Debates of Nov. 3rd, 1998

Supply

[Inky Mark, Reform, Dauphin—Swan River, MB]

Mr. Speaker, first I would like to thank the member for Lethbridge for splitting his precious time with me.

My riding is Dauphin—Swan River and it certainly is a rural riding. Farming is the backbone of the riding. There is no doubt that the health of all the communities in my riding depends on the cash in the pockets of farmers.

There is a real farm crisis whether the government realizes it or not. It is impacting farmers, and certainly farm families, as many of them are going broke and they rely on farming for their livelihood.

I have received a countless number of calls on this issue. At times as a member of parliament I feel very helpless. All I can do is bring the messages to this House and I am very glad to have the opportunity to relate those messages to members of this House today. Hopefully the government will listen to the real people in the ridings.

I would like to put some face to the concerned farmers and farming families and tell the House what they have asked me to do. I will begin by saying that the president of KAP, the Keystone Agricultural Producers Inc., has talked to me about the crisis in farming. This organization represents many farm producers in Manitoba.

Those producers are very concerned. This is not only a crisis in Manitoba, it is a crisis in all of western Canada. In the upcoming months KAP will host meetings throughout the province to listen to farmers.

A lady by the name of Audrey Warkentin from Fork River called me. She is concerned that their family farm is at risk of going under. She is concerned about the prices at this time because they cannot meet cash requirements.

David Hanlin from Miniota in my riding wanted to talk about the low prices of grain and the high prices of chemicals and machinery. The price of grain has bottomed out. He tells me it will eventually put him out of business.

Stan Yaskiw of Birtle, Manitoba, is very concerned about the farm economy as it has been impacting his life and his family.

Bert Stewart of Benito, Manitoba, is concerned about the farming economy and low prices. The cash crunch is impacting on his family farm. He has farmed most of his life.

Don Ray from Russell, Manitoba, called about the low grain prices and his farm income, which is in jeopardy. He told me that he has 1,500 acres and that it requires $250 an acre to maintain equipment and pay for fuel. He has also experienced a crop loss due to flooding, not from a flood like the one in Winnipeg, but from too much rain. Part of my riding received too much rain over the past summer. In his area there were numerous fields which were flooded. There was a 50% loss due to excessive moisture. He wants to know how the government can help him survive as a farmer.

Bert Stewart from Benito has the same concerns. In fact, 55 cents per bushel of barley puts him at great risk. He told me that 333 bottles of beer are produced from one bushel of barley. He would like to see some of those returns.

Cam Mateika from Swan River is paying more for freight now and he is getting less money for his crops. He cannot survive. He says that many farmers are talking the same way. There certainly is a crisis out there.

David Wilson from Rapid City has a problem surviving. He says that GRIP has been a total disaster as far as he is concerned. Farmers were counting on it. He has also heard many horror stories about NISA.

Barry Durston, another constituent of mine, is concerned about commodity prices, freight rates and NISA. He is not happy with the whole business of NISA and how it has been dealt with.

There is a crisis out there. People are pleading for help. These are real people. The government needs to be accountable to these people. We help people in crisis situations like the ice storm and floods. This is a time when the government needs to help people who farm for a living because their livelihood is at stake.

[Joe McGuire, Liberal, Egmont, PE]

Mr. Speaker, I thank the member for Dauphin—Swan River for his remarks.

The member comes from a province with the most diversified agricultural base in western Canada, and people have done a lot in that regard. They do not rely on one or two crops. They are very diversified these days. They are even growing a lot of potatoes. They are in competition with my province.

He has brought up individual situations. I would like to have his comments on the fact that the government has to take into consideration the suffering of all farmers and the different commodities across Canada. We cannot take an ad hoc approach and simply write a cheque today. We have to look at the statistics and we have to look at individuals on an individual basis to ascertain who is most in need and who has been taking advantage of the NISA program.

This is going to take a little time. I do not think the hon. member wants us to sit down tonight, write a cheque and send it to Manitoba. The government has to get in touch with its provincial counterparts, with the producers in those provinces and in those commodities and do what is right.

