AGRI Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, May 29, 2003

Á

1105

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

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

Á

1110

The Chair

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

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Á

1115

Mr. David Anderson

Mr. Bruce Deacon

The Chair

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

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Howard Migie

Mr. David Anderson

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

The Chair

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

Á

1120

Mr. Douglas Hedley

Mr. Louis Plamondon

Á

1125

Mr. Douglas Hedley

The Chair

Mr. Gérard Binet (Frontenac—Mégantic, Lib.)

Mr. Bruce Archibald (Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food)

Mr. Gérard Binet

Mr. Bruce Archibald

Á

1130

Mr. Gérard Binet

Mr. Bruce Archibald

Mr. Gérard Binet

Mr. Bruce Archibald

The Chair

Mr. David Anderson

Á

1135

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Á

1140

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

The Chair

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

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Douglas Hedley

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Á

1145

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Douglas Hedley

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

Mr. Bruce Deacon

Mrs. Rose-Marie Ur

The Chair

Mr. Louis Plamondon

Mr. Bruce Archibald

Á

1150

Mr. Louis Plamondon

Mr. Bruce Archibald

Mr. Louis Plamondon

Mr. Bruce Archibald

Mr. Louis Plamondon

Mr. Douglas Hedley

Mr. Louis Plamondon

The Chair

Mr. David Anderson

Mr. Howard Migie

Á

1155

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

Mr. David Anderson

Mr. Steve Verheul

Mr. David Anderson

Mr. Steve Verheul

Mr. David Anderson

Mr. Steve Verheul

Mr. David Anderson

Mr. Howard Migie

Mr. David Anderson

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

Mr. Howard Migie

The Chair

Mr. Murray Calder

Â

1200

Mr. Bruce Deacon

Mr. Howard Migie

Mr. Murray Calder

Mr. Douglas Hedley

The Chair

Mr. Louis Plamondon

The Chair

Mr. David Anderson

Â

1205

Mr. Howard Migie

Mr. David Anderson

Mr. Howard Migie

Mr. David Anderson

Mr. Howard Migie

Mr. David Anderson

Mr. Howard Migie

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Â

1210

The Chair

Mr. Rick Laliberte (Churchill River, Lib.)

Mr. Howard Migie

Mr. Rick Laliberte

Mr. Bruce Deacon

Â

1215

Mr. Bruce Archibald

Mr. Rick Laliberte

Mr. Bruce Deacon

Mr. Rick Laliberte

Mr. Bruce Deacon

Mr. Rick Laliberte

The Chair

Mr. David Anderson

Â

1220

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

The Chair

Mr. Louis Plamondon

The Chair

Mr. Rick Laliberte

The Chair

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Mr. David Anderson

Mr. Bruce Deacon

Â

1225

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. John Maloney (Erie—Lincoln, Lib.)

The Chair

Mr. Bruce Archibald

The Chair

Mr. Bruce Archibald

Â

1230

The Chair

Mr. Howard Migie

The Chair

Mr. Michael Presley (Acting Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

Â

1235

The Chair

Mr. Bruce Deacon

The Chair

Mr. Bruce Deacon

The Chair

Mr. David Anderson

The Chair

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Mr. David Anderson

Mr. Douglas Hedley

Â

1240

The Chair

Mr. Rick Laliberte

Mr. Douglas Hedley

Mr. Carl Neggers (Director General, Prairie Farm Rehabilitation Administration, Department of Agriculture and Agri-Food)

Mr. Rick Laliberte

Mr. Michael Presley

The Chair

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CANADA

Standing Committee on Agriculture and Agri-Food

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NUMBER 033

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Thursday, May 29, 2003

[Recorded by Electronic Apparatus]

Á  (1105)  

[English]

    The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we will begin our meeting. We want to continue consideration of the main estimates. This will be the final consideration of estimates. We will, at the conclusion of this meeting, have the estimates study deemed as having been presented in the House later today.

    This morning we are going to be considering votes 1, 5, 10, 15, 20, 25, 30, 35, and 40, and the report on plans and priorities under Agriculture and Agri-Food.

    This morning, of course, we have with us--no strangers to this committee--Bruce Deacon, assistant deputy minister, corporate management branch; Doug Hedley, assistant deputy minister, farm financial programs branch--a regular at this meeting--Howard Migie, acting assistant deputy minister, strategic policy branch, for the second time this week--welcome back, Howard--Michael Presley, acting assistant deputy minister, market and industry service branch; Paul Schubert, assistant deputy minister, communications branch; and Bruce Archibald, assistant deputy minister, research branch.

    Okay, I think we have everybody. I'm not sure who's leading off.

    Are you leading off, Mr. Deacon? Your time is now beginning.

    Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman. I'll make my comments brief.

    I just thought it would be valuable to draw to the committee's attention four points on this year's estimates and RPP.

    First, last year our total budget for the department was about $2.7 billion. As you will see from the estimates, that was made up of $1.8 billion, which we had in estimates, and $900 million that we brought in as supplementary estimates.

    This year our budget will also be about $2.7 billion, but we are bringing $1.3 billion in, in the form of estimates, and we anticipate another $1.4 billion will come into the department's budget through supplementary estimates later this year. What this reflects is the shift from ad hoc funding, which was declining, to new APF funding coming into the budget. Next year you will see this stabilize, and our estimates should be approximately $2 billion on a stable basis into the future.

    Included in the money that will be coming--that is available in the $2 billion, which is a stable number into the future--is approximately $1.1 billion for business risk management, which is, as the minister said the other day, just about double what the base was in previous years.

    The second point, which I think is important, is that as a result of comments made by this committee last year when we presented our RPP, this year we pressed the Treasury Board to allow us to include in planned expenditures all anticipated but not necessarily yet fully approved planned expenditures.

    So what you have in front of you is in fact planned expenditures that fully reflect APF funding that has been approved, some of which has not yet been formally voted. So it is an accurate reflection of the planned expenditures as we know them today, into the future.

    The third point I would make is that the detail that appears in the RPP is at a relatively high level from a planning point of view, but it reflects the detail that was available at the time the RPP was prepared, which is around January or February each year. Subsequent to that, a lot of work has been done to refine the details and to actually convert the planning picture you have in the RPP into very detailed plans from an implementation point of view.

    Within the department we are now working within the order of 600 individual outcome projects that will actually implement the direction laid out in the RPP.

    Finally, I would just repeat the point Minister Vanclief made the other day, that at the time the RPP was prepared, we put in best estimates with regard to what we knew at the time on FTE--full-time equivalent--projections, and those numbers have now been significantly revised. So instead of the very significant increase that appears in the RPP, the net increase at the end of the planning period is expected to be about 120, and that is primarily in the area of additional research and in the areas of implementation of programming other than business risk management. Those numbers are continuing to be revised and refined, but it's a significantly better picture than what appears in the RPP.

    With that, Mr. Chairman, we are available to answer questions.

    Thank you.

Á  (1110)  

    The Chair: Mr. Anderson, you're on for seven minutes.

    Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Just as a matter of interest--I was looking through the RPP this morning, but I don't have time to look it up now--what did the RPP say in terms of FTEs? It was several hundred, is that correct?

    Mr. Bruce Deacon: It's on page 44 of the RPP. It shows the net base of the department as of 2002-03 at 5,632, and it projects an increase to 2005-06 to 6,502. We are now projecting that increase will not be of that order of magnitude, but will be approximately 120 more than what is going into this fiscal year.

    Mr. David Anderson: What changed in the last few months?

    Mr. Bruce Deacon: It's basically that we have refined the program delivery design and have completed assessment of where we can transfer people from old programs phasing out into new programs. We have simply revised the numbers.

    The ones that were prepared last February were very preliminary estimates and we put in the best we knew at the time. We knew this was high, but then we worked to reduce it.

    We've already started, for example, training people currently delivering CFIP to deliver the new NISA, cross-training and transferring staff.

    Mr. David Anderson: Okay, I understand how 2005-06 could be preliminary, but in 2003-04 you showed an increase of 500 people. All of a sudden you're going to 100 over 5 years? What's really going on there?

    Mr. Bruce Deacon: In the first year, at the end of the period 2005-06, the net change relative to today will be 120. That number will be slightly higher this year and then decline to the 120. There will be approximately an additional 327 this year. That's largely because we are continuing to have to run programs that are phasing out as we design and bring online new programming. We are running legacy systems while new systems are being brought online to replace them, and we are introducing new programming while adjusting old programming.

    Those numbers, however, will be for only a relatively short period this year and then decline next year and into the following year.

