AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 23, 1998

• 0907

[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): I call the meeting to order. Good morning, everyone. Pursuant to Standing Order 81(4) and the order of reference of the House of February 26, 1998, this is a study of the main estimates for the fiscal year ending March 31, 1999; votes 1, 5, 10, 20, and 25; and part III, report on plans and priorities.

I'd like to welcome this morning, from the Department of Agriculture and Agri-Food, the minister, the Honourable Lyle Vanclief; his deputy minister, Mr. Frank Claydon; Michelle Comeau, associate deputy minister; and from the Canadian Food Inspection Agency, Dr. Art Olson.

Welcome, people.

There are a few people at prayer breakfast, I guess. They will be here in a few minutes, but we'd like to get started and take your statement, Mr. Minister. Welcome. We'll go to questions, as I know your time is very short here, and we'd like to get as many questions in as possible.

Mr. Minister.

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman and committee members. It is a pleasure to be here this morning, I'm sure. I understand others will be joining the committee. I too went to the prayer breakfast for a little while. I didn't know whether it was significant that I go to a prayer breakfast for a while before I come before the committee or not.

Some hon. members: Oh, oh!

Mr. Lyle Vanclief: The other comment I have, Mr. Chairman, is that on a nice morning like this, maybe we should all be outside. It wouldn't be setting a precedent if we all took our chairs and left and went someplace else and had a meeting.

Some hon. members: Oh, oh!

Mr. Lyle Vanclief: Anyway, it is a pleasure to be here this morning.

I am pleased to be here to present to the committee the estimates of my portfolio, including Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency. You've certainly all received the two blue books: the report on plans and priorities for Agriculture and Agri-Food Canada and report on plans and priorities for the Canadian Food Inspection Agency.

I welcome the opportunity to meet with the committee again to discuss how we can best use the resources that are available to us in order to support the development of the Canadian agriculture and agrifood sector.

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Mr. Chairman, you have already introduced the deputy minister, Mr. Claydon; the associate deputy minister, Michelle Comeau; and Dr. Art Olson. I'm pleased to have them at the table with us all this morning. There are a number of other officials in the room to answer questions in further detail than I might be able to, if the need arises.

When we met last December, I talked to the committee about the portfolio and the federal cross-government rural initiative, for which the Minister of Agriculture and Agri-Food has the lead. I also outlined some of my priorities, including, to name a few, market development, food inspection, the upcoming World Trade Organization talks, research, environment, grain transportation, and the review of our safety nets framework.

The 1998-99 plans and priorities before us today are very much in line with what we discussed last December and with the new management approach of the department. If you take a look at the numbers in the Agriculture and Agri-Food Canada plans and priorities document, you will see that the budget projection for 2000-01 declines to $1 billion from last year's $1.6 billion, and I want to explain that at this time.

I want to clearly point out that all of the reductions you see—I repeat, all of the reductions you see—are a result of prior spending decisions. These estimates documents contain no new expenditure reduction decisions.

Part of the projected reduction is explained by programs, such as the dairy subsidy, that were made during the 1995-96 budgets. A significant part of the reduction is also due to one-time payments in 1997-98 programs, such as the Western Grain Transportation Adjustment Fund, which will expire before the year 2000-01. And finally, about $200 million is earmarked for items such as safety nets and the Canadian Adaptation and Rural Development Fund—I always refer to it as the acronym, the CARD fund—but it is not yet formally entered in the estimates. That is money that is set aside but that we have not yet brought over.

With all of these adjustments, the department will have a secure and stable budget of approximately $1.2 billion by the year 2000-01 that will meet all of our expenditure commitments.

The department, as you see in the document, is now managing its business along a set of four business lines, to help us all better focus on the results we are delivering to Canadians. I might say this is as a result of a request in the past of parliamentarians, so that we can better understand, as parliamentarians, the work of departments.

This new business line approach reflects our unique contribution to the sector. It promotes teamwork and offers flexibility to deal with emerging issues and priorities for the department as a whole, rather than by traditional activities of individual branches. What I mean is that branches are working together to attain business line results, and those business lines cut across traditional organization boundaries to involve all spheres of the department.

Page 4 of the estimates clearly outlines how each branch relates to those spheres, while table 3 on page 34 shows the planned spending for each branch. All in all, Agriculture and Agri-Food Canada's new business line approach represents a better way to manage the department. I am confident that it will allow us to effectively monitor our performance while reporting to parliamentarians, the agriculture and agrifood community, and all Canadians on the basis of clear goals for the sector.

The first business line is expanding markets, and that encompasses everything we do to capture market opportunities and to attract investment.

The second business line, innovating for a sustainable future, focuses on using the department's excellence in research and development to produce products that are economically competitive and environmentally sustainable.

The third business line is devoted to securing a strong foundation for the sector and rural communities, in other words, working with our partners to enhance the economic viability of the sector and our rural communities.

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The final business line, corporate policies and services, includes management goals and priorities for departmental operations such as human resources.

These four business lines form the basis on which Agriculture and Agri-Food Canada will help our sector meet the challenges and the great opportunities that lie ahead.

From primary agriculture to processing and distribution, to the food service sector, the agrifood industry is fundamentally sound and well positioned to achieve even more growth and create more economic activities and more jobs for Canadians from coast to coast to coast.

As Minister of Agriculture and Agri-Food, and the minister responsible for rural affairs, I recognize the need to work in close partnership with the sector to build an even stronger and an even healthier industry. We are already seeing the value of partnership in programs such as the matching investment initiative, where the Government of Canada matches dollar for dollar industry's funding. We anticipate that the MII, the matching investment initiative, will create a pool of more than $70 million a year for agrifood research.

I'm also extremely pleased with the support I'm receiving from cabinet ministers and the caucus for our partnership approach in rural Canada. The last budget included a commitment of $20 million over four years to the Canadian rural partnership initiative to identify opportunities for developing new partnership approaches to respond to rural issues. Last month I launched a rural dialogue as part of this rural partnership approach.

Over the coming months meetings will be held in communities across the country to gain input directly from rural citizens. The meetings will provide an opportunity for rural Canadians to share their ideas and suggest improvements to federal programs and services. My cabinet colleagues and I have made a commitment to use the rural lens approach to ensure consideration of the impact on rural Canada in all future federal decisions on policy, programs and services.

The spending plan now before you includes the new resources for rural partnership and provides stable funding for ongoing programs. Safety net funding is being maintained at $600 million. Funding for our research activities, for our adaptation programs and for our market development programs is also secure.

Before responding to your questions, I would like to also touch on my responsibilities for the Canadian Food Inspection Agency. The CFIA is being managed within one business line, and that's safe food, market access and consumer protection. Four business priorities have been identified within this business line. The first is the efficiency and effectiveness of the inspection and quarantine system. The second is facilitating trade in food, animals, plants and their products. The third is coordinating our approach to consumer awareness and emergency response; and the fourth is improving intergovernmental cooperation.

I would like to note that during the past year the CFIA has concentrated on maintaining and enhancing Canada's internationally recognized food inspection and animal and plant health activities. The agency has consulted widely with consumers, the public, industry, staff and other parties to ensure Canada's approach in these areas is well recognized, well understood and well accepted. Food safety is and will continue to be the number one priority for the government. Canadians expect and deserve the best.

I will be tabling in Parliament the first corporate business plan of the agency in the near future. This plan that will be tabled in the near future has been developed in consultation with all stakeholders and will lay out our approach to meeting the key plans and strategies outlined in the report on plans and priorities for the agency.

Mr. Chairman and members, the 1998-99 estimates build on a proven and successful path. They represent a commitment of resources and they provide a foundation to support effectively the Canadian agriculture and agrifood sector in the next three years. I believe, and in fact I know, the sector can go even further than it is now. The sector can be more ambitious. The sector can be more aggressive. There are no limits to the potential for our success and further successes.

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Our challenges consist of a number of things such as ensuring that we take full advantage of our domestic market and use that domestic market as a springboard to achieve global excellence and success. Our challenges also consist of seeing that everyone—and by everyone I mean farmers, rural Canadians, consumers and the food industry—benefits as we move aggressively into the global economy. Our challenges also consist of doing so in a way that protects the environment for future generations and ensures a safe and reliable food supply for our consumers here at home and abroad.

Mr. Chairman, in June, after nearly a year as minister, and having had the benefit of meeting an extensive number of people and organizations in our sector and hearing their concerns and the aspirations they have, I would like to ask now for the opportunity to come back to your committee to build on these estimates with some further thoughts. I will then provide you with a broad perspective on the key accomplishments that we will be working towards over the next few years.

Mr. Chairman, I thank you for the opportunity to make these opening comments, and I will be pleased to address any comments the members may have.

The Chairman: Thank you very much, Minister.

