AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 9, 1997

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[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): Order. Pursuant to Standing Order 108.(2), the committee will have witnesses on the programs, policies, expenditures, and administration of the Department of Agriculture and Agri-Food. Today our main witness appearing is the Honourable Lyle Vanclief.

I think we all know Mr. Vanclief. He started on that side of the table. He went over to that side. He was sitting in this chair. Now he's sitting in that other chair. If anybody knows this department, it should be Mr. Vanclief.

Mr. Vanclief, if you would introduce the people you have with you, we'll take your statement and we'll go to questions and answers immediately.

The Honourable Lyle Vanclief (Minister of Agriculture and Agri-Food, Lib.): Thank you very much, Mr. Chairman and committee members. It's a pleasure to be here. It's certainly a different view from the table. I did sit here a few times when I was parliamentary secretary to my predecessor, but it's certainly a pleasure for me to sit here with you as Minister for Agriculture and Agri-food Canada.

With me are Frank Claydon, deputy minister of Agriculture and Agri-food Canada; Dr. Art Olson, president of the Canadian Food Inspection Agency; and Michelle Comeau, recently appointed to a new position in the department, associate deputy minister. I welcome all those folks at the table, and there are other staff members behind us in the room, Mr. Chairman and committee members, if there are more detailed questions later.

I will make a statement. I will inform you, Mr. Chair, that as far as my schedule is concerned, as long as we can get to question period by 2.05 p.m. I am prepared to stay here until that time. I wasn't aware—I guess none of us were—there was going to be a vote a few minutes ago. We'll stretch our time as long as we possibly can. I'm sure if I don't have enough time to prepare for question period committee members won't ask any questions when we get in there, so we can stay here as long as we possibly can.

I do want to thank you for the opportunity to talk about the portfolio of Agriculture and Agri-food Canada, as well as the cross-government rural initiative. I know from experience what a valuable contribution members of this committee can make. I'm very proud, as has been referred to, to have sat on all sides of this table over the number of years I've had the opportunity to represent Prince Edward—Hastings riding here in Ottawa.

In the past three years there's no question the agriculture and agri-food sector in Canada has undergone unprecedented change. Like all sectors, agriculture played its part in reducing the deficit, a challenge we are about to do away with once and for all. The deficit and high interest rates, as we know, were no friends, and are not friends, to the farmer or the agri-food industry. As a government and as a department we took this opportunity to focus our spending and to open up opportunities for growth in the sector. With changing trade rules, our agriculture and agri-food sector also went truly global.

In the face of change and adjustments our industry did not falter. It has become more self-reliant. It has achieved its target of $20 billion in exports four years ahead of time. It has undertaken significant new investment, particularly in western Canada. Today the agriculture and agri-food sector employs almost two million Canadians from gate to plate, which is up slightly from previous years. The industry accounts for almost 9% of our gross domestic product.

Optimism is strong in the sector. We have only begun the process of change. The ever-expanding market for food worldwide and our continually improving market access mean more opportunities ahead.

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Markets are a key priority. The majority of our sector's growth comes in realizing new market opportunities. As I mentioned, the industry has achieved its $20 billion export target four years early.

We believe we can go further. We believe future goals should be and can be achieved with a concerted effort by industry with a focus on priority markets and on new emerging markets, and with effective partnerships such as Team Canada. Just one example is the progress we made just recently on trade in oilseeds at the APEC conference last month.

The next round of WTO, the World Trade Organization, will also bring more opportunities. We are committed to working closely with industry and the provinces in the lead-up to that round. Producers in the east and the west will also look to us to take a hard line against baseless challenges from the United States, whether it be against trade exports or against supply management.

Access also means removing internal barriers to trade through processes such as the agreement on internal trade so that we can maximize the full potential in our domestic markets as well.

Supply management has continued to evolve. It must not and has not become stuck in time. We need to ensure that the pace of change, however, is dictated at home. We want a constructive evolution of this sector. The industry has taken some very positive steps in this direction, and we want to and will support that evolution.

Our research system has been a huge success story. It pays off. Whether it be in canola or high-quality wheat that has been developed and refined in government labs, those products, for example, now command significant premiums in the international marketplace. We have invested in realigning our research centres to increase our effectiveness, and that has paid off. Our research into wheat, for example, has returned in the order of $40 to the Canadian public in benefits for every dollar invested. Anyone would have to agree that's an unprecedented rate of return.

The matching investment initiative referred to in the acronym of MAI.... In that program we have levered private investment for collaborative research. The combined contribution in this project is projected to reach over $70 million annually by the year 2000. The matching investment initiative is also allowing us to create a lot of new jobs for young people throughout Canada, be they scientists, technicians and so on, and to support the government's youth employment agenda.

Our research is also central to meeting our environmental responsibilities. Environmental pressures have also the potential to significantly constrain the growth of agriculture and agri-food sectors in rural Canada. In fact, the Department of Agriculture and Agri-food was one of the first departments to release a sustainable development strategy. I'm sure you've all seen a copy of that strategy. If not, we'll certainly be more than pleased to get you another copy of that document, entitled Agriculture in Harmony with Nature. This strategy focuses on understanding our impacts on the environment using science as the base for solutions, promoting sustainable practices and building on our environmental strength in the world marketplace, all in partnership with industry.

For example, we are working closely with the pork industry and our provincial partners to develop a hog environmental management strategy to ensure that the growth potential of that hog industry, which had sales of $2 billion last year, is realized in a sustainable manner. We have recently begun consultations with the sector and the provinces on this strategy.

As you all are aware, given the hearings you had here before this committee just last week, biotechnology is here, and it will play an even greater role in our sector. Many traditional agri-food products as well as new value-added products are now being developed through biotechnology.

I will be working with my colleagues, including the Minister of Industry, the Minister of Health, and the Minister of the Environment, to build on our regulatory framework in order to protect human health and the environment, to promote market access and to secure the confidence of consumers, both here at home and abroad.

Grain transportation is an issue that preoccupies many of our producers as well as our international customers. Regardless of the quality of our product—and we know we have the best—if producers can't get it to market, it doesn't matter.

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I'm working with the Minister of Transport as well as the minister responsible for the Canadian Wheat Board, and in partnership with the grain sector, to forge a more effective grain transportation and handling system. Following a meeting with industry leaders on July 25 of this year, the car allocation policy group developed a contingency plan and an early warning system to ensure that we avoid the reoccurrence of last year's winter events. Mr. Collenette has responded already to close to 40 submissions on the process and scope of a review of the grain transportation and handling system, and a person to conduct the review is expected to be named in the very near future.

Our agricultural safety net is a federal-provincial producer system that provides farmers with the protection necessary against the vagaries of weather and international markets. Our programs are designated to give producers an opportunity to invest in good times in order to save and to have that safety net there if bad times come along. With the recent signing of the Canada-Quebec agreement on safety nets, we now have in place a Canada-wide safety net system for farmers, based on the sound principles of whole farm.

