Mr. Speaker, I would like to pick things up exactly where we left off approximately 67 minutes ago. We were replying to the Parliamentary Secretary to the Minister of Agriculture on Bill C-75 which will raise from 1.5 billion to 3 billion dollars the maximum amount of government guaranteed farm loans.
As I had to split my speech in two, I should perhaps remind members that the bill before us seeks to amend the Farm Improvement and Marketing Cooperatives Loans Act. I will now continue reading my text exactly where I left off at two o'clock, about 67 minutes ago.
Let us say, for example, that the Quebec Société du financement agricole keeps a very close watch on the rate of increase of farmers' indebtedness and that, in so doing, it modifies its standards and criteria. It would never have the necessary leeway to implement its decisions because a federal agency would once again meddle in its affairs and muddle up the initial goal of the Quebec government. The federal government's eligibility criteria do not necessarily reflect provincial priorities.
Federal agencies compete with provincial agencies, which may have stricter criteria, and I must say that the provinces are in a better position to know the real needs of their citizens. In any case, they are certainly in a better position than the federal government, which has to enact general policies that must be realistic and applicable from coast to coast.
The thing that we must remember is that, once again, instead of eliminating overlapping and giving the provinces their own tools, the Liberal government has decided to keep everything under its control. By maintaining this overlapping, the federal government gives itself the opportunity to intervene in the management of our agricultural sector in Quebec.
It should also be emphasized that it is very strange that this act is administered by the department instead of the Farm Credit Corporation. Even if the programs are different, the Farm Credit Corporation already arranges loan guarantees. That is a striking example of administrative duplication. This is not duplication between government levels but in fact duplication within the same government.
We, in the Bloc Quebecois, wish that the government would give to the provinces the financial resources that belong to them. As the Prime Minister said earlier in answer to a question from the Leader of the Opposition, Quebec is not begging but merely asking for what it is entitled to.
Provinces will thus be able to take over the administration of programs like the one Bill C-75 deals with. It must be clearly understood that we are not against the bill as such but we firmly oppose the overlap and duplication it perpetuates, whether in the same government, that is the federal government, or between the federal government and provinces. We believe the bill is relevant but we regret that it maintains duplication.
I would now like to submit some statistics found by our researchers about FIMCLA or Bill C-75. First I wish to remind the House that since February 1988 when the above amendments came into force, over 65 000 loans totalling some $1.5 billion have been granted under the act.
I should also remind you that the province which benefits the most from the act is Saskatchewan, followed in second place by Alberta and third by Quebec. I believe Ontario comes in fourth place in terms of utilisation of the act but I must remind you the rural Ontario enjoys a high standard in terms of agriculture and investment needs. To this day, some 10 loans have been granted under the act for co-operative projets with a total added value of $14.2 billion.
In 1994-95 for example, 17,000 loans totalling some $475 million have been granted under the act. Again in 1994-1995, the average loan is $27,000 and the five-year average is $22,000.
In the last 25 years, net losses incurred under the act have accounted for 1 per cent of all guaranteed loans each and every year.
I would now like to talk to you about interest rates. I think that interest rates are reasonable and favourable to farmers. The maximum interest rate that lenders can set is the prime rate plus 1 per cent in the case of variable rates. Or, if you prefer, the variable rate is equal to the prime rate plus 1 per cent, so it changes like the tide. If interest rates go up, the interest rate paid by farmers on loans guaranteed under this act will go up as well. Conversely, if interest rates go down, the interest rate paid by farmers will also go down.
However, if the farmer wants a fixed rate for five years, the rate will be the prime rate at the time he negotiates his loan plus 2.25 per cent. But it must not go beyond a fixed five year period. According to the statistics I am quoting to you, in 1991, some 683 rural lenders such as caisses populaires and credit unions were accredited as lenders under this act.
As you know, Mr. Speaker, caisses populaires were treated inequitably in the past, because the caisse populaire network plays an extremely important role in Quebec. Often, it was less profitable for the large banks to do business in rural areas, so they withdrew to the major centres. They left rural communities to the caisses populaires, making it difficult for our farmers to borrow money since the caisses populaires were not even accredited.
