MINORITY REPORT OF
THE PROGRESSIVE CONSERVATIVE MEMBERS OF
THE HOUSE OF COMMONS
STANDING COMMITTEE ON AGRICULTURE

ON

THE FARM INCOME CRISIS

1. With respect to the report of the Standing Committee on Agriculture, the Progressive Conservative Party of Canada acknowledges and appreciates the hard work that has been done by the many producer associations in their briefs on the farm income crisis. However, we wish to express disappointment that the Committee has not seen fit to offer the government detailed solutions and recommendations to deal with the problem. In addition, the government did not consult many provincial partners and industry stakeholders about the farm income proposals that the Minister of Agriculture has presented to Cabinet to date.

2. As well, we are disappointed that the government continues to stall on announcing immediate assistance to farmers who are in desperate situations. The Minister had access to departmental information on the farm income situation for over a year. The Minister has the resources, yet the Government of Canada has chosen to do nothing. According to Statistics Canada, net farm income dropped 55% nationally between 1996-1997. It is projected to drop a further 35% from 1997-1998. Next year is only expected to be worse. This industry is expected to have the first negative income figure since the Great Depression.

3. Bankruptcies in agriculture and related service industries have totaled 1,053 since 1995 for total accumulated liabilities of $227.5 million. The government has had over two years to develop a strengthened safety net program but has waited until this crisis became a full-blown one.

4. In January 1991, the Progressive Conservative government introduced both GRIP (Gross Revenue Insurance Program) and NISA (Net Income Stabilization Account) which replaced ad hoc programs and put in place assistance for farmers in all regions. They were designed to compliment each other. NISA was meant to smooth out year-to-year fluctuations in overall farm income while GRIP was designed to address the problems of large foreign subsidies and trade wars in the grain sector. In 1995, the Liberal government abolished GRIP but did not replace it with anything national in scope. The farm income crisis would not have escalated to the level that it has if the government of the day had replaced GRIP with a long-term support program.

5. It is critical that the government begin immediate work toward resolving the long-standing problems of agricultural subsidies implemented by our trading partners. The European Union has provided significant support for its grain farmers through export subsidies. The EU is providing direct support for grains at $175 per acre of wheat grown and is also supporting the floor price for grain. The United States has recently announced an additional $6 billion in support, bringing the U.S. government contribution to $14.5 billion U.S. for 1998 alone. Canada ranks second last in the Organization for Economic Co-operation and Development (OECD) in our total share of producer subsidy equivalent. Canada's Producer Subsidy Equivalent (PSE) share is 2%, the United States is 16% and the European Union is 49%. Only Australia, at 1%, is less than Canada. Witnesses have told us that there was no need for the federal government to eliminate assistance programs as quickly as has been done.

6. It is essential that immediate assistance go out to farmers. The Progressive Conservative Party, therefore, recommends the following:

Recommendation 1:

The PC Party of Canada is calling for an emergency assistance package for Canadian farmers that would bring their income up to 70% of their average income over the past five years. This program should be financed by the federal government (60%) and the provincial governments (40%). The program should be based on farmer's net income, using the producer's records for the year, so interim assistance can go out immediately and final verification can be done through the income tax system.

Recommendation 2

The PC Party of Canada proposes that the federal government draw upon the knowledge and experience of the safety net programs that were put in place by the previous Progressive Conservative government. These programs include: Gross Revenue Insurance Plan (GRIP), and Net Income Stabilization Plan (NISA). GRIP can be redefined to ensure that premiums are sufficient to cover drawdowns without being excessively high so that there is no take-up. It can be refined to ensure that administrative costs are not excessive. The program can be re-tooled to cover most agricultural products, with the exception of supply management, to ensure that meat producers and others are also covered and that the risk is spread across a number of agricultural sectors. Changes to NISA should also be considered to make the program more accessible for young and new farmers. The government should look at the level and nature of the program caps, which limits the ability of some producers to fully participate in the program and the question of the adequacy of NISA for new entrants in the sector.

Recommendation 3

The Progressive Conservative Party calls upon the government to begin immediate consultations with industry stakeholders to develop a comprehensive strategy to ensure that Canada's interest in global agriculture trade are protected in upcoming World Trading Organization talks. The government must continue to adopt the principles of the previous Progressive Conservative government in the pursuit of free trade in the agriculture sector. The government must push foreign governments in further reductions of export subsides on agriculture products and the elimination of tariff and non-tariff barriers.

Recommendation 4

The Progressive Conservative Party of Canada calls on the government to use food aid as a means to move those commodities hardest hit by the farm income crisis through the system and provide much needed cash flow to farmers of those commodities.