Good afternoon, everyone.
I call this meeting to order.
Welcome to meeting number nine of the House of Commons Standing Committee on Agriculture and Agri-Food. Pursuant to the orders of reference of April 11 and April 29, 2020, the committee is meeting for the sole purpose of receiving evidence concerning matters related to the government's response to the COVID-19 pandemic. The order of reference of April 11 also stipulates that only motions requesting scheduling specific witnesses can be considered by the committee and that such motions shall be decided by recorded vote.
As you know, today's meeting is taking place by video conference and the proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than all the committee. To facilitate the work of our interpreters and ensure an orderly meeting, I would like to outline a few rules to follow.
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I also want to remind you that all members and witnesses should address their comments through the chair. Members who want to seek the floor when it's not their turn to ask questions should turn on their microphones and raise a point of order. If a member wishes to respond to a point of order raised by another member, they must use the “Raise Hand” feature. By doing so, they'll let the chair know that they wish to speak.
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Speak slowly and clearly and make sure that your microphone is off when you aren't speaking. As you know, we strongly encourage you to use a headset. If your headset has a hanging microphone, make sure that the microphone doesn't rub against your shirt when you're speaking.
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Finally, just as we usually do in a regular committee meeting, we will suspend between panels or sections of the agenda.
With that, I will introduce the guest for the first hour, the Minister of Agriculture, Marie-Claude Bibeau.
Welcome, Minister Bibeau.
We're proud to have you here. Your schedule is certainly full at this seeding time and given everything else. Thank you for being here today.
You have 10 to 12 minutes to give your presentation. The floor is yours.
I appreciate the opportunity to join you today to discuss our government's ongoing response to the COVID-19 pandemic as it impacts our agriculture and agri-food sectors.
The COVID-19 crisis has Canadians realizing how important it is to have the wide range of food that our farmers, ranchers, processors and agribusinesses provide. They prove their resilience, innovation and adaptability in the face of these extraordinary circumstances. However, we know there are big challenges and we are taking action.
As you know, last Tuesday the announced a series of measures to help Canadian farmers and food processors continue their vital work. This amounted to over $252 million, as well as $200 million in added buying capacity for the Canadian Dairy Commission. We also announced important program changes, such as increasing the AgriStability advance payments to 75%, which the Government of Alberta estimated would represent a payment of $20 per head for pork producers.
The financial measures announced last week build upon a number of other measures we have taken to support our farmers, ranchers, food processors and the entire value chain. We've also put in place measures to help safely welcome temporary foreign workers, up to $50 million, and $20 million towards the Canadian Food Inspection Agency. We deferred $173 million in advance payments program loans for cattle, grains and flowers, and added $5 billion in lending capacity to Farm Credit Canada, which has already resulted in over $4 billion in deferred loans to thousands of producers.
Of course, in Canada, we already have all the risk management programs. Every year, these programs deliver about $1.6 billion to help producers who are facing financial pressures, as is the case right now. That number is expected to be even greater this year.
As you know, these programs are cost-shared with the provinces and territories. We know that the risk management programs need improvement. I've been actively working on the programs with my provincial and territorial counterparts. However, the programs are already available and must be used on a priority basis.
We'll keep improving our programs or creating new ones, depending on the specific needs of each sector of the industry, the gaps and the extra needs caused by COVID-19.
I'd like to now clarify some of the measures that we've taken so far.
To encourage producers to enroll in AgriStability, we've extended the application deadline to July 3. Where the provinces have enacted the changes, producers can now access 75% of their expected benefit, up from 50%.
To help them, we've set up an online calculator for simulation purposes. It's not necessary to have the final financial results for 2019, since a simple estimate is enough to obtain the advance payment.
There's also the AgriInvest program. This program is a savings account to manage decreased revenues. Producers can obtain an annual $10,000 subsidy if they also contribute $10,000 to their AgriInvest account.
Currently, the AgriInvest accounts of Canadian producers contain approximately $2.3 billion in accumulated funds.
