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, March 21,.2001

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[English]

The Chair (Mr. Charles Hubbard (Charleswood St. James—Assiniboia, Lib.)): I'd like to call our meeting to order.

Our order of the day, pursuant to Standing Order 108(2), is consideration of financial priorities for the farming community.

We welcome today the Minister of Agriculture and Agri-Food.

First, though, I have regrets from Mr. Calder, who will be joining us shortly. As well, a good member of our committee, Mrs. Ur, is at home with her husband, who had a stroke yesterday. On behalf of the committee, I want to extend our best wishes to Mrs. Ur and her husband, Louis. We hope he will have a successful recovery and that his health will be back to normal shortly.

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Mr. Minister, I don't think I have to tell you that about 15 minutes is allocated for your presentation. I'd like to thank you for the written copy of your speech. Perhaps you could first introduce the people from your department, and then we'll hear your presentation.

Mr. Minister.

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman. It's a pleasure to be here.

With me today is Samy Watson, deputy minister; Doug Hedley, assistant deputy minister, farm financial programs branch; and Tom Richardson—I know them by name but I don't always know their titles, Mr. Chairman. Tom, give us your proper title.

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): Acting ADM, Strategic Policy Branch.

Mr. Lyle Vanclief: Mr. Chairman, our thoughts and prayers go with our committee colleague, Rose-Marie Ur. I talked to her this morning at about 7:30, when she returned from an all-night stay in the hospital with Louis. Things are a little better. Let's hope the next time we hear from her they're better yet.

Mr. Chairman, I do want to thank you for the opportunity to speak to the committee today on the challenges and opportunities facing the Canadian agrifood industry. As we are all aware, the global agriculture and food industry is rapidly changing and increasingly complex. More and more, what happens beyond the farm gate, and even beyond our borders, has profound ramifications for our industry in Canada.

The reality is that consumers are driving the market as never before. In Canada and abroad, they are raising the bar on quality and safety. We are rapidly reaching the point where a producer's ability to sell products anywhere will be linked to assurance that the food is safe; knowledge of where and how it was produced; and comfort that the production process was environmentally responsible.

Farm income is a big issue, but it's more than safety nets. It's about ensuring that consumers want to buy what Canadian farmers can put on their tables. Consumers in Canada, and in our markets around the world, are making discerning choices on how they spend their food dollars. Those choices tell us how we need to respond as an industry.

Consumers are telling us that we need to be absolutely vigilant on food safety. There is no question of that. As well, we need to ensure that we use water and soil resources sustainably. We need on-farm food safety systems to provide information about farm practices and catch problems before they get out of the food chain or affect the environment.

The ability of our industry to meet these demands and to stay ahead of the world pack will allow us to capture new markets and improve the income security of the sector.

We have the challenge and the opportunity to increase returns for farmers by branding Canada as the number one country in the world in terms of producing safe products in an environmentally responsible manner.

Canada already has a very solid reputation around the world for food safety—a reputation virtually unmatched by any other country. However, that reputation cannot be taken for granted. We must nurture it, protect it, and build on it. As strong as it is, our reputation could disappear in a flash.

If we are to maintain the confidence of our existing customers and attract new ones, the time to act is now. If we don't—make no mistake, the consequences could be severe. If we slip up on any product at any time, many other countries in the world would gladly step in to replace us as suppliers.

There is no such thing as zero risk. We must be as vigilant and strong as we possibly can, to keep that risk as low as we can.

What was so hard-won could easily be lost, and not so easily regained. We only have to look across the Atlantic at the devastation caused by mad cow disease and the recent British outbreak of foot-and-mouth disease to see what can happen—and how quickly it can happen.

We cannot let those types of things happen to us. Rather, we must meet the most exacting market demands. In fact, we must exceed them. If we succeed in doing that, we will maintain existing markets and find new ones. In other words, we'll succeed in expanding profitable agrifood trade.

Many provinces are already putting environmental regulations in place. Some farmers have implemented on-farm food safety systems and taken action to address environmental risks on their farms.

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Commodity groups are moving to establish tracking and tracing and on-farm food safety systems, and some farmers are already exacting price premiums by producing commodities that meet specific market demands, especially on quality and environmental considerations. We need to encourage more of this to extend it right across the sector to as many commodities as possible. This will become increasingly important as consumers tailor their demands for food products with specialized attributes related to quality, health, and medical benefits.

But the industry can't do this alone. It's in the public interest for governments, federal and provincial, to assist the industry with science and with the systems and financial resources needed to respond to the increasing demands of the consumer. We acknowledged all of that role of government in the Speech from the Throne, which stated:

The Government will help Canada's agricultural sector move beyond crisis management—leading to more genuine diversification and value-added growth, new investments and employment, better land use, and high standards of environmental stewardship and food safety.

Our objective is for every farm to have an environmental farm plan in place within the next five years, along with an identity tracing and tracking system for the products they produce. In order to do that, we need to push forward with a coordinated national approach that will cover the entire spectrum of the food production system and lead to real consistency across the country. This will put us ahead of the international competition in that we would be the first country in the world to do this in a coordinated and consistent manner. We've already begun discussions on this with the provinces. It's essential that we work together, not only because it's a shared jurisdiction, but because it is in the best interests of farmers and all Canadians.

We recognize as well, Mr. Chairman, that government assistance is important as we make the transition to a more competitive agrifood industry that increases public confidence and responds to market demands.

Overall, the Canadian agrifood sector is quite healthy. Arrears in Farm Credit Corporation loans have levelled off. In fact, some sectors are performing very well. For example, the beef and hog sectors at this time are experiencing steady returns. But other sectors, particularly the grains and oilseeds, are experiencing cyclical downturns, and our safety nets are responding.

Government has worked and continues to work with farm organizations and the provinces to stabilize farm incomes. In the last five years, the federal government and the provinces together have invested $7.1 billion in safety net programs to help stabilize farm incomes. A long-term safety net agreement that we signed with the provinces last summer committed the federal government to an annual investment of $1.1 billion for three years. With the provincial share added in, this adds up to $1.8 billion a year, or $5.5 billion over three years. And as you all know, a few weeks ago I announced an additional $500 million in new federal funding. This money is over and above the $1 billion in federal funding available as of last year.

We're now looking to the provinces to contribute their share of the incremental funding that we put on the table earlier this month. Based on the traditional 60-40 federal-provincial cost-sharing formula introduced in the framework agreement we signed with all the provinces last July, we expect the provinces will partner with us to deliver this new money to farmers. When we include the provinces' share, the new funding adds up to an additional $830 million for farmers this year, on top of what was there just a month ago. Mr. Chairman, as I say, that's $830 million on top of the $1.8 billion, bringing it to $2.63 billion. The government has also more than doubled the amount of money available in the interest-free loans to farmers under the spring credit advance program, raising that from $20,000 to $50,000.

Coming out of the meeting on March 7 with my fellow provincial and territorial ministers, we all agreed to rigorously evaluate existing safety net programs to ensure that they continue to meet the needs of Canadian farmers. This has always been and will be part of our commitment to Canadian farmers, and they deserve no less. But the reality is that even if we do all of this, there will be some farmers who will need other types of assistance. There will be some farms that are too small, are situated on unproductive land, or whose operators lack financial resources or the required management skills. So we'll be looking at on-farm diversification opportunities to increase revenues. We will be looking at skills development programs. We will be looking at a permanent cover program that puts fragile or unproductive land to the best use.

