AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 9, 1999

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[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): Members, I'd like to bring this meeting to order. We welcome the opportunity of coming to Vegreville today to meet face to face with farmers.

We've just come from Grande Prairie, where we had a very successful meeting for three and a half hours this morning, and we look forward to the same kind of experience here in Vegreville.

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Before I introduce our first round of witnesses, I'd like to provide the opportunity to my colleagues to introduce themselves, beginning with Joe.

Mr. Joe McGuire (Egmont, Lib.): Thank you, Mr. Chairman. Joe McGuire, Parliamentary Secretary to Lyle from Egmont, Prince Edward Island.

The Chair: Leon.

Mr. Leon E. Benoit (Lakeland, Ref.): Yes, thank you, Mr. Chair. I'm Leon Benoit. I know many of the people here this afternoon. I'm their member of Parliament.

Mr. Chair, if I could at this time just before we go to the rest of the introductions, I'd like to ask for unanimous consent of the committee to allow television cameras into the committee meeting. A lot of these people have come here to give us their message. I think it's important we get the widest distribution of the messages we hear today. We can do that by having all media possible so we get our message to people across the country, and in the cities.

I'll just ask you, Mr. Chair, if you could ask for unanimous consent of the committee to allow television cameras to televise what's happening here today.

The Chair: Thank you, Mr. Benoit. I would love to be able to do that, but there's a rule in the House of Commons. We need the blessing of the House of Commons to provide that. We can't do that as a committee.

Mr. Leon Benoit: Mr. Chair, in fact that's not accurate. This committee controls its own destiny, and if everyone on this committee agrees that television cameras should be here today, then they will be here.

The Chair: We can allow them to take cover pictures, but we can't allow them to tape the actual proceedings in the meeting.

I agree with you, Mr. Benoit. If we could do it I would. It's simply a rule of the House.

Mr. Leon Benoit: Again, this committee controls its own destiny.

The Chair: I'm just telling you, Mr. Benoit, that's the rule.

Mr. Rick Borotsik (Brandon—Souris, PC): Mr. Chairman, is Mr. Benoit asking that it all be televised? Is there a cable channel or something?

Mr. Leon Benoit: It would be a matter of... the television station from Lloydminster has indicated they are going to be here, and they would like to be able to freely cover the parts of the meeting they feel would be beneficial to farmers in the area.

Mr. Rick Borotsik: Mr. Chairman, with respect to the rules, I certainly don't have any difficulty in allowing the news media to cover it. I know the print media are here. We've gone through, what, six or seven of these now, Mr. Chairman? Really, it's a message that certainly has to get out. I don't think there are any state secrets that we'll be talking about.

The Chair: I couldn't agree with you more. It's just that we have to follow House procedure. We simply have to; we have no choice. I'm sure there are no state secrets. If the cameraman wants to come in and take shots right now while we're doing the introductions, that's fine, but we just can't record the proceedings. That's simply the rule of the House.

Would you like to introduce yourself, Mr. Breitkreuz?

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you. My name is Garry Breitkreuz. I'm the Reform member of Parliament for Yorkton—Melville in the eastern part of Saskatchewan. I am one of the critics in agriculture, and I've been travelling with the committee for the past week.

I too, Mr. Chairman, would really like to raise the concern about adequate coverage here. We had the cameras come in at the last meeting. I don't think it disrupted us in any way. I understand this has been done previously, and television has covered some of the meetings in the House of Commons if the committees have agreed to do so. I don't see the problem there.

The Chair: Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Good afternoon. I'm Dick Proctor. I'm the member of Parliament for Palliser in Saskatchewan and the New Democratic Party agriculture critic.

Mr. Rick Borotsik: Thank you, Mr. Chairman. My name is Rick Borotsik. I'm the agriculture critic for the Progressive Conservative Party. I'm the member of Parliament for Brandon—Souris. I represent Brandon as well as southwestern Manitoba, and I'm sure a lot of you have friends and relatives and people who farm down there. You'll recognize we've had a severe problem down there with respect to excess moisture and 1.1 million acres not being seeded. I think we'll probably get into some of that today too.

I should say to all the people in the audience my complete repertoire of Ukrainian.

[Editor's Note: Member speaks in Ukrainian]

It's nice to have you here.

The Chair: Thank you. I'm John Harvard, the chair of this committee. I'm from the great city of Winnipeg.

Mr. Garry Breitkreuz: On a point of order, could we compromise and at least have them in for a while?

The Chair: I indicated, as it happened at the end of the Grande Prairie session, gentlemen, if the cameraman wants to come in and get some cover shots, that's fine.

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I'd like now to introduce the first round of farmers, Arden Ziegler, Roger Epp, Victor Chrapko, and Gordon Graves, who's replacing, I believe, George Vachon. As we have in the past, we're going to go in alphabetical order, and that means, Victor, we're going to start with you. Welcome, and thank you for coming here for this.

Mr. Victor Chrapko (Individual Presentation): Thank you, Mr. Chairman.

I've taken a slightly different approach with my paper. I've handed you several copies. Again, I stress that it's different, but the message is there, I hope.

The first page of my presentation indicates where we are at present. Our family farm is on a tombstone, and that all stems from the parliamentary type of laws we have, everything from the WTO to seed patents to foreign subsidies to labelling laws, etc.

I'd like to go a bit into that. That's half a day's or a day's presentation in itself, as you're all aware. But we have to lay the blame where it is, as far as I'm concerned, from where I sit on the farm.

We have reduced ourselves to being slaves of some multinational interest someplace down the line. The experimental farms have been dismantled to the point where scientists have to compromise themselves because they're partnered. They have to partner themselves with somebody in order to get funding to do their projects, and I don't think it takes a rocket scientist to figure out what has to happen in some of their results. Even the slightest amount of skewing I have trouble with. And we see what is happening in Europe with GMOs, etc.

Just as recently as a week ago, when we were travelling up to the area you came from today—we were going up to Fairview—from nine o'clock in the morning until ten o'clock we heard an ad three times on our car radio by one of the major chemical companies advertising Roundup at this time of the year. The dust on my combine hasn't settled properly or hasn't been washed off and already we're being pumped to think we must use these chemicals, and I have a problem with that.

I also have a great problem with no price controls on these things, whether it's fertilizer or whether it's the GMO type of seeds. The seed patents are there. The farmers can't buy from one another because there are certain royalties these guys want. When we used to have our experimental farms doing this kind of research, every person had a chance to go and get the kind of grain they wanted, and it wasn't released in such a way that somebody could gain the maximum amount of money out of the farmer who is out farming.

The cost of production has gone through the ceiling now. To give you an example, our fuel prices have gone up about 50%, give or take a few percent, and that's since January. So again, the present policies we have are not addressing cost of production, and I'm referring to the farm aid programs we have.

The amalgamations of the major companies are doing nothing but giving it to the farmer in the ear, because they control the machinery, they control the prices, and they also own the dealerships. Again, in our good province of Alberta, the farmers had owned the packing plant, but there was pressure put on from government people to get rid of it. All we have to do is look at what happened to the prices since our single-desk selling system was taken away from the hog board and the major packing plant was also taken away from the hog board.

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We are told also that independent marketing is good for us, that I can take my grain, or whatever other product I have, anywhere and sell it. Well, I challenge that statement. We have proven that theory wrong so many times that it's almost a cliché in the negative.

First of all, I'll be the first one to say yes, there are niche markets, that we might get a little bit more for our products if we do it on our own, but in the overall picture we get less, for sure. Why am I so sure? I think all of you who are here know that farming is in a hell of a crisis in Canada, western Canada in particular. So if we're getting so much more as a whole, why are people going bankrupt? Just north of my place there are six people who are voluntarily going bankrupt because they can't make their payments. They got rid of their cattle and their pigs, and they are selling three-quarters of their land, hoping to be able to have a family farm to live on—the home quarter. The young fellow is out working, and dad is out working, and he's 65. It's a disgrace to us in this country that we can't even pay a person who has spent a lifetime farming enough money for their commodities.

Again, the reason independent marketing does not work is that, one, I don't have the skills myself to go and deal with the people in China, Iran, or wherever in the world, nor do I have the time or the financial resources. I'm speaking for myself as well as farmers as a whole. We don't have the time or the skills. Also, as an independent salesman out in the world wilderness, I'm very vulnerable to the large buying powers and the buying pressures—some call it market power—that are out there. I'm that little guy or little bug trying to get in and make something of it. I'm sorry, fellows, that doesn't work, and proof positive is that it's out there.

So what have we done? We have forced ourselves to get into a situation of corporate farms. What is it doing? It's shooting the farmer and the community itself into a non-viable or very dependent type of existence. And I'm talking of the small communities; I'm not talking of Toronto, Ottawa, or Edmonton. I'm talking of the Vegrevilles, the Two Hills, and these kinds of areas. We're in an economic pressure cooker. When these multinationals come in to farm, vertically integrated, there's no way I can compete, with my hog farm, against people like the McCains or Cargills of the world. I can't compete with those kinds of people.

Nor do these companies necessarily practise a sustainable type of agriculture. And I'm referring to being the proper stewards of our soil, so we don't load our soils with chemicals until we all have cancer, and then we try to find out why that soil won't produce and we load it with some more chemicals to try to combat the chemicals we have.

On the first page of my presentation, the bottom line again—for people who are in the crowd—is a broken heart. What are we getting out of it? And this is fact. We have bankruptcies, people leaving the farm, and rural exodus. What are we getting? We're getting suicides and family breakups. You've probably heard about one of the worst situations that we've had in Canada not too long ago, just north of here. So that is nothing short of negative for the community. And I think for every person in Canada there's a loud message that, yes, we have to take that tombstone that I put here in the middle of the page, the family farm...

Is there anything left for us? Is there a chance? I think there is. But it's people like you who have to have the will and the desire to commit yourselves to having good, healthy food in Canada produced by family farmers.

Again, on my second page—

The Chair: I just want to remind you, you've already gone more than 10 minutes. We have only an hour for this segment. We have three others, and we want some time for questions.

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Mr. Victor Chrapko: Mr. Chairman, if that's all that a lifetime of farming is worth to you, I'll quit now. Damn it, there is a whole slug of us in this country, and you guys can't give me 10 minutes, an hour, or 24 hours, when you guys can filibuster—not you—which cost us several million dollars in Ottawa. And now I can't even talk to present what my neighbours have told me.

The Chair: You have a lot of neighbours—

Mr. Victor Chrapko: Okay.

The Chair: —and I want to hear from as many as we can.

Mr. Victor Chrapko: So are you cutting me off?

The Chair: It's just a question of other people to be heard as well on the trip, that's all. If I had my way, I'd love to hear you for three hours, but there are other people as well.

Mr. Victor Chrapko: I'll go through this as quickly as I can, but I'm not going to run away from it.

The Chair: Well...

Mr. Victor Chrapko: What can we do for a healthy rural Canada? To produce our poultry, beef, and sheep, to produce our crops, we should have experimental farms that are supported by government taxation rather than partnerships. From there, we would get the expertise and knowledge of the present or most up-to-date things that we can do on the farms with the most advanced plans, etc. The way we could accomplish that is with marketing boards and farm-friendly legislation.

That would add to our community viability, because if you have a viable farm, you have your grocery stores and your gas and oil people. You have the economy rolling on that, on automobiles and farm machinery, on trucking. You have your schools, your RCMP, your medical doctors, and hospitals in the rural community. You also have the lifestyle. You have it all in rural Alberta, rather than centred in the ghettos of the large cities.

We also contribute to your gross national product. You have your jobs. You have the exports that lend themselves to all the other facets of the infrastructure. You get stronger Canadians, from the standpoint that they have self-pride in producing the good food that we have, and you have the domestic markets, you have a solid foundation for a solid country.

How can we handle that stuff? Again, that's for another meeting. I do feel there are ways to keep our prices on our commodities. We can lay on caps, we can lay on all sorts of things that can contribute to or steer toward good, fair production for the family farm. If we have money for doing the kinds of things that we do, for example, the Kosovo war, or the filibuster that we had going on, I'm sure we can put our heads to coming up with a program that makes sense and represents cost of production. And cost of production, fellows, must be in any kind of program we have. I cited you just one example of the fuel prices and how much they've gone up in less than a year, and your five- and three-year averages are not worth the paper they're written on, I'm sorry, in my opinion.

I'm sorry, Mr. Chair, that I've gone over my time, but farming is our way of life here.

The Chair: Thank you very much, sir. Thank you.

Roger, you're next.

Mr. Roger Epp (Individual Presentation): Thank you. I'm assuming that I'm addressing one of the best-rested groups of MPs in the country this afternoon.

I am not a farmer, although—to borrow a phrase—some of my best friends are. I teach at a small university in Camrose, an hour south of here, on the western edge of what is increasingly becoming the great Canadian outback—that is, the historic export grain-growing part of the Prairies. Many of my students come from small communities in Saskatchewan and Alberta, as I do, and much of my current research is into questions of rural political economy. It's built around the premise that where I am is one of the best places to watch unfold what we are coming to call globalization.

My interest is in the future of rural, farm-based communities and in thinking alongside the people who are struggling to live well in those places.

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Last week I had the terrific experience of being able to fly from Regina to Edmonton. From 31,000 feet, I could pick out my hometown and I could pick out the farmyards of friends along the route. It was amazing. When our family drove the same route in summer, we were driving on roads whose pavement was patched, potholed, and sometimes simply returned to gravel. We were virtually alone except for the big tandem grain trucks that crowded us onto shoulders when we met them, doing what used to be the work of railroads. We got the lesson that the future has arrived in the outback.

In my opening remarks, I want to challenge the idea that the farm crisis is simply about income and therefore is something that can be fixed with the right short-term bailout package—I think I will echo a lot of Victor's comments in doing that. At the edge of the outback, the farm crisis is more than that.

Number one, the farm crisis is about rural communities, as rail lines are abandoned and grain elevators come down, as the tax base shrinks, as populations age and decline—even in Alberta—as retail stores and government services like hospitals, schools, and post offices get consolidated into larger centres, as people who have volunteer energy wear out, withdraw into hard work, or move away.

Number two, the farm crisis is about the lack of leadership that can speak for a fractured agricultural community to a wider urban audience. It is about coming to terms with the national political irrelevance of the prairie farm vote and with urban-rural tensions that are ripe for manipulation. Farm people once got romanticized as the backbone of the country. Now they are perceived as parasites on the public purse and they feel powerless to change that perception.

Number three, the farm crisis is about fears for the future of what has been good work, work that feeds people, that engages parents meaningfully with their children, and that requires a range of skills. Now farm people talk about the prospect of becoming “bioserfs”, under contract to one of a handful of seed and chemical conglomerates.

They work great distances off the farm to subsidize their operations, sometimes in vulnerable rural professions like nursing, and then they face Revenue Canada reclassification as hobbyists for their trouble. They constitute perhaps the oldest occupation group in the country. Many of them are eating up what ought to be retirement equity, postponing what eventually will be a make-or-break period of generational transfer on the prairies. In that sense, the farm crisis is also about the immense psychological burden of maintaining a third- or fourth-generation family farm that is not merely a business but a physical anchor of home and identity.

Finally, I want to say that the farm crisis is about an acute sense of abandonment by the federal government, and I mean more than the symbolic cold shoulder that a prairie delegation got in Ottawa this fall. I mean something more like this: the federal government, for example, is poised to give up the last vestiges of regulatory rate authority over railroads that have already made it clear that grain is a commodity like any other—and not a high business priority at that. The government seems all too willing to play free trade Boy Scout with western grain, when, for the foreseeable future, its competitors won't.

The government's virtual surrender of agricultural research to the private sector, as has been alluded to already, and its enthusiastic support for the so-called biotechnological revolution, have helped create a situation in which seed diversity is dangerously limited and in which ambivalent farmers are suddenly caught in the crossfire of consumer boycotts and plant breeders' rights.

Urban perceptions aside, Ottawa's spending envelope in agriculture isn't increasing. It has dropped steadily and substantially downward. I don't want to leave the impression that immediate government financial aid would be a mistake in the circumstances—quite the contrary.

But if the AIDA program was particularly problematic, designed not so much, it seemed, to help farmers as to weed them out, there are difficulties with almost any short-term aid package. The largest beneficiaries, say, of a one-time per-acre payout would likely be creditors, which only makes the problem of what to do in this case more difficult. It wouldn't stop the migration from the farms. The beneficiaries would be creditors.

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So what we have to wrestle with, I think, is that the farm crisis is a long-term one, a multi-dimensional one, to the extent that it is about income. Let's not forget some elements that are within federal reach, that have been lost in the shuffle, like the very much higher freight rates that have hit western grain farmers in this decade. They has been conveniently forgotten. That's a huge income factor here.

To the extent that the farm crisis is about matters deeper than income—matters like community and leadership and farm work—it will be primarily up to farm people to find the collective resources to protect what they have. But federal policy can help or hinder that work, and I think we could get into that discussion later. I would echo the comments about the old experimental farms as having some virtue these days.

I'll say in conclusion that a surprising number of farm people, in our conversations, express envy at the European Union's political commitment to farm populations, even if they don't like the subsidies or what the subsidies do to them. As I hear them, they are not asking for special handouts. They are asking for meaningful political recognition of the importance of family-farm-based agriculture, and they deserve, at the very least—I say this as an urban person—not to be the sacrificial lambs of deficit reduction or trade talks.

The Chair: Thank you very much.

Voices: Hear, hear!

The Chair: Now we'll go to Gordon Graves.

