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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Tuesday, December 10, 2002

0905

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

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

The Chair

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

0910

The Chair

Mr. Tom Richardson

0915

The Chair

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food)

The Chair

0920

Mr. Bruce Deacon

The Chair

Mr. Bruce Deacon

The Chair

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

Mr. Tom Richardson

Mr. Howard Hilstrom

Mr. Tom Richardson

Mr. Howard Hilstrom

Mr. Tom Richardson

0925

Mr. Howard Hilstrom

Mr. Tom Richardson

Mr. Howard Hilstrom

Mr. Tom Richardson

Mr. Howard Hilstrom

Mr. Tom Richardson

The Chair

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

0930

Mr. Tom Richardson

Mr. Louis Plamondon

Mr. Tom Richardson

0935

The Chair

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

Mr. Tom Richardson

Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food)

0940

Mr. Murray Calder

Mr. Douglas Hedley

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Bruce Deacon

0945

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

Mr. Tom Richardson

0950

Mr. Claude Duplain

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

0955

Mr. Rick Borotsik (Brandon—Souris, PC)

The Chair

Mr. Paul Schubert (Acting Assistant Deputy Minister, Communications Branch, Department of Agriculture and Agri-Food)

The Chair

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Tom Richardson

1000

Mr. Rick Borotsik

Mr. Tom Richardson

Mr. Rick Borotsik

Mr. Douglas Hedley

Mr. Rick Borotsik

Mr. Douglas Hedley

Mr. Rick Borotsik

Mr. Douglas Hedley

Mr. Rick Borotsik

Mr. Douglas Hedley

Mr. Rick Borotsik

The Chair

Mr. Rick Borotsik

The Chair

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

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Tom Richardson

Mrs. Rose-Marie Ur

1005

Mr. Tom Richardson

Mrs. Rose-Marie Ur

Mr. Tom Richardson

Mrs. Rose-Marie Ur

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

1010

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

The Chair

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

The Chair

Mr. Tom Richardson

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Tom Richardson

1015

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Tom Richardson

The Chair

Mr. Paul Steckle (Huron—Bruce, Lib.)

Mr. Paul Schubert

Mr. Paul Steckle

Mr. Paul Schubert

Mr. Tom Richardson

1020

Mr. Paul Steckle

Mr. Tom Richardson

Mr. Simon Kennedy (Director General, Policy Planning and Integration, Department of Agriculture and Agri-Food)

Mr. Tom Richardson

Mr. Paul Steckle

Mr. Tom Richardson

Mr. Paul Steckle

Mr. Tom Richardson

1025

The Chair

Mr. Louis Plamondon

Mr. Paul Schubert

Mr. Louis Plamondon

Mr. Paul Schubert

M. Louis Plamondon

Mr. Paul Schubert

Mr. Louis Plamondon

1030

The Chair

Mr. Tom Richardson

Mr. Rory McAlpine (Chief Agriculture Negotiator, International Trade Policy Directorate, Department of Agriculture and Agri-Food)

The Chair

Mr. Paul Schubert

The Chair

Mr. Paul Schubert

The Chair

Mr. Paul Schubert

The Chair

Mr. Paul Schubert

The Chair

Mr. Tom Richardson

Mr. Simon Kennedy

The Chair

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

1035

Mr. Tom Richardson

Mr. Mark Eyking

Mr. Tom Richardson

Mr. Mark Eyking

Mr. Douglas Hedley

Mr. Mark Eyking

Mr. Tom Richardson

Mr. Mark Eyking

The Chair

Mr. Mark Eyking

The Chair

Mr. Rick Borotsik

The Chair

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

1040

Mr. Tom Richardson

Ms. Michele Brenning (Director, Environment Bureau, Department of Agriculture and Agri-Food)

Mr. Larry McCormick

The Chair

Mr. Rick Borotsik

Mr. Tom Richardson

1045

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

Mr. Bruce Deacon

Mr. Rick Borotsik

The Chair

Mr. Rick Borotsik

The Chair

Mr. Bruce Deacon

The Chair

Mr. Howard Hilstrom

Mr. Tom Richardson

1050

Mr. Howard Hilstrom

Mr. Tom Richardson

Mr. Howard Migie (Director General, Marketing Policy Directorate, Department of Agriculture and Agri-Food)

Mr. Howard Hilstrom

Mr. Howard Migie

The Chair

Mrs. Rose-Marie Ur

Mr. Tom Richardson

1055

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

Mr. Tom Richardson

The Chair

Mr. David Anderson

Mr. Tom Richardson

Ms. Michele Brenning

The Chair

Mr. Paul Steckle

Mr. Bruce Deacon

The Chair

Mr. Douglas Hedley

The Chair

Mr. Douglas Hedley

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 009

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, December 10, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone. Our order of the day is a briefing session on the status of the APF.

We'd like to welcome to our committee Mr. Corey, the assistant deputy minister for the market and industry services branch; Mr. Deacon, the assistant deputy minister of the corporate management branch; Mr. Hedley, the assistant deputy minister of the farm financial programs branch; and Mr. Richardson, the acting assistant deputy minister to the strategic policy branch.

I'm not sure how many branches that tree has, but at least we have four of them here this morning.

Mr. Hedley, are you the lead on this, or is Mr. Richardson? How many branches does the tree have?

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): There are a couple more branches, Mr. Chairman. Because of the size of the table, you get these four lovely people, but Dr. Martel is also here and a number of other officials.

The Chair: Thank you. The floor is yours.

Mr. Tom Richardson: Mr. Chairman, we have a very short presentation just to update you on the elements of the agriculture policy framework. It should take a maximum of 10 minutes. I'll go through it quickly, and then we'll take questions.

We have a number of other officials here. In the event that we get into more detailed questions, I would want to ask people to come to the table to make sure we can give the committee the best possible answers.

If we go to page 2 of the deck, as you know, the Prime Minister announced the agriculture policy framework package earlier in the year. There were basically three parts to this package. The first is $3.4 billion for the agriculture policy framework itself, which was signed by most federal-provincial ministers in Halifax in June. The second component is the income bridging assistance, $1.2 billion made up of two $600-million slices, to help farmers make the transition to a new generation of risk management programming. Provinces are being invited to match these dollars at the traditional 60-40 cost-sharing ratio. The third component is the $589.5 million in new federal funding for a range of important programming to accelerate the benefits of the agriculture policy framework. This programming responds to areas of concern for the competitiveness of the sector. Many of these areas were identified and recommended by the standing committee in its recent report.

If you go to the next page, take a look at the elements. Under the APF, of the $3.4 billion, $900 million was earmarked for the framework priorities, the food safety and quality, environment, science and innovation, and renewal. And $600 million of this is to be cost shared with the provinces at 60-40. In other words, the provinces would have to--

The Chair: Excuse me. You refer to page such and such. People are copying things down frantically. Do we have the decks for members?

Mr. Tom Richardson: Yes.

¿ (0910)

The Chair: Okay. We all have them now. It's much easier to follow when we have something to note with.

You can continue, Mr. Richardson.

Mr. Tom Richardson: We're just completing page 4.

As I mentioned, of the $900 million under this framework, we would be asking the provinces to cost share $600 million. So we'd be expecting the provinces to put up $400 million against these four priorities.

If we go to page 4, the first priority is on-farm food safety and quality. On the slide you see the four areas we're working on. Government is committed to work with industry to put in place food safety systems to develop traceability systems that cut across the entire production chain and to assist in the development of government-recognized quality systems that help industry secure new markets.

We're working closely with all commodity groups in developing these, and with other industry organizations, such as the Canadian Supply Chain Food Safety Coalition and the Canadian Animal Health Coalition. Much of the programming we put in place will in fact be led and delivered by industry itself.

On the next page are a couple of the other key areas we are working on, including research and technology assessment, as well as a range of measures to ensure governments are coordinating their efforts in food safety and communicating to Canadians its importance and the good work being done by industry.

In some of these areas, Health Canada has the lead, as noted on the screen. Sally Rutherford is our team lead in Agriculture Canada in working with all our partners on that, and she's here to answer questions you may have.

The next area is environment, on page 6. We're working to support the industry in its efforts to build a more sustainable agriculture sector. You can see on the screen the general areas where we are working with industry. One area is to support farm planning as a key tool for producers to manage environmental risk, but that is only one piece of the strategy. We are also working to ensure farmers have the tools they need to improve environmental performance, including new technology and better information on environmental risks.

Industry, as I noted, is closely involved in these efforts. The department has an environmental advisory group to obtain expert industry advice on design. Michele Brenning is here today. She's one of the team leads, and she can respond to any specific questions you may have.

Going to science, with the science and innovation element of the agriculture policy framework, our primary focus is on realigning our current spending to better support Canadian agriculture. Agriculture Canada spends about $270 million a year on research, and we want to make sure these expenditures are supporting the sector to the fullest extent. We have 19 research stations across the country. We have organized the work of these stations into the four main areas you see above: sustainable production systems, bioproducts and bioprocesses, food safety, and environment. By looking at our science efforts in this way, we will ensure that our research across different commodities and different research stations is better integrated. Dr. Martel is here today to answer any questions on this part of the package.

Going to renewal, we're working with industry in the areas noted to ensure that all farmers have access to new skills and options, regardless of whether the farmer is new to this sector, at mid-career, or getting ready to retire. Our consultations on renewal include ongoing discussions with the Canadian Farm Business Management Council, the Canadian Federation of Agriculture, Canadian community colleges, and many provincial and regional farm organizations that are part of the National Safety Nets Advisory Committee. Lynne Epp is here today to answer any questions on this area.

