moved that Bill C-50, an act to amend the Canadian Wheat Board Act, be read the second time and referred to a committee.
Madam Speaker, last October the government was elected based on a comprehensive plan for Canada known as the red book, which was our platform. In that red book we made a number of commitments to the people of Canada. I am very pleased that within our first 11 months in office we have made considerable headway on a number of fronts.
As Minister of Agriculture and Agri-food it is my great pleasure to speak today about one of these initiatives, namely the government's commitment to research and development specifically in the context of Bill C-50.
I recall attending my very first meeting with producers as a new minister. It was a meeting of the Manitoba pool elevators last November in Winnipeg. There were a number of issues on the minds of delegates at that meeting. They wanted to talk about GATT and about trade issues. They wanted to discuss transportation and safety nets. All of these issues have been moving forward at a very rapid pace and some of them with much public fanfare and media interest.
I also recall at that meeting another important issue that was raised by one of the delegates, one which received less fanfare and less public attention. The question was about research. I told the delegates at the Manitoba pool convention what I have been telling farmers and farm organizations across the country throughout the course of this past year. I believe agricultural research is an extremely important issue, one where we must continue to focus our resources.
My department already has a very good track record in selecting research and development projects with a high return for Canada. We are continually reviewing our research priorities and programs to ensure that we are getting the best possible value for every research dollar. We are also nurturing our partnership approach to industry responsive research by inviting our industry, academic and producer partners to take responsibility with us.
We are placing a strong emphasis on matching funding and joint projects with stakeholders in all facets of our operations. This allows us to use the market for direction.
Some might say this approach reduces the federal commitment to research or that my department may use the check-off proposed in Bill C-50 as an excuse to reduce expenditures in wheat and barley research. While it is likely that overall government spending will decline as we battle against the deficit, as we must, I want to emphasize that innovation and a strong research program are essential to Canadian agriculture and will be a priority for my department.
I make no apologies for sharing the responsibility of the future of agriculture with our industry and producer partners. Some members may have heard me talk about the matching investment initiative which we have launched this past year. Under this program we will spend some of our existing R and D dollars in a new way. Where industry identifies research projects that are of commercial interest we will match industry's investment dollar for dollar. This is not new money but money we have redirected from lower priority activities.
This approach makes sense and allows us to move forward on research while maintaining fiscal responsibility to Canadians. Producers have told me they want to play an important role in research since the results of research directly affect their operations and ultimately their livelihoods. This shared approach gives us the best of both worlds.
Good research is not a frill or an ivory tower pursuit to be thrown aside in tough times. Dedicated and focused research is a necessity for survival particularly in tough times. Dedicated and focused research supplies the technology that creates opportunities for market development and new exports which are so vital to the sustainability of our industry.
One of the most important initiatives with significant long term implications for the future of agriculture generally and the grains industry in particular is in plant breeding. Today we are considering Bill C-50 which is legislation that will lead to an additional $4.7 million in annual investments in plant breeding research.
This investment has the potential in about 10 years to translate into a $400 million increase in gross returns to prairie farmers annually. It is an investment which will cost wheat producers about half a cent a bushel or about 20 cents a tonne. I think any investor would be more than just a little interested about such an attractive rate of return.
What I am talking about today is a research partnership, the result of a proposal put forward by producers through the Western Grains Research Foundation. The proposal calls for a voluntary producer levy or a check-off program to support plant breeding research programs for wheat and barley. The federal
government is acting on this recommendation from the foundation.
For the past several months my department has been working very closely with the Western Grains Research Foundation to develop a check-off program which will enable grain producers themselves to supplement existing research budgets. To make this happen we require some legislative amendments. That is why I am recommending that the act which governs the Canadian Wheat Board be amended to allow voluntary levies to be deducted for the explicit purpose of supporting plant breeding research. Such deductions are simply not possible under the existing Canadian Wheat Board Act.
I bring this legislation to the House today and I am asking members to support it based on the knowledge that this program is a joint effort among government, industry and the research community. This check-off plan has been developed in close consultation with producer groups as well as with scientists from universities and from my department.
As I stated earlier I am a firm believer that the best way we can accomplish our research objectives is for both industry and government to invest in research in a partnership approach. This effort before you, this specific check-off plan, is supported by the Canadian Wheat Board and has already received strong support from a majority of farm organizations. And well it should since the concept has been a producer initiative from day one, an initiative which we have been working on with producers to make it a reality.
