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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, March 20, 2003

0805

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

The Chair

Mr. Marcel Gagnon (Champlain, BQ)

The Chair

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food)

0810

0815

The Chair

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

The Chair

Mr. Lyle Vanclief

0820

The Chair

Mr. Howard Hilstrom

The Chair

0825

Mr. Howard Hilstrom

The Chair

Mr. Lyle Vanclief

0830

0835

0840

The Chair

Mr. Louis Plamondon

The Chair

Mr. Howard Hilstrom

0845

Mr. Lyle Vanclief

Mr. Howard Hilstrom

0850

Mr. Lyle Vanclief

Mr. Howard Hilstrom

The Chair

Mr. Louis Plamondon

Mr. Lyle Vanclief

0855

Mr. Louis Plamondon

Mr. Lyle Vanclief

Mr. Louis Plamondon

0900

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Mark Eyking (Sydney—Victoria, Lib.)

Mr. Lyle Vanclief

0905

The Chair

Mr. Mark Eyking

Mr. Lyle Vanclief

0910

The Chair

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP)

Mr. Lyle Vanclief

Mr. Lorne Nystrom

Mr. Lyle Vanclief

0915

Mr. Lorne Nystrom

Mr. Rick Borotsik (Brandon—Souris, PC)

Mr. Lorne Nystrom

Mr. Lyle Vanclief

Mr. Lorne Nystrom

Mr. Lyle Vanclief

Mr. Lorne Nystrom

Mr. Lyle Vanclief

Mr. Lorne Nystrom

Mr. Lyle Vanclief

Mr. Lorne Nystrom

The Chair

Mr. Lorne Nystrom

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

0920

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

The Chair

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

0925

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mr. Lyle Vanclief

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

0930

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

The Chair

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, Canadian Alliance)

Mr. Lyle Vanclief

Mrs. Carol Skelton

0935

The Chair

Mrs. Carol Skelton

The Chair

Mrs. Carol Skelton

Mr. Lyle Vanclief

The Chair

Mr. Marcel Gagnon

Mr. Lyle Vanclief

0940

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Gérard Binet (Frontenac—Mégantic, Lib.)

Mr. Lyle Vanclief

0945

Mr. Gérard Binet

Mr. Lyle Vanclief

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Rick Borotsik

Mr. Lyle Vanclief

0950

The Chair

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

The Chair

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance)

Mr. Lyle Vanclief

Mr. Garry Breitkreuz

Mr. Lyle Vanclief

Mr. Garry Breitkreuz

Mr. Lyle Vanclief

Mr. Garry Breitkreuz

0955

Mr. Lyle Vanclief

Mr. Garry Breitkreuz

Mr. Lyle Vanclief

Mr. Garry Breitkreuz

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

Mr. Lyle Vanclief

The Chair

Mr. Howard Hilstrom

The Chair

Mr. Claude Duplain

The Chair

Mr. Claude Duplain

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. Claude Duplain

The Chair

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.)

The Chair

Mr. Howard Hilstrom

The Chair

1015

Mr. Rick Borotsik

The Chair

Mr. Bob Speller

Mr. Rick Borotsik

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 020

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, March 20, 2003

[Recorded by Electronic Apparatus]

¾ (0805)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we want to begin our meeting.

We're pleased this morning to have at the table distinguished people--the minister, the deputy minister, and some other people. We have with us, of course, the minister, as I mentioned, and the deputy minister, Samuel Watson. We also have with us the president of the Canadian Food Inspection Agency, Dick Fadden, and Bruce Deacon, who is the assistant deputy minister of the corporate management branch.

Thank you very much for coming. We thank the minister, especially. It's always difficult to have ministers take time to spend a couple of hours--

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Could the interpreter speak a little more loudly? It's hard to hear the French.

[English]

The Chair: I'm being told that we're not getting the message through clearly. You're not hearing. Can the interpretation turn up the volume a little bit?

Okay, I will speak more slowly, then.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Mr. Chairman, it's always the same thing. Will it be possible to actually hear the interpretation clearly one day? The other day, I had to change places because the earpiece was not working. It's the same in every committee. Could you get the system checked to ensure that we get a better sound for the interpretation? It's not the fault of the interpreter; it's the technological system that doesn't work.

Thank you.

[English]

The Chair: It's in the system, obviously. They are telling me they are at their limits, wherever that is. Technicians are being called in. Hopefully, we'll have this corrected very quickly.

Okay. We want to move into our meeting. Once again, Mr. Minister, thank you for appearing this morning. I know this morning there are two things, primarily, on your agenda. One, of course, is dealing with, for some period of time, the main estimates, and, secondly, the APF agreement. We want to utilize our time as best we can. I apologize for our being a few minutes late getting started. I trust that your time will allow you to at least take us to 10 o'clock.

You're on, Mr. Minister.

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman, and good morning to all of the committee members. It is a pleasure to be here at the committee. And, yes, I am available until five minutes to ten because I do have a cabinet committee meeting to go to at 10 o'clock over in the centre block.

There are two issues the committee wanted to discuss and wanted me to make comments on this morning . One is the supplementary estimates (B). The other is the agriculture policy framework and, probably most specifically in that aspect of the discussion, the proposed new business risk management program that is being discussed.

But first of all, I do want to comment on the supplementary estimates (B) that were tabled on February 26 of this year. More specifically, I will report on the supplementary estimates for the agricultural portfolio, including Agriculture and Agri-Food Canada, the Food Inspection Agency, and the Canadian Grain Commission.

As we know, these supplementary estimates constitute the third and final step by which Parliament approved the budgets for the fiscal year 2002-03. The first step was the main estimates tabled last February 28, 2002. The second step was the supplementary estimates (A) tabled on October 31, 2002.

Now, for Agriculture and Agri-Food Canada the total budget for 2002-03 was $2.74 billion. This was the fourth consecutive year that the Agriculture and Agri-Food Canada budget increased and was double what was in the budget in 1998-99, increasing from, at that time, $1.36 billion to over $2.7 billion last year. This was made up of $1.8 billion in the main estimates that I just referred to, $670 million in the supplementary estimates (A), and $218 million in supplementary estimates (B), along with almost $25 million for administrative Treasury Board transfers. The main components of the final supplementary estimates are estimates (B) for Agriculture and Agri-Food Canada, which included such things as $113 million for grants to support the strategic infrastructure at Canada's veterinary colleges, and $50 million related to the new agriculture policy framework as part of the $600 million approved for the transition to future risk management programming. The remainder of that $600 million was in supplements (A). The final of that $600 million was in supplements (B).

There was also $49 million that was a repayment from the provinces for payments we made on their behalf in the provinces where the federal government administers the program. The provinces were repaying us that $49.4 million we had paid out on their behalf. There was $3.3 million in supplementary estimates (B) to implement cabinet decisions related to pesticides and $600,000 as part of the $3.8 million committed for the Hay West initiative.

As regards the Canadian Food Inspection Agency, the total budget for 2002-03 was $491.8 million. This was made up of $414.3 million in main estimates, $21.8 million in supplementary estimates (A), $44 million in supplementary estimates (B), along with $11.7 million for other Treasury Board administrative transfers. The main components of the final supplementary estimates known as estimates (B) for the Food Inspection Agency include $29 million to cover 2002-03 costs related to emergency animal and plant health outbreaks, $10 million approved by Treasury Board to upgrade critical laboratory and scientific equipment, $1.3 million for pesticide regulatory compliance, $780,000 for the Hay West cost of fumigation and inspection, and $3 million more for increased draw on the statutory compensation authority for payments related to animal and health diseases. This brings the expenditures in that component for the agency this year to approximately $4.5 million.

¾ (0810)

For the Canadian Grain Commission, the total budget for the 2002-03 fiscal year will be approximately $60 million. This includes $27.2 million generated through service fee revenue and $32.8 million of appropriated funding. These appropriated funds are made up of $25.3 million in the main estimates and $7.5 million in supplementary estimates (B). The supplementary estimates (B) funding of $7.5 million was an emergency appropriation to cover operating costs to March 31.

Finally, Mr. Chairman, I'd like to comment on the main estimates for 2003-04, which were tabled in the House on February 26, 2003. For Agriculture and Agri-Food Canada, it's important for the committee to note that as most of the agriculture policy framework program details had not yet been approved by Treasury Board when the main estimates were prepared, the new APF funding will not come into the department until supplementary estimates in 2003-04. The total budget for the department in 2003-04 is forecast to again be approximately $2.7 billion. The agency's budget for 2003-04 will be approximately $474.5 million, and this compares to $462.8 million for 2002-03, excluding any emergency funding, which did happen last year, of $29 million.

Finally, for 2003-04, the Canadian Grain Commission's main estimates show an amount of $20.5 million. This does not include any of the additional $30 million announced in the budget, a portion of which will be assessed through the supplementary estimates this fall, with the remainder to be added to the 2004-05 year. In addition, costs are expected to be recovered through service fees, as they have been in the past.

Mr. Chairman, those are the comments I wanted to make on the supplementary estimates. I don't know whether you want to go to specific questions on the estimates and supplementary estimates or whether you want me to make comments for the next few minutes on the agriculture framework. It's up to you, Mr. Chairman, as to how you want to handle it.

¾ (0815)

The Chair: I think what I'd like to do is perhaps give us a few minutes.... It's the wish of the committee.

Do you wish to spend a bit of time here with the minister on this? I would say we do that first and then get on to the APF and stay on that.

Mr. Hilstrom.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): These two issues are so tied together that I think the minister should finish and then we get at it.

The Chair: Consensus?

We will continue.

Thank you, Howard.

Mr. Lyle Vanclief: Thank you very much. That's certainly fine with me.

Mr. Chairman, I just want to give a little background to how we arrived at the agriculture policy framework. Over the last number of years there has been, I think, a consensus that when we were dealing with issues such as business risk management, food safety, the environment, innovation, and a number of other issues the industry felt were necessary and needed as investments in order to improve the profitability and to stabilize that increased profitability as we go forward, we had to have a broader- and longer-reaching approach to investments in the agriculture and agrifood industry.

