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37th PARLIAMENT, 1st SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, April 11, 2002

0910

The Chair (Mr. Charles Hubbard (Miramichi, Lib.))

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

The Chair

Mr. Borotsik

The Chair

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

The Chair

Mr. Larry McCormick (Hastings--Frontenac--Lennox and Addington, Lib.)

The Chair

Mr. Larry McCormick

Mr. Paul Steckle (Huron--Bruce, Lib.)

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

Mr. Claude Duplain (Portneuf, Lib.)

The Chair

0915

Mr. Martin Howlett (Associate Deputy Minister, Department of Forest Resources and Agrifoods, Government of Newfoundland and Labrador)

Mr. Raymond Williams (Individual Presentation)

Mr. Martin Hammond (Executive Director, Dairy Producers of Newfoundland and Labrador)

Mr. Eugene Legge (President, Newfoundland and Labrador Federation of Agriculture)

Mr. Ed O'Reilly (Director of Agrifood Policy, Department of Forest Resources and Agrifoods, Government of Newfoundland and Labrador)

Mr. Martin Howlett

Mr. Mervin Wiseman (First Vice-President, Newfoundland and Labrador Federation of Agriculture)

The Chair

Mr. Raymond Williams

The Chair

Mr. Martin Howlett

The Chair

Mr. Martin Howlett

Mr. Ed O'Reilly

0920

0925

0930

The Chair

Mr. Martin Howlett

The Chair

Mr. Eugene Legge

0935

0940

0945

The Chair

Mr. Mervin Wiseman

0950

0955

1000

The Chair

Mr. Martin Hammond

1005

The Chair

Mr. Raymond Williams

1010

The Chair

Mr. Howard Hilstrom

Mr. Ed O'Reilly

1015

Mr. Howard Hilstrom

Mr. Raymond Williams

Mr. Howard Hilstrom

Mr. Raymond Williams

Mr. Howard Hilstrom

Mr. Martin Hammond

Mr. Howard Hilstrom

Mr. Eugene Legge

Mr. Howard Hilstrom

Mr. Eugene Legge

Mr. Howard Hilstrom

Mr. Eugene Legge

Mr. Howard Hilstrom

Mr. Eugene Legge

Mr. Howard Hilstrom

Mr. Mervin Wiseman

1020

Mr. Howard Hilstrom

Mr. Martin Howlett

The Chair

Mr. Odina Desrochers (Lotbinière--L'Érable, BQ)

Mr. Martin Howlett

1025

Mr. Odina Desrochers

Mr. Martin Howlett

Mr. Odina Desrochers

Mr. Martin Howlett

1030

The Chair

Mr. Odina Desrochers

The Chair

Mr. Martin Howlett

The Chair

Mr. Martin Howlett

The Chair

Mr. Martin Howlett

The Chair

Martin Howlett

The Chair

Mr. Martin Howlett

The Chair

Mr. Martin Hammond

The Chair

Mr. Paul Steckle

Mr. Raymond Williams

1035

Mr. Paul Steckle

Mr. Raymond Williams

Mr. Martin Howlett

Mr. Paul Steckle

Mr. Ed O'Reilly

Mr. Paul Steckle

Mr. Mervin Wiseman

1040

Mr. Paul Steckle

Mr. Martin Howlett

Mr. Steckle

Mr. Eugene Legge

Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.)

The Chair

Mr. Mark Eyking

1045

Mr. Eugene Legge

Mr. Mark Eyking

Mr. Eugene Legge

Mr. Martin Hammond

Mr. Mark Eyking

Mr. Martin Hammond

Mr. Eyking

The Chair

Mr. Raymond Williams

The Chair

Mr. David Anderson (Cypress Hills--Grasslands, Canadian Alliance)

1050

Mr. Mervin Wiseman

Mr. David Anderson

Mr. Raymond Williams

Mr. Eugene Legge

Mr. David Anderson

1055

The Chair

Mr. Claude Duplain

Mr. Martin Howlett

Mr. Eugene Legge

Mr. Claude Duplain

Mr. Eugene Legge

The Chair

1100

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

Mr. Ed O'Reilly

Mrs. Rose-Marie Ur

Mr. Ed O'Reilly

Mrs. Rose-Marie Ur

Mr. Ed O'Reilly

Mr. Raymond Williams

Mrs. Rose-Marie Ur

Mr. Raymond Williams

Mrs. Rose-Marie Ur

Mr. Raymond Williams

Mr. Martin Howlett

Mrs. Rose-Marie Ur

Mr. Martin Howlett

Mrs. Rose-Marie Ur

Mr. Martin Howlett

1105

Mrs. Rose-Marie Ur

Mr. Martin Howlett

Mrs. Rose-Marie Ur

The Chair

Mr. Larry McCormick

Mr. Mervin Wiseman

Mr. Larry McCormick

Mr. Eugene Legge

Mr. Mervin Wiseman

Mr. Martin Howlett

1110

Mr. Larry McCormick

Mr. Eugene Legge

Mr. McCormick

The Chair

Mr. Paul Steckle

The Chair

Mr. Murray Calder

Mr. Raymond Williams

Mr. Murray Calder

Mr. Raymond Williams

Mr. Murray Calder

Mr. Mervin Wiseman

Mr. Eugene Legge

1115

Mr. Murray Calder

Mr. Martin Howlett

The Chair

Mr. Martin Howlett

The Chair

Mr. Martin Howlett

The Chair

Mr. Larry McCormick

The Chair

Mr. Alain Delorme (President, Union des cultivateurs franco-ontariens)

1135

Le président

Mr. Pierre Bercier (Union des cultivateurs franco-ontariens)

1140

Mr. Alain Delorme

Mr. Robert Perras (Union des cultivateurs franco-ontariens)

Mr. Alain Delorme

Mr. Philippe Henrard

Mr. Robert Perras

1145

Mr. Alain Delorme

Mr. Robert Perras

Mr. Alain St-Denis (Union des cultivateurs franco-ontariens)

1150

Mr. Pierre Bercier

The Chair

Mr. Alain Delorme

Mr. Howard Hilstrom

The Chair

Mr. Alain Delorme

The Chair

Mr. Alain Delorme

The Chair

Mr. Alain Delorme

1155

1200

Mr. Robert Perras

The Chair

Mr. Robert Perras

1205

The Chair

Mr. Howard Hilstrom

Mr. Robert Perras

Mr. Philippe Henrard

1210

Mr. Robert Perras

Mr. Howard Hilstrom

The Chair

Mr. Odina Desrochers

Mr. Alain Delorme

Mr. Odina Desrochers

Mr. Pierre Bercier

1215

Mr. Robert Perras

The Chair

1220

Mrs. Rose-Marie Ur

Mr. Murray Calder

Mr. Howard Hilstrom

Mr. Murray Calder

The Chair

Mr. Murray Calder

Mr. Robert Perras

1225

Mr. Murray Calder

Mr. Robert Perras

The Chair

Mr. Larry McCormick

Mr. Robert Perras

Mr. Larry McCormick

Mr. Robert Perras

Mr. Philippe Henrard

1230

Mr. Larry McCormick

Mr. Philippe Henrard

Mr. Larry McCormick

Mr. Howard Hilstrom

The Chair

Mr. Larry McCormick

Le président

Mr. Claude Duplain

Mr. Pierre Bercier

Mr. Claude Duplain

Mr. Philippe Henrard

1235

Mr. Alain Delorme

Mr. Philippe Henrard

Mr. Claude Duplain

The Chair

Mr. Robert Perras

1240

The Chair

Mr. Robert Perras

The Chair

Mr. Robert Perras

The Chair

Mr. Pierre Bercier

The Chair

Mr. Alain Delorme

Mr. Philippe Henrard

1245

Mr. Robert Perras

Mr. Alain Delorme

The Chair

Mr. Alain Delorme

The Chair

Mr. Robert Perras

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 061

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, April 11, 2002

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

Pursuant to Standing Order 108(2), our committee is looking at a study on the future role of the government in agriculture.

We have visited nine of the provinces. As you know, we were prepared at one time to go to the big province of Newfoundland and Labrador, but I think you know the reasons why we didn't go. We have given you the opportunity to come and visit with us.

We're looking forward to your presentation. Our committee represents all parties in the House. We're probably not all here yet. We had a busy day yesterday.

In any case, Mr. Howlett, we'll have the members introduce themselves, and then we'll ask you to introduce your people. Then we'll proceed with the presentation.

My name is Charles Hubbard, and I'm from Miramichi, New Brunswick. I'm chair of the committee. The vice-chair is from the province of Manitoba. Howard.

Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance): Thank you. My name is Howard Hilstrom. I'm the member of Parliament for Selkirk--Interlake. It is primarily a farming district. I'm a cattle rancher myself, with a cow-calf operation and feedlot. I've been the chief agriculture critic for the Canadian Alliance Party since 1998.

The Chair: Rick, from the Progressive Conservatives.

Mr. Rick Borotsik (Brandon--Souris, PC): Yes, my name is Rick Borotsik. I'm the member of Parliament for Brandon—Souris. It's in the southwestern corner of the province of Manitoba. I'm the agriculture critic for the Progressive Conservative Party. My area is very dependent upon agriculture. We have a very diverse agriculture component in the area. We've been across the country and we're looking forward to hearing from our friends from Newfoundland. It's nice having you here. Thank you.

The Chair: On the government side of the House, we'll start with Mark.

Mr. Mark Eyking (Sydney--Victoria, Lib.): Thank you, Mr. Chairman.

My name is Mark Eyking. I'm from the other island, Cape Breton Island. My riding is Sydney--Victoria. We have vegetables, eggs, and greenhouse operators. Thank you for coming. It's good to see Newfoundlanders on the Hill.

The Chair: Our parliamentary secretary.

Mr. Larry McCormick (Hastings--Frontenac--Lennox and Addington, Lib.): Good morning, gentlemen. My name is Larry McCormick. I've been parliamentary secretary to Minister Vanclief for the last couple of years. I'm certainly glad to have you here this morning. I live in eastern Ontario, in the riding of Hastings--Frontenac--Lennox and Addington. I've not been in Newfoundland since last summer, but we'll remedy that sometime shortly, this year. Thank you.

The Chair: I thought, Larry, you said your other half is from Newfoundland.

Mr. Larry McCormick: Yes, I told them in our introductions.

Mr. Paul Steckle (Huron--Bruce, Lib.): I'm Paul Steckle. I'm the member of Parliament for Huron--Bruce in southwestern Ontario. It's an agriculture riding, very diversified. I'm a farmer myself, so I understand the rural issues. I've been here since 1993, and most of that time I have been on this committee. I am also the vice-chair of the fisheries and oceans committee. I understand you might wonder why from a rural area you have someone representing fisheries, but we do have a large freshwater fishery on the Great Lakes. My interests are diversified as well.

Thank you for coming. We look forward to your presentation.

Mr. Bob Speller (Haldimand--Norfolk--Brant, Lib.): My name is Bob Speller. I'm the member of Parliament for Haldimand—Norfolk—Brant, in southwestern Ontario.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): I am Claude Duplain, from Portneuf, Quebec.

[English]

The Chair: We have these fancy little things here that put the sound into both languages. We want to make sure you are aware of that. You probably should have them ready, because in Claude's position, he's like me. I'm not very good in French, and he's learning a lot more English than I know French, probably. In any case, we want to make sure that when the questioning starts everyone has both official languages available.

Welcome, Martin. You are, I believe, the lead spokesman, are you?

You won't have to worry about the translation between you and me; I speak new Brunswickese, and you probably speak--

¿ (0915)

Mr. Martin Howlett (Associate Deputy Minister, Department of Forest Resources and Agrifoods, Government of Newfoundland and Labrador): We won't go there, Mr. Chairman.

Thank you very much, Mr. Chairman.

Today we're going to make a presentation on behalf of the Department of Forest Resources and Agrifoods. Representatives for industry are here with us. There will be presentations from the Newfoundland Federation of Agriculture; the Milk Producers of Newfoundland and Labrador; Mr. Wiseman, a fur farmer; and Mr. Williams, a producer appearing as an individual.

Starting with Mr. Williams, we'll ask the presenters to introduce themselves.

Mr. Raymond Williams (Individual Presentation): Good morning. My name is Ray Williams. I am a dairy farmer from eastern Newfoundland, the St. John's area. I'm also president of the Goulds Agricultural Society, which I'll be representing here this morning.

Mr. Martin Hammond (Executive Director, Dairy Producers of Newfoundland and Labrador): Good morning. My name is Martin Hammond and I'm the executive director for the association of dairy farmers of Newfoundland and Labrador.

Mr. Eugene Legge (President, Newfoundland and Labrador Federation of Agriculture): Good morning. My name is Eugene Legge. I'm the president of the Newfoundland and Labrador Federation of Agriculture, plus I'm also a chicken farmer.

Mr. Ed O'Reilly (Director of Agrifood Policy, Department of Forest Resources and Agrifoods, Government of Newfoundland and Labrador): Hi. My name is Ed O'Reilly. I'm the director of agrifood policy with the Department of Forest Resources and Agrifoods.

Mr. Martin Howlett: Mr. Chairman, it certainly... Oh, I've forgotten Merv.

Go ahead, Merv.

Mr. Mervin Wiseman (First Vice-President, Newfoundland and Labrador Federation of Agriculture): I'm easy to forget.

I'm Mervin Wiseman, the first vice-president of the Newfoundland and Labrador Federation of Agriculture. I'm a fur farmer. I operate the biggest fox farm in North America and I'm president of Newfoundland and Labrador Fur Breeders Association.

The Chair: Thank you very much.

Normally we would hear all the presentations and begin our question and answer session right after. It's the same way you do things in your own house back home in Newfoundland and Labrador.

Mr. Williams, are you in the lead?

Mr. Raymond Williams: No, Mr. Howlett is taking the lead.

The Chair: Oh, Mr. Howlett is going first. Okay, thank you.

Martin, you have the floor.

Mr. Martin Howlett: Thank you very much, Mr. Chairman. I realize that time is a valuable commodity here for your committee, so I'm going to make a couple of opening remarks. Then Ed O'Reilly, our director of policy, will make a power-point presentation. If I understand the rules correctly, we have roughly five minutes each, ten minutes in total for the department.

Your topic is a timely one, the future role of government in agriculture. Over the last few years we've been through a number of groups and at meetings around the country and what have you. We probably have a different view of the role of government in this area from what other provinces in the country have. Basically this has resulted from our level of development and the types of production and diversification we have in our industry.

We know we're unique in agriculture production in certain commodities. When we have our discussions with the federal government and look at our role, we approach it with this view in mind.

We've been a little different from some other provinces over the last four or five years in terms of our support for agriculture, how we deliver programs in the areas of extension, and our human resources support to the industry. Again, this is because of the level of production we are at, where for most farms in a developmental stage our efforts at growing an industry and adding value are moving forward.

To save time, because we have a presentation and we'd like to get it all in today, I'm going to ask Ed to start. As you said, when all the presentations are made we can get into some discussion.

The Chair: Mr. Howlett, we don't want to put you under the pressure of five or ten minutes. We want to hear about the issues you brought up. Don't feel restricted by... We're not so concerned now--

Mr. Martin Howlett: It's not a problem, Mr. Chairman. I've been known to take more time than was allocated at some of these functions. You'll have to excuse this, too.

Please go ahead, Ed.

Mr. Ed O'Reilly: Thank you. I guess I can speak really slowly now. Everybody relax.

My role today will be to give you a little bit of background on the agricultural industry, talk about our development challenges, give you a few statistics, talk about our strategic plan, and I guess talk about our role with the federal government and particularly with the farmers.

I wanted to tell Suzanne that I actually did some of the translation, so it's pretty minimal. If you want to fault anybody, it'll be me. I talked to my French teacher and she helped me out a little bit.

What I wanted to show you with this slide, basically—and I think you're well aware of it—is that Newfoundland really is a fishing province. That's the history of Newfoundland. Agriculture has always been kind of a subsistence thing—growing your own food, growing your meat, growing the wool for clothing, and so on. That's where it's been. In the last 30 or 40 years there's been an increase in agriculture to a large extent. We're moving forward. We're growing every year. That's kind of where we are.

As an island, we're affected by the Labrador current. It's a very wet environment. Our land base is unique in many respects, I think. It's not flat land, it's not the prairies. So we have those challenges. There is a little area on the east coast that's very hilly. It really has an effect on how we farm in Newfoundland.

I have a couple of statistics. The number of farms we have in Newfoundland is somewhere around 740. That would be commercial, part-time, and hobby. Our farm cash receipts this past year were $82 million. We like to talk about the sales from farm cash receipts and from the value-added for the processing sectors. That figure is estimated at somewhere around $500 million. That figure, I think, makes an impact on the economy in Newfoundland.

