Mr. Speaker, I rise to speak today in support of Bill C-86, an act to amend the Canadian Dairy Commission Act, and to urge speedy passage of this important bill and the amendments it brings forward to this act.
This government is strongly committed to building our vision of a growing, competitive, market oriented agriculture and agri-food sector. Canada's dairy industry is a key component of that sector. Trade and market development, both here at home and abroad, are crucial to achieving the sustainable growth necessary to allow this vision to materialize for dairy producers, processors, and further processors in the industry.
In recent years value added exports have grown steadily in importance for the dairy sector. I would like to add as well at this time that I commend those in the dairy industry for the approach and the actions they are taking in meeting the challenges that are coming forward, the competition that is there, and the way in which they are able to meet that competition and competitiveness in the export markets with the use of these amendments.
Market realities call for changes in the way dairy stakeholders do their business. It is essential to facilitate industry driven marketing approaches in the new GATT environment. With the passage of the amendments before us in this bill, we will enable the Canadian dairy sector to meet some of these new challenges. These amendments will allow for the maintenance of a successful, effective, and equitable framework for the orderly marketing of milk and other dairy products in Canada and beyond our borders, a framework developed and supported by the industry. I repeat that it has been developed and supported by the industry itself.
Bill C-86, along with this amendment, to the Canadian Dairy Commission Act was given first reading here in this place on April 28. It will provide the necessary federal legislative authority to permit the Canadian Dairy Commission, in close co-operation with the provinces, to implement a national milk pricing system with the pooling of market returns from different classes of milk and use. No cost to government is involved in these amendments.
This new strategy conforms with Canada's trade commitments under NAFTA and the WTO agreements. It will provide a mechanism for the Canadian dairy industry to continue to supply important export and domestic markets for dairy products and products containing dairy ingredients, while at the same time maintaining the equity that is inherent in the current supply management regime.
Under the Canada-U.S. free trade agreement, which has been incorporated into the North American free trade agreement, or NAFTA, as we know it, export subsidies are not permitted on bilateral trade in agricultural products. Also, under the World Trade Organization agreement, which was implemented on January 1, 1995, the definition of export subsidies includes producer-financed export assistance. Therefore, as of August 1, 1995, the current system of using producer levies to finance dairy product exports to the United States will be prohibited. The ability to use levies to finance dairy product exports to other destinations is also gradually being reduced in volume and dollar terms under the WTO agreement.
Currently, through levies, milk producers across Canada share the costs associated with the export of dairy products not required for domestic consumption.
These levies also currently provide the funds that are needed to facilitate the payment of rebates to further processors of products containing dairy ingredients. Such rebates have been
necessary to assist further processors using dairy ingredients to successfully compete in domestic and export markets and to assist exporters of primary dairy products to be competitive on the export market.
The Canadian Dairy Commission administers these export and rebate initiatives on behalf of the dairy industry. These costs have always been considered to be a necessary part of managing the milk marketing system in Canada as a whole. The issue of equity between producers is central to the current milk marketing system in Canada and is preserved in the new pricing and pooling approach that will be enabled by this bill.
Equity is currently maintained through the payment of levies on every hectolitre of milk produced in Canada. Each province's current levy obligation is calculated by the commission on the basis of total fluid and industrial milk production. Levies are collected by provincial marketing boards and agencies through the deductions from producer milk payments and are remitted to the commission.
If Bill C-86 is not implemented by August 1, important dairy exports to the United States using producer financed levies will be in jeopardy. Furthermore, while export subsidies by levies to other destinations could continue for now, these subsidized shipments will also have to be reduced over time.
Canadian further processors, such as Hershey Limited in the nearby city of Smith Falls, De Tomasso Limited in Montreal, or McCains in New Brunswick, which use dairy inputs and products such as condensed milk, butter, and mozzarella in their chocolate and pizza products, for example, rely on U.S. exports to maintain the competitiveness of their Canadian production facilities. These companies, which employ thousands of Canadians, must continue to be able to obtain dairy ingredients at world price levels if they are to continue to successfully compete on the export market and to be competitive with the imports on the domestic market.
Pricing these dairy inputs at the producer level at U.S. competitive prices would eliminate the need for charging levies to producers and paying rebates to processors and would thus be a GATT-WTO acceptable method of maintaining this U.S. export activity. However, without the approach of pooling producer returns, which is enabled by this bill, Bill C-86, there would be no way of maintaining the producer equity that is achieved through the current levy system.