There certainly was encouragement from this committee and from all of the agrifood chain out there--from the producers all the way through the agrifood chain and including the consumers as well--that there were a number of issues that needed to be addressed and invested in over a longer period of time. This approach was to be preferred rather than by doing it with short-term measures--in silos, as some have referred to these types of things. Also it needed to be done in an integrated way and over a longer period of time than one or two years at a time.

As a result, we know of the announcement made by the Prime Minister and myself and our government last June. That announcement had a number of components to it. One certainly was the business risk management. Others were the other food safety, the environment, renewal, and research and innovation.

We had considerable sums of money--new sums of money that were added to the A-base for Agriculture and Agri-Food Canada. The direction of those moneys in those different approaches was in a comprehensive and integrated way. For example, there are new dollars of $180 million a year for the other four elements above and beyond the business risk management. There are the other investments by the government into minor use, green cover, environmental farm plans, an increase of $175 million over the five years in marketing, investments into the cooperative movement. I could go on building on all of those investments that will be made by the government.

What we had prior to June 20--all we had in the A-base for Agriculture and Agri-Food Canada for the business risk management aspect for the last many years, since 1996 or 1997--was $600 million a year to contribute to the funding for crop insurance and the net income stabilization account program for farmers. Any additional assistance that was given to farmers because of disaster, as it was referred to, was done on an ad hoc basis. In 1998-99 there was only $600 million. There was no additional ad hoc money.

What we all said--what producers said, what the provinces said, what this committee said, and what my caucus said--is we needed to secure solid funding for that, so that everybody knew what the amount of money was, knowing full well that as Canadians we never are totally happy with the amount of money we could always use more, no matter whether it's on a personal basis or whatever. But we needed to know what that funding was so that everybody could plan around that.

Based on that, the government has now provided a total, and the business risk management component of $1.1 billion a year, that is in the A-base and that is there on an ongoing basis. For the first time ever we have had that amount of money in the A-base.

¾ (0820)

Previously, anything that was done to cover extraordinary circumstances was always done on an ad hoc basis. Our industry, including producers and all the way through, said we had to move away from ad hocery to permanency so that we could plan.

The aspect of the agricultural policy framework being discussed the most at the present time is, as I say, the new program for covering stabilization, the proposed program for stabilization and disaster.

The condition by which the money was given by cabinet was on the fact that the old disaster program, the ad hoc program known as CFIP, is no longer there. We know that as of December 31, 2002, the CFIP program is gone. It is not there. It has not been there, and is not there now, and will not be there for this year.

The industry also said in regard to the business risk management that we needed to move forward with the provinces, and that they liked crop insurance, of course, but it needed to be addressed, and there needed to be opportunities to improve crop insurance within the provinces. As we know, the federal government is a contributor to the premiums in crop insurance, but their specific crop insurance programs are designed in each of the individual provinces with the industry and the province.

The producers also said they liked the NISA program, but it needed to be fixed, and that they wanted a disaster component that was there. We have been working with that.

I have been farming for 25 years. Now this is my 15th year here in Ottawa. I can tell you that as far as consultation is concerned, there has never been as much consultation on developing anything in the 40 years that I've been involved in the agricultural industry. We have listened to the industry. We've made a considerable number of adjustments to what was proposed in the first place.

Mr. Chairman, because I'm a visual person, what I would like to do is take the next 20 minutes with a couple of flip charts and walk the committee members through the approach in order to demonstrate what the proposal is compared to what we have at the present time and what we don't have at the present time, quite frankly, because the CFIP program is no longer there, so that everybody can have a better understanding of the proposal that's there.

I do have a mike here that I can wear so that the interpreters can pick it up better. I'd like to move a couple of these charts over here and walk through that, if you don't mind.

The Chair: Mr. Hilstrom.

Mr. Howard Hilstrom: On a point of order, if the minister is asking for permission to do this, I think we can give him permission to do it, but I think 20 minutes is too long. I think he needs to expedite this a little quicker. We don't have much time for questions here, and we have to give the members of this committee a chance to talk to this minister to ask him questions.

The Chair: Mr. Hilstrom, I should remind you, and others around the table here, that we're here this morning to seek information. Let's see what the minister has. Then we will ask questions. If we need, we'll have him come back again. Let's let the minister do his job right now.

¾ (0825)

Mr. Howard Hilstrom: On a point of order, just in commenting on that, we were six minutes to eight minutes late starting this meeting. So let's try to catch up some time.

The Chair: Mr. Hilstrom, this is not helping our cause.

Mr. Minister, proceed.

Mr. Lyle Vanclief: Mr. Chairman, I will be as brief as I possibly can, but I can tell you that in the years I've been minister, I've never been asked for information on anything to the extent that I have on this, and I appreciate being given time by the committee in order to demonstrate this.

What we need to do, as I said, Mr. Chairman, as we help the industry increase its profitability with all of the other investments and the other activities we do, is we need to help stabilize the return to farmers as we go forward. In so doing, there is always a reference period you go back to, so that if an individual says compared to what I've been doing in the past, I want to compare to that. So in the past, in the CFIP program--which is, as I say, no longer there--the reference was to a gross margin. So that is the reference period you go back to. In the new proposal it's being called a production margin, which reaches far deeper than the old gross margin.

How do you arrive at the production margin? You take the gross income for the particular year that you're in and you do not deduct certain fixed costs. Now there are fixed costs that are there, such as a mortgage, interest, telephone, leases--I won't list them all, Mr. Chairman--building and fence repairs, legal and accounting fees, tools, motor vehicle expenses, licensing, permits, etc. So those fixed costs you do not deduct from what the gross income is. However, there are a number of variable costs, as well as your gross income, that can certainly make a difference as to where you end up in that year. Those variable costs are such things as fertilizer, fuel, pesticides, electricity, crop insurance premiums, those types of variable costs. Certainly these costs can increase or decrease in a year, and unfortunately they too often increase.

If we look at an example of a farm that would have about a $100,000 production margin, a $100,000 production margin would cover about 80% of Canadian farms. There are some other variable costs that are in here, such as machinery repair and labour, and I have asked the Canadian Federation of Agriculture, who are best to give advice on this, whether they want those types of things in a fixed cost area or in a variable cost area, knowing full well that labour on a grain farm may not vary as much as labour on a horticultural farm, etc.

So what you do with that, if the reference was $100,000--and 80% of farms would be around there--is if these costs went up $20,000 in a year, you have a hole then; you only have $80,000 production and you have a hole here of $20,000. So you go back against that and you want to fill that hole. What we want to do is help the farmers have the largest production margin, the largest reference, that they possibly can, and then when there is a shortfall from that, have a system that would fill that.

You've all seen this other chart, which shows different tiers to the proposal that's there at the present time.

¾ (0830)

In the first 15% drop the support would be 50-50 with the producer and governments; in the next 15% it would be 30% from the producer and 70% from the government--at the present time in NISA that's all 50%; and then down in the bottom 70%, it would be 20% from the producer and 80% from governments, suggesting that the farmer can make the decision in a worst-case scenario, if their production margin for that year went to zero, what kind of protection they want.

So if a farmer's production margin for a year went to zero, what does that farmer want to know as a comfort factor would be the amount of money they would want to be able to say to their banker and to their family, we know it will not be less than this.

Let's say the farmer determined it was 70%; the farmer goes to zero and he wants to get 70%. That means the farmer has to fill this $70,000 here at the bottom. On a 20-80 ratio, that means the farmer, with $14,000 in their account, will get $56,000 from the two levels of government.

I'll talk about how we could treat the $14,000. If a farmer said, “I would be more comfortable to be able to say that I know I have 85% of my reference margin, or be able to say to my banker and my family, it doesn't matter if we have a total crash, we'll have $85,000”--this is in the example here of $100,000--then the next 15% on a 30-70 would be $4,500, but that would trigger $10,500 from government. And then at the top, the way NISA is now--and this would only be this portion--it would be $7,500 to get $7,500.

Let's take an example. In the reference year you're in--and remember, your production margin reference is 100. Let's say that because of the year, the income of that farm, the production for that year, was $60,000, so there was a shortfall of $40,000. How does the farmer fill that $40,000?

Here's where the farmer's income was. Down here, folks. So there was $10,000 of that shortfall that fell in the 20-80 ratio. And I'm taking the example of the farmer who says, “Look, I'm prepared to say to my family and my banker seventy; in the worst-case scenario I'll leave that year on seventy.” That's all CFIP did, folks.

Maybe what I should do while I think about it is note that the only way a farmer could fill above the 70% with the old CFIP program is use their NISA account. It's the only way they could do it. CFIP could not take them above 70%. If you filled the rest of it, you had to use your NISA account.

So the question is, what's the NISA account situation in Canada? We have 160,000 NISA accounts in Canada; 48,500 of those people have 5% or less in their NISA account. That's all. They only have 5% of this top 30% available to them. Another 46,000 farmers in Canada have less than 30% in their account. So we have 94,000 out of 160,000 farmers in Canada who can only fill this top part, under the present system, once--we're using the old CFIP that's no longer there. And if they use that once, then their NISA accounts are empty until they build them back up again.

So we have 94,000 farmers in Canada who are extremely vulnerable because of the system we have at the present time. It's not that we're not concerned about all farmers, but those are certainly the farmers we hear from the most often.

If the farmer says, I'm prepared to live with seventy, then you have a situation where this farmer's production margin for a year could be short $40,000; pick up that money over here and come right back up to the $100,000.

¾ (0835)

In the 20-80 portion the farmer would use $2,000 of the $14,000 and get $8,000 from the government, or use the $4,500 and get $10,500, or use the $7,500 and get $7,500. The total of all of those comes to $40,000 and has totally filled the hole.

