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, June 05, 2001

• 0907

[English]

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

Pursuant again to Standing Order 108(2), we're following today with discussions with the prairie provinces' ministers of agriculture on the current farm income situation related to low commodity prices and increasing input costs.

We would like, first of all, to welcome the honourable ministers and the critics from the three western provinces. In a brief background to this, we would like first of all to say to the ministers and to the people of western Canada that the committee certainly received the request from the ministers and, in particular, the Honourable Minister Wowchuk, to visit the west.

It is our intention as a committee to visit the west in the fall. We didn't want to hurry a visit this spring or early this summer, because the time wasn't just to our satisfaction. Certainly, if we go there we want to spend quite a few days talking with people—not only from the three western provinces but also from the province of British Columbia, and with our corn and soybean producers here in central Canada.

We'd like to welcome you. We certainly are a bit intimidated this morning to have before us three ministers and the three critics from those provinces. With that, we certainly want to recognize your concerns on what is happening with grains, in particular, in the west.

In our audience this morning, we have a number of farm groups and farmers who are here to listen to our briefs. Possibly, if the committee should be able to do this, maybe we could hear briefly from some of them if time would permit.

With that, we would like to briefly review the fact that we normally like to have very short presentations—probably 10 minutes at the very most, or a little more brief, in fact. We would probably follow the proper protocol in hearing from the ministers first and then from the critics.

We would also like to point out, in terms of some of the written material that you've placed before our committee, that we do have a small problem here. In fact, it could be even a significant problem. We only accept written reports that are in both official languages.

• 0910

So with that, in terms of my being chair, or the clerk here, we cannot put around reports that are in only one language, but you as presenters may want someone from your staff or you yourselves to give to members what you've brought to us. We do recognize the problems that we do have with translation. It's a problem here in Ottawa. It's a problem across the country, sometimes, to get things translated properly in a very short period of time.

In any case, after the presentations are made, we then begin with questions around the table. With our method of procedure here, the Alliance Party to my left begin questioning with a period of approximately eight minutes. Then we have a period allocated to our friends from the Bloc, followed by Liberal members, and going back and forth across the table. So hopefully we can have a very productive meeting this morning. We want to hear your concerns.

Honourable Minister Wowchuk, as you were the first to write to our committee, I would ask that, if possible, you would begin our deliberations this morning.

Welcome to Ottawa, and the floor is yours.

Hon. Rosann Wowchuk (Minister of Agriculture and Food, Legislative Assembly of Manitoba): Thank you very much, and thank you to the committee members for giving us the opportunity to make presentations this morning. It's certainly an opportunity for us to present our concerns and share with you some of the issues that our farming community is facing, particularly those in grains and oilseeds.

I want to indicate that I have a written presentation for the committee, and I also have the report from the round of meetings we held in Manitoba. So I have those reports—and I do apologize for not having them translated into French—and we will certainly distribute those. The binder is the presentation of what we heard from the standing committee.

On April 17, the Legislative Assembly of Manitoba unanimously approved the special resolution on the farm income crisis. Within the binder that I spoke about is the copy of the resolution and all of the Hansard from those meetings.

We came here today with representatives from farm organizations. I would like to indicate to you that we have Mr. Don Dewar, president of Keystone Agriculture Producers; Mrs. Renske Kaastra, from the Agriculture Committee of the Manitoba Women's Institute; Mr. Brian Kelly, from the Manitoba Chamber of Commerce; Mr. Wayne Motheral, from the Association of Manitoba Municipalities; and Mr. Fred Tait, from the National Farmers Union. Also travelling with us is Mr. Jack Penner, who is a member of the opposition and my critic, as well as several other farmers who have joined us here today.

As I indicated, we took the unusual step of taking our standing committee out to rural Manitoba to hear firsthand what producers had to say about the situation. What we heard at times was heart-wrenching—stories of farm families who had done everything to keep their farm viable but who are fighting a losing battle. These presentations that we heard put a human face on the crisis and the effect this was having on our farm families—not only on our farm families, but also on our rural communities. My presentation today will focus on providing the committee with a better understanding of the farm crisis and why it is imperative that the federal government act to address this situation.

When we look at the problem, to an outsider it would appear that the farm situation can be deceiving. Overall farm cash receipts were estimated at a record $3.12 billion in the year 2000. This is up 5.3% over 1999 and 35% over the previous five-year average. As well, total net incomes were estimated at $453.8 million, an increase of 99.4% over 1999 and 46% over the five-year average. However, to understand the situation, you have to look more closely at those numbers.

Manitoba's livestock industry continues to be very positive, and in 2000 our livestock receipts were up 17.9% over 1999 and up 34% over the average. Also contributing to the increase in the overall cash receipts was a higher withdrawal from NISA, the net income stabilization account, as well as an increase in program payments.

• 0915

Where we see the real problem is in the cash receipts. In 2000 they continued to decline, 10.5% from the 1999 level, and 19% down from the five-year average. Canola and wheat cash receipts in 2000 took the biggest drop, at 17.1% and 10.2% respectively.

It's clear that the grains and oilseeds sector is the crux of the income crisis. Grains and oilseeds producers are faced with the unhappy prospect of producing a crop at a loss. This is the result of continued low prices and a significant increase in input costs over the past year. Wheat and barley crops have not provided a profitable level since 1996 and 1997. In 1999 oilseeds dropped 40%. While oilseeds have recovered slightly, they are still 20% to 25% below where they were several years ago. At the same time, there is an increase in fertilizer and fuel costs, and this means greater costs for farmers. The total operating cost is expected to increase 21% to 27%, and this is on top of the impact of lower commodity prices.

So when we look at this, we say, what is the cause of the problem? The bulk of Manitoba grains and oilseeds go to an international market. The prices of these products are largely determined on the global market. Basically, a Canadian wheat farmer receives a world wheat price. This is not the case for our major international competitors, primarily the United States and European countries, where domestic subsidy programs provide more assistance and affect the world prices.

The mid-1990s saw a change in policy direction to reduce supports, partly to implement the WTO requirements as well. It fulfilled the government's plan to reduce their debt load. At that time Canada significantly reduced its supports, going from above to below the U.S. support for all commodities. The reduction in Canada's agriculture supports primarily occurred in the grains and oilseeds sector, with the elimination of the Western Grain Transportation Act, better known as the Crow Benefit. The European Union and the United States also pledged to reduce their supports for grains and oilseeds, but as soon as some income pressure began, their support was quickly restored, while Canada kept the support down. As a result, our producers are fighting international treasuries on their own.

If you want a direct farm-to-farm comparison between the United States and Canada, I'll share with you a recent Canadian Wheat Board estimate, where a U.S. producer with 1,000 acres could expect to receive from the U.S. Government about $58,780 in direct subsidies. This in Canadian dollars would be $91,000. Similarly, Doanes Agriculture Report noted that their net income averaged $39,179 U.S. Government support payments for grains and oilseeds producers average a little over $45,000 U.S., $71,000 Canadian, per farm. Without these payments, their average would have been negative $6,417. By comparison, a Manitoba producer of the same size could expect roughly $9,000 in support from the government.

There are some who say the Canadian producers just aren't efficient. I have to tell you that this is not the case at all. In fact, without market distortions created by subsidies, Canadian producers would have the edge, and we would be amongst the most productive countries in producing grains and oilseeds for the global market. And we believe that in the long run this situation should prevail.

• 0920

So what can we expect if this problem is not addressed? It is our view that if the federal government is not prepared to address this situation, Canada is at risk of losing an industry where we have a natural competitive advantage. We are going to lose because of international subsidies.

In other industries, such as the aerospace industry, Canada has recognized that it is simply not appropriate to have our competitive industries be lost as a result of action taken by competing nations. For this decisive action, we congratulate the federal government and ask that similar consideration be made for the grain and oilseeds industries. Both are very important industries to this country.

If you look at the NISA data, it indicates that Manitoba has 9,000 NISA participants that have farms relying on over 75% of their sales from grain and oilseeds. These producers will be those most affected in their primary farming incomes, because their primary farming incomes come from grain and oilseeds.

The other issue that's very important and that we have to recognize is that one in 10 jobs in Manitoba is directly related to the agriculture industry. While these jobs may not seem directly tied, there is an impact on our community. Loss of farmers means loss of services, means less children in schools, means less service in hospitals, and pretty soon our rural communities are deteriorating.

When we look at what has been done so far, the current federal-provincial safety net programs have been primarily focused on stabilization of farm incomes on the whole farm basis, as well as production insurance for annual and forage crops. We have the NISA program, which provides a limited amount of funding annually to a producer, and we all know the NISA program is being reviewed. We have AIDA and CFIP, and certainly we have had discussion on those programs and the impact, how those programs have not served the needs of particularly the grain and oilseeds producers. However, it has met the needs of the livestock producers.

In the current Framework Agreement on Agriculture Risk Management, the formula used for allocating federal funds to individual provinces for programming is based upon share of farm cash receipts and farm market receipts. It is a formula that, as many will remember, Manitoba agreed to only reluctantly, once we were given the assurance that the federal funding for 1998-99...would be kept in place for the life of this agreement. There are problems with this new formula because it removes the principle of risk from the allocation of funds. It is certainly something that will have to be reviewed as this agreement comes to an end.

What has happened is that while prairie farms lost the greatest amount of federal support, the new funding formula provides other provinces with much more of the federal support. This has resulted in an uneven playing field for individual commodities across Canada dependent upon available provincial funding. So a real discrepancy has been created in that formula. The lack of targeting has also provided increased benefits for some commodities that are more volatile in the short run, but has reduced benefits for the depressed grain and oilseeds industry.

You know that last year we had a CMAP program that brought $100 million into Manitoba, cost shared between the province and the feds, targeted to the grain and oilseeds producers. The program provided a decoupled payout based on the sales of commodities moved under the old Crow benefit. This year, we have the CMAP 2. Again money will be flowing to our producers. My government and the Manitoba grains and oilseeds producers appreciate the share of that $500 million we got from the federal government, as it did help address some of the problem. However, given the magnitude of the problem, it is simply not enough. Under the most recent OECD support figures, it is estimated that approximately $2 billion is needed to put Canadian producers at a similar support level to our U.S. counterparts.

• 0925

When you look at this formula, because all non-supply management sectors are included, this significantly dilutes the funding to those provinces that have large grain and oilseed sectors but lack high sales in other high-value sectors. Grain and oilseed producers in the prairies saw significantly lower federal support from these areas, and within the presentation that will be handed out to you, there is a chart on page 8 that shows the level of assistance that goes to the various provinces. The non-prairie provinces receive, on average, $21.39 per acre, versus $7.09 per acre on the prairies.

When we look at this we ask what is needed. We believe the federal government must step up and accept responsibility for the issues and deal with the farm income crisis with decisive action.

We strongly believe, first of all, there is a need for an immediate injection beyond the $500 million that has been committed. An additional $500 million is the minimum required, on the assumption that it is provided to provinces based upon the problem—for example, farm cash receipts for grain and oilseeds, or some similar formula. We also feel that there must be no requirement of cost sharing of this additional $500 million, to recognize the limited ability of provinces to meet this demand.

We also believe the federal government must lead in the design and funding of ongoing programs for the grain and oilseeds sector that are effective in addressing the safety net needs of the producers. The program package must explicitly recognize the need to provide similar levels of support to producers compared with our major international competitors, such as the United States and Europe.

In all of this, we must look for a short-term solution, but we also must work towards interim and long-term solutions. We also believe the federal government must focus on coming to some resolution on fighting international subsidies, but in the meantime, our producers must have support while those other subsidies are in place.

It is the federal governments or supranational governments in our international competing countries that provide the safety net supports for their agricultural needs. This recognizes that the benefits go beyond provincial boundaries to the general good of the citizens and that the physical capacity to deal with these issues rests with the senior level of government.

In 1999-2000, Manitoba provided $194 per capita in expenditures to support the agrifood sector. That was the third highest in Canada. Saskatchewan was at $436 per capita; and Alberta, $206. The federal government provided less than half the per capita expenditure of Manitoba, 21% less than the average of all other provinces.

As I look at an October 1999 presentation to the committee, the prairies endured a $2 billion drop in safety net and transportation support over the period from 1987-1988 to 1999-2000, compared with a $350 million drop in non-prairie provinces. So the prairie provinces have taken a far greater drop in support than all the other provinces when it comes to safety net and transportation support.

It is in the best interests of all Canadians to protect the natural advantage that Canada has in producing grain and oilseeds for the global market. Canada wants and needs to protect trade balances to maintain its status and economic position in the increasingly competitive global market. The grains and oilseeds sector has been, and can continue to be, a large factor in this market.

• 0930

In the past four years, Canada's export of grains and oilseeds comprised 13% to 42% of Canada's trade balance. In addition to its direct exports, the grains industry provides the feed for our livestock industry. The loss of domestic feed to the livestock industry would have a further significant impact on the balance of trade.

I think I've taken just about taken all my time, but I just want to share with you some of the thoughts we heard in the presentations. I would like you to think about what some of the families said.

The Chair: I'm afraid we're running into a problem with time; we're up to 17-plus minutes. Could we give you one minute to summarize?

Ms. Rosann Wowchuk: Sure. I'm sorry, I had a watch in front of me, and I thought I had ten minutes here.

One young woman, a 17-year-old girl, talked about how her family had come to rural Manitoba and had invested. Now her worry is, what's happening to our rural communities? Will I have a future in rural Manitoba? There are no children, and the size of graduating classes is going down. I want to share with you the impact on the whole rural community.

The Chair: Thank you, Madam Minister.

Madam McClellan, could we have your presentation.

Hon. Shirley McClellan (Minister of Agriculture, Food and Rural Development, Legislative Assembly of Alberta): Certainly.

First of all, thank you to the committee members who have shown the interest of being here this morning.

This is a new experience for me, Mr. Chairman. In my years as a minister, I have not appeared before a standing committee in any of the areas I've represented. I do want to comment that although it's usual to deal at a minister-to-minister level, I am pleased to have the opportunity to broaden this discussion—particularly as I note that there is no representative from Alberta on the Standing Committee on Agriculture and Agri-Food. So I look forward to sharing some of our thoughts with you.

By the way, in no way does my being here cast any negative implications on our relationship with Minister Vanclief's office. I must say, he has always been available for discussions on this important subject. Maybe I should say we don't always agree, but the opportunity is always there.

I want to tell the committee members that agriculture is a very vital part of Alberta's economy and of our rural landscape. It's a $16.5 billion industry with many challenges and many opportunities. One in three jobs in our province is related, directly or indirectly, to agriculture.

I believe the Prime Minister certainly recognized the importance of agriculture when he appointed the caucus task force on future opportunities in farming. We look forward to that committee's work. However, again we have some concern about the structure of that committee, and we wish there was more representation from our province.

