Debates of Oct. 19th, 1994

Department Of Agriculture Act

[An hon. member]

Not any more.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Not any more, you say? But they did. Stop kidding me, they did. They closed down some post offices.

How about the road conditions. You could tell me: "The province of Quebec has jurisdiction over this issue". It is true, but what did you do four years ago? You cut transfers to the provinces. What did Mr. Ryan, the Minister of Municipal Affairs, do? He transferred $500 million of expenses to the municipalities. Municipal governments do not have the money, the technology nor the know-how to maintain the smaller municipal roads.

Can you imagine the 1,500 municipalities of Quebec each buying a grader, a salt-spreader, a small bulldozer and a backhoe. It does not make any sense!

I know where the Minister of Finance is heading! Of course, it is not the Minister of Agriculture, but his good old buddy. The Minister of Finance will cut transfer payments to the provinces. He is paving the way for this announcement. He has promised not to increase taxes, but last night, on the news, he did say that they never promised such a thing. In the red book, there was a promise-but now they have discovered a gaping hole. They will not be able to fulfil their commitments; they will need more time.

I can see where he is heading! He is going to transfer part of the federal deficit to provincial and municipal governments, again at the expense of rural Canada.

I visited a small town whose 500 residents are concerned with gas supply. Standards for gas tanks are very strict and since it is too expensive and not cost-efficient to dig out old tanks and replace them by new ones, gas is not sold there any more. These people must drive 15 kilometres to buy gas. That is what it means to live in rural communities.

As for government services, since regional offices are not cost-efficient, they are closed down. People will just have to go to the city. As it happens, MAPAQ services were closed in Disraeli. Granted, Ottawa had nothing to do with this but these services were closed and people must now go to Thetford. If you need to have an autopsy carried out on a dead animal, you can no longer go to Sherbrooke. You have to go instead to Saint-Georges de Beauce.

These are small irritants people have to live with in rural areas. People are telling us it is not fun any more to live in the country, and that they want to move to the city to earn a living. Young farmers are fewer and fewer.

What has the Liberal government done this past year? After all, it will be a year next week since it took power. What has it done to help young farmers? Nothing.

One thing we must recognize is that this bill to change the name of the department includes amendments to update the real mission of Agriculture Canada. Therefore, this measure is part of a vast process of reorientation and redefinition which the government is going through with respect to this department's future.

It is in that context that during the next year, the Committee on Agriculture and Agri-Food will try to redefine the future of agriculture in Canada. Let me tell you that this is a big challenge because considering the current economic and political conditions, one thing is sure, and that is that it is absolutely necessary to find a direction for the future of agriculture.

I submit that our discussions on Canadian agriculture must be based on the following three factors: First, the willingness to respect the provinces' priorities. I tell you, Mr. secretary of state, that if the priorities of the provinces are not respected, you are sure to fail. Second, the recent trade deals signed by Canada, in particular GATT and NAFTA. And third, the ability to balance the interests of the various regions fairly. It is not without reason that Quebec's farmers have great difficulty naming the federal Minister of Agriculture and Agri-Food. There are hidden reasons and I know them.

There is nothing wrong with amending the act governing the Department of Agriculture with a view to planning the direction that Canadian agriculture will take in the future. However, before redefining anything, it is important to ensure that the provinces' work plans are fully respected.

In Quebec, this consultation and orientation process concerning the future of agriculture has already begun. Following Quebec's development model, the various players in the agricultural community have undertaken an extensive reflection effort. Let us just mention the États généraux du monde rural and the Trois-Rivières Summit which resulted in a series of real commitments. Quebec took the lead in laying down the principles on which that province's agricultural future will be built. It would be inconceivable that the federal government, the Liberal government, would establish national standards that are inconsistent with its own priorities and development goals. There-

fore, it is essential that any initiatives undertaken reflect the priorities set by the provinces.

Another problem that should be examined is the provisions in the free trade agreements affecting Canada. With market globalization, we recognize that all trade areas will have de redefine their orientations. The main goal is to allow farmers from Canada and Quebec to be able to compete internationally. Agriculture is an important and well established industry in Quebec as well as in Canada. It is essential that it remain so and that we take greater advantage of its export potential.

It is all very nice to export, but it is even better to export processed products, commonly referred to as value-added products. We have just been told that value-added exports are stagnating whereas we are exporting wheat that we import later under a processed form, for instance as flour. Japan is doing that to us. The Japanese buy our wheat, refine it and then re-export it as flour. If Japanese are bright enough to mill our wheat and resell it to other countries as flour, I wonder why we could not do the same here at home. This would provide jobs to our people, and in so doing we would be promoting job creation and economic recovery. We need more than mere words, we need action. We have to get going.

