Agriculture Committee on April 19th, 2007

[The Chair, Conservative, James Bezan]

I call the meeting back to order. We're going to continue with our hearings on APF.

We want to welcome to the table Lorne Martin, who is the assistant deputy minister for Manitoba Agriculture, Food and Rural Initiatives; Bill Swan, who is the board member for district 5, which is this area, for the Dairy Farmers of Manitoba; the president of Keystone Agricultural Products, David Rolfe; and from Manitoba Chicken Producers, Wayne Hiltz and Waldie Klassen. I want to welcome all of you to the table to help us with our study on the agriculture policy framework.

I ask that all of you keep your opening comments to 10 minutes or less. We would really appreciate that. It gives more time to ask questions of you.

With that, Mr. Martin, I'll turn the floor over to you for the first 10 minutes.

[Lorne Martin, Assistant Deputy Minister, Department of Agriculture, Food and Rural Initiatives, Government of Manitoba]

Thank you. Welcome to the standing committee to my beautiful part of Manitoba. I live just north of here at Arnes on the shores of Lake Winnipeg on my great grandfather's homestead. Welcome.

I plan to speak on three separate areas related to the APF: the broad agreement itself, business risk management, BRM, and the next generation of agriculture and agrifood policy, called APF II by a lot of people.

The agricultural policy framework represented an important advancement for agricultural policy in that it moved to a more integrated, broadened approach to federal-provincial policy development beyond BRM, or safety nets as they were called then.

There was also recognition of the substantial provincial contributions in other areas of policy and programming in developing the APF. Other areas of importance to the industry and to Canadians were explicitly included, such as environment, food safety and quality, renewal, and science and innovation under the tag line of non-BRM.

The predominance of funding was in BRM programming, originally identified at $1.8 billion per year in federal-provincial funding, with about $200 million across Canada for all the non-BRM elements.

Finally, there was a smaller federal funding component called wedge funding that was identified to assist provinces to provide province-specific programming. This was an important tool to allow programming in areas of importance to each province.

The national programming approach of the APF provided significant consistency across Canada but lacked the ability to deal with the regional issues faced by provinces. Some of the biggest challenges with the APF came in the implementation of non-BRM programming. It took substantial time both to develop and to negotiate and implement agreements for the many new programs. This was complicated by new federal rules being introduced and enforced after unrelated situations—I don't think I have to explain that—challenged the accountability of the federal government.

Under BRM programming, in the APF, provinces and the federal government moved to a so-called two-program set; that is, production insurance and the Canadian agricultural income stabilization, CAIS, program that began in 2003. The CAIS program tried to combine many of the stabilization features of the net income stabilization account, NISA, program with the disaster income support of the Canadian farm income program, CFIP.

Based on payments being made when current incomes fell below historical incomes, CAIS was WTO compatible and focused on payments to producers based upon need. However, even before the program was implemented, we had challenges when the BSE crisis meant that CAIS payments may have been insufficient to meet the income drops faced by beef producers. The result was that changes were made to CAIS even before it was implemented, with higher payment caps and payments on negative margins being added.

Throughout the period of the APF, we have seen some significant challenges in farm income. This has increased Manitoba's CAIS costs far beyond that anticipated at the start of the APF. In 2005, our recorded costs were 148% above this anticipated cost. In fact, overall farm program spending by the province is at a higher level than it ever has been in history.

CAIS costs incurred by the province would have been much higher in each of those years except for high levels of ad hoc spending by both governments that reduced CAIS payments to producers. Manitoba has made it clear to the federal government that affordability of BRM programming is a substantial issue for provinces like ours with a large agricultural sector and a small population. Interestingly, even with CAIS payments at very high levels, there has been significant dissatisfaction among producers with the program. Changes to CAIS in the past two years have made the program more responsive to producers, but it remains to be seen if this translates into more support for the program.

I'm going to turn to the next generation of agriculture and agrifood policy.

As the APF ends in 2008, governments are now looking to develop the next generation of agriculture and agrifood policy. In this framework, we are borrowing a page from stakeholders in moving away from the pillars of the APF to broader and more integrated policy outcome areas such as being a competitive and innovative sector, being a sector that responds to society's objectives, and being a sector that is proactive in managing risks.