I must say that Alberta has recognized the urgent situation farmers are in. We set up a consultative process last year, called Ag Summit 2000. You may have received a copy of that committee's report. The summit brought together stakeholders from industry, government, and other sectors to look at the challenges facing our agricultural industry, and to develop strategies to meet them.

We are fortunate in our province that our industry has been able to diversify and manage through some difficult times. With strong livestock prices and a growing value-added sector, we've put ourselves in a decent position to build on our strengths.

• 0935

In 2000, primary farm cash receipts in Alberta totalled $7.41 billion—an increase of 14% over the previous year. At the same time, total net income was $409 million—but only after taking into account subsidies and crop insurance payments totalling $711 million. To help sustain the industry in 2000, the Government of Alberta had to assist farmers with a one-time payment of $315 million. Without this aid, net farm income in Alberta would barely have been positive.

We've had to do the same in 2001, with the assistance of the federal government. These numbers tend to mask the true situation. A positive performance by the livestock industry masked the grim situation of the grains and oilseeds sector. In 2000 the grains and oilseeds sector endured a widespread drought, very high increases in fuel fertilizer and energy costs, poor performance in market and price, and an increase in debt load.

Unfortunately, this year we're facing an even worse drought situation. Alberta is no stranger to drought—we've managed it sectorally and regionally for a number of years. However, this year is a very unusual pattern; and 90% of our province is facing drought conditions that haven't been recorded in 130 years.

Fortunately, we did get some rainfall over the last two or three days, and we are all grateful for that. However, last Friday our government introduced a drought assistance program to our producers in the livestock sector, primarily. It was $93 million, or $4 an acre of native pasture. I think the most important component of that program is $20 million for water management, to ensure that we can mitigate the long-term effects of water shortages as much as possible.

But frankly, if off-farm employment in Alberta had not been as buoyant as it was, the farm crisis would have been more severe. Our safety net system can and does respond to year-to-year reductions in income. For those situations, the safety net is relatively effective. The Farm Income Disaster Program, which we lovingly call FIDP, was put in place in 1995, and since then it has paid out over $406 million to more than 22,000 applicants. Crop insurance made large indemnity payments—about $15.4 million—to southern Alberta producers in the year 2000.

Oh, this is unforgivable of me—I forgot to mention that the leader of our official opposition, my agriculture critic, Ken Nicol, is at the table with me. You'll hear from him later. I'm sorry, Ken.

Back to the issues, which Dr. Nicol is very familiar with in our province. What we're facing right now is that the programs can't respond year after year to the grim reality of rising costs, or the downward trend in prices, or severe long-term weather-related issues. These things continually grind away at margins, and increase the risk of sudden farm failure and rural adversity.

We need to develop a more effective safety net package, particularly for the grain sector. We're examining possibilities and looking at a variety of models, but we recognize that the solutions may not be easy to find.

To some extent, the June meeting of federal-provincial ministers of agriculture will be an opportunity to address those issues. We'll also address measures to facilitate adjustment on farm food safety and environmental farm planning.

These are very important issues and must be done. But they will do very little to address the real issue of negative income in the grains and oilseeds sector. Unfortunately, those issues may simply raise costs through restrictive compliance measures.

Today, I want to talk to you about the challenges facing our industry where the federal government can make a difference. These issues are within Canada's control—unlike world market prices, the weather, and subsidies for U.S. and European farmers.

• 0940

We think the farm income situation in Alberta could be significantly improved if the federal government dealt with the problems associated with the issues I'll outline. Many of these issues are not new—we've raised them over the past several years—but we believe they hold our industry back from realizing its full potential, and they need to be resolved.

Some of the issues are grain handling and transportation, marketing choice for farmers, trade issues, and the federal excise tax on farm fuel. These important issues directly affect farmers' incomes. We don't think it's sufficient just to deal with safety nets alone.

We would like progress on two items that would do more for the embattled farmer than any subsidy payment could. We want an end to the compulsory selling of wheat and barley to the Canadian Wheat Board and we want an open market for wheat and barley sales in the domestic human consumption market—similar to the market we have for other crops.

We have observed that after one grain marketing panel review, two reviews of the grain handling and transportation system, and one unilateral reduction in aggregate rail rates, farmers were still paying just as much to export wheat in 1999 and 2000 as they did in 1996. It still costs approximately $57 a tonne to handle, transport, and market wheat and barley through the Canadian Wheat Board.

Marketing choice in an open domestic market should reduce those costs by about $20 a tonne, especially if processing can take place close to the farm gate. Our farmers and processors would not have to pay for costs they didn't incur—as they have to when they go through the Canadian Wheat Board, with its deduction and pricing practices.

Last year the federal government announced it was introducing changes to the grain handling and transportation system, to increase efficiency and reduce costs. They indicated this would make the system more commercial, competitive, and accountable. Changes to the transportation role of the Canadian Wheat Board were also to be phased in. We were very encouraged, and fully supported the recommendations of the Estey-Kroeger report.

Unfortunately, we've seen very few positive results from those changes, because they were too insignificant—and, we believe, of the wrong kind. If anything, these changes strengthened the handling and transportation role of the Canadian Wheat Board, contrary to the Estey-Kroeger recommendations. As a result, system participants are embroiled in a time-consuming and costly negotiation process, rather than working together for the benefit of the system, and ultimately the farmers.

Meanwhile, the farmers continue to face low grain prices, and have not benefited from the competition, efficiencies, and accountability that may have been realized if the Estey-Kroeger recommendations had been implemented. The federal changes announced last year have not led to the promised cost reductions. And if the railways follow through with the increases allowed under the newly legislated revenue-cap process, farmers will face the potential of freight rates increasing by 3.5% for the new crop year.

We have been encouraging additional investment in grain-based, value-added processing for two reasons—to achieve a higher return for farmers and processors and to reduce the dependence on bulk shipments of raw grain.

When investors are faced with the prospect of having to deal with the Canadian Wheat Board as the price setter and the only supplier of raw material in Canada, they prefer to invest in areas that offer marketing choices, such as the U.S. Comparing highly regulated wheat to unregulated canola and feed grain illustrates the tremendous growth that occurred in canola processing and livestock feeding in western Canada, while wheat processing has lagged badly behind.

• 0945

These issues and others came out loud and clear in our Ag Summit 2000 process. We have two action teams looking into this issue. One is Farmers Have Marketing Choice and the other is Competitiveness in a Global Market Action Team. This focus is to develop strategies and plans to provide marketing choices for Alberta farmers and to advance the issue of global competitiveness in value-added product.

The Alberta government is determined to see that farmers in Alberta have choice in how and where they market their grain. The Canadian Wheat Board should be a choice, but a free choice, not a legislated one. We are determined to attract further investment and value-added processing to reduce reliance on the export grain market and put us in a position to compete in a global food market.

With regard to WTO negotiations, my colleague from Manitoba outlined a number of the issues in that. It's critical that current agricultural negotiations achieve substantial and meaningful results in reducing ongoing barriers to market access and in removing the subsidy and policy distortions that continue to plague competitive ag-food economies such as Canada's. The subsidy playing field must be made level. This means reductions in all kinds of subsidies—green, blue, and amber.

We advocate a very aggressive approach aimed at reducing trade and production distorting subsidies and market access barriers to the greatest extent for all products, both domestically and internationally.

Energy costs have been an issue in our province as well. Natural gas, electricity, farm fuels, and production costs for nitrogen fertilizer have put the squeeze on farm margins. We estimate higher farm fuel prices cost farmers about $4.50 an acre.

In our province we offer rebates and exempt farmers from paying provincial taxes on farm fuel. However, the federal government levy of 10¢ per litre on gasoline and 4¢ per litre on diesel represent an annual cost, we estimate, of about $57 million to Alberta farmers. We repeat our call to the federal government to remove the federal excise tax on farm fuel and remove the up-front GST on fuel to provide an immediate relief to farmers from those input costs.

In conclusion, the message I want to reinforce here is that if we really want to address farm income problems, we can do more by reducing costs that occur due to federal government policies and by increasing subsidy payments. We can't lose sight of the need to deal with current policy issues that are impeding our industry's ability to grow and be sustainable.

Grain handling and transportation reform and domestic marketing issues for wheat and barley need to be resolved. Producers deserve to be rewarded for their quality product and deserve a choice in how they market their product.

Our goal is to build a vibrant, viable industry. To get there, we know we need to reach that next plateau. We see that happening through the value-added industry. To do so, producers must be able to add more value to their product, and must be able to move it through the market chain in an efficient and a timely manner.

At the same time, regarding subsidies, we feel that Alberta farmers can compete successfully at the global level. But we recognize that it certainly doesn't appear to be a level environment at this time. Because we can't compete with the massive treasuries of the EU and the U.S., it's critical that our safety nets are effective in terms of dealing with long-term and short-term pressures.

Ladies and gentlemen, we'll continue to work towards a truly competitive global market. But until that time, we need a reasonable, affordable safety net system that can support the needs of farmers.

I certainly appreciate the opportunity to address these concerns with you today. I look forward to working with you to build a healthy and sustainable agricultural industry for Alberta and for Canada. I also look forward to your questions later on in the session.

The Chair: Thank you.

We'll move now to the central province of Saskatchewan.

• 0950

Hon. Clay Serby (Minister of Agriculture and Food, Legislative Assembly of Saskatchewan): Thank you very much, Mr. Chair, and good morning to the members of the committee.

I'm extremely pleased to share this opportunity with my colleagues from the legislative assemblies across western Canada.

This morning we have with us from Saskatchewan as well a number of people from producer organizations and groups, and perhaps I can name them: Mr. Thad Trefiak, with the Saskatchewan Wheat Pool; Mr. Stuart Wells, the National Farmers Union; Mr. Terry Hildebrandt, the Agricultural Producers Association of Saskatchewan; Mr. Sinclair Harrison, the Saskatchewan Association of Rural Municipalities; and Mr. Ray Bashutsky, the Saskatchewan Rally Group.

Over the last several months, a number of things we've been able to accomplish, not only in Saskatchewan but across the country, in terms of additional funding or changes that might come their way and the safety nets, have been due in part to the working relationships of not only the political leaders in each of our provinces but also the work of farm organizations and groups. As you said earlier, if we had an opportunity to hear from them, I know they would make some comments and statements that would further parallel the comments we're making to you today.

I'll try to keep my comments to the 10-minute mark, but being a central province, it seems to me that both Alberta and Manitoba have eaten up a large part of my time. But we are on daylight saving time, so I know my colleague from Saskatchewan will say to you that we might have an additional hour to make our comments.

The Chair: The only problem is time equity, and that would be about 17 minutes.

Mr. Clay Serby: I'll go to my text and follow it as closely as I can.

Saskatchewan grain and oilseed producers continue to face low prices due in part to distortions in the market as the result of continuing European and U.S. subsidies to their farmers. The problem we are facing is that prices for our grain and oilseeds continue to be depressed because of trade rules that, in my view, don't adequately constrain the actions of two major players in the grain trade, the European Union and the United States.

Our submission, which we haven't been able to circulate to you, but we will do so on an individual basis—and our apologies for not having the translation completed in time—outlines the level of support offered in various agricultural commodities in Canada as compared with the United States and the European Union.

For wheat, for example, in 1999, the latest available data, the level of support in Canada was 11% for wheat, 9% for coarse grain, and 10% for the oilseeds. The corresponding numbers for the United States were 46%, 40%, and 28% respectively. For the European Union, the numbers were 52%, 67%, and 46% respectively. It also indicates the reduction in Canadian support to the wheat, coarse grains, and oilseed sectors from 1986 to 1988, when farmers faced a dramatic decline in their grain prices.

You can see how the Americans' support for their grain and oilseeds industry stayed relatively consistent, and in fact, when you look at it closely, it has dramatically increased for oilseeds in the most recent years. The European Union, whose ambassador to Canada I met with just recently, has also maintained their support over the same period. But in Canada, the level of support has declined substantially.

I wish to note here the U.S. farm bill currently under consideration...and the three of us on this side of the table just attended about two months ago. Agricultural producers and farm political leaders talked about not reducing the subsidies in the U.S. but increasing them, and the current bill in front of their assembly today looks at injecting yet another $85 billion to U.S. farmers at a time when we in Canada are reducing ours.

• 0955

Today we have a number of provincial and federal programs in place to help farmers. Saskatchewan farmers, I have to say, appreciate that help. But these programs are generally designed to stabilize incomes. In the case of the grain and oilseed farmers, this means stabilizing an industry facing ongoing price pressures because of large European and American subsidies.

Page 4 of our submission shows the impact this is having on Saskatchewan farmers' incomes. We compared income levels back to 1986-88, using those dollars, when support to grain and oilseed producers was much closer to the level of the U.S. and the European Union. It shows that current incomes in the year 2000 are only 60% to 70% of what they were then, depending on the year of income measure. If you did that analysis in Manitoba and Alberta, you'd find some of the same answers.

We have heard comments that our industry just has to adjust, but the irony is that agriculture is not in a long-term decline. In fact, page 6 of our submission indicates that the amount of grain and meat consumed in the world continues to grow.

On page 7 we show the significant adjustments Saskatchewan farmers have already made, and they are prepared to do more. Ten years ago, our province grew 19 million acres of wheat. Today, we grow 11 million acres of wheat.

The problem is that grain and oilseed prices are depressed even as consumption grows, because two major players in the world market provide significant subsidies to their industry. They get a cheque from the marketplace, and they get a cheque in the mail. I want to state emphatically that Saskatchewan farmers are world-competitive, and just want to access world markets on a level playing field.

I'd like to quote from a speech given in the European Union by the Minister of Agriculture. He says:

...I tried to turn the bottom line on grain prices into a top-of-mind issue for European leaders. Massive farm support payments in Europe and the United States are distorting market values, crippling prices and hurting farmers here in Canada.

He goes on to say “These unfair subsidies are the biggest cause of the farm income crisis”.

The question I pose to this committee is whether the federal government will help the farm sector to compete against the treasuries of the United States and the European Union so that we can get a better trade rule to discipline their support. In our individual provinces, we can't compete against those treasuries.

So we need to make a fundamental decision around this table on whether agriculture in Canada has a value. In my view, there is no other industry that should be more significant to people's lives and values than the one that supplies safe and high-quality food to them.

We're asking for your commitment on an ongoing funding level that puts our farmers on a more level playing field with the United States and the European Union. There should be no mistake that current agricultural programs are not able to address the significant income problems resulting from these issues.

I emphasize, though, that we need to sustain emergency funding and the emergency envelope at the federal level. The farm programs do not provide the level of support needed in our province or the other grain-producing provinces because these programs, as I've said, attempt to address income stabilization—not income shortfall resulting from American and European subsidies. So the continued emergency-aid, or bridging, envelope that the federal government has in place to match the European and the U.S. level should be sustained—and, in my view, bridged over a period of time.

