AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, December 2, 1998

• 1529

[English]

The Chairman (Mr. John Harvard (Charleswood St. James—Assiniboia)): Members of the committee, take your seats, please. The time is 3.30 p.m., which means we can begin our meeting today.

This is another meeting on the current farm crisis in Canada. Today, we have the honour to hear from the Minister of Agriculture and Agri-Food, the Hon. Lyle Vanclief. With him today is his deputy minister, Mr. Frank Claydon, and the acting assistant deputy minister in the policy branch, Mr. Douglas Hedley.

• 1530

Mr. Minister, just before you get into your opening presentation, I would like to simply tell you that our committee has held comprehensive hearings on the farm crisis. We've heard from many farm organizations, and we've heard many opinions and all kinds of analyses. I think one thing is very clear, and on this there is full agreement: many farmers are hurting, especially in the areas of hog production and cereal grain production, and they need help. So we look forward to your presentation. I understand you'll be here for only an hour, so we'll all try to observe our time limits.

Mr. Hilstrom, did you want to say something before Mr. Vanclief starts?

Mr. Howard Hilstrom (Selkirk—Interlake, Ref.): It's just a question, Mr. Chairman. The last time the minister appeared, he had a handout on his presentation. It would sure assist us if we did not have to be scrambling trying to make notes, when we could have the handout now. Would that be okay?

The Chairman: My understanding is that it has not been translated.

Mr. Minister.

Hon. Lyle Vanclief (Minister of Agriculture and Agri-Food, Lib.): We'll leave some information afterwards, but I don't have a copy of my speech, Mr. Hilstrom.

The Chairman: Well, you'll just have to find the journalist in you, Mr. Hilstrom, and do the best you can.

Thank you for coming, Mr. Vanclief, and we'll get right to it since we have a short time.

Mr. Lyle Vanclief: Thank you very much,

[Translation]

Mr. Chairman.

Ladies and gentlemen, honourable members,

[English]

it is a pleasure to be here again. I do apologize, but there's a special cabinet committee that has a number of agricultural regulations, etc., that need my attention at 4.30 this afternoon. So for the good of the industry as well, I need to be there at that meeting.

I do want to thank you very much for holding the hearings you have, and I want to compliment you on those. I think you've had a very effective series of meetings and activities in order to bring to the attention not only of the House of Commons and the government, but of all Canadians, the seriousness of the situation that too many farmers are in right now. I can assure you that, as I've said before, I am working diligently with my cabinet colleagues, counterparts in the provinces, representatives of the farm industry, and caucus colleagues. Again, as I have also said before, I want to thank all of you on all sides of the House for the input you have given and continue to give into this very serious situation.

I'm not going to go into a bunch of numbers this afternoon. I will be leaving some information with you, but I think we know the challenge that's before us. I will, however, restate the fact that we know there are some parts of Canada and some sectors that are affected more by this downturn no matter where they are in Canada, particularly the pork industry and the grains sector. Therefore, there are some areas of Canada that are worse than others. We also know that some projections are showing that 1999 may be a worse year than 1998. However, it is a little bit encouraging, as we see some forecasts that are showing a little more light at the end of the tunnel. As we know in this industry, though, that may or may not happen. So I again thank you for the participation you have had in helping everyone recognize the problem.

Mr. Chairman, I think we all also recognize that neither farmers nor governments want to step back ten years into the past with what might be seen as ineffective, inequitable or unaffordable bailouts for farmers. I know the press is using the word “bailout” a lot. I don't see this as a bailout, Mr. Chairman. I will use some words used by the Vice-President of the United States yesterday, because I agree with him fully—and I know all members present will. He said there is not an industry in our country that touches absolutely every table in every home of every Canadian or every American as does the industry of agriculture. He said there isn't another industry that suffers the vagaries of the weather to the extent of agriculture.

I do realize, though, that there are others that are similar.

At the present time, as we have known in the last number of years, a lot of the end result of the amount of commodities and the price of commodities has been totally out of the control of individual producers. This is because of actions taken on the international level, be they export subsidies, be they within the WTO, be they green support, or whatever they happen to be.

• 1535

After having made a presentation already to my cabinet colleagues, I can assure you that they understand the severity of the situation. We are prepared to help in every way we can. I will be having further discussions and will be making other clarifications with them later this week. As I've said, we know the importance of indicating to the industry, sooner rather than later, the assistance that this government can provide to them. We already know as well that there are a number of tools in place to help producers manage through difficult times. We have taken every action to ensure that farmers are able to use those tools while we map out the best course of action for the present time.

Let me remind you that I look at the situation we're in overall right now in three stages. We have the emergency situation we're in at the present time. We have a situation that goes certainly further than that, and that's the overall review of the safety net system. As well, we have the longer-term discussions that are going on, and the challenges and opportunities before us as we go into the WTO discussions in late 1999.

Also, as I say, we have to recognize that we have some tools there. We have sent out several notices to everyone who has a NISA account, in order to indicate to them that they can now make an earlier interim withdrawal. We're stressing to indicate that they use, to the best of their ability, the advance payments for crops.

The Safety Net Advisory Committee has been working long and hard and diligently on all of this. I've received their report. It is being considered in all of the deliberations, and they have made some recommendations that will build on our current farm income protection system. They've also said that, in their view, we cannot and must not undermine the tools that are already there at the present time.

We know there is a considerable sum of money in NISA accounts, but we also know it is not necessarily available. It's always a problem of distribution. A considerable part of that money is in the accounts of producers who may not be affected in the sectors that are affected at the present time. It may also be that they don't have much in a NISA account. Because they're young farmers, they may have been concentrating on making investments. Or maybe they had a couple of bad years or encountered other circumstances beyond their control. These are some of the farmers we need to be thinking about in whichever action we take.

The Safety Net Advisory Committee has also examined disaster programs that are in place in some provinces already. The committee has recommended that any program, if there is one put in place, be based on the design of these programs, with some modifications, and that there should perhaps be one implemented on a national level.

The committee has also stated very clearly that if there is a program, it should be income-based; it should be targeted to those in most severe need; and it should be generally equitably available to all farmers across the country, whether they're hog producers or grain producers, or whether they trigger the criteria for some other reason in their operation. All of this is good advice, and we appreciate it. It is all food for fodder as we look at the possible design of a program.

I'm also adamant that the provinces get onside and contribute to the effort to assist farmers in their time of need. The safety net program that is there at the present time has been, for a number of years, funded 60% federally and 40% provincially, so we have always taken an overall federal-provincial approach to the safety net programs. We are proceeding on that basis as we go forward.

Besides our work on the safety nets, I've been also touching base with input suppliers and with the financial institutions. I will continue to meet with those, stressing to them that they also have an obligation to work with individual producers in order to help get the producers through the ditch that they may happen to be in at the present time, because we do have a strong industry and can have an even stronger industry.

As some of you are fully aware, we also have some trade irritants with the United States. That $20 billion in trade back and forth with the U.S., our largest customer, is important as well. That's another front that we continue to work on at the present time, and I think we're certainly making up some ground there.

• 1540

So, Mr. Chairman, I think I'll leave it at that. I've made the point that we need to work together to tackle the real issue, which, as I said at the WTO, is the unfair, unlevel playing field there as far as trade is concerned and as far as support to agriculture is concerned. Even as we work through our current income problems, that's why I continue to impress upon the agriculture sector that we need to keep working together to formulate a strong position. It must be one that is strong, one that is unified, and one that is credible as we go forward into the WTO negotiations in the next number of months ahead—and I made those points as well when I was in Washington yesterday discussing with industry leaders, as well as with Vice-President Gore.

I know the time is short, Mr. Chairman, and I will leave it at that so that we can go forward with any questions.

The Chairman: Thank you for those remarks, Mr. Minister.

We have about fifty minutes for questioning, so let's get right to it. Mr. Hilstrom, you have seven minutes.

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

Welcome, Minister. As you know, through the committee here, Reform took a lead in putting a motion forward this fall to have hearings held within the committee to gather information and to provide solutions for your consideration, including supply day debates that we had that would help to enlighten yourself on the issue. Do you have an agreement from cabinet for emergency aid? It has to be a yes or a no.

Mr. Lyle Vanclief: I've said very clearly that, as I sit here today, I do not, but we are in the process. I have made a presentation. They've asked me to come back with further clarification, and I will be there tomorrow morning.

Mr. Howard Hilstrom: Thank you very much.

Canadians do have very cheap food. In view of this and the farm problems we have, there are a large number of user fees and cost-recovery programs applied against farmers that could rightfully be attributed to the general good of Canada and Canadians, and all Canadians would be willing to share in those costs through paying taxes for this. Is there any opportunity for you to remove these cost-recovery fees to help the farm sector?

Mr. Lyle Vanclief: I'll give you a very straight answer. It would be very difficult to remove them, but I have indicated that they are and will continue to be frozen. In terms of their overall percentage, it's a very low percentage of cost recovery. In some areas, they're higher than in others, but overall it's relatively low. We see in the application of those that there is some private good and there is some public good, and we ask the industry to pay for what we consider to be certainly private good.

