Mr. Speaker, I will comply with your instructions willingly and I would like to stress that I always send my salutations along with the Speaker's to the dignitaries who are acknowledged in the gallery behind me.
I was saying just before you intervened that the links between Quebec and Canada would be cut if Quebec voted yes in the referendum. Trade between Quebec and Canada-get a load of this, my friends across the way-is over $80 billion per year. This economic integration alone is justification for maintaining some kind of economic tie between Canada and Quebec or Quebec and Canada. Isolating the case of milk quotas to show that Quebec would lose its exports, and that the opposite would not take place, is pure bunk.
Quebec dairy farmers play a leadership role in the present supply management system. With about 48 per cent of industrial milk quotas, Quebec is the main supplier of dairy products for the whole of Canada. For example, did you know, hon. colleagues, that 40 per cent of Canadian cheese consumed by the rest of Canada come from Quebec? It is with this in mind that we must consider the future.
We will soon have to make a decision regarding the future of Quebec. I strongly believe that no matter what we decide, it is in the best interest of the rest of Canada, as well as of Quebec, to co-operate in order to preserve the dynamism of our agricultural sector. On Wednesday, March 29, we had very concrete proof that this co-operation goes way beyond the political level. This did not happen a century ago, this was last week. Dairy farmers in Quebec and Canada signed a memorandum of agreement integrating the marketing of industrial and consumer milk in six eastern provinces. I would like to name them: Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island. I would remind you that Newfoundland is not part of the supply management system.
An agreement was signed to create a common market between these six provinces. Under this agreement all farmers in these provinces will receive the same amount of money for their milk and will have a common quota. You have to understand that an unfair practise had existed for years. A farmer who had an industrial milk quota sold his milk for up to 10 per cent less than what he could have gotten for consumer milk. If two identical cows had been branded, one for consumer milk and the other one for industrial milk, the farmer would have gotten less for the production of the latter.
In less than 18 months, this inequity will have disappeared. We had this distortion, and it was not in Central America or in Central Africa, but here in Quebec. We had two different prices for the same milk, depending on whether it was to be processed or consumed as such. The six provinces now party to this agreement account for 85 per cent of the Canadian industrial milk quota. This integration will allow them to put in place a single system of milk marketing. In the medium term we can even see the total elimination of interprovincial barriers to milk supply.
The lesson to be drawn from this agreement is that even in a referendum year dairy farmers in Canada demonstrated that they are willing to integrate economically with Quebec. Why should they take the risk of signing this kind of agreement at the present time? Surely because they know that following a yes vote in the referendum, Canada will keep its economic union with Quebec in order to protect its own interests.
This proves that economic reality is stronger than emotional considerations.
Federalists raise another important issue, namely what will happen to customs tariffs with the U.S.? When renegotiating NAFTA, the U.S. will probably try to get a better deal than they already have, which will not be any different from what is happening right now. Just as Canada does at the present time, Quebec will answer that tariffs are protected by GATT, which is what the agriculture minister tells us every time we ask a question in this House regarding the sugar negotiations, wheat exports, and the tariff issues raised by the U.S. the day after New Year. This very minister invariably answers that GATT agreements take precedence over NAFTA. If this is true in his case, it should also be true for Quebec.
The real threat against the dairy industry and Quebec agriculture does not come from Quebec's possible sovereignty, but from the federal government opposite which is increasingly neglecting Quebec agriculture, and especially the dairy industry. It comes from a total lack of planning on the part of the government opposite and, above all, from the lack of fairness of the budget measures proposed by the Liberal government.
February 28 was a sad day for dairy producers in Quebec and Ontario. On that day, the finance minister announced, in his
budget, a 30 per cent reduction over two years of the federal subsidy for industrial milk. Since Quebec farmers alone produce 48 per cent of the industrial milk quota, it is obvious that they are the ones who are the most unfairly affected.
Mr. Speaker, I do not want to use props, but there is in Ontario a farming magazine called Farm and Country. It is the equivalent of Quebec's La Terre de chez nous . Every farmer at least flips through it from cover to cover, if they do not actually read all of it. This week, there is a cartoon on the front page, showing a beautiful Holstein cow and, sitting on a small stool, a farmer who bears a striking likeness to our finance minister. He is milking the cow. His pail is empty. The teat is full of scars. When he squeezes it, all he gets is one lonely drop of milk. This is the kind of future this government is shaping for dairy producers.
Also, last week, Mr. Laurent Pellerin, president of UPA and a great advocate of Quebec farmers, whom I salute today in this House, estimated that the 30 per cent reduction in industrial milk subsidies will cost producers $4,485 over two years. If you allow me, I will take a few seconds to explain how he reached this figure. I would like the agriculture minister to listen very carefully because there is something I want to point out.
Dairy farmers will not receive any financial compensation for these cuts, unlike western wheat and grain producers, who will receive $1.6 billion in non-taxable funds, which is the equivalent of $2.2 billion. But there is absolutely nothing for Quebec and Ontario.
A farmer who produces 2,500 hectolitres of milk per year and who buys 71 tonnes of mash every year to feed his cows will be hurt because, as you know, the feed grain transportation subsidies have also been cut in the East. The Maritimes will be hit hard. The subsidy on 2,500 hectolitres has been cut by $5.43 per hectolitre times 2,500, or $5.43 less 30 per cent or $1.51.
Dairy farmers face cuts of 15 per cent this year and 15 per cent next year for a total of 30 per cent for every hectolitre produced. Next year, they will lose $1.51 per hectolitre. A farmer producing 2,500 hectolitres per year faces a $3,775 cut.
To this must be added the cuts to the feed grain transportation subsidies. The resulting increase for farmers is estimated at $10 per tonne. Farmers will be asked to do their share to correct the past mistakes of successive federal governments that accumulated huge deficits. A farmer buying 71 tonnes at $10 per tonne would add $710 to the $3,775 cut and end up with a $4,485 contribution to deficit reduction.
As you know full well, what will happen in August is that dairy producers will ask the Canadian Dairy Commission to increase milk prices, and I hope that their request will be granted. Dairy producers are not stupid. They do not have to suffer such a major drop in income. The Canadian Dairy Commission will allow them to raise their prices, I hope, to compensate for cost of living increases and the losses incurred.
As a result, consumers will pay much more for powdered milk, butter, cheese, yogurt and ice cream. This is called hidden taxes. Farm and Country , the Ontario magazine I referred to earlier, estimates that every dairy farmer contributes $56 per cow to deficit reduction.
Surprisingly enough, not a single Liberal member rose in this House to denounce the 328,000 flights. As we read in the newspaper last week, these trips cost nearly $1 billion in travel expenses. I have the newspaper article in front of me: the 328,000 flights taken between April 1993 and March 1994 cost taxpayers $275 million so that Canadian Forces members and senior officials, in particular officials at the Department of Transport, could travel.
In closing, I urge dairy farmers in Ontario and Quebec to look out for the ordeal that this government will inflict on them in the next 24 months.