How could the central government, with its so-called respect for institutions, have the nerve not to accredit the caisses populaires? Only large banks had this privilege, because, as we know full well, the caisses populaires never make financial contributions to political parties, be it the Bloc Quebecois or any other political party.
You see, since they were not major contributors to election funds, they were simply relegated to that kind of loan. It is a disgrace. Fortunately, staunch nationalists such as the Parti Quebecois members, whose courage I must salute, pressed and reasoned the the federal government into recognizing credit unions as lenders for the purpose of this loan guarantee.
While accounting for 25 per cent of the total Canadian population, Quebec is only the third largest user of loans guaranteed by the federal government at seemingly interesting interest rates under this act. Why do Quebec farmers not use this window? Because it is not well known at all. So, with your permission, I will try to describe it as briefly and simply as possible.
First of all, I must tell you that this act does not apply to anyone who wants to start a farm business. If you want to buy a farm with a view to eventually becoming an independent farmer, this act is not for you; you have to go either to the Farm Credit Corporation, which is a federal institution, or to the Société du financement agricole, which is a Quebec institution.
The bill before us this afternoon is for farmers who wish to make improvements, expand their facilities, buy out a neighbour, those who want to build extensions, for example an addition to a hog house, build a road across their farm to get to the wood at the other end of the property, install an electric generator in a hog house or refinance and consolidate all their debts in a single loan. That is what this kind of loan is for. It could also be used to buy cattle, install a new grain silo or buy the neighbour's silo to move it to your land. As you know, the cost of building a manure pit or buying tractors, rotary mowers or combine-harvesters is always on the rise.
Of course, the government is not guaranteeing loans of less than $2,000. As you know, in 1995, we cannot afford to create paperwork costing more than the benefit provided. There is also an upper limit. For farmers, the maximum is $250,000, while in the case of agricultural co-operatives, it is $3 million.
Some purchases are not eligible, such as short term goods. Under Bill C-75, piglets weighing 35 or 45 pounds would not be eligible because such a purchase is for a short term of about five or six months. Consequently, it would not be eligible. The same is true in the case of repairs to the family home on the farm. Such an expense would not be eligible. Nor would the purchase of quotas. A dairy producer interested in buying a quota to generate a more substantial income would not qualify.
So, under that bill, a farmer can borrow up to $250,000 and an agricultural co-operative up to $3 million. The loan guarantee must cover the maximum of 80 per cent of the loan. We cannot guarantee more than 80 per cent of the assets bought. In the case of a farm expansion, the maximum period provided to repay the loan is 15 years, while it is 10 years for any other product or good. It goes without saying that, if the product bought will only last four years, the maximum period provided to repay the loan will not be 10 years but four.
Let us now look at payments. Payments could be made on a monthly basis, but at least one payment would have to be made each year. If someone says: "I only want to pay every two years", that would not be possible under this bill, since a minimal payment is required every year.
I have already addressed the issue of interest rates, so I will recap briefly. If you talk about the variable interest rate, the floating rate, that is the prime rate plus 1 per cent. If you choose the fixed rate, that is a lot more costly. A fixed rate is only good for 5 years and is equal to the prime rate plus 2.25 per cent.
Finally, I would like to take a minute or so to talk about the registration fee and the administration charge.
Farmers who ask for a loan under the Farm Improvement and Marketing Cooperatives Loans Act must make a payment of one-half of 1 per cent, or 0.5 per cent of the total amount of the loan. This money is paid to the Receiver General for Canada so that the loan guarantee can be examined. Over and above this 0.5 per cent, the lender can also add $250 or one-quarter of 1 per cent of the amount, whichever is less, as long as it does not exceed $250,000.
As was said earlier, this also applies to co-operative agricultural societies, and there are quite a few of these in Quebec. The Co-operative Society of Disraëli, a town located not far from my area, contracted a loan a few years back when it built silos in order to produce feed. This loan was guaranteed by the federal government.
A co-operative agriculture society can therefore get up to almost $3 million at the same interest rate as the one mentioned earlier for farmers.