Our employment in agriculture is somewhere between 4,000 and 5,000. Newfoundland consumers basically spend about $2 billion on food in the province. We do have opportunities there to produce food for our own as well as... We talk about exporting outside of Newfoundland. We have opportunities to move our products into mainland Canada and around the world.

This is not a typical farm in Newfoundland. It's Hammond Farm out on the west coast. It's somewhere between 300 and 400 acres of cleared land. It's a high-quality farm, but again, the topography is hilly and you have your riverbed-type soils.

We have somewhere around 100,000 hectares of good mineral soil that we can use for farming and about 1.3 million hectares of peat land. For us, peat land is a good resource. We're developing in that area more as time goes on.

Just to give you some more stats, this is the 1996 census. These statistics give a comparison between farms in Newfoundland, the Maritimes, and Canada. What I want to show you here today is the level of land development we have in Newfoundland, in comparison with the other parts of Canada. If you look at the acres of land per farm, Newfoundland has somewhere around 145 acres, the Maritimes have 270, and Canada has 608. Again, there's a significant difference there in acreage.

Another interesting fact is the percentage of farms with more than 130 acres of land. Newfoundland is 14%, the Maritimes is 37%, and Canada is 32%. Again, you can see the level of development here.

Total acres of forage is a very important component of agriculture for us. There are 91 acres per farm in Newfoundland, 164 acres in the Maritimes, and 219 in Canada.

Acres of vegetables per farm: 5 for Newfoundland, 21 for the Maritimes, and 28 for Canada.

¿ (0920)

Again, just focusing on the forage and our feed, our livestock industry is very important to us. I guess we're somewhere in the vicinity of 75% self-sufficient in forage. We import pretty well all of our grain, so feed is an important component.

Turning to capital, Newfoundland basically has, on average, $248,000 in capital per farm. The Maritimes is $425,000 and Canada is $566,000. Again, this is about the scale of farming and size of operations.

I'll talk about livestock and feed purchases. Newfoundland spends about $59,000 per farm; the Maritimes spends about $26,000 per farm; Canada spends $26,000 per farm, on average. Again, you can see our dependence on outside sources of feed, our higher costs and the inability, because of that high cost, to grow a lot of our own replacements and beef cattle and so on.

The combine in this slide is in Newfoundland. We've done a lot of work in grain production. We feel we can do that pretty economically.

To talk about feed supply again, we're importing somewhere in the vicinity of 50,000 tonnes of grain into the province and it all comes in by boat. We are working toward producing some of our own grain.

As an example of what feed costs do to us, the dairy industry recently did a cost of production where they compared the national COP with our own provincial one, and feed costs were 20¢ per litre more expensive in Newfoundland than they were in the rest of Canada. So again, the importance of feed and land base and that aspect is obvious.

So where's the future? I guess we have taken the approach that we're a small province, farming-wise. We have a small group of farmers and we can work with the farmers and get results fairly quickly. Our role has been to work closely with the farmers and the federal government and other private industry to get some work done in R and D and do the extension work that's required on the farms.

I think you realize that many of the other provinces in Canada have downsized their extension services, their research and development services, and so on, to farmers. It kind of put farmers out on their own, in a sense, to do their R and D and technology adoption. Our intent is to work, and we have worked, with farmers to do those things so that we know what we're doing is right, because farmers are going to tell us what's right or wrong from an economic point of view. The proof is always in the pudding in the sense that the farmer will, if it's a good idea, take it and use it on the farm. That's usually how we work. We work with the farmer and if it doesn't work we move on to something else.

To give you an indication of where we're moving, as far as our own department, I want to touch on some of the strategic issues for our departmental plan. The first one is how to improve competitiveness, sustainability, and profitability of the agrifood industry and facilitate its growth and development. Again, you can see this picture is kind of a collage of the technology. This parlour is on the west coast of Newfoundland. It's a $750,000 investment. The research, diversification, those kinds of things, are very important. Yes, we can grow corn in Newfoundland, and yes, it was the farmers who told us they can do it. Actually this farmer started... We began working with them and started doing trials.

This corn here actually is not poorly grown corn but a dwarf variety of corn. Cranberries, we're looking at that in a big way. The peat land resources we have offer opportunities. Diversification in agriculture, R and D gives choices to farmers. That's kind of where we're coming from here. The traditional agriculture is still there, and we want to work toward that through further processing and marketing and so on, but again we've got to explore our options, life sciences economy being another one.

The next strategic issue is a really important one for us as well. It's how to increase the level of secondary food manufacturing in the province. We feel that secondary manufacturing is going to be a kind of catalyst for primary production, so if we get the processing, the primary production has to follow.

As an example, Marklin Wineries, who market blueberry wines, are getting into fruit juices and so on. They're going to need 10 million pounds of blueberries. Initially, that might come from outside the province, but there's a reason for producers to produce more blueberries. So that's an important aspect.

Land productivity and the environment are very important. Strategic issue number three, enhanced land productivity through land preservation and protection, land inventory mapping and farmland productivity improvement measures: again, I hope the message I've given you today is that land development and the environment are very important to us and we're working very closely on that.

An interesting subject area for us now is how to expand agricultural production in Labrador. It's a northern climate, and we've paid special attention to northern agriculture and we have basically started an R and D program to look at what crops can be grown, the economics of them. Again, we'll be working with farmers and the federal government to do this work.

When I read your press release, you talked about making Canadian agriculture an even more competitive and economically sustainable sector. We want to do that as well, and we want to do it in Newfoundland. The federal government has been a key partner, I guess, with us. Agriculture and Agri-Food Canada, St. John's Cool Climate Research Centre, have been key in helping us with the scientific things. The farmers have allowed us to use their land and their expertise and we have used our staff to work at disseminating the information, setting up the projects and so on.

¿ (0925)

I bring in ACOA and HRDC here because of the funding aspects. As well, Agriculture and Agri-Food Canada has helped our province significantly. We'd like to see more help in the future, wouldn't we? Oh, I wasn't supposed to say that. I'm sorry.

So how do we move forward? The message here today, from me anyway, is that we have to work together as partners, and we have to communicate and share risk. The key here is sharing the risk monetarily as well as expertise, all of those things. In the end, what we have is the Federation of Agriculture, the farmers, right up there. That's who we're here for. We're here to assist wherever we can. We want to make Newfoundland agriculture grow over the next few years.

Thank you.

¿ (0930)

The Chair: Thank you, Ed.

Martin, do we go back to you? Who is next?

Mr. Martin Howlett: No. We'll pass it back to you, Mr. Chairman. We'll follow your agenda, and we'll get into a discussion later.

The Chair: The way we do it is we hear all the presentations. I'm wondering who is next. Is Mr. Legge next?

Mr. Eugene Legge: Thank you very much, Mr. Chairman.

Good morning, ladies and gentlemen. My name is Eugene Legge. I'm the president of the Newfoundland and Labrador Federation of Agriculture. I represent the farming community. My association is made up of the Dairy Farmers of Newfoundland and Labrador, the Newfoundland Chicken Marketing Board, the Egg Producers of Newfoundland and Labrador, the Newfoundland and Labrador Blueberry Growers' Association, the Cattleman's Association of Newfoundland, the Newfoundland and Labrador Pork Producers Association, the Newfoundland and Labrador Fur Breeders Association, the Sheep Producers Association of Newfoundland and Labrador, the Horticultural Producers' Council of Newfoundland and Labrador, and the Provincial Farm Women's Association. We pretty well encompass all aspects of agriculture that take place in the province and on the mainland of Labrador.

We are a lobby group. We work with producers to help them with funding issues, funding programs, awards and scholarships, agricultural awareness, farm safety, rural health, the young farmer forum, food safety, soil and conservation, climate change, and whatever else farmers want to throw at us.

You all have a copy of my presentation, so I'm not going to read it. I don't think I'll bore you with 20 pages of document. You will read that on your own. I apologize to Mr. Speller and Mr. Mark. This is pretty well the same presentation I gave to you in St. John's back in October. To everyone else it will be new, but to you fellows it will be old hat.

As Mr. O'Reilly has said, we do have a small population of farmers. It's unique, in a way. When your Department of Agriculture can call everybody on a first-name basis, I think that's unique, when you talk about size. We have a good working relationship with our department and our field staff. We do have a $500-million industry, which is quite substantial to our province. When you look at the growth of our industry in the last 10 years, we've grown 60.8%. That is substantial in any province.

We are very diverse. As I just outlined, pretty well anything that can be grown, we grow in our province to satisfy the needs of our customers and consumers. I would imagine we probably would grow more if we had more land to grow it on. There are vast tracts of land that we can avail ourselves of, and we're in the process of trying to access that property, if you want to call it property, to make sure that we can continue to grow.

We also try to build on the human resource side of it. We are isolated. We are an island. We try to educate our farmers in any way possible, bringing in expertise or sending farmers offshore to learn expertise in order to benefit their home farm units.

In Newfoundland, you're still pretty well on the first- and second-generation farms. You don't see third and fourth, like you see on the mainland. Prior to Confederation, I would say most people in Newfoundland were self-sufficient. They all had to grow their own vegetables. They all kept a few hens for eggs, and a cow. They had a horse and some sheep for—as Ed pointed out—making their own wool for socks and clothing.

I would venture to say there was more agriculture in Newfoundland at the turn of the century, in the 1900s, than there is now in 2000. That's mainly because of the fact that Newfoundland has always been deemed to be a fishing community per se. The emphasis has been put on the fishing and logging industries. We have three major pulp and paper mills in the province, and mining. Agriculture was seen as a way for people to survive after that.

But as you can see in the document here, we have grown quite well. I'll just start going through some of the commodity opportunities here. I won't touch on dairy. There are two gentlemen here who will talk on the dairy industry and its potential.

¿ (0935)

Vegetables: we grow a lot of potatoes, turnips, cabbage, carrots, and beets. These are the most common vegetables that are produced. We find there is a big change in consumer trends. The province's vegetable growers are growing more variety and mixture of crops to capture this market. Some of the crops they are growing on a limited scale to satisfy some of the market need are broccoli, cauliflower, lettuce and Chinese vegetables, radish, leeks, celery, and pumpkins.

Our farmers use the latest equipment, whatever's available to them. We're not into air seeders or anything like that; we don't have the land base to do it. But we are getting very innovative, I think. Ed touched on the fact that we have a lot of peat soils to work on, and most traditional farming equipment does not work on peat soil; it's too heavy and they sink. So being creative and innovative, we pretty well take this machinery that's designed to do one thing and adapt it to do something totally different, so that it will work on these soft soils such as peat and bogs and to capitalize on a lot of that ground that is available in Newfoundland.

If you've ever been down there, you know we have a substantial amount of peat soils to work with, and you also know that there's a fierce competition in our province for good mineral soils. What's good for growing trees is definitely good for growing crops and what have you. So there's a fierce competition in our province for use of that land.

We have a substantial egg industry in our province. We provide more than 100% of what we need. We have surpluses lifted out of the province to go to breaker plants on the mainland, of course. We have a small beef industry. I think they produce about 2% of our needs for the province. Most of the beef industry is located on the west coast, averaging about 100 or 150 head per farm. It's small in comparison to some of the farms out in Alberta, of course, but to Newfoundland it's sizeable.

We have a growing sheep population in the province. We find there is a good demand for mutton or fresh lamb, if you want to call it that, from the country just south of our province called Saint-Pierre and Miquelon, and they pretty well can take everything that we can produce.

We do have a unique chicken set-up in our province. We have one major player, which is now ACA. They do the processing and what have you. We have 10 contract growers who grow chicken for that company and they supply the market. They supply only 65% of what we're using in the province right now, and they have some sectors of further processing and what have you.

Swine has come down in size from where it was. We had a huge pork industry in our province, and then the government decided not to continue on in the processing of pork. They got out of the swine breeding station and what have you and we saw a huge decline in the hog operation in our province. There are about 20 farms left, and they are start to finish and really gate to plate, because they produce, process, and sell pretty well on their own. They are doing quite a remarkable job when it comes to doing bacon and hams and all smoked products on their own. We have three or four farmers who are quite unique and they are doing sales in supermarkets of bacon, ham, and what have you.

We don't really have a turkey industry in the province. There were small pockets of turkey production around, mostly for the traditional Thanksgiving and Christmas markets. We're not part of the national management scheme. I don't know if there is going to be anyone who is going to join that scheme very shortly, because there is no processing plant to handle any huge amount of turkey.

¿ (0940)

There is a huge demand for turkey in our market. Right now we're only producing about 40,000 to 50,000 birds a year, and there should be 675,000 to 700,000 birds a year. So it's quite a growth opportunity.

We're also talking about the blueberries. There are 22 commercial blueberry producers in the province as we speak, with 3,000 acres of production and about two million pounds a year. We have an opportunity, just from the winery in Markland looking for 10 million pounds, not counting what else is out there right now. So we have an opportunity. There is a process in place right now: a group up in Gambo, I believe, are trying to put a coalition together to try to produce four million pounds in that area alone. We have quite a remarkable achievement there.

Concerning strawberries, as the weather persists—if you've been to Newfoundland, you know our weather is like everything else, either a half hour later or earlier than the rest of these fellows—we find our growing season is late starting, but we always seem to have product at the end of it. When all your berries are gone and long forgotten, we're just starting to come on stream.

We have about 50 producers for strawberries in the province, and there was another opportunity there for farmers to do a further process. Right now it's pretty well “u-picks” and what have you, but we have the opportunity to go into other lines such as doing jams and jellies, frozen strawberries, and what have you.

We produce about a million pounds of partridge berries in the province, valued at about $1.1 million. Newfoundland and Labrador is the largest producer of wild partridge berries, and I don't know if there is anyone else doing it.

And as Marty or Ed said, the government has brought in the production of cranberries. They've started off, I think, with five locations on the island for cranberries and marsh berries. We have some small, other types of fruit: bake apples and raspberries and currants and gooseberries. There's not much in the way of orchards, apples and what have you. There's some limited production on the west coast and not a whole lot in the east.

Pretty well, we've been always traditional forages people, looking for livestock feeds. When you look at our industry, there's an argument that maybe 80% or 85% of our industry is supply managed, and supply-managed operations usually consume feeds. We bring in 50,000 metric tonnes of grains offshore to the province every year. In order to be competitive in the future, we have to eliminate that cost. We have to get our costs down to make us competitive with mainland Canada in order to survive, and we have to be creative in how we use our land.

We know we can grow grain. As you saw from the pictures shown, we can grow corn. There have been trials across the province in a bunch of locations for winter wheat, and we've had some really good success stories with it. The tonnage is well up there, well above the national average, and import costs are pretty well the same as the national average. The only hindrance we have is the availability of the land base to grow that material. I think the land is there; it has been identified that we have a substantial amount of land available. It's only a matter of trying to get it made available to us and put into production and developed properly.

I talked about grain production. I think we said 50,000 tonnes of grain came in. That is for all the supply management. We have small Christmas tree wreaths in production. There again, there is a huge competition between forestry and agriculture about where these trees go. Some people say there are not enough trees on the island to sustain the three pulp mills we have on it. Getting access to crown land with trees for Christmas tree and Christmas wreath production is limited because of the demand from the pulp and paper industry.

¿ (0945)

Fur will be talked about by Mervin. I won't touch that.

Thank you for your time and patience. I hope you understood what I said.

The Chair: Thank you, Eugene.

Does Mr. Wiseman have some comments too?

Mr. Mervin Wiseman: Mr. Chair, ladies and gentlemen, thank you.

The fur industry is commodity-specific, but there's a message here as well that can be extended to a lot of other commodities that are more non-traditional, so to speak.

In my preamble I talk about risk in the fur industry. There's risk in all types of commodities, there's no question, but in some areas of agriculture, especially the more traditional or the mainstream agriculture, risk becomes somewhat minimalized through various measures. Supply management, for example, is one area where we've managed to intervene and have some level of risk management. For the stream of agriculture where we don't have these kinds of controls, it's very difficult.

Funding for capital and operational necessities is almost impossible to access, through both governments and private sources. Government programs are rarely tailored to meet the non-traditional farming community. Safety nets are harder to come by, and overall it seems that these farming operations constantly have to piggyback on programs designed for the more traditional farming enterprises of a completely different nature.

I've identified some of the reasons why fur would fit into this high-risk category. It's outside the mainstream of agriculture in Canada—I think that's obvious. It's a domestic activity primarily carried on for an international marketplace. I know there are other commodities that work for the international marketplace, but with this one we're dealing almost exclusively with an international marketplace. The fur commodity caters primarily to the luxury marketplace and is a non-food commodity, which makes a difference in a lot of cases.