Mr. Howard Hilstrom: Thank you. That's certainly one area to consider. Even though they're just small things, everything adds up and can make up a big amount.

On the lower cost of government, of course, is there any opportunity in the area of tax reductions, either specific to farmers or through changes in the Income Tax Act, that would have the benefit to farmers you're looking for?

Mr. Lyle Vanclief: There's no question that none of us want to pay the level of taxes we pay. I've never been in a country yet where anybody volunteered to pay higher taxes. Everybody would like to pay lower taxes. But when we look at some of the opportunities that are there for farmers at the present time—the rebate on provincial sales tax and on the goods and services tax on their inputs, or the transfer of land to another generation with the capital gains tax for $500,000—there are a number of them there. Certainly a number of provinces give rebates on fuel tax, etc. I think those opportunities certainly play an important role in keeping the cost down as far as producers are concerned.

Mr. Howard Hilstrom: Thank you, Mr. Minister. You've been very concise with your answers for the most part.

I'd like to ask something else. One of the big problems that is hitting us is the fact that probably 85% of our agricultural trade is with the U.S. They are big importers of our agricultural products. No matter what the figure is, it's gigantic. Seeing as that's so key and has been such a big issue all fall, I would like to know what the two largest, key irritants are that you're working on right now. You can't work on them all at the same time and still be effective, so where are you concentrating the most? We have the North Dakota and northern-tier-state farmers getting ready to blockade. We know they're attacking our cattle industry, which is absolutely green and fair both ways. Could you identify the key things that you're working on in terms of these trade irritants?

• 1545

Mr. Lyle Vanclief: Mr. Hilstrom, I don't think I can say specific things. I would certainly be more than pleased to share the points I raised yesterday.

There are a number of myths and misconceptions out there. You referred specifically to the cattle. When I pointed out to the Americans yesterday, and to Senator Max Baucus in my office two days ago when he was here, and colleagues pointed out to him as well, that before the FTA, cattle used to move from western Canada to the big markets in Ontario and Quebec, where a lot of people live and eat in Canada, and now they move down into the midwestern states and American beef comes up on the east side, he wasn't aware that's how the beef movement was. He has been a senator for twenty years and a congressman for four years before that. This surprised and disappointed me. I think this is the biggest challenge we have.

I pointed out to the Americans yesterday that, yes, there's barley moving from the Dakotas into southern Alberta this year, and obviously it's moving there even though barley isn't priced high enough in Alberta. It obviously is priced higher than it is in the Dakotas, and that's why it's moving. They say they can't get grain into Canada. Certainly they can get grain into Canada.

I think that's our biggest challenge, so that there aren't surprises, and surprises that happen and silly things done at the border because of lack of information.

I stressed yesterday that we need to talk more to each other and we need to listen more to each other. There was full agreement on that, including my discussion with Vice-President Gore.

Mr. Howard Hilstrom: I would certainly encourage you to identify at the earliest opportunity what are the key irritants to farmers and ranchers, because we need to know, and we need to know that you're working on those key issues.

If in fact you're working on issues that seem important down here in Ottawa or whatever, maybe in New Brunswick or Quebec or out in Manitoba we have a different view, and we'd like to have the opportunity to come back to you and say, we really think this is our key problem. Is that possible?

Mr. Lyle Vanclief: If you hear of irritants from groups of producers or individual producers, please never hesitate to let us know. We think we know what they are, because the industry leaders, whether it be the Canadian Cattlemen's Association, or whatever they might happen to be....

Mr. Howard Hilstrom: My last question is, in addition to short-term assistance, are you going to have a long-term disaster assistance program developed so that we don't have to go into this ad hoc thing again in five or ten years' time?

Mr. Lyle Vanclief: First, if there is a program, it will not be ad hoc. Ad hoc programs are given to absolutely everyone, whether they need it or not. The industry has said very clearly they do not want ad hoc programs. If there is a program of assistance, they want to target it based on whole farm income so it goes to those who need it and need it the worst and they're the ones who get as much help as possible.

Ideally, a longer-term program would be choice. Can we get a longer-term program at the present time? That remains to be seen, but discussions are taking place in that light as well.

The Chairman: Thank you for your cooperation.

Madame Alarie, you have seven minutes.

[Translation]

Mrs. Hélène Alarie (Louis-Hébert, BQ): We appreciate your meeting with us today. You have helped to highlight the severity of the farm crisis and in particular, the urgent need for action.

You said something at the beginning of your presentation which gave me some cause to reflect, namely that some regions of the country were worse off than others. Quite conceivably, depending on the type and volume of production, some regions may in fact be worse off.

However, with respect to pork producers, my sense is that production costs are pretty much the same across the country and that current market prices, if we can call them that, these ridiculously low market prices, are substantially the same for everyone.

Still with respect to pork producers, because they have some things in common, the head of the Canadian pork council provided some rather interesting explanations as to the reasons for this crisis. He blamed the global situation on a number of factors. What I would like to know is this: will all pork producers be treated equitably under the proposed program?

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[English]

Mr. Lyle Vanclief: Yes, they will. As I said, no matter what the safety net tools are or what programs are in place, if there's another program that comes in—a number of people are referring to it as a national disaster program—it's important that the program in no way, shape or form discourages or diminishes the use of the safety net tools that are already in place to producers of any commodity at the present time, and we have to take that into consideration.

Therefore, any program would be equitably available to all pork producers in Canada—

A voice: All producers.

Mr. Lyle Vanclief: Right, all producers. It would not be targeted to pork producers. What they've said is, on a whole farm income. If part of your farm income is from pork, fine, and if the rest is from horticulture, or grains, or whatever—it's your whole farm income.

Remember, what we need to do must be trade friendly as well.

[Translation]

Mrs. Hélène Alarie: I will tell you why I'm concerned. The province of Quebec has a program in place, the ASRA, which is separate from the Net Income Stabilization Account. Therefore, by force of circumstance, we are already in some ways ahead in our efforts to support our producers.

I'd like some assurances from you that Quebec producers will not be unduly penalized or have to wait for future compensation simply because the province has moved more quickly to help its producers.

[English]

Mr. Lyle Vanclief: No.

[Translation]

Mrs. Hélène Alarie: I'm concerned about the situation.

[English]

Mr. Lyle Vanclief: I understand that, and as I said earlier, the program that's there would have to be and should be recognized if there is a further program.

[Translation]

Mrs. Hélène Alarie: The situation today in 1988 is far more serious. I realize that you don't like to look back, but in this particular case, should 1998 incomes be taken into consideration?

[English]

Mr. Lyle Vanclief: We realize there's a situation that is not good in 1998, and we anticipate it may not be any better in 1999.

[Translation]

Mrs. Hélène Alarie: I see. If I understand correctly, Cabinet is going to support the proposed program.

We have met with farmers and they have asked us a range of questions. When might this program come into effect? We're waiting for you to announce the good news.

[English]

Mr. Lyle Vanclief: If there is a program put in place based on whole farm income, we certainly know it takes some time because of tax filing, and so on, of individual farms, based on that whole farm income, before it would be indicated whether the trigger was met or if someone called upon that aspect of the program.

That's why I've said very clearly that even though all programs take some time for the money to flow, it's important that if there is a program, the industry and the producers know as soon as possible that there will be some type of program there for them, so that they can go to their bankers or suppliers and say, look, help is on its way. They may not be able to say specifically at that time it's going to be x number of dollars, or whatever, for their farm, because it's based on a whole farm annual income, and so on. So that's why we need to recognize the urgency of sending out the right message.

[Translation]

Mrs. Hélène Alarie: Does this mean that there are plans afoot to provide advance payments under this program?

[English]

Mr. Lyle Vanclief: It's difficult to make advance payments. You have to know whether the individual farm is eligible to call on the program before you make an advance payment. But we will act as quickly as we possibly can, if there's a program, to support the industry and the individuals.

[Translation]

Mrs. Hélène Alarie: Thank you, Minister.

[English]

The Chairman: Thank you, Madame Alarie.

Now we'll go to Mr. Calder for seven minutes.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

Minister, we all know that part of the reason we're in this is because of the subsidies, and it's my understanding that when you had a chance to talk to Al Gore you were in fact the first Canadian Minister of Agriculture to meet with him, which is—

Mr. Lyle Vanclief: But he puts his pants on one leg at a time, too. He just has a different job every day than some of the rest of us do.

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Mr. Murray Calder: There we go.

Did you have a chance to talk to him about the FAIR Act, where they're pumping over $8 billion in; the Fair Aid Act, where they're pumping $6 billion in; the Farm Bill of 1996, where they're pumping $35 billion in over the next seven years? What opinion did he have, for instance, on the EU carry-forward program, where there is the possibility of nearly 38 million tonnes of subsidized European wheat hitting the market in the next two crop years? Did you have a chance to talk to him about that?

Mr. Lyle Vanclief: Mr. Calder, I had two brief conversations with Mr. Gore.

The second one was briefer than the first one because he was leaving after he spoke. I had the opportunity to chat for a brief time on some of the comments he had made. It was interesting that a number of the challenges and opportunities he discussed in this speech, just prior to when I spoke, were very much like the challenges and opportunities we have here. And he talked somewhat about rural United States and these types of thing.