But we are not resting on our laurels. We are presently reviewing our agricultural safety net framework with the provinces and the industry over the coming months, to identify opportunities to strengthen and build on our collective accomplishments. As part of the policy reforms contained in the 1995 budget, we chose to reallocate about $60 million annually into programming to help assist industry in its adjustments to the new policy and trade environment that is with us, and to help provide a leg up in seizing new opportunities and becoming more self-reliant. This money not only provides an opportunity to address adjustments in the agriculture and agri-food sector, it also provides a foundation for our contribution to reinvesting in agricultural communities in rural Canada.

A key component to the strategy has been partnerships with industry-led adaptation councils to allow them to set their own priorities and approve projects to meet specific and local regional economic development needs. Over the course of the fall and winter, we'll be doing a detailed analysis with the industry on adaptation challenges and opportunities that remain. We have already begun the process of consultations with the national organizations, and we'll be moving out soon to talk to the industry in all parts of the country over the coming months.

Because you had another presentation earlier this week and Dr. Olson was here at the table with you, I know you are up to date on the activities of the Canadian Food Inspection Agency, so I don't want to dwell on it for a long time. What I do want to say is that the Canadian Food Inspection Agency system and our animal and plant health programs are among the best in the world. In fact, in a recent telephone conversation I had with him in regard to some of the activities that we can do and that he was talking about in his country at that time, my U.S. counterpart, Secretary Dan Glickman, complimented me on our work in this area—and as you can imagine, we don't get many compliments from south of the border. But when Secretary Glickman said “Minister, I wish I had your system,” they were words that I certainly was glad to hear.

I'd like to close by changing hats just for a moment, and talk to you about the cross-government rural initiative, which is another part of my mandate from the Prime Minister. It's agriculture, agri-food, and rural development.

The Prime Minister, as I say, has given me the mandate to lead the government's rural initiative, but I cannot do it alone. The cooperation of a wide range of partners, including all of you on all sides of the table, will be crucial to reaching and responding to the needs of all Canadians in rural communities across the country, including rural youth and aboriginal peoples. We need to ensure, colleagues, that rural Canada is not left behind as we move forward in the global, knowledge-based economy. This is an initiative that we cannot undertake in a top-down manner. The federal government needs to connect with rural Canadians, listen to them, and be visible in addressing their needs. There is a clear leadership role here for the federal government; however, we cannot address the issues of rural Canada by ourselves.

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Partnerships with municipalities, provinces, rural stakeholders and residents are essential. Partnerships with other levels of government are particularly important, as they most often have the lead at the local level. Intergovernmental cooperation will ensure that rural Canadians receive the best that each of us has to offer.

We are currently developing a number of proposals to fulfil our throne speech commitments to rural Canadians. We are working closely with 18 departments and agencies to develop this approach. I hope that I will have the opportunity to share the implementation of the government's initiatives and to hear from you in that regard.

Committee members, I've touched on a few key files, and a few issues. I know there may be specific questions or comments. I look forward to them.

Mr. Chairman, back over to you and the members.

The Chairman: Thank you very much, Minister.

Colleagues, we don't have that much time, so I'm going to be tight on the time allocations. We'll start immediately with Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): Thank you, Mr. Chairman.

Thank you, Mr. Minister, for appearing before the committee, and welcome to you and your officials.

I note throughout your presentation, Mr. Minister, the almost constant reference to partnerships. And I was very pleased to hear towards the end of your presentation that you did include the committee in those partnerships.

Bearing this in mind, Mr. Minister, I wonder if you could comment upon the recent Auditor General's report, which confirmed that there have been a succession of these companion programs, some of them dating back as far as August 1995, that have been implemented, and yet we find that a minister responsible—in most cases, I suspect, your predecessor—did not table the necessary orders in council before the House. I find that a little bit strange for a minister in a government that is going to be acting in partnerships.

Mr. Lyle Vanclief: Yes, thank you very much, Mr. Hill. I appreciate your comments.

These have been developing and the different provinces have been putting the different programs in place. It certainly has not been an intention not to share those. They're known out there in every province and they're known between provinces. We were waiting for the completion of all those programs, and the drawing up of the programs within the provinces and the companion programs, and then to table them all at once. They're not all done yet. We certainly have decided now we're going to table the ones that are there and then when the others come forward we'll table them there for everybody's review.

Mr. Jay Hill: In the future, Mr. Minister, would you agree that in light of the criticism of the Auditor General and others it would be a good idea to table those as they become due, rather than waiting to put them forward as a set so that all of us can be well aware of the goals and objectives of those programs and whether it's the best use of taxpayers' money to support and reinvest in agriculture in Canada?

Mr. Lyle Vanclief: I don't have a problem with that, Mr. Hill. They probably should have been out there as they were developing. The thought was that it would be more efficient to wait and bunch them, but it's no problem to table them as they come forward.

Mr. Jay Hill: In light of that, Mr. Minister, it states in the Farm Income Protection Act that these are only to be used in “exceptional circumstances”, I believe is the term. Would you agree that this idea of putting them forward as a set would not qualify as exceptional circumstances for not presenting those orders in council in a timely manner? It also states under that act that it be done as soon as possible.

Mr. Lyle Vanclief: I can't pass judgment, myself, on whether that is the interpretation. I can just stress that it hasn't been the intention. We thought it would be timely to do more of them at one time, but if that's the interpretation people wish on this, I don't have a problem with it. We'll table them as they come forward. Sometimes they come frequently; other times there may be some that are done that are agreed to, several within a few days or a few weeks or whatever. We can certainly accommodate that—no problem.

Mr. Jay Hill: We'll certainly look forward to seeing those tabled as quickly as possible in light that the House is going to recess for six weeks.

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The next question I have deals with a line on page 28 of the supplementary estimates. I appreciate the fact that you were unable to attend the committee in time to have us deal with the supplementary estimates in a timely manner before they are deemed reported. This particular one is included under vote 1, and its an operating budget carry-forward of some $21.75 million. I wonder, Mr. Minister, if you could enlighten the committee as to what the intent of the department is for utilization of that $22 million.

Mr. Lyle Vanclief: What I will do is ask Dennis Kam from the department to come and enlighten on that line in the specifics.

Mr. Dennis Kam (Director General, Finance and Resource Management, Corporate Services Branch, Department of Agriculture and Agri-Food): There's a Treasury Board policy that's available to all departments that enables departments to carry forward up to 5% of any lapsing operating budget moneys from one year to the next. So in this case we're simply taking advantage of the Treasury Board policy to carry funds forward from the last fiscal year, 1996-97, into 1997-98.

