AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 1, 1998

• 1103

[English]

The Chairman (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): We're going to resume our session. This time we're going to devote our attention to the farm income situation in Canada.

We welcome back, for a second time, Larry Maguire and Kevin Archibald of the Western Canadian Wheat Growers Association. They will be followed by the Canadian Pork Council representatives. Martin Rice is the executive director, and Edouard Asnong is the president and vice-president.

We will turn to Mr. Maguire first. After his presentation, we will hear from Mr. Asnong.

Mr. Larry Maguire (President, Western Canadian Wheat Growers Association): Thank you very much once again, Chairman Harvard.

• 1105

We certainly could have raised some of these issues in the last session with regard to trade, but we believe a number of these issues need to be mentioned during the farm profitability discussions you're having here.

It has been labelled as the worst crisis since the Great Depression in Western Canada. However, as an association we believe we might have short memories if we call it that, because our forefathers would certainly disagree. Even as late as the late 1980s, when interest rates were so much higher, we would call that a more severe time than what we are going through now.

Part of what we're going through now has been caused by a worldwide financial crisis. If there's a crisis, we feel that's where it is.

My remarks are based on the fact that our industry has been caught up as one of those commodities that have taken a hit, as well as all other citizens of Canada with their investments, over the last six to eight months. I'll put it in that broader context when we make comments in regard to how our farm incomes have been impacted.

You have our presentation once again before you. We have outlined there the government supports and market prices in areas like the U.S. and European Union, which I've just talked about. I won't go into detail on those. If you wish to ask us questions on the numbers we've used in there, we would be glad to respond, and respond as well to questions in regard to our U.S. neighbours and the farm supports they have there as well.

The Chairman: Maybe, Larry, I should interrupt to tell you that your statement has not been distributed because it hasn't been translated. We have rules around here that they have to be in both languages before they're distributed. So your statement is not being shared by the members.

Mr. Larry Maguire: Oh. I'm sorry, Mr. Chairman, but we were of the understanding that they would be e-mailed to the clerk and be made available to you. I'll keep that in mind, certainly.

We are thankful as well that Mr. Vanclief and Mr. Marchi are in Washington today dealing with the issue of trade, but it's also relevant in regard to our access and markets and our farm income.

We believe this whole process can be summarized in the eight points we have put before you—which we certainly will make available. We have an eight-point plan that we believe would help the farm financial issue in all of Canada. We are very leery of ad hoc programs that have been utilized in the past. We don't think they are a way to solve these kinds of processes.

Our plan begins with allowing us to be able to manage our own risks better than what we have available to us to do that with today, particularly in relation to two areas—marketing and transportation.

We believe the compulsory marketing mechanism of the Canadian Wheat Board is hurting most of our marketing opportunities. We believe a voluntary Canadian Wheat Board would cure some of these issues. Certainly a voluntary Canadian Wheat Board is not going to cure the low world prices, but it will give farmers the flexibility to manage our own businesses better in the difficult times.

We need to be able to take advantage of some of the non-board-pricing opportunities that are out there today in the wheat and barley sectors as well, particularly, if you will, the example of premiums for malt barley this fall. There is no premium. Malt barley is priced less than feed barley in Lethbridge today, and we question whether we need a monopoly that cannot give us a premium for a crop that is a lower-yielding and more difficult crop to grow than feed barley.

A voluntary board is the single most important tool grain farmers have, we feel. As we said earlier, we believe the working model we have come up with has received a lot of attention in our web site and from a lot of industry players as well when we put that forward to the Western Grain Marketing Panel in 1996. We feel that we must have those marketing choices in that area.

Certainly we believe there are dollars to be saved in the freight and handling deductions that comprise a large portion of our costs of doing business today in western Canada. We support the reform package that the government is moving forward with in regard to the Estey review.

Our paper, “The Implementation of a Contractual System to Control Grain Movement”, explains in detail how to create a contractual system to govern grain logistics.

• 1110

We believe this is one area where the industry is coming together to discuss a lot of common ground, and we look forward to the players in the industry being able to manage their own assets better in the future. There are large dollars there that we could utilize or access in our own farming operations today without having to come to government for the kinds of support programs we're here before you seeking today.

We believe also there should be an enhancement of the Manitoba-style crop insurance across the three prairie provinces.

We believe a net income stabilization account package could be made more accessible for young and new farmers, possibly allowing them to take advantage of future earnings. But that program should be left as it is otherwise, and utilized in those areas, perhaps as a longer-term farm transfer mechanism to stabilize intergenerational transfers, as one example.

We believe as well that we should move towards a FIDP-style program, or farm income disaster package, which the Alberta government already has in place if your income falls below 70% of your three-year rolling average. That is the nuts and bolts of that package.

While you may wish to design one that's a little bit simpler, we believe that package, put in place today, will alleviate a great deal of the concerns of our farm members, because it is much more targeted than a general ad hoc payment across all acres—that is, we believe much more countervailable. Throughout this whole package we believe the market access has to be an important part in assessing any of these packages that we deal with.

There are a few others that we would touch base with, tax solutions we'd like to consider. There is an excess of tax programs in some areas, such as fuel, equipment, land. In Saskatchewan there's a problem with school taxes levied in the farm property, and the manner in which they are. We believe there are some programs that have been used in the past by Revenue Canada that could be reinstated in the short term.

Given the board's latest increase in regard to increased PROs, protected return outlooks, for grain in Western Canada, and their call for increased initial prices, we would certainly concur with that. We also believe there could be a greater use of the cash advance by many small farmers out there today if they were to get a larger increase in the loan rate that comprises a greater proportion of the initial price than what it presently does. That money is there. You have to have the grain to pay it back anyway, so we feel that could be increased.

The eighth point we talk about is a food aid program, which we feel could be put together as well. We don't have a lot of wheat and barley to do that with, we acknowledge, because farmers have responded to the marketplace and grown less of both of those in the past year in western Canada, but we believe there are areas, of course, in the pork sector and perhaps in some of the pulse crop areas we have, that we could see a....

We don't want to compete with the size of the U.S. program that they're trying to work with currently, but that would be market responsive in allowing more of the movement of the product to continue. The transportation people would continue to work, the processing people in the slaughterhouses would continue to work, and eventually the removal of the product out of the system would allow market responsiveness to take place, and perhaps a greater increase in the value of those products.

In conclusion, we'd like to say that grain prices are cyclical, and farmers recognize that there will always be periods of low grain prices. We neither want nor need, nor can we expect, governments to bail us out with temporary programs that do not solve long-term problems. We see the suggestions we've made as a more long-term mechanism toward stabilizing our future.

We need a dependable and predictable safety net mechanism that is targeted to the need, and we must solve long-standing domestic policy problems that interfere with and impede our ability to prosper in this industry. We have worked closely with Minister Vanclief in regard to the safety net review he's had over the last year and a half.

For wheat in particular, we are more dependent on exports than most sectors, and certainly more highly dependent on exports under our regulated system than our major export competitors, so we believe it's critical that Canada take a strong stand in the 1999 trade negotiations to address the issue of trade-distorting EU and U.S. farm support programs.

With that, I will close, Mr. Chairman. I'd be glad to answer questions later.

The Chairman: Thank you, Mr. Maguire. I am told by the clerk that copies of your prepared statement will be distributed before the end of this meeting.

• 1115

For the benefit of all members and witnesses, there will be sandwiches available, I assume just before the noon hour.

Now we're going to turn to Mr. Asnong of the Canadian Pork Council.

Good morning, sir.

[Translation]

Mr. Edouard Asnong (President, Canadian Pork Council; Vice- President, Fédération des producteurs de porcs du Québec): Thank you, Mr. Chairman. The Canadian Pork Council, the National Federation of Provincial Hog Producer Organizations, sincerely appreciates the opportunity to make this presentation on the current severe economic difficulties being experienced by hog farmers across the country, and to update the committee members on what initiatives the CPC is supporting to address the crisis.

As President of the Canadian Pork Council, Vice-President of the Fédération des producteurs de porcs du Québec, and hog producer in the Saint-Hyacinthe region of Quebec, I can honestly say that the current situation is unprecedented in the hog industry. Producers are facing the most difficult circumstances of their entire careers.

To give you an example, hog prices this past week were just over one third of what they were one year ago. The attached graph of Ontario inflation-adjusted hog prices over the past 20-plus years clearly illustrates the severity of the current price downturn.

Why is the hog price so terribly low today? The current situation of hog market returns falling more than 60% below what they were a year ago is not simply due to increased supply here in Canada. It is far more than that. It is a result of a unique combination of a number of price-depressing factors.

There has been an increase in hog production worldwide with higher hog numbers in the major pork exporting countries in both North America and Western Europe. In the United States, hog marketing continues to be up than more 10% on a year-to-year basis. Pork production in the European Union is 5% greater. Canada's hog supplies are up around 70% on a year-to-year basis.

We've also faced competition from other meats. Supplies of other meats, such as beef and chicken, have also, at least until recently, been significantly higher.

We have noted a sudden decline in export demand. Canada now depends upon export markets for more than 40% of its pork production. Within the past year, we have witnessed rapid and devastating economic depressions in many parts of South East Asia and Russia, which has severely curtailed their ability to import meat. Economic slowdowns have since spread into Mexico and Latin America.

We have witnessed unfair export competition and protectionism. The European Union recently reintroduced export subsidies on boneless pork exports, which compete directly with and act to depress the prices that can be obtained for Canadian pork products. This is particularly the case for exports into Japan and other Asian countries.

Meanwhile, the domestic industries in major pork importing countries seek means to limit imports that compete against them. One good example is Australia, where a safeguard case was recently concluded which could introduce tariffs on pork imports, most of which come from Canada. This is despite the fact that the Canadian exports are considered fairly traded.