We did not get into a specific conversation about their FAIR Act and their farm aid. He outlined in his speech a number of the things they have done recently—as recently as yesterday, for example—as far as food aid and these types of thing are concerned.

What I stressed to him was that we have a lot of trade, it's important, and that we need to both work harder as far as managing the trade between our two countries, because it is so important. They are our largest customer and we are their second largest agriculture and agri-food customer. He came back to me very quickly on that issue and said, yes, we need to work together and we need to work harder.

Mr. Murray Calder: Okay. Because obviously it's not just the fact that we're suffering from Asian flu. It's the fact that we are looking too at how subsidies were supposed to be lowered to the level we had negotiated in 1994, and quite frankly they have not been. Would you agree?

Mr. Lyle Vanclief: I think all of the countries actually did carry out what they were supposed to do, based on the base period back in the 1980s. But many of the other countries started from a much higher point than we did. So if you take a percentage off a higher number, it still leaves you higher than we are. As much as I am opposed to all of the export subsidies and this type of thing that the other countries, be it the United States or the European Union, are doing, in all fairness to them what they are doing is inside and within their WTO commitments.

Mr. Murray Calder: Thank you.

Mr. Chairman, I know the minister is pushed for time, and in fairness, I'm going to give the rest of my time to Mrs. Ur.

The Chairman: Go ahead, Mrs. Ur.

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

Mr. Minister, will you be putting a cap on this program?

Mr. Lyle Vanclief: It has certainly been pointed out to us that if there is a program, there should be a cap. There's always the concern that there may be some very large investment groups, if I could use that term, that produce large numbers of livestock or are in large operations and that there should be the consideration of a cap, if and when there's a program.

Mrs. Rose-Marie Ur: That has been a major concern in my riding among many farmers.

I know when you gave your speech in the House the other night, you mentioned that you had approached FCC and I think the Royal Bank. Could you expand on how your feedback is in dealing with those individuals, how they're reacting to the crisis?

Mr. Lyle Vanclief: I met with those two, and I think there are arrangements being made that I meet with the bankers association and the FCC collectively again in the very near future. That meeting, I think, is arranged for the first of the week. I've asked them to come here so that we can talk about it.

As I say, I've also had the opportunity to meet with the Fertilizer Institute, etc. I've pointed out to them—and I can tell you I've pointed out some personal experiences—that they are partners in many farm operations. When you're in farming, everybody knows the risks. And when you're in the business of farming, you're usually in it hopefully for the long term, and there are ups and downs. As partners in the business, it is the best of the partners who stick together and ride out the tough times, work their way through the tough times, so that they're all there in the good times.

• 1600

But we are also pointing out to producers, and I know you people are as well, that if a producer sees that they're going to struggle—and I know it's tough because you think, okay, we're going to get through next month, or we're going to get there—get to the suppliers and the financers as quickly as possible and say “I have some tough sledding here; can we sit down and work out a payment program so that we can all be here when this is over?”

Mrs. Rose-Marie Ur: Carrying on in the same vein, we had several good meetings with various presenters on this issue, and you're exactly right. We have to work as a team, whether we're the primary producer, the processor, or the retailer. From some of the presentations we've received from some presenters I think there's a venue there where we are lagging behind, where perhaps some of the team is not pulling forth under the circumstance. I don't know if there's any approach you as minister can take. I'm basically pointing a finger at the processors.

Mr. Lyle Vanclief: I stress all the time that there are 1.9 million Canadians who are involved in agriculture and the agri-food industry. Seventy-five percent of those are involved beyond the farm gate, but it all starts inside the farm gate. The one part isn't any good unless the other part's there. There has to be economic viability on the producers' side and on the processors' side as well. So that stresses the fact that the simplest way to put it is we are in this together and we are in this hopefully, and I know, for the long haul.

Mrs. Rose-Marie Ur: Am I done?

The Chairman: You have 30 seconds if you want to use it.

Mrs. Rose-Marie Ur: I know that countries have been suggesting, and people have been suggesting, we have such a glut on the market, why don't we send our processed pork for food aid, to Russia for instance? But the challenge is that once it gets there, how do they distribute it?

Mr. Lyle Vanclief: Certainly Canada has always been a major player. I think for the size of our country we have certainly pulled our load as far as our obligation in helping in the disasters around the world is concerned. The government is looking at doing more in that light. There are certainly tremendous organizations that can do the distribution out there.

We need to look at that as well, because even—and I think this speaks well of Canadian producers—in these tough times, they're coming and saying this. And I know part of the reason they're saying it is, it's so cheap you might as well sell it or use it for that. I heard this morning that one individual, or a group of individuals, in southwestern Ontario took 300 pigs and had them slaughtered and they went to one of the food banks in Toronto. Even as tough as it is, Canadian farmers are saying—and I think this is typical of Canadians—it's tough for us, but we know there are other people out there—not diminishing our stress here—who we can help even though we're going through this.

The Chairman: Thank you. Now we go to our five-minute rounds, starting with Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair. Welcome, Minister. This afternoon you've said in response to several questions, “if there is a program”. I think all of us appreciate why you're saying that. At the same time, there are farmers who are desperately anxious and awaiting news. You've also said this afternoon that it's a pretty bleak picture in 1998 and it could even be worse in 1999. Can you not be a little bit more optimistic about what's coming down the pipe?

Mr. Lyle Vanclief: Mr. Proctor, I have obligations to the government, to my cabinet colleagues—and as I've said, I made a presentation to my cabinet colleagues last Thursday. I know they understand the severity and the urgency of it. They asked me to come back with some further clarification. As a result of that, I have not been told by my cabinet colleagues, yes, Lyle, yes, ministry, you have the money and you have the program—or a program or whatever. So all I can say is what I said before. We are working to do all we can as quickly as we can. I think the Prime Minister's comments today also indicated that he recognizes the concern and the urgency as well.

Mr. Dick Proctor: With regard to the net income stabilization account, I'm sure your officials have looked at it. Are there specific things that could be done to loosen up some of that money? I know you've done the interim withdrawal. Are there some other things you're looking at there that could help to alleviate the crisis that some of the farmers are facing?

Mr. Lyle Vanclief: There are criteria that trigger whether an individual...if you wanted to talk about the specifics, but I don't think that's what you're referring to. There's a set of criteria that's set, and that was set in discussions with the provinces and the producers, etc., because that's a tripartite program. It takes the federal government, provincial government, and individual producers to trigger that. At the present time, we're not discussing anything in terms of changing the trigger mechanism in that program.

• 1605

Mr. Dick Proctor: You said in your opening remarks, Minister, that you were adamant the provinces be on side in any program. Can you elaborate on that? Hypothetically, what if one or two provinces don't come on side? How would it work, or, to put it more accurately, how wouldn't it work?

Mr. Lyle Vanclief: Well, I'm pleased with the comments I'm hearing. Certainly some provincial leaders have made some strong statements that they feel it's solely federal, but at other times they have indicated to me that they know they have a role in this as well. I'm certainly pleased with that. If we have a program, we will see that as our 60%. In simple terms, that's the way I will view it—we will see that as our 60%, and my guess is the provinces would be under considerable pressure from their producers to be there for the other 40%.

Mr. Dick Proctor: Thanks, Mr. Chair.

The Chairman: Thank you, Mr. Proctor.

Mr. Borotsik, you have five minutes.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman. To follow up on a question I had in Question Period, when my honourable colleague, Mr. Proctor, said “back to the provinces”, I appreciate the fact that we're all here trying to achieve the same goal, which is to try to assist an industry that's in desperate straits right now. So it's non-partisan, and my questions are not meant to be partisan. It's more in regard to how to get the job done.

As was mentioned by Mr. Proctor, the provinces are meant to be a partner in this. You've said many times, Mr. Minister, it should be a 60-40 split, and I don't think anybody around this table would disagree with that. In saying that, however, if I were involved in it, would it not be best to sit down with the provinces and ask them if in fact the program you've put forward is the right program and if they're prepared to be a partner in that on a 60-40 split? Saskatchewan has already come out and said, we're not going to be there because it's a federal requirement. I don't believe that's the right position to take in Saskatchewan, but then again, I'm not a Saskatchewan politician. If that's the case, I have two questions.

One, why have you not had more direct consultation and input from the provincial governments? Secondly, if Saskatchewan for some reason decides not to go, would your 60% still be there for the Saskatchewan farmers at the 60% level, or would you pull that all back from the province?

Mr. Lyle Vanclief: There are a number of questions there, Mr. Borotsik. We can't go specifically to the provinces at this time and say this is the amount of money we have and this is what we think we would like to do with it, because I don't know those answers. So we can't do that.

What I can tell you is that as early as November 5 and 6, 1998, the deputy ministers met and talked about what type of program could work. The deputy ministers met then. The assistant deputy ministers have met three times since then, and are meeting now on a weekly basis, to discuss what the shape of a program might be, if there were a program.