Let's take a scenario whereby this was reversed. Let's say the farmer's production margin for this year was only 40 and they had a $60,000 hole to fill. What happens? Then the farmer's income is down to here. The farmer at that stage has $30,000 in the 20-80 bracket, $30,000 on a 20-80 proportion. The farmer uses $6,000 of the $14,000, triggers $24,000 from the government, comes up and uses this $4,500 and gets another $10,500. He's used $10,500 out of his $14,000. He has $3,500 left to use up in the 50-50 bracket and he gets another $3,500 from the government because he's used that up. In a 60% drop in production margin, that will bring the farmer up to $92,000, even though the production margin for that farm has dropped 60% for that year. And it's $14,000 if the farmer says they're prepared to go to 70.

What we're saying to producers is, you only have to put down one-third of that the first year and you get full coverage of whatever you choose. Whatever level you choose that you're prepared to live with, in a total crash you fill a third of it. So that's $4,666 and you immediately have that. You have three years to get up to whatever level, say the $14,000. If you never claim, you never have to put another penny down.

Now, remember, just to give an example, if you needed $70,000 in the old NISA program, you had to have $35,000 of your own money on account, and if you needed it and you took it, your NISA account was empty, colleagues, and the most you could get in your NISA account the next year was $15,000, because the most any individual can put in is $7,500 in a year to get the matching government money. So in order to get $70,000 out of the NISA program in the past, it took you $35,000 divided by $7,500, so you're talking four to five years to build that back up.

What happens if a person triggers this one year? They can, by starting the three-year deposit again the next year, start all over again and they have back-to-back coverage.

What happens to the beginning farmer? All the beginning farmer has to do to have that level of coverage is have the $4,666 on deposit.

Some people say the farmers may not have the ready cash. I understand that. There are different ways this can be approached, but if it's to have that coverage, you can go to your banker and say, “Mr. Banker, I can guarantee, if you will loan me $4,666, I'll pay you”--they tell me 7%, 8% is the rate now, so seven times $5,000, we'll say, is $350--“$350 interest to buy that money for this year, and if I have a total of cash, Mr. Banker, I will guarantee you that I have $70,000. However, Mr. Banker, if I have a 40% drop, for example, I will guarantee you that I've got a hundred against my production margin. If I have a 60% drop, I can guarantee you that I've got 92 and I can show you the charts and whatnot.

As I say, if the farmer says they want to have an 80% backstop in a total crash, then they would need to put more down on that.

¾ (0840)

As for the cost of 70% coverage for farmers in Canada, if every dollar of production margin in Canada were covered by farmers, the cost to farmers of that deposit would be about $450 million. Last year farmers put $350 million into their NISA account. But remember, folks, the majority of that was put in there by the 65,000 farmers who had coverage up to about 90% of their margin. There were 94,000 farmers with basically no protection.

The old NISA program ends. In the old NISA, we know that farmers have a fund one and a fund two. Fund one is the money the farmers put in, or after-tax dollars. Fund two is the government money, or before-tax dollars. The rules for winding up the old NISA are that when farmers take money out of their NISA, even at the present time, they first have to take dollars out of fund two, the before-tax money, which becomes taxable money to the farmer. The rules require that the old NISA program be wound down.

Rather than having all of the funds first come out of fund two, I have asked the officials of the Department of Finance and the minister to give permission for half of the money to come out of fund two and half out of fund one. This makes an incredible difference as far as the tax situation is concerned. I've also asked for permission for farmers to take money out of fund one before they wind down, so they can use their after-tax dollars from this fund to start their new NISA program.

When does the wind-down have to take place? The wind-down doesn't have to take place until the end of March 24, 2004—though the producer could start it earlier if they wished. Even if the decision then is that the farmer does not have to take their money, they have 12 months to take their first year of money out, giving them the opportunity to put it in whatever tax year they wish as they go forward.

I don't think there's anything else, Mr. Chair.

The Chair: Let's leave it at that. You've saved us a minute and a half.

Mr. Hilstrom, you're first on.

[Translation]

Mr. Louis Plamondon: I have a point of order, Mr. Chairman. I listened closely to what the minister said, but I would have appreciated receiving the report in both languages, with slides, because that would have made it easier to follow along. Everything was presented in English. That's understandable, because it is the language of the minister, but if he had prepared his documents as do other ministers, it would have been much easier for us to follow. This is a reproach and I hope he will remember it the next time he appears before a committee.

[English]

The Chair: Your point is taken. Unfortunately, this production hasn't been put on paper yet in both languages. The way it was this morning, it had to be done orally. Thank you.

Mr. Hilstrom.

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

Mr. Minister, your knowledge of your program is nothing less than astounding, but it doesn't make it any more acceptable. The program is still insufficient. You spent $15 million to consult and talk to farmers. You travelled through the cities, and I assume you convinced the city people that the government was doing the right thing here.

The only problem with your little plan is that I've heard the majority of provinces are unhappy with it. We know about the petition of the farm groups and that 22 major Canadian farm groups are opposed to this plan. The allegation is that the APF safety net portion of it reduces the amount of money going into the safety net compared to the last three years and that it phases out companion programs. According to the analysis, farmers are getting less out of this than they were before. This is why I say we didn't need your analysis, because we rely on the farm groups' analysis and on what the provinces say.

So why are you so opposed to extending the current programs for one year? Is it because cabinet has tied your hands and that as a result you have no alternative but to blackmail the provinces into signing on, and to shove this down the throats of farmers whether they like it or not? Is it cabinet who said you can't have anything else?

¾ (0845)

Mr. Lyle Vanclief: Mr. Chairman, if I could comment on this, I think Mr. Hilstrom was one of many very vocal people saying that the old programs didn't work. Mr. Hilstrom and others said that tens of thousands of farmers didn't have any money left in their NISA accounts. With the numbers this morning, I demonstrated very clearly that 94,000 Canadian farmers do not have a very big shock absorber in their NISA program. People around this table were vocal and adamant that the CFIP program wasn't any good. They went to great lengths, which is their privilege and opportunity to do, to get me to go to cabinet for some permanent money four years ahead in order to do this.

On consultation, I find it very interesting that Mr. Hilstrom comments that we shouldn't consult when he represents a party that says it represents the grassroots. To talk about my tour, I met in the last two weeks with farm leaders and federations, or whatever you want to call them, in every province of Canada. I personally met with them, and if that isn't a worthwhile expenditure of my time, then I challenge people to say to me, “Don't talk to farmers”.

My safety nets advisory committee met more often in the last year and a half than they probably did in the last four years put together. With the encouragement of farm leaders, the ministers of agriculture said very clearly in Whitehorse in June 2001 that we needed to move to a more comprehensive or national approach, not only in business risk management but also in all the others, and that we needed to have national standards.

As for the comments on the analysis, the reason I wanted to present it personally this morning, and why I will continue to do so with more farm leaders tomorrow morning, is that it has not been understood. We know we have some work to do here. It has been misrepresented and some misinformation has been given out. For example, people have been saying that the top 30% of stabilization was not available. I demonstrated very, very clearly this morning that that is not the case whatsoever, and that when farmers have a situation they have to stabilize or a disaster they have to cover, they get the benefit. The worse the scenario is, the higher percentage of government support they get with this program.

Mr. Howard Hilstrom: There's a difference between consulting, which is what you're supposed to do, and working with the farm groups. In addition to consulting, you have to listen. You have to take the points that are being put forward by the farm group seriously. When they say this is totally unacceptable, you should work with them to get a program that is acceptable, or give a very clear explanation of why they can't have the program they want.

Why won't you spend additional time past April 1 to work with the farm groups and get a program that's acceptable to them and to yourselves? Money isn't unlimited, I appreciate that, but get something that's acceptable. Why can't that be done? Why is there a big rush to have April 1 as the be-all and end-all date?

¾ (0850)

Mr. Lyle Vanclief: I have been very clear for months and months that the lights won't change on April 1. We know there is no disaster program for farmers for 2003. That is clear; that was the decision and the directive of provincial ministers. It was also a directive and a condition, with all of this investment that is being made into agriculture, that the old program, which was criticized and criticized, be fixed on a permanent basis.

The honourable member is just now asking me to do more consulting, when five minutes ago he criticized me for consulting. I have listened to the producers. The producers wanted the rollover ability of the $1.1 billion; we have it. The producers wanted a program that was available for beginning farmers, which we didn't have before. This is available for beginning farmers. The producers wanted back-to-back coverage; it is there. We didn't have it before.

I asked the producers to come back to me, for example, to give me guidance and suggestions on how to treat such things as machinery repair and labour. It has been three weeks since I've asked them that and they have not come back to me. They say that's a very difficult decision for them to comment on. I've asked them to do so because I want to hear what they have to say on that.

They wanted a program that was trade-friendly. This proposal will move more money to support farmers into the green box than previously. I have addressed many of their issues.

April 1 is not a deadline. We have time to continue to develop this. Farmers will not apply for any stabilization or disaster program until the end of the year. The crop insurance is there. That has been arranged with the provinces and they've developed that for this year. They may want changes another year, and there's the ability in here for us to work with the provinces to do that.

No farmer who applies for this year knows what they're going to put into the old NISA program until the 2003 business year is over. No farmer knows what they might trigger out of it. In the old CFIP they didn't know what they were going to trigger out of CFIP until their business year was over.

Mr. Howard Hilstrom: The program is being designed to meet the amount of money you were given.

The Chair: Mr. Hilstrom, you're finished.

Mr. Plamondon, please.

[Translation]

Mr. Louis Plamondon: Mr. Chairman, I would like to raise several issues with the minister: first, funding; second, the strategic plan; third, dairy farmers. I will try to ask fairly brief questions and I would ask the minister to give me fairly short answers.

My first question has to do with the funding you announced for the St. Hyacinth Veterinary College. This institution, which is the only francophone veterinary institution in North America, had hoped for $59 million. But you only offered $35 million. By giving them $35 million, are you basically saying that you will not pay the difference, or is that amount a downpayment, and can this internationally renowned institution expect more understanding on your part?

