AGRI Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, November 28, 2002

¾

0830

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

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food)

¾

0835

¾

0840

¾

0845

¾

0850

¾

0855

The Chair

Mr. Lyle Vanclief

¿

0900

The Chair

Mr. Lyle Vanclief

The Chair

Mr. Lyle Vanclief

The Chair

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

¿

0905

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

¿

0910

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

Mr. Howard Hilstrom

Mr. Lyle Vanclief

The Chair

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

Mr. Lyle Vanclief

Mr. Louis Plamondon

¿

0915

Mr. Lyle Vanclief

Mr. Louis Plamondon

The Chair

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

Mr. Lyle Vanclief

¿

0920

Mr. Murray Calder

Mr. Lyle Vanclief

Mr. Murray Calder

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

Mr. Lyle Vanclief

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

¿

0925

Mrs. Rose-Marie Ur

Mr. Lyle Vanclief

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Lyle Vanclief

Mr. Dick Proctor

Mr. Lyle Vanclief

Mr. Dick Proctor

Mr. Lyle Vanclief

Mr. Dick Proctor

Mr. Lyle Vanclief

The Chair

Mr. Paul Steckle (Huron—Bruce, Lib.)

¿

0930

Mr. Lyle Vanclief

Mr. Paul Steckle

Mr. Lyle Vanclief

Mr. Paul Steckle

The Chair

Mr. Rick Borotsik (Brandon—Souris, PC)

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

¿

0935

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

Mr. Rick Borotsik

Mr. Lyle Vanclief

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

¿

0940

Mr. Lyle Vanclief

The Chair

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

Mr. Lyle Vanclief

Mr. David Anderson

Mr. Lyle Vanclief

¿

0945

The Chair

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CANADA

Standing Committee on Agriculture and Agri-Food

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NUMBER 006

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, November 28, 2002

[Recorded by Electronic Apparatus]

¾  (0830)  

[English]

    The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone. The Standing Committee on Agriculture today is receiving a briefing session on the APF, the agricultural policy framework.

    We're very happy this morning to have the Minister of Agriculture and Agri-Food with us, and two people from his department--there may be more if need be--his deputy minister, Mr. Watson, and Dr. Gravel.

    With that, Mr. Minister, we would first of all receive a short presentation, and then we'll have some questions from around the table. It's my understanding we have until approximately 9:40.That gives us about an hour and 10 minutes, or an hour and 15 minutes, to hear from the minister first-hand how the APF is being received and the situation regarding it in the provinces as it presently stands.

    So, Mr. Minister, welcome. The floor is yours. I know we're starting a little bit earlier than usual, but we certainly appreciate that you have come today at an earlier time than maybe we could have expected. I know our committee certainly appreciates it. Welcome.

    Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman.

    Good morning, colleagues. It is a pleasure to be here to the committee again this morning.

    As you said, I do want to bring the committee up to date on the business risk management element of the agricultural policy framework. I know it is of great interest, not only to the members of Parliament and specifically to the committee members here, but to the industry across the country as well. I will do that in a moment, with about a 10- or 12-minute PowerPoint presentation, Mr. Chairman. I think that will make it a little bit easier to explain and to show to everyone the proposals that are out there being discussed with the provinces and with the industry at the present time. I want to make it clear that the word I said was that these are “proposals” that are out there. It's a work in progress that has been going on for a number of months at the present time.

    However, before I do that, I just want to make a couple of comments about Kyoto, because I know that's also top of the mind for everyone these days. I want to make it very clear that from my perspective I can't help thinking about the weather and climate changes it would appear that we're having, not only in Canada but around the world.

    I know that the standing committee had an informal meeting, for example, with the Minister of Agriculture from Mongolia this week. I know some met with that minister. I met with the minister and was joined for lunch as well by Mr. Hilstrom. Mongolia has had severe climate change as well, and if I remember correctly, in the last three years the livestock population in that country has gone from 30 million to 22 million, and they have had 11 million deaths in their livestock population because of drought and shortage of feed.

    So not only is the climate changing in Canada, it appears that it is in other areas. Certainly we have seen the effects of some of that here. The ongoing climate change may very well bring more extremes in weather, and I think it behooves us all to see what we can do, both locally and globally, in order to at least slow that up, but at a bare minimum reduce what I think is quite obvious--the human element of climate change that is taking place in the world today. We as individual Canadians, and certainly that includes us as farmers and as members of government, without question have a responsibility to do everything in our power to reduce greenhouse gases.

    The United Nations' goals set out in Kyoto are a major step in trying to remedy to some extent this situation, which, as I say, will probably only grow worse if we don't do all we possibly can to try to reverse the trend. As in taking any action, there are always some costs to doing it. But I think we also have to look at what the costs are if we don't take some action in order to try to reverse it. Certainly there are also some gains from it.

    In agriculture, we have some opportunities to develop new markets, for example, for carbon credits, biomass for bio-fuels, innovative technologies that extract energy not only from commodities we produce in agriculture on our farms, but from some of the residues we have on our farms as well. So all of these can not only help solve today's environmental situation and problem, but also create some new markets for our producers.

    The agricultural policy framework is about helping farmers take advantage of opportunities, helping them meet the challenges that are out there and to succeed and be more profitable in a way that respects the environment.

    So with those comments, Mr. Chairman, I'd like to go to the overheads that will be on the screens behind me and go quickly through this presentation on the business risk management aspect of the agricultural policy framework.

    Just before I do that, there are five elements, as we know, to the agricultural policy framework: business risk management, food safety, the environment, innovation and technology and research, and renewal.

¾  (0835)  

    What we'll be talking about this morning is business risk management, which is what we are working on, because it is the element that has to be developed on a multilateral basis across the country. The other four elements will be developed with national standards, of course, but they will be developed by implementing agreements with the provinces on how, for example, they want to work with the federal government in addressing food safety, as an example, in their province, but according to national standards that are there. But the business risk management is one that has to be done on a multilateral basis with the provinces and territories across the country.

    As you know, we successfully concluded a framework agreement for the agriculture policy framework with the provinces last June. Since June we've been developing implementation agreements with signatory governments outlining how the APF will be implemented in each jurisdiction. I just refer to that. That's with the signatory governments, because all provincial and territorial governments have not yet signed. I refer to the fact that it's made up of the number of elements in the agriculture policy framework, but we are advancing very well multilaterally on the design of new business risk management programming, which, as the ministers agreed to, is to be built on the longstanding platform of NISA and crop insurance.