• 1000

We fully respect the safety net review, which we agreed to in Quebec City just a couple of months ago with the federal government and the provinces, this year to examine new program designs and redesigns, because those of us in the prairies on the grains and oilseeds side have said that our current safety net programs don't work. We have suggested in our submission the issues and options that should be further examined, including such concepts as sector programs and set-aside programs.

To summarize, Mr. Chair and committee members, Saskatchewan farmers want the federal government to make a fundamental, ongoing commitment to the grains and oilseeds sector to help them compete against the Europeans and the U.S. Our farmers want to compete from a level playing field. Second, we need your support and your commitment to ensure that safety nets and disaster programs work better for the grains and oilseeds sector.

From our discussions with Saskatchewan farmers and with our producer groups, some of whom are here with us today, we know our leaders want us to look at a number of other areas. They want us to address the issues of grain transportation, as my colleague from Alberta talked about; funding roads; rural economic development; and more access to producing supply management commodities. We want to look at what important role you can play on the issue of elimination of the excise tax. These are some of the examples where we think the federal government can help us as we work together to level some of the playing field.

We're very keen on working closer with the federal government on the programming to ensure food safety, which is a world issue today; environmental sustainability; transition and adjustment; and effective competition in input and output markets. We should see the new envelope that has been designed and created and talked about by the federal government as being new money, not a shift of money from the emergency aid package to now the new envelope as it relates to transition, adjustments, and food safety.

Mostly, though, our farmers want better trade rules. They can compete with anybody in the world if we can level the playing field for them. Saskatchewan is committed to continuing to do their share on the fiscal side to assist our farmers.

In 2001-02 our budget for agriculture increased by 35%, and we are continuing to fund new programs, but provinces with large agricultural sectors like ours do not have the same ability to direct taxpayers' dollars to their industry. Fixed cost sharing as currently practised by the federal government makes it difficult for a province like Saskatchewan. It simply does not recognize that provinces have differing abilities in terms of provincial fiscal resources in agriculture. We are asking the federal government and your committee to take a leadership role to help our industry compete with United States and European Union subsidies and take advantage of those future opportunities.

We would say that the responsibility around agriculture in policy development and support is in large part to be found in this building here. We're committed to working closely with the federal government, with the beginning steps of your committee. I welcome the opportunity, when you come to Saskatchewan, for you to meet with us and our producer groups so that we might expound on some of the options we put forward today.

Thank you very much, Mr. Chair. I look forward to responding to any questions you might have.

The Chair: Thank you, Mr. Serby.

I think now we'll hear briefly from the critics.

Mr. Penner, would you be ready to go first?

Mr. Jack Penner (Official Critic for Agriculture, Legislative Assembly of Manitoba): Thank you very much, Mr. Chairman. Those of us from Manitoba who are not in government but who are the critics for the agriculture department truly appreciate the opportunity to be here, to bring some of our thoughts, and the thoughts of our caucus, to this table on the matter of agriculture.

We think agriculture in this country, and indeed in Manitoba, is still one of the key industries that needs both recognition and a sustainable policy over a long period of time. Wheat production in Canada during 1937, 1938, and 1939 was deemed to be one of the most important commodities in terms of national security. When policies were put in place to not allow the exportation of wheat by individuals, and to confine it to the national and international interest to ensure that our allies would have food for their armies to fight in the conflict, it became apparent that we could, and should, contribute in that manner. However, we seem to have lost focus of what's important to society.

• 1005

I believe food security, deemed as in the national interest, should be, must be, of key importance. We have not yet quite gotten over the fact that our national government entirely abandoned the sugar beet producers in Manitoba by not putting in place policies that would allow us to compete, even though we were the most competitive producers in all the world in sugar. That's a well-proven fact.

We have now relegated Canada to reliance on sugars from outside interests. Should we ever, Mr. Chairman, get into an area of conflict again, we might well find ourselves as a country without a supply of one of the most key elements of food production, and that's sugar. That worries me.

The other area I want to address today is this whole matter of where we're headed in farm policy. When the federal government chose to eliminate the Crow, many of us applauded that, and we still do today. If we had never had the Crow in this country, western Canada would be an entirely different part of our nation, we believe. And yet we had it, and we changed it—without giving any consideration to any of the other elements affected by the transportation of goods east and west into export and/or domestic supply situations. We added the Feed Freight Assistance Program and we added an At and East program to ensure that our feed users would have access to cheap foodstuffs produced in Canada. We abandoned the whole issue without giving consideration to what would happen to the economies of food production and/or livestock production, and where that should happen.

We have done nothing as yet to address the situation of the supply-managed sectors and others to allow for the competitive factor to be the determining point in terms of where livestock should be produced. We still allow the national quotas, provincial quotas, to be set on largely a population basis. That needs to be addressed.

If you would allow for the competitive factor to work properly, I would suspect that the same thing would happen to the livestock sector that has happened to the bean industry. The bean industry has virtually totally migrated from Ontario to Manitoba. Manitoba's now the largest bean producer in Canada. There are limits to that as well in Manitoba, because of the climate, but we can and will produce. If we are relegated to the highest-cost freight of our grains and oilseeds into export position, that means we will have the lowest-cost feed supplies in all of the country, in Manitoba, because we are the furthest from the port.

Where I live, Emerson, Manitoba, we are six miles north of the U.S. border at Pembina, North Dakota, and my freight costs have gone from 27¢ a bushel in barley to $1.18 a bushel to get it into export position. That means the feed costs on my farm are almost $1 a bushel cheaper than for somebody who lives on the west coast or who lives in Ontario and has access to deep water. That's our cost, and that's our competitive advantage, but we're not allowed, in many circumstances, to use that competitive advantage to diversify.

Minister Vanclief was in La Broquerie, Manitoba, last Friday. He told me that my area, the La Broquerie—Steinbach constituency, was an example of how diversification can work. The La Broquerie—Steinbach area is our home for supply managed commodities, and they work well. Supply management works well, and I support that. However, it also works well in the other livestock sectors. We have seen tremendous growth in some areas of the province in the livestock sector, but it is based on low-cost feed.

• 1010

Today, Mr. Chairman, we are forced to compete against American feed costs in our feed production. Corn is now coming into Manitoba at half the cost of what the American producer gets for that corn. By direct cheque, 50% of his income comes from Uncle Sam through their LDP program, through their Land Set-Aside Program, and through their Disaster Assistance Program. Last year their Disaster Assistance Program paid up to $200 an acre in farm supports to those kinds of producers.

That's my competition. We can't stand that kind of competition.

By the way, Mr. Chairman, Manitoba, for the first time in history, will be a net importer of feed grains this year. That's not because our livestock sector has grown enough to consume it all; we've just quit growing it. We have converted to beans. We have converted to lentils, peas, chickpeas, caraway, small fruits, sunflower, elk, ostrich, emu, bison—all those kinds of commodities. We've quit growing barley for feed. We are growing some corn for feed, but only to a limited degree, because we cannot compete with our American friends, at half the price for my commodities. That's the issue.

It is the national government in the United States that has made the decision to support its agriculture base and secure a food supply. Our government has abandoned us. That must be addressed. There are ways to do that.

Yes, I agree with what Mr. Vanclief said to us in La Broquerie. He said we had to diversify, and we have. My farm changed from grains to sugar beets. It cost me a huge amount of money to do that. Five years ago, I lost that. There's been not a dime of compensation for losing the industry. Ontario producers, when they lost their sugar beet industry, were compensated. When they lost their grape industry, sir, they were compensated. When Quebec lost its sugar beet industry and other industries, they were compensated. But not Manitobans. Why?

Therein lies the problem. We in western Canada feel that we are treated differently from most others in Canada, and that needs to be addressed. We believe the grains and oilseeds industry needs some dramatic support over the short term, and $500 million will not cut it. The actual amount of hurt in western Canada alone is between $5.8 billion and $6 billion annually. To address...to put us at the same level playing field that the American farmers, the grains and oilseeds producers, receive.

We sometimes have heard the fact that farmers in western Canada are just going to capitalize if governments give support, but that's not true at all. That hasn't happened in the United States. Land prices right across the border, six miles south of my place, are $300 cheaper per acre than in Manitoba. Why? Farms in the United States are on average half the size of Canadian farms. Why? Because small family farms can make a living to support their families in the United States. The American government's supporting them and we are not. We are forcing our farmers to become large, to expand, and we must address that in order to maintain a western economy that's viable, and to maintain our communities.

Some of the ministers have indicated what some of the problems are.

The Chair: Can I perhaps ask you to take a minute to summarize? You're up to almost 11 minutes already.

Mr. Jack Penner: I'm sorry.

Many, many other areas need to be addressed. For instance, manufacturing can and will happen. Supplies of products can be grown for value-added.

I will table my report. It's in both languages. It's before you. I hope that can be recorded. It speaks largely to what kind of diversification and policies need to be set, can be put in place, and should be put in place to support that development sector in Manitoba.

• 1015

I thank you, Mr. Chairman, and I thank the committee members for indulging my going over time.

The Chair: Thank you, Mr. Penner

Mr. Nicol now from Alberta.

Mr. Ken Nicol (Official Critic for Agriculture, Legislative Assembly of Alberta): Thank you, Mr. Chairman. It's a real pleasure to be here today.

We've heard a lot of discussion already about the characteristics of our sector and some of the issues. I started my career in agriculture policy work 34 years ago, and my first project was to look at what governments can do to support farm incomes, how they can approach the inequities that exist. This is the continuing debate that goes on in our sector. We have to start looking at how we're going to deal with these on a long-term basis, and yet in a way that's acceptable to the public. It was really interesting in the last two or three weeks in southern Alberta, where my constituency is, to listen to the people in Lethbridge, which is not a large urban centre, but it is an agricultural centre. They were saying, farm incomes have gone up, why are we having to put more money into agriculture?

If we are going to serve the agriculture sector correctly and properly as the public guardians, we've got to divide our sector into its component parts and talk about the crop, oilseed, the land-based agriculture component, the livestock component, and the supply-managed, the contract agriculture components. The issues faced by each of those sectors are different, and we have to deal with them in a different way. From the perspective of the public's acceptance of us as their elected representatives making commitments to the agriculture sector, we have to make sure that our public is onside and that they understand why we're doing these things.

When we look at the supply-managed sectors, especially the fluid-milk dairy sector, they have cost-based pricing systems in there, and basically are capable of standing on their own. What we need to do, then, is look at, say, the contract sectors, where they're getting a return on volume produced, and that's a negotiation process that can be worked out with a one-year support network. In the long term the sector can negotiate appropriate contracts when they deal with that contract provision of a product.

As to the livestock sector, the beef and pork sectors, historically, we've seen that those sectors do create a viable income level for their producers. Their problem is the cyclical nature of that income, and a program like NISA, properly designed, will provide them with the kind of cyclical income management that's necessary.

The real crisis sector in agriculture is with the land-based producers, the primary producers who deal with the crops and oilseeds and forages. We have to look at how we can deal with their ongoing acute income situation. To deal with that, we've tried to put in place programs that have supported them. When you have a chronically depressed situation, the NISA program concept for the crop-based agriculture doesn't work, because they don't have the income up front to put into it. What we need to do is look at how we can give them a sustainable support system. The Farm Income Disaster Program that Alberta designed in 1995 and was a model for the agriculture income disaster assistance program at the federal level works very well for a one- or two-year downturn and a crisis downturn in incomes. But when you deal with the slow slide of income we've had in the last four, five, six years, even those kind of programs don't work, because the margin we're dealing with supporting gradually collapses, and there's nothing left to provide support.

So we have to look at how we can get a program in place that sustains our crop-based, our land-based agriculture. One of the things that comes up every time I go into a public meeting is, we're all constrained by the World Trade Organization's agriculture agreement. If you look in there, there is a whole series of programs that we can provide to support the agriculture community.

• 1020

I think we're overlooking the options that are available through our crop insurance. Here, instead of basing our crop insurance on a concept of revenue insurance, what we need to do is base that crop insurance on the basis of cost. As a farmer in southern Alberta, when I go out and buy hail insurance, I go to the private sector dealer and say “I want so many dollars worth of coverage on my crop”, not “This is what I expect my yield to be, and this is what I expect the price to be, which will probably give me this kind of a revenue—can I insure that?” I just go in and stipulate a level of coverage I want, and they give it to me based on a premium. If we took the money we're putting into our farm income disaster or AIDA programs, the acreage payments we make, and created a viable crop insurance program based on costs, it would give our farmers a sustainable mechanism to look at input variability and the competition we see from the European and the American public treasuries. We could do it using that kind of a model.

We're talking right now about trying to go out and deal with farmers in the species at risk legislation. Under the WTO we have provisions to make payments to them to protect acres that are subject to a species at risk, and so what we can do is use the environmental provisions or the regional development provisions there to make the kind of support payments that are necessary to target the land-based agriculture community.

My constituency is in the city of Lethbridge, but I farm just outside Lethbridge—this is feedlot alley in southern Alberta. In that whole area, where you've got a large number of the supply-managed producers and the feedlot and hog producers who are coming in, they have the cashflow to put anybody who is a crop producer, a land-based producer, at a real disadvantage, because the crop farmers don't have the income flow to compete. A quarter section across the road from me last month sold for $550,000 irrigated. A feedlot operator bought it. No crop producer, not even in the specialty crops, sugar beets or potatoes, in southern Alberta can compete with that.

So what we have to do is look at their costs of production, and this will provide us with a mechanism that will also allow us to provide the support. We can do it on a sliding scale, so that in effect, what we've got is a situation where the first, say, $100 or $200 or $300, which is a cashflow commitment of that farmer, gets covered, with a certain percentage of publicly shared cost. If the farmer wants to go ahead and put more on it, the public participation percentage drops. So in essence, as you're covering your fixed costs or your equity returns, the public participates less in it. This prevents revenue-generating being built into an escalating price of the resource.

These are the kinds of issues we need to start looking at. This year the thing we need to do is provide some immediate relief to farmers based on some of the suggestions we've already heard about reducing input costs by removing taxes on fuel and other energy sources, dealing with some of the issues that are important in the transportation sector. But in the long run we have to start looking at how we generate a sector that can adjust, that can become competitive on an internal basis as much as on an external basis, and then move into that.

Mr. Chairman, I know we're running out of time. I'll end there, because a lot of what I was going to say has already been presented, there's no use in my repeating it. I just wanted to talk about some of these other ways that we can go about providing viable support to the agricultural community, support that's targeted and doesn't violate the WTO requirements.

The Chair: Thank you, Dr. Nicol.

Mr. Boyd, I guess you're in the cleanup spot, as they call it in baseball. It's not easy trying to put it together after you've had seven other speakers.

