AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 8, 2001

• 0904

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

Pursuant to Standing Order 108(2), we're looking at consideration of the plans and priorities today with the departmental officials.

I want to mention before we start, that it appears tomorrow we only have one witness under Bill C-25, the Coopérative fédérée de Québec. With that we'll take maybe about one hour.

So in terms of your work in the office and other commitments, would that be satisfactory, Howard?

• 0905

Mr. Howard Hilstrom (Selkirk—Interlake, CA): Yes, that would be satisfactory.

Could you also indicate to the committee what you've done with those letters that have been received from the Provinces of Manitoba and Saskatchewan requesting travel out there? Have you replied to the letters yet?

The Chair: The letters were received and have been circulated by the clerk.

Mr. Howard Hilstrom: Yes, I received them. That's why I'm asking.

The Chair: Perhaps I could reply first.

If we have time tomorrow we'll try to spend a few minutes trying to give an answer on that. I have indicated personally to the Minister of Agriculture for Manitoba that it would probably be difficult for us to get out there before the end of June with the commitments we have at present. I didn't reply negatively to her, but said it would be difficult and that the committee would consider it, Howard.

Mr. Howard Hilstrom: That's good. If we're going to talk about it tomorrow, we'll leave it until then, because we do have guests. But I'd like us to consider the fact that even though the House is recessing, we could fit it in in June sometime, maybe even after the recess, because we'll still be working.

The Chair: We'll look at that tomorrow.

Mr. Howard Hilstrom: Yes, I agree.

The Chair: We welcome today the following assistant deputy ministers: Ms. Baltacioglu, Mr. Hedley, and Mr. Deacon. I'm not sure who the lead is. Is it you, Doug?

It's Bruce.

Welcome. We'll hear your statements, and after that we'll go with our rounds of questioning.

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman. We'll make a few brief comments and then we would be pleased to take questions.

We're very pleased to be here today to talk about the new direction the department is taking to shape the future of the agriculture and agrifood industry, as laid out in the Report on Plans and Priorities for 2001-2002. We will endeavour to answer any questions you have on the overall policy direction, farm financial programs, or the financial plan for the department.

I understand our other colleagues from the research branch, the marketing and industry services branch, and the prairie farm rehabilitation administration will be appearing before the committee later this week.

Minister Vanclief was here last week and laid out the changing context in which the agriculture and agrifood system must operate. In short, there are major new market opportunities, but there are many more demanding consumers, both at home and abroad. The responsible use of the environment is also a growing priority, and farmers are seeking innovative ways to manage all aspects of risk.

The government is also moving to better position the sector and committed itself in the last Speech from the Throne to help the sector move beyond crisis management to achieve diversification, increase value-added growth, new investments and employment, better land use and standards of environmental stewardship, and food safety.

In this context we prepared the Report on Plans and Priorities, which articulates the government's vision for the Canadian agriculture and agrifood sector and the department's plans for achieving it. The vision, simply put, is an innovative and competitive sector whose partners work in unison to be the world leader in the production of food and other related agricultural products and services, to meet global consumer needs in a way that respects the environment and contributes to the best quality of life for all Canadians.

The Report on Plans and Priorities establishes the department's three new lines of business, clear objectives for each, as well as the strategies and action plans for achieving them.

On slide 5 the three business lines and objectives for each are summarized. Also on slide 5 is a pie chart that shows the notational allocation of our 2001-2002 budget by these business lines. I must emphasize that this is a notational allocation based on the mapping of our current activities into these new business lines.

At this point in time we are very much in a period of transition as we shift from the previous business lines into the new ones. We are currently involved in the department in reviewing all activities of the department, and this allocation will change somewhat in the coming months. The security of the food system business line will, however, remain predominant because it includes most of the grants and contributions, which contribute over 70% of the department's budget.

There are two other points worth noting on slide 5. The total of $1.868 billion for 2001-2002 is in fact comparable to last year's budget after one adjusts for the changes in government accounting practices. As well, these forecasts are based on what was approved in the fiscal framework at the time the document was prepared, which was around last February, and does not reflect the $500 million the minister recently announced. This will be reflected in supplementary estimates later this year for fiscal year 2001-2002.

• 0910

The next three slides, slides 6 through 8, summarize the seven key result commitments around which almost all activities in the department are focused. On slide 6, you will find the three key results for security of the food system, which deal with risk management, a secure marketplace, and consumer confidence. On slide 7, you will find the two key results for health of the environment, which focus on environmental awareness and environmental stewardship. On slide 8, you will find the three key results for the innovation and growth line, which focus on innovation and discovery, skills and investment, and market diversification.

The Report on Plans and Priorities also outlines the government's plans to address horizontal issues for which the minister and secretary of state provide government-wide leadership. These include the Canadian rural partnership and the cooperatives secretariat, which Secretary of State Mitchell will address when he meets with the committee, I believe, on March 17.

Finally, the RPP provides information on two largely independent organizations that are attached to the department, the Canadian Pari-Mutuel Agency, which ensures the integrity and standards in the operation of parimutuel betting operations across Canada, and the National Farm Products Council, which oversees the national orderly marketing services and agencies.

Ultimately, the Report on Plans and Priorities is, as Minister Vanclief indicated, about branding Canada as the best at meeting consumer expectations and providing farmers with the tools they need to produce products that are the number one choice of Canadian citizens and customers around the world so that Canadian producers and rural communities reap the benefits of economic growth and investment.

Thank you for the opportunity, Mr. Chairman, of making these brief remarks. We would be pleased to take any questions.

The Chair: Thank you, Mr. Deacon.

Howard?

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

I have to say, ladies and gentlemen, that this was one of the most impressive slide presentations I've ever seen. This is a real nice-looking document and it seems pretty well laid out.

The content, however, is certainly what we're going to ask some questions about. When you say Canada will develop the agriculture sector, you're talking about Liberal government initiatives, right? Is that not what's meant by “Canada”? Or is that too political a question for you? You say Canada will help the agriculture sector. You're talking about Agriculture and Agri-food Canada; you're talking about Minister Vanclief and the government, right?

Mr. Bruce Deacon: We're talking about the plans of the government and of the Department of Agriculture and Agri-Food Canada.

Mr. Howard Hilstrom: In the throne speech it says they're going to help agriculture “move beyond crisis management—leading to more genuine diversification and value-added growth”. How much discussion has there been or is currently ongoing on some of the major issues that affect farmers' income very directly? I'm going to ask you how much is being discussed about the Canadian Wheat Board and the organic farmers who are trying to value-add to their product to export flour, to export organic wheat, which the Canadian Wheat Board will not market and does not market. The organic farmers are being prevented from doing that. Is your department working on that issue?

Mr. Douglas Hedley (Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): If I may, Mr. Chairman, the answer to that question is yes. We are working with the Canadian Wheat Board. We are working with a number of organic groups across the country. The primary responsibility for that is with the market and industry services branch, which I believe is appearing before you next week.

Mr. Howard Hilstrom: Yaprak?

• 0915

Ms. Yaprak Baltacioglu (Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): Also on the organic farming, we are working with the Standards Council of Canada, the Canadian General Standards Board, Industry Canada, the Canadian Food Inspection Agency, and various provincial governments to develop a coordinated approach to the accreditation and certification issues in Canada. That one is a very critical issue for the organic growers as well.

Mr. Howard Hilstrom: Yes, I agree. There are several issues, but the one that seems to be stifling advancement and diversification the most is the monopoly of the Canadian Wheat Board. You're certainly not able to, I suppose, talk about the fact that there's a monopoly there. But that is clearly what's being said in western Canada—that this monopoly is one of the hindrances to value-added on the prairies.

It just doesn't seem like there's any need for that monopoly. We want to have a marketing agency like the Canadian Wheat Board, but it's the orderly marketing. I see your emphasis in here is on orderly marketing. Orderly marketing is not designed, in the Canadian Wheat Board monopoly, to get the best price for the farmers all the time. Farmers have to run their business in order to maximize incomes for their own farm. A monopoly says that a pool price, one price for all, is orderly marketing.

This is why it's so clear that the stifling... So I make those comments—I guess they're not really questions; they're more like comments—that this is a major, major issue with us. It's being imposed on us by the very government that is saying they're advocating this diversification.

In regard to securing the food system and making Canada the world leader in producing, processing, and distributing safe and reliable food to meet the needs and preferences of consumers, is Agriculture and Agri-Food Canada still working on that issue of the water buffalo that came into B.C. from Denmark, in regard to the BSE issue? Is that anything to do with your departments? Because when we're talking about safe and reliable food, the diseases of Europe and the mismanagement of their agriculture sector, particularly livestock over there, is just not the way to go.

