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AGRI Committee Meeting

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[Recorded by Electronic Apparatus]

Thursday, November 26, 1998

• 0901


The Chairman (Mr. John Harvard (Charleswood St. James—Assiniboia)): Welcome to the witnesses.

We have a long and heavy agenda this morning. We'll be sitting for four hours, until 1 p.m. The first two hours will be devoted to the WTO. So we're going to have to make very efficient use of our time.

We have representatives from four organizations at the table right now: from the Canadian Alliance of Agri-Food Exporters, Martin Parent and Richard Watson; from Keystone Agricultural Producers, we welcome back Don Dewar and Marcel Hacault; and from the Western Barley Growers Association, Greg Rockafellow and Ed Armstrong.

I have decided in an arbitrary way that we're going to hear from the barley growers first. I've asked Mr. Rockafellow if he would be prepared to do so, and he said yes. So we'll hear from the barley growers first, then from Keystone, and then, batting clean-up, the Canadian Alliance of Agri-Food Exporters.

Welcome, Mr. Rockafellow.

Mr. Greg Rockafellow (President, Western Barley Growers Association): Thank you, Mr. Chairman.

First of all, on behalf of the Western Barley Growers Association, I would like to express our thanks to Minister Vanclief and the parliamentary Standing Committee on Agriculture and Agri-Food for this opportunity to express our views regarding the question, what negotiation outcomes will further the growth of Canadian industry?

I think a more realistic question should be asked: how is Canadian agriculture going to have to adapt and change in order to remain competitive in this changing world? As we move towards a world that has no global boundaries, will the adaptation and evolution of the Canadian agriculture industry be moulded by international cooperation or external conflict?

We would all agree that at the conclusion of WTO negotiations, the desired results would be increased market access for Canadian products and goods, both domestically and abroad; that domestic and export subsidies be eliminated; that there be a meaningful reduction in tariffs, global elimination of blue box programs, harmonization of sanitary and phytosanitary agreements, negotiated rules based on sound science, and movement towards a level playing field for all global trade partners.

Over the past several months the world has gotten a glimpse of what the two largest signatories to the WTO are going to bring to the table. The European Union in Agenda 2000 will remove export subsidies and replace them with direct payments to producers, which allows them to be more aware of world prices as well as perhaps being legitimately able to trade on the world market.

Reforms will also attempt to force the EU definition of environmentalism and animal welfare onto the rest of the world, firstly, to secure much needed taxpayers' funds to finance agriculture as well as to force the rest of the world to play with a new set of rules that may hinder our competitiveness. North American producers are going to be jeopardized when the world's consumers are given the choice between a subsidized EU food system that disallows by their definition overfertilization, the use of GMOs, hormones in beef, and other technological advances versus our use of technology that provides the world with a safe and low-cost food source. Sound science may not have anything to do with the type of food system the world's consumers are willing to pay for, and perception may be more important than reality when we start discussing environmental issues.

Through the recent U.S.-Canada trade dispute, we have also been shown the teeth of the Americans. I don't think there's any doubt that absolute free and fair trade is going to be an unattainable goal through the next round of WTO. The Canadian agriculture industry must continue to strive for a level playing field for all trade participants, but, more importantly, make the necessary internal policy changes that will help us be more reactive to consumer concerns and the realities of the marketplace.

• 0905

During this past summer, the agri-industry trade group held a series of focus group meetings throughout Alberta, and there were some consistent opinions that were voiced by all working groups. The top three opinions were, one, Canada's domestic policies are blocking international trade success more than international barriers and trade rules; two, Canada's tax regulatory and standard systems are anti-business and anti-competitive; three, the industry system and institutions continue to focus on production and commodity trading while statistics clearly show that our best trading opportunities lie in the value-added niche markets.

The barley industry can identify first-hand with the points outlined by the American Ranchers-Cattlemen Legal Action Fund, or ARCLAF, which you may have heard about, in their anti-dumping suit against the Canadian cattle industry. Even though this case is against the cattle industry, the lion's share of the complaint is based on the American view of the Canadian Wheat Board and state trading agencies. This situation has the potential of not only causing serious damage to the livestock sector, but also to the feed grain industry.

Canadian policy changes have to be made when you consider the CWB is likely going to only market 300,000 metric tonnes of a 12 million tonne feed barley crop this year.

Canadian grain standards are seriously flawed when producers can consistently produce a much higher quality product than we are exporting. New varieties of barley are often harvested at 55 to 58 pounds per bushel weight, with one-half to one percent foreign matter, while at the same time Canadian export standards are exporting a 47-pound bushel weight product that has 2.5% foreign matter. Farmers are being charged for cleaning fees on top of that.

How can feed barley producers in Canada earn any respect in the world market when they have limited influence on the quality of export standards and no way of delivering a higher quality product? In 1994 we had a continental barley market that exported more feed barley out of western Canada than we had ever seen. This market was halted only after Canadian grain companies took the federal government to court and had the continental barley market overturned. In 1998 those same grain companies are responsible for importing American barley into the southern Alberta cattle-feeding industry. This appears to be contrary to any positive goals this country should have on trade liberalization.

Malt barley is another industry in Canada that is going through some very difficult times. Cheap European supplies have made it very difficult for Canada to compete in the international arena, but the fact is Canadian malt companies and exporters can't procure product because initial prices were set too high to compete in the world market, and the livestock feeding industry right now is paying a premium over the malt industry.

If we want our malt industry to survive in this country, we're going to have to let malt companies contract for their supplies, which in turn will allow producers to use risk management, which is going to be essential for profitability in today's agri-business environment.

It is imperative that Canada align itself with trade allies to combat the huge global influence that a growing European Union is going to have on world trade. It was proven at the Canada-U.S. Grain Summit held in Banff this year that when producers are placed together to discuss issues, many misunderstood beliefs are reconciled. Willingness to move forward with industry harmonization was clearly demonstrated in areas such as pesticide regulation, grain and beef-grading standards, and transportation regulation regarding truck weights and load restrictions.

The past three years have been examples of disaster for prairie grain producers. In 1996 we had difficulty getting product to port because of snow, cold weather, and eventually the railways were held responsible for the lack of grain movement. In 1997, deer droppings found their way into western Canadian barley supplies, which eventually became an international incident and a black eye for Canada's reputation as a supplier of quality product.

1998 has proven to be a disastrous year because of the financial crash in many markets around the world, which has caused a decrease in demand for almost all commodities. Producers can no longer afford inflexible agriculture policies that are unable to react to the ever-changing marketplace. We can no longer accept excuse after excuse every year.

Profitable industries and businesses recognize that instant and constant information has to flow from consumer to producer. This is an absolute essential of reality in today's business environment. There are many positive examples of agriculture industries that are recognizing this fact. The cattle industry will soon be able to track beef carcasses all the way back to the birth of the animal, while providing all relevant information pertaining to the care and management of that product.

• 0910

When a rapidly growing export hay market sends a container of product to the Asian market, that container can be tracked right back to the hay producer's field where the product was grown. Information access of this nature allows producers and industry to rapidly adjust to the needs of the marketplace.

Despite what we hear today, there are many positives in Canada's agriculture. Oat producers are receiving barley price for a high-quality product that yields 40% higher than barley, with a lower cost of production. Export hay producers right now are receiving four times the gross dollars this year than their malt barley neighbours, with significantly less cost of production and less risk.

Canadian agriculture producers can become very competitive in the world market without the need of dipping into government coffers, such as the EU and the United States have demonstrated. Subsidization does not result in higher prices for producers' product or a significantly better bottom line. The reality is the funds are capitalized back into the business, not necessarily into the pockets of producers, regardless of what part of the world they reside in.

The farm income crisis is not just a local or regional reality, but it is of global concern. Before we go to WTO to achieve what we can, let's make sure our internal policies are giving the Canadian producer every advantage possible to be competitive in the world marketplace. As globalization moves forward at unprecedented speed, our internal policies must be addressed, for they will be the concern of the rest of the world, not just the producers at home.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Rockafellow.

At the time of my first round of introduction, representatives of the National Farmers Union were not here, but they are now. I'd like to welcome Cory Ollikka and Randall Affleck. Gentlemen, we'll hear from you right after the Keystone Agricultural Producers.

Now we'll turn to Mr. Dewar of KAP for his presentation. Welcome, Mr. Dewar.

Mr. Donald R. Dewar (President, Keystone Agricultural Producers): Thank you, Mr. Chairman and members of the committee, for the invitation to be here to present to you today. My name is Don Dewar and I'm the president of Keystone Agricultural Producers. With me is Marcel Hacault, our first vice-president and also the chairman of our trade committee.

Manitoba producers have been significantly impacted by the last round of the World Trade Organization. We produce enough food for six million people and we're only one million people. We rely heavily on exports. We export $1.1 billion worth of agri-food exports and we import less than $500 million; so we're three to one in terms of dependency on our exports.

There's no doubt, with the loss of the Crow, that Manitoba all of a sudden became the most expensive place to export from. It therefore brought our domestic products to be the cheapest in Canada, relative to cost of production.

So there were significant comparative advantages shifted at the stroke of a pen in 1995. This has led to increased diversification into other agri-industry, primarily livestock production. Unfortunately, a large part of that was into hog production, and we know what's happened with the collapse of the Asian market. That's just a reflection of how dependent Manitoba is on trade—85% of our hog production leaves the province.

We've also seen an increased demand for the quota allocation in the supply-managed commodities. I think a prime example of the supply management willingness to shift and do innovative things is happening in the egg industry. In Manitoba, we're seeing the broiler industry in Saskatchewan adjust in recognition of the need to make changes to adapt to world trading rules.