[English]

Mr. Lyle Vanclief: First of all, thank you very much Monsieur Plamondon.

The only involvement the federal government has ever had in vet colleges in the past--and it's been many years since they've done that--is they invested or participated in some of the capital expenditures to build some buildings.

Even though the vet colleges serve all Canadians, they are a provincial jurisdiction, as are all colleges. However, the government recognizes the unfortunate connection, too often now, between animal health and human health, and the role vet colleges can play in human safety, health safety, and food safety. So the government made the decision to assist the vet colleges.

The presidents of the colleges came to the government requesting $188 million. The contribution we made to the colleges was 60% of that, and the colleges accepted that. As soon as the supplementary estimates are passed, for example, St-Hyacinthe will receive their $35.46 million in one cheque. They won't be spending it all. They'll be able to earn the interest on that. All the colleges will receive their money up front rather than having it allocated over a period of four or five years. I believe you've seen the letters from the presidents of the colleges saying they're very happy with the arrangement.

¾ (0855)

[Translation]

Mr. Louis Plamondon: You did not answer my question, but I gather that there won't be any more money.

With regard to the strategic plan agreement, the president of the Union des producteurs agricoles du Québec squarely rejected it and asked you to push back the deadline of April 1. The problem is that you refuse to recognize that Quebec's management system works. The system is managed through the Financière agricole du Québec; it is an ideal system and envied throughout the world for the way it helps farmers. But you are refusing to go through La Financière in order to deposit the money directly into farmers' accounts. Quebec will never agree to this. If you went through La Financière, it would not cost you a penny and your involvement would be just as visible.

You are turning a risk management system on its head. Generally speaking, when you pay 60¢, the provinces pay 40¢. But in Quebec, when you pay 60¢, we pay $1.60. Because of your obsession with national standards, 24¢ less would be paid to farmers by the Government of Quebec, using the net income stabilization account. Can you tell us today that the federal government will go through La Financière and that you will respect Quebec's distinctiveness in your future strategic framework?

[English]

Mr. Lyle Vanclief: Monsieur Plamondon, I've made it very clear publicly that we are prepared to work with the Financière agricole du Québec--and we are--to have them administer the federal portion in the province of Quebec.

However, on the $1.1 million for business risk management, the Prime Minister has clearly said, in response to a letter from the farm leaders in Canada, that with the $1.1 million from the government, every farmer in similar circumstances in Canada will be treated the same. I think that's the way it should be. We are all Canadians.

The Province of Quebec contributes more to their farmers on a provincial basis than any other province. For every 60¢ the federal government puts into the provinces, most provinces put in 40¢ or a little bit more. In Quebec they put in $1.60. We're just asking the Province of Quebec to make some modest changes, which will not deny farmers any money, to how 24¢ of that $1.60 is distributed, so we have it on a national basis.

It is not going to shortchange any farmer in Quebec any money. The Quebec government can continue to invest, at whatever level they wish on a provincial basis, in their farmers.

[Translation]

Mr. Louis Plamondon: Thank you, sir. Based on what you said, I gather that you are the only one who is right and Quebec's farmers are all wrong. In my view, there is something wrong in the way you approach farmers in your discussions. Quebec farmers unanimously reject your plan, but, to your way of thinking, it will barely affect them.

My third question deals with dairy farmers. Dairy farmers are extremely concerned about the arrival of butter oil and sugar blends. The fact that the regulations are not applied has cost dairy farmers 3 per cent of their milk quotas. As I said on Tuesday to your deputy ministers and to milk producers, Canada has washed its hands of this matter by referring it to the Canadian International Trade Tribunal. It asked the tribunal whether the butter oil and sugar blends should be allowed to enter Canada. The tribunal came down against the dairy producers.

However, if it had the political will to do so, the government could override this ruling. Tariff line 2106.90.95 refers to other food preparations. But other food preparations can be included in line 2106.90.33, which would authorize the government to impose a 212 per cent entry tariff on certain products. In doing so, we would be in line with the regulations of the World Customs Organization. It's simply a matter of political will on the part of the Minister of Finance or the Minister of Agriculture. If the changes were made, dairy producers would be protected because these disguised products would be barred from entering Canada. In the meantime, they have greatly affected dairy production.

In fact, this issue was brought to your attention during the Liberal caucus in Chicoutimi, which is now called Ville de Saguenay, and you promised to create a committee with four ministers, which you did. The four ministers received the report of the deputy ministers last week or two weeks ago. Can you tell us when we will see this report?

¿ (0900)

[English]

The Chair: Mr. Plamondon, you are finished.

Mr. Lyle Vanclief: Can I use some of his time that's left, Mr. Chairman, to answer?

The Chair: I don't know whether--

Mr. Lyle Vanclief: I would like to.

The Chair: Can you do that very quickly?

Mr. Lyle Vanclief: Yes, I can.

There was a working group formed of a number of portfolios in the government and they heard presentations from the dairy farmers. Minister Pettigrew and I met recently on the recommendations of that working group, and we will be commenting on it in the very near future.

Just to back up a little bit, we need to recognize that yes, some people have found some ways of getting around the tariff lines that are there in the Uruguay Round. However, we must also recognize that the dairy industry reviewed all of the tariff lines in 1995, and the dairy industry agreed with them at that time.

Circumstances have changed.

The government tried in 1998 to change it. We went through the CITT. We did not win. We're not done fighting this yet, but we need to do a review of it. That review is in process, and there will be an announcement from the Minister of Trade and me in the very near future on the process we feel should be taken to go forward.

The Chair: Thank you.

Perhaps I can use this time to say to my members that we want everyone to have an opportunity this morning. If we abide by the timelines we have, and if the minister is succinct and the questions are succinct, we will be able to accommodate that.

Mr. Eyking, for seven minutes, please.

Mr. Mark Eyking (Sydney—Victoria, Lib.): Thank you, Mr. Chair.

Thank you for coming here, Minister. It's good to see you. I have to compliment you on your hard work over the last year.

Two years ago the Prime Minister asked us to go on a task force, and we talked to a lot of farmers. Their sense was that they wanted things to change. They didn't want to go every year with something changing. They wanted something more long term and sustainable. So your presentation showed a lot of clarity, and I think it also showed a benefit to a lot of the farmers who don't get benefit right now on the NISA, the bottom half.

I have two questions, one based on trade.

Every time we do something as a government for farmers, we have to be careful, because it could have an effect on our trade negotiations. So I wonder if you can talk a little bit about that and how close we are to that.

Another thing is, the last three years have not been good years for a lot of the farms that grow crops, whether out west or east. With this new program in place, will some of the farmers who could be going out of business now because of the last year with the programs we have now have a better chance of staying in business?

Those are my two questions.

Mr. Lyle Vanclief: Thank you very much, Mr. Eyking.

It's a trick question. We know with the Doha Round and the Harbinson report that the second draft is out. We are not happy with that, and I won't comment on that at the present time, other than that.

What we needed to take a look at is, with the trade rules at the present time, how do we make our programs as green as we possibly can? Very clearly, with the proposed program, as I said earlier, there would be more money go into the green box than there has been in the past.

In the past, the CFIP money of the old program that is no longer there was all green because there was no producer contribution to it, but we could not go above 70% with that. Anything that was paid out in the NISA program in the past was amber. We want to get all the green we possibly can.

In the new program, in the example I gave there of somebody dropping 40% and going down into the lower tier, to the first tier down there, that would mean that all the money paid out, which used to be some CFIP money and then if a producer put in his or her NISA money...all that money in the future would be green. But if there was the stabilization portion at the top, I think I'm correct in saying that money would still be amber.

The other opportunity we have in redesigning our whole business risk management is that we can change how we report crop insurance premium assistance by governments.

In the past, I don't know why, but the way we've always reported from Canada is the total indemnities, the total payout, which this year to farmers was about $2 billion. We reported it as $2 billion.

In the future we will be able to report only the government premium portion, which is considerably less than what the indemnities are. We can do it that way, and furthermore, that's the way the United States does it too, so it's pretty difficult for somebody like the United States.

We don't know where Doha is going to end up. We don't know if Doha is going to succeed, but the best we can do is improve it under the present rules. I am confident that wherever we end up, if we improve it under the present rules, it will also be an improvement under whatever the new rules might be.

In answer to your second question, I think we have to understand, and I think we all know, that this is not a guaranteed income. Neither is CFIP, and neither is NISA. I think that's pointed out, because we know 94,000 out of 160,000 farmers don't have any money to speak of in their NISA programs and are not able to build it up.

That's why my comments were made at the beginning of the presentation. This is what I've been hearing all along, and I agree 100%. How do we help farmers increase and improve their profitability, help them get more markets, help them make use of innovations, help them develop new products, and, for those farmers who desire and wish, help them assess the resources they have, be they personal resources, capital resources? That's why the dollars are there in the renewal. Help them address the concerns of the consumer--because we may not agree with the consumer, but the consumer is always right--on issues of food safety, branding our products, not only domestically but internationally, so that when people think of agriculture and agrifood products, they think of Canadian products because of what they represent, which is high-quality, safe food, produced in an environmentally sustainable way.

As we help farmers increase their profitability, then, with the program, we can stabilize them with a lot more solid stabilization program than we have had in the past. We have to help all farmers, but 94,000 of them out there have nothing at the present time.

¿ (0905)

The Chair: Mr. Ekying, one short question.

Mr. Mark Eyking: Yes. This is a different kind of question, dealing with the whole situation after September 11, the food safety and the country of origin--I know what the United States is doing--and also border traffic.

Can you give us any heads up on what this next year is going to look like? Do you see a lot of problems or how we're going to adjust as farmers, dealing with that country of origin?

Mr. Lyle Vanclief: Mr. Fadden may wish to comment, if he wishes to add to it, but we have a very comparable system, if maybe even a stronger system, as far as the borders in the United States. Our food agency works very closely with the United States.

