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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Tuesday, March 25, 2003

1115

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Mr. Stan Eby (Vice-President, Canadian Cattlemen's Association)

The Chair

Mr. Stan Eby

Mr. Calvin Knoss (Director, Canadian Cattlemen's Association)

1120

The Chair

1125

Mr. Dickson Gould (President, Elite Swine Inc.)

Mr. Marcel Hacault (Chair, Manitoba Pork Council)

Mr. Dickson Gould

Mr. Marcel Hacault

Mr. Dickson Gould

1130

Mr. Marcel Hacault

Mr. Dickson Gould

1135

The Chair

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance)

Mr. Stan Eby

Mr. Dickson Gould

Mr. David Anderson

Mr. Dickson Gould

Mr. David Anderson

1140

Mr. Dickson Gould

Mr. Marcel Hacault

Mr. David Anderson

Mr. Dickson Gould

Mr. Stan Eby

Mr. David Anderson

The Chair

Mr. David Anderson

The Chair

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

1145

Mr. Marcel Hacault

Mr. Louis Plamondon

Mr. Marcel Hacault

Mr. Louis Plamondon

Mr. Calvin Knoss

Mr. Louis Plamondon

Mr. Marcel Hacault

1150

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mr. Calvin Knoss

1155

Mrs. Rose-Marie Ur

Mr. Marcel Hacault

Mrs. Rose-Marie Ur

Mr. Marcel Hacault

Mrs. Rose-Marie Ur

Mr. Stan Eby

Mrs. Rose-Marie Ur

Mr. Calvin Knoss

Mrs. Rose-Marie Ur

Mr. Calvin Knoss

Mrs. Rose-Marie Ur

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Stan Eby

Mr. Dick Proctor

Mr. Stan Eby

Mr. Dick Proctor

1200

Mr. Dickson Gould

Mr. Dick Proctor

Mr. Dickson Gould

Mr. Reinnie Brandt (Accountant, Elite Swine Inc.)

Mr. Dick Proctor

Mr. Marcel Hacault

Mr. Jim Caldwell (Director, Government Affairs, Canadian Cattlemen's Association)

Mr. Dick Proctor

Mr. Jim Caldwell

Mr. Marcel Hacault

Mr. Dick Proctor

Mr. Calvin Knoss

1205

Mr. Dick Proctor

Mr. Jim Caldwell

Mr. Dick Proctor

Mr. Jim Caldwell

The Chair

Mr. Rick Borotsik (Brandon—Souris, PC)

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

Mr. Rick Borotsik

Mr. Calvin Knoss

1210

Mr. Rick Borotsik

Mr. Stan Eby

Mr. Rick Borotsik

Mr. Stan Eby

Mr. Rick Borotsik

Mr. Stan Eby

Mr. Rick Borotsik

Mr. Marcel Hacault

The Chair

Mr. Rick Borotsik

Mr. Marcel Hacault

Mr. Rick Borotsik

Mr. Dickson Gould

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

1215

Mr. Marcel Hacault

Mr. Dickson Gould

The Chair

Mr. Jim Caldwell

The Chair

1220

Mr. Dickson Gould

The Chair

Mr. Dickson Gould

The Chair

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

Mr. Marcel Hacault

Mr. Howard Hilstrom

Mr. Marcel Hacault

Mr. Howard Hilstrom

Mr. Calvin Knoss

Mr. Howard Hilstrom

1225

Mr. Calvin Knoss

Mr. Howard Hilstrom

The Chair

Mrs. Rose-Marie Ur

Mr. Dickson Gould

1230

Mrs. Rose-Marie Ur

Mr. Calvin Knoss

Mrs. Rose-Marie Ur

Mr. Calvin Knoss

The Chair

Mr. Howard Hilstrom

Mr. Calvin Knoss

Mr. Howard Hilstrom

Mr. Stan Eby

1235

Mr. Jim Caldwell

Mr. Howard Hilstrom

Mr. Stan Eby

Mr. Howard Hilstrom

Mr. Stan Eby

Mr. Howard Hilstrom

The Chair

Mr. David Anderson

Mr. Calvin Knoss

1240

Mr. David Anderson

Mr. Calvin Knoss

Mr. David Anderson

Mr. Calvin Knoss

Mr. David Anderson

The Chair

Mr. Claude Duplain

Mr. Marcel Hacault

Mr. Claude Duplain

Mr. Marcel Hacault

Mr. Dickson Gould

1245

The Chair

Mr. Jim Caldwell

The Chair

Mr. Claude Duplain

The Chair

Mr. Claude Duplain

Mr. Marcel Hacault

The Chair

Mr. Jim Caldwell

The Chair

Mr. Howard Hilstrom

1250

Mr. Marcel Hacault

Mr. Howard Hilstrom

Mr. Marcel Hacault

Mr. Howard Hilstrom

Mr. Dickson Gould

Mr. Howard Hilstrom

Mr. Stan Eby

1255

Mr. Howard Hilstrom

The Chair

Mr. Stan Eby

The Chair

Mr. Dickson Gould

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 021

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, March 25, 2003

[Recorded by Electronic Apparatus]

Á (1115)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, I want to call the meeting to order. Pursuant to Standing Order 108(2), we have this morning a continuation of our briefings on the APF, the agricultural policy framework.

We have before us two groups this morning representing primary producers. The first named is the Canadian Cattlemen's Association, and their representatives are Mr. Calvin Knoss, who is a director; Stan Eby, vice-president; and Jim Caldwell, director of government affairs.

From Elite Swine Inc. we have Dickson Gould, president; and Reinnie Brandt, accountant.

From the Manitoba Pork Council we have Marcel Hacault.

I believe those are the people at the table this morning.

Welcome, gentlemen, and we look forward to your presentations. We want to remind you we have started late, and I'm prepared to make up that time with you at some point, perhaps going a little beyond 1 o'clock, if that is required to accommodate. We had you people come from some distance to accommodate our time. I'm sorry that because of some changes at committee we've had to accommodate you with some short notice.

So thank you very much for being accommodating, and we look forward to your presentations.

I might ask at the outset, who is presenting and how many presenters do we have?

We have four presenters? Can we keep the presentations within 25 minutes total? Is that possible? If we can make up some time here, we'll spend it in questioning. Be succinct in your presentations and we will try to be succinct in our questioning.

Thank you very much.

Mr. Eby, are you first?

Mr. Stan Eby (Vice-President, Canadian Cattlemen's Association): Yes.

The Chair: That's wonderful. Mr. Eby comes from that great part of the country known as Huron--Bruce. I'm proud to have Mr. Eby here this morning, a great representative of the cattle industry in Canada.

Mr. Eby.

Mr. Stan Eby: Thank you, Mr. Chairman. You've cut into some of my presentation already, so we're making time here, but I'm certainly proud to be representing the Canadian Cattlemen's Association at this committee level.

With me is Calvin Knoss, a director of the CCA from Saskatchewan, and Jim Caldwell from our office here in Ottawa.

Let me say at the outset that CCA for the most part agrees with the major thrust of the agricultural policy framework. We believe we must build an industry that is efficient, profitable, and responsible. Our association has been involved with food safety issues for many years. We were one of the first to be involved with the HACCP concept and principles, not only at the processing level but also at the farm level. Our Quality Starts Here program has been the blueprint for others to follow in the industry. The CCA was the first group to establish a national animal identification program, and a number of other commodities are looking to us for guidance. We're also working to implement a national check-off program to fund promotion and research and development, which makes us somewhat more independent.

Food safety is the number one priority for consumers now, not only here in Canada but around the world. If it's important to them, it must be a priority for us. Our brief information centre, which is our consumer and promotion committee, has been involved in food safety issues for three decades and continues to inform consumers on the proper handling of beef products.

There is little doubt producers have become more aware of the importance of food safety. The producers must ensure that beef reaches the market free of any problems.

On the issue of the environment, the CCA is very much aware of the benefits of good stewardship of land. We know overgrazing, for example, is not a good practice. We also know the public wants clean air and water--and living in Bruce County and near the town of Walkerton, I know firsthand what public demands can be like.

The CCA encourages our members to be environmentally friendly and responsible. We supported the legislation on endangered species, and we understand that we must leave a good legacy for our children. However, we are also concerned that laws and regulations that can be prohibitive to our farming and ranching operations should not be passed. We can't have environmental laws that benefit only consumers or someone who has chosen to live in a farming community and finds out later they don't really care for our type of operation.

There are laws in some provinces that are so restrictive it's almost impossible to farm. The main reason farming operations continue is that some provincial governments have paid the cost of compliance. This is not something that will make agriculture strong.

The CCA does not believe that more government regulations are the answer. Market returns are a sustainable way for the future of profitable agriculture. I can't overemphasize that the market must dictate our future.

Another area of the agricultural policy framework that CCA can support is science and innovation. Agriculture is based on science. Some would go as far as to call agriculture a science. It is through science, research, and innovation that our industry will grow and prosper. The status quo for the types of animals we produce and our methods of selling is not good enough.

I'd be pleased to expand on these issues a bit later, but I do want to get involved in the risk management sector of the agricultural policy framework. Calvin Knoss will outline the CCA position on that.