I would like to know if the member agrees with that way of doing things.

[Inky Mark, Reform, Dauphin—Swan River, MB]

Mr. Speaker, I appreciate the comments of the hon. member opposite.

The difference here is that farmers in the west are open to the global impact of markets and farmers down east do not have that. We do not have the protection of marketing boards.

Yes, we are talking about farmers who diversify. They grow different crops, and not only cash crops, they also have cattle and hogs. But the whole bottom is falling out because of what is happening on the international markets.

The domestic market in eastern Canada is protected by marketing boards, but western farmers do not have that protection and safeguard.

I would state at this time, because of the circumstances, that the farmers out west do need help. It is a time of crisis for them and their livelihood totally depends on that help.

[Denis Paradis, Liberal, Brome—Missisquoi, QC]

Mr. Speaker, first of all, I would like to inform you that I will be sharing my time with one of my colleagues.

I think it is indeed worthwhile to take whatever time is required to look at the situation of the agricultural industry across Canada. Needless to say it is an industry of vital importance. The agri-food industry accounts for about 9% of Canada's gross domestic product, employs nearly two million people and generates almost $91 billion a year in sales on the domestic market. It is appropriate to take stock of what is going on in the industry and paint a realistic picture of the current situation.

Nationally, net farm income is expected to drop from the 1997 record level, given the prices of major commodities like pork, cattle and grains, which undergo cyclical downturns, and the fact that some of our best foreign markets have been affected by the so-called Asian flu.

In addition, depreciation expenses will grow in 1998 to take into account the substantial capital investments made in this industry in recent years. It is also to be expected that Saskatchewan and Manitoba will be particularly hard hit. However, I want to make it clear that this is not a widespread situation. Cyclical downturns do not affect all industries the same way.

For instance, income from dairy, eggs, poultry and horticulture will remain stable. Farm cash receipts in a number of industries have actually been good these past few years, resulting in record revenues in 1997. However, it is important to recognize that the difficulties experienced in the agricultural industry are part of a much larger economic problem. Indeed, no one is immune to the Asian flu.

As the finance minister indicated in his economic and financial update last week, most countries in the world are experiencing a recession, and the International Monetary Fund now predicts 2% economic growth worldwide this year, instead of the 3.1% growth forecast just months ago.

Stock markets around the world have plunged, and commodity prices have dropped nearly 30% from the peak reached at the end of 1996. In absolute terms, they are now closer to their all-time low since the early 1970s.

But the global economy will recover from this difficult period, as it has in the past, and Canada is in a particularly good position, because it has put its fiscal house in order.

In the agricultural industry, the price of most of the products that we sell has always been determined by world markets. When commodity prices go down, farm income does also. Conversely, when the global economy is on the upswing and commodity prices bounce back, farm income follows the same trend.

Farmers will tell us that cyclical downturns are unavoidable, that they often anticipate them, and that they do their best to cope with the situation.

As a government, we have done our best to help farmers prepare for cyclical downturns and we continue to do so. The Standing Committee on Agriculture and Agri-Food is currently hearing representations from those concerned, so that, together, we can find solutions to provide greater security to our farmers.

Each year the federal and provincial governments invest $1 billion in farm income protection programs. This money is in addition to the contributions made to the various programs by the farmers themselves.

The result is that farmers have now accumulated over $2.5 billion in net income stabilization accounts, which are the cornerstone of our national income security program. According to preliminary studies conducted by Agriculture and Agri-Food Canada, the majority of those contributing to net income stabilization accounts have enough money in their accounts to meet their needs during the winter.

Moreover, crop insurance will probably make payments of about $430 million this year to help farmers who have suffered a shortfall. The government also set up services to help farmers who, for one reason or another, could not meet their cashflow requirements.

Most farmers remain optimistic about the future. The primary production industry is in most cases in a good financial position and things look very positive. In fact, levels of investment in the industry continue to increase.

Long term positive outlooks for the sector are in fact one of the reasons for this situation. The healthy cash flow and credit positions of many farm operations is another reason.