Some two months ago you wrote to the committee, through me, suggesting we do some hearings, take-note hearings with agricultural groups, leading up to the next round of WTO. I understand you've had a meeting with the Cairns Group recently. Are you in a position to let us know in a preliminary way what your department's thoughts are on the next round?

Mr. Lyle Vanclief: We made it very clear, Mr. Chairman, at the Cairns Group meetings in Australia two or three weeks ago, that we are not putting forward a strategy of the Canadian government before much closer a time than the late 1999 beginning of that round of negotiation.

The Cairns Group, as a group of 14—or I believe it's now 15 countries; South Africa joined for the first time at these meetings—put out a vision statement as a result of the day and a half of meetings, in which we stated the goals and a long-term vision for the Cairns Group's members of greater liberalization in trade.

We have committed and will continue to commit to continued consultations with the industry, with provincial governments, with Parliament, and with Canadians. That's why I asked and was pleased that you people, I understand, have accepted to allow people to come before your committee. I don't want to go into these negotiations without having given everyone ample chance to come forward right from, can I say, everyone involved in this industry from gate to plate, to put their views and thoughts on the table. It's like any negotiations; whatever they turn into, there's no way, shape or form you'll get an agreement at any time that makes everybody 100% happy. But we will consult as widely as we possibly can.

The Chairman: Thank you very much.

Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): Thank you, Mr. Chairman, and thank you, Mr. Minister and officials, for appearing this morning.

Maybe on that note, just a word of caution. I certainly appreciate the statement you just made, Mr. Minister, that you're more than willing and open to listen to all the stakeholders leading up to the next round of the WTO talks, but I would caution you not to wait too long, as your government did with Kyoto, and actually be off to the talks without a position.

With that, I note that you used quite a bit of your opening statement to talk about what you call a business line approach to the estimates. In 1997-98 I believe the estimates were called a pilot document, and the way they were reported was changed quite a bit at that time. Now we see that it's changed dramatically again this year.

You'll have to believe me, Mr. Minister, when I say that there are people who are much more adept than I am at crunching these numbers and trying to correlate between the two years. They tell me it's virtually impossible, or very difficult at least, to track the various programs from one year to another because of these changes that have been made two years in a row.

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So my first question is, are we finished with seeing changes? Is there going to be some continuity, so that it will be easier to track through? In other words, is this business line approach going to last more than one year?

Mr. Lyle Vanclief: The simple answer is definitely. The document that this committee, because there was an election that took place, did not have the opportunity to review, which was the last plans and priorities, was a transition one. So the committee did not have the benefit or the opportunity of seeing the movement through. That was a transition one, which was moving through to here.

As I said in my opening comments, there has been a lot of discussion and comment from parliamentarians in the past, Mr. Hill, that we needed to go to this type of document rather than the other. I certainly understand, having been on the committee for a number of years, that sometimes these documents aren't easy to follow.

I would certainly make the offer that after today, if the committee wants a further walk-through of the documents, we will have time with officials today, and I know the officials would be more than glad to come forward and walk some examples through so that people.... It can be very, very worth while.

But this format is here to stay for a considerable period of time. There's no talk, Mr. Hill, of changing it from here.

Mr. Jay Hill: Just to wrap that up, was last year's document a pilot document? I suppose it was a pilot document, and then they found out that way of reporting wasn't the best way. Is that what happened?

Mr. Lyle Vanclief: No, there was a transition year that had to take place to go from the old system of doing it to the new system. There were, I believe...maybe Mr. Graham or the deputy can help me. Were there five or six departments that were asked to go that route to get the ministries to get the idea?

Frank, can you fill in just a bit more on that?

Mr. Frank Claydon (Deputy Minister, Department of Agriculture and Agri-Food): Yes. Last year was very much a transition from the old system of looking at organizations to the new system of looking at business lines. In that document there was an explanation of the business line approach that we were moving to this year, and we've consistently followed through on that approach.

We were one of the test departments. I think there were four test departments. This year all of the departments are going with the business line approach. We're not in any kind of separate category.

We feel that the level of information that's provided about our business lines in this year's document is quite extensive, and there's a lot more concrete information about the kinds of things we are planning to do over the next three years than we've been able to provide in the past.

For example, if you look at our business line that deals with innovating for a sustainable future, which is our research activities and our development activities, we've been very forthcoming in terms of trying to be very clear about the kinds of research results we think we're going to be able to achieve over the next three years.

Mr. Lyle Vanclief: Just to follow—and I don't want to spin out the time on it, Mr. Hill—as I referred to on page 4 in the document, it shows that, for example, in innovating for a sustainable future, that part of that business line is work done in the research branch, the Prairie Farm Rehabilitation Administration, and the policy branch. People have asked in the past what's being done under that aspect in that direction by the department. In the past it wasn't as clearly defined as we think it is now. We think it gives a much clearer picture.

Mr. Jay Hill: Mr. Minister, I believe it was in mid-February of this year that you announced—unilaterally, I might add—an additional $50 million in ice storm assistance to Quebec. Where did that money come from, first of all? My understanding is that it's outside of the disaster financial assistance arrangements. Is that contained in this document somewhere, or is it from some other department or ministry, or...?

Mr. Lyle Vanclief: That came from the Treasury Board. That is above and beyond the budget of Agriculture and Agri-Food Canada. You made the statement that it was done unilaterally. It wasn't done unilaterally. It was done with the cooperation, certainly, of the full cabinet. With the disaster, in addition to, as the money was for the subsidiary agreement for the Red River disaster—

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Mr. Jay Hill: When I said unilaterally, Mr. Minister, my understanding was that Quebec wasn't participating in that program. Are they now?

Mr. Lyle Vanclief: Quebec has not yet decided. That subsidiary agreement was put in place, as there was one in the Saguenay and the Red River, to make sure that part-time farmers.... There's a definition in the Disaster Financial Assistance Agreement, be it the right one or the wrong one, that to be a full-time farmer over 50% of their income must come from agriculture. As we know, many farm families have much less than 50%, so they could not access the DFAA money. So that was put in. In the same manner—

Mr. Jay Hill: But Quebec has never contributed to that.

Mr. Lyle Vanclief: —the Province of Quebec has not yet chosen to take part in that, so we are paying those people.... Let's say they were eligible for x number of dollars as a part-time farmer. In the same way, they would have been treated as a full-time farmer. If they were under the DFAA they would have gotten x, but under the subsidiary agreements they get half of x from the federal government and half from the provincial government. Quebec farmers will get half, which is the federal portion, but to date they will not be matched by the provincial government.

Mr. Jay Hill: The $20 million you announced a couple of weeks ago for Ontario part-time farmers outside of the DFAA criteria—is it also contained in that? Was that a special...?

Mr. Lyle Vanclief: That was a subsidiary agreement so that part-time farmers in Ontario would be eligible for the same items or the same compensation as those in Quebec, except that in Ontario the Province of Ontario is paying the additional 50%.

Mr. Jay Hill: Is that it?

The Chairman: Yes. We'll come back to you.

Madame Alarie.

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): Mr. Minister, I'd not want to enter the slippery area of the ice storm. I hope nevertheless that, since it was mentioned, I can ask that we have another look at it some other time. I don't think it would be the right time to discuss it this morning under the budget, although the definition of a part-time farmer is a very interesting topic and is within the mandate of the Agriculture and Agri-food Committee. I do, therefore, express a reservation.

I'll express a second one: we unfortunately received the documents at the last minute. I only received them the day before yesterday. It is unfortunate because I'd have liked to review them more closely. But since you seemed to open the door to another meeting, we might then have other questions to ask you after an in- depth look at the document.

I see that there is in the document a market-oriented approach which is obviously very interesting. I believe there are three major items in it: food safety, i.e. everything that comes under the Canadian Food Inspection Agency; research and development, at least as far as I'm concerned; and also all the issues that will have to be dealt with again at the WTO talks. My questions will be on these three items.

First, I'd like to know what you intend to do during the coming negotiations so that, as members of this committee, we can be really involved right from the start. For example, with regard to milk, we know that the sugar and butter blends that are added to it are criticized by our constituents across the country. We are waiting for an answer. New problems will always arise because the questions asked vary according to the state of knowledge at any given time.

So my question is as follows. Is it your intention to meet with the committee very shortly, since the talks will soon be starting, or to propose that the committee be involved right from the start?

[English]

Mr. Lyle Vanclief: As I outlined a few minutes ago, the reason I asked the committee to have take-note hearings is that in addition to what the department and the government are doing and have been doing for a number months....

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We have already had three full days—one each in Saskatoon, Quebec City and Guelph, Ontario—where we had the supply-managed sectors, grain sectors and everybody in to have a full-day opportunity to put their views forward. The take-note hearings that I have asked the committee to conduct will give everybody the opportunity to come before your committee and express their views and thoughts, and then you people will have the opportunity to report them to me.

