FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 23, 1999

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[English]

The Acting Chairman (Ms. Sarmite Bulte (Parkdale—High Park, Lib.)): Good morning, ladies and gentlemen. I'd like to call to order this meeting of the Standing Committee of Foreign Affairs and International Trade.

[Translation]

Welcome to our guests and thank you very much for being with us today. It's a great honour to be with you.

[English]

Pursuant to Standing Order 108(2), the main committee is conducting an examination of Canada's trade objectives and the forthcoming agenda of the World Trade Organization. In addition, the Subcommittee on International Trade, Trade Disputes and Investment is conducting an examination of Canada's priority interests in the Free Trade Area of the Americas agreement process.

This is the second meeting of the first series of public hearings being held by the committees across the country on key aspects of Canadian international trade policy. These hearings come at a time when countries are facing some crucial choices and decisions in the complex negotiating processes being conducted both multilaterally, under the auspices of the World Trade Organization, and in developing regional forums, such as the proposed Free Trade Area of the Americas.

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In undertaking wide-ranging studies and public consultations on Canadian interests in both the WTO and the FTAA negotiations, the committee and its trade subcommittee strongly agree with the Minister for International Trade, Sergio Marchi, on the necessity to provide Canadians with more opportunities to have input into the positions the Government of Canada takes going into such negotiations.

This week, while one half of the committee is holding hearings in the Atlantic provinces, the other half of is having similar hearings in Quebec. In the last week of April the committee will again divide into two groups in order to be able to conduct extensive hearings in Ontario and in the western provinces.

We hope to benefit from as a broad cross-section of Canadian opinion as possible, and to reflect that in reports to be tabled in Parliament before the summer in advance of the major international trade meetings taking place later this year.

Leading up to this phase of cross-country consultations, the committee in February heard first from the minister and his senior officials. Following that, during March some very successful initial round tables were convened in Ottawa, with presentations from some 40 witnesses, covering a range of systemic and sectoral corners.

As Minister Marchi stated in his opening presentation to us, international trade has now become a local issue. What happens far away at negotiating tables has consequences that reach right onto the kitchen table and into other domains of life.

As this trend deepens as a result of globalization, the making of trade policy cannot be left only to a few officials in back rooms. It needs to engage the whole of society, and governments at all levels.

The members of this committee therefore welcome these hearings as one step in contributing towards that goal. We encourage more citizens in all parts of Canada to participate, to give us their ideas, and to follow the progress of our parliamentary studies process in the coming weeks and months.

[Translation]

Of course, both official languages can be used and feel free to speak the one you prefer.

[English]

Before we begin, I would like my colleagues to introduce themselves.

I'll start with you, Mr. Stinson.

Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): Good morning. My name is Darrel Stinson. I'm the member of Parliament for Okanagan—Shuswap of British Columbia. It's a pleasure to be here this morning with you gentlemen.

[Translation]

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): Good morning, gentlemen. My name is Daniel Turp and I am the member for Beauharnois-Salaberry. I am the Bloc Québecois speaker for external affaires and a member of this committee.

[English]

I'm happy to be in your beautiful city.

Ms. Wendy Lill (Dartmouth, NDP): Hello. I'm Wendy Lill, the member of Parliament for Dartmouth.

I know one of you is from New Germany. I'm not sure whether anybody is from Dartmouth. Welcome to the hearings.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I'm Bob Speller, member of Parliament for Haldimand—Norfolk—Brant. I'm parliamentary secretary to the Minister of International Trade. In a past life I was chair of the Standing Committee on Agriculture.

The Acting Chairman (Ms. Sarmite Bulte): I'm Sarmite Bulte, but everybody calls me Sam. I'm the member of Parliament for Parkdale—High Park in Toronto.

I have the honour and the privilege of chairing this committee as we travel across Canada. As well, I am chair of the Subcommittee on International Trade, Trade Disputes and Investment.

Welcome to all.

Mr. Johnson, please.

Mr. Jack Johnson (Executive Director, Nova Scotia Milk Producers Association): Thank you very much, Madam Chairperson.

I'm not sure how thoroughly our group is known to you. You've been courteous enough to introduce yourselves, so I will introduce the people with me today.

Peter Hill is vice-president of the Nova Scotia Federation of Agriculture. Stuart Allaby is the recently retired chairman of the Natural Products Marketing Council for Nova Scotia. Ralph DeLong is chairman of the Nova Scotia Egg and Pullet Producers Marketing Board.

I am Jack Johnson, and I'm retired after a few years as chair of the Nova Scotia Dairy Commission.

I think you're well aware that our front-line people are otherwise engaged in discussions in Ottawa today, and that's why we're here. We hope we can help describe our situation here so that you have some appreciation of it.

I am addressing the committee on behalf of the Nova Scotia Milk Producers' Association, the Nova Scotia Egg and Pullet Producers Marketing Board, the Chicken Farmers of Nova Scotia, the Nova Scotia Turkey Producers' Marketing Board, and the free-range poultry producers marketing association.

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I apologize this morning for my voice. It's not my normal voice, but if I didn't have this husky voice, I wouldn't have any voice at all. I hope you'll bear with me.

Of course it's very obvious to you, and to us, that these industries in Nova Scotia are provincial extensions of nationally organized, orderly marketing structures that have created long-term stability for both primary producers and spin-off industries in the processing and service sectors.

While orderly marketing—supply management—is very important in other provinces, it is even more so in Nova Scotia. Sales of milk, poultry, and eggs make up approximately 50% of all agricultural product sales in Nova Scotia. Only in two other provinces are the sales of these three products as important. So when we in Nova Scotia talk about the importance of maintaining orderly marketing, we're talking about 50% of our agricultural product sales.

Before I get into a more detailed description of these industries, let me paint a picture of just where you are in Canada today.

Nova Scotia is a peninsula of land—and I apologize to the member from Dartmouth; I'm sure she doesn't need to be reminded of this—that protrudes into the Atlantic Ocean. Nova Scotia's coastline is approximately the same length as the road from St. John's, Newfoundland, to Vancouver, B.C. The coastline is mostly rock, as you well know from scenes of Peggy's Cove, but if it were not for the rock, we would have washed into the ocean many years ago.

Nova Scotia is Canada's second-smallest province. While figures that describe our number of farms, our production, our processing and service industries are big to us, they are but a minor part of the Canadian total.

Let me tell you where we have come from. In the years leading to 1900 and into the next 20 years, 25% of the total world ship tonnage—to repeat, 25% of the world ship tonnage—was registered in Nova Scotia. We enjoyed export trade that took our vegetables, fruits, meats, fish and some other products to virtually every country of the world. Our apple shipments to the U.K. alone numbered 5 million barrels in one year, which is more than we have produced in bushels in recent years.

As an aside, when we sold 5 million barrels of apples to the U.K., we also sold 5 million barrels, which was a very big part of the industry in Nova Scotia.

At one point, Nova Scotia grew 62,000 acres of potatoes and enjoyed markets in the United States and several Caribbean countries, including Cuba.

All this was possible because we had a rugged, protected coastline that harboured villages of skilled craftsmen who excelled at boat building and had materials close at hand. Boats were loaded with local produce and sailed, often on spec, to south Atlantic markets. Frequently the boat was sold as well as the contents. There were no tariffs, no regulations, no inspections, and there was no political interference. It happened to everyone's benefit.

I know we can't live in the past, but there are those still in the industry who would like to look forward with the same vision they have of the past. And isn't that what this exercise is all about, whether or not we can agree on trade rules that everyone can support and live by?

Producers are essentially producers, and for the most part their vision of opportunity in this industry is with more production.

The evolution and future of supply management is of great significance to the rural economy of Nova Scotia. The dairy, poultry, and egg sectors are vital components of the economic health of many communities and rural businesses.

The role, size, and impact of these sectors are highlighted in table 1 of page 3 in the document before you. It simply spells out that the number of farms in the supply management sector totals 615, with gross farm receipts of $177 million, business and operating expenditures of another $141 million, and total farm capital of $404 million.