Are our producers really benefiting from the last WTO round? Are we able to compete, given the rules that have been set out for us? I think that's the question, and we'll outline some of the things that we would like to see changed, some of the rules, I guess, at WTO, in the next round of the agreement, where we believe agriculture can be improved for all of Canada, and particularly for Manitoba.

Mr. Marcel Hacault (Vice-President and Chairman, Trade Committee, Keystone Agricultural Producers): Our past president, Les Jacobson, initiated a whole process of developing a made-in-Manitoba trade strategy. Part of our organization includes 19 commodity groups that I guess vary from supply management all the way to the Saskatchewan Equine Ranchers Association and the Farm Women's Institute.

• 0915

We put forward a document. We handed it in, but unfortunately it's not translated, so some members may not have access to it.

It's really very similar to the CFA's position, but probably with more emphasis on having access to export markets. Some of the points that have been identified that the next trade deal must improve on would be the quick and easy access to challenging illegal trade actions. That was seen with the actions by South Dakota and Montana when they tried to restrict trade into those provinces.

It was also noted that there should be a clearer definition of the whole area of the green box. There was a strong suggestion that there would be the elimination of the whole blue box spending also.

We need stronger linkages and better rules to deal with the whole issue of the GMOs, phytosanitary issues, harmonization of the labelling and the paperwork, and how pesticides and inspections are treated, which was seen to be a detriment to trade, especially to the U.S.

There was the whole area of TRQ administration and way they're calculated. There's a whole area on whether they're calculated in dollar amounts and whether it's U.S. dollars.

There's the auctioning of quota fills. Some countries are choosing different methods of filling their quota. There's the calculation of the fills.

These are all technicalities that we feel should be cleared up because different countries are using different interpretations that are usually to their benefit. We see that as being part of the hindrance.

We feel that Canada has really gone well beyond what was asked of it in the last round of the WTO. We would like to keep some of the credit for the cuts we've taken in the next round. Maybe we should be able to carry forward some of those cuts we've taken in the past. Instead of starting back at zero, I guess we can bring forward those credits.

There's the issue of the carry-over that the EU is doing in the whole subsidies area. It was identified that, if I'm correct, China is not part of the WTO. It would be very important if we could include some of those major countries in the next deal.

On the issue of the bilateral agreements and all of the other agreements that are happening on the side, it was felt that the WTO should be the primary forum for establishing fair trade rules, and then everything else would come under that.

There should be disciplines on the whole area of credit guarantees, exchange rate fluctuations, and the whole area of state trading agencies. We feel that the Wheat Board has probably received significant international attention. That attention, however, should be paid not only to buying agencies, but to selling agencies. If you're going to include STEs you should include them from even the Commodity Credit Corporation in the U.S., the sugar co-op in Australia, and the ag marketing agency in Poland. There are a whole bunch of other STEs out there; the Canadian Wheat Board is not the only one.

In a nutshell, that's what we're bringing forward from Manitoba. I guess there will be questions later on.

The Chairman: Thank you very much, Mr. Dewar and Mr. Hacault.

Now, we're going to turn to representatives of the National Farmers Union. Who's going to begin?

Mr. Randall Affleck (Maritimes Coordinator, National Farmers Union, (P.E.I.)): I am, sir.

Good morning. I welcome this opportunity to make a presentation on behalf of the National Farmers Union.

The Government of Canada and most provincial governments have embarked on an agricultural strategy of deregulation, privatization, trade liberalization, and the promotion of increased agri-food exports in the hope that some of the export-generated dollars will find their way back to the farm gate.

For farmers, this strategy has failed. This failure is demonstrated when Canadian agri-food exports are compared to total realized net farm income since 1970. Farmers have clearly not been the benefactors of this huge growth in agri-food exports. In fact, Canadian realized net farm income per farm adjusted to 1998 dollars has witnessed a steep downward trend to 1940s levels.

• 0920

While Agriculture and Agri-food Canada's medium-term policy baseline, dated April 1998, projects Canadian net pork exports to nearly double between 1998 and the year 2007, the same publication also forecasts hog farmers' incomes will plummet over the same period. Using a benchmark, a central Alberta farrow-to-finish hog farm with 140 sows and 640 acres will see its net income drop steadily for the foreseeable future.

While there is little evidence that trade agreements and increased exports increase farmers' incomes, there is much evidence that the orderly marketing and supply management agencies endangered by those agreements do increase farmers' incomes. As an example, the 1996 Kraft, Furtan, and Tyrchniewicz report calculated that the Canadian Wheat Board increased wheat producers' incomes by an average of $265 million annually for the period 1981 to 1995.

Also, the Schmitz et al report found the Canadian Wheat Board increased barley producers' incomes by $72 million annually for the period 1985-86 to 1994-95. Additionally, Agriculture and Agri-Food Canada's medium-term policy baseline projects steady growth in incomes of a Quebec benchmark dairy farm. Agencies such as the Canadian milk marketing boards, poultry and egg marketing boards, the Canadian Wheat Board, and the Ontario Wheat Producers' Marketing Board give farmers power in a marketplace increasingly dominated by huge agri-business corporations. They help to increase and stabilize farmers' incomes.

The NFU is not opposed to trade. It is, however, strenuously opposed to trade that undermines and impoverishes farmers and at the same time leaves millions without sufficient food. The current agri-food trade system does just this.

The NFU is a founding member and the North American coordinator of the Via Campesina, an international movement of 69 farm organizations from 37 countries around the world. The NFU has benefited greatly from its work with farm groups around the world. Through its international work, the NFU and its members have been able to gain an international perspective of an increasingly global agricultural production, processing, distribution, and trade system.

The Via Campesina issued the following statement on the WTO in its May 17, 1998 meeting in Geneva:

    The loss of national food sovereignty within the WTO is dangerous and unacceptable. Via Campesina strongly objects to the conduct of negotiations in agriculture under the terms of the World Trade Organization. The WTO policy is above all organized in the interests of multinational companies that dominate international trade destroying our capacity of food production, our communities, and our natural environments.

    International trade must serve society!

The document went on to demand that government and international organizations:

    Remove all negotiations in the areas of food production and marketing from the WTO.

The NFU recommends that the Canadian government take advantage of international dissatisfaction with the WTO process to strengthen its negotiating position.

Further, the NFU recommends that the federal Government of Canada take a clear pro-farmer position in the upcoming round of the WTO negotiations and align itself with nations around the world who are working to change the focus of those talks.

The NFU recommends that the Canadian WTO negotiators defend Canada's unconditional right to create, maintain, and expand orderly marketing and supply management agencies.

In the November 19, 1998 issue of the Western Producer, the U.S. agriculture undersecretary was quoted, in regard to the upcoming negotiations, as follows:

    —Americans will demand lower domestic subsidies, reform of state trading organizations, lower tariffs protecting sectors like Canadian dairy and poultry and tighter controls over export subsidies.

Clearly, the U.S. will target the Canadian programs and agencies that currently serve and protect farmers. High over-quota tariffs were established to protect import-sensitive sectors of Canadian agriculture, namely the milk and feather supply management sectors. We expect that these tariffs will be the prime target for reduction in the upcoming WTO negotiations. Any reduction in these tariff levels will destabilize the supply management sector and lower farmers' incomes.

• 0925

Butter oil is a prime example of the negative impact that low-tariff imports have on the Canadian dairy sector. In the absence of a tariff rate on butter oil-sugar blends, imports have increased dramatically, from less than 2% of Canadian ice cream butter fat use in 1995 to a projected 20% in 1997. This has cost Canadian dairy farmers close to $50 million annually in lost revenues.

The NFU recommends that Canadian negotiators refuse to yield to demands to reduce the tariffs that safeguard supply management sectors. The Canadian Wheat Board is not a state trading enterprise. It is market oriented, non-subsidized, and non-trade distorting. It is a farmer-centred alternative to huge and growing transnational grain companies.

Several countries, including the U.S., are pushing for a new, very broad definition of agricultural export subsidies, which would treat the benefits received through price pooling arrangements as a form of indirect export assistance, even though no government funds are involved. Canadian negotiators should do what they can to curb export subsidies but must aggressively and successively counter any attempts to expand the definition of export subsidies to the point where it might include the activities of Canadian farm marketing agencies.

The NFU recommends that the Canadian government protect the ability of Canada and other countries to support farmers through the use of domestic support tools, until such time as the larger problems within the agri-trade system are remedied. Both the U.S. and the EU have demonstrated a commitment to maintain their production bases and maintain their status as major agricultural exporters. Further, the recent actions of South Dakota and other states, threats of U.S. country-of-origin labelling, and repeated bilateral trade disputes, call into question the possibility that Canada will ever gain significant or secure access to U.S. markets. The EU is determined to maintain its domestic production capacity and, as a result, its exports.

In conclusion, farmers have identified that increases in agri-food exports under the WTO agreement have not improved the net income situation on their farms. In fact, the agreement has made it worse. The NFU recognizes that, historically, a strategy of gaining market power for farmers is a more profitable strategy than one of a gain of market access at the expense of the farmers' marketing agencies.

Thank you.

The Chairman: Thank you, Mr. Affleck.

We're doing very well, and we're moving right along. Now we're going to hear from the fourth organization, the Canadian Alliance of Agri-Food Exporters. I believe Mr. Parent or Mr. Watson will begin.

