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37th PARLIAMENT, 1st SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Wednesday, March 13, 2002

1335

Mr. Charles Hubbard (Miramichi, Lib.)

1340

1345

Mr. David Anderson (Cypress Hills--Grasslands)

Mr. Rick Borotsik (Brandon--Souris, PC/DR)

Mr. Borotsik

1350

The Chair

Mr. Steckle

The Chair

Mr. McCormick

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

The Chair

Mr. Duplain

Mr. Yvon Proulx (Chief Economist, Research and Agricultural Policy Branch, Union des producteurs agricoles du Québec)

1355

1400

The Acting Chair ((Mr. Claude Duplain)

Mr. René Walaszczyk (Union des producteurs agricoles de Saint-Hyacinthe)

1405

1410

The Acting Chair (Mr. Claude Duplain)

Mr. Denis Richard (Coopérative fédérée de Québec)

1415

Mr. Duplain

Mr. Desrochers

1420

The Acting Chair (Mr. Claude Duplain)

Mr. David Anderson

Mr. Denis Richard

Mr. Claude Lafleur (Secretary General, Coopérative fédérée de Québec)

Mr. Anderson

Mr. Laurent Pellerin (President, Union des producteurs agricoles du Québec)

1425

Mr. David Anderson

Mr. Laurent Pellerin

Mr. Duplain

Mr. Desrochers

Mr. Laurent Pellerin

1430

The Acting Chair (Mr. Claude Duplain)

Mr. Yvon Proulx

1435

The Acting Chair (Mr. Claude Duplain)

Mr. Larry McCormick

Mr. Laurent Pellerin

Mr. Larry McCormick

Mr. McCormick

1440

Mr. Laurent Pellerin

Mr. McCormick

Mr. Laurent Pellerin

Mr. Borotsik

1445

Mr. Yvon Proulx

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Borotsik

1450

Mr. Laurent Pellerin

Mr. Steckle

1455

Mr. Denis Richard

Mr. Steckle

Mr. Denis Richard

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

Mr. Laurent Pellerin

Mr. Howard Hilstrom

1500

Mr. Yvon Proulx

Mr. Howard Hilstrom

Mr. Laurent Pellerin

1505

Mr. Claude Duplain

Mr. Charles Hubbard (Miramichi, Lib.)

Mr. Laurent Pellerin

1510

Mr. Charles Hubbard

Mr. Laurent Pellerin

Mr. Duplain

Mr. René Walaszczyk

Mr. Duplain

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Borotsik

Mr. Laurent Pellerin

Mr. Rick Borotsik

Mr. Claude Lafleur

1515

Mr. Duplain

1520

Mr. Duplain

1525

Mr. Steckle

Mr. Charles Hubbard

Mr. Duplain

Mr. Howard Hilstrom

Mr. David Anderson

Mr. Borotsik

Mr. Duplain

Mr. Pierre Gaudet (Fédération d'agriculture biologique du Québec)

1530

Mr. Duplain

1535

Mr. Raymond Roy (Dean, Fauclty of Veterinary Medicine, Université de Montréal)

The Acting Chair (Mr. Claude Duplain)

1540

Mr. Marc Fortin (Chair, Department of Plant Science, McGill University)

1545

The Acting Chair (Mr. Claude Duplain)

Mr. Jean-François Samray (General Manager, Fédération des producteurs d'agneaux et de moutons du Québec)

1550

Mr. Duplain

Mr. Howard Hilstrom

Dr. Raymond Roy

Mr. Howard Hilstrom

Dr. Raymond Roy

Mr. David Anderson

Dr. Raymond Roy

Mr. David Anderson

Dr. Raymond Roy

Mr. David Anderson

Dr. Raymond Roy

1555

Mr. David Anderson

Dr. Raymond Roy

Mr. David Anderson

Pierre Gaudet

Mr. David Anderson

Pierre Gaudet

Mr. Duplain

Mr. Odina Desrochers

Mr. Pierre Gaudet

1600

Mr. Claude Duplain

Mr. Larry McCormick

Mr. McCormick

1605

Mr. Pierre Gaudet

The Acting Chair (Mr. Claude Duplain)

Dr. Marc Fortin

1610

Mr. McCormick

Mr. Duplain

Mr. McCormick

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Marc Fortin

Mr. Rick Borotsik

Dr. Raymond Roy

Mr. Rick Borotsik

Dr. Raymond Roy

Mr. Borotsik

1615

Dr. Raymond Roy

Mr. Borotsik

The Acting Chair (Mr. Claude Duplain)

Mr. Pierre Gaudet

The Acting Chairman (Mr. Claude Duplain)

Mr. Steckle

Mr. Jean-François Samray

1620

Mr. Duplain

Mr. David Anderson

Mr. McCormick

Mr. Anderson

Mr. Pierre Gaudet

Mr. Anderson

Mr. Pierre Gaudet

Mr. Anderson

Mr. Pierre Gaudet

Mr. Anderson

Mr. Pierre Gaudet

1625

Mr. Charles Hubbard

Dr. Raymond Roy

Mr. Charles Hubbard

Dr. Marc Fortin

Mr. Charles Hubbard

Dr. Marc Fortin

Mr. Charles Hubbard

Dr. Marc Fortin

Mr. Charles Hubbard

Dr. Marc Fortin

Mr. Claude Duplain

Mr. McCormick

1630

Mr. Jean-François Samray

Dr. Raymond Roy

Mr. McCormick

Mr. Duplain

Mr. Howard Hilstrom

Dr. Marc Fortin

Mr. Howard Hilstrom

Dr. Marc Fortin

Mr. Howard Hilstrom

Dr. Marc Fortin

1635

Mr. Howard Hilstrom

Mr. Pierre Gaudet

Mr. Howard Hilstrom

Mr. Claude Duplain

Mr. Jean-François Samray

Mr. Claude Duplain

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 056

1st SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, March 13, 2002

[Recorded by Electronic Apparatus]

· (1335)

[Translation]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Ladies and gentlemen, the Standing Committee on Agriculture and Agri-Food is very pleased to be here in Saint-Hyacinthe today.

[English]

My French is very limited and you'll have to bear with me. With my good friend Claude Duplain, we'll try to have une bonne réunion cet après-midi.

Pursuant to Standing Order 108(2), this is a study on the future role of the government in agriculture. We began this study in the western provinces. We met in two places in Manitoba, in Stonewall and in Brandon. We moved into Saskatchewan, into Alberta, and then into Kelowna and Kamloops in British Columbia. On Monday of this week we were in Grand Bend, which is out in the Lake Huron area, and yesterday we were in the other part of Ontario, in Napanee, just outside Kingston. Today we are here in St. Hyacinthe. We will continue tomorrow down to Montmagny, and next week proceed into the Atlantic area.

· (1340)

We've been very encouraged by the presentations that have been made. We've heard many witnesses, and we know that the agricultural sector has many elements. It's certainly good to see presenters here today from various parts of the agricultural sector here in Quebec.

I travel back and forth to New Brunswick nearly every week, and I always appreciate the many good farms I see here on the St. Lawrence, going down to Rivière-du-Loup.

The method we use in our committee is that each presenter has approximately five minutes. We may extend that a little bit because we don't have a lot of presenters here today, but we'd like you to keep your presentations fairly brief. As chairs--whether it's me or Claude--we will try to give a signal when you approach your five-minute time limit.

Following the presentations, the members of the committee will be asking you questions. Hopefully, we'll have a panel that brings out your points, and we'll try to make a good report when we get back to Ottawa.

It's our intent to have hearings across the provinces of this country, and eventually return to our committee work in the chambers in Ottawa. The committee will be doing a report, which we hope will be unanimous, and in any case, it will be published. If you leave your names and addresses with our clerk, we will see that you get copies of the report, as it is presented to the House of Commons.

I met some of you before, in relation to the Prime Minister's task force, when you came to Ottawa to present, so I know some of your problems and concerns, and also some of the very successful points you have here in this province.

We would like to assure you that we have translation and transcription services. What you say will be put on the record. If you have other information you want to share with the committee, we ask that you give it to one of our clerks. That way, it will be put into the record and eventually be part of the deliberations of our committee.

One of our committee members took ill on the bus coming down this morning, so he may not be able to join us--hopefully he will. Our vice-chair from Manitoba, from the Alliance party, is not with us this moment, but he may come in later.

In order to begin, I would like each committee member to introduce himself.

I'm very glad today to see Barry Wilson is with us from the press--there may also be somebody from the press here, in terms of our own belle province of Quebec. Barry writes for the Western Producer. He's also an author of certain renown. One time, about 200-and-some years ago, an American came up to this area to make Quebec one of the fourteen colonies, in that great struggle ahead. If you have time, buy the book he wrote on Benedict Arnold who, of course, tried to capture Quebec City way back in December 1775, wasn't it? So welcome, Barry, and we appreciate the Western Producer coming here.

David Anderson, will you introduce yourself?

· (1345)

Mr. David Anderson (Cypress Hills--Grasslands): Thank you, Mr. Chairman.

My name is David Anderson, and I'm a Canadian Alliance MP for Cypress Hills--Grasslands, which is in the southwest corner of Saskatchewan. I'm a rookie MP. I've been a dry-land grain farmer, and over the last few years we've moved into things like peas, chickpeas, lentils, canola, and mustard.

I work with Howard Hilstrom, who is not here right now. We're the agriculture team for the Canadian Alliance. It's been very interesting for me. I look forward to this afternoon.

The Chair: Rick.

Mr. Rick Borotsik (Brandon--Souris, PC/DR): Thank you, Mr. Chairman.

My name is Rick Borotsik and I'm the agriculture critic for the Progressive Conservative Party. I come from the southwestern corner of Manitoba---Brandon, Manitoba. We have a very diverse agricultural economy, with everything from livestock--hogs, cattle, poultry--to grains and oilseeds.

I'm pleased to be here in competition with the jackhammers. I'm very pleased to be in Quebec. I've spent a lot of time in Quebec. Unfortunately, I have not learned the language as well as I would like to, but I'm here to listen about agricultural issues in Quebec.

Thank you, Mr. Chair.

· (1350)

The Chair: Paul.

Mr. Paul Steckle (Huron--Bruce, Lib.): My name is Paul Steckle. I represent the riding of Huron--Bruce, a southwestern Ontario riding. We call it the western coast of Ontario. I'm a farmer myself. I've been on this committee since my election in 1993, for the most part. I was off for a short while. I come from an area that is totally agricultural, very diverse in its crop and livestock production. It produces almost all the crops you could imagine.

I look forward to the presentations this afternoon. We've had some excellent presentations as we've travelled across the country. We know Quebec has a unique agricultural system, the way they look after their farmers, and we have a lot to learn. So we're looking forward to your presentations today as we travel through the country.

Thank you.

The Chair: Larry.

Mr. Larry McCormick (Hastings--Frontenac--Lennox and Addington, Lib.): Bonjour, messieurs. Gentlemen, my name is Larry McCormick. I'm from eastern Ontario. I've been elected since 1993 with the present Liberal government. At this time, I'm Parliamentary Secretary to the Minister of Agriculture, Lyle Vanclief.

I've had the opportunity to sit in on all the meetings of the federal and provincial ministers of agriculture for the last 18 months. The first one was in Quebec City as they moved across this great country. I felt it was really good to see them working at least 90% together, as they all agree on the future.

I'll tell you, when I look at the front pages of some of the metropolitan papers today about the latest census, we find out that 51% of Canadians live in four urban centres. So most of us are in a minority, Mr. Chair, and I think we'd better work together.

Thank you. I look forward to hearing from you.

The Chair: Claude.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): My name is Claude Duplain and I represent the riding of Portneuf. I am a member of the Committee on Agriculture and Agri-Food. I am also a member of the task force on agriculture established by Mr. Chrétien.

I am from Portneuf, Quebec, and my background is in business. My dealings with the world of agriculture date back mainly to the time when Michel Pagé was involved, someone I am sure you all knew. You may not necessarily be familiar with my ridding, but agriculture and forestry are very important there.

I am particularly pleased to be in Quebec today and I am pleased that my colleagues are here as well to hear your testimony. I am proud as well because, as a member of the Liberal Party I make it my duty to defend and develop a future vision regarding all aspects of agriculture in Quebec and Canada.

[English]

The Chair: Merci, Claude.

As we mentioned before, we have representatives on this committee of all parties in the House. Suzanne Tremblay has been a very faithful member of the committee, but she sends her regrets. She's had some hip surgery and she's not able to attend. Marcel Gagnon is also a member, and Dick Proctor of the NDP has been attending until yesterday, in fact. So we do represent all areas of the House. Of course, with that, the report will represent back to the House on behalf of the standing committee of some 16 members in total who represent all parties in this country.

Claude, can you come to the chair?

[Translation]

The Acting Chair (Mr. Claude Duplain): Please call me to order, Mr. Chairman, if I do not do your job properly.

Our witnesses are from the Union des producteurs agricoles du Québec. You have the floor, Mr. Proulx.

Mr. Yvon Proulx (Chief Economist, Research and Agricultural Policy Branch, Union des producteurs agricoles du Québec): Good afternoon everyone. I would like to mention that we have with us the President of the Union des producteurs agricoles, Mr. Laurent Pellerin, who will be available to answer any questions that I did not cover in my statement, which I will make in the brief time you have allocated. I will describe the views that we set out in a document we submitted to you about two or three weeks ago. These views are on the theme that you suggested, namely, the role to be played by government in agriculture in the future.

The UPA would like to say at the outset that we gladly support the position taken by the federal Minister of Agriculture and his provincial colleagues at their meeting in Whitehorse last summer. They defined five major themes or focuses to help Canada become a world leader in food safety, environmentally friendly agricultural production methods, income protection, adaptation, and so on. We are pleased to support these major thrusts. We have not yet seen the details or the ways in which steps will be taken to meet these objectives or thrusts. Of course, in our paper we describe our expectations of the federal government with respect to all of its initiatives.