I met a couple of weeks ago with Ambassador Cellucci. It was one of the discussions we had. We were talking agriculture and agrifood trade. We both recognize the importance of the two-way trade in agriculture. Mr. Manley has discussed that, along with all two-way trade, with Mr. Ridge. There is no intention of either government slowing that up. We recognize that, and every step is being taken in order to ensure that the concerns of both parties are taken into consideration.

As to the country of origin, I was chatting last night, as some others in the room were, I think, with the Canadian Cattlemen's Association, who, along with many others, have grave concerns. There was an increasing opposition to the country of origin legislation in the United States. Without question, we're encouraging that. More and more of the organizations are saying it's a faulty piece of legislation. The first two years are voluntary and then it's supposed to go mandatory.

As we know, it's difficult to change the Farm Bill in the United States because it's law, but maybe it's not as difficult to just have the voluntary aspect of it continue, if we can't get it totally withdrawn. Since it's not being seen to be extremely costly and not very useful, then the effects of it may very well, and likely will, disappear because their own industry wants it to disappear.

¿ (0910)

The Chair: Mr. Nystrom, seven minutes.

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Mr. Chair. It's good to see the minister of the committee. I'm subbing today for Dick Proctor who had to be away on business in Regina.

What I wanted to ask you about, Mr. Minister, is this. I was finance critic for a number of years and followed the estimates very closely in all departments and the expenditures of the government. One thing I've noticed over the years is that when they had restraint in the federal government, agriculture took the brunt of it. I've checked the estimates here, Mr. Chair, and if you go back to 1991-92, some $4.3 billion was spent in the Department of Agriculture. If you go to the year 2002-03, which is this year--we're just winding up the fiscal year of 2002-03--the expenditure is $2.5 billion. That's a drop of some 42%--a really big hit for the farmers of this country.

I think you, and your predecessor probably, under your reign had the biggest cutbacks in the history of this country in real terms and percentage terms in terms of agriculture. You're accountable for expenditures in that department. What do you have to say to the farmers of this country and the members of this committee as to why agriculture took it on the chin? Why weren't you more effective in terms of protecting the farmers of this country and protecting agricultural programs?

Here it is, a drop from $4.3 billion to $2.5 billion, a drop of almost 42%. That is absolutely astounding when you consider how poorly the farmers of this country are doing in many cases. Half of my riding is rural, half is in the city, and I see it every day when I go out in rural Saskatchewan or across rural Canada.

Mr. Lyle Vanclief: Thank you very much, Mr. Nystrom.

Well, I know Mr. Borotsik won't like me saying this, but when we formed the government and other governments before that--Rick wants me to say that and it's true--what we had were governments in Canada for a number of decades that didn't really care about deficit financing, it appears. As I say to constituents, let's put this into perspective.

In 1993 the Government of Canada was taking in $128 billion a year and spending $162 billion. It doesn't work in any business. It doesn't work in governments, so you have to see what you can do to get your fiscal house in order, and in order to do so, all Canadians contribute to that.

Mr. Lorne Nystrom: My question to you is, why did farmers take it on the chin? Over that same period of time, by the way, the federal government, in 1991-92, spent $157 billion, in 2002-03, $176 billion, so expenditures have gone up by $19 billion. Yet farm expenditures have gone down by $1.6 billion. My question is, why did the farmers take it on the chin? You're the defenders of farmers in the cabinet. Why are you being so ineffective? It's like you're up against Mike Tyson or something; you have no wriggle room.

Mr. Lyle Vanclief: In 1998-99, yes, it was only I think $1.36 billion; it's now $2.74 billion for this last year. That money was not in the A-base, and we now have that money in the A-base. The money you're talking about that went there was ad hoc money, and quite frankly, everybody appreciates getting money, but it simply didn't work.

The situation of farmers became worse and worse, so we had to take a different approach to it, and that is the approach we have taken. It wasn't working for us as a country; we had to look at our priorities.

If you look at the ongoing years from there, it's been relatively stable since then. No question it dropped at that time, but we as a government could not afford to continue to lose money on an annual basis, whether for assisting farmers or for other expenditures of the government.

We know what happened, Mr. Nystrom. I can remember paying 18%, 19%, and 20% interest. Even though I had some cheques from the government at the time, sure as heck, they were eaten up because there was no stability for anybody in business at that time.

We have been there, as resources were available to assist our producers in the past. And we will be there in the future. We will be there in a responsible way. We will be there in a way to both invest in the industry and to stabilize the industry as we go forward.

¿ (0915)

Mr. Lorne Nystrom: I understand what you're saying in the aggregate terms about the need for fiscal responsibility, and I'm certainly fiscally responsible; I don't advocate spending like a drunken sailor, as Mr. Borotsik's party did back in those days.

Mr. Rick Borotsik (Brandon—Souris, PC): I gave it to your farmers.

Mr. Lorne Nystrom: My question is very specific. My question is, why did the farmers take it on the chin, a 42% drop? It wasn't the same in defence, it wasn't the same in health, it wasn't the same in education, it wasn't the same in the fisheries, it wasn't the same in industry--it wasn't the same in most of the government departments.

A 42% drop over that period of time is very severe when government expenditures actually went up; they didn't go down. So why did they take it on the chin? I want a specific answer there. Why did the government decide to hit farmers harder than almost anybody else in this country?

After all, you're responsible.

Mr. Lyle Vanclief: You would have to speak to the cabinet at that time. All I can tell you is that since I've gone to the cabinet table it's gone up considerably.

Mr. Lorne Nystrom: But you're still responsible.

Mr. Lyle Vanclief: We're all responsible for history in one way, shape, or form, whether we're talking about agriculture or not. When I became Minister of Agriculture there was $600 million in my A-base for business risk management. It's now $1.1 billion. In 1998-99 the budget for the Department of Agriculture was $1.36 billion; it's now $2.74 billion.

Perhaps you should be saying I've had a 100% increase, Mr. Nystrom. That's what I've had.

Mr. Lorne Nystrom: Your government had a massive cutback. And you still haven't answered the question.

Mr. Lyle Vanclief: I had a 100% increase from where that was once I became Minister of Agriculture.

Mr. Lorne Nystrom: So you're blaming all this on Ralph Goodale, are you?

Mr. Lyle Vanclief: No, I'm blaming it on Rick Borotsik.

Mr. Lorne Nystrom: You had the increase; certainly Goodale must be responsible for the decrease. I'm following your logic. You're responsible for the increase, then Goodale is responsible for the cutback.

The Chair: We're wasting time, gentlemen. I think we all know history. Let's go on.

You can have one more question, if you keep it short, Mr. Nystrom.

Mr. Lorne Nystrom: Well, I still want the answer.

This minister's government was responsible for those massive cutbacks and I want to know why farmers were targeted.

I get asked that question all the time in my riding.

The Chair: Can you briefly give any more comment?

Mr. Lyle Vanclief: No, I've answered the question.

The Chair: Okay, Mr. Borotsik, now it's your turn, for seven minutes.

Mr. Rick Borotsik: Thank you, Mr. Chair. I'll take responsibility for everything, Mr. Chair. I have big shoulders. I'm fine.

Mr. Minister, you indicated that there were 94,000 farmers who had effectively no coverage. That was not entirely true. Under the old CFIP program, 160,000 producers in fact had 70% coverage, with no premiums attached to it. Was that not in fact the case?

Mr. Lyle Vanclief: You told me the program was no good.

Mr. Rick Borotsik: No, you're telling me that we were--

Mr. Lyle Vanclief: You told me to get out of the program, Mr. Borotsik.

Mr. Rick Borotsik: It's in fact false that 94,000 producers didn't have any coverage. The 94,000 producers did have coverage, and they had 70% coverage with no premium.

Mr. Lyle Vanclief: You're twisting what I said, but I'll comment later.

Mr. Rick Borotsik: That's exactly what you said, and we'll read the blues.

Now in order to retain that 70% coverage, those 94,000 producers have to come up with $14,000 of their own money in order to have that 70%. Is that not in fact where we're sitting at right now?

Mr. Lyle Vanclief: Over a period of three years.

Mr. Rick Borotsik: No, the $14,000 is a required premium. Now, they have an opportunity of putting that in over three years. If they have a loss the first year, they have to come up with the fourteen grand to get the 70% coverage or it'll be taken off their payment.

Mr. Lyle Vanclief: My guess would be that if I went to my banker and said, “Mr. Banker, if you loan me $14,000 for 14 days, I can get $56,000 from the government”, my banker would probably look upon that as a pretty good investment.

Mr. Rick Borotsik: But then it's not 70% coverage. It's only 56% coverage at that point, because the $14,000 is coming from the producers, whereas in fact it wouldn't have come from the producers originally; it would have come from the CFIP program. That's true.

¿ (0920)

Mr. Lyle Vanclief: You told me the CFIP program was useless.

Mr. Rick Borotsik: You also told me it was our responsibility for $42 billion--we can get into those arguments--but that is in fact true. Now producers have to come up with $14,000 in order to get the coverage they used to have with the CFIP. That's a difference.

Is crop insurance a requirement for access to the new business risk management? Do you have to have crop insurance?

Mr. Lyle Vanclief: Ministers, industry, and producers are asking us to take a look at any linkage that might be necessary or required. It has not happened.

Mr. Rick Borotsik: Have we come up with a solution?

Mr. Lyle Vanclief: It has not happened, because crop insurance is in place for this year. That period of time to discuss what linkage might be there....

Mr. Rick Borotsik: Do you think there will be a linkage between crop insurance and...?

Mr. Lyle Vanclief: I'm not sure because that discussion is taking place at the federal-provincial table.

Mr. Rick Borotsik: [Editor's Note: Inaudible]

Mr. Lyle Vanclief: Mr. Chairman, can I answer?

The Chair: Yes, please.

Mr. Borotsik, allow the minister to answer, then ask your next question.

Mr. Rick Borotsik: Okay, please, Mr. Minister....

