AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Friday, December 10, 1999

• 0929

[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): Members, we'll bring this meeting to order.

Ladies and gentlemen, on behalf of the members of the Standing Committee on Agriculture and Agri-Food of the House of Commons, I would like to say how pleased we are to be able to meet with farmers in Airdrie this morning. Yesterday we visited two centres in the good province of Alberta: Vegreville and Grande Prairie. We had very successful meetings, and of course they followed meetings in Saskatchewan and in Manitoba. This is the ninth centre we have visited since Monday.

• 0930

Our first round of witnesses are Colleen Bianchi, Robert Filkohazy, Howard Paulson, and Robert Northey.

We go alphabetically, and so we will start with you, Colleen. Good morning and welcome.

Ms. Colleen Bianchi (Individual Presentation): Good morning. Honourable agriculture committee MPs, I thank you for this opportunity to speak before you today.

I am a partner in our southern Alberta operation of mixed grain with a background in yearlings. Today the grain bins are full and prices are low, dropping to 1930 prices, and input and upkeep costs are larger than the 1930 costs. The grain can't pay for the expense of prices today.

Alberta may not have an increase of auction sales yet, not like we've heard in Saskatchewan and Manitoba, but there are in Alberta lots of producers waiting to see what 1999 brings. These producers feel and know that if the prices and especially if the yields aren't there at harvest, there would be someone else planting in the spring of 2000.

Producers are proud people, but there are beaten people in Alberta too.

The price forecast looks very grim for the next year. Rural communities are dying in western Canada. Family farmers are concerned that this is their last year. These farmers are at the end of a generation of hardworking people. The up and coming producers, the next generation, do not want the stress, the long hours, or the workloads they've seen their parents go through.

Agriculture is a primary industry. One farm provides twenty jobs directly and it generates more jobs. Input costs can be recovered by industry and services. How do we agriculture producers recoup our costs?

Canada's agriculture is an inverted pyramid. Grain producers are at the bottom end of this pyramid and they are pressured from the spinoffs of their products. The industry and the different processors seem to feel that those of us who are the actual producers are there, but they forget that they have to produce down from what we produce. Grain producers need to be on the top of the pyramid and to have the rest of the industry and processes flow from the commodity that all the world needs: basic food.

Europe and the U.S. insist on working and giving subsidies to their producers. Canada must reconsider, especially when world prices are so low. When industry is saying there is a problem this isn't a mismanagement problem or issue.

Dealerships in small rural towns are feeling the crunch. The fuel dealer in my local town looked at the cost of fuel in the 1950s and, compared to today, it has gone up 900%. He worked out grain prices for 1950 and with inflation the price of wheat should be at $10 to $12, all things being equal.

I've talked to the agriculture minister's office, and we feel that FIDP isn't addressing operations that are diversified. Accountants charge high fees for paperwork, up to $1,000, and yet sometimes no funding occurs.

We discovered that payments of tractors and combines do not count in FIDP because they're considered as bettering the farm, but custom work like custom seeding or custom cutter bills do.

When we bought our combine we looked into leasing or buying custom cutters. In 1996, when we bought the one-year-old combine, wheat was over $5 a bushel. Look at grain prices today, four years later, at how prices have dropped. That's a disaster.

Agriculture built this country, but it seems that people feel that food comes from Safeway. Canadians want a cheap food policy and they would be happy to have the corporations grow the grains. The face of rural western Canada is changing and the indicators show our producers that the politicians and consumers feel it's okay. There are many farmers who wouldn't be on the land now if it wasn't for a second income. What other industry relies on a second income to feed the family? How many other Canadians could use those jobs held by family producers?

We producers need dollars in our pockets. Give an acreage payment to us, the actual producers on the land, not the landlords. Landlords do not see the crunch as those working the land. They get the profit side already. The actual producer takes the risk and has the expenses. A payment per acre would be more fair to actual farmers and would not trigger more overproduction. This would give you better farmers. Reward producers for being good stewards of their land. Conserving the soil, grass, and wildlife is very important to family producers.

• 0935

I feel we live in a socialistic world. Farmers do not have control. Bob Rohle of the Wheat Board has said that governments must control the food supply. Our government already controls the grain in western Canada. As a producer, I do not know the business of the Wheat Board; the costs and expenses are not a factor I know anything about. I only know the Wheat Board wants me to know this agency works with my grain and my money for 18 months. That's why accountability and transparency is so important to my business.

What are the solutions? Stop having the responsibility of costs or shortfalls falling into the producers' pockets. The sea port problems costs are paid out in dermurrages. Would shoremen strike if the dermurrages came out of their own pockets instead of the farmers?

If you politicians feel there's a need for another correction, then tell us, the grain farmers. We'll move to the cities if you pay to relocate us and re-educate us. We've paid our dues. A value-added industry must be promoted and allowed to bring jobs into rural Canada. Provincial grain crop yields aren't realistic. With input costs we are paying for a tire tax of $4 a tire. The fund is huge now, and the tires are still growing.

Eliminate the education tax on agricultural land. Eliminate well sites in Alberta being taxed twice, paid by farmers and by oil and gas companies.

These are some of the costs not considered above, plus our input costs rise much faster than grain prices. The only solution is higher grain prices. Give us a dollar per bushel from the consumption tax on the liquor. The person gathering the cans from the ditches makes more than we do in a bushel of barley.

Accountability and transparency in the Wheat Board: allow a voluntary Wheat Board, the choice of using the Wheat Board or allowing producers to find their own markets. This wouldn't cost the government any dollars. Farmers don't sell under the cost of production.

Consider giving a payment so producer bills are paid. The interest is eating into those producers. Our dollars are spent in the industry, not put into the bank account. It's given to the actual producer.

We are not subsidized at all compared to Europe or the U.S. The Canadian government did not need to cut the Crow benefit and all the other subsidies. It only benefited themselves. Europe and the U.S. have made no cuts. This has only broken the western producer.

Our government must remember how the ivory towers came about and why cities grew. We need to work together or this society will die, as past history has shown us. Ultimately, our future as grain producers is in your hands, since you are the ones who change the legislation. No one else can.

In closing, I request that you wear the gold ribbon to show support of the Canadian farm family. I think you all have a handout and a gold ribbon.

Thank you very much.

The Chair: Thank you, Colleen. I'll be happy to wear the ribbon. I'm sure all members feel the same way.

Now we turn to Robert Filkohazy. Good morning, Robert.

Mr. Robert Filkohazy (Individual Presentation): Good morning. I farm at Hussar. Along with my wife, we operate a 2,200-acre farm, where we grow coarse grains, oilseeds and pulses.

With regard to the farm income problem, I think there are three main issues we need to focus on. Number one, what's causing the problem? Number two, how severe is the problem? And number three, what measures need to be taken to resolve the problem? So let's look at the cause.

I don't think there's any doubt in anyone's mind that massive subsidies in Europe and the U.S. are the primary cause of the problem. Some 60% of a European farmer's income is from subsidies. It's 40% in the U.S. and less than 10% in Canada. When their support programs are greater than our selling price, Canadian farmers are suffering the consequences.

So how severe is the problem? It appears to me the federal government does not believe the severity of the farm income problem. And I say that because there's been a tremendous amount of talk about the problem, but the remedies have been very slow and inadequate.

In the mid-seventies, going back 20 to 25 years, you could buy a half-ton truck for about $4,500, a combine for about $25,000, a pail of chemical for about $40 to $50, which was costing you $2 to $3 an acre. Purple gas sold for about 25¢ a gallon. And I could pay for it with $6 wheat and $4 barley.

• 0940

Now today the cost of a half-ton truck is about $40,000. The combine is $275,000. A 20-litre case of chemical is $200 to $400, costing you $10 to $20 an acre. Purple gas is 45¢ a litre now, which is about $2 a gallon. I have to pay for it with number three wheat at $2.24 a bushel.

Let me give you this example. Remember, my production pays my bills. In 1975 a new combine would cost me the value of about 5,000 bushels of wheat. In 1980 a new combine would cost me about 20,000 bushels of wheat. In 1996 a new combine would cost me 66,000 bushels of wheat. That same combine today, if I could even think about affording it, would cost my entire year's production off my farm.

Last week I hauled 175 tonnes of wheat to the elevator, which is about 6,500 bushels. The total value of that grain was $21,000. After deducting freight, cleaning, handling, and my grain advance, I received a cheque for $3,300, or about 50¢ a bushel. Our farm was fortunate to have an above-average crop last year. With the depressed grain prices we're still experiencing cashflow problems. The crop returns don't even come close to covering the costs of production.

We've always used the practice of deferring grain sales into the next year. In the last two or three years our farm has been losing equity because of less deferred income available for future years. So we're eroding our equity fairly fast on our farm right now.

Farms that have suffered any type of extensive crop loss would be under extreme pressure to survive, and next year doesn't look any better. In fact, I hear reports where crop prices are expected to be even lower next year. So I want you to ask yourselves if you believe low farm income is a serious problem.

So what's the resolution to some of these problems? Farmers need a program that will inject cash now—not a year from now, not six months from now, but immediately. Farmers have no faith in the AIDA program. I don't really think the federal government has any faith in it either.

What's wrong with AIDA? There are three things wrong with AIDA. First of all, there's a fairly complicated application form. The only ones making any money out of this are accountants. Whether that application is successful or not, it's costing $400 or $500 at the minimum to have your accountant look at it.

The second thing wrong with it is you gave the provinces complete authority without any guidance or requirements to handle their share of the AIDA money as they saw fit. Here in Alberta we ended up with no new money in safety nets—none, no new program. That's a real waste of federal money. And then you have the gall to tell Canadians you don't have any new money for farm aid.

How many new jobs were created in the federal government as the result of AIDA? And what's the real administrative cost of AIDA? I think this question should be answered.

Another error in AIDA is the deduction of NISA contributions. For many years now, both provincial and federal governments have been telling farmers they had better learn to look after themselves under the existing programs we have available, like crop insurance and NISA. Now farmers are being penalized by having NISA contributions deducted out of any possible AIDA or FIDP payment. That's not acceptable.

I applied for FIDP and didn't qualify. Even with some minor adjustments, we went back through it and we still don't qualify.

So what do we need to do to fix the problem? I think the most important thing for all of us to recognize is that it's not just the farms that are in the most trouble today that need help. Every farm deserves some help. Why? Because every farm is suffering from the same problem: low commodity prices.

It's time the federal government put forward something similar to the special Canadian grain program that we had in the past and base it on either acreage or production, and get the money where it's needed: on the farm.

• 0945

And let's not worry about the world trade implications of our solution, because the Americans and Europeans don't worry about that—they look after their farmers. The more complex the program, the longer it's going to take to get the money out to the farm. AIDA is a prime example. Design something that's simple, quick, and effective.

Finally, let's review some events in agriculture that are adding to the cash crunch.

By all counts, I think it's fair to say that we have an inadequate crop insurance program. Coverages are just way too low in today's cost of production.

The federal government eliminated the protection of the Crow, leaving farmers with their extremely high transportation costs relative to the value of the grain. Transportation is our single biggest cost in the value of the grain today.

The federal government keeps giving up farm programs to satisfy other countries' WTO agendas. That has to stop.

There's not nearly enough tax relief in some of our input costs, like fuel. In the past, fertilizer had some relief in it. As for the fuel tax, the money that's raised in fuel taxes isn't going to the roads anyway. I think only something like 11% of federal money out of fuel taxes is going back to the roads. Why don't you just eliminate it? You're not putting it where you said you were going to put it anyway.

The federal government is providing less agricultural services all the time. The CGC, with their shortfall, is a good example.

I want to leave you with this question: do Canadians want to have their own food produced in this country or not? Your answer will tell me whether you want farmers in this country in the future.

Thank you.

The Chair: Thank you very much, Robert.

Now we'll turn to Robert Northey. Good morning, Robert.

Mr. Robert Northey (Individual Presentation): Good morning, Mr. Chairman.

I would like to thank the committee for the opportunity to speak before you today on some of the farm issues facing farmers these days.

By now I'm sure you have heard many of the issues facing the agriculture community as you've travelled the country. Despite regional differences, the problems are still the same: low commodity prices and the inability to generate a reasonable rate of return to maintain a simple lifestyle while still trying to contribute financially to the well-being of the nation.

As a farmer, I am never happier than when I'm paying taxes. If I'm paying taxes, I know I'm being paid fairly for my products. I do not intend to spend a lot of time with figures but will try to mention a few that relate to my own operation, along with the effects that low prices will have on my farming operation.

Along with my wife, I operate a thousand-acre grain farm, modest by today's standards but capable of providing a living for the two of us when grain prices are reasonable. Our crops consist of wheat, barley, canola, and peas. We specialize in trying to grow malt barley, high protein wheat, and edible peas, not always achievable due to weather conditions—the point being that we try to add value to our products by growing what our customers want. We aim to grow crops with higher value than the traditional feed varieties. The last couple of years have brought reasonable returns and have enabled us to maintain an average return on our investment.

Let me expand on this. In 1998 we sold canola for $8.65 a bushel. In my area, 35 bushels an acre is a good crop. This would result in a gross value of around $302 an acre. With cost of production running around $200—and, gentlemen, I'm very modest with that price of $200 an acre—we were able to achieve a return of around $102 an acre. In contrast, this year a crop of 35 bushels an acre at $5.73 a bushel would gross around $200.55 an acre. Maintaining last year's costs per acre, and not allowing for any increases, you can see that we are barely able to break even. A return of 55¢ an acre does not pay many bills.

As you can see in these figures, we have suffered a drastic drop in income. I will not go into detail on the other crops and their costs and returns, but they would also show drastic drops in their ability to generate any amount of income. Due to the drastic drop in commodity prices, returns on crop input costs will be almost nil and farmers will only be able to break even—if possible.

Some of us will be able to carry forward earnings from the previous years to help offset the losses now being caused this year by low prices. The problem that arises from this is that the carry-forward balance is not enough to maintain my operation for any extended period of time. Many of my counterparts may not have this option and will fold up operations if prices don't improve in the near future.

• 0950

With continuing increases in our cost of production and ever-decreasing prices for our commodities, whether it be in the raw form or the processed form, we can no longer continue to carry the full burden of producing cheap food for the masses. As farmers, we need to achieve a decent return for our products.

In recent years, as we moved to a user-pay system, farmers have been burdened with a large number of user fees: increases in costs of weighing and inspection at the Grain Commission; freight rates to Vancouver; pilotage fees at the west coast; elevation charges at delivery points; increased cost of trucking; and technology fees on seed varieties. We're also being downloaded on to pay the ever-increasing R and D costs for new seed varieties, which everybody benefits from.

As you can see, farmers pay the entire cost, from sprout to spout. If we are to continue to bear the entire brunt of the costs, we must get a reasonable return for the products we produce, whether that be grain or livestock. I know you do not have the ability to fix the price of commodities, but your stand on trade issues and the policies you formulate can have a drastic effect on how we might better achieve a more equitable return.

With the latest failure of the WTO negotiations, as a farmer I don't look forward to any decreases in the amount of subsidies my European and U.S. counterparts are receiving. I can no longer compete with these farmers at the rate they are being subsidized. I also realize that our country cannot compete with their treasuries, but at the same time it cannot ignore the hurt caused to Canadian farmers by the actions of these two. The unwillingness of these two to reduce their support programs has caused commodity prices to spiral downward.

The standing committee can take forward from these meetings recommendations to hopefully improve the crisis that farmers are and will be facing. Here are just a few of my own recommendations. I recommend an immediate reduction of user fees, and if not that, at least a freeze on any increases or having any funding shortfalls made up by the government. In regard to fuel tax, I recommend the reinstatement of the rebate of excise tax on farm fuels and a rebate to farmers of the portion of the fuel excise tax we pay on freight rates of transporting grain—a rebate not to the railroads but the farmers.

Third, there should be an accelerated rate of depreciation on assets, like, for example, the full rate of depreciation in the year of purchase instead of the half-rate. For example, there should be 30% instead of 15%; we always seem to be taking half of what we should be getting. I put this in due to the high cost of machinery; we're talking about combines these days that run anywhere from $200,000 to $300,000, so that 15% doesn't even cover a down payment—if I could even come up with a down payment. It's important that we be able to capitalize these high-cost machines at a faster rate.

Fourth, I recommend a reinstatement of the investment tax credit on machinery, maybe starting at 10% on new and declining downward 1% a year, for up to 10 years. This would maybe help to keep the cost of machinery down while enabling some of us farmers to upgrade some of our older equipment. That may help to maintain some of our dealers in business.

Fifth, keep NISA but increase the contribution rates. It's a simple program and it seems to have benefited most producers. It may need to be fine-tuned to address major, prolonged, income disaster shortfalls. Account balances aren't high enough to cover long-term disasters.

Sixth, I cannot comment on AIDA personally, but everyone suggests that it needs major improvements. I suggest that a committee of farmers and industry people get together and try to improve this program and make the necessary changes so that it is user-friendly.

Seventh, in discussions with many of my counterparts, the same comment is made: some form of immediate cash payment is needed in the agriculture sector. An acreage-based payment to actual producers—and I will mention that again, “actual producers”—of grains and oilseeds would help to offset the hurt of low commodity prices.

These are only a few of my recommendations that I have had discussions about with farmers and related businesses in the agricultural sector.

It would appear that low incomes and low commodity prices will be with us for some time in the future. I believe it's important that the committee recognize that this is not just a farmer problem. If we remain at the present prices for our commodities it will have a ripple effect on the whole economy. It will start at the farm gate and will continue right through to the city core. There is no one sector that will be unaffected by what's taking place in rural Canada. If we are to survive this current crisis, it is necessary for the government and the agriculture sector to find long-term and beneficial solutions to the problems we face today.