Finally, for business risk management, as the minister explained to the committee just recently, we have $1.1 billion a year over five years. These funds are to be matched 60-40 by the provinces, for a total of $1.8 billion. The latest proposals are contained in the draft discussion paper that was released November 22, and we anticipate continuing dialogue with industry and provinces on the paper and on the ideas in there over the rest of this month into January and February.

Just last week the minister met his provincial colleagues. This week he will be meeting the National Safety Nets Advisory Committee and having a round table of farm leaders from across the country. And Dr. Hedley will be having a meeting with the National NISA Committee. So there are a lot of meetings go on, and many more are planned for January as we work through with our partners how exactly the details of this will shape up.

¿ (0915)

Going to the bridge package, that's the second key element of our package, the $1.2 billion in bridge income assistance. The first of the two $600 million payments is on its way. We began issuing payments on October 8, and provinces have been invited to provide their 40% contribution. Payments are being based on a farmer's eligible net sales, as per the current NISA rules. Funds are being deposited directly into farmers' accounts. In certain cases, such as Newfoundland and Quebec, special provisions have been made to account for the fact that NISA is not yet in wide use in those provinces.

Producers have until the end of December to join the program, if they are not currently part of NISA. We've also made provisions for those who previously left NISA to rejoin.

We'll be working closely with industry to determine how best to flow the second $600 million next year, in order to facilitate the transition to new risk management programming. Dr. Hedley is here today to respond to questions on this issue.

Finally, the third and final element is the $589.5 million in bridge programming measures. The vast majority of these investments are federal only. Only a sub-part of the drought measures would be cost shared.

For most of the bridge measures, work is ongoing on program design. Again, we are working very closely with industry to develop the details. For example, on the pesticides area, which you'll be hearing about this afternoon as a committee, we've had extensive consultations with the Federation of Agriculture, the Horticultural Council, and other industry groups. We certainly continue to work with industry on the other elements of the design.

One of the key areas on the next page is the international market development area. Our goal is to maximize our international markets success over the next five years. We have developed the international component of the bridge in collaboration with provinces and territories. This had been discussed and agreed upon at a federal-provincial ministers meeting in Toronto last year and in Halifax.

The $175 million international strategy has also been developed in close cooperation with industry stakeholders, both through formal ongoing government-industry working groups and broader consultations. The strategy is to become the best in the world in food safety, environment, and innovation, and to build Canada's reputation in these areas in foreign markets. This branding market development strategy will be integrated with our activities for improving market access, overcoming technical trade barriers, and focusing on international development activities. Mark Corey is here today to answer questions on this area.

So, in summary, Mr. Chairman, this gives you an overview of where we're at. We continue to work closely with provinces, territories, parliamentarians, and industry. As these elements get developed, we'd certainly be more than happy to come back and report on progress as we move ahead.

Thank you.

The Chair: Thank you, Mr. Richardson.

Just before we begin our questions, I'd like to have clarified for our committee, and I guess the general public.... A good amount of money was involved in the supplementary estimates we voted on last week. You have the original estimates, which our committee reviewed before. Is this additional money requested—I forget the exact figures, but you have them, Bruce—over and above, or not transferred or reallocated money but new money Parliament approved for the APF? Is this correct?

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food): That is correct, Mr. Chairman.

The supplementary estimates were $687.3 million. These included new moneys coming in. A relatively small portion of it was in the $5.2 billion we've been talking about for this year. It includes other moneys, approved as new moneys into the department, and transfers, etc., which are on top of the (A) base for the department.

So with supplementary estimates (A), which is the first one voted on, we are currently at about $2.5 billion in total. This will increase with supplementary estimates (B) to something in excess of $2.6 billion for this fiscal year.

The Chair: Can you just go over that once more? The first estimates were originally for...?

¿ (0920)

Mr. Bruce Deacon: The first or main estimates for the current fiscal year 2002-03 were $1.8 billion.

The Chair: And we added in the other night a further...?

Mr. Bruce Deacon: We added another $687.3 million, for a total of $2.5 billion. This will increase further with supplementary estimates (B), which will come later this year. The total budget for this year will exceed $2.6 billion. This is higher than for last year, and it will have been a consecutive increase every year for the last four years.

The Chair: Thank you.

Howard.

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

There are not a whole lot of problems with the four aspects of the APF, because agriculture and industry have already been doing them to a certain extent. This is certainly an enhanced effort to do it better in a lot of areas. There are concerns, of course, about the environmental aspects of it, because of the possible negative impacts it could have on the farmer's bottom line. But let's try to work just with the safety net business, because it's the key to this whole thing.

I don't know who to ask about this, but are the negotiations going on with each province individually, or is this being done collectively with all the provinces at one time?

Mr. Tom Richardson: Mr. Chairman, we're using a couple of risk management processes. We have a federal-provincial working group made up of officials from all provinces, both those who've signed the agreement and those who have not. So it is a totally open process.

In terms of industry, we have a couple of processes. We have an ongoing working group with the officials who work for farm organizations. They meet every couple of weeks or have a conference call. Then the minister periodically meets with the National Safety Net Advisory Committee. Both of these processes involve people from all commodity groups across the country. So we are using these two processes to work through details and to look at options as we move ahead.

Mr. Howard Hilstrom: Is it possible different provinces will end up with different deals?

Mr. Tom Richardson: Mr. Chairman, in moving ahead on this, one of the concerns has always been that if one province gets a deal, then everybody else should get that deal. The minister has been clear in saying he doesn't want to do particular deals. He wants to maintain a common framework and move towards a two-program set, which is to say production insurance or crop insurance and NISA. So one of the ways to make sure we maintain transparency and uniformity, as the minister said, is to share deals with everybody if they are available—though he's not planning on doing any side deals with any province.

Mr. Howard Hilstrom: Well, it seems from the information we're getting that it's proceeding by province to negotiate this out. The Ontario...just before I get to that, it's easy to throw these billions around here. We used to talk about millions, which sounded pretty good, but are now nothing. Now we're talking billions. The department is talking about an APF of $5.2 billion over six years.

Tom, later on you mentioned there was going to be $1.1 billion over five years for the safety net aspect. Well, when you divide six into 5.2, you don't end up with 1.1 left over for the safety nets all the time. Could you could explain this? To ensure we understand it at the farm gate level, tell me exactly how much money is going to be available and budgeted for NISA and crop insurance in fiscal year 2004-05.

So answer generally, and then give me the specific dollar figure of how much money will be available in these two programs for that fiscal year.

Mr. Tom Richardson: Just in general, the $5.2 billion does not include the (A) base of $600 million that we had in ongoing safety net money. So you have to add that into the package to get the grand total of the resources the government has put into the agricultural safety net. So you have the incremental $500 million over five years, which is $2.5 billion, plus the base of $3 billion.

I'm just going from memory here in terms of the tables the minister put up when he was at the committee last week. Right now we have a forecast of $1.1 billion for 2003-04.

Doug, I think we're forecasting roughly a little bit under $400 million for crop insurance and around $460 million or $470 million for NISA. Then on top of this you've got the spring cash advance program, which runs around $30 million, and then around $16 million for the fall advances. This brings you to just a little bit under $1.1 billion.

¿ (0925)

Mr. Howard Hilstrom: I want to know how much is going into NISA. NISA is the only program there that gets government money. I know crop insurance gets money and how all of that works, but how much is NISA going to get?

Mr. Tom Richardson: I'm going from memory here, but I believe our forecast was $468.8 million. The additional element in the first year is the sleeve or wedge that the minister has proposed to the provinces of around $172 million, which would help in the transition to the new framework over three years. If you add up all those numbers, you get about $1.1 billion.

Mr. Howard Hilstrom: Is the NISA trigger going to enable farmers to get that money out, or is it going to end up staying in there? The minister said very clearly that if you can't trigger it, you don't get it. So can you describe the trigger to us, or is that still being negotiated?

Mr. Tom Richardson: As the minister said, the concept of NISA is to have triggers that trigger when the farm has an income loss or a drop in income over a period of time.

We already have the basic stabilization trigger. There is also a trigger that helps to deal when a farm is expanding. That has been an issue. If a farm expands, its margin may go up a little bit, but in some relative sense its margin may have fallen. So we have what we call a structural adjustment trigger that helps deal with expanding farms.

The further trigger we will see in the new design is the disaster trigger, which will basically be a stabilization trigger. It will bring in the features of the old CFIP program, so when there's a major loss in the income of the farm, the cost sharing will be different and the government will carry more of the cost.

Mr. Howard Hilstrom: So this will be figured out on the CFIP concept and not on eligible net sales.

Mr. Tom Richardson: On the NISA program, just to clarify, sometimes there are really two things going on. A producer's eligibility, or the amount of money they're entitled to under the program, is based on their eligible net sales, but the trigger on NISA has always been the gross margin of the farm. In other words, to be fair across farms, you're triggering on the gross margin, which is a measure of the net income of the farm. We've always triggered NISA similar to CFIP. There are a few little differences between the margins, but it has always been a margin trigger.

The Chair: Thanks, Howard. I have to move on now.

Louis.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): You know Quebec and two other provinces are firmly rejecting the plan you are proposing. Naturally, I am more aware of Quebec’s position on this matter. Last week the Union des producteurs agricoles met with the Quebec Farmers’ association. They always work together. The comments made at this convention during the Minister’s visit were very clear. Enrolling Quebec producers in a Canada-wide program that is not suited to their needs is not an acceptable option. They already have setup a system called La Financière agricole du Quebec which enables the redistribution of both provincial and federal money while still respecting the needs of the producers.

So the lack of flexibility…Why does it matter to you, as a high ranked civil servant, that the money be put in an account of La Financière first and then distributed to the producers rather than having it distributed directly to the producers’ accounts by you? How does it affect your life and why should you care?

