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37th PARLIAMENT, 1st SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, March 14, 2002

0905

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

0910

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

Mr. Anderson

The Chair

Mr. Odina Desrochers (Lotbinière--L'Érable, BQ)

Mr. Dick Proctor (Palliser, NDP)

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

The Chair

Mr. Paul Steckle (Huron--Bruce, Lib.)

The Chair

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

0915

The Chair

Mr. Duplain

The Chair

Mr. Duplain

Mr. André Simard (General Manager, Institut de technologie agroalimentaire)

0920

0925

0930

The Acting Chair (Mr. Claude Duplain)

Mr. Ghislain Cloutier (Centre de référence en agriculture et agroalimentaire du Québec)

0935

Mr. Duplain

Mr. Maxime Laplante (Secretary General, Union paysanne)

0940

The Acting Chair (Mr. Claude Duplain)

Mr. Louis Desjardins (President, Union des producteurs agricoles de la Côte-du-Sud)

Ms. Johanne Laplante (Union des producteurs agricoles de la Côte-du-Sude)

0945

Mr. Duplain

Mr. Howard Hilstrom

The Acting Chair (Mr. Claude Duplain)

Ms. Johanne Laplante

0950

Mr. Duplain

Mr. Marcel Groleau (1st Vice-President, Fédération des producteurs de lait du Québec)

0955

The Acting Chair (Mr. Claude Duplain)

Mr. Gaston St-Laurent (Faculty of Agriculture and Food Science, Laval University)

1000

1005

1010

Mr. Duplain

Mr. Adéodat St-Pierre (Vice-President, Coalition Urgence Rurale)

1015

Mr. Duplain

Mr. Jean-Claude Parenteau (Union des producteurs agricoles du Bas St-Laurent)

1020

Mr. Duplain

Mr. Gilles A. Trudel (Director General, Société de la protection des forêts contre les insectes et maladies)

1025

The Acting Chair (Mr. Claude Duplain)

Mr. Howard Hilstrom

Mr. Maxime Laplante

Mr. Howard Hilstrom

Mr. Hilstrom

1030

Mr. Marcel Groleau

Mr. Howard Hilstrom

Mr. Marcel Groleau

1035

1040

Mr. Duplain

Mr. Odina Desrochers

Mr. Marcel Groleau

1045

Mr. Odina Desrochers

Mr. Marcel Groleau

Mr. Odina Desrochers

The Acting Chair (Mr. Claude Duplain)

Mr. Adéodat St-Pierre

The Acting Chair (Mr. Claude Duplain)

Mr. Maxime Laplante

The Acting Chair (Mr. Claude Duplain)

Mr. Louis Desjardins

1050

The Acting Chair (Mr. Claude Duplain)

Mr. Steckle

Mr. Maxime Laplante

1055

Mr. Steckle

Mr. Maxime Laplante

Mr. Steckle

Mr. Parenteau

Mr. Adéodat St-Pierre

Mr. Duplain

Mr. Adéodat St-Pierre

The Acting Chair (Mr. Claude Duplain)

Mr. Louis Desjardins

1100

The Acting Chair (Mr. Claude Duplain)

Mr. Maxime Laplante

The Acting Chair (Mr. Claude Duplain)

Mr. Marcel Groleau

1105

The Acting Chair (Mr. Claude Duplain)

Mr. Jean-Claude Parenteau

Mr. Rick Borotsik

Mr. Borotsik

1110

Mr. Gaston St-Laurent

Mr. Borotsik

Mr. Marcel Groleau

Mr. Borotsik

Mr. Ghislain Cloutier

Mr. Borotsik

Mr. Marcel Groleau

1115

Mr. Rick Borotsik

Mr. Maxime Laplante

Mr. Borotsik

Mr. Marcel Groleau

The Acting Chair (Mr. Claude Duplain)

Mr. McCormick

Mr. Maxime Laplante

1120

Mr. McCormick

Mr. Marcel Groleau

Mr. McCormick

1125

The Acting Chair (Mr. Claude Duplain)

Mr. Desrochers

Mr. McCormick

The Acting Chair (Mr. Claude Duplain)

Mr. Anderson

Mr. Louis Desjardins

Mr. Anderson

Mr. Louis Desjardins

Mr. Duplain

1130

Mr. Louis Desjardins

Mr. David Anderson

Mr. Louis Desjardins

Mr. David Anderson

Mr. Adéodat St-Pierre

Mr. Louis Desjardins

Mr. David Anderson

Mr. Louis Desjardins

Mr. David Anderson

Mr. Louis Desjardins

Mr. Claude Duplain

Mr. Louis Desjardins

Mr. Charles Hubbard

Mr. Hubbard

1135

Mr. Ghislain Cloutier

1140

Mr. Claude Duplain

Mr. Louis Desjardins

Mr. Proctor

1145

Mr. Porter

Mr. Proctor

Mr. Gaston St-Laurent

Mr. Proctor

Mr. Gaston St-Laurent

Dr. André Simard

Mr. Proctor

Mr. Duplain

Ms. Johanne Laplante

Mr. Duplain

Mr. Anderson

Mr. Louis Desjardins

1150

Mr. Porter

Mr. Louis Desjardins

Mr. Anderson

Mr. Maxime Laplante

The Chair

Mr. Borotsik

Mr. Louis Desjardins

1155

Mr. Maxime Laplante

Mr. Duplain

Ms. Johanne Laplante

1200

Mr. Duplain

Mr. Marcel Groleau

Mr. Louis Desjardins

Mr. Duplain

Mr. Howard Hilstrom

Mr. Duplain

Mr. Louis Desjardins

1205

Mr. Maxime Laplante

Mr. Duplain

Mr. David Anderson

Mr. Marcel Groleau

1215

Mr. Duplain

Mr. Louis Desjardins

Mr. Duplain

Mr. Louis Desjardins

Ms. Johanne Laplante

Mr. Duplain

Ms. Johanne Laplante

Mr. Duplain

1220

Mr. Gaston St-Laurent

Mr. Duplain

Mr. Gaston St-Laurent

Mr. Duplain

Mr. Maxime Laplante

Mr. Duplain

Mr. Marcel Groleau

1225

Mr. Duplain

Mr. Desrochers

Mr. Duplain

Mr. Adéodat St-Pierre

Mr. Duplain

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 057

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, March 14, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

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

I would like to begin by having the committee members introduce themselves. You are looking at mainly a male committee, but we do have on the committee, from your own province of Quebec, Suzanne Tremblay, who has been having some problems with her health. She certainly would have been here if she had not needed to be hospitalized.

We begin with you, Howard, as vice-chairman of the committee.

¿ (0910)

Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance): Thank you very much, Chairman.

Yes, I am the vice-chair of this agriculture committee and the chief agriculture critic for the Canadian Alliance Party.

I come from the riding of Selkirk--Interlake, just north of the city of Winnipeg, up between the two big lakes. I am a cow-calf producer there. We background our calves up to about 800 pounds and then they go off to the feedlots. All of these issues are very important to the members of this committee.

Mr. David Anderson (Cypress Hills--Grasslands, Canadian Alliance): Good morning. My name is David Anderson. I'm a rookie Canadian Alliance member of Parliament from Cypress Hills--Grasslands, which is in the southwest corner of Saskatchewan. I grain and specialty crop farmed for 25 years until I took on this job. I work with Howard on the Canadian Alliance agriculture team. I look forward to what you have to present to us this morning.

The Chair: Next is Mr. Odina Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière--L'Érable, BQ): Good morning. My name is Odina Desrochers, and I am the Bloc québécois member for Lotbinière--L'Érable. Lotbinière--L'Érable is a very rural and agricultural riding near the Quebec City area.

I am replacing Suzanne Tremblay in this round. Ms. Tremblay is at home for health reasons and sends her greetings to each of you, fellow members, and to the witnesses attending this meeting today.

Mr. Dick Proctor (Palliser, NDP): My name is Dick Proctor. I am a New Democratic member from Saskatchewan. I've been a member since 1997 and a member of this committee for seven years. I'm pleased to be here today.

[English]

Mr. Rick Borotsik (Brandon--Souris, PC/DR): My name is Rick Borotsik. I'm the agricultural critic for the Parti progressiste-conservateur. I am the député for Brandon--Souris of southwestern Manitoba. In Brandon, Manitoba, particularly, we have a very diverse agricultural economy, everything from livestock to grains and oilseeds to specialty crops. We don't have a lot of dairy farming, so I don't have much experience with this aspect of agriculture.

I'm very pleased to be here in la belle province and I wish to hear what you have to tell us today. Thank you.

The Chair: Next we have Mr. Paul Steckle.

Mr. Paul Steckle (Huron--Bruce, Lib.): Yes, I'm Paul Steckle, member of Parliament for the riding of Huron--Bruce, a western coast of Ontario riding. My riding is truly agricultural and diversified, with everything from supply management, poultry, dairy, livestock. Grains and oilseeds are very prominent as well. It is very much an agricultural riding.

There's a great document from the milk producers we have here this morning. I found it interesting. I am also a farmer myself and I have spent the better part of my last nine years on this committee.

I'm looking forward to your comments here this morning.

The Chair: Mr. Larry McCormick.

Mr. Larry McCormick (Hastings--Frontenac--Lennox and Addington, Lib.): Bonjour, messieurs. Good morning. My name is Larry McCormick. I'm a member with the government party. I've been elected since 1993. I was former chair of our government rural caucus, which had members in every province. For the last two years I've been parliamentary secretary to the federal Minister of Agriculture and on this committee.

It's great to travel across the country and hear from all the people, but long before I had this job I heard good things about your province and its agriculture efforts, which have resulted in a lot of good things that we need to learn from.

Thank you very much, Mr. Chair.

¿ (0915)

The Chair: Claude.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): Good morning. My name is Claude Duplain, and I am from the Liberal Party. I represent the riding of Portneuf, with which you are no doubt familiar. I am a member of the Agriculture Committee and of the Prime Minister's Liberal Task Force on the Ways of the Future in Agriculture which Mr. Chrétien has established and which is also known as the Speller Commission. I'm particularly pleased to be here and to be able to hear with the committee what the people from Quebec have to say about the ways of the future for agriculture.

[English]

The Chair: Merci, Claude.

My name is Charles Hubbard. I'm from New Brunswick, just a little bit south of here. I have had some experience with the dairy sector, with the cooperative movement, and with beef. It's certainly good to be here this morning.

I'll just mention a few things. As was said, we've travelled across the country. We don't want these meetings to be very formal. We want to make sure that everyone who comes has an opportunity to present. We would like to try to keep all our submissions to about five minutes. When we get close to five minutes the chair will give a signal.

After we've heard the submissions, we will have a discussion back and forth with the members. Each member has only so much time to ask his questions and receive his answers.

It's certainly a beautiful day outside, and we hope this morning's meetings will be productive.

If there are others in the room who want to present, certainly indicate that to the clerk. We want to hear from anyone who wants to come and have a few minutes with us as we travel across the country.

As my French is very limited, I'm going to ask my good friend, Claude, who has been a member of this committee since he was elected, to assume the chair. Translation services are available. We've used both languages right across the country. Sometimes when we're in an area that's completely English we also say a few words in French to make sure we know that we have a bilingual country and that the people of this country are served in both official languages.

Claude, as the expert en français, I'll ask you to take the chair.

[Translation]

The Acting Chair (Mr. Claude Duplain (Portneuf, Lib.)): Once again, good morning everyone.

We're going to begin without delay. We will allow approximately five minutes for each of the presentations. We will start with the Institut de technologie agroalimentaire.

Mr. Simard, the floor is yours.

Mr. André Simard (General Manager, Institut de technologie agroalimentaire): Good morning, Mr. Chairman and members.

First, I am very pleased to come here today to present the views of the Institut de technologie agroalimentaire in La Pocatière. The Institute is located approximately 60 kilometers east of Montmagny. I am proud to have been, for the past six years, general manager of the first school of agriculture in Canada, which was founded in 1859 and which, until 1912, almost exclusively trained growers.

From 1912 to 1962, agricultural training developed agronomic training, as a result of which the agricultural school became a university-level training site for agronomists. In 1962, the university training in agronomy was transferred to Laval University, and the Institute was created to provide technical training, intermediate training between worker training and university training.

Here in Quebec, we talk about a government school since, although it provides college-level training, it is a school that reports to the Minister of Agriculture, Fisheries and Food. It should be noted in passing that there are two institutes of this kind in Quebec: La Pocatière and Saint-Hyacinthe.

Mr. Chairman, I thought I would take what remains of the five minutes allotted to me to make the committee members aware of the fact, first of all, that the Institute, like many colleges and Cegeps, is a member of the Association of Canadian Community Colleges.

A report with a French title, Bâtir un partenariat efficace, was submitted to federal government authorities and I could submit it here. The members of the Association of Colleges have made efforts over the past two years to make the federal departments and government aware of the role and importance of community colleges across Canada which could undoubtedly do more to improve productivity in the country and with regard to positioning in terms of knowledge and technical know-how for Canadians. It is an interesting document since it reveals a fairly present pan-Canadian concern, in all sectors, for education in the community colleges.

Of course, the Institute took part in this thinking and discussion exercise, and I'm going to provide you here with a general summary of technical education, more of a cross section, and, more particularly, our views on agricultural training.

As I said a moment ago, Mr. Chairman, there is a very extensive educational system, at times unknown to the political system, both in the province and across Canada. It is unknown because this level of training is provided between two other levels. It offers good opportunities. There could undoubtedly be closer cooperation in various areas.

In general, what sectors are suited to increased cooperation at the macro level? I have four points to raise on appropriate sectors.

First, the idea is to build a learning culture. I don't believe I'm saying anything new here, but we must recall the importance of building this learning culture in youths and adults everywhere, but particularly in the regions, as well as a concern for upgrading any technologies applied to agri-food. This learning culture is being talked about, but we have to take a closer look at how to build it.

The second point, which seems quite modern but which is within easy reach--and we have to find the ways to get there--is on-line learning, that is to say how we reach this entire clientele, all these young people, all these people in the regions, all these people, to deliver knowledge and information. The technologies exist, but we do not have the means to deliver them.

The third point is expressed in terms of actual support for regional and rural development. You are an agriculture committee. Agriculture takes place in the regions, and you know it. It's rural by nature. This support for regional and rural development is provided in the colleges, including the Institute. We see our role as a role of support for small- and medium-size businesses, to provide them with basic training for the schools, where we sometimes even need upgrading in basic training, in the form of management and business start-up advice. We're doing it.