There has been some comment from Mr. Hill. I understand his point about going into negotiations ill-prepared. I am confident that we will go in prepared, but we're probably not going to tell the world everything we're going to do. I'm sure everybody around the table has taken part in negotiations. I spent a number of years on the school board and I didn't go out and tell the other side of the table all of our strategy. But we will share that to the best of our ability so that we don't diminish our capabilities at the table as well.

On the butter oil and sugar issue that you mentioned, that did go and is still before the Canadian International Trade Tribunal. There were differing views on how that has been handled and how those types of dairy blends could be handled in the future. In order to make sure that everyone could have their say, cabinet sent that to the highest trade court in the land to give everyone the opportunity to put their views on the table. The CITT will be reporting back to the government no later than July 1.

You mentioned the documents. I don't know why you didn't have them. These two documents were circulated to MPs a number of weeks ago. When the estimates were tabled, those documents were available. I would have assumed that all MPs would have had access to those documents a number of weeks ago.

[Translation]

Ms. Hélène Alarie: I should point out that I've only recently been assigned this topic. The error may therefore have been made on our side.

[English]

Mr. Lyle Vanclief: I realize that.

[Translation]

Ms. Hélène Alarie: My second question is on the Canadian Food inspection Agency. We heard various opinions that lead us to think that inspectors are unhappy within the agency. Besides that, we also get questions from consumers. It is also a well-known fact that this is a transition period. The budgetary issue is often mentioned: if the agency had more money, if it had more inspectors, etc. A relationship is often established between the budget and the quality of the inspection. I'd like to know what you think of that.

[English]

Mr. Lyle Vanclief: The Food Inspection Agency that was started in Canada on April 1, 1997, is the first of its kind. All of the food inspection that used to be done by Industry Canada, Health Canada, Fisheries Canada and Agriculture Canada are now under the one agency.

Doing that gave the opportunity to reduce overlap, to gain efficiencies and productivity. Naturally that also gave us the opportunity to save some money. I can tell you that in no way, shape or form has the safety of Canadian food been jeopardized.

As I said in my opening comments, food safety is number one. There have been some reductions in staff, but when you put four big teams together as we did before, there'd better some opportunities for efficiencies and reductions of overlap.

I will ask Dr. Olson. There are always questions in people's minds about the number of inspectors that are out there. But before he does that, I know he will also tell us that we are also taking advantage of any new technique we can to ensure that food safety is number one. It may be that we use new science and new technology to do so.

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As far as the number of inspectors is concerned, Dr. Olson, that's always a question in people's minds. Sometimes we think that if there is even 1% fewer human beings out there, that means we are doing a poorer job, but that's not necessarily the case.

Dr. Art Olson (President, Canadian Food Inspection Agency): Thank you, Mr. Minister. We have adequate resources to carry out our statutory and legislative requirements with respect to areas involving health and safety. We've been involved in a four-year consultation with all of the industry we serve.

On the other non-health and safety kind of functions, this committee has been part of those discussions because one of the tools we've put on the table has been cost recovery, cost avoidance and cost reduction in terms of how we would deal with the changes that are happening within the industry.

The key part, though, is that technology is moving forward very rapidly. As you are aware, we have a number of incidents running right now that are microbial. They are microbiological in nature. An inspector standing on a line looking at a product can't see microbes. He can't see the microbiological contamination.

What we're trying to do is to put in place the systems that are necessary to ensure that product coming off the line is as safe as possible. That includes using microbiological analysis to put our investment where the risk really is.

The Chairman: Thank you.

We'll go to Mr. Jackson.

Mr. Ovid L. Jackson (Bruce—Grey, Lib.): Thank you, Mr. Chairman.

Mr. Minister, it's a pleasure to be here on the agriculture committee.

As you know, my riding is Bruce—Grey. We have a lot of farming. It is quite a farming community. I think it is of concern to all of us as Canadians that we have the best agriculture. I know that over the years the farming community has done extremely well. There seem to be fewer farmers, yet they produce good-quality product for Canadians over time.

Obviously research and development is a very important part for us. I note with interest when I go to some of the agricultural meetings that some niches are developing. For instance, they tell me there is a chap in California who sells animals to movie stars. If people want to have an animal that is not contaminated, they zap a little microchip in its ear and you know exactly when the animal was fed, who its parents were and where it came from, before they actually get the meat on their table.

There is one chap in my riding who uses the satellite navigational technology to get the right inputs with regard to return from the soil and so on, so it's getting to be very complex.

I have two questions for you this morning. First, how are we doing with research and development? Are we putting more money in there to make sure Canadian agriculture is the best in the world and that we're developing those areas where the skills, where the bureaucracy...? Over the years we've developed these niches to get the best advantage for Canadians.

I think there is a lot of opportunity there for us, notwithstanding the fact that the way technology is today it's so easy for somebody to smuggle it and steal it. I know we have certain expertise—as you say, you're not going to give up the game plan, but once the game plan is out, everybody uses it and sometimes you don't get the return. Sometimes there are people behind the scenes who do so much good work and don't get the rewards for it. So how are we doing with regard to research and development?

Biotechnology is another one that we use. People are quite concerned about the kind of results we are going to get when we use it. They say that even with the human beings you can grow an ear from a sample of DNA from a person. We're getting into some precious areas here. How are we doing in this field, at the same time making it an environmentally friendly environment?

Mr. Lyle Vanclief: Thank you, Mr. Jackson.

The first thing I want to say about research and development, and I say it often, is that we all are concerned about whether enough research and development is being done, whether in agriculture and agrifood or any other sector of our economy.

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My first answer to that is no, there is not enough being done. It's like education; there will never be enough. But I am pleased to say that as the overall budget of Agriculture and Agri-Food Canada has been reduced over the last number of years, for obvious reasons, as efficiencies and fiscal realities have been used to adjust all of that, the dollars in research and development have remained the same. So the percentage of the dollars in the ministry that are spent on research and development is a much bigger portion of the pie than it was at one time.

The department does a lot of specific research—and that's my term; it's probably not the scientific way of saying it—but we also do a lot of what's referred to as core research, research that takes a considerable period of time. That's the type of thing that is a little more difficult to get private enterprise to do, because they want to return their dollars to themselves a little quicker. In other words, they want their results to get from the lab to the field, if I can say it that way, much more quickly.

But additional to the $325 million or so in research in the ministry, as I mentioned in my opening comments, there's also the matching investment initiative, which is adding at the present time about $29 million or $30 million a year, I believe it is, from the department, and an equal amount from the private sector out there. As I said, that will be going up to a total of $70 million in the very near future.

So the research is there, absolutely. I've spent my lifetime in agriculture, and every time I go anywhere now, I'm absolutely mind-boggled at the technology that is being used, whether that be in basic tillage practices or in science. I had the time last summer to tour some of our research centres. I see the work that is done, for example, in the sterile insect research program in British Columbia so that we don't have to use as many pesticides. I see the work that's being done in plant biology with biotechnology, which is advanced science, so that plants make better use of soil water and better use of soil nutrients and so fewer pesticides have to be used on them. Tremendous work is being done.

Mr. Ovid Jackson: The second question had to do with biotechnology. I don't know if one of your officials wanted to take that one up. You talked a little bit about research and development; I'm not sure if you answered fully on biotech.

Mr. Lyle Vanclief: There's no question that biotechnology is a subject that at some times can become what I refer to as an emotional subject with people. I want to stress very clearly that we have without question the regulatory framework in place. For anything that is developed with biotechnology, back to what I said about food, safety must be number one.

Biotechnology, in my layman's terms, is advanced science. A number of years ago, I'm sure all of us around the table used to say, “Isn't it wonderful what we can do with science?” Wasn't it wonderful in agriculture what we found out we could do in hybrid breeding in plants, for example? Now it's even advanced further than that, but I want to reassure everyone that safety is number one. The safety of the product of the result of biotechnology must be assured using the best science that's available today before the result of biotechnology can be used in the industry.

The Chairman: Mr. Jackson, just to follow up on your first question on the amounts of money in the research, how is that divided between the processing sector and the primary agricultural sector? Do the officials have any idea how that...?

Mr. Lyle Vanclief: The numbers are in here. One of the concerns a few years ago, when the matching investment initiative was first put in place, was that that would not end up with a very good split. I believe it's 47 to 53, if I'm not mistaken. I forget which is the 47 and which is the 53, but it's close enough to 50-50 as far as I'm concerned.

As for what I refer to as core research, unless the deputy has some comments, I don't know whether that has been split down or whether that can be split down as such.

Do you have any comments, Frank?

• 0950

Mr. Frank Claydon: Mr. Minister, we do not have a breakdown of the core research in terms of whether it's at the agrifood level or the agriculture level. I think it's fair to say the bulk of the core research tends to be at the more fundamental level, the agricultural side of things—the development of new crops and new varieties of crops that grow better in various circumstances, basic research on cattle, and so on—in terms of improving their use in the industry.

