AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, December 6, 1999

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[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): I would like to bring the meeting to order. I am the chairman of the House of Commons Standing Committee on Agriculture and Agri-food. I want to welcome all of you to this session, which will run three and a half hours, from now until 6:30 p.m., which will give us an opportunity to hear a lot of what is important to farmers in this district.

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I can tell you, ladies and gentlemen, that we had a three-hour meeting in Portage la Prairie, at Southport, this morning, which went very well. I think all of us on the standing committee found it profitable to hear from farmers directly in a face-to-face session, and we will do more of the same this afternoon.

I want to explain to the audience, this being a parliamentary committee hearing, that we have to abide by a few rules. We have arranged it so that we will hear formal presentations from farmers in a couple of rounds, and then we will hear from a couple of organizations, but the last 45 minutes of the session will be left to the audience. If you have any observations or questions, and if you are not on a list, then you will have a chance at the end of the meeting.

There is a gentleman by the name of Michel at the back of the room, and if you would like to take the opportunity in that last 45-minute segment to come forward, contact Michel and he will put your name on the list.

Mr. Rick Borotsik (Brandon—Souris, PC): Mr. Chairman, before we begin, just as a suggestion, maybe you could take a poll of the group. If we don't require translation, maybe we could dispense with the requirement of the translator. I see that we don't even have any simultaneous translation equipment.

The Chair: I think that is a good idea. If no one needs translation, our translators might as well take the time off and listen to the farmers. If that is okay, then it is accepted.

I would ask the members of the committee to identify themselves.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): My name is Murray Calder. I am a farmer from Ontario. I also represent the political riding of Dufferin—Peel—Wellington—Grey, which is about 50 miles south of Owen Sound. We have a poultry operation.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): My name is Larry McCormick, and I represent a riding in eastern Ontario. I have plowed only a few tens of thousands of acres, have loaded a few tens of thousands of bails of hay, and have drawn milk for two years, but for the last two or three years I have been the chair of the government's rural caucus. I am glad to be here.

Mr. Joe McGuire (Egmont, Lib.): I am Joe McGuire, the parliamentary secretary, and I represent the riding of Egmont, which is in Prince Edward Island.

Mr. Inky Mark (Dauphin—Swan River, Ref.): I am Inky Mark, the member for Dauphin—Swan River, and on behalf of all the good folks in Dauphin—Swan River I welcome the standing committee to Dauphin.

Mr. Dick Proctor (Palliser, NDP): Good afternoon, I am Dick Proctor, the NDP agriculture critic, and I represent the Palliser riding, which is in Saskatchewan, southwest Regina and Moose Jaw.

Mr. Rick Borotsik: My name is Rick Borotsik. I am the Progressive Conservative agriculture critic and member of Parliament for Brandon—Souris. Most of you have been to Brandon in the past. As you are well aware, I represent an area of agriculture that was affected quite dramatically by the excessive moisture we had in the spring. I am always happy to be in Dauphin.

The Chair: My name is John Harvard. I am the chairman of the committee and I am from the great city of Winnipeg.

I didn't consult the witnesses, but in Portage we went alphabetically. If that is all right with everyone, that means that Mr. Kolisnyk will start.

It is our understanding that there will be something like five to seven minutes for each formal presentation, and then of course we will have lots of time for questions from the members.

I also want to welcome Neil Stewart, Gert Schwickart, and Duane Zimmer.

Mr. Kolisnyk, welcome. Thank you for coming.

Mr. Walter Kolisnyk (Individual Presentation): Thank you. My name is Walter Kolisnyk. I am a farmer from the Swan River Valley. I have been farming for about 25 years. I have put together some notes for you to read and take with you.

First, I want to thank you for giving us the chance to meet with the Standing Committee on Agriculture and Agri-Food. It is quite a rare chance for us, as farmers, to sit across the table from elected members of the House of Commons.

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First I will read what I have written, and maybe I will add something as I go along.

Farmers in western Canada are in the middle of a very serious financial crisis. This is a direct result of very low grain prices. The low grain prices are the direct result of the fact that other countries, through their national governments, are subsidizing export sales and the price farmers receive at the farm gate.

I am not going to throw a bunch of numbers at you to prove my point. The government has access to the prices and cost of production in the Department of Agriculture and Agri-Food.

Many thousands of farmers will be forced out of business in the next six to twelve months. The damage to the western economy will be devastating, to say the least. It is my view that action must be taken now by the federal government. The action should be as follows: a cash injection as soon as possible, based on seeded acres. This will give farmers badly needed cash to pay fertilizer and chemical bills. I think we need at least $25 per acre. That money could be kept or prorated at a maximum number of acres or dollars to get the biggest bang for the buck. In other words, you would help more families if you put a limit on it.

Secondly, the government should develop a long-term safety net program to give farmers some sense of security and predictability. This should be a program to which the farmer and the federal and provincial governments contribute. This program should be based on the grain price side of the equation, and let the crop insurance program deal with the production side. Under this system farmers could receive a fair return for the grain they produce.

Third, the government should negotiate a deal at the World Trade talks to eliminate export subsidies. Canadian farmers can compete with farmers anywhere in the world, but we must be on a level playing field. It appears to me that we are the only exporting country that follows the World Trade rules.

The problem of low grain prices did not happen overnight. We have been facing the problem of lower prices and rising costs for many years. In the past we had programs such as the western grain stabilization fund, the special grains program, and GRIP. The AIDA program just does not work properly, and everyone knows that fact. As a result, farmers are receiving very little money from this program.

Clearly it is time for the government to demonstrate to Canadians that it is prepared to stand up for farmers in this country. Any money farmers receive will be invested back into the economy.

Finally, I want to say that this is an international problem and Canada must demonstrate to the world that our farmers will not be treated as second-class citizens.

The Chair: Thank you, Mr. Kolisnyk. I am sure there will be questions for you after the other presentations have been given.

We will now hear from Mr. Schwickart.

Mr. Gert Schwickart (Individual Presentation): Good afternoon, gentlemen.

Today is St. Nicolas Day. In our country St. Nicolas comes at night with a golden book and a black book and reads out what has happened. I think we have to get the black book out. Normally they have a stick to hit the right person with, but he is not in our area now.

But we are in Canada, and I don't know if you celebrate St. Nicolas Day.

I've written some notes. I phoned the people at AIDA to ask them to send me the package. This is the whole thing. I have 25 copies with me, and you can look at it at the hotel or wherever, when you don't have anything to do.

First of all, we got this instruction guide. Then we got the supplementary guide of farm forms; then we got a hand form; then we got the form package again; then we got the expanding farms form again; then we got the interim payment instruction guide, but that is out already because we got a new form. You can look at these forms.

I invested—my wife mostly—six to ten hours of time to fill these out. I have an engineering diploma in agriculture and a master's degree in agriculture. I get $60 at home... So who is paying me that when I fill these out?

The Chair: Do you have to fill out all of those forms?

Mr. Gert Schwickart: Yes.

The Chair: Not just one or two, but all of them.

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Mr. Gert Schwickart: No, because they always ask the same question again, and you have to oblige each time. When you forget to ask, they don't send you the forms.

The thing is that the fellows who work for AIDA are improperly trained on these forms. I phoned and said “I want the price for feed barley”, and they said “We don't have it.” I said “What is Canadian western?” “I don't know”. I said “Listen, that is feed barley.” They are improperly trained.

I have a grain clean-up operation. I phoned five times to ask them what to do with it. After the fifth answer that I don't have to put it in, I was happy with that, so I took it out. I have it in a separate company now.

AIDA is poorly organized. It has to work better. That money you pay this individual who works for AIDA in Winnipeg—I think $30,000 or $40,000 is what he earned—this is missing from my pocket. I don't receive any AIDA money because I have a mixed farm.

I'm going with my sheet. Maybe it is easier to follow me.

The forms are too complicated. You can have a look; I have 25 copies. It takes too much time to fill them out. I said four to six, eight or ten hours. In the 1999 forms you have to answer questions that you already answered in the 1998 forms.

The price list is very poor. The purebred and commercial herds are not included; it is only the culled bulls or the cows who go to slaughter. I phoned them and said I wanted to take in my value on my cattle. It was not allowed. So I gave the numbers on the culled bull. It is a purebred. If it was $2,000 a bull, I gave it for $1,000. So the prices for breeding stock are missing, or as I said, we cannot take our own prices.

Then, in 1999, why are the following non-allowable expenses? I see AIDA on the new form, the interim payment, but I am $9,000 too high because you're not allowed rent, property taxes, or salaries to related expenses. That is changed already, from what I have heard, and I can take the salary of my family into it. But when I hire someone who is not related, it is an allowable expense. But I have to take these expenses.

The whole program is changed too often—you see that on these forms already—and the staff cannot keep up. I phoned in October or November to ask them what had happened with my form, and they said if you had not triggered 70% you were not receiving any money. To date, I have not received any letter in written form that I will not receive any money.

Then I asked them about that reference margin adjustment form. That is this little thing. Then I took my cow herd in, and I phoned again. They don't know this form. They don't know it. They said “We have to get trained again.”

As I said, when a new form comes out, the farmer has to know. You have to order it. It does not come automatically in your mail. That we found out with that margin adjustment form. The administration needs too much money, and that should be going in our pockets or in my pocket.

As I said, I have been waiting since September 17 to find out if I will receive any money or not. I phoned to say I was $9,000 out on that new form and I asked what I had to do. The lady said “Send it in, because the forms are always changing. It might be that you will receive money.”

In our area many farmers have not applied for these forms. They are frustrated. Many mixed farmers have said they are not receiving any money. I spoke yesterday with one farmer who has 50 quotas, a dealership, and a 250-cow herd. He said that he had applied for it. He had to pay $2,000, and later on he found out he wouldn't get any money.

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I think AIDA is good for hog farms. The crunch came last year when they triggered, I think, under 70%. So Ontario should be happy to receive the money. But in Manitoba or in the north with cattle, we don't see anything.

My solution is very simple. The Europeans have already been, since many years... and when you go a little bit further overseas you get this information. We need cash subsidies. You cannot be naive enough to think that the Europeans cut subsidies. They don't do that. I don't know if you have ever worked in Germany. I was 37 or 38 years in that country. I can tell you that we don't do that, because these big farmers in the east cannot survive when they don't get the subsidies, from 500 to 700 Deutschmarks per hectare. When they get it, they can survive; otherwise not.

You know how subtle the Frenchmen are. We have them here in Canada.

It is not working. You don't have to be naive. Vanclief thinks that when they don't pay, the farms will die and the prices will go up. That is not true.

I think it should be cash money per acre, and then take a cap on so many acres—less money—so the smaller ones can survive. Then the loan program with low interest rates, or interest rate subsidies—Alberta has that kind of program already in place. I don't know if you've heard that. Then we should go back to the GRIP program. It is a coincidence that you cut the GRIP program when the prices went down. So you already knew that you had to pay the farmers out of your pocket, and that is why you quit GRIP. GRIP was a good program. Black sheep are found anywhere. The farmers had them. There were black sheep.

Without subsidies, many farmers will not survive the next year. Over 40% in Saskatchewan, you will hear, will be out of business next spring. I don't know if you are aware of that. You will hear that, I think, during your travelling. I heard on the radio that you will travel to Saskatchewan later on in the week.

There will be less money for living, for sure, and less money for spending. Many businesses in town will close, robbed of $4 million. There is no future for young people in rural areas. I am thinking already of selling out or renting. This year I will rent my land out to the bigger farmers. They've come to me already and said “We'll take it.” I am not growing grain this year.

I tell you, in the last couple of days my little son was in Wal-Mart, and do you know what he did? He took back all the presents for Christmas.

Thank you very much.

Voices: Hear, hear!

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

Now we will hear from Mr. Stewart.

Mr. Neil Stewart (Individual Presentation): Thank you, and I welcome the committee to the Parkland area.

I am from Roblin, close to where Mr. Schwickart lives, 60 miles west of here, near the Saskatchewan border. I wear several different hats. I have been involved in farming for many years; I am also an auctioneer and I am a licensed real estate salesperson.

I will read from my prepared notes, as that seemed to be the request when I was contacted by your coordinator.

First, I have two words. The first one is “crisis”, and the synonyms are “turning point”, “climax” and “zero hour”, meaning importance or change. The synonyms for “aid” are “assistance”, “help” or “support”. These synonyms of crisis and aid help us to understand your focus. Aid is a response to crisis. The farm aid program is the subject of your inquiry. A crisis must be identified and then a response, or aid, should be offered.

A turning point is going on in agriculture. Several turning points have happened over history. In western Canada the first point followed the enactment of the Homestead Act. Thousands of Europeans were lured to western Canada to carve an agricultural base where no agriculture had been before: land to the horizon without a farm to be seen; land of dreams; dreams of wealth, independence, and freedom.

Our dreams faded in drought, floods, pestilence, disease, and economic depression, yet persistence by the farm community sacrificed many livelihoods to last to better times. This persistent is a strength and a weakness among farmers.

My experiences as a farmer, an auctioneer, and a real estate salesperson gives me a view of the agricultural state in western Canada. Some sectors, such as livestock production, seem to be rewarding. Hogs appear to be recovering from near disaster. Grain is suffering from dismal prices, compounded with devastating weather conditions in regions. All of these sectors have one thing in common: a change or turning point.

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Much change is a direct reaction to technological adaptation in agriculture. Cowboys—and aside from my text I use that term loosely, because no horse wants to be sat on by me—choose machinery, computers, and high-technology medicines to assist the cows in their herds. Labour requirements are drastically reduced. One cowboy can care for more cows and more land. There is a turning point here: fewer cowboys are needed.

The same holds for hog producers, grain producers, and every facet of agriculture. Fewer and fewer people are needed to do the same work as before. The economies of scale change—a turning point.

Financial distress has caused many turning points to be recognized. Government programs such as the PFAA, going back many years ago; the PFRA; crop insurance; the LIFT program; GRIP; debt consolidation boards; and now AIDA are some examples of recognition. Have they served well? Agriculture is still here. Production is still high. Have they kept the number of farms intact? No. Is there need for more aid? Perhaps.

In studying public farm auction sales being offered, I find no change in the number of sales. Advertised equipment is often two decades old, perhaps showing that new technology has not been acquired. Frequently, private listings of machinery—and by that I mean those that are not offered for public auction but are privately advertised—claim retirement as the reason for selling. Asking prices are very strong. Markets in used equipment appear to be good.

Similarly, land, the base of all agriculture, is strong. As a realtor, I see similar sales in land sales. Scarce are distress sales right now. Retirement forced by poor health is the main reason for listings in the real estate business, I find. However, financial stability of the seller makes for no panic.

Absent from the 1980 squeeze on agriculture are the 24% interest rates. I lived through those rates and took a pretty good kick, I must say. Using the magic number of 72 divided by 24, I can calculate that the debt unpaid in those days doubled in only three years and quadrupled in six. Today interest rates may be rising, but they have not reached the old summits.

As an aside to this, I was speaking to a friend of mine who has a very well-run farm. He said that if the rates returned he would be instantly gone. Rapid financial distress would befall many farms with the repeat of the old rates by shooting debt up. Agriculture cannot compete in the money market for loans when rates reach double digits.

Compounding any return of high interest rates would be revenue taxation, or income tax. Above approximately $28,000 of income, tax rates jump to about 45%. That makes interest rates look pretty nice. If debt incurred from operational losses has to be amortized by mortgaging the land base or the real estate, the debt cannot be averaged over the life of the mortgage for income tax purposes. Income tax worsens the debt-to-equity ratio by increasing debt when refinancing through mortgages is used. Real income drops. Tax rules paint a different picture of better times.

Identifying a crisis as a temporary financial distress, a reflection of normal market changes, or long-term unchanging woes dictates what aid is needed. Simple money may not be the answer. Perhaps money will postpone the real change but not prevent it. Security of food supply for all Canadians would seem foremost for government, followed by the security of the food-producing industry. Government—and by that I mean the people of Canada—needs to make the decision of what is needed. Simple changes to tax rules or loan interest regulations may suffice. Government is suited to legislation before monetary support. It should do what it does best first.

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Thank you.

The Chair: Thank you, Mr. Stewart.

Now we will hear from Mr. Zimmer.

Mr. Duane Zimmer (Individual Presentation): Good afternoon, committee members. My name is Duane Zimmer. I would like to thank you for coming to Dauphin to hear firsthand the problems facing agricultural producers and for the opportunity to give this presentation. I hope it will help you to understand our problems a little better and that it in turn will lead to some concrete solutions for agriculture today and into the next century.

I live near Inglis on a farm with my wife and 18-month-old daughter. We are expecting our next child near the end of March. My wife is a teacher and currently has a half-time position. We farm together with my father and mother. My grandfather and great-grandfather farmed some of the land we farm today.

We have a mixed farming operation, consisting of grain, cows, calves, and small feedlots. We have more than doubled our cow herd and have also been finishing our calves since the demise of the Crow rate.

There are many problems facing agriculture today and they all contribute to the biggest problem, which is low or negative net income after substantial risk, investment, and work. The problem is much deeper than loss of income. Stress levels have risen dramatically, leading to many suicides. The quality of life has deteriorated because of increased farm size and having to work off the farm to try to keep our families fed.

Some of the problems affecting our farm include high freight rates, high input costs, high machinery and repair costs, high taxes, low commodity prices, loss of buying power, and increasing public pressure to change the way we farm to protect the environment.