Welcome, Gordon.

Mr. Gordon Graves (Agricultural Fieldman, Municipal District of Bonnyville): Thank you, Mr. Chairman and members of the committee.

I'm sort of in shock at what Roger said. He has said what many of us, over a cup of coffee with our neighbours, have said to ourselves. We could not understand how our political system could be so damn dumb as to not see the writing on the wall.

I am here to represent the Municipal District of Bonnyville. At the same time, I am representing some of the producers from northwestern Saskatchewan, in the Goodsoil and Pierceland areas. The area I'm representing also infringes a little upon the County of Lakeland and the County of St. Paul.

The brief I have brought down is one that we presented to the provincial minister, Ty Lund, after a drought committee was formed this summer for our region. I'm not going to go through all of the things in here. I am going to highlight some of the items.

The crop yields that are shown are actually significantly higher than our area sustained, because these numbers were done at the very start of the harvest and the southern portions of the regions that did have showers were the ones reporting in the numbers at that point. The wheat can be dropped: the low goes down to 3 bushels per acre instead of 20. For barley, the low goes down to zero, but the grasshoppers cleaned it completely. Oats go down to 10 and canola to 1.4.

Now, we are blaming the Europeans and the Americans for their willingness to abide by the Uruguay Round when our government hung us out to dry and did away with the Crow, the tripartite on red meat, and any other form of subsidy that was there to support us in international trade. I'm not saying on behalf of our group that subsidization on the international marketplace is fair, but it had damn well better be looked at in terms of our domestic market.

When we talk about hay, that's very significant for this region, because the northeastern quadrant of Alberta, which is Highway 16 north—obviously this facility sits south of Highway 16—to the Saskatchewan border on the east and the Highway 2 corridor on the west, represents 12% of the total breeding cow herd of this country—not of this province, but of this country. That's 12%, ladies and gentlemen, of all the breeding cows in Canada. That herd is being decimated. We do not have the feed in our area. We do not have the cash resources to pay the trucking. The feed is available. It's the trucking that is prohibitive. Trucking is prohibitive because of exorbitant prices of fuel.

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we see other natural disasters in this country: the ice storm in Quebec and Ontario, we saw the Red River flood, we saw abnormally high rainfalls in southwestern Manitoba and southeastern Saskatchewan. They are blessed because at least that gave them subsoil moisture. In our region, you can go down 18 feet with no subsoil moisture. If it rains this spring, we'll have a crop for one year. There are no guarantees for the future, none whatsoever. It's a sad fact that our governments cannot recognize, and it's a sad fact that our consumers, with the exception of Roger, cannot recognize, that food is the very first requirement to sustain life.

Why are we being hung out to dry by our governments? We should be taking a page from our competitors and rather than calling it a subsidy, calling it an enhancement or whatever, we can call it an environmental stewardship reward, because if we do not have the monetary funds this spring, not just in our region but across Canada, to put in the proper inputs that our crops need, the ultimate loser is the consumer. When you give the farmer a handout, which is the term I've heard repeatedly in the media, including from our federal minister, that is not a subsidy to the producers; that is a subsidy, ladies and gentlemen, to the consumer. And it is your job to represent us and make sure that message gets out there. Make them understand that they have two options, to pay four times the price they are paying now on the store shelf or to give it to us through the back door. That is the basic fact we have to look at.

We can liken this to the Lusitania. We're heading with a shipload of people, the captain and the navigators on the ship are the governments—plural—of Canada, not just the federal government, and we're heading into dangerous waters and we're about to be torpedoed. Surely to goodness, the captain and navigators on this ship have the foresight to turn us around before we're torpedoed and no longer exist. Remember, we are the basic requirement to survival.

The Chair: Thank you, Mr. Graves. Thank you very much.

Now, Mr. Ziegler. Thank you for your patience.

Mr. Arden Ziegler (Individual Presentation): Thank you, Mr. Chairman.

I want to say first I feel privileged to be able to sit in front of the committee today and maybe give you a few points for things down the road. But I'll have to start by saying I sympathize with my counterparts here in that I didn't have a drought this year, I wasn't flooded out, and I do have a crop to sell, even though it may not be at the price everybody would like it to be at. But my own personal situation is not quite as bad as some of the ones we've heard.

I think what I'd like to do, if it's okay, Mr. Chairman, is just talk about a few points that are more long term than short term.

I think everybody here has heard about the Kroeger report and all the different suggestions they have made about what we can do in our grain industry. What I'd like to emphasize is that I think the government has to take a hard look at this and make some definite changes in our grain industry. I know we've made some changes in the past, giving up the Crow rate, but there are things the government can do there to make all the different players in the grain industry responsible for their own part of the chain.

Right now, I think we, as grain producers, feel that we carry the whole ball. With everything that happens, it always comes down to us, and I don't think that is fair. I know there are some things in the Kroeger report that are big steps for government to take, and that governments, on the whole, do not like to take big steps; they like to study them before they take them. And a lot of times things get lost in the years down the road. I don't agree with all of it, but there are some parts that are good.

The second point I would like to make is that I think the government has to really get a handle on the international subsidies. This is one area that is really killing us on the world market. I know it's a big game for countries to come together and try to figure out a common set of rules for everybody, but I think if the government goes into these talks with the attitude that every x millions of dollars that they can get off the subsidies is money the federal government does not have to take out of their pockets to put into our pockets... A lot of people don't realize that those subsidies are a direct link to our income as grain producers. We have shown and proven as Canadian farmers that we can compete with most any country on a world level, but we have to have the same rules.

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The last point, and maybe one of the most important points for us, is that it's an agricultural crisis we're in, but I think it's more than that. I think it's a social crisis for western Canada and it affects, as was mentioned, all the small businesses and the small towns and everything else. It has far-reaching effects for western Canada that I don't think eastern Canada realizes. I don't want to get into this east-west thing because everybody mentions it all the time. But I think it is true that you don't have a feeling for what happens out here, and I think it's very important, because if we don't do something about this right away it's going to be a very big problem and I don't think that's what the federal government wants.

It's hard to know what's the right thing to do, but I think something has to be done and it has to be long term. It can't just be short-term programs. I know the short-term programs help people who are in a drought or have a disaster one way or another, and it's good. I don't know all the particulars about the programs because, as I said, I haven't applied for any personally because I just didn't qualify. But there are good ones. What I'd like to emphasize, if I could, is that in the long term government has to do something about agriculture prices worldwide.

Thank you.

The Chair: Thank you very much. Thanks to all of you.

Members, we have about 22 minutes for questions, so that's roughly six minutes for this first two and five minutes each for the next two.

Who's going for you? Leon.

Mr. Leon Benoit: Thank you, Mr. Chair. And thank you, gentlemen, all of you, for presenting here today.

Arden, I'd like to start with some of the comments you made. You've clearly identified solving, or at least making progress, in dealing with unfair subsidies that affect trade and have such a direct impact on our price. In fact, I would carry that farther and say that the very future of grain farming, in particular in western Canada, will depend on how much success we have with these trade talks. And if we don't have substantial success, then the kinds of things that Roger and Victor and Gordon have all talked about are going to get worse; they're not going to get better.

So I think you're definitely focusing on the right things there. Solving those long-term problems is absolutely essential. And there are no easy answers, as you said. We know that.

One thing that we in the Reform Party have been proposing since we've been down there, for six years, has to do with the elimination of the Crow benefit, and that was referred to. What we said was that part of the capitalized value of the Crow benefit should be put into a trade distortion adjustment program, which would compensate... not get into a war of treasuries, because we can't afford that. The Americans and Europeans doing that caused us enough hardship. But this trade distortion adjustment program would compensate for a loss in value, or at least part of the loss in value, due to unfair trade practices in other countries.

We were putting out a figure of about half of the capitalized value of the Crow benefit. Thereby, about $3.5 billion would have gone into this fund back when the Crow was eliminated. That of course would be a much larger fund now because it would be invested at good market rates. Under that scenario there would be something now that would help farmers substantially and I think would help head off some of the very difficult times we're having in our farm community right now. I think it's not too late to go that direction. In fact, I think there's a lot of merit in going that direction.

Now, that's one side dealing with the trade issues, and having this type of program in place that would help us through the interim, hopefully leading to more open trade, is one side of the issue. But also several of you have referred to the input side.

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Victor, you mentioned the cost of fuel. You know that about 60% of the cost of fuel is tax of one type of another. Lowering taxes would have a substantial effect on the input side, and that's certainly part of what we've been proposing, including user fees, which I see being used today as just another tax.

So looking at the tax side, and freeing up some, making it a little easier for farmers, a little less red tape, I think... Arden referred to the Kroeger report, and I think that type of thing certainly would have a very positive impact too. I think you've talked about a lot of the problems and mentioned some of the possible solutions, and they're on both sides. I think this is something that's clear.

I would like you to respond, maybe starting with Arden, and we'll see how far we get. I know my time is short. I would like you to respond to this idea that as we're working on trying to deal with the unfair trade, we'd have some kind of a trade distortion adjustment program that would compensate farmers for a loss in value that could be attributed to unfair trade. What kind of impact could that have?

Then on the other side there's the issue of the taxes, and in particular trying to lower input costs through taxes, and lowering unnecessary red tape—that type of thing.

Mr. Arden Ziegler: I don't know figures and whatever, but I think basically as a government you have to realize that Canada was always and will be a net exporter of grain. I know value-added is good in processing and all that stuff that we've gone through ever since the Crow rate has come off, but if you have it in your priority that you're going to tackle these situations and problems in terms of Canada being an exporter, then some of these problems may get worked out. There's no way we can consume all the grain we produce in this country. We just don't have enough people to do it.

The thing that's hurting us the most, as Leon said, is the subsidies and the world market. We have to sell our grain into that world market, and as long as the Europeans keep subsidizing wheat at $150 a tonne, we're dead in the water.

The Chair: You have one more minute to go, Leon.

Mr. Leon Benoit: Would any of the other gentlemen like to respond? I would like to hear from you on that. Again, I heard a lot about the problems, and I heard a little bit about the solutions, but we have to come up with more proposals for solutions.

The Chair: Gordon, you have under a minute.

Mr. Gordon Graves: I hate to rain on your parade today, Leon, but it's very utopic to think that we can compete with the Europeans and even sway the way they think on food issues, because they've been hungry. Fortunately, and yet unfortunately, here in North America, and in Canada in particular, we have never been hungry. We have to recognize the fact that agriculture in this country is more than just grain production. We have to get our collective acts together and realize that we have two basic things in agriculture that unite us.

The first is the soil and our love of it. The second is the fact that I'm not just a grain producer, I'm not just a cattleman, I'm a producer of a commodity called food. We damn well better get our acts together and quit shooting each other in the left foot and look at the whole picture.

The Chair: Thank you, Gordon.

Joe McGuire.

Mr. Joe McGuire: Thank you, Mr. Chair.

A year ago this month there was some heavy pressure coming from the farming communities across Canada to come up with a disaster relief program because of the precipitous drops in grain and hog prices. So here we are a year later and we've announced a number of times that program of $900 million federal, $600 million provincial. We've topped that up with $170 million just recently. We see on the charts hundreds of millions in NISA. We're still sitting on a $1 billion worth of AIDA money that can't seem to be accessed.

Where did everything go wrong here? There's all kinds of money sitting in accounts, whether private or public. The wrong people seem to be able to, or the right people can't seem to be able to, access dollars. Those who don't seem to need it are sitting with fairly substantial NISA accounts. If you look at the Alberta statistics, there are hundreds of millions in NISA that are not being drawn on, like $48 million when there's $500 million available.

• 1615

So what have we done with our safety net system? That's why we're out here, to figure out how effective our safety net system is, and obviously it's not very effective. It seems to be directed to the wrong people.

So I want to ask you, how do we redesign this thing, especially if a new long-term disaster program is going to be contemplated? Almost every place we've gone, the talk has gone from safety nets to the health and viability of our rural communities, that the trend has been to large farms with fewer people.

In Grande Prairie this morning, they were talking about an area that had 50 families in 1960 and now has four left, and this seems to be a North American trend.

Maybe, Roger, you might have some explanation there, and maybe the farmers here can direct us as to how we can redesign the dollars we have.

Mr. Roger Epp: You see, if I knew the answer to that, I'd be doing well.

I suppose if one were going to look at this from the point of view of an agricultural economist, one would know there is an inverse relationship between farm productivity and rural communities, that the more productive in a very narrow sense that you make farming, the more detrimental the effect is on farming as a social activity. That's one of the difficulties here.

In terms of the question of what we have done with the safety net system, I would date it all back to the winding up of the Crow. In some ways that was the decisive moment for western agriculture, and we're just seeing the unfolding of that.

Mr. Benoit has indicated just how much money is involved on an annual basis there, and I suppose the virtue of your suggestion is that at least it would keep in front of people the amount of money that is now being taken out of the pockets of western producers that wasn't before. There's a huge start on that program, and it doesn't get at the solutions.

But I think we're living that legacy now. That's an important part of the story. I think the biggest input cost there is for farmers. So I think that has to be in the mix somewhere, the grain transportation side.

Mr. Joe McGuire: A program like NISA would seem to be cash-rich, but nobody seems to qualify who really needs it.

Gordon, do you have any ideas?

Mr. Gordon Graves: Yes. Actually, part of the problem with NISA is the way the whole thing is structured. It's structured too much like the disaster program we have here in Alberta, and it's rather unfortunate the federal government took it to be such a saving grace, when we knew here in the province it didn't work. Rather than mimic the program, they should have spent a little more time and tried to draw up something that was more functional.

I would like to point out too, when we're talking about the Crow, that the Crow encompassed a whole lot more than grain. It encompassed other commodities such as compressed timothy hay, alfalfa pellets, boxed beef. It was a far, far wider-reaching disaster than most people are willing to admit to.

The Chair: In 30 seconds, Victor, can you handle that? Do you have a thought on NISA?

Mr. Victor Chrapko: My thought is that it wouldn't work, because I see it almost like a retirement fund. If you put money into it and you know you're going for broke, are you going to take the last penny out of your account to go broke?

But I think it goes back to what a couple of gentlemen here have suggested, that we'd better get our own house in order and not worry about free trade, etc., because we must address the problems we have here. Tripartite in the meat industry was one of the programs that seemed to work reasonably well, and those kinds of programs that hopefully reflect the cost of production. I can't stress that enough, because you can set up any kind of program you want, but if you don't have cost of production, what's the good of going five years back?

The Chair: Thank you very much.

Mr. Proctor.

Mr. Dick Proctor: Thank you very much, Mr. Chair. It's a pleasure to be here.

• 1620

Mr. Epp, this is the eighth meeting we've had this week, and I would say the vast majority of presenters have told us they need two things: an immediate cash injection and then a longer-term program. Most of them favour some kind of a broad-based, acreage-based payment, but certainly a longer-term program.

Now, you're probably saying the same thing, but you noted that the major beneficiaries of the short-term, immediate cash injection would be the creditors. So how do we reconcile the need the farmers have for cash, the desperate need they have for cash now, with the realization, your realization, that a lot of it would immediately go to pay off debts?

Mr. Roger Epp: I think maybe you say part of the short-term crisis is the debt crisis, and you swallow it.

Mr. Dick Proctor: Yes. But it would suggest to me that the two have to happen in a pretty short period of time. We have to have the short-term cash injection, and then we have to have the long-term program in place so people don't starve to death while they're waiting for the longer-term program to kick in. Would you agree with that?

Mr. Roger Epp: I think I would. I don't know that I want to venture a whole lot into this territory, but it strikes me that whatever comes out of this will probably have to have some per-acre component to it. I think if the interest in sustaining rural communities is part of the picture, then maybe there would be a cutoff or a diminishing per-acre payment at the upper end as well. I'm not sure how that would fly.

I do think on top of that there are some signals that could be sent, and one of them might be the idea of experimental farms. Find a way, maybe a low-cost way, of giving people alternatives other than the ones that are being advertised down their throats.

Mr. Dick Proctor: Okay.

Mr. Ziegler, in answer to Mr. Benoit's question, I think it was, a few minutes ago about international subsidies, European-American subsidies, you sort of threw up your hands and said what do we do, we're dead in the water. And the reality of Seattle last week is that we're probably 10 years away before we're going to have the thing sorted out, if at all. So what do we do in the meantime? We certainly can't afford to wait 10 years, based on everything we've heard this week.

Mr. Arden Ziegler: No, you're right, we can't. I don't know. I don't have the answer for that. All I know is if you're going to be a net exporter of grain and compete with the world price, you have to have a fair playing field—

Mr. Dick Proctor: Right.

Mr. Arden Ziegler: —and we don't.

Mr. Dick Proctor: So would you then be prepared to go further and say that until such time as we do have a level playing field we don't have any other choice—

Mr. Arden Ziegler: Sure.

Mr. Dick Proctor: —except to put some money in to protect our own farmers?

Mr. Arden Ziegler: Exactly. No, I'm not ruling that out. The statements I gave were long term.

Mr. Dick Proctor: Right.

Mr. Arden Ziegler: We have to solve this problem somehow. But in the meantime, we do have to deal with the crisis we have now.

Mr. Dick Proctor: Okay. Thanks.

The Chair: Thank you, Mr. Proctor.

Just before we go to Mr. Borotsik, I just want to indicate that the next witnesses will be Henry Kowalchuk, Adam Campbell, Earle Rasmuson, and Gregory Ibach. We'll call you as soon as Mr. Borotsik has finished his questioning.