Under these policy outcome areas are specific undertakings that relate to what was previously called the BRM and non-BRM areas. While BRM is still considered very important in this framework, there is a significant recognition that we need a strong focus on the other areas to position the sector to capture the long-term opportunities.

We are discussing a BRM approach that could include enhanced production insurance, a modified CAIS with the top 15% tier not eligible for producer payments, a producer's savings account program, and a possible agricultural disaster assistance framework that could allow disaster funding when other programming does not deal with the impacts to producers.

Of substantial importance to many provinces, including Manitoba, is regional flexibility, moving away from the rigid national approach used under the APF. The big question here is the degree of flexibility that is appropriate versus a still significant need for national consistency.

Governments have also recognized that the full range of policy tools--program spending, regulatory regimes, and tax-related tools--must be considered and used to address key issues where appropriate.

We must also explicitly take into account the WTO and potential for a new agreement in designing the next generation of agriculture and agrifood policy. It has become clear that our major international trading partners are positioning themselves to take advantage of a new deal, and Canada must do likewise or face major challenges.

We need to do this to assist our industry to capture new international opportunities that result, to allow our sector to adapt to new international trading rules, and to ensure that Canada can meet our trade obligations.

I would be remiss if I didn't identify two key priorities for Manitoba in the next generation: rural development and infrastructure improvements. It has become abundantly clear to us that agriculture and agrifood and rural development are inextricably linked. Agriculture depends upon healthy rural communities, and rural communities depend upon a healthy agricultural industry.

Similarly, improvements in rural- and agricultural-based infrastructure are essential to allowing the agriculture industry and rural developments to move ahead. To ignore these two issues would be to ignore a key opportunity to assist the agriculture and agrifood industry to move forward.

In conclusion, I believe we have an exciting opportunity to assist Canada's and Manitoba's agriculture and agrifood sector to prosper and to realize substantial opportunities in a dynamic and changing world environment. We will continue to work closely with stakeholders to ensure that we get the next generation of policy framework right.

Thank you, Mr. Chair.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Martin.

Mr. Swan.

[Bill Swan, Board Member, District 5, Dairy Farmers of Manitoba]

I'd like to welcome the committee to Manitoba. It's great to see the committee touring Canada. I certainly thank you for the opportunity to make a presentation today.

I represent Dairy Farmers of Manitoba and sit on the board of directors. I also sit on the board of directors of the Dairy Farmers of Canada, but I will speak today as a producer from Manitoba.

The dairy industry in Manitoba represents 430 producers who generate some $200 million and produce about 300 million litres of milk annually. Dairy Farmers of Manitoba is committed to producing milk according to the highest standards of quality and is totally financed by and represents all dairy farmers in the province.

I believe the committee has heard from the people in B.C. about recognizing supply management as a business risk management program, so I'd like to focus a bit more on market development and trade.

Dairy Farmers of Manitoba believe it is critical to acknowledge the importance of the Canadian domestic market to Canada's agriculture and agrifood economy in the next generation of agriculture and agrifood policy. The bulk of revenue from Canada's agriculture and agrifood production, over 70%, comes from the domestic market.

The biggest market for Canada's farmers and processors is Canada. The Canadian agriculture and agrifood market is a vibrant one that encourages growth and value-added processing. Canada's farmers are the foundation of that growth. Moreover, from a global perspective, of all food produced in the world, 90% is consumed locally. Only 10% is exported internationally. Domestic markets are important to farmers around the world.

The next generation of agricultural policy framework must clearly and explicitly recognize supply management and the three pillars: producer pricing; import controls; and production discipline as Canada's dairy, poultry, and egg business risk management program.

The Canadian dairy industry has become the viable sector we know today because of the supply management system that was implemented four decades ago. Market development strategies have been and continue to be an important element of the Canadian dairy industry. The Canadian market for dairy would not be the viable market we know today without an adequate market development plan.