Canola prices were profitable in recent years. This one commodity carried farmers for years. Canola prices have dropped 30% to 40% in the last year, adding to the problems.

I would also like the choice to sell our wheat in a dual marketing system, although I don't blame the Canadian Wheat Board for the problems we have today.

We have very little control over our costs, and our end product price is set by the global marketplace. Therefore, even though our costs continue to rise, we are unable to pass these increases on because we are unable to set the price of our product, as most businesses do. The price of grain is lower now than it was 25 years ago.

I believe agriculture is very important to the health of Canada's economy. The spinoffs from agriculture are tremendous and there are many people and companies making a great deal of money from farmers. This being the case, it angers me that we, the primary producers, are left with very little, even though we are the start of billions and billions of dollars being injected into our economy. The actual amount of money that we get out of a loaf of bread, a container of margarine, or a pound of hamburger is a fraction of what it costs. Yet the middlemen are making substantial profits and always taking a bigger share of the pie.

These problems are not all new problems. They have been around for years. They have all come to the forefront because of commodity prices being so low. Farmers have tried to survive these bleak economic times by increasing operating loans, restructuring loans, not replacing equipment, obtaining credit wherever possible, and working off the farm. These are short-term measures. They are not good long-term business decisions.

The erosion of our buying power is hard to believe. An example of this decline is that in the early seventies a bushel of wheat could buy about 20 gallons of diesel fuel. Today that bushel of wheat buys just over one gallon of diesel fuel.

We have also not been able to replace equipment when it should be replaced. Equipment costs continue to rise, and with income so low, we are forced to continue to repair old equipment. This hasn't happened overnight, but has been building for many years. Non-farmers comment on how well off farmers must be since they have all that big equipment. This is not a luxury; it is a necessary component in agriculture today and it must be constantly upgraded to ensure a successful business in the years to come. Farmers have been living on equipment equity too long. There must be profits in agriculture to make upgrading this equipment a wise business move.

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By increasing operating loans we are increasing our debt load further, and by restructuring loans we are increasing the interest we will pay. How can we be asked to continue increasing our debt load without any recognition of the problems farmers are facing today?

The European Union and the United States have been a major cause of the low commodity prices because of the use of subsidies and programs. They use their subsidies to ensure a secure food supply for the people in their countries. They value and look after their farmers. Canadian farmers produce some of the highest-quality grain and meat in the world. Our farmers are very efficient at producing this food. We have been competing against these subsidies for years and have managed to hang on until now.

Do Canadians value this safe, high-quality food? Is it taken for granted, without any thought of who produces and supplies it? Does the consumer realize that almost all of the money they spend on food goes to the retailers, processors, and any other middlemen that can make money from our primary product?

Farm organizations have been telling our governments for years of the escalating problems in agriculture, but this has been falling on deaf ears. I feel that our own Minister of Agriculture and Agri-Food doesn't understand the situation and just plain doesn't care. He seems to be saying that because he was forced to sell his farm, every farmer in Canada who is having financial trouble should sell their farm, no matter what the cause.

We have been snubbed by our own Prime Minister, who has replied to this situation by saying that the statistics show things are improving.

I think our federal government has created an ideal policy for agriculture if what it is encouraging are corporate farms and western alienation. The corporate farms being created will not be run by farmers, but by the large multinational agricultural companies. They will have no regard for producing safe food. They will do whatever returns the most money to their shareholders. Is this what the government wants? I would bet that consumers might become alarmed at such a policy.

The programs we have to address these problems are AIDA and NISA. The agriculture minister has publicly admitted that AIDA has failed. It is unfortunate that he wasn't listening when it was designed. Farmers and farm organizations told him this months ago, when it was designed. NISA is a good program that is still in its infancy. This program was not designed to compete against the treasuries of the EU and the U.S. It will take many good years in agriculture before it can stabilize our industry.

Farmers need an injection of money now and a long-term program to be put in place to ensure that agriculture not only survives but thrives in the next century. New farm programs must be designed by farmers and farm organizations, not by bureaucrats. Any new program must keep administration to a minimum. We do not need another make-work project for civil servants like AIDA.

A long-term program is important to achieve an environment where farmers can ensure themselves, through good management and hard work, a profitable future. The program should not encourage farm size to keep increasing. Farms with production larger than an agreed-to size should not be rewarded for any excess production. The program needs to encourage farmers to stay on the land and for some to even return to farming. The program should encourage more diversity, because exporting raw products isn't feasible with our high freight costs. It should also encourage farmers not to rely on off-farm income. I would hope it would decrease stress levels and return a higher quality of life to Canada's farm families.

In the next century farmers will need to spend more money and resources on the environment because of growing public pressure. This will need to be recognized and dealt with in any farm program. There are no easy solutions, but first these problems must be recognized by the people who have the power to make the necessary changes.

In closing, I would like to say that I am proud to be a farmer and I am proud of my forefathers who were farmers. They helped to build this country with good management, ingenuity, and hard work. Agriculture has changed in many ways, but farmers still are good managers, have tremendous ingenuity, and work hard.

My father and grandfather helped me to have a good start in farming, and I want to be able to give my children the same opportunities I was given. It is time we were acknowledged and rewarded for what we do for this country. We have been content with public and government ignorance, as well as being taken for granted, long enough. We must be recognized for the large contribution we make to Canada's economy and rewarded for our substantial risk, investment, and work.

Thank you.

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The Chair: Thank you, Mr. Zimmer. I thank all of you. We appreciate your remarks.

Now we will have our first round of questioning. Mr. Mark, please.

Mr. Inky Mark: Thank you, Mr. Chairman.

Let me first thank the presenters. Their stories certainly demonstrate the frustration that the farm community in Dauphin—Swan River has experienced throughout the summer. As the member, I know that agriculture is the backbone of this riding. The economy of Dauphin—Swan River depends on the farms. When the farms don't have income, then none of the communities have a hope of surviving.

I must say that the farmers of Dauphin—Swan River throughout this summer have been very vocal in their concerns about the state of farming. They have taken part in traffic slowdowns. They have held rallies. They have written to ministers. The municipalities have passed resolutions.

The challenge for all of us has been the question: Did anybody hear? Getting the message out has been priority number one. I know that many farm folks from Dauphin—Swan River went to Ottawa to speak to the politicians and to organizations on the Hill, and they came back rather frustrated.

I would like each of our presenters to answer my first question. Do you believe that your cry for help at this time is being heard at all by Ottawa? If you don't think so, why not? Why is it that Ottawa is not listening to your concerns?

Mr. Gert Schwickart: Ottawa is far, far away from the west, and when you look at our Parliament—I have to say ours—most MPs or ministers come from the east. Mr. Vanclief comes from the east too. I never see anyone from the west, from Manitoba or Saskatchewan. I think that is the reason.

I tried to phone them, but I was blocked. I have to pay it on my own expenses and I am not willing to do that. We have a 1-800 number, but you don't have that in Parliament, so I cannot speak. That is why I often go over to Inky Mark's office to express my concerns.

We are Canadians. Where do we find Canadians in the crowd? At the back. You are talking and talking and discussing everything, but you are not acting. That is the Canadian lifestyle. You have to inquire and you have to study and study. You study so long, until the patient is dead, and then you say “Well, we did something. We put AIDA and other programs in place.”

As I said, they are not willing to hear us. We tried it with rallies to Ottawa. They blocked. When another party comes to power, I think it will be the same. It will not change, because we are too far away from Ottawa. What percentage of the people are living in Saskatchewan and Manitoba? It's not very much.

The Chair: Mr. Kolisnyk.

Mr. Walter Kolisnyk: First of all, I don't think the federal government realizes that the situation is as bad as it really is. I think it is starting to understand now.

I really think that Mr. Vanclief has been a disappointment—and I hate to say this—as the Minister of Agriculture. Simply put, when you analyse what he has said in The Western Producer and the Free Press at different times, it just tells me as a farmer that he is out of touch. It may be because he is living in Ontario and doesn't understand western agriculture the way he should.

I think the federal government, overall, is starting to hear the message and is starting to get the message. I think that you, as a Manitoba member of Parliament, realize the situation. It is devastating, to say the least.

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When you think about it, who is really in Ottawa to speak for farmers? Let's be honest about it. There is a handful of Liberals in Ottawa. You are going to spend money where you get the biggest bang for your buck politically. You can elect a lot of Liberals in Ontario and Quebec. You won't elect too many in Manitoba, Saskatchewan and Alberta, no matter how many dollars you put into farmers' pockets. That is the political side of it.

Members of the Reform Party have been very vocal in the past and have very clearly stated that they are opposed to any subsidies. They don't think that government should be supporting the agricultural industry with taxpayers' dollars, so they are not speaking on our behalf.

Who is out there to speak on behalf of farmers?

I think the Minister of Agriculture and Agri-Food and the members of Parliament on the government side have to take a proactive approach to this thing and explain to the people of Canada that this is something we have to do.

Mr. Inky Mark: I have to clarify your response. The Reform Party believes in short-term and long-term solutions, and in the short term we know that there is a cash crunch, a crisis. People need cash. In fact, there isn't a day that goes by when my office doesn't get an inquiry from farmers in the riding who are concerned about their future. With this uncertainty, and with Christmas around the corner, it is devastating to farmers and to their families.

What effect has this stress had on your family or your community to this point in time?

Mr. Duane Zimmer: It has created a real hardship for farm families—and not only farm families, but the rural economy. I think that any pride farmers have in what they do is really taking a kicking from some of the comments our Minister of Agriculture and Agri-Food has made about farmers. I think a lot of them are very unfair comments and I am wondering where he is getting his information from.

The Chair: Thank you.

Mr. Calder, please.

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

Gentlemen, I went through what you are going through back in 1984 as a hog producer. I went right to the financial wall and made it because we switched to poultry and supply management. I had a section 88 on my farm. I know where you are coming from.

Duane, I was at about the same age and at the same point with my family. I had two young kids at home when we made the switch. It was very difficult.

I was out here in August to get a better feeling. I came out here by myself to talk with farmers. I was in the Regina and Yorkton area, so I got a really good feeling for what was going on.

Currently the federal government puts forward safety net programs worth about $600 million a year. One of my questions, right off the bat, is to ask what figure you think that should be to help in this situation, bearing in mind that I, as a farmer from Ontario, am being faced with my own farmers saying that whatever you send out west, we want our fair share. That is the other thing I am faced with. But I know the problem out here is much more grave than it is back in the eastern part of Canada.

The next question I would like to deal with is a set-aside program. I know that when grain prices were good in 1995 and 1996 a lot of extra land was put into production that, quite frankly, should be taken out of production. I am wondering how you feel we should address that.

Those are my two questions.

• 1545

Mr. Walter Kolisnyk: I will answer your first question, as to what figure we are thinking of as farmers. I'm not in the middle of all the numbers to know exactly how it would be distributed. As I said in my presentation, I think we need $25 an acre, pronto. I also think there's a much longer-term problem down the road, even besides the $25 an acre. I think it has to be a long-term solution where all three levels are involved: federal, provincial, and producer.

Listening to the radio today, I heard that Saskatchewan farmers are saying they need $1 billion alone for Saskatchewan. So you can roughly say that between the three prairie provinces we'd likely need over $2 billion.

Mr. Murray Calder: Just along what you're talking about. We still have the GRIP program in Ontario because the provincial government, at that point in time, did not do away with the program, and yet the provincial governments out here did.

Are you saying that we should get GRIP back out here again, given the fact that Ontario right now is sitting on about $350 million in reserve with that one single program, which will probably help us through another year in Ontario, maybe even two?

Mr. Walter Kolisnyk: The way I understand it, a lot of Ontario-based agriculture is supply management, such as your poultry industry.

Mr. Murray Calder: That's right.

Mr. Walter Kolisnyk: So you're in a completely different ball game than we are. You're basically guaranteed a profit. If you can produce it, you have the profit.

Mr. Murray Calder: 1995 and 1996 were difficult for us because at that point in time feed costs for me were about $350 a tonne, and that was because grain prices out here were good.

Mr. Walter Kolisnyk: I don't think GRIP was the perfect program, but it put money in farmer's pockets. It did what it set out to do. It was an expensive program, costly for the provinces and for the federal government, but it was at least a cash injection. A lot of farmers received quite a bit of money from it, and it probably could have been made into a better program rather than being scrapped.

The Chair: Mr. Stewart.

Mr. Neil Stewart: As to how much money is now given to farmers and how much is needed, these numbers are beyond my concept and my realm. You certainly should have the data resources to deal in $600 million. I can tell you that the party could last for a long time before it was gone if one person had it.

How much is needed? As I said in my presentation, at this present time, as a businessman, I don't see the distress there. Nobody has come to me saying “Neil, let's sit down and talk about how I can divest myself of some of my assets that are not making me money.” And that's both land and machinery. No one has come to me. If you talk to my competition or colleagues—whichever way you like to look at it—in the auction business or real estate business, they're not finding that either. It hasn't happened yet. That's the first point that I think needs to be said.

Second, when you talk about the set-aside program, perhaps amongst the four of us I may have been one of the few who sold enough to be involved with that in the early 1970s, in what was called the LIFT program here in western Canada. That program probably saved our bacon on my family farm. My father was farming at that time and I was working with him. That was a program whereby we took land out of production and put it into summer fallow. It helped us and gave us the cash influx.

We had situations at that time... There was one farmer in the Interlake area of Manitoba, to the east of here, who sold barley for three bushels for $1. That was publicized in every daily and weekly newspaper that I know of in western Canada, and that set the price for feed barley in western Canada.

I know there was a chap six miles from the Montana border, in Saskatchewan, who hauled grain 400 miles and delivered it in those days for 25¢ a bushel. I crossed the border at 3 o'clock in the morning, because it was illegal for me to cross a provincial boundary, and delivered to the same place. I met him there. He didn't make any money at that, and it was a foolhardy thing to do.

So the LIFT program, should it come in, has to be a long-term thing. This is why I say in my presentation that we have to decide how much of the industry we want to support and secure for the wealth of the nation. Here in western Canada we are primarily exporting producers, and because of that, we produce more than we can consume. The reason you in the east, Mr. Calder, are able to have a closed marketing system or a limited production one is that you have a domestic market. I can see Mr. Zimmer doing this.

• 1550

The Chair: I will now go to Mr. Proctor.

Mr. Dick Proctor: Mr. Chair, I will begin by congratulating all the witnesses for interventions that were not only eloquent but emotional as well.

Mr. Schwickart, you obviously know a great deal about AIDA, but you didn't answer the question that's on my mind. Do you think it should be scrapped or do you think it's possible to reform AIDA?

Mr. Gert Schwickart: It should be cancelled.

Mr. Dick Proctor: What would we put in its place?

Mr. Gert Schwickart: I would like to get GRIP in place and then put land out of production and pay $30 an acre, which is $300 million. What is $300 million for the government when it has a surplus? Well, we don't have a surplus because we have a high debt. That's what I think.

Once the land is out of production, we could then take canola in for fuel. But that would interfere with the petroleum companies and they don't want that, so you have the next problem. We could also take hemp on it. We could then do something for the environment with the canola, and not make summer fallow. We would just keep it in crops, and not use the crops for the domestic market, but for industrial.

Mr. Dick Proctor: My next question is for Mr. Kolisnyk. I think in your statement, Mr. Kolisnyk, you said “it appears to me that we are the only exporting country that follows the World Trade rules”. I would suggest to you that we are probably one of the few countries that doesn't follow the World Trade rules.

After the 1993 GATT round, it was agreed as a guideline that Canada, along with all the other countries in the world, would reduce its domestic support subsidies by 20%. Canada in fact decreased by more than 60% on those, and that's why we're in the fix that we're in right now. We simply cannot compete with what's been happening.

Mike Gifford, who is one of our key negotiators, has come before this committee as well as the Senate committee and said in effect that Canada could put $2 billion back into domestic support payments tomorrow without engendering any kind of dispute under our international trading obligations.

I just wanted to let you know where we're coming from. We think Canada has been offside on this and it needs to get back onside.

I suppose the question that arises out of all that is that, given what appears to be a failure in Seattle last week to really do anything, we now have Bob Friesen, the president of the Canadian Federation of Agriculture, saying this morning in the paper that Canada will have to put in large amounts of money if we're going to be able to compete with the Americans and the Europeans.

I'd like your reaction to all of that, Mr. Kolisnyk.

Mr. Walter Kolisnyk: I agree totally. I think there were a lot of hopes and prayers in the last round of negotiations in 1993. I think farmers were left with the impression that Canada had to cut all of the subsidies, the transportation subsidies, GRIP and and all these other programs, simply because we wouldn't be legal. We wouldn't be following the rules.

They cut all the programs, grain prices dropped, and costs went up. Farmers started getting into trouble financially. At the same time, the government was telling us, “Well, we can't go back into farm subsidies.” However, during this time, the Americans and the Europeans never stopped and in fact they increased their subsidies.

I think Mr. Schwickart is completely right, you'll never convince the Europeans to eliminate or even cut back on the farm subsidies, because that is something they have had in place since World War II, and for a good reason: they want a healthy farm economy.

I don't think Canada can afford to spend great gobs of money on farm subsidies. However, what we need to do is hit a balance somewhere and have some money earmarked for farm subsidies and get into a long-term program. I really do believe that farmers should be involved in it and pay a premium. The province should be involved in it and maybe help with administration and the federal government should be involved. I think that's where we could all be involved in it. We should also have some kind of long-term security and some predictability.