Thank you, gentlemen.

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

Now we turn to Howard Paulson. Thank you for your patience, Howard. Please proceed.

Mr. Howard Paulson (Individual Presentation): Thank you, Mr. Chairman.

• 0955

I'd like to start by first thanking the Standing Committee on Agriculture and Agri-food for giving farmers and the other industry players input into the farm aid program.

As we all know, there is no easy solution to the problem producers are facing locally, regionally, and, for the most part, globally. There is a lot of producer apathy within the industry of farming. The producers are feeling that the government doesn't care, and when our own federal Minister of Agriculture states that “maybe some farmers should look at their situation and get out of the farming industry”, it does not help these feelings.

Statistics quoted show that 47% of prairie farmers are facing financial problems and that a high percentage of current farmers are thinking of quitting. What is going to happen with all this land? Who's going to farm it?

I just had the opportunity to speak to the grain marketer at the Canadian Wheat Board. The comments he made to about 40 producers were depressing, to say the least. He was predicting prices remaining the same for the next nine months. He does not see a turnaround in the near future.

This brings us to why we are here today: the farm aid program. I contacted several producers, accountants, my bank manager, and a farm implement dealer, asking them how they perceive NISA, FIDP, and AIDA programs. One comment received from all the contacts was that none of these programs deal with the real issues facing our industry: the rising cost of production—machinery, fertilizer, chemicals, fuel, transportation, and handling charges—and the constantly declining grain prices.

Most farmers and accountants think the NISA program is one of the better programs out there. The form is simple to fill out. It follows the tax return and it is not costly to have the accountants fill it out. The NISA staff are very helpful. The downside of NISA is that it was never meant to handle a number of years of price declines. Once you have triggered NISA, it's gone, and it takes a long time to rebuild. The other problem with NISA is the triggering mechanism. Your money is not readily accessible. If you could trigger your own contributions, it could help the farmers diversify, make payments, or buy land. Also, the young farmers are not making any money to contribute to their NISA fund.

The AIDA program does not get a very favourable response from anyone. The application is costly to have processed by an accountant; the cost ranges all the way up to $1,500. Very few producers who really need it are benefiting from the AIDA program. One of the comments I got from an accountant is that people who quit farming two years ago get the majority of the money.

Also, cheques are very slow in coming to producers. In Alberta, my accountants—who have filled out a lot of the forms—got only one cheque that they know of from the federal government. All the media reports we see say that this money is flowing freely. Well, where is it?

AIDA does not take into account the continuing slide of commodity prices. Some improvements have been made to the program since conception, but is still a very complicated and time-consuming process. The feedback I received was that the program should not be thrown away completely but that work should be done with producers, accountants, and bankers to improve it so that it is more responsive to the changing demands of the industry.

Producers are fed up with hearing that all farm income programs have to be green in the eyes of NAFTA. The Americans and Europeans are subsidizing to the sums of billions of dollars, not caring what this does to the world prices. Canadian farmers can compete in the world market, but only if it's a level playing field.

In conclusion, farmers need a farm aid program that puts them on the same terms as the rest of the world, a program that is simple to administer and puts money in their pockets by spring—and I emphasize those words, “by spring”, or a lot of farmers aren't going to be able to plant a crop. Also, it has to be a long-term program because the subsidies that are paid to the other countries won't be easily phased out. We're kidding ourselves if we think the other countries are going to listen to Canada. It could take five to ten years or more. There has to be a commitment made by our government that farming is an important industry contributing billions of dollars to Canada's economy.

I've included attachments of actual grain tickets from my farm, using the gross amounts of 43.606 tonnes of number one red spring wheat. In 1990, I would have received $5,082.08. This fall, for the same amount of grain, I took home $3,885.80. I've also included a farm dealership purchase report on the cost of a similarly equipped 161 hp tractor. In September 1990, the cost of this tractor was $90,400. The same tractor today retails for $163,283. These are just a few examples of the reality farmers are facing today in our global economy.

Thank you.

• 1000

The Chair: Thank you, Mr. Paulson. I appreciated your comments very much. Thanks to all the witnesses.

I just wanted to say, Howard, that I share some of your frustration. It seems that the anecdotes about AIDA payments and the reports or the stats from the government don't match. You were indicating that very few payments have been made, or at least you haven't heard about many, and yet as of yesterday there has been $68 million paid out under AIDA in the province of Alberta. So it is frustrating.

We're going to go to Mr.—

Mr. Dick Proctor (Palliser, NDP): On a point of order, I have two quick points. I think some people are having difficulty hearing because of the fan, so I'd encourage everybody to speak directly into the mike. Second, a lot of them probably don't know who each of us is, and it probably would be a good idea to introduce ourselves.

The Chair: Go ahead and introduce yourself, Dick.

Mr. Dick Proctor: Well, we always start on the government side.

The Chair: Okay, Joe, go ahead.

Mr. Joe McGuire (Egmont, Lib.): I'm parliamentary secretary to Lyle Vanclief. My riding is Egmont in Prince Edward Island.

The Chair: Thanks, Joe.

We did ask to have the fan turned off, but apparently modern technology can't turn it off. In the old days, you just had a switch.

Gary.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): I'm the member of Parliament for Yorkton—Melville in Saskatchewan.

The Chair: Talk into your mike. Sit down. That's what the mike's for.

Mr. Garry Breitkreuz: I'm one of the agriculture critics for the Reform Party.

Mr. Rick Casson (Lethbridge, Ref.): Thank you. I'm the MP from Lethbridge. I'm one of the Reform Party's agriculture critics.

If I can, Mr. Chairman, I'd like to introduce a colleague of mine from Lethbridge. Ken Nicol, MLA for Lethbridge-East, is in the audience.

The Chair: Welcome, Ken.

Mr. Rick Casson: If I'd known he was coming out today, I'd have driven with him.

We're here to listen to what has to be said, and so far it's just great.

The Chair: And there's that stranger beside you, Rick.

Mr. Myron Thompson (Wild Rose, Ref.): This is Wild Rose riding, and that's me. I'm really pleased to see a good turnout. Thank you all for coming.

Mr. Dick Proctor: I'm the New Democratic Party agriculture critic. I'm from the riding of Palliser in Saskatchewan.

The Chair: Thank you, all. I'm John Harvard, the chair of the committee. I'm from the great city of Winnipeg.

We start with Mr. Thompson, for seven minutes.

Mr. Myron Thompson: Thank you, Mr. Chairman. I just lost 30 seconds trying to turn this on.

I want to start with a couple of questions regarding your personal feelings, your human feelings. Any one of you can answer.

When you hear statements coming out of the government that if farming is too tough for you, if things aren't going as well as you like—or whatever the comments may be—then maybe you should seek retraining and move into some other occupation, how does that make you feel? Would anybody like to comment on that?

Mr. Howard Paulson: I think as farmers we have diversified, we've listened to everything, we've become very productive farmers, and I'm not willing to give up my farm. But I need to be on a level playing field with other countries. If we're on a level playing field, nobody can top the Canadian farmer. And I put it in here, when I hear my federal Minister of Agriculture say that, it really ticks me off. As farmers, we're doing the best we can, but we have no control over the situation globally, and we have no control over the situation on crop insurance—federal and provincial. We are asking for a program that helps us out, not one that's just for publicity.

Mr. Myron Thompson: Thank you.

I believe Colleen was talking about the Wheat Board, probably more than some of you.

Colleen, in 1993 they brought in an open border regarding barley—I think it was an open barley market—for a period of about six months. I had a lot of feedback that it was a very successful time for the producers of our country. Also, upon research, we found that not only was it good for the producers, but the Wheat Board had literally doubled or even tripled their efforts in moving more barley on behalf of the farms. Good times were rolling. Yet the government that came into being felt that this wasn't right, and through a court procedure managed to get it shut down.

• 1005

Do you believe there should be an open market of that nature sought, that we should look at the possibilities of it and do those kinds of things in the future?

Ms. Colleen Bianchi: Yes, I do.

I live right on the Montana border. I'm not advocating that because I want to look into the U.S. markets, but I was surprised, as you say, about how in such a small period of time the volume that the Wheat Board handled had increased. I feel if we had a more open system, our price would have to be competitive in our elevators. What I mean is that in order to compete, we'd have to get the price right at our own elevators, in our own system in Canada. If we had it more open, I think we would be able to handle it ourselves. But we also might see a more open Wheat Board; it would have to be more accountable, more transparent to us. I really don't think, if it were open, that we would end up with a big influx into the States. I think a market would be found in our own system in Canada.

You asked how we would feel if we were to leave the land. I have a 17-year-old who's always wanted to farm, and we've been told that we have a gold mine in that, that we are very lucky that we have a son who has been bred into farming. Our farm was homesteaded in 1910, and he would be the fourth generation.

We're already supporting two families, and because of the low income, I don't know how we can continue with us, let alone have him be the fourth generation. Even for next spring, we're debating about whether we should just sell and get out while we can afford to, or whether we should just mortgage everything, throw the dice and gamble that we have something for our fourth generation to continue on. The stakes are getting too high to really know, if we gamble, whether he is going to end up with anything.

Mr. Myron Thompson: Thank you.

For a final question on this round—I presume we'll have other rounds—I'm going to ask it directly to you, but I would like the audience to respond just by a show of hands, because we're not going to be able to hear from everybody.

If this AIDA thing continues, and if they tinker with it some more—I don't know what the success of that would be—if that were a choice, that you could continue to try to achieve help through AIDA, would you prefer that, or would you prefer a broad-based compensation package, like an acreage payment, brought in immediately? How many would prefer the AIDA procedure?

A voice: We would like a fair price for our grain.

Mr. Myron Thompson: What about—

Ms. Colleen Bianchi: I'd rather have an acreage payment.

Mr. Myron Thompson: Acreage payment. How about the rest of the folks here?

Ms. Colleen Bianchi: To the actual producer, not the landlord.

Mr. Myron Thompson: To the producers. Okay. Very good. Thank you for that, and I wish you all well during the season that's coming up.

It's not going to be easy. I've been there. I've been farming in my life. I know what it's like to go out. It hurts, and it's not easy to change directions in your life. I want you all to know that agriculture is the most important issue regarding industry in this cowboy's eyes, and we're going to fight hard to get it to be number one in this government you're surrounded with.

Thank you.

Ms. Colleen Bianchi: It's that way in my eyes also.

Mr. Myron Thompson: Thank you.

The Chair: Mr. McGuire.

Mr. Joe McGuire: Thank you, Mr. Chairman, and good morning, everyone.

I just want to go back over the programs we have available now. I know one of the recurring themes in Alberta, more than in any other province, is an improved crop insurance program.

A year ago the federal and provincial governments and farm organizations announced a new disaster relief program called AIDA, which is delivered in Alberta through the FIDP program. Basically, AIDA was based on Alberta's model, with the exception recently of the inclusion of negative margins, which I don't think Alberta recognizes in their proposal.

• 1010

So here we have over $1.5 billion announced for that. A year later, we still have $1 billion sitting in that program. We have a NISA program where there's almost $500 million just from Alberta. Seventy-five percent of that could be withdrawn. Only 20% actually has been withdrawn, even with the hard times. So obviously there's something wrong if people can't qualify for AIDA, and they're sitting on their NISA accounts. When Lyle goes to cabinet looking for new money, they say you have all kinds of money there. But it can't be accessed by the people who really need it.

I'm just wondering if you could tell us how these programs can be opened up to the point where people who need them can qualify for these dollars. I know you did mention some of your ideas, but maybe you could sort of flesh them out. There is money there. It's two-thirds of our safety net program where we're sitting on hundreds of millions of dollars. Something seems to be wrong here, that we have the money there, but nobody... We go from town to town, and we get the same response. Nobody seems to have been able to trigger AIDA, or only a few. Either AIDA was too small, or if it was NISA, it's older people who were qualified, and the young guys can't because they have nothing in it.

Maybe you could just give us your general response. How can we improve this for the long term? If we can get through next year, it's one thing, but in the long term we need a program there, because, as somebody mentioned, this is not going to be cured in one year anyway.

Colleen, maybe you could start it off.

Ms. Colleen Bianchi: I don't know where to start. I don't know that much about AIDA and FIDP because the accountants do it.

I don't know what the real solution is, except that it isn't working. We had a negative income last year, and by the time they did the reference margins, we ended up above it. I don't understand how it happened, except that your loan payments, like I said, don't count.

I went to a workshop in February. I don't know if I should say this out loud, but we all just figured that if we have a combine payment that doesn't count in FIDP—and I guess AIDA would be the same—then we might as well go out and cut each other's fields, because that's what the program kind of makes you feel like doing. I don't know enough about it. But you have payments, and you're trying to go, and it doesn't trigger it. I just find that really difficult to understand.

Mr. Joe McGuire: Robert.

Mr. Robert Filkohazy: Thank you. I can't speak for anyone else, but if you say the figures show you that NISA accounts could be triggered or people are not taking it out, I don't understand that. But if you have the figures, you have the figures. In my case that's not the case. We cannot trigger a NISA payment out of my account, and I've been in NISA since its inception.

Under the FIDP, one thing that I think has caused not being able to trigger that, for example, is interest, which is a huge cost in farming. Most farmers pay a lot of interest on things, and you can't deduct that as an expense. There are a number of things like that. We're very capital-intensive. Just repaying loans on land payments, machinery, things like that, takes a big chunk of cash, and it doesn't do you any good on those applications.

Mr. Joe McGuire: The figures show that $224 million out of $520 million is available for withdrawal, and only $48 million has actually been withdrawn.

Ms. Colleen Bianchi: There must be something the matter with the program.

Mr. Robert Filkohazy: One thing that comes to mind on that issue—and I know that was one of the things a lot of people were concerned about back when NISA first got started—is that it wasn't being used by younger and newer farmers because they either didn't see the wisdom in putting money into NISA or plain old didn't have it. It was well-established farmers who were putting money into NISA. Let's face it, it was a pretty good deal. If you had extra money to put in NISA and somebody's going to give you 103% back the same day you put it in, why wouldn't you do it? So maybe it's those well-established farmers who don't need to withdraw it.

• 1015

Ms. Colleen Bianchi: They already have the cashflow.

Mr. Joe McGuire: So as an income support program, it's not really hitting the right people. People are sitting on it as a retirement fund.

Howard, have you something to add?

Mr. Howard Paulson: I had a long talk with my accountant over this just in case this question came up. The firm is Young, Parkyn and McNabb. They do a lot of these programs.

One of the things you have to realize about the NISA account is just what my counterpart said. It's the older, established farmers who are sitting on NISA accounts. They're looking at getting out while the getting is good. They have nobody to come in. It's a retirement savings plan, so they can get out with this. The accountants are telling them to keep it in there. Sell your farm and then take it out. You can get the full amount out, and they can work on the tax end of it.

The reason the AIDA program doesn't work, the accountant says, is because the wrong people are getting it. The best thing to do is to get out of farming. If you had gotten out of farming two years ago, you'd collect $50,000 to $60,000 under this program. But for farmers who have had a steady decline and for about three years were in constant trouble, this program does not work, because you cannot make that 70% margin.

If you look at your statistics, it's the established farmers or the older farmers who have the NISA accounts.

I turned in my NISA account. We went into 200 head of sheep. I used it for that and to diversify, but my income had to be down to zero.

There are other ways of triggering AIDA, too. I can set up two or three different companies with my wife, and we can joggle the system and maybe then get a full payment out of AIDA. I don't want to do that.

The Chair: Thank you, Howard. We're out of time for this round.

I just wanted to say to you, Colleen, that I've never liked the word “triggered” when it comes to NISA, because I think for some it connotes that the money is actually dumped out of NISA into your bank account. Trigger just simply means you're eligible. You then have to withdraw it. Where the issue is is that in many cases, as Joe has pointed out, the triggering has taken place—in other words, the qualification has taken place—but for some reason the money hasn't been withdrawn.

Just to you, Albert, before I go to Dick, in your formal presentation at the opening you asked about the cost of the administration of AIDA. According to the government the administration charge is 3%. That's $26 million out of a total of $1.7 billion for the program.

Mr. Proctor.

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

Welcome. I appreciated your very informative presentations.

I wanted to start out with a question concerning AIDA. I think today is the first anniversary of the announcement of the program.

Just as an aside, as an opposition member of Parliament, I went home at the end of the session last year feeling we had done a relatively good stroke of work in terms of bringing the farm crisis to the attention of the government and having them act. Obviously the disappointment came later, when the details dribbled out in February.

As everybody knows, AIDA is based on the Alberta program, FIDP. This is our third meeting in Alberta, and during the previous meetings in Vegreville and Grande Prairie lots and lots of folks who spoke there said that FIDP didn't work particularly well for them.

So the question I have is, didn't we do a good enough job or didn't the officials do a good enough job of finding out what the flaws were in FIDP in order to try to correct them for the AIDA program? I know both Robert and Colleen pointed out that FIDP hadn't been all that brilliant a program here. Are there any thoughts that we should have just done our homework better or that the people who were putting the program together should have done it better?

Ms. Colleen Bianchi: I phoned Minister Stelmach's office, and I congratulated him that he snowed the rest of the country to go into AIDA. I said “It doesn't work for Alberta. How is it going to work for the rest of the country?” So that's my response to it.

Mr. Dick Proctor: Robert.

Mr. Robert Filkohazy: Something I think you have to keep in mind is that it is a disaster program. The reason FIDP hasn't worked for people who have been in more difficulty is because once you have gotten down to a point where you've actually triggered a FIDP payment, the next year your reference margin is even going to be worse, and it just reaches a point where you end up with nothing.