The also announced two new federal investments under the AgriRecovery program. First, up to $50 million will serve as a set-aside program to help cattle producers cover the extra costs of keeping animals on the farms while they wait longer to be processed.
I was very happy to see the Province of Alberta announce $17 million towards our federal cattle set-aside initiative, joining their 40% contribution to this cost-shared program, and another $50 million to help pork producers cover costs of managing their surplus animals due to the temporary closure of food processing plants.
These changes to the AgriRecovery program represent real leadership from the federal government on our business risk management programs. This has been a very urgent request from industry. We have listened and delivered on significant changes on how the AgriRecovery framework operates.
Recognizing this unprecedented crisis, the federal government will make available its 60% contribution in all provinces or territories, whether they contribute their share or not. Also on AgriRecovery, we are boosting the coverage by the federal government of eligible expenses from 70% to 90%.
On AgriInsurance, we are asking the provinces and territories to include labour shortages as eligible risks under the program. This would help to ensure income lost by producers because of an insufficient workforce.
These measures add to the significant work we have been doing to address labour shortages. For example, through the incredibly hard work of the government, in collaboration with leading industry groups, such as F.A.R.M.S. and FERME, we were able to welcome over 11,200 workers in April. That is 86% of the number of workers we were expecting in April 2019.
Also, last week the announced $3 billion for wage top-ups for low-income workers in essential services, such as agriculture. While Quebec has already announced its wage top-up plan, we look forward to seeing plans from other provinces soon.
Our food processors are vital to our food supply and our economy. Across Canada, food processing plants have slowed down production or temporarily closed as a result of the impact of COVID-19.
We understand the health concerns of workers in these plants. Workers need to feel safe and be safe when they go to work. That's why we are also investing $77.5 million in support of food processing, to implement measures to protect the safety of their workers while maintaining production.
This funding will ensure we can expand our capacity for Canadian-made products, by adapting and reopening plants that have closed or are operating under capacity. This funding is additional to the $62.5 million we announced to help fish and seafood processors.
We are also working to ensure the safety of workers by removing all tariffs on the importation of personal protective equipment.
We're also helping to address the surplus of food across Canada. Farmers, such as potato producers, are facing higher surpluses as a result of the closure of restaurants and establishments in the hospitality industry. We'll invest $50 million in a surplus food purchase fund to distribute the food to organizations such as food banks, which serve the most vulnerable in our communities and in remote and northern regions.
To help manage the surplus of dairy products, we're proposing to increase the borrowing capacity of the Canadian Dairy Commission, or CDC, from $200 million to $500 million. This additional support will enable the CDC to increase its supplies of dairy products, such as butter and cheese. This measure directly addresses the request of the dairy industry.
Our government will work with you and all our parliamentary colleagues to implement the legislative changes required for this vital measure.
In conclusion, Mr. Chair, I want to thank all the committee members for their dedication to the sector. The women and men who work on farms, in processing plants and throughout the food production chain are providing an essential service during this extremely stressful time. We're grateful to them.
I'm determined to ensure that the sector is well-positioned to continue to serve Canadians and to keep feeding the world. As we begin to restart the economy, we'll build on these measures to help Canada's agriculture and food industry lead our country on the road to recovery and success.
As the said, we've been and we'll continue to be there for our agriculture and agrifood industry every step of the way.
Good afternoon, Mr. Chair. Thank you for the invitation to appear before the committee and for seeing Canadian pork producers as an important part of Canada's economy.
I'm Rick Bergmann, Canadian Pork Council chair and a producer from Manitoba. I will be sharing my time today with René Roy. He's a Canadian Pork Council vice-chair and a producer from Quebec.
I'm quite honoured to be part of the pork sector. I see my farm contributing to the rural community and the wider Canadian economy by providing food to Canadians and people around the world. With $4 billion in exports and a positive trade balance, Canada’s pork sector could play a key role in restarting the economy.
We have a great story to tell, but instead, I am here today because producers are not confident of the future they have in helping with the rebuild after COVID-19.