The other important factor is the general good health of the Canadian economy, characterized by a lack of deficit, low interest rates and relatively low inflation. As the minister mentioned, the government has taken a pragmatic and strategic approach to the financial challenges. We have set guidelines. We have followed them and will continue to do so in the future.

I will give members an example. At one point, as tangible support, the Farm Credit Corporation initiated the agristart plan. The agristart program provides a new range of farm loans to ensure the future of farmers expanding their operation and to help pass on farm operations from one generation to the next.

There are three types of loan. There is the family farm loan, which enables the developing farmer to finance the purchase of farm assets, or transfer shares in a family farm business. The 1-2-3 grow loan permits farmers starting or expanding an enterprise to defer payments over three years or longer in order to accommodate the drop in their income. The payday loan is for people wanting to start a farm or people with off-farm employment wanting to expand their operation.

This government is continuing to work closely with farmers and the provinces to set up an income protection program that meets the sector's current and future needs.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, if we listen to the conversation in the Liberal Party we would think there is nothing wrong with our farming communities and farm families.

Unfortunately the fact is that farmers are in a crisis and need help now. They do not need further consultation with industry leaders and Liberal backbenchers or government people. They need emergency assistance now, and not just on the prairies but from coast to coast to coast.

The hon. member mentioned that some industries and some parts of the farming practices were doing well. I remind him that the farmers and agricultural producers of the Annapolis Valley, as well as the Hants East area and the Musquodoboit Valley in my area, are suffering due to weather droughts and everything else that is happening.

Members of the federal government are downloading responsibility on to the backs of the provinces. It is similar to what they did in health care. It is similar to what they did in the fishing industry.

We do not have a national agricultural policy. That is one of the main reasons we have such a crisis today. If the government had paid attention to rural Canadians and their needs, we would not be having this discussion today.

[Denis Paradis, Liberal, Brome—Missisquoi, QC]

Mr. Speaker, if my hon. colleague listened carefully to what I was saying earlier, he will realize that we have many existing programs to serve farmers' immediate needs. As for the future, and this is important as well, there are the upcoming negotiations with the World Trade Organization.

As for the present crisis and farmers' reduced incomes, we all listening to communities from all provinces. Their spokespersons are appearing before the Standing Committee on Agriculture and Agri-Food and together we are trying to find the best solutions possible.

At the same time, we are preparing Canada's position for the upcoming negotiations with the WTO. An important fact that I did not raise earlier, but one which I would like to mention to my hon. colleague, is that the present state of the Canadian dollar allows us to increase our exports.

I come from Brome—Missisquoi, a riding bordering on Vermont. Because the Canadian dollar is weaker than the American dollar, farmers in my riding can cross the border, sell more on the American side, as well as diversify our farm economy.

These are positive measures that farmers themselves are taking, which result in a favourable balance of trade.

[Joe McGuire, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-Food]

Mr. Speaker, I would like to comment on the Reform member's answer to my question that this appeared to be a western Canadian issue. I remind the official opposition that there is a beef industry in the rest of Canada. There is a hog industry in the rest of Canada. There is also a wheat board in Ontario. To say this is strictly a disaster for western Canada is misplaced.

The government supports Canada's agriculture and agri-food industry in a way that works for industry shareholders and for all Canadians. We have not abandoned our agriculture industry and we will not abandon the people who feed our nation and our planet.

The Government of Canada invests $600 million each year in safety nets for Canadian farmers. The provinces add another $400 million to that total, which means that Canada has one of the most stable and reliable farm safety net systems in the world. It is not perfect but it has been working, helping farmers to achieve stable incomes by banking money in the good years to use in the bad years.

I will not minimize the challenges facing some of Canada's producers today. Some are dealing with the fallout from fluctuations in foreign markets. Some are dealing with normal cyclical downturns in prices for some major commodities. Some are dealing with poor yields. That is why the Minister of Agriculture and Agri-Food has called together farm group leaders and provincial ministers of agriculture for a meeting tomorrow in Ottawa.

