AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, December 6, 1999

• 0858

[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): I want to bring the meeting to order. We are in Portage la Prairie, Manitoba, at the Southport Aerospace Centre.

On behalf of the members, I want to say what a pleasure it is to be here in my home province of Manitoba, where I first started my broadcast career more than 40 years ago. In fact, the riding where I first voted many long years ago is not far from here.

This meeting is convened under Standing Order 108(2) to study the effectiveness of long-term safety nets and other national initiatives to provide the stability and the environment necessary for stable growth in the agricultural industry.

• 0900

We started these meetings, ladies and gentlemen, about three or four weeks ago and it was decided that we should come west to talk to farmers directly. We have heard, naturally, a lot from farmers directly and indirectly, but I suppose there is really no substitute for talking to people face to face. We want to hear exactly what you have to say. We want to hear what is on your mind. Tell us as it is. We know there are problems, and if we are going to find some effective solutions perhaps this is one way to improve our chances of finding some of the answers.

Just before I allow members to introduce themselves, let me say that this is a regular House of Commons standing committee meeting, so there are some rules, time limits and so on. In the first round, we will give each presenter five minutes and then we will have more than half an hour for questions from members. Then we will have a second set of presenters. Then we will hear from a couple of organizations, the Canada West Equipment Dealers Association and the Rural Disaster Recovery Coalition.

This meeting will run three and a half hours, and in the last 30 to 45 minutes we will open it up to visitors, to farmers who are in the audience.

Before we hear from the first presenter, Susan Van De Velde, I would ask members to introduce themselves.

Mr. Joe McGuire (Egmont, Lib.): My name is Joe McGuire. I am the parliamentary secretary and I represent the riding of Egmont, Prince Edward Island.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): My name is Murray Calder. I am the vice-chair of the committee and an active poultry farmer in my other life.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Good morning. My name is Larry McCormick. I am from eastern Ontario and I am also the government's rural caucus chair.

Mr. Inky Mark (Dauphin—Swan River, Ref.): My name is Inky Mark and I am the member for Dauphin—Swan River. I am sitting in for the Reform Party today.

Mr. Dick Proctor (Palliser, NDP): Good morning. My name is Dick Proctor and I am the NDP agriculture critic. I represent the riding of Palliser, Saskatchewan.

Mr. Rick Borotsik (Brandon—Souris, PC): My name is Rick Borotsik. Some of you I have met many times before. I am the sitting member for Brandon—Souris, Manitoba.

Murray is very humble. He is the chicken farmer that we have on the committee and he can tell us anything we would like to know about chicken farming.

The Chair: Thank you, Rick. My name is John Harvard. I am from Winnipeg and I represent the riding of Charleswood St. James—Assiniboia. I am the chairman of the committee.

Now we will get down to work. I have asked Susan Van De Velde to be the first presenter.

Ms. Susan Van De Velde (Individual Presentation): Thank you, Mr. Chair. Before I start, I would like to express my thanks to the committee for making the effort to come to rural Manitoba, because I don't think your next three days of deliberations in Manitoba are going to be easy. You are going to hear from a lot of disgruntled people, but I think we would all have to agree that as farmers we appreciate the opportunity of being heard by the people from Ottawa.

When I was approached on Friday afternoon to make a submission to the Standing Committee on Agriculture, I jumped at the opportunity, not because I had a lot of time on my hands but because I truly believe that the present government is totally out of touch with the reality of the situation that farmers are facing in Canada and in particular in western Manitoba and Saskatchewan.

I am also very tired of the endless discussions we have at our house on how we are going to make ends meet and what we can grow next year in order to make some money. I am really tired of working this hard for such a poor return.

I will give you a bit of background on myself and my husband so that you know where I am coming from. My husband and I plant 3,500 acres of crop, mostly grains and oilseeds, and we have a purebred Charolais herd of 150 cows.

We are both university educated and I think we are astute business people. We certainly don't farm for the lifestyle. We could have an easier lifestyle doing something else. We put in extremely long days every day and we really have to work at getting time off.

We farm as a business. I don't think our farm could run any more efficiently and cost effectively. We have analyzed it to death. We do everything we can to save a buck, right down to doing our own accounting and income tax. We can't afford to bring in outside help when we need it, so we put in extremely long days.

Our equipment is aging. We can't afford to replace it. We can't afford extra manpower, and we can't afford to pay our hired help the wages they deserve.

• 0905

The bottom line is, we are good producers, but we need a level playing field in which to market our product.

Making up less than 3% of the population, farmers often feel ignored. When your committee decided to hold these hearings, I was pleased to have the opportunity to tell you that farmers are losing heart and they are angry. Let me tell you why.

We are angry because we are largely ignored by government. When we were flooded in the spring, because people's lives and homes were not threatened, we barely made the news. The flooded area was a three-hour drive from Winnipeg and initially it was difficult to get media attention, although I must say that Rex Murphy and the CBC have been doing an admirable job lately.

With all of the hardships that this area experienced, we were not even paid a visit by our Prime Minister. We are angry at the insensitivity and arrogance of the Minister of Agriculture and Agri-Food. His attitude left us in disbelief. He stated that he had some tough personal choices to make, that he quit farming and that many of us would have to do the same. If that is the government's plan and it does not want any more farmers, it should let us know sooner rather than later. However, it better keep in mind that we all can't become politicians.

What Mr. Vanclief fails to realize is that our farms are not going under from poor management but because of the subsidies being paid to farmers in the U.S. and Europe. The world market is a factor over which we have no control.

We are angry because there is no safety net program such as GRIP. The GRIP program was put in place at considerable time and expense, and we would not be having this session today if it had not been abandoned.

We are also angry at the bureaucratic bungling of the AIDA program. Considering that it was supposed to help farmers who are cash strapped, I can honestly say that I have not met one farmer who has received an AIDA payment. My credit union manager informed me that she knew of a couple of people who had received a payment, but in both cases it was minimal.

The administration of this program is a nightmare and is eating up the funds. Why not give farmers an across-the-board acreage payment based on land productivity? We have all of the productivity information readily available. Hog producers should be treated similarly. They should be given so many dollars per animal.

The government is so terrified that someone is going to get a dollar more than they should that no one appears to be getting any help at all.

AIDA payments are taxable income. They would help to fuel an almost paralyzed rural economy. Farm size should not be a factor because large farms have expenses and debts relative to their size. In western Manitoba many farms are large to take advantage of the economy of scale. In the long term, governments should look at tax breaks for farm inputs, such as fuel and fertilizer, and eliminate the land tax on farmland.

We are angry at financial institutions whose representatives appear before this committee to say there is no crisis because they don't have accounts that are in arrears. These folks are out of touch with reality. Who gets paid first? Of course it is the bank, usually at the expense of everyone and everything else. If the depressed agricultural economy continues, land prices will start dropping drastically. In turn, this will lead to insufficient security to secure many of the remaining bank loans. Then your vice-presidents from the various banks will be around to tell you about the crisis in agriculture.

Many people in rural Manitoba are living in poverty. Tomorrow you will hear stories of what it is like in western rural Manitoba. Ask the merchants and the trade credit representatives. In a community close to me, both of the machinery dealerships have laid off two mechanics. They are on a work share program. One dealership is going to have to consider closing its doors for the winter.

Farmers feel the economy of southern Manitoba. In the past year, grain and oilseed prices have dropped roughly 35% since the beginning of the year, while fuel prices have gone up 20%. The drop in price in canola cost our farm over $200,000. That is a big hit.

• 0910

Western farmers are good producers. They have proved time and again that they are competitive. However, we can't compete with the treasuries of Europe and the U.S.A. We have to eliminate subsidies, but that could take another decade. As we know from the world trade talks, Europe isn't going to accept giving up subsidies for their farmers. Until this happens Canada is going to have to decide if it wants its farmers. If it does, how is it going to help them compete? That is the bottom line.

The Chair: Thank you, Susan.

We will now hear from Fred Tait. I want to remind you that we have an hour for this session, and I hope there will be time for questions.

Mr. Fred Tait (Individual Presentation): Thank you, Mr. Chairman. In looking at the issue today I can't really say I am happy to appear before the committee to talk about the worst financial crisis we have had in probably over 60 years. I would probably be much happier if we were appearing before the finance committee trying to find some tax breaks on the high incomes we had earned.

Because of the time limitations, we have produced some graphs and we will focus more on one section of agriculture than the rest, because to try to take a blanket shot at the whole thing probably wouldn't be productive.

The first graph you have, the one with the number 1 on it, compares net farm income since 1926. We took realized net farm income from over the 73-year period and adjusted it for inflation. When we did that we found we had a graph that showed a constant decrease.

We felt, however, that simply adjusting for inflation did not produce a fair comparison, so then we reflected the decline in the number of farm families over that same period. The important thing about the graph is, when you look at net farm income, it compares quite closely to 1935-36.

We refer back to that period of the thirties. In the thirties it took a worldwide economic collapse, a stock market crash, mass unemployment, and prairie-wide drought to drive the net farm income to record low values. Today's stock markets are booming, employment levels are fair, the economy is growing, the weather, with the exception of southwestern Manitoba and southeastern Saskatchewan, has generally been pretty good, and crops have been average or better. The current farm income crisis is absolutely unprecedented in times of economic prosperity and stability.

We took a look at what we feel are some of the root causes behind our economic situation.

The second graph I gave you was from an Agriculture and Agri-Food Canada publication entitled Medium Term Policy Baseline. Note that it is predicting continual climbs in exports. One has been taught, at least so far, that increased exports are some salvation in relation to income. There seems to be some disconnection there.

When we take a look at the next graph, again using the Alberta benchmark, we see the projection for income declining. That is exactly opposite to the trend that showed on the previous graph. Exports are going up and income is projected to go down. In spite of the near doubling of exports, Canada predicts that the net income for the average hog producer will fall to less than half its current level.

All of you out there with hogs know that this projected decline in income is actually quite a bit of a reality right now.

The total irony of this, of course, is that incomes are dropping significantly, even as exports are rising significantly. In general, exports of food are rising swiftly.

The next graph, again using information from Agriculture and Agri-Food Canada, which is labelled number 6, demonstrates that agrifood exports have quadrupled since 1974 and that incomes have not increased. Despite dramatic success in increasing exports, we are facing a farm income crisis.

The decline in the net income of hog farms is not caused by the collapse of Canadian pork exports. Hogs are moving. They are selling. Exports are increasing. If there is an income crisis on Manitoba and Canadian hog farms, it cannot be blamed on the collapse of the Asian market or the loss of export markets.

• 0915

Take the graph that shows the difference between net farm income and the value of exports. When you further study it you will find that for every dollar in exports it costs farmers $1 to $1.10 to achieve that dollar of export value.

The next graph, the one labelled number 5, shows hog prices in relation to consumer retail prices. You can see that they have become separated too. Hog prices were lower when we prepared this graph in February than they were 23 years ago. Despite this, pork prices have doubled. Hog prices may have fallen, but pork prices have not.

Seen another way, for every dollar the farmer received in 1976, the packing companies and grocery stores received about $3. Today, for every dollar the farmer receives, packers and grocery stores receive $6 to $8.

Had packer and grocery store inefficiency not taken away such a large chunk of the grocery dollar, and had farmers maintained the quarter share they received in 1976, hog prices today would be $1 a pound and there would be no income crisis in the hog industry.

The next graph I want you to take a look at is the one entitled “Comparison of Pork Links program to current commercial system”. This is a project that we did in February 1999. We went to one of our members near Saskatoon and we purchased that day, depending on size and grade, hogs ranging from $100 to $120 each. We paid our member $217, which we figured was his current cost of production. We took them to a local abattoir, which I believe was at Humboldt. We had them cut and wrapped, and it cost us $80 to $90, again depending on carcass size.

We don't have a figure on what the cost would be for the processor, but it would probably be substantially lower because of the economies of scale. Nor do we know what the retail share is. We can't break that out. However, we were able to go to the retail outlets that day and price the retail price of that hog at $450. The way we put it through, it came out at the retail level at $307. There was a difference in value to the producer and to the consumer in that one hog of $243. For a thousand hogs you are talking about a difference of a quarter of a million dollars.

We ran the numbers on four quarters. We came to a difference of $2.1 billion. That number is very significant in relation to the $1.3 billion that farmers in Manitoba and Saskatchewan were requesting to assist us in our economic crisis.

We are continuing this model of marketing hogs directly through to the consumer as a way of tracking what happens.

We would point out that the pork links program delivers prices to farmers that respect their cost of production and delivers affordable, locally grown pork. Those are two things the commercial system does not do.

Further, non-farm families must come to know farmers and understand their situation. This step is critical if we are to build a food system that is truly sustainable. All participants must understand and respect each other's interests.

In conclusion, from this brief summary of what we have put together, increased exports are not connected to increased farm income. In fact, the opposite trend is well documented. Farm gate prices are a declining share of retail prices and we would like to determine why. Consumer prices are more than adequate to support the cost of production at the farm gate, but there is no method apparently to transfer those consumer prices back to producers. In fact, the very opposite is happening. Provincial governments, and to some extent the federal government, are removing our ability to extract those premiums from the marketplace.

The Chair: Thank you, Mr. Tait.

We are running a bit long on our presentations and I would ask that we tighten up a bit.

We will hear next from Mr. Toews.

Mr. Rey Toews (Individual Presentation): Good morning. I come from the Neepawa area. That is where I have made my home. I am a small cow-calf operator. I do a few other things as well.

When Sharon got hold of me I was in Winnipeg. I represent the Manitoba Association of School Trustees as its vice-president. I apologize for not having copies of my written presentation for you, but I promise that you will have them.

• 0920

The farm crisis we are facing today is very real and troublesome. The reasons are varied and also very real. Between ridiculously low commodity prices and more rain than one can imagine, the struggle to continue is intense and full of stress.

I say this not to be dramatic but to give you a picture that is real and honest. There are people in communities who are hurting and who will continue to hurt unless there is help.

Let me begin by saying that I feel there is a short-term need. We are talking about the long term, but there is a short-term need right now. Help is needed now. The question of a long-term solution, I believe, is for another day. If we can't get the short-term help we need now, the long term will be determined.

We are an exporting country. We export into competitive markets, markets that are subsidized to the point where we cannot compete. For many years Canadian agriculture—and when I say that I mean farmers—has subsidized the consumer by providing a cheap primary product, food. Farm people are no longer able to bear this huge burden. It is time this is recognized, the efficiency of farm management and its “do it well” management approach.

The AIDA program is not working because it is not sensitive to the margins needed to provide real profits. Farm folk have been working with declining margins for many years, and 70% of something that isn't working is still not working.

I believe it has responded slowly because it is based on a tax year, not a production year. I also feel that a minimum income level needs to be determined.

Crop insurance, especially this year, did not allow farmers to increase their coverage level as their risk level increased. Insurance levels need to reflect the actual market revenues needed to keep farmers in production. They are not doing so.

Why was the rail subsidy removed in one year? It was my understanding that it could have been done in five years. The transitional funds in no way represented the true value of what was being lost. The wrong approach has been taken to the removal of all subsidies, and that has hurt us.

What happened to the investment tax credit? Even as capital costs have risen sharply, there seems to be no way to recover them.

We need tax relief. By that I mean that income tax and the ESL need to be looked at. I understand that the ESL, the educational support levy, is provincial, but to my understanding there is just too much reliance on property taxes to fund education. That needs to be looked at.

Let me come back to the issue at hand, the issue of the short-term need. Cash is needed now to help us ride out the wave of low commodity prices. Diversification is not the be all and the end all that some feel would remove this problem. I believe it may only serve to bring hardship into the diversified areas.

We know that when countries can feed themselves there is wealth, affluence, and prosperity. The reverse is true when countries cannot feed themselves. We need to remember this.

I would compare the Red River situation to the situation we have in our part of the world. The Red River in many ways provided work because of insurance and the moneys that were put in place. People were able to make a living from the disaster, if you will.

In our situation, that is not the case. In fact, the reverse is the case. It is not as visible. The flood, from the air, was obviously a very visible and tangible sight. The situation we are faced with is not. It is one that doesn't have a sense of urgency attached to it, and we need to recognize that there is a great deal of urgency.

• 0925

The Minister of Agriculture and Agri-Food has told us that he has failed, and it seems as though he wants us all to feel the pain of his failure. One has to ask the question, is this what we are looking for in leadership?

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

We will now hear from Mr. Rempel.

Mr. Henry Rempel (Individual Presentation): I have listened to the three presentations. That is all I have heard so far. I should be able to do it in a little less time.

First of all, I left the farm at the age of 23. I moved back to the farm at age 41, in 1967, and I have sort of made my living on the farm, or I have lived on the farm. The person to my left has a farm that in our area we consider to be a large farm. We have a few of them.