Some research takes place with respect to the processing industry. For example, at the Lacombe station in Alberta there's quite a large activity related to the use of meats, particularly beef, as a product in the processing industry. Some very interesting work is going on there on developing new ways of grading meat. In fact one of the things we're looking at is a new technology that we're actually going to be able to export to the United States regarding the way meat is graded, something we'll be able to earn some royalties on to help us keep our costs down within our own research establishment.

But I would say the bulk of the money in the core research is aimed at the agricultural side.

Mr. Lyle Vanclief: Just to add to that, Mr. Chairman, I want to emphasize as well that with the way we're doing things now, there's increasing.... I don't yet have the figure of the dollars it has brought us, but the deputy mentioned the word “royalties”. As we have ownership of some of the results of this, the government as the beneficiary can be the beneficiary of royalties from some of the results.

The other—and it is certainly a net benefit to the primary producer in the end—is the work that's done in the big food lab at one our centres of excellence at Saint-Hyacinthe, Quebec. I've had the opportunity to have a quick tour of that and see the work that's done there for the food processing and further processing and for and with that sector of the industry. Certainly when the processors find better ways to use primary products, two people at least benefit from that.

The Chairman: Thank you very much.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Chair.

Welcome, Mr. Minister.

Just as an aside, perhaps to the staff who are here, it is discouraging to hear it said that this document has been available for several weeks, because we only got it the day before yesterday, after we called to request a copy. So I don't know what happened between the time it was published and the time it got out, but that's our story, and that's a fact, and we're sticking to it.

Mr. Lyle Vanclief: I'm sorry. They're tabled in the House, Mr. Proctor, so....

Mr. Dick Proctor: Well, yes. Anyway, Mr. Minister, I wanted to contrast the unbridled enthusiasm and optimism that you demonstrated when you were before the committee last December with what I would describe as the unrelenting pessimism that farmers in the prairie provinces are feeling this spring and indeed were feeling this past winter.

I'll give you three numbers: 11, 15, and 35. That's not a fertilizer blend; that's the drop in net farm income that your department says is going to happen this year in the three prairie provinces, Alberta, Saskatchewan, and Manitoba, in that order.

The Canadian Federation of Agriculture says simply that the Department of Agriculture has cut far too deeply in safety net programs. The budget, if you look at it, in 10 years will have fallen by 80% of what we spent in 1991-92, to what you're saying it will be by 2001.

I'm just wondering how you square all of that and how you would respond to the CFA and to farmers in my constituency, but I'm sure others on the prairies.

Mr. Lyle Vanclief: On the projections for the net farm income for 1997, the numbers are not all in yet, but I agree they are higher than they have been in the past. The projection for 1998 is that there will be a dip in the net farm incomes in 1998.

We all know farming is cyclical and grain prices are cyclical. We have gone through a number of years recently where we've had very good grain prices, good pork prices, and good beef prices in the prairies, if I could go for those three in particular. There's no question, as well, that during that time farmers had the opportunity to—and the figures demonstrate that they did—make some major capital investments in order, I assume, to put themselves individually and collectively in a better competitive situation down the road.

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Yes, a number of years ago there was more on the safety net program. There is no question of that. I have said that the safety net program will be maintained at $600 million a year, which is the federal contribution to it. The provinces put in another $400 million a year. With the net income stabilization account, for example, farmers have built up I think $2.4 billion in their NISA accounts. Quite frankly, I hope they never have to draw on it, but it's there.

With that type of thing, and with the programs for crop insurance and the companion programs with the provinces, I'm very confident that type of safety net will assure the stability.

There will be ups and downs. I farmed for 25 years, Mr. Proctor. We all know that. There were good years and bad years. I know that. I hoped I would never have a bad one, but the reality is I did.

There are some pressures in the grain industry right now. That can change. I hope we don't have a drought or something someplace else in the world, but I just came back from Australia and I'll tell you they're scared stiff they won't have enough moisture to get through this year. We all know, for example, how quickly it can change. That's not an excuse; it's a reality of the flexibility.

It behoves all of us to make sure...and that's why the safety net review committee was put in place, that's why the provincial and the federal governments are talking. Let's make sure we take the available safety net money we have and build the best safety net we possibly can. Putting more money into it doesn't do any good, because hopefully it's not called upon. If it has sufficient money, it can do the job, and we're confident there's sufficient money.

Mr. Dick Proctor: Thank you. I think there's no question we'd all agree that farming is cyclical, but if you look at the realized net farm income over the last ten years or thereabouts, it really hasn't grown at all. We can see that the agricultural exports have increased exponentially, have more than doubled, but farm income has remained very flat over that period of time. So a decade is a long time for it not to become a pattern, I guess is what I'm trying to say.

Mr. Lyle Vanclief: Yes, if we go back to where it was ten years ago. But if you look at what's happened in a shorter period of time, it's an increase in what's happening.

As I say, I farmed for a long time, and I know that farmers always say they want the money from the marketplace, not from the mailbox. That's what's happening as well. There's been a tremendous increase. I don't want to get caught up in the numbers, or misquoted on them, but I think three to four times the percentage of the net farm income is now coming from the marketplace compared with what it was not too many years ago. That's the right direction to go.

I'm fully conscious of what you're saying, and it points out very clearly to us that we have to take the best and the most open and frank view of the whole development of our industry.

Mr. Dick Proctor: Just on that last point, Mr. Minister, your comments in the communiqué from Cairns would suggest that on the supply management side things are going to get a little worse before they get better in terms of reductions and so forth. I just wondered if we could get your comments and thoughts on that.

Mr. Lyle Vanclief: Every country, Mr. Proctor, has its sensitive areas. Certainly the United States has its sensitive areas. I was in Korea just last week, and they have a sensitive issue called rice. Japan has a sensitive issue called rice. We have a dairy, egg, and poultry industry, and we were very careful when we agreed to that communiqué from Cairns...that we are striving for a vision for the Cairns Group of greater trade and liberalization. We know very clearly that many sectors of our Canadian agriculture industry want greater trade and liberalization.

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In the last Uruguay Round, the government did a pretty good job of going forward with a balanced position. The reality as well is there is no question, and I've said this very clearly before, that a big challenge going into the next round is that there will be those who want greater reduction in the protective tariffs the dairy, egg, and poultry industries have at the present time.

If there is a reduction, how is it going to handled? I don't know yet. I've said it publicly before and I'll say here that probably three things will not happen. The protection level of what we had in 1995 and what we'll have by 2001, in all likelihood—we don't know—will not remain at 85%, nor will it go up to 90% or 95% or 100% of where it was in 1995, nor will it go to zero overnight, as maybe our American friends might want. I doubt if their protection on sugar and some of their other products will do that either.

Our challenge is handling the pressures we're going to have. How do others handle the pressure we're going to put on them? This is not a one-way street. I was in Korea last week, and they're paying six times the world price for rice because they want to protect their rice producers. We recognize that.

There are going to be some challenges, there's no question about it, but I'm confident that supply management will be here for a long time. The industry has been evolving, it's been doing it itself, it's been doing it within the trade agreements we are all signatories to. The federal government certainly has the legislation in place to allow supply management to continue, and the supply managed sectors are evolving between that legislation and the trade agreements to which we are signatories. They're doing a very good job of it.

The Chairman: Thank you very much.

Mr. Borotsik and Mr. Hubbard.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Minister, for the opportunity to talk to you in a public venue as opposed to just a private venue.

I am of mixed minds when I look at the financial spreadsheets from 1997 to the year 2001. There is obviously a substantial reduction in the total overall budget.

I appreciate the fact...and you had made a comment about the efficiencies that have been developed within your departments and the savings that have come from those. I'm also a little concerned that you're the master of a department that's shrinking to the point at which agriculture may be losing its influence, if you will, within government.

As you said, you've already commented that the efficiencies are a great part of that. Another big part of it is the pass-through of costs to the producer, and we can talk about a number of areas where that's happened. Do you see the majority of your efficiencies coming from that pass-through of cost to the producer as opposed to efficiencies within your department?

Mr. Lyle Vanclief: I'm not centring you out here, Mr. Borotsik, but I don't know whether you were here for the beginning of my opening comments.

Mr. Rick Borotsik: No, I wasn't, I'm sorry. Yes, you are centring me out, but no, I wasn't.

Mr. Lyle Vanclief: Okay. We're square on that.

I did explain that the difference between the $1.6 billion and the $1.2 billion is the ending of a number of expenditures and decisions. There are no cuts in this budget compared with last year's. There were budget cuts such as the dairy subsidy prior to 1997. These things are finished, so they're taken out of the $1.6 billion. The $300 million western grain transportation fund was there...and I could go down through them. About $442 million payments are finished, and it is not necessary that they be in the budget down the road.

