AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, December 8, 1999

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[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): Members, we'll call this meeting to order in the good town of Prince Albert. I invite everyone to take their seats.

Welcome to this House of Commons standing committee meeting. We're going to be here for the next three and a half hours. We just finished a very successful meeting in Regina. We spent three and a half hours there and met with many, many farmers. There was a frank exchange of views and concerns, and I'm quite sure the same thing will happen here in Prince Albert.

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First of all, I would like to allow my committee members to identify themselves, and then we'll introduce the first round of witnesses. Murray, would you like to start?

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman. My name is Murray Calder. I'm the vice-chair of the standing committee. My riding is is in central Ontario. In my other life I'm still an active chicken farmer. I'm a part-time chicken farmer, while my wife is a full-time chicken farmer. I survived our farm crisis in the mid-1980s.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Hi, my name is Larry McCormick, and I'm a member of Parliament from eastern Ontario. I'm glad to be back in Saskatchewan. I did a lot of driving through here this summer. I'm chair of the government rural caucus.

Mr. Joe McGuire (Egmont, Lib.): I'm Joe McGuire. I'm Lyle's parliamentary secretary, and I'm from Egmont, Prince Edward Island.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): I'm Gerry Breitkreuz, member of Parliament for Yorkton—Melville district. I would like to take the opportunity to welcome the committee to my home province. It's really good to see such a good turnout of farmers from around the district. Welcome.

Mr. Dick Proctor (Palliser, NDP): I'm Dick Proctor, member of Parliament for the Palliser riding here in Saskatchewan and agriculture critic for the New Democratic Party.

Mr. Rick Borotsik (Brandon—Souris, PC): My name is Rick Borotsik. I am the member of Parliament for Brandon, Manitoba. I'm the Progressive Conservative agriculture critic and the national caucus chair for our party.

Mr. Murray Calder: Are you?

Mr. Rick Borotsik: I am. I've always been the national caucus chair. He's the caucus chair for the rural. I'm the caucus chair for the national PC Party.

The Chair: All right, guys, calm down. We're here to do some serious work.

I'm John Harvard. I'm the chair of this committee, and I'm from the good city of Winnipeg.

I want to introduce our first round of witnesses: Dave Bailey, Barbara and Bob Willick, Leonard Blocka, and Mark Cousin. We'll go alphabetically, and that means Mr. Bailey will start. One would hope that you could keep it to seven minutes, and we'll have time for questions afterwards.

Mr. Dave Bailey (Individual Presentation): I'd like to thank the committee for coming out.

I will hit you first with this: AIDA does not work for grain farmers. It is a disaster and must be replaced.

I want you to think about this, people. Would you as members of Parliament be willing to have a second job pumping gas? Would you inject all that earned income back into the government purse just to keep your MP's position? That's what farmers, farm wives, or both are doing with their off-farm income.

Could you as MPs or any other wage earner pay a new tax to the government of the day equivalent to 25% or 30% of your gross income? Would you be able to meet your monthly or yearly financial obligations? No, I don't think you could. On western farms our increase in freight costs is equal to that tax. The Conservatives started to open up the WGTA, which is the Western Grain Transportation Act. Then your government did open it up completely, and our freight bills went up 800%. Yes, that's 800%, people. Now can you see why we're in trouble?

During the Crow debate approximately 137 meetings were held in western Canada, and farmers had input. They told the committee that was out here running this—it was a firm the government had hired—that the WGTA should not be opened up and the Crow should not be eliminated, and we told you why: freight rates would increase, rail service would get worse, branch lines would close, elevators would close, farmers could not afford to pay the full freight rate, roads would get pounded out with all this extra traffic, and our taxes would increase to pay for the roads. The federal government's reply was that CN and CP plus the grain companies were good corporate citizens, so this would never happen. Well, it has happened, and we're in big trouble.

You might come to the conclusion that farmers can survive with this change, but we can't.

What's your vision for Canada? Is it everyone living in the cities, no small towns, corporate farms, or are we going to become an importer of food? Every small town in Saskatchewan that has two elevator companies handles approximately 3 million bushels of grain, and the total freight we were paying before the WGTA took effect and the Crow was gone was approximately $375,000 for each of those communities. When we lost the Crow and it increased 800%, the community had $2,625,000 less with which to pay its bills. The average farm produces 40,000 bushels now, and the freight rate is $40,000, so we have an increase of approximately $35,000 per farm. We were paying about $5,000 before.

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We've had studies, even this year, showing that now that the WGTA is gone, the railways are overcharging us. This thing is mushrooming. We're losing employment at the elevators because the elevators are closing. If two elevators close and you have so many people working there, we're losing approximately $170,000 to $200,000 worth of wages, plus the tax we have for education and everything else. That puts more pressure on the businesses, and they're closing their doors.

You're seeking answers from us, the western farmers, about our problems, and we're giving you the answers and maybe some of the solutions. We're asking, why has the Liberal government alienated us? As agriculture goes in the west, so goes it in Canada and the rest of the provinces.

I'd like to leave you with a couple of thoughts. Farmers are in trouble, not just because of the low grain prices and subsidization of U.S. and European grain, magnified because of drought and floods; we're in trouble because of the farm policy in Ottawa. You've taken billions out of our pockets and we cannot pay our bills, because one big thing is the freight and other inputs.

We've even talked to the Department of Agriculture down there, and we've had people in that department admitting they knew that when the Crow was eliminated, our freight rates would go up and we'd be getting less for our grain.

Mr. Vanclief says he understands western problems, and we know he lost his farm, but he admitted it was because of high interest rates, leaving tomatoes in the field, and low markets, and so on, but he didn't have his freight rate go up 800%.

The surplus that Ottawa now enjoys comes partly from our struggling farmers. This burden to western grain farmers resulting in Ottawa's surplus is year after year; it's not just one year. We're paying that extra freight every bloody year.

Prime Minister Jean Chrétien addressed the Quebec Liberals in the last few days and stated that the Liberals were in Ottawa for peace, order and good government. Well, we out here in the west are wondering whether that is good government.

So let's get an equalization payment into the hands of Saskatchewan grain farmers and get us on a more level playing field with the Americans and Europeans. We need that equalization payment now.

I'll leave you with this: My wife and I farm 1,500 acres, 1,200 acres cultivated and 300 acres of pasture. My wife has an off-farm job. We've diversified into 40 beef cows, resulting in more debt. We've put all our Saskatchewan Wheat Pool share money into that farm, and we've put all the western grain Crow money back into the farm. We keep putting in from the top, and you guys keep taking out from the bottom. We can't keep going with that.

I have two sons. They have both left the farm for professions other than farming—we're professionals as farmers.

AIDA does not work for western grain farmers. There is an 800% increase in our freight costs. Crop insurance is not working; 80% coverage does not pay the bills. Grain prices are low, of course—oats, canola, barley, and wheat—and we cannot keep producing farm products at below the cost of production. We need government programs that enhance and support farm families in Canada plus keep our young people on the farms.

Thank you.

The Chair: Thank you, Mr. Bailey.

In regard to your question about how we would like to be offered a second job pumping gas, some people think our first job is pumping gas.

I want to say to the audience that during the last 45 minutes of the meeting, from 5:30 to 6:15, we'll open it up to people back in the audience. If you want to get your name on the list, please do so. Just talk to a gentleman by the name of Michel at the back there. We'll have room for perhaps eight or ten farmers, if you get your names on the list.

Now we're going to Mr. Leonard Blocka.

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Mr. Leonard Blocka (Individual Presentation): Thank you, sir.

I have copies of my presentation.

The Chair: Fine, a gentleman will pick them up. Here he comes now.

Mr. Leonard Blocka: Thank you, Mr. Chairman. Good afternoon, committee members and ladies and gentlemen.

Before I begin, I would like to welcome the committee to Prince Albert and commend their efforts to listen to the producers and to gather input from the grassroots on the critical position of agriculture, which is of national importance.

I further thank you for the opportunity to express my views and those of other producers. In preparing this, I worked with other producers.

My name is Leonard Blocka. I'm in partnership with my brother Don, and we run a diversified farming operation. We have a 60-cow dairy herd, a 60-cow beef herd, and we also farm 25 acres of land, the majority of it grain, which is sold. Both Don and I are on numerous boards that generally pertain to agriculture.

I don't have room up here, but I brought two other local producers with me whom I could use as reference if so needed. Eugene Matwishyn and his brother farm an average grain operation. Mr. Matwishyn's farm is south of Prince Albert. Also along is Gerald Dupuis, who has been involved in agriculture longer than the two of us. Mr. Dupuis' farm is also located south of Prince Albert. These gentlemen have a great deal of knowledge of the grain industry, and I bring knowledge of the dairy industry.

There's one thing we have to highlight. We do support the Saskatchewan farm organizations' and the provincial government's request to the federal government for the support needed in the agriculture community in Saskatchewan and western Canada. The support desperately needed for this crop year is $1 billion in trade equalization payments. This support will have to continue into the future, since World Trade talks are just beginning. Changes will not take place for at least the next five to eight years, and the reduction of support paid by the Europeans and United States. This timeframe could be longer, as we've all seen lately, as it appears this World Trade round will be more drawn out and protectionist than the last round.

A band-aid program, namely AIDA, was structured to try to address the income crisis in western Canada, mainly the Prairies. I must highlight that the AIDA program is not working and falls well short of addressing the income crisis.

The reason the AIDA program isn't working is that the program is a bureaucratic nightmare, plain and simple. Application forms are very complicated. True business expenses can't be used on the application form. Examples are losses, land costs, and other things that I've been informed of, the capital cost allowance, interest, rent—true business expenses. It just doesn't make sense.

The program is grossly unfair to efficient and diversified producers. Why are diversified producers expected to prop up the cereal grain part of the business? In business, each area must return its financial share. The monetary amount falls well short of the assistance required. Numerous farmers have applied for this program, but the majority of these farmers were declined payment. I've talked to a number of producers in the last few days, and I haven't heard one indicate to me that they received any payment.

Following is an example of one inequity that exists, and there could be many others. This was a strange one we found out about.

A career person retired from his government job last year. He has farmed two quarters of land for a number of years. His application was approved. He is a person with a sizeable pension. He applied under AIDA, his application was approved, and he received a substantial payment in short order. Meanwhile, the full-time cash-strapped farmers continue to have their applications denied. This is mind-boggling.

AIDA is not working. It greatly falls short of the needs of a farmer who is in need of financial support in the agriculture community. This is a federal responsibility and a national emergency. The province did not sign the trade deals; the federal government did. The federal government traded a major part of Canadian agriculture away in the last trade organization talks by way of reducing subsidies. What have the European Union and United States done? The fact is that because of corporate lobbying and demands by shareholders for increasing profits, the Canadian negotiators traded away the livelihood of our Canadian producers.

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Fingers have been pointed at supply management industries for causing some of the trade distortions. This is totally ridiculous. These sectors provide a fair return and supply the domestic market, not the international market, and seemingly less than the United States so-called free market. Why pull returns down to destroy a program that is working, namely supply management? The returns of other financially strapped sectors need to be brought up. This is the responsibility of the federal government, and they must act.

Here are some recommendations.

The Saskatchewan delegation proposal should be supported. There is a $1 billion shortfall in realized net farm income for 1998 and 1999. There should be a land-based payment, a quick method of payment to producers, and simplified administration.

Declaring a crisis situation is not trade-distorting. The income tax system would return money back from adequate income producers. An acreage payment recognizes that producers are engaged in a trade war on the international market. In Saskatchewan the return on cultivated acres would only amount to approximately $21 per cultivated acre, and that's that $1 billion. The person who farms and incurs the cost of production should receive the payment.

The payment could be administered in a number of fashions: through permit book holders; some producers would have to declare, because they do not have permit books; or there could be something administered through local municipal offices. Minister Vanclief did indicate at the Saskatchewan Wheat Pool annual meeting that more has to be done to support farmers under the World Trade Organization.

A long-term safety net must be developed that can address the continued decrease of farm incomes and shortfalls. World Trade, European Union, and United States subsidies will not change for the foreseeable future.

Areas that could be improved are as follows: Improve NISA. A lot of improvements could be done there. Improve crop insurance. And support the agriculture industry while the two trading giants, namely the European Union and the United States, continue their export subsidies. Canada must remain firm at the international trade discussions and move to eliminate trade-distorting export subsidies by these two countries.

The federal government could assist producers without taxpayer involvement. There could be changes in the grain transportation and handling system with maximized returns to producers. An example there is the Kroeger report, which could be made producer-friendly. The elimination of the Crow benefit in 1995 removed $320 million from Saskatchewan producers alone every year. Competition needs to be introduced to the railways. This would reduce freight costs. Also, agriculture producers support the nation in a significant fashion. Figures indicate that 48% of each dollar of input cost is tax.

In conclusion, the agriculture producers have worked very hard at becoming efficient, yet at every turn the bottom line continues to be eroded. The corporate business sector always talks about the bottom line and getting more return for their shareholders. We all know their profits and their bottom line continue to improve. What is wrong with having a fair return for agriculture producers?

The monetary request is small in comparison to the total federal budget, and the result would be a tremendous spinoff effect of growth and prosperity for the rest of the nation.

Thank you, gentlemen.

The Chair: Thank you, Mr. Blocka.

Voices: Hear, hear!

The Chair: Now we'll hear from Mark Cousin.

Welcome.

Mr. Mark Cousin (Individual Presentation): Thank you for giving me the opportunity to come here today and participate in this exercise, which will hopefully help you understand the despair and hopelessness felt by our farm communities.

The depopulation of rural Canada is definitely not a step forward but a giant step backwards for the social structure of this country. As the corporate agenda is being adhered to by both levels of government, families are uprooted from their farms in the name of fiscal responsibility. Cheap raw product demanded by corporate America has driven farm gate prices to historic lows.

Profits made through lower commodity prices are not funnelled down to the consumer but swallowed up by corporations, hastening acquisitions and takeovers in the name of efficiency. As corporations grow, rivalling our government in size, who leads? The trend becomes irreversible without a strong and determined government. Like quicksand, the deeper you go, the harder it is to get out. It's up to our representatives such as you to halt this assault on rural and urban Canada and make life bearable again for millions of Canadians.

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This country is rich in every natural resource possible, and as Canadians, we should be sharing this wealth and not be forced into third world standards of living because of so-called globalization, a corporate buzzword to justify their actions.

Sitting here today in this plush environment makes appreciating the farmers' plight difficult. To really witness the pain of the crisis, you must be there, not for seven minutes but for seven years, to witness the sorrow felt by children, wives, and husbands hanging on to dreams that have become a nightmare. Dreams die hard for everyone. When they die, a part of you dies with them.

Farm families ask themselves, what's left? Where do you turn? As all commodities fall below the cost of production, what alternatives are there? With dwindling populations, schools, stores, and garages all succumb to the lack of resources. Alternative livestock, i.e. elk, bison, ostrich, and llama, can become a trap to inexperienced farmers unaccustomed to erratic and extreme price cycles, confounding an effort to remain viable on shrinking resources. They are a good alternative, but time is not on the side of the struggling farmer. With no returns from the present operation, sinking borrowed funds into diversification is a risky and high-stress undertaking.

Hard work is not a deterrent. Promise a farmer a decent return and he'll be out there fifteen hours a day, year round.

Historically, it is proven that the small family farm is the most productive unit in the world. Nations collapse when farmers are driven off their land by warfare. We are being driven off our land by economic warfare. The difference is in the time it will take.

As corporations gain control over all sectors of food production, price discovery becomes a problem. Establishing a price on a commodity becomes a problem, with most production under contract and price disclosure not obligated. The cattle sector has had this problem for a decade now, as packer concentration intensifies. Some economists estimate that at least a dime has been lost in the finished cattle market over the last ten years due to price manipulation by packers. Charts support this.

And the hog sector is next. With two consecutive years of prices well below cost of production, the hog industry is in its worse crisis ever, leaving many victims in its path. A large business laying off 250 people would grab government's attention, yet 250 farmers go down and not a word is said. As farm income declines, off-farm income is necessary, worsening the labour market for the rest of the community. A decent safety net would ease the situation, and the real cost to government would be a fraction of the initial amount. NISA and AIDA are going in the right direction, but 70% of three poor years is not enough. In most cases 100% would barely suffice.

I have in my hand here a paper that compares producer support subsidy by percentage. For all commodities, the U.S.A. is at 22%, Canada is at 16%, and the EU is at 45%. When you take out milk and eggs, which are primarily produced in eastern Canada, we fall to 6%. Removing their subsidies is not the solution, but giving us the equivalent would only be fair.

The solution is simple. Give us our fair share of what consumers spend to feed themselves. Our share of the consumer dollar has been shrinking for several decades. Consumers need to be made aware of our plight and put pressure on governments to reverse this trend.

I hope this has shed some light on our problem, and I encourage you to assist us in our struggle. Thank you very much.

The Chair: Thank you, Mr. Cousin.

Voices: Hear, hear!

The Chair: Now we'll have a joint presentation by Bob and Barbara Willick.

The gentleman will take the copies, Mr. Willick. You may begin.

Ms. Barbara Willick (Individual Presentation): Good afternoon, and thank you for coming to Prince Albert.

I have farmed with my husband Robert for twenty years at Blaine Lake, Saskatchewan. The farm crisis in Saskatchewan has gone beyond serious to become very critical. At this present time, the farmers are being foreclosed on and forced off the land. There are farmers who don't have money to buy groceries, and their children go to bed hungry.

Farmers don't want to work twelve- to fourteen-hour days on the farm, sleep for a couple of hours, and then go off to work in the cities. This causes accidents and an untold amount of stress. Their credit is cut off, and they don't qualify for welfare.

