AGRI Committee Report

PREAMBLE

From December 6 to 10, 1999, the House of Commons Standing Committee on Agriculture and Agri-Food held public hearings in nine cities and rural Prairie communities, pursuant to its order of reference to study "the effectiveness of long-term safety nets and other national initiatives to provide the stability and the environment necessary for stable growth in the agricultural industry." The Committee listened to more than 150 farmers and other members of these communities who discussed the farm income safety net, particularly the Agricultural Income Disaster Assistance (AIDA) program, and heard as they spoke of the state of mind that prevails among farmers and rural communities on the Prairies. The first word, therefore, belongs to the farmers.

What the Committee heard...

...About AIDA:

We are also angry at the bureaucratic bungling of the AIDA program. Susan Van de Velde, farmer (Evidence, Portage la Prairie, December 6, 1999, 9:05).

The thing is that the fellows who work for AIDA are improperly trained on these forms. I phoned and said "I want the price for feed barley," and they said "We don't have it." I said "What is Canadian western?" "I don't know". I said "Listen, that is feed barley." They are improperly trained. Gert Schwickart, farmer (Evidence, Dauphin, December 6, 1999, 15:10).

The problem of low grain prices did not happen overnight. We have been facing the problem of lower prices and rising costs for many years. In the past we had programs such as the western grain stabilization fund, the special grains program, and GRIP. The AIDA program just does not work properly, and everyone knows that fact. As a result, farmers are receiving very little money from this program. Walter Kolisnyk, farmer (Evidence, Dauphin, December 6, 1999, 15:05).

The reason the AIDA program doesn't work, the accountant says, is because the wrong people are getting it. The best thing to do is to get out of farming. If you had gotten out of farming two years ago, you'd collect $50,000 to $60,000 under this program. But for farmers who have had a steady decline and for about three years were in constant trouble, this program does not work, because you cannot make that 70% margin. Howard Paulson, farmer (Evidence, Airdrie, December 10, 1999, 10:15).

In the provinces where the income crisis is being felt the most-Saskatchewan and Manitoba-about 4 of every 5 applications that are made for assistance are not accepted. The program is designed as a safety net under the occasional severe income drop, and not the kinds of severe and lengthy price drops that we are experiencing now. George Groeneveld, Agricore Cooperative Ltd (Brief, Airdrie, December 10, 1999).

This brings me to NISA and AIDA. NISA is not a bad program if you have or can find the money to put into it. AIDA, on the other hand, is a nightmare not just for the farmers but also for the accountants. The cost of getting it done, redone, and redone again, only to find out you don't qualify, only frustrates producers and the accountants. Walter Finlay, farmer (Evidence, Brandon, December 7, 1999, 8:50).

...About farm assistance:

I saw a bumper sticker the other day that said that "If you don't want to support the farmers, stop eating." I think that says it all. Marvin Wiens, Vice-President Saskatchewan Wheat Pool (Evidence, Estevan, December 7, 1999, 17:45).

I think the overriding comment I would like to make, first of all, though, and I think all of the farmers in the room and in the area would echo this, is that actually they probably would rather not get anything from the AIDA program. They'd rather get fair value for their crop to begin with. Doug Stroh, partner, Meyers, Norris, Penny & Co. (Evidence, Brandon, December 7, 1999, 10:50).

...About farmers' state of mind:

[F]or the last 22 years the Canadian flag flew high and proudly off of my farm workshop near Hamton, Saskatchewan. This fall, after listening to all the broken promises from all levels of government, the Canadian Maple Leaf flag flies no longer in my yard. Ed Keyowski, farmer (Evidence, Estevan, December 7, 1999, 15:55).

Indeed, October 28 was a sad day. When I got home from my off-farm job that day, the first thing I did was take down the Canadian flag that has flown over our farm since before I can remember. I will never put it up again. Trevor Doty, farmer, quoted by the Honourable Dwain Lingenfelter, Deputy Premier, Minister of Agriculture and Food (Saskatchewan) (Evidence, Regina, December 8, 1999, 8:35).

I'm 23 years old and I'm trying to be a new farmer. I've got five years of university under my belt, two degrees in agriculture [...] Last week I was at a Meyers, Norris, Penny educational session on farming-how to tighten the grasp, how to make more money in farming. Here's a list of stuff I got from them of reasons not to farm. It's basically a bunch of charts and stuff that showed the lack of income in farming, the decline in farms, and the troubles farmers are going through. Kyle Cochrane, farmer (Evidence, Brandon, December 7, 1999, 11:45).