    Mr. David Anderson: Okay.

    One of the criticisms the Auditor General's people made was that you had a good overall view of the department's activities, but nothing really as far as a specific description of targets you were trying to reach. Now you say you've refined details and converted planning to details for implementation.

    I'm just wondering if you can give us some specific programs where you've set up some of those targets, so we'll be able come back next year and ask if you've met these targets.

    I understand, in reading this, it's very general, but that was one of the things they suggested we should ask, how you're measuring your targets specifically and what some of the areas are that you've refined.

    Mr. Bruce Deacon: Maybe I could just address it very generally and then ask one of my colleagues to talk to a specific area. Perhaps we could look at food safety/food quality on the international side, which would be a good example.

    We have taken this broad planning, which is reflected in the RPP. We have taken each one of the major components, broken it down into specific projects, each targeting specific outcomes within certain timeframes. Each of those is being reviewed in terms of specific performance measures, targets, and resource requirements, and we're now in the process of completing that exercise and converting them into budget allocations and specific tracking on each component. There are over 600 outcome projects being defined to implement this broad area, and that is now being worked through in detail.

    That will become the basis, then, for our departmental performance report, which is tabled every fall, and it will become the ongoing basis for revised planning, which you will see reflected in next year's RPP.

Á  (1115)  

    Mr. David Anderson: Are you intending to list nearly all of those 600 performance reports in order for people to see if you've measured them?

    Mr. Bruce Deacon: No, that would be, I think, a level of detail that would be too much for the RPP, but you will see them rolled up, and we would certainly be able to address them in terms of specific questions or detail if any member of the committee requested it.

    The Chair: Mr. Migie.

    Mr. Howard Migie (Acting Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): Can I just add something? We've been negotiating implementation agreements on the agricultural policy framework with each province, and in each agreement we have very specific targets that we and the province are committing to over a period of years. I have some for the environment, to illustrate, that we are going to be reporting to Canadians as part of the process of the implementation agreements on the agricultural policy framework.

    So, for example, in the case of a target for water, it would be literally a reduction in the risk of nitrogen contamination of water from agriculture by 10% from a baseline we've agreed upon in this agreement. So once we have the agreement signed--and we have the same for soil, air, and biodiversity--we're committing to very specific targets that are outcome-based, saying this is what we want to achieve with all of our environmental programming, federally and provincially, and we'll be measured against that each year as we go toward it. We'll be constantly trying to refine better measures, but those are hard targets that I think people can relate to.

    Mr. Bruce Deacon: We'll report to Canadians annually.

    Mr. David Anderson: One of the concerns might be that people feel you are holding the provinces very accountable, and if you held yourselves as accountable, there probably would be better and quicker understanding of the results of the programs.

    Mr. Bruce Deacon: We will also be accountable to these targets, because we are working together with each province on the environment, food safety, renewal, science, and business risk management. So we will both be reporting.

    Mr. David Anderson: I have a question about some of the provincial agreements.

    This morning the minister was on TV and he said compensation for the producers in this BSE situation through the provinces is dependent on provinces signing the APF. I wonder if you can tell me what he meant by that. Can you tell me how much is available if they sign those implementation agreements? Also, are the producers going to be held hostage to the APF in order to get compensation for the animals that are being destroyed?

    Mr. Howard Migie: I think the reference the minister was making was to the fact that the new programs would come into place as soon as the provinces sign the implementation agreements and we have the amending formula map. I think he was referring specifically to the business risk management programming that would be available for 2003 and subsequent years.

    Mr. David Anderson: Last week we were told that we were losing about $11 million a day, potentially, with the BSE crisis. This week we're told it's up to almost $30 million a day.

    We have a number of senior officials here today. Are you working on a compensation package that might be necessary, and if so, what are you working on?

    Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): The beef industry has been in town this week both for meetings with us on Wednesday and for the round table yesterday and today. That is a major topic of conversation that we have with them in terms of what kind of assistance they may need.

    Let's understand that for depopulated herds, the compensation package is in place for those cattle that are depopulated by CFIA. We have programs in place, as I indicated, through business risk management for those losses in income that producers may have.

    We are then looking at what other kinds of assistance might be needed. We are working with the beef industry on that in terms of actual programming or needs.

    The Chair: Mr. Anderson, we'll get back to you.

    Mr. Plamondon, you have seven minutes.

[Translation]

    Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Thank you, Mr. Chair.

    I would like to ask a non-political question. Perhaps you will find it political, but I would like you to answer in terms of the budget, as a budget officer, meaning an advisor who worked on the budget.

    Some provinces signed the agricultural policy framework, but several provinces have not signed the regulations, and one province, Quebec, did not sign anything. This agricultural policy framework refers to a net income stabilization account or NISA. However, at international negotiations, at the WTO, this agricultural policy framework will be considered our internal policy. Normally, this is not, therefore, part of negotiations. But sometimes, within the WTO, some aspects of our internal policy come under attack, and one of the things that could be attacked is possibly NISA. The supply-managed industry has a suggestion. It says it does not need income stabilization, since it is governed by supply management. It knows in advance what it will receive during a one-year period, since whatever it produces is consumed, and the variation from one year to the next is minimal. As a result, the industry's suggestion is to withdraw from the net income stabilization account or NISA, since it does not need stabilization; however, outside the strategic framework, it proposes establishing disaster insurance. As a result, its management system could not be challenged during WTO negotiations or would be subject to fewer challenges during WTO negotiations, since this industry would not be part of NISA.

    As an administrator and advisor to the minister, could you tell me if it would be possible to adjust your budgets to respond to expectations, like those of the supply-managed industry, without increasing your budgets but simply by making some changes?

Á  (1120)  

[English]

    Mr. Douglas Hedley: Chairman, let me start with the way in which the supply-managed industry is being treated in the implementing agreements.

    By the way, the implementing agreement for Newfoundland, which contains common clauses on this, is on our website and available publicly.

    For the supply-managed industry, they have access to the full program as long as they have more than a 30% loss. This is parallel to what happened in the CFIP program, where they were fully eligible for that program, and we did have some claims from the supply-managed industry. Typically it was where farms had gone down because of disease or some other individual farm disaster.

    For the stabilization component, only the non-supply-managed portion of that farm is eligible for the stabilization component if they have a loss of less than 30% on that farm. So I think many of their concerns have been taken into account by that difference.

    The other is, in trying to make the program green, particularly the part that involves the disaster component, we're required to meet the conditions of the clauses in annex 2 of the WTO. They say it must be available to all farmers. So we've allowed for the disaster component in the supply-managed industry, the same as they had in CFIP, to which they did not object.

    We have said we would not pay it in the stabilization component if they had losses of less than 30%. I think that gives us the ability to claim that it is green under the exact rules of the WTO in annex 2, the green programming.

[Translation]

    Mr. Louis Plamondon: In other words, the position of the supply-managed industry in its last publication, in which it asked to be treated differently and not belong to the overall plan, but to have separate disaster insurance and to be exempt from regulations relating to income stabilization, because it does not have any, but to clearly define within the policy framework the three rules of supply management, this position is, in your opinion, not unacceptable but impossible to address. In short, you are denying this request.

Á  (1125)  

[English]

    Mr. Douglas Hedley: There are two parts to your question. First, we have said in supply management that because of annex 2 we are opening that green program to all producers. If we specifically exclude producers, then we have a very great risk that we would be denying that green program to other producers in Canada and having it challenged if we tried to represent it as green.

    We did include in the agricultural policy framework statement in Halifax that supply management is an effective risk management tool. We have extended those words in the implementing agreement to include that, with more words in there about the use of supply management as an effective risk management tool. We have talked with the supply management industry at length on that, but to try to treat them separately gives us a WTO-type problem.

    The other kinds of rules, the three you mention, are really contained within the arrangements for supply management now--federal, provincial, and industry.

    The Chair: Mr. Plamondon, your time has expired.

    Mr. Binet, you have seven minutes.

[Translation]

    Mr. Gérard Binet (Frontenac—Mégantic, Lib.): Thank you very much, Mr. Chair.

    Welcome, everyone.

    At his most recent appearance before the standing committee, the minister explained that the research activities of Agriculture and Agri-Foods Canada had been changed and that they would be less compartmentalized than previously.

    Could you explain the goal behind the restructuring of the research branch?

