AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 7, 1999

• 0832

[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): Members, we'll bring this meeting to order.

As an advisory to the media, they'll have to shut down their cameras, according to House of Commons rules. This is a regular House of Commons standing committee meeting.

Welcome to everyone, especially to the farmers in this room. This meeting is for farmers and for us to hear what you have to say.

Yesterday we were in Portage La Prairie and Dauphin, and I think we had a very good day. We're looking forward to the same kind of discussion and input from farmers here in Brandon.

We're going to start off with four farmers: Harvey Paterson, Don Bromley, Walter Finlay, and Murray Downing. We will then hear a second set right after them, and then we'll be hearing from three organizations. Then we'll go to the audience after that for the last 45 minutes of this three-and-a-half hour meeting.

Those of you who have not yet indicated that you might want to talk, get your name on a list. There's a gentleman at the back by the name of Michel; he'll take your name. We may not be able to hear all of you but we'll do our best.

We shall start right away, and we're going to start off alphabetically, so we will go with Don Bromley first. The intention is to go for something like five to seven minutes, Mr. Bromley, for each formal presentation so that members have time for questions.

By the way, my members are: Murray Calder from Ontario; Joe McGuire from Prince Edward Island; Garry Breitkreuz from Yorkton; Dick Proctor from Palliser; and nobody knows this other guy, Borotsik is his name; and I'm John Harvard from Winnipeg, the chairman of the standing committee.

You can start, Mr. Bromley, and welcome.

Mr. Don Bromley (Individual Presentation): Thank you, Mr. Chairman. Good morning, and welcome to Brandon. I'd like to thank you for this opportunity and this invitation to speak to this committee.

My name is Don Bromley. I'm from northwest of Brandon. I grow a crop mix of cereals and oilseeds and I have a very small cow/calf herd.

We are certainly experiencing an income crisis in southwestern Manitoba, which certainly is not surpassed by the Dirty Thirties. When the government removed the transportation subsidy and saddled farmers with the full cost of bulk grain transportation by rail, freight costs in Manitoba increased by more than three times; it went from about $10 a tonne to pretty near $40 a tonne on my farm. The direct farm subsidies by the U.S. and European governments to their grain and oilseed producers have depressed world market prices and masked market signals to discourage overproduction.

• 0835

In the fall of 1998, heavy rain fell and made harvesting in most of Manitoba difficult, and in many places impossible. Crop quality and yields were severely reduced. The rain continued in the spring of 1999 and the land became saturated with water.

Manitoba crop insurance reports that 1.1 million acres in southwestern Manitoba did not get seeded. That affected 5,597 farm units, and nearly as much forage and pasture land was flooded.

Crop inputs, fertilizer and herbicides, applied to that land were completely lost in those acres. The seed that was planted went into a soggy, muddy, poorly conditioned seed bed, and as a result germination was poor and plant growth was slow. A moist humid summer made ideal conditions for disease, fungus, and insect predation, which further degraded yield and quality.

A $25-an-acre advance on AIDA and a $25-an-acre payment from the provincial government did no more than allow farmers to control weeds, repair erosion, and try to return the land to a state in which it could be seeded the next year. The full $50 an acre should be treated as a disaster payment and not linked to AIDA.

Nearly half of the late-seeded crops were too immature to withstand the killing frost in early September. It was rendered valueless and unharvestable.

The buying power of a bushel of wheat is only a fraction of what it was 10 years ago. Meanwhile, production costs have continued to rise at the same time. Fuel costs went up at least 25%, fertilizer costs have increased 60%, and equipment costs have increased by at least 80%.

Government cost recoveries of services once supplied to agriculture, such as the Canadian Grain Commission and ag extension services to farmers, and the lack of funding for the research of new crop varieties has increased the burden on the farmer's back. Even with a normal crop next year, and if the trend in low commodity prices and high input costs continues in the way it has, farmers will be unable to meet their immediate financial obligations, let alone feed their families and recoup the losses incurred over the past few years.

Farm families will be forced from their homes and the land by the thousands. The land will be controlled by multinational corporations like the Monsantos and the Agrivos of the world. Cash-strapped farmers will have to enter into a production contract with integrated agribusiness corporations that will indicate what to grow, how to grow it, and what the farmer will receive for his production. The farmer will assume all the risk, lose the stewardship of his land, and receive little of the rewards. The consumer will have no influence as to how or what food is produced for their table.

Farm safety nets are not adequate. Crop insurance coverage is too low to cover expenses, and of course if you didn't seed, you don't get crop insurance. Those who have NISA accounts left will exhaust them. The withdrawal per account will be too small to meet requirements. Due to a flaw in the application formula for AIDA, it is out of the reach of many grain farmers.

Grain prices have been on the decline. Hail, drought, and poor harvest conditions have also caused poor margins in the reference years. A payout of 70% on an average of three low margins doesn't work. It would be better to use the best three reference years out of the last five.

Another flaw in AIDA is the method of accrual accounting in inventory. Using the same dollar value for each commodity for opening year and closing year does not accurately reflect the reality and the changing value. Using true market value at the beginning of the year and the true market value at the end of the year would be more appropriate and prevent artificial inflation of the gross margin in the claim year, which reduces AIDA's benefit.

I'll give you an example of that. AIDA values canola on December 31, 1998, at $8.50. If AIDA values canola in 1999 at $6 a bushel and the farmer sold his canola later in that year at the price of around $6 or less, he incurred at least a $2.50 loss due to market collapse. This is not recognized in a one-price inventory calculation by AIDA.

This disaster situation in Manitoba cannot be ignored. It is indeed a crisis. Canada must have a vibrant rural community with a strong agricultural industry. A mass exodus of farm population to urban centres would only further stress an already overloaded public safety net system. There just aren't enough jobs to go around.

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I encourage you to give this immediate and serious attention. For some it's already too late.

We need a long-term plan to define the future of agriculture. We need to know immediately what that plan is. We need a level playing field, access to export markets, and we need a support plan to carry producers through in the interim.

How do we plan for and invest in the farms if the Canadian government is not willing to invest in western agriculture? Is there any reason to encourage our young people to invest their lives in the farm? Does the federal government even care if there is an agricultural industry in western Canada, or do they choose to throw us to the corporate wolves, because the wolves are all that will survive on the Canadian prairies?

The Chair: Thank you very much, Mr. Bromley.

Now we'll go to Murray Downing.

Mr. Murray Downing (Individual Presentation): Good morning, Mr. Chairman and Standing Committee on Agriculture.

I am Murray Downing from Reston, Manitoba. Along with my wife Linda and daughter Lindsay, we farm 2,200 cultivated acres. We own or are trying to own 600 acres and the other 1,600 acres are rented. I am on the agriculture committee of the Pro-West Rally Group.

Last spring, due to excess moisture, we only managed to seed 1,270 acres of the 2,200 cultivated acres, but the acres we managed to seed were a real struggle. It took three to four cultivations before the fields were fit to seed. The 1,270 acres we seeded turned out to be not quite a disaster but awfully close. We had 180 acres of wheat yielding 22 bushels per acre at $3.23, yielding $71.06 per acre; 820 acres of canola yielding 23 bushels per acre at $5.53, equalling $127.19 per acre; 270 acres of oats yielding 30 bushels weighing 20 pounds to the bushel at 60¢ per bushel, equalling $18 per acre.

I carry Manitoba crop insurance at the 70% level. The only claim I have had this year was on my oats, an approximate claim of $9,200.

On our farm I need $140 to break even. By breaking even I mean my crops have to make enough to pay all my payments—mortgage, machinery, all inputs, cost of living, etc.

As you can see by the above example, there is a problem. As I sit down to try to address the situation of approximately a $60,000 shortfall, I look to AIDA, the agricultural income disaster assistance program. After doing the calculations I find myself receiving an AIDA payout of somewhere between $15,000 and $65,000. Now I sit and wonder why there is such a difference in the numbers.

The provincial and federal governments seem to be playing politics and the farmers appear to be caught right in the middle. I received a $47,850 unseeded acreage payment that in turn has had quite an impact on my AIDA. That was on 957 acres that I could not seed.

I have documented the above example to verify these calculations.

The premier of Manitoba declared this spring's excess moisture a disaster. The point I'd like to make is, where have the powers that be gone to let this slip through the crack? Sure, there was no loss of life, but there sure was a loss of livelihood. A disaster is still a disaster.

To get back to AIDA for a moment, this spring I received an AIDA payout. Why was the government share of my NISA deducted from my AIDA cheque? I thought AIDA and NISA were two different programs.

NISA in its present form is a program where the rich get richer and the poor get poorer. Based on eligible net sales, if you have had a bad year or years, it's hard to get any money into your program.

In my case, if I did have a chance, the creditor had his account cleared up first. It would not look good to say to your creditor, “I put money into my NISA account so you'll have to wait for your account to be paid.”

It seems clear to me that the safety nets we have in place now are not working.

Here are some suggestions to the above problems as I see them. Add an immediate cash injection using the following formula: $80 per acre, 1,500 acres minus AIDA, minus half the NISA, equals your payment. The $80 represents the shortfall in commodity prices for 1998; 1,500 acres is the cap, so we are not promoting large farms but instead we're looking after the family farm. Any land held by multinationals or provincial and federal lending institutions is not included. Further, if a person received an AIDA payment, you subtract it and use the $1.5 billion already allocated and put it towards an acreage payment.

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Halve the NISA. Subtract the government's share of the producer's NISA account. I'm tired of government officials saying there's no crisis in agriculture because not many people are withdrawing money from their NISA accounts. In the majority of the cases, there is no money to withdraw.

I suggest a long-term safety net program, which I have developed, called the income assurance program. I developed my program taking ideas from both GRIP and crop insurance. For your information, I have provided you with this program. On Wednesday, December 1, two members of the Pro-West Group and myself made a presentation to Rosann Wowchuck, the provincial ag minister, and Jack Penner, the provincial ag critic. We were very well received with this program.

In my municipality, there are 432 sections of land with 120 active farmers. Included in that total there is a Mennonite community to the west of us. In a year's time, I wonder what these totals will look like. Will they be the same or will they be drastically different? What will my rural community look like?

I request that all levels of government put their differences aside and listen to the grassroots farmers and not the multinationals, whose only interest is in the product once it is in their system.

In closing, I request the powers that be, the people we faithfully elect, to change existing policies and to keep the family farm a way of life, not a dream. Thank you.

The Chair: Thank you, Mr. Downing.

Now we'll go to Walter Finlay. Good morning.

Mr. Walter Finlay (Individual Presentation): Good morning.

A review of the problems with agriculture would take hours: low prices, high input costs, weather, price-takers not makers, payment of freight both ways, and being ignored by Ottawa. I hope today will help cure some of that. Southwest Manitoba and southeastern Saskatchewan have had a very rough year and a half. Excess moisture made it impossible to sow over a million acres and a lot of what was sown wasn't worth harvesting. In fact, when some producers hauled grain to the elevator, they got a bill instead of a cheque because the grain wasn't worth as much as the freight and elevation charges. This should be a story from the 1930s, not the 1990s. It was bad then, but it's a hell of a lot worse now, because the present cost of production is so much higher. It is a sad day when you hear farmers talking and they agree that you were further ahead not to have sewn a crop because you didn't lose as much money.

Freight is the highest single cost on my farm. A reasonable crop costs me $50 an acre. When the WGTA was implemented after the Crow rate was put to rest, the railways were allowed a return of 20% on their investment, which is the envy of every farmer. When the WGTA expired, this rose to 47% or 48%, depending upon whose figures you use. Yes, it looks like the railways enjoy the competition.

In 1997, the Red River area had their flood of the century. The federal government was right there with different programs to aid producers for loss of inputs, payment of diking for future problems, etc. We are getting none of these programs. I must be fair and say that most of the money did not come out of the ag budget. In fact, very little did. But 50% on loss of inputs was offered and they still got their crop in and off. That was a federal election year. Is that what it takes for Ottawa to acknowledge we exist? We have a prime minister who's travelling the world but can't come out and see the national disaster in his own backyard. Talk about a kick in the teeth.

The federal government announced it wants to eliminate child poverty. They are off to a good start by eliminating the farmer. The 1996 census showed over 20% of farm families in Manitoba and Saskatchewan who weren't next to a major centre, such as Regina or Winnipeg, had a total income of less than $20,000 after you added in off-farm income. It is well below the poverty line for a family. These are Canadian census and Canadian Federation of Agriculture stats.

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We need the farmer, especially the younger farmer. The average age of a farmer is 58, and most started farming when they were in their teens or early twenties. That means 38 years is the average that a farmer has been working at the job, only to see his pension funds going down hill. Instead of being able to retire with a full pension benefit after 20, 25, or 30 years, like a lot of professional occupations, farmers have to keep on working.

This brings me to NISA and AIDA. NISA is not a bad program if you have or can find the money to put into it. AIDA, on the other hand, is a nightmare not just for the farmers but also for the accountants. The cost of getting it done, redone, and redone again, only to find out you don't qualify, only frustrates producers and the accountants.

One of the major complaints is there is no consistency from one application review to the next in the AIDA office. Another one is the need for a two-price system on the accrual for 1999 crops. Any custom work done comes off AIDA payments. You would have been further ahead to have left the machinery in the yard.

A further complaint is that the money advanced to us for unseeded acres, $25, is an advance against AIDA payments. No problem. However, the other $25 doesn't qualify as income for NISA, but it does qualify as income when calculating AIDA payments. Sounds fair to me, eh? If it qualifies one place, it should qualify in the other. It should be counted as Manitoba's top-up to AIDA for these reasons.

AIDA was brought in to assist producers with low hog prices, and it was then changed and changed again to try to make it viable for other facets of agriculture. It just won't work without major changes.

The stress in agriculture is great at any time because of high risk and high costs. When low prices and low or no yields are included, it appears to be a mountain too high to climb for some families. This last spring, summer, and fall, my phone never quit ringing. Producers are looking for advice, help, or just company. The area office for ADAM, which is the Anxiety Disorders Association of Manitoba, has very alarming figures, and I don't think the final crunch has hit yet.

In closing, I would like to thank you for giving me this opportunity to speak. I will be farming next year for several reasons. I have 27 crops under my belt. I could have been on full pension with some jobs. My wife works off the farm, which I also do when I have the time. We have no children, so the expense is turned back into the farm. My father, who is over 80 years of age, is still very active and does a lot of the work. I have been able to find good and reliable help on a part-time basis, and I've been lucky.

Between my father and I, we farm over 2,500 acres north of Souris. In 1999, 2,200 acres were sowed in total for flax on June 19. On November 5, it was combined and yielded 12 bushels to the acre of tough flax. At $5 a bushel, that makes for $1,320 in total income. That's pretty much below the poverty line.

I just think next year has to be better.

Thank you.

Voices: Hear, hear!

The Chair: Thank you.

We now go to Harvey Paterson. Good morning.

Mr. Harvey Paterson (Individual Presentation): Good morning. Mr. Chairman, panel members, ladies and gentlemen.

I'm sure I do not have to inform you of the severity of the problems facing southwestern Manitoba farmers this year. All farmers, including myself, are trying desperately to deal with these matters.

I'm not going to dwell on the seriousness of the problems, as this panel is fully aware of the situation from many other presentations. I would like to discuss solutions, however. Before doing so, I would like to tender as support the recent article written by Laura Rance in last Saturday's issue of the Winnipeg Free Press. The article emphasizes the importance of the farm economy to the entire economy of Manitoba and also of Canada. While this importance should be emphasized further, we have no time today to list the many business people in supply industries and government who are depending upon the farming industry continuing.

Focusing on the short-term and the long-term solutions, we all know there's an area within the province of Manitoba that has suffered from excess moisture. While not normally admitted by farmers, the balance of Manitoba had average to excellent crops. For this year, I would recommend that support programs be directed to the farmers in the devastated area. We have the information and resources to fairly precisely define the areas having lower yields. These areas should be helped with a general per-cultivated-acre payment immediately. This can be done quickly and efficiently through a cash payment to each farmer. We now know the farmers who planted late have suffered more than those who didn't seed at all, because of the high input costs they incurred. Please remember how many businesses and industries the farmers carry on their shoulders.

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Turning to long-term solutions, we hear and see the effects of European, U.S., and Japanese subsidies. These are clearly killing our industry, and we know it from the recent WTO conference in Seattle that many people have figured that out. We pay for many different kinds of foreign cars, the profits from which are used to subsidize foreign farmers. The government must either reintroduce the GRIP program or implement directly on foreign imports a scheme of taxation that can be paid to Canadian farmers.

I propose that the following solutions be discussed by our provincial and federal governments, and fast: immediate payment on a per-acre basis for farmers in high moisture areas in Manitoba and Saskatchewan; legislation to enforce the use of feed-grain-produced ethanol as an additive to gasoline and other fuels, something that would utilize some of the production within our own province without incurring high transportation costs; introduction of import taxes on products flowing into this country from the European common market and Japan, with theses taxes designated for use in the agricultural industry; use of the funds raised under the third point to establish businesses that can grow within our local areas rather than suffering high transportation costs—although time does not allow me to deal with the Estey and Kroeger reports; immediate redirection of current revenues raised by the federal government from fuel taxes in Manitoba to the per-acre payment fund and annual continuations of the same; and consideration of the implementation of a 1% food tax, with half of this proposed tax going to the farming industry and the other half being spent on social services.

