While negotiations are continuing towards a price insurance plan for beef in eastern Canada, Agriculture and Land Minister Bloyce Thompson admits the process has been slow.
"It has the potential to be a game changer," Thompson recently told the legislature Standing Committee on Natural Resources and Environmental Sustainability. "The beef industry is asking for this right now."
There is already a regional pricing formula in western Canada and the Canadian Cattlemen's Association has been lobbying for some time to have the program become national in scope. That lobbying effort has intensified as the onset of COVID-19 initially resulted in a downward slide in prices as large processing plants in the west were closed when large numbers of employees came down with the virus.
Thompson said there has been some discussion with his regional counterparts over the last several months, but that process was again slowed down due to the New Brunswick election. He is hoping a meeting can be held with the other regional ministers sometime this month and he said the insurance formula will be high on the agenda.
Dr Les Halliday, who is the beef specialist with the department, added the department looked at the idea under the previous Liberal government and "Our issue was when we had consultants study the amount of data that was available in the Maritimes to establish what’s called price discovery: to get a price insurance index, we didn’t have enough data."
Since then, he said the push to have a national program with western and eastern connotations could make that task easier. He said 25 years of pricing data from the Maritimes, Quebec and Ontario is now being analyzed to come up with an eastern price insurance index.
Dr. Halliday told Summerside-South Drive MLA Steve Howard the system must be self-sustaining, meaning the premiums must cover any payouts. He added "When you buy insurance, to some degree, you hope you never have to use it because then the market is taking care of itself. "
He used the example of feeders that were purchased at a weight of 600 pounds for market in approximately a year. He explained "I don’t know what the price is going to be in one year from now. It could be the same, it could be 50 cents higher, it could be 50 cents lower. I just don’t know. The price insurance would help to take some of that risk out and some of the banks like that too, so they’re more apt to lend when you have some kind of insurance in place."
Deputy Minister Brian Matheson added "we just can't pick up the western program and move it to PEI because they have larger markets. Those markets are so far away from the Atlantic provinces that they don’t necessarily reflect the prices that we have here. "
Matheson said New Brunswick is working on a mechanism to see how the larger markets, maybe in Ontario and the west can actually link to PEI or a Maritime market so that our prices are reflective of what we actually get here."
Opposition Agriculture and Land Critic Michele Beaton said price is the number one topic of conversation in any discussions she has with beef producers. The Mermaid-Stratford MLA wanted to know why producers selling to Atlantic Beef are paid less than their counterparts in Ontario and what price Atlantic Beef pays when it sources product from Quebec.
Dr. Halliday said the price differential with Ontario has been a constant since Atlantic Beef opened its doors. He said the processor works out a price with producers who sell to the plant, whether they are from within the region or Quebec, and the provincial government is not involved in the process.
He agreed with Beaton price is a topic he often hears from beef producers as well. However, he noted there are premiums available from the plant for things like Certified Island Beef and VBP+ and "If you hit the sweet spot on the grade, plus certified Island, plus your VBP+, you’re actually getting Ontario plus, but you’ve got to do the work to get it."
Beaton said she was told by Atlantic Beef Products only 18 producers has signed on for the VBP+ program. Dr. Halliday admitted it was a struggle, noting farmers must follow the program guidelines for at least six months prior to being audited and COVID-19 has slowed down the auditing process. He agreed with the opposition MLA the paperwork involved can be a deterrent.