[English]

    Mr. Bruce Archibald (Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food): When the discussions began on the agricultural policy framework, there were consultations with the industry, provincial governments, universities, and the public as to what the priorities were in terms of research activities that needed to be addressed to move the agricultural sector forward. Through those discussions it was clear that there was greater opportunity within the department to move programs on a more national basis to make sure we were maximizing the use of resources across the country, developing horizontal approaches and teams to deal with pressing issues and make more efficient use of resources.

    One of the real drivers behind the restructuring of the research branch into a unit that looks at national programs and national themes across the country was to better position us to make maximum use of the resources we had and to have greater efficiencies.

[Translation]

    Mr. Gérard Binet: How did the department determine the need to change its research activities? On what basis?

[English]

    Mr. Bruce Archibald: The basis was the consultations that were held through the development of the agricultural policy framework and in further discussions with other government departments, provincial research units, and universities--a series of broad discussions that were driven by the development of the agricultural policy framework.

Á  (1130)  

[Translation]

    Mr. Gérard Binet: The current crisis, although there is light at the end of the tunnel, demonstrated to the Canadian public how Canada could produce and process agri-food products here, in Canada.

    How will you measure the fact that Canada has in fact become a world leader in this area?

[English]

    Mr. Bruce Archibald: A number of initiatives have been undertaken through the agricultural policy framework: the development of systems for tracking and tracing, which we know now in the current issue around BSE is critically important; the development of technologies so that through DNA testing we can actually be able to verify the movement of animals in the food system, to be able to, not just through paper records but also through very advanced science techniques, look at the tracking and tracing systems; to audit it, verify it, and give those types of assurances to the public and to our various markets in the world that we have a system that gives a high level of assurance in terms of safety and the protection of human health.

    So I believe there is an important role that we can play there. The agricultural policy framework identifies a number of those areas. Work has been initiated with a number of the commodities already to develop these systems nationally and use them to better position Canadian products and to brand Canadian products on the world market.

[Translation]

    Mr. Gérard Binet: I want to talk more about our problems with beef. I attended several meetings where people mentioned the need for national standards, but we know there are many exchanges with the Americans.

    What about the research being done in cooperation with our American friends? In my opinion, this is not just a national problem, but one affecting North America. Are there good exchanges in terms of research with the Americans?

[English]

    Mr. Bruce Archibald: Within the research community there are good exchanges on this particular issue with the United States and Europe, particularly Great Britain, which has had a lot of activity over the last couple of years.

    One of the areas we're starting to examine is the possibility that certain beef animals are more susceptible to contracting BSE than others. We think this research area is very important to look at and to pursue, because it could potentially lead to advance determination whether certain animals are more susceptible to BSE and their removal from herds, building our understanding of the disease and animals' susceptibility and greater assurances and quality systems.

    Those discussions are ongoing. It's a research area we are interested in examining, and very much so in collaboration with the United States, the United Kingdom, and other countries who are very interested in this area.

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

    We'll move to Mr. Anderson for five minutes.

    Mr. David Anderson: I wanted to ask you about some figures you had given in your initial presentation. You talked about having $2.7 billion last year, split between $1.8 billion in the estimates and $0.9 billion in the supplementaries. This year you are at $1.3 billion and $1.4 billion. Then you said that next year we're going to $2 billion in the estimates.

    I presume that's not your total spending, or is it? If it is, it's a drop in spending.

Á  (1135)  

    Mr. Bruce Deacon: That is correct.

    The net planned spending shown in the RPP for 2004-05 is $2,070,000,000, which is a decline. The difference between the two numbers arises because this is the last year of the second part of the $1.2 billion in bridging. When that $600 million ends this year, we will go back to a new base of approximately $2 billion. There is quite a significant difference, in that the base is continuing into the future. It's a stable base, and it will be there every year. Because we now know what that base is, it will be the amount appearing in our estimates going into next year.

    Mr. David Anderson: Is that a good tradeoff for farmers' stability for $600 million?

    Mr. Bruce Deacon: The minister touched on this the other day, but it basically means that we will now have a significantly higher base than before to do planning. It enables us to put in place ongoing, stable programs. And should there be a requirement for additional funding, it enables us to flow that money through existing programs, rather than create new programs every time there is a particular problem. In the past, the programs were less stable and there was less ability to do planning, which was administratively more difficult.

    But this will provide a solid base, and within that $2 billion, there is $1.1 billion set aside for business risk management, or $500 million more than the base we had in the past.

    Mr. David Anderson: But is it still a reduction of $0.7 billion in total spending in the agriculture department?

    Mr. Bruce Deacon: The current planned figure is $700 million less.

    Mr. David Anderson: I may come back to that.

    You said you have detailed your plans since January and February, so could you break down the spending on each pillar of the APF? Now that you have details, you have a better idea of where you are going.

    Through this year and next year, can you give us the details, if they have changed? And what are you spending on each of the five pillars?

    Mr. Bruce Deacon: Within the context of the $2.7 billion, we will be spending about $1.8 billion on business risk management this year; roughly $100 million on food safety and food quality; $356 million on the environment; and $372 million on innovation and renewal, including science; and $97 million on international.

    Mr. David Anderson: Can you project those into next year and 2004?

    Mr. Bruce Deacon: I don't have those numbers with me, but those can certainly be provided.

    I can give you the projections for the APF portion of it, but I don't have the other moneys, which are currently still being aligned and adjusted to tie in with the APF.

    Mr. David Anderson: In those pillars, where will the $700 million come out of?

    Mr. Bruce Deacon: As I said before, the $700 million is really made up of two items, which are current ad hoc funding that ceases. There is the $600 million, which is the second year of the $1.2 billion in bridging funding. The second amount is $107 million, which had been put in place a number of years ago to support agricultural risk management that ceases this year and that will then be picked up by the overall programming under APF.

    Mr. David Anderson: Is that coming out of the business risk management portion?

    Mr. Bruce Deacon: Yes. All of the adjustment between this year and next year, to all intents and purposes, is the ending of the special ad hoc funding that had been put in place in previous years.

    Mr. David Anderson: Farmers will be getting two-thirds of what they're getting in terms of business risk management when the program was put in place from what they've been getting in the past couple of years?

    Mr. Bruce Deacon: No, that's not necessarily true. There's another big shift that has occurred. As we have shifted from an ad hoc funding base more into a permanent stable base and a base for programming, there has also been a shift into the amount of that that is covered as a statutory item.

    What that effectively means is that the base, which is now statutory, which is nearly double, provides a basis for ongoing programming, which is statutory. What that effectively means is that whatever the demand is in a particular year, that is the amount that will be paid out. In a year when it's higher, it will be higher; in a year when it's lower, it will be lower. We have a solid base from which to operate.

    Dr. Hedley may wish to comment further on that side of it.

Á  (1140)  

    Mr. Douglas Hedley: Very simply, to follow up, the arrangements that we have on the BRM money is that we will no longer prorate in the programs as we have had prorating in the past on AIDA and CFIP. If the demand is there, then we are allowed to go up in spending that year because of the statutory. If the demand is less in a year, then we would not spend as much. It means that through the implementing agreements we intend to track that, and we will keep adjusting it to about a $1.1 billion federal expenditure, joined, of course, with the provinces 60-40.

    Mr. David Anderson: In a specific year, then, you're allowed to go as high as is necessary to compensate farmers?

    Mr. Douglas Hedley: That's correct.

    Mr. David Anderson: BSE continues to this fall. Have you projected what the cost could be to your program?

    Mr. Douglas Hedley: We're working on projections. The difficulty with projections right at the moment is that we don't know how long the border is going to be closed. As I say, we're working daily on this to try to get some handle on it, but we're not going to have really stable, good estimates for a while yet.

    Mr. David Anderson: You should have because it's going to be in the billions, right?

    Mr. Douglas Hedley: We're aware of that.

    The Chair: I will now go to Rose-Marie Ur for five minutes.

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

    Mr. Hedley, regarding the base funding of $1.1 billion and if you need more dollars you will get more dollars, my question is, if all the dollars aren't used up, can they be rolled forward? Will they be put forward?

    Mr. Douglas Hedley: The statutory arrangement is that if the demand is there you can go well above that number. If you don't need that much, then you don't spend that much.

    Mrs. Rose-Marie Ur: Does that increase your budget the next year in that particular area where it's not spent?

    Mr. Douglas Hedley: It doesn't need to because the demand-driven capability is still there in the following year. We are adjusting it to approximately $1.1 billion a year. We have measures built into the implementing agreement for that.

    Bruce.