There is a shortage of US packer capacity. What appears to us, however, to be the most important reason why hog prices are so much lower than anything that can be explained by consumer demand and supply alone, is that processing capacity in the United States has increased more slowly than the increase in hog marketing. There are right now more hogs than American processors can handle, even though most are operating on two shifts, six days per week.

How long will this last? The best known indicator of what direction hog market returns are expected to follow over the next several months is the series of prices established daily at the Chicago Mercantile Exchange of what speculators are willing to pay for the opportunity to purchase hogs that are delivered in future months.

• 1120

Closing hog futures prices on Monday, November 30, 1998 converted into Canadian dollars per hundred kilograms carcass weight basis were as follows: for delivery in February 1999, $115.84; in April 1999, $127.25; in June 1999, $161.77; in August 1999, $169.45.

These forward indicators compare with yesterday's prices in Ontario of about $58 and suggest the prices will, within a few months, return to levels that enable hog farmers to at least cover their cash cost obligations with further improvements to follow.

What should be done about it? As I have been indicating at every opportunity I have had over the past few weeks, we must take a number of steps to move the industry through this disastrous situation. Each party that has a stake in retaining a hog production industry in this country must join with us in finding solutions to ensure that all of our own domestically produced hogs can be processed in this country. These parties include packing houses, exporters, federal and provincial governments, food retailers and restaurant operators, and the sectors providing inputs to hog producers such as seed companies and the banking industry.

The need to explore how to increase our hog processing here in Canada is being discussed within Canada Pork International, the export arm of the industry, and between the CPC and the Canadian Meat Council at an upcoming industry round table meeting. This would help reduce the price-depressing effect of the current shortage of processing capacity in the United States, where a significant percentage of Canadian hogs have been sold in recent years.

The farm financing sector plays a particularly crucial role as well at this stage. The Canadian Pork Council has initiated a dialogue with the Farm Credit Corporation and the chartered banks to discuss with them what are their concerns and intentions, and to discuss alternatives for dealing with the situation with a minimum of loss for existing producers.

We are disappointed that domestic pork prices at retail have not come down in any appreciable manner given that hog prices are currently below half of what they were a year ago. The CPC has also initiated a dialogue with food retailing representatives to examine and to try to explain the decline in Canadian pork consumption relative to what has been taking place in United States. You may want to consult the attached graph further on in the presentation.

We recognize there are many factors other than the hog price alone which determine how much more pork can be moved to the domestic retail channels, including costs of processing in transportation, product quality and price consistency. However, knowing how desperately low hog prices are today, many producers cannot understand why there has not been more downward movement in retail prices generally. The CPC will soon sit down with the food retailing sector to begin examining these questions in order to arrive at some answers and to define what steps are needed to reverse the negative trend in Canadian pork usage.

Having pointed out the initiatives within the industry through which the pork council has responded to the crisis, the Canadian Pork Council wishes to point out that governments—both federal and provincial—have a major role to play.

The Canadian Pork Council supports the efforts of the Canadian Federation of Agriculture to have a whole-farm, trade-neutral, income disaster program implemented for the 1998 tax year. The CPC has a policy for such a program, which we are providing you with today, and which is in compliance with the World Trade Organization principles that fully allow for such programs.

The Canadian Pork Council first asked the Prime Minister in October that Canada contribute its fair share, along with the US and the European Union, to providing food aid to Russia, a country that had been the world's largest meat importer prior to the onset of its economic and potential food availability crises. The US has made an initial commitment of 50,000 tons of pork to Russia through concessional credits for Russian purchases, and the European Union appears to be on the verge of providing 100,000 tons of pork.

• 1125

The idea here is to maintain quantities similar to those which Russia was importing on a commercial basis prior to their economic crisis, and from a Canadian perspective, to keep us in there as one of Russia's long-term suppliers.

With respect to continental trade, a vitally important factor to ensure an efficient distribution of the hog processing activity given the current surplus, the CPC strongly recommends that Canada and the United States remove and avoid any unnecessary trade barriers in response to the current economic pressures. Wherever possible, US packers should be able to process Canadian hogs and vice versa.

We thank the committee for inviting us to make this presentation and we will be pleased to attempt to answer any questions or obtain addition information which is requested as a result of this hearing. Thank you.

[English]

The Chairman: Thank you, sir.

Just as a point of information, you mentioned in your speech that yesterday's closing hog futures price for August was $169.45 a kilogram.

Mr. Edouard Asnong: Per kilogram, yes.

The Chairman: How would that compare with the price you got for your hogs before the crisis hit, and when you were making, let's say, a reasonable return? What were you getting?

Mr. Edouard Asnong: Last year I think the price was something between $180 to $200 per hundred kilogram.

The Chairman: Okay.

Mr. Hilstrom.

Mr. Howard Hilstrom (Selkirk—Interlake, Ref.): Thank you, Mr. Chairman.

Our agriculture minister, Mr. Vanclief, has come up with the opinion that the NISA accounts should be accessed in order to provide the first line of defence, I guess, or the first line of help. Is that the position of the pork council, too?

Mr. Edouard Asnong: What we have for numbers—and it's not easy to know what the real situation is in the hog sector—is that actually there's an average of $17,000 in all the NISA accounts. In this critical situation we are in, that will take care of a medium farm for about two weeks.

So our position is that when it's a disaster, first of all the disaster program should trigger in, bringing us up to 70% of the gross margin, completed by the NISA accounts. If it does not go down more than 30%, then it would just be the NISA accounts that would trigger.

Mr. Howard Hilstrom: That's a plan we're talking about putting in place in the future, I think, a future safety net plan. Is that not what you're talking about there?

Mr. Edouard Asnong: The disaster program?

Mr. Howard Hilstrom: Yes. It's not in place right now.

Mr. Edouard Asnong: It's not in place right now, but I hope it's not too far away.

Mr. Howard Hilstrom: That's what we'll have to see.

Mr. Edouard Asnong: The way we see it also is that it will be applied using the same rules or the same principles as the NISA accounts.

Mr. Howard Hilstrom: Okay.

In this income crisis, remember, we have to deal with all the other sectors, not only agriculture but also the people living in the cities. I mean, the government has put half the money into these NISA accounts, and it was for disaster assistance.

If the rules were changed so that the trigger could be used to get a payout right away, should that be part of the government solution to this in the short term—i.e., use up the safety net that you have and then add more to it?

You guys have already talked about this with the government, but I'm not privy to these discussions. Can you comment on that?

Mr. Edouard Asnong: Yes. Actually, the regulations have changed. The producers can have an interim withdrawal from the NISA accounts. What we are saying is that the money in NISA actually is not sufficient to keep producers in business.

What we say is that because the prices are so low, and the prices on the gross margin have declined more than 30%, first of all, the disaster program should trigger bringing the producer up to 70%, and then.... Which one will trigger first, I don't know, but the way the NISA accounts are built, it's not enough to take care of that.

• 1130

The other thing is that this is the first time, personally, I have seen a situation like this one, where prices are so low. As a producer, I cannot be prepared for such low prices. It means all the money I'm making, I would have to put in an account just to be prepared for this kind of situation. If I did that, I would be out of business in two years, because I have nothing invested in my farm to stay more competitive.

Mr. Howard Hilstrom: Okay.

“How long is short-term aid?” is a question I was asked by a newspaper the other day. You've heard that expression?

Mr. Martin Rice (Executive Director, Canadian Pork Council): Is it the period of time over which the aid is needed?

Mr. Howard Hilstrom: Yes. If the futures in August or whatever don't translate to the producer the price—now, it should, but if it doesn't happen—what are you going to be telling the government in August, that we're still in a short-term aid situation, or what? Because the new disaster assistance plan is not likely going to be set up to deal with that.

Mr. Edouard Asnong: No. In fact, I don't think the disaster program can take of a producer more than one or two years, because it's always based on the previous years. Then, when you have a bad year, that comes into the calculation. So it cannot take care of more than one or two years.

Mr. Howard Hilstrom: Okay.

If you had a 7% increase, would you comment also on whether or not the industry will do any liquidation of supply? We have brand new barns, gigantic barns, 10 thousand or 12 thousand hog barns going up in the Interlake of Manitoba. These barns are going to be filled with hogs come January, February, or March, when they are ready to start producing.

Is that the way the industry should continue to fill these barns, hoping that the price will be better in the future?

Mr. Edouard Asnong: If the barn is there, I think the producer always stays optimistic that somewhere the prices have to recover the cost of it.

The other thing is that actually, in Canada, a study was done—and I don't have it here—on which country or which place in the world was the best place to raise pigs because of the availability of land and cost of grain and all those things. Canada came out as one of the best. I don't think it's normal that we are the first ones to liquidate when some other countries are—

Mr. Howard Hilstrom: Okay, but the question then is, how much should the government support the industry, waiting for this market to improve—for instance, the export market? We know we have to export. How long does the government support the industry financially?

Mr. Martin Rice: Perhaps I could mention that this is not an aid program. This is not a bail-out program. This disaster program is only where those disaster circumstances exist.

Mr. Howard Hilstrom: I'm talking short term, Martin, please.

Mr. Martin Rice: Okay. But I guess we're hoping that the government will implement a disaster program that is short term in the context of it getting in place in time to cover the 1998 tax year. We think, very likely, in the 1999 tax year, for someone who is purely in hogs, a disaster program would not be helpful.

Now, someone who is in hogs in 1998, if they are into some other commodity that is paying them profits, then, of course, the disaster program won't be, and even NISA may not be, triggering for them, but as Mr. Asnong indicated, the NISA simply isn't the disaster program that is needed.

Even if those futures market prices are not realized, the hog influence on a whole farm enterprise will be not requiring disaster payments.

Mr. Howard Hilstrom: In terms of whole farm enterprising, we have lots of them. In fact, most hog producers are like that. There's grain and whatever else.

This is the big question in my riding. If the farm is showing a profit in the other areas there, why should they get compensation—or rather, short-term disaster assistance—for the one area of their farm that's not making money, or because the prices on that went low?