Mr. Lyle Vanclief: I won't take any more of.... I need time to answer if he has time to question.

You know farmers very well. I talked about the fact that we need to make sure they have their production margin as high as they possibly can. If you don't buy crop insurance or if you don't have the grain in the bin, your gross income drops.

The best thing you want is a good crop in the bin. The second best thing you want is the crop insurance cheque. If you don't have either one of those, Mr. Borotsik, then your gross income shrinks, your reference margin shrinks, and you work yourself into a hole on that.

There needs to be a carrot approach looked at in order to get producers to buy crop insurance, so that they don't depend just on the disaster aspect.

Mr. Rick Borotsik: From those comments I take it that you're leaning toward the mandatory crop insurance.

Mr. Lyle Vanclief: No, I didn't say mandatory.

Mr. Rick Borotsik: Right now crop insurance in Saskatchewan has increased by 53%, the premium. That's because they had a $700-million loss last year. There may well be another one this year. I hate to be the harbinger of bad news, but there may be a drought.

Mr. Lyle Vanclief: And it may be a good year.

Mr. Rick Borotsik: If those premiums go up again, it's going to be difficult to have a premium on crop insurance as well as the premium on the CFIP. The reason I'm mentioning that is because there are a lot of unknowns. We don't know about the crop insurance. We don't know about, right now, the calculation of the production reference margin. You've already said there are other areas, whether they be the fixed costs or the variable costs. We don't know what that production margin is. There are unknowns at the present time.

Can you tell me when all of these unknowns will be answered, all of the blanks will be filled, and we will know exactly what the program is that's going to be there for the farmers?

Mr. Lyle Vanclief: We have a number of weeks, Mr. Borotsik, to complete that. As I said a number of times already, April 1 is not the drop-dead deadline--

Mr. Rick Borotsik: I don't disagree with you.

Mr. Lyle Vanclief: --and I've said that all along. Some people like to promote that it is. That is not the drop-dead deadline. We have time over the next weeks to complete this, knowing there is no disaster program there since January 1 of this year.

Crop insurance premiums.... I think that's a decision. I certainly have some producers say to me very clearly that crop insurance should be mandatory. I have other producers saying don't tell me what insurance to buy. I've had to bite my tongue in the last year or so, because I've been on farms and on national television where farmers were suffering severely from the drought, but I found out they had made the personal business management decision on their own to not buy crop insurance--

Mr. Rick Borotsik: My last question, Mr. Minister.

Mr. Lyle Vanclief: --and they wanted to participate.

If you take a business decision to take the risk on your own, then....

Mr. Rick Borotsik: We've dealt with that aspect.

Mr. Lyle Vanclief: But what I'm saying is that we need to look at that. The approach I think we should take is a carrot approach to encourage people to buy crop insurance, not a stick.

Mr. Rick Borotsik: I'll ask two questions at once because then you can answer them both.

First of all, we know the AIDA, we know the CFIP, we know the administrative costs, we know the numbers of staff associated with it. Are you anticipating that this is going to be an employment program for you and have more staff involved than they did in AIDA and CFIP?

The second question is, you talked about consultation. As of March 11, 2003, I have a news release from KAP, which is my organization. It says, “Minister Vanclief showed today that he remains unwilling to listen to the concerns of farmers and farm organizations from across Canada.” Is that the kind of consultation where you're there to put this program forward or you're there to listen to the KAP and the Mr. Newtons?

Mr. Lyle Vanclief: I'll answer the last one first.

Mr. Newton was at a meeting last week and made some suggestions to me. But I also have to say that it's very frustrating for me when I continue to ask the producers out there for information and they don't want to get back to me with it. I mentioned a couple of them this morning. They've had three weeks. They know it's a difficult decision to make, so maybe they want me to make it so it'll be easier to criticize.

There has been an incredible amount of consultation. I listed the number of things we have made changes to from the initial proposal. Last week I went across this country and explained them to producers because they said they didn't understand them and wanted to hear from me.

We do not anticipate that this will require any more staff than what NISA and CFIP did together before. The cost of administering those two programs in total in the past was about $62 million to $65 million. We anticipate that this new program will not cost any more than $70 million.

I can tell you for sure that the complicated ridiculous forms of the old CFIP will be incredibly simplified. We've simplified the first-year forms for farmers because they were awful, and in two years we can have the forms as simple as they were in the past for NISA, so they can be done right from income tax filing.

¿ (0925)

The Chair: Let's move on to Ms. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Minister, for appearing. I'm really sorry that we have the estimates and the APF because they're both very important. It's been brought to the government's attention that we should be a little more diligent on estimates, and we have so few minutes.

One of my favourite departments is PMRA, to say the least. I was looking at their allocations here of $3,277,000. Then under CFIA there's another $1.3 million, which together adds up to $4.5 million. That's for building public confidence in pesticide regulations and improving access.

Can you tell me what percent of that money will actually go toward improving access by our farmers to these products and how much will go to public relations? It appears that dollars are continually being added to that program, and our producers are not greatly satisfied that it has improved.

Mr. Lyle Vanclief: The PMRA, as we know, is under the Minister of Health. The PMRA has said it is extremely underfunded to do all the things you, I, and many others want it to do.

About a year ago the Minister of Health and I announced $7.7 million of new money for the PMRA. Then in June the Prime Minister and I announced another $54.5 million. The system wasn't funded to do this, but we are confident this money will be able to provide us and our producers here in Canada with a system that is very comparable to the IR-4 program in the United States. That's what our producers have wanted.

We have transferred--not without monitoring and participation--some of our $54.5 million to support the PMRA, but it's with the condition we get results for that.

Mrs. Rose-Marie Ur: I hope so, because it just seems to be a little loosey-goosey at times and I'm really concerned about that.

On the APF, concerns have been raised. Because the production margin is approximately twice as large as the gross margin, a much larger drop in revenue is required to trigger a payment, and the larger the margin as a percentage of sales, the greater the decline in sales needed to trigger the payment. So they're saying this will not be as good as the old application for funding.

Mr. Lyle Vanclief: That's not true. If your production margin for this year drops $5,000 against your reference period, you get $5,000. If it drops $20,000, you get $20,000. I showed you on the chart. It used to be that the first 5% of a drop was not available to producers. I took that away a couple of weeks ago, much to the consternation of some provincial ministers and commodity groups out there that didn't want me to do that.

I find that very difficult to understand, because even if your income drops 5%, with this new program you can fill that hole. That's part of what producers need and want. Some producer groups are saying they didn't want to do that. But a lot more money will be triggered at the top of that chart because of small declines than at the bottom.

¿ (0930)

Mrs. Rose-Marie Ur: What are the linkages between the NISA and the production insurance? That was a concern raised at the--

Mr. Lyle Vanclief: I think that's the topic that--

Mrs. Rose-Marie Ur: That was really a major concern at the Ridgetown meeting.

Mr. Lyle Vanclief: Yes, I think that's what Mr. Borotsik...Mr. Borotsik, are you there?

Mr. Rick Borotsik: I'm here. It wasn't our fault...[Editor's Note: Inaudible] I wasn't even there.

Mr. Lyle Vanclief: But it must be wearing on your mind because you keep wanting to talk about it.

Let his conscience be his guide.

Anyway, as I said before, the industry and the provincial ministers have said that we need to look at the linkage. But as we look at the linkage we need to look at a carrot approach rather than a stick approach. In other words, can we say to a producer that the cost of having protection is less if you have crop insurance, rather than the other way around? We need to encourage more farmers.

There are some interesting statistics--

Mrs. Rose-Marie Ur: I have those, Lyle.

Mr. Lyle Vanclief: --on the percentage of crop insurance participation in difference provinces. There are a lot of opportunities in some provinces to look at how other provinces are providing coverage in the hort industry or whatever, versus where they are.

The Chair: I'm sorry, the time is up. I'm trying to accommodate here.

Ms. Skelton, for five minutes. And I'm going to put the hammer down at five, because I'm trying to get everybody in this morning.

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, Canadian Alliance): I totally agreed with Mrs. Ur when she spoke about having these two subjects together, because I think it's a disservice to us and to you, Mr. Minister, having these pushed into one session.

I want to ask how many NISA accounts are there in Saskatchewan, and what's the average in those accounts?

Mr. Lyle Vanclief: In Saskatchewan there are 59,569 NISA accounts. Of those, 34,480 have less than 25% of their production margin in their accounts.

Mrs. Carol Skelton: Okay.

I've had producers come to me and say this program is no different from the old program; they're just going to be forced to pay more. I also want to put it on record that one day this week I had over 800 e-mails in my office stating that this program is not acceptable to the farm population. A farm wife in Saskatchewan came to me before our government signed the agreement with you, and she said “Carol, please tell them we will take anything, because the programs we have had are not suitable.”

The CFIP is a disaster. I noticed in the estimates there is money for CFIP. Why is there still money when the program was supposed to be finished December 31? Is this kept in there to hire the people to draw the money back from the farmers? I have a huge number of farmers in my riding who are being harassed by CFIP officials for money back because they have changed the rules and regulations. I have people who have gone to Farm Credit to make their payments, partial payments, and they can't pay the interest because we've had disasters for three years. That interest is being tacked on to the end of the loan, so these farmers are paying interest on interest.

And you sit there and tell us you're helping agriculture producers?

Mr. Minister, in Saskatchewan, farmers who have farmed for 40 years and 50 years are having their mortgages pulled. They cannot get operating loans. You say “Go to your banker”. I know farmers who have been steadfast, and because of the drought we have had over the last three and four years, these people are struggling, with two people working to feed their families. And you're sitting there saying you have given us more money.

Mr. Minister, you have failed Saskatchewan. You were supposed to help us under disaster. I'm sorry, but I have women and clients--men--coming to the office crying. They can't get welfare because they have land.

You want agriculture; you want food on people's tables in this country. Mr. Minister, you're wiping out a whole province. And I'm sorry to say it but your programs are inadequate. What you're bringing forward will not keep the people on the land in Saskatchewan. I really have a problem.