I go out for coffee every now and then and try to get the drift of what is happening.

I have a few points that I would like to mention. First of all, our school taxes, our taxes in total, are very high on land, as Susan will probably tell you. She has more experience with that than I have.

With respect to NISA, if you take the top 5% of the NISA accounts, they probably have as much money as the bottom 45%. NISA helps the big farmer. You have to be able to put money into it to do any good.

I withdrew $29,000 out of NISA this year, which is taxable. I think I have about another $23,000 left in it. In past government programs we had the LIFT program. I think it worked to a point. In our case, we used LIFT a couple of years ago. We saw what was coming. It worked against us because we couldn't increase summer fallow, etc., so we were penalized.

Government programs come and go. Either you are on the right side of them or you are on the wrong side. We have been on both sides.

In our area we have a few farmers. I don't hear them complaining, but there are some young fellows who must be having a rough time of it.

I was in Morden on Saturday and I talked to a hog farmer. He said that he has been in it two years and it is a bit rough for him. He said that he has put in for AIDA. I asked him about AIDA. He said that they haven't heard anything yet. He said that maybe that is because they have only been in it for two years.

I don't know. Certainly we wouldn't get anything out of AIDA. I looked at it three times and threw the forms back. There is too damn much paper. The government can't do anything without sending out a lot of paper.

Finally, they said that there are only seven pages you have to look at. I promised myself that if I ever pulled them out a fourth time I would do them myself. I did pull them out a fourth time. I almost put them back, but then I looked at them and there were two pages that didn't apply to me at all, so that left five. There was one page of statistical information. That wasn't hard to do.

• 0930

Being as I am in NISA, I found the other four not too bad either. It took me less than an hour and a half to do it. I sent it in. I think there was one question. They phoned me and my wife was able to answer it.

We got our returns back on AIDA. Of course we didn't get anything. I will fill them out again for the coming year, but we won't get anything this year either.

In our case, when I went back to the farm, we had the rough years in the early seventies. It wasn't too long before we were worth 50¢ on the dollar. The only thing that kept us on the farm was that we had a reasonably good reputation and the bank would have lost more than it would have gained by putting us off. We stayed on the farm and in a couple of years things turned around.

We have had more bad years than good years, but the good years have kept us there. Inflation has helped us. It has worked for us. We run a relatively small farm. We have 13 quarters of land and we keep 150 commercial cows.

For the last 20 years or so I have stayed on the farm. I have been keeping it so that my son can take over. He is farming. As you can see, I am probably the only senior citizen around here. My son is really doing the farming. I still balance the bank books and pay the bills.

We are staying, but the problem we have in today's time is that I find it a bit hard to have to put out as much as we are putting out just to keep the farm viable. The only reason we are able to do it—and we don't farm very seriously—is because we own the farm and we owe very little debt. I have a good enough line of credit, which I use every year.

I must say from what I have heard today that they are making a good case. We can stay on the farm, but we need help from the government. There is no way the government can expect farmers to stay with it if prices are this poor. It is too hard for many.

The Chair: Thank you, Mr. Rempel.

I think all four of you spoke extremely well. We have 27 or 28 minutes, so I think we can have questions from each party, and we will start with Mr. Mark of the Reform Party.

Mr. Inky Mark: Thank you, Mr. Chairman.

First, let me thank you for coming before the committee. What you have told us this morning is certainly not news to people who live in the west. Over the last year I have had the same kinds of concerns brought to my attention.

The biggest challenge I found over the last year was getting the government to realize the reality of the situation, the farm crisis, which is not only due to the weather problems of the past spring, but also the cash crunch from the previous year. Farmers have really been hit with a double whammy when it comes to trying to make a living.

The other concern I have is that it is not only affecting farmers, it is affecting communities in rural Manitoba and in western Canada generally. All communities are concerned about the livelihood and the viability of agriculture because it will have a huge impact, not only for the short term but certainly for the future.

The biggest criticism of AIDA is that not enough of that money is getting into the hands of the farmers. In this province, Manitoba, three-quarters of the money is still in government hands.

I know a short-term solution is the way to go because people need help. There is a crisis. What do you think needs to be done at this point in time to pry some of that AIDA money loose so that it gets into the hands of the farmers who are in need?

• 0935

Ms. Susan Van De Velde: I think it would make more sense for the government to make an across-the-board payment based on the productivity levels that are available to it. It wouldn't be a difficult thing to do.

I don't know why the forms have to be so complicated. I hear nothing but complaints from farmers that they can't work through the forms. We worked through our forms, but it took a good day's effort. If you are not used to doing your own accounting, then I think it would be a major undertaking for most farmers.

The way the program was set up originally, what it tended to do was to help the farmer who was trying to work his way out of business rather than the farmer who was trying to expand or maintain the level he was at.

I would suggest an across-the-board payment. It is taxable income; tax it back. If somebody gets too much money...I can assure you that farmers don't hoard their money, they spend it. It will go right into the rural economy and you will get it back. There will be a big spinoff.

I don't think it has to be as complicated as the government has made it.

Mr. Fred Tait: First of all, there has been no discussion at all as to the overall purpose of farm aid. If it is only to maintain production, then you would probably put it totally on an acreage basis without a cap. Probably 80% or 90% of the aid would go to the largest producers, who would expand their operations and production would be maintained.

If, on the other hand, you are looking at trying to bring some equilibrium to rural populations and retain diversity, there would be other models you could look at. One of course would be capping. The other could possibly be a very high acreage payment on the first 300 to 500 acres and then downrate it in sections after that. That would have the opposite effect. That would probably direct about 80% of the available funding to the medium and small producers, which statistics show are the ones who are most vulnerable.

There are other models of dealing with net income. Unfortunately, AIDA I think has probably destroyed the possibility of applying that in this environment.

The Chair: Mr. Calder.

Mr. Murray Calder: I went through the same thing back in the mid-1980s, Fred. At that time I was a pork producer. To be quite honest with you, I didn't like the direction of the industry, so I switched and went into supply management.

What I am looking at, and I think what this committee is looking at, is the short term but also the long term. It seems to be that we keep coming back to this all the time. Do you have any idea of what we could put in place that would stop us coming back to this problem?

Currently the federal budget sets aside approximately $600 million. The AIDA program has problems. I am the first one to admit that. The other side of the coin is that the minister has instructed the department to get all of the money out before Christmas, which basically means $3 million to $5 million a day to meet that schedule.

What should we be looking at? Should we be looking at an expanded NISA? Ontario still has the GRIP program. The GRIP program was out here, but the provinces did away with it. Should that be brought back?

Mr. Fred Tait: It would seem to me that NISA probably has done the same discriminatory things that I talked about earlier, in that the greatest amount of benefit was available to those in least need. Again it comes back to the question of what is our priority. I haven't heard the answer to that question.

The minister said that small and medium-sized producers are not sustainable in the first place and the best thing we could possibly do for them is force them off their land. I don't know if that is widely accepted. It certainly isn't accepted in the rural communities, but is it accepted from an urban perspective? That is where I see the gap.

• 0940

I don't see any of the models that we have used, at least in the last few years, as dealing with the situation, as I see it, from a personal perspective and from an organizational perspective. We very strongly oppose this continued de-population, because at some point we are going to pass over an equilibrium where it will start to bring into peril the food production system itself, the environment, etc.

As I said earlier, and I keep coming back to this business, in fairness, if you talk about individual family incomes, I think AIDA has gone so far, but you are looking at an emergency situation now and you have to get the money out quickly.

I don't know if I have given you answers; questions probably.

Mr. Murray Calder: I will address this question to Rey.

Rey, when you gave your presentation you talked about a minimum income level. Are you talking about the establishment, for instance, of a cost-of-production formula? Is that what you're talking about?

Mr. Rey Toews: That certainly is part of it, and it would take some time to arrive at that. I think that is something that should be looked at more for the long term.

There definitely needs to be some recognition, in whole or in part, that what we have today is not working and is not sustainable. The NISA program was never designed to work in a catastrophe as large as we have. It is a good program but it was not designed to do what we are asking it to do now. Those who are pulling out money will soon know that.

I still go back to the margins. Decreasing margins are simply decreasing margins. When you are working with decreasing margins of 70% or you are going to be paid on 70% of something that isn't working, it is still not working. You are no better off than you were before. You are not addressing the real problem.

Mr. Henry Rempel: Talking to one of our better farmers, a rich farmer, he said that everybody should be paid, that it should be across the board. I was also talking to the other end of the scale and they said that AIDA isn't working. The other side said that too, that AIDA isn't working. They said that the government should simply go to the income tax system and pay us accordingly, make us taxable. There you have the two sides.

Ms. Susan Van De Velde: We should look at some long-term solutions, perhaps tax breaks on fuel, fertilizer, that kind of thing, and then provincially at the educational tax levy.

I think there are places where we could be cutting our costs if we had a bit of federal and provincial help.

The Chair: Thank you, Murray.

Now we will let Mr. Proctor ask a question.

Mr. Dick Proctor: Thank you very much, John. I would like to begin by welcoming everybody and thanking them for their very comprehensive presentations.

I will approach it from the angle of last week's news out of Seattle, that the WTO round did not get off to a promising start. It would seem that we are several years, if not light years, away from resolving some of the subsidies that are being paid, to which many of you have alluded this morning.

My take on it, our party's take on it, is that Canada cut its domestic support payments to agriculture far more than was required under the 1993 GATT Uruguay Round. We cut about 40% more than was required. Now we are seeing that it is going to take some time to get a new round, to get new agreements. What do we do in the meantime? Surely one of the answers is for Canada simply to increase its level of support payments.

I think the loss of the WGTA particularly hurt western Canada. One of you mentioned that it could have been phased out over five years, but it was done in one year.

• 0945

In the short run, while we are trying to work out long-term solutions, shouldn't we simply be putting some money back into domestic support payments to help our beleaguered farmers?

Mr. Fred Tait: You are exactly correct. Failure to do that—and it is an emergency program, Dick—would result in farm losses. The projections I have seen are for five years. The lowest figure is a 25% reduction in the number of farm units and the highest is 50%.

When we talk about western grain transportation assistance, the Crow benefit, that has really been, I think, a fairly reasonable approach for Manitoba and Saskatchewan. It has been supported by all of the farm organizations, and we are very diverse in our opinions.

We said that, yes, we are going to have to have this money. Really what we asked for was a reinstatement of that money as an interim measure until adjustments are made, or we find long-term solutions, or we are able to deal with these disparities that our rather ridiculous trade negotiating position got us into. We get 9¢ on the dollar coming from government programs. The Americans get about 34¢ or 36¢, and the Europeans get 52¢.

Our negotiators put us into that position. I think there is some responsibility for our negotiators to compensate us for putting us in that situation. For them to deny that, one can hardly be polite.

Mr. Dick Proctor: I want to direct a question to Susan. You talked about an acreage payment. Of course, the government has rejected that, saying it would be in violation of some of our earlier trading arrangements.

Again, from my perspective, it is hard to see how you can have a level playing field when the farmers in Montana or North Dakota can have an acreage-based payment on their side of the 49th parallel, but on our side it would be a violation of our trading arrangements. I wonder if I could get your comments on that.

Ms. Susan Van De Velde: I know that in western Manitoba, with the flood of last spring, right across the border the North Dakota farmers got $80 an acre and unemployment insurance, and we got nothing. That is what we are trying to compete with. It is difficult.

Mr. Dick Proctor: I have one last question. Susan raised an interesting point and it goes, I think, to Mr. Toews' comment about a minimum income program. Do you think farmers should be allowed to pay into unemployment insurance or some sort of program that would enable them to have some financial assistance during the hard times that you are clearly experiencing?

Mr. Rey Toews: I suppose that would certainly help. I think, traditionally, farm people have not benefited from those programs because they seem never to be out of work. Out of cash, yes, but not out of work. There is an inequity, I think, and it has a bit of an ironic tone.

All of these things I think are worth looking at, and in the longer term they could be of assistance. However, very often the dollars that are needed are much more substantial than what unemployment insurance could provide, although I recognize that it has a certain value.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: Mr. Chair, I thank the presenters for being here and all of the people in the audience who have come out to give us their opinions.

I have a couple of questions. First of all, Susan, you mentioned a couple of times that perhaps one of the immediate responses should be a reduction in taxation, fuel taxes, and taxes on input costs. In your operation, can you give us some handle as to what that would mean to you financially if in fact those reductions could be put into place? I don't know how they would be implemented, but you obviously do your own books and you know how that impacts you. What kind of advantage would it give you if that were to be dealt with immediately?

• 0950

Ms. Susan Van De Velde: I haven't brought any figures with me. I know that on our farm our fixed costs are about $130 an acre.

Mr. Rick Borotsik: But you are talking about taxation. There is a cost, obviously, for fertilizer, for pesticides, for the gasoline you use in your vehicles. The taxation you deal with—and it has been mentioned a couple of times—do you have a handle on that?

Ms. Susan Van De Velde: I don't know the exact figures, but that would lower our costs of getting the crop in.

Mr. Rick Borotsik: But is it enough? I have heard it quite often, but I don't know how it would translate. I don't know what it would mean. Is it enough? If that were the only thing that came forward out of this meeting—

Ms. Susan Van De Velde: No. No, that wouldn't be enough.

Mr. Rick Borotsik: So it is not the major—

Ms. Susan Van De Velde: No. It is not the be all and the end all. It is just one thing that we could take a look at in the future to make our agricultural production a little more competitive. That's all.

Mr. Rick Borotsik: I still have to get a handle on it. Rey, do you want to speak to it?

Mr. Rey Toews: I will make an attempt. I don't know Susan's situation or position, but I will say that the reality of it is that the costs versus the income is still not enough. It is not meeting those needs.

I am going to go back and use the situation of a young farmer. If you are a young person and want to go into business for yourself, there is no way you can do it unless it is in some kind of a supply management situation or you have help. The cash needed is so great that it is virtually impossible. It is doomed to failure the way it is structured right now. You cannot generate enough money. Unless you own 50%, 60%, or 70% of your business, there is no way you can do it, and for today's young people it just won't happen.

Mr. Rick Borotsik: Another issue was mentioned. There are two issues that we have, particularly in southwestern Manitoba and Saskatchewan. One, obviously, is the commodity crisis in those areas, and we recognize that there is a serious problem.

The other issue is the natural disaster. I would like Susan, Rey, or Fred to comment on this question: What do you see with respect to the natural disaster that has happened? There are farmers in those areas who have taken no product off. There is no commodity sitting in the bin. How do you see the government dealing with that very unique situation? It is an extraordinary situation, which is outside the commodity crisis. How do you see that being handled by government? There was a provincial payment of $50 an acre and nothing more than that. Would you see any opportunity for the federal government to react to those areas?

Mr. Rey Toews: The irony of that is probably that those who got the fifty bucks an acre for not doing anything are maybe just as far ahead or further ahead than those who put a crop in, simply because the crop that was taken off was damaged due to the frost or the late planting.

I think it needs to be said that farmers work very hard. Sometimes they get the rap that they are out there for handouts and stop-gap measures, yet they will put a crop in. Even when they know it is close to the line, they want to do their work, because that is what they do. That is what we do.

What was your question? I got off on a bit of a tangent.

Mr. Rick Borotsik: I want to know if there is anything you have in mind that could be done about the disaster. If the guys who put their crops in are worse off than they would have been if they had not put their crops in, is there something we should be looking at there?

Mr. Rey Toews: Definitely.

Mr. Rick Borotsik: What?

Mr. Rey Toews: Probably the same. I think they need the equal treatment approach.

Mr. Rick Borotsik: Fifty bucks an acre?

Mr. Rey Toews: I will step out on a limb and say yes.

Ms. Susan Van De Velde: I would like to see a program like the crop insurance program.

Take a look at the situation we have had this year. Our problem was that even though we were living in an area that was considered a disaster area, unless we actually planted the crop we couldn't get any crop insurance.

We all have individual averages with the Manitoba crop insurance board. The board knows if you are a good producer, a moderate producer, or whatever. It has that information.

• 0955

I think in terms of the poor crops that resulted from being planted late, the damage that was done to machinery—all those kinds of spinoff effects could have been handled by crop insurance if the board would have had some kind of leeway to deal with a disastrous situation. I would like to see that addressed.

The Chair: Thank you very much. We have time for one short question from Mr. McGuire.

Mr. Joe McGuire: I would just remind everybody that it has been a year since we began working on this problem, which was created by precipitous hog price drops and grain price drops. Our infamous AIDA program was announced last December.

I think to be fair, Fred, it was our minister who wanted a program that was directed to the small and medium-sized operations and that is why he had a cap on it for larger ones.