For the past several years governments and producers have worked closely together so that today we can manage the challenges facing us. That partnership will continue at the meeting tomorrow. The current situation will be discussed as will the tools government and producers have worked to put in place to deal with this kind of situation. There are $2.5 billion in the net income stabilization accounts of farmers. These accounts were put in place to help out in situations like the one facing farmers today.

In addition to the net income stabilization account or NISA farmers can take advantage of crop insurance which protects them against losses from hail, drought or other natural disasters and is expected to pay out about $430 million this year. Farmers can also use province specific programs to which the federal government contributes $200 million. That will not stop the government from working with farmers and the provinces to explore what else can be done for farm income protection programs.

Just as we began preparing for this situation five years ago, we are preparing for the future today. We have positioned ourselves through our safety net programming to meet and manage both the foreseen and the unforeseen blips that show up from time to time on our radar screens.

The advance payments program also helps farmers manage risk by providing loan guarantees so that farmers can receive cash when they need it but still have the flexibility to negotiate the best possible price for their crops.

This program kicked in for the benefit of grain producers earlier this summer. Given the early harvest and the resulting need for cash, federal government and Canadian Wheat Board officials worked to get cash advances issued two weeks earlier than normal, a full four weeks earlier than last year.

It is important to note that farm safety net programs are not the only way in which we are supporting the agricultural industry. The government is making a number of strategic investments to help Canadian producers be competitive. These investments help to improve access to the latest technology, access to up to date and relevant industry information, and access to new markets abroad.

Our agriculture and agri-food minister was a farmer himself for many years. He knows how important research and investment are to Canada's agriculture and agri-food industry, important enough that as a country our total spending per year on research in the sector amounts to about $1 billion. The Government of Canada is the largest single contributor, investing more than $350 million annually. Much of the research is done in partnership with the private sector in programs like the matching investment initiative which helps to ensure we meet the industry's research priorities.

As a result of our activity Canada is a world leader in innovative agri-food research and farmers reap the rewards from that. Because of research producers have access to new and better crop and livestock production techniques, more environmentally and economically sound ways to manage disease and insect pests, and cutting edge technology. All these add up to a more competitive industry.

We further enhance our competitiveness through trade agreements, export and marketing programs, and export credit facilities that help farmers not only satisfy the domestic market but expand into markets abroad as well.

We are also investing in the sector in other ways that encourage farmers to diversify production and adapt to changing consumer demands. The Canadian adaptation and rural development fund is a $60 million a year fund designed to help farmers and others in the agri-food industry adapt to changing market conditions.

Farmers and other agri-food stakeholders are able to take a very hands on approach to this program. Through their participation on councils in each province and their involvement in national programs, they help to decide on the priorities and expenditures for CARD related activities.

On another front the Minister of Agriculture and Agri-Food has been working with provincial agriculture ministers and deputy ministers to develop an investment strategy designed to improve the investment climate in Canada. This summer they agreed to focus their efforts on promoting Canada as an investment location and on securing increased investment in Canada's agriculture and agri-food industry.

Short and medium term work plans will be implemented to increase investment activity. Departmental officials will establish performance targets so that we can track progress and make sure we provide top quality service to interested investors.

The Federal-Provincial Steering Committee on Investment is continuing to work to ensure that our investment strategy is implemented and that the Canadian agri-food industry is duly consulted. I am confident that these efforts on the investment side will also contribute to a stronger agricultural sector and a better livelihood for Canadian farmers.

Farmers have made tremendous progress since we last experienced low commodity prices in the mid-1980s. They deserve credit for working hard to embrace new ways of doing business, to manage their operations better and to take advantage of the tools that governments have put in place to help them manage risk.

As a result the net worth of farmers on average has gone up. Farm assets have reached historical highs. The debt to equity ratio has been declining since 1991. This is good news. It indicates that most of our farmers are in good shape as we enter this period of depressed income in certain areas. In short, the system we have may not be perfect but an ad hoc system like the one in the United States is not the answer. Our farmers want a system that is reliable and predictable.