The Chair: Mr. Borotsik.

Mr. Rick Borotsik: I too echo my colleagues' statements about thanking you for being here and making a presentation. I'll be quick in my questions and you be quick in your answers, because I have a lot of questions and not a lot of time.

• 1555

Walter, you said that $25 would be your number. I believe $30 was mentioned by one individual—Gert, perhaps. I don't believe, Mr. Zimmer, you mentioned any number. As I understand it, Neil, you don't have a number that you even want to throw out.

What would your number be for the short term and long term?

Mr. Duane Zimmer: I don't really have a number in mind. You sort of have to look at what kind of revenues agriculture generates for Canada's economy and go from there.

Mr. Rick Borotsik: Do you agree with me that there's a short-term problem that has to be dealt with immediately and then a long-term problem? By the way, the GRIP and NISA programs were developed prior to 1993 by the previous government, and we take some pride in having those there. Have any of you applied for AIDA?

Have you applied for AIDA, Walter?

Mr. Walter Kolisnyk: No, I haven't.

Mr. Rick Borotsik: Have you applied, Mr. Zimmer, for AIDA?

Mr. Duane Zimmer: No, I haven't.

Mr. Rick Borotsik: So none of you have.

Mr. Duane Zimmer: I got the application forms. That turned me off.

Mr. Rick Borotsik: Do any of you believe that you would get any AIDA?

Mr. Walter Kolisnyk: I'll get some.

Mr. Rick Borotsik: You will get some AIDA. Are you aware that 60% of the applicants right now in Manitoba who apply for AIDA do not get it?

Mr. Walter Kolisnyk: Right.

Mr. Rick Borotsik: I'm going to ask you a question. I already know the answer, but I want to hear yours. Do you honestly believe that the 60% of the people who will fail to get AIDA or qualify for AIDA don't need the money?

Mr. Walter Kolisnyk: Yes, they do need the money.

Mr. Rick Borotsik: Thank you very much. I was waiting for that answer. I guess the reason I asked the question is that a lot of people out there are falling through the cracks and not getting the cash.

So that's the short term. I will now get into the long term.

Mr. Stewart, your presentation confused me a little bit because I'm getting conflicting reports. You said that in your opinion and your experience land sales or land costs were still fairly high. You said that there were no distress sales, or that they were scarce.

Mr. Neil Stewart: None that I've seen in my area.

Mr. Rick Borotsik: Is used equipment still bringing in some fairly reasonable strong prices?

Mr. Neil Stewart: That's correct.

Mr. Gert Schwickart: I don't believe that.

Mr. Duane Zimmer: I don't believe that for a second.

Mr. Rick Borotsik: Can I hear your comments on that, please?

Mr. Gert Schwickart: I don't believe it. That is why my canola is locked in my bins—and I cannot sell it, because the price is under my production costs—because I'm sitting at home and cancelling it out. Most farmers, or at least some, don't do that. I phoned the elevator to ask if I could deliver my wheat, and they said no.

Mr. Rich Borotsik: Can I just interrupt here? Mr. Stewart, the problems are going to show themselves, maybe in another couple of months, perhaps in the spring or next fall. Are you anticipating that the land prices will drop and that distress sales may increase in the spring or fall of next year?

Mr. Neil Stewart: I think traditionally what you will see in agriculture and land prices is that high-quality land areas will maintain their price. If anything happens, sales will just slow down. Prices won't change there. Where you will see any land prices change is when these more marginally profitable areas soon drop off. At present, I am saying that I have seen no distress land sale listings coming to the industry in this area. I defy these gentlemen—and we're good friends, I don't mean to be enemies about this—to name me the ones on the market today that are distress sales.

Mr. Rick Borotsik: You said “today”?

Mr. Neil Stewart: That's right.

Mr. Rick Borotsik: So “today” is the key here?

Mr. Neil Stewart: That's right.

Mr. Rick Borotsik: I have friends in the industry who are—

Mr. Neil Stewart: Well, so do I.

Mr. Rick Borotsik: —in a potential liquidation of assets from producers. They haven't liquidated to date because we're sitting at December 1999.

Mr. Neil Stewart: Are they talking to realtors? I don't see them.

Mr. Rick Borotsik: Well, Mr. Stewart, I don't want to argue with you. All I want to do is get some information back.

Mr. Neil Stewart: Okay.

Mr. Rick Borotsik: You're telling me that you don't anticipate any of those distress sales come the year 2000?

Mr. Neil Stewart: In the last six months, in the municipality I live in, there have been six land sales involving more of an arm's-length agreement, which means outside of a family member.

Further to that, as an auctioneer—because I wear different hats—I was contracted to do a land tax sale for a local municipality in October. Two hours before the sale, the chief administrative officer phoned me and said “The sale's cancelled, but we'll honour your contract and pay your firm for your services because all the taxes have been paid.” Some of those were lots and also farm properties. I think it's time that fact came out. So that distress is not here yet.

The Chair: I'll give you 30 seconds here, Rick, and that's it.

Mr. Rick Borotsik: Mr. Zimmer, you gave a good presentation, and I want to go over it more closely. You talked about a long-term program and that the program should encourage farming and farmers to stay on the land, that the short term was to inject more money and resources, and that the environment would be under public pressure.

• 1600

We talked about set-asides. Is that part of this program that you envision right now, perhaps with a cash value attached to the set-aside to keep people on the farm?

Mr. Duane Zimmer: It's something that might work and it might prove beneficial to farmers in western Canada first.

Mr. Rick Borotsik: Would you be in favour of something like a set-aside of 20% for your own farm?

Mr. Duane Zimmer: Yes, possibly I would be.

The Chair: Thanks to all of you. We will now go to round two.

Our next group of witnesses is Stuart Zander, Art Potoroka, Albert Dohan and Richard Hamilton. Welcome, gentlemen.

If it's all right with the group, we'll start round two in alphabetical order. Mr. Dohan, you will have the dubious distinction of leading off. If you could keep it at five to seven minutes, we would then have time for questions. Presentations are always very good, but the toing and froing and the questions after are also very helpful.

Mr. Albert Dohan (Individual Presentation): I would like to express my appreciation for being asked to make a presentation here. My name is Albert Dohan and I have a farm. I, my wife, and my three girls run a mixed cooperative farm of grain and cattle.

I have three points that I think are very important to the agricultural economy. First, I think what is necessary is an immediate cash injection into the agricultural society, and second, it should be followed up by a long-term program. I will touch on these two points a little later on. The third point, I would suggest, is that western Canada needs a new agriculture minister.

The cash injection is necessary immediately because we will lose hundreds and hundreds of farmers, all depending on what the people in Ottawa want to see in western Canada. Do they want to see conglomerate farms or do they want to see the family farm survive?

We did have the AIDA program. In my personal case, I and my accountant have looked at it, but I do not qualify. AIDA does not provide a level playing field, basically because it does not take margins into consideration. Without the margin consideration, many farmers in this area will not qualify. In my area, we've had four or five years of very wet conditions. We've been able to get a crop in, but we have put it in under adverse conditions, with yields dropping off, therefore, income not being there and AIDA not qualifying us.

I would say that right now approximately 90% of the farm women work off the farm, and this is very unfortunate. When I got married 22 years ago, we decided to have a family and the farm was going to support us. Right now, without off-farm income, be it from the wife or the husband having a job, it is very difficult to keep going.

• 1605

Off-farm income does not qualify under the AIDA program. Therefore, I'm being penalized by my wife not working or myself not working off the farm as compared to other people having off-farm incomes, and it still does not qualify us.

Another thing is that expenses such as interest, property taxes, and cash spent are disallowed under the AIDA program. These expenses make up a very big part of all farm existences now. The property taxes that farmers are paying, or the lack of payment due to the municipal act... If someone is not paying their taxes up to date, the rural municipality has to pay the municipal tax and the school tax, leaving themselves in a deficit. The school divisions in the next few years will find it very difficult to keep going. Interest will have to be charged on the school tax.

We need to develop a long-term program that will be kept in place. We had the GRIP program, but that has been got rid of. In the past 10 years, probably four or five programs have been installed and removed. I think a program has to be put in place and left to grow. Let's groom it and let's make it work.

In our municipality again, we have a lot of crown land. Louisiana-Pacific Canada has moved in, cutting off all the hardwoods, and the crown land has not been reassessed. In previous years, mixed farmers have been able to buy crown land for grazing permits. Now it's not being sold, and the taxes have gone up or the rents have gone up due to the value of the wood.

In closing, I don't really think we have a farm crisis; I think we have a social crisis coming, because it's affecting our education and it is affecting our health. We have people leaving. Anybody who closes up a business in rural Manitoba is not going to reopen it, and anybody who moves to the city is taking up a job that someone in the city should have. Therefore, I think this is more of a social problem than an agricultural problem.

The strain on health care is getting higher and higher. We're having problems keeping doctors and nurses and keeping beds open. The more people who leave the rural community, the tougher it's going to get.

As for foreign aid, instead of giving money to foreign aid, I think we should be giving wheat or grain. They can't get it any cheaper than they get it now.

On the WTO, we have had three years of talks. By the time these talks are finished, we will be broke.

Concerning diversification, in our case on the farm, it seems to me that the more we diversify the further we get into debt. We only get halfway through the diversification when the money runs out. We then have our previous debt and are now carrying a new debtload. I don't think that is working properly. It's very stressful on the farm life, on the family, and on everybody else.

Voices: Hear, hear!

The Chair: Thanks, Mr. Dohan.

Just before we go to Mr. Hamilton, could I have clarification on a couple of points? You mentioned crown land in connection with Louisiana-Pacific. Is that provincial crown land or federal crown land?

Mr. Albert Dohan: Provincial.

The Chair: I don't think I understood your reference to negative margins or positive margins. What did you say? I thought you said that margins had been excluded, and of course a fundamental part of AIDA is margins. It started off naturally with just positive margins, and now negative margins have been included. Could you help me on that?

Mr. Albert Dohan: In our case, we've been sliding down for the past four years. We have nothing to compare it to. The previous year has to compare to some of the crop failure. They'll take 70% of that. Down here, we have no comparison.

The Chair: Yes, you're in that troubled group. Yes, I understand that.

Mr. Hamilton.

Mr. Richard Hamilton (Individual Presentation): We operate a mixed farming operation at Ochre River and have always been interested in trying to better our farming industry and our community. When asked to make this presentation, I readily agreed because I believe too much discussion takes place in neighbours' houses and coffee shops, but little, if any, constructive action is taken. I also believe that for every letter written to the Minister of Agriculture, there are 1,000 silent supporters of that particular viewpoint.

There are three main areas of concern when it comes to farm aid from the federal government: the EU and U.S. subsidies and programs, eastern Canada versus western Canada, and one Canadian industry traded off for another Canadian industry. My comments will be all intertwined around those three issues.

• 1610

I realize that the WTO talks are very complicated and our government needs to be there. It is very apparent, however, that these talks are not going to solve the Canadian farmers' problems in the short or medium term.

The EU countries are making it very clear that they do not intend to stop subsidizing their producers, regardless of what we think. The German government has guaranteed their farmers a subsidy until the year 2007 at a minimum. It is obvious that Canadian farmers cannot wait for subsidy removal in the EU or U.S. if there's to be any faint hope of survival.

The media tells us every day that a very optimistic timeline for achieving any agreement whatsoever at the WTO talks is three to four years. The reality is that it will likely be much longer. Farmers here don't have time for promises and carrots on a stick. We need action, and quickly. When 40% to 50% of farmers indicate that they may not be around in one or two years, does this not justify swift and immediate action?

I'm sure I need not repeat the well-known statistics of our meagre assistance when compared to the U.S. and the EU. Grain and oilseed prices give absolutely no indication that any meaningful improvement is even on the distant horizon. Grains, oilseeds, and red meats are the dominant sectors in Manitoba and account for 72% of market receipts. Also, 75% of this production is exported, thus making us very vulnerable to world markets.

Although I consider myself to be a free enterprise person and do like to ask any government for help, I see no other solution. As farmers, we are told constantly that there is no money in the government's pockets. I believe it simply comes down to attitude and political will.

It is my understanding that the farmers in Europe make up 3% of the total population. The 1996 figures indicate that farmers in Canada make up slightly more than 3% of the total. If European governments can justify huge subsidies to their people, why can't Canadian governments at least go half as far and directly and simply subsidize us?

It appears that in the last round of the WTO talks, Canada's negotiators got hoodwinked and out-manoeuvred. They thought they had achieved a target for removing subsidies and rushed home and diligently and immediately dismantled the few programs we had. They even went far faster than required.

Could it be true that this was one quick way to reduce the deficit? I'm all for reducing the deficit, but don't do it at the expense of one of Canada's most important industries, and the one least able to afford it. Meanwhile, other countries agreed to do similar things but in actuality did nothing. So here we are, 10 years later, worse off than prior to the talks.

The second and third areas of concern I have of western versus eastern Canada and industry versus industry are particularly disturbing.

One area of deep concern is the debate over supply management. Mr. Vanclief has stated that he intends to vigorously defend the right to maintain supply management. This will probably be at the expense of some other area of agriculture. Two things come to mind on this issue: first, 80% of the dairy industry is in Quebec and Ontario; and second, there's no cost to government in allowing supply management to continue.

The recent tariff on beef has been removed, thanks mainly to our own Canadian Cattlemen's Association's vigorous defence. I saw very little table-pounding by Mr. Vanclief, saying that this tariff was unjustified and absurd.

A different story appears to be the case with the airplane manufacturer, Bombardier. The government stated it was asking for a multibillion dollar settlement from Brazil because it was very upset with the unfair subsidization practices Brazil was using. It seems to me that there was the odd shekel given by Canadian taxpayers to Bombardier. Hopefully they are as concerned with western Canadian agriculture.

Now a word about AIDA. The program is obviously flawed and not working. The media headlines say that the government is trying to get as much money to the farmers as possible. The reality seems to be the complete opposite. Not only is it very difficult to qualify, it would appear that civil servants have been told to delay any possible payout as long as possible.

My own application was sent in July. Not a word was heard until mid-October. Then came a question about cattle receipts. Two weeks later, a call came saying they had decided they didn't need that information. Two weeks later, a call came questioning my fertilizer and spray bills. After a further two weeks, a different person called asking for the same cattle receipts that they had said previously they didn't need. This all happened in a program that was supposed to have money in farmers' hands by seeding time.

• 1615

I see the need at present for a quick and simple form of cash injection to farmers. We should continue to work toward subsidy removal in other countries, knowing it will take years. There will be no single program that satisfies every type of producer. I would therefore suggest two or three variations to accommodate different sectors. I think some form of income-based program is fair, but it must be much simpler and much more effective than AIDA is.

A strengthening and continuation of NISA and a stronger crop insurance program are also possibilities. Government could also take action to reduce input costs, which would achieve the same thing as higher prices for our products. One thing is clear: the government must do something quickly or the talk of western separation will grow and become much more prevalent.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Hamilton.

Now we have another family name starting with Z. That's interesting. Thank you for coming, Mr. Zanders.

Mr. Stuart Zanders (Individual Presentation): Thank you, honourable members. I thank you for coming out to rural western Canada to assess what is happening.

Farmers have been facing a decline in prices and an increase in costs over many years. Governments change, programs change, but the trend continues. Ad hoc programs from the past have not necessarily been fair, but they have helped communities and infrastructure as well as some of the people they were intended to help.

We've had provincial and federal programs over the years that included a provincial interest rate relief program that would rebate interest paid by a select few, and a federal gross revenue insurance program that maintained production revenue at about the previous year's level, in my case, for a couple of years. However, it used a long-term average, and with prices going down, it only took a short time until the producer was paying large premiums without any chance of surviving until the prices rebounded.

A trigger from the current AIDA program requires a drop in net income of about 35% to 40% in four years. This is the starting point for collecting, and therefore very few farmers qualify to collect any amount of money, if at all. You have to have at least above-average crops in the reference period and a poor crop along with the poor prices in the trigger year.

The following chart shows my farm situation over the last few years. I've already made adjustments to reduce costs and risks over the last fifteen or so years in order to survive this long. If everyone makes the same adjustments, it will not work for very many.

You can see that from 1993 to 1997—prior to that, I had just increased my land base a little bit, so the figures did not work well—I had a gross income of $110,000, in 1998 it was $89,000, in 1999 it was $29,000 and in the year 2000 it will be $45,000. My expenses were $76,000, $73,000, $44,000 and an estimate of $45,000, which left me a margin with an average from 1993 to 1997 of $24,600, in 1998 it was $16,000, in 1999 it was minus $15,000, and my projection for the year 2000 is $197.

In 1999 I received an AIDA payout of $6,025. And, no, I don't want to do any more AIDA forms. My projection on the interim AIDA payout would be that if I weren't penalized for my decrease in acres, I would get $8,661 out of AIDA for the year 2000, providing the provinces put their money in.

The projection for the year 2000 deals with last year's grain that's still on hand, and the other deals with the AIDA payout. All income and expenses are reported on a cash basis, with a fair bit of income not being sold until the following year. Normally grain is not harvested dry and cannot be sold until later. The 1998 year had sales of more than one year's production, some of the production being what was produced during 1998, which normally would have been carried to 1999, or a lot of it. The 1999 year had sales of less than one year because some of it had been sold. I'm carrying all of my 1999 grain to 2000. The expenses are considered to be the same as the year before for the year 2000.

