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37th PARLIAMENT, 3rd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Monday, March 8, 2004

1530

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

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

1535

The Chair

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC)

Mr. Bruce Deacon

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

1540

Mr. Gerry Ritz

Mrs. Mary Komarynsky

The Chair

Mr. Rick Borotsik (Brandon—Souris, CPC)

Mrs. Mary Komarynsky

Mr. Rick Borotsik

Mrs. Mary Komarynsky

Mr. Rick Borotsik

The Chair

Ms. Pauline Picard (Drummond, BQ)

1545

Mr. Bruce Deacon

Ms. Pauline Picard

Mr. Bruce Deacon

Ms. Pauline Picard

Mr. Bruce Deacon

Ms. Pauline Picard

The Chair

Ms. Pauline Picard

The Chair

1550

Hon. Wayne Easter (Malpeque, Lib.)

Mr. Bruce Deacon

Hon. Wayne Easter

Mr. Bruce Deacon

Hon. Wayne Easter

Mr. Bruce Deacon

Hon. Wayne Easter

1555

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

The Chair

Hon. Wayne Easter

Mr. Tom Richardson

1600

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mrs. Mary Komarynsky

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

Mr. Bruce Deacon

Mr. Dick Proctor

1605

Mr. Andrew Marsland (Assistant Deputy Minister, Market and Industry Services Branch, Agriculture and Agri-Food Canada)

Mr. Dick Proctor

Mr. Andrew Marsland

Mr. Dick Proctor

Mr. Andrew Marsland

The Chair

Mr. Andrew Marsland

The Chair

Mr. Andrew Marsland

The Chair

Hon. David Kilgour (Edmonton Southeast, Lib.)

Mrs. Mary Komarynsky

1610

Hon. David Kilgour

Mrs. Mary Komarynsky

Hon. David Kilgour

Mrs. Mary Komarynsky

Hon. David Kilgour

Mr. Tom Richardson

Hon. David Kilgour

Mr. Tom Richardson

Hon. David Kilgour

Mr. Tom Richardson

Hon. David Kilgour

Mr. Tom Richardson

The Chair

Mr. Gilles Lavoie (Senior Director General, Operations, Market and Industry Services Branch, Agriculture and Agri-Food Canada)

Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

The Chair

Mr. Gilles Lavoie

The Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

Hon. David Kilgour

Mr. Gilles Lavoie

The Chair

Mrs. Mary Komarynsky

The Chair

Mr. Howard Hilstrom (Selkirk—Interlake, CPC)

1615

Mrs. Mary Komarynsky

Mr. Howard Hilstrom

Mrs. Mary Komarynsky

Mr. Howard Hilstrom

Mrs. Mary Komarynsky

Mr. Howard Hilstrom

Mrs. Mary Komarynsky

Mr. Howard Hilstrom

Hon. Wayne Easter

Mr. Howard Hilstrom

Hon. Wayne Easter

Mr. Howard Hilstrom

Mr. Andrew Marsland

Mr. Howard Hilstrom

Mr. Tom Richardson

1620

The Chair

Mrs. Mary Komarynsky

The Chair

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

Mr. Tom Richardson

Mrs. Rose-Marie Ur

Mr. Tom Richardson

Mrs. Rose-Marie Ur

1625

Mr. Tom Richardson

Mrs. Rose-Marie Ur

Mrs. Mary Komarynsky

Mrs. Rose-Marie Ur

Mrs. Mary Komarynsky

Mr. Tom Richardson

The Chair

Ms. Pauline Picard

Mrs. Mary Komarynsky

1630

Ms. Pauline Picard

Mrs. Mary Komarynsky

Mr. Andrew Marsland

Ms. Pauline Picard

The Chair

1635

Ms. Pauline Picard

The Chair

Ms. Pauline Picard

The Chair

Mr. Dick Proctor

Mr. Tom Richardson

Mr. Dick Proctor

Mr. Tom Richardson

Mr. Dick Proctor

The Chair

Mr. Gordon White (Vice-President, Corporate Services, Canadian Food Inspection Agency)

The Chair

Mr. Gordon White

The Chair

Mr. Dick Proctor

The Chair

1640

Mr. Gordon White

1645

The Chair

Mr. Gerry Ritz

Mr. Gordon White

Mr. Gerry Ritz

Mr. Gordon White

Mr. Gerry Ritz

Mr. Gordon White

Mr. Gerry Ritz

Ms. Debra Bryanton (Executive Director, Food Safety, Canadian Food Inspection Agency)

Mr. Gerry Ritz

Ms. Debra Bryanton

Mr. Gerry Ritz

Mr. Gordon White

Mr. Gerry Ritz

The Chair

Mr. Rick Borotsik

1650

Mr. Gordon White

Mr. Rick Borotsik

Mr. Gordon White

Mr. Rick Borotsik

The Chair

Dr. George Luterbach (Chief Veterinarian, Animal Health and Production - Western Area, Canadian Food Inspection Agency)

Mr. Rick Borotsik

The Chair

Dr. George Luterbach

Mr. Rick Borotsik

Dr. George Luterbach

Mr. Rick Borotsik

Dr. George Luterbach

Mr. Rick Borotsik

Dr. George Luterbach

Mr. Rick Borotsik

Ms. Debra Bryanton

Mr. Rick Borotsik

Mr. Gordon White

Mr. Rick Borotsik

Mr. Gordon White

Mr. Rick Borotsik

Mr. Gordon White

Mr. Rick Borotsik

The Chair

Mr. Rick Borotsik

The Chair

Mr. Gordon White

The Chair

Ms. Pauline Picard

1655

Mr. Gordon White

Ms. Pauline Picard

Ms. Krista Mountjoy (Executive Director, Operations Coordination, Canadian Food Inspection Agency)

The Chair

Ms. Pauline Picard

Ms. Krista Mountjoy

1700

Ms. Pauline Picard

The Chair

Mr. Gilbert Barrette (Témiscamingue, Lib.)

Ms. Krista Mountjoy

Mr. Gilbert Barrette

Ms. Krista Mountjoy

Mr. Gilbert Barrette

Ms. Krista Mountjoy

Mr. Gilbert Barrette

Ms. Krista Mountjoy

Mr. Gilbert Barrette

The Chair

Mr. Dick Proctor

Ms. Krista Mountjoy

1705

The Chair

Ms. Debra Bryanton

Mr. Dick Proctor

Dr. George Luterbach

Mr. Dick Proctor

Dr. George Luterbach

Mr. Dick Proctor

1710

Dr. George Luterbach

Mr. Dick Proctor

Dr. George Luterbach

Mr. Dick Proctor

Ms. Krista Mountjoy

Dr. George Luterbach

The Chair

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

1715

Ms. Debra Bryanton

The Chair

Mr. Howard Hilstrom

Dr. George Luterbach

Mr. Howard Hilstrom

Dr. George Luterbach

Ms. Krista Mountjoy

1720

Mr. Howard Hilstrom

Ms. Krista Mountjoy

Mr. Howard Hilstrom

Ms. Krista Mountjoy

Mr. Howard Hilstrom

The Chair

1725

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mrs. Rose-Marie Ur

Mr. Gordon White

Mr. Greg Stubbings (Director, Plant Health and Production Division, Plant Products Directorate, Canadian Food Inspection Agency)

Mrs. Rose-Marie Ur

Mr. Greg Stubbings

Mrs. Rose-Marie Ur

Ms. Krista Mountjoy

Mrs. Rose-Marie Ur

Dr. George Luterbach

1730

Mrs. Rose-Marie Ur

Dr. George Luterbach

Mrs. Rose-Marie Ur

Dr. George Luterbach

Mrs. Rose-Marie Ur

The Chair

Mr. Dick Proctor

Dr. George Luterbach

Mr. Dick Proctor

Dr. George Luterbach

Mr. Dick Proctor

The Chair

Mr. Dick Proctor

Mr. Gordon White

Mr. Dick Proctor

The Chair

Ms. Krista Mountjoy

The Chair

1735

Mr. Rick Borotsik

The Chair

Mr. Rick Borotsik

Hon. Brenda Chamberlain (Guelph—Wellington, Lib.)

Mr. Rick Borotsik

Hon. Brenda Chamberlain

Mr. Rick Borotsik

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 006

3rd SESSION

37th PARLIAMENT

EVIDENCE

Monday, March 8, 2004

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we want to begin our meeting. We have just enough members. I know others are coming; they're just arriving from their respective communities.

This afternoon, pursuant to Standing Order 81(5), we're going to be looking at supplementary estimates (B) 2003-2004. We want to do that now.

We have people today from the Department of Agriculture and Agri-Food: Bruce Deacon, assistant deputy minister, corporate management branch; Andrew Marsland, assistant deputy minister, market and industry services branch; Tom Richardson, Acting assistant deputy minister, strategic policy branch; and Mary Komarynsky, acting assistant deputy minister, farm financial programs branch.

At 4:30 we will be moving to the CFIA for their presentations on supplementary estimates (B).

Are you leading us off today, Bruce? The time is yours, and we will await your presentation.

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Agriculture and Agri-Food Canada): Thank you, Mr. Chairman.

I thought before we took your questions on the supplementary estimates it would be useful to put them into context for you.

This year the total budget of the department is going to be approximately $3.9 billion. This is the fifth year in a row that there has been an increase in the total budget of Agriculture and Agri-Food Canada. Within that $3.9 billion, which is our forecast total expenditure for this year, $1.3 billion was approved as part of the main estimates, $400 million last fall as part of supplementary estimates (A). The remainder, the $2.2 billion that we are talking about today, is coming in under supplementary estimates (B).

What I think is interesting, though, is when you look at the total budget of the department, 81% of that constitutes total transfer payments directed to farmers, or $3.1 billion, and within that, 85% is statutory.

Within the supplementary estimates that we are bringing forward, of the $2.2 billion, virtually all of that is in fact statutory items. All but $50 million constitutes statutory information items provided in supplementary estimates to Parliament.

You'll see the breakdown of that provided in the supplementary estimates themselves, which break out the relatively small amount that was voted, and then the principal amounts, which are under statutory--for business risk management, the second part of the transition funding to the new programming, the special programming put in place for BSE, and a relatively small amount that is the amount transferred annually of unused money so that it remains available to farmers, which is put into each of the following three fiscal years.

So I guess in total what we are bringing forward today is, to all intents and purposes, an information item, which is the major statutory components of our programming.

The reason that was not brought forward earlier in supplementary estimates is largely because it is reflected either as new programming or money that was connected with the APF, and the decision was made last fall not to include any statutory items in supplementary estimates (A), because they were accelerated in terms of timing.

So what you are seeing here are really two things: all of the statutory items that were approved under the APF, plus incremental estimates as a result of the situation taking place within the industry. There is approximately $800 million in incremental expenditures forecast as a result of triggers that have happened within the sector.

With that, Mr. Chairman, we'd be pleased to answer any questions.

¹ (1535)

The Chair: We will being the line of questioning.

Mr. Ritz will lead off, for seven minutes.