Have you done anything about that? Or is that your department?

Doug Hedley.

Mr. Douglas Hedley: Mr. Chairman, that falls under the Canadian Food Inspection Agency.

I believe there are some legal issues there that have been raised. As a result, I won't comment on it, but it is being explored by CFIA at the present time.

Mr. Howard Hilstrom: Okay.

The minister mentioned the other day that he wants to see environmental plans for all farms across Canada. Now I know that in Ontario they have kind of a voluntary system that is actually kind of mandatory. I think every farm has it. What are the plans in that regard? Is there budget money in here, and are you planning for that? How much of the plan is already available to go forward?

Mr. Douglas Hedley: Let me start on that and then turn it over to Yaprak.

Over the last four years, we have spent a fair amount of money through the CARD program to encourage farmers to develop farm plans. We have been perfecting the scheme, if you wish, working jointly with the councils and the provinces.

The Ontario council has done a fair amount in developing farm plans. We're pleased to see that. We're now proposing that we go much further, now that we have tested that pilot, into environmental farm plans for every farm. If we're going to brand Canada, then everyone's going to have to be in the scheme. You can't have some in and some out.

We have no direct funding for achieving that at the present time in the current budgets, although we have spent and will continue to spend money through CARD in the development of the pilots.

Yaprak.

Ms. Yaprak Baltacioglu: I think Doug Hedley has outlined what we're currently doing.

Quite a lot has happened in Ontario. Not all farms do have farm plans. Our challenge right now is that we do have the policy direction from our minister in terms of the desirability of environmental farm planning. The devil in this case is in the details because there is no particular definition of what an environmental farm plan may be across the country. For example, Ontario and the Maritimes have some definitions and guidelines, which are in quite thick binders.

Mr. Howard Hilstrom: I've got one.

• 0920

Ms. Yaprak Baltacioglu: Yes. On the Quebec side, I think they are approaching conservation plans and different, more targeted areas. What we are doing currently, working with the federal-provincial ADMs committee and the deputy ministers committee, is trying to tackle the issue of what does it mean—what do these plans involve; what kind of national goals can be set for the country and for agriculture that are meaningful and practical, because farming is a complex business, and environmental farm plans have to fit the nature of the business. So we're in the process of scoping the issue out with our provincial colleagues.

Mr. Howard Hilstrom: Yes, and avoiding stepping on provincial jurisdiction. I would think that you'd be working cooperatively as opposed to some federally imposed plan.

I appreciate that my time is up, Mr. Chairman.

The Chair: You're watching very closely.

[Translation]

Marcel, please.

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chair.

I would like to follow—up on this, because it seems there is an environmental issue in the project which is a little stronger than what you are presenting to us this morning. Is that because of the incidents caused by agriculture we hear more and more about? Someone said rightly over the week—end, that agriculture is becoming more and more industrialized. The huge farms make that we have problems, including drinking water pollution and so on.

Is the department taking more and more the direction of research in order to try to prevent the inconvenience caused by agriculture? Is that what you mean by the term "health of the environment"?

[English]

Ms. Yaprak Baltacioglu: Yes. For the department and for our minister, environmental sustainability is a critical issue partly because it is mainly about our nature, our air, and clean water for all Canadians. From the agriculture sector, though, long-term sustainability is very much dependent on environmental stewardship as well.

In terms of progress, Canadian agriculture has made significant strides in the past 10 to 20 years in terms of environmental management. Should the members wish to have it, we did do a report on the environmental indicators for all of Canada, and that, I must say, is one of the model reports in the OECD countries.

According to the indicators report, while we have improvements in agriculture in many areas—for example, in terms of soil conservation practices, in terms of things like zero-tilling, etc.—there is still room for improvement in terms of water quality, in terms of chemical use... The list goes on.

So our department's plans involve a number of things. Our colleagues from the research branch will be in front of the committee next week, I think, and they can outline the extensive research efforts that we are doing. Examples of our research are things like integrated pest management, for example. Instead of using just the chemical way of managing the risks, are there ways to deal with it in a more holistic fashion, for example. Basically, we have lots of projects going through on the environmental side.

As well, on the program side, the Canadian Adaptation and Rural Development Fund... The CARD has made the environment a priority. It is one of the success stories of the CARD I and II fund to date, where the sector has actually taken the leadership and has done things like, for example, all of the environmental farm plans in Ontario.

Maybe Doug has more things about our programming.

Mr. Douglas Hedley: If I may add, the CARD fund has also supported what we popularly call HEMS, the hog environmental management strategy. What this is doing is looking at ways in which we can better handle manure on farms, whether they are small or large. The problems are not because of large farms or small farms. It is all farms. Some of the large farms, in fact, are doing a better job than many of the small ones.

• 0925

But we are working away on that, because we do regard it as a significant problem for not only existing farms but also the growth of farms—additional hog facilities, for example—whether they be in Quebec or Manitoba or Alberta.

[Translation]

Mr. Marcel Gagnon: We are certainly going in the direction of agricultural development when we ensure that the environment also has its share of support within the farm community.

You said earlier that Quebec was doing some work on it, but I did not understand the difference. You said that studies are made in order to avoid duplication, so that it is rather complementary.

Could you repeat what you said about the way Quebec is working for environmental stewardship in agriculture?

[English]

Ms. Yaprak Baltacioglu: I said that there is no national definition or standard for environmental whole farm management plans in Canada. In Ontario and the maritimes we have something called environmental farm plans. In Quebec, for example, they encourage farmers to join regional agricultural conservation clubs. We have approximately 60 conservation clubs in the province, with 2,300 farms participating.

I mentioned in response to the earlier question that across the country we don't have consistent application of environmental farm plans, or a standard as to what should be in them.

[Translation]

Mr. Marcel Gagnon: Thank you.

In the estimates, I can see a decrease from $2.3 billion to $1.8 billion. In view of your concerns, it is a rather big drop. What services have been changed or simply removed? Can we say there is an improvement in agricultural development with such a budget cut?

[English]

Mr. Bruce Deacon: With regard to the overall budget figures, the number you quoted appears somewhat artificially high because of a change in accounting practices. When you compare the number for 2000-01 with the number for 2001-2002, it appears to drop from $2.5 billion to $1.8 billion. In fact, the $2.5 billion figure includes both the first year of the CFIP program and the last year of the AIDA program.

The reason for this is that the government has changed its practices, reporting on a program in the year in which it occurs as opposed to the year in which it's paid. If you take out of 2000-2001 the more than $600 million for the last year of the AIDA program, the two years' budget figures are roughly comparable.

In addition, the 2001-2002 figure does not include the $500 million that will be added in supplementary estimates. So in fact the budget is relatively stable or will in fact increase, depending on whether you include the $500 million.

The Chair: Thank you, Marcel.

Before I go to Murray, with regard to a couple of questions asked here you referred to somebody who is going to come later. In the department are there four assistant deputy ministers? Yes? So are you referring to the fourth person who is going to give these answers? How does this whole structure in terms of the department relate to the committee in terms of what is being presented today?

• 0930

Mr. Douglas Hedley: My understanding was that the committee had requested two sessions. Three of us would appear this morning from the strategic policy branch, the farm financial programs branch, and the corporate management branch, and at a later date you would be talking with the market and industry services branch and the research branch.

The Chair: For committee members, that branch or that ADM will have the answers to these questions that are being referred to today.

Mr. Douglas Hedley: Yes, some of them.

Mr. Howard Hilstrom: So this isn't quite as accurate a report as I thought, because it mentions environment and all these issues here. It got me on the wrong track if that's not the topic.

The Chair: Well, that's what I'm trying to clarify for committee members, where we sit with this. I had the idea that today we would be looking at the total plan, and then at parts of it later. But you're right.

Do you have an answer to that?

Ms. Yaprak Baltacioglu: I have a partial answer.

When I referred to my colleague from the research branch who is going to come here to present to the committee, he will have the details of almost every research project we are doing. These are scientific projects, and I didn't want to misquote certain types of projects.

However, on the business plan, as we have presented, and our reports on plans and priorities, many of us have parts of different files. For example, almost every branch in the department works on the environment. I work on it from the policy side, my colleagues in the program side work on the programs, and the research branch works on the research. The marketing people, who will be coming next work, work on the marketing and international side. So every one of us has parts of the puzzle, and we would be happy to answer the questions. When we referred to the details, it is partly because sometimes on the science side you have to be a scientist to explain it in an appropriate fashion. But we can definitely cover all of the plan.

