Madam Speaker, I am pleased to lend my support to Bill C-34 and the motion to refer it to the Standing Committee on Agriculture and Agri-Food prior to second reading.
Bill C-34 represents a commitment made in the red book and reiterated in the February 1995 budget to reinstate federal statutory authority to make interest free cash advances to farmers across Canada.
The new law, which is long overdue, will be known as the agricultural marketing programs act or AMPA. It will among other things replace by statute the previous government's ad hoc cashflow enhancement program which is due to expire next year. It is very important to have this act in place by statute. In doing so we will be providing security for our farmers.
Bill C-34 is an amalgamation of four existing acts: the Advance Payments for Crops Act, the Prairie Grain Advance Payments Act, the Agricultural Products Co-operative Marketing Act and the Agricultural Products Board Act and one ad hoc program which I have already mentioned, the cashflow enhancement program.
Besides being confusing, producers were not being treated equally under the four acts. In order to overcome this confusion and unfairness, the new agricultural marketing programs act will treat all commodities groups alike. In this way, inequities and irregularities of the previous programs have all been eliminated. Simply put, cash advances give farmers the flexibility to meet their expenses after harvest and before crops are sold, despite what may be untimely market limitations or unfavourable prevailing prices when cashflow is desperately needed.
In Canada these cash advances have traditionally been interest free until 1989 when the previous government removed that feature from the law and left interest charges to be decided on an ad hoc basis from year to year through the cashflow enhancement program. The results have been far from satisfactory, creating confusion, instability, anxiety and unfairness. In order to make this new legislation more effective, it has been divided into three particular programs: the advance payments program, the price pooling program and the government purchases program.
Under the advance payments program, which is covered by clauses 4 through 25 of the bill, the maximum allowable advance payment to producers will be $250,000, the first $50,000 of which would be interest free. If there should be a crop disaster due to abnormal weather conditions or disease, an emergency advance payment of $25,000 could be paid but in such a case the minister would not be liable for the interest.
This part of the bill is fairly similar to the Advance Payments for Crops Act but it would also make adjustments in order to take into account the specific situation of grain producers under Canadian Wheat Board jurisdiction. Under the bill and unlike the situation under conditions now in force, advance payments would be paid directly to producers, not the Canadian Wheat Board permit book holders. As well, clause 14 would allow the use of cash purchase tickets as advance payments to producers under CWB jurisdiction. This particular example illustrates just how flexible the new act will be to meet the needs of producers who operate under a wide range of diverse marketing systems throughout Canada.
In cases where a producer who defaults on his obligations with a partner, a member or a shareholder of another association, the association would not be eligible for advance payments and vice versa. For greater clarity, the rule applicable to associations between spouses, parents or children would be the same rule which is applicable to Revenue Canada income tax returns.
One important objective of Bill C-34 is to reduce defaults on repayments which have unfortunately cost taxpayers heavily over the years. Defaults on repayments under the Prairie Grain Advance Payments Act have reached several million dollars. The bill would provide that producers who defaulted on repayments would have to pay all recovered costs and interest on outstanding advance payments. As well of course they could not obtain other advance payments nor avoid repayment by setting up another company or business. Obtaining a new Canadian Wheat Board permit book would not allow a grain producer to avoid the obligation to repay advance payments which were obtained by using another permit book.
Although eligible crops are listed in clause 2 of the bill, the following criteria would also apply: the crop would have to be harvested and stored; it would have to be possible to store the crop in its unprocessed form; the producer would have to retain ownership of the crop; and the producer would have to be responsible for marketing the crop. In some sectors of agriculture, particularly horticulture, these criteria have been perceived as being overly restrictive since many products are difficult to store in their unprocessed form or are acquired immediately after being harvested.
The Ontario corn producers were one of the three farm groups that had requested that advance payments be made at seeding time and that advance payments be set at 70 per cent rather than 50 per cent of the value of the crop.
I must reiterate that this act is primarily based on equity among crops, regions and producers right across Canada.
As for spring advances not being included in the act, it is important to remember that consultations for this bill involved over 160 producer groups across Canada. Most of these groups were either neutral on the issue or opposed the concept of spring advances.
The great majority of producer groups felt that spring advances would change the focus of the advance payments program in such a way that the current focus of marketing would be changed to one of simply supplying operating credit. The producers felt that this would ultimately reduce the benefits and increase the costs of the program to unacceptable limits.
The act will establish a new risk sharing program where the delivery agent's liability for defaults will be based on the history of defaults. It will range from 1 per cent and 15 per cent instead of the current 2 per cent for the Advance Payments for Crops Act and no liability for the Prairie Grain Advance Payments Act. The act will also define more clearly the crops and eliminate potential overlap with the price pooling program.
The new legislation will permit producers to continue to use price pooling mechanisms while the approval process for these provisions will be greatly streamlined. Since the bill in clauses 26 through 30 would delegate authority to the Minister of Agriculture and Agri-Food subject to the annual concurrence on general terms and conditions by the Minister of Finance, it would thus remove the requirement for the appointment of auditors and professional accountants for each agreement.
Having removed these layers of red tape, the federal government could much more easily establish a minimum guaranteed price for all products sold out of a pool by grade, variety and type of product. This guaranteed price would cover the initial price to producers and the operating costs of the pool.
As for the government purchases program contained in Bill C-34, the act will incorporate the provisions of the Agriculture Products Board Act. The act will maintain the ability of Agriculture and Agri-Food Canada to buy and sell agricultural products when unusual marketing conditions exist while removing another layer of bureaucracy, that is, the requirement for the agricultural products board.
In closing, I would like to briefly summarize the benefits that would come about once the agricultural marketing programs act is scheduled to come into force January 1, 1997. There will be one act instead of four to deal with the financial agricultural marketing programs in Canada, thus reducing current crop and regional inequities, inconsistencies in program administration, and overall program costs. Financial marketing programs will be easier for producers to accept. All producers will be able to obtain cash advances under the same administrative requirement. Defaults will be reduced by better screening before issuing advances, by improved controls, improved collection methods and stronger penalties for defaulted advances.
The act will be consistent with current government policy to recover administrative costs, increase risk sharing with participants, combine legislation which shares a common base and reduce program costs through less bureaucracy.
An overwhelming majority of farm producers and their organizations across Canada have shown widespread support for the direction the government is proposing to take on these issues. I encourage members in the House to do likewise by supporting the motion to refer Bill C-34 to committee prior to second reading so that my colleagues and I can give this bill our undivided attention.