In Nova Scotia, the supply management sectors account for almost half of all agricultural product sales. This compares with one-fifth of farm production at the national level.

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In 1966—and this is really an explanation of the table—615 farm operations in these sectors reported a gross amount of $177 million.

As well, there are 20 dairy and poultry product processing plants in Nova Scotia. Another 20 plants within the feed, meat, slaughter, and mixed fertilizer industries are also dependent on supply management sectors for much of their business volumes and their overall economic viability.

This is also the case for many farm service businesses, such as the farm machinery dealers across the province.

Let me deal with the dairy sector. Dairy farms compose the largest sector within provincial agriculture. In 1996, 442 commercial milk producers shipped 171.5 million litres of milk, valued at $93.6 million, to dairy processors. Sales of milk and dairy cattle represent just under one-third of all agricultural product sales.

While dairy farms are concentrated somewhat within the central region, milk production is undertaken across the province, from Yarmouth to Sydney. Outside the Annapolis Valley, dairy farms are usually the core business of local agricultural services and other commercial infrastructure.

Dairy farms' operating expenditures in 1995 injected $79.4 million into local economies, including the $12.5 million paid in wages to hired labour. Purchases of capital assets and capital improvements added another $23.7 million.

The dairy sector accounts for about one-third of the provincial feed industry sales, 40% of the business of the mixed fertilizer industry, and a similar proportion of the province's agricultural limestone shipments.

In 1995, veterinarian and artificial insemination services expenditures by dairy farms came to about $3.5 million.

Farm machineries derive about 30% of their sales and service revenue from the dairy sector.

Milk and cream transportation expenses paid by farms were in the vicinity of $3.7 million.

Production per cow for all herds on test in Nova Scotia has increased 12% since 1991, to 808,456 official kilograms, with an average of 8,185. In fact, Nova Scotia has the highest level of milk production per cow in eastern Canada.

The average dairy herd in Nova Scotia is 60. That comes from Statistics Canada. Our other sources of information indicate that this may be high, but if I may, I'll draw a comparison. Technically, for milking cows in the herds of Nova Scotia, the average herd is about 52; in Ontario, the figure is roughly 42; and in Quebec, it's in the high 30s, about 38. That's just to give you the relationship among them.

Dairy herds account for half of the total cattle on farms in Nova Scotia. Our dairy cows directly make up one-third of the slaughter-cattle supply in the province. Sales of livestock out of the dairy sector, either to immediate slaughter or for raising in other places, were about $7.9 million in 1995.

At the secondary industry level, there are 17 dairy processing plants in nine different counties in the province, including 9 small specialty or cottage-type operations. Total secondary employment of these operations is reported at 814.

Two-thirds of the province's milk supply is processed into fluid milk products. The remaining third is utilized for manufactured products such as butter, cheese and yogourt.

For 1996 the value of shipments of dairy product in Nova Scotia was reported at $249.1 million, while the salaries and wages paid to processors were reported to be another $26 million.

As an aside, 80% of the fluid milk processed in Nova Scotia is done through two major co-ops.

The poultry and egg sectors at the primary level comprised 113 chicken, turkey, and egg farming operations in 1996. Live shipments of birds that year totalled 34 million kilograms of chicken and 4.7 million kilograms of turkey. Receipts totalled about $54.4 million. Farm sales of eggs in 1996 were $25.3 million.

Poultry has been a high-growth segment of Nova Scotia agriculture. Since 1985, production has increased 60% in that segment alone.

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Chicken and turkey production is highly concentrated in Kings County in the central part of the province, but there are also poultry farms in four other counties both east and west of Kings County.

Poultry and egg sectors account for 40% of the provincial feed industry's business. Feed expenditures in Nova Scotia poultry and egg farms in 1995 were $27.6 million, and wages of hired labour totalled $6.5 million.

There are four chick hatcheries in the province. Two of these produce meat-strain chicks for chicken production, while the other two hatcheries provide chicks for replacement in laying flocks.

Three poultry processing operations located in Kings County employ 700 workers. The value of the shipments of these operations comes to about $85 million to $90 million annually.

Salaries and wages at the secondary level total about $11 million to $12 million. In addition to live poultry supplied for farms, these operations make other purchases of material and supplies, totalling approximately $20 million annually.

There are also two poultry by-product plants in Kings County. These plants produce feather meal, poultry by-product meal, blood meal, and poultry grease. Sales are made to feed mills, and directly to the provincial mink industry.

This is a point I'd like to stress with you. On the back of the poultry industry, Nova Scotia is the largest producer of ranch mink pelts in Canada. Mink farms make up a sizable rural sector themselves. Feed supply sources are the major constraint on production, and the provincial poultry industry is a major supplier of feed materials to the fur industry.

There are 29 registered egg-producing operations in Nova Scotia, and another 10 farms produce pullets for laying flocks, excluding farms producing both eggs and pullets.

In 1996 table-egg production totalled 16.7 million dozen. Nest-run eggs are delivered to egg grading stations. Grading and packing adds another $3 million to the value of the primary product.

Both hatchery and poultry producers make significant out-of-province shipments. Sales of pullets to egg producers in New Brunswick, Prince Edward Island, and Newfoundland return about $1 million annually to that sector.

In terms of rural employment, dairy, poultry, and egg production—and the associated activity generated—all represent a significant component of the economic base of rural Nova Scotia. This is particularly true in the towns and rural areas, where the production and processing is mostly concentrated.

Employment at the farm level—operators, family, hired labour—has totalled approximately 2,050 person-years since 1996. Secondary industry employment is another 1,733, with a further 210 identifiable jobs within the commercial farm service sector.

Additionally, indirect and induced employment also results from the economic activity generated by the dairy, poultry, and egg sectors. The overall employment linked to dairy, poultry, and egg production is estimated to be in vicinity of 7,600.

Table 2 is intended to give a breakdown of the numbers I have just told you, and an explanation of how the figures were derived. If you wish to come back to that, we can.

Finally, we have prepared an executive summary of the points we'd probably like you to remember about Nova Scotia.

Supply management sectors account for almost half of all agricultural product sales in Nova Scotia. These sectors have provided stability in the agricultural industry against which capital expenditures and long-term financing have been applied. The dairy, poultry, and egg sectors are vital components in the economic health of many communities and rural businesses in Nova Scotia. A total of 7,600 jobs are linked to dairy, poultry, and egg production.

Nova Scotia is strategically located to benefit from any increased export opportunities. Supply management commodities can take advantage of export opportunities by planning extra production specifically for export.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Johnson.

Mr. Jack Johnson: Thank you. We are quite prepared to answer questions—or to attempt that.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Stinson.

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Mr. Darrel Stinson: I have just a couple of quick ones here.

My background is rural. I was raised on a ranch. I'm actually a trapper, so it was kind of interesting to find out about your supply to the ranches. It's an industry that's going along fairly well here, as far as I can understand.

Mr. Jack Johnson: Yes.

Mr. Darrel Stinson: When we go into these impending negotiations, the ongoing ones or those coming up, we're going to have to have some idea of exactly where your industries want to go, and what you want to see come out of these negotiations.

In all honesty, what would you really expect? I know you want to increase your export capabilities. As sure as we're sitting here, there will be arguments from the other side in regard to subsidies and so forth from all countries. We'll be arguing with them, they'll be arguing with us.

Realistically, if you were sitting in this as representatives for your industry, for Canada, what would you suggest? How would you go about this?

Mr. Jack Johnson: I think our national position on this is that we're quite prepared, in the supply management industries in Canada, to be a part of a regulated world trade initiative, but we need rules that everyone will agree to and that can be monitored so that those who are breaking the rules can be somehow brought to task.

As you're well aware, there have been major changes in the dairy industry since the initial negotiations. With the help of government, we thought these changes were in the right direction, but now, with New Zealand and the United States challenging us, we're not too sure.

As I understand it, though, in the first round of negotiations there were no rules established. There were principles but no rules. Now we find ourselves needing help. The rules we thought we were living by are not being followed by other major players in international trade.