• 1025

Mr. Bill Boyd (Official Critic for Agriculture, Legislative Assembly of Saskatchewan): Thank you, Mr. Chairman, committee members, honourable members. It certainly is my pleasure as well to speak to the committee about the problems associated with agriculture.

As a farmer myself, I was thinking about what I would say to the committee over the weekend while I was working on our farm, and it occurred to me—and I think it is the same in all provinces—that the last thing the farm people of western Canada want is handouts. But they are competing with farmers all over the world who have a partner, and their partner has very deep pockets and is putting billions of dollars into their hands. Those are the people we have to compete with on an international level.

We've been competing with them, I think pretty well, even though we find ourselves in a situation where we don't have the same resources they do. Programs have been put in place in our province, like AIDA, CFIP, and others, and they have been in large measure, I think, very well accepted in regard to the amount of money generated and put into those programs, but they haven't been responsive in many ways. While appreciated, they simply are not meeting the needs of the grains and oilseed sector to the extent that they should be.

Crop insurance and NISA have worked quite well. I appreciate Dr. Nicol's comments in that respect. I think his comments form the basis for, perhaps, a good program in the future. What we need are clearly two things, a long-term safety net program that takes out the bumps and one that provides support in the short term as well. Those are the two things we need. We have been told by people of all political stripes that there is a need for diversification, and I think Minister Serby has outlined very clearly the amount of diversification that has taken place in Saskatchewan and how positive that has been.

While I was riding around on the tractor the other day, it occurred to me that at this committee we are all elected, and we are partisan as a result of that. In our country from time to time we do set aside partisanship. When we see Canada respond at a national level to crisis, I think we are all very proud of our country as a result of that response. When we've had floods, the country has responded. When we've had ice storms, the country has responded. When we've had fishery needs, the country has responded. In Saskatchewan we supported those needs and the action each and every time. I believe there is a need now in western Canada, a very large need. While it may not be a natural disaster, it is the same type of need in that people require assistance. That's why our call in Saskatchewan has been for the federal government to respond to that national need.

We have, unfortunately, in our province witnessed over a period of time a shrinking agriculture industry in respect of people. We are watching as farm sizes get larger and larger. We're watching our neighbours move from our community constantly. You don't have to pick up more than one paper in Saskatchewan to see auction sale after auction sale. What that represents is not simply someone deciding they want to move on out of the industry, what it represents is the loss of family, the loss of friends, the loss of neighbours to our communities. I came from a community that once had approaching 2,000 people in it, a very strong, vibrant little community. It is half that size today, and that in under 15 years.

That, to me, represents more than anything the need for action at a federal and a provincial level. Our challenge is how to meet those challenges that are before us. I think the federal government has at its disposal the means to meet those challenges.

• 1030

We have been told over time that, yes, there are always competing interests at the federal level in terms of where the resources are to be dedicated—towards health care, education, economic activity of various sorts—but this is a call as well for the national government to meet the interests of our country and our province.

We have, I believe, three important challenges before us. There is first the challenge of transportation, and the need to continue efforts to reduce the costs of transportation or to keep them in check, at the very least. We need to transport our products to market. After all, we export something like 80%-plus of our product out of our province, so there's a need for efficient transportation.

With respect to marketing, I believe the farmers of our province are calling for changes in that as well. We support the Alberta model of choice, and we believe that is a necessary change that will help our industry move forward.

Last but not least is the need for the long-term safety net I spoke about. We have a need for a partner at the federal level to help us compete with farms all over the world. We simply cannot meet those challenges without the assistance of the federal government.

Mr. Chair and committee members, on behalf of farmers in Saskatchewan, we certainly support the call for increased assistance from the federal level, and we call on you to respond, in a national effort, to assist our producers.

Thank you, Mr. Chair.

The Chair: Thank you, Mr. Boyd.

I would like to commend the presenters this morning. We have a number of farmers visiting here, too, and quite often they think we don't as politicians do a good job presenting their views, but I'm sure this morning most of them should be very well satisfied with what they have heard.

I have a little problem with time now. I've asked Garry if he could try to restrict his time to about five minutes so that everybody, as much as possible, can participate.

So I'll leave it with you, Garry. Just do the best you can, working toward that.

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): Thank you, Mr. Chairman. I don't know if those five minutes include the answers...?

The Chair: Oh, yes.

Mr. Garry Breitkreuz: Then I can't see how that can happen.

At any rate, thank you all very much for coming and for bringing to the table the expertise and the insights you have. Thank you also for the support you have sitting behind you. It's very important that we have a united group coming here. There has been a theme through all of your presentations that I appreciate very much, and I appreciate that you've laid politics aside to bring the message to us here today.

I think Mr. Serby really hit at the heart of the problem we face here in Ottawa, and that is, does agriculture have a value to Canada? Do Canadians understand the importance of agriculture to our country? I firmly believe agriculture is fundamental to our entire economy and our culture and our fabric in this country, so once that's established, then we can go on and ensure that it remains. We need to make agriculture a priority at the international bargaining table. I mean, that should be obvious. It should be equal to the aircraft industry, at least, when we sit down to bargain.

Statistics Canada figures, just released, indicate that the average farm income in Saskatchewan is less than $7,000. I don't think most Canadians realize how serious the situation is. That figure alone should indicate that.

Now, the theme that all of you have presented here is that we, in western Canada, have been treated differently, have not been treated fairly. The prairie provinces have taken a much greater reduction or hit than any other provinces when agricultural support was reduced. The question then would be, can you conclude from this that the government itself has created some of the problems farmers experience, and the inequities within Canada? I would like you at some point to address that in your response.

• 1035

I feel that one example of how that has happened concerns the Crow rate. The necessary changes weren't made to the transportation system to correct the problems created when the Crow was removed.

All of the commissions and studies that have been made really have not been acted upon. The U.S. continually reviews their programs, but they act on them. Maybe some of you would like to address that as well.

The Chair: Garry, you've used up three minutes. We had debates in the House on this at length. In fact, we spent days and nights on it. I'm sure they've heard your speeches before, Garry, but this is questions, and we'd like to give our witnesses an opportunity to spend some time bringing something to the committee.

Mr. Garry Breitkreuz: Yes.

The Chair: So could you get to the point?

Mr. Garry Breitkreuz: Does that come out of my time, Mr. Chairman?

Is the federal government's commitment to agriculture adequate? That's what we need to answer. Has the money promised by the Minister of Agriculture flowed to farmers in your province? What is the source of the delay? Let's get at that. What changes to CFIP are necessary to ensure that the program helps the grains and oilseeds farmers in your province? What changes would you like to see in the government's policy on the 60-40 split? Would the provinces be willing to share in some kind of a transition program?

We in the Canadian Alliance have been calling for $400 million in immediate help. However, the government has indicated there's going to be some type of transition program for producers pursuing options outside of farming. How do you feel that is best addressed?

There are six questions, Mr. Chairman, and they have about 30 seconds to answer them. Thank you.

The Chair: Comments from Alberta first.

Ms. Shirley McClellan: Well, I'll certainly take a few seconds to address a couple of them.

We didn't come here necessarily to talk about money. We have that dialogue, and I don't think we have to spend a lot of time explaining the cash crunch, although we welcome the opportunity to talk about that. And, no, it hasn't been equitable. In fact, if you want to go one step further, we don't think it has been equitable for Alberta, because this year is the first year that we were...and very appreciative of the federal government contributing to a possible cash payment. We were not included last year.

The bigger issue is the safety net issue. What I find interesting is that when I was Associate Minister of Agriculture from 1989 to 1992, we talked about a safety net program that would include a cost of production. I find it interesting that when the railways need a rate increase because of fuel costs, they get it. But can you tell me where in the safety net program for farmers that rate increase is picked up? That, in simple, simple terms, is the crux of the problem we have today.

Let's have no more reviews, no more costly committees until we're prepared to implement and apply the very valuable information we have. I meant what I said; we were encouraged by the Estey-Kroeger committee. We participated fully in it and we supported it. But you can't pick little parts of a review and expect the system to change. It was to encourage competitiveness in transportation and grain handling, and we have in fact done neither.

Those are the issues. Until we change and make a commitment, I don't want to be part of another review. I've been studied enough and enough time has been spent. Alberta is a fair contributor to Canada. I don't want to see my tax dollars go to any more reviews if we're not prepared to stand behind the work they put forward.

The Chair: Other comments? From Manitoba.

Ms. Rosann Wowchuk: Thank you.

You asked whether we thought things were being done fairly. When I think about the elimination of the Crow and the impact that had on western Canada, particularly Manitoba, and the amount of money that came out, that had a devastating effect. But it has not been replaced in other programs.

• 1040

Our province has made many adjustments, and we need support from the federal government during the transition as we make those different changes in our provinces. A lot has happened. As Jack indicated, a million acres have been changed to bean production. There have been a lot of changes. But we do need additional support. You talked about the transition programs, and that's part of the transition, but it was the federal government that took the money out. Provinces can't fill the gaps. We do not have the resources to fill the gaps created by the federal government. When they made the decision to eliminate the Crow, they said it was for deficit reduction. But provinces can't fill that gap. We need additional support from the federal government.

The Chair: Thank you.

You did get your eight minutes, Garry.

Marcel.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman. You're going to be pleased, I will try not to use all of my time in order to give more to my Western colleagues.

I would like to make a brief comment about the French translation. I won't spend too much time on that but I would really like in the future, Mr. Chairman, to get documents in French. It is difficult for us to be involved in these matters if we can't understand the witnesses.

I would like to deal with Mr. Nicol's and Mr. Boyd's comments. Mr. Nicol stated that income insurance should rather be a cost insurance. Could he elaborate?

As for Mr. Boyd, he mentioned three issues: transportation, marketing and long-term income safety net. Could he also elaborate?

If I have any time left, I give it to the others.

[English]

The Chair: Thank you, Marcel.

Dr. Nicol.

Mr. Ken Nicol: For each of the specific commodities, including wheat, barley, corn, canola, soybeans, all of them, what we have to do is develop reasonable cost scenarios in each of our provinces and within the regions of those provinces. Our crop insurance programs do that right now as they calculate this revenue concept.

Then what we do is allow the farmers to go in and buy the insurance. It has to be a farmer participatory thing, because if we don't do this in a risk-management way so that the farmer has to be a participant, then what we end up with is the passive recipient of a benefit that doesn't show in their decision-making. Then if farmers want to overextend themselves and put extra costs in, they have to justify it. That's where we have, as I talked about, the declining public contribution. If you're going to put in more and your costs are higher, then you have to assume more of the risk so that the public doesn't finance your risk-taking and new development.

[Translation]

Mr. Marcel Gagnon: Sorry, could I ask another question on that? Do you know the system in Quebec? Is Quebec moving towards what you recommend?

[English]

Mr. Ken Nicol: I'm familiar with it a little bit, but not to the exact operational detail. I think that program is much more usable than some of the other crop insurance programs we have.

Mr. Bill Boyd: With regard to the three areas I spoke of in quite brief terms, I don't think there's any other area of agriculture in western Canada that has been studied more than transportation. We've had study after study after study with little, if any, change in the process, and the results just simply haven't met the needs of farmers.

The Estey-Kroeger report was, I think, a good basis for a more competitive, lower-cost system, and yet we've seen no implementation of that process whatsoever. That is a critical component in terms of the change needed to address the transportation concerns of Saskatchewan, and indeed of all western Canadian producers.

• 1045

With respect to marketing, we are firmly of the belief that farmers require and need more marketing choice if they are going to go forward in their industry. We are not advocating, in any way, shape, or form, the elimination of the Canadian Wheat Board, but we are asking for choice, in terms of whether we want to use it or not. I think that's something producers in other parts of the country have and we would like, and we fully expect the federal government to implement changes to assist in that effort as well.

In terms of a safety net program, we think it should have three components to it. There should be an enhanced crop insurance program and a NISA component to it, which are already in place. The most important part of it is what was at one time called the “third line of defence”. It has become somewhat out of vogue to talk about it, but we believe the third line of defence should be a purchased revenue component—something along the lines of what Mr. Nicol was talking about. We'd certainly be interested in discussing that further at another time.

The Chair: Thank you, Marcel.

Mr. Steckle.

Mr. Paul Steckle (Huron—Bruce, Lib.): I want to thank all of you for your excellent presentations. I think we've had a dialogue where partisanship has been put aside. Let me just tell you, quite a number of us, including myself, are primary producers. All of us around this table are interested in agriculture, or we wouldn't be here.

I think if we look at what's happening with the industry, the pattern that develops from industry, and how they develop policy for marketing and production, whether it's high-tech sectors or simply manufacturing, the directive, for the most part, comes from the industry itself. I think farmers need to play a greater role. I guess because we're so diversified, we find it difficult to come together with a unified voice.

But the government is looking for agriculture—and the provinces play a big role in this—to come together and come to the federal government with a plan. It has to be varied, because we obviously have many components to agriculture. Unless that happens, for us to come up with a policy, how do we accommodate? There has to be a common voice with a message that says, “We need this”. We first of all have to make the commitment that we believe in a sustained, safe, and secure food system for Canada. That should be the cornerstone of whatever we want to do.

Having said that, I think we must come together and agree on what we want for agriculture, in the long term. We would all agree that these ad hoc programs don't work.

I guess my question would be to those provinces, and there's two of them at the table here this morning—this is not political, but it has happened—who have abandoned a program we still have in Ontario, the market revenue program, or GRIP. I think what we're getting back to is that the buy-in program is sort of similar to what you're talking about as your third line of defence. I'm just wondering whether there are reviews in your provinces of that issue, and whether that can be redressed.

The Chair: Is there a response?

Mr. Clay Serby: Thank you, Mr. Chair.

To the member, I first want to say that when you highlight who is responsible for what role, you ask an important question. From the provincial perspective, you'll often hear that there has been an abdication of responsibility at the national level in terms of agriculture, and over time provinces have picked up a larger piece of the pie.

So when you ask whether or not there is a national plan today on agriculture, the answer is that there isn't. Along the way we've been trying to piecemeal, on an individual basis, in each of our provinces, an ability to sustain an industry that shouldn't only be a provincial responsibility.

The very same question was put to us by Mr. Vanclief in Quebec City a couple of months ago. He said, “Why don't we get together and develop a plan?” That's not a bad idea. We should get together and develop a plan, and we should determine who takes on which part of the puzzle, because the provinces can't carry the kind of responsibility they've inherited today, in our view.

• 1050

So that dialogue is continuing. We're going to try to achieve it from three perspectives. We're going to look at what kind of a safety net program will work in Canada today that's reflective of all of the provinces, with our diversity. We, at this end of the table, say it doesn't work with grains and oilseeds, so around this table you need to understand that it doesn't work.

