So think there's a slight difference, perhaps, in relation to how we would respond to that question.
In regard to your reference to the previous audit that was done on AgriStability and AgriInvest, yes, there have been findings in relation to that audit around timeliness, and there were concerns about the timeliness of payments in the context of the AgriStability program in particular. I can tell you that for the last program year the federal administration actually exceeded our published service standards for AgriStability and AgriInvest. For AgriStability, 91% of the files were processed in 75 days or less, and the target we have set for ourselves in the context of that program is actually 75% in 75 days. For AgriInvest, 97% of the files were processed in 45 days or less, and our target is actually 80%.
So in relation to that last audit, we did take the findings quite seriously and work to try to improve our service standards, but I am sure those individuals who fall outside that 97% are dissatisfied with the speed with which we are responding to their particular application. I can assure you that we work hard on every single one of them to try to respond in a timely fashion, but sometimes there are issues that prevent us from being able to do that quickly.
Thank you to all of our witnesses for your testimony today.
Obviously, AgriRecovery is a new approach, founded in 2007 and working hand in hand with the provinces to try to find better ways to serve. I don't necessarily agree with Mr. Allen's assessment that the federal government needs to be the crusading person. What I think most of my constituents would like to see is all governments working hand in hand.
My understanding from the testimony here today is that it is a framework, so that when a disaster happens, both the federal and the provincial governments, and any other relevant authorities, work together to try to find a way to mitigate damage and to make sure that we have a strong stable food supply but that we also have a growing economy. There's only one taxpayer, so I don't think the constituents in my riding really care if it's the federal government or the provincial government leading the charge, as long as the results are assured.
Mr. Auditor General, thank you for coming in. I have a few questions in regard to the survey.
I'm really rather confused, because in paragraph 8.16 regarding the 9-month target, it says quite clearly:
We examined whether the Department had met its payment target and found that it had. The Department met its 9-month target for 84 percent of initiatives”. Your report also found that the communications efforts “work well after an AgriRecovery initiative is approved.
I'm very happy to hear some of these things, but what gets me is that about one third of the surveyed food producers.... By “food producers”, it's not the actual farmers who use the program but the industry associations, is that not correct? Or am I wrong in that?
Good afternoon to our witnesses.
I'd like to start with Mr. Ferguson, and then, as officials feel appropriate, please jump in.
I'm looking at paragraph 8.35 in the report, where you talk about a guide to developing performance measurement strategies, and about the latter being both valid and relevant. In 8.36 you go further to outline some timeliness targets that you referred to in 8.14. You say in here that 80% of the expected producers affected apply for assistance. Somewhere, then, 20% of those who were affected went elsewhere. Did they meet their needs, or were their needs met under AgriStability or AgriInvest?
You also state in here that “...70 percent of producers surveyed are still farming one year after the disaster payment, and 75 percent of producers surveyed believe that the financial assistance provided under the program played a role in their recovery.” In your report you talk about the two-thirds and the one third, where two-thirds were somewhat satisfied or thoroughly satisfied, completely satisfied, with the timeliness.
When you did the survey, was the survey done in highlighting the timelines of 45 days to ten and a half months and looking for their feedback on those timelines, or was it done on the basis of a crisis, a disaster, that was in place, and they've met certain financial constraints and significant issues, and their response on somewhat timely and completely timely was based on the moneys that were paid out of the AgriRecovery or one of the other agri programs to meet their need in the midst of that crisis?
I wonder if you could answer that one, sir.
I think to understand the surveys, we need to go to what we say in paragraph 8.31:
The Department’s performance measurement framework states that surveys should be undertaken to assess how well AgriRecovery assists producers. We found that the Department has not ensured that such surveys have been conducted for many initiatives and therefore does not have the information to determine whether AgriRecovery is assisting producers.
So under the department's performance measurement framework, there was the intention to do these surveys, but we didn't find that they had been done in all the cases. We went out and basically, I guess, dealt with two sort of high-level questions. One was around whether the amount was satisfactory to deal with the types of problems. The other one was to deal with whether they felt the payments were received in a timely fashion.
We didn't ask if they were received within the timeframe of the department, or if they were happy with the timeframe of the department, because the program objectives were about providing quick, targeted assistance to facilitate the return to work as rapidly as possible. That's why we were asking the question about whether or not they were satisfied with the timeliness of the payments.