We need a definition of what constitutes a government subsidy. That is unclear. We would be very interested to operate without government subsidy, but our products are facing competition from other countries where government subsidy is still very much a part of their initiatives in international trade. So that's another point.

Further to that, I would say that in this province we subscribe to the ten principles set forth by the Dairy Farmers of Canada as a basis for new negotiations of this round of the WTO.

May I say, Madam Chairman, I've just been advised that the binders we had hoped would arrive before our session started are now at the desk at the hotel. I am prepared to leave these with you, because they restate the national position of all these supply management products.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Johnson.

Mr. Jack Johnson: If someone could pick them up it would be helpful.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Assadourian has a direct follow-up.

Mr. Sarkis Assadourian (Brampton Centre, Lib.): No, my colleague asked the same question I was going to ask.

Great minds think alike.

Mr. Daniel Turp: You're so modest.

Voices: Oh, oh.

The Acting Chairman (Ms. Sarmite Bulte): Do you have another question?

Mr. Darrel Stinson: No, I'll pass.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

Mr. Daniel Turp: Would you care to comment on the WTO decision that came last week, which you referred to a few moments ago? What do you make of it? I know there's an important meeting tomorrow in Ottawa. You probably will be there, or represented there.

What do you make of it?

Mr. Jack Johnson: I'm not sure someone from Nova Scotia should be making a comment on that, on the position, but as I understand it, the decision of the panel has nothing to do with fluid milk, and as such has addressed some things other than the ability of Canada to market fluid milk and to protect that market.

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I think that may be the subject of a challenge Canada may put forth in an appeal, but I'm not apprised of the progress on that. That'll be a legal decision at some point in the future.

I think it's an excellent question, but I'm sorry, I don't think I'm the one, or we're not the people, to comment.

Mr. Daniel Turp: It is something that's very complex. You mentioned that New Zealand and the United States were not playing by the rules. Is this part of a strategy of not playing by the rules but requiring that Canada itself plays by the rules, and then bringing challenges before the WTO?

Mr. Jack Johnson: I didn't mean to imply that those specific people are not playing by the rules on this one.

What's happening is that there were no rules, only principles, as I understand it, in the negotiations. Since then, Canada has changed its policy for dairy production in Canada, how it disposes of surpluses and how it could access the export markets.

We were led to believe that these would comply with the principles of the agreement in place at the present time. Those two countries have challenged us on that. They have decided that our method of marketing is still providing subsidy for export. We understood that we were not.

I really can't go more deeply into it.

Mr. Daniel Turp: Who led you to believe that?

Mr. Jack Johnson: It was through the Canadian Dairy Commission. We have government people and trade representatives who advise the Dairy Farmers of Canada on how we could restructure the dairy industry in Canada so that we would be more compliant with the TRQs and the tariffs that were in place at the time. We thought we were going into this round in a better situation than New Zealand and the United States seemed to think.

But I don't want to overstate what I think I know.

Mr. Daniel Turp: One other question. In the last round I think your organization and many others had put a lot of pressure on the government to keep article 11 in the treaty. That didn't happen.

Mr. Jack Johnson: That's right.

Mr. Daniel Turp: On supply management as a system itself, do you have the same kind of position—namely, don't touch that; do everything to make that system agreeable to other countries? Is that non-negotiable, the supply management system?

Mr. Jack Johnson: I don't want to disagree with our national policy, but personally, I don't think it is.

The thrust of our brief here today was to tell you that for many years we have developed this system. It has served us very well. We know there are very extreme pressures to do away with that from not only other countries but also other major food industries.

There may be other ways that we can provide protection for our farmers and protection for our markets. Our assertion is that supply management doesn't have to just put fences around the Canadian market. It can operate by planned production for export.

In fact, we are now taking part. It's not out of the way to say to you that through cooperation with New Brunswick, we in Nova Scotia are taking part in an optional export program, which is moving cream from these two provinces to the New England states, as we speak.

That's because of the demand situation in the States. It is for a year. The prices have gone down but the contract is...

There are other examples, if you go across Canada, of optional export programs that our farmers are taking part in with the sole purpose of exporting that to a contractual obligation in another country.

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Mr. Daniel Turp: I understand you well in saying that this system is not sacrosanct, that there are other alternatives Canada should be looking at with other countries during these forthcoming negotiations.

Mr. Jack Johnson: We would be very cautious on that point because of the fact that we redesigned—I'll speak mainly for dairy, which is the one I think I know—the system in Canada. It was completely redesigned, although it still is governed by supply management—in other words, orderly marketing. Now we find out that other countries don't see us as being as clean as we thought we were.

That's bothersome, and I'm not sure what the outcome will be.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp, I believe Mr. Speller has a direct follow-up, if you don't mind.

Mr. Bob Speller: I have a couple of points of clarification.

First of all, on the whole question of supply management, the position of the Government of Canada is that the way we market our products isn't on the table in the next round of negotiations. That's something we dealt with under the last round. Article 11, as you know, was changed. As a result, we got our tariff rate quotas. We dealt with that last time around, so we don't feel those types of questions are on the table this time.

Mr. Daniel Turp: Would other countries suggest that they're on the table?

Mr. Bob Speller: Well, they will suggest in terms of state trading organizations, but we don't feel that the way we internally market our products is on the table. There are obviously questions when you're into the area of exports, as was the case with this recent decision that just came down.

You might, Jack, just explain to people—I don't think people understood you—why Nova Scotia should not comment on the difference between industrial milk and fluid milk, and the difference in the milk you use for export.

Nova Scotia, as I understand it, doesn't take part, is that right?

Mr. Jack Johnson: In export?

Mr. Bob Speller: Yes.

Mr. Jack Johnson: We are currently, but it is more difficult.

Our market for milk has traditionally been 80% fluid production and 20% processing into other products, so while we are supplying our domestic market for fluid milk quite substantially and successfully, our consumption of industrial products is largely dependent on products being marketed in this area from outside of this region.

In other words, 20% of our production is not necessarily equal to the consumption of all of the other dairy products consumed here. Our yogourt market is open to all of the international brands, so we are competitive with those—I assume we are, or we would not be in business—but it is a unique factor.

Now we're pooling returns with five eastern provinces in Canada so that producers in all five provinces get the same returns for their production. This puts a considerable pressure on efficiency, because if you just take those uniform returns at face value, then you would expect milk production to shift to the area that's most competitive with those returns. But that's not the case.

This was my point in raising that; if there's some efficiency in larger herds and in milk production per cow, I think we have a modern dairy industry in Nova Scotia. The point you'll get as you go around from people, other than us, in agriculture is that supply management fosters inefficiency because these people are protected. That has not been the case. The price of dairy products at the retail level has not increased according to the consumer index in recent years.

As I think Mr. Stinson said, not to our knowledge is this on the table, or the way we do it. I think it's on the table for us to defend as a pretty good system.

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I would say it may have to change. I would also like to be awfully sure that when we are changing it, we're not jumping into something that, by other people's standards, is going to be not as favourable to us or not as acceptable in world trade circles.

I hope that helps in some way.

The Acting Chairman (Ms Sarmite Bulte): Mr. DeLong, you wanted to add to that.

Mr. Ralph DeLong (Chairman, Nova Scotia Egg and Pullet Producers Marketing Board): Just to add to those comments, in the egg industry we've traditionally always exported out of the province. Even before the board existed we exported into the Caribbean and Montreal markets and other provinces in the area. Of course, with time that's been displaced by either American product or product produced in the other provinces. Our industrial product is going to a processing plant in central Canada.

So we consider it very important that our controlled or supply managed markets be maintained. The land base in Nova Scotia is fairly restrictive, so the ability of agriculture to survive just based on the land base is questionable. It's important to maintain that supply managed structure to allow for control of the supplies that would provide consumers with a good product.

If we can't supply a good product, we can't afford to produce it and to supply producers with a reasonable return to keep the rural economy going.

In our area, we're a bit removed from the fishing industry. We're about 30 miles from Lunenburg. Forestry employs some people. Nevertheless, we supply a lot of employment in the local area, a lot of economic activity. It's fairly important to a local economy that the supply managed production continue.

