AGRI Committee Meeting

    Good afternoon and welcome, everyone.

    Today, pursuant to Standing Order 108(2), the standing committee will have a briefing from the Department of Agriculture and Agri-Food.

    We have with us from the department Ms. Kara Beckles, director general of the research and analysis directorate, strategic policy branch; Mr. Tom Rosser, assistant deputy minister, strategic policy branch, who has been here before; and Mr. Marco Valicenti, director general of the sector development and analysis directorate, market and industry services branch.

    Welcome, lady and gentlemen. Thank you for being here with us today.

     I don't know if you want a 10-minute statement between the three of you, or if each of you wishes to make a statement.

    Mr. Chair, I think a total of 10 minutes would be sufficient if we make our three presentations quickly.

    Okay.

     So please go ahead.

    Mr. Chair, thank you for inviting us to join you this afternoon to provide you with an overview of the agriculture and agri-food sector in this country. We have just circulated a document.

    I'm going to turn to Kara and Marco to walk you through that very quickly, to allow as much time as possible for questions.

    Before I turn the floor over to them, though, I would simply begin by acknowledging that we're well aware that 2019, and indeed, the early weeks of 2020 have been a difficult time for many in the agriculture industry for many reasons, ranging from uncertainty and volatility in global markets to unusual and extreme weather events, to disruptions in the country's transport system.

    Notwithstanding those very real near-term challenges, when we, and many in the industry and many independent analysts, look to the medium and longer term, we are very excited about the potential of this sector to sustainably contribute to growth in the Canadian economy. When we look at projections for growth in global population, growing global wealth and what that will mean for food demand in the years and decades ahead, we share the view that these create very unique opportunities for a country with Canada's knowledge in this sector, as well as our endowment of resources such as land and water.

    With that, perhaps, I will invite Kara to very quickly walk you through the first few slides of the deck.

     Thanks, Tom.

    I'll start on slide 3. I probably won't touch on all of the slides, but we'll briefly go through a few of them.

    Slide 3 demonstrates the agricultural sector's contribution to GDP. In 2018 it was $143 billion, making up 7.4% of total GDP. That includes the entire value chain, everything from input suppliers, such as fertilizer companies, all the way through primary and processing industries and including your restaurants and grocery stores.

    We had a very strong decade in the agricultural sector leading up to 2018, setting income records for farmers in eight out of the ten years. Leading up to 2018, there was very strong global growth, we had good interest rates and exchange rates, and world prices were climbing pretty much the entire decade.

    Leading into 2018, however, we saw a significant decline in farm income. That was due mainly to increases in expenses. Generally, every year we see some expense categories increase and other expense categories decrease. In that particular year they all increased, all at the same time. Despite the fact that we saw receipts on farms go up, expenses went up more significantly and led to an overall decline in income.

    We don't have final numbers yet for the year that just finished, but for 2019 we are expecting to see a stabilization of farm incomes, and then, hopefully, a rebound leading into 2020.

    Slide 4 goes into a little more detail, whereby you can see, across the board, those increases in expenses. There is no one expense that explains the overall increase; it really was spread across all categories of expenses.

    Slide 5 shows the interconnected relationships along the entire value chain. I would also say here that the sector is very diverse. Depending upon the province or region you're in, different segments of the agricultural sector are more important, either in terms of products being developed or of whether that region is involved more in primary agriculture or in the processing sector.

    Slide 6 shows a little bit of information about the department and how we function and indicates some of our priorities. I won't go through the slide in any detail, but it's there for your reference.

    The case is the same with some of our minister's mandate letter commitments. Those can be found on slide 7.

    In slide 8 we touch on our relationship with the provinces, as agriculture is a shared jurisdiction with the provinces. While the federal government has several levers to initiate change and to tackle various problems, we have to work in concert with the provinces, which have other levers. In going into changes to programs, for example, this is a relationship that's very important to maintain and build, in terms of both priorities moving forward and ways to tackle these matters.

    With that, I'll switch over to Marco.

     Thank you very much, Kara.

    On slide 9, notwithstanding the challenges mentioned by Tom at the beginning of the presentation, many people in the sector see this sector as having significant potential for economic growth. About two years ago a business-led table formed under the Agriculture and Agri-Food economic strategy table defined five key specific areas that the sector should continue to work on.

     Those were regulations; infrastructure; continuing to look at diversifying our markets; thinking about innovation, which is really important for our sector; and of course thinking about our labour and skill sets not just now, but also into the future.

    We think about the context of additional real opportunities for the sector. We know on slide 10 that global food demand has been increased by 50%. We think we're ready for that.

    We also have to take into account consumer interests and trends that we're seeing. We can certainly talk a little about protein and some of the things we're doing in the context of innovation and superclusters.

    When we're thinking about science and emerging digital technologies we should think about big data, precision agriculture, and automation and digitization really taking hold in the sector. We think we're well positioned. We know that trade is a very important aspect of the agriculture sector, and we need to ensure that we're on top of that.

    Of course, from a productivity perspective, we are looking at opportunities in climate change also.

    Turning to slide 11, again I mentioned reliance on exports. One of the things I should mention that the economic strategy table talked about was to look at both the domestic market, taking advantage of our own market, and also at how we can diversify our own markets globally. Most of you know that we are the only G7 country with trade agreements with all other G7 members. That's really an important feature of our export strategy.

     We certainly look at engaging our international standard setting bodies, including the WTO when required.

    Slide 12 gives you a bit of a perspective on our export strategy and our exports to countries that we have FTAs with and that we don't have FTAs with. You will see the mix. Just over 75% of our exports go to countries with whom we have FTAs. It gives you a bit of a place marker on our export strategy.

    Slide 13 provides some perspective to what that Tom mentioned with regards to some current market and production challenges that we see in the context of global trade. Certainly in some of the recent disputes, we have seen pork and beef prices fluctuate. We're also seeing those prices rebound over the last few months. Tom talked about the weather events that took place in late 2019 and early 2020.

    On slide 14, to Kara's point, we are still seeing some underlying strengths. We are seeing exports continue to grow, reaching $67 billion in 2019. We did see significant growth in our food processing sector over the last few years, close to 12.5% until the end of 2018. While we did see some decline in canola exports, we certainly did see some increases in fish and seafood, beef and pork products.

    Slide 15 provides a little perspective on our food processing sector. Looking at sales over roughly the last 10 years, again, we've had a steady increase, which is very nice to see. We think this is an untapped area. We certainly think we can do more in the value-added space as well.

    Slide 16 provides a little perspective on the distribution of our food and beverage processing shipments. I think we do need to remember that the number one market for our primary agricultural products is the domestic market, representing 42% of primary production. It gives you a flavour of the percentages over 2018, from meat to seafood to baking and, of course, grains and oilseeds.

     Next we have a bit of a perspective of the distribution of farms over the last 50 years. We've seen some changes. The average farm size has doubled. The farm value per acre has quadrupled. We have seen a consolidation of a small number of very large farms, with the largest 8% of the farms accounting for over half of farm cash receipts.

    That gives you a flavour of the distribution and the breakdown from a farming size perspective.

    Next are some demographics in the context of the next generation of farmers. One-quarter of the farm operators are 65 and older. And there are some statistics in the context of women operating farms, as of 2016.

     We do need to continue to focus on new entrants to the agriculture community, for sure.

    I'm sure the committee has heard of the labour challenges. We tend to look at the labour shortages not necessarily in the here and now, but also at the new skill sets that are going to be required. If you're thinking about technology and precision agriculture, automation, digitization, that will require a new skill set and so we want to make sure that those coming into the agriculture sector have, and can take advantage of, those new technologies in the workplace. That gives you a flavour of the use of automation.

     With regard to temporary foreign workers, the government has made some changes. We've included some rural pilots that will, hopefully, help for both the processing and the primary sector.

    I believe I will turn it back over to Kara on climate change.

    I have a couple of final words on environment and climate change.

    As you can see from slide 20, overall GHG emissions from the sector have been fairly static over time. This is despite the fact that overall production in the sector has risen over that same time period. We often talk about GHG emission intensity, which has declined fairly significantly, and this is through efficiencies in the sector and the adoption of new technologies and new practices over time that have led to more and more GHGs being sequestered in agricultural soils over that time period.