We are asking the federal government to stop this now. How long does the Prime Minister expect the farmers of Canada to subsidize the food industry? I would like to invite the Prime Minister and his wife Aline to personally fly out to Saskatchewan to spend a day with a farm family. I would like them to experience first-hand the stress of dealing with trying to feed your family while warding off the bill collectors.

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The federal government must accept its responsibility for limiting agricultural programs and for designing programs that work against the farmer, such as the loss of the Crow benefit; railway abandonment; the loss of tax credits on new equipment and machinery; the loss of provisions for five-year averaging under the Canadian Income Tax Act; long-term patent protection for the chemical companies; and downloading costs on the province, which forced the province to increase land taxes, education and health costs.

Here are some solutions for the agricultural crisis: cash acreage payments paid to the producers immediately; and changing NISA rules so that farmers who were forced to cash in their NISA and therefore opted out will be allowed to rejoin without waiting for a penalty. If the politicians federally and provincially declare that we have a disaster, then moneys could be distributed and the program would be GATT-able. We need a moratorium on farm foreclosures immediately. A study must be done on the 49% hidden tax that is collected by the government on chemicals, fertilizers and fuel, to see if there can be a reduction in these taxes. Investigate why FCC, Saskatchewan land branch, and ACS have stopped leasing back to the producers.

Policy changes must be made immediately. Long-term agricultural policies must be designed by the producers, not by the corporations. Our grassroots-funded lobby groups and farmers must be sitting at the table designing these programs.

I would just like to leave you with this thought: I would like to thank you for the opportunity to speak in front of this committee, and I hope I have expressed the seriousness of the farm crisis. The farmers of this province keep hoping the federal government will accept its responsibility for the crisis. The average farmer in this province is 57 years old, with a grade 8 education. Every time we are turned down or told there is no crisis, there are farmers who commit suicide. Please think about this, and do not refuse us the help we need. Stop killing the farmers and the family farm.

Thank you.

Voices: Hear, hear!

The Chair: Now we'll hear from the other half of the Willick family.

Mr. Bob Willick (Individual Presentation): Thank you for this opportunity.

Governments must recognize that part of the federal surplus of $95 billion exists because of the stripping of GRIP and the Crow. Immediate payment to farmers of $80 per acre will return the money that was ours. This will allow farmers to service their accumulated debt. Personally, my equity has dropped by $160,000, or $100 per acre. Government must recognize and address the fact that farmers do not qualify for welfare and do not qualify for EI, and our equity now being destroyed by the agricultural crisis was our pension plan.

Government responsibility is to set in place a permanent agricultural policy designed by farmers, one that is protected from change every time there's a change in government and is based on productivity and the cost of production, thereby ensuring parity with industry. Government responsibility is to apply pressure to remove international subsidies and to promote fairer trade. Saskatchewan farmers are among the most efficient in the world, but we need a level playing field.

Putting profit back into farming will promote a value-added economy. The Crow rate removal was supposed to create a new industrial economy here. In reality, all it did was take money away from the producer, thereby killing any chance of our participating in new industry.

We need government, and government needs us to enhance our freedom. Because we have no power over prices, the commodity prices and the so-called free market are distorted by international subsidies and the oligopoly of grain companies that control world grain trade. We want our freedom, but there's no freedom in poverty.

How many times have we heard the question, why we should support agriculture with tax dollars? For one thing, if we don't, an estimated—we heard this figure last night—$4 billion could be spent on welfare if we are forced off our farms.

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I would like to present a proposal that a study be commissioned to determine exactly what the value of western grain farming is to Canada. This study has never been done. I've tried to find information on it and I've had Vanclief's office send me a fairly thick package, but it's not there.

Such a study would determine the number of times that a dollar brought into a farmer's pocket turns over in Canada. In other words, we would establish how many hands receive that dollar as it is passed on from farmers to Canada, as we pay for all our expenses of fertilizers, chemicals, fuel, machine parts, and all the supplies, freight and consumer goods and taxes.

There are estimates from the U.S.A. and Europe that the agricultural dollar turns over as many as twenty times. No wonder they subsidize their farmers. They know that, but we don't know this. So, for example, our Saskatchewan grain sector, which grosses about $7 billion if freight is included—as it should be—becomes $7 billion times a factor of twenty, or $140 billion. That's hard to believe, but this is using statistics from other countries. That is $140 billion in the Canadian economy that wouldn't exist if Saskatchewan were to cease grain production. That's a huge amount, because the entire Canadian economy is $717 billion. That $140 billion is approximately 20% just from Saskatchewan. We need this study to start immediately.

I spoke to Professor Jack Stabler about this at the University of Saskatchewan's Saskatoon campus. He told me this kind of study could be done in a year. Considering how important it is, if more resources were put into it, I would hope it could be done in three or four months because of the urgency of the situation.

I can't understand this. How have politicians been able to make decisions about agriculture without knowing these numbers? You don't know what agriculture is worth to the country.

Thank you for this opportunity.

Voices: Hear, hear!

The Chair: Thank you very much.

Now it's time for questions from members of the committee, and we'll start with Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much.

Indeed, you've given us all a lot to think about. This comment is a very key comment. We have been trying to communicate to the people in the big cities the importance of agriculture to Canada, and we have had a difficult time. If a study like the one that you proposed were done, that would go a long way to helping us show how important agriculture is.

But there are other things, such as the importance of the communities to our provinces, and so on. They are very important. But I appreciate those thoughts, and I assure you that we will carry them forward.

As I was listening to you, I found you all have basically one theme: there is a tremendous crisis in agriculture out there. In fact, I haven't heard anybody disagree with that. It has become a non-partisan issue even in our own legislature.

It's very difficult to get farmers to all speak with one voice. Even in regard to AIDA, some farmers are getting a payout on it, but from what I've seen, it's totally inadequate. Would you all agree that AIDA is not working, that minor tinkering with it is not going to help, and that there should be a broad-based change, a payout of some kind, to this? Would you all agree on that?

[Editor's Note: Applause from the audience]

Mr. Garry Breitkreuz: Mr. Chairman, this is a little bit unusual, but can I ask our audience to raise their hands if they think we should tinker with AIDA in order to get it to work?

A voice: No.

Mr. Garry Breitkreuz: I only see two hands up in the audience.

How many of you think there should just be a broad-based payout in that regard? The majority. Thank you.

Thank you, Mr. Chairman.

One of you invited the Prime Minister to come, and I think that also would really help. I wish he could sit here on this committee. I just don't think you can let this pass. I think he should see how great the crisis is. It doesn't play well on television. There aren't these images out there.

Besides what you've proposed, what else can we do to communicate to other people? Does anybody have any ideas, or is that something that needs more thought? Somebody said it's our job. Possibly it is.

The Chair: Go ahead, Bob or Barbara. You were going to say something.

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Ms. Barbara Willick: Invite them out to our communities.

Mr. Bob Willick: Yes.

Ms. Barbara Willick: Invite them out to spend a day with us. That would show what it's like for even our rural kids.

Mr. Garry Breitkreuz: Yes. Suicide statistics...in my riding, there have been some suicides attributed to this. The pain in families, the stress it's causing, and the harm it's doing to our children because their parents aren't home because they're out beating their butts to work...again, I think that would help.

There's one other key question here: 48% of input costs is tax. Unbelievable! I don't think that money is coming back in any way, shape, or form through government support. Would it do more to at least reduce the tax by 10% than any payout through AIDA, in your opinion?

A voice: Ten percent is not enough, though.

A voice: Ten is not enough.

Mr. Garry Breitkreuz: No, 10% isn't enough, but my point is that it's much more than any AIDA payment that would ever be coming.

Mr. Bob Willick: Well, that's true.

Mr. Garry Breitkreuz: I'd like you to comment on that.

Mr. Bob Willick: I think some percentage should be considered. I don't know what it would be. I think that has to be studied, for sure. I can't give you an exact answer. Until a lot of statistics are out, we can't give a precise number. I would like the whole thing back.

A voice: Cut the tax until the WTO is settled.

A voice: Sure.

Mr. Leonard Blocka: I have one comment. You talk about cutting the tax, but how many are going to survive until next year?

Mr. Garry Breitkreuz: Yes.

Mr. Leonard Blocka: If they don't survive until next year, there are no inputs.

Mr. Garry Breitkreuz: Yes.

Another point some of you made is that there have to be some long-term solutions, that there has to be some hope offered to farmers. Otherwise, the statistics are going to get even worse. I don't know if you would agree with that.

There's one other thing that hasn't come up here, but it did come up at a couple of other meetings. I'd just like to get a broad answer. There have been some feelings that the Canadian Wheat Board is hampering farmers' marketing decisions. Does anybody have any comments on that?

Mr. Dave Bailey: I'd like to make a comment on that.

The Chair: Mr. Bailey.

Mr. Dave Bailey: I disagree with that altogether. I'm a strong board supporter. If I want to sell my durum wheat, why not take the final payment and the interim payment and everything else? That's a bonus to me. The people who are pushing for the pasta plant will use that for an example. They state in the papers and in the media that it doesn't matter what they get paid for their durum wheat, pasta does not change in price, so take your bonus that you get from your interim and your final payments and sell it through the Wheat Board to the pasta plant.

The pasta plant knows where that wheat came from. I mean, it's right there in your permit book. So take your bonus that you get from your interim and final payments and sell it through the Wheat Board to the pasta plant, and the pasta plant pays the premium to the farmer. What you're doing is destroying the pooling account in the Canadian Wheat Board.

the fellows who are really close to that pasta plant are the ones who are benefiting from all this. If I'm 300 miles away and I don't have a marketing agency like the Canadian Wheat Board, and it gets 300 miles away from home and all of a sudden they decide my dockage is 35% or my grade is downgraded three points, I lose. You don't say to them, well, load it back on the truck and bring it home. You can't afford to.

I'm telling you right now that if we don't have the Canadian Wheat Board.... If the open market is such a wonderful thing, how come the farmers in the United States are in a bloody turmoil? They're in worse trouble than we are.

Mr. Garry Breitkreuz: The pasta plant is one issue.

We just came from Estevan yesterday. Fifteen miles away from them, malt barley is $4, and they're getting about $1.80 or something. That's another issue.

Mr. Dave Bailey: Well, you can look at that, but you don't know what it's going to be when they get the final payment either. Don't start quoting $1.80 and $4, and don't pull a figure out of North Dakota, where the elevator is paying a premium just to stir things up in Canada. The prices aren't the same in Minnesota, sir, and I know that for a fact. I have relatives in Minnesota.

The Chair: Thank you, Mr. Bailey.

Mr. McCormick.

Mr. Larry McCormick: Thank you very much, Mr. Chair.

Thank you, witnesses, for being here.

As I've tried to remember to say at each stop, I appreciate the fact that you people have bared your souls so much in some of your exercises here with the intimate knowledge of your businesses, because farming is a business. As at least one of you has mentioned, besides the family farm being in such great danger, it's also the communities and the way of life in this country. I live in a community of 200 people.

• 1540

One of the questions we ask is, if we have an equalization payment, something for the short term, should it be targeted or across the board? There will never be a black-and-white answer.

But there's one other target we need to make sure we get on the record. I'm sure we can get support for the idea that if and when we get an immediate payment—and we're counting on getting something—it doesn't have to go to the banks or the Farm Credit Corporation. But often I've been buttonholed at the back of the room and told that we must ensure this money goes to the operator of the farm and not necessarily to the owner. Now, that's easy to say. I've rented land too. I'm wondering if you have any opinion on that. That's a tough sell for that owner, who also may have obligations.

Mr. Dave Bailey: I have a definite opinion. When the Crow was paid out and I was renting land from the Saskatchewan government, my freight rate on that particular piece of land in one year would be approximately $15,000. I was given $150 of that piece. I'm the guy who's paying the freight bill. I'm the guy who needs the payment. It's my cost. He has taxes and everything else if I'm renting land, but we're the guys who have the high inputs and everything else.

Mr. Larry McCormick: Dave, I appreciate that. I just think we have to get it on the record. Would there be—and I'm just picking on you here—a ratio there? You people can handle this, but should that owner be getting a smaller percentage? I'm just looking for a little....

Mr. Leonard Blocka: Nothing.

Ms. Barbara Willick: No.

Mr. Larry McCormick: Okay.

It's interesting to hear your comments. As we've gone north and south in Manitoba and Saskatchewan so far, and knowing that this country is so vast, you're reminding us that we might hear a different story when we're 15 kilometres from the international border, and not just about the Wheat Board, but about the grass on the other side of the fence, which is so very close there, versus you people who are valid producers and have every right to equal programs. So I appreciate that.

Mr. Chair, back to you.

The Chair: Thank you.

Mr. Proctor.

Mr. Dick Proctor: Thanks very much, John, and welcome, everyone.

I'd be interested in asking any of you or all of you to gaze into your crystal balls and tell me what you think will happen if in February 2000 yet another federal budget comes and goes with little or no reference to agriculture. What impact will that have in terms of your communities?

Ms. Barbara Willick: I'll just make a comment on that. As we were driving in today, I said to my husband, if we cashed in our NISA, we might be able to pay our bills. Then I said, but are we really going to do this again next year without a payment? We said no, we're not. Our land will sit. We'll go get jobs in the city. Why would we go and borrow hundreds of thousands of dollars and not be able to repay it? We're in an honourable profession, and we are responsible for the debt we incur. So, no, we're not going to be doing it. I think there are a lot of people out there who are not going to do it. I'm not farming to farm.

Mr. Dick Proctor: Right.

Dave.

Mr. Dave Bailey: The comments I'm going to make are not necessarily my own. A neighbour of mine who farms a lot of acres and is into no-till and really believes in no-till—I'm from the other side—says he's going to summer fallow. He's going to seed some. But with the prices the way they are and his inputs as high as they are, he says he can't afford it.

What is happening is that we who can't borrow from the banks are having to go to the grain company, the supplier, and take out what they call a deferred input loan. The minute you do that they have you, because they can dictate when and where you deliver the grain. They have you exactly where they want you. Besides that, the minute your time limit comes up for your October 31 deadline, your interest rate is 24% approximately, and that is retroactive from when you took the inputs out, if you can't pay your bill. If we get into that scenario more and more all the time, there are going to be more of us gone a lot more quickly.

• 1545

A voice: That's great.

Mr. Dick Proctor: Mr. Blocka, in your presentation, you've said “The Federal Government traded a major part of Canadian Agriculture away in the last World Trade Organization talks”. Are you aware that under the guidelines of the GATT Uruguay Round in 1993, each of the countries that are signatories to the agreement agreed they would reduce their domestic subsidies by 20% over five years, but that Canada tripled this. And we're offside in that. We've cut our domestic subsidies by 60%.

So you can make the argument that the Americans and the Europeans and the others have abided by the rules; it's our country that hasn't abided by the rules. In our desire to eliminate the deficit as fast as possible, and in this case on the backs of western farmers, we have tripled the amount of cuts to our support programs.

Mr. Leonard Blocka: First, I'm going to give an answer on your crystal ball question—

Mr. Dick Proctor: Great.

Mr. Leonard Blocka: —about what's going to happen, because I wanted to make a comment there. There are a few producers I worked with in preparing notes for this, very efficient producers, very good business people, and their crystal ball says their financial resources in one more year are going to be totally stripped. And these are dynamic producers. What about those who haven't been so fortunate? There are going to be bankruptcies beyond comprehension.

Now, about the trade, there are all kinds of discussions on trade, but what did the Europeans do? The subsidies are there, both internal and external. And the worst part is the external. Americans pushed for a reduction in the subsidies. What have they done? They've gone up. Compare the food prices. I know where our dollar is; it isn't very attractive compared to the American, but it's been good for us in some ways. But a dairy basket in the United States, after you make all the conversions, costs more than it would in Canada. And the producer isn't getting the money; it's in between. Who's getting the subsidy down there? It's not the producer.

Mr. Dick Proctor: Are you of the opinion that in terms of the subsidies, Canada has tended to hide behind international trading arrangements as an excuse to lower support payments in western Canada?

Mr. Willick, maybe I'll give you a chance. You've been wanting to get in.

Mr. Bob Willick: I believe we've been told many times the Crow didn't have to go. It was just that Canada was the boy scout in the negotiations and gave it up too soon; we didn't have to.

Mr. Dick Proctor: Right.

Mr. Bob Willick: I couldn't find the original document, but this is from page 75, chapter 7, of the GATT agreement, apparently. In regard to your question about the GATT obligations, it says in that agreement, in chapter 7, page 75:

Nothing in the Agreement will in any way affect the right of the federal government and provinces to introduce and maintain programs to protect and stabilize farm incomes.

They didn't have to give it up and it doesn't mean they can't put it back.

Voices: Hear, hear!

Mr. Dick Proctor: Thanks.

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: Thank you.

Bob, let me go one step further—and Dick usually mentions this. We have been told by very reliable sources that up to $2 billion can be put back into support systems for agriculture. It's not a matter of being GATT-able, it's not a matter of not having the ability to do it under WTO, it's simply a matter of political will and trying to convince people to put dollars back into agriculture. We went from, at one point in 1993, $4.6 billion in support systems to agriculture to about $1.6 billion in 1998. So there's lots of room, make no mistake about that.

• 1550

There are a couple of things. First of all, indulge me a little bit. Could you please identify, by raising your hands, how many people applied for AIDA? The great majority.

Could you also identify how many of you have received an AIDA payment? I see four hands. Thank you. You're buying the beer, okay?

By the way, that's not unusual. In any other group we've had, very few people have actually triggered the AIDA program or applied to AIDA, so I thank you for that.

The reason I mention that is that I think almost everybody around this table right now recognizes that AIDA is a flawed program and something has to be put into place other than the AIDA program, and certainly the bureaucratic bull that goes along with the program has to be taken away. So I thank you for that.

Bob, you have a comment?

Mr. Bob Willick: I got 10% of what I thought I was going to get, and I will gladly pay it back if you'll give me an acreage payment.