In most cases those funds were lapsing because projects that were planned could not be carried out because of various delays or because managers decided to delay a purchase until the following fiscal year. Treasury Board policy and the government's broad endorsement of that policy is to encourage the prudent management of operating budgets, and to ensure that spending takes place when it's required, not in advance of need simply to—

Mr. Jay Hill: Is it the intent, then, to return that $22 million to general revenues? Since we're into November now, I would suspect that if there was going to be some use for that money, some need for the money, then the department would have identified that at this point.

Mr. Dennis Kam: In our department those moneys are returned to the responsibility-centred managers who actually lapsed the funds in the previous year. So we have over 150 responsibility-centred managers who will receive their entitlement to those funds. As I said, they have generally set up their budgets for the current year anticipating that they will receive those funds through supplementary estimates, because when they lapsed those moneys at the end of 1996-97, they earned a credit to carry funds forward into the next year. So, in forming their budget for this year, they've anticipated they'll have those funds in their budget and they've developed expenditure plans on that basis.

Mr. Jay Hill: Then why doesn't it show up as being earmarked to those various departments?

The Chairman: We'll take that answer and go to Mr. Chrétien.

Mr. Dennis Kam: It's a supplement to the note. I'm sorry; I don't understand your question.

Mr. Jay Hill: In clarification, my point is that if it is actually allocated as you're suggesting and various departments are anticipating the use of those funds, why doesn't it appear in their department's budget instead of just as a lump sum?

Mr. Dennis Kam: What I meant by “responsibility-centred managers” was the various budget managers within our department. There are about 150 of us.

For example, my budget would receive maybe in the order of $50,000 that I would take into account in developing my budget. I could have decided to buy computers last year; I could originally have budgeted for them last year but decided at year end that I didn't really need them. I'll carry the funds forward and reassess my requirements in the current year. If I don't require them then, they can be carried forward again the next year. So I'll spend the money only when I actually need to spend it, not because it's there in one particular year and if I don't spend it, I'll lose it.

So that was the mentality that was being addressed.

Mr. Lyle Vanclief: I believe the Treasury Board.... And within the House of Commons not too many years ago MPs were allowed to do the same thing, carry a certain portion forward. We still are, and the Treasury Board thought that was prudent management, because if not you may get the situation where in the last month people say, well, I'd better spend it or I'm going to lose it. Therefore it's carried forward.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): Mister Minister, I attended the 73rd Annual Conference of the Union des producteurs agricoles for two days.

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I noticed that the greatest worry everybody had was the massive importation of a certain butter oil and sugar mixture. It seems that once these products are in Canada, the butter oil is separated out and used to produce butter, of course, cheese, yogurt and all kinds of dairy products.

Mr. Minister, between 1995 and 1997, imports have grown by 488 percent. Being generous and applying geometric progression, we can see that in six or seven years, managing the supply of dairy products in Canada will no longer be a problem because there just won't be any.

Mr. Minister, you stated that the tariff line currently applied to the butter oil and sugar mixture perhaps wasn't the best and that an alternative solution was being considered.

Yesterday afternoon, in the House, in answer to a question by one of your colleagues, Paul Bonwick of Simcoe—Grey, you said that you and your colleagues would put forward a solution very soon and that Canada's rights and obligations would be respected at the international level.

On Thursday morning, Mr. Minister, you also added, to please Quebec dairy producers, that you were hard at work on the problem. Hard work is all well and good, Mr. Minister, but you're going to have to work fast and put in some overtime because time is slipping by and, for the current year, processing milk quotas for Canadian dairy producers have already been cut by nearly 3 percent.

Mr. Vanclief, could you give us some specifics on the statement you made in the House yesterday to reassure the Quebec and Canadian dairy industry? And, while you're at it, I wonder if you could tell us exactly when you intend to announce this decision.

In fact, I would like to know if dairy producers throughout Canada can count on the diligence and, more importantly, on the political will of the Government and get the reclassification they've been asking for, before Christmas. That would be a lovely Christmas present, Mister Chairman.

[English]

Mr. Lyle Vanclief: Thank you very much, Mr. Chrétien. There are just a couple of things I want to clarify in your comments.

I did enjoy being at the UPA conference last week and seeing you and many others there.

I don't believe I made a statement on whether the classification of the butter oil and sugar blend was correct or incorrect at the present time. What I said very clearly there was that it was my hope that in consultation with my cabinet colleagues we would put a process in place to determine the tariff classification for the butter oil and sugar product blend that's coming into Canada at the present time.

We do recognize the concerns the dairy producers have with this issue. We do also recognize the fact that all participants in the dairy industry do not feel the same on this. I have met with the dairy producers a number of times myself. Not only have I, the Minister of Agriculture and Agri-Food, met with them, but other ministers and officials have met with them.

Last week the president of UPA stated that he hoped the classification of the butter oil and sugar blend coming into Canada today could be classified into an existing tariff line.

As I said in the House yesterday, we are continuing to explore. Hopefully we'll be able to announce a process very soon that will find a solution and address the issue in a way that is consistent with our international rights and obligations.

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[Translation]

Mr. Jean-Guy Chrétien: You'll have to act fast, Mr. Minister. You know that the dairy production quota for all Canadian dairy producers has been cut by 2.6%, all because of butter oil imports.

Could you give us a clear indication of the Government's intentions in this matter? Don't make promises like you're going to work hard because you know very well that by applying geometric progression, the proportion doubles every year. And if it doubles every year, in six years and a few months, we will have imported enough butter oil to convert the dairy industry into I don't know what.

[English]

Mr. Lyle Vanclief: On your last comment, Mr. Chrétien, I know you're familiar enough with the dairy industry that you know every dairy product in Canada cannot be made from a combination or a blend of butter oil and sugar. But we won't get into that discussion. You're trying to leave the impression that every litre of milk in Canada could be displaced by a blend of butter oil and sugar coming into Canada from outside of Canada. I think you know within yourself that this is probably more than a bit of an exaggeration of what the reality is.

What I will tell you—this is what I told you a minute ago, and I will repeat it to you—is what I told the UPA convention last week, that I'm working with my colleagues on ways to find solutions to address this issue that are consistent with our international rights and obligations.

I'm sure the dairy industry, as they have said very clearly, Mr. Chrétien, in the WTO challenge of the United States...is taking the concern about the dairy policy and the dairy pricing in Canada. They are saying very clearly, and we're supporting them, that they are playing by the trade rules in that regard. I'm sure the dairy industry wants to continue to play fair and abide by those international rights and obligations to which we are signatories.

The Chairman: Mr. McCormick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Thank you, Mr. Minister, and departmental officials, for being here. I want to make a passing comment on the butter oils.