Mr. Calvin Knoss (Director, Canadian Cattlemen's Association): Thank you, Mr. Chairman, for the opportunity to speak.

I became quite involved in this process over the last year or so as a CCA director representing the Canadian Cattlemen's Association on the National Safety Nets Advisory Committee. We've had quite a lot of discussion and have worked on the issue, and we just came out of our annual meeting where we and our board debated domestic egg policy.

Our position as we've developed it is that the Canadian Cattlemen's Association, CCA, has a major concern in the development of any new safety net program for Canadian agriculture. In our case, the Canadian cattle industry, the program should offer a reasonable level of protection while presenting the lowest possible risk for trade action.

To achieve this, payments to producers must be reportable to WTO as green. The most recent proposals were presented to the CCA at the domestic egg policy committee meeting on March 22. The committee felt it was a step in the right direction.

However, there are still some concerns. CCA believes that in order for the program to be green, government funds must only cover income loss up to 70% of the reference margin. The program would not be triggered unless losses exceeded 30%. The income loss would be compared to a base period of either the last three years or the Olympic average for the last five years, namely without the highest or lowest years.

There are several ways to offer support, not exceed the 70% level, and therefore remain green. CCA would support a formula that offers the highest level of protection in the area of greatest loss, the disaster component.

The CCA's main objection to the current proposed program is that payments could be triggered with a loss of income of less than 30%, which would have to be reported to the WTO as amber. CCA therefore supports a provision that coverage not be triggered until there is a loss of income of over 30%.

It is not the goal of the cattle industry to develop either an income support program or an income stabilization account. CCA does, however, see a need for some form of disaster protection insurance program and would not have a problem with producers' contributions to the program being viewed as insurance premiums.

The program as outlined would assist producers in times of greatest need. Producers in an industry that remains viable and profitable for an extended period of time may receive little financial benefit from the program. However, the producer only needs to make an initial contribution and his investment remains untouched unless triggered. The idea of managing risk would be good for the agriculture industry in general.

Here are some basic concepts CCA does support in the new program as it was presented and as it's developing: a deposit-based program; a whole farm, modified accrual, margin-based program; production or contribution margin coverage instead of gross margin; a notional entitlement of government funds that are not transferable and cannot become an asset; the concept of a graduated trigger; covering disaster component first; no interest bonus on the producers' accounts; no minimum income trigger; no limit on coverage levels; some form of linkage to crop insurance as long as both programs remain separate and voluntary; a possible rollover of old NISA into the new program; and classifying the withdrawals as farm income.

CCA does not support the investment component of the plan because of possible trade problems. It would be a mistake if government funds were being used to pay individual producers for such things as environmental farm plans through a business risk management component of the APF. However, CCA continues to believe that industry development programs could be funded from the overall safety net envelope.

Á (1120)

The Canadian Cattlemen's Association is not interested in livestock production insurance for cattle at this time. We feel the program must begin April 1, 2003, to ensure that the cattle sector will have the disaster coverage. CFIP will end on March 31, thus leaving the livestock sector with no coverage.

Thank you.

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

We'll move on to the next component of our groups this morning, Mr. Gould.

Á (1125)

Mr. Dickson Gould (President, Elite Swine Inc.): Good morning, Mr. Chair, and members of the committee.

My name is Dickson Gould and I'm president of Elite Swine Inc. I'm joined here today by Reinnie and Marcel.

I'd like to begin by thanking the committee members for providing us with the opportunity to appear here to discuss the new NISA. We take an active interest in the design and implementation of agricultural policies and programs at the national and provincial level that affect hundreds of farm families we work with. The new NISA is no exception.

We believe, along with Elite Swine and Manitoba Pork Council, that we have a unique and valuable perspective to add to the review of this process. As many of you may know, Elite Swine is the largest swine production management organization in Canada, providing over 600 independent hog producer operations with swine management expertise.

Elite Swine is a division of Maple Leaf Foods. As you know, Maple Leaf Foods is Canada's largest food processing company, employing over 14,500 people across Canada, many of whom reside in ridings of members here.

[Translation]

Mr. Marcel Hacault (Chair, Manitoba Pork Council):

On behalf of the Manitoba Pork Council, I want to thank the committee for providing us with the opportunity to appear here today. I would just like to tell the committee that Elite Swine members sit on our board and are a very important part of the industry in Manitoba. That is why we are here today with its representatives to make this presentation.

The Manitoba Pork Council is the membership association of hog farmers in Manitoba. Our mission is to speak on behalf of producers and to develop programs to ensure the sustainability and the profitability of the hog industry for the good of hog farmers and all Manitobans.

[English]

Mr. Dickson Gould: While we believe that many of the contemplated revisions to the new NISA are improvements, we have specified specific recommendations that will promote sustainable growth and provide enhanced support to existing operations, as well as further diversify farm family operations.

Today we are seeking committee support for these recommendations. I also want to note that the Canadian Federation of Agriculture is in support of the recommendations we're putting forward too.

Mr. Marcel Hacault: There are four key areas in which we have specific recommendations for your consideration. They include the program eligibility component, the operational requirements of a payout, the impacts on the private and public sector risk management programs, and the business interruption insurance component.

For the remainder of the presentation, Dickson and I will outline our recommendations under these four categories. Reinnie is here in the capacity of accountant to help on some of the more technical matters, if you have some questions.

Mr. Dickson Gould: In regard to program eligibility, there is a concern that the current NISA program prevents many legitimate and productive operations that support numerous farm families from qualifying because of overly restrictive ownership rules. For example, the shareholder groups in which all of the shareholders have less than 10% do not qualify for the program. Producers and limited partnerships do not qualify, regardless of their ownership, because of the passive income nature of a limited partnership.

As the new NISA will be the gatekeeper for new support programs, being excluded now also prevents legitimate farm operations from qualifying for new programs down the road. To give you an example, to put up a 3,000-sow operation will take somewhere in the order of $5 million and $2 million in equity. Also assume that you have 20 producers, each investing less than $100,000 in this project, so that each owns 5%. That operation would not qualify for NISA, or for the CFIP as it stands today. On the other hand, if 10 farmers invested $200,000 each, they would each own 10% of the operation, and the farm families would be eligible for NISA and CFIP.

We think the 10% rule is an artificial barrier to farm families who want to invest successfully in operations to diversify their income. As such, we urge the government to establish broader eligibility criteria to enhance the effectiveness of the program and to support more farm families. The new program's criteria should not discriminate against production systems, bases of ownership structure, size, or capital investment. Flexible criteria will allow, for example, economies of scale to be considered a positive aspect in program applications. Eligibility should be based on the filing of taxes and be in the Canada Customs and Revenue Agency's definitions of rules associated with farming income and business association—not a percentage of ownership, as is currently being planned by the new NISA. The new program should encourage diversification—if it is chosen by farm families—into economically efficient farming models.

Á (1130)

Mr. Marcel Hacault: In regard to the operational requirements of payouts, the changes in the new NISA must ensure that there's clarity in the program's calculations. Under CFIP presently, producers, agricultural businesses, farm accountants, and farm lending institutions do not have clarity on how the program does its calculations and when the payments will come. This situation pressures farm families to bridge the gap from the problem period to when the cheques arrive. There's a significant opportunity to bring clarity, so that the banks can provide bridge funding. The cheques from the new NISA can be used to secure interim bank funding. This would bring certainty to the farm families, banks, and suppliers.

Program participants should be allowed to use their contribution commitment as efficiently as possible. In short, the program must be bankable. Banks must have confidence that the risk management program will complement the farm and allow lending or credit to be made on that basis. An example is crop insurance. In my mind, the banks see it as bankable; when you are going in for your loan, they know that if you take crop insurance, you'll be assured a certain level of coverage. You can take it to the bank. We would like to see the new NISA have that same ability.

As for recommendations, the new program should ensure that payout amounts can be calculated easily and be delivered to producers when most needed.

The new program should ensure clarity so that the calculated payout amounts can be included as an account receivable in a producer's financial year-end statement. This will ensure that the operations have accurate ratios for bank reporting purposes—even if the actual payouts occur some time later.

The new program should ensure that amounts being paid from the new NISA be classified as farm income and not investment income. The producer funds needed to trigger the entitlement must be reduced to tie up less equity. Producer contributions could be a 10% deposit, with a credit note to secure the rest of the contribution in the event of the trigger. The reason I've put this in here is that the proposed government portion would be an entitlement. As a smaller producer, I'm looking at the contribution margin that I would have to put out, which would be roughly $20,000. To me, $20,000 is a significant amount of money to have tied up in a program that I hope I never have to use. If we would move to a similar type of concept of a producer entitlement, where we actually have negotiated or secured the line of credit, it would allow us to meet our commitment when and if the time would arise. This would really reduce the amount of cash needed, which we don't have access to and which could be used for our everyday operations.

Mr. Dickson Gould: I would like to address how important it is to ensure the new NISA complements existing private or public sector risk management programs.

There's concern the new NISA will offer program options to minimize day-to-day income risk for farm families, but in a way that competes with risk management programs offered by the private and public sector. There needs to be a strong link between crop insurance and NISA so that large crop production losses continue to be paid through premium rates calculated over a 25-year period. Without such linkage, producers will move from crop insurance to NISA, thereby severely diminishing the NISA ability to deal with disasters.