In conclusion, I would like to emphasize that the problems we have in farming are structural. In other words, they are not caused by bad management. The unqualified farmers left our industry many years ago. For some time, the larger farmers had an advantage spreading high machinery costs over many more acres to remain in the industry. At present, this previous advantage does not exist.

Many farmers are recommending the re-examination of transportation and marketing issues. Every producer agrees that serious efforts must be made to market effectively and transport cheaply. In spite of the monopoly granted to our railways and the government funds that were poured into them, they are owned and controlled by residents of other countries. This cannot continue. Western Canada must be placed in a position wherein rail decisions are made here as opposed to in the U.S. or central Canada.

For many farmers the game is over. They are not bankrupt. They are simply unwilling to take the risk of financing a farm and doing all the work for nothing. So please do something, or more of the agricultural sector will collapse.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Paterson.

Now it's time for questions, and we'll start with Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much. I wish I could say it's a pleasure to have you here. Of course, you know I appreciate listening to you, but it's not a pleasure to be holding these hearings.

I have several questions that I would like to pose. The first one stems from statements that several of you made that we need strong and vibrant rural communities. One of the problems we have is that there's a lot of politics involved with making a payment to farmers and so on. It's very difficult to communicate the problem to people in the big cities, where most of the votes are. As members of Parliament, we have that challenge to try to communicate to the people in those large urban centres the importance of agriculture to this country.

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If you were in my position, how would you go about trying to portray to those people the need to have a broadly based, strong farming community with lots of people involved in it? I myself am concerned about the move to large farms, about corporations taking over farms, and so on. How would you demonstrate the danger in that and the need to have a strong rural community in Canada?

The Chair: Who'd like to answer that? Walter.

Mr. Walter Finlay: One thing that I think you could suggest to them is that if there is a mass exodus from the rural community, those people are going to be going to the urban centres and they are going to be taking the urban jobs. If you check with a lot of the urban business people, they will very gladly hire farm people because those people are willing to work, and maybe at less pay than what the businesses are paying other people right now. If the urban people start seeing that their jobs are going to go to other people or that they're going to have to take a cut in pay to keep their jobs, you might have a lot better response.

Another thing you can relate to them is that they have some of the cheapest food in the world. I believe that in Manitoba about 11.7% of your income goes to putting food on the table. That is one of the lowest, if not the lowest, in the world. Now, if they want to go and spend the kinds of dollars that are spent in Japan or wherever to put food on the table, that's another way you can get a point across to them.

Mr. Garry Breitkreuz: You're all welcome to answer this. It's not directed to anyone in particular.

Mr. Don Bromley: I think we have an opportunity that has presented itself because of a related debate, and that's the one on gene manipulation and that whole category that maybe we don't want to get into today. I think that would set the stage for some good discussion on food production in this country. Maybe we should be capitalizing on it by using that initiative to also get the message out that there is an agriculture industry in western Canada. Whether we want to admit it or not, or whether the urban area wants to admit it or not, that ag industry plays a major part in our national economy. We need to beat that home. For example, there's a program going on in Manitoba called “Agriculture in the Classroom”, in which we encourage our education system to promote agricultural awareness and how the food gets from the farm gate to their table.

Mr. Garry Breitkreuz: Can I explore this a little further? I was hoping I might have more input as to the value of local communities and a strong, broadly based farming community to the country.

Let me approach this another way. The Europeans really ensure there are a lot of farms out there, smaller farms that lead to a diversity and a strength in the economy that you do not have if you move to large corporate farms. If you move in the direction of large corporate farms, you will eventually end up with the food supply being under the control of a few individuals, and I think most people in the cities do not realize the risks involved in that. Why do the Europeans protect their farmers? Maybe that's another way I could get you to look at this, other than in terms of taking the jobs away from people in the cities. They would still want to know. The economy will grow in the cities, but what about the value of farms to the country?

Mr. Don Bromley: I think history has dictated that attitude. In recent history, Europe has been hungry at least twice, while Canada has never been hungry. From that experience, the Europeans have developed the attitude that they are going to protect their food production at all costs. Because we're an export nation—we export somewhere in the neighbourhood of 80% of everything we produce, and particularly agricultural products—it's going to be a long time before domestic Canada is short of food. Our production would have to be cut back considerably. I think it's an attitude problem, because we've never been hungry.

Mr. Harvey Paterson: I think we're concerned about getting the message out to the people. In our presentation here, I think we somewhat answered that in the fact that if you impose a tax on food, that's the easiest way to get people's attention. I'm sure by doing that you can take the funds from that tax and reinvest it in the communities across the country for making pasta plants, ethanol plants, or whatever, to use your products.

• 0905

I have another suggestion, as far as getting the message out to the public is concerned. I've been watching TV lately and the only thing I see on it coming from Ottawa is the focus on the Quebec situation, which, in my mind, was settled down. Everything was quiet, and then all of a sudden, bang, we're taking the initiative to do that, when out here nothing's being said.

Mr. Garry Breitkreuz: It's a diversion from some of the real problems in the country.

Mr. Harvey Paterson: It could be.

Mr. Garry Breitkreuz: I suspect that's what's happening here, and I regret that. Does anybody else want to tackle that?

The Chair: You're pretty well out of time. Sorry.

We'll go to Mr. Calder.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman. I would prefer to deal more with the issue at hand instead of the politics.

One of the things I've heard over the last couple of days out here... And, gentlemen, in my other life I was a farmer. I'm still an active farmer, a poultry farmer, in central Ontario. That's right, I'll own up to that immediately. So marketing is something I've been involved in since I started farming in 1974. We had some people appear in front of us in Ottawa, and one gentleman gave us a definition of the “family farm”. It's the workplace, likely the residence of the family, but the labour that is supplied is largely family labour. The size doesn't matter. The farm can be 600 acres, 1,600 acres, or 6,000 acres. It all falls into that category.

The points I've heard are six, over the last couple of days: bring back GRIP; look at a set-aside program—do we have too much land in production right now; we need support, whether that be $25 an acre, $30 an acre, it's still back and forth; strengthen the NISA program and make it more accessible; enhance the crop insurance program; and finally, work on a long-term agricultural support program.

I'd like your comments on those six points.

The Chair: Who wants to take a stab? Murray? You don't have to comment on all six, just whatever you want to say.

Mr. Murray Calder: Any one you want.

Mr. Murray Downing: In regard to that GRIP-style program... I guess I remember that back when I was...

[Editor's Note: Technical difficulty]

...whenever that program was bad for us. When we entered into the field in the spring of the year, we had some idea of what we were covered for. The way the crop insurance exists now, we really don't know. I guess that's my point. I think if we had one good program and only one good program—or maybe two—NISA and a GRIP-style program—that's all we would probably need as farmers.

Mr. Murray Calder: Okay. Bear in mind too that we still have GRIP in Ontario. Our provincial government decided to take back that program, and we're sitting on approximately $350 million worth of reserves that will help our farmers through the next couple of years.

Is AIDA savable? I've heard over the last couple of days that it's too complicated, and yet I've still heard presenters say, be careful, don't throw the baby out with the bathwater here.

Mr. Walter Finlay: Actually, AIDA, as far as I'm concerned, is not a bad idea. The formula has to be worked on, have some changes made on it, so it is more viable. I am not against AIDA in the principle of the formula. It's what is included in the formula, etc., to make it viable.

Mr. Murray Calder: Does anyone else want to comment on that?

The Chair: Walter, on AIDA, we have changed it. We now include negative margins, and we've added another version of the reference period, the Olympic model. Those are two changes. Are those two changes welcome to you, and can you think of one other change—there could be many—that would represent to you a major improvement to AIDA?

Mr. Walter Finlay: There's the two-price change, or whatever you want to call it, on the accrual system for prices—the ending price for 1998 and the price for 1999. If you have the commodity still in your bin and the price drops $2.50 a bushel, say, using canola as an example, you're losing $2.50. Yet as far as AIDA is concerned, it's still there. So that comes right off your line.

• 0910

The Chair: Sorry about that, Murray.

Don.

Mr. Don Bromley: In spite of our contempt for the GRIP program, probably if it were still in effect, we wouldn't be having this meeting today. There would still be problems out there, but not of the magnitude they are now.

The big problem with AIDA is that if it's 70% coverage, it's a one-shot deal. We can survive on a 70% margin for one year. Margins in agriculture are so small that 70% will carry us through, provided we've got a decent reference margin to go with it. Most people can cut 70% of our margin for one year. But if you have 70% for two consecutive years, or less, you're history.

The Chair: Yes, Murray.

Mr. Murray Downing: I see you have a 30% deductible in the top end, because it only covers 70%. Out come the negative margins, and they are only covering that 70%. So you have 30% at the top end, and 30% at the bottom end, equalling 60%. That's a pretty high deductible.

The Chair: Mr. Calder, did you have another question?

Mr. Murray Calder: I have just one last question, and it goes back to my question on the set-aside. What was your opinion of the LIFT program of the 1970s?

The Chair: I don't know if they'd remember.

Mr. Murray Calder: I don't know, I think we're all in the same age group, Mr. Chairman.

Mr. Don Bromley: I was farming in the 1970s and before. The LIFT program at the time may have looked like a good idea, but in hindsight, maybe it wasn't all that great.

First of all, it got us through a tough time, but when the market situation turned around and there was an increase in the price, we had nothing to sell because we'd taken those extra acres out of production.

Also, when we shorted the market in those years, we shorted some customers, and our competitors moved in really quickly to fill that supply. We had trouble getting those customers back, and in some cases we didn't.

The Chair: Okay, thank you very much. We'll go to Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Mr. Downing, your presentation was good—all the presentations were good. You had some material on your income assurance program that you really didn't have a chance to elaborate on, and I'd like you to take us through that, if you would, please.

Mr. Murray Downing: What I've done here is I've taken some of the GRIP ideas and taken crop insurance and turned it upside down. Getting back to the old GRIP-style program, when you see your confirmation from crop insurance, you see red spring wheat, $100; durum wheat, $110; prairie red, $120, for example. You knew what kind of wheat you were growing. We were all growing prairie spring wheat. That was one of the faults with GRIP.

So I said, let's come back and put the coverage levels at probably $100, $140, $160, meaning that I think probably 80% to 90% of the farmers should be able to break even with those numbers in a bad year. And there should be two styles of premium: a basic premium and a surcharge premium if I collect, the reason being to try to stop the abuse under the GRIP system.

There's an incentive, for example, if I select the 70% range at $140. It gives me an incentive to go out and try to produce that, because if I do, I'm only going to be charged $7. These are just hypothetical numbers to explain it. But if I do happen to collect, I don't mind paying the extra premium, because I have the coverage that's going to keep me on the farm.

And with the IPI systems, the way they are under crop insurance right now, I'm taking my field of wheat and probably comparing it to 15,000 acres of wheat in my risk area. Whereas under this program, if I want I can take it and compare it to my municipal average, which would be more accurate. If I'm below my municipal average, what's the reason for it? If I'm above it, give me some credit. That's the way I'm saying the surcharge would work. If I were better than my municipal yield, you'd lower my surcharge accordingly. If I were higher, you'd raise it. If I haven't had a hail storm, in example two, why am I below area average or municipal average?

Is that clear?

Mr. Dick Proctor: Well, it's helpful anyway.

Mr. Murray Downing: Yes, okay.

Mr. Dick Proctor: That does give us the chance to understand it a little bit better.

• 0915

Several of you, including Mr. Downing, mentioned the GRIP program. Yesterday, when we were in Portage, a Mr. Zander said GRIP had worked because it had maintained production revenue for a couple of years by using long-term averages. But he was concerned that inevitably producers would be paying large premiums without a chance of surviving until the crisis had rebounded. Someone else, I think it was in Portage, suggested that if GRIP were to come back, it should be changed somehow to a cost-of-production formula. I just wondered if I could get any comments on that from any of you.

Mr. Don Bromley: One of the problems I could see with GRIP when it was in effect was that it was not market-neutral. It didn't tell me to grow what I had the best market for; it told me to grow what I had the best coverage for. That's wrong. It didn't make me react to the true market atmosphere out there.

Mr. Dick Proctor: Anybody else? Murray.

Mr. Murray Downing: By having one coverage level at the top, wouldn't that answer Don's question?

Mr. Dick Proctor: Yes.

I just wondered whether Mr. Paterson or Mr. Finlay had any thoughts.

Mr. Harvey Paterson: Yes, it could get expensive for premiums, but if we had some other source of income that the government could subsidize those incomes with, such as a food tax or something like that, and you could hold the line and make it viable for a farmer to...

The nice thing about the whole thing is he knows exactly what he's working towards, and he can make plans. Right now we can't do that. As far as we're concerned, in ours we have administration costs for AIDA, for crop insurance, and for all these. If we bring back GRIP and NISA, we have another two administrations, and we're just throwing a whole lot of money away to run a whole lot of things that maybe aren't working that well.

So if we revised them all and made a GRIP program that would work with crop insurance and run under the same banner or the same administration, I think we'd be much more efficient that way.

The Chair: Thank you.

We'll go to Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman.

For Murray, there are points 7 and 8. Point 7 you can write down—and I think we've heard the message quite clearly—differentiate between disaster area and the AIDA program that's there for commodity prices. So write that down as number 7; you're going to hear that a lot. Number 8—and I think I heard it from all of the presenters—there is no long-term agricultural philosophy that the government has put aside as to where these gentlemen and the other people in farming right now see agriculture going in the future. Those are points 7 and 8. Put those down, okay?

Don, with the AIDA program, again I appreciate your comments about differentiating the two. One is a disaster program, and we have to get the message across—not to these people, because they understand it; we have to get it across to their colleagues, quite frankly.

You say of the $50 that has been paid by the province right now—because I don't think the federal government is committed to any of that $50 just yet—$25 is going to be an offset to AIDA and the other $25 is a disaster payment that's taken into income, which obviously affects any AIDA you may have. Would you say that in the disaster area, the first priority right now with the AIDA program is to make sure those incomes are not shown as income into AIDA? Would that help you? And should there be an additional payment under a disaster program for the unseeded acres we have right now—the 1.1 million in Manitoba, plus another 1.1 million in Saskatchewan?

That's to Don and whoever else would like to answer that.

Mr. Don Bromley: The $50-an-acre unseeded acreage payment did little more than cover costs of weed control and erosion restoration. I have a washout across one of my fields that you could lose a small car in, and that has to be fixed at my cost, at a cost to me.

Also, there's a cost of maintaining that land so that we can seed it next year. There was nothing in that $50 left over to give me some resources to react to this situation we're in. I have no investment capital out of that to diversify or anything like that. There was nothing left from that $50 to even put food on the table to feed my family.

• 0920

Mr. Rick Borotsik: My question is—and please, I don't have a lot of time—how much more from a disaster payment is required right now to make things so that we can plant the crop come springtime? What are we looking for?

Mr. Don Bromley: Probably our input costs for next spring.

Mr. Rick Borotsik: Thank you.

You mentioned two programs. One is a lost-input program. That program isn't there, and we have to continue to put pressure on to get a lost-input program. The other one is what I consider a stewardship program or a maintenance program for spring.

How much did you guys spend for spring? I know Walter didn't get a crop in. How much did you spend on spraying to knock the weeds down for next spring? That's to both of you, anybody.

Mr. Harvey Paterson: We made two passes for spraying and three passes on cultivating. Each pass for spraying is $12 or $15.

Mr. Rick Borotsik: So $30.

Mr. Harvey Paterson: Yes, $30 or $35.

Mr. Rick Borotsik: Is that pretty fair? Is that a reasonable amount?

Mr. Don Bromley: For the spray application, yes.

Mr. Rick Borotsik: Okay.

Murray, you have rental land, 1,600 acres. Does your landlord expect you to pay for that rental land even though you didn't seed it?

Mr. Murray Downing: He sure likes to see it.

Mr. Rick Borotsik: That comes out of the $50?

Mr. Murray Downing: Yes.

Mr. Rick Borotsik: Do you guys rent land too?

Mr. Harvey Paterson: Yes.

Mr. Don Bromley: Yes.

Mr. Walter Finlay: Yes.

Mr. Rick Borotsik: All right. So the $50 is a non-issue right now. It's gone to cost, right?

As a part of a disaster program, what else would you like to see, other than the spraying and other than perhaps the lost inputs. Is there anything else?

Mr. Walter Finlay: If we had the lost inputs, that would make a big difference. As for the spraying, I spent more money on spraying than that. I'd be looking at likely... Well, some of it had over four litres of Roundup, and some of it is still under water. It will be two to three years before I sow some of it, and that's in normal years. If we get a lot of rain again this year, you can forget about sowing likely 1,000 acres again.

Mr. Rick Borotsik: Walter, I just want to ask a very quick question about anxiety disorders. We have a statistics list here, and I know you've been involved in that through CAP. We haven't had a chance to look at this. Can you give us just a thumbnail sketch of the social problems out there that are going to be anticipated probably—

Mr. Walter Finlay: Actually Sheryl is here.

Mr. Rick Borotsik: I don't know if Sheryl is going to get a chance to speak or not.