Dairy farmers alone invest $90 million a year in market development, promotion, and nutrition. It must be recognized that the supply market is a critical element of the market development strategy for the dairy sector.

Regarding the WTO, we understand that the survival of supply management is an uphill battle, but we must remember that unequivocal support for supply management was expressed by the members of the House of Commons in the November 2005 motion. Consistent with that motion, the Canadian government must go beyond by sending a clear message to our trading partners that Canada is serious when it comes to protecting and defending the three pillars of supply management.

Canada is a model when it comes to respecting international obligations. All countries, including Canada, have rights, and invoking Canada's rights may be necessary at times to support the domestic policy objectives.

We should not be shy about exercising these rights in support of domestic policy objectives, including the operationalization of Canada's right to use the special safeguard measures; exercising our rights, such as article 28 of the GATT; using due restraint when considering whether to issue supplementary import permits; and reviewing CITT and CBSA practices to ensure greater transparency and to ensure that producers of raw products have standing in the context of Canada's trade remedy regime. Proceeding with these measures will increase Canada's credibility at the international level.

To conclude, Dairy Farmers of Manitoba believe it is critical to acknowledge the importance of Canada's domestic market for Canada's agriculture and agrifood economy in the next generation of agriculture and agrifood policy. It must clearly and explicitly recognize supply management in its three pillars: producer pricing, import controls, and production discipline as Canada's dairy, poultry, and egg business risk management program.

Thank you, Mr. Chairman. I'll wait for questions.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Swan.

Mr. Rolfe.

[David Rolfe, President, Keystone Agricultural Producers]

Thank you very much, Mr. Chair.

First, in introduction, I'm David Rolfe, the president of Keystone Agricultural Producers. Keystone Agricultural Producers represents approximately 7,000 farm families from across Manitoba, and on behalf of those farm families, I would like to echo Bill's comment: “Welcome to Manitoba”.

I do not have a prepared speech, but I do have a series of bullet points that I would like to address.

First off is a look back at the APF. The APF was a five-year plan, and there was certainly merit in having a five-year plan in place for agriculture. It was the first time that had ever been attempted in Canada. However, it was a five-year plan without a clear vision of where agriculture needed to go.

During the three or four years we've had since 2003, since the program was put in place, most of the time has been spent on program development. A significant amount of time and resources have been put into program development, and the consequence of that means the delivery on the program has been slow. Especially when you look at the environmental programs, business risk management suddenly got a whole series of changes that have complicated the issue.

There have been enormous problems with CAIS. There have been administration issues on the cost of delivering the program, and the wait times that producers have to experience to receive any benefit from this program are just outrageous. CAIS was supposed to put an end to ad hoc payments, but guess what? We've had an ad hoc payment every year since. It certainly hasn't solved the problem. In fact, it has made the problem worse, in many cases.

I was part of the APF review panel that the former minister put in place to look at APF's accomplishments. It became very apparent from the information we received that there had been a significant amount of money spent on the industry one way or another, whether it was in support, through the CAIS program, whether it was in development of programs, and so on and so on, but what we couldn't find was any real results on the ground. There was no evidence that the money being spent had actually made a difference to agriculture.

When you look at Manitoba's situation in particular, in 2001, Manitoba had 21,000 farms. By 2005, we were down to 18,000 farms. I don't believe APF achieved its goal, not in that period of time.

The business risk management portion certainly hasn't put confidence in the industry. It hasn't put enough confidence in the industry to make investment. If we look at the amount of debt that industry carries—and I have some statistics here—that debt has doubled since 1996. It was around $25 billion in 1994—$26 billion, I believe—and it's now up to over $50 billion. In the same time period, net cash income from farms in 1996 was $2.5 billion; and in 2005, it was $1.94 billion. That tells me that we as agricultural producers have been borrowing to stay in business; we haven't been borrowing to invest in our operations.

I'd like to echo one comment that Lorne made, that one size does not fit all. That has become very, very apparent in the programming. We've attempted to make that glove fit right across Canada, and it simply cannot. There are too many regional differences, too many provincial differences, and too many commodity differences.