GATT and NAFTA herald deep changes in the workings of international trade. That is why Quebec and Canada must have a clear and specific agenda.

It is important at this point to mention negotiations on durum wheat. My colleagues in the Reform Party dealt extensively with that in the agriculture and agri-food committee. Those negotiations should teach us a lesson. If our arguments are flawed, and if our action plan is defective and outdated, we will knuckle under to major league players like the United States.

The government and the agriculture department had an ideal case with durum wheat. They had all they needed to play a good hand of poker, but they ended up sharing the pot. This does not bode well for the future. It is therefore becoming urgent that we plan our strategies and solve the difficult problem of Canadian trade deals. I ask the Minister of Agriculture: Which comes first, GATT or NAFTA? Let me say this once more. Which takes precedence?

I do not want to hear anything like sometimes it is the GATT and sometimes it is the NAFTA and in some cases neither one because they are equal. Which one takes precedence? As long as this question remains unanswered, any assumptions on the markets for agricultural products will only be a smoke screen.

When we talk about negotiations, the issue of regional disparities always comes up. Agriculture is one of the best examples of this dead end debate. The heart of the problem is that in a negotiation process, you must compromise in order to make gains you consider crucial. You cannot win it all, but you cannot lose it all either. How can we speak for the key sectors of all provinces with one single voice?

Canada is a vast country and, as my colleague the hon. member for Richelieu said so very well, it is quite a job to govern a country. How could we speak for the key sectors of ten provinces and two territories with one single voice? The GATT negotiations are a striking example of the fact that one voice cannot speak for all regions of Canada. In Western Canada, the priority is grain exports; in the East, it is quota controlled productions.

There is no denying that Canada's failure with regard to Article XI.2(c) of GATT is a good example of these opposite interests. In December, a few months after being elected member of the federal riding of Frontenac, I went incognito to a meeting organized by UPA in Saint-Georges-de-Beauce-I remind you that I am also a farmer. At that time, the GATT negotiations were going full steam. I wanted to find out the farmers' opinion on the matter. I walked in and, although I was recognized by a few people, I could sit in a corner with a few friends and listen to the chief economist of UPA. This man is a professor at Laval University and also the owner of a dairy farm in the Drummondville area. He explained very simply what the negotiations involved.

I must say that the 500 producers present at the meeting were very concerned. The older farmers especially were worrying about their retirement, because their milk quotas represented their retirement savings. Clearly they worried about their future: "I invested in milk quotas. I was counting on the sale of this quota to retire". They were unable to give him a satisfactory answer.

Most farmers do have RRSPs. Today, during question period, the finance minister was asked once again if, in the next budget, he was going to tax RRSPs. His answer was neither yes nor no.

If the Liberal government decides to tax RRSPs, I hope that the agriculture minister, totally unknown by Quebec farmers, will stand up and speak with one voice for all the farmers in Quebec and Canada. This is their pension fund. The government changes the rules at the very last minute. This is totally unacceptable.

In Quebec, we believe that the future of agriculture lies in shifting power to the regional decision-making units which are more sensitive to local realities. Unfortunately, shared jurisdiction in agriculture and the very diverse interests of the main agricultural areas in Canada leave very little room for initiative on the part of Quebec farmers.

The Bloc Quebecois believes that sovereignty is the indispensable tool which will allow Quebec agriculture to fare better. I want to stress that bills like the one before us this afternoon are surely very important, but we should keep in mind that there are other urgent issues to deal with.

Bill C-49 reflects the government's desire to make changes within the Department of Agriculture. I sincerely hope that it will meet the provinces' concerns and that the government will not take advantage of this to confuse further the issue of provincial jurisdiction.

To conclude, Mr. Speaker, I would like to remind the Minister of Agriculture and Agri-Food and his secretary of state that it is not by changing a name that they will solve the agricultural problems in Quebec. It will take the will to change, and things have to change.

[The Deputy Speaker]

Colleagues, it is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Mississauga West-Pearson International Airport; the hon. member for Calgary West-The Constitution.

