[Recorded by Electronic Apparatus]
Thursday, June 13, 1996
.0907 
[English]
The Chairman: Welcome, everyone. Our witnesses this morning are from the Ontario Fruit and Vegetable Growers' Association. They have a presentation to make to us. The committee will be going into an in camera meeting in, I hope, no more than one hour from now. I believe that was the understanding, and I think that will give us sufficient time.
John Jaques is the president of the Ontario Fruit and Vegetable Growers' Association, and Michael Mazur is the executive secretary.
Welcome, gentlemen. Over to you folks.
Mr. John Jaques (President, Ontario Fruit and Vegetable Growers' Association): Thanks, Lyle.
We welcome the opportunity to come and give you some information on the self-directed risk management proposal. I think most people have a basic understanding of the concept, but there have been some misunderstandings about how the program would work. We will not go into too much depth on that this morning, but at least we'll give you the basics of how it will work.
The Chairman: I think you're right, John. We're not as knowledgeable about it as we could be.
Mr. Jaques: I'll give you a little background on it. In 1992 the National Horticultural Committee was asked to evaluate what at that time were called the ``second line of defence'' mechanisms available to the Canadian horticultural industry. At that time all we really had was NISA and the current crop insurance program. However, the current crop insurance program covered very little of horticulture.
The industry, through the National Horticultural Committee, repeatedly told government officials that the current crop insurance plans for the majority of horticultural crops were poorly designed and were in most instances non-existent. There is a schedule on the back of our presentation to show the number of crops that have no crop insurance programs whatsoever - and that's just in Ontario.
.0910
The National Horticultural Committee commissioned a review of crop insurance plans and requested that other alternatives be looked at. In 1994 the review was tabled to the NHC listing a number of alternatives to the status quo. These included self-directed risk management, basic crop insurance, multiple-crop averaging option, and single-peril crop insurance. After discussion and evaluation by members of the industry, the most viable option accepted by the NHC and industry groups was SDRM.
Subsequent to this report, an SDRM working committee was established to develop a program document that would then form the basis of preparing a program and its operation. This report was released at the annual meeting of the Canadian Horticultural Council in March 1995.
It was the desire of the industry to move this concept forward, but it was stalled with the announcement of a national crop insurance review. In our view, this was another delay in addressing the shortcomings of the current crop insurance plans for horticulture.
At the time of the writing of this document, our association was informed of the Ontario producer representative's resignation on the national review committee. The resignation letter cited the frustration of dealing with the thinking that exists within the process relative to new ideas and/or concepts.
I guess I can relate to his frustrations. I sat in on one of the conference calls of the National Crop Insurance Review Committee. The producer reps on that committee were very frustrated. The staff basically ran the show, and it was just a list of why they couldn't change anything; the status quo was the only way to go. They were not prepared to make changes to the current crop insurance system. I guess I would just use the comparison that we were the round block and we just didn't fit into the square hole. They weren't prepared to change that hole.
Marshall Schuyler, the representative from Ontario, was a very capable person. He did the best job he could, but he said he just got frustrated dealing with the staff. They were not prepared to make the changes that were needed for horticulture.
The Ontario Fruit and Vegetable Growers' Association is currently in discussions with OMAFRA and Ag Canada, designing a pilot project under the SDRM concept within Ontario and for a selected number of horticultural crops. We are not looking at crops under the jurisdiction of the vegetable board. In terms of processing vegetables they are fairly happy with their crop insurance programs. We're not trying to disrupt their crop insurance programs. We want to be quite clear on that. We are looking at these mainly for fresh horticulture.
The overall concept is a program similar to NISA. The current government spends approximately 5.5% on crop insurance plans. If we are to equate this to an SDRM-type concept, the shared cost arrangement under this proposal would be 3% federal government, 3% provincial government and 6% producer. The concept is being proposed to address the concerns of producers who grow crops with unique characteristics, and cropping practices. It will address issues such as commodities' lack of yield, market and price and/or acreage information. It will also address the issue of crops with no crop insurance plans. It will address administration costs and details under both the current and possible future budget restraints being faced by all levels of government.