    So I'm here today to talk to you about what the proposed business risk management package could look like from the farmer's perspective. I will be addressing the questions along the lines of what would be different about a new approach compared to the existing approach in terms of benefits to farmers; given the range of changes proposed, what would the new approach to business risk management mean for farmers in terms of adjustments for next year; and how do we ensure that over time federal funds shift entirely to national demand-driven programs.

    The proposed new approach to business risk management offers three key features to better help farmers manage business risks. To cover income losses from margin changes, we propose an integrated approach to stabilization and disaster mitigation. As we know, colleagues, the Canadian farm income program ceases existence as of March 31, 2003, and I have been very clear, and the industry and the provinces have been very clear, that in the future we need to have our business risk management programs developed in such a way that they cover disaster situations. So we propose an integrated approach to stabilize and include disaster mitigation so that, for example, small, frequent income fluctuations would be covered mostly as they have been in the past with NISA, whereas larger and hopefully less frequent drops in income would be covered mostly by governments.

    The second area is production risk and would be addressed through broader insurance coverage, covering more crops and could include livestock. So that's why I'm now using the term “production insurance”, and not just “crop insurance”, as a term.

    Another point is to provide farmers with additional options in supporting future profitability. We propose that we might be able to build in some sort of investment component into a broadened NISA.

    So I want to look a little bit more specifically into the key features of the proposed package, and I want to talk you through how the proposed approach compares to the current program in terms of benefits to farmers.

    Under the current program to stabilize income, farmers need to apply to get funds out of NISA, and they must apply separately to get disaster coverage, as they have in the past when we've had the ad hoc disaster program. First it was called AIDA, then it was called CFIP, but that is no longer there. In practice, this means that they must complete a NISA form and they must complete a CFIP form, with each form requiring a different set of information, given that the two programs do not use the same criteria to calculate the benefits. Of course, their accountant gets the fees for that work. NISA and CFIP payments as well have been made separately.

    Under the proposed new program, the new program set would be much simpler to use for farmers. Under this proposal, the disaster component will be built into NISA, leading towards an integrated system. This means farmers would not have to fill out two separate applications any more, just one set of forms, using the same set of criteria.

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    Since programs would be integrated under this type of approach, farmers would receive one single payment to deal with both small fluctuations and income disasters, if that were the case. Under the current program, if a farmer becomes short of money in a given year and cannot fully contribute to his NISA account, that farmer loses the opportunity to receive the maximum amount of matchable funds from the government.

    Another situation may arise where the farmer triggers the funds, but then realizes that maybe he can make it through and tough it out this year, and decides not to withdraw the funds that have been triggered. The problem then is even though the farmer has not withdrawn the funds, he loses access to those funds for that year, and loses the trigger that expires at the end of the year.

    So what is being proposed is a carry-forward. To put it in very clear terms, if you are eligible to pay into your NISA account this year, you may have eligibility pay-in but you may not have the cash to do so without borrowing, because of your cashflow. You would be able to carry forward that opportunity to pay into your NISA for up to, say, three years ahead. You might have to pay in a minimum amount, a small percentage, in order to maintain that eligibility in the future. It would be the same on the way out.

    At the present time, if you're eligible to pay in that year and you don't, you lose that. If you trigger and decide not to take it out, you lose that opportunity. We're suggesting you be able to carry forward both of those opportunities for a specific period of years.

    With the new program, therefore, the farmers would have much more flexibility in managing their NISA accounts across a number of years. With a carry-forward provision, farmers would be able to roll over their unused contributions, so even if they didn't put in their cash contributions they could, under specific conditions, receive the matching government contribution. Farmers would also be given the flexibility to carry forward their trigger, as I have said, over a limited or specific period of time.

    Under the current program, farmers receive some support. This is not well-known because it only applies to a small number of people. Farmers receive some support, under what's referred as the structural adjustment provisions of NISA, to help cover the risks of investments to expand or change their businesses.

    For example, consider a farmer who expands the size of the business by 50%, but for some reason that year there's an unexpected downturn in the market they're involved in. As a result, the farmer's margin may only rise 20%, even though the business has grown much larger--he's doubled the size of his farming operation, or whatever it is. In such a situation at the present time, the structural adjustment provisions protect the farmer by allowing him to access funds to help make up the difference.

    Under the new proposal, we could expand the protection available to farmers who were making adjustments to include not just investments for expansion, but improvements in the farm operation that were needed for future profitability. Some producers have expressed concern that an investment component in NISA could be abused by governments.

    I'll give you an example of the concern, and it's my concern as well. I assure you that whatever's done in this area, this will not be allowed to happen. For example, the concern is that if a government passed regulations around, let's say, environmental activity they wanted to encourage, they tell the producer to take funds from his NISA account. In other words, government could drive farmers to use their NISA accounts.

    I agree with that concern, so it is being proposed that we strictly limit anything around an investment component to such things as food safety or food quality systems that have been approved by the farmers themselves, through their commodity organizations. We would build in a joint government and industry assessment every year, to see how the investment element was working, whether we needed it or not.

    A number of farmers over the last number of years have told me they'd like to be able to use their NISA accounts for some other things. But I'm saying I do not want to create a situation where governments could make that decision for them. It should be the farmer's decision.

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    Finally, turning to insurance coverage, under the current program farmers can only purchase insurance protection crop by crop. Coverage is limited or may not even be available for a range of commodities, because it may be deemed that the size of that commodity is not actuarially sound as far as providing a program for it is concerned.

    With the new program farmers could be provided with a stronger set of production insurance tools. For example, they could have access to a whole farm crop option in order to supplement the existing crop-by-crop option. A whole farm option would likely be cheaper because it would be over a broader set of crops, and it could be cheaper in terms of premiums. It would provide more comprehensive coverage for the entire farm operation. This would provide farmers with a cost-effective alternative to existing crop-specific programs.

    A number of producers over the years have said that we need to take a look at making crop insurance more effective. They might look at the crop makeup on their own farm and say, the crop insurance for this crop is fairly good, but for others it isn't. What we're saying is that as these programs are developed in the future with the provinces--and of course the provinces develop them with their producers--this type of flexibility should be built in. Coverage could also be broadened, as I said earlier, to cover more commodities in this way and potentially to cover livestock production as well.

    In the past we had $600 million in the business risk management aspect, and that was to cover the support from the federal government for crop insurance, NISA, and companion programs. In the last few years we've been able to add, on an ad hoc basis, program money such as AIDA and CFIP. That ad hoc money is now gone. What we have now is $1.1 billion, which is the same amount we had in the past, I do admit, but it is there strictly for business risk management. The other thing is that in the past the ad hoc money was up to the amount of money available for those programs, and if it was not used, it went back to the centre. We now have the $1.1 billion to be used strictly for business risk management.