    Mr. Bruce Deacon: It's important to note that statutory items are put in the estimates for information only. These are merely notional amounts that are for planning purposes in the fiscal framework and they will fluctuate up and down. We then report after actual expenditures. The item of $1.1 billion will appear in the framework, but the actual expenditures may fluctuate. That number is now in the fiscal framework permanently every year into the future.

    Mrs. Rose-Marie Ur: Maybe I'm not making myself clear. I'll try one more time. There's $1.1 billion there. If all the dollars aren't used up, can those extra dollars be added to the $1.1 billion the next year--to the base amount of $1.1 billion?

    Mr. Douglas Hedley: Oh.

    Mrs. Rose-Marie Ur: Do you understand what I'm saying now? I can see it if you need to borrow. But if there's some left over--I'm thinking the glass is half full in that we have extra money--can our program utilize that extra money rather than falling wherever it may?

    Mr. Bruce Deacon: In practical terms, within the management of the fiscal framework, they are moving moneys around. But really what it means is you start every year with the new base and then whatever is required against that is available.

    Mr. Douglas Hedley: Bruce, if I could add, the issue is that if you're short in a year, you still have the $5.5 million that we have for BRM. And as we continue to adjust those parameters, it is not a matter of adjusting them only downward; we can adjust them upward so that we stay on that track of about $1.1 billion federal, which means about $1.7 billion federal-provincial.

    Mrs. Rose-Marie Ur: Okay, great.

    In the presentation you had indicated there were about 600 individual outcome projects ongoing, but, as you had answered Mr. Anderson, you don't do a specific review on each project. How do you judge then what is working and what isn't if you do not have a specific criteria review?

    Mr. Bruce Deacon: Within the department, within our overall management planning structure, all of those projects are reviewed on a regular basis and it rolls up.

    In terms of reporting out, we will probably report out at a much more aggregate level, but that detail is available certainly within the planning structure and the management structure of the department. We do track the individual projects and we do review those in terms of performance and budgeting and timeliness, and so on.

    Mrs. Rose-Marie Ur: The other day too it was stated, and you stated it here again today, that you're within your FTEs. You're training new people to carry out the new NISA program--people who were in CFIP and AIDA. But that's not requiring new people. You're working with the same people from within, but you're training them to do another project.

Á  (1145)  

    Mr. Bruce Deacon: That's correct. And that's one reason why, when the original estimates were put together, we had estimated the potential new requirement for new programming and we had simply added that onto the base. Since then, we have refined what is actually required and we have now done the precision of what we'll actually phase out and when can people be moved over. You're quite correct. Those will not require additional people, so we're netting those out.

    Mrs. Rose-Marie Ur: Right. There was information provided to the committee, and I'll just quote from it. It was the RPP for 2003-2004 for respendable revenues, and that included a $4.6 million overpayment under the AIDA in the CFIP program.

    Are these overpayments under the NISA program accounted for in the RPP?

    Mr. Bruce Deacon: NISA is not included in these numbers. These overpayments are predominantly from those sources. It's usually more in the order of $1 million to $2 million a year, and these are just adjustments.

    But specifically to answer your question, those numbers do not include NISA. The forecast for this year is probably about $700,000 in adjustments, with regard to NISA, and those will be brought in later.

    Mrs. Rose-Marie Ur: Right. You may not have the answer to this question, but the way that money was paid out under both those programs, I found it interesting to have an overpayment.

    Mr. Douglas Hedley: For individual farmers. The process is that we bring the information in from the farmer, we look at it, we make the payments to the farmer, we also do on-farm follow-ups, and where we find that there has been an overpayment after the fact, we go back to the farmer with that.

    Mrs. Rose-Marie Ur: Okay.

    Mr. Douglas Hedley: We also do underpayments.

    Mrs. Rose-Marie Ur: Well, that's good to hear as well. It necessitates consultation with various delivery programs and information dissemination.

    What is the dollar allocation for travelling, getting information out, communications within the agriculture budget?

    Mr. Bruce Deacon: I don't have the actual number for travel, but we may be able to get it for you while we're taking other questions.

    Mrs. Rose-Marie Ur: But does that actually come from your budget or does that come from another department? I was reading here that costs of services provided by other departments include accommodation provided by Public Works and Government Services Canada. That actually doesn't come from your department then?

    Mr. Bruce Deacon: No. What this is reflecting...the reference here, for example, is that the Sir John Carling building is owned by Public Works Canada, so that space is provided to us. The cost of maintaining the building, etc., appears in their budget, and then there's an amount attributed that we get as a free item, for which we don't actually expend the money.

    Mrs. Rose-Marie Ur: Okay.

    Mr. Bruce Deacon: It's an adjustment. That only includes things like accommodations. Travel is in the normal operating budget of the department, and that would normally be charged against individual budgets throughout the department.

    Mrs. Rose-Marie Ur: Thank you, Mr. Chair.

    The Chair: Mr. Plamondon, five minutes.

[Translation]

    Mr. Louis Plamondon: This is perhaps a follow-up to Gérard's question earlier on research. Do you have a breakdown by province with regard to this budget? Perhaps you do not have it here, but would you be able to locate it and provide it to the committee? After the restructuring of research activities, how much would each province have spent?

[English]

    Mr. Bruce Archibald: I don't have the breakdown of research by province, but that's information we could obtain, I'm certain, and provide to you. Having said that, as we've developed these national programs, we look at them across the various research centres that we have in the country. It's not developed in a way that there is an allocation for each region or each province; it's looking at the particular discipline, and we make investments into those areas.

    I do have some percentages to show the change in terms of the percentage of activity in the four different national program areas from where we were previously to where we are now, if that at least answers part of your question. So in the area of innovation and renewal, previously in the research budget we spent about 45% of our activity in that. In bio-based products, it was about 15%, in food safety and quality, about 15%, and in the environment, about 25%. Under the new structure, innovation and renewal makes up about 35% of the research budget, bio-based products and bio-processes, 17%, food safety and quality, 17%, and environment and health, 30%. So there is a slight reduction in the innovation and renewal portion of the budget and an increase in environment, food safety, and bio-based products and bio-processes. This is really--

Á  (1150)  

[Translation]

    Mr. Louis Plamondon: Where are the main research centres where this is done?

[English]

    Mr. Bruce Archibald: I don't have the percentages in terms of the actual expenditures at the research centres--

[Translation]

    Mr. Louis Plamondon: But where are they located?

[English]

    Mr. Bruce Archibald: We have 19 centres located across the country. There are facilities in Quebec, in Sainte-Foy, Saint-Hyacinthe, Saint-Jean-sur-Richelieu, and Lennoxville. There are facilities in Saint John and Fredericton, St. John's in Newfoundland, Truro and Kemptville in Nova Scotia, and in Charlottetown and Ontario. There are facilities in--

[Translation]

    Mr. Louis Plamondon: That is what I want to know. I presume that each of those research centres has a budget. I would like to know the budget of each centre, if possible.

    Second, you mentioned special budgets earlier. Of course, with the current mad cow crisis, these special funds must be taken from outside your normal budgets. However, you said earlier, and the minister has also said, that the funds to deal with this unexpected situation will be obtained from the Treasury Board.

    I want to know the following: in the past 20 years, how many special budgets for agriculture have there been, above and beyond the regular operating budget? For example, a few years ago, $1.2 billion went to wheat. During other situations, money has gone to other things. I want to know how many times over the past 20 years the federal government has intervened to try to help or to resolve one-time situations, as well as the amounts invested and which provinces received this additional funding. Can you provide us with this information?

[English]

    Mr. Douglas Hedley: Mr. Chairman, I don't have 20 years of history on programming with me. We would be happy to provide that kind of detail, broken out as suggested.

[Translation]

    Mr. Louis Plamondon: Yes.

[English]

    The Chair: Your time has expired.

    Mr. Anderson, again.

    Mr. David Anderson: Thank you, Mr. Chair. You caught me by surprise.

    I wanted to talk about a couple of different issues. One is trade challenges. What do you have in your budget for trade challenges? The second question is, why are producers paying the cost of international trade challenges that are being brought forward?

    Mr. Howard Migie: Steve Verheul is just joining us.

Á  (1155)  

    Mr. Steve Verheul (Chief Agriculture Negotiator, International Trade Policy Directorate, Department of Agriculture and Agri-Food): We don't have a particular budget allocated for particular trade challenges. We work on those in conjunction with Foreign Affairs, and we have a cost-sharing arrangement with them for particular cases that we do on a case-by-case basis.

    With respect to the ongoing cases and producers having to pay some of those costs, producers who are being challenged often choose to retain their own legal counsel to advise them on the case. That's certainly not something that is required, but it's often in their best interest.