But be that as it may, a lot of compromise was made among the provinces, the federal government, and farm organizations to come up with AIDA and the changes that have been made to AIDA since.

If we were looking at a permanent disaster program, how would you change the present one? We keep coming back to what we would do. To get away from the federal and provincial governments and their bureaucrats, and maybe even farm organizations and their bureaucrats, what would the regular farmer like to see in a long-term disaster relief program?

Mr. Henry Rempel: First of all, we want to be in the Quebec ice storm area or we want to be in the Red River Valley. Those are the two that get attention and we don't. We have had problems worse than that many times and we don't get attention. You have to be in an area where you can draw attention.

Mr. Joe McGuire: You want to move east, do you?

The Chair: Thank you very much.

Susan, I want to finish this round by making one comment and asking a short question. Your suggestion with respect to across-the-board acreage payments probably would draw at least the potential of a countervail from members of the WTO. I am sure you are acquainted with that.

Secondly, I think we have all become critics of AIDA. Despite the fact that 1999 is just about gone and we will be into the year 2000, and AIDA was for 1998 and 1999, there is still well over a billion dollars in that program. It is intrinsic to the AIDA program, which is targeted and based on income, that it is inherently slow in getting money out.

If through some magic all of that money for the two years was in the hands of farmers now, do you think the situation would be quite different than it is?

Ms. Susan Van De Velde: Yes, I do. I think it would mean that we could all pay our bills this year.

The Chair: Would it be fair to say that maybe AIDA—maybe—in principle, targeting those in need, except for the farmers who have had this sliding income for the last two or three years, was going in the right direction but it is just so damn slow in getting the money out?

Ms. Susan Van De Velde: Yes, and it doesn't address the people who had several bad years prior to the AIDA years.

The Chair: That's right.

Ms. Susan Van De Velde: It doesn't address their situation.

The Chair: Yes.

Mr. Rick Borotsik: Mr. Chairman, would you indulge me for 30 seconds?

The Chair: Yes.

Mr. Rick Borotsik: We have the vice-chairman of the Manitoba school trustees here, Mr. Toews. I wonder if I could ask him how this is affecting the school division. Are you finding any stress levels? Are your teachers coming forward and saying there is a much more difficult teaching environment right now than there was before? I know it is a social issue, but I think it is directly related to the farm issue. Can you give us a bit of an understanding as to what is happening in the school system?

Mr. Rey Toews: Yes, I would appreciate that. I really struggled and debated as to whether I should incorporate it into my presentation, but I decided not to.

The answer to that is yes. We are working with the Association of Manitoba Municipalities to deal with the education tax, the ESL, because our people are telling us that the level of taxation on property is too high.

• 1000

There is no question that the stress level is there.

I like to have a high presence in our schools, as much as time will allow, and people tell me that the answer to that question is yes. They see the stress that kids are under. Kids today are very much in tune and in touch with their world and what is happening around them, and they understand far clearer and better than we often given them credit for.

The Chair: Thank you, Mr. Toews. Thanks to all of you for your presentations.

We will now hear from the second group of farmers: Henry Reske, Ian Wishart, Ross Tufford, and Duncan Broadfoot.

After the second round we will hear from the Canada West Equipment Dealers Association and the Rural Disaster Recovery Coalition. For those of you who have come late, there will be time at the end of the meeting, at least half an hour, perhaps 45 minutes, for observations and questions from the floor.

I would like to welcome Mr. Broadfoot.

Mr. Duncan Broadfoot (Individual Presentation): Thank you, Mr. Harvard, ladies and gentlemen. I think one of the most important points we can make today is that you are finally here to hear what we have to say.

When I received the phone call the other day, I had some hesitation, I must say, about speaking to you. It has been a number of years since I have done this, through the Keystone Agricultural Producers and the CFA.

I do not wish to appear to be another western farmer with my hand out, whining. However, Manitoba farmers have been through a lot this year and much of it has not been good.

Mr. Harvard, I heard your statement on the radio a few minutes before coming. I wasn't going to include this paragraph, but I have to say that Mr. Vanclief's statement of a few weeks ago galvanized a lot of western Canadian farmers. His tough love approach did not go down well in my area. I had met with him previously. I understand where he is coming from, but it was not the best area to speak to.

Fifty percent of my farm was affected this year by excess moisture in the spring. It is the first year in my lifetime that I had to have a four-wheel-drive tractor to pull through the field to spray my crop before I even sowed it.

We all have crop insurance. We all met the extended crop deadlines. However, because of other factors—disease, cool weather—our cereal crops were disappointing. Thank goodness we have some crop insurance, as poor as it is.

The main factors that are affecting us are the GATT and the WTO negotiations. Canada was very noble in its last round of negotiations. We seem to have the approach that if you do this, we will give up something, and none of it happened.

• 1005

The Americans and the Europeans—and I probably shouldn't say it this desperately—screwed us. We gave up much too much. Our GRIP, our Crow rate, and many other things were given up too freely.

We may even look at the situation with cattle that we have had in the last six months. I know it is not a GATT position, but it hurt our markets in western Canada by at least $50 a head. They were not even sold out of the area, but the price dropped that much.

We have not been inefficient in our production. We have better land use. You will not see the dust storms we had in the 1980s. We have rotation, new crops, diversification, and the new zero till. There are many positive areas, sustainable areas. Streams and lakes are cleaner because of the reduction in the use of chemicals and fertilizers. There are more earth worms, as Gordon McPhee would say. There are wildlife benefits, buffer zones, and livestock planning. My own area of expertise is in the recycling of pesticides. More farmers are aware that they are on the edge of a new era of responsibility, but they cannot stand the unfair foreign market subsidies we face today without commitment by our governments.

The Canadian Agri-food Marketing Council has pointed out that it wants a 1% increase in the agricultural food market share by the year 2005. Where is it going to come from?

Western Canada has 80% of the arable land in Canada. Are we going to be paid for it?

We must have adequate safety nets. Risk management is an area in which we excel; however, we must be paid. Green areas, the GATT, and user fees must be taken over by government. Research dollars and development programs are included in this area.

I also bring this up, but I don't know how much it relates. My thoughts go back to 1963 when I was in university. I took a marketing course that was taught by Dr. Woods. I don't know whether any of you know him. At the time it was pointed out that we should enjoy about 25% of the food dollar that is paid by Canadian consumers. At that time it was 22%. Today I believe it is about 9%.

Please forgive my ramblings. In conclusion, I remind you that we can and will produce the food needed for our consumers. However, I have no equity left to produce it. Therefore, I must have a commitment by this government to continue.

The Chair: Thank you, Mr. Broadfoot.

We will now hear from Mr. Reske.

Mr. Henry Reske (Individual presentation): Thank you, Mr. Chairman, members of the agriculture committee.

I am going to tell you a bit about myself. I started farming in 1955. Back then one thing that was quite different from today is that prices were more stable. Your costs and what you got for your production were stable. It didn't differentiate like today.

We seem to be wandering from crisis to crisis these days. We had a serious crisis in 1992-93 and here we are again. We have had disasters caused by weather, but we have also had disasters caused by prices.

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Programs were put in place, such as the western grain stabilization program, GRIP, NISA, and now AIDA, which obviously has a lot of problems. I have read a lot of news articles about it. We have had all kinds of experiences with it, but it is not doing anything. It is not doing what it was obviously intended for.

With the exception of supply management, all commodities are down in price. It is disastrous.

It has often been said about agriculture that there is a cheap food policy in place that past governments have dwelt on and that this is what we have now. I sort of disagree with that. I will give you some examples.

I just looked at the Co-operator pork prices. Pork is 61¢ a pound, give or take a penny. But when you look at the cuts at the supermarket, they range from the low end of $2.25—and I got these from a flyer announcing a sale—to as much as $4 for the better cuts.

Beef is around 95¢ to 99¢ for choice steer. Those are the prices I got from the Co-operator. Again, if we look at the lower end, ground beef, for example, it is $2.50 and the better cuts are $6. There is a huge price spread, and the gap is getting wider and wider.

It doesn't seem to matter what programs we put in place to make up the difference. It costs a lot of money. Apparently the Europeans have learned from this. They have put a lot of money into subsidizing their farmers to make up the difference.

If we were to put something in place, perhaps we should look at a number of things. One is that we should tie our farm-gate prices to the retail price by some formula.

I brought two friends with me and on the way here we talked about the set-aside program. The idea came up that perhaps we should be looking at a 15% set-aside and use that 15% of the land to produce crops for energy—for example, canola for diesel energy or ethanol.

We need to put money back into agriculture. There is a crisis and we need to deal with it.

We are being told that we need more competition, that there needs to be more competitiveness. When I look around me, that is a joke. Just last week it was announced that Exxon is merging with Mobil Oil. Our airlines are merging. Gerry Schwartz came along. He didn't want to buy Canadian Airlines to compete with Air Canada; he wanted the whole picture. We see this with grain companies and seed companies merging with chemical companies. As far as I am concerned, we are not doing what we are saying. There isn't more competition. It is being lowered down to where we are seeing monopolies. There will be a handful of companies out there.

I disagree that we are dealing with this in a rational manner. We are not. It is not true either. We saw mergers just recently, in the last few years, with ADM, the UGG, and the Alberta pool, and the list goes on.

Now we are looking at fuel prices, another energy crisis possibly coming up. In the last few weeks prices have increased by at least 10¢ a litre. In agriculture we are very dependent on energy. Fertilizers, all of our inputs, are related to energy costs and they reflect back to them.

I am concerned about the WTO negotiations. In my view, if we are going to remove subsidies, then we have to do it fairly and equitably. In the last round we gave up the Crow rate and received nothing in return.

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It seems to me that the group we are sending to the negotiations this time, gathering from news articles in the paper, is willing to put the Wheat Board on the table. I don't want to give up the Wheat Board. It is not a supply management organization; it is an agency that sells our crops. To be able to compete against other countries and the huge handful of companies that are merging, we need the Wheat Board to deal with them.

If the agreement is supposed to bring cheap labour, to our benefit, then I think it is a sad situation. Really what you are doing is you are keeping labour in the third world countries poor and you are unemploying ours. That is really what you are doing. In the end it comes back to us and we have to pay for it.

Thank you for giving me this time to address a few problems.

The Chair: Thank you very much, Mr. Reske. We appreciate it a lot.

I should tell you that in the negotiation position that was struck by the federal government, and the position that has been taken to the WTO, there is no hint of negotiating away the Wheat Board. The language I think is pretty strong that the government supports the Wheat Board. We can talk about that later, if you care to.

Now we will hear from Mr. Tufford. Thank you for coming, and welcome.

Mr. Ross Tufford (Individual Presentation): Thank you, Mr. Harvard, committee members, ladies and gentlemen. I have to say that I wasn't clear as to why I was invited to appear before the committee, whether it is because I am a farmer or because I am a farm equipment dealer. I own and operate a farm equipment dealership and, together with my wife, our family farm. However, because I feel it is not often that one gets a chance to be heard, I welcome this opportunity.

As we are all aware, or at least should be, the farm community is in crisis. As a farmer, during the last decade I have seen margins disappear, and as a farm equipment dealer, although to a lesser extent, the same trend prevails.

Where are we headed and why? What steps can we take to enhance the nature of our agriculturally based economy?

These are questions that deserve serious and careful consideration. We need to plan our futures, not just react to situations in a way that is politically acceptable. It has been my experience that governments tend to act in a way that they feel will make them popular at the polls. Long-term strategic planning never seems to be the chosen path.

Some seem convinced that our current crisis is simply a result of poor commodity prices. While this is partly true, we should examine some of the factors that also contribute to an unhealthy farm situation.

Our farmers are becoming more and more productive, while at the same time less and less profitable.

In the years since 1974, gross farm income has tripled, from $9 billion to over $29 billion. Input suppliers, however, have captured 100% of this increase, and as a result net farm incomes are lower today than they were 25 years ago.

We can do very little about the global price of our products. We are told that subsidies by the Europeans and the Americans are causing the low prices, so we should do everything we can to end the subsidy war. While this is a noble cause, it is staggeringly unfair to try to do it unilaterally on the backs of Canadian farmers. In Europe, 56¢ of every dollar from a farmer's wheat sale is subsidized by government, and in the U.S. it is 38¢, while in Canada it is 9¢.

Why are we unable to get a fair deal for our farmers at the trade talks? Why do we continually bow to pressure from Americans and others while they continue to protect their producers?

I believe we need to focus on not just prices but on what happens to the dollars currently generated on our farms. Farmers are expected to pay for many things over which they have no control. One of these things is called demurrage. Maybe you are familiar with it. If a ship is at the port and cannot be loaded for any one of a number of reasons, demurrage is charged. Sometimes it is in the millions of dollars. Who pays for this? You guessed it: the farmers. I would like to know why. Once a farmer has delivered his grain to his local delivery point, it is out of his hands. If the railways or the grain companies can't get the job done, why then should the farmer pay for this incompetence?

• 1020

In 1998, CN and CP profits exceeded the combined realized net incomes of all 79,000 farmers in Saskatchewan and Manitoba. In the same year, Cargill Grain had revenues of $75 billion, making it two and a half times as large as the entire Canadian farm sector. There is something wrong with this picture.

Farmers are continually told they need to become more efficient. In 1974 a farmer received 5¢ from a loaf of bread worth 43¢. Today he receives 5¢ from a loaf of bread worth $1.33. Maybe the processors and retailers, not the farmers, could become a little more efficient.

We embrace new technologies that are supposed to make us more productive and more profitable. But who really benefits from these technologies? Some of these technologies make us more productive but ultimately only add to the oversupply problem and the resulting lower prices. The real beneficiaries of these technologies are the companies that supply them.

Here are some examples. In the 1970s we were introduced to a non-selective herbicide called Roundup. We could use it to control difficult weeds like crabgrass and thistles, right down to the root system. This luxury, however, would cost us dearly.

The cost per treated acre was about $45. We used the product, and the oversupply of grain notwithstanding, we produced more crop on previously less productive soils. A few years later, when a generic duplicate of this chemical was introduced, the price began to fall rapidly, to the point where it now costs about $10 per acre.

The chemical companies decided they must find new ways to extract money from the producer. Along came genetically altered crops. Now we can plant a variety of canola, for example, that is resistant to the herbicide Roundup. This would let us grow canola in previously weed-infested soils and allow us to economically control a broad spectrum of weeds. There was a catch, however. In order for the privilege to plant this crop we would have to pay $15 per seeded acre to Monsanto. It is not very difficult to see where the economic benefit for this one is headed.

More recently we have learned that some of our customers do not wish to buy crops grown from genetically modified seed. As we have no way to distinguish GMOs from non-GMOs, it became clear that research was needed to find a way. Who do you think should pay for this research? I was absolutely outraged to read that the Canadian Wheat Board had committed $1.5 million of farmers' money toward this research.

My suggestion to the government is to ban the production of these crops until such time as their promoters can provide us with a self-funded method for keeping these crops separate from other crops.

These technologies have nothing to do with making farmers more profitable or feeding the world's starving masses. They have only to do with profits for large chemical companies. The sooner we wake up and realize it, the better.

As a farm equipment dealer it is startling clear to me that our industry is hurting. In 1999 sales of combines and tractors were down about 50% from 1998 levels, and 1998 sales were down from 1997 levels. It should, however, be just as clear to other taxpayers, whether they sell shoes, hardware, or build houses, that our economy is driven by agriculture. If we fail to protect our primary producer, we will all suffer the consequences.

The Chair: Thank you, Mr. Tufford.

Now we will hear from Ian Wishart. Welcome, Mr. Wishart.

Mr. Ian Wishart (Individual Presentation): Thank you very much, Mr. Chairman, committee members. I appreciate the opportunity to be here today. I know you have had wide-ranging discussions and presentations on a number of points. I am going to be fairly specific because we have come up with a suggested alternative that you may find useful. I am not going to pretend that it will solve all of the problems, and it is certainly not a short-term solution.

There are many reasons that I wanted to come today. A lot of change has taken place in agriculture since farmers came to this country. Since the time of the Homestead Act there has been a lot of transition. We are certainly not done yet, but in the last 10 years we have seen transition at an accelerated rate, a lot of it due to the change in the WGTA. Farmers were given a period of time when they were supposed to make the adjustment. However, when it takes 50 years to put something in place, you don't change it overnight. Farmers seem to be running out of time to make the adjustment.

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It has been devastating in many rural communities. I am tired of seeing empty farmsteads scattered around the countryside. I am sure that if this sort of thing was happening in big cities and every other house was empty, the government would be up in arms over this type of impact. This is the type of impact that is happening in rural communities, but no one seems to be catching on.

We have proposed an acreage set-aside program. I know it was mentioned earlier. I will give you a bit of background as to what assumptions were made in this proposal.