If you don't plan to listen to us, why did you plan these meetings? I want to see my dad more than two and a half hours on weekdays, and most of the time weekends. I want to see him more. Farm for a year so that you can see what it's like to farm in Canada. Are you going to help me in my future or are you going to leave me? You said you promised to help kids. I'm a kid, and I want farming to be better, now. Adam Luciuk, young child, (Evidence, Prince Albert, December 8, 1999, 16:15).

...About the safety net:

NISA in its present form is a program where the rich get richer and the poor get poorer. Based on eligible net sales, if you have had a bad year or years, it's hard to get any money into your program. Murray Downing, farmer (Evidence, Brandon, December 7, 1999, 8:40).

Most farmers and accountants think the NISA program is one of the better programs out there. Howard Paulson, farmer (Evidence, Airdrie, December 10, 1999, 9:55).

In our view, Canada's farm safety net should consist of three main components: crop insurance to deal with all types of production risks; the cash advance program to assist farmers with cashflow management; and NISA to provide income support, stabilization, and-as we will explain later-trade equalization payments. Properly structured and financed, these three programs would be adequate to meet the financial needs of Prairie farmers. Terry Youzwa, member of the executive committee, United Grain Growers (Evidence, Prince Albert, December 8, 1999, 17:10).

I feel that NISA is a very good program, but it still has a few faults. [...] the ability for a farmer to trigger a withdrawal from NISA has been too restrictive. Farmers should be able to withdraw funds when they need them, not necessarily based upon a current projection or the past year's actual income. Neil Wagstaff, farmer (Evidence, Airdrie, December 10, 1999, 10:45).

INTRODUCTION

Chief among the many points made by witnesses appearing before the Committee were two concerns: the genuine fear that the present farm income crisis might indeed signal the start of a serious social crisis in rural Canada; and the urgent need to develop a national agriculture policy that would address both farm production and rural development issues. According to evidence heard by the Committee, the vision underlying this policy must include a strategy to increase awareness and win support among urban dwellers for rural communities.

Seconding these concerns, on December 9, 1999, the Federation of Canadian Municipalities (FCM) urged the federal government "to take immediate action to resolve the farm income crisis, which is likely to result in the demise of many family farms, causing significant changes to production, marketing and delivery of life-essential agricultural products."

With the apparently increasing numbers of natural disasters in recent years, on the one hand, and the farm subsidy war between the United States and the European Union, on the other, markets for agricultural commodities and particularly for grains and oilseeds are experiencing ever-greater disruptions. Under these circumstances, the present farm income safety net with its three components-the Net Income Stabilization Account (NISA), crop insurance, and provincial companion programs, as well as a recent, temporary fourth component: the Agricultural Income Disaster Assistance program (AIDA program)-is not managing to provide adequate protection for many Western Canadian farmers. A number of witnesses stated that the sustainability of Canada's farm production capacity was at stake. In this report, the Committee makes recommendations aimed at quickly making the farm income safety net stronger and tailoring it better to the needs of Canada's farmers.

THE EXISTING FARM INCOME SAFETY NET

A. The present situation

In its December 1998 report on the farm income crisis, the Committee pointed out that, for the first time, a farm income crisis had seriously tested the strength of Canada's farm income safety net. The safety net, set up shortly after the grain price war of the late 1980s, includes the Net Income Stabilization Account, crop insurance, and provincial companion programs, and since December 1998 has included the AIDA program as well. During the Committee's December 1999 hearings on the Prairies, exactly one year after the publication of its 1998 report on the farm income crisis, it heard evidence confirming that the farm income safety net was too loosely knit.

In connection with the present farm income crisis, farmers told the Committee that the AIDA program had serious shortcomings and was not designed to address extended periods of low prices for agricultural commodities, particularly for grains and oilseeds. Witnesses were unanimous that Western Canadian grain farmers could not compete with highly subsidized farmers in the U.S. and the EU, and that the present farm income safety net did not cover the shortfalls Canadian farmers were experiencing. Grain prices in particular did not allow farmers to recover the costs of their inputs, while farmers in the U.S. and the EU received assistance that offset low prices. Western Canadian grain farmers had also endured successive years where natural disasters occurred-flooding in southern Manitoba and Saskatchewan, and drought in Alberta and northwestern Saskatchewan-that made their situation even more critical.