It's certainly very important. We all realize that. The 3% cut in my riding amounts to $1.8 million that will not be spent in small-town Canada. I do realize and recognize that this product would only be used for cheap ice cream. The composition of it is not what you'd want to put into cheese or something else. But it's very important that our minister share—I'm sure he will—with the other cabinet colleagues in all the departments that we need to take the time to find the correct solution. We want the solution to be there so that some other products cannot be made to circumvent it, or at least we'll be ready to react.

Mr. Minister, biotech is such a fascinating part of agriculture today. It certainly is assisting our producers, our farmers, in helping feed the hungry people in the world. I know it's my responsibility, and all our responsibilities, to educate people on what biotech is, because there's always the fear of the dark, of the unknown.

I wonder if you have any thoughts you'd like to share on what biotech is. To some people it's part of the unknown. They refer to the one case, but biotech can help in a lot of ways.

I'd give you that opportunity, then, if you would.

Mr. Lyle Vanclief: Mr. McCormick, I appreciate that.

The way I put it, we used to say, as a society, “Isn't it wonderful what we can do with science?” We all marvelled at that. Now we have a word that's a little fancier than that, “biotechnology”. That's certainly advanced science.

Biotechnology gives industry and scientists the opportunity to enhance a plant, for example, by moving some genetic capabilities of one plant over into another. I think genetic enhancement of crops can play a very important role in a lot of ways, and there are certain examples of them out there now: reduction in the amount of pesticides that are used; the better take-up of soil water; the better take-up of soil nutrients, which may very well allow the production of some certain species in areas they would not have been able to grow in before. And we have a concern about what's happening to the environment. Whether it's soil conservation, water conservation, or whatever the case might happen to be, genetic enhancement of plants can do that. Genetic enhancement can also, for the nutriceuticals, provide through plants what we've all referred to as pharmaceuticals.

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The bottom line on all of this, however, has to be safety. The consumer, the public and society have to be assured that before any of these are approved for sale, they go through the regulatory process. We certainly can be and are proud of the regulatory process that we have here in Canada in order to put all of those applications for a genetically enhanced organism through that process, so that we can assure the consumer the final product is safe. That's the bottom line.

Mr. Larry McCormick: Thank you very much.

I'm certainly glad to hear you refer to the throne speech. That does include, I understand, possible windows of opportunity for the rural development part of your ministry. I often add that on when people talk about “Lyle and the agriculture ministry” in our area of eastern Ontario, or even across the country, because the ministry is all of that and more. It takes nothing away from agriculture, but the fact is that rural Canada does deserve to receive its share of programs. I think it's always challenging within our government and our own caucus to work to obtain that fair share.

If I had a few moments, I'd like to hear a little more about anything you see in terms of how we can work together to partner this rural development among our communities.

Mr. Lyle Vanclief: There's no question that I think it's going to be a challenge for all of us, Mr. McCormick. We know about nine million members of our Canadian population live in what we refer to as rural Canada. There are different definitions, but I know the largest centre in my riding is the city of Belleville. It's a centre of about 37,000 people, but within many definitions I think that is still considered to be part of rural Canada.

We also have to recognize that without question the largest surface, most of the geography of this country, is in rural Canada by far because of the dense population in the urban areas. The challenge that any government has, whether it's a municipal government from one side of town or the other, a provincial or federal government, is to deliver the programs and policies that they have and want to deliver as equitably as they can across town, across the province or across the nation. We all know very well that you probably have to deliver a program differently in one area than you do in another in some cases, in order to get the same result in the end.

We also know there is more to rural Canada than just agricultural rural Canada, and that comes in under the mandate that I have too. It's rural forestry in Canada, mining in Canada, fisheries in Canada, tourism in Canada, and agriculture in Canada. As individuals, at the community level and up, we are facing an increasing challenge in having all of those living in harmony. Quite frankly, in my personal opinion, we know there are very few communities in Canada today that can and will survive only on basic agriculture. We have to work with the financial institutions and industry in order to support them as much as we possibly can so that there's financing, so that there's value added, so that our young people don't have to go to the big city to get their jobs. That's why I want ideas from you.

It's kind of an intangible thing out there. We all say we want to further develop rural Canada, and we push ourselves back against the wall and ask what can we do. We don't have the money to throw around, and I think history has shown that throwing money at problems doesn't do it. It needs to start from the bottom up, so everybody has ownership and partipates in it.

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Then we say, what do we have to do? Well, I don't know. We have to develop rural Canada further. So that's why we're following up, hopefully, on the rural work that was done by the natural resources committee last year and moving on with some further thoughts and ideas.

The Chairman: Mr. Proctor.

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

Welcome, Minister Vanclief, Deputy Minister Claydon, and officials.

A week ago today, Minister, the Auditor General's report had some unkind things to say about the Prairie Farm Rehabilitation Administration, PFRA, which, as you know, is headquartered in Regina and currently has about 700 employees there, with an annual budget of $75 million. In reviewing the PFRA operations, the Auditor General found some lapses and said it should clarify its strategic direction and priorities. I'm wondering what the department will be doing in response to that report from the Auditor General.

Mr. Lyle Vanclief: Thank you very much, Mr. Proctor. I appreciate your bringing it up so we can get it on the record.

I think we'll have to admit that the Auditor General also said some very kind things about the PFRA. We need to recognize that. We can look back just as recently as the floods in the Red River Valley and other operations like that, where the PFRA played an incredibly major role. In July I had the opportunity to see some of the work they did at that time. I can tell you I was absolutely mind-boggled by the speed at which they did it.

That having been said, the Auditor General certainly did point out some areas that need to be reviewed, maybe readjusted, the distribution of the resources there. I have already asked the officials to get back to me with their comments and their suggestions and actions following on the Auditor General's report.

Mr. Dick Proctor: There has been a significant decrease in the staffing levels at the PFRA. Is that something that is going to be looked at as well in this overall review?

Mr. Lyle Vanclief: There has certainly been a decrease in staffing right across most departments and in most branches of the department.

Mr. Dick Proctor: It's 17% in this instance.

Mr. Lyle Vanclief: Yes, it may very well be. I don't know whether that's above or below what some other departments.... But here again, it's the challenge of needing to do more with less. There's no question, that may very well come out of the review: how do we decide what we would like to do in life, what can we afford to do with the resources we have available? I think since the 1930s the PFRA has demonstrated very clearly not only to western Canada but to all of Canada, and, quitely frankly, a lot of places in the world, the work that can be done on land and soil and water management. I know you're not suggesting we do anything but to strengthen that—

Mr. Dick Proctor: That's right.

Mr. Lyle Vanclief: —but we need to do it as efficiently and as effectively as we can, and we will be reviewing it in the light of.... It was ongoing anyway, but it's always nice when the Auditor General reminds us or points it out, to say, keep up that direction.

