AGRI Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, October 23, 2003

1535

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

Mr. Ken Bee (President, Grain Growers of Canada)

The Chair

Mr. Ken Bee

1545

The Chair

Mr. Gerry Ritz (Battlefords—Lloydminster, Canadian Alliance)

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

Mr. Gerry Ritz

Mr. Cam Dahl (Executive Director, Grain Growers of Canada)

Mr. Gerry Ritz

Mr. Cam Dahl

Mr. Gerry Ritz

1550

Mr. Ken Bee

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Cam Dahl

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Gerry Ritz

Mr. Ken Bee

Mr. Gerry Ritz

The Chair

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

1555

Mr. Ken Bee

Mr. Louis Plamondon

Mr. Ken Bee

Mr. Louis Plamondon

The Chair

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

1600

Mr. Ken Bee

Mrs. Rose-Marie Ur

Mr. Ken Bee

Mrs. Rose-Marie Ur

Mr. Cam Dahl

Mrs. Rose-Marie Ur

Mr. Ken Bee

Mrs. Rose-Marie Ur

Mr. Ken Bee

1605

Mr. Cam Dahl

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Cam Dahl

Mr. Dick Proctor

Mr. Ken Bee

Mr. Dick Proctor

1610

Mr. Ken Bee

Mr. Dick Proctor

Mr. Cam Dahl

Mr. Dick Proctor

Mr. Cam Dahl

Mr. Dick Proctor

The Chair

Mr. Howard Hilstrom

1615

Mr. Howard Hilstrom

Mr. Ken Bee

Mr. Howard Hilstrom

Mr. Ken Bee

Mr. Howard Hilstrom

Mr. Ken Bee

Mr. Howard Hilstrom

Mr. Ken Bee

Mr. Howard Hilstrom

Mr. Cam Dahl

Mr. Howard Hilstrom

Mr. Ken Bee

Mr. Howard Hilstrom

The Chair

1620

Mrs. Rose-Marie Ur

Mr. Ken Bee

Mrs. Rose-Marie Ur

Mr. Ken Bee

Mr. Cam Dahl

The Chair

1625

Mr. Louis Plamondon

Mr. Ken Bee

The Chair

Mr. Dick Proctor

Mr. Ken Bee

1630

Mr. Cam Dahl

The Chair

Mr. Jacques Laforge (First Vice-President, Dairy Farmers of Canada)

1635

1640

The Chair

Mr. Howard Hilstrom

Mr. Jacques Laforge

Mr. Howard Hilstrom

1645

Mr. Richard Doyle (Executive Director, Dairy Farmers of Canada)

Mr. Howard Hilstrom

Mr. Jacques Laforge

Mr. Richard Doyle

1650

The Chair

Mr. Louis Plamondon

Mr. Richard Doyle

Mr. Louis Plamondon

Mr. Richard Doyle

1655

Mr. Louis Plamondon

Mr. Richard Doyle

Mr. Louis Plamondon

Mr. Richard Doyle

Mr. Louis Plamondon

Mr. Jacques Laforge

Mr. Louis Plamondon

The Chair

Mrs. Rose-Marie Ur

Mr. Richard Doyle

Mrs. Rose-Marie Ur

Mr. Richard Doyle

Mrs. Rose-Marie Ur

1700

Mr. Jacques Laforge

Mrs. Rose-Marie Ur

Mr. Richard Doyle

Mrs. Rose-Marie Ur

The Chair

Mr. Dick Proctor

Mr. Jacques Laforge

Mr. Dick Proctor

Mr. Jacques Laforge

1705

Mr. Dick Proctor

Mr. Jacques Laforge

Mr. Dick Proctor

Mr. Richard Doyle

Mr. Dick Proctor

Mr. Richard Doyle

Mr. Dick Proctor

Mr. Richard Doyle

The Chair

Mr. Gerry Ritz

Mr. Jacques Laforge

1710

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Gerry Ritz

Mr. Jacques Laforge

Mr. Richard Doyle

Mr. Gerry Ritz

Mr. Richard Doyle

Mr. Gerry Ritz

1715

Mr. Richard Doyle

Mr. Gerry Ritz

Mr. Richard Doyle

Mr. Gerry Ritz

Mr. Richard Doyle

Mr. Gerry Ritz

The Chair

Mr. Louis Plamondon

Mr. Richard Doyle

Mr. Louis Plamondon

Mr. Jacques Laforge

1720

Mr. Louis Plamondon

The Chair

Mr. Dick Proctor

Mr. Richard Doyle

Mr. Dick Proctor

The Chair

Mr. Dick Proctor

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 049

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 23, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): We'll begin our meeting. We are not at full quorum, but we are at a level where we can begin.

Today we want to hear once again from the Grain Growers of Canada, following our trip to the WTO meeting at Cancun. Both our presenters here this afternoon, Mr. Bee and Mr. Dahl, were in Cancun, as I was. We've had first-hand exposure to the subject matter, and you will bring your insights to us this afternoon.

Mr. Bee, are you on?

Mr. Ken Bee (President, Grain Growers of Canada): I am indeed.

The Chair: Can we have your presentation, please? We have one hour with you people.

Mr. Ken Bee: Thank you.

Good afternoon, ladies and gentlemen, Mr. Chair, Madam Vice-Chair, Mr. Vice-Chair, and committee members. On behalf of the Grain Growers of Canada, I want to thank you for the opportunity to appear before you today.

As you can see from my name tag, my name is Ken Bee, president of the Grain Growers of Canada. I farm in southwestern Ontario in the riding of our vice-chair, Mrs. Ur. Also present today is Mr. Cam Dahl, executive director of the Grain Growers of Canada.

The Grain Growers of Canada represents over 80,000 farmers from coast to coast. It is important to note that our voice represents grains and oilseed farmers exclusively.

I'll start the presentation by stating that the production from the farmers represented by the Grain Growers of Canada is worth over $10 billion a year. Exports of grains and oilseeds and their products make up a significant portion of Canada's $25.9 billion in annual agrifood exports. Prosperity and innovation in the grains and oilseed industry will translate into significant benefits for all Canadians, regardless of whether they live in urban or rural areas. The Grain Growers of Canada have developed polices that will help to ensure a vibrant future for this important sector.

Certainly, international trade negotiations are one of the most important issues, if not the most important issue, for Canada's grains and oilseed farmers. Our industry continues to be hit by market interference caused by foreign domestic and export subsidies; as well, it faces significant tariff barriers. These tariff barriers not only limit access for raw commodities, they also prevent the sale of processed agricultural products. This takes jobs away from Canadians and money out of the hands of our farm families.

The cost of foreign market interference is high. By Ag Canada's analysis, subsidies in the United States and the European Union alone cost grains and oilseed farmers about $1.3 billion a year. Research shows that the elimination of tariff barriers would increase wheat prices by $27 a tonne, barley prices by $21 a tonne, and corn prices by $9 a tonne. This is without considering the impact on farm gate prices if the tariffs on processed products also came down.

Clearly, grains and oilseed farmers have a lot to gain from a successful round of international trade negotiations, and we will lose tremendously if these negotiations fail. However, it is not just grains and oilseed farmers who will lose if these talks are unsuccessful. The Canadian economy as a whole will suffer, employment opportunities will go unrealized, and potential economic development will be lost. No one in Canada, including Canadian grains and oilseed farmers, can afford to let this round fail. It is in the best interests of Canadian farm families that the world come to an agreement that will liberalize agriculture trade.

Grains and oilseed producers must obtain the following three key concessions from our trading partners: one, significant increases in market access for grains and oilseeds and their value-added products; two, the elimination of export subsidies; and three, significant reductions in distorting domestic support. I want to emphasize that all three of these pillars are critical and interrelated. We must see real progress on all three fronts.

The attached brief is divided into seven sections. Parts one through three give an overview of the Grain Growers of Canada and its position and demonstrate why the current WTO negotiations are so vital to Canadian agriculture. As an example, we export some 75% of our wheat and canola as either raw product or processed product.

Part four highlights some success stories to illustrate how beneficial trade liberalization can be. The pulse industry's trade with India is a prime example of the benefits that can happen when tariff barriers come down. The new opportunities in China for barley and barley malt are also an indication of what can be accomplished with China's accession to the WTO.

Much of the brief concentrates on the status of the WTO negotiations and in particular the recent ministerial meeting in Cancun, Mexico. Detailed analysis shows why we believe that the draft framework text coming out of the ministerial meetings was much stronger than the draft text going into the meetings.

Some of you may think that this flies in the face of some of the reports that the Cancun meetings ended in failure and that little progress was made in agricultural negotiations. We do not believe either of these perceptions to be accurate. It's important to note that while the talks did break down, agriculture issues did not generate the impasse. The talks fell apart because of a failure to come to an understanding on the four other so-called Singapore issues, particularly discussions on investment.

The Grain Growers of Canada is disappointed that there was no agreement in Cancun on a framework that would define future agriculture negotiations. However, we are indeed encouraged by the progress that was made during the week of discussions. We believe that if adopted, the draft framework could allow us to move closer to our goals of freer and fairer trade.

The discussions surrounding trade liberalization are often impassioned, and a number of misconceptions have resulted from this level of debate. One of the misunderstandings is that the framework text would require an end to Canadian income stabilization programs or production insurance. This is not correct. The Cancun framework text would still allow Canada to offer these important programs to our farmers. Furthermore, there are provisions within the WTO that specifically allow programs like production insurance and income stabilization. Moreover, during the negotiations over the last year, recommendations have been brought forward from the WTO that would strengthen and improve these clauses, that is, allow for an extended reference margin for production insurance.

