Agriculture Committee on April 26th, 2007

[Brian Edwards]

I think at this point in time we have our elected representatives, who are the Ontario Flue-Cured Tobacco Growers’ Marketing Board. Their mandate is marketing and production.

There are some growers, as I stated in the question, who think they can still grow if there is a restructuring of the tobacco scenario. We, as the Tobacco Farmers In Crisis, have said that we want an exit program for those who wish to exit.

Looking at the other programs in agriculture, we don't believe that it should actually be an agricultural issue. At one point in time the companies themselves said they would be part of the solution also. I think at this point in time they've said they're going to have to be forced to be part of the solution.

If they are part of the solution, then there's a possibility of some tobacco production continuing on for those who want to try that, and it will probably be a completely different system. There will be a free market system, as in the United States. That's what happened down there. All tobacco quotas disappeared, including the flue-cured. It's direct contracting with those companies.

Here in Canada any exit program in the future, and there have been a number of them.... There used to be five provinces growing tobacco: Quebec, Nova Scotia, New Brunswick, Prince Edward Island, and Ontario. All of those provinces have exited. There were programs put in place for those producers.

At this point in time we're left with a situation where the crop size that's been offered by members of the TAC.... And the TAC does not include all tobacco manufacturers, unfortunately. To be a member of the TAC you have certain obligations that you have to sign--guarantees of payment, and that type of thing. Unfortunately, our federal government issued licences outside of this TAC with no requirement to be there. There are no Canadian content rules whatsoever.

We have this product that is hazardous to people's health. It's been stated by the health people that it's a carcinogen. And do you realize that there are no requirements for testing under the Canadian Food Inspection Agency? It's not a food. It doesn't fit.

There is monitoring done by scientists to see exactly what is coming in here. And for those people who do smoke, we, as Canadians, no longer supply the majority of that tobacco, as farmers.

The companies have decided to have just-in-time production, cheapest product available. They're going to defend their shareholders.

We looked at other programs in place that have been done in other countries and we did a comparison. Our marketing board had an independent accounting firm do a study of what it would cost to replace the lost investments we have.

And that's actually what we're asking for. If we're going to be taken out of business, if it's government policy that we're no longer going to produce tobacco in Canada, what we're actually asking for is to be put back in the position we were in. Provide a program, whatever that is, to allow the tobacco farmer to exit tobacco production and recover the investments they've put into it. And this is multi-generational.

Unfortunately, if the government goes to Farm Credit Canada or it goes to the banks, that doesn't look at all the debt. It really doesn't. We have multi-generational farmers where the father has given a mortgage to the son and there are private mortgages there. There is ACC, just to grow tobacco, because possibly the banks haven't looked at you for growing for a number of years now. You have to get outside money to grow your tobacco. It's not just the long-term debt that we're looking at here. For those in debt, the average debt is estimated at $400,000 each.

The average quota size is not large. When you look at 1,068 individual quotas and 272 million pounds of quota, you're not going to be able to get out of debt.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Edwards.

Mr. Atamanenko's time has expired.

I want a quick follow-up on what Alex was just asking about, if you could just answer it very quickly, Brian. Who paid for the exit strategies in the other provinces?

[Brian Edwards]

It was a combination. In P.E.I. there was a combination of funds between the federal and provincial government. There were exit programs, I believe, in some of the provinces. The most recent exit program was a combination of federal and provincial funds under the APF normal funding. It's a 60-40 split.

[The Chair, Conservative, James Bezan]

In which province?

[Brian Edwards]

In Ontario and Quebec.

The last exit program established an exit that was a combination of moneys in Ontario that worked out to $1.05 federally and I believe 67¢ provincially, so it ended up at $1.72. But the amount of funds was limited. There were 700 bids placed and only 252 were allowed to exit, because the funds ran out. It was run as a reverse auction.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Easter, you're on.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you all for coming. One of the problems with six witnesses is that there are too many questions and not enough time.

Just to start off, David, you had mentioned that really Steve Verheul's hands—and the government talks about this often—are tied in terms of negotiations because of the House motion. For the government to use that as an excuse is nothing but malarkey. About one or two motions a week go through the House that the government doesn't listen to. Some of you mentioned the Canadian Wheat Board. There have been two motions in the House giving direction to the government in that area, and they absolutely, completely ignored them. So for them to use that as an excuse is absolutely wrong, and I just want to make that point, that it's clear malarkey. And for them to talk about that, where on the one hand they abide by House motions and on the other they ignore them.... Don't allow that to be used as an excuse.