The fur market is highly cyclical in nature because of its vulnerability to fashion shifts, the animal rights campaigns, and climatic anomalies. When we have very warm winters, as we have had in the past four or five years, the fur doesn't seem to sell as well. That has a big impact on the inventory supplies and of course on the price.

The health of foreign economies has an impact. Russia, for example, went through a hard time a few years ago with its economy. It's getting on track now, somewhat, and we've seen a big difference in the marketplace for fur, because of Russia and its appetite for long-haired fur.

China is also becoming one of the biggest players now in the international marketplace. Last year, for the first time ever, China was the biggest consumer of any nation in the world of fur commodities. That's pretty exciting, but as it gets more into a free-market system, it seems to be able to lever in some of these areas much better than it could in the past.

Fur farming is a rural activity and is scattered over a very broad area. It requires long-term investments without short-term returns, and that makes it a little difficult to attract venture capital, and things like that.

What are we chasing here? It's important to understand it's not just a frivolous commodity or farming activity. I've outlined some of the opportunities here. The fur industry is a multi-billion-dollar international industry, employing thousands of people in trapping, farm production, manufacturing, retailing, and other spinoff areas.

Farm fur is the mainstay of the fur industry of Canada, accounting for 85% of the industry's turnover. The European Union has estimated that the fur trade employs approximately 175,000 people directly, plus a further 50,000 working in the supply trade. The total retail trade turnover of the EU in fur is estimated at $6 billion U.S. annually.

¿ (0950)

The Greek fur industry, which operates exclusively on imported fur, is valued at approximately $1 billion in secondary processing annually, so there are incredible figures here. I visited Kastoria in Greece a couple of years ago. It has a population of about 65,000 people, and there's no unemployment. About 90% of the employment is in the fur industry, and they don't produce one pelt. They import from Scandinavia and from Canada. It's incredible we can't do the same thing with it on our doorstep.

The Scandinavian fur industry produces over 60% of the world's mink pelts and over 80% of the world's fox pelts, an industry worth close to $3 billion U.S. annually. They came to Canada to start fur farming, went to places like P.E.I., took some silver fox, went back to Scandinavia, and began producing this great industry.

The latest figure from a survey on fur retailers in the United States indicates that sales have increased from $1.2 billion in 1995 to $1.5 billion in 2000.

According to the Fur Institute of Canada, the fur industry provides important income for over 85,000 Canadians. That includes a lot of trapping. In Canada approximately 2,000 people are directly involved in fur farming, a further 2,500 people are employed in manufacturing and processing, 2,500 people are in retail, and at least 1,000 people are working in related services.

There are about 700 mink and fox farms in North America. They're family-run farms. They produce approximately 3.5 million mink and fox pelts, valued at $127 million U.S. Fur farming, of course, is a rural activity and provides employment where opportunities are very few, especially in a place like Newfoundland. Fur farming is a renewable resource operated on a sustainable basis with strategic environmental advantages for the utilization of waste meat byproducts, particularly the marine byproducts we have in Newfoundland.

As to some of our strengths, I mentioned here that Canada produces 1.2 million of the approximately 28 million mink pelts farmed worldwide. We only produce 15,000 of the 4.5 million fox pelts produced annually, and that's a shame. That is a real shame, because we're really strategically placed where we can compete with the best. We should be way above these figures. We have an abundant and ideal land base situated in remote rural areas, an abundant supply of relatively inexpensive raw feed materials from marine and agriculture byproducts, a climate ideally suited to producing high-quality pelts, and a good human resource component that is well endowed with talents complementary to fur farming and internationally competitive in expertise and cost. We have established a good base of breeding stock that exceeds international quality standards and a research and development infrastructure that, if properly directed, can ensure competitive advantages.

Among the barriers we've had to face is a lack of a long-term strategy by both government and industry. We've done fairly well in Newfoundland on strategies, so I'm talking more of the national strategy. We just simply do not have a national strategy when it comes to fur farming. There's a lack of industry diversification, and I think we've seen the results of that with the fox industry. The long-haired furs took a bit of a dip, and strategically we weren't properly equipped to deal with that. As a result, we're losing the fox industry.

Certainly we don't have a suitable safety net program. We have inadequate research and development strategies and support. There's an inadequacy or unavailability of funds for capital and operational needs and of loans needed to mesh with annual revenue sources. It seems the banks, FCC, or whatever institutions are out there operate on the basis of monthly payments. We have a revenue base where we work on an annual basis. We see revenue once a year, and it's very difficult to make monthly payments on the basis of that.

There's a lack of support and strategy for disease control. We have a huge Aleutian disease problem in Nova Scotia now, and it's threatening the industry. There are poor controls there. Financial constraints imposed by environmental criteria now seem to be getting a little worse.

There are security constraints imposed by animal rights activists. We have to equip ourselves pretty well to offset some of the threats we have there, from chain-link fences right to public relation programs.

¿ (0955)

I've talked about here, in conclusion, some of the recommendations, some of the support mechanisms we should be looking at. I mentioned that Scandinavia serves us now as an excellent reference point, where producers and government have synchronized from the beginning to develop one of the greatest fur industries in the world.

Canada should develop a national fur farming strategy. Fur farming strategies should identify critical fur farming support infrastructure such as quality control, genetic development, research and development, training, demonstration and centralized feeding facilities, funding mechanisms, and all the things that you need to implement a proper strategy over a long period of time.

Special farm development funds should be established under appropriate companion agreements to provide for modern efficiency standards, technology transfers, extraordinary costs associated with farm security, and certainly disease control, help with diversification, water supply systems, environmental control, all these kinds of things.

I won't go over all the recommendations here, just the key points.

We feel that there should be a comprehensive marketing program to keep pace with the changing dynamics of international fashion shifts.

Aggressive marketing analysis and support programs should be available on an ongoing basis to be able to respond and to get into some of the markets in Russia, China, and other parts of the Far East.

A comprehensive awareness program should be supported in order to assure the public of safe farm practices conducted in an environmentally sustainable manner.

We feel that government should intervene somewhere, with FCC in particular, I think, to provide financial support to fur farmers instead of having them rejected as a risk problem, which is mostly the case. I personally have had the experience of being turned down many times, and I don't believe there's one fur farm in Canada that's supported today by FCC.

We feel that FCC should be changing its lending criteria to accommodate repayment on the basis of annual revenues, rather than monthly.

In addition to existing capital loans programs, FCC should be empowered to provide operational loans with an annual repayment option. If you can't access operational loans, it makes it very difficult for us.

Perhaps if we look at the advance payments program, there are changes that can be made there to accommodate some of the operational needs. If we could make this program work for us while inventory is on the farm, as opposed to being in the auction house... When our furs arrive at the auction house, they probably clear there in three weeks to a month. We have our revenue, but that doesn't help when it's sitting on the farm for quite a period of time without operational cashflow to get it to the marketplace.

We talked about the net income stabilization program, and again it's this issue of piggy-backing. We found we had to plug into a national program that I believe was designed for other types of agriculture, a good program, but because of the long-term downturns that we had in the 1990s, we just couldn't establish the appropriate levels of income to take a percentage off. We always ended up taking a percentage of zero, and any percentage of zero is usually zero. It's hard to set up a fund for yourself to trigger this kind of situation.

With the CFIP, it's the same kind of situation. When we went back to establish some historical figures, where we could get some disaster assistance because of the long-term problems we had with marketing downturns in the 1990s, we found we couldn't establish any levels of income to give us something we could tap into from the disaster income perspective. We did get into the negative margins situation, which allowed us some level of support, but of course when CFIP came down the tube that all changed. That was unfortunate. So there was never anything there tailored to meet the needs of fur farmers, and I'm sure other commodities can say the same.

I think I've laid out the situation here that we should be pursuing. It's good for the rural economies in particular, and I think for Canada in general. I hope this committee can be an instrument to help us move that particular item forward.

À (1000)

The Chair: Thank you, Mervin.

I don't think we've had anyone before talk about furs, have we? I talked to the taxi driver in P.E.I. about it, but that's as far as we got with this committee about furs. Of course, they had a very adequate fox industry in P.E.I., probably 20, 30, 40, or 50 years ago, or 100 years ago.

Moving to the dairy sector next, Martin...

Mr. Martin Hammond: Thank you, Mr. Chairman.

Today I've brought along our dairy industry adjustment strategy report. I have no intention of reading it. This was developed in the past year by all industry stakeholders in our province. I have it for circulation after the meeting. What I'm going to provide to you right now is an overview of what took place during the past year in our province. I understand that Suzanne will also circulate this later.

During the past year, 2001, farm production at our farm levels amounted to $28 million. We produced some 34.6 million litres of milk. Total consumption in our province amounted to 33.4 million litres, an increase of 2% over the previous year. Consumption per person is 65 litres; nationally it's 88 litres.

We operate on a quota allocation policy. During the past year we allocated 32 million litres of fluid milk. We shipped out of the province a total of 1.8 million litres of milk for further processing into skim milk powder.

The dairy industry adjustment strategy and the national milk marketing plan.... The strategic plan for the Newfoundland dairy industry has been developed and is presented in four elements. The first element was to bring the negotiating process of Newfoundland's participation in the national milk marketing plan to a successful conclusion. On July 25, 2001, at a meeting of the Canadian Milk Supply Management Committee, the other nine provinces voted unanimously to accept Newfoundland's plan.

What do we get? Upon signing the P-10 agreement on August 1, 2001, we received an initial allocation of 7 million litres of industrial milk production. Our target MSQ production over the next 15 years is 31 million litres, in addition to our fluid milk requirements.

What are we required to do? We are responsible for all financial obligations. We have to follow the national classification system on milk. We have to conform with the dairy here, follow all Canadian Dairy Commission audit procedures, and within one year submit a plan to participate in an eastern pool.

The second element would involve providing as much information as possible to producers and processers to explain all facets and implications of the agreements reached. This process has begun. Individual farm enterprises will have to make decisions with respect to MSQ production. This will enable long-range plans to be done in the production and processing sector.

The third element relates mainly to the production area. Forage development and land enhancement will be needed. Current and projected deficiency in forage production constitutes the single greatest challenge and opportunity to the Newfoundland dairy industry, in fulfilling this MSQ of 31 million litres.

The IAS committee is addressing the following issues: production enhancement of land under cultivation, underdeveloped land designated for agriculture, human development issues. We have met with and received support from our minister, Rick Woodford; the economic policy committee of cabinet; HRDC; and ACOA.

The fourth element addresses issues intended to strengthen the dairy industry and enable the processing and production area to diversify. We have to maximize the skim-off in our province. We're undertaking an in-depth consumer market study. We're going to make a detailed assessment of the multiple component pricing system; undertake an examination of Newfoundland's regulations with respect to the dairy industry; establish measures to enable and to ensure that the quota is maintained in our province; develop and implement a communications process with government and the public; develop access to financial resources to strengthen and grow our industry; and maintain the consultation process.

I hope you will take the time to read the report. As stated, it will be translated and circulated. Once again, on behalf of dairy farmers, thank you for receiving us today.

À (1005)

The Chair: Thank you, Martin.

The final presenter is Mr. Raymond Williams.

Mr. Raymond Williams: The best is the last.

On a little bit of background, ladies and gentlemen, the Goulds Agricultural Society was started as a not-for-profit organization. My father was one of the founding members. He has since passed away, and we continue it. The agricultural society name came into being as an access route for funding as an organization.

During the past two decades we have carried out a land enhancement program using small amounts of funding from both federal and provincial programs. The farmers themselves provided equipment and machinery, as well as some of their own money, to open up approximately 1,200 acres of forage operation in the Goulds area. It was called the Goulds forage project. It was on the east coast of Newfoundland, for those who are not familiar.

Just in a small way, it points to a model that can be used to further assist farmers, now and into the future. Because of the project, the farmers in the area are almost self-sufficient in hay production. There are 20 to 30 more full-time employees, and upwards of another 20 part-time employees are employed in the area during harvest season.

Now the farmers would like to turn their attention to the grain commodity. We have the capability of growing corn silage, as well as other grains in the area, with our available heat units and the climate, with new technology and grain research in the department. With an increase in the grain and corn silage, the farmers in the area and on the island will be able to make it more feasible to grow their own replacement stock and herds.

The pressure on governments worldwide to allow populations access to affordable food is unlikely to go away very soon. Therefore, the farming community would like to see our government offset the enormous subsidies provided by Europe and the U.S.A. This may be achieved by providing assistance in land development, land enhancement, and land refurbishment. After all, land is one of the most valuable renewable resources any country could wish to own, and some extra land would allow the farmers to better manage their supply of nutrients and at the same time contribute to the reduction of carbon dioxide.

Transportation is a factor in agricultural production. Therefore, the faster farmers become self-sufficient, the faster peak efficiencies are achieved. To assist in this area, the government should continue to research and develop new forms of silage and forage, and test new manure handling systems and equipment. In light of recent contamination events, this is now a major environmental issue, and a concern to the community nationwide. Contributions to the on-farm subsidy program would address some of these issues.

We have recently become a member of the Canadian Milk Supply Committee. In order to fully utilize our allocated quota and share, we must increase and improve our forage production to make it a viable operation. The objective of any area is to buy, sell, or trade locally, and ours is no exception.

Currently, all of our culled cows are being shipped out of the province for processing. There's no facility to produce cheese and other products from industrial milk, and no facility for long-term vegetable storage. In addition to dry cows, a small centre like this could allow free-market processing of vegetables and secondary processing of milk. Adequate planning and funding of all these items will give a tremendous boost to our industry and our economy.

In closing, throughout the country the average age of farmers is well over 50 years old. If some significant steps are not taken in the near future to make farming a more attractive vocation, we may soon find ourselves depending on other countries to supply our food.

Thank you.

À (1010)

The Chair: Thank you, Raymond.

We've now completed our presentations. Each member is limited to a certain amount of time for questions, and Howard will start off.

You have seven or eight minutes, and that includes the answer time. So we try to keep both our answers and our questions quite short.

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

It certainly sounds like Newfoundland has a plan and its producers and government are moving ahead with it. Of course, while it's not without problems and challenges, as we've heard, it generally sounds like it's been a positive experience.

To get a little perspective on it, what is the cost per acre of land capable of growing corn? Do you have a rough figure? Does much farmland sell here? Not too much, okay.

Is the issue one of farm transition between generations, then?

Mr. Ed O'Reilly: Well, talking about corn, I don't know what the economics are. I'd have to refresh myself on this, but as far as its reaching maturity, there were some discussions about this. Basically, the dry matter levels needed for corn weren't always high enough. But farmers were finding that it was certainly of good enough quality to be a significant source of feed on their farms.

Time of harvesting was another aspect. The corn was ready after all the forage was made. It allowed them an opportunity to get more product from their operations. The two cuts of forage they generally have, plus the corn, gave them a great feed. As you know, the high energy in corn makes it a good feed, even at a dry matter level of 30%.

À (1015)

Mr. Howard Hilstrom: Okay, that's fine, thank you.

Let's deal with a couple of other issues, then. The government is responding to great concerns over the Kyoto agreement. Raymond, are you familiar with the Kyoto agreement, generally—not the details of it, but with the concept of the greenhouse gases?

Mr. Raymond Williams: Yes.

Mr. Howard Hilstrom: One of the government's suggestions is that we should have more land left as natural forest, and you're talking about clearing land. Would you like to see the Kyoto agreement restrict the amount of land that can be cleared?

Mr. Raymond Williams: We look to land-clearing development in our area more as a way to make better use of our manure systems. Our farmers seem to be expanding the size of their herds without sufficient land to dispose of the nutrients from the manure. So this is where we would like to see land enhancement.

Mr. Howard Hilstrom: Yes, with a little bit of warming in Labrador and Newfoundland, a lot of land there could probably end up in agricultural production in the future. But we won't go into that.

As for other issues we are looking at right now, a bill dealing with changes to the section of the Criminal Code that deals with cruelty to animals is currently before the House. Are you in favour of this bill as it currently stands? Or do you go with the dairy industry when it says that the bill potentially would have a negative impact on it? Are you for it or against it?

Mr. Martin Hammond: I would say we are for it.

Mr. Howard Hilstrom: You're for it?

Mr. Martin Hammond: Yes.

Mr. Howard Hilstrom: Yes. So your position is contrary to that of the Dairy Farmers of Canada, who said on April 3 that it was against the cruelty to animals provisions to the act as they now stand. But that's okay. I'm not trying to start a fight between you and your industry. I received a letter from them on April 3.

Before I ask the same question to our presenter from the fur industry, I'm going to ask Eugene, or possibly Martin Howlett, this question. You were talking about winter wheat. We have a great organization in the west called the Canadian Wheat Board. Would you like to see Newfoundland as a part of the Canadian Wheat Board, which would then have a monopoly on selling your wheat?

