AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 9, 1999

• 0830

[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia)): [Technical difficulty—Editor]...crisis on the prairies.

First, we have a group of four people who will make presentations. I'd like to welcome this morning Mills Anderson, René Blanchette, Art Macklin, and Cliff Richards. We'll go alphabetically, so that means you will be the lead hitter, Mr. Anderson. I think if you can keep your presentations to five or seven minutes, we'll have some time for questioning after.

Thank you. We welcome this opportunity, and you may proceed.

Mr. Mills Anderson (Individual Presentation): Thank you, Mr. Chairman. I appreciate the opportunity to speak to you, the committee. I have just a short overview first, as I see the situation, and then some possible solutions.

Large areas of the province have experienced severely adverse weather conditions for some years. In the case of the Peace country, some districts, including my own, have had crop disasters for six years in a row. My own farm has had six years of floods and droughts alternatively, and hundreds of farmers are facing bankruptcy because of this.

In the long term on the world scene, production of agricultural commodities these past few years has been relatively bountiful, hence prices have not been buoyant. More important, however, has been the subsidization of their farmers by the United States and the countries of the European Union. This has resulted in a severe downward distortion of prices received by Canadian grain farmers.

Adding to our problem was the removal of much of the subsidy we had received, in particular the Crow rate. The removal of this subsidy alone meant that Canadian grain producers grossed over $1 per bushel less than before. Since wheat, say, is worth less than $3 for an average grade, we have thus lost about one-third of the gross value of the product. I believe if any industry were to have its gross income reduced by one-third, it would be in serious trouble.

I believe the Canadian grain farmer would not have objected to the levelling of the playing field by the removal of subsidies, but the fact is that Canada played by the rules and eliminated subsidies, while the Europeans and the Americans kept right on, with their programs relatively unchanged. We effectively were the good boy scouts and led the way, while the rest carried on regardless. To this we strenuously object.

The effective levels of subsidization are now 56¢ per dollar of income in the EU, 38¢ in the U.S., and 9¢ in Canada. We cannot compete with this.

On existing programs, the farm income disaster program in Alberta was based on a reasonable premise and worked well at first. However, in areas of successive disasters, the program rapidly becomes ineffective, as it pays out 70% of the difference between the current or claim year's net income and the average of the previous three years. After several poor crops, the payout becomes negligible—70% of zero is zero. The recent amendments to FIDP announced by the Government of Alberta, i.e. the amendment of the averaging period to be the best three out of the previous five years, and the admission of negative margins, will greatly enhance FIDP.

As the federal program AIDA, or agricultural income disaster assistance, is very similar to FIDP, it can be reasonably expected to be of help to farmers now that the entry rules have been relaxed in a manner similar to FIDP. In fact, AIDA has become somewhat more beneficial to farmers than FIDP with the new rules.

Crop insurance is supposed to help in weather-related income loss situations, but it has proven to be inadequate to the task. I was in the crop insurance program for years but dropped out some time ago, as the premium-to-benefit ratio became so punitive it was no longer worth taking out. Crop insurance is under general review at the moment, as you know, and it remains to be seen how the program can be amended.

On solutions to all of this, there's absolutely no doubt that the western Canadian grain industry is in dire need of an immediate cash injection to overcome its short-term difficulties. The simplest and quickest program to institute would be that of an acreage payment to farmers based on seeded acres of grains and oilseeds.

Another short-term solution that is receiving considerable attention in the west, although controversial, is a moratorium on farm debt repayment to the banks, FCC, credit unions, and provincial farm lending agencies. Debt repayment would only be deferred, not forgiven, and deferred payments would merely be added to the end of the debt repayment period. The federal government's main role would be to compensate the private lenders, and both levels of government would absorb the government lending agencies' loss of the interest payments.

• 0835

As I understand the proposal, the compensation would constitute the interest on the interest, i.e., about $225 million per year, as the total farm indebtedness in western Canada is about $24 billion. This would be a very speedy program to institute and would save many farms under threat of foreclosure.

These are not the only possible solutions to the cash crisis. To compare Canada's grain industry with that of the U.S. for a moment, our industry is worth about 10% of that in the U.S. As the American grain subsidy over and above the normal USDA budget this year is $22.5 billion, it follows that for similar assistance, Canada's grain industry needs a cash injection of about $2.25 billion, or about twice that presently announced.

AIDA will not be the best vehicle for disbursement of the money, as the percentage of payout and number of years of averaging are at a maximum. I believe the federal government should institute a variation of the American subsidy system of grain price support over the next several years. I further feel that the grain sector needs the bulk of the aid, not the livestock sector, which is quite buoyant. In fact, the prices of feed grains are the lowest ever, which directly benefits the livestock industry.

The most important long-term good the Government of Canada can do for the Canadian grain industry is to help negotiate an end to the trade distortions created by other countries' agricultural subsidy policies. The next round of World Trade Organization talks will set the playing field for Canadian grain farmers for the following decade at least and will be critical to the long-term health of our industry.

We cannot afford to be the good scouts again. If we are and our competitors are subsidized unchecked, our grain industry is bound to fail, and the country will be the worse for it. When imported foods triple or quadruple our food costs, the government programs that are being designed today to protect our farmers will seem like the cheapest food taxpayers ever bought.

In conclusion, I'd just like to emphasize a few points. I'm tired of subsidizing the consumer for the groceries he or she buys. I've been putting at least $50,000 a year from my off-farm employment into our farm—money that goes into fertilizer, fuel, or chemicals to produce that food. I'm sure the other 90% of farm people who have off-farm employment feel the same. It has surely reached the height of the ridiculous that our farm can feed 100 people with its production every year, but I have to work off the farm myself to feed my own family.

There's nothing more that I can do as a farmer, and I cannot wait for the WTO talks to bear fruit. It may be six or eight years before the present round of talks is concluded, and then it will probably be another ten years before subsidies are equalized. There's just no point in waiting and hoping for a good result from the WTO. We need help now. It is just not acceptable for Minister Lyle Vanclief to say there's no more money for agriculture when our Minister of Finance is soliciting ideas on how we can spend the $90 billion surplus forecast for the next five years.

Because I don't see how the AIDA program can be manipulated any further, I'm convinced an acreage payment for grains and oilseeds is the best way to immediately respond to the crisis. Further down the road, an American-style support system should be instituted. Agriculture, Mr. Chairman, is in dire straits. Please listen to us. The problem is as bad as we say it is.

The Chair: Thank you, Mr. Anderson.

Just before we turn to Mr. Blanchette, I'd like to give my colleagues an opportunity to introduce themselves. May we start with Joe?

Mr. Joe McGuire (Egmont, Lib.): I'm the parliamentary secretary from Egmont, Prince Edward Island.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): I'm the member of Parliament from Yorkton—Melville in Saskatchewan and I'm one of the agriculture critics for the Reform Party.

Mr. Charlie Penson (Peace River, Ref.): I'm the MP for this area. I want to welcome the presenters this morning and everybody who has taken an interest and come out. I also want to welcome the committee to Grande Prairie.

Mr. Dick Proctor (Palliser, NDP): I'm the member of Parliament for Palliser in Saskatchewan and the agriculture critic for the New Democratic Party.

Mr. Rick Borotsik (Brandon—Souris, PC): I'm the agriculture critic for the Progressive Conservative Party, and I represent the riding of Brandon—Souris in Brandon, Manitoba.

The Chair: Thank you, gentlemen.

Now we'll turn to Mr. René Blanchette. Welcome.

• 0840

Mr. René Blanchette (Individual Presentation): Good morning, ladies and gentlemen.

My name is René Blanchette, and I am a grain and hog producer in the Girouxville area of the Smoky River region, 100 miles northeast of Grande Prairie. It is with great pleasure that I welcome you all to the Peace region of northern Alberta.

The Peace region has been plagued with adverse weather conditions for the past four years, which has resulted in below-average crops, and, combined with low commodity prices, it has quickly put farmers and farming communities in a very serious financial problem. For the balance of my presentation, I will focus on my farming situation and the problems that are developing in my local community.

The years 1996 and 1997 have proven to be some of the wettest years in the history of farming conditions for the Smoky River region, and then, as unbelievable as it may seem, 1998 and 1999 have literally been drought conditions. We have seen fields flooded by excess rain, to the point where they have become lakes, and at the other extreme we've seen crops literally burn under the sun, to the point where harvesting was not an option. However, our financial obligations have not washed away in the rain, nor have they dried up under the sun. They have been haunting us in a terrible way, to the point where meeting them is just not possible.

We have always had crop insurance on my farm for as long as I can remember. Crop insurance has pulled us out of bad situations in the past. But when it's bad crop after bad crop after bad crop, the program eventually fails. Farm income disaster assistance programs also fail to meet their objectives, and I won't dwell on that for I'm sure you have heard all about their failures all too often, and rightfully so.

Many farmers here fear the worst, as farm foreclosures have already begun in our area. The majority of the farms in my area will not generate a positive cashflow again this year. Many are wondering where the money will come from to put the crop in next spring, and that includes me. We are heading into the next crop year with the soil completely depleted of moisture.

Unless we get very timely rains in the spring, we'll be behind the eight ball once again. For many it's a do-or-die situation. If we don't get a normal crop next year, along with decent prices, it's game over for many of us. The crop insurance program in its present state will not keep us afloat this time.

Something needs to change. If grain and livestock production is to survive in Canada, the past and present governments must wake up and give agriculture a much higher level of priority. I'm not talking about general cash handouts. I'm talking about insurance programs that have guts, insurance policies that will, at minimum, cover my input costs, nothing less.

If my barn was to burn down tomorrow, my insurance company will replace it, at replacement cost. If I was to get into an accident with my truck and my insurance company writes it off, I get replacement cost. Tell me why it is that when I sow a crop, I can't insure my cost of production.

It is imperative that we take some of the risk out of farming. Both the provincial and the federal governments must stop the spread of moneys that are allocated for agriculture into four or five different farm aid programs that are not effective in any way.

My vision and recommendation for a successful farm aid program is the immediate implementation of a revised crop insurance policy that covers total input costs, plain and simple; and second, revise the NISA program to make it more lucrative and far more accessible when needed.

• 0845

I'll give you an example of how this program is failing. I have in my NISA account $96,646, and after four consecutive years of bad crop and below-average income, the program has yet to trigger a payment. I ask you, do I need to declare bankruptcy before I can get some of this money?

The federal and provincial governments are putting millions of dollars into far too many programs, and the sad part of it is it's not reaching the producers who so desperately need it. Far too much of that money is wasted in administration of these programs. It almost seems as if the government is focusing on job creation rather than farm aid.

These two programs, in their modified states, need to be in place by April of next year. This will eliminate a lot of the risk we now are facing. This will ensure long-term stability in farming, but in the short term, this won't help one bit. Many of us need a direct cash deposit immediately.

The lack of commitment by our government to put a proper safety net program in place has put many Canadian farmers in jeopardy of losing their farms and their livelihoods. As much as I don't believe in cash handouts from the government, I'm afraid I see no other remedy to solve the problems we are faced with. An acreage-based payment in areas that have been declared disaster zones is what it will take to save us from going bankrupt.

In closing, I would like to thank you all for giving me this opportunity to speak my mind and to listen to my recommendations. I am hopeful that a solution to our problems can be quickly reached, and I ask that our government give agriculture a higher level of priority in their daily agenda. Agriculture affects every person in Canada. Let's make sure it doesn't fail. Thank you.

The Chair: Thank you, Mr. Blanchette.

Now we welcome Art Macklin. Good morning, Art.

Mr. Art Macklin (Individual Presentation): Good morning, and thank you for the opportunity to make a presentation.

I would like to look at the larger picture in terms of western Canadian agriculture, and that's the direction of my presentation.

First, let us look at the fundamentals of western Canadian agriculture. Production of grain for export and for domestic processing and consumption has been an important driver for the economy of Canada and is the largest net earner of foreign currency in the country. With our small population we must export a large proportion of our production, whether it is in the raw or the processed form, and we are very dependent on rail transportation to move our product to ports and end users.

Relative to our competitors, the Canadian prairies are a long distance from tide water and consumer markets. Australia, Argentina, the U.S., and the EU all have tremendous competitive advantage over Canadian prairie farmers, with the combination of their proximity to markets and export positions, government support of transportation and grain handling infrastructure, favourable and less variable climate, a large domestic market, and both direct and indirect government support for producers.

I would like to just give a bit of an example of that in the case of Argentina. I had the opportunity to travel there about a year ago and study their grain industry. Their expenses from farm gate to a port position on the Parana River are about $15 U.S. a tonne in the high season when the trucks are most in demand. Compare that to the western Canadian situation, where we're looking at between $40 and $60 a tonne to move our grain the same distance. So the competitors we have in the international market have some tremendous advantages over western Canadian farmers, and I think our government has to recognize that.

On Canadian farms, value adding and diversifying into other production may help to generate additional income, but these activities are subject to transportation costs and small domestic markets. It is also fundamental to note that food is a strategic product that is essential for life and that the political fortunes of many governments rise and fall on the issue of food. Therefore, it is not realistic to expect that governments around the world will not intervene in agriculture to accomplish food security, social, environmental, or political goals. If Canadians want to maintain a viable grain production sector in western Canada, we must have public policy and programs that will make it happen.

• 0850

With regard to the current situation, I know you have had numerous presentations documenting the personal hardship of farmers who are in an untenable financial situation because of economic factors that are out of their control. The high export subsidies of the U.S. and the EU, coupled with high transportation costs, high input costs, and in some cases weather disasters, have all contributed to the current dilemma.

What do Canadians want? Our government must make a public policy decision as to whether it wants a stable and viable grain production economy in western Canada, which will be a primary driver of the economy, or whether it wants a grain economy that is, because of transportation costs, a residual and high-cost supplier to a global grain economy dominated by the large transnational grain traders.

Public policy in the last twenty years has clearly been moving to the latter position. If we want a Canadian-controlled grain industry that will support secondary industry and jobs in Canada on a long-term and stable basis, then public policy will have to make it happen.

What can Canadians do? The government must implement a transportation policy that recognizes the distance that prairie farmers must ship their products. The policy must be cost-based and control the excessive power of transportation providers. Based on the recent analysis of railway costs done by both the Canadian Wheat Board and the Canadian Transportation Agency, an immediate lowering of railway freight rates of at least $5 per tonne would be in order. That, of course, could save farmers on an annual basis at least $150 million.

Government investment in transportation infrastructure, similar to programs for U.S. railways, waterways, ports, and roads, would all be compatible with our bilateral and multilateral trade commitments and would improve efficiency and lower costs.

Two, renewed investment and control by the public sector in agricultural research and development would not only protect the public interest with regard to the direction of this research but also help alleviate costs to producers, which can be as high as $30 per acre for this new technology. Again, investment in research and development is trade compatible.

The stable sectors of the Canadian agricultural economy are the supply-managed sectors. Government policy to encourage farmer marketing boards and orderly marketing would help to increase and stabilize farm gate prices. Studies have shown that the CWB involvement in grain logistics reduces the risk premiums that farmers would be charged by at least $5.53 per tonne. Government policy support to increase the bargaining power of farmers to negotiate prices on both inputs and outputs would be beneficial.

Four, in the short term there is an immediate need for direct producer payments to counter the low grain prices and keep the grain production economy viable until some longer-term measures can have an effect. With the U.S. and the EU using both area payments and commodity payments, it would seem appropriate and fair for Canada to do the same.

The above suggestions are not an exhaustive list, but they are actions our government could take now to help address the agricultural financial crisis.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Macklin.

Now we'll hear from Cliff Richards.

Good morning again, Cliff.

Mr. Cliff Richards (Individual Presentation): Good morning.

To the members of the Standing Committee on Agriculture and Agri-Food, thank you for finally taking the time and having the courtesy to travel to western Canada to investigate the desperate situation that agriculture is facing. We hope that all that is being presented will be taken seriously and that a sound and rapid solution will be found to address the financial hurt, the emotional stress, and the lack of social concern for those involved in primary agriculture production.

Welcome to the County of Grande Prairie and the Peace region. According to the 1991 census, the County of Grande Prairie represents 1.15 million acres of the 7.1 million acres in the Peace region. Of these acres, 4.25 million were in crops and summer fallow, 700,000 of them in the county.

• 0855

The acres in the Peace region equal those of Manitoba in total. It is a vast area of land in the vast Canadian landscape that, like all farm land, relies on Mother Nature to be cooperative in order to profitably produce product.

The main, basic problem is the lack of programs to cover the cost of production, which in this area varies from roughly $175 per acre for established farms to around $250 per acre for beginning farms.

Many issues affect a farmer's profitability, as most of you are aware. Much of the corrective process is far too slow and not properly focused on the economic survival of primary production.

Major constraints include the following: transportation costs that are too high and uncompetitive; only partial branch lines being sold off, which limits the new owners from becoming creative and cost-effective; lack of storage at port position for quick ship turnarounds; lack of full-cost penalties to industries and unions that tie up grain movement and timely loading at port positions, since currently these costs come out of our pockets; rising input costs, including, to name a few, new technology costs being downloaded at profit, increasing costs of fuel, fertilizer, chemicals, machinery, and repairs, taxes on all inputs, and the rising price of land, which currently costs more than productive capability; lack of reliability for Grain Futures to work, as it was originally intended, for buyers and sellers, as now large grain companies use fund money to profit by; initial grain prices that are far too low at the beginning of the crop year; cash advances that are extremely low; and low commodity prices, where today pork has hit a 50-year low, canola and barley have hit a 25-year low, and wheat just recently hit a 22-year low.