• 1135

Mr. Martin Rice: We agree with that. If they're managing their other enterprises well, they will not be defaulting on their loans or defaulting on their mortgage. So they don't need this disaster program, logically—not logically; they wouldn't be eligible.

The Chairman: Thank you; you're out of time.

Mr. Howard Hilstrom: Thanks, Martin.

[Translation]

The Chairman: Ms. Alarie.

Ms. Hélène Alarie (Louis-Hébert, BQ): We are meeting today to discuss the crisis and emergency measures that should be applied very quickly. The more we progress—because we did have a debate last night—the more we see these emergency measures take shape and what an anti-disaster program could look like.

I believe that there will be eligibility criteria based on the farm's overall income. It would seem that this would be a shared- cost program with the farmer and would be in compliance with WTO rules. Therefore, it would truly be a short-term, disaster income program.

I appreciate the fact that we were reminded that this is to cover the 1998 period and that there is some insistence that such action be taken rapidly, because we are really at the end of our tether.

I was listening to the questions put earlier. It seems to me that we must be cautious regarding the establishment of new producers in the market. That worries me. Yes, we are in a crisis situation. Yes, there are people already established who are in need. If we broaden production without knowing whether the prices anticipated by the Chicago Mercantile Exchange can be obtained... It's all very nice to see this level of production occur, but we don't want to see a situation where the anti-disaster emergency measures become a long-term program and encourage certain individuals to enter this field without any regard for conditions, since there is an emergency measure in place.

Mr. Edouard Asnong: First of all, we will not be basing the increase in production on any anti-disaster measure. In the past few years, Canada may have increased its production the least among the major exporting countries.

The worse signal we could send out right now would be to say that Canada is halting its progress. Increasing our production would send a positive signal to other countries, both in Europe and in the United States. Otherwise, these countries may decide that since Canada has stopped its progress, they will produce what Canada cannot. I think that that could have a negative effect and give rise to an even more precarious situation.

Normally, our increase should be based on the market, on the increase in demand, as in the past few years. But as a result of the economic situation, markets we expected to open up—Japan, Russia and China—stayed closed. At the same time, the United States does not have the processing capacity it needs. Everything happened at the same time.

A disaster program cannot remain in place for more than a year or two, because it is based on the average of the preceding years. If the calculated average included disaster years, it would be very low.

Ms. Hélène Alarie: I see. In your brief, you state that U.S. packers should be able to process Canadian hogs, and vice versa. You also state that we should increase our hog processing here in Canada.

Could you tell me a little bit about our processing and packing capacity here in Canada?

Mr. Edouard Asnong: At present, if we took all the necessary measures, we could process all the Canadian hog.

A processing facility will also be built in Brandon, Manitoba. It will have a capacity of 80,000 heads. At present, the U.S. is responding to the fact that we would be in a position to sell them hogs, while they would be unable to bring theirs here. In some areas, the U.S. could bring their hogs to Canada. It would be easier for us, because we are closer to the processing facilities. But there is a protocol.

The Canadian Pork Council has agreed to a protocol for the import of live hogs from some states in the U.S., because of the incidence of pseudorabies in some U.S. states, which are at levels 4 and 5.

• 1140

The protocol was established in order to authorize the import of hogs from U.S. states in which there has been no incidence of pseudorabies for one or two years.

In refusing to accept live hogs, we are putting pressure on producers who are members of the U.S. National Pork Producers' Council; they would also like to block the import of live Canadian hogs into the U.S..

Ms. Hélène Alarie: So once the Brandon processing plant starts up, we will have a much greater processing capacity?

Mr. Edouard Asnong: We would not have enough hogs.

Ms. Hélène Alarie: Do I have time for another question? I see I do not. Since my next question is somewhat long, I'll save it for the next round.

[English]

The Chairman: Okay, thank you.

Mr. Rice, do you want to say something?

Mr. Martin Rice: I just want to know if Mr. Asnong would have had any extra minutes left, because it had been our intention to very quickly run through these charts and graphs. It would take about three minutes.

If he used up his time, then I guess we'll have to skip that, but some of the graphs and charts give a little bit of background to some of the questions we've been hearing from the last two speakers.

The Chairman: I think members would be more than happy if you want to spend two or three minutes on that. Yes, go ahead.

Mr. Martin Rice: The reason we put them in is to just give some context to the kind of extraordinarily low price we're dealing with relative to what we've had historically.

Our first chart is actually out of date already, because the price that was received on our first chart is monthly hog prices in Ontario. We've adjusted these to an inflation series so that we can put them in context and compare today's prices with what we got ten years ago, or even fifty.

The price yesterday in Ontario fell to $58. If we take an adjustment for inflation, we would see the inflation-adjusted price fall very close to that $50 line.

You can see that in 1996 we had a hog price in real terms that was up around $200. Although we have had a long-run decrease in our real hog prices as we become more efficient, the current price has just taken too big a dive for producers to adjust to.

We've mentioned that we have a lot of potential, we think, to increase our domestic consumption. The next chart gives you the picture of how our consumption, which is the bottom line, has fallen relative to the U.S. situation. We think there are some reasons, perhaps, on our side, that we have not maybe been as attentive to our domestic situation as we have been to exports for some time. However, we think there's also a lot of potential for our own Canadian retail sector and packer sector to do more to develop Canadian tastes for pork. And it's not purely a matter of charging a lower price.

This next chart is not the easiest to make an immediate interpretation from. The solid line, absent of these little diamonds, is the trend of the consumer price index for pork. As you can see, it continues to climb over time, whereas, as we've just indicated, the hog price has not been increasing. In fact, it's been decreasing over time.

We will show some numbers a little bit later on the U.S. side, which we have not been able to confirm in terms of whether they meet the Canadian case or not, but certainly we have a larger and larger percentage of the consumer dollar going to the distribution and wholesale sectors.

Just to show how rapidly we have seen our export markets increase for Canadian pork, the fourth page gives you a 1991 figure of less than $0.5 billion, which climbed in 1997 to $1.37 billion of pork exports. And this does not include the live animals that are being shipped.

So we are looking at a very rapidly growing industry in response to rapidly growing export markets. We are—temporarily, we're very sure—in a period where that growth in the production level has exceeded the growth in the processing capacity on the continent.

• 1145

We are, by the way, the only stage of the pork marketing chain that cannot stockpile. We cannot stockpile the grain and other inputs that go into the hogs. We cannot stockpile the meat that goes into storage. Pigs that are born six months ago must be marketed somehow. That's why we can't make an abrupt adjustment in our supply due to the current circumstances.

We have a couple of tables based on data shared with us by the National Pork Producers Council, our American counterpart, which, for their purposes anyway, indicate that they are looking at a much lower share of the retail dollar. Despite that, their indications in the data in the U.S. are that they have had rapid growth in demand, which we think maybe reflects that they do more merchandising in the States than we have been doing here in Canada.

And we're not putting the blame for that just on the retailers. We are going to sit down with them very soon—next week, we hope—to try to identify what have been our problems in having more pork consumed in Canada.

The next page is based on the last hog and pig survey in the States, which was on September 1. If you go through these numbers, they do suggest there is a decline in the rate of expansion in that U.S. herd. We will see, on the December 1 survey, of course very critical numbers as to whether or not there have actually been cutbacks in the breeding herd. That December 1 survey probably will be out around the middle of December.

Then there's a little story on our long-term growth.

I guess the last page I'll leave with you to look at has four factors that we look at as having a negative influence for our long-term prospects for pork. All the others are what we look at as positive influences.

These include the supply of other meats and the stabilizing of certain Asian economies, which are critical for us to see our exports resume the long-term growth path they were on. We are now at zero-countervailing duty-free live swine going into the U.S. We've had that for a couple of years. I think that gives us good prospects for maintaining free and open access for our hogs into the U.S.

We're also seeing a very major expansion in pork slaughter capacity in western Canada, which, as Mr. Asnong had mentioned to Madam Alarie, could lead us to looking at a strong continental trade pattern here, where we may even have a need for more hogs coming into Canada. It tends to give you a better hog price when you have more hog demand than you have capacity.

The Chairman: Thank you, Mr. Rice.

We'll go to Mr. Steckle for seven minutes.

Mr. Paul Steckle (Huron—Bruce, Lib.): I want to be fairly brief, but I must tell you, as a hog producer, and one who came through the 1972 crisis, I can appreciate what hog farmers are into today, but I find it's as difficult today as it ever has been to organize any kind of farm group, particularly hog farmers and beef farmers.

My own intentions at one time were to initiate a supply management formula for hogs, which could have worked and should have been implemented, but never was. I'm sure there are times farmers are wondering why they didn't.

I know there have been times I've had to question some of the judgment of the pork council in terms of their importation of hogs a number of years ago, when pseudorabies was an issue and the pork council was supportive of bringing American hogs into Canada.

But how quickly can we respond? One of the things we can do in terms of pork, and one of my suggestions in the supply management field, is that we base it on pounds of pork, not on numbers of units of hogs, because the pigs we're marketing now are marketed at 245 to 250, whereas at one time, when I was marketing 15 years ago, they were 220. That was top weight. So we're adding 10% to the weight of a hog.

What are you doing now to reduce the weight of those hogs going to market? Obviously, if you have the hogs you have to go to market. That's one of the questions I have.

As well, are you seeing us going down that slippery slope—or are we already on the slope, unstoppable—of following the route the Americans have taken in the poultry industry, where we're giving it all to the ADMs, where we're giving it all to the Tysons and the Cargills? And when the next round of negotiations comes up for these guys in the loop to settle their contract or to find new contracts, are we then caught into something we can no longer get out of, and we're tied in, and from here on in it's the big boys, and the little guys are out? Is this simply a case where we're going to help these people through this emergency situation in the short term, but in the long term, they're not going to be with us anyhow?