Rick.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

I was going to Arden first, as well, on that question. You still haven't, in my opinion, given me anything I can go home with as to what's necessary in the short term. And maybe you can't come up with a number, Arden, but let me give you one little piece of information.

I was at Seattle. I talked to the European parliamentarians, as did the chairman. I can tell you—and I don't want to be negative, I'm not a negative person—that they're not going to move off their agricultural philosophy and policy. And that's what it is.

So knowing that and knowing we're years down the road, what can we do in the short term? We have AIDA. How many out here have made an AIDA applications? Okay, about 20. How many have been approved? One. Good. The rest are all in cattle, I take it, so you didn't qualify for AIDA.

A voice: We're all in grain.

Mr. Rick Borotsik: Okay. What do we do in the short term? We have the AIDA, which is an ad hoc program, which is flawed, which is not working, for any numbers of reasons. What can we do, Arden? What can we do to help?

• 1625

Mr. Arden Ziegler: I really don't have an answer for you. You mentioned cutting down expenses, the inputs that farmers have. That's a way to do it too, but other than an acreage payment or a per tonne payment or something...

Mr. Rick Borotsik: Okay. That has been mentioned, by the way, an acreage payment, a per tonne payment, maybe the transportation subsidy given back in another fashion on the tonnes you transport.

Roger, what I was alluding to is that in Europe they have this wonderful vision and philosophy about agriculture, which we don't have here in Canada and probably haven't had for quite a while. You talked about it being more than planting a seed and growing grain. Agriculture is about the environment and about endangered species legislation and habitat. Agriculture is about rural lifestyle and living, and that's one of the major cornerstones to the European philosophy, to keep people in the rural areas in that lifestyle.

How do we educate the urbanites that it's more than just growing seeds, and what value should society in general place on those other functions of agriculture?

Roger, you're the academic. I expect you to answer this, and I expect you to help us fix it.

Mr. Roger Epp: It's a curious thing to me why that is such a hard sell in this country.

Mr. Rick Borotsik: How do we sell it?

Mr. Roger Epp: I'm not sure I know that. Even in this province... This province is one of the most urban in the country by now, and the urban-rural divide is getting wider. You go to Calgary. I think most of Calgary doesn't have any connection with rural Alberta any more. It's a funny dynamic.

I think in some ways we share a mentality with the United States. We've been raised on a kind of cheap food policy, and it's very hard to move away from that. Maybe it won't be the salvation of large-scale agriculture, but the consumer concerns that are wafting over from Europe may be the kind of thing that can put farmers into some kind of relationship with immediate consumers, where consumers actually start getting concerned about where their food is coming from. That may be a slim possibility, but it seems like the one possibility to actually—

Mr. Rick Borotsik: Gordon, in your dissertation you touched on this. Do you have any comments about where we can head with this, with an education of the urban dwellers?

Mr. Gordon Graves: Actually, I may be a little bit radical in my thinking, but I would take another tack and come from a different direction.

I know the Province of Alberta is saying we have 30,000 too many farmers. My answer to that one would be that if you take those 30,000 farmers out of the province of Alberta alone, you're talking about a small city, between the families that are directly affected and the ones that are indirectly affected through the trickle effect of three jobs and the percentages that are there.

If we point out to them that if you take 30,000 farmers out of Alberta, and Saskatchewan obviously doesn't have the population but take 20,000 out of them... We can work the numbers out, but 30,000 farmers displaced in Alberta, between the displacement on the farms and the demise of rural Alberta, works out to be, believe it or not, a scary number of 480,000 people looking for a house, for food, and for a job. Maybe that's the tack we should be using—hit them in their own damn pocketbooks—because as a farmer, I'm used to working long hours for diddly-squat and surviving.

Mr. Rick Borotsik: Okay, I asked another question: what kind of cash value can be placed on that by society?

In my opinion, society has to pay for what they ask the farmers to do. We have a carbon sink right now. Agriculture and the environment is going to be a major contributor to the carbon sink. What value should be placed on that, and how do we get that value into a cash value in the farmer's pocket?

The Chair: This is the last answer, and I want it to be pretty short.

Mr. Gordon Graves: Cash value, $25,000 per farm, right now.

The Chair: Thank you.

Just before you go, Rick asked the audience how many had received AIDA payments, and few hands went up.

Mr. Rick Borotsik: One.

The Chair: This has been asked before, and it's always the same thing. Few hands go up, yet in Alberta $68 million has come in so far, and in the last week, according to the statistics I have, there have been five claims in the province. So it's interesting.

Anyway, thank you very much. I really appreciate your comments.

• 1630

We must move on to the next round, with Henry Kowalchuk, Adam Campbell, Earl Rasmuson, and Gregory Ibach. Thank you, gentlemen. Welcome to all of you.

As we always have, we'll go alphabetically, unless there's some strenuous objection. Mr. Campbell, you can begin, and thank you for coming.

Mr. Adam Campbell (Individual Presentation): Thank you, Mr. Chairman.

For a start, I think I must be one of the stupidest people in this room. I came away from Scotland, as you can tell by my accent, to farm in Canada.

One of the things I'd like to say before I start is that we hear a lot about subsidies in Europe. European farmers need the subsidies as well, as I know from talking to friends back home and from my own personal thinking. I left because I could not make money farming in Europe. The only thing we have going for us is high land prices, and we can hang on for a little bit there.

What I'm going to fit in here is that a few of us last week were rather concerned about what has happened, so we got around our table. I'll read the statement we have come up with.

Farming in western Canada has always held a degree of risk, risk from weather or from market prices. However, over the past number of years, new risks have evolved that are even more devastating than the vagaries of price and weather. These dangers include the naive removal of support systems that gave stability to family farm operations, such as the Crow rate, the Western Grain Stabilization Act, and the gross revenue insurance plan. Also, plant breeder rights and the duopoly of the railroads give great cause for concern. Even inspection fees and Canadian Grain Commission fees, once financed by government, are now shouldered by farmers.

Grain and oilseed prices are depressed to a level where the average producer cannot make ends meet. All predictions indicate that world surpluses will keep prices depressed for several years.

This income crisis is very serious. We are apt to lose many good farmers and community members. It will change the outlook of the family farm in western Canada, and unless some hope is provided, this will drastically change the face of the Prairies. What will we pass on to future generations? Will we have a few huge farms with not enough people to support our local communities? The land needs families living on it. They nurture each other. It is very important for the country that our communities remain viable. Depopulating the land is not a desirable future.

Farm inputs in this country bear no relation to farm commodity prices. It often takes a bin full of grain for some relatively minor repair. Farm produce prices must be comparable with subsidized exports coming from competing countries. Fuel prices are rising. CP, CN, the banks, and the chemical companies all charge rates that ensure a high rate of return for their shareholders. If competition is to be relied upon to keep corporations from overcharging their customers, why are railways, banks, and chemical companies making such huge profits?

The Canadian public should not complain about a policy to support agriculture. Petroleum companies have been given subsidies and incentives during times of depressed prices. Even auto workers make very good wages in part because of the high import duties on foreign cars. It is just as important to the Canadian economy that we have a healthy agricultural sector. Some government money will need to be invested to protect that sector.

Many agricultural supports have recently been phased out. The Crow rate, which enabled us to move our produce competitively to tidewater, was eliminated at a time of high prices. That has probably cost the average farmer about $20,000 a year. The Western Grain Stabilization Act would have been a great help for farmers this year.

Big corporations—railway companies, grain companies, chemical companies, plant breeders, and banks—are playing an ever-increasing part in shaping agriculture and agricultural policy. They have money to provide for public relations people and advertising. These groups are promoting their own interests rather than farmers' interests. The Western Canadian Wheat Growers Association, for example, is supported by an extensive list of corporations determined to achieve their own agenda.

• 1635

An issue that would benefit farmers immediately would be the rejection of the Estey and Kroeger reports. I've tacked on something that was in the newspaper, which I thought might be of some interest. These reports are a good example of corporate manipulation that overrides the best interests of farmers.

Another example is plant breeders' rights. Legislation on these rights will make it increasingly difficult for farmers to have any kind of control over seed and chemical costs. As plant breeding becomes more concentrated in fewer and fewer hands, seed and chemical costs will inevitably increase as much as the trade will bear. Public breeders must be maintained, because all society has the potential to benefit from improved varieties. Each beneficiary should have a say in the system. Farmers are often ill-equipped to lobby for their own best interests.

What are the solutions? Other countries have helped their farmers to meet their costs and improve income by providing export and production subsidies. It is very unlikely we will get these powerful countries to eliminate these supports. Consequently, if Canadian agriculture is to be competitive and survive, our government must provide support relative to the support provided by our competitors.

We need short-term aid now. This will allow for the survival of the family farm through this present crisis. Perhaps an acreage payment using the Crow buyout infrastructure could be a solution. Also, we need a longer-term plan that would maintain profitable farm incomes. Aid could be based on support provided to farmers in competing nations.

We understand there is no easy solution to this global farm crisis, but this is the time for imaginative and strong leadership from our politicians in order to maintain a viable rural community.

Thank you.

The Chair: Thank you, Mr. Campbell.

Now we go to Gregory Ibach. Welcome.

Mr. Gregory Ibach (Agricultural Fieldman, Lakeland County Council): Thank you. Good afternoon, ladies and gentlemen. I'm here on behalf of the Lakeland County Council, the Agricultural Service Board, and also our ratepayers. I'm presenting their views and concerns.

Farmers in Lakeland County experienced one of the driest crop years in history. Hay and pasture yields were approximately one-third lower than average yields. There were some basic herd reductions.

We do appreciate the tax deferral for 1999 income from the sale of basic herds. However, we would appreciate some consideration for farmers who may have to sell two calf crops in one year due to the drought conditions. The tax deferral should have been announced months ago, and we should have been given more details. It has been done in the past. Why not this year?

The drought assistance programs announced by the federal and provincial governments are not providing the needed cash for those farmers experiencing drought conditions. The loan program announced by the Alberta government will in some cases provide some cashflow, but it must be repaid at some point. The changes made under the FIDP program for 1998 will not help most livestock producers for that taxation year. If the changes made for the 1998 crop year are considered for the 1999 year, some more cow-calf producers will qualify. The programs do not provide the cashflow at the time it's most needed.

The disaster programs are not injecting cash. Producers are concerned about the 1999 crop year, and expenses are due this same year. Disaster programs currently have a one-and-a-half-year lag time. Producers will not collect for 1999 until the spring of 2001. By then it will be too late for many producers, especially if 2000 proves to be as disastrous as 1999.

Low commodity prices for cereals and oilseeds. Low commodity prices have forced farmers to use equity as a means of continuing operations on the farm. It is extremely difficult for farmers in western Canada to produce and match subsidized prices in Europe and the U.S. The federal government must attempt to level this playing field. U.S. producers are subsidized approximately 33¢ per dollar. The EEC is even worse at 56¢ per dollar, and here we are in Canada at approximately 9¢ per dollar. How can we compete with that?

This cannot continue in the long term or even in the short term. This crisis is here now, and it needs to be dealt with in no uncertain terms.

FIDP and AIDA provide funds to the farm industry, but not necessarily directly to the farmers. The levels are much too low. Farmers need to be below 70% of their income margins based on the best three of the last five years. In our case, four out of the last five have been disastrous.

• 1640

In plain English, they have to lose over 30% of their income in order to trigger payments to bring them up to only 70%. This is not acceptable. Very serious long-term damage is being done to farmers and their sustainability. Let's get some realistic, positive solutions now.

Per-acreage payments are a good idea. They get immediate cashflow directly into the hands of farmers, where it is needed most. Put the money in at the bottom of the ladder and it will work its way up. When it filters from the top down, too much is lost, and only one-third makes it to where it is intended.

Let's even out subsidies. The U.S. and the EEC are not about to lower their subsidies, so that leaves us with only one solution: raise ours. Let's get export enhancement programs similar to the U.S. and the EEC. The U.S. and the EEC treat farmers as a necessary, primary, maintain-at-all-costs industry to preserve food sources. Why can Canada not follow this example? Why are we lagging behind?

Currently our programs do not properly address long-term or even immediate concerns. Cashflows from the program lag too far behind for immediate concerns. Much money is lost in downward transfers, and the long-term cashflows are inadequate for sustainability. If the federal government is not willing to go the subsidy route through export enhancement programs and/or per-acreage payments, then could the federal government please answer the following questions?

Please advise Canadian farmers as to what course of action is to be taken to make farms profitable. What steps do current farmers have to take to become profit-makers? How do farmers make money to survive and stay farming? What is the future of the Canadian farmer? With no positive, encouraging signs from the federal government, how will farmers continue?

The average age of farmers is approximately 57 to 60 years old, with limited younger involvement. How will the farms continue? What is there to encourage young farmers to start or even to continue? What is the future fifteen years from now?

Here are some commodity prices: barley, off-board, 1999, $1.80 a bushel; barley, initial payment, 1982, $2.41 a bushel, and in 1989, 89¢ per bushel; canola, 1982, $6.60 per bushel, and in 1999, $5.60 per bushel.

Here are some cost comparisons: diesel, 1982, 24¢ a litre, and in 1999, 35¢ a litre; purple gas, 1982, 26¢ a litre, and in 1999, 46¢ a litre; shop rates for repairs, 1982, $27 per hour, and in 1999, $55 per hour. Equipment costs: 130 horsepower tractor, 1979, $32,000, and in 1999, $120,000; combine, 1981, top-of-the-line, $72,000, and in 1999 we're looking at over $225,000.

And it's not much better on the cow-calf operations. For maintenance costs and expenses per cow, you're looking at approximately $300. With 150 cows at $300 each, that's $45,000 of cost. For income, 130 market calves at $600 each and 15 open or culled cows at $600 each gives us an income of approximately $87,000. Take off the maintenance costs and expenses and you're left with a net income of $42,000. A family of four's yearly living expenses are $25,000. The remainder is $17,000. That has to go to service debt load; to pay municipal, provincial, and federal taxes; and to repair or replace equipment. If you look at an operating loan of approximately $35,000 for this gentleman, he was left with $18,000 in the hole that had to be repaid this year.

As for total farm investment, land was $400,000, equipment $200,000, and basic facilities $100,000, for an approximate total of $700,000, of which about 60% is owed on.

Another concern we have is the fuel tax. It appears the federal government is not spending the amount of money collected from fuel taxes on roads and infrastructure in western Canada. Many branch lines of the railroad system are being discontinued, which applies more pressure to western highways due to the extra truck traffic.

• 1645

The federal government needs to give some consideration to helping with the infrastructure, particularly on the highways. What has been done in the past and must be reinstated is the agricultural infrastructure program. It is a necessity to keep upgrading our infrastructure to keep up to the demands.

Concerning rural development issues, major changes are occurring in the rural areas of western Canada. Many independent fertilizer and herbicide dealers are being consolidated with the major grain companies. Many grain companies are closing elevators and moving to a more central location. With elevator closures and consolidation occurring in the agricultural supplies area, there is less competition. Eventually there will not be as many people living in the rural areas, due to consolidation of staff into more central locations.

In the past, federal and provincial governments have provided assistance programs to help with adjustments occurring due to the changes in the rural parts of western Canada. At this time there are very few programs—none that I know of—available for helping and assisting individuals during this time of adjustments and transitions.

On biotech crops, recent consumer reaction has become very negative regarding any food products that are genetically altered. Most consumers, producers, and many professional agrologists do not realize the full impact of genetically altered foods. With the privatization of most of the food inspection branch, many consumers do not feel confident food safety issues are being properly addressed.

Can the federal government ensure genetically altered foods will not create long-term effects for humans? Can the federal government ensure the privatization of many of the inspection operations will ensure Canadians will have safe and high-quality food products?

Emphasis is switching in the world scope. Instead of using the precautionary principle, where governments could limit access to markets by companies if there were any doubts as to health and safety concerns, now the emphasis is being placed on governments doing the research to attempt to prove a product is unsafe. The companies are saying “Here's our product. If you don't like it, then prove something is wrong with the product.” The government needs to retain authority to use the precautionary principle to ensure the health and safety of our public. Can we still be assured that the precautionary principle must still be used?

Again, in Lakeland County, our council, our service board, and our farmers are willing to work towards a solution with our federal government, but the government has to do something. It has to lead the way.

Thank you.

The Chair: Thank you very much, Mr. Ibach.

Voices: Hear, hear!

The Chair: Now we welcome Henry Kowalchuk.

Hello, Henry.

Mr. Henry Kowalchuk (Individual Presentation): Hello, Mr. Chairman, gentlemen of the agriculture committee, ladies and gentlemen, and fellow farmers.

It's quite amazing today to come here and see so many farmers who shouldn't be going to meetings; they should be retired in their chairs and maybe taking life easy, after spending a life farming, raising a family, and keeping the country going. These farmers are here today, ladies and gentlemen, and they're not here because there's nothing better to do; they're here because we're all in trouble.

You may think there's something wrong with the people if they're in trouble. Well, let me tell you, it's not of our doing; it's what we're faced with. That's why we're all here. I really am amazed to see so many gentlemen my age and older here. It shows you they shouldn't be here, but they're still active. There has to be a problem; that's why they're here.

They say to us, “What are all these problems from? How did you create them? You must be poor managers.” Well, when I was invited to this meeting and I looked at the fax, it said “farm aid”. So then the wife and I started to cobble together a few things, because you know, we don't want to beg. We've never begged. I've never begged. I don't think any of these gentlemen ever begged. We want a fair deal. The fair deal is not coming. I don't know why it's not coming. To me it looks as if a lot of problems are created for us, and we have to live through them handicapped.