I want to try to get to some specifics in terms of your own commodities, Martin. The specific question to you is about transportation. Although we're the agriculture committee, it is absolutely crucial to the agricultural industry. I mean, transportation is functional to marketing. It doesn't matter whether they were the government or we were the government, the problem is the Department of Transport. They might as well call themselves “the great railway defenders”. I've dealt with railways since the 1970s, when I was president of the farmers union. I guess the key in this one is what needs to be put in place to deal with the concerns of shippers in a more rapid fashion? The Canadian Transportation Agency doesn't really effectively work. What do you suggest in that regard?

I'll raise the second question now really to anyone, but mainly Mary-Ann, as you've mentioned a number of areas. The U.S. is much more strategic than Canada, and you mentioned that we had to be careful in terms of opening ourselves up to trade action. If you look at the U.S., they do school milk programs, they do food stamps, they do environmental programs, and they do it across a section of departments and across the government. They're green. Why can't we do that? Why shouldn't our on-farm food safety be entirely green, entirely paid for by the Government of Canada, or at least a combination? Why not an environmental program of the same things? Why can't we pump money into our system, the same as they do, under green programming? Would anybody be in favour of doing that?

[The Chair, Conservative, James Bezan]

The floor is open to you, Mr. VanderLoo.

[Martin VanderLoo]

As has been pointed out, agriculture is tied very closely to transportation, regardless of whether it's rail or truck or containerized shipments, and vessels as well. It's all about getting it to the consumer in a timely basis and a competitive level.

I recollect that years ago we had some serious issues with our railroads back in the days when CN Rail was a crown corporation. It was losing money, bleeding profusely in the pocketbook, and there were moves afoot to change that.

We as an industry certainly don't oppose the fact that our railroads should be profitable. That's certainly important to maintain the infrastructure and so on that's required. However, it appears to us in the last number of years, and I don't recall exactly when this was put in place, that firstly CN Rail became a private corporation and the railroads were not under the transportation guidelines as they once were. Just from the outside looking in, to us as an industry it's very apparent that the two railroads in Canada really consider their shareholders as their customers, as opposed to the shippers and the consignees of this country and elsewhere.

I'll cite one example here, and this is maybe just a small one, but a local hog farmer down the road from me decided three years ago that he was going to venture into organic pork production because he felt he could make a far greater return going that way into a specific niche market. He had to rely on securing some organic grains from Saskatchewan, and of course there's a producer car program that the organic grain producer in Saskatchewan would sell his grain to this particular hog farmer and have the railroad send this producer car to Ontario. So it allowed him to make some feed. He's begged and pleaded with me, this hog farmer has, to try to help him move some of these products in a timely basis. He's waited as long as six months for delivery of some items, for grains, particularly barley out of Saskatchewan, to be able to feed these hogs.

He's at a loss for what to do. He felt that the decision he made to go organic was a wise one and that it was certainly going to be a profitable and sustainable operation for his family. We're trying to work together with some trucking companies, as odd as it sounds, to try to move some grain from Saskatchewan by truck to Ontario to be able to facilitate his feed needs.

Essentially we're told week after week after week.... Let me just back up for a minute. We felt many years ago that it was in our best interest as a small company to work as closely as we could with some of the mainline elevator chains in western Canada, thinking that the railroads obviously would pay more attention to their transportation departments than a company in Ontario. What I've explained to you earlier is all that's fed to us from these mainline elevator companies in western Canada. And essentially regardless of who you are, whether you're James Richardson, or Cargill, or whoever you are, it's irrelevant. The railroads are demanding that if you want to move grain, they'll accept 100-car shipments to the west coast, and if it's anything different from that, sorry, we can't provide you with any equipment.

[The Chair, Conservative, James Bezan]

Thank you, Mr. VanderLoo.

Mr. Easter, your time has expired, but you did have a second question to Ms. Hendrikx. Make it very brief, please.

[Mary-Ann Hendrikx]

I think it's entirely a great idea. Farmers work very well to incentives. The environmental farm plan that you heard Ed talk about is a prime example of that.

[The Chair, Conservative, James Bezan]

Good.

Mr. Miller, you're up.

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

Thank you very much, Mr. Chairman.

Lady and gentlemen, it is nice to have you all here and to listen to your comments.

To the rest of the committee, welcome to the heartland of agriculture in Canada. There's no doubt about it. I am not going to get into an argument with Gary about who has the most agriculture in the riding. We both come from similar areas.

There is one point I want to make here. Mr. Woods, you mentioned the Wheat Board and supply management. There is a very distinct difference. First of all, there is fearmongering among a couple of political parties and at least one farm organization about the connection. And that's all it is: it is fearmongering. The difference with the Canadian Wheat Board, and the plebiscite on barley proved that, is that a number asked for change. In the dairy industry, the chicken industry, and egg supply management, none of that has ever been asked, and I doubt that it ever will. I just need to point that out.