Our recommendations are that the new program should complement existing private and public sector risk management alternatives, not compete with them. For example, Maple Leaf Foods, Quality Foods, Cargill, and other processors offer an extensive array of risk management options to livestock producers. Maple Leaf, for example, offers hog risk management options, future programs, innovative cost-of-production contracts with built-in return on capital components, cashflow stabilizer contracts, as well as wholesale meat cutout contracts.

The new NISA should include all risk management programs as farming income and adjust by 60% when calculating the NISA entitlement. This will encourage participation in private and public sector risk management programs. And the 40% we've talked about is generally the cost, particularly on crop insurance, that is the producer's portion of the premium cost of that--the cost he incurs, which wouldn't be eligible.

These programs go a long way to minimize the day-to-day risk in commodity prices and annual income levels.

Our last area of recommendation falls under the issue of business interruption insurance for catastrophic events. As such, we strongly urge the government to use the development funds in the business interruption to design a production insurance program similar to crop insurance so it provides producers with market price protection in the event of catastrophic events such as foot-and-mouth disease. The new program could provide protection in the event of trade actions such as anti-dumping, countervailing, etc.

On behalf of Elite Swine and the Manitoba Pork Council, we once again want to thank committee members for this opportunity to contribute to your review of the new NISA. The importance of the development of programming details under the new NISA cannot be underestimated, as the agriculture community will operate under these details for years to come. Elite Swine plays a significant role in Canadian hog production and, along with our sister companies, Landmark Feeds and Shur-Gain Feeds, has a significant relationship with farm families across Canada.

The Manitoba Pork Council is the voice of the hog producers across the province of Manitoba. As such, we respectfully ask the committee members to give full consideration to our recommendations for the new NISA as you develop your final report. We'd be pleased to address any questions.

Thank you.

Á (1135)

The Chair: Thank you very much, gentlemen. You've stayed well within the timelines I've given you, and I want to thank you for that. It's very timely information you're bringing to the table. Certainly, some of the recommendations have my interest already. We'll see where the discussion goes, and we'll start with the Alliance.

Mr. Anderson, for seven minutes.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Thank you, Mr. Chair.

I guess just to begin I'd like to ask you if you feel you've been consulted adequately in the process that's led to where we are now with the APF. Are you comfortable with the level of consultation you've been involved in?

We've had some groups that have had concerns about that. As you know, there's discussion over the April 1 implementation deadline. I noticed the CCA says it's comfortable with that. The Alberta government has said it's comfortable with it. Other groups have been very strenuous in their objection to that.

I'd like comments from both groups on that.

Have you been consulted enough, and are you comfortable with the implementation date or not?

Mr. Stan Eby: Yes, we're comfortable with the implementation date, as we stated. Without the implementation there's no coverage for livestock. We feel we've been going around this for a year and a half on a consultation basis through the safety net committee and various other inputs, and it's time to move on.

Mr. Dickson Gould: I would like to comment that from a provincial standpoint we've had excellent support in being able to deal directly with the people from the provincial governments. We've had limited conversations with the federal officials, but we look forward to becoming more actively involved as the details are announced.

Mr. David Anderson: Okay.

I'd like to go to something specific on page 4 of the Elite Swine-Manitoba Pork Council presentation. You're talking about eligibility being based on the filing of taxes and meeting CCRA's definition and rules associated with farming income. I'm wondering if you want to expand on that a little bit and just explain to us how you would see that working, how it would change the eligibility of some of the people who are in the program. I'm willing to give you that opportunity.

Mr. Dickson Gould: The key one is going through the rules of the 10% eligibility. I think that was clearly outlined and how that was dealt with. The key thing about having the CCRA definition and rules is that they have a lot of rules on defining what farming income is.

The other area that is also very important is, from a business standpoint, the rules of association. For example, if a person had one company and he set up another company with the identical ownership, the rules of association would bring them together as one application. Using the tax rules that are already there goes a long way to maintain the stability of the program.

Mr. David Anderson: I want to talk a little bit about the clarity of the program. You talked about that on page 5 as well.

I had a file that just came into my office where CFIP had decided that somebody needed a payment. The farmer and his accountants had determined they didn't qualify. CFIP insisted on paying them, so they took the cheque. He spent it, and now CFIP wants that same amount of money back because they made a mistake. This has been a constant problem.

Do you see a major difference in the structure, the way this is set up in order to trigger payments, and do you have any confidence at all that the administration of the new program will be more efficient than the administration of the last two?

Á (1140)

Mr. Dickson Gould: I would say that if you look at the NISA, there's very good clarity on the NISA program.

When the CFIP program first came out, there was a lot of confusion. Year by year, there has been continuous improvement in it. I think one recommendation is, let's not go back to square one but take a look at some of the key lessons we have.

The area of concern we see from the CFIP is, again, probably better clarity on inventory calculations at the year-end, and we're aware that a lot of farmers do cash accounting. So being able to come up with a little bit more structure on what the year-end accruals are would probably go a long way from there.

In fairness, to go back a number of years, the program was very challenging. Step by step, it has gotten better. It's not fine-tuned yet, but let's build upon it.

Mr. Marcel Hacault: If I could add, I know of a couple of farmers right now who thought the downturn in prices would have ended in the hog industry, and they're now going to their banks to look for some refinancing. They're in the position right now that they have no idea what kind of risk management is going to be offered outside their existing operation. Wouldn't it be great if they would know, or their bank would know, within a fairly reasonable spread, what their risk management from the support programs would be? It would sure put them in a stronger position to plan for the year coming up.

Mr. David Anderson: I would like to give you an opportunity to address a little different issue here, which has to do with a domestic issue in the United States--that is, the country-of-origin labelling. I guess you don't get an opportunity to be here too often, but I'd like to hear your opinions and your comments or statements, if you have some, that you'd like to make about that issue.

Mr. Dickson Gould: I spent a little bit of time about two weeks ago with some of the people particularly on the pork industry side of it. There seems to be a strong understanding that, from a North American context, this country-of-origin legislation is ill-conceived. I think it distorts the North American trading patterns we have on hogs as well as cattle. We're all counting on some common sense to come in to prevent those things from happening.

Mr. Stan Eby: From the cattle industry side, we certainly concur with the pork people. Whether it's ill-conceived or not, it is in legislation right now. That's the tough part. Canadian cattlemen are basically approaching it on a three-pronged basis: one, to work with like-minded people in the U.S. and groups to see if that can't be rescinded, or at the very least remain voluntary, which leaves it much more open; two, to investigate along with Ag Canada the potential of a challenge to either NAFTA or the WTO; and three, to work with processors here in this country to see what we can do with their assistance to secure markets that we have in the U.S.

There is some feeling in the U.S. that we may be handed a gift on this. We're not taking that for granted in that the U.S. has to prove that their livestock is bred, born, and processed there, whereas we have to say “Product of Canada”.

Some in the U.S. are saying they cannot meet that, so a lot of their product will either go to export or to food service and leave a big gap at retail. That may be true, but we can't bank on that, and from the cattle industry side we're preparing for the worst on this.

Mr. David Anderson: Do I have some more time?

The Chair: Yes, you have--I'm sorry, no you don't. I was so enthralled with the response, I forgot the time.

Mr. David Anderson: I shouldn't have asked.

The Chair: You should never have asked. Thank you very much, Mr. Anderson.

We'll now move to Mr. Plamondon for seven minutes.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ) : I am going to speak in French because you would still need translation if I spoke in English.

I am less familiar with the situation facing hog producers in your beautiful province than with that facing producers in Quebec who have a slightly different perspective, both in terms of management and the overall concept of specialized production. But what I find surprising is that, this morning, I heard you read a very eloquent document in which you say that you would like to do one thing instead of another, that you want to retain this thing and add that thing. Ultimately, you indicated, at least 20 or 25 times, changes you would like made to the agreement. You are suggesting changes to the agreement, and you concluded by saying that you are prepared to sign.

Are you not going against common sense, which would be to continue to negotiate until you get what you want and then sign, instead of signing in hopes that things will change after?

Á (1145)

Mr. Marcel Hacault : Manitoba’s position is really to support the positions of the CFA and the Canadian Pork Council. Before Manitoba joins this new program, it must ensure that a few things are clearly identified. Once the program is developed, we will have to live with it; it is almost like getting married. We will have to live with it for five years.

Mr. Louis Plamondon : That is right. And you say that there are things that you do not like, that you want to change and that you want to negotiate but, you say that you are prepared to sign and to be part of this program as of April 1.

Mr. Marcel Hacault : No, the cattlemen's association said that.

Mr. Louis Plamondon : Oh, so that association wants it and you are less enthusiastic. Excuse me. So I should be asking it this question.

So, those of you who are prepared to take part, could you tell me why are you are prepared to do so, when the others are not?

[English]

Mr. Calvin Knoss: We've said it's a step in the right direction, that we view the aspects of the new program as being better than the previous programs.

Our areas of concern we think can be worked on, and there's still plenty of time to deal with certain details if we're in agreement with the major parameters and the major design of the program, which is what we have said we are in agreement with. We have less concern about moving forward with a new program.