Another example is support for applied research, problem solving and technological solutions. There are also the college-level teaching firm which offer nursery potential for business start-ups. This is part of the regional fabric. It's implanted everywhere, and there is potential to exploit this side.

The fourth point regarding the major promising sectors is support for research.

¿ (0920)

In the past and even now, research is done or recognized much more at the university level, since that's the place for pure research, and there's funding. As you'll see, the document refers to Industry Canada and certain funds which have been created and dedicated exclusively, or almost exclusively, to university research.

It must be realized that, at the college, Cegep and institute level, there is real potential for applied research, for transfers to businesses, because we are relatively close to the sector. As we say modestly, it's research with a small r, but which is linked to the need for business support. I'm not saying that the universities don't do it, but when you talk about universities, you're talking about pure or basic research, which is farther away from the field. That's normal.

¿ (0925)

For agriculture in particular, I have a few points to raise and press. I believe that training will have to be increased, particularly continuing training in sound agricultural and environmental practices.

One minute and it's over.

The Acting Chair (Mr. Claude Duplain): I'll allow you a few minutes to finish.

Mr. André Simard: I'll move on to food processing training since the raw materials produced in the region receives very little processing there.

I spoke a moment ago about support for research and development, but there is also the rural and forestry aspect. There must also be an awareness of agri-forestry, that is to say the exploitation of non-wood material, which is promising. There is increasing talk in the regions where there is potential in this respect. This is a promising development sector for the rural communities.

There is also support for research and development for new technologies. People talk about using GPS and digital imaging. We are carrying out projects of this kind. These are new technologies, the knowledge economy applied to agri-food. It's here; it's now.

As far as barriers go, we should mention that, to go further, there is always the question of funding, funding for colleges, funding for institutes and funding for research.

¿ (0930)

The Acting Chair (Mr. Claude Duplain): It's unfortunate, but I have to interrupt you. We will definitely have the time to come back to this during the question period.

We now go to Mr. Cloutier from the Centre de référence en agriculture et agroalimentaire du Québec.

Mr. Ghislain Cloutier (Centre de référence en agriculture et agroalimentaire du Québec): First, let me take this opportunity to introduce myself. I am a shell egg producer, together with my wife, in Saint-Jean-Chrysostome. We took the business over together from my parents, and our own succession is under consideration. For us, continuity in farming is important. I'm also an administrator of the CRAAQ, the Centre de référence en agriculture et agroalimentaire du Québec.

From year to year, we have organized 160 conferences. There are 6,000 farmers who take part in these various activities or in farming support measures. The Centre has 30 employees and 40 standing committees, which are concerned with research and the dissemination of information. We have 700 contributors in Quebec who take part in these various committees.

I am also a director of Unicoop, a regional farming cooperative in the Chaudière--Appalaches region, which has 250 employees and turnover of $100 million. Annual investments to $2 million and the redistributed return amounts on average to approximately half a million dollars a year.

I'm also a director of the Coopérative fédérée de Québec, an organization which is slightly better known at the provincial level. It has 9,300 employees, turnover of $2.5 billion and 37,000 members in 91 regional cooperatives. We are present in Quebec mainly, but also in Ontario, New Brunswick and, since last year, in Alberta, in the pig slaughtering sector. Annual investments amount to $30 to $40 million and redistributed returns are approximately $10 million a year.

In observing Canadian agriculture in recent years, we have noted a certain disarray in agriculture in the West, which is attributable to the problems of the major cooperatives, mainly financing difficulties. In view of these observations, Quebec cooperators have been led to redefine themselves.

The concern of Canadian consumers is quite clear: they want safe foods, quality foods, domestic products, as far as possible, at competitive prices. Consumers are very concerned by the definition of agriculture. The family farm is an important concern for consumers, and we are well aware of that fact.

Last year, Quebec cooperators requested and obtained a tax deferral from the provincial government. This is a significant tax measure as a result of which the declared returns, either from the federated cooperative to the local cooperatives or from the local cooperatives to the farmers, are not taxable as long as they remain in the cooperative as invested capital.

We call it patient capital. The members leave their money in the cooperative to finance long-term projects.

Since the last fiscal year, that invested capital is no longer taxable in Quebec. In the coming months, we will be meeting with federal government authorities to request that the same measure be applicable to federal level. We know that the cooperatives pay twice as much income tax to the federal government as to the provincial government.

So this is an important measure, not so much in terms of money at the Canadian level, but in terms of money at the regional level, to permit the development of agriculture. It is a promising measure that we currently have in Quebec, and we hope there will be such a measure across Canada next year, because the development of agriculture is based to a great extent on the development of cooperatives which belong to farmers.

CRAAQ disseminates information. So we talk about education, technical support and continuing training in agriculture. At the regional level, the cooperatives provide financial support to farmers.

I had the opportunity to start out in farming as a result of the support of my father, my parents, and I'm going to do the same thing with those who take over from me. But there are a lot of farmers in Canada who do not have that opportunity to start out with their parents' support. In that case, patient capital is required for those farmers.

The cooperatives are already providing that capital, but, as you know, money doesn't grow on trees. So we are asking for your support to enable the cooperatives to have that capital, to help the next generation start out in agriculture in order to continue developing intelligent farming at the Canadian level.

We would also like Canadian agricultural policies not to be wall-to-wall policies, from one end of Canada to the other. We would like to have agricultural policies that take into account the regional nature of the 10 Canadian provinces. Canadian agricultural producers do not have the same mentality or way of doings things across the country, and Canadian agricultural policies should not be wall-to-wall policies. It would be highly demotivating for our farmers, who form the basis of the Canadian economy.

Thank you.

¿ (0935)

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

We'll move on to Mr. Laplante from the Union paysanne.

Mr. Maxime Laplante (Secretary General, Union paysanne): Good morning.

I'm the Secretary General of the Union paysanne, a very recent movement in Quebec which has been in existence for only a few months. Personally, I am an agronomist and teacher, and I also have a mixed farm in Lotbinière county.

The mandate of the Union paysanne, which has some 2,500 members, is to review the way agriculture operates in Quebec. We entirely disagree with the trend we are currently witnessing toward industrialization and the disappearance of farms, villages and territories.

You must have seen the news last week, reporting that 26 percent of farmers in Canada abandoned farming from 1998 to 2001. We thought the rural exodus would be over one day. On the contrary, it's continuing.

Furthermore, the population of Quebec and the other provinces is paying considerable support for agriculture through taxes. The Union paysanne believes that, if the population must, in any case, pay to support its agriculture, which is an entirely laudable choice, because a society is entitled to support its agriculture for reasons of self-sufficiency, land use, food safety and human food and it is entirely proper for farmers to play a major role, a population must also have the right to decide how that money will be used. We have to be more concrete. The Union paysanne currently advocates a complete revision of the method for funding agriculture.

Currently, bulk or volume funding is provided. Funding is provided on the basis of so much per pig, so much per tonne of grain, so much per hectare. So a farmer who has a big business obviously receives a larger share of taxes. At the other end, the farmer who has fewer animals and little land is left to his own devices, and these are the farms that disappear first.

So the Union paysanne firmly requests that the money which in any case is allocated to agriculture be reassigned to the kind of farms we want to reestablish on the land. We propose that there be a book of specifications. Farmers who respect the buffer strips, who plant trees, who rotate crops, who ensure that their fields are not uncovered throughout the winter, who abandon GEOs, chemical fertilizers and pesticides, which are mainly the choices of the public, will be entitled to support.

The recent survey by Équiterre, an organization dedicated to local and regional agricultural marketing, showed that 81 percent of the Quebec population agrees that the government should provide financial support for organic farming, small farms and so on. The public already agrees on this.

So if rural residents, farmers and producers submitted to a book of specifications similar to what the public wants, they would be given support in the form of direct aid, not in the form of price support. When prices are supported, distortions still occur in which farmers with large production volumes recover more at the other end. We leave market prices to fluctuate as they will. They drop, they rise and that's all. Farmers will respond to consumer demand; that's all. In exchange, however, they comply with the book of specifications and they are entitled to an income.

Second, aid should decline as the business grows, in accordance with the principle that large businesses, even if they are very environmentally friendly, they help to empty the land. This is a social choice. We are setting an order of magnitude. If a farm has more than 100 animals, more than 100 hectares or more than a certain gross income, he will have to do without public support from the government. So that's the first part: review funding.

Here's the second part, and then I'll stop. If, in any case, we have to help or redirect assistance, we also have to prevent the prohibition against succession in rural areas. At present, we have a series of measures as a result of which there is no succession, succession is virtually impossible. For example, quotas of $25,000 or, more recently, $27,000 per cow simply do not promote the establishment of new farms.

Measures such as that of the Commission de protection du territoire agricole, which prohibits the purchase of a portion of a farm from a producer who is not a full-time farmer or, at least, for whom farming is not the main occupation, are a factor in preventing the agricultural succession. Even those who are sons or daughters of farmers cannot take over the family farm because it has enormously increased in value and their finances are not sound enough to take it over. Consequently, the farm will be bought by integrators, the big companies.

Is this the farming model we want to put in place? The Union paysanne has made a clear choice: no. We want to promote small farms. That does not mean that we would prohibit large farms, but they will exist without government support. Thank you.

¿ (0940)

The Acting Chair (Mr. Claude Duplain): Thank you very much, Mr. Laplante. We move on to the Union des producteurs agricoles de la Côte-du-Sud. Mr. Desjardins.

Mr. Louis Desjardins (President, Union des producteurs agricoles de la Côte-du-Sud): Good morning. It's a pleasure for me to appear before the committee. I'm a producer in Saint-Denis de Kamouraska. I produce milk, grains and potato seedlings. We have a message to deliver and it will be delivered to you by Ms. Laplante because she can deliver it to you more effectively than I can in the same time.

Ms. Johanne Laplante (Union des producteurs agricoles de la Côte-du-Sude): Good morning. Thank you for the opportunity you have afforded us.

Incidentally, the Fédération de l'UPA de la Côte-du-Sud represents 2,138 agricultural producers carrying on their occupation here on their own land. We welcome you to our area. They are also essentially family farming businesses and represent more than 95 percent of our membership. As we have little time, we have selected seven themes which I hope to have the time to present to you.

Emerging production and new eating habits make it possible to develop new types of production in some of our farming regions which respond to emerging market niches. For some agricultural producers, they afford an opportunity to set up in farming and to build a business that develops the area's agricultural potential.

Those who invest in these emerging areas are left to their own devices and are continually facing under-financing of their businesses. Available knowledge is limited and not very accessible, and technical support is virtually non-existent. Consequently, we ask you to recognize the importance of emerging types of production which call for the development of the area's resources, to provide financial and technical support for producers engaged in the development of these non-traditional types of production, to put in place programs that are accessible and easy to implement, programs which make it possible...

¿ (0945)

The Acting Chair (Mr. Claude Duplain): Excuse me.

[English]

Mr. Howard Hilstrom: Mr. Chairman, you could point out that these briefs are all received in written form, and the whole context will be part of our record, if she doesn't get to present it all verbally.

[Translation]

The Acting Chair (Mr. Claude Duplain): In any case, we have the briefs, and we can read them. If you wish to adhere to the five minutes allotted to you, it would perhaps be better for you to summarize your brief or to read the main paragraphs.

Ms. Johanne Laplante: All right.

The other theme that concerns us is processing and food safety. The food products in emerging or non-traditional niches are products to which value has been added through specific production and processing techniques. To develop and market those products, we need access to processing tools that enable us to make a differentiated product of excellent quality at a lower cost and in small volumes. These new products, called local or niche products, offer considerable economic development potential for our regions. So we need support to develop this sector.

The challenge is a sizeable one. We have to try to develop a local and regional distribution network. With the concentration of processing and distribution activities in recent years, this is becoming increasingly difficult. At the same time, we have to ensure that food safety standards in Canada remain very high.

A number of countries have experienced economic crises following the spread of infectious diseases. We must always guarantee the public highly safe products. We will be able to offer this guarantee, provided the federal government maintains its support for the Canadian Food Inspection Agency and for the various organizations and agricultural businesses working to introduce standards validation and traceability systems.

I will spare you the requests made in our brief. They concern this sector.

Agricultural development in recent decades has been characterized by the specialization and concentration of agricultural production. The purpose of these economic trends is to offer the Canadian public products of excellent quality in quantities and at prices that are competitive in global markets. These rapid developments in agriculture have resulted in increasing isolation for producers. At the same time, we have an increasingly urban population which has gradually lost its knowledge of agricultural realities.

What we're asking you is to help us get involved as partners in carrying out events and projects designed to promote producers and their technical know-how. These activities may be carried out in rural or urban areas.

With regard to the environment, other federations have already informed you about our demands in that area. I will not repeat them.

I will address two points which we are concerned about because they apply more in our region, in particular the spring monitoring of the greater snow goose. The greater snow goose population is still at a very high level and is causing considerable damage to crops, mainly along the shoreline. More than 10 years ago, the regional federation introduced springtime scaring projects. Those projects, twinned with the spring hunting program, have proven effective and help to reduce crop losses. However, each year, we are still uncertain about federal government financial support.

Consequently, we are asking you to put in place a permanent program to reimburse farmers for damage caused by the spring arrival of the greater snow goose on farm land, to support the implementation of greater snow goose scaring projects and to maintain the spring hunt until the snow goose population has reached a reasonable level.

With regard to tax measures and the transferability of farming businesses, for a number of years now, the union has been working with the Fédération de la relève agricole to find various solutions to keep agricultural succession active. Apart from the various efforts provided to develop agricultural employment and interest young people in taking over farms or starting out in agriculture, the various levels of government must be more interested in putting in place programs and tax measures to facilitate and promote the transfer of farming businesses between relatives or non-relatives.

For a number of businesses in the municipalities south of the RCMs of l'Islet and Montmagny, the phenomenon is even more striking since the farming businesses are often isolated. The exodus of young people is being felt more acutely and services are more limited. In addition, the investment credit is not applicable to those to RCMs, which are readily comparable in economic terms to a number of municipalities in the resource regions such as the Lower St. Lawrence and Saguenay--Lac-Saint-Jean.

Similarly, our region previously enjoyed transportation assistance. That support enabled our businesses to remain competitive with businesses in the central regions.

Consequently, we are asking that tax or other measures be put in place favouring the transfer of farming businesses instead of the dismantling of those businesses; that, for the RCMs of l'Islet and Montmagny, an investment credit be granted to farming businesses equivalent to that provided in the Lower St. Lawrence region; and that support be provided to farming businesses so that they can remain competitive with businesses located near major centres.

Thank you for your attention.

