Thank you very much, Mr. Chair.
Let me thank all of the committee members who are here today. I would just take a moment to compliment the committee. It has done a lot of hard work over the life of this Parliament, and I want to take an opportunity to thank you for that work. For all the producers who are watching, I'd like to thank you on their behalf as well, for all of the work that you've done.
I don't have to tell the folks at this committee that we are operating in what is a challenging and complex environment for producers and public policy-makers in respect of agriculture and agrifood. It is something I know each one of us, regardless of our political stripe, is dedicated to address and something for which we are dedicated to working toward resolution.
As the chairman mentioned, today we're going to talk a little bit about business risk management, the CAIS program, and I suspect perhaps some other things, as well. However, let me begin by just making an observation about something I know we all are aware of but that I think is worth making.
Business risk management payments by governments are at record levels today. The reality is that last year they came in around $4.9 billion. For the first six months of this year, they're at $3.4 billion. But that's a double-edged sword, so to speak. That sends two messages. On the one side, it sends the message that governments are in fact working to respond to the economic challenges that are faced by our producers, and that's a good thing. But there's another message in those numbers, and one that I think is just as important for us to address, and it is that the ability for our producers to earn a living from the marketplace is being impaired. Those payments are being made because they're having challenges in the marketplace in making sure they can earn their income that way.
I think—and I suspect I share this with the committee—that it's imperative, as government, that we address both of those important issues: making sure that we have effective business risk management programs, but also that we deal with the underlying and structural issues that need to be addressed in agriculture. That takes a multi-disciplined approach, one that really has to try to work to achieve three objectives, which I know I've outlined to this committee before, and which I, the department, and this committee are in fact working very diligently towards.
The first one is very straightforward, and that's to create an environment that allows producers to earn a living. The reality is that if somebody can't earn a living farming, they're not going to farm. If they're not farming, that's not just a problem for themselves and not just a problem for rural Canada, it's a problem for all Canadians. It's an important public policy issue that all of us need to address here in this place and right across the country.
As well, we need to ensure that we have policies that continue with the profitability of the agrifood sector and allow it to continue to make what is a significant contribution to the Canadian economy. Some 8% of our GDP comes from agriculture and agrifood. That's significant. It's a major contribution to the wealth of all Canadians, and we need to work hard to make sure that can continue.
And thirdly, we need to work hard to ensure that we can maintain the sustainability of that network of communities that exists primarily in rural Canada, that supports or agricultural industry, and for that matter, Mr. Chair, our other natural resource industries.
So as we undertake policies, I think it's important for us to keep in mind all of those things.
There are a number of things we need to deal with, Mr. Chair. One of them has to deal with the whole issue of wealth being generated by agriculture and agrifood, and making sure that wealth is distributed along the value chain. I know that's an issue this committee has grappled with. It's an issue that my parliamentary secretary, with his report, has worked on. It is something we dealt with as federal and provincial ministers at our last federal–provincial meeting, in Kananaskis. And at the next meeting we're going to be having in Saskatchewan later this month, we will deal with those issues through what is commonly called the transformative change agenda.
Secondly, Mr. Chair, it is important to deal with the issue of international trade. In my view, it is essential that we have a rules-based trading system, one that creates a level playing field for Canadian producers right across the board. That's why the negotiations that Canada is engaged in at the WTO are so critical for our agriculture industry, Mr. Chair, whether we're dealing with the elimination of export subsidies, the reduction of domestic supports by our trading partners, increased market access, or making sure Canadian producers continue to make choices about the domestic marketing machines and that we have the flexibility that allows them to make their choices, whether that means a supply-managed choice or something else.
It's also important, Mr. Chair, that we build on the traditional Canadian advantage, and that is that we are an innovative, creatively based industry, one that has consistently been one step ahead in the international marketplace. That's something Canadian agriculture is known for around the world, and that's why I believe the initiatives we've undertaken—and are in fact in the process of doing right now in terms of our science review—are critical. We need to be able to give our producers those kinds of tools.
The fourth item is the issue you've called me here for, Mr. Chair, and that's the issue of business risk management. Regardless of how successful we continue to be on those other issues, business risk management is going to be part of the agriculture industry. It's a different type of industry from what you may see in a traditionally based manufacturing or technologically based set of industries. It's cyclical in nature. That's its reality. There are challenges that are faced from time to time that create significant fluctuations in income. Having business risk management programs that deal with those is important, so there's no question that we need to continue to emphasize them.
There need to be a number of components to that program, and right now we do have a number. We have the CAIS program, Mr. Chair, which, in payments in its second year, has paid out $2.3 billion to date to producers across the country. In and by itself, it needs to have a complementary program, our production insurance program, which I think most producers right across Canada see as an effective program, one that is cost-shared by the provinces, the federal government, and by producers. Last year alone, governments paid something in the order of $600 million to support our production insurance.
We have our advance programs, Mr. Chair, in respect of ensuring that we can provide our producers with liquidity so that they can more appropriately choose to market their products. Following up on a budget commitment to expand that program, I announced new legislation so that it now will cover livestock and begin the process increase the eligible amounts that producers can in fact access.
Mr. Chair, there's also the issue of targeted programs. We've had to have targeted programs. For instance, in respect of BSE, we tried to deal with the disruption to the marketplace caused by a closed border. This past spring, Mr. Chair, we provided $408 million to grains and oilseeds producers across Canada, and I think that was an important investment that was undertaken. However, Mr. Chair, it's important to realize that it isn't simply one particular initiative, but a combination of initiatives that deal with the issues that our producers face.
Mr. Chair, specifically on the CAIS program, one of the things—and we've talked about it before here at this committee—is the importance to make sure that it is a dynamic program and not a static program, one that can respond to the issues and the needs of producers, and one that can respond to the issues that are brought up by producers. It's why I have three different structures, all made up of producers—whether it be the CAIS committee, or the APF review committee, or the national safety nets committee—providing ongoing input about how we can make the program as effective as we possibly can, and to suggest changes that should be made from time to time.
As you know, Mr. Chair, a number of those changes have already been put into place. We changed the cap, the total amount that can be paid under the program. We moved to covering negative margins under the program. We've included special advances that have been made under the program. At Kananaskis, ministers agreed in principle that they would eliminate the deposit requirement from being part of the program.
We also intend to introduce a targeted advance program so producers can receive money closer to the time when they're experiencing loss, and don't have to wait until the following year. We have also proposed changes in eligibility for negative margin cover for producers.
In addition to that, ministers asked officials to come together and work with the industry to look at some additional changes. One was how we value inventory. I know this committee has discussed that at great length, and it is an issue of extensive importance to our producers.
What is the linkage between CAIS and production insurance, and how should that be formulated? There's the whole issue of margin calculations and the best way to calculate margins.
This committee has also talked on a number of occasions about a suite of administrative changes to work toward simplifying the process by which producers apply for the program.
So that's a bit of an update, Mr. Chair. I'll be happy to entertain questions on business risk management, or some of those broader issues we talked about.