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

It's an interesting discussion we're going to have here today. We're talking about money that's supposedly going to go back and cover off commitments that were made earlier in the supplementary estimates (B) and the main estimates, and this type of thing.

I still have some concerns. With all the money the government talks about going to agriculture, we still end up with a negative $13 million income for agriculture in this country. So somebody missed the mark somewhere.

You say 81% of transfers went directly to farmers. Well, my guys certainly didn't get it. They're still coming to me and saying they got shortchanged on every program.

CFIP wasn't paid out fully. The APF was held off for 2003 because they didn't have the signatures on it. We're now putting it in retroactively. You still don't have enough signatures to make the APF a workable program. All you can do is take an advance on this $1.2 billion you're talking about here. So I just can't quite understand how farmers are going to come out of this with money they can take to the bank, something that will stave off the bankers who are starting to pound on their doors and ask, “Where's your cashflow?”

Here we are, voting through money that was supposed to happen a year ago and still hasn't happened. You can take an advance if you're lucky and you fit the narrow criteria. There are major problems with the business risk side of it in reference margins and inventories, opening inventories, and so on.

It's fine to vote all of this through, but how are you going to get it to the farm gate?

Mr. Bruce Deacon: Perhaps I could start that and then turn to my colleagues to go into more detail.

Of the $3.1 billion we are proposing to spend that would ultimately be charged to this year in terms of total transfer payments, approximately half of it has already been expended and transferred to farmers. The remainder is planned to be expended over the coming period and is often delayed because of the timing of applications, etc. So a good portion of it has actually been paid out, and the rest is planned to be paid.

Mary, would you like to speak?

Mrs. Mary Komarynsky (Acting Assistant Deputy Minister, Farm Financial Programs Branch, Agriculture and Agri-Food Canada): Let me add to what Bruce has said.

First of all, with the signature of Ontario on December 11 and the signature of Saskatchewan on December 29, we now have all ten provinces signed on to the business risk management programming. We actually have begun paying out under CAIS, the Canadian agriculture income stabilization program, interim payments to farmers right across the country.

Let me continue with the questions, sir, that you've asked.

In terms of payments that have actually gone out to farmers in this fiscal year, we have the risk management fund, which is the second $600 million that was provided to producers to transit them to business risk management programs. As of February, over $457 million has been paid out to producers.

As I indicated, CAIS interim payments are available to producers. At this point across the country we have paid out $21 million to 3,400 producers federally. In those jurisdictions where we deliver—we deliver in six provinces—we've paid, out of that $21 million, $7 million.

For CFIP 2002—the member mentioned CFIP—we have to date paid out $385 million. We've also paid out in NISA $262 million to producers. We've paid out crop insurance of $194 million to provinces. We've also provided funding under the advanced payments program and SCAP. This means we've paid out $5 million worth of interest. As well, we've paid out $11 million this fiscal year in the spring credit advance program.

So while I don't have the exact total, at this point in time we have paid out over $1 billion in money to producers under the programs I've noted.

¹ (1540)

Mr. Gerry Ritz: That's two years' worth of payouts you're talking about there, for 2002 and 2003. You also have to realize that the livestock sector across this country has taken a $2 billion hit, the grains and oilseeds sector has probably doubled or tripled that in their negative margins, and yet you're talking in terms of a “whole billion dollars” going out. Well, you're putting a band-aid on a gaping wound here. It's not even close to covering off.... You talk about $21 million having gone out so far on advances on CAIS. That's not even a drop in the bucket.

Somehow we have to be able to get this money out quicker, in a more streamlined way. The second $600 million transition fund that was paid out—supposedly in July, but it didn't happen until the end of this year—was roughly half, or less than half the amounts everybody got in the first payout. Were that many more people qualified in the second go-round?

Mrs. Mary Komarynsky: First of all, in terms of the second $600 million that was paid out, I have here that we've issued over 150,000 cheques to producers. That is based on 3.5% of their five-year average eligible net sales. We know there are some producers who are not part of NISA—we used our NISA database to make those payments—and those producers had until December 31, 2003, to meet the deadline for applications.

As applications come in, we've begun paying out money to those producers with application forms as of mid-February.

The Chair: You may have just a short question, if you wish.

Mr. Rick Borotsik (Brandon—Souris, CPC): I was very happy to hear all the numbers with respect to the programs. I wonder if Mary would be prepared to table those numbers for the committee and give us all the dollars that have been submitted to producers at this time, the ones she just went through.

Also, for my purposes and perhaps for the purposes of individuals at the head of the table, I just got off the phone from a producer in Manitoba, and we recognize that there's been somewhere in excess of 81% of $3.1 billion transferred directly to farmers, as you've said. The example I just received was a cow-calf operator with 300 animals who received a total of $1,900 out of all these programs, which is five days of feed for these animals. So let's put it in proper perspective. After all the wonderful numbers you've just mentioned at the head of the table, in fact a lot of these dollars are not getting to the producers who actually need them.

So I would really like to see those numbers, how many cheques have been issued, where they're going. As well, are they all federal dollars you're identifying right now, or is there also a provincial component in some cases?

Mrs. Mary Komarynsky: The numbers I quoted to you are federal dollars. For example, for this year we've projected at this point $900 million that will go out in CAIS payments. If you add to that the provincial share, we're anticipating that $1.5 billion will go out in federal-provincial money for the 2003 CAIS year.

Mr. Rick Borotsik: What I would really like to see, if I could, is the federal dollars that have flowed through the programs you've mentioned. If you could just itemize those and tell us how much has gone, it would be useful, and also--and I don't know if you can do it--break it down by province, which provincial jurisdiction received what amount of dollars.

Mrs. Mary Komarynsky: Yes.

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

The Chair: We will move to Ms. Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): Of the amount of $34.8 million that was allocated to overall operating expenditures, the most important item, totalling $15.2 million, was used to pay for professional and expert services. Can you tell me what those professional and expert services were and for which programs they were used?

¹ (1545)

[English]

Mr. Bruce Deacon: This item is for a very wide range of professional services and would include professional engineers, architects, systems experts, communications people, translators, a very wide range of professional services that would supplement or go beyond the expertise we have within the department. A good example would be something like the Duncairn Dam, where we are doing major dam renovations and restoration; we would hire professional engineers who specialize in that area and we wouldn't normally have within the department. I think in virtually every program you will have some expertise used at one point or another. It could be systems experts, professional engineers, or whatever, depending on the nature of the program. These people generally are there to supplement the permanent staff within the department by providing specialized expertise.

[Translation]

Ms. Pauline Picard: Yes, but those engineers, those specialists that you hire, is that for buildings? I am a neophyte, by and large, and I do not understand what you mean in this document. What are those professionals asked to do?

[English]

Mr. Bruce Deacon: It will depend again on the nature of the program. Let me take some specific examples. The department operates major information systems. As we look at updating those, adding new software, new systems capacity, we will have a requirement to bring in specialized expertise in systems engineering and design. We have a very large asset base in the department, over 2,600 buildings and major water structures. The maintenance of those will require from time to time specialized expertise, architects, design engineers, water structure engineers, people who specialize in various aspects of engineering and we wouldn't normally have on staff. The list could go on. These are specialized professionals beyond those we normally have on staff within the department for specialized projects and initiatives.

[Translation]

Ms. Pauline Picard: So, you expect to have needs that will cost an additional $15 million. This is a rather large sum. It is the biggest item.

[English]

Mr. Bruce Deacon: The numbers that appear here are estimates based on previous performance. I think you have to see it in relation to the total expenditure in the department for salaries, which is about $350 million annually. So this is a relatively small amount in respect of the overall staff of the department, although it is only one piece of the total expenditure on professional services. As I say, it covers a very wide range of services, and in some cases, it's routine contracting of out-services. A good example would be professional translation, which we would not normally do within the department.

[Translation]

Ms. Pauline Picard: Mr. Chairman, I would like to ask one brief question. I have a question on a sum that goes to the Canadian Food Inspection Agency. Should I ask it when we question the other witnesses?

[English]

The Chair: Yes, in the next hour, if you have a question for the next group.

[Translation]

Ms. Pauline Picard: Thank you.

[English]

The Chair: I might, as chair, say to the presenters today this is not the first time we've come to these meetings. We always come here asking for materials to be presented. We believe it's in your best interests, and certainly in the interests of the members around this table, for you to have those numbers. Requests have been made today for moneys that have been allocated and sent out to the farming communities. We'd like to know where they are. We have a right to know. It's pretty hard for us to go back and say those numbers are coming. Those numbers should be forthcoming at the beginning, or even before we go to these meetings. I would encourage you in the future, when we have you people come before the committee, to bring those numbers in both languages, so we can have them distributed to all the members and at least we have something in hard copy that will help us to ask you some reasonably intelligent questions, rather than going to the elementaries. This is not the way it ought to be, and I would encourage you in the future to do that.

Mr. Easter.

¹ (1550)

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

The first question is somewhat along the same lines as Ms. Picard, but I will say I'm pleased to see that the department is coming forward looking for more money. That's a good thing, Mr. Chair, because it's direly needed out there in the farm community.

I think all of us around this table feel that there's going to be a lot more money needed for the farm community before we see the end of this calendar year, given the situation we're in. We may even have to go beyond the farm programs, I believe, to meet the needs of the farm community. I've been in the farm movement since 1970, and I've never seen the devastation financially in the farm community as bad as it is right now.

My first question really relates to vote 1 in the estimates, where it's $19.6 million for vote 1, which is operating, I understand, and for vote 10, $13.3 million would be transferred.

Maybe I didn't correctly understand your answer to Ms. Picard. Can you explain why it's so high in terms of the cost of getting that money out there? Or am I misinterpreting these estimates?

Mr. Bruce Deacon: I believe you're referring to the explanatory note under CFIP?

Hon. Wayne Easter: Yes, I am.

Mr. Bruce Deacon: It's important to note that many of these numbers appear in the way the Treasury Board presents them because they cannot present negative numbers. These are in fact net figures.

I can give you the more detailed numbers. With regard to the CFIP program, the total operating amount that we are bringing in this year is about $25 million; that's the vote 1 total. The total that we are bringing in for vote 10, grants and contributions, is about $22 million. Now, that has to be again put in context of what we are delivering. These are moneys, in both cases, which are repayments or moneys that we recover from provincial expenditures, overpayments, etc., from the previous three years. These have to be added to the total.

In terms of the relationship you were asking about, we will spend about $50 million this year, half of which is being brought in from supplementary estimates from previous years, to deliver around $600 million in overall CFIP payments, which is around 8%. The numbers, the comparisons you were making, are only net figures and are only part of the total. The real relationship is about $50 million to $600 million.

Hon. Wayne Easter: Where do I find the documentation to come up with the answer you've given me?

I don't mind admitting, Mr. Chair, the way the estimates are done now, in my view, does not give us good information, as parliamentarians. We do need a system. It's not Agriculture Canada's fault; it's a Treasury Board guideline. I recognize that. We have to, with all departments, find a way of seeing the numbers so we can understand them better than is currently the case.

In my view, they used to be better about 1995-96. In the documents we used to get then, you could tear them apart and you could get down to the nitty-gritty detail, but now you can't. Where do we go to find these numbers?

