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37th PARLIAMENT, 3rd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, April 22, 2004

0905

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

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

The Chair

Mr. Rick Borotsik (Brandon—Souris, CPC)

The Chair

Hon. Bob Speller (Minister of Agriculture and Agri-Food)

0910

0915

0920

The Chair

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC)

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

0925

Mr. Gerry Ritz

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

Mr. Gerry Ritz

Hon. Bob Speller

The Chair

Mr. Gerry Ritz

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.)

Mr. Gerry Ritz

The Chair

Mr. Gerry Ritz

The Chair

Hon. Bob Speller

Mr. Rick Borotsik

The Chair

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

The Chair

Mr. Louis Plamondon

0930

The Chair

Hon. Bob Speller

The Chair

Mr. Louis Plamondon

Hon. Bob Speller

The Chair

Mr. Sébastien Gagnon (Lac-Saint-Jean—Saguenay, BQ)

Hon. Bob Speller

0935

Mr. Sébastien Gagnon

Hon. Bob Speller

The Chair

Hon. David Kilgour (Edmonton Southeast, Lib.)

Hon. Bob Speller

Hon. David Kilgour

Hon. Bob Speller

Hon. David Kilgour

Hon. Bob Speller

Hon. David Kilgour

Hon. Bob Speller

Hon. David Kilgour

Hon. Bob Speller

Hon. David Kilgour

Hon. Bob Speller

0940

Hon. David Kilgour

The Chair

Hon. David Kilgour

Hon. Bob Speller

Hon. David Kilgour

The Chair

Mr. Dick Proctor (Palliser, NDP)

Hon. Bob Speller

The Chair

Mr. Richard Fadden (President, Canadian Food Inspection Agency)

0945

Mr. Dick Proctor

Mr. Richard Fadden

Mr. Dick Proctor

Mr. Richard Fadden

Mr. Dick Proctor

Hon. Bob Speller

Mr. Dick Proctor

Hon. Bob Speller

Mr. Dick Proctor

Hon. Bob Speller

Mr. Dick Proctor

The Chair

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

0950

Hon. Bob Speller

Mrs. Rose-Marie Ur

Hon. Bob Speller

Mrs. Rose-Marie Ur

Hon. Bob Speller

Mrs. Rose-Marie Ur

Hon. Bob Speller

Mrs. Rose-Marie Ur

Mr. Rick Borotsik

Hon. Bob Speller

Mrs. Rose-Marie Ur

Hon. Bob Speller

Mrs. Rose-Marie Ur

Hon. Bob Speller

0955

Mr. Richard Fadden

Mrs. Rose-Marie Ur

Mr. Richard Fadden

Mrs. Rose-Marie Ur

The Chair

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

Mr. Rick Borotsik

Hon. Bob Speller

1000

The Chair

Hon. Bob Speller

The Chair

Mr. Samy Watson (Deputy Minister, Agriculture and Agri-Food Canada)

The Chair

Mrs. Mary Komarynsky (Assistant Deputy Minister, Farm Financial Programs Branch, Agriculture and Agri-Food Canada)

1015

1020

1025

The Chair

1030

Hon. Wayne Easter (Malpeque, Lib.)

The Chair

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Agriculture and Agri-Food Canada)

1035

The Chair

Mr. Louis Plamondon

The Chair

Mr. Louis Plamondon

1040

Mr. Tom Richardson

The Chair

Mr. Louis Plamondon

The Chair

Mr. Tom Richardson

The Chair

Mrs. Rose-Marie Ur

1045

Mr. Danny Foster (Senior Advisor, Program Planning and Performance Directorate, Farm Financial Programs Branch, Agriculture and Agri-Food Canada)

Mrs. Rose-Marie Ur

Mr. Danny Foster

Mrs. Rose-Marie Ur

Mrs. Mary Komarynsky

Mrs. Rose-Marie Ur

The Chair

Mr. Danny Foster

The Chair

1050

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

Mrs. Mary Komarynsky

Mr. Gerry Ritz

Mrs. Mary Komarynsky

Mr. Gerry Ritz

Mrs. Mary Komarynsky

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

1055

Mr. Danny Foster

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

Mr. Danny Foster

Mr. Gerry Ritz

The Chair

Hon. Wayne Easter

Mrs. Mary Komarynsky

Hon. Wayne Easter

Mrs. Mary Komarynsky

Hon. Wayne Easter

Mrs. Mary Komarynsky

Hon. Wayne Easter

Mrs. Mary Komarynsky

Hon. Wayne Easter

1100

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 016

3rd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, April 22, 2004

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we want to begin our meeting this morning to continue the study on estimates.

Yes.

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): I have a point of order. I want to take 30 seconds to give a message to the minister from the grain producers of Quebec.

[Translation]

They gave each Quebec MLA a sack of grain with an important message about agricultural subsidies in the world. I will take 30 seconds with my colleagues of the Bloc Québécois to give this message to the minister, if I may.

[English]

The Chair: Thank you, Mr. Plamondon. It's not a point of order, but I will give you the privilege.

I should point out that there should be no pictures taken in here.

Mr. Rick Borotsik (Brandon—Souris, CPC): It's for a householder, Mr. Chairman. How can you do a householder without a camera?

The Chair: Back to the business we started this meeting for. Order, please.

This morning we want to address the main estimates, votes 1, 5, 10, 15, 20, 25, 30, 35, and 40 under Agriculture andAgri-Food and various agricultural programs.

We have with us as our first witness, from 9 until 10, the Honourable Bob Speller, Minister of Agriculture and Agri-Food. We have with us also the deputy minister, Mr. Samy Watson, who is no stranger, Mr. Bruce Deacon, and Mr. Richard Fadden.

To you, Mr. Minister, and your opening comments.

Hon. Bob Speller (Minister of Agriculture and Agri-Food): Good morning.

Thank you very much, Mr. Chair. It's a real pleasure for me to be back here at the ag committee.

In the time I have, I'd also like to update the committee, Mr. Chair, on the avian flu and BSE situations. As well, I want to talk briefly about CAIS. In the second hour, my officials will provide more details of the program.

Our meeting is timely because there's no question these are difficult times for Canadian farmers and farm families. You know, over the past four months I've been travelling across Canada and talking to farmers and farm families and listening to their concerns. I've also been consulting with other parts of the value chain in agriculture. In the week before last, in fact, I met with my provincial counterparts in Toronto, where we discussed immediate issues as well as the national food industry strategy for the longer-term future of agriculture.

In 2003, as you know, farm income was at its lowest levels ever. There's the BSE situation, which has continued into 2004; there are low prices for some commodities; there's the appreciation of the Canadian dollar; there are also weather challenges, ongoing drought in some areas; and as you know, now we have the avian flu situation in British Columbia. All these pressures are taking their toll on producers, their families, and the communities they support. This has been an extremely difficult year, but I want to say how much I appreciate the hard work that this committee continues to do to lay the foundation for a bright future for Canadian agriculture.

With that as a backdrop, I want to address the first item of business, and that's the main estimates for 2004-05. This is the first run at this for me, so I just want to remind members that the main estimates are really the opening budget for the department for the start of each year. They do not reflect the final picture.

You have the numbers before you, but I think the key story they tell us is that for the first time ever we have had a significant stable funding base for spending in agriculture, one that is based on the needs of Canadian farmers. The numbers for last year bear this out. As you can see in the main 2003-04 estimates, they were for $1.3 billion, but in fact the final spending looks to come in at almost $5 billion. This is a direct reflection of the additional $3.6 billion that the Government of Canada provided this last fiscal year, needed measures that were serious, and the unprecedented circumstances faced by Canadian farmers.

I'd like to turn briefly to the department's main estimates for this year, 2004-05. The main estimates show an increase of some $800 million over last year's main estimates. This increase is mainly a result of the APF money, which kicks in later this year.

Just to touch on the CFIA numbers, the CFIA's budget as reported in 2004-05 has increased by some $54 million. The lion's share of this increase, $47 million, announced in the recent federal budget, is to reinforce inspection capacity. This includes some $18 million to deal with animal and plant health emergency measures.

As for the actual spending for this year, that will depend on the need that is out there. No one forecasted the BSE or other emergencies that we had last year. Likewise, it's impossible to predict total spending for this year. It will depend very much on the circumstances. This government will continue to meet the needs of Canadian farmers and farm families. We were there for farmers last year, in fact over the past five years, because the budget has increased in every one of those years. We are there for farmers this year and we will be there for them, Mr. Chairman, in the future.

Mr. Chairman, it is the statutory meaning that there is no monetary cap in this new CAIS program. So if demand for farmers increases, expenditures will increase accordingly, regardless of what the forecast was. Forecasts are for planning purposes. What CAIS does is address the reality of the situation right here and right now.

¿ (0910)

CAIS is not pro-rated; in fact, I'd say CAIS is pro-farmer.With CAIS, for the first time ever, farmers have stable, permanent programming for disaster coverage—programming that is based on need.

For the first time ever, we have a five-year commitment with all of the provinces on board. Every province and territory has been part of the development of the CAIS program, and so were the producers. In total, the federal planning for BRM programs is $5.5 billion over the next five year, with flexibility up or down during those years, as demand requires. That's almost double the amount planned for under the old safety net system. In total, this expands the department's annual base to some $2 billion a year. What this budget creates, I believe, is certainty for the sector—a comfort level for the sector that, if need be, the funds will be there.