• 1620

In 1998 we had a disastrous canola crop due to excess moisture, and this was a contributing factor for the AIDA payout in 1999. Our 1999 crop was well above average.

It seems that all costs on the farm have increased a lot over the years, but I only looked at the increase from 1990 for items that were directly comparable. I did not look at chemical costs, because I'm not using the same chemicals as I was 10 years ago.

Farm repairs are expensive. Their costs have probably increased more than automotive or hardware costs. One hundred dollars in farm parts would buy you a key chain, $1,000 would fill your pocket, and $10,000 worth would fit in the front of the half-tonne.

Here are some comparisons. You can see the prices and the change. The wheat price is based on AIDA price estimates that are in our AIDA forms. Our initial payment is considerably less than that, but the price of wheat has gone down by 62% from 1990; diesel fuel has gone up 30%, which doesn't include the GST; 46-0-0 has gone up by 40%; 11-51-0 has gone up by 43%; my land taxes have gone up by 51%; and the education tax portion of those taxes has gone up by 67%. I went back and looked at some bills in 1990 for the tachometer drive in my tractor and phoned the dealer to get today's price on it. There was an 82% increase. The increase in the gasket price was 56%, and there was a 52% increase in rod bearing prices.

My newest tractor is a 1978 and is worth about $15,000. That might be at an auction sale if a few guys were drinking while the auctioneer was working. Its replacement cost is about $125,000, and it is about at its expected life as far as hours are concerned. A major breakdown of the engine or power train would cost between $5,000 to $10,000 and would probably come at a peak period, when a person's choices would be limited.

This is a problem faced by a very large number of farmers of all sizes. I hope this helps to show where farmers in our area are at.

The Chair: Thank you, Mr. Zander.

Can I just have one clarification? On your second page, it's printed that your average gross income in the years from 1993 to 1997 was $101,000?

Mr. Stuart Zander: Right.

The Chair: But you had mentioned $110,000. Did you just misspeak?

Mr. Stuart Zander: I probably misspoke.

The Chair: That's all right.

Mr. Potoroka, we will now hear from you.

Mr. Art Potoroka (Individual Presentation): Thank you very much.

My name is Art Potoroka. I also farm in this area. I have operated about 3,000 acres for about 25 years. I grow cereal grains, oilseeds, forage and forage seeds, and special crops. I do have an off-farm job, although I'm not active in it. My wife and I operate a real estate office.

First of all, the subject matter of the farm aid program does not, in my view, fairly or clearly express the problem of and solution to the farm crisis today. The agricultural business in Canada is very profitable on the other side of the farm gate. All, without exception, are well served with high, stable, and dependable incomes as a result of the primary production of commodities on farms, both large and small, across this country. This would include transportation, handlers, inspectors, processors, retailers and traders, exporters, civil workers, politicians, consumers, etc. For every loaf of bread consumed, the farmer's share of benefit is still a mere four cents.

In this chain from soil to consumer, the numerous benefactors can be represented by links, some of which are stronger than others. The first link is the farmer, who is the genesis of the benefits but the loser of the rewards.

So can our weak link be broken to the detriment of the other links in the chain? Think back to the better days on the farm, when the steel mills and equipment manufacturing shops of Ontario were humming with activity. Load after load could be seen going through Dauphin to supply western farm operations. Need I remind you that today the last farm tractor assembly plant remaining is on its way out.

• 1625

Is a strong and stable agrifood industry important? Consider the level of support that members of the European Community give to their farmers, or even that of our neighbours to the south. Why does the Canadian government regard the western Canadian farm industry as some sort of cancer on the land, the only cure being to kill the patient?

Many countries, including the former Soviet Union, strive to be self-reliant in their food supply but are unsuccessful. The Canadian consumer, on the other hand, enjoys one of the world's lowest-cost food supplies. It is a wise society whose citizens take their supply of food seriously and ensure that future generations of farmers will be there to provide a continued domestic source of food. Responsible, sensitive, and forward-thinking politicians will heed this current crisis as a wake-up call and act quickly to bring this about.

These are some of the areas of concern. I am going to reiterate a lot of things that have already been said, but, very simply, the bottom line on an average farm is non-existent. According to the figures of the federal government, the average farm income in Manitoba and Saskatchewan in 1999 will be $9,000. Considering the few at the top or above the average of the income scale, the vast majority are left with a negative cashflow. There is no room for error, unstable prices, adverse weather, or lack of good policy. I cannot understand how both levels of government can argue about and debate whether there is a crisis on the farm.

Some of the reasons for the negative bottom line are low commodity prices and high input costs. It is simple. The prolonged low and falling commodity prices destroy income stability on the farm.

For example, the price of canola, at $5.25 today, is approximately 40% less than the price of a year ago. Current levels of wheat prices are about one-half of what they were in the early seventies. I know because that is when I started farming. Since then, the cost of production has escalated, in some cases, eight to ten times. This applies to the large-ticket items like equipment, fuel, chemicals, and fertilizer. Somehow all of the benefactors mentioned in my introduction keep extracting an ever-increasing share of the pie.

I would like to talk about transportation and handling services. While I am not keen on subsidies, the loss of the Crow benefit changed very drastically the bottom line on my farm. This loss was brought about during a short spell when prices began to improve and received little opposition.

Following this disaster came the rationalization of rail and grain-handling services. This translated into more transportation costs and on-farm storage costs for the farmer. Rationalization in grain handling and transportation is designed to give more to the stakeholders for less service, again at the expense of the farm operator.

In an effort to offset the situation, the farm has grown larger, with more risks, taking on an ever-increasing amount of debt.

Mother Nature can be a farmer's friend but can also deal a disabling knockout. Poor or out-of-season weather can quickly degrade an otherwise good crop. In recent years, adverse weather has put many farm operations on the slippery slope to bankruptcy. In southwest Manitoba, locally, we had the same situation.

Government farm policy can hardly be criticized because there is no clear policy.

I would not want to depend on the Canadian Wheat Board for my income and cashflow on my farm. Final payment on grain produced can be two years in coming, and without compensation for carrying charges or storage costs on outstanding deliveries. We have no choices in marketing our high-quality milling wheat. On the production side, the bills are due and payable in 30 days or are subject to interest charges of between 21% and 28%.

Incremental payouts during the crop year are oftentimes announced as a collective amount in bold headlines and perceived by non-farmers as another windfall for farmers. No one else would allow their paycheque to be advertised for all to see.

• 1630

By now we know that the WTO talks in Seattle have been unsuccessful. Our minister, Lyle Vanclief, sought to eliminate export subsidies as a means of levelling the playing field for Canadian farmers. While this may be a workable solution in the long term, I don't believe it is going to happen any time soon. I believe that more effort needs to be put into developing a domestic policy that which will preserve our agricultural industry for the next generation.

Under AIDA, the worst program ever, by now a large of portion of dollars allocated has been expended on administration, not to mention the windfall for accountants.

AIDA does not address the real problem. Don't fix it. Get rid of it.

NISA is a good program, but it needs to be expanded to include more government contribution.

Diversification is the buzzword in agriculture today. Again, this is good in the long term, but it does not address the urgent needs of today. Diversification is an expensive alternative, and therefore not all farmers who need it can afford it.

The federal government has saved billions of dollars since abolishing the Crow benefit, resulting in mounting surpluses. It is now time for it to find ways to return some of that money to farmers who desperately need it.

In Canada the consumer enjoys one of the least expensive supplies of food in the world. Perhaps we should have a special levy on domestic food products that would go directly to farmers. A return to a two-price system for wheat would be something to consider.

As a result of the natural disasters that have been encountered in Manitoba in 1999, there must be quick and decisive action taken by both governments to help farmers and service businesses survive this dilemma.

School taxes must be removed from all farmland, with the exception of the home quarter. This is a most unfair tax.

Government policy-makers need to plan and develop goals and objectives that will remove as many uncertainties for farming as possible and help to ensure a decent return to farmers.

In summary, as we approach the turn of the century and a new millennium, one thing is certain: the need for agricultural products is here to stay. Agriculture is essential to life itself. Will we be able to carry on as we are today? Who will control the production of food in the future? Will the production of food be environmentally sustainable? Do we have too much political interference to come up with the right answers? Do we place too much emphasis on international rules of trade and use them as an excuse?

There are more questions than answers. For many farmers the time is running out to come up with answers.

The Chair: Thank you, Mr. Potoroka.

On the question of administration, I am told—and take it for what it is worth—that the cost of administration is 3% of the AIDA program.

Mr. Art Potoroka: I don't know the exact figure.

The Chair: That is what they say, 3%. It comes to $26.8 million, and there was a one-time start-up cost of $9.5 million. Anyway, I just throw that out to you.

Mr. Inky Mark: I would like to thank all of the presenters for bringing their concerns about the crisis to the table. The message is very loud that farmers need help. They need a cash injection. In fact, there is a lot of cash. At our meeting in Portage the chairman indicated that there is still about $1 billion in the AIDA program. The big challenge is how to get that money from the cabinet table to the kitchen table of the farmers.

My first question to you is, how do we do that and who do we pay it to? In other words, should everybody get an equal payment or should only those in need get a payment?

Secondly, the provincial government in Saskatchewan has indicated that it wants to take its portion of the AIDA program and pay it out in cash to the farmers. What direction do you think the Manitoba government should take regarding the AIDA payout?

• 1635

Mr. Albert Dohan: I think the fairest, the simplest, and the quickest way is an acreage payment to get cash into the economy now, and then work toward a long-term solution that can be moulded and built properly. And I think that an acreage payment should include all seeded acres.

The Chair: If you don't mind, Mr. Mark, I would like to ask Mr. Dohan a question.

With respect to an acreage payment, would the circumstances of the individual farmer matter? Whether he is doing very poorly or reasonably well, regardless of the circumstances, you would just give it out?

Mr. Albert Dohan: That's right, because by the time you sort out who deserves it and who doesn't, it will just be another mess and nothing will ever get done. People who don't need it will pay it back in tax or will recycle it. It will go back into the economy and revolve.

Mr. Richard Hamilton: I think an acreage payment is definitely the simplest and quickest way to get money, but there are certainly drawbacks to it, and there are going to be inequities. As I mentioned, I don't think the government can come up with a program that is going to satisfy every sector. If you look at productivity or acreage payments or whatever, somebody will be getting the short end of the stick.

I agree that we need something quickly—simple and quick. Perhaps an acreage payment in the interim is a way to do that. A neighbour of mine suggested, with no offence to a farmer who is farming 10,000 acres, that maybe a cap is in order. I still think, to be fair about it, that you have to revert to an income-based program for the long term. We tried that with AIDA, but obviously that is too complicated. Something is wrong because it is not working.

The Chair: Is that it? Okay, Mr. McCormick.

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

I would like to thank all of the witnesses and the people who are here. You are being very kind, in my opinion, to the government by being here.

Probably the only time I hear you swearing at us is when you use the word “AIDA”, because it is certainly not a great word in this situation.

When we first got that $900 million, working with the CFA, Keystone and other groups, a lot of people thought we had made a good start. Of course the good start went down like the Titanic when we didn't deliver. It was poorly constructed and so on.

I want to thank you people. You have bared your souls. Some of these submissions I will find very valuable as the chair of the rural crop government caucus. We have been discussing this for months and we have to do a better job, and you are putting it all out in front of us.

Mr. Zander, I am wondering about the experience of people in your area with the NISA account. I am not saying that they should access it for this crisis; I would just like to check on that.

Also, we have NISA now. There is money designated for 1999, for this year. We sure as heck have to do a lot better job of getting that money out following January 1, which is not very far away. I think the government is committed to that, and we have a lot of people who are going to keep on us to make sure we do that.

I am looking for suggestions on how we can do a better job with that money that is designated now. I am not saying we don't need more.

Mr. Stuart Zander: First, I think a lot of the money that is in farmers' NISA accounts belongs to older, closer-to-retiring farmers who are managing some other tax situation, and so on, and not necessarily in the active, aggressive farmers' accounts. It is not that easy to trigger them. It is hard to trigger your money out of it. I haven't been able to trigger mine for a number of years, but I have done an interim trigger now that will give me some major dollars out of my NISA account. But I haven't triggered for seven or eight, or whatever, years.

I have been recommending to the farmers with whom I deal that they should trigger their NISA money and revolve it.

• 1640

Mr. Larry McCormick: I appreciate your personal comments, because they will help us do what we want to do.

Later we will hear from the Western Rail Coalition. In committee I have often said that mining companies, banks, fertilizer manufacturers, and the railways have built their fortunes on the back of rural Canada. Taking nothing away from government—it is your money and your government—the solution has to come with the cooperation of many groups across the country.

The other day representatives of the Royal Bank of Canada and the Farm Credit Corporation appeared before the committee and said that they couldn't help approximately 30% of the farmers in Manitoba and Saskatchewan because they wouldn't come under their jurisdiction. You wouldn't qualify. I want to give you the opportunity to address this matter. How do you feel the Farm Credit Corporation and other chartered banks are using you? Of course that includes where we are with the input people.

Mr. Richard Hamilton: In talking to other farmers, including my own operation, I don't think there is any question that the banks are not in a helping mood right now, to say the least. When things get tough, it seems that is when they get tough, and that is precisely when you need the help. When things are going well, then they are ready to throw lots of money at you, but when you need the help, that is quite often the time they don't offer much assistance. That has been my experience.

Mr. Larry McCormick: Mr. Hamilton, we had some discussion on this earlier today. Of course each case is different and I don't want to get personal, but some people were saying that so far the banks were being halfway decent.

Do you have any comments on the rail transportation policy? There is possibly a few hundred million there that would help out the producers on the Prairies if we could move on that.

Do any of you people have any thoughts on that?

Mr. Stuart Zander: I think the first people who should have been standing on the rail lines helping the farmers when they were closing the elevators were the people who worked for the railway companies. They are going to lose their jobs pretty soon, when the trains stop running. They won't run the trains up and down the tracks indefinitely. As they close the elevators, they are going to need fewer and fewer staff, and that will impact on a lot of people other than farmers.

Mr. Art Potoroka: I am surprised that an action like that would come from government. Is it not aware that the agenda for the railways, particularly CN, is to dismantle all subsidiary rails? They want one rail from east to west. They don't want to bother with the short lines, but they don't want someone else to run them.

In a sense, I see a monopoly running wild.

I was involved in a short line acquisition and found that the minister at that time, Mr. Collenette, was very hard to reach on the matter, and the government disowned any responsibility for it.

Mr. Larry McCormick: Art, I want to say in closing that I hope you are going to be somewhat encouraged by what we may see put forth to the two rail companies and where they are going to be—

Mr. Art Potoroka: It may be too late in a lot of cases.

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

Mr. Art Potoroka: As a matter of fact, it is too late.

Mr. Larry McCormick: It is too late in many cases.

Mr. Dick Proctor: I am going to put the same question to each of the four of you that I asked Mr. Schwickart in the first round: do you think AIDA should be scrapped?

Just for background—and I don't have the exact percentages—in British Columbia, on the number of claims processed to date under AIDA, probably about 75% of the people who made an AIDA claim have received money. The average in B.C., if you are interested, is almost $21,000. In Alberta I would say that closer to 80% of the people who claimed are receiving a payment of $19,164. In Ontario it would probably be about 80% and it is worth $13,725. Saskatchewan and Manitoba are 40% and 36%, in that order, in terms of the number of claims processed which qualify.

• 1645

On the basis of what we see, it is a mixed bag. In some provinces it seems to be going reasonably well. In others, including this province, obviously it is not.

The question again is should we scrap it?

I think it was Mr. Dohan who said, in effect, that we can't have ad hoc programs every two or three years. We have to develop something and revise it as necessary. Do we revise it or throw it out?

Mr. Albert Dohan: My personal opinion is biased because I don't qualify, so I would say throw it out. You have a province that has supply management that qualifies very highly. I would say, in that case, they would want to keep it. It is ironic that the three biggest producing provinces don't qualify. Being a farm package, I don't think it has any merit.

Mr. Richard Hamilton: As I understand it, the reason it is taking a long time for some of the provinces to get the money out is because of their administration.

Mr. Joe McGuire: There is no fee.

Mr. Richard Hamilton: I am not familiar with the fee, but Alberta—since it is provincially run—as I understand it, came through with the money a lot more quickly.

As to whether it should be scrapped or not, I think there has to be something a whole lot better for the long term. That is certain. But don't throw it out until you come up with something else.

Mr. Dick Proctor: Yes.

Mr. Steward Zander: I think AIDA will have the same problem as GRIP did. It is a sliding average, and I would hope we are getting close to the bottom of that average. If you start averaging together three losses, and if you have to lose 40% more before you get a payout and you don't qualify now, there isn't anyone who will qualify.

Mr. Dick Proctor: Let me follow up quickly with this question. Last month, when Mr. Vanclief appeared before the Saskatchewan Wheat Pool, he said that he expected that there would be a long-term program in place by March 2000. I am asking you, on behalf of the standing committee, what should we be telling Mr. Vanclief should be in that long-term program?

Mr. Art Potoroka: What about a support program of some sort? Let's say the equivalent of the salary of a backbencher. That would be okay.

I am serious when I say that there are a lot of people making a very good living from the agricultural business, right from the farm gate onward. I don't know whether it is because the farmer has no time to organize this or if the policies are wrong. We are subject to all kinds of policies. We can and cannot do certain things. But why kill the goose who lays the golden egg? Eventually it will hurt.