However, as much as we support the focus defined in this new framework, we do insist on the fact that the historic reasons justifying government intervention in agriculture, not only in Canada but in all industrialized countries, are still valid. They still exist.

Consequently, even though it is legitimate to try to set some new directions, we think we must maintain and enhance the directions and policies initiated and implemented to date. That is what we outline in our brief.

However, before I review all these policies and all our expectations of the federal government and its policies, we would like to remind you of two or three points we consider important.

The first concerns the importance of agriculture in the economy of Quebec. Clearly, we are speaking on behalf of the agricultural producers of Quebec. The importance of this sector—and I will be extremely brief on this subject—is considerable. One job in nine is related to the agri-food sector. That is almost 10 per cent of the gross domestic product. Consequently, agriculture is extremely important in supporting jobs, revenues and the social life of regional and local communities.

Second, we would like to remind you of the historic reasons justifying government intervention in agriculture. These reasons are related to the specific characteristics of the agriculture sector, which is dealing with a rigid demand for food products, one not really based on prices, but related to a flexible and fluctuating supply, because of climate considerations and all the other factors. Consequently, costs fluctuate a great deal as well, as do producers' incomes in turn.

This has to be combined with the fact that in farming, as you probably know, substantial operating capital is required. It takes $5 or $6 of capital to make $1 in sales or gross agricultural revenue, compared to many other sectors, where much less is required, such as the trade sector [Editor's Note: Inaudible] where it takes only 25 cents. Thus, in some sectors, the difference is 20 times less than in agriculture. As a result, since the sector is subject to major price and income fluctuations, and the investment involved is very high, there is an insecurity problem, which requires support from governments.

Our third reminder is linked in an extremely important way to the theme of today's meeting—namely, the role of the federal government as regards agriculture. We should remember that during the 90s, federal government support for the Canadian agri-food sector was reduced by half. At the beginning of this decade, the support was roughly $5 billion to $6 billion. I am referring support for the entire agri-food sector, not just to assistance to the production sector, which dropped to roughly $2 billion to $2.5 billion at the end of the decade.

Overall federal government assistance to the agri-food sector, which was about 4 per cent of total expenditures, fell to less than 2 per cent. The support was cut in half during this decade. As a result, today, studies done by the Organization for Economic Cooperation and Development show that Canada's support for the agri-food sector is two times less than that provided by the United States.

· (1355)

In other words, the federal government has really misunderstood its role with respect to the support it must provide, particularly in a world in which trade is becoming increasingly free and in which we must compete with producers in other countries, particularly our closest competitors, the Americans. The situation is much the same in the European Community, where agricultural producers receive twice as much support from their governments as Canadians producers do. A significant change in course is required in this area.

I imagine I must be close to the end of my five minutes. I will therefore speak briefly now about our expectations with respect to government policy.

I said earlier that while it is good to adopt some new directions such as food safety and improved environmental awareness—we fully agree with all of that—we must maintain our historic policies, particularly the supply management systems. There's a round of trade negotiations that will begin shortly. It is extremely important, in fact crucial, that in these negotiations, the Canadian government ensure that the legislative framework that allows for supply management in Canada be maintained and that we never make any trade concessions with respect to the supply management system that would jeopardize the way we operate in Canada.

My last comment is about income security programs. There was agreement in White Horse to improve the income security programs. How will this be done in concrete terms? There is a great deal of ambivalence and uncertainty about what the federal government intends to do in this regard.

From time to time, we hear that all the current programs will be replaced by a single program. We are surprised to hear that, because the federal government, together with the provinces, held a major consultation process with Canadian agricultural producers not so long ago. The consultation revealed that Canadian agricultural producers want to maintain the NISA program. They find it helpful. The same goes for crop insurance. There is just one program that has some flaws, the CFIP, the Canadian Farm Income Program.

For the time being, there is a great deal of ambiguity surrounding the intentions of federal government officials. Some days, the government says that it wants to do one thing, while other days, it says it does not want to do that. So we really do not know what it wants to do, but we suspect that it wants to replace all the current programs with one program of the type agricultural producers identified as having flaws. There's something wrong somewhere, and we are going to have to make some adjustments.

With respect to reforming income security programs, we are calling for improvements to existing programs. We have been asking for that for four years now.

Those are my comments for the time being.

¸ (1400)

The Acting Chair ((Mr. Claude Duplain): Thank you very much. We will have an opportunity to come back to your comments during the question period.

For the members who do not know him, I would also like to introduce Mr. Pellerin, who is with Mr. Proulx today and who is the President of the Union des producteurs agricoles.

We will now go to Mr. René. I would ask you to pronounce your surname, because I would not want to mispronounce it.

Mr. René Walaszczyk (Union des producteurs agricoles de Saint-Hyacinthe): First of all, I would like to thank the committee for inviting us and for giving us an opportunity to express our expectations and our vision regarding the future of agriculture.

I am the President of the UPA Federation of Saint-Hyacinthe. Our comments are complementary to the brief and to statements made by the UPA. We fully support the demands of the UPA, but we wanted to add three concerns that are more regional in nature, and that are really unique to us.

The Saint-Hyacinthe region is a farming area, with just over 5,000 farms. We account for more than 20% of the agricultural production in Quebec, and roughly 22 to 25% of the production revenues in Quebec. The region produces all types of products found in Quebec, both animal and vegetable. We actually grow more types of vegetable crops than other parts of the province.

The three areas of activity we identified are consulting services, regional development and environmental concerns in agriculture. I will try to summarize these three areas quickly.

We reviewed the issue of consultant services in the regions, and we realized that two types of service are available in our area: there are the so-called “tied” consultant services, that is those connected to an input used to purchase components that go into the manufacture of a product, and the “non-tied” consultant services, those that are not directly connected to the resale of a product. In cooperation with the Quebec Department of Agriculture, Fisheries and Food, we studied the whole issue to see whether we could offer businesses in the region what we call “non-tied” consultant services.

The needs mentioned were in the areas of investment and modernization of operations, development of computer services, new production techniques, growth, and so on—everything not connected to the sale of products.

We also realized that operations are structured differently, and some may be considered integrated, while others are more independent. Generally, the services offered to integrated operations are offered in full compliance with the integration formula and are tied to a product. We therefore made a distinction between these two types of service, and in the regions, we intend to offer and organize a full structure of non-tied services. In order to do so, we will probably have to establish an organization, which will require financial and personnel resources. The situation of firms elsewhere in Quebec is doubtless the same.

We are convinced that, for the future and for the independence of family farms, the development of non-tied consultant services is an important step in which the two levels of government should invest. Canadian policy should take into account this preferred approach to agricultural development in the future.

This is an extremely quick summary of the part of our paper on consultant services.

I would like to say a few words about our vision of regional development. In the past, when we spoke about agricultural development, we spoke to both levels of government, the federal and provincial level. However, increasingly, we have to deal with regional authorities as well in the form of MRCs, regional county municipalities, and CLDs, the local development committees. These organizations are responsible for all issues relating to the economy, and the agricultural sector has been asked to play a role in these bodies.

We realized, by attending meetings, that we were very far removed from the regional structures, and that we were accustomed to working outside these regional structures. We also realized that at this level, agriculture was unfamiliar to the participants, and that their day-to-day work had no connection to this sector. In light of this, our position is that we must play our role to make the entire agricultural sector better known, including agriculture, agri-food and the organic food industry. That is what we call assuming our proper role at the regional level.

In order to do this, once again, we are going to have to invest a great deal of energy. Let me give you an example. In Saint-Hyacinthe, where our federation operates, there are eight MRCs, thus eight CLDs. Our organization must take this structure into account. We have to split ourselves around everywhere. When we became aware of the situation, we decided that we would have to have some resources directly related to the organic food sector within the CLD and resources to establish a regional task force on the whole structure of the organic food industry. When I talk about the organic food industry, I am thinking both of the agricultural sector as such and the processing sector, and all other related activities.

¸ (1405)

The last subject I would like to look at is agri-environment. As I said earlier there are over 5,000 agricultural businesses in our region and between 6,500 and 6,800 producers. In 1996, the federation developed an agri-environment development plan. As we moved through the various stages of this plan, we realized that the more active the federation is through the various unions—these include 16 general, regional unions and just as many specialized ones — the greater the number of agri-environment activities that could take place. In terms of the challenge that we set ourselves in light of the agri-environment study conducted in Quebec, we have seen that some progress has been made.

I'd like to give you an example of this progress. Between 1998 and 1999, 10 initiatives were developed, in which 655 businesses took part. Between 1999 and 2000, 1,400 businesses took part, and between 2000 and 2001, this figure rose to 1,700.

Can I conclude there?

A voice: Yes.

Mr. René Walaszczyk: I will not elaborate further.

We analyzed all that. Of course, we can access the program—as the rest of the UPA can also do—through the CDAQ. However, we would like to see the CDAQ paying more attention to the specific requirements of our region. I think that CDAQ officials should be distributed a bit differently based on the various problems, the scope of the work to be done and the number of companies to be covered. What we want to know, at this current time, is whether the policies of this organization are set in stone. We believe that different policies should be developed to those of the CDAQ in order that regions with specific problems such as those we are facing might be able to access the resources and specific tools, to enable them to reach out to the various companies in their areas.

¸ (1410)

The Acting Chair (Mr. Claude Duplain): Thank you very much.

We are now going to move on to Mr. Richard and Mr. Lafleur from the Coopérative fédérée de Québec.

Mr. Denis Richard (Coopérative fédérée de Québec): Good afternoon, Mr. Chair. Good afternoon, ladies and gentlemen.

I'm going to begin my presentation by giving you a bit of background on the Coopérative fédérée de Québec, since, between you and me, we often joke with each other by saying that the Coopérative fédérée is the best kept secret in the agri-food industry in Canada. This organization is approximately 80 years old. It covers over 90 regional cooperatives and represents 37,000 member producers in the province of Quebec. Our overall turnover, including those of the cooperatives to which we belong, stands at $3.7 billion. That represents 14,000 jobs in Quebec alone, not to mention those in the rest of Canada.

I think that our subsidiaries are better know than we are. The subsidiaries include Olymel, which owns hog and poultry slaughterhouses throughout Canada. There is also the Coop brand, which deals in farm supply for agricultural producers. In the oil industry, we are the largest distributor of petroleum products in Quebec. Our distribution goes under the name Sonic. All these companies belong to the Coopérative fédérée de Québec, and consequently, to the 37,000 producers who own our organization.

Over the past 10 years, we have invested around $650 million in the various regions in the province of Quebec and even elsewhere in Canada. Our investments are most often channelled into rural areas rather than highly urbanized centres. This is mainly so because our member firms are owned by producers in the regions. Investment is made closer to the agricultural producers who live in these areas.

Our $650 million investment has led us to create 7,000 new jobs. These are permanent jobs which often carry a salary which is above the average of other jobs in the province. Over the next 10 years, we intend to invest $1 billion and to create 3,000 new jobs. It goes without saying however, that this is a major challenge which will not be easy to meet and we will undoubtedly need assistance.

We wish to continue to be major players in regional development, particularly in Quebec, but also outside the province.

This is not easily done, as there are big challenges. Our competitors in this particular field are often multinational or very big companies. Retailers are very concentrated. There are hardly any buyers left for the producers' products and our competitors often come from outside the province with far less limited capital resources than our own and this of course does not make it easy for us to continue to expand and to serve producers.

Our producers are decreasing. Every day, there are fewer producers throughout Canada. Quebec does not escape this phenomenon. We are told that every day there are two or three producers less. Whenever producers retire, they wish to retire their capital. It's something to be expected in this situation. When people retire, they want to work for their retirement but not for the cooperatives, that means that the capital is constantly decreasing. It is becoming increasingly difficult to get hold of capital.

There are other possibilities. There are other large cooperatives in Canada that have tried other approaches, like the Saskatchewan Wheat Pool, and that have toned down their cooperative approach, so to speak. This has caused problems and has made them more vulnerable. The have obtained access to capital but there are not many cases where this approach has proven to be successful.

The other way of going about expanding is to take on massive debts. But when you take on debts, that means you increase your risks and the chances of success are not great. It means we have to be more efficient than our competitors who have access to larger amounts of capital and can act more quickly.

We are asking your government to give us a hand to continue our development, to assist in our capitalization so that we can respond to the different expectations of our producers when it comes to our development.

We do have a certain number of tools that were put into place by the provincial government. I am thinking of the RIC (Quebec Cooperative Investment Plan) that allows employees and producers to invest and obtain a tax rebate on their investments. This encourages investment on the part of producers but the RIC only applies to provincial taxes, it is not available to group farms. Only individuals and corporations are eligible for it. Companies, corporations outside of individuals do not have access to the RIC. That is one of the drawbacks of the RIC in Quebec, but nonetheless it has enabled us to provide some capitalization for businesses over the recent years. If the RIC were extended, at the federal level as well as the provincial level, we believe that we could obtain more money from our members and our employees and that that would help us invest in the business.

Recently the Quebec government granted us a tax deferral on the patronage dividends paid to our members. At the present time, when we declare dividends, if we wish to capitalize a part of this amount, we are required to pay under tax legislation. This means that members must pay income tax immediately even if they leave the money in the business. Recently in Quebec we were given permission to leave this capital in the business and pay tax only upon the withdrawal of the money which means that we can leave larger amounts in the business and thus provide slightly more capitalization.

If we were able to obtain a similar tax reduction at the federal level, it would be even more attractive. As a matter of fact, we have prepared a campaign that you will be seeing in the coming weeks to explain to you the requirements of the federated cooperative and its affiliated cooperatives in the matters discussed here today. It is important to take rapid action because as we already explained, big businesses do have access to capital. They are our competitors and we constitute the only way of bringing about integration at the base of the pyramid rather than at the top. If we lose the race, then the producers run the risk of losing their long-term instruments.