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There is not one solution to fit all. We need to ensure that we have the right tools in place, and we must work with farmers on an individual basis as they face today's challenges. We have to remember one important factor. As I said earlier, there is much more to farm income than safety net programs.

To sum up, Mr. Chairman, there are five key areas we need to invest in: one, establishing ongoing safety net programs; two, maintaining and enhancing the safety of our food right across the chain; three, putting systems in place at the farm level to protect and conserve our natural resources; four, investing in the science that will help make this all possible; and five, providing the right tools to help some producers make those decisions they need to make in terms of the challenges they face.

Mr. Chairman, I'm looking forward to the comments of the standing committee members today, and I look forward to working with the committee, the provinces, and the industry as we go forward in the agriculture and agrifood industry.

Thank you.

The Chair: Thank you, Mr. Minister.

Howard, are you leading off?

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you very much, Mr. Chairman, and thank you for being here today, Mr. Minister.

And the Canadian Alliance's best wishes certainly go out to Rose-Marie and her husband, given the family situation they had arise yesterday.

Mr. Minister, I suppose we did actually receive an answer yesterday at our vote in the House of Commons on additional farm support for this year. But in dealing with the money that has been committed—and you gave us various figures today, like $7 billion—farmers are still waiting for money for the calendar year 1999. Whose fault is it that this money isn't getting out to farmers, and what is being done to get money to farmers more quickly following these big announcements?

Mr. Lyle Vanclief: Yes, 87% of the money has been distributed to farmers, and 90% of the applications have been processed, Mr. Hilstrom. As for the total number of dollars that have gone out to farmers to date, the numbers are here, and maybe the officials can look it up...$1.4 billion has gone out to producers.

There is no question that as we changed the criteria in response to what the industry wanted for 1999 over 1998, it meant some major changes as far as the computation and the calculation was concerned. We covered a number of things in 1999 that we were not covering in 1998, so that made for some changes.

The other thing is that I certainly know farmers are busy, but I also know that for the 36,000-plus applications that came in to the federal government—some provinces do their own; for example, Ontario administers it there, and Alberta administers it there—in order to get them in, we advanced the deadline twice. The last deadline was September 29, and 16,000 of those came in the month of September. Farmers were not able to find the time earlier in the year, even though I would have to think they would have had their books and their taxes done, etc., so unfortunately they came in at the last moment. There are also now still at least 2,000 applications out there for which farmers are being asked for further information. But we are moving as quickly as we can.

I understand they need the money, but that's the reason, Howard.

Mr. Howard Hilstrom: That's a good answer, but identify that clearly, as part of the problem is to make sure that money gets flowing.

Mr. Lyle Vanclief: Yes, I agree.

Mr. Howard Hilstrom: There are many things governments can do. The organic producers of grains and such very clearly are going out to find their markets. I think this fits into your future outlook for the science and the changes of meeting consumer demand and that. The organic producers there—600 out of the 800—and the particular association said they need to be able to market outside the Canadian Wheat Board. While I know that's not under your jurisdiction, you can give us your opinion on it. But certainly it would appear that the farming sector can improve its income if it has a choice between marketing through the Wheat Board and not marketing through the Wheat Board, both for non-organic and organic grains.

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Other things that have been identified by the industry, for instance, are that government could remove the four-cent federal excise tax; the government could do work on the grain transportation to make it more commercial and effective so that the cost to farmers goes down. There are things that government policy can do that will help the bottom line of farmers' income. So I would ask you to tell us what else.... Besides the farm safety net and long-range goals of research and all that, are there not some more immediate things that could be done that you're going to be pushing for?

Mr. Lyle Vanclief: Well, as I said to the federal and provincial ministers last week in discussions, I tried to get and hopefully got that point across a little bit in the debate that we had yesterday in the House. Yes, what we have been doing—I liken it to all of us, and I don't want to simplify it because it's very, very close to all of us. We need to take a look at the approaches that we have taken in the past. There have been programs designed in the past, and, as I said yesterday, it's like designing a new building. Not long after you get a design, you soon think, well, if I was to do that again I'd make some renovations to it. That's why we're re-evaluating on an urgent basis programs such as CFIP and NISA, etc.

As to the Wheat Board, you recognize that I can't make those decisions. The Wheat Board can make those decisions, and we know how the directors of the Wheat Board are elected; they're elected by producers. Since we're elected by constituents and we represent the constituents, therefore the directors of the Wheat Board that are elected must represent their constituents. If the producers—

Mr. Howard Hilstrom: Lyle, did the producers pass the Canadian Wheat Board Act, or did Parliament pass the Canadian Wheat Board Act? Who passed that act?

Mr. Lyle Vanclief: The Parliament passed the Canadian Wheat Board Act.

Mr. Howard Hilstrom: So that's who's in charge of the Wheat Board.

Anyway, I've got just one minute left, or a fairly short time. Just quickly, I guess, I'd like to comment on this issue of the funding for the Canadian Food Inspection Agency. You've given them an additional $12 million, which is great in view of the fact that foot-and-mouth is a threat to this country, and that I hope goes around for a couple of questions here. Would you just start off by saying what Canada is doing to absolutely ensure it? The safety net programs will look like peanuts if we have foot-and-mouth hit this country. That'll cost us...$10 billion is not an unreasonable figure to cost us in year one.

Mr. Lyle Vanclief: Well, by my first comment I don't want to put any fear out there in the public or around this table. We must recognize that, no matter what it is, there is no such thing as absolute, zero risk. I am very pleased with the surveillance of the Canada Customs and Revenue Agency and the Canadian Food Inspection Agency, and they have never extended it as far as they have at the present time.

Mr. Chairman, if you want me to take a minute, I won't spin out the time to explain it.

The Chair: Mr. Minister, it is a very important question, and if the committee agrees.... Howard, you're over your time, but let's hear the minister's response, and it certainly would clarify some of our—

Mr. Lyle Vanclief: All right. I thank you, and I'll do it as briefly as I can.

Passengers that are leaving the country to those areas in the world that have foot-and-mouth disease, particularly right now the United Kingdom.... As you know, a week ago we put a very similar ban, with the exception of horses and chickens, in place for all of the European Union because of the one outbreak that took place in France about a week ago. We also put a ban in place for Argentina at the same time. The agency will review that after 14 days because there is an incubation period of 14 days. If there are no further outbreaks, they will make a decision.

We have stopped all risk material from all of those areas—the meat products, live animals, embryos, semen, etc. No used farm equipment, for example, can come in. You heard the answer in the House today from the Minister of Defence. DND is cooperating fully with us.

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The first point of contact when people come to Canada are the customs and immigration people. On the airplanes as well, people are told that they need to report stuff. They're reminded that if they have clothing, or whatever, in their suitcases, that needs to be told about...can't get the right words, but anyway. As well, there are disinfectant mats for people when they come off those flights, etc.

The food products that come in from foreign flights are always treated in a way so that, in case there's any disease or anything comes in, there's even more vigilance. In this case, the sniffer dogs are being used. We only have six of them, but, as you know, there are drug dogs, which are not the food agency's. If you ever get a chance to see the sniffer dogs work, folks, it will just blow your mind how effective they are. When I see an animal that can find a can of meat wrapped in a plastic bag inside a sweater inside a suitcase moving on the carousel, and they can pick that out, it's pretty impressive.

So all of those are the types of steps that are being taken. If there are any other questions, Mr. Chairman, I'd be glad to answer, just to clarify.

The Chair: Thank you, Mr. Minister.

