AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 25, 1999

• 0902

[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): We'll bring the meeting to order and continue our discussions as per our motion having to do with farm issues.

Mr. Rick Borotsik (Brandon—Souris, PC): Mr. Chairman, just as a point of information, I unfortunately have to leave at 10 to speak in the House. This session, I believe, goes until noon, so will we be hearing the witnesses until 11 o'clock and dealing with the other issue then? Is that the process?

The Chair: Yes. I would hope those other issues wouldn't take that long. I was thinking, Rick, that maybe we could go to about 11.30 with our witnesses. The steering committee has dealt with almost all the matters relating to our trip west.

Mr. Rick Borotsik: That's fair ball. I will come back from the House, probably by 11 o'clock. That's what I'm trying to say.

The Chair: Mr. Breitkreuz was complaining the other day about some of the meetings being too short, and since we have three organizations to hear today, I thought maybe we would aim for 11.30 and then—

Mr. Rick Borotsik: I will try to be back at 11. I would like to deal with the travel issue.

The Chair: Thanks.

Just to reiterate the travel budget motion that's before us, we can deal with that at about 11.30. Madam Alarie gave notice of a motion at the last meeting.

We can deal with that as well, Hélène, if that's all right, at about 11.30.

But now we're going to get to our witnesses. We have the pleasure today of hearing from Sinclair Harrison, who is from SARM, the Saskatchewan Association of Rural Municipalities; Allan Holt, representing Wild Rose Agricultural Producers, from the great province of Alberta; and from the great, great province of Manitoba, representing Keystone Agricultural Producers, Donald Dewar, who is the president of what we refer to affectionately as KAP.

Welcome, gentlemen. Have you decided who is going to start? Does it matter?

Mr. Donald R. Dewar (President, Keystone Agricultural Producers): It doesn't matter to us. We'll just go from right to left.

• 0905

The Chair: Mr. Harrison, you can bat first. Especially if you're a fast base runner and good at bunting, you can lead off.

Mr. Sinclair Harrison (President, Saskatchewan Association of Rural Municipalities): Thank you very much. I appreciate the opportunity to be in Ottawa this morning. Don and I were before some of the committee close to a month ago now, when we came down with the premiers.

Just reflecting on that visit and the response we got from the Prime Minister, certainly when we returned home the hurt hadn't gone away. I guess we got into a numbers game when we were here a month ago, but the folks back on the farm didn't take very kindly to the response we got from the Prime Minister. This isn't a numbers game; it's about families and farm families.

We're encouraged to hear that you are coming west. We speak for a large constituency, but certainly for you to come west and hear from the individual farm families, as I believe you're going to do in a couple of weeks, is extremely encouraging.

We also had the Minister of Agriculture in Saskatchewan a couple of weeks ago. I had the opportunity to listen to his presentation to the Saskatchewan Wheat Pool annual meeting. In Saskatchewan we observed a much different minister than we did a month ago when he was answering questions in Question Period. Certainly I think that reflects well on our trip down here a month ago. I think the people in Ottawa are starting to understand that there is a problem in western Canada. We want to build on what we see as maybe some momentum to address the problem in the west.

We've given you a chart that just reflects commodity prices, what the five-year average is, and what the forecast is this year. You've probably seen these numbers over and over again, but as one who has sat on council for 25 years, let me say that this is how you get the job done. The guy who's in your face all the time, coming back time and time again... you finally do something to make him go away. I guess what we're suggesting is that we're not going to go away until this problem is addressed.

The first page deals with the income problem. I think you've heard those things over and over again. In Saskatchewan we did produce a fairly large crop, but the quality of that crop is less than normal. Because of the late seeding there was frost damage and a lot of ergot in a lot of the wheat, so it is being downgraded. Just to reflect on the difference between number 1 wheat and number 3 wheat, you're looking at $140 for number 1 and $66 for feed wheat. A lot of the wheat being sold is of the feed grade, so certainly that reflects poorly on our net income too.

You've all seen the other chart that's on this page: what the U.S.A. pays for subsidies, what the Europeans pay, and what we pay. Again, we're on the short end of the stick when it comes to wheat and oilseeds. When you get into commodities like milk, we're on a par with the U.S. and the Europeans. For pork there's not much difference, and for poultry there's not much difference. So certainly it's the grains and oilseeds where we have the dramatic difference among the Europeans, the Americans, and ourselves.

The other area that would help us somewhat in this whole exercise is the grain transportation review, and we don't want to get into that. That's another issue, somewhat. But there are some savings that we feel could accrue to western Canadian farmers if we choose the right model out of the Kroeger report and out of Estey. I believe there's a document floating around Ottawa at the present time that has some thoughts that support KAP, WRAP, and SARM's paper, so that is encouraging.

Going to the section on recommendations, we came here a month ago looking for somewhere in the neighbourhood of $1 billion for Saskatchewan. Whether that's the right number, whether it should be somewhat more or somewhat less, it's in the right ballpark. We have suggested that it should be a land-based payment and we're prepared to negotiate that.

• 0910

We look at a land-based payment as being a quick method to get money to producers, with uncomplicated administration. It is not trade-distorting, as some may try to tell you. It is seen as a green program. It's not tied to commodity. It's not tied to price. A land-based payment is seen as green. Certainly if money goes to those who are in what is seen as an income bracket, some of it will be clawed back through income tax. That's how we would see the targeting taking place. You give it to all land and then claw it back.

When I say the land, we ought to be careful where it goes to. We're suggesting that it should go to the person who farms the land, not the landowner. This is not an exercise to get money into the hands of the Royal Bank and the Farm Credit Corporation, which are large landowners. They seem to be doing very well, from the reports recently issued by banks. It's important that this payment go to the people farming the land. That was not the case in the Crow buyout, where it went to the landowner. That caused a lot of problems. I guess we would see it as some equalization taking place when this payment goes to the person farming the land.

Just roughly figuring, in Saskatchewan, if it were to be a land-based payment, it would work out to somewhere in the neighbourhood of $21.50 per acre, based on $1 billion and 46.5 million cultivated acres.

Administration of programs such as this one can cost a lot of money. Sometimes it can be difficult. Through our municipal offices, which we have 260 of, administrators are familiar with who is farming the land. We are prepared to do whatever we can to administrate the payment of whatever money comes in. That is an offer we made a month ago, and that offer is still on the table.

When Mr. Vanclief was in Regina on November 18, he did suggest that we in Canada should be pushing the envelope more when it comes to supporting farmers under the WTO. It seems that the Europeans and the Americans come up with programs and we never make any effort to countervail them here. His suggestion to us, as we took it, was that if we need to get some money into farmers' hands, we have to find a way. As we see it, a land payment is a green program, but if there's something that's more acceptable... from his suggestion, maybe we have to start taking more chances.

We certainly support a long-term safety net program. I know Don was at a meeting earlier. That's being worked on, but we cannot wait for it to be developed. It's just like the WTO. Several people are going to Seattle; I know that Rick and some others from this committee are going. We can't wait for the results of that. That's probably going to be a five-year exercise.

In summary, the farm crisis is real. The situation does not appear to be improving in the near future. The crisis will spread from family farms to rural and urban communities. Certainly we're seeing that. It's feeling its way right across the province. I would suggest that maybe even Ottawa and the larger cities across the country are starting to feel the impact.

The federal government is respectfully asked to address the shortfall of $1 billion in income through a land-based trade equalization payment. One other caveat there is that if the federal government wants to do something that won't cost them a nickel, they can reduce the freight rates—or suggest to the railroads that it would be appropriate—in the order of $5 a tonne, which would be of immediate assistance to everybody.

I want to thank you very much. I will certainly answer questions whenever that is appropriate.

The Chair: Thanks, Mr. Harrison.

Just before we go to Mr. Dewar, on the land-based payment proposal, in some other context you mentioned $1 billion. Is that what you're estimating as the cost of a land-based assistance program?

Mr. Sinclair Harrison: If you spread $1 billion over the cultivated acres, it works out to about $21.50 an acre in Saskatchewan.

The Chair: That would be for the year 2000?

• 0915

Mr. Sinclair Harrison: Who farms them varies, but the number of cultivated acres doesn't vary much from year to year.

If we do it through the RM offices, they have an excellent handle on who is farming the land. It's sort of like social services. If the province administers it, they don't know who's doing what to whom at the local level. But certainly the administrators know who may be fiddling with applications and who might not.

Mr. Howard Hilstrom (Selkirk—Interlake, Ref.): Mr. Chairman, I also have some questions, in conjunction with yours.

Mr. Sinclair Harrison: If you could cut a cheque to Saskatchewan, we would get it out to our offices and they would get it out to the people. You could cut the cheques to the RMs or do it through PFRA. We would hope administration wouldn't hold this process up.

Mr. Howard Hilstrom: A point of order, Mr. Chairman. Are we asking questions now? I'd like to ask some questions of—

The Chair: No, we will go to Mr. Dewar first and then Mr. Holt.

Mr. Howard Hilstrom: So there will be no questions until then?

The Chair: That's right.

Mr. Howard Hilstrom: Okay, thank you.

The Chair: Don, welcome.

Mr. Donald Dewar: Thank you, Mr. Chairman and committee members, for the opportunity and the invitation to be here in Ottawa again. As Sinc said, we're starting to recognize the faces around the table, so maybe this is happening too often.

I gave the clerk copies of the presentation. I don't know if you have them in front of you. I don't plan on reading that verbatim. It's there for you to read. I just want to highlight some parts of it. As I said, we were here two to three weeks ago, and I was here about a year ago talking about the very same problem.

There was an announcement of $900 million, but only $200 million of that has been delivered. It is too little and it's coming almost too late. It addresses the deep disasters some people have experienced.

I have been on the National Safety Net Advisory Committee that has been working in the area of safety nets, but I think the problem we're going to be talking about today is something you can't design a safety net for; it's just too deep an experience.

The issue of the unseeded acreage in southwestern Manitoba and southeastern Saskatchewan is only on top of the income problem that is general across Canada in the grains and oilseeds and hog sectors. We talked a year ago about the credit and financing concerns. I understand you had some bankers here a couple of weeks ago. We met with Farm Credit in October. They told us—I'm not sure what numbers you heard—their arrears in grains and hogs in Canada were up 77%. That was in October.

We know the loans at Farm Credit are structured to be due November 1, so even today they wouldn't be able to give you a number for 1999. They should be preparing that, and I suspect those numbers will be much larger. Also, if you talk to the banks about the farm suppliers and their credit lines and where they're at, I think you would find it is getting deeper. The problem is going beyond the farm gate to the farm suppliers. There's going to be severe economic hardship amongst the rural communities.

We've talked about the problems and Sinc talked about the problems. We know the net income stabilization account has been triggered at 50%, and this was supposed to be a stabilization program. Its projections for 2000 are worse. The other 50% could be gone.

As I mentioned with AIDA, it's only a 70% program. It is a low level of support by design, but it ran out of money at that level. As we know, there was some money added to it just two weeks ago, but it's all going to go. So there is a problem.

One of our banks in Manitoba, as we said a year ago, is still estimating that 30% of the farmers will not be farming four years from now.

There are three reasons. The first is the support our competitors are receiving from their governments and the decision our government made in recent years to reduce support. That leaves us in a non-level playing field, while their subsidies distort production and we have to compete with an oversupply and take the world prices.

• 0920

I was in Fargo two weeks ago, and a presenter from North Dakota, which is that far away from Manitoba, was putting up an overhead. He said “This is the intervention price”, which is the floor price in Europe, and “This is our loan rate in the United States”, which is a floor price for their grains. He said “Unfortunately I don't have the numbers for Canada”. I followed that speaker and gave him the numbers for Canada. The numbers for Canada are the market prices, which are considerably less than either one of those two prices. That's what our producers are asked to compete with.

The second reason is the reduction in farm support. It's difficult to get the numbers, but I think you have seen them. For the prairie farms of Manitoba, Saskatchewan, and Alberta in 1991-92, a total of $3.5 billion went into safety nets and program payments. In 1998-99, including AIDA, that's $441 million. So if you couple that with the market prices we're seeing today, I think it's pretty understandable.

There is a typographical error. The Crow subsidy was $0.5 billion, not $2 billion. I think we all know that. The $2 billion was the total reduction. When you look at that and see the problems that are happening in the prairies, we feel it's time for the government to start reinvesting.

The third problem we have is the government's failure or slow response in recognizing the problems we're experiencing. Even the disasters that made the headlines, such as the vast acreage under water in 1997 in the Red River Valley, attracted a quick response. The ice storm made a lot of good press, I guess. It attracted attention and sold the papers and got a quick response. But the problem in southwestern Manitoba and southeastern Saskatchewan has yet to get a response.

On similar types of programs for repairing their infrastructure, which is the land they have, there was a program for lost inputs from the 1997 flood. These farmers may have applied up to $50 or $60 worth of chemical fertilizer a year ago, which they weren't able to use, and they've received no compensation for that. The infrastructure they've lost is their land. You drive by it on the road and it looks like there isn't a problem, other than it's covered with weeds instead of crops.

The provincial government responded and the federal government agreed to the $50 an acre paid in Manitoba—$25 of that was an advance on AIDA if they qualified. The other $25, in effect, was a reduction in the AIDA payment anyway because it became income, so at the end of the day it saved the AIDA program some money.

On just one other point, we know that in Quebec after the ice storm it was a long, hard-fought battle. There was compensation for the loss of the trees. I think that can be very easily equated to the loss of the soil for the prairie farmers who lost it. We have to try to find a way to get that single issue out of agriculture and dealt with as a disaster, through whatever appropriate channels.

We need to know what the government's view or vision is for prairie agriculture. We've developed an export market, export grains, built the railroads, put the Crow subsidy in place, and masked some realities to develop an export market for the good of the economy of the country.

There is another typographical error. There is much more than 53 million cultivated acres in western Canada; it's closer to 90 million. If we're not going to grow export grains on them, what are we going to do? What is the government's wish for this vast acreage or expanse of western Canada, so it can continue to contribute to the economy?

• 0925

We highlight some of the production losses, as we talk about export interests and export markets. We have vastly changed the production methods and the crops we grow. I believe there's a delegation in Ottawa this week to talk about hemp, to try to get that industry going, in spite of some of the constraints they have to deal with in terms of regulation, etc., and I guess recognizably so. But these are such small markets that with the 90 million acres we can easily flood any one of them. We still need to have the signal for our traditional grains and oilseeds we've always been growing.

We're looking for direct financial support to compensate for the low commodity prices. Sinclair put one proposal forward, based on acreage. We're not suggesting how; we're suggesting it be adequately addressed and it remain green. If acreage payment is the choice, how do you address, in a green fashion or with a green program, the losses a hog producer is experiencing? Those prices are only now approaching the break-even price, from the depths they were at a year ago, with losses of over $100 a hog. So we're looking for some direct financial support, and I think we need that commitment from the government.

There's an opportunity, as Sinclair mentioned, for the policy changes on transportation. I think those have been well defined. There's very little argument about the amount of money producers can realize from a changed transportation system. There's just debate over how it gets into their pockets, whether it's indirectly through the grain companies or more directly through the Canadian Wheat Board pool.

In regard to increased support for our road infrastructure, in tandem with losing our railways, I think there was a recommendation from Justice Estey that the excise tax be sequestered for roads. We've always supported that. I know governments don't sequester taxes, but I think the excise tax on motive fuels is very clearly one that could be. It comes from the motive fuel, and it would go to increase the use of motive fuels if it were used in the roads. When we look at the infrastructure the federal government has provided in the United States for their roads to markets, I think we can clearly see the lack we're having in western Canada. We need those.