Mr. Bruce Deacon: These numbers are not formally reported other than in the format they are in here. Many of these numbers will appear, or the documentation will appear, when we do our report on plans and priorities and various other reports that we prepare.

I can understand the member's frustration with these numbers. It is difficult to understand what is behind them with what is actually presented.

Hon. Wayne Easter: Thank you, and I do recognize that's not your problem; it's Treasury Board's problem. Anyway, we need to deal with it.

The second and final question relates to where do we go in the future and how do we get the best use of the limited dollars that are available? Now, I understand that early last month the payment cap to the program was raised from $975,000 to $3 million. Am I correct in that, the payment cap was raised from $975,000 to $3 million? I understand, based on research we have done, that 95% of the Canadian farm operators would be fully covered by a cap of about $400,000, and I'm interested in ensuring that the majority of farmers out there are protected by these programs.

If you raise the cap and there's only so much money in the system, then the big guys are going to get the money. Raising the cap from $975,000 to $3 million to me seems atrocious. So can you explain to me, number one, is that in fact true? Number two, what do you see as the impact on the program by having the ability to fund the multiple players in the system out there, and who is to gain by this? Is it just the large operators? What about the average farmer in this country?

¹ (1555)

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Agriculture and Agri-Food Canada): Mr. Chair, I'll start on this, and perhaps Mary will follow up.

The $3 million cap and the negative-margin provision of CAIS has not yet been ratified by the provinces. We have six provinces that have signed on. We need one more province to have seven provinces and 50% of production. We're expecting that at any time in the next few weeks. Some of the provinces are in their budget process right now, and we hope to get a positive sign from one of the four that are remaining.

In terms of the impact of the cap on farmers and the availability of money, this is a very important point. I can assure the member that federal-provincial ministers spent a considerable period of time discussing this very point. For the most part, what you said about the $400,000, 95% is about right. At the tail end of the distribution, what you're really looking at, in terms of concentration of the industry, are a number of feedlots. One of the reasons for the amendment on caps is that when you're in the value chain, if feedlots fail, the whole beef value chain fails, because if you can't move cattle into a feedlot, from the cow-calf operations into the feeders, then everybody loses.

There was considerable debate by the federal-provincial ministers about what an appropriate cap is, because as you pointed out, caps are important for Canadians and caps are important in the sector. A number of options were put on the table: the $1 million that's there now, $3 million, and $5 million. In the end, the ministers decided to go for $3 million. We do have analysis based on the census of how that affects larger farms. I didn't bring it with me, but we could certainly table that information with the committee if it wishes, because it does outline.... It certainly doesn't cover all farms at a $3 million cap.

But the signals we are getting from the industry are that this cap will make a difference in terms of the survival of some of the players in the beef value chain. I think the collective view of the ministers when they agreed to go forward with this amendment was that they thought it would be important in terms of the industry surviving over the next few years.

The Chair: Okay, we--

Hon. Wayne Easter: Mr. Chair, can we get the analysis as it affects the average farm operations?

Mr. Tom Richardson: Oh, sorry, Mr. Chair, I forgot to mention that the way that CAIS has been approved by Treasury Board...in effect, it's statutory. As I think the honourable member indicated, 2003 was an extremely bad year, and it did have a very big impact on not only the beef sector but also other sectors. But when we looked at the analysis, you do have a relatively small number of large farms, and in the case of 2003, obviously feedlots were affected more than others. But when we tried to look at the analyses over five years, we don't see a big impact of big farms on the overall amount of money available, simply because there aren't that many big farms.

This program is designed to be statutory, so for 2003 we're forecasting somewhere between $1.3 billion and $1.8 billion to be paid out. Not very much of that in the end will go to a small number of big feedlots; most of the money will go to the average producer. But when we look at it over a long period of time, that small amount of money will make a difference to those feedlots, and we don't see that it will have a substantive effect on the ability of the program to pay out over the five-year period.

º (1600)

The Chair: We must move on.

Mr. Proctor, for seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thanks, Mr. Chair.

First of all, I have a question around the business risk management program. We see in these numbers that it totals $1.174 billion. I'd like to know what the total funding to date has been to the programs and how much of that has been actually paid to Canadian farmers.

Mr. Bruce Deacon: I assume you're referring to the number that appears in the supplementary estimates, the $1.174 billion?

Mr. Dick Proctor: That's right.

Mr. Bruce Deacon: In fact, that's only one component of the total business risk management program as such. The total this year will be approximately $2.5 billion--business risk management in total. This represents the supplementary estimate increase in mostly statutory estimates associated with it. There are other components included in there as well.

The second item, the $598 million that appears in the supplementary estimates, is also included as part of the overall business risk management program of the department. In terms of what has been actually paid to date, approximately half of it has been paid out.

Mr. Dick Proctor: So $1.25 billion. Okay.

And you were mentioning earlier under the CAIS program that all provinces have now signed on. How many provinces have signed on to the business risk management program?

Mrs. Mary Komarynsky: For the business risk management program, all provinces have signed on. There was a previous question in terms of raising the caps, negative margins, and making the deposit requirement simpler. That is considered to be amendment number 3, and at this point Alberta, P.E.I., and Ontario have signed on. We require two-thirds of the provinces' signatures to be able to actually implement those proposed changes.

Mr. Dick Proctor: Thank you for that.

Let me move on.

Something that caught my eye was in the main estimates, page 26, on items not required. It totals $182 million, of which the safety net companion programs are the vast majority. Can somebody explain to me why these programs--if I'm reading it correctly--are simply not required in 2004-05?

Mr. Bruce Deacon: In the government structure of accounts, items are put into the accounts and will continue there until they're specifically deleted. So if you have a program that rolls into another program, you have to specifically delete it, even though the money may continue and it may become part of something else.

I believe on that list you'll find, for example, the rural water development program. That has been assimilated into a much larger program under APF that will deal with national water.

Mr. Dick Proctor: So what you're saying is that the money is still there; it's just in another line item.

Mr. Bruce Deacon: In most cases it's still there. It's been assimilated into another program under APF. In other cases, it will be specifically ending because it's the last year of the program. Therefore, it has to be deleted from the accounts.

Mr. Dick Proctor: The last area that I wanted to probe on this round is under the BSE program. I think there's a pretty general consensus that in many, many cases the money didn't seem to get to the people we felt it should have been earmarked for. I just would like the impressions of the department officials who are here today, whether they agree with that analysis. Of course, hindsight is always 20:20, but what could or should have been done differently to make that program more successful and get to the people who really needed it the most?

º (1605)

Mr. Andrew Marsland (Assistant Deputy Minister, Market and Industry Services Branch, Agriculture and Agri-Food Canada): I think the starting point has to be the objective of the program. Back in May-June 2003, I guess, we saw the slaughter rate drop significantly down below 30,000, I think, with cattle being held back from market. The objective of the program was to get the market going again. In that context, it certainly achieved that objective, bringing slaughter rates up to 55,000. I don't think the price dropped below 79¢ while the program was in place. I guess the historic, pre-BSE price was somewhere around $1.05, $1.10.

I guess in that context it achieved its objectives in terms of getting the market going again. Prices, while they were low in a historic context, didn't go below that 79¢ level.

Mr. Dick Proctor: We all feel here that there are an awful lot of people who didn't see that money. The way it was rolled out is that the packers basically got the lion's share of it and the prices simply dropped for producers. They didn't seem to benefit to the same extent that they should have. Do you not accept that criticism? Do you not think it's valid?

Mr. Andrew Marsland: I think it's difficult to say at this point what would have happened without the program. I think we were in a situation that was unprecedented in a context that you had an industry that was exporting 60% of its production and was closed down overnight. The market was completely dysfunctional to the extent that very low levels of cattle were moving to slaughter.

I repeat that in the context of its objective, it appeared to achieve its objective.

Mr. Dick Proctor: Just a last, quick question. If we had another crisis tomorrow, would we introduce a program exactly the way we introduced the BSE recovery program last June?

Mr. Andrew Marsland: I think it's a difficult question to answer. I think we probably would, in the same circumstances.

The Chair: I wonder if maybe I'm not hearing you correctly, but you mentioned 79¢. What relativity has 79¢ got to the marketplace? What's your argument? What's your point? The 79¢ being what, the benchmark? What is 79¢ referring to?

Mr. Andrew Marsland: I guess to the extent there was a benchmark, the pre-BSE price was somewhere in the range of $1.05, $1.10. The price dropped significantly, as one would expect, given that 60% of the market was closed down overnight. The 79¢ is simply as low as the price got while the program was running, the price in terms of returns to producers.

The Chair: I'm sorry, you still have me lost. Maybe I'm the only one in the room who's lost on that one, but the price dropped substantially below 50¢. The 79¢ may have been a benchmark on which the farmers could have recovered lost dollars through the program, but certainly not when it dropped below 50¢.

Mr. Andrew Marsland: I guess the 79¢ is the market price plus the BSE recovery payment.

The Chair: Okay, we all understand that. We would have liked to have seen it stay at 79¢, but it dropped below 50¢. That's where we got into big trouble. So at least we have some clarity at the table here, because I don't think we knew where we were going on that one.

Thank you for your clarification.

We move back to Mr. Kilgour.

Hon. David Kilgour (Edmonton Southeast, Lib.): Thank you, Mr. Chairman.

On the same subject, the recovery program on BSE, can you tell us exactly where all of the money went by category of recipient?

Mrs. Mary Komarynsky: I can categorize it by the payments that went to producers. Also, Mr. Chairman, I can table at a later date in both languages the document I'm referring to.

First of all, in terms of the payments to producers for the drop-in price, we have paid out, to date, $429 million to producers, and that's federal and provincial. In terms of money going to packers, we have currently paid out $9.9 million. In addition, there are some producers who have ruminants--sheep, lamb, elk, and bison--and to date we have paid out $5.9 million to those producers. I will provide the chair with a breakdown by province.

º (1610)

Hon. David Kilgour: Can you do that today, by the way?

Mrs. Mary Komarynsky: Yes.

Hon. David Kilgour: Taking the producers by category, how many of those would be, for example, cow-calf operators?

Mrs. Mary Komarynsky: I don't have those statistics with me, so I can't answer your question today.

Hon. David Kilgour: A packer could qualify as a producer, could they not?

Mr. Tom Richardson: No.

Hon. David Kilgour: Does anybody know the answer?

Mr. Tom Richardson: The payments paid to producers would have been paid to feedlots, right? Normally there's a high degree of concentration in feedlots, but some cow-calf producers do finish animals, so the payment was made in respect of a requirement to slaughter the animal in a packing plant. So anybody who would have produced an animal for slaughter would have received that payment.

Hon. David Kilgour: How many of those are--

Mr. Tom Richardson: Are you asking for the distribution by size of operation?

Hon. David Kilgour: Yes, that's one thing I'm interested in, but I'd like to know how much of the $429 million went to packers who happen to own the animals.

Mr. Tom Richardson: I don't know.

Gilles, do you have that?

The Chair: Can you get it?