The egg industry is perhaps more extreme than the others in that if you compare Nova Scotia with the Canadian model, and with the American model, Nova Scotia has the highest birds per farm of any province in Canada. We're over 30,000, at I think 33,000.

It's necessary to be competitive with central Canada and the rest of Canada because of our high feed costs. We're doing things to try to remain competitive. In the 1970s, there were 100 egg producers in Nova Scotia, and now it's down to 25. We're consolidating, trying to maintain efficiencies, trying to remain competitive. Nevertheless, we still have that problem with feed prices versus central Canada. We need those competitive advantages just to compete, to remain competitive with central Canada.

We can't go to a million-bird structure here in Atlantic Canada to compete with American production. We need to have a domestic policy that maintains agriculture throughout Canada. Just opening it up to say, “Whatever is best for the world is the best for Canada”, is not necessarily the best for rural Canada, or the best for rural Nova Scotia.

We don't want to have a province of just a few fishboats and trees from coast to coast. We want to have an agricultural industry.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Ms. Lill.

Ms. Wendy Lill: Thank you for coming.

I must say, I didn't know about our roads actually stretching from St. John's, Newfoundland. That's an incredible fact.

What you paint in the early part of your submission is really an idyllic, nostalgic picture of trade in a very vibrant marine society that built its boats, put its apples on them, and then took them across the ocean into Cuba. It really was a wonderful, vibrant market.

I'm not sure what exactly we've evolved into. I wouldn't mind you telling me that, how this picture has now moved into the 1990s and what it actually looks like. This is a subjective type of thing, but it helps all of us understand where we are at now.

I hear you say that government subsidies are at issue here. Other countries are getting government subsidies, and people are going to court over this issue of what is a subsidy. There's this issue of suddenly everything being on the table, and the World Trade Organization suddenly having a lot to do with your farms and your chickens and your eggs. Isn't it all quite different from what you were talking about at the beginning of your submission?

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So is it progress? Is it inevitable? What is it you think you need to safeguard enough of in this dream of a rural, agriculturally based economy? What do we need here? What safeguards do we really need?

Mr. Jack Johnson: What I implied in that section you referred to is that it's cost Nova Scotia a lot to be a part of Canada.

I would like Mr. Allaby to comment.

Mr. Stuart Allaby (Past Chair, Nova Scotia Natural Products Marketing Council): I want to respond, Jack, simply from the point of view that part of the early history is in the document we have.

If you start looking at the history from the point of view I would have, from my involvement in the industry from 1951 to currently, in terms of Atlantic agriculture we in the egg industry were twice as large as we are now. The chicken industry was just starting out and developing, running into all kinds of serious problems with pricing. We were losing egg farmers. I can look at Ralph DeLong's area in Lunenburg County and tell him there were ten egg producers in that area, of fair size.

From that early history, we came to the conclusion in 1973 that something needed to be done to save the poultry industry. That's the one I was connected with. That's when the signatures were made to form a supply managed system.

All I'm saying is that if it hadn't been for the supply managed system, with the new regulations that came in we likely would not be in the production of the poultry industry products that we have today. I just shudder to think of what might happen if we get the X on the wall that we can no longer be part of a supply managed system for the poultry industry in Canada.

With regard to the boards that Ralph is connected with, the national agency Cynthia Currie chairs, and every supervisory board across Canada, I want to tell you about the amount of work they each have put into trying to get this regulation such that we don't run into the conflicts different people have known about in terms of going international.

As Jack's paper says, we'd like to look at export under a supply managed system, but we want to be able to play by a fair set of rules and want to know what the rules are so that we in Canada, whether it's Quebec or Nova Scotia, can develop and increase our numbers.

I think Jack's figure of the amount of increase since supply management became a factor would be about 60%. To me, supply management hasn't been holding us back. Supply management has been the reason, as far as I'm concerned, for the development we've had.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Does anyone else want to add something?

Mr. Ralph DeLong: As a farmer from the south shore, my egg business is the most important part of my business. Nevertheless, we also produce Christmas trees, which we export into the States. We don't go to Venezuela, but into the Caribbean, and we send mail-order Christmas trees all over North America. I expect some year that will just dry up. Someone will shut down the border and that's it; you're shut down. It's important for me, as someone putting money into the industry, to have rules I can count on.

It's the same with the eggs or chickens or dairy. It's important to have rules you can count on, not just, “Well, I think this will work.” We saw that in the example of the dairy: “Well, we thought it would work, but it went to world trade and it didn't.”

• 1045

We now have Ontario increasing their production for export. Well, they tell us it'll work legally, and the national board tells us it won't work legally. That's not really a tenable situation, with one province saying something will work and another group saying it won't because the rules aren't solid enough that you can say it'll pass a dispute.

The Acting Chairman (Ms. Sarmite Bulte): Who is “they”, as in, “they” say it won't work?

Mr. Ralph DeLong: The Ontario board and the Ontario government council versus the national council.

Mr. Daniel Turp: What kind of certainty do you expect, though?

Mr. Ralph DeLong: You can't have complete certainty, obviously. Nevertheless, the rules are general enough that there can be disagreement as to what is legal and what is not. As a farmer, I have to question that.

I think the thrust of what we're saying here today is that there are regulations and principles out there, but the rules are not uniform, nation to nation, or are not spelled out so that we can say, “This is what the rules are”, whether it's the United States or the EU or Europe or whomever.

The Acting Chairman (Ms. Sarmite Bulte): Ms. Lill, do you have any questions?

Ms. Wendy Lill: I don't know about your section nearly as much as I wish I did, although I've learned a great deal today, but in terms of the one area I do know quite a bit about, culture, we have just been going through a situation in Ottawa with split-run magazines. I think, in fact, the government did craft a bill that might have been WTO-proof, but I don't think it was American-proof.

I think there's no harm in really mentioning this here. There have been people who have come before this committee and said that this is not a level playing field. We're talking about a whole lot of small players, a whole lot of small national players, and then we're talking about the United States and the WTO being an extension of the will of the United States and their desires with regard to exports.

I guess I'd like to just lay that out. Who's setting the rules in this game, in your estimation? Do other countries of the size and stature of Canada, with the same types of issues, have the clout that you feel is necessary at—quote, unquote—“the table”? Who has the power at the table here?

The Acting Chairman (Ms. Sarmite Bulte): Mr. Hill.

Mr. Peter Hill (Vice-President, Nova Scotia Federation of Agriculture): I represent that other half of the industry, all the beautiful horticultural products and so on, but I'd like to go back a minute to your first question, about where the future is.

I think the future can be very bright for Nova Scotia. We have a lot of advantages. We are closer to the Caribbean islands than any of the eastern seaboard ports in the U.S. If the container port comes to Halifax, I don't think we've even come close to recognizing that advantage. We're closer to Europe. Our prosperity was built upon trade.

Part of the decline in that prosperity was the construction of artificial trade barriers to make the nation of Canada. You can see that those trade barriers worked if you just take a line of where the bulk of the population in Canada is. It's just north of the U.S. border.

So I think there can be a reconciliation between supply managed and between the other sectors, which tend to say we should take down all barriers, because those are easy rules to understand.

I don't think we get anything in return for what we gave up. In other words, we gave up article 11. We put tariffs in. The concern now in supply management is that those tariffs will be reduced, and they'll be reduced more rapidly than the industry can adjust to. That, of course, given the size of supply management in Nova Scotia, is a very real issue for the industry.

But what did we get on the other side? Well, what we got was that the United States still subsidizes its farming community three times what Canada does. Canada was a good boy and came back and cut the daylights out of any subsidies to farms. I think we had to go 15% into the amber area. We went 85%. Other nations came back, sat down, and said, “How can we make this work for us?”, but we came back and said, “How can we be the good boys?”

• 1050

I think it's time we stopped being that. I think it's time we said that the pesticide regulations that we impose on our farmers are not realistic if we're going to compete in the world trade market. It can't take eighteen months to get a pesticide registered in Canada when it takes six in the States. You're at a disadvantage.