Also, we realize that on March 31 the existing CFIP program will not exist. From that point on we'll have no program. So we're determined to be part of the process and to continue representing our position and negotiating. The program, as it's been presented in our last presentation, which was just on Friday, is close enough to our position that we're willing to recommend signing and moving forward rather than standing still.

[Translation]

Mr. Louis Plamondon : And are you prepared to recommend it?

Mr. Marcel Hacault : The Manitoba Pork Council, of which I am chair, has just travelled around the province talking with its producers. About one-third of Manitoba's production comes from the Hutterian Brethren, families operating collective farms; another third comes from more traditional one-family farms; and the final third comes from several entrepreneurs or farmers working together.

As a result of my recent provincial tour, the message that we are getting from producers, when we compare the new proposed program to the old one, is that the producers truly believe that, to receive the same amount of money, it will cost them twice as much to take part.

So, before we jump on the bandwagon, there are several things that I, as chair, need to convince our members to agree to this. One of these things is that, when we go to the bank to get a loan, we need to be able to say that this program is sound and in place. Another point is for the program to recognize the different frameworks because, in Manitoba, many families want to take part and starting a farm requires a great deal of cash. There are new frameworks allowing people to participate without having $2 million cash. So, it would be good if the framework of the new program incorporated such arrangements.

Á (1150)

[English]

The Chair: Mr. Plamondon, your time has expired.

We'll move to the government side and Mrs. Ur for seven minutes.

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

To continue on the same vein as Mr. Anderson, we had a presentation earlier today, and last week as well, with CFA. They keep telling us there hasn't been consultation, and then this morning we hear from the Canadian Cattlemen that indeed there has been consultation and we hear from the Manitoba Pork Council that there hasn't been sufficient consultation. If we can't even get this together, how on earth are we ever going to get APF together? That is my statement.

There has to be some truth somewhere. I won't say the opposite. I like to look at the glass being half full rather than half empty, but I find it very challenging--and no one said this would be an easy job--to come to a consensus, because I think what industry is presenting here today.... You probably represent a peak and valley industry, whereas we have a grains and oilseed sector that is more on a sliding scale than peaks and valleys. And I had the hog industry in my office too. I think it's important to note that we have statements by many commodity groups stating their viewpoints on it. I have to say today is probably the first fairly positive day from the Canadian Cattlemen, the day they have been the most receptive to this.

Do you understand the situation we're discussing as to the grains and oilseeds, where they're viewing it as well? Have you looked at that, Mr. Knoss, when you've been at the National Safety Nets Advisory Committee?

Mr. Calvin Knoss: Yes, I've been involved in the process and I've been at the meeting. The difference when you're talking about consultation, if we continue.... We've met and repeatedly discussed the same questions and have been stuck at the level of accepting basic design, and so we maybe haven't got far enough into the details as I'd like to have seen it. But I think I've had plenty of consultation with all industry.

I want to make reference to a workshop I was invited to and participated in for a couple of days right after New Year's, organized by the Western Barley Growers Association. There was representation from all of the livestock sector. I think with the barley growers organizing there was at least as much grains and oilseeds input at that meeting as any time. We had two days of heavy discussion and debate.

I felt that meeting had a lot to do with me coming to some of the conclusions I'm at today. A lot of discussion came out of it. I've had a good following. Members from the Western Barley Growers Association have contacted me and a lot of my input into the national committee has shown some representation for their organization. A resolution that was passed at their meeting, and their position, is very similar to ours.

I can't come here and speak for them, but I know that group--I'm also a grains and oilseeds farmer. I have a very diversified farm with an almost equal base of grain, cow-calf, and feedlot.

I've been involved in all aspects of that, and I've had lots of discussions with groups. I've been involved in the provincial safety net committee, and our provincial stock growers association has expanded the consultation well outside of just the one committee and the one involvement.

Á (1155)

Mrs. Rose-Marie Ur: Do you want to speak to that, Marcel, or are you just waving at me?

Mr. Marcel Hacault: On the issue of consultation, I have to say that our province has been very forthcoming in talking to us as the Pork Council, so very much on the provincial level we've had a good dialogue with the government. What they do with the message, I'm not quite sure. And on the national side, with CFA and CPC, I know they've had discussions, but as to what level of influence we have, I'm not sure.

Mrs. Rose-Marie Ur: But there have been discussions.

Mr. Marcel Hacault: Yes.

Mrs. Rose-Marie Ur: Did you want to speak, Mr. Eby?

Mr. Stan Eby: Yes, I want to say a couple of things.

First, the definition of a safety net I think needs to be defined--not redefined, but defined. I think part of the concern is because it's a program this broad covering so many different sectors. That's I think where a lot of the questions arise.

Mrs. Rose-Marie Ur: Absolutely. It's pretty hard to have one-size-fits-all when you have such a varying sector, not only in one province but across Canada. In all fairness, I wouldn't want to do that job myself.

Do you really feel APF has a sufficient mandate to assist farmers in trade injury? Do you think there is going to be a component there that will cover that basis under the way it is proposed to be set up?

Mr. Calvin Knoss: Probably not real major trade injury or long-term sustained injury. It can easily come in and deal with the short term. If you're coming from a position of profitability or stability, at least then a one- or two-year change in that could be covered with this type of a program. I think that's probably all we need to have. I'm not sure that trade injury needs to take as much time as it does in so many cases. It's not exclusively the reason for unprofitability in all sectors. We're seeing--

Mrs. Rose-Marie Ur: In some sectors it really is, though, with all due respect.

Mr. Calvin Knoss: But I think we see competition coming from countries that aren't involved in the subsidies that are still a major influence and having an effect.

Mrs. Rose-Marie Ur: Do I have any more time, Mr. Chair?

The Chair: You have a couple of seconds.

Mrs. Rose-Marie Ur: I'll wait for the second round.

The Chair: We'll move to Mr. Proctor for seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Chair, and thank you for the presentation, gentlemen. I know it was incidental to the main thrust, Mr. Eby, but I was struck with your comment on environmental laws having to benefit rural as well as urban. You said it's almost impossible to farm in some provinces, and I wondered which provinces you would single out and put in that category.

Mr. Stan Eby: As things move along, I'm not real sure. I know in my own municipality they're making it very difficult for us to farm, and I farm in Ontario here. We see--

Mr. Dick Proctor: What kinds of roadblocks are you encountering?

Mr. Stan Eby: We see the special interest groups wanting to put caps on our livestock numbers, those types of things, such as having a 75-animal-unit basis, and then we have to go through a number of hoops to try to enlarge that. A neighbouring municipality has that in place right now. Those are the types of things that are restrictive to an industry, and we see some provinces that have a more healthy package to help people meet environmental standards they've set. Those are the types of things we're referring to.

Mr. Dick Proctor: Maybe that segues into the whole business of the cutoff. It seems to me that the Elite Swine group were clearly saying there shouldn't be a cutoff. Refresh my memory on CFIP and AIDA--or AIDA and CFIP, to put it in chronological order. There were cutoffs, correct?

Â (1200)

Mr. Dickson Gould: What you're referring to is caps?

Mr. Dick Proctor: Yes, and what were those caps? Was it $100,000?

Mr. Dickson Gould: Reinnie, do you want to answer that?

Mr. Reinnie Brandt (Accountant, Elite Swine Inc.): In Manitoba it was $145,000 per producer, per shareholder.

Mr. Dick Proctor: And the position you're advancing here this morning is that there should be no cutoffs, is that correct? No caps, to use your terminology.

Mr. Marcel Hacault: What I'd be advancing is that in Manitoba, because we have so many flavours of entrepreneurship, the cap should be allowing those structures to happen. So if you're going to put a cap in place, make sure it doesn't disadvantage a certain type of structure. What I'd like to reiterate is, let the farmer make up his mind on whether he wants to join up with 20 other producers or whether he wants to go out on his own. It shouldn't be new NISA telling him how to form his structure; let him decide. So if you're going to have caps, they should be sufficiently large to allow those decisions to be made.

Mr. Jim Caldwell (Director, Government Affairs, Canadian Cattlemen's Association): From the cattlemen's point of view, we've discussed this many times, and under the old tripartite stabilization program there were no caps, and we don't believe there should be caps now. One of the downsides to this program is the feedlot operator would soon use up his cap rather quickly if it was capped. Caps are really a political problem, not a producer problem.

Mr. Dick Proctor: But the question that occurs to me is, is there going to be enough money in these programs to be able to fund programs that don't have caps?

Mr. Jim Caldwell: The question is, do you penalize the person because he wants to be a large family feedlot? And there are lots of them. If it's capped, he's not going to have much room to manoeuvre. But I guess we have to decide what type of agricultural system we want in Canada.

Mr. Marcel Hacault: I apologize for not being familiar with crop insurance, but if we're talking about equity among industries and equity among programs, I'm not 100% sure, but I'm pretty sure that regardless of whether you have 100 acres or 10,000 acres, there's no cap on your crop insurance. So I throw the question back, are we looking at equity between commodities? Are we looking at trying to treat all farmers with the same equity?