Could any wage earner survive on 1974 wages, or could any business that sells a product at a profit economically survive 1974 profits with a 1997 cost of living or cost of production? Think back as individuals to what you made in 1974, and visualize trying to survive with today's cost of living and no certainty for the future.

My guess is that there would be riots in the streets. Wars have been fought over less issues. Primary production is on the edge of disaster. What will be the impact on our society of the future of the lack of a clear and realistic vision today with regard to stable profits in primary food production?

Canada has fiscally bailed out and left us to wage a war we cannot financially survive. With supposed subsidies of 9% in Canada, the U.S. is at a 35% level and rising, because they've increased their agricultural spending this year by several billion. Much of Europe is at 56%.

A breakdown of WTO last week told us the story of why Europe subsidizes so heavily. Primary food production is a social responsibility, and it is not open for negotiation, or so they said in a news report a week ago. Europe has had food shortages twice in the last hundred years. They are going to maintain self-sufficiency while we are left to deal with their overproduction.

Their overproduction is subsidized into the world at about $85 a metric tonne, which lowers our internal prices equally, thus creating artificial pricing here or subsidized prices for end users here at home.

Canadian support is too difficult to qualify for, as can be seen in the fact that only 15% of the AIDA support money has been claimed. Support is not equitable across the provinces, or areas within the provinces, or even the regions. I'm referring to crop insurance, mainly.

We producers need cost of production protection on a scale of cost to coverage. It has to be coupled with profitable income protection or we will not have further producers. A trend has started, as can be seen in Alberta census figures from 1991-1996, where farmers over 55 years of age have increased from 31.8% to 32.3%. Those aged 35 to 55 increased from 47.7% to 51.3%. Those under 35 dropped from 20.5% to 16.4%. This represents a 19% reduction in the next generation.

A recent independent survey puts the numbers even higher for 1999, which I find very disturbing. If we don't address these issues, where is the next generation of farmers going to come from?

• 0900

The profits made in agriculture are in secondary production. A way must be found to share these profits with primary production or there will not be a secondary side to the picture. If corporate ownership is allowed in Canada, concerns for the environment must be front and foremost, as profits precede sustainability. We cannot eat lumber and natural resources. Food does not come from the store shelf. It comes from the land.

There is too much apathy in society with regard to profitable primary food production. Many feel the government is duly responsible to educate with regard to its necessity.

I am 46 years old. I farm with my wife, my mother, my brother, my son, and his wife. Our 4,000-acre farm produces grass seed, wheat, barley, canola, peas, and oats. My wife and son have cattle, and all of us have recently purchased bison. We're trying to diversify. We're considering less grain production, more grass seed production, and more bison. However, the adjustment takes time and additional funding, and 1998 was basically a break-even year. The year 1999 saw a loss of $95 per acre, as happened to a vast amount of acres in the Peace district.

To date, rough calculations place cash losses in the County of Grande Prairie at $60 million, and in the entire Peace district at $300 million. These are break-even figures and are a loss of total primary dollars, no spinoff to tax.

It takes profit to create tax revenue. We farm land that is very productive and that used to consistently produce some type of profit. With the ever-increasing cost to ship now, at 25% to 33% of the gross value, and the low commodity prices, floods in 1996 and 1997, and droughts in 1998 and 1999, we are left wondering how our business will survive.

With very little left to sell and not enough to cover the bills that are still outstanding, how can we afford to put in the 2000 crop? The majority of producers are business people who enjoy making sound, profitable decisions. However, we cannot pass on in our products our costs of production the way other businesses in the world can. We have no choice but to rely on society and government to aid us in times of strife so that you can rely on us to produce safe and nutritious quantities of food. At today's costs and today's prices, our farms have to have far above average yields just to break even.

In closing, we ask for your understanding of our need. We ask you for rapid support that fully meets this need. We ask you for the opportunity to further discuss the problems facing agriculture, and we ask for producer involvement in finding long-term solutions through development of good, sound programs.

The seven-minute, 2,000-kilometre dash is not enough time to resolve a complex issue. It is in Canadians' best interest now and into the future to ensure that agricultural primary production remains a profitable pillar of the foundation in society. It is time to stop playing politics and grab some guts, desire, and action to ensure that we remain on the farm as stewards of the land. It is our responsibility to look after the diminishing land base to ensure that it remains suitable for humans' needs out into the infinite future.

We are asking for wage parity, not subsidies. The money taken from this industry must be put back. When there is further need, ways can be devised. Many people will be willing to help out once they are informed of the facts.

Voices: Hear, hear!

The Chair: Thank you, Mr. Richards.

There's just enough time to hear from each of the party representatives.

Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman.

I'd like to thank members of the panel for presenting this morning. This is certainly consistent with what I've been hearing throughout the riding for the last year and a half, and much longer in some parts of the riding where they were experiencing problems with flooding.

Mr. Chairman, this is the second time that I'm aware of that the Standing Committee on Agriculture and Agri-Food has come to Grande Prairie as part of a hearings process. The other time was when I asked to have the area added during the Canadian Wheat Board hearings.

• 0905

My understanding is that our own party—this is an all-party committee, by the way—has been asking for the Standing Committee on Agriculture to travel for some time to hear from people directly in the communities they live in, rather than them having to make that trip to Ottawa to make their presentation. That has been resisted very much by the Liberal government. Essentially, the only reason this committee has started to travel is that our own party has put together 60 hearings, starting last week in western Canada, to go to the people affected. Now, be that as it may, I think it's welcomed that this committee is travelling—although it's only, I think, nine centres in three days. So it is a whirlwind tour, as Mr. Richards said.

The question is, when the committee is here and this government is here, they're listening, but are they hearing? I just want to point out that I wrote a letter to the Minister of Agriculture, Mr. Vanclief, last year in December. Mr. Chairman, I want to read briefly from it, and I'll table it with you so you'll have it. This is from December 18, 1998, almost exactly a year ago.

I was happy to see your announcement last week of emergency aid for our hard-pressed agriculture sector. It is unfortunate that this situation has developed again which necessitates the need for this type of aid package.

I believe we must challenge the Europeans vigorously to reduce their systemic use of subsidies. We know of course that this leads to overproduction which finds its way into international markets. This in turn depresses world commodity prices received by our Canadian farmers.

In regard to the program you intend to use to help our farmers, I caution you about using a rigid Farm Income Disaster Program based on that used by the Alberta Government. The reason for my concern comes from my experience upon hearing feedback from many Peace River producers over the past couple of years.

Farmers have told me they have been unable to qualify for FIDP because of the three year rolling average even though they have had crop failures for three years because of weather problems.

This is a very real concern; farmers with no taxable income because of this serious situation will now also not qualify for the proposed federal program! This is a serious flaw, which will disqualify farmers who are most in need.

That's exactly the experience the farmers here are having. We had that situation in central Peace River. The response to it was that the farmers who needed it the most got nothing out of the FIDP program. Because the farm income disaster program in Alberta was the model that was used for AIDA, although there had been changes to both, I would ask Mr. Blanchette and Mr. Richards this question.

We see the $1.7 billion that has been allocated. Governments—provincial and federal—have set aside $1.7 billion to address this problem. Mr. Richards, you told us that only 15% of that has come out to farmers. We understand that's right in the range—somebody told me the other day it was 17%. Can this program be salvaged?

Mr. Blanchette, you told us that farmers are going to need some money by April to put the crop in. Should we just throw this thing out and go to some other type of payment, take the remainder of the $1.7 billion and find another less bureaucratic vehicle to deliver it?

Mr. René Blanchette: I'll respond to Mr. Penson's comments. I totally agree that these AIDA programs, these FIDP programs, need to be abolished. They do not put money into the hands of the producer on a timely basis. We need to have programs that are time-specific. For me to receive a cash payment or an aid payment two or three years after the time I needed it doesn't help me one bit. As I said in my presentation, we need programs that fix the problem when the problem is occurring.

The Chair: Mr. Richards.

Mr. Cliff Richards: Thank you. The one year I had to make a claim for FIDP, it did work, but it took a long time. It cost me money, because I had to go to the bank to borrow money. As a matter of fact, I had to extend my operating line of credit. I had to double it because it took so long for the money to come through, and because we were a limited company it took an extra long time to come. It added another three months over an individual. Maybe they thought it was a Hutterite farm, I don't know. It's not a fair statement, but....

I am a farmer. I farm with my brother. We're no damn different from any individual. Why should there be a delay in getting my money when I need it just as badly as an individual farmer?

• 0910

The bureaucrats who handle these programs don't trust me. They phone and ask questions. All accountants don't know how to fill out forms for these programs either. That's a problem. I believe it is too costly, too timely, and it just takes too long to get the money. As René said, we have to have money by spring. I need money by spring. I cannot put a crop in.

Mr. Penson, I think the only thing to do is abolish AIDA and give some kind of cash payment. But I don't think the money the government has sitting in that pot is enough. I know on my farm—and I have talked to a lot of farmers—we're very close to having lost, out of pocket, $100 per acre. I don't like acreage payments because they go to people who maybe only lost $50 or $75. But the guy who lost $150 needs $150. I don't need $150. I want to break even on this program. That's all I'm concerned about. I want to make a profit, but we have to find a different way of doing it.

The Chair: Thank you very much.

Mr. Charlie Penson: We have a lot of farmers in the audience.

The Chair: No, we're out of time, Mr. Penson. I know you're not on this committee usually, and we have time constraints. You had seven minutes.

Mr. Charlie Penson: Why do we have the time constraints?

The Chair: It's so everybody can be heard. You've had your opportunity.

Mr. McGuire, it's your turn.

Mr. Joe McGuire: Thank you, Mr. Chairman. I'd like to direct some questions on the NISA program, which normally receives a fairly positive response. About 25,000 farmers in Alberta are participating in NISA. About 75% of those farmers have triggered withdrawals, but only 15% have actually requested withdrawals. Is NISA performing the role for which it was designed for a downturn in income? There's a lot of money in that NISA pot that farmers are basically not withdrawing. I'm not really sure how you can have four years of disaster and not trigger NISA. Maybe we'll need someone to explain that one for us.

Just leave AIDA alone for a moment. There's a lot of money in NISA in this province, but very few people are really triggering or wanting to trigger withdrawals—wanting to request withdrawals. We understand that some people, especially older farmers, are looking forward to keeping this in their accounts as a retirement asset. Is that why we designed NISA? I thought NISA was for guys like you, René, who can take it out when you need it. Any of you can respond to that.

Mr. René Blanchette: Mr. McGuire, you're absolutely right. The NISA program, in my personal view, is a good program. It can generate a lot of cash. In my particular instance, when your net income doesn't drop more than 30%, you don't trigger the payment. If you drop 25%, you don't get the payment. Next year, if you drop another 25%, you don't get a payment. When crops are adverse year after year, the program fails.

On the comment that a lot of farmers are using it as a retirement fund, I totally agree with you. Changes need to be made there as well. When a payment is triggered, it should be mandatory for that producer to pick up his money, put it where it needs to be spent, and implement the program for the purpose it was put there. Too many farmers are using it as a retirement fund and then turning around and asking for government assistance. So changes are needed there. It is a good program, but it needs to be more timely in times of need.

Mr. Joe McGuire: Mills, you were shaking your head there.

Mr. Mills Anderson: The NISA program is a fine program, but it's just an RRSP for farmers. That's all it is. It has nothing to do with emergency reaction to the kinds of situations we find ourselves in. On my own place, our cashflow has been such that I have never been able to put any money into NISA. We've taken a little bit out once in a while—you know how the program works—but as a FIDP or AIDA-type program, it's hopeless in a crisis. Great RRSP, if you've got the money, yes.

• 0915

Mr. Joe McGuire: Obviously, for the past few days, we've been hearing about all the flaws in AIDA, but there still is over $1 billion sitting in that pot that can't seem to be accessed by farmers. If you were designing a long-term disaster program, what form would it take? Would you build on NISA or would you scrap NISA altogether and design another type of policy?

A voice: AIDA?

Mr. Joe McGuire: Yes, AIDA, right.

Cliff, did you have any response to that?

Mr. Cliff Richards: Yes. I guess what all of us have asked for here is cost recovery, and the only vehicle that's in place right now to allow cost recovery on a timely basis is crop insurance. I think we need a combination of cost-recovery crop insurance and an effective NISA program. I think we can rework NISA. I believe AIDA should be scrapped. I think it's a disaster.

Voices: Hear, hear!

Mr. Cliff Richards: Cost recovery is, as René mentioned in his presentation, buying replacement cost insurance on a house, on a building, on a vehicle. To me, buying crop insurance is like saying to someone who owns five houses in town and one burns down, “You've only got 70% cost recovery. Sorry that fifth house burnt down. That's too bad. You've got four you can still carry on with.” But he's out the rent on that house. This is the way we look at the percentage problems that are coupled with AIDA, with FIDP, the poor trigger mechanisms with NISA. They have a cap, they have a limit, they have a trigger.

To me, a well-defined crop insurance program kind of follows what GRIP had. I could buy what they called offset through GRIP. GRIP was a good program. GRIP kept me alive in years of need. I wish I could still have a GRIP program. It is like anything else; it rises and falls. It's expensive one year and the next year there might be a surplus. The only reason Ontario's got it is they still have a surplus.

It was the political will of the day to dump a program that appeared to cost money, but it did keep some farmers alive. I think anybody who looks back on that program, who criticized it in its day, is taking a different light and look at that program. But you could buy an extended range of coverage as the need was presented on your farm. I think we have to approach it in that manner.

Mr. Joe McGuire: We're hearing a lot of good things about GRIP all of a sudden. So a new program, a replacement for AIDA, would have to be a gross-revenue-based or a revenue-based program?

Mr. René Blanchette: If I could add to Cliff's comments, an insurance program that would cover cost of production seems to me the simplest way to do it. It is time-effective and it's cost sharing between federal, provincial, and producer. It is by far the simplest program to administer.

We seem to be trying to put in these AIDA and FIDP programs that are so darned complicated, probably 80% of the producers don't understand them. Money is wasted in administration costs to implement these programs through government agencies, through our accountants. Thousands of dollars are wasted before they even reach the farm gate.

Crop insurance protection is by far the simplest and most effective way to go.

The Chair: Thank you very much.

Maybe as the day goes along we can find out about the changing of opinion about GRIP or why at one time GRIP was in and now it's out and some people would like to have it back.

Mr. Proctor.

Mr. Dick Proctor: Thanks, Mr. Chair.

I'd just like to begin by saying I agree with Mr. Richards' comment that it's time to stop playing politics on this issue. And I'd like to distance myself from my colleague to the right who says the ag committee—

Mr. Charlie Penson: You're the only one who does that.

Mr. Dick Proctor: Yes, I know that, Charles.

This committee—and I have no vested interest in it, but for the record it was Mr. Borotsik, my colleague from the Conservative Party, who recommended in October that the committee travel to the west. One of the parties that voted against it was the Reform Party.

• 0920

This request came from Vanclief when he was at the Saskatchewan Wheat Pool convention. We have yet to see Mr. Hilstrom, who is the lead ag critic for the Reform Party, at any of these meetings in western Canada.

Mr. Charlie Penson: [Inaudible—Editor]...stop playing politics.

Mr. Dick Proctor: That's for the record, Charles.

Mr. Anderson, you likened Canada's position on world trade to the boy scouts, and I think you're giving the boy scouts a bad name. The boy scouts' motto is “Be prepared”, and I think Canadians were woefully unprepared for what happened after 1993. The fact of the matter is Canada reduced its domestic support subsidies three times more than they had to, and we could have another political discussion about why that happened after 1993, but we won't go there.

I would be interested to know from you what it is you think we should be doing now in terms of resurrecting some of those—making a more level playing field, because clearly we don't have one.

Mr. Mills Anderson: Well, we certainly don't, and of course that's the long-term aim of WTO, but we can't afford to wait around for WTO to bear fruit.

My own personal feeling in this—and I know there are some people in this audience who are well prepared with figures compared to me—is if we were to follow perhaps a reduced type of American program, then we would be free and clear, because they seem to be able to get away with what they do. I know there's clout involved there too, which we don't have. But the loan rate program, the target program—in other words, per-bushel price support—seems to me to be a fair long way to go about it, and we'd be fitting right in in North America.

Mr. Dick Proctor: Good.

This is our first meeting in Alberta, and I would really like the help of the presenters here this morning. First of all, when you apply for the AIDA program in Alberta, is there an application fee to apply? Does it cost you money aside from what you might pay your accountant?

Mr. Mills Anderson: Well, we do it through FIDP. The Alberta government does it for us, as it were.

Mr. Dick Proctor: Okay. So there's no application fee as such that you would pay?

Mr. Mills Anderson: There's a $50—

Mr. Dick Proctor: Fifty dollars?

Mr. Mills Anderson: Through FIDP, yes.

Mr. Dick Proctor: And is there an accounting fee that you pay?

Mr. Mills Anderson: If you can do it yourself, there's none.

Mr. Dick Proctor: But I'm trying to understand, when you say FIDP does it for you, if you don't have an accounting background or you're not skilled, you have to—

Mr. Mills Anderson: Most certainly. Most people have been using accountants, yes.

Mr. Dick Proctor: I'm just trying to—I hear the applause going up to say that AIDA should be scrapped. I'm just looking at the numbers that have been supplied to the committee as of a week ago, December 2, and it does show that in Alberta about 76% of the claims that have been processed have actually been paid out. The average value of that payment is just over $19,000. That's interesting to me because in Manitoba the numbers of claims are roughly the same, but about 36% of the claims are being paid on. So there's a 40% difference in terms of the number of claims that are being paid in this province—40% higher in Alberta than Manitoba. Has anybody got any explanations for that, as to why that is? The average value of payments is not that different, a couple of thousand dollars again in favour of Alberta.