The Province of Ontario has said, for example, they will be there with the feds. I believe the minister from Manitoba has said the same thing. Nova Scotia has said the same thing. As a matter of fact, I had a phone call from the minister from Nova Scotia before one o'clock today just to confirm they want to help as well. So that's the answer I can give. Hopefully, as soon as I get the green light, the phones will ring even more.

Mr. Rick Borotsik: I only have five minutes, and I appreciate your comments and your explanation as to the meetings that have gone on with the deputy ministers and the assistant deputy ministers.

We talked about a bankable program. You talked about it. I found out yesterday that the Americans made a decision in one week and the next week there was actually money flowing. I appreciate this is an income-based program and it's a little bit more complex, and quite frankly, it's a better program than what they have. I don't endorse theirs, believe me. I do not at all endorse the way they do their program. I endorse our program based on income. But the point I'm making is there isn't cash flowing.

For a farmer to say it's bankable and go to the bank and say, yes there's going to be a program, but I don't know how much and I don't know when.... Are there other ways of getting the cash flowing more quickly than by looking at a tax statement at the end of March or April? Is there anything your department has looked at to try to get cash in their pockets for spring seeding?

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Mr. Lyle Vanclief: I don't know if there is, unless you went to an ad hoc program.

Mr. Rick Borotsik: No.

Mr. Lyle Vanclief: I realize that, and I appreciate that's not what you're saying. If it were an ad hoc program and it were x number of dollars per acre, all you would have to do is say, I have 1,000 acres times x number of dollars, Mr. Banker, and that's what I'm going to get. That's not the kind of program our industry wants and that's not the program this table wants, and I appreciate that.

I'm not contradicting what you're saying about the American program, but we have some very close friends who are farmers in the state of Illinois. I phoned them last night to tease them a little bit by saying that I met their Vice-President, knowing they had never met him, and we had a little fun with that. On the other hand, I asked him what does this program do that was announced before your governor elections, and he said, I haven't a clue.

Mr. Rick Borotsik: So he has a cheque.

Mr. Lyle Vanclief: No, he has not.

Mr. Rick Borotsik: There are cheques that have been delivered, I can assure you of that.

Mr. Lyle Vanclief: There may be some, but he's a sizeable wheat, corn, and soybean farmer, and his answer was, I haven't a clue and I have seen no money.

The Chairman: Sorry, we're out of time. Five minutes has gone by.

Mr. Minister, you're a former farmer. In your opinion, in the eyes of a farmer, can something that is bankable—whatever your definition of bankable is—be as good as money?

Mr. Lyle Vanclief: If a farmer is able to push—and I know they all can—and if they know as quickly as possible what are the criteria of a program—in my terms, what it would take to trigger the program—I would think that with their banker or their accountant or without them or with their computer, they could quickly tabulate where they're going to be this year.

I have already had producers indicate to me that they've done some work with projected prices from now until the end of the year, which isn't very far ahead, and they have indicated to themselves whether or not they are going to be able to trigger their NISA account. If they know that and they know what their criteria are, then I would think they're going to be able to say to their bankers, this looks like this is what this might mean to me. That, to me, would have to be awful valuable, rather than where they are now with only their NISA account, if they have one.

The Chairman: Thank you.

I'll now turn to Mr. McCormick for five minutes.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair, and thank you, Mr. Minister and deputies, for being here.

The committee has had a great opportunity to meet with the producers and representatives of the sectors from across the country. I am interested, as I'm sure we all are, in finding a solution that will be as fair as possible to all the people who are involved.

Yet there always seems to be a perception that the grass is greener on the other side of the provincial line. I believe you answered this, but I want to get the answer in response to my question. If and when the short-term and long-term programs are available, will there be more equality following that than what there has been up till now? For example, pork producers here in Ontario sure envy their neighbours and relatives in the province of Quebec, because they're not getting even half of their price.

Mr. Lyle Vanclief: Mr. McCormick, the Province of Quebec chose to take its safety net money and put that into a price support program, while other provinces put it into the NISA program. That was their choice. As far as the current situation with pork is concerned, I'm sure the pork producers are pleased that choice was made. In other provinces pork producers had the opportunity to take part in a NISA program. I think it's important, as I said earlier, that we don't destroy those.

There are other provincial programs as well. Ontario has the market revenue program, and I think we need to recognize as well the strength of that program.

I can tell you that whatever we do will not be perfect. It will not be all things to all people. Will it save or can we save every producer that's out there? I don't know. I'm a realist. I doubt it. But as well, it has been indicated to us very clearly that if there were a third line of defence or a national program or a national disaster program—and this is clearly what I'm being told—it should not be rich enough, if I can use those words, that it allows an inefficient producer, if there is one out there, to use the program and exist on the program for a long period of time. A number of producers are saying that's not fair either.

• 1615

So there's a line to walk here. I'm sure that whatever is done, if and when something is done, there will be those who say it's not right, the line wasn't drawn in the right place, etc. All I can say is we will do our best with whatever resources we have, if we can find resources, to help the most.

Mr. Larry McCormick: Mr. Minister, I realize that—if you ever have the opportunity to get home for an hour or two once in a while—you live in Ontario. I'm hearing from some of the Ontario pork producers, the smaller producers who have a family farm, and they're concerned that if this program follows any of the guidelines as have been proposed, say, by the Federation of Agriculture or whatever, the producers who have other sources of income may not be in a position to get any of this aid if it's based on this. They're wondering if there will be any windows of opportunity for this type of producer.

Mr. Lyle Vanclief: Off-farm income would not be included in any calculation.

Mr. Larry McCormick: If they had a mixed operation, total farm income is total farm income.

Mr. Lyle Vanclief: If it's a mixed operation, it's total farm income.

Mr. Larry McCormick: Mr. Minister, I just want to put one other thing on the record. You mentioned how our farmers give, and they're great. They've always shared their bounty with all of Canada. I often think about the ice storm of this year, and the same farmers who gave so much to their neighbours during that crisis are still helping out today. You told the story about the food banks in Toronto.

On food aid, and I realize it's not always just your department, there are markets in the world today in which we could be involved where it wouldn't take any sales away from any other country. For example, in North Korea, and I'm always using this as an example, two million people have died in the last two years. Today they are supplementing their diet with grass and bark. It's a communist country. It wouldn't be easy to get food in there, but countries such as Australia and those in Asia have said, go ahead and help these people if you can, because there's no money coming from the country. So I just want to put on the record that there are opportunities for us to be involved.

Mr. Lyle Vanclief: Thank you.

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

The Chairman: Next is Mr. Hoeppner for five minutes.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): I must applaud the minister for making this a whole-farm income program, plus that off-farm income is not going to be included. I think that's going in the right direction.

Mr. Minister, have you looked at how much of the hog farmers' hurt is being caused by subsidies and how much by actual overproduction?

Mr. Lyle Vanclief: I'd like a clarification. What do you mean by “caused by subsidies”?

Mr. Jake Hoeppner: I mean subsidies to other pork producers in the U.S. Is it not mainly just a matter of overproduction?

Mr. Lyle Vanclief: Mr. Hoeppner, there is a hog cycle; we all know that. There are cycles pretty well in any commodity production, and it's not unique to agriculture.

It's a deep gully in the hog industry. I believe there was about a 10% production increase in the United States. Our Canadian production overall only went up about 3%. We know the world is small, and with the Asian crisis, some of our big customers, be they in Asia or Russia, aren't buying. I don't think there has been a lot of work done on how much was because of this and how much was because of that. Rather, we have been working on what can we do about the situation and how we can help.

Mr. Jake Hoeppner: I appreciate that.

There's one other thing I just want to quickly point out, and then I'll let Mr. Breitkreuz take over. The Wheat Board has always been a big issue. It's an irritant on both sides. Would it be possible for the Wheat Board to increase their initial prices to the cash price at Minneapolis on these grains and thus avoid this conflict? I think that would solve a lot of your trade irritants.

Mr. Lyle Vanclief: I don't know. I'm probably not as familiar as I could be or should be with how the Wheat Board sets its initial prices. We know the views of some Americans, and we know the views of some Canadians with regard to the Wheat Board. But what I pointed out to the Americans is that just because we do some things differently on opposite sides of the border doesn't mean the other person's doing them wrong.

Mr. Jake Hoeppner: I appreciate that, but I know from my own farm being close to there and from hearing from other farmers that the initial price is only about half of what the U.S. cash prices are right now, and that's hurting us.

With that comment, if you wouldn't mind looking at that, I'll now turn it over to Mr. Breitkreuz.

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Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much, Mr. Chairman.

Thank you, Mr. Minister, for coming before the committee. I find this very helpful and interesting.

Would you consider an offer made by a group of farmers in the west such that they would forgo any compensation by the federal government if they were given the option to market their products freely? Would you consider that offer?

Mr. Lyle Vanclief: What you're saying is dual marketing.

Mr. Garry Breitkreuz: They're willing to put their money where their mouths are. They're willing to not be part of any compensation package, presuming there's one coming, if they would only be given the option to market their products. They feel this would actually solve their problem.

Mr. Lyle Vanclief: We have an opportunity in western Canada to revamp, if the producers so desire, the marketing system for grain. I think that's what you're referring to in western Canada. It's been democratized like it has never been before. There's an opportunity there. I guess the elections are over, and the names are about to be announced. I certainly haven't seen them, or whatever, but I think if that's the way the majority of farmers in western Canada want to do it in the future, then those types of decisions will be there. There's a process for them to take place.

