Madam Speaker, it is my pleasure today to speak in favour of Bill C-86, an act to amend the Canadian Dairy Commission Act. The proposed amendments will permit the strengthening of the partnership between the commission, provincial milk marketing authorities and the dairy industry, through the joint administration of the new pricing system and the pooling of market returns.
This approach will allow Canada to comply with the new trade conditions under the North American Free Trade Agreement and the World Trade Organization agreement. Milk used for exported products or for products on domestic competitive markets will continue to be made available to processors at competitive prices. At the same time, we will maintain the producer equity that is so essential to the current milk marketing system.
Even though Bill C-86 gives new powers to the Canadian Dairy Commission, it has no effect on provincial jurisdiction. An interface between current provincial and federal powers on pricing is necessary so that all milk marketing can be regulated, whether the milk is sold beyond provincial borders or on export markets.
The pricing and pooling approach, authorized by the amendments in Bill C-86, was proposed by the dairy industry itself and represents only administrative changes to the mandate already given to the Canadian Dairy Commission and the provincial milk marketing authorities.
Since its creation as a Crown corporation in 1966, the commission has assumed a key role in the development and implementation of the federal dairy policy. It is working in close collaboration with important national organizations such as the Dairy Farmers of Canada, the National Dairy Council of Canada and others working under them.
The Canadian Dairy Commission is also facilitating the essential work of the Canadian Milk Supply Management Committee through the chairman of this committee responsible for controlling the implementation of the national milk marketing
plan, the federal-provincial agreement governing the management of milk supplies in Canada.
After detailed consultation with the industry, the commission sets the target price of industrial milk-the milk used in dairy products such as cheese and yogurt-and the support price of butter and skim milk powder.
The Canadian Dairy Commission is also authorized to collect levies from producers remitted by the provincial milk marketing authorities. This is to cover exportation costs and finance special programs aimed at increasing domestic consumption of dairy products.
Provincial milk marketing authorities are authorized to set the prices and pool market returns within their respective borders. The new legal provisions contained in Bill C-86 will place the commission on equal footing with provincial authorities as far as price setting is concerned and authorize it to operate the pooling system agreed on by the provinces for milk earmarked for interprovincial or international trade.
In order for the Canadian Dairy Commission to be able to manage this new price setting and pooling approach in the interest of producers, legislation must give certain powers to provincial dairy authorities and, as required, provide that they give up certain responsibilities. In the new system, provincial authorities will grade milk for export or sale on competitive domestic markets and set prices depending on end use.
Under the terms of the amendments before us, the Canadian Dairy Commission would be able to delegate to provincial authorities its present responsibility with respect to the pricing of milk traded interprovincially while being granted the power to pool revenues from the sale of milk sold interprovincially by provincial authorities.
On a regular basis, boards and milk marketing boards would report to the commission the sales volumes and going prices for each grade of milk sold during a given month. The Canadian Dairy Commission would then be asked by provincial authorities to average nationally the price for each component included in the pool. Sufficient amounts would be included from each province to ensure fair distribution of the proceeds from the sale of milk for the lowest priced classes.
We must bear in mind that not all provinces contribute to the same degree to processing activities. The quantity of milk for special classes of products, that is to say, dairy products for export such as cheese, or further processed products such as chocolate and pizza, varies widely across the country.
Most of the inexpensive milk in these classes will be sold to processors in the most industrialized provinces, namely Ontario and Quebec. Some smaller provinces, however, are greatly affected as to their proportion of the total volume of milk sold at reduced prices.
To ensure that the cost of maintaining these industries and the essential export markets is shared equitably among producers, each province will be required to inject a minimum percentage of its total monthly sales of milk into the pooled fund.
This is how national average prices for the different classes of milk products would be calculated. This percentage is being negotiated by provincial authorities.
Returns from the agreed upon percentage of milk sales would then be pooled and redistributed to producers through provincial authorities on an equitable basis negotiated by the industry and provincial authorities and set out in official federal-provincial agreements.
The industry has concluded that creating special classes of milk sold at competitive prices on the destination market would be a good way of maintaining our share of the dairy export market without resorting to production levies.
The importance of finding an equitable way of maintaining our share of the export market in dairy products and products with dairy ingredients was the main force behind the intense negotiations and hard work undertaken by the provinces through the various committees and working groups in the past year.
Just before Christmas, the hon. Ralph Goodale and his provincial and territorial counterparts responsible for agriculture and agri-food confirmed their support of the industry's consensus that some pooling of market returns from dairy products was urgently needed so that the industry could meet Canada's international obligations and maintain an orderly marketing system.
By passing Bill C-86, the House can finally take an active part in the development of this essential sector of the Canadian economy, which successfully faces the modern challenges of the emerging global market.