The draft framework text does include terms that would significantly corral the ability of the United States to provide product-specific support to its grains and oilseed producers or to expand its trade-distorting programs to other areas.

I just want to go off my text for a minute and remind you that under the U.S. Farm Bill, 95% of all direct farm cash payments go to the crop sector. You'll also recall that in the most recent Farm Bill, the loan deficiency program was expanded to cover additional commodities, namely pulses.

Provisions in the text would also make it more difficult for the U.S. and the EU to shift product-specific funding from one sector to another. The U.S. loan deficiency program can provide high levels of support to wheat farmers one year and high levels of support to corn producers the next. It's an example of the type of fluidity in the program spending, and it would be of significant benefit to Canadian grains and oilseed producers if this practice could be curtailed.

We're also very pleased that the draft framework text included provisions that would allow for a better definition of non-trade-distorting or non-production-distorting support programs, so-called “green” programs. This would be a key gain for the grains and oilseed sector as many of the programs listed as green by the U.S. or the EU clearly distort production and trade and should be subjected to WTO disciplines.

There are also significant improvements for grains and oilseed producers to the market access portion of the final draft framework agreement. In particular, there was the strengthening of the clause that would require reductions in the gap between tariffs on processed products and tariffs on raw products; the term commonly used is “tariff escalation”. A reduction in tariff escalation would allow for increased value-added processing in Canada, putting increased money into the hands of farmers and more jobs into our rural communities.

Unfortunately, the terms on tariff escalation did not extend to reducing tariff differentials between competing products. The difference in tariff levels on soybeans and soybean oil versus canola and canola oil is an example of this practice, and in a lot of cases the tariffs on soybeans and soybean oil will be somewhat less than those on canola or canola oil. We encourage the Government of Canada and our negotiating team to continue to push for an end to this discrimination, which often hits Canadian exports directly.

We are very disappointed that the draft framework text does not mandate an aggressive program to eliminate export subsidies. This subsidization of exports is one of the most trade-distorting practices and has been eliminated from virtually every other industry but agriculture. We note that the final draft framework text specified that a date for the elimination of export subsidies would be subject to negotiations. We encourage the Canadian government to demand that this negotiated date be at the beginning of any agreement.

The Grain Growers of Canada fully understands it will take some time to reach our goals of more liberalized agriculture trade. We also know that instead of contracting, the subsidy gap between our trade competitors and Canada has continued to grow. That is why we continue to advocate for a trade injury compensation program that would protect Canadian farm families from the trade- and production-distorting practices of our competitors. This program should be in place until we reach a meaningful agreement at the WTO.

We note that the farmers in the United States can access the trade adjustment assistance program. The U.S. has acknowledged and has reacted positively to the issue of trade injury. It is time the Canadian government also took action to address this issue. The Grain Growers of Canada will continue to fight for this critical but missing portion of Canada's farm safety net.

In summary, while we are disappointed that the WTO ministers have not yet reached an agreement on a framework that would define future agriculture negotiations, we are indeed encouraged by the progress that was made at the mid-term review at Cancun. We believe the draft agriculture text that emerged at the end of the week was clearly an improvement over the document that had been prepared for the beginning of the ministerial meetings. We believe that if adopted, the framework text could allow us to move closer to our goals of greater liberalized trade in agriculture and a more level trading field for our farmers.

We do not want to leave the impression we are comfortable with all components of the draft framework text. We are not. However, the WTO has taken some small steps down the road towards the goal of a less distorted world market for agriculture products. The Grain Growers of Canada will continue to encourage our government to aggressively build on the progress that was made.

In closing, I would like to take a few moments to thank you, Mr. Chair, ministers Vanclief and Pettigrew, and all the other members of the Canadian delegation for the tremendous work you undertook during the Cancun WTO ministerial meeting. I especially thank the Canadian delegation for their efforts to ensure that all Canadian non-governmental organizations were kept fully informed of all developments during the week. The Canadian delegation truly set an example for transparency and openness.

Thank you, and I'll be glad to try to answer any questions.

¹ (1545)

The Chair: Thank you, Mr. Bee.

We'll begin our questioning now with Mr. Ritz, opening our seven-minute portion.

Mr. Gerry Ritz (Battlefords—Lloydminster, Canadian Alliance): Thank you, Mr. Chairman, and gentlemen, thank you for your presentation here today.

Cancun must have been an interesting experience. A lot of things happened there behind the scenes, of course.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): And out on the beach.

Mr. Gerry Ritz: Yes, that too.

Looking at your WTO update that came out in the last day or two, I saw a couple of things in here that kind of leaped out at me. You're talking about misunderstandings and misconceptions. One thing you're talking about here is a Canadian income stabilization program or production insurance. Of course, I think back to the days of AIDA and then CFIP, with the minister continually saying that those types of situations could never be addressed in a farm support program in Canada because they were not GATT-green, they didn't follow that type of ideology. What's changed? You guys are saying it can be done, yet the minister has said it can't happen.

Mr. Cam Dahl (Executive Director, Grain Growers of Canada): Something like the NISA program, for example, could fit within, and in fact CFIP and AIDA did fit within the definition of green. I think this compatibility with WTO guidelines has been something that has often been debated as we've gone forward with the development of the CAIS program. It's one of the things the people who have developed this program have assured us, that the program has been specifically tailored in order to meet the definitions of the WTO. That's something, from the Grain Growers of Canada's perspective, we have been concerned about from time to time, that programs may in fact fail to meet not only the current definitions but future definitions, but we have been assured that those programs--

Mr. Gerry Ritz: We seem to be the only country in the world, though, that's scared of these trade challenges. Everybody else's program seems to be way outside the parameters of GATT green. Does might make right? Is that what we're faced with here?

Mr. Cam Dahl: I think that's one of the reasons we talk in the brief a little bit about the end of the “peace clause” and why we are encouraging the Canadian government not to accept an extension of the peace clause. That would allow Canada as well as other countries to specifically go after programs like the counter-reciprocal programs in the United States and other aspects of the Farm Bill the Americans have labelled as green but that are probably not green. That's one of the reasons we're looking for those types of actions after the end of the peace clause at the end of this year.

Mr. Gerry Ritz: We see the loan deficiency program in the States expanding to cover additional programs and so on that weren't outlined to begin with, and no one's challenging that.

¹ (1550)

Mr. Ken Bee: You have to understand that the United States has its own domestic legislation for dumping countervail, and they use it on a regular basis. They have found that by exerting political pressure, certain producer groups are often successful at challenging programs in other countries. We in Canada don't seem to have the same legislation in place that would allow us to do that.

Mr. Gerry Ritz: Can it be put in place?

Mr. Ken Bee: I don't know. All I can say is, you also have to look at whether it's going to accomplish any good to go after and challenge some of the programs. I think we need to. We need to challenge whether, when a country says their program is green, it is in fact green. But it should be the responsibility of our government to do that, not of producer groups.

Mr. Gerry Ritz: Yes; they don't have the resources to do it.

Mr. Ken Bee: We're always in a balancing act here in Canada when we design a program. Yes, we want to try to meet the WTO rules, but we're always conscious of what the U.S. countervail rules are as well.

Mr. Cam Dahl: This is just to add a point on why it's so important for Canada to pay attention to that when we're designing our programs. I'd mention our utter dependence on trade, especially in the grains and oilseed sectors. We must have access to foreign markets...and then we get hurt.

Mr. Gerry Ritz: You go on to say that the Grain Growers--and I've seen this before--continue to fight to have trade made the sixth pillar of the APF. How are you making out on that? You have two provinces the minister is working on to have sign on, Ontario and Saskatchewan, and then this APF will come into play. Are you lobbying them hard to say, this is the deal-breaker; let's get this in place and then sign on? How is that going?

Mr. Ken Bee: It's not our role as a national organization to lobby provincial governments. However, to answer your question, I would say that at this stage we are somewhat disappointed in the amount of emphasis the government has put on trade in the APF. We don't think they are giving it its due respect.

Mr. Gerry Ritz: You're talking about fighting for a trade injury compensation program. That's been talked about for years, but there's never been the political will to put the dollars in. Is anybody softening on that issue now that we're seeing farmers hurt more and more? BSE has brought the cattle industry to its knees, and that industry had been our bright spot.

Mr. Ken Bee: BSE is a little different issue. I'm not sure I want to link the two.

However, as far as trade is concerned, we tried to point out in our brief that the United States has recognized that yes, there are going to be adjustments to trade. They have a program in place for their producers where if they're negatively impacted by prices going down something in the order of 20%, then they qualify for the program. We're just asking our government to recognize that yes, there are trade adjustments, and yes, we are being injured beyond our producers' control. We're not asking this to be forever. Get us a good deal at the WTO and we won't need the bloody program.

Mr. Gerry Ritz: Timing comes into play. The WTO is not a short-term situation.

Mr. Ken Bee: We recognize that.

Mr. Gerry Ritz: We're looking at years of hurt already, and there's no way to play catch-up and make the WTO retroactive, of course.

Mr. Ken Bee: No, I don't think we would expect that.

Mr. Gerry Ritz: Thank you, Mr. Chair.

The Chair: Monsieur Plamondon.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Thank you, Mr. Chairman. This will allow you to appreciate the exceptional quality of the interpretation we have here in Ottawa.

I would like to talk to you about your very firm position in favour of the abolition of subsidies and about your attitude with regard to supply management. One sometimes gets the impression that there are two visions in Canada. The first advocates the abolition of subsidies and the second advocates protecting supply management. By supporting both positions Canada finds itself in an uncomfortable position when there are international negotiations.