Some of the administration costs for the minor crops are just horrendous. We cannot get the numbers from the Ontario crop insurance people for the minor crops. They tell us they're not available. We did get some numbers out of New Brunswick on potatoes: $1,200 to $1,500 administration costs per grower. It's just absolutely ridiculous that this amount of money is being spent on administration.
With this type of program there would be very minimal administration. There have been discussions with the NISA administration, and although it isn't perfect we think that would be a very economical way to administer the program.
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We did meet with our provincial minister yesterday. He has said that he does support the SDRM pilot project and he will be bringing that forward at the ministers' meeting in July.
One of the other buzzword expressions we keep hearing is ``moral hazard''. With the SDRM program the moral hazard risk is next to nothing, because it would be your own account. If you're abusing the system it's going to come out of your own account, not from your fellow growers' accounts.
There is a list of the crops that are not covered by crop insurance at the present time. We're not asking for a special funding for horticulture, we're asking for equitable funding compared to our counterparts in grains and tobacco and processing vegetables, which have crop insurance programs. Unfortunately, with the way our commodities are produced, we just don't have the numbers. We don't have the track record of yield and data to make a current crop insurance work for our commodities.
Those are crops that do have crop insurance programs. To put that in perspective, though, the first one on the list is fairly close to my heart; it's asparagus. In Ontario, even though there is a crop insurance program, last year there was one grower enrolled. That is not a pool. The current crop insurance program is supposed to be a pool, and when you only have one grower enrolled it certainly doesn't have a pooling effect. I think it's an example of how poorly the current crop insurances are subscribed to. It's simply a business decision. The current crop insurance programs do not offer adequate coverage to have people buy them.
The Chairman: John, to help us completely understand it or understand it more fully, maybe you could give us an example of one of the crops. It doesn't matter what it is, just one of these crops where there is not a program, whether it's subscribed to or not at the present time. How would it work? If you were a grower of cantaloupe, which there is not a program for, how would the self-directed risk management program as you lay it out work for the producer?
Mr. Jaques: Quite simply, if I produced $100,000 worth of cantaloupe when I filed my SDRM along with my NISA, if it were a 3%, 3%, and 6% program under the SDRM, as we propose, the producer would put $6,000 into an SDRM account.
The Chairman: That's 6% of the eligible sales.
Mr. Jaques: Yes. The federal government would put in 3% and the provincial government would put in 3%, and that would go into his SDRM account. That would carry on from year to year. If the person's eligible net sales dropped below the 5-year average, then he would be able to draw some out of this account to subsidize his loss of sales.
The Chairman: So it would basically work the same way as NISA, only it would be in place of crop insurance, which is not presently available or workable or feasible, or whatever words people want to use, for what we'll call speciality crops or minor crops.
Mr. Jaques: That's correct.
The Chairman: With that same $100,000 worth of sales, would they be eligible for contributions through a whole farm NISA program if the producer wasn't enrolled in the whole farm NISA program?
Mr. Jaques: Yes, they would.
The Chairman: So the producer could contribute 6% towards the SDRM program for the eligible sales of cantaloupe and could also contribute the producer's portion into the NISA program for those eligible sales.
Mr. Jaques: That's correct.
.0920
The Chairman: I'm not saying there's a double situation here, because I know what you're saying. If there were a crop insurance program for corn or wheat or tomatoes or whatever, there would be a crop insurance program available for, can I say, a support safety net for the producer, as there would be the NISA program available for those same acres. So there would be two things available there for support.
Mr. Jaques: That's correct. What we're saying is that the existing crop insurance program just plainly isn't working. We think the NISA-type program is probably the best alternative for this type of crop. With the vegetable board, to use them as a comparison, they do have good working crop insurance programs. They have hard numbers; everything goes through the vegetable board and everything goes to the processor. All of the numbers are there and all the records are there.
With the fresh market commodities, you might be selling to one buyer today and another buyer tomorrow; you might be on the food terminal the next day and you might be changing crops from one year to another. We have one fellow in our organization who has 35 different crops.
