AGRI Committee Report

DISSENTING OPINION OF THE OFFICIAL OPPOSITION

Introduction

Since October 21, 1999, the House of Commons Standing Committee on Agriculture and Agri-Food has examined issues surrounding the farm income crisis facing farmers. The Committee has held hearings into the effectiveness of long-term safety nets and other national initiatives to provide the stability and environment necessary for stable growth in the agricultural industry.

The hearings are necessary because the ongoing farm income crisis has not abated, and because the government's Agriculture Income Disaster Assistance (AIDA) program has failed to deliver the necessary emergency compensation to farmers. At the time of this report, less than 25% of the $1.7 billion promised by the federal government has been delivered to producers.

The situation, especially in Western Canada, is so dire that 40% of producers have indicated that they may be leaving the farm in the next year. Immediate government action is necessary to ensure that this does not occur.

Government action should begin by adopting the recommendations included in the Official Opposition's dissenting opinion on farm income crisis, tabled in the House of Commons on December 10, 1998. The Official Opposition recommendations extend beyond the need for immediate emergency funding and, if implemented, would significantly address the root causes of the current farm income crisis.

The current recommendations of the Official Opposition are based, in large part, upon input received from producers. The Committee report does not adequately reflect the views of farmers. While the Committee did travel to Western Canada and held a total of nine meetings, the hearings held by the Committee were inadequate. The hearings have not heard from enough farmers, the Committee travel in the West was not extensive enough, and the hearings ignored the needs of farmers in other parts of the country. A glaring example of the deficiencies in the Committee report is the lack of any hearings or discussion on the rift that has developed between provinces that want to distribute safety net funding based on risk and those provinces that want provincial safety net funding based on farm cash receipts.

The Official Opposition proposed three amendments to the Committee travel plans that would have corrected these deficiencies. We proposed that the time frame for Committee travel be extended through to the end of January, the Committee travel be extended into the cash crop regions of Ontario, and the Committee hear directly from primary producers when travelling. We are disturbed that the majority of the Committee rejected these amendments.

Because of the inadequacies of the Committee hearings, the Official Opposition has undertaken independent hearings, Action for Struggling Agriculture Producers (ASAP). In total, we intend on holding 60 town hall meetings, and we intend on submitting the report of these hearings to the Standing Committee and to the House of Commons.

The recommendations of the Official Opposition are all supported by presentations to the Standing Committee and would significantly improve farm incomes if implemented.

1. The $1.7 billion promised to farmers by the federal government must be immediately delivered to farmers.

On December 10, 1998, the Minister of Agriculture and Agri-Food announced that farmers would have a "bankable program by Christmas". This pledge has not been fulfilled.

The Premiers of Manitoba and Saskatchewan are on record that their farmers alone require $1.3 billion. At the time of writing this report less than 25% of the $1.7 billion promised by the federal government has been delivered to farmers. In Manitoba and Saskatchewan, 62% of farmers that have applied for emergency compensation have been denied.

The Agriculture Income Disaster Assistance (AIDA) program has completely failed to address the farm income crisis. This sentiment was put succinctly by the Chairman of the Standing Committee on Agriculture and Agri-Food who stated that the AIDA program was "an absolute failure".

The failure of the AIDA program, and the refusal of the government to address the program's shortcomings have alienated farmers, as demonstrated by Mrs. Susan Van de Velde who stated in Portage la Prairie, Manitoba, " ... the present government is totally out of touch with the reality of the situation that farmers are facing in Canada ...".

The Official Opposition is continuing to demand that the government immediately deliver the emergency assistance that was promised over a year ago.

2. Farm Safety Nets must be reformed to ensure long-term stable protection for farmers and eliminate the need for ad hoc programs in the future.

The Official Opposition recommends that the government vigorously use federal safety net programs to support Canadian food producers who are struggling against conditions outside their control, such as foreign subsidies, trade distorting influences, market cycles and natural hazards.

a) Income Disaster Program

The farm safety net package must include an effective income disaster program that protects producers against market failure caused by foreign subsidies.

