Agriculture Committee on May 30th, 2006

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I have some questions in my thread of thought here.

Thanks for taking time to meet with us. I'm encouraged by your hard work and the many positive measures you have outlined, Minister Strahl.

In agriculture, we're at a very interesting, but also very critical, point in history. By working together, particularly with those operating in agriculture, we're well placed to ultimately put in place a vision that will help determine the future of our country. For example, I'm encouraged by your commitment in the biofuels sector.

By building our agricultural policy together, I encourage you very strongly to rely on the report prepared by the Honourable Wayne Easter entitled “Empowering Canadian Farmers in the Work Place”.

Here's my first question: Will you consult that report, which reflects some in-depth deliberations?

It's in the spirit of cooperation with the stakeholders in agriculture, especially the primary producers, that I ask this government to move forward. I will be tabling a motion here with amendments by Mr. Easter in regard to the federal government's decision to retain ownership of the hopper car fleet.

In spite of certain comments that I've heard in regard to the Farmer Rail Car Coalition, they do in fact represent farmers and I encourage you to work with them. In fact, thanks to them, hopefully we can get to the bottom of why farmers have been overcharged for hopper car maintenance. As you know, we have asked the Auditor General to look into this.

The time is right to ask the FRCC to work closely with our government as we deliver policy in regard to hopper car maintenance. Let's use their expertise as we work together in the best interest of farmers. My second question is, are you prepared to do that with them?

Another critical area where this is possible is the Canadian Wheat Board. There are those on this committee and otherwise who believe that the Canadian Wheat Board should have a dual marketing role. On the other hand, according to calculations by the National Farmers Union, marketing and policy benefits of the CWB are worth at least $800 million a year, more than $2 million per day for western Canadian farmers. This sum equals roughly the value of the Crow benefit that farmers lost in 1995. The loss of the Crow is a significant cause of the farm crisis now gripping farmers. According to Stewart Wells, NFU president, losing the CWB would be equally devastating.

Members of this committee have differing views on this subject; however, let's look at the polls. The results for the spring 2006 producers survey were prepared by Innovative Research Group Inc. This survey is conducted annually for the CWB to measure farmers' concerns and attitudes on a number of issues. Of 1,303 CWB permit book holders who were interviewed for the survey, a total of 76% of farmers support the CWB, and 66% of those below age 35 support it. A total of 71% of farmers believe this is the most effective representation for their views on agriculture and trade issues.

The most important result is that 88% of the farmers believe that the final decision on the Canadian Wheat Board single-desk versus dual marketing should be made by farmers themselves through a plebiscite or CWB director elections rather than leaving a decision to the federal government alone. Clearly, here is a chance for this government to work with the farmers rather than imposing its will to change the direction of the CWB.

Governments from all political parties, all levels, often impose their will on the people. With guidance from this government, let's let the farmers decide their future, and most of all, let's put aside our political ideologies.

I would like to see your response and your commitment to working with them. In other words, is this government prepared to let the farmers, the stakeholders, decide the future of the Canadian Wheat Board?

That was my final question, Mr. Minister.

[The Chair, Conservative, Gerry Ritz]

Minister Strahl, you have one minute to respond.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

One minute? I'll just quickly go through them, then, and try in a minute.

I certainly have a copy--in fact I have an autographed copy of the Easter report. I do understand there were extensive consultations, and I've appreciated that input, as I will from this committee generally and from other farm organizations. But certainly I have a copy and have read it, and we've even done a couple of things out of that report. For example, the way we're funding day care now, for example, was a recommendation from the Easter report. So we've even taken a couple of suggestions out of it.

I did meet with Sinclair Harrison the other day when I was in Regina. He gave me an envelope echoing your ideas, that he's prepared to work with us. I appreciated that about Mr. Harrison. I have met him several times, of course, and appreciate his willingness to work with us, and certainly his ideas will be taken into account. They have some expertise there that should be made use of, so we'll continue to do that.

On the hopper cars generally--I think that's what I have down here--are you having the transport minister here soon?

[The Chair, Conservative, Gerry Ritz]

Not necessarily the minister, but officials from the department.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Because it's dealt with mostly by Transport Canada, regarding the details as to how to ensure that hopper car replacement and maintenance and other issues involving shippers' rights and so on could be dealt with, I would encourage you to deal with Transport Canada. We work with them, but of course it's their bailiwick.