Mr. Rick Borotsik: Thank you, Mr. Minister. In effect there were certain pass-throughs, because additional costs have been associated to producers with those programs being no longer in place.

Mr. Lyle Vanclief: Certainly there were some changes and some costs, yes.

Mr. Rick Borotsik: One program I am actually quite impressed with is the one you mentioned, the matching investment initiative. You say there will be $70 million this year, $35 million from industry and $35 million from your own department. I've had the opportunity to talk to some of the people in the research stations, and quite frankly, I'm very impressed with the buy-in there has been—boy, I had a lot of nervous looks back there, Mr. Minister—there with the staff.

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Mr. Lyle Vanclief: You can at least see them back there. I can't.

Some hon. members: Oh, oh!

Mr. Rick Borotsik: Actually, it's quite nice to see bureaucrats in these research stations actually getting involved in the industrial side of it.

Now, that's the positive. There is a little bit of a downside, and I'd like you to talk about it.

I've had the opportunity of talking to a number of universities that have in fact used industry in a similar fashion in the past, whereby industry would be a part of the research and development throughout the universities. They now are losing their opportunity to develop those dollars through industry. You're now saving on one side by now having the government go out in the research stations in getting the industrial side of it, but the universities are in fact now losing those funding dollars and they come from a different area.

Have you considered that at all, that you're impacting other institutions with your MII? Remember what I said. I like the program. I'm not saying it's wrong, but you're impacting another area that is cash-strapped, by the way, and that is our universities.

Mr. Lyle Vanclief: It's an interesting comment, because the MII program is way oversubscribed. We can't take them all on, because we don't have enough money.

I will follow up on your comment. As a matter of fact, in the very near future, I plan on having one-on-one meetings with a number of the university presidents, and we'll raise this with them at that time. I have talked to a number of them already. Individually, they haven't raised that with me.

It's certainly not our intention. It's my understanding that there are enough research dollars out there to go around for all of us. I know there is a cluster that's taking place at Saskatchewan. There is certainly one of these types of things—biotech and others—taking place at the University of Guelph.

Mr. Rick Borotsik: The one I referred to was the ag facility of the University of Manitoba, and that was a comment made to me by the ag dean. It was not necessarily the president, so the president may well not be aware of it as similar to yours.

Mr. Lyle Vanclief: Okay, we'll follow it up.

Mr. Rick Borotsik: I would also like to make one more other comment.

The Chairman: Very short.

Mr. Rick Borotsik: Very short. You don't time this, you just make it up, don't you, Mr. Chairman?

The Chairman: The clock's right here.

Mr. Lyle Vanclief: I'm sure he does. He must be using the same time clock I used to, and it worked then.

Mr. Rick Borotsik: Anyway, I have one other question, if I may, and it's an interesting one.

I've gone through some of the background document. Your research, your value-added R and D, and your biotech are very laudable. One of the problems that flows from them in value-added processing particularly, though, is a requirement for infrastructure development in communities that you talk so nicely about, particularly the rural communities in Canada. The infrastructure development is necessary in order to accommodate that value-added processing. There's nothing in Agriculture, and I can quite honestly tell you there's very little in any other government budgets right now. To have the best possible plan in place, the best R and D, and the best value-added, and to not have the infrastructure to accommodate them, is a waste of time and money. Have you given any thought about how your department can accommodate them?

Mr. Lyle Vanclief: I think I can safely say we're not going to have money in our department to go out and build infrastructure, but I don't think you're asking for that.

Mr. Rick Borotsik: That's not what I'm asking. I'm talking about a marriage, if you will, between what you're doing and what other departments in government are doing, and what can accommodate that infrastructure.

Mr. Lyle Vanclief: That's the whole Canadian rural partnership, which is led by, but is not only, the Department of Agriculture and Agri-Food.

Mr. Rick Borotsik: It's $20 million over five years.

Mr. Lyle Vanclief: Yes, but in my opening comments I said the $20 million is to be used to look at priorities and programs, the types of things that can happen. That's why we're having the rural dialogue, so people can have the opportunity to have their input. I've had these discussions with rural caucuses and folks for a number of years, and it's a struggle to know how to handle that.

If you look at the KPMG study that was put out, the one that was done last year comparing seven countries and 42 cities, agriculture was one aspect of what they looked at, and the investment climate in Canada is probably the best in the world in the agrifood industry. When you look at the fiscal situation that we have in Canada now—inflation rates, interest rates, etc.—it's very attractive to that.

We've said this before, but one of the difficulties we have is that we say we have to do something more to develop rural Canada, but we then push each other back against the wall and ask what it is. It's not throwing money at it, and I know you're not saying that. How do we do it? That's the challenge that's out there for us. I agree it's a frustrating one, but the reality is that the stronger the whole economy is, the easier it is for that to take place. There was the Canada infrastructure program for a number of years, but that's over and done with now. There's the PFRA water infrastructure program that they have as well. Within the realities of the fiscal situation that we have, I certainly would welcome any ideas that you have on how we can go about this.

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The Chairman: Mr. Hubbard, and then we'll go to Mr. Hill.

Mr. Charles Hubbard (Miramichi, Lib.): Thank you, Mr. Chairman, and good morning, Mr. Minister.

First of all, I would like to compliment you on the fact that you were able to, with your cabinet colleagues, get some assistance for the part-time farmers in Ontario and Quebec. I think you realize, Mr. Minister, that more and more farmers are becoming part-time today because off-farm income has become a necessity for many of the farm groups. Basically, I think you should try to look at other methods of helping some of these part-time people, who are really the majority of farmers in this country.

In New Brunswick, we have the largest rural population of any province in Canada. I know your department is very important to us. We certainly would like to see more initiatives in terms of trying to develop, improve and enhance rural Canada—and I hope this committee can work with the minister to do that, Mr. Chairman.

I think most Canadians generally realize how important rural Canada is, or that more than 40% of our exports are developed through rural initiatives. I happen to be very much concerned, Mr. Minister, with the fact that many agricultural people in this country feel very insecure with foreign competition. In terms of many of our crops, and also in the beef industry, we have to be concerned with more than something like 75,000 tonnes of beef entering our markets each year. I know you did allude to the fact that the beef sector was good, but I certainly don't think the Canadian Cattlemen's Association would agree with you.

Mr. Lyle Vanclief: I said it was good.

Mr. Charles Hubbard: Yes, some time in the past.

In terms of foreign competition and the new trade talks happening down through the Americas, how does your department see concerns for cash crop farmers and others being affected by crops that can be produced with very low labour costs in other constituencies?

Mr. Lyle Vanclief: First of all, I will be in Atlantic Canada in May for three days, I believe, to meet with industry people, ag ministers and others there. I just wanted to put that out now.

Let me explain it this way, with a well-worn phrase. The world is awfully small. It's globalization. When I have a horticulture producer telling me the price of apple juice in Canada today is being determined by the price of apple juice coming from China because China is the biggest apple producing country in the world—it's no bigger a country than ours, but it's a big country—that's the reality we're in.

I also have another way to describe it. When my part of Ontario started growing grain corn in the early 1960s for feed, it really didn't matter what I needed or thought I needed for a bushel of corn. At that time, the price was set by how much people in Rose-Marie Ur's riding would deliver to Belleville for, because in the Chatham-southwestern Ontario part of the province that was where they were growing corn. Then it got bigger—and I'm being simplistic—but it was how much it could be delivered from the States for. And now we have countries like China also exporting corn.

So it's tough. It's a very small world and there is a lot of global competition. There is no question of it. What we have to do, and what we are continuing to do, is get the best possible trading agreements that we can—NAFTA, free trade for the Americas, negotiations with the European Union, or countries in Asia through the World Trade Organization—for trade access to their countries or whatever the case might happen to be. We then have to work with our industry to make it as competitive as we can possibly help it to be in order to compete in the reality of today.

• 1015

Whether we like that reality or not, it is a reality that we have to deal with. We are probably not going to change that whole globalized situation. We have such an incredible ability to produce in this country, and we have the best quality in the world as well. But we can't eat it all. We can't use all that we can produce.

The trade goes back and forth. As we know, for example, in the beef industry, western Canada sells the beef down into the U.S. south, and in eastern Canada the beef comes up from the U.S. That's simplistic, but it's a circle that goes around, just because of the production. Our exports to the U.S. have doubled under the NAFTA agreement.

The margins are increasingly challenged. I don't deny that in any way, shape or form. I don't like to see that happen, but it's also a reality. Show me one industry out there today in which the margins aren't being challenged. The margin of profit per unit of production is being increasingly challenged because of efficiencies that other people develop, efficiencies that one producer in Canada develops compared to his neighbour, whether that neighbour is on the next road, the next farm, or in a province someplace else.

The Chairman: Thank you very much. Mr. Hill.