Farmers are now in the process of signing up for CAIS to help bridge producers over until the full benefits of CAIS kick in. About a month ago in Lethbridge, the Prime Minister and I announced an investment of almost $1 billion. Those funds are both to help producers with transition and to help those farmers directly hit by the BSE situation.

Payments under the transitional industry support program are now going out to Canadian producers. As of the latest information, more than 4,000 producers with cattle will be receiving more than $17 million in the first batch of cheques going into the mail this week. As well, more than 11,600 general payments under the program, totalling almost $9.5 million, are being processed this week.

As you know, the Lethbridge announcements also included a top-up of the CFIP payments to 100% of the federal share.

I just have a final word to say about the program payouts. It is my intention, Mr. Chairman, to provide quarterly updates, so that there's no question about whether or not these programs are working and the money is getting out to the producers. So this committee will have an opportunity to see on a quarterly basis exactly what's going out to farmers.

So CAIS is definitely better than anything we've had before. It helps farmers cover large and small fluctuations in income; it provides disaster coverage; and it helps beginning farmers, the future of our sector, because they can access the program immediately with just one-third of a deposit and don't have to wait for years to build up an account.

That said, we will keep working to make CAIS even better, and we have done so in close consultation with the industry and the National Safety Net Advisory Committee. Higher caps, simpler deposits for 2003, and negative margins will all help producers better manage their business risks, and they will help raise the comfort level with their lenders, particularly in disaster situations like some sectors have in fact been experiencing.

It's for this reason that I want to stress the urgency that all provinces sign the amendment. As you know, all provinces have committed funding to the APF, but not all have signed the amendment to put the CAIS improvements in place. We now have five provinces who have signed on to the amendment. Only two more are required, and they are in fact in the process of doing exactly that. We hope to have all of this in place very soon.

There's no question that making the transition to a new program is challenging. I want to insure as many farmers as possible and, in fact, encourage them to join the program.

In provinces where the federal government delivers the program, I'm announcing today that the deadline to join CAIS will be extended to June 30 and that the deadline to file CAIS supplementary forms will be extended to September 30.

Mr. Chair, I also want to mention the serious situation with regard to avian flu. As you know, two weeks ago in Abbotsford, I announced the depopulation of all commercial poultry flocks and birds in captivity in the established control area of the Fraser Valley. That was not a decision I took lightly. It was a necessary measure to stop any further spread, and to protect the long-term viability of the poultry industry. I fully recognize that it is having an economic impact not only on producers in the Fraser Valley, but also on the processing industry and the employees that work in that industry. We're working very closely with the CFIA and the province on a number of fronts.

¿ (0915)

CAIS is available to the supply-managed sector. We are currently conducting CAIS workshops throughout British Columbia, with special focus on supply management, to help get producers up to speed. We are also working hard to ensure that the consumers and the primary processors in British Columbia get the supply of the product that they need to meet their demand.

The poultry industry in Canada is showing remarkable determination to work together to supply the B.C. market. First and foremost, we see farmers helping farmers, supplying product from the rest of Canada to British Columbia, particularly in the processing industry, and for further processing and distribution. If, after all of this has been fully utilized and there still is a market shortage in British Columbia, then and only then will we consider how supplementary imports can help fill this gap.

Combined with supplementary imports, we also anticipate that other provinces will be able to ramp up production to meet the supply needs of the affected primary processors. Right now, however, our immediate preoccupation is to stop the spread of this disease and, in fact, to stamp it out.

On the issue of the opening of the U.S. border to Canadian beef, as you know, on Monday the U.S. announced that it would resume the import of Canadian ground beef and beef on a bone from cattle aged 30 months or younger. This is a positive signal from our key trading partner.

There's another step toward full restoration of trade between Canada and the United States. As you know, the comment period ended April 7, and now the U.S. is going through the submissions and responding to them. This is the next step in their legal process. I am confident that the U.S. will move as expeditiously as possible, and I've been given that assurance by Secretary Veneman, their agriculture secretary.

But, Mr. Chairman, we will continue to keep pushing hard, and at the end of the month I will be accompanying the Prime Minister as he travels to Washington to meet President Bush. We will continue to press for full restoration of trade.

At the same time, Canada continues to work with the U.S. and Mexico in asking the OIE, the world organization for animal health, to develop a more practical risk-based approach to BSE. I'm in regular contact with my counterpart in the U.S., and my message is always the same: there's absolutely no reason, based on science, why these borders should be closed.

Going forward, I will keep up the pressure on all fronts to fully reopen the borders. Our case is strong, because it is a case based on science. It's based on our world-respected food safety and quality systems, and it is based on the bedrock of domestic pride and confidence that consumers have shown in Canadian beef. I'm confident that the message is getting through, and that we will see some positive results.

Mr. Chairman and colleagues, I thank you for giving me this opportunity, and I look forward to answering your questions.

¿ (0920)

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

Our first questioner is Mr. Ritz, for seven minutes.

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC): Thank you, Mr. Chairman.

After that glowing account of all the government has done, I'm surprised that farmers are in trouble at all. It seems that all the answers are there.

The CAIS program is very problematic, Mr. Minister. You're talking about it being extended for five years. On the surface, that's a good thing, but the problem is that you get all of the hairs and warts for those five years as well, unless we can come to grips with some of the flaws that are built into the program. Of course, the negative margins are huge, and I know that you're working on them with the provinces, and so on.

My first question is, if you get those amendments, will they be retroactive to 2003?

Hon. Bob Speller: Mr. Chair, I appreciate the question.

As you stated earlier, why shouldn't farmers be happy with all of the glowing reports? I think we do have a direction as a government that puts the farmers primarily first. In fact, what we are doing is recognizing that there are some challenges out there that need to be met, and we believe those challenges can be met. As a government, we have policies that we believe do that.

In terms of CAIS, the answer is yes, it certainly will be.

Mr. Gerry Ritz: Great.

For CAIS, can you explain to me, if it's in the best interests of the farmers, why closing inventory values are used rather than opening inventory values, especially in the BSE situation and grains and oilseeds? Everything that we're seeing is sliding down in value. In order to trigger any type of a pay-out, of course, it's negated by going to these closing inventory values, which are off by 50% in some cases, as opposed to using the opening inventory values, which were, in fact, the reality.

Hon. Bob Speller: You can go through CAIS. Obviously, for certain parts of it, in fact, farmers have questions about it. You're not the only one to raise questions about CAIS.

What I'm trying to do is to say, look, CAIS is the program that we're moving forward on. In many ways, it's probably the best program we've ever had in the hands of farmers. In fact, this is a program, as I said, that has no limit. It is a program, for the first time ever, in fact, that we have based on need.

Farmers obviously have some questions as to whether or not certain parts of it will work for them. What I've indicated to them is that we will put a review process in place. If we find, through the review process, which will involve the provinces and the producers, that there are areas in which CAIS is not working for farmers, we'll make the necessary changes in order to get the program working. We want a program in place that in fact works for farmers.

¿ (0925)

Mr. Gerry Ritz: Mr. Chairman, again, on the surface, that looks fine. The review is a great idea, and of course all the provinces wanted it. The problem is that we have farmers in crisis today, and from last year, with minus $13 million income. The review isn't going to happen for another year, and then it'll take a year to operate and act on that. A lot of guys are going to be lost in that timeframe while you review a process where we're pointing out the flaws up front. Farmers are as well.

On reference margin appeals, how do we do that? I have farmers in my area with years of drought. If you take the Olympic average, the one good year they've had in five years, and you take that out, I have 2,000-acre farmers with a reference margin of $12,000. That doesn't even trigger a payment to cover their fuel. Where do we appeal that? How do we get that reference margin back in the $140,000 to $150,000 area that it should be in? How do we do that, Mr. Minister?

Hon. Bob Speller: There's no question that farmers are having a difficult time right now. That's why the Prime Minister and I had the $1 billion announcement. We did that. In fact, we wanted to make sure, as this program is coming in, that we recognized there might be some difficulties, but we wanted to make sure we got dollars into the hands of farmers who are in fact having a difficult time with this.

There's no question that in some cases it's because of drought and people having a number of different years of drought in some areas.

Mr. Gerry Ritz: Isn't that the target?

Hon. Bob Speller: In fact, the margins will be very low for some of these people. There's no question. I wish we could provide a program that is tailored to each and every individual farmer. Unfortunately, we can't, but we will address some of the problems that have come up. This program, I believe, is a program that, overall, is to the benefit of Canadian agriculture and Canadian farmers.

You are pointing out some problems. These are problems that we will look at and these are problems that, in fact, we will address.

Mr. Gerry Ritz: When? I guess that's the problem. It's problematic for farmers, and you're extending the deadlines. It's kind of like increasing the maximum sentence for something.

Hon. Bob Speller: We've been doing it all the time. We've been making changes.

Mr. Gerry Ritz: Nobody is applying, because they cannot make the program work. Why would I put cash on deposit in a program that I can never trigger?

Hon. Bob Speller: We have been making changes to it all the way through.

Mr. Gerry Ritz: I want to keep the cash to keep myself alive.

Hon. Bob Speller: As farmers have come up and said they need some changes, we have been adapting. We have been changing. We have been making sure, in fact—

Mr. Gerry Ritz: The ones that I've outlined here, Mr. Minister, are fatal flaws in this program that have not been addressed.

Hon. Bob Speller: —that it does work through.