Mr. Rick Borotsik: I'm going to talk about that right now.

There have been some differences of opinion even amongst the panel here as to the acreage payment. One mentioned $80, others have talked about $20 to $35. Dave, you had talked about the Crow benefit being $35,000 per average farm. What does that convert to, in an acreage payment, if you did that on the average farm?

Is there a consensus amongst all of you as to exactly what it is that you want?

Mr. Dave Bailey: The $80 that everybody's been talking about came about by what they took away from us from when they did take the Crow in 1995. That's where this $80 is coming from. But if you take it from when the Crow was called the Crow rate and then they changed it to the Crow benefit, the freight doubled. So on an average farm that produces 40,000 bushels of grain—and that's an average 1,500-acre farm—that comes to a $20,000 increase per farm.

Mr. Rick Borotsik: Okay.

Mr. Dave Bailey: So that's where they're coming with this $80; it's approximately four years to $80 an acre.

Mr. Rick Borotsik: Leonard, you referred to $1 billion in a trade equalization payment.

Mr. Leonard Blocka: Yes.

Mr. Rick Borotsik: Are you suggesting, in terms of the $1 billion, that there should be a correlation between what the Americans are giving in their support payments to their farmers, or it is simply $1 billion? Is that the number?

Mr. Leonard Blocka: I'll say that I haven't worked on this alone, because I felt other producers should be involved in what I put together, but there is a proposal from the farm organizations in the province and the government that we support as one voice: a $1 billion trade equalization payment.

Mr. Rick Borotsik: I've one more question, Mr. Chairman. I don't know how much time I have.

Barb, you mentioned that there's a point in time when you have to decide whether you want to farm or whether you're going to work. There were some other suggestions here by a number of farmers who are obviously in your area that it's the same and it's true.

Dick talked about February as a timeline. When do you make that decision? We've heard urgency, we've heard crisis, we've heard necessary, immediately. We've heard all of those adjectives. When do you make that decision? When you say you need a payment now, immediately, crisis, when are you going to make your decision as to whether you're going to put a crop in this coming spring?

Ms. Barbara Willick: December 31.

Mr. Rick Borotsik: December 31, at the year end.

Ms. Barbara Willick: That's right.

Mr. Rick Borotsik: Anyone else?

Obviously, with the supply-managed system of dairy, you don't even have to worry about that just yet.

A voice: Be careful.

Mr. Rick Borotsik: Dave, how about you? Are you going to make that decision, and if so, when?

Mr. Dave Bailey: I know I'll be putting another crop in, but the fellows I've talked to say they feel they have to make that decision before the bank makes the decision for them. What's going to happen is.... I said this in my speech. You keep wanting us to give, give, give, and you keep taking out of the bottom end, and, damn it, if we're going to leave the farm, we're going to leave with a little bit of dignity and we're going to leave with a little bit of money in our pockets. We aren't going to leave broke.

The Chair: Thank you.

Mr. McGuire.

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

I want to ask Leonard if it's typical of a lot of farms in the Prince Alberta area that you have a mixture of grain and supply management?

Mr. Leonard Blocka: Not necessarily supply management, but there is—

Mr. Joe McGuire: Dairy?

Mr. Leonard Blocka: South of Prince Albert, there are only three dairy farms, and ours is one of them. No, there aren't very many supply-managed industries right in this area.

Mr. Joe McGuire: It's basically a grain economy?

• 1555

Mr. Leonard Blocka: It's a grain economy, with some beef producers.

Mr. Joe McGuire: In the community of Blaine Lake, have a lot of people been leaving or coming in over, say, the past number of years? Have a lot of properties changed hands?

Mr. Bob Willick: There has been a pretty steady outflow of people over the years. On our road there are three, and there'll be a fourth vacant farm out of six of us. That's in the last 25 years, I guess.

Mr. Joe McGuire: Who's buying the land?

Mr. Bob Willick: The guys who had a good, solid base that was paid for, mostly. The Muskeg Lake First Nation had some money, and Beardy's and Okemasis First Nation bought some land out of the RM when they had their land claims settlement, so that's out. Hutterite colonies have gotten some extra now, within the last year.

Mr. Joe McGuire: So a lot of young people are not getting an opportunity.

Mr. Bob Willick: I don't think there are any. Maybe some neighbours back here might know better, but I don't know of any new farmers starting out.

Ms. Barbara Willick: I just wanted to add a few things. We didn't have a grocery store in Glen Lake. We finally got one nine or ten months ago, I think it was. Can you believe that? It's really hard to believe. Also, the reserves did purchase a lot of it, but I just noticed in the paper that it's all up for rent again. It's as though nobody can afford to farm it even though they were able to purchase it or whatever. There are big blocks of it up for rent, but nobody can even afford to rent it.

Mr. Joe McGuire: Does Farm Credit Corporation own it, or is Farm Credit renting it?

Ms. Barbara Willick: This was the reserve. I noticed they had a whole bunch of land. We have land listed for sale, but who's going to buy it? We had, what, two phone calls.

Mr. Bob Willick: We ran an ad for a month and a half. We got two phone calls for 800 acres of cropland.

Mr. Joe McGuire: So the rural population is getting smaller as the years go by.

Ms. Barbara Willick: Yes.

Mr. Bob Willick: The risks are too much of a bother to take, so they're out of there.

Mr. Dave Bailey: Could I make a comment on the young people on the farm? We have a few young people in our area. I'm not being critical when I say this, but a couple of them thought they were really going to light the world on fire three years ago. Then the Crow left. One young fellow went out and bought three semis and went further into debt. You can buy a semi for very little down right now, because they're promoting the truck industry. He says this could be the last year he's farming, because he's making money on the semis. He said that if he does put one more crop in, it'll probably be his final one.

The Chair: Thanks, Joe.

Can I finish this round with a short question to Mr. Cousin? Why would an acreage payment be preferable over a payment targeted at farmers who need assistance most?

Mr. Mark Cousin: Are you saying an acreage payment would be preferable?

The Chair: No, I'm asking why, in your opinion, the across-the-board payment would be preferable over a targeted payment going to those who need it the most?

Mr. Mark Cousin: I'm not sure if an acreage payment would be better than a targeted one. In my case, I don't farm a lot of acres. I have hogs, and I have just started bison and elk.

The Chair: Let me put it this way. I didn't use the word “acreage”; I said “across-the-board”. In other words, a payment would go to all farmers regardless of financial circumstances, versus a targeted payment that would go to farmers who needed it the most. Is that a tough question?

Mr. Mark Cousin: Yes.

The Chair: Is it tough for Leonard?

A voice: We've got that. It's called AIDA.

The Chair: I know, but I'm asking why would it be? You indicated, Leonard, that the across-the-board payment would be favourable.

Mr. Leonard Blocka: It would be favourable, and I'll get to the point. Some of the producers have had the benefit of better crops, have had the luck of the weather, or have been very efficient. I'm not saying all the producers are inefficient, because they've become very efficient, but some have had poor crops and some have had disease in the crops. It's not their fault. An acreage payment isn't discounting the person. Even though he had some good fortune, he still has those expenses and the low prices on his commodities. He still deserves that return.

• 1600

The Chair: Thank you, Leonard, and thanks very much to all of you.

Now we're going to go to the second round, and I will call Bruce Wagner, Michelle Luciuk, Garfield Lutz and Ted Cawkwell.

Mr. Cawkwell, your name begins with C, so you will begin this round. You will be followed by Michelle and then Garfield, with Bruce Wagner batting clean-up.

Thank you all for coming. We look forward to your remarks. If you could, please keep them under seven minutes if that's possible.

Mr. Ted Cawkwell (Individual Presentation): I'll do my best. I just have some notes of what I'm going to talk about here. I don't have enough copies for everybody, but....

The Chair: The clerk will distribute what you have.

Mr. Ted Cawkwell: Thank you.

Good afternoon, everyone. My presentation might be a bit different. I want to touch on some domestic problems that I feel we have here in western Canada, at least. Part of the reason is obviously the high subsidies that beat the hell out of grain prices, but I feel these are also some of the reasons that can be looked at within Canada.

I'd like to start out with the Canadian Wheat Board. The monopoly must end now. We don't want reasons or excuses that are like the most common one, which is that we have a newly elected board of directors and it's up to them. It's a government decision. It's a political decision to remove the Wheat Board monopoly. It's not up to the board of directors. Don't keep passing the buck.

The Canadian Wheat Board doesn't export any amount of feed barley any more except for rejected malt. That distorts the domestic feed barley price, i.e., lowers it. Feed barley uses have no competition in feed barley purchasing, basically. It all has to be consumed within Canada, because very little is exported.

Stock switching between the Canadian Wheat Board and trade distorts carry-over numbers, again decreasing domestic price.

In 1988, at the peak of the drought year, the minister in charge of the Canadian Wheat Board stated the Wheat Board wouldn't short the domestic market. That was the peak of the barley market that year, and it cost my farm $30,000 the day he made that nice statement.

Cashflow from board grains is almost non-existent because you have to pay for your inputs in the fall. Due to low initial prices and a contracting system, that really doesn't work as far as cashflow is concerned. You have no idea how much they're going to take of what you offer them.

Cash advance administration fees are a small one, but they're a pet peeve. First, the Wheat Board charges $50 to administer it, and I don't think anybody should do something for nothing. But now we have the grain companies taking $50. Who's next for a piece of the pie? Are we going to give the royal mail $50 because they haul the paper, and the railways $50 because they haul the grain in the end? This kind of crap goes on and on.

On transportation, the Estey report or Kroeger report, or whatever it may be called now, should have been implemented when the Crow was taken away. Everything's backwards all the time. One should have coincided with the other. The people who are against Estey are the same people who wanted to save the Crow. They fought long enough and hard enough so that we got $1.5 billion instead of $7 billion or $8 billion, which is what a previous government offered up way back, probably when I was just starting to farm. They're the same people who want to maintain the status quo in marketing. This type of system doesn't work.

As we sit today, low-value Canadian Wheat Board grain plugs the export system in lieu of moving out higher-valued commodities like canola, special crops, and containerized stuff that's at value-added here. As far as cashflow is concerned from the farmers' point of view, that just doesn't cut any ice. It doesn't work. We can't cashflow the operations when this type of stuff goes on.

There seems to be a lot of influence on transportation from Atlantic province MPs. You're all one government and I'm not picking on anybody, but this is a western problem. I think the people from the west should be listened to a little bit more than the people from the east. We live here and we know what's going on.

• 1605

There's one paragraph that I would quote here from a letter written to Mr. Collenette by some other federal MPs. I'm not picking on anybody, but when I read this paragraph I was disgusted. I'll read it to you, and then I'll tell you why. It's a letter to Mr. Collenette about the Estey-Kroeger thing. The last page is on the role of the Wheat Board:

The new board was elected in November of 1998. They have moved aggressively to restructure the CWB and are not resistant to change. We feel that to move the board aside without even a chance to perform negates the progressive action taken by our Government, Parliament, and the democratic process by which the new board was elected. We must trust what we have created.

Anybody who thinks this new Wheat Board is aggressive is dreaming in technicolour. I'd hate to see regressive if this is aggressive.

They say the board is not resistant to change. I don't grow durum on my farm because I farm in an area where it's not grown, but I refer that back to the people at Prairie Pasta. I think they're trying to set up a value-added plant.

Then they mention the positive action taken by the government. No disrespect intended, folks, but that's not positive action. I mean, that's silly.

They then refer to “the democratic process by which the new board was elected”. I don't know why that's mentioned, unless there's a bit of a feeling of guilt somewhere that the process wasn't democratic. That's what I make of that, anyway.

Another one is the Canadian Grain Commission. We have a grain commission that's funded approximately 90% by the producers, yet if we send a sample in to have it checked for grade, dockage, or whatever it may be, we have to pay a fee. I believe in user-pay, but I don't believe in the user paying twice. That's not fair. We fund them as producers. Basically a large part of their revenue is the inspection fees at the export terminals, but when we want a sample checked on our own, we have to pay for it again. I'm not sure how many times we have to pay for these things.

Also, they just tried to force us to pay for small grain dealers' insurance through another program that they had. I think that's sitting on hold right now.

We can get into taxes on inputs. There's fuel, fertilizer, chemicals, and land. The Income Tax Act doesn't allow you to put any money away in a good year to offset yourself in a poor year, if you make any kind of money. Farms turn large dollars. Everybody knows where the Income Tax Act stands. If you make any kind of money, you have to give half back right away. There are other things you can get into on it, whereby you buy storage and can only depreciate it slowly. NISA, land payments, principal payments on land, etc.—all that stuff is after-tax money.

On paper this looks good. It looks like farmers are paying income tax. I've been farming for about thirty years. With the principal payments that I have on land and with NISA contributions, my income tax goes in to the government and they think I'm doing okay because I'm paying income tax. I am, and I have negative margins because of the way the tax is structured. As I said, it looks great on paper.

Another comment on this—and this is not mine; I just picked this up from another article some people had—is that the federal government keeps giving us and the media the gross income figures rather than the total income figures. Let me give you an analogy. Eaton's stores' gross income showed their stores were not in trouble due to a huge inventory sell-off. Total income showed Eaton's was bankrupt. That's where my farm is. It doesn't look bad, but I've sold a whole slug of inventory just to pay the bills.

This meeting here today is about farm aid. I don't believe in subsidies, whether they're in my country or somebody else's. I believe in free enterprise and letting the marketplace work. It doesn't work when I have the government on my back because of the previous things I talked about. I can't operate.

Anybody who says we're going to get a solution at the WTO is dreaming. We didn't get one in the GATT. It takes six or seven years. I'm not saying we should walk away from the talks or anything, but it's probably a longer-term solution. It's not a shorter-term thing, by any stretch of anybody's imagination. If something is not done now with short-term assistance somehow, you won't have to worry about it in a year or two, because there won't be any of us left in business out here to have to worry about. We'll be gone.

If you make a payout of any type, don't put caps on it. Large farmers are in the same boat as small farmers. The only option I'd give you on that is that if you want to cap it to the size of a farm, you'd better give that farmer the option of capping the taxes on his inputs. Rate them at the same rate at which you would make a payout.

That's about all I have for now, and I'll gladly answer any questions you have after the other speakers are done.

Thank you.

The Chair: Thank you, Mr. Cawkwell.

Now we're going to go to Michelle Luciuk. She has with her a handsome young man. What's your name?

Mr. Adam Luciuk (Individual Presentation): Adam.

The Chair: Well, welcome Adam. I gather that's your mother, right?

Mr. Adam Luciuk: Yes.

• 1610

The Chair: So mom's going to perform now?

Mr. Adam Luciuk: Yes.

The Chair: Wonderful.

Welcome, Michelle.

Ms. Michelle Luciuk (Individual Presentation): Thank you for inviting me to speak today.

As all the farmers in this room can attest, the current support systems do not come near the level required to save a vital industry in this country. Not one of these programs addresses the current commodity prices.

About the AIDA program, everyone says you may be able to find someone to help you apply, but there is no way you will ever qualify. Although our minister has admitted there may be problems, I see no genuine effort to fix these mistakes. Does this government plan to simply sweep 1998 under the carpet? Over a year ago the federal government claimed I would have money by Christmas 1998. Well, here it is December 1999 and I've yet to receive a penny. This is a government program that does not address my $2 wheat.

Next the farmers have their NISA. I'm sorry, but that program is a great retirement savings plan. The only way NISA could work as a proper safety net program is if farmers had decent steady incomes for four or five years, followed by one bad, then again successive years of good prices. In the last four years, farm gate prices have steadily decreased by almost 50%, making it impossible for farmers to contribute to such a program. When the program first began, we were able to have funds accumulate, but not nearly quickly enough. Many farmers have simply drained their accounts.

NISA also has a major flaw. It only takes into account my net sales. With the cost of transportation now nearly 50% of my gross sales, NISA basically says I produced half the amount of bushels I really did. Once again, this is a safety net program that does not address my $2 wheat.

Another program available to the farmers is their crop insurance. A lot of farmers do not apply for crop insurance, as the premiums have steadily increased while coverages have decreased. It is a very expensive insurance program. I do carry crop insurance on some crops, but if I were completely wiped out, my payout would not even cover my inputs. Technically premiums should be decreasing as the price of grain goes down. A good example is canola. Last year I insured canola worth $8.50 per bushel. This year it was $5.50. My premiums did not reduce by 40%, but my coverage did. This is another program that does not address my $2 wheat.

Another way government has told farmers to survive is by diversification. What does diversification really mean? You're telling me to continue to produce grain at a cost to myself. I hear suggestions like specialty livestock such as bison or elk. Even if I were capable of making thousands of dollars in these enterprises, I would still have to subsidize the grain portion of my whole financial picture.

Many farmers have taken off-farm employment as their diversification. They take off-farm income earned to subsidize their grain prices. The scary thing for them is that if you start to have too much off-farm income, Revenue Canada starts to consider you a hobby farmer. A farmer is considered just that based upon income. Once again, this current government's ideas do not address my $2 wheat.

What are the solutions to my current problem? First and most important would be an immediate cash injection equivalent to $80 per acre, capped at 1,500 acres, to address that 1998 loss you spoke of a year ago. Farmers need that money in their hands before Christmas, much like what was promised a year ago. An acreage payment is simple and fast to implement. If I don't see this type of payment received immediately, I will then know this present government has indeed turned its back on Canadian citizens and instead is listening to the huge agribusiness and food companies, who are trying to eliminate all of us. If this government does take this important step and then continues one step further by setting a national agriculture policy in place to ensure the future, I will finally be able to see this present government is dealing in good faith.