    The changes that we propose to make to the business risk management program would not only make farmers better off in terms of stabilizing their income, but would also ensure a more effective use of the risk management dollars we have available. For the first time farmers would be able to rely on a long-term stable funding commitment. All of the funds devoted to risk management would be spent on risk management.

    Out of the $600 million we had available in the past, about $50 million of the federal funding alone was spent on other priorities. In some provinces it was all spent on risk management. In other provinces it was used for other things. It's not that it wasn't being well spent, but it was not being used for risk management. In some provinces some of it was used for research work. I don't have a problem with spending money on research.

    But with the announcement that the Prime Minister and I made last year, not only do we have the commitment of the $1.1 billion for business risk management, we now have a commitment on an annual basis of $180 million to add to what we're already doing and moneys we haven't had specified before for the areas of food safety, research and innovation, renewal, and environment. The money will be used only for risk management, while in the past, as I said, some of the funds supposedly targeted for risk management were spent on other things. As I said earlier, disaster funds will no longer be at risk of lapsing at the end of the year because the $1.1 billion is locked in for business risk management.

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    Government funds devoted to agriculture would remain in the sector. The proposal is that farmers would no longer be able to take unspent money from their NISA account into retirement. Surveys have shown that at the present time approximately 70% of farmers look at their NISA account as a retirement fund, and quite frankly--and we've talked about it around this table before--at the same time some producers have had moneys in their NISA account and they chose not to use it. They came to us as parliamentarians and said that they needed disaster support, while at the very same time they had that.

    For farmers with present NISA accounts, those NISA accounts would be grandfathered so that the terms and conditions, and the amount of money they had in there at that time, would be there and the new criteria and new rules around NISA would not affect what's already in their NISA account at the present time.

    Poorly targeted funds--and we've had discussions with the industry on this--such as the interest bonus would be redirected into risk management. The money would stay there. At the present time, it costs the provincial and federal governments about $40 million a year for that 3% interest bonus, and many of those dollars are going into NISA accounts that are not being used to stabilize the farm businesses in some cases, but are being used to create a larger account for use maybe for some other purpose.

    New funding would be available for other APF priorities beyond the funds devoted to risk management, including better support for farmers in chronic difficulty, and that's the $180 million that I referred to for the other four elements of the APF.

    Future business risk management programming will be built on the trusted platforms of NISA and crop insurance. In 2003 farmers will be filling in much the same forms with much the same data and coming face to face with many familiar procedures. The world will not change at midnight on March 31, 2003. What is absolutely crucial to underline is that many of these changes in the future, as we go forward, will mean more work for government administrators and not for producers. If anything, farmers will clearly be able to see that their administrative burden will be eased significantly.

    I want to illustrate what kind of adjustments farmers will probably need to make if these proposals go forward for 2003. With respect to NISA, farmers would continue providing the same information at current NISA through the tax system, and they could also provide additional accrual information when needed to calculate disaster entitlement. But that is not saying to farmers that you must change to an accrual system for taxation. The cash base for taxation stays the same way it is at the present time.

    With respect to crop insurance, farmers would not encounter changes, as the same insurance products would be available in 2003, recognizing that each year provinces work to improve their crop insurance on a provincial basis. New products would be gradually added, however, and could be gradually added, toward a broader range of crop insurance approaches by 2005.

    With respect to companion programs, if a province so chooses--and this is in the agreement the ministers have signed--companion programs could continue to operate as normal next year; for example, the market revenue program in Ontario. The market revenue program in Ontario is a provincial decision that they wanted that companion program in using some of their business risk management money. That can continue in Ontario, but the Province of Ontario must make the decision to continue that prior to March 31 next year. It is a provincial decision to do that.

    The federal funding for companion programs will gradually be shifted to the two-program set over three years, and this is a decision the ministers made that over a period of transition we want to see the federal moneys go to the two-program set, a more effective crop insurance, and a broader NISA than we have had before.

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    Remember, for example, the moneys available for NISA in the past and for crop insurance all had to come out of the $600 million. We now have $1.1 billion. The moneys available for NISA in the future will be two to two and a half times the size of what they were. So in looking at raising the caps and raising the triggers and all of these things that have been proposed to us by producers, we have to compare the size of operations when the caps were set on NISA a number of years ago. Operations are much bigger now, so NISA accounts should be allowed to go bigger in order to have a better type of coverage.

    The new risk management program will begin coming into place in April 2003 and will be fully in place by 2006. Consistent with this timetable we'll also be changing the way to ensure effective use of public money based on demand, which will provide fair and equitable treatment for all producers. The new approach to funding that we are planning would ensure that farmers get equal treatment, no matter what province they reside in, and guarantees that the full $1.1 billion in federal money will be spent on risk management.

    However, we recognize that it takes time to adjust, so this is how we propose to get to this new funding approach over a three-year period. Let's look at year one for any given province.

    The Chair: We want some time for questions. How much longer will your presentation take?

    Mr. Lyle Vanclief: I would say about five minutes.

¿  (0900)  

    The Chair: Okay, thank you.

    Mr. Lyle Vanclief: These questions are going to come up, Mr. Chairman, and if we don't explain it--

    The Chair: I know members do have--

    Mr. Lyle Vanclief: It takes time.

    Let's look at year one for any given province. We can forecast the actual demand for NISA and production insurance and the cash advance program using the current participation rate. That is what you see on the screen here. We'll look at the average federal expenditures in this province in the previous four years. Any difference between the average and the actual expenditures in year one would be made with a wedge or a cash payment and could be used by the province to fund provincially specific programs, or what we now know as companion programs.

    In years two and three the federal funding for each province would equal the actual cost of production insurance in NISA and advance payments programs, plus the wedge for additional. However, the wedge would gradually be reduced to zero, as you can see, over the first three years. It's important to note that while the wedge is declining the federal government will still be providing $1.1 billion in risk management. The only difference is that the federal funding by province will be more and more determined by producer participation and national programs. So producer participation in crop insurance and NISA will take the money.

    The only way that a farmer, for example, in any province in the past has been able to get a piece, if I could use that term, of the disaster payment is to have a disaster. In the future, if we go this way, they can invest more money each year in their good years into the NISA than they have been able to do in the past. This is a much more proactive approach for the producers as well. In the final two years of the framework, all contributions to cost-shared expenditures would be determined solely by producer participation in national programs such as NISA and production insurance.