Mr. Richard Watson (Marketing Director, Canamera Foods, Canadian Alliance of Agri-Food Exporters): Thank you. Mr. Parent and I are going to share the presentation today. I will start and will intermittently review our presentation to you.

The Canadian Alliance of Agri-Food Exporters appreciates the federal government's proactive approach in initiating consultations. As Canada prepares for the upcoming round of WTO agricultural negotiations, your commitment to providing all interested parties with accurate information and the ability to help define Canada's role through such forums as today's take-note hearings must be applauded. This approach has stimulated debate and discussion at an early stage of the process, and it will help to ensure the successful development of a workable Canadian position.

The Canadian Alliance of Agri-Food Exporters is made up of fifteen members representing virtually all of the export-oriented production and processing sectors. We came together with the purpose of identifying for Canada and the world that there is a large component of the Canadian agri-food industry whose welfare is inextricably bound to the international market. Together, our members conduct well over $30 billion in business, and they account for hundreds of thousands of Canadian jobs and for more than $20 billion in exports, over 7% of total Canadian exports. Between 40% and 80% of the production of alliance members is exported.

• 0930

Our alliance is united by the common goals of expanding export opportunities and eliminating unfair trade practices. If real growth in agri-food exports is to be achieved across all agri-food sectors, Canada must obtain meaningful gains in market access and the complete elimination of export subsidies in the next round of negotiations. Canada must take a leadership role and must continue to press for reform in future multilateral discussions. However, to be effective, Canada must be seen as a credible participant, entering the discussions with a negotiating strategy that is consistent, realistic, and achievable.


Mr. Martin Parent (Director, Canadian Pork International, Canadian Alliance of Agri-Food Exporters): The scope of negotiations should be comprehensive enough to provide the WTO members with a real incentive to negotiate significant and meaningful market liberalization.

With the framework for agricultural disciplines currently established, the next round must strengthen the principled/formula approach and, to the greatest degree possible, avoid trade-offs.

The next round must achieve increased predictability in the liberalization of agricultural trade. This should be accomplished through specific phase out requirements, disaggregation, and any other means that makes the liberalization process more transparent and objective.

Finally, the future negotiations must provide substantial results early on in the process. Although Canadian agri-food exports showed strong growth throughout the 1990s, market development activity and potential gains were limited by several factors including prohibitively high over-quota tariff rates, aggregated commitment levels, a lack of effective disciplines on the administration of border measures, and limited transparency in TRQ administration.

Future negotiations must result in significant tariff reductions that will permit the entrance of products and the actual opening of markets globally. This will require a significant and meaningful increase in minimum access commitments, applied to products on a disaggregated basis, obtaining a maximum reduction on over-quota tariffs, restricting the practice of tariff escalation and minimizing in-quota duties in instances where countries maintain protection of their domestic market through a tariff-rate quota.

Beyond minimum access commitments and tariffs, there are several other market access issues that continue to hamper our export initiatives. Canada must address these issues as follows: negotiate transparent and predictable administration procedures, develop a system for re-allocating under-filled quotas, and finally, ensure countries cannot exploit consumer safety or environmental concerns by employing unjustified sanitary and phytosanitary barriers to limit imports.


Mr. Richard Watson: Further work on export subsidies is required. Not only do Canadian exports remain vulnerable in world markets, but subsidies continue to depress price levels, directly reducing returns for Canadian producers and providing unfair import competition. It is essential that future negotiations ensure the total elimination and prohibition of all export subsidies and that they develop effective disciplines on the use of agriculture export credits. The Canadian agri-food industry must be permitted to respond to market forces and opportunities without the burden of competition from heavily subsidized products. Canada should also attempt to negotiate limits on the use of export restrictions, as these restrictions are often placed only on the export of raw product, providing a cost advantage for foreign processes in procuring raw product.

• 0935

Future negotiations must lead to significant reductions in domestic agricultural support levels that distort production or influence trade. Blue box expenditures should be considered a transitional measure and should be eliminated altogether. While decoupled support payments distort trade to a lesser extent than price supports, these capital injections will quickly influence future production decisions in a capital-intensive industry such as agriculture. The extent to which such supports distort world trade needs to be examined and taken into account in future negotiations. Canada must also address the issue of domestic support issues within the context of international competitiveness and work to maintain the current countervail and anti-dumping exemption status for green programs.


Mr. Martin Parent: In addition to these issues, the multilateral negotiations present an opportunity to address other concerns our alliance considers very important. Specifically, these include the need to attain renewed commitments to ensure science- based sanitary and phytosanitary measures and guarantee that these technical restrictions do not become trade barriers to block imports or replace border measures which previously restricted market access, and working toward ensuring that science is the only basis on which countries assess the acceptability of genetically modified organisms and their products and that labelling requirements not act as a non-tariff barrier to trade.

Recently, agriculture ministers agreed to work with the industry to double Canada's agri-food exports and reach a target of four per cent of world agri-food trade by the year 2005. To realize the full potential for future economic and job growth, Canada must enter the upcoming WTO agriculture talks with a negotiating position that supports an internationally competitive agri-food industry.

We strongly approve of the role Canada is assuming within the Cairns Group and the opportunity to chair the Free Trade of the Americas discussions. However, in order to capitalize on this momentum, Canada must be seen as a credible participant at the table. Therefore, it is important to enter the discussion with a negotiating strategy that is consistent, realistic and achievable.

We appreciate the chance to provide comments on the public discussion documents and look forward to close consultations in the future. Thank you.


The Chairman: Thank you very much. Those were good presentations from all four organizations.

We are now going to go to rounds of questions. We will have well over an hour to do so, so we'll start with Mr. Hoeppner for seven minutes.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): Thank you, Mr. Chairman.

Welcome here this morning, gentlemen. I want to start where Mr. Penson left off yesterday.

During the 1995 beef import issue, when manufactured beef was coming in from Australia and New Zealand, I did some research. I found out that the United States is the only trading partner that we have a trade surplus with. We had about a $27-billion trade surplus that year, and we dwindled that surplus away to about $9 billion because of negative trade figures with other countries. As Mr. Penson mentioned yesterday, are you looking at this at all when you go to your provincial and federal governments? Are you using other levers than just agriculture to balance the trade issue?

When I see a country like Italy in 1995 importing our durum and then shipping back most of the pasta they manufacture, only to have a billion-dollar trade surplus with Canada, something is wrong. I'd like to ask each one of you if you have looked at any of the trade distortions when it comes to surpluses or negative balances.

Mr. Richard Watson: Our initiative is to open up trade opportunities. That is a step to removing the barriers that are put forward by our trading partners around the world, and that is something we're looking for as growth in our opportunities. The way to increase our trade balance is to open up markets.

• 0940

Mr. Jake Hoeppner: Are you not concerned that if you point these figures out to the negotiators, that we don't need Japanese cars if they don't need your—

Mr. Richard Watson: World trade is part and parcel. It's not a one-way street; it's a two-way street. That requires liberalization and a recognition that liberalization will lift world trade for everybody in the agriculture sector. By lifting world trade and removing impediments, we have an opportunity to raise the commerce level, to raise the income level for everybody in the agriculture sector. That's not only to raise the income level for Canadian producers; it's to raise the income level for world producers, for European producers, not in a subsidized concept, but in a consumer-oriented, market-driven response context. That's what we would like to see: the market paying fair value for the commodity, not governments paying subsidization or protection for inefficient components of the marketplace.

So in a very broad context, we are addressing what you are referring to, but as exporters and as an export alliance, of course, our initiative is aimed at trying to put forward the importance of making those changes in our trading partners' arenas. That can't be done independently without understanding how we are setting up our trade practices here.

Mr. Jake Hoeppner: I just want to further that a bit. The gentleman from the farmers' union pointed out butter oil. There was a loophole there that developed after the fact. If it had been closed, it would have helped somewhat in Canada's favour. So if we're going to bargain just on agriculture subsidies, I don't think we have a hope in hell in terms of getting anywhere, because we've bargained everything away on the agriculture scene.

Now, I'd like to hear some other responses.

The Chairman: I think Mr. Rockafellow has something to add, as does Mr. Affleck.

Mr. Greg Rockafellow: Thank you, Mr. Chairman.

Mr. Hoeppner, I'd like to agree with what Mr. Watson said. Recently, I pulled up a speech from the WTO director general—and I think his name is Renato Ruggiero. Not too long, he ago spoke about what has happened since the Geneva round of WTO. There has been an increase of income in the world of $500 billion.

We're obviously going to have to rely on trade, and there's a huge opportunity in the world today. It's going to be competitive. Yes, there's a lot of disparity with tariffs and everything else that's going on. But I think we have to keep our eye on the big picture. It's going to take a long time for those things to fall down to where we need them to go.

We are going to be an exporting nation. We have to be zealous in trying to open up those markets. There's going to be blood on the floor, like there is right now all over the world over trade. But the fact of the matter is that there's a huge opportunity. It's risen by $500 billion since the last round of WTO, and probably by more after the next round. I don't think we can idly sit back and say we don't want to be an exporting nation, because it's difficult.

The Chairman: Mr. Affleck.

Mr. Randall Affleck: There's no question that there's a trade surplus in our trade balance with the United States. In fact, I thought it was greater than $6 billion.

The point I would like to make is that we have to ask if liberalization of trade rules is going to increase farmers' income. Since 1989, we've been in the CUSTA with the United States. We've had this phenomenal increase in our exports, but farm incomes have trended down ever since. It just hasn't been working for producers.