We need the excise tax on farm fuels. If it's a motive fuel that's not a motive use, the government can—and there are other ways—reduce our expenses. As well as writing a cheque, there are several things the government could do to look at ways of reducing our costs.

The last one on my list is increasing support to agriculture research. We need public research. We need access to publicly developed technology so that we are not held ransom by the large life sciences companies of the world. I think it's more important today that we have that access, so that there are choices for producers—and I'm not talking about just the GMO issue. As there is more research done and owned by private industry, they control it, and people have to pay—they charge for the technology. The government with their matching-investment initiative is doing this in tandem. So we're using public money to support that research industry, and we pay double, because as the farmers use the technology, it's usually owned by the developing company. So we need that access to the technology.

• 0930

We can look at what we need to do in western Canada. Whatever it is, it needs an injection of capital. The capital reserves just aren't there for changes to occur. If it's going to be in livestock or special crops, it all takes some capital reserve.

One thing I heard last week in Fargo from a producer... Their loan rates are very low because they have their decoupled Freedom to Farm Act. It has nothing to do with the production today. I think they use 1991 production, and they have a formula for paying out. But two farmers were talking and they both agreed that the Freedom to Farm Act, by flowing money to the farmer, allowed them to make the changes they had to make on their farm for success in the future—and I use the words “to achieve success in the future”, rather than survival. Farming shouldn't be about survival.

We talked about value-added processing. It is great for the economy. A neighbour pointed out to me, though, that telling a farmer to get into value-added processing is like telling a labourer “We're not going to give you a raise this year. Why don't you buy a grocery store and put your wife and kids to work there? Get more income that way.” We talk about moving up the chain and more integration, but it's like telling a labourer to get a second job, because the one he or she has isn't good enough.

It is great, I think, and we do have to consider it, because if we can increase the value of the economy, the tax base in rural Canada can support the infrastructure that we need for the social economy and the environment.

But if we're going to hit 4% of the world market in agri-trade, we need to know how we're going to get there. We need to know what the government's intent is, and some of this capital has to flow.

I think with that I will close my presentation. It's very simple. Are you committed, as our representatives, to ensuring that agriculture is a viable industry on the Canadian prairies into the next millennium? We're almost there. We need to know the answer so we can get on with our lives. If the tough love that was spoken about two weeks ago is the answer, then we have to talk about the transition to tall grass and buffalo.

Thank you.

The Chair: Thanks, Mr. Dewar. I appreciate your comments.

We'll now go to Mr. Holt.

Mr. Allan Holt (President, Wild Rose Agricultural Producers): I would also like to thank you for this opportunity. This is my first time before this committee, although one of my colleagues did have an opportunity several years ago to present on Bill C-4. I had hoped that you would allow me to speak first so I'd have something to say—my colleagues have said almost everything on the points I was going to make. However, I'll try to think of something to tell you this morning.

I did have an opportunity to visit Saskatchewan just last week, and I was asked by many farmers there if things were really that well in Alberta. We don't hear a lot about Alberta in the crisis; we hear a lot about Saskatchewan and Manitoba.

Things are not all well in Alberta. Because Alberta is probably more diversified than the other two prairie provinces, the impact is not quite as severe. However, our grain producers are under a lot of stress at this time.

I had an opportunity to hear our premier speak at a municipal convention just last week, and he was asked why he didn't go to Ottawa a few weeks ago with that delegation with premiers Romanow and Doer. He said the reason he didn't come to Ottawa was that the Alberta government was quite willing to support their farmers. Well, they may be willing to support some of their farmers, but they're not willing to support the grain farmers in Alberta.

Now, you probably read the headlines that the Alberta government recently contributed another $100 million to their FIDP program, which parallels AIDA. However, they don't want to say anything about where that $60 million in federal money went, which was contributed as a federal share of AIDA. We're very certain this money has been buried in the FIDP program and the Alberta government is taking credit for moneys they have really not contributed. So we are very concerned about that.

• 0935

The AIDA and FIDP work reasonably well if you're in the livestock sector because they operate on a five-to six-year cycle, with the highs and the lows, and if you're a prudent manager you can manage through the lows. However, in the grain sector it simply doesn't work.

I had an opportunity to come to Ottawa about five or six weeks ago with some of my prairie colleagues. We met with Mr. Vanclief and he told us that to be realistic there is no relief in sight until at least the year 2010. Of course, I'm sure most of you realize that's because the WTO talks won't conclude for at least three years, and any relief we may get from foreign subsidies will be phased in over at least a five-year period. So that causes us a great deal of concern. And because the margins in grain have been so low for so long, if we take 70% of our margin, unfortunately 70% of nothing is still nothing.

I would like to ask everyone in this room to reflect for a moment: what would the impact on your life be if you knew you had to take a 30% reduction in the income you receive today? I would suggest it would be quite dramatic.

We've heard a lot about the somewhat over $1.1 billion federal money that's gone into AIDA. However, if that money all went only to the prairie grain farmers, it would only amount to about $10 an acre, or the cost of us cultivating an acre twice. We all know that it's going to all sectors of agriculture; we know it's going to all farmers in Canada. So the amount the prairie grain farmers receive from that program is actually quite minuscule.

We're very certain that our federal negotiators let us down badly at the last round of the WTO talks. We think that, to a large extent, in the drastic reduction in federal support, although it was said to be fair to trade, there was more concern given over balancing the budget. You've heard those figures. I believe you have the figures in front of you.

I live in the central part of Alberta. We have very stable weather there compared to the rest of the province, and even with above-average crops this year, we're not able to show a profit. We're concerned about some of the income projections that we hear, mainly from the federal level.

I think the reasons the predictions are for a small percentage increase, especially in Alberta—in our income they're predicting 5% to 6% increase—is because of the averaging. To give you an example of how deceiving averages can be, did you know that the age of the average patient in the maternity ward in the Ottawa hospital is now 12 years old? That's because the average mother is 24, and of course as her infant is zero it makes an average of 12.

Of course, we have very good prices in our cow-calf. The cattle prices are very strong now. Supply management is doing very well and all safety net moneys are considered as income. So when you take those figures and balance them against the very low commodity prices and profitability that we see in growing grain, it's very hard to survive.

I don't think anybody in this room would argue that the cause of the problem is beyond our control. It's because of the massive subsidies that our competitors receive. We know the European farmer receives approximately 56% of his income through subsidies. We know the U.S. farmers receive approximately 38% of their income through subsidies. We also know that the Canadian farmers receive approximately 9% of their income from subsidies.

Although things have been tough in prairie grain growing for quite a few years, we really hit a crunch this year. Up until the crop we just harvested, we were able to offset the losses we experience in growing coarse grain with the very good profits we received in growing canola. However, this year, because of the U.S. changing their loan deficiency program, the American farmers now receive $10 a bushel for their canola, and because canola competes directly in the marketplace with soya oil, this has resulted in a one-third decrease in what we receive for our canola. It's gone from $9 a bushel last year to a little below $6 this year. So that's really exacerbated the problem we see.

• 0940

We have been criticized on the prairies for the fact that there's still all kinds of money left in our NISA accounts. I would like to tell you why that happens. First of all, when farmers need money they depend on their operating loan. Most of us have an operating loan to smooth out the cashflow over the year. That's the first option. When that has been expired, the next step is for a lot of farmers to rely on credit from their suppliers, whether it be the farm supply dealer supplying short-line machinery or fertilizer fuel, etc. And the last line where they look for money is to mortgage the farm to get more money from the bank. The very last option that most of us use is to then start drawing money from our NISA accounts. Because of the interest incentive, this makes the most sense to most of us.

In Alberta there are a lot of different opinions on how some kind of farm aid should be administered. We do know that a per acreage payment is green. We do know that you have the figures close at hand. You can use the same production figures you used in paying out the WGTA. We know you have the human resources to research and find out what the implications are of any moneys you do see fit to administer to us. So I would leave it in your hands.

I would like to thank you once again for this opportunity.

The Chair: Thank you, Mr. Holt. We appreciate your comments as well.

I'm glad to see some of my colleagues from the government side are drifting in. I know there have been all kinds of meetings this morning. I met Mr. McCormick earlier this morning; we had a breakfast meeting.

I have to step out to see a constituent who is a recipient of a prime ministerial award. I'll be leaving at about 10 a.m. and just stepping out for a few minutes.

It's time to go to Mr. Hilstrom. Madame Alarie?

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): Mr. Chairman, I would like to raise a question of privilege.

Members of this committee had agreed that the documents would be submitted in both official languages; those not in both official languages were not to be distributed.

Of course, in a situation like the crisis being experienced by Western producers, I am prepared to be tolerant, but I wish to submit very humbly that in future, such things ought to be avoided, please.

[English]

The Chair: I regret that this has happened. We have a rule that unless remarks are in both languages they're not to be distributed. I'll take responsibility for that, Madame Alarie, and try to ensure it won't happen again.

Yes, Mr. Harrison.

Mr. Sinclair Harrison: I apologize for it not being down here in time to translate. It was rather short notice.

The Chair: Yes.

Mr. Sinclair Harrison: Then there was some concern about whether this was going to go ahead or not. But we apologize for not having this in both official languages.

The Chair: We compounded it because they're just not supposed to be distributed.

Mr. Hilstrom.

Mr. Rick Borotsik: Mr. Chairman, I wonder if I could intervene here. Howard, could you give me three minutes before I have to leave at 10 a.m.? I have to speak in the House. I promise I won't take my full five minutes. I just have two very quick questions.

Mr. Howard Hilstrom: I prefer your full time.

Mr. Rick Borotsik: You can have the rest of my time.

Mr. Howard Hilstrom: I appreciate it.

Mr. Rick Borotsik: Mr. Chairman, I have two questions. One is to Mr. Harrison, who suggested the $21.50 that's been calculated on the 46 million acres at $1 billion... The first question is when Saskatchewan came down they suggested $3 billion was the number for the shortfall; it's now $1 billion. Maybe you could answer that.

The second thing is you mentioned that you want the farmers of the land to receive any of the compensation, and I don't disagree with you on that. That's sometimes difficult to administer, and I would like to have you give me a very short understanding as to how it could be done. First of all, do you have any handle on how many farmers are actually leasing the land as opposed to actually owning it? Out of the 46 million acres, do you know how much of that is leased acres?

• 0945

Mr. Sinclair Harrison: It's my understanding that about 60% of the land is owned and 40% is rented.

Mr. Rick Borotsik: So 40% of the 46 million acres would be actually leased land farmed by somebody who didn't own it.

Mr. Sinclair Harrison: Yes. And that takes in the banks, the Farm Credit—

Mr. Rick Borotsik: And private owners.

Then how would you do that? How would you identify the dollars going to the actual farmer of the land as opposed to the owner of the land?

Mr. Sinclair Harrison: Our suggestion is that through the RM offices you would come in and swear an affidavit, as the actual farmer of that land, that you farmed it. I would suggest that the administrators have a pretty good handle on who's farming what land. By application, or sworn affidavit, or a combination of both, I don't think it would be that difficult.

Mr. Rick Borotsik: Can you tell me why it's $3 billion to $1 billion?

Mr. Sinclair Harrison: As you know, there are several organizations within Saskatchewan that claim to represent the producers, and you can come up with all kinds of numbers, as the Prime Minister did, to say whatever you want. Certainly some feel they can justify $3 billion. The coalition came down here—and maybe there was some confusion, but the coalition's position was $1 billion for Saskatchewan. I think mainly of one group that was asking for $3 billion. They were part of the coalition. They agreed that the $1 billion figure was the compromise position. So the $1 billion is what we were asking for.

Mr. Rick Borotsik: I have one final question, Mr. Chairman, to Mr. Dewar and to Mr. Harrison as well.

There are two specific issues here, particularly in some of our communities. Moosomin particularly is affected as well as my area with respect to a natural disaster, the water issue. Mr. Dewar, you touched on a couple of programs—recovery of lost inputs, perhaps a maintenance program for weed control in the spring. That's outside of the commodity crisis we're dealing with right now. Do either one of your organizations have any numbers you would like to attach to the natural disaster component that's sitting there in southwestern Manitoba and southeastern Saskatchewan?

Mr. Donald Dewar: We know in Manitoba there were just over a million acres affected.

Mr. Rick Borotsik: I'm talking dollars now.

Mr. Donald Dewar: Dollars?

Mr. Rick Borotsik: You want to talk about lost inputs and you want to talk about a maintenance program or sustainability program.

Mr. Donald Dewar: We don't know how many inputs were applied last year. Normally a lot of those farmers would do almost 50% of their land in the fall. Then you have to say that's 500,000 acres that maybe had inputs on them. What's an average cost of inputs? The fertilizer is maybe $25. If they were doing some special crops and then applying some sort of weed control chemical, it would double that.

So you would have to go to the individual records, but I think you could pretty safely say that $25 on 500,000 acres would do the lost inputs. We know it costs about $12 an acre for the chemical and spraying for one application of something like Roundup, which will clean up the land. Some of that land is still too wet to do that. How do you do maintenance after it's gone to seed? That's a tough one. I don't have numbers. It's expensive.

Mr. Rick Borotsik: The point I'm trying to make is that the $50-per-acre payment will be eaten up very quickly on lost inputs and on maintenance of that particular land.

Mr. Donald Dewar: Yes.

Mr. Rick Borotsik: So don't think that the $50 that's been put in there already is anywhere close to what the costs are going to be on that land—

Mr. Donald Dewar: And land taxes.

Mr. Rick Borotsik: That's the point I'm trying to make.

Thank you, Mr. Chairman, and thank you, Howard.

The Chair: Thank you, Mr. Borotsik.

I'm going to vacate the chair to Mr. McCormick for just a few minutes while I go to that ceremony. Go ahead, Mr. Hilstrom, for seven minutes.

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

Gentlemen, as I expressed here beforehand, it's nice to see you again, and certainly the expertise you bring is just top-notch.

You've covered the problem. You've covered the request for assistance to Manitoba and Saskatchewan in particular. You know the action that's been taken. The $900 million plus the $170 million is insufficient. The money hasn't flowed. Do you believe your message has got through to the Prime Minister? Do you agree it's gotten through to the agriculture minister?

• 0950

Mr. Sinclair Harrison: As I indicated, when Mr. Vanclief came to the Wheat Pool, he was a much different individual. I would like to think it's not just because he didn't have the safety of Parliament and his colleagues sitting around him. He was on different territory, different turf. We met with him after the Wheat Pool convention. The coalition that came to Ottawa met with Mr. Vanclief before he came back. I believe he's sincere.

The fact that your committee is coming west shouldn't be seen as a hollow promise. Mr. Vanclief said he asked the committee to come west. I hope that's the case. The fact that you are coming west to us is a signal there must be something there.

Mr. Howard Hilstrom: Thank you. The reason I asked that is I know for a fact the agriculture minister is well aware of what the problem is and what the solution is. The holdup seems to be in cabinet; the Liberal cabinet is not willing to apportion the amount of money required.

Mr. Dewar, or Don—we prefer to be more informal—the Reform minority report identified many of the things you identified as things the government could do immediately on that. So there's no doubt in my mind the government knows what the problem is and what should be done.

As a committee, we are looking into the effectiveness of the safety net programs, because we know the job has been done of telling the government what the problem is. The premiers of Manitoba and Saskatchewan came down and said “Here's what the solution is”, so it's just a matter of the government doing it. So we won't go any further into that aspect of it. You've made your presentations before.