Mr. Dick Proctor: On another point, I was interested in your comments on the WTO and your specific singling out of the Americans and what you referred to as “baseless charges”, as I think was your quote. I wonder if you could expand on that and perhaps indicate what the government is doing to prepare now for the next round of the WTO, or the first round of the WTO.

Mr. Lyle Vanclief: Just a couple of quick references to the word “baseless”. If we think back to a year or so ago, there was a NAFTA challenge on supply management in Canada. I'm not being sarcastic about it, but we said to the Americans we were right. They took us to a panel and we proved we were right. They are now taking Canada to a WTO panel on the dairy industry over the “two-price system”, as they refer to it, in milk. The dairy industry and we feel what we're doing is within the rights and obligations we have signed as a nation, and we will defend the industry and be there with them to defend that vigorously. We are confident that here again we will be right.

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However, that is the beauty and that is the good thing about a rules-based trading system. If you don't have rules, you can't challenge them and they can't challenge you. There certainly is a lot to be gained from a rules-based system.

As far as building up to the next round of WTO, which is said to be starting in late 1999, we have already begun country meetings in Geneva. Canada is part of that, where countries are getting together periodically in order to share issues and to share—not strategy, but issues and concerns that are there. The last thing that anybody does as you build up to negotiations is share very far ahead, if at all, your strategy that is there.

As well, there are ongoing meetings. The preparation and consultations here in Canada have been ongoing for nearly a year. There was one of the first, and probably the most all-encompassing one held in Saskatoon five or six weeks ago. I was there, and you were there I believe, and others at the table may have been at the same one, where everybody—the supply management, the grain sector, the meat sector—was there to discuss so that we can come up with a balanced....

We are also members of the Cairns Group, and there will be a meeting of that group next spring. Also next spring there will be a meeting of the quint ministers, which is the United States, Japan, Australia, Canada and the European Union. All of these are leading up to it.

Throughout all this, the farm organizations, the Canadian Federation of Agriculture, the sectors and the industry people, agriculture and agri-food and the provinces are all part of the consultations.

The Chairman: Mr. Borotsik. You are very patient.

Mr. Rick Borotsik (Brandon—Souris, PC): I am. Thank you, Mr. Chairman.

I would like to welcome you, Mr. Minister, to the agriculture and agri-food committee. I would also like to, at this time, suggest to you that your staff is doing a wonderful job. We have had numerous briefings in my office, and they are very cooperative. They are very forthcoming. So I do thank your staff for their cooperation, with a new MP particularly. That's my little bit of sucking up. Now I'll get to the questions.

You mentioned a few things—some very serious priorities—in your preamble, and I do appreciate it. The first one—I'll return to the Auditor General's report and your special measures programs, the thirty-odd programs that you haven't tabled in the House. I appreciate the fact that you're going to table them, as we heard from a previous question. It would be very nice to know what they are. Those special programs are dealt with programs and situations with exceptional circumstances.

I'd like to talk about an exceptional circumstance with respect to the Nova Scotia drought that we have right now. Not knowing what programs you have in place, it's difficult to see what the criteria are. Would you suggest that would be an exceptional circumstance—that perhaps your department would look at the Nova Scotia drought with respect to some sort of once-in-a-lifetime opportunity to help alleviate some of the pain they are having in Nova Scotia, as well as perhaps putting in a long-term plan for these types of exceptional circumstances for other susceptibilities in the agricultural industry? I am very familiar with these.

I only have five minutes and I have fifteen questions.

Mr. Lyle Vanclief: Okay, so if I talk for four and a half—

Mr. Rick Borotsik: No, no, no. I'm going to cut you off.

Mr. Lyle Vanclief: First, I want to thank you for the compliments to the staff. I feel very strongly that I can't do this alone. I have said it publicly and I say it here: it's not my ministry, it's not my department; it's our ministry. And that includes all of us around the table. We can't do it alone. I'm very fortunate to have that staff.

Since you're doing some sucking up, I also want to congratulate you on obtaining a huge—

Mr. Rick Borotsik: You're using my five minutes, Mr. Minister.

Mr. Lyle Vanclief: The chair will set this aside.

Mr. Rick Borotsik: Oh good, the chair will.

The Chairman:

[Inaudible—Editor].

Mr. Lyle Vanclief: I congratulate you on obtaining a very large processing facility in your riding.

On the Nova Scotia drought, on the companion programs, the safety net is set up so that some of the safety net money is used for crop insurance—for NISA and for those across-the-country programs. Some of the safety net money goes to each province on an equitable basis, so that they can have companion programs. Some of them are similar programs that are unique and required because of circumstances within that province.

There is no question that the Nova Scotia drought was a very, very severe drought—the most severe in a number of decades. However, we are not in the ad hoc business, and we are not going back into the ad hoc. There's crop insurance that's available to producers. There's the NISA program that's available to producers and there are the companion programs within that province with the producers in the province and our federal share that the provinces can put in place.

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We have put in place income tax assistance, not only for Nova Scotia but for cattle people who have to sell their cattle. We've had a lot of discussions and I have met with the minister's office and the premier. We're working with them to use some of their companion program money in the very near future in Nova Scotia.

Mr. Rick Borotsik: One thing you touched on that is very important to this committee, and we talked about it as late as this morning, is rail grain transportation and transportation in the global sense. Are you prepared, with your other ministers and Minister Collenette, to look at the systemic problems and not just do an overview of the problems in rail transportation but really try to get to the issue itself? Are you prepared to look at the allocation of rail cars? Are you prepared to look at the port delivery? Are you prepared to look at the influence of the CWB with respect to grain transportation? Or we just looking at sort of a bland type of review of transportation?

Mr. Lyle Vanclief: I don't want to cut you off, but I want to give you an answer.

Mr. Rick Borotsik: Thank you. I want to hear your answer.

Mr. Lyle Vanclief: That's the purpose of the overall grain transportation review that will be all-encompassing.

Mr. Rick Borotsik: Are you prepared to make those changes if necessary?

Mr. Lyle Vanclief: We haven't heard what the review says. We're not going to say what changes will be made before we have a review. If that's the purpose, I'm sure you'd ask why we were having a review.

The legislation dictates and mandates that there be a review in 1999. We want to move that up and start it very soon. Unfortunately, we know there's a CTA situation there, and the sooner it's out of the way the sooner we can get going.

But all of what you said definitely needs to be looked at in that overall review.

The Chairman: Mr. Steckle is now on.

Mr. Rick Borotsik: Do we get another five minutes later, Mr. Chairman?

The Chairman: If we can keep going here we can.

Mr. Paul Steckle (Huron—Bruce, Lib.): I have two matters of concern, Mr. Minister. Coming from rural Ontario, as I do, I know you understand that at the local level, the provincial level, and the federal level we have some real concerns in terms of our rural areas and how we prevent pollution from taking place.