I have heard it reported that in private discussions, Mr. Dahl said that Canada had to make concessions on supply management in order to facilitate the elimination of subsidies. I have also heard it said behind the scenes that President Bee was a little tired of milk producers and other agricultural products that are handled through supply management and that he would like Canada to adopt a more flexible position on supply management.

Am I mistaken?

¹ (1555)

[English]

Mr. Ken Bee: First of all, we don't comment on supply management. We represent grains and oilseed producers. I think it's pretty obvious, when we export some 75% of our wheat and canola and lesser portions of other grains and oilseeds, that to supply only the domestic market is not an option for grains and oilseed producers.

As to your reference to what we think or don't think about supply management, I have no comment on supply management. That is their role, to state what they think they need for their industry. We know we need to have freer and fairer trade. We know we need to have discipline in the subsidy issue. We are continually put at a disadvantage because Europe and the United States are basically allowed to very directly subsidize their grains and oilseed producers by an almost unlimited amount of dollars. We need to have that disciplined in some manner.

[Translation]

Mr. Louis Plamondon: At the WTO negotiations there were discussions about ceilings on high customs tariffs in relation to supply management. You seemed quite comfortable with this position and would no doubt have applauded the minister had he decided to go with that and make that the Canadian position. You do not want to talk about supply management but you did not hesitate to do so then, since imposing ceilings on high customs tariffs would probably have facilitated the conclusion of an agreement. You are dodging my question on supply management.

Why do you not adopt a very clear position stipulating that supply management has no adverse impact on international trade and should not undermine your request that subsidies be abolished?

[English]

Mr. Ken Bee: I think you misinterpret us by saying we say subsidies should be abolished. What we're saying is that there has to be a set of rules, there have to be reductions in distorting domestic support, and there has to be an abolishment of export subsidies.

Again, caps are an issue for grains and oilseeds because other countries, mainly the United States and the EU, have an unlimited ability to direct any amount towards their grains and oilseed producers. To have some sort of cap on the amount of support would be of benefit to our grains and oilseed producers.

Our supply-managed people in this country are good customers of our grains and oilseed producers, and I am not going to wade into making any comments on supply management.

[Translation]

Mr. Louis Plamondon: I will speak again later.

[English]

The Chair: Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair, and thank you for your presentation, Mr. Bee.

Also, I didn't have the privilege of being down there, but some of my colleagues did. Having been briefed on what took place down there, I'm glad to see you saw some of the same situations some of my colleagues described when they came back. They certainly had a different viewpoint on how negotiations and meetings went on, not just in the front lobby but also behind the scenes. It's good to hear that it wasn't all a negatively based get-together for all countries but that there were small baby steps made going forward, although maybe not as quickly as we all want.

My one concern is with the developing countries that were there that bonded together. Did they have a major impact or play a major role in slowing down the process, do you feel, or did they take a positive approach to the new talks at the WTO?

º (1600)

Mr. Ken Bee: My impression of the developing countries is that they were not willing to accept another warehouse agreement where the United States and Europe sat down behind closed doors, came up with an agreement, and said to the rest of the world, here, you accept this. The developing countries said, enough is enough; we need to see substantial reductions in this trade-distorting domestic support both Europe and the United States apply; we want to see the export subsidies reduced; we want to see developing nations have some special treatment to allow their economies to grow. Without getting into details, I think it was just a case of the developing countries saying, we are not willing to accept the same process that happened back in 1993.

Mrs. Rose-Marie Ur: Do you believe that was the right move, Mr. Bee?

Mr. Ken Bee: I don't blame them for what they did.

Ultimately, though, our goal can't be whether we're for the G-21, Europe, or the United States. The ultimate goal has to be to try to come to an agreement so we have fairer, freer, disciplined world trade in agriculture. That has to be the ultimate goal.

Mrs. Rose-Marie Ur: Did you want to comment, Mr. Dahl?

Mr. Cam Dahl: Yes, I'll add a bit because it's an appropriate time to bring it in. I think some of the presentations made by the developing countries have actually had a positive impact on the negotiations. There are very significant development goals for this round, and I think those presentations were very positive.

But one of the uncomfortable topics we're going to have to start talking about is what is meant by “developing country”, because at this time, for WTO purposes, a country is developing if it says it's developing. There are obviously different stages of development, and we're going to have to start talking in the WTO about specifically defining those special safeguards and special measures. Which stage do they apply to? Do they apply to all stages? Do they apply to all commodities? We're going to have to start talking about that.

Mrs. Rose-Marie Ur: Then you had said in your speech that the subsidization of exports is one of the most trade-distorting practices, and it has been eliminated in virtually every industry but agriculture. Why agriculture? Because it's so diverse? What do you believe is the reason?

Mr. Ken Bee: I think there has been a reluctance on the part of the nations to sit down at the table and recognize that agriculture should be moved along the same road other industries have gone down. They just aren't willing to do that at this stage, and we're fifty years behind when it comes to fair trade rules for agriculture.

You have to remember, before the Uruguay Round, my understanding is, there were almost no rules at all. Let's give some credit to the Uruguay Round. It was a step forward to try to put some sort of rules-based system in place, and now we're trying to refine that and make it better yet.

Mrs. Rose-Marie Ur: In your opening remarks you had said grains and oilseed producers had to obtain the following three key elements, and you listed one, two, and three. I appreciate those, and I've seen them many times before in many of your presentations. I was just wondering whether you'd like to expand on them and tell us if you have any input as to how one, two, and three could be advanced. Do you have suggestions on one, two, and three?

Mr. Ken Bee: I'll comment and then I'll turn it over to Cam. You see, it's a tough question.

First of all, the reason there are three points there going hand in hand is because they intertwine. You can't just do one or two of them and ignore the third. They're all interrelated, and you need to be able to reduce the export subsidies, reduce the distorting domestic support, and remove tariff barriers. Even if you do two of the three but don't do the third, then you're still going to be at a disadvantage. You absolutely have to have to work on the three together, and that's all part of the negotiations. If you do two here and then you have the third one left, you'll have to sit down and make sure they're balanced.

One of the problems we have here in Canada with the grains and oilseed sector is that our government does not provide very much in the way of product-specific support for grains and oilseeds. Yet that's how Europe and the United States do their business, and we have to compete against them.

As an example of where we have been the boy scouts of the world, we've agreed to the principles of the Uruguay Round and have cut support. We don't use the product-specific type, and now it puts some of us at a disadvantage.

So you have to take all three of those components, balance the pros and cons of each one as you reduce the domestic and export subsidies and the tariff barriers, and work out a solution that's acceptable.

Now I'm going to turn it over to Cam.

º (1605)

Mr. Cam Dahl: It's why we say there are some aspects of that framework agreement that do make us a little uncomfortable. However, to put it in a nutshell, I'd say that if we moved forward with this framework and started negotiating those little empty brackets, we could accomplish progress in all three of those areas. That's why in coming out of Cancun we felt we had made some progress, so I would encourage our government to use that document as a basis for future negotiations.

The Chair: We'll move to Mr. Proctor for seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thanks very much.

Sorry I was a bit late, but I did read your brief last night. My apologies.

It's good to see both of you here. I know you've been here many times before at the committee, Cam.

I'll just pick up where Rose-Marie left off. She talked about points a, b, and c, and then the next sentences in your brief say “All three of these pillars are critical and interrelated. We must see real progress on all fronts.” My question is, or what?

Mr. Cam Dahl: The simple answer to that question is, or we're going to see continued difficulties in the grains and oilseed sector. I think we all know it hasn't been an easy number of years for the grains and oilseed sector. The phrase is, move this industry beyond crisis management. Critical to that is seeing progress in these areas.

Mr. Dick Proctor: What are you seeing within the industry itself in terms of people who are giving up or selling out or in terms of farms that are becoming larger? Is there a pattern? Is there a trend? Does it vary from region to region or from province to province?

Mr. Ken Bee: I'm sure there is variation across the country, depending on the region and the crop mix, etc., but it's an ongoing process where yes, some of us are getting out of the business because the returns aren't there. Suppose you've invested $1 million, $2 million, or $3 million in an operation and you ask yourself, what's my return? And the answer is, your return isn't what you think it should be. So yes, that's an ongoing process.

In the long run it's absolutely critical that we come up with a fair, rules-based trading system. The producers in this country have a huge natural resource, some seventy million acres of agricultural production. That's a huge asset for a nation to have, yet we're continually being put behind the eight ball, so to speak, because of the unfairness or inequities within the current system. It's absolutely critical that we have those three points and that we make progress in all three areas for our industry to prosper in the future.

Mr. Dick Proctor: I think, Ken, you said we need to make challenges. I agree completely with you on that. Cam also said this country has an utter dependence on trade. I would add in parentheses that this is especially with the Americans, and I frankly think that's one of the problems we have. There's such an imbalance in our trade with the United States, not just in agriculture but on a number of other fronts as well. I think the fear of challenging the Americans and some of their practices make us skittish about it, to put it mildly. We hesitate and we don't do those sorts of things because of the ramifications for a country like ours. I can think of issues like split-run magazines and steel a few years ago, where everybody says, oh well, we'll just kind of back away from that.

I think it's a huge problem. I don't know what you folks think, but I'd be interested in your comments.

º (1610)

Mr. Ken Bee: That's why we need greater clarity in the definitions for the various support programs and in the rules you have to follow. If you don't meet the standards in the definition of green, amber, or blue--and hopefully the blue box disappears--then you also need a rules-based system that's very clear that if a country doesn't meet these criteria, then there's going to be some sort of consequence. Currently, under our system the consequences are vague; I'll put it that way.