Ms. Sheryl Cavers (Outreach Worker, Anxiety Disorders Association of Manitoba): I am.

Mr. Rick Borotsik: Oh, you are?

Okay, we'll talk to Sheryl about it.

The Chair: Thank you.

Mr. McCormick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Mr. Chair.

Thank you for your good presentations.

Certainly we need a long-term program, and there have been some excellent suggestions. We need to address the disaster here, which hasn't been recognized enough. The reaction has not been there from across the country.

But just on AIDA for a moment, the intent was good. The crisis was recognized. At the time of the $900 million, the first moneys from the federal government, we had groups from within this area who said it was a good step and perhaps even almost enough at that time. But of course the fault lay in the design of the program, the slowness to change, and the fact that we didn't get the money out and still haven't gotten it out well enough.

Right now we have money designated for this year, the calendar year, which is almost over. We hear figures of up to $1 billion that's there. A good portion is still there for this year. We also have to look at what we have today and look at the changes we have to make so that at least following January 1, we can get the money out much more quickly.

The minister has stated that he wants to have all the money for the 1998 year out before Christmas. Wow! I'm glad the federal mail is working quite well. But seriously, next year, for this year, we do want it to get to those who need it under the AIDA. So I welcome any suggestions you have for changes we can make to enact that.

Mr. Walter Finlay: One of the problems with it is the inconsistency in the AIDA office. You can send in two applications, identical, they go to two different people reviewing it, and you come back with maybe $30,000 or $40,000 difference in payment amounts. One will be disqualified completely and the other one will get $30,000. And that's out of the same office, identical applications. You have to get some consistency in the program.

Mr. Larry McCormick: I've heard this before, and it is important that you tell us now and get it on the record. Everything you say is being monitored, thank goodness, and listened to.

Mr. Walter Finlay: That is one of the problems. If there is a formula out there for expanded acres or decreasing acres, get it out to the accountants so that they know what they're doing. They have to see that formula, because otherwise they're scratching their heads. When there is no consistency in the office, they're scratching their heads on what they're even supposed to be putting down.

• 0925

Mr. Larry McCormick: The changes to AIDA, for example, come from negative incomes. I've heard that it will help quite a few people. I've even heard that discussed this morning over coffee. I'm just wondering in this area whether or not it will help many additional people who weren't included before.

Mr. Walter Finlay: Not being an accountant who's doing a lot of the books, I wouldn't be able to say for sure, but it should help definitely the ones who didn't put a crop in. On the other hand, the $50 an acre that the provincial government has allocated is going to take away from your AIDA payment, even with negative margins included.

The Chair: Mr. Downing.

Mr. Murray Downing: I'd just like to make a statement there.

That AIDA top-up program would help us in the southwestern corner, if that $50 an acre we had was in the form of a cheque so that when we enter it on AIDA, it's zero. That's documenting my farm, what it does. When I say that $15,000 to $65,000, that's what this paper should tell you guys. That's the impact on my farm.

In the southwestern corner of Manitoba there are going to be people fairly wild when they get to doing their books and saying, I should have an AIDA payment of this in a disaster year, but when I have to subtract that other off, I get nothing.

Mr. Larry McCormick: No, I appreciate that. Yesterday I said that you need to be commended for your frankness in disclosing your lives and putting it all there. And you're doing it because of the hurt felt by so many people.

I have a comment I want to get on the record. As we look at a long-term program, besides just the producers, and you are the most important, it's also a matter of communities, and we're all working for our children and the communities.

We have to look at getting other departments of the government involved. There certainly could be money there, as under the set-aside programs. If we can get into the Environment, Western Diversification... Industry Canada can come through. There certainly could be more money there too as soon as next year.

So it isn't a simple... want to approach it, but we have to do a better job for you. You also have to work with us as we work across all those departments.

Thank you, Mr. Chair.

The Chair: We're out of time for this round. Joe, you'll have to wait for the next round.

I would like to ask a question. Are any of you planning to seek an AIDA payment on the 1999 operation?

Mr. Walter Finlay: Yes, very definitely.

The Chair: So my question is this. Given the rules under AIDA, when would you be able to begin the process of applying for your AIDA payment? And when might you expect it under the best possible circumstances?

Mr. Walter Finlay: I can apply likely the second week of January. My books will be done. Depending on how long it takes to go through the AIDA office... that's the hold-up factor.

The Chair: Do you think most farmers would be in a position to—

Mr. Walter Finlay: Depending on when their year-end is, that is a drawback. If your year-end is at the end of May, July, or whatever, it's a varying circumstance.

The Chair: All right, thank you very much.

We're going to go to the second round of witnesses. I'd like to call forward Bernie Sambrook, Bill Morningstar, Wendy Bulloch, and Bob Brigden.

I want to welcome four more farmers to this meeting. If it's all right with the second round of presenters, we'll go in alphabetical order.

• 0930

So that means you, Bob, will begin, followed by Wendy and then Bill Morningstar. You're going to bat the clean-up, Mr. Sambrook.

Welcome to all of you. You have five to seven minutes, and then we'll have some time for questions.

Mr. Bob Brigden (Individual Presentation): Thank you for inviting us here to speak this morning.

Let me begin by introducing myself. My wife, Pat, and I own and operate a grain and livestock farm in the southwest corner of Manitoba near the town of Melita. It is a family-run operation involving one of our sons and his wife.

I will not use this part of my time to elaborate on the impact felt on ourselves personally by the events that have happened in the agricultural industry. I choose instead to speak in general terms of what I have seen happen to our industry, who should share in the responsibility for what has happened, and where we go from here.

In the past few years several trade missions, led by government at both levels, provincially and federally, have determined that the opportunity to enhance our trading position worldwide would be beneficial to our country. In that regard, the agricultural sector of our economy was told that a growing demand worldwide for our product existed, and as such, as the economies of developing nations grew, so would their demand for food.

As a result, most producers reinvested or recapitalized most of their profits as well as borrowed against their equity to not only meet the anticipated demand but also to attempt to remain competitive in a rapidly changing industry. Unfortunately, what was predicted to happen didn't happen. Many third world economies crumpled instead of growing, and the demand for agricultural products from this anticipated market either hasn't developed or existed at such as level as to make it unprofitable for the primary producer.

Many of the players in our industry have worked to create a volume-driven market, but I suggest very little attention has been paid as to whether or not this volume-driven market would in fact be profitable for the primary producer who is expected to create the volume that fuels this economy.

As a result, almost all primary producers are losing money, but it is becoming clear that many, in particular the younger generation of producers, are not likely to survive. Not only would this be a serious loss to our industry and endanger the survival of many of the rural communities in western Canada, but these communities, among them my own community, can ill afford another exodus of people, let alone their young, whose families fill their schools and fuel their economies.

I will be the first to admit that our industry must continue to change and adapt. I will admit that there will be casualties along the way. This is life. I say to you today that in no way should the agriculture industry, an industry that is built to not only feed our nation but also to feed many of the poorer nations of the world, sit back and be disseminated by events in this world that are beyond our control.

If it is the sole responsibility of the Canadian farmer to feed the poor of this world, then as a country say so. If the stability provided in this world by a stable supply of reasonably priced food is of no consequential value to the taxpayer, then say so.

As an industry, difficult as it may be, I suggest long-term farmers will adjust. As Canadians, we will have to deal with the consequences of those decisions. The most serious of those consequences will be that rural life as we know it today would cease to exist, and many rural communities such as my own would survive but very little will be left to offer.

I believe, though, the greatest casualty would be that an entire generation of younger people would be lost to our industry.

So where do we go from here? No doubt you have found out already that the solutions offered for this problem are as diverse as this nation itself. As a result, I offer these guidelines. I do not believe that any one solution will meet the needs of this problem. In fact, I go so far as to say that the agriculture industry in western Canada will need the attention of all levels of government for some time.

If a younger generation of people are to be a part of our industry, then they will have to be targeted and supported. We cannot fund agriculture at all levels equally and expect the next generation to compete.

Without this generation, as I indicated before, rural life in many parts of western Canada will seriously decline.

I believe every program developed for agriculture should meet two key criteria: number one, encourage, not discourage, young people from entering this industry; and number two, serve to stabilize rural economies and cause them to grow, not to decline.

• 0935

I come here today not to lay blame. No one could have seen this one coming, but as in all things, it seems the solution for so many is to pretend the problem was caused by someone else. It matters not what series of events created the situation we're in today. What matters is how we respond to those events. The decisions made today, tomorrow, and beyond will set the stage for where we will go from here. The western Canadian agriculture industry is at a very crucial point in its history. In your search for solutions to our problems, I wish you well.

The Chair: Thank you very much, Mr. Brigden.

Voices: Hear, hear!

The Chair: Good morning, Wendy Bulloch.

Ms. Wendy Bulloch (Individual Presentation): Good morning.

The farm—best home of the family—main source of natural wealth—foundation of civilized society—the natural providence

Eighteen months ago, when a colleague of mine from Nova Scotia and I stood in Washington and read this inscription high above on Union Station, I never imagined that I would be bringing this quote to you today and under these circumstances.

I am here today to speak with you and challenge you as to how we can serve the people of rural Canada, especially of western Canada, in the continuing challenge of the farm crisis, which impacts more than just the farm producers and their families.

My roots are long and strong in agriculture, but I am not a farm producer. The concern I wish to raise today with you is the issue of community development and how we as Canadians can help to serve our rural communities.

Yes, change is inevitable, but so is the foundation of civilized society. As a home economist, I know about the importance of the family and the role the family plays in our communities. I grew up on a farm and lived in rural Manitoba for a portion of my life. I presently work in rural Manitoba and Saskatchewan.

As this crisis continues and our families begin to feel the need to leave the farm—there are suggestions that 30% of them will leave—what will happen to our rural communities and the natural providence that exists due to these communities? What will happen to the well-being of the families? Many of the organizations that I've talked to in the past few days identified that people in rural Manitoba have strong coping skills, but what are the long-range impacts of the continuous crisis for rural people and rural communities?

In the late 1980s and early 1990s, my work as a 4-H and youth specialist with the Manitoba agriculture department allowed me to work with some outstanding young people. I remember a 4-H conference in February 1990 at which the young people were wondering what was going to happen to them and to their farms. They were worried about their families and they were worried about themselves.

Many organizations are doing their best, their utmost, to help people work through some of the stresses and despair they are experiencing. Even the local media have addressed the issue and have interviewed various people on the farm and in rural communities in order to help the urban person understand the crisis that is being faced. Manitoba church congregations are twinning with their urban counterparts in order to improve understanding of farm issues. This is a unique partnership and alliance that needs to be strongly encouraged. Others are having coffee klatches to encourage people in the community to come together and feel free to talk.

We need to look for other partnerships and alliances to enable and empower our farm families and rural communities in their need to develop a vision, to help them produce the tools to meet their vision, and to meet the challenges of the farm income crisis. Dollars to these specific community groups that are providing needed support right now would be very welcome.

Community development is an ongoing process in rural Manitoba and rural Canada. If we look at the definition of community, it means fellowship, and development refers to a process of gradual change, a planned evolution towards progressive improvement.

In December 1997, the federal government formally endorsed a rural initiative under the banner of the Canadian Rural Partnership. Through a rural dialogue, 11 priority areas were identified in order to improve the quality of life for Canadians living in rural and remote areas.

I find it interesting that here in western Canada and in rural Manitoba, this initiative has not been discussed or addressed. I have had phone calls from various government and private organizations asking me about funding opportunities for various projects, and when I mention that this initiative exists with a budget of $3 million to support this project, no one seems to be aware of it.

The 11 priority areas identified are very important to rural Canada and would be very beneficial at this time as a possible tool in some of the solutions. Some of these areas are: to improve access to financial resources for rural business and community development; to strengthen rural community capacity-building, leadership, and skills development; to create opportunities for rural communities to maintain and develop infrastructure for communities; and to connect rural Canadians to the knowledge-based economy in society and help them acquire skills to use that technology.

• 0940

The social well-being of rural areas can be defined in three ways: that of the welfare that involves both material sufficiency and the non-economic aspects of rural living such as education and health; resource development that involves increased production and efficiency; and organizational development involving the maintenance and creation of rural structures through which people can challenge their creative energies and behaviours for rural betterment.

What will happen to our rural well-being with the loss or decrease of family farms and rural communities? We all know that if the family farm leaves the area, this will impact the rural community that exists: the school system, our health system, the agricultural business that exists. Will the social well-being of rural areas continue to be met in the ways I described above or will they just die a slow death, leading to the decrease in education and health, the loss of jobs and the eventual erosion of rural Canada, and the decrease in efficiency? Our Canadian farmers are very efficient producers.

I am a member of the Manitoba Women's Institute, and along with a colleague I have been conducting focus groups across Manitoba for the institute. These focus groups are addressing the issue of why rural women are not involved in community organizations. The responses to questions have resulted in varied but interesting comments. A common phrase I have heard is about the issue of income. One woman farmer told me that if I could pay her $10 a bushel for her wheat, she would not have to work away from the farm and then she could be more involved in her community and local organizations.

The issue of income and trying to make ends meet has been a more common comment this past fall as we conducted these focus groups. Many of these rural women return to the farms with their husbands and families in order to have that quality of life—“the best home of the family”—only to find that in order to continue to live on the farm, one or both of them must take off-farm jobs. The stress of trying to provide some normality in their families and support to spouses and children, along with off-farm jobs, being a farm helper, and being a parent, pull women in many directions. Many can't afford to volunteer; they cite long-distance telephone calls and extra gas costs.

As a recent graduate of the Canadian Agriculture Lifetime Leadership program, I had the opportunity, with 27 other Canadians, to travel across North America and look at agricultural issues. Agricultural issues are the same here as in other parts of North America. However, here in Canada we enjoy a quality and a standard of life that are very different from our counterparts in Mexico.

Why, in an old civilization like Mexico, is it a top priority of all levels of government to help keep the people in rural areas? One of the reasons is that the cities become overpopulated and the levels of crime and poverty increase immensely. When you have people in the city suffering from poverty, they cannot sustain themselves like their rural counterparts in the countryside. The reasons they want to maintain a rural population are many, but some are worth mentioning: to slow down the rate of soil deterioration and to maintain the environmental sustainability of the rural communities.

Mexico is a much older civilization than ours here in western Canada and in Manitoba. In Mexico, especially in rural areas, people work just to live, as compared to Canada, where people live to work. Agriculture is the main source of natural wealth, and all one needs to do is look at countries such as Mexico, which is struggling both socially and economically, and one discovers that their agricultural base is either non-existent or very weak.

Is that what we want to happen in rural Manitoba and rural Canada? We need to pay attention to our grassroots and our history. We need leaders with vision. If we lose our farms, in particular our young farm families from rural communities, we lose the opportunity to have strong leaders who are needed at the farm and agribusiness level in order to continue to have long-term success. At our community and regional levels, we would lose the political and organizational leadership that is needed for the development of rural economic and social activities that are environmentally sustainable. At the provincial and national levels, we need men and women who understand the complex issues and who have the skills to provide the vision and leadership to this industry. This will not happen if the grassroots that exist in rural Manitoba are eroded and left to wither and die.

Thank you.

Voices: Hear, hear!

The Chair: Thank you.

Now we turn our attention to Bill Morningstar. Good morning.

Mr. Bill Morningstar (Individual Presentation): Thank you. Good morning.

The Government of Canada must do something long-term for the farmers of western Canada that will be affordable and predictable and will allow farmers an acceptable living standard.

“My son is not coming home.” Farmer after farmer is repeating this phrase. Farms that are viable operations have no daughters or sons coming home to continue the operation. Unless something is done to reverse this trend, the concept of extended families in communities will totally disappear.

If you're interested, my wife Judy and I have two sons who graduated from agriculture at the University of Manitoba and who are “not coming home” to farm the land that was homesteaded by their great-grandfather in 1884. It's also going to be the end of the line for Judy's home farm in Saskatchewan, bought in 1905 by her grandparents and farmed continuously by her family until now.

• 0945

At the end of this year, the world will have 130 million tonnes of wheat carry-over and 157 million tonnes of coarse grain carry-over. If 25 million tonnes of wheat and 60 million tonnes of coarse grain are taken out of the world supply, prices should rise to a level where farmers in Canada can make ends meet on their own.

Surely the five largest grain-exporting nations of the world can get together and set enough land aside on a paid acreage program, based on good environmental practices, to take this small amount of grain out of the world marketplace.

The question is, does the Government of Canada want a cheap food policy for the world or does it want western Canadian farmers? Is the Government of Canada committed to keeping the agricultural industry in western Canada or not? We farmers need to know, right now, so we can plan our futures. To this date we have no indication from the federal government that you care.

Farmers in Canada need a direct infusion of $25 per acre. Keep the program extremely simple. Send the payment before spring seeding. Canada cannot needlessly lose any more farm families. The ones being forced out of farming are most under 40 years old.

The AIDA program, like most of the recent so-called farm programs, seems to pay the wrong people. Many AIDA payments have gone to senior citizen farmers and those who do not need it. Over $70 million will be spent in the administration of this program. I suppose we can only guess how much farmers have spent paying accountants to see if they qualify for the program. Now you have changed the AIDA program, so we get to go back and pay these same guys all over again.