We were assuming at the outset that crop insurance would remain and that, in addition to the standard crop insurance and excess moisture insurance, a clause would be added to pick up any situation such as arose this last spring in the southwest, which in fact has already been proposed. I know the provincial government is looking on it favourably. I can't say what the federal government is doing.

We would continue with the NISA program, which many farmers accept as a good short-term stop-gap measure. If an individual farm or a very small area is impacted negatively, it comes into play and seems to serve a role.

We also assumed that the AIDA program, as it is currently proposed, would be able to fill at least some level in the short-term crisis situation. There is certainly room for criticism. However, I don't think it is a program that can't be made to work with some major changes. The specifics of it are becoming a nightmare. My wife, a chartered accountant, does a number of applications on behalf of farmers, and the list of appalling examples gets longer every day. A lot of the problems are based on the fact that the people who are administering the program don't use good accounting principles. I don't want to get into this discussion because it could go on for quite a while and become very specific, but I assume that AIDA could be made to work.

What we are proposing is a nine-year program in three-year blocks. A percentage of each farm operation would be paid to set aside acres. The number we are proposing is approximately 20%. Initially, a price per acre could be established to pay farmers via several methods, one being productivity ratings. We could either use crop insurance data or Canada Land Inventory data, both of which are available for every farmable acre in Canada.

Participation in areas would be targeted based on percentages that would be desirable for other factors, such as the environment. It would also have to be limited based on available funding.

The establishment of a price per acre could follow the same format as the American CRP program when it originally came into play. It was an offer and acceptance system. They had a target percentage in each area and they went out to farmers in that area and offered them a price per acre. The farmers either accepted it or rejected it en masse. If they got the percentage of the acres they wanted in a particular area, then that was it, the deal was done. If they didn't, an offer came back from the government at a higher level until they targeted the percentage they wanted in a particular area. That way you could get by the criticism of overpaying. It becomes an offer and acceptance system.

Once you have established participation in an area, farmers would be able to do a number of things. I list a few examples. Every time I talk to producers I seem to come away with another example that might be added to this list.

The first would be permanent forage acres. That would be land that would be sown down for one year or longer and would not necessarily be harvested or grazed, but would be available as an emergency source of feed, should there be a specific emergency.

The second would be grain manure crops. This is a rotatable situation. A percentage of a given farm, say 20%, would be in grain manure crops and they would be moved around, of course, from year to year. This has a number of positive soil conservation and environmental factors.

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The third would be chem fallow. This would be to allow adaptations of this program into the dryland cropping areas of the province where chem fallow has become a fairly standard practice.

The use of new tame pasture would allow limited grazing and therefore would not take marginal land or low-quality land out of production altogether, but would still allow livestock expansion, which I think is probably necessary for the economic future of Manitoba.

We are also talking about giving bonuses to producers based on water storage areas. We in Manitoba have our share of floods, either locally or regionally, such as the Red River Valley flood. There is limited opportunity, at considerable expense to the government, to address this problem. However, individual farmers, if enough of them participated, could actually have an impact on a farm by farm basis.

You also could bonus producers based on their riparian zones, along rivers that are considered to be environmentally sensitive, and also in the case of areas with endangered species.

I will touch on a few of the benefits. First, a program like this would be considered trade neutral. In fact, most of our competitors in world trade already have similar programs. The Europeans have them and the United States has its CRP.

A reduction in acreage of perhaps 20% would send the markets a message, although I don't pretend to think that 20% of western Canada would have an impact on world markets. In fact, I think you could probably take all of western Canada out of production and there wouldn't be an impact on world markets.

Experience based on the CRP in the United States would suggest that in fact you would only get a 5% to 8% reduction in productivity if you take 20% of the land out of production. That is actually a positive factor, because one of the criticisms of the CRP was that it was devastating on the farm supply dealers and the farm equipment dealers in rural areas. You don't really want to take a big chunk out of production on a permanent basis if you wish the infrastructure to survive that is there to serve it.

A reduction in acreage would also decrease the demand for inputs on each individual farm. Therefore, there would be a little more cash to go around. We are proposing that the money in this type of program be paid to the farmer each spring, when land rent is often due. That would allow the farmer to have the cash to operate a little more efficiently and not to have to borrow quite so heavily.

Farm demographics in Manitoba in particular are such that we have a lot of older farmers. I know many of them are looking for ways to retire from farming, either on a phase-out basis or abruptly, without having to take into consideration what happens in the markets. If there is 20% reduction in the number of farmers due to economic reasons, that will have a negative impact on farmland prices. This type of program would allow them to put 20% of their land into the program. The rest of it would be available, if they wish to cease farming, to be rented.

In fact this happened in the initial years of the CRP. It actually freed up land, and younger farmers or farmers who wished to expand were quick to take advantage of it. They had surplus equipment and capacity to do that because they too had enrolled 20% of their land in the program.

What we end up with is the rationalization of farmland. I think we all recognize that if you were paying farmers to set aside land, very likely the land they would set aside would be the least productive. That is not all negative. Farmers would end up producing on their better land, which is usually the most profitable. I know in my own situation that the better the land, the more profitable it is.

This would also reduce demand on financial institutions and make farmers a little more independent.

It would have a number of positive environmental and wildlife factors, and I have had some discussion with non-governmental agencies in this regard. Proposals like this have been circulated. In fact, under the North American waterfowl management plan, a proposal has been circulating for about six months. In many ways it is very similar, but it looks at the program as being a much longer-term program than we did.

It might become a method to incorporate the carbon credit system that agriculture hopefully can take advantage of. So far we are a long way from the position where carbon credits could become a valuable asset to farmers. In fact, the only business transaction in Canada on carbon credit seems to involve the petrochemical industry in Alberta buying carbon credits from farmers in the United States. It is kind of ironic when you think about it.

• 1035

This has been prepared from our producers' point of view, as to how it might work for us. I know it is a thumbnail sketch. We have certainly expanded it in terms of details in some aspects, but it is premature to go into too much detail until we know we have a commitment on behalf of governments to get involved.

I also know that it doesn't address all of the problems. Certainly it doesn't get into the whole concept of value-added, in which I think western Canadians, particularly the Manitoba and Saskatchewan producers, have to be involved.

We are starting from behind on that, simply because of the WGTA. We have to catch up to our American counterparts. They had 50 years of transition from small operations to larger, more economic operations. We haven't got that advantage.

I would like to mention, in terms of value-added, that they keep telling us we can use producer-funded or closed co-ops to make it work here in Manitoba. I have certainly looked at that and have found that the differences between the Canadian and American legislation take away some of the big advantages.

Yes, we need to look at that. Here in Canada we have to pay tax on retained earnings that are held in the co-op, whether or not we receive them. In the United States they do not. Of course that is a considerable incentive to leave your money in that co-op and reinvest in that co-op. Very soon they become very solid financial organizations because the money that stays is tax free. There is quite an incentive for producers to do that.

In summation, this is really not about paying farmers not to farm. It is about allowing the agricultural economy to restructure, giving it a little time to do so and making farm communities more viable so that they have a fighting chance to survive and become a major contributor to the Canadian economy again.

The Chair: Thank you, Mr. Wishart.

You didn't mention a price tag. Do you have any idea what the price tag is?

Mr. Ian Wishart: Yes. I have just done Manitoba's figures. Using an approximate per acre value on a 20% figure, we would be looking at $60 million to $80 million a year.

The Chair: For the province?

Mr. Ian Wishart: For the province, yes. I am not suggesting that it all should come out of agricultural funding, by the way.

The Chair: Thank you.

We will start the questioning with Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chairman.

Thank you for your presentations. I was glad to hear Ian bring up the whole business of the impact on rural communities, because this crisis is much bigger than just the impact it has on farmers. Many of the municipalities in my riding have passed resolutions and forwarded them on to the minister.

My question is for Ross, as he is in the machinery business. I know that in my riding numerous businesses have been severely impacted. What is your projection? If there is no help to alleviate this crisis situation, what will happen by the summer of 2000 in your industry?

Mr. Ross Tufford: It is already happening. The industry is being rationalized.

Everybody is probably aware of large machinery manufacturing companies merging. We are very, very close to losing our last tractor manufacturing facility in Canada. I think it is a foregone conclusion that it will be gone.

We need legislation in the farm equipment industry to protect us from some of the strict dealer purity issues that manufacturers are forcing upon us. They are restricting competition. They are making it difficult for farmers to have a choice as to where they purchase their farm equipment and what brands of farm equipment they may purchase. The manufacturers who still exist in western Canada are expert manufacturers and produce high-technology equipment. The big foreign builders don't want to let their dealers sell that equipment. So we are threatened on several fronts.

It is difficult for Canadian manufacturers to stay in business and compete in this situation. Those Canadian manufacturers employ people. I consider them to be of huge value to our economy. But if we are not protected, particularly from the dealer purity issues, our industry will be in serious trouble.

• 1040

The Chair: Mr. McCormick.

Mr. Larry McCormick: I would like to thank all of the witnesses for being here. There are many topics, from the GMOs to dealer purity issues and the trade talks. We sure can't wait for the WTO to make changes that will help commodity prices in the west. That is down the road.

We flew here this morning. We could have driven just as quickly, but we are continuing throughout the prairies. As I walked through security at the Winnipeg airport, the lady asked “What are you people doing here?” I told her. That is the one benefit you have had in the west for 40 years. She said, “Do something. Listen to these people, because what is bad for the farmer makes a difference in Winnipeg.” I wish there was that awareness in Ontario. That is what we have been trying to do in our committee, in our rural caucus, and when we report each week to cabinet.

We have been talking about long-range solutions, but I have a question about the short term. There are three disasters: commodity prices, the weather, and AIDA. The design and delivery of that program has been a disaster, as far as I am concerned, and I am sitting on the government side.

The end of the year is very close. We need to hear from the groups we meet—and I have met with municipalities in Manitoba, Saskatchewan, and Alberta—how we can change this program for the next year to get the money out. It has been a disaster.

Also, Ian, if you have any more information, we would like to give the department some of your ideas.

I would like to get your ideas on how we could get the money out more quickly, whether we need to look at a different year-end or whatever.

Mr. Ian Wishart: I can make a few comments, but I said I didn't want to get into too much detail.

Certainly there should be a longer term for the base period. I know that won't make the project simpler, but there should be a five-year window rather than a three-year window, and you could drop—

The Chair: What is the reference period now, Mr. Wishart?

Mr. Ian Wishart: The reference period now is three years. There should be a longer reference period, going to five.

We should drop the highs and lows for the so-called Olympic average concept, and I understand that is acceptable under the GATT.

The Chair: That has already been added to AIDA. That was part of the amendment.

Mr. Ian Wishart: All right. That was the most recent amendment. I'm sorry.

Also, one of the areas that we found difficult on an individual basis was, when your farm size is increasing it is very difficult to make this program work for you. They go in and try to make what they call accrual adjustments, using very questionable techniques.

I can give you one very specific example. They count your inventory at the start of the year in grain, count it at the end, subtract the two, and value that based on the year-end price. That may sound like it is right, but try it with numbers attached and you will find that it is completely wrong.

Mr. Larry McCormick: What do you suggest?

Mr. Ian Wishart: Use good accounting principles. Accountants would never do that. They would use the dollars, start and finish, not value in inventory. I couldn't imagine how they ever thought that would work. That is just a specific.

The Chair: Do you want further answers, Larry, on the question of how to improve AIDA?

Mr. Larry McCormick: We have this money allotted for next year. I don't say it is enough and I don't think any of us would. We would like to supplement it. I think we have to work until we get more money for 1999, let alone the start of the commodity prices.

Whether you bring your comments now or later, I know there are others in the room who will get back to us. I can see a lot of huddling going on between now and the end of January to address the program. I am ashamed of the delivery of it. That is my opinion.

• 1045

The Chair: Mr. Proctor.

Mr. Dick Proctor: I want to refer to a comment that was made at the end of the last session, with the last four witnesses who appeared, and it picks up on Larry's point about the slowness of getting the AIDA money out.

In preparation for this tour of the prairies, members of the committee were given the latest information on AIDA. I am looking at the information for Manitoba and I see that there have been almost 3,700 claims processed by the folks at AIDA.

By the way, you spell “accrual” accounting as “a cruel” when it comes to the AIDA program.

There have been 3,695 claims processed and 1,591 have been paid out, with an average payment of just under $14,000. That suggests to me that just over 40% of the farmers who applied for AIDA in the province of Manitoba are getting anything.

The Chair: I am sorry to interrupt, but you may not have the latest figures. I have them for December 2.

The total value of payments to Manitoba farmers is now $35,443,000, with an average payment of $17,090.

Mr. Dick Proctor: All right. Do you know how many claims have been processed in Manitoba and how many have been paid out?

The Chair: The number of claims that have been processed in Manitoba is 5,188 and the number of claims paid out is 2,074.

Mr. Dick Proctor: We are still just over 40%. I don't know what the numbers are, but whether we pay out the billion dollars that is still in the plan, and get it out by tomorrow morning, half of the people who are applying aren't ever going to get a penny.

Somebody said that if the program was dramatically restructured it could be made to work. I tend to buy into that argument, but the dramatic restructuring is where the emphasis is. I would like your comments and suggestions. What do we do with it?

Mr. Ian Wishart: I have one idea regarding that, but I haven't been able to do the analysis on it. You certainly have the figures, but I don't.

It seemed to me that the whole point of trying to make accrual corrections was a waste of time. You might as well have done it on a cash basis, because in most cases producers were already at the end of the first year before we even knew there might be a program. We are pretty near the end of the second year. It doesn't take producers very long to figure out a loophole, but leaving that aside, if there is any overpayment it is probably a very minor amount and you will get it back one way or the other, because, as was pointed out earlier, farmers spend their money. It will go back into the economy. It will go into the rural economy where it is needed the most.

Is that all bad?

The Chair: No.

Mr. Broadfoot, do you have a comment to make?

Mr. Duncan Broadfoot: I have a comment regarding the administrative cost of the program. It is utterly fantastic. I am wondering if there wasn't a simpler method. Previous speakers have said that maybe a cash payment per acre would have been simpler and much easier to administer.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: In the last number of presentations, and Mr. Broadfoot in particular, the EU has been blamed for a lot of our problems. I should tell you, for the record, that there is room within our safety net programs for more dollars. Don't simply blame the EU. There was a ratcheting back of substantial support. Previous support that was there was ratcheted back for financial reasons, not specifically because of the EU. I want you to know that for the record.

Mr. Broadfoot, you said that 50% of your area was affected by the floods or too much water. You put your crop in. You have crop insurance. In your experience, did the crop insurance cover your cost of inputs for that particular crop or were you still in a severe loss situation even after the crop insurance payout?

Mr. Duncan Broadfoot: I can't tell you exactly, but I would suppose, yes, that it will be below what it cost.

Mr. Rick Borotsik: Mr. Wishart, you mentioned the terms “we” and “us”. Who are “we” and “us”?

Mr. Ian Wishart: I'm sorry. This presentation was based on discussions with District 6 of the Keystone Agricultural Producers. It has gone to general council and has some support in principle, although the specifics have never been presented.

• 1050

Mr. Rick Borotsik: Thank you for that clarification. I knew you were with KAP, but I wanted to let the rest of the people know that obviously KAP is talking about a set-=aside program. I find that rather intriguing, quite frankly. I talked to a couple of farmers over this past weekend and even outside your organization they have come up with the suggestion of a 20% set-aside. It is very interesting. It would be nice to see you flesh out that program and we could talk more about it.

When you went through the proposal of the set-aside you talked about a number of functions, the permanent forage, the environmental side of it, water storage, and a number of areas. What came to mind initially was a term called multi-functionality, which is something the Europeans are grasping on to quite definitely. In fact, they use that as the philosophy of agriculture, particularly in France and in other European countries. Does your organization see us heading in the same direction?

I don't know if you have a handle on this yet, but I have seen in my experience in southwestern Manitoba a lot of additional acres coming into cultivation. There are a lot of areas that are being broken now, being cultivated, that weren't cultivated previously. There is a lot of bush that is being bulldozed out and brought into cultivation.

Does your organization have a handle on how many more acres in Manitoba came into cultivation over the last five years? You are now talking about a 20% set-aside. How much additional cultivation came in over the last five years? Do you have a handle on that?

Mr. Ian Wishart: The organization, Keystone, probably wouldn't know, other than trends, as you have pointed out.

I know from some of the crop insurance data that the seeded acreage has actually been dropping from what it was in the 1970s when the WGTA was in place and grain production was king. We are finding that forage acres in particular are reducing. I couldn't quote you numbers. The trend is slightly downward, but nowhere near a rapid rate.