When we put forward a plan that gives us a different kind of view of what the safety net should look like, incorporating what the safety net envelope should address—which could be part of my colleague from Alberta's presentation—we need receptivity here.

Second, if the market tools we have today aren't working, we also need to look at how we can make them work better, and not let only our political ideologies get in the way. We need to look at the bigger piece.

Third, we should be working toward transition and change, because the industry is in change. There are lots of things happening today in agriculture that didn't happen 25 and 30 years ago, partly on their own and partly because of investment. We should do more of that.

But we should not take the money out of the emergency aid envelope, where it sits today. We've seen it happen this year. We had $900 million last year—almost $1 billion in emergency funding for farmers in Canada today, because we said last year it was an important industry. This year, we reduced that to $500 million, but the additional $500 million we didn't get should be put into a transition fund to help us adjust. We should and will adjust, but we need to have resources at that level.

Leave the funding sources in place over time, so you can get there on a national plan, with the provinces. We're asking you, in your committee today, to help us get through that process. There's a whole host of issues in there—crop insurance, NISA, and whether the Canadian Wheat Board is working today. We should examine all those things, but it should be in the purview of leaving at least the kind of financial commitment in place today to get there.

I'm feeling—and hearing, to a large degree—that some of the revenue source we get from the federal government, in terms of commitment to agriculture, is eroding. That's what worries me most, as we develop a plan.

The Chair: Mr. Serby, I'm having some problems with this. We allocate the time to the member, and when the answer gets...we run out of time. I'm sorry that other witnesses can't answer the same question.

I propose to give each witness maybe two minutes at the end to sum up. You'll have a chance to speak and to answer something.

Dick, I'll go to you next.

Mr. Dick Proctor (Palliser, NDP): Just for clarification, do we have until noon today?

The Chair: We're trying to work toward that.

Mr. Dick Proctor: Okay. Thanks very much.

I have just a quick question, to the Manitoba and Saskatchewan ministers.

I noticed Murray Downing and Lloyd Pletz broke into big grins and high-fives when Minister McClellan said “Cost of production is the way to go.” I would just like, from ministers Serby and Wowchuk, their views on cost of production.

The Chair: Ms. Wowchuk can answer first because Mr. Serby just had a few minutes.

Ms. Rosann Wowchuk: Certainly, when you look at cost of production, every producer would like to have their cost of production. When you look at the supply management sector, there is the ability within the formula to get a cost of production. It's something that's been in discussion many times. We've talked about how you would get cost of production in, if you were shipping to a foreign market. Would you cap the amount, and only have cost of production for production in Canada, and then not have the cost of production for the export market?

It's something we've often talked about, but the funding of it is the issue. In other sectors, in supply management, you can pass those costs on to the consumer. How do you pass the cost on? The cost of production is certainly something to consider.

The Chair: Clay.

Mr. Clay Serby: I think cost of production should be part of our discussion and review, which would encompass who supported it, in terms of finance. We should be reconstructing today the safety net envelope we have in place, as my colleague from Alberta earlier talked about.

In our province today, $700 million of revenue goes into NISA crop insurance and CFIP producer premiums. It's a large chunk of money. Probably only 40% of the people are happy with all of it.

So clearly it's not working. Is cost of production an area we should be addressing? For sure. Now, there are some barriers here to get there, but we should be looking at how we do that.

• 1055

Mr. Dick Proctor: Thanks very much.

I apologize in advance, because I'm going to throw some numbers out, but there is a point to all this. Statistics Canada recently said crop revenues have fallen for the third straight year and reached a six-year low. As to provinces that are here today, Manitoba was off 2.1% on net cash incomes, largely as a result of grains and oilseeds, Saskatchewan was basically unchanged, and Alberta, because of a very strong livestock sector, was up 62.9%, I think, Minister McClellan.

Ms. Shirley McClellan: That's what it showed.

Mr. Dick Proctor: Then we jump down, though, to this formula that Minister Wowchuk talked about, 50% of farm cash receipts plus 50% of market receipts, and what do we have? We see Alberta actually getting slightly over one-quarter of the federal money, again probably for grains and oilseeds. So we have, as the National Farmers Union has pointed out, the perverse impact of lower federal contributions as farm receipts decrease.

I know all of you have talked about the need for safety nets, but when you have scarce safety net dollars that don't appear to be based on need, is that good, healthy public policy? I'll throw it open to whoever wants to take a crack at it.

The Chair: Ms. McClellan.

Ms. Shirley McClellan: I want to make a couple of comments. I think Dr. Nicol hit the key point on the issue of cost of production and the level of public participation. The producer has the option of purchasing that with more input from the producer's standpoint. I wanted to make one quick comment on that issue.

You can talk about what's fair in who gets on the basis of need, but one thing we do resent in our province is the actual idea that because we're doing okay, we don't need any help. And we should not reward inefficiency. We say that all the time, although we're doing it in our transportation system, we think. We should not penalize a province if they do make tough choices and make changes. That's our other point.

This isn't an us-or-them, either/or. I farm 15 miles from the Saskatchewan border, right next to Bill, so I'm certainly aware of what they've gone through. My heart aches for them, because Kindersley used to be our biggest trading area and isn't any more.

We need to get away from the discussion of subsidies. That's why today we tried to talk about things we thought the federal government could change in policy that would have a positive impact. With safety nets, Quebec and Ontario have two models, both of which, I think, we can build on. That's what we're working for in our province, we're committed to doing that. And 81% of Albert producers polled said they want marketing choice. We have never asked to get rid of the Canadian Wheat Board, despite what you hear. However, even the chairman of the Canadian Wheat Board has suggested that you should change. His suggestion was to go away from producing board grains, and I find that an interesting comment. We're saying keep the Canadian Wheat Board, but give us a choice. We buy in the free enterprise system. We buy all our equipment at a retail, free enterprise level, and we sell our grain in a closed system, a monopoly. We're one of only two countries in the world that have that. I find that interesting as well.

The Chair: Thank you very much. We are running into another problem, those bells that are ringing. For some reason the House has called for a vote, and we're going to go as far as we can towards that.

For the information of those who may be watching on CPAC, we have about 16 committees meeting in various rooms around the Hill this morning, and for some reason, somebody has called for a vote in the House. So it's certainly going to cause us a problem—

Mr. Rick Borotsik (Brandon—Souris, PC): Could I ask a question?

The Chair: I would like to get a decision, Rick, if you could just wait for a moment. I know you came in late, but we certainly will hear from you in due course.

• 1100

Mr. Rick Borotsik: Thank you, Mr. Chairman, but perhaps we could ask questions.

The Chair: I am presenting to the committee an opportunity to determine what we can do. We have the room until 12:30 p.m., apparently, and after that we're going to have to adjourn, but I understand some witnesses have flights to catch back home. For that reason, I will try to adjourn briefly, come back as quickly as we can, and hear from those who are to leave.

I'll try also, Rick, to give all members of our committee an opportunity to ask some questions. So if you'd bear with me, I certainly appreciate criticism, but I don't want to take time with it.

I'll go from there to Mr. Calder and his time.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Mr. Chairman, it's a half-hour bell, so we have lots of time; we're close.

I have three things I want to focus on. The first is the value-added sector. We're talking a great deal about this, and quite frankly I would like you to tell me how the primary producers are going to get a fair share out of it. In supply management—and I have a part in this—we're at the bargaining table with the processors and we sit down and come up with the farm-gate price that also sets the wholesale price. So how do we do that?

The Canadian Wheat Board should be a choice, a free choice. If you use the example of the Ontario Wheat Board, you find choice. Producers have dual-desk selling, but there is a catch. The producer has to sign off on the promise not to sell that year's production through the Ontario board. Could you comment on this?

Finally, Minister Serby, you had spoken of greater access to producing supply-managed commodities. Well, I used to sit on the Ontario board, and it's basically based on population. So when you make a statement like that, I know full well the two options you're looking at. Number one, you want reallocation of quota from other provinces to your province so you can in turn sell back to Ontario, for instance, which I have a problem with, or you are looking at an export policy.

The Chair: Who would like to answer?

Ms. Shirley McClellan: I'll deal with the Canadian Wheat Board question first. Absolutely; that's why we use the word choice, and that's why we believe the Canadian Wheat Board should stay. In fact, it's a Western Canadian Wheat Board, because as you have well pointed out, Ontario has a totally different system, if you want to talk about national equity in agriculture. The producers should have that choice.

We believe the Canadian Wheat Board needs to have the ability to fulfil international export market commitments, so as a producer I will have the choice of signing a contract with the Canadian Wheat Board to ship my grain through them, and if I choose not to, I'll sign to that effect as well.

Mr. Murray Calder: But we also have to have a check and balance there—

Ms. Shirley McClellan: That's right.

Mr. Murray Calder: —so that the producers are not allowed to cherry-pick.

Ms. Shirley McClellan: Absolutely. There is no question that you would sign a contract as to how you wish to market your grain.

Mr. Murray Calder: Okay.

The Chair: Would the other visitors like to comment?

Jack.

Mr. Jack Penner: Thank you very much, Mr. Chairman. I'd like to respond to the gentleman from Quebec first.

The Chair: I'm sorry, you can't do that.

Mr. Jack Penner: Okay, then I'll go to Murray's question on supply management.

I'm a great proponent of supply management. However, the way the provincial quota allocations are done today are fair neither to the consumer nor the producers. Canada made a decision to do away with the equalization of freight rates, which puts Manitoba at a distinct cost advantage for exporting or moving grain to the real marketplace. We, however, are not given an opportunity to develop the livestock industry in its entirety, based on that competitive advantage.

This needs to be corrected. The quota allocation needs to be done on a competitive basis instead of on a population basis. There's no question about this. I'm amazed that the consumer hasn't spoken very loudly to this yet. There needs to be a greater degree of competitiveness brought into the system.

• 1105

Your second question was on the value-added sector. The Americans have demonstrated with their pasta plant in North Dakota that they can not only compete but also compete very well against the Catellis of the world. The North American pasta plant is now the second largest pasta producer in all of the United States—in North America. I think the producer-owned, cooperative model they use is one we should work very hard at developing, allowing for the Wheat Board to be set aside so that domestically produced wheat can be utilized. That's where we need to go.

The Chair: Thank you.

I'm moving to Rick now. Hopefully we'll be able to give you your five minutes, and then we'll adjourn shortly afterwards.

Ms. McClellan, what time do you have to leave? Would you like to have a summary before we adjourn?

Ms. Shirley McClellan: No, I have another meeting at 1 o'clock.

The Chair: Okay.

Rick.

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

I want to touch briefly on the cost of production programs again. My question is to all three of the ministers and I'm asking for quick responses, because I have two other questions for you. We did have a pseudo cost of production program with the GRIP program back in 1995. A number of provinces decided not to continue with it. It was on the tripartite model you spoke about, Minister McClellan—producer, federal, provincial.

Is this a model you would see going back to, ministers? Very quickly, would you like to see this model again?

Mr. Clay Serby: The provinces and the federal government are reviewing the entire safety net feature—

Mr. Rick Borotsik: I appreciate that.

Mr. Clay Serby: —of which cost of production is on the table, but provinces like Saskatchewan and Manitoba need to know what the federal government's commitment is here, because when you look at cost of production, the cost here will be huge.

Mr. Rick Borotsik: Okay. I'm getting to that in my next question. You're jumping ahead of me.

Mr. Clay Serby: Well, I'm reading what you're saying.

Mr. Rick Borotsik: Is the model sufficient? Is it okay in your mind? Would you be prepared to look at it?

Mr. Clay Serby: We need to examine the model, and we are examining the model.

Ms. Rosann Wowchuk: I think Clay is right. It has to be reviewed—what are the impacts, what are the financial impacts.

Mr. Rick Borotsik: Minister McClellan.

Ms. Shirley McClellan: Minister McClellan happened to be one of the architects of GRIP back in the old days, so certainly I see the value of it. Where the GRIP program was lacking, and perhaps why it went completely out of the way, was that for any program you put in place, you have to put it in place for a year or two of operation—

Mr. Rick Borotsik: Absolutely.

Ms. Shirley McClellan: —and continue to review it and change it, not let it get to a point where you have to dump it—

Mr. Rick Borotsik: Like NISA.

Ms. Shirley McClellan: —as we've done with NISA.

Mr. Rick Borotsik: There were some problems there, and we did.

My next question, coming back to Mr. Serby, is on the 60-40 split. Contributions to GRIP were etched in stone at that time. I don't know where this arbitrary number came from, this 60-40 now with all the programs.

I'm going to ask you a question; I think I know the answer. Do you feel there should be more financial responsibility coming from the federal government as opposed to the provincial government even on that split? I go back to the United States. When you talk of American numbers, it's totally federal. There isn't a North Dakota requirement to help fund those numbers when they go to their North Dakota farmers.

Do you see us heading in that direction from a policy side?

Mr. Clay Serby: Absolutely, without any doubt. I don't know where 60-40 comes from other than here. It's come from here. It's entrenched in every agricultural policy we try to develop, and in my view it's not fair. It's not fair to the provinces. The federal government needs to answer the question about what its responsibility is today in terms of agriculture.

We're looking at changing the formula. Part of the discussion is about changing the formula, but the entrenchment here is that it's all 60-40.

Mr. Rick Borotsik: I have 30 seconds left.

Rosann.

Ms. Rosann Wowchuk: If you look at it, it wasn't always 60-40. There were many programs 100% funded by the federal government. When you look at the grain industry, the whole country benefits from it and from the large land base we have in the west.

Mr. Rick Borotsik: I have one last question and a little time.

My question is on land costs. You touched on it. Could each of you very briefly speak to the current land costs in your provinces? I know Alberta land costs are still fairly high; even though we have serious income problems with the industry, land costs are high. Are you finding that land costs are coming down or staying static right now? And under the circumstances of no income, why is that?

Ms. Shirley McClellan: I'll start.

Land cost prices are still fairly high in our province. It doesn't matter where you are, land is always going to be a good investment. There will always be somebody with money to buy it.

I think the bigger issue is what Dr. Nicol pointed out very clearly, the unfair...or the ability to purchase land for a purpose. It would be high in our province, obviously, and we are seeing a lot of our agricultural land being taken up by urban sprawl.

• 1110

The Chair: I have time for maybe one round.

Rose-Marie, would you be ready with yours?

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I can be.

I too would like to thank everyone for their presentations here this morning.

Dr. Nicol, I was certainly interested in your presentation, because I'm a farmer as well, and I've had many farm meetings in my riding over the past summer and subsequently. You really hit the nail on the head when you stated there are three major sectors—supply management, beef, and cash crops.

I think a problem arises when we start to identify sectors, because it makes it very difficult for a national safety net program to be implemented to encompass one voice coming forth and allocating dollars for its safety net program. I can tell you, when the crisis was happening in the hog industry in my riding, I had the grain producers not totally sympathetic with the cause. And when that has turned around, I have.... So it's always a shifting change.