For years and years, we've sold grain under the Crow agreement. All of a sudden the Crow flew away. We were promised all kinds of luxurious living after the Crow left, because the Crow was detrimental to all our livelihoods.

Voices: Hear, hear!

• 1650

Mr. Henry Kowalchuk: Do you know what happened? I happened to sell some grain the other day. I'm a senior citizen, but I had to shovel the wheat to get it going to market. We needed the money. I sold this wheat, and 25% of it I left on the counter, ladies and gentlemen of the panel. If I had at least 80% of this money that I left on the counter, I could have a merry Christmas. I could maybe buy a few gifts. However, it's not to be; the Crow left, and we all went to hell at the same time. Or we're going to hell; we haven't arrived there yet. They tell me it's quite intricate to get there.

However, with the help of our government... And this is where it really pains me. I have a deep pain, because I helped to get this government installed in my little way, in the country helping out, putting a poster up, maybe talking to a neighbour, maybe shaking a hand, encouraging. And this is what I did hopefully to better the country. It's been nothing but a disaster. However, we're not going to give up yet, and we're not lost.

After the Crow we were promised a big payment, and that was the biggest scam ever. We got a payment. Most of the people who got money were the people who live in the cities and own the land. The person who rented the land didn't get two bits, and he's the one who paid the bills and produced the grain. He got zilch. And they say this is government. And you could fight that by hiring another government bureaucrat in Regina for $200 or $300 an hour and he's going to help you, and nobody ever did. It doesn't work that way. You can't hire anybody to help you when the bureaucrats have you.

Well, we did the Crow, and we're finished. Nothing good is happening. We're losing money. So they say farmers... it was a big term the minister used. I wouldn't want to use a term like that on animals, that they're of poor breeding or whatever. I don't know, I think we're of pretty good breeding to be able to stand up to all the abuse.

Things aren't getting any better. They say the farmers are begging. We're not begging; we are trying to enlighten you. Maybe you could do something for us by lowering the fuel tax. We have an excise tax on fuel. You know there's a GST that we all work with. We were promised it wasn't going to be around, but it's still around.

Then they have this trade fiasco in Seattle. And we are abiding Canada especially... and I don't know why Canada is so vulnerable. But they always send the boys all over the country to put out fires, whether there's a fire or not, or they're needed or not, but they send them anyway because Canada is a very great nation.

This WTO deal is distorting our markets. The Europeans are getting subsidies, the Americans have hidden subsidies, and they don't tell you; they pretend it's not even there. They claim we are subsidizing and we're not supposed to be subsidizing, but they can do it. And then they can fine us for stuff if they want to come into our country and, say, take our water or create some chemical plant or something, which we don't allow. They can fine us. We paid $22 million to Exxon or somebody in the United States last summer.

These are the things that are going on under the guise of free trade. We are not making any money. It's detrimental to our cause as farmers. Yet everybody else has control. We're not free any more, and we're not going to be, and the more this so-called free trade for the corporations and everybody else in the big money... We're slaves. My grandfather escaped from this stuff 100 years ago and he came to this country. Why did he come here? Because he wanted land. He had no land.

I met a fellow in a cattle commission meeting a few years ago, and he also came from South Africa. But he's a Libertarian, and the Libertarians believe there are only a few people who should control everything. My grandfather just wanted a little bit, and I believe in a little bit, and all these other people believe that they want a little bit of their own property. We like property. That's what we work for and that's what keeps us going when there is no money, because we'd all fold up. But we're not folding up, and we're going to...

• 1655

I tell you, gentlemen—I hope I'm not too loud, because I was always told that I'm quite loud and a lot of people have dainty ears—I find that you can't talk to the bureaucrats, you have to pound it in somehow. And the only way I find you can pound it in—you can be judges, you can be high-priced whatever—is money. Everybody understands money.

How would an MP like it if 20% of his paycheque didn't arrive? I wonder how he would react? I know the RCMP don't like it, they'll go on strike. The judges don't like it, the big high-priced lawyers. The judge is appointed. If you ever talk to him about money, why, it's obnoxious. He's supposed to get all the money in the world.

Why can't the farmer get a fair share? All we're asking is for our costs. Of all these programs that we have had so far, not one of them ever tied the cost of production in the formula, and if we—

Voices: Hear, hear!

Mr. Henry Kowalchuk: I thought somebody wanted to—

The Chair: You're beginning to run out of time, Henry. You're doing wonderfully.

Mr. Henry Kowalchuk: Time, we have lots of time. I just got started.

We have Kyoto here. Everybody says our curtain is coming down, the ozone layer is being depleted. Okay, the farmers jumped ahead of the crowd. How many air seeders do we have here, at home? Okay. That is helping the ozone layer, involuntarily, inadvertently, whatever, but we're team players. Why hasn't the government, in their wisdom, given us a little carbon tax or a little funding for that? It's unbelievable.

There are a lot of young farmers, and there are a lot of older farmers, paying their mortgages off. That's another gem. It's all after-tax money. Why can't we have a program whereby, when things are so hard, there can be a little flexibility, a little adjustment, maybe a little after-tax savings or something?

I'm not an accountant, I don't know the exact terms, but I hope you gentlemen get the meaning of what I'm trying to tell you. We should get a little income tax revenue, a few deductions. Maybe we shouldn't have to pay that much tax and then pay the mortgage. If we're paying the mortgage, maybe some degree of revenue can be flexible.

The Chair: We have to hear from Earl.

Mr. Henry Kowalchuk: Yes, we will, we will. Just one moment, because I have the better part yet.

The other gem we had was gopher poison. A lot of guys said it was crazy to mention gopher poison to such an astute body from the House of Commons. I said, yes, it is, but I'm a farmer. I run quite a bit of acreage of grassland. We're what you would call mixed farmers. All of a sudden they took the strychnine out of the gopher poison, because somebody's owls died someplace, like Beaver Lake or someplace. So all of a sudden they called all the important people in Canada and they decided to water it down.

So what do we do now? We're feeding gophers, and there's no action, and no reaction. I was surprised that Mr. Benoit was the only one who mentioned it.

Once, three years ago, I went up and I sat on the car phone, all the time talking to different chemical people asking why I couldn't get any strychnine. They said, “Our hands are tied.” So I went to the county office. No. They finally told me to go and buy a pail of this new watered-down stuff.

I was going to bring it, but I thought too much of you gentlemen to bring a pail of oats here—you know, $44 for a bushel of oats with $2 worth of strychnine in it, and this is your supposed gopher poison. That doesn't work, and I know it doesn't work, because we tried it—not on ourselves, on the gophers.

Gentlemen, the problem here is that we are trying to do our best. We don't mind suffering a little bit. We've suffered all our lives. We survived. All we want is for the government to help us in our time of need.

• 1700

In 1991-92 we had the same problem. We had a drought, but it was not that big; it was a small drought. We had a couple of meetings. We had 1,200 to 1,400 people at those meetings. We had a minister at the meetings. The minister took us to the European or to the export market, saying there was going to be a bonanza there. We have to go with our security blankets. We can't go native to the foreign shores.

Anyway, they told us it wasn't a big enough disaster and they couldn't pay us. Well, you know what happened? The minister got defeated the next go-around, and he's no more in politics. I hope the same, gentlemen, that you can see through it. This is a problem not of our making; we are victims. We would like you to be helpful, and maybe together as a team we can improve the situation.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: Mr. Rasmuson, you've been very patient. Go ahead.

Mr. Earl Rasmuson (Individual Presentation): Thank you, Mr. Chairman, ladies and gentlemen.

I began my farming career in 1962, after graduating from Olds College, joining my father on the family farm. Since then I've been joined by two brothers, and our operation has changed over the years. Presently we are running a 400-sow farrowing operation, along with a cereal crop, direct-seeded, as part of the operation.

During my experience in farming, excess profits have never been a problem. Farmers as a whole made 0.6% return on equity in 1998. During the last quarter of 1998 and into 1999, we saw prices paid to farmers for pork at the lowest since the 1930s. Yet processors and retailers maintained high prices to the consumer. The cost of wheat in a loaf of bread worth $1.33 is 5¢, the same as in 1974, when the price of a loaf of bread was 43¢.

The present price of hogs has remained unchanged since 1984, yet the price of pork chops has risen 250%. In 1998 farmers producing cereal crops earned negative returns on their investment. The same year, Kellogg's, Quaker Oats, and General Mills enjoyed a return on investment of 56%, 165%, and 220% respectively.

Farmers are told to become more efficient, buy into new technology, and cut costs just to remain in business. Yet these rules don't apply to others in the food business, because of their size and lack of competition. Their profits in the business of food are after it leaves the farm gate.

The marketplace isn't working for the farmer. Currently export-dependent farmers are in an income crisis, while those producing for Canada's stable higher-price markets have largely been spared.

The hog price crisis came after governments dismantled single-desk selling in many provinces and encouraged farmers to produce for the export market. This is the reason supply management and orderly marketing must apply and be available to more commodities, and not be traded away in current World Trade Organization negotiations.

Lack of competition and deregulation are reflected in the 700% increase in freight rates since the ending of the Crow rate in 1984. This not only is reflected back to a lower price paid to farmers on export grain, but also reduces the price of all feed grain used in the prairies. The increased elevation costs and reduced services by the railway companies have added to the cost of selling grain. Recent changes proposed by the Kroeger report will not result in lower transportation costs for shipping grain and will put the Canadian Wheat Board at a disadvantage in the marketing of grain into the world market.

The European Union will spend close to $90 billion to support its farmers. The U.S. will spend close to $25 billion. Canada will spend just $1.6 billion—maybe. The marketplace isn't working for the farmer. It is clear to me, facing these numbers, that a direct cash injection into the Canadian farm economy is important.

Using the same terms of reference as the European Union and the U.S.A., the federal government should transfer an additional $1.3 billion to $2 billion into farmers' hands before spring seeding. The program should be capped and targeted so that those who need it most receive the most. AIDA has failed to do this.

• 1705

An immediate reduction or elimination of all taxes related to farm inputs as well as user fees and inspection fees should be implemented, as they all add to the cost of production.

Any changes to rail transportation should reflect an immediate costing review and the reinstatement of productivity gains. This would mean an immediate $5-a-tonne decrease in freight rates.

In conclusion, I must emphasize that in the end, the lands must pay the way. Thank you.

Voices: Hear, hear!

The Chair: Thank you very much, Mr. Rasmuson.

As in the past round, we have six minutes each for the first two questioners and five minutes for the last two.

Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much, Mr. Chairman. I'll be sharing my time with Mr. Benoit—at least I hope I can.

I'm going to pose a couple of tough questions. I will give you a little time to think about them, and I'd like all of you to answer.

The last presenter here, Mr. Rasmuson, said those who need it most should receive the most. That really runs counter to what we're hearing from most of the presenters. Most of the farmers we have heard do not agree with that.

My question for you is, can farmers agree on what needs to be done? Do you think it's possible to get a consensus of farmers in this room, in this country—well, at least in the three prairie provinces—as to what needs to be done? If I took a poll here right now...

I've done this in every meeting. I've asked how many people think AIDA is working. They just laugh. They don't even answer that one. But then I say “How many of you think AIDA should be tinkered with so that we can make it work, or how many of you would like a broad-based payment made?”

Maybe I should ask that here. Maybe I'm completely wrong. How many of you think we should try to fix AIDA? And the other side of the question is, how many of you think we should go for a broad-based payment?

Let me just take a poll here. How many of you think we should tinker with AIDA and make sure we pay out more funds that way?

Mr. Henry Kowalchuk: I have one question, sir.

Mr. Gary Breitkreuz: Let me take the poll, and then you can ask it.

Mr. Henry Kowalchuk: But this is pertaining to the vote. Is this going to be a one-time broad payment? Because suppose you have a few droughts one after another, and we have the payment up front or in the middle someplace and everybody's still suffering. What do you do then?

Mr. Garry Breitkreuz: Well, AIDA is a two-year program.

Mr. Henry Kowalchuk: But AIDA could be made to work better, sir.

Mr. Garry Breitkreuz: That's what I'm asking: should we try to make AIDA work or should we have a broad-based payment?

Mr. Henry Kowalchuk: But if there's the spirit, sir, from the government to make it work...

AIDA is a phenomenon. The thing that gets me is the government people came to do away with the GRIP, and they brought AIDA out. We have another phenomenon here that wasn't mentioned, Ralph Klein. He fits into this big-time. He had the FISP program, and that's the biggest sham you ever saw. It does not work. It works for specific people only. The feds based their AIDA on the same principles as the FISP program.

We'll make a program for you, gentlemen. I think in this room we could have a program cobbled up here by the time you're done.

Mr. Garry Breitkreuz: Well, that's my point, sir.

Mr. Chairman, he's using my six minutes here, by the way.

Voices: Oh, oh!

Mr. Garry Breitkreuz: How many agree with him that we should tinker with AIDA and try to make it work? Five.

How many of you would like a broad-based payment, right across the board—acreage or whatever? More. Okay, thank you.

Now you have to answer my question: Do you think we can get farmers to agree and get going here? Because if you can't, you'll probably end up with nothing.

Mr. Henry Kowalchuk: I think they have to realize that there has to be a little give and take. You maybe can't get your wildest utopian idea, but you should at least get some cost of production.

Farmers have to get down to it and get serious. We're all in the same boat. We're all the same. There's no big difference. There's no different philosophy here. It's a matter of life and death. That's all the government wants to hear. A little diversion, and boy, they'll roll right through you. I agree with you.

I think we've come to the end of the rope. In fact in my area we've gone beyond that. Some people have committed suicide. They went beyond it. It's very, very serious in eastern Saskatchewan. I don't know; maybe it's more serious than here. I'm not sure.

What do the rest of you think?

• 1710

Mr. Earl Rasmuson: I think that's probably true, but just judging from the reaction of the people we have here today, it might be a little easier than you'd think to come up with something we'd all agree to. You'd have to be fair. I think, for the most part, farmers are reasonably fair in their outlook on this crisis in particular.

My needs may be a little different from my neighbours', but I don't think, in the situation we have here, we're going to start quibbling about a few thousand dollars one way or the other. I really think we could probably come up with something fairly quickly, and not be used by the government again because of our inability to agree. If it came down to the situation that it was either all or nothing, I think we would make some kind of—

Mr. Garry Breitkreuz: I think we have to come up with something very quickly. I don't think we have time.

The Chair: You have half a minute. Do you want more answers?

Gregory, on this question.

Mr. Gregory Ibach: I think we can get a consensus. I don't think it will be a very difficult thing, because we are experiencing the same things in Manitoba, Saskatchewan, and Alberta. It varies a little from commodity to commodity. The beef industry is not under quite as much stress as the grain industry maybe. The hog industry is under different kinds of stresses. But I believe you can amalgamate. I believe you can put them all together and make a program that works.

The Chair: Thank you very much.

Mr. McGuire.

Mr. Joe McGuire: Thank you, Mr. Chairman.

I'd just like to ask Gregory about his suggestion for an export enhancement program on page 3, and that the cashflows from the current programs lag too far behind for immediate concerns. Much money is lost in downward transfers, and the long-term cashflows are inadequate for sustainability.

I'm wondering, with a country like Canada that exports—we only consume 20% to 25% of our production and 43% of our total economy is based on trade—would an export enhancement program really benefit our people? Would you not be subsidizing the consumers of the rest of the world if we went down that road?

The Chair: Gregory, do you want to answer that?

Mr. Joe McGuire: I'm just wondering what you're getting at here with this suggestion.

A voice: The idea is that we're talking about a family farm—

The Chair: Sir, we will have 45 minutes at the end. Perhaps we can hear from you then.

Gregory.

Mr. Gregory Ibach: I feel that the export enhancement program will not necessarily be subsidizing the world. We will just be making an even playing field for us to get into the game again, because right now we aren't even close to seeing the ballpark, let alone being in the game with the world exports. With ourselves, it would actually be putting it back into the hands of the producers. That's where you're going to generate the economy—from the bottom up. You're not going to generate it by holding onto the money and saying “We'll suffer with that later”.

I believe we need these enhancement programs. They're going to help the farmers directly by giving them money. You're not going to be subsidizing transport payments, which will go to the rail companies. You're not going to be subsidizing chemical companies to implement new chemicals, or helping them get their chemicals registered and stuff like that. It will be going directly to the producers who need the cashflow.

Mr. Joe McGuire: I just want to mention to Adam and Roger Epp that we have a new secretary of state for rural affairs. We are expecting him, through the next budget, to have some programs that will directly affect the future of our rural area.

• 1715

I'm one of 70 MPs who belong to the government rural caucus because most of our ridings are either rural or semi-rural related. We were able to convince the Prime Minister to have a minister in charge of rural affairs because of the concerns we've been hearing. It's not the first time we've heard them. We've been hearing the concerns about the future of our rural areas for a number of years now.

I just want to let you know we're not entirely immune or unaware of what is happening in the current trends throughout North America in the rural areas. We're expecting things in the next budget from him, so any suggestions you may have, certainly give them to us as soon as possible, because that budget is being put together. We're taking as many suggestions as we possibly can to implement in the next budget.