The Chairman: I'm asking a lot of questions, but hopefully to clarify. The SDRM program would not be specific to the cantaloupe crop. If the cantaloupe crop was one of 35 crops that I happen to grow as a grower, which might be 3 acres of cantaloupe and 2 acres of something else, and I had a whole basket of non-insurable crops - if I could use that term - then it would be the gross sales of all of those that I would contribute on to the SDRM program.
Mr. Jaques: Yes, it's a whole farm within horticulture -
The Chairman: Yes.
Mr. Jaques: So if I had a complete failure of my cantaloupe crop but I had a reasonable asparagus crop and a reasonable broccoli crop, my eligible net sales might be the average they had been over the past five years; therefore there wouldn't be any pay-out. It's basically whole farm net income insurance. It's not -
The Chairman: On the basket of...we'll call them specialty, minor - they're not minor to those that are growing it, I don't mean minor in that way - acreage crops.
Marlene.
Mrs. Cowling (Dauphin - Swan River): I have a question and it relates directly to what Lyle was talking about. With respect to NISA, there was a third line of defence that never did trigger in. I wonder if in fact you've worked that in, meaning that within the third line of defence bearing a disaster which may well be a climatic disaster, have you thought about that and how that may be figured into your calculations? For instance, suppose there were a hailstorm or something that was not controllable by the grower.
Mr. Jaques: Right now there's nothing available for those commodities, and I can speak personally. In the last month in Ontario, on May 13, there was a frost that wiped out probably 25% to 30% of our asparagus crop. At this point I guess we'll have to wait until next year, because we have no third line of defence.
There is no crop insurance...well, there is a crop insurance that one grower enrols in. It is just not designed well enough that anybody will buy it. At this time, we're just plain out of luck. If we had an SDRM program... The first couple of years you're not going to have a lot of money in that SDRM account. If you have a disaster the first year, you're not going to get a lot, but you're going to get something. The idea is that you will build up that account over the first few years, and then if you have a disaster you can draw from that account to help offset your problems. Does that answer the question?
Mrs. Cowling: Yes, I believe it does. That's the third line of defence that you're talking about.
Mr. Jaques: Right now, for most of these commodities, if there is a complete wipe-out of your crop, a hailstorm comes along and takes your broccoli crop out completely, there's nothing. You're plain out of luck.
The Chairman: I will go to Mr. Easter, Mr. Landry and Mr. Hoeppner.
Mr. Easter (Malpeque): Mr. Chairman, I think you've covered most of what I wanted to cover.
Have you done any estimations in terms of what the cost of this might be to the federal government? If the committee were to look favourably on it, what are we looking at in terms of budgetary costs?
.0925
Mr. Jaques: Some cost estimates have been done. I'm not sure if we have any of those with us today, but we are working with a committee with the Ontario OMAFRA and also with Agriculture and Agri-Food Canada. They are crunching the numbers. I believe the estimate was in the range of $4 million to $5 million a year.
Mr. Easter: Secondly, are there any discussions with producers in other provinces, or is it mainly Ontario at this stage? It will apply to some crops in some other provinces.
Mr. Jaques: We passed a resolution at the Canadian Horticultural Council, and that's nationwide: the B.C. people, Prince Edward Island, all across Canada. Some of the processing vegetable people who have the good crop insurance plans are not supportive of it because they do have a good program at present. But in general across Canada fresh fruit and vegetable producers are strongly supportive of the SDRM proposal.
The Chairman: Mr. Landry.
[Translation]
Mr. Landry (Lotbinière): You said in your presentation, Mr. Jaques, that there was a producer who was part of this plan. I would like you to explain why the others are not.
[English]
Mr. Jaques: It's basically a business decision. I think it's the same as when we buy any type of insurance. Producers don't feel it's worth buying. There's very low coverage and it's at a very high cost. Producers will look at the expense versus the possible benefit. If there's very little chance of a possible benefit and a very high expense, you just don't buy it.
That's been the tradition with most of the fresh horticultural plans, at least within Ontario. There's very low participation. In a lot of cases fewer than ten growers are enrolled in plans. It's very expensive to maintain a crop insurance plan for that low a number of growers. The administration cost for a low-participation crop then becomes very expensive.
[Translation]
Mr. Landry: How many cranberry producers are there in Ontario and in which region of the province are they to be found?