As René and I go through this presentation, remember this quote from William Jennings Bryan: “Burn down our cities and leave the farms, and your cities will spring up again, as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country.”
This gentleman lived about a hundred years ago, and it's unfortunate that his wise words have become forgotten in many circles.
The Canadian Pork Council represents 7,000 producers from coast to coast. Combined, producers bring a GDP value of $24 billion to our great country of Canada, and we are a major employer.
Pork production is a diversified agricultural sector. All of that diversity has not been enough, though, to protect pork producers from being pushed into a crisis by COVID-19. Really, because of the current government program, producers are at their wits' end in this time when we are seeking meaningful help, help that will make a difference.
First and foremost, our current crisis is a cash crisis. That means farmers do not have the income they need to pay their bills, feed their animals and keep the lights on. We are trying to navigate market conditions, and they are incredibly volatile right now. The drop in our market price has been incredibly steep and the recovery is quite slow.
Our conservative estimates are that pork producers will lose, on average, about $30 a hog for every pig they sell in 2020. In some regions, that loss may be $50 an animal. This doesn't mean that pork producers will lose $30 on every animal they sell since the beginning of the crisis in April: It means that because of the damage done to the pork market, for every market hog that is sold in 2020 from January to December, farmers have lost or will lose about $30 a hog on average.
These losses are not sustainable at all. They will force farmers out of business. Unfortunately, the hardest hit will be the mid-sized family farm, the young farmer and those farms that have been struggling through the years of depressed prices as a result of the global trade war between China and the United States.
The U.S. government has recognized the hurt their producers have experienced over the past few years due to the trade war and, most recently, the impact of COVID-19. Canadian pork producers, forced to compete against this support, continue to remain at a disadvantage.
As farmers, to us the answer is extremely clear. Over 90 countries around the world knock on our door for valued Canadian pork, so it seems as though our government should do the same. Our food security is too important to leave in the hands of the rest of the world, and we have a good story to tell here. We've just got to get back at it.
I want to take a moment to clarify where COVID-19 has hit the farmers so hard and why we need your help.
Pork production in Canada is a just-in-time business. There are several business models, but for the most part, barns are built so that the sows are housed in a farrowing barn, where the piglets are born. When the piglets are weaned, they are moved to a different barn, and a new group of sows goes into that farrowing area after it is washed and disinfected.
The piglets are then moved through different facilities as they continue to grow. In some operations they will be sold at 15 pounds or at 50 pounds, as in my operation. These feeder pigs are then transferred to another facility where they're grown into 260- or 270-pound market animals, and away they go to the processing plants.
However, regardless of where you farm or what your business model is, these operations do not have the extra capacity to hold the animals. Barns are designed to refill as soon as a group of pigs is sold. COVID-19-related reductions in slaughter plants and slaughter plant capacity have meant that market-ready hogs aren't able to move out of the barn. This, in turn, means that the next batch of pigs cannot move forward, so you can understand the just-in-time philosophy that I just mentioned.
The backlog in the U.S. has been particularly bad. There they have seen processing plants close for extended periods. Given how connected our two industries are, the impact on U.S. prices has hit Canada hard for producers who export weaned pigs into the U.S. My farm, for example, has needed to give piglets away because we were not able to sell them and we needed to make room. It's a considerably important part of our marketplace. In 2019, the export of animals was valued at $250 million.
I'd like to invite my colleague René to carry on with the story.
Thank you, Mr. Bergmann.
Due to the temporary shutdown of processing plants in Quebec and Ontario, more than 100,000 pigs that should have been processed are instead stuck on farms. It is costing farmers money to feed those pigs. Their welfare is at risk and, adding insult to injury, they are losing value as they get further from the target market weight requirements.
This backlog of hogs and the COVID-19 market disruptions are being felt on two major fronts.
First, it has driven prices down and pushed many farmers into a cash crisis. While the price has recently strengthened, it is still seasonally low and still well below the cost of production. Farmers are unable to sell their hogs and must continue to feed them to avoid euthanizing them. For some, such as my colleague Mr. Bergmann, who specializes in early weaned piglets, it is hard to find a market.