Mr. Jay Hill: Holy smokes, that was quite an answer, Mr. Chairman.

Following the precedent of question period, Mr. Minister, I'll try to keep my questions short if you try to keep your answers short.

I want to get back to this ice storm special program, the side program to the DFAA ice storm disaster. I want to make it perfectly clear that I'm not opposed to it. Would it be fair to say that you moved unilaterally, not waiting for Quebec to buy into the assistance for part-time farmers, because you saw a very real need there that was not addressed under the criteria of the DFAA?

Mr. Lyle Vanclief: We were determined, Mr. Hill, to make sure, as we did in the Saguenay and the Red River floods, that part-time farmers were eligible for compensation for the very same issues and losses as were full-time farmers. We were not going to make a difference between the DFAA definition of a full-time farmer and a part-time farmer. We were determined to treat everybody the same—

Mr. Jay Hill: Okay.

Mr. Lyle Vanclief: —and we did, from the federal perspective.

Mr. Jay Hill: When was the precedent set to move outside of the DFAA and create a new program? Somebody must have set up that special program initially.

Mr. Lyle Vanclief: I could be corrected, but I think the first subsidiary agreement was the Saguenay. The second one was the Red River—

Mr. Frank Claydon: The Edmonton tornado.

Mr. Lyle Vanclief: Oh, sorry, the Edmonton tornado was the first one. And the Saguenay—

Mr. Jay Hill: Okay. So some minister at some time made a decision to move outside that because they saw a need there. Right?

Mr. Lyle Vanclief: Yes.

A voice: It was cabinet.

Mr. Jay Hill: Don't you think—

Mr. Lyle Vanclief: It was cabinet. Those decisions aren't made by a minister; they are made by the cabinet.

Mr. Jay Hill: I appreciate that. Wouldn't you say, then, when you see the very real needs of Peace River farmers in northeastern British Columbia and northern Alberta and when you see the farmers in New Brunswick and Nova Scotia who don't fit into the DFAA box, that someone somewhere has to take the bull by the horns, set a precedent and say that there is a very great need to address this and help those farmers?

Mr. Lyle Vanclief: In the subsidiary agreements that I referred to, what we covered were the losses, the compensation that met the criteria of the disaster fund and assistance agreements with the provinces. Those losses that are covered do not include insurable losses and do not cover loss of income, inconvenience or loss of opportunity.

In regard to the losses you're referring to in the Peace River, there's crop insurance there, there's NISA there, and those programs that are there. In those types of losses that have taken place in those areas—

Mr. Jay Hill: Are you aware that you can't get crop insurance if you don't get your crop seeded?

Mr. Lyle Vanclief: Yes, there is crop insurance for unseeded acres, sir. That's right. I'm also aware that—

Mr. Jay Hill: Do you think it's adequate, Mr. Minister, to cover the overhead costs of a farmer two years in a row?

Mr. Lyle Vanclief: That is set by the province. So in the case of the Alberta Peace, that is an agreement reached between the producers and the provincial government on the level of coverage.

Mr. Jay Hill: You've said you would—

The Chairman: Mr. Hill, please let the minister finish.

Mr. Jay Hill: Yes. I'm conscious of the time here.

The Chairman: Okay.

• 1020

Mr. Lyle Vanclief: That agreement on what is covered and to what extent it's covered, Mr. Hill, is determined within each province, and the federal government pays its portion of whatever is determined within that province.

Mr. Jay Hill: Okay. Earlier, in questions in the House of Commons about this very real issue for so many farmers in the east of the country and in the west, you said you would consider it if a province came to you with an application. My understanding is that Minister Stelmach from Alberta has written to you—as long as three weeks ago—and has not received a reply yet. Can you enlighten me and northern Albertan farmers who are facing putting their crop in very quickly as to where you're at with that request?

Mr. Lyle Vanclief: I haven't replied, but our officials have had a number of meetings with the officials from the agriculture department, Mr. Stelmach's department, discussing this very issue. And I will be replying to Mr. Stelmach in the very near future.

Mr. Jay Hill: Thank you.

The Chairman: Thank you. Mr. Proctor.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Mr. Chair, on a point of privilege—

An hon. member: A point of privilege? Whew!

Mr. Larry McCormick: Well, you can either give it to me or not, Mr. Chair.

Some hon. members: Oh, oh.

The Chairman: You have the privilege.

Some hon. members: Oh, oh.

Mr. Larry McCormick: Can I give it to you now, Rick? I would gladly do that if the chair allows me to, my friend.

The Chairman: Go ahead.

Mr. Larry McCormick: Thank you, Mr. Chair. I just want to apologize for being about 14 minutes late.

With all due respect to the minister and the officials here, this is the fourth year that I've put on the record that I do believe there's one day a year when no committee should start before 10 a.m. I've walked out before on the Prime Minister and the leaders of the other official parties, but I didn't feel that today was the day to walk out—and Paul Henderson was there this morning with many of us.

So I want to put on the record that on a day of the year which is only scheduled for a few months ahead—it's certainly not the responsibility of the chair or clerk here—when the national prayer breakfast is here, with a few hundred people and sixty-two countries represented, and all colleagues, I just want to say that I think we still have to look at that at a future time.

Thank you, Mr. Chair.

The Chairman: Thank you. Mr. Proctor. Mr. Proctor?

Mr. Dick Proctor: Oh, sorry. I was meditating on that.

Some hon. members: Oh, oh.

An hon. member: Offer a short prayer.

Mr. Larry McCormick: That would be terrific.

Mr. Dick Proctor: I had a couple of follow-up questions on cost recovery, Mr. Minister.

The CFA says that all of this is making farmers uncompetitive and that it's time to rethink the whole area of cost recovery. I wonder if we could get your response on that.

And I have another question on the CFIA.

Mr. Lyle Vanclief: There's a cumulative impact study that is nearing completion as far as cost recovery goes, about the effects on farmers and everyone involved in the cost recovery initiative. It will be out towards the end of June. We have gone out of our way when issues have been brought to us, as we've felt that there have been undue effects of cost recovery. Unfortunately, Mr. Proctor, cost recovery is probably one of the realities of the day as well, and there's always the decision on what the private good is and what the public good is as far as cost recovery goes.

If I could refer to the cost recovery fees of the Canadian Food Inspection Agency, they're less than 20%. Closer to 15%, I believe, of the budget of the Canadian Food Inspection Agency comes forward from cost recovery. If we look at the figures in the United States, they're higher than that. And just as an aside, in the United States and in Great Britain, for example, they are going to move to 100% cost recovery in meat inspection. We are a long way from that. So it's one of the realities that we do have to deal with, but we'll try to be as fair as we possibly can.

The Chairman: Thank you. We'll keep everybody to a tight five minutes to get everybody's questions in.

Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair, and I do apologize, Mr. Minister, for being late. Larry and I were together—

Some hon. members: Oh, oh.

Mrs. Rose-Marie Ur: The CFIA has been around for a year now. Could you give us your personal feelings as to whether you really feel you've accomplished the goals you had after one year with the program? Is it working to the standards you had hoped it would?

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Mr. Lyle Vanclief: Yes, it is. There are always issues that will come up when you put together four and a half thousand people who came from four different departments in the past. This is not just because some of them are sitting here with me, but I do think the officials have done a tremendous job putting that together. At no time—and this is the critical point—was the safety of the Canadian food system in jeopardy. That's the bottom line on the whole thing.

A lot of our employees were displaced. There were employees who went from one department to another and had to move to another city. Their families were uprooted, whatever the case might happen to be. But they have done a very good job.

Mrs. Rose-Marie Ur: Will the numbers remain the same within the agency?

Mr. Lyle Vanclief: There's a slight reduction in the numbers taking place. They're all taking place on a voluntary system. Dr. Olson can confirm this, but I believe it's 315 people.

Mrs. Rose-Marie Ur: Who'll be leaving.

Dr. Art Olson: Correct.

Mrs. Rose-Marie Ur: What is the total amount now?

Dr. Art Olson: About 4,260. We bring in a significant number of summer students to deal with holidays and training and what have you, so the numbers vary over the summer, but the permanent establishment of the organization is about 4,260.

Mrs. Rose-Marie Ur: Which sector, Mr. Minister, do you really feel has had the most impact regarding the program?

Mr. Lyle Vanclief: In the agency?

Mrs. Rose-Marie Ur: Yes.

Mr. Lyle Vanclief: The biggest thing that's been done is the de-layering. There was an incredible number of layers in the food inspection system before. The management team there has done a tremendous job taking out a number of those layers. That has meant the inspectors are still there, but we have fewer processing plants in Canada than we used to. Some of them are much larger than they used to be, but we have basically the same number of inspectors as we had in the past.