[Allan Kerpan, Reform, Moose Jaw—Lake Centre, SK]

Mr. Speaker, I must admit when I first laid eyes on Bill C-49 I had no idea it would be so convoluted and complicated. Today we have heard two speeches that went into great detail and involvement in the department of agriculture. Certainly I had no reason to expect what we saw yesterday with the amendments in Bill C-49. There were voice votes and all matters of things I had not anticipated we would see in a bill that I originally thought was a very lackluster one containing absolutely nothing.

The federal department of agriculture certainly needs more than just a name change. As laudable as Bill C-49 is, to reflect the reorganization of the department made in June 1993 we need to do much more to restore hope for the future in the agriculture industry. Today I would like to place before this House a proposal for reforming the entire jurisdictional areas of the agriculture industry.

My proposal builds on statements and ideas put forward in this House by my colleagues on this side beginning last May. It also reflects the ideas that are being generated and talked about by many farmers, academics, and farm leaders right across this country. There is a real momentum building to radically alter and redesign how governments and industry function together in agriculture, in other natural resource sectors and the other many sectors of our society.

This is an issue where people are way ahead of governments in their thinking, their ideas, and their proposals. It is time to lay those ideas and those proposals out on the table to look at them honestly and openly, to have the debate and discussion needed to move forward. I am not suggesting in any way that what I will share today will be the final word in the way things should ultimately be but, it is a starting point for discussion and dialogue.

Our proposal builds on Reform's vision for reconfederating agriculture on the basis of a clearer division of responsibilities for both levels of government and for the industry. It also lays the foundation for a new visionary, comprehensive and cohesive Canadian agri-food policy.

The new governance system proposed here calls for decisions to be made at the lowest most local level at which decisions can reasonably be made. The task of the larger unit is to assist or support the individual industry or more local government bodies in carrying out these tasks. This new governance entails a devolution of senior government responsibilities to the provincial and local levels and to the industry and the citizens themselves.

Consequently we should have a leaner and more strategic senior level of government to deal with norms, standards, general directions and values over and beyond the managerial tasks that can be handled effectively at that level. The system would be more community owned with the federal government in a more catalytic role. It would call for local and provincial governments to minister to the public and to deliver the service best adapted to the diverse needs of different communities.

Such devolution might entail a Canadian governance system of the year 2020 in which a small percentage of the agri-food civil service will be federal. It would be organized into small units concerned with longer term national policy in the areas of trade arrangements, financial support, and safety and health standards. Again, although there is an attempt in this proposal to more clearly delineate jurisdictional responsibilities in the agri-food sector, this does not mean an absolutely watertight allocation of tasks among players.

This new system of governance tries to reconcile contradictory tendencies, for example the need to be global in outlook but local in application, to be small and big, to be centralized and decentralized, to be capable of generating both freedom and justice for all the players. This therefore must and will be an ongoing process of learning.

This proposal complements the current study being undertaken by the Liberal government in its effort to downsize government programs and departments. The Liberal study is based on six questions that each department asks itself.

The questions are: Does the program or activity continue to serve the public interest? Is there a legitimate and necessary role for government in this program or activity? Is the current role of the federal government appropriate, or is the program a candidate for realignment with the provinces? What activities or programs could or should be transferred in whole or in part to the private or volunteer sector? If the program or activity continues, how can its efficiency be improved? Lastly, is the result and package of programs and activities affordable within the fiscal constraint and if not, what programs or activities would be abandoned?

By thinking hard about these matters now we can help lead the way to a sound future for the agri-food industry. This proposal forms a theoretical basis for examining how agri-food programs currently in existence at both levels of government and in the industry could be reformed, removed or reassigned. As such, it is a prerequisite step for proposals we would make about federal budget cuts, savings and expenditures.

Mr. Speaker, I am afraid I will not be able to continue my speech as I cannot get a word out of my voice. I would just like to ask the Chair if I can take my leave right now.

[The Deputy Speaker]

Certainly. Would somebody wish to carry on and give the speech for the hon. member?

[Allan Kerpan, Reform, Moose Jaw—Lake Centre, SK]

Mr. Speaker, if it is all right, I would just defer at this point in time.

[The Deputy Speaker]

Does that mean nobody wishes to speak on behalf of the Reform Party at this point in the debate?

[Allan Kerpan, Reform, Moose Jaw—Lake Centre, SK]

Mr. Speaker, maybe we could move on to the next speaker and that will be fine.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I am very happy to participate in the debate on third reading of Bill C-49, an act to establish the Department of Agriculture and Agri-Food.

Our farm community has many concerns today. I used to farm. I was not a full time farmer. I was a part time farmer but I certainly realized very shortly that farming is a lot of hard work and not a lot of money.