The Chair: Murray, I'll go to you now.

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

I'm going to go on here with the environmental issue, because in Ontario, in our farming operation, we did the environmental farm plan three years ago. We found it a very interesting exercise, and it helped us with our own nutrient management plan off the farm. But Ontario is still reacting and recovering from the Walkerton issue of last year. One of the things I see that is probably going to come out of the provincial government is legislation that will stiffen up how agriculture is carried on.

The environmental farm plan that was developed in response to the money that came out of CARD is a good program. It has momentum within Ontario. One of the priorities we're looking at is obviously the environment. Is there a way that we can develop the environmental farm plan, which right now is in the Maritimes and in Ontario, into a nationwide program?

Mr. Douglas Hedley: Mr. Chair, let me start on that.

First of all, the CARD fund really has been our pathfinding capability in the department. Some of the work it has done on the environment, particularly in farm plans, now puts us in a very good position to expand and accelerate that into a Canada-wide program. We know a lot more now. We know what works and what doesn't. We know the nature of the farm plans that we are going to have to develop.

Our objective, and the one the minister laid out on the environment, is to extend that now to all of Canada, to set a standard in Canada that will allow us to brand Canada as an environmentally responsible place in which to produce food and sell to consumers both at home and abroad.

With the foundation work we've done, we now feel we're ready to accelerate that to the national level. We are in discussions with provinces now on how and when we do it. Whereas we have not allocated money in this budget, we are exploring how we best go about that jointly with the provinces, because both federal and provincial responsibilities are involved here for delivery of it.

Mr. Murray Calder: One of the responsibilities I see in the partnership you're going to have to develop with the provinces on this is obviously going to be a financial one, because within that, within nutrient management, you're definitely going to have to talk about manure storage. That storage is probably going to be a minimum of eight months' worth of capacity, depending on the size of your operation, probably roofed-in coverage. So we're looking at a cost to a farming operation of anywhere from $10,000 to $30,000, depending on the stipulations and specifications of how you take and construct this.

• 0935

Is that going to be totally on the back of the farmer, or is there going to be some government involvement in establishing that nutrient management?

Ms. Yaprak Baltacioglu: Maybe I'll give two answers.

First, we're at the stage of working with the provinces on the farm planning level as to how much it would cost to farmers and what needs to be in it.

Secondly, plans are plans, but they're not meaningful if they're not implemented—

Mr. Murray Calder: That's right.

Ms. Yaprak Baltacioglu: —and that's what your question is about.

I think our minister made the point last week that we recognize that the agriculture sector in many ways is a price-taker. Although in the environmental policy there's something called “polluter pays”, we feel from Agriculture Canada's perspective that this particularly doesn't apply to the agriculture sector, because they have no way to pass the costs on to consumers or to the export markets. Therefore we feel there is a role for the governments to play. That's part of our conversations with the provincial governments. I can't tell you exactly where we're going to end up as to who is going to pay for what, but that is the direction in which we're going.

Mr. Murray Calder: It's definitely something on which we are going to have to have an answer, before implementation, not after.

Ms. Yaprak Baltacioglu: Absolutely.

Mr. Murray Calder: We've already established within the farming community that you can break it up into thirds. Basically, the first one is from 12,000 to 100,000 gross, then from 100,000 to 500,000 gross, and then from 500,000 on up. You get into those first two categories where, basically, I take a look at the sun-downers who have a nine-to-five job and a pastoral operation of 1960s or 1970s vintage, and there is no real facility for manure storage. It's a cement pad in the barnyard and a pile of manure. That's it. There's no retaining wall, no roof, no nothing. As to whether or not that operation can survive because of the capital investment you would have to have for storage, obviously you have to have something in place to be able to compensate that grower, because everybody benefits from it. That's the other thing: everybody benefits.

How long do you see the negotiations with the provinces on this particular issue until we come to an end result?

Ms. Yaprak Baltacioglu: We haven't started negotiating with the provinces. We're at the discovery level. We're having very intense conversations. Federal, provincial, and territorial ministers are going to discuss this issue in June and later in the fall. So before the end of the year, we should have at least details on the farm planning aspects of this issue.

Mr. Murray Calder: Okay.

You're working this basically province by province, but it's eventually going to be a national perspective. You've told me you're discussing it with the governments. What about the farm groups: the Ontario Federation of Agriculture, the Canadian Federation of Agriculture, and the NFU? Have you been talking to them, and what have they had to say about this issue?

Ms. Yaprak Baltacioglu: We have been talking to industry groups on the environmental issue, on the environmental farm plans, for many years now.

In terms of this particular aspect, as Douglas has said, we're in the discovery phase, and we will be going out and having a series of informal meetings in weeks to come to talk about the details of what we're finding out, and also to get their input at the outset before policies are formalized and put into programs.

Mr. Murray Calder: Have they voiced any concern about the capital investment for—

The Chair: Murray, I'm going to have to cut you off.

Mr. Murray Calder: Is that it?

The Chair: Dick.

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

Welcome, everyone.

• 0940

In the Speech from the Throne, which we have on slide 3, it starts out by saying that Canada will help the agriculture sector move beyond crisis management. Some of us are worried that is really signalling you intend to leave behind those farmers who haven't been able to adapt. I think the minister was fairly clear. I noted his comment when he was here last week, I think it was. He said something to the effect that we're not going to prop up the past as we hurtle into the future. Are there any plans in place in the department or any indications from the political leadership on any kind of transition programs for farmers who aren't able to adapt to some of the realities of world markets?

Mr. Douglas Hedley: Mr. Chairman, first of all, let me repeat the priorities the minister outlined to this committee: one, safety nets; two, food safety; three, the environment; four, transition; five, science; and six, trade and trade development.

The fourth priority he outlined was transition. It is to try to deal with those farmers who find it very difficult to continue in today's market circumstances, whether that be in terms of the level of their investment, skill levels, or marketing, you name it. We are exploring that, and we have discussed it with the provinces for a few months now.

I think most provinces, if not all of them, recognize that there is a set of farmers with whom we need to deal other than by simply providing more safety nets. If we base our safety nets on income levels or margin levels, the income levels and margin levels of those farmers are low enough that we can't offer them very much assistance. So going into transition to make them stronger as individual farmers or offering them alternatives in farming or outside of farming in terms of skill levels and how we deal with them is, I think, a critical aspect of getting beyond the crisis management that the throne speech talked about.

Mr. Dick Proctor: Just to pick up on that, Mr. Hedley, you've said that discussions are underway. Do you have a timeframe as to when discussions will come to an end and farmers might see a joint federal-provincial program announced?

Mr. Douglas Hedley: Mr. Chairman, anyone who tries to predict the timing of conclusions on discussions and negotiations with the provinces will probably be wrong. We are hoping that an integrated risk management package, as the minister outlined, which we're working on with the provinces, including food safety, the environment, and transition, will begin to emerge starting with the meeting of federal, provincial, and territorial ministers at the end of June and again in the fall.

Mr. Dick Proctor: Thank you.

This is my other question in this round, Mr. Chairman. I'd like to contrast slide 4, which talks about an innovative and competitive sector whose partners work in unison, with something the women's president of the NFU said recently. She said:

I cannot imagine anyone doing better in coming years than Canada has done over the past decade.

She was talking about the small Caribbean nations and the South American nations. This is the quote:

Canadian farmers have done everything we were told: We doubled exports and doubled them again; ...cut subsidies and tariffs; expanded farm size and cut the number of farms. Canada has embraced and implemented every aspect of the global free trade... model. And the result is economic devastation for family farms and rural communities.

I'd be interested in hearing your comments.

Mr. Douglas Hedley: Mr. Chairman, I'm not certain I can comment on a statement from someone else. Is there a question?

• 0945

Mr. Dick Proctor: All right. Let's try it this way, Mr. Hedley. Statistics Canada says that 71¢ of every family farm dollar now comes from off-farm income. What would your comment be on that?

Mr. Douglas Hedley: At the present time, Mr. Chairman, we anticipate that federal and provincial governments will spend about $2.6 billion on farm programs in the course of the next year. That will be out of the long-term safety net funding, which is the $1.1 billion plus the provincial share we agreed to nearly a year ago, and on top of that we have $500 million from the federal government, which stimulates another $333 million from the provinces, bringing the total up to $2.6 billion. If I compare that with farm income, your number of 71% is about right.