    With respect to anti-dumping actions, like the one we have currently ongoing with respect to wheat, producers retain legal counsel because the challenge is on an industry-to-industry basis rather than on the basis of government practices or policies.

    Mr. David Anderson: That's interesting. So why would western Canadian producers in particular have to pay the cost of a trade challenge that's against a government agency and then be expected to absorb some of the costs and hire their own lawyers to defend?

    The agency itself is supposed to do that, yet the farmers have to pay the bill when you're saying that...I mean, it's a government agency being challenged. Why are producers then being forced to pay some of the costs of that? It seems to me their legal costs, to the Wheat Board in this case, should be picked up by the government since it's a government agency.

    Mr. Steve Verheul: Well, the Wheat Board is covering the costs of their own legal counsel to defend the practices of the Wheat Board--

    Mr. David Anderson: The Wheat Board is not; the farmers are.

    Mr. Steve Verheul: The farmers are covered--

    Mr. David Anderson: The farmers are being directly charged for that.

    Mr. Steve Verheul: Right. Well, that's certainly a situation where the Wheat Board is defending its practices and the policies they have put in place with respect to pricing.

    That cost does go back to producers as part of the Wheat Board's operations, you're quite right.

    Mr. David Anderson: And the penalty is actually against all Canadian producers, so there's one small group that's being targeted to pay the costs when the challenge is against all Canadian producers. I guess I have a problem with that, and I wanted to make you aware of that.

    We asked this question the other day, but I'd like to ask it again. What are you doing on efforts to get the border open? I'm thinking particularly in terms of communications. We have pressure building in the United States from producers down there who think it's a good thing the border is closed, and they are actually encouraging their government to make that permanent. What are you doing to challenge that, particularly in light of the foolish comments made by the Prime Minister over the last couple of days about the President of the United States?

    What is your communication strategy? What are you doing to deal with this problem to convince the Americans that we need to get that border open and leave it open?

    Mr. Howard Migie: As the minister mentioned, he is having very frequent calls with the secretary, our deputy is having calls with his counterpart, and CFIA are in communication with their counterparts every day. Foreign Affairs are also doing that; we're doing that through the embassy. So we are communicating with our counterparts in a number of ways on a very frequent basis on this issue.

    Mr. David Anderson: Do you have a plan to deal directly with the American media and the American public? I understand there are government-to-government relations, but do you have a plan, does the ag department have a plan, to deal with this issue with the media and with the American public in order to make our point?

    Mr. Paul Schubert (Assistant Deputy Minister, Communications Branch, Department of Agriculture and Agri-Food): At this point there is no specific plan to go through the American media, but it's a situation, of course, that we're watching day by day. And we're in touch with CFIA. Depending on how the issue develops, that's certainly something that would be under consideration, but it's not something we have a plan for at the moment.

    Mr. Howard Migie: Might I add one point? Every day CFIA, when they have their media briefing, are inviting and including a number of U.S. media in terms of keeping them up to date, so they are regular participants in these updates on BSE.

    The Chair: Mr. Calder, for five minutes.

    Mr. Murray Calder: Thank you very much, Mr. Chair.

    To go back to the APF again, the department spending for 2003-04 is going to be $2.697 billion. I am wondering how this is going to be distributed around in the APF itself.

    Your security of food system is going to cost $2.016 billion. That is about 74% of your budget, which leaves you $681 million. How is that going to be distributed to each priority within the APF? I'm also interested in a breakdown by province of how the total spending is going to be allocated in the APF.

  (1200)  

    Mr. Bruce Deacon: Maybe I could address your first question. With regard to the money in this year's budget coming out of the APF, in 2003-04 that is going to be about $3.4 billion of APF funding of the total budget of the department. The breakdown in terms of the total amounts we'll be spending is: on food safety and food quality, about $69 million; international, about $30 million; environment, including the National Land and Water Information Service, about $101 million; in terms of science and innovation and renewal, the total is approaching $67 million; for rural and cooperatives, which are included in part of the overall program, the total is $14.5 million; business risk management, which is by far the largest component, is the $1.1 billion we referenced earlier. That totals to just under $1.4 billion, which is the amount coming out of APF and which is the amount that we will be bringing in through supplementary estimates.

    With regard to your second question on the provincial breakdown, we don't have a provincial breakdown as such because many of these moneys cut across provinces and will vary as the year goes on. It would be very difficult to add up a provincial breakdown going in. It is not budgeted on that basis.

    Howard, do you want to comment?

    Mr. Howard Migie: On the provincial breakdown we are negotiating agreements with each province. In those agreements we are committing to spend a certain amount of federal funds in that province on the four areas of the agricultural policy framework outside of business risk management. We have allocated over the five years $600 million of APF funds for those four areas that will be cost-shared with the province. That $600 million will be in all of the agreements once they are signed, and the provinces will in turn match them and pay about two-thirds of that $400 million. The share per province has been predetermined in the Halifax framework agreement for the total of the four, so what we will have is a very explicit commitment to spend those funds in each province.

    For the rest of our agricultural policy framework, it is hard to tell in advance where the funds will be spent. For some of the rest of it, such as in science, we are not sure what research station or what part of the country the research may be undertaken, even though we may know that we will be doing some research in, let's say, the food safety area.

    We do have specific amounts for that portion of the agricultural policy framework where the provinces are cost sharing, and that's $1 billion over the five-year period.

    Mr. Murray Calder: I will switch gears here. This isn't really an estimates question, but I would like to see whether or not I can get an answer.

    Right now you are in negotiation with the provinces on the APF. My guess is that if it's going to respond to the 2003 crop year, those negotiations are going to have to be finished some time toward the end of September.

    Within that time period of negotiation, is there any chance that we can get recognition within the agricultural policy framework of supply management, either in the preamble or in the risk management aspect itself? Is there a chance for that?

    Mr. Douglas Hedley: First of all, the agricultural policy framework agreement signed in Halifax did have written into the agreement a recognition of supply management as an effective risk management tool.

    In the implementing agreements we have a longer text within the business risk management section indicating supply management as an effective business risk management tool. As I indicated earlier, the implementing agreement has been signed with Newfoundland and is available on our web publicly.

    The Chair: Mr. Plamondon.

[Translation]

    Mr. Louis Plamondon: No, that is all.

[English]

    The Chair: No questions?

    Mr. Anderson.

    Mr. David Anderson: Mr. Migie, you suggested the other day that you would be able to bring some figures back about the licensing fees being paid by farmers illegally through the Canadian Wheat Board that the government is supposed to be paying. Do you have any more information on that?

  (1205)  

    Mr. Howard Migie: What I indicated is that there was a question in the House and there will be an answer provided soon by the minister responsible for the Canadian Wheat Board. This was to do with the question of administering export licences that apply both within the Canadian Wheat Board designated area and also the administration related to those export licences when there are exports from outside the designated area of the Wheat Board. I expect that will be submitted to Parliament soon.

    Mr. David Anderson: It's been over seven months since the minister has been aware of this. It has been brought up a number of times. The board is acknowledging now, and some of the directors have acknowledged, that this is illegal.

    I am just wondering why Canadian farmers continue to pay those fees when clearly they're not supposed to be doing that. Do you have any timeframe? It seems to me that the minister is putting us off and trying to make the issue disappear before he has to deal with it.

    Mr. Howard Migie: I expect that there will be a response provided in the next couple of weeks.

    Mr. David Anderson: Is the agriculture department then moving to absorb some of the cost of that? Have you begun to budget for that cost?

    Mr. Howard Migie: I think we'll have to wait for the response, because that action would presume a particular type of determination, whereas the legislation does and has been used to cover off administrative costs related to the export licences for a very long time.

    Mr. David Anderson: Yes, and it's actually a significant number. Australia is talking about $18 million of costs that they experience. Hopefully we'll get this settled and get the money back to the farmers as soon as possible.

    Mr. Howard Migie: I can say it's a much smaller amount that the Canadian Wheat Board has in its budget. It roughly has two people who work on administering export licences, so it's not nearly that kind of a cost.

    Mr. David Anderson: I want to go back, I guess, to this idea of the $1.8 billion and $1.1 billion on business risk management. You've probably done some worst-case scenarios. You've set the trigger at a certain level, I presume, so that it doesn't trigger more than a certain amount of money. But in a worst-case scenario, have you estimated what the total payout would be in one year?

    Mr. Douglas Hedley: The only thing we can base it on is our running scenarios from the last several years for which we have really quite good data in the NISA and CFIP databases.