I would like to deal with two concerns that our farm community has today and possibly address how our government is dealing with them. They deal with general financing and also with intergenerational transfers and farm properties.

In my riding agriculture is a very significant enterprise where gross agricultural production is second only to General Motors. From Bowmanville to Orono to Port Perry and Uxbridge farming is a major way of life. It is a community that has developed over 100 years of agricultural background. One thing I have noticed is that our farm community is aging. The average age of the Canadian farmer is about 54 years.

I have spoken in this House and in committees about the need for small business to seek access to new forms of capital. Indeed, the industry committee which I sat on has just put out a report on access for growing small business. All too often we forget that farms are small businesses as well and they have significant problems in dealing with their banks. When I was farming every spare dollar I had went back into the farm, into equipment and new buildings. As a consequence, farmers have very little cash flow.

Over this last break I had the opportunity to talk with some of the local bank managers. Many of my constituents who are farmers have expressed the major concern that they are having a hard time dealing with their banking enterprises. These are not people who started farming overnight; they have had long term credit ratings with their banks, possibly 15 or 20 years. I talked to some of the managers. One of them commented that the banks no longer want to make evergreen loans. I had never heard that expression before so I asked him to explain. He told me that an evergreen loan is one the banks consider never gets repaid. I suppose the analogy is that evergreen trees never shed their needles; similarly the banks do not want to make loans they think will not be repaid.

Quite frankly, I thought that to be rather preposterous. I can remember not too many years ago that the last thing a bank wanted to do was have its loans repaid, because obviously once forming a good credit relationship with a farming enterprise it went on for decades and decades. A relationship was formed with these people.

Farmers need to finance numerous things on the farm. The two basic ones however are the financing of livestock inventory and the financing of next year's crops. Like any other small and medium sized business, as it grows it continually needs that degree of financing. By definition, it is not money that is paid off every year. In fact in a sense it becomes a fixed asset or liability of the farm. It becomes what we used to call a hard core loan, something that is there all the time; the farmer pays his interest on it and the banks make their profits on it and everybody is happy.

We have discovered that the banks have changed their attitude to all kinds of sectors of small and medium sized businesses. Farmers are feeling this very hard pinch as well. The banks are saying they want their loans paid off. They have also become a little different; they are now brokers of money as opposed to bankers. That means every time someone wants to borrow money the banks will charge a fee. They charge all kinds of setup fees.

Worse than that, I have clients in the farming business who have been with a bank for 15 or 20 years and they are now being asked to do all kinds of financial reporting. These are things the banks used to do internally and now they are telling the farmers to hire professionals to get all this work done. Of course the farmer is in a very precarious situation. He owes the bank $100,000. He may have a half million dollars worth of assets but he cannot pay the $100,000 back tomorrow without selling his cattle or getting rid of all his crops, or not planting next year's crops. In a sense the farmer is in a bad position so he has to comply.

I am a chartered accountant and my own profession would love to deal with the extra business from that source. But the reality is and the question is, is it necessary? Is this a necessary expense to farmers? I suggest that along with some of the studies that have been done in the industry committee that we also focus on small business loans to farmers.

I look at the banks and their pampered position in this country. There are special tax laws for banks. There are even laws that allow them to create money. What better operation can you have than that, when you can lend money that you do not even have? These are the rights of the banking sector. We have to look at those rights and privileges and reflect on what they are doing to our farm community.

One of the recommendations made by the industry committee was the possibility of regional banking. People can think back to the early 1900s when there were such things as farmers banks. The local people could form their own banking enterprises so that the smart alec MBAs from Bay Street are not telling them whether or not they can buy that new combine or manure spreader, even though they may have more of an affinity for the latter than the former. These are some of the aspects of capitalizing small business. I think our government is very interested and very concerned about moving in the area of improving access to capital for farmers.

I would like to deal with the aspect of retiring farmers. As I mentioned in my opening remarks the average Canadian farmer is 54 years old. One of the exemptions that they have under the Income Tax Act today is a $500,000 lifetime exemption for capital gains. I would like to discuss capital gains in relation to farming.

The reality is that the capital gains tax, in spite of what the people in finance might tell us from time to time, generally speaking does not exist on the farm. In fact what it represents is inflation. In other words, what was the value of the farm in the 1950s and what is the value of the farm today. If we go back and extrapolate the real value of money we discover the farmer in fact has not gained anything.