The process itself is extremely expensive from a producer's point of view. If one of our producer organizations were to challenge the U.S. or Europe on a program, it would be extremely costly. That's why I think the major effort, instead of going into challenging, should be to get some fair rules in place. Once that's done, if countries don't follow those rules, then as far as I'm concerned, by all means use those rules. If other countries don't obey them, then our government should be willing to challenge those countries.

Mr. Dick Proctor: Thank you.

Cam, you made an important point to Rose-Marie about a definition. We have to have definitions about what a developing country is. Now, as I read the reports out of Cancun, it seemed to me those newspaper and other reports were saying that India and China had kind of taken the lead with the developing countries. One, is that accurate, and two, if it is, where would you place them in the stage of developing countries for agriculture?

Mr. Cam Dahl: I would add Brazil to that list, and there's no question that there are development issues in all three of those countries. I'm not going to pretend for a moment that there aren't; there are. But if you compare some of the other countries like....

Mr. Dick Proctor: Haiti or something.

Mr. Cam Dahl: Yes, exactly. Clearly, they are at different stages, and I think one of the things the round has an opportunity to do is to bring forward some very aggressive and very helpful development tools for those countries that really need it. But in order to do so, we have to ensure that we have a proper definition of what those countries are.

Countries that are major players in the export market for agricultural products should not be able to shield those commodities with special and differential treatment, and I think that's just a basic bottom line.

Mr. Dick Proctor: Thank you.

The Chair: Thank you, Mr. Proctor.

I will move now to Mr. Hilstrom, who, I believe, has a question or two.

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

I'd like to start off by saying it's nice to have you folks here.

Of course, I would have been in Cancun myself, but my beach clothes and my swimming suit were out to the launderers and I wasn't able to go. It might have fallen down as I walked down the beach, though.

Some hon. members: Oh, oh!

º (1615)

Mr. Howard Hilstrom: In any event, I'm interested in the dynamics of what happened down at these trade talks, whether they were in Mexico or elsewhere.

We know that the supply management of commodities in Canada here totally restricts trade between the provinces. The Canadian Wheat Board restricts trade between provinces. We know that members of your group bring tens of billions of dollars of hard foreign currency into this country every year through your exports, even if the individual farmer isn't making much money, and we know that supply management doesn't bring anything in, virtually.

So we have this situation at the trade talks where the Canadian government is trying to say we're not going to have greater market access in supply-managed commodities, but we are in everything else. I wonder, when the negotiations are going on, is Canada part of the problem or part of the solution in getting these trade talks going?

I have two questions, and the first one is on the dynamics down there. We had the Canadian Federation of Agriculture representing supply management for commodities, and we had, I believe.... Was it the Grain Growers or were you under an umbrella group down there?

Mr. Ken Bee: It was both, Howard. We were there as the Grain Growers, but the Canadian Agri-Food Trade Alliance, of which we are members, was there as well.

Mr. Howard Hilstrom: Now, were you just receiving presentations from the ministers and from the trade officials there, or were they asking your opinion and for input?

Mr. Ken Bee: It was a two-way street. They asked us for input, and as we were having meetings with other farm-oriented groups from other countries, they asked us what ideas were coming out and if we had any information. It was a very good two-way flow of information.

Mr. Howard Hilstrom: Good.

Was there any discussion with the government trade officials or ministers in the form of either suggestions from your group or discussions about what Canada might be able to do to help get the trade talks moving along, or is there nothing Canada can do? Do you know what I'm asking, the issue of whether Canada can do anything to help act as a catalyst to get the trade talks moving further, or do we have to go in with our current Canadian position and just stand there?

Mr. Ken Bee: I got the sense that our negotiators were making a very sincere effort to keep the trade talks going. When we had our meetings with some of my American friends, the American Soybean Association and other groups as well, we would take some of the ideas from discussions where we had common ground and would let our negotiators know about them. We'd say, look, we think the United States is willing to go in this direction. We'd let them know so it could give our negotiators some sense of confidence that they could approach their counterparts from other nations with some new ideas.

We had talks with people from New Zealand, Brazil, Mexico, Argentina, and the United States; those are the ones I recall off the top of my head.

Mr. Howard Hilstrom: As an example of what I'm talking about, did Canada--Pierre Pettigrew, the minister, or any other ministers or trade negotiators--ever give any indication that they might be willing to give up the monopoly of the Canadian Wheat Board? Did that ever get discussed?

Mr. Ken Bee: It was only discussed in the context of the framework agreement, where there would be some discipline, if I recall, on export guarantees, etc. Cam would be more up to speed on that one.

Mr. Howard Hilstrom: But the Canadian representatives were resisting those kinds of discussions, were they not? Did they say they wouldn't discuss that at all, that they refused to move?

Mr. Cam Dahl: I think Canada's negotiating position is that they are striving to preserve their monopoly. Definitely, others out there, like the European Union and the United States, are looking for an end to state trading export enterprises.

Mr. Howard Hilstrom: I guess this is a little bit of a rhetorical question, because maybe you're not able to answer. It just seems that for Canada, with the position we've taken at the trade talks, we are not any kind of catalyst in getting the talks moving along the road. We kind of take our position of being hard and fast on those sensitive commodities and on the Canadian Wheat Board. We more or less go in with that position, and then in effect we say to the EU, the U.S., and the world, well, you just push us and tell us; you make an agreement and then we'll just go along with it. That's the concern I have.

But again, maybe that's not something you can really answer on.

Mr. Ken Bee: That isn't the perception I got from our negotiators. I have the highest respect for our negotiators and ministers who were at Cancun. I think they were making every effort to try to seek common ground with different countries, and I give them full marks for their efforts.

Mr. Howard Hilstrom: Canada is the only country in the world that has supply management. How can Canada have a negotiating position on that with other countries when nobody else has it? Isn't that kind of strange?

The Chair: Your time has expired and I'm going to jump in.

I think, in fairness, Mr. Bee has already stated that Mr. Pettigrew enjoyed the respect of many countries. He was considered a facilitator, as he had been at a previous meeting.

In fairness to Mr. Verheul and our own Ag minister as well as others, I'll say that Mr. Bee and of course the people from the Canadian Agri-Food Trade Alliance were working hard--as we were--but we from the government side found it extremely difficult to meet with our American counterparts. We were not able to meet with a single American other than at a social event, where we met a couple of congressmen. They simply did not want to meet with us.

I think it's also fair to say, and I think Mr. Bee would agree, that it was never a case of the agricultural issues becoming the downfall of this conference. We never even got to that point.

Mrs. Ur, you have time if you want to use it.

º (1620)

Mrs. Rose-Marie Ur: Mr. Bee, you have stated we need to have a fair, rules-based system. Now, I've never been there and I don't know how it works. Would you think it would be appropriate between meetings to develop a fair rules system and have that sent out to the various countries that go there, the hundred-plus countries? How many countries are there now, 140 or so? Could we put that forth, a kind of check-off list, to see where there is consensus? Would it be of benefit, instead of us getting there and trying to argue the point, to have some of this legwork done ahead of time so more time could be spent discussing other matters? Would that help the system flow a little bit more quickly?

Mr. Ken Bee: I get the sense that the negotiators do that on a regular basis. Part of their process is to contact the other negotiators from other countries and do what you suggest.

The Grain Growers of Canada have networked with some of our counterparts in the United States, such as the National Association of Wheat Growers and the American Soybean Association, and put together some common statements on things we agree on, on what we think could be some general principles with regard to these trade negotiations. As far as our organization is concerned, we are doing some of the things you suggest. The Canadian Agri-Food Trade Alliance sought and got support from numerous organizations in both Canada and the United States, and it then put out a common trade statement, so what you suggest is being done.

Can more be done? I'm sure it can. I'm sure there could be a lot more ideas put down and circulated for further discussion if all the countries decided they had to come to an agreement and wanted to see what other ideas were out there so they could find some common grounds.

I think your idea has merit. Our organization is trying to do our part where we can, and I'm sure other negotiators are doing that. Putting a little more pressure on them would, I think, do a lot of good.

Mrs. Rose-Marie Ur: Thank you.

Also, of course, there's the size of Canada. Now, our producers are second to none in the world, and I'm always promoting our good Canadian farmers. But when we go there as a country, do we have many allies when we get to the table? It's great to express our great virtues and praise the great products we produce here in Canada, but when you get there, how many people come on board? Because we're a small country compared to the United States and the EU, we need to have allies to be able to bring our concerns to the table a little bit more forcefully.

Mr. Ken Bee: In our discussions with the farmer representatives we met with from numerous countries, we found Canada was well respected and our negotiators were well respected. I think we do have allies, but maybe we have to work harder to understand our allies' positions and to try to find some common ground.

Mr. Cam Dahl: I'll just add a bit to that on the need for allies, because you do raise a very important point. When Canada speaks alone against 147 other countries, we're not going to carry a lot of weight. Canada is a member of organizations like the Cairns Group, for example, and I think our voice carries a lot more weight and we have a lot more negotiating power when we're able to sit down with like-minded countries and bring forth common positions, and that's absolutely the case.

The Chair: Using a common term these days, “juggernaut”, I wonder if the juggernaut is not really the European Union and the Americans, combining their might and will against the rest of the world. It's partially the reason the G-21--or G-22 now--has taken a very strong position that they're not going to be bullied any more.