Mr. Dick Proctor: It was mentioned this morning that when we met in Portage a woman who lives close to the American border made a presentation. She said that they were receiving absolutely nothing on the Manitoba side, but on the North Dakota side they were not only getting crop insurance, they were also getting unemployment insurance. Should farmers have an opportunity to pay into unemployment insurance or social programs to help them through difficult times like the one they are going through now?

Mr. Art Potoroka: I don't know. Maybe it is a little simplistic to say something similar to unemployment insurance. Some farmers qualify for unemployment insurance if they are working off the farm and they work their sales in such a way that they qualify. But this is a much more complex situation than, say, an hourly wage earner or a salaried person. A lot of thought has to be put into this to take the peaks and valleys out of the situation, because it is not a good one.

• 1650

The Chair: Thank you.

Before I recognize Mr. Borotsik, I would like to comment on the question of rejection rates. It is true that the rejection rates in the provinces of Manitoba and Saskatchewan are higher than those rates in Ontario, Alberta, and British Columbia. It is interesting that the rejection rates are higher in the provinces where the AIDA program is federally administered. It is also interesting that where it is federally administered there is no application fee, whereas, say, in the province of Alberta the application fee just to get your forms is $500. You have to put out $500. One might conclude from that—might—that where there are high fees, that discourages some farmers from applying at all. That might explain why the rejection rate in Alberta is only 15% compared to Manitoba's 50%. I simply throw that information out.

It could be that the federal government thought it was doing the generous thing by applying no fees and putting up no barrier, yet what has happened is that it has, I think, encouraged a flood of applications, which has driven up the rejection rate.

Mr. Rick Borotsik: I take the other side of the argument on that one. Having some experience with AIDA verifiers in Manitoba—and, Gert, I am sure you will confirm what I have to say—some of those verifiers think it is their money. They find it very difficult to let go of those dollars and find ways of getting money into the farmer's pocket, as opposed to wanting to retain it. I have seen that happen, Gert, and I think you would probably agree that there have been some of those cases.

Also in Manitoba, with respect to the high level of turndown, in Alberta it is administered through the FIPA program and in Ontario it goes through the MR, which are direct programs that are there for farmers and producers, where we have bureaucrats administering the programs as opposed to people who really understand agriculture in those other provinces. That is the other side of that equation with respect to the turndown.

I don't have to ask you about AIDA, Art. In your presentation you said that it is the worst program ever; don't fix it, get rid of it. Are you saying that we should get rid of it now, in 1999, and put something else in place, or get rid of it at the end of the program, which is supposed to end in 1999—I am sure you are aware that it is a two-year program—and put something else in place after that? Do you want to get rid of it for 1999?

Mr. Art Potoroka: I think we should get rid of it as soon as possible, because it is not helping the people who need it most. They may be people who have not had a descending income for the last three years, but no income for the last three years.

Mr. Rick Borotsik: I was going to ask Albert that, because he mentioned that if you had three bad years on your farm, obviously, when you have 0% margins, 70% of nothing is nothing.

I would ask you the same question. Are you suggesting that we should get rid of the 1999 AIDA and replace it with something else, or are you looking at 2000 forward for another program?

Mr. Albert Dohan: It won't come any sooner than that, anyway. For those people who have applied, I imagine that it should carry through. But as I say, in my case it won't.

I would reiterate that we have to have some kind of program put in place. My bankers are sitting behind me listening, so I can't say too much. But that's right, we have had zero. We have to have a program, but the thing is, we have to let it grow and mould it. To have it for two or three years and then throw it away is doing no one any good.

Mr. Rick Borotsik: I would like to ask another question. I can't remember who mentioned school taxes. That happens pretty much with every presenter we have seen.

It is my understanding—and correct me if I am wrong—that school taxes range from about $3 to $5 per acre, depending on which municipality you are in. To take school taxes or an educational special levy off your tax bill is something I agree with, but it is only $3 to $5 per acre. That is not the end-all and be-all. Why is it that everybody who makes a presentation mentions school taxes? Is it that much of an irritant to you, or is it really a financial issue?

Mr. Albert Dohan: Yes. If you are surviving on maybe $2 an acre, that $5 is a big deal.

Mr. Rick Borotsik: I think you mentioned it, Stuart. Do you have any comments?

Mr. Stuart Zander: I was just saying that you can pretty well pick anything you want and it will have gone up.

Mr. Rick Borotsik: Am I right with the $3 to $5 an acre? Is that pretty close to the municipalities?

Mr. Art Potoroka: In most cases it will be about 50% to 60%, so it is about $3 an acre.

• 1655

Mr. Rick Borotsik: You are also aware that it is provincial, it isn't federal. But there might be something we could do.

Mr. Joe McGuire: I would first like to make the observation that at this time last year there was no disaster money. There was heavy pressure put on both levels of government, federal and provincial, by the farmers' organizations and the safety net committee, and there was a major announcement before Christmas that there would be over $1 billion—$900 million federal and $600 million provincial—directed to the people who needed it. It wasn't going to go to those who didn't need it; it was supposed to be directed to those farmers who needed disaster dollars, because there were disasters in the hog and grain industries.

Since that time it appears that the wheels have come off, and what was a very positive announcement has turned out to be negative as time has gone by. As was stated earlier, we still have a billion dollars sitting there waiting to be accessed. What we want to find out from you people is how can we get that out to the people who need it? The accrual basis that the AIDA program is based on, is that the way to go?

It would be nice if we could get all of the provinces to agree to a per-acre payment, or agree to include all of the negative margins. The minister had to come down hard recently on providing the negative margin change. There are provinces in this country that are still dead set against that. A year ago he did very well, in my opinion, to get the kind of program he got, to get the provinces to at least agree to this type of program along with the farm organizations.

To go back to the per-acre payment, there are provinces that will go right to the hilt for a per-acre payment.

Politics is the art of the possible. This is what was possible a year ago. We are trying to figure out what is possible now. How can we get the dollars that are sitting there into farmers' pockets as quickly as possible? The minister said that he would have the AIDA cheques out by Christmas.

The Chair: For 1998.

Mr. Joe McGuire: For 1998. He made that promise in Regina. Let's assume that is happening. What is going to happen next year? How do we get the rest of the dollars out before too much time goes by and the banker comes knocking on the door?

We didn't expect to be here. With the announcement a year ago, we didn't expect to be here asking you how we should spend the billion dollars that is sitting there that the governments are providing. What we are looking for are your suggestions on how to get that money out in the second phase of AIDA.

Mr. Art Potoroka: Very often when there is an announcement by the federal government that there is money coming, what it doesn't say is that it is conditional upon the province kicking in its share, and that comes almost as a surprise.

Mr. Joe McGuire: Excuse me. A year ago we said that we were going ahead with our 60%, regardless of whether the provinces anted up their 40%.

Mr. Art Potoroka: Why don't you do it? Why don't you just go ahead with a federal program and forget about the provinces?

The Chair: The provinces are in. There is no condition. There is no condition, Art. The provinces are in.

Mr. Art Potoroka: It would make it simpler if that were not the case, obviously, because there seems to be the willingness to do it.

Mr. Joe McGuire: Thank you.

The Chair: Does anybody else want to answer the question of how to speed this up?

Mr. Richard Hamilton: Speed is in my books too. I touched on it in my presentation.

Why on earth is it taking so long? You keep talking and the media keeps talking about this billion dollars that is there trying to get out to the farmers, and it can't get there because we are not applying or some silly thing like that. I applied in July. What I am going through to try to get this bit of money is just like being audited by Revenue Canada. I paid my accountants $450. I paid a fee.

The Chair: Does anyone else want to tackle that question?

Mr. Stuart Zander: How long will it be before you can assess how much of the first year's payment is going to be made of the $900 million? When it was first announced, it looked to me as though, for the two-year program, it was going to be about two-thirds as much total money as was in the feed freight assistance program, and instead of going to western Canada, it was going to be divided amongst all farmers in Canada. In a lot of cases the farmers, under the feed freight assistance program, or whatever the last payment was after the Crow, were getting just under $2,000. This is only two-thirds as much money, it is divided into two years and is spread all over Canada.

• 1700

We might not be talking about very much money per farmer anyway, even if we do get it out. If you target it to grain farmers, you won't find any grain farmers whose income has not slid in the last 20 years. I used 10 years in my presentation, but the prices were already a long way down by 1993. That is why we had this.

The Chair: Thank you very much.

I want to tell the audience that we will be hearing from Allard & Yakubchak Certified General Accountants and from Parkland Industrial Hemp Growers. We are going to hear from more farmers right after these groups, and I want to apprise the farmers of who will be heard, at least off the top: Calvin Gust, Terry Drebit, Don Fyk, Boris Michaleski, and Alan Armstrong. As soon as we hear from these two organizations, we will invite those farmers to give their presentations.

I will now invite to the table George Allard and Russell Yakubchak, and Joe Federowich of the Parkland Industrial Hemp Growers.

Joe, I think you actually wear two hats, don't you?

Mr. Joe Federowich (Chairman, Parkland Industrial Hemp Growers): Yes.

The Chair: You are a hemp grower and you are something else as well, aren't you?

Mr. Joe Federowich: Yes, I am a farmer.

The Chair: You are a farmer.

Mr. Joe Federowich: Unfortunately.

The Chair: You can farm it, you can hemp it—whatever.

Mr. Joe Federowich: I am the chair of the hemp growers association.

The Chair: Mr. Allard, is your partner, Russell, here?

Mr. George Allard (Partner, Allard & Yakubchak Certified General Accountants): No, just me.

The Chair: Welcome. Please, go ahead.

Mr. George Allard: Could I provide copies of my presentation?

The Chair: Sure. Just give them to that gentleman, and he will be more than happy to distribute them to the members.

Mr. George Allard: In giving this presentation today, we are trying to represent the viewpoints of our clients, many farmers, and the people in our firm who have had direct experience with some of the issues. We recognize that there are many issues, that each region throughout Canada is distinct and that there are many different problems. We have limited our discussions to the NISA and AIDA programs, and I think that is generally what we were asked to do.

The NISA program seems to be well received in the Parkland area. The farmer is helping himself by contributing to a reserve fund that is matched by a government contribution.

While NISA is a sound program, it could be improved. The major problem with the NISA program is that should a farmer have a disastrous year and need to draw from his NISA account to maintain his farm, he may be penalized. He cannot make further contributions to the NISA program for the next three years unless he is eligible to make the necessary withdrawals based on his net income trigger or his gross margin trigger.

This restriction is unfair, as farmers may have demands put on them by banks, suppliers, and other institutions that force producers to access these funds in years when disaster strikes or there are large changes in the marketplace.

We believe that a change is required to allow farmers to draw from their NISA accounts in years of need without the penalty of being ineligible to make future contributions to the NISA program.

The AIDA farm package, which is intended to provide assistance to farmers who have suffered losses in 1998 and 1999, is a superficial fix, in our view. In many cases it has not helped where help is really needed.

• 1705

More specifically, the following points are concerns that we have identified:

Farmers did not have all of the criteria for determining the AIDA benefits. Therefore many farmers did not apply.

The calculation was not consistent. The three-year average in comparison to the 1998 margin year is like comparing bananas to oranges. The three-year average is on a cash basis, while the current year is on an accrual basis.

Some farmers had problems from 1995 through 1997, and therefore, based on the three-year average calculation, they do not qualify. They may be in a much worse position than a producer who does qualify.

The information being requested by the AIDA administration was, in some cases, very difficult to produce; for example, protein levels of wheat in prior years and the weight of cattle going back to 1995. Administratively, some of the information was almost impossible for some of the producers to come up with.

Mixed farmers may be penalized when grain prices are down and cattle prices are up.

Administration of the AIDA program is slow and cumbersome and, in many cases, is too late for cash-strapped producers.

In summary, we feel that in listening to our farmers—and this is more or less a long-range plan—aid packages are not the solution for farmers in western Canada. Rather than developing complicated programs or creating administrative nightmares, a more reasonable approach would be to ensure that farmers receive a fair price for their produce.

For example, farmers in North America are receiving $9.50 per bushel for canola and farmers in Manitoba receive around $5.40 per bushel. Currently, Canadian farmers are the lowest-subsidized farmers in the industry. European farmers are subsidized at approximately 49% to 60% and U.S. farmers at approximately 25% to 38%, while Canadian farmers are subsidized at 9% to 10%.

If farmers receive a fair price for their commodities, then with good farming practices they can make up for bad years of production due to weather or unfortunate circumstances.

These aren't the final solutions, I am sure, but they are ideas that may provide solutions for stabilizing commodity prices.

It may be possible to set up a board like the Wheat Board to market all grains. This board would ensure that grain is marketed efficiently and that producers receive the highest possible price.

Overproduction has lowered the price of grain. A system could be put in place to pay farmers a reasonable rate on a certain level of production. Overproduction would not be subsidized. We should compensate farmers for leaving their acres unseeded, thereby reducing production levels if the market so demands.

The cost of inputs is skyrocketing. Government controls should be placed on large national entities to control the price of their products.

In summary, we hope this information is helpful in your endeavours to recommend solutions to our government.

The Chair: Thank you, Mr. Allard.

Now we will hear from Mr. Federowich.

Mr. Joe Federowich: Good afternoon, honourable members, ladies and gentlemen. I am wearing two hats today. I am the chair of the hemp growers association. I am sure everybody has heard of industrial hemp. It has been on the news quite regularly. I am also a farmer. We farm approximately 7,500 acres of crop. We run approximately 300 head of cattle, a cow-calf operation.

I didn't even apply for AIDA. I am not saying I don't need the money; I had to go to the bank to increase my operating budget by $60,000 just to make it to the end of the year. Our focus is in the wrong area, somehow.

I am here to talk about farmers trying to diversify, getting into other crops and specialty areas. The key in something like this is that we need money. We need the cash influx for a farmer to diversify into something else. If you are talking about potato growers, for a half section of potatoes an investment of about $750,000 is required just to get into it. That is not something we can just pull out of the air, and then go to the bank and say “We need this money.” If we are looking at going into beans and stuff like that, we need specialized equipment. We need to buy this product. We need to have funds available somehow, in some way, shape or form, to get some of this done.

• 1710

Another great example is our famous hog industry. Three or four years ago the government was just throwing money at everybody, telling them to build a hog barn. It was the greatest thing. I invested in a hog barn. It wasn't exactly the smartest move I ever made in my life, and nobody was there to back me up when it crashed.

With respect to the AIDA program, because I own only part of a barn, which is the case with most barns because that is how you get established, I don't even qualify for funds.

I was going to talk more about diversification, but from what everybody is talking about here, I think it is more critical to understand what you people are looking for from us. We are willing to change any climatic control that needs to be changed, but we want to keep our pride and our family farms intact in some way, shape or form. Don't get us wrong; we are not anti-government, we are not anti-program, we are not anti-anything. We are pro-farmers and we just want to keep that concept going.

We have to understand how government views us. Who are we to you?

With that, I will leave it open to questions.

The Chair: Thank you. You grow our food, and we need you very badly.

Mr. Inky Mark: I would like to thank you for your presentations. If I may, I want to congratulate Joe and the Parkland hemp producers. They were proactive enough that just a week ago they went to Ottawa. They went looking for answers. They met with people at the Department of Agriculture and they met with other key people. They are looking for help. I know the government is going to bend over backward to help them.

My question will be for George. I notice that you have offices throughout the Parkland, in Roblin as well as Shoal Lake. As an accountant you see a lot of people, I am sure, certainly through this crisis, needing help. I have two small questions.

First, just exactly how bad is it in Dauphin—Swan River with this cash crunch? The second question is, can you project, if there is no input of cash into the system by the federal government, what will be the percentage of casualties in, say, the coming spring or next summer?

Mr. George Allard: I think this region isn't as bad as other regions. Throughout the regions there are pockets that have had disasters because of weather and so forth. I think, generally, as far as production goes, this area has probably fared better than the rest of southern Manitoba.

I don't know if that answers your questions. There are certain areas that have been hit so that they couldn't put in crops. I think it is closer to Gilbert Plains, in that area. The Parkland region has probably fared better than other parts of Manitoba.

I think the biggest problem with grain producers is the price we are dealing with right now.

Mr. Inky Mark: What percentage of your clients would not fill out the AIDA forms?

Mr. George Allard: I would say probably 75%.

Mr. Inky Mark: Is there any reason they would not?

Mr. George Allard: I think it was a very complex procedure. Basically, there are some producers who, when we looked at their position, didn't appear to qualify. Maybe in some cases, because we didn't have all of the criteria, they may have qualified, but they just didn't want to go to that much trouble to fill out all the details and so forth.

Mr. Inky Mark: For the clients whom you did help to fill out the applications, do you know the success rate?

Mr. George Allard: That is still left to be determined, because a lot of producers still haven't completed the AIDA review. I know of certain instances in which we didn't expect a payout and AIDA calculated a payment. In some cases there were farmers in a crisis situation who ended up getting nothing because they had problems in 1995, 1996, and 1997, and because they had such low margins, again they had a problem in 1998, but they still didn't qualify for the AIDA package. There were some instances like that. That is really where it hurts, when you have these programs and somebody who is really in need still can't qualify.

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The Chair: Just before we go to the government side, Mr. Allard, you mentioned in your opening remarks that farmers in North Dakota are getting $4 a bushel more for their canola than Canadian farmers are getting. Can you explain why there is that rather dramatic difference?

Mr. George Allard: It has to do with subsidies. It is directly related to subsidies.