In terms of the large operations that are being set up currently in dairy and now in hogs in both Ontario and Manitoba, how are we working with the provinces and municipalities to ensure that the policies that are in place are the correct ones so we don't find ourselves in double jeopardy at the local level? This is really where the rubber hits the road.

Are there measures in place or new programs, or do you envision programs that may take into account the kinds of issues we will be facing? We're not only looking at having more hogs, we're looking at concentrations of hogs, and this is where the problem comes from. I'm just wondering where we're going on that one, so that when we get asked these questions at the local level all of us around this table will be able to say in which direction we're going.

Mr. Lyle Vanclief: There's no question that when I went to all ten provinces this summer, the environmental concern that came forward more often than anything else was about larger pig farms. That was probably brought to the front because of a piece of journalism on an American TV channel on some very bad situations in one of the states in the United States. Unfortunately, every producer in Canada seemed to be tarred with the same brush. As far as I'm concerned, we certainly do not have that kind of record, but there are concerns.

There are a number of things being done federally. There are a number of things being done by the industry itself. I met with the leadership of the hog industry in the province of Quebec a couple of weeks ago, which is doing tremendous work on that. I know the pork board in Ontario is doing tremendous work. It realizes the responsibility and opportunities it has.

Federally, the hog management strategy is in place. People from all levels of the industry are taking a look at what can definitely be done starting with the short term and over the long term. There's the national soil and water program, which is part of the Canadian adaptation and rural development fund. It is being used by the provinces in those areas. That's $10 million over two years.

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Then there are the adaptation councils, more of the CARD fund, the Canadian agriculture and rural development fund. There's one of these groups in every province. At the provincial levels they can use those for programs or work in research at that level as well as in cooperation with others in order to move towards that.

Mr. Paul Steckle: The other question deals with the whole issue of supply management and us going into negotiations in 1999. I was part of that group that was there in late 1993 and early 1994. We were led to believe as politicians in the 1993 race that article 11 was still there. Obviously it wasn't. There were those who knew it wasn't there.

I happen to be one of those who supports supply management. I realize that the way we deal with it now is through tariffs, not under the old mechanism, but I'm wondering whether we have the solid support of the caucus. We asked this of our negotiator at the last round when he met with us a week or so ago.

Do we have the solid support of the department given that there were departmental statements made within the last four years that would lead at least me to believe that we are not as solid in our support of those in the supply management sector? And there's one particular person at this table who made a comment to that effect. I don't have that statement to read verbatim, but I'm just questioning whether we are as solid in our support for supply management sectors as we were going into the 1993 round. At least, I'm led to believe that. I know that you, Mr. Minister, are supportive, but do we have that committed support from the department so we're not speaking with forked tongues?

Mr. Lyle Vanclief: Yes, you do have the committed support from the department and I think we demonstrated that very clearly in the NAFTA panel challenge. That was probably a template that has never been used before and certainly will always be copied. The producers, the processors, the provincial government and the federal government went into that NAFTA panel. We said before we went in that we were right, and we went in and we proved that we were right. And for example, we'll use that same template as we go forward into the WTO challenge that the United States is probably going to take us into now.

The Chairman: Mr. Hoeppner.

Mr. Jake Hoeppner (Portage—Lisgar, Ref.): Thank you, Mr. Chairman.

Welcome, Mr. Minister. The good news I heard here today is the $20 billion worth of exports four years ahead. The bad news I see on the horizon is that the Japanese have come out publicly and said Canada cannot be number one for supplying their products any more. They will have to look to the U.S. because of capability to deliver what they need. That's bad news. As you know, Mr. Minister, I've always said there's too much politics in both the transportation system and the grain marketing system.

The transportation hearings could start tomorrow if you would tell your colleague, the wheat board minister, to withdraw the court case. If the railways are guilty of non-performance, the wheat board should be in the fiery pit, as far as I'm concerned. They have probably caused more transportation problems than the railways.

So what are you going to do, Mr. Minister, about the roundabout shipping of our grains and the inefficiencies in our transportation system? The Americans are going to clean up their act. I sat in on hearings in Montana last week, and they know what their problems are. And they're going to get those products delivered to the Japanese, so we'd better get cracking. Where's your backbone, Mr. Minister? How much persuasion have you got to get the politics out of our marketing and transportation systems?

Mr. Lyle Vanclief: Mr. Hoeppner, it surprises me when you suggest that any politician who gets involved in the justice system.... You suggest that a minister withdraw something or get involved in the justice system there. There's a court case. I don't particularly want to live in a country where a politician can point a finger at a court system and say “Cancel that case.”

Mr. Jake Hoeppner: But Mr. Minister—

Mr. Lyle Vanclief: Just a minute, I—

Mr. Jake Hoeppner: It's crazy, the non-performance.... You sat on this committee as chairman, and we've seen the backtracking. We've seen these problems over the years. They have to be addressed.

Mr. Lyle Vanclief: It's in the courts, Mr. Hoeppner, and I'm not about to tell the courts what they can or the cannot do.

As far as Canada being the number one supplier to Japan, Canada never has been the number one supplier to Japan. Japan is a major customer of Canada, and I'm confident that it will continue to be a major customer of Canada because not another country in the world can guarantee the quality of product to the customers that our Canadian grain system can. That is known around the world. Our Canadian Grain Commission and our Food Inspection Agency are second to none. I've had the opportunity in the last few months to be in different countries in the world, and that comes back to us in spades all the time.

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I said it in my opening comments: we can have the best product in the world, whether it be on an international basis or across town, but if we can't deliver it and get it there on time that's a problem.

There was one thing that came out very clearly from the July 25 meeting, and that was a solid concern and determination that everybody who was there, from the producers to the railroads, said that it cannot and will not happen again, for that very reason, that you can't afford not to deliver. The determination is there and I'm confident that as soon as we can get the things through the courts.... The Minister of Transport said that all he can do before that is finished he'll start to do earlier.

The Chairman: Mr. Breitkreuz, it's time for a short snapper before we go to Madame Alarie.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): I've got two really important questions. I'll try to make them as brief as possible to get them on the record.

First, rail transportation is really important, but why don't we have a national highway transportation strategy for national highways to get our products to market? It's a serious concern in Saskatchewan.

Second, farmers are still smarting from the removal of the Crow subsidy. Without warning, that was suddenly removed, and they are asking me to ask you what other issues you see coming down the pipe. We talked about the negotiations in 1999. What other issues are going to be on the table that we should know about and what preparations can farmers make in that regard?

Those are two key issues.

The Chairman: Very briefly, Mr. Minister.

Mr. Lyle Vanclief: Very briefly, on the grain transportation review there's no question that the road system will enter into that whole discussion. We also have to recognize that roads are basically a provincial jurisdiction. I'm not passing the buck on that one. It's a reality. If we don't have the railways—we have to move the grain—the roads had better be able to take it.