The Chair: Please, Mr. Ritz, allow the minister to finish.

Mr. Gerry Ritz: I was still questioning and he was cutting in.

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.): Can we vote on that?

Mr. Gerry Ritz: Go ahead.

The Chair: Are you finished, Mr. Ritz? Are you finished with your questioning?

Mr. Gerry Ritz: Yes, there were no answers.

The Chair: Mr. Speller, do you have any response to that?

Hon. Bob Speller: No, I think that I answered.

Mr. Rick Borotsik: Do we have more time left?

The Chair: Be very short.

Mr. Rick Borotsik: Well, I'd like to ask one question on CAIS as well. I appreciate there are changes going on constantly.

I've been in contact with a new producer, a beginning farmer. You said that this particularly helps the beginning farmer. This beginning farmer cannot identify a reference margin. Do you know what he was told by your staff? He was told to go and ask his neighbours what their margins were, and maybe then they could come up with some margin. That doesn't work.

What am I going to tell this guy? How is he going to find his margin? How is he going to get into the program?

Hon. Bob Speller: At the end of the day, we create a margin for them. We work with them individually.

Mr. Rick Borotsik: He was told to go and ask his neighbours what their margins are.

Hon. Bob Speller: Well, look, Rick--

Mr. Rick Borotsik: Well, Mr. Minister, you recognize that margins are individual.

Hon. Bob Speller: I can't go through every single individual case here--

Mr. Rick Borotsik: Where can he go?

Hon. Bob Speller: --but if you can get me his name--

Mr. Rick Borotsik: Sure, you've got it.

Hon. Bob Speller: --and send me the stuff, we'll get him a margin.

This is what we're doing for individuals such as that.

Mr. Rick Borotsik: You've got it today. Thank you.

The Chair: Okay, we'll move to the next questioner, Mr. Plamondon. I believe you're sharing your time with a first-time member of the committee.

Mr. Gagnon, welcome this morning.

[Translation]

Mr. Louis Plamondon: Thank you, Mr. Chair.

As you know, Mr. Minister, and you said so yourself, these are difficult times for our farmers. When we look at the 1991 budget and compare it to this budget, we see that in 1991, 3.9 p. cent of the Canadian budget was directed to agriculture, compared with 1.6 p. cent today. The difficulties of our farmers are directly linked to the fact that the government is doing less in that area, especially since Mr. Martin took over the Finance Department. This has had a damaging effect on the level and the stability of their income.

I would like to have your reaction on two points. I met some producers last week and they told me the strategic framework had been in effect for six months but that certain criteria were much too strict. They wish those criteria were more flexible because their income keeps shrinking, when subsidies increase in the United States, as in Europe, where they increase rapidly. This the first part of my question.

The second part is this. How do you explain the fact that Quebec which accounts for 24 p. cent of the population and produces 20 p. cent of agricultural products in Canada receives only 14 p. cent of the budget of the strategic framework?

¿ (0930)

[English]

The Chair: Mr. Minister.

Hon. Bob Speller: Thank you very much. There are a number of questions here.

You've asked us to be more flexible, and I think generally we have in fact been flexible within this program. This is a program where, for the first time ever, there are no limits on what the need is. You could go back to whatever year and look at statistics and say, well, this much was budgeted and this much was used. But these are really programs that are based on need.

It isn't a question of who gets what in this. In fact, it would be my suggestion that most farmers don't want dollars like this; they want to make dollars off the market. But in fact, if there is the need there, they want to make sure the government is there with them.

So it's not a question that all of a sudden we had drought in the west and so they got a whole lot of dollars, and we didn't have drought in Quebec or Ontario so they didn't get any. It's really, as I said, a question of whether or not the government will be there for producers in their time of need, and I believe these programs, particularly the business risk management side, will in fact do that.

The Chair: Mr. Plamondon.

[Translation]

Mr. Louis Plamondon: I was saying that 24 p. per cent of the Canadian population is in Quebec and that this province produces 20 p. cent of Canadian farm products. How come Quebec receives only 14 p. cent of that money? I was not talking about special programs but about the base budget of agriculture. We receive 14 p. cent when we produce 20 p. cent.

[English]

Hon. Bob Speller: I don't know how you're getting those numbers. You can throw out all kinds of numbers here, there, and everywhere. The fact of the matter is, if you're talking about business risk management, again this is something that is based on need. So if there is a need in a particular area or in a province, we don't base it on province; we don't base it on what amount of production is in that province. In fact, what we do is base it on the need, and that's the key point.

The Chair: Mr. Gagnon.

[Translation]

Mr. Sébastien Gagnon (Lac-Saint-Jean—Saguenay, BQ): Mr. Minister, thank you for being here.

In my area, in the county I represent, we have had a number of problems. We have had ESB and a sharp reduction of farmers income.

Now, the coalition is aggressively campaigning to educate the population about supply management and the rest. This coalition has now close to 11 000 members. Even the Quebec minister for agriculture, Mrs. Françoise Gauthier, has joined the coalition.

If we think of what happened last time in Cancun, we know we have reasons to be worried. Can you reassure these producers, Mr. Minister, and guarantee them that you will fight to defend supply management? It's no secret that agriculture accounts for 32,000 direct and 36,000 indirect jobs in Quebec.

[English]

Hon. Bob Speller: I think if you look back at my previous statements, you'll see what I've said on the issue of supply management. If you look at what my colleagues on this side of the table have said on supply management, you'll know there's no question that we fully support the pillars of supply management. That doesn't just mean the principle of it; the actions I've taken and the actions this government has taken have reinforced those pillars. There's no question that in my party and in my government there is a strong commitment to supply management, which may not be there on all sides of the House. Certainly, though, you can give your farmers the assurance that the Government of Canada and the Prime Minister, who has also mentioned this, are fully behind not just the principle but certainly the pillars of supply management.

¿ (0935)

[Translation]

Mr. Sébastien Gagnon: About CAIS, we met last week with grain producers. They think that the existing program, in its present form, doesn't really fill their needs. They were wondering if the minister was going to consult them when he starts to review the bases of that program.

[English]

Hon. Bob Speller: There's no question--and I've said this before--that I welcome input by grain producers, in fact by all producers, because I want to know whether or not the programs we have put in place are working for them. We are setting up a process to have experts, along with the producers and their organizations, involved in a review process that will look at CAIS. If there need to be changes, we will make those changes to make sure it is working for individual producers.

The Chair: We're moving to Mr. Kilgour for seven minutes.

Hon. David Kilgour (Edmonton Southeast, Lib.): Mr. Minister, you indicated that 80% of the Picture Butte or Lethbridge funds would be going to cow-calf producers. Can you explain how you arrived at the 80% and perhaps explain why 100% of it isn't going to cow-calf producers, given that they got so little of the previous funding?

Hon. Bob Speller: As you know, it is $80 per cow, and what my officials are telling me is that if you look at it...maybe I can get somebody to give you further details. Maybe what I'll do is get some charts and have the department put together exactly where it's going out, because it's really hard to show now specifically why. In fact, you're right that about 80% of these dollars are going out to individual cow-calf operators.

Hon. David Kilgour: That would be fine.

On the 20%, how much of the 20% is going to animals owned by the packing companies, and how much is going to feedlot animals owned by investors, Canadian or U.S.?

Hon. Bob Speller: That sort of information, David, I can send to the committee if they're interested. I don't have it at my fingertips right now such that I can answer in seven minutes. I think it's probably better if I just send you the details.

Hon. David Kilgour: Will you do that fairly quickly?

Hon. Bob Speller: Sure.

Hon. David Kilgour: About 500,000 to a million live animals go across the border to be slaughtered now every year when the border is open. Charles Gracey has written an article you've probably seen showing why our packing industry disappeared in the eighties--the traditional packing industry, the Burns, the Canada Packers, and so on. Can you give us any insights, perhaps, on how many producer-owned packing companies have applied to open? Perhaps the Canadian Food Inspection Agency has approved some. Can you give us any hope that producer-owned packing plants will be encouraged by your department?

Hon. Bob Speller: We've been working very closely in a number of provinces. Rather than ship these live cattle south, people are trying to put value on them here in Canada. I agree that helps create jobs, and I've asked our FCC and our CFIA officials to work with them to encourage them to do so. I can't give you the number right now for those that are applying; we can get the numbers for you, but there are a number across the country.

Hon. David Kilgour: That'll come fairly quickly too?

Hon. Bob Speller: Sure.

Hon. David Kilgour: Here's a different theme. The Dutch do extraordinarily well at exporting agricultural products around the world. We do as well, but I wonder if we can't learn some lessons from the Dutch as to why they do so conspicuously well in that area. Do you have any thoughts you can share with us on that?

Hon. Bob Speller: I can't tell you here today about the Dutch model, but I can tell you we've put a lot more investment into mass marketing Canadian products around the world. We now have on the ground a number of more officers in different places around the world who are working with the local people to take Canadian products. We feel it's very important that we continue the marketing of Canadian products around the world.

We did have a model a number of years ago where we put a lot of emphasis on marketing, exports, and that. At the same time, as colleagues know, as exports went up, we were still seeing farm income go down. I think it's important to recognize that it's just not exports that are the priority. What our priority should be is to make sure that Canadian farmers and farm families have a decent income and, if they are exporting, that they are making dollars also so that they can continue in agriculture into the future.