But it's imperative that if and when there is a program, that program should be offered to everyone. As I said, it would be equitable. If you want to get into the bartering system, you won't be able to say that you don't want to take part in the program, but you'll do this if we'll do that, and go back and forth. If there's a program, there will be a program available to everyone.

Mr. Garry Breitkreuz: I'll just follow up on the food aid questions that were put forth. Say food were to be purchased by the federal government and sent abroad. Many people in Saskatchewan see this as far superior to sending cash. I'm glad to see you're open to that.

The problem is that they want to be sure that all ag sectors are treated fairly. What assurance can you give them that this would indeed happen?

Mr. Lyle Vanclief: You mean that all ag sectors would have—

Mr. Garry Breitkreuz: Yes.

Mr. Lyle Vanclief: —access to providing food?

Mr. Garry Breitkreuz: Well, the federal government should in fact treat all of them equally, and not just send pork or wheat overseas. All ag sectors would be treated fairly.

Mr. Lyle Vanclief: I understand what you're saying, Mr. Breitkreuz, but one of the challenges in food aid is getting the food there that they can use. Catherine Bertini, the head of the World Food Programme, was in to see me a few weeks ago. This was back when she was talking primarily, but not only, about Honduras. What they needed then was fish and dehydrated products. What if we had sent them pork? They're not pork-eating people to any great extent. There are parts of the world where corn is the product.

I met with the Food Grains Bank the other day. In some years they need soybeans; in some years they need wheat; in some years they need pork; in some years they need beef—it depends on the situation.

Mr. Garry Breitkreuz: There are ways to make it equitable. Some parts of the world have bread—

Mr. Lyle Vanclief: Yes.

Mr. Garry Breitkreuz: It's something to work on.

The Chairman: Your five minutes are up.

Mr. Bonwick, you have five minutes.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Thanks very much, Mr. Minister, for showing up today. I certainly want to start by congratulating you, your department, and your staff for reacting quickly, very quickly in fact, to this farm crisis situation.

I'm aware of the fact, through your presentation, that at this point in time you're just attempting to secure approval from cabinet for funding or moneys available to put in place a safety net.

I'm just wondering about the long-term strategy. Are you going to be involving stakeholders to create a long-term strategy to offset potential farm crisis situations down the road? The types of organizations I'm thinking of are federations of agriculture, pork producers, oilseed producers, etc. This is so you have all the stakeholders at the table to try to devise these long-range strategies.

Mr. Lyle Vanclief: There was the meeting of federal-provincial ministers this summer. Prior to that, there had been considerable discussion about a review of the safety net envelope and the safety net program in Canada. The present federal-provincial agreements end in March 1999.

Everybody agreed that sufficient achievement wasn't made, and that this should be extended for one more year as a transition year. During that period of time, the safety net review committee, deputy ministers, ministers, and all of our teams will continue to work together to find all the resources we possibly can to make sure we use those resources and—I'll say it, because I believe it's this way—invest those resources in the best way we possibly can.

• 1625

As well, we'll use our experience of the realities of the industry in the past, the best knowledge we have presently, and the best crystal ball we can have in order to work on the overall safety net review. So that's taking place.

They're all at the table. The safety net review committee has all the organizations there.

Mr. Paul Bonwick: That was my basic question. Certainly the different stakeholders I've met with want to ensure they have an opportunity to participate in long-range strategies as well.

Again, I just want to thank you for affording us the opportunity over the last several weeks to meet with you on a number of different occasions to discuss the crisis situation in Ontario. Well done.

The Chairman: Thank you, Mr. Bonwick.

We'll take two short questions from Mr. Steckle, and then one each from Madam Alarie and Mr. Borotsik. Mr. Steckle, you have two questions.

Mr. Paul Steckle (Huron—Bruce, Lib.): I want to thank the minister, the deputy, and their associate here this afternoon for taking the time not only this afternoon, but on almost every occasion we've asked, to be present at our meetings.

The reason I had to leave this afternoon for a few moments was that I was addressing some concerns with hog farmers back in my riding. So if I missed something and duplicate a question, replicating what's been said, it's basically because of that.

I'd like you, Mr. Minister, to perhaps elaborate a little bit on the market revenue insurance plan in Ontario, and whether the guarantees made to that plan are going to be extended by an extra year. I believe that was to terminate at the end of March 1999 or something. Can you perhaps elaborate on that?

You might also want to tell us what kind of cooperation or consultations you had with the financial institutions regarding their participation and cooperation with those farmers who are finding themselves short of finances for the banks. What's your response to those who say they want caps on the program?

If I might, just for a moment, I'll tell you that in my community, there's a strong view that, whatever program we engage in, we should not be seen to be financing and supporting the furtherance of those integrators who are now in the business and those who want to get into the business. Basically, we look at the need. I think we're in general agreement around this table that with this program—I realize we have to do it very quickly—there's a sense that we're together on this. We're cooperating very well. Everyone is agreeing with that. We want to make sure that those who receive the assistance are the ones who need it. We don't want to add to a problem that has been created, in large part, by a number of very large operators who are getting larger.

Mr. Lyle Vanclief: Mr. Chairman, I'll address the last one first.

I did comment on it earlier, Mr. Steckle. Yes, we are considering—it has been made very clear to us—that if there is a program, then there need to be caps. This is recognizing the concern you have had expressed to you.

As for the market revenue program, we certainly realize the strength of that program and its role. We're working on the extension of that program as we go forward.

I didn't write it down, but there was one other. Just give me—

Mr. Paul Steckle: It was on the financial institutions.

Mr. Lyle Vanclief: Oh, yes. It was on financial institutions. I met with some of them individually. Early next week, I will be meeting with the bankers association executive and the Farm Credit Corporation to stress to them that they have a role here to help producers get through and over this ditch, because this is an industry that we're in for the long term. I know they'll need to look at each operation individually. They'll have to do that, and they will do that. But there is a role here for them.

Mr. Paul Steckle: I have a supplemental question on the financial institutions. I'd like to know if you know and are able to tell us this. Your department hasn't been able to get this to my office. What is the Farm Credit Corporation doing in terms of lending for the furtherance of building barns? Are we involved in lending to those operations now?

Mr. Lyle Vanclief: The Farm Credit Corporation is in the business of breaking even. That has been made very clear to them. So they will make their individual decisions on what they finance based on what any lending institution is accustomed to. Interestingly enough, in talking to some bankers, there are still a number of proposals before banks for further livestock operations. Even though there are some troubled times right now, there's certainly also some optimism in the long haul.

The Chairman: Thank you.

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Just to remind you, members, Mr. Vanclief's officials will be staying after he leaves.

We have time for two very short questions—one from Madam Alarie and one from Mr. Borotsik.

[Translation]

Mrs. Alarie.

Mrs. Hélène Alarie: I have question concerning the cap. I don't understand how you can put a cap on this program. Is the size of the operation a consideration? Will the cap be based on income? The fact of the matter is that farms today are no longer a family enterprise, but more like corporations. I know of cases where some operations have been split up into four small farms. I fail to see how farms can be viewed as anything other than a corporate entity.

[English]

Mr. Lyle Vanclief: Madam Alarie, Dr. Hedley could answer that better than I could. I hate to do this, but could I ask him to answer that, Mr. Chairman?

The Chairman: We shall do that. The final question goes to Mr. Borotsik.

Mr. Rick Borotsik: Well, I have a political question, so the minister has to answer this question.

[Translation]

Mrs. Hélène Alarie: It was a good question.

[English]

Mr. Lyle Vanclief: Mr. Chairman, why don't you answer it?

Mr. Rick Borotsik: It has to do with the blockade.

We had a blockade in South Dakota. It affected my province more than any other province. We're right north of South Dakota, and anybody transferring livestock or grain had to go around.

There's a blockade being suggested for December 6 that is now supposedly going to extend from Minnesota all the way to Washington. If this is the case, we have some serious problems.

What contingency plan does the government have to diffuse this potential blockade on December 6?

Mr. Lyle Vanclief: No matter who does it or how it's put up, there's not much difference in the end result of any blockade. As I said, they don't help. They get attention, but they're a detriment. Both sides know this.

The previous blockades were supported by governors and encouraged by governors. It's my understanding from anything I have read in the press that the present blockade is being put up by individuals. I'm not diminishing their importance, but it's individuals and individual organizations.

When they stopped the last blockade, negotiating teams from both countries got together. As we sit here right now, they are continuing those negotiations. It's our hope that, as a result of those negotiations, we will be able to show sufficient win-win results in the very near future. Also, a number of politicians in the United States, including Max Baucus, who was here the other day, said that he would then discourage any blockades there.

Now, we'll always have Mr. Dorgan. Mr. Dorgan is Mr. Dorgan. Unless we stop absolutely every kernel of wheat and every animal from going into the United States, Mr. Dorgan will never be happy. I'm not diminishing the effect he might have, but that's a reality.