Perhaps we need to seek allies. I think we're doing that among other countries, some of the developing countries, because we have things we can do for those people and they can likewise help us. I think maybe that's where our strengths are going to lie in the future, even though our main trading partners are still going to be those two, the EU and the U.S.A.

Mr. Plamondon.

º (1625)

[Translation]

Mr. Louis Plamondon: What I have to say is along the same lines as what Rose-Marie and you said on the perception that other countries have of Canada's attitude. In light of the comments made here by producer representatives, I got the impression that Canada had not properly explained how the two types of interventions we practice in this country actually work. There was very little explanation of the fact that supply management does not at all hinder the international trade system. Certain countries believed that supply management was a barrier blocking their products, which is not the case.

Canada found itself isolated. The people I met told me that had there been an agreement, Canada would have been alone and would have had to sign the agreement without respecting the commitments it made before going to negotiate, because it was not a member of the group of 23. It had little influence in the group of 30 and had even withdrawn from it. It found itself isolated and was in fact saved, to some extent, by the fact that there was no agreement. These comments don't give me much confidence in the way Canada is behaving. The lobbying is often done by the producers and not by the government's official negotiators.

Were you under that impression?

[English]

Mr. Ken Bee: We provide input for our negotiators, and our Canadian delegation gave us every opportunity to do that. From our grains and oilseed position, our Canadian Agri-food Trade Alliance position, and our supply management position, we were all given the opportunity to outline what our needs and concerns were and to put forward some ideas as to how we might achieve our goals. We were given the opportunity to meet with groups from other countries.

As far as the suggestion that our negotiators didn't negotiate goes, which I think is what you're implying, I do not accept that. Our negotiators worked very hard to try to find some common ground in laying out Canada's trade position, and it's an ongoing process.

The Chair: We'll move to Mr. Proctor for the last question. We're right out of time.

Mr. Dick Proctor: Thanks very much, Mr. Chair.

In your brief you were particularly scathing in your criticism of the U.S. loan deficiency program, and you talked about how in one year it would help wheat producers and in another year it would help corn folks. Can you just expand on that a little bit for my edification and as well indicate how that impacts back on the difficulties our farmers have in terms of competing?

Mr. Ken Bee: I'll take a shot at it, and then I'm going to turn it over to Cam. The loan deficiency payment, in our view, is a product-specific support. It allows U.S. producers to receive dollars when the price of corn, as an example, goes below a certain level. It doesn't matter how low it goes below that level; their government will make up the difference.

Well, that puts dollars into their pockets. It also means they can continue to produce just as much as they want with no ramifications of market price, whereas for our producers that market price for grains and oilseeds is determined in large part by the United States and Europe. We have to compete against a price that is partially arrived at because of these subsidies, which apply when the marketplace is telling those farmers they don't need to grow more corn but maybe need to grow something else. The U.S. farmers grow for the Farm Bill, not for what the market is telling them to grow. In my estimation, that's the harm it does.

Cam may want to elaborate a bit further.

º (1630)

Mr. Cam Dahl: I think that's exactly what it does. It provides a floor price or a guaranteed price, and if the world price is below that, it doesn't matter. As an example of that, at times we've seen corn coming into Ontario at low prices.

The Chair: Thank you very much, gentlemen.

I must say, on behalf of this group, we were good ambassadors for your particular organizations. Even though there were differences of opinion from time to time, I think everyone felt they were being heard, and there were no limitations placed on anyone in terms of their ability to go out and to lobby and work for their causes.

Thank you for appearing. This is like the Doha Round. It will continue and another chapter will be written another day, another time. Thank you very much.

Now we will call to the table the people on the other side of the spectrum, a group that has already been referred to today. We will begin the second half of our meeting with the Dairy Farmers of Canada, who are no strangers to this meeting, with Mr. Richard Doyle, executive director, and Jacques Laforge, first vice-president.

Probably, Mr. Laforge, you will be making the statement. Thank you for coming.

Mr. Jacques Laforge (First Vice-President, Dairy Farmers of Canada): Good afternoon, and thank you.

I'll make the presentation. The first part will be in French and the second part in English. I'll do the presentation and Richard will help me answer questions.

[Translation]

I am very pleased to be here today to discuss with the committee the current WTO negotiations and what they could mean for Canada's supply-managed sectors.

In the interest of time, I am going to jump right into what we see as the main issues for supply management and why the latest ministerial text on agriculture is not acceptable and does not reflect key principles in the Canadian government's trade mandate.

DFC objectives to maintain supply management, which we share with the other supply-managed sectors, are the following. On domestic support : have administered prices under supply management recognized as non-trade distorting measures; prevent product-specific commitment under the Aggregate Measure of Support; and maintain de minimis at 5 per cent. On market access, we want no reduction in over-quota tariffs and clear and clean rules on minimum access.

With regard to administered prices, the WTO rules on domestic support primarily attempt to address financial contributions by governments. In Canada, the administered prices in the dairy industry do not consist of government financial transfers, but rather they are an empowerment of producer organizations to establish market prices based on cost of production. The WTO amber box includes administered prices where such prices are either trade or production distorting.

As you will recall, the recent WTO Panel on export of dairy products determined that exports at prices below the domestic price would be considered subsidized. It means that any trade distorting effects of Canadian prices are already captured through the WTO rules on export subsidy. Under supply management, production is disciplined. Supply management does not distort trade.

We are therefore seeking for the WTO to recognize that our pricing mechanisms should not be considered under the amber box. Rather, our pricing mechanisms should be considered in the green box. They are not currently eligible because the green box only covers programs designed to provide direct payments.

DFC is further seeking a review of the green box criteria to ensure that our price mechanisms are recognized as non-trade distorting.

I would like to comment on the WTO's focus on dealing with government financial contribution more than market-oriented mechanism. Following the WTO Panel on the export of dairy products, the Canadian dairy industry must now notify export subsidies of about $100 million per year. The WTO makes no distinction between a government contribution of $100 million to producers and producers accepting a loss of income on export equivalent to $100 million, which is very important.

In other words, if tomorrow the federal government decided to pay milk producers $100 million per year, our producers would have an improved income but the WTO would only recognize that Canada is subsidizing to the extent of $100 million per year. If the WTO can't see the difference between these two scenarios, our producers sure can.

º (1635)

[English]

With respect to product-specific commitment under the AMS, in the current negotiations there are ongoing attempts to ensure that pressure for reform of agricultural policy is put on all countries independently of their degree of trade-distorting programs.

The concept of putting a cap on support on a product-specific basis in a given historical period has the effect of penalizing countries like Canada that have attempted to accelerate the reduction of their AMS beyond their WTO commitment. Countries that have developed policies to maximize the utilization of their domestic support commitments, like the U.S., benefit from this proposition.

Let's take an example where two countries are allowed to provide $1,000 on overall AMS. One country has spent $500 on the dairy sector and $500 on grain, while the other has only spent $100 on dairy and nothing on grain. If the WTO seeks to reduce the AMS by 50% and impose a cap on product-specific contributions, both countries will have on paper an AMS of $500. However, the first country can either maintain the $500 in dairy and eliminate grain support or spend $250 on dairy and $250 on grain. The second country would not be eligible to exceed $100 on dairy and would have no opportunity to introduce a support program for grain. So there is no concrete level playing field between these two countries.

Closer to home, if this approach had been in effect, the federal government would not have been in a position to provide assistance last August to the cattle industry in the BSE crisis as the cattle industry currently receives no AMS support.

On de minimis, the de minimis is an exemption in the calculation of the AMS for programs for which support represents less than 5% of the value of production. To reduce the de minimis will require reforms from all countries rather than putting the emphasis on the countries with the most trade-distorting practices. Some countries have amber support as high as 60% of the value of their agricultural production, while other countries like Canada have an amber support of 5%.

If the WTO reduces AMS by, let's say, 50%, the first country will be able to have 30% support. It makes little sense to also seek to reduce by 50% those programs that provide less than 5% of the value of production. It would be more equitable to all to only seek a reduction of the de minimis once all countries had achieved a level of AMS of 5% of the value of agricultural production. This would be a level playing field. This is why DFC supports the Canadian government's position to maintain the de minimis at its current level of 5%.

Concerning clear and clean rules on minimum access, for supply management the predictability of imports is essential to the establishment of production quota. Many believe that with a 300% over-quota tariff, a reduction of 15% will not have much impact. Not only is this wrong, as I will explain in a second, but if it's true, then there is no point in reducing it. The real issue is what is truly offered as access to the market.

If we maintain over-quota tariffs at their current levels and provide access to the market with a zero in-quota tariff, exporters into Canada have access to a value-added market. Reducing tariff would depress the value of the Canadian market. Exporters would have the same access but to a market of a lesser value.

The dairy, egg, and poultry producers have been promoting and will continue to promote clear and clean rules on minimum access commitments under tariff rate quotas.

DFC and the other supply management sectors have raised the issue of our ability to maintain domestic prices with the current level of over-quota tariffs. DFC has provided the committee with a graph depicting an actual situation that occurred last summer. We all know that the international market for butter and skim milk powder is a dumping market. For a few months last year the world price for butter dropped to about $1.50 a kilogram. This was not the price butter actually sold for in New Zealand but was the dumping price they were offering on the world market. The Canadian price for butter was $6 a kilogram, so at a 300% tariff, the customs duty of about $4.50 a kilogram barely prevented an unknown amount of imports from entering the domestic market beyond the 5% free access already provided for imports.

This is why the SM5 is calling for the maintenance of over-quota tariffs at the current level.