• 1020

We talked about crop insurance just a little bit. A new component of crop insurance is that they would for a very cheap price per acre cover you at 50%. That's worth nothing, absolutely nothing.

Mr. Dick Proctor: Yes. The other question I wanted to get into is obviously all of you in your own ways are experiencing a lot of frustration with it, lack of signals from the government about what they want you to do. I also can't help but observe at the press table here—you know, we're 15 or 20 minutes away from one of the largest media centres in western Canada—where are the television cameras? Where are the daily reporters, or the radio stations?

Haven't we got a problem here between rural and urban? Somebody said, you know, food doesn't come from Safeway. Isn't that a big part of the problem we're having, just that it doesn't seem to matter, it doesn't seem to impact? We do have a cheap food policy in this country, and people don't know or understand the depths of the problem on the farm.

Ms. Colleen Bianchi: Because of the time factor, one of my solutions was that I think the government could help and just publicize your discussions, helping to educate consumers on how important food is. Instead, when you hear these payments made, it makes it look like we're getting millions or billions of dollars, when in essence it's very few thousands, or ten thousand. It never comes out that way. I really think we need to work together to communicate the concern. In the groups I'm involved in that's one of the top things—how do you get the education to them so they realize it?

Mr. Dick Proctor: Robert.

Mr. Robert Northey: I guess one of the problems I see in getting the message forward is we are now one generation removed from the farm. That is probably one of the major problems with agriculture these days. A lot of people in the urban communities don't have hands-on contact with farms any more. I guess that's a problem. I don't know how you solve it. You don't really solve that problem.

My thoughts are the agriculture sector is a highly capitalized operation. Regardless of what you do, it's a capital-intensive operation. We do not have the ability to tack 5%, 10%, 15%, 20% for cost increases on a product at the end like we do in an urban centre. I mean, there's competition; there's no doubt you can only tack on so much. At the same time, I don't have the ability to do that. I think it's important that we realize food doesn't come from the Safeway store, but unfortunately that's where most people think it comes from because they're too far removed from it.

The Chair: Thank you very much.

Mr. Casson.

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

Thank you all for being here, whether you're presenting or just in the audience. It's encouraging to know there are so many people working toward trying to find a solution.

There have been a number of things you've talked about and some commonalities run through it. Maybe just to relay some of the information we've received at the agriculture committee, the commodity prices have been falling for 150 years, and economists say they are not going to recover very quickly, or even start to in the near future. So we've got to keep that in mind when we're looking at where we're going here.

Then there is the fact that the subsidies from the foreign countries are killing us, and their costs. In Seattle last week—Colleen, I know you were there—it was quite an experience to go through that. We've got to keep that in mind, that on the world stage the organizations we have in place to deal with some of the problems we think we need to deal with are not working.

Internally, we have user fees that are levied against us that have absolutely no relation to the cost of the service provided. It's just a number plucked out of the air. So that is something we can address pretty quickly. The transportation costs since the Crow rate has gone have been in my area 37%—37% of your grain cheque is gone immediately.

One thing we have to look at is we need a short-term bridge to get us over this hump. We have to realize the things we're fighting, the foreign subsidies and the commodity prices, are not going to recover quickly. So when we're looking at a bridge, we have to keep those things in mind.

AIDA's not the answer; we hear that wherever we go. It's tough to get it activated, to get the money out of it. The ripple effect is going through—and Colleen, your gold ribbon campaign is just showing the effect on families. And what are we doing to the small towns and the industry that supports agriculture? It just expands and expands.

• 1025

I think Colleen and maybe Robert said we are at a crossroads—and I believe this too—and we have to tell our farmers whether we are going to support the family farm or not. Let's do it, and let's not BS any more and give people false hopes with an AIDA program and then pull it back. That's not the answer. If we're going to support, let's support; if we're not, let's not. But let's not try to do both.

Ms. Colleen Bianchi: That's what we need to know.

Mr. Rick Casson: That's right. And that's going to be a very, very tough decision to make.

What I want to ask Robert Filkohazy, if I can... In your mind, what can we do or what can we present to this government to make them realize the severity of the program and so offer the solutions you feel we need to put in place right now to get us to a point where we can start making a decent return to regular commodity prices? What do we need to do—priority?

Mr. Robert Filkohazy: I guess just exactly what I talked about in some of my presentation here. I think the simplest solution is we need to have either an acreage or a production style of straight cash injections into agriculture. It has to be simple. The more difficult you make it, the longer it takes and it gets watered down. We have already found that out. Maybe 3% doesn't sound like much money, but when you add it up and it's $26 million, that's a lot of bucks somebody could have used, and it's gone.

I'm of the opinion now that the hell with the WTO trade implications. Put some money into agriculture in Canada, like everybody else is doing. We don't have any choice.

I want to leave you with something else. Just last week a young fellow in the community took on a contract job trying to sell canola seed to farmers. Pretty tough right now, but he's out there trying to do it. He comes from a local farm. When I asked him if he thought he would come back to the farm, he gave a darn good answer. He said “Well, if you were talking about any other industry and someone offered you an opportunity to get into an industry that was going to be extremely capital-intensive and you probably wouldn't make any money for maybe 10 to 15 years and you might not ever make it, would you even consider it?” And he was right on the money.

Mr. Rick Casson: Thank you.

The Chair: Thank you very much, Mr. Casson. Your five minutes are over. We have just a few seconds.

Just let me say, in finishing the round, Robert, that you had said in your formal remarks that you doubted the government believed in the severity of the problem. I understand where you're coming from on that, I really do. And yet a year ago Mr. Vanclief, the minister, did go to bat and went to cabinet and found $900 million from cabinet and got another $600 million from the provinces, for a total of $1.5 billion, to address the situation.

Now, it's quite obvious that AIDA has not worked out anywhere near as well as we had hoped. And it makes you wonder.

I want to touch on something Mr. Northey said. Mr. Northey said AIDA needs improvement and he said he suggests a committee of farmers and industry people get together to try to improve this program. Well, AIDA was worked out with farmer representatives and with industry and with government, and yet despite all that mix, it still hasn't worked out the way all of us wanted it to. So it really is frustrating.

Thank you very much. We appreciate this a lot.

Now we're going to go to our second round: Hilton Pharis, Larry Van Slyke, Glenn Norman, and Neil Wagstaff. And thank you again to our first witnesses.

Welcome, gentlemen. As per usual, we'll go in alphabetical order, and that means Mr. Norman will be first up.

• 1030

Mr. Norman, thank you for coming and for sharing your time with us. We look forward to what you have to say.

Mr. Glenn Norman (Individual Presentation): Gentlemen, basically what I have to say is about my own situation.

I'm a second-generation farmer. I come from a mixed farm. The situation for us is not what I would say is dire, by any means, because we have some diversification. We probably are in a situation in which, if it continues for another three or four years, I can see no point in keeping my capital in the farm. It just isn't going to happen.

Right now, the situation is that we've exhausted our NISA accounts in the last two years. We've taken the withdrawals out of it and there's no money left in it. It was not a bad solution while you had money, but once the money is gone, that's it. We do not qualify for AIDA. Our income has been slipping continuously. Even though we're not in a negative income situation, we have reached the trigger point for NISA and we've emptied our account. We've looked into AIDA. We spent our $100 on the accountant, and it just does not work. We in no way qualify for it because the income has been slipping.

Through all this time, the farm has been expanding. In the thirteen years that I have been farming, we've increased from four quarters to nine. At the same time, even though we now have a larger land base and a larger cattle base, my income has in fact decreased. I sometimes wonder why I even chose to farm.

There was a suggestion made by the previous speakers that we need acreage-based payment if we're going to support agriculture. I think that's probably the only way to do it. I think we need to go ahead and ignore the World Trade Organization. We've already given away our rail subsidy and every other subsidy we had, and what have our trading partners, the Americans, done? They're subsidizing at the same level. It's killing us.

The government doesn't seem to understand the situation, in my opinion. They seem to have looked at it as a short-term solution for the disaster that has occurred. Well, the disaster has been occurring constantly. It's not so much just the commodity prices. We can survive up and down commodity prices. But things like fuel have increased enormously. In the thirteen years that I've been farming, fuel has gone from a mere 10% of our expenditure to somewhere around 30%. Fertilizer has also increased. This is not a situation that can continue. As you've heard, combines are up and tractors are up, but the cost of all these particular items is in no way related to the commodity price.

Unless the government chooses to give some sort of subsidy to agriculture, I can't see us continuing. When you hear of farms of 8,000 acres and up, that's hardly a farm that they farm any more, and those guys are in as much trouble as we are.

I don't really see AIDA, the way it stands or even if it's improved, to be anything that's going to work. We don't hit the trigger point for it. You have to hit 70% of your previous three years' income. That's my understanding of it. Well, when you're on a sliding-scale income, it just doesn't happen. As far as AIDA sees, I've been looking at 1% and 2% returns on a $3 million capital investment. If it were any other business, I'd have gotten out of it years ago. It just doesn't make any sense at all to really continue in agriculture. I think the president of the Royal Bank suggested to farmers that they should get out while they still have some capital and equity left in the farm to get out with. That was probably a good suggestion.

Basically, unless the government drastically changes the way it's going to aid or help farming, I can't see it working. I cannot see agriculture really surviving as a viable operation, particularly the family farm.

That's all I have to say for now.

The Chair: You said it very well. Thank you, Mr. Norman.

Now we go to Hilton Pharis. Good morning.

• 1035

Mr. Hilton Pharis (Individual Presentation): [Woodlot Association of Alberta] Thank you, Mr. Chairman.

I'm here today representing a rather small part of the total agricultural part of Alberta, or of all of Canada for that matter. I must say that perhaps I would have a great deal of enthusiasm in endorsing what others have said here this morning, but I will keep my remarks pertaining to woodlots in Canada.

In Alberta alone, woodlots generate about $75 million at the farm gate for many, usually not too large operators. With that, I would like to present my brief.

In a letter to Mr. Glover, the president of the Woodlot Association of Alberta, dated November 24, 1999, the Honourable Ralph Goodale, Minister of Natural Resources, recognized the importance of sustainable woodlots in Canada. The association welcomes this approach from the federal government.

We believe sustainable woodlot development plays an important role in many areas, such as maintaining and improving the quality and quantity of our fresh waters; enhancing the habitat for many varieties of plants and animals; helping to ensure a supply of wood and other products for our markets; helping to provide a sustainable financial return for many landowners, landowners who are usually comparatively small operators; and, finally, playing a significant role in offsetting the impacts of greenhouse gas emissions.

In the interests of sound planning, we believe all levels of government should encourage the maintenance and expansion of sustainable woodlots. Within the federal jurisdiction, there are two areas that cause concern regarding the present rules of taxation that may cause long-term tenure of woodlots to be discouraged.

The first concern has to do with the intergenerational transfer of woodlot properties. Agricultural lands can usually be transferred to the next generation without capital gains taxes. This is often not possible with woodlot properties. The recipient of the property may decide to sell the timber or convert the land to other uses in order to satisfy the tax requirements. We believe the transfer of legitimate woodlot land should have the same tax deferral privileges as agricultural land.

The second issue is in regard to tax-deductible expenses for the development and maintenance of woodlots. To be eligible for deductions, operators must show a reasonable expectation of income within a very short timeframe. Cash return from silvicultural developments are often not realized for decades. This situation has a tendency to discourage woodlot owners from making investments for the long-term management of woodlots. We believe the long-term nature of woodlot development should be recognized in the taxation structure.

There has been a surge of interest in the development of woodlots in the last few years. Encouragement from all levels of government will be enthusiastically received by persons involved. The environmental and financial benefits to the communities involved will be substantial.

Thank you.

The Chair: Thank you, Mr. Pharis.

I find your comments very germane to these discussions. In these discussions, while the talks have been dominated by agriculture, we're also talking about rural Canada. Of course, in your case, woodlot operations are an important factor in your part of rural Canada.

Now we'll go to Larry Van Slyke. Good morning.

Mr. Larry Van Slyke (Individual Presentation): Good morning.

I hope I'm not the only one in this room who is confused. I spent the week talking to neighbours, reading about FIDP, NISA, Kroeger, and the World Trade Organization, but I didn't come to many conclusions.

It's a pleasure to participate in this forum. When we have politicians who are willing to listen, we as farmers have some obligation to tell our stories. I'd like to offer some ideas that I have about the problems in agriculture, as well as some of the views or suggestions of my neighbours. Unfortunately, we don't have the answer.

The thing that initially drew me to agriculture was supply management. My parents ran a commercial egg production unit in conjunction with grain farming. The farm has treated us well. We were able to borrow and expand, with the security of cost-of-production returns to pay off our loans.

• 1040

In 1989 we felt supply management was threatened under the trade negotiations. We sold out at that time. Presently, we farm 1,400 acres, half of it rented, growing cereals, pulses, oilseeds, and forages.

On the income crisis, I'm not going to quote statistics about grain price input costs. You have access to these and know them better than I do.

I will give you one example of personal experience. In 1976 I started farming, bought a quarter section of land and based my projections on $2 a bushel barley. Avadex at that time was $6 an acre. Twenty-four years later barley is still $2 a bushel, and Avadex is $16.50 an acre. In 1976 we already had good varieties, we had sprays and fertilizers, and our yields were good, so the productivity gains since that time haven't offset the price-cost squeeze.

As for our frustrations, we work hard, we take risks, we try new crops and techniques. I have 25 years of building equity; some of the equity my parents built up over 50 years. The farm sustains itself, or has up to this point, in terms of its cash position, but our equipment is aging. The average age of our tractors is 18 years. We are relying on off-farm investments to live on. Why should we continue to do the work and take the risk for no return?

I'm also angry that I can't encourage my nephews to farm, to continue what their great-grandfather started a hundred years ago. We have a local club dealing with direct seeding, and in anticipation of today's proceedings I asked if anybody in the group had any suggestions about safety nets and the farm income crisis. It opened a floodgate, a lot of emotion, a lot of anger directed at various agencies, some of it probably misdirected.

They're angry at the governments in their haste to comply with GATT rules that left us dangling in the wind; at the grain industry, from the wheat boards, the railroads and grain companies that have made dramatic changes—and those costs have all come back to us; at the feed and pesticide industry, which seemed to have a $16-an-acre solution for any problem; and at the meat-packing industry, which is becoming highly concentrated and vertically integrated.

How did we get to this position? Following the Uruguay Round of GATT, the expectations were for strengthening grain prices. The governments took advantage of this to slash budgets, quickly complying with GATT commitments, federal cuts, something like $4 billion since 1991-92. We've had an increase in freight rates sevenfold since 1983. There is the green revolution, high-input farming, pushing for ever-increasing yields, and this is on a world scale. Developing nations are being pushed into export agriculture to meet their loan commitments. The result is high world grain stocks and low prices, with no light on the horizon.

We were naive as a nation in our assessment of the GATT rules and implications. Neither Japan nor the U.S. will abandon their domestic agricultural policies, not primarily because of economic reasons but because of political and social reasons.

Where do we go from here? Grain companies are spending millions of dollars revamping their country's elevator systems to handle a commodity that we cannot afford to grow. It struck me that we have banks, grain companies, rail lines, fertilizer dealers, pesticide dealers, fuel companies, brokers, etc., all depending on primary producers. We have achieved record volumes of agrifood exports from this country in the last few years while farmers go broke. If these exports are so important to our balance of payments and therefore the country as a whole, and all of these other businesses are dependent on primary producers, we had better find a way to share the revenue.

What are the solutions? I said earlier I didn't have the answer. There are probably many. In the short term, Alberta recently announced enhancements to Alberta's FIDP program, and I think it's going to make it a lot more useful. They now use the best three years out of five, for example.

The Chair: Yes, we changed that.

Mr. Larry Van Slyke: These are short term, and both these programs were designed for a disaster situation.

We wondered if NISA could be topped up in the short term to alleviate the immediate problems. Some of the farmers I talked to really questioned the acreage payment approach. It's partly because we have a lot of intensive livestock in our area.

A dairy farmer, for example, may have 300 acres of land. He's probably doing quite well under the supply management sector. So would he be eligible for an acreage payment? That's just an aside.

• 1045

In the longer term, we need to review our status in terms of the World Trade Organization process. We need to defend supply management. We need to install mechanisms that follow some of the revenue from the agrifood chain back to the primary producer. For example, productivity gains in grain handling and transport have to come back to the producers. If grain companies do what they're supposed to do, they're out there to make money and they're not going to voluntarily compete.

Some of the tax dollars paid in inputs could possibly be returned to the producers. That was mentioned earlier today. Perhaps we could go back to an income tax averaging system, because we are subject to fluctuating revenues. In the long term, I'd like to see the NISA program revamped and make it the key to our support programs.

Thank you. Good luck. We could all use some.

The Chair: Thank you very much.

Now we go to Neil Wagstaff. Good morning.

Mr. Neil Wagstaff (Individual Presentation): Good morning.

My wife and I operate a grain farm near Elnora, which is about 90 miles north and east of here. I believe we are examples of the many people who have farmed part-time and worked many years to accumulate enough capital in order to get to a position where we can farm full-time. Even today, we still find it necessary to have a non-farm business supplementing our farm income.

During the past three years we've been very fortunate in our area to have had above-average crops. These are the kinds of years farmers usually depend upon to build up reserves and to reduce debt. Unfortunately, with declining commodity prices and increasing input costs and increased expenses such as freight and handling, profit margins have only just allowed us to barely make ends meet.