Mr. Mills Anderson: Perhaps it's only because we've had the program for three years and we're used to it and we know how to work it. That's the only immediate answer I would have for that.

Mr. Dick Proctor: This is my final question, Mr. Chair, to Art Macklin. Area payments and commodity payments were part of the last point you mentioned, Mr. Macklin, in your presentation. You wanted to see them similar to the U.S. and the EU. Could you just elaborate a little on that, and would you include what you think the cost of that might be, could be?

Mr. Art Macklin: Well, I guess the point I'm making is that both the EU and the United States are using these mechanisms and they seem to not be causing trade problems for those two countries. I see these as short-term measures, at least to get us out of this immediate problem. But in the long term, I think we would also have to consider those programs. Whether it's done by way of a crop insurance program that's more comprehensive, such as René mentioned, or whether it's direct acreage or commodity-specific payments, they have to be considered.

• 0925

I don't have any idea as to what the overall cost would be, but I do know that the western Canadian grain industry is a very basic driver of the total Canadian economy, and I don't think this country can afford to lose it. If we don't take some very concrete action, if we don't have a commitment from our government to make this a stable industry, we're not going to have this industry because of the competitive factors in the world markets, such as the transportation disadvantage we have. So there has to be a commitment from the federal government to make this a stable industry.

The Chair: Thank you.

Mr. Borotsik.

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

First of all, I'd like to welcome all of the people here today and thank them for their valuable input. We've had what I consider to be a very good session over the last couple of days dealing with producers and getting their input. It has been non-political up until today, I can tell you that, and it has been very valuable. I think we'll leave it that way.

Mr. Charlie Penson: That's the problem.

Mr. Rick Borotsik: René, I can appreciate your position. I represent an agricultural area in southwestern Manitoba that did not seed 1.4 million acres last year, and, believe me, I've heard from a number of those producers about their difficult times.

The reason I mention that is that in this particular case they've tried to use the AIDA model to deal with something that's totally outside of what AIDA was meant for, and that's a natural disaster. You talked about an improved crop insurance program. In fact, if we think about that seriously, that may well be the way we should be heading with the new program. Do you think a natural disaster, such as you've been dealing with over the last three years, should have perhaps another program that is specifically modelled for natural disasters, as opposed to simply a commodity crisis, which we have in a lot of other parts of the country?

Mr. René Blanchette: No, I don't, actually. I think these programs don't address the problem when the problem is before us. When I mentioned that crop insurance should protect your input costs, if the crop is not to standard, then at least you recover your expenses and break even. Sure, you're going to coast for that year, but you will have the money to put the next crop in.

While I have the microphone, I'd like to comment as well on the FIDP program.

Mr. Rick Borotsik: Remember, I only get five minutes, so make it fast.

Mr. René Blanchette: Dick mentioned there were payouts under the FIDP program. Yes, there were. There are two producers in my area, and one of them got over $40,000 and the other over $60,000 out of the FIDP program. What a great program. Those two gentlemen sold 50% of their farms to their sons, dropped their income level, and triggered that payment. What a fantastic program.

Mr. Rick Borotsik: We've heard of those anomalies with regard to the AIDA and FIDP programs, believe me.

With regard to GRIP, I have to take some—no, I don't take any credit for it, but certainly previous governments should take credit for it. It was put in during the late part of the 1980s and taken out in 1995. It's a tripartite arrangement. It's with federal, provincial, and producers. In your opinion, René or Cliff, do you feel the producer input into that would be acceptable to the producers of this area and perhaps other areas for that tripartite program?

Mr. Cliff Richards: If we're looking for a benefit, we also have to put a cost to it. It has to be affordable. This is why I asked the caucus to come back to this area to talk to us again because we can't do it in the short time we've been given.

Mr. Rick Borotsik: I have one more question for you, Cliff, and I'll ask it quickly because I know the chairman is going to cut me off real fast. You said you had a cash loss of $95 per acre last year. We've been travelling around, and we've heard numbers ranging anywhere from $20 to $80 to $95 now. We've all heard from just about everyone that there has to be an immediate short-term solution and an implementation of cash into the farmers' hands, and in all cases it has been an acreage payment. Can you guys tell me, and everybody can answer, what number you're looking at and how you see it being distributed? Cliff, start.

Mr. Cliff Richards: I can't answer that one for sure. I'm sorry. It's a complex thing.

Mr. Rick Borotsik: And it has to deal with dollars, too, obviously.

Mr. Cliff Richards: Saskatchewan was asking for $80 an acre this spring. They based that on the cost of the fertilizers they put in the ground, and there must have been some other things involved in it. But—

Mr. Rick Borotsik: René, do you have a number?

• 0930

Mr. René Blanchette: I certainly don't see anything less than $50 an acre to cover your input costs, and it has to be distributed on a seeded acre basis.

Mr. Rick Borotsik: To everyone.

Mr. René Blanchette: To everyone.

Mr. Rick Borotsik: Art.

Mr. Art Macklin: I don't have a number, but there certainly is a formula. Alberta Agriculture has the regional costs of production in all crop sectors in Alberta. We can easily calculate the amount of revenue that comes from the average crop. So that figure can be calculated and a fair number can be arrived at.

Mr. Rick Borotsik: Mills.

Mr. Mills Anderson: In my case, $50 an acre would allow me to pay the bank payments I have not yet been able to pay and would make sure I put a crop in next year.

Mr. Rick Borotsik: Thank you.

The Chair: Thank you.

Just before you go, I'd like to know whether you favour a targeted program going to those farmers most in need or an across-the-board program going to all farmers regardless of financial circumstances. Those in favour of a targeted program, please put up your hands. Now let's have a show of hands for those in favour of an across-the-board program.

Now I'd like to go to the audience. Please put up your hand if you're in favour of a targeted program. Now we'll have a show of hands from those who favour an across-the-board program regardless of financial circumstances. Good. Thank you.

Mr. Rick Borotsik: I get to ask my question, too, after we do this. It's a little skit we have. How many out there have applied for an AIDA/FIDP payment? Okay. Now can you tell me how many have received the AIDA/FIDP payment? Boy, the hands tell the story. Thank you very much.

The Chair: Thank you very much.

Now we'll call on—

Mr. Garry Breitkreuz: I have a point of order, Mr. Chairman. I didn't get a chance to ask any questions.

The Chair: That's right. We're out of time. So you'll—

Mr. Garry Breitkreuz: Let the record show that I didn't have a chance. I had six important questions and I didn't even get a chance.

The Chair: Every party, Mr. Breitkreuz, gets an opportunity.

Now we call Rick Nagel, Garry Smolik, Peter Eggers, and Donald Dumont.

Gentlemen, we're ready for your formal presentations of from five to seven minutes, something like that. We'll go alphabetically, if that's all right. That means you'll start, Mr. Dumont. Welcome, and thank you for coming. You may proceed.

Mr. Donald Dumont (Individual Presentation): Good morning, ladies and gentlemen. Thank you, Mr. Chairman, for the opportunity to speak to your committee on the present state of the agricultural industry.

My name is Donald Dumont. I am reeve of a rural municipality, the Municipal District of Smoky River number 130, and an area farmer for the last 20 years.

I'd like to give you an overview of the situation our grain and oilseed producers are facing at this time. In the Peace region in the last four years, I've seen two seasons of excessive rainfall followed by two years of drought. This has resulted in significantly lower than average crop production. Coupled with low commodity prices, many of our area farmers have had to alter their operations to ensure their viability. Several young families have been forced to seek employment elsewhere. Both husband and wife must have off-farm income to support the family farm. In extreme circumstances some have been forced to sell their farm or decrease their operations.

This has greatly affected our community by the closure of businesses, such as three equipment dealerships, a fertilizer processing plant, and numerous agriculture-related businesses. Our alfalfa dehydration plant, the largest in North America, usually has over 200 employees. With the present conditions they now employ approximately 140 people, with reduced employment periods and with very few full-time employees. Sales are less than half, with low prices and poor quality. Because of the lack of employment within our area, many of our youth and young families have relocated to seek better job opportunities. This has created a loss of population and services to our rural area.

I'd like to elaborate a bit on the safety net programs. Farmers have access to several voluntary farm aid programs, which include NISA, FIDP, AIDA, farm income disaster loans in Alberta, and crop insurance, and in theory those should help the average farm through a crisis. However, I don't think any of these programs were designed for the situation we are in right now.

With regard to NISA, the amount of money that can be deposited in any year is based on your farm's eligible net sales. This program makes the assumption that producers will have the money to set aside and to put into their account. Unfortunately, many producers who are trying to establish a farming unit do not have the funds available to set aside. Many producers who have been depositing the matchable portion do not have a large enough fund to do any good in such a financial crisis. In many areas this program is viewed as a retirement fund for established farmers. The younger farmers are not able to make full use of the program, because of other financial commitments and short-term debts.

• 0935

To do with the AIDA or FIDP in Alberta, in the Peace region, many producers have had four consecutive bad years due to excessive rainfall and drought and low commodity prices. Margins have been reduced drastically, and for many they are negative. Even though negative margins are put at zero, this still drastically reduces the level of support producers can receive. If commodity prices remain depressed, many producers will not qualify for any support in the future, regardless of the size and quality of crop they grow.

To talk about crop insurance, many producers express extreme frustration when asked about crop insurance. Crop insurance does not guarantee a per-acre gross revenue, even though premiums are a per-acre cost. Many producers are able to produce the guaranteed yield, which means no claim can be made, but with low commodity prices they are unable to meet their financial commitments.

The agricultural industry in the Peace region is suffering. Poor crop years combined with low commodity prices have placed many farms in severe financial difficulty. Many potential young farmers have left agriculture because there's no way to maintain viable farm units. Many farm families have acquired two off-farm incomes to support the family and the farm, because the farm is unable to support itself. Many of our established farms are surviving by using equity that was created during many years of hard work. Agricultural service centres are losing business and population. People are having to relocate.

When producers are asked what they see as solutions to the farm crisis, many answer they would like a fair price for the product they produce. Other countries are subsidizing their producers through various programs. What we need is an immediate injection of cash to help producers in the short term, and then a long-term solution such as crop insurance, if you could insure for a guaranteed gross revenue per acre.

One other thing I'd like to say is that most of the time in situations such as we have happening, there's a reaction to try to solve the problem. What we need in this country is some kind of proactive solution, something in place that would be good for the long haul.

In conclusion, if something is not done immediately, we won't have a farm crisis on our hands; it will be a total farm disaster.

Again, thank you, Mr. Chairman.

Voices: Hear, hear!

The Chair: Thank you, Mr. Dumont. We appreciate that.

Now we go to Peter Eggers.

Mr. Peter Eggers (Individual Presentation): My name is Peter Eggers, and I thank you very much that I can present here today.

I farm in the La Glace area in the county of Grande Prairie. I have three children and a wife, and we run a 2,600-acre grain farm. We are a little bit diversified into some high-generation seed production, and we're also thinking about fencing.

I present to you here my five years of average accrual accounting farm income, and I have allocated all the costs according to how they present in a farm business manner. This is not my cash accounting; this is to show you how viable my farm is at the current level. My depreciation is not taken out of the income tax statement, but it's done on the basis of 10% for machinery and 5% for buildings, and it shows a net loss over five years of $2.80.

In 1995 we had a great year. It was extraordinarily better than any other year we had experienced previously. We used the income of that year to cover up the 1996 year, which provided us with a net loss of $61.88 due to unseeded acreage on heavy land due to excessive moisture. Again, we used that same profit to cover up a loss of $37.30 in 1997. In 1998 we were in a drought situation, but we still came out with a profit of $24.71. And in 1999, we experienced a frost on 15 July, and we are coming out with a loss on this year of $33.19.

• 0940

To add to my financial statement, the grain produced from this land is loaded into producer cars, which gives my farm a savings of $10 per acre over somebody who delivers into the elevator system.

Then on page 2 I have a little graph for you, so that when you go home you can see why we do have a problem. I'm showing the years from 1999 down to 1992, and I'm taking the Canadian Wheat Board final payments for 1999 as an estimate on number one red spring and number one CPS wheat.

I also have a graph below that shows my freight rate differential between 1999 and 1992, which shows a dollar figure of $16.40 difference from 1994 to 1999. Thus if you relate our farm to a one-tonne-per-acre producer, you have to assume our cost per acre has increased by $16.40 per acre and our production on wheat, for example, has decreased by $89 per acre and by $98 per acre on CPS wheat over that period of time. So now you can picture how we as farmers have to cope with drastic price fluctuations.

My farm was debt-free until 1997, for ten years. We have been able to finance all expenditures out of our cashflow. For the future, I see that my farm will not borrow any more money to keep farming the next year. I will have to change the system of my farm, find better rotations, possibly fence my farm for livestock, and sell equipment, but I have a little problem, because my neighbour is even thinking about the same thing.

I have used my RRSPs to pay down principal payment, and I have also used my NISA to pay down principal payment to alleviate cash costs for interest payments and principal payments for the next years to come.

As a result of my grain production decrease, which is already happening to some degree, because we're also into grass seed production, it will actually mean for the people in the grain industry that there will be increased costs in the elevator system and in the rail system due to higher capital costs per unit handled, as farmers are depriving their grain of the system. Then eventually it will go down to all suppliers and processors, and it will slow the whole economy.

I had crop insurance in the years 1999, 1998, and 1997, but the crop insurance seems to be—and there was past experience—very ineffective. I have a little example here. My flax yielded only 10 bushels per acre, and the market value is $4 per bushel. That is not due to drought alone, but that's the frost effect on my crop. The crop insurance will pay me $6.45, and my premium is $4.70, which leaves me $45 of crop sales plus $1.75 in crop insurance adjustment to cover my $115-per-acre cost before depreciation is taken into consideration.

If I see any government assistance helping us farmers, it should not be individually targeted help, but it should be across the board. Also, the Canadian government should have a policy that benefits Canadian people, Canadian farmers included, and does not expect foreign government policies to solve our problems. We are spending way too much time on what other people are doing and how they are destroying our price. Part of our problem is that the outside world has no money to purchase our grain produced here at the price we need to recover our costs of production.

Also, if we think value-adding will be the salvation of our business in the prairies, it has to be brought home that value-adding will only work if the grain producer will have a cost of production for his product, because there's no use for me to value-add something I can buy cheaper from somebody else.

• 0945

Also, as a government policy, I would really look into not overemphasizing the corporate business side in dictating to the country how their affairs should be run. What I want to make you aware of is that, for example, in Germany and in the United States, three chicken producers produce 90% of the eggs consumed on the market. It has squished out every farmer-operated chicken or egg-laying operation and pushed that toward a multinational or corporate farm, because they in effect are controlling the wholesale into their marketplace. With that, they're also controlling what a farmer will receive for his product in the marketplace.

I see that already happening with the hog industry. Last week there was an announcement that an Alberta packing plant is buying into hog farms. Maybe the hog farmers think that's a saviour because they are in financial problems, but it's actually a detriment to my chance of diversifying my farm. I know now that I cannot set up a smaller hog unit on my farm because they will in effect drive down the price I will receive as an individual producer.

Another suggestion on the support level is that the crop insurance should maybe be reworked. I remember we used to have the western grain stabilization program and we had a check-off program. There was very little bureaucracy involved. I'm not sure whether that is workable, but for a long-term solution I would think it is maybe something we should look at.

I am from Europe and I know that European farmers are very dissatisfied farmers. Even though they have cash in their pockets, they are totally at the mercy of their governments. They're also totally at the mercy of laws and regulations controlling their farm business and expenditures, because the government tells them, you get the money and you do what we tell you.

Thank you very much.

The Chair: Thank you, Mr. Eggers.

Now we'll go to Rick Nagel. Welcome.

Mr. Rick Nagel (Individual Presentation): Thank you. Good morning.

My wife told me to talk slowly and clearly, so I'm going to give it my best shot. I operate a grain and oilseed and forage seed farm 30 miles north of Grand Prairie. My wife as well as my mom and dad are my equal partners in this endeavour. We farm about 2,300 acres, and our farm is one that probably falls within the category of a typical family grain farm.

It is my understanding that you are carrying out these forums in order to assess what is perceived as a crisis in some sectors of the agriculture community. I was asked if I would like to add my input to the process. I accepted, but I was a little unsure as to whether or not I was qualified to douse you with facts and figures that would help relate our particular farm situation. I'm sure you will hear many presenters give you facts and figures that point out quite clearly the financial obstacles that farmers face, in particular grain and oilseed farmers.

Having said that, the only way I can see to articulate to you the farming economy the way I see it is to explain our farm situation. My grandfather started farming on our home quarter in 1939. He cleared and broke the land that he farmed by hand and horse. I know by having said this that some eyes are already rolling back in their sockets with the thought “Here we go again, those sad farmers thinking they're entitled to a living just for being there.” Until you understand the investment that the huge majority of farmers have in their farms, we will never get any closer to stabilizing an industry that produces food—not computers, not cars, but food.

I would also like to add that you are looking at an industry that is one of the most efficient producers of top-quality food anywhere in the world.

To get back to our farm, my dad bought my grandpa's farm in 1960. One quarter section was not enough to survive on at that time. He was encouraged to expand by the government of the day, as was his dad before him. The goal of the government was growth and economic development. My dad expanded and developed his farm until I decided to go farming. My wife and I starting farming in 1982. The government of that day was saying to me, “You cannot start slowly. If you're going to go farming, you need x amount of acres and you cannot work off-farm for more than six months of the year if you want our financial assistance.”