We need to do a couple of things. One, I'd like you to comment on each of the four legs in our safety net programs and how effective they are for this. I would like you to also reflect on whether or not the safety nets advisory committee—which I believe most of you are on, or at least your organizations are on—is prepared to say we are going to duplicate the American farm programs and get them in place, and then leave it up to the government of the day, no matter who's in government, to either fully fund those programs or say we only have $2 billion for it and we won't fund any more; we'll just prorate it down. That way our farmers would be on a level playing field with the programs of our main competitor, where we export 90% of our agriculture produce.

I'd like comments on those two issues, because as I say, what we're studying here is the effectiveness of our programs.

Mr. Donald Dewar: I'll start with the safety net programs. One of the big ones is crop insurance, and that is production insurance. Particularly Manitoba, but a lot of the provinces, have aimed to individualize that so that a producer is buying insurance for his own production. Again, it's production. It guarantees me so many bushels. It mitigates the risk, the production risk, but it doesn't address the price side of it. People mistakenly look at their crop insurance coverage, because the insurance is for a certain level of bushels or tonnes times a price, and they say “That only comes to $80 an acre. My costs are more than that. My crop insurance isn't doing the job.” What they're talking about is revenue insurance. Crop insurance is very effective production insurance.

NISA is a stabilization; the “S” stands for stabilization. It's to deal with minor fluctuations in income. And it's been working. When NISA was set up in 1991, it was thought it would take $10 billion to $12 billion to adequately stabilize agriculture in Canada so that there was enough money. So people are reluctant... Since inception, the government, the ministers, and whoever has been in charge have said “Save, save. Put it in your NISA account. Don't take it out until you absolutely need it.” Well, in 1999 we're seeing the withdrawals doubled in NISA.

The $2 billion that was in the accounts a year ago was a problem. I don't know whether it's a problem with the finance department or the bureaucrats in Agriculture. We can't get that straightened out. They look at that $2 billion and say there's no problem because you're not drawing it down.

• 0955

I think the other side of it is that $1.1 billion of that has been triggered for the 1998 year. In 1999, the farm incomes in Manitoba, even the new numbers—I didn't mention those when I was going through my presentation—that were talked about, that upset our premier when the Prime Minister released them, showed an improvement of $150 million. That went from minus-$100 million to plus-$50 million. Our five-year average is $355 million.

Somebody said a 30% reduction. You go down to one-seventh of your income and try to manage your household, let alone a business. But NISA is stabilizing the top end.

The fourth one is companion programs. Different provinces do different things because of the uniqueness of their geography or whatever. In Manitoba we have an excellent program on waterfowl and wildlife damage. In your area, Howard, the geese and ducks go up and down that corridor, and producers receive compensation. That's their companion program.

The fourth one is the disaster-type program for which AIDA was designed. It is working for deep disasters, but it is a low-slung program. I'll use the example of a hog producer who had been in business, who didn't change the structure of his farm because that disqualified him from AIDA. So he had to have the same size of farm. He couldn't be expanding his farm. He couldn't be doing the things everybody said he should be doing, like diversification. If he stayed at the same level of hog production, he would have suffered a deep cut in 1998 and therefore triggered AIDA. I believe if you talk to the hog industry, it worked well, and as Allan said, the livestock industry.

Mr. Howard Hilstrom: Certainly the low net margin income—

Mr. Donald Dewar: Is grains and oilseeds.

Mr. Howard Hilstrom: —is the problem that has to be dealt with.

Mr. Donald Dewar: Yes.

Mr. Howard Hilstrom: That's why I wonder about your comments that we should match the American programs with the deficiency-type payment where you guarantee the price for wheat or whatever, at whatever level. That way, the people growing the darn thing—

Mr. Donald Dewar: Yes. Again, regarding this recent trip to Fargo, it was a northern plains conference with producers and governments from Manitoba, Saskatchewan, North and South Dakota, and Minnesota. It was deemed useful enough that we're going to do it again in Manitoba next year and host it.

But the comment I found the most was the comment from the producers. This decoupled program, low-deficiency payment, is very commodity-oriented; it's targeted. It would not be green. It would be an amber program, which would cause problems, because we do export into the United States. The decoupled program would allow money to flow for the changes to happen, like these two farmers said.

The other part of your question was the adequate funding, and that is tantamount; $600 million in the safety net envelope is not enough, even without the disaster program. We need to put these programs in place and say this is what we need to support, and when we need the program, it's triggered and it's needed.

I would say it's similar to the DFAA, the disaster financial assistance arrangements, that when it gets triggered, there's no limit to the money. They recognize that it's a natural disaster. It needs to be funded, and we all accept that, whether it's the ice storm or the Red River flood. That's the kind of disaster program. If we're going to have an agriculture program, it needs to be funded.

The Acting Chair (Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.)): I'm sure we'll get back to you, Howard.

We'll move on to Madame Alarie, please.

• 1000

[Translation]

Ms. Hélène Alarie: There really is a problem in the overall economic climate in everything you said this morning. I will give an overview of your intervention and would like you to tell me whether you agree with my comments.

There is obviously a long-term decline in prices. No increase is likely in the short term in the prices of grains and oilseeds. Added to this is grain transportation. Then there was the disaster in southern Manitoba and Saskatchewan. There is the diversification of farm products. You also mentioned support for agricultural research. This makes a rather impressive package deal for the current situation.

Basically then, we need to think about the short-term and long-term problems as well because there are really two categories of situations. These long-term problems will be dealt with quickly; these would include diversification, support for research and changes to the income security system.

In the short term, if we want to deal with the crisis, we need to consider the whole issue of subsidies and the funds that you are requesting. I am somewhat bothered when, for example, there is talk of setting aside amounts of money per acre or area because then productivity is not taken into consideration. Everything focuses on the same point: it's the number of acres that matters. What annoys me still more is that I don't know how production can be managed—in this case, we are speaking of pork production—if it is an intensive type of farming that does not at all match standards for acreage. That is my first question, my first concern. How can we manage that?

My second question has to do with income security programs. You spoke of crop insurance, which is an effective program. I do not know what percentage of farmers subscribe to the program. Are all farmers paying into it?

Quebec has previously looked with envy at the western stabilization account and believed that this was the solution to the problem. Now, in the longer term, we have seen that it is not the solution to the problem. For the future, have you considered implementing, not a stabilization account, but rather stabilization insurance based on production costs?

Those are my questions.

[English]

Mr. Donald Dewar: The first one, addressing the other commodities than just acreage and the productivity, is a concern we have in Manitoba. That's why I said we don't have a plan.

We have discussed it. I guess if I try and I accept the fact that there is a financial constraint from the government on the amount of support, if it were a payment based on the NISA history, because NISA history is productivity—it's all commodities; it takes the whole farm into account—it would be completely green. It would cover all commodities, and I think it would be very acceptable to the farming community.

The problem is it would not be targeted in any way to those producers or commodities that really need it.

• 1005

For example, the cattle industry in 1999 is fairly healthy, cow-calf in particular. Those people, using the NISA history, would automatically get the money as well.

But I also think that if the government were to look at the net cost of that program... If that cattle producer is doing very well and somebody gives him a cheque, the government has this great way of taking it back with income tax. So the net cost to the government wouldn't be very much. I think if you look at the benefit of any type of payment, even if we could get the billions of dollars that would be required through a NISA flow-through, it would all end up in the economy. It would create or maintain jobs, versus the alternative. I think the net cost to the government would be very small compared to the social benefits, the economic boost that would be seen as the money... Farmers don't keep any. That's the problem. And this is already spent. It's needed. Yes, some of it would go to the banks. That keeps the economy rolling.

I don't know if that answers all your questions, but we favour something that is more generally available than something based on land.

Mr. Sinclair Harrison: I just wanted to add that in Saskatchewan we don't have as many acres covered by crop insurance as they do in Manitoba. It's not seen to be as rich or as good a program, and that's been one of our problems. The farmers in Saskatchewan have chosen to take up crop insurance on about 55% of the acres. So it leaves 45% unprotected. And when you're short of money, unfortunately one of the things you choose to get along without is crop insurance. People even go so far as to start cutting things like fire insurance. It's not a good management decision, but when you're short of money, you have to start prioritizing.

You talked about short-term and long-term problems and solutions. Certainly the long-term is important, but if you can't see your way by the short-term... A lot of farmers in Saskatchewan are in that situation. We're not bringing the youth back to the farm, to agriculture, and anybody knows that probably the biggest crisis of all is around who will be the farmers of the future. Whatever program we come up with, short-term and long-term, should keep that in mind—the question of who is going to produce our food in the next millennium.

[Translation]

Ms. Hélène Alarie: Can I add something? I am surprised that the percentage is so low for crop insurance in Saskatchewan. Is it because the crop insurance program is poorly suited to the needs or because the provincial government, through its agronomists, is not doing its work? I remember when there were crises in Quebec, and people who had not taken crop insurance did not receive subsidies because they were told that assistance had been put in place to protect them. I do not really understand your point of view and would like you to explain it to me.

[English]

Mr. Sinclair Harrison: We've been told over and over again that we should have crop insurance, but the coverage in a lot of cases is so low that people don't feel it is worth the investment. I guess if they were in a situation of having 20% return on their capital, like the railroads, and they had money to spend on insurance, it would perhaps be higher. But again, it's priorities, and they don't feel at the present time that crop insurance is a good investment. We have to, as part of the package, improve on that.

The Acting Chair (Mr. Larry McCormick): Thank you.

Yes.

Mr. Donald Dewar: Excuse me. I'm sorry. In Manitoba, we have 85% of the acres covered in crop insurance. Part of the reason is—and as president of KAP, I'd like to take some credit for that, because we work very closely with our crop insurance department making a better program—we do have a 50% coverage that's basic. It's included with no premium to the producer. We call that a disaster component of crop insurance. If you get only half or less of an average yield, that coverage is there free—or for an administration fee of, I think, 20¢ an acre. So it's a very minimal cost to get a 50% insurance. That has enticed people into it.

• 1010

The problem, as Sinc was referring to, is that people look at the dollar value, which is average production times market price, world price, and say “If I'm only going to get $70 an acre coverage and my premium is this much, I can't live on $70, so I might as well not buy any.” But with the 50% component in there... And we have an excellent database for dealing with any crop issues in Manitoba.

The Acting Chair (Mr. Larry McCormick): Thank you.

We'll move on to Ms. Ur, please.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

Thank you for your presentation. You may or may not know this, but I was a farmer in my previous life and also a nurse. Sometimes we get labelled as not caring; we're in Ottawa and we don't understand. Trust me, I'm a farmer; I've been through the highs and lows. Also in nursing, the fact of the matter is you don't have to die every death with a patient, but you still can be caring and understanding. So when I question you, keep that in mind. I'm not here to be antagonistic. I just want to know so that I can better understand the situation.

This morning I heard something, and I'm confused, so I'm going to ask you the question. We had officials here speaking to us about AIDA, and they were telling us the per-acreage payment was not a grain program. This morning I hear it is a grain program.

I'm going to throw a few questions at you, so maybe you can keep them in mind and respond to them at the end. That is one question I have.

Also, the crisis is probably the same out west, in the east, in Ontario, and in Quebec, but the fact of the matter is when you have mono-agriculture, as some people want to label it, southwestern Ontario may look as if they're not suffering as much, but I can tell you, if you're only in hogs, you're suffering the same as the grain farmer out west. So the similarities are there, but when you have a little bit of diversity, it offsets. We have the same action from southwestern Ontario. Because I've diversified, I'm penalized. So it's hard to justify some of their concerns as well.

My next question—and it's never been asked—is this. It was explained that 60% of the land is owned and 40% of the land is rented. We've not heard that before. Out of that, how much marginal land has been brought into production over the year? Has that been a factor in some of the problem? Have the input costs—say chemicals, fertilizers, or seed—also been a factor? And has the cancellation of the GRIP program been a factor in this situation?

We had interesting presenters this week. One presenter said the problem with agriculture is that we have too many acres and not enough people. That was a different slant. Then when we had the FCC and bankers in, they said we can divide agriculture approximately into thirds: 30% are doing quite well, the middle 30% will survive, and then there's the bottom 30%. My concern is the 30% we need to address on the bottom.

Maybe I can get a few answers to those questions and then get to ask the rest. I hope I'll get a second round.

Mr. Sinclair Harrison: On the AIDA, in Saskatchewan you always try to stack up a program to see if it's working, and one benchmark we used was northwest Saskatchewan, which had had very poor crops for a number of years. We felt one of the reasons AIDA came about was to try to address that very large area.

I don't know if you're familiar with the criteria for AIDA. If you take an average of three bad years, you have a bad average, and then you take 70% of that. So right off the bat, and before AIDA came in, we said it's not going to address the problem in northwest Saskatchewan, so it has a really big problem. It's turned out that there are other areas of the province it should have picked up, and it hasn't.

We haven't seen the numbers yet, but we understand that maybe it is addressing the hog industry better than the grains industry, because they did have some buoyant prices to bring their average up in previous years, and then it went into the tank. So it appears the formula has addressed the hog industry to more benefit than the grains industry. When you take averages, you can get into trouble.

• 1015

On marginal land, certainly we would suggest that there has been some marginal land put into production in Saskatchewan that perhaps shouldn't have been. And I think we're prepared to work on a set-aside program, or whatever, that's been suggested to get some of that land back into pasture.

On the one-third, one-third, one-third, I think that's pretty general. We suggest there's been quite a shake-out over the last ten years of our producers, and we feel we've lost a lot of what you might consider the low-end farmers. Certainly there are some who are doing well. In terms of off-farm income, you have a portion of Saskatchewan where farmers have oil wells on their farm and they get a payment for that oil well, which helps. It's just like an off-farm job but you don't have to work at it.

So certainly we have to take into consideration what the bankers are telling you. They know our accounts as well as we do, and we're going to be having some discussions with them. But when you take into consideration what they're saying, what the farm supply people are saying, what credit card people are telling us, that all those accounts are going up and we're headed for a crisis... I don't think we have to tell you that.

The Acting Chair (Mr. Larry McCormick): Yes, Mr. Holt.

Mr. Allan Holt: With your question about prairie acreage payment not being green, it's our understanding that because it's not commodity-specific it wouldn't be in any way market distorting, so it should be green.

As to your question about marginal land, I think back in the days of GRIP there was some marginal land in Alberta that was put into production that never should have been. However, because we have a very strong cattle industry in Alberta now, there's been a lot of marginal land taken out of grain production, and there's been a lot of very good grain-producing land that's been taken out of production as well.

We've seen the rental rates on cow-calf units, which means that for an individual who four to five years ago was paying $12 a unit, $12 per month for each cow-calf the land would carry, that has doubled to $24 an acre now.

So it's far more lucrative right now to seed your grain land down to grass. However, if we all did that, I'm sure you know what would happen to the price of grassland. So that is one option we do have in Alberta.

Input costs most certainly are a concern; 25% to 40% of our input costs are in grain transportation alone. We did reflect on the grain transportation issue, but we don't want to spend all morning discussing that one. So input costs are certainly there, and we would certainly encourage any reduction we might get in the fuel tax we pay to work our land.

Mr. Donald Dewar: If I might add to that, on the per acre payment, I agree with what Allan says, and, yes, Ontario would be included. I think the part of it that would really make it green is it would have be generally available to all producers, and we do have friends in Ontario who—

Mrs. Rose-Marie Ur: More friends.

Mr. Donald Dewar: The problem is the same. When the government looks at the averages, 50% of our supply management is in Quebec and Ontario, and supply management is doing okay and maybe we should have more of it.

Mrs. Rose-Marie Ur: That's music to my ears.

Mr. Donald Dewar: But if we had to do supply management in wheat, which 80% would we not produce?