I think for the most part—we can point this out to the Americans, and I made an attempt at it yesterday—we do trade fairly, and there is a lot in this for both of us. Hopefully, we will see less and less of this type of activity.

The Chairman: We'll have to leave it at that. We've taken an extra five minutes.

On behalf of all the members, Mr. Minister, I want to express our deep appreciation for your coming here and spending 65 minutes with us. I think we appreciate the concerns you've shared and the views you've shared. I know you're working hard on this crisis, and we look forward to any substantive announcement in the near future. Again, our thanks.

Mr. Lyle Vanclief: I just want to thank all the members all the way around the table for the support they have given. We're not done yet. But let's keep our fingers crossed, and let's hope that between the federal and the provincial governments we do all we possibly can to help those who are in the worst conditions out there.

The Chairman: Thank you again.

Members, we're going to just continue working here. Mr. Claydon and Mr. Hedley will remain.

If it's all right with the members, Madam Alarie had a question.

Mr. Hedley, maybe you could address Madam Alarie's question.

Mr. Douglas D. Hedley (Acting Assistant Deputy Minister, Policy Branch, Department of Agriculture and Agri-Food Canada): Thank you, Chairman.

We have discussed this issue at very considerable length in the National Safety Net Advisory Committee. This committee expressed a good deal of concern about large corporations that would be in a position to receive a payment if they were producers of farm products under a program of any kind. As a result, the advice the committee has given to government is that we should find a way of limiting payments so they do not go to large corporations. They have also advised that the payments do not get to excessive levels for those very large operations, particularly those further along in the processing system.

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We're taking this into account as we work with the minister to develop the program. I really can't say any more than that, as development of the program is still underway.

The Chairman: Thank you.

Mr. McCormick.

Mr. Larry McCormick: Thank you, Mr. Chairman.

I know Mr. Hoeppner asked this question, but I think it's a very valid one. You people do not represent the Canadian Wheat Board, but I want to also put the question forward. Perhaps we have to ask the Canadian Wheat Board. But I also believe your ministry needs to contact them and see if we can start to explore what opportunities there would be to get a higher initial payment to our producers.

Mr. Frank Claydon (Deputy Minister, Department of Agriculture and Agri-Food Canada): Mr. Chairman, there is a process for adjustment of the initials, as I'm sure Mr. McCormick knows. We will contact the officials of the Wheat Board and discuss with them what their plans are. This is something that they look at in terms of markets around the world, and expectations, and so on. We'll certainly talk to them about what adjustments there might be in the process.

Mr. Larry McCormick: Thank you.

I appreciate that. Last week we had the president, the chair, the CEO, whomever, of the Wheat Board here. I put forward a question he didn't think was perhaps properly put to them. He said there was no way they could help out with the farm crisis. I think with the size of their operations, all partners, if they were to explore it—we're talking about the fertilizer companies and the seed companies here—would possibly find some way they can help besides just marketing. So I just want to make sure we leave no stone unturned.

My next question is this. We have heard people ask that we explore ways our younger farmers, or our farmers who have not been involved as producers in the business as long, could use a mortgage type of payment to purchase payment insurance for future years. We're talking about future programs for long-term safety nets and that. We just want to make all this stronger for all players. So I'd ask someone to make note of this.

My other comment is on the price of pork. When we read the paper, we see the futures price is 76% higher for August 1999 than what it is today. I probably should know this and I do not. What percentage of our pork produced here in Canada is sold on the futures market? I wonder if anyone has any idea of this, including the people who might be sitting right behind you.

Mr. Frank Claydon: I see you left the tough questions until after the minister left.

In terms of your first idea about young farmers being able to have some way of delaying the payments they might have to make to join a program like NISA, for example, this has been a concern over the past few years as we've seen NISA develop.

As far as I know, there's nothing anyone has come up with yet that's a foolproof way of doing this. But this is the kind of thing we're reviewing all the time with our safety net review committee. We'll certainly take this back to them again and have a look at it, because until those producers have the ability to build up their accounts in NISA, they are quite vulnerable. So it is an important consideration.

• 1640

In terms of our hogs, perhaps Mr. Hedley has an estimate of the percentage marketed in the futures market.

Mr. Douglas Hedley: The way you have asked the question, the answer is really negligible on the futures market. A number of the hog boards—Ontario, for example—are working with their producers to price hogs forward. We're finding a growing number of farmers are using those forward-market mechanisms to lock in prices. I don't have a percentage of what's going through the board on that. We can get this for you, if you wish.

Mr. Larry McCormick: Mr. Hedley, would the people who would use this forward-market pricing system be mainly the very large producers that are tied in and controlled, for all the right reasons, by some of the multinationals or international companies? Are some of the smaller operators involved in this type of system?

Mr. Douglas Hedley: Yes. Very briefly, the way I think the provincial hog boards are trying to run this is size doesn't matter. You can get in at any size. You don't have to worry about trading lots on the exchanges. You work through the board with almost any number of hogs.

The Chairman: You are out of time, Mr. McCormick. I might remind you that the Canadian Pork Council will be here tomorrow with respect to our WTO hearings. Maybe you should repeat your question then.

We'll go to Mr. Hoeppner, Mr. Borotsik, Mr. Bonwick, and then Mr. Steckle. I see Mr. Breitkreuz also wants to ask a question.

Mr. Hoeppner.

Mr. Jake Hoeppner: Thank you, Mr. Chairman.

I want to go back to the Wheat Board issue. I know this is of prime importance, not just to Manitoba farmers but also to North Dakota farmers. I'm not so sure the government is again going to make a deal with Americans and cap our imports into the U.S. to keep the livestock industry flowing. That happened the last time. If it happens again, there is going to be war on both sides of the border.

What guarantee do you have that the Americans will be happy with your explanation that the Wheat Board is not selling the grain at below market cost to our own livestock industry and to theirs? When you have initial prices of 77¢ a bushel on barley, something is wrong when you can get $2 or $2.25 at the feedlot, and that's where the Alberta farmers are bringing it in from Montana. There's something out of balance here. What's going on?

Mr. Frank Claydon: On the first part of your question, in terms of whether we can get some guarantee from the Americans that they aren't going to keep complaining about the Wheat Board, my sense is our chances of that are very slim. It seems to be the kind of thing they like to complain about perennially.

Even when you look at the numbers from the OECD on the support levels for wheat in the United States and compare it to Canada, we're now looking at in the order of ten times as much direct support to the American producer as to the Canadian. Yet Canada is still seen to be doing some special sneaky deals with the Wheat Board, or whatever. It's a good political issue for a northern state to press on, and I don't see that we're ever going to find a way—

Mr. Jake Hoeppner: I've done quite a bit of investigating myself. As you probably saw in The National Post not too long ago, a broker in the Minneapolis grain exchange claimed that he wanted to buy somewhere around a million bushels of wheat. He offered 20¢ above the asking price of the Wheat Board and they wouldn't sell to him because he was not an accredited exporter. Then they found out they had undersold by 15¢ to a foreign country. These are irritants, and we had better address them.

I talked to the broker. I know from having my own farm that right now I can get more than double the price for my durum in the U.S. How do you expect farmers on this side to believe the Wheat Board is selling the grain into the U.S. at a proper price? That's why I'm asking you, is the Wheat Board going to be man enough to pay us the cash price at Minneapolis? That will solve all the problems.

• 1645

The Chairman: I want to remind Mr. Hoeppner that these officials don't work for the Wheat Board and they're not politicians—

Mr. Jake Hoeppner: They work for the government.

The Chairman: They're not politicians. They're here to explain policy perhaps, but not to answer political questions.

Mr. Jake Hoeppner: That's not political; that's dollars and cents out of my pocket and those of the livestock producers. These are real issues, not politics. This is an issue. Is it happening or isn't it?

The Chairman: Mr. Claydon.

Mr. Frank Claydon: It's something we could undertake to talk to the Wheat Board about and express your concerns.

Mr. Jake Hoeppner: I'll pass to Mr. Breitkreuz.

The Chairman: Thank you. Go ahead.

Mr. Garry Breitkreuz: Thank you. The minister has indicated that this is likely going to be income-based. That means it's going to be a long time coming. I've had conversations with farmers, and I guess it's well known by you as well that if this doesn't come by February or March, it's going to be too late. The deadline for tax returns is the end of April. They can't wait that long. Isn't there some way this can be structured so it can kick in a lot sooner, so they can buy their fertilizer, chemicals, etc., in time for—

The Chairman: You had only one minute from his portion.

Mr. Claydon, would you like to answer the question?

Mr. Frank Claydon: We're going to be looking at whatever ways are possible. As the minister said, we're hoping the description of the program will be reasonably bankable in terms of the producer being able to make some arrangements with his creditors, particularly for the spring planting period. We'll be working with the provinces as well to see what we can do in terms of potential linkages with provincial initiatives that might be available. We're going to do everything we can to help people get through that difficult cash crunch in the spring.

The Chairman: Thank you. We're out of time.

Mr. Bonwick.

Mr. Paul Bonwick: I'll just make a quick statement, and then I have a question on the program and how the program might be set up, if successful.