I think we have to talk about the fact that the U.S. has requirements of zero parts per million on anything shipped into them and we have 0.01. You can get hung up. If you're shipping strawberries into New England, which is a natural market here and which we can produce, you can't afford to have a truck sitting for three days while they wait to inspect.

We have to come to grips with that. It's fine for principles, as Ralph said, but we have to have some rules on those things. We have to look at what we're doing in our safety net and in our support system to agriculture. We have to look at such areas as market development and so on that can be sponsored and fostered and that do not impact on trade. In other words, how can we take an existing agreement and maximize it?

Now, you'll get the answer that we can't possibly compete with the millions of dollars the U.S. has. Well, if we can't do that, then we'd better not enter a free trade agreement.

The other thing that really concerns me is that I think Canadians are patting themselves on the back. Agriculture does $20 million in trade a year, I believe, and the target is to increase that to $25 million. I think we'd better think about the Canadian dollar. What would happen to that trade if we were at an 85¢ dollar? Would we have it? What would happen to our domestic markets if we were at an 85¢ dollar?

So I think there are some real issues coming up in this round of negotiations. I don't think a little old boy from Nova Scotia can solve those, but I do think that if you're going to give up something, you had better make damn certain that you're getting something in return, and that it's clear that you've gotten it.

Finally, I think there is also a natural Canadian advantage—and perhaps Nova Scotia leads in that—in Canada's international reputation as a healthy, clean country. I think that can be exploited in the export market. We have to be careful about what's happening with growth hormones. We have to be careful about what's happening with our HACCP programs. You can put money into enhancing that, and supporting the agricultural community, and then turn that into a trade advantage.

I hope that's some help to your question.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Hill.

Mr. Assadourian.

Mr. Sarkis Assadourian: This will be a follow-up, if I may.

Because of our geographic location next door to the U.S. giant, wouldn't it be to their advantage not to have any rules so they could dump on us whatever they wanted?

Is that a summary of what you're saying, basically, that in our case it's best to have rules to make sure they won't come over our border and take over, really, especially in Nova Scotia, I'd say?

Mr. Peter Hill: I think you can look at that two ways. I don't think anybody in the United States is losing any sleep thinking about how they can exploit the Nova Scotian market. You have 1 million people here. That's not a major issue. But look at the market we have just south of the border.

So I think proper rules, and rules that are clearly understood, can be very much to Nova Scotia's advantage, but we should not look to giving up our small domestic market, which I don't think matters a great deal to anybody else. We shouldn't look to give that up, but we should look to saying how can we access that major market in the south? How can we access the Caribbean islands?

To do that, we have to get help in terms of how our pesticides are registered. We have to get help in terms of those types of investments in agriculture that can be made, that trade grains. We have to get help with some infrastructure in terms of marketing support and those things.

If we do that, then I don't think we have to be afraid of trade. I don't think we have to put up with those rules.

Mr. Sarkis Assadourian: My concern is around the fact that the Americans are so big. Let's put the U.S.A. on one side and Nova Scotia on the other. Nova Scotia has 1 million and the U.S.A. has 250 million, or whatever the case may be. It's to their advantage not to have any rules so that they can dump whatever they want onto Nova Scotia.

In our case, because we are small, we like to play by the rules so that we know what we're getting into.

• 1055

Mr. Peter Hill: Yes. The other part of it is that size is obviously going to be extremely important in making the rules in the first place.

Mr. Sarkis Assadourian: For us, it's fantastic to have a market of 120 million.

Mr. Peter Hill: But in spite of the shrinking globe, there are some disadvantages to size. Those disadvantages may be very true in terms of agriculture, because there's a certain advantage to smaller, concise operations that can control their health and safety standards far better than can a large operation.

There are advantages to organic farming, for example, which has to be done on a small scale, and which I think is an increasing market.

So I don't really have a great deal of concern about being able to compete. I think we have to look at different markets, perhaps, and we have to look at different market gaps, but I also think you can't go from A to B overnight. We can't give up.

You see, Nova Scotia in large part has mixed farming, as Ralph described. He's not just an egg producer; he also supplies Christmas trees. That makes Nova Scotia unique, particularly unique in the Canadian situation, but most of our national programs are designed for single-crop industries. Most of our national strategy, I expect, is, “How can we export wheat?”

I think we need to reposition ourselves and ask how we can export some strawberries from Nova Scotia to the New England states; how we can build our blueberry market, which is already blossoming; how we can ship some processed carrots; and how we can get advantages in those things while protecting that other part of our market at the same time.

I don't think it's a hard part to protect, because I don't think it's something that's really desirable for the other people to get into. It's not worth it.

Mr. Sarkis Assadourian: Can I ask one more quick question?

Every year I think there is a conference of New England governors and east coast premiers. I'm sure they've discussed this issue numerous times in the past.

What's the reaction to your concerns locally? Are they in favour of having regulations be set at the national government in Washington? Because that's where your business is, for the most part.

Mr. Peter Hill: They just had their last formal meeting. The most interesting thing in the papers was that the New England governors supported the Port of Halifax's bid for this container as opposed to New York and Baltimore. I think there's a natural affinity there, and I don't think they see it as wanting to construct trade barriers.

So I don't think it's an issue with regard to New England.

The Acting Chairman (Sarmite Bulte): Thank you.

Mr. Speller.

Mr. Bob Speller: Gentlemen, I thank you very much for your presentation this morning. It looks as though a lot of work has gone into this document here, and we appreciate the fact that you gave us a fairly good breakdown of the importance of not only supply management but also agriculture to the province of Nova Scotia, and also that you took the time to explain what it is you do, particularly to some of the people around the table who may not be from a rural area.

For instance, I noted that when you talked about mink, our chair perked up.

Voices: Oh, oh.

Mr. Bob Speller: She could relate to the fur farming and the mink.

One of the questions I have—and I apologize if this question has been asked; I was out of the room—is on what types of discussions you have had. It follows up on Mr. Assadourian's good question, particularly on the relationship between the New England states and Nova Scotia. What other talks have you had with agricultural groups in the United States in terms of trying to sensitize them to some of the concerns?

When we're talking about these trade rules and trade questions, the people negotiating these seem to be trade lawyers or people who may be out of touch with the land and agriculture. A lot of times we go government to government, and we sometimes forget that at the grassroots level it might be useful for farm organizations themselves to sit down and to sensitize each other across the border on these issues.

So I'm wondering if you've done any work in that area and what response you've had from your American counterparts.

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Mr. Peter Hill: I think very little has been done. The Nova Scotia federation did sponsor an international trade forum about a month ago, and we did have the U.S. negotiator come and make a presentation. There was a lot of informal conversation around that, and some sharing of issues. But our focus is largely a national focus. In other words, we participate very actively in the Canadian federation. We participate in the Canadian Horticultural Council and each of the other groups.

I suspect the answer to your question is probably more of our national bodies, rather than local, talking to national bodies in the States.

Mr. Jack Johnson: I think you're right in your assumption that often this is government to government and lawyer to lawyer. Our idea of spawning trade in the New England states is to take a number of our food processors aboard the Bluenose, go down and visit in Boston harbour, and have bagpipes and so on. We'd have “A Taste of Nova Scotia” panels and try to impress would-be buyers of Nova Scotia product down there that we have something to offer them.

We haven't, to my knowledge, done a lot of “farm organization to farm organization” work. Of course we visit constantly with American dairy farmers, from that standpoint, and we have not run across any who wouldn't love to have our system, but they're completely smothered by government bureaucracy that says they will never have it. They completely control the price. We would not like to farm as American dairy farmers.

That spills over into the hormone issue, as well. Our organizations, our farmers, are steadfastly against injecting cows, as is now done in the States, for humanitarian reasons as well as safety.

I don't know whether that helps, sir.

Mr. Bob Speller: Perhaps Wendy has asked this, but I'd like to ask you what your position is on the government's stand on Bill C-55.