As well, NISA is mostly for over-55 farmers, for their retirement, and the Crow payout went to landowners who were mostly older farmers and non-farmers.

Canada has 60 million acres of cropland in western Canada and 4.2 million in the rest of Canada. Why is our agriculture minister a used-strawberry farmer from eastern Canada who just doesn't seem to get it?

Voices: Hear, hear!

Mr. Bill Morningstar: Farmers in western Canada do not want European and U.S. farmers brought down to our level. We want to be lifted to their level. U.S. senators and congressmen stand on the line and fight for their farmers, and U.S. farmers have every reason to be proud of their representatives. The fact that Canadian flags are being lowered on prairie farms should be raising red danger flags on Parliament Hill.

Taxes need to be removed from fertilizer, pesticides, and fuel. School taxes must be removed from farmland. Farmers should pay income tax, not hidden taxes.

Embargoes on food and grain exports to other countries are financed totally by western Canadian grain farmers. Farmers lose not only sales but they also can lose these customers for life. Canada has become known as an unreliable supplier of grain. Food must never again be used as a tool or a weapon.

Canadians can help farmers by buying a bushel of wheat and donating it to the Food Grains Bank, but the level of support from the Canadian government should be raised from the present $16 million to $22 million.

Long-term policies that involve agricultural production, including not only agriculture but also environment and trade, etc., must be developed with producers who are involved in their planning and the final outcome.

Farmers need interest-free cash advances on the crops that will be sown in the spring of 2000, based on crop insurance coverage levels of 80%.

With regard to the Estey report, Doug Livingstone, past president of the Alberta Wheat Pool and one of the facilitators of the Kroeger report, ended the final session in Portage la Prairie by saying, “It will be a giant leap of faith for western grain farmers.”

Farmers are used to taking giant leaps of faith, but this is the first time we will have to put all of our faith in the CPR, the CNR, and a bunch of multinational grain companies. Within these companies, upper management takes as much as 30% of their wages from incentive bonuses. Obviously, what is in the best interests of farmers is of very little consideration to them.

The flood of 1999 in southwest Manitoba and southeast Saskatchewan was one of the worst disasters to ever hit the province of Manitoba. Few people would ever have believed the fields could get that wet.

• 0950

It is even harder to live with the social, mental, and monetary problems that the spring rains of 1999 have created. The spring started out with people feeling sorry for those who did not get a crop in. The year has ended with sympathy going to those who did put the crop in.

Combining in late November; frozen, damp wheat full of diseases; oats weighing 18 to 20 pounds per bushel; combines and tractors being excavated from mudholes with backhoes; applied fertilizers and chemicals lost due to excess moisture—all these problems and more have created an overwhelming feeling of bleak despair in western Manitoba and eastern Saskatchewan.

To the Royal Bank, this may not constitute a disaster, but to the farmers of southwestern Manitoba and southeastern Saskatchewan, it sure as hell is.

We wonder why the federal government tries to make-believe our area does not exist. For many years government programs have led us to believe that exporting grain from the prairies was the proper thing to do. The Liberal Government then took the Crow benefit away and left one of the largest industries in Canada to make massive adjustments on its own.

The Liberal government has said they cannot match the European and U.S. treasuries. Let me tell you, neither can the farmers of western Canada.

The Estey report was to be a total package. Willard Estey said that the open access package was the means whereby the farmer would get competition built into the system. The Liberal government must not isolate and remove the open access portion of the report. The report must be accepted in its entirety or not at all.

Short-line rail must be allowed to happen. Municipal and provincial roads are fast becoming major safety concerns for our rural families. The roads built many yesterdays ago were not constructed for B-train traffic. They are not wide enough for these semis to pass school buses and cars. Your transportation policies have put these semis onto our roads with no thought as to the consequences.

Voices: Hear, hear!

The Chair: Thank you very much, Mr. Morningstar.

We'll now move to Bernie Sambrook. Good morning.

Mr. Bernie Sambrook (Individual Presentation): Good morning.

My name is Bernie Sambrook. I operate a grain farm in Medora, in southwestern Manitoba, and 1999, without a doubt, has been the most challenging year in my farming career. Constant rain stalled seeding operations this past spring. When the rains finally subsided, our fields were nothing but weeds, water, and mud.

Of the 2,800 acres on our farm, we mudded in 2,000 acres, and most of that in the second and third weeks of June. The canola did surprisingly well for being seeded late, but because of disease and just the fact that they were mucked in so late, the cereals were disasters.

But I'm not here to say woe is me. I want to talk to you about what needs to be done to improve our prospects as grain farmers and return a sense of optimism to the farm.

When I think of all the talk and positioning that surrounds this issue, I'm reminded of this quote: “Complex problems have simple, easy-to-understand, wrong answers.” This truly is a complex problem. No one magic solution exists. Government aid by itself will do next to nothing in addressing the long-term core problems that exist in this industry. Sole reliance on taxpayer money to keep this industry going will only lead to greater hardship for all. Realistic solutions lie elsewhere.

A number of years back, first, second, and third lines of defence were the terms used when talking about farm income and safety nets. The first line is the farmer's own management abilities. The second line would include such government-sponsored risk management programs as crop insurance, NISA, GRIP, and now AIDA. The third line would include any special disaster-type program. I believe you're here today because farmers are asking for the deployment of a third-line program.

Now, I'm not going to argue against the need for a third-line payment, but it seems to me that if the second and third lines are being too frequently called upon to shore up farm income, the best long-term solution lies in strengthening our first line. Ignoring these first-line issues will place constant burdens on our safety nets and will only lead to a worsening situation with our farm economy.

Minister Vanclief has been talking about a policy of tough love. If this truly is to be the federal government's policy, then you have a duty and a responsibility to those to whom you are saying sink or swim. Your duty demands that you allow farmers the unbridled ability to manage their farms as best they can. Failure to do so will result in a policy of “sink or sink” and an unprecedented erosion in the farm economy. If you fail to do what needs to be done, we're going to be dealing with the effects of an under-performing farm economy and mass farm exodus for many years to come.

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Things that may have been considered wise and thoughtful policy in the past are rings around farmers' necks today. Today's technological world demands different policies and different approaches from government than in the past. Today's farmers need to be more in tune to the marketplace. We must be allowed the individual freedom to market all our crops under an open market system.

Canola and other special crops have been the grain farmers' saviours over the past few years. These commodities offer us vital cashflow at world prices. The free market system these crops are marketed under offers farmers a wide choice of pricing and marketing options, choices that farmers use to the best of our abilities. The free market system does not mask the crucial price and basis signals that farmers need today. It is here that all our success stories can be found.

Wheat is another story altogether. The Canadian Wheat Board continues to stifle and choke this industry. Even after the passage of Bill C-4 and the cosmetic changes to a new governance structure, the Canadian Wheat Board remains the same intrusive command-and-control entity that was created back in 1943. The promises of flexibility, openness, and accountability to farmers have all given way to a rigid determination to preserve the status quo, and a frightening and disturbing bunker mentality has set in.

Prairie Pasta's attempt to add value to our grain and our economy has been quashed by this new board. Ontario wheat farmers are being offered six new pricing options, all outside of pooling. These new options have been well received by farmers. Prairie farmers are still allowed only compulsory pooling, and these new pricing options that may or may not be offered are still bound to the pool and will all be at a discount to the pool. There's no support for this type of cash pricing option, but the CWB refuses to consider anything that does not involve pooling.

Results from a recent CWB survey that asks farmers their opinions about these issues—whether they support a single desk, a voluntary board, or abolition—as well as many other issues surrounding the Wheat Board and farming, are being withheld from farmers and the public because the results are so bad for the Wheat Board. Rumour has it that the survey shows support for the monopoly at only 20%.

Farmer-elected CWB director, Jim Chatney, is under constant harassment, and as we speak, he is being threatened with legal action. And for what? For trying to be open and accountable to farmers who elected him. For saying anything that does not coincide with the Wheat Board propaganda campaign. For revealing the truth about Wheat Board support. I was one of those farmers surveyed this fall for their latest poll, and I can assure you there's nothing commercially sensitive about it. These results should become public.

The number one impediment to a farmer's future prosperity is the Canadian Wheat Board. The most positive thing a Liberal government could do to address the farmers' first line of defence is to remove this impediment. The quick adoption of Justice Estey's recommendations in grain handling and transportation reform are also vital. Ending legislated freight rates and moving the Wheat Board to port are integral to these reforms. Retreating from Justice Estey's recommendation and keeping the Wheat Board in transportation will only ensure more future problems in this area and will lead to Canada falling farther and farther behind our competitors in terms of efficiencies and reliability.

Tax relief and negotiating an end to the price-distorting subsidies are also vital ingredients to the recipe for an invigorated and strong farm sector. In 1776, British economist Adam Smith wrote The Wealth of Nations. This body of work has served as a guide to capitalist economic policy ever since. Smith proclaimed that:

Every individual in pursuing his or own good is led as if by an invisible hand to achieve the best good for all. Therefore any interference with free competition by government is almost certain to be injurious.

Smith's principle of the “invisible hand” must be considered as we try to reach an understanding of today's farm crisis and look for solutions to it.

Thank you.

The Chair: Now we go to questions, and we start with Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much. I found all of your presentations very interesting.

Wendy, I was very pleased. In the previous round, the previous group of speakers, I asked the question “Why is agriculture so important to Canada?”. I think you answered that, and you gave us a lot of really good points. I appreciate that very much.

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I have a great number of questions, but I'm going to have to zero in on some of the ones that I think are key. We look at the present crisis and we don't realize to what extent some of the hidden factors within Canada have contributed to it. Mr. Sambrook, I appreciated your presentation. One of the things that you touched upon was the need for tax relief. Many people have looked at the present crisis and said, if my input costs were lower, I could manage.

A farmer came to me and said that our high tax regime in Canada is really to blame for a lot of the problems. And I said, really? Most farmers come to me and say they don't pay any tax. He said, no, because of the high income taxes that farmers are asked to pay, they will do anything to avoid that. They will make investments in areas that may not be wise.

But you said your first line of defence is proper management skills. To what extent does government skew those management decisions because of the effort by farmers to escape taxes on certain levels? Then when times get tough, as they are now, they're caught with a debt load that's a lot higher than normal. Would you agree with this assessment? Taxes are built into all the input costs that farmers have to pay, and a lot of that is hidden. Many farmers don't realize how much tax they pay. But do you think if there were some genuine tax relief, it would seriously address the problem?

Mr. Bernie Sambrook: Most definitely. We pay so many taxes—for example, property taxes. That's an issue that's affecting all farmers. It doesn't matter whether we have a good year or a bad year. We're paying taxes on land that wasn't seeded and was non-productive this year. The property tax system, the education component of it especially, was designed back when there was a farmstead on every quarter or half section, and that isn't the case any more. The farmers who are left out there are being burdened with an extra cost here that I don't think society has taken into account. That's one thing.

Yes, we're paying hidden taxes, taxes on fuel and fertilizer. All these things add to our costs. And there's income tax. When we do manage to make some money in some years, half of it is taken away. If we were given the opportunity to keep more of what we earn when we do earn some money, we'd be in a better position to ride out these low cycles. Agriculture is a cyclical business. We all know we're going to have our ups and we're going to have our downs. If we're allowed to manage our farms the best we can, and if when we do make some money, we're allowed to keep more of it, we're going to be in a more stable position.

Mr. Garry Breitkreuz: Yes. I find that interesting, because there are a lot of hidden taxes as well. When Canada Pension Plan premiums are raised almost 10%, that is built into the cost of everything that farmers buy, because companies and corporations don't pay that tax, they simply pass it on. It's the same with EI premiums that are used by the government for other things, and so on.

Now, one of the taxes we pay is going to foreign aid, and one of you mentioned that it's a problem. Why do we, as Canadians, hand out a lot of cash? Why don't we give out food? Would you like to comment as to whether you think that's a reasonable request to make of government, that rather than simply giving cash to a lot of countries, where it's then turned around to buy guns, we should seriously consider buying food from our farmers and giving that out as foreign aid? Do you think that's feasible, or would that somehow skew the market and create more problems than it's worth?

All of these questions I'm posing, even on the taxes, are for anybody to answer. Just go ahead and volunteer.

Mr. Bill Morningstar: I think, going back to the Canada Food Grains Bank, one of the things that puts them arms and legs above everybody else is that between 97% and 98% of the product and the money they take in goes back out, and actually goes where it's supposed to go. That's one of the highest in the world, and I don't think anybody else can match that.

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Churches now are beginning to ask what they can do for western Canadian farmers. As with most churches, people do not have the money to come out, and they maybe don't realize how much money is involved. These churches, if they want to do something, should donate one bushel of wheat to the Canada Food Grains Bank. The reason the government portion needs to be lifted is that the government donates on a 4:1 basis. For every bushel of wheat that a farmer or somebody else donates, the government donates four. It's just a simple way of getting a little bit off the market. Like most problems, if you pick away at it and pick away at it, after a while things kind of right themselves.

The Chair: You have 40 seconds if you want to pursue it, Garry.

Mr. Garry Breitkreuz: I quickly have to make a point about prairie pasta. Of course, I live on a farm, and it's become the big issue in my riding.

There's a big concern out there that government is tying the hands of farmers by not allowing them to add value to their product. Would you agree with the assessment that there's a real problem there in terms of not allowing farmers to process their products and sell them without having to jump through a lot of hoops and hurdles?

Mr. Bill Morningstar: In my opinion, most of the problems we have here would be very quickly and easily solved with $6 wheat.

Voices: Hear, hear!

The Chair: Thank you very much, Mr. Morningstar.

We now go to Joe McGuire.

Mr. Joe McGuire (Egmont, Lib.): Speaking of taxes, Mr. Chairman, a previous presenter, Harvey Paterson, recommended in his suggestions that there be a tax on food. I was just thinking that one way to get the country's attention would certainly be to put the GST on food. That would certainly make people more sensitized to the cheap food policy that we pursue in North America, and I think consumers might then have a different attitude when it comes to assisting the farmers in this country if they were hit with that tax on a daily basis. I'm not advocating that, but it certainly would get headlines if this committee ever did such a thing.

[Editor's Note: Inaudible]

Mr. Garry Breitkreuz: —

Mr. Joe McGuire: I know you would be, Garry.

[Editor'Note: Inaudible]

Mr. Garry Breitkreuz: —

Mr. Joe McGuire: You're the tax man here.

I know this was also referred to in Wendy's presentation. She quotes Peter Newman as saying consumers will have to pay more. It runs through a lot of the presentations that what the farmer is getting is not what it's going to take to keep people on the farm and to continue the development of rural Canada.

At the same time, we have about $2 billion sitting around in NISA and AIDA. At this time last year, we didn't have a disaster program at all. A year later, we have a program in which $400 million has been paid out if you take it across the country. I think it was $90-some million in Saskatchewan, and I just forget now, but it was so much more in Manitoba. However, we have this money sitting there, but we can't seem to get the cheques out to people who actually need them. This is a program that's supposed to be directed to those who were in need of an infusion of cash. It was supposed to be a directed program, yet we're not getting it out. Presenters appear to be unaware of the changes that were made recently in the Olympic averages, but especially in the negative margin change that should be giving people bigger cheques and giving more people cheques.

It seems like the wheel has come off. A year later, really we shouldn't be out here after the announcement of a disaster program, yet here we are because the program obviously is not well designed or we can't access the dollars that are sitting in there. People are saying they need more dollars, but we can't utilize the dollars that are there.

I was just wondering if you could tell us. Bernie, from your presentation, you don't think we need a disaster program. We should be left on our own to fight these battles, and let the best man win. Is that what you're advocating, or did I take you up wrong?

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Mr. Bernie Sambrook: That's not what I'm advocating in the here and now. I think we have a true crisis out here in agriculture right now, and we have to deal with it.

My presentation was about what we do in the future to prevent these types of situations from occurring all too frequently. As far as the money that needs to be coming right now is concerned, I admit I'm not an authority on AIDA. The only thing I really know about AIDA is that I did my 1998 this summer, and once I determined that I was not going to qualify, I fired it in the corner. That's where it still sits, and that's as far as I've ever gone in dealing with AIDA.

As for getting money out, let's say we're talking about an acreage payment versus other mechanisms to get money out. There are some drawbacks to an acreage payment. If there is new money coming out, I personally would like to see that it would be funnelled through the NISA program.

I don't know if I'm answering your question at all, but...

Mr. Bill Morningstar: Could I answer your AIDA program question in terms of how it would relate on our particular farm? In 1994-95, my son came out of agricultural college and decided to come home to farm. We knew at the time that the Crow rate was disappearing, and they had told us that if we wanted to survive, we were going to have to get into livestock. “Diversification” was the big word at that time, and everybody used it.

We did our diversification. We built our corrals, we dug our dugouts, we put in our water supplies, we built our fences, and we bought our cattle. We took grain land out of production and put it into land for cattle to pasture on. We did the things we had to do to put in a cow herd. It wasn't that big a one, either; it only got up to about 70 head. But what this did in those years, in 1995, 1996, and 1997, was take our income down below zero in order to pay for all of these things that went on.

When AIDA showed up, we looked at it and we said that our income... We knew very well what was going to happen when we did this diversification. We were going to spend more money than we were taking in by quite a long shot in order to get this diversification done. We did our diversification, we did what we were supposed to do, and now there isn't a chance in hell that we're going to qualify for AIDA. Last spring, my son packed his bags and left the farm.