Mr. Easter, you have a....

Mr. Wayne Easter (Malpeque, Lib.): Yes, I do.

Mr. Chairman, if I could, I want to point out first, regarding Mr. Hilstrom's point on the Wheat Board, that democracy is a wonderful thing. Parliament passed legislation, and last fall there were elections to the Canadian Wheat Board again, and producers decided. They supported the orderly marketing candidate, and they are in charge of their own destiny. Just because right-wing producers out there, who are opposed to the board, can't elect their people, doesn't mean he needs to attack us.

Anyway, Mr. Chairman, I understand that next week you'll be hearing about the potato issue. But I have to raise the issue today because of its importance and the amount of time that has dragged on on this issue.

Now I know the minister will already know, and I guess the deputy minister as well, how dissatisfied I have been with the department's performance on the issue of potato wart and the consequences of that potato wart, and the illegal closing of the border by the U.S. I'm certainly not the only one.

There was a major protest in Prince Edward Island on Monday, where farmers and the service industry—the equipment dealers as well—closed down the tax centre in Summerside. I'll just quote what they had to say so you understand where they're coming from.

They said, and I quote, in the press release:

The federal government has abandoned not only the P.E.I. potato industry, but also the population of the province of P.E.I.

Our major point of protest is the complete unwillingness of both Agriculture Canada and Foreign Affairs and International Trade to defend this industry in a timely manner. The U.S. border closure has been proved illegal, yet our Federal government continues its failure to represent our trade interests.

Now, Mr. Chairman, that's a pretty strong statement, but I can definitely understand how they feel. It's been 152 days today since potato wart was discovered.

I will compliment the department on one point, and that is that, initially, in terms of the soil testing and the probes, you moved quickly. The soil sampling was done by, I believe, November 20. We had the science—over 300,000 soil probes—which proved that this problem was isolated to 72 potatoes in one-quarter of one acre of one field. It was handled by the best science possible. But, as you know, there was a request for assistance to dispose of the crop and stronger.... In fact, I wrote a letter myself for stronger, more aggressive border action on December 19. We've been all this time getting to that point.

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My first question, then, Mr. Chairman, is on the moneys for disposal. An amount of $12.6 million was announced. It's not all we wanted.

But my concern is, what is wrong with the system that it takes 152 days to get a decision to get product off the market? Why the time? I find it very hard to justify the 2¢, but why does it take 152 days? Now we're in the position of trying to dispose of a crop, and you may not know it on the top floor of the Sir John Carling Building, but by golly, when it gets into late March, you don't have the cold weather to freeze the crop in the field. I want some justification. Why did it take this long to get this money allocated? It's still not out there, and it won't be, I understand, until possibly next Tuesday. What's wrong with the structure at Agriculture Canada that the system can't respond in a timely fashion?

Mr. Lyle Vanclief: Mr. Easter, there was no question that the Canadian Food Inspection Agency, which has the lead on these types of issues, worked as diligently as they could. I know that for many of them in that agency, the only day off they had over Christmas and New Year's was Christmas Day itself.

I had many phone calls with the previous administration in the United States. We know that we were in between two administration teams there. It was evident to me, and I made it very clear to Secretary Glickman at that time, that this was a trade protectionist action that was being taken, because it couldn't be based on science. He took exception to that, but that was fine. I told him that certainly appeared to be the case. Our scientific officials met many, many times. The new administration came in. They said they needed to get briefed up, etc. We kept pushing on this. We launched a NAFTA process on this in mid-January.

The agency stepped up the surveillance at the border. From January 9 until early in March there were 196,700-and-some tubers checked in over 300 loads of potatoes from 10 different states in the United States. They were checked for quarantine pests and sprout inhibiting, if that was a requirement from there. For the Canadian consumer and Canadian plant health, I'm pleased to say there were no negative results in all of those 196,000-plus tubers.

We were certainly always hoping. We were in constant contact with the industry. There were times when I had personal discussions with the industry as well as with officials, and they would say, no, don't do that type of thing right now, if you're even thinking about it.

The last conversation of many was with Secretary Veneman when I met with her a couple of weeks ago for two hours. I discussed it with her the day before yesterday. Our scientists were together with them last Friday. A panel of U.S. scientists went to Europe two weeks ago. There was a Canadian observer. All of those scientists plus other technical people from the agency met in Washington on Friday of last week, and I was hoping they would settle it. However, the Americans came back again with some very, very strict regulations, and the bottom line is they're not prepared to open the border. I took her to task—

The Chair: We're already over the time. Now, I know you had a long question and you have a long answer, but....

Mr. Lyle Vanclief: I can do it in another 20 seconds.

The Chair: Since you're the minister, we'll give you the 20 seconds.

Mr. Lyle Vanclief: I took her to task that their scientists would not share the information and give the scientific justification. She agreed that her scientists and our scientists will meet again either later this week or next week with technical and decision-making people. It's my understanding the meeting is going to be on Friday of this week. She wants to settle this, too. That's the best I can give you. That's where we're at at this time.

The Chair: Thank you, Mr. Minister and Mr. Easter. Madame Tremblay.

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[Translation]

Mrs. Suzanne Tremblay (Rimouski—Neigette-et-la-Mitis, BQ): Thank you, Mr. Chairman.

Mr. Minister, you spoke earlier reassuringly about all the steps that have been taken to dismiss people's concerns. I would like to follow up on one of the issues.

A question was raised in the House this afternoon about that issue, but I do not think we got a comprehensive answer. As usual, it is Oral Questions Period, not Oral Answers.

The British soldiers who are coming over here for training activities will be bringing their equipment. Those soldiers will stay in Canada for a while and will bring all their luggage with them. They are coming from a country where the risk of contamination poses a concern.

When those soldiers arrive with all their equipment and luggage, will there be special steps taken to disinfect all their luggage and their military equipment? Are we seriously planning to do something special or will they just be required to wash their boots when they land here?

[English]

Mr. Lyle Vanclief: No, Madame Tremblay. It's a valid question. The Canadian Food Inspection Agency will be working with the Department of National Defence to make sure every precaution is taken as far as any equipment, clothing, etc., they bring and the transportation they come on. Every precaution will be taken by CFIA and DND.

[Translation]

Mrs. Suzanne Tremblay: I have another question.

My colleague who sat here on Committee on Agriculture, Mrs. Alarie, spoke many times over those three years about food labelling, about the famous GMOs. One of your colleagues has tabled a Bill in the House. Is there a real political will in the Department to design a program in that respect so that consumers will know exactly what they have in their plates? Or are we going to keep on asking questions and insisting for another four years without any moves being taken because you have no intention of doing anything whatsoever? What is your position on this?

[English]

Mr. Lyle Vanclief: It was a number of months ago now that the government put in place a team, which is being led by the Canadian Standards Council and the Canadian Council of Grocery Distributors. Approximately 60 other organizations, including provincial governments, producer organizations, and consumer groups, have been meeting on this issue, and they are very close to reporting back to Minister Rock and myself and government on their proposals and suggestions as far as labelling is concerned. In respect of the work that's being done there, we need to wait until they report back, which I'm told should not be much longer.

There's no question we recognize that consumers have the right to know and want to know, but we also have to keep in mind that when we do it, we have to be able to make sure we can enforce what's there and that what's there is credible and meaningful. I recognize that, and I agree with those who feel that way, but we have to be very careful.