In terms of the butter oil, I'll quickly respond to that. It's an example of a situation in which we negotiated a package for Canada, a deal to defend ourselves, and the spirit of the law was automatically abused. It's one thing for international countries to interpret it to their benefit, but I feel we didn't do that in Canada and that there was a breach of the spirit of the law.

The Chairman: You have about a minute, Mr. Hoeppner.

Mr. Jake Hoeppner: I have another quick question.

On the issue of the Wheat Board, I know there are different views. I get a little hot under the collar when I hear people say the Wheat Board made them $350 million, but without any figures. As you know, M&J Farms launched a case that was before the appeal court in Manitoba, but the Supreme Court wouldn't hear it. We proved that beyond a reasonable doubt farmers lost up to $54 a tonne that was never entered into the pooling system. The only defence the Wheat Board had was that they had no mandate to sell your grain for the best price; their only mandate was to move the grain in an orderly fashion.

• 0945

If we aren't going to become level-headed enough and at least allow the Auditor General to audit those books, the Americans are going to close the door, I can guarantee you that. We had better be vigilant of that. I'd hate to lose those markets. If we lose the American markets, we'll be in trouble.

How do you respond to that?

The Chairman: It'll have to be very short. We're out of time.

Mr. Randall Affleck: Okay. The number was $265 million and they were respected economists in Canada who did that. You can't move the Canadian wheat crop or barley crop on the peak market.

The Chairman: Thank you, Mr. Affleck.


You have five minutes, Mrs. Alarie.

Mrs. Hélène Alarie (Louis-Hébert, BQ): Good morning. My first question is for the representatives of the Canadian Alliance of Agri-Food Exporters. You stated that before entering the discussion, Canada needs to develop a consistent, realistic and achievable negotiations strategy. Shouldn't the committee be somewhat critical at the outset and, following the first round of negotiations, assess the situation or highlight the negative aspects before pondering a strategy?

For example, you mentioned that further work is required on non-tariff barriers. These issues are still unresolved and still on the table. Some discussions on phytosanitary products and labelling have been dragging on since 1991. You have a very clear idea of what you would like to see in the future, but shouldn't our committee first conduct a more comprehensive analysis of past results and assess the situation before going any further?

Mr. Martin Parent: I believe that we're on the right track and that we achieved some positive results during the last round of negotiations. The important thing now is to maintain our momentum and stay the course.

That's why we are calling for the elimination of tariff and non-tariff barriers. We are ready to face the opening up of world markets. Some countries resort to non-tariff barriers to restrict access by other countries, including ours, to their market. Therefore, it is important that we maintain our momentum and stay the course during the next round of negotiations.

Mrs. Hélène Alarie: As I was listening to the presentation by the National Farmers Union, one statement caught my attention, namely that our negotiators should be defending the position of producers more vigorously. It isn't everyday we hear something like that. You referred to the case of butter oil where producers had called on the government to take swift, concrete action. We heard that when it came time to negotiate, it was impossible to anticipate everything that could happen and this matter was left to the courts. The matter dragged on and losses eventually totalled $50 million. The situation apparently cannot be salvaged. Is it your impression that negotiators adequately defend the interests of producers at the table? Do you feel left out of or involved in the talks?


Mr. Randall Affleck: In response, no is the short answer. I believe the Canadian public and the Government of Canada on the surface want to protect rural Canada and the farmers there.

We represent small and medium-sized family farm members, and the results we are seeing in the hills of Canada are not benefiting producers. So in answer to your question, I don't believe our views are being represented.

• 0950

The Chairman: Is that it? Thank you, Madam Alarie.


Mr. Coderre:

Mr. Denis Coderre (Bourassa, Lib.): Thank you very much. My name is Coderre. It's an old Norman name. I agree that things aren't always black or white. l prefer to adopt a more balanced approach. On the one hand, I strongly support family businesses and I would like to find a way to protect them. That doesn't mean that I advocate protectionism. On the other hand, I realize that we must export our products to other markets and that markets must be opened up.

I'd like to continue in the same vein as my Reform Party and Bloc Québécois colleagues. One of the problems we have encountered is with butter oil. We have seen how this situation has evolved. No one is going to give us a free ride. Each time we pass legislation or propose new measures, there'll always be some country that wants to screw us. I don't know how the interpreters are going to tackle that expression.

With respect to transparency, everyone knows that the United States awards certain subsidies and that quite often, other countries pretend to be the offended victims. They play their little games while we always tend to be a little too fatalistic. Instead of agreeing to open up markets all at once and to allow a free-for-all, shouldn't we instead set some parameters in order to protect our own markets? We mustn't think only about the large producers, who represent billions of dollars, but also about the small producers who are represented by the National Farmers Union. There are many such producers in my province of Quebec.

Far from advocating anything extreme, how can we arrive at a balanced approach? This question is more for Mr. Watson from the Canadian Alliance of Agri-Food Exporters. There is another problem that I would like to discuss a little or on.


Mr. Richard Watson: I don't disagree that a balanced approach can be beneficial, but the balance we would like to see is a balance toward removing restriction globally and creating opportunity globally. I think a good example of that is one of the studies done by the Canadian agricultural industry and the Canadian government on liberalization of trade on oilseeds. It showed if we took a zero-for-zero approach in removing all tariffs on oilseeds globally, this would have the impact of stimulating consumption of edible oils and would raise the price of edible oilseeds by 5%. Right now on the commodity markets that are depressed, that's about $20 a tonne on canola seed, which is very significant.

Mr. Denis Coderre: So you're against supply management.

Mr. Richard Watson: Yes. We're looking more for the establishment of efficiency, cost-effectiveness, and competitiveness that will allow us to grow the marketplace and develop opportunity, as opposed to trying to protect—

Mr. Denis Coderre: But if you want a balanced approach, it's like we say in French vous jetez le bébé avec l'eau du bain. Don't you think we need some protections right now? If we're not doing so, you're going to kill the family farm.

Mr. Richard Watson: I don't think we're going to kill the family farm. I think we're going to promote the efficient farms, grow the good farms, and remove some of the government intertwining in the business sector. If you look at oilseeds in Canada, they have the least government support and the least restrictions, and they are the highest agriculturally priced product now that's giving the greatest opportunity for growth. It's because the market forces drive efficiency and growth. It's just where we're going.

If you look at even Internet access and globalization of everything, we have to be as good or better than everyone in the world. We don't do that by shielding inefficient markets. It has to be phased in and stepped out, because coming from a regulated market moving to a free market, it can't be done in one fell swoop in some sectors. Certainly, the areas that don't have support currently need to be promoted with more liberalized—


Mr. Denis Coderre: We must learn from our mistakes and to some extent, protect ourselves. I am not working in the interest of other countries. I am looking to expand our markets and I'm defending my bailiwick, that is my dairy, poultry and other producers.

• 0955

Since you appear to be saying that when it comes to non-tariff barriers, public health or environmental issues should not be invoked as reasons for blocking or restricting imports, I'd like to play devil's advocate. Have you forgotten sheep scrapie, mad cow disease, tuberculosis or other diseases that science is incapable of detecting immediately? Do you need to be convinced any further of the need to establish some public health parameters? We need to protect ourselves from other markets, otherwise we run the risk of ultimately encountering serious problems, like sheep farmers in Quebec. We don't know if this disease came from the United States or from somewhere here at home, but one thing is certain, if we don't protect ourselves from a health standpoint, the consequences will be felt directly by the public. We can't think like that, Mr. Watson.

Mr. Martin Parent: We are not advocating fewer safeguards in these areas, but we are recommending that once again, protection measures be based on scientific data. We can't accept a country's word that it is complying with phytosanitary protection measures when it is facing problems domestically.

Mr. Denis Coderre: Can you give me an example of one market, perhaps in Europe, where there is no free-for-all situation? They aren't about to look at a cow, determine that it is sick and decide to put to stop to everything. This is serious business. Can you give me an example?

Mr. Martin Parent: In China, for example, our producers must supply a certificate from a veterinarian attesting to the fact that their hogs do not suffer from any respiratory illnesses.

Mr. Denis Coderre: China is not a participant in the WTO negotiations.

Mr. Martin Parent: I was merely giving you an example.

Mr. Denis Coderre: I understand.

Mr. Martin Parent: However, China is not required to certify that its hogs are disease free. We are recommending that scientific proof be required and that conditions which they do not comply with in their own country not be imposed on us. We're not saying that the health of our consumers should be put at risk. We're not advocating a free-for-all situation, but rather science-based protection measures.

Moreover, I believe that by removing tariff barriers, industries that are competitive will have an opportunity to expand. In time, this will prompt some producers to recycle themselves into other fields.

Mr. Denis Coderre: You work with pork producers. Am I to understand that since a special program on the impact of production costs is in place in Quebec, we should forget about all of these producers for the sake of international negotiations, open markets and a free-for-all industry? Is that what you're telling us?


The Chairman: Just a short answer.


Mr. Martin Parent: I'd have to say no. We need to consider specific market conditions.


The Chairman: Thank you, gentlemen.

Mr. Breitkreuz has advised me that he has a commitment at 10.05 a.m., so in the spirit of accommodating where we can, I'm going to ask Mr. Proctor to delay his questions for five minutes. We'll hear from Mr. Proctor after Mr. Breitkreuz. We'll go to two members on the government side and then get back into our regular pattern.

Mr. Breitkreuz, five minutes.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much, Mr. Chairman. I appreciate that. And thank you, Mr. Proctor.

One of the main causes of the present farm crisis is low commodity prices caused in part by the oversupply of product, which can probably be traced back to subsidies of other countries, beginning with the European Union.