Mr. Eugene Legge: I'll answer that.

Most of the wheat we would grow in the province would be for our own consumption, so we wouldn't be selling to the Wheat Board at all.

Mr. Howard Hilstrom: I'm talking about wheat for human consumption.

Mr. Eugene Legge: Pardon me?

Mr. Howard Hilstrom: Aren't you processing some organic wheat there for human consumption that people sell in the natural food stores?

Mr. Eugene Legge: Not really, no. We're pretty much looking just at farm-grade wheat to feed the livestock.

Mr. Howard Hilstrom: It's just livestock feed, okay.

Mr. Eugene Legge: That's all we're doing right now.

Mr. Howard Hilstrom: Okay, that's fine.

Now let's talk about this cruelty to animals issue with the fur industry people. Do you think the fur industry should have the protection currently in the Criminal Code of legal justification and a right that protects it from legal charges against it over how the animals are raised? Can you comment on this?

Mr. Mervin Wiseman: For the record, we're not in favour of this particular piece of legislation. I don't have the details in front of me. I didn't read up on it before I came here.

Our feeling is that with what we have in place, we're well equipped to deal with the animal rights situation. We have our own code of ethics from a provincial perspective, and we have a code of ethics from the agriculture industry. We have SPCA members sitting on the board, for example, along with veterinarians and representatives of the agriculture industry. So we have the protection, I think, to make the public comfortable with this animal rights issue.

We're looking at some of the things that are happening in the EU, such as the Scandinavian industry, fur farming in England, and the situation in Holland. They found that through legislation they can come in the back door to shut people down.

It's the hidden agenda that worries us. I think the protection is already there. Why should we arm the animal rights people to do any more damage than they've already done? I think we've seen good examples of that.

À (1020)

Mr. Howard Hilstrom: Those are the questions I had. But if I have a minute, I'd also like to ask about research and development. Is the federal funding adequate? I think, Martin, that would be your area.

Mr. Martin Howlett: We do have a research station in the province that works very closely with us. We have all kinds of projects that we do jointly through partnership agreements. We have a relationship with the research facility in our province that probably doesn't exist anywhere else in the country. That's again because we're a small industry and we know each other. We don't have any problem getting them onside in terms of research that's suitable for our province.

I'd just like to comment on a couple of other things you brought up. You talked about greenhouse gases, land development, and animal rights.

I don't think anybody in the agriculture industry is intentionally doing something to harm animals, whether it be dairy or what have you.

We have roughly 100,000 hectares of land in the province that are suitable for agricultural production. As you know, Newfoundland and Labrador has a land base equal to all of the Maritimes put together.

I don't think the level of development we're at in land productivity, enhancement, or clearing, whatever you want to call it, is going to add tremendously to the greenhouse gas emission issue in this country or elsewhere. If it is, I think we have a more serious problem than we are going to be able to deal with around this table. If we were to clear the full 100,000 hectares, I don't think it'll make the sky open any more than it already is.

The Chair: Thank you, Martin and Howard.

Mr. Desrochers, do you have any questions en français?

Mr. Odina Desrochers (Lotbinière--L'Érable, BQ): Oui.

Good morning, everybody. I would like to speak to you in English, but I prefer my original language. It's easier for me.

[Translation]

I think you appreciate that our beautiful country is bilingual. I have a few questions to ask. First, I would like to thank you for coming here today all the way from Newfoundland. We had anticipated we would go and greet you there. Instead you came here. We are delighted to welcome you.

I have a few questions and comments with respect to the percentages. What are the percentages invested by the Provincial and Federal Governments in your agriculture budget?

Secondly, since 1993, you know that the Canadian Government has readjusted the level of all aid and subsidies taking into consideration the negotiations, notably the ones that took place in Uruguay.

Have you also been penalized by the decrease of the aid and the increased vulnerability of our agriculture? I would like to understand Newfoundland’s position with respect to these decisions that were made by the Canadian Government.

[English]

Mr. Martin Howlett: In terms of decisions that were made by the Canadian government in the Uruguay Round and with respect to some of these trade issues, we normally don't feel a great impact because of the fact that a lot of our production is domestic production, going especially into our own marketplace. As was said earlier, we're not a big exporter of agriculture products. We only export in total—I guess with our berries and fur—about $3 million or $4 million, so traditionally we're not going to feel a big impact.

As we move forward in our development, we anticipate more exports because we're getting into some of the areas that are more exportable with our berry crops, cranberry production, and what have you. A big impact is not being felt now.

In terms of the percentage of dollars invested in agriculture, we have a small budget that could run, depending on cost-shared programs, anywhere between $12 million and $20-odd million. Agriculture Canada's budget is probably a little smaller than that because you have to look at how Canada will factor their budget. In the province they have inspection services in different areas of government, and they have research.

We have one thing in the province that sometimes is an irritant to me when I speak about the numbers here, and that's the quarantine we're under in moving products out of the province through Port aux Basques or North Sydney. The inspection facilities that are in place are for the protection of other provinces, not Newfoundland. But when we hear numbers, they're put in the total numbers of Canada's investment in our industry, which has a zero effect.

À (1025)

[Translation]

Mr. Odina Desrochers: We can conclude then, that the decisions that were made since 1993 have not had an impact in your province.

You say you do not want to argue about numbers, but with respect to these percentages from 1993 to 2002, have the levels of participation from your province and from the Federal Government been the same? Have they changed?

[English]

Mr. Martin Howlett: The amounts have remained fairly stable since 1993, but they will vary. See, it's a difficult question because they will vary if we sign agreements. For example, we are now into a safety net agreement and into negotiations for an APF agreement. When we factor in cost-shared agreements, yes, our budgets go up and down on both sides, both on the federal side and the provincial side, if that's your question.

[Translation]

Mr. Odina Desrochers: My question addresses the fact that currently our Canadian Government is contemplating implementing nation-wide standards. Whether we are representing Quebec or another province we are trying to find the best solution for all provinces.

I understand you are telling us that you are satisfied today, but you would not want to be subjected to a restrictive “Wall to Wall” type model. It would require some flexibility. The agreements as they stand today lead us to believe fixed percentages could be implemented as part of a framework agreement. With this in mind, my question aims at finding whether your province would benefit more from a flexible model, suited to its needs and expectations.

[English]

Mr. Martin Howlett: Now I understand where you draw your question. In terms of national standards, it's going to depend what you're looking at. We'll take in some of the inspection, and we'll talk about small slaughtering facilities, for instance. We would see some of that having a negative impact, because we just have one federal inspection plant in Newfoundland, and it happens to be a chicken plant. All of the small slaughter facilities—we have about 26 of them—are provincially licensed and inspected. If we move to a national standard, we can see an impact here, yes.

In your other question, you're talking about the discussions that are now ongoing for flexibility in an agriculture policy framework. From our province's point of view—and we're still a developing province—for the five elements of the APF, we are certainly in agreement with setting national standards and national goals. How and when we phase the thing in and who pays for what is an issue that has to be resolved.

The other issue we have in our province, as I said earlier, is the stage of development we're at. We've heard a lot about a level playing field. And I'll go back to 1993, because I've sat around the federal-provincial table for a long time; sometimes I say probably too long.

From our province's point of view, we'd like some day to reach a level playing field in terms of adequate access to cost-shared agreements. The stage of development of all other provinces in this country is much greater than ours. In a lot of cases, if not all, that's been because they've had a long history of access to cost-shared funds from the federal government.

We've been the new kids on the block, mainly in the last 10 or 12 years, in trying to develop a commercial industry and have access. I guess we were late getting on the block. When we got on the block, I think we had one cost-shared agreement, and then the federal government moved out of cost-shared agreements and into things like safety nets and what have you.

I'll say in front of this committee, I like the APF approach that's been taken. But when we get to the stage of bilateral agreements between provinces, the needs of the provinces, and probably the flexibility issue and so on—the level of funding, who pays for what, how those are triggered, how long we phase it in while getting out of existing programs, if we're going to take that route—are factors.

I'll just to add to that. I think in whatever we do in moving with an APF or even the future roles of government, there are three things I say we have to look at. One is financial viability and sustainability over the periods we're going to be talking about. Another one would be environmental responsibility and viability, because it's a big issue these days. The other one I refer to as the social viability—the family farm and the rural communities and everything most of us live in. I think wherever we go in programming, we have to have those three things uppermost in our minds, because they're all equally important.

I will just stop by saying the five elements of APF are critically important. I like the approach; I think it's long overdue. From my point of view and that of our province, I brought to the table about 15 years ago that the programming we have in the country, and talking about certain things not qualifying—e.g., supply management, and what have you—was the wrong approach back then. If we look at an umbrella agreement and a whole-farm approach to where we're going, I think we're getting our heads and our resources in the right place.

À (1030)

The Chair: Thanks, Martin.

Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: Thank you very much. Merci beaucoup.

[English]

The Chair: Before we move on, the figures... Maybe I didn't quite hear correctly. You have a combined department in Newfoundland where one minister has two industries. But what, again, was the figure for the amount of money allocated for agriculture, Martin?

Mr. Martin Howlett: We're right now at about $12 million. That will vary, depending whether we're in the cost-shared agreements.

The Chair: Does that $12 million include federal funding?

Mr. Martin Howlett: No.

The Chair: That's your provincial budget?

Mr. Martin Howlett: That's provincial.

The Chair: That is in a budget area of how much per annum?

Martin Howlett: Our total budget in our department is about $44 million, so we're about one-quarter of the department. The other piece is for--

The Chair: But what is your annual budget for the Newfoundland and Labrador government?

Mr. Martin Howlett: I don't know that off the top of my head. We're not a big portion. We're probably about less than 1%, maybe three-quarters of a percent.

The Chair: That's what rather shocked me, that it's a very... Yet, you know, Martin, in terms of your own industry, I saw a headline in the farm press and you mentioned that there's a goal your government has and your federation has for 2016, the Dairy Producers of Newfoundland.

Mr. Martin Hammond: We have been allocated 31 million litres by the Canadian Dairy Commission and it's over a 15-year period. At the end of the 15-year period, whatever we're producing market-share quota will become our quota at that point in time.

Our objective is to hopefully have enough land development opportunities take place over the next 15 or 16 years that when we get there we will be able to produce the full 31 million litres.

The Chair: But all your farmers are working without hardly any government involvement. That's what is rather, you know...

Mr. Mervin Wiseman: That's the problem.

The Chair: I'm going to go to Paul now. Mr. Steckle.

Mr. Paul Steckle: Thank you very much for appearing.

I've always had a fascination with the province of Newfoundland, because it has probably the biggest moose in the country, and I have a fascination with that particular sport. But I think for this morning we'll stay with agriculture.

We're talking about dairy, and of course I'm a big supporter of supply management in the dairy industry. Is it realistic to expect that the opponents you have toward further land expansion and clearing of land for the purposes of agriculture will keep you from doing that, or is the possibility of expanding that area a reality?

Mr. Raymond Williams: If I may speak a little bit, in our area, the area that we're talking about on the east coast, we don't have a whole lot of forestry. It's not a forestry end of the island, as toward the centre and the west coast. So we don't get a whole lot of kickback from forestry groups opposed to us clearing land for land refurbishment and enhancement. It's more of an agricultural community than a forestry camp community. The only forestry that's there basically is household, domestic cutting, you know.

À (1035)

Mr. Paul Steckle: So it will be an economic decision that you make as people in agriculture whether or not you feel it is economic or viable to clear land and get it into pasture or grains or whatever. That's a decision that will be made on economics.

Mr. Raymond Williams: Yes.

Mr. Paul Steckle: Is there a lot of land that's available for that to happen? You have a lot of peat land. You have mineral-based lands. Is there a great area where this could be expanded, or are you limited there as well?

Mr. Raymond Williams: We're limited to a point, but there is... I'm not sure of the acreage. Marty can probably tell us what acreage is available in the area on the east coast.

Mr. Martin Howlett: I'll just talk, I guess, from the point of view of the entire province.

We have land available. As I said earlier, we have 100,000 hectares of mineral, and there's about 1.3 million hectares of peat land of 30 hectares or greater. All of that has the potential for agriculture.

The costs of developing that land vary from the east coast to the west. They'll vary with tree cover and what have you.

As anyone here who's involved in agriculture will realize, farms don't just happen. I guess we're probably to the stage where we're trying to make farms in a lot of cases almost out of the wilderness, in terms of going in and clearing land and what have you. And it's expensive.

Yes, we are hoping to be in a position to do something between the province and the federal government on some of those issues, because we do need help. As I said earlier, every province in this country over the last 50, 60, or 70 years has had that help. I guess we're a little late at the table.

We're not going to relinquish the fact that we have opportunities in agriculture in the province, in the supply-managed areas, and in a lot of our other traditional berries and crops. And right now it's the nutraceuticals and what have you. We have a lot of potential, but it's going to be costly.

If anyone has looked at the throne speech that our government just put out three weeks ago, the government has made a commitment to do something on the land issue, particularly in support of dairy. Also, in that piece it was said that our minister will be having discussions with our federal counterparts on how we move that forward. So we're hoping we will move forward in that area.

Mr. Paul Steckle: Okay, on another question, can someone quickly tell me, what is the average heat unit level in the agricultural areas of your province?

Mr. Ed O'Reilly: For corn, maybe 2,100—

Mr. Paul Steckle: Twenty-one hundred.

Mr. Ed O'Reilly: It's just kind of on the borderline there.

Mr. Paul Steckle: Okay.

Mr. Ed O'Reilly: It depends, of course, on what—

Mr. Paul Steckle: Sorry, but we'll move on quickly because I only have limited time here. Thank you very much for that. I know a little bit about that.

Because you're producing for generally a domestic market, while you may feel disadvantaged, let me tell you that you don't suffer with some of the disadvantages that we in the rest of Canada do. So you do have some merit in where you're living and where you're attempting to expand your industry.

The purpose of this committee is of course to look at what government role in agriculture is. Farm credit was mentioned. I believe my furrier friend mentioned that this morning. Is there not the possibility, is there no room within farm credit policy to allow for the fur industry...? I realize it's not the dominant industry; we have a bit of that in my own area. Is there not room for them to accommodate someone? We used to pay our junior farmer loans, our farm credit loans, on a one-year annual basis. What's the problem there?

Mr. Mervin Wiseman: Listen, I don't know what the problem is, but I believe it is there. If you look at their brochures and their presentations, you say what's Wiseman talking about, because this isn't the case. But I know it is the case. Our industry, our individuals have gone, and I've gone myself, and for some reason they always come back and say risk levels are too high; we're just not prepared to go the gamut with you; if you can't demonstrate through off-farm income in some way that you can do a monthly payment, then we just can't accommodate you.

I believe it is there. I think somehow the government is going to have to come back and reinforce that.

I don't know how, but if you look at the record over the past few years—I don't have the figures with me now exactly—when you look at some of their lending routines, I think, over a five-year period, the number of applications they had out there, they rejected most of the applications in the non-supply areas, like fur. I think over 80% of their approvals were in the supply management areas. That figure is too high. So obviously they're not willing to share the risk.

I believe their mandate is to share the risk. I think that's their wherefore. If they're not going to share the risk in the non-supply, in the areas like fur, then we just can't go anywhere. We have no programs to work with.

À (1040)

Mr. Paul Steckle: Okay. That's fine.

Yes?

Mr. Martin Howlett: I'd like to add to add to that. I've been around agriculture in Newfoundland since 1964. I've seen quite a number of programs, and I've seen quite a number of policies of FCC. I recall back when FCC had a new entrant policy for agriculture. I don't know the exact number of years, but over a period of time, when we looked at the statistics, there was one loan made in our province over a seven- or eight-year period in that program. Basically we were told it's because it's high risk, and you name it.

We had a recent experience, which I'm just going to touch on briefly—and I don't think it's a fact of policy; I think it's a fact of how policies get implemented across the regions in this country. We had a case where there was an amalgamation done of our chicken industry, where producers got together and did an amalgamation, and what have you. That didn't work, unfortunately. Producers lost a lot of money, and I guess we, as provincial governments, lost a lot of money. Today we have a chicken industry where there are new players, and it's moving forward. But we have contract growers who are being told today that because of the bad experience and because we lost some money, we won't loan to chicken producers.

In my view, that's not the way to implement a policy. You have a policy and a producer. Regardless of what the experiences have been, if he can demonstrate that he can put something forward that's viable, it should be considered on, as I said before, the financial viability, the environment, and whatever the issues are, not because there was something happening that didn't work. If this is where we're going to go with agricultural policy in this country, I could put cases on the table that happened in other regions of the country in which FCC wrote off substantial amounts of money, and you can look today and FCC is loaning in those same areas. So I think it's how policy gets implemented, not the policy itself.