Second, it has forced some producers to take more drastic actions as their losses become even more unsustainable. We know that farmers across the country have been forced to dispose of animals because they have not found a market for them. For a farmer, that means a lost income and added costs. For Canadian families, it means that good food has gone to waste.
Other farmers have taken steps to reduce their production. For some this means not breeding sows and for others it means aborting sows that were close to farrowing. Both situations result in reduced incomes and put an increased psychological strain on farmers, a situation made even worse because food is being taken out of the supply chain.
Should it continue, Canada will see reduced exports and a greater reliance on imports, and in extreme cases the reduction in production will contribute to a food shortage. Producers have been calling for emergency actions to help us get through the crisis. Based on losses of $30 to $50 per pig, we've asked the government for crisis payments of $20 per hog.
We have said from the beginning that it's up to the government to figure out the most efficient and effective means to get the money to pork producers as quickly as possible. Pork producers have long called for changes to the programs. We also strongly urge the government to make the changes necessary so that payments, including interim payments, can flow more quickly. Without these changes, the program will offer little support.
We heard that the business risk management suite offers farmers $1.6 billion in support. However, our focus is on pork production, not on all agriculture. Based on decades of experience with farm programs, we know this level of support is not available to pork producers—
I will be fairly brief, because I want to take a few minutes at the end of my presentation to explain to the members of the Standing Committee on Agriculture and Agri-Food how the AgriStability program works. A lot was said about the program during the minister's presentation. There are a number of different opinions.
First of all, I feel there is a general misunderstanding of how the program works. We are going to try to do an exercise with you to explain how it works.
In Canada, agriculture accounts for $112 billion in revenue, $60 billion in exports and $68 billion in farm gate revenue. It is one of the biggest economic sectors in our regions.
This sector has been hit by the COVID-19 crisis. Meat packing plants have been shut down, the consequences of which have just been explained to us, and there is a labour shortage. A number of things have been done to address this. Markets have been lost and disrupted. In addition, producers have had to dispose of products, resulting in net losses for them.
We are starting to be able to quantify the losses. In poultry alone, nationally, the losses are $115 million, and in beef, according to the Canadian Cattlemen's Association, it is $500 million. Quebec grain producers have estimated losses in value, taking into account the advances on the American market, to the tune of $86 million in Canada for two grains alone, corn and soy.
The processing sector, especially meat packing plants, has sustained heavy losses. The sector has also had to put in place the safety measures required to protect employees. In Quebec alone, losses amount to $100 million or more.
The assistance measures announced last week fall far short of our expectations. However, the program to support temporary foreign workers when they arrive is a substantial effort that I would like to highlight.
As for the other programs, the aid is insufficient compared to the $19 billion provided by the United States to address the COVID-19 crisis. That is 10 to 12 times more than was announced last week here in Canada.
The future remains very uncertain and market fluctuations are highly unpredictable. The AgriStability program, which should be helping us cope with the situation, is not working. That is why only 31% of producers in Canada are participating in it. Producers are not fools. If the program worked, they would enrol. The reason producers are not enrolling is not because they do not understand it, but because it is not working.
I find it hard to hear the minister tell us that we should use the $2.2 billion in the AgriInvest program that we have in our accounts. That money is not necessarily in the accounts of the producers who are struggling right now. Quebec pork producers only have $40 million in their AgriInvest accounts, with a production value of $1.4 billion. We are being asked to use that $2.2 billion, but it is not available directly. It is like asking people to make sure they empty their bank accounts before applying for employment insurance. It is like telling the students who have just been offered $9.5 billion that only those with nothing in their accounts are entitled to it. That argument does not hold water.
With regard to the $1.6 billion theoretically available to producers that Ms. Bibeau is urging us to use, let me point out that last year more than $1.1 billion of that $1.6 billion was paid out in crop insurance in Canada. So it has nothing to do with AgriInvest or AgriStability.