In 1998 and 1999 we've had to rely upon cashing in RSPs, cashing in savings, withdrawing from our NISA account, off-farm work in business. We've also had the good fortune of having some oilfield and pipeline activity on our farm, which has generated some income.

In the past few days I've spent considerable hours crunching a lot of numbers on my own farm and doing projections. The more calculating I've done, the more concerned I have become. If my crop had been an average crop in 1999, I would be in serious financial difficulty today. I figure I would have been facing losses in the order of up to $60,000, or in the order of $40 to $60 per acre.

I have no doubt that there are farmers who have easily incurred losses of that magnitude or more during the past year, because we have been fortunate to have a bumper crop. We cannot expect to always have good fortune. If we have an average or below-average crop next year, existing safety net programs are not adequate to ensure us against a serious loss.

I'd like to give you some of my observations of how effective existing safety net programs have been. Crop insurance coverage in Alberta is grossly inadequate. They do not anywhere near cover our current input costs. Most producers in my area feel they need in excess of $200 gross per acre per year to cover all their costs. Crop insurance will only cover a maximum of $125 to $140 per acre, depending upon cropping combinations.

I feel that NISA is a very good program, but it still has a few faults. Farmer deposits come from after-tax income, which is often needed to be put into the cashflow of the farm operation. Many farmers have not chosen to make deposits, especially during tough times, which many grain farmers have encountered during the past few years.

Also, the ability for a farmer to trigger a withdrawal from NISA has been too restrictive. Farmers should be able to withdraw funds when they need them, not necessarily based upon a current projection or the past year's actual income.

• 1050

In my own case, I needed some additional income in 1999, and I was not able to make a withdrawal based upon my 1998 income until the rules were changed this summer, increasing the income withdrawal levels.

As many farmers withdraw NISA funds and deplete their accounts, what will they have as a safety net in the near future? There's AIDA, which is called FIDP in Alberta. There's no doubt some farmers have obtained assistance through AIDA. I would venture to say they are mostly single-commodity types of operations, and AIDA will not be enough support to keep a lot of those businesses in business.

Very few grain farmers who have had diversified crop mixes are likely to be eligible for AIDA. When the average margin has been barely adequate to survive upon, supporting it to 70% is not enough to keep a farm operation in business.

I've talked to a number of farm operators who are facing serious financial difficulties, and a lot of times this is through no fault of their own. They have not been able to access FIDP or AIDA. I believe farmers have lost faith in AIDA, and unfortunately many of them see it as a cruel joke or an expensive public relations ploy, brought upon by the provincial and federal governments.

So what are the solutions? I'm sure you agree there are no easy solutions, but the economic welfare of the prairie economy is in jeopardy. If western Canada is to remain prosperous, grain farming must become a more viable business undertaking. The trend we have seen during the past three years, where gross income has increased while net income has decreased, cannot continue much longer.

A large percentage of western Canadian grain production relies upon exporting to a world market that is being unfairly distorted by subsidies. In the very near future, it may be necessary to reconsider our attitude toward world trade and subsidies. Some type of safety net system needs to be developed that recognizes the uniqueness of prairie agriculture that is so dependent on exporting and so seriously affected by commodity prices that do not reflect the real cost of production in western Canada.

I'm going to skip over what I have given you in the document that has been passed around on some of my calculations on long-term average yields and prices that are needed to break even, because I think you can read those. I've also documented what the current market prices and projections are for these commodities I produce on my farm. The bottom line is that you'll see there's an obvious gap.

The more I read about the United States farming situation, the more I realize that the U.S. loan deficiency program seems to be working down there, and wonder why we cannot duplicate a similar program for grain producers in all of Canada. Such a program provides immediate cashflow to the grain farmer and supports what is considered to be a break-even price. From a trade position, how could the U.S. object to a program that is the same as the one they provide to their grain producers?

On the issue of acreage payments, they've been talked about a lot. Certainly it's a simple and quick solution, but if it's not productivity-based, there will be serious inequities.

The old GRIP that we scrapped had the potential to be one of the best safety net programs for grain producers that was ever developed. Unfortunately, it was not given a long enough opportunity to become actuarially sound. Perhaps it is time to redevelop a similar type of program.

In the area of taxes and fees, this is not a quick solution but it is an area where considerable reduction on input costs could be achieved. Bureaucrats, unfortunately, have initiated many of these fees as a way to maintain programs in departments that were given cost-cutting and reduction directives, and so cannot be trusted to adequately research such possibilities. Farm organizations should be given the resources to research these opportunities and report such possibilities to government. Any farm inputs have hidden taxes built into their prices, and fuel and fertilizer costs are two very obvious components.

The ability to periodically do a block averaging of income, through a five-year block-averaging income tax provision, could allow a farmer in a poor income year to recover income tax paid during a prosperous year.

• 1055

NISA needs to be reorganized, so accounts can be quickly built back when they are depleted or emptied. Larger government-matching contributions for low account balances should be considered.

An ad hoc government contribution to NISA accounts for all grain farmers, whether NISA participants or not, should also be considered. This could be based upon eligible net grain sales and would be simple, quick and a fair way of injecting cash into the grain sector.

In summary, the whole agricultural industry on the prairies is seriously hurting. The economies in many rural communities are in a serious state, and many grain farms are slowly going downhill, as generations of assets are depleted.

In many parts of the prairies we are on the verge of having an economic collapse comparable to what happened in the 1930s. All it will take to become extremely serious is a widespread poor crop. This problem has become more serious during the past three years, with large areas having poor crops and low commodity prices. To date, the only solution that has been brought forward is the inadequate AIDA program. Time is running out fast to put in place programs and plans to minimize the damage.

In the short term, a significant injection of cash is seriously needed in the grain farm economy within the next few months. In the longer term, effective safety nets must be developed that can provide an adequate level of insurance for farm operations that are efficient managers and are being impacted by conditions that are beyond their control.

The debate as to whether Canada can afford the level of assistance needed by grain farmers should be looked at from a different perspective. I ask you, can we really afford not to do something? The prairie economy is at risk if we do not act quickly.

Thank you.

The Chair: Thank you, Mr. Wagstaff. I appreciate those comments.

Just before we go to Mr. Breitkreuz, Larry, I'm told that when it comes to income averaging under FIDP, the best three years of five years are counted. But under AIDA, the so-called Olympic averaging is offered, where you take the last five years and drop the lowest year of income and the highest. I believe you take the average of the three years.

I just want to ask a question of the farmers that's a bit different from Mr. Thompson's. Mr. Thompson basically asked you for your preference between AIDA on one side and an acreage payment on the other. You indicated quite conclusively that you preferred an acreage payment.

Let me ask a slightly different question. The result might be the same, but it's a philosophical question. Forget about AIDA. What would you prefer in the way of a federal assistance program? Would you prefer a program that is targeted and provides money to those farmers who need it the most, or an across-the-board payment that goes to all farmers regardless of income or financial circumstance? So those of you who favour targeted, put your hands up.

So it's roughly the same.

Thank you very much.

Mr. Breitkreuz, you have seven minutes.

Mr. Garry Breitkreuz: Thank you, Mr. Chairman, and thank you very much for coming before us. I'd like to thank all the farmers in the crowd. I'm sure we have a hundred stories out there, and we need to hear as many as possible.

Larry, you said “I hope I'm not the only one in the room that's confused”. That's choice. The problem is really very simple, but by the time it gets to Ottawa, and we get the problems we have like AIDA, you wonder where the simple message was lost, you really do. What's confusing to me is why the government doesn't get the message and act. That is truly confusing. Because if we listened to all one hundred farmers here, I think it would be abundantly clear what the problems really were.

• 1100

We have been misled. I want to give you an example of confusion. We've been told the WTO agreements we have signed do not allow for acreage payments—that they're amber or they're red. That's not true. Here in plain black and white, the grain criteria allow acreage payments to be made, with a qualification: it must not affect the current producer decisions or eligibility for a payment.

It's been confusing, because we've been sent mixed messages in regard to this. Maybe some of you would like to react to that; I'm not sure.

I've been with the committee, and we've heard from farmers from across the Prairies: Manitoba, Saskatchewan, and Alberta. I hear the same story all the time. Farming is really not going well.

There's one thing I don't understand. Glenn, you said you don't see any point in keeping your capital in the farm. Then at another point you said it makes no sense to stay in farming. Why then would corporations want to put money into capital purchases such as farmland if farmers can't make them profitable? I'd like you all to take a go at that, if you wish.

Mr. Glenn Norman: Because they have a captive market, the corporation can control the initial production all the way to the sale to the consumer. If a corporation is feeding cattle, if they can grow their own grain, they feel they can control that entire market. And because they control the end result of it, Cargill, IVP, and I think there's one other are 85% of the sale of beef in North America.

That's really why the corporations are interested in farmland. I don't think they can be any more efficient than the family farm is. It's basically that they have captured the entire production, from the initial grain right down to the cattle, and in many cases they're probably involved in or own the final distributors, the retailers of products, or certainly the final manufactured products. It's more a matter that they feel they can control the entire industry.

Mr. Garry Breitkreuz: I appreciate that. I think you've hit the nail on the head.

Mr. Neil Wagstaff: I agree with what Glenn has said. They also have a longer-term capital capability than most farms have. Most grain farmers in particular are operating on a year-to-year basis, and they can't stretch much beyond that. Some of the larger ones, with more well-established asset bases, certainly have that capability. So we have to be careful when talking about large corporations, smaller corporate farm enterprises, and family farms. There are some differences.

While I have the microphone, I want to make a distinction. We keep talking about farmers and farming. I want to make the point that the sector of farming that is really hurting now is grain. We can't generalize when talking about farms, because we have supply management that is doing all right in most cases and we have some livestock sectors that are having some difficulties because of commodity cycles, but grain production in particular is where the real problem is today, in my opinion.

Mr. Garry Breitkreuz: The next logical question is, what can we do about it, if corporations are starting to move in? And they are. In Saskatchewan we've tried with Prairie Pasta to try to take our own durum and process it and so on. Of course the government has thrown a roadblock in our path with the Wheat Board, but is more of that possible? What can we do about that? Maybe we won't answer that today, because of limited time, but is it possible to prevent corporations from taking it over?

I think the people in the cities do not realize the danger in that. The cheap food policy in this country is gone if we let that continue. The people in Toronto and Montreal right now have a safe food supply, and they don't think it will ever change.

• 1105

Mr. Neil Wagstaff: I'll jump in again. We have to distinguish between the long-term solutions and the short-term solutions. If we start talking about diversification and things like that, those are longer-term solutions. Right now we have to be looking at short-term solutions, or we're not going to have a long term.

Mr. Garry Breitkreuz: Yes, but with the short-term solutions, we have to keep in mind the fact that the corporations will take over if we don't...

I'd like to say one other thing, and it ties in with what some of you have touched on, and the previous presenters as well. Somebody said, “As a farmer, I'm always happiest when I'm paying taxes.” My question to you is, when aren't you paying taxes? Do you know some of your input costs can have as high as 50% tax hidden in there? I can't understand a farmer even making a comment like that.

I mean no criticism to the presenters here, but somebody else said input costs are rising, and the only solution is higher grain prices. I dispute that. That's not the only solution. If your input costs are half tax, there is another solution, is there not?

Mr. Glenn Norman: On that question, I wonder if the government getting rid of the taxes on input costs would really be returned to the farmer. I think in most cases you'd find the corporations would simply pocket it. They might get a 50% reduction in the cost of their taxes, but I doubt they would pass that on to the farmer as a consumer. And that happens continually. We're expected to take a 1% or 2% return on investment, but in other industries that's totally unacceptable.

The Chair: Thank you very much, Mr. Norman. We're out of time.

Mr. McGuire.

Mr. Joe McGuire: Thank you, Mr. Chairman, and welcome, people.

Over the past five days we've gotten a lot of suggestions about the future of safety nets and what form they will take. A lot of them are geared to local conditions. Everybody has low commodity prices for grains and high input costs, but in addition to that, they have either too much rain or too little rain, depending on the area of the country they happen to be in.

But another recurring theme—and Larry briefly touched on it here—was the future of the rural community and what's going to happen to it. We were told yesterday in hearings in Grande Prairie that one rural municipality had fifty people in it—fifty families, I should say—in 1960, and now it has four. Another witness who was talking to his son about taking over the farm said his son said, “If you do that, I'll charge you with child abuse.”

Voices: Oh, oh!

Mr. Joe McGuire: We've been hearing those types of comments. It may be funny, but it may be not so funny either. The hospitals are going, the schools are going, and the small businesses in rural areas are going. There's a trend that seems to be irreversible in Canada and North America.

I just wonder what your opinion is. Can something be done through programs, or is it beyond government interference or influence to stop the trend of the shrinking rural communities, with people going to large urban areas? That's part of what Mr. Proctor was referring to too—the big disconnect that's happening between the rural and the urban. We now have a secretary of state for rural affairs, Andy Mitchell, who is supposed to be coming up with some new programs in the next budget.

What is your feeling about this whole trend? Are we just beating chains against the waves here, like King Canute? What can be done, if anything?

Mr. Neil Wagstaff: I'll jump in, because part of my non-farming business up until about ten years ago was a consulting business in rural economic development.

Those trends have gone on for a long time. There's no doubt about that. But it's the rate of that decline that concerns me. We've had consolidation, with farm sizes getting bigger and bigger and bigger, so you're having smaller populations out there. So that trend's gone on. But what's really important to rural communities is cash and the cashflow that goes through those communities. When you have a depressed economic situation, that just compounds the difficulties communities are faced with.

By the way, you were in Grande Prairie yesterday, and I was in Grande Prairie two weeks ago, and a friend of mine is a superintendent of schools for the South Peace. I don't know whether this was related to you yesterday, but he gave me some statistics of how enrolments have declined since June in the rural schools in South Peace. They were alarming. I asked how he could explain this. He said there are families that are just giving up and pulling out. That's more than just the trend. That's something that's happening that's drastic in the short term.

• 1110

Mr. Joe McGuire: Glenn, do you have any opinions on that?

Mr. Glenn Norman: I don't know. I feel basically you need a support for the family farm if you want to keep people in the rural areas through most of the country. Our own area is rather a different situation, because we have acreage developments going up all the time. Our land values are astronomical. It doesn't compare with much of Saskatchewan and Manitoba and a lot of Alberta. We actually have more people moving into the rural area. They're not farmers; they really don't have an attachment to the land. They're often very short-term in the time they stay there.

I think without support for the family farm as a smaller unit you're not going to keep people in the rural communities, throughout most of the prairies anyway. I mean, our area is the Edmonton-Calgary corridor, and basically the real estate end is booming. So it's hard for me from own personal experience to talk about this, because I don't see it in our area. In most areas if you don't keep people on the farm and keep the farms viable you will not keep the people there. You'll see basically taxes going up—like I say, four families that are supposed to support the municipal district.

Mr. Joe McGuire: Larry, you've thought about this. According to your presentation you've thought about this a lot.

Mr. Larry Van Slyke: I'd like to see the trend reversed and see more people. I think the key is we need to keep a share of the revenue from the agrifood business. I'm not too sure of the mechanisms to do that. I don't even think we should be embarrassed to ask for that. It's not a subsidy. We just want a reasonable share.

So if it has to be done through taxes, tax the rail lines and the grain companies and direct it back to the farmers. I don't know how we do that, but we need those mechanisms in place that protect the primary producer. There are a lot of us primary producers, and we don't have a lot of power in this game.

Mr. Joe McGuire: Just another couple of particular questions—one is on the amount. If there were a per-acre payout, if that were the solution, a number of people said it's got to go to the producer, not the landowner per se. I'm just wondering how much land is actually not in producers' names. How much is rented, and what kinds of rental agreements do people sign?

The Chair: Neil, go ahead.

Mr. Neil Wagstaff: I'm really concerned about the possibility of an acreage payout because of the potential inequities. Let's use the Crow benefit payout that was made as an example. It went to the landowner. With many people renting land and with various different kinds of rental agreements, often... I was in one of those same situations where I nearly lost some rental land just because of that issue, and the landlord wasn't willing to share.

I believe a top-up on NISA has the best potential of being equivalent to an acreage payment. If you use grains and net sale receipts, and base some type of a top-up on NISA, that's equivalent to an acreage payout in a sense, and it would be directed at the production of those acres in grain.

Mr. Joe McGuire: Great, thank you.

The Chair: Just before we go to Mr. Proctor, can I just pick up on that, Mr. Wagstaff? You mention the possible inequities under an acreage payment, that it would be similar to some people saying it just simply is not fair. Do you think the appeal of acreage payment under the current circumstances is because an acreage payment is seen as providing money much faster? Is that why an acreage payment is seen as the preference of a lot of people?

Mr. Neil Wagstaff: I think many people see that as something that's very simple and quick and easy to do.

The Chair: But are they prepared to accept some of the inequities that go along with it?

• 1115

Mr. Neil Wagstaff: Possibly, but I'm afraid those inequities will exaggerate themselves and become an issue once it happens.

The Chair: Do you think a top-up of NISA could be almost as quick?

Mr. Neil Wagstaff: Yes, because we have the administration in place, and it's based upon income tax returns. A large number of farmers are already participating in NISA. The ability to file what would be required for the information to make that kind of payment is already in most farmers' accounts.

The Chair: Thank you.

Thank you for your patience, Mr. Proctor.

Mr. Dick Proctor: Not at all. Thank you.

Mr. Wagstaff, in addition to the top-up on NISA, you also said you thought the grain sector was the real problem. I'm trying to link the two together and ask you whether the top-up on NISA would address that reality, in your opinion.