Thank you.

¸ (1415)

The Acting Chair (Mr. Claude Duplain): Thank you.

We'll now begin our questions. Welcome, Mr. Desrochers. You didn't have the opportunity to introduce yourself to everyone but I think that probably everyone knows you.

Mr. Odina Desrochers (Lotbinière--L'Érable, BQ): I am Odina Desrochers, the Bloc Québécois member for the constituency of Lotbinière--L'Érable. I have known all the people present at the table for a long time. The riding of Lotbinière--L'Érable is one of the most agricultural constituencies in Quebec. I'd like to take advantage of this opportunity to welcome you and thank you for attending this important hearing undertaken by the Government of Canada. I'd also like to take the opportunity to welcome my colleagues from elsewhere, from Manitoba, Ontario and the other provinces of Canada, who are part of this important committee touring Canada in order to hear your concerns and views about the Canadian agriculture of tomorrow.

Mr. Chairman, I'll be asking my questions later on.

¸ (1420)

The Acting Chair (Mr. Claude Duplain): In that case, we'll follow our normal practice of alternating among the parties, in keeping with the time allocated to each. It is now the turn ,then, of the Canadian Alliance.

Mr. Anderson.

[English]

Mr. David Anderson: Thank you very much.

I'd like to ask a question. You said you can leave provincial taxes in businesses until the money is withdrawn. Can you explain the program a little further? What kinds of things trigger the tax? What can you invest your money in that does not trigger it? I'm a bit interested in the program.

[Translation]

Mr. Denis Richard: At the present time, since the producers pay their tax at the time when they declare their dividend, they may, upon retirement, recover their capital upon which the tax has already been paid. So it is not taxable at the time of retirement. If it were to stay in the business and the tax were calculated at the time of withdrawal, producers who are retiring would have far less interest in withdrawing the money upon their retirement. They could spread it out over several years, allowing the cooperative to make use of it as an economic lever to engage in development for other producers.

Mr. Claude Lafleur (Secretary General, Coopérative fédérée de Québec): To add to that point, the measure basically states that until the producer withdraws his cash, he does not pay any tax. If he leaves his money in the cooperative, he does not pay tax, which is not the case at the present time. It is a temporary measure, which has been in existence for some years, that allows the cooperative to capitalize, because, as Mr. Richard said earlier, the biggest problem we face are the multinationals, and buying and expanding are difficult because there is not enough capitalization.

The number of producers is decreasing. They are growing old and retiring and we do not have resources in keeping with our ambitions, contrary to the multinationals. Now if we want to keep the Canadian economic heritage in the hands of people at the grassroots at the regional level, we are going to have to provide the cooperatives with some ways of keeping this heritage together.

In the case of the Saskatchewan Wheat Pool, since the American dollar is so strong, the danger is that, when things are going badly, it is so easy for the Americans to buy up our heritage. That is the problem. If we want to keep an economic balance in Canada, then we'll have to have Canadian businesses, and for agriculture to be Canadian, we need cooperatives. If we start issuing shares, we are finished.

[English]

Mr. David Anderson: The primary problem with the Saskatchewan Wheat Pool is they became too much in debt. You're right, it does make them vulnerable.

I have a question. As we've travelled, we've regularly heard about the Pest Management Review Agency, the problems with bringing pesticides into Canada, and the problems with not having our regulations harmonized with the United States on some of the chemicals. Do you have an issue with them? This would be to the UPA.

[Translation]

Mr. Laurent Pellerin (President, Union des producteurs agricoles du Québec): If you have heard comments elsewhere in Canada about the difference between the registry or certification of products here in Canada in relation to the United States, it is true that there is a long time period. Often companies will tell us that there's no point in going about the formalities to have their products registered in Canada. In view of the volume of sales, it is not worth the trouble of going through the exercise again since it is very expensive. So the problem has to do with the time required as well as the lack of will, in certain cases. The same holds true for Quebec.

¸ (1425)

[English]

Mr. David Anderson: Do you represent lots of the smaller market-garden-type farmers, or the vegetable growers as well? That's the group we've heard from regularly.

I would like you to take a couple of minutes to explain, because I'm from western Canada, so I don't understand all of your programs. What are your most successful farm programs in Quebec? Could you give a quick summary of how they work and why you like them? I know you have a variety, but pick a couple of them and explain to me why they work.

[Translation]

Mr. Laurent Pellerin: The most successful program in Quebec is not a program, but rather the spirit in which the program is applied, namely a spirit of continuity. Last June we celebrated the 25th anniversary of the Quebec Farm Products Stabilization Act, known under the acronym FISI, that is Farm Income Stabilization Insurance.

During this 25-year period, on the federal side, there were probably six different programs developed, completely different programs, in some cases. They were started up, they were put into effect for a certain time period and then they were shut down. During the same time we in Quebec have administered a single program, an efficient program. The purpose is to stabilize. When we take measurements over a long period of time to determine whether it has attained the objective set out at the time of its inception, then yes, it has met this objective.

Unfortunately, because of trade pressures and pressure from Canada as a whole, we have had to face facts. The ministers of agriculture signed agreements at various times requiring us to align our provincial programs to a greater extent on the federal programs, in particular the program known as CSRN, or NISA, in English.

Last year, in Quebec, we started a partial modification of our Stabilization Insurance Program so that at the first level of intervention it would be somewhat more similar to the federal NISA program. I think that if we were to target the most successful program in Quebec it would surely be that one.

Another program that must not be overlooked and that probably explains why Quebec agriculture is far more stable than in the other Canadian provinces is the large number of products under a quota system in Quebec. Here again, because of the continuity of the program — it has been in existence for some 30 years in the dairy sector and for about 30 or 32 years in the poultry sector— we have been applying supply management programs. Quebec does have a significant number of dairy products, poultry, and eggs and I think that these, taken together with the Stabilization Insurance Program, have ensured stability. I think that those are the two factors contributing to the stability of Quebec agriculture.

The Acting Chair (Mr. Claude Duplain): Thank you, Mr. Anderson.

Mr. Desrochers.

Mr. Odina Desrochers: Thank you, Mr. Chairman.

I'll take advantage of the fact that Mr. Laurent Pellerin is present; for some time now he has had two hats, namely as President of the UPA and secondly, as President of the new provincial organization known as La Financière agricole du Québec.

I do not intend to go over the background of the situation. Mr. Pellerin, you are regularly informed about the support or assistance programs available to Quebec agriculture as opposed to what is available from the federal government. A few moments ago you referred to the fact that the situation in Quebec was relatively stable compared to the federal level where there are a great deal of difficulties.

You also mentioned what you had done so that your organizations would fit in better with the definition of the Canadian aid programs.

We visited the Canadian West. They are not particularly satisfied with the performance of the assistance programs. At the present time there are even people who are unable to make a go of it in view of the financial difficulties they are facing.

In Quebec you are in charge of La Financière. In relation to what is taking place in Ottawa, what would you see as the instrument that would facilitate your work?

Mr. Laurent Pellerin: Over the past three years we have been working in partnership with the Government of Quebec to set up La Financière agricole du Québec, which brings together the Régie des assurances agricoles(Farm Insurance Board) and la Société de financement agricole québécoise(Quebec Agricultural Funding Corporation). It involves approximately 600 employees and an annual budget of more $600 million. The final result is an impressive organization, an economic lever for producers.

Our first aim in setting up this entity and the reason why the UPA decided to be a partner of this new corporation, was the need for a vehicle that would talk about agriculture and its economic impact, that would give a positive and enthusiastic view of agriculture for the development of this sector.

Let me just give you something to think about. Sometimes an image helps us understand the direction we want to head in. At the time when the US was enthusiastic about the Farm Bill and a common agricultural policy was being developed in Europe, we in Canada were talking about disaster programs. The image that this conveys to the producers and to the sector does not give a positive view of agriculture, it is not an image of development.

That is what we wanted to do in Quebec, and as part of Quebec society, we were able to count on a tool of the importance of La Financièresince other sectors of Quebec economic activity, the labour unions, have at their disposal important economic levers for investment in business. Agriculture could not be treated as a poor cousin.

I should add that there was a desire on the part of the Quebec government and the producers in Quebec to start taking concrete action. On the federal side, and this is the reason why I'm here today, I think it is important to increase people's awareness. Whereas we've taken action in a number of areas, I think that the tendency in Canada is to consult. You are consulting us today, the Speller Group held Canada-wide consultations, and Mr. Vanclief announced to us in Toronto in January that he would be undertaking extensive consultations with 250 meetings throughout Canada and a budget, according to what we were told, of $15 million. At the same time, in the US, the Farm Bill is being developed and the level of financial support for American production will be raised to a level above that of the 1986 reference year.

If I have one message to leave you today, it is the importance for Canada of acting quickly, presenting a positive image of agriculture and restoring financial support to agriculture. The situation is a catastrophe in some places in Canada. In the West, in some of the places I visited, it is a disaster. We are managing better in Quebec. We are better organized. We have better support from the provincial government but I think that federal government intervention must be restored to its level at the beginning of the 1990s.

Canada has some of the best agricultural producers in the world for all kinds of productions. We have an international reputation for the quality of our wheat, our cattle, hogs, maple syrup, you name it. We have to build on this reputation and our government must also be competitive in relation to the US and European governments so that we producers can compete with the American and European ones. That's what is meant by opening up markets. We do not advocate opening up markets at any cost but when they are open, we are able to play the game. We are asking our government to accompany us and provide us with access to the same tools as our competitors.

¸ (1430)

The Acting Chair (Mr. Claude Duplain): Mr. Proulx wanted to add something. You have one minute.

Mr. Odina Desrochers: That's fine.

The Acting Chair (Mr. Claude Duplain): Go ahead, Mr. Proulx.

Mr. Yvon Proulx: I would like to add some details in response to Mr. Desrocher's concerns, and also to a concern raised by Mr. Anderson in his previous question.

We should bear in mind that the most fundamental difference between programs in Quebec, particularly the Farm Income Stabilization Insurance Program, which Mr. Pellerin mentioned and which has been in place for 25 years, and the Canadian approach is this: in Quebec, the program is based on a target income. Federal programs, by contrast, tend to stabilize income on the basis of past performance.

As a result, in the Saskatchewan and Manitoba grain industry, stabilization is based on extremely low figures because prices have been at rock bottom for five years and income is low.

This is not what we do in Quebec. We establish a target income, and calculate production costs which include appropriate remuneration for work done. We believe this is what it takes. When the market does not provide that target income, compensation is paid from a fund supported by the government (two-thirds) and producers (one-third). This is the basic difference between a sustainable approach, and an approach which has to be re-established from scratch every three or four years because it doesn't work.

¸ (1435)

The Acting Chair (Mr. Claude Duplain): Thank you, Mr. Proulx. Mr. Desrochers, you had asked a third question, but you'll have to come back with it later.

Mr. McCormick, please go ahead.

[English]

Mr. Larry McCormick: Thank you very much.

I certainly heard from the producers in eastern Ontario. I'm in the Kingston--Belleville area. I've been elected for eight and a half years, but I heard long before then, and I certainly heard more often after I was elected, their admiration for your programs and your hard work and your cooperation that you receive from the provincial government, which I'm sure you did not get without working for.

You just said a magic word. You talk about setting goals rather than working to maintain programs. It makes me think of all life, that we've always heard about how many people set goals. Of course the fact is that less than 3% of the people in the world ever write a goal on a piece of paper. So again, congratulations. We have a lot to learn from you.

I have a few questions. The gentleman just said--and I may have missed the answer--that the federal government should allow us to have the same tools as our competitors. I didn't know whether you were going past just money. I wondered if you could further elaborate, please.

[Translation]

Mr. Laurent Pellerin: The references and statistics we have are in the document submitted to you. There are tables to illustrate this. The figures have of course been translated into monetary terms, but our demands are not only monetary. There are some measures for which the impact of organized production, like quota-based production, can be calculated in terms of monetary impact, but this is really regulation.

But the bottom line is that the OECD has measured this, and maintains that the price of agricultural support to the Canadian citizen is some $175 to $180 per capita. This cost is roughly double that for U.S. and European citizens. However, the federal government is saying that we are not wealthy enough to maintain that level of support. I cannot accept that. Four cents on the dollar per citizen per year, when we give them... Canada provides the world's cheapest food basket. Quality is not an issue either. The quality of Canadian products is superior to that of products produced elsewhere. So in addition to getting a high-quality food basket at the best price in the world, Canadians through their taxes also support their agricultural producers less than the citizens of any other OECD country.

So we have to come to some conclusion at the end of the day. If you provide us with the same financial, regulatory and research support package that our competing U.S. and European producers get from their governments, we will be in business worldwide. I believe that would be good for Canada.

[English]

Mr. Larry McCormick: Thank you. I certainly agree that we need to spend more money on research and so on.

Now, as far as the bottom line only being money, as Odina says, this is a Canadian vision for an agriculture policy framework. I say this sincerely, because I do think we want to move beyond crisis management. That's what the agriculture policy framework is about.

I'm not sure that any provincial government would necessarily say we can just spend our way out of this. We're hearing from a lot of people, and the money invested last year in agriculture by the provincial and federal governments I'm sure was not enough, and many people fell through the cracks, especially in the grains and oilseeds sector. That's why we have to redo it. We do have to work together, because we're an exporting nation.

I wanted to mention to you concerns about supply management. Of course your province has very strong supply management people, great producers. But as you know, Minister Vanclief was recently in Montreal for the annual meeting of the Dairy Farmers of Canada. I know he expressed our support for our supply management sector. It is a domestic program and it's not going to be up for grabs; we aren't going to trade it away. The Minister for International Trade has said this repeatedly, publicly, and I'm glad he has, because it's one sector that's not coming to us to ask for money. We have to protect it because it works.