    The estimates for the federal expenditure, when we do all the Monte Carlo work to try to get our estimates of high and low--and that's assuming some variation in yield every year--run somewhere between $800 million and $1.4 billion as a range. That does not include, because we do not have it in the base, the kind of events that one would have in BSE or another major disease or some other event. But all of our estimates are based on that historical period no matter how we run that program. It runs between about $800 million and $1.4 billion.

    Mr. David Anderson: What would a $3 billion payout in the first year of the program do to the program?

    Mr. Douglas Hedley: The program would pay it because it is demand-driven.

    Mr. David Anderson: Then would the next four years be limited to the remaining $2.5 billion that you have committed over the five years? You have $5.5 billion. You have that total amount. We heard this morning that it's ongoing, but we know it's only five years. Is that a case where you'd have to go back to the government and say we have an extraordinary circumstance here and we need to change the situation?

    Mr. Douglas Hedley: Clearly, the agreement foresees that we will spend on a track of about $1.1 billion.

    Given that we now have the BSE situation, which was clearly not part of our estimates when we were putting the program together, we certainly may have to go back to look at that.

    Mr. David Anderson: It's interesting that one of the recommendations in this committee's report was that a disaster fund be set up. It wouldn't have been big enough yet, but I guess it would have begun to handle the situation we may have. The government chose to ignore that.

    Mr. Douglas Hedley: But the program will handle it, given that it is demand driven. The fallout of that is that one would have to look at how close you were to the track and whether or not adjustments would be needed.

  (1210)  

    The Chair: Thank you, Mr. Anderson.

    Mr. Laliberte.

    Mr. Rick Laliberte (Churchill River, Lib.): Thank you, Mr. Chair.

    There was an item you brought out when speaking to Mr. Calder regarding the issue of water, or you referred to a water item using the terminology of national standards.

    Mr. Howard Migie: In the environmental section of each agreement with each province, we have targets related to the four areas. There would be a target for water, as well as for land, air, and biodiversity. We're applying common targets in each province across the country, plus there will be additional ones that each province may have.

    I was indicating they're fairly detailed, just as an example. We have consulted with scientists, environmental groups, and industry, working for a year to have measurable targets against a business-as-usual baseline. So we would be estimating what will happen to water quality in each province if we do nothing in five years time. Then we're putting in place a number of measures and a target to say, “As a result of these measures, plus the other things we're doing related to the two governments, what is a reasonable target to improve water quality, let's say, in that province?”

    Mr. Rick Laliberte: Just along that line of thinking on watersheds and provinces, they don't synchronize. Water has its own boundary systems and provinces dissect these differently. Alberta has a huge headwater responsibility, for example, as opposed to Saskatchewan and Manitoba.

    But when it comes down to scientific knowledge and laboratories, is there any mobility in this to address a crisis in a certain eco-region? If you're far removed from any labs, is there any mobility? As Canadians facing a geographic challenge, are we looking at integrated efforts with Health Canada to deal with the crises in our labs right now? How are we going to address national issues or national crises in the future? Is Agriculture Canada a part of this now, along with Health Canada? Is there an integrated approach with national security, homeland security, defence, or with the whole ball? Is there a snowball happening in the dialogue on how to deal with this? How does this whole dialogue and the budgets...?

    Water is the essence of life. If we don't manage it and we depend on the provinces, it becomes grey matter--and grey matter is not good to drink. So I'd rather see a pristine policy, or clarity in policy, to protect eco-regions and water quality, plus at the same time look at national security aspects of bio or chemical interference from individuals or external sources, or from our own environmental results from transboundary...or induced by our producers or whatever.

    So this should be a national dialogue, which I think should permeate through your department and others.

    Mr. Bruce Deacon: Perhaps I could start on that and then we can go into more detail if you wish.

    With its emergency response capacity, the government has a very integrated structure right across all departments. There are very detailed plans in place to respond to various emergencies, done on an integrated portfolio and cross-departmental basis. Within those, there are standard responses, etc., which kick in depending on the nature of the emergency response.

    There are also very close relationships in place between specific departments. So, for example, with regard to the BSE issue, there's a very close relationship between the agriculture portfolio, the CFIA within it, and Health Canada. In some cases, departments actually have common facilities, like the facility with level 3 and level 4 containment in Winnipeg, which is shared between CFIA and Health Canada. It's a very advanced centre doing diagnostic and other types of verification research.

    So depending on the nature of the emergency, etc., there's a very integrated approach in place.

    Bruce, perhaps you'd like to comment further on the science side of that.

  (1215)  

    Mr. Bruce Archibald: Beyond the emergency situations, there have been a number of discussions and there are ongoing discussions within the science-based departments in the federal government to look at priority areas of research based on policy issues. Certainly environmental issues are very important; health issues are very important.

    To look at our current capacity in terms of our research activities, to find out if there are any gaps, areas where we can work more collaboratively, there's actually a meeting scheduled in a couple of weeks' time in Merrickville to pursue that further with other ADM colleagues of mine in other departments on the science front of it, to address very much what you were talking about. How are we going to ensure that we have good coordination, that there are activities that are going to be there to meet the needs as they develop, whether it be in water quality, air quality, food safety issues, or others?

    Mr. Rick Laliberte: So in terms of a command-and-control aspect, let's say a crisis happened tomorrow out of the blue. Is it a departmental initiative, a provincial initiative, or a regional initiative? Is it a domino effect of command? Does somebody put on a head and take a whole view of it, or does everybody start flailing their arms until we find the problem?

    Mr. Bruce Deacon: No, this is very much defined in advance, depending on the nature of the crisis that occurs. It has to start in respect of, initially, federal-provincial jurisdiction. So in some cases it will start at the provincial level, and then, upon request, move into a federal side.

    For example, the ice storm started out as provincial, and then, depending on the escalation, it moved into a federal area. Then the federal government is asked to intervene, and we step in and support.

    In other areas, like BSE, it starts at a federal level and works with the provincial jurisdictions on a combined basis.

    So it varies from case to case, but there is a very established structure in place that the minute an emergency occurs, it is defined and the various aspects of the overall structure kick in as appropriate. It is done on an escalating basis. So it starts at one level, and then other levels are notified and they become involved as and when required.

    Mr. Rick Laliberte: Just as a closing question, maybe the crux of it is that it sounds like this has been in place since Confederation. What I'm saying is, what's new since these new crises have occurred? Is there a new dialogue within our departments? Is there a new search for something right now?

    I seem to get the message that you're comfortable that this was in place all along; we could have handled any crisis. But as a result of a new basket of crises, are we invigorating ourselves to a new topic of discussion and finding new solutions?

    Mr. Bruce Deacon: Yes, we are. Following September 11, the government undertook a very major review of its emergency response capacity, because many of our plans, and so on, had been designed for situations other than terrorism as such. Margaret Purdy, who is the Associate Deputy Minister of National Defence, headed a major cross-government review of emergency response capacity from the point of view of looking at policies and procedures, and strengthening that. All departments have engaged in exercises to review and strengthen their emergency response capacities.

    That is being looked at, at a federal level, a federal-provincial level, and in many cases jointly with the United States and others, because a lot of our emergency response capacity is linked to what our colleagues in the U.S. do--a good example being the shared jurisdiction.

    Mr. Rick Laliberte: Thank you.

    The Chair: Thank you very much, Mr. Deacon and Mr. Laliberte.

    Mr. Anderson, a short question.

    Mr. David Anderson: I have a final question, but I have a concern. I was going through some figures that I got and the ones you gave Mr. Calder, and you talked about $2.7 billion in funding this year, $1.8 billion in business risk management, $100 million in food safety, $356 million on the environment, $372 million on innovation and renewal, and $97 million on the remaining areas.

    You told him we're dropping to $1.1 billion in business risk management, which is down $700 million; to $69 million in food safety, which is a $30 million drop; another $70 million drop; and then another $256 million drop in the environmental area; a $300 million drop in the science and innovation area; and an $83 million drop in the final category.

    It looks to me as though we're almost cutting what we're doing in this APF by half. The cuts I have here, between the figures you gave me and Murray, over two years are $1.4 billion in reductions and spending. That's on top of a program now where farmers are going to be expected to deposit $3 billion of their own money into making this program work. You begin to see--unless my figures are wrong--why this is unacceptable to farm groups.

  (1220)  

    Mr. Bruce Deacon: The first numbers I gave were the breakdown of the five areas in terms of the total budget of the department. For example--

    Mr. David Anderson: That was for 2002-03?