There's a perception that there's a lack of progress in some areas. Food safety is one where we're receiving messages from AAFC that food safety hasn't moved on as quickly as possible. That's a myth. The food safety program has been driven by the commodity groups since the mid-1990s and has achieved considerable growth in that time, up until APF I started. There has been growth since then, but perhaps it has not been enough to suit AAFC's mandate. But the growth was in the initial stages in the mid-1990s and up until 2003, and there has been a significant increase since then by commodity groups that have been moving forward. So that piece is a myth.

One of the other disappointing facts just recently is that there has been a disbanding of advisory committees. That is disappointing because we feel there's a significant need for more advice to the department to develop programs and policy that are meaningful for farmers and are practical to work. So I certainly hope there's an opportunity to put some of those committees back in place. The ultimate result of loss of farmer input into the process is poorly designed and impractical programs. We need to correct that issue right now.

As I mentioned, right from the get go, APF I was a collection of programs with no clear vision. We have to develop that clear vision. We have to know where we are going. We have to take a look at where this industry needs to be 15 years down the road and then put policy and programs in place to address that.

Farmers need to know that government recognizes the need when it comes to safety nets. The current mess with CAIS, which it is, certainly doesn't put any confidence in the industry. We need predictable and bankable business risk management programs. What we don't need is a carry-on of existing programming.

We started off with AIDA. It was the same principle, a margin-based program. Then we went to CFIP--same principle, a margin-based program. Now we have CAIS. Well, guess what? It's like banging your head against the wall. If it didn't work the first time, it's not going to work the third time.

In your documentation you have an idea from our organization for a contributor-style program. It is the registered farm stabilization program. I would be more than happy to attempt to explain how that may benefit producers as we move forward.

We were glad to see that there was mention of a contributory-style program when the Prime Minister made the announcement in Saskatoon. That certainly is something that industry has been pushing for.

We also recognize, as a farm organization, the importance of supply management in the business risk management envelope. That is certainly critical to Manitoba.

We are looking for a seamless transition between APF I and APF II. There are some difficulties with uncertainty as to whether some programs are going to continue, especially on the food safety side and the environment side. We need that transition to be seamless. There has been a tremendous uptake on the environmental programs. We don't need that progress to stop.

We need to ensure a more predictable operating environment. We are all business people right across Canada, and we need that certainty within the industry so that we can make the investment to move forward. We need that opportunity.

We don't need to repeat the mistakes of the past, and I refer to CFIP and AIDA on that. We need to ensure that all pieces of the puzzle are in place, as opposed to a patchwork approach. I will be more than happy to explain that as we get into the question period. Certainly when it comes to completing a jigsaw, which the farm business envelope is, we don't need a piece missing. We need all the bits and pieces of the puzzle to make the enterprise go.

In the area of research--and this was a huge mistake in the 1990s when research was pulled back; we are paying the price for that right now, simply because the money wasn't spent, facilities were not put in place, and the people weren't retained. We will be paying the price for that for the next two generations.

We certainly appreciate the commitment to research that the present government has made and the dollars that are flowing.

We need more interdepartmental consultations. All too often we have departments where the left hand doesn't know what the right hand is doing. When you get into Health Canada, Environment Canada, and even within the departments of AAFC and CFIA, there is very often no communication, or a lack of communication, between departments. That has to end. If we are going to move this industry forward, everyone has to know what's going on.

We have to be aware of the trade implications of a possible WTO trade deal. One of the issues we've been looking at, as a farm organization, is how we address the possible loss of up to 50% of the level of domestic support that we may experience.

We suggest that APF II is a perfect opportunity to begin to analyze where we need to be 10 years down the road and what type of programming we need in place. We feel there is a significant need to move toward a level of green programming, so that we don't have to make adjustments in midstream APF II. Let's put the right programs in place now. Let's put the environmental programs in place. The classic one that we see fitting into that envelope very nicely would be the ALUS program.

We need to be proactive versus reactive when it comes to policy. We are living with policy now that was designed in the forties and fifties. That was when Canada was emerging and it was the bread basket to the world. We are no longer the bread basket to the world. We have to face that, and we have to put policies in place now that are going to make us competitive in the world. We need to address those issues and we need to address them very quickly.