I don't want to bring up another subject, but we know from past experience that if somebody labels something as, say, fat free, the consumer wants to know that if it says it's fat free, it's fat free. They want to know what fat free means or what something else means.

So with regard to labelling, if and when it's put in place, we have to be able to make sure it's meaningful, credible, and enforceable.

So we await the report of that group, which I think is a really good cross-section of Canadian society, to give us some recommendations.

[Translation]

Mrs. Suzanne Tremblay: I have another question on a different topic, a question I briefly alluded to with you, but which I would like to follow up on because it is of great interest to me: the issue of organic farming.

When I spoke to you, I said that in Quebec we had passed a legislation last year, but that a number of things still had to be finalized by the Canadian government for our producers to be able to export, especially to the European Community, since the Canadian quality standard seal is required for those organic product exports.

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I happen to live in an area where organic farming is expanding very quickly. Could you tell me exactly where you stand on that issue of organic farming and why exactly our producers are unable at this time to sell their products overseas?

[English]

Mr. Lyle Vanclief: First of all, I want to say I think there are some tremendous opportunities out there for organic farming, as there are for many other things in agriculture. There are many other opportunities, and organic farming and products is certainly one of them. There's a growing demand in Europe, a growing demand in Japan, and a growing demand in Canada and North America.

We do have national standards in place now for organic production. The problem we have, and I'm not here to point a finger, is to get agreement among all of the organic organizations in Canada—and there are several dozen of them, I believe—on the accreditation process. I brought them together over a year ago and in a polite way read the riot act to them and told them that if they didn't come to some sort of an agreement, they were going to have difficulty selling into some of the other markets.

For example, as you've pointed out very well, the markets in the European Union are saying they want to see national standards and they want to see accreditation for that.

I'm working with my staff to bring them together again, because they are having extremely difficult times among themselves on agreeing on how accreditation should take place.

Quite frankly, it's frustrating to me, because it's their own industry that's being held back. I don't know whether the term “knock some heads together” is the polite term to use, but I think we have 40-some organizations at the present time, and it's one of those situations of “I don't want that group accrediting me”. But my point is, can you have 40-some accreditation groups? That can be a problem as well. So we keep pushing.

The Chair: Thanks, Mr. Minister.

Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): Thanks, Mr. Chairman.

Thank you, Minister, for coming today, and your officials.

I think Mr. Hilstrom has already asked the question as to why the money isn't coming out, the 20% that we believe is still outstanding. You've given us reasons why it hasn't—the delay in people putting forward their submissions. I'm just wondering whether you have, at this point in time.... I'm sure your officials will be happy to see you answer, I trust, in a positive way, because I've been bothering these people for months on end because I'm being bothered by my farm friends. When do you anticipate that the money would be going to the provinces, the 20% or a portion thereof?

Once it reaches the provincial level—and we have to go from Ontario because that's where I'm addressing the provincial issue—how soon should the province be able to release that money to the farmers of Ontario?

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

We did the federal portion of it, because we didn't know whether we were going to have to pro-rate from the applications that are coming in. We paid, I believe, 60% of the first of the federal portion and then we raised it to 80%. I gave instructions yesterday, when I was given the numbers, that we will now be raising that to 95%, and those cheques will start to be printed immediately, so they will be in the hands of the farmers.

That will mean, with the federal and the provincial portion, that within the next very few weeks there will another $100 million going out to farmers. It's our estimate now that we are going to be able to pay awfully close to the 100%, if not the 100%. The total amount of money that will go out to farmers...as I said earlier, $1.4 billion has gone out now, and it will be about $1.71 billion.

Mr. Paul Steckle: And what is your estimation of the timeframe for the province to deliver to the farmers? Because we do deliver, as you point out—

Mr. Lyle Vanclief: We don't deliver in Ontario. Ontario administers in Ontario. I think in the province of Alberta they already paid the 100% share of the federal government. If we were going to have to pro-rate, they said they were going to absorb that. We administer in Manitoba and Saskatchewan.

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What other provinces does the federal government administer? Saskatchewan, Manitoba....

Mr. Douglas D. Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): New Brunswick, Nova Scotia, and Newfoundland.

Mr. Lyle Vanclief: Those five provinces.

Mr. Paul Steckle: Would it be fair to say that within a week's time after receiving our federal money, the province could deliver the cheques to the farmers of Ontario?

Mr. Lyle Vanclief: They administer it, so that will be up to the province to do so.

Mr. Paul Steckle: Has there been an agreement struck with the Province of Ontario in terms of the delivery of that portion of the $500 million in Ontario? If the mechanism of market revenue is to be used as the vehicle for delivery, and it appears to be the preference of farmers to use market revenue as the vehicle for delivery, we do not have an arrangement with the province at this time. Do you see an arrangement for the crop year 2001, since the crop, the wheat at least, is in the ground? What do you see in the future for market revenue for Ontario?

Mr. Lyle Vanclief: Well, that $500 million is going to be allocated to the provinces in the manner in which the safety net allocation goes to them. Then the provinces will have the opportunity to distribute that through their companion programs that they have. So it will be a decision, for example, in Ontario how much of that they want to put toward market revenue. They may want to put some someplace else. That's a decision the industry in Ontario is going to have to work out with their provincial government in Ontario.

Has Ontario signed? No. There's an amendment being prepared for all of the provinces, going to all of the provinces. Ontario has clearly indicated that they intend to sign, but there's no ink to paper with any province yet. Most provinces have clearly indicated that they will be there with their 40%. Some provinces are not as clear. I'm confident that all the provinces will be there, but I have to admit that there are no signatures from any yet. Some are clearer than others.

The Chair: Thank you, Paul. The five is up.

Dick.

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

Mr. Minister, for at least the last three years, grain and oilseed producers have been really hurting in this country. What, in your opinion, is the fundamental problem?

Mr. Lyle Vanclief: Well, there's no question that last year, for example, in Canada we had a good crop overall—no question of that. One of the main problems, if not the main problem, is the depth of the pockets of the United States government and the European government in the way in which they support grains and oilseed producers. Quite frankly, I had this discussion with the Secretary of Agriculture in the United States a couple of weeks ago, and she agreed me. They farm the mailbox and not the marketplace. They make their decisions on what they plant according to the size of the government supports that are there.

I am pleased that our industry does not do that. However, there's no question that by doing what they're doing in the United States, it clearly distorts the level of production and then clearly distorts international trade because of that level of production.

Mr. Dick Proctor: When you raised that, did you get any indication that they were going to stop doing that?

Mr. Lyle Vanclief: Well, when the Prime Minister raised the issue as one of the first two issues he raised with the President when he met with him, the President said that he was a free trader. And he clearly indicated to the Prime Minister that he.... Well, he told him he was very surprised at the situation that was there. I guess that raises the question to me, did he not know that level beforehand?

All I can tell you is that what the government's actions are in the United States, I don't know. But what I can tell you is that I said clearly to her, “Do you not realize that they farm the mailbox and not the marketplace?” And she said “Yes, I realize, and I realize that our programs affect it in that way.” How she acts on it, Mr. Proctor, I don't know.

Mr. Dick Proctor: When we first started to raise this three or four years ago, your pockets weren't as deep as they are now. We recognize that. But circumstances have changed in this country, and we're running, we're told on a regular basis, very healthy surpluses. So why then can't we begin to match the support payments of Europe and the United States?

• 1720

Mr. Lyle Vanclief: Because if we match them we would need considerably more dollars than we have there at the present time. We have tripled, since we were in that situation—

Mr. Dick Proctor: How much more, as a guesstimate?

