AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 13, 2000

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[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): Members, join us for the beginning of this meeting.

I'd just like to remind members there will be a steering committee meeting a 1 p.m. in this room, in camera. Lunch will be served at 1 p.m., so this will be a long session. We will have two hours with our witnesses and then we'll go directly into our steering committee meeting at 1 p.m..

Madam Alarie has told me she has a commitment between 12 p.m. and 1 p.m., so even if by some chance we are finished with the witnesses before 1 p.m., we'll hold off until then so we can accommodate her.

Today we continue our look at the estimates for 2000. With us we have Andrew Graham, assistant deputy minister; Gilles Lavoie, acting assistant deputy minister; Suzanne Vinet, acting director general, international trade; and Madam Currie. I gather, Mr. Graham, you will begin the presentation.

Mr. Andrew Graham (Assistant Deputy Minister, Corporate Services Branch, Department of Agriculture and Agri-Food): Yes, I will, if that's agreeable, Mr. Chair.

The Chair: Before questioning, will we be hearing from all of you?

Mr. Andrew Graham: No, just myself and Mr. Lavoie.

The Chair: Okay, that's fine.

Thank you and welcome. Please start.

Mr. Andrew Graham: Thank you. We'll attempt to be short.

I'm the ADM of corporate services, and my responsibilities include a range of support services to the programs of the department. They include finance, information systems, strategic and financial planning, capital planning, capital assets, environmental management systems, common business support systems, emergency planning, and information services.

I'm also, within the terms of the report on plans and priorities, the principal for the sound departmental management business line. As such I have responsibility for a number of department-wide initiatives, such as the government-wide initiative to improve comptrollership, risk management, performance measurement, and reporting to Parliament.

Having been involved in the development of several years' worth of estimates documents for Agriculture and Agri-Food Canada, I believe the report on plans and priorities you are considering now shows the very good effort we have put in to try to provide as clear a picture as we can of how we are aligning our resources in the department to better serve the agriculture and agrifood sector and Canadians in meeting the complex challenges that lie ahead.

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I would like to speak just briefly on the sound departmental business line in the report on plans and priorities. We have responsibility for providing centralized support services to the operational business lines within Agriculture and Agri-Food Canada. It is comprised of corporate branches, including human resources, communications, review, legal services, and the corporate services branch, of which I'm the assistant deputy minister.

The sound departmental management is about ensuring that the resources the taxpayers have entrusted to the department—the funds, people, information, and bricks and mortar—are appropriately allocated and used to achieve results that are valued by the sector and by Canadians.

In this respect, all business lines have a vital contribution to make to sound management. I would just like to underscore that public policy decisions made at the level of the government and right across the department by the minister are the foundation of allocation decisions and certainly not those made by the branches I'm talking about.

Taking place behind the scenes, the work of the corporate branches provides the necessary support to review and improve management policies and practices and maintain a strong infrastructure. This support gives the department the capacity to achieve the results for the sector in the most effective and efficient manner possible.

In promoting sound management across the department, we collectively ensure that the department is well-managed and responsive to its clients. Over the past year and a half, Agriculture and Agri-Food Canada has made some significant achievements in the areas of workplace diversity. We have developed and implemented an aggressive three-year employment equity strategy to develop a more sustainable, diverse, and representative workforce that reflects the face of Canada. Even better, I'm pleased to say, is the fact that we are meeting our diversity targets as a department.

Certainly one of the key issues we are attempting to deal with—and I would simply reference some of the comments the Auditor General made in his quarterly report—is the need to have a commitment to people and to have the people in place who are going to carry us into the future.

Following our 1998 staff survey, the departmental management committee committed to improving our work environment in the four key areas of training and development—and I'm able to report some good results there, communication with staff, management development, and issues facing term employees.

We also committed to being Y2K ready. I think we addressed the remediation and testing of facilities and infrastructure on time and well within budget. While Y2K was not the disaster many were predicting, the improvements we've made in terms of the infrastructure across the country are indeed an important springboard to meeting the future challenges, which were articulated in the Speech from the Throne, to put the government on-line.

We've improved information management tremendously over the last year, in the sense that we have launched a whole new financial materiel management information system. We've made significant strides toward developing a user-friendly management information system that will ultimately enable us to report our results better to both Parliament and the public.

Over the next three years, we fully intend to strengthen our ability to provide sound management and continue to realize our achievements as a top-performing organization. We're committed to doing this through implementing a cycle of improvement and introducing a number of measures that are recognized within government. But we would like to eventually move to measures that are recognized across the country, whether it be in government or in the private sector. The result will be further improved service to Canadians and improved management practices.

Mr. Chairman, I've provided a 90,000-foot bird's-eye view of sound department management, but in the interest of time I believe the questions are much more important than this, so I'll turn it over to Mr. Lavoie.

The Chair: Thank you, Mr. Graham.

You may proceed, Mr. Lavoie.

Mr. Gilles Lavoie (Acting Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Thank you very much, Mr. Chairman. Good morning.

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I'm very pleased to be here today with my colleagues to discuss with you the plans and priorities of the expanding markets business line. The expanding markets business line objective is to work with industry and other partners to improve and secure market access, to enable the agriculture and agrifood sector to capture opportunities for trade in domestic and international markets, with a focus on processed agricultural products, and to increase domestic and foreign investment in the sector.

[Translation]

Preliminary data for 1999 indicate that we have exported $21.7 billion of Canadian agriculture and agrifood products. Our major client still remains the United States with $13.2 billion. As indicated in the document distributed to you, $188 million was spent on achieving results in this particular area. I should note that $2.4 million was set aside for the National Farm Products Council presided by Ms. Currie. A budget of $143.5 million was provided for grants and contributions. Out of this amount, $65.5 million will take the form of advance payments under the Agricultural Farm Products Act; $4 billion of guaranteed loans under the Farm Improvement and Marketing Co-operatives Loan Act; and lastly $59.5 million in farm income support contributions to farm communities as part of the Spring Credit Advance Program announced recently by Mr. Vanclief. Thus this amount of $188 million does not apply solely to market development activities as normally defined.

[English]

In the next three years, we will put the focus on advancing Canada's agrifood trade interests at the World Trade Organization, to continue to work to establish the free trade area of the Americas by 2005, and to defend Canadian rights under existing trade agreements to save Canadian market access and remove barriers to trade.

We will continue to work at raising awareness of Canadian products and services and promote the sector's ability to respond to market demands at home and abroad through provision of high-quality market information, intelligence, and analysis. We will also develop a strategy to support the efforts of the sector to maximize the potential offered by e-commerce, and we will continue with our investment strategy.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Lavoie.

Coming to the end of the presentations, we'll go to questions. We will start as usual with Mr. Hilstrom, for seven minutes.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chairman, and welcome, gentlemen.

The agriculture and agrifood department is obviously a massive department. How many employees does it actually have, and what's the proportion of contract work that is put out by the department? Are there contract employees plus full-time regular employees, and do you have numbers for that?

Mr. Andrew Graham: We have the figures for the number of staff. I just have to find it.

Mr. Howard Hilstrom: Until you come across it, we'll continue on.

Mr. Andrew Graham: I have it right here.

Mr. Howard Hilstrom: I'm trying to establish the size a little bit, more than just gross figures, as to the level of bureaucracy you have in the department. Of course, we can judge that by the numbers of people involved. I am also interested in the number of contract people who would be set on the side.

In regard to the actual operations, you have a system of internal audits, and I believe the Auditor General also examines.... Okay.

In the area of securing market access that the department is doing, for instance, in regard to both foreign and domestic, has there been an audit on that particular area recently, in the last year?