Mr. Gilles Lavoie (Senior Director General, Operations, Market and Industry Services Branch, Agriculture and Agri-Food Canada): We don't have that.

Hon. David Kilgour: Who would have this information?

Mr. Gilles Lavoie: As you know, Mr. Chairman, the program was administered by the provinces, not directly by us. We are transferring the money to the provinces that did administer it. We don't know if they have categorized the payment by type of enterprise or ownership or size.

Hon. David Kilgour: So let's try to be clear about this. You wrote out one cheque to the ten provinces and then they distributed it?

Mr. Gilles Lavoie: No, they administer the program, and when they have a claim, say, for $10 million, or whatever, then they send us a claim and we pay.

Hon. David Kilgour: So how many cheques would you have sent out, roughly?

Mr. Gilles Lavoie: To the provinces?

The Chair: Would you first identify yourself, please?

Mr. Gilles Lavoie: Yes. I'm Gilles Lavoie.

[Translation]

The Hon. David Kilgour: Mr. Lavoie, how many cheques did you send to farmers?

[English]

Mr. Gilles Lavoie: The federal government did not pay directly to the farmers. The program was administered by the provinces, so the provincial administrators sent the cheques to the farmers.

Hon. David Kilgour: But surely you have a report from the provincial administrators on where they sent these cheques and to whom, and by what category, do you not?

Mr. Gilles Lavoie: No. We have categories in terms of cattle, sheep, goats, and other species, but that I don't think we have. We've tried to obtain the information, but I haven't seen any information by category--for instance, the owners of cows versus owners of finished cattle, or people owning cattle who also are involved in other businesses, be it slaughter activities, or being a lawyer, an engineer, or whatever.

Hon. David Kilgour: Isn't it possible that a good deal of that $429 million went to packing houses that happened to own animals?

Mr. Gilles Lavoie: We have a few packing houses that do own animals. I don't know the total, but it's not that important in comparison with the total here.

Hon. David Kilgour: Can you give us your estimate of how many animals might be involved in what I'm asking about?

Mr. Gilles Lavoie: No, I don't know--

Hon. David Kilgour: Does anybody in the department have any idea about this? Because this is important, certainly in western Canada and I suspect in Quebec and in every other province.

Mr. Gilles Lavoie: In terms of knowing how many animals a given person owns, I don't know if this is public information. We will verify that.

The Chair: Okay, your time has expired.

On the first question you had, and the comment that $9.9 million had gone to the packers, was that $9.9 million out of the $30 million, which was the federal portion to the packing plants--the announcement made last July?

Okay. So about $19 million is still outstanding in terms of our money.

Mrs. Mary Komarynsky: That's correct.

The Chair: All right.

Mr. Hilstrom, five minutes.

Mr. Howard Hilstrom (Selkirk—Interlake, CPC): Thank you, Mr. Chairman.

The total payments you've outlined, including the $429 million, add up to $450 million, roughly?

º (1615)

Mrs. Mary Komarynsky: That's correct.

Mr. Howard Hilstrom: Of that, 60% was federal?

Mrs. Mary Komarynsky: Yes, that's correct.

Mr. Howard Hilstrom: So $270 million.

Now, $375 million was shown in the supplementary estimates. Where is that other money accounted for? What am I missing there? I'm talking about the difference between the $375 million that's in the estimates and the $270 million federal.

Mrs. Mary Komarynsky: I think if we look at the Canada....

Right now we've received claims of $513 million. Out of that, Canada's share, our 60%, to date would be $308 million. In addition, there are some administrative costs. Right now we are estimating $4.7 million in administrative costs. So it's a total of $450 million.

Mr. Howard Hilstrom: Okay. It's always tough whipping figures back and forth.

Mrs. Mary Komarynsky: Well, I apologize that I have not provided this sheet. I will provide it to the chair in both official languages.

Mr. Howard Hilstrom: These estimates are presented in a format similar to--probably identical to--that of other government departments', are they? So if a former Solicitor General had the opportunity to change the way these were presented, he would have done it, I guess....

Some hon. members: Oh, oh.

Mr. Howard Hilstrom: Wouldn't he?

Hon. Wayne Easter: On a point of order, Mr. Chair, the former Solicitor General complained about it very extensively and wanted to change it.

An hon. member: It didn't do him any good.

Mr. Howard Hilstrom: Don't use up my five minutes.

Hon. Wayne Easter: Maybe it'll happen next year.

Mr. Howard Hilstrom: I want to talk about this cap business. We know that the United States right now is talking about the amount of money, under CFIP and AIDA, that the hog producers have received. They're saying that the hog producers in Canada are overproducing because of the government subsidies.

Do you folks have analysis, or have you done the analysis, on whether or not there's any truth in the allegations the Americans are making? Because this is pretty serious business. It's something we have to watch out for in government subsidies. You can kill export industries when other countries deem them to be unfair. Could somebody enlighten us a little bit on that situation?

The reason I bring it up is that is if you put the cap up to $3 million, roughly 80% of the commodity production in this country is done by big farms--the little farms produce about 20%--so when these payments go out, quite often it will go to the big farmers. You were saying that it really doesn't go there, that there's all these other little guys. Well, the little guys don't get that much money.

So what about this trade issue that I've raised?

Mr. Andrew Marsland: Mr. Chairman, I believe we received the petition, filed by the National Pork Producers Council, just this morning. We're studying it with industry, of course, in terms of the issues it raises, but on the basis of our analysis to date, we don't believe the allegations set out in there are true.

Mr. Howard Hilstrom: Okay. Well, I guess we'll go to the cow-calf operator that's under this program.

Your definition of producer should have excluded that cow-calf operator, because to this point those farmers and ranchers who didn't fatten animals up to be slaughtered have received exactly zero money in regard to the BSE, and this is ten months after it happened.

So on the definition of producer, when you make your comments, not only here but in reports and that, you need to be a little clearer. A lot of these cow-calf operators never got a penny. People are always talking about producers getting money, which they generally assume to be your little cow-calf producers.

So how do you deal with the definition of producer? Do you define it, or just throw it out, in general terms, that farmers get $450 million, and the city people believe it? Truth in advertising.

Mr. Tom Richardson: The way Statistics Canada collects data on the cattle industry, they don't distinguish.... When farmers fill in surveys, naturally Stats Canada is not trying to.... I mean, it's always a burden to fill in information. There are many kinds of cattle operators, and in many cases the cattle operations are combined. Sometimes a feeding operation may fatten cattle, or it may not.

Basically, the data we generally have available just reports cattle sales. So you can't tell, without going into a lot more detailed information, whether a cattle operation is feeding animals for slaughter. When we report how much money goes to producers, we're not really able to say.... Obviously, anybody who didn't have an animal slaughtered wouldn't get a payment. I think that's a given. It's just very hard to separate.

Generally speaking, using the data, the larger operations would be feed lots, right? But other than that, as Gilles pointed out, we don't keep information on the size of the operation that was finishing into a--

º (1620)

The Chair: Will the cull cow program cheques be going out before the end of March, before the end of the fiscal year?

Mrs. Mary Komarynsky: On the cull cow program, we're waiting for the provinces to submit their herd inventories to us. We're expecting the herd inventories by March 19. Ontario will submit their numbers to us by April 7. We will then be able to start sending money to the provinces for that program.

The Chair: Okay. We'll move to Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.) (Lambton—Kent—Middlesex, Lib.): I'm going to approach it much the same as my colleague, Mr. Easter, on the $3-million cap.

I think you suggested, Mr. Deacon, that was a decision you came to with the premiers and the provinces. I'm just wondering, did you consult with the industry at all, or just the premiers? How many of those premiers really have the agricultural background to understand why it should go to that figure?

Mr. Tom Richardson: No, it wasn't made by the premiers; the decision was made by the federal and provincial ministers of agriculture. I believe they had two or three substantive discussions on that topic. For the reasons that have already been outlined, it's an important topic; it's a sensitive topic. Officials were asked by the agriculture ministers to look at a number of options, so we provided information to the ministers on various caps. I believe--I'm going from memory here--it was one, three, five, and ten.

From my recollection, the ministers did have conversations with their industries, with their advisory committees, on what was an appropriate level. It was an important topic, and they took trying to get the right balance with an appropriate cap very seriously. It is a difficult topic because it varies across the country, and it varies by commodity.

Mrs. Rose-Marie Ur: I just find it certainly does not reflect the industry. You have a few major farmers, whether in feedlots or whatever, while the primary producers, the smaller family operations, certainly do not benefit. You don't have to be a rocket scientist; you can see this in your communities, and I can't for the life of me see why it should go to $3 million, because we're just addressing the large operations.

Mr. Tom Richardson: Except the point is, there are a small number of larger operators, so overall it doesn't have an impact on the ability of the program to pay out to the smaller producers. I think that's the balance the ministers were seeking when they opted for that.

Mrs. Rose-Marie Ur: That's the discussion on the 79¢ and whatever.

I think, with all due respect, when that program came out, that's when the pendulum dropped for the industry. The program came into being and the dollars for our cattle industry just dropped horrendously.

In your process of reviewing the program payments, have you ever thought of looking at a floor price within the industry, working with industry so that this wouldn't happen again? God forbid it should happen again. Have you looked at something like that? Is that in your purview, to make a suggestion, or have you done a budgetary sheet on that to see where that would be if this indeed were to happen again?

º (1625)

Mr. Tom Richardson: We did, and I believe the western premiers put forward a proposal that in the end was the option that was substantively accepted. There were options around having a floor price, and I think that in the end it was felt that it would be better to have a graduated price, so the lower the price fell, the greater the compensation would be, to try to create an incentive. The problem with a floor price is that you immediately go to the floor, and then the program ends up costing more. I think that was the concern; a floor can work both ways.

So I think, as Andrew said, if we had to design it again...there are other considerations aside from the floor price. A number of provinces, as you may know, have looked at whether there would be ways to bring in more slaughter capacity. We are now, I think, slaughtering above 70,000 a week. When we started out this process last May, we were way below that, and the fact that we've been able to get slaughter capacity up shows we've learned some things about how we would operate in an emergency again. If we did it again, we'd probably want to focus on things like slaughter capacity, trying to deal with cattle that are a long way from market, such as in Atlantic Canada or Manitoba, and trying to find a way to move those animals into a real market. I suspect that if it had to happen again, we would try to look at all those factors.

Mrs. Rose-Marie Ur: Mary, you had outlined all the payments that were made through CFIP, NISA, crop insurance, and all the rest. With that, do you know the administration cost as well--if you don't have that with you today--as to the costing of those programs?

Mrs. Mary Komarynsky: I don't have the whole list of administrative cost for all of those programs, but I will definitely provide them to the committee. What I do have with me is in terms of CAIS. The administration costs are 5% of the program payments. For production insurance or crop insurance I have a percentage of 9% for administration costs, for the cull animal program the administration costs are approximately 8%, and for NISA they're 3%. But I can provide the committee, Mr. Chair, with the breakdown by all the programs.

Mrs. Rose-Marie Ur: Why are the variables there?

Mrs. Mary Komarynsky: This is new to me.