The farmers of this province have talked for months and months. You have heard their testimonies and suggestions today, which have been repeated over and over again. The farmers are at war and are trying to pinpoint who the real enemy is. Your actions in the next couple of weeks will tell all of us in this room where your political affiliations are held. It has come down to us or them. Whom do you pick?

Voices: Hear, hear!

The Chair: Thank you, Michelle.

Adam, your mother did well.

Ms. Michelle Luciuk: Could he have a chance to say something?

The Chair: Oh, of course.

Go ahead, Adam.

Ms. Michelle Luciuk: It will be only a couple of points, because mom's at another meeting again.

The Chair: That's fine.

• 1615

Mr. Adam Luciuk: If you don't plan to listen to us, why did you plan these meetings? I want to see my Dad more than two and a half hours on weekdays, and most of the time weekends. I want to see him more.

Farm for a year so that you can see what it's like to farm in Canada. Are you going to help me in my future or are you going to leave me? You said you promised to help kids. I'm a kid, and I want farming to be better, now.

Voices: Hear, hear!

The Chair: Thank you. I can tell you've been part of the discussions around the kitchen table.

A voice: Way to go, Adam!

The Chair: Now we go to Garfield Lutz.

Mr. Garfield Lutz (Individual Presentation): Mr. Chairman, fellow committee members, I'm Garfield Lutz. I'm a farmer and I'm a reeve of Bjorkdale municipality in northeast Saskatchewan. Thank you for the invitation and for your attendance at this meeting.

The crisis in the grain sector in agriculture in western Canada will not go away or change without federal government programs and commitments. Land rental agreements in Canada have traditionally been divided into one-third owner, two-thirds farmer. Freight and elevation are approximately one-third of the value of grain. One-quarter of Saskatchewan farmland is rented. Those are Saskatchewan Agriculture's latest figures, and they said if you take into account what the banks and some of the others are controlling right now, it could be over 40%.

How can we farm for one-third of the income of an acre of rented land? Saskatchewan has 44% of Canada's arable land. Agriculture exports in Canada are $22.5 billion. That's exactly one-third of our merchandising exports. It's a huge business. It's an $85 billion business.

We receive 4¢ or 5¢ out of a loaf of bread. One bushel of wheat produces 60 loaves of white bread, 100 loaves of whole wheat bread. If we received—listen to this one—48 bushels of wheat from 48 acres and sold one acre of wheat for bread, we would have to sell all the rest to buy it back, 47 bushels and 48 acres to buy the bread back from one acre.

One bushel of barley produces 330 bottles of beer, with not even a penny for the producer. We have about 4¢ worth of product in a box of cereal, which costs $4 to $5. Free grain would not influence our food prices.

What's the human cost? We have no young farmers left. We have an exodus from rural areas. Ask me; I know. I'm a reeve of a municipality. I know what's happening. The average age of our farmers is approaching 60 years. We have loss of service. We have school closures. We have elevator closures. We have railroad abandonment. We have many more miles to travel for parts, medical, and recreation, because of the shrinking population.

Would you like to see the anguish—and I saw it the other day in the eyes of a young mother—of families who face foreclosure with financial problems? Ken Rosaasen, an economist at the University of Saskatchewan, has called us second-hand citizens in the best country in the world.

What are our problems? What about our freight rate costs? I really was encouraged by Reg Alcock's solution, that we cut the rates by 18% and put a freight cap on, or that we have open running rights. Finally somebody is singing off the right page.

We have to respect the Estey and Kroeger reports, but they ignored the major problem: farmers' income. They're very controversial, and solutions aren't shared by a lot of farmers. There was no connection to agriculture by these people. We need people from agriculture in these solutions. We had a two-price system, with a made-in-Canada price. The last time it was in effect, it brought us $300 million.

Costs of production must be tied to programs. With the elimination of the Crow benefit, what were the farmers' costs? High throughput elevators. We had railroad abandonment. Storage—we spent the Crow benefit on increased storage. Municipal roads—would you like to know what it costs us to run our roads now?

In AIDA we have a three-year average with falling targets. Averages went down because of one poor year, and then they took 70% of that. It raised hopes. It's not applicable for diversified farming. The program must reflect people producing who have to absorb the loss, and that's all of us. It's not worth reconsideration.

• 1620

Crop insurance: 70% average. Do you know that in the northwest, we've had some people with three years of losses? Their coverage dropped to 70% of 70%, and it stayed there for three years. You have 49% coverage. The premiums are too high, and they're far below the costs of production. No other insurance works like this. How would you like to buy house insurance for 70% or 80%, and if the 80% is lost, you lose your... [Inaudible—Editor].

Demurrage charges: this is one that just bothers me to no end. There is no way a farmer should pay for labour or railway problems.

Maybe this one will make you chuckle, but all provincial politicians are singing from the same page on the farm crisis, and that's damned rare in Saskatchewan politics.

It was announced yesterday that U.S. producers will receive $3 Canadian for their wheat in subsidy in 1999.

What are the solutions? We need an immediate cash injection, not tomorrow but yesterday.

We need a lowering of freight rates and a rate cap.

We need an infrastructure program for rural Canada. I'm a reeve of a municipality. Too often we've been trying and trying to get some money for a road that involves four municipalities. We can't qualify. There's a program there, but it doesn't help us.

We need price stabilization control. Input costs have to be tied to income returns. If you give us $20,000 right now for a farm, I can tell you we're going to see fertilizer, fuel, and everything else go right through the roof. We have to be tied to it. If our income goes up, we want control over some of that, and that's the only way you're going to control it.

Why not return the western grain stabilization program? Include farm-fed grain and give farmers with crop failures a traditional yield. Workers have employment insurance. What about NISA? Other Canadians have a pension plan. I was a member of the western grain committee on the stabilization board, on the advisory committee. That was the best program we ever had devised, and we threw it out. We wouldn't have a problem today if we still had it.

Is food important to Canadians? Do we care that two of my neighbours are gone this year? Few are left. Do we care if farm wives are working for minimum wage? Do we care if young farmers can't purchase parents' assets? Do we care that debt-to-equity ratio is astronomical? This has been studied for many years. Somewhere between $22 billion to $24 billion was the static farm debt. It's way over $30 billion today, and that's in a very few short years.

The problems won't leave. Farmers won't quit until a solution is reached for the farm crisis, and I'm sure none of the people who were here today are going to quit. I won't quit, and I won't go away.

Yours sincerely, Garfield Lutz.

Voices: Hear, hear!

The Chair: Thank you.

Now we'll hear from Bruce Wagner. Welcome.

Mr. Bruce Wagner (Individual Presentation): Thank you, Mr. Chairman and honourable members.

Unsolicited advice is seldom heeded. I gratefully accepted your invitation to speak to you, hoping that solicited advice will be considered. When all is said and done, we shouldn't leave here deciding to declare rural coffee shops where farmers meet to complain about their problems as “whineries”, calling it diversification and economic development, and depart for home, job well done.

The job ahead is too large and important to be tackled alone by the federal government, or with excessive partisanship. Partnership and cooperation need to be of the utmost importance. The buffalo are gone and the grass was torn up to plant crops. Deals were negotiated with the railways to provide transport to the settlers and their inputs in from, and their produce out to, export positions. Much has been said of this old development policy and its role in today's financial crisis.

I am a dairy farmer, and a fourth-generation farmer hoping to have a fifth generation take over when I'm ready to retire. My grandfather produced wheat, pork, beef, poultry products, and fluid milk from a well-diversified farm in the twenties, thirties, forties and fifties. He and his family and his neighbours produced the food that made the Canadian Prairies the Allied breadbasket during World War II.

• 1625

The development of Saskatchewan was not solely as a result of our ability to grow high-protein wheat. The dairy and poultry industries had dairy and poultry pools to complement the wheat pool, as farmers owned cooperatives to process and market farm produce.

Whether by chance or by design, polices that spurred the grain economy in relation to the other economies came into being. The Crow became a subsidy for moving grain. Crop insurance covered basic export grains. The western grain stabilization program was a federally funded price stabilization program. When a glut of wheat occurred, the LIFT program was introduced and farmers were paid by the federal government not to grow wheat.

During the sixties and seventies, production of other commodities started to decline, as “King Wheat” took over on the Prairies. Eastern Canada began taking over production, using provincial subsidies to build dairy, pork, and feather industries. At certain times, the federal government subsidized the transport of western feed grains to eastern Canada. Because of the policies of the Canadian Wheat Board, WGSA and transportation subsidies, eastern producers had better access and comparable pricing for western feed grains than western producers did.

Alberta used some foresight and its larger treasury to buy back some diversification. It paid users of feed grains a Crow offset subsidy to keep feed grains at home, strengthening their livestock sector and developing more secondary processing and primary industry. The difference shows today, in that Alberta's net farm income returns are lower, but not to the extent of those in Manitoba or Saskatchewan.

Much of the stability provided by diversification was gone. Foreign governments became involved in day-to-day workings of their agricultural production. European food security led to large subsidies, and increased production led to former importers of grain becoming competitors in world markets. Band-aid solutions were sought by producers and were offered by federal and provincial governments. Billion-dollar handouts and new safety nets that were farmable by producers masked the underlying problems in the grain industry. With the conclusion and the agreements after the Uruguay Round of GATT, the federal government decided to do away with many agricultural subsidies.

The Crow buyout at 20¢ on the dollar again masked the problems in the grain sector. That money went to pay bills. It didn't go into the bank to pay transport for the next twenty years.

Two years of relatively good returns and lower European and American export subsidies lulled some people into believing they could survive growing grain in the new order. Larger inventories and lower Asian demand rekindled the subsidy war and put many of our farmers at risk. Any large-scale relief from international subsidies may only come in time, after more collateral damage is suffered by Canadian grain producers.

AIDA has not helped to a large degree because it was fashioned to take up the slack from short-term pain. Twenty years of decay in the grain industry cannot be covered by AIDA. Even more problematic is the rise in production in more markets, such as India and China. Some economists are forecasting lower bulk sales of grain, and higher niche market and specialty-processed product sales in the future. Today, we are ill-prepared for this prospect.

Since the Crow buyout, Alberta has increased its processing and secondary markets by $1 billion annually, Manitoba has increased $750 million, and Saskatchewan's numbers are at $160 million.

Industry and other experts predict that within ten years most markets will be locked into vertically integrated units, with production, processing, and marketing controlled. Those not participating will be locked out of markets. Producers will have to take a higher profit from further processing products to increase their take-home pay. If they do not participate in the upper part of the chain but leave their fates to the goodwill of others, their fates will eventually be the same as that of the 17,000 laid-off bank employees after bank corporate profits have risen to record levels.

The problem we are discussing today has roots dating back many years. It involves actions of government in taking diversity from the west, and inactions of government in identifying post-Crow strategies to benefit our whole economy.

This patient has had visible signs of disease for years, and has never lacked for bigger band-aids to hide the problem. When we finally look for and find a cure, we hope the patient is still alive. There is a tremendous need for one last band-aid while we look for the cure.

• 1630

The present group of farmers have survived the eighties and nineties. They are the best managers, the brightest lights, and the hardest workers. It is no mistake that they have made it this far. I am not asking for help for myself. I stopped grain farming two years ago because I couldn't see any future. But I need my neighbours to continue to help to pay taxes to supply services such as schools and hospitals. They are consumers of my products and suppliers of my inputs.

They say necessity is the mother of invention. With some financial help and direction, we can return to these producers the independence and opportunity sought by our forefathers when they came to this land.

I wrote a postscript late last night, believing that if I had moment to put it into the record, I would. Is there time?

The Chair: Yes, we'll give it to you.

Mr. Bruce Wagner: Yesterday, Premier Mike Harris of Ontario muddied the waters on the issue of farm safety nets and sharing. He claims Ontario's share is too small in relation to its costs. Our federal government went to war in Kosovo to protect innocent people and return them to their homes. Mr. Harris didn't ask to pay for some of the bombs or to pay for fixing any collateral damage. He rightly assumes the Government of Canada will do the paying.

Foreign governments have been waging a trade war in the grain industry for most of the past two decades, world trade agreements aside. These foreign powers are causing collateral damage to our grain producers, chasing them from their homes, and destroying their livelihoods. Mr. Harris doesn't want to pay for the damage caused. He doesn't seem to assume the Government of Canada should do the paying either. He wants his share. We shouldn't be bickering about provincial shares to fight international trade wars.

No one should miss this irony. On this day after the anniversary of Pearl Harbor, the people with whom our farm boys stood shoulder to shoulder in order to protect their freedom and countries are now chasing our farmers from their land with their fight for power in the international grain trade. Our federal government needs to stand up and protect our farmers.

Voices: Hear, hear!

The Chair: Thank you, Mr. Wagner.

We'll go to rounds of questioning, and we'll start with Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much.

It really looks like our youngest witness has had the most experience with agriculture committees when he asks why we planned these meetings if we don't plan to listen to these people. I made note of that.

I just want to say one thing, Mr. Chairman. In reply to the last group of witnesses, you asked why the acreage payment would be preferred over the AIDA payment. Maybe it could be best summed up by saying that AIDA penalizes farmers who make certain management decisions. I think that's one thing we're hearing loud and clear.

I have a question for each one of the witnesses.

Mr. Cawkwell, I'm really going to put you on the spot. How strongly do you feel about your comments on the WHEAT Board? Would you be willing to forgo your AIDA payment in order to have the freedom to process and market your own grain?

Mr. Ted Cawkwell: Yes.

Mr. Garry Breitkreuz: You're not a politician. You don't elaborate. Okay, fine. You also mentioned the Canadian Grain Commission and all the other fees that farmers are compelled to pay. I think it comes out to $138 million. What's the solution? That $138 million is more than has been paid out so far in AIDA in Saskatchewan.

Mr. Ted Cawkwell: When you're talking about $138 million, do you mean to the Grain Commission, are you talking AIDA, or...?

Mr. Garry Breitkreuz: No, I'm saying farmers are compelled to pay $138 million in user fees. The Canadian Grain Commission is one of those.

Mr. Ted Cawkwell: To put it simply, I'm not one of these people who believes government can do it best. As for the Canadian Grain Commission, I'm not drawing fault with them either. But there are private companies out there that have just as good, if not better, records or names around the world for quality assurance on grain than the Grain Commission, and they do it at less cost.

It's how the Grain Commission is structured and how these tariffs are collected. I've had pet peeves with just about every grain company that most of us can name, whereas Grain Commission fees are taken off my cheque and the grain never sees a Canadian grain commissioner because it goes for domestic consumption. It's bloody robbery.

If you go out to the west coast, they have single-car inspections, which gets back into the car allocation and the single-car units and all this crap. If Sask Pool loads a unit train in Saskatoon, it might not even go to their terminal; it may go to somebody else's. If it went to their own terminal, they wouldn't need it to be inspected, because it's their grain. But it goes to somebody else's, so we're paying a grain commissioner to inspect all these cars because of a car allocation problem. Who pays for that? The farmer pays for it at about 50¢ a tonne.

• 1635

Mr. Garry Breitkreuz: Thank you.

Mr. Ted Cawkwell: That was a political answer. That was a long one.

Mr. Garry Breitkreuz: Thank you. I think the whole area has to be looked at. There are a lot of fees farmers are compelled to pay that create the income crisis we have.

Michelle, you talked a lot about farmers diversifying and so on. Do you think it's fair that if a farmer diversifies, say, into bison, elk, herbs or anything like that, he should be treated differently under AIDA compared to someone who works off-farm? You mentioned that under AIDA, if somebody does their best to diversify in all these things and somebody else has an off-farm job, the off-farm job doesn't affect their payouts under AIDA, but some of these other things farmers do to try to get some additional income do affect their payouts. Do you think that is unfair?

Ms. Michelle Luciuk: That's a good question.

Mr. Garry Breitkreuz: That's a tough one, and I really should give you more time. But we only have five—

Ms. Michelle Luciuk: It is only fair that you would look at it as total income, but on the other hand, as I mentioned about Revenue Canada, you can earn as much as you want in bison or elk and they still consider you to be a farmer, but if you earn too much, which is starting to happen now here in Canada, Revenue Canada will all of a sudden ding you and go back, and all of a sudden you will owe Revenue Canada hundreds of thousands of dollars.

Mr. Garry Breitkreuz: Yes. The point I'm making is that this is what's so unfair about AIDA, and if you think through the whole thing, that's a real problem. Anyway, I appreciate the fact that you brought it up.

We only have five minutes, so I'll move on to Garfield.

Garfield, would it not be cheaper to maintain the rail beds rather than fix our roads? You're involved a lot in those kinds of decisions. You worked a lot on the Churchill route, and all that kind of thing. Wouldn't it be cheaper for the provincial government to take it over and run those railways—take care of those rail beds and allow free running rights on them and create some competition, and so on? What do you think?

Mr. Garfield Lutz: That question arose on the Churchill line when they could, even at slow rates, pull 70 or 80 cars. Do you know how many trucks that would take? I mean, our roads are pounded to hell. We're just losing them. We have two major highways. The sad part of it is that we have a working railroad. I should give you an example.

They've just put a large shipment of peas together for Churchill. The railroad could have run from Prince Albert straight east, right through my little town. It's there—on the tracks they ran some engines the other day—and it would have cost about $5 or $6 a tonne. What did they do? They shipped it all to Saskatoon, then they shipped it to Humboldt and put it together, then they shipped it to Kenora and up to Churchill. They charged the farmers $15. It was the same scenario when we shipped it to Thunder Bay and back to Winnipeg, so we could collect double on the Crow benefit. It's the same thing. It happened just a couple of weeks ago.

Mr. Garry Breitkreuz: It would be cheaper then to maintain the rail beds than to fix all the roads?

Mr. Garfield Lutz: There's no question whatsoever.

Mr. Garry Breitkreuz: My last question is to Bruce.

In your postscript—and that really caught my attention—you outlined a whole bunch of programs. Is it possible to design a farm support program that covers all the sectors from hogs to grain? Does one size fit all?