Our farm expanded again in 1984 and in 1992 with acquisition of rental land. We purchased more land in 1997. These expansions brought our farm to a total of 2,300 acres.

The point I'm trying to make is that we've responded to market situations by becoming larger and very efficient. One immediate result is a serious population decline in our community. Whereas our land base supported 50 people in 1960, it now has to support four people in 1999. The problem is that in 1999, with the largest and highest-quality crop that our farm has ever grown, our land base will not support the four of us. This is also taking into account that all four of us work off-farm at full- and part-time jobs. Let me tell you, without the means to hire help, the farm is more work than most Canadians would tolerate as a first job, let alone a second job. There is no question that on our farm in 1999 it will not generate enough income to cover our expenses, with commodity prices at the artificially low levels they are at.

• 0950

Prior to 1999 there was always some degree of optimism to keep us fighting. Diversification was the government buzzword of the nineties. We diversified and found some short-term success, but small markets are soon flooded with overproduction. It was a short-term solution. We need long-term stability, and we thought we were slowly but surely working our way to that end. However, we've gotten a rude awakening in 1999, and I'd like to explain what I mean.

Everyone knows where they were in 1972 when Paul Henderson scored that game-winning goal. I do too. I also remember exactly where I was when President Ronald Regan announced his Farm Bill, which started and rapidly escalated the trade war between the EU and U.S.A. over farm exports. Every fear I had has come to pass in varying degrees.

The reason we have remained optimistic to this point was because of another acronym that we had become familiar with, which was GATT. This to me was the forum whereby my government was negotiating a reduction of export subsidies as well as establishing a level playing field for Canadian producers versus European and American producers. The timetable that as a producer I was looking at for this to happen was quite long. But I could accept that by 1999 major reductions in subsidies would be realized. However, along the way as a producer I would be expected to accept sacrifices as well, thus the terms GATT green and GATT red.

Agriculture programs in Canada, such as crop insurance and NISA, were GATT green. They're here. Programs such as the Crow rate, GRIP program, and just about everything we had going for us was GATT red. From my point of view, my governments, both provincial and federal, could not get rid of GATT red programs fast enough, as it was an excellent means to reduce budgets. As I educated myself to the actual situation, I found out to my surprise that my governments have reduced their support for my industry in excess of 50%, whereas my European counterparts have realized a reduction in the range of 20%. This was even more alarming to me when I found out the agreement made in the last round of GATT talks was to reduce artificial support by 30% by 1999. On one hand, the EU has not fulfilled its obligation to the GATT agreement. On the other hand, my governments have overdone reduction by 20%. The 20% over-reduction cannot be reversed due to the terms of that same agreement. What good was the GATT agreement, and what good will the new WTO agreement be when it's reached 10 years from now?

The most important question my family and I have to ask is what is next? The answer to this, we hope to hear, is that we are a valuable asset to the Canadian culture and economy and that our government will accept some of the responsibility for the situation we producers find ourselves in. As producers we have been fighting tooth and nail by every means that our will, our stamina, our imaginations, and our equity will allow. The status quo will not do for the majority of us. Our farm will not exist as it is in two years if things do not change. For some farmers that time is now or that time is rapidly approaching.

From my point of view, it is clear that the Europeans and the Americans do not want to deal with Canadian negotiators in good faith. They will always find a way out of or around any agreement they make. That leaves two options for the people of Canada, as I see it.

Number one, let grain and oilseed farmers, and any other agricultural commodity group directly and adversely affected by these international trade subsidies, go head to head on their own with the U.S.A. and Europe. That result would undoubtedly be very negative for all of us.

The second option is to support farmers at a level that reflects as closely as possible what market returns would be if there were no trade distortions. This support should be targeted only to those commodities and producers that are directly and adversely affected by these trade distortions.

The major concern I have heard with regard to supporting specific commodity programs is it will promote overproduction and possible countervail action. I do not accept that argument. I already produce everything I possibly can on every acre I possibly can. If I did not do that, I would have been gone years ago. Not only that, I have never had a problem getting my commodities to market and sold. Somebody out there in that global economy always likes to eat what I produce. All I want as a farmer is to have a chance to compete on a level playing field with my European and American colleagues.

With input costs having tripled since I started farming in 1982, the cash crunch has become extremely profound, which in turn causes stress levels to soar. Commodity prices from the 1940s and 1950s do not promote much optimism in my business. Of the two choices I see the people of Canada having to make on this issue, I would hope they would choose in favour of supporting our industry and at the same time become very aggressive in bringing about an end to these crippling trade distortions. Either way, support or not, please do not leave us hanging somewhere in the middle.

• 0955

When I hear my federal agriculture minister say that I have every right to go broke, it concerns me very much that a man, who should represent my industry to the people of Canada, would say something like that, when we, through no fault of our own, are facing such a tough battle for survival.

I thank you very much for coming to Grande Prairie and asking to hear from farmers directly. I take your presence to be a sincere quest for information concerning the viability of farming.

I do apologize if I have come across to you as being a little cynical, but for me this problem has gone on long enough without resolution. I am always very proud to live in the best country in the world. It's just a little hard to show it sometimes.

Voices: Hear, hear!

The Chair: Thank you, Mr. Nagel. I appreciate that very much.

Now we hear from Garry Smolik.

Mr. Garry Smolik (Individual Presentation): Thank you, Mr. Chairman, and I thank the committee for appearing here. We appreciate the opportunity to come and help deal with this situation. I appreciate this opportunity.

This is a very complex task that we're trying to work on. If we're to formulate a new safety net program, or farm aid program, there are many factors that must be considered to provide appropriate and effective support. I will limit my comments to the grain and oilseed sector. However, other sectors need to be considered when developing a program. For example, we cannot inhibit the livestock industry by including components that may distort production.

Undoubtedly, our trading partners will be quick to react. The same applies to the grain and oilseed industry. Other trading nations eagerly point out potential trade irritants while ignoring their own policies that depress world prices. Canada has been unable to compete with the massive subsidies doled out by the U.S. and the European Economic Community. The grain industry is changing in response to these world pressures. Unfortunately, the nations that hold the largest stocks of export grain are also the ones with the largest treasuries.

The result may be a significant depopulation of rural Canada. Therefore, we need to make some very difficult and important decisions as to the design of a program to address this situation. These decisions will ultimately play a role in the future shape of the industry and will include when and how support is delivered.

An important aspect will be also to whom the support is directed. Do we pick a certain minimum or maximum size of economic unit? Do we consider cost of production or do we use some sort of historic data? What about the complexity and cost of delivery of any new program?

The current programs are not designed to deal with prolonged income shortfalls due to successive environmental problems or price declines. Many industries are faced with price fluctuations and are able to compensate. However, the long-term decline of grain and oilseed prices over the past hundred years is unparalleled. This long-term trend indicates that in real terms market highs and lows will both be lower.

This is not an optimistic picture for the future. What this tells us is that safety nets are not a complete solution. Something else needs to be done to reverse this price trend if the cost of production continues in the opposite direction.

The government currently possesses the power to partially compensate for the serious problems in agriculture. Actions could include measures to reduce input costs as well as enhancing programs that would not require complex administration or eligibility rules and would also be reasonably equitable.

Let's deal with taxes. Farmers pay huge amounts of tax, both directly and indirectly. Fuel tax, for instance, is a considerable cost. Fuel taxes are also passed along to farmers from the transportation of grain, oilseeds, and agronomic inputs by the railroads and custom truckers. Direct fuel taxes can be removed easily, while for indirect taxes it will take more thought to prevent distortions.

Property tax. Education tax paid by farmers is disproportionate in comparison to the amount paid by urban taxpayers. There is no good reason why individual farmers should be required to pay more than urban residents for education.

User fees. More user fees for government services and regulatory agencies have been imposed. Some of these fees are direct, while others are passed on to farmers by other service providers. These fees are imposed without regard to the industry's ability to pay. The other issue is accountability. How can farmers be sure that the fees reflect costs, and what incentives are there to make sure costs are as low as they can be?

Canadian Wheat Board contingency fund. The board of directors of the Canadian Wheat Board has apparently been given the authority to deduct money from farmers to build a contingency fund. Under the circumstances we find ourselves in today, it is unbelievable that such a move would be made. The grain industry is facing some of the most difficult times ever, and the thought of yet another deduction is not acceptable, to say the least.

Technology. One other important issue where government may exert some influence is on the issue of technology. Farmers have adopted technology at a rapid pace, mainly for reasons of survival. With net returns per acre, per unit of production, falling, there are two choices: first, to produce each unit for less—and I think we've all accomplished that—and second, to add technology to produce more units.

• 1000

The cost of added technology is borne by the producer and increases production risk in the event of crop failure. However, because farmers have adopted this technology, the consumer benefits by having access to a safe, abundant, and cheap food supply. The government should investigate a method by which both farmers and consumers can share in the cost and benefits of technology.

I would like to now turn to three existing programs that attempt to assist farmers.

Crop insurance. Crop insurance is based only on production and cannot address the current situation of low commodity prices. While crop insurance should be an important component of any risk management strategy, it has suffered from low participation rates. This indicates that the program needs to be reviewed and altered to provide a more effective tool that will afford better protection for yield loss at a reasonable cost.

Agricultural income disaster assistance. The theory behind this program is sound only if the previous prices upon which any payment is based were at levels high enough to be economically viable. Under the current scenario, where prices have been declining for a number of years, the reference level for any payment also declines. Therefore, 70% of the previous margin becomes too small to be of any meaningful help. In order to be effective, the reference level needs to be large enough to sustain a viable operation. This program also cannot address multi-year, weather-related disasters. To confirm that AIDA will not help the current problem in agriculture, the NISA administration says that five out of six Canadian grain farmers will not qualify for AIDA payments this year.

NISA. The NISA program has several good qualities and should continue to make up a portion of Canadian safety nets. NISA is commodity neutral and generally available. There are ways to enhance NISA programs that would make them more effective and would not add significant administrative costs. More flexible withdrawal provisions and a method to rebuild accounts quickly, including enhanced contributions, would be substantial improvements.

In conclusion, the grain and oilseed industry is under severe pressure. The actions taken by our governments will have a significant impact on the future shape and composition of our industry. We pay North American input costs and receive third world prices for our commodities. The long-term downward price trend for our products must be reversed if the grain industry is to remain viable and continue to be an important contributor to the Canadian economy.

Thank you.

Voices: Hear, hear!

The Chair: Thank you, Mr. Smolik. Your comments are very much appreciated.

Now we go to our round of questions, with Mr. Breitkreuz for seven minutes.

Mr. Garry Breitkreuz: Thank you very much, Mr. Chairman.

I appreciate the presentations all of you have made. You have all given us a different perspective on the situation, and I appreciate that.

I would also like to express my appreciation for the good turnout here today.

Mr. Penson wants me to correct the record here. We did not vote against travel. We objected to a whirlwind tour that would not properly consult with farmers; we wanted to ensure that this tour would be effective. We've even called on the Prime Minister to come and tour the area—like he does with every other crisis—and listen to people. I do not think he could sit here and listen to some of these stories and not act upon them. I really object to the fact that we don't have more time to do this.

I have four questions for each of the witnesses.

Mr. Dumont, I understand you're a reeve. I'm sure you really have a good feel for what effect this crisis is having on your community.

I'm from Yorkton, Saskatchewan, and I know about the devastating effects it's having on my community. Some of those effects have come to light in only the last couple of weeks. Suicides are one thing that are becoming a problem.

Other than that, though, younger farmers that were renting land have given that up, and nobody wants to rent that land. That indicates to you that there are some severe problems, and some of those problems are social as well. Could you elaborate on some of those things? I appreciate what you had to say about having a program in place for the long haul. I think farmers don't see any hope. I think there's a real problem there, and I'm wondering if you could elaborate on what effect it has on your community, including businesses and so on and the spin-off effects.

Mr. Donald Dumont: Well, to start with, our area is an area of very low population. You start seeing businesses closing. All the people who worked at these businesses are leaving. They have to go somewhere else for employment.

I think out in the farming community there's a real fear that if things keep happening the way they are now, it's going to get much worse and eventually the rural areas like ours will be depopulated. There won't be any more supports for schools, hospitals, and all the necessary infrastructure. If you don't have any more population, you'll have a hard time with all these things.

• 1005

Mr. Garry Breitkreuz: Right.

Voices: Hear, hear!

Mr. Garry Breitkreuz: I think that's a good point.

I've even seen stress within families. It's not just that we're losing people in numbers; we're losing people in the sense that families are being torn apart. Children don't have parents at home any more because people are going out to find jobs, and I don't know...is that happening in your area?

Mr. Donald Dumont: It happens a lot in our area too. For most of the young couples, both work out—at least one of them does. There is a lot of stress from that point, because you're trying to run a farm and work at jobs, and at certain times of the year you're working 26 hours in a 24-hour day. It does create a lot of problems. As things go, it will keep getting worse if nothing is done.

Mr. Garry Breitkreuz: And we in Saskatchewan look at Alberta and say, hey, you guys at least have an option—you can go and find a job for the winter. We have difficulty unless we come to Alberta to do that.

Mr. Donald Dumont: I suppose you could look at it that way.

Mr. Garry Breitkreuz: Mr. Eggers, you told us about how you're using up your capital. You're selling your machinery to remain viable and you've used up your savings and so on.

Your comment that government assistance should not be individually targeted but across the board is, I think, a key comment. What would you like to see? How would you put this in place?

Mr. Peter Eggers: I seem to focus quite a lot on my farm, so I haven't quite looked into all the issues about how it should be implemented. At this point, looking at next year, I guess the issue should be addressed in some way, because we are having a cash problem going into the spring seeding, and, as I said in my presentation, I don't think I want to borrow more money, because I have already created a problem with the problem...I don't think it's a viable option to borrow more money. At this point, I have not sold machinery yet, but as—

Mr. Garry Breitkreuz: Okay.

Mr. Peter Eggers: I'm just pointing out my options as a farmer.

I should also point out that on my farm I run a fairly lean operation. I use mostly used equipment. I'm running 2,600 acres with one combine. We hire well-paid people but just one person, generally during harvest time for a brief period of time, so I don't have a whole lot of cost savings to give back to my land. I have already addressed some of my internal problems on my farm—in terms of rents—over the years, so I don't have a whole lot of options there either. So basically it could only be a cash payout across the board.

Mr. Garry Breitkreuz: Okay. Thank you.

I'm so limited in time, but I just want to touch on what everyone here said.

Garry, I appreciated the comprehensiveness. I think you're the first witness from B.C. You never mentioned that you were from B.C., but I believe you are, are you not?

Mr. Garry Smolik: Yes.

Mr. Garry Breitkreuz: I think you're the only one we've had so far from that area.

Your comment that we have to be very careful, that we must not trigger retaliation from our trading partners, is, I think, an important one, which we have to note.

I don't know what kind of program you've designed to get more of a broad-based payment out there. I appreciate very much what you said about the amount of tax farmers pay. I find that in my area farmers do not realize that possibly 50% of their inputs is hidden tax in the form of taxes of one kind or another in some of their inputs—like $300 million through fertilizer purchases alone. As for fuel, it's not just the 4¢ tax and the 10¢ tax the federal government collects; there are taxes from the fuel companies and so on that are built in there.

How would you structure some kind of compensation package to farmers that would maybe return some of the tax they collected and so on? Have you given some thought to that?

Mr. Garry Smolik: It's a difficult situation.

In regard to the direct tax we're charged when we purchase bulk fuel or fertilizer or whatever, those things can be addressed fairly easily, either through tax credits or through whatever type of system. Basically, a legislated change could easily be done. I don't think a reduction in taxes would be considered a trade-distorting situation.

When you get into the situation where the railways pay fuel tax or truckers pay fuel tax, those kinds of situations are a little bit more complex. I'm not sure how to do it in the sense that if you gave tax credits for grain transported on a railway, you would then perhaps create a situation that would be seen as distorting for the livestock producers. It would distort the price received for the grain and it would then distort the costs for the livestock producers. That one is going to take a lot more work in order to develop something that won't inhibit or distort production of other commodities.

• 1010

The Chair: Thank you very much. You're out of time.

Mr. McGuire.

Mr. Joe McGuire: Mr. Chair, just to follow up on the NISA and how effective it is as an income supplement program, when incomes drop, in B.C. about 80% of the people at the farms trigger a payment averaging around $20,000. In Alberta, it's around 75% triggered. How much more flexible can that program be without eliminating all the triggers?

You go on to say five out of six grain farmers, according to the NISA administration, are not going to qualify for AIDA payments. Who is actually benefiting from the AIDA program in these two provinces? I think the program was designed because of a precipitous drop in income on grain and hog farms. Basically, it was supplied on a whole-farm concept across the country. If five out of six grain farmers can't qualify, and if people are not really taking advantage of the NISA program, where does that leave us?

Mr. Rick Nagel: I'd like to take a stab first at the NISA part. I'll give you a scenario from my farm, since I'm baring my soul today anyway.

I had a good crop this year and it's going to be tough, but in 1997 I had a bad year. I needed that NISA trigger because I had been paying in since the beginning of the NISA program. I thought it was a good program, much the same as most of my colleagues do. But it would not trigger.

When my banker phones me up and says I'm in financial difficulty, make the payment, and I tell him the NISA program isn't going to trigger a payment until next year, he says that's nice and asks what I'm going to do in the meantime. Then he says to me that it really doesn't matter if it's sitting there anyway, because he doesn't know that I'm going to use it to pay my bills. So in order for me to even touch my NISA money, I had to quit NISA completely. To get my money out of NISA and A and B accounts, I had to quit the NISA program. Right now, I'm out of NISA because I have to be. In order to get to the money I needed, NISA would not trigger. That's what's cumbersome about NISA.