¿ (0950)

The Acting Chair (Mr. Claude Duplain): Thank you very much. I almost feel like taking 30 seconds to let the interpreter catch his breath before we move on to Mr. Groleau of the Fédération des producteurs de lait.

Sir, you have the floor.

Mr. Marcel Groleau (1st Vice-President, Fédération des producteurs de lait du Québec): Thank you very much. It is a pleasure for me to address the members of the Standing Committee on Agriculture. As you said, my name is Marcel Groleau. I'm the first Vice-President of the Fédération des producteurs de lait du Québec, a milk producer in the Thetford Mines region and a partner with my brother in a dairy business which used to belong to our parents.

I'm going to provide a brief picture of dairy production in Quebec. There are approximately 9,000 dairy farms in Quebec, slightly fewer now. We're talking about approximately 9,000 dairy farms and 15,000 dairy producers. On those farms, and this is my case, farmers are often in partnership with their brother, spouse or other family members, but these are frequently jointly-owned farms. So we're talking about 15,000 producers. We are also talking about some 60,000 jobs directly related to dairy production in Quebec, not to mention indirect jobs. In Canada, if we extrapolate, this means approximately 150,000 jobs related to dairy production.

Every year, Quebec producers invest some $350 million in their farms. So this is a very big industry in Quebec and accounts for Quebec's main agricultural production.

The dairy sector in Canada instituted supply management in 1971. In that year, there were serious problems in the dairy production sector. There were periods of milk surpluses, when prices were very low, and periods when milk was scarce, when businesses lacked milk to supply the market. So there was a two-part problem. At certain times, the government had to buy large milk surpluses, and at other times, there was not enough milk to supply the market. So supply management was introduced, in exchange for which dairy producers became responsible for the surpluses they produced. So they no longer asked the public treasury to support those surpluses

Three main pillars must be in place to support this mechanism. The first is production planning by what is called milk quotas. Producers undertake to produce a volume of milk which corresponds to the market demand. The second is prices based on production costs to generate adequate income for producers, prices which are essentially determined by the market, and are thus not subsidized. Third, there is import control so that market needs can be effectively measured. These are three essential points for making the supply management system work. This is a system that has proven its worth since 1971. Comparison of the prices of dairy products in Canada and the United States over the past six years shows that, on average, prices in Canada are 20 percent lower than in the United States.

I briefly spoke about the situation of producers who charge market prices based on their production costs and can thus live without subsidies. We are inclined to wonder what happens to processors.

Let's look at the recent situation of processors. This year, Agropur had one of its best years in terms of performance. It is the largest dairy cooperative in Quebec, one of the biggest milk processors in Canada. There are other businesses such as Saputo. According to the paper Les Affaires, in the agri-food field, the dairy industry is the industry that has done best, with returns of approximately 20 percent. So in the milk processing field, things are also going very well.

All that is associated with minimal expenditures from the public treasury. Since February 1, the fluid milk subsidy has been a thing of the past. A five-year period had been scheduled in order to eliminate it, but it's been done since February 1. As regards direct intervention in the dairy production field, we're talking about approximately $3 million that is paid out of the Canadian public treasury to operate the Canadian Dairy Commission. Dairy producers essentially do not have access to specific programs to support their production, except for regulatory support.

With respect to farms, the quota system has made possible a lesser degree of concentration of dairy farms. There are still dairy farms all across Canada. There are dairy farms in Gaspé, Saint-Hyacinthe, Trois-Rivières, British Columbia and on Vancouver Island. There are still dairy farms across Canada, and it is essentially supply management that has enabled dairy farms to continue occupying all the land.

In addition, average farms have remained relatively small. In Quebec, the average herd comprises 45 cows. With 45 cows and some cereal crops, a dairy business can support a family, and it is thus possible to minimize the environmental problems caused by large businesses such as those in the United States, for example, where there are herds of 1,000 cows or more.

What we're asking the federal government is relatively simple: that it maintain supply management, a system that has proven itself, a system that is starting to be of increasing interest to other countries. We have contacts with European countries. Even in the United States, where there are serious agricultural support problems, there is increasing interest in this kind of system.

In the steel industry, an international agreement was recently reached to manage production so as to maintain prices. That's supply management. It's a mechanism which has proven itself economically, and that's what's being applied in dairy production in Canada.

With regard to market development, the Canadian market has increased 12 percent since 1993-1994. If Canadian dairy product consumption equalled U.S. consumption, our market could expand another 15 percent. There's still room for growth in our market. If our consumption equalled that of France, which may be an exception in the world with regard to dairy product consumption, our market could rise 110 percent. So there is still a lot of room for market development in Canada, and we believe that, with a supply management system, we can continue to develop both farms and dairy production.

Thank you very much.

¿ (0955)

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

Mr. St-Laurent from Laval University.

Mr. Gaston St-Laurent (Faculty of Agriculture and Food Science, Laval University): Thank you, Mr. Chairman.

I'm replacing the dean of the faculty, Mr. Jean-Claude Dufour, who is away from Quebec City this morning. It is a pleasure for me to accept this invitation.

I would like to talk to you about Laval University's Faculty of Agriculture and Food Science, a faculty that is more than 100 years old and was founded in La Pocatière, as Mr. Simard mentioned a moment ago, but which has been on the Laval University campus for 40 years.

In Quebec, there are three university faculties providing agricultural training. There's the Macdonald College of McGill University, the Faculty of Veterinary Medicine of Saint-Hyacinthe and that of Laval University. This is unique in Canada, because, in the rest of Canada, there are one faculty of agriculture and four faculties of veterinary medicine. So our system is quite unique.

As regards technical training, Mr. Simard explained that a moment ago.

Our faculty has approximately 110 professors and a research budget of approximately $17 million for its operation. We have research programs at the bachelor's, master's and doctoral levels in all agri-food sectors. The programs we have at the faculty are strangely similar to agricultural training programs elsewhere in North America. We are concerned with plants, animals, rural economics and so on. That's virtually what is found across North America.

À (1000)

Here are some general facts about the faculty. Our research and development are largely done in partnership with private businesses. More than 60 percent of our research budget comes from non-governmental sources. One part of that research is basic research and another applied research.

Another fact is that our professors are very much involved in the community through research, as I just mentioned, and also through continuing training and their significant participation in many technical and professional committees.

Today, I would like to talk about two points, one of which concerns training. In Quebec and in the other Canadian provinces, we have observed a decline in the number of students registered in faculties of agriculture at the undergraduate level. This trend has started slightly at our faculty, at Laval, and is also continuing.

It's perhaps disturbing for the needs of the industry and future governments. This concern was expressed by the deans of the faculties of agriculture of Canada, who meet twice a year. They foresee professional succession problems among agronomists at the undergraduate level and problems with the next generation of researchers.

On this matter, we wonder what kind of assistance the federal government, in particular Agriculture Canada, could provide. It could join forces with the universities to recruit and increase interest in young people at the high school level. I believe we have to go down that far and get them interested in the employment potential in the agri-food field.

Earlier, someone raised the problems of public information about agri-food realities. I believe an effort must be made in this area if we want to ensure that, in future, we have enough good students in our schools. At the technical level, there are also succession problems, from what I hear.

As for master's and doctoral training, some 10 years ago, Agriculture Canada had a promising program with large scholarships, approximately $15,000 a year, to get young people interested in doing master's degrees and doctorates. The program didn't last long. It would be a good idea to reestablish it to make it possible to recruit a larger number of students and interest them in doing master's degrees and doctorates.

At our faculty, we have a large number of graduate students, approximately 350. Increasingly, these are not students whose initial training was in agriculture. They come from programs in biology, microbiology and biochemistry. They come and do master's degrees and doctorates and succeed very well, but in their future work...

I'm going to change the subject. We need assistance from the government to inform society. We have five research priorities at our faculty. We're involved in everything, but, in recent years, our research plan has focused on five major fields. I'll list them for you, but not in order of importance: neutraceutics and functional foods, the animal and vegetable genome, rural and forest environments, safety and wholesomeness of foods.

These are areas we want to develop in particular. We have received large amounts of infrastructure money for neutraceutics--unfortunately, that money was cut, but we nevertheless received sizeable amounts--and for the environment. We still have significant infrastructure needs in those two fields. We also had a nice $15 million project on biological control agents which was not accepted. We also have problems with renovating and expanding our greenhouses.

As for research, we have an excellent cooperative arrangement with Agriculture Canada at the four major centres in Quebec.

À (1005)

We cooperate in the sense that a certain number of our graduate students registered in the master's program perform their research work with researchers at those centres. It's a collaborative effort that enables us to have a larger number of master's and doctoral graduates. We would like that to continue, and there are no problems in that respect.

However, there is another field that, in our view, Agriculture does not sufficiently cover and that's the rurality sector, or socio-economic studies. We would like Agriculture to get more involved with the universities. We have agriculture resources on campus. We think these rurality problems everyone talks about are very significant. I believe the universities are well organized to cooperate in this respect. I'll stop here.

À (1010)

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

We will now hear Mr. St-Pierre from the Coalition urgence rurale.

Mr. Adéodat St-Pierre (Vice-President, Coalition Urgence Rurale): Good morning. My name is Adéodat St-Pierre, and I am Vice-President of a movement called Coalition urgence rurale, which has been existence for 12 years and has a relationship with Solidarité rurale at the Quebec level. We cover the Lower St. Lawrence region.

The Coalition urgence rurale movement is a popular movement for change in attitudes in order to build a sustainable future for the rural communities of the Lower St. Lawrence.

My message will focus more on rural development than agricultural development because I believe agricultural development will be sufficiently covered by other speakers For our movement, all the elements of rurality are indissociable. You cannot maintain agriculture and forestry without having people in the villages and without keeping people on our land. So my message will focus more on rural development.

The major principles guiding our movement are development of the rural community and land use, as opposed to the exodus attributable to the lack of jobs in our regions. So we're devoting a great deal of work to projects to increase and maintain employment.

The sustainable use of resources contrasts with strict economic profitability, which compromises the sustainability of resources for future generations. The maintenance and improvement of services stand in contrast to the concentration of services.

We devote our efforts to encouraging local leaders to work together to put in place intervillage projects as part of a network, while identifying regional development issues together: sensitizing young people to the development of their community; making people discover the resources of their villages and creating intergenerational relationships in order to develop self-esteem and a sense of belonging. We must also take the time to contemplate our actions and assess our practices in order to redirect our efforts and improve our local development skills.

Rural development is a major concern for our movement. Central to that concern is the rural community's full and complete participation in the economic and social development of Quebec. Agricultural and forest producers moreover are primary players in this regard.

Despite the vitality of many rural communities in Quebec, the withdrawal or amendment of certain government policies and lack of assistance, particularly economic assistance, can seriously reduce the quality of life for many citizens in rural areas and undermine their development.

In a brief published in 1998, the UPA identified three major general objectives on which a rural development policy should be based.

Those objectives are as follows: develop better knowledge of the rural environment; ensure the vitality of the rural world; and preserve the agricultural and forest characteristics of the rural environment. We, as a movement, believe that, to maintain this, we need training that is tailored to the jobs in the region and we need to maintain leadership in the rural community in order to train new leaders and ensure continuity.

The federal government definitely has a role to play in this regard. The announcement of a new Canadian initiative for rural agricultural communities by Secretary of State for Rural Development, the Honourable Andy Mitchell, on May 25, 2000 is a promising avenue. That program, the purpose of which is to enhance the viability of rural agricultural communities, particularly those undergoing changes as a result of adjustments in the agricultural sector, attests to the federal government's will to support them. One good idea would be to adjust the program so that it could be tailored to the regions.

À (1015)

I believe, however, that the total budget envelope of $9.3 million allocated to this program, which terminates on March 31, 2003, $702,000 of which is allocated to Quebec, should be substantially increased in order to meet the objectives set.

I would like to say in passing that our organization has worked in partnership with Partenariat rural and is currently working with Health Canada. I must tell you that we are sometimes forced to pressure certain programs for support for our organization so that we can maintain leadership in the community.

There is also one project to which we are particularly attached. That is training in rural family homes. I believe a good program is needed to support organizations such as ours which maintain leadership in the rural community.

The Acting Chair (Mr. Claude Duplain): Thank you very much, Mr. St-Pierre.

We will now hear from the Fédération de l'Union des producteurs agricoles du Bas-Saint-Laurent, represented by Messrs. Parenteau and Proulx. Mr. Parenteau, the floor is yours.

Mr. Jean-Claude Parenteau (Union des producteurs agricoles du Bas St-Laurent): On behalf of Mr. Proulx here beside me, who has a nasty sore throat, I'm going to say a few words.

Distinguished members of the committee, we are pleased to make a few comments before you. The Fédération de l'UPA du Bas-Saint-Laurent represents approximately 2,500 farming enterprises in an area located east of hear. We start at Rivière-du-Loup and go as far east as Matane. Roughly speaking, our area is bounded to the north by the St. Lawrence River and to the south by the province of New Brunswick.

The region essentially produces milk, which represents approximately two-thirds of our income. There is also significant development of maple production. With our friends from the south shore, we are the region with the biggest sheep production in all of Quebec. Pork production is also being redeveloped after a 30-year hiatus.

Agriculture is an essential activity in the Lower St. Lawrence. Organic food as a whole generates 16 percent of total jobs. For 2000, approximately $70 million was invested by agriculture in the Lower St. Lawrence; that's more than any other project that might have been done. Obviously, since it's on farms, it's a little spread out and seems less, but $70 million was invested in production. For the organic food sector as a whole, more than $150 million was invested in the Lower St. Lawrence region alone.

As we have little time, I'm going to limit my remarks to two major sectors: government support and farm income stability. There will generally be two minor characteristics for the region.

Agriculture is an essential activity in the Lower St. Lawrence and Quebec as a whole. Quebec's agriculture is highly productive, as Mr. Groleau indicated. We produce high-quality agricultural products at very affordable prices, compared to what is done elsewhere in the world.

All this is done despite a constant decline in government support.

According to the OECD, over a 10-year period, per capita agricultural support fell $86 in Canada, but increased by $101 in the United States during the same time, all, of course, in U.S. dollars. That's a difference of nearly $190. It's considerable.

So it's time the Canadian government reinvested in various sectors, particularly farm income stabilization, the safety of food on the farm and traceability, the agriculture environment, the CDAC adjustment strategy, development of emerging sectors, research and development and consulting and management services. So the first element is government support.