I've told my farmers they have to come with one voice, because I can't represent one group one week, the next group the second week, and the third week someone else. It's a real challenge for me, as a government person and as a farmer.

Can you respond to that? It's not a question, it's really a statement.

Mr. Ken Nicol: The thing we have to look at is that as we put together our programs and direct them toward the characteristic needs of each of those different commodity producer groups, what we'll find is if we do have a program in effect that satisfies, say, the hog and beef, the feedlot industry, which are characteristically pretty similar, and we have another program that meets the needs of the grain producers, the land-based agriculture, if each of the groups feel their programs will meet their needs when their crisis arises, they won't feel bad about supporting the other one.

Right now we're trying to put a program in place that fits this whole agriculture sector, and we are not a homogeneous sector. We have different needs in each part of our sector, so we have to stop thinking about it as a homogeneous need. Design those needs, then each of the groups will feel comfortable; they'll know when their crisis hits, the program will be there for them.

Mrs. Rose-Marie Ur: It's not even just sectoral, it's also regional.

Mr. Ken Nicol: Correct. And the WTO allows for regionalization of programs, as opposed to commodification of them.

Mrs. Rose-Marie Ur: Is that it?

The Chair: Continue.

Mrs. Rose-Marie Ur: Okay.

How many of the ministers here have looked at the Quebec model for payment to the farmers? We don't have as many incidents or concerns coming from Quebec as we have from the other areas, and I know it can be regional. Can you respond to that as well?

Ms. Shirley McClellan: I just want to make one point. If you look at the stats from Stats Canada, they show a very low degree of support for the hog and beef industries. In fact, I think the only reason you're showing support is because they're now in NISA, because I don't know what other programs they have, and frankly, they're the strongest footing in our province. The difficulty is when you look at those stats and you see the inequity in the grain sector. The grain sector would far rather deal without subsidies on a level playing field. They don't have that, so they can't.

If you look at supply management, it's very similar in each country—in dairy, at least. If you look at Canada's support, it's 58%. In the grain sector, it's 11%, which has come up 2% thanks to the last payments that were forced.

They're interesting stats, aren't they? I think that tells the story. You're not going to find a common safety net. In Alberta, cattle producers say, “Stay out of our lives. Please, do not distort the marketplace. Allow us to make a living in the real world.” And we're quite happy to do that.

Mrs. Rose-Marie Ur: Do I still have time?

The Chair: A little one, Rose-Marie.

Mrs. Rose-Marie Ur: I was on the task force for the Canadian Wheat Board. I live in southwestern Ontario—the heart of Canada, of course—so it was really interesting to be on that committee. Since they've changed the format of the Canadian Wheat Board to have 10 farmers on board, I find it interesting that we're still having such difficulty with the board when we have far more representation in the numbers we have. And I strongly support having more farmers than other people.

• 1115

The Chair: Thank you, Rose-Marie.

We have to run now for a vote in the House. We'll adjourn for approximately 20 minutes, and hopefully we'll resume after that.

Minister Wowchuk.

Ms. Rosann Wowchuk: We had discussed our presentations, that although they can't be tabled officially, we do have permission to distribute them. Is that correct?

The Chair: Yes. That is correct. You may distribute them, but I can't, nor can the clerk.

Ms. Rosann Wowchuk: But we can put them on the table.

The Chair: Yes.

The meeting is suspended.

• 1116

• 1140

The Chair: Thank you. We'll continue our discussions, and I'll move back to the Alliance.

David, are you ready?

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): I wanted to talk a little bit about transportation and the Canadian Wheat Board's role in that. Justice Estey called for a change in the role of the Canadian Wheat Board in transportation, and the suggestion was rejected by the government.

I want to ask you this morning, do you believe that the rail rate savings by the federal government would be possible without implementing this recommendation, and what do you see as the Canadian Wheat Board's role in transportation?

I'll leave that open to as many people as want to answer it.

The Chair: Mr. Serby, are you going to respond?

Mr. Clay Serby: I'm deferring first to my colleague.

The Chair: Okay.

Mr. Clay Serby: She had her hand up first. I'll follow her on it.

Ms. Shirley McClellan: It doesn't really matter in what order. I think I made my points earlier on the issue of transportation reform.

We've had a number of reviews, the latest one being the Estey report, which then was put to the task, I think, of implementation to what became the Kroeger-Estey report. The difficulty with that report is that the changes that were made were rather insignificant, and to actually achieve the efficiencies that could be realized, you'd have to implement all of the report, not just pick parts of it. The report would have encouraged competitiveness in grain handling and transportation, but without implementation of the full report, you can't achieve that. So we believe that has to change.

Car allocation definitely is an issue, and it would seem to me the changes that were made increased the Canadian Wheat Board's role in car allocation. What you end up with then is a major discontent between grain handling companies and the Canadian Wheat Board, and instead of seeing change occur that causes efficiencies, you see long periods of negotiations, which we're into now.

Producers still pay the price, and nobody's picking that up for them while we're having those discussions. We've supported fully the Kroeger-Estey report. We were prepared to go along with it even if there might have been the odd thing we'd have liked to have seen different, but unfortunately it didn't occur.

The Chair: Jack, do you have a—

Mr. Jack Penner: Just a very brief one, Mr. Chairman, and thank you.

Your question is an excellent one. The cynicism that we see in the farm community in western Canada today is largely due to the fact that you have the Kroeger process, the Estey process, and at the end of the day, nothing is happening; nobody is really paying attention to it. We wasted a lot of time. We wasted a lot of energy. Farm organizations spent a tremendous amount of time. And nothing, at the end of the day, gets done.

The cost increases that I enunciated before, of 27¢ a bushel to $1.18, are real. Those are the cost increases on my farm. Yet nobody is willing to make the hard decision. We elect people like me and you to make the hard decision in government to get us down the road; to build some efficiency into transportation. It has to happen.

The Chair: Yes.

Mr. Clay Serby: I just want to say that in our province too we supported both reports that were provided, and we take the position today that the Canadian Wheat Board is in a trend of revision and change. We support the process under which they're making those changes today.

• 1145

I want to attach myself to the earlier comments made by my colleague, Mr. Calder, where he said—and I concur with this—that this should not be a cherry-picking exercise, in terms of the utilization of the Canadian Wheat Board. That's by and large what most people would like, so we need to pay attention to make sure the future of the Canadian Wheat Board is reflective of trade in the marketplace and that there is some producer loyalty here. Part of the problem we have today, in my view, is that producers are going to go to where they get the best deal all the time—and they should. We need to be sure the Canadian Wheat Board is reflective of what the marketplace needs are today.

We've had a change in the past year, I think, or year and a half to date, and we have a producer board today that continues to say the Canadian Wheat Board in its mechanism of operation today should remain intact.

Mr. David Anderson: Can I interrupt you for a minute here? We can have this discussion for a long time, because over the years the Wheat Board has cherry-picked farmers as well. It's taken high-quality grain and consistently mixed it with lower-quality grain, and people have had to take that medium price on it. So there has been the opposite of that going on.

But I want to ask a second question before my time runs out. If the government has clearly indicated there's not going to be additional funding.... They voted against the $400 million we asked for, for emergency aid. This morning Mr. Steckle seems to be—and I don't want to put words in his mouth—asking you for direction in agriculture, and I would suggest that the federal government is not providing that.

One of the things they're talking a bit about now is transition programs. I would like to ask you what programs you have in place, particularly for intergenerational transfer, and what you're looking at to help young farmers get into farming, because the age of farmers is getting older.

The Chair: Ms. Wowchuk.

Ms. Rosann Wowchuk: Thank you.

That's a very important question, given the age of our farming population and the difficulty young farmers are facing to get into the industry. We have the Agricultural Credit Corporation, through which we are developing a program called Project 2000, which is a mentorship program at this stage—phase one. We are looking to develop and will be announcing the next phase of the program, which will help with the transfer of farms from one generation to the other. I can't give you the details of the program because it's not announced yet. I want to say we recognize that as one of the biggest challenges we face with the young farmers coming in.

The Chair: Our time is up. I'm going to go now to Larry.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair. Welcome to all the witnesses.

Unfortunately, we can't hear from each member at the back of the room, but I think I've met with most of those people and look forward to meeting with them again.

This is just a thought. I had the fortunate opportunity to sit and listen to the discussion in Quebec City, and I think we are heading the right way toward the future of agriculture. There's nothing more important in this country than that, and the effect it has on our rural communities.

Sometimes, whether I'm in B.C., here in Ontario, or in one of my favourite provinces, Saskatchewan...I even hear people there talking about the money that's going into agriculture. I defend it. And of course, there wasn't enough money this year. When our minister announced the $500 million, anyone in Canada could see and hear that he wanted to have more.

I think sometimes we should mention, when we talk about “only” $500 million and “only” this amount of money, that there was another $700 million before that.

Clay, it's not enough, and we have to do so much with your great province and support you. But this year, I think it is, I'm sure it's just over $770 million of federal dollars going into programs in Saskatchewan. So I think some night we should sit down and look at where we are, and assess it, which is not enough.

Rosann says we have to have this $500 million and it has to be 100% from the federal government. Well, as long as we talk like that, it's very difficult to get agreement around tables to invest more money. I believe the federal government will be investing more money shortly—what's shortly?—along with their partners, the provincial governments, into agriculture.

• 1150

We have a lot of good things on our side. With grains and oilseeds, it's most unfortunate. I think sometimes we should recognize, and maybe even the federal government would like to hear about it, the small effort we may have made in so many people's eyes. I think we should do that.

I'm looking forward to listening in on your meetings and our meetings at the annual in June. I think we're going to make some good progress. I wish we could go back and redo some things. It's not just a shared jurisdiction, it's a shared concern. Of course, here we are talking to the converted.

The Chair: Larry, I'll cut you off at two and a half minutes, because I know Mr. Serby wants to reply.

Mr. Larry McCormick: Thank you very much, Mr. Chair. I'm really glad to see these people here.

Mr. Clay Serby: I just want to make two very short comments. One is that we should not leave with you thinking the Saskatchewan Canadian farmers aren't appreciative of the support the national government gives. The reality is that we are. From time to time we say that, and we compare those who have made a commitment to support and those who have made a commitment not to support. We've made that kind of statement and comparison regularly, so we appreciate that.

I also don't want to leave here the impression that what we have today in the pool of money that's provided is enough.

Mr. Larry McCormick: It's not.

Mr. Clay Serby: In my comments I said—and I'm going to say this a whole lot more—if you continue to say at the national table here that the Europeans and the Americans are reducing their subsidies, it's bunk. The Americans and the Europeans are adding money to their pool, they're adding it all over the place. We're competing against people who get a cheque from two sources. We can fix the marketplace, we can adjust the marketplace, we can enhance the marketplace, we can get rid of the Wheat Board, we can do all those things. But when somebody gets a cheque from the marketplace, and then gets a cheque in the mail, which Americans and Europeans are getting, increasingly in the U.S., and our farmers across Canada are not, I say that's not a level playing field. Don't abandon, at the federal level, the emergency aid envelope, because that emergency aid envelope is today's subsidy. It's subsidy, and don't abandon it until we get from over here to over here.

Mr. Larry McCormick: I agree with everything you said, Mr. Serby.

The Chair: Ms. McClellan.

Ms. Shirley McClellan: Very briefly, first, Alberta was very clear, when we made our announcement on the acreage payment, that we were very appreciative of being included this year.

Second, today we've come with what we think is an opportunity for the federal government to do it on a sound basis, the removal of the excise tax and the GST on farm fuel. You can do that on the basis of the fact that agriculture in Canada is a safe and reliable supplier of foods to our citizens.

I believe that subsidies will come down in the EU. The time it takes is what is distressing. The EU is reaching its cap. They have 15 countries that are going to come into the subsidy world there, with no revenue base to support that. So, yes, it's going to happen, but where was the Uruguay Round when we dashed off to the 9% level, while they stayed at 56?

The Chair: We'll go to Carol now.

Ms. Carol Skelton: Municipal leaders have stated that there's been a significant impact on non-farm businesses because of our income prices on the prairies. Can you give me some confirmation of this statement from your provinces? And what impact has it had on those rural communities?

Ms. Rosann Wowchuk: There is certainly a tremendous impact on municipalities. If you get a chance to go through the Hansard that I provided or the brief that has been provided, there are statistics in there. We have had towns where businesses and schools have closed. The population is going down, and as a result there just aren't the children in the schools and not enough people in the hospitals. So it's a very serious problem in those areas that are strictly agriculture production areas. If there is some value-added going on, there are businesses that are making the communities more stable. The issue we have is, how do we attract people to invest and do the value-added and the additional jobs in those smaller communities rather than in the larger centres?

• 1155

So the impact is not only on the farmers; it's on the rural communities and the whole rural lifestyle.

The Chair: Mr. Penner.

Mr. Jack Penner: Thank you very much, Mr. Chairman.

Just to add to that, we had, in my hometown of Altona as of last month, the closure of the Chrysler dealership, which was a large dealership, the closure of a large machinery dealer, and the closure of a clothing manufacturer. There are announcements currently on the books to close six schools, all rural, in the province of Manitoba. There are also discussions about closing hospitals and health care facilities in the province.

That's what you're seeing. And the ones we're losing from the communities are the most important, 40 and under. I had a young neighbour come up to me this last week and say “Jack, I'm going to the bank to hand in my keys, because the bank can have it”. That's how delicate the situation is and how important it is for the federal government to recognize the importance of underpinning agriculture, as the Americans do, until that trade war is over.

Ms. Shirley McClellan: Perhaps I can make a brief comment on this. I think the impact on businesses is similar in all of the provinces. As I indicated, one in three jobs in Alberta is indirectly or directly associated with agriculture. The sad thing is that we have the infrastructure in rural Alberta. We have the infrastructure. You do not have to build it. The impediments to growth in the industry are what we have difficulty with. Again, processing, value-added—there's room for that to happen.

David asked what we should do to encourage young farmers. Well, we've had a young farmers lending program for a long time. But do you know what? Our young farmers are looking at it...and somebody made the comment that the net real income of a farmer is $7,000 a year. How do you, in fairness, say to your young person that they should put millions and millions of dollars of investment into something that's going to give them that type of return, with a pension tied up in assets that are eroding rapidly in today's climate? I'm talking about the grains and oilseeds sector, primarily that area.

If we believe this is simply a matter of getting out of the subsidy war in Europe, then, yes, we have a responsibility to do the transition time, which is probably where we have failed. I think we've brought some practical solutions that the federal government has the power to implement, to put some rules and disciplines in place that the young farmer can see and say, yes, okay, I'll invest.

There are a lot of people still farming because they have young people who want to farm. I would be one of those. Is it good advice? My advice is to get an education and have an option.