[English]
Mr. Jaques: There are about thirty growers, some down around the Iroquois Falls area and some around the Bala area. Right now that may be a very minor crop. However, with the new biotechnology for plants, in five years or in ten years cotton may be a very important crop in Ontario, or bok choy may be a major crop at some point, but if there is no crop insurance program to cover them, what are those growers...? Right now it's a minor crop, but to the growers producing it, it may be a major crop.
.0930
The Chairman: Mr. Hoeppner.
Mr. Hoeppner (Lisgar - Marquette): Thank you, Mr. Chairman.
It's a pleasure seeing you gentlemen here this morning. I think I have bad news for you. Your plan seems so simple. I don't think a Liberal government could understand that.
Some hon. members: Oh, oh!
Mr. Hoeppner: I had to say something to at least wake them up.
The Chairman: Go ahead, Mr. Hoeppner.
Mr. Hoeppner: Yes, I was interested...one grower in asparagus. How many growers do you have?
Mr. Jaques: We have about 120.
Mr. Hoeppner: That is a fair amount. So I can see that the $400 for farm administration is probably possible for one grower. Is that for all the insurances or is that just for asparagus?
Mr. Jaques: We cannot get the numbers for the administration costs for Ontario. As I say, we did get the numbers for potatoes in New Brunswick, and we've heard that administration costs are $1,200 to $1,500 per farm.
As I say, Ontario tells us that the administration costs are not available.
Mr. Hoeppner: Why not?
Mr. Jaques: I asked the same question. They should be available, but anyway, they're not available to us.
Mr. Hoeppner: That seems very strange.
Mr. Reed (Halton - Peel): You'll have to ask Mike Harris.
Mr. Hoeppner: Yes.
Can you buy hail insurance on these crops? Is that available?
Mr. Jaques: It's only available on apples.
Mr. Hoeppner: Only on apples...so you don't have that chance of covering yourself for hail. I don't know how disastrous that is in your area. In Manitoba and some areas it's very important.
Mr. Jaques: Hail and frost are probably the biggest...
Mr. Hoeppner: Is that right? I like your plan. It's simple. That's why I say I like it. I have a few questions about it.
When government money is involved with it, shouldn't a crop insurance plan probably be revenue neutral? Once it becomes profitable, it will be abused.
Mr. Jaques: When you say revenue neutral, what -
Mr. Hoeppner: I'm looking at it, and I don't know how lucky you farmers are, but we have some who never get hail or who never have a crop failure. They would have a tremendous jackpot at the termination of farming, and it would be government payments. On an insurance program usually it has to be revenue neutral. That's what hail insurance companies work on.
That's the one thing that bothers me about your plan. I wouldn't mind seeing you contribute to that personally, but when government is asked to continually contribute 3% and 3%, I wonder if government wouldn't fight that.
Mr. Jaques: I can't speak for the government, but I guess what we're asking for is a comparable contribution to what the government is putting into the existing crop insurance program.
We feel that more of the dollars are going to go back to producers, because we're not going to be paying that ridiculous administration charge and we're not going to be paying for the policing, with someone chasing around after growers to make sure they're not abusing the system or with someone taking growers to court to sue them for fraud or some other abuse of the system. Again, with this system, if the producer abuses it, it's his own account. It cannot go in the hole.
So if you only have $10,000 in your account, you can't take $15,000 out even if you have a complete wipe-out. The exposure to the government is limited to that 3% of the sales.
With the current program, as you know, the exposure of the government is much higher, because if a hailstorm comes through and wipes out the whole province, there's certainly a lot more than the 3%.
Mr. Hoeppner: Would your growers accept a cap on what government put into it in case your pot builds up to the extent where you have two years' or three years' total coverage? That is one problem I see with this.
.0935
Mr. Jaques: Yes. The proposed cap would be one and a half times the annual net sales. So if your eligible net sales are $100,000 there could be no more than $150,000 in the account.
Mr. Hoeppner: So then the government wouldn't be liable to put funds into that account.
Mr. Jaques: I guess I didn't get into some of the details.
Mr. Hoeppner: Those are things that just kind of ran through my mind.