I mean, I'm here to support the farmers. You also suggested that you don't support CAP. I think there has to be a CAP. If we're seen in any way to be supplementing integrators through this program, then about this program, in many cases, farmers have said not to do it at all, because they feel they're the ones who have caused the problem more so than anyone else.

• 1150

I think that's an important aspect. Maybe you haven't heard that, but I tell you, as members of Parliament, we have certainly heard it. Of course we have the environmental...and it goes on and on.

I'm going to give you a couple of minutes to respond.

[Translation]

Mr. Edouard Asnong: We have started discussing the issue with the NPPC. We do not recommend reducing the number of pounds of pork by just taking a little bit of this total away. At present, we do not even have the capacity to process all the hogs we raise, and we end up with carcasses that are even heavier. If we manage to control the situation, and if all hogs are processed on time, we can of course envisage producing carcasses that weigh less.

Let's not forget that we must also meet customer requirements. The Japanese like heavier carcasses. Processed hogs from Quebec tend to weigh approximately 85 kilos; however, producers exporting to Japan let the weight go to 90 kilos or so.

[English]

The other question is not an easy one.

[Translation]

In a capitalist country, it is difficult to determine who is a small producer, who is a large producer, and who runs a whole- farm operation. I believe that a number of limits were established under NISA, but I am not convinced they could be applied as part of an income-disaster program. We should not put any hog producers at risk: all hog producers contribute to Canada's production and export volume, and to Canada's market share.

One thing is certain; we have to ensure that family farms and small producers, as well as major operations, have the tools they need. This might take the form of providing technical advice. It is hard to define the dividing line between small producers and large producers. Sometime ago in Quebec, we established a program geared to small producers. So major operations divided themselves up into small operations. It's not easy.

[English]

Mr. Martin Rice: Perhaps I could I make two quick comments.

One, Mr. Maguire, the CPC is not promoting the importation of U.S. hogs as such. We are supporting animal health protection regulations that do not unnecessarily restrict importation. We accept that there are other means of protecting our animal health in ways that still maintain an acceptable-risk disease freedom. If U.S. hogs come in, it will be because of us having a good enough price in Canada to attract them, and right now our price is well below the U.S. price. We would like to have the ability to have our prices reflect an amount that reflects that Canadian packers might want U.S. hogs as well as our own.

Secondly, on this evolution toward the chicken model, I guess we have some basis to think that pork production is not as easily done according to a recipe as is chicken production—or it seems, anyway. Because of the much more labour-intensive and skilled management requirements for disease control and such, there tends to be more problems in the larger farms—and we witnessed that when we went to North Carolina—in controlling some of these diseases that are more easily noticed and treated by a skilled hog producer who is running and owning his own enterprise.

The Chairman: Mr. Steckle.

Mr. Paul Steckle: There's an impediment that appears to be surfacing through this whole exercise, and that is the way various provinces support their farmers. There's ongoing debate as to whether we should have it uniform, and whether we should bring down these barriers that exist between one province and another.

Today we have the situation where Quebec has chosen to support their farmers in a certain way with moneys, and that's a choice they've made. Nova Scotia governments have done the same. Other provinces have not done that.

What is your view toward a standard policy of support across the country?

• 1155

Mr. Edouard Asnong: That's an excellent question. We have developed a position on it. For one thing, it's not easy to tell the provinces, “You may not have your program”. What we say is let us have a uniform Canadian program for all the provinces. If the provinces want to have some other programs on top of that, okay, because we cannot tell them, sure, you can have one, but make sure it will not create countervailable trade retaliation.

Let's have a good Canadian program, and if that program is good enough, we will not have any kind of provincial programs or top-ups, all those things. Make sure the Canadian program is not countervailable and is trade green or something like that.

The Chairman: Thank you.

We're out of time for this round. I'd like to see if I can get Mr. Maguire into this conversation. I have something here that perhaps both Mr. Maguire and Mr. Asnong might be able to respond to.

This is a statement, Mr. Asnong, made by a fellow Quebecer, Richard Davies, a vice-president with Coopérative fédérée. He said he does not blame the current crisis on the Asian financial situation, and he does not blame the crisis on a drop in demand.

This is what he says: “Supply happened too quickly”—and this is where he finds the blame—“and it was too big overall.” He says the crisis is the fault of everyone and no one at the same time: “When a full range of countries decided to expand, and no one necessarily talked to each other, growth happened.”

In other words, I might say that you people, whether it's pork producers in Canada or perhaps all around the world, failed to control your supply, something that supply management people talk about all the time.

So are you a victim of your own inaction? You failed to control your supply.

Mr. Edouard Asnong: But those same packers, one or two years ago, said we had to increase our production because they didn't ever have the volumes to send it to those countries.

On the Asian crisis, Japan is still buying. Our exports are up this year. The American exports are up. The U.S. consumption is up. In the Japanese market, the yen was devalued such that although they are still buying, they are not willing to pay the same amount of money. The Russian market, our second-biggest market, has no money actually to buy.

It was impossible for us to know that a few years ago. The packers were also telling us that China would open, and that we had to be prepared to be there before the others.

And I don't know how we can discuss with the other countries to....

The Chairman: So you don't think that it was a case of oversupply, or that you people didn't produce too much. Is that what you're saying? Do you disagree with Mr. Davies?

Mr. Edouard Asnong: I don't think it was a problem of oversupply.

The Chairman: You don't think it was.

Let me hear from Mr. Maguire.

Mr. Larry Maguire: Thank you, Mr. Chairman.

As we look at the situation, I would disagree with his comment that it has not been caused by an Asian currency crisis. We believe that some of this has been. Industry was led to go where it has, not just here in Canada but also worldwide, perhaps as one process because of the increased dollars that developing countries had to purchase these kinds of products, and meat—and particularly in the Asian sector, pork—is one of the main commodities they wanted to purchase.

We certainly aren't deflecting that responsibility, but the GATT agreement and the fact that the Crow is gone has led to an increase in net production in western Canada. We are going to see a processing plant come on stream, and we need to get the trade down between Canada and the U.S. because we might have phytosanitary issues coming north shortly in the Manitoba region.

• 1200

So certainly there's an oversupply of product at this particular moment, but I'm not going to debate that with Martin and Edouard. I'm going to reply in regard to the wheat sector.

We don't have an oversupply of wheat. We have a European subsidy and a U.S. subsidy that has led to overproduction in their two countries. In wheat we have gone from an estimate of 128 million metric tonnes this past year to a lower carry-over in wheat stocks in the coming year. We actually do see some bright future in that whole area.

Our vice-president, Kevin Archibald, is with me as well, and Dr. Earl, our Manitoba policy manager. Perhaps Kevin can just interject on that.

Mr. Kevin Archibald (First Vice-President, Western Canadian Wheat Growers Association): You've raised a very good point, I think, Mr. Chairman. In fact, I don't see us as victims of our own actions; I see us as victims of government action.

I say this explicitly because the hog sector is somewhat oversupplied right now and expansion in Manitoba is taking place at a phenomenal rate. This is in response to the loss of the WGTA without compensation and without, I think, farmers' readiness—

The Chairman: What do you mean “without compensation”?

Mr. Kevin Archibald: —pardon me; without “adequate” compensation—or ability to have time to adapt.

This happened very quickly, suddenly, right out of the blue. Adaptation is a very long and slow process for farmers. In fact, the hog business was the easiest one for producers to get into. There were no restrictions as far as supply management. There were no restrictions as far as buying wheat board grains to process, so it made it very easy to do.

The Chairman: A wide-open market without regulation; why wouldn't you be in favour of that?

Mr. Kevin Archibald: I am, personally. I think it's great, and I think there are some opportunities, but the growing pains are what we're experiencing right now.

Unfortunately, the timing of it, with the Asian crisis, has had an impact. Maybe some of those industries weren't necessarily suited for the prairies. Maybe other ones like flour processing, pasta plants, those types of items are industries that are cleaner, for one thing, and that actually produce a value-added product on the prairies. But going into those industries is very limited because of the Canadian Wheat Board monopoly. People are not willing to invest when there is a single-desk seller.

The Chairman: Thank you.

Mr. Hilstrom.

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

I have a couple of points here. One, we were talking about the provincial and federal programs that are either in place now or could be in place in the future. Do you not agree that whatever programs are put in place, either by the province or by the federal government, they should not provide an incentive for one province to produce a product over the other one, a commodity?

For instance, if Saskatchewan starts to assist hog producers more than Quebec does, so then Saskatchewan's production goes way up and Quebec producers can't compete, theirs goes down. Now, what I'm talking about is an internal subsidy situation.

Do you agree that the programs should not be trade-distorting inside Canada?

Mr. Edouard Asnong: How can you control that?

Mr. Howard Hilstrom: By the federal government's programs. The federal government program of support payments causes overproduction in a given area because it's more profitable to produce hogs in one province over another. I'm asking, should the government not ensure, both provincial and federal, that there is no trade distortion within Canada because of government programs? Let competitive advantage, comparative advantage, be the decider as to who produces hogs where.

Mr. Edouard Asnong: I would certainly have to think about that. There are some other issues, maybe also social issues, in regard to the environment. It can be more costly to raise hogs in Quebec because of the social issues on the environment.

I think that's a decision the province, or the politics in the province, will make, and I don't think it's for the producers to—

Mr. Howard Hilstrom: Sorry, but how can we argue against foreign subsidies and all these trade distortions from foreigners if we're going to do it inside Canada? And it seems that's what you're saying, that there are other considerations inside Canada that we should be able to subsidize internally. That doesn't sound sensible.

Mr. Edouard Asnong: I agree, but somewhere there has to be a good program.

Mr. Howard Hilstrom: Okay.

One last question and then I'll pass.

Mr. Maguire, or I guess the chairman on behalf of Mr. Maguire, speaking for him, brought up supply management and this sort of thing. I'll ask you just a simple yes or no question: Does the hog industry want supply management brought in for it?

Mr. Edouard Asnong: No.

Mr. Howard Hilstrom: Okay. Thank you.