If the crisis in Saskatchewan is so severe, why is the average payout well below—you know, this is supposed to be the province with the most crisis—the national average? It's about $10,000, and only 51% of the farmers who apply get anything.

It's a two-part question there.

The Chair: You have only a few seconds to answer.

Mr. Bruce Wagner: I was told not 10 minutes ago, by somebody I believe, that AIDA was initially set up for Canada's hog farmers. It was quite simply put to work to try to make it fit everybody else. It does not fit everybody else at all. There has to be some other process. But the problem, sir, is that if you don't do it quickly, some of our best and brightest will be gone.

Mr. Garry Breitkreuz: That's a good point. Thank you very much.

The Chair: Thank you.

Now we'll go to Mr. Calder.

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

I'll tell you right off the top, Bruce, your postscript is very interesting for me, because as a member of Parliament from Ontario—and I've been out west many times—I'm constantly getting hit with my own farmers back home saying “If you do anything out there, do it for us too, or you won't get re-elected next time.” That's one of the things I face when I go home.

• 1640

I've heard many things over the last few days that I've been out here, and I've put them down into eight points.

Point one is basically the establishment of a long-term agricultural policy. There are five points incorporated in that dealing with fair returns, young farmer entrants, a revenue insurance plan, the NISA program enhanced, and crop insurance enhanced.

I will go to the revenue insurance part of it, and I'd like your comments on whether or not you would like to see the GRIP brought back and whether or not it should be market-neutral, if that's possible, given the fact that we still have this program in Ontario. The provincial government has decided to support that program, and our farmers in Ontario are sitting on about $350 million that is helping us through current times. I'd like your comments on that—any one of you.

Mr. Bruce Wagner: I believe we need very good first, second, and third lines of defence, but right now I sit here and look at the fact that we've asked the Saskatchewan and Manitoba grain farmers to go into a world trade war that they shouldn't be paying for. The Saskatchewan government should pay their share when it comes to first, second, and third lines of defence—the crop insurances, the NISAs, some form of GRIP.

But GRIP and all of those things put together don't change the fact that we are taking our Saskatchewan farmers, sending them to war, stripping them of their clothes, telling them to buy their own darned guns and fight a trade war. Then we're handing the money out to everybody else. We cannot continue to do that. It's the one trade war that has continued for 20 years. Pork and all those other commodities haven't had that. They all go through free market cycles or supply management. The grain industry has been stripped, and the ones that are still walking need help.

Mr. Murray Calder: Does anybody else want to comment on that? Ted.

Mr. Ted Cawkwell: We've been through this. We've had first, second, and third lines of defence—NISA, GRIP, and western grain stabilization. The programs in other countries.... As I said, I don't believe in subsidies at all, but we've been down this route.

Speaking as a grain producer in Saskatchewan, you're going to have a hell of a hard time selling the Saskatchewan farmer GRIP if the provincial government has any involvement. I agree with Bruce that they should pay their share. We got the royal one on that. All we got was a bill in the mail. If you bring out a program where our provincial government is involved, I think I will take a holiday. I just don't think I want to be part of it.

With the other programs there seems to be a fairly dramatic change, then every time we elect a different federal government everybody has to get in and tinker. I think Bruce said that “one program suits all” just doesn't work. This is too large a country. Interests are different. There are different programs for marketing and selling in different parts of the country. What's good for the farmers in your area might be detrimental to us, or vice versa. There's just too much difference with our producers.

Mr. Murray Calder: Too much diversity.

Mr. Ted Cawkwell: Yes, it just doesn't work.

Mr. Murray Calder: Okay. Garfield.

Mr. Garfield Lutz: An American president said, “You ignore your farmers and grass will grow on your streets.”

Some people are saying the market will dictate the price for agriculture. I don't care how far back you go—go back to the Holy Roman Empire—but nation after nation that neglected agriculture fell. It has never worked in the history of agriculture. Nations won't let it. The current subsidies by the Europeans and the Americans—how much more proof do you need of what's happening? They are tools of war. As my other presenter said, we have no bullets, we have no guns, we have no clothes. We don't send our armies out like that.

The Chair: Is that it?

Mr. Murray Calder: Do I have any more time?

The Chair: You have about another minute and a half.

• 1645

Mr. Murray Calder: The other thing we have talked about repeatedly is the NISA program. Now, here are some of the points that I've heard about it: the program needs to be more accessible than it is right now; 30% is taxed off the top; also, there seems to be one part here that says it is to address the low-income and low-equity farmers, which means basically the young farmers who are entering. I'd like your comments on that—any one of you.

Garfield.

Mr. Garfield Lutz: The young farmers are telling me they don't have the money to put into it.

Also, one of the other presenters addressed one of the questions. It's that our income is falling and falling, so our contribution is less and less.

Mr. Murray Calder: Bruce.

Mr. Bruce Wagner: Yes, I think Mr. Lutz is right. As Michelle said, if we have to use NISA one year in four or one year in five in order to balance out our income, it's a useful program, but we are getting very wide swings in income that cannot be taken up by this program, not on a continual basis. If you don't put something in, you can't take it out. And if you can't afford to put it in, how in the heck are you going to take it out? Those guys that have money can continue to farm for a while, but the young guys or the guys who have bad luck are just out of luck.

The Chair: Thank you.

Now we'll go to Mr. Proctor.

Mr. Dick Proctor: Thank you.

Mr. Cawkwell, you said a couple of times that you don't believe in subsidies. That's highly laudable, I suppose, but what do we do when everybody else is subsidizing up to the hilt?

Mr. Ted Cawkwell: Yes, I follow you. I did say that there had to be a short-term fix, and it's because of the U.S. and European subsidies. They're a big problem.

I don't really call it a subsidy when I call it a refund on my tax money. We pay a pile of taxes on input costs. We pay an inappropriate share of education tax in land taxes in this province. It's a tax rebate; I don't call it a subsidy. On larger farms, the numbers are astronomical for what we pay to the government.

There is a short-term problem. If something's not paid out, the buffalo will roam again, so to speak. There are going to be people leaving the farms left, right, and centre.

I hate it being called a subsidy when we have the government standing in our road every time we turn around out here when we're trying to market our products and move them to market. Through taxes...the word “subsidy” is not the proper term.

Mr. Dick Proctor: Okay.

Michelle, can you enlighten us as to what you see as some of the social ramifications of what is happening out here? I don't address this to you only because you're the only woman here. Adam was here a few minutes ago, and I was actually going to ask a question of him. What are you seeing? What is the hurt you see and feel in your community?

Ms. Michelle Luciuk: It's awful.

Actually, it's funny you ask me that. I was just at a meeting Monday night in Yorkton, where we were hoping to have farmers come up to the mike to ask questions per se, maybe some number-crunching and that kind of thing. Every single one got up and just told their story. Most of them broke down. I thought, this is crazy. I mean, here's a 50-year-old man, I don't even know him and he doesn't know me, and he's willing enough to stand up in front of an audience like this, tell his story, and break down and cry. You think, okay, something's wrong here; this is running so deep.

I know the question was asked here prior to this about where that fine line is where, when you reach it, you say you quit. All of them who were there said they're not quitting—well, until the bank comes and drags them away. It's come down to that.

I've even heard people talking about going on a hunger strike or taking out guns and standing at their farm gates, because they're not leaving. It's terrible. We've actually talked to farmers who literally can't afford to feed their kids. They keep them out of school once in a while just because they can't afford to send a decent lunch and they don't want anybody to know about it.

Then there's the stress. In our family, it's terrible, because now my husband's gone all the time, and the kids.... I've become a single parent out of the deal. It's terrible. I don't think any of you are aware of that type of hurt that's happening out there.

Mr. Dick Proctor: I don't have any further questions. Thanks.

• 1650

The Chair: Mr. Borotsik.

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

First of all, I forgot to say, perhaps, that I'm from Brandon, and I recognize that the agricultural economy is the backbone of a lot of our communities—in Brandon and in Prince Albert, I can assure you of that.

It's also the home of the Brandon Wheat Kings, just in case you're interested—

Voices: Boo!

Mr. Rick Borotsik: Oh, right. I just thought I'd tell you.

I've also been somewhat involved in municipal politics, so I'm going to direct this question to Garfield. With you being a reeve of a municipality, I wonder if you could tell us—and it goes back to the hurt and what's really happening in the communities and how serious the issue is—about your tax arrears.

Normally municipal taxes are paid in October. I don't know if they are in your municipality, but that's usually the timeline. What are your arrears now in the municipal taxes, which you obviously depend on for the education special levy as well as for the municipal...? What do you anticipate the arrears may well be next year? Farmers I know always try to pay their bills, and usually taxes are one of the first things they like to pay, so maybe your arrears aren't that much right now. What do you anticipate next year, come October?

Mr. Garfield Lutz: I told a neighbour of mine the other night that I have to hang up my phone at ten o'clock at night. I am getting bombarded with calls on exactly that question: a tax revolt.

Mr. Rick Borotsik: What are your arrears now?

Mr. Garfield Lutz: We're running about average, about what we normally run.

But I'll tell you about one dramatic change. I was reeve of the same municipality 12 years ago, when the voters list was at 1,650 and some. Last fall that voters list had 1,000.

Mr. Rick Borotsik: What do you anticipate next year? You're close to the issue.

By the way, I also want to talk to you about the education levy on taxes, because that came up—not this time, but in a lot of other groups we've talked to. How do your ratepayers feel about the education levy on their municipal tax bill? What do you think of next year, of October 2000? With what you know right now and the kinds of cashflows that are in the farm economy, what's going to happen to your municipality come October 2000?

Mr. Garfield Lutz: I would almost guarantee you that we're faced with a tax revolt. As you know, as somebody in government I cannot participate, but I envision a tax revolt in our municipality. We're strictly a rural municipality; we have two villages and two hamlets. Our mill rate is 16 mills under the new system. We lost all of our elevators to the next municipality. They have three high-throughput elevators; they don't even need their tax money. They're at 9 mills.

Do you see the discrepancy? People can't handle it. They're phoning me—the phone just rings all the time—and asking, what are we going to do about a tax revolt?

We have to get the message across to the provincial and federal governments. Maybe this is one vehicle whereby we can tell them that we're in a hell of a lot of trouble. The whole message is not just about education tax; they want to pass on the message that it's throughout whatever they're earning and the whole tax system.

Mr. Rick Borotsik: Okay. Thanks.

Ted, you mentioned the Canadian Wheat Board. That has been mentioned in a lot of our meetings as well. Just as a piece of information, last October the Canadian Wheat Board did a poll, a survey, that was paid for by the farmers; you're a partner in that. I've asked the Canadian Wheat Board for a copy of that poll.

Now, the poll has nothing to do with market-sensitive fee information, and it has nothing to do with who we're selling our grain to. It had other issues, about the support of the Canadian Wheat Board. I've been refused that particular poll and survey. I've gone through access to information, but I'll be refused there too. As a contributing member and basically an owner of the Canadian Wheat Board, do you think you should have the ability to get access to that poll, that survey, done by the Canadian Wheat Board?

Mr. Ted Cawkwell: Yes, absolutely. It should be public information.

Mr. Rick Borotsik: By the way, the board of directors you mentioned, which is elected by farmers, have taken it to their board meeting and said that they will not make that information public. As a farmer represented by the board of directors, what do you think about that?

Mr. Ted Cawkwell: It pretty much tells you what the poll said, doesn't it?

Mr. Rick Borotsik: I don't know. I can't get the damned poll. I wish I could.

Mr. Ted Cawkwell: If the poll suggested that the majority of the farmers are in favour of the Canadian Wheat Board monopoly as it stands today, I'm sure they'd broadcast that all over the national media.

Mr. Rick Borotsik: I suspect so. Thank you. Try to get it, would you, please? I'd really like a copy.

Mr. Ted Cawkwell: I really don't want to talk to them if I don't have to.

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

The Chair: Mr. McCormick.

Mr. Larry McCormick: Thank you, Mr. Chair.

Ted, on the subject of the Canadian Wheat Board, we're not going to solve that here now. It may not be a 50-50 split on the pro and the con, but there sure are a lot of different opinions across the country.

• 1655

On the transportation issue and on the letter to Reg Alcock, before I signed my name at the bottom of the letter...my name is one of two that's at the bottom of that letter. It's not everything for everybody, but I do believe that if we get it, several hundred million dollars that are now going out to the rail companies will remain in the Prairies.

I want to make a little plug for the people of Saskatchewan. Yesterday a couple of us asked about this gold ribbon campaign. I had never seen it before. Earlier today we got a copy of the information, and I commend you on it. In Ottawa, in the House of Commons, we all get ribbons every week. They're all for good causes and I'm sure they're very valid, but I don't think there is a more valid one than yours—and ours—and I think we need to take that back to Ontario with us.

Here's my one question. We talked about neighbours leaving. I want to get the sense from this community—as large as it is—surrounding Prince Albert. What's your feeling about what your neighbours are getting as cooperation from the chartered banks and from Farm Credit? We're hearing different stories in different places.

Mr. Garfield Lutz: In the case of one of my neighbours, his land went on the block last week; it was posted by Saskatchewan Agriculture. The other one sold his farm. There were seven children involved, and now we don't have a hockey team in our town for that age group—too many children left. Now for kids in these little towns, for small boys or small girls who are in hockey or skating, it's not uncommon to see them now all in one arena—from four, five, or six small towns that all had a hockey team or a skating club. There are no children left.

Mr. Larry McCormick: Yes. The social cost and the social implications are great, and it's the rural part of it. As much as it's the farmers, it's the communities and all of that. They're all going to suffer. Michelle mentioned, to put the squeeze on it, as you all should—and you've all been so polite doing it—that we need something in two days or two weeks. I heard another young person, previously sitting where Ted is, say that he has to make his decisions about the crop year on the last day of December. But as you know, the federal budget normally comes in February.

I guess I'm saying to keep the faith. I hope we see things before then, but I just thought I would circle February, Mr. Chair.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: Mr. Chair, can I have 30 seconds? I forgot to ask a question. It's for my information more than anything else. I've heard at this panel a number of times about 48% to 49% taxes being hidden in inputs. Where did you get that information from, that 48% of the inputs is tax?

Ted, I think you might have said it. Or Bruce, you might have said it. Who said it?

A voice: Excuse me. There's a University of Manitoba study from about five years ago—

Mr. Rick Borotsik: University of Manitoba? Do you know who did the study, by any chance?

A voice: The agriculture department.

Mr. Rick Borotsik: Okay. Through the U of M? Good. Thank you. That's what I needed to know.

The Chair: Well, we're out of time for this round. I want to thank all of you.

Special thanks to you, young Adam. It looks like you might have a political future. How's everything going in school, by the way?

Mr. Adam Luciuk: Good.

The Chair: How did you get off this afternoon?

Mr. Adam Luciuk: My mom picked me up.

The Chair: All right.

Mr. Larry McCormick: Mr. Chairman, am I allowed to say something to Adam—and not to use the young man?

Adam, one of the things I'm concerned about.... I'm from Ontario, a long way from here. Maybe we earned this reputation, but what I'm really concerned about is the perception that we don't care, because, Adam, there are a lot of people in the east who care.

Voices: Hear, hear!

The Chair: Thank you.

Now we're going to hear from a couple of organizations: the National Farmers Union, represented by Morris Prescesky; and the United Grain Growers, represented by Terry Youzwa and Brett Halstead, both directors of UGG.

I would like to indicate, just as a heads-up to the audience, that when we finish hearing from the organization in roughly 45 minutes from now, we'll be inviting four more farmers to the front. The names are Don Kelsey, Donald Blocka, Armand Roy, and Bill Cooper.

• 1700

Welcome, Mr. Prescesky, and Terry and Brett.

Mr. Blocka, you're not part of this, are you? You're part of the individual farmers group in 45 minutes. But we'd love to have you after that.

We have the National Farmers Union and the United Grain Growers. Okay, we'll start with the Farmers Union, for seven minutes, something like that.

Welcome, Morris.

Mr. Morris Prescesky (President, Local 628, National Farmers Union): Thank you, John.

I'm president of Local 628 of the National Farmers Union, and I was asked to present a brief here today.

First of all, I'd like to tell you that I farm in the Mayfair area. I am married. I have a family, four sons, two of whom are still with me on the farm. To get into this, I would like to read to you a message. It's a news release from our president, Cory Ollikka, as he left the WTO talks in Seattle:

“After attending meetings and government briefings in Seattle over the last four days, I cannot help but conclude that a vast gulf separates Canadian farm families suffering with crushingly low net incomes from the government officials negotiating the Canadian WTO agricultural position,” said NFU President Cory Ollikka on the final day of WTO negotiations.

Ollikka noted that the language and focus of the WTO talks were profoundly divorced from the lives of Canadian farm families. He noted that the negotiations do not, in any way, seem aimed at delivering what farmers want or need.

Now, we have what farmers want, and I'll just list them for you: (1) fair prices; (2) market power; (3) a healthy environment; (4) stable markets; (5) effective, well-funded safety nets; and (6) safe, clean food.

On the other hand, the Canadian negotiators want the following: (1) world prices, not necessarily fair prices; (2) market access, not necessarily market power; (3) an end to non-tariff barriers; (4) increased exports and imports, not necessarily stable markets; and (5) substantial reduction in domestic support. I'll repeat number five: substantial reduction in domestic support. This is one of the wants of the Canadian negotiators at the WTO talks in Seattle. They also have a sixth: risk assessment.

The difference is not just one of language but, more fundamentally, of vision and direction. While the language of trade negotiations may need to be technical and precise, in this case that technical language serves to significantly obscure a Canadian negotiating position at odds with the needs of farm families. The markets are failing farmers. The markets are punishing farmers. Yet the Canadian negotiating position, which is market access, deregulation, and liberalization, is designed to remove any remaining protection farmers may have in that market system.