So, naturally, we are asking for emergency funding to meet the current needs of businesses in the meat sector, for example, which are experiencing particular difficulties. This is mainly to improve risk management programs. The repercussions of the crisis are more than just immediate. They will be felt this year, but undoubtedly next year as well. If our risk management programs in Canada are inadequate, producers are going to be in trouble now and even more so in the coming years.
Now, I would like us to look at the AgriStability table. I don't know if you have had a chance to look at it, but I am going to do a little exercise with you. Ms. Bouffard will be able to help me if I need it. As an example, we took an average farm in Quebec with $250,000 in annual revenue and $100,000 per year in historical allowable expenses. Under the current program, allowable expenses are capped and family labour is not an allowable expense. Therefore, small operations in particular are penalized.
This operation has a historical reference margin of $150,000, that is, $250,000 less allowable expenses. This year, due to COVID-19, it will have a reference margin of $70,000. So, this operation lost $80,000 this year on a gross income of $250,000. That is huge. This year, because this operation has a reference margin of $70,000 and compensation starts at 70% of $100,000, or $70,000, AgriStability will pay it nothing at all. So, even if the operation wanted access to 75% of what the AgriStability program would pay it, it would not receive a penny. Yet this operation lost $80,000 compared to a reference margin of $150,000. That's more than half.
We have proposed enhancements to some of the AgriStability program criteria. For example, the historical margin should no longer be capped. In the second column, the historical margin is not capped at $100,000; it is $150,000. If we do the calculation, 70% of $150,000 is $105,000. That is $35,000 more than the $70,000 reference margin. If we multiply it by 70%, this operation would get $24,500. If we increase reference margin coverage to 85%, the operation would get $40,250.
The third column represents how the program was before the 2013 budget cuts. In 2013, when the program was said to be working, an operation whose margin declined by $80,000 would have been compensated with an amount equivalent to 50% of its reference margin. As Mr. Blois was saying earlier, to get 50% loss coverage, we would have to go back to the program as it was before 2013.
We may send you a more detailed table, but what we are trying to tell you is that, no matter what party you represent, AgriStability is not working. That is why producers are not participating. AgriStability works even less for small farming operations because it does not cover participant opt-out and family wages as allowable expenses.
So, I ask you all to work in a non-partisan manner to improve this program. If you really want to support Canadian agriculture, it is essential that you do.
Thank you very much, and I apologize for the problems. Maybe I'll just take over where Michel left off and talk a little bit about the challenges of COVID-19 that have hit the beef industry.
There has been a dramatic reduction in beef processing capacity in both Canada and the U.S., and this has caused cattle to back up along the entire beef chain. The current backlog is around 130,000 animals and it's growing by 6,000 to 9,000 head per day. The additional costs of feeding these backed-up cattle is around $3.50 to $4.00 per head per day. Right now this is costing cattle feeders in Canada around half a million dollars.
Fed cattle prices have also collapsed, generating a severe cash flow issue and liquidity problems. Markets have been severely impacted by uncertainty, volatility and even panic selling. Current losses are up to $600 per head. An average feedlot with 15,000 head capacity is thus seeing additional feeding costs of some $50,000 per day and a loss of $7.5 million in revenue when the cattle are brought to market.
The priority issue for NCFA is to ensure that processing facilities get up and running as soon as possible, that they can move forward and that prices can stabilize, but there are many challenges to overcome before processing capacity can return to normal. Until such time, cattle feeders need the support of the government to remain viable.
We have been monitoring the supports for cattle producers in the U.S., and whatever happens south of the border has a competitive impact on the industry north of the border. The U.S. is providing direct payments to cattle producers of $5.1 billion U.S. An investment in the Canadian cattle industry of $600 million would be roughly equivalent to the U.S. investment.
We appreciate the open and transparent communication that's been happening between the government and the sector throughout the pandemic, and we share a common goal around the table of having a reliable and safe beef supply for Canadians and a competitive Canadian beef sector. We thank the government for the support announced last week. However, it falls significantly short of what is required, and we would like to respectfully outline some of the reasons why today.