¿ (0940)

Hon. David Kilgour: I have one more question. Mr. Chairman. I have this study by Mr. Gracey, who's a former president of the Canadian Cattlemen's Association, and I'll just quote one paragraph:

This tactic was brilliant on the part of Australia and New Zealand. In fact there was a period in the late 70's when Canada put some temporary limitation on Oceanic beef imports. I do not recall the precise details but I recall perfectly Ottawa allowing Oceanic beef to enter Canada at a price based on NY spot prices, MINUS the cost of transporting it further to Canada and minus the tariff.

It was because of this situation that our cow killing capacity was systematically strangled out of supply and it was this bad policy that has made us so extremely vulnerable today.

I wonder if I could table this report.

The Chair: Yes, you may, but it has to be done in both languages.

Hon. David Kilgour: I'll give a copy to the minister too.

Do you have any comment on that?

Hon. Bob Speller: I haven't read the report, David, but certainly it's a report that would be a very interesting read.

Hon. David Kilgour: Thank you, and thank you, Mr. Chair.

The Chair: We'll move to Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you.

When the member for Prince Edward--Hastings was the Minister of Agriculture, he used to come before this committee and say that food safety in Canada was the highest in the world. I notice in the language now, after avian influenza and BSE, we're saying we want to “make” Canada the world leader in food safety.

I want to zero in a little bit on the avian influenza and the fact that an initial outbreak that affected 16,000 birds has mushroomed to 19 million, referencing particularly Dr. Brian Evans, the chief vet for CFIA, who indicated that the biosecurity protocols were breached and that it was caused by humans. I'm trying to understand how this got away from the Canadian Food Inspection Agency to the degree it did.

Hon. Bob Speller: Mr. Chair, I'm probably not the most appropriate person. Mr. Fadden will answer.

The Chair: Mr. Fadden.

Mr. Richard Fadden (President, Canadian Food Inspection Agency): Thank you, Mr. Chairman.

I don't think it has gotten away from the CFIA or the province.

One of your colleagues was mentioning a Dutch comparison a moment ago. There was a similar outbreak in the Netherlands a few years ago, and before the Dutch authorities--and the Dutch are a very sophisticated, science-based society--were able to get control of the outbreak, 247 infected points were discovered.

We have 34 infected points right now. I wish I could say we only had 16. This is one of the most infectious viruses around. In fact, if poultry litter dries out a little bit and there's a lot of dust and wind, this can spread the virus over a kilometre. When you have circumstances like that, it's virtually impossible to control it in the short term. That's why the minister ordered the destruction of all of the 19 million--not heads of cattle; I'm used to thinking of BSE; sorry about that--birds of poultry in the lower Fraser Valley.

As to the issue of biosecurity, this is essentially a responsibility of the industry, and industry leaders have been as firm as we have been in terms of trying to maintain biosecurity. We have had examples of people who either willingly or unwillingly have breached the biosecurity protocols. The agency has moved an enforcement team of six to eight people to Abbotsford, and we're inquiring into those circumstances where they did breach biosecurity. If there has been a clear violation of the rules, we'll think about finding them or prosecuting them.

I don't think it happens very often, and the proof of that is that most of the outbreak is still concentrated in one area. There's one case that's about 15 kilometres farther away. We do think that was caused by a breach of biosecurity, and we're investigating right now.

¿ (0945)

Mr. Dick Proctor: It's good to hear that we have officers there. Did they arrive too late? Should they have been put there earlier?

You made a comparison with the Dutch. I would refer you to what happened in Texas and Delaware, where there were AI outbreaks in February, which were contained. I don't know if they're similar strains. It seems that now everybody is back in business there.

Mr. Richard Fadden: Mr. Chairman, in regard to the cases in Delaware and that part of the United States, they were all low-pathogenicity avian influenza, and they may or may not have been contained. It's simply not an issue. The important difference between those cases and the cases we have now is that we have a high path. When we discovered there was a case of avian influenza in the lower Fraser Valley, we placed a couple of farms under quarantine right away, before we knew it was high path.

I want to make it clear to the committee that low-path avian influenza is like a member of a committee having a cold. There's a lot of it going around.

It was mostly because of our preoccupation with what happened in the United States that we clamped down as fast as we did. Unfortunately, it takes about 10 to 12 days after you find a sick chicken to find out whether or not it's high or low path. In retrospect, I think we acted quite quickly in imposing the quarantines. But it took us 12 days to find out it was high path. It's very difficult to order the destruction of thousands and thousands of birds without knowing whether or not they merit destruction. We're going to do a post-mortem on this and look at whether or not things might have been done differently. Part of the difficulty in this area is the time it takes to diagnose high path. I think that having determined that we had one case of high path, we moved as effectively as we could to deal with the issue.

Mr. Dick Proctor: Is that post-mortem going to be done by external forces? Have you thought through that?

Mr. Richard Fadden: I haven't thought through it a great deal, Mr. Chairman. But we've already talked to the Government of British Columbia about it, and the industry is interested in participating as well. I haven't discussed it with the minister, but I suspect he would agree with a joint effort.

Mr. Dick Proctor: I have one final question. On the BSE, Mr. Minister, you did say that you were confident the U.S. was going to reopen the border to live cattle exports “as expeditiously as possible”. Are you still thinking that is this spring?

Hon. Bob Speller: As I said before, if they follow the science as they said they were going to, then there's no reason that it should not open as soon as possible.

Mr. Dick Proctor: How much of an impact did the letter from the 10 Democratic senators have, if any, on possibly having the United States administration reconsider?

Hon. Bob Speller: I've talked to Secretary Veneman about the political side. Everyone knows that a U.S. election is going on. I've asked her what sort of impact it will have on the process, and she has given me every indication that she will be making her decision based on science. If you look at the science, you'll see that there's no difference in the risk factors between Canada and the United States, and that border should be opening.

Mr. Dick Proctor: If you were basing it strictly on science, it should have been opened months ago, as opposed to months from now.

Hon. Bob Speller: There is a legal process that they have to follow. They had no choice but to follow that process. Nobody has ever had their markets opened up like we have in Canada. We've moved forward much more quickly than what the standards are around the world. There is a process in place that they had to follow. They've now followed that process. They're at the point of reviewing the submissions. From what we've been told, they should be able to make a decision shortly.

Mr. Dick Proctor: Thank you.

The Chair: Thank you, Mr. Proctor.

Ms. Ur, for five minutes.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you for appearing this morning, Mr. Minister.

I believe Mr. Borotsik mentioned the grain growers. They have been continually coming to my office. They think they are not recognized in the APF to the extent they should be because of the program. They feel that the trade injury aspect is not addressed through the system as it's set up. You indicated that you were willing to work with them. I hope you will continue to work with them, because that sector feels it doesn't benefit from the program as much as other sectors of agriculture do.

There has been a lot of communication in the riding in the last two weeks on the CAIS program. Many farmers are indicating to me through their accountants that the CAIS program is not as good as the NISA program was. We always get this. NISA had to be changed. But when the new program comes out, we find that the other program worked better. Sometimes change is hard to take.

You indicated here today that they only need one-third of their payment this year. They're saying that they have to put dollars they don't have into the program, and they can't afford it. Many of them are in negative margins. So how can this program actually help them?

¿ (0950)

Hon. Bob Speller: It can help them in a number of different ways. As I said, CAIS does have some benefits for new farmers in terms of getting in. I'm hoping that over the next short while the negative margin question will be answered. We need two more provinces to sign on. They're in the process of doing that. Then we can move forward with that aspect of it.

The advantage of this, of course--and I'll keep repeating it because it is an advantage--is its open-endedness, in that it's based on need. So if the need is out there, then most certainly the dollars will be there for farmers.

In terms of the individual aspects of how it might relate to one industry or another, that's what the review process is about. I certainly want the grain farmers involved in that process, because they're a very important aspect of Canadian agriculture. But I want to move beyond that too. Business risk management is only one aspect of grain farming. I don't want to continue to focus on just that one aspect of it, because there are a number of challenges out there in that industry.

There are challenges from countries like Brazil, Argentina, and the low-cost producers. We need to be able to move that industry beyond just focusing on this individual crisis and look to the future and where it's going to be down the road. I think the APF allows us to do that. But one of the things I want to do is make sure we work through a value chain round table, to be able to get all aspects of the industry focusing on where the real challenges are.

Mrs. Rose-Marie Ur: Thank you, Mr. Minister. I have quite a few questions here.

Can you tell me when our farmers can expect the program funding? We've had several calls in our office. They're also looking to see when the cheques will be forthcoming from the TISP. We've had several calls.

Hon. Bob Speller: It depends on which province you're in.

Mrs. Rose-Marie Ur: I live in Ontario.

Hon. Bob Speller: My officials tell me the payments are ready to go out. A claim was received from the province for federal funding and it's ready to go. In other words, it's in the final stages

Mrs. Rose-Marie Ur: Can you give a date in weeks?

Hon. Bob Speller: I will ask.

Mrs. Rose-Marie Ur: That would be great.

Mr. Rick Borotsik: Before the election.

Hon. Bob Speller: In one week.

Mrs. Rose-Marie Ur: Thank you very much. That's music to my ears, and to my farmers more so.

I asked a question on the program funding for feedlots. I want to ensure that our Canadian producers are getting those dollars. Apparently there are cattle that have been bought by American producers in the west, and they are being fed in the hope that the borders will be opened and they will be shipped down to the farmers. Are they going to benefit from these programs that our Canadian farmers need so much?