However, I think you also have to recognize that some parts of the agricultural sector are doing extremely well. I would point out that at the present time the hog and beef prices are some of the strongest the industry has seen in many years.

With regard to the grain sector, we can talk about it in a number of ways, both grains and oilseeds. Prices have come down substantially from the mid-1990s. There is no question about that. There's a little bit more strength this spring than there was a year ago in nearly all of those prices. But, quite frankly, with the productivity gains that have been made around the world in the grains and oilseeds sector, we have a lot more available to us today. We've had about six or seven crops of nearly record proportions around the world back to back. That has been virtually unheard of in the last century. What that has done is put grain prices on a track that could very well be normal for a long period of time.

The Chair: Thanks, Mr. Hedley. I have to move along.

Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): I have a number of questions I'd like to pose. I was rather taken back this morning to read that we're in the parimutuel business. I was of the clear understanding—

Mr. Roy Bailey (Souris—Moose Mountain, CA): It's a racetrack.

Mr. Paul Steckle: —that we weren't in that business. Can you explain to this group of people here this morning what involvement we have in the parimutuel business?

Mr. Bruce Deacon: Our involvement is primarily in the setting of standards with regard to performance-enhancing drugs and then supervising and coordinating the testing of that to ensure that betting in thoroughbred horse racing across Canada is based on fair and best practices.

Mr. Paul Steckle: So we're not involved in terms of whether or not we have parimutuels. As members we have never been involved in terms of supporting or not supporting parimutuels. This comes as a complete surprise, not the fact that we shouldn't be involved in...

Mr. Bruce Deacon: We are part of the regulating structure. We work closely with the provinces. The main component we bring to that is determining what drugs will and will not be permitted and in what dosages and on what basis. We then put in place national standards for the supervision and testing. Then we basically attest to the fair and standard practices that are followed by the racing commissions.

Mr. Paul Steckle: Good.

Mr. Bruce Deacon: I might add that we are currently recognized as a world leader in terms of how well that is done. It is entirely financed by a percentage of every bet that is placed.

Mr. Paul Steckle: So it is self-financing.

Mr. Bruce Deacon: It is completely self-financed, and 0.8% of every bet placed goes toward totally funding the agency. You will find the financial details summarized in the report.

Mr. Paul Steckle: I have that here. I appreciate that. That clears that up for all of us, because I think none of us was familiar with that.

Given that water is a big issue today and given that we're seeing problems in areas where we didn't formerly believe there were problems and that we're looking at environmental issues, should the government be involved in leading on this issue of what we might do to help our livestock operations in terms of models? We know there are companies in Canada that have developed models that might be used on farms. Whether they're viable at smaller operations in terms of 5,000 or less, if it's hogs or cattle... perhaps there need to be larger operations to make them viable; I don't know. Should government be more involved in terms of leading? Should there be more money made available so that models could be established on farm?

• 0950

We are getting just untold numbers of requests from farm groups because they know that ultimately, whether they're guilty or not, they're going to be associated with guilt in terms of what happens with our Great Lakes, in terms of the aquifers. Should we, as the Government of Canada, be the leaders, and should we be the ones solely in charge of water management in this country? I know that we're dealing with that in the House today, and I don't want that to be an influence on what might happen later today. But I do want to have some comment from you on whether or not there should be, at the national level, a body that's responsible for the monitoring of water and enforcement for those who come in violation of certain rules.

Mr. Douglas Hedley: First of all, Mr. Chairman, let me say that, as we have thought through the environmental issues in Agriculture and Agri-Food Canada, we really have two tracks that we could run on. One is to say, we will let the provinces do most of it; we will watch it and take a very passive role. We are going to end up, then, with a patchwork across Canada of how we treat farms, differing by province and region, and probably not touching all farms.

The other route to go, and the one the minister is pursuing, is to say, we have an opportunity in Canada that, if everyone does it and we set the bar for all of Canada, then Canada can become known for the quality of its environment and the quality of the environment with respect to farms. It gives us a selling advantage in the world as well as to our consumers here in Canada. That is the route we are going.

As to whether or not an agency or an institution needs to be created, I would leave that to members. We need to look at that in discussion with provinces, and that's part and parcel of what we're discussing as to what institutional structure we might need. We have drawn no conclusions there yet.

The Chair: Thanks, Paul. Your time is up, and I'm going to have to go now to Rick, okay.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman. I will not be here for the second round, so I'll give it to either Dick or Paul at that time.

Your plans and priorities, the three new lines you have—I'd like to deal with one issue in every one of the three lines. The first one you talk about, and it hasn't been touched on yet, is that of consumer confidence. You mention a higher level of consumer confidence in the quality, safety, and production of Canadian food, and that's very laudable. That's a statement that we can all agree with. There are some issues within that comment there, and obviously the one we talked about recently was the genetically modified organisms—the GMOs. CFIA, we recognize, has fewer inspectors now than they did previously. Can you, as your department, honestly say you're heading in the right direction to try to instil a higher consumer confidence in our food supply and its quality? If so, what about these two issues, and particularly with GMO? Where do you see your department heading with that aspect?

Ms. Yaprak Baltacioglu: GMOs, or genetically modified foods, are part of the government's overall approach to biotechnology. Biotechnology is a very fast-growing area of industry in Canada. Canada is number two in the world, actually, in this area. So from the government's perspective, there is a lot of support behind biotechnology and its establishment in Canada.

Mr. Rick Borotsik: But you're talking consumers here—consumer confidence.

Ms. Yaprak Baltacioglu: However... Yes, sorry, Mr. Borotsik, I think... I have to tell you, the one part—

Mr. Rick Borotsik: You could have read my speech. I said that already.

Ms. Yaprak Baltacioglu: The second part is that biotechnology, like everything else, and the genetically modified foods... Without a stewardship initiative in terms of making sure these products are regulated properly, there will be no consumer confidence, of course. However, in Canada the Canadian Food Inspection Agency carries out safety assessments of plants with new characteristics, livestock feeds, veterinary biologics, and fertilizers, including those derived through biotechnology.

• 0955

Mr. Rick Borotsik: Okay. I can read that, and I have read it before, and I probably accept most of it. I guess my question now is: from your department, through the Department of Agriculture, do you feel that we have the proper consumer confidence now with respect to GMOs? Are we heading in the right direction, in your opinion?

This is your plan. This is your plan and priorities. So you're saying, in this plan, that we're heading in the right direction and we can instil consumer confidence based on the plan that we have put forward right now, which is a voluntary system with respect to GMOs.

Ms. Yaprak Baltacioglu: In terms of regulation of GMOs, we have a world-class inspection system. When you're saying “voluntary system”, I believe you're referring to the labelling initiative?

Mr. Rick Borotsik: Labelling—

Ms. Yaprak Baltacioglu: That's a process with the Canadian General Standards Board. It's a process that's running. All of the players are at the table. That's what they're developing right now. I think, again, this one is an area where the devil is in the details—

Mr. Rick Borotsik: Very complex.

If I can, I have two other very quick questions. Number one is on your slide 7, which is your second business line. You talked about the environment at great length, and I appreciate the fact that there are some good programs that you've put forward. My question is simple. The environmental farm plans that we talk about in Ontario and in Atlantic Canada—if we extend them into other areas of agriculture, do you see in your plans and priorities that this becomes a mandatory requirement of all farms, or is this simply going to be a voluntary requirement of farms? It's a simple question—yes or no. Do you see a mandatory environmental plan at some point in time?

Mr. Douglas Hedley: I believe, Mr. Chairman, that when the minister was here, what he indicated was that we would work toward that over a five-year period, but that we would see it for all farms.

Mr. Rick Borotsik: Mandatory over five years for all farms?

Mr. Douglas Hedley: Yes.

Mr. Rick Borotsik: Okay. You've answered my question; thank you. There are some issues there as well, but I don't have enough time.

My last one is probably one of my biggest pet programs or projects, and you talk about it in your third line, which is the skills and investment—an entrepreneurial and highly skilled workforce. I assume you're talking about the agricultural, highly skilled workforce and not Agriculture Canada, although they both mesh.

I agree. I think that agriculture today has become a huge business. It's not something that we knew 15, 20, or 25 years ago. Do you have any plans now, in your plans and priorities, to see an education process that talks about those wonderful things like GPS, the zero-till, the focus on inputs, trying to reduce inputs, and management skills with respect to accounting and management? Do you see anything coming from your department to help agriculture and farmers in that area?