Without being able to pool returns on a national basis, milk producers in provinces where more Canadian processing and further processing activity takes place would be particularly impacted by the reduced market returns involved.
Under the amendments proposed in this bill, the levy system as it applies to milk marketed in interprovincial and export trade would be replicated through the creation of special milk classes where prices would be set at competitive market of destination levels and through pooling of the returns from those markets.
To maintain equity among producers across the country, milk revenues will be pooled and redistributed to producers through the Canadian Dairy Commission and provincial authorities according to terms agreed upon by the industry and the provincial authorities and set out in federal-provincial agreements.
In order to enable the Canadian Dairy Commission to administer such a pooling system for producers, certain federal and provincial administrative powers must be dovetailed legislatively. Most provinces currently have legislation authorizing pricing and pooling of returns on milk sold within their boundaries. The Canadian Dairy Commission requires similar pricing and pooling powers for milk sold across provincial boundaries and for exports. The commission must also be provided with the authority to both delegate and receive these new pricing and pooling powers from the provincial authorities. Such dovetailing of federal and provincial authorities does not involve any encroachment on current provincial powers.
The principal amendments to the Canadian Dairy Commission Act contained in this bill provide the commission with the legal administrative authority to calculate the average national price level for the milk classes whose returns will be pooled. Also it allows them to obtain the returns from sales to processors through the provinces and redistribute the returns to producers through provincial authorities on an equitable basis as per the terms of the formal federal-provincial agreements.
As I indicated earlier, the same effect is now being achieved through the producer levy system which finances such initiatives as the Canadian Dairy Commission's dairy product export assistance program; the rebate program for further processors and the butterfat utilization program.
Other amendments contained in Bill C-86 enable the dairy commission to recover pooling administration costs from funds generated by the pool itself; to establish a special bank account to deal solely with the producer moneys entering and leaving the pool; allow the commission to return any excess fees or levy funds to producers; permit the commission to establish a line of credit to ensure continuity of producer payments and strengthen the enforcement provisions of the act.
The price discrimination and pooling system approach that it will enable by Bill C-86 was developed through extensive dairy
stakeholder consultation and negotiations and is supported by provincial agriculture and agri-food ministers.
I have a number of letters of support from provincial governments, milk producers, organizations and provincial boards from across the country, from Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, B.C., the Dairy Farmers of Canada, the UPA and the Canadian Federation of Agriculture. They all support this bill and ask us to move it through this place and the other place as quickly as possible.
For the past two years stakeholders have dedicated extensive time and effort to develop a means of keeping in step with and responding successfully to all of the changes taking place in the domestic and international marketplace. Several working groups and committees, including the diary industry strategic planning committee, the negotiating subcommittee and the policy and all milk pooling committees, have all been established under the auspices of the Canadian milk supply management committee.
The committee oversees the application of a national milk marketing plan, the federal-provincial agreement which governs milk supply management in Canada. Chaired by the Canadian Dairy Commission, the Canadian milk supply management committee has representation from producers and governments from all provinces except Newfoundland, which is not a signatory to the national plan because it does not produce significant amounts of milk used in the industrial product sector. National processor and consumer groups also participate in the nationwide forum.
The federal-provincial task force on orderly marketing also reviewed the progress made by the dairy sector in defining a new framework for sustainable, orderly marketing. Last December ministers of agriculture and agri-food were advised of the industry's recommendation that national price discrimination be endorsed as the only viable option to continue current programs designed to export to the United States and maintain domestic markets facing import competition, and that the preferable method of sharing returns from price discrimination at the national level. The method that is equitable and GATT acceptable is the pooling of returns from all milk classes.
Ministers subsequently supported this approach and directed that amendments to the Canadian Dairy Commission Act be developed to provide for a national pooling of milk returns to delegated administrative functions.
The bill before us today is the culmination of this comprehensive, consultative process. Through the system enabled under Bill C-86, the dairy sector is adapting to a changing business environment. I congratulate it for doing that.
Dairy stakeholders have developed a flexible and more market oriented approach that will set the industry on a viable course for the long term. The approach will also encourage greater co-operation among provincial milk marketing boards, agencies and processors in developing new markets for Canadian dairy ingredients and products.
I urge all members and all parties in the House to give these amendments speedy consideration and passage so that we can continue to have a growing and strong dairy industry in this country.