Mr. Dick Proctor: I would comment that it seems to me this morning here we have two different opinions about whether we want a livestock insurance program. It seems to me the swine folks are saying we do and the cattlemen are saying very clearly, thanks, but no thanks, we don't.

I want to ask one question around trade concerns, about risk management programs and whether they meet WTO obligations regarding the new program. It seems to me the government is saying the old NISA was tried and tested and was considered to be GATT green and therefore the new program will be as well. Do you share that sentiment?

Mr. Calvin Knoss: We based our recommendation on the fact that NISA, we have been told and I think have accepted, has always been an amber program. It has, I guess, been tested, and because it hasn't caused serious changes or distortions within the industry, it has passed the test.

We've developed our policy to have the lowest level of risk from trade injury, and since trade is our biggest concern and trade injury is our biggest risk, we determined that we wanted the program to be green and that would give it the lowest risk. So that's where we differ from the proposal.

As it stands now, under the proposal, we're being told there is a clear split anytime the loss is greater than 30% and drops into that area. Then the total payout, right back to 100%, will be reported to WTO as green. But there is still the smaller stabilization component that would be the same.

From that, I'd have to say personally that probably this new program and combining the two is an improvement over the two we have, but it still doesn't take us quite as far as we'd like to go in terms of having no risk.

Â (1205)

Mr. Dick Proctor: Very briefly, it's my understanding that the old NISA wasn't developed in Alberta or British Columbia. Does that give the cattlemen any cause for concern, that maybe this wasn't as clear a decision as it otherwise would have been?

Mr. Jim Caldwell: Excuse me, Mr. Proctor, you meant they didn't take it up? They both do now.

Mr. Dick Proctor: Yes.

Mr. Jim Caldwell: I think that actually was a decision by the provincial governments not to offer it to the cattle producers because the cattle producers basically at that time said they didn't want it.

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

We'll move to Mr. Borotsik for seven minutes.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman. I'm going to continue on this kind of line.

In your presentation, Mr. Eby--I think it was you, or perhaps it was Calvin--said the CCA is quite emphatic that there should only be coverage of 70% of the margins. Is that correct?

Mr. Calvin Knoss: Yes.

Mr. Rick Borotsik: So you're saying only 70%, and the additional 30% or the coverage that's being proposed right now under the business risk management program that has been put forward will allow you to go to 100% coverage. You're saying that's wrong; it should only be 70% coverage because of the trade implications and maintaining the green aspect of it.

Cattle producers would like only 70% of the margins covered, correct?

Mr. Calvin Knoss: We're combining two different things.

Mr. Rick Borotsik: Should it only cover income loss of up to 70% of the reference margin?

Mr. Calvin Knoss: With government funds.

Mr. Rick Borotsik: With government funds.

Mr. Calvin Knoss: The program would allow the income lost to go back to 100%, but 30% of that would be producer money.

Mr. Rick Borotsik: That's fine. I appreciate that. But you're saying up to 70%, not unlike what we have with CFIP right now, which is a 70% coverage of the reference margin at no premium cost. That's what you're suggesting, correct?

Mr. Calvin Knoss: Yes.

Mr. Rick Borotsik: So you're suggesting 70% of reference margin coverage, which we have under CFIP, which we had under AIDA, and there was no premium required to maintain that 70%. So are you suggesting that we go back to a CFIP-type program? Are you suggesting that the cattle guys still want to pay premium on that 70%?

Mr. Calvin Knoss: No, I think the cattle industry has no problem with contributing a portion of the program and being part of it.

Mr. Rick Borotsik: So you want to get the same coverage and pay $14,000 for $100,000 coverage right now? You want the same 70% that you have currently under CFIP, but pay $14,000 for that coverage.

Mr. Calvin Knoss: I guess I'm not paying anything if I'm only taking my own money back out of an account.

Mr. Rick Borotsik: But you have to make a contribution of $14,000 for 70% coverage.

Mr. Calvin Knoss: I would view that as putting away or investing a certain portion of my own money into an account that will be there when I need to draw on it.

Mr. Rick Borotsik: But you're getting that coverage now for nothing.

So you would rather pay $14,000 for the coverage than to get it for nothing. Basically that's what you're saying.

Mr. Calvin Knoss: Well, we have to look at the combination of the two programs as they exist now.

Mr. Rick Borotsik: And that's fair ball. There is the NISA top-up. Okay, I appreciate that.

Mr. Calvin Knoss: I think to get what we're getting on the new program, with NISA included with CFIP as two programs--which is what exists--the producer would definitely need to maintain an investment account much higher than the $14,000.

Mr. Rick Borotsik: Oh, absolutely, to cover the full 100% on $100,000, I think the total cost is $26,000.

But I find it strange you want to pay for 70% coverage that you're getting for nothing right now. It's interesting.

You also said--in bold print--“The CCA is not interested in livestock production insurance for cattle”. And then you added “at this time”. If you sold product at less than cost of production, if in fact the market should drop to that, are you saying at that time you'd be interested in a livestock production insurance?

Mr. Calvin Knoss: I guess it was possibly a mistake. What was going through my mind was that this was part of the consultation process. I have asked this question at every level in every meeting with every producer group. And in every discussion I've had, I've yet to find any clear decision for a case where we would need...or it hasn't yet been explained to me.

Â (1210)

Mr. Rick Borotsik: Pork is being sold at less than the cost of production currently. Right now in Manitoba, pork is being sold at less than the cost of production. They seem to be in favour of a cost of production program, as is being proposed.

If you were selling cattle under the cost of production, and I know you would probably cut back on your production--and you said “at this time”--would the cattle producers be looking at a cost of production insurance program then?

Mr. Stan Eby: If I can step in here, Rick, we're not sure what that term means. That's why we're saying “at this time”. There's some inference that it could be for a foreign animal disease situation, that type of coverage.

Mr. Rick Borotsik: That's a good answer, because you also said that you want this program in place by April 1, come hell or high water. You want it here because you have no coverage or anything else. It's one of the unknowns.

One of the other unknowns is crop insurance. I asked the minister, who was sitting right there in that chair where Dickson is, if in fact there was going to be a linkage to crop insurance, a requirement to have mandatory crop insurance. He said “We don't know”.

If they don't know and there are six days left.... We want the entrance to this program effective April 1, but we don't even know if there's a tie-in to crop insurance. Are you prepared to accept that big hole in the equation before we enter into this agreement?

Mr. Stan Eby: I would say yes, we are. We have some faith that these things have moved along, and--

Mr. Rick Borotsik: Oh, Stan, you've cut me to the quick. I don't have as much faith as you have then. I'm sorry.

Mr. Stan Eby: No, really, if we don't move on this right now, number one, we lose, and number two, what are you going to come up with down the road? We think we have something workable here.

Mr. Rick Borotsik: In my last of couple seconds I have to say, first of all, about Maple Leaf, you've done your commercial for Mr. Eby. Maple Leaf is located in Brandon. It's the state-of-the-art kill facility for pork right now, Mr. Chairman. It's as good as you're ever going to find anywhere in this world, and we do thank them, and certainly Elite Swine, for being there.

I have one question for Elite Swine. You talked about changing or allowing different investments for entrepreneurs under the same criteria and rules that would follow for the normal farm producer. There are a lot of non-farm investors in hog operations now, believe it or not, Marcel. Well, maybe there aren't a lot, but I know people who are not farmers who have invested capital in some hog operations. Should they be covered under the program? And you also wanted that income to be identified as farm income when it came back from the program. If it's a non-farm investor in one of those operations, would that also be reflected as farm income?

Mr. Marcel Hacault: How much time do we have?

The Chair: You have 10 seconds left. Mr. Borotsik is going to have a heart attack, but we--

Mr. Rick Borotsik: No, that's fine. I'm sure somebody else will....

Mr. Marcel Hacault: Rick, my daughter is a university student right now; she's not a farmer. When does she become one? Before she's put her money into my new structure or after?

Mr. Rick Borotsik: If non-farming dentists or doctors want to invest, would their income off this--if they were covered--be farm income as you're describing it?

Mr. Dickson Gould: We've proposed following the recommendations under the CCRA. There are certain rules and regulations for farm losses, for example, different rules depending on who's involved.

I think if you take a look at a lot of the structures around how investments are going, the vast majority of people involved in our program, Rick, are farmers, farm families, people who are neighbours to the operation. If you take a look at any individual, one of the big problems we've had in agriculture is getting equity into agriculture to help build the operations into a viable agriculture industry. At the end of the day, I think that's a question for the policy-makers.

The Chair: Thank you very much. Your time has expired.

We'll move to Mr. Duplain for five minutes, please.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.) : I am going to ask some questions, and perhaps Ms. Ur could finish with her questions.

I want to thank you for coming here and being so exceedingly positive this morning. It is wonderful to hear people make positive suggestions for change to a pan-Canadian program in progress. Most of the federations in Canada agree to a pan-Canadian program, including those in Quebec; for example, the chairs of the UPA and the Financière agricole du Québec agree. Like them, you are coming here this morning with exhaustive recommendations.