Mr. Douglas Hedley: Mr. Chairman, first of all, I recognize that education is a jealously guarded responsibility of the provinces. We are working with the provinces in terms of identifying the strengthening of skills and shifting to a learning culture in agriculture and agrifood. We are working toward that. We have a number of programs out there now that do assist farmers. Let me mention the farm consultation service that we still have—

Mr. Rick Borotsik: Excellent program, by the way. Excellent program. “Expand on it” is all I'm saying, Mr. Hedley.

Mr. Douglas Hedley: —and the farm debt mediation service.

Mr. Rick Borotsik: Well, that's not so excellent. It's good. We don't want them to get to that. We want the consultation process, but expand upon that because what happens there, as I understand it, is that it goes to a certain level and then it stops. Maybe you should have a secondary program that goes back to review as to how those recommendations were followed up or not followed up, and then you can educate the individuals at that point. It's a great program. Don't stop it.

Thank you.

The Chair: Thanks, Rick.

Mr. Rick Borotsik: Thank you.

The Chair: David, do you have anything?

Mr. David Anderson (Cypress Hills—Grasslands, CA): You've assigned $1.3 billion to the security of the food systems on pages 14 and 17 of your estimates here. This includes all safety net programs, is that correct?

What I was wondering is: will you break down your safety net spending for us? I'm thinking crop insurance, NISA, and CFIP. Would you do that for this year and for the next two years when you have estimates on that?

Mr. Douglas Hedley: First of all, Mr. Chairman, we're down into a huge level of detail, so let me give round numbers, and I can give you very exact numbers if you wish.

With respect to crop insurance, our crop insurance payments run approximately $227 million per year. That number changes a little bit each year depending on the experience of previous crops and the levels. That includes not only the basic crop insurance programs but also the top-ups that various provinces request through the safety net package.

• 1000

Under the CFIP program we anticipate spending somewhere around $375 million to $400 million in the coming year. Those are our current estimates. We are just now receiving applications, so trying to nail down a hard number is a little difficult. Our upper limit on that program would be around the $415 million we have available for approved spending.

On our companion programs, our total amount is approximately, depending on how you measure it, between $135 million and $200 million. For companion programs that are not add-ons to other programs, such as crop insurance or NISA, it's around $135 million. That number will fluctuate from year to year as provinces move money in and out of programs.

For NISA, we are spending around $220 million annually. Again, that number changes as farmers in the program join or leave. Indeed, we expect that number to go up in the coming year with the entry of B.C. and Alberta cattle back into the program. We anticipate quite a large increase in that program, which will draw down the other money.

The other side of the equation I need to talk to you about is the fact that we have a fixed allocation for most of our safety nets. We have $705 million in what is known as the general risk management programming. That $705 million is a fixed limit that covers crop insurance, companion programs, and the NISA program.

Mr. David Anderson: I'd like to interrupt you here. Does that limit drop the year after? If it doesn't, I'd like you to tell me for 2003-2004 what your planned spending is on these programs, because your budget is cut by approximately 25%.

Mr. Douglas Hedley: Well, it goes from $1.8 billion to $1.2 billion.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): That's not true.

Mr. David Anderson: That is true. That's 30%.

Mr. Douglas Hedley: We announced the framework agreement in summer. When we signed the framework agreement last July in Fredericton, that agreement was for three years. It covered the three crop years or tax years 2000, 2001, 2002. That agreement was three years because that was the commitment of money we had, over and above our ongoing $600 million per year. So for only three years do we have our fixed federal commitment at $1.1 billion.

Mr. David Anderson: Are you saying these numbers will stay the same, then, for two more years?

Mr. Douglas Hedley: They stay the same for the crop years, the tax years 2000, 2001, 2002. The money will be spent through to 2002-2003.

Mr. David Anderson: Where does the 25% drop in your budget come from then? What programs are affected by that?

Mr. Douglas Hedley: We have $600 million as ongoing spending every year. We don't have to renew that. The cabinet and Parliament have to approve our going above that level. We only have it for three years. So we are currently at $1.1 billion, plus the $500 million. We drop down to $600 million at the end of that three-year period, unless decisions are made to replace it or go above or stay at $600 million. But those decisions have not been made. That's why there is that drop in spending at the end of the third year.

Mr. David Anderson: At the end of next year.

Mr. Douglas Hedley: Yes.

Mr. David Anderson: And you haven't projected past that on what you're spending on farm income programs.

Mr. Douglas Hedley: We do not project until those policy decisions are made.

Mr. David Anderson: Thanks.

The Chair: Thanks, David.

Rose-Marie.

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

Going through my blue book here, it's very interesting reading. I'm a graph person, so I was looking at the graphs for figures 1, 2, 3, and 4. Of course, the greatest allocation, 71% of the budgeting, is for the security of the food system. Figures 3 and 4 are for environment and innovation for growth. But looking at figures 3 and 4, the operating section for those two lines are quite large compared to the transfer payments and that. Why is the cost so expensive in those areas?

Mr. Douglas Hedley: Can I have the page number again?

• 1005

Mrs. Rose-Marie Ur: Page 15. Your operating budget is $11.5 million for environment and your transfer payments are $24.4 million, and for growth the operating budget is $263 million and your transfer payments are $91 million. That's a real discrepancy there.

Mr. Douglas Hedley: First, in the top pie chart all the green is in fact money going out the door to farmers. You have then operating money to be able to deliver those programs and operate them across Canada.

When you look at the other programs, we do not have the extent of grants and contributions in the health of the environment or innovation for growth programs that we do in that for security of the food system, so that our operating is quite small in the security of the food system program, because our transfers are so large.

Mrs. Rose-Marie Ur: Is it because of cost recovery?

Mr. Douglas Hedley: No, quite frankly. Cost recovery under our safety nets is approximately $8.5 million in our estimates this year, out of the expenditures of well over $1 billion.

Mr. Bruce Deacon: I might add, these numbers are also gross figures, so they include total expenditure, even if it is vote-netted in respect of revenue coming in.

Mr. Douglas Hedley: Yes.

Mrs. Rose-Marie Ur: Can we at any time get a breakdown? We just have these graphs. Can we get more specific details as to where these dollars are going—you're saying, in the top chart, transfer payments—a breakdown as to just where those dollars go? I think that's important. And where can I find the business line for the rural secretariat, the dollars that are allocated there?

While someone is looking for that, I'm also looking for information on commitments to the national farm income safety net program. You say you have a priority list. Where is the priority list with the safety net program in your department?

Mr. Douglas Hedley: Mr. Chairman, with the Canadian farm income program, the funding is complex. Let me try to take you through it.

When we set up the framework agreement, it was set up—at box 1 or general programming—at $665 million. That left a balance of $435 million, which funds two programs. One is the Canadian farm income program, the replacement for AIDA, as well as the spring cash advances program. We anticipate that the spring cash advances program is going to cost us $20 million to $30 million, so if you deduct that from $435 million, you have the balance that is available for the Canadian farm income program. However, it is set up so that we do not lose any of the $435 million. If we allocate $40 million to the spring cash advances program, to be safe, to be assured that we have enough money, and we only spend $30 million, that balance of $10 million reverts to the Canadian farm income program, to assure that we have it available.

Mrs. Rose-Marie Ur: Okay. You mentioned spring advances. This may not fall under your department, but I'd like to have it on the record. Why is the cost for making application for a spring advance $450 to a farmer and the fall advance is $75?

Mr. Douglas Hedley: In the case, Mr. Chairman, of the spring cash advances program, there is a good deal more paperwork, because of the collateral we have to verify. That collateral is primarily crop insurance, although we are working with the industry to look for other means of collateral. That is a more costly program to administer. We think over time we can bring that administrative cost down, if the program continues.

Mrs. Rose-Marie Ur: Do I have time for one more question?

The Chair: A quick one.

Mrs. Rose-Marie Ur: My question is to Madame Assistant Deputy Minister—it may be easier than trying to say your name without making a mess of it.

• 1010

You said that every deputy and assistant deputy minister was a part of the puzzle. I thought that was an interesting statement.

So if it's important to have a variety of backgrounds, how many deputies and assistants in the department have financial backgrounds and how many have agricultural backgrounds? I think this is important, and perhaps the other people presenting here this morning do too. It's always good to have the dollar factor, but it's also good to have a balance of people with different views working in a department.

Ms. Yaprak Baltacioglu: Can I ask you to clarify what you mean by agricultural background and financial background?

Mrs. Rose-Marie Ur: Financial, as in business. Agricultural, as in working in the agricultural field, or a school or university with agricultural experience or background. I'm not saying they have to be out driving a tractor in the back 50, but sometimes it helps to have an agricultural background.