At the Committee hearings in Airdrie, Alberta, the Alberta Soft White Wheat Producers Commission put forward a proposal that would incorporate an income disaster account into the Net Income Stabilization Account (NISA) program. This proposal has merit and should be examined further by the National Safety Net Advisory Council, the Standing Committee on Agriculture on Agri-Food and the Minister of Agriculture and Agri-Food.

b) Crop Insurance Programs

Crop insurance programs must have affordable premiums, must provide coverage for unseeded acreage, and provide adequate levels of coverage for crop losses.

Many producers echoed the sentiment of Mr. Ray Toews who stated during the hearings in Portage la Prairie that "crop insurance programs do not allow you to increase your coverage level as your risk increases".

An improved crop insurance program, including adequate coverage for natural disasters, would ensure that the severe income losses caused by flooding in south-western Manitoba and south-eastern Saskatchewan in the spring of 1999 would not recur.

c) Income Insurance Programs

The Net Income Stabilization Account (NISA) is not readily accessible to farmers in times of need. This fact was articulated by Mr. Stewart Sander of Dauphin, Manitoba, when he stated "... it's hard to trigger your money out of it [NISA account]. I haven't been able to trigger mine for a number of years ...". The NISA program must be amended to correct this flaw.

In addition, the NISA program has not been in existence long enough for farmers to build their accounts to adequate levels. Mr. Duane Zimmer noted in Dauphin, Manitoba, that "NISA is a good program that is still in its infancy. It will take many good years in agriculture before it can stabilize our industry".

Some farmers have complained that the NISA program discriminates against Prairie grain farmers because freight and elevation charges are not considered eligible expenses. It is the recommendation of the Official Opposition that NISA be adjusted to allow farmers to use freight and elevation as eligible NISA expenses.

Again, the proposal put before the Committee by the Alberta Soft White Wheat Producers Commission could address some of the concerns regarding NISA.

3. The Official Opposition recommends that the federal government immediately move to implement general tax reductions, lower user fees charged by the Department of Agriculture and Agri-Food, and reduce federal taxes charged on the manufacture, transportation, and sale of agricultural inputs, such as fertilizer and fuel.

This recommendation was included in the Official Opposition's December 1998 dissenting opinion on the Farm Income Crisis. However, it was one of the recommendations that the government chose to ignore.

Almost every farmer who has testified before the Standing Committee has stated that high input costs are killing their farms. The federal government is a significant contributor to these rising costs.

The Canadian Fertilizer Institute estimates that farmers pay approximately $300 million in hidden taxes when they purchase fertilizer. The federal government also takes taxes from other farm inputs such as fuel, pesticides, and transportation services. This tax burden must be reduced.

The taxes on farm inputs are over and above the $2.75 billion that farmers paid in income taxes from 1993 through 1997. Like all Canadians, farmers would benefit from immediate general reductions in tax levels.

The impact of government taxation was eloquently demonstrated by Mr. Boris Michaleski, of Dauphin, Manitoba, who showed that the tax grab on a bottle of beer is 190 times the original selling price of the barley.

As has been noted by many presenters, tax relief must not only come from the federal government. The Official Opposition encourages provincial governments to consider lowering farmers' tax burden, especially in the area of property/land-based taxes.

The federal Minister of Agriculture and Agri-Food also continues to charge approximately $137 million in user fees. In his November 1999 report, the Auditor General of Canada criticized the Minister of Agriculture and Agri-Food because his fees are not related to the cost of the services. In other words, these fees are just another tax on farmers.

The Official Opposition continues to call for the Minister of Agriculture and Agri-Food to reduce these costs immediately. The Ministry of Agriculture and Agri-Food must follow the principle of cost recovery and not use these fees to generate revenue. They also must clearly identify all users and beneficiaries of a service.

4. The Official Opposition recommends that the government immediately move to give Western Canadian farmers the freedom to pursue marketing opportunities independent of the Canadian Wheat Board. This would include (but not be limited to) marketing directly to farmer-owned new generation co-operatives.