The second is farm income stability. Net farm income is stabler and improving more regularly in Quebec than in the other provinces. We are convinced--and the figures show it--that this is attributable in particular to the strong relative presence of productions under supply management, in particular dairy production, as I said, eggs and poultry, which results in income stability, and to the existence of our farm income stabilization insurance programs, which are commonly called FISI, over the past 25 years or so.

So as we said, dairy production is the most important type of agriculture production in the Lower St. Lawrence and Quebec as well. This shows the importance that is attached to supply management. Thanks to supply management, we have been able to exist and develop.

Mr. Groleau told you that dairy businesses are spread right across Quebec and Canada. We are convinced that, had it not been for supply management, there would long since have been a concentration of a few farms around urban centres and no others elsewhere. So that was something beneficial, and we are convinced the Canadian government has a duty to defend this system at all costs in international trade negotiations. It is really a fundamental aspect of Canadian and Quebec agricultural production.

As for income stabilization insurance, the introduction of La Financière agricole du Québec has made it possible, in particular, to add coverage for types of production that had been left on their own to that point, such as maple production, which is very significant in the region, as well as honey and canola, which had no protection. This has made it possible to strengthen our positions and to shelter them from a tax they might suffer under the international trade system.

We expect the Canadian government to defend vigorously our income stabilization plans, which contribute to the stability and development of agricultural production in Quebec and Canada.

I'm going to talk to you about two minor situations specific to our region. We think the Canadian Farm Income Program (CFIP) should be revised as follows. Currently, the CFIP calculation method is based on 70 percent of total net income of a business and does not take into account negative margins. Sheep businesses that have had problems with border disease and which, because they are very responsible, slaughtered their entire herd before benefits were amended, incurred enormous losses. As they no longer had a herd and thus no income, it was impossible to calculate their CFIP. They found themselves with virtually no assistance from the CFIP. Many maple businesses have met the same fate following the bankruptcy of a buyer. Their syrup was not available for sale and they thus had no income.

The same is true of the Advance Payment Program, which should provide for specific situations in the case of buyer bankruptcies for maple producers, potato producers and commercial crop producers which, in recent years, have experienced buyer bankruptcies. The producer finds himself with no products to sell and must repay his advance payments. This became a big problem at that time.

Those are our main comments, Mr. Chairman.

À (1020)

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

We have a last witness, but not the least: the Société de protection des forêts contre les insectes et maladies.

Mr. Trudel.

Mr. Gilles A. Trudel (Director General, Société de la protection des forêts contre les insectes et maladies): Good morning, everyone. My name is Gilles A. Trudel, and I am the Director General of the Société de protection des forêts contre les insectes et maladies.

You are no doubt wondering what connection has brought me here this morning. Our organization is a non-profit organization representing all the forest industries of Quebec, the Quebec Department of Natural Resources and large private forest owners. Our role is to protect all Quebec forests from pest insects and cryptogamic disease. Farming includes the operation of private woodlands, and those forests are also protected by us.

What brings us particularly close to the agricultural world is that we are a very big user of pest control insecticides. These insecticides are mainly used to fight spruce budworm infestations.

The questions we would like to put to the committee concern the role the Government of Canada intends to play in future as regards the role of the regulatory agencies in the use of pesticides. Will there be a harmonization of rules and procedures for the registration of products used in Canada with those that apply to the American market? Often the same products sold in the markets in both countries are subject to highly different registration procedures. We are thinking in particular of the criteria for proving the effectiveness of products for which registration is sought. We know that product effectiveness must be demonstrated to the PMRA and that an ineffective product will be systematically rejected from the market if it does not meet its user's needs.

Furthermore, will there be a simplifying procedure for biological control products which offer alternatives to the chemical products that have been used for too long? In Quebec, strictly biological products have been used against the budworm since 1986. SOPFIM intends to favour the use of these biological products. We know that some products are awaiting registration and could be used fairly soon.

Lastly, one final observation, we use airplanes to apply our insecticides. Will there still be a distortion in the future regarding the ground use and air use of insecticides subject to restrictive and different regulation?

Those are the points I wanted to raise. Thank you.

À (1025)

The Acting Chair (Mr. Claude Duplain): Thank you very much everyone. It was very interesting to hear you. I believe you will have a fairly interesting question.

Mr. Hilstrom, do you want to start the question period?

[English]

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

One of the issues governments deal with is program delivery and getting it to those who are being hurt financially. One of the problems is always defining just who is a farmer--who's a small farmer, who's a large farmer, and that sort of thing.

Mr. Laplante, you asked to have the small farmer supported more. Can you define where the government could target those programs?

[Translation]

Mr. Maxime Laplante: Indeed, the question comes up regularly. That's why we have taken a fairly clear position on it. We don't want to prohibit large farms and permit only small ones. That's not the idea, the purpose of the discussion, except that we're saying that government support should go to small farms. I'll give you some public information on the subject.

We know that Canada or Quebec provides only a little assistance to agriculture. MAPAQ, the Department of Agriculture, takes a different view. In Quebec, on average, one-half of net farm incomes come from government coffers. That's an average. That does not mean that all farms receive the same amount. The distribution is done as follows: 12 percent of farms, which are the biggest, that is to say have an annual gross income of more than $250,000, receive 50 percent of that assistance; one-third of all farms, 33 percent, which are at the bottom of the scale and have gross incomes less than $50,000, receive 7 percent of the assistance. So there's already a distortion.

To answer your question more precisely, we're saying that the order of magnitude... Yes?

[English]

Mr. Howard Hilstrom: Yes, all of our time.... Even as MPs, our time is limited as to what we can do here.

I would certainly like any farm organization to come forward and give a written definition of small farm, factory farm, or whatever terminology. I've asked this consistently across the country; of course, no one has come forward with one because it's very difficult.

The domestic supply management system is a very good system inside the country. But compared to the rest of agriculture, of course, the rest of agriculture is exporting large amounts outside the country and is a big earner of foreign currency. So there is a bit of a difference there.

Mr. Groleau, you say there's an opportunity to grow and increase the commodities under supply management. You can tell me what figure it was that you were indicating. I missed just how much bigger you thought it could grow. But each province, of course, has to try to ensure that its farmers and its producers are making as good a living as they possibly can. And the federal government, of course, has a responsibility to look at Canada as a whole, including each of the provinces.

With this growth in the supply-managed commodities, is it time now to re-examine the formula by which quota is allocated across the country so that each province has an equitable share of the quota allocation? I am talking about either each province or each region, so that farmers in all parts of the country can equitably share in the benefits of supply management. I understood from our meeting yesterday that Quebec is a little short on the poultry side and probably a little long on the dairy side. Is it time to re-examine that formula?

À (1030)

[Translation]

Mr. Marcel Groleau: This kind of discussion took place a few years or months ago within the Canadian Milk Supply Management Committee. The formula was recently reviewed. Previously, the division of growth was done on the historical basis of 90 percent and 10 percent, based on the province's population. Now, the figures are reversed. In Canada, all growth is thus shared on the basis of 90 percent based on population and 10 percent on the historical basis. In a future development, each of the provinces will have a percentage much more equivalent to the population it represents.

[English]

Mr. Howard Hilstrom: Okay, I have just one more.

A year or two ago, the Premier of Quebec--I think it was your former one, but I'm not sure it's the current premier--the federal government, and other provinces all wanted to see a large increase in exports, including supply-managed exports. I guess Mr. Groleau may be a good one to answer this. Where it's being attempted, do you believe this increase up to something like 4% is still achievable, given the New Zealand-U.S. concerns with our state trading enterprises--the Canadian Wheat Board comes to mind--and our supply-managed systems? Will we still be able to achieve those export efforts?

[Translation]

Mr. Marcel Groleau: In terms of dairy exports, after the U.S. and New Zealand dispute, we set up mechanisms to continue export development, mechanisms totally dissociated from supply management, with no government assistance.

À (1035)

The problem with export development is that we have to compete with the United States and European countries, which, as Mr. Parenteau pointed out, enjoy substantial government support, in terms of both domestic support and support for exports. So that is really the problem with exports.

World dairy prices are totally ridiculous. For example, a producer wishing to export milk was recently confronted with prices as low as $17 to $19 per hectolitre, while the costs of production, just on the basis of marginal costs, were such that the producer would have to get at least $30 to $32 per hectolitre to make exporting worthwhile. That is the problem with dairy exports. You can set goals of 10, 12 or 15%, but when the world prices have completely bottomed out, it is just not worthwhile.

À (1040)

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

I would ask the witnesses not to take offence if the members occasionally interrupt them. As Mr. Hilstrom said, each party has only a limited amount of time.

Mr. Desrochers.

Mr. Odina Desrochers: Thank you, Mr. Chairman. I would also like to thank those who have travelled here today to give us a better idea of the opinion of Quebeckers in this debate that is currently going on in Canada, over the general approach the federal government should take in establishing a vision for the future of agriculture in Canada.

Mr. Groleau, this is not our first meeting, nor is it the first time I have heard you talk about market distortion, which is clearly caused by export subsidies and extreme domestic support in the United States and Europe. Also, the Americans regularly haul your federation before the WTO tribunal, constantly attempting to find that little angle that will enable them to lessen the impact of supply management.

With respect to all the steps your federation and the UPA have taken, don't you think the government of Canada should show more leadership? Are you satisfied with what the government of Canada has done in the area of international trade? For example, has the government of Canada ever filed a complaint with the WTO alleging that the United States and the European community are not complying with the agreements entered into in 1995, I believe, during the so-called Uruguay round? I would like to hear what you have to say about that.

Mr. Marcel Groleau: No, Canada has not filed any complaint. However, in fairness, I should acknowledge what was done to defend against the U.S. and New Zealand challenge at the WTO. We got very good support from the Parliament and government of Canada in defending that case. Our goal, once that case is closed—and we hope it will be closed this year—is for Canada to take steps against countries whose practices cause market distortion. You mentioned the United States. Actually, there is also Europe and New Zealand in some respects.

I would also like to draw your attention to imports. We are talking about exports, but we also have to talk about Canadian imports. We really had to pressure the government of Canada to convince it to halt cheese sticks imports, which exceeded the import quota Canada was bound by. We had a lot of work to do with Mr. Pettigrew. In the end, Mr. Pettigrew managed to halt those imports.

Everyone sees the beauty of a supply management system. But this system depends on effective import control.

The same goes for butter oil. A few years ago, the ball was dropped on butter oil. The government could have prevented that. Butter oil now costs us 2 to 3% of our production because it replaces milk components in ice cream. The matter was not pursued.

For example, the United States recently slapped tariffs, without asking permission from any other country, on protein concentrates imported into the United States. These protein concentrates no longer have access to the American market. The government of Canada should also be doing something about that.

À (1045)

Mr. Odina Desrochers: Don't you think that because of the market distortion and quick commitment made by the Canadian government to reduce export subsidies and internal support measures, Canadian and Quebec agriculture is somewhat vulnerable to U.S. and European competition?

Mr. Marcel Groleau: I think that if we want to do well in exports, agriculture in Canada needs the same level of support as it has in other countries. There is no doubt about that. On the domestic market, with adequate mechanisms, the situation is different. But in terms of exports, we cannot perform without equivalent support.

Mr. Odina Desrochers: There is another issue I would like to raise. There is a lot of talk about the growing importance of agribusiness. This phenomenon is not unique to Quebec. It is happening all over Canada. Attempts are being made to define “small farm”. As Mr. St-Pierre was saying, attempts are being made to carve out the necessary space to ensure the survival of rural communities.

There is also the Union paysanne that has just waded into the debate that is currently going on. Under the current circumstances, and given the strong temptation to copy the American model, is there really room for other farming in Quebec? What should the government of Canada do to correct this situation, which is growing increasingly apparent not only in Quebec, but all across Canada?

Anyone can answer. I think everyone touched on the issue of--

The Acting Chair (Mr. Claude Duplain): Mr. St-Pierre.

Mr. Adéodat St-Pierre: First, there is a condition precedent that has to be demystified and clarified immediately: farm size. Are we to decide for our young people how big the farm has to be? I have had a farm my whole life. Today, two of my sons run the farm, and another may join them. Will that make it an industrial farm, or will it remain a family farm? That is the question.

We are going to have to stop talking nonsense about anything and everything. Let's make sure there is access. The next generation of farmers does not have access. They will only have access if they can get together, have their weekends when they are entitled to them, and divide up the work. That is the basis of the discussion around establishing viable agriculture.

I do not want to say anything more. When that debate is settled, we will probably have settled more than just that issue.

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

Mr. Maxime Laplante: What we want to encourage are farms with fewer than 100 animals, fewer than 100 hectares and a gross annual income of less than $250,000. That is the type of farm we want to encourage.

Let me give you a very concrete example. This is not a preposterous model; it is something that is already done elsewhere in the world.

Nine years ago, Switzerland decided to put an end to agricultural factories, the “meat shops”, to use the common expression. Switzerland decided that farms with 20 or 30 cows would receive an annual amount. If the farm increased the number of cows to 40, the amount was reduced. If the number increased to 80, the assistance dropped even more. If the number of cows exceeded 130, there was no assistance whatsoever. A farm could have 300 cows, but it would have to function without any support from the government. The specifications are associated with this. A similar plan has recently been introduced in Norway. France, Germany and the United States have also started talking about such a plan.

To complete my example from Switzerland, after a nine-year period during which this system was in place, 77% of the population voted in favour of this agrarian reform. Thus it is popular.

Second, the level of contamination of the drinking water fell to the level it was at in the 1940s. The use of chemical pesticides and fertilizers dropped between 30 and 40%, and, to top it all off, the national budget for agriculture dropped as well. This is an idea that works.

The Acting Chair (Mr. Claude Duplain): Would you like to add something, Ms. Laplante? No.

Mr. Desjardins.

Mr. Louis Desjardins: We are talking about the size of farms. In my view, the fact that on the farm the decisions are made and the work is managed and done by the members of one family, whether it is one person or five, does not mean... In other words, the fact that a farm is composed of five members of the same family does not mean that the farm will stay small. If there are two brothers with their wives and children, and if they manage the farm... In Quebec, 50% of the farms have fewer than 100 animals and 100 hectares of land.

We can reduce the size of farms, but the important factors are the economic data and the prices. Canada is the country in which the basket of groceries costs the least. People will not pay high prices. Moreover, we have to be competitive with other countries. It is all very well to set aside our threshers and to start doing the threshing by hand. But what price will we pay for that?

À (1050)

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

You have the floor, Mr. Steckle.

[English]

Mr. Paul Steckle: Thank you very much.

I would just like to say at the outset of my comments that this is one of the finest documents I've ever seen. I'm a great supporter of supply management, and thank you very much for giving that to us. It will be used. I will use it in my jurisdiction as well.