I recognize that there is an awful lot of land that is still being cleared and drained, particularly in the southwest, and I am somewhat concerned about what that is going to mean the next time we get a wet spring, where that water is going to end up.

Mr. Rick Borotsik: I think we had that concern this past spring.

Mr. Ian Wishart: Yes. I know this fall was a blessing in that corner of the world, in that it allowed that area to dry up, but it also allowed an awful lot of drainage work to be done, and I am not too sure that is going to prove to be the long-term solution.

Mr. Rick Borotsik: Can you deal with multi-functionality? I want to hear your philosophies, because it is obviously a philosophy that the Europeans are dealing with.

Mr. Ian Wishart: You are presented with it from the European point of argument. I think most producers are pretty good stewards of the land and, given any kind of incentive at all, would work quite comfortably with non-governmental and environmental agencies to set up a type of structure with which we both could live.

As I pointed out, we are not talking about having a major impact in terms of productivity, even with a 20% set-aside. Sure, we are all proud of how many acres we farm, but how much we sell is what really matters.

Mr. Rick Borotsik: What would be the cost of that? I think you mentioned $78 million. I can't remember the numbers.

Mr. Ian Wishart: It was $60 million to $80 million. That is just for Manitoba, and these are ballpark numbers.

Mr. Rick Borotsik: Ballpark numbers based on what kind of cost per acre?

Mr. Ian Wishart: That would probably give us an average cost of about $35 per set-aside acre. And I am not going to suggest for a moment that it all should come out of agricultural funding.

Mr. Rick Borotsik: I wanted to ask you that. When you said that, I said the environment, obviously, should be one of the areas as well.

Give me some of your thoughts as to where the other dollars should flow from, if not just simply agriculture.

Mr. Ian Wishart: Certainly the environment. Some of the non-governmental agencies have indicated that they might talk about it. As well, the carbon credits might be another source, and I don't know where you would take that money from.

The Chair: Thank you.

Although we are out of time, out of respect for Mr. Hoeppner, in whose riding we are located, we will allow him one question.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ind. Ref.): I would first like to thank members of the standing committee for coming to this area, which is one of the most productive and diversified areas in Canada.

Mr. Rick Borotsik: Southwestern Manitoba.

Mr. Jake Hoeppner: Okay. I will go along with that.

We have a cash crunch right now. I hear from farmers right across my riding who are saying that the research funds that are deducted at source by the Wheat Board, by the pulse crop, or by canola growers, are dwindling. People are pulling out of those programs.

• 1055

Would you think it would be a good idea that government should take over some of this funding? I can see your research is going to be devastated if we don't get control of our cashflow.

Mr. Duncan Broadfoot: Mr. Hoeppner, it is a green area. Yes, they should definitely take it over. It was there, and previously we developed many of our grains through that method.

Mr. Ross Tufford: In terms of research, I alluded in my presentation to the fact that these new technologies that are researched are not designed to benefit the farmer or the taxpayer as a whole. Perhaps the people who are promoting these things should be paying the cost of the research.

Mr. Henry Reske: I think research is important. If we can't get it from private enterprise, then we need to go to government.

There have been a number of areas over the last number of years, with the GMOs, chemical herbicide spraying, and so on. We need to develop these things. We have developed a resistance to some things over the years and we need to continue the research.

I want to comment on the value-added situation that somebody mentioned. If you go across the line into the U.S., along Highway 29, you see sugar plants in the Red River Valley, while ours are closed. Why is that? Why are we doing these things? We are talking value-added and the opposite is happening. This isn't quite dealing with reality.

In my opinion, we should have a sugar plant here and it should be operating. Crops were taken away from us that were good cash crops. They are no longer here.

The Chair: Thank you.

I want to ask a question. It is not an AIDA question; it is more of a philosophical question. I would like to ask all four of you to give me a short answer.

Which would you prefer: a targeted assistance program, targeted at those farmers who need it, or an across-the-board program that would go to all farmers regardless of whether they need assistance?

Mr. Duncan Broadfoot: Normally it would be targeted.

Mr. Ross Tufford: I would agree with targeted.

Mr. Ian Wishart: Likewise, I would agree.

Mr. Henry Reske: I would like to say more than that. If you have a disaster in an area, then it is targeted, but if there are low prices, as we have now, it doesn't matter what commodity you go to, the prices are disastrous. You might as well go through the whole lot and then you can go to the other extreme.

The Chair: Thank you very much. On behalf of all members, I would like to thank all of you. We really appreciate it.

We will now hear presentations from two groups: the Canada West Equipment Dealers Association, represented by Clark Tweed, the president, and the Rural Disaster Recovery Coalition, represented by Donald R. Dewar, the president—and, by the way, he is also the president of KAP—and Ray Redfern.

I want to welcome Mr. Tweed from the Canada West Equipment Dealers Association, and of course Mr. Dewar, who represents the Rural Disaster Recovery Coalition, as well as Mr. Redfern.

Mr. Tweed, would you mind leading off this segment?

• 1100

Mr. Clark Tweed (President, Canada West Equipment Dealers Association): Thank you, Mr. Chairman. I want to apologize on behalf of our executive vice-president, who was to be here today. He regretfully had some personal matters that prevented him from coming, so I am sort of flying on a wing without him by my side.

It is an honour to be here today. I will try to provide you with an update on the financial impact our industry is challenged with as a result of the effects brought on by the financial crisis the farmers in western Canada are facing.

As president of Canada West, I must say that we have seen dramatic changes within the equipment dealer industry over the last several years. A lot of the changes have resulted directly from the troubled farm economy in western Canada. According to Agriculture and Agri-Food Canada, national net farm income for 1999 was predicted to be cut by almost half this year.

Farmers are still trying to recuperate from the last two years, and many farmers, although able to cover most of their input costs, are finding it difficult to pay mortgages and other bills.

How does this affect equipment dealers in western Canada? In 1997 equipment sales in Canada were strong. In 1998 sales were down considerably in every category of new equipment. In 1998, according to the Canadian Farm and Industrial Equipment Institute, CFIEI, sales of four-wheel-drive tractors were down 54%, two-wheel-drive tractors over 100 horsepower were down 18.4%, self-propelled combines were down 37%, and round bailers were down 10%.

In 1999 the sales were down considerably over 1998 numbers. The 1999 sales of four-wheel-drive tractors declined a further 27.6%, two-wheel-drive tractors over 100 horsepower were down a further 30%, two-wheel-drive tractors under 100 horsepower were down 4%, and combines declined a further 45%.

The decrease in these markets is largely due to the impact of the declining agricultural economies in western Canada. All equipment sales have been greatly affected by the low commodity prices and high input costs faced by farmers.

Low farm income has drastically affected sales, and due to this, western Canadian equipment dealers are left with high inventory levels, which have created cashflow problems.

The CFIEI conducted a survey of its members to find out what factors were key influences on new equipment sales. The statistics received reflect how the following were graded by order of importance: 56% of the CFIEI members surveyed felt that farm debt was a key influence in a customer's decision to purchase new equipment in 1999, net farm income was at 13.5%, farm cash receipts were at 12%, and crop prices were at 4%.

A similar survey on how they felt these factors would influence equipment sales in the year 2000 showed that farm debt was at 46% versus 56% in 1999, net farm income was at 21% versus 13%, farm cash receipts were at 14% versus 12%, and crop prices were at 23% versus 4%. Of those surveyed, 23.3% felt that in the year 2000 crop prices will have a dramatic effect on equipment sales. This is up considerably from this year's 4.4%.

What does this say about our farm crisis? If this farm crisis is not dealt with and solutions found, the damaging effects to the equipment dealer industry will continue to escalate.

The Canada West Equipment Dealers Association represents approximately 450 dealerships throughout western Canada. Of these 450 dealerships, 75% to 80% are located in communities with a population of 5,000 or fewer. On average, equipment dealerships employ 21 people per dealership, and more often than not, equipment dealerships are the largest employer in the community.

• 1105

We have found that the number of farmers is dwindling, while the overall acreages are becoming larger. Net income to farmers is low and has put severe economic stress on mid-size farms. Due to this, many of the small to mid-size farmers are being forced out due to the economic crisis with which they are currently faced. This is creating larger acreages and less farmers.

Farmers are not willing to purchase new or used equipment, as cashflow is low. This in turn affects the equipment dealer industry.

Along with the farm crisis affecting the equipment dealer industry is the issue of dealer purity. I think it was touched on previously, but I want to bring you up to speed on it a little more.

What is dealer purity? Mainline manufacturers based in the United States are forcing Canadian dealers to eliminate selling Canadian manufactured products. This is resulting in farmers having less choice and less competition, and we feel that farmers will face higher prices for equipment that is less suited for Canadian soil. Dealers have had increasing concerns about mainline manufacturers limiting the competing shortline products they can carry in the same location.

In August of this year, representatives from Canada West, the Ontario Retail Farm Equipment Dealers Association, and the Quebec Equipment Dealers Association met with the Department of Industry and the Competition Bureau in Ottawa to discuss this important issue. The department was receptive and appreciative of our concern in detailing the urgency at which this situation needs to be addressed. However, we have yet to see a commitment from it to bring this issue to the forefront.

Dealer purity is about choice: the dealer's choice to offer products in the marketplace and allow the customer-farmer to have as many choices available to compare those products. Many dealers have developed a relationship with their customers over the years by selling shortline products. These customers expect dealers to provide these products parts and service in the future. The mainline manufacturers have been threatening to cancel their mainline contracts with their dealers unless they discontinue carrying the Canadian shortline products. This is resulting in no choice if you want to remain a mainline equipment dealer in Canada. Mainline manufacturers are dictating how and what a dealer should sell.

This, along with the farm crisis, is contributing to the industry losing dealerships. As I previously mentioned, dealerships employ an average of 21 people per dealership. If you multiply this figure by the amount of dealerships closing, the number of unemployed Canadians continues to rise.

The Canada West Equipment Dealers Association lost 14 large dealerships alone this past year due to the farm crisis and dealer purity issues. With average sales of $10 million per dealership and almost 300 employees now out of jobs, these issues are alarmingly destructive.

The disaster in Manitoba and Saskatchewan caused by excessive moisture has had a major impact on all farmers and businesses in the affected areas as well. Cashflow has and will cause severe hardships to farmers and business, and the effects of this disaster will be even more severe in the spring of 2000 when crops need to be planted. We are only a few inches of snow or rainfall away from being right back to where we were this past spring.

As you can see, the effects of the farm crisis, dealer purity, and the 1999 spring disaster have had an overwhelming effect on the equipment industry as well as the farming community. Our association hopes that government and lending institutions, in particular the FCC and the Royal Bank, will begin to understand this better than they do now.

The Chair: Thank you, Mr. Tweed.

We will now hear from the Rural Disaster Recovery Coalition.

Mr. Donald R. Dewar (President, Rural Disaster Recovery Coalition): Thank you very much, Mr. Chairman. I am not going to say that it is a pleasure to be before you again because this is happening all too often, but I am very pleased that the agriculture committee decided to come to western Canada to hear directly from producers.

I am here representing the Keystone Agricultural Producers, which is involved with the Rural Disaster Recovery Coalition, which is a coalition of groups. I'll just briefly give you the list: Keystone Agricultural Producers, the Canadian Association of Agriculture Retailers, the Brandon Economical Development Board, the Brandon Chamber of Commerce, the Manitoba Chamber of Commerce, the Manitoba Cattle Producers Association, Association of Manitoba Municipalities, and the Canada West Equipment Dealers Association. These were just people who were concerned with the problems that were happening in southwestern Manitoba this spring. This coalition was formed to address those problems and attract the attention of our various levels of government to the situation there.

• 1110

I have with me today Wayne Motheral, the president of the Association of Manitoba Municipalities, and Ray Redfern, who is an input dealer and farmer in the affected area. I have asked Ray to make the presentation on our behalf. Once again, thanks for coming.

Mr. Ray Redfern (Rural Disaster Recovery Coalition): Thank you, Mr. Chairman.

As was indicated, I am a member of the coalition that was formed this spring, and I represent a couple of hats. The first hat would be the Canadian Association of Agri-Retailers, which decided that this was a worthwhile activity to be a part of, and other organizations. This morning I represent the Brandon Economical Development Board and the Brandon Chamber of Commerce.

With regard to the issue at hand this morning, our issue is to again draw attention to the rural disaster, as we have coined or termed it, that was in southwestern Manitoba and southeastern Saskatchewan. The area could perhaps be even broader than that. Out of necessity, we wanted it recognized that it was a real disaster outside of the norm.

The challenge before us, any time we sit together and talk about programs, is to recognize that norms do not cover individual situations with the programs that have been available. Other programs—and we refer to the AIDA program, etc.—have not been found to respond appropriately to the individual needs of the affected communities involved in what we want to make very clear was a disaster, in fact a natural disaster. Support programs have not, in the view of the recipients, been able to address those issues.

In the Manitoba case, this year we were told that about 5,597 producers in Manitoba lost some or all of their acres. The numbers are scary because they mean something to one person and something else to another.

I will put this into context. Over 1.1 million acres were not seeded in Manitoba this year out of something in the order of 13 million acres total. We know we have a significant number of acres that were not seeded into cereal and oilseed crops this year, and that is only looking at the cereal and oilseeds crops component.

We also want to position another statement that needs to be clarified, because the industry suffers from not knowing how to interpret the programs that have been announced. It's our understanding—and we think it needs to be clarified for all producers so they understand—that the two Manitoba-announced programs, done in conjunction with the federal government for seeding support, amounted to some $50 an acre. It is our understanding that the total $50 per acre, not the second $25 program, will all be used in calculations that are done for producers' eligibility under AIDA.

That needs to be perhaps clarified and understood, because I think many, if not most, producers who perceive themselves to be eligible do not have that understanding. When we look at the total compensation that is there for the producers who are affected, that $50 an acre, if in fact it is used under AIDA, will limit their support and the rolling average that AIDA produces will not seem to meet the needs of those individual growers.

As a result, we want to draw attention again to a position that was advanced by our coalition this spring and summer and that we believe is still as important for consideration today as it was then. The need is still there, even though the time has in fact elapsed. We would refer to a number of points in a presentation that we would like to advance to you today.

I'll talk briefly about business interruption compensation, and I'll do that for two reasons. One is to bring to your attention that this disaster, which we submit respectfully is a natural disaster, is affecting not only individual producers but the surrounding infrastructure that producers rely on in significant components to keep their own lifestyle alive and the community alive.

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So the business that Clark referred to a minute ago is important to farmers and to the communities at large. We believe there is an opportunity or a need to look for more innovative ways of recognizing business interruption as well.

There is some precedence, of course, which I will refer to again in terms of previous natural disasters. In many cases, there has been significant and worthwhile work done by government—in this case, I'll refer to the federal government level—with regard to looking for programs, such as under the JERI program, jobs and economic restoration initiative, in the Red River Valley, which recognized business interruption needs. To our understanding, that same level of support has not been organized to refer to business interruption today.

Under that same area, we would submit that compensation for lost value of inventory would be valuable and justifiable to farmers that were affected by that. I'm thinking about the primary lost inventory in terms of not just the grain that might be in the bin that was damaged by rain this spring or hay that was parked on a field that became waterlogged, but a more broad-based...and perhaps of more economic value to the farmer—the value of lost inputs from acres that were not seeded but had already had inputs committed to that land.

Inputs are in fact one of the largest significant expenditures a farmer has, and in many cases, for practical reasons, farmers—and most of you around here are associated with farming, so this is not anything new to you—are recognizing that inputs were put in the ground before April 26, 1999, when the rains we normally like to have arrived this spring.

I'm not talking about petty cash here. I'm talking about serious money being put in by individual farmers who are already struggling to use those inputs to shore up a meagre income opportunity to make sure they use those inputs wisely and to their levels. So individual growers did commit some $10, $20, and $30 an acre of input to that land already, and of course when the land was not seeded, they didn't receive any economic benefit at all.

As an agronomist—and your own sources will confirm this for you—most of those lost inputs will be long lost prior to being able to re-use them in land that would be seeded ostensibly in the year 2000. We're talking about a real loss here in terms of input cost borne in cash by the producer to put that in. So we would like to ensure that recognition is given to that.

We can talk about the lost value of the inputs, the seed grain that was perhaps committed and had inoculants put on it and therefore rendered unable to be sold for other uses, and those same inoculants are not usable again in 12 or 18 months thereafter. So there's another loss again that the farmer would have had to be committed to, to treat the seed, which now has a difficult time finding a home.

There's also the value of livestock that had to be sold from those individual producers who found they didn't have the place to put the livestock this spring. Of course, timing is everything in selling livestock. By selling livestock before it's completely fed out or in an ideal condition, individual farmers lost significant dollars.