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Mr. Gilles Lavoie: As to an audit per se, no, there has not been an audit of the market access area recently.

Mr. Howard Hilstrom: We're spending money in that area, and I wonder if it's being monitored sufficiently so that we can see a set of performance standards. Do you have performance standards for these different programs and the goals that are set?

Mr. Gilles Lavoie: Yes.

Mr. Howard Hilstrom: Okay. In the area of beef exports, they've been going up, and there's the big question right now as to whether or not the funding for that increased market access around the world is going to continue. They're looking for around $1 million. But our reliance right now is about 95% to 97% of export beef to the United States. What are you doing as a department to make us less dependent on the United States for that export market?

You can use any other commodity as well, but beef is an easy example to use.

Mr. Gilles Lavoie: Yes, beef is an excellent example.

Mr. Howard Hilstrom: What specific things are you doing?

Mr. Gilles Lavoie: Of course, as we mentioned before, there are the market access issues, opening the doors, and keeping them open, through WTO, through NAFTA and other trade partners, to make sure we prevent irritants, and, when there are irritants, to solve those as soon as possible in order not to disrupt markets.

We also, of course, assist the industry—and CBEF, which you mentioned, is a very good example—in servicing them with market information, with market intelligence, in helping develop their markets abroad, and particularly outside the U.S., in Japan, Korea, and these type of countries, by our personnel posted abroad who work with them to develop their interests. They also participate through the agrifood industry in market strategies in which they receive a contribution of up to 50% of the total amount put by the industry—that's 50% each—and they have been very active partners in this area.

Mr. Howard Hilstrom: Okay.

Slipping back to your human resources again—and I'm sure you're coming up with those numbers—could you describe in a little more detail your workplace diversity? I believe you're probably still looking at qualifications of employees, and so on. Could you describe that workplace diversity a bit?

Mr. Andrew Graham: I would be happy to.

As to the numbers of employees we have, in the main estimates we have budgeted for 4,736 employees in 2000-01. That's projected to remain relatively stable over the planning period.

I would point out that if you look at the previous year, it was 5,491. The change there isn't that we've reduced the numbers but rather that the Canadian Grain Commission is reporting separately to Parliament, and that is reflected in the numbers that came out of there.

If I could then address the issue of contracting, I'm not in a position to tell you how many individuals are working with the department through the contract process. Basically, we don't contract for people; we contract for services in the particular area you're dealing with. So we don't tend to measure it by how many people we contract with but by the value of the contract. I don't have that information, but I could provide that to you.

Also, if I could point out, there's a huge disincentive to carry people on contract for a long time. The simple fact of the matter is that you use contracting, especially short-term contracting, for short-term purposes because it costs more. If you have long-term work, because of the decontrolling of the number of person-years that took place a few years ago, it's really an incentive to use whatever is the cheapest solution. Certainly it's our experience that with the short-term contract, to get the expert you need, fine, that's great; but in the long term it's just not a financial incentive for you to do so.

With respect to the diversity issue, I think it's categorical to say the questions of merit and qualification are first and foremost in everything we do in terms of acquiring people. We set our targets against, I think, a very realistic measure, and that's workforce availability. It becomes an issue with Stats Canada in determining what that workforce availability is. But basically our target is to meet workforce availability, which means that there are people who are qualified in that area who are visible minorities, disabled, women, etc., and our objective is to reflect society. That being said, how are we doing? We're exceeding all our targets with the exception of women. We're almost there. It's a matter of a marginal percentage.

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The Chair: We have to leave it there. Thank you.

Madam Alarie.

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): I'll continue along the same lines. You say that you have almost met your objective with respect to the participation of women. What was this objective? Was it 50-50, 48-52?

Mr. Andrew Graham: I believe that it was 51% and that we have achieved 49.6 or 49.4%. It's a very slight difference.

Ms. Hélène Alarie: So I take it that there are almost as many women as men in the Department of Agriculture. Is this the case at all levels?

[English]

Mr. Andrew Graham: If I may, I think you've hit upon an important issue, and that is that women are not proportionately well represented at the higher levels. That is an issue that is across government. I'm working from memory here, Madam Alarie, but I'd be happy to clarify that. In terms of the executive group, which is, by the way, about 100 people in the department, I believe it's around 24%. So that clearly is an area where we're not doing well. I think that comment would apply to all of the diversity groups. In other words, the higher you go in the hierarchy, the less our performance. That is why we're working much harder in that area. So our overall figures look good, but we still have a way to go.

[Translation]

Ms. Hélène Alarie: In view of policies in recent years aimed at cutting back employment levels in the public service, are there any poor sectors, so to speak, in terms of qualification or experience? Are there any sectors that have really been thinned out?

[English]

Mr. Andrew Graham: First of all, I just have to say that while those cuts have taken place, we have over the last year been either replacing or hiring. We don't see ourselves in a cutting mode at this point. I'm just trying to think of all the sectors in order to give a fair answer. Did we lose some memory over that process? I think we probably did in a few areas, but we're in the process now of rebuilding it. Once again, I'm trying to think of all the sectors. I don't think, Gilles, that there were any where I feel we've lost.

[Translation]

Mr. Gilles Lavoie: Ms. Alarie, when program reviews were undertaken in our department in 1995, the reductions normally took the form of program reductions and this meant that we kept the personnel responsible for implementing the programs and policies related to the activities we decided to continue. I don't think it can be said that certain sectors have suffered more than others, in view of the fact that these cutbacks took place in 1995.

Ms. Hélène Alarie: Thank you. I have already experienced this kind of situation elsewhere. Suddenly we realized that we didn't have a single expert left on apples. I was wondering whether they went about it the same way here in Ottawa.

The Minister, who is both your minister and our minister, often says that his department can claim the best performance in the public service. Can you tell us something about your style of management? What are the criteria you used to determine performance? What do you compare yourself with when you describe your performance as good? What is your base level and what performance level do you set for yourself?

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[English]

Mr. Andrew Graham: The minister says he aspires to be the highest performing. I'm not sure he's going to say he is the highest performing.

In fairness, I don't say that lightly. I think the objective we have is to set a very hard target for performance, and we've put in place a number of measures, which are just now starting to tell us whether or not we are. There's good news and there's news that says we ought to perform better. For example, we've attempted to increase the amount of client consultation we do and to begin to measure that. In other words, we're learning through things such as the National Quality Institute criteria that we can in fact measure our client satisfaction and put some numbers to it. We're just in a pilot phase on that. That's an example of how you measure yourself.

We participated through the comptrollership initiative of government in trying to find ways of benchmarking our various management and human resources approaches against each other so that we can say, how do we know we're performing relatively well? I think we're doing well in some areas and not so well in other areas. I think one of the key things about being a high performing organization is that we actually do measure and we actually do ask ourselves these questions. It's a very difficult thing to do. In the private sector you can do it and it stays in a boardroom. In government you want to be transparent, so you're always cautious about doing these measures.

In terms of productivity, there are other areas where we haven't even begun that we want to improve.

We participated in a government-wide staff survey, and we measured ourselves against that survey and saw how we performed. We performed better in almost all areas in terms of staff satisfaction, staff feeling that they know who the clients are, that there is a real strong commitment inside the department to the client. As you know, that client is a very diverse client, and yes, there is an apple expert who wants to do the best job.

Those are some of the measures we have put in place.

We are trying to participate on a government level in improved reporting to Parliament. As you know, we're a pilot project. We're looking for feedback on how we can also satisfy parliamentarians' needs.