    Mr. Bruce Deacon: That was for 2003-04.

    So this year's budget is approximately $2.7 billion, and within that we will spend $1.8 billion on business risk management, and so on.

    The other numbers I was quoting are the APF component of that--in other words, this year's portion of the $5.2 billion in new moneys that were approved.

    Mr. David Anderson: So you have money in an environmental portion inside the APF and you are spending another $400 million outside as well. Is that what you are saying?

    Mr. Bruce Deacon: The total amount that will be spent this year on the environment is approximately $356 million.

    Mr. David Anderson: And that $101 million is additional to that or is part of that?

    Mr. Bruce Deacon: It is part of that. So the numbers I was quoting earlier are the total for the department, and the APF component of that is the numbers I was quoting to Mr. Calder.

    Mr. David Anderson: For Mr. Calder, you added the total up to be $1.4 billion for the APF. Is that correct?

    Mr. Bruce Deacon: That is correct.

    Mr. David Anderson: Okay. I'm going to have to go back and--

    The Chair: Could we, if I may, ask our guests to suspend this part of the meeting for just a moment while we engage in a matter that we have to deal with? We do have quorum at the table, and we do have to pass some money here so that we can bring in witnesses to further continue our discussions on GMO wheat and a number of other issues.

    We have to bring in witnesses, so we are asking for $18,600. This needs to be approved by this board.

    Has everyone seen the budget? Does everyone have a copy of that?

    Mr. Louis Plamondon: I have a copy of it.

    The Chair: Do we have a mover?

    Mr. Rick Laliberte: I so move.

    The Chair: Okay. The seconder is Mrs. Ur.

    (Motion agreed to)

    The Chair: Thank you very much. We will continue the discussion.

    Mr. Anderson, you may continue.

    Mr. David Anderson: When you move on to the further years, then, you are going from $1.8 billion in business risk management, and $1.1 billion of that $1.4 billion is business risk management for this year. The other $700 million is being spent on what?

    You are telling me now that out of that $1.4 billion that is spent on APF, $1.1 billion is business risk management. Earlier you told us that we had $1.8 billion in risk management. Is that the $700 million in...?

    Mr. Bruce Deacon: That is correct. This year we will be spending $1.8 billion on business risk management.

    Mr. David Anderson: You told Mr. Calder $1.1 billion on business risk management.

    Mr. Bruce Deacon: That's the APF component of that. That's the ongoing component within that, and we are spending other amounts within the overall business risk management area of the department. I can take you through the details of what's actually in that, if you wish.

    Do you want to comment on that?

    Mr. David Anderson: For the following years, then, what will you be spending outside of APF on business risk management? Will all your spending be inside?

    Mr. Bruce Deacon: In future years, with the ending of the ad hoc payments, which were occurring this year, our base for business risk management will revert down to basically the $1.1 billion per year.

    Mr. David Anderson: Your total spending on the APF will be, over the next years...?

    Mr. Bruce Deacon: The total spending over the five-year period, of course, is the $5.2 billion, and the amounts that will be spent--

    Mr. David Anderson: But that doesn't leave $1 billion per year for business risk management. That's $1 billion per year for the entire APF. Correct?

    Your total is $5.5 billion on APF?

    Mr. Bruce Deacon: It's $5.2 billion over the five-year period.

    Mr. David Anderson: And what percentage? You're saying you're going to spend $1.1 billion on risk management.

    Mr. Bruce Deacon: The $1.1 billion per year includes $600 million that has been in our base in the past. It includes a new $500 million that was approved as part of APF, which gives us the $1.1 billion.

    So about half of that is in the APF figure, projected into the future.

  (1225)  

    Mr. David Anderson: This year you're saying, though, that out of the $1.4 billion to the total APF program, you're putting $1.1 billion into business risk management.

    I'm asking, out of the $1.1 billion average for the APF over the next few years, what percentage are you budgeting for business risk management? Are you budgeting 100% of it? If you are, where are you getting the money for the other four pillars?

    Mr. Douglas Hedley: Let me try again.

    Coming into 2003, we had $600 million in our budget, frozen or allotted to business risk management. The new element from the APF is the additional $500 million, which brings us to $1.1 billion. So within our APF moneys of $5.2 billion and something, there is $500 million times five over five years that would be attributed to APF business risk management. The $600 million is in our A base already and is not counted in that $5.2 billion number. As a result, you have to take the $5.2 billion and deduct the $2.5 billion to see the impact of the non-BRM spending.

    Mr. David Anderson: The $600 million continues, the base funding continues?

    Mr. Douglas Hedley: Yes.

    The Chair: We'll have to suspend your questioning, Mr. Anderson.

    Ms. Ur, do you have a question?

    Mrs. Rose-Marie Ur: No.

    The Chair: Mr. Maloney, do you have any questions?

    Mr. John Maloney (Erie—Lincoln, Lib.): No, sir.

    The Chair: If I might just jump in, I have a number of issues I've been putting off.

    I guess the question I have, because we've put more money into research, is, how are the priorities in research established? How is it established within the research community? How is it then apportioned, and who makes the ultimate final decision as to where the money goes? This is something that has always been rather troubling to me, how this is done.

    Mr. Bruce Archibald: There are a number of places where the department seeks input and gets direction in terms of where it establishes its research priorities. Within the APF we've established a number of sectoral round tables. There was a meeting that occurred yesterday with the beef industry, for example, where we talked about the issues facing that particular sector--marketing areas, but research areas as well. We take that input to the department.

    There are a number of advisory groups that have been established that the department has used in the past, such as the Canadian Agri-Food Research Council, which is a consortium of representation from provincial governments, universities, private citizens, and federal researchers who come together to look at research priorities on a national basis. There are also consultations the department holds within the various regions, and national symposiums.

    So those various pieces of information and various opportunities to solicit input move in through the system. Based on that, the department establishes its research priorities and reviews them on an ongoing basis. And on a fairly regular basis it invites external panels to come in and evaluate the effectiveness of our research priorities to give us input to determine whether or not they need some refinement or adjustment.

    In fact, we are assembling a scientific advisory panel to come in the middle of June for three days to review the development of our four national programs and the 17 scientific themes to see whether or not, based on their understanding and the input they have, these are the right priorities, or whether there should be further reflection and refinement.

    There is no one body we use. There are a number of different approaches, sometimes very specific reviews of very specific programs, such as the potato-breeding program, which is just completing a very specific review; sometimes higher-level advice such as this panel we're assembling; and there are a number of other mechanisms that feed in.

    The Chair: Would you suggest the review bodies you have reviewing these ongoing research projects are independent in nature, to the degree that you feel all of the sectors are being well served by the way the research money is divvied out?

    Mr. Bruce Archibald: Certainly, as far as the first part of your question is concerned, the panels that we assemble, the external bodies, operate in great independence. We certainly provide to them what we hope to achieve out of the review, but they take the information and have a great amount of flexibility to probe, to ask questions, to gather more information, and to provide recommendations back to us.

    In terms of the appropriateness of funding in all the various commodities and sectors, that's always an ongoing discussion and debate. As I'm sure you can well imagine, every sector would like us to do more in their area. They watch what we do in their area. They watch what we do in other areas.

    I think what we try to do is look at the issues on a national scale. I think we're a small country with limited resources. We can't afford to duplicate. Where an industry is being adequately served by either provincial programs or university research programs in a particular commodity, that may allow us to invest resources in other areas. We do that in a very open and transparent way. I explain that to the industry.

    So we try to make maximum use of the dollars we have.

  (1230)  

    The Chair: The question always arises, and I don't know whether we will ever answer it, but food safety is important for all. This is done for the good of all in the country. I guess the agricultural community, the primary producing sectors, continually feel as though they're bearing the brunt of costs associated with the promulgation of information promoting the safety of our food. Also, of course, the issue of food labelling and all of those kinds of issues seem to always fall back to the agricultural community, being out front. We have BSE now, and there will have to be some money spent in terms of bringing us back into the marketplace again, bringing back the public awareness of our food safety.

    These are issues that shouldn't necessarily be borne alone. I know there are other moneys in the treasury that don't necessarily relate to the budget and the estimates we're talking about this morning, but can you give us some assurance that there are other departments, other ministries, that are also sharing in this kind of thing, because this is for the good of all.

    Agriculture is somewhat unique in the fact that what we're doing here is uniquely important to every single Canadian. I don't know whether we can answer it this morning, but it's a question, I think, that if you can give some sort of response to, I would appreciate it.