¿ (0930)

[English]

Mr. Tom Richardson: As the minister explained to the committee when he was here, and when he went to the UPA annual meeting last week, there are a couple of aspects to it. First of all, in terms of flexibility, the minister explained the sleeve or the wedge concept, and over the first three years of this five-year agreement money has been made available. I'm going from memory, but I recall that for Quebec the proposal is that in the first year there will be close to $50 million in flexibility for producers to adjust to the new long-term plan.

The long-term plan is to try to move toward a common two-program set for all Canadian farmers. As the minister said, the objective is to try to be in a situation where all farmers in a similar situation across the country are treated similarly.

In terms of ASRA, which has been an important provincial program for a long time, there's nothing in the agreement that precludes the Province of Quebec from continuing that program after the first three years, with its own funding.

I think the minister feels that this proposal provides room for transition and a basis from which we can move to a situation where all farmers across Canada are treated the same.

[Translation]

Mr. Louis Plamondon: There lies the root of the problem. If I understand your answer, the goal is to gain national visibility rather than to focus on serving the producers better. My understanding is that you need to execute the Minister’s orders and that you can’t take position yourself. It will be for the Minister to answer this question. When he presented his report to Quebec it was totally rejected. If you were there with him at the convention then you know that we put bags of grain on the table and that we promised him to hold protests. The first one will be held here in Ottawa next Monday.

So the plan is rejected. Why reinvent the wheel? We had a satisfactory program in Quebec that did not contradict the Federal Government’s designs. The producers will only accept to work through La Financière for the allocation of money.

As for the consultation you talked about earlier, I had an opportunity to discuss it with grain, egg and milk producers. As far as they are concerned the consultation you conducted was a joke. They went to Montreal twice in the process and were given a pile of documents. They had already been written and all that was left to do was to read them. The second time they went down, the people they met with actually laughed at their suggestions for modifications.

Therefore you should eliminate the consultation from your record. It never was a real consultation. Quebec’s producers were never really consulted from the representatives’ standpoint. It was more the case of a systematic top-to-bottom implementation of a plan that ignores the differences and preferences of the producers and of the Minister.

You are heading straight into a brick wall, traveling at 100 miles an hour. You will have to face the repercussions as the Minister was told last Thursday at the convention.

I don’t need an answer. Thank you.

[English]

Mr. Tom Richardson: I have just a couple of additional points. Dr. Hedley brought to my attention that in the discussions with Quebec on delivery, this has been an important point for the responsibilities of the Financière. As everyone knows, crop insurance has always been delivered by the provinces. The minister has suggested we could work out an arrangement with the Financière, whereby the Financière would deliver NISA in Quebec. As maybe not everyone on the committee knows, but in Quebec they've developed a program called CSRA, which is very similar to NISA. So we are looking at the possibility of being able to build a delivery of NISA on CSRA, to provide that flexibility.

On consultations, I understand what the honourable member is referring to, but overall, when you go across the elements of the APF, certainly with the supply-managed sectors, we are doing a number of things that we think are of great benefit to supply management in the environment area and the food safety area. The supply-managed sectors are full partners in those elements of the APF.

On another thing we're proposing in the business risk management area, some of you may know that the way NISA works technically, it's been somewhat difficult to make sure a producer with supply-managed production and non-supply-managed production can effectively use NISA for the non-supply-managed part of the business.

We've been conducting a pilot project in Nova Scotia for some time and have general agreement from the provinces to apply that pilot project across the country for all supply-managed farms, so they will not be disadvantaged in using risk management for non-supply-managed enterprises. Dr. Hedley can give you more information on how that will work.

I think there are a number of things we're doing in this APF that will be beneficial to the supply-managed sector. The minister was very clear with this committee and when he went to the UPA that he was 1,000% behind supply management.

¿ (0935)

The Chair: Thank you, Mr. Richardson.

Murray.

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

Gentlemen, good morning.

Tom, you talked about the cash advance. One of the things I see with the cash advance right now is that the spring cash advance has a $50,000 cap and the emergency advance is $25,000, and we're left with $25,000 that's not covered. As of December 31, you have to start paying interest on that. If you have crops sitting out in the field, which exists in parts of Canada right now, especially in western Canada, your crop insurance doesn't really kick in until some time between the end of February and the beginning of March. So you have a problem here.

I'm wondering whether you are looking at addressing this issue right now with the cash advances within the APF. Quite frankly, I see this scenario. If the caps were adjusted, we could probably get the farmer out of a squeeze where he has to put crop on the market, flood the market, depress the prices. If the cash advances were a little more flexible than they are right now, you could probably avoid that problem.

Do you have any comment on that?

Mr. Tom Richardson: I think Dr. Hedley could answer the details.

In general, Mr. Chair, in the discussion paper we put forward we have identified the cash advances as being an important program, and in the longer term we do want to try to integrate them better. A number of farmers have put forward some ideas on that, which are somewhat in line with what officials have been thinking as well, so it's part of our plan.

Because it's legislated, it takes a little longer to make changes, but I think Doug could address both the short term and the longer-term things we've been thinking about.

Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): Mr. Chairman, perhaps I can explain the operation of those two programs.

First of all, the spring cash advances offer up to $50,000 interest free. The security for that is the crop insurance program that the individual farmer has. The interest provisions on that program run out at the end of December, and if a farmer is in default at that point, the program rules indicate that they pay interest from the beginning of the loan.

With the crop insurance as the guarantee on that program for repayment, we know now that probably 4 million to 6 million acres in western Canada, in Saskatchewan and Alberta, are under snow and they are unlikely to be harvested until the spring. This means there will not be a final crop insurance settlement until much later this winter or early next spring. For that reason, there are two provisions for farmers. One is, clearly, if they have any crop in a bin, then they can roll that into the fall advance program this fall, prior to the December 31 end of the spring cash advance program. Second, the minister announced the $25,000 emergency advance last week and farmers have access to that to pay off that spring cash advance.

We're still working with the Canadian Wheat Board and the Canola Council of Canada. Those two organizations deliver about 97% of our spring cash advances in western Canada; the others are by much smaller organizations.

We've been working with them since early November, when the crop first started to go under snow, to try to figure out exactly what the needs of those farmers were.

We think the $25,000 advance is going to cover most of it, for those with some crop in the bin and for crop going under snow.

So we think it's going to take care of most of the cases. We know it won't do all of them and we're looking at how we deal with that now.

¿ (0940)

Mr. Murray Calder: Doug, what estimates have you made? The grassroots producers of Manitoba, for instance, have put forward a proposal to your department that if you worked on, say, the cash advance being 80% of what the crop's insured for.... Have you made any cost estimates on what that would cost you in interest charges? It seems to me they've put forward a very viable proposal.

Mr. Douglas Hedley: Mr. Chairman, we have begun examination of that proposal. It's in line with some of the ideas that in fact were put out in the business risk management paper, where we better integrate spring and fall cash advances and bring them closer together with our safety nets program.

As to the costing of it, we have not completed the costing of it yet. We'll be quite happy to share that with the committee once we have that information.

The Chair: Dick Proctor.

Mr. Dick Proctor (Palliser, NDP): Thanks, Mr. Chair.

I'd like to begin with Bruce and actually pick up where the chair was going. The $687 million in supplementary estimates that was approved last week--what is the bulk of that money intended to do, Mr. Deacon?

Mr. Bruce Deacon: It includes a fairly wide range of things. I can take you through some of the major pieces.

For example, there is $10 million that is being brought into the department for consultations. There is $9.7 million that is funding under the Canada rural partnership agreement. There is $6.4 million dealing with revenue sharing with the Treasury Board. There is $5.6 million for the genomics-based research program under the Canadian biotechnology strategy.

Some of these are relatively small amounts: sectoral involvement in departmental policy development; round two of the agrifood assistance program; sectoral involvement in departmental policy development, round two, etc.

There is $5 million that is new money coming in under the agrifood trade program. This is money that is part of the $5.2 billion brought in this year to supplement and to begin working on that.

There is $10 million for contribution to farmers and ranchers and small communities in Manitoba, Saskatchewan, Alberta, and the Peace River district of British Columbia for the development of dependable water supplies. This is being done under the rural water development program and is part of the $60 million that was announced as part of the overall APF package. This is to accelerate funding and to deal with drought issues on an urgent basis.

The large amount is contributions to the future risk management programming of $544.7 million. This is the initial part of the $600 million that Tom Richardson mentioned earlier.

Another $36.2 million is for contributions to provide farm income assistance to the agricultural community. This is part of CFIP 2000. And another $19.4 million in the operating budget is carried forward. This is money that was not used as part of operating last year and is automatically carried forward into this fiscal year.

¿ (0945)

Mr. Dick Proctor: Thank you.

The first item you mentioned, the $10 million for consultations--are they the consultations that took place last spring with the farmers on what became of the APF?

Mr. Bruce Deacon: That was included in that, yes.

Mr. Dick Proctor: Okay. But you also indicated that the department would be coming back for, perhaps, $100 million for supplementary estimates before the end of this fiscal year. Is that correct?

Mr. Bruce Deacon: Every year there are at least two supplementary estimates, (A) and (B), and the final supplementary estimates will be later in the fiscal year.

Mr. Dick Proctor: What is the amount, approximately?

Mr. Bruce Deacon: We don't have the final amount yet because it includes many items. But of the $600 million that was mentioned earlier, there is an additional amount of about $50 million, which, again, Mr. Richardson mentioned, that would still have to come back in supplementary estimates associated with the new programming money.

There are various items that will come in. It's hard to estimate the total of that at this point, but our assumption is that we will probably exceed $2.6 billion this year.

Mr. Dick Proctor: Would the date for that supplementary estimate be in February, March?

Mr. Bruce Deacon: Usually it is in March, and it will usually follow the budget period when we know what other items are approved and would be coming into this fiscal year.

Mr. Dick Proctor: Thank you.