With regard to the comment “can you ever convince the Americans not to challenge or complain”, if the Americans deem we have an efficient board or agency that is encroaching into their markets, I would suggest they will never quit complaining if they deem us to be more efficient in a certain segment of the market they're in and we're capitalizing on some of their markets. I think the Wheat Board certainly falls in that line, Mr. Hoeppner.

Mr. Jake Hoeppner: Open the books and look. They're audited every year.

Mr. Paul Bonwick: I know that you certainly challenge the Wheat Board almost at every opportunity—

Mr. Jake Hoeppner: It's my livelihood.

Mr. Paul Bonwick: —but that's certainly one of the areas where we see the effects of the Americans wanting to challenge a very efficient board.

There is one thing I want to stress, and certainly it has been stressed, but I think it's worth revisiting again. That is the absolute urgency of the situation, in particular in Ontario—southwestern Ontario—with the pork producers.

Mr. Larry McCormick: What about eastern Ontario?

Mr. Paul Bonwick: Eastern Ontario too, Mr. McCormick.

I've had an opportunity to meet with many producers, and Mr. Breitkreuz made mention that the difficulty will be in the summer. They may not be around. So I appreciate the fact that hopefully, if we're successful in securing the funding, we'll have some sort of bankable solution so that they can indeed deal with that funding coming forward.

One of the things I want to make sure of, and if I missed it, I apologize, is that the program is not contingent on NISA accounts. They should be taken into consideration, definitely, but it shouldn't be contingent on them. There are a lot of pork producers in my riding who have not, because of the conditions over the last few years, been able to put money into NISA accounts, so they certainly do not want to see a program come into place that says you have to have certain dollar balances in your NISA account. I hope that's not going to be a prerequisite, and I'd like your comments on that.

Mr. Frank Claydon: Mr. Chairman, as the minister said, the program is not finalized, and if and when we have a program, that's certainly a primary consideration in terms of program design. Certainly, it's something the minister is well aware of. I can't really say anything more than that at this point in time.

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Mr. Paul Bonwick: Okay, as long as we've demonstrated that very clearly. We certainly don't want to see it contingent on that.

Going back to Mr. Steckle's comment on the oilseed or the GRIP program that's in place right now, I'm curious as to whether you could provide me with an update on what discussions you've had with Finance on their position on possibly pulling out of the GRIP account, pulling out their money, specifically, and secondly, ongoing funding available over the next few years.

Mr. Douglas Hedley: We continue to have discussions with Department of Finance officials on that. I cannot give you results of that. Those discussions are still ongoing.

Mr. Paul Bonwick: Can you keep us updated on the ongoing discussions, so that we have an opportunity, from the political avenue, to lobby both the finance minister and the agriculture minister to make sure the results are acceptable?

Mr. Douglas Hedley: I hesitate to be giving you information on which you are going to lobby.

Mr. Paul Bonwick: I shouldn't say “lobby”, but certainly to make sure our positions are known to the minister.

Mr. Douglas Hedley: Yes.

The Chairman: Thank you.

Mr. Borotsik.

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

On the administrative side of the questions now, the non-political side, the NISA account was mentioned by the minister and by yourselves, as administrators, that there's the potential for an early withdrawal. That's true. The unfortunate part is that there are a lot of people out there who don't know they are eligible for an early withdrawal.

How did you try to get that message out to the producers, and in fact, how do producers now trigger that early withdrawal? How do they make application for that?

Mr. Douglas Hedley: As far as I know, it's up to the individual farmer during the year to trigger that request. We certainly provide the information to them that an early withdrawal is possible. We have advertised that again in the western press in the last ten days.

Mr. Rick Borotsik: How did you market it initially, Mr. Hedley?

I don't want to be antagonistic, but I've had a lot of phone calls in my office, and when I asked them why they didn't trigger an early withdrawal from their NISA, they said nobody told them; they didn't know they could withdraw.

Have you done any advertising or marketing of that?

Mr. Douglas Hedley: Yes, very much. Every farmer has received a letter, at least two, to my knowledge.

Mr. Rick Borotsik: Do you know when the letters were sent out?

Mr. Douglas Hedley: That change was made June 1, and that information went out. It was advertised again two weeks ago. The minister has included it in his speeches on a number of occasions.

Mr. Rick Borotsik: I hate to tell you this, Mr. Hedley, but sometimes producers who are in dire financial straits don't necessarily listen to the minister all that closely, so whether he says it in his speech or not may not get the message out.

I do appreciate the fact that—

Mr. Douglas Hedley: But then they did not read their mail either.

Mr. Rick Borotsik: They may well not have, but I do appreciate your answer as to when it went out. Hopefully, we can continue to tell people out there who have a need for cash that they can trigger that early withdrawal of NISA.

It goes back to another point I have. We've talked about cashflow a lot; we've talked about cash requirements. There are some people out there who are worse off than others. There are some who may well not have a bankable opportunity, in taking a bankable program to a bank and suggesting that maybe the bankers could help them through these desperate straits. That may not be available to them.

Have you, as administrators of this, considered perhaps having the opportunity of pulling more NISA money out, other than simply that which can be triggered, with a payback situation at a later time so that there can be access to cash? Have you in fact looked at the FCC potential for those people who are really in trouble, that may well have the opportunity of extending credit based on this bankable program?

Mr. Douglas Hedley: I think it's fair to say that over quite a period of time we've looked at an exceedingly wide range of options in terms of dealing with this situation.

Mr. Rick Borotsik: Are you prepared to tell us about some of those options?

I'm asking on behalf of producers out there who are saying, well, it's good—and we're still on an “if” there is a program. I'm more optimistic when there is a program.

Mr. Frank Claydon: One thing that has been put in place over the last couple of years is the farm counselling program and the farm debt mediation, which is something that is designed to be able to provide producers with some advice on how to be able to deal with their situation before it becomes an absolute crisis. That's certainly available, and there is a mediation approach that would help farmers deal with their creditors.

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In circumstances where they have something that was coming out of a program like this, it gives them an option of finding some accommodation with the banks and others. That's the only thing that's currently in place. There has been an increase in the last couple of months in the use of those programs.

Mr. Rick Borotsik: I'm sure there has been.

Thank you, Mr. Chairman.

The Chairman: Thank you. Now we will go to Mr. Steckle, then Mr. Breitkreuz, and then Mr. Proctor. I sense there's some feeling around here of wanting to get away as early as possible, but we'll accommodate.

Mr. Steckle.

Mr. Paul Steckle: My comments are very brief and to the point. Has the deadline for application for early withdrawal from NISA been totally removed, so there is no deadline, since we're into this situation, or what are we saying here?

The other point I want to make is one should not believe the $1.16 futures hedging on February hogs is in actual fact what the farmers are guaranteed. As I understand it—I'm no expert on this, but maybe there's someone in this room who can clarify it—we're looking at a basis price that somewhat reduces that, and I understand that basis price may be in the 45¢ range. We're looking at something like 45¢ less than $1.16, so we have to be somewhat careful that when we project that farmers could be futures hedging their hogs rather than marketing direct, that's an option. That option may not be as great an option as it first appears.

Mr. Frank Claydon: On your first question, Mr. Steckle, I don't believe there is a deadline—

Mr. Paul Steckle: We just need to know whether there is or there isn't.

Mr. Frank Claydon: My understanding is there isn't.

Mr. Paul Steckle: You've answered the question, thank you. That's all, Mr. Chairman.

The Chairman: Thank you Mr. Steckle.

Mr. Breitkreuz, then Mr. Proctor.

Mr. Garry Breitkreuz: I'd just like to follow up a little on the indication that the assistance will be income-based. What about producers of grain who have had declining incomes for several years in a row now and are finally getting to the point where it's really hurting? Are they going to benefit from something like this? I'm reflecting to you what I am hearing in my constituency. They are very concerned that any compensation that comes will not be of help to them because of their declining revenues over quite a number of years now, for various reasons.

Mr. Douglas Hedley: I find it very difficult to answer your question until I know the exact parameters of the program. As the minister indicated, he is working on gaining approval from the federal side. It will take us some time with the provinces thereafter to finalize with them the nature of the program. I would certainly hope we can deal with those in the greatest difficulty. That is clearly where the minister is headed in terms of where he would like to see funding go. I can't tell you about specific cases until I know what the details of that program are.

Mr. Garry Breitkreuz: I appreciate that. It's just that he indicated it was going to be income-based, so if it's income-based they would be looking at what a farmer's income was in the past. Maybe that's a red flag I should raise that you should be aware of when you discuss this with the minister.

Mr. Douglas Hedley: I appreciate it.

Mr. Garry Breitkreuz: Let's say there's $460 million coming down the pipe here for this. Do you have any indication of how much that would give Saskatchewan? Saskatchewan is probably one of the hardest-hit provinces, especially because of the reliance upon grain production. If there were $460 million, approximately how much would be going to the province, and what would that mean for an individual producer, on average?

Mr. Douglas Hedley: First of all, given what the minister has said, he indicated he would worry very much about trying to treat farmers in the same circumstances the same way, everywhere in Canada.