Voices: Hear, hear!

An hon. member: Thank you very much.

The Chair: Just before we go to Mr. Proctor, I would ask Mr. Sambrook a question.

You said you didn't qualify for an AIDA payment under the 1998 crop year. Was it because your income did not fall below average—that is, your three-year average? If it did fall below the three-year average, was it that it did not fall more than 30% below the average? Could you just tell us why you didn't qualify?

Mr. Bernie Sambrook: When I finally got things done down to the column where you can make your own calculation to determine your payment, I was right on the line.

The Chair: On the 30% line?

Mr. Bernie Sambrook: Yes, I would have been right at about 70%. In fact, I was below that slightly, but then the NISA component kicked in—

The Chair: And that killed you.

Mr. Bernie Sambrook: —and that killed me.

There were some adjustments. It was mentioned earlier about the valuations of the grains. They were valued at prices higher than what the market price turned out to be at the time. They were valued at January 1, when in July we were looking at $2 less on canola and durum wheat.

The Chair: Apart from these other variables, like the accrual system or whatever, do you think it's realistic or fair to have drawn the line at 30% or 70% of average. Should it have been at 80% or 90% or 60% or—

Mr. Bernie Sambrook: Yes, it should have been much higher.

The Chair: It should have been higher.

Mr. Bernie Sambrook: That's the problem. It's at 70%.

The Chair: Where do you think it should be?

Mr. Bernie Sambrook: Our costs are going up.

The Chair: Yes, so where do you think it should have been? At 5%, or even?

Mr. Bernie Sambrook: No, right now we're at 70%, but I was thinking 75% to 80% would have caught most of these farmers.

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Right now, I believe what's happening is that a lot of farmers are falling into that 70%, 71% or 72%, so they're not qualifying for AIDA. But our costs are going up and, as I say, our income's going down, so this is the result.

The Chair: Thank you.

Mr. Proctor.

Mr. Dick Proctor: Thank you.

Mr. Brigden, Ms. Bulloch and Mr. Morningstar, in your presentations this morning, all of you spent a fair amount of time dealing with youth. In fact, Mr. Brigden, I think you said we have to find ways to encourage and not discourage young people from entering this industry.

We all know the average age of farmers is too high. I'm not sure what it is here in Manitoba, but I think in Saskatchewan the number we use is 58. My question is about what specific ideas or suggestions any of you might have about ways in which we could encourage young people to take up farming. We've heard Mr. Morningstar say his son has recently packed his bags and left. Obviously income security is one of the issues, but what other ways do we need to look at in order to turn this thing around?

Mr. Bob Brigden: I guess I go back to the time when I started farming. At that time, my generation, the 40-and-over group, would never have expected to pick up a government cheque, because things were different then. A lot of the support went towards people like myself who were entering the industry. One of the things was that the Farm Credit Corporation had a number of programs out whereby they lent certain amounts of money to young people to start into agriculture. Sometimes those rates were subsidized, but for the most part they were just given an opportunity to borrow money without having to already have had a lot of capital. But those programs are all gone.

We've spent so much time in the last 10 or 15 years—and justifiably so—looking out for my generation and the older ones that we've totally forgotten about that generation. And even as I sit at the table today, it's not that any of these concerns that everyone raises aren't valid. But if you really think about it, that money is still not targeted towards that generation at all. In fact, in most cases they miss it.

I hear farmers say NISA is a good program. Try to tell that to some young guy. I'll give you an example. On our farm last year, between my wife and I, we collected $13,000 in federal contributions towards our NISA program a year ago, while our son, who's just trying to get going, collected $8,000. That's hardly a way to get young people into the industry, and that isn't about to change. So in trying to solve the problem we're dealing with today, I think we just have to not forget that this generation out there is important, and we have to target funding towards them.

I'll tell you, whatever program you develop, the money will not get to those people if you develop programs that meet the needs of all of us. You'll miss them, and we can't miss them. I'm not saying there isn't a need for programs to come our way, but don't miss that group. If you talk about first, second, and third lines, the bottom line is that's the one group we're going to lose, and we can't lose them.

Mr. Dick Proctor: Ms. Bulloch, do you any specific suggestions?

Ms. Wendy Bulloch: I just wanted to comment that I think agriculture is still not held high enough in regard in our country. The fact is that this is the case in our school systems and amongst our consumers.

We talked about raising the taxes for our consumers, considering that we only spend 10% to 11% on our food. My concern is whether or not we are encouraging these young people to look at agriculture as a viable industry. I agree with what Bob has said. If they want to go into farming and want to become involved in agriculture, unless they have someone behind them and supporting them, there's no way they have the resources to begin.

Mr. Dick Proctor: You talked in your presentation about targeted opportunities for rural youth. Could you elaborate a little bit on what you mean by that idea?

Ms. Wendy Bulloch: I think what we need to look at is continuing to encourage rural youth to stay in rural Manitoba or rural Saskatchewan, but when we look at the jobs out there, the jobs are not there. We look at minimum wage. We look at the type of jobs that are available. I think we need to look at more opportunities for young people to apprentice in different programs and to be supported through different organizations, whether it's within a large corporation in which they can apprentice and they can help, or whether it's through even some of the farming organizations.

The Chair: You have one minute.

Mr. Dick Proctor: Okay.

Does anybody have any thoughts on this? With the failure of the WTO last week, I think the government is now going to have to do something in this country in the short term in terms of increasing support payments or subsidies. Sitting on the opposition side, though, who knows what the government has in mind. But it seems to me that despite the fact that everybody talks about acreage-based payments, there's a lot of resistance to that, at least in the mind of the Minister of Agriculture, for whatever reasons.

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Do you folks have any suggestions on what other opportunities might be there, besides an acreage-based payment, that would provide some meaningful assistance for western Canadian farmers?

The Chair: Does anybody want to answer?

Bill.

Mr. Bill Morningstar: What I would suggest we need is to get the farmers back on the land again next spring. There's a whole lot of farmers, especially in southwestern Manitoba and southeastern Saskatchewan, who don't have the money to go back out there again.

I would suggest an acreage payment to start out with, a smaller one, $20 or $25 an acre, and then I don't see any reason you can't give a payment based on next year's crop that would be coming into the bin, to the tune of 80% of crop insurance values. Lay that out to them interest free. It's not going to hurt the government that much; the interest on it is not such a big deal.

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

First of all, I neglected to welcome every member of the agriculture committee to my home constituency, my riding of Brandon—Souris. Thank you for being here. I know it took a bit of coercion to get you here, but ultimately you saw the light. We do welcome you here in Brandon, and I welcome all the presenters and observers here today.

As you can see, gentlemen, there is certainly a great deal of concern and angst as to what's going on in this area right now. It's not something I've been making up. Thank you for being here and seeing this.

There's a couple of issues. We've gone a little bit beyond the urgent need today. In fact, the previous presenters talked about the urgent need today with respect to the disaster assistance. I think we've dealt with that and have a pretty good handle on that.

We've gone beyond that, and now we're talking about the urgent need for the future as to how we're going to get our minds together with respect to an agriculture philosophy. We've heard, and Murray's eighth point is, that we don't seem to know where we're heading with agriculture right now. All of you dealt with that in saying there has to be something done to encourage people, not only to stay on the farm but to develop the farm. I guess Bob and Wendy and Bill particularly dealt with that.

I've just come back from Seattle, and the question I have right now is that in the European Union, philosophically they have in their heads that they will encourage people to stay in the villages, in the small rural communities, and on the farms, and they do that with a heavily subsidized domestic payment. They justify that multi-functionality, if I may use that term, by saying that the farm communities in their countries are necessary because of the environment. If we want to talk about carbon sink, there's a very important environmental component here with agriculture. They talk about endangered species, where in fact there's habitat being maintained by the rural communities and farms for endangered species. They talk about social issues with rural areas, obviously, and Wendy, you talked about that in your presentation. I guess it ultimately comes down to a guaranteed income for people to stay in smaller communities—they refer to villages—and on the farms, and in some cases inefficient farms, by the way. They have about 40 acres where in fact they are inefficient, but they keep people back on the farm. I'd like to hear your opinions about whether we should be heading in that fashion as a Canadian society with respect to agriculture.

We recognize now that the Europeans will not give up that philosophy. In the WTO talks, there was a suggestion that they should get away from that philosophy. I can tell you now from talking to the European parliamentarians that it is not in the cards. They will not deviate from the position they've taken.

In saying that, I'd like to hear your opinion as to where you believe we should be going with respect to the long-term vision in agriculture.

That question is directed to anyone.

Mr. Bob Brigden: I'm glad everybody has finally realized that, Rick, but the bottom line is that I think most of us out in the field realized the Europeans weren't going to stop subsidizing. We've known that for a long time.

Personally, I've grown tired of hearing it as a reason we're in trouble. If I were a taxpayer living in Europe, I'd subsidize the producers too. They live next door to a whole group of people, as we all know, and they don't want them on their doorstep, so it's cheaper to feed them. But that's another issue. We're not changing that. Let's settle that, trying to think that will solve the problem, and move on from here.

Do we want to become like the Europeans? No. We're Canadians. I think what we have to recognize is, what do we do in this country, and move on from there. That's the question you ask.

First, you have to remember when you talk to farmers that this is a very productive group, and for God's sake, don't ever send a signal out there that there's an opportunity to market more grain unless you're damn sure it exists, because if you do that, we're going to swamp you. We've done that in the past.

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Every government—the NDP in Saskatchewan, the Conservatives in Manitoba, and the Liberals in Ottawa—went on these trade missions. They came back with these success stories, and that's why we're here today. So I say to you, it's not totally the farmers' fault that we're in this problem. We got in this together, and we're going to have to get out of this together.

In the long term, the next time you go on those trade missions to those countries, make sure the signals you give this group of people, including us, are clear and accurate. Don't encourage us to produce unless you have a market for us.

Mr. Rick Borotsik: I would like to hear some comments from some other philosophical mindset too, perhaps Bernie and Bill.

Mr. Bernie Sambrook: No, Rick, I don't believe we should be going down the European road. I think it's unrealistic for Canadians. I don't think Canadian society wants to go down there, and it would be foolhardy for farmers to try to take them down that road.

I see that our solutions lie elsewhere. The trend is towards people moving away from the farm, and larger farms. That isn't going to change. That's reality. We can like it or hate it, but that's what's going to happen.

Wendy.

Ms. Wendy Bulloch: I think we need more partnerships. We're not partnering enough. I'm not knocking producers as independents. I grew up on a farm, and anyone who knows my father knows he's a very independent man, but I think we have to start looking and thinking out of the box and looking at new partnerships and alliances.

The Chair: Thank you.

Mr. Bill Morningstar: Could I give one quick answer to that?

The environmental practices are fine, and looking after all the endangered species is fine, but eventually somebody has to realize that farmers are not the only ones who benefit from this. We have to receive dollars, and big dollars and cash dollars, for looking after these damn things that every else benefits from.

Thank you.

The Chair: Larry, you want to say something on rural partnerships.

Mr. Larry McCormick: Yes, Mr. Chair.

To Wendy, regarding the rural initiatives, we do have a new minister of rural development, for the first time ever. His name is Andy Mitchell, and on the next round of applications, we need to give you latest information and guidelines for these. That comes up about March, which isn't so far away.

The Chair: Thank you.

Mr. Morningstar, I was curious about one remark you made regarding the cost of the administration of AIDA. You mentioned a figure of $70 million. That's at variance with what the government is saying. The government says it's 3% of overall cost, and that's $26 million, not $70 million. So I wonder where you got that figure.

Mr. Bill Morningstar: It's seems to be a figure that is bantered around quite a bit. I would be very surprised if they come in with 3%, especially after they have done all the audits they're going to end up doing on damn near everybody who gets a buck out of it.

The Chair: I'm just saying that's what the government says it is.

Mr. Rick Borotsik: Mr. Chair, by the way, if you recall, the last time the AIDA administrators were at our committee, we asked them the actual administration cost. They had said $20 million at that time, but that didn't include the administration in those provinces that are administering themselves. They promised to come back with that number. When they do, we will get a real number for it.

The Chair: Thank you, and thanks to this round of witnesses.

I want to say to the audience that after we hear from the organizations that are about to present, I'll be calling five farmers forward. I want to advise you of their names: Bill Bell, Don Hamilton, Sheryl Cavers, Jim Green, and Ron Rutherford. We have more names. It will depend on actually how long the farmers talk, but if we can squeeze in more, we will.

Now we want to bring forward Malcolm Harding, who is the Bishop of the Anglican Diocese of Brandon; Ray Redfern and Bernie Thiessen, from the Canadian Association of Agri-Retailers; and Eric Olsen, an accountant from Meyers Norris Penny.

• 1030

• 1031

The Chair: Okay, ladies and gentlemen, we're going to start again. I want to bring this meeting to order, as we have more witnesses to hear from.

I want to introduce Ray Redfern and Bernie Thiessen from the Canadian Association of Agri-Retailers; Doug Stroh from Myers Norris Penny, an accounting firm; and Bishop Malcolm Harding, Anglican Diocese of Brandon.

We've always been going alphabetically, so, Bishop, you're the lead-off hitter. Thank you for coming, and I'm sure we'll need your help.

Right Reverend Malcolm Harding (Bishop, Anglican Diocese of Brandon): First of all, may I thank the organizers of this event for an opportunity to speak this morning.

On the first page of the September issue of the national newspaper of the Anglican Church of Canada, an article appeared with this headline, “Church Stands with Prairie Farmers”. My photograph also appeared on the same front page. I was surveying a waterlogged field in the southwestern corner of Manitoba, which, like many of the fields last spring, was not seeded. That was July and my first real exposure to the devastating rural crisis we are considering today.

I came away from Reston and Melita that day determined, as a church leader, to play my part in heightening the awareness of this crisis across the country, and God willing, with others, in finding short- and long-term solutions.

This past summer, the Anglican Diocese of Brandon forwarded resolutions to the provincial Government of Manitoba and the federal Government of Canada, appealing for the immediate provision of special financial aid to the farming communities until more long-term solutions could be worked out.

From what I read and hear, I sense much more is yet to be done in this financial area. Over the summer I did begin to realize that we were on track as a church body when articles started appearing in the Brandon Sun, with such headings as: “Farmers Say they Face the Worst Crisis since 30's”, “Loss of Livelihood, Always a Tragic Event”, “No Profits to be Found in Crops”, “Stress calls Soar, Anxiety Ripping through West-Man”.

• 1035

My heart began to ache even more when continuing personal contact with a variety of people in the hard-hit areas of this crisis revealed a growing sense of hopelessness and despair, a desperate feeling that no one really cared or was in fact listening, and a prevailing mood of extreme anxiety.

Earlier this spring water seeping into basements causing a health hazard was of itself a cause for anxiety. Overall, there seemed to be a common cry that went something like this: Can we get through this year, and even if we do, will we be around next year?

I am not a politician or an agricultural economist, so I will leave the pressing questions surrounding subsidies and low commodity prices to others more skilled in those areas.

As a Christian leader, however, I firmly believe I must be involved in this crisis, especially on the human and social level, along with others, as this, in my opinion, is not only an economic crisis but a grave issue of social and moral concern. When the inspired Old Testament prophet Amos attacked the social inequalities of his day, he proclaimed loud and clear, “Let justice flow on like a river and righteousness like a never-failing torrent”.

In response to expressed needs, both for counselling and emergency financial help, the Anglican Diocese of Brandon has taken some definite steps. A financial grant from our national church office is now being used to subsidize the cost of counselling services being offered through the Westman Interfaith Counselling and Education Centre for people affected by this rural crisis. This is one of several agencies offering a loving and listening ear to hurting people. And this outreach is essential and must continue.

As a diocese, we have now established an agricultural crisis reserve fund designed to help anyone in the area experiencing extreme financial hardship. All Anglican clergy in the area can direct requests to me, or I can be reached at my home or office here in Brandon.

A few years ago I discovered a book containing letters written by children to God. One letter in particular comes back to mind and went something like this: “Hello God. I like your book. Count me in.”

To the politicians, government officials, economists, religious leaders, agricultural specialists, and everyone gathered here today, may we continue to find short- and long-term solutions to the critical rural crisis before us, and may we all find ourselves echoing that child's sentiment: “Yes, yes, indeed. Count me in.”

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Bishop Harding.

We'll now go to Ray Redfern. This is a 45-minute segment, so we really have to keep moving.

Mr. Ray Redfern (Past President, Canadian Association of Agri-Retailers): Perhaps Bernie could speak first.

The Chair: Okay, Bernie.

Mr. Bernie Thiessen (Past President, Canadian Association of Agri-Retailers): Ray and I will be speaking on behalf of our national association, in short, CAAR. We're both retailers in Manitoba and we are also both farmers. The presentation is on behalf of the national association. We may answer the questions, though, on a personal basis.

I will deal first with trends in input pricing and Ray will deal with the impact that income shortfall has had on the agri-retail industry and credit availability.

On behalf of the Canadian Association of Agri-Retailers, we would like to thank the standing committee for inviting us to discuss the current dilemma in the farm economy and the impact on the agricultural retail industry.