Mr. Adam Campbell: Since I've come to Canada, I've realized that Canada is quite a liberal country, overall. Maybe out in the west we're a little more right-wing, but Canada is a liberal country. You're speaking about rural affairs, and thank goodness there may be a department that's going to speak up for us. Since I've come here it seems that native issues have their own way, the gays and everyone else around here seem to be minorities. Someone said to me we only account for about 1.5% of Canada's population now, so maybe we need special status. Maybe we could get something more with that.

Mr. Joe McGuire: That could be.

Mr. Adam Campbell: But as I say, I've been through the thing in Europe, and it kind of hits home a little bit. Where we used to live in the north of Scotland, we felt we were quite reasonable, quite educated and everything, and then suddenly someone turns around and puts you on par with a goat farmer in northern Greece, or someone living on the top of a mountain in Spain. A kind of realization comes to you then that we're all part of a community. We weren't doing very well in different parts.

I don't want to ramble on too much about it, but thank goodness somebody's doing something. Good luck, because there's no easy solution.

Mr. Joe McGuire: No, there isn't.

The Chair: Thank you, Mr. Campbell. I love that accent.

Mr. Proctor.

Mr. Dick Proctor: Thank you very much.

In the last set of questions—this is to Earl—I think it was Mr. Ziegler who worried that creditors would be the major beneficiaries of any short-term payout. There's another side to that. If there were a short-term payout announced, what would the probability or likelihood be of seeing some of our input costs, which are already very high, get even higher, as people who have the ability to raise the prices simply turn around and do that to take advantage? Is that something that keeps you awake at night?

Mr. Earl Rasmuson: It certainly is a consideration. Some time ago the provincial government had a subsidy program in fertilizer. They re-examined that, and I think they found out that whatever benefit was provided by the subsidy was more than taken up by the fertilizer companies. So in reality there wasn't much of a benefit in the end to the actual producer. We'd almost need to have some way of benchmarking some of those prices, so you could track them. I don't know if it would solve the problem entirely, but it would certainly be one way of those things disappearing.

Mr. Dick Proctor: Thank you.

Mr. Kowalchuk, they've only spent about $420 million out of the AIDA program. I was in Regina last month, on November 18, when the Minister of Agriculture and Agri-Food said he was going to be checking the numbers daily and making sure all of the 1998 payments were out before Christmas. The money allocated for AIDA in 1998 was just over $1 billion, so there's about $600 million still left in the fund. It's humanly impossible to get that out. You've already confessed that you helped to elect this crowd as the government, so what are you going to do about it?

Mr. Henry Kowalchuk: It hurts, sir, it hurts.

I've been around for a long time. About eight years ago, we happened to have a meeting with the Honourable Mr. Goodale in Lacombe—it was fewer years than that because it was after the Crow payment—and we told him, “You know, Ralph, if you had hired the guys you have here, we would have done that thing, and we would have done a hell of a lot better than what was done at that time with your bureaucrats.” It was a scam, a partial scam. I lost about one-third of my payment through rented land.

• 1720

Some people say it's okay, they'll count, but others don't because it's their money and you don't dare touch it. So in order to harmonize the thing and live, you say that's their money and you forget about it.

Mr. Dick Proctor: But, Mr. Kowalchuk, the reality is that everybody knows that AIDA was really based on the FIDP program—

Mr. Henry Kowalchuk: Right, that's exactly what I said a minute ago.

Mr. Dick Proctor: So how is possible that we didn't learn—

Mr. Henry Kowalchuk: I don't know, sir. I know what I learned, but I don't know what everybody else knows or should know. I know it doesn't work, and you can ask that of all the gentlemen here. It doesn't work!

I think we have to know a little bit about practicality. You see, a lot of this stuff here is great theoretically. The greatest example was the Supreme Court ruling on the eastern fishers a month ago. You could have had a bloody war over nothing. All it needed was a little soundness. Even the Supreme Court doesn't have the soundness sometimes. All it had to do was be practical and use common sense. It's not there.

Mr. Dick Proctor: Just one more.

Mr. Henry Kowalchuk: Now, we could cobble a program for you, sir, and I think it would fly. We're not greedy people.

Mr. Dick Proctor: No, I know you're not.

Mr. Henry Kowalchuk: We're old-timers, and we just want to live and let live.

Mr. Dick Proctor: Speaking of greed, someone in Saskatchewan—

Mr. Henry Kowalchuk: We love to own land, though.

Mr. Dick Proctor: Someone in Saskatchewan said this fall that the laws in that province have to change, that every farmer must be allowed to have two or three wives, because it takes more than one wife to support a farmer these days.

Voices: Hear, hear!

Mr. Dick Proctor: I just wondered if you had any comments, Mr. Kowalchuk.

Mr. Henry Kowalchuk: Well, theoretically it could be possible, but then there are some women who know how to spend it, so you'd need a hell a lot of money.

The Chair: Don't go there, Henry. You were doing just fine.

Is that it, Dick?

Mr. Dick Proctor: That's it.

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: It's really hard to follow up on that.

Henry, I'm going to ask you a question, but not until the end, okay? If I ever get you talking on a question, I never get back in. So we're going over here first and then we'll come back to you.

First of all, I didn't even want to mention this, but I have to because you brought it up in your presentation, Greg. You talked about a transition program in your presentation. It was you, wasn't it?

Mr. Gregory Ibach: Yes.

Mr. Rick Borotsik: Do you want to embellish that a little bit? Could you expand on it? Where were you going with the transition program that you talked about?

Mr. Gregory Ibach: Yes, Mr. Graves touched on it a little bit in his presentation too.

Currently the population is changing. We're going more from rural to urban. We're just about completely out of a rural population now. Only approximately 3% of Canada is on farms. If we're going to take another percentage and a half out of that, we're going to have people who have to be relocated. Jobs still will have to acquired, because some of the jobs skills were not necessarily there. Some of the guys do not know how to program the computers that are currently on the farm, but they may have to look at doing that. They have to have a way to make an income, make a lifestyle. We have to have a way of integrating these people into an urban society that no longer knows what rural society is like.

Mr. Rick Borotsik: We've had transition programs before, obviously. In fact the last agriculture crisis that we had back in the late eighties and early nineties was also attached to a transition program. The reason I didn't want to mention it, as I said, was that I would rather find solutions so that people can redevelop, if you will, or reinhabit these rural areas, as opposed to having a transition to other areas.

There are ways of doing that, by the way, if we take the blinders off and maybe look at other rural legislative changes or processes, maybe like a northern allowance. Perhaps we should be talking about some rural allowances. Maybe we should be looking at tax changes for residents in rural areas.

As for doctors, the biggest problem in my area is trying to get a doctor into a rural area. You're not going to have people living there if you don't have doctors. We have to attract doctors to rural areas, and we could put programs in place to look after that. Rather than look at transition periods to get them out of the rurals and other places, I'd rather find transition processes to get them back into the rural area.

I'm going to ask something right now. I want each and every one of you to answer it, but you're last, Henry.

We've heard of something a couple of times throughout the last couple of days, and that's a set-aside program. We're overproducing in the world right now. We know that. It's subsidized overproduction; nonetheless it's overproduction. I know you haven't given a lot of thought to it, but what are your comments on a compensated set-aside program to reduce the overproduction of commodity right now?

We'll start with you, Adam.

• 1725

Mr. Adam Campbell: I've lived through one set-aside program. It's an administrative nightmare, for a start. You're going to have to measure accurately every single part of western Canada for it.

It didn't really impact grain production that much. There are millions of eurodollars, or whatever you want to call them, now spent on administering the program. I think one farming organization politician I spoke to in the U.K. said they might as well have just gone around and given the equivalent of $100,000 to each individual farmer, and they would have been way ahead.

Mr. Rick Borotsik: I think you would get agreement on that, by the way.

Have you any comments, Greg?

Mr. Gregory Ibach: I don't think a set-aside program is going to work very well, for reasons similar to what Adam said. It's just not going to properly put the money where it should be, and we're going to end up with more overhead and more administration than we can handle.

Mr. Rick Borotsik: Earl.

Mr. Earl Rasmuson: I could see there might be some environmental areas that one might apply for under that type of program. But I don't really think it would affect production too much, because most of the land set aside would be the marginal land anyway. In the long-term situation, I don't think it would really result in that drastic a change.

Mr. Rick Borotsik: Henry, you can talk about set-aside, and then you can say whatever you want.

Mr. Henry Kowalchuk: I just wanted a clarification, sir. Do you mean set aside acres, or set aside products?

Mr. Rick Borotsik: Set aside acres.

Mr. Henry Kowalchuk: Well, there's nothing wrong with that. In fact they could be classified as environmental reclamation or whatever. But then, on the other side we're going to have an overproduction of cattle, because all this land will be utilized for cattle. Whenever there's a problem—and this is what irks me to no end—in Ottawa, in Winnipeg, or wherever it comes from in the papers, some important person in the government says, “Well, go and raise more cattle.” What's going to happen? You know, I've been through five busts in the cattle business—in 1951 it dropped 20¢ in one day.

Mr. Rick Borotsik: They're cycles.

Mr. Henry Kowalchuk: We're due for a cycling now. We're going up right now, but if anything goes up, it's going to come down with a bang. We had it in 1974, after Nixonomics. You know, bingo, steers were at 60¢ in the fall. I sold 30 steers—1,250 pounds—for $390. Barley was $2.50 a bushel. Everybody growing grain went to Hawaii, and I wondered what the hell had happened to my head, because I didn't have any money.

Mr. Rick Borotsik: You've got a minute left, Henry. Don't waste it.

Mr. Adam Campbell: I would just like to add something. Since I left the U.K., people from France have brought in an extensification program. Now, extensification means, basically, that Europe is paying them to run fewer cattle on a given acreage—grow less, and maybe try to take in less cereal, reduce their fertilizer inputs and things. Maybe a lot of people don't like hearing that, but the one thing it does is help you environmentally. It's something the public can swallow a little bit easier, because it's an environmental project—we've less pollution.

It's something I thought might be worth adding.

Mr. Rick Borotsik: I appreciate that.

The Chair: Thank you very much.

Thank you very, much, all of you. We do appreciate all the comments that you've offered. I know that for a lot of us, when it comes to AIDA, it's a conundrum. It was worked on for a number of months. The provinces, the federal government, and a number of farm organizations were involved. Yet despite all that talent pool—if you can put it that way—they still didn't get it right. Thank you.

Now we're going to go to the next segment. I want to invite to the table Bryan Davidson, who is the president of the Canadian Dehydrators Association, along with Garry Benoit. I also want to call forward, from the Alberta Grain Commission, Pat Durnin and Brenda Brindle, who is a grain industry analyst.

I should say to the audience that right after the presentations by those two organizations, we'll go back to more individual farmers. I have a number of names. I don't think we'll get through them all, unless everybody decides to talk for two minutes, and no one seems to be in that mood. But I will be calling at least four more names and hoping we can get more. It will depend on how long farmers talk.

The four names I will be calling are Einar Loveseth, Bernard von Tettenhorn, Greg Porozni, and Ed Armstrong. So you can get ready.

Incidentally, for those who won't have the opportunity of speaking today, we would be more than happy to have a letter from you, any kind of brief. You can send it to our committee in Ottawa. No stamp is needed. You simply send it to the clerk of the Standing Committee on Agriculture and Agri-Food, House of Commons, Ottawa, Canada, K1A 0A6.

• 1730

Now, I want to welcome the next set of witnesses, and normally we go by alphabetical order. I don't know how to choose this, dehydrators or grains. Let's go with the dehydrators first.

Hello, Bryan and Garry. It's nice to see you again.

We have 45 minutes. I hope we have time for some questions, as well. But without further ado, we'll hear from you, Mr. Davidson.

Mr. Bryan Davidson (President, Canadian Dehydrators Association): Thank you, Mr. Chairman. Thank you, fellow members here. I'm very happy to have the opportunity to appear before you again this afternoon.

Our brief will be short today, in the interests of your time. We have written material for the committee members. I think it has been distributed to you, and we hope you will read it to understand our industry's plight. We like to think of ourselves as being impacted by all of the same things as the grain industry, and as many of you know, we've been for some time looking for consideration under some of the programs that are open to the farm sector right now.

To begin my talk, I'd like you to know—many of you have met with us on other occasions, particularly in Ottawa—that we were there last November. We met with senior officials in Agriculture and Agri-Food Canada at that time to appeal our case and look for some assistance with the losses that we're incurring right now on export markets. At that time, they asked us to prepare a business plan for our industry for the next five years.

Part of the material you have received today includes that plan, and it substantiates our earlier claims to the devastating effects our industry is operating under. Copies are available here for committee members. A CDA delegation will be in Ottawa next week to deliver that report and explain the results.

If we can just for a minute talk about some of the highlights out of that report, it will certainly identify the three stages that government officials asked us to detail for them: a short-, medium-, and long-term outlook for our industry. We have a very good submission based on the intermediate outlook, and we're in the process of adapting.

In my own plant in particular—I've been the manager at Legal Alfalfa for many years, if you know that company—in the last five years, we have basically diversified our operation from less than 10% to over 34% domestic sales. So we think we're adapting, as many of the other companies are, in domestic and export markets.

Another area we've dealt with in the report is the extent of the damage that is being done right now to our industry by oversubsidized production of grains and food by-products, and that kind of thing. It's all in the report, and if you look at the AIDA parameters of the decrease of 30%, you'll see that our industry has undergone much more extensive damage than that.

Today I would like to talk more generally. I think most of the committee members have heard our presentations in the past. We were in Ottawa on two or three occasions earlier in the year. We've talked extensively about how our industry is being impacted. I could go through all of that again, but I really don't want to do that today. It's in the report. So I would like to just talk a little more generally to members of the committee to let you know what's happening.

Number one, plants are closing across Canada right now. I don't think there's time here to detail in each particular region of the country each particular plant that has closed, but even in our own operation, although we're not closed, we have not run since some time in October, and we don't plan to run until probably middle or late January, because of the situation in export markets.

• 1735

Basically, nobody in our industry can operate for very long at the losses we have had to sell under in the last two years. We've heard all of the evidence here today in terms of the grain industry. You can just start to apply that to operations like ours. Basically, as many of you will know, we farm acres with large equipment and large staff and that kind of thing, so we carry on a bit of a farming operation as well.

This devastating effect on the industry is just beginning to really show itself right now. There are going to be very serious consequences to some of the small towns where these closed plants are, because in many cases they're the only industries in town. I could detail places like Rolling Hills, Alberta, and Falher, where this is occurring right now, and it's going to be very serious. In our own case we've had layoffs. Certainly there are going to be some poorer economies. Of course, eventually that will all lead to an exodus to urban centres and that kind of thing.

Just a few minutes ago I heard a little about the government's rural development initiative. I'd like to dwell on that a little because, quite frankly, since Mr. Mitchell was given that mandate, I have been trying to get to see him, with not a heck of a lot of success, in his constituency or in Ottawa. We tried in August. We tried again in November. Basically, he has promised to come to see our industry, but we can't get a timeline on that.

I'm very disappointed Mr. Calder isn't here today, because the last time we were Ottawa he promised to bring one or two MPs out to talk with a group of us during the Christmas break. But then because the committee was travelling, we thought, okay, we'll slide that over into the committee. I understand he was at the meeting this morning, but he didn't make it to Vegreville here today. So I'm kind of disappointed he wasn't here for me to talk with on that.

I would submit there is no finer example of a truly rural value-added agriculture initiative than the Canadian Dehydrators Association. I want to talk a little about the Crow. Everybody says the Crow didn't foster value-added. Well, we were not on the Crow until 1984, but with the WGTA in 1984, our industry expanded from 287,000 tonnes in 1984 to around 700,000 tonnes in about 1995-96, all under the Crow regime. So to argue that the Crow didn't work for value-added... I would like people to take a look and see what happened in our industry.

I submit that there's no finer example for rural development than the dehydrator industry. Is it to be sacrificed because the government can't seem, in its grand plan now—or lack of a grand plan—for agriculture, to make some resources available for industries such as ours, that can't compete with the treasuries of some of these foreign countries?

On the whole business of rural development, how seriously is the government committed to this theme? I've heard very little about anything really happening in this area since the announcement some time ago. Is it intended for the whole country or is it something to just kind of trot out in eastern Canada for votes, or whatever? I would just like to know what new thrusts have been directed to western Canada through this new department, vehicle, or whatever it is.

Basically, let's look at the times we live in. Groups are appealing for changes in regulations and programs to get on with some of the changes that are needed. Of course, a couple of nights ago on TV we saw something about the Prairie Pasta situation. This is a very good example. I don't want to get into all of the intricacies of the regulation there, but if you go back to look at the challenges of the late 1960s, you'll see the same kind of scenarios. I'd like to remind committee members that when challenges like these presented themselves in the past, to Liberal governments in particular, ministers like Mr. Lang acted on things.

I know a lot of people here will not like to hear about Mr. Lang's LIFT program. But I happened to work in Ottawa in the grain marketing office for several years, and I knew a lot about Mr. Lang's GOMI program, the grains and oilseeds marketing incentive program, and I knew a lot about DREE. In fact, two years out of school I got a DREE grant and established a business in southern Alberta. A lot of people established businesses with that.

• 1740

I think these kinds of programs can encourage diversification away from traditional crops. The dehy example is a very good example. It wasn't really an export-oriented western business until the late 1960s, when Mr. Lang came out with some of those programs. I think we have to look at some of those things again—now. There was some talk earlier today about designing programs. I have some ideas and I think my colleague, Mr. Benoit, has some ideas that we could put to people.