I would suggest, Mr. Chair, that we have a session next spring, and before that, to go into the supplementary estimates a little bit more fully before we're asked to approve them.

The Chair: Thank you, Dick.

Claude, s'il vous plaît.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): Hello.

I apologize for you might find my questions a little technical. As politicians, in the field we must answer questions. Sometimes we do not have control over the spending or on the programs that are implemented differently than they were first planned.

We seem to have a good program here but we are having difficulty respecting the differences among the various regions. We know that Quebec’s agriculture is different than that of the Western provinces. We know that Ontario has reservations with regards to the program. Why is it so difficult to allow for regional differences? For instance, we keep saying that Quebec’s consultation was a sham and yet we get no answers to our questions.

You are attempting to answer questions today but we are out there in the field. We meet with the producers and they tell us that they are upset. Is it because we are ignoring them? Are we implementing a program without listening to them? We held consultations. Can you tell me why we can’t take into account regional differences?

We hope to see the provinces invest when the Federal Government invests and that is what they are doing. I think it’s good. The province of Quebec wanted to contribute significant money and it built itself a structure that we seem to have difficulty approving. What’s the problem? Can you figure it out so that we politicians can try to explain it to our people in the field?

[English]

Mr. Tom Richardson: Mr. Chairman, I think there are a couple of points that could be helpful here. First a little bit of history. Crop insurance is common across all of Canada. So when you think about commonality programming, I think people are comfortable with crop insurance. The kinds of changes that are being proposed for crop insurance, which will give farmers more options, are something that all producers will be interested in looking at and testing to see whether the new options work for them.

NISA, which is called CSRN in Quebec, is in fact a relatively new program in Quebec. NISA has existed in Quebec for 10 years for the horticulture sector. Although ASRA has existed for something like 25 years, there was no ASRA program for the horticulture commodities in Quebec, so they had no income protection. When the NISA program started in 1991, the horticulture producers in Quebec asked for this protection, and they became part of the NISA program.

What's happening now in Quebec under the Financière is that they are gradually moving to have this NISA-type approach for all commodities in Quebec. So you are seeing CSRN, or NISA, being extended across the board, and Quebec and the Financière are going through a process of shifting the relationship between ASRA and NISA. I think--and this is me speculating a little bit--producers in Quebec are just becoming familiar with this. CSRN is coming in over the next two or three years. So maybe there is a little bit of newness to that for some producers.

The minister has said he wants to get to a common two-program set, as I said earlier, and we think that approach can serve all Canadian producers and provide a common base. As I said earlier, if Quebec wishes to continue ASRA as a provincial program, they can certainly do so outside of the framework. I think we are in a situation where we can have a common approach and a two program-set, crop insurance and NISA/CSRN, that can work uniformly across Canada. Where a province chooses to have an additional program, such as ASRA, they are free to do so.

¿ (0950)

[Translation]

Mr. Claude Duplain: May I ask you another question?

Last Wednesday there were negotiations. My colleague said that you had received directives from above and that for people in the field it seemed as if… Last week at the negotiations, after reading the texts from some producers and from some officers, I was under the impression that everybody agreed except the Deputy Ministers. I was told that a very simple text that would have enabled Quebec to participate in the policy framework or in the negotiations was rejected. I am in the field and I am getting bombarded from all sides. I am asked questions for which I do not have answers. Therefore, I would like to be informed on these issues.

[English]

Mr. Tom Richardson: I think the discussions with both the Quebec government and the UPA are ongoing, and as I mentioned in the opening comments, the minister is meeting with national farm leaders on Friday for a five-hour session. The president of the UPA, Mr. Pellerin, will be there.

The day before, there will be the National Safety Nets Advisory Committee. The representative of the UPA, Gilbert Lavoie, will certainly be there, and we will continue to work through the options, the processes, and development of this policy.

So I think we should all be cognizant of the fact that the minister is working with farm organizations and with provinces, and there is a totally open and transparent process to develop this approach.

The Chair: Thank you, Mr. Richardson.

To clarify, we're talking about APF. In the supplementary estimates, Bruce, there was $10 million for that--the framework, you call it. That would be these consultations and explanations and newspaper advertising. There's quite a bit of that going on across the country right now. Is that what the $10 million was for?

Secondly, with that, there was also an amount in the main estimates. How much have we spent in terms of discourse, dialogue, explanation, and consultation? Do you have any ballpark figures on that?

Mr. Tom Richardson: Mr. Chairman, the new ADM for communications, Paul Schubert, is here. With your permission, he could come to the table and provide the committee with details on what we've spent so far.

The Chair: I was just looking for a quick answer.

Mr. Tom Richardson: I don't think it would take very long.

The Chair: Well, maybe afterwards. I don't want to interfere with Rick's questioning.

¿ (0955)

Mr. Rick Borotsik (Brandon—Souris, PC): Get your answer, Mr. Chairman.

The Chair: Yes. How much money has been put into that?

In Quebec especially, there's a communication problem or a buying-in problem. How much money has been allocated in the main and now the supplementary estimates towards consultation, explanation?

Mr. Paul Schubert (Acting Assistant Deputy Minister, Communications Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chair.

Actually, for the two-year period, this fiscal year and the previous fiscal year, there was an allocation of $15 million for communications and consultations. To date, we have roughly, I would say, a bit under a third expended in that amount.

The breakdown would be about $2.4 million on consultation activity, which included 55 sessions across the country over a fairly intense three-month period, and about $1.4 million on advertising, which also is quite related to the consultation and happened just before and as the consultations were under way. There is some capacity-building within the organization, so some money has gone to salaries, roughly $700,000. There is groundwork being done on international marketing. Ultimately we're looking to expand Canadian markets, so some of the groundwork on the international side is being charged against the communications consultation budget. That's an amount of about $400,000.

The Chair: Thank you very much.

Rick.

Mr. Rick Borotsik: Thank you.

To Mr. Richardson, you said the ASRA in Quebec could well continue. In fact, I think that's what your comment was on the last answer. Does that mean the MRI program in Ontario could continue as well, and the FIDP program in Alberta, and does that allow other provinces to put in similar types, mirror programs, and that they could go forward with those programs as well?

Mr. Tom Richardson: In the proposal the minister shared with the committee, he did say--just to repeat a bit--that over the first three years the federal government would be willing to provide some support for those programs, and in the last two years of the five-year package the proposal is that the federal government and the provinces would move towards the basic two-program set. But the minister has always said if a province wished to fund on its own, outside the framework, any additional program, they would be free to do so.

That's the proposal on the table now. So if the Province of Ontario wished to continue MRI beyond the third year with its own funding, outside the framework, the minister has been okay with that.

Mr. Rick Borotsik: On the $80 million on the measures to deal with drought, including the measures to increase water supply, is that under PFRA?

Mr. Tom Richardson: Yes.

Mr. Rick Borotsik: Does that include the $60 million that was announced previously with the increased $60 million of the PFRA?

Mr. Tom Richardson: I believe so.

Mr. Rick Borotsik: I wanted a clarification on that number there. That was all.

The renewal portion is rather interesting actually. It's not fleshed out. Do you see the renewal as being more of an exit strategy, a retraining program for farmers? Can you perhaps flesh it out a little?

Mr. Tom Richardson: You're right, it is being fleshed out. We didn't spend a lot of time on it in the overview. We do want to go through the options and the details with the minister's national Safety Nets Advisory Committee. We haven't done so yet, so we're still short on details.

In terms of the exit strategy question, it is definitely not a retraining program. One program we are looking at, which is perhaps a little of a model for federal funding, is in Saskatchewan, where they have a farm families opportunity program. The idea of that program is to help smaller or mid-size farms, which are not perhaps doing as well financially as they might, to look at skills or new approaches to their farm business or perhaps indeed off-farm employment so that they can continue to stay on their farm.

Mr. Rick Borotsik: Are there any numbers associated with this category? Are there any dollars allocated?

Mr. Tom Richardson: No, we haven't allocated a fixed amount of money yet. It's looking at the overall demand. We're getting some experience from the Saskatchewan program on what the interests would be. It's still under development.

Mr. Rick Borotsik: On the $600 million, I believe, to food safety, that's the CFIA component we already love and respect and know about in agriculture, correct?

Mr. Tom Richardson: It's not $600 million. It's a portion of that.

À (1000)

Mr. Rick Borotsik: Will a portion of that go to the component in here?

Mr. Tom Richardson: Some of that will go to the CFIA. There are two or three specific allocations for things the CFIA does itself, medicated feeds being one, and a couple of others. The CFIA will also be involved in the development of the HACCP systems. They will be a third-party validator.

Mr. Rick Borotsik: There are two components to the safety nets, and I'm comfortable with them and actually quite supportive of them--NISA and the crop insurance.

Mr. Hedley, when you were here the last time there was a potential for drought. We've seen that happen. We had the drought. Do you have any estimates on what the payouts are going to be in crop insurance for Manitoba, Saskatchewan, and Alberta this crop year?

Mr. Douglas Hedley: We are still working with the Governments of Alberta and Saskatchewan to get final ones, because we don't know about the crop under snow.

Mr. Rick Borotsik: Could we get a ballpark estimate?

Mr. Douglas Hedley: The range in Alberta is currently $700 million to $780 million. The estimate we have for Saskatchewan at the present time is $1 billion.

Mr. Rick Borotsik: And Manitoba?

Mr. Douglas Hedley: I'll look that number up for you.

Mr. Rick Borotsik: No, I don't have much time. You can do it later.

Of the Saskatchewan $1 billion, I'm told that about $500 million will be a deficit. We talked about this when the minister was here, the re-insurance program, the $500 billion being paid over a period of time by the producers, by the federal government, and the province. The timeline for payback, I'm told, was anywhere from 12 to 15 years.