As far as the Crow is concerned, I certainly don't foresee that type of thing happening anywhere down the road. We are going to go into WTO as far as the grains are concerned. We're trying to get more liberalization as far as trade goes. That can be nothing but beneficial to the grains producers in western Canada with the diversification that's happening. With Mr. Borotsik's killing plant out there people will be able to grow more livestock. With what's happening in the beef industry in Alberta, what's happening with the swine and the beef industry in the diversification in Saskatchewan, there are going to be a lot of things happening, a lot more jobs in western Canada.

Quite frankly, as much as maybe we didn't want to see the Crow go, the going of that, the disappearing of that, is going to create a lot of jobs and do a lot of fantastic things in western Canada.

The Chairman: Madame Alarie.

Mr. Garry Breitkreuz: But what issues are going to be coming up?

Mr. Lyle Vanclief: I don't see other major issues, but I can't guess at this stage what's going to come up in the WTO.

Mr. Garry Breitkreuz: But you mentioned that there were some being discussed.

The Chairman: Madame Alarie.

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): Mr. Minister, your visit gives rise to a great many questions.

I welcome you and I'm happy to see that you've come with your team, in which I recognize some very competent Quebec women.

My question is this. The industry, generally, has undergone significant budget cuts in the last few years in the field of research and development. Looking in the book, I see that, between 1994 and 1997, the budget for agriculture in Quebec was reduced by 8 million dollars to some 671 million dollars. How can we ensure the competitiveness of the agri-food sector if we neglect research and development?

[English]

Mr. Lyle Vanclief: There's no question that the overall budget of Agriculture and Agri-food Canada has been reduced over the last number of years. I'm pleased to say that the amounts of dollars in research and development and research of Agriculture and Agri-food Canada have remained the same in core research. That's about $225 million or $230 million per year. Those actual numbers are the same in a much smaller budget, so the section or the piece of the pie is much bigger than it used to be.

On top of that, the matching investment initiative program that I talked about, with federal money and independent industry money, will soon be up to $70 million per year. As well, we have eighteen centres of excellence under Agriculture and Agri-Food Canada, and four of those are in the province of Quebec.

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I wish we could do more in research. When somebody asks whether we are spending enough money on research, my answer is no. Is our society spending enough money on education? Our answer is no. The key is to spend as much money as we can and as we can afford and do the best job we possibly can with it, whether we're talking about research or we're talking about education.

What is happening with the matching investment is that, quite frankly, we have more people in our research centres now than we had before we had the cutbacks. The matching investment initiatives have brought industry people into our research centres and they are there, young people, people of all ages, scientists and researchers. A lot of those people who come in with a one- or two-year program...guess where they are ending up? If they are sponsored by a company as a partner, many of them are going with them.

I had the numbers with me for the MII programs in the province of Quebec. They were at the tip of my tongue a week ago, but I can't give them now. Mr. Morrissey has some details on the province of Quebec, Mr. Chairman, if we could have a minute or two to give those.

[Translation]

Mr. Brian Morrissey (Assistant Deputy Minister, Research Branch, Ministry of Agriculture and Agri-Food): I have four points to clear up, Mister Chairman.

As regards the Partnership Program, if we divide the country into three parts—Western Canada, Eastern Canada and Central Canada, the share is about equal in the three parts of the country.

At the time of the budget cuts of 1995, it was here at the Experimental Farm in Ottawa that the deepest cuts were made. We went from 850 employees to about 300 and about half of these were transferred outside Ottawa, to places like Lennox and Saint- Hyacinthe.

The other comment I can make is that Saint-Hyacinthe, for example, has grown because of that instead of being cut.

Finally, I would point out that, at the moment, we are allowed to hire 2,300 employees following the cuts. There were 3,300 before, but in June, an inventory of the staff in our laboratories was done and 4,500 employees were found when the partnership is taken into account. So, we have quite a few more employees than before the budget cuts. Thank you.

[English]

Mr. Lyle Vanclief: Just for information, to date there are 120-plus projects in the MII program in the province of Quebec.

The Chairman: We'll go now to Mr. Coderre.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): Good day, Mr. Minister.

The federal Liberals met this weekend and made some resolutions of an agricultural nature. I would like to ask you a question concerning the notorious rBST hormone. What is your position on that? Do you think it should be banned? The problem is that we have found out that this hormone is in butter oil. We also know it is used in the United States. What is your position on this hormone?

Secondly, we do a lot of biotechnology, which is very positive, but I'm a bit worried by the labelling question. What is your position on labelling? Is it satisfactory or should we be more explicit on the labels, for health reasons?

[English]

Mr. Lyle Vanclief: Thank you very much. The BST issue, as we know, has been around for a long time now. I think everybody knows the application for the registration of that product is in the hands of the Department of Health. The Department of Health has not yet made a determination whether or not they will register that product here in Canada. The use of that product in Canada, if it's not registered, is obviously illegal.

You made the statement that there is rBST in butter oil and sugar coming in from the United States. I don't think we should make that statement, because you can't tell. There is no testing.

Much of the butter oil and sugar coming into Canada now is coming from outside the United States. I believe only 6% of it is coming from the United States. The rest of it is coming from New Zealand, where rBST is not allowed to be used. A good chunk is coming from the European Union, where rBST is not allowed to be used. I believe there's some coming through Mexico. Whether the milk is produced in Mexico or whether the product is stopping off on the way through, I don't know.

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So I can't personally pass a comment, because the Ministry of Health has not determined whether the product is safe or not.

Perhaps I'll ask Dr. Olson to make a brief comment as far as the labelling is concerned and what the requirements are on labelling all food products as far as content is concerned.

Mr. Art Olson (President, Canadian Food Inspection Agency, Department of Agriculture and Agri-Food): Very briefly, when it comes to the labelling it comes down to whether or not there is a health and safety issue. At this point in time that hasn't been identified.

Obviously there is a very significant debate around rBST as perhaps being the leader of a series of biotechnology products. One of the solutions, for instance, proposed by the European Union is that they label all these products as containing genetically modified material.

We've had three consultations in Canada. That's not been the advice we've had. The advice we've had is that you should label these products if there is in fact a significant health risk.

The Chairman: We'll go now to Mr. Proctor, and we may have time for Mr. Borotsik as well.

Mr. Dick Proctor: I'll be very quick, to give my friend Rick a chance.

I have a quick question on this rBST. Does the department have any indication that there may be Canadian dairy herds or dairy farmers using this?

Mr. Lyle Vanclief: My comment, Dick, will be that if they are, they're doing it illegally.

Mr. Dick Proctor: If they are doing it illegally, what are the penalties?

Mr. Lyle Vanclief: Dr. Olson. It's the food agency that enforces it.