• 1205

Mr. Martin.

Mr. Martin Rice: I only wanted the opportunity to make a couple of points in response to Mr. Harvard's question. Whether I do it now or later doesn't matter.

Mr. Howard Hilstrom: Now is good.

Mr. Martin Rice: Very quickly, then, we have a lot of respect for Richard Davies. He's actually a member of the Canada Pork International board of directors, where the producer people on that board were told that the packers were dealing with an empty wagon. That was the term they used—“empty wagon”, not enough pork to sell to meet all these foreign demands they had.

We stayed out of getting ourselves in a position where we would actually encourage people to raise more hogs. We left that as an entirely individual decision to do it, their own independent risk situation. Now, Mr. Davies' company may not be one of those that was the most vociferous or aggressive with this message, but that was the collective message from the packers.

Two years ago, around February or March of 1997, when the foot and mouth outbreak occurred in Taiwan, that was seen as a short-term misfortune for them but a real blessing for the pork industry in other countries. It turned out to be anything but, because there was a collective overreaction to that. Not only did we see more opportunities for pork shipments in Japan as a result of Taiwan pulling out but so did the U.S., so did Europe, and so did pork farmers in Korea and Japan itself. They've had expanded production.

We'll have seen an increase in pork production, hog production, in the U.S. by, say, mid-year next year. The increase will exceed our total annual pork production. So we could have been completely unaware of that opportunity in Japan as a result of Taiwan, but our hog price would still be probably where it is—too many hogs in the U.S. for the packer supply, and we're still fairly small. It's like the wheat situation; if we cut back our wheat production, what effect does it have on the world price? Not an awful lot.

We're still dealing with Europe. When things get tough there, they throw up the wall. The walls are always there. We can't ship into Europe. But now they're subsidizing their exports against us in those few markets where we still have opportunities.

So I would think Richard would be a little more sympathetic to the producer response, responding to market signals as we did. They did it perfectly, just as they said we should.

The Chairman: Thank you.

We'll go to Mr. Calder.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

The previous group that was in here had some recommendations, and one recommendation they had was to shift our focus from a strictly farm-gate agricultural policy focus to incorporate all the members of the agricultural supply chain. Everybody's a great big happy family here; we have the producers, the processors, further processors, and finally the retailers. Everybody's working as a team.

Well, you've seen your prices go down by 60%. Have you seen the retail price go down by 60%?

Mr. Edouard Asnong: No.

Mr. Murray Calder: How come?

Mr. Edouard Asnong: That's why we want to talk with our retailers, to explain that to us. We want to ask them that question. Don't you think maybe 50% of the cost of the meat on the counter is related to the hog price? That's one thing. The other thing is the value added—workers, the killing, the transportation and distribution.

It didn't come down as much as it had to, in my mind, but we have to talk with them to find out how they would explain that the price wasn't lowered that much. How come?

The other thing is, if packers are not making any profit on that meat, they would sell beef or poultry or any kinds of meat so that they can make a profit. Then we will sell less, because we will have less place on the counters.

Mr. Murray Calder: The processors here in Canada obviously have some fixed costs. One of them would be wages, for instance. Wages here in Canada are considerably higher than what's paid to an employee in a processing plant in the United States. Probably the wages are higher than what is paid to a person in a processing plant in Europe.

• 1210

Are they asking you to subsidize the international trade they're going after? Because when you get out into the international market, the processed products are a heck of a lot cheaper. Given they have a higher overhead here, they obviously have to look for the primary product coming into their plants. I'm saying, are they asking you basically to subsidize their international trade?

Mr. Edouard Asnong: No, or not as far as I know. For instance, Olymel here is a packer, and he also is a trader to the export markets. I do not have any figures to show, on that step, that there is a difference in price on what they sell in Japan, in the States or in Canada.

I think the figures that Martin gave, from the USDA, show that the packing plants were at 17% and now they are at 19%. So that's not a big change. I think a company like Olymel sells what is most profitable.

I think it's just here that the retailers are maybe not making all their effort.

Mr. Martin Rice: We have had a couple of years of this round table process, where we have been sitting with packers and trying to establish what they need, or what we need to do, so that we can get as good a price as the U.S. producers get. I would guess that most Canadian hog farmers don't get a price that is as high as the U.S. market. Given that we export to the same export markets that the U.S. does, it's not accepted, I guess, by most.

In Quebec, they have definitely accomplished more of a parity with the U.S. in that their packers will pay a formula price based on the U.S. market. But on the producer side, the hogs are basically assured to those packers to utilize.

We have a fair way to go to have in Canada the conditions under which Canadian packers will pay enough so that we don't have three million Canadian pigs going south. And I guess we still haven't arrived at those conditions.

We hope when these new plants open in western Canada there will be that kind of demand for hogs that will force the price in western Canada to go up to where they'll be a pull, actually, of U.S. hogs in. Whether it happens or not, we just hope we see the price there.

The Chairman: We'll go to Mrs. Ur, Mr. Hoeppner, and then Mr. McCormick.

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

Someone had asked whether you would be in favour of supply management, and you said no. Is that the view shared by all hog producers?

Mr. Edouard Asnong: Oh, yes, certainly when we are facing low prices some producers will think to go to supply management. The question is, what's the real life in that when actually we are exporting 40%? If we talk about supply management, that means we will keep a higher price here, and the rest of it will be on the world market price. I don't know how we can negotiate something like that, or how acceptable it would be.

The other thing is that Quebec and Ontario I think have a fairly good cost of production, but in the prairies, you know, in terms of announcements made by a few of their ag ministers the last years, in one province they made an announcement that they want to raise 50 million hogs, and another one 20 million hogs. If we talk about supply management, that means not that much growth. So I don't see how it's reasonable to talk about this, or how feasible it is.

Mrs. Rose-Marie Ur: But do you not think this would save the situation you're in today? Look at the other supply management people out there; they're not facing what you're facing here today. Chicken is cheaper in Canada than in the United States, and that's supply management.

Mr. Edouard Asnong: But I'm not here to talk about those other commodities.

Mrs. Rose-Marie Ur: I'm just making a comparison. You told me the cost would be higher in Canada if it was supply management, so I'm indicating to you that under another supply management product, that indeed is not so.

Mr. Edouard Asnong: What I am saying, in fact, is on average, no, but in terms of those low prices, certainly the price would be higher than the world price on pork, but how far would it be considered subsidized?

What we're working on—and we're coming back this week for the same committee on Thursday—is our position on the trade issue. If Europe was not giving export subsidies, and if we had access to the European market, because they have quotas and tariffs, I think we would be in good shape in the hog sector with regard to North America.

• 1215

Mrs. Rose-Marie Ur: There is sympathy out there presently for the hog farmers, but if this goes on much longer, and you still want to be able to have all the latitude you want and have support from the government, I don't know how much longer that will last either. I get both sides of the coin tossed at me.

In your longer-run considerations, you say “Russian ability to purchase meats”, and then further on down you say, “strong likelihood of need for food aid package to Russia”. Well, you're covering both sides of the package with your recommendation, or your suggestion. You can't have it both ways there. You're expecting a market in Russia but then you're looking at food aid. Even if you go with food aid to Russia, the problem is, yes, you can get the pork to Russia, but how do you disperse the product once it gets into Russia?

Mr. Edouard Asnong: If the product goes to people who are able to buy and to pay, that's the worst thing we could do. It would have to be distributed over there to people who are really in need and do not have any money to buy. If it's not that, no, we would not go for that.

So we are not asking to depend on the government for the rest of our lives. That's really not what we are talking about. I think there is a crisis, actually, which has to be supported by the government. There is no way the producers can pass through this situation we are in now. And certainly the next round of WTO negotiations will be very important for the hog sector.

Mrs. Rose-Marie Ur: I'm not making light of the seriousness in the hog industry, but as politicians—and I'm speaking for myself, but I'm sure for the rest of my colleagues—we're invited to many banquets, and I can tell you, probably in the last five years I've had one pork dinner compared with beef and chicken. So there's a good opportunity there. Even if you go into the restaurants, you can see a big menu in beef and chicken, but pork is a one-line kind of thing.

So the opportunity is there, but I think there is an ability to expand even in our own domestic markets.

Mr. Edouard Asnong: Absolutely.

The Chairman: Thank you.

I neglected Ms. Alarie's name when I listed names earlier, so we're going to go to her first, Mr. Hoeppner, and then Mr. McCormick, if he returns.

Ms. Alarie.

[Translation]

Ms. Hélène Alarie: I would like to comment on the point made by Mr. Steckle. The farm-income support measures currently applied in Quebec are now being revised. We're trying to improve them, because they are extremely costly for the government, or rather for the Department of Agriculture. A committee spent months studying what other provinces do. Obviously, it is difficult to come up with a perfect formula right away, but ideally we should establish standards that can be applied across the country. However, these standards must take environmental costs into account, which are very high in Quebec because the pork industry is very concentrated in the province, and there are waterways everywhere. Other provinces will come up against the same problem. Certainly we will see it in Manitoba, where the water table is perhaps even more vulnerable than ours. All these considerations must be taken into account, and any comparisons must be made across the board.

In concluding my remarks, I'll just say that I have heard a great deal about the Crow's Nest regulations this morning. I have to concede that people living in the East felt too much money was going West. It did not seem constructive. For example, if the $66 million received by our UPA—a farmers' organization—had been invested in a given unloading point, we could probably have organized a variety of services, including railway transportation.

Nothing is clear when we look at the issue from the outside. We often believe that our neighbours have things easier, but that is not the case.

So here is a brief question and a brief comment. Mr. Maguire and Mr. Asnong, you both talked about humanitarian aid. In my view, humanitarian aid is very important in a country like ours, which is very open to such things. It is an issue I'm very concerned about and mention frequently.

• 1220

As politicians, should we take that path in the short term or the long term? We could donate PEI potatoes, and many other products.