I know this is perhaps a hypothesis, but if there were another drought, which there may well be in the next year or two years, do you have any estimates on how the insurance program itself would pay back another $500 million deficit on top of the one they've incurred this year? Have you done any of those numbers, any of that modelling at all?

Mr. Hedley, you said this is the program that's going to resolve the problems. You said that. So how is it going to resolve another drought?

Mr. Douglas Hedley: We're working with the provinces now on two things. One is, what will the premiums look like next year, based on the experience of this year? We're also looking at what happens if we run into one, two, and three years. That work takes time in terms of the actuarial work and the experience we've had this year. I don't have estimates yet, but we are working on them.

Mr. Rick Borotsik: Well, that's positive in itself because this is, as you say, the cornerstone of your safety net programs.

The Chair: Thanks, Rick. I'm sorry.

Mr. Rick Borotsik: I have nothing else.

We'll come back to NISA.

The Chair: We'll come back.

Rose-Marie.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thanks, Mr. Chair.

I don't know who can answer this. Do we know the cost, or the estimated cost, to implement APF?

Mr. Douglas Hedley: At this point, Mr. Chairman, I don't think we have the final estimates on the actual cost of delivery of programs. We have in our authorization something in the order of 4% or 5% of our total expenditures on the BRM, for administration of the programs. The number escapes me on the other four elements. Certainly we can get that for you.

Mrs. Rose-Marie Ur: Could you present that to the committee in due time then? I'd appreciate that.

Mr. Tom Richardson: Certainly in some areas we are trying as much as possible to use third-party delivery. For example, in environment a lot of that will be delivered through conservation clubs, farm groups, etc. So we are trying to do that as much as possible.

Mrs. Rose-Marie Ur: I still have a real hard time understanding, and the producers in my riding also have a hard time understanding, how this program, with the various numbers of commodities out there, not only in the province of Ontario, not only in the riding of Lambton--Kent--Middlesex, but across Canada, will ever--and I'm an optimistic person--replace...and be the cornerstone for farm safety.

À (1005)

If farmers have three or four bad years and you put 4.5% on a negative margin, or negative in their industry, there aren't dollars going into their NISA program, or whatever, and if they have a catastrophe in the third or fourth year, where is the money going to come from? I still haven't had anyone really explain that to me.

Mr. Tom Richardson: On a technical point, Mr. Chairman, I would describe one of the proposals to deal with that. The way NISA works now, your eligibility is based on your eligible net sales for the current year, and what the honourable member has pointed out of course is that if you do have a couple of bad years, then with that kind of a formula approach, you can't rebuild your account very quickly.

So the proposal is that the basis for contribution would be either the five-year average of the farm, or, say, the middle three of five. In other words, it would provide a basis for contribution that reflected the performance of the farm over a period of time. So you could have a couple of bad years and you would still have a high level of eligibility. That's one mechanism.

Mrs. Rose-Marie Ur: He still wouldn't because he wouldn't have the profits there to be able to reinvest into his NISA.

Mr. Tom Richardson: There is another part of the proposal, Mr. Chairman, and I believe the minister did refer to it. Under the current NISA program you have to match the government money completely. The proposal we have on the table is that the producer would only have to put up a percentage. So let's say under the new NISA--I'm just giving an example here--the maximum amount is $7,500. With the kinds of changes in the program we're talking about, that number might go to $15,000 or $17,000, something like that. Right now, the producer has to put up $7,500. If they don't have it, they lose it.

The proposal on the table in the paper is that the producer would only have to put up 30%. So if we raise the number to, say, $15,000, the producer would only have to put up 30% of this to get that entitlement. We put that option on the table, the idea of taking the average of the past three years so that the number would be higher, so that the producer has the flexibility to capture the entitlement, and then when they trigger, they're in a position to have enough money in their account.

So there are a number of proposals around this that I think will deal with these problems, which have been problems for some farmers in the current program.

Mrs. Rose-Marie Ur: Can he carry forward that amount?

Mr. Tom Richardson: Yes.

The other feature, which is actually a suggestion of the minister, is.... Sometimes farmers will have a bad year. They'll say, I'm going to leave my money in the account. They're going to tough it out until the next year. Next year is another bad year, but they've lost the trigger.

The proposal again is that you could carry that forward, so if you had a previous year and you had chosen not to take the money out, but then you have another bad year and you need the money because your cashflow is bad, you could carry forward that trigger and bring all of the money out to deal with the financial situation. It's another flexibility that we think could help manage for the producer.

The Chair: Thank you, Rose-Marie.

Is the NISA payment an expense on the farmer's tax report?

Mr. Tom Richardson: It's after tax, Mr. Chair, and that's the purview of the Minister of Finance. One thing we are pursuing with Finance, and I think in principle the Department of Finance will be prepared to give it support, is that NISA payments would be treated as farm income. Now they're treated as investment income. Dr. Hedley has spoken to the Department of Finance and he has some general agreement from them that the money would be treated as farm income, which would be of benefit to producers.

The Chair: Sometimes I'm a slow learner, but please go over this again with me now. The farmer puts, we'll say, $7,000 into his NISA account. Does he pay income tax on that or is it an expense on his balance sheet?

Mr. Tom Richardson: He pays tax on it.

The Chair: He pays tax on it.

Mr. Tom Richardson: It's an after-tax payment.

The Chair: So that really is a bit of a problem too in terms of how other people are able to deal with income. Have we looked at that?

À (1010)

Mr. Tom Richardson: Yes. I should mention to the committee, Mr. Chair, that the Quebec government has agreed that they would not have to pay Quebec income tax. But other provinces and the federal Department of Finance have not been persuaded that is the way to go.

The Chair: Has the department made an effort to do that with the Department of Finance?

Mr. Tom Richardson: Frequently.

The Chair: Frequently without success.

Mr. Tom Richardson: Since 1991, Dr. Hedley is saying.

The Chair: It is a very significant aspect of this.

David.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): The second part of this is that when farmers take money out they have to take it out of the federal side first and then pay the tax on that before they get access to the money. That's the second side of the equation.

The Chair: David, you have your five now.

Mr. Tom Richardson: Mr. Chairman, we are changing that as well. The money, government money and producer money, would be coming out at the same time so that the tax impact would be mitigated.

Mr. David Anderson: I think one of the solutions to NISA is to allow the farmers to take the money out at half federal and half provincial, whatever that is, and that's a good suggestion. But some of the other moves you're making here I think are wrong, and I think they're bad for farmers in terms of them being able to access the money.

Before we go into that, I'd like to talk to Mr. Hedley again. You're looking at $2 billion going out in crop insurance this year, and as Rick said, that was your fallback program last year. Saskatchewan already cut coverage this year because, in the words of the federal government, they'd already borrowed ahead on their federal money. What are we looking at next year?

You don't have your safety net agreements in place. It doesn't look like they're going to be done in time. What are you going to have in place for farmers who are going into now, in some places, their third year of drought conceivably? On April 30 last year you told us you had no plan to deal with the drought. What do you have in place for this coming year?

Mr. Douglas Hedley: Mr. Chairman, as the minister indicated, there is optimism that I think Saskatchewan will in fact join the agriculture policy framework. In doing that then their crop insurance program would in fact be demand driven, not based on an allocation that would be squeezed when you see premiums rise.

So I think based on Saskatchewan joining, there is no question that the premiums will rise in Saskatchewan, and they will rise for two very specific reasons. Number one, as prices are rising now, you're going to have a higher value crop for each acre and in doing that premiums must rise on it. The second is, because of the shortfalls in the program, the deficits in the program, there will be an increase in reinsurance payments, so premiums will rise.

I would point out that current levels of premiums--this is total premium--in Saskatchewan crop insurance are some of the lowest ever on record, historically low. I am assuming that with Saskatchewan in the program, their program would be demand driven, so it would not be limited in terms of how much money the federal government would have for them in the allocation, as they have now. Premiums will rise but be cost shared by federal-provincial producers.

Mr. David Anderson: Premiums rose last spring and coverage went down. That's why producers are not using the program. You can say you have a two-tier program, but if it's not fit for people to use, it does absolutely nothing for the farmers in the economy.

I want to switch over a bit. The history of AIDA and CFIP is brutal for farmers. In fact, only yesterday somebody called me. Their farm accounts had been combined, fathers and sons, wives and husbands, and so on. You're indicating that in terms of supply management there will be NISA accounts for the non-supply management part of supply management operations. Other farmers have been combined and had their operations combined under AIDA and CFIP, and it sounds like this is going to be fairly similar.

I'm wondering, are you going to allow other farmers, say, who farm grains on one side and ranch on the other side with cattle, the same opportunity to split their operations, their margins, and their gross sales? Is that an opportunity you'll give other farmers as well?

Mr. Tom Richardson: I think maybe Dr. Hedley can answer part of it. To clarify on the supply management question, a producer with supply-managed production has always had eligibility for the non-supply-managed part of the farm. What we're proposing in the paper is simply to make it more workable. There were technical problems with the way it operated. It tended to discriminate against them covering those non-supply-managed enterprises.

I think, Mr. Chair, the question is more about farm splitting or how you combine a farm. It's a different question. It's really, how do you treat a farm and how do you make sure, when you're dealing with the farm from an administrative point of view, that you're dealing with the whole business?

I guess you must be referring to a particular situation where there has been some question about the definition of the ownership of the farm.

À (1015)

Mr. David Anderson: What I'm asking is if you're allowing one sector of the economy to basically split their operations in order to be eligible for benefits in one part of it, are you going to allow other operations to do the same thing?

Mr. Douglas Hedley: Mr. Chairman, when we run the NISA program and the CFIP program, we bring together all of the interests that an individual has in agriculture to determine those payments. By splitting a farm, you cannot gain more payment under either CFIP or NISA, the way we have structured those programs. So if you split, you don't gain.