Mr. Tom Richardson: Where you have an insurance program like crop insurance, say, you will have higher costs because you have to collect premiums, you have to do audits on payments, and you have to assess damage, so typically crop insurance tends to be a little bit more expensive. The BSE program was a brand-new program, where provinces had to collect information and develop brand-new systems, which meant that there were set-up costs, and of course there were audit requirements to make sure things were as they seemed to turn out. Depending on the program, you will have higher costs, depending on whether it's a brand-new program, where you had to invent some things, or whether it's a program that's been operating for a number of years, where you've been able to get the efficiencies down. Certainly, insurance programs do cost more.

The Chair: Okay.

We move to Ms. Picard. Do you have something else?

[Translation]

Ms. Pauline Picard: I believe I understood, Madam, that currently, farmers who are having to deal with the problem of cull cows are not receiving any payments. Is that correct?

[English]

Mrs. Mary Komarynsky: There are two programs. One of them is called the BSE recovery program. Those are the ones that I indicated up to $450 million worth of payments have been made.

The cull animal program is the second program to deal with BSE. There have been no payments made yet. It's going to be administered by the provinces. We are currently waiting for the animal inventories to come in to actually be able to flow money to the provinces for that program.

º (1630)

[Translation]

Ms. Pauline Picard: It is the province—for instance, Quebec—that must compensate the producer for the number of cows he or she has lost. This situation has been ongoing for some time now, and several producers who did not know what to do with the cows have probably already buried them. In light of those circumstances, how can we do an accurate tally to come to the aid of those producers?

Forty per cent of all dairy production comes from my region, central Quebec, and dairy producers are suffering terribly from this situation since they do produce a large number of cull cows.

Currently, they are on the verge of bankruptcy. There is a crying need and I do not understand why they have received nothing. It is urgent that we transfer this money. The province could undertake the necessary verifications with the farmers. I do not know how we could proceed, but this crisis has been ongoing for some time now and in my opinion strategic measures should have been taken to help these poor people. We are killing agriculture here.

[English]

Mrs. Mary Komarynsky: The cull animal program, the second program, had a deadline of March 1 for producers to register their inventories--how many animals they had on inventory. We've extended the deadline to allow producers to get that information in. As well, there was an announcement made where we've removed the slaughter component and have committed to making a straight per-animal payment.

As I indicated, provinces are collecting this information. I think that my colleague Tom indicated that it's a new program. It's not as if a province would have all of that information ready to send to us to issue payments. They actually have to collect the information from producers and submit it to us to be able to send money to the provinces that will administer the program.

[Translation]

Mr. Andrew Marsland: Under the program, eligibility for the payments is based on a percentage. Eight per cent for beef and 16 per cent for dairy cows. Each farm must have a good inventory of livestock. That is the process we are currently trying to finalize with the provinces. It is not based on the real number of animals.

Ms. Pauline Picard: I would like to ask you another question.

You said that should such a crisis arise again in the future, you would consider the possibility of increasing slaughterhouse capacity. Do you find it normal that Quebec, which has the second highest population in Canada, has only one federal abattoir, which is in fact in my region?

According to me, the most serious problem that is affecting people right now is the lack of abattoirs, and the lack of inspectors. Have you planned any measures to address that situation? We must not wait for another crisis to break out; we must attend to solving the problems that exist already. Someone said earlier that normally, we were self-sufficient insofar as abattoirs are concerned. But I do not believe that, and I have statistics...

[English]

The Chair: I know the question, but I'm not sure they can give us that today in the estimates. Basically, that's—

º (1635)

[Translation]

Ms. Pauline Picard: I think that was about financing. He is concerned with increasing funds. Why not plan an increase in funds in order to hire inspectors and ensure that there are abattoirs that comply with federal standards? I think that would be one of the first things to do. There is a crying need, and that is what the livestock producers are asking us to provide.

[English]

The Chair: Perhaps we should talk about it in the next section, when we talk about food inspection.

[Translation]

Ms. Pauline Picard: Fine.

[English]

The Chair: Our time has expired.

Mr. Proctor, do you have a question?

Mr. Dick Proctor: Very briefly, in response to Mrs. Ur, somebody gave the figure that the weekly slaughter is up to 71,000, which has come a long way back. Does the department have breakdowns for percentages or the numbers of animals in various categories? Are they under 30 months, cows and bulls?

Mr. Tom Richardson: Yes, I think we had 9,000 culled cows last week.

Mr. Dick Proctor: Was that 9,000?

Mr. Tom Richardson: Yes, 9,000. That's a key indicator because it's a category everybody is worried about. I think we have more detail on that, though, which we could table.

Mr. Dick Proctor: You can get that for us.

That was my question. Thank you.

The Chair: Thank you very much for presenting, and I would hope and trust that you will provide the committee with the information. A lot of documents have been asked for today. I would give you this advice: when you come the next time, bring those bits of information with you. That would be helpful.

Thank you very much. We look forward to seeing you again sometime.

We would ask that the next group, the Canadian Food Inspection Agency, make its way to the table as quickly as it can.

From the Canadian Food Inspection Agency, we have before us this afternoon Gordon White, vice-president of corporate services; Krista L. Mountjoy, executive director,operations coordination; and Debra Bryanton, executive director,food safety.

Mr. White, you are going to lead with your comments, and then we will begin questioning.

Mr. Gordon White (Vice-President, Corporate Services, Canadian Food Inspection Agency): Thank you, Mr. Chairman.

We have a number of other people with us here as well, who may come to the table from time to time.

I'd like to take a different approach from my colleague. I have a two-page piece of opening remarks I'd like to go through, if you don't mind.

The Chair: Is it in both languages?

Mr. Gordon White: It is bilingual—half English and half French.

The Chair: That's not good enough. I think the rules are that you have to bring it to the table in both languages, so it can be distributed. Otherwise, it can't be distributed.

Mr. Dick Proctor: On a point of order, I think the witness is just going to read his remarks. He is not distributing the document.

The Chair: No, but it would be nice.

And I'll say to you, as I've said to the other group, when you come before the committee on these kinds of things, we need to have documents with numbers substantiating the kinds of arguments that you want to make on behalf of the estimates, so that we have something substantial to go on, because basically we are flying with really very little this afternoon.

That's just not good enough. It's all right for you to say that you'll present it, but we'd like to have it before rather than after the fact.

º (1640)

Mr. Gordon White: Understood, Mr. Chairman, understood.

Again, thank you very much for inviting us here today. Joining me are Debra Bryanton, our director of food safety, Krista Mountjoy, executive director of operations coordination, and Dr. George Luterbach, chief veterinarian for the western area. Also joining us is Jody Grimes, a financial planning officer supporting us.

[Translation]

As the committee is aware, the Canadian Food Inspection Agency is the Government of Canada body that is responsible for regulating and monitoring the health, safety and quality of Canada's food supply, as well as animal health and plant protection. It is our mission to maintain and improve our very safe food supply, which Canadian men and women now take as a given.

In order to accomplish this, we cooperate with federal departments, the provinces and territories, as well as producers, processors, distributors and consumers.

In past years, much of our activity was focused on strengthening our capacity to intervene in case of emergencies threatening the safety of food products, animal health and plant protection.

The agency's plans and priorities vary according to a certain number of challenges that could have an effect on the future of food safety, animal health and plant protection in Canada. Among others, I might mention international trade, as well as an increase in the incidence of parasites and diseases. The agency works to meet these challenges and reduce risks within the framework of its general planning process.

In order to help the agency strengthen the Canadian food safety system, we are asking for the authorization to increase its budget by approximately $38 million under supplementary estimate (B).

[English]

How are we planning to spend the $38 million? Incremental funding will be allocated to four main areas, Canada's response to BSE, the food safety and food quality component of the agricultural policy framework, specific major capital projects relating to the agency's laboratory structure, and statutory compensation payments.

This significant increase to CFIA's budget includes $11.6 million to be spent in the current year, 2003-2004, for Canada's ongoing response to the BSE situation. Over the five-year period this funding will be increased to a total of $98.9 million to support the removal of specified risk material from food, increase efforts to facilitate export certification, improve surveillance and testing, and enhance enforcement of the cattle identification program.

[Translation]

We are also asking that a sum of $6.5 million be transferred from the envelope allocated to the Agricultural Policy Framework of the Department of Agriculture and Agri-food Canada to the food health and safety item. These funds will be used to support regulation on medicated feed and the Farm Food Safety Recognition Program. An additional sum of $10.6 million, funds not used in the capital budget carried forward from 2002-2003, will be allocated to completing capital projects approved by the agency that mainly involve the agency's laboratory infrastructure.

Finally, a sum of $6 million which corresponds to an increase in levies for the payment of compensation authorized by law will be used to compensate the owners of animal herds that had to be destroyed in whole or in part because of animal diseases.

This sum includes payments that will be made to livestock producers whose animals were slaughtered during the course of the BSE investigation. It also includes payments to be made to orchard owners who had to destroy all or some of their trees because of the plum-pox virus.

º (1645)

[English]

The remainder of the funds being requested via supplementary estimates (B), approximately $1.4 million, relate primarily to incremental inspection activities at Lester B. Pearson International Airport and initiatives under the smart border declaration. This funding will be ultimately transferred to the Canada Border Services Agency as part of the government's recent restructuring exercise.

Mr. Chairman, this is a very quick overview of the Canadian Food Inspection Agency's spending requirement being presented for approval via supplementary estimates (B). I would welcome the committee's detailed questions at this point in time.

Thank you very much.

The Chair: Thank you, Mr. White.

Mr. Ritz.

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

Thank you, ladies and gentlemen.

How much money did you ask for last fall under supplementary estimates (A)?

Mr. Gordon White: In our operating vote, $395 million, approximately.

Mr. Gerry Ritz: That's the previous estimates.

Mr. Gordon White: That would be our main estimates, sir, plus supplementary estimates (A).

Mr. Gerry Ritz: So that's your main estimates plus supplementary estimates (A) for $395 million. Then you're asking for roughly another 10%, $37 million.

Mr. Gordon White: Yes.

Mr. Gerry Ritz: The third point down, an explanation of requirement, talks about building public confidence in pesticide regulation and improving access to pest management products. Is that not the job of the PMRA? Why are we doubling up?

Ms. Debra Bryanton (Executive Director, Food Safety, Canadian Food Inspection Agency): That funding is part of a broader package. The part that relates to the Canadian Food Inspection Agency does relate to our testing program. The funds identified there are oriented toward increasing the number of samples we are able to include in our sampling programs.

Mr. Gerry Ritz: But the PMRA is doing exactly the same thing--taking samples, testing, and so on. In fact, they're so far behind that they'll never catch up. Is this part of the shortfall they're facing?

Ms. Debra Bryanton: No. PMRA primarily does the approval of the products. We do residue testing in food products after the products are approved. We also investigate to see if any unapproved products are being used in the system.

Mr. Gerry Ritz: Further down under objects of expenditure, operating, you have personnel at just under $6 million, and then you have professional and special services at almost $9 million. Is it a matter that you don't have enough in-house people so you have to buy that many more?