We are moving to the hazard analysis critical control points method of doing things. As we know, a worn example is that if somebody's sitting there and seeing 90 chickens go by them an hour, yes, they can tell whether there's a wing missing, but is that the best way to use food inspectors? Or do we use them to make sure that the technology to check the quality of the water the chickens are being washed in—and I'm being very simplistic here—is being done properly?

Mrs. Rose-Marie Ur: I've had several meetings with ag associations in the riding over the past few months, and it's been brought up each time that they certainly appreciate the exporting of agriculture products. Certainly the numbers are there to show that we're escalating there, but at the same time, farmers don't appear to be pocketing as much. They're really concerned about that.

They say, for instance, their government can really stand quite tall, and the export market is really surpassing anything they expected, but on the other hand, the farmer is not having as much take-home pay.

Mr. Lyle Vanclief: In every speech I give, Mrs. Ur, I stress that exports must be profitable exports. They must be profitable not only for the final exporter but also profitable back to the primary producer. There are a lot of links in the chain, and we have to work to make every one of them as economically viable as we possibly can. Hopefully, the gauge of steel of each one of those links is the same, and not out of proportion.

I made some comments to Mr. Hubbard earlier that the margins are tight. That's one of the reasons that some farm operations are getting larger, to capitalize on the fact that they have to produce more units in order to have the same standard of living they want to have for their family. It's a reality.

The Chairman: Thank you very much.

We'll go to Mr. Borotsik, Mr. Grose, and Ms. Alarie.

Mr. Rick Borotsik: Thank you, Mr. Chairman. I won't be long. I just want to make a comment.

I heard the minister extol the virtues of the free trade arrangements and agreements, including NAFTA. It's funny how an election into government has a tendency to change people's attitudes to trade arrangements and trade agreements.

You've said that in fact the exports have doubled under NAFTA. I had heard at some point in time that the agreement was going to be ripped up. I do accept and I do appreciate your full support on trade agreements, but it's funny, as I say, how that does change philosophically.

• 1030

Mr. Lyle Vanclief: Do you want me to comment now or later?

Mr. Rick Borotsik: No. I have just one question. I go back to the $600 million you say has been sustained for not only NISA but all the safety net programs. I guess I want some assurances.

I appreciate that NISA has been and will be a very good safety net program. However, I look at the budget lines here, and you said initially in your remarks the reason why there's $300 million less in one budget line is because of the grain transportation—the Crow rate that was taken out. NISA is about the same about of money; $600 million is what you talked about as a contribution from this government. NISA and the safety net programs will be reviewed in the very new future.

Is this another line in the budget that can be reduced in the next budget that comes around, Mr. Minister, or will the safety net programs be protected?

Mr. Lyle Vanclief: I gave the assurance earlier today and I will continue to say the $600 million is in the budget for the three years.

Mr. Rick Borotsik: For the three years.

Mr. Lyle Vanclief: That's as far out as we go.

Mr. Rick Borotsik: You can't make any assurances beyond that, Mr. Minister.

Mr. Lyle Vanclief: No, I can't.

I can't go on without making some comments on the trade agreements. Mr. Borotsik, you didn't have the good fortune of living in my riding over the last number of years. Had you been there, you would have heard me say very many times that any agreement, be it the FTA or the NAFTA, can have its pluses and its minuses. They have had that, there's no question.

One of my concerns in 1988 was the fact that the horticultural industry, in the short term at least, would be very heavily hit by the FTA. I'm not happy to say it was. It has adjusted. It still has some adjustments to make, and it's in the process of doing that.

The Chairman: We won't get into this debate. We already did this in 1988.

Mr. Grose.

Mr. Ivan Grose (Oshawa, Lib.): Thank you, Mr. Chairman. I must admit right off the bat that my only acquaintance with agriculture is that I consume the end product. I only had ten minutes' notice to come to this meeting, and therefore my research is rather limited. But so I don't sit here like a bump on a log, I'll ask a question.

Mr. Minister, you mentioned the moisture situation in various countries around the world. I'm told by my one farmer friend that the moisture situation in Canada is not good this year. Do we have an adequate relief arrangement in place or are we going to be scrambling at the last moment?

I'm interested in this because if the farmers' incomes are not adequate, they do not buy new cars and trucks. Guess who makes the new cars and trucks?

Mr. Lyle Vanclief: They wouldn't happen to be made in your riding, would they?

Mr. Ivan Grose: Just by chance, they are.

Mr. Lyle Vanclief: What you point out, Mr. Grose, is the importance of the maintaining of the safety net system we've been talking about. The safety net system is the right system and it is an investment made by everybody, whether it be the federal government, the provincial government or the producer; whether it be crop insurance or taking part in the NISA program or companion programs within the different provinces. That's the important thing there, and we have to have it there. I've certainly expressed my views on the importance of that.

The moisture situation certainly was not good in much of western Canada earlier this year. They were fortunate enough to get some good rains and some good snow in most of those areas. There are some areas that are under considerable stress right now in western Canada.

They are getting an early start getting the seed in the ground, as is Ontario. You like to seed to come up soon, but from past experience, you have a better chance over a longer period of time of getting the rains you need. The worst situation is, for one reason or another, not getting the crops in until later and then having no moisture. But we are dealing with agriculture and, thank goodness, neither the federal government nor the provincial government controls the weather.

The Chairman: Thank you.

Mr. Ivan Grose: I had my own business for 35 years, and believe me, all my years weren't good either.

The Chairman: Thank you. Madame Alarie.

[Translation]

Ms. Hélène Alarie: Mr. Minister, with regard to rural development, I'd like to know what the budgetary goals are in that area.

[English]

Mr. Lyle Vanclief: Madame Alarie, in the ministry there's a rural secretariat. That is an ongoing secretariat in Agriculture and Agri-Food Canada.

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The $20 million that was in the recent budget over 4 years is further money, on the basis of $5 million a year, in order to work towards developing and funding some pilot projects and those types of things. I believe I expressed our frustration to Mr. Borotsik a few minutes ago on how we can talk about it and the types of things that can be done.

As I said, I'm extremely pleased with the cooperation and the efforts of all different ministries. As for the rural ends aspect, there isn't one policy or issue that comes before the cabinet that I don't make comments on how that's going to affect and help rural Canada, wherever that is.

For example, we are working very closely in a tremendous relationship with Solidarité rurale du Quebec, and they are doing some tremendous things. I have shared a number of hours with Jacques Proulx, who expressed to me last summer that they are doing some things they want to share with the rest of Canada because of the successes of the types of programs they're doing in the province of Quebec.

The other area, which I refer to as the secretariat in the department, is the cooperatives. There is a tremendous amount of work that is being done and that can further be done in terms of the cooperative organizations in Canada, in local communities, bigger companies, or whatever.

[Translation]

Ms. Hélène Alarie: If I understand correctly, it is a national program within which regional characteristics are taken into consideration.

[English]

Mr. Lyle Vanclief: We are having discussions with each individual province so that there is no duplication, but we take every opportunity we possibly can in order to form partnerships with them. For example, we have supported Solidarité rurale financially in the work they are doing. That type of cooperation and partnership is vital.

[Translation]

Ms. Hélène Alarie: Thank you.

[English]

The Chairman: Mr. Hill.

Mr. Jay Hill: Mr. Minister, you were talking about the NISA, the net income stabilization account. Is that available to all farmers?

Mr. Lyle Vanclief: It's available to all farmers who wish to use it, except supply management.

Mr. Jay Hill: That was my recollection.

Mr. Lyle Vanclief: I believe beef farmers in Alberta and B.C. have chosen not to participate.

Mr. Jay Hill: But even if supply management wanted to participate, they're excluded under the present rules, are they not?

Mr. Lyle Vanclief: They have told us at the present time that they're not interested in even having a discussion about it.

Mr. Jay Hill: I see. I've been informed that—

Mr. Lyle Vanclief: Excuse me. The deputy just informed me that in Quebec it's only horticulture that's in NISA. They have provincial programs in Quebec.

Mr. Jay Hill: I see. But it is available to all farmers and it's just that some have chosen not to participate?

Mr. Lyle Vanclief: Does somebody want to give a better explanation of that? Mr. Hedley.

Dr. Douglas Hedley (Acting Associate Deputy Minister, Policy Branch, Department of Agriculture and Agri-Food): The NISA program is available to all farmers as the program is structured. It is, however, up to the federal and provincial governments jointly to determine which commodities are brought in and funded under the program. In some cases provinces prefer not to cover certain areas, whereas the federal government typically is willing to cover whatever the province is willing to cover.

What that has left us with is virtually all the grains and oilseeds. In Alberta, beef is not there. In Quebec it is only horticulture that is covered. We make arrangements through the hogs and the ASRA program with Quebec for that same amount of money.

Mr. Jay Hill: What I hear in that answer is that in some cases it's the provinces that are excluding some farmers or some commodities from participation and not the farm groups themselves or the farmers themselves. Is that correct?