While we're on supply management, what do you think of the price of quota? It's great if you're an old guy like me who was about to sell some quota and move on, someone with no one in the family, but it can be quite an obstacle to young people. Some people say it's up to the government. And yes, we need more programs for young people. But will the price of quota keep going up forever? Do you have any comments you'd like to share on this?

¸ (1440)

[Translation]

Mr. Laurent Pellerin: Yvon Proulx is an economist, he has a PhD in economics, but he is also a dairy producer. He has bought quotas and he still does. Yes, buying quotas is expensive; I think we must recognize this fact. But when you compare that with other sectors in our society, other people also have to deal with the issue of quotas or goodwill, which is just as expensive, if not more so, than milk quotas.

Tomorrow morning, you or I could open a restaurant and sell hamburgers without having to purchase quotas. Anyone can do this; it's not a problem. But would the business be profitable? That's another issue. A person, for instance, may buy a MacDonald's franchise, but this person would have to pay an extremely expensive franchise fee, although the business would bring in money.

There are quotas for every business: the taxi industry, medicine, accounting, nursing, etc. Is there any sector which is not subject to fees in our society? Other sectors may be managed differently, but they are nevertheless regulated. Every profession is regulated; if you're trying to enter university, you have to pass a test or pay the price.

So, is the quota or professional protection system only valid for the so-called liberal arts professions, and not for regular folks, such as farmers and handymen? Despite the cost of quotas, we believe they have their place.

[English]

Mr. Larry McCormick: I'm certainly with you on the quotas, but I'm wondering about your concern for the young people tomorrow. Perhaps we have to get to this later.

[Translation]

Mr. Laurent Pellerin: Over 95% of Quebec businesses are passed on to family members, to the children. Therefore, whether a quota is worth $25,000 per kilo or $50,000 per kilo, or $0, in the vast majority of cases, it's not a problem. You set your price when you transfer your quota, and if your parents are decent, they will pass it on for the amount they paid, which is $0.

The Acting Chairman (Mr. Claude Duplain): Mr. Borotsik.

[English]

Mr. Rick Borotsik Thank you, Mr. Chairman.

First of all, I enjoyed all of your presentations, and I'm learning a lot about the organizations in Quebec agriculture. I must congratulate you, Mr. Proulx, for being a smart economist and getting into the dairy industry, as opposed to grains and oilseeds.

Can you please tell me what percentage of agriculture GDP in Quebec is made up of supply-managed systems?

¸ (1445)

Mr. Yvon Proulx: It's 45%

Mr. Rick Borotsik: Forty-five percent--that's why Quebec agriculture is doing very well. The ASRA program you have is very interesting. You are, I should tell you, the envy of the rest of Canada. Don't lose the program. It works extremely well.

I like the comment you made, Mr. Pellerin, about it's being a 25-year program. There is some continuity there, and that's important for any kind of a support system so producers and farmers can have some dependency on the program for a length of time.

The labour component you talked about is one of the really interesting points about the ASRA program. Can you tell me what amount you're allowed to put into that program for the labour component?

[Translation]

Mr. Laurent Pellerin: My answer will address your question, as well as the one asked earlier.

[English]

We have to get out of crisis management.

[Translation]

So, Quebec's FISI program helped us manage every crisis. It has stood the test of time. In times of crisis, the profitability fund falls into deficit, sometimes deeply. Today, the FISI cereal fund is about $200 million. As a result, because it's an insurance program, producers' premiums will be extremely high for the next five years. Consequently, market signals—and this is something the federal government repeatedly told us—are never lost on producers, even with a program like the FISI.

I'll now address the second part of your question, which dealt with the income component, producer income. In 1975, when the bill was passed, the occupation of farmer was compared with 10 other specialized trades in Quebec. At the time, the salary was close to $9,000. At the time, this was the figure which was used in programs or production cost models. It has been indexed since 1975. Today, the figure is around $38,000.

[English]

Mr. Rick Borotsik: So $38,000 is the labour component--that's excellent.

[Translation]

Mr. Laurent Pellerin: If you compared the 10 trades chosen in 1976 with the situation today, those trades, which included construction, increased much more quickly than indexation. That figure should stand at about $48,000.

[English]

Mr. Rick Borotsik: Okay, I have one other question if I may, please. We haven't touched on genetically modified organisms, but I know each one of the organizations probably has some opinions on it, particularly your organization, Mr. Pellerin. It's been a theme we've heard constantly throughout our travels. Does your organization have a position with respect to GM?

[Translation]

Mr. Laurent Pellerin: The president of the Fédération de l'agriculture biologique, which is affiliated with the UPA, is sitting in the back.

[English]

Mr. Rick Borotsik: I want to know your position--we'll get to the chiefs of the organic organizations. We've had their position. What is yours?

[Translation]

Mr. Laurent Pellerin: We have been holding those discussions with the UPA for three years now. We held an annual two-day conference on genetically modified organisms. The message we sent to producers after that meeting was one of caution. Producers using grains, in particular, should be cautious, because they are used in everything. Producers must be careful and ensure that the buyers are always present at harvest time, because we will not be able to intervene on their behalf.

Therefore, I would say that people are stepping back a bit because of consumer and public perception. Some producers can definitely use these products for certain crops, but I do not believe that farmers...

[English]

Mr. Rick Borotsik: Mr. Pellerin, I'm going to cut in. I want ten seconds for another question. I forgot to ask it. It's on the ASRA program. Are there producers who use the ASRA program on a regular basis, who are continually using the ASRA program and getting contribution from it? Are there some of those producers in Quebec?

¸ (1450)

[Translation]

Mr. Laurent Pellerin: I did not complete my answer on the salary of specialized workers. I will do so now. I do not want to give you the impression that the $38,000 is partly funded through the FISI program. A specialized worker's salary may be compensated up to 70% for certain productions and 90% for others. But, it is not completely paid under that program.

You asked whether some producers receive compensation under FISI every year. I have a hard time answering that. Some productions receive compensation under FISI almost every year. This is true in the area of sheep and lamb production and for certain types of cattle, but sometimes there are deficits and premiums may rise accordingly. Producers are told to consider other types of production to see whether they may not do better there.

The Acting Chairman (Mr. Claude Duplain):Thank you.

Mr. Steckle.

[English]

Mr. Paul Steckle: Let's continue the ASRA theme for just a moment. Perhaps you could quickly give us some indication of what portion of the moneys that are funded into the ASRA program are farmer funds. What percentage are federal and provincial funds?

You might also want to tell us how time-sensitive they are in terms of delivery. The argument we get so often is that we're too late, too often, and we're not responsive enough. Given the fact that the Americans are looking at a new farm bill, would you agree that the ASRA program has been very good in delivering its money, in those areas that I've just mentioned, in a time-sensitive way and to the appropriate people rather than to the oligopolies and the multinationals that are taking huge sums of money out of the national programs and the farm programs in the States?

It's a little convoluted, but I want to get as many things in there as I can.

[Translation]

Mr. Laurent Pellerin: I would first like to address the issue of whether the monies are paid just in time or much later.

For instance, the grain production year begins on April 1st and ends on March 31st of the following year. At harvest time, in the fall, people already have a good idea of what the harvest will look like and the price the market will bear. The Financière agricole may issue the first advance six months after the beginning of the production period, and not a year and a half or two years later, but rather six months after the beginning of the production period. In fact, the entire harvest has to be sold and you have to wait until the following fall to know what price the market actually paid, as well as the price of inputs for that production year. The final payment may therefore come in 18 months after the production period. But it is possible to receive an advance for any production which falls under the FISI program after six months.

You ask whether the program funds all producers, rather than just the larger operations. I'll give you an honest answer. Since compensation is based on production units, the FISI program, even if for a while it claimed to limit its interventions once a certain production threshold had been reached, has historically had trouble limiting its intervention to large producers. This matter is a concern and is still being reviewed. Certain changes were made last year, which saw limits imposed on very large operations. Of course, this caused an uproar at certain points. However, I feel we were under an obligation to make those changes. The Americans are currently debating the issue in light of the Farm Bill. What will their ultimate decision be? I'm not sure they're going to keep the old system, but it nevertheless is an important factor in this debate.

[English]

Mr. Paul Steckle: That's a big part of the debate in the United States right now, in terms of who doesn't and isn't allowed in the program.

I want to go to you, Mr. Richard. At the cooperative level, you are in the machinery business. Do you carry multi-line machinery products, such as John Deere? You sell farm machinery, is that correct?

¸ (1455)

[Translation]

Mr. Denis Richard: Yes, we do sell farm machinery, but the Coopérative fédérée has no relationship with the major suppliers like John Deere, AGCO or New Holland. We just sell the equipment. However, some member cooperatives of the Coopérative fédérée are authorized dealers of John Deere, New Holland or the whole range of AGCO products.

[English]

Mr. Paul Steckle: The three major lines in the machinery business, John Deere, Ford New Holland, and Case IH, have some very strict rulings in terms of the short-line equipment they can sell. Are you are allowed to do all of that? Are the rules in Quebec different from those in other parts of Canada? The answer may simply be no. I'm not familiar with the co-op and what it's able to do. In the United States of America, they have many brand names in one particular dealer lot.

[Translation]

Mr. Denis Richard: The same thing applies to Quebec as to the rest of Canada. We have a lot of problems. Some cooperatives have different legal names, and this allows them to create companies that they own in order to be able to sell two different major trademarks to their members. But the major suppliers don't like it, and under their regulations, they can twist the arm of Canadian cooperatives. It would definitely be a lot easier for us if it was like in the United States. We could choose to have more than one dealership, and the suppliers couldn't do anything about it. If the legislation prevented the major suppliers from doing anything about it, things would be a lot easier. It is true that that is a major limitation.

The Acting Chair (Mr. Claude Duplain): Mr. Hilstrom, do you have any questions?

[English]

Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance): Yes, thank you.

I'm a farmer from Manitoba. I wasn't feeling too good today and wasn't able to be here at the start.

Are there any statistics on the ASRA program, Yvon, or anyone who has knowledge about it, as to what the average payment would be to farmers? I guess it varies considerably.

[Translation]

Mr. Laurent Pellerin: It is hard to put a figure on the average payment to farmers. Perhaps I would approach it from the other end. The question was asked earlier, but I did not answer the part of the question about how much of the FISI (Farm Income Stabilization Insurance) money comes from the federal government and how much from farmers?

There was quite a discussion around the creation of La Financière agricole. Some people felt it was a huge privilege to sit on the board of La Financière agricole. Out of La Financière agricole's $600 million annual budget, $200 million comes from farmers' premiums, $100 million from the federal government and $300 million from the Quebec government. However, not all of the $600 million goes to stabilization. The money also goes to the administration of farm financing and to various other programs.

Annually, about $327 million—$100 million from farmers and $200 million from the provincial and federal governments—goes to FISI. The federal share comes from the matching program. So that is a very small part. Some $30 million, out of $200 million in government contributions, comes from the federal government. That is the money from the matching program.

[English]

Mr. Howard Hilstrom: Thank you.

The federal ministers, the agriculture minister in the federal government, and the provincial ministers had a serious debate not too long ago, a year or so ago, in regard to ensuring each province receives an equitable share of the federal support dollars. I believe it's now done on the gross dollars received in each province. I think that's the way it's done. If it's not, you can tell me.

We're putting together a report that's going to go to the minister and to the government, and my question is about this concept of the federal government's responsibility to be equitable and fair with each province and with each region of the country. It seems that farmers in other regions are having a lot of problems that Quebec isn't. And the one successful federally legislated program, of course, is the supply management.

For the dairy, is the quota allocation fairly distributed across this country between regions? I suppose one should use regions, as opposed to individual provinces. If it is, confirm that. If it's not, my understanding was that at one time Quebec had a much larger share of the dairy quota, but that may not be true. I don't know. I'm asking, is it fairly shared across the country? Yvon, maybe you could answer that question.

¹ (1500)

Mr. Yvon Proulx: Yes. It was distributed according to the production before the system.

Mr. Howard Hilstrom: Nothing in this world is forever.

We have in this country a minister, Lyle Vanclief, who is trying to be fair to every part of the country. This is a federal government program that sets this up. Would Quebec be willing to renegotiate that share of its supply management so that other provinces, based on their population, could then supply? Would the agriculture producers in Quebec be willing to renegotiate so that it would then be fair across the country?

[Translation]

Mr. Laurent Pellerin: The formula for supply quota distribution among the provinces already contains an interprovincial allocation mechanism. So that problem was raised from the start of the program. In terms of how production increases are divided up and how the old quota is divided up too, there is a distribution formula. For example, in the case of shell eggs, Quebec does not have its fair share of the market; its share is far lower than its share of the population. However, each time there is a quota redistribution, we slowly gain ground toward our fair share, very slowly, but at least it's something. As for milk, whenever there is a redistribution, we lose a little bit of our market share. Historically, that has been the situation. If, tomorrow morning, there were to be a complete and total overhaul based solely on the population of each province, I am sure that that would provoke a very stormy debate.

To the other part of your question, I would answer that the current distribution of federal money to the provinces is not solely based on farm production in each province. The formula takes into account a combination of factors. So there is no one factor. History and risk are also part of this distribution formula.

You mentioned fairness. If the money were distributed based on one factor, that would not likely be fair, in my view. Quebec would never accept being penalized in terms federal agricultural funding because it is better organized than other provinces. You have to understand that if we are better organized in terms of marketing, better organized with our stabilization insurance plan, we will never accept less federal money just because we are better organized.

Some provinces, some of the western provinces, argue that more money should go to places with higher risks. But is risk something to be cultivated or is it something for which a solution should be found?

I think our marketing mechanisms in Quebec, collective marketing mechanisms, and provincial programs have lowered the risk. But it is still negotiable. Canadian formulas have always been negotiated.

I will give you an example. In the Canadian disaster fund, the disaster money—I do not like using that term, but that is what the program was initially called; the name has since changed—there was a surplus one year.