Ms. Yaprak Baltacioglu: I cannot tell you how many people have agricultural or financial backgrounds. From my perspective, I'm a lawyer—I don't know where that fits in.

Mrs. Rose-Marie Ur: I'm not pointing fingers, but it would be nice to know the makeup. It would be easier to understand.

Ms. Yaprak Baltacioglu: I appreciate that. In the public service, we are here to provide the best advice to our minister and to serve Canadians. As you can imagine, our department's makeup represents the diversity of Canadians.

I'm sure you already know some of us. For example, I worked most of my career in the Department of Agriculture—so if that qualifies as an agricultural background, I'm proud to say I serve Canadians through working in this department. But I can't tell you exactly what everyone's experience and background is. That's mainly personal information, and I don't have that information for you. I can tell you about mine, though, if you'd like.

Mrs. Rose-Marie Ur: Thank you.

The Chair: Thanks, Rose-Marie.

This probably follows along the same lines as the people who applied under AIDA last year. We had complaints from farmers that the department apparently hired a lot of boiler-room people who were called in on a short-term basis, with casual or indeterminate status, without being really attached to the department. So when farmers called Ottawa, they often found they had a different person every time they called. Often these people even had no concept of what an acre or a hectare of land was. It was very frustrating for them.

I see your HRD department falls directly under the deputy minister. But Rose-Marie brings up a very valid point. I hope the department is looking at that, and trying to provide a better relationship between the farm community and the people trying to serve them, who live in an asphalt jungle.

Rose-Marie, I think what you're saying is that there's a feeling that people who have experience in the agricultural field, or who have attended our agricultural universities, are maybe not very well represented in the department.

Well, I have a problem here, because some members haven't had their five minutes yet, and others are coming up for their second time around.

Roy, I'm going to go to you, and then back to the Liberal side.

Mr. Roy Bailey: Thank you very much.

If I ever write a book, I'm going to do two chapters on AIDA—and one would be a little bit of comedy.

I appreciate what the chairman has said, and Rose-Marie, and also my friend from the Palliser constituency. I'm not on this committee regularly, but you don't represent a rural area like mine without being on top of agriculture daily, because it's still by far the most important thing there. About 60% of the phone calls I get deal with agriculture. So I'd better be on top of it, whether I like it or not.

The AIDA program just about drove me crazy, simply because of the inconsistencies the applicants were getting at the other end. I'll tell you one story real quick: the department kept coming back and asking the same farmer “Those four calves that died in 1998, how much were they worth?” Finally, he threw up his hands and said “When a calf is dead, it's not worth a damn cent.” We had all kinds of problems like this, and we still do.

• 1015

I want to ask a question very quickly about the AIDA and the CFIP, which is what we have now. When you finish one program and you start the other, what do you do with the money that is left in the AIDA program?

Mr. Douglas Hedley: First of all, Mr. Chairman, the amount of money available in the AIDA program is a fixed amount. Therefore, we have been unable to pay 100% of all claims in that program. We are currently at 95%. We anticipate being almost exactly at 100%, but I would point out that's totally by chance and not planned.

We will set aside a reserve for appeals sometime in the next few weeks as we close the books on the program, and then we will write final cheques against the outstanding balance. All will be spent.

Mr. Roy Bailey: Very quickly, can you tell us if the new CFIP programs are going to be less confrontational than the former AIDA program as far as the producer is concerned?

Mr. Douglas Hedley: The CFIP program has been streamlined somewhat from the AIDA '99 program. I can report that we have already begun receiving applications, and some 300 have now been received. We are starting to process them, and we're hoping to put cheques out in the next few days.

Mr. Roy Bailey: Thank you.

In your report then... I was interested as I read this before coming this morning. I liked your terminology, such as “better land use”. I appreciate what I am seeing, that within 20 miles of me to the north there's a huge new hog operation.

I say that because I want to ask you a question about that. Now, 20 miles to the north there's a huge hog operation and 40 miles to the east of me there's a huge new cattle feedlot under construction. I believe the result of both these operations means better land use, not just because of the technical and sound way the manure is being used, but also because of the income from the crops and the type of crops growing that feed into these operations. At this time, if I am correct, the total regulatory system regarding the operation of the hog barns and the cattle operation is provincial. Is that correct?

Mr. Douglas Hedley: It's also municipal.

Mr. Roy Bailey: And it's municipal. That being so, the province to the east and the province to the west of me could in turn develop their own requirements. Is that correct?

Mr. Douglas Hedley: Yes.

Mr. Roy Bailey: To me that is not satisfactory. To me there has to be one set of guidelines. This is a national issue, food production is a national issue, and marketing is a national issue. I'm not suggesting you should come in and take over the requirements of, say, the province of Saskatchewan as it relates to these things, but what I am saying is that we can learn from one another.

Certainly, I don't believe that you people, the federal people, want to invade that particular territory, but you're going to find out in debate in the House today that there will be some invasion for the control of safe drinking water. I think it is necessary for you to do that, and I just want to say that as an observation.

The last point is that we are told in the prairies that we have to diversify. It was Mr. Proctor who very correctly said that there are 71% of people or more living off the farm, and sometimes it's as high as 80%. But the farmers have diversified, and one of the biggest ways they are diversifying is into organically grown products.

I want to tell you about the last phone call I got last night. It was at eight o'clock—that was eight o'clock his time and ten o'clock my time—and was from a young lad who has spent three years getting into organically grown wheat and who even had to remove the treated fence posts to meet the requirements. He had gone and sought on his own a contract in Idaho for 3,000 bushels of his organically grown durum. If he hauled that to the nearest terminal, which is almost 80 miles away, he would get $2.40, and that's not counting his trucking costs to get there. He's contracted for this. Now, in order to buy the durum back—I think you understand that, to buy it back—it's going to cost him $3.65. The grain may never leave his farm. The diversification has taken place, he's gone to get his own buyer, but then we have—

• 1020

The Chair: Your story's going over your time.

Mr. Roy Bailey: Okay, but the point is that diversification gets squashed with that type of arrangement.

Thank you.

Mr. David Anderson: It's deadly accurate.

The Chair: Mark.

Mr. Mark Eyking (Sydney—Victoria, Lib.): As far as being on the farm goes, I think your department's doing the right job by educating farmers and employees and giving different courses, whether on food safety or pesticide handling and even on environmental plans and animal welfare.

My question concerns slide number 6, “Secure Marketplace”. Right now there are quite a few crops like apples, potatoes, vegetables, and grain that are really not doing well. Prices are depressed, and there are a lot fewer buyers out there. Farmers are breaking even, and the only income they're really getting at times is through AIDA, NISA, and whatnot.

The long-term goal we're hoping for here is that they won't get their net income from those programs. They'd like to see it coming out of the marketplace. A lot of them are very efficient, and they're keeping up with the rest of the world.

My question is, what are you doing? It says here “a secure domestic and international marketplace for Canadian agricultural products”. Securing it is one thing, but how is your department going to get them to have a return?

Mr. Douglas Hedley: Let me start on that, Mr. Chairman.

When we talk about securing the marketplace, we mean it in many senses. Number one, there's security in terms of the confidence of the consumer. Then there's security in terms of being able to move product from farms, through the processing, and into consumers' hands both at home and abroad. Finally, there's security through trade agreements and trade negotiations to secure access to those markets abroad—better access than we in fact have now. It's a whole package of security in that marketplace.

That clearly offers opportunity to farmers. On top of that, what we're saying is that instead of simply producing commodity as we have for years and as many people around the world can now do, we want to improve the quality of our products, raise the level, and set a standard for food safety environment that is above the rest of the world's. Over time there will be a premium our farmers can capture thanks to the highest, most consistent, and most readily verifiable quality in the world, with environmentally friendly practices used to produce it.

That is the approach we are taking. It is not something we can do in a year. It is a long-term strategy we will be implementing over the next several years.

Mr. Mark Eyking: I don't think that's going to cut it. Right now if you're a potato grower, you're producing a high-quality product, and you're doing all the bells and whistles, but you only have one buyer or processor and you're getting a certain price. At the end of the day this is really not going to help him, according to what you're saying. Nor will it if you're an apple grower, with whatever is happening in their industry.

I think you're going to have to be more creative there. You're going to have to look at the situation as to how that farmer's going to get more of the market. It won't be with WTO, I don't think. You'll have to start looking at how the dynamics work in this country and what is really happening out there, whether it's with processors or with chain stores. That's going to have an effect on the tomato grower in Leamington or wherever, and it seems that often we don't look at that.