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Dr. Douglas Hedley: It is up to the province along with the federal government to determine in each province what is in, yes.

Mr. Jay Hill: I've been informed that in the calculation of net income, farmers have been surprised to learn that in western Canada shipping, elevation, and handling are not considered expenses. Is that correct?

Dr. Douglas Hedley: The issue here is the point-of-sale argument.

Mr. Jay Hill: To the farmer, they sell it when they haul it to the elevator. That's what they consider.

Dr. Douglas Hedley: The net receipt they receive for it is the initial, minus the initial established at port, minus the transportation costs back to that point.

Now, you really have two ways to deal with it. One, you can give them the initial at port. Then you would have to have that as expenditures in their accounts. Two, you can give them the net at the elevator system when the grain goes in the system.

Otherwise, you end up with a beef farmer saying, no, I own the animal all the way through to the retail counter, and that animal is worth $8,000, or whatever it is, when I get there.

So if you don't stop it at the elevator, you can go to port, or you can say that when the grain arrives in China, or wherever it goes, that's really my final point of sale. You have to find the line somewhere. As a result, it is when the farmer gives up title to that at the elevator and receives the initial price.

Mr. Lyle Vanclief: Mr. Hedley's coming before the committee again, I believe, in the very near future, Mr. Hill, if you want to follow up on it at that time.

Mr. Jay Hill: I have one more short question.

Is the department putting together some type of clear, and hopefully reasonably concise, communications package to try to explain this? I mean, to me it's incredible. I've farmed for 20 years. That's maybe not quite as long as the minister, but almost.

On the basis of an input cost and expense, farmers are now totally picking up transportation costs after the demise of the WGTA. For the government, in the design of this program, to have it that this is not considered an expense is.... I mean, the farmers cannot understand it. Frankly, I don't understand it. It's a very complicated issue, the way you just tried to explain it.

Is there some communications piece being put together to try to explain this?

Dr. Douglas Hedley: We are reviewing this right now in both the NISA committee and the overall safety nets committee. We expect to report to federal provincial ministers this July. I think we'll look forward there to any changes in the safety net system over the next one to two years, based on that meeting.

Yes, we are concerned about this, about getting the information out. We are working on that information now.

Mr. Jay Hill: Thank you very much.

The Chairman: Mr. Proctor.

Mr. Dick Proctor: Thank you.

I'd like your thoughts, Mr. Minister, on the consistent theme that I think has emerged this morning from both sides—that is, the current low income of farmers and the growth of part-time farmers.

Personally, I can't think of any other business where someone might have $1 million, $2 million, or $3 million invested in an operation and yet somebody in that family has to work outside in order to bring in enough to provide for the basics of life.

Within your department, what are the projections? Are we going to see a continuing growth in the number of people who farm for a living having to work outside, off the farm, in order to keep that operation going? Are there longer-term projections by the department?

Mr. Lyle Vanclief: I'm not aware, Mr. Proctor, of any longer-term projections, but I do want to comment. As you say, there are more part-time people involved, and part-time farming, but statistics will also show that there are more full-time farmers than there used to be. How that works out on a percentage basis I don't know, but there are more people.

This is not unique to the agricultural industry. I'm sure all of us wouldn't have to think very long before we thought of friends and acquaintances in all kinds of businesses in which two people in the family are in the workforce. That is a reality and it has always been a reality in agriculture.

• 1045

A lot of us can probably remember a time when a bigger percentage of farms were small compared with today's sizes. The farm was—still is but was more so then—a way of life. The family was raised there and they produced enough to feed and clothe the family and meet the rest of the desires of the family.

In many cases now, farms are much more a larger business, but there are a lot of part-time farmers, there's no question. Part of that is out of necessity, probably. The other part is...and I'll use a personal example. Our own son farms 800 acres and works full-time off the farm, and that's his choice. I asked him one day why he chose that; he said he wanted to pay down his mortgage faster. He could still pay it down, I hope, over a period of time, but he's made a decision to put himself through. He's younger than I am, obviously, and is prepared to do that.

Mr. Dick Proctor: I'll preface my last question by saying I was always terrible with math, but how can there be more part-time farmers and more full-time farmers at the same time?

The Chairman: Do you want to comment on that, Frank?

Mr. Frank Clayton: What's happening overall in terms of the farm population demographics is that during the 1950s through to the 1970s there was a very large decline in the number of overall farmers. In the 1980s and into the 1990s the numbers go down a little bit, but it's incredibly stable. There's a bit of a myth that there's a big decline in the number of farmers in Canada going on at this point in time.

What seems to be happening with the numbers, though, is that there were a lot of small full-time farmers who were trying to make a full-time living out of farming. What's happening is that those people in the middle, their numbers are going down and they're deciding to become big, full-time farmers and go at it as a commercial operation. There's a significant increase in the number of farmers who are making that kind of choice. We're seeing farms, for example, with more than $100,000 in sales, and their absolute numbers are actually increasing over time.

On the other hand, a lot of farmers are saying they will go with either an economic choice or a lifestyle choice in terms of a two-income operation. They will keep their farms but know that if they don't grow it they'll have to supplement it with other income. It's sort of the middle that is being vacated, and people are making those choices, either to be full-time or use a second income for support.

We could show you some of those graphs when we come to talk to you later on.

The Chairman: Thank you very much.

Mr. McCormick will conclude.

Mr. Larry McCormick: Thank you, Mr. Chair, and thank you, Mr. Minister and officials, for being here again. I hope we have you back.

Biotechnology has always been of interest to me. You've heard this before. And today it's certainly touching all facets of Canadian agriculture. There are hundreds of new companies compared with what there were just a few years ago.

I have two requests. One, since we have quite a few people here, can you tell us what is biotechnology, because I still have people ask me that in the street. Also, does your department—

Some voices: Oh, oh.

Mr. Larry McCormick: No, I think “what is biotechnology” is very important, because people have only heard about one product, rBST. They've accepted the Flavr Savr tomato. I've put the question on the floor before. I think it's very important.

Mr. Minister, does your department invest, specifically target, a lot of money into biotechnology because of the importance of that research, or not? I want to learn a little, if I could. Thank you.

Mr. Lyle Vanclief: Mr. McCormick, I think the best way to answer that is that biotechnology is a word that's been given to what I said earlier—as we used to say, advanced science. It's a method of doing things today that wasn't used, maybe wasn't thought of, wasn't available to be used a number of years ago. So I can't quote you one definition of biotechnology. I've seen a number of them, but I can't quote one off the top of my head. It's advanced science and it's very specific.

Mr. Larry McCormick: I think that's a good definition. I wanted to—

• 1050

Mr. Lyle Vanclief: There's no question that it's very specific. I saw some work that was being done, I believe it was in Saskatoon, last year, where they were using biotechnology to develop a product that would break down organically very, very quickly. It was to be used to control the Canada thistle on the prairies. It's very positive, tremendous stuff. It's accepted much more readily in the plant kingdom than it is in the animal kingdom, and we're aware of that.

However, following on that, we cannot be complacent—I stress this to everyone all along—and just say that this is the way it's going to go and it will be accepted. There are people in areas in the world and in North America, without question, who question biotechnology.

What I stress continually is that those decisions must be based on science, on the best scientific evidence that we have today. The European Union is very, very conscious and very, very paranoid, if I could use that word, about the word “biotechnology”. As for genetically enhanced organisms, for example, they seem to be very frightened of them. We have a challenge to explain what it is and that it will not be used unless safety is the number one issue.

The Chairman: Thank you very much.

Colleagues, we'll continue our study of the estimates next Tuesday with departmental officials, but we agreed some months ago to meet with the foreign affairs committee and with a delegation from the World Bank at 9 a.m. on Tuesday.

Before we go, Mr. Minister, I'd just like to mention the long-term dairy policy. Is that due out fairly soon?

Mr. Lyle Vanclief: The industry tried to come up with a long-term dairy policy a year or so ago, they could not come up with a long-term dairy policy among themselves. They agreed on some methods of pricing over a period of time with some discussions. It's the industry, if there is a long-term dairy policy, that will have to develop it themselves.

The government—I believe, with a committee led by our colleague Jerry Pickard, parliamentary secretary to Minister Goodale at that time—worked with them. I guess they all agreed in the end that they couldn't come up with a long-term dairy policy.

The industry, between the producers and the processors and everyone involved in it, has been evolving. The dairy policy in Canada, whether it be ingredient pricing, milk class pricing, or whatever the case might happen to be, has been doing that and continues to do that. It's up to them. That may be the approach to any evolution that takes place that they end up using.

The Chairman: Thank you, Minister, for your time this morning. We may take you up on your suggestion of coming back in June.

Mr. Lyle Vanclief: I'm going to ask to come back in June. I hope you don't turn me down.

The Chairman: I doubt if we will.

The meeting is adjourned.