    Risk management programming will not necessarily be the same across the country on April 1, 2006. Provinces will still have the ability to continue companion programs or initiate new programs. The difference is that they would be doing so as provinces. They could still do that, but there would not be federal participation in it, because the federal money will go into the crop insurance and NISA. But there are provinces that have additional programs at the present time and they do it on their own.

    We've had a lot of consultation on this. For example, my Safety Nets AdvisoryCommittee usually meets twice a year. They've met nine times in the last twelve months, and I can go on about how much consultation there has been. There are still some things to work out, such as the pay-on-the-way-out proposal; nailing down the detailed parameters for an integrated disaster trigger; the design of an investment trigger, in particular exploring the option to restrict access to commodity-approved food safety expenditures; and working through how the system will work in year three.

    In conclusion and in summary, from a farmer's perspective the proposed new business risk management program would be a better deal for producers. It would provide more effective stabilization and disaster coverage through NISA and production insurance for a broad range of producers. The proposed changes would be introduced in a way that places the administration burden where it belongs, and that's on the government, not the farmer. Changes would include many new features that the industry has sought for years, and changes would make the new program much easier to use than past programming.

    Mr. Chairman, that's a quick explanation of the proposals that are out there on business risk management at the present time.

    The Chair: Thank you, Mr. Minister.

    As chair, I have a slight problem. We have about 40 minutes left, and the rules of the committee are such that each party has seven minutes in the first round of questioning. If each party wants to share it with other members....

    Howard, I'm not sure how you want to handle that, but I'm rather taken back that so many are at the table this morning, and it would appear that only about five people will have an opportunity to question.

    So, Howard, perhaps you will start and then Louis will follow.

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

    The amount of money that has been appropriated for this, about $1.1 billion over the term of the APF here, is clearly an insufficient amount of money in regard to foreign subsidies that have driven the price down, and there's nothing in there for these grains and oilseed farmers that deals with that issue. But in regard to the NISA, you're saying the money that doesn't get taken out by the farmers would never be given to them, even though they're entitled to receive it. Right now, the trigger doesn't allow for farmers...and your own department has sent me correspondence that said 1,000 farmers right now are sitting on a NISA that they can't trigger but would like to. So will a trigger enable every farmer to take out their full amount that they're entitled to, so that they don't lose it?

    Regarding this mythical retirement fund, there is no retirement fund in NISA. This is a farm program, or that's what it should be. That's one question.

    As to my other question, on March 31, of course, the new programs are supposed to take place. It is my understanding that you don't have agreement from Saskatchewan, Quebec, and Prince Edward Island. Saskatchewan, in particular, represents the grains and oilseed farmers, and it would seem that their position is that these program proposals are not going to take care of the farm support programs that are required in that particular province.

    So I'd ask you to comment in regard to March 31. Either you intend to extend the deadline of the same programs for a year or you intend to arbitrarily impose these programs on the provinces.

    Today we have five farmers from Manitoba sitting in the audience, Murray Downing and other farmers. These are average concerned farmers from Manitoba who came down here on their own volition, and they've advanced the cash advance program, which you say is part of this APF. I'd like to make sure their suggestions in that regard were considered, and in fact, if they are not to be incorporated into it, that you explain to them, either now or after the meeting, why that wouldn't be the case.

    On any CFIP money that is left over, where is that going? Is that going to the farmers, or is it just going to disappear if there's any left over?

    Those are my questions, if the minister could deal with those. I think he jotted them down.

    Thank you, Mr. Chairman.

¿  (0905)  

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

    I'll try to go back from the end to the beginning. As I said in the presentation, regarding the ad hoc money that has been advanced to us in the past, the terms and conditions of it being advanced are that it's up to that amount of money. If in a case that has not always been used, it has to go back to the centre. I tried to get it rolled over, but to date I have not been successful in getting any moneys that have been left rolled over.

    It's anticipated that again this year, out of the moneys advanced for the 2001 business year, for which farmers have sent their applications in now, there will be very little left over. But unfortunately the terms are such that it must go back to the centre. However, in the future, the way we've developed it for that $1.1 billion, that cannot take place. That money is there for business risk management.

    On the cash advance, certainly I have spent some time over the last number of years with the group that's here from Manitoba this morning, as have my officials. I understand their concerns, and certainly their suggestions have been taken into consideration. I know the value of the cash advance, I know the value of the spring credit advance as well, and I can assure you that both of those programs will stay in the future as programs that are there.

    On your comments about 1,000 farmers who have triggered money out of NISA, I guess I'd ask you to talk to officials to explain that a little bit more. There are triggers. I'm not aware of any situation where, if they trigger it, they can't take it out, because that's it.

    There are lots of people who trigger money. For example, for the 2001 business year about $1.2 billion was triggered. Farmers have been informed that they could take that money out of their NISA. Less than $400 million of that has been taken out. Farmers have made the decision not to take out $800 million, and to leave it in their accounts. So if somebody has triggered and--

    Mr. Howard Hilstrom: They can't trigger it.

    Mr. Lyle Vanclief: They can't trigger it. Well, then, they haven't met the criteria. That's why I say, Howard, as we go forward with a new NISA, with some changes in NISA, we need to look, and we are looking, at some concerns there may have been around what the triggering mechanisms have been.

    Mr. Howard Hilstrom: In the future, though, the trigger will allow a farmer to take that money out before he loses it back to the government.

    Mr. Lyle Vanclief: If he triggers it.

    Mr. Howard Hilstrom: But if he can't trigger it--

    Mr. Lyle Vanclief: Well, it's there as a net income stabilization account. If you can't trigger it, you don't trigger it. You don't get a tax rebate if you haven't triggered.... It's not a tax rebate, but if that's the case, just because you would like it.... There's a set of criteria. If you trigger--

    Mr. Howard Hilstrom: You qualify for program money because of your accounts over the years, your income and expenses. You qualify for support money from the federal government. You're saying that because of the trigger rules, it could end up in a situation where the trigger does not allow a farmer to take out that money that he qualified for over the years.

    Mr. Lyle Vanclief: There's a set of criteria that everybody knows going in will trigger money out of the account. If you don't trip the trigger, you don't get money out of the account. That's it.

    Mr. Howard Hilstrom: But you're still going to be putting in your own portion of farm money.

¿  (0910)  

    Mr. Lyle Vanclief: You can put your own money in, yes.

    Mr. Howard Hilstrom: Oh, you're not going to have to in the future?

    Mr. Lyle Vanclief: No. You have that choice. You have the choice as well. At the same time as you trigger eligibility to pay, we're not saying the farmer must pay. What we're saying is that if you don't pay in, you don't trigger any money to get it out.