Hon. Bob Speller: As I've said before, they have to pay Canadian taxes to be able to benefit from this program, and I assume most of them don't pay Canadian taxes.

Mrs. Rose-Marie Ur: What is the status of MGI?

Hon. Bob Speller: The last I heard on MGI--and maybe Dick can bring you up to date--is that they've gone through the final stages, they've come to an agreement on what needs to be done, and they're working on it.

Do you have anything?

¿ (0955)

Mr. Richard Fadden: I do.

The blueprints were approved yesterday. The last stage is simply a site visit by our officials to make sure everything is hunky-dory. So we're talking about a very short period now. The real holdup was agreement on the blueprints and the changes that were necessary. That was approved yesterday.

Mrs. Rose-Marie Ur: The changes that were requested by CFIA were rather supplementary to the cause of getting this open--like a paved parking lot, or whatever. Let's make sure we put our best foot forward here and get this plant open, and not be cosmetic.

Mr. Richard Fadden: I understand that in this particular area we're bound by the regulations. We have very little discretion. I've asked the officials to bend over backwards to the extent they can, but the regulations are very prescriptive.

Mrs. Rose-Marie Ur: Thank you.

The Chair: Thank you very much.

Mr. Borotsik.

Mr. Rick Borotsik: Thank you.

It's important we recognize that with the CAIS program...and I appreciate you're attempting to put something forward that's going to be accessible. But when there are low reference margins, when there's been a drought three years in a row, and when there are no negative margins, you can put as much money as you like into the program--you can make it $10 billion if you want--but if you can't access the program, which a lot of the producers can't do at the present time, it doesn't matter how much money is in the program. What matters is how much flows to the individual. Quite frankly, there are some difficulties within the program.

I appreciate your trying to rectify that, but I want people to know that $1 billion isn't going to flow to the farmers; it's only going to be $1 billion if they access the program, and there's going to be some difficulty with that.

By the way, I was encouraged when you said we were going to have an answer soon about the negative margin component of it. Are you now saying here publicly that the negative margins will be incorporated into the program?

Hon. Bob Speller: We have two more provinces left to sign on. They are in the process of doing that, which will make the seven plus 50%.

Mr. Rick Borotsik: So I take it from that answer that you're confident those provinces will sign on.

Hon. Bob Speller: In fact, we're hoping one of them will today. But I would suggest that maybe you go back to your own province and talk to your--

Mr. Rick Borotsik: I have, many times, Mr. Minister, trust me. By the way, that's a very good message to send, and I will take that back; I can assure you of that.

I'd like to talk about the avian flu just a little bit. I too, like Mr. Proctor, had a lot of confidence in the CFIA, and I'm a fan of the CFIA. I think they handled the BSE, from the science side of it, extremely well. I have to admit that I'm losing a bit of my confidence with respect to how the avian flu perhaps got out of control.

The biosecurity, you say, is the responsibility of the industry, but Mr. Minister, please, this is agriculture. Generally in Canada that's the responsibility of the department, and I think we probably should have been more vigilant and not had 16 million birds being destroyed in one area.

One mile? We should have known that, and I think a one-mile quarantine is probably not out of the question. I suspect that if we take this a little further and we talk about foot and mouth or other diseases, are we in the same situation now with perhaps other diseases as with what happened with the avian flu? That's one question.

The second question is this. You had also said--and this makes me a little nervous--that the CAIS program will in fact comply with the requirements for the supply-managed system. Are you saying there will not be any compensation package beyond the CAIS program for the producers in the Fraser Valley?

Hon. Bob Speller: Let me go to your first one in terms of the reaction. I believe the CFIA reacted. In fact, when the first case came in, we were treating the low pathogenic as highly pathogenic. We were in fact doing that.

There are circumstances within the Fraser Valley that aren't in other parts of the world. It is a highly concentrated area, which also makes it difficult. There are larger questions that, when we're done this, really need to be addressed, and that's--

Mr. Rick Borotsik: And we'd like to be a part of that, Mr. Minister. As a matter of fact, this committee just made a recommendation to travel to Abbotsford to listen to the producers themselves as to how this was handled. So we'd like to hear both sides of the story.

When BSE was being dealt with, I think this committee would agree with me that we had an up-to-date, almost daily briefing from CFIA. We haven't heard much of anything with respect to the avian flu. I think that's what we should be doing, and I'd like to hear from the producers how they felt the CFIA handled the situation.

Hon. Bob Speller: I would be pleased that this committee do whatever to dialogue with producers.

I'm not sure the committee actually asked the CFIA for any briefing.

Mr. Rick Borotsik: Perhaps it's the committee's fault, and that will be rectified.

Hon. Bob Speller: So I think it's probably better, but certainly we are prepared to provide all the information this committee requires.

Mr. Rick Borotsik: Could we have the payments now, just very quickly, the payments other than CAIS? Is there a compensation package?

Hon. Bob Speller: In terms of a further compensation beyond that, we are working at ways to make sure that as we depopulate the birds, that is processed so that the processing industry continues on. We're not seeing a lot of layoffs as of yet, and so it's hard to project that this is what's going to be needed in the future in terms of a compensation package.

What I can assure you is that we are in constant contact with both the producers and the processors and the province, and we've given them our assurance that we will work with them to make sure that the impacts this is having on them are mitigated.

À (1000)

The Chair: The time has expired, but I should point out to you, Mr. Borotsik--maybe you missed the meeting--that we did have the CFIA and people from the Canadian chicken producers here. So we have already addressed this at the committee level.

I want to thank you for coming in this morning, Mr. Minister and our deputy minister.

There is something that someone said to me. In all the times we've had you here, Mr. Deputy, we haven't heard your voice. We know that you do speak to the minister from time to time. Do you have any parting words before you leave?

Hon. Bob Speller: That's the sign of a good deputy.

The Chair: Do you have any audible words for this committee?

Mr. Samy Watson (Deputy Minister, Agriculture and Agri-Food Canada): Yes, I do.

I'd just like to thank you all very much for all the experience I got in the last four years. I've had very good ministers, and it has been a pleasure to serve them. It has been a pleasure to serve this sector, it has been a pleasure to serve this committee, and I look forward to new challenges. Thank you very much.

The Chair: Thank you, Mr. Deputy. I want to thank you as well from the committee and wish you well in your new venture into environment. In fact, perhaps we might meet you again as we discuss streamlined fencing.

Thank you very much.

We're going to suspend for a couple of minutes.

À (1002)

À (1011)

The Chair: I'll reconvene the meeting.

Mr. Richardson, if you would take your place at the table, a number of members have gone over to have the House find us numbers to convene business this morning. They will be back very shortly.

We're happy to have you with us this morning as we look at estimates again. I want to just name the people here this morning. From Agriculture and Agri-Food Canada, we have Tom Richardson, acting assistant deputy minister, strategic policy branch. Welcome, Tom. You've been here many times. We have Mary Komarynsky, assistant deputy minister, farm financial programs branch--if I say it often enough, I get it right--and Danny Foster, senior adviser, program planning and performance directorate. Welcome, Danny. And from the farm financial programs branch, Michelle Taylor, managing director, executive division, farm income programs directorate--that's a long title. Welcome this morning.

Are you first, Mary?

Mrs. Mary Komarynsky (Assistant Deputy Minister, Farm Financial Programs Branch, Agriculture and Agri-Food Canada): Yes, I am, thank you very much, Mr. Chair.

I think we've handed out a presentation as planned. I'd like to take a few minutes to provide an overview of the CAIS program, including an update on how the program is being rolled out. I think all members have a copy of my presentation.

As you're aware, CAIS was officially launched this past December with the signing of the implementation agreement for Ontario by the federal minister and his provincial counterpart. Today, all provinces are participants in the program. It's based on a number of key principles as outlined in the agriculture policy framework and the implementation agreements between Canada and each province.

These principles were fundamental to the design of the program, and as a result, there is a program for producers, as our minister indicated, that is permanent, predictable, and demand driven. CAIS represents a long-term commitment by governments that for the first time responds to the producers' need for a comprehensive program that effectively protects farmers against both small and disastrous drops in farm income. It replaces the net income stabilization account program, known as NISA, under which it took years for producers to rebuild their accounts after a downturn, and it goes a long way to eliminating the uncertainty producers faced in the past because of government's continuing reliance on ad hoc program responses to disaster situations.

As well, as noted by our minister, unlike previous programs where funding was limited from year to year, CAIS is not limited for a given year, which makes it more flexible in difficult times.

In terms of the objective, CAIS represents an integrated program response to producers' needs, both for stabilization and disaster assistance. Two third-party reviews were conducted, one funded by the federal government and one funded by the Province of Ontario. These reviews concluded that CAIS does a better job of stabilizing producers' farm incomes across commodities than the programs it replaced. It also better directs funds to areas of need and improves equality of treatment of producers across the country and across commodities.

The program provides immediate protection to young farmers just starting out and ongoing protection to farmers who have suffered back-to-back disasters—two important improvements over past programming. For young farmers just starting out, their requirement is a one-third deposit to be able to access CAIS benefits.

Under CAIS, the greater the loss a producer experiences, the larger the share of that loss is absorbed by governments. We'll look at a simple example to demonstrate this in a few minutes, but first I'd like to explain some of the program mechanics.