To your question on the 80%, the 70%, and the 75%, originally those measures were set by the department. They're the target levels, they're not the actual levels. The department would have to speak more to that.
As I understand the two-thirds and the one third, two-thirds see it as completely or somewhat timely. That's not necessarily a bad number, depending on what you're measuring. What I'm trying to understand is that as we measure both the timelines of the programs and the various levels of complexity that are built into three different programs, the amounts of money that stream out of those....
I mean, clearly, losing one farmer, one producer, is one farmer, one producer too many to lose. So I understand your empathy and your focus in trying to ensure that these guidelines are met throughout. What I'm trying to understand is this: how many numbers of farms are we in fact talking about here, or producers? I don't understand, within the producer groups, how many farms are contained within each producer group.
Again, from my understanding, I'm finding this very difficult to work my way through the effectiveness of the program. I appreciate that you've come up with a tracking device for March 2014. I think that's critical. I look forward to the next time we have an opportunity to review just to see how effectively we're doing it.
But I want to understand; we talk about the ten and a half months, we talk about two-thirds who are happy, we talk about the amount of money and three different levels of complexity, but how effective are we? Are we getting the job done or not? Obviously we don't want to lose any farmers, but what are we accomplishing here? Is it working or is it not working?
I have a very brief question.
It was pointed out that one of the ongoing problems was not only the timelines but also—and this is very unfortunate—your criteria. In fact, you act when there is a request for provincial-federal cooperation and not when the producers realize they have lost their harvest.
If an apple tree loses its flowers in May, the grower knows this in May. If that request is only made in October, then four months is added on to the ten months.
You calculate your administrative timelines. However, the grower's timeline is dictated by the bank, not by you. That is when you missed the boat, and in a big way. That is one of the strongest criticisms expressed by producers.
Given that the timelines have sometimes been four months, could we hope to see approximately four-month criteria?
OK. That’s fair enough.
I'd like to cover what Mr. Hayes referred to earlier, specifically that it seemed to be that there are different issues with trout, with disease, when we have flooding or excess moisture, as it says here. He suggested that perhaps the department should look at creating, instead of an arbitrary 45 days—and we've heard from the officials here today that it is a very arbitrary 45-day deadline that they are going to be renegotiating with the provinces so that these kinds of issues get dealt with.
I do notice that your recommendation in paragraph 8.44 says that, “Agriculture and Agri-Food Canada should assess risk for each AgriRecovery initiative and streamline its administrative effort for smaller, lower-value initiatives.”
Are you saying, very similar to what Mr. Hayes suggested, that perhaps there should be a different risk assessment and perhaps a different time period for these more complicated matters so that it's based more on a situation? Is that what the recommendation is saying?
I think I referred to it earlier, Mr. Chairman. There is a two-step assessment process. It's triggered—that was the word I was looking for before—either by the federal government or by the provincial government, but most normally by another jurisdiction.
The first step in the assessment process is a preliminary assessment, and there are specific criteria that are looked at. One is that the disaster event isn't a recurring event. One is that the disaster event is an abnormal event and therefore is something that producers could not have foreseen and prepared for. The third is that the disaster would result in extraordinary costs to producers, which are costs that they would not normally incur resulting from actions they must take in order to mitigate the impacts and/or resume production as quickly as possible. In terms of that preliminary assessment, those three criteria must be met to trigger a formal assessment.
In terms of the criteria that are looked at from a formal assessment point of view, it's that the incident would be a collective experience affecting a large enough number of producers in a region such that it has an impact on the sector in that region; that it results in significant negative impacts on affected producers and their capacity to produce or market agricultural products; and that it results in significant extraordinary costs. Again, those are defined as costs that would have a substantial impact on producer's income and are large enough that it makes sense for governments to help with those costs, and that it be beyond a producer's capacity to manage even with the assistance available through existing programs.
That last point is what we've been trying to underscore: that we really attempt to use the other business risk management programs, and if they're not sufficient, that's typically when you would have an AgriRecovery initiative approved by governments.
All right. Hearing that there's majority agreement, we will conclude.
As I began to say, I thank you very much for your attendance today. We appreciate the fulsome answers. When there are problems, I say so, but there weren't, and it's very much appreciated.
To you, Auditor General, again, our thanks for the work you do and for the excellent work on this chapter.
All of you are excused. The formal part of our hearing has now expired.
I'm looking for Mr. Albas for a motion to go in camera for committee business?