I ask that knowing that in a lot of other cases, whether it be your commodity or other commodities across the country, the government has had to take tough stands. The government is always faced with either negotiating something or just standing pat to see what happens, to see what happens on the other side, what the Americans will do in terms of a response.

What is your position now? I've heard, particularly in those areas that have been threatened be retaliation, groups say, well, maybe we should be giving in, and we shouldn't be making a stand on an industry such as culture. As you may or may not be aware, culture is a fast-growing and very large industry in Canada. Those who are in some of the affected areas seem to be concerned with American retaliation, wondering why we would be standing up in an area such as culture.

Coming from an area that is constantly under attack by the Americans, I'm wondering what sort of view you have on an issue such as that, on whether or not the Government of Canada should be standing pat against the threats of the Americans.

Mr. Jack Johnson: I guess our stand is largely that of the Dairy Farmers of Canada, which says we don't want to be traded off in other sectors. We will not go under in some food-related area that we represent here today for some other area that Canada wants.

It's of grave concern to us when a truckload of potatoes is turned down at the border, as you are well aware—or will be before you finish—in Prince Edward Island. I mentioned in my brief that we had produced 62,000 acres. That was more potatoes than were grown in New Brunswick or Prince Edward Island at the time, but they've gone on to increase their acreages much beyond that now, to double that. Ours has shrunk, if you can believe it, to 4,000. Why? Because we've had alternatives, and they haven't.

That's one reason we're sticking with supply commodity in our area. In Ontario, 20 dairy farmers can go out of business in a year and be swallowed up by 16 other opportunities to farm. That's not so here. When our dairy farmers sell quota and cows, that's the end of that farm. There is no viable alternative. So we're stuck with these things.

• 1105

Sure, we think there are opportunities. We have the biggest carrot producer in Canada operating in Nova Scotia. What a place for that to happen. He's probably the same person who's also the biggest single blueberry producer, with operations in Maine and New Brunswick and Nova Scotia.

These things have a market in the United States and all over the world—carrots and blueberries go to Japan and France—because the Americans don't challenge us on those, but when they want to sell a litre of milk in Canada, then they tell us they should have free access to our market, regardless of what effect it would have here. That's what bothers us.

In fact, I'm sure you followed the food basket surveys in the last year and found out that the prices are really, if anything, a little bit in favour of Canada.

Mr. Bob Speller: That's right. They have been. I mean, it goes up and down periodically between Canada and the U.S., but certainly in the last number of years it's been in Canada's favour.

Mr. Peter Hill: If I may, I think we've talked a great deal about, and focused on, Canada and the U.S., but from a Nova Scotian perspective, it might even be more important to focus on Europe. We obviously have some advantages in terms of our location. If you look at protectionism in the agricultural sector, it's far greater in the European countries than it is in the United States, and we are blocked from those markets.

In answer to your question on Bill C-55, I think we very much support protecting what's uniquely Canadian. We would support protecting a way of life in our rural communities in a very real sense. I really think it's a question of where you pick your fights, however, and I'm not so certain the magazine industry is that crucial to Canadian culture.

Certainly here in Nova Scotia we have a burgeoning cultural industry at the film level and at the music level, and I would think support through proper government assistance can grow that industry.

I don't find it particularly distasteful that Time magazine has some Canadian advertising in it, and that it does a split run. I don't think Canadian magazines are necessarily in a position where they can't compete. Perhaps we should stand the issue on its head and look at why we're being blocked from the States, because I think that's very much how the Canadian magazine industry feels.

Mr. Bob Speller: When I spent my time over the last number of years standing up for supply management in the House, and agricultural issues, it was always with the understanding, knowing, that many of my urban colleagues probably felt the same way as you. We in the rural areas see the importance of our food, and we produce the best food in the world, and we understand that. Sometimes, though, in the urban areas, they look for the best and cheapest food. They don't understand the importance of the agricultural industry not only to rural Canada but to the country as a whole. I would suggest that they may say the same thing on the other side.

I would hope there would be a way in which we would have common principles, because I can assure you, we cannot have a strong trade common front going into these negotiations unless we have both rural and urban Canadians onside. It's vitally important for negotiations like these, particularly when you talk in an area of supply management, where most urban Canadians, I would suggest to you, when they think supply management, think of increased prices to products.

So there's no question about it. We have not done a good job in terms of any of the supply managed industries of promoting that, of giving urban Canadians a better understanding of it all, not only the price. You always hear that down in the States you can get it cheaper. Well, as you know, you can't any more. They may argue, well, that has something to do with the price of the Canadian dollar. It may, but it also has a lot to do with how efficient Canadian farmers and supply managed commodities have become over the years. It's probably more so due to that.

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I'll leave it at that, Madam Chair.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Before I start round two, I have a few questions.

From your presentation, Mr. Johnson, can you tell me what part of your production in these sectors is exported, and where it's exported to internationally?

Mr. Jack Johnson: I'm sorry; I can't tell you that from the figures we raised.

From the figures I've given you, I would expect that this is pretty well... Well, I could be corrected on the eggs.

Are there poultry meat markets outside of the area?

Mr. Stuart Allaby: Yes, the chicken farmers of Nova Scotia have an export market. It's part of their provincial quota. I can't tell you the volume, but this comes when they set their different production periods. They apply for an export quota, and they grow for it. That becomes part of the production for the province.

It is really the processor who does the marketing, though. You'll notice that we've changed the name in most of the marketing boards in Canada to say, for instance, Chicken Farmers of Ontario, or Chicken Farmers of Quebec. They're doing it separately because they're not in the marketing business.

So the processor would be the one who would apply for the export quota. It would be grown by an individual within the province. That is how it would work.

The Acting Chairman (Ms. Sarmite Bulte): I see.

Mr. Johnson, just for my benefit, could you explain what the optional export programs are?

Mr. Jack Johnson: It's where there has been a market identified that's outside of Canada. One of the ways in which we've addressed this in various provinces of Canada is to insist that if that is an opportunity, it has to be available to all the farmers. The resulting benefit, if it is to be a benefit, has to accrue to all farmers, whether in fact they ship milk to that particular market. In other words, it's a portion of the milk they ship. They have the ability to opt out. It's usually done on a contractual basis.

As Mr. Allaby says, in the supply management sectors, particularly in Nova Scotia, I would say, we haven't been big enough to allow our processors to even become actively involved in an export opportunity. We don't have, at any one time, enough product that is not already committed to domestic consumption, so this has to be planned over time.

I don't know whether you've had, or will have, discussions in New Brunswick.

The Acting Chairman (Ms. Sarmite Bulte): We will.

Mr. Jack Johnson: Well, ask them the same question, please. We are cooperating with them, as I alluded, on an optional export market that has to do with shipping cream. It's a sizable piece of business while we're able to take part in it, but in order to do this, there are all sorts of things thrown up.

For example, before New Brunswick could become involved in this—and I would like them to explain this—they had to have an USDA inspector come and inspect every farm that was going to take part in this export market in order to gain credibility. I think they eventually ended up forming an import company from the other side of the border. But they would explain that to you.

There are optional export programs in Alberta and Manitoba. They also can contribute as to how this works.

In a small market like this, though, this is one of the criticisms of supply management, that we're programmed to do mainly the domestic domain. Particularly where we are running it fairly close, unless there is planning there is never enough extra product to think seriously about allowing one of our processors to enter in a agreement such that we could ship outside.

• 1115

The Acting Chairman (Ms. Sarmite Bulte): The optional export program would be done through the farmers—or through the processors, again?

Mr. Jack Johnson: In this particular case it's carried out largely at the initiation of New Brunswick dairy producers, but it is sanctioned by the Canadian Dairy Commission, and monitored by it. The returns from that are pooled with other provinces.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Hill, you had said that one of the things we have to look at is how we can get access to the Caribbean. One of the things the subcommittee is examining is also the free trade of the Americas agreement. Do you see that as a venue where we can try to negotiate some kind of access? That's one question.

As well, members of our agriculture committee recently went to Washington. When they spoke to the American counterparts, the Americans were actually asking for Canada's support. They needed Canada to rally against the EU.