Finally, on the CWB, of course we continue to consult. We've consulted with hundreds of groups and we'll continue to do so. I also read that report. One of the interesting parts of that survey that was done the other day was the majority support for dual marketing for barley, for example, which I thought was an interesting angle. It seems to be where there was, again, one of those consensus numbers that went along with the other ones you rattled off.

So obviously we'll have to work, and I am working, meeting with the CWB and others. I've said to people that the changes will be evolutionary rather than revolutionary. I don't want to do something that's going to unsettle a very unsettled industry either.

Thank you.

[The Chair, Conservative, Gerry Ritz]

Thank you, Minister.

We'll move to Mr. Easter for five minutes. You can pump up Mr. Atamanenko in response to his cheerleading for you.

[Wayne Easter, Liberal, Malpeque, PE]

When you have a good report, Mr. Chair, it speaks for itself.

Anyway, Mr. Minister, welcome. I know that certainly your heart is in the right place in doing what you can for the farm community, but you're dealing with a tough crowd in terms of your cabinet and even the department.

I've been fairly open about this. I believe we've seen a lot of wordsmithing from the new government on what they're doing for the farm community; the impression is left with the general public that they're doing much more than they really are, starting with the budget. The budgetary announcements by Minister Flaherty left the impression that you were putting more money out there for farmers, and actually there is less money than was committed the previous year.

I have a few specific questions.

Certainly the impression was left with the farmers who were demonstrating on the Hill that there would be immediate assistance for spring. We haven't seen any of that money, and there really is nothing there in terms of immediate assistance for spring. So on your $1.5 billion you claim, I have two specifics on that. First, will any of that money be there to meet spring bills? We're beyond the need for cash now. Will any of that money be there to meet spring planting bills and spring bills? Second, on the low family farm income, is that a part of the $1.5 billion, or in addition to it?

Tied into that is the interest-free loan. I think you know—you've been in business, Mr. Minister—you can't borrow yourself out of debt. Your average Canadian out there actually believed, when you announced the $100,000, that was money from the Government of Canada to the farm community. It's farmers' own money. It's a good program, and we will work with you to try to get that legislation through rapidly. But the fact of the matter is, there is a break from government on interest, and it is really just an additional loan. Has the department done any analysis on how many farmers will not qualify for that interest advance?

I'm hearing from farmers out there that they're in a credit crunch. They haven't paid last year's interest cash advance; they won't qualify for this one. In terms of this announcement, has the department done any analysis on who will not be eligible for that money? You cannot borrow yourself out of debt. The impression has been left with the general public that you're dealing with the farm crisis, when in effect you're doing practically nothing.

I have more. Just as long as you don't give me a Ralph Goodale answer, Mr. Minister, we'll have enough time for another question.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

You asked quite a few there, Mr. Easter.

I'm just checking with officials here. I don't believe we have an analysis of how many will not qualify. We do have an estimate of how many will take it up. It's a bit of guesswork, of course, because we're not sure. Farmers don't have to take it up, so it's a bit of a guess. We are estimating that it will put another $500 million into the system, and so that's the analysis that has been done, but I don't have a number as to how many won't do it.

Just on several fronts--one is on low family farm income. That is part of the $1.5 billion. Details of it haven't been announced yet, either because it hasn't gone through the approval process or because it hasn't been completed yet. I announced the general parameters of it. It's an attempt to catch those who have fallen through the cracks, have low family farm income for whatever reasons. It could have been that they've had a couple of drought years in succession on the prairies, or grasshoppers, or they could have been diseased out, or who knows what. This will catch a good number of farmers. Again, I can't announce the details of it, but it is part of the $500 million.

As you mentioned, the $100,000 maximum interest-free loan and the $400,000 maximum available under ESCAP are not completely without strings for farmers; they have to pay them back, but they do allow them not only the increased dollar amount, but also an increased period to market their products. The combination should be good for farmers. It gives them until September 2007 to market, and so it's not as if they have to plant their product, sell it this fall, take whatever price is there, and pay them back. They'll have 16 months to market. That should allow them, in that 16 months, to hope they have that money interest free, and they give them the maximum opportunity to market at the best price during that 16-month period. So it's hoped that will be beneficial to farmers as well.

Maybe I'll go back for another question.

[The Chair, Conservative, Gerry Ritz]

You're actually out of time. We'll catch Mr. Easter again in the next round.

Mr. Bellavance, you may continue for another five minutes.