    The challenge, though, has been getting the overall GHG emissions to start heading down, so that overall emissions go down at the time as we continue to increase production over time.

    There are lots of challenges, but there are also some opportunities that come with climate change for Canada and agriculture. Some of the challenges are extreme weather events that we see more and more and the impact they have on both animal and crop production, as well as the increased incidents of pests and disease with warmer temperatures.

    There have been some opportunities that have been taken advantage of, with longer growing seasons and the ability to start moving more production farther north. We have seen soybeans spreading from Manitoba and across the Prairies, and this is in reaction to slightly longer growing seasons as well as technologies allowing soybeans to ripen more quickly and be grown in Canada. This is a crop that we've taken advantage of, as well as other adaptations to grow different varieties and different types of crops that have increased the ability overall to increase income.

    Canada is well positioned with our abundance of fresh water, which is really where climate change is having an impact around the globe on different countries' ability to produce various crops and animals.

    I'll leave it there. I think we've touched on a lot of different topics across the agricultural sector. We probably could spend an hour on each of these topics, but that was a brief highlight.

    Thank you.

    Thank you.

    We will now go to our question round, and we'll start with Ms. Rood for six minutes.

     Thank you, Mr. Chair. I will be splitting my time with Mr. Lawrence today.

    Thank you very much for being here today. You have some great information here in your briefing.

    I'm a young farmer myself and I'm very interested in some of the statistics you have in here, because as I see it—and I see this on an everyday basis—I don't see young people wanting to get into the business of agriculture anymore.

    You have some statistics here saying that the farms have decreased by half, and yet there's an increase in production.

     I'm wondering if you have statistics that break that down, not necessarily by commodity but by cash crops versus fresh fruit and vegetables. What I see—and I'm not sure if we do collect the data on that—is a lot of folks and young farmers getting into cash cropping or into livestock but I really don't see young farmers wanting to get into the fruit and vegetable sector. I foresee that 20 years from now we are going to have a major food security issue with being able to secure our own food here in Canada.

    Can you speak to any of that?

    Mr. Chair, thanks so much to the member for the question.

    She's absolutely right—and Marco touched on this— that attracting the next generation to the sector is important and a priority. You'll notice that the relevant slide in the deck shows, from the most recent census of agriculture, a bit of an uptick in people under 35 entering farming. The challenge is twofold: first, to get people excited about careers in the sector, and then to help them get started.

     In terms of a breakout of young farmers by farm type, Kara may know off the top of her head what the statistics show, but, if not, we'd be happy to look into what data's available and share that with the committee.

    Off the top of my head, I don't necessarily know about farm type, but I do know that as more women farmers have gotten into the business, there's a tendency for them to get more into mixed farming and crop and greenhouse operations as opposed to the large crop or large animal-type farms.

    We do have the statistics on that from the census of agriculture in terms of the breakdown on young farmers and the types of farms, but I don't have that information with me.

    No problem.

    Also, for the path forward, do we have some sort of long-term plan in place? Is that something you've been looking at through the years, so that we have a long-term plan to secure our own food and have food security and not have to rely on imports from other countries?

    Also, with respect to food safety, as you know, Canadian farmers produce some of the best and safest food in the world. That is becoming something that even farmers who are in the business now are worried about for down the road.

    Can you speak to that?

     I'd offer a couple of thoughts.

     Marco alluded to the work of the economic strategy table and its recommendations for growing the sector and what the priorities are in terms of infrastructure and skills and regulation. In terms of a blueprint or a plan for growing the sector, that has certainly been a bit of a guidepost for us in that regard.

    That report talks about not only growing exports but also the opportunities at home, because in addition to being the fifth-largest exporter of agri-food products, I believe, we're also the fifth-largest importer, and there is economic opportunity to be had, to the extent that some of that domestic demand that is currently being met by imports could be met through domestic production. That would create some significant economic opportunities as well.

    Okay.

    I'll give the rest of my time to Mr. Lawrence.

    Thank you.

    Welcome, and thank you for being here.

    I'd like to start off with the expenses over 2018. I see one expense that's not attributed or included, and which is relatively new to farmers, is the carbon tax. I don't see any statistics on that. The industry has published numerous statistics from agriculture, from Saskatchewan and Manitoba, and I don't see those here.

    Do we have those numbers?

     Any carbon pricing would be included in the energy expense in that chart. We have estimates for the cost of this. We do know, however, that the total GHG emissions from the sector come from numerous sources, some of which are from energy, but we also have some from animal production as well as crop production. However, those ones do not fall under carbon pricing. All of the carbon pricing within agriculture falls under energy, so they are captured within that expense.

    That seems odd to me, because the carbon tax applies across the industry. There's obviously going to be an increase, I would think—maybe I'm incorrect—in seeds, in pesticides and in livestock purchases, because the carbon tax is layered in all of those things. Do we have any numbers for the actual costs of the carbon tax for the agriculture industry?

    Unfortunately, you are out of time. Perhaps you can ask that question later on.

    Mr. Blois, you have six minutes.

    Thank you, Mr. Chair.

    Thank you to the witnesses. You had so much good stuff I'm going to try to lead us through, so I'm hoping that you can be succinct in your answers.

    First of all, can you just briefly touch on the advance payment programs at a high level?

    I believe that our colleagues who will be joining the committee for the second hour are the experts in our business risk management programs. They're probably best placed to answer that. In the interest of time, I'll defer until they're here.

    Okay. I guess the next piece is talking about climate change. Ms. Beckles talked about the impact on the sector. In what ways can the Government of Canada help support that transition? There's been a lot of talk, of course, about the price on pollution. On farms specifically, can you give some examples of how we can help make that transition?

     We have a number of programs. There are a number of things we can do.

    Through our cost-shared programming with the provinces, we do have a number of measures in place called BMPs, or best management practices, where we provide incentives for on-farm reductions in the environmental footprint of producers. Through our scientific research, we're rolling out a concept called living laboratories. We're working collaboratively with producers to figure out how not just to reduce the environmental impact of agricultural operations, but also how to make that work best for farmers so that there's rapid uptake.

    It's important, too, that we have programs to encourage the realization of opportunities in clean technology. Things like biofuels, bioplastics and products of that nature also create significant opportunities for agriculture.

    Kara mentioned as well the good-news story of sequestration of carbon in soils. Beyond soil sequestration, there are also opportunities through shelter belts, permanent cover and other things to increase carbon sequestration on-farm above ground as well as in the soils.

    Thank you so much.

    Obviously part of this is innovation, which you mentioned in your remarks. We know that's an important piece in agriculture. Can you speak to some of the particular research priorities of the department or in partnership with industry?

    There's an understanding of the opportunities in soil sequestration and in nature-based solutions to both increase carbon sequestration and the environmental co-benefits. Things like shelters belts, for example, can contribute not just to sequestering carbon, but also have benefits for water availability, water quality and biodiversity. Understanding some of the interactions among different measures and how they can help to advance not just a single environmental good, but in some cases several, is an area of interest to us at the moment.

    The member opposite, my colleague Lianne, mentioned youth in agriculture and some of the different initiatives. Do you have some broad statistics? Can you talk about the need to ensure that we have new entrants? Can you speak to that?

    I'll maybe invite my colleagues to comment too, but I was remiss, in responding to the earlier question, not to mention that, as some members may be aware, several weeks ago Minister Bibeau did a call for interest in a youth council to get at exactly that, to hear directly from younger people involved in and interested in farming and agri-food what their perspectives and priorities are.

    Marco may be able to offer greater precision. My understanding is that the hope is for an inaugural meeting of that council to take place in the coming weeks this spring.

     Thank you, Tom.

    Yes, we're looking at having an inaugural meeting sometime this spring.

     The intent is to allow the council to provide perspectives in the context of whether.... I should talk about how this council will be represented across the country. We'll look at it from a producer lens as well as a processing lens, and at the supply chain and the value-added perspectives. We are very much looking forward to hearing from them to see how we can engage with and define priorities from a youth perspective.