When the Americans are asking us for help, one can't help but be a little bit suspicious. Is that something we can bargain with them on to get what we want?

I wonder if you could comment on that.

Mr. Daniel Turp: To rally on what issue?

The Acting Chairman (Ms. Sarmite Bulte): On subsidies, or on things that are imported.

Mr. Hill.

Mr. Peter Hill: I don't think we should talk of subsidies. I think what we're talking about is a way of managing supply. That isn't necessarily a subsidy. I think we have to make that case.

I do think we can cooperate with the Americans in terms of opening up the European market. I think the Americans right at the present stage are very much in need of some friends, and quite badly. They're attempting to bully their way into that, really, and it depends on what's going to happen in the World Trade Organization, and how it's going to rule. I wouldn't purport to know what the answer to that is.

I don't think the Americans are necessarily our enemies. I think we have more in common with the Americans than we have at odds with them. I think the real situation, as was pointed out by Bob, is that we have to do a better job of selling what our approach is, and selling it to our own public.

I think the paper mentions the size of the Nova Scotian apple industry 100 years ago, and how it's shrunk. The reason it's shrunk isn't that we're not capable of growing that many apples but that we didn't promote the varieties we had. They've been displaced in the world market by the Granny Smiths and the Fujis, which the customers now demand and which we can't grow because of our climate.

I think that's a very good example of how we can overcome some of our difficulties. If we had been far more aggressive in marketing the McIntosh and the Spy, we'd still have that industry. I think what we have to do now is market supply management.

It should also be pointed out that in the poultry sector—and I don't know about the other sectors—we are not even supplying all of our own domestic Nova Scotian market.

Correct me if I'm wrong on any of this.

Supply management means that other parts of Canada are shipping that product here. If you do away with supply management or lower the tariffs, that's going to be replaced by a north-south alliance because of the natural trade advantage.

So it isn't just looking at Nova Scotia when you're talking about supply management but what we want in terms of a national policy.

I don't know if that's any help or not. I think you're in the right direction.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

Mr. Daniel Turp: I have just a comment on culture.

Bill C-55, which my party has supported, and I think the NDP has supported as well, is not only about magazines. It's a big issue. It's about government assistance.

• 1120

You talked yourself about government assistance, and how government assistance is justifiable to help Nova Scotia and Nova Scotians and the people that do culture and make it happen here. That's what the Americans are threatening generally through this and through all kinds of other means.

So it would be interesting to know if that's your point of view. If there is a need for government assistance, do you believe government should challenge the Americans when they do things that suggest we shouldn't assist our cultural industry?

Having said that, I feel there's some kind of contradiction, though, between Mr. Johnson and Mr. Hill in terms of protecting your domestic market.

You think the domestic market is of no interest to Americans or others because it's small, because it's provided for by your local producers. Is that what I'm hearing?

I have the impression that Americans are interested in everything, every market, everywhere. This is not only the Americans; the Europeans as well. People are looking at this planet as a very small planet where they should be able to have access to all markets.

Is there a need for protection, and should we continue to insist on maintaining those over-quota tariffs?

You're right, Mr. Hill, about what happened in 1994, when the Uruguay round finished. Article 11 disappeared, over-quota tariffs, and then the Americans, and others, obviously would like to see those tariffs disappear, and much faster than they said they would like them to disappear.

So if there is a need for some protection of the domestic market, what kind of measures are needed to protect that market?

Mr. Peter Hill: There are about forty questions in there, I think. I would answer the first one, part of which implies the answer to the second.

I think any nation, any country, has to have the freedom to identify priorities and to assist in those priorities, but if your priority identification is correct, and you give that industry or that sector or that culture the start, then if it's the real thing, at some stage you don't need that assistance. I think that answer on the cultural level can equally be applied to supply management.

The supply managed people have done an excellent job adjusting to the new rules. If I hear them correctly, they're saying they've adjusted according to what they thought, and that hasn't always been matched elsewhere.

If you're looking at the next round of negotiations, don't make that adjustment too rapidly, because it is a good way. It does protect. But I think there's a general recognition that given time, and given the tendency to universal free trade, these adjustments are going to have to be made. If you look at the price of product, it's cheaper here now than elsewhere, so that tells me we have a competitive advantage there.

I suppose there are some things in a country that you would probably have to support forever and ever and ever. I wouldn't make any absolute statements on that, but as a general principle I think that would be acceptable.

The problem is, we didn't get anything on the other side in agriculture, and we have all these artificial trade barriers in terms of pesticide registrations, for instance, some of them self-imposed.

The other thing is, you have to ask yourself... I think every agricultural producer would like to be rewarded by the market price, but you can't do that if your competitors have a price support system.

• 1125

In some cases it's an indirect one, but if the United States is paying for all its agricultural irrigation, which it virtually is—the agricultural community is getting 10¢ on the dollar—then how do we compete if we have to pay 100% of that cost?

Mr. Daniel Turp: So that's the kind of government contribution you would like to exist.

Mr. Peter Hill: I think it's an absolute necessity if your competitor is being supported on one level. You have to. But then you sit down in the course of negotiations and say to your competitor, “We want you to pull back on that, and if you do, we will.”

I think for a smaller country like Canada, the advantage is to pulling back, because we don't necessarily have the economic resources to subsidize. If we get into a subsidizing war with the United States, we're going to lose, because they have the resources.

The Acting Chairman (Ms. Sarmite Bulte): Mr. DeLong.

Mr. Ralph DeLong: I think it's quite obvious that little Nova Scotia is not the front line in terms of trade between the United States and Canada. It's going to go through Toronto and Montreal. I mean, we're going to get caught in the sidewinders. Don't forget that we are going to get caught, but we're not the front line here.

The other point I wish to make is that we're not talking about government support financially in supply management. We're talking about legal support, having a structure where we can have a domestic policy such that farmers can exist and we're not being subsidized by government money or being subsidized by consumer money. Rather, we're not being exposed to swings in supply and demand that mean for two or three years you are losing money or you have bankruptcies and you have to deal with those problems.

Rather, we're asking for a domestic policy that allows us to control the supply that gives consumers a constant quality product. That's what we're asking for.

So in terms of thinking little Nova Scotia is going to be immune from world trade, well, it's going to come through central Canada, up through that corridor. It's going to spill over down here very quickly.

Mr. Daniel Turp: Mr. Johnson, can you comment on the idea of whether we need to protect our markets?

Mr. Jack Johnson: I think we do. I was thinking about that question earlier, and I think it's rules. We could adjust our industry if we knew which way to go and we knew that the rules we thought we were using were being adhered to by other countries.

Agriculture in much of Europe is a social problem. It's a tourist industry. People with seven cows are going to be kept in business because it's part of their heritage, and it's part of the tourist industry. So when it comes to exports from those countries, it's entirely a government function. It really has nothing to do with the fact there is product. Not all of Europe is like that, of course.

What I tried to point out here was that we now face half of our industry being dependent on the system. Whether it's right or wrong, half of our farm product sales are based on the fact that we have developed a supply management thing that I think can be proven to have been very efficient over the years. It's not been a protection of added margins in the industry.

But I think we have to guard ourselves against sudden change. It takes awhile.

These men here have $1 million invested in their future. When you have grown up in the system and know it's where you want to be, and you have a big commitment at the bank that says on the system you entered, you're going to try to get out of it and leave something for your family...and that's what we have. We have some very good producers in all areas of supply management. It's not that they're rich, but they're absolutely committed and they're convinced this system will see them through.

The Acting Chairman (Ms. Sarmite Bulte): Ms. Lill.

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Ms. Wendy Lill: I appreciate the question about what kind of protections are needed to protect our domestic market, and I also appreciate the answers.

Mr. Hill, you mentioned that some things possibly do need to be supported forever and ever, almost as if that is some type of a weakness. I would counter that by saying we are not simply talking about commodities here. We are talking about the fact that it's not simply a big marketplace; we're also talking about nations and citizens, and not simply consumers. There is that whole other argument around the whole debate that's going on right now.

There are some comments here that I thought were very interesting. I would like your response to them.