• 1040

We hope our presentation today will assist in the process as it relates to crop inputs and protection products from the retail perspective. We are prepared to offer whatever help or insight is within our means to ensure that all of your questions have been answered with regard to this important topic.

The Canadian Association of Agri-Retailers is a voluntary association of the crop production retail industry, representing approximately 80% of the crop protection and crop nutrient products sold to Canadian farmers. CAAR members supply products and services to the farm production sector in virtually every rural community across Canada.

The farm community and the members of CAAR are mutually dependent sectors. The products and services provided by the agri-retail sector enable farmers to produce healthy, abundant food supplies and help them to derive the maximum profit potential from their land investment as well as their equipment. In turn, farmers determine the ongoing success of these local businesses. It is recognized that this partnership results in the ability of both enterprises to survive and thrive. As such, CAAR members take an active interest in issues that affect farm receipts and the overall profitability of their customers.

Trends in input pricing. Canada's farmers are an integral part of the domestic economy, and agriculture is an important contributor to our nation's balance of trade. On a local level, they are an important element of the economic base in virtually every rural community in Canada's growing areas. Thus, their profitability is critical to the businesses that support these communities. The agri-retail sector is particularly sensitive to the fluctuations and the economic stability of the farms and the farmers in their areas.

While there are differences between products and services offered at retail outlets across the country, crop protection products and crop nutrients are the economic base of most dealerships. It is these two areas that are most critical to the success of the outlet and vital to the productive capacity of the farmer. Reduced inputs in crop production lead to lower yields, which result in reduced profitability. In turn, low economic returns result in reduced capital to pay the bills and to plant next year's crop.

In light of this relationship, it is important to examine how fertilizer and chemicals are priced. While fertilizer is a large factor in the Canadian agricultural economy, it is not a domestically priced commodity, as is the case with grain exports. Canada is a price-taker rather than a price-setter in the context of the North American fertilizer market. In fact, it represents only 10% of the demand in this market.

Canadian pricing of crop protection products is notably different in character. While fertilizer is priced according to supply and demand, chemical products are valued through a uniquely Canadian regulatory system. Three factors are considered in determining the final market price: the cost of the initial research and development necessary to obtain registration under Canadian law; the relative cost-benefit ratio as compared to competing crop protection agents; and the value of the product to farmers in terms of increased yield.

While fertilizer and chemical prices are determined through different mechanisms, both systems result in a reasonably visible and stable pricing structure to farmers across Canada.

To better discuss input costs in context with the economic fortunes in the farm community, the future of these products was calculated on an imaginary 2,000-acre grain farm in Manitoba, and there are a number of charts at the back of our presentation that will prove that point about what it costs for inputs and the relative returns farmers might see.

As the standing committee will be hearing submissions from the farm sector, there's little point in pursuing a discussion of commodity prices and the subsidy war among treasuries in the international marketplace. However, the Canadian Association of Agri-Retailers would like to support their case on this matter. There is a serious decline in the marketplace and the result is starting to be felt throughout the agricultural industry.

• 1045

There's a significant net benefit to increasing the volume of production through the use of inputs. If there weren't a visible advantage, farmers would have embraced the reduced inputs logic a long time ago.

As a final note, the average price paid to farmers in 1919 for a bushel of wheat was $2.63 in 1919 dollars. In 1998 it was $3.67. It is currently at about $3.32. In 80 years, neither hard work nor inflation have had much of an impact on a farmer's salary. Nor were farmers in 1919 competing against international agricultural policy. They were paid a fair price for their product. There are some charts at the back of our brief that follow through how prices have basically declined in inputs and also in the revenue received.

Ray.

Mr. Ray Redfern: That's our position.

I guess I could take what bit of time I have, then, to maybe touch on the issue of the current income shortage—if that's the right word for it—in our own agri-retail industry. It's no secret to us or to any of you that our economy is cyclical.

That's a given, and we get into it recognizing that, but it's probably important to say that we are the front line and we probably know the reality as early as anyone. We're here today to tell you that it in fact could be said to be true. Product sales dry up, whatever the lines. Fall purchases slow down. It changes; it's the cyclical nature of the our industry. It affects the overall profitability.

When the problem is in the short term, the industry and the farm partner can usually work it out. When the problem is more systemic, the solutions are in fact few or nil. When weather problems compound it, then you turn it into the reality of a disaster.

It could be said that in the past the farm supply community has had some flexibility in working their way through those times because usually there has been some solution coming at the end, and it was more a matter of the supplier waiting for the cheque to come—the one that comes in the mail—or at least recognizing the delay in getting paid until program funding, if it's government, was released.

However, it would appear that this time the situation has changed. There's not the certainty in any part of the community, in the farmer's mind or in his farm partner's mind, about what the level of support will be or whether that funding to meet obligations is in fact forthcoming.

We can tell you that there is already a serious cashflow problem out there, and we've only seen the tip of the iceberg. It's affecting the ability of the retail industry to provide products. The minute you affect that, you affect the farmer's ability to be solvent and to remain in the farm business.

It wasn't CAAR's mandate to analyse the programs, but we do want to tell you that the health of our customer directly affects all other links of the food production chain, and that includes us and each and every one of the constituents we represent in our home communities as well.

So we add our voice as the voice from the front line, and we're saying that the issue is in fact not a usual issue. It is in fact a challenging issue, for all of us. It's a serious problem; it affects the stability of rural communities, and we're a part of those rural communities.

This morning we also want to speak to the issue of credit availability and whether credit is in fact more or less available. It's challenging to try to quantify the changes in credit availability because of the different situations in different communities and, more importantly, the different agriculture lenders—and I'll call our agriculture input industry a lender. We didn't intend to be, but we are, having recognized ourselves as a supplier of inputs.

There is a variety of credit terms, but it's fair to say, though, that the retail suppliers have found it necessary to take a serious look at those credit policies and are being challenged to strengthen the requirements at a time when they're providing more challenges to the farmer.

To most farmers, the bank is usually the first line, the one that he would like to use first as his credit purveyor, but at this time it's our observation that in fact when the farmer looks today he's looking for additional supplies beyond his traditional banker, and he is caused to look at our industry for alternate financing options.

In our industry, there are relatively few purchases made that are strictly cash. I don't think the farmer knows the word “cash”, until he finds out, of course, that his cashflow would never allow him to meet it. When a farmer is unable to meet the terms of any agreement he has made with regard to extended credit—that term is used periodically in our industry—it places significant stress on the business to meet its own financial requirements. It therefore affects the viability of not only the farmer but the businessman supplying the farmer and ultimately the community.

Since the growers' loans are largely unsecured debt—and I use that word “loans” advisedly. I've been asked to. It's called “accounts receivable”, and they're the real dilemma, because that is largely unsecured. There's been an increase in our observation in the number of farmers who are assessing a longer term of supplier input.

• 1050

By nature our industry is a financially exposed service industry, but we submit to you that we cannot sustain the dramatic shortfall in farm income that seems to be occurring, at least not for any length of time. Therefore, we ask you, within your own area of interest and role, and with those associated arms in other sections of government at the federal level, to investigate the availability of additional farm credit alternatives with the whole farming community and traditional credit levels, as compared to the position we seem to find ourselves in.

Again, we want you to know, along with the others in the audience, that we consider ourselves to be partners with the farming community, and therefore it's been our challenge in the past, and will be again, to help see our partner through this issue. We would not want to suggest that we're not there in the front line to support him in the issue of credit, but it is an increasing challenge, and we want you to recognize that we are doing the best we can to respond to it.

Voices: Hear, hear!

The Chair: Thank you very much, Mr. Redfern.

We'll now hear from our accountant, Doug Stroh. Welcome.

Mr. Doug Stroh (Partner, Meyers Norris Penny & Co.): Good morning, and thank you again for the opportunity to come and speak to you here this morning.

Just to give you a little bit of background, I am a partner with Meyers Norris Penny, here in the Brandon office, and head of the agricultural services for our Brandon office. Meyers Norris Penny represents over 10,000 farmers in western Canada, so I think it's safe to say the company has its heart in agriculture. We've heard a lot of comments about the challenges the farming community are currently dealing with in terms of the ag crisis we're currently going through.

I'm not going to get into a debate this morning, given that I only have five minutes to talk about whether or not the AIDA program is good, bad, or otherwise, but I did want to take an opportunity to go through and highlight a number of issues from an accounting perspective and the challenges the producers and the accounting firms are faced with in terms of trying to complete the applications and actually get dollars into the hands of the farmers. I'm going to try to avoid getting too technical, so if I lose you, just put up your hand and say help. I am going to go through a number of different points in terms of the program itself.

I think the overriding comment I would like to make, first of all, though, and I think all of the farmers in the room and in the area would echo this, is that actually they probably would rather not get anything from the AIDA program. They'd rather get fair value for their crop to begin with.

Voices: Hear, hear!

Mr. Doug Stroh: In terms of some of the challenges, some of the issues we're dealing with, just to give you a bit of an idea of the time to prepare the applications, the forms themselves are rather onerous. I think I've heard that many times. It probably takes about 10 to 15 hours for our technicians to actually prepare the information, complete the forms, do the calculations, and submit them. That's just to fill out the form. We have to go through that process before we can even tell the farmer whether he's going to qualify for a payment. There is no way, the way the program is structured, to take a look at the farmer's operation for the year and say, yes, there's a good chance you're going to qualify. The program is so detailed and there are so many adjustments and variables, it simply cannot be done.

When a farmer comes in to talk to us, the first thing they're going to ask is, do I qualify? I say, it's going to cost you for me to tell you that, because I have to do all of the calculations first. So one of the challenges they have is they're already strapped for cash and now the accountants, or whoever is preparing their forms, are going to tell them, guess what, it's going to cost you more just to find out whether you should even be submitting the form. So part of the challenge is the complexity of the forms and the time that's required just to complete them, really just to find out if they're even going to qualify.

The other challenge we're faced with now is the follow-up. While on one hand the forms are very detailed, we're finding now that in terms of actually processing the claims, we're fielding anywhere from 15 to 20 phone calls a day from the AIDA administration, just dealing with follow-up questions in terms of variance analysis and other issues that aren't even on the application form. Part of the challenge we have is that we have, in the Brandon office alone, three people working full-time doing nothing but AIDA. At this point, we're not filling out applications any more; we're just fielding questions. The administration costs we're dealing with are rather substantial, even outside the administration within the AIDA program. So there's a huge investment in time.

• 1055

In terms of the issues themselves, one of the biggest problems we ran into is in terms of trying to match up the production year with the AIDA application. From a tax planning perspective, business perspective, many of the producers do not operate on a calendar year basis for NISA or for tax purposes. What happens is in the production year, for example 1998, which was the first year of the application, a producer who has a corporate year-end in March 1998 was filing their AIDA application based on their March 1998 corporate year-end, which has absolutely nothing to do with the 1998 production year. So the program simply did not have a means to capture those individuals.

Another example was partnerships where there were corporate companies that were involved and the partnership had a calendar year-end and the corporation had an off-calendar year. What happens is, from a tax planning perspective, they may have a November year-end for the corporation and they have a December partnership year-end date. The December partnership that's being reported on the November 1998 statement is the December 1997 partnership statement, so it has absolutely nothing to do with the 1998 production year. And that was the first year of the so-called disaster.

What's happened is we had a huge number of farmers who were simply miffed in 1998 because there was no provision for them to be captured in the program. What's happening now is that when we get into 1999, especially in western Manitoba, where there are unseeded acre payments and disaster relief in terms of other payments that are coming through, the farmers now, with these off-calendar year-ends or partnerships that aren't being captured, are reporting their 1998 income plus their 1999 unseeded acre payments on their 1999 AIDA application. Once again, they're not going to be captured in the program because they're going to be doubling up income in the wrong year and we're not capturing the production year.

A simple solution to this is simply to develop some kind of a mechanism whereby we can file the application based on the production year. The farmers now are businessmen. It's not just a lifestyle, it is a business. They have the technology, they have the resources, to produce detailed reports and information on a production year basis. However, the program simply does not enable us to file it on that basis.

Another issue we're running into is in terms of dealing on a cash revenue basis and the accrual adjustments. A case in point is in terms of adjustments through the year where when you're capturing a change in inventory, the pricing system that's being used will only take the actual cost within 30 days before or after the year-end and use your inventory change to adjust your current year's sales. To give you an example of what's happening, take a producer who grew canola last year and sold it in 1999. They may have had inventory on hand at December. They may have had $90,000 of canola on hand in December. They didn't seed an acre this year. They have no canola at the end of this year. They may have $90,000 of sales or revenue showing up on their income statement. But when you do the inventory adjustment, the prices that the AIDA are using, because they don't have any sales within the last 30 days of year-end, they're getting a much lower price adjustment than what they actually sold it for. So they're in fact being penalized for selling their canola during the year and they're overstating the actual income they had for the current year.

There is no provision to change that, so really we're working on what we would call a modified accrual basis rather than a true accrual basis, and again a number of farmers are simply not being captured because the revenues and the cash income are not being adjusted properly.

Another issue that is similar in nature would be the expanding farm operations. We've seen in terms of the farm industry and the agriculture industry that the expanding farms are almost a given in terms of the whole sector, and in order to meet the demands in terms of shrinking margins and volume, they are the answer in a lot of cases. In terms of the program, again, the adjustment on an expanding farm is simply to take what they call an accrual adjustment of inventory payables, prepaids, and other adjustments to the margin years.

• 1100

What's happening, though, is that a farmer may expand his operation by 2,000 acres over a three-year period and he may have a significant amount more crop and payables, but what typically happens is the farmer will be selling his inventory in the fall and paying the payables down in the fall in order to manage his cash and keep his costs to a minimum. What happens is in an expanding farm operation, you may have 2,000 more acres in 1998 than you did in 1994, but your inventory and payables aren't significantly different because you're in the habit of paying off the bills, and, from a tax planning perspective, making sure your expenses are covered off.

So the adjustment that happens doesn't capture the fact that it's a much larger farm operation. The revenues, however, are sitting there, and the current year isn't reflective of the income from the margin years. So, again, a simple solution to that would be some sort of mechanism to pro-rate the margin years to match the production unit of the current year, rather than trying to do the accrual adjustment, because the accrual adjustment simply does not capture the change that's happening over the period.

So the solution may sound simple on paper, but it's not really going to be that straightforward, obviously—and I'm not so naive as to believe that. But I think the current system simply doesn't capture the expanding farm operation.

The other one we're running into this year and that is probably of a more critical nature is cashflow and tax. This year, in 1999, we have a huge problem in our office dealing with tax. The farmers, especially those who didn't get their crop in this spring, were selling last year's crop in the current year. They had not near the expenses they would normally incur because they didn't get their production in; so they didn't have their fertilizer and their chemical expenses and other related input costs, but they spent a large chunk of their unseeded acre payment just trying to keep the weeds knocked down and keeping the place from going out of control. So what's happened is they have their unseeded acre payment, which is coming in as income, they have last year's crop, which is coming in as income, and their expenses are way down this year and they now have a huge tax problem, because tax is on a cash basis for most farmers.

So what's happening is the government really was handing out money in one hand, in terms of their relief, and holding out the other one and taking the money back in tax. This is what's going to happen this year.

Just to give you a bit of an example, for some of the clients we have been dealing with, as much as half of the unseeded-acre payment is being paid back. So it is huge dollars. It is very substantial.

In terms of the 1999 program, there are a few issues, so that while there have been some changes and improvements to the program from a service perspective, we have a significant challenge. Right now, we have a lot of producers coming to us and saying, “Am I going to qualify for a payment in 1999?” To be perfectly honest, we can't answer that question. We have no way of knowing at this point because there are too many variables in the formula.

Just to give you a couple of examples, the first question is if they're going to pro-rate the total payment. We have no idea what the total claims are going to be for 1999. And if there's a cap on the dollars, the claims are going to be pro-rated and we don't know how much you're going to get.

Another is if salaries are going to be included or not. In terms of non-arm's-length salaries, it's been indicated that they're going to be treated the same. That doesn't mean whether they're going to be included or excluded. And we haven't been able to get an answer as to whether family salaries are going to be included in the calculation or whether salaries in total are going to be excluded. So, again, there's a variable there.

Inventory values. The indication right now is that inventory values are going to change. There are interim values that are out right now, but the actual values are going to change at the end of December, based on what happened in terms of the formulas and calculation. So we don't know what the changes in inventory values are going to be because we don't have those price adjustment numbers right now.

So there are a number of variables, and those are only a few of the ones we're dealing with. At the end of the day, we really can't answer the question as to whether or not a producer is going to get a payment in 1999. What's happening is right now they're sitting there looking at how much they have in terms of product sitting around, in terms of the farm they're going to be able to sell, and they're looking at bills they're going to have to pay, at loans that have to be met, and at financing, and they're trying to cashflow their operation. In a grain farm operation, they're looking at how they're going to cashflow this thing till next November, so they have a huge challenge in front of them. Unfortunately, as accountants, we're sitting there and we can't provide the answers they need. That's where our challenge is coming in. It's trying to figure out how to provide the answers and how to help them get through really what's going to be the next year where the cashflow crunch is coming.

• 1105

To conclude, there are a number of issues in terms of the program, because of the complexity in the agriculture sector and the wide range you're trying to deal with. I think it's impossible to address all of the issues, but there are definitely opportunities.