Madame DeBellefeuille.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Good morning, Minister.

There's nothing reassuring for Quebec producers in what you said about the WTO supply management negotiations. You just said, twice instead of once, that we were alone on this question among 148 countries. We are in fact quite isolated. You virtually asserted, on at least two occasions, that we would continue to be a member of the WTO following these negotiations.

Wouldn't allowing large quantities of milk proteins to enter the country, as you're currently doing, be an indirect way of making the supply management problem disappear? Couldn't you simply make it so that the tariff line permitting protein imports is amended?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

I don't think the milk protein concentrates are a potential problem for the supply-managed sector. I'm very pleased that the producers and the transformateurs laitiers are working together right now in a working group, which I put together, along with a mediator. Those discussions are taking place on everything from milk composition standards to milk protein concentrates, on what to do with skim milk powder excesses, and on a whole range of issues that I think are best solved by working with both the processors and producers in a negotiated way.

That being said, I don't think the importation of MPCs mostly from Europe is an attempt to destroy supply management. It's simply an attempt by someone—a producer or a transformateur—in Europe to make a dollar. It's an opportunity for them to make money, and that's why they're doing it.

But it's difficult to control. Initially there was some thought of using the WTO's article 28 to try to limit the imports of MPCs. The difficulty then becomes that since we lost the Canadian International Trade Tribunal ruling to try to limit these imports, it's doubtful whether using article 28 would be successful in actually limiting imports for very long.

What's worse is the worry that it will simply switch from European imports to American or New Zealand imports, all of which have lots of MPC capacity. They're just looking for an opportunity to dump them into Canadian markets.

My hope is that between the farmers and processors, this working group will come up with a range of options or solutions, including composition standards for milk products and what to do to re-establish growth in the industry. I think it's the best way to solve this problem.

I don't think it's particularly an attack on supply management, but indirectly of course, it does affect it.

[The Chair, Conservative, Gerry Ritz]

Mr. Bellavance, you have a minute and a half.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

In fact, Minister, you could do as the Americans did in the case of milk proteins and act through regulations. The idea would simply be to correct the mistake made at the outset by the Border Services Agency, which included the product in the wrong tariff line. I believe you can do that by regulation.

Why don't you take action in that direction?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

We could try that, but the difficulty may be that once we get down that road.... Of course, whenever we make those kinds of changes to an established process—right now, it's below 85% protein level and different rates above that—the Americans will certainly challenge it.

Our concern is that under NAFTA, the Americans will not only challenge it but likely use the opportunity to challenge the whole supply management system. That's the real danger, and what I said to the Dairy Farmers of Canada is that if we can negotiate something with our processors on milk composition standards and the whole use of MPCs, what we do with the excess dry milk powder, and so on, then we can do it internally. We can secure the market and create our own domestic market for MPCs, or whatever it might be. That's the best way forward.

If we throw it open, it's the old situation, and it becomes like a court case with the Americans. We might win, but what's the danger of rolling the dice with this if we lose? If we lose, the Americans will be delighted to take us to court. But they won't just challenge us on MPCs, they'll challenge the whole system, because we won that battle back in 1996. But if they reopen the battle again, they'll say this is a delightful time to do it. Of course, they're eyeing our market hungrily, and we're trying to protect our supply management system.

I'm concerned that if we throw that open into a court type case, like we did with the CITT, then you may win, but you might lose big too. So that's why I'm encouraging the processors.... And I'm pleased to see the processors and the farmers working together to try to negotiate something.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Bellavance.

Mr. Miller, five minutes please.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you very much, Mr. Minister, for being here.

I appreciate the work you're doing in giving western wheat farmers the same advantages as Ontario wheat producers have in marketing their product. I think that's an option that every producer should have.

On the CAIS program, Mr. Minister, we're stuck with a program put in by the former government and there are some changes that we would like to have scrapped. You have made some changes there that didn't make all commodity groups happy at the start, but most of the commodity groups in Ontario are happy with it. Now, there is a bit of a concern with the grains and oilseeds people. I'd like you to speak about that because I think these changes are probably going to be more beneficial than they appeared at the start.

Mr. Minister, I'd like you to comment a little more on our biofuel policy, not only the financial benefit but the environmental benefit to our farmers, and to speak on a national meat inspection code and what the federal government's role might be in that. Also, you didn't get a chance to finish your comments earlier to Mr. Bezan on the bluetongue issue.