    One of the things I'm curious about as well across the department.... Again, I know you won't get into the specific suite of programs that are out there, but just for the benefit of the committee, can you give us a general sense of where the department funding goes in terms of things like BRM, research and some of the different programs out there so we can have a sense of that?

    Off the top of my head, I would say that the BRM suite of programs, in terms of where dollars are allocated, I think would be the largest share of programs. In addition to that, we have two types of programming. We have the federal-only programming that's delivered by the department, and then there is cost-shared programming, where we have these five-year framework agreements with provinces. That programming is usually but not always delivered by provinces and territories but cost-shared on a sixty-forty basis between the federal and provincial governments.

    In terms of some of the other areas of activity within programming, there is significant support for research and innovation and for markets, marketing and market development. Also, in the new framework agreement, we have programming to encourage diversity and a greater representation of under-represented groups in society in the agri-food sector.

    Those are some of the main elements of the programming.

    Thank you, Mr. Rosser.

    Thank you, Mr. Blois.

    Mr. Perron, you have the floor for six minutes.

    Thank you, Mr. Chair.

    My thanks to the witnesses for coming here to join us.

    We have talked a lot about generalities so far and I would like to ask more specific questions.

    If I understand correctly, business risk management programs are reviewed on a regular basis. With respect to AgriStability, has your department looked at increasing production margins to 85%, which was the rate prior to the 2013 budget cuts? In addition, have you considered removing the reference margin cap on allowable expenses?

    I would also like to know whether you have assessed the effects of the budget cuts in the agricultural sector since 2013. People on the ground are telling us that the programs no longer meet the support needs since those cuts.

    Thank you for the question. The colleagues who will be joining you shortly are the ones administering the risk management programs. They will be able to offer their perspective on those issues.

     According to the mandate letter for the Minister of Agriculture and Agri-Food, she is indeed responsible for assessing how to improve risk management programs, which are managed jointly with the provinces and territories. We are in discussions with the provinces to determine how to improve all of those programs, particularly AgriStability. For any changes or improvements to these risk management programs, we usually seek consensus with the provinces, because that's usually the most effective way to proceed.

    A meeting between Minister Bibeau and provincial agriculture ministers was held in December. We have already reached consensus on some program changes, and the next meeting is scheduled for July in Guelph. In the meantime, we will come up with options to improve the programs.

    Are all the programs reviewed in this analysis, or just AgriStability?

    The mandate letter for the Minister of Agriculture and Agri-Food asks her to review all the programs, with a special focus on AgriStability. So that is the approach we have taken.

    If I understood your answer correctly, you say that it is possible to increase the production margin to more than 70%, perhaps even 85%.

    Is it also possible to eliminate the reference margin cap?

    Yes, we are looking at a number of options to improve the programs. We are having a lot of discussions with stakeholders to understand their priorities. To that effect, we have heard a number of ideas from producers. In addition, we are having proactive discussions with the provinces to understand their perspective on these issues and to come to a consensus on reforms. We are considering a number of options.

    Let's now talk about climate change. The programs are supposed to help producers cope with it. Earlier, the issue was addressed briefly. What steps has your department taken? What is your view?

    I'm specifically referring to the fact that lands have been less arable since the major floods of 2017 and 2019 and the fact that harvesting is difficult because of early or late snow. Climate change and global warming are very much here.

    Can you comment on that?

    Scientifically, our department is conducting research to try to predict and better understand the impacts of climate change on the agricultural sector. We are trying to predict temperature and precipitation for the next few years and decades to help the agricultural sector adapt to the changes we have seen to date and will likely continue to see in the future.

    Are concrete measures being considered?

    Farms are in great financial difficulty. I'm not sure whether this is the case everywhere, but I imagine it is.

    We are trying to encourage producers to improve their environmental performance. We specifically have programs to help them reduce their environmental footprint.

    In addition, we are looking for better ways to encourage carbon sequestration to reduce emission levels in the sector and to increase the number of carbon sinks on farms.

     Mr. MacGregor, for six minutes.

    Thank you, Chair.

    Thank you to the witnesses for coming today. It's good to see you back.

    I also want to talk about the economic costs associated with climate change, specifically with regard to the agricultural sector.

    I'd like to know whether the department has done an economic analysis of the impacts of climate change on agriculture. I'm putting that in the context of trying to game out what we may need in terms of our business risk management programs. Have you done an analysis of what governments could be on the hook for in trying to deal with the economic impacts of climate change going into the future?

    If not, why not, and are there plans to do so?

    We have come at this issue in a number of different ways. One recent example is that when the CAP framework agreement came into being, it was agreed that we get an external panel of experts to review our business risk management programs, which was done and a report was sent went back to ministers, I think about a year and a half ago now.

    One of the questions they asked themselves was what is the changing nature of risk facing the agricultural sector, and what does that mean for our suite of BRM programs, in particular, AgriInsurance? It may not be the only example of our looking at what a changing climate may mean for the economics of agricultural production, but it's certainly a recent one that comes to mind.

    Thank you.

    I have another question. We've started to hear a bit more chatter from stakeholders about a review of the Canada Grain Act.

    Can you provide this committee with an update on how that review is proceeding; what particular aspects you may be looking at to modernize; and whether we should expect some legislative action on this during this Parliament?

    It is true that as part of some regulatory reform initiatives, the Treasury Board Secretariat called for stakeholders to identify priorities for regulatory reform. Reform of the Grain Act was one of the more frequently identified priorities coming from the agri-food sector.

    Budget 2019 committed to undertaking a review of the Grain Act. Since that time, we have engaged with grain stakeholders in a fairly informal way about reform priorities. It's hard to definitively say at this stage what that reform will look like and whether the reforms would entail legislative changes, but we are in active discussions with stakeholders and with provinces and territories that have expressed an interest in the issue of what a reform of the Grain Act might look like.

    Am I right in saying that at this point the review is fairly open-ended and that the department is not really giving itself a closed end date for the end of the review?

    I would characterize that as fair. We are moving forward and will be, but no, I would not say we're working under a definitive timeline for the process at this stage.

    Thank you.

    My next question is with regard to the royalties that are paid to seed companies and the varieties that research money goes to. Can you provide us with an overview of what the trend has been for the federal government's research dollars being put into developing new varieties? I've heard some concern that the pendulum is swinging a little too far towards private companies doing this research. Some stakeholders would like to see more public dollars put into research so that more farmers can benefit from it.

    Can you can provide any kind of an overview of where we are with research dollars being put into developing new varieties?

    In terms of specific dollar figures, we'll need to get back to the committee.

    We have had dialogue and discussion over time of the appropriate role of the public sector vis-à-vis the private sector in variety research. It's really more a question of where we position public research efforts and how we best attract private research dollars into this space to complement public investments.

    Again, we can probably get more precise data for the committee, but certainly we have not, to my knowledge, in any meaningful way tried to withdraw any of our research funding from variety development.

    Thank you.

    Mr. Valicenti, you mentioned in your statement that we could be doing a little better with value-added development. In British Columbia, Minister Popham announced some money for local food processing.

    Is there any further detail you can provide us on what the federal government is planning to do to develop more value-added processing here in Canada?

    It is an area we want to continue to focus upon. We're looking at some challenges from a foreign direct investment perspective. To increase our investment opportunities domestically, we are looking at the supply chain and how to get primary production into the value-added space.

    One example is through the use of superclusters, in particular a protein supercluster. How do we look at innovation and research and development to move some of the production from primary exports into the value-added space?

    We're looking at it, then. from a couple of different angles, whether it be investment, whether it be science and innovation.

    One area we're looking at—

    Thank you, Mr. Valicenti. I have to stop you here.

    Mr. Lawrence, I understand you will be splitting your time with Ms. Rood. You have six minutes.

    Thank you, Mr. Chairman.

    I want to follow up with respect to the carbon tax.

    To be clear, does your department know how much the carbon tax is costing the agriculture industry?

    Yes, we have over time done some analysis on the estimates of the impact of pollution pricing on costs in the agricultural industry.

    Recently there has been a focus on the cost associated with pollution pricing for grain drying, in an exceptionally wet harvest season in many parts of the country. We have done some analysis in that area.