The government noted in its announcement that the agriculture sector already has $1.6 billion available through current business risk management programs. The government has also noted that there's $2.3 billion sitting in the AgriInvest accounts of producers, but these funds are not always accessible to farmers, and this is especially so with Canada's cattle feeders. AgriInvest is a producer government savings account that helps farmers manage small income declines and makes investment to manage risk and improve market income. However, given the collapse in market prices for cattle, approximately 85% of all beef processing is currently at risk, so it's quite likely that beef producers have already drawn what they can from their AgriInvest accounts.
Of the $1.6 billion paid out in AgriStability, AgriInsurance and AgriInvest, $1 billion comes out in the form of insurance payments for producers for production failures, primarily for crops. Then of the remaining $600 million, about $300 million is allocated to AgriInvest, and matching programs, which I previously mentioned, can help only those who are able to put savings into their accounts. The remaining $300 million is largely used in AgriStability for direct payments to producers experiencing severe income decline. This is allocated to all agricultural producers.
The COVID pandemic is not a normal business occurrence and it cannot be addressed by the business risk management programs in the current format. The government announcement last week of $50 million for the fed cattle set-aside program is certainly appreciated, but the reality is that the current backup at the farm gate is 130,000 cattle, which are costing producers around $500,000 per day to maintain, and their value has fallen from $250 million to $165 million. The backup at the farm gate will continue to grow in the coming weeks, and the sector needs a more significant financial commitment.
The NCFA is also calling for a number of supports that were not part of the recent announcement and will help to provide cattle producers the support they drastically need. We're requesting changes to the current business risk management programming to benefit cattle ranchers and feeders.
Under AgriStability, we're asking for the $3-million cap to be removed. For an average feedlot, this cap already removes them from being able to access these dollars. We're also asking for other AgriStability changes, such as increasing the trigger from 75% to 85% for the remainder of CAP, the partnership agreement; invoking the late participation clause, to allow producers access to the needed support; and removing the reference margin limiting, for meaningful and longer-term support.
A serious issue for cattle feeders managing this pandemic is business liquidity. The spring is a very busy time of the year for farmers and the need to purchase inputs is acute. With significant losses due to falling market prices and with not being able to move their cattle, feeders need access to financing.
We've asked the government to issue a stay of defaults under the advance payments program used to finance the purchase of cattle. This would increase liquidity by extending the repayment further down the road. The interest-free portion of the program should also be increased, as this is particularly useful for younger cattle producers with less liquidity in their business operations.
We call for the government to increase federal financial backstops and loan guarantees to banks and financial institutions, allowing producers access to expanded operating credit limits and increased liquidity. We also request that the government ensure that chartered banks and financial institutions pass on the interest rate reductions. This is key to maintaining liquidity in the cattle industry.
We recognize that all sectors are calling upon the federal government for support through this pandemic, but besides health care, there can be no more critical sector than food, and we ask that additional federal supports be provided accordingly.
Thank you for your consideration.
Unfortunately, that's all the time we have.
I would like to thank the three panels again.
Thanks to the Pork Council, with Rick Bergmann and René Roy.
I'd also like to thank Marcel Groleau and Isabelle Bouffard, from the Union des producteurs agricoles.
Also, thanks to the National Cattle Feeder's Association, Janice Tranberg and Michel Daigle.
I apologize for the issues with the sound as we learn how to navigate these new technologies.
Thank you, all. You may now leave.
I will ask all the members to stay with us to settle one or two business issues.
We have just learned that the meeting next Tuesday will be cancelled. What I need to know from the committee is where you want to put that meeting with the same panel. In other words, our next meeting will be the following Friday, on the 22nd. Do you want to take the Tuesday meeting and move it later on, or do you want to continue...?
Don't forget that on Friday, we have the . On Tuesday, we have the horticulture sector and foreign workers. I need to get some direction as to how we want to proceed on Tuesday the 19th.
Mr. Perron, you have the floor.