Perhaps I could leave those with you. What's your answer?

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Thank you. I appreciate your comments on the Canadian Wheat Board, and as already mentioned, there's a healthy debate out there about what should happen to the Wheat Board. Certainly we've been very open about our desire to move to a dual marketing system.

What I've been reluctant to do is just say, well, let's make the changes and let the chips fall where they may. I think it does need to be a well-managed change. I think farmers have to be engaged in that. We don't want to leave some unanswered questions and leave farmers vulnerable. So we're being very careful about it, and I think that's the prudent thing to do. But I do think as we move to more value-added products and more farmer involvement in the processing industry, it's going to be important that farmers get a chance to make a buck, every buck, through this system, and that's why I think a dual marketing system is in their best interests.

As for the CAIS program, again, some of these figures are still being worked out with the provinces because some provinces administer their own CAIS program. There is no doubt that our initial figures, our best figures that we have, show that the grains and oilseeds sector will benefit the most from these retroactive inventory valuation changes more than any other sector. Beef is second, and then the rest. All the sectors get something out of it, but grains and oilseeds are the biggest single recipients, and then beef is after that. So grains and oilseeds, of the $900 million on the inventory valuation, will get the biggest share of that.

Of course, they also receive their portion of the $755 million GOPP program that was announced on the first day of the government.

On the meat inspection code, we have done some work. I know there's some interest from the provinces to try to have the CFIA international standard, if you will, the standard for export purposes. There is a very rigorous standard and it's getting more rigorous, and it will probably continue to be more rigorous. There is interest from the provinces to have a standard that will allow the sale of meat across provincial borders--not internationally, but across provincial borders. There is broad interest in that, and we're working with the provinces now to see what that might look like. Of course, a large number, especially the small abattoirs, tend to be local efforts, but when they're right along a border on any of the provinces they see an opportunity there, and we're trying to find a way to make that possible without having to reach the highest standard of the international standards.

So efforts are ongoing to make that happen, and the provinces are very interested in that. There is some budget set aside to see if we can make that happen.

On the bluetongue/anaplasmosis issue, this is going very well. I think there has been an effort by CFIA working with officials down in the States. We've been keen, as have the Canadian Cattlemen's Association and the provincial cattle associations. They have all wanted to get the border open for a free flow of beef without the restriction on bluetongue/anaplasmosis. There has been an ongoing study for some period now. I don't know when it started, but what we have done is publish a document. It's available for discussion now. The provinces are commenting on it, the industry. Parts of the industry, the agriculture sector, the sheep industry, for example, are commenting on it because they are quite concerned about potential bluetongue/anaplasmosis in their own livestock.

So that discussion paper is out. They've asked for an extra week or so, I think, to express their views, and then following that, we hope to move ahead, based on science and some other technical documents that are published right now. That paper is available for discussion. If anybody has some particular views on it, I welcome those, but it should be done quickly because we plan to move ahead with that and we plan to open the border for anaplasmosis and for bluetongue as quickly as possible.

[The Chair, Conservative, Gerry Ritz]

Thanks, Mr. Miller.

Mr. Boshcoff, we have about two or three minutes left. They're yours.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Then I will ask two questions.

Is there a sense of urgency, not only in your department but also in the public service department, in response to the income crisis in agriculture?

Second, yesterday in the international trade committee the softwood people clearly indicated that the appeals panel was essentially now rendered useless with the current agreement in that it will precipitate, especially on supply management, a numerous set of challenges that the Americans will be allowed to make without our being able to defend them.

Thirdly, on the hopper car fleet, the Farmer Rail Car Coalition has indicated they're willing to support the government, provided their conditions.... There are six conditions. I believe you are familiar with them. I'll table them now so the chair can have them and distribute them.

Why don't we just go with those three, seeing as my time is rather limited, and I know yours is. I also have lots of questions for the dairy industry later on.

Thank you.

[Chuck Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Obviously there's a sense of urgency, and right now it's particularly in grains and oilseeds. I'm always careful to point out to people not to be completely doom and gloom about the agriculture sector. There are parts of it doing quite well, that are profitable and so on. But especially in grains and oilseeds, there's a real income problem, no doubt about it.