I would like to make mention of the Canadian farm bill, under the CFA. I think that is an excellent model to move industry forward. It has three pillars: the business risk management pillar, the public benefits pillar, and the strategic investment pillar. I would be more than happy to go into details of that as we get into the questions.

I would like to leave you with a joke. I have a friend in the farm media, and he was sitting right behind me here earlier on this morning. He likes telling me the joke of a farmer. Why do Canadian farmers wear their baseball caps backwards? And I think he tells me this joke to wind me up. He says it's so we can look in the mailbox and find the government cheques. It's actually not. It's because we have our hands tied behind our back so we can get closer to the mailbox and pull those government cheques out with our teeth, because that's what it's like trying to operate under the circumstances we're operating under.

I'll leave you with that thought.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Rolfe.

Mr. Hiltz, please, from the Manitoba Chicken Producers.

[Wayne Hiltz, General Manager, Manitoba Chicken Producers]

I'd like to thank the committee for the opportunity to present. Manitoba Chicken Producers represents both the hatching egg and the chicken industry in Manitoba, and combined, we represent approximately 142 producers. We produce about 40 million kilograms of chicken on an annual basis and about 39 million hatching eggs in the province.

Supply management is an important and integral component of Canadian agriculture. As such, supply management requires proper recognition of supply management and its three pillars within the APF. The APF, as we all know, is a framework of policies for agriculture and agrifood. The principal goal should be to achieve and sustain profitability and growth for every sector. To achieve this goal of profitable sustainability, the APF must go beyond simply identifying solutions to problems. The APF must also identify, embrace, and strengthen the components of Canadian agriculture that are successful.

The APF must strengthen the mechanisms that allow for these successes such as supply management. These mechanisms must be defended in international agreements to ensure the strength and sustainability of these successful components and programs for the future.

Supply management needs to be clearly defined as a program within the business risk management pillar. Supply management systems are federal-provincial agreements initiated and supported by appropriate legislation that regulates the marketing of dairy, poultry, and eggs in Canada. These systems are dependent upon the support of the three equally important pillars that Bill mentioned.

Producer pricing. Our mechanisms are based on farmers collectively negotiating a fair market return for products such as milk, poultry, and eggs. These fair market returns reflect what it costs to produce a safe, healthy, and nutritious product for the Canadian public.

Import controls, pillar number two. Import control measures are essential to efficiently plan production to meet Canadian demand by permitting imports to the level of access agreed to at WTO or NAFTA agreements. Proper mechanisms to administer and classify products that are imported under tariff rate quotas are also essential. Whether it's article 28 being revisited as products are renewed or as new products are brought into the country or whether it's supplemental tariff rate quotas being given out, these need to be properly handled, and the mechanism needs to be there for industry and producers to have a say in decisions that are made.

The third pillar is production discipline. Production discipline allows for the balance of supply and demand, thereby promoting price and market stability. Production is determined on regular intervals to efficiently reflect changes in consumer demand.

Specific to poultry production within the business risk management programming suite, the poultry industry's primary concern with an agricultural policy framework in business risk management is that poultry support be available for poultry farmers, either as a group or individually, in the event of a disease outbreak that requires depopulation.

The next generation of APF needs to address the gaps in the current programming with respect to ensuring that there is no disincentive for a farmer to report any suspected cases of a rapidly spreading or zoonotic disease.

Appropriate compensation for destroyed animals is critical to a successful pre-emptive cull program and to drastically reducing the cost of a disease outbreak for both government and industry.

Other business risk management programs must cover any Health of Animals Act shortfalls. Some of the issues that are of concern are costs associated with cleaning and disinfecting, and business interruption.

Secondly, the BRM programming suite must ensure that any negative economic impact on other farmers or businesses in close proximity to a diseased farm is minimized until normal production can resume. Farmers who are caught in the net who aren't necessarily directly affected are not covered by the Health of Animals Act, and their most significant risk is their inability to produce or market their products.