    Also, as members will no doubt be aware, Minister Bibeau has invited provinces and industry groups to share with us their analysis, and several have done so. This has been helpful in enriching our understanding of the situation.

     Thank you. What is that number?

    Our own internal analysis, as well as from those submitted to us by both industry and provinces, would suggest that it's a fairly small share of overall costs. Typically, I think grain drying represents about 1% of total costs for grain producers. This year it was probably running about double that, probably closer to 2% of total costs, for the cost of fuel for grain drying.

    Are you aware of the work done by the Manitoba agricultural society that puts the number more at 12%? Do you think that number's wrong?

    Mr. Chair, I remember that the Alberta government had submitted a number. Their estimate had the pollution pricing bid in place in Alberta in 2019. My recollection is that their estimate had the figure at about $2.7 million as the added cost from pollution pricing.

    The grain sector in Alberta, I believe, has a total cost in the neighbourhood of about $5 billion. Some of the other analyses that we received from Saskatchewan and Manitoba tried to extrapolate pollution pricing at higher pollution pricing levels. They tried to estimate not just the direct cost associated with pollution pricing for producers but also the indirect costs. Some of those did, in fact, generate higher estimates.

    I'm sorry, but the time is short.

    For the agriculture industry, is the carbon tax revenue neutral?

    Mr. Chair, that's a hard question to answer because most of the analyses done, including our own, look at the cost, either direct or indirect, imposed on the industry. None of them, to my knowledge has looked at the recycling effects of those revenues remaining in the province, returned to citizens and/or put into programs that help small businesses, including agricultural producers, to lower their environmental impact. I'm not aware of any analysis that's looked at the entirety of that, so it's difficult to answer the member's question.

    I have one last question, I'm sure that you'll be willing to share those documents with the committee that show us the impact of the carbon tax on the agricultural society.

    We do have some analysis, Mr. Chair, in the public domain. We'd be happy to share this. I believe that most of the groups that have done analysis on costs associated with grain drying have put their analysis in the public domain, but we'd be happy to compile that for the committee.

    I'll give the rest of my time to Lianne.

    Thank you, Mr. Chair.

    You were talking about expenses on farms that saw their largest increases since 2008, and now we see expenses going up by over 13%. Do we know why there's such a dramatic increase and how much of that increase is due to the carbon tax?

    Mr. Chair, we did see increases across the board in 2018. For the most part, those just reflect increases in costs of things like labour, fertilizers and fuel. These figures are from 2018, at least in terms of the federal backstop for pollution pricing. It was in place in 2018—although it might have included some provincial costs associated with provincial programs in place at the time.

    Kara, do you have anything to add?

    We did see overall energy prices increase. Prices for electricity, propane and natural gas all went up in 2018. There is a carbon price also associated with the energy price that went up that year.

    Do you expect that to increase even further now going into 2019?

    Unfortunately, we're out of time on that one. I meant to say that the second round was five minutes instead of six.

     Mr. Drouin, you have the floor for five minutes.

    Thank you very much, Mr. Chair.

    Let me remind you that the federal lever for carbon pricing was not yet in place in 2018. It was implemented on April 1, 2019. The numbers you have quoted probably reflect provincial numbers. Is that correct?

    I think you're right in saying that the federal system wasn't in place in 2018. Oil, electricity, and fertilizer prices are set by the markets, and they can go up and down. There is volatility, and prices go up and down. There are a number of provincial pollution pricing programs, and I'm assuming that's reflected in the 2018 numbers.

    Thank you very much.

     We are talking about increasing exports to $75 billion by 2024 or 2025—I can't remember the exact date.

    On page 3 of your presentation, you have the percentage of GDP that each sector represents. Food services account for 1.6% of GDP, food retailers and wholesalers for 1.6%, food and beverage processing for 1.8%, and primary agriculture for 1.7%. I know that the major challenge facing people in these sectors is labour shortages.

    Can you explain what is happening? Is there a coordination table working with the provinces to find a way to finally address this issue?

    Thank you for your question, sir.

    The Agri-Food Economic Strategy Table has made recommendations, both short-term and long-term, with respect to labour shortages.

    The short-term recommendations are geared toward improving programs to allow foreign workers into the country to address the labour shortage. According to the table, the long-term solution is automation, which would reduce labour requirements. It suggested that we invest in automation, but also in training. We may need fewer people in our agri-food system, but they will need more training to ensure the growth of the sector.

    Last year or the year before, we had a program encouraging young people to work on farmland. Do we know the results of that program?

    I'm not sure whether Mr. Valicenti can answer that. You're right, there is a program in place. We will follow up and see what information is available on the results of that program to date.

    In closing, I would like to briefly talk about the spent hen issue, because there are a number of chicken producers where I live. We have previously talked about DNA testing and I know that pilot projects have been conducted. Has that gone well?

    Yes, we are looking at the possibility of using those tests, but I'm not sure where we're at with that. Mr. Valicenti can probably give you more details.

     Agriculture and Agri-Food Canada, along with the Canada Border Services Agency and Trent University, is going through a round of testing. We are close to finalizing the next step, what protocol we should look at. We're hoping to see some additional information in the coming months.

    That is still ongoing. I have to say it's been a really positive dialogue with the universities in looking for the right test for spent fowl.

    It's extremely important for producers back home, and they're patiently looking for the outcome.

    Thank you.

    Thank you, Mr. Drouin.

    Mr. Lehoux, you have the floor for five minutes.

    My thanks to the witnesses for being here.

    I have a question about supply management. We talk a lot about risk management, but supply management is still an interesting concept.

    A series of concessions have been made in recent agreements, including the one that is about to be reached. We are being told that a major loophole will be closed in the supply management system. All these mechanisms reduce the ability of the state to intervene. What are the prospects for these ventures? We should not go back to the practices of the 1960s when supply management did not exist and we were losing government support. Has the department looked at that issue?

    Thank you for your question, sir.

    Yes, we have put in place a process with a working group and industry. Two working groups have been set up, one for the dairy sector and another for the egg and poultry sector, to discuss the impact of market concessions in trade agreements and how to minimize that impact and fully compensate farmers.

    In the dairy sector, stakeholders wanted to create a second working group with the government to develop a long-term vision for the sector. This was mentioned in the mandate letter of the Minister of Agriculture and Agri-Food.

    We are in the process of setting that up by working with dairy sector stakeholders, not only to estimate and minimize the impact of trade agreements, but to work with them to develop a vision for the future of the sector.

    As part of that work, have you ever thought of removing those products, which are subject to the supply management system, from existing trade agreements? Has that ever crossed your mind?

    Yes, we have had extensive discussions with industry stakeholders about what trade agreements mean and how they will affect the industry in the future. That process has helped us to more fully understand their perspective on the impacts and on how to minimize them. Marco Valicenti and Kara Beckles were part of that process. I am not sure whether either of them would like to add anything.

    I would like you to continue those discussions and, if possible, to share them with us here. I would be very interested in the outcome of your discussions.

    On another note, the issue of labour that was raised earlier is a major problem.

    On the subject of coordination between the various departments, many agricultural entrepreneurs in the field tell me that it's very complicated. Given the particular problems in this sector, could there be better co-operation between the departments of Immigration and Agriculture?

    We work closely with our colleagues in the Department of Employment and Social Development and the Department of Immigration to make sure that the system works as well as possible.

    I know that our colleagues at Service Canada have had to deal with an increase in the number of applications received in the last year. They have allocated additional resources to ensure that their administrative system is working as well as possible.

    In addition, industry and the departments in question have formed a working group to directly discuss and resolve issues related to the system.

    On the ground, producers are telling us that, in the past, they used to have delays of five to six months, whereas the wait is now 12 to 13 months. That is far too long. People are losing job opportunities.

    We are running out of time.

     There is not enough time for a full question.

    Mr. Blois, you have maybe two minutes.

    Thank you, Mr. Chair.

    I want to go back to some of the points on the price on pollution and some of the information you have.

    Just so I'm clear, this is not really the mandate of the Department of Agriculture. This would be more under Finance, in terms of economic gain, as well as Environment and Climate Change Canada, and perhaps CRA. They would be more responsible for tracking those numbers. Am I correct in saying that?