º (1640)

In conclusion, these are what DFC and the SM5 view as the most critical issues for our sectors in the current trade negotiations. The Canadian government has a mandate to maintain supply management. The government negotiators must succeed in promoting the government's position and need to make progress on these issues. If not, supply management will suffer and so will other agricultural sectors in Canada.

With that you also have a graph at the end explaining the world price and showing how close we got to the bar with the low, dumping world price. It's not getting any better; the world price fluctuates as much as it ever did. This is a scenario to show you that if a large quantity--or even a small quantity--beyond regular imports were coming in unanticipated, it would have a devastating effect on our system.

The Chair: Thank you, Mr. Laforge.

We will now take some questions, with Mr. Hilstrom for the first question--but not Wheat Board questions. We're talking to the dairy group.

Mr. Howard Hilstrom: Actually, being a western Canadian farmer, I'm impacted by the Wheat Board pretty directly, but I don't want to discuss that right now.

If I could sum it up in one sentence, I'd say the objective of the WTO talks in regard to agriculture seems to be that the WTO wants to increase trade between countries in agricultural products. Is that a fair summing up of what the WTO talks are about on agriculture, Mr. Laforge?

Mr. Jacques Laforge: The objective at the start of all this is basically to have clear and clean rules so trade is done fairly. After that we'll evaluate how trade is being done and see what comes forward.

Mr. Howard Hilstrom: If we were all just worrying about the status quo, there wouldn't be much to talk about...to have to go to have discussions on trade. When I look at the DFC objectives on both domestic support and market access, it seems one objective is not to have any increase in dairy trade around the world. Is that a fair assessment? Do you want to have increased trade in dairy commodities on some basis I'm not aware of?

º (1645)

Mr. Richard Doyle (Executive Director, Dairy Farmers of Canada): There are different ways of increasing trade. In fact, some of the proposals we're making, in our view, will substantially increase trade. In fact, we made a proposal--I'm talking more SM5 now--that Canada should pursue a 5% minimum access, when you have TRQs, on a clean basis. We all know that in the last round the 5% rule of market access was not really a rule; it was just a modality. Countries basically calculated what they wanted, and nobody agreed with each other because they were tired of the eight years of not getting anywhere.

The U.S. offered 2% access on dairy. We offered 4%; we didn't offer 5%, we offered 4%. Although we say you should have a clean 5% access, we would likely end up with about 6%, because for some products we have more than 5%. You would double trade in the U.S., you would double trade with the Europeans, and so on. In grain, for example, or for some meats such as pork, you would have huge access. You would probably have, if you had that 5% applied, more increase in trade than you had during the Uruguay Round. That's one element of trade liberalization.

We also suggest that in the administration of TRQs, you should offer minimum access at zero tariff. Offer the access you're offering so it's predictable and equitable for everybody. You still have tariffs on minimum access that are extremely high, 30% or 40%. That's on the access provided, that famous 3% to 5% that is not being utilized basically because the tariff is so high.

These are all elements of trade liberalization that are in fact part of the initial Canadian position, which we fully support.

Mr. Howard Hilstrom: It seems, the way you've explained it, a very reasonable position on that. What other countries, specifically, in the world agree with Canada's position on this? Are there any? Name them if you can if there are, and that's fine then.

Mr. Jacques Laforge: The question is fairly broad. If you look at supply management as it exists in Canada and you try to compare something the same or quite similar, you could argue there's none. If you compare the example of the European dairy quota system with Canada's, there are some similarities. If you look at other countries, there are similarities, but they don't have a total duplicate of what we have.

How it fits in the rules becomes quite important. Clear rules become extremely important if countries are to actually apply the same rules and be treated the same. Now, I compare it to this, and it basically reflects the Canadian position. World trade is basically a whole bunch of agricultural commodity trading practices, and it's like sports, let's say. If you look at dairy as a sport, grain as a sport, and so on, you'll understand why they all need clear rules to be played. Now, the rules that would apply to dairy in an international perspective would probably be quite different from those for grain or for anything else. But if you don't have clean rules before you start playing a game such as hockey, usually the biggest guy gets to determine the rules, and that's what we're into.

We look at it inside Canada from our perspective, but the true manner of how to do trade--open trade or trade in mature markets like dairy in all developed economies--is that you have to have clear rules. Yet everybody is trying to hide behind something and is not dealing with the issue of clean rules.

Mr. Richard Doyle: I have two quick points, Mr. Chairman. One, we've been working very closely with the Canadian Federation of Agriculture, which represents a broader spectrum than just supply management. There was a statement signed by representatives of 36 countries that was very supportive of the concept of orderly marketing and so on.

The problem we're having is that we don't have anything like the Cairns Group, for example. Canada is a member of the Cairns Group, but Canada has only supported the elimination of export subsidies. We agree with the elimination of export subsidies. When they got into the signing of the Cairns Group statement on domestic support or on market access, Canada was not part of the statement because Canada has its own approach.

Canada supports a lot of the elements of the Cairns Group's position, and we support elements that are supported by Norway, by Switzerland, by Japan. The problem is that when we get into the overall statement, because there's a hole in there somewhere in how this thing works together, it doesn't work. The reason for that--and we make that point in here--is that what is unique about our system is not supply management--that's not a context within the WTO--it is the fact that our system does not rely on government finance. That's the problem.

All these rules about the blue box, about the amber box, about the green box...it's all about government money. I have a production-limiting system and therefore that's blue box, but I'm not eligible for the blue box. Only if the farmers are getting funds from the government are they eligible for the green box. I cannot have an administered price in the green box because the green box is only about the government contributing to the industry, and this is a problem.

People are going to have to start looking at those systems and saying, gee, maybe if we broadened the rules a little bit and considered that, you could have the same mechanism whether it's green, red, or amber. But that recognizes that there are systems where the government does not transfer funds. It intervenes but it does not transfer funds, which maybe is not trade-distorting or production-distorting, and that's what we're seeing.

º (1650)

The Chair: Thank you, Mr. Hilstrom.

Mr. Plamondon.

[Translation]

Mr. Louis Plamondon: Thank you, Mr. Chairman.

You were at the meeting in Cancun, I believe. Can you confirm that Canada seemed open to a proposal to place a ceiling on the customs tariffs a country could impose?

Mr. Richard Doyle: I could not confirm that Canada supported that. On the contrary, I think that there were discussions.

We met our counterparts the Japanese producers. Discussions had already taken place, both with the members who were present and with the Japanese delegates and the governments. The discussion centred on the issue of capping tariff ceilings. However, the debate focused on whether or not, if the ceiling was set at 300 per cent—you must understand that certain tariffs are set at 1,000 per cent— this would have any impact on Canada. Naturally, we let it be known that we were in favour of ceilings on tariffs applying to tariff lines that are not subject to quotas.

There is also the whole WTO context. In the case of a country that has adopted tariffs that are protectionist measures, there was to be minimum access and what we call an over-quota, a higher tariff level, in other words, a two-price system. However, countries that were already imposing 600 per cent tariffs reduced them by 15 per cent. Those tariffs are thus a little higher than 500 per cent, but those countries have offered absolutely no minimum access.

The Canadian position aims to correct that situation. There are two possibilities : either the countries who maintain very high tariffs without granting any access should convert to a two-tier quota system with a minimum level of free access, or we must limit the possibility of maintaining such high tariff levels.

Mr. Louis Plamondon: In a confidential document on the lead-up to the fifth WTO ministerial conference : “Draft Ministerial Text for Cancun, Second Revision”, dated September 13, 2003, one can read the following in the “Market Access” section :

2.1 The formula applicable for the tariff reduction to be applied by developed countries will be a composite formula in which each element will contribute to a substantial improvement in market access for all products. The formula will be the following :

i) [...] per cent of tariff lines will be subject to an average tariff reduction of [...] per cent and a minimum of [...]

Are you familiar with this? Was this discussed there? I would like you to tell me about it.

Mr. Richard Doyle: You have George Yeo's text; he was the chairman. The text isn't really confidential, incidentally. It has now been made public.

º (1655)

Mr. Louis Plamondon: This document is public?

Mr. Richard Doyle: It has now been made public.

Mr. Louis Plamondon: It was confidential for a while. It was in fact distributed at the meeting.

Mr. Richard Doyle: That is correct, Mr. Yeo's text did advocate that approach. Obviously, we were very worried about the supply management system. Although certain producers made gains, this represents a step backward for our management systems.

Mr. Louis Plamondon: On that basis, your president, Mr. Grégoire, in an editorial published in the magazineLe producteur de lait québécois, wrote the following :

The negotiations will now have to continue on the basis of the last document discussed in Mexico. That text does not allow a country to be exempt from tariff reduction for its sensitive products. That provision in and of itself threatens the future of supply management since we could no longer protect ourselves from the dumping of subsidized products. But in addition, it proposes a measure that would prevent us from continuing to set our prices on the basis of production costs.

I have a daughter who is a dairy producer in Saint-Chrysostome. When she read that, she called me, because she was worried. Was she right to be concerned?

Mr. Jacques Laforge: I think that she was right. I think you are trying to get a better handle on what happened at Cancun from beginning to end, and on what the situation is today.

After the Montreal WTO mini-summit, Canada arrived in Cancun probably quite confident that it could obtain what it wanted. During the conference, the alignment of countries changed. Canada found itself isolated to some degree and the texts began to change and eventually lead to the text you are familiar with today. This text worried us and also worried the representatives, the negotiators and the ministers. Stopping this kind of evolving situation just like that is not easy. I think that everyone was concerned. Everyone is aware of what is at stake and we are anxious to see how the positions of our government and negotiators will evolve. We are monitoring this very closely. We are concerned because with this document as we understand it, we could not keep supply management.