The Chair: It all has to do with subsidies.

Mr. George Allard: That is what I understand, yes.

Mr. Murray Calder: George, I found your presentation to be very interesting. One of the things I find when we go through these exercises is that there is always a theme that starts to emerge, and I am beginning to see this theme already.

There are five points that I have heard consistently today. Number one would be to bring back the GRIP program. Number two would be to have a set-aside program to take land out of production. A figure of 20% has been kicked around, which falls into one of the points you made. The third is support on a per-acreage payment, be that $25 an acre or $30 an acre. The fourth is to strengthen the NISA program to make it more accessible, which fell into another one of your points. And the fifth calls for a crop insurance program.

Are you aware of the fact that with the reference period within AIDA you can use either the three years or three of the previous five years? Are you aware of that change?

Mr. George Allard: I think I recently heard about it.

Mr. Murray Calder: Another change has been made to it too, because we are trying to fix the thing, which is that family labour is treated the same as non-family labour. That is another point.

Mr. George Allard: Okay.

Mr. Murray Calder: As well, there is the modified accrual for all farmers for the 1999 program.

The question has been, is AIDA worth saving? We obviously know it is too complicated, that it needs to be simplified. That is the message I have heard loud and clear. If it is not worth saving, do we replace it with a GRIP-like program? What do we do?

Mr. George Allard: AIDA is a two-year program. The administration is in place and we have already gone through the first year. I would say that if we are looking at farmers in a crisis situation, it should be left in place until the end of the program. What we are suggesting in our presentation is that there should be a better long-term solution.

But the administration of AIDA is in place. I think for 1998 and 1999, let's deal with it and let's look at better solutions for the future.

Mr. Murray Calder: There are three sub-points that I have identified: an immediate cash injection, AIDA is too complicated, and a domestic policy to recognize agriculture. I will zero in on that one.

We know that the problems we have with grain prices are not going to go away next year and could be around for a couple of more years. From that aspect of it, how would you foresee or envision a program like AIDA or GRIP, or whatever? How would that program be set in place for the long term?

Mr. George Allard: I don't think I have gone that far yet.

Mr. Murray Calder: This is obviously something we are working toward.

Mr. George Allard: Yes, and if that is something you are working toward, I think that is great.

Mr. Murray Calder: Thank you.

Mr. Dick Proctor: Mr. Allard, thanks for your presentation. I have a question on NISA.

At the bottom of the first page you say: “A change is required to allow farmers to draw out their NISA accounts in years of need without the penalty of being ineligible to make future contributions.” It seemed to me that when officials from agriculture were before the committee last year, it came as a bit of a surprise to them to know that somebody who wanted to take money out of NISA could only do so once in a 12-month period.

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There was a specific farmer in my district who went back when he realized that he was in deeper than he had originally thought. He was initially told that there would not be a problem, but all of a sudden he was then told that he could not.

Do you know whether there have been any changes in that NISA program that would allow farmers to withdraw more than once in a 12-month period?

Mr. George Allard: I believe you probably can, under certain circumstances, go back and take out... I think there may be an interim application where you can take out extra NISA funds. The problem that we've addressed is that when it is not triggered or if you don't meet the qualifications and you're forced to take it out in a crisis situation, then you're not allowed to come back in for another three years. That's really the issue we're trying to address. I think that if it's within the trigger or within your gross profit margin, if it triggers a payment, then they probably would allow you to go back and take out extra money. But I know it has been kind of cumbersome to work with.

Mr. Dick Proctor: On that specific point about the three years, do you feel you're getting anywhere in terms of people listening to you and saying that you have a good point, or have you been advancing that argument to the NISA officials?

Mr. George Allard: We really haven't had an opportunity to discuss it with the NISA officials.

Mr. Dick Proctor: Just one quick question, if I may, on the reference to the AIDA program. You're saying that the AIDA administration was in some cases very difficult to produce, going back several years. This reminds me of a farmer we met in southwestern Manitoba, who said “If you asked me how much it costs for the food in the family home in 1995, I could do that. If you wanted to know how much ketchup and mustard I had left in the refrigerator at the end of the year, I would not be able to provide that answer.”

The question I have, based on that, is that as we see changes on AIDA coming, is there any relief provided in this particular area of needing to know so much about inventories from previous years?

Mr. George Allard: Well, I'm not clear on what all the changes to the NISA applications are. You're talking about AIDA?

Mr. Dick Proctor: Yes.

Mr. George Allard: I'm not sure what changes they've put in place at this point in time to the calculations.

Mr. Dick Proctor: We have seen and heard that there have been some changes made in the last month on negative margins, the Olympic average, and families being categorized differently. But on this one, you're not aware of any changes?

Mr. George Allard: No, I'm not aware of any changes.

Mr. Dick Proctor: Okay. That's it.

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: George, you said that 75% of your customers did not file an AIDA application. In rough numbers—and 25% may well have done—how many AIDA applications have you or your firm worked on?

Mr. George Allard: I have three partners. I'm not sure exactly how many applications each one of them actually did. I would say that in total we did maybe 100 applications.

Mr. Rick Borotsik: A year?

Mr. George Allard: I don't know exactly.

Mr. Rick Borotsik: No, that's fair ball. I said rough numbers, and I'm not going to hold you to it.

Of those, were they 1998 applications?

Mr. George Allard: Yes, they were for 1998.

Mr. Rick Borotsik: Of those 100, do you have any sort of handle on how many haven't received either any notification or any payments?

Mr. George Allard: Well, we haven't heard from everybody, but I know of a few that have been in process since July.

Mr. Rick Borotsik: Were they bigger applications? It's my understanding that the bigger the application the more detailed the verifiers and the more questions they ask. In fact there could well be an on-farm audit on some of the larger requests or applications.

Mr. George Allard: Actually, a number of them have gone through a detailed audit. Yes, they went through it in quite some detail. I would have to agree with you that there are some applications that are still sitting in limbo.

Mr. Rick Borotsik: Is it your opinion that after the 1999 AIDA program there should be something that is much simpler, less complex, and can access perhaps those people who can't apply or can't qualify for AIDA now but in fact need cash and should qualify for some other program?

• 1725

Mr. George Allard: It seems to me that the government already has a lot of the information there through NISA and through Revenue Canada. If it is going to put an administration in place, maybe all it needs to do is to get the information directly and fill in the details. That might be an easier way of handling some of this. There is no doubt that it is kind of a complicated issue, but there has to be an easier process and a simpler calculation than what the producers have been through.

Mr. Rick Borotsik: Joe, I think you mentioned that you farm about 7,500 acres. A little later in your presentation you said that we have to look at some way of making sure we save the family farm. Would you consider your operation to be a family farm?

Mr. Joe Federowich: Yes, it is a fifth-generation farm now. My son just came back to farm, unfortunately, and now I can't retire. I'll have to put that off.

Mr. Rick Borotsik: If you have sons you'll never retire. But you do consider your farm, at that size, to be a family farm?

Mr. Joe Federowich: Yes.

Mr. Rick Borotsik: Now, 7,500 acres is a lot of land.

Mr. Joe Federowich: You have to understand that it is a family farm but it has to be run as a business. If you don't crunch the numbers properly, then the farm will come to a stop.

Mr. Rick Borotsik: Are you incorporated?

Mr. Joe Federowich: No.

Mr. Rick Borotsik: Speaking of that, I have another question. And I am glad I asked that question. There's been a serious problem or flaw in the AIDA program with respect to corporate year ends. Have you dealt with any of that, George, with respect to a corporate year end not being a typical year end?

Mr. George Allard: We do have farm corporations, but I'm not aware of any real problem, except for maybe the delay in the applications.

Mr. Rick Borotsik: I guess we'll get them from an accountant later, maybe tomorrow.

What I have heard is that if you have a corporate year end, not a fiscal year end but a June or July year end, they have backdated the AIDA. In fact, you will not be eligible for an AIDA application for the 1999 crop year. Now, we all recognize that the 1999 crop year was worse than 1998, and certainly a lot worse than 1997. Have you not run into any of those problems?

Mr. George Allard: I don't think we filed any AIDA forms for corporations at this point in time.

Mr. Rick Borotsik: Then that's why you haven't run into the problem, believe me.

On diversification, you suggested that there should be some sort of program or support system for farmers to diversify. You mentioned potatoes. By the way, you shouldn't mention potatoes with these guys, especially Joe. He still thinks P.E.I. is the best place to grow potatoes.

Mr. Joe McGuire: Easy on the potatoes.

Mr. Murray Calder: I have potato farmers in my riding too.

Mr. Rick Borotsik: When you said you wanted to put in $750,000 to grow potatoes, I know Joe said “Forget about it. P.E.I. can do that.”

You're into diversification. Obviously you're into the hemp.

Mr. Joe Federowich: Industrial hemp. Don't forget industrial.

Mr. Rick Borotsik: Industrial hemp. What are you looking for?

Mr. Joe Federowich: When you're talking diversification, you have to understand what diversification is for farmers or traditional farmers. I don't know how you would classify a traditional farmer, but I think you have to classify that first.

However, if you're strictly a grain farmer or strictly a cattle farmer and you cannot make ends meet, while the government or the policy expects you to shift over and do something else, it's not as simple as saying “Okay, I'm going to do this.” There are equipment costs and there are tax laws. It's a big deal. You just can't pull that money out of your back pocket when you are in a crunch, as we are right now. We wouldn't be sitting at this table if canola was $9 a bushel and wheat was $5.50. We would all have been diversified, or thinking about it.

Mr. Rick Borotsik: Or stay with canola instead of wheat until the prices go up.

Mr. Joe Federowich: Well, I think going through this might be a learning experience. I think all of us sitting here do realize the farm had better start diversifying and spreading out a little bit more than it is. It's hard to just stay mainstream, but it does cost a lot of money to do that.

Mr. Rick Borotsik: What are you asking for? What are you looking for from us?

Mr. Joe Federowich: Well, my feeling is that we need a basic flood of cash, acreage payment. It's the fairest and easiest way to get the money out and it hits everybody. Then you will not get all these complicated figures where, if A doesn't meet B or B doesn't meet C, then your farm will be audited. When they come to audit your farm, that's not cheap either. I don't think there is any perfect answer. In my opinion, I really think the acreage payment is as close to a perfect answer as you can get.

The Chair: I like the definition by a professor at the University of Saskatchewan, by the name of Furtan, of a family farm. It has nothing to do with the size of the farm. It has nothing to do with the income of the farm. It has nothing to do with whether the farm is incorporated or not. It has all to do with who does the work on the farm. If a family does the work, it's a family farm. I kind of like that definition.

Mr. McCormick.

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

I have just a couple of things here. I want to thank George again. I know you have been thanked for your excellent presentation and you've given us things we can take with us to review in order to try to do a better job.

I want to put questions to each witness. I would like to hear from our accountant about whether this change we made in allowing negative margins made much difference in your area. I will also take this opportunity to encourage people here in the room to ensure that your provincial government covers negative margins, because it has helped some people.

I would also like to ask the accountant how he would suggest that we measure income for AIDA, looking at different changes. Do we just ignore the inventories and operate only from a cash basis? You do realize that we have a significant change with the grain that is still sitting in the bin.

My question for Joe concerns challenges and opportunities. Health Canada approved several hundred licences for hemp production. I'm sure it looked and looks very attractive, but there have been some pitfalls. I think it would be very valuable if you shared, on the record, an update on where you growers are and where your product is that you grew this year.

The Chair: Mr. Allard and then Mr. Federowich.

Mr. George Allard: I guess the first question was whether inventories should be eliminated from the AIDA calculation. When you look at it from a reasonable point of view, I would have to say no. You pretty much have to take the inventories into account, because that's part of the income, whether it has been disposed of or not.

Mr. Larry McCormick: Now, the next part was when did we allow that to be included?

Mr. George Allard: There's no doubt that this is a positive step, and it should be. Yes, that will definitely benefit those producers with negative margins.

The Chair: Joe.

Mr. Joe Federowich: I just want to say a few words about the hemp situation. We are involved in it right now. I basically have all of my product baled, all of it combined, and all in storage on my farm. There is payment coming out at the end of this month for the first third of it. That has been measured for the people who did not accept a salary. There are people who aren't taking payment until January 30, so that will be handled in January, but the people who are taking the payment November 30, the bins have been measured, the stoppages have been taken, contracts have been signed between the producers and the company, and it seems like that's underway.

As far as the plant goes, to my understanding it's as close as it has ever been. Now, what that means I really don't know. That's just like the AIDA program. It's as close as you can get to being imperfect, and I think it is.

The Chair: Just before we go to Mr. McGuire, we'll be hearing from another group of farmers in a moment: Mr. Gust, Mr. Drebit, Mr. Fyk, and Mr. Michaleski.

Those of you whose names I've not mentioned, how many more would like to have the opportunity to say a few words to the committee? We do go to 6:30. Nobody else? Okay, that's fine.

We'll now go to Mr. McGuire.

Mr. Joe McGuire: Mr. Chairman, one of the remarks made by Mr. Allard in his presentation was that the three-year average is on a cash basis while the current year is on an accrual basis. As a professional, would you recommend that Revenue Canada require all farmers or fishermen to file taxes on the accrual basis rather than on the cash accounting method?

Mr. George Allard: Actually, that's a question we debate constantly in our office. I guess in looking at the farm business compared to other businesses, there is no doubt that having farmers on a cash basis is a benefit from a tax point of view. Farmers have a lot of issues with respect to risk, probably more risk than other businesses and so forth. Basically, having farm businesses on a cash basis does give them some tax benefits, especially in the start-up years. It provides more working capital, more money for them to continue operating. Therefore, they're probably spending more money in the community, which generates taxes in other areas. I think that's one incentive the farmers have that shouldn't be taken away from them.

• 1735

I do know that in New Zealand they have converted to an accrual basis. It has forced farmers into different management practices. I feel that in Canada having them on a cash basis basically provides for a better working capital.

Mr. Joe McGuire: Do you agree with that, Joe?

Mr. Joe Federowich: Yes.

The Chair: Thank you.

Just before you get up, I want to put a question to every farmer in the hall. I asked this question in Portage La Prairie, and I want to put it to all farmers in the audience. It has nothing to do with AIDA, but all to do with philosophy.

The first question is: do you favour a targeted program, a program that is aimed at the hurt, aimed at only those farmers who really need assistance? You could say that a targeted program like AIDA is the fairest in that it aims at farmers who need it and doesn't give money to those who don't need it, but of course it's slow and complicated.

The alternative to that is an across-the-board program. Call it an acreage payment or something like that. It's obviously a lot faster. All you have to do is just tell the government how many acres you have, that you're a farmer, and we'll send you a cheque. Perhaps the downside to that is that it's not fair, and of course it probably means less money for those in need because those who perhaps don't need it as much would share in the pot.

I will just ask you to put your hands up to this question: how many of you would be in favour of a targeted program like AIDA? Nobody. God, I probably don't have to ask the second question, but you probably need the exercise after sitting there so long.

How many of you are in favour of an acreage across-the-board program? Everyone. It's interesting, you know, because I put that question to only four farmers in Portage La Prairie and basically three and a half of them favoured the targeted program.

Mr. Rick Borotsik: Mr. Chairman, can I ask one other question?

The Chair: Yes.

Mr. Rick Borotsik: How many producers in the audience today have actually put in an AIDA application? I won't ask if you got it or not, but that's good enough, thank you. So you have applied for AIDA. There were quite a number of hands up, so you're firm is not doing a very good job today, George.

The Chair: Did you want to say something, Mr. Allard?

Mr. George Allard: I was just going to tell Rick that my percentages may be out a bit.

The Chair: Thank you.

We will now call on Calvin Gust, Terry Drebit, Don Fyk, and Boris Michaleski. We will be adding one more farmer to this round, a gentleman by the name of Chris Dzisiak. I think we can accommodate five in this group.

Terry, you will start.

• 1740

Gentlemen, we have about 45 minutes. If you can, I would appreciate it if you could keep your formal presentations down to about three minutes. There are five of you, and that would make it at least 15 minutes. So we would have 25 or 30 minutes for questions. I know it's difficult to do that, but sometimes the information that you have to leave out from your formal presentation can be provided in an answer to a question later on.

Mr. Terry Drebit (Individual Presentation): Thank you, Mr. Chairman. You realize that, as an elected official, it takes me more than three minutes to introduce myself.

Some people have asked me why I'm here today and I'll tell you. I am a mayor of a small town in southwestern Manitoba. We have been devastated this year by our wet conditions.

The Chair: What's the name of your town?

Mr. Terry Drebit: The beautiful town of Minnedosa.

We have been devastated by the wet conditions—not only Minnedosa, but Neepawa too. But the problem is that it wasn't a sexy problem like the Quebec ice storm or the Red River Valley flood; it was just a whole bunch of mud.

I can tell you that the farmers in our area struggled and struggled to put their crops in, and many didn't. The ones who didn't got a small cash payout, and the ones who did really wished they hadn't.

I think we have to address two problems. First, we have to address the natural disaster that we're facing, and second, we need to address the farm crisis. The farm crisis is basically the commodity price problem we have. I'm here, Mr. Chairman, to basically tell you the problems we have with our flooding.

We dealt with mud in Minnedosa. I know Melita dealt with water, but we dealt with mud. I can assure you that dealing with mud is far worse than dealing with water. So that's the problem.