So those are some of the things that we think help our aspiration.

[Translation]

Ms. Hélène Alarie: Generally speaking, clients who do business with the Department of Agriculture are more satisfied than those who do business with the Department of Revenue, particularly during the tax season.

I'll give you a concrete example. You take part in a number of international shows or fairs, including Food Ex. Are you in a position to measure the spin-offs of your activities in this field from one year to another? If so, how do you do it? I'd like you to give me an example.

Mr. Gilles Lavoie: It's an excellent example. We ask Canadians who take part in exhibitions abroad such as the Food Ex to tell us about the results of their presence. Have they had any successful contacts? Do they expect to make sales in the coming year as a result of their participation in such exhibitions? We attempt to follow up on this later to find out whether the sales they expected to make as a result of the exhibition did in fact take place. We ask them whether their potential clients changed their mind in the meantime.

We also try to measure our performance by comparing our services to those offered by trade commissioners posted abroad, and by comparing the results obtained by those who serve the agri-food sector and those who serve other sectors. This is a relatively new way of making the comparisons, and it is proving most interesting. We found that in most cases, our results are better than average. So we are getting positive results in this regard.

In our own sector of activity we try to compare our international market penetration with that of our competitors. For example, we try to determine whether our share of the American market is growing more quickly than that of other countries. If it is, all of us who worked together—the officials from our department and our partners at the Department of Foreign Affairs, in the provinces and in industry—can say that we had better than average success.

[English]

The Chair: Thank you.

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To the witnesses, just keep an eye on the chair. I'll give you a signal if you're running out of time. We went two minutes over on that round.

Madam Ur.

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

I thank you for coming back to us here again this morning.

My first question will be regarding your expanding markets. You're saying in the agriculture and agrifood sector you want to capture market opportunities in domestic and export markets. That's all well and good. I read your chart here, and it has excellent information.

What you want to do and what's happening are not exactly positive results. The only area where we've increased our export market is the United States. In Japan, EU, China, Mexico, Hong Kong, Korea, Taiwan, and Brazil we've had major, major losses. So what have we done wrong in all those countries?

Mr. Gilles Lavoie: It's not necessarily what we have done wrong. Even in those countries we have performed as well as the other competitors. Of course the Asian crisis of the last two or three years has hit significantly the ability of some of the importers to buy products from abroad, including products from Canada. That's one factor that explains some of the reduction.

There is also another factor. The low prices for grain and oilseed commodities do affect the value of our exports. In tonnage we may export as much as before, but at a lower value. If we're able to compare tonnes of one product and tonnes of another product, we don't necessarily do badly in these types of circumstances.

Mrs. Rose-Marie Ur: Yes.

I'll just focus on a fact. Earlier this year an all-party delegation went to Taiwan. I'm getting a little bit specific here. We led a trade delegation on agriculture to Taiwan. It's the first time it's ever happened. It was an excellent opportunity. They have an excellent fellow there named David Mulroney, at CTOT, and he has all kinds of ideas, along with his assistant Martin in foreign trade and all the rest. But they don't seem to have the same continuity from here in Canada to get good export market displays over there.

I can tell you we visited several areas where we have great potential, and we're not there. The United States is there, and we're missing the boat. They're making barley tea. They're making millions of dollars out of this barley tea and all those kinds of things.

We have high quality. They really sat back and listened to our promotion of Canadian quality products. Yet we sit there with a little hole in the wall, and we're not giving this fellow an opportunity to display what we have to trade with them. It's imperative that those kinds of things be looked at so that our farmers here in Canada have that kind of opportunity to export to a country with 22 million people.

So I don't know how much we're really doing to help the cause. I'm just picking on Taiwan. It could be the same in other countries.

Mr. Gilles Lavoie: Yes, Taiwan is one of our priority markets.

Mrs. Rose-Marie Ur: You wouldn't know it if you went there to see their office.

Mr. Gilles Lavoie: Yes, given the type of relationship we have with Taiwan, it's a relatively small office. But in terms of market promotion, for example when I went there last September, we had negotiations with the government, and we also had promotional activities. For example, on Saturday the Canadian Beef Export Federation had beef promotion events where they were inviting citizens in the city, in Taiwan, to taste the product there.

Mrs. Rose-Marie Ur: Yes, I'm aware of that.

Mr. Gilles Lavoie: Obviously we are not in a position to put as many financial resources as some of our competitors are able to put into helping the industry with this type of promotion, but the industry in general is telling us they are very satisfied with the results we obtain with the resources we have.

As I mentioned before, we try to match fifty-fifty the investment they make in general promotion of their products. With more money, we will obviously do more. But given the resources we have, the feedback we receive from the industry is positive.

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Mrs. Rose-Marie Ur: All right.

Also, I see in your book key result areas for your main estimates, including market access, market development, investment, and all the rest. The numbers are quite clear there, but going through the book, there's no specific area I can turn to for the primary producer's cost of production and cost recovery, so that I can look at what exactly it's costing the producer.

Mr. Gilles Lavoie: With very few exceptions, we do not have cost recovery per se in the expanding markets.

Mrs. Rose-Marie Ur: How can we say the farmer is not getting ripped off then, if we have no—

Mr. Gilles Lavoie: We have been using Canadian Beef as an example. We can use another example, maybe Canadian Pork International. The processors and the producers have joined together to create Canadian Pork International, and they develop a market development strategy where they target a number of countries with a number of key activities they believe will help them open the door to develop the market there. They present their strategy, and if their strategy is accepted—if we are sure they have good tools and a good target and so on—we contribute up to 50% of the total cost. Then it's a contribution; it's not a cost recovery. We do contribute to them. We reduce their costs by up to 50% of what they have estimated.

Mrs. Rose-Marie Ur: Did you want to add to that, Mr. Graham?

Mr. Andrew Graham: I just didn't understand what you meant by cost recovery, if it was global or just what the department does. I'm sorry.

Mrs. Rose-Marie Ur: Okay.

The Chair: You have about thirty seconds.

Mrs. Rose-Marie Ur: Okay.

In the vein of Mr. Hilstrom's question, I don't know whether you found your numbers as to the number of people working in that area, but I think it's four hundred and some. He asked for numbers. If I remember correctly, that's what the numbers are.

Mr. Gilles Lavoie: It's 432.

Mrs. Rose-Marie Ur: Yes, I remember those numbers.

Mr. Andrew Graham: That's in your area.

Mr. Gilles Lavoie: Yes.

Mrs. Rose-Marie Ur: Put those numbers with the administration costs. What percent of the budget is it costing to implement this then?

Mr. Gilles Lavoie: Our salary budget is around $23 million, and we have $14 million or $15 million in operating budget, out of the $186 million.

Mrs. Rose-Marie Ur: Okay.

The Chair: You'll have to figure out the percentage, Rose-Marie.

Mrs. Rose-Marie Ur: I'm good at math.

The Chair: Oh, I'm sure you are.

Mr. Proctor, you have five minutes.

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

Mr. Graham, in your answer to Madame Alarie, you said some areas were working well and some were working poorly. The media and opposition parties tend to focus on what's working less well, so I wonder if you could be a little bit more specific about areas that need to be addressed.

Mr. Andrew Graham: The comment to Madame Alarie was that we do....

I'm just having a hard time with where to focus, in the sense that in all of our surveys, it's not all good news and it's not all bad news, but it covers the waterfront. For example, when our NISA people do the client satisfaction surveys, there are issues of timeliness, but there aren't issues of being treated unfairly.

I'm trying to deal with the question in a way that might be helpful. I'm trying to think of some other good examples.