There are all kinds of things in here on the estimates that I would like to ask.

¿ (0935)

The Chair: You have about a minute and a half left. That's all that's left.

Mrs. Carol Skelton: I would like to ask the minister if he will come back to answer the questions on the estimates too.

The Chair: You can ask him that question, certainly. Is that one of your questions?

Mrs. Carol Skelton: Yes, it's one of them. He can tell me what he's going to do for Saskatchewan.

Mr. Lyle Vanclief: I can have officials come, and I can come back as well, Mrs. Skelton.

On Saskatchewan, I just gave you the numbers that 34,480 farmers in Saskatchewan have less than 25% in their NISA accounts. You said that CFIP failed them. All CFIP could get them, Mrs. Skelton, was 70%, and that's why it failed them.

That's why I am not content that two-thirds of the farmers in Saskatchewan do not have better coverage than they have at the present time. With the new program for their one-year investment in NISA they can have full coverage.

If that isn't better than what is there at the present time, I don't know what is, because they don't have it.

All they had with the old CFIP was 70%. They didn't have enough in their NISA to fill it up the rest of the way. If they did fill it once, they didn't have anything left, to speak of, in order to fill it if they needed to fill it the next year.

That's a concern of mine.

The Chair: Your five minutes is up.

Mr. Gagnon, for five minutes.

[Translation]

Mr. Marcel Gagnon: Thank you. Minister, I'm having some problems understanding the new framework program and I've just noticed that I'm not the only one. You've just mentioned that you had to tour Canada to explain it because nobody understood it. I believe that's exactly the problem posed by this program.

The farmers who come to see us don't understand why such a program has to be set up so quickly while just about no one wants it. I don't know why. If it's so good and so easy to understand, how come people in all the provinces, including Quebec, don't want it?

The other day, senior officials came here to explain that framework program to us. I asked them why Quebec didn't want it. In front of the whole committee, the senior officials addressed the chair and said that it's because Quebec was a bit further along in the area of agricultural protection in general.

This morning, we're having problems understanding why, in answer to a question put by one of my colleagues, you said that all farmers in Canada must be treated in the same way. We were told that programs that had already been studied and implemented in Quebec had to be adjusted downwards to bring them down to the Canadian level. I really have problems when someone says something like that and I'd like you to explain this to me again. Why do we have to lower our standards?

I was a militant member of the UPA in Quebec in the 70s and 80s. I worked very hard to set up the agricultural programs we have in Quebec and I have problems understanding why, today, to adjust to your new framework agreement, we have to throw overboard some of the advantages gained by Quebec farmers thanks to their blood, sweat and tears. Because of that, I think it's normal that your program should be refused by just about all our producer associations.

[English]

Mr. Lyle Vanclief: Mr. Speaker, I hope the honourable member isn't saying that as minister I shouldn't go out and talk to farmers to explain what this program is. I don't think he's saying that.

Concerning his comments about being on an equal footing, what I've said very clearly, what the Prime Minister has said, and what the government has said is that for the business risk management portion of this, every farmer in similar circumstances in Canada should be treated the same. A Canadian is a Canadian. A Canadian farmer is a Canadian farmer, whether that farmer is in Saskatchewan, Ontario, Quebec, Prince Edward Island, or wherever it is.

We are not asking Manitoba and we are not asking the Province of Quebec to support their farmers at a lower level at all. They can support them at a higher level, as they have done. They have made a provincial government decision in the past to support their farmers at a very high level--to the envy, I think, of most farmers in the rest of Canada. But that was a provincial decision.

What we are asking them is for a little portion of that, not to be taken away from their farmers but to be used in the same way with their farmers as it's used with farmers in the rest of Canada. They do not have to take their protection down; they can build on it if they so desire.

Why Canadian standards? I think it was Mr. Eyking and others who raised the trade issue. Trade is more on the radar screen of everybody in the world today than it's ever been before. We have to be as proactive as we possibly can on a national basis not to subject ourselves to trade challenges. We have to be as proactive in order to prevent those as we possibly can.

If provinces do something within themselves, they may not be challenged as much, because it's localized, if I can put it that way. But on a national basis, we must be as proactive in that as possible.

If I could just go back and comment on--

¿ (0940)

The Chair: We're right out of time, Mr. Minister.

Mr. Lyle Vanclief: I just checked the arrears for Farm Credit Canada. As of October 31, 2002, in Saskatchewan they were at 0.41%.

The Chair: I'm sorry, we can't take any more time.

We're going to move to the government side. Mr. Binet and Mr. Duplain are, I think, sharing the five minutes.

[Translation]

Mr. Gérard Binet (Frontenac—Mégantic, Lib.): Thank you, Mr. Chairman.

Minister, it's a pleasure to welcome you here especially as I'm a new member on the Standing Committee on Agriculture and Agri-food. Last week, there was a demonstration in my region and there were two main subjects.

The first was milk. I was at the demonstration in the Saguenay and I heard you say that you were in support of supply management. Since then I've had many meetings with my constituents. I was well-informed by all of these discussions with all of those people.

The second matter was the strategic framework. I'd had a meeting because of my being assigned to the Standing Committee on Agriculture and Agri-food and I really had problems discussing it. After that, of course, I said that I'd get involved and I would be asking questions and I'm really happy to be here today to put them to you even though we met yesterday and had a fruitful meeting.

I'll start with supply management and the products crossing our borders and coming in here, which is a matter that really raises a lot of concerns amongst our milk producers. Presently, the ministerial team that you wanted to have has been set up. I'd like you to repeat what you said before concerning milk product imports.

[English]

Mr. Lyle Vanclief: Thank you, Mr. Binet. There's no question the support and encouragement was there, from yourself and all of the rural caucus at the summer Liberal caucus meeting in Chicoutimi, to put together a working group to discuss with the dairy industry and all the portfolios involved in it. We have, I think, CCRA, Finance, Trade, and Agriculture all involved in tariffs and how they're treated. That was put together as a result of the discussion in Chicoutimi this summer. The report of that is now back to all of the ministers. Minister Pettigrew and I met on it earlier this week.

As I said earlier, we will be making a recommendation on how to approach the concern. The industry had a number of concerns, not only on butter, oil, and sugar; there were a number of concerns about the effects of things happening to the supply-managed sector. Some of their concerns apply more to certain individual ministers than to others; some were more inclusive of the different ministers. We will be indicating the approach the government is prepared to take on that in the very near future.

¿ (0945)

[Translation]

Mr. Gérard Binet: It's because the heading I saw in the newspaper this week said that the government was proceeding at a snail's pace. That means that somewhere, someone knows that it happened last summer and that we'll be getting the results soon.

My other question has to do with the strategic framework. As you know, in Quebec, union associations have a rather strong influence on the government. We know very well that there's a good association in Quebec, the UPA, that is very strong. I don't mean that in a negative way. The Quebec caucus has had many meetings with Mr. Pellerin and yourself. We heard that the Quebec government was ready to sign. Is it the government or Mr. Pellerin who is going to decide? Is it true that the Quebec government is ready to sign the agreement?

[English]

Mr. Lyle Vanclief: Mr. Binet, it's a known fact that the previous federal-provincial agreements, which were signed three years ago and were the first that had been made for so long a time, end as of March 31 of this year, with all provinces. It's the federal government and the provincial governments that have to sign new federal-provincial agreements so that moneys can flow.

None of the money in the APF to assist provinces on top of what they're doing in environment--on environmental farm plans, food safety--can flow from the federal government to the provincial government unless there's an agreement permitting it. The flexibility is there on those others to do it.

Quebec, for example, is very well advanced on environmental farm plans, more so than maybe some other provinces, so there is flexibility in the bilateral agreement that's there.

The Chair: I'm sorry, we have to cut it off.

Mr. Lyle Vanclief: The minister has told me he wants to sign.

The Chair: Mr. Borotsik, you have five minutes.

Mr. Rick Borotsik: Thank you. I'll be very short.

Mr. Minister, we all recognize that it's almost impossible to come up with a program that's going to be accepted by everybody. I think everybody around the table recognizes that.

One of the issues that has not been dealt with by this new program--this new business risk management--is the issue of commodity prices, trade injury. It doesn't matter if you have 100% protection under the program; if in fact you're selling commodities at a loss on the world market, there are going to be fewer and fewer producers around.

We've heard from some of the organizations with respect to a need for trade injury protection. That's not covered here. Again, remember my opening comment. I know it's impossible to develop a program for everything, but this is a reality: a lot of our producers in the grains and oilseeds, particularly over the last number of years, have been hurt terribly badly because of that trade injury.

How do you plan on your department dealing with that trade injury? Or is it just simply that those producers, if they can't make money on the open market, shouldn't be producing?

Mr. Lyle Vanclief: Producers, in the end, will have to make the decision on what they produce on their farms. There's no question, they make that final decision. But what governments can do is help them make those decisions, and market their products, diversify, innovate, etc.

In any business, if you can't meet the competition in some way--and we cannot meet what the United States is doing; financially, this government does not have sufficient money to meet the United States' way of domestic support, export support, etc.--you need to find a way to beat the competition. That's why we have increased our emphasis, doubled the money for marketing, emphasized branding, in order to....

I'll give a very personal example. When my wife and I were farming--some of you will chuckle at this, but it's a reality--there were a lot of strawberry growers in my area. It was one of the crops we grew. We built a brand for Willowlea Farms strawberries that brought the customers to Willowlea Farms. We can build a brand, because we're already well along on Canadian. I didn't get any more for my strawberries than anybody else, but when they bought mine instead of the other guy's, it was pretty meaningful.

¿ (0950)

The Chair: Mr. Borotsik, do you have any more questions?

Mr. Lyle Vanclief: I'm not saying everybody grow strawberries. I'm drawing an analogy. The western farmers are diversifying. They're diversifying and they deserve full credit and compliments for it. They're going into specialized crops. They're producing more livestock. They're walking their product off the farm rather than trucking it off the farm, and their value-added--

Mr. Rick Borotsik: They got into peas and lentils, and now the American Farm Bill is going to subsidize unfairly those same crops of peas and lentils.