Mr. Neil Wagstaff: I think you would target the grain receipts on a top-up for NISA.

Mr. Dick Proctor: Right. Now, I don't know about Alberta—I guess the numbers are in here, but I don't have them—but not all farmers in Saskatchewan have NISA accounts, even though an awful lot of them do. Have you thought about how we could fix that?

Mr. Neil Wagstaff: What I'm saying is for those who don't currently have NISA accounts, you would generate a NISA account.

Mr. Dick Proctor: I see. So it would be some kind of a deeming aspect we would need to do. That's helpful.

Mr. Van Slyke, one of the presenters in Regina started off his comments by saying make no mistake about it, agriculture is thriving; yields have never been higher, farmers have never been more efficient, agrifood exports have gone from a little over a billion dollars 30 years ago to more than $20 billion today. So it is thriving; the reality is that the farmers are getting little or none of that success.

Our situation is this is the ninth and the final meeting we've had out here this week. Someone said in the earlier presentation that the indicators are that Mr. Martin is projecting a very large surplus, approaching $100 billion in four or five years. The deficit has been eliminated over the last few years, and you could make the argument that it has been largely on the backs of farmers, with the elimination of the Crow subsidy and things like that. My submission is that the government has the means to correct the problem; what it currently lacks is the will, or what we have yet to see is the will to correct the problem. I wouldn't mind your comments, Mr. Van Slyke, and anybody else's comments.

Mr. Larry Van Slyke: I think I would agree with that. I think the government was lax in keeping up with what was happening in agriculture, and now all of a sudden it has turned into a crisis. Given the international trading world, I don't think it would be out of line at all for the Canadian government to support agriculture.

Mr. Glenn Norman: I think perhaps people view this as a massive agricultural handout. But you know, if you were to hand the farmer $3 billion, farmers are going to spend it. That's going to generate economy; it's going to generate tax; it's going to generate returns for the community. And it's going to snowball. The government's going to get every cent of that back.

Mr. Dick Proctor: Mr. Wagstaff.

Mr. Neil Wagstaff: Just to follow up on what they're saying, we need to think about the type of cash injection we're talking about as an incentive to the industry, rather than a subsidy. We have to acknowledge that what's happening is we're operating in an international marketplace that has some unfair competition. The oil industry in Alberta never seems to object to incentives; they don't get subsidies, but they certainly get some assistance at times.

Mr. Dick Proctor: Right. Mr. Pharis, do you have a comment on this?

Mr. Hilton Pharis: I think it's rather obvious for the shert term. The long-term solution... I don't know what the answer is to that. The short-term solution is get some money into the pockets of farmers, grain farmers particularly.

Mr. Dick Proctor: Right.

Mr. Hilton Pharis: When you asked for the poll, my personal preference would be to target it to those who need it. How that can be done I don't know, but that would be my preference.

• 1120

Mr. Dick Proctor: And if we were targeting, or even an across-the-board payment, how do we ensure we get it into actual farmers' hands so that they can access it, as opposed to them seeing input costs getting even higher because all of a sudden farmers have some money in their jeans to pay for things that they didn't have a month ago? You've already talked about it in terms of the Crow subsidy, and also in terms of not necessarily input costs but the fact that the landlord's got a fair share of that. How do we do those things?

Mr. Neil Wagstaff: I don't think you can control that kind of thing. If you look back at 1995 and 1996, when we had a little bit more buoyant times in grain for a very short spell, although they weren't really all that great, they were also supplemented by the Crow benefit. I think we saw machinery costs go up and we saw some input costs go up. That's a marketplace that we probably can't control, but, as Glenn said, that's still cash that's flowing into the economy through the farmers.

The Chair: Thank you very much.

Mr. Thompson.

Mr. Myron Thompson: Thank you.

I'll probably make about a two-and-a-half-minute presentation here, and then you fellows can just feel free to take whatever I said to heart and comment any way you wish.

Earlier somebody said it's time we started looking at simple solutions, and to quit complicating things so terribly that we don't know what we're doing. Well, I kind of like that idea. I think the simple solution should start in Ottawa, to begin with. We need a real attitude adjustment in this government, a serious attitude adjustment that brings the realization that agriculture is the most important industry in this land. We had better start viewing it as such, but we're not doing so.

Voices: Hear, hear!

Mr. Myron Thompson: I would like to take some time not only to educate the public in some of the large cities, but I think we have some Bay Street lawyers in our government who need some real serious educating. I wouldn't mind being their instructor for a few days, but I would welcome any others to come and join me.

When we talk about simple solutions, I look at all the government agencies. It's high time that there is no agency in this land that's affiliated with the government in any way, including the Wheat Board, that should not be open and accountable to the public it serves. The transparency has to be there. To me, that seems like a simple solution to get the ball rolling.

I believe it's time we start looking at how we are spending our money. Look at the big business subsidies going out to businesses that are profiting with big dollars. They're getting big grants. Look at the amount of money we're funding to special interest groups or other people who are purporting to be in some project that is of a self-interest basis.

Getting to the public accounts, I think every person in this country ought to have a copy of the public accounts to see where their tax dollars are going. Take a look at what's happening with the millennium projects. They're a nice thing to do. Let's spend several millions of dollars on millennium projects. I'm sure the people in Sylvan Lake are going to enjoy the statue of the mermaid. I don't know if it looks like any of the mermaids that exist in the lake, but look at those kinds of spending. Free flags are a nice thing to do, a nice little gesture for only a few more million dollars.

Committees are being struck and the government is studying all kinds of unbelievable topics. It's spending thousands and millions of dollars, and yet this just continues to happen. A committee is studying seniors and sexuality. Just because I turned 65, I don't feel any better about that. And good grief, Bubbles Galore films? Money is going out to produce these. There has to be an attitude adjustment. I believe we have to have the people of this land helping that adjustment come true, and really quick.

I believe in one solid program regarding the farming situation. A real effort should be made to come up with one that would be an all-encompassing one covering what AIDA tries to do, and covering GRIP and NISA and crop insurance and disaster relief and trade disputes. Try to bring those all together so that we can say this is what we're going to do for our agriculture. Every time you look at AIDA or GRIP or NISA, every time you create something new, you've just created another level of huge bureaucracy in a government that's floundering now in terms of decision-making.

Those are my comments. Please respond in any way you like.

• 1125

Mr. Glenn Norman: I'd like to respond to your comment on the Wheat Board.

Currently, the Wheat Board PROs are probably about the only real bright spot in the commodities. Our PROs are sitting far above what the local price for barley is, and it's the same for wheat. You're going to throw away something that has been proven time and time again to benefit farmers. Single-order desk-selling should be non-negotiable at World Trade Organization meetings. It's probably about the only bright spot that we have in agriculture.

Voices: Oh, oh.

Mr. Glenn Norman: There are lots of people who disagree with that—

A voice: That's for sure.

Mr. Glenn Norman: —but the fact is that our farm, in the long run, over the thirteen years that I have farmed, has made more money on the grain sold to the Wheat Board than it ever has on the grain that has been sold off-board. That's not because I'm a poor marketer. I do as effective a marketing job as anybody else. Our farm is still viable. My concern is how long it can remain that way.

So before we give away the Wheat Board, we should take a seriou looks at it.

I can see there are some problems with the pasta producing in Saskatchewan, but sometimes self-interest is not necessarily the best thing for everybody in the first place. Perhaps what they really need to do is get a higher initial payment because they're delivering directly to their own company. Perhaps their final payment should remain the same.

A voice: It's a can of pop for a bushel of wheat.

Mr. Glenn Norman: Well, that's not quite the way it is. I can probably buy about five cans of pop right now for my bushel of wheat.

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

I can take one very short question from you, Joe.

Mr. Joe McGuire: I'd just like to know something in regard to the NISA program. Do banks give loans on the basis of not cashing in your NISA?

Mr. Glenn Norman: No.

Mr. Joe McGuire: They don't do that?

Mr. Neil Wagstaff: No, and I think that's a problem for many people who have deposits in NISA. Some of it is your own money. It's equity that you have in there, yet you aren't able to use it as equity when you have to deal with the banks.

Mr. Joe McGuire: Do you have any views on the present situation with GMOs, where they're taken out and what effect they have? This is not a short snapper by any means, but maybe one of you guys could help.

Mr. Glenn Norman: I don't know whether GMOs are good or bad. All I know is that the vast majority of the public, the consumers in Europe, and now spreading here to North America and Japan, view them as “Frankenfoods”.

Why contaminate the best wheat in the world by bringing in a GMO wheat? It's insane. I can't understand why they allowed the licensing of it. If the perception is there among the public, and it has not changed... In Europe they've been dead set against GMOs since they heard of them. Whatever happens in Europe eventually spreads here and eventually spreads to Asia, so why put our industry at risk by licensing GMOs?

A voice: All seed is GMO.

The Chair: Thank you.

Mr. Wagstaff.

Mr. Neil Wagstaff: On the predicament we're in with GMOs, when we're talking about a cash crunch in the grain sector, part of the advantage of GMOs is that they have improved our production capabilities. The only way we can have better returns is to increase our production when prices are depressed. So this is a real dilemma we have. As long as there are consumers accepting them and willing to buy them and pay a decent price, I think we're forced to use them. It's a consumer acceptance issue more than a production issue.

The Chair: Thank you very much. We're out of time for this round.

I want to thank Mr. Pharis, Mr. Wagstaff, Mr. Norman, and Mr. Van Slyke. I appreciate your comments a lot.

Now we're going to call on representatives from Agricore Cooperative Ltd. and the Alberta Soft Wheat Producers Commission. Representing Agricore, we have George Groeneveld and Dennis Nanninga, who is the second vice-president. From the Alberta Soft Wheat Producers Commission, we have Arthur Eckert, chairman of research. I understand there are a couple of others as well: Edwin Bronsch and John Van Tryp.

• 1130

Mr. Arthur E. Eckert (Chairman, Research and Production, Alberta Soft Wheat Producers Commission): John's not here.

The Chair: John's not here, so it's just Edwin and Arthur, right? That's fine.

I guess we should go alphabetically, if that's fair, with Agricore first, and then the Soft Wheat Producers.

Are you going to begin, George?

Mr. George Groeneveld (Vice-President, Agricore Cooperative Ltd.): Yes, I will, Mr. Chairman. Thank you very much.

The Chair: By the way, audience, after we hear from these presentations I'll be calling four farmers forward. I'll just give you the names now: Darcy Davis, Jim Ness, Murray Woods, and Ken Sackett.

Welcome, Mr. Groeneveld. Please proceed.

Mr. George Groeneveld: Thank you, Mr. Chairman. I guess you and I are no strangers. We've sat at these tables quite often lately. We're going to have to stop meeting like this.

Thank you very much, gentlemen. Of course I have Mr. Nanninga with me this morning. He is now a vice-president of Agricore.

I have a little presentation here that I'd like to go through, and then we'll take it from there.

On behalf of Agricore, I would like to thank the committee for the opportunity to meet with you today. Your decision to come to western Canada to investigate the financial situation here is encouraging and welcome.

I'd like to take just a few minutes to introduce Agricore to those of you who may not be familiar with our new farmer-owned co-operative, although in your travels across the prairies I'm sure you've noticed our country facilities.

Agricore was created just over a year ago with the merger of Alberta Wheat Pool and Manitoba Pool Elevators. Agricore is a very significant investor in the agricultural industry in the three Canadian prairie provinces, in northeastern British Columbia, and in the northern Great Plains in the United States. We are positioning our company and our farmer owner-members to capture the opportunities that will be provided in a world where the population continues to grow and in which we believe the demand for our consistently high-quality product will increase.

We are hopeful that the agricultural negotiations that must take place at the World Trade Organization level will allow us to find new and growing markets for our products, and that our industry will help Canada reach its goal of 4% of the total world agricultural trade by 2005. We urge the government to continue to take an aggressive and proactive position at the negotiations to level the international playing field, to open up markets for our products, and to reduce and eliminate the trade-distorting export and domestic subsidies that have had a devastating impact on Canadian grain and oilseed producers.

We know that real and permanent solutions to the current and future income problems that are being experienced in the grain and oilseed industry can only come with restored sanity in international markets. However, sanity will not be easily won. The lack of progress to even start a comprehensive round of trade negotiations is a clear indicator that trade solutions are going to be a very long time coming. In the meantime, we believe it is absolutely critical that your committee, the federal cabinet, and the government understand that the western grain and oilseeds industry is indeed at risk.

You may have noticed in your travels that this year's harvest was a bountiful one. Statistics Canada figures indicate the canola harvest was a record, and that the production of wheat and barley surpassed last year's harvest. This should have been a time for optimism and hope, but due to the trade-distorting subsidies provided by our competitors and the resulting drop in world prices, combined with poor seeding and harvest weather resulting in lower-quality crops, farm income is going to be significantly lower than average this year. The outlook for next year is not much better.

Agricore's members appreciate the efforts the government has made to date to provide disaster assistance to Canadian farmers. However, we need to point out that the safety nets and disaster assistance programs currently in place were designed to help farmers mitigate the risk of normal market and weather fluctuations, not to address the levels of the trade-distorting subsidies and the prolonged periods of extremely low income that result.

To illustrate that point, I will use the most recent numbers for AIDA, the federal disaster assistance program. In the provinces where the income crisis has been felt the most, Saskatchewan and Manitoba, about four of every five applications that are made for assistance are not accepted. The program is designed as a safety net under the occasional severe income drop, and not the kinds of severe and lengthy price drops we are experiencing right now.

• 1135

Agricore participates in the National Safety Nets Advisory Committee, which has been charged with recommending a new package of safety net programs to the federal Minister of Agriculture. We are encouraged by the work that is being done in this committee and by the willingness of the committee to explore a broad range of options to ensure that farmers have the solid program tools available to help them even out the market and production risks that are inherent in agriculture.

We are concerned, however, that the committee's ability to design effective long-term safety net programs is hindered by federal budget constraints. The committee has been asked to design programs to fit a budget, rather than focusing on what programs would be the most meaningful to the farmers.

We encourage this committee to recommend that the safety nets advisory committee be given the authority to design reasonable, trade neutral, effective safety net programs that are not constrained by a set budget and that a commitment be made by federal and provincial governments to give serious consideration to funding the product of the safety nets process.

As I said earlier, the financial crisis being felt by many western Canadian farmers cannot be addressed with the current safety net and disaster assistance programming. If the government is concerned about the welfare of western grain and oilseed producers, and we believe it is, efforts are going to have to be made to provide support outside of the current safety nets envelope.

Agricore's board of directors and staff have been preoccupied with finding a way to deal with the income crisis that takes into account that this is not likely going to be a short-term problem. We need to ensure that the package helps the industry adapt to capture the benefits of the changing trade and economic environment and that farmers can continue to make use of available risk management tools.

We appreciate that there has been a lot of discussion and debate at all levels of government and within the industry around how to address the income crisis. We believe the time has come to take some concrete action to provide support to the western grain and oilseed industry.

We have asked the federal government to address the situation on a number of fronts, the first in the area of costs. Agricore urges the federal government to immediately reinstate the rebate on excise tax on farm fuels. This will return more than $170 million annually to the agriculture economy. We have also suggested that farmers receive a direct rebate of their share of the excise tax paid on rail fuel. Upon presentation of an elevator ticket indicating the amount of freight a farmer has paid, a simple formula could be devised to rebate the excise tax directly to the farmer.

The grain and oilseed industry pays more than $62 million annually in fees for government services. This is more than three times the amount paid by any single agrifood sector.

Agriculture Canada's 1998 cost-recovery study found that the federal government's cost recovery reduced the net farm income of a Saskatchewan benchmark farm by 4.5%. The same study clearly indicated that the off-loading of the cost of federal services or services required by federal legislation onto our industry occurs in many departments, such as the Department of Fisheries and Oceans through coast guard recovery and Transport Canada through the pilotage authorities.

As we grapple with this serious income problem, we are very concerned to see that some of these departments continue to allow for increases in cost recovery, seemingly without any recognition of the impact on western farms. If we are to slow the financial bleeding in western Canada, all government departments and agencies must play a role. We have asked the federal government to immediately freeze all user fees that have an impact on farmers and to take steps to roll back some of the fees until the economic situation in western Canada improves. Increased user fees were part of our industry's contribution to eliminating the federal deficit. Now our industry needs assistance. We believe it's time to take some of those costs back.

One of the biggest expenses on any grain and oilseed unit's balance book is transportation. Agricore has been very involved in the efforts to develop the recommendations to improve the efficiency, affordability, and accountability of the western grain transportation system. We believe that by putting in place a more commercial contract based grain handling and transportation system, founded on effective rail competition, the federal government could ensure that more than $2 million annually is returned to the farmers in cost savings.

Agricore has also asked the federal government to take action to help producers with increasing debt loads. Between 1993 and 1997 grain-farm debt in Alberta jumped by 22%, in Saskatchewan by 13%, and in Manitoba by 24%. Debt servicing is a very significant fixed and variable cost for farmers.

The drop in commodity prices, combined with weather disasters in many of the areas in western Canada, has caused a serious problem. For many farmers income and expenses no longer line up. Some or all of the returns from this year's crop are required to service operating credit from last year's crops. Given the prospects for commodity prices over the next few years, it is unlikely these producers are going to be able to catch up.

• 1140

Agricore is encouraging the federal government to work with the provinces and the Farm Credit Corporation to put in place a debt refinancing program for western farmers who are having difficulty because of the very low commodity prices and weather-related problems. We believe the government could design a program along the lines of the 1994 New Brunswick debt refinancing program, which provided interest-free loans for refinancing up to 80% of unpaid debt.