The Chair: Thank you.

And thanks to Mr. McCormick for filling in while I was away. We'll now go to our five-minute rounds, starting with Mr. Casson.

Mr. Rick Casson (Lethbridge, Ref.): Thank you, Mr. Chairman.

Mr. Harrison, I have a question on your offer to administer the AIDA program through your rural municipal offices. In your estimation, can you do that without any additional cost with the staff you have presently, or how did you look at that?

Mr. Sinclair Harrison: It was the acreage payment, not the AIDA program, that we offered to administer. We have a database there that has every acre in it. The field sheets from assessments spell out what's cultivated and what isn't. Our administrators have taken zero increase in pay this year, and they say they will do this at no cost just to help out the rural economy.

Mr. Rick Casson: Good.

Mr. Holt, I'd like a a comment from you. I live in Picture Butte, which is right in the middle of the feedlot alley, and dozens and dozens of dairies and intensive livestock operations are there. However, when you get out of the irrigation area and into the dry land, we do realize there is a serious amount of hurt there because of what's happening with commodity prices. The changes that were made to FIDP this last round, with the extension of the years and things—have you analyzed that to see if it's going to be of any benefit or how it's going to shake out in the end?

• 1020

Mr. Allan Holt: I have talked to quite a few mixed farmers, or diversified farmers, and they think they will now qualify for a small payment under the new rules of FIDP, but it's still going to be very small. I have talked to a couple. One individual thought he would now qualify for $10,000, and the other... I believe his figure is $15,000. However, these are larger operations, ones that would gross close to $1 million and up, so it's not really a significant amount of money.

Mr. Rick Casson: Mr. Harrison, we hear of many different ways whereby we can look at this income crisis and try to help. Input cost is certainly one, and with the price of oil going up now it looks like that is going to be a tough one.

In terms of the European Union subsidies, we heard the other day it will be 10 years before there will be any help to the farmer on that, and now one of you just said the same thing.

The other thing we hear is value-added. A comment the other day from one of the witnesses was that the benefit to a farmer through the value-added industries is the fact that he can get off-farm income. I would have hoped the comment had been a little different, that possibly there'd be more return for the product produced. But how are we going to expand value-added in the grain sector when we have the Wheat Board in place, which seems a little bit inflexible in helping that out? Do you have a comment on that?

Mr. Sinclair Harrison: Both Keystone and ourselves have been in discussion with the Wheat Board and one new generation co-op in particular, on being flexible. We just came through a convention at SARM a week and a half ago when there was a resolution saying that policies have to be in place by the Canadian Wheat Board to accommodate new generation co-ops. I would suggest we're going to go back to the table with the Canadian Wheat Board. They are a relatively new board; they haven't been in place for a year. But you can only be new for so long, and you have to take the bull by the horns and start making decisions. We would suggest that this is the case with the Canadian Wheat Board. They have to start working with us, and there's going to have to be some changes.

We endorse what you say, that if the Canadian Wheat Board is going to remain our major marketing force, they're going to have to accommodate value-adding.

Mr. Rick Casson: Do I have time for another?

The Chair: Yes.

Mr. Rick Casson: Canada's position going into this next round of WTO talks is coming under a bit of fire internally from provincial agriculture ministers and from other countries. The provincial agriculture ministers are concerned that, once again, we're going to lean to protecting a certain sector of our agriculture industry to the detriment of another, that meaning the grain industry. Have you analyzed or had a chance to look in detail, maybe Mr. Dewar, at what our position is? Do you think it's presentable?

Mr. Donald Dewar: I think it's very presentable. We talk about in-quota access and zero tariffs in quota. We have 5% access; other countries aren't allowing access. If other countries would allow 5% in-quota access, our grains and oilseed exporters would be very much better off—if we could just get the 5%. I think if the world were at 5%—and this is a personal comment—we would then talk about 6% and 7%. I think Canada's prepared to do that, our Canadian producers. But why would we beat down the only profitable parts of our industry? We can't hurt grains and oilseeds any more. We've been beat.

In Manitoba we lost a very viable sugar industry through policies of the Government of Canada, and that could still be turned around before we lose the technology. The producers who are there have the experience and the ability and the technology. When the next generation takes over, if there is another generation, you'll lose that. The equipment's already gone, but they'll lose that, and then it's a much harder industry to try to build.

Mr. Rick Casson: Thank you.

The Chair: Thanks.

Mr. McCormick.

Mr. Larry McCormick: Thank you very much, Mr. Chair, and thanks to the witnesses for being here.

No matter how often we have witnesses and people of your calibre, we always hear something new and we learn more, and that's where we're at with this. I'm thinking about Keystone, Don, when you shared that farming should not be about survival—it certainly shouldn't. Of course, there's that interesting question that should be put to us: are we committed to agriculture? The trouble is, we're talking to the converted here, I believe. We all have to take it further than this.

• 1025

My colleague, Rose-Marie, touched on the issue of one-third, one-third, and one-third. It's especially interesting, as you say, that we've already lost a lot of the so-called bad operators, unfortunate situations, or whatever. We heard from the Royal Bank, which represented the economists and all banks fairly well, and gave us a lot of good figures. Farm Credit seemed to be in sync with that—one-third are doing okay or well. They can help one-third and will be able to continue to help.

On this one-third they can't help because they can't qualify for help—I know you addressed part of this, Mr. Harrison—I'm sure not all those within that one-third are on land that's questionable, marginal, or whatever. It's so serious. Can we afford to lose one-third of our producers?

These numbers coincide with what the new ministers said, when they were here on the Hill at this committee recently. I especially remember the new Minister of Agriculture, Wowchuk, from Manitoba. I suspect she was giving us the figures to the best of her ability. I don't think she was trying to be over-dramatic about it. I'm wondering here about the fact that the bottom one-third is alarming.

When we were at a fertilizer reception last night, it was interesting that business people from Ontario were giving me hell because we weren't doing a good enough job in the west. I was glad to hear that, and I was glad to see that support for the families, for the individuals, and for our country. But what percentage could this take away from the market if we had a transition program in a fair partnership? Mr. Harrison, did I miss something on how many people this might affect? I'm not quoting; I'm just looking for some help and education here.

Mr. Sinclair Harrison: I think it comes down to what we want. Theoretically, one person could farm Saskatchewan—one person, one company.

Mr. Larry McCormick: We don't want that either.

Mr. Sinclair Harrison: There could be one grain company. You could put one large terminal in the middle of Saskatchewan on one railroad, and we could haul all our grain.

What do we want? In rural Saskatchewan, you can hardly see the lights of your neighbours now. If that's what we want... But our forefathers came here to own land and carry on agriculture as families.

We're getting into a trap. Our lines of credit at the bank are at their limit, so you can't get any more money there. You go to a farm supply and they more or less let you sign your life over to them. So you can't pay your farm supplier and you can't pay your banker. You then become a tenant. That's not the Canada and the rural way of life most of us envision.

I think it's incumbent upon the federal government to help us through these difficult times. We have said that agriculture is cyclical and we wouldn't be farming if we weren't optimistic. There are a lot of excellent farmers in the bottom one-third, and to suggest that they have to go is not on.

Mr. Larry McCormick: I believe we will be scheduling witnesses here who represent suppliers, such as fuel companies, grain companies, fertilizer companies and others. That's where there is a lot of debt that will need to be serviced some before next spring, I expect. That'll be very important.

Mr. Sinclair Harrison: There are very high interest rates. The grain companies that are supplying inputs—a lot of them came due the end of October. Now the 24% interest clock is starting to tick.

• 1030

Mr. Larry McCormick: As I talk to people across this country—and I'm a person who hangs out on main street of small town Canada, from coast to coast, and have for the last 40 years—the only way I can tell your story to build support, not just for the immediate future but ongoing, is to try to get through to them that the price of grains, wheat, and barley is less than it was in the dirty thirties. You hope, somehow or other, you can paint this picture. I'm not so sure the people in the metro areas are... The government will need their support sooner or later on this.

The Chair: Okay, Larry.

We'll hear from Mr. Holt on that and then we'll move on.

Mr. Allan Holt: I think maybe a closer look should be taken at the one-third who are supposedly doing so well. We are a little bit unique in our business with agriculture in that we can live off our depreciation for quite a few years. A $200,000 combine depreciates at 20% a year, so you don't necessarily have to replace it.

I farm a relatively small acreage of 800 acres, so I can farm that with my $50,000 combine. But my neighbours who are farming 3,000 acres and 4,000 acres don't have that opportunity. They have to go out and buy a new combine, or a close-to-new one, for over $200,000 every three or four years. So I think you should take a look at that.

You were quite correct when you mentioned that grain is worth less now, in real dollars, than it was in the 1930s. The price is also quite a bit lower than it was in 1974.

I dug out two documents just recently—I did an interview with a TV station. In 1974, I had a grain ticket for barley of $1.98 a bushel. Today it's $1.90 a bushel. I also had a bill of sale for an 80-horsepower tractor with the cab and a loader, which was purchased at the same time for $13,700. So it took less than 7,000 bushels of barley to replace what's now considered a very small tractor in 1974. Today it takes 40,000 to 50,000 bushels to replace the same little tractor. Of course, nobody can farm with an 80-horsepower tractor any more. It's just not economically feasible.

The Chair: It was pointed out here earlier this week by a university professor from Saskatchewan that back in the 1960s, farmers were operating on about a 30% margin and now they're operating on about a 5% margin. Their sustainability, to carry them through a down period, is just so weak.

The other thing is, when we talk about the farm community in a general way, breaking it down into three groups, I don't think anyone is suggesting the three groups are equal in size. If there is a group that is doing fairly well, I don't know whether that's 20% of the population, 10% of the farm population, or 40%. This general description may be a little misleading, but I don't think anyone is implying that these groups are all equal in size.

We're going to Madame Alarie.

[Translation]

Ms. Hélène Alarie: The last two comments or questions from Ms. Ur and Mr. McCormick I find very interesting, because I do not claim to be familiar with agriculture in the west. Even though I have been to Western Canada a number of times, I am not familiar with western agriculture. The trip will therefore be very useful to me.

My question concerns productivity. Are there analyses—I would like to have numbers—that provide us with somewhat more information on productivity. We have spoken about the three thirds. Is there a third that does not meet the average level of productivity? I do not know.

There is a great deal of rented land. According to the figures you mentioned a while ago, it constitutes 40%. Who rents the land? I would like to link this to productivity. Are those who rent land productive, or are they people who lag behind, who can't make ends meet and who expect still more?

Are there fallow land programs in the west? Who is in charge of agriculture? Is it in the hands of big companies or individuals? Are they family farms? How do things work there generally?

There is talk of destructuring the rural environment. It is true that once 30 or 40% of people in a rural community are in trouble, the community will almost certainly disappear, or at least undergo significant changes. On the other hand, if is major companies that are in trouble, it does not have the same impact on the rural community.

I would like, before going to see you, to have an overview of your situation. I will then speak to you about societal choices.

• 1035

[English]

Mr. Sinclair Harrison: I don't think we can say big farms are in trouble or big farms are doing well. There are big farmers who are seen as doing well and there are big farmers in great trouble. Some big farmers are having auction sales. So I don't think we can say one category of farms is in trouble.

Who is renting the land? There are small farmers renting land, trying to get started in agriculture. Medium-sized farmers are renting more land because they can't afford to purchase more land. Certainly there are large farmers who own half their land and rent half their land.

It makes it complex for all of us to try to say these are the people who are in trouble, because farms of all sizes are in trouble. I'm not trying to make it more complex, but there's no easy solution. If there were one particular group of farmers that seemed to be having more difficulty than others, it would be easy to target that group and say, here's the solution.

I guess we go back to the subsidies that are being paid in other countries. They are affecting every size of farmer, whether we own or rent our land. We just don't have the resources to take on the treasuries of other countries. Our federal government says they don't have the treasury, but they seem to think we have the treasury as farmers, and we don't. We could produce on a level playing field with anybody else, but certainly not in the arena we're in today.

Mr. Donald Dewar: You ask, who are the farmers? We are the farmers. I would say there are no big companies. There are family farms that have incorporated for transitional reasons, so it's easier to pass the farm on. I hear the words “corporate farms”, but in our area there are corporations owned by families that are farming corporations. I think that's true all across Canada. Family farms are trying to make a go of it.

We rent about 40% of our land from families who used to farm it. With the next generation of those families, I don't know where the landowners will go. Right now they live on it or close to it, and that land may be sold. We bought some land recently that we'd been farming for 35 years. The owner wanted to sell it. But people, families, are farming the land.

Who's in trouble? It's more reflective of the circumstances and the weather. We grow 12 different crops on our farm. We didn't qualify for AIDA, and I'm glad of that. We didn't suffer the loss of income some people did, for whatever reasons.

The Chair: We'll just take a short answer from Mr. Holt.

Mr. Allan Holt: I don't think many people realize that these foreign subsidies go far beyond affecting the price of our grains, especially in central Alberta. We see a lot of Europeans moving into central Alberta, and in the last four years the price of our land has doubled.

They're selling their land in Europe for $30,000 an acre and buying in Alberta for $1,500 an acre, and it's certainly not because their land is 20 times more productive than ours. It's because of the subsidies they receive. They can buy land for $30,000 and pay it off over many years. Our young farmers—and I have two young sons myself—can hardly afford to buy any more land because they've driven the price almost out of sight.

The Chair: Thank you.

When Professor Furtan was here earlier this week, I liked his description of a family farm. It had nothing to do with the size of it or whether it was incorporated or not; it had to do with who did the work on the farm. He said a family farm was one where the family did most of the work. He didn't see much change in the foreseeable future or an incursion of large corporate farming.

Howard.

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

I'd like you to comment on that definition of farmer, if you'd like. Certainly there has to be an element of the gross dollars you earn farming.

• 1040

I'll just make a comment here, seeing as how my friend, Larry McCormick, brought it up. It is my understanding the fertilizer people were supposed to be here today. That chair is empty, and I understand they declined to attend. They would have been a great witness to have here to describe that very aspect of their carrying some of the debt for farmers and the application of fertilizers.

The Chair: By the way, Mr. Hilstrom, they're going to be here next week.

Mr. Howard Hilstrom: Oh, are they? I just thought they were in town today.

You have given us an awful lot of information to go over here.

As you say, we're studying the issue of the effectiveness of the safety net programs, and it's been brought up several times that Ontario has some of the same concerns. Here again, I would hope that we're going to be hearing from some Ontario farmers at this committee meeting or during our travels, because I've also met with farmers, especially the cash crop farmers from Ontario, who are having some of the same problems as western farmers are. So your suggestion that our committee needs to hear from Ontario farmers is also excellent.

The question of provincial differences in these programs is one of great note really. Madame Alarie said Quebec would love to have NISA. The fact is that Quebec decided they would just take the money and use it for their own subsidy programs for farming as opposed to using NISA.

I find I spend a lot of time here in Ottawa correcting inaccurate general statements that reflect poorly and give a lot of people the impression that farmers are, for instance, getting a lot of help that they're in fact not.

You could perhaps help us just a little bit here in regard to my first question. What do you believe the perception of the city people is towards farmers and the amount of help they're getting and towards all the statements that have been made in the press over this issue?

I refer that to each one of you for a comment.

Mr. Donald Dewar: I think the urban community is getting better informed. Perhaps I'll take this opportunity to say that I hope you start to see a lot of green ribbons in the cities and towns, particularly in Ottawa.