Mr. Louis Plamondon: Thank you, Mr. Chairman. I will come back to that later.

[English]

The Chair: Thank you, Mr. Plamondon.

Mrs. Ur.

Mrs. Rose-Marie Ur: Thank you for your presentation once again.

Every time we come to discussions on the WTO, we always end up on supply management. That seems to be the topic of the day. We in Canada certainly understand that supply management does not distort trade, because it's a domestic market. I can't understand for the life of me why it's so difficult to educate other countries as to what our system is all about. Can you help me understand why it's so difficult for people to understand that it's a domestic market and there shouldn't be such controversy over a supply management system?

Mr. Richard Doyle: I'll try first, and maybe Jacques will want to add something.

It's a good point. I think history is the reason; that's my view on this.

Mrs. Rose-Marie Ur: Remember, I only have seven minutes.

Mr. Richard Doyle: I know, and I'll be very quick. I know I'm bad on this.

I'll be very honest; I think it's history. People understand the concept of producer empowerment; that is what this is all about. But they receive that through government funding.

If you're in Europe, you may be very positive towards the Canadian system and its quota. It's very similar--they copied us--but they have done it through a system where they have subsidies on exports, subsidies domestically, and so on. When they get into these negotiations, it's not that they don't understand our system, it's that they don't want to go to our system. They would have to forego all the money they get from the government and say yes, we're going to adopt your system and support you. They're fighting to maintain the CAP reform.

Meanwhile, the U.S. is fighting to maintain the Farm Bill system. In dairy they've recently introduced a voluntary supply management system. They agree on the concept, but they just don't want to lose the government money.

Mrs. Rose-Marie Ur: Don't you feel there's going to come a time when there won't be sufficient dollars to continue and they're going to have to start looking at things a little differently? I don't know whether we can survive as we wait for that day to come, but I've heard it time and time again from some U.S. people that the dollars won't be there forever, and they have to start looking at where they can start saving some dollars as well.

» (1700)

Mr. Jacques Laforge: This is just in addition to what Richard has said. When the farmers and even the government people in other countries understand how supply management is handled here, what the consumer pays, and what the farmer's share of the consumer's retail price is, they're amazed. If you compare it with the system in neighbouring countries, it's still affordable and even cheaper for the consumer. They can't figure it out. They say it's the best system, but they ask how they can attain that and not lose income.

We show that it works. I think the Canadian government is convinced that it works, and everybody wants to hang on to it because it's a good deal for everybody.

Mrs. Rose-Marie Ur: I certainly add my yes to that statement.

What is DFC doing to help review the green box criteria to ensure that the price mechanisms are recognized as a non-trade-distorting factor? How are you looking at that?

Mr. Richard Doyle: Well, I think the way we're looking at that is that first of all, we've been talking for at least a year and a half on this, the particular concern we have with regard to administered prices as a result of the WTO panel and the need for clarifying the criteria. The major problem we had in our discussion with the negotiators was that primary criterion, where if you don't talk about the transfer of funds, you're not even part of the box. It's not even conceivable that you could have a subsidy in there that is not a transfer of funding.

So that's the first challenge we have to meet. We're now working with our lawyers to try to come up with a text that we feel will indicate exactly how within this agreement you would change the criteria.

We're satisfied with the Yeo text, for example. It's a framework for the upcoming negotiations on developing the modalities, and it says they will open discussions and negotiations for reviewing the criteria of the green box. In this respect we feel satisfied that the opportunity will exist for us to pursue it.

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

The Chair: Mr. Proctor.

Mr. Dick Proctor: Thank you very much.

Mr. Laforge, in your response to Mr. Plamondon you talked about the confidence Canada had exhibited coming out of the mini-ministerial summit in Montreal and which carried on to Cancun, but unfortunately we got isolated there.

I was with the delegation that went to Japan back in February, and it so happened that when we arrived in Vancouver, we got the interim Harbinson report. In talking with our negotiators a few week before, I had found they had been very confident that Harbinson had been listening very carefully to the Canadian position, and they were cautiously optimistic that it was going to be reflected in that interim report. Of course, again we were disappointed, in fact devastated, by what was in there. Canada was singled out, I think, and was one of the few countries to be singled out in a negative way in that interim report.

We all want to think the best of our negotiators and we hope they're doing a good job, but recent history doesn't really confirm that this is the case. You were there and I wasn't. Can you allay my fears a little bit here?

Mr. Jacques Laforge: You probably have the same fear I have, and it's what the negotiators fear also. It's a negotiation. I think Canada got overconfident, believing they actually had some influence over the contents of that paper, but other countries did also. When the final paper came out, you could see on paper the amount of influence we had. I think Canada probably carries more influence than you'd think from the size of the country, and we're still big players.

Mr. Dick Proctor: But then how did we get isolated? That was your phrase.

Mr. Jacques Laforge: This is my view. If I look at world trade today and I look at the Canadian position, I'm convinced that any final agreement, where everybody agrees on something, will have to be extremely close to the Canadian position. This is because the Canadian position has a balance among all commodities, between export interests and domestic interests, and so on. If you study the global nature of all countries, you'll see that's how an agreement will be arrived at. Everybody has concerns in some areas and everybody wants more market share in another area, so I think it's bound to be fairly close to the Canadian position

I can go and use CFA's statement that if you look at overall export trade, when agriculture is basically about 6% of total world trade, the rest is all domestic or internal. You're not going to upset the apple cart in domestic areas when it only represents 6% of exports internationally.

For every country there is a sensitive area, and it will have to be a balanced position. The only thing is, we have to make sure our government negotiators are on the ball all the time, regardless of who is negotiating whatever.

» (1705)

Mr. Dick Proctor: Obviously.

I was speaking with one of the journalist who were in Cancun--this will bring a tear to Howard's eye--and he actually felt that supply management was in tougher territory than the Canadian Wheat Board in terms of the future of the WTO negotiations. I don't expect you to comment on that particularly, but do you feel it is a difficult challenge? Rose-Marie made the point that we understand it and it seems pretty clear-cut. You folks are saying you're not being subsidized, yet nobody else seems to get it. What's the solution?

Mr. Jacques Laforge: Not to repeat myself, but I think the number one solution is to have clean and clear rules to really test territories, to move anywhere, and to minimize risk. I think that's number one. If you cannot achieve clear and clean rules, we don't know what we have. It's a hockey game where the biggest will rule, and that's what we have to work on.

Probably all countries want a deal so much right now that this emphasis might get lost, and we have to make sure it stays on the table.

Mr. Dick Proctor: Let me just take advantage of the fact that you're here and ask you quickly, what is the status of the butteroil-sugar blend issue for the dairy farmers?

Mr. Richard Doyle: We received a letter from Mr. Manley about the approach we were suggesting for using section 13 of the Customs Tariff to change the definition of “butter substitute”. It would then encompass products that substitute butter in the making of other products, which is what's happening with ice cream. Mr. Manley sent us a letter saying the justice department had indicated that this was not feasible.

We're not going to launch a whole debate on the judicial aspect. We had offered a legal opinion, we're debating legal opinions that are contradictory to each other, and a court would have to decide. I don't think that's what we'll do, but we haven't made a final decision within the organization on how we will pursue it.

The only option that is left, then, is basically to pursue it in keeping with our recommendations to use the WTO rules that allow you to introduce new TRQs. You pay for it; you have to compensate your trading partners by offering additional access. But we still feel this would make imports of those particular products more predictable, which would therefore enable us to establish a quota so we can plan production, knowing the amount of trade that will occur.

Mr. Dick Proctor: Approximately how recent was Mr. Manley's letter?

Mr. Richard Doyle: Oh, I believe it came about three or four weeks ago.

Mr. Dick Proctor: So it was in the last month.

Mr. Richard Doyle: Yes, it was late September, something like that.

The Chair: I'll move to Mr. Ritz for five minutes.

Mr. Gerry Ritz: Thank you, Mr. Chair.

It's interesting material, gentlemen.

Mr. Laforge, you're talking a lot about clean and clear rules. Of course, I don't disagree with you. We always need that in any negotiations. How do you attain that when you toss in the political hand grenade?

Mr. Jacques Laforge: I think you obtain that by always being there, being aggressive in pursuing it, and being consistent, and you also have to preach it. As an example, the best way to defuse U.S. and European approaches to all these green boxes is to start talking about clean rules on market access. As soon as they're clean, you have to give some; it becomes a different story. For Canada that's our strength as a country.

» (1710)

Mr. Gerry Ritz: I'm looking, on your first page, at your supply management objectives, at your wish list. What are your chances of attaining that and maintaining that?

Mr. Jacques Laforge: First of all, it's not a wish list; they're necessities. Again, coming back to how I understand these trade talks and what the sensitive areas are for each country, I'll stress that any final agreement will have to be extremely close to the Canadian position.

Mr. Gerry Ritz: Is the Canadian industry preparing for any different reality?

Mr. Jacques Laforge: Do you mean the agricultural industry?

Mr. Gerry Ritz: We're talking supply management. Other facets of agriculture have had to change drastically in the last number of years, and not for the better in a lot of instances. I'm just saying, are you folks talking about a new reality, one where you may not be able to maintain any of this? Is there any preparatory work going on for a new reality?

Mr. Jacques Laforge: I wouldn't want to give the idea that supply management is not changing all the time, because our system is changing continuously from a market perspective and from every other aspect. With respect to the last WTO levies and all that, it's been a constant adaptation.