Mr. Lyle Vanclief: Well, you get all kinds of figures. I had a cabinet colleague come to me who met farmers in Manitoba last week and they said they needed $5.6 billion. Mr. Borotsik is shaking his head. Others will say $2.2 billion and others will say $3 billion and some will say $4.5 billion.

Mr. Dick Proctor: But the fact of the matter is that back in 1993 we did have considerably more money in our support programs than we do today.

Mr. Lyle Vanclief: I don't question that.

Mr. Dick Proctor: You use 1995 or 1997 as a reference point, but there is history that goes back further than that—

Mr. Lyle Vanclief: No question.

Mr. Dick Proctor: It was about $1.6 billion more.

Mr. Lyle Vanclief: Yes. And prior to 1993 we were losing $42 billion a year.

Mr. Dick Proctor: But we don't have that. You're saying that our pockets.... We're not going to get back to those numbers that we had.

Mr. Lyle Vanclief: We will not financially. I discussed this with my provincial colleagues last week, and quite frankly they agreed that collectively, between the provincial support and the federal support, we are not financially able. They agreed to the letter to the number that Canada....

What I am saying to everyone is that in anything, if you can't meet them we have to look at ways in which we can beat them. How can we do other things with and for our industry and our producers out there in order to help give our producers a leg up in some other way if we can't meet them as far as the subsidy is concerned? I mentioned some of those in my comments today and yesterday.

Mr. Dick Proctor: I have one last very short question.

Brian Doidge, who is known to a number of us around here, said recently:

...the notion of a free market...is a myth. The U.S. support programs for producers...“are designed to drive world prices down, eliminate competition...and protect U.S. growers....

What in that statement would you disagree with?

Mr. Lyle Vanclief: When he makes that analysis of the U.S. I don't think I can disagree with anything. And I think I just stated that to you. That's the type of thing. I said that type of thing very clearly to Secretary Veneman. We don't have as many dollars, and we try to target our dollars. They don't target their dollars. We know the situation down there. It doesn't matter in most cases down there; it's back to acreage or whatever it was back a number of years ago. It is WTO compatible. It's within the WTO limits, etc. They simply mail the cheques based on whether the individual needs it or whether the individual doesn't need it.

The Chair: Rick, from Saskatchewan.

Mr. Rick Laliberte (Churchill River, Lib.): Thank you, Mr. Chair.

Honourable Minister, I guess the agricultural industry is a national policy, not a regional issue. The impacts are regional because of the climatic and economic realities in certain areas. But in trying to sum up a lot of these issues, the farmers in my constituency.... I'm in the northern part of Saskatchewan, and certainly the high energy costs and the efficiency at the family farm come into question at this time.

The other issue I've stumbled upon is the concentrated control of the agribusiness, the whole input and output and the multinationals that have the farmers.... Farmers want to be independent; that is their pride. But now the agribusiness has evolved to bringing in multinational control.

There is the whole issue of genetically modified organisms, the health and seed on the input side and also on the food side. Soil and water quality is permeating through the prairie provinces at the family farm, at their homes, right in their wells. There are international trade impacts, as you just mentioned; grain transportation factors; rail and rail abandonment; the impact of roads. The rural municipalities in my province are being impacted big-time. And there's access to ports; farm industrialization and the whole evolution of where it's going; the safety net and income crisis; climate change and the impact the Kyoto Protocol has on this with carbon sinks, which is being discussed, and what the impact will be, a benefit or risk; food safety and crisis management of food and disease issues; and also the Canadian Wheat Board. That's a big basket of issues.

How do you look at the long-term impacts of this? We're looking at crisis management here in the last few days in the House. I'd like to look at where the next generation of farmers will go. Are they going to make decisions on the opportunities of the agribusiness or the risks of agribusiness? Should a royal commission be considered in this country to look at the family farm situation?

• 1725

Mr. Lyle Vanclief: I haven't had any experience with royal commissions since I've been here, since 1988. I don't know whether a royal commission is the answer or not. Quite frankly, I think the process that is underway needs to be a very broad process.

When I discussed this with my provincial counterparts a couple of weeks ago, they agreed fully. I can tell you that this was refreshing to me. I've been going to federal-provincial ministers' meetings since 1993, first as parliamentary secretary, and we've had a number of these meetings. I missed a couple of years when I was chair of the committee. There used to be one a year and now there are two, three, or four a year. It was the first time I was able to get the discussion going around the table and the talk was, yes, we've got a short-term situation. But what are we going to do to address these types of things, Mr. Laliberte, in this whole thing?

I said in my comments today, this industry is incredibly complex and there are no easy answers. Corporate concentration.... I'm a realist, and I don't think any government in this country is about to dictate about corporate concentration. If we're going to do it in agriculture, are we going to do it in everything else? I just raise that question. Take carbon sinks, for example. We're fighting to get carbon sinks recognized, and I think that could be very helpful, but some of the rest of the world is not there.

As to GMOs, there are pluses and minuses, depending on your point of view on genetic modification. I had some very large potato users in Canada who, within two months of my becoming minister, were really going at me, saying we need more research in potatoes, we need more research in potatoes. With some new technology that has come along, potato plants don't have to be sprayed with chemicals to the same extent. Interestingly enough, that very large buyer of potatoes, when that came along, said they wouldn't buy it. This may be in response to the market out there, and I recognize that.

There are all these things that are there. That's the discussion we have to have, but quite frankly, we don't have a long time to have it because the industry needs to have as much direction.... I can tell clearly that these issues have to be addressed. We can't deal with it for my son, your son, or somebody else's daughter by just saying there will be safety nets, subsidies, and so forth. I don't think that's fair to them either. Those safety nets have to be there—

The Chair: Thank you, Mr. Minister.

Mr. Lyle Vanclief: —as well as an integrated risk management approach. There are a lot of things that have to be factored in that can help and improve farm income.

The Chair: Thank you, Mr. Minister. Now, Rick from Manitoba.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you very much, Mr. Chairman.

Welcome, Mr. Minister. I would like to extend an invitation on behalf of this committee to have you appear as often as possible. You are not the enemy here. We only try to ask questions and get answers.

Mr. Hedley and yourself took great pleasure in telling us that the AIDA program has distributed or will distribute up to 90% of the funding—95% is going to be distributed, the federal government's portion of it.

Perhaps you also threw some blame on the farmers themselves for not putting forward their applications soon enough. I would like the members of this committee to realize that we're talking about a recovery from the 1999 crop year. It's now March 21, 2001—one and a half years later, not 152 days—and I'd like to ask the minister, does he believe there were some inadequacies in the program, or does he actually believe that the AIDA program has been a success?

Mr. Lyle Vanclief: There is no program that is all things to all people. In the AIDA program, if you have, for example, from your farm—and I can tell you there are tens of thousands of them in Canada—a gross income well below $100,000.... I'm not exaggerating, there are many farms in Canada that have gross incomes of $20,000, $25,000, or $30,000. The program that's there is to guarantee people 70% of their gross margin. If your gross income is $30,000, your gross margin is far from that, and 70% is far from that. So even if you had relatively stable years and then you dropped down, and your reference years are there, once you fall below 70% of a gross margin of a $30,000 gross income operation it isn't very much, and someone will obviously say CFIP or AIDA didn't do anything for me. I'm not opposed to that, but I have to say it was a $30,000 gross business in the first place.

• 1730

Mr. Rick Borotsik: I appreciate that, Mr. Minister. You're saying essentially that the AIDA program was a success.