Slide 6, how does CAIS work? Generally speaking, the program concept is that payments are triggered when the producer's current year income falls below his or her historical average income. Under CAIS, a measure of income is known as a production margin. For any given year a production margin or income is defined as the allowable farm revenues, generally such things as commodity sales and crop insurance indemnities, minus the allowable expenses, generally direct input costs such as feed, seed, fuel, etc.

The program reference margin, which is the historical average income against which the current production margin will be compared, is calculated by taking the past five years' production margin, dropping the highest and lowest years, and then averaging the remaining three years. This is referred to as an Olympic five-year average.

Next is page 7. As mentioned, government payments are triggered when the current year production margin falls below the reference margin. I'd like to now, Mr. Chair, take the committee through a simple example.

In the example on page 8, we have the producer's production margins for each of the last five tax years, from 1998 to 2002, with 1998 being the low year and 2000 being the high year.

I should mention that the program year for CAIS is based on the tax year of the producer, whether it be an individual or a farming corporation.

À (1015)

On the next page, as noted earlier, to calculate the reference margin we dropped the high and low years and averaged the remaining three, giving us a reference margin of $70,000. This is the producer's historical average income as defined by the program and therefore the basis of support for the producer under the program. I should point out that $70,000 is in fact the current average reference margin of producers who have signed up to date in Manitoba and Saskatchewan. The reference margin changes from year to year.

Next is page 9. To look at an example of how the program would work, if we were to assume that our producer in this example selected maximum protection under the program—and it's the producer's choice—and saw his or her production margin, so his income, for 2003 decline by $10,000 to $60,000, under CAIS governments would compensate the producer for half of that $10,000 decline, therefore $5,000. If the producer's decline was $20,000, government compensation would be close to $12,000, or about 60% of the total decline. If the decline was $50,000, government compensation would be $35,000, or 70% of the total decline. This illustrates that as the producer losses get relatively larger to their historical income level, governments are picking up a greater share of the loss.

On page 11, the chart tries to illustrate how the program works. The chart illustrates the cost-sharing of producer losses by governments and producers under the CAIS program. As depicted by the arrow on the left-hand side, the deeper the loss, the larger the government share of that loss. Losses of 15% or less, so down 85% from the 100%, are shared 50-50 or dollar-to-dollar, producer-governments. Losses of 16% to 30%, therefore from 85% down to 70% of the reference margin, are shared 30% producer, 70% governments. In other words, for every dollar the producer shoulders, he or she will receive $2.33 from governments.

These top two layers are known as the stabilization tiers.

The bottom portion of the chart representing margins less than 70% of the producer's reference margin is known as the disaster tier. Any losses in this tier are cost shared 20% by the producer and 80% by governments, or for every dollar of loss by the producer, governments pay $4.

In the example we just went through, the $10,000 decline to $60,000 left the producer at about 86% of his or her $70,000 reference margin, just above the 85% line on this chart. As you can see, governments and producers share losses in this range dollar for dollar. Hence, with a $10,000 decline, the producer is paid $5,000 by government.

In terms of selecting a protection and making a deposit, under the program producers must elect a margin protection level and make the corresponding deposit. The minimum protection level under the program is 70% of the reference margin. In other words, if the producer had a disaster in that their current year margin went to zero, no income, the program would bring them back up to 70% of that reference margin, with $4 of government contributions for every dollar contributed by the producer.

It is important to note that the producer deposit is just that. It's not a premium. In other words, if the producer does not experience a loss in a year and triggers his or her deposit out of the account, the deposit is not lost, it can remain on account to secure protection for the next year.

On page 13, there are special provisions to help producers participate in the program. Producers just joining the program, or those participants who experienced a margin decline of more than 30% of the previous year are only required to have a third of the normal deposit requirement in their account for the current and the following year. Only when producers qualify for a government payment are they required to put their other two-thirds deposit in their account, so that they can trigger the full government payment. Amendment three, as our minister noted, will change that.

À (1020)

It should be pointed out that for 2003 we have proposed that this requirement to put the additional two-thirds deposit in the account be waived. This is one of the proposed changes referred to by our minister.

To give you an idea of what that “one-third deposit only” means to an average producer, if we continue to use the example of the producer with a $70,000 reference margin, a deposit of just over $5,000 would secure the maximum protection available under the program.

Concerning program promotion and awareness, a lot of effort has been made by governments to promote awareness of the program. We have found through focus groups that producers prefer to receive information through face-to-face contact, direct mail, and advertising.

Producer information sessions have been held over the last year across the country. In addition, accountants, financial advisers, and provincial extension staff have been briefed, as producers do turn to them for information. In addition, we have media ads and have had numerous media interviews. We have a toll-free service, where producers can call, ask questions about the program, or specifically ask about their own personal needs, and we have information on our websites.

All governments have taken a similar approach to promoting the program. Response to the information campaign has been positive. For example, over the last year some 56,000 producers have attended 780 CAIS information sessions. Our toll-free lines now are averaging 4,000 calls a day.

What do producers need to do this year? In order to participate in the program, producers currently need to first of all select a level of protection for 2003 and 2004. They will need to complete their 2003 tax and supplementary inventory forms and to make a deposit into their CAIS account at a financial institution.

Regarding the selection, the minister announced today that the deadline for those provinces where the federal government delivers CAIS has now been extended to June; tax forms are completed by June; and the minister also announced that the supplementary inventory form, which had a June deadline, has now been extended to September. To open an account at a financial institution, producers have until the end of December to make their deposit.

As noted, the federal government delivers in six provinces: B.C, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, and Newfoundland. The remaining provinces are administering CAIS for producers in their respective provinces.

Producers are currently in the process of electing their protection margins under the two programs. Page 17 notes that to date producers have been advised by administrators of their estimated reference margin for 2003, using data from past programs such as NISA. To date, over 40,000 producers have signed up for protection under the program for both the 2003 and 2004 program or their tax years. The total value of reference margins of these producers is over $3.2 billion, and over 90% of producers are electing maximum protection under the program.

Page 18 shows, as indicated earlier, that the program year is based on the producer's tax year. The farm income and expense information producers report for tax purposes is used to determine their eligibility for payment. As a result, full entitlements under the program are calculated after the producer has filed tax forms the following spring.

CAIS does have an interim payment feature, which allows producers to apply early for partial benefits in the fall of the program year, some six to nine months before they file their taxes. In 2003, the interim application deadline was March 1, 2004, and as of this week over 2,000 producers had received $41 million using this feature. We would expect that these numbers will increase for the 2004 program year, now that the program is fully launched and producers gain a better understanding of the program rules.

À (1025)

We have proposed important enhancements, as shown on page 19, for the CAIS program, including a simplified deposit feature for 2003 and a review of deposit requirements for 2004, raising the cap on government payments to $3 million from the current $975,000, and providing negative margin coverage to producers who have seen their expenses exceed their farm revenues in a year because of exceptional circumstances. This enhancement would see governments compensate producers for 60% of a negative margin, with no additional deposit required by the producer.

However, there is a linkage to participation in production insurance that factors into the producer's eligibility for negative margin coverage under this proposed amendment. As our minister noted, five provinces have now signed amendment number three, and we are waiting for two additional provinces to sign.

Continuous improvement is important in any program. Because CAIS is a permanent program, much effort can be and is being placed in establishing the appropriate processes for continuous improvement. These processes will include, among others, as noted by our minister, an annual review, the ongoing monitoring of operations and making of recommendations for improvement by a national committee that will be composed of producers and government officials, the ongoing surveying of producer program awareness and satisfaction in order to identify areas where improvement is needed, and ongoing consultation by the Minister of Agriculture and Agri-Food with his National Safety Net Advisory Committee.

In all cases, these processes involve consultations with stakeholders with the goal of ensuring that the program continues to comply with the underlying principles of the agriculture policy framework and as well improves its response to the needs of producers.

Thank you very much, Mr. Chairman.

The Chair: Thank you very much, Mary.

Now we will get to the questioning. I'm going to continue with the process we had here of five minutes, because we want to get everyone on in the time we have.

Mr. Easter, you're first.

À (1030)

Hon. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

Before my question to Mary, I just wanted to point out to Mr. Plamondon, on his question earlier to Mr. Speller about the population in Quebec, I would hope he's not advocating this principle that we have funding in provinces based on population, because in Quebec you have a 47% or 48% share of the dairy quota, and I'm sure you wouldn't be advocating it be reduced to 24%. We value those dairy producers in Quebec and value the Canadian system that keeps them profitable there.

In any event, here is my question to the witnesses. There do seem to be mixed views on the program out there. I guess those mixed views will continue until the program has been going for two or three years and people begin to understand it better. Indeed, it does on the surface sound good, but I have producers concerned and accountants concerned about where it will go over the long term.

One of the difficulties with the program from my point of view is that there really is no relationship with return on labour and investment, return on capital, or with profit. You are dealing with historical returns, and there's no relationship. If your historical returns were in a profitable zone, you're okay, as I understand it—you can correct me if I'm wrong—and that's one of the difficulties: we need to ensure there's profit at the end of the line for farmers for their labour and investment and the work they do.

One of the difficulties people talk about—and explain to me if there's a way around this—is in producers under the old system and this one, if they're in two commodities such as potatoes and hogs, having to set up separate corporations to run both. In effect, in those operations that are in mixed commodities, if one commodity is up and the other is down, then under this program, compared with their neighbour, who might be in a single commodity, they really end up internally subsidizing compared with the neighbour, who may get a payout under the program when prices are down.

What's your view on that? Is it in fact true that this is happening?

