AGRI Committee Report

DISSENTING OPINION OF THE PROGRESSIVE CONSERVATIVE

1. With respect to the report of the Standing Committee on Agriculture, the Progressive Conservative Party of Canada acknowledges and appreciates the hard work and revealing personal testimony of the 150-plus individual producers and interested parties during the series of public meetings in 9 Prairie towns and rural communities. The terms of reference provided that the Committee would study and report back to the House of Commons with recommendations on "the effectiveness of long-term safety nets and other national initiatives to provide stability and environment necessary for stable growth in the agricultural industry".

2. However, we wish to express disappointment that the Committee chose to delay hearings until December and abbreviate the time frame allotted, in spite of recommendations by Members of the Opposition, preventing a more comprehensive study of a long-term national vision for agriculture. In addition, the Committee did not see fit to report to the federal government with specific and detailed solutions and recommendations prior to the federal/provincial/territorial agriculture ministers' meetings on safety nets to offer advice on how to sustain the future viability of the agriculture industry.

3. As well, we are disappointed that after two committee reports and well into the second term of their administration, the federal government has failed to provide the leadership, long-term vision and workable solutions the agriculture industry justly deserves. To date, the federal government has not adequately addressed important and pressing issues of, including but not limited to, increasing subsidized competition, rising input costs, natural and economic disasters and an inadequate long-term national safety net program. It is not difficult to understand that with all of these factors working against the Canadian farmer, as one witness pointed out, "even if one or both members of the family work off the farm they still have difficulty keeping the farm afloat".

4. The Minister of Agriculture also failed to pre-empt the problems associated with the Agriculture Income Disaster Assistance (AIDA) program by neglecting to take the advice of the National Safety Nets Advisory Committee, industry stakeholders and primary producers. The problems that plagued the AIDA program relating to the reference margin period, negative margin coverage, NISA linkage, family labour and the delivery and administration of assistance payments could have been rectified, at the onset, had the Minister and his department taken the necessary precautions to address these issues. Furthermore, the AIDA program as it was designed served only as an ad hoc program that had, at best, tepid support from the provinces. What the provinces and industry have been requesting is a long-term safety net program that can withstand the test of time, like the Net Income Stabilization Account (NISA), not more ad hoc programs.

5. Although the PC Party of Canada supports the principle of the recommendations put forward in the Committee's Report, we feel that it does not adequately encompass some of the fundamental components needed in a national agricultural framework. An effective and progressive long-term vision for agriculture is needed in order to maintain a viable industry well into the 21st century. The Progressive Conservative Party of Canada, therefore, recommends the following:

Recommendation 1:

The PC Party of Canada supports a safety net funding formula based on farm cash receipts as long as the federal government develops a comprehensive national disaster program that would take into account regional differences, climatic risks or economic downturns, addressing any shortfall due to the change in the funding formula. This program should not penalize farmers who practice prudent risk management and should be made available to all commodities, except supply management. The design of the new program should draw upon the knowledge and successes of the previous GRIP (Gross Revenue Insurance Program) and the current MRI (Market Revenue Insurance) program in Ontario and Alberta's FIDP (Farm Income Disaster Program). The new program could be cited as the Federal Agriculture Stabilization Transfer (FAST).

Recommendation 2:

The PC Party of Canada recommends that funding for the new national disaster program should be provided from an account outside the current safety net package of NISA, Crop Insurance and companion programs. Furthermore, any expenditures left over from AIDA after the program has been exhausted should not be returned to the government's Consolidated Revenue Fund but set aside as "seed money" for the creation of the new national disaster program.

Federal expenditures for agriculture have declined dramatically since 1993. According to Agriculture and Agri-Food Canada's Policy Branch, over $2 billion (in 1993 dollars) has been eliminated from the federal government's budget for agricultural support, illustrating over 55% reduction under the Liberal government's administration. Increased funding is required in order to develop a comprehensive and effective disaster program that is able to bridge the gaps in the current safety net framework. There is a need for the federal government to begin looking at the extenuating circumstances of a natural disaster and consider compensation for loss of value of inventory, property damage, restoration or maintenance of productive land condition and business employment support. Even the federal government's departmental trade experts have stated publicly that "Canada has around $2 billion in wiggle room" under our WTO (World Trade Organization) domestic support commitments to accommodate further farm aid payments.

According to the Economic and Policy Analysis Directorate at Agriculture Canada, the Agriculture and Agri-food portfolio accounts for 77% of all industry cost recovery fees. Canadian farmers pay $92 million or 67% of the $137 million federal cost recovery bill charged to the food sector. The user fee burden on the primary producer is significant given the compounding effects of natural disasters and the commodity crisis.

Recommendation 3:

The PC Party of Canada requests that the federal government extends the moratorium on new or increased regulatory fees for the agriculture sector until:

a) Departments minimize costs;

b) Fees are based on more accurate accounting of costs and services;

c) Full economic cost of fees are considered in the overall cost/benefit of the regulatory system;

d) There are proper redress mechanisms for stakeholders.

The 1996 Carter & Lyons' economic study on single-desk selling pointed out the benefits to the primary producer that occurred following the removal of oats in 1989 and the short-lived continental barley market in 1993. For example, after oats were removed from the CWB, they state "Canadian farm gate prices for oats have risen relative to world levels, and marketing costs have fallen by about one-third". Providing such marketing opportunities outside of the CWB can assist the primary producer in establishing a more sound financial footing. Some witnesses at the Standing Committee hearings have gone so far as to suggest that Canada should put the CWB's monopoly trading power on the negotiating table in exchange for a reduction of export subsidies at the WTO.

Recommendation 4:

The PC Party of Canada believes that Western Canadian grain farmers should be given the freedom and opportunity to market their product outside the Canadian Wheat Board (CWB). The CWB should be designed as a voluntary marking board in order to provide producers with an alternative marketing venue to maximize their returns and improve their financial position. Furthermore, we believe that the CWB should remove impediments to the value-added process and new generation co-ops on the Prairies.

Support for establishing a SDRM program has come not only from the horticulture industry but was a recommendation put forward to the federal Agriculture Minister by the National Safety Nets Advisory Committee in its report on June 15th, 1998. An example of the success of an SDRM initiative was the 1996 pilot project in Ontario which had 972 producers participate or about 50.2% of eligible NISA participants. The program costs were $64.81 per participant as compared to an average crop insurance administrative cost of $264 per contract.

Recommendation 5:

The PC Party of Canada recommends that Self-Directed Risk Management (SDRM) should become a national program made available to commodities which are currently not insurable or not adequately served by Crop Insurance programs. To be eligible for SDRM, producers must not have enrolled in crop insurance for that crop year.

The federal government collects approximately $4.4 billion annually in transportation related fuel taxes. Currently, Canadian farmers pay the federal government 4 cents per litre for diesel and 10 cents for gasoline in taxes. In addition to other measures needed to reduce the overall tax burden for all Canadians, eliminating taxes on farm use fuel would specifically target agriculture producers in an effort to help alleviate the devastating impacts of the farm income crisis. According to estimates from Agriculture Canada, the cost of eliminating all federal taxes on farm use fuel would be $175 million.

Recommendation 6:

The PC Party of Canada recommends that the federal government eliminate federal taxes on diesel fuel and gasoline for agriculture producers used directly for fieldwork.