Mr. Lyle Vanclief: What I'm telling you is that the AIDA program is going to put out $1.7 billion over a period of two years to Canadian farmers.

Mr. Rick Borotsik: I wonder if I could just jump in; I don't have a lot of time and I have about four questions. Let's go back to Mr. Easter, where he's talking about a very serious problem with the potato wart.

We've had a lot of examples of serious disasters, whether it be natural disasters or trade disasters; the ice storm comes to mind, and the Red River flood comes to mind. There's the potato wart for which you came, Mr. Minister, with $14.6 million. Mr. Proctor and I have suffered through a natural disaster in southwestern Manitoba and southeastern Saskatchewan, for which we've asked for similar types of disaster programs and we received nothing. Is there some reason why there's this inequity? That's the first question.

The second question is, do you envision at any point in time a disaster program that's actually going to encompass a natural disaster and put into place something that will treat everybody equally, have a consistent program without this ad hoc problem that you're dealing with with Mr. Easter, and for things like the ice storm?

Mr. Lyle Vanclief: I'm a realist, Mr. Borotsik, and I've been in this industry now all of my life. There will always be requests for ad hoc programs, even from those who say they don't want ad hoc programs. There will always be disasters that nobody can foresee coming, whether that's the potato situation in Prince Edward Island, whether it's plum pox in Niagara Peninsula, whether it's a weather situation in southern Manitoba and eastern Saskatchewan, or whether it's a drought this year, which unfortunately we might see coming down the tube in the province of Alberta. But we do have programs such as NISA, we have crop insurance, and we have AIDA and CFIP. We know NISA is not the answer to everyone, crop insurance is not the answer to everyone, CFIP will not be the answer to everyone, and there will always be pressure for disaster ad hoc programs.

Mr. Rick Borotsik: Can I just jump in here?

Mr. Lyle Vanclief: Yes.

Mr. Rick Borotsik: What you're saying—-

The Chair: Mr. Borotsik, I have to cut you off now.

Mr. Rick Borotsik: I'm not quite at five.

The Chair: That's okay, your time is up.

Mr. Rick Borotsik: Will AIDA not satisfy Mr. Easter then?

Mr. Lyle Vanclief: AIDA can be used by Mr. Easter, so can the growers—

The Chair: Mr. Minister, we have a limited time. I do want to try to give all members an opportunity. I'll move back now to the Alliance.

David.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Thank you for coming today. I have some concerns over AIDA. I have a practical question that addresses clawbacks for 1998 in particular. I've had constituents come and talk to me about the fact that they're having money clawed back and it's been up to $30,000. The reason for this is given as changed criteria. There have been AIDA mistakes that have been made, and there have been files that have been combined without consultation with the producers.

This has been the most distasteful part of my job so far. I enjoy what I'm doing, but having to deal with people who had gotten their money 18 months ago and then are being asked to pay it back, and it's enough to finish them off, does not sit well with me.

Your staff has tried to help us out with this, but hasn't been able to accelerate the progress at all either. I'm wondering what can, or will, you do to stop these clawbacks and to deal with that?

Mr. Lyle Vanclief: It's my understanding that if there's an overpayment it will be taken from a further payment in the future. But I think you have to agree that if there's an overpayment it would have to be corrected in some way, the same if there's an underpayment it has to be corrected in some way.

I don't want to get political, but I remember some heated discussions in the House last year where we were discussing government programs and everybody wanted to make sure that people got the proper amount out of the criteria that were there.

There is a review committee and an appeal committee, and, as I say, we will try to move them along as fast as we possibly can. I understand the situation that there are some cases like that, but I do have to say, in all fairness to others, that if it's seen that there's an overpayment it cannot stay that way. If there's an underpayment it cannot stay that way either. There has to be a correction both ways.

Mr. David Anderson: It's brutal to people to change the criteria and then try to get the money back from them.

• 1735

My second question is this. Last night we saw that there's a reluctance to give an additional $400 million in funding to farmers, and I'm wondering if that is because that money is being set aside in case we need it for livestock producers in a worst-case situation. If not, what plan do they have for compensating livestock producers if this foot-and-mouth disease ends up being a problem in Canada?

Mr. Lyle Vanclief: Those are issues that governments have to face. My guess is that the United Kingdom didn't have $20 billion set aside for foot-and-mouth disease or $12 billion set aside for mad cow disease either.

Mr. David Anderson: They didn't get the warning that we've gotten either, though.

Mr. Lyle Vanclief: Those are issues that governments have to face. Quite frankly, if our government—let's hope we never see the day—is faced with that, I'll tell you there are a lot of other things we might like in government that we won't see. Governments have a lot of priorities and it's there. So we just have to deal with those when they come.

Mr. Howard Hilstrom: Mr. Chairman, in order to use up the last of our time here with my colleague, I'll just ask one question.

You were talking about many farmers with a gross of $25,000 to $30,000—somewhere in there, around $30,000. With the funding level that is coming from the federal government in all the support programs and companion programs, according to the statistics from your deputy minister, Mr. Watson, how many farmers are you anticipating will drop by the wayside, go bankrupt, or sell out their equity in their farm because they can no longer continue due to their low incomes, based on the level of support the federal government is giving right now?

Mr. Lyle Vanclief: I don't think anybody can give that answer, Mr. Hilstrom.

What I do know is that we have in this country about 90,000 farmers who have less than $10,000 in gross sales, we have about 90,000 farmers who have gross sales between $10,000 and $100,000, and we have 90,000 farmers who have gross sales over $100,000.

As I said on CBC the other day, people will look at all the risk management tools and financing they can in any business. As I said in my comments earlier today, the level of arrears in the Farm Credit Corporation is, the president told me not too long ago, nowhere near as high as it was a number of years ago in the eighties. Thank goodness. So we use those factors.

The reality is—not that I want to see it happen—that some people decide to change what they're doing every year and that will likely continue.

The Chair: Thank you, Mr. Minister. He only has five minutes and I can't let him....

I'll go to Mr. Calder now.

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

Minister, thank you for appearing in front of the committee.

As you know, I and my colleagues have been after this $900 million. We got $500 million. That's $400 million short of what we asked for. But I'm very curious. How fast is this money coming out? That's what I'd like to see, because we're not too far away from seeding. I'd like to know, first of all, how fast is that money going to get into the farmer's pocket? Is it going to be targeted to the sectors that need it the most?

Mr. Lyle Vanclief: As I said earlier, Mr. Calder, that money will go to the provinces to distribute in their companion programs. They have to sign the commitment before the end of March. It will be the provinces that will be making the distribution through companion programs after that.

Mr. Murray Calder: So you're saying to me then that this should be all finalized by the end of this month.

Mr. Lyle Vanclief: The provinces have to make the commitment to the federal government so that the federal government can book that money out before March 31. The provinces, once they make that commitment, will know how much money they have.

Mr. Murray Calder: Okay.

Then what's your best guess, once that's done? How quickly can it get out?

Mr. Lyle Vanclief: It depends how the provinces decide to distribute it. Some provinces may do it differently from others. It will be up to the provinces on how and when they distribute it.

Mr. Murray Calder: Okay.

Thank you, Mr. Chair.

The Chair: Thank you, Murray.

[Translation]

Mr. Gagnon, please.

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman. I am told I only have five minutes.

Mrs. Suzanne Tremblay: Five minutes for the questions and answers.