As far as the AIDA program goes, have you seen it? I don't mean to be sarcastic, but it is cumbersome and bureaucratic. It's not something a farmer is going to eat through very quickly. With what I'm going to get out of the AIDA program or the FIDP program this year, we'll probably be able to go buy a case of beer and have a drink after this. That's the problem.

Voices: Hear, hear!

The Chair: Garry, do you want to tackle that?

Mr. Garry Smolik: The only thing I would add is that we were able to trigger a NISA payment of $3,240 on our farm. Well, it costs us $100,000 just for fertilizer. The payment is insignificant. It's really not particularly helpful to cover those kinds of bills.

With AIDA, it's the same as Rick has indicated. It's a complex program. It probably has to have all these different features in it in order to address something we'd like to call a moral hazard, so that someone doesn't get something they shouldn't get. I think we probably need to forget about those kinds of programs and go back to something like a solid crop insurance program.

The GRIP was a good program in the sense that it protected both price and yield. The one downfall of the GRIP program was that it used historic data in a declining market. The historic data declines, and therefore you're only guaranteeing a lower return each and every time. You don't necessarily deal with your true costs, which, with the technology and so on, have gone up, as I've indicated.

• 1015

Mr. Joe McGuire: So if you're designing a long-term disaster program, would you actually design one, or would you just enhance NISA, enhance crop insurance and perfect what we have, rather than developing another program?

Mr. Gary Smolik: I think what I would do is make crop insurance a good solid program, one that's effective. I would also look at the NISA program and find ways to enhance it. And if those two could not deal with the situation, then I'd go to a GRIP-like program that would encompass both crop insurance and cost-of-production protection. Instead of the crop insurance, I'd go to a yield- and price-protective-type program.

Mr. Joe McGuire: Does anybody else have suggestions?

Mr. Donald Dumont: Yes, I'd like to say something about crop insurance.

I've been talking to many of the farmers in our area, and a lot of them like the idea of crop insurance that would have some of the qualities of GRIP in it. You would be insured a certain revenue per acre. With crop insurance, you pay a premium into it as an insurance plan. If you were to buy so many dollars of insurance in the spring, then in the fall you'd be guaranteed at least that return, and then you could manage that.

Mr. Peter Eggers: Maybe I could add to it. My scenario with 450 bushels of flax actually plays right into that. My insurance per bushel is higher and I'm having the yield, but because of it I'm penalized. I shouldn't have harvested the flax. I would have had more money.

The Chair: You have one minute, Mr. McGuire.

Mr. Rick Nagel: May I also respond to that? I don't know what the solution is, because I'm not in a position to be able to see all sides of the issue. From my point of view, though, a lot of these government programs are so cumbersome and bureaucratic that it makes it really hard for us to take advantage of them. We're competing against the Americans and Europeans. Why don't we find out what they're doing and beat them at their own game? That's the only solution I can come up with, because I'm not an expert in that area. We have to not worry so much about what they're going to say about us, because obviously they don't care what we say about them.

Mr. Joe McGuire: A land set-aside has been suggested in a number of our meetings. In Alberta or in the Peace country, would having a land set-aside be an option?

The Chair: We just have room for one short answer on the set-aside.

Mr. Peter Eggers: I don't think that's a really good plan. You may remember that this has happened before, and I also know they are doing it in Europe. They are paying farmers for land set-aside, which has no benefit to the environment, the people, or the land itself. By doing that, I don't think you would do us any favour.

The Chair: Thank you.

Mr. Proctor.

Mr. Dick Proctor: Thank you for four very good presentations.

Mr. Nagel, I don't know whether or not you can go home and tell your wife that you spoke slowly. From my point of view, though, you can tell her it was one of the most cogent presentations we've heard. I think your grasp of the GATT red, amber, and green programs is right on, and one that we haven't heard a whole lot about. I agree completely with your view there.

I did want to pick up on something else you have in your paper. You say:

[The] support should be targeted only to those commodities and producers that are directly and adversely affected by these trade distortions.

As we've heard as we've gone through these meetings, and as we've heard here again today, most folks are saying an acreage-based payment should be something that benefits everybody. Can you explain your rationale for coming to that conclusion?

Mr. Rick Nagel: The reason I came to that conclusion is that if I'm going to sell to my fellow Canadian citizens the fact that I need help, there's basically only one argument that I feel I can stand on in this day and age. If the global economy was fair, what would I be receiving for my product? If they were to accept that as an honest and fair expectation for me to get a return on my investment, I would live with the ups and downs of the marketplace like everyone else. But I need to know I'm getting the fair and undistorted price for my product. I can live with the world price because I know I can compete against those gentlemen, those farmers in other countries. That's why I would say to target it to those groups that are being distorted.

Mr. Dick Proctor: Okay, thanks very much.

Mr. Smolik, I think yours was one of the presentations.... We haven't heard a lot about user fees, but you did reference user fees and the fact that the Canadian government in recent years has offloaded an awful lot of things, which they used to pick up the costs for, on the backs of farmers. In no way were these decisions GATT- or international trade-related. They were simply a way for the government to reduce the deficit, to eliminate the deficit as fast as possible.

• 1020

We've been told something by people who know a lot more about it than us—at least, we hope they know a lot more about it than us. The folks who are negotiating on our behalf have told us that Canada could put back or take over some of those fees, absorb them, as opposed to putting them on the backs of farmers. Is that something that you're advocating, something that you want to see come back? Which user fees are you specifically thinking about when you include them?

Mr. Gary Smolik: I think that is something that can be done, and it wouldn't affect our relations with other countries. Part of the reason I think those user fees should be rolled back is that in many cases they're a benefit to more than just the producers. For user fees for things such as quality assurance and those types of things, everyone benefits from top quality. And there are the pilotage fees at the coast. There are a number of fees that are sort of hidden and that we actually are being asked to pick up. I think this is a good and easy step to take, as one of many.

Mr. Dick Proctor: Just to conclude, Mr. Chair, to go back to Mr. McGuire's set-aside program, I think Mr. Eggers had a chance on that. Does anybody else want to comment on whether or not they think a set-aside program could work? We're seeing so many markets with so much product. In your opinion, would it work in this region? It is something we have heard in Manitoba and Saskatchewan as a possible solution.

Mr. Gary Smolik: The one comment I would make is that, in a lot of cases, land that would be set aside would probably be the most marginal land, so the production would not necessarily decline very significantly.

Mr. Dick Proctor: Anybody else? Mr. Dumont or Mr. Nagel?

Mr. Donald Dumont: Even with these set-aside programs, I think some of them that they had in the past in the U.S. actually increased production. If you set aside summer fallow land, sometimes years after that it may do the opposite, increasing production rather than decreasing it.

Mr. Dick Proctor: So you're not in favour of it.

Mr. Rick Nagel: I agree with these gentlemen.

Mr. Dick Proctor: Okay.

The Chair: Thank you, Mr. Proctor.

Mr. Borotsik.

Mr. Rick Borotsik: Rick, again, you made a great presentation. Your wife can be proud of you. We can put an ad in the newspaper. I wish she was here.

Rick, you have a really good grasp of the GATT and of the WTO. What you didn't mention in your presentation—and I think it's important that you know this—is that there is room within the existing rules of the WTO for Canada to in fact have about $2 billion more in supports going to agriculture. It's not a matter of WTO rules; it's really a matter of the political will that we have here in the country. I say that because this is going to be a judgmental question. Certainly it's going to require an answer that maybe none of us has. I'd like to ask you why you think agriculture particularly has such a low priority right now in Canada, not just within the government but within Canada in general, within our society. Do you have any feel for that?

By the way, I saw in the paper yesterday that Mr. Martin is talking about tax reductions and roads right now. Those are okay for a municipality in terms of being the priority issues, but why didn't agriculture hit that list?

Mr. Rick Nagel: From a layman's point of view, my impression would be that, first, there aren't very many of us farmers left, so we're not a political force. Secondly, as long as the stores are full of food, I don't think we really.... We produce lots of it, and we produce good food. I think the Canadian citizen on the whole needs to realize this is a privilege mostly in this world, not a right. That, from my point of view, is why it's low.

Mr. Rick Borotsik: I think that message is getting out, but slowly right now. We have to get an educational program out there. There's no question about that.

Peter, I thank you for your financials here. As I see here, in the last four years you've had a loss in three of the four. Is that typical of the area you're in? Would that be a typical farm financial for the last four years?

Mr. Peter Eggers: Yes, it could be, but my losses are probably lower than average, I assume.

Mr. Rick Borotsik: Okay, but your neighbours—

Mr. Peter Eggers: I brought my numbers to show you what I got, and that's what I know. This is not something we're just talking about.

• 1025

One thing I would point out is that at one point there was a two-priced grain system. The Canadian people paid for Canadian production at a Canadian wage level, and for our export production we can't change it. Our buyers abroad cannot pay a price for that product.

But internally.... My wife is a registered nurse. That's why I keep farming. She earns $22 an hour. She can probably afford 1¢ more per loaf of bread. That would revert into 60¢ per bushel of wheat, for example.

Mr. Rick Borotsik: Okay. Where my question is heading to is, if this is typical, do you anticipate that a lot of the neighbours you have right now will have a great deal of difficulty putting a crop in this spring, and in fact will some of them not be able to put a crop in?

Mr. Peter Eggers: Nobody shows me their bank account as I showed you mine now—

Mr. Rick Borotsik: I know.

Mr. Peter Eggers: —but I can anticipate that there will be difficulties, because people have already had difficulty paying the crop inputs from previous years.

Mr. Rick Borotsik: That's where I was heading to. Trade credit is becoming tougher in a lot of areas. Do you find trade credit is becoming more difficult to get here?

Mr. Peter Eggers: I assume it's probably getting very difficult for some producers out there to get.

Mr. Rick Borotsik: Donald, I have a quick question for the reeve. You probably have a pretty good handle on things in the municipality.

Can you tell me about tax arrears? Have you seen any change, any increase in tax arrears, and if not for this year, what do you anticipate for next year, the year 2000, in tax arrears?

I have one other question. We have heard constantly about education taxes on farmland. What would your solution be with respect to education taxes on farmland?

Mr. Donald Dumont: Coming back to the first question, the tax arrears are presently no higher than they've ever been. But if you look at taxes as part of a farming operation, it's really very insignificant overall as an expense.

Mr. Rick Borotsik: So you don't anticipate any tax arrears or any tax problems in the year 2000?

Mr. Donald Dumont: There could be more. I won't say there won't be, but, as I say—

Mr. Rick Borotsik: I'm just giving them some ideas.

Mr. Donald Dumont: It's quite a small percentage.

Sorry, I forgot your other question.

Mr. Rick Borotsik: That's okay. I think I forgot it as well.

The Chair: You have 30 seconds.

Mr. Rick Borotsik: To remember the question? It was on education taxes.

Mr. Donald Dumont: The Province of Alberta is presently looking at education taxes on farmland. I think most municipalities would like to see it—

Mr. Rick Borotsik: Okay, but let me go back to your first answer. You just said there are no tax arrears because it's fairly insignificant in the big picture of things—

Mr. Donald Dumont: Yes.

Mr. Rick Borotsik: —yet we've heard constantly from producers that they have this real issue with education taxes on the property tax bill. So there seems to be an inconsistency there.

Mr. Donald Dumont: In some ways, there is, because what industry and farmers pay in education taxes is not exactly the same in Alberta.

Mr. Rick Borotsik: Okay, thank you.

The Chair: Thank you.

We have just enough time for me to ask one question. I want to direct it to Mr. Smolik.

In your opening remarks, you made mention of the contingency fund under Canadian Wheat Board legislation, and it is true that Bill C-4 did provide the ability to the board to set up a contingency fund if it so wished. It hasn't acted upon that legislation, and I don't know whether it will ever happen. My understanding is that it could, especially if the board went to some of the pricing options that they may have to consider. But right now they haven't acted upon it.

Under the new governance, under the new shape of the board, it now has 10 directly elected directors. Do you feel you now have direct accountability to you through those 10 directors, and if you feel strongly about any possibility of using the contingency fund, you can express your views directly to the board of directors through the elected representative?

Mr. Gary Smolik: Yes, I can express my views. My views may not necessarily be taken with any degree of value.

Regarding the board of directors, I'm not sure particularly how their hands may be tied. Because of the new governance, they may not be real certain as to the level of input the 10 directors have. In that case, we haven't seen it perform yet. It's all new, and we don't know. I just see the ability to collect this contingency fund as another possible chance to offload other government.

• 1030

The Chair: I suggest that if you know your representative, give him a ring, meet him on the street, have coffee with him, and express your concerns. If you need some information in that regard, I would hope he would be in a position to provide you with the information you need. Thank you.

Thank you, Mr. Smolik, Mr. Eggers, Mr. Dumont, and Mr. Nagel. I thought these presentations were outstanding.

Now we're going to go to a 45-minute segment. We'll be hearing from representatives of a couple of organizations. I'd like to call forward Leo Meyer and Duane Stevenson. I know Mr. Meyer, and I met Mr. Stevenson for the first time this morning.

For the benefit of the audience, I believe Mr. Meyer is wearing three hats. Knowing Leo a little bit, I'm sure that's pretty easy for him. He's here representing the Prairie Oat Growers Association, the Western Barley Growers Association, and the Rye & Triticale Association. Mr. Stevenson is here representing the Agri-Link Corporation.

We've been taking witnesses in alphabetical order. Given the fact that “m” comes before “s”, we would call Leo, but I understand there is agreement between the two of you that Mr. Stevenson would bat first. That's fine with me.

So we'll ask you to begin, Mr. Stevenson. Thank you for coming.

Mr. Duane Stevenson (Agri-Link Corporation): Thank you for the opportunity to be here today.

It's a bit different here this morning. I passed around my presentation because I'd like to present a visual, if I could. I am an agriculture consultant and I work with a lot of numbers with farmers in the Peace country, and I think this will summarize up some of the things that have been talked about already here this morning.

My topic is the gap between cost of production and safety nets on the farm and some of the issues and background here. As was said earlier today by René Blanchette and others, we certainly have had some extreme conditions here in the Peace country.

I have three charts for three different areas in the Peace. The first one is the Fairview area. What we've done here is look at the 30-year average for the growing season precipitation in millimetres. As you can see, the 30-year average is certainly a lot higher than 1998, as well as 1999.

Then we have the Falher area, and again the 30-year average, 1998 versus 1999.

Then we have the Grande Prairie area. These numbers were taken in the Grande Prairie area from our airport. As you can see, we're a little bit higher in 1998 in this particular area.

That gives us some background.

The other thing that's a key issue in the Peace, and it was said earlier, is that we had a frost on July 15, 1999, which in my territory devastated the peas. In fact, most of them are in silage or in bales at this point so we don't have peas to sell on the market. It affected the canola as well as the wheat.

Low commodity prices again were talked about and will be talked about more here today on the WTO in terms of our reduced subsidies since 1995 and the loss of the Crow, as was discussed, and the Canadian subsidies as compared to the U.S.A. and the European markets.

In regard to changes in the last five years, we certainly have seen big management changes on the farm to compete worldwide into transgenic canolas and the use of CPS wheats, which in turn cause higher input costs in order to reach those increased yields. So what we work with is an operations spreadsheet to evaluate our input costs as well as fixed costs. A number of farmers have talked about it here already this morning, and I'd like to review some numbers I've found.

I've compiled what I call the average client. We must remember here that there's no such thing as an average client, because there are going to be farmers who are far lower than what I'm talking about here and some that are far higher.

• 1035

I've found that the input costs for my clients in the Peace country, including seed, fertilizer, herbicides, hail and crop insurance, custom application for herbicides, insecticides, and fungicides—for example, a Roundup-ready canola—are in the neighbourhood of $108 per acre.

On page 3 on my spreadsheet, I go through how we arrive at our fixed costs. We go into the farmer's financial statements and use information right out of them. I've compiled some average dollars per acre for repairs, wages, living, interest, property tax, insurance, fuel—all the way through the system, including land payments and machinery payments, which we very strongly believe have to be factored in as opportunity cost or capital cost allowance, so they are truly costs here. We have a subtotal of about $105 per acre and then, with my most average farmer, we have a rent figure in there of about $9 per acre.

On page 2, just to discuss the rent for a bit, many of my clients are renting land and it is a big part of the program. It's interesting that the farmer has one vote, but many of his landlords have votes as well. I have farmers who rent from five different farmers, so in terms of voting out there, it gets a bit distorted.

On page 1, I just want to sum up the medium yield numbers of costs of production. For possibly a Roundup-ready canola, we're looking at $223 per acre for cost of production. We show a market price per bushel of $6 per bushel—which is a little optimistic at this point; it's tough to get that price right now—so a medium yield of 30 bushels per acre would lose us $43 per acre in the current situation. So we have a problem.

I guess my job is to work with farmers on break-evens, and our break-even on that particular crop is about $7.44 a bushel. On this particular farm, if the farmer were working with medium yields, we'd have a profit of about minus $5 per acre, or a loss of $11,000. The farmer is risking a total gross expense here of about $440,000 in the program to lose $11,000. This is of great concern to me, with my customers, and I guess we're looking for solutions here.

Just to take it one step further, I've put in a number that would indicate crop insurance yields. If we work with Roundup-ready canola, we can look at the chart for local crop insurance. You will all be familiar with this. This one's for the county of Grande Prairie. Canola has 70% coverage. They'd be insured for 14 bushels per acre, and the coverage would be $111 per acre for the farm. The cost for that would be about $7 per acre. I've just taken a non-indexed farmer—basically, it's just at one across the board. There's no question that the crop insurance program has indexes to improve over time.