He has however taken every spare cent he has and buried it in that farm property. That is his retirement income. He does not have a retirement savings plan. Maybe some do, but very few just by the nature of the business itself.

Finance from time to time talks about $2.2 million lost revenue from this deduction for farmers. The reality is that it is not lost money at all. It is money that does not exist. It is a tax on inflation.

I draw that to the attention of the House. Presumably the finance minister will also feel similarly impressed that this is something we have to maintain in order to assist our farmers to make orderly transfers of their farm property to another generation or even to retire completely from farming.

My second point is where Agriculture Canada and more specifically the Farm Credit Corporation have been active in assisting our farm community. Only recently Farm Credit Corporation introduced a new mortgage plan for farmers. Some of that will relate to farmers who are retiring and turning it over to their sons or daughters and some of it will involve farmers who are retiring from farming completely. Generally speaking this program will assist retiring farmers to transfer their properties to another generation.

All too often farmers stay with the farm away beyond the time they should turn it over to another generation. Usually the problems are financial. Farming is hard physical work. Obviously at 54 we should have thought about retiring or becoming a manager long before this.

Farm Credit Corporation has devised a mortgage instrument. It is a little complex but I will explain it briefly. If the farmer wants to sell his farm for say $100,000, his son will have to come up with 10 per cent of the proceeds, $10,000. Farm Credit Corporation will then advance $40,000, up to 40 per cent of the sale price to the retiring farmer. He will have $50,000 or half of the proceeds of the sale on the day of sale. The balance of the money is paid to the retiring farmer over a maximum five year period. It could be a shorter period than that.

The other side of that is the retiring farmer only receives the interest on the $40,000. The new farmer, his son or daughter, will pay full mortgage payments. More and more money is being applied against the principal and only a small portion is paid toward the interest on the $40,000.

This is another good idea that Farm Credit Corporation has which is going to assist the new farmer to build up equity in the farm and assists the retiring farmer to get his money out of the farm.

What is the catch? Generally speaking the retiring farmer is not going to receive interest on as much as $50,000 over that short period of fiscal time. However, most farmers I know realize and in fact I have heard it mentioned many, many times in the farm community that if we charge over 10 per cent interest we are going to get the farm back.

Most farmers are knowledgeable about the concept. They would be happy to reduce the amount of their real interest with the concept that they are going to get their cash flow out of the farm.

This is one area where the Government of Canada through Agriculture Canada and the Farm Credit Corporation has added a very specific and useful instrument to assist the farm community to make intergenerational transfers.

I conclude with the remark that these are some of the things we will have to take into account when dealing with our agricultural sectors, the problems they have with their banks, the fact that they must retain their $500,000 lifetime exemption. The Government of Canada has heard their concerns about intergenerational transfers and it is trying to do something very positive in assisting them.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, I listened with great interest to what the hon. member for Durham had to say when he talked about financing for intergenerational transfers. I will comment very briefly and would appreciate the hon. member's comments as well.

I know quite a few farmers who need a very substantial line of credit. The problem is, however, that the bank or credit union charges very high interest rates on this line of credit, because it does not pay for the farmer to mortgage his farm, his house or part of his property to get the loan.

I am reminded of one of my friends who bought a quota in the spring, a very substantial quota worth $35 per kilo of butter fat, not produced, and then ran into some bad luck. He had to replace, and he had not budgeted for this, his baler, bale-catapult and four-wheel drive which all broke down at some point, and at the end of the haying season, he had to replace his mower-conditioner as well.

This was money he had to spend right away. He could not afford to waste three weeks looking around for financing. He needed the money yesterday. He could not afford to wait, because every minute counts when the haying season is under way. So he increased his line of credit and had to pay much higher interest.

Perhaps the hon. member for Durham could suggest that his government set up some form of assistance, so that farmers could have a line of credit based on their income as reported on the previous year's tax return. The interest would be paid largely by the Farm Credit Corporation or else the FCC, which he mentioned earlier, could provide financing in a few cases when farmers are hard pressed. As I said before, a farmer cannot afford to wait six months. The money would have to be available within a week.

I would appreciate the comments of the hon. member for the Liberal Party.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I thank the hon. member for his question.

First, the Farm Credit Corporation does have a program of what is called variable rate mortgages. The reality is that Farm Credit usually takes its credit by way of a mortgage on fixed property so it is usually the mortgage on the farm.

I think what the hon. member is really addressing is more of a demand for what we would call working capital. The reality is that there is a great void between our banking sector and how it operates and how farms operate. As the hon. member has mentioned, it is because there is always a degree of uncertainty on the farm. There is always the possibility that hailstones will wipe out your crop. There are countless problems.