Now, what does that mean to my family farm? My wife and I were married in 1969 and have raised a family of four sons and one daughter. Two sons are married and have families. Their ages are from 17 to 26 years. We raised them, educated them, and groomed them to become the farmers of Saskatchewan.

• 1705

One year ago, in December 1998, my oldest son told me, “Dad, it appears that Canada doesn't want to pay us for the grain we produce. I cannot make a living here any longer.” With that, I watched him drive away.

Last spring I wrote a letter to Mr. Vanclief stating that the grain prices were too low to pay the bills, and that AIDA wasn't working. His office sent me a letter back stating that the government was supporting agriculture with crop insurance, NISA, and AIDA; and if that wasn't good enough, I should try an auction sale.

I think that letter from Mr. Vanclief is what convinced by youngest son to leave farming as a career. He left two weeks ago for a job in Alberta.

Now, I have here with me—and I showed this to some of you—a 1948 grain ticket, which was for 84¢ a bushel. The 1999 price is 85¢ a bushel—just one penny more, and 52 years have passed. Today barley is $1.44 a bushel. By the way, that's the open market price. The PROs on the Wheat Board are over $2. Our wheat today is $1.90 a bushel—and that's feed wheat as well.

When the Crow benefit was taken away from western Canada, we as farmers became landlocked, paying full freight to the railways to move our exports for Canada. At that point, our living from farming ceased to exist. Off-farm income and savings are what kept most of us going. Most of us have nothing more to give.

In the former Soviet Union, we have heard of people waiting a year to be paid. Some of us in western Canada are now waiting over three years to be paid. Without support for agriculture at this critical time, we as farmers are being starved in a land of plenty.

Thank you.

The Chair: Thank you very much.

Just before we go to the UGG people, you mentioned that you got a letter from the Minister of Agriculture. Do you have it with you?

Mr. Morris Prescesky: Yes, I do.

The Chair: Could you table it with the committee?

Mr. Morris Prescesky: Yes, I'll leave it with you.

The Chair: Thank you.

Now, Terry, are you going to begin?

Mr. Terry Youzwa (Director, United Grain Growers): Yes.

The Chair: Welcome.

Mr. Terry Youzwa: Thank you, Mr. Chair and honourable members.

I'm a member of the executive committee of the United Grain Growers. I farm in Nipawin, Saskatchewan.

Mr. Brett Halstead (Director, United Grain Growers): I'm Brett Halstead. I'm a new director with the United Grain Growers. I'm a grain and livestock producer from Nokomis, Saskatchewan.

Mr. Terry Youzwa: I'll be summarizing this presentation that you have in front of you, if it's been circulated. I left it at the front. I encourage you to read between those statements that I'll make. I hope he circulates it soon.

Thank you for this opportunity for UGG to appear before you. In this presentation we do not intend to go on at length about the extent of the farm income problems. These problems have been well documented.

Instead, UGG's focus today will be on offering solutions. At the outset, it is important for the federal government to acknowledge its responsibility for the financial difficulties facing prairie farmers. The reduction of farm income supports, the onerous tax burden, and the failure in trade negotiations to adequately protect the interests of western grain and livestock producers are at the heart of the financial difficulties.

In addition to safety nets, UGG will provide comments on matters relating to trade, taxation, road expenditures, grain transportation reform, user fees, and barriers to further processing.

I should mention that the proposals UGG puts forward here today are based primarily on resolutions passed by farmer delegates to UGG annual meetings. These resolutions are attached to our written presentation. UGG also relies on its network of some 180 policy advisers.

We believe any farm support program should be trade exempt and have the following basic principles—which I'm not going to read to you in the interests of time.

In our view, the AIDA program fails to meet trade-related problems for western Canadian farmers. It wasn't designed to meet them. That being said, we do believe that AIDA should run its course for 1999. Those farmers who may be eligible for assistance have already factored the program into their decision-making and have adjusted their plans accordingly.

• 1710

In our view, Canada's farm safety net should consist of three main components: crop insurance to deal with all types of production risks; the cash advance program to assist farmers with cashflow management; and NISA to provide income support, stabilization, and—as we will explain later—trade equalization payments. Properly structured and financed, these three programs would be adequate to meet the financial needs of prairie farmers.

With respect to crop insurance, we believe the program should be enhanced so that all possible production risks are adequately insurable at a reasonable cost.

The cash advance program is well regarded amongst most farmers. We support its use and any improvements that can be made to it. It's especially vital for Wheat Board grains, where our ability to sell the product is restricted.

NISA is also well received by most producers and meets the criteria that we talked about earlier. The program provides an effective way for farmers to stabilize income on their own individual farms. It also provides an effective and appropriate vehicle for government to deliver additional income support.

To meet current and future needs, we believe NISA should be used to provide farmers with trade equalization payments to offset the damaging effects of subsidies and other market distortions caused by other countries. Given that negotiating international trade agreements is a federal responsibility, we contend that the responsibility for offsetting these distortions rests solely with the federal government. These trade equalization payments should be made until such time as European export subsidies and other production- and trade-distorting programs in Europe, the U.S., and elsewhere are eliminated. The payments should be based on the extent of damage caused by these market distortions. We note that Canada has ample room under its WTO domestic support commitments to support these payments.

The federal safety net advisory committee recommends that government contributions to NISA be doubled. We concur with this recommendation.

On trade reform, I think most of us recognize that the long-term solution to the farm income problem lies in resolving the market distortions caused by other countries. In our view, export subsidies and production-distorting programs in Europe and the U.S. are the most damaging forms of all types of support. We do not begrudge these countries choosing to support their farmers, but it is incumbent on all of us to insist that they provide the support in a way that is not production or trade distorting.

As you are aware, Canada has eliminated all export subsidies on grain, including the transportation subsidy under the WGTA. We note that this subsidy was financed entirely by the federal government and was not subject to the 60-40 federal-provincial split. We can accept the 60-40 split on crop insurance and other income support measures that are not related to trade. However, this is not an acceptable funding formula for matters such as international trade that fall solely under federal jurisdiction.

Canada's obstinate trade position regarding the Canadian Wheat Board is unacceptable. According to media reports, the EU agriculture commissioner Franz Fischler is willing to lower export subsidies if Canada is also willing to put the CWB monopoly powers on the negotiating table. In our view, any benefits the CWB monopoly may bring to western Canadian farmers pale in comparison to the benefits that would arise from a reduction in export subsidies. We strongly urge Canadian negotiators to respond positively to Mr. Fischler's overtures. We note that removal of the compulsory provisions of the CWB is one action the federal government can take to assist prairie farmers without any cost to the federal treasury.

Europe has also promoted the concept of a multi-functional farm policy in which programs are used to promote environmental and other social policy objectives. In our view, multi-functionality is simply an excuse to continue with production-distorting programs and to maintain access barriers to trade. If Europe is genuinely interested in a multi-functional farm policy, then it should immediately convert all red, blue, and amber programs into the green category.

Market access is also vitally important. Western Canadian grain and oilseed producers continue to face high tariffs on the export of many agricultural commodities to Pacific Rim countries and elsewhere. In our view, Canada has a contradictory trade position, resulting in an uneven level of federal support among various commodities. According to the OECD, the 1998 producer support estimates for Canada show that wheat is at 9%, and oilseeds, beef, and pork are at 6%, whereas dairy support is at 58%. This is an inequity that must be addressed. Federal farm support programs and regulations should ensure that support across regions and across commodities is more balanced.

On fuel taxes, UGG would now like to talk about the onerous tax burden that prairie farmers face and the inadequate level of federal funding of road infrastructure. In October, the UGG commissioned a study by the University of Manitoba Transport Institute that examined federal-provincial fuel taxes and road expenditures across the Prairies. It is appended to our presentation.

• 1715

The study found that the federal government collects about $4.4 billion annually in transportation-related fuel taxes, of which 96% represents road fuel taxes. Farmers, it must be noted, are not exempt from paying federal taxes on either diesel fuel or gasoline. The current rate is 4¢ per litre for diesel fuel and 10¢ per litre for gasoline. This represents an unwarranted tax burden.

We can accept paying fuel taxes for the portion that relates to road travel. However, in the case of diesel fuel used by farmers, we estimate that 95% is used for field work. A typical grain farm of 2,000 acres is paying about $750 to $1,150 in taxes for diesel fuel used on farms. Gasoline federal taxes would generally account for another $100 to $500.

In our view, these fuel taxes represent an unwarranted tax on food production. We note that the manufacturers of most other goods are not subject to this extra taxation.

The study also shows that while the federal government collects about $4.2 billion annually in road fuel taxes, only $200 million is spent on road construction. To put it another way, less than a nickel is spent for every dollar collected in fuel tax revenues.

The federal government's record of contributions to prairie road infrastructure is even more dismal. Over the past ten years, the federal government has contributed $1.6 billion nationally to road infrastructure projects. Of this amount, only $100 million, or 6% of the total, has been spent in the three prairie provinces, even though the prairie road network accounts for 52% of the national network.

On the matter of transportation reform, UGG urges the federal government to implement the Estey report along the lines put forward by Mr. Arthur Kroeger. If you want to give us $5 a tonne in a fast manner, here's a good way to do it.

Regarding user fees, the Auditor General of Canada has just issued a report that indicates that prairie farmers are shouldering an unfair burden of these costs. The report goes on to say, and I quote, “It is not clear why certain programs recover full costs, others recover partial costs, and still others recover nothing.”

The Auditor General has documented the cumulative effect of these user charges and found that the impact is varied by sector. The report notes that grain and oilseed farms have seen a 2.5% reduction in operating income as a result of these user charges. That's compared with a 3.2% reduction for cattle, 0.9% for hogs, and no reduction for dairy, poultry, and egg farms.

It would seem that agriculture sectors that predominate in western Canada are being singled out, bearing the brunt of federal cost recovery measures. UGG asks the federal government to immediately reduce these user charges.

With respect to further processing, UGG believes the Canadian Wheat Board and the federal government should reduce impediments to new-generation co-ops and other value-added processing initiatives in the prairie provinces.

We note, for example, that an Ontario wheat grower is permitted to market directly to processors. We find it unacceptable that growers in one part of the country are accorded marketing opportunities that are denied to growers of the same commodity in another part of the country. Intransigence on the part of the Wheat Board and the federal government are preventing these opportunities from being realized.

Similarly, quota allotments in supply management sectors are preventing the expansion of these industries in western provinces, despite many natural comparative advantages. We look to the federal government to eliminate these impediments.

We observe that domestic support policies and programs, according to the OECD, provide far less support for those commodities that are not predominantly produced in western Canada; a trade position that fails to adequately protect and promote the interests of western Canadian grain and livestock producers; a fuel tax regime that places an unwarranted burden on western Canada's farmers; a national road expenditure regime that has seen the prairie provinces receive a relatively meagre share of what little expenditures have been made; cost recovery measures that place a greater burden on the grain and cattle sectors; wheat marketing policies that don't treat farmers across the country the same; and restrictive quota rules. If prairie farmers are to realize their full potential, then these systemic inequities in the application of federal programs and policies must be addressed.

To conclude, UGG has put forward a number of proposals—namely, allowing AIDA to run its course for 1999; improving crop insurance; extending the cash advance program; using NISA as the vehicle for the federal government to provide trade equalization payments; doubling government contributions to NISA; continuing to press for the elimination of export subsidies and other production and trade-distorting policies of other countries; maximizing market access for grain and livestock products in export markets; addressing inequities in federal support to various commodities in regions; elimination of federal taxes on all farm-use fuel; sharply increasing the proportion of fuel tax revenue spent on prairie road infrastructure; implementation of the Estey report along the lines recommended by Mr. Kroeger; a reduction in user charges paid by prairie grain and livestock producers; and removal of impediments to value-added processing in the Prairies.

• 1720

We thank you for this opportunity to present our views, and we look forward to your questions.

The Chair: Thank you very much.

We have pretty well the normal time for questioning.

Mr. Breitkreuz, six minutes, please.

Mr. Garry Breitkreuz: Thank you very much.

I listened to you very carefully. You've covered a lot of territory, and it will take a bit of time for us to digest all of it, but I appreciate what you've done.

I have four questions. My first question is the same for both of you.

How many farmers do you represent, and what percentage of all prairie farmers would that be? I'm just talking about how many farmers on the Prairies you represent, not nationally.

As well, how do you determine your policies? In other words, how did those farmers have input into what you said today?

Mr. Morris Prescesky: We represent the farmers of Saskatchewan, and we get our information from them at kitchen table meetings. I know these meetings have not been taking place as much as they should have been, but as of late we have had a hard time getting away from the kitchen table, because the phone hasn't quit ringing.

That's how we get our information from our farmer members.

Mr. Garry Breitkreuz: But in terms of membership, how many farmers do you represent? What is your membership in Saskatchewan, Manitoba, and Alberta?

Mr. Morris Prescesky: I believe it's somewhere around 3,000.

Mr. Garry Breitkreuz: I guess you wouldn't know what percentage of all farmers that is. What is that, 6%?

Mr. Morris Prescesky: I believe there are 55,000 permit book holders in Saskatchewan, but as you know—

Mr. Garry Breitkreuz: So it's between 5% and 6%. No, that's just in Saskatchewan, you say.

Mr. Morris Prescesky: Right.

In terms of permit book holders, a lot of widows and retired people hold permit books. So when we talk about 55,000, we may be out a bit.

Mr. Garry Breitkreuz: What about the UGG?

Mr. Terry Youzwa: We represent farmers from across the three prairie provinces. We have a voluntary active membership base of about 16,000 farmers.

Wherever we do business, local farmers have the opportunity to set up what's called a member advisory group. They elect a delegate who attends an annual meeting, where they in turn elect people, such as Brett and I, to represent the companies.

Trying to estimate the number of farmers is a challenge. As the gentleman said, a number of farms have more than one book, and estates often gets defined as farmers.

Mr. Garry Breitkreuz: Okay. I guess I can figure out the percentage myself.

So you have a democratic process where essentially they have local meetings, elect their delegate, and then form policies.

Let me go to the National Farmers Union.

I was wondering why Cory Ollikka said at the WTO talks that in no way was Canada representing or delivering what farmers want; that it was completely divorced from the Canadian farm family scene. I'm concerned about that, because if we don't have a unified position going there, and if we don't agree that other countries' subsidies have to come down, we have a problem.

Don't you think that's important? Why would he say Canada wasn't representing him?

Mr. Morris Prescesky: I think there's an overtone at the WTO talks of corporate interests being emphasized and individual people not being represented. I think this is why Bill Clinton mentioned that those people outside in the streets should be around the table also.

By the way, many of those people outside walking in those streets were farmers from Africa and Europe and the States and Saskatchewan and Alberta.

Mr. Garry Breitkreuz: Thank you.

To the UGG, you mentioned diesel fuel tax as being 4¢, and gasoline 10¢. Do you have any idea how much that would total for all farmers—for instance, in millions of dollars? How much would the federal government be collecting in fuel tax? Do you have any idea, or am I putting you on the spot?

• 1725

Mr. Terry Youzwa: I'm sure you can find it in the appendix that's presented, or if you had the number of acres that were actually worked, you could extrapolate it. It would be substantial.

What I find appalling—and I saw it at a transportation conference I was at last spring—is that our federal government has no national policy on road infrastructure. It's a totally ad hoc policy. And they're spending less than 5¢ of what they collect. In Saskatchewan it's not surprising that we have poor roads when we're spending less than what we were spending twenty years ago on roads.

Mr. Garry Breitkreuz: Yes, I couldn't agree more.

I wanted you to make some comments on new-generation co-ops and point out the unfairness—Ontario can have and we can't—but I'll go to another question.

Could you describe how we should use NISA to provide for trade equalization payments?

Mr. Terry Youzwa: The federal government has a responsibility to make a payment to producers in a green manner, that being NISA as the vehicle and using NISA numbers of eligible net sales, so that a producer still is encouraged to take all his signals from the marketplace. Base a payment on what Europe and the U.S. are doing, justify it by that action, and flow it through NISA. This could even be a cheque that could be cashed.

I believe there's substantial value for a trade or federal agriculture minister, when he's negotiating with a foreign country minister, to be able to say his trade equalization payment is based on the problems the other countries are causing and it's paid in a green manner.

The Chair: Thank you.

Mr. Calder.

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

I'm curious about one thing here, as a poultry farmer from Ontario. You made a bunch of statements, Terry, about supply management—that you consider this an elimination of an impediment. This is a sector of agriculture that's working. We deal with the domestic market and we also have an export policy. So my question to you is, why would you want to take apart something that's working? Why wouldn't you want to take a look at how it works and see whether or not you can adapt parts of it into the grain industry?

Mr. Terry Youzwa: Two things. The question is, who is it working for? It's working largely—

Mr. Murray Calder: It's working for the family farm.

Mr. Terry Youzwa: It's also working more in eastern Canada than it is in western Canada. If you looked at the natural economic advantages, you would see a greater portion of the new production shifting to western Canada than there is in eastern Canada. It's the supply allocation formulas that are restricting that natural migration.

The other one is, I hope you're not trying to suggest we should only produce enough grain to feed our own country.

Mr. Murray Calder: No, I'm not suggesting that. What I am suggesting is that with supply management, because it is a domestically oriented type of system, you see concentrations of poultry and eggs and dairy within Ontario and Quebec because of the population based there. We have over 10 million people in Ontario.

The other thing we are trying to address right now with the supply-managed industry is the export policy, and the industry at the present time is doing quite well at moving towards that.

I would like to ask you another thing. I'd like to go back to the issue we had put in front of us of a revenue interest insurance plan like the GRIP. I'd like your comments on that. Is that something we should bring back? Should we look at that, or is it not worth looking at?