While measures to reduce farm costs and to help farmers deal with debt will provide a welcome assistance to producers, governments also need to address the severe income situation on the income front.

Agricore's board of directors has been discussing ways to provide meaningful targeted assistance to farmers. We are exploring the concept of linking support to diversification and restructuring efforts. We have presented the concept of a renewal program for agriculture to the Minister of Agriculture and Agri-Food.

The renewal program would use existing consultation services to help farmers develop renewal plans and draw on resources outside of the agriculture budget to help farmers stick to the renewal plan and to implement any changes or modifications that might be required to help the farm. Therefore, the entire industry would be restructured to capture the opportunities we know would be presented in the future.

Once again, I want to stress that Agricore is committed to working with all levels of government to develop a package of programs and steps to help our industry get through what looks like a long-term financial downturn caused by the unfair trading and subsidy practices of our competitors.

Gentlemen, on behalf of agriculture, I'd like to thank you for taking the situation seriously and for giving us the opportunity to discuss possible ways to address it with you. Thank you.

The Chair: Thank you, George.

I apologize to you, Dennis, for mispronouncing your name. George has spoken for you. Is that it for your organization?

Mr. Dennis Nanninga (Second Vice-President, Agricore Cooperative Ltd.): Yes, Mr. Chairman.

George made one statement in here that there would be $2 million annually returned to farmers in cost savings. This was in the transportation issue. He meant to say $200 million.

The Chair: There is a little difference there, Mr. Nanninga. Thank you very much. We appreciate that, Dennis.

Now we're going to hear from Arthur Eckert of the Alberta Soft Wheat Producers Commission. Welcome, Arthur and Edwin.

Mr. Arthur E. Eckert: Thank you, Mr. Chairman and ladies and gentlemen.

It is indeed a privilege and an honour to come before you on behalf of the producers in the irrigated areas of southern Alberta. That's primarily where soft white wheat is grown. It's a pastry wheat that's used for the finer food among the many flour components you have.

We have four people in Ottawa presently meeting with the minister, and I'm not sure whether the Prime Minister will be included, but they're having a week-long discussion period with federal people and with the Ontario white winter wheat producers in Toronto as well. That meeting is probably going on at the same time we're here. I've had the opportunity to meet with them on many different occasions. So while we are similar, we are also very diverse.

It's fairly difficult to respond to the concerns of the people we represent. You might say the buoyancy of agriculture has very many different aspects.

I happened to have been in Montreal in 1962 when supply management was conceived. I'll never forget Dr. Nesbitt's very vivid presentation. I went home and quit milking cows, so you know what I thought about supply management.

I could say that I probably have the same view today, because in a free market we have absolute control of every input and it always comes out with a profit. You'd need to know these people have the privilege to produce under supply management at no cost.

That was great, but it's been capitalized on ever since. Now there are milk producers paying $1 million for the privilege to produce milk. That's in a free country. That's part of our problem, ladies and gentlemen. While all farm management is blessed unequivocably, the wheat sector is blamed and ultimately is being destroyed for lack of wisdom.

• 1145

In wheat our whole infrastructure is predicated on moving wheat into export channels. Part of our problem with the WTO is the fact that the Americans can grain-box every program they have, and they have over $61 billion worth in the farm envelope, compared to $65 billion in the European farm envelope. And that's not an unfair trade practice; it's quite fair. This government has just decided they would feed their people and help the producers to do it. There's nothing wrong with it; there's something wrong with how we view it.

It's quite difficult to address how to correct the imbalance presently. As far as targeting goes, if you do move to targeting the hurt that's presently in agriculture in western Canada, don't look at the producers, the colour of their skin, the farmer, the size of the farm. Look at the commodity. You target the commodity. It's called wheat. If you correct wheat, every other commodity in western Canada that ultimately flows to it will be corrected, because you will move away from choosing other alternatives and you will allow wheat to carry the burden of the day. Once you've addressed wheat, you've addressed all the other hurts.

I'll quote from Socrates, because he made a very profound statement. Five hundred years before the time of Christ was when Socrates happened to be on this earth, and he said it was more important for kings to feed people than it was for them to win a war. He said “No man who is entirely ignorant of the problems of wheat is said to be a statesman.”

Gentlemen, many of you fall into that category. You need to understand that wheat is two-thirds a ministry and one-third a business, because it feeds hungry people worldwide. And those people have no defence, they have no currency. So often we go abroad giving them the money, they come back and buy our wheat and then default on paying for the wheat with the money we gave them. That all goes under the international trade agreements. All those fancy terms that are out there still can't master it properly.

There's another quote I'd like to use by a certain bishop, and I won't give you the relationship. He said “There's more salvation in wheat than there is in all the political systems worldwide”, and that “Wheat has been ordained to be the staff of life”.

That brings me to my point, gentlemen. If Our Heavenly Father said it's important that the sparrows be fed, it's probably fairly important that the people be fed, and that's been my role for 50 years—feeding hungry people worldwide.

Either Canada chooses to stay part of that by design or moves out of it by default. Gentlemen, if you move out of it by default, our infrastructure is gone, because our whole infrastructure is predicated on exporting our surplus production, a curse to us, a blessing to everyone else.

We're at an era in history when the people who hold those vast reserves of wheat are begging for bread.

I'll use a quote from the newsletter of the Ontario Corn Producers Association. It says “The OCPA directors remain firm in their belief that disaster relief based on 70% of an historic three-year average income base provides inadequate support.”

Let me digress for just a moment. We met with the Honourable Lyle Vanclief in Red Deer just about a year ago now, and we pled with him not to tie into the Alberta disaster program, the reason being, even though no cattleman will ever admit it, that it was designed for the red meat sector. They have an excellent benchmark for two, three, or four years, and then they fall, because of the cyclical nature of that business, and it brings them up to 70% of those previous three high years. It's a fantastic program for the red meat sector.

• 1150

I'll quote from Gordon Harrington: “We will never have a grain envelope in this province”. Gentlemen, you need to know why the lines are drawn so tight. Alberta is not in favour of supporting the grain industry. They want cheap feedstuff for the feedlot industry. I know both sides, and I understand this quite clearly. I don't have a problem with either, but you people will have a problem in trying to design a program that will fit a grain sector that's on its knees.

I'll continue reading from this newsletter:

...Canadian grain and oilseed producers facing continuing large (and growing) subsidization for grain and oilseed products just across the U.S. border. And European grain subsidies are also protected to grow with Agenda 2000 “reforms”. The situation for grain and oilseed producers is much different than for some other Canadian commodities where U.S. income support is negligible, and where the threat of countervailing duties on Canadian exports is substantial.

We expect, sooner or later, the Government of Canada and the three Prairie governments will be forced to introduce new or modified income support programs which directly address the unique income/subsidy situation for producers of grain and oilseed crops.

The Chair: Arthur, I just want to remind you that this is a 45-minute segment. You can take whatever time you want, but we'd like to have some time for questions. You make the choice.

Mr. Arthur Eckert: I'd like to make one more quote if I may.

The Chair: That's fine.

Mr. Arthur Eckert: The other quote I want to give you is as follows:

One contentious item in the U.S. Senate is the doubling of limits on farm subsidies individuals can receive. Technically, individual U.S. farmers are currently allowed to receive no more than $75,000 in crop subsidies through Loan Deficiency Payments... or market transition payments.

That amount allows another $40,000.

Many farmers claim twice those limits by having both husband and wife claim separate payments on the same farm...

That's $75,000 times two and $40,000 times two, which is $230,000. The debate in the Senate now is whether they should double that to $460,000. Those are the issues we're having to deal with in the grain sector in western Canada.

I'll let my friend continue.

I have one further comment, Mr. Chairman. I met this person in Winnipeg on Sunday evening. He happened to be part of that head blight study that's being done by all the researchers across western Canada. We happened to be in Winnipeg at the same time. The hotel room was packed with these people. This gentleman here is considered to be the wheat king of breeders for Alberta. I won't mention his name, but if you want to ask me afterwards, I'll tell you. He said “Art, this year we lost $1 billion to this head blight”. Great, I said. What would have happened if we had lost $2 billion or the remaining wheat that was left in our country had been worth $3 billion more?

My point is that we need to reduce our production, not increase it. We're growing so little for so long that they look at us and say you can grow it for free.

Thank you, Mr. Chairman.

The Chair: Thank you, Arthur.

Ed, are you going to be talking about transportation? You may not have time to read all of this.

Mr. Edwin Bronsch (Director, Tilley (Alberta), Alberta Soft Wheat Producers Commission): I don't plan to read it all.

The Chair: Okay.

Mr. Edwin Bronsch: I'm going to start on page 2 under “Executive Summary”.

Producers in western Canada are facing a major financial crisis as commodity prices have fallen to comparative 1930 levels. Producers have relied on increased productivity to generate a positive bottom line. This has been achieved with higher yielding, agronomically superior cultivars with better disease resistance. Even with the increased productivity, producers' costs now exceed their gross returns.

• 1155

There are two ways to offset this paradox of low commodity prices and high input costs. The most effective and most sustainable method would be to lower input costs. Producers have exhausted conventional input cost reductions. The other method would be to provide assistance to safety net programs, national or provincial, and ad hoc methods.

Since producers have effectively reduced costs they directly control—fertilizers, herbicides, fuel, etc.—the only input items left to reduce are large input costs, such as freight, elevation, handling charges, and inspection, etc., which they do not control. These items comprise from one-third to one-half of the gross returns from commodities.

An initiative was developed to examine a handling and rail transportation system in western Canada with the goal in mind to make it more cost-effective and efficient, to strengthen the marketing system, and to reduce the costs to producers.

Justice Willard Estey was commissioned by our government to complete a study of our transportation and handling system and identify areas that can be changed to make it a more cost-efficient, market-driven system. He completed his report in May and submitted it to the Minister of Transport. Finding much debate on the report, and the concern that his recommendations would not work, the Minister of Transport commissioned Arthur Kroeger to seek consensus from the stakeholders at three sessions across western Canada.

Mr. Kroeger submitted his report to the Minister of Transport in September with no apparent consensus. Again, there was much debate over different aspects of his recommendations as to how they would or would not accomplish the original goals.

The Alberta Soft Wheat Producers Commission make five recommendations, based on the premise that they are implemented once there is adequate real rail competition.

Our first recommendation is that the rail rate cap be replaced with a revenue cap that is reflective of the real costs of transporting grain, as identified by the mini CTA review of costs—a beginning base rate of $25.79 per tonne, with a productivity sharing formula for three years.

The second recommendation is that a target of 25% tendering be used by the Canadian Wheat Board and assessed annually.

Third is that a contractual system be established with stakeholders with clearly identified responsibilities.

Fourth is that during this transition and at evaluation stage, some Canadian Wheat Board control be maintained and facilitated through performance contracts.

The final recommendation is that the Canadian Wheat Board must receive grain at port in store to guarantee blending revenues flow to producers.

The income shortfall of grain producers in western Canada is real and serious. There must be programs in place that respond effectively in the short and long term. The commission's recommendations for transportation deal with lower input costs and affect net returns at no cost to the government or the taxpayers.

In addition, a long-term safety net must be established, as well as short-term provincial and federal initiatives to stabilize the agriculture sector—AIDA, FIDP, the Ontario Market Revenue Program, NISA, and the Alberta Soft Wheat Producers Commission disaster support. The situation producers in western Canada find themselves in is not a result of poor management, but of market prices driven down by large subsidies and intervention pricing on a playing field that needs to be levelled.

Would you like to continue, Art?

The Chair: Are you going to leave it there?

Mr. Edwin Bronsch: Do I have time yet?

The Chair: Well, we have fifteen minutes. We give each party five minutes to ask questions.

Mr. Edwin Bronsch: Okay, I'll leave it there, then.

The Chair: Okay.

Mr. Edwin Bronsch: I'd like to make some personal comments, though, in regard to subsidy. The Europeans and Americans see it as subsidized. But your government is talking to the NHL about subsidizing those millionaires, and it really puts an ache in my heart.

In regard to NISA, it's a great program, but it's only for the rich. I don't understand why we're not allowed to use our rail freight rate as part of our NISA program. That's a cost to us. That's part of our net income. I don't see why we can't use that.

The Chair: It's a cost of doing business.

• 1200

Mr. Edwin Bronsch: A while ago we found out we never did have a Crow rate, because just as the dentist charges you more when he finds out you have dental insurance, this is what the railways were doing. They were charging us more because the government was paying half of it, and now we're caught with that.

Thank you.

The Chair: Thank you very much.

Members, we have roughly four minutes or a little better for each party. We'll begin with Mr. Casson.

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

Mr. Eckert, we were able to meet with your delegation in Ottawa on Wednesday morning. We took an hour out of the 42-hour marathon to meet with some people who made sense. We appreciated their time to come, and we appreciate your time here today.

I'd like to direct my questions to Mr. Groeneveld. You mention the fact that with this AIDA program, the government took a bundle of money and tried to adapt a program to fit that, instead of doing the study to find out what the hurt was and doing it the right way. But you mentioned that you were involved in the National Safety Net Advisory Committee and that you were encouraged by some of the work being done there. Could you relay to us some of the work that's being done there? Is there some light at the end of the tunnel?

Mr. George Groeneveld: Thank you, Mr. Casson.

Yes, I am on the safety net committee, but I will quickly point out to you that I came on the committee after the AIDA program was set up—

Mr. Rick Casson: We won't hold it against you.

Mr. George Groeneveld: —and the dollar figure was instituted. That's the comment—we figured that the dollar figure was instituted, and we worked backward from there. That's made it very difficult.

When I say we see some progress, I think part of the progress that I see happening now is that we have done a few things like the negative margin cover and what not, which does very little in the overall picture—I think it's 2% to 4% more people who qualify, which is negligible.

What I see now—and it goes back to the issues I was talking about—is that outside of safety nets, Agricore particularly has been working with the Minister of Agriculture and his people on some of these issues. I now see them moving—because we're talking to the same people we talk to at the safety net committee—up through the other side. So I see some light at the end of the tunnel. We have identified about $60 million on the cost-recovery side we can work on, and of course this is aside from the $200 million I mentioned on transportation that we think we can save.

Yes, I see some light for the average run-of-the-mill years we would have. It does nothing for the grain and oilseeds industry, because of the long slopes we have. We don't have the sharp peaks and troughs. I don't want to throw the baby out with the bathwater here. I want to put something else in place before we scrap these programs.

Mr. Rick Casson: You mentioned that the rebate on the excise tax on fuel would be $170 million. Then you also mentioned returning the excise tax on transportation. Now are you talking strictly about rail, or are you talking about trucking, all aspects of transportation?

Mr. George Groeneveld: The figures I had here, which the people in Mr. Vanclief's office helped us work out, were strictly for rail, yes.

Mr. Rick Casson: You've identified almost $500 million here that is under direct control of the government, and things that could be done very quickly. So that's encouraging.

Mr. George Groeneveld: Yes. That's the issue we were trying to get at—immediate relief, if we can do it.

Mr. Garry Breitkreuz: Can I ask one question?

The Chair: It'll have to be 30 seconds. You're not famous for short questions.

Mr. Garry Breitkreuz: I'm not?

Mr. Eckert, you said if we were to correct wheat and allow it to carry the burden of the day, all other things would correct themselves. I need a much better explanation as to what you mean by that.

Mr. Arthur Eckert: In 30 seconds, I'm sure I can't do it. I can probably do it for you personally.

Mr. Garry Breitkreuz: Okay. Thank you.

Mr. Arthur Eckert: If I may respond before I give up the mike, the NISA account rewards prosperity. You need to understand that very clearly. I was in Winnipeg when it was being designed, along with the GRIP program, and the NISA account rewards prosperity. There's a fantastic grandfather clause in there. There's nothing for my grandson or my son. That's part of the reason Mr. Vanclief can't figure out why there's money in there. Do I have to take my money and throw it away so that my son can get help? I don't need that money. And there's a very clear distinction here between need and what we're doing with these programs.

• 1205

As far as the MRI—the market revenue insurance—in Ontario is concerned, I've recommended that to our ministers in Edmonton. I'd like to recommend to you to take back to Ottawa that you go with the Ontario model. That's a 15-year running average—probably draw up the high and the low, and I'm not sure of that—and an 85% payout of that 15-year average, with no premium costs. But you need to give up a third of your payment in lieu of premium when you do receive a payment. There's a good concept there.

The Chair: Thank you, Arthur.

Joe McGuire.

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

Just to continue with safety nets, George, even though you weren't there when this program was designed, there's still a billion dollars there. If we're going to be making recommendations to the government on safety nets, we'd like to know what the members on that safety net committee are recommending too. Maybe we should be more in tune here. You're looking for something outside of the present safety net program. Is that a per acre payment you're looking for or have you suggested that?

Mr. George Groeneveld: Do you mean on the moneys that have been issued...

Mr. Joe McGuire: Or money that's not now allocated under the present... that's outside of AIDA, outside of NISA, outside of crop insurance. Are you recommending anything outside of that safety net as a short-term solution?

Mr. George Groeneveld: As a short-term...

Mr. Joe McGuire: Yes.

Mr. George Groeneveld: For the short term, we have been working with NISA on various ways of maybe topping up NISA, although that is not the answer, because we have young people that are not in NISA. We are going to let the same people fall through the cracks; it doesn't seem to matter which program we come up with. Crop insurance is one issue, of course, that we're trying to work on some, but as soon as we tinker a little bit with crop insurance, everybody says, it's not GATT-green, fellows, watch what you're doing here. So we've—

Mr. Joe McGuire: If NISA is not targeting the people who should be targeted, people that have financial problems, and if all this money, half a billion in Alberta, is going to be sitting there until people retire and then take it out, what can we do to replace it? There's not much point in us continuing with NISA if it's not playing the role it's supposed to be playing as a safety net.