If that surplus had been placed in a general fund and held in reserve, and if the next year, like this year, $500 million or $600 million had been earmarked for disasters, but things went well and that money was put in a fund, in a special reserve for a third and fourth year, and if, suddenly, there was a disaster and the money was withdrawn, perhaps one, two or three billion dollars would have accumulated. That is what we are doing, in Quebec, with our stabilization fund.

At times, there is $500 million in accumulated reserve money. Farmers' premiums have not been waived. We have always paid premiums, and the government too. In good times, the fund builds. When there is a disaster, you do not have to go before cabinet in a panic to plead for government intervention in agriculture: there is a reserve.

Once you have a reserve, you can set up a mechanism to control money going in and coming out of the reserve, and I think that at the federal level in Canada, the current thinking on income security is that there is a need to create such a reserve. I encourage you to think about and work on that.

¹ (1505)

The Acting Chair (Mr. Claude Duplain): Fine. We do not have much time left. The questions are very interesting. Mr. Hubbard has a question and Mr. Borotsik has asked if he could ask a quick one. Mr. Desrochers, is that okay? The questions were good ones.

As for the other speakers, we are running over time a little bit, but we will not cut your time short; we will have enough time.

Mr. Hubbard.

[English]

Mr. Charles Hubbard (Miramichi, Lib.): This is so interesting. I also think it's much different from what we've heard in other parts of the country. I think we have to note as a committee the sense of cooperation and working together...a “union” of producers.

You know, it's important for all of us, in agriculture especially but probably in every walk of life, to cooperate and to share the way they do in the cooperative movement. I see your problems. I've been in co-ops where people retire, and you get those letters at the end of the month. You sit around a board saying, “Can we pay that guy out? Can we give him the money?”

I would suspect that your own legislation here in the province of Quebec, or a little part of their procedures, would allow you to work in the best interests of the co-op rather than the individual.

Credit unions--here you call them caisses populaires--are good organizations that keep money in local communities. They make sure that the people who have the money share what happens with the money and the benefits from the interest. So it's important.

I think the committee has to recognize, too, that in terms of your taxation program....

You know, Mr. Chair, in our work as federal members we have to think that, whatever we do, both groups, federal and provincial, have to decide what the outcome is going to be. In some provinces they're not very supportive of trying to match or to share in the other responsibilities.

In terms of your taxation program, comparing New Brunswick with Quebec, I probably would pay more if I lived in Quebec. In other words, your government has more money to take from the general good to help various groups. Maybe that's how this ASRA program could be seen. Mr. Steckle has talked about a tax on certain things that might be used for agriculture.

I can't help but see the degree of positive approach, the image that people have of agriculture in your province, the enthusiasm that some of your people have. All of that is part of keeping young people in the industry, because if people are walking on their bottom lip all day, nobody else wants to get into the same movement.

Mr. Proulx, we have a little program, one they talk about in Ottawa sometimes, about the size of farms. I think you've heard some of that. If you have income of less than $100,000 a year you're in one category, and $100,000 or more in another category. But a lot of your dairy farmers here in Quebec don't have a big gross annual income.

Now, you talked a little bit about size. Mr. Pellerin used the phrase “unit of production”. How does size relate to what you see as the future of agriculture here in the province of Quebec?

[Translation]

Mr. Laurent Pellerin: Perhaps I could comment on that. The agricultural product marketing process in Quebec is organized in such a way as to offer some protection for smaller farms. No matter what the size of the producer in Quebec, he has access to the same market, and to the same prices as a larger producer. This would not be true under a completely open free market system.

In a free market system, larger producers are in a position to negotiate better prices, lower transport costs and delivery bonuses. However, here in Quebec, we have a process of pooled selling. In Quebec, we have a single marketing body, known as the Fédération des produsteurs de lait. If a milk processing plant requires a huge volume of milk, we are in a position to deliver. When the milk processing plant requires smaller amounts of milk, we are in a position to meet that demand also. If the plant wants delivery on a Sunday, we can do that too. When the plant says it doesn't need milk on Mondays, we don't deliver milk on Mondays. We can adjust to the requirements of the customer. Our smaller and even larger producers are not subject to the vagaries of the direct open-market system. This is a type of protection for smaller producers.

¹ (1510)

[English]

Mr. Charles Hubbard: Mr. Chairman, the comment I would like to get at is that farmers who earn less than $100,000 should be forgotten about. They shouldn't necessarily be part of the system. Those with $100,000 or better gross income are people who may be in trouble. Then there's this big group. But we're hearing bureaucrats talk to us about size, that maybe we should forget about the little guy in terms of being a government. The parliamentary secretary is getting worried here. But that seems to be the attitude.

Mr. Laurent Pellerin: There are too many civil servants in Ottawa.

[Translation]

The Acting Chair (Mr. Claude Duplain): Please wait just a couple of moments, we want to get a comprehensive answer here.

Mr. René Walaszczyk: The demands that we talked about earlier deal with regional development. One of our concerns is maintaining family farms. This is the way, as we see it, of being able to achieve that. We must work with regional bodies, with advisory services, with regional development bodies and within the framework of regional markets.

When I refer to regions, I'm not just talking about Quebec or Ontario, I'm talking about regions within the regions of Canada, a region such as our own, for example, near Montreal, or Boston or even New York. We have decided that conducting development activities with the economic stakeholders in the region... in order to do that, these initiatives need to be structured and we need the resources to enable us to look at the issue in-depth with the various bodies at each particular level. That was perhaps additional information to Mr. Pellerin's answer.

We have three types of companies in the region. We have medium-sized businesses, large industries and much smaller businesses. We have companies specializing in new types of products, we have those dealing in more traditional merchandise and we also have those working on a contract basis. We think that under the initiative that we have put forward that we will be able to sustain traditional family-type businesses also.

The Acting Chair (Mr. Claude Duplain): Thank you.

Mr. Borotsik.

[English]

Mr. Rick Borotsik: Very quickly, first of all, Charles, one of the labour components of the ASRA program helps support those small farming units, does it not?

Mr. Laurent Pellerin: I think there is a misunderstanding here. I don't want you to leave with the idea that everybody receives a full salary.

Mr. Rick Borotsik: No, I appreciate that.

Mr. Laurent Pellerin: It's true for the supply management program and the same thing for the ASRA program. If we decide that the right size of the farm, for example in milk, is $300,000 gross income, the salary for one full-time person is paid one time, no matter if there are three, four, or ten farms to make the $300,000 gross income. If farmers decide they want to produce $50,000, that's their choice. They will receive one-sixth of the income.

Mr. Rick Borotsik: That's not my question.

If I can, please, to Denis, and just very quickly, you said that one of your major problems right now is access to capital. There was a change federally to the Canada Cooperatives Act that allowed cooperatives to access capital on the open market through an investors program. Do you access that at the present time? Saskatchewan did, by the way, and they have some difficulties with their share structure right now. But do you not have the ability to access capital on the open market?

[Translation]

Mr. Mr. Claude Lafleur: First of all, we do not have a charter. We would have to have a federal charter. Here in Quebec, the Agropur Cooperative does have a charter. The Coopérative Fédérée is a private company, and as such, it is not able to access capital.

But this is not the whole issue. All cooperatives are able to demutualize if they want to, but is not what we want to see, as that means that our assets are transformed into shares. When things go sour in Canada, the Americans gobble us up. That's the real problem. You can't sell a cooperative. A cooperative belongs to a particular region, and to the people who live there. If you place the cooperative under... In our opinion, that is the situation.

Look at what is happening in Saskatchewan. The share price was initially $17, it rose to $24 and now it's dropped dramatically to $2. In six months' time, you will see who owns that particular company.

For cooperatives, then, becoming a company with shareholders is not an option. We don't want our members to have to invest in their own cooperative. In order to do that, we would need to be on an equal footing with the multinationals. It is for this reason that we intend to ask the federal government to allow us to defer our taxes. We're also going to ask for what Denis referred to earlier, that is to say an RIC to allow the members of the cooperative to garner equity for their own cooperative in an attempt to put it on an equal footing with the multinationals. This is really a matter of defending Canadian heritage.

¹ (1515)

The Acting Chair (Mr. Claude Duplain): Thank you, everyone. I am very happy that you were able to come here today. I think you have already met with federal representatives on many previous occasions and I hope that we will have an opportunity to meet you many times again in the future, because I think you still have a lot of ideas to submit to us. I also think that my colleagues on this committee are very pleased with what they have heard here today.

We have gone on somewhat longer than anticipated, but it was a great pleasure for me to be able to take the time to hear what you had to say. We hope to see you back again very soon. Thank you very much.

We are now going to suspend the meeting for five minutes, just to allow the next panel to take their seats.

¹ (1512)

¹ (1519)

¹ (1520)

The Acting Chair (Mr. Claude Duplain): Good afternoon, everyone. It's a great pleasure to have you here with us this afternoon. As you know, the Agriculture Committee is travelling throughout Canada fot the purpose of forming an opinion on the future of agriculture in Canada. It is for this reason that you were invited here today.

Were you here earlier on when the members introduced themselves? I don't think everyone was here at that time, therefore, I would like all the members of the committee to introduce themselves in turn. You could perhaps introduce yourselves when it is your turn to present.

The floor is yours, Mr. Steckle.

¹ (1525)

[English]

Mr. Paul Steckle: Paul Steckle. I'm from the riding of Huron--Bruce, a southwestern Ontario riding. I'm a farmer by profession and have sat on the committee here on agriculture since 1993.

Mr. Charles Hubbard: Charles Hubbard, from Miramichi, New Brunswick. I've been involved in agriculture in terms of the so-called cooperative movement and also as a beef producer and with the dairy process.

[Translation]

The Acting Chair (Mr. Claude Duplain): My name is Claude Duplain and I am the Member for Portneuf in the province of Quebec. I am quite sure that you are familiar with the Portneuf riding, which is an agricultural riding. I'm a member of the Agriculture Committee and I am also a member of the Speller Commission. I am standing in today for our usual chairman who did me the honour of allowing me to chair this committee today in the province of Quebec.

[English]

Mr. Howard Hilstrom: Howard Hilstrom. I'm the member of Parliament for Selkirk--Interlake, which is the north side of the city of Winnipeg up to the two lakes. I'm the chief agriculture critic for the Canadian Alliance. I currently run a 200-cow cattle ranch in Manitoba, north of Winnipeg. I look forward to your presentations.

Mr. David Anderson: My name is David Anderson. I'm a rookie Canadian Alliance MP from Cypress Hills--Grasslands, which is 40,000 square miles in southwestern Saskatchewan. I've spent 25 years as a dryland grain and specialty crop producer. I've been working with Howard on the agriculture committee, and I look forward to what you have to say today.

Mr. Rick Borotsik: My name is Rick Borotsik. I'm the member of Parliament for Brandon--Souris. It's the southwest corner of Manitoba. I'm with the Progressive Conservative Party; I'm their agricultural critic. As I said earlier, my constituency is a very diverse agricultural area. We have everything from livestock production to specialty crops and oilseeds and grains.

I'm happy to be here. Certainly we learned a lot from the last panel. I expect no less from this panel. I'm sure we'll learn an awful lot.

[Translation]

The Acting Chair (Mr. Claude Duplain): You have about five minutes for your presentations. We will be hearing from, in this order, the Fédération d'agriculture biologique du Québec, the Université de Montréal, McGill University, and the Fédération des producteurs d'agneaux et moutons du Québec. Then, we will move on to question period.

We shall begin with Mr. Pierre Gaudet.

Mr. Pierre Gaudet (Fédération d'agriculture biologique du Québec): Mr. Chair, members of the committee, thank you very much for meeting with us here today. Firstly, I would just like to introduce myself. I am an organic farmer and have been for the past 22 years now. I run a 1,500-acre grain farm in the province of Quebec. We grow grain crops, oilseeds and medicinal plants.

I won't go into detail about what the Fédération d'agriculture biologique actually is because I'm sure that you've had time to read a bit about it in the UPA's brief. I won't talk either about the actual scale of organic farming in terms of the 1,000 farms that exist in Quebec. Seven hundred of these farms are certified organic and 300 are making the transition from traditional farming to organic agriculture. I won't go into detail either about the economic state of organic farming. All that information can be found in the UPA brief.

What I would like to do however, is to have some input, through you, and through the report that you intend to produce. However, I'd also like you to approach Agriculture Canada and the federal government to encourage them to develop a vision for organic agriculture in Canada and the benefits that organic agriculture can provide.

We should not look at this issue in terms of a type of agriculture which is in direct competition with traditional farming, but rather as something that is complementary. We should also consider this type of agriculture as meeting specific market demands.

I spent the past two days in Ottawa, where I sat on an Agriculture Canada committee which mandated the Standards Council of Canada to develop standards for organic agriculture.

On this committee, there were producers, processors, representatives of the distribution network and even consumers' associations.

At 3:40 p.m. yesterday afternoon, the entire membership of the committee issued a unanimous statement to Agriculture Canada, saying that the standards that it was developing should be regulations and should not just be implemented on a voluntary basis. It is not our industry who is refusing to look at this option. I would even go so far as to say, at this juncture, because I'm not aware of the government's position on this issue, that at the very least we are dealing with a systematic refusal on the part of the federal public service to look at the issue in this way. All those around the table yesterday, representing one or another level of government, stated that this issue could not be resolved on a regulatory basis because it would cost too much money. If you are someone who's not really looking to solve the issue but rather to put a spoke in the wheel, there is no better way of achieving that goal than using the arguments that were put forward to us over the past few days.

In Quebec, organic farmers have set out a development plan designed to increase production, which currently stands at around 3% of total Quebec agricultural production, to 20 per cent. The whole Quebec agriculture industry has signed on to the plan which was tabled by our organization. However, we are well aware that for some, organic agriculture is undoubtedly something to be feared. It is, without a doubt, a type of agriculture which can be deemed quite troubling.