Mr. Jaques: We wanted to change a couple of the things from the NISA account. We were recommending keeping the account caps. So if your sales are $250,000 your account cap would still be $375,000. This would be the cap of the account. However, we did want to eliminate the cap on the annual eligible net sales because we feel this discriminates against the commercial growers. There are certainly a lot of growers out there. Currently the NISA eligible sales cap is $250,000. So if you're a producer who grows $500,000 worth of produce, you could only get NISA on $250,000 of it. This has caused some creative accounting.
Mr. Hoeppner: I could see that.
Mr. Jaques: Yes. I guess we don't feel this is reasonable because if you grow 5,000 acres of corn, you can have crop insurance on 5,000 acres of corn. They don't say you can only get it on the first 1,000 acres. So we don't feel it is reasonable, but we do agree with the argument that there should be a limit on how much you can have in your account.
Mr. Hoeppner: How would you handle the premiums as far as an expense goes? Would it be an expense to your operation and later on then not income? Or would you put it in as non-taxable income?
Mr. Jaques: I guess originally with NISA we had asked for it to be a tax-deductible expense. This didn't go through. So at the present time this would be after-tax dollars the producer would be putting in. When it is withdrawn, there would already have been tax paid on it so that would be tax-free. Any interest or any of the government's portion would be taxable upon withdrawal.
Mr. Hoeppner: It looks pretty simple and straightforward to me. I can't see too much of a problem with it. The problem is, as I say, you've got to convince government.
Mr. Jaques: That's why we're here today.
Mr. Hoeppner: I know.
The Chairman: Thank you, Mr. Hoeppner. Just as a point of clarification, Jake, you mentioned hail coverage. Hail is covered in Ontario. There is specific hail coverage - the gentlemen might correct me - for apples. But hail is one of the perils covered for a corn producer or a grain producer. It is covered a little differently in the west. There is specific coverage. I think it is referred to as spot coverage in the west that a producer can buy as a crop... If I'm not mistaken, I think a producer in the west can buy only hail coverage and not the overall crop insurance.
Mr. Hoeppner: Or you can get both.
The Chairman: You can get both, whereas in Ontario the only place you can buy specific hail coverage is in apples. Otherwise, if you have a crop failure because one of the perils is hail, you're covered. As you know, Jake, the limits are there for NISA as well as for as the total contribution. So it's not a never-ending growing account.
Mrs. Ur.
Mrs. Ur (Lambton - Middlesex): Thank you, John, for coming before us this morning. Being at the same spot as you have been in farming, I can certainly understand why you're here presenting this to us this morning. We were in farming as well. The insurance that was available was just too costly and the regulations were such that there was no way a farmer could ever collect. It was just inappropriate.
I would like to know about the $4 million to $5 million estimated cost in ratio to the volume of commodity. What would the percentage be? Do you know what the sales would be in comparison to...?
Mr. Jaques: What we're looking at is 3% of the eligible net sales. It would actually be less than this, because we know there is not going to be 100% participation. I believe it was at 60%. We're looking at the 60% to 70% participation rate. I guess it doesn't matter if you come up with what you think is the perfect program. You're still not going to get everyone to enrol. You could take some money and hand it to someone and they would say there must be a catch, and so they're not going to enrol. So we're assuming there is going to be between 65% and 70%. I believe right now it is around 60% in NISA.
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So we would assume there are going to be some increases in participation from the basic NISA because of a little more coverage. This is where the numbers came from. It was through OMAFRA and through Agriculture and Agri-Food Canada that we came up with those numbers.
Mrs. Ur: I think it is important to get as many as possible on board to make it a viable operation. Was this based on similar set-ups elsewhere, or was this just brought together by the Ontario group?
Mr. Jaques: No, it was actually a national committee that developed this.
Mrs. Ur: For Ontario, or for...?
Mr. Jaques: No, it was for all of Canada.
Mrs. Ur: It was for all of Canada.
Mr. Jaques: It was through the National Horticultural Committee. We had representatives from British Columbia, Quebec, Manitoba and Nova Scotia on the committee that developed it. So this isn't just an Ontario initiative.