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As we see prices cycle in agriculture, the amount going to any given province will change as the commodity mix and the circumstances in that market change. Until we get the program details finalized jointly with the provinces, I can't tell you how much will go to Saskatchewan for a particular year.

The one thing I would point out, from what the minister said, is we do not plan on having fixed provincial shares. It will move to where that disaster really occurs each year as we go forward.

Mr. Garry Breitkreuz: Finally, and this isn't directly related to the crisis at the present time, farmers complain a lot about the high input costs of everything from transportation to fuel to fertilizer to chemicals and all of this. They believe the federal government needs to take quite a big responsibility in that because a lot of it is tax and so on.

Have you done any studies on what percentage of a farmer's input costs are tax? The Canadian Fertilizer Institute was here and they said farmers pay $300 million in tax just on fertilizer. Have you done anything? Have you monitored any of that? Is there any possibility there can be some consideration given to lowering that in the future?

Mr. Douglas Hedley: Let me deal quite specifically with the reference to the fertilizer companies. As best we can tell in looking at that number, they're talking about corporate income tax paid by the fertilizer companies. When you buy fertilizer in this country as a farmer, you do not pay GST, and I think in most cases PST is either zero-rated or rebated.

Are you suggesting, just for my own information, the fertilizer companies in Canada should not pay income tax? The other side is that a very high proportion of the products of our fertilizer companies in Canada goes abroad. We are a major exporter of fertilizers, so I would be surprised if all of that were attributed to Canadian fertilizer.

Mr. Garry Breitkreuz: No, I was thinking, for example, that one of the main components in fertilizer is natural gas. I don't know if you've done a study on this, but a large part of the cost of natural gas is tax and that tax is passed on. Has there been any study done in regard to that?

Following this up, my final question would be, because chemical and fertilizer costs seem to have been rising so dramatically in the last while, have you done any studies on whether there's fair competition in those areas, why those prices are rising so dramatically, and if there's anything that can be done to control that?

The Chairman: One minute, Mr. Hedley.

Mr. Douglas Hedley: First of all, the federal-provincial ministers raised this question a year or two ago and a federal-provincial study group had a look at it. I think we can get you that report. I don't know if it's public yet. With respect to competition, I can't recall if we've ever looked at it, but normally if we had any problems there we would turn it over to the Competition Bureau.

The Chairman: Thank you.

Mr. Proctor, followed by Mr. McCormick.

Mr. Dick Proctor: Thank you very much, Mr. Chairman.

Gentlemen, for several months the minister has said that as far as he was concerned, NISA and crop insurance together were adequate. He left that suggestion, and may have even said they were adequate. Farmers, since last spring, have known otherwise, and perhaps in fairness the minister has as well. We're now talking about the third leg on the stool that goes along with both NISA and crop insurance. So how long has the Department of Agriculture and Agri-Food been working actively on the whole-farm program?

Mr. Frank Claydon: Do you mean in terms of a disaster program?

Mr. Dick Proctor: Yes.

Mr. Frank Claydon: This has been going on for at least a couple of years. There was a large discussion of this among federal and provincial ministers in July. They had hoped to have a program in place by July, but there was some work still to be done, so it's taken more time. But one of the goals has always been to have a disaster program as part of the overall safety net approach.

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Mr. Dick Proctor: So has the dilemma that many farmers are in today speeded this up quite a bit, somewhat, or not at all?

Mr. Frank Claydon: I think it has certainly put a point on it, a focus on it, in terms of getting it done. They plan to get back together next March to do the finalization on it, but I think we're obviously going to have to get something in place if the governments agree as quickly as possible. It's going to have to have a long-term view to it as well—we hope—so the ministers are going to have to get that worked out as soon as possible.

Mr. Dick Proctor: I just had one question on NISA, as well, Mr. Chairman.

I recall a farmer in Palliser telling me recently that he had indicated that he wanted to take some money out. He got approval to take some money out, but it was just a percentage of what he wanted. He then decided that he wanted to take more money out of his account this year, but he was told he could only make one withdrawal in a twelve-month period.

That's the kind of parent-child relationship that I think is of concern to many farmers, and that was where I was coming from in my question to the minister. Are you thinking about those kinds of things, so that we could have a more grown-up relationship with producers with their own NISA accounts in terms of when they can access that money and when they can't?

Mr. Larry McCormick: That's a good question.

Mr. Dick Proctor: Well, thank you, Larry.

An hon. member: It's a great question.

Mr. Douglas Hedley: Mr. Proctor, we can certainly look at that. I hadn't known there was a limit of only one per year. I'm certainly willing to ask the question, though.

Mr. Dick Proctor: Thank you. I appreciate that, Mr. Hedley.

The Chairman: I think we're going to finish it up with Mr. McCormick.

Mr. Larry McCormick: I have one question only, Mr. Chair. If I have the opportunity, I believe I'll share the other half of my question with my colleague Mr. Bonwick.

In sitting here, I guess whoever is in this room or is listening in on the committee would be aware of the situation, the crisis is that severe. We look at the calendar and it's December. I sure hope our government, with the cooperation of all the players, can come up with the right program as soon as possible, because I think this is a very special time of the year for families.

I do have a concern, and I know my concern is shared around the table and by our producers. Yes, the Farm Credit Corporation has gone the extra mile in meeting the demands at the moment. That's what I hear from producers. I expect the banks will cooperate; the credit unions in the west have made an announcement in the last two days. But the real concern is what the rate of interest will be on this loan relief from the Farm Credit Corporation. I realize you can't answer on behalf of the credit unions or the banks, but this is something we do need to raise, watch, and encourage. There's room for compassion and support here for our producers, Mr. Chair.

The Chairman: That's it? Then I think Mr. Bonwick wants to ask something.

Mr. Paul Bonwick: I have a question based on Mr. Breitkreuz's comment with regard to the income-based formula that may or may not be approved—so we're talking hypothetically.

I don't agree that there's a parent-child relationship. I don't think that's necessarily an appropriate analogy. Rather, there's an ongoing partnership in which we try to evolve things and create better efficiencies in whatever programs we have between the Department of Agriculture and the producers.

Regarding income-based formulas that are being discussed, is one of the considerations being looked at an individually based, income-based formula for individual farms, or are we looking at industry average? Would we be looking at taking into consideration low- and high-income yields, thereby demonstrating an average and in turn putting into place a program that is neither too weak nor too rich? Is that what we're looking at? How are you deciding on this income-based formula?

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Mr. Douglas Hedley: Let me base it on the discussions we've had in the National Safety Net Advisory Committee. What those discussions have indicated is that if you're going to use government money in assistance, then the committee would like to see it targeted to those who really need the money. As a result, they have advised government that it should be based on the individual farmer's own accounts, it should be based on that farmer's own records, so that we are not giving an average to farmers, to some who don't need it and to some who do need it, thereby weakening the strength of the program. So it will be for the individual farmer, yes.

The Chairman: I think Mrs. Ur wanted in.

Mrs. Rose-Marie Ur: I have one quick question. Are you going to be considering land values and rental values as part of the equation in formulating your payout? Say you rent land. Land rental in southwestern Ontario is a little bit higher than it is perhaps in northern Ontario or out west. Are you going to factor that into your formulation?

Mr. Douglas Hedley: If you base it on income or net income, then I would have difficulty seeing how you would add a land price into the history of farm income that would be shown in the farmer's accounts.

A voice: The rental would be.

Mr. Douglas Hedley: Yes, the rental would be counted as an expense in the gross margin.

Mrs. Rose-Marie Ur: In that respect, when someone rents property and has their commodity taken off, if you have an expense of $150 or $120 per acre in southwestern Ontario as compared to maybe $25 in another area, then that factor is not a balancing factor in one province versus another. And I'm not pitting Ontario against any other province. It's just a case that does happen. Land rentals are more expensive in southwestern Ontario than they are in perhaps other areas. I don't know how you'd do it, but it's kind of a heads-up or a red flag. I hope you take that into consideration when you're formulating things. I certainly wouldn't want your job, but I wish you would remember that when you're deciding how you're going to do that.

Mr. Douglas Hedley: I appreciate that.

The Chairman: Can I just finish it up with what I would think is a short question? This is really not a hypothetical question, but I think I'll put it this way. If I were the largest hog farmer in Canada—I don't know how big that might be, but let's pretend I'm the largest one in Canada at this moment—presumably with the prices that now exist, I've had a bad year in 1998. If I'm the biggest hog farmer in the country, chances are I already have millions of dollars in assets, and so on. Under the kind of income-based program that you're envisioning, Mr. Hedley, would I be able to at least count on getting something from this so-called disaster program, even though you do talk about caps?

Mr. Douglas Hedley: Being large would not change your eligibility, but the minister did indicate that he was considering caps on very large payments. We have not set those yet; we're still exploring what they would be. But if you are by far the largest hog producer in Canada, I suspect you might very well be caught by caps. You'd obviously be incorporated and would be treated as a large corporation, the same as what the safety net committee has given us some guidance on trying to avoid.

The Chairman: I appreciate that.

On behalf of all the members, I want to thank you for your appearance here today and for your candid answers. Of course, we appreciate all your efforts towards finding a response and a solution to this farm income crisis.

This meeting is over.