Also, I was just too polite when I came here, because my mother lives in Dawson and she made me promise to be polite. But there was a gentleman speaking earlier, and honestly, when I was sitting in the back of the room I almost said “Bullshit”, but I knew I couldn't in this room.

Voices: Oh, oh!

Mr. Terry Drebit: He went on to tell us about the farmers he talked to and that he didn't believe there was a real problem, that he didn't believe the price of the equipment had gone down, and that he didn't believe we were in a crisis. Well, he's wrong.

Mr. Chairman, I challenge your committee to come to Minnedosa and I will introduce you to a thousand farmers who will tell you the opposite. I hope this gentleman is not taking his comments right to the minister, because if he is, then we have some serious problems, because the minister is not hearing the real problem.

We're in a crisis situation. I'm the mayor of a small town. Half my customers in my little restaurant are farmers and the other half are town people. I've been on council for 11 years. I've got to know everyone. They're my friends and my neighbours.

I've talked to the guy at the grocery store who lost his business because the farmers don't have money to spend. We can talk to the fellows in the Meat and Deli Hut—the young family man I met who also went bankrupt because the farmers don't have the money to spend. I've talked to one convenience store owner who is down 10% in sales. The other convenience store closed.

This is just the tip of the iceberg, Mr. Chairman. This is not just a farming crisis; it is a Manitoba crisis that we have. And because it's a Manitoba crisis, it's a federal crisis.

I believe we need a federal assistance disaster plan to deal with our crisis. Once we can solve our immediate crisis, which is from the flooding problem... I know I may sound very selfish because I'm speaking for the areas that were affected by the flood. I call it a flood because... what else do you call it when you can't get your tractor out until June 20 and then some fool encourages you to seed the ground anyway?

Mr. Chairman, it's a disaster. So we need to focus on the two problems: we need to focus on the flood, and we also need to focus on the economic crisis.

There is another thing I want to bring to your attention. You asked for a vote on who wanted AIDA and who wanted some targeted program. Well, it's obvious that AIDA doesn't work. I suggest that possibly AIDA was created by accountants for accountants, because they're about the only people who understand it. None of my friends who farm understand AIDA.

The Chair: Thank you very much.

Voices: Hear, hear!

The Chair: We will now go to Mr. Dzisiak.

Mr. Chris Dzisiak (Individual Presentation): I'd like to thank everyone for the unique opportunity to speak to you.

I don't have a prepared presentation, but sitting in the crowd I got a sense of what you were after. I have a family farm and I know what my concerns are. Where I see the disparity is between what you want and what we provide.

• 1745

If I look back at a chart that projected gross income and gross expenses over about a 15- or 18-year period—I can't show it to you, but I'll draw it for you in the air—gross income was going up over time, this being 15, 18, or 20 years ago. Just below that was net expense. Where did the net income go? If you looked at a chart showing net income, you would see it was bobbing along right at the bottom. What that is telling you is that the amount of cash going into farming is going up and up and up. Just ask any of the bankers here how much money is involved.

You have a shortfall. As I understand it, the average NISA account is about $12,000 relative to what's required to farm. If you had about a 1,000-acre farm, that $12,000 would probably cover some of the chemicals. It doesn't amount to an actual amount of money that will serve a purpose, so the NISA account isn't sufficient.

The next thing is that most people are probably looking at it as a last source of cash. When you start touching those NISA accounts and the money hits the bank, I'll bet that's the last money those farmers will see coming into their cashflow.

I don't think you want to see a whole bunch of NISA accounts get triggered, because I don't think it's going to be very good.

A huge portion of farm income is off-farm income. If those people who are working in small communities don't have the jobs because the farmers don't spend the money, you will only compound the problem. Most of the cash being spent by farmers, the money going into the farm income or the farm economy, will not sit in the farmers' pockets. It will not go into somebody's savings account. It will go right back to support the banker, the shoemaker, and the guy who is selling the equipment. They will all be hiring somebody in the community. Who are you supplying the money to? You supplying the money to the communities in western Canada. You're not supporting farmers, you're supporting the whole thing.

If the community goes down, you will not have those rapeseed crops that turn into canola crops that bring billions of dollars into the community. We can compete with anybody who is able to produce things. What we can't compete with are foreign subsidies and foreign bank accounts. If you want us to compete with that, you're crazy.

Voices: Hear, hear!

Mr. Chris Dzisiak: Either we stay alive and you keep us alive or you have a social problem that is beyond your measure. If you think this is going to cost you money, you wait.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: Mr. Fyk.

Mr. Don Fyk (Individual Presentation): Good afternoon, committee members. Welcome to Dauphin.

I'm here to give you a little different twist to a producer problem. I have a few handouts, and perhaps the gentleman over there wouldn't mind passing them around to the committee as well.

My purpose here today is to try to give you a little different perspective. Nobody has really addressed this issue because it seems to be dying down slowly. It is the Estey-Kroeger process.

As you know, my name is Don Fyk and I am the Manitoba chair of the Western Rail Coalition. The coalition is comprised of a group across the three prairie provinces that seeks to develop a rational competitive rail system.

Currently, legislation leaves us, as producers, vulnerable to the whims of the railways when it comes to establishing short lines. The Canadian Wheat Board is the one avenue we now have to ensure some form of equal treatment as we develop new initiatives that will increase returns to farmers.

A board of directors elected by farmers govern the Canadian Wheat Board. This is a democratic process, one the farmers have asked for and the government has given. To circumvent the wishes of farmers by undermining the Wheat Board is unacceptable.

At this point in time, because nobody has ever mentioned it, I have to take a shot at the western Canadian wheat growers. No one seems to come to the rescue of the Canadian Wheat Board other than the coalition and SARM, WRAP, KAP, and all these other issues.

Farmers should be able to determine the role of the Wheat Board through their democratically elected members. As we speak, a pilot project in Saskatchewan is being implemented. How does it work? The Canadian Wheat Board or an agent of the Canadian Wheat Board will test the grain in the farmer's bin. When the Canadian Wheat Board makes a sale, it contacts the farmer to deliver that particular grain in that particular bin.

• 1750

When the farmer makes a delivery, the amount of grain is determined. Blending is done on the cars and is then sent directly to port, which is known as a direct hit. This is another saving.

The benefit to producers of blending for protein, etc., is calculated at between 50¢ and 78¢ a bushel. If you take 30 million tonnes of wheat, for example—and not all the wheat would go through that particular system, only about half—you're still looking at about 50¢ to 78¢ a bushel or about $350 million directly into the producer's pocket. It never has to leave the farm. That doesn't have to get shared with railway companies or elevator companies; it stays on the farm with the producer.

The whole system seems to be forgetting about the producer. We're always talking about stakeholders and, if not stakeholders, the grain companies and railway companies.

This project, once implemented, will see true competition, particularly with the grain companies. The Western Rail Coalition supports reforms of the system, and farmers must benefit from these reforms.

The government is committed to making a market-driven system. This system works well only when there's adequate and vigorous competition between the players. This is not demonstrated in the case of Canada's two major railways. As such, there must be special measures to protect those captive to the railways, as are farmers who ship grain to export.

Mr. Alcock's report recommended that open access would be a safety measure that would ensure competition. The Canadian Transportation Agency has judged the railways that discriminated against the movement of grain. Our government must protect producers by legislating open access, as outlined by Mr. Alcock's report. The Western Rail Coalition stands solidly behind this recommendation and others.

We also support your recommendations to maintain the Canadian Wheat Board and its role in transportation—paragraph 28(k), which all of a sudden has surfaced. People have been trying to tear it down.

In order to facilitate the workability of paragraph 28(k), short lines provide the mechanism. The Western Rail Coalition's mandate is to promote, protect, and preserve short lines. We can't save all the short lines, but a good percentage of them have been. We represent approximately 22 committees, with approximately 20,000 permanent bookholders in those committees across western Canada.

Canada's major rail companies are intent on ripping up branch lines, which will doom rural prairie communities. Legislative reform of the Canadian Transportation Act must be enacted to provide fair and equitable access for community groups to purchase branch lines.

The grain companies speak of their considerable investment. If you were to take one grain terminal with an investment of $15 million and draw a line of a six-mile radius around it, you would find that you would have approximately 110 sections of land. This would represent producers' investment of about $30 million, an investment of about two to one, because an inland terminal costs about $15 million.

If you were to grid all western Canada, all three prairie provinces, up and down one way and up the other way, the western economy would still outnumber the investment of the grain company two to one in whatever factor or number you want to play. Yet I think the western economy is worth about $100 billion versus the railways and elevator companies put together, which is around $10 billion or $12 billion. In this case, it's like the mouse telling the elephant what to do.

The position of the Western Rail Coalition on these issues mirrors that of farmers' groups across the prairies, namely SARM, KAP and WRAP. We support all these groups and we work with them. We believe that open access, revenue caps, fair short line legislation and the retention of the Canadian Wheat Board at the farm gate—paragraph 28(k) of the Canadian Wheat Board Act—are the safety nets that are tied to the continued survival of the family farm.

The Chair: Thank you, Mr. Fyk.

Mr. Gust.

Mr. Calvin Gust (Individual Presentation): I don't know where to start. You have a copy of my presentation. I was called last week and I got pulled off the stand and got pulled back again. I'm thankful for that.

I just want to say that I voted in the last election. You're supposed to use a lead pencil, but my pencil fell behind the crack and I had nothing but a pen. It was a leaky pen, as a matter of fact, and all I could do was put an “Inky Mark” beside Marlene Cowling.

Voices: Hear, hear!

The Chair: You're a welcome “gust” in this room.

Mr. Calvin Gust: We could use a little breeze in this room too.

• 1755

I have a one-sheet handout. It has numbers on the back side and a letter on the front side. I'm going to dispense with the letter and cut to the chase. I have a couple of asterisks and underlined sections. I would ask, for your homework assignment this afternoon, that you read especially where it says “Since 1995, however, I feel the federal government has been tripping all over itself in its haste to abandon western agriculture.” There is a whole litany of things there that I want you to really look at carefully.

I also want to say that I consider my farm to be fairly secure for now. The bank thinks I'm okay, but that can change in a heartbeat.

The numbers that are listed on the back page, gentlemen, are from my tax statements, the Craigsford Farms Ltd. tax statements. I have about five or six years of data. To make a long story short, I just want to highlight a couple of things.

If you look at the line called “income tax”, that's the amount of tax I paid in the last five or six years. You'll notice that it varies considerably. The average income tax paid per year by Craigsford Farms Ltd. from 1995 to 1999 is about $10,000, and as you will notice, since 1996 it has been going down, down, down to the year 2000. My year end, by the way, is July 31, so I've already done my 1998-99 taxes and I'm in the middle of my 1999-2000 year. My estimate for 2000 is zero tax payable.

I have a $10,000 prepaid tax account with Revenue Canada, and those fuckers are sending that money back, because we've checked the little box on my tax return that says they will.

There's something I want you to notice, gentlemen. There is an average of $10,000 per year that the federal government will not see from my farm in the foreseeable future. So $10,000 times one farmer is $10,000; $10,000 times 100 farmers is $1 million; $10,000 times 1,000 farmers is $1 billion. That's just to put those kinds of things in perspective.

The other number I want you to look at is the net profit number in the column on the right side. We had a deficit of $14,000 and change in 1995. 1996 was a good year for me because we had a good crop and high prices in 1995, with $61,000 net. It tailed off a bit in 1997 and went down to $21,700. In 1998 I had minus $10,000. In 1999 I had minus $20,000.

Let's go to the next table to see what the year 2000 will show. Table 2 was taken from statements prepared by my bank. The value of production is the total farm production for my farm in the last four years, 1995 through 1998. In the numbers there you will see the 1995 through 1998 average at the bottom. It shows a $425,000 average value of production. The cost of production is in the other column. Again there are four numbers with an average of $359,000, almost $360,000, in the cost of production. I guess there is a fairly healthy profit there.

Let's look at 1999. In 1999 we added 290 acres to our farm; that is 16%, because we farmed 1,800 acres throughout this scenario. In 1999 we upped our acres by 16%, to 2,100 acres. So the value of production should also go up by 16%, and should go up to $493,580, as you can see the number there.

I have already calculated my 1999 production. I know what I've produced, and the number is $343,000. The cost number again is below that. Let's assume a few economies of scale—my larger farm, 16% more acres, and maybe I will get by with 12% more costs. So $359,000 and change times 1.12 is a little over $400,000 in costs.

So we have a $403,000 cost for 1999 as opposed to $343,000 value of production. This is a shortfall of $60,000. You can take that $60,000 and slide it up into the question mark one in the table above. So now we've gone from minus $10,000, to minus $20,000, to minus $60,000.

You can see what's happening, then, to my farm. How many more years can I stand that?

• 1800

If you look at the top of the middle column, you will see that my net worth for the last three years has gradually gone down. It went down $10,000 and then $15,000. It will probably go down $40,000, $50,000 or $60,000 in the next year.

There is one last table that I want to refer to before I make some general comments. The last table shows the net amount of money that I have spent on capital purchases on my farm: a new tractor minus an old tractor, etc. The average capital purchases for this farm through 1994 to 1998 were $80,811. The average 1999 capital purchases were $18,265. The projected capital purchases for the year 2000 are zero.

You will notice the difference as we go from $80,000 a year to $18,000 to zero. How does that impact on the community, all the way back to the cities? Someone talked about machinery loss. I talked to my dealer, and he tells me they are definitely afraid of holding over used equipment for one year because they really take a beating on it. Things are backing up.

Incidentally, the dealer I spoke to says their profit picture almost identically mirrors mine. They came into business in 1995. They had good years in 1995 and 1996, started sliding in 1997, and 1998 and 1999 have been the two worst years. So they are following us exactly.

If I stopped spending $80,000 a year and 20 more farmers like me stopped spending $80,000 a year, that would be $1.6 million. If 200 more farmers like me stopped spending, that would be $160 million. That's almost identical to this last announcement by Mr. Vanclief, which was so annoying to us.

I will now make a couple of quick comments. There were so many questions answered here, and I was just bursting at the seams back there because I knew I had all the answers. I would now like to give you just a few.

Diversification is highly overrated. Somebody talked about hogs. I had the opportunity to diversify into hogs or to stick some money into a funeral home. Guess which one I picked? I picked the funeral home. Boy, am I glad I did!

Somebody talked about banks. Banks in the United States are at the forefront of procuring farm aid for farmers. They are quite absent and, in fact, half the time are working against us, as Mr. Murphy's comments were taken in context.

We haven't touched our NISA yet, but last year the government put in my share. I stopped putting money into NISA. I allow the government to put in my share. It has to be recognized that as soon as we take money out of NISA, bing, 30% of it is gone right off the top because the first money that comes out is taxable.

There were some comments about no distress sales. Well, there are usually no distress sales any more because farmers are slowly choking. They will pull the plug before the bank does. They won't risk a bankruptcy, which is too public and embarrassing. We had that situation in our area this last summer, and it was just a real media circus—a complete circus.

Most farmers, when they see the end coming and they see their equity eroding, as you see on my table here, will not let it slip away. They'll put an ad in the paper saying “Retirement due to poor health”. Do you know what the poor health is? They are sick of losing money.

Land prices are still strong. Yes, they were last year. I'm as guilty as ever. I spent way too much money on a piece a land about this time last year. What an idiot! Now I know I'm going to have to pay for it. Cash rent will have to fall $10 an acre at minimum across the board. Poor land will not even find a renter next year. I predict that is what will happen.

Canola prices. Somebody made the comment that last year canola was at $8. It is now at $5. Some of us sold $8 canola this last month. We had priced it a year in advance. There is no more of that $8 canola. It has all been sold. Anything we sell from now on is $5 to $5.50 a bushel, and that is five-eighths of last year's price. There is no money in canola. I don't care whose farm it is, you can't make money at $5 for canola.

With respect, sirs, the questions on the AIDA program were like a red herring. I felt like you were wasting my time when you were asking some of these questions. When the government came in, in 1993 when Marlene Cowling was elected, its red book promised us a whole farm safety net. It never happened.

• 1805

When the government wants things to happen, it happens. Just ask Allan Rock.

Mr. Larry McCormick: Was that a shot I heard?

Mr. Calvin Gust: It could have been.

The set-aside, bringing back the GRIP, the strengthening of NISA—those things are all fine, they're good and they're working, but they're really tinkering at the edges.

I said that the federal government was tripping over itself to abandon agriculture. You have cut back so far in the last five years that you've gone too far and you've pulled the rug out. Somebody said “What's the amount of money that's still in the green box that we could be spending?” It could be $2.2 billion. That's the money we should have.

We should go back to pushing the envelope, just the way the European Community and the U.S.A. are doing. They are spending every dollar they are allowed under the WTO that they can possibly spend while still staying in the green box, and we are way under that.

I think it's fine to ask us how we want to see it done. You say that the farm organizations with expertise that have gone before government committees to say how they get things done have asked for AIDA. Well, by the time the programs the farm organizations have asked for come out, they have often been watered down so much that the farm organizations have a tough time supporting them. These programs have always been a disappointment. Our farm organizations go in good faith and ask for things that they believe to be true and right, and it's always cut back to almost nothing.

It really adds insult to injury when Mr. Vanclief on one day announces $170 million added to AIDA, when Manitoba and Saskatchewan had asked for $1.3 billion. In the same week, Mr. Martin, the finance minister, publicly wonders what to do with the large surpluses that are building up. Then another cabinet minister announces another $100 million for the Quebec ice storm to pay civil servants overtime. These kinds of things really bug us. PR is not good.