Mr. Paul Steckle: Thank you very much. That's important.

I'm wondering about the research dollars. Do you feel that you have access to the research dollars you need, whether it's in trade development or whether it's in other areas? How do you feel about that issue? I think it's important that it's on the table.

Mr. Eugene Legge: I don't like the way the new program, the MII, has come down. Before the research station was given x number of dollars for MII. Now there's a body in Ottawa who are going to decide what programs will be funded, and how much is going to be delivered to each station across this country. I don't think people in Ottawa could really understand the requirements or the needs of the farmers in each individual province.

We're a big country, and we have different climates from east to west coast, as we all know. We have different soil conditions and different growing conditions. How can one person have that much knowledge to sit down and decide what is good and what is right for each province?

In our province, we're still developing. There's a lot of potential to try out what types of varieties of corn or wheat are available to us to make sure we can get the right variety for the right soil conditions that we have. Even from the east to the west coast in our province, we have different growing conditions, different soil conditions.

I don't think the research dollars are adequate for our province. We get a small pittance, as always, because it's always based on farm cash gate receipts minus supply management. Think of it, we're 80% supply management.

Mr. Paul Steckle: Thank you, Mr. Chairman.

Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.): He's a sweet talker.

The Chair: David, would you mind if I go to Mark? He's another islander here, and he operates under some pretty tough conditions in Cape Breton.

Mark.

Mr. Mark Eyking: Thank you, Mr. Chairman.

Being from Cape Breton and working with a lot of your producers, I know Newfoundland agriculture has come a long way in twenty years. It's something your organizations and your producers should be proud of.

Our task force was travelling across the country in the last year. One of the biggest challenges and concerns with the farmers was this fast-changing marketplace. We see a concentration of control happening with the retailers and the processors. They're getting more centralized. I have two questions for Eugene. How is this impacting the future of agriculture in Newfoundland? Is it an advantage or disadvantage where you're located?

À (1045)

Mr. Eugene Legge: It's a disadvantage to the point that right now you're dealing with two major retail chains in our province. You get the Sobeys and the Loblaws or Dominion, whatever you want to call it. They're pretty well telling you what they will take, what price they'll take, and when they'll take it.

Not having the vegetable storage available in our province, it's pretty well you have a flood of local product coming on at one time. So the powers that be say that's fine, maybe we can really milk this situation to its fullest; we know that there is a surplus, or they don't have the storage facilities to hold this product, so we can pretty well dictate what we want, when we want it, and what price we're going to pay for it.

So we are at a disadvantage in that sense. There's only so much local support you can get when all production comes on. You're dealing with offshore product coming into the province as well.

Most farmers have gone to the farmers' market type of thing. That's how they're trying to do it. They're also trying to look at how the market trend is changing. We've gone away from the traditional turnip, carrot, potato Sunday dinner type of thing, into the more broccoli, lettuce, and, as I said, the leeks and the Chinese vegetables and all that. That's where the marketplace is going.

We're getting more cultures coming into our province. You're seeing more immigrants coming into the province. So their eating habits are different from what the locals' habits were in the past.

Mr. Mark Eyking: At least 75% of the food is purchased through retailers or through food services. So it is a problem breaking into that market. That's not just vegetables, what about chicken and the milk? Do you have systems in place that deal with that? Because sometimes you decide we're going to process cheese, and we're going to process it in New Brunswick. I'm wondering how that affects it.

Mr. Eugene Legge: I don't know about milk, but in chicken we have a local plant that deals primarily with fresh product. And they're even dictated to by the local chains, in terms of what the firms want, when they want it, and the quality and the price. So it's getting very hard to deal with, as I say, the Sobeys and Loblaws of the world.

The milk... You have two processors in St. John's?

Mr. Martin Hammond: Yes, we have. Our processing facilities are located in St. John's and also in Corner Brook in the west corner of the province. Our processing facilities are owned by Nova Scotia co-ops. They came in a couple of years ago to further their own bottom line. They took over our own local processing plants. Plants in our province are owned by Farmers' Co-op and Scotsburn.

We have no trouble moving our milk within the province. We're self-sufficient in fluid milk. We have no further processing in the province into industrial milk, only some ice cream. We have the equivalent of 80 million litres of products coming into our province on a yearly basis.

What we want to do is develop our fluid market and go into further processing in skim milk powder, butter, yogurt, or cheese in the future.

Mr. Mark Eyking: Instead of the milk going somewhere else, getting processed, and coming back, they can process it right there.

Mr. Martin Hammond: That's correct, yes.

Our dairy industry has only really grown since 1983, when we formed the Dairy Farmers of Newfoundland and Labrador. At that time we were producing approximately 7 million litres of milk. Now we're producing almost 35 million litres of milk. The farmers have the will; they have the know-how. We have the largest herds in the country. We have the highest technology in the country in the farming industry. All we need is funding and assistance to help develop the land, and we'll be there.

Mr. Mark Eyking: Thank you.

The Chair: Thank you, Mark.

Are your farmers members of Scotsburn or Farmers...?

Mr. Raymond Williams: Most of them are.

The Chair: They have membership in those two organizations?

Mr. Raymond Williams: Yes.

The Chair: We're going to move now to David.

Mr. David Anderson (Cypress Hills--Grasslands, Canadian Alliance): The discussion on the FCC was interesting to me. One of the first items we had when I came down here as a rookie MP in 2000 was a change in the FCC legislation. At the time, the Alliance was concerned about the fact that this would enable them to move to those big loans that were easier to syndicate, and we're seeing that clearly in western Canada. This year, for example, the Saskatchewan Wheat Pool has a financing program that's only available to them and not to anybody else.

I'm just wondering, are you running into the same situation, where you're finding it difficult for smaller producers to get loans? Are you seeing them going to the bigger producers and the bigger organizations?

À (1050)

Mr. Mervin Wiseman: Yes, definitely. We're certainly seeing them leaning favourably towards the supply-management commodities, which is okay—not, I guess, a bad thing. The bad part is they don't do the same for us. I think they look at us in rural parts of the province and see land, for example, as our security arrangements. What do you get for a piece of land in North Harbour, two hours from St. John's, that's rocky? It's just not there?

We've had experiences as well where we've had good off-farm income, and still they're simply not doing it. I know about some of these changes. We felt that in the past year or so we should be seeing changes, but I haven't seen any change. I don't know if it's just mindset or where it's at.

I think if you're going to develop some of the unique opportunities with unique characteristics, such as fur, and as we get into the life science revolution and look at things that are very non-traditional, if we don't overcome this particular mindset we're going to have very serious problems, because we have no other places to go. Forget the bank. The bank just simply won't let you in the door.

Mr. David Anderson: Thank you. Those were our concerns. It's interesting to see that some of that is happening.

Raymond, you gave an indication you wanted more government involvement in your life. We've travelled across Canada here the last month or so. It's interesting that the organizations that have been doing well have been in things like cattle. They've been very strong over the last couple of years. They really insist on the government staying out of their lives. Specialty crops, particularly in western Canada, have increased about 3,000% over the last 10 years on their own, with very little help even in research. The organic industry is growing on its own, for the most part, at 10% a year. Horticulture, from the sound of things, has been doing pretty well.

I find it interesting that the places where the government has gotten involved are the places we have problems—the AIDA, CFIP, crop insurance. Grains and oilseeds is a disaster. The government has had its fingers in that pie for decades, especially in western Canada, and refuses to let us market our own grain.

I would like to give you an opportunity to respond to that. The successes we've seen have come from those organizations that are basically outside that restrictive government involvement.

Mr. Raymond Wiliams: Pardon?

Mr. David Anderson: Are you willing to give up your success in order to have the government in your life?

Mr. Raymond Williams: We're not signing everything over to the government.

I think Eugene might be able to answer that a little further.

Mr. Eugene Legge: I think what we're talking about here is you have to look at where we are. If we went back 30 years to the cattlemen and all the people out west who you've just talked about, they enjoyed getting land development grants and all this money. We're trying to get to the stage where they are now.

We're at two different levels. They're up here, and we're still down here. We're still knocking down trees and picking rocks and boulders off land to try to make it viable to do anything with it. Those people had the same problems 30 years ago. The federal government helped them out to the point where they didn't need that help any more, and they've gone on to bigger and better things. That's fine, but we're still back in the development stage. We would like to be at the same level of development they are today, and then we wouldn't want government involvement either.

Someone made a comment here to the effect of, look how well we've done without government. How well would we have done if we had had some help, as did the rest of the provinces twenty years ago when there were cost-shared agreements and all that? We would be there today. We wouldn't want the help today.

Mr. David Anderson: Well, I hope you get that, then. I understand you're developing an industry, but I think the success is going to come through things like your locally owned cooperatives. Then local producers, when they put their product into it, realize extra money from the value-added aspect that comes from that. We in my area have produced raw product for 80 years, and we're no better off for it. There have been deliberate farm policies that have kept us from being able to value-add to that.

Keep your freedom. Don't turn that over in terms of making those decisions, because the policy has been directed from this particular area of Canada for years. It does not necessarily benefit those of us who are away from this city.

You look at things like the...well, there's a whole list of them, such as Bill C-68. I would suggest the agriculture framework plan in it is an indication that four pillars are going to be used to remove support from one of the other ones. I think you'll see that unless people fight very strongly for it. We see this animal rights bill that's coming through today. It's a terrible piece of legislation. We need to understand that those of us who aren't situated right here are not always being taken care of just because people tell us we are.

À (1055)

The Chair: Thanks, David.

I'm going to go now to Claude. Monsieur Duplain.

[Translation]

Mr. Claude Duplain: I only have one question. I would like to understand the value and contribution of cooperatives in your province’s agriculture. What are the importance, size and involvement of such cooperatives?

[English]

Mr. Martin Howlett: I assume your question is in terms of agriculture cooperatives, not food cooperatives. We have a number of cooperatives—Mr. Williams talked about one—though I guess they call it a society. I look at it as a cooperative because they're getting money and putting it into projects and what have you and realizing some additional benefits.

We have an eastern farmers cooperative that operates on the island, but we don't have a lot of farmer cooperatives that are basically getting together to buy inputs, sell products, and so forth. We do on the food side have a number of cooperatives in supermarkets and what have you, but for the farm areas there's not a lot.

In my view, it's one of the important ones where we've been saying for years that it could work. When we do some programming, we like the farmers to do even the programming cooperatively, through the equipment that can be shared, through equipment purchases, and what have you. There's some of that happening. But in terms of the large cooperatives... And I know where you're coming from. You're from Quebec, I assume, so you already do a lot of cooperative things in agriculture we don't do.

Mr. Eugene Legge: Just to add to that, I think you have to look at the geographic aspect of the province. When you look at numbers, there are 48 dairy farmers in the province, and they're spread over 565 miles. It's kind of hard when you only have two or three dairy farmers in one small section and then you drive 50 or 60 miles before there's another group of farmers.

The same goes for the layer industry. There are 12 or 13 egg producers in the province, and they're spread from one end to the other end, so it's kind of hard... There's a group in central Newfoundland that has an egg grading cooperative, right? There's another group of egg producers in the Avalon that has an egg grading cooperative, right?

So they are small sizes, not to the extent you have them in Quebec or some of the other major areas. You have to look at the geographics of our province if just for the fact that we're spread over such a vast amount of land and that there are only 700 farmers, whether they be commercial or hobby farmers, in the province.

[Translation]

Mr. Claude Duplain: Would the expansion or re-organization of cooperatives help your agriculture? Do the existing cooperatives have problems with raising capital like the ones in Quebec do? Are you aware of such an issue?

[English]

Mr. Eugene Legge: Some sectors are having problems raising capital because of the nature of the industry they're in. As we have said, fur cannot raise the capital. The chicken industry--supply managed--cannot get capital for expansion. There is good demand for more production space in our province, but we can't get the capital to do it. I'm a chicken farmer, but I can't get the capital.

Once again, a group of vegetable producers in Musgravetown came together as a cooperative. They went to a co-op and got some money to build a new building and some production facilities and what have you. It's all according to people getting together and getting someone to be the catalyst to approach certain sectors to come up with the funds and all that. I suppose there are some sectors that can, but the majority of sectors cannot.

The Chair: Thank you.

Ms. Ur, do you have a question?

Á (1100)

Mrs. Rose-Marie Ur (Lambton--Kent--Middlesex, Lib.): Yes, I motioned quite a while ago, but that's fine. Am I on?

The Chair: Yes. Sorry.

Mrs. Rose-Marie Ur: Okay, good.

When we were supposed to travel to Newfoundland I was disheartened because I couldn't make it for personal reasons. I've never been to that beautiful province. Hopefully, before my career ends I'll be able to travel to that great province. I'm from southwestern Ontario, which is a rich agricultural belt as well.

You may have spoken to this prior to my arrival, but you have 700 farmers, and what is your average farm size in Newfoundland?

Mr. Ed O'Reilly: We gave some statistics earlier.

Mrs. Rose-Marie Ur: Will that be handed out to us?

Mr. Ed O'Reilly: I've passed it to the translators.

Mrs. Rose-Marie Ur: Okay, I can get that information, then.

And what is the cost per acre for farmland in Newfoundland?

Mr. Ed O'Reilly: There is crown land, which I guess is rental and surveying. To clear a piece of land, though, is somewhere in the vicinity of $2,000 per acre, I think.

Would that be fair, Ray?

Mr. Raymond Williams: That is just for clearing. Did you mean for clearing land?

Mrs. Rose-Marie Ur: No. If you have a farm and you want to sell it, what would be the buying price per acre, on average?

Mr. Raymond Williams: That depends on the area it's in, really.

Mrs. Rose-Marie Ur: Yes, I understand that. But still, there's a ballpark figure.

Mr. Raymond Williams: In some of the agriculture agreements, I think there is a set price. Where is that, Martin?

Mr. Martin Howlett: In terms of agriculture in the province we have 21 ADAs, agriculture-designated areas. Two of these areas are protected by legislation. In the one in the immediate St. John's area, we have a land consolidation program where people who are adversely affected by the legislation and want to sell their farms or retire from farming and so on...the government will negotiate with them to buy the land rather than let it go out of agriculture. Because it's zoned for agriculture, it can't be used for any other use.

The average price on good productive land in that area—and some of this land has probably been in agriculture for 50, 60, 70, or 80 years—is roughly $5,500. That's in one of the main dairy areas and probably one of the main producing areas of the province.

Mrs. Rose-Marie Ur: In the farming industry, is there diversification, or are they uni-sector farming?

Mr. Martin Howlett: We have probably the most diversified agriculture in the country. In this last five or six years we've probably gone fairly heavily into diversification, value added, further processing and so on, and I guess we've enjoyed some significant growth because of that. As you realize, we're heavily supply-managed, but there has been a big emphasis on diversification into other crops, nutraceuticals, some of our berry crops, native fruits, plants, and species.

Our greenhouse horticulture industry has more than doubled in the last five or six years. That industry is growing by leaps and bounds, I guess because the baby boomer generation has more time on its hands and more disposable income. People who don't like gardening are now going to do it. I was out shopping with my wife last week and got the fright of my life. I only have a little garden that I play in when I'm home. My wife said “I'd like to buy some different seeds.” I looked at her and said “For what? You haven't been out in the garden in your life.” She said “I think I'm going to plant something this year.” I said “I've got to see that. Give me notice.”

Mrs. Rose-Marie Ur: That's a positive. Is there much off-farm income in the farming sector, or are most farmers earning an income solely from their farms?

Mr. Martin Howlett: I'm glad you asked this question. When Merv brought up the off-farm income I was going to ask to make a comment about it in closing.

There's a bit of a disconnect in what is happening in the country. Right now we're talking about different types of programming and the five elements and what have you, and two of them trigger the off-farm income discussion—renewal and risk management. On the other hand, we look at the experience of Mr. Wiseman, who has an off-farm income and one of the largest farms in the country, and this option is shunned by some of our lending institutions, federal lending institutions in particular. Your committee has to look at the programming across this country and find out where the disconnects are, because there are some.

I point this one out to you because we're doing some programming on it now and we've been encouraging it for probably the last five or ten years. It might not be from the main breadwinner on the farm. It could be the farmer's son or daughter coming back to the farm, bringing in an off-farm income. So yes, we do have some off-farm income mixed with some production.

Á (1105)

Mrs. Rose-Marie Ur: When the committee was out east we heard from a lot of farmers in the organic farming sector. I read in your presentation that there are about eight organic farmers in the province. Are they compatible with the rest of the industry? Are they able to make it work?