That is the marketplace, namely who's buying the product. I think you have to switch sometimes a bit where you're going here. We're not looking at the real issues the farmers are facing in the marketplace.

The Chair: Thanks, Mark.

Mr. Deacon.

• 1025

Mr. Bruce Deacon: I want to reply to the earlier question. You were asking about the amount that will be spent on the rural secretariat.

Mrs. Rose-Marie Ur: I was looking for that information.

Mr. Bruce Deacon: For 2001-2002 the number doesn't appear specifically. It's included in here in the section on innovation, but the number that will be budgeted for this year is $11.3 million. You had asked also about the amount for the NFPC. That detail is actually provided on page 48 of the report. There is a table showing planned spending for the current year for the National Farm Products Council.

The Chair: So with the rural secretariat, did I hear correctly, it's $11.3 million? And the total budget for the department is how much?

Mr. Bruce Deacon: It's $1.8 billion.

The Chair: So $1.8 billion and $11 million? Are you sure there's no mistake in that? It seems like a fly on the side of an elephant, but that's—

Mr. Roy Bailey: What does that include?

The Chair: Dick, could I go to yours, just for two minutes?

Mr. Dick Proctor: Yes. Last week the Bush administration put Canada and a number of other countries on notice about ordering them to remove objectionable trade barriers. Canada was cited for barriers to farm trade. Do we assume that's the traditional things like supply management and the Canadian Wheat Board, or are there other things?

Mr. Douglas Hedley: Off the top of my head, Mr. Chairman, those are the only two things that come to mind, but clearly we can find out more information there and respond if you wish.

Mr. Dick Proctor: Yes, I would. I think the farmers would be interested as well.

The other one is also with the Americans. They're saying that the U.S. farmers will see $5.5 billion and perhaps far more in a federal bailout this year. They're talking about a 77% increase in agricultural programs between the next fiscal year and 2011. My two-part question is this. Do we foresee that the Canadian side will be matching this? And what plans, if any, do we have to retaliate against some of those programs that, indeed, some people are saying may in fact be subject to trade retaliation?

Mr. Douglas Hedley: First of all, for the current U.S. farm bill, which began in 1995 and runs out at the end of 2002, they're starting their work right now in terms of replacing that bill. If you look on the web or if you listen to the news out of the United States, you can find a pretty wide range of possibilities they may explore in putting that together. So I can't hazard a guess as to where the U.S. may go, whether it's high spending or low spending, or directions in programs.

As to whether or not Canada would match U.S. levels, it has not been the policy of the Government of Canada to try to match other countries' levels. What we are doing is trying to target our programs to those in need, and hence the design of the CFIP program. You have to have a major change in income to be eligible for that program. If your income is running steadily along, then you do not have access to it. The other is that in running those national programs, we also feel we need to do more and that is why we have laid out the strategy, and the minister laid it out here at this committee on two occasions now, of going after the security of the marketplace in a wide range of ways and branding Canada with a food safety environment.

The Chair: I'm going to go to Paul now. While we're waiting for Paul, I noted that “with CARD” was referred to several times this morning. The allocation for CARD is how much this year?

Mr. Douglas Hedley: The annual allocation, Mr. Chairman, for CARD is $60 million, of which $25 million is allocated to the provincial and territorial councils and the balance is spent on national programs directly out of Ottawa.

The Chair: Paul first.

Mr. Paul Steckle: My question would be with regard to the $104 million, Ontario's portion of the $500 million. The portion deliverable from the province has been delivered. When might the farmers of Ontario expect to receive the cheques for their portion of the $104 million?

• 1030

Mr. Douglas Hedley: Mr. Chairman, we have in fact just finalized the understanding with the Province of Ontario on how that money is to be spent. We anticipate going through the processes internally to get terms and conditions established within the next couple of weeks so that money can flow to the farmers.

Mr. Paul Steckle: To be precise, can we suggest that money might be in the farmers' pockets by the first week of June given that the province delivers on its commitment to farmers upon receiving the money from the federal government?

Mr. Douglas Hedley: My last discussions late last week with the Province of Ontario indicated that when we get the money into the province's hand, they would take approximately four or five days to get it back out to farmers, if we give them notice on when we're doing it. We're working very closely and collaboratively with our colleagues in the province to get that done as soon as possible.

Mr. Paul Steckle: My other question would be to Mr. Deacon, and it has to do with the statement on slide 3.

When you talk about better land use, I think farmers have been great stewards of the land. I think they constantly work at being better stewards of the land. Would you be able to tell us what you have in mind when you talk about better land use? Can you can give us some description of what you would see as farmers using land in a better way?

Ms. Yaprak Baltacioglu: Maybe I'll take that question.

Mr. Paul Steckle: Fine.

Ms. Yaprak Baltacioglu: As I mentioned at the beginning, Canadian farmers have made amazing strides in terms of land use, especially in terms of managing soil. I think in the 1980s we had problems with the declining soil quality. The farmers reacted and technology helped. So we have made strides.

But on the negative side several environmental risks still remain. For example, the intensification of agriculture across much of the country resulting from structural changes is putting pressure on the environment. There are also increased inputs of nitrogen and other nutrients. The unit of land area is increasing.

According to our indicator's report, in terms of soil degradation risks, the result is that they have been reduced overall. Additional effort is required to conserve soils remaining at risk of an unsustainable level of degradation; for example, areas that are close to rivers, riparian areas, or certain types of land more suitable for forage depending on the class of the lands... Taking marginal lands out of production is an area we can consider as a potential action area.

In terms of improvements, there are other issues that are beneficial. For example, under climate change, climate change is an environmental concern where the government is taking very serious action to make sure that overall Canada will reduce its emissions.

For farmers, though, I think it is somewhat of a different story. While we have part of the emissions, we also have the potential of sequestering soil carbon. This activity may be recognized in an international treaty once the international treaty is negotiated and finished. But there are opportunities for farmers in terms of that area, and the department will be putting out programming towards this end.

I am not able to let you know the details of that one because I don't have the details, but there will be some climate change programming happening.

The Chair: Thank you, Paul.

[Translation]

Marcel.

Mr. Marcel Gagnon: Thank you, Mr. Chair.

I revert to the environmental side, because it is a big area of concern to me and I realize there are some of us around this table who have concerns about it.

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There is a lot of talk being done about the health of the environment but on page 5, when you see the portion of the budget which goes to the environment, you realize that environmental stewardship may be more talk than a reality. Only $143 million from a budget of close to $2 billion are allocated to the health of the environment.

Am I right or is it that, in the two other business lines, there is also some money going towards research and environmental issues?

[English]

Mr. Bruce Deacon: Perhaps I could start with this. I made a point at the beginning, which I think is quite important. These numbers are preliminary numbers, based on the planning we were at when this report was prepared. And what we did, in preparing these numbers, was to take the new business lines and, last February, to map into those new business lines the activities that we were currently undertaking within the department as a basis for giving some indication of how we would be functioning in the context of these new business lines.

Since then, we have been engaged in a very intensive planning exercise across the entire department, re-examining all activities, how these activities fit together, and the activities that are essential to deliver the results of the new business lines on these new terms. So the allocation across the business lines as it appears here will change to some degree. And one of the areas that may very well likely change will be the area of the environment, as we capture more environmental-related activities that appear elsewhere in the current structure.

So I guess the point is that these numbers are somewhat preliminary and reflect, really, where we were at a point in time.

The Chair: Unless it's very quick now...

[Translation]

Mr. Marcel Gagnon: I understand we are doing our homework. Once the figures have been reviewed, how much more money will there be for the environment?

[English]

Mr. Douglas Hedley: Mr. Chairman, I'd like to take that on if I could.

As Mr. Deacon indicated, we went to the direct expenditures that the department was making on the environment as of that time. I would also point out that in the safety net programs and in the companion programs, there is a growing amount of that money being spent on both food safety and the environment—the environment in particular. I do not have those figures broken out here in this document. We continue to work on them, and we will be back to you with that information as soon as we get it broken out. We are still negotiating with the provinces on last year and this coming year. All I can assure you is that more and more of that companion money is moving into the environmental area to ease the costs the farmers have in meeting new and different environmental levels demanded by provinces and, increasingly, by the federal government.

The Chair: Thank you.

Rose-Marie, a short one, then.