This program will generate additional research funds through the voluntary levies on wheat and barley sales. The levies will be deducted from Canadian Wheat Board final payments to producers. They will apply to board sales of most wheat in the four western provinces and the sales of barley in Saskatchewan, Manitoba and B.C. Alberta sales of soft white wheat and barley would not be subject to this levy as producers of those commodities already have check-offs in place provincially.
Some people might point to reduced wheat acreages and suggest that producers will not want to support a so-called declining crop. To these people I would say that despite ongoing diversification of crops, wheat is still a major crop for many producers on the prairies. Last year it contributed $2.7 billion to the Canadian economy.
Despite the recent and dramatic surge in the importance of canola as a crop in Canada, with better world prices in the last number of weeks wheat may have regained its rank as our most valuable crop. It is important to remember also that wheat is not one crop but actually is seven. Some varieties such as durum, extra strong, and white prairie spring are gaining acreage and gaining market share.
I would like to provide the House with a bit of background about why research levies are needed and what we hope to achieve with them. I would like to explain how the grain producers on the prairies in partnership with government came to the decision that such levies are a necessary and important key to the future of prairie agriculture and the grains industry in Canada.
The Western Grains Research Foundation is a federally chartered public organization with a proven track record in supporting effective pure research. It was established just over 10 years ago to allocate research funds. Its economic base came from the interest earned on $9 million left over from the prairie farm assistance act when it was repealed.
Currently the foundation distributes about $900,000 a year in interest funds. It has done some very good work with that money. It has focused on vital issues such as the problem with fusarium head blight in Manitoba. The foundation is quick in its reaction time and it is targeted on vital issues.
The foundation is run by a board of directors representing its member producer organizations and includes a representative from the research branch of my department. What this means is that the research decisions of the Western Grains Research Foundation are made by producers and the foundation is accountable for those decisions to all of its producers as well as the federal government.
To carry out its new research objectives the foundation will establish two research advisory committees, one for wheat breeding and one for barley breeding. These committees will be responsible for developing operational plans and co-ordinating research programs designed to achieve our plant breeding objectives. They will decide which research projects to fund in western research centres and the emphasis will be on funding work that will meet a future market need.
Western plant breeding centres receiving funding will report on their progress annually to the Western Grains Research Foundation. This progress will be reviewed by the advisory committees who will make decisions about continued support. Furthermore the foundation will report annually to all prairie permit book holders giving an accounting of the money received and how it has been used to accomplish the research goals.
The role of the Canadian Wheat Board in all of this is purely administrative. All major decisions will be the responsibility of the Western Grains Research Foundation which is ultimately accountable to its producers and to the Government of Canada. I feel very comfortable with the accountability process which the Western Grains Research Foundation has established for itself under this proposed program.
In supporting these amendments to the Canadian Wheat Board Act hon. members of the House will be in very good company. They will in fact be joining a team of supporters from
12 prairie farm organizations which make up the Western Grains Research Foundation.
Those member organizations are: United Grain Growers; Western Canadian Wheat Growers Association; Manitoba Pool Elevators; Prairie Canola Growers Council; Flax Growers of Western Canada; Saskatchewan Wheat Pool; Keystone Agricultural Producers; Western Barley Growers Association; Oat Producers of Alberta; Alberta Wheat Pool; Canadian Seed Growers Association; and the Unifarm organization of Alberta. There are recent indications that other groups and organizations wish to join this team of research oriented and progressive farm organizations.
These organizations are key players in the Canadian grains industry. All of them have backed the voluntary check-off proposal and they have consulted with their producer members. It was the decision of these organizations that dedicated research funds be collected and applied explicitly to plant breeding research.
What we have here is a program that producers want. It is one we will be supporting through the legislative amendments to the Canadian Wheat Board Act now before the House in the form of Bill C-50. Simply put, the program will enable producers to do what they have asked for: to invest a portion of their own money into the future of their crops, their industry and their very livelihoods.
Canada's grains industry is highly dependent on exports. Today's grain customers are demanding both a stable supply and a high quality product that meets their end use requirements. I have consistently maintained that we must be able to respond quickly to changing market conditions if we are to remain competitive in those vital global markets.
The proposal before the House will help us to improve our competitive advantage while also improving farm incomes. New varieties of wheat and barley will be developed. New varieties will lead to improved field performance, higher yield potentials, increased resistance to disease and insect pests, earlier maturity and reduced harvest losses, all improvements which will reduce per tonne production costs for farmers.