Mr. David Anderson: When you combine, you certainly cut them down, I can tell you that.

Mr. Douglas Hedley: When you combine, yes, you do.

Mr. David Anderson: People who insist that their operations are separate, when they've been arbitrarily combined by your department, have had their payments cut, and the payments have been demanded back as well.

Mr. Douglas Hedley: Yes, that's true.

Mr. Chair, when we look at this from a legal point of view in a tax system, if they are independent arm's-length operations, then they are treated separately. Where they are not and there is a combined interest, we bring them back together.

Mr. David Anderson: I have one short question. I think I'm probably just about out of time here.

Mr. Douglas Hedley: There's also an appeal process to deal with that, made up of producers.

Mr. David Anderson: I have producers who have the same person who rejected their application doing the appeals. That's another issue.

I want to ask the question--it's the final one--what's the difference between a sleeve and a wedge when you're talking about the NISA program?

Mr. Tom Richardson: No difference.

The Chair: Thanks, David.

Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): Earlier there was a question from the chair in terms of costing of the kinds of consultations you've done. You talked about $2.4 million being spent. I kind of put that in perspective to what the committee spent in going across this country conducting about half as many meetings as you had. We spent $245,000, or thereabouts, and your costs were $2.4 million.

I'm wondering why it costs so much more for you people to do your consultations than it does for us to do ours.

Mr. Paul Schubert: Thank you, Mr. Chair.

I'm afraid I can't explain comparatively why the costs would be greater than for consultations the committee has undertaken.

The process for selecting facilitators and logistics providers was done through an open competitive process. We did engage a firm to look after the facilitation and advice and to conduct the consultations. After three months of fairly intensive consultations, there were 55 meetings, provision of reports, provision of facilitation and the advice, and the value of that contract was $1.5 million.

Mr. Paul Steckle: I won't prolong that because I have some more questions, but perhaps next time you might engage the committee to do the work for you. We could do it much cheaper.

I would like to also ask, basically because that committee did bring forward a good number of recommendations, what recommendations, if any, were incorporated into the APF?

Mr. Paul Schubert: Allow me to defer that one. The question was, which of the recommendations coming out of consultation were included with APF?

Mr. Tom Richardson: Perhaps, Simon, you could respond to that, in terms of the way we actioned the recommendations.

To add to the previous answer, a lot of the money we did spend was in assisting industry costs in coming to those meetings. In some cases we were bringing people from across wide areas. Some of the money Mr. Schubert referred to in fact was expenses for industry people.

Simon, are you in a position to comment on the general recommendations that came out of the consultations, in terms of how we moved on them?

À (1020)

Mr. Paul Steckle: You're referring to the committee consultations. You alluded some time ago to the fact that our thoughts and our interpretations of what we had heard were being incorporated into the policy of the APF. I'm just wondering, what part of what we said did you incorporate?

Mr. Tom Richardson: You're talking about a lot of the bridge financing proposals.

Mr. Simon Kennedy (Director General, Policy Planning and Integration, Department of Agriculture and Agri-Food): Mr. Chair, the department did conduct an analysis of the findings of the committee. A lot of that analysis and the work of the committee figured into the package that was brought forward by the minister to cabinet when the discussions were going on in the agriculture package last summer. A lot of the bridging elements and so on were part of the response to the work the committee had done. There was an analysis of the committee's report done in the department.

Mr. Tom Richardson: We could probably share some version of that with the committee. I'm thinking in particular of market development.

Mr. Paul Steckle: I would also like to ask something in response to an earlier question by Ms. Ur. In regard to being able to carry forward, I'm just wondering, in taking money out you can do that, but you're suggesting we can do that or may be able to do that.

I'm also asking the question now, can we carry forward moneys we could actually pay into the program? For instance, if the $7,500 wasn't available this year and we felt we could do it better next year, something similar to an RRSP program, would that be a possibility? If we can take it out in 50 years, can we defer putting it in for future years?

Mr. Tom Richardson: Mr. Chairman, that has certainly been an option that has been discussed. In the paper that option was not proposed, but it certainly has been an option. In talking to industry and provinces, I think there's a view that a producer should make a minimum payment each year for the very fact, as the RRSP example shows, that a lot of the time people don't have to put money up; they just roll it forward, and they never actually get to capture the benefits.

There has been a proposal that we should ask the producer to put down a minimum payment each year to make sure they are focused on saving. The option of a carry-forward in extreme circumstances is definitely a possibility, and we're certainly going to be open to that in the consultations and the negotiations over the next few months.

Mr. Paul Steckle: I'm also wondering, are we moving in this whole approach to support of farmers? I still have some questions in terms of developing a program that addresses need rather than simply...in my opinion, this program is still addressing people who have successes; with the net eligible sales, the higher they are, the more you can contribute until you've reached your cap.

The people who seem to come down seem to be the ones hurting, perhaps, over a two- or three-year period. I realize the averaging takes place, but I'm just wondering whether we're really addressing the issue of need, because that's what support programs are for, to address need, not for ensuring that farmers have security for their retirement.

I like the idea of going to a simple program that can be shared by everyone across this country, but I'm still not totally convinced in my mind that what we're doing is really addressing the needs of some of those medium-sized farmers.

Mr. Tom Richardson: Mr. Chairman, that's a fundamental question. It's something that gets to the balance between how you use a stabilization program to help a farm business and whether you use other mechanisms. As I mentioned earlier in terms of renewal programming, what the minister has indicated he wants to do is ask the National Safety Net Advisory Committee that very question. In other words, how do you, if a farm is going through a long period of, say, chronic income difficulties...? For example, let's suppose that a farm has a certain commodity production. Maybe the commodity in general is doing well but this particular farm is not doing well. Then is a risk management program an effective way to help that farm business get turned around, or what other mechanisms in terms of skills training or other mechanisms might you use?

The minister has indicated he wants to go to the National Safety Net Advisory Committee to try to explore that topic, and that's the renewal programming that was referred to earlier. There's definitely some work to be done there.

À (1025)

The Chair: Thank you, Paul.

Louis, you have the floor.

[Translation]

Mr. Louis Plamondon: Mr. Chairman, Paul puzzled me with his first question when he said that you had spent $3 million to consult while the committee had spent $240,000 to do it. I am still intrigued by something and I have already asked this question to another Department. You have several officers at the Ministry of Agriculture and you have a communication group. How come your communication group is not capable of booking a meeting room or a hotel? Here we have the clerk that performs all the plane reservations and room bookings for all of the Members of Parliament and she is on her own. Your Department has a communication’s group yet you feel the need to contract a communication firm to perform all your phone bookings, to invite the producers, to book meeting rooms, coffee, etc.

I have already asked this question to another Department and I am asking you as well. Did you ever consider that it might be cheaper if you made your own calls to book rooms? Also, I would like to know which firm was contacted to perform the consultations.

Mr. Paul Schubert: Thank you Mr. Chairman.

We always have the option to perform the work internally but given the scope and the tight deadlines of this consultation process it was deemed preferable to contract an external firm to help us. This approach has been used in the past. But we always have the option to do the work internally. I can’t comment on the relative efficiency of the two methods of doing the work.

The firm that was contacted to perform the first two waves of consultations was GPC. It was chosen to do the logistics and to give strategic advice.

Mr. Louis Plamondon: What does this firm do?

Mr. Paul Schubert: It is general consulting firm that frequently is involved in consultations and communications.

M. Louis Plamondon: GPC. Very well.

Mr. Paul Schubert: That covered the first two waves. We contracted GPC again through a separate competition as well as another firm called Prime Strategies to build a model for future consultations we might have. These consultations have not yet been fully defined.

Mr. Louis Plamondon: I would like to ask a short question on another topic. I find there is an interesting question in the document we were given by the library before the meeting. It discusses the global support measures that help estimate the global subsidies given by the WTO members to their agricultural producers. It says that in the Uruguay Round Canada has agreed to reduce its subsidies by 20%. The second question asks: “What is the proportion taken by the measures outlined in the APF with respect to Canada’s Global Support Measures?” In other words is the fact that we are planning to reach $4 billion consistent with our commitment to reduce the Global Support Measure by 20%? Maybe some of the spending was already accounted for in our reduction commitment. I am not knowledgeable on this topic but the researchers suggest such a viewpoint.

Thank you.

À (1030)

[English]

The Chair: Time now. Be short.

Mr. Tom Richardson: Mr. Chair, I would ask Rory McAlpine, our trade negotiator, to address that question.

[Translation]

Mr. Rory McAlpine (Chief Agriculture Negotiator, International Trade Policy Directorate, Department of Agriculture and Agri-Food): Mr. Chairman, we still have not determined how we will categorize the various elements of the program in the Policy Framework. We are striving to make the programs fit the Green Box to protect them, and to which there is no limit. We can then spend what we want up to a certain point and are assured that the Americans and others are not going to pursue compensatory measures. If not, we still have considerable leeway to categorize them in the Yellow Box. We have significant room to do it. Therefore if necessary we will just put the programs there. Thus, in the future we will honor our commitment to reduce the amount if necessary.

[English]

The Chair: Thank you, Louis.

With regard to Louis' first part, you came up with GPC, and then you talked about Prime Strategies. Are there companies out there that specialize in agricultural background that are involved with this? You probably advertised on a website that this contract was out. How many companies out there could provide expertise in agriculture in terms of trying to plan this communication process?

Mr. Paul Schubert: I wouldn't hazard a guess at how many firms would be out there that might be in a position to bid on a proposal such as this. The expertise is really in the areas of facilitating and consultation. If the firm has an understanding of or grounding in farm issues, so much the better. But I think it's the areas of consultation, facilitating, organizing, making effective meetings, pulling the right people together--

The Chair: Who is GPC? Where are they located?