The Chair: Ms. Skelton, you do have a little bit of time left.

Ms. Carol Skelton: It was very nice to see the Honourable Shirley McClellan declare Alberta a drought area—not that I like to see drought, but I think the PFRA money was gone within four days. I know when my husband phoned to see if we could get some dugouts dug, he was told the allocation money was gone within four days.

I'd just like to know, are you asking for more money for the PFRA, and what is Saskatchewan going to do about that with our drought situation?

Ms. Shirley McClellan: Perhaps I can answer first.

I had a discussion with Minister Vanclief, actually about five minutes after we made the announcement on drought, and you're right, I think PFRA had something like $2.3 million and over 200 applications. They were able to service, at least partially, 14 of them. Unfortunately, PFRA has changed its mandate greatly, and I think to the detriment of water management. I think they did a fine job. We have much evidence in our province, and I believe Saskatchewan does as well, of long-term water management projects that have assisted, and I'm sorry about that. However, what I do hear is that they do not have any more money to participate in this program.

We are working with PFRA, Alberta Environment, and Alberta Agriculture on a program that will do as much as it possibly can to mitigate or drought-proof our province. That means a lot of long-term work in water management in that province. This work should be coming to me in about a month. We did bring some of it forward into the water program announced last Friday, but we intend to carry that on and not have to deal with these issues on an ad hoc basis.

• 1200

The Chair: Thank you.

With that, we've completed a round, I guess, with all members. I'd like to propose to the committee something perhaps a little bit unusual. The ministers have people from their provinces here, and many have come at their own expense today. Perhaps they can partake a little bit in these discussions.

As chair, then, I would like to propose that the clerk go to the back of the room and get the names of anyone who would like to have two minutes to share their points of view with this committee. Would the committee agree with that?

Some hon. members: Agreed.

The Chair: So the clerk will go to the back of the hall. If particular farmers could give their names and the organizations they represent, we'll welcome them to the table for a maximum of about two minutes to give some of their ideas on what they think the committee should hear.

I have a little bit of time now while the clerk is doing that. I think there's one person I do know, and that's Murray.

Would you be prepared to come up here for a couple of minutes? Good. Come up to the microphone and just give your name, where you're from, and what you represent. I know I met with your group yesterday.

Mr. Murray Downing (Individual Presentation): I'm Murray Downing, a grain and oilseed farmer 60 miles west of Brandon, Manitoba. I'm just a grassroots farmer who has gotten involved in this to say that, at our level, enough is enough.

With regard to these farm programs we have been working with, we say that we need a substantial cash injection for the failure of our safety nets, because they have not worked. Crop insurance—when you collect it, you have a disaster to start with. NISA—if you have disasters, you can't put money into it. AIDA—if you have disasters, it doesn't work. That's why we say give us a substantial cash injection. This $500 million....

I'm a farmer. My CMAP cheque came yesterday. At $2.77 an acre, that won't even fill my diesel tank. That's not the change in the fuel price to put the crop in the ground. Thanks for the cheque, but it doesn't address the issue.

We're in the arm of Pipestone, and we have 432 sections of land. There are less than 100 active producers. Thank God we have a Mennonite community to the west of us. We have one elevator left. The infrastructure our forefathers built is going down faster than we can imagine. It's there. Let's not destroy it. We have a beautiful country. Let's keep it. Agriculture is the backbone.

Chairperson, members of this committee, we need help. We're not down here begging with our hands out, but please help save the industry. It's a $95 billion industry, so $5.6 billion, which is what we asked for when we were down here in January, is a pretty small percentage to pay to save it.

Thank you for your time, Mr. Chairman.

The Chair: Thank you, Murray.

We have a good number of people. Some of their organizations have been here to the committee just recently, so I'm going to have to pick and choose a little bit.

We have, from the Saskatchewan Rally Group, Mr. Bashutsky. Welcome. You have a couple of minutes.

Mr. Ray Bashutsky (Representative, Saskatchewan Rally Group): Thank you, Mr. Chair.

My name is Ray Bashutsky, and I'm a farmer from a place called Wingard, Saskatchewan. It's a small farming community in the heart of grain country in Saskatchewan. I'm also chair of a small organization that we call the Elfros Marketing Club, and I'm going to give you guys a few observations on that organization.

• 1205

We provide a bursary every year for someone furthering their education beyond high school and going to university, and that bursary is $1,000—it's sizeable. This year we have no one applying for that bursary, and that's a shame. It surprised us. The area we cover is probably a 50-mile radius, and it just boggles the mind how, in an agriculture-based area, we have no youth who is going to further themselves in agriculture. That's the shame of it all.

I thank you for your time. It's just food for thought. Thank you very much.

The Chair: Thank you.

Mr. Pletz, Madam Kaastra on deck, Mr. Tait after that, Mr. Hildebrant, and Mr. Dewar.

Mr. Lloyd Pletz (Individual Presentation): My name is Lloyd Pletz. I'm a farmer from Balcarres, Saskatchewan. That's northeast of Regina.

One thing I was a little disappointed to hear this morning from all provincial agricultural ministers was the possible solutions. Part of our problem today is the safety net formula. It's based on cash receipts. It's ludicrous. It's just the opposite of what it should be based on. It should be based on losses, percentages of acres and percentage of taxpayers, to fix the 60%-40% problem.

For an example, let's use Quebec. They have the ASRA program, they have the cost of production plus 90% of a skilled worker's wage. According to the cash injection, their province should get over $21 an acre, if it is worked out on an acre basis. Here in Saskatchewan, according to the income tax numbers, we have 62% of the herd, 47% of the cultivated acres, and we're only going to get about 23% of the pot of the cash injection, which works out to just over $4 an acre. Why are we getting $4 while Quebec is getting $20 and Ontario is in the $20 range too? We all grow wheat, we all have the same losses per acre. That's the common denominator here, the losses per acre, per seeded crop, no matter what crop that is. I don't care if it's a crop of fruit or strawberries or potatoes or grains or oilseeds, you guys have to start targeting losses. And the reason you haven't targeted losses today is that the losses are not in the income tax numbers. We need to change the income tax system so that our losses show up.

I'd like to recommend an income tax system that's changed to modified net worth filing, which could be done simply by modifying the present cash filing system. Let us show you our losses to the penny, let us show you, to the penny, what our debt it, that we lost our line of credit, we lost a quarter of land, we lost some equipment, because it's not in today's income tax numbers. Please fix the income tax. Please fix the numbers. Please use the losses, not the cash receipts.

Thank you.

The Chair: Thanks, Lloyd.

Madam.

Ms. Renske Kaastra (Manitoba Women's Institute): Thank you for this opportunity.

Women have a different view on agriculture. We have to deal with upset husbands and children who have to help on the farm. I think many people don't realize how hard farm families work. Children are used—I'm using the word “used”—to help on the farm as soon as they can push a clutch on a tractor. They're out there summer and fall, and they're doing other work. Farm children are well rounded in their working capabilities, for that matter—that's the only plus.

If we continue the way we are going, the problem will solve itself, because there won't be any farmers left. This will be a great loss to Canada, because many people right now, with clean water things going on, should realize that water is a crown asset and it's being taken care of by the farmers out in the country. If they're not there, things will not stay the same, they will deteriorate.

Farmers are just about the only group in Canada who finance totally, at their own risk, their own working place, take all the risks, and have no input into what they receive for their products. To give an example of how they try to lower the cost of production—and I must say, many farmers are very innovative in their ways of trying to stay on the farm—if a tire on my baler blows, I don't go out to the dealership and get a new tire, I go get my stone picker, because it's parked anyway, and take that. That's one example.

• 1210

So I hope you do support us and see the larger picture of agriculture, especially if in the future we could get credits, stewardship money, for planting trees, maybe taking some non-productive land out of production, instead of cropping it.

Thank you.

The Chair: Thank you very much.

Mr. Tait.

Mr. Fred Tait (National Farmers Union): If you look at the agriculture problem today from a different perspective, you'll get entirely different answers. If you were an agricultural economist and you saw fewer farmers producing more produce for a lower net return, you would say you had improved your efficiencies in the agricultural sector. In fact, that's the exact comment a very prominent agricultural economist in Winnipeg recently made in regard to the crisis in employment and the destruction of rural Manitoba. He said it was a signal that agriculture was becoming more efficient.

If you were a representative of an agricultural food corporation and you saw this group of people before you today asking government to subsidize the wages of those of us who farm, so that we could provide lower cost inputs and increase the profitability of those food corporations, they would be very pleased by what they heard today, the lobbying effort we have got for you to pay the wages of what we're producing.

But I also have heard repeatedly that if only we could get rid of the international subsidies, of course, all would be fine and prosperity would return to the prairies. I don't really believe that. I think hardly anybody believes that any more. If you took all subsidy away, whether it be the Crow Benefit or the European rural support policies, it's our net farm income. If you take take net farm income away, you reduce the number of people employed in agriculture, the people that remain have to consolidate the size of their operations, use the largest and so-called most efficient technologies available to produce more. We have to consider that if we removed every subsidy in this world, technology would replace labour, production would stay basically where it is today, and there would be no adjustment in prices.

We also have to deal with the issue of market powers. It's interesting that here today I heard arguments that our solution would be to have less market power, while those that we deal with continually strive to have more. There has to be something wrong in that equation.

Thank you for your time.

The Chair: Thank you, Mr. Tait.

Mr. Terry Hildebrant (President, Agriculture Producers Association of Saskatchewan): Thank you, Mr. Chairman.

The point I would like to make today is that we need an equitable playing field. We producers, as was mentioned often, can produce and can compete on an equal basis. We need that on an international market. We also need that at home. We have to be treated as Canadian producers, no matter what province we farm in or produce food for other people in.

I agree with the doctor when he says we need different safety nets for different commodities because of differences, but the point is that with any moneys in the assistance, we have to get the best bang for the buck. It has to go to the region and the commodity at time of need. That, in this particular time in our history, is grains and oilseeds, where Saskatchewan has 65% of the hurt. In three years it may be beef, where Alberta would have the larger percentage of the hurt, and so on and so forth. But it must go to the region and the commodity, and we must be treated equally as Canadian producers.

The Chair: Thank you, Mr. Hildebrant.

Mr. Dewar.

Mr. Don Dewar (President, Keystone Agricultural Producers of Manitoba): Thank you very much.

I first want to thank the committee for this special consideration. We've certainly heard a lot of different versions of the problem that's facing us, particularly in western Canada, but generally in land-based production in Canada. What's needed today is a willingness to address that problem, along with the resources to address that problem from the Government of Canada.

• 1215

We need to allow the industry a chance to adapt to some of the visionary situations or places we've heard about, and we have to deal with the problem. The problem is not with safety nets. You only need a safety net if you're allowed to perform, but if you can't even climb the ladder to get to the trapeze, then it's not safety nets, you need the ladder, you need the support.

So I think right now we need the short-term support, and I believe that is why we are all here today, to deal with the short term, while we all look to the long term. We know there are a lot of different processes in place trying to study and say, what is the vision? We've asked the question of the Government of Canada for the last three years, and we have yet to see a vision, other than the life sciences economy, which companies of the world are divesting themselves of. So we really question that vision, and we are looking for where the government sees us going. We know we can't go some place counter to the Government of Canada. What is going to happen to agriculture and the communities of western Canada?

So, ladies and gentlemen, I thank you very much for the opportunity.

The Chair: Mr. Dennis.

Mr. Andrew Dennis: (Individual Presentation): I farm in close proximity to the community of Brookdale. This is located in a Brandon-Neepawa triangle in Manitoba. I have a wife, Sharon, and two children, Riordan 11 and Ryerson 4. We presently farm 2,000 acres of grains and oilseeds. I would like you to know that I'm very pleased to be able to address this committee. I will keep it brief, I assure you.

We have faced overwhelming hardships. A lot of my colleagues in this industry have abandoned their dreams of carrying on the important work of their forefathers and taken their expertise, their families, and their microeconomies elsewhere, never to return. A lot of these people have been 35 and 45 years old. With their entrepreneurial spirit and broad knowledge base, they will do very well for themselves elsewhere. This is one small step forwards for a family and a giant step backwards for agriculture.

I would like to share some of the details of the kind of income that has been derived from running an efficient 2,000-acre grain and oilseed farm over the last 20 years in Manitoba. This is my farm, the kind of farm that has over the last five years averaged 115% of the area average of its own Manitoba crop insurance management history figures. This farm has low-disturbance seeding, low fuel consumption, low manpower, relatively low overhead—tractors and air seeders are 15 to 20 years old—and subsidizes itself with a custom spray application business as well. Last year it took $100,000 from that business to make the other one get close. I sat in the seat of that thing for 50 hours three times in a row in a 10-day period, and I did that all summer. My father said I was going to kill myself doing it. I'm really trying hard not to do that, but I'm trying to keep this thing going.

This is a farm that is efficient in almost every sense of the word. This is my family's farm. Over the last 20 years I have averaged approximately $5,500 in earnings on that farm, as my Canadian Pension Plan statement shows, and in the last five years it has been zero. I'm not even putting anything into my own pension plan. There's not much of a future for me, it would seem. This farm, combined with the business that helps keep it floating, has gross sales of nearly $500,000, but virtually no net income. It's ironic to be producing food for the world, but not be able to make enough income to put food on your own table. The family living costs in 2001 in Manitoba show that I need $40,000 a year to keep my family going. To be able to do this, I just keep borrowing more and more money.

Diversification, specialization, value-added, manufacturing, we've heard all these things before. We need help, we need financial assistance, and we need it now. For some, tragically, it's too late, as the auction sales continue again this year, more numerous than ever before. It is my hope that this committee will take their task very seriously, as I'm sure they do, and do everything in their power to change the course before it is too late. Much expertise has been lost, some will never be now the teachers have moved on.

I hope the information I've provided is helpful and presents a clear, truthful picture. I hope that my grandfather's work and my father's work are not lost, and I hope Canada doesn't leave us sitting, because it is damn important for us to address this issue.

• 1220

Thank you very much.

The Chair: Thank you.

Mr. Thad Trefiak (Vice-President, Saskatchewan Wheat Pool): Thank you.

My name is Thad Trefiak, and I am vice-president of Saskatchewan Wheat Pool, a publicly traded cooperative in Saskatchewan that services farmers and also speaks on behalf of farmers and farm policy. I'd like to thank the committee for this opportunity to speak this afternoon—well, it's morning at home.

I'd like to acknowledge that I believe—and I think this committee has to understand—the main theme the presentations today by the provinces are trying to address, if we want to focus on one, is the impact of trade on the incomes of grains and oilseeds producers.

I'd also like to acknowledge and appreciate the $32 billion referenced in recent newspaper articles, which the federal government has put into agriculture. Every dollar in programs, if they're well thought out, is an investment in the future.