    Yes, it is correct that within the federal government the policy leads for that policy would reside with the Department of Finance and the Department of Environment and Climate Change.

    In the graph, we talked about energy expenses, and it was referenced by the members across the way. Has actual energy consumption on farms increased in the last number of years? Do you guys track the actual amount of energy being consumed on farms?

    Yes, we have data on that, and more generally the data shows that energy efficiency has been improving on the farm over time.

    Kara may be able to talk to that in more detail. If not, I'll be happy to follow up with some additional data.

     I hesitate to give a complete answer for energy, but I know, for example, on-farm fuel use has decreased over time as practices have changed. Machinery has become more energy efficient, and with no-till farming, fewer passes of machinery over the land has reduced fuel use over time. I can't speak to energy overall, but definite improvements in efficiency have reduced use.

    Moving very quickly to the graph, we talked about 13.3% and it says it was “due to price increases”, but would it not make sense if farmers were consuming more energy in a particular industry or in a particular activity on farm that this would play a role, not necessarily just in terms of price, but the actual energy consumed as a result?

    That will be a statement rather than a question. We'll have to end it here.

    I want to thank the panel for coming to us this afternoon on very short notice. Thanks for the information.

    We'll suspend for two or three minutes to get the new panel in.

    Welcome to the second half of our business risk management programs.

    With us in the second portion we have, from the Department of Agriculture and Agri-Food, Paul Samson, assistant deputy minister, programs branch; and Francesco Del Bianco, director general, business risk management directorate, programs branch. Welcome to both of you.

    You can open on this for up to 10 minutes if you wish. Do you each have a presentation? Just one, okay, go ahead.

    Thank you, Mr. Chair.

    Good afternoon, everyone.

    Thank you for the invitation.

    We're glad to be here today to give you some context on our programs. There are three things that I would like to talk about here in the few minutes that we have.

    The first is to provide some context on the history of agriculture risk management programming in Canada, because there is quite a significant history there. Second, I will provide an overview of the existing program suite. Finally, I would like to outline the work under way with our provincial and territorial colleagues to evolve the programs to meet the needs of Canadian farmers.

    Canada is one of the largest agricultural producers in the world, as we heard just now. It generated over $143 billion of Canada's GDP in 2018. Agriculture is at the centre of Canadian identity, and is a key to our long-term prosperity. For these reasons, there is a long history in Canada of government support for risk management in agriculture. Crop insurance, for example, has been in place in some form since the 1950s.

     In the 1980s and early 1990s, risk management support for this sector was characterized by a series of regionally specific and commodity-specific programs. During that time there were also a number of ad hoc programs that responded to specific needs, but they didn't necessarily provide longer term program solutions. In addition, during the same time, a number of international trade actions were taken against the Canadian livestock sector in particular, due in part to differing support in the agriculture sector across commodities and regions. These events led to efforts to better standardize support for the sector, including the creation of the first agriculture policy framework with our provincial and territorial counterparts, which started in 2003.

    That's a bit of history for you. Indeed, it goes back to the 1950s, but in 2003 we started with the new agricultural policy framework. This landmark agreement was the first in a series of five-year policy frameworks. We're now in the fourth of those policy frameworks. It established a set of cost-shared business risk management programs alongside investments to help the sector grow as well.

    The issues relating to risk management programming have continued to evolve since that 20-year period when the program framework was put in place. Under the first two framework agreements, dating back to the early 2000s, the focus of program support was very much on income stabilization, although evidence emerged over time that government support was covering what would be considered to be normal business risks in many cases and was slowing innovation and adaptation in the agriculture sector.

    Also at this time the sector was experiencing a period of rising commodity prices and therefore was seeing higher levels of profitability than it had in the past.

    As a result, governments agreed to reallocate some support from business risk management programming into proactive investments in the sector to promote innovation and growth.

    ln 2017, federal-provincial-territorial governments agreed to continue to focus risk management support on severe loss and disaster under the Canadian Agricultural Partnership, in order to help producers manage those risks that threaten the viability of the farm. ln addition to the significant investment in risk management, the Canadian Agricultural Partnership also includes a $3 billion investment in broader initiatives to help the sector grow, innovate and become more competitive.

    The current business risk management programs are intended to function as a suite. Now I'm just going to outline what they are. It's not necessarily expected that every producer or farmer would use every one of these programs. They are intended to do different things, and farms work in many different ways.

     There are five. The first one is AgriStability, which was already mentioned in your previous session. It's a whole-farm program that provides support to farmers when they experience a large income decline.

    AgriInvest is the next one. It's a government-producer matched savings account that producers can draw on at any time to help manage income declines or increased costs or to make investments on their farm, so it's quite flexible.

    AgriInsurance, often called crop insurance, provides subsidized insurance for production losses primarily for crop sectors, which helps protect farmers against natural perils such as drought, flood and disease.

    AgriRecovery is a framework program that allows the two levels of government to work together to assess the impacts of an unexpected natural disaster, pest or disease event. Where appropriate, governments then develop initiatives to provide support for the extraordinary costs required for farmers to recover from the event.

    Then finally in our business risk management programs, we have AgriRisk initiatives. These are available to help the sector investigate new risk management tools and approaches that can help support piloting new programs. For example, the western livestock price insurance program, which was developed a few years ago, is available to cattle and hog farmers in western Canada, and it's currently funded through that AgriRisk program.

    Together these programs do provide significant support for the agriculture sector. They are federally and provincially cost-shared in a sixty-forty ratio, and in total they have averaged approximately $1.5 billion over the previous five years of the program I mentioned, so it's cost-shared sixty-forty.

    Governments nevertheless recognize that the risks facing producers continue to change, particularly with respect to climate change and international trade.

    Climate change is increasing risks due to the increased frequency of extreme weather events, and may also provide new opportunities for production.

    International trade offers opportunities in new markets, and risks when access to existing or key markets is disrupted.

    For these reasons, business risk management programs, not surprisingly, are under regular review. The system is constantly evolving. Reviews have highlighted the challenge in determining the balance of government support between market risk and production risk. These have worked to address farmers' concerns, in particular relating to the timeliness, simplicity and predictability of the AgriStability program.

    Following the most recent review in 2018, federal, provincial and territorial ministers met in Ottawa in December 2019 to discuss progress on making targeted changes to the business risk management programs to better meet the needs of the sector. At that meeting, ministers directed officials to make two key changes to AgriStability right away for the program year 2020.

     The first one was to incent farmers to purchase complementary coverage by allowing a new treatment of private insurance under the program to increase the incentives to use private insurance.

    Second, understanding that administrative burden has been an issue for farmers coming into the program, ministers agreed to launch a pilot program in selected jurisdictions to make applying for support easier by using tax return information to simplify the application process.

    Details of both of these changes are expected to be finalized very soon.

    However, ministers also recognize that there may be opportunities to further evolve the programs, and to this end they have asked officials to report back to federal, provincial and territorial ministers in April on an assessment of business risk management programs to ensure they are aligned with the intended objectives. In addition, officials are to develop options to make the programs more effective, agile, timely and equitable for farmers.

    It's a challenging period in the long-term evolution of business risk management programming. While our current suite of programs has provided significant levels of support to the sector in recent years, it is important to consider that these programs may need to further evolve to meet the changing needs of today's farmers.

     While working closely with our provincial and territorial colleagues, it is important to advance options for ministers' consideration that will provide our farmers with the tools they need to grow and innovate.

    Thank you for your time, and I look forward to your questions.

    Thank you very much, Mr. Samson.

    We should start our questioning round starting with Ms. Rood.

    I will also say happy birthday to you. You have six minutes.

     Thank you, Mr. Chair.

    Just for me, six whole minutes. Thank you, Mr. Chair. I appreciate that.

    Thank you very much for being here today. I appreciate your taking the time to come in to talk to us about these important programs.

    I have a couple of questions. Maybe you mentioned this earlier, but I'm just curious about how many farmers qualify for AgriStability and, of the farmers who do qualify, how many actually subscribe to the program?

    Shall I take the questions in order, Chair, or do you want to list more than one question?