• 1740

Mr. Marcel Gagnon: Right.

Since the Walkerton incident in Ontario, people have become increasingly concerned with the size of farms and the impact on the environment which is becoming worse and worse. Farming is often blamed for those very serious problems.

I know that the farming community in Quebec, especially the UPA, as well as the Department of Agriculture, I believe, are trying to focus more and more environmental protection while continuing to develop farming activities. A great deal of research is going on in that area.

I would like to know if, at the federal level, there is also a department that works in cooperation with the Department of the Environment, for instance, to help agriculture become increasingly successful as well as environmentally safer.

[English]

Mr. Lyle Vanclief: You raise a very good point. First of all, I want to commend the Province of Quebec for the work they've done. I don't want to exclude any provinces, but the Province of Ontario has done a lot of work as well in the industry and on farms with environmental farm plans.

As I said in my opening comments, my goal is to have every farm in Canada with an environmental farm plan in five years. But in order to make those as meaningful as possible and to help brand Canada—we have a reputation as a country of high quality, safe, clean, pristine products now—we need to work with the provinces to make sure these standards are similar, if not the same, across the country, so that one province isn't trying to outdo another—and then we end up with competition within provinces, etc.

The provincial ministers agreed with that when I met with them two weeks ago, and that is part of what I said in my five points today at the conclusion of my talk. Safety nets, food safety, and environment are issues we have to work on. We must work with the industry to assure consumers of where it comes from, how it's produced, and what's being done to the environment when it is produced.

[Translation]

Mr. Marcel Gagnon: I welcome this answer as the response should definitely come from the industry. The government should provide some encouragement, but the answer should definitely come from the industry.

You are no doubt in favour of the supply management system. One of the concerns with the Summit of the Americas and the free trade negotiations is that this supply management system is always being questioned and even attacked. When questioned on that issue, the Minister for International Trade answers that supply management will definitely not be on the table. I would like the Minister of Agriculture to give us the assurance that he too will be insisting with his colleague for International Trade that every possible step will be taken in the free trade negotiations to protect the supply management system.

[English]

Mr. Lyle Vanclief: I can give you that assurance, Monsieur. I have made it very clear that I and this government are 1,000% supportive of supply management. If you look at the free trade agreements we've made with individual countries and the agreements that are going on, supply management has been exempt. We have a system that serves not only the producers, but the consumers here in Canada exceptionally well.

I am very pleased to always remind people, for example, in the dairy industry, that when the Dairy Farmers of Canada has looked at the comparative cost of dairy products, a basketful of varying products in Canada and the United States, and they bring the currency to a level, for the last many years the cost to the Canadian consumer has been at least 30% cheaper than it has in the United States. I have the pleasure, quite often, of reminding my Secretary of Agriculture colleague in the United States that we do that with supply management for our Canadian consumers and our Canadian producers.

The Chair: Thank you, Mr. Minister and—

• 1745

[Translation]

Mr. Marcel Gagnon: My time is over?

[English]

The Chair: No, I'm sorry.

Bob.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): Thank you very much, Mr. Chairman.

Thank you very much, Mr. Minister, for coming and for all your hard work in getting the $500 million for farmers that we were asking for.

I have a quick question, because I understand this is an opportunity for the opposition to ask questions. I'm wondering about something with regard to the $750 million of interest-free loans. That, I believe, will cost about $28 million or so, or somewhere around there. I'm just wondering where that money is coming from. Is this new money, or is this redirected?

Mr. Lyle Vanclief: The cost of that—and this was in the agreement we signed with the provinces a year ago, or in the allocation—does come out of the whole safety net package, as does the cost of the interest for the fall cash advance.

Mr. Bob Speller: So that's part of the agreement that was signed in the summer.

Mr. Lyle Vanclief: Yes, that's part of the agreement.

Last year, 31,000 farmers used the program, and there was a maximum of $20,000 per farmer. They borrowed about $356 million. This year, they can go up to $50,000. Of course, there has to be collateral, be it crop insurance.... Remember, unlike the fall program, there's no product in the bin, so there has to be collateral of some sort there for them. In most cases, I think the organization that administers it wants crop insurance, but not always.

Mr. Bob Speller: But what about those who don't have crop insurance?

Mr. Lyle Vanclief: Those who don't have crop insurance? I think the corn producers in Ontario, for example, took some other form of collateral, but I can't tell you specifically what they did.

But we anticipate the cost of that will approach $40 million if farmers borrow at least $700 million this year, which is what we anticipate.

Mr. Bob Speller: About $40 million. And that's—

Mr. Lyle Vanclief: Yes, and remember that, depending on their operation, the farmers can roll that over into the fall advance program if they so wish. Some of them certainly will be able to do that once this is finished. So what it means is they could have whatever amount of money it is that they have in those two programs interest-free for a full year.

Mr. Bob Speller: Well, it's a great program, and I appreciate the fact that you brought it in.

Thank you.

The Chair: Thank you, Bob, and thank you, Mr. Minister.

Larry.

Mr. Larry Spencer (Regina—Lumsden—Lake Centre, Canadian Alliance): Thank you, Mr. Chairman.

Thank you, Mr. Minister. I can assure you I do not envy your position these days.

Diversification has long been named as a partial solution to farm income improvement. Recently, the Saskatchewan Research Council indicated that Saskatchewan alone has the potential to become a major producer and exporter of ethanol. I was curious as to what the federal government is doing to assist in the research and development of alternative fuel production and fuel development as an agricultural product. Do you see this as a potential for additional profit for the agricultural sector of Canada?

Mr. Lyle Vanclief: Well, there's no question that I think there are great opportunities there, especially if you look at some of the work that's done in the United States, for example, in some of the corn-producing areas down there.

I went to an alternate fuels conference in Windsor last year. There were a number of people there from the United States and certainly from across Canada, from companies that are in this. In some areas in the United States, for example, corn producers got together and sold their corn at market price to the ethanol plant, but they were partners in the ethanol plant and the profits from the ethanol plant came back to them. I forget the number, but they gained a number of cents per bushel by being part of the whole thing. So I think there are some great opportunities there.

Agriculture Canada works with the private sector in the research that's being done. It was a few years ago—and maybe some of the colleagues here can help me with the name of the program, but I think it was the national biomass energy program—that the federal government guaranteed a substantial number of dollars for the encouragement of ethanol. That money is now used up, and I don't know whether or not the Department of Natural Resources is taking a look at doing anything more.

• 1750

We also took the excise tax off ethanol, which has a tough time competing with other fuels unless feed grain prices get very, very low—and I hope that won't be the case. Maybe with the crude oil price going up and the grain price staying put...I don't know what the mathematics of it is now. Anyway, the excise tax is off.

On diversification—look at what Saskatchewan has done, shifting out of wheat and into other crops. Look at the success of our pulse crops: we've increased the production of pulse in Canada 2,500% since 1980. Farmers are looking at some other things as well.

No matter what we do in life, whether it's farming or sitting around this table here today.... There's a little book—I haven't read it yet, and I forget the name of the author, but it's called Who Moved My Cheese? The book is about two mice called Sniff and Scurry and two little people. The cheese was moved and the mice went to look to see where it was, but the two little people just sat there, thinking if they stayed long enough the cheese would come back.

I don't want to make light of this, but the cheese out there is moving, folks, whether it's in agriculture, the high-tech industry, or wherever. That's the way we have to look at things now. Many, many farmers are doing that, and I give them a lot of credit for it.