I draw a comparison to other programs that have been used in previous cases when the community at large recognized an economic loss to individual producers when there did not seem to be programs that could respond directly to them. I implore you to understand that those needs are real and that there is a need to look for innovative means to provide compensation to them.

I draw the parallel again to the JERI program and its unique abilities to respond to growers in the Red River Valley in 1997. I would suggest that growers are asking for nothing more and nothing less than that same approach to be taken for those individual growers who are affected again.

If I make a single point at this morning's presentation, it will be that our constituents have us on a pretty tight mandate, which is to get you fellows to deliver. That's not easy, since neither you nor I control the purse-strings in the end, but I would suggest to you that there's enough precedence and an expectation out there that we're being asked to deliver on. We have enjoyed this opportunity to raise your awareness again to what we think is an opportunity to do the right thing.

I will add to that a corollary in terms of point number four in our presentation, which is the restoration and maintenance of productive land conditions. Those same growers, who may or may not have inputs on, also had to maintain that land to ensure that it would be land that could be used and seeded in the year 2000. That didn't come at no cost. That came at significant cost above and beyond the cost that might have been there if this was a normal year. The cost of maintaining or restoring that land has been pretty significant.

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It is challenging to know what the right approach would be to maintain it, but there are precedents that would say that eligible costs shall include restoring farm land to workable conditions where practical under section 25 of the disaster financial assistance arrangements guidelines. It would suggest there is a precedent for us to look to, to support those growers who were on those 1.1 million unseeded acres for 1999.

Our coalition maintains that the cost of controlling weeds on unseeded acres over the past year is a cost of restoring farmland to workable conditions and therefore should be eligible under DFAA or an associated side program.

I would also draw attention to points five through eight of this same program, just to suggest that the business employment support that Clark alluded to is a real practical issue of the inequality of our present enjoyable declining unemployment plan.

We have just heard the announcement that unemployment across Canada has been reduced. If that is the case, then it's to everyone's credit. However, if you're in a small community in southwestern or southeastern Saskatchewan or in Manitoba, that may not be the case at all. Those communities with populations under 5,000 look to small business as being their lifeblood and their future.

We want the economic opportunities that are in place for Canada as a whole to be shared equally by those communities that have a unique natural disaster above and beyond the general agriculture disaster. The businesses in those communities are labouring under a two-fold challenge, and I can tell you that's not a small challenge.

If any of you have been in business, you will recognize that the buck stops at cashflow, and cashflow not being there creates real economic hurt. We submit that the cost of rebuilding is much more than the cost of trying to maintain an infrastructure that's there today and that Canada as a whole wants to see maintained.

We would suggest that since businesses have had no alternative but to lay off manpower costs, we would look to programs that would allow businesses to retain their staff and unemployment insurance benefits. I acknowledge that there are already programs in place that have been made available to begin to address that issue. I'm thinking about the work share program that's in place, which was reintroduced to rural Manitoba businesses.

Support for transportation of hay and straw supplies is perhaps not a widespread issue, but it's really there. If your land in southwestern Manitoba doesn't have the production it needs, then the commodities would have to be brought from somewhere else. Yes, the commodity may not be as expensive as the sellers would have liked to have had this year, but there's a significant economic cost in moving hay or straw materials from one area to another. The farmers are finding it challenging to have to bear that cost themselves. Again, precedence would say that it might be appropriate to use that program.

We recognize that the announced programs, in the case of Manitoba and Saskatchewan since our coalition also has support from southwestern and southeastern Saskatchewan organizations, would recognize the need for federal and provincial cost sharing, especially for the disaster recovery programs, recognizing that we call on both levels of government to exercise their role to come forward and look for support programs that will give the farmer overall recovery.

Last is the mental health resources program. This program has been recognized to a degree that's appreciated for southwestern Manitoba, but the resources can never be enough. I would challenge you again to do whatever you can in order to make sure that both provincial and federal programs are in place to provide support. This is not just providing support for farmers to leave agriculture, but it would also provide support in terms of health resources to allow farmers to find ways to get through the social and economic stresses that occur and ultimately give rise to health stresses. When we have health stresses in people who are important components of our economic industry, they give rise to economic loss as well. Investment in mental health resources is an investment in our future.

I will ask Don and others whether I've missed any glaring issues that I should have brought forward.

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The Chair: Wayne, do you want to just speak for a minute or two and then we'll go to questions?

Mr. Wayne Motheral (Rural Disaster Recovery Coalition): Mr. Chairman, I will, and I will not talk numbers at all. I will just talk about the overriding issue of the Association of Manitoba Municipalities' involvement in this particular disaster.

One of the reasons we got involved was that our membership asked us to. This was not an agricultural disaster at all. It was an economic disaster and it hit many communities.

Coming back from Ottawa to the Federation of Canadian Municipalities, it shows you what can happen in a national sense. People across the country do rally to help other people. This natural disaster we had was a disaster. The reason we were involved in that was to keep us focused on that particular issue. There were other overriding issues in the farm crisis, but this natural disaster just happened to be one we wanted to focus on.

I think there is definitely a need in the future—and this came across the FCM table too—for a non-partisan body that will look at natural disasters across the country so that they can be treated equally. All we're asking for is that we be treated equally, as they were in other areas of Canada, because that's what federalism is all about. I just wanted to enlighten you on that.

The Chair: Thank you very much, Mr. Motheral. I appreciate that.

Just before we go to Mr. Mark, I want to say, Mr. Redfern, that in my opinion the incessant rains back in May and June did produce a disaster in southwest Manitoba and southeast Saskatchewan.

I'm deeply disappointed that our national disaster program has not been able to deal with that disaster in a meaningful way. Not all natural disasters look alike. They manifest themselves in different ways, and unfortunately government criteria do not take that into account. One disaster for some reason falls within the ambit of the criteria and, guess what, the next disaster doesn't. It's just not fair, because a disaster is a disaster. I just hope we never give up on this issue, because while it's late in the day, I don't think we should give up.

Mr. Mark.

Mr. Inky Mark: I'd like to thank you for your presentations. I also congratulate you for the leadership you've taken over the past year in speaking for all Manitobans in a very effective manner.

One of the challenges and most frustrating experiences I've had throughout this past year has been trying to get the message out. I'm sure you have had the same challenge of not only getting the message out but of being heard. This spring we concentrated on the weather problem, but going back as far as last fall, there was still a cash crunch because of the low commodity prices.

I would like you to tell the committee about some of the experiences and concerns you have had throughout this past summer in trying to get the message out to Ottawa so that it would actually acknowledge that something of a disaster crisis nature was actually happening in this part of the country.

Mr. Graham Starmer (Rural Disaster Recovery Coalition): Perhaps I can answer that. My name is Graham Starmer. I'm the executive director of the Manitoba Chamber of Commerce.

It has been a frustrating summer. We've made endeavours to contact the various media. We've met with the opposition parties, federally and provincially. With the premier of the province we've made representations directly to Ottawa, on Ottawa's ground. None of these efforts has been overly productive, because there seems to be a distinct confusion over what is a disaster under an income support program.

We're talking about a disaster here and that's what we're trying to focus on. I don't necessarily know if the federal government, in all its wisdom, is able to focus on that.

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It has been a frustrating period of time. We do thank some of the media for its efforts in identifying what this disaster is all about.

The Chair: Don.

Mr. Donald Dewar: Mr. Chairman, two of the key issues that we've also found frustrating...one is the equity treatment between what happened in 1997 and what's happening in 1999. When the Assiniboine Valley flooded in 1995, it was also completely ignored by all levels of government. In 1997, it was again a very visible disaster and it was addressed. In 1999, there is a misconception amongst a lot of people that these farmers who didn't seed received $50 an acre and have AIDA, when in fact all they have is AIDA. That $50 an acre is a full deduction off your AIDA if you qualify for AIDA.

The Chair: What happens if the $50 an acre exceeds what they qualify for under AIDA? Do they have to return it?

Mr. Donald Dewar: No, they would keep that. However, if they have grown no crop, they are probably in a negative margin position and would only get a portion of that covered. It's welcome that they are covering negative margins, but they get a portion of it. These producers do not have $50 an acre and AIDA. I think that's an important point to make.

The Chair: Thank you, Mr. Mark.

We will go to Mr. Calder. We're going to try to keep these down to five minutes.

Mr. Murray Calder: I'll be as concise as possible.

When I was out here in August, Don and Marv were nice enough to take me around. As a farmer from Ontario, I've been trying my best to understand the problems out here. There have been some changes made to AIDA and I'd like your comments on them.

The choice of reference—for instance, the three years. They are now using the Olympic average, the three to five years, family labour being treated the same as non-family labour, and the modified accrual system for all farms for 1999, including the possibility of an advance up to 60%. How can we improve on that?

Mr. Donald Dewar: As I said before on the negative margins, the change in the average will allow people who were affected two years in a row, where normally, if you had to pick one of those two in 1998 and use it again in 1999, you would probably not be eligible.... No matter how you look at it, you wouldn't qualify for 1999. This gives the opportunity, having used the previous three years, to drop that worst year, which is probably 1998. That was welcome news. It still doesn't address the overall problem that the grains industry is a 10-year cycle and we're trying to address it on a 5-year cycle. I guess the chronic low margins do not get addressed in that situation.

The modified accrual still doesn't take into account—I guess this is part of the low averages—the low reference margins that have been maintained through an expanding period. Farmers have been trying to maintain a margin by adding acres and in effect lowering their margin per acre, but have maintained the overall farm margin. Nowhere in the program does it address the expanding farm or the person who's actually diversified and changed the structure of his farm and added or expanded a particular enterprise.

There are still problems, as well as the linkage to NISA, which we've always maintained shouldn't be there. We need to make the program a better program.

I do not know about a disaster program in the grains and oilseed industry. I know you will be in southwestern Manitoba and will probably talk to producers who have received a significant amount of money from AIDA. However, it's such a low-strung program in the first place that you have to be financially strong to be able to survive one year with the help of AIDA.

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As we've been saying outside, and as I said when I was in Ottawa 10 days ago, these chronic low prices need to be addressed outside of a long-term program because the problem you run into with a long-term program is people farm the program, which is something we've been trying to avoid.

The Chair: Thank you.

We will now go to Mr. Proctor.

Mr. Dick Proctor: I think Mr. Hoeppner wants to get in on this, so I will just ask a quick question. I know he has a specific question and I'd like to make sure he has that opportunity.

Just for the record, the new information that is available on AIDA as of the December 2, 1999, stats, as opposed to the October 25, 1999, stats, has some good news and some bad news for Manitoba. The averages are up about $4,000 to just over $17,000 for those who qualify. That is the good news. The bad news is that only 36.2% of producers are now qualifying, which is down about 6% from what it was in October. So the problem still remains.

Mr. Redfern, you acknowledged what we all live with, that we don't make the decisions and we don't control the purse strings around here. If Paul Martin was sitting where John Harvard is sitting, what would you be telling him? How much money do we need in Manitoba to get through the rough spot we're going through, and for how many years will we need it?

Mr. Ray Redfern: Perhaps that question is bigger than I would dare be challenged with. It may be because we haven't tried on a macro basis to put the numbers together to respond to the issues. If we're talking this morning, specifically in my case, about the lost inputs and associated costs of coverage, then one would have to take a look at the levels that are there. Those numbers escape me this morning because we only tried to put them together with our limited resources in a macro way.

I was asked in the spring by some officials in the Department of Agriculture and Agri-Food what those numbers might be, and we attempted to go through some theories to see what they could amount to. The number $50 million to $60 million comes to mind as a potential number, albeit that was done long before anyone researched the actual percentages of land that had fertilizer put on or some of those other lost inputs.

The Chair: That would work out then to $50 or $60 an acre.

Mr. Ray Redfern: Perhaps it would have been if you took the secondary programs we referred to in terms of not only lost inputs but the lost value of seed and the cost of some of the other supporting programs we envisaged, such as the movement of hay and fodder to another market area. All the different programs that one envisaged may have been used at one time or other could have been that. I would have to admit that when I think back, that number might have been based on $1.25 million to $1.3 million anticipated unseeded acres at that time too.

The Chair: Mr. Hoeppner.

Mr. Jake Hoeppner: Mr. Redfern, I would like to get back to property taxes. Commodity prices have been sliding for the last three years. My property taxes on the farm have gone up from 8% to 10%. Does that also apply to the property taxes on implement dealers?

Mr. Ray Redfern: Those of us in the industry would say that our tax requirements have not changed. However, the reality of the change to the new format of the tax determination has adjusted the taxes for many organizations, and those that are making progressive improvements to their asset base have found that the taxes would have gone up as we went to a market value taxation system.

Most of us in business do not think the local tax base is the appropriate place to ask for support for the farm disaster. It is the least likely able to provide support, so it would probably be the last place we in business would look to, to re-adjust its tax costs to us. It's a fact of life that for many of us our taxes have remained stable and in fact have increased over the last three or four years as the taxation determination has been changed.

The Chair: Thank you.

Just before we go to Mr. Borotsik, I want to indicate that I'll have time for one question from Mr. McCormick and one from Mr. McGuire.

Let me just say to the audience that when this group has completed their presentation, we will be going to the audience. Some have already indicated that they want to say a few words. I would indicate to the following that you will be first up: Brad Mroz, Dale Smith, Curtis Simms, David Faurschou, and Jim Pallister. If you're all in the room, you'll get the first kick at the can after these gentlemen leave.

Mr. Borotsik.

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

Mr. Redfern, thank you for focusing on the natural disaster. Unfortunately, this committee often looks at the big picture, which is the commodity crisis. I've been trying, and I know a lot of the people around this table have tried, to focus on an extraordinary circumstance that happened once in a hundred years and should be dealt with differently than just simply the total commodity prices we're having across agriculture in general.

We talk about consistency, about equity, and about dealing with natural disasters equally across the country, whether it be ice storms or whether it be the Red River Valley and the like. We mentioned three or four different areas. Business interruption, in my experience, was offered to the Red River Valley. Is that correct?

Mr. Ray Redfern: That is correct.

Mr. Rick Borotsik: Lost inputs were offered to and paid for in the Red River Valley. Is that correct?

Mr. Ray Redfern: That's our knowledge, yes.

Mr. Rick Borotsik: That is our knowledge through the JERI program. In your opinion, why do you think southwestern Manitoba is not able to get those same types of programs now in a circumstance that's almost identical?

Mr. Ray Redfern: In very blunt terms, that escapes me. I'm sure there are lots of valid reasons, and they've been alluded to today, but the general programs that are in place under DFA haven't apparently been recognized as supporting the claims we put forward. To my and our committee's understanding, there has not been a willingness to develop the side agreements that have been used in the past.

Mr. Rick Borotsik: Ray, help me with this. I have only five minutes and I have a few more questions for you. I really liked your points here.

In your opinion, on an average basis, would you say $20 an acre would be a fair assumption as to what the input costs would be?

Mr. Ray Redfern: Yes, that's the number that one could use for the value of inputs. It would vary, and I'd need to substantiate, but that's a good starting number.

Mr. Rick Borotsik: Okay. Sustainability, spraying—you put a lot of spray in the ground. We have weeds four feet high right now. On average, what would one of your producers be spending right now per acre to make sure those weeds are not found so you can put a crop in next spring?

Mr. Ray Redfern: I would say that there is no doubt that even a direct cash cost would be in the order of $7 to $16 an acre, so one might pick $12.

Mr. Rick Borotsik: Okay, so $12 an acre is being spent right now just to knock down the weeds. We have lost inputs, and in some cases on rental land.

Most people seem to think that the $50 that has been paid per acre to a lot of the producers is a hell of a lot of money. In most cases, the $50 per acre would be extended just trying to get your land put back into condition for seeding, would it not?

Mr. Ray Redfern: There is a spray direct cash cost there, which goes beyond the norm when there's no income to support it.

Mr. Rick Borotsik: Perfect. No, it's not perfect, but at least it explains a lot of things.

Mr. Tweed, you've got the finger on the pulse of the Killarney business community in Manitoba. What are you hearing right now from the business community with respect to their reduction in sales and how they're being affected by the lack of cash coming in from the farm economy?

Mr. Clark Tweed: Well, actually we just recently sold our Killarney business and are back in Medora now.

Mr. Rick Borotsik: Well, Medora is right in the heart of it. How about Medora?

Mr. Clark Tweed: We're closer to the wetland out there. There is a huge concern from the whole industry about this disaster.

As members of this coalition, we're trying to impress upon people that this is outside the norm. We certainly don't want to see it again, but as I alluded to in my remarks, with the snow and rain we have had, we are a few inches away from being right back to where were. We don't like looking at that possibility again when we still haven't got this situation under control.