    Yes, you can answer them at.... You know.

    Right.

    There are two parts to the answer there. The first one is who qualifies—

    No, it's how many.

    How many depends a little bit on which commodities we're speaking of, because almost all commodities are included—but not all, so not every single farmer is eligible, but the vast majority are.

    Do you have facts or figures based on the commodities that are eligible, and how many farmers would qualify?

    We don't have that exact number with us here, but we can come back to you with a number that describes out of those who are eligible to apply, meaning by commodity, how many do and what that total is. I do not have that number with me.

    Do you have the number of how many farmers who qualify actually subscribe to the program?

    Yes, we do have that number, both in terms of the percentage and total. My colleague will provide it.

     Thank you, Mr. Chair.

    It was 31% of producers who were eligible to participate in AgriStability, which represents approximately 56% of market revenues, and that figure is for 2016.

    Kind of along the same lines of questioning, do you have the figures for how much money is put into the envelope for AgriStability each year?

    Yes, we do have that number. It goes back a couple of years for the final numbers, but we do have that number. I believe 2017 is the most recent year. Would you like to hear any particular year right now?

    Well, we can start with 2018, if you have 2018, or 2017, whatever the most recent is. Also, do you happen to have the cost of administering the program each year as well? Is that available too?

    Yes.

    Go ahead with the 2017 number, and I'll come back on the cost.

    AgriStability is demand driven, so the amounts disbursed every year depend on the state of the sector. In 2016, it was $503 million, and in 2017 it was $219 million. There's an up to two-year lag in the way the program works and, given that some of provinces deliver the programs, it takes some time to have the full program figures, which is why we don't have more recent figures to provide to this committee.

    Okay.

    Mr. Chair, can I ask them to table those documents so that we can have those numbers?

    Yes, sure, if they wish.

    If you have those available, that would be great.

    With regard to the cost of the administration of the programs, the costs.... I'm almost there, my apologies.

    If they have them and want to table them.... Yes, you can just table the document, and I can continue my questioning.

    I'm sorry; I found them.

    For Agrilnvest, the expenses account for 6% of the program. For AgriStability, it's 24%, and for Agrilnsurance it's 12%. In terms of absolute numbers for the 2017-18 program year, AgriInvest is $14.6 million, AgriStability would be $69.2 million, and Agrilnsurance would be $129 million.

    You also mentioned the western livestock insurance program. Has the government considered making this a permanent program rather than one renewed every few years? If so, have you considered expanding the program across the country to subscribe on a voluntary basis?

    Thanks, Chair.

    We have been looking at this program in terms both of expanding it and of making it permanent. That decision has not yet been made, but it is certainly under consideration jointly with the provinces.

    Excellent. Thank you.

    Now, we will go to Mr. Ellis for six minutes.

    I used to sit on the veterans affairs committee, where we did a study on programs for veterans in other countries. I am wondering whether we have compared this program and our risk management programs with those of other partners, such as the U.S.A., Germany or any of our other counterparts with whom we trade. Do we know whether our suite of programs compares, and if not, what we should be looking at?

    International comparisons are always very difficult to do, to ensure that we're comparing one thing with another, because of the variation in commodities, regional conditions, etc. We have some comparators, but we tend to not really spend much time trying to compare one commodity with another, between countries.

    We're certainly, on the other hand, very attentive to changes in other countries to trade rules, subsidies and the like. We watch those very attentively.

    We could come in and talk specifically about international comparators, but we don't really have anything to share with you here today.

    We talked a lot about AgriStability. This program has been changed in the past. Could you talk about when it was changed, what it was changed from, the uptake limits and what effect they had.

    You did give some numbers here: in 2017, $290 million and in 2016 $503 million was paid out in the program. Do you have numbers going back to when it was the old program to compare with the new numbers that we have today?

    Yes, we have those numbers. Let me contextualize them a bit before we turn to the actual numbers.

    Of course, the amount that's paid out in any given year for AgriStability depends on how the season went in terms of the costs that were borne in the production, the international prices and things such as that. The major variation you see from year to year is usually driven by events external to the actual producer's operations and not by what the program looked like exactly. They are a major factor, anyway.

    Francesco can note a couple of the figures here.

     I'm sorry to interrupt you, but I guess I wanted to ask about.... I have spoken with many farmers who said they used to use the program but are not using it now, so that the uptake isn't as large as it was before.

    That's what I was trying get at. Is it a true statement by farmers, that whether because of the paper work to do or other reasons it's just not worth it now with the lower limits?

    Before we get into the numbers, Chair, I'll answer by saying that when the trigger was changed from 85% to 70%—

    When was that done?

    It was changed from Growing Forward to Growing Forward 2, so it would have been between 2012-13 and 2013-14.

    Okay. Thank you.

    Does that answer your question sufficiently?

    How much time do I have left?

    About a minute and 45 seconds.

    You identified AgriStability, AgriInvest, AgriInsurance, AgriRecovery and AgriRisk. Are there any more programs that we should have? What are the gaps we're missing?

    There's a great suite here, but is there anything that the stakeholders are coming to you about to say that we need such-and-such a risk management tool? Are there any new ideas that the department is looking at to help our farmers?

    There are two parts to the answer I would give.

    First, I mentioned that at the December ministerial meeting last year there was a decision to incent the use of private insurance to complement the existing AgriStability program. That's part one—to give farmers more tools and more potential coverage.

    The only other thing I would note is that business risk management programs are complemented in a general sense by the other programs I mentioned under the Canadian agricultural partnership, with $3 billion over five years. Those programs can also help farmers.

    The minister's mandate letter includes looking at these suites. Do we have a plan to take input from our stakeholders or have a round table on this that will be speaking with farmers and bringing them in?

    There are two parts to that. The first one is that ministers agreed that provincial and territorial ministers would have some regional consultations. So they will be doing their own discussions, essentially between last December and when they meet again in July, face-to-face.

    The federal minister has plans to reach out on an ad hoc basis to connect with producers. We have a formal table known as the national program advisory committee, in which producers come together with the provinces and the federal government to engage and consult on plans.

    Thank you very much.

    Thank you, Mr. Ellis.

     Mr. Perron, you have six minutes.

    Thank you very much for joining us today.

    A few minutes ago, we talked about the AgriStability program. Have you looked at the possibility of increasing the margin coverage to 85%, the percentage that was in effect before 2013? That's a very pressing request from the community.

    Have you assessed the impact of the 2013 cuts on the use of services and compensation? I think there were actually far fewer cuts.

    Thank you for your question.

    I can say that, indeed, the 85% coverage is one of the topics that we are discussing with your provincial and territorial colleagues. However, we don't have a specific plan on this. Everything is connected.

    On the issue of cost, as I said earlier, when the government decided to change the percentage from 85% to 70%, new programs were implemented to supplement it. As far as this change is concerned, there isn't really a complete separation. We don't have any figures to measure this impact.

    In this case, can you estimate the cost of setting the margin back to 85%? Also, have you considered removing the margin cap?

    In terms of the cap, the limit, the reference margin, I can confirm that it's something we are looking at with our provincial and territorial colleagues. These discussions will continue over the next few months.

    Generally speaking, I would say, however, that we don't have any specific plans on this.

    You are looking at AgriStability but, as I understand it, you're also looking at all the programs.

    Would it be possible to carry out a thorough overhaul of the programs, to harmonize them again? Is that possible, or is your approach more a matter of making ad hoc improvements to each of the programs?

    Thank you for your question.

     We are looking at the changes that need to be made separately, but since all the programs are connected, our approach is also comprehensive.

    With regard to AgriInvest, I would like to know if it would be possible to create a tax exemption for withdrawals made by businesses for the specific purpose of reinvesting it to improve their productivity.

    With respect to this tax aspect of the AgriInvest program, the decision and analysis rests solely with the Department of Finance. In fact, tax issues are the exclusive responsibility of the Department of Finance.

     You don't make recommendations?

    We at Agriculture and Agri-Food Canada are not working on it. I can't speak for the other departments.

    Okay. Thank you.