    Mr. Howard Hilstrom: Yes, but in order to get my own money out of my NISA account, the way it works now, I have to get the government money out first. If I can't trigger that, how can I even get my own money out?

    Mr. Lyle Vanclief: Well, obviously you didn't trip the trigger. There's a trigger there that's based on criteria.

    Mr. Howard Hilstrom: Well, this doesn't sound like much of a farm program that's going to help farmers. I'm amazed.

    Mr. Lyle Vanclief: It's not a savings account. It's a net income stabilization and a disaster account.

    Mr. Howard Hilstrom: It's supposed to go to the farmer and the farmer has to be able to access it.

    Mr. Lyle Vanclief: Farmers will be able to access it if they trip the criteria.

    The Chair: We have extended the seven minutes by a couple of seconds.

    Louis, would you like to question now?

[Translation]

    Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Thank you, Mr. Minister, for being here this morning.

    Regarding the response to your program, since you will be meeting next week with the UPA, the Union des producteurs agricoles du Québec, and you will clearly be hearing their point of view in this matter, I prefer to wait and stick to four down-to-earth issues. I hope to get some clear commitments and answers on those files.

    My first concern is with the Veterinary College of St-Hyacinthe. You have been asked questions on this issue in the House on several occasions, and your fellow Liberal M.P.s from Quebec have also questioned you on this issue. As you know, that Veterinary College is the only one of the four veterinary colleges which receives a limited appropriation. The other colleges are still fully funded, but this one is kept alive with a respirator. As you know, the Principal must submit a final answer to the International Association to have the accreditation renewed.

    Do you still stick to your commitment to try and get from the Minister of Finance the amount of funding required to support the St-Hyacinthe Veterinary College?

[English]

    Mr. Lyle Vanclief: Mr. Plamondon, I can tell you now that for over two years, my caucus colleagues and I have been working very hard on this. I thought I had achieved that goal some months ago. I was not as successful at that time as I had hoped to be.

    You're right. The college that is the closest to the edge, if I could put it that way, in terms of accreditation is the one at Saint-Hyacinthe. Others are in a similar situation not too far away.

    The vet colleges are very important to human health, as is the availability of the labs. We need such labs--hopefully we won't--for such things as BSE, mad cow disease, foot and mouth disease, West Nile, or whatever.

    I'm still working very hard with the centre and with the Minister of Finance and everyone on that. I'm relatively optimistic, but as we always say, it's not over till it's over. I'm feeling pretty good, but I don't have the final say. I'm working very hard, as are my colleagues and as I know the House is. All of the parties are interested.

[Translation]

    Mr. Louis Plamondon: Thank you, Mr. Minister for your commitment on this file.

    My second issue is that of maple syrup producers and of Gestion Cadapp. Eighty-seven Quebec maple syrup producers have received an advance payment under Bill C-2. They gave their maple syrup to a distributor who went bankrupt after selling the maple syrup, and they are left without any revenue, but they are still required to refund the 75 per cent which they received from the government as advance payments.

    The Federation of Maple Syrup Producers of Quebec urges you to intervene. Those producers have lost $2 million wich they will never recover. Since they did not receive any of the proceeds of the sale of their maple syrup, they are unable to pay back the 75 per cent which they received as advance payments from the government.

    Are you in a position to tell us today that you will say to those people that their debt with the government will be forgiven as they are in no way responsible for what happened?

¿  (0915)  

[English]

    Mr. Lyle Vanclief: First, Mr. Plamondon, we have extended the stay of default to those producers--and we have notified them of such--until the end of January 2003. However, the terms and agreements under which they receive the advance are such that the government may not be able to just forgive them of that. That's why there are programs such as the CFIP, etc. If for some reason, whether it be weather conditions or something, not as much is recovered as they would like in the sale of a product, those other programs are there to help.

    We have extended the stay of default until the end of January. Some of the producers involved have already made their payments. I know that others are working toward doing that.

[Translation]

    Mr. Louis Plamondon: With respect to the supply management plans, the Minister for International Trade has again insisted in the House, in reply to questions by Bloc members, that he will maintain those supply management plans. Can you, as the Minister of Agriculture, also state very clearly that you will defend that philosophy in the WTO negotiations?

    This week, egg producers in Quebec were deeply concerned. As you know, there are 3,400,000 egg-producing hens in Quebec, but you can find 25 million egg-producing hens in a single U.S. poultry farm, more than in all of Canada. These producers are therefore deeply concerned that the supply management program might be on the table again. They have sent a letter of warning to 75 Quebec Members to tell them that they have been deeply concerned since that possibility was mentioned in a paper released in August. When I arrived here last week, however, at the Agriculture and Agri-Food Committee, I was surprised to receive from our researchers a paper dealing with the major files which says, on page 8:

... it appears that the Canadian supply management strategy might be more open than the Canadian producers would wish.

    I would guess those researchers consulted with officials before they wrote this. This document would appear to be along the same lines as the secret paper which was issued in August and which said about supply management plans that although the producers might resent it, it was necessary to offer concessions in the negotiations. Since eggs are only a minor issue in the overall discussions, those producers are deeply concerned.

    Can you tell us again very clearly, as the Minister of Agriculture did, that supply management will not be on the table in the WTO negotiations?

[English]

    The Chair: Sorry, Mr. Minister, but I'm going to stick very close to the seven minutes. You're a little bit over and I have to move on.

    I'm sorry, Louis, we may come back.

    Murray, you have seven minutes now on the other side. If you want to share it, that's okay.

    Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thanks very much, Mr. Chairman. I will do exactly that.

    Minister, you've had a chance to review the Downing proposal on the cash advance, coupling it with crop insurance. Their proposal is to have the caps increased. Has the department had a chance to do an analysis of what the proposal would cost? Is the department considering moving in this direction, incorporating this type of program, or a variation thereof, within the APF?

    Mr. Lyle Vanclief: The proposal you're referring to, Murray, and many proposals that have come forward to me and the department are all taken into account. I can't give you the specifics on costing any specific proposal off the top of my head right now. But they emphasize to me very clearly, as I said earlier in the presentation, that we need to continue to make crop insurance, cash advances, and spring credit advances as effective as we possibly can within the confines of the amount of money we have to do that. We have $1.1 billion a year now and into the future, which is a known number we haven't had before. We'll have a big chunk of that every year, based on “ahead of” money.

    So we take into consideration all the suggestions we receive, but it's one of those things in life for which, whether it's this or not, we cannot develop a program that is totally satisfactory to everybody. I am convinced that with the moneys we have and through working with the province and the industry, we can make them more effective than they have been in the past.

¿  (0920)  

    Mr. Murray Calder: Then I'll redirect my question. Does their proposal have merit, and is the department considering it?