We get two million hits a month on our Internet site, so it's a very important source of agricultural information. This is a commodity now. It's changed dramatically. One of the remarks we continue to get—and we're working on this—is, “Look, I don't want to have to figure out how your organization works. If I want to know what you know about pork, you have to have an adequate search engine to do that.” And we're working; we're changing.

With respect to other areas, certainly in audit areas, probably the biggest issue is the tension between getting payments out on time and getting them absolutely 100% accurate. That's always an issue. Clearly the client need comes first, and as such you're always trying to improve it.

Those are just examples. It's not as if we're absolutely failing disastrously in any particular way.

I'll tell you, the further producers are consistently saying in surveys—and Gilles of course is the expert on this—“We want to deal with you as a whole piece. We don't want to deal with you as a marketing or an income support.” And we're learning from that too.

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Mr. Dick Proctor: In your opening remarks you talked about training and development as being a key priority. When the Auditor General reported this week, a general concern he had—and I'm not specifically focusing on agriculture—is the bulge that's about to go through in terms of the senior civil service. My question is, do you feel comfortable that you're preparing for the future, that those people are being developed and are in place to take over as the boomers go through?

Mr. Andrew Graham: Speaking as a bald boomer, yes. It—

Mr. Dick Proctor: A bulging boomer.

Mr. Andrew Graham: Yes. I'm getting more and more optimistic. First of all, in our recruitment we're bringing in a tremendous number of young people, and it's exciting to see.

We're also beginning to look at means to things that will ensure the transfer of knowledge and expertise. I think this is our biggest risk as a total government, that people leave and you lose the memory.

Mr. Dick Proctor: Right.

Mr. Andrew Graham: And we're looking at techniques such as what we're calling double-bunking—double-banking, not double bunking. That's from another line. We're finding ways whereby people can overlap and learn from each other. In fact, we're doing that.

We're going to have to face a more competitive market. We know that. Probably the government as a whole is going to be challenged on that. That's straight economics. It's not a matter of policy. I'm finding this even in the areas that I have responsibility for, and probably one of the most vulnerable is computer expertise. If you put together a package, it's not just salary, it's also a commitment to training and a commitment to development. That's why I'm really pleased. For instance, last year our expenditure was 4.6%, even though we targeted 4%. We're trying to keep that this year.

The Chair: That's it. We're out of time.

Mr. Andrew Graham: Sorry.

The Chair: Being a baby boomer, you should be long past double-bunking.

Mr. Andrew Graham: Statistically speaking, Mr. Chairman.

The Chair: Ah, but we can dream.

Mr. Murray.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Mr. Chairman.

Monsieur Lavoie, I'll address my question to you. You probably noticed that I'd be asking about this already, because I asked it inappropriately of your colleagues who were before us the other day when we were looking at a different business line.

I'm really struck by the amount of money we spend on expanding markets. You mentioned $186.3 million. That's a lot of money. It's about 8% of your total departmental spending. I'd like to get a sense from you as to how you decide where to spend that money. How do you decide on priorities? Have you been able to determine what kind of a return on investment we get for that expenditure?

Mr. Gilles Lavoie: Thank you.

As I mentioned in my opening remarks, out of this $186 million that you just quoted, there is $143 million in contributions and subsidies. This includes the spring credit advance program, $59.6 million; the programs under AMPA; the Advance Payments for Crops Act program; and the price-putting program. In total, we paid the interest plus the default, and it's $65.5 million that is budgeted for that. We have $4 million to cover the expenditures related to default under the Farm Improvement and Marketing Cooperatives Loans Act.

Then, in terms of contributions to what we would normally refer to as expanding market development, under the agrifood development strategies and the like, we have only $12.9 million. We obviously circulate the details of programs to all the clients. When they make an application, they know already what the rules are, what the program criteria are.

In the case of the market development strategies, we have a steering committee at the director general level, with representatives from the Department of Foreign Affairs, WDO, ACOA, Agence de développement économique du Canada pour les régions du Québec, and ourselves, where we review the strategies. If they are good strategies, we approve them, depending on how much money we have. Obviously, at times we have more requests than dollars available. And this is normal business. But we try to support the best strategy to look at how much has been spent in the past. Is it a newcomer or somebody who has been there for a long time? We have criteria we have established to help make decisions.

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While we cannot satisfy everybody, in general the feedback from those who have been cut or received less than what was requested.... I spoke to one of them again yesterday morning, and he said he appreciated that we cannot give the money to only one group.

Mr. Ian Murray: I noticed on the chart you gave us that a couple of the commodities that seem to be doing quite well are processed food, whiskeys, and frozen french fries. Is there any way you can help the farmers themselves maybe take advantage of the value-added when these things are being exported? Is there any move afoot within the department to help farmers move into that area and get a better bang for their buck when they're exporting?

Mr. Gilles Lavoie: Yes, normally we estimate that for every million we export there's around 300 million that will be the farm-gate value of the product being exported when it is processed.

We do encourage producers to go into more value-added, to try to add value to their product. Even in fresh products, the way it is presented, the way it is packaged, the way the quality control is done all along the chain, from the farm to the time it reaches the consumer, is important in this regard. We try to encourage them to brand their product as opposed to selling in bulk commodity, because for commodity prices, as we know, there's 100 years of history of their going down.

We have to do better in terms of presenting our product, our Canadian product, as something unique in terms of quality. We do work a lot with the industry in this regard.

Mr. Ian Murray: Do I have any time left?

The Chair: One minute.

Mr. Ian Murray: I want to ask if you could define very briefly what Canada's competitive advantage is when we're trading around the world in agricultural products? Is there anything that stands out in your experience that helps Canadians when they're exporting food?

Mr. Gilles Lavoie: Yes. I will say quality. The quality of our food inspection system is well recognized around the world. There is the reliability of supply, and we respect our word, we respect our contracts. We have some advantages in many sectors in comparison to other countries. Beef and pork are good examples where we have grown very significantly over the recent past. We have been able to present Canada as a reliable supplier of high-quality beef and high-quality pork, and for servicing the client as well. It's very important that the clients get the product on time.

Mr. Ian Murray: Thank you.

The Chair: Members, I have a chivalry test for you. Mr. Steckle and Mr. Hilstrom have turns before Madame Alarie, but Madame Alarie must leave at 12 p.m., in seven minutes, to meet with the Algerian ambassador. I'm wondering if there's enough chivalry left in this world that would have someone step aside.

Mr. Paul Steckle (Huron—Bruce, Lib.): Unfortunately, she will miss my question, but I can let her go ahead.

Mr. Murray Calder: Chivalry is not dead in the Liberal Party.

The Chair: All right, thank you very much. I knew you men would step forward with alacrity.

Madame Alarie, five minutes.

[Translation]

Ms. Hélène Alarie: You see how good we have it on the Agriculture Committee. Thank you.

You are familiar with my concern about genetically modified organisms. I have noticed that our market is up in the United States, but that it is down in Japan and in the European community. I am going to ask the following question, because this subject bothers me a great deal. Have you assessed the future impact of the regulation on mandatory labelling that some countries are establishing? Although the control procedures are not perfect, the European community began applying these regulations yesterday. Japan, New Zealand, Australia and now Mexico have started requiring mandatory labelling. Has your department studied the impact of these measures on our exports?

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Mr. Gilles Lavoie: No, we have not carried out a proper study of the impact, although we are watching events very closely, and we are in constant touch with the industry on this. Our role is to give farmers all the information we have about what is happening on foreign markets and the regulations to be applied by various countries. The final decision is up to them, and they must determine what type of products they want to export to these countries. In the vast majority of cases, we can give sufficient notice of the regulations that will be implemented by these countries to avoid any immediate, significant impact (which in some cases can be measured) on our farmers.