Mr. George Groeneveld: I think we can fix NISA. I'm not sure we can fix AIDA. I think we can do something—

Mr. Joe McGuire: How do we fix NISA?

Mr. George Groeneveld: I think we have to work on the trigger, so that when people qualify that they maybe have to take their money out, for instance.

Now, I'm not arguing with what my colleague is saying—that it's a rich man's crop—because certainly I think even Mr. Vanclief understands why the money sitting there is sitting there. But NISA is being drawn down quite rapidly right now, I understand; those were the last figures that I saw.

Mr. Joe McGuire: So AIDA is not salvageable. Do you want to come up with a new scheme for AIDA?

Mr. George Groeneveld: Yes.

Mr. Joe McGuire: Long-term...

Mr. George Groeneveld: Long-term... we have to come up with something for the long term. In the meantime, I think we have to let it sit there. AIDA will do what it's intended to do, which is that if you have a one-year disaster, it will cover that one-year disaster—but it will cover only one year.

Mr. Joe McGuire: It will cover a one-year disaster if you've had three good years before that.

Mr. George Groeneveld: Well, that's right—and then what I'm saying, I guess, a worse disaster than you had the three previous years—

A voice: Yes.

The Chair: Mr. Eckert.

Mr. Arthur Eckert: I'd like to respond to your question, sir.

Remember that NISA was designed as a companion program to crop insurance and the guaranteed revenue insurance program. There were three prongs. If the Alberta GRIP, the guaranteed revenue insurance program, had not become predatory by changing the formula to pay out to crop insurance detail rather than the guaranteed revenue detail we would never ask the ministers in Edmonton and in Ottawa to get out of it. That was the person that modelled getting out of GRIP in Alberta... not because we didn't like the program, but because it had faltered and failed by redesigning the payment mechanism.

We need, like the Ontario growers say, to get back into the companion program. NISA only helps those who have been helping themselves. The GRIP program was designed to help you get to the place where you could help yourself. So there's a clear distinction.

The Chair: Thank you, Mr. Eckert.

Mr. Proctor.

• 1210

Mr. Dick Proctor: Thanks very much.

I have a quick question for you, Mr. Groeneveld. Mr. Eckert mentioned that we have to target one specific commodity—wheat. Now, you sit on a safety nets advisory committee. We've been told that we can't target specific commodities. What is your thinking on that?

Mr. George Groeneveld: Well, I agree with Mr. Eckert that wheat certainly is in trouble, but I guess all grains and oilseeds are in the tank right now, so I would take issue with saying that just wheat is a problem here.

Mr. Dick Proctor: But whether it's wheat or whether it's... can we target it? What is your understanding? Can we or can't target a specific commodity?

Mr. George Groeneveld: It's my understanding that we can't—

Mr. Dick Proctor: Cannot.

Mr. George Groeneveld: Cannot. Yes.

Now, Mr. Eckert brought up the GRIP program. We have started on numerous routes in the safety net committee that tie production and price together. As soon as we do that, we're in trouble, but that is the only way we can do it. Whether the Government of Canada can find some way to keep the Americans off our backs when we try these types of things, I'm not sure. And of course the problem is, if the Americans, if they do it... They don't give a damn, to be honest. It doesn't matter.

Mr. Dick Proctor: Thank you.

Mr. Eckert, I have a question to you. I was interested in your comments that your organization had met with the Minister of Agriculture and cautioned him against a FIDP-type program before the program was introduced. I'd love to have your insights on that. Why do you think, given that recommendation, that we ended up with AIDA?

Mr. Arthur Eckert: Well, my own observation here is that the design of AIDA has been good for the civil servants and for the accountants, but desperately inadequate for the producers that it was targeting. So it answers the need of keeping people working, but it doesn't answer the need of helping the people it was targeted for.

Mr. Dick Proctor: I don't normally come to the defence of the Minister of Agriculture, but I don't think that's what he had in mind. That may be what he ended up with, but that's not what he started out to do.

Mr. Arthur Eckert: I said that too, so you've restored my confidence. Thank you.

I don't really understand why he chose to go the way he did. I have to back to Drumheller to answer this question, with your indulgence, Mr. Chairman.

When this program was being designed under the safety net coalition—and we were part of the safety net coalition for many years in Alberta—I challenged the presenter, who was a very capable person, in Drumheller. I said he was designing a program for the red meat sector. He said no, he wasn't. I said, well, we'll go through the steps to see how it fits. When he got done, he tore all the pieces of paper off the front of the podium and said, “I'm not supposed to do this, but you're right, Art.”

It fits very, very well for single entity operators who have a benchmark. And who has a better benchmark than anything that's cyclical? Wheat has been flat for so long, how would you ever establish a benchmark?

Mr. Dick Proctor: Yes.

Mr. Arthur Eckert: Because 70% of nothing is 70% of nothing. For so long... We've had one peak in my memory. Otherwise, we've always been introduced to the 1932 standard: 18¢ of purchasing power per bushel. It's still that way.

Mr. Dick Proctor: Thank you.

The Chair: Thank you.

In the last 30 seconds, I just wanted to say to Edwin that I appreciated your comments on transportation. It is absolutely paramount to get transportation costs down. I know that we will work as hard as possible to bring benefits to producers, coming out of Kroeger and Estey. If we could get, just at the beginning, $5 less a ton, that's worth hundreds of millions of dollars, and that doesn't have to come out of the public treasury.

Mr. Edwin Bronsch: Can I respond to that?

The Chair: Yes, in a few seconds.

Mr. Edwin Bronsch: The fact is that it won't be seen as a subsidy so our input costs should not go up.

The Chair: That's absolutely right.

Thank you for the opportunity to let me make one non-agricultural comment, and that is, I know I'm just a few miles from the Saddledome, and it might not be safe saying it, but I'm not in favour of one damn red cent going to the NHL.

Voices: Hear, hear!

The Chair: That's it. Thank you, gentlemen.

Now we're going to call more farmers: Darcy Davis, Jim Ness, Murray Woods, and Ken Sackett. I do have more names, but I won't release them right now. It will all depend on how long these farmers speak. I'm going to put the burden on them. The shorter they speak the more farmers we hear from. So if you don't make the list, don't blame me. Blame your brethren. But I hope we can get through a number of names.

• 1215

Darcy, I understand you're with the Alberta Cattle Commission. Is that right?

Mr. Darcy Davis (Spokesperson, Alberta Cattle Commission): Yes, that's correct.

The Chair: We go alphabetically, so, by golly, you're going to be first as well.

Mr. Darcy Davis: Okay.

The Chair: Welcome. And you may proceed.

Mr. Darcy Davis: We would like to thank the committee for the opportunity to speak here today. I come here representing the Alberta Cattle Commission, of which I am a delegate and a director. I also am the director of the Canadian Cattlemen's Association, which represents 100,000 cattle producers across this country.

I farm 30 miles from where we're sitting, to the northeast in a town called Acme. As well as having cattle, I also have the distinction of still having a Canadian Wheat Board permit book.

Canadian cattle producers are no strangers to farm income challenges. At present we are enjoying good prices, but we do experience the ups and downs of the cattle cycle. We have just been subjected to two major trade battles: an anti-dumping case and a countervailing duty case brought against the Canadian cattle industry by a group of U.S. producers as a direct result of a timeframe in which cattle producers on both sides of the border were losing money.

Some U.S producers in an organization called R-CALF looked at their balance sheets and decided that Canadian imports were causing their problems and launched these trade actions against us. We won both cases, but not before spending $5 million in producer check-off dollars to defend ourselves. We didn't like spending that money on lawyers' fees; we would have preferred to have had it spent on research and promotion. But the industry was willing to do so because we recognize the importance of trade to our industry. Canada exports over $2.5 billion worth of beef and cattle each year. We export half, 50%, of our production.

Keeping our borders open to free and open trade is the most important issue for the Canadian cattle industry. It's important to remember, too—I'll be wandering off my notes a little—that we still remain countervailable if we get above the de minimis level that's calculated by the Department of Commerce in the United States, which is 1%. We stand at less than 1% now, but it's if we get over 1%.

I would like to mention at this point the appreciation the cattle industry feels for the job that Minister Lyle Vanclief and ministers Sergio Marchi and Pierre Pettigrew, their staffs, and the staff at the Canadian Embassy did in helping defend our industry against these trade actions. It is easy to be critical of the government officials and especially politicians. They become lightning rods for everything when things aren't right. While we don't always see eye to eye with the federal government on all issues, we believe credit should be given where credit is due. And I'd also like to say I don't envy the members of this committee the tough job they're trying to accomplish.

Just being through these trade challenges, the cattle industry is very aware of the importance of Canada, and especially Canadian agriculture, conducting their affairs in a manner that does not leave them open to international trade sanctions. Perhaps that is why our view of safety net programs differs from that of other sectors.

The Canadian Cattlemen's Association is a member of the National Safety Net Advisory Committee, but we do not agree with all of the committee's standpoints. The advisory committee has taken the position that negative margins should be covered under AIDA. CCA does not agree. Under WTO rules only up to 70% of a three-year average is acceptable. Covering negative margins would go well beyond this figure. We strongly believe that safety net programs must meet both NAFTA and WTO rules.

I understand that with the failure of WTO in Seattle... Our chairman, Ben Thorlakson, was there. He said 134 out of 135 countries would vote on some of the things and agree, and the country left outstanding was the United States.

CCA has also called for changes to the NISA program. We believe that NISA funds should be withdrawn when deemed triggered, and we believe that the 3% bonus on NISA accounts should be eliminated so that producers will not use the fund as a savings account. We believe these two changes to the present program would resolve some of the issues and criticisms facing the Minister of Agriculture.

Another thing that's not in the notes but I want to emphasize is that the return to five-year averaging of incomes would give farmers the ability to spread good years against bad years. In 1993 it was the decision of the Canadian cattle industry to end the national tripartite stabilization program, saving the government hundreds of millions of dollars and investing bridging moneys into the beef industry development fund to commission research and projects.

I think I have to mention here as well that for Alberta and B.C. cattlemen, their commodity, cattle, is not involved in NISA. We do not receive NISA top-ups as result of having those funds directed toward beef development funds.

• 1220

Between 1994 and 1999, over $22 million was invested by federal and provincial governments into the beef industry development fund. The beef industry development fund identified four major objectives: to increase export markets, thus reducing our reliance on the U.S.; to increase domestic consumption; to fund research that will ensure the quality and safety of our product; and to encourage Canadian technological advancements and improve producer management practices. The moneys invested to date have significantly benefited the industry in all these areas.

Direct subsidies to producers would compromise our industry's trading relationships. However, the beef industry development fund has been proven green in the recent trade challenge and is therefore a non-contervailable program that can be supported by government to increase returns to all sectors of our industry.

A request has been made to the government's Minister of Agriculture that available moneys originally earmarked for farm subsidy programs be reinvested in the Canadian beef industry development fund to further our objectives of ensuring a quality, safe, and wholesome product for our domestic and international customers. This includes the Canadian Cattlemen's “Quality starts here” project, which has conducted quality audits, produced good production practices manuals for producers, as well funding our Canada Beef Export Federation. The Canada Beef Export Federation is working in Asia and Mexico to try to improve our markets and our market share in those areas so that we're not so dependent on the American market for our exports.

Industry support for the BIDF program is strong. The cattle industry recognizes that producing a product that's in demand, while at the same time keeping Canada's borders open to trade, will allow our sector of the agriculture industry to be self-sustaining into the new century.

I would like to point out that the feed livestock industry, especially in western Canada, now consumes more coarse grains than what we export. This is something that has come about, I beleive, from the Crow rate being gone. Leaving my notes and now speaking quickly as a producer, I'm going to say—and I'm not going to take credit for this, as this came from a grain producer I was talking to in my area—we have it half right by disposing of the Crow rate. What we need to do now is get rid of single-desk selling and allow producers the opportunity to sell their grain.

Voices: Hear, hear!

Mr. Darcy Davis: I'd like to thank you for the opportunity to meet with you today to present the views of the Canadian cattle industry.

The Chair: Thank you, Mr Davis. Thank you very much. And I want to say how much I appreciated your remarks in support of ministers Vanclief and Pettigrew and former minister Marchi. I know they worked hard on those two particular cases, and I'm glad you came out the winner in both cases.

Now we're going to go to Jim Ness.

Mr. Jim Ness (Individual Presentation): Mr. Chairman, I'd like to thank you for helping with this opportunity for producers to voice their opinion. I'm very appreciative of the opportunity for different groups to voice their opinions.

I'd like to make a comment to some of the other groups that have already made their presentation. I'm one of those guys who believes in socialism for the socialist and freedom for the rest of us.

Mr. Chairman, unfortunately, in the crisis we have in Canada today there are actually two disasters that are working together. One is low commodity prices and one is the Liberal administration of Canada. Those two things are working together to make it very difficult for the producers in the west.

I have a couple of simple solutions. I don't want to take up a whole bunch of time here, because there are other people who want to speak, but there are some simple solutions. And it's not going to cost the taxpayers of Canada anything; in fact it's going to make them money.

The main solution to a lot of our problems is to get rid of the Canadian Wheat Board monopoly. That's the number one solution. If we had the privilege of having the same options and freedoms as the Ontario grain producer, we would have had a lot more money in our pockets from 1994 to 1996. The Ontario grain producer... I don't know what he does besides vote Liberal, but he must do something to get extra favour. And I want to see that ended.

• 1225

The other thing is to include the Canadian Wheat Board on the schedule of entities under the Access to Information Act. The only way there's going to be any accountability and transparency with that organization is to get it on that schedule. It doesn't involve a whole bunch of money to do it. You as Liberals just have to agree to do it in caucus. It's a real simple solution. Then western Canada farmers will be able to see if your Canadian Wheat Board has been as good an operation as we've been told for the fifty-some years.

I refer to the Canadian Wheat Board as being your organization. It's not mine. I'm a producer, but it's not my organization; it's yours.

A recent survey the Canadian Wheat Board did showed that 30% of producers supported the Canadian Wheat Board as is, and 70% either wanted the entity drastically changed or eliminated. I understand that this was done in 1998. This year there's been another survey that has happened, and I don't believe the results have been released as yet.

Basically, there are three steps to help the western Canadian farmer. Number one is get out of our pockets. We need tax relief. Liberal spending in the last few years is just crazy. It's right out of control. We need tax relief. Number one is get out of our pockets.

Number two is get off our backs and get out of our way. Eliminate the monopoly. Let us get through price discovery by offering our grain, our barley, and our wheat to the world. We can't do that under your Wheat Board monopoly. But if we have the ability to offer our grain to the world, we could get world price right here on the prairies, and that's going to make a big difference to our income.

Thank you very much.

The Chair: Thank you, Mr. Ness.

Now we'll go to Ken Sackett.

Mr. Ken Sackett (Individual Presentation): Thank you again for the opportunity to speak here today. They say the mind can only absorb what the butt can endure, and mine's sore, so I'll be quick.

As was related several times this morning, NISA's good only for those who have been able to contribute for several years. AIDA is a paper nightmare and will not reward farmers who are good risk managers or are diversified operators. As farmers, we want to make our living from the marketplace. We don't want welfare.

Not only are commodity prices low, but at the same time our costs are out of control. The following are some suggestions for the government to reduce our costs, reduce the cost-price squeeze, which could give all farmers immediate long-term and sustainable efficiencies.

First of all—it's been mentioned several times—the federal excise tax on fuel takes $4 billion out of the western economy every year and 4% comes to back to us. Right there is a lot of money the government has to work with. It takes an enormous amount of natural gas to produce nitrogen fertilizer. Taxes on that natural gas should be reduced or eliminated.

Chemicals are a large part of our annual costs on a grain farm. Human safety is of paramount importance, but the federal government insists on an inordinate amount of testing and retesting of chemicals, even if the same tests have already been done in earlier years or in other countries. This is a needless duplication, which common sense dictates should be reduced.

Also, as was mentioned earlier, there are education taxes. Farmers pay an unfair share of that. The government can easily rearrange or distribute that load more fairly.

User fees are unrealistic. The Canadian Grain Commission is a good example. We are charged cleaning fees on all our grain, even though most of the grain entering the system is cleaner than export standards. We are charged for weighing and inspection on grain several times between the farm and a port, and all those costs come right back to the farmer. Most of the weighing inspection procedures are for the benefit of the grain companies, yet the farmer pays.

We should be encouraging, or the federal government should be encouraging, value-adding on the prairies. The spinoff from the oil industry they say is seven to one; the spinoff from agriculture they say is over twenty to one. Yet the Canadian Wheat Board denies people such as Prairie Pasta Growers the opportunity to risk their own money, put in extra work, and denies them the opportunity to make a little extra money at it.

• 1230

At the same time, the Wheat Board rewards certain people in Manitoba under the Warburton contract, who are given a monetary incentive to produce grain for a particular customer in Britain. The hypocrisy of that cannot be allowed to continue.

The Canadian negotiators have failed western agriculture badly in both North America and WTO negotiations. Other countries don't abide by the so-called trade values or trade rules of the federal government. The federal government can no longer use these trade agreements as excuses for not enabling farmers to make a living.

It seems the most benefit to western cereal and oilseed producers is for the federal government to implement their own Estey recommendations. By implementing Estey, cost savings to farmers of $10 an acre, or $15,000 on an average 1,500-acre farm, are easily obtainable. This is a total of $300 million across the prairies. It is recoverable every year, has the potential to be much higher, and it costs the taxpayers nothing.