Mr. Martin Howlett: If you look at the size of the province, there's really no competition with those who farm organically. The province is so large, and most of this kind of production is taking place very far away from other agriculture. They can easily stay organic. There's no doubt about it.

We have a lot of opportunities in the organic, or what I call the pure or natural area of agriculture.

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

The Chair: Larry, you are next.

Mr. Larry McCormick: Well, I just have a comment, Mr. Chair. Certainly Newfoundland and Labrador is a big area as far as agriculture goes.

I'm glad the question about Farm Credit Canada has surfaced here today. We gave it more of a mandate and more money. It can move beyond the farm gate. We need to encourage it to get involved with the cooperative movement in any way possible. I know Finance Canada has a new bill coming out now that will allow cooperatives to move and be more flexible.

Have there been applications made—I just want to put this on the record—to Farm Credit in the last three years that have been turned down for the same reasons as before? I have a reason for asking this.

Mr. Mervin Wiseman: Yes, there have been, absolutely. And I'll speak to my own personal experience.

I've made out three different applications and have been turned down, even with an off-farm income of about $100,000 a year.

Mr. Larry McCormick: Access to capital is the challenge across Canada. But yes, go ahead.

Mr. Eugene Legge: I've been through this in Newfoundland with the chicken industry. I was one of the people involved. I had $10,000 worth of debt written off by FCC, and that is not a whole lot of money when you consider that I have a quota of 126,000 birds, and buildings and assets probably in excess of $1 million.

I wanted either to improve the one I have now or put up another barn. I've been told no from John Ryan right on down to the local person because a business decision was made to write off $4.5 million for Newfoundland, so no new money was being made available to chicken farmers until sometime in the near future—and I don't know how “near” is defined in that context.

Mr. Mervin Wiseman: May I make one quick comment again, Mr. Chair, on this issue?

Right now I'm personally engaged, along with four other farmers, in an exercise with a consultant who says we have to have $1.2 million to bring our farm up to a level where it's self-sustaining.

We've looked for financing. We have some support from agencies like ACOA. We've turned over every stone in this country and have been turned down. We're leaving in May to look for investment capital in Scandinavia. If you're going to farm here, you should not have to leave this country to look for investment capital.

Mr. Martin Howlett: Just to add to that, Mr. Chairman, I think what we see in our province with the Farm Credit Corporation and other things that happen on a national basis is that it's how the thing gets assessed. With the Farm Credit Corporation it's how the risk will be assessed. When we're developing an industry, the risk is going to be much higher in those developmental stages, but the Farm Credit Corporation doesn't appear to want to take that risk. If the farm gets up and going, it's somebody else taking the risk, such as the province or ACOA putting in the money. There's no problem getting them to come in when the risk is minimized.

To me, with national programming, that's not the way to do it. There should be a way to weigh that risk for beginning farmers and developing farms. But I think what happens is you get that broad national approach saying here's how we look at risk in the sector, and a level is put on it and that's it. It stops. I think Merv and Gene have had that happen, and there are other cases. Those operations are farming today. Merv's farm is farming and so is Gene's, so they must be making money and paying their bills.

Á (1110)

Mr. Larry McCormick: I think it's very important that we get this on the record, gentlemen, and we can also take it beyond this.

In case Paul doesn't get on, I'd like to ask you this. Do you believe that the story of what happened in the cucumber facility in your province is now tainting some of the applications, even though they have nothing to do with it? We hope not. I just want to get your comment on that.

Mr. Eugene Legge: No.

Mr. Larry McCormick: Okay. We need to work with you.

Thank you, Mr. Chair.

The Chair: You can give your time to Paul.

Mr. Paul Steckle: I passed my questions to my colleague. I just wanted that on the record.

The Chair: Murray, do you have some questions?

Mr. Murray Calder: Yes, I have a short one, Mr. Chair.

The task force visited Newfoundland. I must say that you have a very interesting way of growing corn, but it works.

Raymond talked about the average age of a farmer. The average age nationally is 58 years.

Mr. Raymond Williams: [Editor's Note: Inaudible].

Mr. Murray Calder: I'm getting close to that myself.

Anyway, that means that a large number of farmers age 65 and up are going to take a look at retiring. Where do you think the government should be involved in the intergenerational transfer of farm assets? I see that as a huge problem, because, quite frankly, I don't think it has been addressed. I address that question to all of you.

Mr. Raymond Williams: Are you talking about transferring the farm to the next generation?

Mr. Murray Calder: If the next generation wants to farm. I'm a poultry farmer in my other life, and I know exactly what our operation is worth. We started working on this about 15 years ago.

Mr. Mervin Wiseman: I believe it's a systemic problem. It starts in kindergarten. It's awareness and education. I think there's a total disconnection between urban and rural in Canada, even in Newfoundland. That's hard to believe. I think we have to look at education and a lot of the things we talked about, such as funding to move projects forward and land development. Here I am at 48 with a lot of assets built up off farm and on farm, and I'm having problems with the FCC. I'm seeing young people come along at 25 and 30 and they don't have a snowball's chance in hell of getting any money to do anything. I think it involves a lot of the things we talked about. So we have to develop, I think, a holistic strategy around all these particular items, and there are more than those I just mentioned.

Mr. Eugene Legge: Just to add to that, I know where you're coming from. Your farm is a one-family type of operation; it supports one family. That's your retirement. How can I physically sell that to my offspring or someone down the road? Who's going to buy it, knowing that it can only support me? I pretty well own the assets. I don't have that much debt. How can that person buy it and give me what I want, knowing that he can't afford to pay on the debt and make a living on it too without going off farm? That's a catch-22.

If it's for your own family, you'll probably take a hit on what the true value is, if you're going to give it to your son or daughter or whatever the case may be. But if you're going to sell it to a complete stranger down the road, do you have to undervalue what you have in order for him to buy it and make it viable? No one's going to take it or buy it if they can't make a living on it.

I don't believe you should have to have an off-farm job to support a farm. The farm should support itself. There should be enough money in it to make sure you can make a living.

I think there was an unwritten policy in Canada that we have a cheap food policy. It's not written down anywhere, no one says it's there, but it is there. As long as we export 85% of what we produce in this country, that policy is going to stay in place. When we get down to the nitty gritty, it's like the lettuce we've seen. There was a shortage of lettuce. Where has the price of lettuce gone? Up to the roof. People will buy it because they want to have their salads and eat healthy and all this stuff.

It all comes down to what the person can afford to pay for your farm and make a living. How that's going to happen in the future, I don't know. I really don't know. It's going to be painstaking. I think you're going to see a lot of farms go vacant. You'll see quotas being sold or whatever the case may be and the assets will not go with it, just the piece of paper. I can grow chicken, milk, eggs, or whatever. That's where it's going to go. The farmland is going to be so valuable that someone's not going to be able to buy it.

Á (1115)

Mr. Murray Calder: Thank you.

Mr. Martin Howlett: Mr. Chairman, just to add to how farms transfer and what have you, I think a serious look has to be taken at the tax system in this country in terms of capital gains. I'll just preface that from this standpoint. Let's say there's an elderly gentleman and his wife who have a large tract of land. They don't have any family and they're just prepared to sit on the land because there's not a great tax on them. They don't want to sell it, either to a farmer or, in our case, to a land consolidation, because the first thing they have is capital gains.

I think there has to be a way that we can look at the tax system so that we can allow those things to happen without eventually getting into the situation, as Gene said, where no one can afford to buy the land because the cost is prohibitive and they can't afford to farm the land. I think there's an area here in the system—and this could be looked at in all provinces—of how you do that, how you allow that to happen.

Probably there will be no difference. It would probably be some kind of indirect support, but it should be allowed to happen because of the money that would be lost in the tax system. Without crunching any numbers, it would probably be back in circulation in the country, in the economy, within a five-year period.

The Chair: I think we've pretty well covered most of this topic. I have one point, though, in terms of your land base in Newfoundland and Labrador. Most of us are accustomed to the old system of homesteading and landing, but it appears that a lot of the land... You're talking about clearing crown land, land owned by the government. The government gives the farmers leases of that land and they maintain it over a period of time. How big is that sort of system? Are the farms land grants, freeholds? Are they mainly land that Joey Smallwod or someone since then still lays claim to?

Mr. Martin Howlett: We won't talk about a former premier, but his land is granted.

Most land in agriculture right now--

The Chair: I thought he started off farming, didn't he?

Mr. Martin Howlett: Yes. But he started back in a time when the system in the province allowed you to get a lease, and if you met certain requirements of building a certain percentage over a 5-, 10-, or 25-year period of lease, you could have it converted to a grant. The system changed back in 1976, I think, where now you get a lease for agriculture and it remains a lease. There are conditions to be met, and what have you.

On the farm today, I don't know, probably 60% or 70% of land is in that form, not in the grant form. There's a lot of pressure, I guess, these days for grant land.

Yes, there is some crown land that's available to agriculture, but we have a lot of land tied up, large acreages, in absentee landlords, people such as the elderly who don't want to sell it because they'll get taxed.

The west coast of the province—and I don't know if all of you are aware of it, but when you get over for your next meeting, which I'm sure you all will, you will be aware of where it is—used to be a large agricultural area. There's a lot of granted land and absentee landlords in that area, who are living in the States, and what have you. That is why I advocate that there might be something, maybe in the tax system, whereby that could get back into agriculture.

I'll stop at that one.

As just one point of clarification—there may not be any confusion, but I want to be sure there isn't—the question was raised about the cucumber fiasco, and I think it was raised on the tail of Farm Credit Corporation. I want to be sure there's no misunderstanding that Farm Credit Corporation never had one nickel in the Sprung deal. It was all provincial money. Okay?

The Chair: With that, on behalf of the committee, I'd like to thank all of you for coming to Ottawa. We would like to see a bit better weather. Apparently it will be warmer today, but you're a little bit too early for the tulip season. But it certainly was an interesting presentation, and we hope that when we write a report we can consider your input.

Just to mention for you, we'll be working on a report in the weeks ahead, hopefully presenting it to Parliament, to the House of Commons, sometime before the end of June, and we will ask that each of you be sent a copy of the report, which will reflect your input and also your so-called vision, hopefully not only for Newfoundland and Labrador and agriculture, but for the agriculture of Canada.

We'll adjourn for about five minutes and then come back to the second part of our meeting.

Á (1120)

Á (1132)

The Chair: I'll bring our meeting back to order again, pursuant to Standing Order 108(2).

We would like to welcome to our meeting the Union des cultivateurs franco-ontariens.

I first of all want to say that our parliamentary secretary has said we have been sitting here listening for so long to different presenters during the meeting that he has ordered some muffins that might come around the room. They hopefully will be very good in terms of our health.

Are there particular kinds, Larry, that you've chosen?

Mr. Larry McCormick: I think beggars can't be choosers.

The Chair: Blueberry maybe, and carrots, and all kinds of ingredients that will—

Mr. David Anderson: Chocolate chip.

The Chair: Chocolate chip, now that's an out, because that doesn't sound as if it's very good for the nutritional health of our guests.

We would like to welcome you to our meeting. We follow a format where first of all you present. It's my understanding, Alain Delorme, that you are the lead in this and then Mr. Perras. In any case, I think each of you has a short interjection, and we will hear all of that. After you have completed your presentation, we will start a system of questions back and forth with you. We're trying to work, I think the clerk has said, in terms of maybe a ten-minute presentation, or five to ten minutes. The floor is yours.

[Translation]

Mr. Alain Delorme (President, Union des cultivateurs franco-ontariens): Thank you Mr. Chairman.

I would like to start by thanking you for inviting us. Our group, the Union des cultivateurs franco-ontariens, represents francophone agriculture producers from Ontario. Therefore, we will discuss issues that relate to our members, francophone people wishing to prosper in a French environment in Ontario while at the same time, being agriculture producers.

I will deliver a short presentation in which I want to cover six or seven topics. My colleagues will add their comments as we go along.

The Union des cultivateurs franco-ontariens (UCFO), our organization, believes that the Canadian government has a key role to play in developing our agriculture. We have identified several important issues.

The most important issue is protecting earnings. I think every group that you have met here today has brought up this point. Protecting earnings is a critical element of our Canadian agriculture policies. We must ensure we secure revenue levels for all producers and define an earning protection system based on production costs. A very good example is Quebec’s existing agriculture aid system for which revenues are linked with production costs. We must help producers based on their production costs and by implementing long-term agreements between agricultural producers and provincial governments. It is crucial for us since we have long-term investments.

Á (1135)

It is therefore critical that producers obtain competitive financial support since there are numerous internal and hidden subsidies in the U.S. and in the European Union. It is also important to reduce or help reduce measures distorting commerce, while supporting collective marketing tools such as managing supplies.

I think some of my colleagues here today would like to comment further.

I am a corn and soybean producer from eastern Ontario. Every day, I must deal with American corn setting my local sell price. What I mean is that American corn enters freely in Canada, without being taxed, while it is three to four times more subsidized than my own corn. I therefore have to face unfair competition, which negatively impacts on my earnings. Thus, we will need to either create parity between the aid we receive and the equivalent American aid or set up a tariff of some sort to enable us to compete on an equal footing with them.

That is one of the major problems facing producers of grains, soybeans and wheat. We currently experience the problem and it is important that we do something about it quickly, since as we just heard, the average age of farmers is increasing; and that due to the lack of revenues we risk not having a new generation of farmers, and I don’t know what would happen then.

The future does not look bright and that is why we are here today asking you to take action to remedy the situation.

Le président: Thank you.

Mr. Pierre Bercier (Union des cultivateurs franco-ontariens): To further illustrate the comments with concrete numbers, we have lost 18 of our members this past year in eastern Ontario. This time last year, they were producing on their farm. They were forced to sell for various reasons but mainly because no one could take over the farm to replace the parents. I think we have a big problem, and these numbers show it.

I also want to point out that, as you well know, we have the world’s cheapest food basket here in Canada. I like to repeat this: Canadians must be able to feed themselves. It is obvious that other countries can feed us but would we have the same quality of products and at equivalent prices? I wonder. If we abandon the farms like it is done elsewhere in Canada, it is certain that eventually we will have to buy food from foreign countries.

Á (1140)

Mr. Alain Delorme: Robert, did you want to add something?

Mr. Robert Perras (Union des cultivateurs franco-ontariens): Yes, perhaps. To continue along what Alain was discussing earlier about marketing boards of products such as milk, pork, etc., the message should be clear: we are all in favour of keeping them and even protecting them. As an example, tremendous pressure has been exerted on the Canadian Wheat Board in the past few years and it is heading into conflicts with the Americans. To that effect, I think we must protect all product marketing boards in order to protect the Canadian agriculture. They constitute a foundation for Canada’s agriculture and many countries envy us. We need to protect them.

Mr. Alain Delorme: The second point that the UCFO would like to bring to your attention is that the government should foster the growth of human scale businesses by its policies and actions. These businesses are often managed and operated by families.

What I mean simply by this comment is that most of our farms are family businesses and should remain so if we are to transfer them successfully to the next generation. They cannot become massive companies that are difficult to transfer since the investment is much too large to pass from one generation to the next.

Otherwise, families will disengage from operating these farms as they become commercial and too large to be managed by families.

Did you have comments to add with respect to this issue?

Mr. Philippe Henrard (Union des culivateurs franco-ontario): Just one. In the past, when one used to refer to family farms, one would think of an old barn, with one hundred acres of land and a small house. Today it is not so. The notion of family farm is applicable to a business that must generate revenues, remain competitive while retaining its human scale. A family manages it: a father and kids or a father with his spouse. It has a human characteristic. The size of the farm is more difficult to determine and can vary greatly. A farm producing cash crops can be operated by a typical family and cover more than 2000 acres while in another region it would only cover 500 acres. Many reasons will create these differences in size.

Mr. Robert Perras: As we have just mentioned, I also believe the future of farming does not hinge on mega-farms for pork which we are hearing a great deal about lately, in Ontario, Quebec and the rest of Canada. Why? Because I think very large enterprises and multinationals go hand in hand. If we look at the U.S. to try to learn since they are apparently 15 to 20 years ahead in every domain, we notice that the grill chicken industry is more or less under the control of multinationals.

The pork industry is also heading towards a similar direction, since, as you are probably aware; the American senate has voted a bill to try to prevent multinationals from owning animals longer than 14 days prior to being butchered. The bill that is currently under review was created precisely because the industry is falling under the control of a few individuals. Such is the danger facing agriculture.

I am part of those who defend the notion of a family owned farm. And I believe that in order to protect such a business model in Canada we must make it profitable. It is our first priority and we will discuss it shortly.

Á (1145)

Mr. Alain Delorme: The third issue we wish to address is that of food safety.