So, yes, they are trying to diversify, they are trying to get into different crops, but we're not helping them or protecting them against the unfair subsidy of the American Farm Bill or the European Union. And this doesn't deal with it. This deals with catastrophic losses, but it doesn't deal with the issue of unfair trade.

Mr. Lyle Vanclief: Your farmers in Manitoba are a prime example of adapting to the realities. You don't like me giving examples, but I think you're proud of your hog industry.

Mr. Rick Borotsik: The hog industry now is selling below the cost of production. That's diversification.

The Chair: Now we're going to move to Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): Thank you very much, Mr. Chair.

I just want to begin by underscoring what Mrs. Skelton said. I spent a week going around my riding, and the most common comment I heard was, “Why doesn't the government care about farmers?” I just have to put that on the record.

But I want to talk about non-tariff trade barriers.

We joined the U.S. on the beef hormone issue and we won that battle. The United States is planning to challenge the European Union restrictions on the import of genetically modified foods. They plan to file a World Trade Organization challenge to the EU barriers to trade in GM products.

It would really create opportunities for farmers who grow GM crops if we would participate in this, and of course it would send a message to WTO negotiators that trade rules have to be based on science.

We aren't doing very well in cooperating with our allies on the Iraq issue. Are we going to join with the U.S. in this challenge?

Mr. Lyle Vanclief: It was one of the issues I discussed with Ambassador Cellucci, and I know the trade minister has discussed it with the U.S. Trade Representative, Robert Zoellick.

A few months ago the United States said they were going to go forward with a challenge at that time. They have postponed that challenge. Whether there are other things happening between the United States and Europe.... We told them very clearly that we wanted to discuss the way challenges go. Other countries can join in. We indicated to them at that time that this should be a joint effort.

I can assure you, if the United States goes, we will be there with the United States on that.

Mr. Garry Breitkreuz: I presume that is a strong “yes”.

Mr. Lyle Vanclief: Yes.

Mr. Garry Breitkreuz: Okay, I appreciate that.

I haven't heard an announcement yet--maybe it has been made--about the $600 million in bridge funding. Last year it was paid out through NISA. How is it going to be paid out this year?

Mr. Lyle Vanclief: That decision has not been made yet, Mr. Breitkreuz. I'm having discussions with the industry and with the provinces. There are a number of different views. The provinces would like it done one way. Some sectors in the industry would like it done another way, and some would like it done another way.

Some decisions are made by me. It will not be sent to the provinces to do with as they see fit. Only three provinces put their 40% with that last year. That money was provided by cabinet--two lots of $600 million as bridge and transition money--and we are looking at ways we can use it to do that, to bridge and to transition.

Mr. Garry Breitkreuz: I have a third question.

Research and development was cut back $20 million. Really, it's very important to agriculture. According to information I have--you look puzzled on that--agriculture is in a dramatic period of change right now. Adapting to a changing world market is very important. Genetically modified foods are something I've already brought up; their safety is a huge concern. New varieties of crops are needed to meet export demands. Farmers are very concerned...even with the large corporations developing all these new crops, where they sell the chemicals and stuff.

Why would you cut back on such an important area to farmers as research and development? That is something that needs to be explained to farmers, because to me, it is a very serious thing.

¿ (0955)

Mr. Lyle Vanclief: I'd like to see your numbers there, Mr. Breitkreuz, because we're not...can you provide them?

Mr. Garry Breitkreuz: You should have the numbers.

Mr. Lyle Vanclief: I don't have them at the top of my head, sir. I have a big book in front of me, but I would like to see....

What I would suggest, because I have a sincere concern--not about the cutback, because you can see in the ag policy or APF announcement there's more money in there for research. We're reorganizing the research. My deputy has done a lot of work with our research people there.

What I would suggest is it would be time well spent by this committee to have the department come forward and talk about the reorganization. We used to do a whole bunch of stuff in silos; now we're doing it in teams across Canada.

But I don't think overall, Mr. Breitkreuz, we're cutting back on research.

Mr. Garry Breitkreuz: The Library of Parliament is a very reliable source. I just dug it up here. I think that is something you should look into, because that is not an area that should be....

The Chair: We're going to go to Mr. Duplain for one question before we adjourn. This way we have everybody in this morning, and time is running out.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): Thank you, Mr. Chairman.

Minister, thank you very much for being here today. It's really refreshing to see that through this program, you want to provide help to farmers all across the country, whether big or small, in order for them to enjoy some protection.

Nevertheless, today, I'm disappointed, because the opposition has either backpedaled to the past or simply tried to delay the program, rather than putting the real questions on the table which are, among other things, whether or not this is a good program. The opposition doesn't put that kind of essential question on the table even though it does have the opportunity to do so.

Nor did they have any questions about the first four components we'll be investing in although that is a really interesting aspect. In my opinion, those four components of the agreements arrived at with the provinces don't pose any problems. It would be interesting to hear you tell us what's going on with these four components of the agreement with the provinces.

[English]

Mr. Lyle Vanclief: As I said at the beginning, Mr. Duplain, it was clear by everybody that we needed to invest to increase profitability both on an individual basis and industry wide. When profitability increases it filters up. And it filters down from wherever you are in the value chain in the agrifood industry, and we needed to help stabilize that as it took place.

The other four elements are those investments: $180 million a year for new investments with the provinces to build upon what they are doing in environment, food safety, renewal, and innovation; as well as the $580 million over five years for the other aspects of the June announcement, such as market development.

I've announced, as part of that, for example, just ten days ago, more than a doubling of the money that was spent working with organizations.

l'll give two examples, certainly not the only ones: Canadian Pork International, Canada Beef Export Federation. They have participated in the agrifood trade program in the past. We now have renamed that program the Canadian food and agriculture international program. It will go from less than $13 million a year to $26 million a year...to participate with the sectors in the industry to develop strategies and markets around the world.

The Chair: That is the end of our questioning. I want to thank the minister, Mr. Fadden, Mr. Watson, and Mr. Deacon, for coming in this morning.

Obviously, this subject matter has not been exhausted, and we need to have you back, Mr. Minister. We will work with you, your office, and your department to accommodate that.

We want to continue on with this meeting for a short time. Perhaps we could ask those who are not part of this committee to evacuate the room.

We will suspend the meeting for a few minutes.

À (1000)

À (1010)

[Editor's Note: Public proceedings resume]

The Chair: We are now no longer in camera; we are in a public meeting.

Mr. Hilstrom's motion is put. Is there any further discussion?

Mr. Hilstrom.

Mr. Howard Hilstrom: I would just ask that the motion be read out and that the vote be recorded by the clerk.

The Chair: I will read the motion by Mr. Hilstrom, from Selkirk-Interlake:

I move that this Committee formally request that the Minister of Agriculture delay the implementation of the Business Risk Management Pillar of the Agricultural Policy Framework for one year.

Is the question clearly understood?

Mr. Duplain.

[Translation]

Mr. Claude Duplain: On a point of order. I'm sorry, I'm having trouble following. There's a motion. You have introduced something. Are we discussing the motion or not? I'd like to understand.

[English]

The Chair: Let me clarify. I introduced a letter, a letter to the minister, which had not been seen or had not been introduced for 48 hours; therefore it had to be done in camera. We went in camera to introduce my letter. We have now proceeded from in camera to a public meeting, and in the public meeting we are now entertaining a motion by Mr. Hilstrom.

Is that understood? Is that clear? This is a public meeting now.

[Translation]

Mr. Claude Duplain: Do we have to vote on it?

[English]

The Chair: Yes, we're going to vote on it. I'm just asking for discussion.

Mrs. Ur.

Mrs. Rose-Marie Ur: I would like to make a statement on this.

I think, with all due respect, there's a hell of enough problems with the APF--pardon my English--that we're getting so political on this thing. Why aren't we doing it for the good of the farmers instead of making political brownie points on such a serious issue?

Whether it's one year...if we don't get our act together, the farmers aren't going to have anything. It's really important to me and my farmers, whether in Lambton--Kent--Middlesex or all of Canada, that we have something. Enough is enough.

The Chair: Thank you, Ms. Ur.

Mr. Duplain, did you have something further to say on this?

[Translation]

Mr. Claude Duplain: We're talking about amending this motion. I'd like to ask Mr. Hilstrom...

[English]

The Chair: No, this is a motion; no amendments.

Mr. Speller.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I just want to echo Mrs. Ur's comments, but I didn't expect any better, frankly, from the Canadian Alliance Party.

The point I want to make is this: the way I read this, farmers will now lose, by this motion, the CFIP. This doesn't call on the government to continue the programs that are there now. If we just follow through with this motion, farmers end up with fewer dollars this year than they did last year. So I certainly won't be supporting this motion.

The Chair: We want to bring this to conclusion. The mover can have the last response.

Mr. Howard Hilstrom: This motion in no way ties the hands of this government from supporting farmers with whatever financial support is necessary and that the government is capable of delivering. They can say it's just due to the circumstances, that it's just going to be another ad hoc program for the year; because we weren't able to get it right at the start, we're going to do an ad hoc for one more year, and then we'll have a good program after that.

That's all this motion has the effect of doing. It does not make for less money for farmers.

I'd ask that the question be called.

The Chair: The question has been called. Let's have the vote.

À (1015)

Mr. Rick Borotsik: On a point of order, are Mr. Jackson and Mr. Speller members of this committee?

The Chair: Yes.

Mr. Bob Speller: I'm a member of the committee.

Mr. Rick Borotsik: Are they members and not alternates?

The Chair: Let's finish the vote first.

(Motion negatived: nays 6; yeas 5)

The Chair: The motion is defeated; therefore I call this meeting to an end. We'll go back in camera for just a short while.

[Editor's Note: Proceedings continue in camera]