The extremely wet spring of 1999 in southwest Manitoba and southeast Saskatchewan was a good example of a situation that seriously affected farm production capacity and was not covered by the farm income safety net. Flooding in the spring of 1999 prevented farmers from seeding much land (witnesses spoke of over one million acres left unseeded in Manitoba) although they had already applied fertilizer and pesticides the previous fall. The ground did not dry out early enough, and farmers who seeded late had poor crops. Witnesses stated that crop insurance did not cover expenditures incurred and it did not apply to unseeded acreage. Farmers who were able to seed only part of their land were unable to benefit from the AIDA program, even though it was specifically set up to respond to these situations. Among farmers who were eligible for AIDA program payments, the Program covered only a small percentage of expenditures incurred. Farmers appearing before the Committee stated that this situation should have been covered by a program like the one set up for farmers affected by the Red River flooding in 1997, payments under the Disaster Financial Assistance Agreement (DFAA) enabled farmers to recover the costs of lost inputs. Information provided to the Committee indicated that the DFAA did not recognize the situation in the spring of 1999 as a natural disaster. The Committee therefore makes the following recommendation.

Recommendation 1

Your Committee recommends that the criteria used to determine whether a natural disaster exists be reviewed and clarified, so that all events considered natural disasters are treated with equal fairness and consistency.

Farmers appearing before the Committee gave further, structural reasons for the present farm income crisis, including the costs of transportation and inputs, but many considered the crisis to be primarily an issue of price distortions on international markets, aggravated by the unfavourable natural conditions of recent years. They called not only for a short-term solution that would put fast cash into farmers' pockets but also, and soon, for a long-term solution. According to evidence heard by the Committee, then, it is imperative to repair the present farm income safety net and make it a risk-management tool that can handle inevitable fluctuations in markets for agricultural commodities with equal effectiveness in both the short and long terms.

B. The Agriculture Income Disaster Assistance program (AIDA)

The AIDA program was a major topic of discussion at the Committee's hearings on the Prairies. When the AIDA program was announced in December 1998, its purpose was to provide prompt assistance "to address the extreme farm income difficulties experienced in 1998".¹ The Program, which at the time had $900 million available in federal funding over a two-year period-$600 million in 1998-99 and $300 million in 1999-2000-was aimed at farmers experiencing a precipitous drop in income.

Evidence heard by the Committee clearly indicated that, although the idea underlying the AIDA program was sound, the Program's overly complex and limiting design and criteria made it ill-suited to farmers' actual needs. Even the 1999 changes to the Program, including an additional $170 million over and above the initial $900 million, coverage of negative margins in 1998 and 1999, and the use of an olympic average in 1999,² seemed barely to meet farmers' expectations.

In addition to the Program's administrative complexity and apparent inconsistencies in reviewing AIDA applications, witnesses pointed out the following shortcomings: inadequate payments in the case of expanding farms; inequalities created by the fact that fiscal years differed from one farmer to the next; the problems of novice farmers, who operated on narrow margins; AIDA program inventory calculations using a single price, which failed to take into account market realities; and the linkages between AIDA program payments and NISA. Witnesses also said the AIDA program was a copy of Alberta's Farm Disaster Income Program (FDIP), which was better suited to the business cycles of livestock ranchers than grain and oilseed farmers. Some farmers also stated that the AIDA program budget should be increased and its coverage raised to 90% from the present level of 70%.

Some farmers stated that the AIDA program should simply be dismantled immediately; others felt that it could be fine-tuned and better adjusted to farmers' needs. Witnesses found it regrettable that the AIDA program, which was quickly granted over $1 billion in public funds, was not itself quicker to make payments to eligible farmers. As one witness appearing before the Committee in Brandon clearly put it, any farm assistance program should be based on the following four principles: simplicity, fairness, predictability, and consistency,³ basic principles that AIDA program designers seemed to have ignored.

The Committee believes that changing three specific aspects of the AIDA program on the basis of these four principles would give farmers much better access to the $1 billion still in the Program's coffers for the 1999 claim year.

Firstly, according to many witnesses, basing AIDA program inventory calculations on the accrual method of accounting was completely unrealistic. Using the same monetary value, at the beginning and end of the year, fails to reflect fluctuations in markets for agricultural commodities and tends to result in lower payments to eligible farmers. Moreover, the AIDA program operates on a calendar year basis; however, farmers usually operate on an individual production year basis. Thus there is a discrepancy between the information asked for on the AIDA application and the income situation of a farmer. The Committee therefore makes the following recommendation.