[English]

Mr. Larry Maguire: If I may, Canada already has a humanitarian aid package that they deal with every year. The government does those types of programs through many organizations and many areas.

We're not suggesting that it be anything near the magnitude of what our American counterparts are looking at, but it's one of the more minor tools we would use in our eight-point plan, if you will, on how to constructively look at the income process we're dealing with today.

We know we have an ongoing program that way, and we're just looking at adding to it. Maybe it would be triple-P, for example—pork, pulses, and the potatoes that you've added to it.

We think there are opportunities in a lot of other areas, notwithstanding what Edouard and Martin have already said in regard to pork and the directions we were going. Because we are wheat farmers and we feed wheat to hogs, we'll comment on the potential demand that was there in 1994 and 1995, where Canada and the United States produced 9 million metric tonnes of pork—about one of that was exported out of Canada—and China produced 33 million tonnes in their own country, went in one year to 36 million tonnes, increased 3 million tonnes in one year, which was three times what we exported out of the country at that time, and they never met their demand in China. So there was potential there.

Right now, the U.S.—and Martin or Edouard can correct me if I'm wrong; this is according to the presentation I heard in Washington a month ago—has increased its exports 61% in volume since 1995, and since 1994 there's been an 84% increase in its import value. So there are very much expanding markets in the world in those areas, and we would see that continuing once the stability comes back into some of the financial sectors that are out there today.

[Translation]

Mr. Edouard Asnong: Canada is both a rich and a generous country. In my opinion, it should establish a food aid policy. However, the policy should not encourage farmers to produce more, creating a surplus that will automatically be rejected. Our US neighbours have a number of programs associated with military procurement, lunch boxes and other outlets. If the US makes a donation to Russia, and all we do is fill the vacuum they create, it could be a shock for them. Canada should have a food aid policy to help people who are hungry, but the policy should not prompt us to overproduce.

Ms. Hélène Alarie: Thank you.

[English]

The Chairman: We'll now go to Mr. Hoeppner for five minutes.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): Mr. Chairman, I want to ask Mr. Rice a question.

I gather from you that a diversified farmer who has hogs, and they're losing money, should not get disaster aid. I'm in a real conundrum in my province of Manitoba. I get the little producer who has diversified to other lines—special crops, what have you—saying, “Don't you dare give disaster aid to those huge conglomerates, because they have really ruined us”. If I promote aid for these people, I'd probably get booted out in the next election.

The other thing I want to point out to you people is that we haven't had a market-driven feed policy for years. We've had artificially low feed prices, which has given you the opportunity.

I'll just point to 1995-96. The wheat board carried over a million tonnes of wheat when it was worth $7 a bushel in the U.S. They wouldn't allow us to export it. We had barley supplies kept over when we should have sold them and had room for the next crop. Then we got a drastic winter and it backed up some more.

What do I do as a politician? Do I urge government to give a bailout to every pork producer or do I just go with the small producer? Because they tell me, point blank, we've suffered enough because of the distorted feed grain prices. They diversified, you more or less increased production on the backs of these guys, and how can you ask for a bailout and let the other pork producers hang?

• 1225

Mr. Martin Rice: There are some political elements to that question that I'll let my president answer. I just would make the point again that Canada's contribution to the world increase in pork production is pretty modest, and we have not been expanding as rapidly as, say, the U.S., or many parts of Europe.

The one thing we have been urging our companies involved in pork processing to do is to build bigger, more efficient, modern plants. I guess it's been a collective effort to increase the production.

I'm sure if you talk to Michael McCain, or if you talk to Smithfield, who purchased Schneiders, they want to keep those new hog barns there. And not only the new ones; the old ones, too. They need all of those pigs to make those plants run efficiently.

Again, we could have totally missed out on the expansion of pork production, but you could tell your producers we would still not have had any effect on the hog price today because that's determined almost entirely outside of our own country.

Mr. Jake Hoeppner: But you're demanding a lot of aid that could have gone to some other sectors that need it very badly also.

The other question I had for Mr. Maguire was that under your point seven, you talk of the Alberta support, or the disaster program. How much different is that from their old GRIP program? I always felt GRIP worked fairy well in Manitoba.

Mr. Larry Maguire: It's very different in that you determine your eligibility. Each individual farmer has to determine their own eligibility. It's based on a three-year rolling average, and if your income falls below 70% of that, you would then trigger any eligibility for a payment in that process.

What we're suggesting is the federal government more or less adopt that. We're saying Alberta-style, but we're not going to hold them hard and fast to that. We believe if that was put in place today, we would be able to end these kinds of discussions in regard to having a long-term, predictable, dependable safety net mechanism we can use in the future. We know the government is working toward that. We believe if that was put in place for January 1, perhaps we wouldn't have these kinds of discussions.

Then there are the people who are targeted the most. We have wheat farmers who are in trouble because west-central Saskatchewan had a drought—it doesn't matter what the value of it is—two or three years in a row. So crop insurance does not cover enough need in that area.

The net income stabilization account is a nice program, I guess, but you have to have net income to get involved in it. That's the drawback. But dollars are not in the hands of the people who need them the most, we believe. That's why we think a third level of defence, that's been talked about for years, could come into place with this in regard to the rest of the package.

Mr. Jake Hoeppner: Is it similar to the whole-farm income program you people have been having dialogue with the government about over the last three or four years?

Mr. Larry Maguire: It very much is a whole-farm package. As Mr. Asnong said in his earlier remarks, he is not asking—I did not hear him ask—for a direct payment to hogs. We are not asking for a direct payment to wheat. It has to be in a trade-neutral manner so that we do not disrupt the market access we have worked on so hard as a nation to maintain and continue with.

So if you establish something like this, this program has already been recognized as green, trade neutral, a number of those areas, and we believe it could be implemented very quickly, because the model is already there. British Columbia has already accepted it even for their horticulture in that area, administered by them as well.

Mr. Jake Hoeppner: So really, that's our answer to future problems as well as the disaster right now.

Mr. Larry Maguire: We would certainly believe so. We understand Ontario still has a GRIP program, and they can continue to work with that as long as those programs are not trade distorting and other provinces could manage theirs. We're suggesting a Manitoba, enhanced-style crop insurance across the three provinces of the prairie region because of the similarities in our production.

The Chairman: Thank you.

Mr. McCormick.

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

Yes, Mr. Maguire, I know you do a great job always, at us for all the right reasons, for the people you represent, for the past few years.

On the theme you're discussing there, the different programs available in the different provinces on the farm income disaster and the insurance, even if and when we get this national program, no doubt there will still be provincial programs. There always have been, there probably always will be. There seems to be certainly a need to have some provincial standards, though.

I realize the question has been put to the pork people, but I wondered if you wanted to share your thoughts on this.

• 1230

Mr. Larry Maguire: It's as I've pointed out—that is, if we could find some common ground on the kinds of crop insurance programs we have.

One thing that came out of GRIP on the prairies was that most of the provinces—Manitoba, Saskatchewan and Alberta—ended up with individual documentation as to the kinds of coverage available to each individual farm, and our production levels are determined through those programs.

So it's very clear that if we had common ground in those areas, we think we could move forward and I guess be less trade-irritable, if you will. Then you would have more continuity between the three programs we have talked about, keeping in mind that they are a second level of support.

Mr. Larry McCormick: Even though what you're proposing and what the government is looking at is not an ad hoc program, over the next calendar year to the end of 1999 or whatever have you done a cost estimate on what it would cost per province, or per the western sector?

Mr. Larry Maguire: We made a presentation to the Senate two weeks ago, and I would go back and say that if you're looking at a $460 million program, and even over half of that goes into the hog sector in the east and the west, and you end up with some $100 million left in for grain, perhaps, with 55 million acres in the prairies you're not going to put a program in place for $2 an acre.

So we see it as a stop-gap measure. That's why we believe it is very important to put in place a national disaster program—call it that, if you will; no offence to our NDP member, Mr. Proctor, who's not here—that is adaptable all the way across Canada, and we are then seeing those farmers apply for it who are in need, as are these farmers in west-central Saskatchewan. Because the ones on the Alberta side of the same territory are covered under the farm income disaster program that they already have.

Mr. Larry McCormick: Not to do with the national program, you mention here in your sixth point the CWB's recommendation to increase the initial prices, and also the cash loan advance. Now, all that makes sense.

Will this happen? How soon might it happen, and how does this happen? Because the need is yesterday.

Mr. Larry Maguire: That program is administered by the Canadian Wheat Board. It's not a Canadian Wheat Board program. Let me make that clear.

It could be done tomorrow. The change could be made by the government tomorrow that we will allow a greater proportion of the initial price to be used for cash advance. We're not asking for an increase in the $50,000 interest free or the quarter of a million total CAP. It's just that many farmers would access some funds if this program were changed right away.

I guess I want to make the comment, though, that we see this reform of our transportation and marketing as very critical. Let me make the point that if farmers had the ability to receive the dollars from the grain they have already put in the system this year, we would not be here before you today. Approximately 6 million tonnes of grain came into the system in western Canada since the first of August; 3.6 million being wheat; 1.4 million being durum; and over 1 million being barley.

Even after the adjustments, and the call for increased initial prices of $10 a tonne here the other day, you're still looking at about a $35 final payment, average, on those volumes. We're talking about $210 million that has been kept out of the farmers' hands in western Canada today. We wouldn't be here if we had access to that $210 million in our own pockets today, never mind the examples Mr. Archibald could give you in regard to further comments on the example Mr. Hoeppner just gave you.

Mr. Larry McCormick: Thank you.

The Chairman: Thank you, Mr. McCormick.

Mr. Maguire, Mr. McCormick was asking you about some costing. He made mention of a possible whole-farm disaster program that might come along. There's a cost there. But your organization is also calling for improvements in NISA and improvements in crop insurance. Then you're also suggesting some kind of food aid.