Mr. Rick Borotsik: Mr. Tweed and Mr. Redfern, you're in the agri-retail business. One of the concerns that's been brought to my attention right now is that trade credit has been a very major part of how producers are putting in their crops. You guys are the ones who in most cases provide some of that trade credit. Where will that be heading come the spring of 2000?

Mr. Ray Redfern: I have to warn you that I intend to sit before you again tomorrow. Having said that, if you allow me, I will speak more particularly to that issue in another role.

Nonetheless, I can tell you that trade credit is a fact of life that has grown to what I would call crisis proportions, specifically in our areas, which was augmented by the disaster we have here. We have had people with limited cash to do it with, and the stress on businesses and on producers trying to find a way to meet their obligations is untold. You will see a sleeping giant that is going to wake up and bite us all here.

Until now, we've all gone on as if life was normal: I had a loan so I still have a loan. The due date on that loan just came due. Even a thing called extended credit, as we all know in the input industry, runs a natural course of life. It would have normally lasted until the end of October. It is a big issue.

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The Chair: Thank you.

Mr. Redfern, I've already told you that I share your disappointment, and even beyond disappointment, that the government's disaster program does not meet the critical nature of the disaster in your area. However, to be fair, when you make mention of the program in the Red River Valley, there was assistance to businesses, but it was limited to physical damage and actual business interruption. In other words, if a business had to actually close its doors, then it qualified, which was the problem. The criteria covered a businessman or a businesswoman who actually suffered physical damage in the flood or actually had to close his or her doors, but that was not the situation in your area. That's unfortunate, but we have to be careful that we don't compare apples with oranges. Is that fair?

Mr Ray Redfern: I agree with that completely, and that is part of the challenge.

The Chair: Larry.

Mr. Larry McCormick: I appreciate the opportunity, Mr. Chair.

We had businesses in eastern Ontario during the ice storm that are probably still not going to make it because they didn't get money. So the far-away fields look green.

I want to congratulate you on your coalition. I know when Wayne was in Ottawa last week, he was in our face, seriously. He was meeting with the past chair of the federal CFM and all these people. This is where we do need your support as you work across the country and we work with you.

You might say that it is a very small thing, but the Toronto members of Parliament, who do happen to be from one party, are supporting a farm aid program just for awareness in the Air Canada Centre on January 15 and 16. It's not going to produce a lot of money, but we think it's awareness. Here you have the chamber of commerce on board and all the partners involved.

I want to ask you what the impact will be from the closure of this versatile plant. I'd like to give you an opportunity to put that on the record. There are many ways it will impact on the economy of the west.

The Chair: Mr. Tweed.

Mr. Clark Tweed: I'll try to give you my perspective or our association's perspective on that. We understand that it's not a closing but a divestiture. However, the players out there are less and less, and it may not be such an easy product to sell. We don't anticipate it happening in the next 120 days. I think 150 days is the timeframe they have before a trustee is brought on board to move the facility and some of the products they're building.

I think it'll have a huge impact not just on the city of Winnipeg and the province of Manitoba, but on all of western Canada. It's been there a long time and it's a state-of-the-art facility.

The Chair: Thank you.

Mr. McGuire, you get the last question for this round.

Mr. Joe McGuire: Thank you, Mr. Chairman.

At number 5 on page 3 of your presentation concerning employment support, you referred briefly to HRDC doing something for employment insurance benefits. What are other agencies, like Western Diversification, doing for community and economic development? What is your rate of unemployment? What program is HRDC actually putting in place to keep money or get people qualified for EI on a temporary basis to get them through this particular period in their lives? Is there any concerted or coordinated effort by federal-provincial governments to, on the employment side, address the problems in the affected area?

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Mr. Ray Redfern: I'll speak for that as a businessman in the community. I'll let Graham add any comments he might have, but I'll speak to it just in terms of my awareness of it. Maybe that will speak volumes.

There may or may not be programs that are being worked on, but to my knowledge, they've not reached the community for us to be aware of and therefore look for ways to utilize them to enhance our business sustainability. Regretfully, I can't think of a single one this morning, other than the one I referred to, which is the work share program. There may be others, but they're not on top for me or the business people I work with.

Mr. Joe McGuire: So nobody is coordinating the delivery of temporary programs with the affected communities?

Mr. Graham Starmer: Not to our knowledge. Believe it or not, a lot of the corporations are making a more coordinated approach at trying to alleviate some of the problems of the people in that area, more so than in the government. We have no knowledge of any programs outside of the HRDC efforts. I might add that it has been very good in that area, but it's the only department that we know of that has done anything.

Mr. Joe McGuire: It seems to be natural for HRDC and Western Diversification to cooperate with chambers of commerce and other organizations to identify what is required and deliver on that.

Mr. Graham Starmer: When we talked to Western Diversification some time ago, there was basically a statement that it had no funds. That was the last we heard from it.

Mr. Joe McGuire: Just labour market agreements with the province. There are all kinds of pots of money around. If they were coordinated properly, they should be able to deliver, at least on a temporary basis, what you would need to get you through the next few years.

Mr. Graham Starmer: I think we will need more counselling assistance in the areas. I think we will be faced with a lot of businesses going out of business. I think the term we used, that it's a creeping disaster, is a very apt one. I think we have yet to see the actual impact there.

Mr. Joe McGuire: Mr. Chairman, the one thing we could advocate right off the bat is a coordinated effort by the rural provincial agencies.

The Chair: Point well taken.

I want to thank all of you for coming today. You've made excellent presentations.

Mr. Don Dewar: It wasn't part of our presentation, but Mr. Hoeppner raised a question. Could I just give you a quick response?

The Chair: Yes.

Mr. Don Dewar: He asked about the research people pulling out of some of the research funding options we have. When other people invest in research they receive tax credits. We are trying to get the producers' portion of these research dollars recognized to qualify for those tax credits. Again, it's an equity issue. Some of our money goes through our pulse growers into research through the Western Grains Research Foundation, and we do not get recognition of that from Revenue Canada. That was just another point I wanted to make.

The Chair: Yes, Wayne.

Mr. Wayne Motheral: I just wanted to take a moment to answer one of Inky Mark's questions. He asked what we were doing and what were the results. You will also be glad to hear this, Mr. Chairman.

On our recent trip to Ottawa with the Federation of Canadian Municipalities, we found that people thought we did not have support in other areas of Canada. We have tremendous support. We have support from coast to coast on the farm crisis. I just wanted to bring that up. Mr. McCormick said we do have the support of the Toronto people and Ontario.

The Chair: That's good to hear. Thanks to all of you.

We will now go to the audience. I will call forward Brad Mroz, Dale Smith, Curtis Simms, David Faurschou, and Jim Pallister.

We can't be as generous with you as we were with the previous people. We only have about 34 minutes. I would ask you to keep your presentations to just two or three minutes, if you can, because I'd like to go to more people in the audience.

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Could I just have a show of hands from people in the audience who would also like to have the opportunity to say something, even if it's only for a minute or two? I see there is just one other person. Okay.

Curtis Simms, Clarence Baker, Mr. Faurschou, Mr. Pallister, and Brad Mroz. Alphabetically, we will begin with Mr. Baker. Could you just keep it to about three minutes at the absolute, because we're beginning to run out of time?

Mr. Clarence Baker (Individual Presentation): I understand that, Mr. Chairman, and I will be brief.

I know that if I did have a long speech, I'd probably be repeating what other people have said. I'd like to maybe just try to get off a few points.

First, there's an old adage that I'd like to refer to that says if you repeat a lie often enough, a lot of people will believe it. I'm hoping that works for the truth as well. It's working already. The appearance of you gentlemen here today is evidence of that. It seems like we have had a hell of a time getting our message across to get you fellows out here. If you had come out here five or six months earlier, you probably could have saved the government from getting beat up as much as it has.

The first point I'd like to make concerns the AIDA program. One day when these full-page ads were running in the paper back home, a fellow at a coffee break of businessmen in town told me that the farmer was always whining and crying and getting money from the government.

In view of how this whole AIDA program was worked out, I was wondering if you'd fire the guy who decided to run that ad to start with and perhaps use some funds other than agriculture's to correct the erroneous message that was left, which was that the program was the be all and end all to all of the farmers' problems.

I'm sure other people will have something to say, so I'll just say one thing in a positive sense. We are glad you came out here. I'm also happy you adjusted the format so that everybody who came here could go home feeling he was heard. I appreciate it very much. We can't keep going back to Ottawa all the time. I hope you members of the agriculture committee will carry the message from here on in, even if it means you have to have a sit-in in Ottawa or something to get your message across. We hope you will do that for us.

Thank you for being here and allowing me to speak. Maybe there will be some questions that I could answer later on.

The Chair: Thank you, Mr. Baker.

Now we'll go to Mr. Faurschou.

Mr. David Faurschou (Individual Presentation): Thank you, Mr. Chairman. My name is David Faurschou. I am the MLA for Portage la Prairie. I welcome you to our constituency here. I appreciate the opportunity to appear...and those who have gone before.

I am one of those individuals who has taken on the position of a politician and left the farm. I'm very proud to say that my roots go very deep in agriculture. We as farmers are very proud of our lot in life. Providing the sustenance for others is indeed an honourable profession, and all of us who are in it are very proud to say that.

We are very efficient operators today, and that's why so many of us listen with a great deal of contempt to some of the comments that have been made in Ottawa regarding our profession.

We have made strides to become extremely efficient, and because of the external factors right now, you are going to be extremely hard-pressed to find somebody who hasn't diversified and caught those efficiencies in their own operations. We do adapt well. We are an extremely competitive lot here in the agricultural sector and we'll do whatever it takes in order to make our business survive.

I won't go into a lot of other details here, but the federal government has hit us on both sides of the ledger here. Not only have the support mechanisms gone that were directed to us, but also those that have supported us in the past. You're probably very familiar with PFRA, the Prairie Farm Rehabilitation Administration. Do you realize, sir, that at this point in time, before the crisis came forward here, due to funding cutbacks for PFRA, its list of active files of work to do—and all of those are very viable, otherwise they wouldn't be there—under today's current funding regime would require 80 years to cover off? That is atrocious. PFRA was designed to provide for rehabilitation in water management—for instance, conservation and other projects. It is an extremely well thought out plan, and that particular program is being abandoned.

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Since 1995, when we lost the benefits that had come under the Crow benefit package, the federal government has also taken away all federally collected gasoline or roadway taxes and not returned a dollar specifically to highways. In the case of Manitoba, it is estimated at between $145 million and $165 million annually.

I will also talk to you about communication. This is a fantastic first step to come out and talk with and listen to the people who have invested in the area of agriculture.

AIDA is exactly the opposite of what we need in the industry insofar as you would have had a program had you consulted with us as you're doing here today. AIDA came out of one office without any consultation with any other office, pure and simple. They will be the first to admit they have.

You've heard a number of different proposals today. Please study the set-aside program that was detailed earlier here by Ian Wishart. We can diversify and move into other areas, but we need to research those areas first.

When we go together as a cooperative or as an association, why can we not benefit from the R and D tax credits? I think you can address that very, very quickly. There are others at this table here who I have the utmost respect for.

I'd like to thank you very much on behalf of us.

The Chair: Mr. Faurschou, thank you.

To be fair, Mr. Faurschou, AIDA did not come out of one office. AIDA was worked out with the provinces, and you were part of a government that was in on that. The consultations, especially with the provinces and with the industry stakeholders, proceeded over a number of months before the principles were announced at Christmas.

I certainly accept, as we all will, criticisms of AIDA. However, to say that it came from one office is just stretching the truth considerably.

Mr. Mroz.

Mr. Brad Mroz (Individual Presentation): Thank you, Mr. Chairman. I'm Brad Mroz. I farm at Beauséjour with my family. I have a family farm there.

One of the issues that is being studied right now is the transportation policy. I believe the Liberal caucus has made a recommendation to Minister Collenette to open running rights. I agree with that. We should keep the freight cap on. The railways wanted to remove the freight cap in order to reduce their costs. Well, I can't understand that. If there's a freight cap, you still can reduce your costs to the farmer if that's your intention. Maintaining that cap is essential.

Another part of that was moving the Wheat Board to port. I can just see that as increasing the costs on my farm. If you take the Wheat Board out of the allocation process, send the cars out to the country, line up the sales, gather the grain and so forth, it would be replaced with a tendering process. Grain companies would then bid for cars. In a year, when the crops could be a little better, I can see an auction taking place and the highest bidder getting the cars. This would translate into lower grain prices for me because they would increase my freight costs. I don't think moving the Wheat Board to port would help me at all in the long term as far as reducing my costs for shipping grain.

As far as the help needed on the prairies right now, a cash payment is what is needed immediately, on a per acre basis, on all acres of a farmer's farm. I'm just saying $50 an acre outright on every acre. However, in return for that $50—and this is voluntary—the farmer has to set aside 20% of his acres in the next year, two years, three years, whatever works when you do your figures.

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You have just come back from the WTO meeting. We, along with the Americans, the Europeans, and possibly the Australians—all the exporting countries must do the same thing: set aside acres. In the long term, that's the only way we will be able to increase the prices for our commodities. If you're really interested in increasing the prices for farmers' commodities, we have to grow less.

You should put this all together with an acreage payment immediately and an agreement to cut back on production in order to qualify for acreage payment. In the meantime, we would still have GRIP where farmers are paying premiums into it.

The GRIP was based on a sliding average moving price. If you used a cost-of-production formula in GRIP and a reduction in our acres would increase our grain prices, the GRIP program wouldn't kick in. In years where the opposite is happening and we are paying premiums into the program, we've got a floor under our prices. We could do these three things in tandem together to hopefully raise the farm-gate prices.

I know the industry will be on your backs saying that cutting back on acreage isn't the right thing to do, but if you are for the farmers' interest, it would be the right thing to do because you're trying to increase prices.

Thank you very much.

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

Mr. Pallister.

Mr. Jim Pallister (Individual Presentation): Thank you, Mr. Harvard, and thank you very much, gentlemen, for coming out here. It's good to see you. You are welcome to come out more often.

The short-term needs of agriculture in the west have been very eloquently expressed. There's no question that there are some urgent problems. I have some policy ideas for the medium and longer term that I want to discuss that will not cost the Government of Canada anything.

From the beginning, Canada's Parliament has had to deal with the realities of our geography. We have to implement policies that take that into account, that is primarily that we are a long way from markets and from salt water and that we are very dependent on exports.

The policies we need to implement are those that create wealth right here and promote a vibrant economy. We really only have two choices in western Canada, and that is, we must either add value or we must ship to salt water cheaply and efficiently. There really aren't any other choices.

Many of you fellows are from farms. When I was a kid, my dad got together with five neighbours and they bought a silage cutter. They all worked together, went from farm to farm, added value to the corn and made silage out of it. None of the other neighbours were involved in that particular co-op. They had other co-op ideas of their own that again added value to that product.

That was many years ago, but right now there's a group of farmers in southern Saskatchewan who are trying to get together and do fundamentally the same thing. As farmers, they buy a piece of machinery. Maybe it's a pasta plant, but it's the same concept.

When the policies of this government stand in front of value-added diversification and create barriers to what is really a fundamental prairie and traditional right across Canada—that is of cooperation—then it is very destructive.

On the whole idea of adding value, the Government of Canada has done some of the right things, I would argue, by removing the subsidy on the export of raw grain. That was a positive thing and it bore a lot of promise. However, the federal government needs to do the second part of that, which is to make sure to remove all the barriers to, first, value-added here in western Canada, and second, the efficient movement of grain to port.

I think the federal government can take a lot of satisfaction in seeing some of the things that are happening here that flowed from that correct policy decision; that is, the investment in livestock production, the investment in canola crushing, and the huge investments in oat milling. It's not going to happen in wheat unless you make one particular change, and that is to liberalize the domestic market or at least liberalize so that generation co-op farmers can add value to their grain without having to buy it back.

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When we go back to my example and the examples on your own farm of neighbours working together, we didn't have to go to the federal government and buy that corn back before we processed it. We simply went ahead, took enterprise, took initiative, and added value. This is a $100 million investment, and there are potentially many others.

There is a second part to the promise, if you will, of liberalizing. It was in fact the Liberal governments that fixed up the domestic feed grain situation in the 1970s, which started the initiative toward the WGTA, and that ultimately reformed it. There's no reason why this federal government can't go all the way.

We've gone through processes in terms of reforms. We've gone through the review and the consultation, and the western grain marketing panel was one of them. It came up with a compromise, which is already a compromise, and then it gets watered down further and compromised further.

What I would like this government to do is surprise us all and go even further than this Estey compromise. It's already a compromise. Go to a full commercial system where all grain will move commercially and will move well, like coal, lumber, sulphur, and potash, because somebody owns those commodities. They're not owned by nobody; they're owned by somebody. As one farmer said here earlier, why can't a farmer put the money in the bank? Why is he or she still penalized for problems that are not of his or her making?