    Mr. Howard Migie: Through the funds that we have in the agricultural policy framework outside of business risk management, which is roughly $280 million a year, we have a component that's dealing with international and access issues. We also have provinces contributing $80 million each year as well, so we are using that with our counterparts in the departments of environment and health.

    We will be having, in effect, agreements with those departments as to how we're going to work together to achieve the goals we've laid out in the agricultural policy framework over this five-year period. As in the environment, where we have some goals that are fairly specific, in the food safety area we also have goals so that after five years we want to be at a certain place. We call that a memorandum of understanding.

    We want very much to bring in our colleagues in other departments, because what they do will very much determine whether we'll be successful in the agriculture area. So we're using the agricultural policy framework, really, to provide some leadership to our federal counterparts as well as with the provinces that are trying to do the same with their counterparts.

    We have funds set aside in our framework for things like market access, advocacy, improving our reputation and developing it. So I think we have the tools right now.

    The Chair: Does anyone else want to respond to that?

    Mr. Presley.

    Mr. Michael Presley (Acting Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): I'll simply add that I'm very involved in a number of those sorts of labelling exercises, whether genetically engineered food labelling, organic labelling, and so on. We're very conscious of the fact that the systems are increasingly required now by buyers.... In fact, as we've surveyed food manufacturers across the country, we've seen the number one requirement that buyers are now specifying from their suppliers is food safety assurance. This is why we provided in the APF dollars to help develop the systems.

    I think a really important component of that is our recognition that while putting in place a HACCP system, a HACCP-like system on farm, it tends not to have a lot of significant capital costs attached to it. It's basically a matter of record keeping. We recognize that there is third-party verification required and we've provided for that. We provided funding, for example, in the program to help offset the cost of those audits for the first couple of years of getting the systems in place in recognition of precisely that point you've made.

  (1235)  

    The Chair: Mr. Deacon.

    Mr. Bruce Deacon: I have nothing to add to that, Mr. Chairman, but at an appropriate time we could go back, as I have the answer now for Mrs. Ur, if you wish.

    The Chair: Go ahead.

    Mr. Bruce Deacon: You had asked what we spent on travel per year. To put it into context, the non-salary operating budget of the department is about $200 million a year, of which we spend--it varies from year to year--usually between 8% and 11%. It's somewhere in the order of between $17 million and $22 million. This year I would expect it would be in the order of $20 million. Two years ago it was a little over $16 million, and last year it was slightly higher, mainly because of the extensive consultations we were doing. This year it will be in the order of $20 million.

    The Chair: Mr. Anderson, have you a closing question, one question? I realize we have time until 1 p.m.

    Mr. David Anderson: I have a question with two parts to it.

    The Chair: Okay.

    Mr. David Anderson: Mr. Hedley, I simply want to know for how long the $600 million is committed, the base funding?

    Secondly, you talk here about the fact that you're looking toward the development of private sector risk management products to address vulnerabilities in the industry. I'm wondering whether you are talking to private insurance companies about being able to provide crop insurance and those kinds of options, and are you willing to have those kinds of discussions?

    Mr. Douglas Hedley: First of all, the $600 million that has been in our base will continue to be in our base, and by that it's indefinite--

    Mr. David Anderson: It's permanent.

    Mr. Douglas Hedley: --until such time as cabinet or a decision is otherwise made to change it. Now the $500 million is there as well, so it's--

    Mr. David Anderson: The $600 million is committed year to year.

    Mr. Douglas Hedley: Yes, year to year.

    Mr. David Anderson: But it could be gone as well. It could go at cabinet's discretion.

    Mr. Douglas Hedley: Of course, they have the right to make those decisions. But we have it now in an agreement with the provinces for at least five years where we are planning on spending, on average, about $1.1 million.

    On your other question, in the APF we set aside a small amount of money to look at how to best help develop private sector risk management tools to specific situations for farmers.

    We have an example we have worked on in the last couple of years with the poultry industry. They came to us and sought our help to start a program to assist producers when, for example, a flock goes down with salmonella. We looked in Canada, through insurance companies and other mechanisms, and couldn't find anything that would fit the industry.

    We searched on a world-wide basis and found some programs operated by the private sector and the poultry industry in the Netherlands. We brought that information and the people in from the Netherlands and worked with the poultry industry to set it up. They now have a completely private reciprocal insurance arrangement for the poultry industry. It's now set up for Ontario, and we're expanding that across the country.

    Our investment in that was a few contracts, probably less than half a million. It is now being taken over completely by the private sector here in Canada to provide that coverage.

    We are now looking at what kinds of things we could do, and we are encouraging industry to approach us on that issue. We'll also be looking for the kinds of things we'd like to look at with industry.

    Mr. David Anderson: So you're willing to sit down with, say, a private crop insurance company and come and say we've got a proposal for an area.

    Mr. Douglas Hedley: Yes, absolutely. We've got a number of proposals that we are looking at now that involve price risk, yield risk, across a wide range of problems.

    Mr. David Anderson: Have you considered putting money into educational programs and things like futures and options and those kinds of things to teach people how to use the management tools that are there already?

    Mr. Douglas Hedley: We have that set of skill building within the renewal component of the APF. But certainly those are some of the things that we are looking at in the private sector business risk management development.

  (1240)  

    The Chair: Okay. Mr. Anderson, that was one question with four parts.

    Mr. Laliberte, for the last questions. We understand Dr. Hedley has to leave here in about three or four minutes, so please be as succinct as possible.

    Mr. Rick Laliberte: Is there anything specific on the Kyoto commitments, as a department, not only the producers' need for compliance on energy but also the carbon sink aspect? Where is the department on this? There is value and there are credits to be calculated in all of this. Is this part of the estimates and part of the budgeting that will be taking place, or is there any provision in this budget for calculations or advances of future carbon credits that can be acquired from agricultural practices?

    Mr. Douglas Hedley: Could I ask Carl Neggers, who heads the PFRA, to come to the table?

    Mr. Carl Neggers (Director General, Prairie Farm Rehabilitation Administration, Department of Agriculture and Agri-Food): Yes, that's an important question. The challenge is that there's a lot of work that needs to be done in terms of the appropriate calculations and the result or the impact that may or may not have on producers. There's a lot of on-farm initiatives that we're encouraging that will increase the opportunities in the area of mitigation of greenhouse gases and increased carbon opportunities. But to say we've nailed it down wouldn't be right. We are working on it, and we are hopeful that in the next little while, on the larger government agenda, this will be worked out.

    Mr. Rick Laliberte: I know I made reference to watersheds earlier, and I think it also flows to a Kyoto aspect, but another interesting agrifood is wild rice and that whole aspect of the boreal region. So it's on the fringe of the traditional agricultural activities. But there's this agrifood activity that takes place on water, growing rice on water.

    What kind of assistance, nationally, do you have for wild rice? There's a whole intrusion by DFO. Because of the habitat and river management aspect they are questioning wild rice practices. Is there any advocacy for wild rice producers now? Now they're feeling a little threatened by the enforcement officers from the DFO side; somebody discovered their activity, so to speak, in the bush.

    But from the agrifood side, is there any help or is there some dialogue? Am I raising an alarm bell that you haven't heard about before?

    Mr. Michael Presley: One of the really active ways whereby we work with various commodity organizations, whether it's wild rice or others--I can't speak particularly to wild rice, but the program we have available is for market development in general--is that through our CAFI program, which is export oriented, we provide means for organizations, commodity groups, to be able to identify targeted markets and be able to access those markets, and we match funding with them to be able to take advantage of where there are market opportunities for those commodities. That tends to be our focus, which is on market assistance.

    We also have regional offices that work very closely with various commodity groups to liaise with various other government departments to provide the assistance they need, whether it's environmental assistance through provincial or federal departments or whether it's with the Department of Fisheries and Oceans with respect to fish-bearing streams and those sorts of relationships. So those are the major ways in which we work with those kinds of commodity organizations. Wild rice isn't one that I'm familiar with as having come in recently for any kind of market assistance funding. But that's traditionally the role the department has played.

    The Chair: We must, in fairness to Dr. Hedley, conclude our questioning.

    On behalf of the committee, I want to thank you people coming to us again this morning. Obviously, we needed accommodation today because this is the last opportunity and we have some obligations. It was a worthwhile exercise, and I think many of us had some good information brought to the table.

    I want to thank Mr. Presley, Mr. Migie, Mr. Hedley, Mr. Deacon, Mr. Schubert, and Mr. Archibald this morning for appearing and being forthright in your responses. We thank you again.

    The meeting stands adjourned.