My question deals with aligning ourselves with our trading partners and seeking allies out there. In your estimation—I'd like all the groups to answer this—what are some of the factors that aggravate the other people sitting around the table when we negotiate? When we go to the international bargaining table, what factors aggravate them about our situation?

How can we strengthen our position? Can we, as part of the Cairns Group, do something in that way, or should we align ourselves more closely with the U.S.? Can we in some way mirror U.S. programs so there's more of a free and open market that would allow us to go to the international bargaining table with more of a unified voice with the U.S? Would that strengthen it?

• 1000

In essence, what can we do to have more clout when we go to that international bargaining table? I've put in a few suggestions there. I think that's one of the key questions we have to answer in order to avert these farm crises that tend to repeat themselves. This one is much more severe than most, but I think that has to be something we need to address.

Mr. Randall Affleck: In our brief, we encourage aligning ourselves with nations that want meaningful change in the WTO negotiations.

For the record, I want to state the concept again of food sovereignty. Every nation should have the ability to protect or ensure their domestic food production. In terms of the farm income crisis, it's worldwide; it's not just Canada and Canadian farmers.

I was in Australia in the spring and an Australian grain farmer from south Australia said it wouldn't be so bad if wasn't for all the subsidies Canada gets in terms of its grain exports. I said “What are you talking about?” We pit farmer against farmer on these issues. For the same reason, I'm of the opinion that we're aligning ourselves with the wrong crew when we align ourselves with the Cairns Group.

I know that's not the position of my colleagues across the way here, but the National Farmers Union takes the position that we should align ourselves with countries like India. You go to Mexico and Brazil, and a lot of the small farm organizations in different European countries are very much opposed to some of the direction that's being taken in terms of the WTO. We should push for something that's beneficial to Canadian agriculture and agri-food. From a farmer's perspective we really have to re-analyse who we align ourselves with to make changes in the WTO negotiations.

The Chairman: Anybody else?

Mr. Garry Breitkreuz: How would the rest of you respond to that answer? Would that cause more of an irritant?

Mr. Greg Rockafellow: When you look at what the European Union is doing, there are 350 million people right now, and after the enlargement they'll have 500 million people. They're going to increase their land base by 44% by bringing in Poland and some of the other eastern bloc countries.

I don't think there's any question. I know we've been in this bilateral trade dispute with the Americans and that absolutely has to stop. We have to somehow get the point to them, as well as the Cairns Group, that we'd better form alliances with some of those countries because the European Union's GDP is going to be greater than that of the U.S. The Americans don't seem to realize that right now. They still think they're the big brother on the block, but they're at risk like the rest of us.

The Americans are obviously worried about state trading agencies, whether it's real or just a perception they have. Obviously they've been after supply management as well. We'll have to try to work our way through some of those negotiations and get some harmonization between our countries, because if we don't, we'll be desperately at risk.

I was talking to a hog producer last night who was originally from Holland. As I mentioned, there are 350 million people in Europe and the average cost of agriculture is $800 for every man, woman, and child in the EU; that goes toward the farmer. We can't compete with that sort of subsidy, and never will be able to, so we had better find some alliances.

The Chairman: Somebody can have half a minute if they want.

Yes, Mr. Dewar.

Mr. Donald Dewar: In discussions with the department now, as we've been talking on different lines and different issues, the Department of Agriculture and Agri-food has been telling us “Well, on this line, these countries agree with us here and these countries agree with us here”. So these alliances end up working out when they get around the table because our negotiators—I think we have to give them credit—are identifying what countries agree with particular issues. So I think there are alliances being formed.

The Chairman: Thank you.

Now we'll go to the next round. I want to thank Mr. Proctor for his cooperation.

Five minutes, Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair. Welcome, gentlemen.

I appreciate that we're talking about the next round of the WTO, but we're obviously discussing it in the context of where farmers are today and we know, at least in this country, they're not in a very good state.

• 1005

To the Canadian Alliance of Agri-Food Exporters, I believe, Mr. Watson, it was you who said the goal should be to eliminate tariff and non-tariff barriers in the next round. What bargaining chips do you think Canada has left to achieve, other than perhaps righteousness at this point in time, given what happened in the last round?

Mr. Richard Watson: Well, I like the concept of righteousness as a starting point. To do what's fair and appropriate is a good starting point in trying to understand what I think all producers and the whole industry is trying to achieve. On a level playing field, I think Canada can be a superior contributor to world trade. I think we can grow the industries in many segments of farm production in Canada because we are more efficient and more capable.

Mr. Dick Proctor: I think we could probably all agree with that around here. But the fact of the matter is that as long as the Americans and Europeans are subsidizing to the extent they are, and we see no indication that's going to be reduced in any appreciable way—

Mr. Richard Watson: Precisely. I think that's the path we're trying to go down. We're trying to get global communities to remove subsidization and restriction. That requires some movement on our behalf in liberalizing our trade practices as well. I think our negotiators have put us on a good platform with the first round, and I think they need to continue that process. Whatever bargaining avenues they take, we need to strategize toward that ultimate goal of liberalization in trade restriction removal. What's going to provide opportunity is not protection for weakness, but having opportunity for strengths.

Mr. Dick Proctor: Mr. Chair, I'd like to hear from the NFU. I think they wanted to respond as well on this.

Mr. Cory Ollikka (Vice-President, National Farmers Union, (Alberta)): Thank you, Mr. Chair.

We dove into this a little bit yesterday when we talked about the farm income crisis. Clearly, there's a lack of discipline in the World Trade Organization as far as what has already been agreed to in terms of export subsidy agreements.

To answer your question in part, I don't think we should be moving anywhere until we have the discipline on those things that have already been agreed to. I think you have to look carefully as to whether economics and trade exist to serve people or whether people exist to serve trade and economics.

I think the trickle-down effect—people say this comes with liberalized trade—-to farmers clearly isn't working. That's not to say there shouldn't be trade, but trade, of course, must serve the society.

If you're liberalizing trade, there are two things. If you're talking about international competition, you're talking about competition with probably one of two things. As my colleague said, there are either heavily subsidized products in the world marketplace—these are subsidized, of course, by international governments—or you're competing with powerful institutions and corporations with massive market clout, which also restricts the flow of wealth back down to primary producers.

So you have to be very careful when you're liberalizing trade that you also restrict the flow of capital. The Bretton Woods Agreement of 1944, which sought to liberalize trade, also restricted and regulated the flow of capital. If you don't do both of those things in the same breath, you're ensuring that those power entities, those institutions and corporations that control world markets, will not produce for the benefit of the people of a country, because they don't keep the capital working in that country.

Mr. Dick Proctor: I just have one more question, Mr. Chair.

Thank you for that answer.

Hartley Furtran is a former deputy minister of agriculture in Saskatchewan who's now a respected agricultural economist at the University of Saskatchewan. A couple of weeks ago, he said that one of the reasons Quebec didn't seem to be in such dire straits economically with their agricultural sector was because they spoke with a unified voice for all farmers in that province.

We're talking this morning about forming alliances around the world with other like-minded countries. But do you think—I'll ask the question of these three groups I'm closest to here who are speaking for various groups of farmers—you folks can form any alliance internally that could speak with one voice? There's a lot of disparity. We've heard a lot from previous groups. This is so that our trade negotiators can have a clear understanding of what it is we should be doing in the next round. I'd just invite a quick answer from each of you, if I could.

• 1010

The Chairman: Very quickly.

Mr. Randall Affleck: I'll be brief.

I don't think it's realistic to expect a unified position on public policy issues in the public arena, not just in the farm community, but broadly based. Otherwise, a lot of our national problems would be very simple. I would always participate in a process of debate whereby we present our ideas and farmers vote. In the end I would respect that vote, however it went. But in terms of a unified position, I don't think it's realistic, quite frankly.

The Chairman: Just a short answer, Mr. Hacault.

Mr. Marcel Hacault: I think it might be possible on some common goals, and there are probably a lot of common objectives and goals a lot of groups could agree to. There will be some issues on which there will not be agreement. I don't know how we should deal with that, but we should at least focus on the commonalties we have among the groups.

The Chairman: We'll have to wait until another time for another answer. We'll go to Mr. Bonwick for five minutes.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Thank you, Mr. Chair. I guess, unlike my Norman friend here, I tend to be a little bit more clear-cut on it, coming from a rural riding.

I appreciate what Mr. Affleck has said, and I thought I would just take a quick moment and counter my colleague from the Reform Party, Mr. Hoeppner, who challenges orderly marketing systems despite the success that's been demonstrated over the years, citing the CWB and his ongoing difficulties with them as an example. However, there's certainly been a very positive result come out of the CWB.

One of the things you touched on was supply management and orderly marketing systems. Mr. Calder touched on it last week, I believe, as well. We take it for granted in many other types of industries, yet we seem to be averse to it in the agriculture industry. Many types of industries have orderly marketing systems and supply management programs in place, yet some sectors of the political body tend to be opposed to that.

The question I try to ask myself is what's wrong with knowing how much you have to produce, and therefore being able to efficiently manage it, meet the extremely high levels of quality that Canadians demand and expect, and in turn expect a fair price for it?

I haven't heard the pork producers talk about this, and if I've missed it I apologize. Have they given any thought to asking the committee or asking Ag to investigate the possibilities of implementing some sort of supply management system in that sector of the economy?

If you have that question down for the pork producers, I'll turn to my great concern over Mr. Watson's comments about a sort of completely open agriculture industry, a free-for-all, if I may—tariff-free, deregulated.