Mr. Gordon White: The easiest way to explain that forecast is that these funds are essentially going to be spent on a number of initiatives. They cross the BSE activity, they're related to the APF component, and they also relate to the pesticides registration regulation activity. Also, there are some professional services in with the smart border declaration and the Lester B. Pearson International Airport upgrades.

These expenditures cover a number of things. Under the BSE initiative we're pursuing, we will be paying inducements to ensure we have that supply of samples we need to reach the $30,000 mark. So we will be paying inducements, and they will be charged to professional and special services. That will be the line they get charged to. Under the pesticides item, we are going to be spending about $1 million on private laboratories. That testing is done by contract and is therefore charged there.

To get back to your original question, we don't have enough people, but we do use the contracting route to facilitate the work we have to do.

Mr. Gerry Ritz: Thank you.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: You referred to the $30,000 mark. You meant the 30,000 number mark for the tests that were being done.

º (1650)

Mr. Gordon White: My apologies.

Mr. Rick Borotsik: No, don't apologize, because that was my segue.

One of the things that has been mentioned with regard to BSE is testing every slaughtered animal, as Japan has already done. It's a test that's done after the animal has been slaughtered. I think that we and you, as CFIA, have considered that or at least looked at it. You should have. Maybe I shouldn't put words in your mouth. I would suspect that you've looked at that possibility in order for Canada to get back into the international markets. If you have, have you put numbers to it? You don't have any numbers in these estimates. Have you looked at that, and are you putting numbers on the possibility of doing tests on every slaughtered animal?

Mr. Gordon White: I'd like to ask Dr. George Luterbach to join us at the table and address that question.

Mr. Rick Borotsik: I wish you would.

The Chair: Please identify yourself, Doctor.

Dr. George Luterbach (Chief Veterinarian, Animal Health and Production - Western Area, Canadian Food Inspection Agency): Dr. George Luterbach.

Mr. Rick Borotsik: Is this out of my time, Mr. Chairman?

The Chair: No, you'll get extra. Be nice to me, and I'll be nice to you.

Dr. George Luterbach: In answer to the question, the CFIA believes that the testing of every animal is not the best route to address food safety. The CFIA moved on July 18 to removal of SRMs, or specific risk materials, which are the materials within the cattle beef that would contain the BSE agent, the infective agent. We are currently removing the SRMs from all cattle slaughtered, and that reduces the human risk.

Mr. Rick Borotsik: That's a cost to the CFIA right now; all of the removal of the SRMs is a cost to the CFIA.

Dr. George Luterbach: That's correct. Yes.

Mr. Rick Borotsik: Okay. In the CFIA's opinion right now, you don't believe that any additional testing is necessary, other than the 30,000 that we're trying to attain right now.

Dr. George Luterbach: That is correct.

Mr. Rick Borotsik: That's the policy that has been taken by the CFIA.

Dr. George Luterbach: That is correct.

Mr. Rick Borotsik: If that should change, if things should change internationally, in order to access international markets, there is no money then. You would have to rethink your position, I suspect, at that point in time.

Ms. Debra Bryanton: From CFIA's perspective, the basis of our testing program, our surveillance program, is to demonstrate Canada's status internationally. We want to demonstrate that the level of BSE in Canada is at an extremely low level.

What is happening in some other countries is they're trying to regain the confidence in their systems through testing, which we have deemed to be inappropriate based on science. They are testing animals that would not show symptoms of the disease in the testing program.

Our program is oriented toward demonstrating our status internationally. Should there be discussion on doing testing for specific markets, that would be a separate discussion, but it wouldn't be based on science.

Mr. Rick Borotsik: Thank you. I thank you for your candid answer.

I have one last question, very quickly. On the $1 million that you have mentioned a number of times with respect to the smart borders at Pearson Airport, can you expand on that a tiny bit? What is it that you're doing for $1 million with CFIA at Pearson Airport that has a context to the smart borders?

Mr. Gordon White: The smart border component of that is about $400,000. It's about $1.5 million in total. On the smart border item, one of the items in the 30-odd points that were agreed to was dealing with containers and inspection of marine containers. This was an initiative that we got into prior to the creation of the Canada...

Mr. Rick Borotsik: I see, under the item, there's $1 million for “funding for enhanced security services related to the move to the new terminal at Pearson International Airport”. You had mentioned that as being a part of it.

Mr. Gordon White: That's the terminal one, yes.

Mr. Rick Borotsik: Okay. Is that containers as well, then?

Mr. Gordon White: The smart border item is the container one. There's $1 million and another $400,000.

Mr. Rick Borotsik: I'm looking at the $1 million.

The Chair: I have to stop you, Mr. Borotsik.

Mr. Rick Borotsik: Okay, I'll get back to it.

The Chair: Is there anything more on that, Mr. White?

Mr. Gordon White: No, that's fine.

The Chair: Okay.

We'll move to Ms. Picard.

[Translation]

Ms. Pauline Picard: I see that you have earmarked $10.6 million for the acquisition of lands and buildings and that you have allocated a sum of $11.6 million to fund activities to allay the consequences of the mad cow crisis.

Within the planned uses of this $22 million, are you considering increasing slaughtering capacity, that is to say the creation of new slaughterhouses, and increasing the number of inspectors who monitor compliance with federal standards? You no doubt understood earlier that it is inconceivable that there only be one federal slaughterhouse in the province of Quebec when such a crisis arises. There are other livestock producers in the region, such as cattle farmers, who are forced to send their animals 6,000 kilometres away to be slaughtered, to the west, because of this shortage of abattoirs. I imagine that the same problem exists in Ontario.

What is this attitude, especially when there is a crisis? The witnesses who spoke before you stated that the next time, things would be better and people would think to open abattoirs. But we need them now. Why wait for another crisis? Do you intend to set up additional slaughterhouses with these amounts?

º (1655)

[English]

Mr. Gordon White: Mr. Chairman, perhaps the easiest way to try to answer that question is to deal with the two components.

The first component you referred to was the capital carry-forward amount of some $10.6 million. That amount of money is for capital projects that the agency has on its books relative to its own laboratory structure. So there is no funding within that amount of money to deal with increased slaughterhouse capacity. That's simply for the federal installations that we run under the laboratory network. So that amount of money is allocated for that type of activity.

On the amount of money, the $11.6 million, that's being allocated for BSE, I would defer to my colleague, Krista Mountjoy, to explain to you how we're planning to spend that funding.

[Translation]

Ms. Pauline Picard: I simply want you to answer one question: Why do you not increase abattoir capacity in Canada? Why have you reduced the number of inspectors, when we need them? There is a crying need. Why are additional slaughterhouses not included in your plans? I am going to wait, but I would like you to answer that question first, before you reply on the topic of the $11.6 million that you earmarked to cope with the consequences of the crisis. Why do we not have more slaughterhouses in Canada? People do have to have their animals slaughtered.

How many abattoirs are there in Canada? I know that there is one in Quebec. But how many are there elsewhere, taking into account our animal producing capacity?

[English]

Ms. Krista Mountjoy (Executive Director, Operations Coordination, Canadian Food Inspection Agency): I'll begin by explaining our regulatory role in terms of new slaughterhouses coming on stream. Our job as the Food Inspection Agency is to work with industry and groups who are interested in establishing new slaughterhouses to make sure that the regulatory requirements for federal registration are clearly understood. We do that by looking at proposed blueprints and plans and clearly explaining and interpreting the regulations so that those groups that are moving forward with projects of this kind can do it as quickly as possible.

There is quite a set of requirements that need to be followed for federally registered establishments in order for trade to occur between provinces and outside the country, so we spend quite a bit of time, actually, working with industry in order to facilitate that process.

In terms of your question about the number of inspectors, again, in terms of our role as a regulatory agency for BSE, what we want to do is spend by far the greatest part of the resources that were given to the agency in bringing on more inspectors. As an example, in this fiscal year 2003-2004, the resources are intended to allow us to bring on 61 more inspectors in the areas of verifying that SRMs, specified risk materials, are being removed from food; that we're working to facilitate the re-entry of export markets that were affected by Canada's case of BSE for feed and animal byproducts; to put more inspectors out there to collect brain samples from abattoirs, from renderers, from dead-stock locations, and on farms if necessary; as well, in the case of animal identification--tracing and tracking--that we have more inspectors and enforcers out there to ensure that traceability exists and that animals are wearing the proper ear tags at the levels that I mentioned previously--auction marts, renderers, dead stock--as well as increasing our presence in terms of verifying that imported cattle and cattle exiting the country are wearing proper identification.

The Chair: Ms. Picard.

[Translation]

Ms. Pauline Picard: How many abattoirs do we have on Canadian territory?

[English]

Ms. Krista Mountjoy: As you were asking that question, I was racking my brain trying to think of the exact number to give you. I know that we have in excess of 800 registered establishments, federally, but that includes slaughterhouses, as well as processing plants, and some storage facilities. We can provide the committee with the exact number of slaughterhouses that are federally registered.

» (1700)

[Translation]

Ms. Pauline Picard: Thank you very much.

[English]

The Chair: Thank you very much.

I'll move to Mr. Barrette.

[Translation]

Mr. Gilbert Barrette (Témiscamingue, Lib.): Thank you, Mr. Chairman.

My first question will be along the same lines as that of Ms. Picard. Are you meeting the inspection and verification needs in abattoirs in Quebec as well as in the rest of Canada?

[English]

Ms. Krista Mountjoy: In terms of the current need for our inspection programs to be delivered properly in slaughterhouses in Quebec and across the country, we have, as you know, hundreds of veterinarians and inspectors who are on site making sure that the programs are delivered properly and effectively. The resources we have asked for under these submissions are specific to BSE, to ensure that we have a better capacity to validate that SRMs are removed from food in these slaughterhouses and in cutting and deboning plants, and in terms of the other work that we need to do under the BSE program generally.

[Translation]

Mr. Gilbert Barrette: I have an additional, related question. Does this meet the slaughtering needs of the industries?

[English]

Ms. Krista Mountjoy: That is a question probably better directed to agencies and departments other than the CFIA, but I can tell you that as new slaughter facilities and processing facilities come on board we have a pre-determined level of inspection resources that are required to meet the needs of our programs in those slaughterhouses and processing plants, so we find a way to ensure that we can put inspectors and veterinarians in those new plants as they come on board.

[Translation]

Mr. Gilbert Barrette: Are the new monitoring measures announced at the end of the month of December or at the beginning of the month of January currently in effect?

[English]

Ms. Krista Mountjoy: We received confirmation that the new resources were coming to the agency in late January, early February. We've been working on this file for some time, so we had some planning and activities ready to go. Over the past month we have spent, or have commitments in place, for slightly over $800,000 worth of that new money for fiscal year 2003-2004, plus we're planning on spending more over the month to come. We've also received approval to carry forward any unspent resources into the next fiscal year. So we will have our resources for next fiscal, plus the carry-forward portion from this.

[Translation]

Mr. Gilbert Barrette: But in abattoirs at this time, are greater quantities, larger volumes, being inspected?