We make sure the industry is very well informed about what is going on, what is coming, and the provisions of the various regulations. We are also doing work on the Codex Alimentarius to define what type of labelling and information would be the most appropriate in this area.

[English]

The Chair: That's it?

[Translation]

Ms. Hélène Alarie: I am leaving you already, yes.

[English]

The Chair: Thank you.

Now we'll go to Mr. Hilstrom for five minutes.

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

On your chart, you have the United States being 2.9% up in the agriculture market sort of thing and the rest of them seem to be down. Is that a drop in dollar exports to these other countries?

Mr. Gilles Lavoie: In terms of dollar exports to the other countries, yes, there has been a drop.

Mr. Howard Hilstrom: A big drop. And what's accounting for that?

Mr. Gilles Lavoie: As I mentioned previously, the values, particularly in the grains sector—cereals and oilseeds—have reduced because the prices for these products have affected the value.

Mr. Howard Hilstrom: Madame Vinet, could you tell me the last time you met with Greg Arason of the Canadian Wheat Board?

Ms. Suzanne Vinet (Acting Director General, International Trade Police Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food): I met with Mr. Arason about a month ago. I have a team of people who met with Mr. Arason about two weeks ago.

Mr. Howard Hilstrom: Did you discuss the question of exports with them and what's happening in that regard?

Ms. Suzanne Vinet: I would clearly discuss several aspects of exports. I had a complete team of people to discuss all of the various aspects that the Wheat Board has direct interest in, be it in terms of the relationship with the U.S., export credit negotiations that are going on at the OECD, or the progress we will be making in the WTO for the agriculture negotiations—all of these issues.

Mr. Howard Hilstrom: So that relationship is fairly well established then. You have regular contact, obviously.

The position's been put forward quite clearly that the Canadian Wheat Board is obstructing value-adding in Canada, and thus the income of farmers, primary producers, who want to form up their own processing, including things like developing innovative export markets in barley for niche markets and that, which the Wheat Board isn't able to do. Did you discuss those issues with them?

Ms. Suzanne Vinet: No.

Mr. Howard Hilstrom: It's not something you would discuss because your responsibility in the agriculture department is to promote foreign markets. If you see an obstruction in Canada, like the Canadian Wheat Board, would you not be trying to discuss it with them and convince them otherwise?

Ms. Suzanne Vinet: My specific responsibility in the department is for trade negotiations at the WTO and bilaterally, so my focus is really on market access in foreign countries and the development of the rules in the WTO in particular.

Mr. Howard Hilstrom: Is your position that the Wheat Board is going to be protected to the end in the negotiations on trade?

Ms. Suzanne Vinet: The Minister of Agriculture announced in August 1999 an initial negotiating position at the WTO for the current round of negotiations that was started in March. In the position it's clearly stated that it is the position of the government that Canada will continue to enable orderly marketing systems to respond to the desires of the Canadian producers. The two examples we give are the supply management and the Canadian Wheat Board arrangements as being commitments of the Government of Canada.

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Mr. Howard Hilstrom: Let's get back to the management of this department. We're in a kind of 1960s hippie-type love-in here. But I think the facts of the matter are not that...whatsoever in a lot of significant areas. The Canadian Grain Commission, which you've mentioned, is reporting separately to Parliament now, but it still comes under the agriculture minister, and I note that for two years running it has had an $11 million deficit.

Yesterday in Manitoba on the steps of the legislature there were 300 protesting farmers. Earlier on there were 3,500 farmers in Melita who were protesting. We had a combine driven all the way from the Peace River to Ottawa to protest.

One of your clients, and actually the most important client, is the primary producer, the farmer. Why is there so much dissatisfaction on the part of what should be your primary client? You have two. One is the further processors, and they're very happy. Their incomes and profits are up and increasing. The primary producers' profits and incomes are decreasing. How do you reconcile those two?

The Chair: Can you make your answer fairly short? We're out of time.

Mr. Howard Hilstrom: Mr. Chairman, you can't have a short answer to that question.

The Chair: But you've already used your five minutes, Mr. Hilstrom.

Mr. Howard Hilstrom: Often I lose time, Mr. Chairman.

The Chair: If you would tighten your questions, you would have more time for answers.

Mr. Howard Hilstrom: And if you wouldn't ask questions when the rest of us are trying to get our questions in, it would help, too, Mr. Chairman.

The Chair: I can assure you, Mr. Hilstrom, that if you look at the record, you'll see that I haven't asked one question today.

Madam Vinet or Mr. Lavoie.

Mr. Gilles Lavoie: The work we do in terms of gaining access to foreign countries in terms of market access and market development is part of helping the farmers find profitable markets abroad. We have an economic situation and market conditions worldwide at the moment that are very difficult. We also have to compete with the situation created elsewhere by the assistance provided, say, in Europe and the U.S., which doesn't help in making the life of Canadians easier. But we do not have the same types of financial resources these other countries have.

The Chair: Thank you.

Mr. Steckle.

Mr. Paul Steckle: Thanks very much for being here this morning.

I want to take our focus in a direction where perhaps it's more futuristic. When we look at agriculture today, we look at our exports, and we've achieved the goals we set for ourselves five or six years ago. Yet agriculture today is at a crossroads in terms of financial difficulty. We haven't seen the likes of this for many years. We produce, as Mr. Lavoie said just a moment ago, quality and reliable products. We have access to these products. The world has come to know us for being able to supply and deliver good quality products. Somehow the fruits of the labours of the primary producers are not being realized at the farm gate.

If there's a concern in agriculture today, it's not only for today but for the future. Our young men and women who are graduating from our agricultural colleges are going into business management areas, co-ops and agri-corp offices. We now have a lot of professional managers, but it isn't going to be long before we have all the managers but nobody to be the primary producer, to actually create the resource. This is a real concern. The average age of farmers is well up in the fifties now, and one has to wonder what we are going to do. We live in such a great country. We have such great possibilities here, and yet, as I said a moment ago, we're really at a crossroads.

Value-adding—we talk about doing that. We talk about the cost of production. We have the integration of the food chain business today. Everything is leading into the hands of bigger and bigger corporations, whereas the primary producer is continually losing. There's the cost of production and the cost of these programs we're putting in place. We now have endangered species legislation, which may be a cost to agriculture. We've just recently gazetted the issue of medicated feeds and how that's going to impact farmers. We've put a freeze on cost recovery, so for the time being we've stayed that.

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Farmers are wondering where it's going to end. When do we start sharing the cost of all of these benefits that benefit the broader society? When is the broader society prepared to pay for those benefits they have instead of always reflecting it back to the primary producer, who is at the end of his rope?

Mr. Gilles Lavoie: Obviously there are some social choices in your statement here.

We do not have the answer to all these aspects. I don't think there is one single answer either. We do encourage and work with the industry to try to create as many alliances as possible to make sure the people, from the farm gate to the consumer plate, walk together. We try to optimize the return all along the supply chain.

Yes, the concentration of the distribution centres you alluded to does create some problems in some areas. It's maybe more difficult to sell regionally if you have only one buyer and they ask you to deliver ten loads instead of one.

All these types of issues are being addressed and have been discussed at many meetings with the industry. I don't think we have identified all the magic solutions, but there is no doubt that there is a consciousness that we have to work together all along the chain to make sure that the distributors do appreciate what the processors' constraints are, that the processors do appreciate the farmers' constraints, and how we can help one another to prosper. A processor will not succeed if the farmers who supply him or her with a good product do not succeed. We need these good products. That's why we're working along the chain.