Mr. Terry Youzwa: It's wrong for a government to give an individual a market signal for what crop to produce. He should take his signals from the marketplace. And those who have taken their signals from the marketplace and adjusted their farms, got into buffaloes or grasses or forages or whatever, shouldn't be penalized for doing so by a new program coming out the next year that rewards the guy.

We've made mistakes in the past with special grains acreage payments and the way the Crow was paid out, and created all these debates about soil productivity and types of crops grown, and is this an acre or is that an acre, and what's worth more? That's wrong. It should be based on net eligible sales. It's simpler and it's greener, and it's not a producer responding to a government signal.

Mr. Murray Calder: If that's the situation, then I have to ask you this question, because I sat on the Ontario Chicken Producers' Marketing Board for nearly ten years. How does the individual grower out there assess the market, and how does he make that decision you've just talked about?

• 1730

Mr. Terry Youzwa: I assume every producer left today does a budget at least once a year for his banker. Otherwise he wouldn't still be left, because if there were any poor farmers left, they wouldn't be here. When he does that budget, he looks at his cost production, he looks at what he believes the available market prices are, and he tries to grow crops he believes will provide a return, or at least cover his costs.

If we have a production signal from a program, we're encouraging an oversupply problem, and it's exacerbating our trade problem. That's why there's too much export wheat available in Europe and the U.S., because they have a production signal. It's wrong.

Mr. Murray Calder: Okay.

Morris, do you want to say anything about that?

Mr. Morris Prescesky: I'd like to comment on what crops you grow. On my farm, I split it up between wheat, oats, barley, and canola, because those are the four crops that grow the best on my farm. As you can see, if you grow four crops, you are going to have some winners and some losers each year. That's about the only way I can balance it on my farm, as well as trying to keep a rotation going.

Mr. Murray Calder: Okay.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Calder.

Mr. Proctor.

Mr. Dick Proctor: Thank you, sir.

Mr. Prescesky, a farmer began his presentation this morning in Regina by saying agriculture is doing very, very well. What he meant by that, when he went on to explain, is that yields are larger, farmers are extremely efficient, and our agriculture exports are at record levels. In fact there's a graph you may be aware of that comes from Statistics Canada, which shows that in terms of our agricultural exports, since 1970 we've gone from just over $1 billion to about $23 billion. So there's been a fivefold increase according to this figure.

Of course what hasn't kept pace is realized net farm income, which has stayed basically flat for thirty years. I would like your thoughts on that and what needs to be done to turn that around.

Mr. Morris Prescesky: I was just looking at the numbers, and I went back prior to 1970; in fact I went right back to 1926. I have the records going back to that date. What has happened from 1926 to now is the receipts you get for the product you are growing will be....

Say you grow $2 worth of crop with $1 worth of expenses, and you have $1 worth of income at the end. Perhaps back in 1926 and the years that proceeded from there, you had a 2:1 ratio. When you get up to 1999, you are producing—and I believe the number is stated—$5 billion worth of production with $5 billion worth of expense, leaving you $58 million to play with. That isn't very much money to play with on that kind of operation, with the risks involved.

Those risks are made up of input costs such as fuel, fertilizer, and chemicals, and they have continued to rise too quickly to give us any room for a margin.

Mr. Dick Proctor: Thank you.

On a totally unrelated subject, I can't come back to Prince Albert without recalling that it was five months ago yesterday—and I think you were there—that there was a rally in front of the Marlboro hotel. I see a number of other people who I recognize as having been there as well. What's your take on that? What was the fallout in this community from the fact that, from my point of view, the agriculture minister came out in the shadows of the hotel and refused to speak to the farmers who were assembled there, to allow an exchange, a dialogue, between the farmers and the agriculture minister, who the farmers correctly see as their minister at the cabinet table? What was your sense?

Mr. Morris Prescesky: I sensed that he was very, very scared to step out past that door, because at one point somebody had driven up an 850 Versatile tractor within very close range of the truck he was supposed to get up on, which is very unfortunate.

• 1735

Another thing that comes to my mind is that the Minister of Agriculture in Canada should be more accessible to all of Canada. I know for rallies that we have tried to put together, we wouldn't even get a response from his office, let alone an appearance, which is very unfortunate.

Mr. Dick Proctor: Thank you.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: I was dealing with a number of producers outside in that little room in the vestibule, so I hope this question hasn't been asked, but I'd like to ask Terry this.

Your philosophy is that a free market system is obviously the way to go, without any subsidization, whether it be Americans or Europeans. I think everybody around this table agrees, but we also recognize from dealing with European parliamentarians just last week that this is not going to happen. Let's be very blunt and honest about it. The Europeans obviously are not going to change their philosophy right now about the way they deal with agriculture. That means there's going to be an awful lot of product produced—wheat, particularly, and barley, and oats.

Something that has been bounced around over the last couple of days is a suggestion of a set-aside, where maybe we're growing way too much product in a market that's already flooded. Maybe we should be looking at getting out of the box, so to speak, and looking at perhaps some sort of a set-aside, not unlike the LIFT program of a number of years or decades ago. What would your comment be on something of that nature?

As part of the set-aside, there's also another term that's being used in the European Common Market right now, and that's “multi-functionality”. Farming is not just putting seeds in the ground and growing wheat. There are other advantages to having a farmer out there on the land.

One is the environment, the carbon sink. We talked about that, the carbon sink perhaps having a value added to it or a value associated to it for farming and agriculture.

Endangered species legislation is going to come forward. As a society, we depend on farmers particularly to make sure there's habitat there for species that everyone in our society takes advantage of.

There's a real factor with respect to the rural environment, the villages and the communities that we just talked about. We want to have people reside there and have hockey teams and all the rest of it.

What do you think about a set-aside tied into that kind of multi-functionality? Is that a possibility? Has anybody in your organization talked about it?

Mr. Terry Youzwa: I have to admit that we haven't given that great depth in research, but I would encourage you to read our report in its entirety—I know you're a busy man. We're well under our WTO ability. As you've probably stated in the past, we could be spending $3 billion to $4 billion in subsidies—

Mr. Rick Borotsik: Or $2 billion anyway.

Mr. Terry Youzwa: —and still be there. We were last at, what, around $1 billion?

As for multi-functionality, there is a paragraph or two on it in our report. It's usually a way to create non-tariff barriers to trade, so we're against it.

On the subject of set-asides, in the past I think the one who benefited from the set-aside was the person who didn't set aside. He has a product, and if the supply actually goes down, then he reaps the benefit. If we were the only country that participated in a set-aside, the other country's farmers would be the winners.

Mr. Rick Borotsik: Okay, are there any other comments?

Mr. Morris Prescesky: Yes.

I remember farming in 1970. In fact, 1967 was my very first year on my own. In 1970 we had what they called the LIFT program, and I was actually forced to go out and buy my grain from other farmers in the month of April and May to put grain in my bins to have to sell in the fall, because of the set-aside type program that existed at that time. I was a young farmer and I didn't have the reserves in the bins, so I had to go and buy the grain.

The Chair: Thank you.

Mr. McGuire.

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

I have a question for the United Grain Growers. In your presentation, in the safety net section, you were supporting NISA, crop insurance, advance payments, at least AIDA for this year, and in the future you're looking at a trade equalization payment. How does that connect with your non-support of an acreage payment? I suppose you want to get to the same place, but in a different way. If you're not going to do it on acreage payment and you go into.... I don't know if this was read out in your presentation or not.

Mr. Terry Youzwa: I summarized in the interests of time. It's pretty challenging to say everything you want to say in seven minutes.

Mr. Joe McGuire: Right. Maybe you should explain why, because we had a raising of hands here earlier about support for an acreage payment or not. Your organization does not support it, and you give your reasons there—

• 1740

Mr. Terry Youzwa: Let's make it clear that we do support a payment based on net eligible sales. Okay?

Mr. Joe McGuire: Okay.

Mr. Terry Youzwa: UGG does not support an acreage payment. While there are those who would argue that such a payment is straightforward, in our view the opposite is the case. An acreage payment raises some thorny problems such as weather and how to adjust for productivity, how to treat pasture and unimproved lands, the treatment of summer fallow, and how to deal with the various landlord-tenant relationships. An acreage payment also discriminates against those farmers who may have shifted into livestock or other enterprises or who may have elected to manage intensively a smaller acreage base.

Mr. Joe McGuire: Okay.

Mr. Terry Youzwa: Being from the north and remembering the special grains payment and the Crow payment, we heavily engaged in debates with farmers from the south over the methodology used in these payments. Alfalfa producers were particularly punished in the past programs. By using net eligible sales, that debate does not need to be held, and the database is fully available, whereas it isn't available to deliver that vehicle directly to the actual farmer, not the landlord.

Mr. Joe McGuire: So on your trade equalization payment, how will you determine the amount? Maybe it's in here, but—

Mr. Terry Youzwa: We didn't try to put a number on it. We tried to have some faith in government that it's their responsibility to determine what they can functionally balance. But we do expect them to ante up, because it is their responsibility.

Mr. Joe McGuire: But you're not going to take a chance on the amount. I know there's lots of room there in the WTO.

Mr. Terry Youzwa: I think it's sad that Europe and the U.S. are going into the WTO with a full box and they'll ratchet down. I feel like we're going in with a pretty small box. We started last time with boxes this big. We got 36% and 20%, and we dropped beyond. You can bet the U.S. and the European boxes are full.

Mr. Joe McGuire: Right.

Mr. Terry Youzwa: If we ratchet down again, what's left?

Mr. Joe McGuire: How far should we ratchet up?

Morris, on a long-term safety net, a long-term disaster relief program, would you have any ideas as to what form that should take? Obviously you don't want a continuation of the AIDA model. How would you design one?

Mr. Morris Prescesky: I guess I could comment on the one area that has severely affected our incomes, the elimination of the Crow benefit. In an average year, the cost to my farm to pay the freight is $200,000 per year. It's really easy to figure that out. Just take the bushel times $1, and that's what it is on my farm. One thing that would solve this problem very quickly is reinstatement of the Crow benefit, perhaps even retroactive to the time it was taken away. It would really help catch up our situation as far as our arrears in taxes and everything else are concerned.

Mr. Joe McGuire: So you're saying no long-term program, but just replace the dollars that were lost.

Mr. Morris Prescesky: When it comes to a long-term program, I think we have to have some cost of production in there, because if we get money thrown at us and inputs go through the roof, we end up in trouble again.

The Chair: That's it?

Mr. Joe McGuire: Yes.

The Chair: Thank you very much.

Thanks to all the witnesses. We appreciate your comments very much.

We must go into the next segment. I invite Don Kesley, Donald Blocka, Armand Roy, and Bill Cooper.

Is it Kelsey or Kesley? One paper says Kelsey and another says Kesley.

Yes, Mr. Proctor.

Mr. Dick Proctor: I'd like to serve notice that I would like to raise a point of order at the end of this discussion, before we adjourn.

The Chair: Okay. Thank you.

Mr. Dick Proctor: Thank you.

The Chair: Is Don here? There's no Don Kelsey or Kesley?

Then we'll ask for Bill Cooper. We could then bring one more up, and that would be Wayne Mastrachuk.

• 1745

Let me just point out, I have a couple of other names on my list, if we have time. It will all depend on the length of each of the presentations or the total time of all the presentations. If we have time, I will certainly try to work in a couple more names.

So we will go alphabetically. Mr. Blocka, you're first.

Mr. Donald Blocka (Individual Presentation): Thank you. First I would like to thank the committee for the opportunity to be part of the panel presentation.

The farm situation has been changing in that farmers, who are natural or born optimists, have turned to become pessimists with fear and wonderment. Farmers have seen their industry, which they have been able to control for the most part, taken out of their hands and they have been forced to survive on prices at or below the cost of production on most crops.

With the elimination of the Crow rate, we have seen a lot of land become inefficient for grain farming due to high costs of transportation in this northeast corner. There is also a heavier reliance on operating capital over the past few years, with the reduced margins in grain farming, with the increased inputs for fertilizer, chemicals, fuels, and repairs. I have witnessed an increased difficulty in revolving my operating loans. When we last incurred problems in the farm sector, in the 1980s, it was due to elevated land prices that caused serviceability problems. Now it appears the cashflow is the problem, giving indications that margins are slim.

The general feeling among farmers today is grave concern over their longevity in the industry. They are beginning to wonder if exposing their equity position to weather this period of reduced grain prices is worth the risk in social hardship. The farmers in the mid-fifties age range are looking forward to getting out; however, their ability to do so is limited due to other farmers not having the financial stability to buy or even rent land. Renting out land is harder due to the slim margins.

I have talked to at least five or six farmers who are getting out of the industry over the next year, unless government comes up with at least $15 to $20 per acre to help service their existing payables incurred during 1999. These farmers range from the age of mid-twenties to late fifties and are not considered to have weak balance sheets, etc. They are just not willing to expose what they have built up, in terms of their equity positions, just to be able to farm. The industry has become so highly capitalized that it is difficult to make ends meet when we experience commodity prices as low as they are now.

Due to the highly capitalized nature of the industry and the heavy reliance on operating capital provided through financial institutions and line companies, grain farmers are as highly leveraged as possible, to the point where they are 100% financing their crop inputs.

Generally we are in a very dire situation, and with the outlook for the next two years continuing to be weak, we will likely see a lot of farmers exiting the industry. They are not willing to put up with the reliance on government for support. All that industry basically requires is to let world supply and demand dictate prices, and that will determine the most efficient producers. If this were the case, Canada, in particular the western provinces, would be able to prove their efficiencies and benefit substantially.

I would like to close with a comment in regard to the Wheat Board, to state that I am a firm believer in the Wheat Board, maybe differing from some of the previous panellists. But I do believe strongly in the Wheat Board. Thank you.

The Chair: Thank you, Mr. Blocka.

Now we welcome Bill Cooper.

Mr. Bill Cooper (Individual Presentation): Thank you, Mr. Chairman, and good afternoon to the panel members and to the audience.

I'll make a comment, to start with. I farm in the Foam Lake area with some nephews. I have ownership of about 800 cultivated acres.

At the outset, I want to express my appreciation to the Standing Committee on Agriculture for their willingness to hear my suggestions regarding the numerous problems western farmers must contend with on a daily basis. I think you've heard quite a few of them here today, which demonstrates that there's no one quick fix for everybody. There are some whom you might be able to help out of farming; there are some whom you might be able to help stay in farming. I think it's important to evaluate the differences and where that need is, because there definitely is a serious need at this time.

• 1750

It is my sincere hope that the federal government will act on the legislation and policies that have colonialized western agriculture for the last hundred years. The direct and indirect contribution to the Canadian economy by western agriculture is significant. I'm sure if we're not appreciated by our eastern masters, we would certainly be welcomed with open arms by our good neighbours to the south.

I urge our governments to take the necessary steps by encouraging our industry to be more self-reliant. And when I say self-reliant, that doesn't mean we don't want government help. I think there's a place for governments to help us in many, many ways, as has been outlined by a number of other speakers.

Prosperity is only a dream as long as we are constrained by marketing and transportation regulations, inordinate levels of risk, high service fees and taxes, along with inadequate safety nets. I might just mention that I think it's time, when we deliver grain into our system, as many of us do, that the risk should end at the tailgate of the truck, and we should not be subjected to the risks we have to face all the way up through the system. There are various ways of dealing with that.

Now let me turn to a brief explanation of the items I attached in my notes, and I apologize if all of you don't have them. I just brought along about five copies, because I wasn't sure whether I was going to be on the program, and I didn't pay for enough copying services. I apologize for that.

My first one was a chart, and some of you may have it. It was a chart, and it's been mentioned before by Saskatchewan Agriculture, which shows how farm expenses have escalated, particularly since the mid-seventies, to upwards of $6 billion, somewhere around $5.8 billion. And revenues this year are going to be in a negative position—that is, our net return will be in the negative position. When you look at the line on that chart I left with you, you can see it's very significant. It was about the mid-seventies where that started to take hold, and it's gone steadily upwards in terms of this $5.8 billion in revenues. Yet we still have a negative return, or close to it.

The disparity in net farm gate prices, excluding subsidies between the northern-tier states and western Canada, continues to this day. The analysis noted is USDA and Canadian Wheat Board price information—which I've passed on to you—and is confirmed by the recent comparisons by the Organization for Western Economic Cooperation. This is certainly very much of concern to us, and that is excluding the subsidies, on top of what you've heard some of the others mention about how much subsidy the Americans have compared to ours.

So what we want to work toward, I think, is an open and transparent continental market for all commodities, which would both encourage arbitrage in prices and clear the political landscape. With arbitrage, we would be a lot easier on our roads because we would not be inclined to haul as far as we're doing now by truck. We can explain later if there are questions on it.

The third point, which I included in the notes, is that ever since the repeal of the WGTA in 1995, we've been saddled with regulated rail rates. These could have been considerably lower had they been negotiated by the shippers. There's been no opportunity to negotiate these rates.

I'll give you the example of my particular shipping point. If I load a producer car at Kelliher, Saskatchewan, I'll pay about $39 a tonne. If I take a load of grain through a Weyburn terminal, for example, 140 miles away, I get deducted somewhere around $38 a tonne, just about the same amount. And yet that's going on a 110-car train to Minneapolis, a distance of some 700 miles. I asked the Wheat Board about this, and they said, well, we would want all the farmers to receive the same amount; we couldn't have one farmer receiving more than another. I discovered in that examination that the railways then kick back $600 U.S. a car, or about $9 a tonne, to the grain company, which we don't see in the farmer's pocket. That's about $9 to $10 a tonne in Canadian dollars.

• 1755

So some rate negotiations would certainly be an advantage, and they are hampered, as I've demonstrated, by the Canadian Wheat Board pooling system and their involvement in handling and transportation. And I think that's why Justice Estey concluded that the transportation function should be left between the shipper and the transportation provider. It's a very important item, which doesn't seem to be captured in some of the other presentations.