I received this in Fargo. It was handed out by a religious organization that was suggesting you wear a green ribbon to signify hope for the rural family farm. The family farm, as we talked about, comprises families on the farms who are suffering because of natural disasters. North Dakota did have the flooding as well, and they refer to their farm bill. So they ask people to wear the ribbon to signify support for the agriculture community.

We asked if we could import the program; they assured us it was okay. So we're hoping you'll see some support. I would ask you to go out and buy a little green ribbon, and then you can tell people why you have it pinned on—and they suggest over your heart.

Mr. Allan Holt: We certainly have a concern as well in Alberta about educating our urban counterparts. As the farms get bigger and people move off the farm, people are more disconnected from knowing what actually happens in agriculture. Most people still have an uncle or somebody in their family who used to be a farmer. Perhaps their grandfather farmed. It's strictly a matter of education, and I am encouraged that we are to some extent educating them due to the very good media coverage this crisis has been causing. It is a matter of education. They see the headlines that farmers get $900 million from the federal government, and they just have no perception of the fact that, as I mentioned earlier, if it all went to the prairie grain farmers, it would pay us enough to cultivate that land twice.

Mr. Howard Hilstrom: Most of the city people I've spoken to feel that the farms have $1.6 billion plus another $170 million in their pockets as of right now. Do you not find that's what they definitely think?

• 1045

Mr. Allan Holt: Yes, I agree with that.

Mr. Howard Hilstrom: As was said in the west, $200 million has gone out there. I think Don Dewar mentioned that.

Sinclair, can you comment?

Mr. Sinclair Harrison: Certainly, I agree we have to do a better job of educating, and supply management perhaps has the resources to advertise their products more than the grains industry has.

CFA has an office here. You people help us. Our own organization at the convention a week and a half ago voted to put a person in Ottawa in the coming months to work with the politicians to help represent Saskatchewan. Perhaps it's a bit of a political backlash. As you know, we don't have many people on the government side of the House.

With all due respect to you people, the more people we can put in Ottawa to work with the urban community and with the politicians, we feel will only help the prairie region.

The Chair: Thank you, Mr. Harrison. Can I invite you to add to that government representation at the next election?

Madam Ur.

Mrs. Rose-Marie Ur: Just because I'm from Ontario doesn't mean I don't care or have any respect for the rest of Canada. I want to make that quite clear. It doesn't matter if I live in Ontario; I still care about the rest of Canada.

I didn't get a response on the impact of GRIP from any one of you gentlemen. On the 24% interest on input costs from grain suppliers, they must be speaking to the bankers, because that's a heck of a lot of interest, if that's what you're saying. There's a problem there as well.

Each one of you gentlemen has had the opportunity to be appointed as a negotiator for WTO. Tell me how you would go to the WTO hearings and attack the U.S. and EU on subsidies. You're the government now. What are you going to tell them?

Mr. Allan Holt: I have what I think is a good answer for that. I did have an opportunity to meet with Franz Fischler a year ago last May. He's the European Commissioner of Agriculture, which is similar to our federal Minister of Agriculture. Because of the size of agriculture in the EU, you can imagine how influential he is. My comment to him was that we realize that the Europeans are not about to stop subsidizing their farmers. They had to virtually starve during the war. They know what it's like to go hungry. In Canada we don't.

So my recommendation to him was to continue to subsidize their farmers at whatever dollar amount they like, but don't do it in a way that's world-trade distorting. It's very easy for them to do that. They can give them all the money they want, but not in a manner that drives down the price of the commodities on the world market.

Mrs. Rose-Marie Ur: How would they do that?

Mr. Donald Dewar: They have a term called “multi-functionality”, that is, the farmer is there to contribute to the community, to rural life. If the average herd size is two for milk cows, for example—and I forget which country that is—there's more to it, and they said they want to support this to keep people on the farms for the rural community, etc. They will do that as long as there's no export. I think it's export subsidies we really have to focus on.

At the next round we have to talk about green definitions so that perhaps the three out of five years needs to change, for example. To have a green program, the margin has to be based on the three out of five years. That's one of the rules.

We talk about definitions of the subsidies rather than the subsidy levels. I would like to get into the capping... even domestic support, because we have found that domestic support, green support, still affects what producers do. It affects production. It ends up getting virtually dumped onto the market. We've gone from a 20-day supply of food to a 50-day supply of food, so that lowers prices even more. There is a 50-day supply of food, and the prices are where they are.

Mr. Sinclair Harrison: Certainly we don't want to leave your question on GRIP unanswered, and I think Don mentioned it briefly. We do have production insurance, which is not revenue insurance. GRIP was an attempt at revenue insurance. It certainly had its warts, but if people had the opportunity to take out that kind of insurance now, in light of what we've been through over the last few years, I think we should take a long hard look at it.

• 1050

Don sits on the national safety nets advisory committee and he's much better in tune with what's being discussed there.

Mr. Donald Dewar: Actually, Ontario still has revenue service.

Mrs. Rose-Marie Ur: Yes, and we want to keep it.

Mr. Donald Dewar: And I hope you can.

Again, because of the trade rules, now that we let it go in western Canada, with the cooperation of our governments we have lost GRIP. We did not want to lose it and we can't bring it back. Even though it's an old program, it would be brought back and reinstated as a new program. It's very production distorting. It's commodity specific. It's all the things that make it an amber program, and because we export grains and oilseeds into the United States, it would just close the border on us.

Mrs. Rose-Marie Ur: What do you mean by government interference? Provincial?

Mr. Donald Dewar: Provincial and federal cooperation, budget constraints—in 1991, the year GRIP first kicked in, we had minus $35 million of market revenue in Manitoba. Program payments brought it up to $140 million. In 1992 we had program payments of $273 million on top of a small negative income. Then in 1993 we had $285 million. Those were primarily GRIP payments, revenue insurance. Yes, they had a major effect and they allowed farmers to stay on the farm, but it did have some moral hazards. And that's the problem with bringing it in now. It becomes very trade distorting in the new rules regime we have.

The Chair: Thank you.

Just before we go to Mr. Ritz, Mr. Harrison mentioned, Mr. Dewar, that you're on the safety nets advisory committee. Let me ask you this question.

Mr. McCormick was saying earlier that you're talking to the converted who sit on this committee, and I think that's true. All of us agree on the importance of rural Canada in maintaining a healthy rural Canada, and perhaps in particular in maintaining a very healthy and vibrant agricultural sector, which, to some extent anyway, we don't have at the moment.

My question really is a more philosophical one. If all governments have to watch over rural Canada and agriculture, but at the same time we have to recognize that farming is a business and that this stake can go too far with suffocating regulation, subsidy, or whatever, where does the interface come between the recognition of farming as a business, on one side, and government doing what it has to do to maintain a healthy agricultural community? Where is that interfaced? For example, do we draw the line at guaranteeing or ensuring that farmers get at least a return of their production costs, or is it something above that line?

I just choose that as an illustration, Mr. Dewar. Do we choose something above that line, below that line? Have you come to a firm conclusion on that, Don?

Mr. Donald Dewar: I don't know whether it's the cause of the problem, but the low margin, the drop from 30% in the margins... I normally carry it with me on a graph.

The Chair: You're citing the AIDA example?

Mr. Donald Dewar: No, the margins were 30% 20 or 30 years ago. In fact, in 1971 or 1972 the graph had it at almost 50%. You could suffer a 50% loss in your production or price and still break even. We can't do that any more. So we need safety nets to mitigate that risk. It's so narrow and we're so capital intensive. We spent $3 billion a year in Manitoba on inputs, and this year we're going to have $48 million of net income on inputs.

Do the math. Do the return. And that's just on operating income. That's not the investment we have tied up in land and equipment.

In agriculture we're price-takers. We have to take the world price. We have to decide at times like this whether we want it to continue. Is there enough of a contribution to the economy in the good times to level it out?

• 1055

How does it interface? I think that's the question the government has to decide. At what level? Is it 30% that are going to go or is it 5%? We've had an evolution. Some people will say that the towns were every 10 miles apart because that was how far you could haul a load of grain with a horse. Now it's the truck.

The Chair: I want to go to Mr. Ritz, but I want to say that I think all governments wrestle with that question. I'm just really wondering whether you have found an answer to that question, whether, for example, the state, either through provincial governments, the federal government or both, should promise—if that's the word—to the farm community that you will at least get your production costs back. For example, in the past, deficiency payments have been based on that: here's the cost of production and here's what you're being paid, and what you're paid is less than your cost, so we'll make up the difference. Do we make that a permanent feature of safety nets?

Mr. Donald Dewar: I don't think so, because that's very production distorting. I look at it—

The Chair: I'm not promoting it. I'm just asking.

Mr. Donald Dewar: No, but we don't go there with that. We look more at whether we should find a way of insuring—maybe that's the word—a whole farm margin.

The Chair: What would that be?

Mr. Donald Dewar: Well, so that I could choose... if I can survive a 30% cut in my margin, I would pick a 70% level. If I want to buy a higher margin of insurance to mitigate the risk, depending on my debt load, etc... that's just a concept.

There's something I did want to mention—I think Rose-Marie, it was your question—about the productivity of the land. We do have a proposal at the national safety net advisory committee for a set-aside, because there is some land out there. Producers could decide which land to take out of production; it would be part of a package. There is some less productive land out there.

The Chair: Thank you.

Mr. Ritz, sorry to hold you up.

Mr. Gerry Ritz (Battlefords—Lloydminster, Ref.): Thank you, Mr. Chairman.

Gentlemen, thank you for your very succinct offerings here today. You certainly have a handle on what's wrong out there and on some of the pieces of the puzzle needed to fix it.

Mr. Dewar, I really like the last line of your final paragraph, where you talk about reintroducing tall grass and buffalo back onto the prairie. We could probably get a huge heritage grant. Everybody could do that. It'd be an excellent idea.

Part of the problem, as I see it with the farmers in my area—and, of course, that's my background—is that a lot of the really tough decisions aren't being made by the primary producers. They're being foisted on us by outside influences on both the input and the selling sides of our products. We're controlled at both ends. That's part of the problem we're in.

I find farmers very fragmented: if you put five farmers in a room, you're going to get six opinions. There are too many groups out there representing too few farmers. You folks, in your capacities, probably represent a good majority of the farmers out there in the west, so you have a better handle on the issues.

One of the comments made earlier was that there was a study done that showed 30% of the farmers in Manitoba will be gone with this crisis. Has that study gone any further, as to going past the farm gate, as to suppliers, and as to small-town Manitoba and Saskatchewan? Has there been any study done? I know we're seeing that hurt show up in my small communities. The letters I'm getting are not all from farmers. Of course the suppliers, the fertilizer-chemical-fuel guys, are there, and the farm dealerships are there. They're not having good years. Everybody's hanging on.

I don't think we've seen the bottom of the well yet. I think that this year coming... and that was touched on earlier with the NISA accounts being depleted. There's no money left. Farmers are farming on their equity and eating that up very quickly. Banks have been quite friendly in terming things out longer, in interest-only payments and so on.

I don't take a lot of consolation in Mr. Vanclief's change of attitude. We had promises last Christmas. He's the grinch who stole that one. We're up to the second Christmas now. Is it going to happen again? What do we do to keep the pressure up should they fall short of the mark in getting cash out for Christmas of this year?

I'll start with that. Your comments on that, please.

Mr. Donald Dewar: I think the problem is well beyond the farm gate. We first met with the agriculture minister, Lyle Vanclief, two years ago at Keystone to tell him we saw this coming: the production, the prices that are out there, and the forecast.

As I said, this is the second time I'm before the committee to raise the issue. I think the awareness is there. I think it's incumbent upon the government to make the decision. That's why I concluded with that line about tall grass and buffalo. If we can't sustain the communities, it's going to go. We're going to lose production. People are just going to say that if you have a large farm and more acres, it just gives you an opportunity to lose more money. People are going to stop expanding and say, that's it, we'll shut her down.

• 1100

Mr. Gerry Ritz: So there's too much—

Mr. Donald Dewar: Then you'll see the economy of the whole country affected because we have less to export, less production, and fewer jobs, all these things. The government has to look at this and ask, what do we want to do?

Mr. Gerry Ritz: We were told that AIDA was two and a half years in development—and this is what we got.

Mr. Donald Dewar: AIDA was copied from FIDP in Alberta. FIDP was built to get money to the cattle industry fast, and it did. This year, the Alberta government recognized that it didn't address the grains and oilseeds sector and added another $100 million to it in an attempt to fix some of the problems in grains and oilseeds. I think that's a pretty clear message that AIDA is missing the sector. That's clearly what we've been saying right along: grains and oilseeds are missed in AIDA.

Mr. Gerry Ritz: And a lot of the help is just a nick too late. The damage is done.

Mr. Donald Dewar: The other problem is that the full program hasn't been paid out. They assure us that 1998 will be finished in another month, but...

Mr. Gerry Ritz: Yes.

Mr. Sinclair Harrison: I just want to point out that it was our desire when we came here a month ago to get money out before Christmas. Administratively, we know that's not going to happen. There was some suggestion that the Province of Saskatchewan would take their AIDA money, their contribution, and do something different with it. To do that in the last month of a two-year program... I'm not sure that another change to that already flawed program is the right way to go.

On Monday there will be a meeting of the coalition that came to Ottawa. I think the conclusion of that group is going to be to let AIDA run its course.

When Mr. Vanclief was out west he did admit that it was an administrative nightmare.

Mr. Gerry Ritz: Yes.

Mr. Sinclair Harrison: That was the first time we'd heard that.

That doesn't mean that the problem has gone away. What we're shooting for now, I guess, is that if the federal budget is in February, as it traditionally is, that's our next window of opportunity for money. Collectively we would agree, I think, that as much as we need the money tomorrow, as long as the machinery is put in place for when the federal budget does come down and there's money there, money before seeding, a bankable program... we do support a long-range program, but to get the crop in the ground this spring there has to be bridge financing between where we are today and a long-range program. We need it as quickly as possible in the new millennium.

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

We can go to Mr. Hilstrom, but maybe I can just use 30 seconds to remind ourselves and the witnesses that there was a special committee of the Senate established back in 1960, almost 40 years ago, to look at the farm crisis of that time. That committee made a number of recommendations, but I'd like to bring to your attention the one “whereas” that led to a number of recommendations. Let me read to you the “whereas”:

Whereas there is a need of elimination of problem areas in Canada where farm businesses are small, productivity low and incomes inadequate for family requirements:

One could say that perhaps not too many things have changed in the last 40 years. I don't say that with any joy.

Right, Mr. Holt?

Mr. Allan Holt: I would disagree with that.

The Chair: Would you?

Mr. Allan Holt: The small inefficient farmers have gone by the wayside, most of them, I would think, in the last five years. The problem now is that we have very large and very efficient farmers, particularly in the grain sector, who, through no fault of their own, are unable to meet their expenses.

Granted, 40 years ago there was a completely different picture out there, where we almost had to have a farmer on every quarter section of land. I don't know what the average is now. I wouldn't think we have one farmer for every ten quarter sections of land in Alberta.

We have evolved. We have greatly improved our efficiencies. Those that have not done that are not with us today. There are still some small farmers who, through their own choice, are small and inefficient. They might only farm a half section of land, and they're quite prepared... they are hobby farmers, by their own definition. Those farmers should not be included with the large efficient ones when you're making any decisions.

The Chair: Thank you.

Mr. Hilstrom.

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

• 1105

The legitimate criticism of the agriculture minister and evaluation of his performance is exactly what you get when you're elected as a government. That's part of the game.

I quote from the agriculture minister's speech on November 18 at the SaskPool meeting:

I told them that I want all of the cheques out before Christmas, and even that, I know, is too late.