Our challenge now is to continue to work together to refine our system so that it meets the needs of Canadian farmers now in these difficult times and long into the future. That is exactly what we intend to do.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, I will speak on this motion soon, but I could not help but react to the parliamentary secretary's comments that our farmers are in good shape going into this crisis. He is certainly living in a different world from where I live. He quoted NISA as the answer. Perhaps his part of the country is different, but in mine the average NISA account will not pay the fertilizer or chemical bill for one year. In my part of the world farmers when they have a good year invest it in their operation to improve it and not into an RRSP for their retirement.

The member talked about the advanced payment scheme as a safety net program. What good is an advanced payment scheme when the cost of the commodity they are selling is lower than the cost of production?

I cannot believe this member would stand there and throw out these systems in place as the answer or even anywhere near the answer to the problems facing agriculture. Farmers are are producing hogs at $30 less than the cost of production. How will those programs help those farmers?

[Joe McGuire, Liberal, Egmont, PE]

Mr. Speaker, the hon. member for Athabasca quoted me out of context. What I said is that farmers are in good shape as we enter this period of depressed income in certain areas. That means we are in better shape than we would be if we had not put the programs in place that we have.

The Canadian farming community is coming off the best five years on average in the history of the country. That is not saying that all this money is in the bank waiting to be spent. But there is $2.5 billion in the NISA accounts which is put there specifically for this purpose, to access in times of a downturn in the economy whether it is a collapse of markets or a collapse of price.

We have these programs like advanced payments for crops in place. The situation would be much more difficult if these programs were not in place and if farmers had not been saving and putting money into the NISA accounts.

[Bob Speller, Liberal, Haldimand—Norfolk—Brant, ON]

Mr. Speaker, I thank the parliamentary secretary for his words today.

I note that opposition members keep trying to suggest this is somehow a western Canadian problem. As usual they always try to pit the west against the east.

The hon. member is from Prince Edward Island which is also one of the hardest hit areas in Canada. I wonder if the hon. member can bring us up to date as to the situation in his home province which I know he is very concerned about.

[Joe McGuire, Liberal, Egmont, PE]

Mr. Speaker, in Prince Edward Island we have a hog industry that is in very poor shape, as it is right across Canada. As was indicated earlier, we do have a supply managed system in dairy and in other areas. This is why the marketing boards were put in place in the first place. They put order into chaos. Canadian farmers are benefiting from the forethought and the planning of previous Liberal ministers in the Government of Canada.

The situation is not as difficult as it may be in areas where a supply managed program would not work. It is difficult to have a supply managed program for grains. It is a crop that relies on exports.

In this case there is a downturn because the markets for exports in grain have diminished. The demand for pork in the Asian markets has collapsed. Therefore there is a more serious problem in the western provinces than there may be in the east. There are a lot of producers in the east, in Prince Edward Island, New Brunswick, Nova Scotia and in Quebec. We can look back to a few weeks ago when there were hog farmers blocking the Trans-Canada Highway.

There are problems in eastern Canada with the same commodities as there are in western Canada, even though we are more diversified. However, the west is becoming more diversified in agriculture and that is because of the programs put in place by the Liberal government.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, on a point of order. Before we continue debate can I get the consent of the House to ask the member a couple of key questions?

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, I appreciate being part of this debate. From my point of view and my constituents' point of view this will be one of the most important debates in this session of parliament. Farmers across the country who are certainly listening as we discuss this issue in the House will hopefully get some indication of where the government is coming from on the issue.

In order to have a productive and useful debate, the members opposite must be open to the arguments put forth by the opposition parties. That does not appear to be what is happening today. This is the case, of course, in all debates but it is particularly crucial when debating an agricultural issue.

Farmers from across Canada are suffering serious economic hardship. Unfortunately few are represented by Liberal government members in this House. Outside of Ontario the Liberal government holds very few rural seats. It is extremely difficult for rural farmers to make their voices heard when dealing with an urban based government. It is for this reason that debates like this one are so important.

As a rural Canadian third generation farmer, I am especially close to this issue. I am extremely troubled by the government's dismissive attitude toward the issue. Thus far the government has done little more than minimize the magnitude of the problem. We heard just that from the previous two speakers.