Which agricultural model is currently given pride of place in Canada in terms of development? What are the choices that Canada is currently making for agriculture? Should we copy the models used by our southern neighbours? Should we replicate models used elsewhere in the world? Undoubtedly, if you ask that question to people in the agribusiness community in Canada, they will certainly tell you that there is only one type of agriculture possible: economics-oriented agriculture.

Currently, the crisis in terms of the development of rural communities and agriculture in Canada stems from the fact that despite all the advantages that agricultural currently provides the country, only one aspect is considered in terms of the issues set out to either you or other agricultural partners. I'm talking of course about the economic factor. Just for fun, try to fry a $100 bill. Choose either vegetable or animal fat to fry your $100 bill in. Look at the finished product and see how it will taste. When you do that, you will see that it is not just the economic aspect of the issue that counts in agriculture.

From a strategic point of view, the market for organic products is developing at a rate of around 25 to 30 per cent per year. Recently, some of our members took part in an international symposium on the issue of certification standard equivalence for the organic agriculture industry. Approximately 55 industrialized countries now have standards in place. These countries have agreed on a set of rules. Starting in the fall of 2002, the Americans will be implementing their rules. The Europeans have rules in this area that they passed back in 1999. These will be phased in over the next two or three seasons. Why is Canada taking so long to develop its own strategy, when the industry—and I mean here all sectors of the industry—is raring to go on this issue?

I do hope that you will have some questions to ask us on the issue of GMOs. I want to comply with the time limits that the chairman set out for me, but quite honestly, I could go on for hours.

Thank you.

¹ (1530)

The Acting Chair (Mr. Claude Duplain): I believe you could.

We will now move on to Mr. Roy from the Université de Montréal.

¹ (1535)

Mr. Raymond Roy (Dean, Fauclty of Veterinary Medicine, Université de Montréal): Thank you, Mr. Chairman, for providing me with the opportunity to speak with members of the committee. My name is Raymond Roy. I am the Dean of the Faculty of Veterinary Medicine at the Université de Montréal, the only such faculty in Quebec and one of four veterinary faculties in Canada. My speciality is veterinary microbiology.

Today, the opportunity of speaking to you about a new vision for federal agricultural policy leads me to a very specific problem, namely animal health and food safety.

The vision we have outlined in our brief is extremely important. I believe that Canada must move forward, given, on the one hand, market globalization, issues surrounding GATT, including sanitary and phytosanitary issues, and, on the other hand, the potential new risks with regard to bioterrorism.

In a global context, it is very important that the issue of animal health and its potential risk for agriculture and human health be studied and that we take concrete measures to reach our global objective in this area.

The objectives are to protect our livestock and consumers who eat meat. Of course, we have to create programs which will help us reach these objectives. We are all aware of the fact that several animal diseases are at our door. Foot-and-mouth disease—I believe your committee already studied this issue—is spreading around the globe and there is a high likelihood that it will reach Canada. There are many other such examples. Seventy per cent of new diseases in humans will originate in animals.

As a consequence, we are facing many risks, serious risks. So, what we need to do is prepare ourselves. We have to prepare to deal with these things. England was not quite ready and it ultimately cost them billions of dollars. Therefore, Canada must immediately take action to protect its livestock and citizens.

Some measures can be taken immediately and I know that certain groups are already working on those. But it may take longer to implement other measures which, in my view, will have a lasting impact. One of these measures is to reinvest in the infrastructure of faculties of veterinary medicine.

At the moment, two of our faculties of veterinary medicine don't have the same level of accreditation as other such North American faculties. Another one of our faculties has just been inspected by the accreditation organization. This organization has pointed out the weaknesses of the veterinary medicine infrastructure and of the environment in which equipment is maintained.

I want to draw your attention to this matter, because if you want to train people who will help us fight these new scourges, who will be able to diagnose disease before it breaks out and spreads and causes as many losses as occurred in England, we will need experts, laboratories and conditions which are not as dangerous as the ones we which to prevent.

At the moment, our faculties of veterinary medicine do not have any level-three autopsy rooms or laboratories. This means that if a producer sends us an animal carcass infected by an extremely contagious disease, the very faculty of veterinary medicine may become the source of the disease should it spread to the entire herd.

This situation is very alarming and I believe it is extremely important for your committee to convince the minister that this problem is a priority which has to be addressed as soon as possible. I have left with the committee a short document which I hope will be distributed and which outlines the problem with regard to the accreditation of faculties of veterinary medicine, including that of Saint-Hyacinthe. If that faculty does not receive enough money to renovate its facilities, it will lose its accreditation from the American body and this will have significant repercussions.

Thank you.

The Acting Chair (Mr. Claude Duplain): Thank you very much. We will now move on to Mr. Fortin from McGill University.

¹ (1540)

Mr. Marc Fortin (Chair, Department of Plant Science, McGill University): Thank you for the opportunity to participate in the work of the standing committee.

[English]

Canada is essentially a success story. We have been successful in our agrifood system. Over the last 20 or 30 years we have doubled the amount of food we produce. We've set ourselves goals that are ambitious. We've set ourselves a goal to double exports by 2005, three years from now. It will be a challenge to continue to increase productivity of the agrifood system, but we're also faced with a different set of challenges. We're faced with climate change. We're faced with the need to maintain the quality, the safety of our products, which are recognized internationally, but we need to maintain those standards. We need to also mind our production systems. How will we maintain our production systems while achieving increased yields, increased levels of production?

We believe we're seeing a consensus developing now that what has been achieved so far, this doubling of production in the last 30 years, cannot be repeated with the same methods, with the same approaches we've used in the last 30 years. We cannot double again the same food production levels while using more fertilizer, more pesticides, more surface areas. The surface areas are not there any more. We're seeing concerns about pesticide use; we're seeing concern about what goes in the food production system. We need to be innovative. We need to develop new markets. We need to innovate, we need to develop new skills, new ideas. We need to fuel innovation if we are to fuel this continuing increase in agrifood production.

We believe we need to see a new partnership with producers, universities, and governments to achieve these goals of new products, new markets, and new skills. The government's role should be primarily that of fueling this innovation, fueling the manpower, retraining, new manpower skills, new research, to develop the new knowledge that will be required.

There's a range of tools that are available to the government to achieve those goals. Knowledge generation is one of them. If new products are to be developed, where will they come from? They will come from research. Eighty percent of the increase in productivity in the past has been fueled by research and development, investment in research and development.

The government needs to set a research agenda that will mind the public good. We have seen research agendas in the recent past that are fueled more by the possibility of return on investment in those research programs rather than return on investment in terms of public good. We've seen research programs that are fueled by “Let's find a new gene that will pay us a million dollars Let's find new pesticides that will return money on the investment.” We would like to see increased emphasis on minding the public good in this public research agenda.

With respect to information flow, the lack of information has been critical. The lack of resources to access information has been a cause of failure, we believe, in the past. We need to establish clear leadership in the context of a regulatory environment. Mr. Gaudet has referred to that in the context of GMOs, for example. There is consensus, as Mr. Gaudet.... Mr. Gaudet is not referring to GMOs, but is referring to biological agriculture. But in the context of GMOs, we see consensus among university partners, industrial partners, and consumer groups.

We need to develop norms for the detection of GMOs. The different participants in this industry are willing to work together on this. We're not sensing very good reception at the federal level. We're not sensing leadership at that level.

Finally, we need to train a new workforce to provide the workforce with new skills to face the challenges. We think the federal government could play a key role in that respect.

Thank you very much.

¹ (1545)

[Translation]

The Acting Chair (Mr. Claude Duplain): Thank you very much. We will now move on to the Fédération des producteurs d'agneauxproducteurs d'agneaux.

Mr. Samray.

Mr. Jean-François Samray (General Manager, Fédération des producteurs d'agneaux et de moutons du Québec): To begin, I would like to apologize for the absence of our president, Mr. Croft. Something came up at the last minute. I would also like to thank the committee for giving us the opportunity to present our brief. Indeed, we tabled a brief which we unfortunately did not have the time to translate, but that will be forthcoming.

I will just go directly to our conclusions and perhaps I can address the issue in more detail during questions. I will not come back to the subject of income security, which was addressed by Mr. Pellerin, nor to the importance of consulting services, which Mr. Walaszczyk spoke to earlier, and which are two key factors in the development of sheep production in Quebec and Canada. It is important for sheep producers to have access to unbiased consulting services.

One issue which sheep producers and the administrators of the Canadian Sheep Federation frequently have to deal with is international trade, that is, the upcoming negotiations and the impact of imports from New Zealand and Australia to Canada.

It's clear that producers have questions. In fact, I have received several calls from House of Commons researchers telling me that members had raised questions in the House as to why imported lamb from Auckland, New Zealand was available in the deep-freeze section of our supermarkets for $50 a piece, in spite of the fact that supermarket chains take a 30% profit margin, and that the product gets here despite being transported by ship and by other means. In the view of Canada's sheep producers, and more particularly those of Quebec, it would not be asking too much to call for the creation of a task force to answer that question. After all, it's important for us to get to the bottom of the matter. How is it that a country, even if it is competitive, can produce lamb at that price? We work very hard to produce our lamb meat. We have carried out a lot of research and have made great productivity gains.

In Quebec, we have introduced a classification system, by which the price is based on the quality of a carcass. These issues come up frequently. We recently carried out a study on consumer perception and it revealed that fresh lamb produced in Quebec and Canada is considered the best in the world.

And yet, the price of New Zealand lamb is much lower than our own. So, it would be greatly appreciated if we could understand why. We would like to understand how this could be possible. We are not asking to file an anti-dumping complaint, but we just want to understand how such a thing is economically feasible.

As well, when people talk about sheep and lambs, they think about scrapie; it's unavoidable. I will conclude with two points on scrapie. First, I would like to address some of the issues raised by Dr. Roy, who is still here. There is the issue of food safety, of risk in terms of capital invested by producers to fight disease in either cows or sheep.

As it now stands, the Canadian Sheep Federation has twice asked the Minister of Agriculture to implement a program to eliminate scrapie. This has been done in the United States and if you know how things work, that program will, in the short or long term, become a non-tariff trade barrier between Canada and the United States.

This program is worrying or nerve-racking for the Canadian Cattlemen's Association, because the American government has decided there is a link between scrapie and cattle. Canada produces 3.5 million steers every year. Fifty per cent of that production is exported and 90% of the total goes to the United States. Therefore, if the Americans decided to close their border, it would have serious repercussions at home.

As for ovine production, the production of sheep and lambs, most of the production in western Canada is exported south, to American states bordering the prairies. If that border were to close, there is no doubt that the sheep and lamb destined for U.S. markets would flood onto the Toronto and Montreal markets, which would create a national crisis for producers, since the additional supply would cause prices to plummet.

So, one of the our recommendations is that the Canadian government develop a program to eliminate scrapie. However, before doing so, it is essential that we conduct an epidemiological study on the repercussions which would result if the disease were to spread.

The Americans carried out such a study before creating a program and prevalence rates were studied. When you carry out a study, you don't have to declare any cases; therefore, you don't have to cull the entire herd.

As it now stands—and this is my final point—Canada is thinking about creating a voluntary certification program against scrapie. But the government does not know how widespread the disease is, nor how much such a program would cost. But once the system is up and running, you cannot stop it anymore. That's all.

¹ (1550)

The Acting Chair (Mr. Claude Duplain): Thank you very much. We will now move on to questions, but I would first like to welcome Mr. Jean-Louis Fréchette, who is the father of Jean-Denis, who is our very hard-working researcher on this committee. If the chairman were here, he would speak to the researcher's professionalism and competence and to the fact that he is an asset to our committee and is of great help to us. Welcome, sir, to our meeting.

Mr. Hilstrom, you have the floor.

[English]

Mr. Howard Hilstrom: We'll share this a little bit, here. We'll just quickly do it.

One question I have, Mr. Roy, is you mentioned a level-three autopsy facility for diseased livestock. Are there any in the country right now? If so, where?

Dr. Raymond Roy: Right now there's no level-three autopsy facility in Canada.

Mr. Howard Hilstrom: That is a very major concern. That's something I'm sure we'll be addressing with our report. That's all I had, thank you.

Dr. Raymond Roy: I can comment further in saying that if we want to make autopsies of sheep with scrapies, if we were in France we would need a level-three autopsy room.

Mr. David Anderson: I'm getting off track here, but why don't you lay out what a level-three autopsy facility does then, so it's on the record, in our blues.

Dr. Raymond Roy: Autopsy level facilities, which can be laboratories and autopsy rooms, are rooms in which all the inventilation and all the waste are treated. So no germs or virus or bacteria can go outside before being treated. All the people working there are equipped to be safe.

Mr. David Anderson: I have a question on accreditation. When we were in Davidson, I believe it was, Dr. Livingston talked to us about accreditation in Saskatchewan. He mentioned that two of the four colleges have been based on limited accreditation status. He also suggested that although education is a provincial responsibility, these facilities supply infrastructure for the government. I'm wondering, what do you need to bring your schools back up and to have them accredited again?

Dr. Raymond Roy: The evaluation of our architects tells us that what we need for improving the facilities and equipment will be around $59 million just for our schools. This excludes what I told you about level-three facilities, which are really costly.

Mr. David Anderson: Thank you. What will you do if you don't get that money?

Dr. Raymond Roy: If we don't get the money, I'm quite sure that our American evaluation team will just pull out the accreditation, because right now we don't have the facilities to support our program. Most of our large-animal buildings were built in 1965 to accommodate 35 students, with the level of security of that time. We are in a different time. Since we graduate 80 students per year, it's very important that we can graduate all these students. If we don't get accredited, we will have a real shortage of veterinarians in Canada. We already have one, but it will be devastating.

¹ (1555)

Mr. David Anderson: Without that accreditation...I understand it affects our ability to license exports and those kinds of things.

Dr. Raymond Roy: That's right, because especially in veterinary medicine, we lived in a real global world before it was globalized. All 31 schools have the same types of programs, and this American evaluation team just compares North American schools. So it's a chance that we are in this type of situation because in the past all the livestock movement has been in some way adopted because we have similar types of programs.