I would like to say, because you've commented--Mr. Legros, is it?--on the whole issue of challenges. The issue on which we were challenged--and you, I think, would agree--was one we should never have been challenged on, because we should never have been there in the first place. The farmers themselves created that unnecessary challenge, and I trust they've learned a lesson from that. I think the way they're marketing now, in terms of first milk out of the tank, is a better system. I don't think it's a good system yet. I think we should consider that you can't have it both ways. I think the dairy industry is being responsible in terms of how they're doing this. I encourage you to become even more responsible, because I think we don't want to go into unnecessary challenges.

The business for us going across the country is to try to develop a policy for the future. We want to see profitability in farming. Unless we see profitability at the farm gate for those young men and women coming into farming in the future, there just won't be young men and women. It doesn't matter the size of the farm. Your choice of using Switzerland as an example--my forefathers came from Switzerland--is not perhaps a good one, because we're not living with neighbours as the Swiss do. We have different neighbours and live in a different environment from theirs.

Having said that, there are a number of issues I am concerned about, one of those being how we intergenerationally transfer our farms, in terms of the taxes. What can we as a government do for you--the farmers who are now in that 50- to 59-year range--who are thinking and contemplating retirement, with young men and women coming along wanting to take over? How can we best, through the taxation system or otherwise, prepare the way so that we can do that with a minimum of difficulty?

Anyone can answer.

Mr. Maxime Laplante: I will give the answer in English. Maybe it's easier for you.

The first point is to change the laws to permit the establishment of young farmers--part-time farmers too. Presently it's forbidden. If somebody wants to buy a piece of a farm--for example, 30 hectares somewhere--and he already has a job somewhere else but he wants to get experience in agriculture, he is not allowed to buy a piece of a farm, because he is not a full-time farmer. If he gets a part, he's not allowed to build his house on that farm, because he's not a full-time farmer.

It's a block for any kind of establishment coming from outside of agriculture. We have two different kinds of establishment that are possible: from the agriculturalist to the sons and daughters of farmers, and from outsiders. For the outsiders, it's almost impossible, unless you start out big. Right at the beginning you borrow $1 million; you don't have any experience, so it's quite risky. Or you get some financial help from your parents. But if the farm has a value over $1 million, it's not an easy way to transfer the farm. The result is the farms get bigger, so you have fewer farms.

We had in Quebec over 148,000 farms about 50 years ago. Presently, we have 32,000, and it's going down each year. So we have a problem. The rural areas are empty. That process has gone on and on, and we have to change something.

One way to change it, possibly, would be to re-establish some part-time farmers. They would get experience, learn how it works, get used to it, and after a few years become full-time farmers--

À (1055)

Mr. Paul Steckle: Sorry to break in, but what about the capital gains exemption? It's now at $500,000. If we raised that to $1 million, would it be helpful in a positive way, or would it create a negative in another area?

Mr. Maxime Laplante: We think it's not enough. It would work for a couple of years, but after a while you would get some farms valued at $2 million. What do you do then? Young farmers won't take the farm if it's too expensive.

So it's never-ending. We have to give them the possibility to live on a normal farm--call it a family farm, if you want--with 40 cows. It's normal to be able to make a living at that without making it a specialized industry.

Actually, you need--

Mr. Paul Steckle: But your cost of unit size doesn't change whether you have 40 cows or 200 cows. Your acreage costs remain the same, and your equipment costs. Your unit costs actually get higher the smaller you become. But I'm not here to defend the large operations.

When we were driving through the countryside from Saint-Hyacinthe last evening, we noticed the damage done to the woodlots, particularly the hardwoods, the maples. What has happened in the maple sugar industry? I believe the gentleman over here spoke briefly about the maple industry. Being familiar with it myself, I'm just wondering, was there some compensation? Are you still able to conduct yourselves in that industry in a reasonable fashion, or has it seriously jeopardized that industry?

[Translation]

Mr. Jean-Claude Parenteau: Yes, it is still possible to purchase a sugar bush. Clearly, this is an activity that has become more popular in recent years. The main problem will ultimately be the availability of maple trees.

I come back to what you were saying earlier about the capital gains exemption. It is true that this has already been mentioned as a measure that could facilitate transfers. Of course, care would have to be used in its implementation to ensure that the exemption is not reduced rather than increased. But I think this could be one way of helping the next generation of farmers.

Mr. Adéodat St-Pierre: I wanted to say something earlier about the profitability of farms.

The Acting Chair (Mr. Claude Duplain): Very well. Please proceed before we go to other questions.

Mr. Adéodat St-Pierre: First of all, I'd just like to say that I am president of the Quebec Fédération des producteurs de bois. During the ice storm, we developed programs which provided very little compensation but which focused rather on rehabilitation. Broadleaved trees such as maple trees regenerate naturally. Consequently, it seemed that there were shortcomings in terms of the timeline.

It took us some time to address this issue. We requested a two-year extension and we were given one year. This was a half-victory. We would have needed an extension of a further year to simply spend the money which had been allocated and to manage the forest in such a way as to enhance the quality of the broadleaves in all the wooded areas throughout the area affected by the ice storm.

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

Mr. Desjardins.

Mr. Louis Desjardins: It is all well and good to talk about the transfer of farms. However, I want to talk to you about my current situation. You mentioned the figure of 50 years of age. That is approximately my age. I'm in my fifties, I am in fact 56 years old.

I have to transfer my farm to my children. This is no one else's business, it is my business and mine alone. I own a farm, which is worth $2 million. If I were in a situation where I owed half the value of my farm and was able to retain the other half for myself, you might think that I was rich, because I would have a million dollars in my pocket. If this were indeed my situation, I would not be in a position to be able to pass on my farm to my children. Let's imagine that I owed only $500,000. Then, you would be telling me that I have a million and a half dollars in my pocket. However, if I wanted to sell my farm to my children, I would have to reimburse the $500,000 that I owe. In addition, I would need the $500,000 to buy myself a house in which to end my days. That means that $1 million has already been taken care of. My children couldn't afford to buy my farm at that price. They wouldn't be able to make a living from it.

Indeed, I think that my children are quite lucky because I owe nothing on my farm. I will be in a position to sell them my farm for $500,000. and at that price, they will be able to make a living out of it.

There should be a credit equivalent to the farm's value attached to each farm, so that if the farm is broken up—a track of land to one buyer, a quota to another—thus liquidating... This is the danger that exists. Many people are selling the farm this way. But there is also the risk—which will undoubtedly not occur in my case—of selling the farm to a member of your family who turns around and liquidates it a year later. When farms are not in family hands, they...

Some farmers have families to take over their holdings. However, you will understand that this is not the case for all farms. Sometimes, farmers don't have children. In a case like that, the farm has to be sold off to a stranger. Are there any of you here today who would be prepared to sell a farm worth $2 million to a complete stranger for $500,000? Perhaps Mr. Laplante would be quite happy to do it, but I think that defies all logic.

For example, the government could stipulate that a farm is worth a million dollars or $500,000 and that the potential buyer does not have to pay. However, as soon as that buyer intended to either sell or liquidate the farm, he would be required to pay up. If this type of system is not implemented, what is going to happen to these farms? Who is going to grow the crops on these farms? Farmers are getting older. It is all well and good to talk about small farms, but in 10 years' time, there will be nobody left to run these farms. I think that that's a problem.

Á (1100)

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

Mr. Proctor, you have the floor.

Mr. Dick Proctor:Thank you Mr. Chair. And I'd like to thank all the presenters this morning.

[English]

My knowledge of Quebec agriculture is probably like my knowledge of French--just enough to get me into a whole lot of problems. One of the things that farmers in other provinces think about Quebec farmers is that you have one voice, or you have had one voice, that speaks for the farm community--the UPA. Farmers elsewhere tend to think that's one of the reasons the programs seem to be better. You have better support programs in this province than we do in many other provinces. The argument goes that if you have many agricultural groups speaking for some farmers, it's easy for a government to play one group off against the other.

That's a long way around of coming to Monsieur Laplante and your Union Paysanne, which, as I understand it, is now in competition with UPA. I'm just wondering if there's a danger, if you see a downside to having more than one organization and the ability of any government to play one off against the other.

Mr. Maxime Laplante: First of all, our point of view is that not all farmers are represented by UPA, and this is the main point. All small farmers having less than a few hectares or selling less than $5,000 a year are not represented in that system.

More than that, they actually control all the selling of products. If you want to get a subsidy for hogs, for example, you have to sell at least 300 hogs a year and you have to sell them through enchère électronique, a kind of electronic auction. If you don't do that, you don't get subsidies for that kind of production. It's not fair for everybody.

So this is what we represent. It's not necessary, even if we have two organizations.... Actually, there is a law in Quebec that forbids a second organization. The law says precisely that there is only UPA and that's all. We want to change it, but anyway....

We don't want to get rid of the UPA. On the contrary, we want the possibility of having many associations. In Ontario I think there are three associations or something like that, so it's not impossible. But if we have two organizations representing each group of members--and it can be really different--we still can have the same way to sell products or to control the production. You don't need to have two systems of quota or two systems of Commission canadienne du lait and so on. It could be possible to discuss, to find a new way to represent all people, keeping exactly the same force to deal with the others.

[Translation]

The Acting Chair (Mr. Claude Duplain): Mr. Groleau, you wanted to...

Mr. Marcel Groleau: Mr. Proctor, I wanted to pick up on the issue of UPA representation. In Quebec, the existence of the UPA and the fact that agricultural producers are represented by one single body has meant that—through the discussions that we have held with our governments—we have succeeded in developing specific and clear positions, which have enabled us to target support programs where they're needed. It is in fact the case that, compared to the rest of Canada — and I think that has already been mentioned — agricultural income is higher and farm yields are better in Quebec. This is the case partly because we use the supply management system more widely here.

I also wanted to point out that the UPA remains the sole body representing Quebec agricultural producers. The Union paysanne is an organization whose members include some producers, but mainly ordinary people from the towns and country areas. These people set up this organization to articulate different messages and different demands. However, the Union des producteurs agricoles remains the sole organization representing Quebec producers.

I would also like to make a comment on the use of chemical fertilizers in Quebec. This issue was raised in reply to an earlier question. We have significantly increased the acreage under cultivation but at the same time, we have cut chemical fertilizer use in Quebec by 40%. It is not just Europe that is cutting fertilizer use. We are also doing it here in Quebec.

Europe is often an example that is put forward. Indeed, Europe has a so-called multifunctional agricultural system. Indeed, farmers are encouraged to stay on the land through a subsidy system. However, is that the type of agriculture we want to see here in Quebec? Do we want to develop a type of welfare system to keep people farming and living in the country? Is that what we mean by revitalizing rural communities? I'm asking you that question.

Another point I wanted to raise, still on the issue of Europe, is the following: is it easier to buy a farm in Europe or in Canada? Why then are there so many Europeans coming to buy up farms here in Canada? Just try to buy land in Europe. It's almost impossible.

Thank you.

Á (1105)

The Acting Chair (Mr. Claude Duplain): Mr. Parenteau, you wanted to say something.

Mr. Jean-Claude Parenteau: Indeed. I had several points that I wanted to raise, but I will just say that, despite what some may believe, our organization does try to include people. I should give you a concrete example of this. Recently, the Fédération de l'agriculture biologique affiliated to the UPA. The Quebec association of English-speaking agricultural producers also voluntarily joined the UPA just a few months ago. We work with smaller bodies, which often represent smaller-scale producers. This is the case for example in the goat milk, goat meat and cranberry—which is perhaps a bit larger—industries. We also represent game producers such as bison producers. Consequently, we work with all producers.

I would perhaps just have something additional to say on the legal issue. Legislation does not specify that the UPA is the sole organization with the right to represent these people. Legislation specifies that there should be one certified organization and that, if another organization was able to prove that it was indeed representative, that organization would be certified.

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

[English]

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

Those were excellent presentations. Thank you very much.

This whole exercise is about public policy--where governments, the federal government in particular, should be going or changing. There have been some great comments, but first of all I have four questions in about five minutes, so we'll try to get through them all.

Mr. St-Laurent, with respect to the educational side of it, you said that 60% of the research and development currently in Laval is non-governmental. Is that the right direction? Should we be heading in more non-governmental research and development, or should there be some public policy put into place that suggests there should be more support with respect to governmental funding in R and D?

Á (1110)

Mr. Gaston St-Laurent: Excuse me, I should explain that. When I say 60% of non-governmental sources, it means that we have federal or provincial programs where it's--

Mr. Rick Borotsik: Joint venture partnerships.

Mr. Gaston St-Laurent: --joint venture programs.

Mr. Rick Borotsik: Is that good?

Mr. Gaston St-Laurent: Yes.

Mr. Rick Borotsik: Should we be expanding on that?

Mr. Gaston St-Laurent: Well, I don't know. We have around 60% right now, but this 60% non-governmental is not private industry only; it's farmers associations like the dairy farmers organization in Quebec, which are....

Mr. Rick Borotsik: Is it working, in your opinion?

Mr. Gaston St-Laurent: Yes.

Mr. Rick Borotsik: So it is good public policy.

Mr. Gaston St-Laurent: Yes. We do that with the dairy, pig producers, various groups like that, and also some other organizations too. But it's not private industry only, that's what I want to be clear. It's mainly associations of farmers organizations right now.

Mr. Rick Borotsik: Okay.

Mr. Groleau, you've made some excellent comments about the public policy in Europe with respect to multi-functionality, supporting smaller farms, perhaps less efficient farms, but more farms. However, land costs are astronomical, and unless it's coming from family to family it's impossible to get into. They have their own difficulties. I don't suspect you're suggesting that this is where we should be heading here with public policy. I'd like your comments on that.

Secondly, you've said something really interesting: if we increased our domestic milk requirements to the American levels it would be a 12% increase, and to European levels it would be 100%. Are the dairy producers not doing their job in promoting domestic milk consumption, or should there be some sort of a public policy? I go specifically to the Americans, where I believe they have a school milk program. We're talking public policy here. Should we be looking at something at that level?

[Translation]

Mr. Marcel Groleau: Yes, the United States has developed a policy on the use and promotion of dairy products in schools, in hospitals and in other so-called government institutions. For example, this policy deals with the use of butter rather than margarine and of milk in schools.

In Quebec, we used to have a program called the Lait-École program which was in part subsidized by the ministries of Agriculture and Education. This program was withdrawn. Indeed, I think it would be an excellent idea to develop programs of this type in Canada to encourage people to drink milk rather than soda-type drinks. Companies such as Pepsi and Coca-Cola are now investing in our schools. Don't you think that, as the body responsible for public health, we should invest here too? Indeed, these are excellent proposals.