    Mr. Lyle Vanclief: I gave you that. We have considered it. On whether all aspects of the proposal have merit, there is merit in the type of direction the proposal has, and that type of direction has been and will be taken into consideration.

    Mr. Murray Calder: Okay. Thank you.

    I will defer to my colleague, Rose-Marie Ur.

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

    If the $1.1 billion in the safety net isn't all used up, will the remainder be forwarded to the next year?

    Mr. Lyle Vanclief: No, we'll use it because of the flexibility that will be there in the future. At the present time, the contribution to a NISA account is 3% of eligible net sales by the producers, 2% by the feds, and 1% by the provinces. In the future, since we'll have the money available when it's demand-driven, if the demand doesn't use up all the money, let's say it's 3%, 2% and 1%, we will be able to go back and say this year we can make it 3%, 2½%, and whatever. So it will be used up every year, and it will go to the producers.

    Mrs. Rose-Marie Ur: On another question, Mr. Minister. I find it hard to see how this program will deal with needs of the farmers. I'll give you an example. In Essex there are $900 million worth of sales. Greenhouse sales are $750 million, and they're doing very well. There are 151 growers and they all have NISA. So what happens to the rest of the people? Those individuals will do very well, but how will this program benefit those who really need the dollars?

    Mr. Lyle Vanclief: That's why we put in caps. You put in caps so they're eligible up to a certain amount, like at the present time. Therefore it's not disproportionate; everybody is treated equally, up to whatever the cap is. If your business happens to be three or four times what the cap allows you, the cap only goes to a certain amount. That's why we have caps on all of our programs.

    Mrs. Rose-Marie Ur: We have the five pillars, and in some of the documentation there's a sixth pillar, trade injury. I've seen it in some of the documentation.

    Mr. Lyle Vanclief: Do you mean trade injury or the issue of trade?

    Mrs. Rose-Marie Ur: The issue of trade, but subsidies are trade injuries--whichever way you want to mix your words here.

    I understand that the cash advance, the crop insurance, NISA, and the self-direct with management and the market revenue will all be wiped out. So what are we going to do for income support?

    There are three risks. The first risk is production loss, and that's covered by crop insurance. The second risk is income stability, which is covered by NISA. The third risk is income support, and that's sometimes beyond the farmers' doing, whether it's weather, commodity prices, or U.S. subsidies. What part of the APF will cover that portion of the risk?

    Mr. Lyle Vanclief: The proposal for the NISA account in the future, as I said earlier, is that for small fluctuations in income it would be covered in a manner very similar to how it has in NISA in the past. As income fluctuations for an individual operation became greater, the greater the fluctuation the bigger portion of the amount that was triggered would be picked up by the government.

    So that's how it covers income support and that's how it covers income stabilization as well. But I want to go back to something. I think you made the statement that cash advance and some of those things, SDRM, would be wiped out. Cash advance will not be wiped out. Spring credit will not be wiped out.

¿  (0925)  

    Mrs. Rose-Marie Ur: No. I realize that. I meant the self-directed--

    Mr. Lyle Vanclief: The self-directed market management. But what self-directed risk management does at the present time, for example, is it covers those crops for which there are not actuarially sound programs. On an individual crop, if a producer has the option of going to a whole farm program, then that type of situation is covered as well as going to a much broader NISA.

    The Chair: Thank you, Rose-Marie.

    Dick.

    Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Minister. I thought I detected some hypotheticals in your opening statement. You said that production insurance could include livestock, that an investment trigger might be developed. What are the conditions here? Is this based on a favourable outcome of discussions with the provinces and the territories next week? Why the hesitation?

    Mr. Lyle Vanclief: It's not a hesitation, Dick. It's because these are proposals at this stage. We're often accused of coming here and saying this is the way it will be and then somebody says, then where's the consultation and where are the discussions? We are in that process at the present time. The document on business risk management that went out on the Web last Friday, I believe, and has gone to the provinces and everybody is a proposal. That's why I'm using the words “proposal” and “could”, because all of the decisions have not been made. The last slide up there, for example, listed some of the issues that are still up for discussion.

    So it's not a fait accompli, because the decisions have not been made.

    Mr. Dick Proctor: So you're going to have a meeting next week with your provincial and territorial counterparts, and is what happens based on the outcome of those meetings?

    Mr. Lyle Vanclief: It's based on the outcome of a lot of consultation on a weekly basis, either by phone or face to face. Provincial and federal officials have been working on this. As I said as well earlier, the Safety Nets Advisory Committee has met nine times in the last year. A working group of officials and technical officials from the Safety Nets Advisory Committee has met. We've had 55 meetings across the country, etc., and I could go on on the consultations.

    Mr. Dick Proctor: Right. I know you could. But I think both producers and provinces are growing increasingly concerned that this has to be in place pretty quickly. You're saying there are going to be ongoing consultations. When is the drop dead date? When are you going to have to extend the current situation for another crop year if you can't get the agreement? We already have farmers who have seeded and are wondering what their crop insurance premiums and benefits are going to be for the next year.

    Mr. Lyle Vanclief: As far as crop insurance is concerned, as I said earlier, crop insurance does not have to change next year. If a province wishes to improve their crop insurance programs for next year, they can do so. What I do know is that as of March 31 next year, the business risk management money available to our industry is $600 million, because the CFIP is gone. If we start taking actions to improve the NISA, etc., then we have access to the other $500 million.

    Mr. Dick Proctor: I have one last question, Mr. Minister. You said in your statement that up until now the only way to access disaster insurance is to have a disaster. I would say that recognizing what happened with the flooding in Manitoba and Saskatchewan, the drought in Saskatchewan and Alberta, you can have a disaster and still not trigger any disaster insurance.

    How would this new proposal deal with those two situations?

    Mr. Lyle Vanclief: It would deal with it because of how that would affect the income of that individual person who was affected by it. And then the other DFAA, which is under the Minister of National Defence, is still there and has been used. And some of those situations have triggered payments with the provinces out of the disaster financial assistance arrangements, or something like that--DFAA.

    The Chair: Thank you, Dick.

    Paul.

    Mr. Paul Steckle (Huron—Bruce, Lib.): Mr. Minister, in an opening commentary, I would just say a word of caution. First, I think you've worked hard. I've spoken to many of the groups that have worked with you in trying to get us to a point where we can implement a new policy for the future. But I think we have to be very sensitive to the fact that a new program is open for a lot of scrutiny and there will be a lot of things that we need to address. I think we have to be flexible in the way we approach these programs, particularly the NISA and the crop insurance, because they have become the real pillars of this program.