Mr. Danen, you made a couple of comments, and I'd like a bit of clarification on them. One coment was that the government should make a commitment to match the U.S. Farm Bill, even if we don't have the money. I don't know whether you meant that as an idle threat or that basically we should find the money. I would like a little clarification.

Also, I believe you made a comment about an environmental plan. I might have missed some of the words, but you talked about confidentiality. That bothered me. If there is no confidentiality, we should be dealing with that. I'd like to hear a little more on that if I could.

[The Chair, Conservative, James Bezan]

Mr. Danen.

[Ed Danen]

First, my comments about the Farm Bill or U.S. programming related more along the lines of what Mary-Ann talked about as far as trade impacts and so on. They were more meant as the “administration of the programs”, not an attempt to commit government funding where there isn't any. So if we could at least mimic American programs so it doesn't open us up to trade action....

As far as the environmental farm plan, to this point I'm not aware of any confidentiality issues. But I wanted to make sure this was still ingrained, and that it stayed ingrained, in the program.

As I said, if farmers are going to open themselves up in their book as to what issues they may have in their operation, I think they need to be the only ones who know what is going on in their operations. I think that will help them best address all of the issues.

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

I agree with you. We have to have that confidentiality.

And I agree with you on the U.S. Farm Bill. We have heard this across the country, that the Americans...call it cheating or call it whatever, but they do it. I think we need to follow that, and obviously a number of groups have.

Mary-Ann, you talked a bit about the lack of research and development. What else could we do? Of course that's something that has normally been done with the provinces and the feds. Could you give more specifics on what government could, or should, be doing towards research and development, and how it will help your industry, for example?

[Mary-Ann Hendrikx]

I think each commodity probably has its own priorities and things that need to be done. The CORD program worked fantastically well, except it changed pillars in the middle of it. It was supposed to be a seamless transition. There was some real concern that some of the crop projects were in peril of getting funded. Because of the delay, the adaptation council actually had to front the money for some projects until the government funds came through.

I think that knowing the parameters up front, having them stay the same throughout the time period, and having a seamless transition so you can assess what research you need to do is important. Otherwise, it's oh, there is a pot of money and let's figure out what we can do with it. I think you get a lot better planning if you can scope out what needs to be done.

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

Thank you.

Have I got a little time left, Mr. Chairman?

[The Chair, Conservative, James Bezan]

No, you don't. You're out of time, Mr. Miller.

Mr. Hubbard, you're on.

[Charles Hubbard, Liberal, Miramichi, NB]

Terribly tough chairman here. He's always watching the minutes, so I'll have to be very careful.

With the tobacco farmers, and my colleague here mentioned other members, I know we talked about that with Lloyd St. Amand just before we left Ottawa for committee. You're into another growing season, and you're still apparently quite a long distance away from making an arrangement with the government to satisfy both groups. Oddly enough, this tobacco industry also affects people in my constituency, and they've been hurt by it, because a lot of the seasonal workers who came to Ontario were from my area over the years, so they have found hurt and a need for alternative employment.

On the exit strategies, I would think you have looked at the other provinces with tobacco, but also in the fishing industry we have exits. On my coast with the Atlantic salmon, on the west coast with the Pacific salmon, in all those exits, people have been hurt. In Atlantic Canada, some people who didn't settle with the government back in the late 1970s, early eighties, are still holding licences, their quotas, and they can't use them and they never did get any satisfactory recompense for their business. They're simply out of luck, I guess we'd have to say now, because things have passed them.

How close or how far are we in terms of a settlement? Has an offer been made to you by the federal government, or is it simply a stonewalling, that they've never really come with any satisfactory offer on the table?

Mark is ready for that one, I'm sure.

[Mark Bannister, Vice-Chair, Tobacco Farmers In Crisis]

As recently as last week, our marketing board met with Minister Strahl. Minister Strahl's message to the board was for us to go back to the drawing board, that what we were asking for was too rich.

As you've indicated, exit programs are hurtful; it doesn't matter where you look. I think tobacco producers have it figured out. We've been kicked enough times that we want out. We're willing to leave, unlike fishing. A fisherman wants to fish. We want out of tobacco production. We understand the harmful effects. We want out, just as simple as that. For the minister to indicate that what we're asking for is too rich, I disagree. I think we're asking for a fair program that's recognized by other countries. International standards are set. The world's framework convention on tobacco control recognizes that.

[Charles Hubbard, Liberal, Miramichi, NB]

For the record, how far apart are you?

[Mark Bannister]

We have no idea.

[Charles Hubbard, Liberal, Miramichi, NB]

You have no idea. Your presentation, then, for the table, would cost how many dollars?

[Mark Bannister]

We're suggesting that $3.30 a pound, as asked for the marketing board originally, times 272 million pounds. We're asking for a top-up for the producers that went out in TAAP, including the Quebec producers. That was not a fair program. There were no funds to establish--