In my brief encounter with farming it seemed that the equipment would always break down on a Sunday when nothing was open. It goes on and on and on. These are the problems of farming.

To address the specific intent of the question, I think it goes back to some of the things that I was saying. Our financial sector genuinely is not set up to really deal with farmers. The banking sector, which has always been a short term lender, is becoming more and more of a short term lender and wants its money back every year. It wants to be able to be flexible. It wants to be fluid. Farms are just the reverse of that. Farms are long term commitments to capital. In other words, there is a breakdown in the financial structure of that system.

We have realized through the Industrial Development Bank that in the business sector there is this problem of obtaining long term capital. I think it is an apropos question to ask how we can reform the credit lending system for agriculture. Maybe this goes back to my first comment. Maybe we should think about things like schedule 3 banks, regional banks, a farm bank where farmers will understand as creditors of that bank and as lenders and depositors the problems of banking. I think that is possibly one way we could address that issue.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I have a question for the member about the Farm Credit Corporation. The member referred to a particular program that the Farm Credit Corporation offers.

I would like to ask whether the Farm Credit Corporation is needed any more. I have heard from managers, directors and members of the credit unions that they would like to fill the lending gap or would like to be lending the money that Farm Credit is lending now. They are asking if there really is a need for the Farm Credit Corporation and that is the first question I am asking you.

The second question is along the same line. There is considerable money which should be available to farmers in any farming community. This money comes from retired farmers and in particular from within that community. Unfortunately what is happening now is retired farmers are concerned enough about the economy and the future of agriculture that they are investing the money mostly outside of the country now. This is as a direct result of the lack of resolve on the part of finance ministers for the past 10 to 20 years to eliminate the deficit and reinstate in Canada an air of confidence in the economy.

My question to you is do you believe it might be a wiser move to get rid of Farm Credit and use that as part of the budget balancing funds and indeed make that money available through private investors by creating this more positive atmosphere?

[The Deputy Speaker]

I take it the member for Vegreville wants the Chair to answer the question. I am making the point. Please, members, when they say you please refer to the Chair and the third person as an hon. member.

[Alex Shepherd, Liberal, Durham, ON]

Thank you very much for the question. I think the thrust of that question is whether there is still a need for a Farm Credit Corporation in this country. I am going to say yes, very much, in the affirmative. On some of the things that you are talking about concerning confidence in our economy, we are doing those things in a positive way as well.

The problem with financing in agriculture is the thing that I talked about which is the necessity for long term capital. Generally speaking, our capital markets have not addressed that, even in the residential mortgage business today. I can remember when everybody had a five year mortgage. Today it is down to two years or three years and people are playing around with that. That is another problem with residential mortgages.

The United States has 30-year mortgages. Canada cannot come up with anything better than a five-year mortgage. It seems to be a dilemma of our capital markets. They are not large enough and strong enough to be able to address that concern.

We have a parallel situation in industry with the industrial development bank. In spite of what we might say-they have had a lot of management as all other banks have had-generally speaking the industrial development bank has been successful at addressing the issue of the need for long term capital. If private industry would come along and take that over we would all be very happy about it. The reality is that they are not prepared to take the risk.

In answer to the member's specific question, we still need something like the Farm Credit Corporation. Perhaps we should open up its doors. The hon. member talked about farmers who are investing overseas. In my area we would not have such a luxury. Perhaps too many subsidies are being directed to the member's area so these people have that kind of luxury.

They might invest in something like a farm credit corporation. That is a possibility. Perhaps we can cross the line and partially privatize it. Everybody wants to address the concerns of farmers for long term capital.

[Jean Landry, Bloc, Lotbinière, QC]

Mr. Speaker, my speech will deal with Bill C-49, an Act to amend the Department of Agriculture Act.

The Department of Agriculture being renamed the Department of Agriculture and Agri-Food is something that we can understand. It goes without saying that the economic future of the agricultural sector depends not only on government assistance but also on the development of processing, marketing and distribution. I have questions on the last point, distribution, and on overlap. Agri-food processors often talk about the difficulties they encounter in distributing their products.

How can we develop the agri-food sector successfully without tackling the deficiencies of the distribution sector?