Mrs. Ur: I think it's really important that we do get something together for our groups here in Ontario. Anyone who was reading the paper this morning might have read about all the people who were sick from imported strawberries. Here again, we encourage our local farmers to be able to have some kind of level playing field. This is a necessary tool for them to be able to survive in this industry. It is very important that we have our regulations and not have to rely on U.S. products.
I know sometimes it is pretty hard to grow strawberries or asparagus in January in Ontario, but I think it is the right direction.
Mr. Jaques: We think it is a very cost-effective way to cover things.
The Chairman: Are there any other comments? We will go to Mr. Landry and then toMr. Collins.
[Translation]
Mr. Landry: I would like to know which province is the largest producer of fresh fruits and vegetables.
[English]
Mr. Jaques: Ontario is the largest producer.
The Chairman: Mr. Collins.
Mr. Collins (Souris - Moose Mountain): Thank you Mr. Chairman.
With regards to your proposal, I certainly can see the need for it. What bothers me is that only 65% to 70% would come on board. If you're talking across the board, surely others would see the merit of it. I guess if it were in place they might at some later date say this is something they could live with.
Mr. Jaques: I think this is quite possible in the future. But looking at it from the simple logical side as well, we would think a lot more than 60% of people would be enrolled in NISA. It has certainly had its administration problems, but you know we can't find a better, simpler program to help farmers. Yet only 60% enrol.
I think 20% of the people produce 80% of the commodities. Of those 20%, probably 95% or 100% are enrolled. Maybe those we consider the smaller producers just feel it is not worth the paperwork and that sort of thing, or they perceive the program to be a lot more complicated than it is.
Mr. Collins: Just quickly, then, following up on what Mr. Vanclief said, you're looking at it based on eligible sales on an annual basis as one of the fundamentals. You'll have a five-year averaging feature in the program.
Mr. Jaques: Yes.
Mr. Collins: You have for all intents and purposes gone along with the 3%, 3% and 6% arrangement.
Mr. Jaques: Yes.
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Mr. Collins: And is the minister from Ontario agreeable to that kind of process?
Mr. Jaques: Yes. What we had actually proposed is 3%, 3% and 6% to start for the first three years to build up the account a little bit, and then drop it back to 2%, 2% and 4%. That falls well within the range of the current cost on crop insurance.
Mr. Collins: Finally, you're looking at this as all-encompassing across Canada as opposed to your saying, for all intents and purposes, hey, we're looking at an Ontario proposal right now.
Mr. Jaques: We're looking at a pilot project in Ontario right now, but we would like to see it available all across Canada. I think it would be up to the provincial governments to go on board with the federal government. Similar to NISA, I guess, some provinces aren't as agreeable with the federal government on NISA as others are.
Mr. Collins: Do you have a length of time on that SDRM pilot project? What are you talking about - two years?
Mr. Jaques: We're looking at a two-year pilot.
Mr. Collins: Okay. Thank you.
The Chairman: Before I go on to Mrs. Cowling again, and Mr. Hoeppner, I have a question.
John, you mentioned the conference calls, and that Marshall has withdrawn from the review committee at the present time. What seems to be the problem with Ag Canada coming on board? I know this has been going on for a long time, and discussions have been going on for a long time. How close do you think the pilot project is, and what's the problem - or the problem as perceived by others?
Mr. Jaques: It depends on who's doing the perceiving, I guess. When I was on the conference call I was very frustrated, and I think the grower reps on it were very frustrated. It was just as if the federal staff had a list of why we couldn't change anything: you can't do that because of trade policies, and you can't do that because of the legal wording of certain acts. It boiled down to the fact that if you went by their wording, you couldn't change anything, so why were we having a review? Our argument at the start of the review was don't waste your time having a review if you're not willing to make changes.
We asked that horticulture be excluded from the review, because two years ago we had a review. We went through all the different options we had and we came up with SDRM. We're not saying it's perfect. It's certainly not the answer to all the problems. But for the horticultural sector we felt it was the best answer.
Coming out of the crop insurance review, from the meetings I attended, it was the same answer. The people who had crop insurance were saying, well, the status quo isn't all that bad; we want to make a few minor changes. But for the people who don't have crop insurance or who have very poor crop insurance programs, it looks as though SDRM would be the answer for that sector.
