Thank you.
Thank you for holding this hearing and for inviting us to appear before you this afternoon.
My name is Brad Wildeman. I am the president of Pound-Maker Agventures in Lanigan, Saskatchewan, home of the Grey Cup champions. I'm sorry, I digressed.
We feed cattle and have also operated an ethanol plant since 1991.
I have served on the board of the Canadian Cattlemen's Association since 1999, and I have been the vice-president since 2006.
There truly is a crisis occurring at this moment in the livestock industry. It's both an income crisis and an input cost crisis. Both pressures are occurring at the same time.
There are many factors creating this situation, and thus there needs to be a combination of actions forming a solution. I would also add that I sense a crisis of confidence in this industry. Because there are so many challenges all heaped on us at once, some people doubt that it will ever get better, and this makes them make some poor decisions out of despair.
I strongly believe that things can and will get better, but this will only happen if industry and government work together to address the underlying problems. To this end, we have provided you with two documents produced by the Canadian Cattlemen's Association. The first of these documents, with the title, “CCA Recommendations to Address Current Challenges for the Canadian Beef Cattle Industry”, outlines the problems and identifies several options that could address the issues facing the industry. Before I begin to outline our recommendations, I must stress that we are an industry that relies on our ability to export. With that clearly at the top of our minds, our recommendations are formulated with a view to surviving the existing crisis but without unduly exposing ourselves to countervail risks in the future.
Keeping that in mind, our recommendations are as follows.
First, a monetary policy that returns the Canadian dollar to a more familiar rate of exchange would immediately improve producers' income levels.
Second, addressing uncompetitive regulatory costs facing the value-added segment of the industry would improve income levels for producers, such as ensuring that the cost of the enhanced feed ban policy are addressed and, where necessary, are offset to ensure a level playing field with the U.S. industry at suspending user and meat inspection costs.
Third, it's a simple fact that when grain goes up, cattle prices go down. Cattle producers are prepared to live with this when grain prices are the result of normal market forces. However, government interventions and biofuel policies have artificially distorted grain markets and driven down cattle prices in the past two years.
We have several recommendations that are outlined in our “Challenges” paper that you have before you. I won't read them, but they are aimed at improving feed grain yields and availability.
Fourth, establishing a new dedicated trade directorate that could pull together resources from CFIA, Ag Canada, and International Trade Canada to focus maximum resources on market access agreements for Canadian cattle, beef, and beef products would enable processors to export more parts of the animal and therefore improve income levels for producers.
Fifth, the availability of labour continues to be a serious and worsening problem throughout western Canada.
Sixth, several changes to the CAIS are required to ensure national uniformity and greater responsiveness to the rapidly changing events, including those I have just described.
At this point, I'll focus my comments on the second document before you, the one entitled “CCA Recommendations on Business Risk Management Options”.
First, we must address the issue of producers' declining reference margins. If this is not addressed, the new AgriStability program will not work for Canadian producers. We are prepared to work with officials to achieve this outcome.
Next, we should eliminate the viability test, which requires that producers have positive margins in two of the three years used to calculate their reference margin. With the economic situation that has affected producers over the last few years, many producers who would have viable operations under normal market circumstances have now been removed from the program.
Allow producers who might have opted out of CAIS to participate in a program at this time when they need it most if they have paid their fees and a nominal penalty.
Allow producers across Canada the option of using the better of either the Olympic average or the average of the last three years to calculate their reference margins. Currently, Alberta is already offering their producers this option.
Allow custom feeding to be included as a production indicator on the structural change calculator used to predict CAIS payments and/or reference margins.
The next change is the AgriInvest Allowable Net Sales, ANS, calculation to include 90% of the custom feeding income and custom feeding expense amounts reported on a producer’s tax return, instead of 50%, as currently proposed.
The next one is to allow producers the option of calculating their annual net sales on an accrual or cash basis regardless of the method they use for income tax.
Finally, we ask that you remove the cap on annual contribution limits of $22,500 per year or a maximum contribution level of $375,000.
These are several things that need to be done to truly help cattle producers be competitive and manage their business risk in the long term.
Let's get back to the short term. Cattle producers need the option of getting an advance payment on their future incomes to avoid panic selling at low prices. Government has already agreed in principle that advance payments are a necessary tool for cattle producers, but as I have discussed, the current mechanisms are preventing this short-term tool from working. Therefore, we would propose a special advance payment be offered to cattle producers. Our recommendation is up to $100 per cow and up to $150 for each feeder animal based on the 2006 year-end inventories.
I want to be clear that we're not asking for a handout. This advance would simply allow producers timely access to dollars that they will eventually receive anyway, either through CAIS or from selling their animals. The option to access their cash without having to liquidate cattle at the market lows will go a long way to addressing this crisis of confidence while we continue to work on addressing the underlying problems.
With that, I'll conclude my initial comments and will be pleased to answer your questions.
Thank you.