The Chair: Can you make it a short answer? We're out of time on this round.

Ms. Cynthia Currie (Chair, National Farm Products Council): Yes. Thank you, Mr. Chairman.

If I could just add to that, Mr. Steckle, like you, I strongly believe that the benefits of any increased exports must be shared by all sectors, including the producers. To that end, our council, which as you know looks after the poultry and egg sector specifically, has put in place a working group to deal with the export market. That working group comprises producers, processors, further processors, and distributors.

The Chair: Thank you.

Mr. Proctor, followed by Mr. Calder, Mr. Ritz, and Madam Ur.

[Translation]

Mr. Dick Proctor: Mr. Lavoie, I am interested in the objective of the sector of activity entitled “expanding markets”, to which you refer on page 29 of your report. The last sentence of the first paragraph refers to domestic and foreign investments. This is a subject of interest to many people, including myself, particularly as regards Canadian food products. Why did you distinguish between domestic and foreign investments?

Mr. Gilles Lavoie: Mr. Chairman, we might not have made this distinction, but we thought it helpful to do so. One of our objectives is to help investors already established in Canada maintain, and actually increase their investments in Canada, in agri-food research and the transfer of new technology, for example. We are not necessarily looking for foreign investments, since Canadians are prepared to invest, and there are already investors here, and their numbers must continue to grow.

This distinction enables us to give a clear indication that this is not limited to foreign investment only, which is what some people might have assumed. It is important to emphasize that there are also Canadians who are ready to invest in their economy.

Mr. Dick Proctor: I see.

[English]

I have just a quick question as a follow-up again to Madam Alarie's. You acknowledge in the executive branch that you're not at the level you should be in terms of gender parity, etc. Is there some kind of program in place or on the horizon to redress that situation, Mr. Graham?

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Mr. Andrew Graham: First of all, all hiring and all appointments are made under the rules of the Public Service Commission. In other words, there's no program that overrides the merit principle—

Mr. Dick Proctor: No affirmative action program...?

Mr. Andrew Graham: There's no affirmative action program. There are development programs to get people ready to take on the responsibilities. There are special assignments and those things aimed at particular groups, who, in this particular case, are women.

Mr. Dick Proctor: Is there any particular reason? Is that government policy not to have that?

Mr. Andrew Graham: In Canada, we essentially have never had affirmative action programs as writ in the Americas—and they don't have them any more either, because they don't work. If you override the basic principle of merit, the person who has the job is working with somebody at the same level and that just doesn't lead to long-term health of the organization. But we certainly have established across government that aggressive development programs do in fact get people ready to take on those responsibilities.

Mr. Dick Proctor: You mentioned the double-banking before. I'm not sure I totally understand it. I think I have an idea, but—

Mr. Andrew Graham: That's simply a technique whereby an individual can either be appointed or can work with an incumbent over a period of time to develop, to learn what's in the incumbent's head in terms of the history, and also to benefit from their experience.

Mr. Dick Proctor: But that double-banking isn't done with any sort of recognition—

Mr. Andrew Graham: It's actually a technique that's being used more in government now. We learned it from the private sector; they started about five or six years ago. It's increasing, but we don't do it with every position because in many cases you don't need to do it.

Mr. Dick Proctor: You wouldn't do it with a particular bias towards trying to bring—

Mr. Andrew Graham: In terms of development, yes.

Mr. Dick Proctor: —under-represented people along...?

Mr. Andrew Graham: Yes.

Mr. Dick Proctor: You do.

Mr. Andrew Graham: Yes.

The Chair: Thanks, Mr. Proctor.

Mr. Calder.

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

These estimates are, very simply, basically a performance evaluation and a progress evaluation, because we're able to set the estimates from the previous year and compare them with what's coming up for this year. It's a sort of checklist as to whether or not we're moving in the right direction.

I want to piggyback on a question Mrs. Ur asked, which was on cost of recovery. I have been sitting on this committee since 1993. We went through the process, for instance, of cost recovery with PMRA. The only way we could really find out in their budget exactly what they were charging the farmer in cost recovery was to do vote netting through Treasury. That was something that really irritated me at that time and, to a certain extent, still does.

I went through the estimates, and there isn't really a breakdown within the estimates that shows cost recovery. So my question is this: seeing that this is a performance evaluation, a progress evaluation, what improvements do you think we could make within the estimates to improve that? Let's face it, cost recovery is a big issue for our primary producers.

Mr. Andrew Graham: Mr. Chairman, when we met the committee and discussed that issue of cost recovery, we clearly recognized that we had to find a better way to communicate that impact. You're right. In essence, the main trick is to go to a netted vote revenue, and I can go into that, but I don't think that's what you're interested in—

Mr. Murray Calder: No.

Mr. Andrew Graham: —in terms of the details.

One of the difficult—“complicating” is not the right word—factors is that we can report out what we earn in terms of cost recovery against the four areas where we have cost recovery as a department. We can't then say that's what the impact is on the individual farmer. We can do it on a gross basis. We can say how much money flows in as a result, say, of the administrative costs associated with NISA, the administrative charges associated with NISA. I don't think a report of this kind can then say what the impact is on farmers in this part of the country or that.

We know we need to have better information on that. As you know, we did a study of gross impact; we're one of the only departments of government that did. You did discuss it. I know you discussed it a number of times.

My view, Mr. Chairman, would be, I guess.... We would welcome some thoughts about it. Maybe in a supplementary information form we could easily do that, and we could highlight it.

Mr. Murray Calder: Because we are dealing with progress evaluation, what would be a better way of improving the process we're in right now, then? How would we improve the process?

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Mr. Andrew Graham: I guess I'm looking for some guidance here, too, in the sense that we can report that out. All I can tell you is that I'm not sure how much detail we can get into in a report at this level. We can report out the amount of money earned as a result of what you would call “user charges”. We can describe them; we can put numbers on them. I can do that today. You know I can do that, because it's in here—

Mr. Murray Calder: Sure.

Mr. Andrew Graham: —and you've developed the expertise to find it. We can do it as supplementary information.

Mr. Murray Calder: Who do you think should do the evaluation, then?

Mr. Andrew Graham: Then you're talking about something else, which is an evaluation of the program.

Mr. Murray Calder: It's sort of the next step.

Mr. Andrew Graham: That's really now driving us to policy. Whether the minister directs us to evaluate a specific one or not is really a matter of direction we would receive in order to do that.

We can't pull out of the air that we should evaluate this one or that one. Clearly, we can evaluate the administrative effectiveness. We can evaluate how we do against policy. As to whether or not we should have it, we don't make that decision.

Mr. Murray Calder: Okay.

Thank you very much, Mr. Chair.

The Chair: Thank you, Mr. Calder.

Mr. Ritz.

Mr. Gerry Ritz (Battlefords—Lloydminster, Canadian Alliance): Thank you, Mr. Chairman, and thank you, gentlemen, ladies.

You speak glowingly about Canadian foodstuffs and why people in the rest of the world like to buy our product—the quality, the consistency of supply, and so on. Yet I look at your graph, your handout, and up in the top corner I see the huge markets we've lost—Hong Kong, China, and so on—as we've brought up before. It's great that you've identified these losses, but who's filling those markets now, and what are we doing to recapture that market?

With our low Canadian dollar, our quality and consistency, and all that, why did we lose them? And who's filling them? Those folks are still eating.