I wonder if you take this into consideration. Do you not worry about what we're witnessing—an ever-decreasing stability in the agriculture industry, as well as a decline of young persons either taking over family farms or buying new farms? Certainly you can tie different issues to that, but one of the main issues is the fact that there is a great deal of instability and uncertainty about the future viability of family farms. Based on what you're saying, that would be a stimulus to create more uncertainty. If you can't produce a product efficiently and be assured, based on the qualities demanded, to retrieve a fair price, then you can't stay in business.

We can't look at a farm, in my opinion, the way we can a car or a computer. It's a different thing. The sovereignty of our nation, our ability to live, is based on what we produce as farmers, and I think they should be treated accordingly and not thrown into the same lump as an automobile or computer manufacturer.

So there are some comments I would like to put forward—

The Chairman: The comments are going to have to be relatively short. I have to remind members, if you're going to use most of your time with questions, you're not going to have much time for answers. It's a matter of laying down your own priorities.

Mr. Watson, you have about a minute.

• 1015

Mr. Richard Watson: I think our desire for trade liberalization is in order to provide opportunities for the agricultural producer from the farm up. I think some comments were made earlier that some of the difficulty in the global markets is as a consequence of subsidization by other countries. When we're talking about fairness of trade and trade liberalization, we're talking about a fairness that goes beyond simply tariff barriers. It's government support and it's government involvement. If the marketplace can determine value without that international sport—and I think we all know who the big price depressors are overseas that create difficulty for us—and if our negotiators can work towards removing that impediment and that pressure on our marketplace, it's going to raise prices, and that's going to provide opportunity for Canadian agriculture, and it's going to support our producers.

The Chairman: Who has an answer to the original question?

Mr. Paul Bonwick: Excuse me, there was the pork group.

The Chairman: Oh, I'm sorry. Mr. Armstrong or—

Mr. Martin Parent: Regarding the pork producers, the answer is that with a fair trading practice around the world, the Canadian producers will have opportunities for growth. They will grow and generate more jobs for Canada and more income if we have a fair trading practice. That's why we want the elimination of the tariffs for other importing countries and non-tariff barriers.

The Chairman: Thank you, Mr. Parent.

We are out of time for this round. Now we're going to go to Mrs. Ur.

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

Mr. Watson, in your presentation you stated twice—so obviously you wanted to really flag the statement—that the negotiating strategy must be consistent, realistic, and achievable. Are you saying the last one wasn't?

Mr. Richard Watson: No. I think obviously you have to crawl before you can walk and walk before you can run, and I think we made initial steps that were good. I think we just want to continue on that path and develop and grow.

Mrs. Rose-Marie Ur: Also in your presentation you said that despite having a multilateral trade agreement meant to diversify the final destination of Canadian exports, our sales show an even greater concentration in the United States' markets today than in 1990. How would you propose we start changing that?

Mr. Richard Watson: As an example, in the oilseed industry, where we have our free trade agreement, we've doubled our exports of canola meal and, similarly, perhaps trebled the exports of canola oil. The industry has grown, with increased production and processing, and it has supported the agricultural industry. We just need to broaden that concept of open trading practices to include other nations, such as China and Japan, and to become a diversified exporter globally, with as few restrictions as we have in the U.S. Ultimately, that would benefit the industry and Canadian agriculture.

Mrs. Rose-Marie Ur: Turning to the representatives from the National Farmers Union, yesterday when you made your presentation you made the statement about the butter oil and sugar problems the dairy farmers had experienced, and today you said that our representatives have to be more pro-farmer, as Madam Alarie has also stated. Although I was a rookie MP in 1993 when this was going on, I was under the impression that the information—and this is what we've been told constantly during these WTO hearings—flowed from the primary producer to the— Mr. Doyle, I believe, was your representative over there. Are you saying that the information the farmers provided to Mr. Doyle was not presented at the table on the farmers' behalf? Government can only take the information that's given to it by their farm leaders.

Mr. Randall Affleck: The negotiators and the Government of Canada made a compromise. They converted non-tariff import barriers into TRQs, tariff rate quotas, and they did put in place to protect that industry a high tariff. The intent of that, ultimately, is to reduce those to zero. So the supply management industry was compromised at that moment. It hasn't gone to pot in the dairy industry yet, but it is certainly not as profitable as it was at the beginning.

For the record, I'll make a comment about Mr. Proctor's question about what do we have left. Everything they want to take, that is, a reduction in TRQs, an expanded or more concise definition of green box, an expanded definition of export subsidies—each and every one of them will hurt Canadian domestic policy in the effort for export policy.

• 1020

Mrs. Rose-Marie Ur: Right. I can appreciate what you're saying. I do believe what you're saying. But what I'm saying is, why did your representatives not see that and bring it to light?

Mr. Randall Affleck: Oh, I believe they did. I very much believe that they recognized their industry was compromised. But as for the protection, that was a Government of Canada decision.

Mrs. Rose-Marie Ur: Do you mean the butter oil and sugar?

Mr. Randall Affleck: No.

Mrs. Rose-Marie Ur: Well, that's what I'm saying.

Mr. Randall Affleck: That's one that slipped by everybody.

Mrs. Rose-Marie Ur: Okay, that's what I'm trying to get at.

Mr. Randall Affleck: Okay. For the record, here is my interpretation of the evidence I read from this committee on butter oil. There was a department member from a department that I forget. I think they were with the tariff line specialists or whatnot. Before they negotiated that, the importer came to them to ask whether having put the percentage at 49% for butter oil and 51% for sugar, this would come under that tariff. The answer was no at that time.

Then they went to the negotiations. They negotiated knowing full well there was a loophole. It wasn't necessarily the members who were negotiating and it wasn't necessarily the government. But that knowledge was there prior to that. Now that's my interpretation of what I read. To me, that's a crime.

The Chairman: One minute.

Mrs. Rose-Marie Ur: Back to Mr. Watson, you say your alliance is made up of the processing industry.

Mr. Richard Watson: Yes, there are 15 members throughout the processing industry in Canada.

Mrs. Rose-Marie Ur: And they're all just in the processing industry?

Mr. Richard Watson: Well, there are some associations as well. There are the Canadian Oilseed Processors Association, the Canadian Meat Council, and so on.

Mrs. Rose-Marie Ur: Right, so there's processing.

Mr. Richard Watson: It's their industry representatives.

Mrs. Rose-Marie Ur: I just find that—

Ms. Patty Townsend (Representative, Canadian Alliance of Agri-Food Exporters): Mrs. Ur, can I just—

Mrs. Rose-Marie Ur: I only have a minute.

Ms. Patty Townsend: If you have a minute, these are producer and primary processor representatives.

Mrs. Rose-Marie Ur: That's fine.

Your statement on supply management kind of irked me, to say the least. Does it not benefit you having supply management with constant quality-priced products so that you know what you're getting and you're able to do your job more efficiently due to supply management? God only knows what we would be in if we didn't have supply management today to help our farmers.

The Chairman: Please give a short answer.

Mr. Richard Watson: Again, my view is that we're looking for fair trading practices. We're not looking for destabilizing quality and substance in the industry, but for opportunities to promote and grow the industry. I think in an open marketplace we can do that.

Mrs. Rose-Marie Ur: It will be on the backs of supply management.

The Chairman: Thank you.

Mr. Richard Watson: No, I don't think it will be on the backs of anybody. I think it's an opportunity to add value.

The Chairman: Thank you, Mr. Watson.

Members, I'd like to finish this session at five minutes to the hour so we can start our next round on the stroke of 11 a.m.

We have five questioners listed. We have just enough time, I think, to accommodate all five questioners. We'll turn to Mr. Thompson for five minutes.

Mr. Myron Thompson (Wild Rose, Ref.): I'll be as fast as I can.

In my riding, I have a huge amount of barley growers, as some of you know. I remember back in the 1993-94 year when the continental barley market was opened. Things were flourishing. For the first time in years, the markets were producing dollars that were really beneficial to the group.

I also remember the door slamming shut. The competition ceased, and we were back to single-desk selling.

I went to conferences where buyers from the United States were attending the barley conferences that were taking place in Banff. They wanted to buy our product in the worst way. We did anything we could, as we wanted to try to get that to happen. But all that was stopped by these grain companies when they took the federal government to court and put an end to it.

I'm really shocked to hear that farmers and producers are being charged a cleaning fee to have their product devalued. That's a statement made by Mr. Rockafellow. They say it's because that's the way the system is operating. What kind of a system would slam the door on people who are trying to make a living and are successful at doing it when a certain thing happens but not when something else happens? The door gets shut.

Now we're back only five years later—it's less than that—to a time when we're living like we're in the 1930s with these same guys. We had progress. We opened the door. Things started happening.

• 1025

I'm sorry, but it just doesn't make any sense to me that those kinds of things would have such a neat progression and then our government, the courts, would slam the door on something that's so successful, something the American buyers obviously wanted to happen. Somebody's going to have to draw me a clear picture.

First of all, I'd like to NFU to comment on what the WBGA is saying, then on what I've said, and any other comments, and I'll be quiet.

Mr. Greg Rockafellow: Obviously, Mr. Thompson, that came from what we had to say. It was a difficult time. We had the continental barley market and the industry was revving up, and producers were actually quite happy and profitable producing the crop. Unfortunately things have changed.

I mentioned in our briefing that the Wheat Board will probably export only about 300,000 tonnes of feed barley this year. They used to export two million tonnes of feed barley. That has a lot to do with the circumstances on the world market, obviously. It has a lot to do with the circumstances regarding the quality of what we have delivered over the past couple of years. It hasn't been very good.