More and more farmers in Western Canada are calling for changes to the Canadian Wheat Board's (CWB) monopoly powers. Reports of a recent survey of western farmers indicate that only 33% of producers support the CWB in its current form.

The call for changes have increased because of the CWB's ongoing refusal to grant new generation co-operatives an exemption from its monopolistic pricing policies, and thereby encourage the development of farmer driven value-added processing.

One proposal, put forward by the Prairie Pasta Producers, would put an extra $3 per bushel, or $15 million annually, into the pockets of durum producers. Because of the CWB's opposition, it is becoming doubtful that this proposal will proceed. It is unacceptable for the CWB to use its legislative powers to block farmers who are trying to stabilize their incomes.

This position is supported by many, including Mr. Sinclair Harrison, President of the Saskatchewan Association of Rural Municipalities, who, when testifying before the Standing Committee stated, "They're [the CWB] going to have to accommodate value-adding".

5. The Official Opposition recommends that the federal government immediately lower farmers' costs by enabling, through legislative changes, a competitive, commercially accountable grain handling and transportation system.

The current grain handling and transportation system is rigid, unaccountable, and does not efficiently serve the needs of farmers, grain companies or railways.

Mr. Curtis Simms told the Committee in Portage la Prairie, Manitoba, that the current system has "suppressed creativity, ingenuity, performance, accountability".

The Prairie Farm Commodity Coalition estimates that reforms to the current grain handling and transportation system could save farmers over $300 million annually. Put another way, this would result in a cost reduction of over $15,000 per year for an average farm.

6. The Official Opposition calls on the federal government to immediately begin, in partnership with the United States and Cairns Group of countries, to secure bilateral negotiations with France, Japan, and Korea with the aim of reducing harmful export and domestic subsidies.

Canadian farmers, who depend upon exports, are being forced into bankruptcy because foreign subsidies are driving down the world price for their commodities. For example, European wheat farmers receive 56% of their income from government, US wheat farmers receive 38% of their income from government, while Canadian wheat farmers receive only 9% of their income from government. Canadian beef farmers, who only receive 6% of their income from government, are forced to compete against European beef producers who receive 62% of their income from government.

The impact of foreign subsidies is also crippling value-added industries that have been a significant source of income for farm families. The Standing Committee heard from the Canadian Dehydrators Association how their export markets have been destroyed because of subsidies from the European Union. Canada must aggressively pursue a negotiated end to market interference from our trading partners.

Canada must negotiate a reduction in foreign subsidies to reduce this imbalance. While aggressive negotiations at the WTO are necessary, it is clear that, given the recent failure of the initial WTO talks in Seattle, Canada must pursue other, bilateral, trade negotiations.

The collective buying power of the free trading nations should be used to push the protectionist countries back to the table. For example, from January 1999 to the beginning of September, Canada imported $2.5 billion more from France than they bought from us. This trade surplus is leverage that should be combined with the buying power of our partners and used in negotiations.

For months, the Official Opposition has been calling on the Prime Minister to become personally involved, and lead bilateral trade missions aimed at lowering agricultural subsidies. He has refused. The collapse of the talks in Seattle makes his personal involvement more important today.

7. The Official Opposition recommends that the federal government, in cooperation with the provincial governments, ensure that adequate counselling/support programs are available for farm families suffering through the farm crisis.

News reports have documented the severe stress level facing farm families. Bishop Malcolm Harding, of the Anglican Diocese of Brandon, stated, "I know of suicides, I've heard of threats of suicide, it's very real ...".

The Official Opposition agrees with the Bishop's conclusion that "I firmly believe we must be involved in this crisis, especially on the human and social level, as this in my opinion is not only an economic crisis, but a grave issue of social concern".

8. The government must clearly define, especially for agriculture producers, the future direction for agriculture policy in Canada. As part of this, the government, in conjunction with the provinces, and the Farm Safety Net Committee, must develop a definition of "farmer" to ensure that agriculture policy and government funding are clearly focused.