    I guess in the past, NISA triggering often caused farmers to receive the money that was triggered in the year following the one in which it was needed. That has always been a sore point, and I think we need to address this, making sure that farmers can trigger quickly and get their money within the fiscal year in which they need it so they don't become taxable on something they've already spent and haven't got. That's one of the concerns I have.

    Secondly, how do we differentiate a supply management operation that has a dairy or poultry operation but may have a secondary operation of cash cropping? Do they need to have this registered under a different entitlement, or can they separate those two sectors within the operation?

¿  (0930)  

    Mr. Lyle Vanclief: I'll answer the last one first. There's a pilot that's been taking place in the province of Nova Scotia to see how we can address that. If you have two parts to your operation, a cash crop operation and a supply management operation, you could have NISA on the cash crop operation, but certainly NISA is not there for supply management, for the obvious reasons.

    How do we get money out quicker? There has always been an interim application. It is very interesting to me that this summer, with the stress that was out there on a number of producers across the country, by August 1, there were fewer than 100 applications for interim for this year. We're a little higher than that at the present time. Very few people have applied for interim applications. If they feel they're likely to draw because of the 2002 crop year, they've always been able to apply under the interim, and they're all notified that they can do so.

    How many interim applications have we had? Just over 300 from across Canada, and there are 146,000 NISA accounts.

    Mr. Paul Steckle: I think it's good to have that on the record. I know that in the past there's always been a lot of concern about farmers who received the money following--

    Mr. Lyle Vanclief: What happens is that they do their calculation and the money is turned around in 30 days. With the application for an interim, they're advanced 50% of what is perceived might be their need by the end of the year. Then of course at the end of the year, the final calculations are done.

    I'm very surprised that there haven't been more applications this year, as I'm surprised that less than $400 million has been triggered and drawn out from the previous years.

    Mr. Paul Steckle: We want to make sure our programs remain user friendly. I mean farmer friendly and not accountant friendly. Obviously farmers have expended far too many dollars in trying to have those dollars attained when really it went to the accountant.

    I'm just offering some words of caution. I think these are very important.

    Thank you very much. I'm going to defer.

    The Chair: Thank you, Paul.

    Rick.

    Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman, and welcome, Minister.

    I do appreciate the fact that the $1.1 billion will stay in the industry. It will be rolled over. It's not going to go back to general revenues.

    I've tried to get some calculations. With the CFIP program for the year ending this year, there may well be a residual there of some $40 million to $50 million. I haven't got a handle on it, but let's just assume that's the case. You said in the $1.1 billion you could then top up NISA, you could use it. Why can't we do the same thing with the residuals and the CFIP now? Can we not top up NISA? Can we not go to perhaps a negative margin on some of the huge disasters that we've seen in Saskatchewan and Alberta? Can we not keep the money in the industry, Mr. Minister?

    Mr. Lyle Vanclief: I'm trying, but you have to abide by the conditions on which you're given the money. You can go back and ask for those conditions to be changed, and I have and I will be. But it was ad hoc.

    Mr. Rick Borotsik: Are you looking at those two ideas, the topping up?

    Mr. Lyle Vanclief: I have no shortage of ideas on how I could use the money and how farmers could use the money. I'm trying, but it was ad hoc money, and I said before that it was given on the basis of “up to”.

    Mr. Rick Borotsik: Perfect. We appreciate your doggedness. All I'm suggesting is go back to the table and say that because of the problems in those areas, we do have ways of getting the money out to people who really need it. Please, Mr. Minister, the $40 million to $50 million is better in agriculture than it is perhaps in some other general revenue fund.

¿  (0935)  

    Mr. Lyle Vanclief: Roy Romanow might question that.

    Mr. Rick Borotsik: We're not sitting at Romanow's table now; we're sitting at the ag committee's table. So I'll fight that one.

    Mr. Lyle Vanclief: I agree.

    Mr. Rick Borotsik: Crop insurance, absolutely. I've heard all along that there has to be a revamping of crop insurance. The 80% to 90% potential that I saw there is really exciting.

    I have a real problem, however. In Saskatchewan right now, there's the potential of about a $500 million deficit in this past year. How is that going to be resolved? If you want to go to an 80% or 90% crop insurance and you're only sitting with a $500 million deficit... That's just Saskatchewan. There may well be $500 million in Alberta too. I'm really nervous. Are the feds goings to pay for that?

    Mr. Lyle Vanclief: There's a reinsurance program that many of the provinces participate in. They pay a premium into that each year to the federal government. It's like any insurance company. All of our mutuals, etc., have reinsurance, and that reinsurance is covered by the federal government.

    It's anticipated this year... When there's been a call in the past--I think it has only been two or three times in the past--there is money in the reinsurance account that the federal government has, or in the reinsurance line--

    Mr. Rick Borotsik: You had also said, Mr. Minister--

    Mr. Lyle Vanclief: The federal government has always covered it. If there's a shortfall in what's in that line in the books, it covers it.

    Mr. Rick Borotsik: This isn't Lloyds of London. This is a self-insurance program.

    Mr. Lyle Vanclief: The federal government carries the reinsurance.

    Mr. Rick Borotsik: You also said there is more potential for extremes in weather. That reinsurance program may be tapped into on a fairly regular basis--

    Mr. Lyle Vanclief: Indeed.

    Mr. Rick Borotsik: —and that is certainly a program that is going to continue with the federal government.

    NISA accounts, absolutely, I've looked at the changes. At first blush, they seem to be fairly reasonable. The problem with that is, if you're a producer in an area that's had two and three droughts and you have no more NISA, you've triggered it, where does the assistance... And crop insurance, yes. But where does the assistance come from for those producers?

    Mr. Lyle Vanclief: What we have to do in cases like that is have our criteria reference periods over a longer period of time.

    Mr. Rick Borotsik: Is that being proposed?

    Mr. Lyle Vanclief: The decision has not been made on what the reference period is.

    Mr. Rick Borotsik: You have a lot of smart people in your department and you recognize that is an issue right now--

    Mr. Lyle Vanclief: Yes, there is no question.

    Mr. Rick Borotsik: --where there have been two to three, and if you have no NISA accounts you can't depend on them.

    This is my last question. Provincial requirement is still a 60-40 split. Is that what we're looking at, Mr. Minister?

    Mr. Lyle Vanclief: Business management, 60-40, yes.

    Mr. Rick Borotsik: Mr. Chairman, please bear with me.