But I do not see the difference between the Canadian Federation of Agriculture's position and the one you are advancing this morning. You say that the provinces consulted you and that you were able to have your say; how then would you explain this huge difference of opinion? Six days before the agreement is to be signed, everyone is negotiating and the program changes daily. We are trying to note the comments, but the federation claims it was neither listened to nor consulted.

You say that you were consulted, so can you explain the difference between its opinion and yours? How can there be such a huge difference of opinion? I do not understand.

Did you consult other provincial federations, for example, the Quebec hog farmers? Is there such a big difference of opinion between you and the Quebec hog farmers, in terms of this new program?

Â (1215)

Mr. Marcel Hacault : I think that the problem lies with how the word “consultation” is defined. I am not going to speak for the CFA, but I get the feeling that, if it feels frustrated, it is because there are many changes it would have liked the government to have agreed to, and this did not happen.

In the case of Manitoba, it approached us to ask what we would like to see and it considered many of our positions, which it took to the federal negotiations. Many were agreed to. But the Manitoba Pork Council did not work directly with the federal government.

The various federations in each province belong to the Canadian Pork Council, and we work with it to ensure that it presents our position.

[English]

Mr. Dickson Gould: From an industry perspective, we've had good consultation with the province. We have made a presentation to the federal government. But at the same time, it's really difficult for the business side to get into much until you actually know what the details are.

So I think there's a bit of a gap on those issues.

The Chair: Mr. Caldwell.

Mr. Jim Caldwell: You're getting different opinions from the CFA, the CCA, and other groups, and I think, as Calvin pointed out, he's been on this committee and it's sometimes very frustrating. He's like the Maytag repairman sometimes, because he's the only one who may be a little bit different, along with Agricorp and some of these other people.

I'm not speaking for the federation. I would never pretend to do that. I think one of their concerns, and the concern of some of the commodity associations, is that while the concept has not changed, some of the details of the plan do change from time to time, through the bureaucracy or through the minister. I think maybe this is what the CFA and some other commodity groups have a problem with.

And actually, we have a little bit of a problem with it. We were presented with a plan as late as two or three days ago that was a little different from the one we had talked about at the national safety net committee. I think this is where the problem arises mostly, rather than with the concept.

They also--this is from other groups--like the idea of NISA. The producers like the idea of NISA, of having the money in their accounts. Under this program it's entitlement; they're not going to have the money in their accounts. So that causes a bit of a problem--it's changing; it's not going to be the same.

Those are a couple of the things that are happening and why the consultation may seem a little confusing. But as far as consultation goes, we've been “consultationed” to death, I think, on the issue itself, on the concept, though maybe not on all the details.

As far as the CCA is concerned, I don't think.... We're ready to accept the concept. This is what we're saying. We haven't seen the final details. The one that was presented to us last week is still of concern because of the trade ramifications and because of the coverage.

The Chair: The time has expired, but I wonder if I could insert a question, because we did talk about the upfront moneys into the NISA account.

I think I heard someone this morning, Mr. Gould or Mr. Hacault, suggest that perhaps a letter of credit might be a way of ensuring to the government a farmer's intent rather than him having to come up with $14,000, $16,000, $20,000, whatever, and in many cases much more than that. Have you explored that with the various agencies and groups you've met with, the safety nets and up through to the minister? Has that come to the table?

Â (1220)

Mr. Dickson Gould: I met with some members of the provincial ministry on Friday and talked to them about this concept. I think they're in full agreement that having clarity is very important. The other thing people are becoming aware of is, why can't we set up this account? It's no different from a hedging account you would have to protect yourself for livestock prices. You don't necessarily have to have all the money in, but you definitely need to have a letter of credit or something from the bank. I can't see why any bank would not support that, because--

The Chair: Was there any receptivity to that?

Mr. Dickson Gould: I don't think there was any opposition to that from what I saw.

The Chair: We'll move now to Mr. Hilstrom for five minutes, please.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Now it's time for a little number crunching.

What about that, Reinnie Brandt? You haven't had a chance to talk here and maybe you'll get a chance now.

This is about the catastrophic component of this. Now, you've talked about it, the Canadian Cattlemen, and you're supportive of this. Do you have enough details on it to say it'll be a good example?

Let's use an example, a small cattle ranch or a small hog operation--now, this would be a really small hog operation--say, a small cattle ranch grossing $200,000 a year. Foot-and-mouth hits western Canada. I'll cut it down a little bit in size here: western Canada, no exports. That's the catastrophic situation we're talking about as one example.

For that individual with the $200,000 gross in year one, what does he get out of this catastrophic insurance, given that the exports don't resume for years two and three? What is the situation that producer's in for years one, two, and three? Can you give me an answer to those three things? First of all, has the government given you enough details of the catastrophic insurance component of this for you to even answer this question? If they haven't, then just tell me straight up, but if you have enough details, how does that producer make out in years one, two, and three on the $200,000 gross?

Mr. Marcel Hacault: To my mind, the new NISA is not designed to handle a catastrophic loss such as an event of foot-and-mouth disease outbreak or a total border closure.

Mr. Howard Hilstrom: The government says there is a catastrophic component to this, though.

Mr. Marcel Hacault: To my mind, there's not nearly enough money. There was just a report out where there could be a $40 billion loss. There's no way there's enough money, and you have to remember, crop insurance takes first dibs at this whole pot.

Mr. Howard Hilstrom: The cattlemen?

Mr. Calvin Knoss: I agree that there's no way it could cover all of that type of loss all the way through, but my feeling is there's nothing in place now that would do any better. There's nothing that would give us any better coverage.

As to the consultation and who we've asked, the number crunching, I've used my own operation and I've talked to people. Part of what we did at the process in Edmonton was to look into that.

I guess the program would offer reasonable protection for years one and two, and at that point the industry and industry in general, governments and individual producers, would all have to make major decisions and decide how to deal with it. One of them would be changes in the operation that would hopefully cut costs low enough to help with part of the problem.

Mr. Howard Hilstrom: In a national catastrophe the federal government in particular and provincial governments also have a responsibility to deal with that as a priority, and it would be on an ad hoc basis; that's how it would be done. I don't believe there's any catastrophe component of this at all. I think it's just a routine insurance or program type of thing they're going to try to have out that fits within the $5.2 billion, and that's where it's at.

Let's talk about green cover. I know the environmentalists want pigs running on green grass and chickens too, so it's probably more of a cattlemen's question. The green cover program is designed to sow down land to be used for pasture and forage production. Is that right?

Â (1225)

Mr. Calvin Knoss: We have lots of concerns over that type of program in its design, but at this particular time I think the biggest problem in the program is that it was announced without any details.

At our meetings here the other day I was talking to someone who would have some input into this from the government. My comment was, once the announcement was made last June that the government would participate in having some direction and design on what crop would be produced on a farm by way of offering some money or an incentive, that immediately affected decisions. I know there have been producers who probably since June...there wouldn't have been a whole lot of spring seeding, and I don't know so much about fall. Producers are waiting to this day, trying to make a decision on whether or not they want to seed forage.

Whether you love it or hate it, we need the information on it because--

Mr. Howard Hilstrom: Well, this is the point here, Calvin, that the--

The Chair: Howard, if we have time, we'll come back to you for one more question.

Go ahead, Rose-Marie.

Mrs. Rose-Marie Ur: Thank you.

One of you gentlemen, I forget who, asked the question, does government want to penalize farmers for wanting to get bigger and to diversify? Well, being from Ontario, I think Ontario is a good example of how farmers have diversified. I know I get the complaint sometimes that because we've diversified, we're not able to access some of these programs that are available for areas that are perhaps in one sector or the other.

When the minister was before us last week he explained on a flow chart that this new NISA program was there. As the Manitoba Pork Council has stated, the new NISA's effectiveness needs to help and support more farm families. At his presentation he indicated to us that with the new NISA, young start-up farmers were indeed able to be a part of the new program because it was accessible with a one-third deposit of 70% margin, whatever that figure came to. He kept saying there were 160,000 NISA applications out there, and roughly 94,000 were under the 25%. They really didn't have a lot of NISA dollars in there, so this is what he was trying to make sure of, that they were levelling the playing field for all farmers.

So you're not seeing it the same way, are you?

Mr. Dickson Gould: If we come back to some of the things we talked about on NISA, on NISA payments and being able to put money into a contribution account, number one is that there has been a lot of discussion by the government on how to encourage more and more young people to go into agriculture.

I take a look in our organization, which is probably a little different because of the growth in the hog industry in Manitoba, but the average age of people we're associating with is probably in the mid-thirties. If you go to other sectors of agriculture, they're probably a lot older. What we need to do is, we need to develop programs that allow more young people to become involved, making sure they're not penalized by off-farm income so they can't participate in programs, and be able to have something that can be a graduated program to allow them to go.

Where I'm coming from, my presentation has been to say that for farms that are fairly well established, why not use a letter of credit to be able to secure that amount of money into that margin account? Then if there are things that need to be done for the farm and decisions that need to be made, they can actually reinvest some of that money back into the farm, and with the relationship with the bank, when the day comes that it's called for, it can be there.

The whole intent of the program is actually not to use it. You're not basing your decisions on being in this program.

Â (1230)

Mrs. Rose-Marie Ur: Yes, that would be wonderful.