Mr. David Anderson: Thank you.

Mr. Gaudet, can you tell me how you market your wheat and barley?

[Translation]

Mr. Pierre Gaudet: As it now stands, there are two markets, the one for human consumption and the one for animal consumption. Before leaving the farm, products for human consumption are thoroughly processed. They are cleaned, standardized in terms of moisture content, classified by category and then sold by sample. Since you are a producer, I'm sure you are familiar with the rules. The products are then traded in part on the domestic market and in part on the export market.

[English]

Mr. David Anderson: What I'm interested in is how do you sell it? Are you allowed to market it yourself, or do you have to go through a board? How do you market the wheat?

[Translation]

Mr. Pierre Gaudet: We sell directly to the farm. Sometimes contracts are signed with buyers. Sometimes sales are closed after the harvest, when the time is right and based on a delivery schedule. The producer makes direct sales.

The Acting Chair (Mr. Claude Duplain): We will revisit that issue in a few moments.

Mr. Desrochers.

Mr. Odina Desrochers: Thank you, Mr. Chairman.

Mr. Gaudet, I don't think you'll be surprised if I ask you a question about GMOs. You are familiar with our political party's position; we have been very clear on that issue. During the last Parliament, we asked for legislation on mandatory labelling, but our initiative was defeated. A similar initiative was also taken by a Liberal member, but it was also defeated.

I am more or less in agreement with Mr. Laurent Pellerin when he said that we are big on consultation, but weak on action. I would like you to give us a few concrete examples, because they are often telling. Let's talk about the danger of GMOs. Say a person plants crops using genetically modified seed, and that on a windy day the pollen from this crop is unfortunately blown into an organic crop, it means that the organic crop is threatened. I think the time for consultation is over; now's the time for action.

Second, you know just how closely Americans are watching us. Well, just imagine what it will be like when they have standards on organic farming and they shed doubt on the integrity of our organic crops, because we will not have passed any legislation on GMOs yet. If that happens, our organic production will die within Canada. But first, I would like you to give us some concrete examples.

Second, when do you think the Canadian government should take action, by which I don't mean consultations, but really take action regarding GMOs? The matter has been discussed in Ottawa for the last four years. We're still discussing it in committee and nothing is being done.

Mr. Pierre Gaudet: Mr. Desrochers, thank you for your question. Let me give you an example of the direct impact of GMOs. At home, on my farm, in 2000, it cost $36,000 for a field of soybeans that had been contaminated by a neighbouring field of soybeans.

No evaluation has been done to find out how many farms have been contaminated by cross-pollination, but let me tell you that in my case, the cross-pollination that took place in 2000 cost $36,000.

We know, with the technology we have, that the possible level of contamination by soybeans is relatively low. With crops whose pollen travels further, like corn, for instance, it has been proven that the risk of contamination between two fields can extend up to five kilometres. The cadastral division applied in Quebec creates long, narrow strips of land. The possibility of contamination is very, very great. Because of this, as a federation, we filed a request for special protection. You cannot sue a neighbour because he is following the prescribed rules of the art.

Now I come to the second part of the question where you asked when the federal government should intervene. Basically, you should have more influence than I do on the federal government because, to a certain extent, you are a member of the House. I address this to everyone around this table. Are you aware of how vulnerable we currently are, as a people, if only because we are losing our genetic knowledge which is currently being controlled? You must be aware of this because experts in genetics have certainly spoken to you about it in different places, because those people are everywhere. Genetic control over plants and all living beings is in the hands of three or four persons on this planet. Are you aware of how vulnerable we are now as a country, politically and economically, for these reasons?

The need for quick intervention, if only to show on a label that a product contains GMOs, is essential. Studies have shown that 95% of the Canadian population is very concerned about genetic manipulation. As a producer, I cannot make any statements about the good or ill effects of this. Clearly, prudence is in order. On the other hand, the other strategic element to be considered, besides strictly technical matters, is the fact that Canada exports various products, and especially grain. The markets on which Canada sells its products have already taken up substantial positions based on market signals. They say that they will not buy genetically modified products. In a purely strategic way, setting aside all the technicalities, this is a major key and a tool for development.

Why do we feel so much resistance in the federal apparatus? Our analysis of the situation is simple. We imagine that this is because of the lobby, the very same lobby that funds research in Canada. If you connect the two, I think that the situation is easily understood.

º (1600)

The Acting Chair (Mr. Claude Duplain): Mr. McCormick.

[English]

Mr. Larry McCormick: Thank you very much, Mr. Chair.

I realize that Suzanne Tremblay wishes she was here today--not that Odina needs any help on this.

I want to go to mutton and I want to go to scrapie, because we've had people from this great province in front of our government rural caucus several times on scrapie.

On the GMO, as you know, you are allowed to advertise your products and your markets as GMO-free if you wish, because I'm sure you can show that it is from that source. In fact, people are doing that, from B.C. to Nova Scotia, and I'm sure they are from this province. I think that's the direction we're going to go in.

In fact, Mr. Murray Calder, who is often on this committee--he's a chicken farmer in Ontario--was quoted the other day as saying “I wonder why we're spending this time, because ultimately consumers will decide”. I think part of it's education. I want to know more, and I want to know more about our products. But at this moment in our kitchen cupboard at home is canola oil, because it's healthy, we've been told. We use it, and it's probably in the cupboards of most homes in Canada, yet that's a genetically modified food.

I want to mention, because it gets a little bit political, the time we had the vote on the private member's bill for mandatory labelling. This will change as we go along, I'm sure, but at this time the House of Commons, the Canadian government, has never passed a law that couldn't be enforced. And yes, there are tests that I believe are reliable. I have to tell this again because we're here now, and I want to put the facts on the table.

My daughter took me to task the other day about why I led people against this bill. There are tests that show whether a grain is GMO or not, but when you take it to the processed products in the supermarkets, whether it's pizza or many other things, there is no agreed-upon test in the world today that will show whether something's a GMO product or not.

As far as our exports go, 85% of our products are going to the United States of America, and they're not quite ready for it.

I'm with you. I'm a great supporter of organic, and I think your market will grow and grow, but I had to put those facts on the table. Perhaps you'd like to comment back to me on that.

º (1605)

[Translation]

Mr. Pierre Gaudet: Mr. Chairman, allow me to point out that I did not make any statements about the integrity of the process before this group. I told you that there are problems to be solved and that they must be solved because they are slowing the development of the agricultural market in Canada.

I also said that we absolutely must invest in research and not leave it entirely up to private enterprise. Private companies only defend their point of view and only fund research based on objectives that are in their own interest. Regarding this, if need be, we will demonstrate to you some day that research has been done without ever being published because the sponsor of the research, who also owns the study, does not want it to be published when it does not suit him. When the governement, at all levels, withdraws from basic research, because of the economic situation, I presume, we get what we have now, and we want to raise the questions that were just raised by both Mr. Roy and Mr. Fortin.

On the other hand, the food distribution network in Canada also sets the rules of the game. When Loblaws refuses to buy from a supplier a product identified as GMO-free, it oversteps the rules of trade; it intervenes politically and decides what Canadian consumers should eat, even if we have technical problems with labelling some things.

Thus, we must have a clear signal regarding this issue, and if the Canadian government will not respond, it will not meet the demands of the population as a whole. Ninety-five per cent is not something to be sneezed at.

The Acting Chair (Mr. Claude Duplain): Mr. Fortin would also like to add something about this matter. Would you like to hear him out or...?

Mr. Fortin, please be very brief.

[English]

Dr. Marc Fortin: Maybe I should declare my colours to some extent. I was a member of the expert panel of the Royal Society of Canada that submitted a report to the Canadian government, an expert panel that is very frustrated by the lack of action in response to our recommendations.

I'd like to come back to a technical point where you mentioned that we cannot detect GMOs in pizza. That was the consensus I was referring to a few minutes ago, that we can do these things. We can detect GMOs in very small quantities. The technology is there. The Europeans are putting this into place. In Canada, we are doing strictly nothing on the topic of detection, of norms, of how we regulate this product. The technology is there and we're not using it. There's a sense of frustration on our part.

º (1610)

Mr. Larry McCormick: We'll have to continue a little later. I have much to learn from you, Doctor.

On scrapie.... Have we a moment?

[Translation]

The Acting Chair (Mr. Claude Duplain): We will have to come back to this issue later on.

Mr. Borotsik.

[English]

Mr. Rick Borotsik: Just on that, Monsieur Fortin, you say you can detect it in pizza. The Royal Society's report did in fact say voluntary labeling is acceptable at the present time. Do you believe it's a safety issue with respect to the identification of GM product in mandatory labeling?

Dr. Marc Fortin: The problem at the moment is that we do not know, period. We do not have data that will indicate whether these products are safe or not safe.

Mr. Rick Borotsik: How long would it take us?

Dr. Marc Fortin: It's not that difficult. We just need to do the research.

Mr. Rick Borotsik: Twenty years? Twenty-five years?

Dr. Marc Fortin: No. We have done it for the pharmaceutical industry--I say “we”, meaning outside.

There are rules to follow to test the safety of every product. I'm not advocating that we go to the same extent. I'm saying we need to ask the questions as to whether the product is safe or not.

Mr. Rick Borotsik: Monsieur Fortin, you had also said at the beginning of your dissertation that we've doubled production in the last 20 years, and that it's the goal, whoever's goal it is, to double between now and 2005. In your opinion, is it a realistic goal, and is it a necessary goal that we double production by 2005?

Dr. Marc Fortin: Well, the goal is to double exports, and not necessarily production, over the next two years. To double production is not--

Mr. Rick Borotsik: Is it a realistic goal to double exports? Is it a required goal? Is it a goal that is, in your opinion, necessary?

Dr. Marc Fortin: There has been tremendous progress in increasing the amount of exports. In the last six years I believe we've gone from a deficit in trade balance with agrifood products to a surplus.

Mr. Rick Borotsik: The reason I ask that, Monsieur Fortin, is that a lot of people have come before us now and said we've increased our exports, but the net incomes to the producers have either stagnated or in fact in some cases have dropped. So I ask the question--and I'm a free trader, by the way--is it necessary that we have the increase in...?

Dr. Marc Fortin: I think it is necessary for our producers to increase the value-added content, or what we call the knowledge content of the products, which brings more income to the producer.

Mr. Rick Borotsik: You also said, Monsieur Fortin, that research and development was absolutely necessary. That has been a recurring theme as well--research and development, constantly. The problem is that everybody we talked to--whether it be biotech, whether it be canola, pulse, wind energy, organics--says the same thing. Would you please tell me how the priorities are to be chosen on research and development, and how the funding levels to those priorities are set?

Dr. Marc Fortin: We have a history in Canada of a rigorous peer review system that works. What's missing is the money, because the average researcher in plant biology is receiving $35,000 a year from the Natural Sciences and Engineering Research Council, NSERC--$35,000 a year. You can't go far on that.

Mr. Rick Borotsik: You say we have a rigorous peer review. Could you expand on that, please?

Dr. Marc Fortin: When a researcher submits a grant application, it is subjected to analysis by a group of experts. The peer review system has some weaknesses, but around the world it is still the most rigorous system, the most conflict-of-interest-free system for determining who deserves to receive research grants.

Mr. Rick Borotsik: Dr. Roy, are all the veterinary schools in the United States accredited?

Dr. Raymond Roy: Right now, one of the American schools is on limited accreditation. It is the Davis school, and they have just received from the Government of California $166 million to put their infrastructure in shape.

Mr. Rick Borotsik: Do all of those schools have level-three autopsy--?

Dr. Raymond Roy: Right now, I believe about a quarter of them have. The other ones are in the process of building them, and there's a large group of schools that are joining together in asking for the federal government to....

Mr. Rick Borotsik: Here's my last question. It needs a very simple answer. Can we eradicate scrapie?

º (1615)

Dr. Raymond Roy: Yes.

Mr. Rick Borotsik: Thank you.

[Translation]

The Acting Chair (Mr. Claude Duplain): Mr. Gaudet, you have a...

Mr. Pierre Gaudet: Let me add an item of information, without wanting to put words in the others' mouths. We just asked about what precautions should be taken, and I would like to say that even those who produce and sell genetic products ask growers to handle their supplies with care.

Let me give you an example: Starling corn, which is a genetically modified product, is always touted for its extraordinary yield. However, the supplier who holds the patent must give the producer a document showing that a protective layer must be placed between this corn and other strains because of the risk of contamination. Now, given that the supplier has to provide such information, how can I control the wind? I think that this is a clue.

The second point that seems important to me concerns plans for expansion. Is anyone questioning this objective to always want to push ahead? Is anyone questioning the models currently being developed? Is anyone questioning the concentration of property, property of the land base and property of the production values? Who is currently funding agriculture in Canada? We will soon realize that we're about to change our flag.

The Acting Chairman (Mr. Claude Duplain): Mr. Steckle, do you have a question? Or do you, Mr. McCormick?

[English]

Mr. Paul Steckle: Yes, I have one question following up on what Mr. McCormick wanted to ask on the scrapies issue.

About five years ago, Mr. Coderre, who is now the Minister of Immigration, was on this committee. The whole scrapie issue was one he put forward at that time because it was a problem in Quebec. Where is it at today? Has it been brought under some sort of control? How do you feel about this issue, given the circumstances in Britain of a year or so ago? Obviously, to some degree it is under control, but is it at a level you feel comfortable with, given our limited ability to control some of these things, which sometimes get beyond our control?

Mr. Jean-François Samray: Honestly, I don't know.

[Translation]

I should tell you that I can answer in English but I'll give my answer in French in order to use the precise terms.