I'd like to say another thing. We're hearing a lot about bureaucrats here today. We had some solutions presented to us by bureaucrats the last time we were in Ottawa, but they can't go forward with these until they get the political direction. Where do the politics end? There are some very highly qualified people in Ottawa in the bureaucracy. I go back to the days of the WGSA. I was in Ottawa when the special Canadian grain programs were being done, the GRIP and the NISA things, the third line of defence. Mr. Mulroney was not well paid for the billions of dollars that he put into western Canada in that kind of thing.

Now we have AIDA. I will submit to you that AIDA is a fine program, because bureaucrats in Ottawa and bureaucrats here in the province have been put under direction to reduce budgets, to make programs that won't pay but reduce budget deficits and that kind of thing. I think the bureaucrats have designed a hell of a good program: it's very successful in not paying out money!

Voices: Hear, hear!

Mr. Bryan Davidson: Here's another example, if you want to go back a bit. Under the last GATT agreement, we were asked to reduce export subsidies by 36% over six years, but our government saw fit to reduce it 100% in one year. Now, I just calculated it at the back of the room—and somebody brought this up—and we should be four years into a 6% per year reduction in the WGSA. We should now be down about 25% of that money, but nevertheless it's gone down 100%.

Now, there were provisions in the last GATT agreement to bring back that money if we chose to do that. I know that for a fact. So when are we going to start to ask the governments to consider that? If the government doesn't get asked to consider those kinds of things, I don't think you can expect it to just volunteer to do that. That provision is there, ladies and gentlemen, and I would ask you to look at it.

Industries like the dehy industry, and particularly the export market part of it, were born, and export markets were explored and identified, to capitalize on the natural advantages we have. We believe our industry is the lowest-cost, highest-quality alfalfa processing group in the world, but right now at plants we don't receive as much money for our product as the processors in Europe get for that product through subsidies. In fact, we're at around $100 a tonne right now in export markets and their subsidy is about $114 a tonne on top of everything else. You just can't expect an industry like us to go out and compete with that and stay alive.

Basically, if you go back again and just look at the government's record, in 1984 we were seen to be a bit of a success story, and ministers like Mr. Pepin saw the value of this industry to western Canada. He, himself, took the initiative to make sure we were included in the WGTA. As I said before, we weren't on the Crow, but we were on the WGTA, and that's when we expanded into markets. In some cases like Japan, Korea, and Taiwan, we became virtually the only supplier of pellets in those markets. We just literally took over those markets because we had a cheap land base, we had cheap energy, and we had a good transportation rate. That of course died in 1995, and basically we've been dying ever since.

Anyway, I just really want to stress the importance of that WGTA. The other gentleman talked about that. I really do believe that we're starting to reap the benefits of what we've sown not too long ago. I think this committee should take back a report and should really address the issue of how this government wants to leave its mark on the future of western Canada and that kind of thing, because to me that's really where it seems to be at right now.

If the government sticks to the same plan—

• 1745

The Chair: Bryan, we've gone almost 15 minutes, and we have to hear from the grain commission. I'd like to have a couple of extra minutes—

Mr. Bryan Davidson: I thought you said I had 45 minutes.

The Chair: We have 45 minutes for the two groups, and that includes questions. You can do whatever you want—

Mr. Bryan Davidson: Okay.

The Chair: We have 45 minutes.

Mr. Bryan Davidson: I'll finish up here.

Basically, I'm really concerned with the future of agriculture in western Canada right now. I think you've heard today the concerns from the grain group; we're suffering from the same kinds of factors in overseas markets for our products as well. And it really disturbs me to think that with so much time and energy that has been put into creating industries and sectors such as ours by past governments, it could disappear at a fairly rapid rate under the situation we're faced with.

At least grain people can look forward to a program that may be adjusted, tinkered with, or altered in a way that is going to begin to pay something out. We have not been able to become eligible for consideration under those programs, because we're so-called processors, yet at Legal, which is only a medium-sized plant, I have equipment and staff to farm 15,000 acres. So we think we're in the farming business too, but we just can't get people to see that.

Anyway, I just don't think it's right for a government to stand idly by and witness the demise of an industry, and I think that's what it's coming to with us fairly quickly, because of these negative margins that we're up against and that kind of thing.

The one thing I'd really like to leave with the committee is that you perhaps could do a report out of this round of meetings you've had out here, and perhaps identify a clearer vision for western agriculture or agriculture in Canada. I think that is really what's needed right now, and certainly nobody could be against the diversification thrust and that kind of thing that we're hearing of people trying to do. But if your hands are tied, it's really hard to get on with that.

I have a couple of comments for the group's consideration here. You do realize that agriculture budgets have gone from over $6 billion down to just a little over $2 billion in the last few years. I can't tell you how many years, but it's the last four or five years. So you know there's great difficulty in getting more money out of the government. On the other hand, I think a task force or a group of people have to be put together to see what's going to happen through this period, because if nothing is done, as you've heard today, some very major restructuring is going to go on. I think a group of people should be put together in a task force to make recommendations.

The rural development initiative is a good one, and I think it certainly applies in western Canada. It certainly applies to an industry like ours, because most of our plants are on the fringe of the main growing area.

I heard some comments earlier about the Europeans. I don't think they're going to change either. I really don't. I don't think there's going to be an agreement for 10 years. The minister keeps tell us that our solution is all mixed up in a successful trade round; I just don't know how many of us will be around in 10 years.

But I can tell you, I've been in Europe, and I've seen how the groups like COPA over there do their business. I can tell you they're very skilled at what they do.

Basically, I agree with the gentleman earlier who said that Europe wasn't going to change very quickly. I think if we're going to wait for a trade-related solution in our particular case, we're all going to be dead before that happens.

With that, Mr. Chairman, I'll end my remarks.

The Chair: Thank you.

Members, we have 25 minutes left. We'll hear from the barley commission, and any questions that you might have.

Who's going to begin, Pat or Brenda? You're welcome.

Mr. Pat Durnin (Member, Alberta Grain Commission): I'll begin, Mr. Chairman.

My name is Pat Durnin. I'm a grain farmer from just outside of Calgary, and I'm a government-appointed member of the Alberta Grain Commission.

With me today is Brenda Brindle, our grains market analyst for the commission. You all have a prepared document that you can follow along with, and Brenda and I will share in the presentation of that document.

The Chair: Will you go through the whole thing, Pat?

Mr. Pat Durnin: Yes, we will.

The Chair: If you go through the whole thing, there will be no time for questions. But that's fine, if that's your choice...

Mr. Pat Durnin: We'll watch it closely and try to cut out whatever parts we can.

The Chair: We have to be finished at 6.15 p.m. on this segment.

• 1750

Mr. Pat Durnin: We should be okay.

First of all, we welcome the members to Alberta. I have to say that you picked a good time to come: you're probably getting more sleep than some of your fellow members in Ottawa these days.

The Alberta Grain Commission is a body appointed by the Minister of Agriculture, Food and Rural Development, and we are mandated to review any and all matters pertaining to the grains, oilseeds, and special crops sectors in Alberta. We're comprised of six farmer-members from various regions of the province and three departmental officials.

Through extensive consultation with industry representatives and in cooperation with the department, the Alberta Grain Commission constantly reviews policies and programs affecting Alberta crop producers, and we make recommendations to the minister on appropriate courses of action and/or changes to improve farm returns and the long-term viability of the industry.

We welcome the opportunity to meet with the standing committee, and we compliment you on your western Canada public meeting process in your effort to gain insight and information on the farm income situation concerning western farmers.

Ms. Brenda Brindle (Grain Industry Analyst, Alberta Grain Commission): Thank you.

I will be referring to some of the tables at the back of the brief, so you might want to separate those out from the document. There are about six tables and charts. I'm sorry—we did bring overheads, but I guess you didn't have a projector available.

Alberta's agriculture industry is diversified and has a growing value-added component. The combination of our large and efficient livestock sector and progressive grains and oilseeds sector helps to reduce the volatility of price swings for any specific commodity.

If you look at the first chart and look at the blue bars on table 1, overall things look relatively healthy in Alberta, considering current and short-term commodity prices. However, this cannot be said for all farmers, for all areas of the province, or for all sectors of the industry.

We all know that grain prices have been depressed for the last few years and that hog prices took a sharp turn downward in 1998 and have still not recovered to profitable levels for many producers. As well, in particular, producers—and this is important in the context of the room you're sitting in—in the northeastern, northwestern, and Peace regions have been negatively affected by continuous years of adverse weather conditions and significant production shortfalls.

If you turn to table 2, the blue bar shows that while net cash incomes rose during the period of 1971 to 1998, the yellow line is expressing constant dollars—removing inflation—so you see that the overall trend for net cash farm income is indeed down.

Tables 1 and 2 clearly show that farm margins, on a net basis, continue to decline in relation to farm cash receipts. The only way farmers have managed to survive and remain viable is to continue to become even more efficient by producing more volume at a lower per unit cost.

In table 3, we put together farm cash receipts, shown by the blue bar, the expenses in green, and the realized net income in yellow. This just reinforces some of the messages that you've heard this afternoon. Table 3 shows an even bleaker picture in the sense that farm expenses have trended upward while realized net farm incomes have trended lower—and this is for agriculture as a whole. The picture would be somewhat more dramatic for the crop sector if we were to look at that alone.

If you turn to table 4, we look at the key indicators for the short term. The picture does not appear to be overly positive for crop receipts. With the possible exception of wheat, current crop year prices will be lower than last year's and will below the five-year average. Although prices are expected to improve slightly next year, they will still be well below the five-year average.

World grain prices continue to be depressed and there is not much room for optimism for price improvements in the near term. Exporters such as the United States, the European Union, Canada, Australia, and Argentina all have large grain crops again this year. The key thing is that although world wheat stocks have come down a little this year, the carry-over stock held by the major exporters in the world is up.

Why, then, are we continually plagued by large surplus stocks of grain? One of the reasons is production support payments, primarily in the European Union and the United States.

• 1755

Table 5 shows two sub-tables within it. The top one is in dollars per tonne and the bottom one is in percentages. Both clearly indicate, as we're all well aware, the large, almost obscene level of subsidies in Europe, and to some extent in the United States, with Canada far behind.

When you consider that the U.S. has increased their farm subsidy payments in 1999, even beyond what is shown on that table there, bringing the total to some $22.5 billion, you can well understand the frustration western Canadian farmers have when told that Canada's support payment programs must be green and that Canada cannot compete with the treasuries of the U.S. and the European Union. This may be true, but it is of little solace to a prairie grain farmer who is seeing his farm's viability being eroded.

The Alberta grain farmer has three primary safety net programs available to him. These include crop insurance, NISA, and FIDP. You asked questions about AIDA earlier this afternoon. Something to realize is that FIDP is far more familiar to farmers in Alberta than AIDA is. It might clarify some of the questions if you were to talk in those terms. The FIDP in Alberta is currently linked with the federal AIDA program for 1998 and 1999.

Crop insurance can be an effective production risk management tool. Unfortunately participation rates in Alberta continue to be below acceptable levels, with only 50% of eligible acres covered in the province. There are concerns that the crop insurance program has not kept pace with technology and management improvements and that the risk area system we use is not appropriate.

The Alberta Grain Commission compliments the Alberta government for calling for a comprehensive review of crop insurance, which we believe is to occur next year. We would encourage the federal government and other provinces to take similar initiatives. We need to ensure the crop insurance program of the future reflects the advances made in our industry over the years and meets the needs of producers in the future.

NISA is a very popular program. As a financial risk management tool, it provides an attractive rate of return. However, there seem to be questions about the program's ability to stabilize farm income when significant income shortfalls occur. The Alberta Grain Commission suggests NISA be evaluated in a broader review of Canada's safety net system and perhaps adjusted to be more effective in stabilizing farm income, if in fact that's the primary objective.

Alberta's FIDP, and to a certain extent the federal AIDA program, do appear to be effective in targeting payments to those in most need. However—and this is the important thing—where these programs appear to have fallen behind is the ability to deal with prolonged problems or prolonged periods of income shortfall.

If you look at table 6—and it's on two sides—you'll see it shows a summary of weather problems that have faced northern Alberta for multiple years. This area and to the north have experienced multiple years of drought-like conditions. The table outlines, from 1990 to 1999, by county, the areas affected by drought or unable to seed. That points out why counties such as the one you heard from today, Bonnyville, which is on the second page, encountered only three years of what would be normal weather out of a nine-year period.

Table 6 indicates the weather problems that some northern counties have faced in recent years. So when you add on low grain prices over the past few years, it is easy to see why farmers in these areas are facing non-existent and in some cases negative margins.

Mr. Pat Durnin: In response to concerns and criticisms raised by Alberta farmers, the Alberta government made changes to the FIDP. The Alberta Grain Commission supports these changes and feels they were necessary and timely in dealing with consecutive years of low income that many farmers face.

In general the Alberta Grain Commission is not convinced that the current set of safety net programs is appropriate or effective in meeting the needs of grain farmers. The government programs should not be designed to save every farmer or guarantee every farmer will be profitable. However, it is our view that governments must develop a clear definition of income disaster and develop appropriate programs to address significant income shortfalls that are beyond the control of farmers.

Current programs are designed to respond to one or at best two years of income decline. Beyond that they fall short. The Alberta Grain Commission feels we might have things backward if we provide generous support when a one-year hit occurs but no support at all if you have three or more consecutive years of income shortfall.

• 1800

More appropriately, the federal government must take more responsibility in offsetting the distortions caused by subsidies in other countries. While the WTO process may be the appropriate mechanism to seek a reduction in export and domestic subsidies, the results from Seattle are disappointing and clearly show that achieving a level playing field is a long way away. What do western Canadian grain farmers do in the interim?

We agree that the substantive reason for the grain farmers' current problem is that other countries' policies are distorting production, markets, and prices. But we must also look at home. Difficult problems such as low farm incomes have many facets and need a multifaceted solution.

The Alberta Grain Commission acknowledges that the first line of defence is farm management. Grain prices are trending downward, input costs continue to increase, and we appear to be experiencing more volatile weather conditions. One has to be a top-notch farmer to maintain positive margins, and we have to continuously look at ways to improve our returns. Farmers can manage some of the risk of volatility if they have the tools to do so.

With our rigid marketing system, farmers are not at liberty to take advantage of value-added opportunities and use risk management tools for wheat and barley. With pooling, there is no reward for good marketing skills. Those with poor marketing skills are the winners. As it stands now, farmers carry far too much risk with the current wheat marketing system, because they can't respond to true market signals and manage their own affairs.

Plebiscites and surveys since 1995 indicate that Alberta farmers want the freedom to market their wheat and barley to any buyer, including the Canadian Wheat Board. The inequities between the Ontario wheat marketing system and the Canadian Wheat Board in the designated area can no longer be ignored. If the Canadian Wheat Board is in the best interest of Canada for marketing wheat and barley, then either make it fully national in scope or provide the flexibility for farmers in each province, if they so choose, to be independent producers, processors, and marketers of their own products. If Ontario can have its own wheat marketing system, why can't Alberta?

We have a $2.4 billion grain handling and transportation system that's also part of the problem. Handling and transportation are the largest input on our farms—not fertilizer, seed, chemicals, depreciation, or interest, but transportation. According to Westac, logistics costs are typically in the range of $60 to $80 per tonne. For wheat, that's $1.63 to $2 per bushel. That is a huge expense.

We commend the federal government on the initiatives they have made with regard to improving western grain handling and transportation. We further commend the Minister of Transport for his policy statement last May where he agreed with Justice Willard Estey's vision that the western grain handling and transportation system can be made more efficient, accountable, and beneficial to farmers by moving to a more commercially oriented environment, with appropriate safeguards of course to protect the public interest.

Grain handling and transportation costs approximately $2.4 billion a year. A 5% reduction in costs would save $120 million a year. We believe Justice Estey's vision could save much more. Implementing Mr. Kroeger's recommendations is a step in that direction.

On the international scene, if Canada wants to see other countries make significant changes to their trade- and production-distorting policies, then Canada must be seen as a credible participant at the negotiating table. Survival of the Canadian grain industry, both raw and processed products, rests on expanded market access and improved trade rules. Canada should not be going to the WTO table wanting market access and domestic policy changes in other countries while protecting our marketing boards and the Canadian Wheat Board at home.

The George Morris Centre study done for the Agri-Industry Trade Group indicates that potential net benefits to Canada's agrifood sector, not just grains, through the elimination of current barriers to market access is at least $2.5 billion per year. Canada must fully support trade-liberalizing policies, or the whole economy will ultimately be affected.

In summary, you wanted to know about the effectiveness of long-term safety nets. Our response to that is, continue to work towards resolving international trade issues. In particular, we need to reduce the global overproduction that is artificially stimulated by subsidy action of our main competitors. Do not protect supply management in the Canadian Wheat Board at the WTO to the detriment of the whole prairie grain economy. Also recognize that resolving trade issues is a long-term solution to current problems.

• 1805

You wanted to know other national initiatives to provide stability and the environment necessary for stable growth in the agriculture industry: Investigate a safety net package that addresses income problems beyond sudden income changes, as is done by AIDA and FIDP. Ensure crop insurance reflects the needs of producers. Develop a clear definition of income disaster and appropriate programs to address significant income shortfalls that are beyond the control of farmers. This may need changes to NISA or perhaps other safety net tiers, which directly offset the impact of export subsidies.

Solutions for ensuring that the agriculture sector and the rural communities in western Canada will remain stable: Eliminate federal regulation that hampers the ability of western farmers to compete in global markets, that constrains value-added opportunities on the Prairies. Giving up our freedom to choose our marketing and transportation system, or letting us out of the CWB-designated area is certainly one course of action.