It was just very frustrating dealing with the staff. This is a personal opinion, but I guess one of the reasons a lot of the staff are fighting against SDRM is that they can see their jobs on the line. If SDRM was in place, you wouldn't need as many staff in crop insurance. You wouldn't need the adjusters to go out and check the crops to see whether or not you harvested them. You wouldn't need the sales staff to go out and sell the program. You wouldn't need the administration to make changes to the program each year.
Again, it's my personal opinion, but I think a lot of the staff are more worried about their jobs than they are about coming up with a good program.
The Chairman: As your list shows, crop insurance programs are available now for a number of crops. Is your group suggesting that those programs be cancelled and an SDRM program be available in its place, or are you suggesting that the producers of strawberries, for example, which has a program in place, have an option of a crop insurance program or an SDRM program? Is one of the concerns that if there were an SDRM program in place, the enrolment in a crop insurance program for a crop such as strawberries would decline or disappear? If there were still a program there, I question why anybody would be worried about their job.
.0950
Mr. Jaques: The concern the crop insurance people have, which I think is a legitimate concern, is that if there were an SDRM program and a traditional crop insurance program, you would end up with all the low-risk people in the SDRM program and all the high-risk people in the existing crop insurance program. The argument is that there's nothing wrong with that. Then the high-risk people would have to pay big bucks, which they should be paying.
Right now, the apple program is one of the so-called bright lights in horticulture as far as crop insurance programs are concerned, and the apple people are saying they would rather have SDRM. OMAFRA did some studies over the last 5 years, and 70% of the producers who are enrolled are subsidizing the other 30%.
The Chairman: Is this in the apple program?
Mr. Jaques: This is in the apple plan in Ontario.
The Chairman: Thanks, John.
Mrs. Cowling.
Mrs. Cowling: I want to come back to the issue of 65% enrolment. I'm wondering if your group has considered a compulsory or a check-off provision and whether you've talked about that.
Mr. Jaques: We haven't discussed any compulsory check-off. It's something you present to producers and say we think this is good for them, but we don't feel it's our place to force them. Again, there are some people you could hand a tray full of money to and they would say there must be a catch so I'm not going to take it.
At least if this type of thing is offered and if there is a disaster, you won't have producers coming and saying there was nothing there to help them with this disaster. The theory is that they wouldn't have a reasonable argument if they came to the government and said they got wiped out and there was nothing there to protect them. This is available for them and if they don't take it, I guess that's their choice.
Mrs. Cowling: Maybe I can rephrase my question. Let me say it this way. Have you considered the check-off provision, which would in fact probably provide a lot of viability and stability to the program?
Mr. Jaques: When you say ``check-off'', do you mean mandatory enrolment in the program? Is that what you're saying?
Mrs. Cowling: Yes.
Mr. Jaques: Again, we're dealing with fresh fruits and vegetables. Most of our membership is funded through a container toll, which is when they buy their containers for shipping. That's our funding mechanism for the fresh fruit and vegetable industry.
We have no way of tracking what crops they're growing. We have no mechanism we would be able to do that through. If a person is growing 35 different commodities on their farm, some might be going to the food terminal, some might be going to stores, some might be going to the U.S. They're not selling through our board or through our association, so there's no tracking mechanism there.
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Mrs. Cowling: I would like to raise one more question. You indicated you would at some time be backing your 3%, 3% and 6% back to 2%, 2% and 4%. What criteria would you use and on what timeframe?
Mr. Jaques: The proposal is that for the first three years it would be 3%, 3% and 6%. The reason for that is that obviously for the first few years you don't have very much in your account if you do have a problem. This is designed so you can hopefully build up your account to help cover a disaster if it does come. We felt three years, if it was at 3%, 3% and 6%, would give the producer a chance to build up his account. Then it could drop back to more of a maintenance level.
If the government felt we should keep it at 3%, 3% and 6%, I don't think there would be too many producers who would argue. But that was the reasoning behind that.
Mr. Hoeppner: John, how many years has this been in the making? Is this an offshoot of the GRIP program that was available to grain farmers?
