Madam Speaker, I am pleased to begin debate on the motion to refer Bill C-38, the farm debt mediation act, to the Standing Committee on Agriculture and Agri-Food prior to second reading.
The government promised to give MPs and parliamentary committees more influence. By sending bills to committee before second reading, something that was done very rarely in the past, we are delivering on that promise. This procedure gives committees a chance to make major amendments to bills. It also allows us to make doubly sure that no concern has been overlooked.
The Minister of Agriculture and Agri-Food has chosen to follow that route with this bill because he wants to ensure that stakeholders have every opportunity to be heard on this important piece of legislation.
As a former chair of the Standing Committee on Agriculture and Agri-Food I share with him the confidence that committee members will be able to make positive contributions to the farm debt mediation process through their deliberations and hearings.
The issue of farm debt is not a new one. It has been with us for a long time. Farmers must make significant investments in seed or stock, fertilizer or feed, machinery or buildings, long before they see a return on those investments. They are subject to the whims of nature and markets. When these turn bad farm debt can reach crisis proportions.
That is essentially what happened in the 1980s. High interest rates at the beginning of the decade diverted large amounts of cash for debt servicing while low returns on sales reduced inflows of cash. In addition, market values of many assets, especially land values, depreciated over the same period.
By the mid-1980s many farmers were in arrears on payments to their creditors. In response, the Farm Debt Review Act was proclaimed in 1986. That act established farm debt review boards in every province to provide impartial third party mediation between farmers and creditors.
In our 1993 agriculture platform we promised to strengthen the farm debt review process. This legislation will do just that. It will create a new farm debt mediation service to replace the farm debt review boards as they are phased out.
This new service will help farmers position themselves to better adapt to new income opportunities as well as helping those who are experiencing financial difficulties.
It has been designed around three major considerations. It should build on the existing services and not duplicate them. It should be administratively efficient. It should cost less than the existing farm debt review board process.
Funding for the new service will come from the $240 million Canadian adaptation and rural development fund announced in the 1995 budget to help the sector make a transition to a more efficient and competitive market economy.
This proposal was not drafted in an ivory tower by isolated bureaucrats. Agriculture and Agri-Food Canada consulted with representatives from major farm organizations, provincial departments of agriculture and lenders last summer. The department also held seven regional focus groups with farmers and farm management advisers.
The purpose of these consultations was to identify the elements of a new farm income review service and possible ways to deliver it. The department then drafted a program design reflecting what emerged from the consultations as the most important elements of the new service.
A national consultative review committee was set up with representatives from farm organizations, lenders and two provincial governments. The committee met last December to discuss the proposed program design and identify concerns and suggestions.
In January, the Farm Debt Review Boards and all provincial governments were invited to comment on the proposal. Based on the input received, the government is proposing the farm debt mediation service. The new farm debt mediation service will provide insolvent farmers the same benefits as the current Farm Debt Review Boards, that is a stay of proceedings, a review and mediation.
Essentially it will continue to allow them to undergo mediation and work out, with their creditors, a way to resolve their debts. One
change from the current procedure is that farmers and creditors would be able to appeal decisions on stays of proceedings to an appeal board.
The current Farm Debt Review Board members could be appointed to the new appeal board while qualified mediators would be selected through the regular government contracting process. Farm Debt Review Board members, who are currently mediators under the Farm Debt Review Board Act, could be put on the list of mediators under this new program. Mediators would act alone rather than in three-member panels as they do under the current act.
These changes and the limiting of the new proposed act to insolvent farmers could reduce the program costs by more than $1 million per year from an estimated $3.5 million in 1995-96 to $2.2 million per year.
The consultations also showed that farmers and farm organizations, provincial representatives and industry could support a consultation service that is not tied to a debt crisis. Such a farm consultation service would concentrate on financial assessments to help farmers who have cash flow problems and to identify income opportunities and reduce costs to develop more viable operations.
Depending on their particular situation, farmers could also be referred to provincial extension staff, other federal or provincial programs or the private sector as appropriate for other types of services.
Because referral to other services and programs will be a key component of the farm consultation service, it is important that delivery of this service be developed through further consultations with farm organizations and others such as lenders, Canadian farm business management program members and the provinces.
It would also be important to have an up to date inventory of services in every province. Delivery costs for the farm consultation service would be kept to a minimum. This service could be delivered by the farm debt mediation offices or it could be developed and delivered in co-operation with the provinces or other existing programs where appropriate. The service would provide assistance to help farmers look at other income opportunities for diversifying, expanding and creating value added enterprises and to develop farm plans.
I have just explained how the new farm debt mediation act would work. I would ask members of the House to approve the motion to refer this proposed legislation to committee now, prior to second reading.