    In terms of the environment, are you planning to take any very specific action on flooding of the land, for example? I talked about that with the previous witnesses. Right now, many producers are facing the impossibility of farming their land for many months. In Quebec, in particular, they are even reviewing the flood zones. Some producers are at risk of seeing areas that used to be arable become non-cultivable.

    Are you currently considering compensation measures for these people? In some cases, it's a matter of rescuing them. Floods can jeopardize their businesses.

     Mr. Chair, in answer to the member's question, the most appropriate program is AgriRecovery. The provinces apply, and the needs and cost analyses are done in conjunction with the federal government. Of course, these extraordinary costs can be covered in the case of a flood, for example.

    For its part, the AgriInsurance program insures products against flooding.

    If I understand correctly, you're not doing any particular study on this right now.

    Are you just going to change the AgriRecovery and AgriInsurance programs?

    To my knowledge, there are no studies about specific programs. We are not doing a study on that specific subject.

    I have a question about specific productions that have experienced difficulties on the international scene. I am thinking, among others, of the pork and canola industries, which have suffered greatly this year.

    Has your department ever considered the creation of an emergency fund that could be used by governments of the day?

    I have no comment on this, as discussions are ongoing at this time.

    Thank you, Mr. Perron.

     We have Mr. MacGregor for six minutes.

    Thank you, Chair. Thank you to the witnesses for coming today.

    I received correspondence from the AGgrowth Coalition. They noted in their correspondence with me that participation in the program, specifically AgriStability, declined precipitously since cuts were made back in 2013. They say that approximately two-thirds of farmers are opting out of the program. I've even had farmers say to me directly that the program serves their accountant better than it does them.

    This is not new news. I think this committee issued a report in 2017 that made some recommendations. How has the department been handling these complaints that have been building up over the years? I guess my question is, why have we been a little slow to react to them?

    The first thing I would note is that last decade or so has been a good period for farmers and commodity prices, so there's been less reliance on AgriStability and some of the other programs, according to the analysis we have done. As I mentioned earlier, there have been issues raised about the timeliness and simplicity of the program, and other comments. We've been trying to improve there. We agree that it is still a work in progress. We're looking on, as I mentioned, the ministerial mandate from last December.

    When the ministers met in December, and then looking ahead to when they'll be meeting again in July, are the provinces generally on the same page here? Can you maybe itemize some of the asks that the provinces have of the federal government right now? Are we responding to those requests?

    Mr. Chair, I think the best comment on this is that it is a federally, provincially, territorially managed program. As I mentioned, many of the programs are cost-shared sixty-forty. We're looking at it as an integrated set of things. There aren't any specific provincial requests per se in that context. I think there might be some preferences, but for the time being it's really an integrated conversation and analysis that we're having right now.

    Is it your sense that they're still generally happy with the sixty-forty split? Have there been any asks that the federal government maybe chip in more money?

    Chair, no one has flagged any concerns with me about the sixty-forty split, but I'm not sure this is the place to really get into that. There may be conversations, but certainly nothing has been raised.

    Okay. Thank you.

    You said that AgriStability, first of all, is a demand-driven program. When a farmer is trying to access it, it's based on their total production. If they have mixed production, it's based on a decline over everything. Am I correct?

    Say, a farmer were growing peas, lentils, canola and wheat, but only one of those crops had a catastrophic loss. If you were to look at just that farmer's canola growth, you'd see that maybe they experienced a 90% decline in their canola stock, but overall, because they were in other sectors, it wouldn't equal much of a loss. Has the department ever considered looking at different ways to apply AgriStability in that respect?

     I would first confirm that, yes, it is a whole farm program, so it looks at all the commodities that would be on the farm.

    In the example that was mentioned, that could be a production issue that would make AgriInsurance applicable, or if there were some other extreme weather event or a flood, or something for a certain commodity, AgriRecovery would also be applicable. They all work in parallel.

     AgriStability itself, which I mentioned earlier, evolved away from commodity-specific coverage for a variety of reasons, including fairness, it was felt, and trade challenges, to be this more integrated model. The debates still continue a bit on these issues, but that's how it evolved.

    The main reason we're doing this study is to see if these programs can adequately meet the challenges of farming in the 21st century.

    Given that AgriStability is a demand-driven program, and there are a few storm clouds on the horizon for farmers, can you inform the committee how you're looking ahead, particularly with respect to climate change and maybe how the economic impacts of that on our agricultural market are going to affect AgriStability's cost, but sustainability, going into the decades ahead?

    It's a good general question. I don't think I can give it justice in a few seconds here, but the programs, and not just AgriStability, are designed to factor in changes that will increase costs for producers: more frequent extreme weather events, market instability, price drops, and so on. It is intended to evolve with the changing circumstances.

    As you know, it's a statutory program that allows the level of funding to fluctuate based on demand and need. We think there is space to respond.

    Thank you, Mr. Samson.

    Now Mr. Soroka will be splitting time with Mr. Lawrence. Go ahead.

    We were given some data here before the department came before us, which indicates that over the last 50 years, the number of farms has halved. They've doubled in size, they're producing twice the amount, and the value per acre has quadrupled. That sounds very impressive, but when you go back to page 3 in your overview, the debt load has continually increased. Despite more production and better yield per acre, people are deeper in debt. You can understand that we need to have these programs working, but obviously they're not.

    One of my questions is from the 2018-19 departmental results report that was just released. Under the changes to BRM programs, it says:

    Have all of those enhancements already been announced? If not, can we get a list of the remaining enhancements the department is considering?

    On the first issue of debt load, we certainly are very attentive to this issue. Household debt in Canada is at very high levels, so it's certainly not just in the agriculture sector that the government is paying close attention to this issue.

    In the agriculture sector, we do have several programs that help bridge financing across the needs. There was a question earlier about the advance payments program, which I'll probably get to in a minute. We have several mechanisms that help farmers bridge the financing they need.

    In regard to the question of enhancements, we are looking at that right now in the context of the mandate that the ministers gave us to prepare for the July meeting. There's nothing else to announce at this time.

    Thank you for appearing today, and for your obviously serious approach to the testimony. I appreciate it.

    One of the things I've heard across my riding, and really across the country, is the impact the carbon tax is having on farmers. Of course, we had a wet harvest that will force many people to rely on some of the programs you provide, which are great and are helpful.

    Was the carbon tax taken into consideration when calculating your programs and working on the new programs, particularly if, in fact, the carbon tax does double over the next couple of years?

     We did not look specifically at pollution pricing impacting the programs, simply because that's captured in the input costs, which are part of the calculations in the program. For example, if energy costs are increased for whatever reason, that is automatically captured in the calculations for the program benefits.

    On a different topic, we've had some discussion about getting young people involved in farming and the challenge that will be. As farms grow bigger and more expensive to invest in, are there programs designed or considered that will allow young people to enter farming?

     Here is where I would point to programs outside the business risk management suite, which we've been focusing on here. We have a large number of innovation-focused programs that are focused on promoting new technology use and the kind of thing that would not only improve productivity, but also attract new entrants to farming.

    Further to that, perhaps you could expand on some of the ways your programs currently, and maybe in future iterations, will promote innovation?

    We have several innovation programs, as I mentioned. One in particular is called the AgriInnovate program—$128 million over five years. It accelerates commercialization, adoption and/or demonstration of innovative agri-based products, technologies and processes and services. It's the entire spectrum of innovation and the whole range of agricultural activities.

    Thank you, Mr. Lawrence.

    Mr. Blois, you have five minutes.

    Thank you, Mr. Chair.

    I only have five minutes, so I'm going to try to move quickly, if you can be succinct in your answers.

    What is an advance payments program?

    The advance payments program is a legislated program. It provides agricultural producers with access to low-interest cash advances to help provide marketing flexibility to allow producers to sell their commodity at the most opportune time. This is an important fact in selling agricultural commodities. It's available for over 500 different crop and livestock products, and we manage it in association with 36 different industry associations located on the ground across Canada.

    The maximum was recently increased to a limit of $1 million. The Government of Canada pays interest on the first $100,000 of the advance. For the 2019 program, there was an additional benefit of $400,000 interest free for canola producers.

    I can get more into the description, but if that suffices now that may be enough.

    Can you tell me what an APP administrator is?