Did you have bids from across the country? Could someone from Brandon, Manitoba, or Grand Bend, Ontario, have done this?

Mr. Paul Schubert: GPC is a fairly major consulting firm. I believe their head office is in Ottawa.

The Chair: Did you have bids from across the country for this?

Mr. Paul Schubert: Mr. Chair, I would have to check to see exactly how many people--

The Chair: You're in charge, or somebody here is. Did you have five bids, ten bids, or one bid?

Mr. Paul Schubert: That I would have to confirm, Mr. Chairman.

The Chair: Secondly, how much spread was there in terms of the contract?

Mr. Tom Richardson: Mr. Chair, I'd ask Simon Kennedy to comment. He was involved in the assessment of the bids, so I think he could provide the committee with some information on that.

Mr. Simon Kennedy: For the first round of bids that were put out, where GPC was selected, we used the MERX system of Public Works, which is where it goes up on a website and there are a certain number of days where anybody can put in a bid. The way the rules work, depending on the type of contract you're looking for, it has to be either Canada-wide or North America-wide. In the case of the first round of consultations, there were two contracts. One was a Canada-wide contract for event management and one was a North America-wide one for facilitation. In that case there was a 45-day period during which firms that were interested had a chance to apply.

I don't have the exact number of companies that applied, but we did have a range of companies apply for both sets of contracts. There was a panel composed of three public servants with different types of expertise to assess the bids. The bids were assessed and then ranked. Once the ranking was in, the financial package was looked at to see what the relative costs were. Then a company was selected on that basis.

The Chair: Thank you.

We do hear a lot about advertising, and it's a topic under discussion around the Hill.

Next is Mark from Nova Scotia.

Mr. Mark Eyking (Sydney—Victoria, Lib.): I have a couple of questions, so please make the answers fairly short.

In the last few years of travelling the country in our consultations, there was a lot of talk about young farmers. They can't seem to be able to take advantage of some of these programs right away. They don't have the cash base, the margins, and whatnot.

In your consultations, was there any talk about doing something different? Should young farmers starting up have some seed money for the first payment in NISA, or something like that? That's my first question.

Go ahead.

À (1035)

Mr. Tom Richardson: That's an important question. It's one the minister has certainly focused on. It was a topic of discussion at the recent federal-provincial ministers' meeting.

In the paper, we're proposing that the kind of mechanism we have now in the CFIP be adopted for NISA. The way CFIP works now, if you're a beginning farmer, if you don't have a track record and you haven't been able to build up accounts, we can make a payment to you based on the size of the farm business, using similar farms in your area. We want to bring that mechanism into the new NISA and make sure the farmer has that kind of protection, until they can build up their accounts.

I think that idea is one everybody supports. It will give that added protection we don't have in NISA now to beginning farmers.

Mr. Mark Eyking: Second, on page 11 in your pamphlet it shows $75 million is going to rural communities and co-ops. Is that a federal-provincial program, and what are some of the details of it?

Mr. Tom Richardson: Donna Mitchell, our ADM for rural the secretariat, was not able to come today, so unfortunately I don't think any of us are dialled into the details. We could reply by way of a letter to the chair, if that's acceptable.

Mr. Mark Eyking: Okay. I have a little more time then.

When you're putting in your cost formulas over the next two years, when you talk about advance cash payments for various things and there's a cost in there, usually the farmer pays it back. Where does the cost come from? Is it from default loans? Is it from paying interest or for administration? Where you talk about $30 million for cash, where does that cost come from?

Mr. Douglas Hedley: In our cash advance programs, the largest share of the cost is the interest foregone. For example, in the fall cash advance, the cost of the program is normally $27 million to $30 million, depending on the amount of loans outstanding. The vast majority of that is interest. The second element is defaults. We normally run under 1% to 2% on those programs, which is fairly good on lending programs. The third element is administration, and the administration is currently around $1 million on those programs.

Mr. Mark Eyking: Do other countries, like Australia and maybe Argentina, have programs like that cash advance in place for their grain farmers, or is this something very unique? In the United States do they do it, or is this very unique just for Canada?

Mr. Tom Richardson: I think it's in my head that Brazil has a loan program, but we could certainly report back to the committee on that with information from OECD on interest-free programs in other countries.

Mr. Mark Eyking: Thank you.

The Chair: You have a little bit of time left.

Larry, do you want to wait until after Howard? Is it okay with you?

Mr. Mark Eyking: If I have a little time.

The Chair: You have about a minute left.

Mr. Rick Borotsik: Are we having another round?

The Chair: We're going through our next round right now.

Larry hasn't had an opportunity yet.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Just on the cooperatives moneys--and I know I can't answer your question--we're definitely encouraging provincial involvement, and partnership certainly works and helps us to multiply our funds and to work with important groups such as our co-ops.

Mr. Chair, I just want to mention that according to the news, Kyoto is going to start in Canada, and I think there's a real comparison between that and the APF. I've had producer members in the House of Commons from each facet of the House, all political parties, talk to me personally, saying they hope and they are working to encourage their provincial ministers to sign on to the APF because they believe we can then work together on this.

I have a question, Mr. Chair. At a previous meeting of our standing committee there was a person here from Agriculture and Agri-Food Canada who said their division did not do any research or cost-benefit analysis regarding Kyoto. Today we have the assistant deputy ministers here, so I do want to ask them to address this, as to whether we, Agriculture and Agri-Food Canada, have done any work and whether we're doing any work. Can you bring us up to date on that please?

À (1040)

Mr. Tom Richardson: Michele Brenning is here, and she is our team lead on environment. I believe Norine Smith has been to the committee and this information has been tabled. I think Michele could provide the committee with the details of the work we have been doing.

Ms. Michele Brenning (Director, Environment Bureau, Department of Agriculture and Agri-Food): Thank you, Mr. Chair.

Yes, indeed, we have done some economic modelling, and we have something called the Canadian economic and emissions model for agriculture. We've used this for a number of years to assist in analyzing the kinds of practices that need to be put in place to mitigate against greenhouse gases.

Ms. Smith indicated at the committee when we were there on Kyoto that this was the basis of analysis for the report of the agriculture table published in 1999, which has been provided to this committee. This table, together with some work we've done with the federal-provincial process, the analysis and modelling group for climate change, where agriculture was modelled in the federal climate change plan...our department did contribute data, and our department also contributed some numbers that were incorporated into that analysis.

We're continuing with our further analysis of the agriculture sector, and we're going to be drilling down and looking in more detail.

Mr. Larry McCormick: Mr. Chair, I know my fellow members around this table would like to ask the department to share with us the work that's gone into this. We'd like to have some of that and be part of the solution in helping sell this and inform our constituents.

Mr. Chair, I think we do need to look more at what Ms. Ur and others have said about...following a disaster of not one or two years, but three or four years, which is very possible. Now, I realize Saskatchewan is ending up with one of the wettest years in history after having one of the biggest droughts. That's how fickle Mother Nature can be, and the rain comes at the wrong time. We have to work and be ready for this because the fact that these farmers...in a long-term drought, how are they going to be able to put in 30%? If they don't have it when you're in a commodity such as grain...and I want our people to continue to produce the world's best wheat, Mr. Chair.

So, Doug, I'd like to see you work further on that.

The Chair: Thanks, Larry.

Rick.

Mr. Rick Borotsik: It is a short question. I have only one, and it's just for clarification actually. The APF, when everyone signs on--if in fact they do--will be effective April 1, 2003. We have a total budget of $5.2 billion over a six-year period. I'm right so far, am I?

Voices: Yes.

Mr. Rick Borotsik: That's where I'm heading with this one. CFIA is a program that is already incorporated into the agricultural policy. PFRA is a program that's already incorporated into that as well. Companion programs, the NISA contribution and the crop insurance contribution, are programs we've known previously that are now incorporated into the APF.

So of the $5.2 billion over the next six years, how much is actually new money? Can you help me out on this one? Bureaucracy has a tendency to baffle with numbers, so please just be simple for me. How much new money outside those existing programs is going to go forward for the next six years? Is it all new money?

Mr. Tom Richardson: Mr. Chair, the $5.2 billion is all new money. I think the one qualification people would make...people always assume the minister.... The government committed to CFIP for three years at $500 million a year; that was a three-year decision. So it was sunsetted, the money ended, and clearly what the government has done with the $5.2 billion is that they have in effect continued--

Mr. Rick Borotsik: For another six years.

Mr. Tom Richardson: Some might say it's not new money, but certainly in terms of the decision of the government, in terms of the fiscal framework, that three years of $500 million terminated; it was done. The government made a decision to extend it for five more years, and I think, as the minister has said many times, this is the first time in the history of agriculture in the recent past where we've seen this kind of commitment.

À (1045)

Mr. Rick Borotsik: Mr. Richardson, thank you very much, and that does clear it up.

Mr. Deacon, you said that in the fiscal year April 1, 2002, to March 31, 2003, you're going to expend somewhere in the neighbourhood of $2.6 billion. That's what you told me.

Mr. Bruce Deacon: Yes.

Mr. Rick Borotsik: Okay. If you take the number of $5.2 billion and add the provincial contributions, it takes you to $8 billion. If you divide this by six, you come up with about $1.4 billion. You had $2.6 billion in the last fiscal year and we're now going to $1.4 billion over the next six. Can you tell me how you're increasing the programs for us?

Mr. Bruce Deacon: The portion in the $5.2 billion that will appear in the current fiscal year 2002-03 is approximately $680 million. It's included in the supplementary estimates part.

Mr. Rick Borotsik: You're going to say $2.6 billion is going to be expended in this fiscal year. That's what you told me. If you look at the programs identified under the APF for six years going forward, do the math...even with the provincial contributions, you're looking at about $1.4 billion. Help me.