Mr. Jaques: It wasn't really an offshoot of GRIP. Through the horticultural committee... We've been at it for about three or four years. As you know, the GRIP wasn't available to horticulture. It was mainly the crop insurance we were looking at.
Mr. Hoeppner: How much do you export? Is there a certain percentage of these crops you would be exporting?
Mr. Jaques: It's a very low percentage.
Mr. Hoeppner: What worries me is that I know the GRIP program was designated as amber or maybe even red.
Mr. Jaques: Yes.
Mr. Hoeppner: But the astounding thing we found out when we were in Washington is that the Americans are now having a pilot project that pretty well is identical to GRIP. So you never know where you're going. That's the one thing I thought you should be aware of, that the exports could run into some problems.
Mr. Jaques: Probably the main exports would be potatoes from P.E.I., greenhouse tomatoes and cucumbers, and some apples.
Mr. Hoeppner: I don't think this is a big export in some areas.
The Chairman: John, I wasn't clear on whether you explained to us in your view when and if a pilot project is going to get off the ground in Ontario.
Mr. Jaques: We're hoping to have it in for the 1996 tax year. I know it's 1996 now, but you don't fill out your 1996 NISA form until the spring of 1997. So there was some argument that they should wait until 1997 because some people have already bought crop insurance for 1996. I guess our argument is that if you wait until 1997, that means you're not filling it out until 1998-99, and you really can't analyse it until the year 2000.
If people have already bought crop insurance for 1996, then they won't be eligible to be in the pilot project. You can't double-dip. You can't have crop insurance and SDRM. You have to make a choice of one or the other. If you have bought your crop insurance for 1996 already, then you're not eligible for the 1996 SDRM. However, you could switch to SDRM in 1997 if you so desire.
The Chairman: How all-encompassing is the pilot project going to be?
Mr. Jaques: We're looking at two different scenarios. One would be for asparagus, tender fruit, and strawberries to be the core crops. If you grow other commodities on that farm, if you have ten acres of strawberries, twenty acres of broccoli, and five acres of squash, the broccoli and squash would be eligible for SDRM also.
Part of the reason for the choice of those commodities is that asparagus and tender fruit have been involved with the SDRM from the start and have been requesting it. Strawberries were another commodity we put in. Those are all perennial crops.
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So we thought by using those, someone couldn't just go out and plant 20 acres of broccoli this spring, for instance, just to get enrolled in the pilot project. It rules out the chance of any games being played to get into the pilot project.
The Chairman: So the lead-in now is basically with a perennial crop. If you have some of the annuals on the farm, they can be brought into the SDRM program for that individual producer.
Mr. Jaques: Yes. As I said, we're looking at it for the 1996 and 1997 crop years. One of the other options they're looking at, if the cost isn't that much greater, is to then offer it to all horticultural commodities.
The Chairman: I have one last question about your level of optimism in seeing this program put in place across the country. Are you winning?
Mr. Jaques: Maybe I should ask you. I think we are winning, but it's a slow win. Sometimes we think we're winning, and then we find out a week later maybe we were just being told what we wanted to hear. It's frustrating sometimes. I think we have a very simple, affordable program that would help a number of producers who have nothing at the present time. It's almost too logical and efficient.
We have support from the Ontario provincial government, and we think we have a fair bit of support at the federal level also. But I think our biggest stumbling block is not the elected officials, it's the staff.
The Chairman: I can't speak completely on behalf of the committee, but we will be discussing your presentation this morning. It would not surprise me, knowing the committee as I do, if it will very likely be asking some very pointed and specific questions to the department to get its views and comments on the issue we've discussed this morning. If and when we do that, it's also the practice of the committee to forward information to witnesses about further action the committee takes on an issue.
Are there any other questions or comments from committee members this morning? If not, gentlemen, thank you very much for coming. May the rest of the season go well.
I understand, John, that the business you're in is a challenging one again this year. The weatherman has played havoc with you. We hope, in some way, shape or form, it comes around okay in the end.
To the committee members, please do not leave. Then we'll go into an in camera committee meeting in order to discuss a couple of letters we will be forwarding to the minister, as a result of some previous meetings and witnesses we've had before the committee. Thank you.
This meeting is adjourned.