I assume all of these things have to be financed, at least partly, by the Canadian taxpayer. Have you made an aggregate costing of all these proposals of yours?

Mr. Larry Maguire: The ones we've suggested to date in regard to crop insurance would be parallel to the programs that are already there, Mr. Chair, in regard to cost to the taxpayer. We're not asking for more funds in that area.

The Chairman: You're not asking for more?

• 1235

Mr. Larry Maguire: Not in regard to a common crop insurance program across the prairies, because each province already kicks in, and so does the federal government in regard to those programs.

The Chairman: So you can enhance these programs without extra money from anywhere?

Mr. Larry Maguire: Yes.

The Chairman: From anywhere.

Mr. Larry Maguire: Yes.

Now, that's on the crop insurance side; we're talking about NISA in regard to not changing it at all except for beginning farmers who maybe don't have the ability to have Net already put into their program. And we're talking about them having to pay that back over time. So we're not calling for more dollars there, either.

On the FIDP program, it's estimated that it would cost Alberta about $100 million this year. If everything was parallel and we were all targeted evenly and the hurt was across all three provinces the same, you might be looking at $30 million to $35 million in Manitoba and in the neighbourhood of $300 million in Saskatchewan. So the dollars are certainly not much more than what you're talking about as a federal program right now.

The Chairman: And that's based on a 60-40 split?

Mr. Larry Maguire: How you split it is after that. We're talking about those kinds of dollars being needed. If you want to put it on a 60-40 split, then the federal government would only be eligible for 60% of those dollars.

The Chairman: All right. Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much.

Sitting back and just observing the questioning here, I wondered why the questions on supply management were directed just to the pork producers.

A voice:

[Editor's Note: Inaudible]

Mr. Garry Breitkreuz: Oh. Because my question would logically be—and we asked this of the cattlemen, and the cattlemen unequivocally said “no”, just like you did, like the pork producers—what about the grain producers?

I'm wondering why we're differentiating between the sectors here, because pork producers are moving toward export, the cattlemen depend on export, and what about you guys? Do you want supply management?

Mr. Larry Maguire: No.

Mr. Whelan had asked me about comments I had made publicly that high European and U.S. subsidies had increased the carry-over levels of stocks of wheat in their countries. Therefore, he took from that corollary, I was starting to begin to talk as if I would support supply management in the wheat sector, to which I said he must have a very vivid imagination.

With all due respect, we both respected each other's view on that discussion in that proceeding.

So certainly not; if you look at the kinds of opportunities we see from our own farms today in the wheat sector, we don't need government support in relation to future ability to lock in profits in regard to some of the non-board grains—like canola, like oats, like flax, like sunflowers—that are out there today. You can actually lock in deferred delivery contracts. Never mind the futures for those who don't want to speculate or hedge in the futures process; they can lock in profits on deferred delivery contracts today for portions of their crop for next fall, for the fall of 1999, in the grain sector.

We don't have that ability in wheat and barley because they're centrally desk controlled. That's why we have been asking, as an organization, for voluntary mechanisms and for a particular pricing mechanism that Kevin has worked on over the last two years and that I've spoken to with the government. I've had very good discussions with the present federal government on it, and the bureaucrats involved as well.

Mr. Kevin Archibald: Too, supply management doesn't work when a lot of the commodities are being exported. Let's face it, if we could control the supply of wheat in the entire world, I'd say fine, go ahead, sign me up. I'd love to see my land worth more money, just like a chicken barn or a dairy farm. Initially those people were made wealthy, in essence.

The similar is probably true for the hog sector as well in that the majority of the pork is exported. They have identified markets there. Right now those markets aren't as strong as what they'd like to be, but supply managed commodities do not work in an export scenario.

Actually, supply management is a way of managing risk. To us, the volatility of a rising/falling marketplace offers opportunity. The difficulty from the wheat side, especially, is that we can't go and grab that opportunity. That's what we're asking for.

The Chairman: Mr. Rice, you'd like to say something.

Mr. Martin Rice: Yes. Just in the same context—and I'm not trying to indicate pro or con on supply management, although practically speaking I don't think we could apply it—I think, under the post-Uruguay round environment, or reality, it's simply out of the question. No import quotas are allowed any more. Everything was tariffied in the last round.

The tariffs were set at amounts that reflected the premium of the domestic price over the world price. Well, Canada has the cheapest hogs in the developed world, so we have a zero tariff on imports, which would be useless.

• 1240

A trade expert could better answer it, but I just think it's impossible, and we shouldn't even let producers think it's an option.

Mr. Garry Breitkreuz: That's a good point. I think something else that is not understood by people in the east is the effect that the removal of the Crow subsidy had. If we were to go supply managed in pork, and remove the Crow subsidy, it would be devastating.

I have a question here now going on the other side. You were very clear on what you thought about the supply managed industry. I have in my hand a press release by a group of farmers who are saying there's aid coming down the pipe. The government is coming up with a cash bail-out. I think they used the figure of 460. They are willing to forgo any of that cash just to have the ability to market their product.

What do you think of that? Would you be willing to put your money where your mouth is in that regard? Now, that's pretty radical; they're willing to give up a complete cash payout in order to be able to market their product. What do you think?

Mr. Kevin Archibald: Sign me up today. I'll give you an example to explain why.

We have low-protein wheat on our farm this year. It's 10.5% protein. The yield was good but the protein is low. Through the Canadian Wheat Board marketing system, the initial price I received for that was $1.98 a bushel. Expected final payment? Probably another 30¢, which puts me at $2.28.

Forty miles from my farm, in North Dakota, they are begging me to bring that wheat down. They will pay me $4.06 Canadian a bushel for it today, right today.

So to answer the question, show me where to sign.

The Chairman: Okay. We're out of time.

Mr. Calder.

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

Actually, in terms of where we're going here, right now, we might as well just come right out and say it: The Reform Party is against supply management. Call a spade a spade.

Larry, you were saying that you don't need government support in the wheat industry. What I would like to do is ask you if you are aware of the EU carry-forward policy. Are you aware that they didn't have to use it in 1994-95, 1995-96? They have a carry forward of potential subsidy that they could take and use to the tune of about 37.8 million tonnes. As well, because of what they agreed to in the negotiations in 1993 and signed in 1994, they're faced with a “use it or lose it” situation that's going to hit them in the year 2000-01. So in the crop years of 1998-99, 1999-2000, they're going to have to use that all up.

Are you concerned about that? How are we going to deal with that if they decide to use that 37.8 million tonnes?

Mr. Larry Maguire: Absolutely, Mr. Calder, we're concerned about that.

I want to clarify a few points. One, I did not say that wheat farmers do not need government support.

Mr. Murray Calder: That was verbatim, what you said: We don't need government support.

Mr. Larry Maguire: As long as we are locked into the kinds of market-restrictive programs that we have in western Canada....

And I did not say we were against the implementation—we are, you know, the ones promoting it—of a crop insurance program across the prairies, of a NISA-style program to stay in place, of a national disaster assistance package to be in place. Those are government supports.

Mr. Murray Calder: Okay.

Mr. Larry Maguire: What I'm saying is that as long as we are tied to the kinds of transportation restrictions and marketing restrictions we have in our wheat industry, and we have closed borders that do not allow us to alleviate some of these concerns with our American neighbours—I mean, we have 200,000 tonnes of barley probably coming into southern Alberta from Montana and North Dakota this year—we as barley and wheat farmers are not opposed to that kind of trade. We certainly acknowledge that it's very important for us to continue to have two-way trade in our beef and hog sectors and our grain sectors. We would like to see that continue.

With regard to the programs that, as I said, European Union and our U.S. neighbours put in place, it's our view that we can whine all we like, but we will have very little impact on the kinds of domestic programs and supports they set up, whether they're carrying them forward or using it all. And because we depend on exporting, 80% of our particular product being wheat, then it's so very relevant for us to make sure that any kinds of programs we put in place are trade neutral so that we do not impact negatively the market access that we have.

• 1245

Mr. Murray Calder: Agreed. It has to be a whole-farm process. If we start dealing with commodity specific, we're going to be into a blue box really quickly.

Mr. Larry Maguire: Absolutely.

Mr. Murray Calder: The other thing I want to clarify for the record is that my Reform colleague over there seems to have the perception that we in eastern Canada don't know what goes on out in western Canada. I want to clarify the fact that we're very much aware of what happened in Manitoba and eastern Saskatchewan when the Crow rate and the Feed Freight Assistance disappeared. That's one of the reasons that now we see a lot of processing plants springing up in Manitoba and eastern Saskatchewan, because now you're shipping wheat a different way. It's wrapped in either a cow skin or a pig skin.

Would you agree?

Mr. Larry Maguire: I would agree, except it's also going north-south into more of the processing plants that are available in the U.S. The grain companies today are building $8 million and $10 million facilities to access that. So are our railroads and transportation—

Mr. Murray Calder: Exactly.

Mr. Larry Maguire: —directing their new purchases and investments, if you will, so that we will have more of that kind of trade. Some may say they're doing it in a regulated environment that gives them more of a return than they might otherwise require if there was more competition in the system.

Mr. Murray Calder: The other thing with the supply managed commodities, too, is that when we changed from article XI and went to tariffication, we set tariffs high enough to replace the import quotas we gave up with article XI. When we switched to TRQs, we agreed to the fact that we were going to reduce those TRQs by 15% over six years, which in fact we have done. But the axiom that low prices will stop low prices has not worked, obviously, because Europe and the United States have in fact increased their subsidy level from when they signed in 1994.

Mr. Larry Maguire: That's exactly why we're suggesting that we do away with export subsidies in the world trade talks. That has to be Canada's position.

Mr. Murray Calder: Agreed—and supply management has been in there, doing its part, by 15%.

Mr. Larry Maguire: It's done some. My point is that we received 15% benefit of the hurt that we took; they are only reducing theirs by 15%. We would like to see them become more responsive in that whole process and open up so that we, who have taken the big hit in the wheat industry and in the small grains industry, can actually get into some of the production of those products that they are protecting us from getting into because of some of the export markets that we have identified out there that are not being met in today's marketplace.