Of course, he's referring to the previous Christmas. He goes on to say:

I've told them repeatedly—I told them yesterday, and I will be telling them again tomorrow, that they must—and there is no excuse to do anything but—assure me and you that this happens, and that I want daily updates in order to monitor that action.

Now, I'll follow up on the daily updates, but Sinclair, you don't believe those cheques are going to all be out before Christmas, that all that AIDA money is going to be in farmers' hands in Saskatchewan before Christmas. Is that what I got from your comment?

Mr. Sinclair Harrison: Well, it can't be. As I understand AIDA, most of the final application forms aren't going to go in until your 1999 income tax, which isn't until April. There's an interim application where you can get an advance on your 1999, but we're not—

The Chair: We're talking about 1998, though, aren't we, Mr. Harrison?

Mr. Sinclair Harrison: Well, the question—

Mr. Howard Hilstrom: Yes, the 1998 money too.

Mr. Dewar.

Mr. Donald Dewar: The minister, I believe, was referring to getting the 1998 year cleaned up.

Mr. Howard Hilstrom: Yes.

Mr. Donald Dewar: From the information we've had—we've been getting updates regularly, because I'm on the national committee—part of the problem is that the rules have kept changing. That's an administrative nightmare. The administration has to go back and reprogram. I think we accept that when you do those kinds of things. But the mechanism should be in place now so that they can be done. As I understand it, they've really increased the pace of writing cheques in the last week. I think those comments maybe have spurred them on a little.

Mr. Howard Hilstrom: I just know that when you go back and review submissions that have already been made and recalculate to determine what effect the negative margin has on it... what we've seen, of course, is what a boondoggle the administration is that the minister refers to. We had to have farmers brought in to the people administering this program and making the decisions, handling the individual case accounts, to explain what an open cow was and what farm terminology actually was.

That's a fact of life, because the farmers told me. An accountant up in Asham, Manitoba told me that. He's got the evidence right in his pocket. That's why I question whether or not even 1998 is going to be cleared up by Christmas.

Part of the reason I dwell on this is, as I say, legitimate criticism of the minister. We've had false hopes given out since last December. There was to be a bankable program by December 1998, and that bankable program did not happen. We're still talking about trying to make sure it's bankable by December 1999.

It's this confusion and the inaccuracies that are really hurting the individual farmer who wants to see some hope on the horizon that he's going to have some help. That's what I get.

Is that delegation that came down from the premiers still a group, and are they still taking action in regard to this issue?

Mr. Sinclair Harrison: The meeting I referred to on Monday is that exact group in Saskatchewan. I don't know about Manitoba, if they're still meeting, but we meet on a regular basis. The group is still together. The opposition parties are there. And we may come back to Ottawa in January, who knows.

Mr. Howard Hilstrom: Do I have any more time?

The Chair: Yes.

Mr. Howard Hilstrom: Okay, just one last little question here.

We talked earlier on about value-added. I don't know that the government's actually telling each farmer they should be involved in value-added. I think the issue is if a farmer does have an opportunity to value add, he should be able to avail himself of that. It's very clear that we have to have some legislative changes to ensure that each farmer is able to avail himself of that opportunity to value add on his own, or in conjunction with a bunch of neighbours, get together and value add on their own. At the present time the Canadian Wheat Board legislation prohibits that, and we see that with the group of farmers that want to do some further processing in regard to durum, or at least make the attempt.

So my question to each of you, and I'd like each of you to answer this, is this. Should the government not pass legislation that makes participation in the Canadian Wheat Board voluntary, so that's it's up to each farm unit to decide whether to market through the Wheat Board or not? I'd like your stand on that, because that is one way, through marketing, that farmers are able to increase their income. Without getting into the whole debate of the Wheat Board, just your initial perceptions, would that be an advantage or a disadvantage?

• 1110

Mr. Donald Dewar: It's pretty hard to answer the question without getting into the debate of the Wheat Board, because that's where you're trying to lead it. Our producers, our membership, clearly say no. It also clearly says that if... and it doesn't require any legislation; it requires the board of directors of the Canadian Wheat Board to make a decision that will address new generation co-ops. Our policy is that the new generation co-ops should be able to operate outside of the Canadian Wheat Board pool.

Mr. Howard Hilstrom: Okay.

Mr. Allan Holt: Well, we have a dual market for barley, as you all know, and it's very important to the economy of Alberta with our strong cattle industry.

Mr. Howard Hilstrom: The export barley.

Mr. Allan Holt: With the dual market you can market barley within Canada on your own, but to export it out of Canada you have to go through the Wheat Board. We would certainly support that with a wheat dual market, which would include the prairie pasta producers.

But we have a newly elected Wheat Board—they haven't been in for a year yet. They've been sidetracked to a very great extent by this whole transportation and grain-handling issue. They were elected by the producers, they're going to have to work for the producers, and they're going to have to answer to us to get re-elected, and we're quite prepared to put our confidence in any decisions that board of directors makes.

The Chair: Mr. Harrison.

Mr. Sinclair Harrison: Well, traditionally we've backed the Wheat Board. We had a resolution passed at our convention a couple of weeks ago instructing us to work with prairie pasta, and for the Canadian Wheat Board to come up with an acceptable policy. We and KAP have done as much as we possibly could before that point. This resolution says to us that if the only acceptable policy out there is an exemption, I guess that's what we have to settle for. So we will be going back to the table, and that will apply to all new generation crops, not just prairie pasta. They seem to be in the headlines right now.

Mr. Howard Hilstrom: Yes, that's just an example.

Mr. Sinclair Harrison: And it takes some money to get into value-added. We don't have any high-risk capital in our jeans right now, and there are going to be some mistakes made. I think the program Don was talking about in the States put some money into the jeans of the farmers, and let them decide what value-added they wanted to get into. That's the route to go.

The Chair: Thank you.

Mr. Borotsik and then Madame Alarie. We're going to take this until 11.30.

Mr. Rick Borotsik: Thank you, Mr. Chairman, and again I apologize for my absence. I don't know what Sinclair said to you, Don, to have you move over to that side, but it must have been something—

Mr. Donald Dewar: The translation didn't work.

Mr. Rick Borotsik: Oh sure. Yes, I'd stick to that story.

Mr. Sinclair Harrison: He didn't like being in the middle.

Mr. Rick Borotsik: He wanted to be on the left?

Mr. Holt, when I came in you'd made a comment about the smaller farms. In fact, I think you'd referred to a half section, that some of them had farmed a half section in earlier years and were viable, and now they aren't. You also said at that time that they should not be included when making decisions. I'd like you to expand on that, and I'll tell you why.

I just read a letter late last night in my office from a farmer... an older couple who does 320 acres, which is a half-section. They showed me all of the inputs and receipts off their land, and they lost, I think, somewhere in the neighbourhood of about $8,000 or $9,000 on that half-section. It's their total livelihood; they do not have any off-farm income. And I feel for them. They're older, and they obviously didn't expand when others expanded. Are you saying that type of operation should not be included when decisions are being made as to whether there should be a payment, whether it be an acreage payment or an AIDA payment?

Mr. Allan Holt: No, not by any means. If I could clarify, these people should be subject to just as much per acre, per bushel, or whatever the decision may be. They should get an equal amount per unit of production. But when you're assessing the overall economy of grain growing on the prairies, these people's cost of production is considerably higher. It could be two to three times per unit higher than that of an individual who farms 2,000 or 3,000 acres, which is about close to average.

Mr. Rick Borotsik: As clarification, though, they should be included in there.

Mr. Allan Holt: Most certainly.

Mr. Rick Borotsik: I'm glad you clarified that, because you did say that they shouldn't be included when those decisions were being made. I just wanted to clarify that, because there are some of those producers—not a lot left, but there are some.

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These particular examples—which I have in a letter, by the way—do not have any on-farm income. They never have. Years ago, the half-section was viable for them. Now, in your opinion, it's not viable.

Mr. Allan Holt: Yes, and I really have my eyes open.

I would like to tell you this little personal anecdote. Last Sunday I went to a family birthday party. I have a brother-in-law who farms 3,500 acres, feeds 1,500 hogs, and turns that barn over three times a year. My sister is a school teacher at the top of the pay scale. Everybody thinks he's doing just great. He gets 25% above the average yields, but she told me he spends many nights sitting at the table at 3 a.m. trying to figure out how to pay his bills.

Mr. Rick Borotsik: I have one other question if I can, Mr. Chairman.

We talk about new generation co-ops, and I think it's rather appropriate. Before I went to committee this morning, I got a call about another example. Don, you'll be aware of the river seed cleaning operation that we have just north of my constituency. It's not operational now, but there's a potential there for a buyer. It's a cooperative, as we're well aware. It has always been a cooperative and it's to remain a cooperative. They want to get into the malting industry, but as a new generation co-op, they can't at that point in time buy product directly to the operation.

Either you or Sinc said both you and Manitoba KAP are trying to get the Canadian Wheat Board to take off the blinders, I suspect, and to try to allow those cooperatives to be able to operate in a different fashion than the one in which they are operating right now. Can you tell me just how successful you've been so far, and how successful you think you're going to be in the not too distant future? Quite frankly, this is an operation that will be put into scrap within the next couple of weeks if we cannot get the Canadian Wheat Board to make some adjustments to their policies—and you know the operation I'm talking about.

Mr. Donald Dewar: I think Sinc referred to it. We volunteered ourselves to try to chair meetings to bring them to the table. We were not mediating per se. We've talked to the Wheat Board. Maybe you weren't in the room, but I said the policy of Keystone is that new generation co-ops should be able to operate outside of the Canadian Wheat Board pool.

Mr. Rick Borotsik: If you can get that policy put into place by the Canadian Wheat Board within the next two weeks, we'll be able to save an industry just south of you. Can you do that within two weeks?

Mr. Donald Dewar: You know the board.

Mr. Rick Borotsik: No, I'm asking you. You know the board. Can you do that?

Mr. Donald Dewar: We can't, I can't, and you can't. Only the board can do that. We will be encouraging the board to make decisions.

Mr. Rick Borotsik: Will you help me when I ask you to make that phone call to the board?

Mr. Donald Dewar: Certainly.

Mr. Rick Borotsik: Thank you.

Mr. Sinclair Harrison: I'm not sure if you were here, Rick, but as a result of the resolution passed at our convention, a new generation co-op is coming into our board meeting in mid-December. It's outside the two weeks, but I think we're committed to go back to the board saying we still don't have an acceptable pricing policy and that we have to redo it.

Just in answer to your question to Mr. Holt about the smaller farms, we talked about a land-based payment and we talked about an average payment of $21 across the board. Something else we've explored is the idea that we'd also entertain a graduated scale of, say, on the first 1,000 acres, $30 an acre, $20 an acre, and then $10 an acre. The theory behind that is that it takes a basic amount of money to run a household. Whether you have 500 acres, 1,000, or 5,000, there are some basic expenses that are in every operation regardless of size. I think there's some justification for perhaps taking that basic unit, whether it's 500 acres or 1,000 acres, maybe bumping it up a little higher, and giving the 5,000- or 6,000-acre farmer a few dollars less on those acres.

Mr. Donald Dewar: Just a little further to the farm size and support, this is an industry problem. No matter where you are in the industry, you need support. If you're going to pick and choose—we used the 30% number, but maybe it's a different number—then you're looking at the social aspects of the program and you're prepared to do that on a scaled-in process per acre or through eligible net sales.

This is an industry problem. The whole industry is suffering the low prices. I think we have to deal with that part of it, and the social aspect is another. Look at varying on size or something because of that part of it.

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On the so-called 30% at the top, I think it's foolhardy to say they don't need help. When the net farm income is one-seventh of what it was—I have the five-year average—the industry needs help.

[Translation]

The Chair: Ms. Alarie.

Ms. Hélène Alarie: Precisely, I want to talk about this social problem. In Quebec, we decided to keep only two plans, crop insurance and stabilization insurance based on the cost of production. But these plans cost the whole population enormous amounts of money.

Three years ago, some $350 million were paid out, and this year, the total is over $700 million. The Department of Agriculture's budget is approximately $500 million. It can thus be seen that society, as it were, decided to save its farms. I am paying for that and everyone is paying for that.

This, of course, is something that is possible when the number of farmers relative to the rest of the population is small. You spoke earlier of multifunctionality; it would be the same thing. If there is a very large number of non-farmers in a population, it is possible, through a form of equalization, to have others pay for the problems. But if you have a very large percentage of farmers compared to the rest of the population, it will be very difficult to educate people in cities and come up with the same societal choice; it will be impossible.

Have you thought about this problem?

[English]

Mr. Donald Dewar: I think that's why we're here. The Quebec government chooses to spend $1.60 for every federal dollar, whereas other provinces spend 40¢. They have the population base. They have the willpower or make the decision first, but they have the population base to be able to afford that. Manitoba has only one million people, and 650,000 of those are within the perimeter highway of Winnipeg. To support $500 million would mean $500 per capita. We just can't afford that in our society? I would like to think we could.

Mr. Allan Holt: I think all three of us certainly recognize the enormity of the expense that would be involved to get us even a subsistence out of this. There are only 3% of us—I believe that's an across-Canada figure—who farm. Do you think the other 97% should help us survive? I think they should.

Most people don't realize what the ripple effects of agriculture are. Of course, that's very evident in the west, where I live. You've heard from the bankers. You're going to hear, hopefully, from the fertilizer and chemical companies and the machinery manufacturers. For every farmer who has to leave the farm for economic reasons, keep in mind that some person living in town is going to be displaced. Farmers have a very good work ethic—it's well recognized by our counterparts in the cities—and farmers have less difficulty getting jobs than others. There's certainly that effect out there.

We get a little discouraged when we hear the Prime Minister of Canada say he doesn't think $2 billion in foreign aid is enough; maybe we should contribute more. We feel that maybe the people who live in Canada are more in need of that aid than some of our counterparts in the third world countries.

The Chair: Thank you.

Mr. Sinclair Harrison: I guess we realize we don't have the impact at the ballot box we once did. That's unfortunate. I guess that's why organizations like ours feel we have to put lobbyists or people in Ottawa.

I encourage you, when you're out west, to just keep track of the goods and services we purchase as farmers. I'll use half-ton trucks as an example. We don't build half-ton trucks on the prairies, but I'd be very surprised if, when you're out there, half the vehicles you see on the roads aren't half-ton trucks. Without resources, you don't get half-ton trucks. They come from down east, where the goods and services all go into those types of products.

• 1125

Our numbers are not big, no, but we feel we're important to Canada.

Mr. Howard Hilstrom: On a point of order, Mr. Chairman, one of your members is sleeping over there, and it's bothering me quite a bit. Despite the importance of these hearings he's not even listening, and I find that against my privilege as a member of Parliament.

The Chair: I haven't noticed anybody sleeping, Mr. Hilstrom. I don't think that's a point of order.

Were you finished, Mr. Harrison?

I think Madam Ur is going to finish this.

Mrs. Rose-Marie Ur: Sorry, Rick, we got caught.

To follow up on what Rick had said on new generation cooperatives, I don't know a lot about them, but we have the Canadian Wheat Board, which is supposed to have some elected farmers on there, with good representation.

Mr. Dewar, you're a little concerned that they may not be totally supportive of this idea. Why wouldn't they be? You have expertise on the board.

Mr. Donald Dewar: It's not a simple answer. It's the way the pooling system works. I'll use the example of Prairie Pasta. If the domestic market is higher than the world market, and that durum is allowed, it's going to replace other pasta. It's not that they're making more pasta for the world; they're going to replace theirs. So it's not a new market for durum.