We know that the Canadian government wishes to make food safety a cornerstone of its long-term strategic plan. It is of paramount importance. Our government must play a central role in the creation and establishment of food safety norms and standards. It also needs to promote food safety norms with the public in order to increase the consumption of our products and to highlight and explain the value added to our consumers.

We previously stated that Canada has a low price policy when it comes to food. It is true that consumers spend only about 10% of their revenue on food. One wonders how much of a price is paid by the producers for such a policy. We must therefore convince our consumers that producing safe foods, clearly identifying the production region and guaranteeing production processes, concerns them since it requires they pay a premium price to cover the significant incremental costs.

The government will also need to position itself with respect to the use of Genetically Modified Organisms (GMO) as to comfort producers and consumers on the impact of biotechnology. Research in this domain is making quick progress as we know. The market is seeing a number of genetically modified products, which the consumers have a lot of questions about. Our governments will need to decide how to make such products acceptable to the public or at the very least identify the products to help the consumers choose.

Mr. Robert Perras: I would like to point out that a facet of the honourable Minister Vanclief’s agriculture vision concerns food safety. To my knowledge, there is no new money to cover these costs. In the vision, we come up with big ideas and that’s fine: one must start somewhere. The vision helps to understand the direction. What is missing from this picture is new money to address the new requirements.

Mr. Alain St-Denis (Union des cultivateurs franco-ontariens): Ladies and gentlemen, I would like to stress a point. As a producer, what bothers me most is the credit the governments take for the low price of the food basket. Such good press is built on the back of the producers. Nothing is for free. As we lose agricultural producers the price of the food basket will rise accordingly. It is not a threat, but what strikes me most is the extremely low price of the food basket. Somehow, it is not low for nothing.

Á (1150)

Mr. Pierre Bercier: Mr. Chairman, you probably know that Agriculture Canada has created a system to identify cattle. It is a Canada wide system. I think everyone agreed that one such system was needed. I am referring to the bar-code system. Everyone agreed.

I have already started identifying my cows and calves. I have ordered tags and we are placing them. I have adhered to the program primarily because I did not have a choice. You know, as of July 1st, all animals from Canadian farms will have to be identified properly. I did it even though I had a previous identification system but since I have pure bread animals, I already have a registration number and there is an alternative way to identify the animals according to the milk control program I am part of.

Consequently, we have just added a third system. I understand the requirement for a system but when we add a third system like the new one, we unmistakably raise production costs. We have spent three days tagging our cows. First they need to be identified. You can’t just place any tag on any given ear. We have to catch the cows and heifers and they do not like it when we place tags. They know it will hurt and it is a nasty job to do. It increases our production costs but I doubt it will increase our revenues.

I wonder therefore why we did not get any help with this program. It costs $3.50 per head to obtain the tags. It raises our production costs considerably. Everyone will benefit from it; it concerns the industry in general from the butcher, to the wholesalers and the retailers. In conclusion we are the ones paying for it from A to Z.

Thank you.

[English]

The Chair: How many more points do you have? I'm having trouble knowing where we're going. I thought you were making a presentation and the others were going to give theirs afterwards. How many more points do you have?

Mr. Alain Delorme: I have four more.

Mr. Howard Hilstrom: I think this is working pretty well.

The Chair: But will there be any time for questions? That's what I'm wondering.

Mr. Alain Delorme: If you wish, we can go faster.

The Chair: I'll take direction from the committee.

Mr. Alain Delorme: I can present the rest in 10 minutes.

The Chair: Let's take another fifteen minutes at the most, okay?

[Translation]

Mr. Alain Delorme: Thank you Mr. Chairman.

My next issue addresses the environment. This government must implement environment agricultural rules and regulations. Each province, with enough flexibility and in a progressive manner as to enable producers to remain competitive, should do it.

You know that the burden of agricultural technological advances for a cleaner environment, which profit society as a whole, has a significant cost. Consequently, it is important that our government spread the costs accordingly.

The government will have to use green initiatives from the negotiations with the WTO, which aim at protecting the environment as a means to support the growth of our agriculture and to increase our competitiveness.

Concerning knowledge and information, it is something that our governments should use extensively to promote agriculture with the WTO. It is critical to help agriculture knowledge institutions. For example, Alfred’s College is an agriculture school, the only francophone such school in Ontario. It is located in Alfred, about 60 km east of Ottawa.

These agriculture knowledge institutes often operate within communities that are part of the linguistic minority. They are usually rural Colleges and are subject to budgetary cuts that hamper their ability to deliver new programs essential in disseminating knowledge required for the new agricultural generation vying to prosper in an increasingly competitive and innovative environment.

There are aid program for Colleges operating in linguistic minority communities. But our government agriculture institutions are not part of the Colleges and Universities system. This prevents the learning institutes from getting aid from Agriculture Canada or even Heritage Canada. I would therefore encourage our Federal Government to ensure that linguistic minorities get a fair share of the aid.

The sixth issue concerns the support for change and innovation. The government must continue to implement support initiatives for change and innovation with long-term policies. The Ontario board for agricultural change is an excellent venue to grant producers an access to funds for innovation that enable them to better adapt to market shifts often dictated by consumer preferences. We suggest here to continue to support the mechanism of the board for agricultural change of distributing aid for innovation.

Á (1155)

With current capitalism, we are witnessing a rapid and very profitable development of multinationals in the agriculture industry, often to the detriment of local producers that have no choice but to sell their products at bottom prices.

We have seen the government’s aid policies in the sectors of milk, eggs and poultry greatly profit the agriculture producers on a long-term basis.

We should build a system by working with the producers. We should implement a marketing or profit sharing system that would help producers from other agricultural sectors such as pork, grain, etc. get a fair share of the value added captured by the transformers and retailers. How? There might be ways to do it. I don’t have clear suggestions at this point but I feel it is achievable.

I would like now to ask whether my colleagues have anything to add. I know Robert has a 5 minutes presentation to share.

Â (1200)

Mr. Robert Perras: Do you want to start asking questions?

[English]

The Chair: Well, make your remarks.

[Translation]

Mr. Robert Perras: I had prepared something. I don’t know Mrs. Verville if you have the document.

The committee clerk: It was not distributed since it is not in both languages.

Mr. Robert Perras: Fine. I will address specific points to speed up the presentation. For example, I believe the NISA program needs to be improved to better the current situation with respect to protecting Canadian revenues and earnings. It is a good program since it is widely accessible to all types of producers in Canada. It should be maintained and enhanced, whether by implementing eight-eight participative deposits—such as getting participation from the producers and participation from the government—or by improving the compensation scheme to adapt it to real production costs. Deposits should be exempt from taxation until withdrawn, similarly to RRSPs today. It would greatly improve the program and make it more relevant. The funds from the program are steadily increasing and the producers are looking for new ways to use them such as borrowing against money they have deposited instead of withdrawing the funds. That has become one of the problems.

Another problem with the current revenue protection program is the disaster recovery program. It was never built to be a revenue protection type program. Its purpose is to help deal with natural disasters such as floods or the ice storm that hit eastern Ontario. Unfortunately, it is based on products historical prices and that is a problem. In a year facing a disaster, the industry must demonstrate a loss of revenue greater than 30% than the average of the previous three years. That is too large an amount. Furthermore, the funds are only freed up the following year and sometimes even two years later while the amounts available are reduced by the participation to NISA. The net effect is a reduction in the margin of protection to 60% instead of 70% as stipulated by the program guidelines.

Diversified producers, representing roughly 50% of all Ontario producers, are at a serious disadvantage. The majority of them are not even eligible to receive aid from this program. Their diversified businesses must then compensate for the loss of revenue or they have to draw from their own savings, for those who have them. In order not to lose their farms, other producers’ incur more debt.

I think the future vision should include solutions with a program that stabilizes agricultural revenues. A program to complement NISA should be created. The program must guarantee a minimal level of aid for agricultural businesses to ensure stability of revenues that will facilitate financial planning by both the business and the various lenders such as the Farm Credit Corporation, the Banks, etc. This program must have a long-term life span and should help level the field with export competitors. It should be accessible to all producers both diversified and specialized. Producers should have to participate to the program by contributing in the areas of claims like Crop Insurance. It must also provide participative risk management tools such as Crop Insurance.

Marketing wise, I thing free markets of the past conditioned by supply and demand no longer exist. It is hard to still think we have a free market or a capitalist market anymore. Multinationals dominate the market and control supply and demand at their will. Examples are abundant and only a few local markets here and there around the globe escape the trend.

Â (1205)

Increasingly complex aid programs in the USA, Europe and Japan distort what is left of capitalism in our industry. The data from the OCDE, Organization for Economic Cooperation and Development, which includes Canada as a member, shows that the average aid received by the world’s 29 most industrialized countries and members of the OCDE, tally 40% of gross revenues. It is called the producers support estimates.

What are we also to think about aid to exportations that approximates 15 billions for the European Community only?

Canada has no choice but to follow international leaders in areas of bringing to market products and protecting producers’ revenues in order to sustain the growth of the country and continue to feed its population. We have a pressing need for a national agricultural policy in Canada. The right decisions can make the difference for our future.

That covers what I had planned to present. I had other issues to discuss but I will limit myself to stay within the time allotted.

[English]

The Chair: Thank you, Robert. Are there any others?

[Translation]

Mr. Alain Delorme: We are ready for questions.

The Chairman: Howard.

[English]

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

I think their presentations were fairly in-depth and there probably aren't a lot of questions from myself.

There's something that didn't maybe come across in the translation, Robert, one of your last comments that supply and demand no longer works or is in the process. And Alain Delorme, you mentioned that the capitalist system, I guess it is, is no longer the way to go. What are you guys talking about? What system do you want in there? Do you want communism?

I am serious. If you don't want supply and demand and free enterprise, what do you want?

[Translation]

Mr. Robert Perras: I understand that you are questioning what it is we want since we look at the model used by the Americans and various other countries. We are currently in a global transition period. Canada is not the only country where multinationals have grown powerful with the help of organizations such as the WTO, the World Trade Organization. It is obvious in North America that with NAFTA, the trade agreement between Canada, Mexico and the USA, the multinationals are gaining complete control of the market.

As I mentioned before, it is clearly happening in the United States in the chicken and pork industries. Tyson Foods and Smithfield Foods control the market and it can no longer be viewed as a free market. Sadly, it is the case.

Where do we go from here? We are at a crossroads. Should we continue to help multinationals get more powerful? They will end up dictating our future. It will happen unless we find means to limit their growth and set a new direction for ourselves.

Mr. Philippe Henrard: We are experiencing the same phenomenon with our suppliers. They are merging and are becoming quasi monopolies. Cargill has just merged with another company and the number of suppliers in the industry is thinning out. The day will come when we will be like pawns trying to defend ourselves against these profit hungry giants without the proper support to succeed. That’s why we are appealing to our government today.

Â (1210)

Mr. Robert Perras: Global Trade Watch is a valuable source of information on this subject. I don't know if you are aware of their Internet site that describes the effects of the North American trade agreement with Mexico and the U.S. these past seven or eight years. We clearly see the impact on Canadian, American and Mexican agriculture. The revenues of the producers of the three countries have decreased substantially while the cost of food for citizens of these countries has increased by 250% to 300% during the same period.

Who emerges as the clear winner in the North American Free Trade Agreement? It is the multinationals. Their earnings have increased by 250% to 300% over the same period. Today, both producers and consumers have lost their negotiating power to the food clusters and multinationals, which control the food industry and continue to gain more control.

Therefore, I agree with you sir. What are we to do today? What direction do we want to take? Do we want the Canadian agriculture based on family farms or do we want it to be controlled by multinationals and in the process become land owning serfs like it has happened in the American chicken industry?

Mr. Alain Delorme: Does that answer your question?

[English]

Mr. Howard Hilstrom: Thank you. That's a full answer. I appreciate it.

That's the end of my questions. Thank you, Mr. Chairman.

The Chair: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: Thank you very much for your presentation. I am aware of these issues. In Quebec, we are experiencing a similar situation.

The next few years will be decisive. Today, both provinces and the Canada as a whole seem to privilege the growth of industrial agriculture. The emphasis is put on exporting.

Such a model worries me because, for example in the lumber industry, I see the Americans at the WTO always questioning if our supply management model is adequate in Quebec. I find the American’s attitude is introverted and focused on America’s interest only. What will happen if we privilege industrial agriculture and neglect local agriculture? What do you think will happen?

Mr. Alain Delorme: I believe we are hurting ourselves at the moment. Exports are important and represent large revenues for Canada. Conversely, rural communities will not survive unless we have a strong local agriculture in our regions. So what is it we want? Crowded cities and deserted rural communities? That will not work.

Let’s consider Europe. Why is it that many tourists visit Europe, France, and Switzerland? They visit because of its beauty; because Europe has thousands and thousands of farmers. These small businesses create a thriving rural life. Here in contrast, with an agriculture based on large industrial producers, our communities will disintegrate, our schools will empty and our way of life will be a thing of the past.

Mr. Odina Desrochers: Are there any other comments?

Mr. Pierre Bercier: A solution would be to preserve our networks. We have active networks, but they have had difficulties these past ten years. Quebec has been successful at keeping these networks alive and strong. It is not the case in the rest of Canada.

By networks I mean the groupings of agricultural producers that exist today or have existed in the past. In Ontario, we have lost the UCO. When UCO was active, despite some problems, it was able to help small local cooperatives. The same phenomenon happened in Canada’s West. One by one, the cooperatives disappeared for reasons I do not have the time to get into. I believe that we still have time to react, that we can hope to keep our family own farms and that preserving these networks is the way to do it.

I spoke about cooperatives but I could have easily talked about associations. The Canadian government’s mission should encompass helping these networks, whether they are cooperatives or whether they are large organizations such as the FAO or the UCO. These organizations can become autonomous and develop agriculture in their regions.

Currently, the people working for such organizations are volunteers. Eventually, they tire of it and stop doing it. The participation to our annual meetings for instance is declining, not because of a lack the interest but because our members are simply too busy. They have so much to do at home that it seems unreasonable to leave for five or six hours in the middle of the work day to attend an annual meeting. Also, people are lacking a long-term vision. I often discuss these things with my neighbours. These people are 45 to 47 years old, like me, and they are already planning to retire within 4, 5 or 10 years. They tell me that if quotas continue to rise they will sell the farm. They are thus not interested in attending our meetings. That is how our networks are disintegrating.

In my region for instance, I don’t understand why we had to dismantle a cooperative after 5 years when it had served the community for 75 years. We built it back from scratch. With federal or provincial help, we could have kept this cooperative in the first place like many more. In western Canada, large cooperatives such as the Wheat Pool no longer exist. I think that given some financial help, like tax breaks, they would still be active. There is still hope since some cooperatives remain. But we will need to grant them the support they need to survive.

Thank you.

Â (1215)

Mr. Robert Perras: Mr. Desrochers, to answer your previous question on exports I would like to remind you that I am a pork producer. I would never say that pork farmers are not dependent on exports. In Canada’s industry, one pork out of two is destined for exportation. Our livelihood depends on exports. I don’t think the industrial production is the only viable model for the future. We can build our exports around family own businesses.

Denmark is a good example of such a model. It is a major country for exports of pork meat. In fact, it is our competitor on every level: quality, quantity and all.

Denmark does not have many farms and most of them sell 2000 porks a year. These farms are thus not considered large by North-American standards. The same group of businesses in Denmark is responsible for transforming and producing. These are producers. To help them compete on export markets, Denmark businesses are granted financial aid that eventually benefits the producers since they are owners at the transforming and producing stages of the industry. Their industry is well organized, and it resembles Quebec’s model considering that the producers own Quebec’s Federated Cooperative. This model prevents multinationals from gaining total control and guarantees the survival of family own agriculture in the country.

[English]

The Chair: Thank you.

I think the farm girl from Saskatchewan translated all that about the cooperative movement there, so we're getting some really good advice.

Murray is next, and who else? Rose-Marie, do you have something too?

Â (1220)

Mrs. Rose-Marie Ur: No. I'll defer my time to Larry, since he shared his before.

Mr. Murray Calder: Thanks very much, Mr. Chairman.

I'm going to talk a wee bit about the reality of what we're facing as farmers. In my other life I am an active farmer.

Mr. Howard Hilstrom: Chicken farm?

Mr. Murray Calder: I didn't say that. Thanks, Howard.

Mr. Larry McCormick: We've heard.

The Chair: I think I'm going to have to put fines on advertising.

Mr. Murray Calder: The reality is that as farmers today, we have fewer and fewer suppliers to buy from and fewer processors to sell to. That's the reality.

Robert, you say you're a hog farmer. You probably market your pigs to Maple Leaf Foods or Michael McCain.

Mr. Robert Perras: No.

Mr. Murray Calder: You don't? Okay.