    Again I have to go to Saskatchewan. Right now the contributions on a per capita basis are fairly low in places like Ontario and Alberta. Saskatchewan now on that 60-40 split is about $127 per capita, whereas in fact I think the average is about $15 per capita. Is there anything in your proposals that may provide an opportunity to look at that kind of inequity?

    Mr. Lyle Vanclief: What we have to look at is there are different sectors of our economy that are in different proportions in different provinces. The people in Saskatchewan don't pay very much as far as supporting the fisheries industry when we had... I forget the name of the program the last time we realized the cost—

    Mr. Rick Borotsik: TAGS. It didn't work for a while, by the way, and it had more money than agriculture, but that's okay.

    Mr. Lyle Vanclief: TAGS. But there were some billions of dollars that went there. Certainly, my guess would be that the Atlantic provinces, on a provincial basis, picked up a bigger proportion of that, not of the federal money but provincial cost.

    The disappointment is, to me, quite frankly--and I've been challenged on this before, but the facts do stand--that some of our provinces, Saskatchewan in particular, over the last number of years have made some major changes in the amount of investment that they make from their own annual budgets into agriculture as well. With the exception of a few years, it has been declining.

    Mr. Rick Borotsik: If they sign on to the APF, are they committing to the 40%?

    Mr. Lyle Vanclief: If they sign on to the AFP as we move forward, it's demand driven, and therefore if the demand is there, they get the money.

    Mr. Rick Borotsik: They are committing to the 40%. If they sign on to the AFP, they commit to the 40%.

    Mr. Lyle Vanclief: Definitely.

    Mr. Rick Borotsik: Does that mean that if they don't pay the 40% the programs aren't existent in those provinces?

    Mr. Lyle Vanclief: I'm confident they'll sign on.

    Mr. Rick Borotsik: I have less confidence.

    Thank you.

    Mr. Lyle Vanclief: I think the Province of Saskatchewan and the producers of Saskatchewan, as we work through the next few weeks on the proposals of risk management, will see that they want to be there.

    The Chair: Thank you, Rick.

    Claude, do you have a question?

[Translation]

    Mr. Claude Duplain (Portneuf, Lib.): Thank you, Mr. Minister, for coming.

    I have two questions regarding Quebec and the flexibility of the APF in Quebec. We know that the agreements have not been signed yet. This worries me a little bit and I would like you, without unveiling the details of the negotiations, to give us a progress report on the situation in Quebec and the flexibility of the framework with respect to the Province of Quebec.

    Instead of asking you a second question, I would leave you 30 seconds to answer Mr. Plamondon's question which worries the Bloc Members quite a lot. You have answered that question over and over again, but Bloc Members are still worried about supply management.

¿  (0940)  

[English]

    Mr. Lyle Vanclief: In the discussions with the Province of Quebec, as with a couple of the other provinces, there are still some details to be worked out. What I want to make very clear is that there's some concern out there of other provinces that, in the terms of some people, we're “cutting deals” with individual provinces as we go forward. We are not cutting deals. We have said very clearly, and all ministers agreed, that we have to go to national standards on this.

    The other part of the agricultural policy framework that all ministers signed is that when we have an arrangement on an implementing agreement with the province, that implementing agreement is there for every province to view. There's total transparency. So province A can see the arrangement that's made with provinces B, C, D, and so on--total transparency for everybody.

    The minister in Quebec has told me that he wants to sign. I'm confident that we will. There are some details that still need to be worked out. One is certainly flexibility. They do deliver some programs differently, but our goal and our intention is that the end result for the farmers in Quebec will be the same, on a national basis, as it is in every other province.

    Thank you. I do want to respond to Louis.

    Louis, there's no question that this government is 1,000% behind supply management, but I think we also have to recognize that all of the members of the WTO are not. They are, as we know, at the present time Australia, New Zealand, and the United States as far as the exporting of dairy products is concerned.

    Those challenges will come forward, there's no question, as there will be challenges to the Canadian Wheat Board and other things, and as we will challenge other countries on some of the ways in which they support their agriculture. We certainly have challenged and will continue to challenge the commodity-specific support in the U.S. Farm Bill in the way they do some of that.

    The other comment is, I don't know what document you have, but researchers don't set policy. Researchers may make comments, but they don't set policy. Government sets the policy, and the policy of this government is clearly four-square strong behind and for supply management.

    The Chair: Thank you, Claude and Louis.

    David, I have just a little bit of time.

    Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Thank you, Mr. Chair, I appreciate that.

    Thank you, Mr. Minister, for coming this morning.

    I've been an MP for two years, as of yesterday. Last night I was thinking about the situation at home and whether the producers are in any different a situation than they were when I came down here. In many ways, they're not. Farmers are still leaving the farms. There's no ability to respond to natural disasters. Crop insurance is still inadequate. Government programs are a confusing failure. There's no trade-injury compensation program to assist them. There's no clear plan for the future.

    I would argue that much of this plan is negative for farmers. One of the worst things about this, as I think you indicated to Mr. Hilstrom this morning, is that the government is intending to keep some of the money in the NISA programs.

    You put money into the program, and producers have put money in. Producers see that account as their money, and they've seen it that way for years. They've planned accordingly. I've had many producers tell me that when they've been in tough financial situations, they have left their NISA in and have taken their RRSPs and used them to continue farming their operation. They've used their RRSPs to protect the money in this account.

    Now you are changing the rules. For however many years, they have been under the impression that this money is available to them. They have known that when they quit farming, if they haven't used it, they can take that money out. You're telling us this morning that you're changing that, and if that is the fact, you're going to have a major problem right across Canada in terms of what you're doing to farmers, because they have been left with one impression, and you are now changing the program.

    The Saskatchewan government did that with the GRIP program and paid the price, and this government will pay the price as well.

    Mr. Lyle Vanclief: Mr. Anderson, I told you very clearly that the present NISA and all the moneys in the NISA and the criteria around that will be grandfathered. That will not be changed.

    Mr. David Anderson: Your own document says that, upon retirement, producers will only be able to withdraw their own contributions.

    Mr. Lyle Vanclief: I'm talking about the proposal for a new NISA. If you read the document there, it also says that the present NISA and rules and criteria around it will be grandfathered.

¿  (0945)  

    The Chair: Mr. Minister, we'd like to thank you for coming, and we know we're just about on the right timeframe for everybody. Hopefully we have brought to everyone's attention the situations surrounding the agricultural policy framework.

    The NISA, of course, is something that has been debated at length, and probably some members are not as aware of it as we should be, but we will continue our efforts to support your initiative, and we hope that all of us can work in the best interests of the agricultural communities of our country.

    So thank you for coming, and with that, we'll adjourn our meeting.

    Thank you.