Recommendation 2

Your Committee recommends that the AIDA program inventory calculation formula be changed in order to take into consideration actual market values of inventories at the beginning and end of the year. Furthermore, the Committee recommends that a mechanism be developed whereby AIDA applications can be filed with respect to the production year.

Secondly, expanding the farm was often seen as a solution to shrinking margins and volumes. According to evidence heard by the Committee, the AIDA program adjustment formula applied to expanding farms was nothing more than a modified accrual adjustment of unpaid and prepaid inventories, with other adjustments made to the reference years used to calculate the margin. Thus, although a farm might be much larger than in previous years, inventories and accounts payable might not be much different than when the farm was smaller, since farmers who were expanding usually paid their bills and covered their expenditures. The AIDA program adjustment formula therefore failed to reflect these farms' expansion phase, since the overall margin remained essentially unchanged during expansion. Although these farmers' situation had changed, the AIDA program failed to take that fact into account and thus, to some extent, discriminated against farmers who expanded or diversified their operations. A solution to this discriminatory approach would be to include in the AIDA program formula a mechanism for pro-rating margin years so that they would correspond to the current year's production unit. The Committee therefore makes the following recommendation.

Recommendation 3

Your Committee recommends that the AIDA program formula be changed so that the margin years used to calculate payments reflect expanding farm sizes and diversified farm operations.

Thirdly, a number of witnesses noted a lack of compatibility between the AIDA program and NISA; in particular, they stated that the linkages between them, under which an amount equal to one year's government contribution to NISA participants (3% of eligible sales) is deducted from federal payments to all AIDA program participants, should not exist. Witnesses repeatedly stressed that there should be greater consistency between these two programs so that farmers might use NISA as best meet their needs and still take maximum advantage of the AIDA program. The Committee therefore makes the following recommendation.

Recommendation 4

Your Committee recommends that the present link between the AIDA program and NISA be changed so that farmers may obtain maximum benefits from the specific features of both these farm income safety net programs.

According to evidence heard by the Committee, these three recommendations would put the AIDA program in a good position to provide effective support to Western Canadian farmers, on condition that the recommendations are implemented promptly. The Committee therefore urges the federal government to act immediately.

SHORT-TERM NEEDS FOR FARM INCOME SUPPORT

Although witnesses were unanimous that a long-term farm income safety net is essential if Canada's agricultural industry is to survive, the Committee also heard clear and consistent expressions of the immediate need for a short-tem injection of money, to go directly and promptly to farmers, independently of the present farm income safety net. The Saskatchewan Legislative Assembly and some witnesses, including the United Grain Growers (UGG), mentioned the possibility of a trade equalization payment program: under World Trade Organization (WTO) rules, Canada could increase its support to farmers, although retaliatory measures would have to be avoided by ensuring that the program was "green" under WTO rules, that is, that it does not distort production.

Interestingly, informal polls at the Committee's hearings indicated that most farmers favoured a universal non-targeted program over an AIDA-like program specifically targeting a certain category of farmers; it was often pointed out that, under non-targeted programs, farmers who were not in need paid back assistance indirectly through income taxes. That said, given the AIDA program's flawed design and slow start, the results of these informal polls were not surprising.

Western Canadian farmers and farm organizations appearing before the Committee suggested, in addition to changes and improvements to the AIDA program, the following two main solutions to the problem of meeting farmers' immediate cash flow needs.

• The first solution, proposed by many witnesses, was a program of payments based on seeded acreage, amounting to between $20 and $80 per acre, and paid directly to the persons farming the land. Supporters of this solution considered that it would be simple to set up, quick, and free of red tape. The Saskatchewan Association of Rural Municipalities (SARM) proposed that these acreage payments be made through its offices; other witnesses proposed that the Prairie Farm Rehabilitation Administration (PFRA) be made responsible for administration so that acreage payments could be made promptly. Although supporters of acreage payments told the Committee that they do not distort markets, certain conditions would still have to be met for such a program to qualify as "green" under WTO rules. According to witnesses who did not support this solution, acreage payments would involve many problems, including how to adjust payments to land productivity; how to deal with fallow, pasture, and unimproved land; discrimination against farmers who converted from grain growing to livestock ranching, or chose to farm small acreages intensively; and the possibility of some farmers expanding seeded acreage in order to obtain assistance, in response to which some witnesses proposed that eligible acreage be capped.
• The second proposed solution was to use NISA as a vehicle for a trade equalization payment program. Use of NISA for such a program would be based on eligible net sales. Farmers who had not yet participated in NISA could open an account and obtain this type of assistance.