Again, I would like to stress that from the farmer's perspective, while it is nice to have a relief program in place, the bottom line is we'd all be happy not to need it.

Voices: Hear, hear!

The Chair: I have to account for the time; we're severely over on this segment. I'm going to limit each party to one short question. We actually have only about eight or nine minutes for the entire group.

Mr. Garry Breitkreuz: We have zeroed in on the tax issue and there's a lot more money going to Ottawa than coming back.

Should things be structured differently? We had targeted these problems over a year ago when this was first raised, and we pointed out the problems with it. Now we're living with those problems. Is it too late to structure it in some other way? Would you be able to do anything in that? That would be my question to you.

And to the bishop, the question I have is on the social effects of this, the stress on families, even the suicides in my area. I was talking to a funeral director recently. Farmers are being cash-strapped, but the stresses are manifesting themselves in many, many other ways. Could you point out the secondary effects on businesses—

The Chair: Mr. Breitkreuz, I said you'll have to have just one question. We just simply are running so short of time.

Bishop Harding, please.

Bishop Malcolm Harding: Yes, there's no question about the stress factor. On Friday, I'm going to be down in Melita-Reston meeting with a whole host of people especially about this area of counselling and how we can reach out. I know of suicides; I've heard of threats of suicide. It's very real and it's a very vital part of this whole approach. We hope to be able to help in that area.

The Chair: Doug, did you have a short answer to Mr. Breitkreuz's earlier question?

Mr. Doug Stroh: On how to structure it differently, I don't think we can fix it all in the short term. In terms of the structural changes, the issues in terms of year-end, I think just having the flexibility to file the forms on a production-year basis would address a lot of those.

The Chair: Mr. Calder.

Mr. Murray Calder: Doug, I am a farmer in my other life, and taxes and everything else are very much of interest to me. First off, are you aware of the changes made to AIDA in November?

Mr. Doug Stroh: The announcements and stuff that were issued in November? Yes.

Mr. Murray Calder: Okay, great.

You made mention too that high revenue, low expenses... and therefore the farmers will be experiencing high taxes. They can carry forward their losses for 10 years, can't they?

Mr. Doug Stroh: You have the ability to carry them forward for seven years.

Mr. Murray Calder: If you're in that situation, why wouldn't you carry forward previous years' losses. That would lower your tax position and in fact eradicate it?

Mr. Doug Stroh: That's assuming you have losses to carry forward.

Mr. Murray Calder: Isn't that what we're here talking about right now? There are major losses and there's a farming crisis in Manitoba.

Mr. Doug Stroh: Not only in 1998 and 1999... Depending on what agricultural sector you get into, if you look back in 1995, 1996, and 1997, the hog industry, for example, was experiencing some of its greatest years. Hog producers don't have loss carry forwards carrying into 1998 and 1999. So yes, if they have losses carried forward, it would be great, but in a lot of cases those are not there.

The Chair: Mr. Proctor.

Mr. Dick Proctor: I have some questions for Doug Stroh. Number one, in your opinion, is AIDA salvageable from your accounting point of view? And number two, with all the experience your firm has, has anybody from the department or from AIDA ever asked you to talk to them about how they could make the program a better program? Do you get any opportunities to provide input of that sort?

Mr. Doug Stroh: To answer the first question on whether AIDA is salvageable, it's my understanding it's a two-year program and at the end of the two years it'll be salvaged.

Voices: Hear, hear!

The Chair: Or in other words, scrapped.

Mr. Doug Stroh: I didn't say what salvage value you were going to get for it.

On the second question, in terms of whether we've been approached in terms of providing input, yes, we've had a number of conferences and meetings with the AIDA officials and administration in Winnipeg. And we are continuing to have ongoing discussions with them in terms of concerns and making recommendations for changes.

• 1110

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: Thank you.

In your experience with Meyers Norris Penny, you say you represent some 10,000 farmers. In ballpark figures, how many applications have been submitted to the AIDA administration, and of those applications, what percentage would be approved and accepted and a claim returned?

Secondly, one of the problems I've heard about from a number of producers in this area is that there is an inconsistency in the interpretation of the criteria and rules with the verifiers within the AIDA organization itself. Have you found that similar applications being submitted perhaps don't get the same answers back from those verifiers? With Meyers Norris Penny, have you seen that as being one of the problems and issues?

Mr. Doug Stroh: To give you a quick couple of statistics, to answer your first question, in terms of Saskatchewan and Manitoba—the FIDP program in Alberta is obviously a little bit different—there were just under 1,000 applications that we actually prepared and filed.

In terms of ones that have payments, where they're receiving actual amounts for which they're eligible, there were about 39%. Of those, to date, probably about 50% have been actually processed through. A large number of the rest of them are still in the process. A large number of them have been coming in during the last week or ten days. There have actually been a lot of claims now finally getting processed through, and the backlog is starting to get caught up.

In regard to the second one, in terms of getting the same answers coming, if we ask two different people in AIDA, we often get two different answers. In terms of applications, we've had cases where we've had two farm corporations that are partners in one farm operation. Both of them were eligible for a claim. We had one come back where it was rejected and they said they didn't qualify, and the other one qualified and it matched what we had sent. So we ended up having to resubmit and make changes based on the follow-up simply because there were errors in the calculations and numbers on the one corporate farm. They were identical right down to the letter.

So, yes, there are errors. That's why the follow-up process is taking so much time.

The Chair: Thank you.

To finish off this segment, I'd ask Mr. Redfern or Mr. Thiessen, do I take it that some farmers have now exhausted their credit supply lines at banks or other financial institutions and have turned to suppliers for some relief or as a source of credit to carry them through?

Mr. Ray Redfern: I'd even suggest that this isn't necessarily a brand-new phenomenon. There has always been a portion of supply input given on a credit basis. But I would suggest to you that it's not only common knowledge but accurate that in fact the percentage of the material sold on extended credit has increased.

The Chair: Thank you.

I apologize for the shortness of time here, but we have only three and a half hours and I want to hear from more farmers. You did very well. Thank you very much.

I'll now call forward Bill Bell, Don Hamilton, Alan Armstrong, Sheryl Cavers, and Jim Green.

I want to remind the audience, and especially the next round of witnesses, that some other farmers have indicated that they would like to speak, so it will depend on how long your presentations are. If you can keep them down to just two or three minutes, it would be appreciated.

We're going to go to... Your name, sir?

Mr. Alan Armstrong (Individual Presentation): Alan Armstrong.

The Chair: Mr. Armstrong. Well, you're an A, so you're going to start it off. Then we'll go to Bell, and then Cavers. As I say, try to keep it as short as possible.

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Mr. Alan Armstrong: I'll skip through some parts of the paper here as I go along. Some of it has been covered.

Of course, as everyone already knows, my name is Alan Armstrong. I'm married, with two children. We farm 1,500 cultivated acres at Cardale, Manitoba, which is northwest of Brandon.

The other day I sat down and made a short, incomplete list of people and services employed in the manufacture of grain on our farm. The list is comprised from the ingredients of fertilizer, chemicals, fuel, machinery, and repairs. This list comprises a minimum of 40 services and entities that are directly benefiting, and a maximum... I can't count them all.

The federal tax collected from the income of those minimum 40 entities, at 40% for every dollar, equals $16. That's a minimum of $16 created for federal coffers from every one dollar of expenditure from our farm. That's a minimum of $16 earned for social programs.

I won't even attempt to list the people and services employed to get the grain produced from that one dollar to the end consumer.

We can conclude that money spent on agriculture creates business and jobs, which generates wealth and healthy social standards for all of Canada.

I think that answers why spend on agriculture. Now I ask, how? How can government support agriculture and at the same time adhere to the WTO rules and regulations? A number of things come to mind.

Firstly, allow exemptions from the Canadian Wheat Board for processing to source raw product directly from farms, hence subtracting global processors here to western Canada. As a note on that, on initial payments from the Wheat Board on $5 of wheat, 39% of the value goes to freight, from my local area to Montreal. The freight on flour is only 18% of that value. It takes four tonnes of wheat to make one tonne of flour.

NISA, which you are asking about today, works in part because you need to have positive margins—that is, income. NISA becomes redundant when bad years happen in succession, as they often do.

The point I would like to carry more on is that the Manitoba-Canada crop insurance offers 50% to 80% tailored coverage derived from 10 to 15 years historical production value. The cost of inputs has more than doubled in that same time period, so double my coverage—seriously. Let's take the production and values from my crop insurance records and average all the crops for which I am insured. The average at 80% coverage is $375 an acre for a $15-an-acre or 4.1% premium. I need a minimum of $250 an acre in order to stay in the farming and manufacturing business.

By basing coverage on cost of inputs factored by production and values, I could be offered broad coverage, tailored to any amount up to $375 an acre at 80%, while using the same cost-sharing arrangement as is currently used and still fall within WTO guidelines. This coverage would be broad, regardless of the insurable crops grown, making it market neutral—that's one of the areas where GRIP failed, on being market neutral. Do an accrual adjustment at the end of the year on inventories, payables, and receivables, and it's a done deal. But I stress, will government do it?

I look at this question objectively: farmland will always be farmland and will always use inputs. Not so. A typical grain and livestock farm can produce $250 an acre in some years and as low as $100 an acre in others. Our farm has averaged approximately $173 an acre gross income over the past 10 years. In today's market, that's a deficit of $77 an acre.

I made a little note here that the quickest way to a small fortune is to start with a big one.

Many farms have used up their NISA in 1999. I know I took mine out and used it. Many farms have margined out any and all equity in the land through programs like the recovery loans program, which was designed to help through our provincial government, in order to carry on.

FCC and banks are moving current payments and overdue payments to the rear end of mortgages and loans. This practice is fine, but I disagree that it should change the status to “in the black” and cancel out arrears. If I'm to believe what I've read, these same institutions have minimalized the farm crisis and stated to this committee that arrears have seen little increase. Arrears have taken on a whole new meaning, called “the future”.

Off-farm income can no longer subsidize such a large deficit.

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My conclusion is that many farms will use little to no inputs in the years to come, but will take whatever the land will give. In short, they'll mine it out. Some already have. After that, move off. Let the farms go back to weeds and erode away to natural phenomena.

The bottom line is that I can think of a nation that was once a world exporter of grains but is now an importer, and that's Russia. This federal government appears to have the same agricultural mandate, and that's state farms. For this government to abandon agricultural producers—i.e., through tough love—in a time of crisis, is simply to abandon its responsibility to the people of Canada in order to be a government with a mandate of tough love for the care of this country's social wellness. I accuse this government of committing agricultural genocide in western Canada and economic genocide on the entire country. I will leave this committee with the earlier mentioned question, but will government do it?

Thank you.

Voices: Hear, hear!

The Chair: Thank you.

We have less than 40 minutes. I would suggest that you try to keep your remarks as tight as possible, Mr. Bell.

Mr. Rick Borotsik: Mr. Chairman, may I make a suggestion? Rather than ask questions of these presenters, since there are many other presenters, maybe we could have the other presenters make presentations as well.

The Chair: Sure, if we have the time.

Go ahead, Mr. Bell.

Mr. Bill Bell (Individual Presentation): Thank you. Good morning, and welcome to members of the Standing Committee on Agriculture. It's a pleasure to have the chance to speak to you.

Remember 1948? That was the year Henry Ford started building Meteor cars. My dad took delivery of a new Meteor car on September 8, 1948. We had just thrashed 100 acres of wheat and hauled it to the elevator. He gave a third of it to his landlord and paid for his new car with the balance, $2,148. He did that with 66 acres. In 1999, at today's prices, it would take 350 to 450 acres to buy a car, and you still wouldn't have the expenses on those acres paid for. Can I buy a 66-acre car today? I would need $450 per acre return to do it. An organic farmer near me did in 1998. He had 40 bushels of wheat per acre at $12 a bushel, but he had one problem. The Canadian Wheat Board kept $1,000 per trailer load of wheat. Wasn't that nice? Why do we need farm aid? How can the average farmer buy a 66-acre car?

Remember all the farm aid programs we've had? Who needs any of them? How long did they last? What was the thinking behind them? We started with PFAA; then crop insurance started in 1960. The drought of 1961 was a disaster for us. My father and I got $400 PFA—for each permit holder. Crop insurance paid out nothing to our neighbours. There were cow-calf handouts, there were port fees, grain commission fees, fuel taxes, and the GRIP program. Handouts are all smokescreen band-aids to keep us quiet, but they have done very little to help the sagging farm economy. Now we have AIDA to get around the free trade fiasco. It costs $1,000 in accountant fees to find out that you don't get 5¢. It only proves how ignorant Ottawa bureaucrats can be.

Then we have an animal like the Canadian Wheat Board, which grows like an incurable cancer. It causes railway strikes, grain handlers' strikes, dock strikes, ship demurrage, and the list goes on and on. It's sucking us dry like a big leech. Get the Wheat Board out to port. Maybe that would help.

When we lost the Crow, it cost us $37,000 per average farm on freight. We lost the open-market barley system to the Canadian Wheat Board, and that cost us $2 per bushel. I lost $10,000 on a 3,000-bushel bin of barley the very day it went back to the board.

We have a stupid, unlawful tax grab called a buyback. To get an export permit, it costs us $2 to $4 per bushel on durum wheat. It costs at least $75 an acre to market durum wheat through the Canadian Wheat Board. Our cost is $35,000 per year. This fall, it cost $100 an acre to export robust barley to the United States. If you doubt my words, I have the proof. Try me.

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Why can't farmers be the exporters? Why do we have to go through ADM and Cargill? Let me, as a producer, ship a producer car to Maple Leaf in Montreal, to Churchill, to England, or to a pasta plant or a flour mill in the U.S.A. I know what it can get. The market's there. I can have a 66-acre car if you let me go for it.

We lost our producer car sales. That was another dumb move by the Canadian Wheat Board, brought in by contracting. We lost $800 per car. That's 25¢ a bushel. That paid our fuel bill.

Who needs subsidies? Farm aid, band-aids—call them what you will. If your will is a farm aid program, give us a real crop insurance plan, one that is designed by practical people. Crop insurance was a disaster for us this year. It made you sole-crop, it made you let it grow, and it made you harvest it. It forces a farmer to end up in a disastrous situation. Keep the coverage level. Give young farmers a break on premiums. Put your GRIP, NISA, and AIDA money into a crop insurance plan that works. Don't force a man to sow a crop or harvest it. Use some common sense. Get the leeches off our backs. Give us a break.

Ottawa stole $750 million of the Crow money and $450 million in energy and fuel taxes in one year. Now you're giving us back that money in a stupid AIDA program that won't pay out 5¢. Put $100,000 of AIDA in my NISA account, but be quick. Get off our backs. Give us a chance. Let my son buy a 66-acre car.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Bell.

Sheryl Cavers.

Ms. Sheryl Cavers: I'm replacing a farmer. I'm with the Anxiety Disorders Association of Manitoba. They thought it was important that I speak in regard to the calls I get, so this is more on the emotional impacts.

Just to let you know, I represent the Anxiety Disorders Association's west-Man branch. I am a one-person show. I work 25 hours a week and I cover a clientele or a population of around 200,000 people, which is our trading area in the western Manitoba area.

In your package, you may have gotten a stat sheet showing you the comparison of our calls in terms of what has happened since June of this year to the present. They have stayed at a continual high. They have doubled and tripled in some cases over the last couple of years, and we don't really see any end in sight.

Farming is one of the ten most stressful occupations. Many Canadians see farmers as hardy, reliable individuals who seem to exhibit a high tolerance for both pain and heartache. But behind that image lurks a darker and sadder truth. Farmers are susceptible to stress, anxiety, and fear. As a group, they have a suicide rate more than double that of the general population. National statistics show the suicide rate in the farming community is 14.6 per 100,000 people, a huge disparity when compared to the 18.1 per 100,000 rate for the general population.

Many of the calls I'm receiving right now are due to free-floating anxiety. Anxiety disorders can lead to family breakdown, chemical dependency, job loss, and suicide. They can become very debilitating very quickly.

Individuals calling in right now are feeling overwhelmed. There's helplessness, fear, lots of despair, and an incredible amount of pressure and tension, especially in the younger population of the farming community. People are also experiencing high blood pressure problems, digestive problems, and insomnia.

Every year, millions of dollars are spent on medications, emergency room visits, and doctor visits in an attempt to deal with anxiety. Our calls have stayed at a steady high since June, and we are trying to prepare for what may come yet in 2000. In talking with other associations and service organizations, they're also expecting the crunch to hit in February or March. Anxiety leads to depression, and depression can lead to suicide. That's very real, and I think we need to address that.

Thank you.

Voices: Hear, hear!

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The Vice-Chair (Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.)): Thank you very much.

Jim, you're up next.

Mr. Jim Green (Individual Presentation): Thank you very much, Mr. Chairman.

My name is Jim Green, and I am likely to be Sheryl's next client. I not only farm, but I don't particularly take a great deal of pleasure in sitting before standing committees with the order of the day as it is. I suggest you should probably have two orders, one being the order of this day, and that is to recognize, as you have all well heard, the natural disaster that occurred in this part of the province and southeast Saskatchewan.