Mr. Gilles Lavoie: As I mentioned before, based on the statistics I have seen—and if this is not correct, we can correct it and provide you with more accurate information—we have not lost market share in these countries. Because of the crisis, particularly in the Asiatic countries, people have imported less from abroad, and they have adjusted their diet.

Most of these countries are coming back. Korea has started importing more. That is also the case with Taiwan and elsewhere. The statistics I have seen—and again, I'll provide you with more information if this is not correct—do not suggest that we have lost ground.

Mr. Gerry Ritz: Okay.

At the top of your sheet, you talk about agrifood exports, but then there's also $16.5 billion of imports. We talk about going out in the world and finding more markets. What's being done to search out internal markets? If we're importing $16.5 billion worth of foodstuffs, what markets are we missing internally that we could develop and grow into?

Food supply in Canada is about 90% politics and 10% production, and that's unfortunate. That has led us into this cheap food policy. How can we expand internal markets when we have trade barriers province to province? There's a lot of niche markets and processing that should be developed. What can we do more in that regard?

Mr. Gilles Lavoie: Obviously, part of our importation is produce that we do not produce in Canada. There are some fruits, vegetables, coffee, tea, and nuts that we do not produce in Canada and have to import. That accounts for a good portion of that.

At the same time, as a trading nation, trade goes both ways. It's a business of import and export. We do not try to stop those who want to come and do business with us in Canada, but to a very large extent, in general, the bulk of our imports is not products that compete directly. They compete, but not end to end with what we do here; it's in terms of production.

For example, we import a very limited amount of wheat. We import a little bit of live cattle, but we re-export them after slaughter. We add value to them and we export them.

We import very few live hogs, for example. We do a little bit there in purebred and that type of thing, but in general, it's in that area.

Mr. Gerry Ritz: Thank you.

The Chair: Thank you, Mr. Ritz.

Now we'll go to Mr. McGuire.

Mr. Joe McGuire (Egmont, Lib.): Thank you, Mr. Chair.

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I guess you're all familiar with the famous chart, with exports going this way and farm incomes going the other way. Maybe, Cynthia, you could develop your initiative a little more and just say that the farmer's income maybe gets flattened out a little and can achieve at least the cost of production. I don't know how you do that in grains and oilseeds, but I guess you're not in that.

Ms. Cynthia Currie: No.

Mr. Joe McGuire: Go ahead.

Ms. Cynthia Currie: Thank you, Mr. Chairman.

Mr. McGuire, what we are doing in terms of making sure the farmers benefit from these increased exports is, as I said, to get the people involved in the industry around the table.

Just as a precursor to that, I might just use this occasion to mention the fact that, for the first time, our council led a mission to Asia last year comprised of producers, processors, and downstream stakeholders. The objective of that mission was to seek out export market opportunities. We called it an export awareness mission, because we wanted people to see for themselves what was happening in that part of the world and we wanted people in that part of the world to see the opportunities we have to supply markets in China and Japan with value-added Canadian product.

I don't think the objective should be that we just get into shipping commodities offshore. Everyone is in that game. Can Canada compete? I'm not so sure that in the poultry sectors they want to compete in commodity exports. I think our niche should be in developing value-added product. To that end, that's why we led that mission.

Now that we've come back home, the mission has established a working group, as I mentioned. The working group is sitting down and looking at some of the possibilities as a result of what we saw. So the work is continuing in that vein.

It's a bit premature to tell you what the final outcome will be, because the final outcome will be something that is driven by industry, i.e., the producers and the processors and the further processors, with government there acting as a facilitator to help them take advantage of those opportunities. Work is progressing, and I think it's on the right track.

Mr. Joe McGuire: With the continued farm losses that are occurring and the bleak predictions for the future, do you see farmers making different choices in what they're growing, especially in regard to grains and oilseeds, Mr. Lavoie?

Mr. Gilles Lavoie: Yes, it's certainly possible that they will look at diversifying their operations more. For example, they may decide to complement the income from grains with more income from livestock, or to go with specialty crops, to have vegetables and so on, in order to have a better mix in order to reduce the risk. Normally you may have one market down for a product, but that's not to say that all products are affected at the same time. If you have a better mix, you have a better chance, on average, to be able to maintain your operation. Monoculture will not be as popular in the future as it has been in the recent past.

The Chair: I think we're going to be able to wrap this up a little early, so just for the sake of the members, I've ordered lunch for twenty minutes to one. We won't be able to start the steering committee meeting until one o'clock in order to accommodate Madam Alarie.

Mr. Hilstrom, then Mrs. Ur, and that's it.

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

Well, statistics are always just the most wonderful thing to play with. I've just been doing a little figuring here. As a single province, Ontario certainly is the biggest exporter, at roughly $6 million. Ontario has around 10 million or 12 million people. I note that Manitoba and Saskatchewan, combined—of course, in Ontario the exports are going up and that's great—have a population of approximately two million people. Combined, their exports are in excess of Ontario's, to the point of being at $7,442,000. So Manitoba and Saskatchewan are very significant to this country, you will agree.

I note that the exports from those two provinces have dropped. One has an 11% drop and the other a 17% drop. What are you specifically doing in the agriculture department to...? And the problem with that, of course, is that in Manitoba and Saskatchewan the capital investment and all of the investment in agriculture is going to be hurt by these drastic drops in exports. This is a gigantic problem.

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This is a gigantic problem, and it goes right to the heart of the matter of income for the individual farmer on the prairies. What is the department doing about that specifically?

Mr. Gilles Lavoie: In terms of helping them, you have had two opportunities to discuss with Minister Vanclief and our colleagues on Tuesday what we do in the safety net area in this regard.

In terms of the other areas, there is no doubt that it's one sector in which we work really hard with our paid partners to make sure they apply the proper rules, the scientifically based rules and trade rules that are respected, in order to maintain the open markets abroad for our products. That's why also in our initial position we want the elimination of all export subsidies from other countries in such a way that we establish a level playing field for our Canadian farmers with farmers of other countries. This is the type of thing we do at the moment.

Mr. Howard Hilstrom: Madame Currie, we have Manitoba currently attempting to increase its exports of industrial eggs, breaker eggs, and we're having a real problem getting that through. In fact, Manitoba has been threatened under supply management marketing with serious fines.

Can you describe from your departmental position where we're at on that and where the solution is? Is this not a way that Manitoba can get its exports back up into the positive percentage points?

Ms. Cynthia Currie: Mr. Chairman, the problem you have just outlined with respect to Manitoba and the industrial egg program is an issue that is currently being discussed between the Canadian Egg Marketing Agency and Manitoba. I'm hopeful that a solution will be reached on that issue. In the interim, Manitoba's exports are continuing to climb in the industrial egg program.

The agency gave them, I think it was last year, a significant quota allowance for the export program, which I believe Manitoba is very satisfied with. The discussions on allocating more quota, not only to Manitoba, but to several other provinces, on the industrial side of the egg equation, if I can put it that way, is a matter that is being discussed. Hopefully the agency will take the decisions that everyone wants later this year.

Mr. Howard Hilstrom: Who does the agency report to?

Ms. Cynthia Currie: The agency reports to our council. I'm not a department, and I hope you'll—

Mr. Howard Hilstrom: You're not in the Department of Agriculture.

Ms. Cynthia Currie: I'm not in the department. I'm a portfolio agency.

Mr. Howard Hilstrom: Okay.

Mr. Graham, is there any reporting by this agency or any of the supply management agencies to the Department of Agriculture?

Mr. Andrew Graham: No. The agency reports within our RPP. In fact, it reports directly to the minister and not through the department.