M. Art Olson: The product is not approved for use in Canada.

Mr. Dick Proctor: Understood.

Mr. Art Olson: There have been some anecdotal reports that in fact the product has been used. I believe some product has been backstopped to the border. The difficulty we have here is that there is no test.

I went back through our discussion a week or so ago; I've researched the literature again. There is no test that allows the determination of the product in milk. There is some work being done with blood serum from the cattle that produce the milk, but there is no test as such.

You have a difficult problem carrying out an inspection responsibility if you don't have a test for the particular compound.

Mr. Dick Proctor: I'll defer my other question for my friend Rick.

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik: One of my questions has to do with the regulations and licensing of pesticides. The term “harmonization” is well known in your government. Are you as a department prepared to look at the harmonization process with pesticide regulations with the United States and Canada? It would certainly clean up a fairly large backlog in that particular bureaucratic jungle out there.

Mr. Lyle Vanclief: In reference to the backlog, thank goodness there's not much of the backlog that's left there. It's gone from I believe about 1,000 applications down to...the last time I saw it it was under 300, but you'd have to check. It's in the Ministry of Health, as you're aware.

I have had over the years some involvement in the Pest Management Regulatory Agency, as parliamentary secretary, and therefore some involvement in the concerns to our industry. As a matter of fact, I just had a discussion within the last hour and a half with the Minister of Health on this, and I believe he's having discussions today on this issue as well. We are getting closer to harmonization, but quite frankly we will never have a system where if a product is registered in the United States it would be registered here automatically. If so, we would be using rBST here in Canada today.

So we can't talk out of both sides of our mouth, Mr. Borotsik, but we can do a better job of sharing the data. We don't need to re-create the wheel. We also have to understand that there are climatic differences that we may have to analyse a different product under. We can share data. We are getting better co-operation with the manufacturers to submit joint submissions in the U.S. and in Canada. We're getting there.

Are we getting there as fast as we would like? Probably not, but I can tell you we're getting there a lot better than we were.

Mr. Rick Borotsik: Perfect. Thank you.

The Chairman: Thank you very much.

We'll have a short question from Mr. Hill and then Mr. Chrétien, and then we will conclude.

Mr. Jay Hill: Thank you, Mr. Chairman.

I just want to pick up on something one of my colleagues was asking you, Mr. Minister. Are you suggesting that the early review, which we support, by the way—

Mr. Lyle Vanclief: Everybody does.

Mr. Jay Hill: —of the grain transportation problem in western Canada cannot begin because of the hearing or court case before the CTA? Are you suggesting that the minister responsible for the Canadian Wheat Board does not have the responsibility for the Canadian Wheat Board's actions and can suggest to them that they might want to shelve that in the best interests of farmers, so that we can begin the review?

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Mr. Lyle Vanclief: My understanding of Mr. Hoeppner's comment was that he not suggest to them that the minister order that the court case stop. The minister can't order that a court case stop. I'm not a lawyer, but I think anybody can voluntarily withdraw their participation—

Mr. Jay Hill: That's our point—not that they intervene in the court case, but that the minister accept his responsibility for the Canadian Wheat Board.

Mr. Lyle Vanclief: I'm not the minister responsibile for the wheat board, and I know you've probably had some discussions with him.

Jay, I forget the first part of your question. Sorry, I should have made a note.

Mr. Jay Hill: It was just this issue, Mr. Vanclief.

Mr. Lyle Vanclief: Oh. Can we start early? Yes, the Minister of Transportation said he will do as much preamble and preliminary work as he possibly can in the meantime. There's no question that we all agree. Everybody wants to move that review forward as fast as we possibly can, but there are some other things that one way or the other have to be out of the way.

[Translation]

Mr. Jean-Guy Chrétien: A little while ago, I was shocked to hear my friend McCormick, on the other side there, try to trivialize the losses suffered by our dairy producers who suffered a 3 percent cut for the year.

[English]

Mr. Larry McCormick: On a point of order, Mr. Chair....

[Translation]

Mr. Jean-Guy Chrétien: I only have a few seconds left and I would like to finish. According to producers...

[English]

The Chairman: Yes, Mr. McCormick.

Mr. Larry McCormick: On a point of order, I'll let my colleague continue, Mr. Chair, but to say I'm trivializing the 1.8 million I lost in my riding.... I'm not happy about it. Thank you.

The Chairman: We'll move back to Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I was saying that, according to Canadian dairy producers, the losses suffered this year because of butter oil imports total 50 million dollars. Since we have 25,000 dairy producers, that represents, on average, a dead loss of $2,000 each. Now, you know that it's the last cow that turns a profit, and not the first.

Mr. Chairman, at the UPA conference, several sheep producers complained to me about the compensation you give them when they have to dispose of sheep, of superior quality hybrids, seeing as how the Minister only pays $300 a head when each animal is worth more than double that amount.

Mr. Minister, do you intend to increase the amount of compensation paid sheep producers when their flocks are infected with scrapie?

[English]

Mr. Lyle Vanclief: You're right, Mr. Chrétien, I met with the president, Madam Pépin, of the Quebec Sheep Producers a couple of weeks ago at the UPA office in Longueuil and we discussed this. We've had discussions with food inspection agency officials since then. They had two concerns. One was the level of compensation for pure-bred sheep, for hybrid sheep, and for commercial sheep. The levels of compensation, whether they be for sheep or whether they be for cattle that have to be disposed of because of reportable diseases, are reviewed every year.

One of the other concerns they had was the cost, when someone does have to have their sheep put down, of the disposal of the animal. We are having discussions with them to see if we cannot come up with more support, maybe complete support, for the disposal of those animals so that we can assure everyone they are disposed of properly. I'm not saying they haven't been, but we want to be assured of that and to recognize as well that there is more than a cost of losing the animal, there is a cost of disposing of the carcass.

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

Maybe I could squeeze in a little one.

Mr. Lyle Vanclief: Your time's up.

The Chairman: On the Kyoto conference, what in fact do you see for the agricultural industry, producers and processors, coming out of that particular conference?

Mr. Lyle Vanclief: Mr. Chairman, it depends on what comes out of there. I think the industry is certainly prepared to address that, but I don't think we need to put out of mind the tremendous work that is being done and the gains the industry has made with minimum tillage. In the past number of years, with the change in cropping programs and moving to less summer fallow, we are moving in the right direction, and we're just going to have to wait and see. We're prepared to work with the industry in collaboration to help do what we have the responsibility of doing.

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The Chairman: Okay, thank you very much, and thank you to your officials.

Mr. Lyle Vanclief: I thank you for the opportunity to be here, and in case I don't see you individually—

The Chairman: We'll see you tonight.

Mr. Lyle Vanclief: Yes, see you tonight.

The Chairman: Okay.

The meeting is adjourned to the call of the chair.