Lastly, as you leave Portage, I ask you to take a look at some of the developments that are happening here. You've already been past Isobord. As you leave you will see Can-Oat.

I was at the oat growers meeting last Thursday and Friday. Western Canada has 43% of the processing in oats in North America; 10 years ago, 7%. It is a tremendous success story. Western Canada had 20% of the wheat in 1943; we're down to 3%. This is a de-industrialization in western Canada. Oats is a success story.

Canola, continuing investments in processing—as you can see with the Maple Leaf plants, all you have to do is let the light of de-regulation shine so investors can deal directly with farmers. That would be a legacy for all of you.

The Chair: Thank you.

Mr. Simms.

Mr. Curtis Simms (Individual Presentation): Thank you, Mr. Chairman and committee members. I farm west of here at MacGregor, Manitoba.

The concept of direct government support has been extensively pursued here today. I don't propose to say a lot about that. Suffice to say that the margins on a grain farm are typically about 15% in normal times, and this program doesn't cut in until you're down 30% already. So you're obviously in a going out of business format over time.

As a realist, I step back and ask myself what else we could do to help ourselves that would not involve direct government cheque writing and how the government could help us do that. One of them, of course, as was mentioned, is the WTO talks, which could have good benefits. It's obviously slow motion and we need a little quicker speed than that.

The two principal areas I'd like to address are grain transportation reform and the Canadian Wheat Board and marketing freedom. On the transportation side, I was a producer representative on the old senior grain transportation committee that existed. I was privileged to be elected twice to that and sat on various committees under that category. That does not mean I'm any smarter than anybody else. It just means I have certain other exposures that I wouldn't otherwise have had. It was a privilege to do that.

What it really comes down to is that the current regime is based on a command structure. The system runs layer on layer of regulations and formulae. The irony is that we as farmers requested many of these items, and it turns out, in my opinion, that they've ultimately backfired. The large corporate operations, be they grain handling companies, terminal operators, railways, whoever, have learned to use that, and in some cases to their own advantage.

In any event, it suppressed creativity, ingenuity, performance, and accountability. I've been there. When something went wrong, the standing joke was “It snowed in the winter, therefore we're not responsible”. That was kind of the in-house joke that went around. That gives you a feel for how hard it is to make that kind of a structure work.

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On that basis, I strongly encourage adoption and immediate pursuit of the Estey-Kroeger type approach and philosophy to the transportation system. I think it will work. I'm not naive as a farmer. I think we need to put some real interest and energy into final-offer arbitration and mediation, equivalent line rates, interswitching, and a couple of other related items.

We need to pay attention to that, certainly, but within that context, we need to have freedom for the industry to operate like any other industry will, so we can get the job done and get going. It doesn't matter what the rates are. If you don't have service, you don't get performance. It doesn't matter any more. That's what really counts and that's what we're not getting.

As part of that discussion, I include the Canadian Wheat Board marketing monopoly. I don't think it's serving us as well in its format. I'm not going to reiterate what Jim was saying here regarding value-added. It's clear in my mind. I think he represented it well. However, I think there are real opportunities that we're missing by only having one party in this country running the whole show on wheat and barley.

If we don't do some of these things that are non-cash cost to the government in terms of reorganizing how we operate, we'll be meeting here again next year, the year after, and the year after. As much as I enjoy seeing people from other parts of the country here, I'd rather do it on other terms and on a more progressive basis, if you will, or a less crisis basis.

I would like to make a formal offer to the committee. In order to express to the committee and to the government how strongly I feel about implementing the transportation and Wheat Board reforms to their full extent, I am prepared to waive all my funding that comes out of AIDA. I'm not kidding. I'm serious. That is how important I think these reforms are.

The Chair: How much is your funding from AIDA?

Mr. Curtis Simms: Well, I don't know. I have to fill the forms out first.

Voices: Oh, oh!

The Chair: Thank you, Mr. Simms.

We have about 12 or 13 minutes. Mr. Mark, do you want to ask a question?

Mr. Inky Mark: Thank you, Mr. Chair. Again, I thank you for your presentations.

My question is for David. It's good to see a member of the provincial legislature here. Last week, the province of Saskatchewan indicated that it wanted to take the AIDA money and distribute it on its own. Can you tell us what the current position is of the Manitoba government?

Mr. David Faurschou: I'm not part of the government any longer. I am representing the interests of agriculture. As Chairman Harvard referred to, there will probably be close to $1 billion unallocated out of this program because of the mechanism that has been adopted. I would suggest that potentially the dollars be turned over to the provinces that are most in tune with the needs of the producers in their particular jurisdictions. I would encourage the unallocated dollars to be placed in the hands of the provinces.

The Chair: Thank you, Mr. Mark.

I hope I didn't leave the wrong impression. There is more than $1 billion in AIDA right now, but the minister has indicated that every last dime will be spent. The question is, can we get it out faster? We have to get it out faster.

Mr. Proctor.

Mr. Dick Proctor: I'll go back to Brad. You talked about resurrecting GRIP, but a different GRIP. I know you didn't have enough time to elaborate on that, but could you just take us through what a cost-of-production formula would be in comparison with what we had before?

Mr. Brad Mroz: I believe what we had before was a five- or ten-year average price.

The Chair: Are you talking about the GRIP?

Mr. Brad Mroz: Yes. The formula that was used in the GRIP was a sliding price, a 10-year average. So as the prices of the commodities were coming down, it was lowering our coverage as we continued. If the grain prices dropped, it resulted in lower coverage. If you used a cost-of-production formula, it would be stable, and the way our input keeps increasing, it could possibly increase with inflation and our coverage would then be in line with our expenses.

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Mr. Dick Proctor: You'd be satisfied that that would meet our international trading agreements and we wouldn't necessarily have a problem with that?

Mr. Brad Mroz: I don't think we'll have a problem with it. If I understand it right, I think the Americans are trying to adopt that GRIP system themselves right now. That's what I understand. I don't think there would be.

As I said, if you put a GRIP program in place in conjunction with a set-aside...so at the same time as we're trying to raise our grain prices, we don't collect the GRIP payment. I don't want a GRIP payment. I want higher grain prices. If I have higher grain prices, I can support my economy. Your goal has to be to increase commodity prices.

The Chair: Let's go to Mr. Calder and then Mr. Borotsik.

Mr. Murray Calder: Thank you very much, Mr. Chairman.

I have two things I would like to focus on. I was involved in the process of C-72 and C-3 when we changed—

The Chair: That was C-4.

Mr. Murray Calder: Pardon me, C-4. I get my bills mixed up here.

Mr. Jake Hoeppner: Chicken farmers are a little slow.

Mr. Murray Calder: Come on now, Jake, be nice.

I was just wondering how the 10 elected members are working on that. Do you see any changes in the board from that?

On the rail issue, Brad, I was also on the task force for the privatization of CN. I also sit on the transport committee. We're just finishing airlines at the present time.

Common running rates with the railways will be a nightmare, if it's achievable, because both railways are going to oppose it adamantly. We have actually privatized both of them, so we're putting an encumbrance on private industry. I was wondering how we would do that.

Mr. Brad Mroz: Well, it worked for the highways. I know the highways are nationalized. Any truck, any carrier, and any individual can haul freight on the highways. If the railways are against it, then they're against farmers. All they want to do is make more money off us. If they don't like it, nationalize the rail beds. Let any carrier pull the freight for the lowest cost.

Mr. Murray Calder: So you'd be heading toward the British system of railways?

Mr. Brad Mroz: If that's the way the British system is. I don't know how it works in Britain.

The Chair: Do you have more questions to someone else?

Mr. Murray Calder: Yes. Does the CWB have 10 elected members?

The Chair: Did you direct that to Mr. Pallister?

Mr. Murray Calder: Sure. Any one of them. Everybody made reference to the CWB.

Mr. Jim Pallister: Nine of the 10 have expressed that they're not interested in bringing about any reforms that actually lessen the control of the board. According to the results of the first, some 42% of the farmers wanted reforms, but they only got one elected member. The new board is now actually threatening to sue the member from Alberta, Jim Chatenay, with a huge civil lawsuit if he doesn't stop criticizing the board. I should bring that to your attention.

Mr. Larry McCormick: Like the Reform Party.

Mr. Jim Pallister: I believe Parliament's intention was to use this as sort of a farmers' parliament, if you will, a forum for an exchange of ideas and so on. This is actually equivalent to the civil service mounting a lawsuit against the official opposition, because this fellow very legitimately sees his role as the representative of all these farmers who want to see this thing reformed. He could be in the majority now. Some polls have said that things are continuing to shift toward the need for reforms.

The same thing has happened in Ontario now where farmers are able to get a cash price or an opt-out, if you will. They've been given a window. This has a lot of farmers here asking questions about why we can't have the same sort of opt-out system.

Meanwhile, the board's reaction is just to shut down Prairie Pasta and throw its controls over that. It seems they won't tolerate voices of reform. Some polls are talking about the total abolition of the board. That is the response if you don't deal with ideas of change.

The Chair: Let's have a short answer from Mr. Simms, and then we'll go to Mr. Borotsik.

Mr. Curtis Simms: Regardless of the amendments that were made to the Wheat Board Act, nothing has changed. The corporate culture's the same. The reaction to reform pushes whatever you will, modification, etc. Nothing really changed.

Perhaps some of the origins of that are even on the voters' list. A lot of farmers don't have permit books and couldn't vote if they wanted to.

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We also have the landlord issue. There were as many landlords who were eligible to vote as there were full-time commercial farmers, grain producers. So we have a distorted voters list to start with, and in the way the bureaucracy and management have responded there, you could read the press releases and you would never know anything had changed. I'll leave it at that.

The Chair: Mr. Baker, and then Mr. Borotsik.

Mr. Clarence Baker: We had the same argument thrown up against us when we were trying to preserve the Crow rate. I don't know if you're aware of this, but at one time flour went full rate and wheat was under the Crow rate. They said that if we just got rid of the Crow rate, flour would continue to be manufactured in western Canada and we'd all prosper from that.

I think we've been burned once, and if we're going to get burned the second time we want to see absolute proof of the efficiencies that can be made by getting rid of the Wheat Board, because I don't believe there are any, Mr. Chairperson.

We're operating in a world where everything is getting bigger and where people are working together more, not less. To suggest that if we somehow split up all this market to various companies wherever they come from will benefit the farmer...I want to see proof first because I don't believe it. That's not where we're headed in the world. We're headed to more cooperation amongst producers. Even with countries, we're begging the Europeans now and the Americans to cooperate with us rather than kick us in the pants.

The Chair: We have about three minutes, Rick.

Mr. Rick Borotsik: I won't take that long. I have two questions. First of all, I'd like to hear all of your opinions with respect to the 20% set-aside that was mentioned today. I'd just like to hear a yes, no, or maybe from each of you. I know it's a tough question to answer without having some further detail, but I'd like to hear if you're at least interested in looking at something of that nature.

My second one is to Mr. Pallister. A poll was taken by the Canadian Wheat Board in October. We've asked them for a copy of that poll. My office was told that the board of directors had decided that this would be retained internally and would not be made public. By growing wheat, a number of you are obviously members of that corporation. Do you believe that should be made available to the members? It has nothing to do with marketing and nothing to do with sensitive information with respect to market access offshore. Why would the Canadian Wheat Board not want to give that information to its own members?

So my first question on the 20% is to all of you. The second question is to Mr. Pallister. And if you can get that poll, I'd appreciate a copy. I've been trying very hard to get it.

Mr. Clarence Baker: I would be for anything that would give the farmers some security. We are living in a world where we are overproducing, which is really causing problems. It's not the subsidies that are causing the problem. It's that little bit of surplus we have. We shouldn't forget that the world's population is growing awfully fast, and what might be the answer today, down the road might seem pretty ridiculous. We should be awfully careful about this and maybe build some flexibility into it. However, the idea is certainly good.

The Chair: Try to keep the answers short.

Mr. Curtis Simms: I certainly will. Green is good, politically correct, and all those good things. This is a green program—not the WTO definition, but just the general definition. Conservation is important to me. We do reduce tillage, etc. I have land set aside on our own property for marshes, forests, etc., that I'm deliberately leaving and not breaking. I'm doing my own conservation myself now, so a bit of help in that line would be appropriate.

Mr. David Faurschou: Yes, you've heard my views on it, and we'll certainly support it.

I did not get a chance to reflect on the Wheat Board question. If you look at the present Prairie Pasta ruling, I think we're all very proud of the elevator system we've seen across the prairies coming through with association and member orientation and cooperatively working together. We would not have an elevator system on the prairies if that particular ruling had been invoked at the turn of the century.

The Chair: Mr. Pallister, on the first question.

Mr. Jim Pallister: If you could get everybody else in the world to cut back 20%, I'd be in favour.

The Chair: Mr. Brad Mroz.

Mr. Brad Mroz: The 20%, absolutely, but, yes, Canada should be striving to get the other countries on line as well. Then we'll solve everybody's problems.

As far as the Wheat Board question, this is turning into as a Wheat Board debate, not a farm income situation.

However, as far as polls go, we had elections and the directors were elected. We have transportation policy going on right now. Let the elected directors do their job. Do not appoint Mr. Kroeger to do their job for them. The farmers voted these people in to make a decision. Let these people make the decision for them.

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The Chair: Jake, a short question.

Mr. Jake Hoeppner: When I started farming, my first mortgage was with Manitoba Farm Credit. In that mortgage, there was a clause that gave me a grace period of three years if things were tough, where I didn't have to make my payment, principal or interest, as long as I paid the property taxes.

Wouldn't that type of legislation today help a lot of farmers who are struggling because banks have lent them money, where they could defer some of their principal and interest for two years, added to the back of their mortgage?

The Chair: Who wants to give a shot at it? Clarence?

Mr. Clarence Baker: I certainly agree that there are things that could be done within the lending institutes. You forgot to say, Mr. Hoeppner, that you got the property at 4%, if I remember correctly.

Mr. Jake Hoeppner: Four and a quarter percent.

Mr. Clarence Baker: Yes. It was a very low interest rate at the time. Of course, everything else was comparable, so it really didn't matter that much.

Certainly I think lending institutes have a big role to play now. I can't imagine anybody wanting to kick a farmer off the land because he might be behind for one or two years. I don't know if they're doing that either. I don't know of any institution that's doing that.

The Chair: Jim, and then that will be it.

Mr. Jim Pallister: Mr. Borotsik had a question about the poll. Part of the concept of the reform of the Wheat Board was openness and accountability, and it just doesn't seem to be happening. As Mr. Borotsik said, he can't get the poll. Do you mean this committee can't get the poll?

Mr. Rick Borotsik: Nobody can. The board of directors decided not to release it.

Mr. Jim Pallister: As Morris Deros said in Agri-Week, it's almost like they've taken their place among the sovereign nations. They're going to tell the Government of Canada what they are or aren't going to get you.

As far as polls and popularity contests go, we've got a diverse democracy and hopefully a Liberal democracy. Hopefully the rights of the majority will always respect the rights of the minority, but that doesn't happen. In this situation, the majority is forcing everyone to belong to something they don't believe in. You're not going to have peace in western Canada or prosperity until everybody can associate the way they want, with whomever they want.

The Chair: Brad, you get the very last word.

Mr. Brad Mroz: One quick word on the Wheat Board. There is no wheat board in the United States or Europe, and the farmers are in trouble there too. The prices are too low for our commodities.

A gentleman who was up earlier said there was a cheap food policy. Well, there isn't. It's a cheap farm-gate policy so that industry can benefit on our backs from the products we produce. The problem is that they're getting their share but the farmers are not. We have to do something to increase that.

As far as the set-aside acres go, right now fuel prices are threatening to go up, which will increase our costs again. I believe on set-aside acres in Europe they're allowed to grow industrial rapeseed. That rapeseed is processed into biodiesel fuel.

Our biodiesel fuel is processed, it's value-added on the prairies, and it's then priced, I believe without tax, to compete at a lower price than other energies, such as diesel and so forth. We will then have a renewable resource on our set-aside acres using our fuel on our own prairies. We'll eventually drop the price of the other fuels because we will be competing with them, but we will take the taxes off it and sell it at a competitive price so that we can use what we grow on our set-aside acres. At the same time, we will increase the price of our commodities with some help from GRIP and with some cash payment in the short term. With a balancing act by us, I think we'll all be better off.

The Chair: I want to thank all of you. I want to thank everyone who appeared before the committee this morning. I think we've had three and a half very productive hours. I think you've proven to us that we made the right decision to come and meet farmers in the west.

This meeting is adjourned.