The last point I want to make is that I am hearing a lot of concern out there over raising the cap to $3 million. The minister has explained that raising the cap won't affect anyone in terms of the payout over time. I just want you to assure me that this is correct.

The Chair: Who wants to take that one?

Mr. Richardson.

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Agriculture and Agri-Food Canada): We're just debating here, Mr. Chair, how to answer this. I'll start, and Danny will add.

I think on the whole farm, there are a couple of points there. First of all, it is true that you do find situations where, if a farm diversified, the neighbour didn't, and the neighbour got a payment, the farmer feels that somehow the neighbour is better off. I think when the farm leaders and the National Safety Net Advisory Committee debated this--and they debated it many times--they said in the end, you're probably always better off not to be getting a payment, because the maximum payment you get is 70%. If you're getting it from the market, you're doing better. Of course, with diversification you're maintaining your margin, because if your hog revenues are down and your potatoes are up, you maintain a margin.

I think the farm leaders felt that even though they get the complaints the same way the officials do and the same way MPs do, in the end, you're better off to try to find a way to maximize your revenues. That's important in terms of creating the right incentives.

It's true that there are people.... We get this constantly, and Michelle, in terms of being an administrator, has to deal with the fact that people threaten they're going to split their farm, they're going to use weird behaviour to try to maximize payments. We do try to monitor that and make sure people aren't doing things that create more hazards. In a way, it's a bit like a crop insurance problem.

The trade thing is an issue here. When you look at the CAIS program, what we're really trying to do...and an important consideration is dealing with the Americans. We're under threat right now of a hog countervail. Danny and Tom go back a long way in agriculture, and that's one of the things we worked on in the eighties. The hog industry paid a huge price for the countervail actions against, at the time, the NTSP program, which was a special program just for the hog industry. The hog industry loved that program, and Danny, I think they'd love to have it back. But it got countervailed. And with all those exports to the U.S., we lost a lot of money.

The industry does respect the need to try to deal with the Americans, because that's an important market for hogs, for grain, for cattle. We are stuck with that, and we do have this problem. I think it's an important point and it's one we have to keep debating with the industry.

The issue of the caps keeps coming up. Mrs. Ur raised it at the last meeting, and I didn't have a good answer. I have a better answer now.

One of the things that were brought to our attention by the advisory committee is the fact that right across the country, because of the capital requirements of agriculture, people know that they have to cooperate to get the size. I'm reminded of a cooperative in LeRoy, Saskatchewan, where 15 or 20 grain farmers and a family that's been in the hog business for a long time got together to create a co-op. The grain farmers commit to putting barley into the feed system and they share in the profits of that hog cooperative.

With the lower cap we had, that operation wouldn't happen, because all those farmers collectively, or some of the investors in the town, could not benefit under the previous system. I think it was five members. So one of the things the farm leaders and officials worked toward was to try to create an environment where the program could help stabilize that kind of operation, where you have to get the economies of scale. That's a good example.

It's true that people are concerned that if you have these big operations, they're going to suck money out of the smaller farms. I think when we did that analysis...and I believe it might have been tabled with the committee in the last meeting. In the end, there aren't really that many big farms, so our feeling is that over the life of the agreement, with the flexibility the minister indicated, it's not going to take away from the other farms. At the same time, it does create an incentive for people to get together and build economies of scale.

À (1035)

The Chair: Thank you, Mr. Richardson.

I know Danny has something to say, but we went way over time. Maybe you can jump in next time, Danny. I want to be fair in getting these members in.

Mr. Plamondon.

[Translation]

Mr. Louis Plamondon: Since Mr. Foster talked to me, I will take 30 seconds to answer him. If you take the total budget for agriculture and divide it by 24 p. cent, you will see that Quebec is losing 800 millions of dollars per year. Quebec receives less that it should. If his milk quota is the biggest, it is because the rest of Canada did not want any, when the system was introduced. It's because Quebec decided to take up the challenge that we have today a bigger share of this. Every time Quebec gets a dollar, it is too much and everytime that Quebec pays a dollar in tax, it is fair: that's your philosophy.

[English]

The Chair: Mr. Plamondon, I apologize. I allowed Mr. Easter to do so, and that's why I allowed you to make a comment, but please, let's direct our questions.

[Translation]

Mr. Louis Plamondon: I am getting at my question. He should have a second look, because his government has broken every administrative rule to distort the result of the referendum. If Quebec was not a good thing for Canada, you would not spend millions of dollars to keep it.

I am speaking now to the witnesses. In a press release last week, the Fédération des producteurs de cultures commerciales du Québec stated:

Moreover, the Agricultural Policy Framework, the new agricultural policy imposed by the federal government and accepted by the Quebec government, will not solve the difficulties of grain producers.

For Mr. Couture who signed this letter, there is only one way to solve this crisis: adapt the Canadian Agricultural Income Stabilization Program so as to give a competitive support to Canadian and Quebec producers.

What do you answer to that? You just talked about the Canadian Agricultural Income Stabilization Program, you just told us how good it was, almost the perfect thing, even though it could still be improved, but they tell us they feel strangled by this framework that doesn't answer their needs at all, especially when you take into account the last five years to establish the amount that will be paid to the farmers.

À (1040)

[English]

Mr. Tom Richardson: Mr. Chair, I'd like to respond to that question.

I think there are a couple of important points to be made about Quebec. Quebec has consistently stayed with its producers in terms of providing stronger program support than other provinces have, if I may say it that way.

In Quebec, there is a program called ASRA, which is a price-based program that applies to a large number of the commodities in Quebec. When this package was being developed, Quebec was fully at the table. It was fully recognized that these programs in Quebec could complement CAIS.

The programs do work together. They do work in tandem. CAIS is a base program that applies across the country. In Quebec, for a grain producer—in the example that the member has identified—ASRA complements CAIS. In the kind of situation that the member is talking about, the Régie in Quebec is able to make sure the grain producer's support level is maintained and there is no double counting. The programs work together.

I'm a little surprised about the statement from the grain producers. It was certainly our understanding, as the thing was developed, that the two programs would work together and would support grain producers in Quebec. I'm a little surprised, I'm puzzled, by the fact that they are concerned this is not working in the way that it was proposed. Perhaps it's something we will have to come back to with the Régie in Quebec to take another look at it.

The Chair: Mr. Plamondon, a very short question.

[Translation]

Mr. Louis Plamondon: We have met last week members of the Fédération des producteurs de cultures commerciales du Québec. They went to every Quebec MLA, whatever their party, with a sack of grain on which you could read all the subsidies paid to the American, European producers, as well as to those in Canada and in Quebec.

As things are going, they talk about bankruptcy, closing and giving up their activities. These are their own terms; they were in their press release, in the statistics and the material they gave us. They were saying they felt abandoned by the federal government, that the Policy Framework was in no way responsive to their needs, that they felt strangled by all that. They knew Canada wanted to eliminate all subsidies during negotiations at the WTO, but they thought it could take three, five, seven or even ten years and that they would not live that long.

They were saying in their document that the Policy Framework did not answer their needs and that they needed a support commensurate with that given to Americans and Europeans, while waiting for the new standards to be adopted by the WTO.

[English]

The Chair: Okay, you're out of time. Let's leave some time for the response, please.

Who wants to take that?

Mr. Tom Richardson: I would just reiterate what the minister said, Mr. Chair. The federal government has increased permanently, doubled, the amount of money for support. I think the question about the overall level of support that Canada has relative to the United States and Europe is really a political question, and I think that would be a question to put to the minister the next time around.

The Chair: Okay, we will move to Mrs. Ur--if you wish.

Mrs. Rose-Marie Ur: I wish.

First of all, kudos. I think this is probably one of the best documents I've ever received at the agriculture committee, the deck that Mary read through with us today. It certainly explains it quite clearly, and I really appreciate the information.

One concern that has been raised with my farmers is the amount of dollars they have to put in, the $100,000 that's referred to, or the $70,000 here. Using a $5,000 deposit seems rather minimal, even if they're in the dire straits that they are in. But quite often their margin levels are certainly higher, so the deposit is substantially more.

What is the reasoning? They've brought forth quite often to me that perhaps they could put in a percentage of the deposit and perhaps the latter part as a banknote. Have we looked at that, and what would your response be to that?

À (1045)

Mr. Danny Foster (Senior Advisor, Program Planning and Performance Directorate, Farm Financial Programs Branch, Agriculture and Agri-Food Canada): First of all, as was mentioned, with the amending agreement number three, we're looking to simplify the deposit requirement for 2003. As part of that amending agreement, we've referred to the fact that we need to look at deposit options for 2004, and that includes the issue of affordability. So that's what we're doing.

It should be noted as well, on the interest differential, that what the producers have talked about is tying up working capital and the interest differential or the interest cost of having to find that money and put it in a bank account. The first thing in terms of tying up working capital is that the money is fully assignable to the bank. So in terms of the bank, they're not really taking on any additional risk, so the ability to actually access those funds is there.

In terms of the interest cost, the net interest cost can be anywhere from 0% to 2% for a producer. So it's quite minimal.

There's a lot of competition going on right now between the credit unions and the financial institutions to get CAIS accounts, and in fact, there's some innovative work going on by private sector entities to engage producers to go with them for deposits in their CAIS accounts.