Let us take the example of fine cheeses, which are difficult to distribute. This small market could be profitable but transportation and market placement costs are exorbitant. Intercompany consultation could be a solution. The current distribution monopoly hurts processors. We could look at the example of the Quebec consultation forum on exportation, where businesses worked together to transport food products to new markets. The government has a responsibility to provide more information on these markets. There is room for improvement on its part in this area.

Such co-operation must be encouraged among wholesalers, who have a hard time competing with their American counterparts enjoying special access through U.S. subsidiaries established in some Canadian markets. These subsidiaries already have their own suppliers of cheaper U.S. products. That is why it is important for our wholesalers to work together to fight these American companies with a significant advantage.

Producers do not enjoy a power relationship with the distribution sector so they must co-operate on transportation to become more competitive. Joint price setting by producers, processors and, of course, the government must not be done at the expense of producers.

With respect to overlap, we see, once again, that the government did not take it into account in drafting a bill. The minister of agriculture did not say clearly that his bill would save Quebecers from paying twice for the same services. This happens all too often, unfortunately.

As I already pointed out in a previous debate on agriculture in this House, industry and government in Quebec have worked together for a very long time to implement market-winning strategies. Meanwhile, the federal government sets up programs that conflict or overlap with provincial programs, thus wasting public funds.

This also increases the debt, which surely displeases the Minister of Finance. When the government imposes its policies, does it realize that these do not always, and I would even say not often, fit in with the priorities and development approaches of those who work in the sector concerned?

Let me remind you of some of the objectives which came out of the summit conference on rural Quebec in 1991: respect and promotion of regional and local values; co-operation among regional and local partners; diversification of the regional economic base; protection and regeneration of resources; a top-down shift of political power. From this conference arose the co-operative councils, which have proven their effectiveness. The federal government does not take these objectives into account at all in developing its programs.

The government should stop trying to direct farming, but should consider farmers as business people when it supports regional entrepreneurship. It must distinguish agricultural development policies from regional development policies and encourage farmers themselves to realize the importance of environmental issues as a way to promote agriculture. Those are provisions we could have found in this bill.

It is all very well to agree with the spirit of this bill, but nothing prevents us from seeing that there is still a big potential for overlap. Some activities that overlap? Here are some: The Canadian and Quebec governments both support farmers. They both promote the development of markets, research initiatives, as well as inspections of agricultural products.

The fact that the Department of Agriculture will become the Department of Agriculture and Agri-Food confirms the greater responsibility of that department. It will no longer simply help producers, because the future of the agricultural sector is dependent on the processing, marketing and distribution of products. The minister made it clear in this House last month. Needless to say that the new department will have to help our producers become more competitive and self-sufficient in relation to foreign producers, and will also have to ensure the future of our agricultural sector.

The bill provides that the minister will assume his responsibility in the field of research, which is essential. Indeed, with the opening of world markets, the department should play an active role in that regard.

I will conclude by asking the minister to look at the issue of overlapping as well as the distribution problems experienced by processors, which I referred to earlier. Then, the new name of his department could be a meaningful change.

[Patrick Gagnon, Liberal, Parliamentary Secretary to Solicitor General]

Mr. Speaker, I have a number of farmers in my riding, and as you know, farming is a major industry in Eastern Quebec, in the province as a whole and, of course in Canada.

I was again very interested to hear the hon. member's comments, but I was surprised at this tendency to ignore what the Government of Canada does for a sector that is so important to Quebecers and especially to the people in the Gaspé.

I had the privilege of working with the Union des producteurs agricoles du Québec in my riding, where we handed over a cheque of $84,000 to develop a small-fruit industry, as part of a program to provide new incentives for local farmers to grow new products for local, provincial and even international markets.

I would also like to point out that the same people have already contacted me, and I am referring to representatives of the UPA and farm producers, especially in the dairy sector, to set up a program for regional processing of milk and cheese.

These people came to see the Government of Canada. They came to see their federal member. However, they have yet to receive an answer, and people may have the impression that their member is the Minister responsible for Agriculture in the riding of Bonaventure-Îles-de-la-Madeleine and has not bothered to respond.

I took this project very seriously. I transmitted it to the Federal Office of Regional Development, because we want to show local people that the federal government is prepared to work with them, in partnership with farmers, the Government of Quebec and all the agencies concerned.

[An hon. member]

Question.

[Patrick Gagnon, Liberal, Bonaventure—Îles-De-La-Madeleine, QC]

So I am very surprised, and I realize we are on questions and comments, but just the same, if we are talking about agriculture and research, including research on cattle, I repeat, the federal government has made a commitment to develop new technologies, but unfortunately, once again we hear the Bloc Quebecois setting themselves up as the defenders of the public service. I do not claim to defend the public service. I defend and promote the

interests of farmers in the Gaspé. And when I hear the opposition defending the public service, I have my doubts.