CPS wheat would be 70%—27 bushels per acre coverage at $98 per acre. The field peas would be 18 or almost 19 bushels per acre, which would be about $68 coverage, and they cost about $4.20 an acre.

• 1040

With our spring wheat we've got coverage of 24 bushels per acre, $100 per acre of coverage, and a cost of $5.33. Oats, 48 bushels per acre, covering $70 per acre, and we have barley at 34 bushels per acre or $82 on the price side. So when we factor those numbers into the spreadsheet, potentially this farmer could lose upwards of $100 per acre in his program.

It confirms some of the comments that were made earlier this year. Definitely we have a concern that we are not covering our costs of production. I'm certainly a believer that a farmer should be able to feed his family in this process as a cost in the program.

Just to sum that up, on the back of the front page, if a farmer like the one I'm presenting of 2,200 acres lost $100, it would be a $220,000 loss, and to work in the winter to make $20,000 to $30,000 wages certainly does not affect his business. It would only feed his family. Certainly that's what farmers are doing at this point. Farming is a business and we should be looking to that.

To go back to the constructive solutions—I guess that's where I'm at here—there's one more page.

I guess the question we have is, is our government committed to agriculture in western Canada in the long term? It's my belief—and I was raised in this country as well—that definitely the farmers you're hearing from here today are committed to agriculture. I guess the concern is, do we proceed to exit farming or do we help build an infrastructure that we can have some confidence in so that our youth and the banks and suppliers will have confidence in this?

Basically, what it sums up to is this. Agriculture exports amount to $22 billion, which is one-third of the merchandise trade surplus. I think that's very significant with our government here. I think we have to build a long-term, clear vision over the next 15 years and avoid the ad hoc programs. We definitely need some long-term plans.

On the safety nets—it's not an easy program. I've listed 10 different criteria here that we have to meet. The first one is no distortion in crop patterns to fit the program; no rewards for poor management; no distortion in costs of production such as land values, rents, input costs; affordable to producers and taxpayers; easy to administer and understand; fits the WTO and NAFTA; covers all agriculture—grain, cattle and hogs; no moral hazard, which was talked about here earlier today; universal participation; and provide an exit option.

We'll move on to crop insurance. This is another issue that I definitely get a lot of input on from my clients. I understand the provincial government is organizing an agriculture summit to review the crop insurance program this winter for the crop year of 2000. I strongly recommend that the federal government get involved there as well because they are a one-third participant in that.

Just as a point of reference, only 20% of the acres in the Peace country are insured. There are more farmers than that who are insured, but in terms of acres it's very low. There's a reason for that. They would like it modified because their farming practices have changed and our input costs and yield expectations have changed as well. I guess the point is we definitely want to adjust for realistic input costs.

• 1045

What I've found is that with the expansion of farms in my area of work, where we have many farmers working with as much as what used to be three farms geographically, you could have a very good yield in one of your farm areas, but the way the crop insurance works, it's all averaged together. So a loss in one area is offset by a gain in another area.

As I was saying, the farmer premium is 38%, the federal premium is 32%, and the provincial premium is 32%, so we all have a share in this process. From what I'm hearing this morning, it definitely needs a readjustment. I guess I'm a believer that maybe we should look at it as a true insurance program, with replacement costs, a premium and a deductible, almost, as was discussed earlier, like house insurance or truck insurance. Maybe we could have a sounder foundation there. I guess overall there is a need for an overhaul on NISA, AIDA, FIDP, and crop insurance.

The NISA in my opinion is a bit distorted for young farmers. I find the younger farmers are investing in equity to buy out or to survive to be able to take over their father's farm. So it's as difficult for them to put money into NISA as it would be for an RRSP. It doesn't fit our youth, in my opinion.

Just as a closing comment, this morning Carol-Lee Eckhardt mentioned there is a resolution through the municipalities across Canada that we recognize the agriculture crisis in Canada. I commend the municipalities or our urban voters for recognizing the problem we have in agriculture. Thank you.

The Chair: Thank you, Mr. Stevenson.

I just want to remind ourselves that this was a 45-minute segment. That takes us to 11.15 a.m., and that includes any time for questions.

Welcome, Mr. Meyer.

Mr. Leo Meyer (Vice-President, Prairie Oat Growers Association; Vice-President, Western Barley Growers Association; President, Rye & Triticale Association): Thank you. Mr. Chairman, John, ladies and gentlemen of the committee—I see there are no ladies here—farm colleagues and friends, thank you for the opportunity to speak to you on behalf of the Prairie Oat Growers, Western Barley Growers, and the Rye & Triticale associations.

We also participate as the only farm member on the board of governors at the Winnipeg Commodity Exchange, a delegate to the Alberta Barley Commission, a member of the Alberta Safety Net Coalition, and a member of the executive committee of the Prairie Farm Commodity Coalition. We belong to the C-Team, an agricultural think-tank, together with the George Morris Centre in Guelph, Ontario.

As a farmer here in the Peace River region operating a family farm and growing all major crops, including our own integrated marketing and logistics system, we are well aware of the difficulties in today's agrifood business. I'd like to concur at this time with all the many good points being made this morning by my colleagues and presenters. I agree that many of us are before the edge to fall over the cliff and have serious difficulties on our farms.

Farming in this region has been severely affected by four years of weather extremes. In 1996 and 1997, too much rain and wet conditions prevented many farmers from planting their crops in time, if at all, and the little they seeded was either frosted out or snowed under. When 1998 and 1999 came around, the weather completely switched and severe drought covered a good part of the Peace River area, and many had again only little or poor crops to call their harvest. Indeed, it was a bitter harvest because by now grain prices had dropped to a 20- to 25-year low. As we speak, this trend suggests it will continue.

Markets are being hammered by international trade wars, predominantly between the United States and the European Union. However, as of late, significant issues are domestic non-production-related green and blue box support programs and the controversy over SPS issues, that being mainly the BT crop and the backlash over GMO food products.

Canada and the United States have in the meantime managed to become the discount stores for food and feed stuff by still defending and supporting the Monsanto-Dupont-Novartis-led push for GMO-style food systems around the globe.

At the WTO, we argue not to open the SPS issue box, which signals our unwillingness to reconsider our BT and GMO position. What is so sad about this is the fact that the high-quality food and feed stuff markets have now turned their backs to the ideas of GMO foods, and consumers have decided that when it comes to food and feed stuff, perception is more important than reality.

• 1050

In all this, Canada has not yet realized that what's so desperately needed is a clear Canadian agricultural vision for 2000 and beyond of where we need to go. Given the current circumstances in world agriculture, we need to establish a workable and comprehensive agriculture and food policy framework. This would signal a clear direction and re-establish some sense of security for the Canadian agriculture and food sector. Not all progress can be driven by commercial interests alone.

Brazil, one of the largest food giants in the world, has decided to implement a non-GMO-based food production and logistical system and will make significant efforts to provide its farmers with meaningful loans and additional financial backing to offset lower but higher-quality yields with better prices in the future and to bridge the temporary income gap at the moment.

When it comes to food, a nation's vital interests are at stake. Clear visions are needed.

In sharp contrast with Europe, Japan, Brazil, and others, we North Americans are so blessed with often too much of the most important essentials that we cannot comprehend how it ever could be different. A healthy food and agriculture system is not only about production but also much more about stewardship of the land, sustainability, environmental considerations, and respect for such other inhabitants of our land as wildlife, including creatures that cannot be seen with the naked eye.

The sooner we begin to recognize and to see those different and most important aspects of agriculture, the sooner the overall perspectives will shift. The multi-functionality of agriculture is where significant support and goodwill from those not directly engaged in the food business in the future will come from. In other words, the future consumers are prepared to pay extra for a system that comprises those factors mentioned but discounts products that disregard those basic principles.

If food is produced in the BT and GMO systems, or meats are hormone-treated, then the food must be labelled and it be made clear that the consumers have a choice.

Those are the issues, in my opinion, when it comes to food and agriculture in the new millennium. I just needed to establish a platform to specifically talk about safety net systems in Canada.

First, as a concept, the idea of creating a program that guides the aid to those in greatest need is, from a government perspective, the most defendable and justifiable way to deliver a support program. In theory, the AIDA and FIDP programs should do that. As a member of the Alberta Safety Net Coalition, we have supported that in the past.

There are some other significant things we could do that would have an immediate impact on the cost side of many operations by simply making some regulatory and system changes, increasing efficiencies, and giving more marketing choices and risk management abilities to farmers.

We must reform the overall logistical management and marketing systems in Canada. The Estey-Kroeger recommendations must be implemented as quickly as possible, and competition with liabilities must replace the current system of finger-pointing and farmers paying for somebody else's shortcomings. This would only be the beginning. Further dramatic changes in this commercial, contractual arrangement would follow very quickly.

Taxes on inputs and different levels of government, property, and education taxes should all be reassessed because of their burden on the fewer and fewer people living in rural areas and on the agriculture and food industry overall.

An open-minded position at the current WTO round would go a long way toward dealing with many global issues affecting us at home here in Canada. The overall safety net envelope should be developed with those mentioned regulatory and legislative changes. Together, these would significantly change the income situation in agriculture.

Such components as crop insurance and NISA need to be re-evaluated and adjusted. Crop insurance must be fundamentally changed and reflect much more the true costs of production and also the different management systems applied in agriculture today.

Yield cannot be the only measurement for insurance levels. The way we treat our soils and our level of environmental stewardship need to be factored into the current system that comes from many years ago and is outdated.

The NISA account should not be used as an integral part of the safety net envelope. The view of keeping NISA as a retirement fund is understandable. However, if money is available in NISA, and farmers are not willing to withdraw those funds but are asking for new aid programs, then that is not acceptable. Only if participants have exhausted their current available programs should additional support perhaps be considered. If that can be measured, then in those cases new support programs should be developed.

• 1055

The latest changes to AIDA and FIDP have made both programs non-compatible, as they had been before the changes were made. Unfortunately, it is difficult to understand why more cooperation between Alberta and the federal government was not possible before announcements of the latest changes were made. It's fair to say that in both programs the changes have made things even more complicated, and many farmers are shaking their heads.

One needs to ask why we need this level of administration for a farm program. As we speak, forms for the changed AIDA program are still not available, and help is a long way away from reaching the many farm families in need.

Announcements seem to be made long before the administration infrastructure is in place. Agriculture ministers and government officials are meeting in Toronto at the moment. I hope they realize that things in program delivery have to be changed. If nothing is done and the status quo persists, you will not know the face of Canadian agriculture within two to five years down the road. Young people will see no reason to come into agriculture in the face of seeing their parents struggle to meet daily needs and hearing all the negativity in media and their communities.

I appeal to you all to quit talking and take meaningful action. The time is now, at the dawn of the new millennium. Farm families, the people in agriculture and agrifood, are watching and waiting in hope and desperation for direction.

Thank you for your attention.

Voices: Hear, hear!

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

We have about 17 minutes, which means we have about four minutes for each party.

Mr. Penson, you have the first four minutes.

Mr. Charlie Penson: Thank you.

I'd like to thank Leo and Duane for presenting this morning. From the comments made earlier, along with the comments you've made, I think the stage is set here.

Duane, you asked whether government is committed to agriculture. I would expand far beyond that to ask whether the Canadian public is committed to having an agriculture industry in Canada.

Canadians are paying 9% of their disposable income on food. It's one of the lowest in the entire world. A lot of people are making a lot of money out of agriculture, but just not farmers.

Even this year, for example, there were farm demonstrations held in Regina, the cornerstone of agriculture in Canada, and not a lot of people were supportive. They were saying, you know, if these farmers can drive their $250,000 combines down the road, then what are they doing? Man, they even have air conditioning in those combines, and radios.

That's the kind of problem we're facing. Right now we have food that can be bought more cheaply from other countries. The European Union is sending canola into eastern Canada cheaper than we can supply it. Export enhancement barley that is coming from the United States into feedlots in southern Alberta is cheaper than Canadian barley.

It seems to me we have a problem that is very difficult to address. Is Canadian agriculture needed or not? I would suggest it is, very much so, because down the road, when this cheaper food may not be entering if our exchange rate changes significantly, and we've lost an entire generation of farmers, then my God, the Canadian public will ask why they aren't there, and what happened to them. That's the kind of time delay we're facing.

How do we get to the public on this issue and put in place the programs we need to ride through these tough times until some resolution to the long-term problems with European subsidies can be addressed? Do you have any help for us there?

Somebody suggested earlier that there are now 380,000 farmers in Canada out of a population of about 30 million people. That's the challenge we're facing. Anything you could do to help us with that issue is going to be needed, I think.

Mr. Duane Stevenson: That a tough one, and I'm not sure I have the answer.

As I was saying earlier, the farmers' vote is a very small one. Even on the farm it is. As I was saying, he's renting land from other farmers who potentially are voting. We've done a very poor job of educating our taxpayers as to the importance of agriculture. I think we definitely have to focus on that, there's no question.

• 1100

So there's a lot of work to be done in that area.

Mr. Charlie Penson: Leo, do you have anything to add?

Mr. Leo Meyer: Thank you, Charlie, for that question. I don't know if I'll be able to answer it in any way that's easy, but I do think one of the problems in Canada and in the United States certainly has been that agriculture has purely and only been related to production. I think that's where the problem lies.

We must realize that we're doing a heck of a lot more than just producing crops. I mean, we're maintaining the landscape. We're there for the people, too, who drive out from Toronto. I was there recently, and you have to drive an hour and a half or so to get out of that city. You think it's all city, by the way, if you're there.

If we can bring home to the people how significant the agricultural system is to their society, then in essence, ladies and gentlemen, I would go so far as to say the nation wouldn't argue about whether they needed an agriculture system any more than they wouldn't argue as to whether they needed a defence system, or an army, for security. Of course, that's a fundamental thing that you see being addressed in Europe.

I believe we're at the stage now that Europe was at about twenty years ago. Europe has addressed this, and I believe we can't get around it. We have to begin to talk about that. I think there will be a lot of support on that point, as I said, from those who are not necessarily directly engaged in agriculture.

The Chair: Thank you very much.

Mr. McGuire.

Mr. Joe McGuire: Thank you, Mr. Chairman.

Duane, I think you're the first person who's ever ventured close to suggesting there might be a transition program required. There was one previously.

It was done away with in 1995, Mr. Chairman, is that right? It was a transition program available to exit farmers out of the...?

The Chair: Yes.

Mr. Joe McGuire: Another presenter earlier was saying there were fifty people in his district in 1960, and now there are four. I mean, farmers have become so efficient at producing food, and I guess in bigger, more efficient units, that there's not really that many more people left to exit. The value of the program would be mainly geared to older farmers who are looking to leave.

But you know what? One of the problems we have is that farmers can't make a living without working off the farm. In a period of low commodity prices, even the off-farm income is not enough, in a lot of cases, to cover expenses.

Where is North America going? If we keep going down this path—and I know Leo has some concerns about that—and if all these trends continue, where do we end up?

Mr. Duane Stevenson: Well, it's not very far away. I'm working with quite a number of farmers in Peace country here, and I'm struggling hard to attract youth, or the sons of these farmers, to get involved with dad's operation. The only alternative is to rent the land out or to have an equipment auction.

It hits pretty close to home for me. I used to be in the fertilizer business, and six of my key customers, right within five miles of Grand Prairie here, have decided to exit agriculture. It changes things. The youth are not interested in renting that land. They can't possibly operate or get the operating line to rent that land.

So it's coming into a problem, there's no question, if this trend continues.

Mr. Joe McGuire: Leo, do you have any views on the future of farming in North America, and where we're headed if these trends continue?

Mr. Leo Meyer: I thank you, Joe, for that.

Actually, I feel quite emotional about this. It just about overtook me when I spoke about the young people coming into agriculture, because I think that's the most important thing we have to worry about.

As it stands right now, I think it's a disaster. Duane touched on it, as did others. I mean, how can you convince bright young people to go through what most of us are facing right now? It needs to be addressed.

• 1105

While listening this morning to all the presentations, I thought that it's very seldom I've heard this unanimous type of effort. It must be mind-boggling for you people travelling around western Canada. I don't think there's anybody standing and saying, this is all off base. It's not happening. So it must be reassuring to you that in fact it is extremely serious.

I think we have to address the points I touched on. I don't have all the solutions, but I tried to touch on some points. How much can you say in eight or nine minutes?

I think what needs to happen is that some crisis management style of council has to be put together for Canadian youth. Forget about regional youth. Put a national policy together and begin to reassure the people in agriculture about what needs to happen. What's most devastating right now is that uncertainty, Mr. Chairman.

I guess I have to quit now.

The Chair: Thank you.

I just want to give a heads-up to the audience that right after this segment I'll be calling forward four farmers: Dave Hegland, Brett McFarland, Marcel Maisonneuve, and Harry Schudlo. Depending on how long the farmers speak, we may have time for one or two more. If your name wasn't heard, you could go to Marcel, who is sitting at that desk. It will all depend on how much time is used up. But we certainly will call those four farmers.

Now we'll turn to Mr. Proctor.

Mr. Dick Proctor: Thank you very much.

Mr. Stevenson, does your business represent any alfalfa dehydration processors?

Mr. Duane Stevenson: Actually, I have clients that sell to the alfalfa dehydration industry.

Mr. Dick Proctor: It's my understanding that they did everything they were told to do to diversify. They had a good operation going, and they were shipping a lot of their product to Japan. Now along comes France, I think it is, that's undercutting them by a significant amount of money, and that has effectively shut off that market. Is that a fair summary?