    As we mentioned, there are 36 APP administrators. They vary quite a bit in terms of who they are and in size and profile, but they tend to be associations of either specific commodities or specific regions. They administer the bridge financing, the loan, with the producer directly, with our backstop behind it for loans that cannot be repaid.

    The reason I'm asking this question is that we've heard about this a lot in the House of Commons. The Conservatives have asked the Minister of Agriculture to extend the advance payments program. I understand that some work has already been done on that.

    What is a stay of default, very quickly, if you could?

    In the simplest explanation, it would be simply giving the farmer more time to repay that financing.

    Has that already been done for some of the farmers, particularly in western Canada, who have been impacted, as we've talked about?

    Yes, a stay of default was given in 2019.

    Yes, in August 2019 the minister announced a stay of default, at the request of an administrator.

     At the request of the administrator, so the APP. So the minister has the discretion to be able grant them, but it has to come from the APP first. Am I correct in saying that?

    Yes, that is correct.

     And it must be done within four months, within the end of that program year.

    When is the end of the program year, for this year particularly?

    For 2019 advances, September 2020 would be when they'd have to be repaid. The request from an administrator would have to come by May of 2020 in order to seek a stay of default to extend the repayments past September.

    As I understand it, the minister actually has to receive a request from the APP in order to be able to use her ministerial discretion to provide these stays of default.

    Is that correct?

    Mr. Chair, yes, that is correct.

    Now, to the witness here, to the best of your knowledge, in any of the provinces and particularly in western Canada, has the APP actually requested the minister or put that forward at this point?

    I think I'll answer that, Mr. Chair.

    There are many different producers and associations here, so I would not want to say definitively whether or not such a request has been received by the department. I just cannot confirm that.

    Just so that I'm sure, the Minister of Agriculture and Agri-Food cannot provide a stay of default for any type of advance payments program where there could have been an impact, without receiving a request from the APP, correct?

    The administrators of the program would receive the information from the producers. They would be able, through the administration of the program, to make an assessment and then ultimately to make a recommendation to the minister.

    I don't know to what extent that information can be tabled, but I would certainly be interested to know whether or not the APP has actually asked the minister at this point. I ask because we've had a lot of discussion and dialogue in the House on that. My concern is that some of those questions don't reflect the nuance that the minister can't actually evaluate those programs if the APP hasn't put it forward. So if that could be tabled, or if we could at least see what's happened on that front, that would be wonderful.

    I want to move to just one more piece. Obviously, we've talked about the fact that the BRM programs were cut under the Harper government. They went from 85% down to 70%.

    What about private insurance? Some of the farmers have had private insurance to try to cover that 85% to 100%. Do we allow that to be considered as part of revenue?

    Again, Mr. Blois, I won't be able to—

    I got my points across. Thank you.

    Mr. Lehoux, you have five minutes.

    Thank you, Mr. Chair.

    From the outset, you said that in 2018, 31% of farmers had enrolled in AgriStability for approximately 56% of total market revenue.

    Why do you think farmers' participation doesn't exceed 31%? Are the programs perhaps too complex or inadequate for the current reality of 2019-20?

    Have you looked into it? What conclusions have you drawn from it? When the participation rate in a program is only 31%, there's a problem.

    Thank you.

    As I said earlier, one of the reasons the participation isn't higher is that the market has been quite strong in recent years. That is now changing. We also understand that the complexity of the program is a challenge, and that's why we've been actively pursuing this with our provincial and territorial colleagues.

    You have to look at this quickly, because there are real repercussions, year after year. They've been really significant, especially in the last couple of years, both in terms of late seeding and early harvesting due to the snow that arrived earlier.

    What is the mechanism and timeline for the review? Does it depend on the provinces and territories? Who does it depend on?

    The owners of the fields often get the runaround. Someone should operate faster. Can we pick up the pace?

    Thank you, Mr. Chair.

    As I explained, we have a work plan that we are working on between now and the ministers' meeting in July. We will provide an update in the spring. However, we are working on that plan in order to provide advice in July.

    In my riding, I'm often approached by farm owners who say they don't want to join the program because it's too complex, as you mentioned. I find it disturbing that there is still such a long delay in finding a solution to the problem, given the real impact on the ground and the fact that the last two years have been even more difficult for some agricultural producers.

    We talked earlier about the advance payments program. You said that there was a process to be followed, but, if I understand correctly, the administrators have to make an application to the minister so that we can proceed in a more concrete way. Did I understand you correctly?

    Yes, in order to extend the deadline for repayment of advances, the administrator must make a request. The minister will then consider the request and decide whether or not to accept it.

    Okay.

    With respect to the first component of the AgriRisk initiatives program, what is the approach to be taken?

    Again, there are programs available, but they are very complex and very difficult to set up. What specific steps should some companies take? We're talking about technological development, but if we want people to use this program, it has to be accessible.

    The AgriRisk initiatives program is one of the smaller programs. One of its goals is to seek out new ideas and new programs. It isn't really a program that directly affects producers. It's about ideas that will come along in the future, and I think it is doing a pretty good job of fulfilling its mandate.

    Thank you, Mr. Lehoux.

    Mr. Drouin, you have five minutes.

    Thank you very much, Mr. Chair.

    I want to say how surprised I am that the Conservatives are trying to push CUSMA through even faster, especially since witnesses came to tell us last week that they were opposed to it, particularly for reasons related to the dairy year. I see that news travels fast. I know that my colleagues on the other side would not agree with this approach. In their defence, they are not in the House.

    I'd like to ask a question about risk management programs. The federal government and the provinces fund these programs on a 60-40 ratio. If the federal government wanted to increase its funding for all risk management programs while maintaining that ratio, the provinces would have to follow suit. Is that the case?

     Regardless of what is going on right now, is that the way negotiations are done with the provinces?

    This 60-40 ratio has been fairly stable over the last few years, and we see no reason to change it. It could always be discussed among ministers, but it is a framework that has been in place for a long time.

    Many farmers, especially those in the grain sector, are finding that there are no permanent programs in the U.S. and that producers are receiving billions of dollars in compensation. Of course, they come to us and ask us what is available to them on our side. The AgriStability program is one of the programs that has been mentioned. To date, what possible solutions have you heard about?

    I know that some advocate the direct payment approach, while others advocate the program approach. I would like to know if you have heard of any other possibilities. If you have, can you tell us about them?

    I will just say that this is one of the topics we are working on with our provincial and territorial colleagues. We don't have a solution to highlight at this time.

    Thank you very much.

    Given the range of programs, do all the provinces have to agree to make a change to a program, especially when it comes to its funding? Do all provinces and territories have to say yes?

    What happens when one province says no?

    There is a formal agreement between the partners. My colleague will give you more details on that.

    As mentioned, all ministers sign an agreement. Usually it takes two-thirds of the provinces representing at least 50% of the market to have an agreement. Of course, since this has an impact on all the provinces, the ideal is to have everyone in agreement.

    Okay.

    In the way the programs are applied, there is a question of money, and perhaps the criteria need to be redefined. However, is focus also being put on how quickly certain situations can be responded to so that programs can be applied more quickly?

    There are provisions in the programs. With the AgriStability program, for example, there is a targeted advance and interim payments. The government or the producer can apply to receive a payment that reflects the advance payment.

    The AgriInvest program allows farmers to withdraw the money at their discretion.

    Measures have already been put in place to ensure that producers can access a certain amount in the immediate future.

    If I remember correctly, three or four years ago, the committee had difficulty knowing how the provinces' share was being spent.

    Is this still the case or will the provinces submit a report to the federal government? We are also accountable to the taxpayers. Are reports submitted on how programs are triggered?

    As I said, there is a five-year program framework. We completed the last one almost two years ago. So we have all these figures on shared programs. That said, in terms of the programs that are ongoing, we're still waiting for the data.

    Thank you, Mr. Samson and Mr. Drouin.

    That concludes this round of questions.

    I would like to thank Mr. Del Bianco and Mr. Samson for their time. It will certainly help us in the study that will follow with our partners. I would like to thank them for taking the time to come and testify.

    Have a good day.

    The meeting is adjourned.