The fact is, even as we sit here, the WTO and related institutions responsible for the global economy are in fact experiencing a crisis of legitimacy. There are many people who really have a lot of doubts about that. The MAI negotiations were halted, as you know.

Even Bill Clinton warned that the WTO and its member countries were in danger of losing touch with civil society in pushing ahead too fast with their agenda for globalization.

Hosni Mubarak, the President of Egypt, said:

Our global village has caught fire, and the time has come for us to rethink the direction our planet is taking.

Those are very critical and powerful statements coming out of some of the big players.

I look at my life and my children's lives, and I too am very nervous about the direction we seem to going in, almost willy-nilly.

What do you think about that, guys? You all come from a farming background. You're close to the earth. I don't think trade negotiations are probably where your hearts are at. Where are we going in terms of our look back to where we came from and where we want to be as human beings?

Again, that is a broad, open question. Maybe you can just take a crack at it.

Mr. Ralph DeLong: We have a pretty strange society right now, where people read the business page before they read the news page, where livestock are treated like people and people are treated like livestock. Certainly our society has gone a bit askew.

As far as you can apply that to trade, whether we're going to go back to protectionism or not, certainly the theory is that we're going too far one way and then swing too far the other. It's necessary for people in leadership positions to realize that the masses are not really always right, or ever right.

Certainly it's necessary to remember what's important—the welfare of not only rural Canadians but also urban Canadians. If anything, the problems are worse in urban Canada than in rural Canada. They're certainly worse in the urban United States than in urban Canada.

You just can't say that the dollar sign is the end of everything. You have to put social concerns into perspective. The world cannot be run by multinationals. People have to run the world.

Mr. Daniel Turp: You must like hearing that.

Voices: Oh, oh!

Ms. Wendy Lill: On your comment about the masses not always being right, I would say that the masses are not involved in these decisions. That's the problem. I think the more the “masses” get involved in these kinds of things, the more alarm bells go off. I think it's actually a very healthy thing when that does happen.

Mr. Ralph DeLong: I didn't sleep last night because I have chicks coming today and I'm supposed to be there. My grader's broken, I'm trying to look after the hens, and I have three or four other irons going today. It's pretty hard to think of the big picture when you're down on the farm trying to keep things going.

Mr. Daniel Turp: You're saying that the masses are not well represented by their leaders. That's what you're implying by your statement.

Mr. Peter Hill: I'll take a little shot at that.

Voices: Oh, oh.

Mr. Peter Hill: I think it would be nice... Often you dream about going back to your childhood, to the small, 25-acre, mixed farm. There was a certain peace. There was a certain easiness. The winters were particularly good. The summers I remember as being really hot, and a lot of work.

We're not going to go back there, and if we went back and looked realistically at it, the good old days might not have been quite so good. We're very modern, highly mechanized, agricultural producers, competing in a world market whether we're supply managed or not, because there is a pressure outside. If supply management was costing our consumers twice that of their neighbours' for the product, I think we'd soon hear about it. So it's a competitive system as well.

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Even from little Nova Scotia you have to take a global perspective. Geoffrey Barraclough wrote about his concept of the shrinking globe back in about 1953, so this is not new stuff. If you look at that shrinking globe, the problems are far greater than those of the agricultural producers in Nova Scotia. The problems are how do we feed the world's population, and how do we raise the living standards of others to a level that's closely equivalent to ours?

If we don't answer those questions, then we're looking at world revolution. The only way you can hopefully answer those is through more contact, more knowledge, which implies that you're going to have to have more free trade, because that's what drives that contact.

Yes, sure, I dream at night about putting the gun on my shoulder and going out and shooting a few pheasants, the way I did forty years ago, but that's not there any longer.

Mr. Darrel Stinson: You're going to have to register it.

Voices: Oh, oh.

Mr. Peter Hill: We shouldn't get into that one. There's a unanimous view in the agricultural community on that issue.

Mr. Sarkis Assadourian: You have a colleague here.

Mr. Darrel Stinson: Oh, there are a lot of them here.

Voices: Oh, oh.

The Acting Chairman (Ms. Sarmite Bulte): Ms. Lill, do you have another question?

Ms. Wendy Lill: I just wondered if Mr. Johnson or any others would like to comment on that.

Mr. Jack Johnson: Well, we're all human beings. I've spent a lifetime in this industry. Sure I'm concerned to think that nine food companies are running this whole show. I'm concerned when I read that Conrad Black is dominating our papers, our communications.

Yesterday we woke up to find that all four telephone companies in the four provinces are now one. It's all to provide more competition on local calls. Think of all the banks wanting to get into leasing cars, and all these things. We don't know, as an average person, whether this is the right direction to go in.

I guess we treat this WTO as something similar. We're not in a position to know the real facts of the thing, and we depend on people like you, and the advice you give government. Hopefully they represent us.

It's a scary, scary world we're getting to have. The MAI is not dead, and that's another scare.

All I can say is, yes, I agree, we're going to need some very good leadership to get us from here to there. We as citizens—I agree with my colleagues—can be very concerned about the number of people going to bed hungry and the number of people dying. Every day we read in the paper about some more people whose lives were just blotted out.

The frustration is, what can we do about these things? Really inhumane things are happening, and we don't understand. We don't understand why it can't be stopped. I can't understand.

A voice: Like Kosovo.

Mr. Jack Johnson: Yes, like Kosovo. Who can sort that out?

The Acting Chairman (Ms. Sarmite Bulte): Mr. Stinson.

Mr. Darrel Stinson: I just want to agree with Mr. Hill. It's nice to think about the good old days, but maybe they weren't all that good.

I was raised on a 3,300-acre ranch, and I remember -50°, no electricity at all, coal oil lamps, and the running water was you running down the hill with a bucket. You took the lamp out to the outhouse at night. So they weren't all that good.

The truth of the matter is, we're into a global economy. Things that are going on in this world were going on before; it's just that we didn't hear about them as quickly. The communication was not as great back then. We had the potato famine and all kinds of diseases and all kinds of war. The great Russian revolution went on.

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This is a continuing thing, and we all worry about our fellow human beings on that aspect of it, but the fact of the matter is, we're a trading nation. We may not like it. Some of us may not like that word, but we don't have the population in this country to be self-sustainable, let's face it.

Now, we can be self-protectionist here. We can try to build little walls and try to live within them, but you and I know that's not going to happen. We all want to have a bank account at the end of the day—you as well as the rest of us, as well as the people who work for you, and the people you represent.

We're here to try to find out the best way to open up these markets for you and to take your concerns. What I've heard here today is that the basis of concern here is the lack of clarity in the rules in regard to what constitutes subsidies, and that it's not being made clear to you what those rules are.

I just want to come to an understanding on that. I find it hard; I sometimes get the feeling that maybe we're here to promote Bill C-55. That's not why I'm here at all.

So if I can, I'd like to go away the knowledge that if there was one thing that came across to us here today, it is that we have to clarify these rules and make them standard right across the board, and then you people are quite willing to compete on that level.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Daniel Turp: I hear a lot more, I must admit, because these people have some concerns for others on our small planet. I'm really always moved to see that kind of solidarity. We're concerned not only about what we need but also with the fate of the community as a whole.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Mr. Turp.

Gentlemen, I want to thank you very much for your words, and your brief, but I'd also like to remind you that the lines of communication are open. This is, again, the first of our series of public hearings. It's not the end of our consultations. We would encourage you and your members, if there are other issues that you feel you would like us to address, not to hesitate.

Don't just wait for your national associations but please write individually to the clerk and let us know, because it's an ongoing process of consultations. This is just the beginning. There's a follow-up still to do, so I encourage you, if you have any other issues and concerns, to please submit them to us in writing or to contact the individual members who are here at the table.

I thank you for your participation and your input.

Mr. Peter Hill: On behalf of the Nova Scotia federation, I thank you for having us here.

Mr. Jack Johnson: I would like to thank you for your patience and for hearing us out.

The Acting Chairman (Ms. Sarmite Bulte): The meeting is adjourned.