As many witnesses, including UGG representatives, clearly pointed out,⁴ acreage payments, especially made directly to farmers, might indeed seem attractive in the present situation. However, the urgency of the situation must not obscure that solution's long-term impact and ramifications, which led the UGG and others to oppose it firmly. The Committee acknowledges the validity of these witnesses' arguments. As well, in order to comply with the rules of international trade, acreage payments would have to be made available to all farmers in Canada and would require a federal-provincial agreement. The Committee wonders how quick and easy negotiating such an agreement would be and, assuming an agreement were reached, how long it would take to set up such a program. Although acreage payments would technically be simple to administer, they would still have to be quick and easy to develop; otherwise they would be of no use to farmers experiencing cash flow problems. Nevertheless, in light of evidence it heard, the Committee recognizes that it must explore this possibility and therefore makes the following recommendation.

Recommendation 5

Your Committee asks that Agriculture and Agri-Food Canada and the National Safety Nets Advisory Committee immediately consider the feasibility of setting up an acreage payment program, and report back to the Committee on this point as soon as possible.

If a feasibility study showed that an acreage payment program were as simple to develop as it would be to administer, the Committee could then review its position and make related recommendations for changing and improving the AIDA program.

The Committee considers the second short-term solution, a trade equalization payment program, an interesting concept. The failure of the Seattle negotiations in preparation for the upcoming round of Multilateral Trade Negotiations (MTNs) has meant that export subsidies and production support could continue to be a major source of distortions in markets for agricultural commodities for some time. If the upcoming round of MTNs lasts as long as did the Uruguay Round, a trade equalization payment program to reduce the risk associated with these distortions could become a basic management tool for Canadian farmers. Clearly, trade equalization payments will be part of any future long-term farm income support strategy.

LONG-TERM VISION FOR FARM INCOME AND FAMILY FARM SUPPORT

The long-term vision for a sustainable agricultural industry has two main aspects: the risk-management tools required for farm operation and production; and policies for rural development and communities. A risk-management tool like NISA is not a rural development tool. Prairie farming regions now need both farm production programs and rural development programs.

A. Risk-management tools

An essential message the Committee heard was that the farm income safety net must provide as much protection in the short as in the long term, and that short-term measures such as the AIDA program should promptly be followed by predictable and consistent long-term measures. If Canadian farmers are to carry out effective business planning, they must know what direction Canadian agriculture policy will take and what level of funding for farm programs will be maintained. Similarly, it must be made clear that the farm income safety net budget is to be spent on tools for managing the risks inherent in modern farming, not on rural development programs.

Witnesses repeatedly told the Committee that NISA was the strongest component of the farm income safety net. Most farmers by far considered NISA an effective management tool for stabilizing farm income according to individual farmers' needs. That said, even the world's best program cannot achieve its objectives without adequate funding, particularly when the fluctuations of traditionally cyclic markets for agricultural commodities are obviously being intensified by the use of farm subsidies that distort world prices. Canada cannot compete with the U.S. or EU treasuries, but it can increase funding for its support programs and thus provide farmers with risk-management tools that are more reliable and predictable than is now the case. If more assistance were available under NISA, farmers could stabilize their incomes better and, as some witnesses suggested, NISA could include a trade equalization payment program. Some witnesses noted a recommendation from the National Safety Nets Advisory Committee that the federal-provincial governments contribution to NISA be doubled. The Committee endorses this view and therefore makes the following recommendation.

Recommendation 6

Your Committee recommends that the federal-provincial governments contribution to the Net Income Stabilization Account be doubled, from 3% to 6%, and that the federal and provincial ministers of Agriculture consider the possibility of making the rules governing the use of NISA more flexible, thus adjusting NISA to better suit changing conditions in markets for agricultural commodities.

The Committee also considers that a farm income disaster assistance program must become a fourth, permanent component of the farm income safety net, in addition to the three basic components-NISA, crop insurance, and provincial companion programs-, and therefore makes the following recommendation.

Recommendation 7

Your Committee recommends that the federal government develop a permanent farm income disaster assistance program with a minimum annual budget of $500 million and, in order to ensure the program's long-term sustainability, that this annual budget be separate from the farm income safety net budget, so that unused funds can accumulate and form a contingency fund.

A permanent farm income disaster assistance program could take the form of the AIDA program, with the adjustments the Committee recommends; or, if the feasibility study requested by the Committee is conclusive, it could take the form of an acreage payment program.