I'd also like to acknowledge that we, as a company, and the producers who patronize our company have diversified. Historically, since our beginning, the Saskatchewan Wheat Pool has seen the need for producers to value-add their products—flour mills, canola crushing, livestock, pork farms. We are not solely wheat producers in Saskatchewan; we understand the need to diversify.

Producers have diversified, and I believe the Saskatchewan document has a good table that shows how the diversification has taken place. The diversification has taken place to a market. You can't just diversify for diversification's sake; there has to be a market. If one point was missed today, in general, it's that you have to have a market.

In closing, I'd like to say I appreciate the opportunity. I believe history will show that this is a very pivotal time for Canadian agriculture. There have been references to the ages of our producers. The need for a skilled, knowledgeable agriculture production workforce in the future is critical to this nation. We look forward to the federal government providing the leadership and the framework necessary to guide producers and the Canadian agricultural industry in their future decisions. Thank you very much.

The Chair: Thank you.

Mr. Wells is next. Then we'll have one more and brief summaries.

Mr. Stuart Wells (National Farmers Union): Thank you, Mr. Chairman, and standing committee for the opportunity.

I'd like to start by saying how proud I am of the farmer representatives for sticking to their time limits. I think they've done a tremendous job.

There are just a couple of things I'd like to point out to the committee.

First, I'm disappointed at all of the rhetoric around the Canadian Wheat Board, as the solution to a major problem. I need the committee to understand that right now, in western Canada, any farmer can sell their own wheat or barley. I'm an organic farmer near Swift Current, and I routinely do it myself. You just have to access the producer direct sales program and go out and sell your own grain. That point hasn't been made here this morning.

The only catch is when you use that producer direct sales program, you have to match the price at which the Wheat Board is selling that same grain in their markets around the world. If you can't match that price, quite frankly, you shouldn't be trying to sell your own grain; you should leave it up to somebody who knows what they're doing. This is a very important piece of this Wheat Board puzzle. We are living right now in the only true dual-marketing system we'll ever have. I just want to make sure that's out there.

We have a situation, in this whole farm income picture, where farmers are the only ones who are actually competing with each other. We have a quarter of a million farmers in Canada, and they're competing against each other in this so-called world marketplace. All of the other players in the industry—the input suppliers, the handlers, the processors, and the railways—talk endlessly about competition, but they don't compete with each other.

• 1225

There are four banks, two railways, two or three chemical and fertilizer companies, two or three fuel companies. These people talk endlessly about competition, but they don't compete. The ones who are competing are the farmers. We have a nearly perfect competitive environment for farming, and in a perfect competitive environment, nobody makes any money. Well, guess what? Farmers, not just in Canada but around the world, are in that situation.

I just want to make sure those two points are out there.

The Chair: Thank you very much.

Carol, probably Mr. Motheral will answer one of your questions on municipalities.

Mr. Wayne Motheral (President, Association of Manitoba Municipalities): Thank you very much. My comments will be brief. My name is Wayne Motheral and I represent all the municipalities in Manitoba. Our association represents urban and rural communities across Manitoba, and that's who I'm going to speak on behalf of for a few moments.

I had the pleasure, along with Sinclair Harrison from the Saskatchewan association, to make a presentation to the Senate Committee on Agriculture and Forestry just last week. Our emphasis too was on communities and on our rural focus in Canada. I don't like to say western Canada because I believe this is a problem all over Canada. I'm really disappointed when I hear “western”; we have to talk about communities in Canada as a whole.

We have a loss in revenue in many municipalities now from federal policy. We have elevator consolidations. We have communities losing elevators. We have communities losing railways. That is something that is very difficult for a lot of rural communities, because their major tax base is gone.

I know one particular community in Manitoba—I'm not going to mention the name because they get tired when I keep mentioning it. I don't want to say don't ever settle in that community. I think Mr. Borotsik knows who I'm talking about. There is a community in southwestern Manitoba that has lost an awful lot of business. They have actually had to increase their tax base by 10%, by a whole $2 million, in order to cover that shortfall of revenue.

That's the point I have to make. We are not an agricultural lobby organization, but we work with the agricultural groups to do what we can in our rural communities. That is something I think we need to really focus on. The help of this committee would be very much appreciated at the higher level. What is the alternative? The alternative is that we have nobody in our communities. Our urban centres get bigger. Who is going to look after our precious resource, the land? It's not farmers. I think we should call ourselves land stewards. We look after that land. What is the alternative if we go to the larger corporations?

Thank you very much for the opportunity, and I wish you well.

The Chair: Thank you, Mr. Motheral.

We are running really short on time, but in any case maybe we'll have a reverse order. If you'd like to make a very short statement, Mr. Boyd, I'll start with you.

Mr. Bill Boyd: Thank you, Mr. Chair.

Just to re-emphasize the points I made, I believe the three key components, the three key areas, that need to be addressed are the areas of transportation, marketing, and safety nets.

On the first, with respect to transportation, there needs to be a continued drive for more efficiency in that area. With regard to marketing, notwithstanding Mr. Wells' comments, I believe there is unquestionably a need...and there is a belief in marketing that farmers in Saskatchewan want to see change in that area. With respect to the safety nets, there are three components of a safety net: an effective safety net, crop insurance—NISA—and a revenue-based component to address market distortions.

The Chair: Thank you. Mr. Nicol.

Mr. Ken Nicol: In conclusion, I've talked a lot about some of the specific policies, but I think what we also need to do is look specifically at whether we want agriculture to be rural development policy. There's a whole issue here in terms of what vision we see for our agriculture sector and what vision we see for our rural communities.

If agriculture is going to become the policy that we use for rural development, then we need a whole different set of policies than if we're going to develop policies that encourage a commercial agriculture sector and then have a separate set of policies to deal with what constitutes an appropriate rural development.

• 1230

I guess the other thing I didn't touch on when I was giving my talk was the role we have to play when we start dealing with the international competitors, basically the U.S. and the European Community, and the whole concept of comparative tariffs. One of the things that I've noticed in the last four or five years is that we are faced with this constant challenge of these countervailing duties that come in. One of the things we have to start looking at when we go to the next round of negotiations is.... Countries or groups of producers that put up a countervail action or some kind of a challenge under the WTO have to put up a bond, so if they lose and it's declared frivolous, they have to pay.

I know the cattlemen in Canada.... For $250,000 the R-CALF group in the west central states filed a challenge, and my understanding is that between the cattle producers and the governments of our country they had to put up over $20 million to defend it.

These kinds of challenges are becoming a harassment. One of the things that I would encourage you to do when you go to the WTO negotiations is make sure that some kind of a bond is put up, so that if it is declared a frivolous action, they have to cover the cost of defending it.

The Chair: Thank you. Mr. Penner.

Mr. Jack Penner: Thank you very much, Mr. Chair.

What we really need in Canada is some very hard decisions to be made very quickly.

Number one, the request for immediate cash infusions, as presented by a number of the farmers today, is very real and I think needs some urgent attention in the short term. In the long term we have a group of young, hard-nosed, university-trained businessmen on the farms today who I think will remain there if they're given half a chance. And they will make the decisions; they will make the hard business decisions, based on business principles, to get us down the road.

But I think we need to give them the encouragement, through government action—and I think the provinces have a role to play in this. It needs a joint effort, and thereby I think we can get down the road and make agriculture viable again.

Mr. Chairman, to conclude, I say in all sincerity that I think the federal government needs to take a very direct action to sincerely address the trade initiatives with the U.S. and the Europeans in talks that need to start immediately.

The Chair: Thank you, Mr. Penner. Mr. Serby.

Mr. Clay Serby: Thank you very much, Mr. Chair.

I want to say first that I came away from Quebec City as someone who was extremely inspired by where the future might lie in this industry, because it's so important and it has so many opportunities within it. When we came away from Quebec City, there were a couple of things that we had highlighted.

One is that we need to put our political swords down for a while if we want to build this industry and if we want to build a climate in agriculture...because we've all had a chance at this thing over the last 50 years. We continue to find ourselves in a very similar place. So we need to put our political swords down. We need to start working at an overall vision and framework.

In our vision and framework there are three areas we're hoping to address in the future, and I think this committee needs to help us as we move along.

One is that we need to address the immediate need. We've been saying forever—and as a farmer I too say it—just for this year; just help me get through this year, one more time. We need to get by with just one more year. We need the immediate needs, the short term.

On the long-term piece, we need to put together the whole issue around transportation, safety nets, and markets, and through this committee and ours, at the provincial levels and through the producer groups, we need to try to get there. We shouldn't forget that agriculture is in transition, a huge transition, in a way in which we've never seen before and I've never witnessed over my short lifetime. It will continue to change, and we need to be responsive to those changes.

We need to address agriculture on a regional basis, because we can't design a program or programs today that are going to be universal for everybody.

So this is not an easy solution. We need to put our political will in place, Mr. Chair, and we'll be counting on your committee to provide us with some assistance and direction and leadership as we move ahead over the next six or seven months in crafting our future policies as they relate to agriculture.

The Chair: Thank you.

• 1235

The Quebec City meeting you're referring to is the meeting of the ministers of agriculture for Canada.

Mr. Clay Serby: Yes, I'm sorry.

The Chair: I just want to clarify that for the record.

Now to Alberta, Ms. McClellan.

Ms. Shirley McClellan: Thank you. We'll be brief.

Much has been alluded to about the Quebec meeting, which I didn't participate in personally, but certainly our minister at the time did. Mr. Vanclief talked at that time about the need for change.

What we've brought to you today are things that we think are practical, that you have the power within the federal government to change, and that would have some very significant success in alleviating some of the issues.

Grains and oilseeds producers are efficient; they do provide a quality, safe, reliable product. If they weren't efficient, they wouldn't be in business today. I do not know of any other industry that has come through what they have and are still in business.

I want to remind everyone at the committee that this quality product is respected throughout the world and does much for Canada's trade image, as well as success.

I'm fortunate in Alberta in that the Liberal opposition leader, our agriculture critic, is non-partisan on this issue and is anxious always to work towards the best solution for producers. I agree with my colleagues who have mentioned that this has to get away from the partisanship, as difficult as it might be for all of us to do that. In issues such as agriculture—health is another one—you should put those things aside.

So a safety net program that is responsive, not distorting, and has a high producer responsibility in it is critical and can't wait for several years more study.

For grain handling and transportation, simply put in place the recommendations of the committees that the federal government commissioned and charged with that responsibility. Don't ask for the information if you don't intend to carry out the recommendations.

On the Canadian Wheat Board, don't be sensitive whenever anyone talks about a change. We're not talking about destroying the Wheat Board. It has a respected international marketing position that has been there for years. Bring it up to today's realities. A domestic choice wouldn't be a bad one. If we're afraid to risk it on a broad basis, let Alberta be a pilot. They're not afraid to try that.

A lot has been said in the area of trade issues. It's absolutely critical. We have strong partners in the Cairns Group. I was the minister responsible for international trade and I was in Seattle. I don't think I have to go to Qatar. But those issues have to be resolved, and we have to stay with our partners.

And lastly, again, you have it within your power to make a significant cash injection into producers' pockets today by removing the federal excise tax and the GST on farm fuel. I would remind you that the federal government makes money when prices go up, because GST is taken on the high end of the price, before our rebates. So you would really not be affecting the treasury a great deal by removing that excise tax.

The Chair: Thank you very much.

Ms. Wowchuk, I've left you to conclude this meeting. The floor is yours.

Ms. Rosann Wowchuk: Thank you very much.

I want to thank everybody for being so patient and listening, and for being so thoughtful on this issue that's very important to us.

I want to express also that we do very much appreciate the money the federal government puts into agriculture, and that is in our comments in our report.

I made the comment that we want the federal government to address this 100%. The reason I say that is because this problem is of such magnitude that provinces do not have the resources to address it. The federal government did take a larger role in support for agriculture, but provinces like ours do not have the resources to go 60-40 on every program. In the supports, we're prepared to do that, but sometimes it's beyond the ability of provincial governments to address it.

• 1240

Others have said it, but I want to reinforce that this is a very important industry. It has played an important part in the economy of Canada and international trade and will continue to be an important part of that trade. We do not want to lose this industry.

People have talked about practical solutions. The issue of removal of tax on fuel was raised at the western premiers conference last week in Moose Jaw and will be communicated to the federal government, because that's one of the steps that can send a very good signal to producers, that there is another area of support.

In the area of transition—they're all important areas—looking at value-added, the improvement of the safety net program is one of the most important things we can look at, and it has to be reviewed. As others have said, producers don't want ad hoc programs; they want to know what the programs are. I'm very interested in the comments by Dr. Nicol on how we might be able to improve on those. I think that's part of the safety net review and things we can work at so that we do not have to have ad hoc programs.

One issue that wasn't mentioned today but has had a lot of discussion is alternate land use and land set-aside, and what we should be doing with that. We didn't raise that, but it's something this committee should also be looking at.

I want to touch briefly on the Canadian Wheat Board, because I didn't have the opportunity to do that when the questions were being asked. We have to remember that that's the farmer's position in the whole marketing strategy. There are the grain companies, there are the purchasers, and the Wheat Board is the marketer...the farmer's place in this whole scheme. It now has a producer-elected board, and those producers will make decisions for us, but I would not want us to be pushing to take farmers out of that marketing position, the role they have there.

We also have to recognize that the Wheat Board is working with processing companies. We have examples of that. They're getting involved in marketing of organic production, so they are changing as the market demands grow.

I want to close on the topic of discussion of whether we should be growing wheat in Canada or not. We have to remember, given the land base we have—I'll talk about western Canada, but it's the same in eastern Canada as well—that we are always going to have grain production; it's part of the rotation of agriculture.

But our grain production is also important if we are going to diversify into livestock. We can't raise livestock if we don't have the feed there. We don't want to be importers of feed.

We know there's a short supply of wheat around the world; the food supply is very short. So our grains are important in that economy.

The other thing, which someone else mentioned, is, who is going to manage that land base? We can't be taking all this land out of production. It can't all go into spices or beans, and it can't all go into cattle.

So I thank you very much, and I look forward to working with you on long-term solutions to this challenge we have.

The Chair: On behalf of the committee, I'd like to thank all of you for coming today. It certainly was good to hear from you on this occasion, and we're looking forward to going to the west in the fall and meeting with more of your producers. But I'm sure when they see and hear your presentation today, they'll know you did speak for them and did present their views.

Also, on behalf of everyone, I'd like to thank committee members for putting a lot of time into this, this morning. I know many are rushed to get to other meetings. It certainly was a very productive meeting, and we're looking forward to considering this issue in the fall and hopefully offering hope and perhaps some better solution to the situation as it presently exists.

So thank you. With that, we'll adjourn our meeting this morning.