Thirdly, the BRM suite must ensure that industry mitigation efforts are covered--reimbursement of expenses for industry, for mitigation efforts such as cleaning, disinfecting, rendering, etc.

With respect to the existing programs that are available under the Health of Animals Act, compensation maximums under the compensation for destroyed animals regulations must be at levels that encourage early reporting. The Health of Animals Act must include compensation for fixed costs.

I think several people have spoken to CAIS already, but to speak specifically to the poultry industry, with the implementation of CAIS, poultry farmers lost the disaster coverage they had under previous programs. The current CAIS program does not meet the needs of poultry farmers, as even in a disaster a margin decline of 30% is not common, and therefore poultry farmers do not trigger the program. In the B.C. avian influenza crisis, over $3 million of claims were submitted. Approximately $100,000 of claims were approved.

Manitoba chicken producers applaud the expansion of production insurance to all commodities, and we view it as positive. However, the proposed model is essentially mortality insurance, which will not provide any additional benefit to poultry farmers beyond the existing Health of Animals Act.

That leaves a gap. Additional insurable areas need to be included in this program. Production insurance needs to cover fixed costs resulting from animal disease that are not covered under the Health of Animals Act. These need to be analyzed.

The disaster framework has been authored to compensate farmers in a disaster scenario where gaps occur in other programming. Our understanding is that the framework will only trigger when there is a “collective” disaster. Nowhere have we been able to find out what the definition of “collective” is. It's our position that the disaster framework must apply to a single farmer who suffers a disaster. Again, the APF II must ensure that there is no disincentive for farmers to report on an issue.

On ad hoc programming, Manitoba chicken producers are concerned that the gaps that exist in the business risk management programming suite may only be covered by ad hoc programming. Ad hoc programming is not business risk management. It is strictly financial redress, and in many cases it's not forthcoming once an incident has occurred. The poultry industry is proactively pursuing initiatives to manage and reduce risk as well as food safety issues, and we need the government to support these initiatives with comprehensive business risk management programming that covers all identified gaps.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you very much.

With that, we'll open a round to Mr. Easter, who is going to lead off for us.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you all for your presentations. There was a lot of information there.

Lorne, to start with you, there seemed to be in your presentation—and I guess I can understand it, coming from government—a lot of concern over the cost to the government of these programs. That concerns me even more when I look at the information coming out of the federal-provincial meeting of ministers, in which they seem to emphasize “cost neutral”.

Any producer sitting in this room knows the reality is that we have been under a cheap food policy—a low raw material return policy, if I can put it that way. Farmers seem to be providing the cheap goods for others to gain income from it, and farmers can't bear the burden of those low returns. If governments are going to have policies that make money for everybody else in the system but not for the primary producer, then somebody has to come up with some kind of compensation for it. I wonder if you might have a comment on that.

As well, where do you stand on companion programs? Producers across Canada are basically saying they need national programming, but maybe it's time to bring back companion programs where, in certain regions, there are differences and companion programs may be necessary as well.

[The Chair, Conservative, James Bezan]

Mr. Martin.

[Lorne Martin]

Thank you, Mr. Easter.

In terms of the cost, first and foremost, just to give you an idea, when we went into the two-program set, in our first budget the CAIS cost was something like $42 million. I think we talked about an expectation that there would be a long-term cost of approximately $50 million for the province, which actually would have been higher than what we were spending on NISA and CFIP at the time.

In terms of the kinds of costs that we've had so far, in our first year, 2003, we had around $52 million. In 2004, our costs were about $66 million. And in 2005--of course, we had a pretty bad situation in terms of excess moisture--we expensed $129 million. Of course, that's just the provincial government's cost.

Obviously the difficulty there is that we do have a demand-driven program here, and at no time have we said we won't make good on the whole amount that is required in there. But it is a real challenge when you start going back to Treasury Board asking for those additional dollars.

In terms of cost, it's a real challenge. I recognize that the federal government has faced the challenge, too, but what it comes down to is that they've got 10 provinces to work off. We've just got ourselves, so the volatility for an individual province can be very wild and very difficult to manage. That's a lot of the issue there.