The producers in the co-op would get the higher price for their durum if they were outside the Wheat Board. The domestic price is higher. The whole pool then doesn't have the effect of having that premium market. Therefore, there's a reduction in the returns that other farmers will receive.

That is the Wheat Board's concern. We're saying that the impact would be insignificant and that the producers who invest in the co-op should have the opportunity to reap the benefits.

Mrs. Rose-Marie Ur: But I think that's where the positive side of the newly elected Canadian Wheat Board comes into play, because it's not stupid government people who don't know how to farm.

Mr. Donald Dewar: That's right. This isn't a government decision.

Mrs. Rose-Marie Ur: That's right. I'm not protecting the government, because I have my own viewpoints at times, too, but the thing is, here again we have farmers making these decisions, and rightfully so. That's how it should be. So I'm glad to hear they're making the hard decisions, and for the right reasons.

I think it was you, Mr. Dewar, who said the whole industry is suffering. I know the primary producers are suffering. Are you telling me the processors are also suffering in this?

Mr. Donald Dewar: No, I was meaning... Well, they are now, or they're starting to.

Mrs. Rose-Marie Ur: Let's go to the hog producers. If they suffered, we didn't notice it in the stores.

Mr. Donald Dewar: No.

Mr. Allan Holt: I have an interesting point. A year ago last November, when the real crunch hit the hog producers and they were getting only about $40 a hog, which of course is a huge loss, the major hog processor in Alberta admitted to making a $90-a-hog profit on processing that animal.

Mrs. Rose-Marie Ur: Absolutely.

Mr. Allan Holt: The result is that these people are getting vertically integrated. They supply the feed to the farmers. They supply the young stock. The farmer only gets paid for being a janitor.

Mrs. Rose-Marie Ur: A tenant.

Mr. Allan Holt: That's exactly it. That really concerns me, and it's happening in my own neighbourhood. It's the only way the young, progressive farmers can get into it.

Mrs. Rose-Marie Ur: I just wanted that clarified.

Mr. Donald Dewar: When I said “industry”, I meant the primary producers at all levels, the whole 100%, not just the 30% and 30%.

Mrs. Rose-Marie Ur: Okay.

The Chair: Perhaps I can finish this off with a question to you, Mr. Harrison. It may be more of a clarification than anything else.

When I was listening to you earlier, you seemed to be saying that the government, or governments, should on a temporary basis or perhaps permanently abandon the objective of targeting assistance to farmers; that we should forget about that and go to an acreage payment system despite the fact that some of that assistance may go to farmers, small or large, who really wouldn't be considered in need; and that for the sake of expediting delivery of money, we should forget about fairness, let's say, or targeting, and go that way.

Is that what you're saying, Mr. Harrison?

Mr. Sinclair Harrison: We're not saying we should forget about it, but we saw AIDA as an attempt to get money supposedly to those who needed it. We don't have time to sit down and come up with a complicated formula.

• 1130

What we're suggesting, I guess, is that an acreage payment is rough justice. It is going to get the majority of the money to those who need it. If you're going to wait for a program that identifies every need and the dollar that needs to be there to address them, we'll be back here for ten years and you'll be there for ten years.

Maybe it's quick and dirty, but, folks, things are tough out there, and maybe it takes a quick and dirty program to get the job done.

The Chair: Thank you.

I want to tell members that we'll break for two minutes so that we can say our farewells to Mr. Harrison, Mr. Holt, and Mr. Dewar.

I want to thank all three of you. I think you gave a very good account of yourselves and the situation that's out there. I think I can say quite safely on behalf of the committee that we look forward to coming out west in a couple of weeks to hear more of this. Even though it is, naturally, somewhat depressing, it's an important issue, and it has to be addressed.

Thank you very much.

• 1132

• 1139

The Chair: Members, we have two or three motions to deal with. The first motion would be to accept the report of the steering committee. A lot of the work, if not all of it, was done by the steering committee yesterday, I think. I've lost track of time.

You have the first report of the steering committee in front of you. I'll just leave it at that unless you want me to read it.

Mr. Hilstrom.

Mr. Howard Hilstrom: I think we need to have clarification on a couple of the issues surrounding the travel before we vote on this. As I say, we're all in favour of doing this travelling, but we want to clarify a couple of things.

• 1140

The first issue with regard to the travel budget is the advertising. Other than other contingencies, I wasn't clear on what that was coming under. I have a concern there.

The Chair: That's under another motion.

Mr. Howard Hilstrom: Which motion are you dealing with?

The Chair: There are three motions. The first motion is to accept the steering committee report. The second is the motion that would authorize us to travel. The third motion is the travel budget, and I think your first question or observation relates to the third motion.

Sorry, Howard.

Mr. Howard Hilstrom: Mr. Chairman, you're right. The steering committee motion is fine to deal with now.

The Chair: Will someone move a motion to accept the report of the steering committee?

Mrs. Rose-Marie Ur: I so move.

Mr. Larry McCormick: I second the motion.

(Motion agreed to—See Minutes of Proceedings)

The Chair: I think the second motion is quite straightforward, members. Do you have it in front of you? It proposes that the Standing Committee on Agriculture and Agri-Food be authorized to travel to western Canada from December 5 to December 10. This is just to authorize travel—not the budget, just the travel.

Mr. Howard Hilstrom: Mr. Chairman, I'd like to put in two amendments to that motion. I can give my reasons later, but as the first amendment, I would insert the words “and rural parts of Ontario” between the words “Alberta” and “from”. You have the copy of the amendment in front of you.

The Chair: I have it. Does everybody else have it?

Mr. Larry McCormick: I don't.

The Chair: I have several copies.

Mr. Howard Hilstrom: I supplied it to the clerk.

The Chair: Mr. Hilstrom, let me hear your reasoning for the proposed amendment.

Mr. Howard Hilstrom: We're examining in the original motion the effectiveness of the safety nets, and the safety nets for Canada certainly include Ontario. We've heard from numerous witnesses in our presentations that Ontario is negatively affected by the commodity prices. We certainly need to understand Ontario also if we're going to make recommendations to the minister about fixing safety nets. That's the basic concept of it, that we have to hear from the farming areas of Ontario also.

The Chair: Mrs. Ur.

Mrs. Rose-Marie Ur: If we're going to look at that, I don't think we can be exclusive of the east coast as well.

Mr. Rick Borotsik: And Quebec.

Mrs. Rose-Marie Ur: If we're going to stretch ourselves, how far will we go? I'm not saying the rest of the region is insignificant, but for now—

The Chair: You're suggesting leaving well enough alone.

Mrs. Rose-Marie Ur: And that's not to take away from the fact that this may need to be addressed, but I think right now we should be looking at what we have rather than looking—

An hon. member: We just do this and then we look.

Mrs. Rose-Marie Ur: Yes.

The Chair: Mr. Borotsik, do you want to say something?

Mr. Rick Borotsik: I would just comment that Quebec should be included as well—

Mrs. Rose-Marie Ur: Yes.

Mr. Rick Borotsik: —and certainly there are a lot of issues raised in the Atlantic provinces, Nova Scotia particularly, and P.E.I.

I don't disagree with that, Mr. Chairman, but if I could get your opinion on this, this motion is specifically for the travel from December 5 to 10. Is there an opportunity to get the consensus of this committee that in fact we may well be able to travel into Ontario, which I think is very important, as well as Quebec and the Maritimes, in the not-too-distant future?

• 1145

Mr. Larry McCormick: That's possible, but we need to address this.

The Chair: I don't know how to answer that except to say that we have time challenges and logistical challenges.

Mr. Rick Borotsik: And financial challenges.

The Chair: There are only three parliamentary weeks left before Christmas. If we're going to do anything to give any credence to the west, where right now the major part of the problem exists...

Yes, the problem does exist in all areas of the country, but the focus is on the west, on Manitoba, Saskatchewan and Alberta. If we're going to do justice to the west, I think we have to go there, and then, if we're going to have any impact on, say, the next budget in February, we have to get a report out and get it out quickly.

As well, as I think I mentioned before, the safety nets review committee will be having a very important meeting in February. So time is simply not on our side.

For my part, I think we should focus on this trip. We're going to cram in a lot of communities, we're going to hear from a lot of farmers, and, well, that's it.

Mr. Howard Hilstrom: I'd give the chair notice that my second amendment deals with extending the time in order to accommodate the motion to include rural parts of Ontario. The fact is, we have to get back and represent Ontario farmers who have identified the weakness of the safety nets as have those in the western area, which is hard hit. That's why I believe we have to pass the amendment to include rural parts of Ontario. I deal with the time issue in my next amendment.

Mr. Larry McCormick: Mr. Chair, what everybody is saying sounds good, but at the moment, is the proposer of the amendment saying we're just going to add Ontario? I have many friends in both Atlantic Canada and our neighbouring province, Quebec. So where can we go with this?

I think we should have been there before now. We should have been across the country. We should have had all this behind us, or we should be in the middle of it.

At the moment, Howard, I think we have to go with this motion, and we can't just add Ontario now. That wouldn't prove anything. It would for Ontario, and I'm happy about that, but I can't vote to add Ontario and not add Atlantic Canada. In some areas there, such as the Annapolis Valley, and with the flood water in P.E.I...

The Chair: Members, let's remember that we've heard from quite a few organizations so far. We're going to hear from more organizations, not only farmers in the west. A lot of these organizations from whom we've heard represent not just the west. They also bring to the table a national perspective.

For example, Mr. Dewar has been here. He was here today and the other day. He's on the safety nets review committee. We've had Mr. Friesen, who is a co-chair of that committee. He speaks for the national program.

Mr. Hilstrom, I don't think we can do everything. We're going to have to be satisfied with limiting our travel to some extent.

Yes, Madam Alarie.

[Translation]

Ms. Hélène Alarie: I have a proposal to make. Perhaps when we get back, during the last week, if we are still there before Christmas, we could invite a representative from Ontario, a representative from the Maritimes and a representative from Quebec to come here to explain their point of view on what we will have learned in the west. It will perhaps be a way of making things less alarming.

[English]

The Chair: I've just been reminded that we don't have a quorum, so we couldn't even have a vote if we wanted one.

• 1150

Yes, Mr. Hilstrom.

Mr. Howard Hilstrom: Why are we trying to approve and vote on something when we don't have a quorum? Why did you even start this? I don't understand.

The Chair: There was a quorum when we had the witnesses. Remember, we have two different standards for quorum, one for witnesses and one for taking votes.

Mr. Howard Hilstrom: I suggest we get a quorum so that we can deal with this travel. It is important to travel out west.

The Chair: You know how it is with a quorum, Howard; they come and go. My understanding is that we had quorum for awhile but don't right now.

Can we suspend this debate for a moment and perhaps go to Madam Alarie's motion? I'm not asking for a vote, but I'd like to go to her motion and indicate to her something I indicated to Mr. Hilstrom about three weeks ago.

My recollection, Howard, is that it's not that different from yours.

Mr. Howard Hilstrom: On the GMOs?

The Chair: Yes.

Mr. Howard Hilstrom: You're right.

The Chair: I want to say to you, Madam Alarie, that this matter of GMOs, biotechnology and so on, touches on not only agriculture but also health. In fact, I think it touches on health to a greater extent.

As I indicated to Mr. Hilstrom last month, the government has indicated to me that they want to examine this issue, but through the medium of a committee that would represent the concerns of both this committee on agriculture and the committee on health. I had hoped that by now the government would have made its decision, but it hasn't. Things around Ottawa don't happen as expeditiously as one hopes, but I think it's going to happen.

It's also a bit of a moot point here because the committee is tied up with this particular motion having to do with the farm crisis. We're going to be seized of this issue until the House rises at Christmas anyway, so even in the best scenario, we won't be able to deal with this issue you're bringing forward, which I think is a good one, until at least February.

By February, God willing, the government I hope will have indicated its intentions, conclusively, to establish this committee. If the committee has not happened by the time we return in February, maybe we will have to force the issue ourselves and set up a subcommittee.

Madam Alarie, given the fact that this issue has such an enormous health component, I just think the way to go is to have a committee that represents both standing committees. That's the way I feel. Do you have something to say?

[Translation]

Ms. Hélène Alarie: I listened to your opinion with a great deal of respect. Perhaps presenting a motion today would encourage the government to move more quickly.

I am very much aware, Mr. Chairman, that there will not be a meeting on this before Christmas, unless we stay here until December 31, but I would nevertheless like, when work resumes in February, for this to be considered a priority on the agenda.

You will no doubt remember that in 1998, when we worked on biotechnology, one of our six recommendations concerned the labelling of genetically modified products. Since the spring, this file has grown quickly. We are now competing with countries like Japan, the countries of the European Community, Australia, New Zealand, and Brazil, who already have mandatory labelling. In view of such international competition, strictly from the economic competition standpoint, we will lag behind the rest of the world unless we deal with the issue immediately.

I recently read a bill tabled in the US Congress on November 16 specifically on the mandatory labelling of genetically modified organisms. The points covered in the bill address my concerns.

• 1155

Consumers have a right to know. Consumers have the right to be informed about matters that affect health, religion, traditions and education. Thus if the United States is considering a bill, we cannot afford to waste any more time.

Given that we have already done some of the work, we could go into the matter in much greater depth and calculate the impact of all this. I repeat that I have nothing against biotechnology, quite the contrary. That then is the intent of my motion, Mr. Chairman.

[English]

The Chair: Thank you, Madam Alarie. I take those remarks as given. Would it be all right, then, if we simply tabled the motion or set it aside until our return in February?

[Translation]

Ms. Hélène Alarie: Yes and no. As we do not have a quorum, I'm pretty much wasting my time. But if we could reach a decision today, it could mean spending one month less on preparing the work in the spring. I imagine, Mr. Clerk, that you will be in touch with everyone in January. Work is being prepared for February. I find that we are already considerably behind given the speed with which this matter is progressing. We are getting farther and farther behind.

[English]

The Chair: I think we should go back to Mr. Hilstrom. We'll come back to your motion in a moment.

Mr. Howard Hilstrom: I concur with you on the idea that we should just table the GMO motions, both mine and Madam Alarie's, at this time. It can be brought up again at even the next committee meeting, but it would seem sensible to do it in February, after you have heard these other proposals coming forward on how to study this issue. We know we have to study it.

The Chair: I think you're right, Mr. Hilstrom. Let's just deal with your amendments. I think we have a quorum.

Mr. Howard Hilstrom: Okay.

[Translation]

Ms. Hélène Alarie: One, two, three, four.

[English]

Mr. Rick Borotsik: I'd like to know what the new members really know about agriculture and how they're going to relate to some of these motions.

Mr. Larry McCormick: Mr. Chairman, the member we had representing the PC Party was a lot better member a couple of days ago.

The Chair: Order.

Maybe I should just repeat the amendment, especially for those who are not normally members of the agriculture committee and are here to give us a quorum, so that we can deal with our business.

The main motion really has to do with this committee travelling to the west. The main motion suggests we go west for five days, from December 6 to December 10 inclusive. We've been trying to fit this trip in just before Christmas. We face a lot of time constraints, not only because of Christmas looming but also because of such other matters as the budget of Mr. Martin in February and some other things. The question is, can find any more time to travel around the country?

The agriculture crisis is centred on the prairies at the moment. There are some crises, or certainly some serious problems, elsewhere in Atlantic Canada, British Columbia, and perhaps Ontario, to some extent. Mr. Hilstrom's amendment would amend the main motion to extend our travel to southern Ontario.

Mr. Hilstrom.

Mr. Howard Hilstrom: Just so the additional members can be brought up to date, I've also given notice to the chair that there's a second amendment coming that extends the time to enable this to happen.