Mr. Duane Stevenson: I'm not a professional in that area, but I do have a client in the business in the Girouxville area, and I know that it's very depressed. We asked ourselves why we chose that option. The returns aren't there. But definitely agronomically it is a wise decision to grow alfalfa in the Peace area.

Sorry, I'm not qualified to speak on that.

Mr. Dick Proctor: Okay. I'm being told there is somebody coming up who will be able to help us.

Mr. Meyer, to you, I think of all the presentations we've listened to this week, yours is one of the only ones that has referenced non-GMO food. I just wanted to get a sense of where you're coming from personally on that and what you think this country should be doing in that regard.

Mr. Leo Meyer: Thank you, Mr. Proctor.

Obviously, I made a statement in my presentation, Mr. Chairman. It is not an easy topic, since it's touching on a lot of commercial interests. There's a lot of people in industry right now who would love to speak out, but they can't, because there is a tremendous amount of money tied up in this new technology. What's so unfortunate is that when you're in it, it's extremely difficult to get out.

Maybe what's more unfortunate is the fact that Canada completely dropped the ball on that one. We actually had no proper vision, and no clear direction was given to industry as to what we want and what we don't want.

Obviously, there are some major trading areas in the world now that are able to react because of the problems we're facing. You see it happening every day now. I pointed out that two days ago Brazil made a significant move toward beginning to say, we want to be non-GMO.

With regard to Europe, of course we know about that issue. Most people argued about Europe, Mr. Chairman, that they're using that as a trade distorting thing and it will go away. I don't believe that.

• 1110

When it comes to food, I think it's great that the consumers out there stood up and we're hearing their voices.

What's so encouraging for me, Mr. Proctor, is that it kind of reassured me that in today's age, which is the so-called information age, in essence nobody can be so big that they can gag everybody. What you saw is a tremendous backlash because of the information available around the globe. I think this issue will only get bigger. It's not getting smaller. All those who are not going to address this are going to have great difficulty. So I hope, Mr. Proctor, that we can can come up with some type of vision as a nation where we say we want this or we want that.

But on the label issue, Mr. Chairman, I don't think we can compromise. I think the consumers want labelling.

The Chair: Thank you.

Mr. Borotsik.

Mr. Rick Borotsik: Thank you.

Leo, you brought up a number of things we haven't heard in our past presentations.

The first question is, is there any organization you're not the vice-president of?

Mr. Leo Meyer: Do you want me to answer that?

Some hon. members: Oh, oh!

Mr. Rick Borotsik: No. By the way, I only have five minutes, so, Leo, keep your answers a little shorter than you normally do.

Leo, you talked about multi-functionality, and that's the first time it has been raised by a producer. I've raised it a couple of times throughout the process. Multi-functionality is a philosophical outlook as to what agriculture really means to our society. It means the environment, with the carbon sink obviously being a very major issue. It means endangered species and habitat legislation. It means stewardship of the land, and you touched on that. The justification the Europeans use for their heavily subsidized farming is the multi-functionality component. Do you see, Leo, in the next 10, 15, or 20 years that we as Canadians have to follow more of that multi-functionality concept or philosophy? If we do that, there's obviously a cost to society. There has to be a payment by society to the farmers for providing that multi-functionality of agriculture. To what level should that cost be?

Mr. Leo Meyer: I thank you for your question, Rick.

By the way, with regard to my involvement, many of those organizations are very closely related to each other, and I firmly believe that in the future we're going to have far fewer organizations working much closer together.

Rick, I think that multi-functionality is not just a trend word. I think it would greatly benefit Canadian agriculture and most of us individual farmers and farm families if in fact we would be able to sign on to that.

Certainly, personally, and I think for most of us in this room, it touches me right to my soul when we talk about things that we are very much made up of as farmers, who are the stewards of the land—

Mr. Rick Borotsik: Leo, how do we put a value on that society payment to agriculture?

Mr. Leo Meyer: I think what you would see immediately, Rick, is a shift from the purely production type of thinking for agriculture to a more sustainable type of agriculture where yield is not going to be the only factor. I have people right now who tell me that with lower grain prices, all they do is produce more bushels to offset that income—

Mr. Rick Borotsik: Leo, I want to go to another topic. You mentioned labelling. It's going to be a hot topic when we get back to Ottawa after Christmas. You said that you are a supporter of mandatory labelling, that the consumer should have that choice. Is that a belief of most of the producers you deal with and talk to, or is there still a split where some of them suggest there should not be a labelling component?

Mr. Leo Meyer: Thank you, Rick. I think it's fair to say there's a pretty dramatic rift between industry at this point, and for obvious reasons. Those in the BT and GMO types of production systems are fearing that their crops are going to be discounted.

Mr. Rick Borotsik: McCain's just announced that they will not be using GMO potatoes. We grow a lot of potatoes. Do you not see industry perhaps going in that direction as well?

Mr. Leo Meyer: Segregation is going to be the thing of the future.

Mr. Rick Borotsik: Like Brazil?

Mr. Leo Meyer: Yes.

Mr. Rick Borotsik: Okay. Thank you.

The Chair: Thank you.

Thank you, Mr. Meyer. Thank you for speaking with so much feeling.

Thank you, Mr. Stevenson, for a very good presentation.

We're now going to go to the final 45-minute segment. A couple of additional names have come to my attention. I'd like to add the name André Harpe. We can take up to five, so it'll be André Harp, Dave Hegland, Brett McFarland, Marcel Maisonneuve, and Harry Schudlo.

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Come forward, please.

I have another couple of names, and if we can squeeze you in, we certainly will. It will depend on how much time these farmers take up. We have to conclude by 12. I'd love to stay here all day, but I suspect that the farmers of Vegreville might take some issue with that, because we have to go to Vegreville right after this is completed.

Thank you very much.

We'll go alphabetically, so that means, Mr. Harp, that you will begin. You have five to seven minutes. I leave it to you, but we just simply have to finish at 12.

Mr. André Harp (Individual Presentation): Thank you. I probably won't be that long.

My background is that I'm a partner in a family farm. We seed about an average of 3,000 acres a year.

First of all, I'd like to thank all the previous speakers. I think they were great. They outlined the problems very eloquently. Actually, I don't have very much to add to that. I just want to emphasize a few things.

I think it's time for Canada and its people to decide if they want to support agriculture in Canada, because we are definitely at a crossroads. Right now the Canadian government is letting the Canadian farmers fight the European subsidies and U.S. subsidies by themselves. They've said more than once that they cannot support the subsidies and that it's up to us to get as lean and mean as possible to support subsidies.

I'm sorry, but as individual farmers we cannot fight governments and unions of governments. It's impossible. It has to stop. It's time for the Canadian government to step up and help.

As for the short term, we are in an area of extreme drought. We've had drought situations for two years. As Duane explained, I think, we had a frost in July. Something has to be done immediately. The current programs do not help, and they're going to come too late for some people.

In the long term, what I would like to see is crop insurance being changed so that we can insure crop inputs. That way, to use the vehicle analogy, if we have a VW Beetle that's a 1960, we can insure for that, or if we have a Chevy 4x4 extended cab, we can insure for that. The premiums would be different for each individual farmer. I think that would work quite well.

One thing I'd like this committee to do is to remind Paul Martin that when he was here a month ago he promised the speaker, in a Q-and-A session at the college, that he would find more money for Canadian agriculture. In the recent headlines it looks like they're looking at tax cuts, and agriculture is not mentioned, so I would ask the individual members and you as a group to ask Paul Martin about what is being done.

In closing, farming should be a proud profession. After all, we are the breadbasket of Canada, and if you could, please help us to make it that way again.

The Chair: Thank you very much.

Voices: Hear, hear!

The Chair: Now we'll go to Dave Hegland.

Mr. Dave Hegland (Individual Presentation): Thank you, Mr. Chairman and members of this committee. I'd like to thank you very much for giving us the opportunity in the Peace River district to present our concerns about the state of agriculture in this region.

My colleagues have done an admirable job of stating what the problems are, and I don't know that I need to repeat a lot of this. I wish to just emphasize some of the issues that I feel are fairly important.

The present programs seem to be helpful for some producers. NISA is helpful if you've had a lot of good years in your background and have built up an account and can trigger it. Some grain farmers have been successful in doing this, but the ones we're forgetting or are losing out on are our beginning farmers. As has also been stated, they do not have an account built up and therefore they're not going to be able to trigger.

In Alberta, AIDA really hasn't done anything for us. As you've been told, the FIDP program kind of takes care of it for us, so we do not really participate in AIDA.

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The FIDP program also falls into the same category: it's good government public relations to have programs, but it's also good not to pay anything out. The taxpayer seems to like that. I guess for the FIDP program...until last fall we had the good fortune of having a strong lobby in Alberta and a Minister of Agriculture who went to bat for farmers in this region and made some changes. We're hopeful that those changes are positive.

Here's an example of how the FIDP program has failed us in the past. The NISA clawback provision in the FIDP program cost this region some $10 million in payouts in 1996. That was a year when there were some severe floods in areas north of here. I think it showed the flaws in the system.

Another thing I find is that the two programs, AIDA and FIDP, are both very complex. It is very difficult for producers to predict the outcome, because both are based on accrual accounting systems and most farmers work on cash systems.

My recommendations are as follows, for the following reasons. Back when we had the western grain stabilization program, we also faced low commodity prices. The small check-off at the elevator wasn't that noticeable in good years and the program seemed to help us through the low commodity prices. I recall receiving some very timely cheques from that program.

The second program that worked well on my farm was the gross revenue insurance program. We were able to insure our production costs through this program. Coupled with crop insurance, it made a package that was affordable for individual farms. In Alberta, we were fortunate to be able to buy offset to top up our coverage.

Various regions have different coverage levels, determined by production levels. Our government abandoned this program, as they determined it was flawed because of not being GATT green and because of abuse by producers. If there had been some political will to continue the program, I'm sure these areas of concern could have been modified.

This brings me to recommendations.

Return to a GRIP/western grain stabilization type of program, which would allow producers to cover their inputs. AIDA and FIDP assume that 70% coverage does this, but in reality the costs are going so high that in many cases 100% doesn't even make a break-even.

These programs do not work on back-to-back disasters with low commodity prices, so we would need something to deal with low prices for the long term. For this, I suggest an American-style loan rate system, which would go head to head with the U.S. and European subsidy programs. You've already heard a lot of the numbers about an unfair playing field. I think the current round of WTO talks has failed and that in Canada we'll have some more difficult position to compete from. If we adopt programs similar to those of our competitors, we will have fewer problems in the upcoming negotiations.

In conclusion, I can appreciate the difficult task faced by governments in making decisions to support agriculture over other sectors in the economy. I don't know any farmers who want government handouts. We would rather get our income from the market, but currently the world market is failing us due to the unfair advantages of nations with large treasuries. I hope your deliberations will conclude with programs that address the fundamental problem, which is commodity prices.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: Perhaps I should just point out, Mr. Hegland, that AIDA as such doesn't exist in Alberta.

Mr. Dave Hegland: Yes, that's right.

The Chair: It's delivered through FIDP, and 60% of the cost is federal dollars. In other words, the federal government covers 60% of that.

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Thank you.

Monsieur Maisonneuve.

Mr. Marcel Maisonneuve (Individual Presentation): Merci, monsieur le président. Thank you, Mr. Chairman.

It's a pleasure for me to be here this morning to address the members of the committee. I did have an opportunity to discuss some of the issues with you about a month ago when I was in Ottawa, but it's also a pleasure for me to be here in my own Peace country to talk to you about it.

I wonder why the political voice that has come from western Canada to the Government of Canada in the last number of years has opposed subsidies. We all oppose subsidies, but within the realm of the trade war that has been taking place since 1985, we all realize that we can't let things just happen. It's a trade war, and a war has winners and losers. There's no reason why we in western Canada in the crop industry can't be winners.

As for the level playing field, if we continue the way we're going, by the time we get there to play football, we're going to be showing up in soccer uniforms, and I think we're going to get beat up pretty badly.

I think the timing of this meeting is excellent. It follows the WTO hearings in Seattle, which amounted to very little, I understand, except for a continued dialogue in agriculture. This means we have to take a look at where we are here and perhaps have policies that address the problems we do have. The main thing is this: do we want to have a crop export sector? That's really what's at stake here. Does Canada want to continue to export grains, oilseeds, and alfalfa pellets on the world market?

Not everything is gloomy in Alberta. The livestock industry is doing extremely well. That farm income is actually going to be up this year. But there are conflicting views between commodities and commodity groups, and also between political parties.

I think it's perhaps time to take a look at the programs the United States has in terms of having a farm bill that addresses a five-year period. Take a look, within that farm bill, at the types of programs they have that support their commodities directly. It doesn't mean we have to support them to the same level, but that support should probably be delivered in a similar manner. If we're going into battle, we need to have the equipment in order to fight the battle.

But to get there, a lot of the industry does need a short-term cash injection. It's mostly in the crop sector. This part of the world is very similar to Saskatchewan in terms of being dependent on exports.

We're a lot closer to the coast than people realize. The freight rate from this area is around $29 a tonne—not much different from Edmonton. Mind you, that rate has increased from $6.68 in 1988 to $29 today. That's $23 per tonne, and on the 2 million tonnes produced out in Peace country, that amounts to $40 million. That is exactly the caution I was giving ten years and five years ago when the WGTA was being dismantled too quickly in comparison to what was happening to our competitors.

I think we need to try to maintain what we have. We need to support the value-added industries we have in this part of the world. Brett will address the individual situation of Falher, which is the largest alfalfa plant in Canada. It needs help now.

For the short term, I think you talked about a few issues. For crop insurance, there's a possibility there of indexing, of increasing the indexes back to levels that are attractive to farmers. When you hear that only 20% of the acreage is covered, there's a problem. We had a review in 1985, we talked about all the same things, and here we're back at it again, but when you have your car smashed up and get it repaired, the insurance you still have on your car isn't equal to the average of how it was when it was broken and then after, when it was fixed. I think these points were made this morning.

NISA could be made tax deductible. Government might be able to put less money in, but if farmers could use it as a tax deduction and were able to access these funds more quickly instead of going through a lot of administration, they could pull the money in and out when they feel they need it.

I don't want to go on too long, but property tax is another item that was brought up this morning. There's an imbalance in Alberta between the taxes the livestock sector pays and the taxes the grain sector pays. The grain sector basically pays the bulk of the taxes that are used to run municipalities, including the education tax. That issue is being addressed, but I don't believe it will get very far.

The FIDP-AIDA program was mentioned. If the federal government had wanted to know about the problems with the AIDA program, they could have interviewed many of us farmers that have been involved with it for two or three years. We could have explained some of the things that were going wrong. They've been addressed in an ad hoc manner to put more money out, and that's good. It's an attempt to face the problems. I think we have to let these programs run in the 1998-99 year, but for the year 2001, we have to come up with a better plan to address some of these things.

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There's another issue in Alberta. We have income tax paid by privately owned utilities, by all consumers, including our alfalfa plants and our farmers—every consumer. These are income taxes that are paid back by the consumers because of the fact that power is privately owned. That is not the case in Saskatchewan, in Ontario, or in most of the Maritimes. This amounts to $300 million a year—$200 million going to the federal government and $100 million to the provincial government. It's a tax on the use of power and utilities. It's more money than we're putting into the FIDP program, which is going to be $200 million.

In terms of subsidies, we're not going to match Europe, but this year a European canola farmer gets $420 per acre for his production of canola, $250 per acre for his wheat, and $80 to $90 on set-aside land. The alfalfa industry in Europe receives $100 per tonne; $500 million per year is spent on one small industry. So it shows you the greatness and the kind of thing we're competing with. I'm not saying we're ever going to match them, but if we're going to be in that game, we're going to have to develop some policies that are directed toward the commodities that are being hurt and not get overconcerned that we might increase the feed grain to a sector that probably can afford to pay maybe twice what it's paying today and still make money.

These are the thoughts I want to leave with you. Thank you very much.

The Chair: Thank you.

You mentioned exports. There's a particular number that sticks in my mind. Saskatchewan farmers alone grow enough wheat to feed 90 million people. There are fewer than one million people living in Saskatchewan and of course about 30 million in all of Canada. Those figures alone suggest that we do have to export.

Mr. McFarland.

Mr. Brett McFarland (Individual Presentation): Thank you, Mr. Chairman and fellow committee members.

It's very good to see that the committee has come out west. Even though it's a very quick trip, I hope the snapshot you get of the severity of this crisis is taken back to Ottawa and that in future decision-making something positive can come out of these meetings and all the suggestions.

I represent Falher Alfalfa. Falher Alfalfa was established in 1973, locating in Falher, Alberta. The company was started and is owned by a group of farmers. It is presently the largest employer in the community. The company harvests alfalfa from 60,000 acres in and around Falher.

The severe drought lowered production, reducing yields 50% in 1998 and 41% in 1999 from our long-term averages. This has caused very high operating costs, and sales have decreased by more than 50%. Low world commodity prices have compounded the situation. Selling prices are below the cost of production.

The industry is unique in that we operate as a very large farm, cutting, raking, chopping, and baling hay for the plant, then trucking the hay to the plant for pelleting, cubing, and baling. This is value-adding at its finest.

Our community has been seriously affected by the agricultural crisis. Several businesses have closed and many have reduced staff. In our own case, full-time staff is down to 25 from 50 employees three years ago. Seasonal workers have been laid off much sooner than normal.

Now is the time to support rural development. Our alfalfa company, as well as the alfalfa industry, needs the support in the short and medium term. The WTO negotiations will hopefully correct the market distortions in the future. Bridge funding is required now.

Please include our industry in AIDA or a subgroup of AIDA funding to ensure our community long-term jobs and the needed spin-off revenue for small community survival.