[English]

Mr. Rick Borotsik: Thank you, Mr. Groleau. I don't think Coca-Cola would appreciate those comments, but I'm sure the school systems would.

Mr. Cloutier, this may be a bit outside the agricultural framework, but I'm very interested in the Quebec policy that has been structured with respect to the non-taxation on dividends within the cooperative side of it. Should those dividends be taken out, would they then be taxable at that level, at that point?

Secondly, what about other cooperatives? There are housing cooperatives, there are retail cooperatives, there are banking cooperatives. Do they also fall under the same jurisdiction of taxation where in fact if the dividends are there and stay in the co-op, they are not taxable?

[Translation]

Mr. Ghislain Cloutier: Your point is well taken. Indeed, the dividends, which are what we call cooperative surplus earnings, are not taxable as long as they remain part of the actual equity of the cooperative. When a farmer withdraws these dividends, they are subject to taxes. This is the policy that we have had accepted and which only applies to agricultural cooperatives. The same policy does not apply to other types of cooperatives.

[English]

Mr. Rick Borotsik: Should they affect other types of cooperatives, in your opinion?

[Translation]

Mr. Marcel Groleau: I think that this policy is geared to cooperative and company development. I think that the cooperative model might be used for example, to develop social housing. We could enhance this development by providing equity to all sorts of cooperatives. We are aware that cooperatives develop in regional areas. The equity of these cooperatives is invested in specific regions, by the residents of those particular regions and we also know that these cooperatives will never be sold to outsiders.

Á (1115)

[English]

Mr. Rick Borotsik: I have one last ten-second question for Mr. Laplante. It's very simple.

We've gone over your philosophies and your organization, but at the very end you said something to the effect that the cost of $25,000 per cow is way too much, and it doesn't allow others to get into the industry. You are referring, obviously, to the dairy business.

We've heard that almost all of the presenters support supply management. When you say $25,000 for a cow is too much, are you saying your organization does not support supply management?

Mr. Maxime Laplante: We say for the quota, the price of $25,000 for a cow makes it impossible for young farmers to become established. It doesn't mean we want to destroy that kind of system. We just want to make it affordable, or available, for young farmers who want to take over farms.

For example, the state could buy back or take the quota when farmers leave their jobs, and keep it for young farmers, so they wouldn't have to pay for that. Actually, you bill the two systems. It's a two-way system. Some farmers got that quota for free in the 1960s, and the new farmers have to pay half a million dollars for--

Mr. Rick Borotsik: Just very quickly, Mr. Groleau, do you want to comment on that?

[Translation]

Mr. Marcel Groleau: I would just like to add that quota prices do indeed put a damper on dairy company startups. However, this doesn't mean that it is impossible to get this type of business going. There are examples of young producers who have bought farms and who have made a go of it. Quotas are one issue, but if I was in a different type of farming where land cost $4000 or $5,000 an acre... The same situation exists in any industry. If you want to set up a restaurant on one of the busy streets in Montreal, you can imagine how much that would cost. Try buying a taxi permit in Montreal to run a service between the airport and downtown. How much do you think that costs? This type of situation is not unique to the dairy industry. Indeed, there are costs associated with setting up a business of any type.

I would just like to add that we do indeed have a program here in Quebec to assist young people wanting to get into agriculture. The Fédération des producteurs de lait lends out quotas to young producers who are just getting into the industry. We are currently reassessing this program in an attempt to enhance it so that we will be able to increase our lending capacity. Under our system, producers lend to younger producers.

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

Mr. McCormick.

[English]

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

Yes, the federal government is committed to supply management. It is our domestic support system, and we need to keep working with the producers and the organizations. I'm sure the challenges will not end in the near future.

To Mr. Laplante, I don't think we're getting far enough with any organization on the quota costs and how we might make the system of supply management more accessible for young people wanting to get into the industry.

But you said we could buy back the quota. I'm just wondering who you mean by “we”, and where the money would come from. I'm not saying you don't have a legitimate idea. I'm just giving you an opportunity to say a bit more about that and explain it to me, sir.

Mr. Maxime Laplante: Instead of having to buy the quota--for 40 cows it's about half a million dollars, which is unaffordable--when a farmer leaves the job, the state could take back that quota and give it for free, as it did in the 1960s. It will increase; it went up $2,000 more last week. What will the price of a quota be in ten years--$50,000 or $100,000 a cow? We don't know exactly, but it should be normal.

It's a society decision. If we want to keep family farms, we have to make a move right now. Otherwise, only the big ones getting financial help will be able to establish themselves or buy the quota. It's not normal.

Á (1120)

Mr. Larry McCormick: I have my own personal thoughts on it. If the government of the day had it in the policy and, included at the time, quotas were there on loan or whatever, I'm not so sure any government today could make the statement to take back quotas. I'm not sure any government has enough money to buy back the quotas. I think we'll have to settle it on another day.

On supply management, again, I support it, and will continue to, because it works. What about your concern about the cost of the raw product?

I live near Kingston, Ontario. I go to the United States and check the prices personally. The price of butter and cheese is less in Canada than it is in the States. Yet I'm concerned about what's going to happen. What will be the fallout when some urban newspaper in a metropolitan area, whether it be Montreal, Toronto, or wherever, starts playing more with the figures?

I think perhaps urban people, or people who are not in support of agriculture, don't support agriculture as well in other provinces as they do here. You've done a great job. Are they going to be as happy about buying milk and butter at bargain prices when they find out the producer is sending it to the United States for less? I would like your comments on it, if you could, please.

[Translation]

Mr. Marcel Groleau: In any industry, be it agriculture or dairy production, a market-based price discrimination system is entirely warranted from an economic point of view. However, it is really a volume issue. Selling 5, 6 or 7% of one's output cheaply or at cost is entirely warranted. However, when we start getting up to 40 or 50% of output, then, consumers should be asking questions.

Undoubtedly, you will all have taken the plane to get here today. The price of plane tickets varies depending on when you reserve it. If you reserve a ticket in advance, you will pay perhaps half the price than someone who buys at the last minute. That person may very well be sitting right next to you. That is an example of price discrimination.

In the automobile industry, you will pay more or less for an automobile depending on the time of year when you buy it. At the end of the year, the following year's models are coming out, and consequently, you will pay less for this year's model. That is another example of price discrimination. Of course it goes without saying that an automobile manufacturer could not sell all its automobiles at that price.

There are other policies of this type. In the milk industry, we have the same type of issues. When we're talking about a low volume of output, price discrimination is totally justified.

[English]

Mr. Larry McCormick: Mr. St-Pierre, or someone, gave us the comments on rural development. Of course rural development has been part of many of your presentations. I'm glad to see you're working with the federal government on it. I think for individual communities, and great communities here in Quebec, we can all benefit by working together.

The first-ever secretary of state for rural development in the last two years, Mr. Mitchell, is from Ontario. We've had two conferences with people from all parts of Canada. I attended one two years ago in Magog, Quebec. There were people there from all areas of Quebec and across the country.

Up to now, in Ottawa every department seemed to run within a silo. Here's Agriculture Canada and there's Environment Canada. Here's Fisheries and Oceans and there's HRDC. Here's Industry Canada.

The small department a secretary of state has, under the Minister of Agriculture, does not have enough money. We will also, speaking for myself and this side, support more money for the secretary of state in the future.

By working horizontally, we've been able to make more programs available for rural Canada. I know you people are ready for these types of programs because of your support for small communities.

My question is a comment. I've been at all the ministers meetings, with your minister of agriculture in Quebec City, in Toronto two or three times, in Ottawa, and in Whitehorse, where the accord was signed. For the first time ever, each provincial minister and the federal minister came to an agreement, agreeing 98% on where we need to look at going in the future.

I'm just saying that I think when we can come to this stand today where we're working together, it can be better for our communities and our individual producers.

I just wanted to put that on the record, Mr. Chair.

Á (1125)

[Translation]

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

Mr. Odina Desrochers: A point of order, Mr. Chair.

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

Mr. Odina Desrochers: I would just like to point out to Mr. McCormick that when the agriculture ministers' agreement that he referred to was concluded, Mr. Arseneau was present. He was part of the discussions, but he did not sign on. We should not forget that fact. He did not totally agree with some of the Canadian government's approaches in terms of the Quebec model. Consequently, we should not lose sight of the fact that Mr. Arseneau did not sign on to the final press release.

[English]

Mr. Larry McCormick: Just a small point of order, Mr. Chair.

You're right, I was there, and I think he was correct. But keep in mind that when this program is finished and signed, any individual province can still add additional help and can still do their own programs in addition. So I think we're coming along well there. I've met with and talked with your minister.

Thank you, Mr. Chair.

[Translation]

The Acting Chair (Mr. Claude Duplain): The floor is yours, Mr. Anderson.

[English]

Mr. David Anderson: I will go into a much less controversial area.

Ms. Laplante, you talked about the fact that you represent grain producers. I come from an area in southwest Saskatchewan where we have a lot of depopulation. Farmers are looking now at trying to be able to process their grain. I'm just wondering if you could tell me what your system is here. You're talking about setting up facilities for processing grain and that kind of thing. How do you go about that as local producers? You've got it in your bin. How do you get it from there to your company to process your grain?

[Translation]

Mr. Louis Desjardins: Here in Quebec, we have an organization which is made up of grain producers. You mentioned the UPA earlier. The UPA is a body which focuses on stabilization. In other countries, such as the United States, when prices fall, the grain industry is subsidized. Consequently, we have to lower our prices too. If we didn't have income security in Quebec, the grain industry would be really on the ropes.

When I was a young man, the grain sector was self-sufficient.

[English]

Mr. David Anderson: Excuse me. What I would like to know is, how do you market your grain? If you were in a local community, you would like to set up a local processing facility. Are you able to set up those companies and then sell your grain directly to those processing facilities, develop the processing facilities within your small communities? Are you allowed to do that?

I'm interested more in how you market your grain right now. I understand the international grain situation, but I'm asking how you process your grain. Are you allowed to sell it to your local processing facilities without anyone else coming between you and that transaction?

[Translation]

Mr. Louis Desjardins: A large proportion of grain produced here is sent to farms. The grain that is not sent to farms may be sold to cooperatives. There are regional grain centres here in Quebec. Producers can bring their grain to these facilities where they are paid market price for it. They can sell their grain to the highest bidder.

I am a grain producer. I deal mainly in seed grain, but also grow some feed grain. Yesterday, I called my grain centre to inquire about the going rate. They stated their price. I think that the price will go up a couple of dollars over the next few days. I intend to wait a week or so.

The Acting Chair (Mr. Claude Duplain): Mr. St-Pierre.

Mr. David Anderson: Just one moment.

[English]

What was the price yesterday and what is your price at support per bushel?

Á (1130)

[Translation]

Mr. Louis Desjardins: Yesterday, when I called, I was offered $168 a metric ton for my wheat.

[English]

Mr. David Anderson: Is that feed wheat or human consumption?

[Translation]

Mr. Louis Desjardins: It is feed wheat. For barley, I was offered $158 a metric ton.

[English]

Mr. David Anderson: Thank you.

[Translation]

Mr. Adéodat St-Pierre: Indeed, there is a difference between the way we market and the way western farmers market their products. You have marketing quotas in the west. Producers market their output based on a quota system, and some of their production volume is sold on the free market. Here in Quebec, we have a free market system.

We set our prices via various stock markets, including Chicago and Thunder Bay. These are the two bodies that we use as a reference in terms of setting up prices. From time to time, there is a replacement value. This is the equivalent of the production that is in the region. On a seasonal basis, we collect the equivalent of the replacement value of production which is in the regions. But we do have an entirely free market system here. A large proportion, and even almost all of what is produced in the various regions is reused by producers in our region.

Mr. Louis Desjardins: We have always had a replacement value, but currently, in Quebec, barley is sold at a higher rate than corn. This is quite abnormal. There is no barley. There is more corn. We always have to face a supply-and-demand based system.

[English]

Mr. David Anderson: Do the same rules apply to wheat for human consumption as well? Does the same system work for that as well?

[Translation]

Mr. Louis Desjardins: In terms of wheat for human consumption, the Fédération des producteurs de cultures commerciales is currently developing a pooled marketing system. Those who buy our food wheat are telling producers that they can no longer take it to the flour mills. Both wheat that is bought and sold ends up in the flour mills, but wheat that is sold costs five times more. This means that some farmers won't be paid for the crops they delivered to the flour mills because they're being told that they are no longer allowed to sell directly to the flour mill if the crop cannot be processed into flour. However, this is completely false. On this issue, the Fédération des producteurs de culture commerciale is trying to set up a pooled marketing system, in an attempt to organize a pool of producers which will have the capacity to send their wheat further afield.

[English]

Mr. David Anderson: What is the support price for wheat? What is the support on it per bushel of wheat?

[Translation]

Mr. Louis Desjardins: For wheat? As Mr. St-Pierre was saying, there is no guaranteed price here in Quebec. We establish a price based on the stock exchange prices. In Quebec, we think that wheat for human consumption is selling for $50 less per metric ton than what it is worth. The federation is, however, doing something about it. It may take another year or two, but...

The Acting Chair (Mr. Claude Duplain): Mr. Anderson, you could go back to your question later on. If I may, I would like to allow myself, as the chair, one question.

Mr. Louis Desjardins: I think I understood. We have now set a new production cost. The guaranteed price for grain is still based on the production cost. An investigation was carried out a year or a year and a half ago. We have just completed an investigation in Quebec. Grain production costs were established for 200 farms. They examined all of the farmers' figures and, once this had been done, they calculated the average production cost of a tonne of corn, a tonne of barley or a tonne of wheat. That is the guaranteed price. As producers, we support 20 per cent ourselves. This is approximately $200 per metric ton.

The Acting Chair (Mr. Claude Duplain): Mr. Hubbard, the floor is yours.

[English]

Mr. Charles Hubbard: Thank you, Mr. Chair. It's certainly good to be here today and to hear another province in terms of how your province and how you as producers and various organizations...your attitudes that you have toward agriculture.

Probably one of the biggest difficulties that we as a committee will face, Mr. Chair, is that it differs so much across the country. You're very lucky here in Quebec as farmers that you do have strong support from your provincial government, because it appears that in some cases provincial governments across this country would rather see agriculture as kind of a nuisance industry that is somehow taking their money and not producing a whole lot in terms of their economy or in terms of their way of life.