[English]

Ms. Krista Mountjoy: The new resources that we've requested and received for BSE are to ensure that we can verify at the federal level that SRMs, specified risk materials, are being removed from meat, and we're targeting those new resources primarily to cutting and deboning facilities, processing plants, where we want to better meet the prescribed frequencies for verification, plus we'll be investing some resources at the provincial level to conduct joint activities with provincial authorities in the provincial system where there are some challenges to meet the prescribed frequencies for verification.

Mr. Gilbert Barrette: Thank you.

The Chair: Thank you.

Mr. Proctor.

Mr. Dick Proctor: Thank you very much.

You mentioned today that there are 800 abattoirs in Canada, and we know from previous witnesses who have appeared before our committee that we have a wide range of abattoirs: we have federally inspected plants, we have provincial plants, all the way down to people who sell animals or animal parts off the backs of their half-tons. In the wake of this BSE crisis, has CFIA given serious thought to tightening those rules, or been in conversation with the provinces about changing the rules and tightening them up so that some of those different levels perhaps will be eliminated as we get to a higher quality of meat inspection?

Ms. Krista Mountjoy: Perhaps I'll start, and then I have a colleague here from the program's policy side who I'm sure will only add to what I'm saying.

You're raising what I'm sure you understand is a very complex question, because it reflects a very complex system, and in the case of the resources that we've requested and received for BSE we have already engaged in discussions with the provinces, not only around what we need to do in our own federal system, but what is needed to be done in the provincial system for, as an example, the removal of specified risk materials from foods.

There is some variety among the provinces, as you know, in terms of their programming, their level of resourcing, their legislative authority to take action. We have spent quite a bit of time with provincial officials confirming that they are in a position to respond to, and are responding to, the need to verify the removal of SRMs in the provincial system, and where there are some challenges we have been working with them to increase awareness and education, to provide training materials, and to go out and do joint inspection blitzes to make sure that SRMs are being removed from food at all levels.

» (1705)

The Chair: Were you wanting to add to that?

Ms. Debra Bryanton: If I could add a point on that, we recently had the opportunity to present to an information session offered by the Library of Parliament on the food safety system in Canada, and during that session someone asked the question, “What did you learn from BSE? What's changed for you?” Something that we did note is the unprecedented degree of cooperation that happened between provinces and among federal departments in this particular crisis, and that has been ongoing. The provinces have been sitting down with federal departments, both health departments as well as agriculture departments, to look at how we can improve our food safety system in Canada.

We do believe that the commitment is there to improve our system. There are some variations in our food inspection system across the country, depending on the degree of provincial involvement. It is a shared jurisdiction. Everyone is willing to work together to improve that system. So we certainly have seen a great deal of commitment to that over the past year.

Mr. Dick Proctor: I can't remember which one of the two of you at this end talked about the fact that testing every animal was not cost-efficient, not the best way to go. I wouldn't disagree with that, but what about testing all animals over a certain age? Is there merit in doing that so you can say to a potential customer, “This animal has been checked and we know it to be BSE-free”?

Dr. George Luterbach: The testing of all animals regardless of age is deemed to be not the most effective way nor the most cost-efficient way to provide public safety. It has been shown by science that public safety can be enhanced a further 99.8% by removing the specified risk materials from animals regardless of age. In the younger cattle under 30 months of age, it involves the removal of parts of the small intestine. For the animals over 30 months of age, it involves principally the removal of tissues around the central nervous system of the animal. That's deemed to be the most effective way to provide public safety.

Mr. Dick Proctor: Extrapolating from that, then, are you saying that there wouldn't be a need to do more comprehensive testing on older animals?

Dr. George Luterbach: As a food safety issue, that's correct.

There is a requirement to test older animals in a targeted surveillance manner, looking at diseased animals, the older animals, animals that of course show signs of mad cow disease. These are all part of our targeted surveillance program, but that is not for food safety.

Mr. Dick Proctor: You're saying that the indication was that the level of testing was not bad. In fact, it's quite low on a per capita basis, I think, with the Americans and certainly much lower than with the Europeans and a number of other countries. Yet we are ratcheting up the number of animals that will be tested over the next several years under the CFIA program. Is that correct? We're going to get to testing something like 30,000 four years from now. Am I right on that? And how many are we testing today, or in this year?

» (1710)

Dr. George Luterbach: I'm not sure of the final figures, but approximately 5,000 were tested by November.

Mr. Dick Proctor: For last year.

Dr. George Luterbach: That's correct.

Mr. Dick Proctor: And that was up from about 3,100 from the year before. So you are moving on it.

What can you tell us about banning all animal-to-animal feed, not just animal-to-ruminants? Is CFIA looking at that?

Ms. Krista Mountjoy: I guess I'll start and then again I'll defer to the expert at the end.

Certainly we're considering what we need to do with the current feed ban, whether we need to adjust the current feed ban and how. If you recall the international panel report to Canada, the feed ban is the remaining piece of business for the government to address. I'm sure you're well aware of the discussions that have taken place over the past several months in terms of possible options for adjusting the feed ban.

Canada is working very closely with the U.S. and Mexico in terms of a trilateral harmonization process. We want to, obviously to the extent possible, proceed in concert with the Americans in terms of adjustments to the feed ban due to the integrated nature of our market and the impacts that will be felt on both sides of the border. So there was in late February a sub-cabinet-level group, headed by various officials in these countries, to move forward on discussions and hopefully on agreement around how we might adjust the feed ban in North America.

Dr. George Luterbach: I would add that, in similar fashion, you're protecting the health of Canadians through the removal of SRMs. The removal of SRMs from the feed chain effectively does the same thing. The effective material is focused in specific tissues within the animal. Thus, in determining the various options, that removal of SRMs may approach the same level of risk reduction as removing all animal protein.

The Chair: Thank you very much.

We will now move to Mr. O'Reilly for five minutes.

Mr. John O'Reilly (Haliburton—Victoria—Brock, Lib.): Thank you very much, Mr. Chairman.

Thank you for attending.

My specific question was towards CFIA, and not necessarily the cattle industry but other areas that are of concern to me. We all realize that the cattle industry is down 40% to 50% at the barns, and I think we're going to deal with that later on this week, so I don't want to get into it now.

Is CFIA responsible for deciding the labelling on a product as a product of Canada? I see some nods.

You don't seem to bother with country of origin. I'll give you an example.

A few years ago I had an experience with an overreaction to a dose of tetanus. I had to have a tetanus shot, and it made my system react. One of the mild reactions I got was from orange juice, not from California and not from Florida, but the type of orange juice you buy in a jar where it says “Product of Canada”. I don't know if the Southern Ontario Orange Growers Association is producing a lot; there is certainly none in my riding.

What happens is that orange pulp is bought from countries, brought to Canada and put in a glass jar with a label on it, and Canadian water is used. I assume that 35% of the content of that jar, including the jar and the labelling, has to be of Canadian origin, which allows it to be a product of Canada.

When I sent it to the lab to find out what the problem was with it, I found that the pulp was not from Florida or from California, or even South America; it was actually from Malaysia. On pulp coming in from Malaysia, of course, Malaysia has nothing to indicate its use of pesticides, DDTs and so forth, still heavily used there. They decided that the reaction I had from this was actually from the pesticides that were inside this product.

It went from Agriculture Canada to Health Canada, to CFIA, to being sued by a large retailer that thought I shouldn't use their name in public. I never did get an answer as to how you could possibly run an agency such as CFIA and receive so much money, and yet we still have an unsafe product.

I will guarantee anybody that the next time you go to one of those little stores and see one of those little glass jars with all the pebbles on it, and you look at it and it has a picture of an orange, you think of California or of Florida. You automatically think of that. Think of Malaysia when you buy it, and the use of DDT.

Is there any way for a consumer to be assured that something that says “Product of Canada” actually is from Canada? This isn't from Canada. Is there anything in your scope that would allow us, as consumers, to not have to find out the hard way that “Product of Canada” on a label doesn't mean that the country of origin is Canada?

I speak on behalf of the new organization, the Southern Ontario Orange Growers Association, of course, that I am going to form.

» (1715)

Ms. Debra Bryanton: CFIA does have some of the responsibility for food labelling through our consumer packaging and labelling regulation responsibility, as well as components under food and drugs. Some of our individual commodity regulations also include some provisions for labelling. So labelling is by no means easy; it is rather complex.

When it comes to country of origin labelling, generally if there is a statement on the country of origin, it reflects.... If it says “Product of Canada”, for example, on orange juice, that's obviously reflecting the value that has been added to the product in Canada. That is how the existing regulations do read right now.

Our legislation is oriented around truthfulness in labelling. When it comes to something that gets as specific as country of origin labelling, that's quite often a point of discussion for other reasons. There can be more specific references to country of origin, for example, under our meat inspection regulations that reflect when a product has entered Canada, has undergone a specific transformation, and then is marketed in Canada. There are also specific requirements that relate to when a product is imported. Depending on the legislation the product comes under, sometimes you don't have to say where the product is imported from, but just the fact that it has been imported.

So country of origin labelling is not straightforward in Canada. Usually when there are changes made to a country of origin provision, it is with a specific objective in mind.

The Chair: Thank you, Mr. O'Reilly.

We'll move to Mr. Hilstrom.

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

I guess this would be more for Mr. Luterbach, but you can decide who answers.

With regard to your targeted surveillance, how many on-farm brain samples have been taken from downers and deads, and how much does it cost to get each one of those samples to the CFIA?

Dr. George Luterbach: My understanding is that most of the sampling to date has been at packing plants and at dead stock removal. The plan is to move to a greater on-farm component. It is ongoing. It would be a relatively small number at this point in time.

On the cost, Krista, I think....

Mr. Howard Hilstrom: The farmer is paying for dead stock removal right now, from my understanding. They're paying to have the carcasses taken away.

Dr. George Luterbach: Krista, there are no plans, I believe, to charge the producer for the actual testing of dead stock?

Ms. Krista Mountjoy: No, no, not at this point in time.

In answer to your question about the costs of obtaining the sample, the approximate laboratory cost to run the sample is $167, or in that neighbourhood. On top of that are the costs related to getting the sample.

As I think Dr. Luterbach mentioned, we haven't yet mounted a campaign to go onto farms and collect samples there. We've been working with the industry to make sure that samples transit to dead stock collectors, in the case of dead animals, or into the abattoirs for live animals, which are still being presented there.... We anticipate that over time we're going to see less of the target population we're looking for at the abattoir level. We'll have to go after those samples, rendered and dead stock, on farm, so we'll see a shifting in location in terms of where we obtain our samples.

Our cost to get those samples ranges from $35 to $90 per animal, per brain sample, in terms of locating and sampling those and getting those into the lab network.

» (1720)

Mr. Howard Hilstrom: Yes, well, you need to consider paying the farmer during that process, because for the farmer, time is money, the same as it is for anybody else. If you're coming onto his farm to take a sample of a down or dead animal, he has to be there, which involves time. They're probably going to use his tractor, too, at some point.

But here's the real question we have to get to. The packers are coming in here on Wednesday. They told us previously that they have costs associated with the removal of SRMs. At the CFIA, you say it's costing you money, too. And there are two steps in this, the slaughter of the animal and then the disposal of the SRMs from the slaughtering. I want to get down to precisely what the CFIA pays for.