We've maintained for a long time that a 60-40 cost-sharing arrangement, especially for those provinces that have a large agricultural base, a small population, and probably a large agricultural GDP compared to the rest of the economy, is a particular challenge that makes it difficult to deal with.

[The Chair, Conservative, James Bezan]

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

I think we have to look at what the case would be if that money hadn't been expended. We have to start looking at this money not as a cost but as an investment in the industry.

Both you and David mentioned BRM, business risk management. And I think you mentioned, Lorne, that we have to be proactive in managing risk.

Supply management groups have said they believe the three pillars should be in the APF II. What about orderly marketing, and what about the Canadian Wheat Board? Should they be in it as well?

We had a good presentation yesterday, which talked about managing risk options through the Wheat Board. There are several of them, under their producer payment options, beyond pooling itself: fixed price contract, basis payment contract, early payment option contract, and daily price contract. So there are lots of options under the Wheat Board as long as it maintains single-desk selling. Should those options also be considered, or could the tool of orderly marketing also be considered as one of the APF II options for managing within organized marketing risk on the farms?

[The Chair, Conservative, James Bezan]

I'm going to ask for quick responses. Mr. Easter's time has expired.

Could we have David first?

[David Rolfe]

I think there's been a lack of recognition of the opportunities that the board did provide. I'm not sure where the blame belongs for that. I think we've moved a little bit past, at least on the barley side, whether there should be orderly marketing or not. It appears that producers across western Canada have had their voice on that, and they've said--at least the majority have said--that we should move away from it.

However, there is no clear picture of what the option is for barley marketing from here on, and we're looking forward to hearing what that vision is into the future.

The issue over wheat marketing remains on the table, and again, it becomes one of those decisions that we, as a farm organization, leave to producers across western Canada to make.

[The Chair, Conservative, James Bezan]

Mr. Martin, could we have a quick response?

[Lorne Martin]

From our government's perspective, it is important to have those kinds of tools that can provide market power for producers, and orderly marketing clearly has been one that has delivered.

There have been a lot of studies around that have suggested there are some significant advantages that have come in the order of around $15 per tonne, premium, from the board, so that has been an important component.

I guess the best way to say it, from our perspective, is that any kind of tool that provides additional market power is an important one to consider for the next generation.

[The Chair, Conservative, James Bezan]

For those of you who require translation services, the mechanisms are in front of you. Channel one is for French.

Mr. Gaudet, you have five minutes, please.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

My first question is for Mr. Martin. Earlier, you said that your provincial programs were flexible and that federal programs were not. In your opinion, what would be the solution or solutions to this problem?

[Lorne Martin]

The way I would answer that is I think there's a degree of flexibility you need to have in terms of designing your own program so you can address the individual needs of the producers in your province. We've done a number of things with what they call wedge money; we've provided some programs for our producers, which have been very important.

One of the difficulties we find, though, is answering the question, where are you going beyond that continuum of very rigid national programs versus flexible? You have to have some national consistency, not the least of which is to try to make sure that you're WTO compatible, and also so that you have a fairness across the country. It's something we're still trying to work through, but clearly, in the last APF we had too much rigidity and not enough flexibility. I think we're explicitly trying to deal with that right now.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

Mr. Swan, I'd like you to tell us about the next generation of dairy farmers who will be replacing you. Is there such a thing? Is there not? Will it disappear?

[Bill Swan]

It's a very interesting question.

I think if you look at the history of supply management, it's been around for some 40 years. I guess we've always been under a lot of pressure to survive. Supply management always has a certain amount of flexibility. We've always been able to survive. I think it's up to the leaders of today to in fact make sure it does survive and to continue to adjust as we move forward. We need to find ways whereby we can meet the demand, whether it be through trade or whatever. We need to continue to evolve and continue to deliver the benefits to producers that we've delivered over the past. We need to continue that on into the future. I certainly think it can be accomplished.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

Mr. Kiltz, are young farmers essential or are they difficult, in your field?

[The Chair, Conservative, James Bezan]

Whom do you want to speak?

Mr. Hiltz.