Voices: Hear, hear!

The Chair: So you invested in a funeral home. You know where the bodies are, right?

Mr. Calvin Gust: They're just dying to come to us.

The Chair: Mr. Michaleski.

Mr. Boris Michaleski (Individual Presentation): Thank you, Mr. Chairman and committee members.

The word “crisis” means different things to different people. We can look at all sorts of different scenarios. To me, as a producer, some of the signs of a farm crisis is when farmers, one, quit farming or consolidate; two, sell assets in order to pay input costs; three, have one or both spouses working off the farm in order to earn enough money to feed their families and keep the farm afloat; or four, suffer emotionally and physically from their predicament.

Imagine this scenario. Person A is a non-farmer living in Dauphin with a full-time job at a local business. This wage provides the employee's family enough money to, one, buy clothing and food; two, pay the house mortgage and the utilities; and three, hopefully have some money left over for luxuries, such as holidays, entertainment, sports activities and so on.

Compare this to person B, a farmer, living in rural Dauphin, who has a similar full-time job at a local business. Using simple logic, one would only assume that this person, who works full-time in addition to operating a family farm business, should not only be able to afford the same items as person A but have additional disposable income from the farm.

This is not the case. The majority of farm families in this area have at least one spouse working full-time off the farm. These people are not doing this so they can be away from their families from 8 a.m. to 5 p.m., working off-farm, only to turn around, rush home, gobble down supper, and then work another eight hours on the farm. The survival of the farm is the only reason this is being done, and that's why we still exist.

A quick survey of 20 farm families in my neighbourhood shows that 55% of families have one person working full-time off the farm; 30% of the families have two spouses working full-time off the farm;, 10% have one spouse working full-time and one spouse working part-time off the farm; and 5%, or one out of twenty families, do not work off the farm. Those are pretty bad numbers.

The reality is that we, as producers, are feeding the world with cheap, high-quality food while our farm incomes are not able to sustain our families with the basic requirements of food, clothing and shelter.

• 1810

What kind of message is our government sending to the farm community? Are we, as primary producers of food, supposed to sell our commodities at below the cost of production only to have all the secondary industries and society in general prosper from the wealthy resource we have produced while we have to scramble to make ends meet?

I, as a producer, cannot compete with the coffers and subsidies of the U.S. or the European Union. Government, over the years, has told us to become more efficient, expand, and/or diversify. We have done all these things. The fact that agriculture still exists in western Canada is proof enough that we are efficient, hardworking, and resilient members of society.

The reality is that we, as farmers, can no longer individually carry this burden on our shoulders. We have tightened our belts, picked up off-farm jobs, and diversified just to survive. Meanwhile, the general economy is flourishing and prospering from the products we produce.

The following charts, as you see, list only a few examples of the financial burdens of the western Canadian farmer. Mr. Chairman, as you can see, the numbers are very startling. From 1990 to 1999, red spring wheat has dropped approximately 53% in price and canola has dropped approximately 14%. These numbers have not been adjusted for inflation or cost-of-living increases.

To make matters worse, our import costs have risen dramatically. From 1990 to now, fuel costs average 12% more and fertilizer about 30% more. This is just a small example of the price squeeze farmers are facing today.

Most industries sell their products on a cost-plus basis, and their principal applies to both the wholesale and retail levels. Farmers, on the other hand, are forced to sell their production on a world market, with factors such as weather, import costs, WTO, GATT, loss of the Crow benefit, U.S. and European subsidies, and others affecting their prices. These same factors do not apply to secondary industry, which makes their finished food products for resale to the consumer on a cost-plus basis.

Just imagine if the same price factors applied to the retail food markets as they do to the farm community. A loaf of bread, which retailed for $1.69 in 1998, would then sell for about 92¢ today. Or, a tub of margarine made from canola, which retailed for $2.99 in 1998, would sell for $1.76 today. These figures are appalling considering the fact that the average loaf of bread might contain about 3¢ worth of wheat.

To think that agriculture not only supplies the primary resources for most of Canada's secondary industry but is also a major contributor to the tax revenue of the federal government is astonishing.

Let us consider that if an average bushel of malt barley produces 333 bottles of beer and a 500-bushel truck of barley produces 166,500 bottles of beer, at $2.50 per bushel that truckload of barley is worth $1,250. One bottle of beer contains 0.8% of barley. If beer retails for $2.75 a bottle and 500 bushels of barley makes $457,875 worth of beer, approximately 52% or $238,095 would go to the federal and provincial governments in taxes. The $238,095 tax windfall correlates to 190 times the original $1,250 selling price of the barley. That money could supply us with a lot of farm aid.

Agriculture is the primary wealth of this nation and it is imperative that the farm industry be supported fairly, not only in the short term but also in the long term, so that all facets of our society can flourish in a viable and sustainable economy.

Programs such as AIDA have failed miserably at addressing the financial crisis we are facing. We need an equitable, simple, and fair program to help Canadian farmers. This program needs to be income and production based and must be a reliable, bankable, and predictable program today and in the future.

Over the years we have had numerous farm support programs, only to have them scrapped shortly after the bugs are out of the program. Let's develop one program to work for all producers, and let's stick to it for the long term.

Thank you.

Voices: Hear, hear!

• 1815

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

I just want to mention that the committee members have to leave to grab a plane at 6:30, so we have 15 minutes.

Mr. Mark, do you want to start?

Mr. Inky Mark: Thank you, Mr. Chair, and thank you to all of our presenters.

Our presenters certainly have delivered a very loud and consistent message throughout the last three and a half hours: that there is a crisis out there and that the farmers of Dauphin—Swan River do need help. The question of how this help is delivered will really be determined by the government.

The problem throughout this past year has been getting Ottawa to understand that there is a crisis here. A lot of messengers have come to Ottawa, but no one seems to have heard the concerns of the farmers here in Dauphin—Swan River.

It's so ironic, because as we approach the millennium we're all talking about celebrating next year. There's not going to be a lot to celebrate if this farm crunch isn't resolved in the short term with a cash injection of some sort.

I will put my question to Mayor Drebit. Could you paint a picture for us in the event that there is no assistance to the farm economy and the farm community? Will it be like in Minnedosa somewhat?

Mr. Terry Drebit: I just want to say one thing. Harvest is a time of celebration for farmers; December is a time of celebration and harvest time for retailers. If the farmers don't have anything to celebrate, then I can assure you that the retailers don't either. Everyone I have talked to up and down main street are down in sales. There isn't one person I know of in business in Minnedosa who can look me in the eye and honestly tell me that sales are up this year.

The Chair: We will now go to Larry.

Mr. Larry McCormick: Gentlemen, I just want to mention that your ministers of agriculture came to Ottawa recently. We had your Minister Wowchuk from Manitoba. Inky, I will say this in front of your face. I remember Howard Hilstrom, the Reform member, kicked it off by saying that all five political parties on this committee do get along.

I know that our bureaucrats and perhaps some of our cabinet colleagues did not recognize soon enough that there was more of a crisis in some areas. In many areas with the flood, it's a tragedy. During the ice storm, some parts of my riding had no hydro for more than three weeks. All I am saying is that sometimes the billion dollars the federal government gives is not enough. It has been a darn poor program, and I think some of us recognize that there is a crisis.

Gentlemen, you have been very kind in your presentations. I think Murray summed it up well when he said that there were many facets to all the challenges you're facing.

Some people in eastern Ontario, where my riding is, are not aware of the situation. They just think that we will not have food. I told them we would have food, but that we do not know who will provide it, the multinationals or multi-whoever. These are not the people who will give us the value that you people will.

Thank you, Mr. Chair. I think Mr. Calder had something to add.

The Chair: Thank you.

Mr. Proctor.

Mr. Murray Calder: As long as I'm after him.

Mr. Dick Proctor: Okay.

I would just like to get the opinions of the farmers here. We've addressed the social concerns a little bit. What is your feeling generally about farmers who have to have off-farm jobs in order to keep the operation going? Mr. Gust, do you or your wife Beth do that?

• 1820

I guess where I'm coming from is that when I look at some of these operations that on paper are worth perhaps a million or half a million dollars, I think of a business in town that would be worth in the neighbourhood of that amount of money. We don't expect the people who are running those enterprises to also have another job somewhere else in order to make ends meet, to provide what you need and the food on the table for your family. This is the social aspect to the problem. I'd be interested in your thoughts on the reality that seems to be more and more the norm in order to keep food on the table.

Mr. Calvin Gust: In our own case, my wife teaches part-time and earns $15,000 a year. The farm that I run, counting the land, all the rented land and so on, is probably worth $2.5 million. Her $15,000 salary on a good year is a drop in the bucket, but, boy, when we have numbers like I showed you here, it puts the groceries in the fridge.

We don't live particularly high on the hog. In 20 years, I've been to the Caribbean once and to no other southern island. I don't consider myself to be somebody who spends a lot of money on fancy vacations and that sort of thing. It's just a fact of life that in order to pay the bills many women and men go out and get a second job.

Mr. Boris Michaleski: I think that's the reality of the western Canadian farm families. I can't think of very many families where somebody isn't working off the farm. In my own personal situation, if it wasn't for off-farm income I could not have continued to farm.

The Chair: I think the last figure I saw—I don't remember what year it was, maybe 1997-98—was that 69% of all net farm income came from off the farm. That's 69%.

Mr. Boris Michaleski: I think that's why the Canadian public don't see the problem that actually exists. It's actually masked by the off-farm income and other businesses that farmers have. We have to separate off-farm income and off-farm businesses from the farm. Let the farm stand on itself, and then we'll see the real numbers.

The Chair: The interesting thing, though, is that despite the huge subsidies in America, their off-farm income is paralleling ours. It's a strange world.

Mr. Calder.

Mr. Murray Calder: Thank you very much.

Don, I have a very quick comment concerning your railway question. I've done two short-line railways in Ontario. I'll give you a quick synopsis of how I did it.

I approached the municipalities and basically said that if they could come up with the money—and nine times out of ten they could, quite nicely—they could buy the right-of-way and lease the plant back from the railway. Usually you have a leasing agreement for how many cars go over the top of the line, and there's money attached to that. The first thing you've done is circumvent property taxes through the Municipal Act, because the municipality doesn't pay taxes on its own roads—or city hall or anything. So you've lowered the overhead on the railway.

After that, you approach a short-line operator and cut a deal with him on a leasing agreement, or in this situation, because you'd be working with low car usage over top of these lines because you'd only be hauling grain at harvest time... or if you have support industry, then from there you can probably do that—I don't know, even right down to a truck that has been modified to roll on the rails to pull cars, because you're dealing with low freight. What we've done was with short line operators on two railways, and it's worked quite well.

Mr. Don Fyk: Before I answer your question, can I ask you another question?

Mr. Murray Calder: Sure.

Mr. Don Fyk: How long did it take you to obtain those rail lines? In other words, how long did it take you to cut a deal?

Mr. Murray Calder: On the Barrie-Collingwood railway, for instance, we were in process for approximately four years.

Mr. Don Fyk: What is the other one that took about 15 years? There's another rail short line in Ontario that took approximately 15 years to have a final end.

Mr. Murray Calder: You're probably talking about Goderich-Exeter.

Mr. Don Fyk: That could very well be. It was somewhere up in your jurisdiction.

Going back, I will try to answer that question. It really sounds rosy when the Transportation Act comes into play. It's supposed to all work fine and fall into place for the benefit of municipalities eventually, if it ever gets there. But what happens is that over a period of years CN or CP come and de-market this particular line. The bottom line is that you can get a facilitator or an agency to try to make a deal on this line, you can have fisticuffs over it, but at the end of the day you have to do business with CN. If CN does not want to deal with you, it will not deal with you. With the process that's going through in western Canada and the timeframe that is taking place, all the rail lines will be ripped up before anybody has a chance to actually salvage any of those lines.

• 1825

Mr. Murray Calder: However, if you can show through the CTA that a person is willing to buy the railways, then at that point in time you trigger, I believe, the 90-day clause that says the railways have to put up or shut up in that situation.

Mr. Don Fyk: That very well could be. I'll use a simple example.

The Cowan subdivison just north of Dauphin starts at mile zero and goes to 98.6. At the transportation conference held on May 2 in Minister Collenette's riding, the big announcement put out by CN was that the marginal line that's supposed to be Cowan subdivision was de-marketed badly, but all of a sudden the people managed to turn it around and it's going to fly. CN made a public announcement. Today there is still not a train running on it, and that's because CN still does not want to do business with any person on that particular line.

Mr. Murray Calder: That is why the 90-day thing is in place for that, because it stops that de-marketing of the line.

We'll talk later. I want to go to another question.

The Chair: Try to keep it short.

Mr. Murray Calder: Okay, really short.

As everybody has stated here today, we have cut back on our subsidies and the other nations haven't. Under the current GATT, we obviously have movement here that we could actually put back in. What would you think of increasing or topping up NISA when we can legally do that without triggering any trade retaliation from the United States or Europe?

Mr. Don Fyk: I would actually have to go back and ask my accountant that very question, because when I deal with federal people I always send them to my accountant.

Mr. Murray Calder: In all honesty, I worked for the government, and the cheque is in the mail. I've heard that before.

Mr. Don Fyk: In all honesty, I'm not sure what sits in my NISA account that I have been building over the past four or five years. If I could trigger the whole 100%, it might pay half of my operating expenses on the farm.

I want to go back to Mr. Proctor's question concerning a business in southern Ontario with assets of a million dollars. That really looks good on the asset sheet and so on, but that particular business with a million dollars in assets doesn't have to have $1.2 million worth of investment to generate 10% of whatever margin or profit. When those guys have a mark-up on whatever there is in their particular commodity and they net 10%, they're still sitting on $100,000 a year for that business. If we could only get that 10% of our inputs, we wouldn't be sitting at this table.

The Chair: Thank you.

An hon. member: Chris was nodding.

The Chair: Okay, and then we have to go to Rick.

Mr. Chris Dzisiak: If I may, the prospect of having a built-up NISA account works well from the point of view that it would serve to address localized disasters, where you have small areas with excessive rainfalls, like where Boris lives, where they had a localized disaster, in effect. It would serve that purpose. That would be one thing. But you're still keeping the guy alive so he can go broke next year. That's a nice thing, but you need to provide some sort of support. If everybody is going to play the subsidy game, then either we're going to have to play it or you're not going to have a western farm economy. You're only going to go from bump to bump to bump and you guys will be here every second year.

The Chair: Thank you.

Rick, you get the last question.

Mr. Rick Borotsik: I have a quick question. I know we don't have much time. I want to go in a different direction.

You farm about 2,100 acres now, is that correct? You just bought another 269? Do you rent any land?

Mr. Calvin Gust: Yes, about one-third of our land is rented from outside the family.

Mr. Rick Borotsik: I want to head in that direction. With commodity prices as they are right now and the cost of rent, whether it be from share-cropping or cash rental, are there lots of farmers up there renting land in the Bowsman area right now? Are you typical? Would you say about one-third is rented?

Mr. Calvin Gust: One-third of our farm is rented.

Mr. Rick Borotsik: Is that typical?

Mr. Calvin Gust: Oh yes. I would say that probably 40% to 50% of the land is rented.

Mr. Rick Borotsik: That's where I'm heading, Cal. Just help me with this one.

So about 40% of the land is rented. With commodity prices the way they are now, do you see farmers continuing to rent the land they are currently renting and farming?

Mr. Calvin Gust: I think the poorest land is being dropped already this year. People will not farm land that doesn't bring them a reasonable expectation of a profit, especially at these prices.

Mr. Rick Borotsik: So the bottom has dropped. Do you see that affecting the value of that land?

Mr. Calvin Gust: Absolutely.

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Mr. Rick Borotsik: I'm going somewhere now with the asset value.

Mr. Calvin Gust: Yes.

Mr. Rick Borotsik: If that land loses value, do you see that being reflected in other lands that are owned? Would your own land drop in value?

Mr. Calvin Gust: I would say that my own land would drop in value. My equity will decrease.

Mr. Rick Borotsik: Your asset value right now—and you've shown the numbers, so I don't mind saying them—is $663,000. I assume the majority of that would be land.

Mr. Calvin Gust: That's a corporate statement, so a lot of those assets are at cost. Not very much of that is land. Probably about $500,000 of that is in machinery.

Mr. Rick Borotsik: Oh, really?

Mr. Calvin Gust: Yes.

Mr. Rick Borotsik: So you're not reflecting the land asset value on that?

Mr. Calvin Gust: No.

Mr. Rick Borotsik: Okay. Well, you've sort of screwed up my argument, then.

Mr. Calvin Gust: That's done for Revenue Canada.

Mr. Rick Borotsik: Okay. Now, when you start losing the equity in your land, then it's kind of like a deck of cards at that point in time. If you start chewing at your equity, then obviously you will not be farming all that much. If you anticipate a loss of $60,000, then obviously you'd have to count on equity, right?

Mr Calvin Gust: Right.

Mr. Rick Borotsik: Or the funeral parlour. Are you generating $60,000 a year from the funeral parlour?

Mr. Calvin Gust: I have to get my initial investment back.

Mr. Rick Borotsik: Yes, I know.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Borotsik.

I want to thank all of you for appearing here today. Thank you for your excellent presentations and for sharing your insights. I want to thank everybody in the hall. I think you did a wonderful thing coming out today and sharing your time with us. On behalf of the committee members, thank you, and I want to give you a round of applause.

This meeting is adjourned.