That's why we need a system of integrated risk management, or whatever. It's not just safety nets; it's the types of things you're talking about: diversification, addressing food safety, addressing the environment. No matter what the product costs, if consumers don't like it—if they don't like what you did to the environment, or they don't like their perception of the food safety—they don't buy it.

As they say in the grocery business, if a product doesn't cross the scanner, it doesn't matter how good you tell the consumer it is, right or wrong, it means nothing.

The Chair: Thanks, Mr. Minister.

I have a number of minor points we've got to get across the scanner.

Mark, I'm sorry I've left you to the end. If you could be brief....

Mr. Mark Eyking (Sydney—Victoria, Lib.): Minister, I just watched on the news what's going on in Vermont, a state very close to our border. It's been known about for a couple of years, and it's been held up in court because they couldn't dispose of the animals.

Can you give me an update on that?

Mr. Lyle Vanclief: It has come to the attention of the press and others that some sheep in Vermont have scrapie. That's an international sheep disease—wherever there are sheep, there can be scrapie. It's the same type of disease as mad cow disease—I can't get my tongue around the fancy name of it—but it's not mad cow disease. There is no connection between it and humans, and there is no real scientific proof that there's a connection between scrapie and mad cow disease.

We've had scrapie in Canada. Two or three years ago we destroyed thousands of sheep because of scrapie. That's the control of the disease. There is no visual sign. The only way you can test for scrapie, I believe, is in the animal's brain. So when scrapie is found, that flock of sheep is destroyed, and any sheep that went from there to other flocks are sought out and destroyed.

Mr. Mark Eyking: What I'm worried about is how it was two years in the courts.

Mr. Lyle Vanclief: We don't wait that long.

Mr. Mark Eyking: If we get a situation in Canada with foot-and-mouth disease, I hope we don't have that problem. Do we have a little more strength in our laws, so that if it's confirmed, we can jump right in there and dispose of the animals?

Mr. Lyle Vanclief: Yes. We have the authority in Canada. If scrapie is found, the CFIA goes in immediately and destroys the sheep. Once it's proven, they go in. It's the same with tuberculosis, or chronic wasting disease, or the one cow we found with mad cow disease in 1993.

We had a good enough tracing system in Canada—we can be proud of that, everybody—that we were able to go back and trace every animal that came from the United Kingdom since 1986, and we destroyed all those animals.

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The Chair: Thanks, Mr. Minister.

We'll have a few short rounds. I'll give you 30 seconds for the question and we want to get a 30-second answer.

Marcel.

[Translation]

Mr. Marcel Gagnon: Thank you, Mr. Chairman.

Mrs. Suzanne Tremblay: A quick sprint.

Mr. Marcel Gagnon: Okay. Quick, quick.

Since we are talking about diseases, let us go back to the food-and-mouth disease.

You said earlier that we are not planning to set aside $20 billion in case we should be faced with such an outbreak. We hope it will never happen and we take the relevant precautions to avoid it.

Considering the serious threat raised by such a highly contagious disease, don't you think that you should simply ask your colleague, the Minister of Defence, to forbid foreign soldiers to come here or plan to come here for training purposes?

In my view, the risk is far too high. What is your opinion?

[English]

Mr. Lyle Vanclief: I'm confident that the surveillance can be there and the checking can be done, and the disinfecting can be done in the same way, probably at least as thoroughly, for all the tourists that come. We certainly are not in a situation of saying to people that they cannot travel to the European Union or cannot come here from the European Union.

The Chair: Thank you, Marcel.

Howard, you have a quick question?

Mr. Howard Hilstrom: Yes.

Mr. Minister, you're certainly familiar with the “We support farmers” ads that were taken out under the Government of Canada name. This happened immediately after the $500 million was delivered instead of the $900 million that farmers had been asking for.

I have two short questions in that regard. One, we don't want to give the impression to the consumer in the cities that in fact farmers are getting wealthy off these farm programs. Also, it was insensitive to the farmers who were trying for $900 million to come out and advertise and say how much the government is doing for farmers. Was that authorized from your office, or was it authorized from Mr. Watson's office as part of the bureaucracy?

Mr. Lyle Vanclief: It was authorized from my office. I have a number of people who are farm people and a number who are non-farm people who want to know what support is there for farmers. The total cost of those ads in Canada was $21,000.

The Chair: Thank you, Howard.

Now we'll go to Mr. Easter for 30 seconds.

Mr. Wayne Easter: Thank you, Mr. Chair.

First I'd like to clear up a point with Rick on the potato wart issue, because I think it is often misunderstood. The fact of the matter is that with their response to potato wart, what the Americans are doing now is not only dictating policy within the United States, but dictating agriculture policy within Canada. We in Prince Edward Island could have shipped within Canada, but we didn't, and as a result of that saved your bacon from retaliation in Manitoba. So we'd certainly welcome your support.

Mr. Minister, you seem to be putting a fair bit of confidence in this meeting on Friday. This is not the first meeting on the border issue and the way the Americans have treated us. I've been saying for a long time that we need to send the Americans a message.

I think the potato board said it better than I. In their update to producers on March 16, they said

We are very sorry, but once again the USDA has made fools of Canada in the Potato Wart border “negotiations”.

Mr. Minister, I'm saying it and I'm saying it very clearly: we need aggressive action. There are 37 states with quarantinable pests. If these meetings follow through on Friday, I would hope that you're willing to treat those states with measures equivalent to those they've treated us with, in terms of soil sampling and everything else. If we're going to play ball with the Americans, let's play hardball.

The Chair: Thanks, Wayne. There's really no time for an answer to that. It's a good statement.

Now we'll go to Dick.

Mr. Rick Borotsik: I'd just like to set the record straight. It was me, not—

The Chair: Just a minute now. It's Dick's turn.

Mr. Rick Borotsik: Oh, did he say Dick?

The Chair: Those “D”s and “R”s are important.

Mr. Dick Proctor: Mr. Minister, going back to where we were, it seems to me pretty clear that “our pockets aren't as deep” translates into “we're not going to pay”, or “we're not going to be able to pay”. But to pick up on Mr. Easter's point, it also appears we're not going to challenge under NAFTA or WTO.

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It seems to me that's what we were told in 1993, that we did have a rules-based system, and we were going to challenge when one country stepped out of line. What are farmers to do in this situation where you're doing neither one nor the other?

Mr. Lyle Vanclief: Mr. Proctor, as I said earlier, we have taken the potato situation to NAFTA. The first meeting was January 17. The NAFTA process on the potato situation is in place and has been since that date.

The Chair: Mr. Minister, time has elapsed; it is 6 o'clock. We have certainly appreciated the fact that you and your staff came here today—

Mr. Rick Borotsik: Mr. Chairman, on a point of order, please, I have been on the agenda for a long time. In fact, you jumped the agenda quite a number of times.

The Chair: The only problem with this, Rick, is that the agenda has ended with the time that the minister—

Mr. Rick Borotsik: I'm sure if I asked the minister he would stay for 30 seconds.

Would you, Mr. Minister?

The Chair: He has some other appointments, but in any case, it has been a good meeting.

We certainly appreciate your coming here, Mr. Minister. We want to make sure you will be back, hopefully.

With that, we want to assure everyone in the room that agriculture and agrifood is a very important part of the Canadian economy, and with this committee, we'll work with the minister and with all people involved in the industry to make sure it's improved in the time ahead. So thank you for coming.

Rick, I probably owe you one, but next time we'll do our best.

The meeting is adjourned.