So at the end of the day, we're still very early in the process. I think we're going to see some innovative mechanisms for producers being able to get money into the accounts. But the interest cost, at this point, is quite minimal for producers, plus they have their NISA accounts, in which there's still quite a bit of substantial money.

Mrs. Rose-Marie Ur: Another concern was raised by one of my hog producers. Her accountant had indicated that under the program they will not qualify for CAIS, because in her situation she's basically a landlord to the piglets in her barn. It's a contract, contracted piglets, and also the feed comes in. There are no expenses, basically, other than the housing of the pigs while they're being fed. How do you base your criteria as to whether a producer is accepted or not? How do you come up with that?

Mr. Danny Foster: There are a couple of key criteria. One is that it's basically the person who is taking the risk raising the hogs, the price risk and the yield risk. As well, do they report the income as farm income for tax purposes? Those are the two basic criteria in terms of eligibility for the CAIS program, and on a case-by-case basis, the administrators will have to look at situations like that to see whether or not the individual is eligible. But the basic thing is, are they incurring price and yield risk, and are they reporting the income as farm income for tax purposes?

Mrs. Rose-Marie Ur: You had indicated that there will be an annual review by an independent panel of experts. They would consist of whom?

Mrs. Mary Komarynsky: The annual review will consist of producers, provincial representatives, and federal representatives.

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

The Chair: Okay.

On the question raised by the member, would letters of credit be part of the innovative way in which moneys could be guaranteed?

Mr. Danny Foster: Yes, they would be. There is a lot of misconception about the letters of credit. In fact, we have received a letter from Mr. Protti, the chief executive officer of the Canadian Bankers Association, raising the issues about the letters of credit, saying that with the commissions and the additional fees it can cost more than simply going to the bank asking for a loan. What we're trying to do is ask what all the tools are out there. Looking at deposit options will be part of the annual review process.

The Chair: On the other part of the question, in terms of who has the risk, there are people who own barns, and there is a risk in that. If there isn't a guaranteed return to cover the mortgage costs of that barn, there is a risk there. We had better be very careful that those people are not excluded, because right now, at least in our part of this country, we have a lot of barns where people are really questioning whether they are going to have a contract. For them, this is a real, serious hardship. We have to be very careful that we don't marginalize these people, because there are going to be people left out.

Mr. Ritz.

À (1050)

Mr. Gerry Ritz: Thank you, Mr. Chairman.

Ladies and gentlemen, welcome back. There is always a good exchange when we're here. There are a couple of things.

One thing is, with cash on deposit, no matter how you do it—letters of credit or whatever—it still takes a chunk of your borrowing capacity. It's cash out of an account. The bank looks at your borrowing capacity, and that's gone. No matter how you do it, the cash on deposit is one of the sticklers for my folks applying for this.

There is a reason that the deadlines have been extended; it's because nobody is signing up. In your program, you talk about the average reference margin in Saskatchewan-Manitoba as $70,000. What's the percentage of farmers who have actually applied from Saskatchewan and Manitoba?

Mr. Danny Foster: In Saskatchewan and Manitoba, we've sent out about 80,000 option notices to producers. Probably between 20,000 and 25,000 have replied. That's about, let's say, 25% of producers, representing about 30% of the total production margin in those two provinces.

Mr. Gerry Ritz: Yes.

Mr. Danny Foster: We should keep in mind as well, and we've seen it with all our programs, that producers tend to come in right around the deadline; 60% to 70% of applications or sign-ups happen right around the deadline.

Mr. Gerry Ritz: The problem is that the 20% to 25% who have applied are folks who think they can trigger some money. They have run the numbers with their accountant. The others are folks who aren't going to trigger anything, so they're not buying in. You will never get them under these rules. If you're going to do a review in 2004, that's great, but you're going to lose a whole sector of farmers--that other 75%. You are going to lose them in the next two years, or however long it takes to put the review mechanism in place with the new formula.

Moving on from that, because we're running out of time, when you were here the last time, three weeks ago or whatever it was, if I remember the number correctly, you folks had traced $1.3 billion that had gone out to producers. That's how much of the federal money you could find. Is that number still current and correct?

Mrs. Mary Komarynsky: No, it's not, Mr. Chairman. We sent some material to the committee, and I would like to bring attention to the other document that was tabled with the committee. What we've tried to do here is take a look at eight programs that came up at our last presentation, to provide you with an update.

One of the biggest challenges we have in explaining numbers is that many of the programs are based on a crop year or a tax year, and payments go out in fiscal years—and in more than one fiscal year, depending on the program. What we've tried to do is provide you with an update as of April 18 on the specific program. If there are any questions about this, we could go over this material.

Mr. Gerry Ritz: The eight programs are part of the problem. All of my folks phone in wondering which one they qualify for, and how they trigger it, and whom they talk to. I need some contact numbers I can call to get specific answers. At this point I can't get them. My colleague was talking about a young farmer who called him—and I've had the same situation—a beginning farmer with no reference margin. At one point he was told: go and talk to your neighbours, and we'll use theirs. Well, if you have a 5,000-acre farmer and a 500-acre farmer with some cattle, the reference margins are totally different. You can't do that.

Who do we call? Who has the answers? So far, I haven't found anybody with—

Mrs. Mary Komarynsky: The answers for the CAIS program—

Mr. Gerry Ritz: No, I'm talking about all eight of these, Mary, actually. We need a contact number for each one, if possible.

Mrs. Mary Komarynsky: We will provide that to you.

I just wanted to answer your question by saying that for some of these programs such as CAIS, the risk management funding, which is number three, and number four, which is the CFIP top-up, and number five, which is NISA, as well as for the transitional industry support program, there are toll-free lines available—for all of those programs—where questions would be answered. We will provide the committee with a list of contacts.

Mr. Gerry Ritz: That would be great.

In your slide on page 17, you say that the total value of reference margins being protected is over $3.2 billion. Are you extrapolating that's what it will be? Is that the actual number?

Mr. Danny Foster: That's the actual number for the 40,000 people.

Mr. Gerry Ritz: What is the cash on deposit they would have to have in order to backstop that? The $3.2 million looks really impressive. But if farmers have to kick in $1 billion on deposit, then it doesn't look nearly as impressive.

À (1055)

Mr. Danny Foster: I'd take 10% and say $320 million to $500 million.

Mr. Gerry Ritz: I'd say you're awfully low, from the things I've seen.

Mr. Danny Foster: They only have to have one-third on the account.

Mr. Gerry Ritz: But I'm talking about the full value. The third is great upfront, but I'm not going to get a payout. The cash isn't going to come to me. It's going to go to the other two-thirds I need on deposit.

Mr. Danny Foster: The proposed amendment for 2003--and we're hoping to get the two provinces to sign--

Mr. Gerry Ritz: But 2003 is over.

Mr. Danny Foster: --they're just signing up now--is one-third of the normal deposit requirement on account. If that one-third is there, the producer is able to trigger the full government payment without putting up the other two-thirds. What we're saying is that for 2004, we're going to go back and do a study through the annual review process and review that requirement.

Mr. Gerry Ritz: On that same situation, the first rules that came out said you had to have the full 100% of the deposit in play. You had to put it all in by the April deadline. I know guys who did that. Now the rules have changed. They'd like to trigger that two-thirds out because it's money they borrowed. They need the cash. How do they do that? They only need one-third now. How do they trigger that cash back so they have it for spring operations?

Mr. Danny Foster: At this point they can't.

Mr. Gerry Ritz: I know, but why? That's unfair.

The Chair: Perhaps there are a lot of unfair situations.

Mr. Easter, do you have a question?

Hon. Wayne Easter: Yes, and it is on the last BSE announcement. I'm getting a fair number of questions on that. The thrust of that program is to get the money out before spring. Does it look as if we're going to meet that target? The key to this particular program is to have a quick turnaround on the money so that the money is in the farmers' pockets. One of the criticisms of federal and provincial programs is that it's 18 months down the road before you get the money. Is this one going to meet what we targeted, which is payments before spring?

Mrs. Mary Komarynsky: Mr. Chair, I'd like to refer to the last page in the package I just referred to. It's called the transitional industry support program. In terms of the direct payment for cattle producers, the minister indicated in his speech, and this shows, that to date we have given out over $17 million to 4,000 producers. Producers have until July 31 to apply. So it is first come, first served, cheques out the door. The application forms were on the web a week after the announcement. Producers have received mailings of program information on the direct payment. As application forms come in, obviously they have to be checked. As for any government program, we do have certain audit requirements for high risk. But the cheques are going out the door as the applications come in.

Hon. Wayne Easter: The payout is 70% of what's requested.

Mrs. Mary Komarynsky: Because there's a limited amount for this program, $680 million for the direct payment, the initial payment will be 70% of what the producer would get. Once we've done all the payouts, we will then look at the amount of money left. We will then pay out the rest of the money to the number of producers that have applied.

Hon. Wayne Easter: Do you have an estimate of how much of that other 30% will be paid out? Don't put yourself on the line.

Mrs. Mary Komarynsky: It's quite difficult to predict. I think we've estimated how many producers should apply. As I indicated, the deadline for the program is July 31.

Hon. Wayne Easter: Then the 30% will not be a factor until after July 31.

Mrs. Mary Komarynsky: That's correct.

Hon. Wayne Easter: Okay.

Thanks.

Á (1100)

The Chair: Thank you very much.

Our time has expired. Again, we've had a very productive hour together. Thank you very much for your presentation and for the material you provided. We will meet again.

The meeting stands adjourned.