The fact is, I am producing 58-pound feed barley on my farm at .5% foreign matter. When it leaves Vancouver it's 46 pounds and 2.5% foreign matter, and I'm being charged $4.50 a tonne to clean it. That's ridiculous. The reality is if we don't get around that and improve this system, producers are going to quit growing the crop.

In the area I live in right now there are five compression plants for timothy hay that is being exported to the Asian market. Those people are making $205 a tonne to their farm gate and producing four tonnes to the acre. They're not growing barley any more. One of those five plants this last year sold 30,000 acres worth of timothy hay seed. People are going to quit growing the crop if the system doesn't change.

Frankly, I don't really care, but the problem is the cattle feed industry and our hog people are going to be brutalized if this continues to happen. I have options as a farmer. I can do an end run around the regulatory system when it doesn't benefit me, and I'm going to do it.

The Chairman: Mr. Affleck, do you want to say something?

Mr. Randall Affleck: In terms of blending the cleanings back into the barley, in the potato industry, as an example, we contract with a buyer for a certain Canada number one or Canada number two and we accept a certain amount. It's good business from a farmer's perspective to maximize the hundredweight as it's going out your door and maximize that revenue. The customer knows what they're getting in advance.

In terms of support, there was a vote recently on the barley issue, and I believe two-thirds of the producers in western Canada supported it.

The Chairman: I think we're out of time on this round. We'll now go to Mr. Calder for five minutes.

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

Mr. Watson, I listened to some of the things you had to say here. You said we have to crawl, then walk, and then run. You talked about fair trading practices and that level playing field and said our negotiators did a good job.

Maybe we should just take a little bit of a 1998 snapshot of where these negotiations went and just see what type of job was done. We know in the United States, for instance, they brought in the FAIR Act, the farm aid package, and dusted off EEP to the point where they're going to be supporting their farmers there in subsidies to the tune of $15.225 billion this year.

If you take a look at wheat, for instance, and just do a synopsis of what type of subsidies are attached to it, in Europe they attach approximately $116 a tonne or $3.15 a bushel in subsidies. In the United States they attach about $72 a tonne or $1.95 a bushel. In Canada we attach $15 a tonne or about 40¢ a bushel, and in Australia they attach about $13 a tonne or about 35¢ a bushel.

How are we going to get to the level playing field you were talking about and the fair trading practices? Do we just kind of sit there and tread water while everybody else catches up to us? Let's call negotiations what they are; it's the barter system. How do we do that?

Mr. Richard Watson: I suppose if I had a ready answer for that, I'd be one of the negotiators instead of one of the representatives of the export group.

• 1030

I think our negotiators are carrying forward some of the concepts in order to move towards fairer and balanced trade practices. At the heart of that is the distorting trade practices, which you mentioned in your figures. When we say fair and open trade, we're talking about equanimity for everybody to compete in the global marketplace. I think that's the direction we need to go in, and we need to have our negotiators pushing in that direction. I believe that is the direction they have been working towards. I also recognize that it's not something with the degree of restrictions we've had in tariffs, quotas, and so on. It's something that is going to take time, and it's going to go in various segments. The first segment we had didn't meet all our desires, but it was a start, and we need to continue on that path.

Mr. Murray Calder: Is there any other comment?

Mr. Cory Ollikka: Thank you, Mr. Chair.

Open trade is fine, and I don't think anybody has objections to open trade. Although farmers were very willing to believe trickle-down from open trade would work for them, what they realize is that it clearly hasn't. It's a question of open access versus market power, and I think from a farmer's perspective it would be a mistake for negotiators to go to the table and negotiate nothing more than open access to various markets that they may or may not get. Clearly, the high-priced markets are in the EU and U.S.

What farmers really need is to be able to have the freedom and ability to build their collective marketing power. This speaks to the Wheat Board issue as well. Clearly, the barley vote, which my colleague alluded to, points to the fact that farmers think the way they can best compete in the world market is by marketing collectively through—call them state trading organizations, if you wish; that has a Soviet ring to it—marketing arms by farmers directly.

It's an issue of access versus market power, and access clearly hasn't been working, because of the unfair trading practices you alluded to, Mr. Calder.

Mr. Murray Calder: Does anybody else wish to comment?

Mr. Marcel Hacault: Some of the members have mentioned that maybe we should be analysing or identifying the things that weren't fixed in the last round before we move ahead, but I think that's only part of the solution. We should move forward, probably through a staged process, towards determining harmonization rules and how we deal with the SPS issues and all that.

On the other hand, Canada should probably be more aggressive. As Mr. Hoeppner was saying, in our trade situation with Italy, why are we in a deficit position? Is it because of the trade rules or non-trade barriers? I think we have to be aggressive and try to identify why that is. Once we've identified why, we should put that on our list of things we want to address in order to have access to those markets.

The Chairman: That's it. We're out of time for this round.

Now we go to Madam Alarie.


Mrs. Hélène Alarie: In your presentation, you stated that Canada's domestic policies hampered competition and that agricultural policies were truly inflexible. Can you give us any concrete examples to support this contention?


Mr. Greg Rockafellow: With regard to the domestic policy, I wanted to point out the incredible difficulty the malt barley industry is in right now. I have talked to a number of people who are traders for large malt companies. One of them said to me a couple of weeks ago, I need to get 700,000 tonnes of malt barley and I can't do it. Obviously, we know the price of barley on the world market is very much depressed. The Wheat Board—and it's not their fault—set a pricing policy, an initial payment at a certain level, and because the world market fell below that, now maltsters can't simply buy any product and sell it on the world market. They'll lose money if they do that.

Domestically, I believe export malt people are paying about $190 a tonne. I don't know the numbers, because I'm not allowed to know the numbers. It's a secret. The price on the world market, I believe, is around $130 a tonne. They're forced to buy it for that $190 from the Wheat Board. They can't sell the malt in the export market. They'll lose money every time. We usually sell about 2.4 million tonnes of malt barley out of Canada out of a 13.5-million to 15-million tonne drop. This year we might make a million tonnes.

• 1035


Mrs. Hélène Alarie: I believe the witness had something further to add.


The Chairman: Go ahead, Mr. Ollikka.

Mr. Cory Ollikka: Thank you, Mr. Chair.

I think it's important to mention that domestic programs that are a hindrance to trade are not the issue. Trade as a hindrance to a nation's sovereign ability to protect citizens and farmers is the issue. We went through these discussions yesterday in the farm income crisis hearings: many are already living in fear of this nation's own ability to protect its citizens and farmers based on what is GATT-green or WTO-green or all the rest of it. There is no need for a sovereign nation like Canada to live in fear of what trade agreements say if you can then go to WTO negotiations with a say in what those agreements enable you to do in terms of protecting your citizens and farmers. The issue is that when negotiators go to the table, they shouldn't be prepared to trade away a sovereign ability to implement domestic programs.

The Chairman: Are you finished, Mrs. Alarie?

Ms. Hélène Alarie: Yes.

The Chairman: Okay, thank you.

Mr. Steckle.

Mr. Paul Steckle (Huron—Bruce, Lib.): As we get this round going, I apologize for missing your comments earlier. I was in another meeting.

I would like to clear something up with Mr. Affleck. The fact is that this current government did not have article 11 to negotiate. We came to power in 1993, and it was negotiated away two years before that. Much as we were led to believe it was there, it was not. That being on the record, I would like to take us into the next stage.

Basically, when we look back to where we were five years ago as compared to where we are today, world trade agreements were to make the playing field more playable or more level, if you please. When we look at where farmers are today, the sectors that have been supply managed are not at our door asking for help.

There isn't an industry in this country that doesn't manage itself. I can recall very well the time when Chrysler was in trouble many years ago. Chrysler had cars they couldn't sell, but they didn't give them away two for one because they were not able to sell them. They took them back, took the engines out, compressed them into steel, melted them down, and made new cars. That's what they did with them. We can't do that as farmers. As farmers, it's time we get our act together—and I should qualify that by saying that I'm a hog farmer, so I know what I'm talking about.

Mr. Watson, when I hear you talking about the impediments that are there, the impediment from your standpoint, as I see it, is the fact that you can't access enough product for nothing or cheaply enough. To me, that's an insult to farmers. Farmers today will produce all you want if you pay them the price. There's only one thing that matters to farmers, and that is the net bottom line at the end of the year.

When we negotiate agreements, the biggest impediment we have is foreign treasuries. If we can negotiate a deal in which foreign treasuries get out of the business of giving away subsidies, farmers in Canada will compete with the best in the world.

I want your comments on some of these things, even though I have a whole lot of things I could talk about. You mentioned impediments, but I think the impediment I suggested you were probably alluding to is in fact access to product.

Mr. Randall Affleck: I'd like to comment that the key to success in the dairy industry not requiring subsidies is discipline in production, and you mentioned that. I'd like to quickly quote Harlan Hughes, a North Dakota State University livestock economist. In a recent article in The Manitoba Co-Operator, his contention is that “the major problem with today's agricultural markets is something has to be done to fundamentally reduce supply of most agricultural products.” In terms of livestock, he goes on to talk about the record levels in cattle and hogs—and we also know about record levels in terms of grain production.

We know the current strategy is not working for farmers. As an alternative for farmers, why did Canada not take a lead at the WTO negotiations in terms of trying to get some kind of discipline internationally on supply? I don't believe we've tried that yet. I don't know how much success we'd achieve, but Canada can be a leader in these negotiations also.

The Chairman: Mr. Dewar wanted to say something.