Now, you can tell me what precisely you pay for--that would be the simplest thing--but I also want to know a few other things. For instance, do you pay the packing plant for any special equipment? Do you pay for extra labour to take that SRM out? How much do you pay in terms of the time the veterinarian inspector spends examining and watching the removal?

Do you understand my questioning? In other words, can you break that down precisely? I want to know how much you pay per animal, exactly what you pay for each animal, and for what part of the process.

Ms. Krista Mountjoy: Our costs are related to the regulatory aspects of verifying that SRMs are being removed properly. Within federal abattoirs, we already have staff, veterinarians and inspectors, and in the slaughterhouses it is those people who are verifying that SRMs are being removed.

We're not contributing to the costs of staffing for the plant. We're not contributing to the costs of holding the SRMs prior to receiving the results from the laboratory. However, we are aware that the industry has raised, at many levels of government, the storage and holding capacity as a bit of an issue for them.

Mr. Howard Hilstrom: This has been required by regulation, by federal regulation, right? And the way things operate in the commercial world is that the packing plants have this additional cost. So what they do is they pass that cost along by bidding less for the slaughter animal from the feedlot, and the feedlot bids less from the guy who can't do anything about it, the farmer who delivers the original animal to the feedlot.

Was there no consideration given to the fact that the real user in this is the consumer, the one who wants the safe food? Why wouldn't the CFIA, or the government generally but through the CFIA, have picked up the cost of removal of SRMs, as opposed to having the poor cow-calf farmer paying it? Why wouldn't you have paid for the cost of this?

Ms. Krista Mountjoy: Again, the resourcing we have sought to date has been based on the regulatory costs to us of verifying that SRMs are being removed. I know that in various venues there have been discussions around costs like that, and where they appropriately should go.

To date, our discussions have been limited to our regulatory role in terms of acquiring additional resources we need to do the job of ensuring that SRMs are being removed.

Mr. Howard Hilstrom: Being a businessman, I know it's always the regulations that cost businesses money. That was my line of questioning.

The Chair: Okay.

Is there anything else you want to add to that, anyone?

Mrs. Ur, if you have something you want to ask, go ahead.

» (1725)

Mrs. Rose-Marie Ur: Thank you.

You indicated, when you outlined your dollar factors, that $10.6 million was carried forward. Where is that written here?

Mr. Gordon White: That is in our vote 35 adjustment of $10.59 million.

Mrs. Rose-Marie Ur: But it doesn't really say there that it's carried forward, does it?

Mr. Gordon White: It uses other wording: “Additional investments for maintaining and upgrading capital assets...”--

Mrs. Rose-Marie Ur: Yes, I can read that, but should it not be a little bit more clear?

Mr. Gordon White: You make a good point. This is the wording our colleagues at the Treasury Board ask us to use for estimates purposes.

Mrs. Rose-Marie Ur: I'm thinking maybe it would be a good suggestion on your part to go back to Treasury Board on that.

Mr. Gordon White: I agree with you.

Mrs. Rose-Marie Ur: Okay.

You also said that your budget was going to increase from $38 million to $98 million over x number of years.

Mr. Gordon White: The BSE amount, which I was speaking of, was $11.6 million, increasing to $98 million over five years.

Mrs. Rose-Marie Ur: Okay.

You also indicated increased compensation payments to producers for loss due to animal and plant disease, and indicated the owners of orchards who had their trees destroyed from plum pox. Are you going to be as generous to us in southwestern Ontario with the emerald ash borer?

Mr. Gordon White: I wish I had the easy answer to that one.

Mrs. Rose-Marie Ur: So do my constituents.

Mr. Gordon White: Yes, I understand that.

Now, where is my friend Mr. Stubbings?

Greg Stubbings has been deeply involved in the emerald ash borer and Asian longhorned beetle file. I think he's probably best prepared to answer that.

Mr. Greg Stubbings (Director, Plant Health and Production Division, Plant Products Directorate, Canadian Food Inspection Agency): As Gord has said, we've been involved right from square one, basically, on the whole emerald ash borer situation, and not only from a regulatory side, which, as you know, is difficult. So we know the issues around Windsor--Essex and also Chatham--Kent.

We also recognize that beyond the regulatory side, there is a need for tree planting and restoration in the area. We have been engaged with our federal and provincial partners on that. As you're aware, the Ontario Ministry of Natural Resources has announced a $1 million program. I can also tell you that federal ministers have been discussing a federal program in that same regard. So right now the major issue is getting money to local conservation areas, etc., which can direct the tree planting to areas where it's critically needed.

Mrs. Rose-Marie Ur: There are also stewardship programs out there that work equally as effectively as conservation, although conservation is certainly good too.

Mr. Greg Stubbings: Yes.

The second aspect, as you've been reading probably most recently, is that with this eradication program, we can't always pick and choose the ideal times for it. Right now we're heading into milder weather. We've had a lot of rain. So there's this whole aspect of soil compaction and the rutting of land, etc. We're working with the University of Guelph on that aspect as well.

Mrs. Rose-Marie Ur: I saw them working yesterday while I was driving by on the 401.

Thank you very much.

I have another quick question regarding the SRMs. They're removed at the processing plants, obviously. Are they removed manually or by machine?

Ms. Krista Mountjoy: At this point the common practice in Canada is to cut them out, if I can use that expression, with a knife. In some other countries they're exploring the use of aspiration, or vacuuming out the SRMs, but at this point in time the Canadian industry seems more geared to removing them through cutting them out.

Mrs. Rose-Marie Ur: It appears to be the choice, as I hear.

Also regarding the testing for BSE, presently we can only test after the animal is dead, checking the brain, because the prions are there. Do you foresee or has CFIA done any work on testing blood? Because to my understanding, the prion is basically in the brain, not necessarily in the blood. Do you see us ever going that far, checking the blood? Obviously, you would have live animals, not dead animals.

Dr. George Luterbach: Yes. Worldwide, I think, scientists realize it would be a silver bullet if we could test live animals, so there is research ongoing throughout the world. I'm not aware of any test that is showing promise to the point where it's been adapted to cattle at this point in time. There has been some research in mice that has shown some promise and that may have some application down the road.

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Mrs. Rose-Marie Ur: I have one last question. You had indicated that probably testing of the brain for BSE...but you also indicated the removal of SRMs is probably as good a safety system as checking the brain for prions. Do you have a good communication strategy around the world with international scientists, explaining this to those countries that will not allow their borders to be open to our Canadian beef so they understand that situation?

Dr. George Luterbach: Dr. Brian Evans, our CVO for Canada, is very active within the OIE and very active in his meetings with other countries with regard to explaining Canada's position and the science behind our decisions. We have solicited support from our NAFTA partners in order to take a common North American approach.

Mrs. Rose-Marie Ur: Did I hear correctly that there was another BSE case found in Japan over the last week or two?

Dr. George Luterbach: Yes, I understand there was another case found.

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

The Chair: Thank you very much.

We'll move to Mr. Proctor for the last short question.

Mr. Dick Proctor: Thank you very much.

Also on BSE testing, there is more than one way to test for BSE. It's my understanding that the test we currently use takes about eight days to do the analysis and so on but that there is another formula. Obviously, it involves killing the animal too, but it's of shorter duration; I think it's called a Swiss test or a Swiss formula. The question I'm getting at is whether there is any thought about changing. Are we looking at the various tests? What's the situation there?

Dr. George Luterbach: I think the test you spoke of initially is called the immunohistochemistry test, and it was the test that was used up until this year.

Up until, I guess, a little more than a year ago now, Canada was evaluating various tests, and now we have adopted in the federal system the prionics test. It's a test that's called, for lack of a better name, a rapid test. It allows us to have results within eight hours of the laboratory receiving the sample. There are still preparation time and shipping time that add on to that, but to assist in assessing those surveillance samples at packing plants, we have a goal to try to turn the results around in approximately 24 to 48 hours.

Mr. Dick Proctor: So that second test, that rapid test, would aid and abet in our achieving that goal. Is that correct?

Dr. George Luterbach: Yes, and the rapid test at this point in time will still be backed up. Any positives found on the rapid test will be tested with the immunohistochemistry test, the more traditional test, which is considered to be the gold standard.

Mr. Dick Proctor: Can I ask one more question?

The Chair: Yes, but be very short, because we're out of time.

Mr. Dick Proctor: Who makes the determination within Canada as to whether we accept meat from a country like Japan? Is it the Canadian Food Inspection Agency on a recommendation to the government, or who does it?

Mr. Gordon White: It's us.

Mr. Dick Proctor: It is you. Okay, that's what I wanted to know.

The Chair: I have just one question. I think it's very important, given the kinds of meetings we're going to hold later this week. How much of the SRM material is still used in animal feed—not ruminant to ruminant, but in other animal feeds?

Ms. Krista Mountjoy: I think that by far the majority of it is still going into animal feed as such. There are some other uses for it within the rendering system, but I would say that probably the majority of it is still going into non-ruminant animal feed.

The Chair: Okay.

I want to thank you very much for your candid responses. I think the last hour was a very worthwhile exercise.

Any material that you feel.... I know that you did your presentation in both languages, but could you have your material prepared for us in both languages so that we could have it formulated?

Thank you very much for presenting. We'll be hearing from you again, as time goes on. You're doing great work, which we appreciate.

For the committee, we have a procedure or some votes that I need to take you through.

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Mr. Rick Borotsik: On a point of order, does Brenda know what committee she's sitting at right now?

An hon. member: Oh, oh!

The Chair: Oh, absolutely.

Mr. Rick Borotsik: Do you know which committee you're at right now?

Hon. Brenda Chamberlain (Guelph—Wellington, Lib.): Yes.

Mr. Rick Borotsik: Okay, I'm just checking. I just wanted to make sure you knew what committee it was.

Hon. Brenda Chamberlain: Yes, I'm a farm girl, honey.

An hon. member: That was a sexist comment.

Mr. Rick Borotsik: That wasn't meant to be a sexist comment. She just walked in.

The Chair: The government has a great communication system in letting its people know where....

As a procedure before we report, I now call votes 1b, 5b, 10b, 30b, and 35b under Agriculture and Agri-Food of the supplementary estimates (B) 2003-2004.

AGRICULTURE AND AGRI-FOOD

Agriculture and Agri-Food

Vote 1b--Operating expenditures..........$34,810,187

Vote 5b--Capital expenditures..........$1,421,518

Vote 10b--Contributions..........$13,310,532

Canadian Food Inspection Agency

Vote 30b--Operating expenditures and contributions..........$21,074,770

Vote 35b--Capital expenditures..........$10,641,432

(Votes 1b, 5b, 10b, 30b, 35b agreed to on division)

The Chair: Shall I report votes 1b, 5b, 10b, 30b, and 35b under Agriculture and Agri-Food to the House?

Some hon. members: Agreed.

The Chair: Thank you very much, gentlemen and ladies.

Let's not forget our Wednesday meeting at 3:30.

The meeting stands adjourned.