Move toward Justice Estey's vision of the grain handling and transportation system, which he believed would make the farm into a family profit centre, by implementing Mr. Kroeger's recommendations. The Alberta Grain Commission appreciates the opportunity and thanks the committee for coming to western Canada. We look forward to your questions.

The Chair: Well, they'll be very few. We have less than eight minutes, gentlemen. I will not steal time from farmers who have been waiting patiently all afternoon. I would just invite one tiny question from each of you and we'll see how far we go.

Mr. Leon Benoit: Okay. Good afternoon, ladies and gentlemen.

I will just ask one question. We've heard a lot of negativity from people who've presented so far today as to the chances of any meaningful trade negotiations that will help deal with the real cause, a big part of the cause, of depressed commodity prices. We have heard some suggestions on the other side, on the input side, that certainly would help. I would like to hear from each of you who want to comment on it your thoughts on whether things are as negative as they've been presented here today in terms of the likelihood of arriving at a meaningful agreement on agriculture subsidies, and especially trade-distorting subsidies.

Just as a little bit of background, I've gone several times now to a NATO parliamentarians' association meeting in Europe, and one of the key issues I deal with is trade issues, and farm trade in particular. I visited the Dutch parliament and they told me their goal is to completely eliminate subsidy, quickly. That's their goal. This is from the main opposition party and the three main coalition parties in that government. They're inside the EEC. By the way, they've never heard from a Canadian official other than the ambassador, and they are obviously an ally for us inside the union.

With that bit of background, I really want to hear your thoughts on whether things really are as negative as we've heard presented today in terms of a meaningful agreement that could really help commodity prices.

The Chair: Can we have a relatively short answer to that?

Mr. Garry Benoit (Executive Director, Canadian Dehydrators Association): I was in Seattle last week, and I survived.

I'm not too encouraged, but having said that, we'll go through cycles. With our particular interest, as bad as AIDA is and everything else, we're saying give us something parallel for just the two years that AIDA is out there. That just might be enough to tide us over until the market corrects itself a little in spite of those terrible subsidies and that terrible subsidy situation. We've also been very modest in saying give us even 20% of what the Europeans get every year for just our two or three most critical years, and we'll probably somehow tough it out and be around.

The Chair: Thank you.

Mr. Garry Benoit: But it's not going to get solved in the short term.

The Chair: Mr. McGuire, do you have a short question?

• 1810

Mr. Joe McGuire: Okay, I just want to mention that the most persistent lobby group in western Canada is the dehy guys, and I want to say that Murray really wanted to be here today and was ordered back. He was a little upset about that, but I'm sure... you're coming in in December?

Mr. Bryan Davidson: I'm coming in next week.

Mr. Joe McGuire: Coming in next week, so you'll probably get hooked up there. I'm just wondering, who has your business plan at this point and—

Mr. Bryan Davidson: It's just off the press and this is first group to get it.

Mr. Joe McGuire: Okay, and what's—

Mr. Bryan Davidson: It'll be delivered next week and explained and all that. We've been asked to quantify the figures, and we've tried to do that.

Mr. Joe McGuire: Okay, so we won't get into the plan today. We'll talk to you next week on it.

On page 3 of your presentation, on NISA, you say NISA should be “evaluated in a broader view of Canada's safety net system and perhaps adjusted to be more effective in stabilizing farm income”. How would you suggest you do that? How would you improve NISA? There's all kinds of dollars in the NISA account, but it's sitting there.

The Chair: Do you want to try that?

Mr. Pat Durnin: I could try that. If I could just briefly say so, the situation in the crop sector is as serious as you've been hearing, and it will become more serious unless we adjust our programs and policies to address it.

NISA is one aspect. It's a program, it is popular, it is useful for a very small percentage of farmers. However, that percentage is also important to the economy. The NISA program could be adapted to become a vehicle or perhaps a payout mechanism of some sort to offset the distorting subsidies that are out there. There are any number of mechanisms that could be used in the program more effectively, I think.

Thank you.

The Chair: Dick and Rick, you have two and a half minutes to share. Dick, go ahead.

Mr. Dick Proctor: I have a quick question for Mr. Davidson. It's nice to see you again.

Have you, the dehy group, now resigned yourself that the AIDA program is just never going to work for you? The minister has talked about changes to AIDA—flexibility and all those good words. Are you just talking now about a parallel program that would have to come into play?

Mr. Bryan Davidson: No, we would be quite willing to have ourselves considered under the AIDA umbrella, if you will, if changes could be made.

Mr. Dick Proctor: Is there some hope that could happen?

Mr. Bryan Davidson: Well, yes, there's a lot of hope with a lot of people in Ottawa, but not in the minister's office.

The Chair: Okay.

Mr. Bryan Davidson: Half the bureaucrats are frustrated that they can't get the political direction they're wanting.

The Chair: Rick.

Mr. Rick Borotsik: Mr. Chairman, I'll waive my questions. I've obviously met with the dehys many times. They are a very active lobby group and I understand the position of the grain commission, so we'll listen to the producers, if you don't mind, Mr. Chairman.

The Chair: You can take one minute, Mr. Benoit. One minute.

Mr. Leon Benoit: I appreciate that, Mr. Chair.

Pat, when you responded to my question—actually, you didn't respond to my question, and I fully recognize how tough the situation is. That's not the question. The question is, what is the likelihood over the next two, three, or five years of some really meaningful progress in trade talks that will help relieve this problem? It isn't about the problem—we all know that's there—it's about the likelihood of getting a meaningful agreement of some kind.

The Chair: Mr. Durnin.

Mr. Pat Durnin : My personal feeling, and I think the feeling of my fellow commission members and staff at the grain commission, is that there likely is not any real possibility of any meaningful negotiation that will lower trade-distorting subsidies in the short term, which I consider five years. The fact of the matter is that if society in Canada wishes to maintain the grains industry in western Canada, in particular, in its present form, then those subsidies must be offset to some extent, using the existing programs or a new program or whatever works out there.

The other side of it is that if society in Canada does not want to support the existing environment in the western Canadian grain sector, then we must be preparing society for a very traumatic and dramatic readjustment in this industry.

Thank you.

Mr. Bryan Davidson: Can I make one short comment, Mr. Chair?

The Chair: Make it very short, Bryan.

Mr. Bryan Davidson: I really think, based on the talk on the street and what's going on in western Canada right now, the government is at a point where it really has to develop a vision. It has to develop a vision because the differences are just so great.

• 1815

I think the Europeans developed this vision a long time ago, and they're just going to stick with it. It's working and they're going to stick with it. It's time the government of the day really developed a vision. There are people out there who can work on that and are certainly better qualified than I am.

Thank you so much.

The Chair: Thanks to all of you.

Now we're going to get back to some of the farmers from the audience: Einar Loveseth, Bernard von Tettenhorn, Greg Porozni, and Ed Armstrong.

We have until 7 p.m. I have other names on the list, and it'll all depend on how long you take. The shorter each presentation is, the more farmers we will hear from. I'll just leave this in your hands. I hope you will try to make the presentations as compact as possible, because we have a number of others who would like to speak.

We'll proceed with the first four. Mr. Armstrong, you'll be first since we're going alphabetically. Welcome. Please proceed.

Mr. Ed Armstrong (Individual Presentation): I wish to thank you for this opportunity. I came here hoping I could speak, but mainly to listen. I farm in the Dapp area, which is just north of Westlock. I'm a grain farmer. I've been involved with the Western Barley Growers Association. I've been the chairman of the safety net committee since 1984.

There are two issues at stake here. Agriculture is going to a global economy, whether we like it or not. There are going to be world subsidies—European, U.S., wherever. They're there whether we like it or not.

In 1988 I was on the national review committee, and the goal statement was that Canadian agriculture had to be competitive on a global basis. The farmer had to be market-driven and self-reliant on a global basis, and I agree with that 100%. If Canadian agriculture is going to be there, that's a good goal to start from. I would really encourage the government to keep that goal upfront and foremost.

How are we going to get there? There are two things. First, farmer independence creates wealth, not farmer dependence on government. The other issue is the farmer's ability to be able to produce a good-quality product, sell it and fetch a good price, whether domestically or abroad. He must have that opportunity.

The second opportunity Canadian agriculture must have is an environment where Canadian farmers are the lowest-cost producers, so we can compete in a world marketplace.

We have some safety nets in place. We have crop insurance, FIDP, AIDA—FIDP mainly for Alberta—and NISA. I've spent a lot of time on these programs, and I think it's fair to say—and it's going to happen—there will be a huge cash outlay of money in Alberta in the next six months. The program that was announced, with the changes to the FIDP, will really affect farmers, based on hurt over the last five years. It will go back to the GRIP days. A fair number of farmers will receive a fair chunk of change.

The other area, which the Alberta program may not really address that much, is the farmers who've had, say, four years in a row. However, if the changes to the AIDA program combine these two, which I've been told they're supposed to, it will address more the farmers who have been hit over the six years. There's going to be a big shot of money coming here within a six-month period. I would encourage every farmer to make sure he follows this one closely and the appropriate applications are made out for FIDP, AIDA or whatever the mix is, because there will be a large shot of money.

The problem with the FIDP and AIDA programs, which you've heard are not working, is that in the northeast it's been a crop insurance issue, not an FIDP or an AIDA issue. Price has not been the problem. It's been production. Therefore crop insurance has been the weak link. AIDA and FIDP were never designed to address the crop insurance issue.

• 1820

The other secret with the AIDA and FIDP programs is that they are profit-margin-driven programs.

The other issue, which I'm very pleased about, is that it's the only program we've had, that I know of, that tracks both the cost and price side of the equation. What these two programs have done is they've raised a huge red flag to the government that we have a problem on the cost side. I think that we as a government and we as farmers have to deal with this big red flag that's raised on the cost side if we are going to be competitive in world agriculture prices.

What we're looking at is that we have to look not at throwing more money at the problem, as I said before, like the subsidies in other countries; I think we have to look inward, at our whole regulatory process. I think we have to look at whether the government programs and the regulatory process are cost-effective for farmers or are they really a liability to farmers. I think we have to relook at that, and we have to look at our tax system.

The other thing we have to look at, and it was addressed here a little bit today, is the Farm Credit Corporation, a lending agency at the federal level, and also the provincial ones. We have one here in Alberta called the Agriculture Financial Services Corporation. If you have a mortgage—and this is something that hasn't been addressed, and I think the government has to address it—with the Farm Credit Corporation at 12% and you go into arrears, and a lot of farmers here are in arrears... It's the same thing with AFSC; the only thing different is that the Farm Credit Corporation amortizes it semi-annually, and ADC annually. But if you have a 12% mortgage, when that thing goes into arrears your real rate of interest comes up to approximately 40%. The farmer has one of two options: number one, he has to get refinancing right away; number two, he has to make double payments for not quite three years, but more that two and a half, or else he loses his farm.

We have to address this. The profits from Farm Credit Corporation go to the federal treasury—I think a couple of years ago it was over $40 million—and the profits from AFSC go to the provincial treasury. So really what is the point of giving the farmers $1 if you're going to take $6 out of their other pockets? This has to be looked at. This is part of the whole process of the whole intergovernment review to see what are we doing for agriculture; and I think this is what we have to look at.

The goal we had, which I've mentioned previously at the opening, is a good one. Canada is at the crossroads of agriculture, and we have to either ride the wave of global agriculture or else be crushed by the wave. We're on the top of this wave, and the key here is to start looking internally and see what's causing the high cost of agriculture.

Thank you.

The Chair: Thank you, Mr. Armstrong.

Now we'll turn to Einar Loveseth. Einar.

Einar Loveseth (Individual Presentation): Thank you, Mr. Chairman, honourable members, ladies and gentlemen, fellow colleagues.

First of all, I want to say that the prices I am using on this report are not statistics; they are drawn from my own ledger based at Viking, Alberta.

The elimination of the western grain transportation subsidy, the Crow rate: The transportation subsidy in 1995 was around $780 million, and as the honourable Mr. Benoit said, it would be substantially higher today. Freight rates in 1995 were $12.93 per tonne; freight rates in 1999 are $29.23 per tonne, an increase of 126%. The western grain transportation adjustment fund, which was paid to farmers early in 1996, paid for approximately one and a half years of freight on the average farm.

Secondary industry: The elimination of the Crow rate was supposed to promote secondary industry. For example, governments encouraged expansion of the hog industry. Barley prices stayed the same for the hog industry as export prices; meanwhile, hog producers were killing off newborn pigs and giving away pork at farmers' markets. The market for hogs wasn't there.

Secondary industry will not help grain producers unless there is a profit to be derived from that industry and some of those profits can filter down to the grain producers. This is very unlikely to happen in the future, as large corporations and companies take over these facilities.

• 1825

My conclusion is that the federal government is going to have to step in and make sure that if they want an export grain industry in western Canada they're going to have to make that industry viable.

There's been a continuous decrease in grain prices and a continuous increase in input costs. I'm taking these figures right out of a ledger and I'm trying to keep the dates as close as possible, but on October 24, 1995, number 1 wheat, 13.5% protein, was at $4.32 per bushel net, and for that I'd take out the cheque. But on November 26, 1999, number 1 wheat, 13.6% protein, was $3.07 per bushel net, a decrease of 41%.

Canola prices: On November 1, 1995, they were at $7.74 a bushel net; on November 30, 1999, $5.65 net—and I think it went down to about $5 today—a decrease of 37%.

Barley prices: On September 18, 1995, the price was $141 per tonne or $3.06 per bushel; on November 10, 1999, it was $80 per tonne or $1.78 per bushel, a decrease of 72%.

Inputs: Canola seeds could be purchased in 1995 for about $1.25 per pound; in 1999 the prices are $1.90 to $5.25 a pound, anywhere from 65% to 324% more.

Fuel prices: In 1995 diesel was at 25.5¢ per litre. These are net prices, mind you, after the refund from the Alberta government came, so they may seem low to some of you. We get six, eight or ten; they change it every once in a while. In 1999 diesel was 32.5¢, an increase of 27.5%. In 1995 gasoline was 38.5¢ per litre; in 1999 44.3¢, an increase of 15%.

Fertilizer prices increased from 30% to 40%, or maybe higher. I didn't do research on that one.

World trade: The World Trade Organization in Seattle. The procedure that Canada took on trade issues in Seattle was ridiculous. Canada confessed to being squeaky clean in regard to subsidies being paid to agricultural producers. This may be true, but it has hurt the grain producers of the Prairies tremendously the last three or four years. Canada threw the cards on the table and wanted the other countries to pick a hand. You don't do that in a poker game. You play the hand that you've been dealt, to the best of your ability.

Going into the negotiations, Canada knew the European Economic Community were not prepared to bend on any of their positions. Farmers had demonstrated in Paris the week before. President Bill Clinton, one month before the negotiations, announced a $7.5 billion payout to farmers suffering from low commodity prices. The money was to be paid immediately; $5.5 billion was to be in the farmer's hand by American Thanksgiving, November 25, 1999. The other $2 billion was for disasters such as flooding, hurricanes, severe drought, and other problems. Any changes at that level would not help grain producers for many years to come, if they were possible.

The present agricultural programs, the FIDP and the AIDA program, are not working. The government has spent millions of dollars promoting these programs—advertising on TV and radio, full pages in newspapers, large cardboard displays in banks and post offices. They are forever changing the guidelines for the programs and deadlines for the applications. If these programs were working, the producers would be standing in line to get the money. The only thing about these programs that is right is the name “disaster”, and that is exactly what these programs are.

• 1830

The farm crisis: Governments have decided that they will not support the smaller farms, stating that 20% of the grain farmers in western Canada produced 80% of the grain. However, we have to recognize the impact that removing more people from rural areas will have on small towns and communities. Fewer people means less support for rural schools, hospitals, churches, and recreational facilities. Small businesses will be forced to close.

Family farms are part of our Canadian heritage. Our forefathers and fathers settled the land, raised large families and built the schools, churches, elevators, roads and communities. Now third- and fourth-generation farms are being lost through no fault of their own, but by depressed grain prices. Recently the United and Lutheran churches of Canada announced that they were organizing committees to address the problem of the family farm crisis. They are twinning city churches with small town churches to support them in their time of need. Usually when churches call for support on agriculture issues, it is a third world country we are talking about. Now the call is for aid here at home in Canada.

The emotional pressure put on many farm families is tremendous. To expect people to give up an entire way of life without there being repercussions is ludicrous. The need for support services and financial aid for these displaced families will be great. It's better to provide a support program for the people who want to stay on the farm, and I have this proposal for a farm health program. No one else seemed to present one or have anything, so I'm going to throw this by you, Mr. Chairman. Do I have a few minutes yet?

The Chair: There are a lot of farmers who want to present, and you've already had quite a bit of time, Einar. You make the choice. I only have another 28 minutes and when it runs out, it runs out.

Mr. Einar Loveseth: In the proposal I have for a farm health program, the program would be based on the tax assessments on land and also on permit books that would verify the crops that were grown. It would be something like when the transportation thing was paid out. It could be a one-year program or continue until our grain prices increase or subsidies are reduced or eliminated in other countries.

As the governments do not like acreage payments, this proposal based on taxes could be considered a tax refund program. There would be a limit on the number of quarter sections eligible, and also declining payouts as the number of quarter sections increased. This would be a quick solution to put money into the hands of prairie grain producers.