Grain companies and railroads must be forced to compete against each other, just as farmers have competed against each other for hundreds of years. The system must be transparent. The farmer's share of shipping, handling, and transportation costs has to end when he or she unloads their grain. Farmers cannot afford to continue paying for inefficiencies that happen after the grain is out of their control.

The Canadian Wheat Board must be moved to port position, and grain companies and railroads must bid for the right to service the Wheat Board. A system of commercial contracts with penalties and incentives must be in place for timely delivery of our crops. In the future, if a line or portion of the grain handling and transportation system breaks down, a monetary penalty must be imposed on the guilty party and those moneys returned to the producer—not as in the past, where the Canadian Wheat Board simply cried foul and the farmer paid the shot.

The western caucus recently had proposals to simply cut the railroad transportation revenue cap by 18%. I think that would be a major mistake. The railroads I'm sure have lots of room to cut, but just to automatically take 18% off them is going to backfire on the government. Down the road, the railroads will not reinvest in hopper cars. Years from now the government will be asked to repurchase hopper cars instead of selling the ones they have. If you chop the railroads that hard, they're going to ban more of the branch lines that so many people want to save. You have to think that thing through really closely.

In closing, I question the government's hypocrisy. They're a government readily worried about a monopoly in the airline industry; they're worried about a duopoly in the transportation industry, yet they gleefully shove a grain-buying monopoly down the throats of farmers.

Thank you again.

The Chair: Thank you, Mr. Sackett.

It looks as if we're certainly going to have room for another one, so after Murray Woods we'll hear from Ron Leonhardt.

Mr. Woods, welcome. You may proceed.

Mr. Murray Woods (Individual Presentation): Thank you. I appreciate being here. I guess the unfortunate thing is I found out about this meeting quite by accident. I don't think it was publicized well. I found out about it because I happened to read a letter in the paper yesterday in which there was a comment, in Myron Thompson's column. That's the first thing.

The second thing is I've been to a lot of these over the years, and I certainly hope this one will be more productive than the other ones. In the other ones I've been to there's been a lot of good input, and then when it comes down to it—and I speak specifically of the Senate meetings on the Canadian Wheat Board—when it was all done all of that input was ignored. I hope this one will go further than that.

My main occupation is a grain farmer. I farm with my wife Linda. We farm 1,900 acres of peas, canola, rye, barley, forages, and wheat. My secondary occupation is that I'm a financial management consultant with farmers, so I get to see a lot of the problems.

On my particular farm, my two highest costs are taxes and regulations. A lot of people say it's free, but unfortunately about half of what we pay for virtually everything is taxes. The regulations we endure certainly make our business a lot harder.

I had a conversation with the president of a large hog operation, very diversified, within the last week, and they've been trying to site some hog barns recently and they virtually can't get them through. I fault both the provincial and federal governments for not having some clear regulations on what is required to site these sorts of facilities, and not saying that once the regulations are in place, if they fit them, they can do them.

• 1235

If we want industry in this country, we have to let the regulations be clear as to what they're going to face, and not let every little long-haired person with a sheep go out and stop them from proceeding with the projects that clearly fit with what we're trying to do.

When I say our taxes are the highest, specifically on our farm we pay a lot of fuel tax. Extremely high taxes are built into our cost of fertilizer, grain shipping, education, property taxes—and I could go right down the list. Our taxes go up every year. I watched the table over here when Mr. Ness made the comment about the taxes increasing every year. Eyebrows were raised and there was whispering and discussion, but quite frankly if you look at the budgets, the amount of money the government's taking in every year is increasing. We can say taxes are lower, but governments get revenue from one place, and when they take in more money every year than they did the year before, taxes are going up.

I take the federal government tax now, and it works out to a little over $5,000 per person, which for my family costs me $35,000. I know they are providing some very worthwhile services, but I also know there's a lot of waste. I'm thinking particularly of handing out flags to anyone who might want one; hanging dead rabbits in trees; handing money to NHL teams—quite frankly we have already done that to some extent because the little Canada logo on the boards or the uniforms was paid for by our tax dollars; and designing a national daycare scheme, which will take money out of our pockets, to help somebody else take care of our kids. Quite honestly, my wife and I would rather raise our own kids and take care of our own.

Talking about the Estey report, Judge Estey did probably the 2,000th report on transportation reform. I think he did an excellent job of it. It's now being watered down and watered down. Minister Collenette has already floated a couple of trial balloons, basically saying “We won't do what Judge Estey recommended; we're going to put an 18% cap on rail revenues.” We should learn from history. We had a Crow rate and we got so we could no longer move grain. If railways cannot make money moving grain, they won't move grain. If I cannot make money farming, I will quit farming. We have to look back at that. He's going to make a recommendation that, essentially, the Wheat Board be left in charge—or capped or whatever—of allocating cars. Again, it would be a disastrous mistake.

Right now we're looking at 70% to the Wheat Board and 30% off-board. The off-board has been growing and growing. I'm another one who says we shouldn't even have a Wheat Board, but if we're going to, they should have to compete for their cars like everybody else. We've had canola sales lost. I also grow a lot of peas, and we're having trouble moving those peas to market, even though we have a good market for them. They're the most profitable crop on my farm, and we can't move them because the Wheat Board is tying up cars to move a crop that really isn't worth very much.

I have serious concerns about the Canadian Wheat Board's secrecy. I have my theories as to why they won't release information. I don't know what they are because it's so secret we can't even find out why they won't release information. I think they're going through an exercise now where they're going to muzzle the board of directors and not even allow them to talk about what they're doing there. I have some real concerns about that. If we're forced to sell our wheat and barley through them, if we want to go to the export market, we should know what's going on in that organization.

Again, with them, the government has been telling us for a lot of years to diversify. If I, as a farmer, want to set up a little pasta plant on my farm, process my own durum and sell that pasta, I'm allowed to do that. But if I want to join together with 500 of my neighbours and build a world-class plant I can't, unless I'm willing to pay a fee—I call it an extortion fee—to the Wheat Board to let me process my own grain through my facility that I own part of. I find that really ironic from an organization that tells us the only we can survive—and quite frankly, I'd rather prosper than survive—is to work cooperatively. Then when a group of farmers wants to work cooperatively they say they have to create a whole new set of rules for us, rather that letting us work on our own.

• 1240

Mr. McGuire asked why farmers aren't taking their money out of NISA. I have two main reasons for that. One is that a lot of the NISA accounts are held by established farmers and also by communal organizations, Hutterite colonies. I don't begrudge them that, but none of them are going to take their money out.

I just sent in my application for withdrawal from my account, and the reason we put off the decision to withdraw our money is that we don't want that income until the next taxation year. With the rather onerous level of taxation, it's another method of putting that off. I fully expect there will be a lot of money withdrawn in the next few weeks that will then be paid out in January.

I heard several comments here about making a payment and ignoring WTO, NAFTA, GATT and all that, but that would be one of the largest mistakes we could ever make. We're a small player. The Americans can do what they want; people can challenge them and they're going to survive. If we in Canada end up with tariffs... If you want to talk to some of the fellows who have been in the hog industry a lot of years, the worst thing that happened to them for a long time was the tariffs they had imposed on them. That was because we ignored our trade obligations and our trade treaties. It would be a great disaster if we did something to break those and ended up with a tariff that lasted for an awful lot of years—way beyond where we're going to get payments from government.

Another comment I keep hearing is to target those who need it. To me that's just a Canadian solution. Those who are doing a good job now we're going to ignore, and those who aren't doing a good job we're going to subsidize to keep them there. We've done that far too many times in far too many industries.

I think we need to concentrate on what we can do. We cannot change the European policies and we cannot change the American policies. Europeans have gone hungry, and they're going to pay for food, through either taxes or the marketplace. They're going to ensure they don't go hungry again. What we can do is lower our input costs. That's what I've done on my farm. I'm not out there trying to hit the top of the market selling things; I'm trying to be the lowest-cost producer in the marketplace. If I can be that I will be there.

If we look around the world, our biggest competition to stay in this business is not the Americans and the Europeans, it's the South Americans, Australians and New Zealanders. If we look at what the South Americans are doing, they are rapidly dropping their infrastructure costs. At the same time, we're rapidly escalating ours. That is where we're going to run into problems.

We started reforming the grain transportation and marketing system twenty years ago. At that time it was said we couldn't piecemeal this, but unfortunately we have. We've piecemealed all the things that paid farmers, like the Crow rate. I'm glad a lot of them went, but the one thing we haven't solved is all the regulations and conditions put on farmers operating.

My last point is that what I need, if I'm going to prosper, stay in this industry, keep paying my taxes, and make money for this country, is the government to get out of my pocket for things the country really doesn't need. I need you to get off my back and let me run my business.

The Chair: Thank you, Mr. Woods.

Now we'll hear from Ron Leonhardt. Good morning, Ron.

Mr. Ron Leonhardt (Individual Presentation): Good morning. Thank you, Mr. Chairman.

To the members of the standing committee, we're privileged that you have come out here to Alberta to hear us. I think you've heard today from a lot of producers that there's a lot of unhappiness.

First of all, producers want their income from the marketplace. They don't want it from a subsidy or a program. Unfortunately, that's not available today.

We talk about farm subsidies and subsidies to agriculture. I'd like to turn that around and suggest to you that it's a subsidy to consumers in this country. We have been subsidizing food consumers for a long time. Consider that there's about 6¢ worth of wheat in a loaf of bread that retails for $1.50. My favourite is breakfast cereal. The side of a box of Shredded Wheat says it's 100% wheat—nothing added. It costs $4.49 and contains nine cents worth of wheat. If another nine cents of that $4.40 could be directed back to the producer, you would double the price of wheat.

You can go on and look at a product like beer, where the producer gets one cent for the barley in a bottle of beer. If another one cent of that could be directed back to the producer, it would double the price of barley. This committee wouldn't be here today and we wouldn't have a farm income crisis. That's talking about the things that are consumed here in Canada.

• 1245

We have to get some of the money the consumer is paying now for their food and direct a few cents of every dollar of that back to the primary producer. It would solve a lot of troubles.

We have the export in there. We're a big exporter on the world market. About 80% of our wheat is actually exported. We've heard a little bit today about world prices. I don't think we should talk much about that, because we're supposed to be talking about safety nets, but the world price of grain today, anywhere you go... We have friends in Australia. We got a Christmas card from them yesterday. They said the price of grain is terrible in Australia. We have friends who farm in Montana who told us they ship barley into southern Alberta. So we have to be aware that world prices are very, very low.

Grain analysts are predicting that grain prices in the year 2000 will be lower than they are now. So this is not a one-year thing. This is very, very serious.

We were told when I started farming forty years ago—and it's been said many times over—that there wasn't enough grain in the world to feed the world. What has happened over the last forty years is grain production has increased, and it has increased faster than demand. That's a surprising figure. In the last twenty years, grain production has increased about 2% per year in the world. We are producing more than... I shouldn't say more than is needed. There are people in the world who are going hungry and can't afford to buy it. But we are producing more than what the demand is.

The program we have at the present time isn't working. It was designed here in Alberta. It was a poor program. It was actually the poorest we had in any province.

I'm farming with my son-in-law; we retained 800 acres and he rents 800 acres. In 1988, on our 800 acres, our income dropped by $42,000 from the previous three years. We took our own resources to cover our expenses. Now 1999 isn't quite over, but it's going to be a bigger drop than $42,000. So we have had to make up $80,000 out of our savings to keep in operation these last two years. That's on an 800-acre farm, remember.

We were able to withdraw $21,000 from NISA this past year, so the other $60,000 has depleted our savings account to close to zero. The outlook for the coming year isn't any better. So I'm at a stage where I'm ready to turn my operations over to my son-in-law, and I don't know if I'm doing him a favour or not. He doesn't have those kinds of resources to back him.

So the question is, what are we going to do? What kind of program are we going to design? Crop insurance isn't adequate to cover loss in production. When we're into a situation like this, where the rest of the world decides they're going to subsidize their agriculture...

I was told by a person whose family farm is in Denmark that they're paid $300 an acre simply to work the land. It's not paid for production; it's simply paid for the fact that they look after the land. That's how they justify those kinds of things. It's a pretty sad thing to say to somebody that we're going to have to do that in Canada in order for agriculture to survive. It's really a sad commentary when a country can't afford to provide enough dollars for the people who provide the food for it, and they aren't able to maintain their life on that land. It's a shame.

We've heard a lot of suggestions here today about what could be done. Maybe five or ten years down the road, Europe or the United States will decrease their subsidies and grain prices will improve. Maybe somewhere down the road, if competition develops in transportation, freight rates will come down. But that isn't helping the situation right now. You have a really, really difficult job ahead of you.

• 1250

What we as grain producers here in western Canada have to think about is the fact that the world price for grain is low, and we are at a disadvantage as far as transportation goes. We are going to have the highest transportation costs in the world; it doesn't matter how it operates. We are at a disadvantage.

So we have to make a decision. Do we, Canada, a grain-producing country, want to stay a major player in the world export market, or are we going to allow primary production, as someone has suggested, to shift to third world countries?

The government has to take leadership in this—federally, because you've failed to solve the issue as a world trading partner, and provincially as well. You have to say, what's going to happen to our rural communities? Are we simply going to allow them to dwindle away to nothing? Are we simply going to disappear from the picture? So you have some very serious questions ahead of you.

Thank you very much.

The Chair: Thank you, Mr. Leonhardt.

Voices: Hear, hear!

The Chair: I'd like to squeeze in one more before we have to end this session. I'd like to call forward Ike Lanier.

Ike, are you in the crowd? I have your name on the list here. You registered your name this morning.

You can take microphone eight, Mr. Lanier. Thank you for coming. I guess you're going to be batting cleanup.

Mr. Ike Lanier (Individual Presentation): Thank you for the opportunity, members of the committee.

I farm just south of Lethbridge with my son Rob. It's a grain and oilseeds operation, with some irrigation.

We've been talking about safety nets this morning predominantly, it seems to me, and the difficulty with designing them to be effective and put money in the pockets that need it the most. It's obvious the government and producers have had a hard time designing a good system.

I would suggest the federal government has designed one of the best in the world. The trouble is it's a safety net for the Canadian grain companies and millers. It's called the Canadian Wheat Board.

We pay the highest elevation charges and handling charges in North America, and within a secret, state-controlled monopoly, the Canadian Wheat Board is able to mismanage, manipulate, and protect those it wants to. I see no advantage for the producer.

Obviously the grain companies have done very well by the Canadian Wheat Board, illustrated by their huge investment in concrete elevators. There's only one place that money came from—right out of our pockets.

There's a solution for the ills that face producers, and that's implementation of the Estey report.

Mr. Chairman, you mentioned saving us $5. I suggest you will not do that by regulation. You might do it by incentives, and you can only do it by allowing competition.

I heard an MP the other night on television suggesting they were going to control rates and routes for Air Canada. I suggest to you that won't work. Only competition will.

My other concern is with the relatively new board of directors of the Canadian Wheat Board. The minister responsible for the Canadian Wheat Board has publicly said many, many times that now the control of the Canadian Wheat Board is in farmers' hands. Yet the only dual-marketer director on that board is continually harassed, gagged, and pressured into not releasing information—non-commercial information—to his constituents.

He was elected on a dual-market platform, and elected by a wide margin, and yet he is not free to bring back information to his producers. Can you explain that, Mr. Chairman?

• 1255

The Chair: I don't speak for the Wheat Board. I don't know the situation you're talking about, Mr. Lanier.

Mr. Ike Lanier: Do you believe it would be justifiable for us to expect that kind of information, information that's non-commercial?

We understand it's publicly known that the board has done one survey, mentioned by Mr. Ness, that was certainly negative to the board's position. That's been made public. We paid for that survey. Farmers paid for that survey.

I understand there's possibly another one even more negatively against the board. I don't know. No one's told me. We paid for getting that information, and we can't access it. That's not a situation where farmers are running the board.

The board has been asked for information on oats marketing. The board hasn't been in the oats business for ten years, and yet we can get absolutely no information about oat sales. That's unjustifiable.

That's about the end of my comments. The secrecy of the board has to be stopped. It has to be accountable. Whether it stays or leaves is less of a point than whether it's open and above board and its prices are transparent.

Thank you.

The Chair: Thank you.

Voices: Hear, hear!

The Chair: I appreciate your comments, Mr. Lanier, as I appreciate the comments of all.

I don't think it's my duty or role as chairman of this committee to get into a debate over the Wheat Board, but let me just say a couple of things. A number of you have mentioned the release of certain information or that you wanted the books audited. Under Bill C-4, which was passed a couple of years ago, there is a provision to have the Auditor General do exactly that, and I assume the Auditor General will do that.

I'd say just one more thing. I don't know the details of this dispute about this information that one of the directors would like to have released, Mr. Lanier. My understanding is that the information he would have liked to have released contains some sensitive commercial information.

The other thing is, it is a board of fifteen directors, and ten are elected directly by the farmers. I assume that from time to time, as it is with a lot of boards of directors, one or two persons may find themselves in a minority, and yet decisions have to be made on a consensual basis. I assume that's exactly how the board works. When you have more than one body, you have to reach some kind of majority decision.

These meetings are for you. We came to listen to you and to have your concerns heard. That's all I would like to say.

I want to thank, on behalf of all the members, everyone who presented today. I want to thank everyone for coming. This has been very profitable. This is the ninth meeting we've had since Monday, and they've all been very productive for us. Just let me assure you that later today, all of us will be returning to Ottawa, and we will carry your message as well as we can. Thank you.

This meeting is adjourned.