Government ministers have not even gone so far as to acknowledge there is an income problem let alone a net farm income crisis. Whether the government has acknowledged it or not, the farm income crisis is very real, painfully real, for farmers feeling its effect.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I rise on a point of order. The minister fully admitted there was a problem this morning in his remarks. Maybe the members opposite should be a little more truthful.

[The Deputy Speaker]

The hon. member would not want to suggest that anybody was not being truthful, but I think he would also know that what he is really raising is a point of debate. I am sure he will get ample opportunity in questions and comments to make his point.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, in recent months I have sat around the kitchen table with farmers and their families who are feeling the real effect and it is extremely painful.

From 1996 to 1997 farm income declined by a whopping 55%. This decline was especially felt in the west where farm net income dropped by 35% in Alberta, 40% in Manitoba and 84% in Saskatchewan. Farm income will likely fall another 40% across the country this year. Like last year, this decline will be felt more severely in the west.

I am dumbfounded as to how the government can deny there is a crisis in light of these statistics, especially in light of the fact that other governments have responded to this problem. The United States has already announced a $6 billion package for agriculture producers. This package includes $3 billion in market loss payments to offset low prices and $2.5 billion in disaster relief for crop loss.

The measures taken by the U.S. are significant for two reasons. First, the U.S. government has not only acknowledged the crisis but has responded to it. Already our government is two steps behind. Second, further subsidization in the U.S. can only worsen the crisis in Canada. It is imperative that the Liberal government deal with the issue of trade distortion and foreign subsidies.

It is also important that the government take these issues seriously. I have little confidence that this government will do that.

This fall when mid-western states began disruptive actions barring the entry of Canadian livestock and grains into the U.S., some government ministers dismissed these actions as election year nonsense.

Election year nonsense was not the problem. Falling commodity prices are at the root of the dispute and they will not disappear after the U.S. election. That is just one small example of the way the agriculture portfolio has been handled over these years.

In each of the three generations of farming in my family there was one or more income crises, although perhaps varying in degrees of intensity. In each case the government went through a period of denial before taking action. This denial stems from fear as the government has never had a comprehensive plan to ensure secure future for the agriculture industry in Canada.

In response to questions about this crisis, the minister of agriculture has repeatedly stated that the net income stabilization account will adequately address the current situation.

NISA was never intended for a crisis of this magnitude. NISA accounts contain an average of only $18,500 per account which is not enough to cover the average fertilizer or chemical bill for even one year.

The program has not had enough time to accumulate adequate funds and the government is partly to blame for this as there were years of delay in making the decision to implement a farm safety net program.

Many businesses will not have enough money to finance the upcoming season and many more will go bankrupt if the crisis is permitted to continue even longer. This is an urgent matter. Measures must be taken now so that farmers can make decisions about the upcoming spring.

As part of its election platform the Liberal government committed to a whole farm safety net program to see farmers through such crises. Now the crisis is here. Nothing has been done and the government is poorly prepared to deal with it.

This government must make modifications to the existing safety net program such as NISA and follow through with promises to develop a whole farm safety net program that includes disaster relief.

The government must also address trade issues. When the world trade agreement was signed in 1994 the intention was to level the global playing field for Canadian farmers. If anything, the playing field has grown steeper with Canada at the bottom of the slope.

Canada is fighting an uphill battle against heavily subsidized American and European producers. American farmers will receive billions of dollars in extra assistance this year. Americans also have emergency aid for natural disasters. In addition, the Americans have income support to offset depressed commodity prices.

According to the Canadian Wheat Board Americans receive $2.68 per bushel in direct subsidies. Meanwhile their competitors in Canada receive a subsidy of less than 40 cents per bushel. This difference is nothing when compared to the difference between Canadian and European subsidies.

European grain farmers receive direct area support payments of $175 per acre just for being farmers. European farmers also receive intervention support that creates floor prices for grain.

OECD's analysis of this situation shows that Canadians have approximately a 10% subsidy, Americans 30% and Europeans 36% to 37%.