Again, that's why we accelerated not only the payout but the amount of money that went out from the GOPP payment that was approved in the previous Parliament and hadn't been paid out. We paid out much more of it in the spring advance--90% of it went out in the initial payment rather than dividing it into a 70-30 split, as it was originally designed. Also, the changes to the ESCAP program, and even the AMPA, if we can get it done through Parliament, will all help farmers this spring.

I am somewhat encouraged that prices seem to have bottomed out and come back a little bit in recent weeks, both on wheat and corn. There's starting to be a little bit of movement there, perhaps partly because of biofuel initiatives around the world, but also because of some particular problems both in Brazil and the United States with drought and so on. Let's hope the wheat prices continue to rebound and the corn comes back some.

All of this is hopeful, but every time farmers plant a crop they're hopeful. So hopefully all this will help.

On the idea of NAFTA challenges or the fact that we're likely to see a series of NAFTA challenges because of the Softwood Lumber Agreement, I've had no indication of that. There hasn't been any concern expressed from our legal department about it, that we see anything brewing, that something's on the horizon or somebody's tabled a document. There's been nothing that I know of. I don't know what might have.... I can't even comment on it, because I've seen nothing on it that would indicate that's the case.

I'll have to look that testimony up to see what their arguments are. From my point of view I haven't seen anything, but I'd be interested in having a look at that.

Finally, with the rail car coalition and their conditions on how they want to help, there are a couple of things.

I'm keen to work with people who are keen to work with farmers, and that includes the people from the rail car coalition. But the truth is that thing went on for eight years under the previous government--eight years of “We're going to sell it to them”, “We're thinking of selling it to them”, “We might sell it to them”, “We're really going to sell it to them”. And now for the coalition to say we've been way too quick to move on this....

When I talk to farmers in the Prairies, even the ones who supported the coalition said, finally, somebody made a decision. They're concerned about some of these same conditions you've raised, and we need to address them.

But the reality is that the decision had to be made. Uncertainty is a killer for business. This thing wasn't an anvil, but it had become a political football, and I think we needed to make a decision. Now we need to make it work. That's why I'm interested in seeing these proposals and motions. I'm not allergic to any of them. Let's find out what went wrong before and what we can do to make sure it goes right.

To me, the rail car coalition is a group of people supportive of farmers, concerned about farmers. In that sense, I'm interested in working with them. But the rail car coalition was formed to buy the cars. If that's its purpose, its purpose is over. We're not selling the cars. We're keeping the cars. We're going to look after the cars, and we're going to use them for farmers. The way we have it designed, it will mean lower freight rates for farmers. We're not engaging with the rail car coalition with any idea that we're going to reverse that decision. We're just interested in their input as interested people supportive to farmers.

I'm interested in hearing from them, but it's not in the light of thinking we'll reverse our decision or that they're going to persuade us differently.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Boshcoff.

Thank you, Minister, for appearing with us today, on the first of many such trips, I'm certain. Thank you for your input. I know the committee has gained from that. We look forward to having you back before us again.

This committee will suspend for a couple of minutes while we--

[Wayne Easter, Liberal, Malpeque, PE]

I have a point of order, Mr. Chair. I know you've argued previously that ministers should stay an extra hour, so I would create the same argument. I wonder if the minister would be willing to stay for the full time of the committee.

[The Chair, Conservative, Gerry Ritz]

I'm not the caretaker of the minister's time. It's certainly up to him. But I know that on his schedule today we had him down for an hour, and everybody has had access to that schedule for well over a week, Mr. Easter.

Your point is well taken. Certainly the minister will make himself available to us again. Thank you.

The committee will suspend at this point so that we can bring up a new set of witnesses for the next half of the committee meeting.

Thank you.

[The Chair, Conservative, Gerry Ritz]

Welcome, everyone, to the second half of our meeting this morning.

We have with us today Terry Hearn, assistant deputy minister, corporate management; Andrew Marsland, assistant deputy minister, market and industry services; Suzanne Vinet, assistant deputy minister, strategic policy branch; Marc Fortin, assistant deputy minister, research branch; Graham Barr, director, multilateral trade, policy division; and of course, Danny Foster, no stranger to the committee, director general, business risk management, program development. Fancy title.

Thank you, ladies and gentlemen, for appearing with us today.

Does anyone have opening remarks? We'll keep them fairly short and concise. We just have the half hour.

Mr. Hearn.

[Terry Hearn, Assistant Deputy Minister, Corporate Management, Department of Agriculture and Agri-Food]

No, we don't have any opening remarks. We're ready for questions.