Mr. Speaker, I am pleased to begin debate on the motion to refer Bill C-34, the agricultural marketing programs act, to committee before second reading.
The Minister of Agriculture and Agri-Food has asked the House to approve this procedure because he wants the committee to ensure that all members with any interest in this legislation have opportunity to be heard.
During the 1993 election campaign we made commitments to give MPs greater influence in the legislative process. By moving to proceed directly to committee on this bill, we are following through on those commitments.
Even though we consulted extensively across the country with this bill, we are following this procedure to make sure no thoughts or concepts are overlooked.
The objective of Bill C-34 is to provide a common legislative base for financial marketing programs in agriculture and to reinstate provisions for interest free cash advances.
Currently, the efficient and orderly marketing of agricultural commodities is supported and encouraged through four acts, one of which is the Prairie Grain Advance Payments Act, developed to assist producers marketing Canadian Wheat Board crops, wheat and barley by providing them with cash flow soon after harvest when marketing bottlenecks often occur.
Second is the Advance Payments for Crops Act, which is to assist producers who market all storable crops other than Canadian Wheat Board wheat and barley. Third is the Agriculture Products Co-operative Marketing Act, designed to encourage producers to process their products co-operatively. Fourth is the Agricultural Products Board Act, used to facilitate intergovernment sales and to purchase products from domestic markets to be sold at a later date when the market is not under pressure.
These acts were all developed at different times. They reflect the domestic, North American and world markets and marketing systems which were in existence when they were created. Although these different acts have served farmers well, many farmers and farm groups have found it confusing to have four different pieces of legislation.
They have also expressed concern that the present legislation does not treat all producers equally. For these reasons the government is proposing to replace the four acts by one new piece of legislation called the agricultural marketing programs act.
This legislation is the end result of extensive consultations throughout the sectors. The federal government consulted more than 80 producer groups directly for their input on Agriculture and Agri-food Canada's financial programs. We also asked over 160 producer groups and other organizations including provincial governments to review a summary report from the consultation process and give us their comments.
The proposed act takes into account as many of the suggestions expressed by producers as possible. It has received widespread support among the producer groups.
The new legislation responds to the needs of producers. It will treat all commodity groups and all regions of the country alike. At the same time, the new act is flexible enough to meet the needs of producers who operate under different and diverse marketing systems throughout the country.
Another important point is that the new act will tighten administrative controls, thereby reducing administrative costs. It will also eliminate inconsistencies and inequities between the two previous advance payment programs. This new act is thus in line with the government's commitment to increase budgetary efficiency and get the structure of government right.
This new act also fulfils the promise we made in the last federal election campaign and repeated in the February 1995 budget to introduce a statutory interest free advance program to replace the current cash flow enhancement program which expires next year.
I emphasize that the program will be statutory. It will eliminate the uncertainty that cash strapped producers faced in the past while waiting for government to announce whether interest free cash advances would be temporarily granted.
Like any other industry that operates in a competitive environment, farmers need to sell their products in order to pay their bills. Cash flow problems sometimes force them to sell their crops and products right after harvest when prices are not generally favourable.
The new act will provide cash advances to farmers, allowing them to sell their products not necessarily at harvest but at a later time. This allows producers to sell their output when prices are better instead of dumping the products on the market at the same time, a practices which depresses the prices.
The agriculture marketing programs act will avail cash advances up to $250,000 to qualified producers. With the first $50,000 interest free, the balance will be lent a preferential rate, generally less than the prime rate.
The new legislation will also benefit co-operatives. The pooling provisions will be maintained in the new act but will be streamlined to encourage more producers to market co-operatively and to get into the value added processing so they can increase their revenues.
The pooling provisions establish an anticipated selling price for the pooled product and offer a price guarantee of up to 80 per cent of that price. This will help co-operatives avoid serious losses in the event of a significant, unexpected downturn in prices. The price guarantee will also allow co-operatives to negotiate larger loans with lower interest rates from financial institutions.
The new act will also deal effectively with compliance problems experienced under the Prairie Grain Advance Payment Act.
In recent years, the act has experienced a significant rate of defaults. Although an effective inspection campaign has greatly reduced the default rate, producers have asked the federal government to find a permanent solution to this problem so that they can have confidence that all other producers are complying with the law.
The new act will reduce the number of defaults and thus restore producer confidence. The bill stipulates that producers who default will have to pay all reasonable costs of collecting that default. In addition, producers will pay interest on the default advance from the date the advance was issued until it is completely paid. Finally, they will not be able to get another advance under any other permit book or any other business organization until previous advances and any other defaults are fully repaid.
It is only fair to the majority of producers who fulfil their commitments that these procedures be tightened up. In fact, many of these measures have already been implemented administratively and have produced positive results. Defaults have dropped from $64 million in the 1993-94 crop year to under $10 million in the 1994-95 crop year.
With the implementation of this bill, defaults will be kept at acceptable levels through legislative rather than administrative means. This will result in significant savings to the taxpayer.
Since the majority of these changes in the Agricultural Marketing Programs Act are directed at the reduction of defaults, processors who participate in the program will probably not notice any changes compared to the Advance Payments for Crop Act or the Prairie Grain Advance Payments Act, programs of the last few years.
In conclusion, I believe this new legislation represents real progress for our farmers who get a more stable operating environment and progress for our taxpayers who get a more effective use of their tax dollars.