Mr. Murray Calder: We in fact have actually—

The Chairman: Thank you, Mr. Calder. We have time for just two more questioners.

Mr. Hoeppner.

Mr. Jake Hoeppner: Thank you, Mr. Chairman.

I want to follow up the issue of supply management. I see Mr. Calder doesn't quite agree with us on this side. Eugene Whelan made it very transparent when he said, you know, if you want to get three farmers under the same umbrella, two have to die. And I think that's the same with politicians.

Mr. Larry McCormick: We don't wish that of your party.

Mr. Jake Hoeppner: You want to have it one way in one industry and another way in the other industry.

I'd like you people to comment on it. The Ontario wheat farmers knew they could access markets in the U.S. By not allowing them to do that, who's benefiting from that? Is it the Ontario wheat farmer? Who is benefiting from cutting them out of the market opportunities in the U.S.?

Mr. Larry Maguire: Obviously we believe it's the milling and processing industries in Canada. They, notwithstanding, could purchase their wheat from the U.S. They were afraid they wouldn't be able to actually purchase Ontario wheat, as we understand it.

All we're asking for in western Canada is the same freedom they already have in Ontario in regard to establishing the kind of program they have, being able to hire their own staff and move forward in that area with a completely elected board, a number of differences in those areas.

But we certainly don't believe.... I mean, we in western Canada would not want more choices if it wasn't to our benefit in the long run such that we were able to plan better our long-term use of the resources available to us in the farming industry today.

The tools are there; we just have to be allowed to use them.

Mr. Jake Hoeppner: That's why I was wondering. I've had people in Manitoba come to me and say, you know, Jake, sure, let's have supply management, but why should they always benefit from the imprisonment of the grain farmers marketing their own grain?

They want a certain price for their product. In Manitoba, I think it's only been the supply managed industries that really have made good use of keeping the feed grains at a low price, and centred in the province. Am I wrong?

• 1250

Mr. Larry Maguire: No, we don't believe so.

Mr. Jake Hoeppner: What about the pork industry? How do you feel about it?

Mr. Edouard Asnong: Sorry, I missed the question.

Mr. Jake Hoeppner: It's on the imprisonment of grain farmers not being able to market their grain.

It's all central desk, right?

Mr. Larry Maguire: Yes.

Mr. Jake Hoeppner: Who benefits from that? We know it will distort the prices. We've seen it with the wheat. If you get a back-up of wheat, it'll impact on the barley and vice versa. The special crops, we've not seen that happen that way, even with increased production.

Now, I'm saying supply management people are a little selfish. They want the gravy and they want the potatoes and they want the meat. They don't want to share too much.

Mr. Edouard Asnong: But I have no expertise on your question about single-desk selling in the west in grains. I have no expertise in that.

Mr. Jake Hoeppner: I want what's right for this country, and I think that's what Mr. Maguire pointed out. We want a program that's fair. If it isn't fair, why have a program at all?

Mr. Larry Maguire: On the market access that we have, I mean, if we had access to some of those plants, there's a new durum plant that's just been built in Ames, Iowa, in the middle of corn and bean country, that could have just as well been built in Canada.

We believe the way to have those built is to have more open trade between our two countries, not restrict it so heavily that Americans have to actually come up and put a facility on our soil. We would welcome Canadians to do that, but they're not going to do it if they have to purchase it from a single selling agency.

When we have seen all the expansion that we're talking about, it has certainly not been in the flour industry or in the pasta industry in western Canada. That's why, as wheat farmers, we are so concerned about needing more choices.

The street price for durum today in Minneapolis is $7 a bushel. From southern Manitoba, you can deliver that durum into that plant for—

A voice: Seven bucks?

Mr. Larry Maguire: —$4.63 U.S. cash price in Minneapolis today for 15% protein on their hard red spring.

Mr. Jake Hoeppner: It's number two durum, probably.

Mr. Larry Maguire: The durum is about $4.30—pardon me—and the hard red spring wheat is $4.63 today, at a 15% protein level.

Mr. Jake Hoeppner: That's a far cry from $2.28.

Mr. Larry Maguire: We're looking at about $4.40 after we get the final payment 12 to 13 months from now. That's the market distortion I'm talking about, the $200 million being held out of farmers' pockets today, and we're only looking at a 20% call on the grain.

The Chairman: We'll finish with Mr. Steckle.

Mr. Paul Steckle: There are two things. I wanted to go to the pork council people first.

Orderly marketing has always been the way to go. We had in Ontario, about two years ago, a disagreement among those who wished to sell their pork to the United States. Just last week some of those people who wished to market their pork in the United States had to gas their pigs in the States, because they don't want their pigs any more.

You see, there are problems when we get out of the system of orderly marketing. There isn't an industry in the world...and I'm talking about Chrysler, Ford, General Motors. They produce what they can sell. When they can't sell it, they don't produce it any more.

Having said that, quickly, can you tell me what is your foremost resolve in terms of what would be your resolve for us to go to the GATT negotiations? What is your foremost concern as we go to the next round of negotiations? If you could do one thing to make things better than they are right now, what would that be?

Mr. Larry Maguire: While Edouard is coming up with his comments, perhaps I can say that certainly our key proposal would be to get rid of export subsidies worldwide and to give us the reforms we need domestically in regard to carrying forward the issue of state trading entities, making them at risk in the marketplace, and voluntary, but getting rid of those export subsidies; moving programs from blue and amber to green and continuing to reduce those down. Notwithstanding that's already being done in our supply management sector, we realize a number of those and the changes they're going through.

We should continue to negotiate, then, as Mr. Vanclief is doing in Washington today, in regard to making sure there's market access between our two countries. We think there are some things that can be done leading up to that. It would give Canada and the U.S. a better lever in the next round of trade talks if we were to be partners in the process going forward than we would be, obviously, as the small country of Canada. Even though we think we're large, in world trade volumes, we're not a big player.

• 1255

So we feel strongly that we need to move forward, get the harmonization on pesticides, on labelling issues with beef and pork, on phytosanitary issues, and get those out of the road as quickly as we can. We hope some of those will even be solved by the minister's visit to Washington right now.

Thank you.

Mr. Edouard Asnong: The first would be to eliminate, if possible, export subsidies, and the second one would be to obtain market access. If we obtain that, we will be big, big taxpayers.

The Chairman: Is that it, Mr. Steckle? Thank you.

Mr. Maguire, weren't you one of the western Canadian voices advocating the abolition of the Crow, believing that, on balance, good things would come out of it?

Mr. Larry Maguire: Never.

The Chairman: You didn't say that.

Mr. Larry Maguire: We are Western Canadian Wheat Growers, and any presentation I've ever made, Mr. Chair, was to redirect the Crow benefit payment to farmers, not to do away with it completely.

The Chairman: I wasn't asking about the adjustment funds. I was asking about whether you favoured the elimination of the Crow.

Mr. Larry Maguire: No.

The Chairman: You didn't favour the elimination of the Crow? You wanted to leave it in place?

Mr. Larry Maguire: We wanted the Crow benefit paid to farmers, not left in place the way it was. There's a vast, vast difference. That kind of a process, as we put forward—

The Chairman: In other words, you wanted the maintenance of the subsidy.

Mr. Larry Maguire: We would have had it in a different manner, phased out over a number of years, like tariffication is now in the supply management sector. It could have been set up that way but it was not set up that way.

We would have perhaps not seen the same kinds of economic changes happen as quickly in western Canada as they have, but we certainly believe this benefit should have been paid to the farmers at that particular time.

The Chairman: So you're really saying, then, that you believe the taxpayers should have continued to subsidize grain transportation for prairie farmers.

Mr. Larry Maguire: The taxpayers were subsidizing it—

The Chairman: I know; and you favoured the continuance of that?

Mr. Larry Maguire: If it had been phased down, as was proposed by many organizations back in those times, we believed we would have, sooner or later, if you will, come off the taxpayers' dole in regard to that.

The Chairman: And I wasn't asking how to implement the phase-out; I was asking you whether you favoured at some point—at some point—that there would no longer be Canadian taxpayers subsidizing grain freight rates. Forget about the methodology; it was just whether in principle you favoured the elimination of taxpayer-supported subsidy of grain transportation.

Mr. Kevin Archibald: The reality of WGTA is that it was being phased out anyway. That was the program. It was reduced every year.

The Chairman: And you favoured that?

Mr. Kevin Archibald: We favoured it being paid to farmers while it was being reduced—

The Chairman: I don't think I'm going to get my answer.

Mr. Kevin Archibald: —which was in the act.

Mr. Larry Maguire: If we in fact were consistent with our present process here on diminishing export subsidies, then it would have fallen into that category.

The Chairman: Well, I guess we could probably be here all day. I don't think I'm going to get an answer to my question. I thought my answer would be either yes or no; either you were in favour of subsidies or you were not in favour of subsidies, one or the other.

Mr. Larry Maguire: Now that GATT has been signed, we are not in favour of export subsidies.

The Chairman: I wasn't asking about export, I was talking about the Crow.

Mr. Larry Maguire: That was an export subsidy at that time.

The Chairman: Well, yes, but—

Mr. Larry Maguire: So previous to negotiating with other countries in regard to them reducing theirs, we were saying that we wanted, long before GATT allowed for tariffication to come into place, some of those programs to be phased out over time. That's all we were asking for back in the 1980s, if it had been phased out over time.

In fact, there was a program put in place in 1991. If it had been put in place over the seven years that we recommended it be phased out at that time, farmers would have received a much better time to adjust than what we have in western Canada today.

The Chairman: Thanks so much.

We appreciate your coming today, Mr. Maguire, Mr. Archibald, Mr. Asnong, and Mr. Rice. Thank you all. I think we had a very good session.

This meeting is ended.