• 1040

Mr. Donald Dewar: You mentioned the treasuries of the other countries. I had the occasion to visit with Mr. Franz Fischler when he was here in June. He made it very clear that European domestic policies were going to support agriculture. Under Agenda 2000, when they have to change their production subsidies to become green, the Europeans are going to pay them out as environmental subsidies and are going to increase them. We're dreaming in technicolour if we think we're going to change that, because it's a social issue to them. When we go to the table, we have to remember that.

I agree with the coalition. We have to define these green and blue boxes, and we have to make sure they're being used in the way they were intended to be used. In that way, we're doing things— We have to clean up the little loopholes that were in the last one before we start doing our running.

The Chairman: You have less than a minute, Paul. Do you want to use it by—

Mr. Paul Steckle: I'd like to know from Mr. Watson if he'd want to comment on those impediments that we spoke about.

The Chairman: Mr. Watson, you have a few seconds.

Mr. Richard Watson: When I refer to impediments, I mean the impediments to access to global markets that we could use to grow our marketplace.

We're quite aware of the pressure in the agriculture community in the hog sector. Hog growers are our customers. Soybean and oilseed producers in the segment I'm involved in are our suppliers and, in a way, our customers. What works for the agricultural community for the producer is to the betterment of the entire industry, which includes the processor and the grower. Our initiative is not to undermine the grower. We're looking for ways to provide opportunities to improve the benefits to everyone in the industry, and particularly the producers, since that's where the foundation of our industry is.

I don't say that I take exception to it, but I have some disagreement with the view that the trickle-down effect doesn't work. I think we need more of a flood than a trickle right now, but I'll give you an example. In the soybean industry in Ontario, when we used to have our negotiations with the Soybean Growers' Marketing Board and the processors, we would come head to head on what we should pay for beans. During the fighting back and forth, we realized at one point in time that we needed to get on the same side of the table. We had to try to develop policies that can grow the industry and approve our competitiveness. Through supporting the free trade agreement with the U.S., we've improved the access and growth of the whole oilseed sector. We've doubled the acreage in soybeans. We've kept the price at the highest level of any of the grain and oilseed segments in the country. These things have not been for the benefit of one and to the detriment of the other; they've been for the growth and support of the industry.

So we're really just trying to liberalize and give opportunity. It's not meant to undermine. It's meant to take a direction that's beneficial for the Canadian agriculture sector.

The Chairman: Thank you.

Just before we go to Mr. Hoeppner, I have a question for Mr. Rockafellow.

In your opening statement, Greg, you spoke in favour of what you called the global elimination of blue box programs. In a different part of your speech you said the European Union, in its Agenda 2000, is going to remove export subsidies and replace them with direct payments. You seem to favour that, but my understanding is that the direct payments are in the blue box. So on one hand you're in favour of the direct payments, yet you want the elimination of the blue box. Can you just clear that up for me, please?

Mr. Greg Rockafellow: Yes, thank you very much.

Don't get me wrong. I'm absolutely not in favour of the blue box. However, I also had a chance to meet with Mr. Fischler in Winnipeg. Mr. Harvard, I know you did as well at the Canada-U.S. Grain Summit in Banff. Last week, at the Going Global conference in Red Deer, participants were there from the EU. The blue box discussion came up at all three of those meetings.

I had the opportunity to sit at the table with people from the EU last week, and there is no way in heck that the EU is going to give up its blue box programs. We're already starting to see oats flooding from Europe and into the U.S. My fear is—and I believe this is the reality, but I hope I'm wrong here—that when Agenda 2000 comes into place, Europe is going to have the ability to market more product in the world than it has had in the past couple of years, since the reforms started in 1992.

So I'm not in favour of the blue box. I agree that Canada should try to get rid of the blue box in favour of green box programs—there's no question about that—but I think we had better be prepared when Europe doesn't do it.

The Chairman: Thank you, Greg.

Mr. Hoeppner will be our last questioner.

Mr. Jake Hoeppner: Thank you very much.

I want to go to a timeframe. I'm one of the MPs who had an uncle starve to death in 1922 in the Soviet Union, the richest country in the world at that time.

• 1045

I don't think we have overproduction. I think we have lack of distribution. I still see millions of people starving every day. One thing we have to acknowledge, and I'm glad I hear it here today, is that the Europeans are never going to allow their farmers to become not viable, whether it's green box, blue box, or whatever. That's a fact.

I want to ask each industry how much time do you feel you have to get agriculture in Canada to a viable position? That's what has to happen, or it will disappear.

Mr. Watson, I think, doesn't have as many problems, because, as he says, the oilseeds industry is pretty healthy, and if it wasn't for the oilseeds on my farm this year, we would be really starving. That doesn't hold true for the barley producers. I know they're doing their darndest not to get subsidies but to make it a viable enterprise, and probably it's the same for the other people.

So I'd ask each industry, how much time do you think we have to solve some of these problems if we want to become viable or stay viable?

The Chairman: Mr. Affleck.

Mr. Randall Affleck: In terms of time, it depends on the cooperation or the partnership with government in terms of moving in directions that achieve those goals that will benefit farmers and provide food sovereignty for countries around the world. Mr. Hoeppner's point about the EU is I think a bang-on analysis. They starve to death, and there's no way they're going to compromise on their farmers in terms of providing domestic food security.

I talked earlier about the Via Campesina. That's a growing international organization representing 37 countries around the world. A lot of them are very poor countries and are having trouble feeding themselves. This is not a situation of oversupply because of lack of need. It's oversupply because of lack of markets with money. This is what makes the current Canadian financial crisis difficult. How are we going to spend ourselves out of this problem? Where are the markets in terms of doing that? This is why the Via Campesina and a lot of governments around the world are pushing ideas of food sovereignty, that you protect your domestic food production base first and you export your surplus in a cooperative fashion.

The Chairman: Mr. Watson.

Mr. Richard Watson: I have heard that the philosophy of looking inward instead of outward can sometimes lead to some of the things that have evolved in the European Community, where they're trying to protect their producers. When they have excess, they don't know how to get it out of the market, so they subsidize it away. That provides difficult competition for us. That's the difficult competition we want to remove, and that's a trade negotiation: how are we going to get the Europeans to change?

That's probably going to mean we're going to have to change too and we're going to have to grow. We're going to have to grow through a process. Again, growers and producers can't say we're not getting enough for our money and people around the world are starving. The people who are starving can't pay for their food. We have to open up markets that are viable and can grow and that will grow the community. The more efficient we get servicing them, the broader we're going to spread the wealth globally. At the end of the day, I think we're all on the same page. We've just somehow got to get together and formulate the strategy.

Mr. Jake Hoeppner: I appreciate that.

Mr. Randall Affleck: May I make one quick comment?

The Chairman: Go ahead, yes.

Mr. Randall Affleck: In terms of getting money into the rural communities, when farmers make net farm income in the black, that's how you get money into the rural communities and that's how you give them money to buy food. That applies in Canada and it also applies all around the world.

The Chairman: Mr. Rockafellow, you wanted to say something?

Mr. Greg Rockafellow: Yes. Actually, just recently I went through some monthly charts that go back 12 or 15 years for most grain commodities, and what we see is that obviously in the last 5 years we have come down in price on commodities, but for the previous 10 years before that, we're actually a little bit higher.

We haven't talked today about the cost side of farming. We would be in far better shape if some of our costs were coming down.

We did apply fall fertilizer for next year this fall, and hydrous ammonia came down, but all other fertilizer costs actually went up from last year to this fall. I think we also have to put some pressure on the input side of agriculture and try to get some of those costs down. Chemical costs have gone up two to three times in the last two years. We have to deal with that.

The Chairman: Thank you.

I have one short question for Mr. Dewar and then we'll wrap this up.

Mr. Dewar, I ask you to hearken back to the clearly unwarranted and illegal obstruction of truck traffic just below our border back in the early fall. It probably helped Governor Janklow of South Dakota to get re-elected, but it was clearly intolerable to us.

• 1050

To me, it screams out for a better dispute settlement process. Don't we need something even better than that at least to nip these things in the bud very quickly? We need some kind of injunction so that when something like this happens, we can go to a court or whatever to get an injunction. Then we can take time later to settle a dispute of this kind.

Mr. Donald Dewar: I think it carried on a little longer than it should have. But in fact it was a demonstration of how the rules did work in our favour when the Government of Canada applied for rulings to the WTO as well as through NAFTA.

The Chairman: Yes, but it took many days.

Mr. Donald Dewar: It took too long. We were working very closely.

As you know, Keystone Agricultural Producers has members like Manitoba Pork, cattle producers, and all the livestock people as well. We were talking to their members. There was a minimum of hurt to our membership by letting them have their way. It was a nuisance, but it wasn't a high cost.

We were afraid at that time of irritating them any more. We didn't want to do that. We didn't want to tell them that we were still getting our hogs into Iowa at an extra $50 a load. We didn't want to tell them that the price of pork went up because they were afraid of a limited supply.

These things were beneficial to our producers. In fact, the system did work. I think there's room to improve it so that it wouldn't take as long.

The Chairman: Thank you very much. Thanks to the witnesses and the members. I think we were all very cooperative with each other today, and I think we covered a lot of ground.

I want to remind everyone that we'll be resuming at the top of the hour, at 11 a.m.

I know there's a tendency to chat, but we're going to have to clear the way for a whole new crew of representatives, witnesses. So we'll try to do our best.

Thank you very much. This meeting will resume at 11 a.m.

The meeting is adjourned.