The development of new varieties with specific qualities required by the marketplace will improve sales through the development of new market opportunities. This will keep Canada on the fast track in meeting marketplace demands.
For example, Canada must be able to respond rapidly to new demands for varieties of wheat suitable for specific uses such as frozen bread dough, Asian type noodles, or new varieties of malting barley that are needed in markets like Korea and China. In fact we do have a variety of wheat that is suitable for the frozen bread dough requirement, but so far it is not grown in large enough quantities.
Meeting the demands of these changing trends in food consumption preferences could mean significant new market potential and increased profits for western producers. Sound investments in crop research will pay off in better market returns to farmers in the future.
Will Canada be ready when opportunity knocks in terms of these new markets? With the benefit of research initiatives such as this voluntary check-off proposal contained in Bill C-50, I firmly believe Canadian farmers will be in a better position to compete in that very tough and demanding international marketplace.
As I said earlier, the program has the potential to bring plant breeding research almost $5 million in additional funding each year. The House will note that I used the word additional. This is important. I know concern has been expressed in some quarters that governments might take advantage of the contributions made by producers under this program to reduce the government spending on wheat and barley breeding programs.
We all know that cuts have occurred throughout government and that overall spending reductions are likely to be a fact of life in government for the foreseeable future. My department will not target wheat and barley research for special reductions just because of the contributions made by farmers under the program. Funding levels for wheat and barley research will be held in proper proportion to the amount being spent on research for other grain crops within the Department of Agriculture and Agri-Food Canada.
Here is how this voluntary check-off will be implemented. It will work in the simplest form possible through deductions from Canadian Wheat Board final payments before that money is distributed to farmers. When I say "as simple as possible" I mean just that.
There are no huge administrative costs or red tape. I would suggest that the administrative costs proposed in Bill C-50 will be lower than the costs of other similar types of programs already in place in some provinces.
Annual operating costs are estimated to be in the order of $106,000 a year or about 2 per cent of revenues. That amount will be deducted from the total amount of levies collected. Western producers of wheat and barley would pay levies of 20 cents per tonne on wheat and 40 cents per tonne on barley. The barley levy is higher to partially offset the lower volume of barley deliveries.
The amount to be levied will be fixed by order in council. The levies will be deducted from Canadian Wheat Board final payments beginning with those for the 1993-94 crop year and those final payments in the ordinary course of events for 1993-94 would be made in January 1995.
The funds collected, beginning in the coming year and in subsequent years, will be automatically transferred by the Canadian Wheat Board to special accounts set up and administered by the Western Grains Research Foundation.
This program is not intended to duplicate or replace current check-off programs already in place in some provinces. Producers who choose not to participate may opt out if that is their preference. Any farmer wishing to opt out of the levy on an annual basis can do so by a simple notice in writing.
However early indications are that we can anticipate a participation rate in this check-off program in the order of 90 per cent. We have confidence in that participation rate because this program has been initiated by producers and producer organizations. It has had their keen support throughout its developmental stages to the point now where legislation is ready in the House of Commons.
Research and development spending cannot be simply turned on and turned off like a tap. Such an attitude toward research only results in inadequate and inconsistent support and missed opportunities. Inaction on the research front would negate the day to day efforts of hardworking farmers across the prairies and Canada would risk losing its competitive edge in wheat and barley markets. We absolutely cannot run the risk of our wheat and barley breeding programs falling behind those of our competitors. For years now our major competitors like Australia, the United States and the European Union have been taking a direct role in renewing public plant breeding programs in wheat and barley. Incidentally, much of their research has been implemented as a result of producer funded programs. A check-off or a producer levy in Canada is required to keep up with that international competition.
I am pleased to bring forward this producer initiative to increase funding for plant breeding research in Canada. The proposed wheat and barley check-off is a very good example of how producers and government can work constructively together to achieve something that will benefit the industry as whole and will translate into benefits for future Canadians.
I recommend that the House approve Bill C-50 amending the Canadian Wheat Board Act to allow voluntary levies to be deducted in support of this important research program. I am anxious to hear the comments and remarks of members of the House who I hope will indicate their support for this particular direction.
I would draw to the attention of the House, this being Tuesday morning, that I have a commitment in cabinet to which I must attend. I regret not being able to stay to listen to the remarks that will be offered by other members in the course of the debate.
I am very pleased that the secretary of state for agriculture and agri-food and my parliamentary secretary will both be here and listening to the remarks of hon. members. I suspect they will be participating in the debate. I very much look forward to the reaction of members to this important bill.