The Bloc Quebecois will support Bill C-75. But again, I want to make it clear that we support this legislation so that our farmers can receive the financial resources they need to expand and so that they can get from the federal government the guarantees to which they are entitled, since they pay taxes just like any other worker in Canada and particularly in Quebec.
But, as I said a few moments ago, we do have some objections concerning duplication and overlap.
During the four days of recess in the week after Easter, I visited several farmers who are friends and colleagues of mine. I told them that I was going to speak on this bill today. A very big majority of farmers, although not all of them, said to me that they were not familiar with this act. This is certainly why Quebec is only the third most important user of the services provided under this act among the ten Canadian provinces, even if Quebec farmers alone account for more than 17 percent of farm production in this country.
Saskatchewan, a province with a small population base, ranks first because the program was well advertised in that province. Mr. Fernand Fillion, a hog producer in Lyster, told me that, before building his new hog house, an investment of well over $1 million, he examined the services provided by the Société de crédit agricole du Québec, the Société de financement agricole in Quebec and under this act. He realized that the loan provided by the Société de financement agricole du Québec was the most profitable option in his case.
Farmers have three options: they can borrow money through the Société de financement agricole, the Société de crédit agricole du Québec, or under the Farm Improvement and Marketing Cooperatives Loans Act. Why not save money through the single window approach? Farmers would not have to knock at three different doors, and travel to as many as three cities to meet with civil servants who cost the government a lot of money. It is always the same taxpayer who pays for this kind of inefficiency and duplication.
When we, members of the Bloc Quebecois, visit people in our rural areas, our concessions, our municipalities, our small towns, and tell them about all this duplication, they understand easily and quickly why we have a $40 to $45 billion deficit every year.
We could easily save millions. I have a perfect case of duplication within the government. Just last week, a farmer was telling me: "We would like to deal exclusively with the Quebec Minister of Agriculture because he is the one that we know. We do not even know who the federal Minister of Agriculture is and, when he comes to see us, he has great difficulty talking to us in our own language". It is not a bad thing, of course, but it must be understood that Quebecers are a lot closer to their provincial government than to the federal government.
The Minister of Agriculture is constantly telling us that his ultimate goal is to help farmers. If he really wants to help farmers, why not make things easier for them by having a single window and using the money that the government will save this way to lower interest rates? It would not cost a penny more and farmers would be a lot happier.
I take this opportunity to invite the Minister of Agriculture to take a week off and to come and visit with farmers in rural Quebec. Among the 17 or 18 Liberal members who represent Quebec in this government, there are certainly a few who come from rural ridings. I am sure they are not all city members from the West Island. There must be a few among them who have seen a cow up close and who have been in a hog house. Let them come and visit. There is the Prime Minister, whom I know very well and who represents the beautiful riding of Saint-Maurice. There are fine farms in his riding. I invite, for example, the Minister of Agriculture to visit the riding of Saint-Maurice and to ask farmers what they want. In Saint-Maurice, which is different from the riding of Frontenac, there must be some federalists, since they elected the Prime Minister. So, that is where the minister should go.
I am telling you, Mr. Speaker, farmers know that they are being had by this government. Monday morning, I met a farmer who told me-because he had watched the debates of the opposition day concerning cuts in agriculture, being himself an industrial milk producer-that he thought he would lose approximately $4,000. And it is the last thousand dollars that is profitable, not the first.
You know, Mr. Speaker, in a cow barn, it is not the first cow that is milked in the morning that is profitable, but always the last. Indeed, the last one is all profit. With this 30 per cent cut in the industrial milk subsidy, the government is taking away from the farmer this last cow which brought him his $4,000 at the end of the fiscal year.
He did not need to convince me, of course, but the dairy producer's concern was that in August the price of dairy products would be increased. By increasing the price of dairy products, and this is a proven fact, we will diminish consumption, which, in turn, will entail a reduction of the quota. So, I get the picture, Mr. Speaker. I am explaining these things to you and I am sure you understood them before I started speaking about them. And you may share my point of view that we should try to work not for us, but for our farmers, once and for all.