Mr. Howard Hilstrom: Okay. The reason I'm asking these questions is that I haven't seen Minister Vanclief coming out and saying a lot about some of these major issues, and my point is that I'm trying to establish who should be speaking out to in fact move this along—somebody with some authority. That's why I'm asking where the department comes in on this.

Ms. Cynthia Currie: I'll make just a slight modification. The agencies report to my council. I, in turn, report directly to the minister.

Mr. Howard Hilstrom: Minister Vanclief.

Ms. Cynthia Currie: Minister Vanclief.

Mr. Howard Hilstrom: Yes, that's what I'm getting at. This isn't just some separate agency—

Ms. Cynthia Currie: No.

Mr. Howard Hilstrom: —that you can shuffle off the responsibility to. The responsibility in these performance evaluations and estimates rests with one person, and that's the minister.

Ms. Cynthia Currie: Yes, absolutely.

Mr. Howard Hilstrom: So my recommendation is that there be some leadership shown by the minister in regard to that particular issue and the whole issue of exports, including, of course, all the other things that are affecting farm incomes on the prairies, such as grain transportation and the issue of the Canadian Wheat Board not allowing for innovation and having farmers increase exports on their own, requiring them to do it through an orderly marketing system.

The Chair: Mrs. Ur.

Mrs. Rose-Marie Ur: Thank you, Mr. Chair.

I believe I heard you say earlier that the department places a strong emphasis on value-added farm products. Is there any information as to the number of dollars allocated to promote the development of value-added products?

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I have an underlying reason for asking that question. We have a hog processing plant, the three Ps, just outside of my riding in South London that wants to get into operation.

So, say for an operation like that, what would be open if we were promoting this kind of value-added? What could they look for?

Mr. Gilles Lavoie: If they structure themselves as a cooperative, they can obtain a guaranteed loan under the Farm Improvement and Marketing Cooperatives Loans Act, up to $3 million, to get established. If they are farmers, all farmers can obtain a loan from the Farm Credit Corporation.

Mrs. Rose-Marie Ur: And that's as much as we support—

Mr. Gilles Lavoie: For start-up of this type of operation, yes.

Mrs. Rose-Marie Ur: Is that the way McCain and all those people are supported too then?

Mr. Gilles Lavoie: No. McCain is not a farmer.

Mrs. Rose-Marie Ur: Okay.

Mr. Gilles Lavoie: He's not eligible under the FIMCLA or the FCC.

Mrs. Rose-Marie Ur: Okay.

Mr. Graham, in your opening remarks, you went through many statements: information management, stride, strengthening, the cycle of improvement—many statements like that. Then you went on to say you're looking for measures to be recognized by the private sector. You said you were here looking for guidance, and you talked about frustration. We're frustrated. You're frustrated. Guess what? Our farmers are frustrated too. We hear this cycle, this fluffball that always gets turned a little bit more. But out of that we want to see some kind of substance so that the frustration at the primary producer level is addressed.

You're looking for measures to be recognized by the private sector. My question to you is, what warm and fuzzy things are you looking at?

Mr. Andrew Graham: I can't recall saying that I want to be measured by the private sector. I certainly said—

Mrs. Rose-Marie Ur: “Measured to be recognized by the private sector” is what I had written down, but maybe I wrote wrong.

Mr. Andrew Graham: Certainly, in the number of business areas I'm responsible for, let's say for information technology, resource allocation, or capital asset management, we're looking for solutions both within government and private sector at the least cost. That's the intent of what I have to.

We have been trying in the last three years, as part of the improved reporting to Parliament initiative, to find the best ways to find the measures. We're looking for how to measure those things. We're also continuously looking for ways to give assurance that we do high-quality work.

And I totally agree with the word “fuzz” in that regard, because it is often in the eye of the beholder. As such, we're looking for things that are generally agreed to be accepted practices or of high quality, and we often will look to the private sector because we only—

Mrs. Rose-Marie Ur: But it's good to have an example, not to just say those things as a kind of blanket statement.

Mr. Andrew Graham: Yes.

Mrs. Rose-Marie Ur: It's just to see something at the end of the day. I can sit through meetings, but I like to walk away and say, this is what I heard and this is the example that I brought from what I heard someone speak on—something of substance.

Mr. Andrew Graham: With the responsibilities that I have, some examples are not going to go directly to a farmer. Are we providing, as I mentioned to Mr. Proctor, for the rapid increase in requests from all parts of the community—primary farmers and beyond—for information? Are we providing that in a timely fashion? We can now measure that. We can say how fast we're doing that.

Are we providing a level of client satisfaction in direct farmer relationships? We can now measure a lot of those, let's say in NISA, where we do have those measures.

Mrs. Rose-Marie Ur: I'll close with one last question. You brought up NISA, and that was my last question. Could you give to this committee figures on the administrative costs of NISA and AIDA?

Mr. Andrew Graham: I can provide them. I don't have them in front of me.

Mrs. Rose-Marie Ur: No. I asked you to provide it.

Mr. Andrew Graham: Yes. I will provide that.

Mrs. Rose-Marie Ur: Okay. Thank you.

The Chair: Mr. Lavoie.

Mr. Gilles Lavoie: If I may, Mr. Chairman, you will note in your book from pages 30 to 43, at the bottom, there are suggested measures. It's called “How we intend to assess our progress”. It's the first year you have this. We'll try to add to that, to enhance them, to improve them as we move. The comments we have received today are certainly a good contribution to that. Consequently, as we come next year and the following years, you will say “You told us you were going to be assessed against this”.

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An hon. member: That's good.

Mrs. Rose-Marie Ur: That's why I indicated I was impressed with the book and the way you had put it together. Trust me, we will have the book here in a year or two.

Mr. Andrew Graham: That's part of our plan too.

Mrs. Rose-Marie Ur: I'm sure we'll have really good information.

The Chair: Thank you.

Let me just finish this off with one question to Mr. Graham or Mr. Lavoie. We all know primary producers constitute just one link in the food chain. When the NFU representatives were here last month, they pointed out that when one looks at the return on equity in each of the links in the food chain, the primary producer's return on equity comes dead last.

I guess my question is this. Primary producers can produce only so much and they can squeeze costs only so much. If they're ever going to turn this around and get a return on equity that perhaps is even somewhat comparable to what is enjoyed by others in the other links of the chain, where is the hope for farmers? Is it in this thing we always call value-added? In other words, should they be adding other functions or other dimensions to their enterprises? Where is it?

Mr. Gilles Lavoie: You have already mentioned a part of the response. Value-added is part of that. Diversification is another part of that. Establishing a level playing field with our trade partners in such a way that we can compete with other farmers, not with other governments, is surely part of the solution as well.

I have not seen the NFU figures, but this is not new. The return on investment, or the return on equity in farming, has always been low in comparison to the other sectors. I assume there are a lot of historical reasons for that, but obviously the answer lies in using all the tools we have at our disposal to address the very important issue you raise. Diversification, level playing field, and value-added are all part of the solution.

The Chair: Yes.

On the question of competitiveness, if you look at the trade figures, we're selling more abroad all the time. That would suggest, at least to this finite mind, that we're not doing that badly when it comes to competitiveness. Yet farmers' incomes, especially in the area of grains and oilseeds, are in the tank. It's a hell of a conundrum, isn't it?

Mr. Gilles Lavoie: Yes, it is.

The Chair: Well, on that point, which is hardly cheery, thank you very much. I appreciate your coming.

Members, we will break for a 20-minute lunch and then we'll have our steering committee. This meeting is adjourned.