Mr. Gerry Ritz: I'm wondering too, how did we get to this point? Before 1995 and the Uruguay Round there was no problem. How did supply management get on the table?

Mr. Jacques Laforge: Basically, the change from article 11 to a tariffication system was the main aspect of all of this. The Canadian government gave up article 11.

Mr. Gerry Ritz: So is the die cast?

Mr. Jacques Laforge: No, the die is not cast. It was traded for a high tariff with the intent that supply management would be maintained.

Mr. Gerry Ritz: Just recently the agriculture minister has been going province to province and getting everybody to sign onto the APF. Quebec did sign on, and now Agriculture Canada is waiting for Ontario or Saskatchewan to sign to make it fly. Quebec signed on under the condition that supply management would be maintained, and the minister said to them, as you have it, so will it be maintained. Do you not believe his statement that supply management is not going to be touched, which is why Quebec signed on for the APF? We're missing something here. You guys are saying there's a problem, and he's saying no, we're going to maintain it exactly as it is.

Mr. Jacques Laforge: I cannot answer that 100%, but I think the intent of having supply management in the APF is that we wanted it there to be recognized. It had been part of all agricultural policy but it had only been vaguely mentioned, and we thought it was important. Maybe it was missed because of the conversion from NISA to APF. Dairy, because it was under supply management, had not been part of the NISA program. I think Quebec wanted it to be specific.

Mr. Gerry Ritz: You talked about Canadian agriculture being only 6% of world trade.

Mr. Jacques Laforge: Sorry, that's world agricultural trade in its totality; 6% of the total is actually sold internationally. The rest, 94%, is really domestic trade.

Mr. Gerry Ritz: Okay, that was a little bit misleading to my ear.

You said the same thing about the Americans, who were willing to give up 2% of market share, and for Canada it was 4%. I'm wondering about economies of scale. When you talk about those percentages and so on, I'm not sure it gives a true picture. If you talked dollar value of those percentages....

Mr. Jacques Laforge: The 94% and the 6% were basically there just to illustrate that while you may think you're going to get a big change in international movement, with 6% it's going to be a slow process. That's where the Canadian position makes sense. The others are for market access.

Mr. Gerry Ritz: If the Canadian position makes sense and we only have 6% clout....

Mr. Jacques Laforge: No. The 94% and the 6% are international, global trade in agriculture, not just Canadian.

Mr. Gerry Ritz: I understand that, but you're just counting the Canadian clout with one and then saying it's okay with the other. I'm missing something in your numbers, I guess.

Mr. Jacques Laforge: I'm missing something too, I guess.

Some hon. members: Oh, oh!

Mr. Richard Doyle: Just to clarify the 2% and 4%, I should explain that what we're basically saying is that you should have rules that apply the same way to everybody. If people say we have to offer 5% access, then offer 5% access, but don't have the U.S. offering 2%. As you say, because they're bigger, that's exactly their argument. They'll do the same thing in terms of export subsidies. Listen, if I only have 10%--

Mr. Gerry Ritz: Concerning the dollar value of that 2% as compared to our 4%, I'm wondering, do you have those numbers?

Mr. Richard Doyle: In terms of access? The 2% and 4% I was using are for access in terms of dairy--

Mr. Gerry Ritz: But there's a dollar value for those access percentages, is there not?

» (1715)

Mr. Richard Doyle: You could probably have a dollar value, but I'm not sure. You're comparing our industry with one that's ten times our size.

Mr. Gerry Ritz: At 2% at ten times your size, it has still to be larger than 4% of--

Mr. Richard Doyle: Absolutely, but does that make it right?

Mr. Gerry Ritz: No, I'm not arguing that. I'm just talking economies of scale and the long-term stability of our supply management sector.

Mr. Richard Doyle: If I may explain just so we all understand, Mr. Chairman, if you were to take this rationale within the context of the WTO, for example, you would say, all right, while the U.S. only has to cut 10% of their export subsidy...because, look, it's going to be billions of dollars if Canada or other countries should eliminate everything. That's not how this thing works. They're the biggest traders, and they're the most protectionist and the most subsidized.

Mr. Gerry Ritz: I can't argue with that; nobody can.

Thank you.

The Chair: Mr. Plamondon, it's your turn.

[Translation]

Mr. Louis Plamondon: I would like to raise another topic.

In Quebec, dairy producers have been demonstrating quite a bit recently, and I would add that they do so in sometimes original ways. The assistance they have received from the provincial government is insufficient since it excludes cull cows. I believe that in Quebec 14,000 dairy producers are affected; they count a great deal on the sale of cull cows which represents approximately 70 per cent of their livelihood. So they are concerned.

Yesterday or the day before yesterday, the Quebec minister invited dairy producers to join with her in asking the federal government for assistance precisely with regard to these cull cows. Quebec has already invested $20 million, that is $10 million from La Financière and $10 million from new funds allocated to bovines. Since we are at the Standing Committee of Agriculture and Agri-food in Ottawa, would you have a message to convey to the government? This is baseball season, and I'm throwing you a ball.

Mr. Richard Doyle: We have been working with Agriculture and Agri-food Canada for several weeks now precisely on that issue. We want the minister and officials to grasp the substantial losses the producers are going to incur and the problem that will arise when pasture lands are no longer available in a few weeks. The barns are already full. The images we saw on television recently could become much more frequent, unfortunately, and that would be regrettable for everyone, including the industry.

I think that our message has been understood. We are currently holding discussions to see what the federal government could do with the provinces within a week and we are very optimistic. The federal government absolutely has to get involved. I think it has the will to do so and that all that remains is to confirm that with Cabinet.

Mr. Louis Plamondon: So, we will keep up the pressure. You can count on us.

Mr. Jacques Laforge: I would like to add something, since I am a farmer from New Brunswick, that is to say quite close to the Quebec border. The problem of mad cow disease has had a very broad impact on farmers and has affected heifer exports as well. This is a whole area that hasn't been discussed very much, but I think that the pressure we are already feeling is going to increase, as Richard said.

Take my farm as an example; it is a bit bigger than the average farm. Currently, I have 15 cows that should be going to the slaughterhouse. Last year at this same time of year, if I had sent the same 15 cows to the slaughterhouse, I would have received between $11,000 and $12,000. Now, I'm looking at $1200. The price is $100 or $150 per cow.

There are a number of other things going on that we don't see. When a cow becomes ill, do I call the veterinarian or do I try to save it myself with what knowledge I have, and run the risk of having it die? There are a lot of losses at that level that you don't hear about. In my region, I talk to my veterinarian and he tells me that the calls he receives have decreased enormously. If my cow is now worth $100 or $150, will I invest $60 on a visit from the veterinarian and another $100 for medication?

In addition, if the cow is beginning its lactation and if I know that it will still give me a lot of milk, I might consider it, but if it is in the middle of its lactating cycle or at the end of it, my decision becomes easier economically, because there is nothing to be gained.

There are big losses at that level that we don't even hear about.

» (1720)

Mr. Louis Plamondon: That is one aspect of things I was not aware of.

Thank you, Mr. Chairman.

[English]

The Chair: Mr. Proctor, just ask a short one. I want to make a statement to my committee members at the conclusion.

Mr. Dick Proctor: Looking through your brief today, gentlemen, I don't find it clear how you viewed the ministerial meetings in Cancun. You were here, I think, for the earlier presentation. The Grain Growers saw some small but encouraging steps. Do you have the same view on it? What's your take on what happened in Cancun and on prospects for the future?

Mr. Richard Doyle: I think that for the grain industry there was some small progress made, because the elements they were seeking were different from the elements we were looking for, though the one is not necessarily contradictory to the other. The wording for the Wheat Board was satisfactory as well, and the negotiators were happy with the new framework because it went the way Canada wanted.

With regard to supply management and with regard to administered prices with market access for dealing with TRQs, as far as we were concerned, we were worse off than when we got into it. That's what we were so concerned about.

Mr. Dick Proctor: Thank you.

The Chair: Thank you very much, gentlemen.

As one who was there as a participant and an observer, I would only encourage you, the SM5 group, the group that preceded you, and others perhaps to find some way you could work together in the succeeding days. I realize our objectives are different, but we need to accommodate both. I think we can do that; there's lots of room for us to do that, but we need to find a way of doing that. So I would encourage you to work together. It would certainly make our position a lot easier to define and make the ministers and negotiators' position a lot easier.

Thank you very much for coming today. We'll be meeting again.

Before we leave, I just want to say to the committee that we're meeting on Tuesday from 3:30 to 5:30. Given that there's a vote at 5:30, we may have to leave this place for a short time for the vote and come back.

We would like to get the report work finished if we can. We've made some good progress on it. We have done some major work on the clarification of some of those issues since we met last time, and further recommendations that were asked for have been included. They have now been drafted and are being sent for translation.

If we could, let's have cooperation next week, because we have an interesting meeting at 3:30. We have the PMRA people coming here as well as the environment commissioner, so we'll have a great meeting. Come prepared with some good questions. This is an issue where, once and for all, we need to ask those tough questions we've asked before but haven't had answers for. We need to seek those answers, so I challenge you to come prepared.

Yes, Mr. Proctor.

Mr. Dick Proctor: It's my understanding from our caucus that they're expecting a ton of supply votes on Tuesday night. There's nothing to indicate that it will be short and that we'll be coming back.

The Chair: It may be, Mr. Proctor, and if that's the case, then we may have to adjust to the realities of Tuesday evening. We may seek some direction from the committee as we meet in the early part of that day. Let's leave it at that, okay?

Thank you very much, and the meeting stands adjourned.