I think, Mr. Knoss, you had mentioned the linkage between crop insurance companion programs and the new NISA. Can you expand on that? What would you like to see happening?

Mr. Calvin Knoss: I think we agree with the comments that new programs should not be designed so protection from them makes it unnecessary to have crop insurance and we draw away from that.

Mrs. Rose-Marie Ur: Absolutely. I agree. We had that under CFIP.

Mr. Calvin Knoss: We recognize that we need a form of linkage. But I believe that crop insurance today is a voluntary individual farm decision. Depending on conditions within their farms and ways of managing risk and looking at it, many farmers choose not to carry crop insurance, and they have that choice. My comment was that we support a linkage as long as both programs remain separate and voluntary.

Then there was the comment about what we support or not, based on the last proposal that was shown to us as late as Friday. In that paper there was quite a bit of discussion still going on about the linkage. The first one was that the idea of mandatory compliance between both programs was rejected. Then it listed three other options that could be considered.

I feel comfortable that we can discuss any of the three options knowing that the mandatory compliance has been rejected. That was my own concern. Based on that, I'm comfortable saying I support what I saw.

The Chair: Thank you.

Mr. Hilstrom, now you can ask your five minutes of questions.

Mr. Howard Hilstrom: Thanks a lot. It gives me a little more time.

I was trying to be careful not to get into personal situations here. As you all know, I'm a cattle rancher myself, and the check-off is going to whack us for $500 to $600 next year. So I wanted to be careful not to get into accountability of the CCA to me as a producer.

I'm just wondering what specifically the cattle industry is getting out of the APF. We've established already that there isn't enough money in there for any kind of a decent catastrophe program, and there probably won't be. We don't have the details on the green cover program to really sign on to that. What specifically does the CCA believe is worth bringing out, contrary to the other farm groups? What specifically are we getting out of this APF by signing on immediately?

Mr. Calvin Knoss: Although there isn't enough coverage to handle the extreme catastrophe situations we've discussed, the program does offer a reasonable level of coverage for the disaster area, and fluctuations in income larger than just a stabilization component. We think individual producers should be able to handle year-to-year fluctuations on their own, short of a foot-and-mouth outbreak. But something comparable to the drought situation of the last couple of years in western Canada, which has caused extreme difficulty in areas, has provided some opportunity in other areas, and will change from year to year.

Mr. Howard Hilstrom: So there will be a big enough improvement in the new NISA that an average cattle operation is going to be better served by it than by the old NISA? Is that what you see?

Mr. Stan Eby: Definitely. That's the position on things.

I have just a couple of comments about your question, Howard. Number one, check-off is an investment, not a cost.

Â (1235)

Mr. Jim Caldwell: More than your money's worth.

Mr. Howard Hilstrom: It is. I agree.

Mr. Stan Eby: I think the long-term program is positive for our industry, being stretched over breeding seasons in time to market. The other thing is we need the coverage. I don't like to get into personal things either, but I have a May 31 year-end for my operation. I've been without any coverage for this past year already. I don't want to see the producers of Canada facing the same thing.

The other thing is being responsible, and we mentioned that. Whether it's actuarially sound or not, we have to approach it on that basis. What can we afford as producers and as a country? We see so many other grabs for financing, whether it be for military, health care, education--the list can go on and on. I think we're being very responsible in our approach.

Mr. Howard Hilstrom: Yes, I think that's right. I think most producers look at it as, “If there happens to be something coming from a government program, fine and dandy, but I'm planning my business to be viable without it”. Certainly, the government component in regard to marketing and establishing markets has been good.

While we have you here, I think it's important that we consider the remarks of Dr. Preston, who is a dean of veterinary medicine and with the Manitoba department of agriculture. Do you know who he is?

Mr. Stan Eby: Yes

Mr. Howard Hilstrom: In the last two weeks he had an article in the paper stating that the plan for controlling a serious disease like the foot-and-mouth outbreak still has some serious problems with it. In everything from zoning to producers having enough information to know how to respond to an outbreak in their or some other locale, it is not complete. Could you quickly give us some comments on this?

All of these government programs are fine and dandy, but if you take care of or eradicate things like tuberculosis, you also need to have a good foot-and-mouth plan that is fully complete and ready to go. You have to deal with your customer relations with the U.S. and with your feedlot imports. You can do all of these other things that can make a bigger impact on your bottom line than all of the government programs put together. This is where the cattle industry is right now, if all these other things were done.

So please just answer the first part on the plan.

Mr. Stan Eby: It's a good question.

A plan has been under development by the Canadian Animal Health Coalition, a group of livestock commodities...or an offshoot out of the Canadian Animal Health Consultative Committee, which meets here every December. They met the Canadian Animal Health Coalition last week on this very topic.

What stage are they at? It's an ongoing work in progress to get the plan up. There was a mock trial about two years ago in which they identified a number of things. They have visited the European Union to see what they went through.

Will we have a complete plan that's airtight? It is not likely, but the plan is progressing as we speak. I don't think we can ask for any more than ongoing work like this to protect us, because the risk has been there and will be there of an incursion of foreign animal disease.

Mr. Howard Hilstrom: Yes, but it would sure be nice to have a timeline for that to be in place. We can't wait five more years.

The Chair: Mr. Hilstrom, your time has expired.

We've been very generous this morning, very liberal in our time.

Mr. Howard Hilstrom: I've been very Canadian Alliance in my time.

Voices: Oh, oh!

The Chair: Mr. Anderson for five minutes.

Mr. David Anderson: I have just one question. The CCA has supported or given a number of suggestions here of things you'd like to see. One of them was a rollover of the old NISA into the new program.

I'd like you to tell us a little bit of how you see that happening. I met with the grain growers' group last week, and they clearly did not want that old NISA money forced out. The minister told us earlier at the ag committee that it would be grandfathered—whatever that's turning out to mean. Now they are suggesting that it should come out over five years, 20% a year, and be forced into that new program.

What does your position mean when you say you want the rollover of the old NISA into the new program?

Mr. Calvin Knoss: I think that had to do with the discussion on how the old program was ending, and with the timeframe. Based on the rules as they exist today, when the old NISA ends there will be five-year time to take the money out.

One of the ways we would like to see some rollover is...under the current rules the fund two government dollars come out and are taxable first and the producers' fund one tax-paid dollars are the last to come out. So when you're being asked to start up and establish this new level or new account, producers' money is already tied up. Because many producers have accounts built up now and have money in place, it may be as simple as just changing the order in which money first comes out, or allowing a portion of the money from the old program to be borrowed against or to be automatically rolled over, or in some other way. Because of the tax liability of taking out the government dollars first, it may be very difficult to access the producer dollars later on. Yet we have a requirement to start funding this new program right away. So this area is where we need to look at some form of a rollover.

Â (1240)

Mr. David Anderson: There's been no suggestion then that the government money will come out of there and not be taxable, or that people will be allowed to carry it over to the other account, or anything like that? That money is going to be forced out, be taxed, and then farmers will be able to use it. Is this what you're...?

Mr. Calvin Knoss: Again, I guess it's one of the details that's being discussed. But one of the changes was that both funds be drawn out equally over the five-year period, so that the government dollars come out over five years, rather than all of them being drawn out first.

Mr. David Anderson: Is the first five-year withdrawal period part of old NISA and written into the regulations, or was it introduced to shut it down?

Mr. Calvin Knoss: It was part of the regulations from the beginning.

My understanding is that there are two options. If a producer chooses to no longer participate in NISA, whether from retirement or from closing their business, they have the option of closing out over five years. Also, the written regulation for a wind-down of NISA requires that it be done over a five-year period.

I don't think the NISA was ever established to be a program forever.

Mr. David Anderson: Thank you, Mr. Chair.

The Chair: We'll move to Mr. Duplain for five minutes.

[Translation]

Mr. Claude Duplain : In fact, I have just one question. I am extremely interested in program accessibility and the eligibility of young families in terms of these programs. You mentioned this, and I would like you to expand on this.

In his presentation, the minister told us that, before, under the old program, many farms were ineligible. Now, the program will be accessible to many farms, and you are talking about making it even more accessible. I would like you to tell us what you want to see. I am very interested in seeing small farms have access to this assistance program. This is very important to me.

Mr. Marcel Hacault : That is one of the reasons why I thought of the 10%. I remember the situation I was in 20 years ago, and I wondered what would have prevented me from taking part in this program. When people borrow all the funds they need to start a business and when they struggle for the first few years to make ends meet, it is impossible to set aside the $20,000 needed to take part. Maybe it is $26,000, I cannot remember the exact figure. Back then, I never would have been able to contribute the $26,000 needed for risk management under the new NISA.

So, I was wondering why a percentage could not be established. And if the bank is assured that this is a sound program and the money will be there when it is needed, it should not have a problem lending the money to put in the account when needed. I think that this is a positive point about the new program. If the amount of money required and which the producer will not be able to access can be kept as low as possible, this will be a positive change over the old program.

Mr. Claude Duplain : This is where you got your idea about credit, instead of putting cash into the program?

Mr. Marcel Hacault : Yes, to tell the truth, the idea came to me when I was washing in the barn.