I was really interested, Mr. Simard, in your presentation in terms of the necessity for education, especially with what we call in English distance education. Wherever you live in this country you can turn on a computer and through the Internet learn a little bit about part of the industry or part of the process. It's certainly good to see that.

I always enjoy driving through Quebec. I drive through here quite often. I watch the farmers as they work, and it's certainly good to see. With farming of course, most people don't look at farming--the property, the farm--as an abstract thing. It's part of their family, part of their lifestyle. In Quebec you have continued to promote the concept that through three or four hundred years some of your families have participated in this industry.

I was especially interested in your attitudes towards the co-op movement. In Atlantic Canada Father Coady from St. Francis Xavier University was a big promoter of the system of cooperatives, the credit unions--the caisse populaires, as you call them here in the province of Quebec, as we do sometimes in New Brunswick.

There are a few points that I've missed here in terms of your presentations. We talk about the system of taxation and we see a growing number of so-called incorporations in order that your tax advisers can say it's a better system to run your farm under. It's not that we question that. You get incorporated simply to deal with government. It's better for you in terms of your taxes.

In Atlantic Canada we talk about soils, which we haven't heard a lot about. We have a lot of acid rain that contaminates our soils in Atlantic Canada. I don't know if it's a problem here in Quebec.

You haven't mentioned energy costs, which is a factor in agricultural production big time.

Another program I think you have here in Quebec, and which is very good, is the idea of cooperation in buying farm machinery. The costs of machinery today are really escalating, and in some areas we find governments encouraging farmers, three or four, to cooperate to buy a piece of machinery that they only use for maybe three or four days of the year.

Overall, we haven't heard much this morning in terms of crop insurance or NISA.

But I would like to, as chair, congratulate you on your efforts. Hopefully you can continue this tradition here in Quebec.

If a few people have comments to make on a few of those points I've raised, it certainly would be good to hear, just to put on the record. We deal with records. We deal with what is transcribed here today. When we go back to Ottawa, that is what our committee discusses and what our clerks and researchers work with.

I see Mr. Cloutier is ready to make a short intervention.

Á (1135)

[Translation]

Mr. Ghislain Cloutier: I would like to go back to the issue of cooperatives and the financial question you dealt with in your intervention.

The CUMAs, which are the support coops that the farmers established in order to purchase farming equipment, enable us to farm at a lower cost. This is a model that could easily be used throughout Canada.

Agricultural cooperatives are a great example of sustainable development. The Ontario federation went bankrupt about 10 years ago. The American cooperatives picked up the torch.

In the francophone region of eastern Ontario, we are starting to feel the need for support that is closer to us. The Coopérative fédérée has therefore got involved in providing this support to farmers.

In the west, we unfortunately did not provide enough support to the cooperatives and one fine day we found ourselves in a situation where agriculture was suffering. Farmers are suffering from the fact that the cooperatives are no longer what they were 10 or 20 years ago in the Canadian West. I think that we have to prevent this type of situation from happening everywhere in Canada. We really have to get things back on track and give back their economic pillars, the cooperatives, to the farmers.

I cannot offer you any solutions for the Canadian West, but I hope that together we will be able to come up with a solution because western grain is very important for Canada's economy.

Á (1140)

The Acting Chair (Mr. Claude Duplain): A comment, Mr. Desjardins.

Mr. Louis Desjardins: I will try to add to that answer. You talked about crop insurance and I am talking about income security. In Quebec, we have a new system, the CSRA, the Compte de stabilisation du revenu agricole (Farm Income Stabilization Account). Six per cent of this fund goes to general distribution. Then, there is the second level, which will replace... That may answer the gentlemen's questions about grain. So the second level is accessible to those who are going to participate in organized marketing. We have income security in Quebec, and in order to obtain this, you need organized marketing. In the grain sector, something is going to have to be done. When we band together and market our products in our organized fashion, we are more likely to obtain a better price.

The Quebec government was specific. It said that it would set up income security but it told producers to band together and to try and respect one another. Those who do not want to participate will not be eligible.

We also have crop insurance. In Quebec, we like to have things that are a bit more specific to us. The Financière agricole told us that it would be in agreement, but this has been blocked by the federal government. We cannot do this any which way.

We used to have a system for livestock hay. This didn't work all that well and we came up with a new system with different types of coverage. This system has been in place for five years and it is working well. However, the federal government decided that it would no longer prepare statistics about probable yields. As a result, we no longer have any statistics and the Financière agricole had to cut back by 7, 8, 9 or 10 per cent depending on the region. We just reduced a program that is environmental friendly, which was running well and all of that.

In Quebec, a portion of the money that comes from crop insurance comes from the federal government. The federal government sets the parameters. We are quite targeted when it comes to insurance in Quebec and we would like to be able to do a little bit more with the money. If there is money owed to Quebec, we have it. Not all producers in Canada are capable of banding together to form a marketing pool as is done in Quebec. We have federations that are in good shape because of that.

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

[English]

Mr. Dick Proctor: Merci, monsieur le président.

I wanted to take advantage of the fact that we have people from Laval, training people, to wonder about veterinarians. I don't know whether vets are trained at Laval, or are they all at Macdonald College?

Á (1145)

Mr. Gaston St-Laurent: The faculty of veterinary medicine is located in Saint-Hyacinthe and is under the University of Montreal.

Mr. Dick Proctor: Okay.

Mr. Gaston St-Laurent: That's why I said there are three faculties in Quebec under three different universities. If you compare it to Ontario, there's agriculture, and the vet school is on the same campus and there's only one. It's the same across Canada, but Quebec is different.

Mr. Dick Proctor: Okay.

Do you have any particular knowledge about what happens to the veterinarians who graduate, in terms of where they go for jobs? The reason I'm asking the question, sir, is that when we were in Saskatchewan about three weeks ago, we were told that very few vets are being employed by the Canadian Food Inspection Agency, simply because the starting salaries are too low. I don't know whether that's only in western Canada or whether you would know about what's happening in this part of the country.

Mr. Gaston St-Laurent: No, I don't really, but Dr. Simard might complement. He is a veterinarian. But I don't have a relationship with the vet school very much.

[Translation]

Dr. André Simard: Your question is timely because I am a veterinarian. I will try to provide you with the information I have because I am a member of the Ordre des médecins vétérinaires and, as such, I am privy to certain things.

Indeed, the veterinarians working in the area of public health, and who are therefore hired by the governments, at least on the provincial side, are complaining that their salary is far lower than what they would be obtaining in private practice, particularly in the large animal sector. There may be a difference between these salaries an those paid by Agriculture and Agri-Food Canada or the Canadian Food Inspection Agency. That is possible, but I believe that there is a problem there as well.

[English]

Mr. Dick Proctor: Okay, merci.

[Translation]

The Acting Chair (Mr. Claude Duplain): Ms. Laplante, do you wish to add anything?

Ms. Johanne Laplante: I would like to answer Mr. Hubbard's question.

We did not all cover the points that you listed. Acid rain is more of an environmental issue. A few years ago, the UPA adopted an agro-environmental strategy dealing with non-point source pollution and all pollutions, primarily those originating from animals.

Crop insurance and the CSRN are two programs that are now included in La Financière, which my colleague, Mr. Parenteau, talked about to some extent earlier.

We talked to you primarily about the problems confronting us. Earlier, I talked about the greater snow geese. These are all programs that pertain somewhat to crop insurance or the income insurance that the federal government included.

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

David.

[English]

Mr. David Anderson: I'm going to come back to grain marketing again. I find this fascinating for a number of reasons.

It's interesting that in western Canada we do not have the option of going on the open market. There are no options there as far as selling directly to anyone. Ontario has six options, including direct marketing. It's interesting. I was doing some reading about it. The pooling part of their program is actually the part that is almost disappearing. Then I find it interesting to come here and to find that that's what you are moving toward.

I only have two questions. They're probably yes or no answers, which are okay. Can you currently market your own wheat for human consumption? Can you sell directly to the flour mills? That's a simple question.

I understand that one of the reasons you're moving toward the pooling system is to give a stable supply of wheat to the flour mills and to the processors. That needs to be done, to give them that supply, but will it be mandatory to sell through the pooling system when this is set up?

So the two questions are can you currently sell directly to flour mills and processors voluntarily, and when the system is done changing, will it be mandatory? Or do you know that?

[Translation]

Mr. Louis Desjardins: We can sell the wheat directly to the flour mills, but we have noticed, for the past two years, that we sell it and they tell us that it isn't good. They pay us as though it were wheat for animal consumption but sell it as wheat for human consumption. The federation has told producers that they are losing $50 per tonne and that is not acceptable.

We are trying to form a group in order to market and sell the product together. All participants will have to go through the system, because otherwise, there would no longer be a system.

The Acting Chair (Mr. Claude Duplain): It will be mandatory.

Mr. Louis Desjardins: This applies to wheat for human consumption.

What was the second question?

Á (1150)

[English]

Mr. David Anderson: Will it be mandatory?

And the third question is do you ever have anything to do with the Canadian Wheat Board? Do you ever hear from them, talk to them, have any dealings with any of their certification or anything like that, including permits?

[Translation]

Mr. Louis Desjardins: What we are setting up will be mandatory. You will not have any choice; you will have to be a member of it because, otherwise, there will be no system. It will be mandatory.

As far as I know, we have no dealings with the Canadian Wheat Board. That doesn't exist here, in Quebec. At any rate, this is not something that I...

[English]

Mr. David Anderson: Thank you.

Mr. Maxime Laplante: To respond to our question, we do in fact support grain production. There is, first of all, an insurance program, assurance stabilization. For example, if oats rises to about $120 for a metric tonne, the supported price would be at about $200, so the difference is given to the producer.

How does it get the money to make the difference? Two-thirds of that help is given by the government and one-third is given by the producer himself. So he pays one third, the government pays two-thirds, and it makes the $80 or $100 difference between market price and supported price.

But there is another insurance program that has been started quite recently with Financière to support the income and not really production, and even in that case the producer gives about 50% and the government gives 50% as well. So it's not exactly completely enterprise-free; it's partly paid by the government too.

Most of all, that system is not equal for everybody. For example, I produce grain for my farm, for my animals, but I don't have a big farm so I only have maybe eight or ten acres of grain when I do my own production. So I don't have the minimum of surface to get that help. My production costs are maybe $100 or $120 a tonne, and if I were to sell my production I would get maybe $100 or $110 a tonne for that, so it would just be stupid to sell my production. I keep it because it's made in a biological way, to use it for my own consumption in animals, but I couldn't sell it. It would be just crazy. But the neighbour who has 500 acres gets the subsidy difference for all his production. So we have a two-way system, two classes of producers, which is just a point I wanted to add.

Mr. David Anderson: Thank you.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: Thank you.

Basically, what Mr. Anderson was referring to, Mr. Desjardins, is, as I understand it, that your producers in Quebec currently are selling, marketing directly, to the flour mills and the processors. From what I've heard you say, that has not been terribly profitable for the producers, and what you're looking at now is a pooling system that would allow you then to approach the flour mills and the processors as a group and demand a higher price for your commodity.

The question was whether that pooling is going to be mandatory. Are you going to be forced into that pooling system, or are you still going to be able to do either/or, pool with the other producers or sell directly to the flour mills? Are you going to have that option?

[Translation]

Mr. Louis Desjardins: It isn't finished yet. They are in the processing of negotiating and the system is being set up. But I have been assured that when you are a member of this pooling system, you have to go through it in order to sell to the mills. We realized that a lot of people were trying to sell to the mills, but the mills take a percentage and they are saying that it isn't enough.

When Quebec producers sell, let's say 25,000 tons of grain for human consumption to the mills, they sell 25,000 tonnes but, in actual fact, 75,000 are processed in Quebec. That means that they sold 50,000 tonnes for animal consumption, that 50,000 tonnes were processed on the animal consumption market and that they lost $50 a tonne. This is precisely what we want to stop.

Here, in Quebec, given that we have to deal with quotas, we might as well accept them. Obviously, if there were nothing, we would be free and nobody could... In Quebec, we set up the stabilization fund, which kicks in at a certain level. As Mr. Laplante explained, there is one third, two thirds, etc. In the case of the CSRA, we decided that everybody would have access to it at the first level. This was an improvement for these people. But there were no quotas and, as of yet, there is no obligation.

It would be an ideal situation if, in Quebec, we were able to recognize that the marketing problem, in a province or in a country, would be resolved if there was only one vendor. When you have several vendors, the number of buyers declines. If you are able to establish one sole vendor, the problem is resolved because you will get the best market price for any product whatsoever.

Why has the pork-producing sector developed in Quebec? Because there is a sole vendor and several producers.

Á (1155)

[English]

Mr. Maxime Laplante: About 40 years ago, to answer your question, Quebec developed a system of plans conjoints. A plan conjoint is just the opportunity for the farmers to group themselves, as Mr. Desjardins has just explained. But of course if you contribute to that kind of system for marketing, it's necessary to have all producers go in. That was the idea in the 1950s and 1960s when this thing was developed. Presently you have this kind of system for milk, eggs, hogs--not for every kind of product, but for many kinds. It can go as far as a quota. For example, it can include a precise price for a product, and the control of product, and so on. Or you can just say we want to organize ourselves as a group to be able to defend a certain price, with our costs of production and so on, but we don't want to have a quota. So you have the opportunity to decide where you go: quota, or just a selling office or marketing office, and so on.

Of course, it's important to control production. If you produce too much, the price goes down. You have to support your farmers. You have to make sure, first of all, it is always possible to sell or to use your product in your own area. If you control the plan conjoint or the marketing system so that only a few farmers are able to produce a lot and transport that production--for example, grain--to Montreal or Sherbrooke or Toronto, or wherever, and the small producers in the area can not sell to the neighbours or to the village, you have a kind of distortion. Actually, this is what is happening for all the products that are under control. There's only an opportunity for the big farms to sell their product, and it's almost forbidden, for many practical reasons, for the small ones. So we have to take care of these two points of view.

[Translation]

The Acting Chair (Mr. Claude Duplain): Ms. Laplante, you wanted to say something as well.

Ms. Johanne Laplante: I wanted to add that the supply management of wheat for human consumption is, as Mr. Desjardins explained, the same as for all kinds of supply management. Supply management enables us to be competitive with respect to our buyers who form pools all the time. We are dealing with mergers, both in the milk distribution sector and in any other food distribution sector, and concentrations of buyers. This is what is enabling the producer to survive, regardless of where he lives in Quebec and regardless of the size of his business, be it small or big. Supply management allows the producer to sell his product for the same price, regardless of where he lives, and to obtain the best price.

Supply management, in the dairy sector, in the food wheat sector and even in the pork sector enables us to standardize the income of producers.