Mr. Bruce Deacon: The expenditure I quoted for this year is included in the main and supplementary estimates, and a portion of it will be in supplementary estimates (A) and (B). This will take a portion out of the $5.2 billion and other new moneys that have been approved. Add this to the (A) base of the department, which appeared in the estimates. We currently have $1.8 billion in the estimates that went forward this year. This is our ongoing (A) base of the department. We added $687 million to this in supplementary estimates (A), and there will be some additional funding that will come in supplementary estimates (B).

Mr. Rick Borotsik: Will we be spending more money this coming fiscal year, 2003-04, than we did in 2002-03?

Mr. Bruce Deacon: Yes.

Mr. Rick Borotsik: We will be expending more money on agricultural programs?

Mr. Bruce Deacon: The budget for the department increased every year from 1998-99 through to 2001-02. Our total expenditure last year was $2.578 billion. With the money approved by Parliament coming into the department, this year we are currently at $2.5 billion. We believe this will increase, and it should exceed marginally what we spent last year. So we will have a budget that will increase every year from 1998-99 through to this year. The forecast for next year is an increase again, up to about $2.7 billion.

Mr. Rick Borotsik: If that's the case, the money is coming from outside the APF somewhere.

The Chair: Thanks, Rick.

Mr. Rick Borotsik: Thank you.

The Chair: Bruce, another point is probably that this allocation of $5.2 billion is revolving...it's not cut off on March 31. If it's not spent, it can go forward. Is it true it is carryover money?

Mr. Bruce Deacon: There are provisions. The $5.2 billion was approved, albeit by cabinet. Its individual elements are now going to the Treasury Board. That's when we will put in some of the details on the actual cashflows. There will be flexibility built into it to enable us to actually move moneys. Some of it is built into our regular flexibilities and some of it will be special flexibilities.

The Chair: Thank you.

Howard.

Mr. Howard Hilstrom: Is there any aspect of the risk management that specifically addresses the needs of the grains and oilseeds farmers, who have low prices on the world markets because of the overproduction of other countries due to subsidies?

Mr. Tom Richardson: Mr. Chairman, this is an important point. It's one the minister and the National Safety Nets Advisory Committee in particular have spoken to. I think there are a number of ways of looking at this. A point the minister has made to farm leaders and the grain industry is that the Government of Canada...if you think about the steel industry, about softwood lumber, and about agriculture, all of these industries get pressured from the United States or other countries. The minister has said we cannot, as a government or as a country, permanently protect everyone from the actions of other countries. But this does not mean we do not have transition measures or we do not take action to mitigate the impacts. I think if you look at the APF, with the bridge funding, the five-year commitment on funding, and the trade negotiations, we do take action as a government.

The minister also said that when you look at what's going on in grains worldwide, it's not just a question of U.S. subsidies impacting our producers. There's also the question of new production coming in from Brazil, Argentina, and other countries. We have to have an ongoing effort in terms of R and D. In terms of the $270 million we spend on research every year to come up with new varieties and new production technologies, it's certainly also part of what we can do as a government or a department to support a basic commodity like grains and oilseeds.

À (1050)

Mr. Howard Hilstrom: I think western Canadian farmers, and probably a lot in Ontario, are going to feel that they've just got the Trudeau salute again from this government under the APF.

My last short question--we won't bring up the Trudeau salute too much more--is, how do you work with all those bureaucrats who work for the Wheat Board minister, Ralph Goodale? He's in charge of the Wheat Board, so he must have a bunch of bureaucrats working on the effect the Canadian Wheat Board has on people in a designated region. We know that the Wheat Board markets, they handle the advance cash thing, and they effect rail transportation. So how many bureaucrats does he have who you work with, or are you guys doing all the work for that Wheat Board minister?

Mr. Tom Richardson: Mr. Chair, I'd ask Howard Migie to respond to the question.

Mr. Howard Migie (Director General, Marketing Policy Directorate, Department of Agriculture and Agri-Food): The department provides any sort of analytical support. There's no special group that supplies, independent from the bureaucracy, any advice or services to the minister responsible for the Wheat Board. It's virtually the same as when the Minister of Agriculture had both responsibilities.

So in the case of cash advances, it would be the people who run the program who would deal directly with the Wheat Board. In terms of initial payments and processing orders in council, that would be from within the department, people who work in different areas. So there's no group set aside that works on supporting the minister responsible for the Wheat Board or for the Canadian Wheat Board.

Mr. Howard Hilstrom: What you're saying is the board of directors, and not the Wheat Board itself, is actually the bureaucracy of the minister, Ralph Goodale. Are you saying that's the bureaucracy you work with? Does Ralph have a bunch of bureaucrats stuck away some place, ADMs and that, who work for him on Wheat Board issues and work on safety net issues with you guys?

Mr. Howard Migie: No, there aren't any. There's a group in the department that deals with issues with respect to cash advances, and they'll include dealing with the Wheat Board, the same way they will with the Canola Council, as the administrator.

There are some legal functions under the act for which the minister responsible is required to go to cabinet, for adjustments on initial payments. That will be provided by people in the department who would work on general grains issues.

Mr. Howard Hilstrom: Which department, your department?

Mr. Howard Migie: The Department of Agriculture.

There are no people in, say, the Department of Public Works who work on any related issues for the Canadian Wheat Board. It would just be part of various people's functions within the Department of Agriculture.

The Chair: Thanks, Howard.

Howard is becoming an expert on the Wheat Board.

Rose-Marie.

Mrs. Rose-Marie Ur: Good morning. In part of the presentation, the question was asked regarding Kyoto.

When we had the presenters here last from Ag Canada and from Environment Canada, I was really surprised to hear--as Larry said, I'd asked that question of the individuals who were in--that the department hadn't done a cost-benefit analysis, and the statement made here this morning was that Ag Canada had given some information to Environment Canada.

Being the Department for Agriculture and Agri-Food, do you not believe it is serious enough that you, in your department, do a cost-benefit analysis and not just give information to another department? Do you not think it's serious enough in our agriculture community to really wrap yourself around this? I think it's really, really important.

Agriculture and Agri-Food has a limited budget, so when it comes to trade or when it comes to the environment, are we able, under the basis of agriculture, to tap into other departments and gain dollars there, rather than everything coming from your department to satisfy these needs?

Mr. Tom Richardson: On the first point, as Michele explained, there is an agriculture table within the climate change secretariat. So we do work collegially with other departments.

When Michele said we provide data, that's probably a bit of an understatement. We have a lot of economic models within the department, we have research scientists who've done a lot of work on carbon sinks, and all of that analysis has fed into the climate change process. So it was more of an integrated approach across government.

Michele, do you want to add to that?

À (1055)

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Maybe I could add as well, on the international component.

One of the things that was announced under the agriculture policy framework on June 25 was $175 million in new funding to support international.... This is very important, because Canada exported a bit over $26 billion worth of agriculture and agrifood products last year. We had a $7-billion trade surplus.

We're very anxious, as the world becomes more complex, that we be able to protect that. So that money is going into things like market development, trade policy, defending our interests at the WTO. Technical trade issues increasingly are going to be the things that either allow us into or keep us out of markets, so we're spending money on that. In the WTO, the developing world is now over 100 of the 140 members, so we're spending an awful lot more time thinking about developing country issues and how that integrates into the whole international strategy.

So the answer is yes, we will be spending more money on it. It is a very important part of the program.

Mr. Tom Richardson: And we do work with DFAIT, and they will be supporting that effort.

The Chair: We still have two members who want some time. How about one minute each?

David, and then Paul.

Mr. David Anderson: I'm really concerned that you never did a cost-benefit analysis of Kyoto. We had the young lady up today talking about the fact that you've done a study of emissions, that you've done some work on sinks, and so on. You say you're spending a lot of money on developing countries and international relations. Why was that cost-benefit analysis on Kyoto not done, given the tremendous impact it's going to have on our agricultural community?

Mr. Tom Richardson: Michele.

Ms. Michele Brenning: Mr. Chair, I'll repeat for the committee: we have done cost-benefit analysis in the department, and we used models that have been well established for a number of years. These models are called the Canadian economic and emissions model. This work has gone back. It integrates science information as well as economic information that allows the department to look at different scenarios and the different impacts on agriculture.

We're currently also looking at the federal climate change plan. As you know, agriculture was modelled in the climate change plan. We're looking at the modelling results that came out from the analysis and modelling group for climate change, and we're continuing our analysis more specifically of the agriculture sector.

Thank you.

The Chair: Thank you.

Paul, very briefly.

Mr. Paul Steckle: Very quickly to you, Bruce, and sort of concluding with what Rick brought forward, I believe I understand this, but to be sure we all understand, (A) base funding is not part of APF. Is that correct?

Mr. Bruce Deacon: That's correct. APF is new money coming into the department.

The Chair: We discussed here the advance--Howard referred to it and so forth. How much money would have gone out this present year on the advance? How much money are you putting out to farmers, collectively, in round terms? Doug, you seem to....

Mr. Douglas Hedley: This past year we put out approximately $675 million in advances to something in the order of 33,000 or 34,000 farmers. We deliver that program through about 24 or 25 farm organizations, including the Canadian Wheat Board.

The Chair: And all of this is interest free to farmers until the end of the current year. Is that correct?

Mr. Douglas Hedley: The spring cash advances are interest free up to $50,000 for the period from when they take the loan, with crop insurance as the collateral for it. They have to dismiss that loan, either by rolling it forward into fall cash advances or by paying it off before the end of December of the same year.

The Chair: I'd like to thank all of you for coming this morning. As members, we all appreciated the very concise and direct answers you offered us.

Kyoto, of course, is something we're concerned about. With that, we'll look for further information, but in any case, thank you.

The meeting is adjourned.