[English]

Mr. Dickson Gould: I think there are also a couple of other areas that could be looked at. You could take a look at a lot of the provincial programs, such as the MACC program in Manitoba, and at the FCC program federally. An initial part of FCC was to allow people to get going in agriculture. If there are opportunities through these programs to assist people to get into the industry, they would also be good vehicles.

Â (1245)

The Chair: Mr. Caldwell.

Mr. Jim Caldwell: Mr. Duplain, I think if you had looked at the way the concept is being set up, the program only requests that a portion be put up the first year, rather than the full amount. For example, for $100,000 in coverage, they are only asking you to put up a portion of $24,000 or $26,000, with the promise that you will contribute in future years. I think this would make it a little easier for a younger person to get into it.

Under the NISA program, to get $100,000 coverage, you would somehow have to get $50,000 of your own money in it, versus $14,000.

The Chair: That's right.

Mr. Duplain, are you finished?

[Translation]

Mr. Claude Duplain : Do I have time to ask one more quick question?

[English]

The Chair: You have time.

[Translation]

Mr. Claude Duplain : When you go to set your contribution margin, some criteria will be eligible and others will not. Some questions were asked, for example, about tractor repairs or things like that. Were you asked and did you answer these questions about what the eligibility and ineligibility criteria should be?

Mr. Marcel Hacault : Yes, but I do not have the answer. That is why we talked to Reinnie, to find out the impacts. I was asked those questions, but I did not answer. I am waiting for experts to make some recommendations. But I cannot make any myself right now.

[English]

The Chair: Mr. Caldwell.

Mr. Jim Caldwell: I'd like to make a comment before Mr. Hilstrom makes a comment, to get it on the record. I've been around this organization quite a while, as have Stan and some of the others. Safety nets are a real problem for the Canadian Cattlemen's Association. We have to show leadership. If you ask the members themselves, most would say they don't need any help at all. But we also know it is a fact of life that if we put a program out there they're going to sign up.

The Canadian Cattlemen's Association was one of the associations involved in setting up NISA. We were all in favour of it when it was set up. Unfortunately, when it came time to implement it, half the provinces said they didn't want to be in NISA.

We have a concern with this program and its concept. If you ask our board they will say don't go for any program that's the slightest bit yellow. It has to be green as grass. Well, I don't know if you're ever going to get that as green as under the WTO, let alone what the Americans might do to you. But we're in this dilemma now. Last year 500,000 head of our feeder cattle went to the States; 70% of our production is being exported.

We are terrified of any movement that might upset our trade. We seem to be tentative about what we want to do. As Calvin has pointed out, the new plan isn't perfect. I think it goes further, but we would like it to be ratcheted back even more. This is what we're trying to say. We're saying April 1--let's get the concept in the mix. Let's get it going. That's where we are.

On Howard's comments about foot-and-mouth disease, if the prices go down there hasn't been a government in history that hasn't bailed the farmers out. That's going to happen. Europe found that out. They tried to do it on their own and couldn't. I just wanted to get that on the record because this is not a comfortable situation for us to try to do. Don't blame the messengers.

The Chair: I appreciate you putting that on the record. We have also been given assurance that this program is green beyond 70%. We're still trying to make an absolute determination on that, but so far we believe we are. If that's true, we've allayed some of those fears. We understand your concerns.

Mr. Hilstrom.

Mr. Howard Hilstrom: Thanks a lot, Jim. Those were excellent comments. That brings me once again to the idea of paying farmers and ranchers to sow down grassland and forage crops and then use those for their production. That's subsidized production of livestock and I don't think it's green. I would really question it.

If the Canadian public has some environmental issue and they feel that marginal land.... Of course, you always point to Saskatchewan, and that burns me up too, because I'm from Saskatchewan. It should be a Canadian policy to take that land and maybe not transfer ownership, but pay to have it totally set aside without production. That to me would be green. It would accomplish an environmental plan. But anyway, you aren't here to listen to what I have to say.

I'm going to need a little help here. Tonight I'm speaking to a bunch of farmers here in Ontario and they're going to ask me about this on-farm environmental plan that is part of the APF. Rose-Marie Ur quite astutely recognized that there has been a fair amount of consultation. I don't know if you exactly used the words, but how much listening has gone on by the department and the minister?

So there has been a lot of consultation, but who will pay the costs--and I'm asking both groups--for the on-farm environmental plan? Will it be the farmer, the government, or both? That's the first question.

What specifically will the on-farm environmental plan entail? What will a producer have to do specifically?

Those are the two questions. We can start with the hog producers on the environmental plan for the individual farms.

Â (1250)

Mr. Marcel Hacault: On the environmental plan in Manitoba, it seems we are asked every week to go to another meeting about an agro-environmental scan or an environmental farm plan. My fear is that we're turning farmers into paper pushers. If we were truly concerned about the environment, we would have programs in place that would help identify and actually help mitigate some of the risks related to these environmental issues.

Maybe I'm being presumptuous, but I don't see this coming from the federal level.

Mr. Howard Hilstrom: The minister was here the other day. He had flip charts and he knew his subject pretty well. He had figures from all over the place. He must have told you, from the federal aspect of the APF, what specifically a farmer or hog producer will have to do, not from the provincial end but the federal. I would like to know the specifics of what you were told.

Mr. Marcel Hacault: As far as I'm aware, I haven't seen anything yet. They're still in the listening stage.

Mr. Howard Hilstrom: What about the cattlemen?

Mr. Dickson Gould: I have a couple of comments. We haven't seen the details specifically from an industry perspective. There are a couple of key things we need to remember on the environmental plan. Every province is also developing its own environmental plan. One of the recommendations should be not to have duplication. Let's make sure the provincial and the federal plans are unified.

Then also, let's make sure this whole program is driven by the agricultural community, because if it's not going to be driven by the agricultural community, we'll be going down different paths.

Mr. Howard Hilstrom: Once a province has signed on, the federal government will be able to dictate to it, I think.

Do you want to answer that for the cattlemen, Stan?

Mr. Stan Eby: Yes.

Personally, I have no problem with an environmental farm plan because it is a risk analysis of your operation. As far as where they want to take if from there is concerned, the capital program to address some of those risks you've identified, there seems to be a lot of concern across the country as to whether you need an engineer to do it or whether you and I could sit down and do it.

In our province, Ontario, we do it ourselves in a workshop setting. My workbook is actually in Saskatchewan right now with the president of the Stock Growers Association so that he can see what is reasonable on things. In my own municipality, we're even trying to get the urban people to do their portion of this to address water quality issues.

I don't see this as a threat. I think it has to be sold, as you mentioned, from a producer's standpoint. I know the minister used the term “environmental scan”. I'm not aware of the details of it. Our industry is not afraid of it.

Â (1255)

Mr. Howard Hilstrom: No, I'm not afraid of it. In fact, I spend a lot of time on my ranch worrying about environmental issues. They're tremendously important.

But before I sign onto a program, I need to know the details of that program. And that's what we're getting from a lot of the farm groups. All they want to know are the details and they want to be able to negotiate some of those details.

There's so much missing out of this APF that we have to put a report together to recommend to the minister this one-year delay, so we can have all these questions answered. This is being pushed, to a certain extent, by all members of this committee. We're trying to establish the details.

Thank you.

The Chair: Thank you, Mr. Hilstrom.

You may quickly respond, if you wish to. We want to conclude. Are there any other concluding questions from anyone else? Are there any concluding comments?

Mr. Eby.

Mr. Stan Eby: From the Canadian Cattlemen's Association, we certainly appreciate the time we've had here to visit with you and all the concerns we've had a chance to express. Let's bear in mind that nothing is perfect at day one. As I mentioned earlier, we have faith that this thing is coming into proper focus. The concerns you voiced--you, Howard, in particular--are well-founded. I don't discredit them.

We feel we have to move on to meet some type of a deadline. We've been aware of this for a year and a half, and here we are, near the end, scrapping over some details. I think it's time to move on.

Thank you.

The Chair: Is there anyone else?

Mr. Gould.

Mr. Dickson Gould: Once again, I'd like to say that I appreciate the opportunity to speak. One thing we didn't get a chance to have much dialogue on is the risk management program, similar to crop insurance, private sector risk management programs. The one thing we have to make sure of is that we don't discourage the use of this, because if we do, take a look at a situation like the drought in western Canada; that would have drained NISA for this year.

The Chair: Does anyone else want to comment quickly?

If not, we will conclude the meeting.

Thank you, gentlemen, for coming on very short notice and for bringing to the table this morning these diverse views. Agriculture is a very diverse industry. We understand that. We're attempting to get it right. It may take a little longer, but we do want to get it right.

Thank you again.

I want to let the committee know that we will be meeting on Thursday to continue our studies on APF. You will note that the Union of Agricultural Producers in Quebec will be with us, as well as the Ontario Corn Producers' Association and the Western Barley Growers Association.

I've circulated to the table a letter that will be going to the Honourable Sheila Copps. We can't deal with it today; I'm simply circulating it for the 48-hour notice period, which will allow us to deal with it on Thursday. So those are the two issues.

Thank you again for your time and we'll see you on Thursday. The meeting is adjourned.