Your long-term goal, as it is stated, is to create national initiatives to provide the stability and environment necessary for stable growth in the agricultural industry. That is a daunting task, compounded, as I said, by a natural disaster and the other disaster of low commodity prices.

This has almost denigrated into what farmers do best, and that's berate each other. I've heard comment made about a certain farmer in the Ontario region who lost his farm as a strawberry farmer. I've heard it talked about that the only real farm out there is a 1,500-acre farm. I've heard that perhaps we're going to be taken over by corporate farms. Farmers do this very well. We pick at each other, we divide, and somebody else conquers.

We as an industry have to recognize that we have issues in common that we all need to address and that our governments need to help us get through these times. Today's times are very, very challenging times. I'm a fifth-generation farmer. My maternal great-great-grandparents settled in the Gatineau and started farming in forestry there. My great-grandfather settled in the Douglas area, and today, along with my two brothers and my mother and father, I'm farming the same land.

Needless to say—and you've heard it many times—we'd like the next generation to take over the family farm. We're realistic enough to know that may not be a reality. They may not choose to do that. They may see the stress involved with farming operations now and decide there's a better and probably a more profitable way to earn a living. But I hope they have the choice and the chance to make that decision in an environment that is conducive towards agriculture.

You've heard many suggestions as to what to deal with for the immediate crisis, from cash payments on a per-acre basis to topping up crop insurance programs to many different things. I commend you in your vision of looking for something to solve the long-term problem.

I believe the long-term problem is in fact world trade. I'm also realistic enough to know we may not be able to solve it. The solution is a continent and a country away. There are trillions of dollars within those two treasuries that we as Canadians cannot match. I honestly don't have many good answers or any good suggestions as to what can be done to solve that. It's going to be a long process. It's a process that's occurred over the past two generations. It started when my father was farming, and it's likely to continue into the next generation. But it will be a long process of multilateral negotiations. It has to be resolved if this country is to support agriculture—or not to support agriculture.

The comment was made earlier that most farmers would rather get their money out of the marketplace. That's probably the truest comment that's been made here today. But we have to accept the reality that we can't do it here in western Canada.

I was at a presentation a couple of months ago. It was an animal rights film. I believe it was called A Cow At My Table. Brandon's local social and environmental activist—and many in the room will know who he is—stood up at that film and made the comment that it isn't the duty of western Canadian farmers to feed the world. If in fact that comment is true and does come to pass, then let's get on with the mission at hand and quit prolonging the agony and the bleeding in this part of the world.

We, as agriculturalists, farmers, and producers, have a duty to provide food for the world. We don't do it for the glory. We certainly don't do it for the money. We do it for love of fellow man.

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I have some suggestions for the immediate problems.

Fix AIDA. The fellow from Meyers Norris Penny probably has as good a handle on what the problem is as anybody in this room. As an industry and as business people, we rely on accrual statements. For the life of me, I'm not sure why those accrual statements get thrown out the window when we bring in a program such as AIDA. That's about the only way I know you can effectively measure performance, going either forwards or backwards. You take a point in time and you do an assessment of your business. At that same time a year later, you do a reassessment. That's where you measure your progress. AIDA doesn't address that.

NISA is a good program, so good that it took us roughly seven or eight years to get to the point where our account was well over $200,000. Today it is now down to $658. I don't think we can survive another six years trying to build that account back up to where we can rely on it for a one-year event. It's a good program. It was designed for a purpose, a rainy day fund, if you will. But quite clearly the rain has lasted far longer than anybody anticipated.

I got some statistics from FCC the other day. They have 1,200 accounts. I'm not sure if it's in the southwest region or where it is. I believe it is. I wasn't clear, and I didn't pursue it. At October 31, 1998, 273 accounts were in arrears. At October 31, 1999, 309 accounts were in arrears, which isn't really significantly more, but if you take into consideration that most of those payments are due sometime in the month of November, I think if you review that number again maybe on January 1, the arrears accounts will be considerably higher. I also found out that at October 31, 1998, no accounts were in need of special attention. At this time there are well over 100 accounts requiring special attention.

The crisis is from this spring's natural disaster, but the real crisis is before us in the next twelve months. As you heard from Mr. Redfern, banks and farmers are at the extreme limits of their operating credit. They're relying upon industry trade credit, which has a significantly higher price. Those things indicate that we have a real crisis looming on the horizon.

Thank you very much.

Voices: Hear, hear!

The Chair: Thank you, Mr. Green.

Just before we get to Mr. Hamilton, if we're not going to have any further questions from members, we might be able to squeeze in three more farmers. So I would ask three farmers in the crowd to get ready for their presentations after Mr. Hamilton. They would be Kyle Cochrane, Ron Rutherford, and Gregg Fotheringham.

Mr. Hamilton.

Mr. Don Hamilton (Individual Presentation): Thank you very much, Mr. Chairman and members of the committee.

I farm southwest of Brandon, five miles out of Brandon, and I'd like to say that so far I'm a survivor. I feel rather long in the tooth when it comes to agriculture. I've been in it for forty years. If anybody here knows my father, Charlie, he probably had me started much before that. Just four years ago, our farm came on its 100th anniversary. So maybe we come from a long list of survivors, but what I see out there right now is “unsurvivability”.

With your indulgence, I would like to go through some of the events that have brought this region to the farm crisis we have today. I know this is rather prolonged, but with the demise of the Crow, this region, as well as the rest of western Canada, started on a whole new era. Although we had a short reprieve with low grain prices during this period, there were calls from farm organizations for a third line of defence to deal with upcoming crises. Nothing of substance was done. It soon became apparent, with rising input costs, that if the market price was to continue, the farming region and indeed also the urban areas in Manitoba, Saskatchewan, and Alberta would suffer.

During this period, especially in Manitoba, the farming sector started to diversify in all directions, from llamas to saskatoons, from buffaloes to grass. Oh, I'm sorry; I mean hemp.

Voices: Oh, oh!

Mr. Don Hamilton: Let it not be said we didn't try to adapt.

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How much can be done in six years? Well, obviously a lot. But to handle the situation we are in now, we are woefully inadequate.

In June of 1998 it began to rain. It rained so much that by the end of June of 1999 some regions had received over five feet of rain, a real disaster when you consider that the average rainfall in this area is eighteen inches.

Crops were ruined in 1998 in this region. Crops were not planted in 1999—so much so that one million acres were unseeded, compared to the flood of the century in Winnipeg, when a mere 1,500 acres were unseeded. Furthermore, those farmers in the rain-soaked areas who managed to seed late were hit by disease and frost.

Calls went out for help. AIDA was to be our saviour. It simply hasn't been. Its serious defects, as Mr. Vanclief pointed out, make it the swear word choice of western Canada. NISA was to come to our rescue also. We were told that the farmers weren't withdrawing from the NISA account—those who had one, that is. If the committee would check the latest statistics, you will find a steady withdrawal from these accounts.

We were also told that the federal government had no money to help the rain-soaked region, that it could not compete with the European and U.S. subsidies. But for all intents and purposes, these subsidies are nothing short of economic warfare on this region. They are massive, and without help from the Canadian government we cannot hold off this subsidies assault.

Later we heard the federal finance minister is projecting a $90 billion surplus in five years. I may say this government can find money for support for those who are under siege in Europe and East Timor, but it's time to recognize that the farm industry here at home is under siege as well.

Voices: Hear, hear!

Mr. Don Hamilton: Because farming is a renewable resource, every year employing people directly and indirectly by the thousands, the government must come to recognize that those dependent on the farming industry are under siege as well.

What has been offered so far through AIDA to combat the record foreign subsidies is at best insignificant. The farmers and the business people, both directly and indirectly, have demonstrated, sent petitions, made trips to Ottawa, staged rallies, and have given presentations by the dozens in the months that followed the seeding and the harvest in 1999, all in an attempt to get Ottawa to recognize the farm crisis here in Canada.

The latest event to come and go was the negotiation in the much-touted WTO meeting in Seattle. Ottawa hoped to level the agriculture subsidy playing field, but we all know the collapse in trade negotiations means a continuation of the subsidies assault on the Canadian farmer.

Without going into further details, our situation in the southwestern Manitoba region has become worse without federal intervention. In this farming crisis we will see a breakdown of our family farms, rural towns, and cities, not only in the southwestern Manitoba region but throughout western Canada.

Time is running out, gentlemen. It's time to act now.

Thank you.

The Chair: Thank you, Mr. Hamilton.

Thanks to all of you. I think we have room for at least three more. We have a meeting in Estevan this afternoon, so we have to maintain a schedule.

We have Kyle Cochrane, Ron Rutherford, and Gregg Fotheringham. We'll start with Mr. Cochrane.

Good morning, Mr. Cochrane.

Mr. Kyle Cochrane (Individual Presentation): Good morning.

The Chair: We've got about fifteen minutes for the three of you.

Mr. Kyle Cochrane: Okay. My name is Kyle Cochrane. I'm 23 years old and I'm trying to be a new farmer. I've got five years of university under my belt, two degrees in agriculture. Again, I'm trying to be a farmer. I wonder if I'm doing the right thing.

I'm very concerned about agriculture as a whole, not just farmers, but agribusiness. Ray Redfern was up here a little while ago. If farmers are going to lose money, I wonder how long he's going to be able to keep younger people around. Sooner or later, he's going to start laying off the younger people who are going to school in agribusiness.

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I'd like you to look around the room at how many young farmers there are here. You'd be lucky if you can find a handful. Am I nuts? The older farmers are here to support the younger farmers. The young farmers are just giving up.

Last week I was at a Meyers Norris Penny educational session on farming—how to tighten the grasp, how to make more money in farming. Here's a list of stuff I got from them of reasons not to farm. It's basically a bunch of charts and stuff that showed the lack of income in farming, the decline in farms, and the troubles farmers are going through.

My concern is not only AIDA and the ad hoc programs you're trying to work with now, but the long term—how to keep young farmers like myself going. How do we get started? It's very hard to go out and buy machinery and land to start farming.

I'm farming with my father right now. Even if he gave me the farm, I'd be in the same situation he's in; I'd be no further ahead. I'd be damned near broke. We don't want welfare handouts. We want something concrete that's going to carry us over into the next five, ten, thirty years.

Earlier on there were people talking about tax breaks: lower the taxes on our fertilizers, our chemicals, apply tax on the food. It's very easy to notice that food is cheap in this country. Why not try to kick some of that cheapness back to the farmers? Try to put something in our pockets. Let's get some of the money in the hands of farmers. The farmers will recirculate it. We don't hold on to our money; everyone knows that. We spend it just as fast as we get it.

We're not trying to be millionaires at this. We're just trying to make a living doing what we love. We need some confidence from you people to show us that we're not crazy and that we can make a future at this.

I just got married a little less than a month ago, and for me and my new wife, we're not sure whether we're doing the right thing or not. But if we can have some idea from you people that we are doing the right thing, we can stay and do the things that we love.

Thank you.

The Chair: Thank you, Kyle. And you're not crazy. And by the way, congratulations.

Mr. Fotheringham.

Mr. Gregg Fotheringham (Individual Presentation): Thank you, Mr. Chairman. I'll try to go through this quickly.

Good morning. I'm Gregg Fotheringham. My family operates Fotheringham Farms south of Reston. We annually plant about 3,100 acres in Albert municipality. Some of the pictures going around the table are our farm as of May 25, 1999.

Albert municipality was the first municipality, I believe, to declare itself a state of emergency in the spring of 1999, because of a combination of above-normal rainfall in the summer and fall of 1998, high snowfall amounts through the winter, and above-normal rainfall again in 1999. That contributed to our farm planting 300 acres, or about 10% of its total acreage. That is the single largest factor to poor farm economies in our area, but it's also compounded with the low prices, which are having the biggest devastating effect.

Here are some of the facts, gentlemen. The $50 an acre that was advanced to the flooded area is totally tied to AIDA. That's starting to come forward, with its tax implications that you heard from Doug Stroh. NISA accounts are zero, or very soon will be. Inventory is zero, or very close to it. Operating lines are in the red, and different means of securing those lines are required—something other than inventory, obviously. Many producers have deferred as many payments as possible into the next fiscal year. Essentially, you've heard of that adding another year to the term.

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Producers in this disaster are affected with one or a combination of these factors. Our contention has been and still is that the twenty-plus municipalities that declared a state of emergency in the southwest of this province should be extended the jobs and economic restoration initiative. The JERI program has been offered to such disasters as the flood in 1997 and the ice storm in Quebec. These were weather-related disasters, which were beyond human intervention. The losses related to this disaster were estimated in May and are now known to be financially unreasonable to both farm and rural business.

The JERI program should be initiated to include loss of inputs, flood-related business downturn, cost of returning farm infrastructure to a plantable state for the future, and inventory loss due to flood and wet conditions.

Page 2 kind of goes on about the crisis at hand, I guess, or why we're all here today about the long term. If you will allow me the history, the farm economy on the prairies is one of instability at best. When we reflect, all the issues are tied to weather events and commodity prices. For example, the thirties, the LIFT program, the drought of the late eighties, the price slump of the nineties we're in—all have contributed to the roller-coaster ride we call farming.

Let me be clear that the issue facing us today is not one of stress, nor is it an issue of the work and labour we invest in our operations on the landscape today. The issue that is paramount is that the primary agriculture industry is the only one that is not in a cost-plus scenario. And risk—we're tired of taking the risk, gentlemen. It's plain and simple.

What is absolutely mandatory for the prairie region is a revenue assurance program that is fair, simple, budgetable, long term, with a comprehensive disaster package that reacts quickly and fairly to all disaster situations, whatever they may be. This economic development plan would allow the prairie region to grow and prosper for the betterment of this entire country. The prairie region—I'm speaking of Manitoba and Saskatchewan—is an exporting region in the truest sense. This must be maintained for the survival of this region.

When this stable agriculture region is attained, our rural communities will survive and thrive. Infrastructure will expand. Jobs will be created. Diversification will occur, and risk is shared. All will evolve in an economic and environmentally sustainable fashion. A government voice is needed to champion and defend the cause so that together we can attain the target of 4% of the total agriculture export market in the world. That's a target that has been set by this government. The prairie region is integral, and the target will not be reached without it.

Thank you, gentlemen.

The Chair: Thank you, Mr. Fotheringham.

We're right on schedule. We have about five minutes for you, Mr. Rutherford.

Mr. Ron Rutherford (Individual Presentation): Thank you.

I farm with my family in the Melita area, in the same municipality as Mr. Fotheringham.

I want to deal with this in two different parts, the flood situation and then the long term.

With some of my work with farm organizations and so on I get to talk to a lot of farmers, and one of the things I'm hearing a lot lately with this flood situation is they've managed to pay their bills up until now, and basically now they're out of money and out of inventory until next harvest. It's a serious situation to be in. They're going to have to go on credit, if they can get it, until they can sell some more crop next year.

The other thing I keep hearing about—and I think Doug mentioned this—is the biggest income tax bills they've ever faced. It seems ironic, but that's what's happening. I think he covered that fairly well; I won't go into it any more. It was basically because all the income was compressed into that one year.

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Just as an aside, when we were asking for the $50 an acre this spring we were reluctant to ask for it to be deferred, but that probably was a mistake in hindsight.

Some of the possible solutions have been talked about. As already mentioned, if part or all of the provincial flood payment could not be counted in AIDA, it would help a lot. Call it a disaster payment. I don't know how you get around the tax one, but perhaps somebody who knows more about it than I could figure that one out.

I just want to talk about the long term. As you've heard many times, AIDA is not working for grain farmers in an industry where margins tend to go down gradually over several years.

In this room there are probably as many reasons why they don't like AIDA as there are people in the room. One of mine is that it discourages diversification, which is exactly what we need.

Instead of an AIDA-type program, here are just a few suggestions. You've heard some of them before: crop insurance improved, higher coverage, lower premiums, a combination of both, or, as some people have said, some sort of GRIP-type program. I might mention that this is a good program for young farmers. If you want to help them, give them a bottom line.

NISA has been a useful and good program for some people. It does have the problem of not helping young people, but it's certainly being used now, and in a lot of cases as it is intended to be used. We built up the accounts in the better years and now they're being used up.

Other possibilities, as some people have said, include lower taxes on inputs, less user fees, some freight reform, and working with the provinces to get education tax off farmlands.

In conclusion, in talking to farmers over the years you should apply these four words to any program you come up with, and you might want to write them down. “Simple”, as in we don't need a lawyer or an accountant to help us with them; “fair”, as in being generally available to everyone, and when I say that I don't mind targeting young farmers, but otherwise I think targeting is fairly unpopular in general; “predictable”, something we can count on and budget for; and “consistent”, not changing from year to year or month to month.

As you have heard before today, whatever we come up with we need to know what level of support we can expect from our governments for the future so that we can plan what we want to do with our farms and with our lives.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Rutherford.

Thanks to the last three witnesses. In fact, thanks to all the witnesses who appeared here today. I thought we heard outstanding presentations.

I want to thank my colleagues for relinquishing the last few minutes of their time so that we could hear from as many farmers as possible.

This has been a very profitable session for us. The input has been strong and I can assure you we'll be taking many of the messages back to Ottawa.

And thanks for everyone coming here today. You've all added to the occasion. God bless you all.

This meeting is adjourned.