On the question of the budget that is coming down in February, certainly Mr. Calder has identified it as an issue to also be concerned about.

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With regard to the budget, I would only say that the provinces of Manitoba and Saskatchewan have identified $1.3 billion as the amount of money needed. The Manitoba government has identified that the federal government needs to come up with $25 of the $50 per unseeded acre due to the flooding in the natural disaster area.

The dollar figures are before the finance minister right now. I think he could quite easily act on them immediately and get them into the budget in February.

The Chair: Mr. McCormick, and then perhaps we can have the vote.

Mr. Larry McCormick: Last night I was trying to research this whole thing, seriously. I was reading a paper known as the Western Producer. It wasn't all written by Mr. Wilson, either.

My point—and it's sincere, Howard—is that we're all working to try to get more resources for this. I read a week-old paper probably because of the federal mail, but I read last evening that two of the provinces in the west said they were not going to match the last money we put forward. So we have time to do this, but it can't be included in this at the same time.

Thank you, Mr. Chair.

The Chair: Howard.

Mr. Howard Hilstrom: I don't mean any disrespect to the rural southern Ontario MPs, but I'm going to have to ask for a recorded vote on this amendment.

The Chair: That's fine. There's nothing wrong with that.

Mr. Borotsik.

Mr. Rick Borotsik: I agree that the committee should be made available to the communities, and that means travelling to those communities. If you recall, I put the motion forward first and foremost about a month ago to travel out west, and it didn't include Ontario.

I would hate to jeopardize the travel out west. It's a good itinerary. We have a good program. I don't necessarily disagree that we have to go other places, but perhaps we can do that outside the timelines Mr. Hilstrom has put forward of December 5 to January 31.

If this motion is approved, with maybe amendments to the rest of Canada—Quebec and Nova Scotia—would Mr. Hilstrom look at extending the timelines from January 31? He's putting us in a box right now. I can't support the motion the way it is now without having more flexibility. I agree we should go to those other areas, but I'm not so sure we can accommodate that between December 5 and January 31. He's putting me in a box.

The Chair: Howard.

Mr. Howard Hilstrom: Each member of Parliament has to represent to the best of his or her abilities, and I believe other members are quite capable of submitting amendments to this motion, as I am. I've submitted mine, and would ask that others submit theirs, if they have some.

The Chair: Larry, and then we'll have the vote.

Mr. Larry McCormick: There will be more motions. They don't all have to be here today. I'll tell you, I won't start listening to farmers and producers just when we do this tour, because I've talked to them across this country in nine provinces this year. I've been there and talked to them. We just didn't start yesterday.

The Chair: Joe Jordan, and then we'll have the vote.

Mr. Joe Jordan (Leeds—Grenville, Lib.): Given what happened with the aboriginal affairs trip west—and I think we all agree this is a serious issue—I want to go on record as saying I think trying to play politics with this takes away from the issue. I'm very disappointed with this approach. I think we need to keep the real need in focus, and if we're trying to bring solutions to the problem, we have to look at what's productive and what isn't. I find it rather disappointing.

The Chair: Mr. Hilstrom.

Mr. Howard Hilstrom: To ensure the full procedure has been followed, there's just one thing here before we move on. I maybe didn't mention that the seconder to my amendment, which I believe is required, is the member from Battlefords—Lloydminster. That's just so it's on record.

The Chair: We'll vote on the amendment.

(Amendment negatived—See Minutes of Proceedings)

The Chair: Is there another amendment?

Mr. Howard Hilstrom: Yes. This second amendment is that the motion be amended by replacing the words “December 5 to 10, 1999” with the phrase “December 5, 1999, through January 31, 2000”.

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By way of comment, that also is seconded by the member from Battlefords—Lloydminister.

I'm putting this amendment forward for the individual farmers who have not yet been heard by the committee other than through their representatives from the various organizations. I want to try to ensure that they have the opportunity to describe to this committee how, when they started their farm, either purchasing the land or inheriting it from their father or grandfather, they went through the various safety net programs—that's what we're studying—over the years from LIFT to GRIP, and which ones seemed to work the best and which ones didn't, and how their farm income went up and down in relation to those safety nets, including the commodity prices that caused their farm to be successful or not successful.

I think they need more than just a few minutes to describe that so we can fully understand and appreciate how the safety nets fit in with the overall net margin income that we know is very low on many export-oriented farms in Ontario and in the west.

That's the reason for my amendment, Mr. Chairman.

The Chair: I was just going to say, Mr. Hilstrom, before the vote—and I think you wanted to say something too, Madam Alarie—that it seems to me the intent of your second motion is somewhat similar to the intent of the first amendment, which was defeated. Your first amendment suggested we travel beyond western Canada. That was defeated. Now you want more time to travel when the committee has already said it's going to stick with the travel in western Canada. I'm not too sure whether there's much difference.

Madam Alarie.

[Translation]

Ms. Hélène Alarie: Mr. Chairman, I am going to vote against this second motion, because I am leaving at the end of the week. I will be spending a week in Seattle followed by a week in the west. I have things to do in my riding. I am already almost fully booked for January. It is therefore impossible for me to spend any more time than the weeks already set aside.

[English]

The Chair: Okay, let's have the vote.

Mr. Howard Hilstrom: Seeing as how you brought up the steering committee, I'd like to point out that in fact during the steering committee I made this same argument that individual farmers who have not been heard do need to have sufficient time to make their presentation to the steering committee, and one week isn't sufficient to get to enough of them. That would be my comment in regard to that.

The Chair: Mr. McCormick, and then we'll go for the vote.

Mr. Larry McCormick: Mr. Hilstrom's correct on many points here, but I just want to say that I'm voting for no additional time or travel or areas at this time.

The Chair: We'll now vote on the amendment.

(Amendment negatived—See Minutes of Proceedings)

The Chair: Now we go to the main motion. The main motion reads:

That the Standing Committee on Agriculture and Agri-Food, be authorized to travel to Western Canada (Manitoba, Saskatchewan and Alberta), from December 5, to 10, 1999, in relation to its Study of the effectiveness of long term Safety nets and other national initiatives to provide the stability and environment necessary for stable growth in the agricultural industry and that the necessary staff do accompany the Committee, and

That the Chair be authorized to seek the House's permission to travel.

Mr. Howard Hilstrom: Mr. Chairman, I'd like to further my third amendment to that motion, seeing as how we've disposed of the first two. My amendment this time, seconded by the same member from Battlefords—Lloydminister, is that I'd like to insert the words “and to hear directly from primary producers who have been unable to present their concerns at committee hearings in Ottawa” between the words “agriculture industry” and “and that”. I think that amendment will clarify the reason we're going out to the hearings in the west.

Mr. Chairman, it hasn't been eminently clear just why we're going out to the west here and I think that amendment certainly helps clarify what we're doing out there.

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Mr. Larry McCormick: Mr. Chair, I thought we agreed at the steering committee that we're going out to hear one group per session. Otherwise, it was to be individual producers, the farmers. That's who I do want to hear.

An hon. member: From each government list.

Mr. Larry McCormick: Yes, from each government list. Actually, I don't think you're going to see it overloaded from this side. I want to go to the areas where we can see the people who are most affected. What you're saying is redundant.

Mr. Howard Hilstrom: Mr. Chairman, certainly that's a good comment, and I defer to the comments that Mrs. Ur made and the media certainly picked up on. The fact is, this tour by the committee is not and should not become some form of Liberal-bashing committee hearings out there. I certainly don't want to see it turn into that.

In regard to the witnesses and this amendment, that's where the advertising in the travel budget certainly has to be extensive enough, so that farmers throughout the areas where we'll be touring can attend of their own volition and can possibly have the opportunity to make a presentation. Certainly it wouldn't be good to have all presenters from one party. In fact, it would be good if farmer presenters were simply picked off the floor of the meetings we hold.

The Chair: Madam Ur.

Ms. Rose-Marie Ur: Let's just get to the basics here. I thought I understood at the steering committee, at which I was present—all of the steering committee members were there—that we would have one organization presenting, and then all parties were supposed to put together a list of individual farmers who wished to present. In that way, we would ensure every party would have farmer representation there. The government would not be running the show here, and far be it that they should.

I can't see how we can be more equal than that.

An hon. member: It's more than equal.

Mrs. Rose-Marie Ur: Every party has a list provided to the committee, and every party has individuals. We could have a farmers' list, and then no one could say it was all Reform or it was all Conservative or all Liberal or all Bloc. I think that's fair.

I'm trying not to be political on this, Mr. Hilstrom—and I'm not here for the media, trust me.

Mr. Howard Hilstrom: Mr. Chairman, I agree with the statements of Madam Ur, and I'd go further. No farmers out in the west should feel they've been excluded from either attending and/or having the possible opportunity to make a presentation. That's why I bring up the idea that this has to be well advertised throughout the west in our budget, and that our motion should reflect very clearly that this has to do with hearings from primary producers. That's why I think this amendment is a good one.

The Chair: Let's make it clear what we are doing, Mr. Hilstrom. First of all, we are going to be going west. The committee will issue a news release. I think it's incumbent upon all members of this committee, and especially those who live in the west, to apprise their communities and their regions of our coming. I would think, Mr. Hilstrom, that if you take your job seriously—and I'm sure you do—you will be telling your friends in Interlake and elsewhere in Manitoba that the committee is coming.

I would think the media is going to be quite interested in our travel. Inherent in this travel is listening to farmers. It's intrinsic to our work. We're not going out to talk to lawyers, Mr. Hilstrom. We're not going out to talk to nurses, although I'm sure it would be nice to talk to some nurses and to hear about their woes. This is an agricultural committee.

The motion has to do with safety nets and the farm income situation. It really would take someone quite thick not to understand that we're going out to see farmers. I'm absolutely aghast, Mr. Hilstrom, that you would somehow suggest we're going to go out and see anyone other than farmers.

There's another thing, too. Because there are some organizations that have not been heard from yet, I would think we will hear from one organization per meeting. But guess what? They speak for farmers. They don't speak for foresters and they don't speak for miners. This whole exercise is intended to hear from farmers directly, and from their representatives.

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You have already been invited, Mr. Hilstrom, to bring forward a list of farmers whom you think should be heard. But do you know what? Not everybody will be heard, because we're going to have limits to our meeting, at three and a half hours.

By the way, we started off talking about three hours, but now we've pushed it up to three and a half at the behest of either you or your sidekick, Mr. Breitkreuz. I think we're doing everything possible.

Mr. Larry McCormick: It's on the record. Call the question.

The Chair: We'll vote on the amendment.

(Amendment negatived—See Minutes of Proceedings)

(Motion agreed to)

The Chair: We now have to go to the travel budget.

Mr. Gerry Ritz: Mr. Chairman, if I may, before you get to the budgeting, there is one change I would propose. On the last day of your tour, which is Friday, December 10, you have us in Airdrie. I would much prefer that we attach ourselves to Lloydminster, which is about 30 minutes from Vegreville by air. There is a direct flight back to Calgary, since you have the chartered aircraft. Lloydminster puts us into the drought areas of northwestern Saskatchewan and northeastern Alberta, which were far more hard-hit. In Mr. McCormick's words, we want to get out there and talk to the people in those areas most affected.

So if that could be done, sir, it would be most appreciated.

The Chair: With all due deference, Mr. Ritz, I think it's a bit late. Maybe you can blame your representative on the steering committee.

Mr. Gerry Ritz: I'm not blaming anyone, sir. I'm just putting forward the idea that if you want to get to a farm community rather than a bedroom community, Lloydminster's it.

The Chair: I doubt whether the good people of Airdrie would agree with you that they are... Let me say this: Your representative on the steering committee made one suggestion for the province of Alberta. That was the community of Vegreville, and it was accepted. We chose Airdrie, Mr. Ritz, because while it is a farming community, yes, and it is close to Calgary, there are members of this committee who have to get away Friday afternoon, so we have to be somewhat close to the Calgary airport.

I'd love to go to Lloydminster. I have a wonderful niece who lives in Drumheller, and I'd love to go there to see her as well. I have a sister-in-law in Edmonton. But we simply can't go everywhere. Thank you for the suggestion, but I think we're going to have to go with the plan.

Now, I just want to note that we've worked assiduously on your behalf to get the cost of travel down. When we started off, we thought this travel was going to cost $211,000, but mainly through turning to Canadian Airlines, which came up with a deal, we got it down to $169,000.

This is through the best efforts of prudent Liberals, Mr. Hilstrom.

Is there any need for debate or comment?

Howard.

Mr. Howard Hilstrom: Could it be that Canadian Airlines is in trouble and needs that Liberal government to be on their side?

The Chair: Oh, I can't imagine. Anyway, I'm very thankful that Canadian Airlines has come through with a pretty good deal.

The Chair: We'll vote on the travel motion.

(Motion agreed to—See Minutes of Proceedings)

Mr. Rick Casson: Mr. Chairman, are we to believe, then, that this schedule is the schedule, and that there will be no variations from what you presented?

The Chair: I don't think so, Mr. Casson. I think we're...

Mr. Rick Casson: Can we bank on this schedule? Are we going to be in those towns on those days?

The Chair: Yes, I think you can bank on that schedule.

Mr. Borotsik.

Mr. Rick Borotsik: It's just a question, Mr. Chairman. We obviously have our final destination at Calgary on Friday afternoon. Is it the responsibility of the individual members to make travel arrangements from Calgary back to their ridings, or will those be made through the clerk?

The Chair: Something tells me Calgary is where it ends, but let me just ask Georges. Can you reframe your question?

Mr. Rick Borotsik: Our final destination is Calgary, at 2.30 p.m. Is it up to the members themselves to arrange transportation from Calgary back to their ridings or other destinations, or will the clerk of the committee be making those arrangements?

The Chair: I understand from Georges that Canadian will provide transportation back to your respective ridings, although not particularly on that chartered aircraft.

Mr. Rick Borotsik: Is that booked and paid for by the committee or do we have to do it ourselves?

The Chair: By the committee.

Mr. Rick Borotsik: Fine. I'll let Georges know when I want to leave.

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The Chair: Howard.

Mr. Howard Hilstrom: All parties will get their names to the clerk as soon as possible—

The Chair: Oh, yes.

Mr. Howard Hilstrom: —so he can get hold of them and discuss their attendance.

The Chair: Our clerk was just pointing out, members, that he has distributed the forms you have to complete for the purpose of travel, so the sooner you fill out the forms the better.

Now, Madam Alarie, I think for all practical purposes there's nothing that can be done with respect to your motion until February anyway. To avoid a debate—because I think we will have a debate—I would suggest to you that you set aside the motion for now, that you table it, and then we will deal with it in February. But I would hope by that time the government will have moved and will have obviated the need to act on your motion. I think that's what we should do.

[Translation]

Ms. Hélène Alarie: I cannot say that this really suits me. In any event, I would like the minutes to mention the fact that I presented the motion today. If it is defeated, then it is defeated, but action needs to be taken before leaving for the Christmas holiday. So there, I am doing it today.

[English]

The Chair: Do I hear a vote being called?

Mr. Larry McCormick: I think it's being called but it's being deferred at the same time.

The Chair: We're already 22 minutes... We're going to need to have a debate on this motion, because I think it's—

[Translation]

Ms. Hélène Alarie: Mr. Chairman, can I make a proposal? Can we debate this motion? If there is not enough time today, can we debate it in the final week before the break?

[English]

The Chair: Okay. Let's put it over until next week's meeting.

Is that fair?

Some hon. members: Agreed.

The Chair: It's set aside until next week's meeting.

This meeting is adjourned.