[Jean Landry, Bloc, Lotbinière, QC]

Mr. Speaker, it is a real pleasure to respond to my colleague opposite. There is one thing that I would like to tell him about. Let us look, if you will, at maple syrup, where we have an over-production. Look at what is going on. I will go further than that by telling exactly to the government what happened in Quebec and the rest of Canada. Let us talk about potatoes. In New Brunswick, farmers produce potatoes; they are also produced in Quebec, and the federal government was subsidizing the New Brunswick potato growers so that they could go on the Quebec market.

Quebecers never got 5 cents to leave their area and go on the market, within their own province. So, I justify myself today; that is exactly what the federal government did, or give me some evidence to the contrary. The evidence that I have is that it has never been fair. I could also talk about many other issues.

[Patrick Gagnon, Liberal, Bonaventure—Îles-De-La-Madeleine, QC]

Mr. Speaker, it is a well known fact, although the opposition seems to ignore it, that 48 per cent or the Canadian milk production comes from Quebec, and this is because of the quotas that were instituted by the federal government. It is thanks to the federal government which protected the Canadian market that Quebec could control 48 per cent of our milk production.

Potato farmers were mentioned once again. Let us talk about potato farmers, let us talk about maple syrup. I know what I am talking about, I used to work for a company abroad which tried to open up this market for Quebec producers. It is totally false to say that the federal government did nothing. In my riding, UPA received $84,000, and you refuse to acknowledge that we paid more money to people who work in the field in order to diversify local production.

I am disappointed by the denials of the opposition. Once again, we only hear the separatist rhetoric, that real Quebecers do not want.

[Jean Landry, Bloc, Lotbinière, QC]

Mr. Speaker, in Quebec 24 per cent of the population works in the agricultural industry, but only 10 per cent of the agriculture budget goes to Quebec.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Only 10 per cent.

[Jean Landry, Bloc, Lotbinière, QC]

Only 10 per cent. I want equity. Once my colleague opposite gives us equal treatment, we will talk.

[Patrick Gagnon, Liberal, Bonaventure—Îles-De-La-Madeleine, QC]

Mr. Speaker, there is no doubt that much remains to be done in agriculture. The hon. member must bear in mind however, that the federal government and several departments are working on finding ways to make programs more accessible to the Quebec producers. At any rate, I would like to point out to the hon. member that, as it happens, we are managing and considering programs in which producers are invited to get involved in biotechnology.

As it happens, there is program in my riding to encourage farm producers, these men and women who work the land, to try and find ways to perhaps introduce such products making use of new technologies, for the betterment of Canadians health and well-being.

Of course, the opposition is none too pleased to hear such things, but as far as the entrepreneurs are concerned, when we talk about bank loans, about the implications for example of the involvement of the Federal Office of Regional Development, of the Federal Business Development Bank, it is all a matter of balance. What matters for Quebec producers, in terms of balance, is to make sure that there is a Canadian market in the first place.

I think that Quebec producers agree almost unanimously on the importance of the Canadian market and the need to maintain this market to compete with the United States.

Funds were made available to farmers, scientists, research workers, unions, labour organizations. The federal government has a role to play. Let us not forget it and let me tell you that it is often welcome, contrary to what the hon. member opposite claims.

[Jean Landry, Bloc, Lotbinière, QC]

Mr. Speaker, we were talking about fairness. That is a point I wish to raise. I would like to debate the issue of fairness.

In my riding in Quebec and elsewhere, we see young people who, after completing agricultural studies, want to start working on farms, or to buy family farms. There are many restrictions and requirements at the FCC. Young agricultural school graduates are not allowed to work in their field of study.

We in Quebec know what we need. I have nothing against them defending the federal government but I want fairness. As I said earlier using the figures I quoted, we have 24 per cent of the population but only 10 per cent of the budget. I am not asking the impossible; we should simply get our fair share per capita, that is, 24 per cent.

With respect to agriculture in Quebec, there is overlap and duplication. The party opposite has asked us to offer solutions. We do more than just criticize. The Official Opposition is not only to criticize but to propose solutions, as we saw this afternoon when we talked about tax shelters and family trusts. We indicated where cuts must be made and what is needed. We do more than just criticize. I am willing to criticize but also to offer solutions.