The intent of this program would be to support the family farm. This process would prevent the large corporations, Hutterite colonies—not that I have anything against them—and foreign ownership from getting the lion's share.

For producers renting the land, their assessment would be based on the taxes or the assessment of the said lands. The administration costs would be minimal if processed by the rural municipalities or counties, using the seeded acres per quarter section arrived at by the use of grain permit books. I didn't like to use the words “seeded acres”, but what I really mean is that assessment would show up whether a quarter was broken into 160 acres or whether it only had 80 or 70 acres. That's the reason I used those figures, Mr. Chairman.

You would have the opportunity to pick your highest assessed quarter sections, to a limit of maybe four or five, or whatever money the government had. But say it was $500 average on one quarter; it would start out at 10% interest, and you'd get $5,000. Then for the next quarter—I'm still just using those numbers—$500 would be 9.5%, and it would come down half a percent on the value of the next quarter in line.

I can't see where you could have a simpler program, and the thing is that you wouldn't have trouble with the people who were in livestock, whether in cattle or hogs, because they'd get paid on that basis, to start with. And that has been the problem with all programs we have tried to put together in this country; we've pitted one against the other.

I think we're just about in the process of doing that here today. We're going to have to be careful with that or, as somebody said, we're not going to get a damn thing out of this. We have to get onside here and get our acts together.

• 1835

The Chair: Thank you, Mr. Loveseth. Are you finished?

Mr. Einar Loveseth: Yes.

Voices: Hear, hear!

The Chair: Thank you.

Now we go to Greg Porozni. Greg, are you sharing your presentation with Mr. Kitz?

Mr. Greg Porozni (Spokesperson, Cropmasters): I'll make the presentation, but Larry Kitz and I are presenting on behalf of Cropmasters.

The Chair: Thank you. Go ahead, please.

Mr. Greg Porozni: Cropmasters is an association of 16 progressive farmers in east-central Alberta. Our members are involved in production and marketing of several industries in agriculture, such as pork, beef and grain production.

Western Canadian farmers are continuing to face some of the toughest economic times ever. Several issues need addressing quickly in order to save our rural economies.

Current provincial and federal support programs make better news headlines than they do assistance for those producers in need. They fail to elevate farmers even near to the subsidy levels of our counterparts in the U.S. and Europe. Canada, to the benefit of its treasury, has reduced its subsidies far in excess of the requirements of the 1995 Uruguay Round of talks. While Europe and the U.S. just meet the subsidy reductions, we in Canada bear the brunt of competing in an unfair international marketplace without a federal government to represent us. The collapse of the WTO talks in Seattle and continued distorting market signals from our subsidized competitors will cause depressed market grain prices for years to come. Steps must be taken soon to end these subsidies or provide adequate compensation so that we can compete on a new level playing field.

On the domestic front, the federal agriculture minister is defending supply management in world trade talks, yet he is expecting other countries to reduce their subsidies. We see this as hypocritical. Canada is enjoying the highest subsidies in the world for milk and eggs. On the other hand, we have the lowest subsidies in the world for wheat, canola, beef, pork, etc. We must deal with these discrepancies domestically first before we have any chance at negotiating at world trade talks.

We request that our government increase income averaging on AIDA from 70%. This amount is obtained from standard insurance programs. When a producer is requested to average income levels over several years and to then take 70% of that total, you realize the compounding effect of reduced support levels that many will not qualify for. Federal taxes must be reduced, both tangible and hidden. There's no better way to give a souring industry a kick in the pants than to reduce taxes and influence investments.

We must be more assertive when negotiating with Europe and the U.S. These subsidies must be dealt with far quicker than the casualness of trade talks. An entire industry can be destroyed in the ten to fifteen years that it will take to enact any resolutions at the WTO.

Turning to transportation, the current transportation system is inadequate. We support the Kroeger report recommending fundamental structural change in the western grain transportation system. Producers are tired of having their cashflow stalled because of congested grain elevators and inefficient grain transportation. That was promised to us with the demise of the Crow but never realized. In fact, it became even more inefficient. When our government is negotiating on our behalf, where is the accountability on behalf of all those involved in an essential service such as grain transportation? Yet producers pay the entire bill.

We need an immediate reduction in freight rates. The provincial government is on record as saying that the freight rates are $12 to $14 per metric ton too high. This is the same government that endorsed the death of the Crow rate.

We also recommend that the Canadian Wheat Board acquire grain at port positions, leaving rail companies and line companies accountable for breakdowns in grain movement, with binding contracts. The farmer must no longer bear the cost of inefficiencies in transportation, demurrage, and labour disruptions that he has absolutely no control over.

Another area that we would like to see investigated is an increase in rail competition, including the possibility of allowing running rights on existing rail lines for competing companies, consistent bid tendering for grain delivery, and open alternative transportation channels into the U.S. to place checks and balances into the whole system.

In terms of cost recovery, government service fees such as food inspection, grain inspection, and seed breeding programs must be re-evaluated. These services not only benefit farmers, but our government and citizens must understand that they do public good. We produce commodities that are safe and cheap for all Canadians, so we all must bear the costs. Now that federal agriculture seed breeding programs have been reduced, seed trade companies have filled a void in new variety development. In documented cases, farmers' seed costs have risen as much as 400%.

• 1840

Rapid implementation of programs to have farmers compete on a level international playing field, improved competitiveness of the entire transportation system—with farmers as the primary beneficiaries—and reduced taxes and cost recovery of services would help to ensure a stable, healthy farm economy.

Thank you for your attention.

Voices: Hear, hear!

The Chair: Thank you, Greg.

Now we'll turn to Mr. von Tettenhorn. Welcome.

Mr. Bernard von Tettenhorn (Individual Presentation): Mr. Chairman, thank you for the opportunity to address you and these ladies and gentlemen.

Statistics Canada came out with a report in July that stated that the total prairie farm debt had climbed from $23 billion in 1991 to $33 billion in 1998, which is a 43% increase. They felt this was probably due mainly to expansion and diversification. While this may be part of the cause of the increase—and obviously it hasn't worked, or the debt would not have increased over that long period, as expansion and diversification are intended to bring in more money—I contend, and it has been substantiated by several bank managers I have talked to, that the increased debt is due to operating and term loans taken out to offset the deficiency of the marketplace to cover the cost of production.

There is no industry that can survive long without its costs of production being covered, the situation agriculture has found itself in over the past several years. We have been living off our depreciation credit over the years, but even that doesn't now cover our increased costs. All sectors of agriculture processors make money from the gate on.

There are two main reasons for the shortfall that the prairie grain producer finds himself in. One is the North American cheap food policy of the past 45 years, and the other is the loss of the government support after the last WTO round, while the other big players continued their support. We cannot sell without support into the world market for what is left over after the export subsidies are used by the big countries.

To correct this inequity will take a large amount of support for family farms as we know them. They have the best return-to-resource ratio. The crisis is not only a farm crisis but a rural crisis, and family farms support the rural infrastructure the best of any system. This may double the price of food in Canada, but would still only make it 23% of income. Try buying a loaf of bread or a restaurant meal in Germany. The alternative will be land owned and operated by large corporations, which will hold the product back until they receive their price. They will then hold Canada captive for food.

Eventually, worldwide production will fall and prices will possibly recover, but if Canada wants a secure, safe supply of food, it will have to support its producers until that happens.

Canada will have to decide if it wants a viable agricultural sector. As a country's agriculture goes, historically, so does it total economy. Every dollar earned in agriculture has a multiplier effect of seven times in the economy.

The best way to support the prairie grain industry is either through an ongoing yearly acreage payment or a commodity support policy. An AIDA or FIDP method does not work in the grains sector, as prices have been steadily declining in their relation to all other costs—a steady slide on a graph. Prairie grain producers are in a crisis because costs of production are not being met, so the whole sector has to be supported, meaning all aspects of agriculture.

The big players, Europe and the U.S., will call foul, but this is exactly what they are doing. They say “Do as we say, not as we are doing”, but they will have no comeback if we do this, if we subsidize also.

The whole Canadian population benefits from a viable agriculture sector, so the whole population should support it. There should be enough profit in farming to put in next year's crop without having to take out an operating loan, but we instead are finding that after 25 or 30 years we're forced to take out an ever-increasing operating loan every year, to the point at which the operating loan is maxed out and the viability of the farm unit is threatened.

Another thing to look at is taxes on our inputs. Natural gas is taxed for fertilizer, the fuel to deliver it is taxed, the fuel that trains use to haul grain is taxed, inputs on sprays are taxed, so there is room to lower our costs of production right in Canada. This, however, is the solution for the long term. At this time, we need immediate support.

• 1845

And don't forget, that little plateful you eat three times a day doesn't mean a thing to you, but you do without it for two or three weeks and you'll give an arm or a leg for it.

Thank you.

The Chair: Thank you very much.

Voices: Hear, hear!

The Chair: Now I'd like to call to the empty chair Ross Bezovie.

Ross, are you nearby? Maybe you could just grab that chair. That's it; wonderful.

Welcome. Please go ahead.

Mr. Ross Bezovie (Individual Presentation): Good evening. I'd just like to thank you for coming out to Alberta and hearing some of the concerns of the residents of Alberta and the farmers.

I want to tell you what's going on on our farm. I'm a third-generation farmer. My grandfather came here in approximately 1906 from Romania. I'm very grateful to be in Canada and to be in Alberta. It's the best province to be in.

Mr. Rick Borotsik: Have you been to Manitoba lately?

Voices: Oh, oh!

A voice: Two weeks ago.

Mr. Ross Bezovie: That's my concern.

I want to let you know what's going on on our farm. We're very diversified. I've been a grain farmer since growing up on our farm. The things that have gone on... We started grain farming, and they said to diversify, so we added cattle. My father started in the poultry business approximately 35 years ago. It's come down to where my wife has to go to work, my brother has moved back to the farm, his wife has to go to work, my father is on pension, and things are tight. We need some assistance on the farm.

The FIDP is a joke, just because of the falling commodity prices. Grain prices started at a higher level and have decreased substantially, as pretty much everyone has said here. When you start at a level of, say, $6 for wheat and you come down to $4, the average comes down substantially. You take 70% of that and you basically have nothing left.

The only thing that's pulled us through, thank goodness, is that cattle prices have been good this last year, but selling two calf crops in one year makes a problem for the next year.

That's about it.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: We can squeeze one more in. Dan Gievelhaus, if you're nearby, you can come up.

We have twelve minutes to go. You don't have to take it all, Mr. Gievelhaus. I'm sure there's somebody else who would like to share a couple of minutes. We'll just go until we run out of time.

Mr. Dan Gievelhaus (Individual Presentation): Thank you very much, Mr. Chairman, for the opportunity and the privilege to be with you this afternoon. Also, thank you for considering Vegreville as a point you'd like to visit.

I have only a couple of copies here. I wonder if I could get them duplicated possibly, to make sure all the participants have a copy.

The Chair: There's a gentleman coming there to take it.

Mr. Dan Gievelhaus: I'd like to particularly zero in on the hog industry, especially the way it is affecting hog producers right in this area.

In northern Alberta there is a two-mile stretch of range that we call Hog Alley. Hog Alley represents and supports eight families, with many of the jobs filled by qualified hired labour. Together these farms market 250 hogs each week, or about 13,000 to 14,000 hogs a year. By January 2000 all production will cease, due to the huge losses taken in the marketplace over the last two years. Only one unit is planning to restart production in the year 2000, and this production will come in about March. But by the end of January 2000, these units will not be delivering any hogs.

• 1850

The financial disaster Hog Alley has seen can be outlined as follows. All figures are based on a cost of production of $120 that's necessary to produce a pig. In the last seventeen weeks of 1998, September 1 to December 31, Hog Alley shipped 250 hogs a week at a loss of $60 per hog, which equals $15,000 a week. This amounted to $255,000 in that short period of seventeen weeks. In the first twelve weeks of 1999, January 1 to March 31, they shipped 250 hogs a week at a loss of $28.24 per hog, which equals $7,060 a week. This amounted to $84,720. In total for those seven months, 29 weeks, there was a loss to this group of $339,720—a disaster.

For just one of these producers, who produces 100 pigs a week, in the seventeen weeks the loss was $102,000, and in the twelve weeks the loss was $33,088. So he had a loss, in seven months, of $135,088 with a 300-sow unit. This type of thing is all over this province. He needed a new loan of $50,000 at 8.4%, which he got from the provincial ADC, which only covered the outstanding feed costs. In other words, he took the cheque, cosigned it, and gave it to the feed company.

If a producer takes a loss of this magnitude in such a short period of time and sets a budget of further production to recoup this loss, suggesting $10 a pig for further production, over a six-year period he will have to produce 25,000 pigs to recoup that loss. He should have at least $15 over that amount to meet his obligations on loans, and maybe another $5 to really have a reason to stay in this production.

The fact that a 3,000-hog producer takes a $135,888 loss in only a seven-month period suggests to me a disaster in the marketplace. If the federal government cannot see this, then I suppose we must reconsider the definition of the word “disaster”. If this is not a disaster, then what is?

The disaster we have seen these last two years in the marketplace is the responsibility of government to correct. It is the uneven playing field in the international market that is causing this, not producer mismanagement. It is not the competition we face internationally; it's still subsidized, with the U.S. treasury and the European Union supporting their agriculture industries to the tune of billions of dollars.

Therefore it is important that the federal and provincial governments in Canada do not hide their heads in the sand and say they don't know what is happening. When a market collapses the way the hog industry has over the last two years, to say GATT rules dictate how governments can or cannot help farmers does not make any sense when we see the U.S. pump dollars into the hog industry.

• 1855

One of their more recent programs was called pseudorabies eradication, which by their own acknowledgement was an effort to lower the supply of hogs and stop the bleeding of the hog farmers. My point is, where there's a will, there's a way. This money went into the hog industry regardless of any GATT rules.

I would recommend that if the market happens to be drastically managed by other forces due to circumstances beyond the producer's control, as we saw these last two years, and if the producer does his job, which is to meet the production goals established by the federal or provincial agricultural lending institutes, such as Farm Credit and the agricultural lending agency in Alberta—if the producer manages the operation correctly to the forecast agreed upon by the lender—then the federal and provincial governments should respond to this type of situation in a different fashion from how the regular lending institutions such as banks do.

For this period of time, the following should happen. Any thought of foreclosure should be postponed. You can see this kind of drop for one producer is unbelievable. They also should consider maybe cancelling the payments for that year or for that period, interest plus capital, those payments.

The government is the co-partner with these young farmers, through their policy encouraging young farmers to agriculture through their beginning farmers incentive loan. These farmers now, through circumstances beyond their control, find themselves in difficult situations. The government co-partners with these farmers to get them into the vocations with loan programs, the latest technology available, and consulting with government agriculture specialists.

If the government has difficulty committing to these recommendations, then I question where the commitment is, not only to agriculture but also to rural communities, towns, and municipalities. Maybe their commitment should be to provide an exit strategy for farmers, as it is difficult to see how they are committed to agriculture.

These young farmers the government has co-partnered with are not uneducated. Rather, they are highly educated, either at trade school or at university. They now find themselves abandoned by the lack of responsible government agriculture policy. In addition, many now are looking at other avenues for their future. If this is not a loss to agricultural communities, then I don't know what is. Instead of helping to lower the average farmer age, we see government encouraging large corporations, as the young farmers exit the industry and communities.

Could I have a drink of water?

The Chair: Sure. Are you almost finished, Dan?

Mr. Dan Gievelhaus: I have about two minutes. There's a real punchline coming up.

I would suggest that both the federal and provincial governments are pushing for farm family and rural community genocide by not doing anything. Corporations have a tendency not to support local businesses in our communities, which leads to population shifts. This disrupts the infrastructure—the schools, which were mentioned earlier, hospitals, churches, and local businesses—and the social life and the fabric of a community. This type of population shift will create ghost towns and vast areas of uninhabited countryside that our pioneers loved and built for future generations to live and enjoy.

• 1900

We got rid of the ancient landlord system that used to abuse the working-class people through poverty and slavery. Are we having the same system slip through the door with a modified mask on that beast, one that we call “the new millennium corporation”?

An example of that is the closure of the Gainers meatpacking plant in Edmonton, where the corporation giant had complete disrespect for the welfare of the workers and gave them the ultimatum that either they accept the new labour package or the plant would be closed and their jobs would be lost. It didn't end there. Once the strong-arm tactics set an example in Edmonton, the same company used this against workers in Burlington to force them to accept drastic wage cuts. This only goes to show the power that these new millennium corporations have.

I'm suggesting that the government consider its commitment to the agriculture industry, because it appears to me that Canada is one of only a few countries that do not have a strong commitment to agriculture. As agriculture economist Hartley Furtan suggested, farm policy is adrift, while jurisdictions like the European Union have decided farmers are at the core of their society and worthy of support.

Quebec stands out in Canada as a province that builds farm support into its fabric, but most Canadian jurisdictions do not. I have to say this because we have all kinds of controversial concepts about Quebec politics, I'm sure, but in this one I admire Quebec. In the hog industry, you don't hear any problems there, because these people don't have that $300,000-odd loss in seven months. They can keep doing what they're doing.

Thank you very much for the time, Mr. Chairman.

The Chair: Thank you very much, Dan.

I want to thank all of you for coming today. I think this has been very profitable, and we appreciate the opportunity to come here and meet with you. The presentations were absolutely outstanding, and we expect more the first thing in the morning when we're in Airdrie.

This meeting is adjourned.