When we want to make support a requirement, it is somewhat balanced by our supply management and the income security that we have in Quebec.

Â (1200)

The Acting Chair (Mr. Claude Duplain): Mr. Groleau, the floor is yours.

Mr. Marcel Groleau: I would simply add that the challenge we face in agriculture is not necessarily about producing. That is relatively simple. The technology is good and our knowledge is becoming more and more vast. The challenge in agriculture is to market the product from the farm.

As regards concentration, whether it be in terms of processing or distribution, or at the national level or international level, the challenge for our producers is to pool their supply and negotiate a price. Regardless of what system you are talking about, this is where the challenge for producers lies.

What do we do in stabilization systems or, in the case of the rest of the country, in NISA? We support a price because we are not able to negotiate a price that covers production costs. We provide minimum support that enables us to maintain production. If we want more than that, we have to be able to band together and negotiate adequate prices and regulations.

Mr. Louis Desjardins: All of the producers voted on the joint plans. For your information, and for the information of my neighbour, the joint plan for grains is not a producer joint plan but a producer-vendor joint plan. If you do not sell, you are not part of the joint plan. We don't have any authority under the joint plan. Consequently, if I grow potatoes and participate in the joint plan, I will have to buy my joint plan for my potato crop even if my family is large enough to eat the entire crop, whereas in the grain sector, if I don't sell anything, I can do what I like with the crop. I can consume it and that will have no bearing on the joint plan.

[English]

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

Mr. Howard Hilstrom: This has been a very enlightening discussion. I think we've run into a little problem with the definition of terms and the translation for what's meant by quota, and different things, when it comes to non-supply management. We'll certainly study it as we look over the minutes and will take care of it.

Clearly, as you develop your initiative, the fact of the matter is that in most commodities--wheat in particular, and cattle--it's a world commodity. It's traded around the world. You're not going to see supply management go in with regard to wheat. It won't happen.

We had a two-price wheat system in Canada. It was changed. The flour mills said to the government, and to everyone else, that they could access European wheat or U.S. wheat at a lower price than what we're trying to get out of them internally in the country. Unless we want to have big problems with the rest of the world on trade, they'd better be able to get raw product at closer to the world prices.

When you start talking about supply management, other than a very closed concept of a single province, how many acres would you be willing to leave idle in the rest of Canada in order to only supply our domestic market? It's an impossibility.

Those are only comments I make.

The Canadian Wheat Board's only mandate is orderly marketing. The price is what the world price is. It's the price they get. It's right in this legislation. When you're setting this up, you can talk about orderly marketing where everyone has to be in it, or you can continue with free enterprise. I'd strongly suggest you stick to free enterprise business in regard to the other commodities.

If there's any comment, certainly go ahead.

[Translation]

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

Mr. Louis Desjardins: We were talking about rarity and quality. This is what marketing is all about. One of my brothers was a cooperant in Africa. Every country gives wheat to Africa. This made my brother laugh. He said that Canadian wheat was set aside because it was the best wheat in the world. When they had wheat of lesser quality, they would mix in a bit of Canadian wheat in order to make some good bread.

We produce the best wheat in the world and we are prepared to sell it at low cost. If we produce the best, why not form a pool to try and obtain a good price?

Â (1205)

[English]

Mr. Maxime Laplante: I would say that we have to take into consideration the population in the rural parts of the country, because actually, with the system we have, we increase the production, we can pay some subsidies and so on, but the number of farmers is decreasing all the time. In Quebec, we have an average of a bit over 1,000 villages and communities. About 400 of these are actually disappearing. In the next year, 400 villages or communities will have disappeared all over the province. So it's urgent.

It's not necessarily a matter of production, selling, marketing, and so on. These communities will have to shut down their schools and post offices. They won't know how to clean the roads and to pay the police and so on. It's urgent. It's necessary to have discussions about food supply, environment, and hereditary occupations.

We don't necessarily want to stop exports and imports, but we do not think they are supposed to be the primary objective or goal of a society. The first goal of an agricultural community is to provide its own population with food. After that, if there is overproduction in maple syrup or whatever, it could be sold. I would like to eat bananas as well; that's not the issue. Our first goal is to support our own population's being able to get food at normal prices. If we have overproduction and some producers want to export, we shouldn't support this with financial help from government.

[Translation]

The Acting Chair (Mr. Claude Duplain): David, do you still have a question?

[English]

Mr. David Anderson: Well then, 85% of the production in grain is what you would call overproduction because we deal on the global market. I find it interesting here that at one point you were calling for farmers to have the choice to sell locally. The bigger, more established people are calling for a closed market to deal with their wheat.

I wanted to speak to something Marcel mentioned. You said the real challenge is not productivity--and we understand that--it's marketing. I challenge you that this is so only if we're content to deal just with raw product. I come from an area of the world where the raw product has been sold until farmers are almost completely broke. You come from a part of the world where your raw product is sold and you've done well.

What we need to do in my part of the world--and from what I'm hearing today here, too--is to add value to our product. The real challenge is not marketing; it's giving people the ability to add value, and I would suggest we do this through choice, particularly in the grains sector.

[Translation]

Mr. Marcel Groleau: Yes; Mr. Cloutier talked about processing. Here, in Quebec, we have used our cooperatives a great deal in order to process our raw products. It is essential that there be some added value.

Currently, in the dairy sector, most of our exports are powdered skim milk or powdered whole milk, which is no longer a value-added product on the international scene. It is essential that we develop value-added products, such as cheese, so that we can obtain a price on the market that will cover processing and production costs. I think this is the same situation in the grain sector.

We have experienced this situation. I come from the mining sector. This same thing occurred in the asbestos sector. We exported, exported and exported asbestos, but we never made any finished products. Today we are left with piles of sand and holes and major problems.

I think that we need to establish a processing policy. We need good production support, but we also need a policy on the processing of our agricultural products.

Â (1215)

The Acting Chair (Mr. Claude Duplain): In closing, if I may, I'd like to ask two questions, one to Mr. Desjardins and one to Mr. St-Laurent.

I would like some clarification. Mr. Laplante talked about how hard it is to buy a farm. You talked about your own situation, of the difficulty your children have when they want to buy farms. So you are somewhat in agreement. Mr. Groleau mentioned that assistance is still available for buying quotas and for renting. We now have in Quebec La Financière agricole. Also, the federal government changed the legislation regarding farm credit.

Would you please tell me exactly what one needs for the transfer of farms? You said that it is difficult, but you also agreed that assistance is available. What is exactly the situation and what should we do to address that?

Mr. Louis Desjardins: Here is what I think of farm transfers. If you have a hotel and you want to sell it, someone will buy it and operate it and make money in so doing.

In Quebec, farms have so little value nowadays that if you sell yours, the buyer will not be able to make its operation profitable. So the only thing we can do is give the farm to our children. If you don't have children, you'd have to be pretty generous to give it to a stranger.

The Acting Chair (Mr. Claude Duplain): I want to know what you need in concrete terms. Earlier you said that you can't sell your farms, but you also said that La Financière can help you. You also said that some assistance was available for those who want to buy quotas. What is missing precisely?

Mr. Louis Desjardins: I think what is needed is some kind of credit attached to that property. If there was a credit coming from I don't know where, attached to my farm, if my children don't want my farm, I could sell it to a stranger. If the buyer wants to wind up the farm operation, he would have to refund the government. However, if the stranger kept the farm, he could then transfer it to his children. The farm would be transferrable. Otherwise the farms couldn't be transferred. A farm can only be transferred from one member of a family to another. Producers are doing it and it works well for them. They have no problems with that. But if there are no children to transfer the farm to or if the children don't want the farm, you wouldn't want to give it to a total stranger. Even if there is stabilization insurance, crop insurance, La Financière, NISA and FISA, the farm is not transferrable.

Do you want to add something?

Ms. Johanne Laplante: Essentially the tax incentives now in place only encourage... We said earlier that notaries encourage people to set up corporations. It's easy to transfer property from one part of a corporation to another. The producers, both milk and poultry producers, are using incentives to help the next generation, but tax measures at both government levels do not promote the transfer of a farm either to a parent or to someone whose not a parent. Winding down is considered the better solution because the producer can see how much immediate profit he can make. We don't have the perfect solution, but we believe that there should be a credit which would encourage farmers to transfer their farms rather than tearing them down or selling them.

The Acting Chair (Mr. Claude Duplain): The changes made by the Quebec and federal government have not helped?

Ms. Johanne Laplante: No, not in terms of tax incentives when it comes to sales.

The Acting Chair (Mr. Claude Duplain): Mr. St-Laurent, I'd like to get back to research. I would like some clarification.

In the past, 90 per cent of research was done by the government and 10 per cent by the private sector but it seems that the reverse is now true: the private sector is doing 90 per cent of research and the government only 10 per cent. It is also said that research data are not as widely available as they were because the private sector is handling the research.

You touched upon it but could you elaborate. I would like to know what is the university point of view.

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Mr. Gaston St-Laurent: You have to be careful. As far as I know, in Quebec, there are very few private companies that actually do research. The only research they in fact do is usually in partnership with universities or with Agriculture Canada under a special program which provides for a 50-50 cost sharing.

Some companies do have their own research laboratories, large companies such as Agropur, but most of them do research in partnership with the universities. As I was saying, approximately 60 per cent of our funding comes from these partnership programs, from non-governmental sources. We do not mind that. This has to be done with the private sector or organizations. We have no problem with that.

The Acting Chair (Mr. Claude Duplain): Do farmers have easy access to the results of that research done in partnership with the private sector or is it sometimes a problem?

Mr. Gaston St-Laurent: No. In any case, we do not have problems with that kind of research. The data from our research undertaken in cooperation with the Fédération des producteurs de lait or the Fédération des producteurs de porcs is available. From the start, we agree on publication, etc. We have no problem in that regard. In some cases, there are issues of patent or copyright, but it is all set out in the research project specifications. It really is not a problem.

At our university, at the moment no research is going on in partnership with large corporations as is the case on GMOs with Monsanto in the United States. We are not involved in that kind of undertaking. We do research in plant and animal genomics but mainly with government funds.

The Acting Chair (Mr. Claude Duplain): I see.

Mr. Laplante.

Mr. Maxime Laplante: I would like to tell you about three instances of farms being transferred when their value becomes too high. In Quebec, for example, there is the Cadet-Roussel Farm, in the Montérégie area, where a foundation has been set up. What happens is that, at the outset, the entire farm is bought and then loaned to the children or to people who want to operate the farm. They do so in order to earn a living, and when they're ready to retire, they have whatever income they have been able to earn, that's all. The farm is then transferred once again to someone else in accordance with the criteria established by the foundation. That is one type of transfer.

In France, you sometimes have contracts that are given out to people who want to farm a particular piece of land. Part of the land stays with a collective, and a contract is given out to whom ever wants to operate, rent, or use the agricultural portion of it. Altogether, there might be some 100 farmers who do not own the land per se. Ownership rests with the collective. If they make improvements to the buildings, the increase in value due to those improvements is then given back to them when they retire, but the land, along with the buildings, is passed on to the next generation.

There is also the German type of transfer. Farms are quite costly over there. Young people just starting out cannot afford to take over their parents' farm when it's worth $5 million. So they would pay off the amount gradually in the form of annuity payments to their parents. Let us suppose that a farmer has decided to give his farm to one of his children, but since he has two other children, they decide on a set annuity. The parents can then continue to live and work on the farm, but they do less and less until such time as they are only living on the farm and not working on it, so the individual who has taken over the farm makes annuity payments to the parents and also to the other two children who did not get the farm. Because the transfer takes place gradually, the parents can continue to live on the farm without having to give it up all at once. So you have three types of transfer.

What has to be done over the medium-term as far as we're concerned is to avoid a situation where farm values become so high that it is very difficult to transfer them. Something has to be done because there is already a serious problem with farms whose value has become just too high, but there nevertheless has to be some support for smaller size operations.

The Acting Chair (Mr. Claude Duplain): Mr. Groleau, I believe you had something you wanted to add.

Mr. Marcel Groleau: We are presently looking into taxation and other measures that make it difficult to transfer ownership of a farm operation. I will give you an example. A comment was made earlier about the capital gains exemption. That is indeed a useful tool, but it would not apply in the same way, for instance, to someone who has shares in a company as it would to someone who has sole ownership.

So there are improvements that can be made.

As far as gifts are concerned, I can transfer ownership to my children as a gift, and that gift is not taxable. I can do that for my own children, but I cannot do it for my brother's children or for a stranger. Then the gift become taxable.

That rule and others make it difficult to transfer a farm operation to non family members. When a producer has worked on a farm for some 40 or 50 years, often times which he acquired from his parents, he is not anxious to see the operation dismantled. That is certainly not his first choice. His choice would be to sell the farm so that it can continue to operate. Tax rules at present do nothing to help him do that.

Let me assure the committee that we will be getting back to you with something more specific on that.

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

That brings our session to an end. It was a great pleasure to have you before the committee. I was especially pleased with the questions from my colleagues. You were able to give them some idea of the situation in Quebec. As for the material that you tabled or that you want to table, you can just give that to the clerks, who will take care of the rest.

Mr. Desrochers has just sent me a note asking to have the floor to speak to you about the forum on rural development which was held in Magog in 1999 and the one which will take place in Charlottetown, Prince Edward Island, April 4^th, 5^th, and 6^th.

Mr. Desrochers, you may say a few words on the forum if you like.

Mr. Odina Desrochers: The witnesses, particularly Mr. St-Pierre, had quite a lot to say about their concerns relating to rural development.

The Government of Canada started to look into this issue as a follow-up to the workshops which were held in Magog in 1999. The first commitments, which you mentioned earlier, were announced on May 25, 2000.

In order to further study this approach, we will be holding another review session to discuss what other actions might be taken. That meeting will take place in Prince Edward Island, on April 4, 5, and 6.

Agriculture and rural development are very much inter-related, but actually, at the federal level, agriculture comes under Minister Lyle Vanclief, but Andy Mitchell is the Minister responsible for the rural development component. If anyone is interested, that will take place in Prince Edward Island.

The Acting Chair (Mr. Claude Duplain): Yes, go ahead.

Mr. Adéodat St-Pierre: I just wanted to say that, now that the Coalition urgence rurale is registered, we will be sending two of our people to Prince Edward Island, along with a pile of material outlining the work that has been done in cooperation with Health Canada and Rural partnership.

The Acting Chair (Mr. Claude Duplain): Thank you to all of you and to the support staff. We look forward to seeing you again.

The meeting is adjourned.