Mrs. Rose-Marie Ur: Yes, I have a couple of quick responses or questions to Mr. Steckle. He had made a couple of good interventions to the responses made by the assistant deputy minister regarding the environment and the demands on farmers for being good environmental stewards of their land—and they certainly are. They recognize that this is where they make their livelihood from, and they spend all winter and all early spring going to seminars, whatever. They're the best-educated.

But I also am aware that probably there's a little less attention paid to our good urban colleagues, who have the lovely, green carpeted grass that probably put as much pesticide and herbicide on their little hunk of land than most farmers do on their whole property, and they go by unscathed by any criticism. So it's not just farmers. We have to look at our urban colleagues, too, because I think a lot of red flags could go up if we really pointed towards that. And your great concern and interest in the climate change... I hope the department really fully supports ethanol, then, because if there were a bigger push from this government, that would certainly enhance our quality of air up there. That was just a statement.

The Chair: Thanks, Rose-Marie.

Howard, a short one, and then—

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Mr. Howard Hilstrom: I sure don't envy you bureaucrats having to deal with the policies of governments that are trying to manage everything and actually making things tougher. When I see what's going on here, it's obvious that the farmer, the primary producer, needs to have an agriculture minister that is strictly looking at the primary producer and initiatives on his behalf.

We have a dandy preserve—fava beans; we have chickpeas; we have all these things going outside this country. People are over in Asia right now selling this stuff, and it seems like you're advocating, or the minister is advocating, more and more involvement all the time by the government in agriculture areas.

When I look at this environmental issue again, here we have a big problem in Manitoba right now. DFO is out there doing environment in regard to the fisheries and that. We have the provinces; we have the federal government coming in. The municipalities are sitting there trying to get permits to do drainage work, and you guys—the governments, the bureaucrats—are driving these municipal councillors nuts because they can't get their permits to do issues like this. I just wonder if this is the same thing that's going to happen in the environment.

I'll ask the one question. We're supposedly sitting around here trying to make things better for the primary producer, and we're missing out on these gigantic things—I mentioned the marketing side. But are you doing anything in regard to the grain transportation side?

We have a bloody mess out there. The Wheat Board, the grain companies, and the railways can't agree on how to transport grain. There are hundreds and hundreds of millions of dollars in transportation and marketing that farmers could have that is not being done. Are you doing anything—any meetings on this grain transportation issue with the railways and the Wheat Board?

Ms. Yaprak Baltacioglu: Mr. Chairman, if I may, I'd like to ask Dr. Howard Migie, who is our director general of marketing systems and who is also responsible for the grain policy, to the table to elaborate on the activities, especially in terms of the discussions between CWB and WGEA, and the status of those discussions.

The Chair: We only have about 10 minutes left, and if it were very brief, but it sounds like a rather complicated answer...

Mr. Howard Hilstrom: I'd really appreciate getting an answer. We're talking hundreds of millions of dollars here, so it's very important we hear this.

The Chair: I know this, Howard, but I have three or four others who have questions, too.

Could we give you two minutes to answer that now?

Mr. Howard Migie (Director General, Marketing Policy Directorate, Strategic Policy Branch, Department of Agriculture and Agri-Food): I'll be brief, Mr. Chair.

The government's policy on this is to have the industry itself—including the Wheat Board and the grain companies—through contracts, reach an understanding on who's accountable for what and how they're going to get efficiencies. The government is not at the moment trying to intervene. We are still hopeful that the grain companies, the producers, the railways, and the Canadian Wheat Board will in fact reach an understanding on what's going to be in various contracts. It will be completely up to the private sector, which includes the Wheat Board in this case, to set their own financial terms and create their own incentives to lower costs and to improve efficiency.

So I know that it's taken a lot longer than anyone expected, but at the moment we are still in the position of leaving it up to the private sector to try to resolve.

The Chair: Okay. Thank you, then.

Murray, I guess, had a quick question.

Mr. Murray Calder: Thanks, Mr. Chairman.

I want to go back to what Mr. Steckle was talking about. This is basically an Ontario issue—the $104 million.

I have two questions. One, I know that we have to have a business plan from the provinces before we release any money through CFIP or anything because we have to know where the money goes. Do you have any idea why it took the Province of Ontario well over six weeks to come up with a business plan as to how we would release that $104 million, as to where the money would go?

It's also my understanding that they haven't signed on for the 2001-2002 year for MRI. Is there any reason why that hasn't happened either?

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Mr. Douglas Hedley: I can't comment on why Ontario took so long. All I can tell you is that I have staff who stay in touch with every province, virtually on a daily basis, in terms of trying to get the plans in place for the $500 million. It's only recently that we got that from the Province of Ontario, and we're moving quickly now to try to get that money out as fast as possible.

Mr. Murray Calder: What about MRI? They haven't signed on. Are they going to do away with that program, or what? Why haven't they signed?

Mr. Douglas Hedley: That would be part of our ongoing companion programs. We are still discussing that with them in terms of the details of that program. That program would start to pay sometime late this year, and with the pressure of trying to get the $500 million out, we have not put on the top of our priority list trying to move forward on the MRI. We expect to do so in the coming months.

Mr. Murray Calder: Thank you.

The Chair: Marcel, a quick question.

[Translation]

Mr. Marcel Gagnon: Thank you.

I would like to tell my colleague Rose—Marie on the other side of the table that I completely agree with what she mentioned on the environment and the lawns. I am shocked when I see a sign which reads: “Do not let children walk on this lawn; a cancerous poison has just been spread on it”. Things continue to work like this. However, this is the Committee on Agriculture and Agri-food, and I think we could talk about lawns in another committee such as the Environment Committee.

Personally, I find that enormous efforts should be made. I have worked for years in the farming sector, and I think that we have made big strides. We are now able to grow about anything and to invent new products with the GMO. However the future of agriculture and the export of our products depend on the stewardship of the environment. So I think that we should give it special attention.

Thank you.

[English]

The Chair: Thank you, Marcel.

Are there other questions?

David, a short question.

Mr. David Anderson: I had a preamble, but I won't use it.

You said you're reporting your programs now in the year that they occur, not in the year you pay them out. Is that true? Why do you do that? It's confusing.

Your accounting procedure is confusing enough as it is. Why are you doing this? Is it because your programs usually lag a year?

Mr. Bruce Deacon: As you may be aware, the government is introducing new accounting principles and moving to accrual accounting. This is going to be phased in over time. The whole objective of that is to better enable a direct costing of programs and results. In order to do that effectively, increasingly we will have to align the year in which we are doing something with the expenditures as they're reported.

For example, in this case, it's the crop years. Whatever crop year we are supporting, we would actually record and report the money against that crop year in that fiscal year, as opposed to the year in which it's paid out.

Mr. David Anderson: What it does, actually, is give you the PR for the extra year. If you're a year behind in your programs, you can use that to cover the declines in the budget. You're dropping your programs off, and you get an extra year's PR out of that program.

Mr. Bruce Deacon: I believe it was exactly the reverse. It used to be that a crop year would actually have it recorded in the subsequent year.

If you take AIDA, for example, the 1999 crop year was actually reported in the fiscal year 2000-2001. Under the new approach, in CFIP, for example, the 2000 crop year will in fact be reported against 2000-2001. So it actually occurs in the fiscal year in which the crop year occurred, which makes it more in line.

Mr. David Anderson: Well, AIDA was—

The Chair: I would like to thank you for coming this morning. It's an annual occurrence, and we have seen significant changes in the way you're presenting your estimates.

I think some people are a bit confused by that. It would be reflected probably this morning in terms of especially the safety net programs, that they're not obvious to the average reader of the estimates. So maybe another year you should consider that. Overall, I guess most members are quite well satisfied.

Howard?

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Mr. Howard Hilstrom: With the bureaucrats. But are you asking me about the minister?

Mr. David Anderson: Do you want a lecture?

The Chair: Now, that's not this morning.

But we will look forward to our future meetings on the plans and priorities, and I hope the person who comes next is not the one who has to pick up all the unsaid things this morning.

Dick.

Mr. Dick Proctor: Back to housekeeping. Tomorrow we have a meeting; is it at 9 o'clock?

The Chair: It's in the afternoon, after question period, at 3:30 p.m.

Mr. Dick Proctor: Okay.

The Chair: That will deal with the first witnesses under Bill C-25, the Coopérative fédérée de Québec. It will be about an hour in length.

We'll also look briefly at an answer to the ministers from Saskatchewan and Manitoba.

Was there another minor housekeeping thing tomorrow, too? No.

In any case, thanks for coming, and we'll adjourn the meeting with that.