This crisis was "settled" when the federal and provincial governments adjusted the compensation payments to be made to the producers on October 27, 1998. Payments were made to the producers and the federation also received a compensation plan from the CARD fund. A part of this fund was applied to a permanent identification program. The federation is setting up a permanent identification system, a data bank for the implementation of a permanent Canadian identification system. It is a pilot project.

The federation is also a member of AgriTraçabilité Québec, which is in the process of establishing a complete traceability system, totally different from the Canadian permanent identification system and almost the complete opposite. We have here an example of how cattle are treated in the two systems, the total traceability one as well as the Canadian system; they are two very distinct ways of going about it.

In order to set up a program for the eradication of scrapie, it is first of all necessary to trace the history of the animals. The report of the commission on the foot-and-mouth disease crisis in Great Britain noted that for cattle just as for wine, we will need a permanent electronic identification for the species as a whole.

It our brief we mention that permanent electronic identification now costs $2.50 for each animal. A lamb fetches between $80 and $150... That is of course the gross price from which the producer must deduct all his costs.

There comes a point when something has got to give.

The government's first investment must be in permanent identification and traceability. We have been presented with the Canadian policy on sanitary measures and regionalization. Without traceability in the case of cattle or sheep, it is impossible for us to undertake anything at all.

Secondly, for the past five and almost six years, the crisis has been over in Quebec. Nonetheless, every year at least 5,000 animals are being put down. They are put down because it has been impossible to trace these animals quickly and they have contaminated others with amniotic fluid during lambing. And there is no stop to it. So because of our inability to trace diseased animals quickly the thing keeps spreading.

As I said, the government will have to commission a study before finding out... Whether it is a pilot project on the certification of farms that are free of scrapie or an eradication program, in both cases, once we begin to systematically discover farms where scrapie exists, the American government, which has just set up its own program, will shut down its border.

So one way or another, before we take any action, we'll have to carry out an epidemiological study. We have been in touch with Dr. Carole Simard on this subject—she works quite close by for the Canadian Food Inspection Agency—and Dr. Bélanger from the Faculty of Veterinary Medicine. It could be done in Quebec or elsewhere in Canada, but an epidemiological study on the prevalence of the disease must be conducted because we do not know how high the cost will prove to be.

One thing is sure, and that is my last point, namely that the Americans will take a close look once we begin, and we have to know how much it will cost.

So, to answer your question about whether I feel comfortable, I can only say I don't know because I do not know what the rate is. There's no mechanism for the statutory review of the payment schedule for producers who have had animals put down. This scale will have to be reviewed both for sheep and all the other productions because it prevents producers from declaring the disease. Even if it is compulsory, the fear of losing money is an obstacle to this declaration because those who were compensated for animals put down in 97-98 are still trying to make up for their loss since the payments that they received were not at the present level.

I'm sure that Ms. Tremblay has a lot to tell you about that.

º (1620)

The Acting Chair (Mr. Claude Duplain): You can come back to this matter.

Mr. Anderson.

[English]

Mr. David Anderson: I think there is a statutory compensation program for sheep that have to be destroyed.

Mr. Larry McCormick: It wouldn't go back, the federal government wouldn't go back.

Mr. David Anderson: I'm going to change the topic back to marketing grain. I didn't get finished with the questions I wanted to ask you.

Talking about wheat for human consumption, do you export wheat outside the country or do you sell into other provinces?

[Translation]

Mr. Pierre Gaudet: We export outside Canada.

[English]

Mr. David Anderson: Are you expected to buy a Canadian Wheat Board permit? If you do, do you pay any money for it?

Mr. Pierre Gaudet: No.

Mr. David Anderson: Do you have anything to do with the Canadian Wheat Board at all? Nothing at all?

[Translation]

Mr. Pierre Gaudet: I can tell you quite honestly that several years ago we would have liked to be able to go through that channel. But we are not under any constraints as far as that is concerned.

[English]

Mr. David Anderson: Actually, you are required to go through it, and apparently they're not applying it evenly across Canada. I would like you to tell me what you think the advantage of that would be.

[Translation]

Mr. Pierre Gaudet: The advantage would be the ability to constitute a larger pool so as to develop markets in a more intelligent way.

[English]

Mr. David Anderson: Actually the majority of the organic producers in western Canada avoid the Wheat Board at all costs if they possibly can. That's interesting, because those regulations are supposed to apply across Canada. We're told that they do. We're also told that they can't give out no-cost licences, and we find out that they aren't even bothering to give them out at all.

Thank you for that.

[Translation]

Mr. Pierre Gaudet: I've also talked to producers from other parts of Canada and I agree with you: there certainly are Canadian grain producers who would like to avoid going through the Canadian Wheat Board.

They want to avoid this because their product is not properly treated within the board. If that is the case, does that mean that the instrument should be destroyed, or rather that some corrective steps should be taken? I think that it would possible to rectify things in order to obtain more positive results.

The Acting Chair (Mr. Claude Duplain): Thank you.

Mr. Hubbard.

º (1625)

[English]

Mr. Charles Hubbard: I have two very short points.

First of all, Dr. Roy, it's certainly good to have you here today. It's an issue we've heard before and have talked to a number of people about. I was really quite taken aback with how much it takes to bring your university up to the standards. You said it was around $60 million. I have two questions, if I could. Is it because of the American standards, or do the Europeans have other standards that might be used in accreditation?

Secondly, to Dr. Fortin, in your written submission you talk about economic models and the idea of producing without markets. The biggest problem we have, as a committee, in terms of our hearings is listening to people who are selling their products below the cost of production. For wheat, grains, corn, and soybeans, we're being told we've increased our production dramatically. Due to American and other subsidies, we are not getting a fair value for our products.

Dr. Roy and Dr. Fortin, could each of you comment on the two questions?

Dr. Raymond Roy: First of all, I want to comment on your accreditation question. We have American standards, and right now they are the best standards in the world for veterinary medicine. The European countries are trying to copy it.

As a matter of fact, three veterinary schools in Europe have been accredited by the Americans. There are two in England and one in The Netherlands. The Europeans have put together a package to accredit their schools to be comparable to the American schools. They are in the process of implementing this type of accreditation.

Mr. Charles Hubbard: Yes.

Dr. Marc Fortin: We're essentially saying we should think about how we produce food and what we produce. We have done research over the last 50 years on essentially one model for crop production. I'll talk about crops; I'm a plant scientist. We've used essentially one model. We have done research in that type of production system. How much research have we done on biological agriculture systems or alternative production systems? How many resources have we dedicated? Should we think about the way we've shaped our agricultural system? Is it really what we want now in 2002?

Mr. Charles Hubbard: You're advocating, for biotechnology, the idea may be that the world has too much grain. The American farmers feel that way. It seems to be the case. Our economists have gone a long way to prove it. Anyway, we have the old supply and demand. You're saying maybe we've outdone ourselves in terms of creating a supply the world is not ready to pay for. Is it what you're saying?

Dr. Marc Fortin: I'm not sure biotech has contributed very much to it. Biotech has been around for the last three or four years, or five years at the most. It's only corn and soybeans. No wheat, as yet, has been produced on a large scale. I don't think biotech has contributed to the excess.

Mr. Charles Hubbard: I shouldn't have used the two words.

Dr. Marc Fortin: I'm sorry?

Mr. Charles Hubbard: I should have probably said “organic” instead of “biotech” for the wheat.

We have more supply out there than the world seems to be willing to pay a fair price for. Is there any solution to it for the Canadian farmer?

Dr. Marc Fortin: It's what we're saying. Shouldn't we think about this?

[Translation]

The Acting Chair (Mr. Claude Duplain): Mr. McCormick, I think you wanted to ask a question.

[English]

Mr. Larry McCormick: Yes, please, Mr. Chair.

As all my colleagues know, scrapie is not only found in Quebec, of course. A year ago I was in Manitoba, and they had an outbreak. We've had it in Ontario, Alberta, and I don't know where else.

Of course it's of concern, not just because of you people, but also I think we should give you more support because when the public reads about this in the paper--and we don't need it in the headlines especially--they make the connection with all meat products and so on.

About four years ago the only test I knew of, and you people told us at that time from your association, was the test they could conduct on a deceased animal. I just want to understand. Do you have this test available now--this new electronic test that is quite satisfactory or accurate?

º (1630)

Mr. Jean-François Samray: Maybe Dr. Roy can answer. There is one that was developed at the federal farm in Ottawa on the third eyelid, but actually the Minister of Agriculture doesn't know if he's going to keep on funding that research. There is some research or test that has been developed in Israel. It has been published, and now some researchers around the world are trying to duplicate the protocol that has been done in Israel.

Dr. Raymond Roy: Right now, the official test is still the tissue test. The eyelid test is not approved in Canada yet.

Mr. Larry McCormick: Thank you, Doctor. One thing I will follow up is the plan the United States has for the eradication, especially if they may not have a live test. I'll talk to you later.

Thank you very much, Mr. Chair.

[Translation]

The Acting Chair (Mr. Claude Duplain): Mr. Hilstrom, I think that you wanted to ask another short question.

[English]

Mr. Howard Hilstrom: Yes, just quickly.

It will be interesting to see if the Quebec wheat industry wants to become part of the Wheat Board. I'll bring that up with them later.

Mr. Fortin, our first hundred years of agriculture in this country is based on massive research of really organic farming, because that's what farming was. There were limited chemicals, pesticides. That's a relatively recent development. The GMO issue is something now that's on the go. But can you tell me...? The organic people use organic as a marketing term implying that this is somehow better than the traditional stuff. But in pure science--and you're a plant scientist--is GMO soybean, which I believe you have in Quebec, not just as organic as a non-GMO soybean, in the scientific use of the word organic?

Dr. Marc Fortin: We've increased production over the last hundred years using three approaches, three tools essentially. One is genetic improvement--I'm not talking about genetic selection--the way breeders have done it for thousands of years. We've genetically improved our varieties. We have managed crops better. And a third factor is we have used fertilizers and pesticides, mostly since the forties or fifties. These are the three ways we've improved productivity.

Biotech, so far, has contributed perhaps nothing to the increase in yield. People are still debating whether use of GM crops really increases yield. In cotton, maybe it does. In soybeans, it's not clear. Anyway, there's debate going on about this.

Is it more or less organic? There are defined rules for what is organic. The current systems that use genetically modified soybeans use traditional, conventional production methods that are not organic. They are not defined in terms--

Mr. Howard Hilstrom: Okay, that's a good answer for the first part of my question. The second part of it is the question of the pure scientific definition of organic. To me, I understand that even though it's a GMO soybean, it is still by pure scientific definition an organic plant, and what you get out of it is an organic compound or food that is organic.

Dr. Marc Fortin: I'm not sure what your definition of organic is.

Mr. Howard Hilstrom: Well, not the definition of how you raised it, but the definition of a plant that whether it has genes from Bt genes in corn or whether you spread the Bt over it by hand afterwards to get rid of pests, what is the difference in that corn kernel that makes it non-organic? I'm referring to the science, not the marketing technique--the science of organics, the terminology.

Dr. Marc Fortin: You're asking essentially whether the corn kernel or the soybean is the same whether we asked the plant to produce the Bt or whether we spray it.

I don't have an answer to that question, and I'm not evading the question. The reason I'm saying there is no answer, or I don't know the answer, is that we have not compared the substances inside a GM soybean versus a traditional or conventional soybean, whether organic or not. We do not know if there is any difference in content between the two.

º (1635)

Mr. Howard Hilstrom: The allegation that we've lost markets isn't exactly true. We had lots of presentations from the canola people, where they grow a lot of canola, and we ship mammoth tonnages over to Japan. That's one of the examples--Pierre, you may want to comment--that's used about why this GM canola is so bad: that we lose markets. Japan still takes it, and they're the fussiest eaters in the world.

[Translation]

Mr. Pierre Gaudet: You certainly will hear from producers that they have to work with this product because they're tied by the neck. When they buy genetically modified seed under contract they are required to sell it back to the same supplier.

How do you think that they would be able to bite the hand that feeds them? I'm sure you're intelligent enough to understand this situation. In the case of many types of production, producers only have the appearance of freedom.

I don't want to put words in your mouth and if I'm mistaken, you can rap me on the fingers, but if I understood correctly, you are asking whether Quebec producers would be willing to use the same commercial networks as the producers in the west of Canada? Did I understand correctly? Is that the question you asked?

No. I see. Then I'm finished.

[English]

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

[Translation]

The Acting Chair (Mr. Claude Duplain): You will have one...

Mr. Jean-François Samray: I have an answer to the member's question.

Yes, there is a scale for compensation when animals have to be put down but I'd just like to remind you that when pressure was brought to bear by the UPA and Quebec MPs, meetings were arranged to double the amounts of compensation under these schedules and the other productions suddenly woke up. They claimed that they had not reviewed their scales for a long time. If tomorrow or six months from now there were an outbreak of a disease requiring compulsory declaration, Canada would be facing a problem relating to compliance with the law on the part of producers since declaration is compulsory and it involves a significant loss. The genetic value resulting from the inflation of demand for good genetic stock means that the compensation that they obtain will not be enough for the replacement of the animals.

That is why we are saying that another mechanism is necessary. Whether it be every year or every two years, there must be some mechanism providing for a statutory review of the amounts to ensure that the compensation allows the producers to buy animals of a comparable genetic constitution. Ms. Tremblay and [Editor's Note: Inaudible] will tell you so, I hope that no one will have to live through the experience that some of the sheep producers had with scrapie. And that is nothing in comparison with what Mr. Eric Thornhill had to go through, a producer with the Manitoba Sheep Association who lives quite near you. He lived through a foot-and-mouth disease outbreak in the 1960s in Great Britain and he saw the eradication of his herd by scrapie last year. I think that you should make a recommendation to this effect and take another look at this scale.

The Acting Chair (Mr. Claude Duplain): I'd like to thank you all. It was a very pleasant meeting. I hope we will have another opportunity to discuss these subjects. I am particularly glad that my colleagues from the other provinces have had a chance to hear what you had to say.

Thank you once again.