The Canadian alfalfa industry will present a plan next week in Ottawa. Please consider it seriously. Our industry needs the support now, as many towns and villages have only one major employer, the alfalfa plant.

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

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We're moving along quite well, and I think I'm going to take the risk of inviting two more to the table: Norman Dyck and Kit Fearon. I think we have time to hear these two witnesses, besides, of course, Mr. Schudlo.

Perhaps a couple of you could move and make chairs available, because we don't have questions in this segment; we just try to hear from as many farmers as possible.

Okay, Harry, we'll hear from you. Thank you for your patience.

Mr. Harry Schudlo (Individual Presentation): Thank you, Mr. Chairman.

I thought I was going to be fortunate enough to do a wrap-up here and be lasting.

Thank you very much to the committee for coming over to our really prosperous area. As you all know, we're living in a viable, relatively new farming area. As a grain producer, an oilseed producer, I farm 3,000 acres in the Grande Prairie area. I would like to agree with all the presenters. However, I would like to voice some solutions that as a farmer I would like you to initiate.

Gentlemen, business as usual just will not cut it any more. Problems that are created by our current level of thinking cannot be solved by the same level of thinking. If nothing else works, this may be the perfect opportunity for all of us to use common sense. The future in agriculture needs long-term solutions because of its rapid change. We need direction and action. For the last 30 years, as you see by my hair, all I witnessed was a lot of thinking and meeting.

I guess the reason all this is brought about is because of something I picked up from Stats Canada. Today we have large farms, $100,000 and over, which contribute most to our total agricultural production, representing over one-third of the farms in Canada but accounting for 82.7% of production in 1996. Farms under $100,000 represent two-thirds of the farms, and under $25,000, one-quarter of all farms in Canada. Of course, of those $25,000 and under, a large percentage of their income comes from the people renting the land.

We as farmers are as efficient as we can be, but we cannot compete with the current subsidies. In 1998, the wheat subsidies in Europe were $141 a tonne; in the U.S. they were $61 per tonne; and in Canada we had a measly $8 per tonne. In 1998, barley in the EU was $171 per tonne; in the U.S., $49 per tonne; and in Canada, a measly $5 per tonne. So let's use some common sense and reflect those figures and put them into perspective.

Young farmers see no light at the end of the tunnel. They have no reason to get involved. I have two sons-in-law and a son who are very active with me in farming. They'd like to take over. When I called a meeting in the family room, they said, Dad, if you hand over the farm, we'll sue you for child abuse.

Ladies and gentlemen, if our governments do nothing, the farming problem will go away, yet there will be no farmers. The crisis is real, and it will spread from family farms in rural areas to urban centres. Low prices are taking their toll. My concern is whether we will have service centres to fulfil our needs, because they rely very heavily on our inputs.

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Existing programs are not working. I don't belong to any of them.

We need federal government action to make significant payouts until the World Trade Organization solution kicks in, and that's going to be a long time, because I do not see the U.S. or Europe giving in; they have enough markets within their borders.

A short solution for cashflow.... Our representatives here are wondering, where are we going to get the money? There always seems to be a shortage of money for the farm groups. Where does our 7% GST go on all the food sold in all of Canada? Where does that 7% go? That should be coming back to the farmer, if you're short of money.

There's one other solution I may introduce. We definitely need a cost-of-production insurance program, which would at least generate return on our input costs.

Another solution to where we can get dollars is to reform our grain handling and transportation system. As you know, farmers always stress that any change to the grain handling and transportation system must lead to improved efficiencies and accountability, lower costs for farmers, strengthened marketing systems, equitable access to farmers, and improved customer service.

Today I have grain, the little I took off. I can't sell it. I'm keeping it. It's costing me dollars. We must have a system to optimize throughput at times of peak market demand. World prices fluctuate significantly over the year. The system must be responsive to premium opportunities. Unnecessary storage, carrying, and other system costs must be driven out. We must have discipline in our system to force efficiency. Farmers have more to gain than lose. The current system has failed us, most recently in 1996 and 1997, when delays in shipments of grain cost us $65 million.

Prices today on grain are those my dad used to get in 1948. The Kroeger recommendations should be implemented, and then the commercial system with grain farmers, $215 million annually. Half of the savings would come from a proposed legislated cap, and railway revenue of $80 million could be saved through lower elevation tariffs, reduced storage costs, less demurrage, and other innovations.

So let's get started. Let's focus on interests, not positions. Put yourself in our shoes, in the process we went through in all the farming communities throughout the three prairie provinces.

In my opinion, two experts have come through: Estey, when he had the hearings, and Kroeger, who made the present report. We have faith in our government by making those two people available to us to make the decisions. They went around, they addressed the issues, they used a process similar to what we have here today. They got farmers to talk with each other and be focused on the past and on the future. The focus was right on what is to be done. They blamed each other and jointly attacked the problem. As farmers, we clarified interests and invented options.

Farmers have been suspicious of railways and grain companies since the prairies were ploughed. Farmers always agree to disagree. However, when there is no consensus, someone has to give direction.

Our Liberal government has appointed Justice Estey and Mr. Kroeger to report the results from these farmer inputs. The Kroeger report should be implemented. It will increase the joint level of satisfaction amongst the government and the farmers. The report is fair to all parties and meets the underlying needs of all.

Thank you for giving me the opportunity to voice my concerns.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: We have fifteen minutes left, so that's seven and a half each, if you want to split the time, Norman and Kit.

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Ms. Kit Fearon (Individual Presentation): Committee members, first of all, thank you for at least coming to the Peace River country. I would like to think this trip is not just a political exercise offered as a sop to farmers. The very little time you have allowed for presentations and the very few communities visited tend to make one believe your sincerity could be questionable.

Many parts of the Peace River country of both Alberta and British Columbia have faced crop disasters four years in a row. The years 1996 and 1997 were years of extreme moisture; we were drowned out. Crops could not be harvested in 1996. Many could not be planted in 1997. Crop insurance required that you had to attempt harvest. This led to severe field damage. Fields were rutted. Underseeded crops that should have been the following year's harvest could not be harvested due to the damaged fields. Equipment was damaged in the attempts to harvest crops in the mud. The reason? No attempt equals no crop insurance.

In most areas of the Peace River country, the topsoil is very shallow. Continuous cropping is not an option. In order to maintain soil fibre content and fertility, a legume such as clover needs to be the crop every third or fourth year. The legume crop is underseeded with the grain crop in year one. In year two, the underseeded crop is harvested and the remains ploughed under. There is no harvest in year two when the field is rutted from attempted harvest in year one. Crop insurance does not allow for this crop rotation and land quality preservation system of farming.

The extreme wet of 1996 and 1997 left farmers with a severe weed problem as well as sour land. Land could not be worked and weeds went to seed, producing bumper crops of weeds the following years. Then 1998 was a drought year. In many cases 1998 was a year to return fields to a farmable condition. And 1999 was again another year of drought, with frosts in June, July, and August.

The farmers in the Peace River country formed a group and met with both provincial and federal politicians in 1996, 1997, and 1998. We provided briefs showing why the safety net programs as set up were not helping. We suggested changes that would make the programs more viable to many more farmers. Our efforts made little impression on the politicians. The Alberta government told us their hands were tied due to federal policies. The provincial people said changes could not be made by Alberta alone, as a great deal of federal money was put into crop insurance, NISA, etc., and the federal government called the shots, so to speak. Our efforts did succeed in some very minor ways with minor changes to the crop insurance program.

We did have an appointment for a personal meeting with Mr. Vanclief on July 22, 1998, at the George Dawson Inn at Dawson Creek, B.C., where we presented him with a brief. I might point out that we could not meet with Mr. Vanclief until we made a donation of $10 per person to the Liberal Party.

Voices: Oh, oh!

Ms. Kit Fearon: Mr. Vanclief accepted that brief. He also pointed out to us that he had been a farmer in southern Ontario, and when his farm started to have a cash crisis, he sold the farm and went into another line of work. We did not ask if it was politics.

Mr. Vanclief also told us that almost all forms of across-the-board farm aid were not allowed under the WTO. We asked about the efforts and the programs of the European and United States help for their farmers. Mr. Vanclief stated that all this help was not allowed under the WTO. He further stated that the Canadian government was not prepared to aid the Canadian farmer in any way, and that the Canadian government hoped the Canadian example would force other nations to abandon their farmers as well.

This meeting left us very discouraged, as it was obvious that our government had little concern for the disaster the farmers living in the west were having.

Our group, along with many other farm groups, has stated that the safety net programs as designed do not work. They are difficult to comprehend and definitely not producer-friendly.

The programs as designed are very discriminatory. For example, one farmer may be basically a cattleman growing his own forage and grain. He has suffered severe reduction in yield of these crops, but because of his livestock, he is ineligible for any aid. His loss on the seeded crops is just as great as that of his neighbour who only grows those crops.

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I will use myself as an example. Our farming operation is a certified organic operation. My husband and I raise livestock to slaughter size. We have a niche market for our product. We have done what the government says farmers should be doing. We have value-added our product.

Due to the extreme wet of 1996 and 1997 crop years, we had an almost 100% die-out of the alfalfa in our forage. This severely cut our production levels. As a result, we have to plough up, rework, and reseed all our forage and pasture lands. This cannot be done in one year as the livestock would have no pasture nor we any forage to harvest for winter feeding. It is a several-year process. There is no farm safety net program to help in this situation.

The financial situation of many farmers is in critical condition and still hemorrhaging. Too many farms are supported by at least one partner of the farm family supporting the farm by an off-farm job.

The municipality raises land taxes every year. This is to cover their costs of operation for services, etc., provided. A big cost to municipalities is wages. Most are union jobs and and pay higher than private industry offers, with a full set of paid benefits. The farmer pays for this but does not have the same opportunity of having a benefit package.

The chemical companies receive the full price asked for all input chemicals and fuels the farmer uses. In some cases, the Canadian price is far higher for the product than the same product sells for in other countries. This is because of patent protection the Canadian federal government gives to these chemical companies.

Seed costs are becoming a major expense. Again, this is because of lack of competition in the seed industry, which is controlled by these same chemical companies and again with patent protection in Canada.

Any equipment used for any form of farming is usually produced by a manufacturer paying union wages and benefits. There has been massive consolidation of the manufacture of this equipment. Again, this leads to no competition. The farmer either pays the asking price for the equipment or does without.

The banks have instituted many service charges on overdrafts if they give them to farmers. Also, the farmer cannot access many programs without audited financial statements. Again, it's a large expense.

If the price the farmer receives for his product is converted to 1930s dollar values, the farmer today is receiving less for this labour and his product than he did in what is still commonly called the Dirty Thirties.

The farmer would not object to paying taxes on his profits. The problem is that he's not making a profit. The farming community is paying federal and provincial taxes on all their input costs. Some can be recovered but many cannot.

The tax system needs to be overhauled. It is too complex and too open to different interpretations. Alberta is proposing a simple flat tax rate. The federal government should also consider this.

The entire public service, both provincial and federal, is funded by the people of Canada. This system has a built-in cost of living increase yearly, with full benefits. Farming, as it now stands, is probably one of the most stressful occupations in Canada. The average age of the farmer as of two years ago was 57 years of age and climbing. It is not an occupation that attracts young people. They are unwilling to live with the stress, regulations, low pay, and almost nil federal programs.

It is my suggestion that as the 1999 WTO talks did not achieve what the Canadian government hoped for, because Europe and the United States do and will continue to support their farmers financially, the Canadian government should immediately institute appropriate financial aid. This aid should be in the form not connected with the current AIDA program, which benefits far too few, or any other current so-called safety net program. This year there should be a one-time cash payment based on acreage to all farmers. This is a fair response. All farmers get a cash infusion. No one is left out. All western farmers have suffered reduced incomes during the last four years. At the same time, the federal and provincial governments should meet and work together to come up with a Canadian safety net program that does work.

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Farmers, both commodity and livestock producers, should be on the committee that drafts this program. It should be user-friendly and in a form that all farmers could join and, more importantly, be willing to join. When such a program is implemented it then becomes the farmer's problem if he decides not to participate. Current programs are not working. Current programs benefit far too few farmers. It needs to be decided if Canadian policy is to support and protect the family farm or whether agriculture is to be a vertically integrated industry controlled by the Cargills and Monsantos of the industrial world.

If the decision is made through lack of action to allow the industrialization of the family farm, I can promise that Canada will see the end of its cheap food policy. These industrial farms will operate at a profit. As a consequence, many rural communities will simply disappear. They're already suffering through closed small businesses, closure of schools because of a shift of population to towns, etc. Operators of the family farm tend to support local business. They are the reason rural Canadian communities thrive.

I urge every member of this committee to vote to support the continuation of the family farm, which in turn promotes the health of the rural communities. I urge you to recommend that the federal government give an immediate cash infusion to all farmers through a cultivated acreage one-time payment. I also urge you to recommend an immediate plan of action to design and institute a safety net program that works with input from all segments of the farm communities. This should include individuals as well as organizations.

I have recently been part of just such a program where players from all segments of the certified organic food production and processing industry, by consensus, designed the Canadian certified organic standard under the General Standards Board. Programs have been designed and success achieved when all players have the opportunity to participate. Don't play political games with this very real farm commodity and livestock production income crisis. Political games have caused this lack of income. I urge you to show support for the farming community by making meaningful and obtainable recommendations.

As producers we want to participate fully in the Canadian dream. We don't want to be reduced to always begging for aid that our politicians seem to feel is deserved by all sectors of industry except for the farming sector. You have the opportunity to recommend that all farmers are important to the Canadian way of life. You have the opportunity to recommend plans of action that would change the face of Canadian agriculture. Please don't fail the Canadian farmer.

Thank you.

Voices: Hear, hear!

The Chair: Thank you.

Mr. Charlie Penson: I have a point of order.

The Chair: Yes, Mr. Penson.

Mr. Charlie Penson: Mr. Chairman, I've just become aware that CTV's local affiliate would like to come in and do some filming to show the context of the crowd here today. I know it's a rule of the House of Commons standing committees not to allow that. However, I would ask unanimous consent of the committee members to allow that person to come in and get some footage.

The Chair: You're just talking about—

Mr. Charlie Penson: He tells me he needs five minutes to do some footage of the people at the meeting.

The Chair: We need unanimous consent. Is there unanimous consent?

Some hon. members: Agreed.

The Chair: Thank you.

Mr. Dyck, according to the clock we have only one minute to go. But maybe we can see if we can steal five minutes for you.

Mr. Norman Dyck (Individual Presentation): I'll start out with a couple of questions and end up with some comments.

What is the government's role in agricultural policy? Who has been served by modifying domestic agricultural policy in past years? The single-desk selling of pork, for instance, in all three provinces ended up in a disaster for pork producers. We lost the two-price wheat system, which cost us $200 million.

Who has benefited from the demise of the subsidy to tidewater of our export grain? Did the benefits of value-adding support the bottom line of primary producers as was promised? Have these policy initiatives stabilized rural infrastructure, communities and schools?

I'd like to make the point that it seems like the whole competitive ideology has run us headlong against our competitors—Europeans, Americans, and ourselves. I personally think we need to consider a permanent cover program. We are overproducing. The competitive ideology is driving us into competitive poverty. It suits the needs of the transnationals and the vertically integrated grain and food companies. I think they have directed farm policies in years past, and they are what the governments have been listening to.

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I have a couple of examples, and I think, Charlie, you brought one to mind. My memory was that some years earlier XCAN, which is an arm of Agricore now, were bringing canola from Europe into eastern Canada. I thank you for reminding us that this is happening again. We're victims of our success in being efficient producers worldwide. We're destroying each other. We're destroying each other's family farms.

If we don't stop we will have more and more vertical integration. Presently in the Peace country, Fletchers hog processors of Red Deer are buying into Peace pork. We have cargo grain, of course. We know they're into livestock slaughtering. Bizarre things are happening. For instance, Dairyworld, which had a processing plant here in Grande Prairie, now exports some milk to Edmonton, Alberta, and they ship it back up here even given how far that is. It's just crazy competition that's driving prices down, and the food processors and the international grain companies are the beneficiaries of this process.

The Kroeger report will not solve our problem. It is most ludicrous to think that. I give the example that there's not going to be competition in the railway sector. It's bizarre to consider building more than one rail system in the country. The capital costs are phenomenal.

When I flush my john in Grand Prairie here, there's only one sewer it goes down, and that makes sense. There's no need for competition there.

We need to regulate the transportation system to meet the needs of all users. We need to go into a national rail system to alleviate the over-expenditure of fossil fuels. Moving grain by truck is crazy. In the Peace country we've seen a terrible loss in grain delivery branch lines and elevators. We're going backwards into the future with that. We need to get the grain back on the rails. Take it off the highways for safety, for the environment, and for responsible use of fossil fuels. Competition is a good thing in places, but in the rail sector it has to be regulated, much like in the airline industry where we're going to see that happening.

That's about all I can say. I would like to see a permanent cover program be brought back in. I think we should take some land out of production. There's no point in overproducing and driving prices down for everybody; it's ludicrous. Thank you very much for the opportunity.

Voices: Hear, hear!

The Chair: Thank you, Mr. Dyck. I want to thank all of you for coming today. I thought your presentations were outstanding, and not only your presentations but the presentations that go back to 8.30 a.m. I think this has been three and a half productive hours. We really appreciate your time here today. I feel that we're better informed, and I wish we had more time, but we do have a meeting at 3 p.m. in Vegreville. So if we're going to get there and not disappoint those farmers, we'd better move on.

On behalf of all the committee members, thank you. This meeting is adjourned.