Well, let's take a look at what Maple Leaf Foods is doing, though. They're a large multinational looking at increasing their quality control of the primary product coming into their processing plants so they can speed up their lines and make more money. That's the reality. They have found that it's probably easier to have that quality control with 100 farmers than 1,000 because as you well know, everybody farms differently. You can't get two farmers on a concession to agree with how they should be farming.

So if you have it down to 100 and their barns are built to Maple Leaf's specifications and they have control of feed and chunks and weaners going into that barn to be finished, their achievement of quality control is probably going to be a lot greater and more efficient. Plus, the pork industry itself has embarked on quality assurance, which is a tracing and tracking system to tell exactly where the pigs have been and where they're going.

All of this is related to one thing: consumer choice. We as people producing food products know the consumer is always right.

You've said repeatedly here that we can't really have mega-business, the multinationals. We have to get control over them. My question would be how. Do we put a cap on the size of farms? Do we step in and tell Michael McCain how to run his business? I know exactly what the answer would be from him. How do we do that?

[Translation]

Mr. Robert Perras: Can I answer your question?

I am from Ontario and my porks do not end up at Michael McCain’s. I sell them to Olymel, a Quebec competitor of Michael McCain. When the McCain family bought Maple Leaf, it first tried to prevent the Ontario Pork Producers’ Marketing board to sell pork at the auction market like it had been done in the past. The auction market was no longer viable anyhow. They first proceeded to sell by contracts thinking they would gain control that way.

The idea of individual contract is a good one. There is no reason why the Ontario Pork Producers’ Marketing Board can’t supply Michael McCain with pork from a series of individual contracts. Pork is sold first on an individual index. The quality of pork is evaluated using weight and quality tables. Nothing prevents the Ontario Marketing Board from meeting the requirements on a contract basis with the transformer.

In another words, we establish a contract between the producers and the Marketing Board and another similar contract with Michael McCain. There are no issues at this point; it is feasible. We tried in Ontario, but the two largest transformers, Michael McCain and Quality Meats did not agree with the Marketing Board because they want to keep the contracts between producers and transformers.

The initial reason was to keep the contracts secret. When McCain would contract someone, other producers would not have knowledge of the terms such as price, conditions, etc. Eventually after a few months, we did find out the information via the Marketing Board. Names were replaced by numbers and with the information made public, we noticed that large contractors who thought they were getting the best deals because of the size of the contract with Michael were in fact getting the same conditions as I did. That insulted Acre T Farms and it is the reason why Acre T, who had dealt with Michael until then, will build a slaughterhouse in Ontario. Similarly, another group of producers in Ontario, the Progressive Pork Producers, want their own slaughterhouse.

To produce an animal given specific conditions, Michael McCain simply has to give his requirements to the Ontario Pork Producers and they will supply exactly the pork he needs of any particular size. The quality will not change whether it comes from a white barn or red barn. You understand what I mean?

I don’t want to make fun, but in Ontario, we got some… [Inaudible -- Editor]

Â (1225)

[English]

Mr. Murray Calder: How do we control that?

[Translation]

Mr. Robert Perras: When we first started to proceed with contracts in Ontario, we did not have any standards or procedures for them. It was sloppy. We would draft whatever we wanted. McCain then began to impose a number of conditions. For instance, we deal with you but your pork must be raised on Shurgain feed; replacement sow must come from our organization, etc.

We therefore decided to establish standards and procedures to specify which conditions could apply to contracts and which one were deemed unacceptable because they would lead to total control of the industry. You are looking for pork with a given set of characteristics? That’s fine. You would like us to deliver on Sunday to have everything ready for Monday morning? That’s fine, but on one condition. We will not allow you to control the market.

One thing must change. We should stop producers and transformers from having any bilateral contracts with one another. Instead, contracts should be entrusted to marketing boards so as to encourage equal conditions for all. Do you understand what I mean?

[English]

The Chair: Thank you, Robert and Murray.

Larry, did you have...?

Mr. Larry McCormick: Yes, thank you, Mr. Chair. I just have a couple of comments.

We don't like to see the consumer paying more for potatoes. We were in P.E.I. the other day, and it was good to hear that the producers were getting about two dollars for a ten-pound bag of potatoes. You and I can accept that when we go to the store, but how do we encourage our producers to pay more? They're not ready for that. Our cheap food policy has happened. In Europe they have this multi-functionality, which leads to the beautiful countryside, but the same continent has had people hungry, and I don't think... If we could get the support, in the ideal system we could get money from other ministries, such as Environment Canada and so on, to do that type of thing, and there may be a bit of that in this policy framework.

[Translation]

Mr. Robert Perras: In Europe, governments subsidize the food industry in an effort to keep shelf prices low. How, in this case, does a producer sustain himself? The income he makes from selling his product is not enough for his lively-hood. He is able to make it thanks to the subsidies he receives. Indeed, 40% of his gross revenue comes from government subsidies. This number is cited by the OECD as the average for 29 countries.

[English]

Mr. Larry McCormick: But how do we encourage our consumers here to pay more so that we can do more?

[Translation]

Mr. Robert Perras: European consumers are not really the ones paying… What I mean is, they pay slightly more than we do here in Canada, but the bulk of the subsidies come from taxpayers. This is what we would need here to compete.

In the United States, it’s the same thing. We need to face the fact that the shelf price of an American product is not much higher here than there because American producers are subsidized by their government.

Mr. Philippe Henrard: Big exporters such as the United States and the European Union basically subsidize the industry so as to lower prices for consumers. But at the end of the day, of course, the consumer is paying for this through his taxes. Governments want it this way and there is nothing we can do to change the situation.

What we would like is to simply have access to the same sort of support given in foreign competitive markets. If there were no subsidies throughout the world, then we farmers, here in Canada, would be competitive. We are, after all, able to produce just as well as our neighbours, but this is no longer the case when our neighbours have access to subsidies three or four times higher than ours.

Â (1230)

[English]

Mr. Larry McCormick: Since I haven't got too much time, I want to ask this. I've been in nine provinces, but did the people here in eastern Ontario get ample notice about the spring advance program? Do most people make use of it in the fall advance program—you know, up to $50,000 interest-free for the people planting corn and so on?

[Translation]

Mr. Philippe Henrard: These are simply agreed-upon interest-free loans, for example $50,000 in credit interest-free. It’s appreciated of course, but it isn’t much, especially considering that there is a fee to get this amount. It’s true that you offer advanced payment in the fall, but there again, there are fees. In addition, although $50,000 are given interest-free, any additional money borrowed will incur interests.

Moreover, this amount is peanuts next to American and European subsidies which are based on one’s production per acre or per ton. In Europe you can get up to $500 for wheat, unlike here in Canada where the price is five times less. On the Chicago stock exchange, an American farmer can sell his wheat for $100 to $120 per acre, whereas mine is sold for only $25 to $30. This simply doesn’t work for me.

Basically, we’ve come to ask for the same sort of aid that is given out in foreign countries so as to make our system work.

[English]

Mr. Larry McCormick: But we're not going to have that same treatment. The support is not there to pay that same amount of money out.

One final question--

Mr. Howard Hilstrom: On a point of order, Mr. Chair. It's 12:30. I'm going to have to ask you to express to our presenters that I have to give a speech in the House and that I'll have to leave, because our meeting was set to stop at 12:30.

The Chair: You are excused. But Howard, there's a general consensus that in view of the length of presentation we were going to go over a bit. So you are excused. Thanks, Howard.

Mr. Larry McCormick: I just have one final question.

Does anyone here, any one of our witnesses today, grow canola at all? No? Okay. I wondered, because we're back to the genetically modified food bit. It's probably going to be a matter of education. We have voluntary labelling now, but kitchen cupboards have canola oil in them now, and yet it's a GMO. People aren't too sure what a GMO is.

Thank you, Mr. Chair.

[Translation]

Le président: Claude, do you have a question?

Mr. Claude Duplain: Thank you Mr. Chairman.

I would like to point out that this is the first time that I don’t need earphones. Instead, it is my colleagues from other provinces are the ones that need them.

I thank you all for being here today. It is a pleasure to meet fellow Ontarians who speak French.

I have a question. You spoke earlier of cooperatives and I would like to bring to everyone’s attention that we are currently working on certain cooperative projects. I strongly believe that the disappearance of many of them in both Quebec and in the West has been a great loss for us. In Quebec cooperatives are doing a little better than individual farmers, but they nevertheless have problems raising capital. I assume this is also the case in the West.

Do you foresee any solutions to this problem?

Mr. Pierre Bercier: In aiding our cooperatives?

Mr. Claude Duplain: Yes, in offering some form of aid to our agricultural cooperatives. Have there been any attempts?

Mr. Philippe Henrard: I don’t have anything concrete but surely various fiscal solutions could be adopted. For instance, one might suggest tax credits for farmers investing in a cooperative. But there is nothing in place yet, so of course it is difficult.

If we had guaranteed revenues, we would surely set money aside for transformation and supplies, as well as other sectors, so as to diversify and stabilize our sources of income. Currently, however, this income is insufficient and we are unable to move ahead. It’s a vicious cycle, without higher revenues one cannot invest, and without investing, one cannot increase his revenue.

This is why we are asking for more money with a short and medium term horizon. As such we could generate more income that would in turn improve our cash flow and allow us to invest in bettering our farms. In addition, it would allow us to invest in processing, thus capturing the incremental income from this value added activity. Of course, the problem is that if you don’t have money you cannot do any of this and waiting 5 to 10 years will not fix the situation.

Â (1235)

Mr. Alain Delorme: The problem has lasted long enough. Farmer’s revenues are stuck in a vicious circle and have been so for the last 10 to 15 years. This is especially true for cereal growers. We’ve had one good year in the last fifteen years. Basically, farmers are eating up their capital. One cannot ask them to invest in a cooperative when they have a hard time settling their accounts.

Philippe’s tax credit idea for farmers investing in cooperatives is good, but one must ensure that we are given the same treatment as the one given to American and European farmers or else it will be our loss.

Mr. Philippe Henrard: The following is a great example: We’ve been trying for the last seven to eight years to build an ethanol factory [Editor's Note: Inaudible]. Everyone tells us to invest in this new ecological technology, but in the United States there is a 24¢ reduction on ethanol, unlike here in Canada where the reduction only amounts to 12¢. Therefore, we are disadvantaged right from the start.

We are unable to find financing. We found a Dutch bank, recently acquired by a German bank, that may eventually provide financing, but the process is slow. Why? Because we are unable to get any form of substantial help from our own governments. In fact they refuse to commit to any help for the next two or three years even if the venture can turn a profit, which it has been proven it can. This sort of help could really offer an outlet for our product, in other words, ethanol would be available here. This venture is profitable from every point of view, but we are unable to get it off the ground. What can be done?

Mr. Claude Duplain: Thank you.

[English]

The Chair: Thank you.

There's one question from the chair. Several of you are producers of livestock, and it's my impression that as producers you benefit from cheap corn, from cheap grains, from cheap proteins and soybeans. If the Americans and the EU suddenly did away with their subsidies, the price of those commodities would go up. Do you agree with that assumption?

Mr. Alain Delorme: Yes.

The Chair: If that did happen, could you survive? We'll say it's $20 a tonne, the subsidy that's affecting the price of those inputs to your livestock industry. Could you, in Mr. Calder's case here with his poultry, yours with your beef, and yours with your pork, survive as a livestock industry in this country after having that subsidy removed? How much more can you afford to pay and still get some profits out of your sector of the agricultural industry?

Robert is ready with that answer.

[Translation]

Mr. Robert Perras: You are asking what would happen if American aid was abolished? Is this indeed your question?

Â (1240)

[English]

The Chair: Yes.

[Translation]

Mr. Robert Perras: In that case, both American and Canadian markets for livestock would have to readjust themselves. Of course, it goes without saying, that this adjustment period would hurt livestock productions, but there would be no other choice than to adjust production to this new phenomenon.

There is still a question as to whether this adjustment would happen with European productions. Your suggestion, however, only refers to cancelling American aid and its effect on both Canada and American producers. I can already foresee the first consequence. I believe a group of producers would simply become contractors for multinationals.

This is exactly what happened during the last two agricultural cycles, when prices for pork in Ontario were low. It also occurred earlier in 1994 or 1995. At that point, many tried what we call segregated early weaning, in other words, independent pork farms for breeding, feeding and finishing. Groups of producers were formed which we call “loops”. This movement occurred at the lowest point of the cycle. The producers most at risk were among the first targeted. The only way for them to get out of the economic downturn was to become contractors for Maple Leaf, for example, and other feed suppliers.

During the second cycle in 1998-99, we experienced the same phenomenon. The same thing is likely to reproduce itself if we abolish American aid and raise the grain price. If we go further back in history, when the American chicken industry fell into the hands of multinationals, something very similar to what I have described above occurred. And the chicken industry fell into—

[English]

The Chair: With this now, Pierre, many of us don't know where we get our grains from, but is your feed mill buying, for example, corn from the United States right now?

[Translation]

Mr. Robert Perras: Personally, I buy my grains from other producers, but I also produce feed. As a pork producer, I buy my grains from other pork producers. Actually, I buy my grain from whoever I want.

[English]

The Chair: So yours is all local, and Pierre's, too?

[Translation]

Mr. Pierre Bercier: As for milk production, I do not believe that an adjustment in grain price would make a very big difference because cows are mostly fed forage. They are fed approximately 60 to 70% of grass, hay, and alfalfa. In Ontario, many milk producers also produce the grain required to feed their livestock. For the past seven or eight years now, there has been a rotation with soybean. In Eastern Ontario, micro-soybean is being produced. Thus, we’ve transformed soybean for milking cows.

An adjustment therefore would not make a big difference. Even now, in this period of low prices, there are only 25% of producers who actually feel an impact on their production costs. As I’ve said before, it does not make a big difference now. Eventually however, if the price of grain and other concentrates continues to increase, the impact on production costs will result in a decrease of output. That will make the price of milk go up.

[English]

The Chair: And Mr. Delorme?

[Translation]

Mr. Alain Delorme: That is exactly one of the issues I wanted to raise. If you take a close look at what is happening in the livestock industry in Ontario and generally in Canada, you see that there are quotas for the production of milk, eggs, chickens and turkeys. The quotas for these sectors are indexed to production costs. Therefore, if the price of grain increases, the revenue for livestock increases as well.

There is another important issue. As cereal producers in Ontario, we are both efficient and competitive. If the price increases on foreign markets, we can continue to produce the goods for a low price. Basically, as far as the local market is concerned, we are fine. It’s a different story at the international level because each and every one of us has cereal surplus to sell on top of a livestock production that it must sustain.

Mr. Philippe Henrard: One thing has been occurring for years now. Big organizations, such as Casco Inc., practice pork integration and buy corn in the fall. Boats come in and they weigh the prices. They buy a more expensive American corn and then wait for us to call them so that we can sell them our Canadian corn. Then they buy our corn for $15 to $30 less than the American one. They establish weighted prices that really affect us.

Why aren’t there any regulations stipulating that while there is corn to be sold in Canada, Canadian corn must be bought first and for a competitive price? When our stock runs out, then foreign corn may be brought in. Right now, the contrary is occurring. Corn is brought in from elsewhere making its local price decrease because big companies will already have a large amount in stock. These people have a lot of power and because there are only a few players on the market they are basically toying with us.

Â (1245)

Mr. Robert Perras: Those following the law of supply and demand, thus those controlled by quotas, do not have any problems. For my part, if the grain price increases I run into problems because I do not have quotas.

Mr. Alain Delorme: I understand that multinationals would like to further integrate themselves in an industry like that of pork. This enables them to protect themselves against increases and decreases in the price of various foods. This integration, however, affects individual producers.

[English]

The Chair: Thank you, Alain and everybody. It certainly was a very interesting type of meeting. It was very different from others that we've organized because we did have so much interaction. It's probably good. It's more difficult at times.

Mr. Alain Delorme: That's the way we are. We like to discuss—

The Chair: Robert, I think it was about two years ago you talked about pork. I drove through about 20 miles of pork on Route 20 coming up from New Brunswick. Maybe it wasn't a marketing board or cost of production, but certainly there was a lot of concern expressed by the pork producers in this country. It's a good thing, of course. Today, I think most of you are doing better, some months up, some months down.

In any case, we appreciate you coming and we thank you very much. You made some very strong presentations in terms of the concerns some of us have with those few companies that are controlling so much of the food industry. I think the committee will certainly note that.

Robert, I see you want to have a word after my last word.

Mr. Robert Perras: Well, I don't want to hold you up.

The Chair: In any case, thank you for coming out. We'll end the meeting, and if you want to say something, that's good. It will be off the record.

The meeting is adjourned.