The long-term forecast paints a very negative picture for Canadian exports of wheat, while the EU is expected to almost double their trade during the same period. If you look at the chart I had, which uses again USDA figures, they're projecting for 10 years, through 2008, that the EU will increase their exports by some 10 million metric tonnes, whereas Canada will only do maybe 1 to 2 million metric tonnes. So our market share is going to go down.

Again, point number five that I made deals with this whole value-added area that has been talked about. We took a real setback this year, in 1999, when the Canadian Wheat Board rejected Prairie Pasta Producers' request for an exemption from Canadian Wheat Board regulations. This is a very serious failure of our marketing system, and it falls clearly in the minister's purview to take immediate corrective action. This is a very serious situation, and there's absolutely no reason why the farmers who are willing to invest in that plant would not receive the awards, as they do have to put up with the very serious risks that might be entailed in that kind of venture.

The Estey recommendations were accepted by the Government of Canada in May 1999, and I make the point that it was one of the first times that any of the studies and so on that have been put forward have been accepted by the Government of Canada. I think that's an important point.

The Kroeger implementation process was flawed and really turned out to be a rehashing of the problems that existed.

Am I over time?

The Chair: No. You can go another couple of minutes.

Mr. Bill Cooper: The Canadian Wheat Board has been front and centre in their scare tactics and negative comments on the Estey recommendations. This of course is a turf war and has nothing to do with the income of prairie farmers. The FCC policy statement enclosed in the notes estimates benefits from somewhere in the range of $300 million per year to farmers if Estey recommendations were implemented. This is backed up by Agricore's analysis of $216.5 million. So it's somewhere between that $200 and $300 million. If you look at the OWEC study I mentioned before, they said $400 million, but even if you take it to that point, gentlemen, it is extremely important, because the Government of Canada is not expected to put anything out if we implements those particular policies and programs Justice Estey suggested.

The final point I'd like to make, and it's with some dismay, is about the November 4, 1999, letter by the western and northern caucus to the Honourable David Collenette. Their recommendations of course only deal with the rail side of the problem. And if that were implemented the way it is, my recommendation would of course say let's not do anything at all; let the system fall apart a little further.

Their recommendations would take us back to the 1970s, and we all remember when the railways almost quit hauling grain because we wouldn't pay them, and therefore that fails to also recognize the importance of a national transportation policy that affects all shippers. This is why the matter of open access needs some more study. I certainly agree that we should try to have this policy, but it certainly needs to be accommodated by all shippers. Therefore I think, gentlemen, we have to really look at some of these policies and take a serious look at the economic impact.

I don't know where the western caucus did their research to find out what went in that letter, but I was really disappointed in that and I think it's been quite negative. I suspect that maybe at the end of the day it might win the day. But if it does, it does nothing for the farmers of western Canada. It maybe gives the railways some money or whatever, but it does nothing for the farmers of western Canada, because the big thing in this whole Estey recommendation is to get some contracts in place. They're contracts between the shipper and the railway, and, if the elevator company is the railway, between the shipper and the farmer, and all the way up, so that everybody is accountable. Nobody's accountable. There's nothing in car allocation; nobody's accountable to the whole system.

So we need more accountability. This is what was meant in the Estey recommendations. It was to have more accountability, with contracts all the way up through the system, right from the Wheat Board back to the farmer or from the farmer back up the system.

• 1800

Thank you very much. I appreciate your time.

The Chair: Thank you, Mr. Cooper.

Voices: Hear, hear!

The Chair: Now it is Wayne Mastrachuk. Go ahead, please.

Mr. Wayne Mastrachuk (Individual Presentation): Thank you, Mr. Chairman and committee members. Good afternoon.

I will apologize because, even though I did it personally, some of my report will be some facts from the Pro-West Rally Group, of which I am a member. It was information I received from them, so please bear with me.

As I mentioned before, my name is Wayne Mastrachuk. I'm from Preeceville, Saskatchewan, and I farm 1,068 acres.

As has been stated, and most of you are aware, there is a major crisis in this province. Provincially we had looked for a $3 billion cost-of-production enhancement payment, and we came up with that by taking the shortfall of our cost of production that we lost over the last three years—1996, 1997, and 1998. It works out to the equivalent of about $80 an acre. As you are well aware, AIDA and NISA are not cutting it. The other thing we were looking at is direct payments to the producers.

In my particular case, my shortfall last year alone was $65,000, which worked out to roughly $64 an acre. If you look at it, it was a combination of transportation cost increase, cost of production inputs, low grain prices, and weather. When you get frost, drought, and excess moisture all in the same season, it does kill the crop.

In my particular operation, I was looking at a cost of production for 1998 of $145. In 1990, my cost of production was $90 an acre. You wonder why? We've changed some of our equipment because of changing agricultural operations; it wasn't new equipment, mind you, but it still was a cost. We had increases in fuels, oils, and the likes of that. Fertilizer went up from $240 a tonne to $450. Last year, 1999, gasoline alone went up 15%; machinery parts, fertilizer and chemicals went up 5% to 6%. Take this last weekend, we just saw farm diesel fuel go up another 7.5%.

In the meantime, our income is dropping. It's 37% basic on canola, barley is 20%, and wheat is 15%. That's not to mention the decrease in grades because of frost and wet conditions. A lot of you may wonder why the Pro-West Rally Group was looking at the $3 billion. It's hard to make a living, and I'm going to state Wheat Board prices: 70¢ a bushel for barley, $2 for wheat, and $5.60 for canola.

You people around in the room have to remember that our costs are your income. Give us this equivalent of $80 an acre and it will turn around 7 to 22 times. Do you want to see us farmers, and the towns and cities in Saskatchewan, flourish? Or do you want to see farm accounts turned over to collection agencies, as is happening already, resulting in seizures, foreclosures, and bankruptcies? Do you want to see suicide, stress leading to stroke and heart attacks, alcohol and drug abuse, family violence, divorce, increased crime, more welfare and unemployment?

What I look at is the loss of farmers. It's going to be the demise of rural towns and cities, leading to a bigger rural-urban split, leading to reduction of constituency representation in this province, not to mention the rail line abandonment, grocery stores closing down, and elevators, banks and dealerships. It's evident.

• 1805

Take Regina. Plains Equipment, the Massey-Ferguson dealer, just shut its doors. Twelve-plus people are out of work. Versatile just laid off 600 people. They shut the plant and moved to the States. We don't know how many were laid off at Flexi-Coil, Bourgault, Morris, Leon's, or Schulte. There are others we don't know about.

We touched on this, and we look at the federal government, of which you're all a part. Your representatives have said there's no money to give us an income adjustment payment or a cost-of-production top-up of $3 billion. But try these figures, for example.

A $3.6-billion settlement for the civil servants; they're talking about $2.5 billion for organized sports; a $16-billion budget for day care. I'm not against day care, but this is what was told in your parliamentary deal. We have heard the federal government wastes $11.2 billion—and you can dispute that if you want. We hear that for the Chinese refugees who came across, $2.9 million was spent. Another $2.5 billion was spent on bringing the Kosovo refugees over, not to mention the $25,000 per bomb to bomb their country. Then, while we're having some rallies and that, we hear Vanclief is over in Algeria spending $600,000 through CIDA to build a dairy farm. That's in direct competition to us. We hear of $1 million given to Ireland for the church problems. There's African aid of $50 million. We heard about Goodale giving a $550-million severance package for 1,100 coal miners in Nova Scotia. What did the ice storm in Quebec cost us?

All these figures are adding up. You had the Prime Minister stating the $2 billion budgeted for foreign aid wasn't enough. We hear the NHL wants help from you people. We ask how much we're going to give them.

How much longer do we continue to subsidize this country with a cheap food policy? And to add insult to injury, our Prime Minister is clouding up the agriculture crisis by talking about Quebec separation to avoid the real problem here.

I ask you where the priorities of this country are. As a farmer, it looks to me like agriculture isn't one of them, you know, and I'm sorry to say that.

I have another question to ask of the committee here, and this is after a story was printed in the November 11 edition of The Western Producer. There are two farmers in Erlon, France, who cleared $100,000 growing wheat on 420 acres. Can we compete with this? We can't. We're going in the hole, and in the meantime they're making $100,000.

We look at the long-term solutions, and I'm going to refer to Pro-West solutions. We're looking at a long-term—

The Chair: Wayne, we're running out of time.

Mr. Wayne Mastrachuk: Okay.

Basically, the solution I'm looking at as a long-term safety net for western grain is removal of these hidden taxes. At Ralph Goodale's meeting in August, he said they're at 49%. We're also looking at reinstating a two-price wheat system, with price parity. We'd like to see an income adjustment or cost-of-production top-up for farmers for every year that the Europeans and the Americans have their subsidies in place, and a revamping of the crop insurance to include income insurance instead of production insurance.

Thank you.

The Chair: Thank you very much.

Armand Roy, you have about six minutes. Can you do it?

Mr. Armand Roy (Individual Presentation): I think so. Thank you very much, Mr. Chairman, members of the committee, panellists, ladies and gentlemen. First of all, I want to commend the committee for coming out to western Canada to hear the views of western Canadian farmers and people involved in the agricultural business.

I'm a farmer from the Hoey area. I run a mixed farming operation, with 2,000 acres of grain land, a 100-sow herd, a finish operation, and 50 commercial cows. I'm also a former politician, so I understand the dynamics at work when it comes to making some of these decisions. I guess I have the benefit of having a perspective of both sides of the issue.

• 1810

There's no doubt there are some major macroeconomic trends taking place in agriculture. Some of these trends we can manage as farmers, of course, and some of them we can't. Some of them are out of our control, and this is where government policy comes into play.

The fact is that the long-term solutions here—and I'm just going to touch on some of them—have to be pan-Canadian solutions. You cannot regionalize solutions. In some ways, as a Canadian government, we are doing that. We're treating different regions of Canada differently, and that has to stop.

The long-term solutions, first of all, include a good long-term income support program. The minister has indicated he is working with his officials and with the ministers of agriculture from the provinces on a program. I was disturbed, though, to hear him recently say that if he did not get consensus on a future income support program by spring 2000, he was going to move ahead by himself, with his officials. I found that disturbing, because I don't think we should be rushed into making a quick decision. We need a good long-term income support program, but we need to make sure we take the best principles out of past programs and incorporate them into the new realities facing agriculture.

On AIDA, I'm going to take a little bit of a different take compared to everybody else. I think AIDA could be made to work. We know the problems; all it takes is money. I think the program principles and the concept are right. There are major design flaws, we know that. But I think some of these principles can be included in a long-term income support program. I think it has to be based on a farmer's revenue stream, and it has to be targeted. If it's on the revenue stream, it will be targeted. If the producer has a major decrease in revenue, I think automatically the long-term income support program will kick in. I think we have to use Olympic averaging. We have to go to using, say, the best of five years.

The Chair: That is already in there, by the way.

Mr. Armand Roy: Yes, I know, and that must be included in a long-term income support program.

The only problem with AIDA is that there isn't enough money to fix the problems. One, 70% is too low. Two, negative gross margins have to be covered—I'm not saying at 100%, but they have to be covered. I believe some of the expenditure items have to be accepted as expenditures, i.e., land payments and machinery payments. And I think if there are major structural changes to a farmer's operation, they have to be taken into consideration, and there has to be money.

So we know the problems. The problem is that there isn't the money to fix the problems. And we have to also fix the bureaucratic problems. We have to let AIDA run its course. It's at the end of 1999, and the producers who are going to be eligible obviously will get some money. For the ones who aren't, we have to find some other way to get some relief quickly to help these producers.

I want to talk about the other side of the equation. I think a big problem globally is overproduction. If we're going to get a long-term solution globally, we have to get agreement amongst producing countries to control production. If we don't.... We're getting fewer and fewer markets, and we're chasing these markets as competitors. We're undercutting each other, and that's driving the price down. So that has to be part of a long-term solution.

I'm progressive. I honestly believe we have to continue orderly marketing, take a look at it, and adapt it. But I believe orderly marketing has served farmers well, and it's going to continue to be an important tool into the future.

Last but not least, I want to say I was witness to the CTA hearings in Saskatoon recently on our branch line in Cudworth, so I know all about transportation issues. For anybody in this room who believes that if you deregulate the rail line industry, eliminate country elevators, and abandon branch lines, you're going to get lower rates, I've got some good, productive swampland to sell them.

Thank you.

• 1815

The Chair: Thank you very much.

My thanks not only to the four witnesses who have just presented, but to all the witnesses today. I think this has been a very interesting and, of course, informative afternoon.

I apologize to a couple of people who indicated they would like to speak. We are simply out of time.

I'll allow you four to take your leave, and then we'll deal with Mr. Proctor's point of order. Thank you again. We really appreciate this.

Mr. Proctor, you can go ahead and make your point of order.

Mr. Dick Proctor: I hope my point of order isn't at the expense of hearing from a couple of witnesses.

The Chair: Our time is already up.

Mr. Dick Proctor: Okay.

Rumours are circulating that perhaps two members of this committee, government members, will be required to leave the committee today and return to the House of Commons. We have concluded that this will be the end of the sixth meeting we've had out of nine that are scheduled. We've had three in Manitoba and have now finished three in Saskatchewan. We're going on to Alberta tonight.

These are rumours to me only, but I would appreciate some clarification from you or from whomever as to whether the rumours are true, and the explanation for it if it is true.

The Chair: I'll respond to the rumours. They're true, so they're no longer rumours. It is true that two of our members will have to go back to Ottawa the first thing in the morning. It's because of the shenanigans going on in the capital.

We understand that we can't get cooperation from the opposition parties to maintain our membership here on our tour. So that we can win the votes that apparently will be coming up tomorrow, some of them involving non-confidence, we have no choice but to send back a couple of our members.

I regret it. I think this tour is going well, and I know the two members who will have to go back feel very bad about it, as I do. I spoke to a number of my leadership people in Ottawa today on the phone, asking if there was any possible way we could prevent any of them having to go back. At one point I thought maybe all of us were going to have to go back, but they've gone over the numbers and they feel that all they have to take back is two members.

I find it very unfortunate, but the main thing is that the committee will be maintained.

I'll let Mr. Proctor respond.

Mr. Dick Proctor: You said there were two members. Could you identify the two?

The Chair: I have left the two to my colleagues. I think it's Murray and Larry who are going back.

Mr. Dick Proctor: Those are the two members from Ontario. There will be no members from Ontario once they leave.

Mr. Larry McCormick: If we could get some matching members from another party.... Darn it, this gets political, but we had lots of people wanting to do this trip and we're here. There should be more of us here, all the way around.

I'd like to stay here, Dick, and I say that honestly.

The Chair: Garry, and then Rick.

Mr. Garry Breitkreuz: I don't understand the reasoning behind this. There's three of us and three of you. How can there be a vote at risk in the House?

The Chair: It happens to be that one of our members has just lost her husband and is not available in the House of Commons. Also, a number of our members are ill and can't attend votes. That's the reason.

Mr. Breitkreuz, you should know better than anybody that your party has put up almost 500 amendments to the Nisga'a treaty. Also, there will be an opposition day tomorrow, which apparently involves non-confidence. So it's a matter of numbers.

I don't want to make it political, and I wish all my members could stay, but that's just the way it is.

Yes, Rick.

Mr. Rick Borotsik: Mr. Chairman, as you're well aware, I was one of the members who suggested that we go on this western Canadian tour, and I was most pleased when in fact you and the committee agreed to it.

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Quite frankly, not to go to our other three meetings is certainly a step backwards, because I think—and I am sure everybody would agree—we're getting an awful lot of good feedback and certainly some great suggestions, and perhaps even some solutions, if we can work them out, from listening to the people who are directly affected by a very major crisis in the agriculture community. To not do it would be a travesty.

I will attempt, and in fact I have attempted already, to get hold of my whip to see if there could quite well be another individual who we may be able to suggest unofficially will not be in the House, but as of right now, officially the three of us on this side will not be in the House, which leaves three. Of course there are four members of the Liberal Party who will be missed, so that means we have to come up with one other.

Mr. Chairman, if we could come up with one other, would you in fact contact your whip, and secondly, when will the individuals be heading back?

The Chair: Rick, I just said that was the first thing I raised with my whip, that as long as we could maintain even numbers, would there be any reason? But apparently that's not good enough because of the depletion in ranks. That's simply the fact of the matter.

Dick, and then Garry.

Mr. Dick Proctor: The standing committee normally has 16 members.

The Chair: It has 15 members.

Mr. Dick Proctor: Fifteen. There are seven of us now. That will go down to five if these disappearances occur. Have we any concerns with quorum?

The Chair: Do you mean quorum here in the committee? All we need for a quorum is three members.

Mr. Dick Proctor: So it's three for a quorum. But it certainly sends out a very negative signal for this committee to head into Alberta with only five members of Parliament.

The Chair: I would certainly then invite all the opposition. You're all very welcome to come to Grande Prairie tomorrow morning.

Mr. Dick Proctor: We all are.

The Chair: No, Mr. Proctor, if you want to send another five or six New Democrats, you're more than welcome.

Mr. Dick Proctor: But, Mr. Chair, you know we're only entitled to one person on this committee from the New Democratic Party and one from the Progressive Conservative Party.

The Chair: We can have more, and if there's room to have more heard, we'll hear them.

We'll finish this with Garry, and then that's it.

Mr. Garry Breitkreuz: In the midst of this agriculture crisis, I'm really concerned about what kind of signal this sends to farmers.

The Chair: Look, Mr. Breitkreuz, I might agree with you on that, and if your party was that concerned, perhaps then they wouldn't be tying up the House the way they are.

Thank you very much for your good points. This meeting is adjourned.