Some witnesses also stated that there was a need to introduce a new national gross income insurance program, like the former national Gross Revenue Insurance Plan (GRIP). A similar program is available to Ontario farmers; Quebec uses a variation, a form of income stabilization insurance that guarantees farmers a positive net annual income. Some witnesses noted that, although GRIP had not been perfect, it had at least stabilized gross incomes, over which farmers had little control. Therefore, the Standing Committee urges the National Safety Nets Advisory Committee to examine the international trade implications of a national GRIP-type program.

B. Climate favourable to family farms

Some witnesses heard by the Committee suggested a farmland set-aside program under which some farmland would be taken out of production, claiming that there was too much farmland in production in Canada, and that only a structural adjustment of total acreage in production would increase prices for agricultural commodities. However, such a program might have limited effectiveness, given Canada's share of world markets. Although Canada did implement a farmland set-aside program in the late 1960s in order to limit production of grain marketed by the Canadian Wheat Board, the global economic situation has changed a great deal since that time. Before expressing an opinion, the Committee believes it would have to become familiar with all aspects of a program of this type.

Many other topics were discussed at the Committee's hearings, including: grain transportation; the need for a road infrastructure program; and direct taxation in the form of fuel tax, provincial property tax paid by farmers, and the cumulative effect of income and other taxes on the costs of farm inputs. Many of these topics exceeded the Committee's mandate but are nonetheless important to have a comprehensive perspective of rural development.

Agriculture is probably one of the last industries in Canada's economy to be family based. Professor Hartley Furtan provided the following crisp definition of the family farm in Canada:

It's a farm that is the workplace of the family. The family does most of the work on the farm, with a small amount of hired labour. That is the key component, that the family farm is a farm where most of the labour - not all of it; it may be one person hired, or two, but not 50, okay? - is family labour. Now, it's not how many acres it has. It's not how many cows it has. But the key definition I focus on is that it's the workplace and likely the residence of the family, and the labour that is supplied is largely family labour.⁵

If there is a desire for farms in Canada to remain the workplaces and residences of families, the farm income safety net must be accompanied by a social and economic policy that will maintain a climate favourable to family farms. The Committee therefore makes the following recommendation.

Recommendation 8

Your Committee recommends that the government continue to develop a rural development policy clarifying the role and direction of the agricultural industry in Canada; one objective of this policy must be to maintain a favourable social and economic climate that will allow family farms to continue to form the basis of farm production.

CONCLUSION

The purpose of the Committee's public hearings was to "study the effectiveness of long-term safety nets and other national initiatives to provide the stability and environment necessary for long-term stability in the agricultural industry," and the Committee's hearings clearly indicated that the status quo was not acceptable and that Canada's agricultural industry needed an immediate injection of money. It was made clear during

The hearings that any short-term measures should be followed promptly by long-term measures that will give farmers a clear, consistent and comprehensive idea of the direction Canada's agriculture policy will take.

In the short term, the Committee has recommended major changes to the AIDA program so that the $1 billion still in the Program's coffers for 1999 be paid to farmers promptly. In the long term, the Committee has recommended that a permanent farm income disaster assistance program be promptly developed with a minimum annual budget of $500 million, to become a permanent fourth component of the farm income safety net. NISA should be improved and its funding doubled to increase its annual budget to approximately $500 million. Implementation of the Committee's recommendations, along with the existing cash advance program, crop insurance, and provincial companion programs, would increase the farm income safety net budget to $1.4 billion, more than double its present level.

Lastly, the Committee's hearings on the Prairies indicated that the present farm income crisis could signal the start of a serious social crisis in rural Canada. The Committee has therefore recommended that the main objective of federal rural development policy be to maintain a social and economic climate favourable to family farms in Canada.

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1^# Agriculture and Agri-Food Canada (AAFC), 1998-1999 AAFC Performance Report, Ottawa, p. 24.

2^# An olympic average is calculated by using a five-year reference period, and weighted by eliminating the highest and lowest values.

3^# House of Commons, Standing Committee on Agriculture and Agri-Food, Evidence, Parliamentary Internet site, Meeting 10, December 7, 1999, Brandon MB.

4^# UGG, presentation to the Standing Committee on Agriculture and Agri-Food, Prince Albert SK, December 8, 1999, p. 3.

5^# House of Commons, Standing Committee on Agriculture and Agri-Food, Evidence, Parliamentary Internet site, Meeting 6, November 23, 1999, Ottawa.