Canadians have upheld their commitment to reduce subsidies and have proceeded quicker than required. Now it is the responsibility of the government to address foreign subsidies.

The government must ensure that our foreign competitors are meeting their commitments and trade responsibilities. No one can know how long this crisis will continue or how serious it will become.

Asian economies represent approximately 20% of Canada's agri-food exports and there is no way to know when these economies will recover.

Livestock and grain sectors are the most susceptible to declines in income and will be most severely impacted by the collapse of world commodity markets. Something must be done.

I am truly shocked that the government is so dismissive of an industry so central to our nation's existence. One of the fundamental factors determining the success or very existence of a nation is its ability to feed its people. A country becomes vulnerable once it is dependent on other countries to feed itself.

By allowing American and European competitors to provide unfair advantage to producers through subsidies and refusing to provide additional assistance to farmers, this government is jeopardizing the future of agriculture in Canada.

My colleagues and I are not asking for retaliatory subsidization. Canada has been moving toward production and trade based on competitive advantage, a steady progression we support.

However, global free trade must also be fair trade. At this point Canada is getting the short end of the stick.

I implore the government to address this problem immediately. There are a number of measures that could be taken, including eliminating or placing a moratorium on all cost recovery programs, eliminating the excise tax on farm fuels, improving transportation to help farmers in the long term, introducing general tax reductions for Canadians, and introducing some flexibility to enable the Farm Credit Corporation to deal with the crisis in agriculture.

It is imperative that the government push for reductions to foreign subsidies and for the elimination of trade barriers which continue to depress the prices our producers receive. The first step is acknowledgement of the problem and that has yet to happen.

It is my sincere hope that by the end of the day the government will be able to admit that Canadian farmers are in crisis and that the farm income crisis is an issue worthy of its immediate attention. Ignoring this crisis amounts to jeopardizing the backbone of Canadian society.

[Julian Reed, Liberal, Parliamentary Secretary to Minister of Foreign Affairs]

Mr. Speaker, was I mistaken or did I hear the member for Athabasca say that the governing party was largely an urban based party? Did I hear that correctly? If I did, do I have to remind the hon. member that the government has probably more rural based members than the official opposition. I suggest the hon. member take a look at the province of Ontario and what rural members have accomplished in that province.

I realize the member for Athabasca resents the ethanol biomass program. However, I would point out that if he makes a speech that is on record and goes to the people of his constituency, he should put it in the proper perspective.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, I stand by my comments. The governing party is largely an urban based party. I did not say it did not have any rural representation. It certainly has no rural representation in Saskatchewan or Alberta, but it is well representative of the legal profession.

All those things aside, I am not here to debate the percentage of farmers or farm based people in my party or in the governing party. I am here to debate the crisis in agriculture. That is simply a diversion from the issue that we are here to debate.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, my colleague in the Reform Party makes an excellent point. The government is trying to paint this as a partisan issue of some sort. It is not a partisan issue. If we wanted it to be a partisan issue, we would have made it votable. We could have done all kinds of things.

Everybody is trying to take shots at everybody else here. We are trying to highlight the fact that the government has bungled this portfolio badly. We need to address these issues now.

I find it unbelievable that the parliamentary secretary continues to defend NISA. We are here to try to debate the issue. NISA is not cutting it. Farmers have to contribute to it and many farmers have not.

To demonstrate how out of touch the government is, I take one phrase the parliamentary secretary used. He said that it has been the best five years in the history of agriculture. Where do these people live? I concur with what my colleague said. They must be living in downtown Toronto to make a statement like that. They cannot live in rural Canada and maintain that stand.

Then they went on to talk about advance payments. Farmers do not want to borrow more money. That is not why we are bringing forth the motion today. We have to walk and chew gum at the same time, I guess. We have to look at the long range and we have to look at the short range. We have to fix what is broken and help them out in the meantime. That is what has to take place.

I conclude by going back to one thing the minister said. If this is his answer to the whole crisis, we are in big trouble. He said that they wanted to show farmers how to use all the tools in their toolbox. They should not throw a wrench in the gears and bring the whole agricultural machine to a grinding stop and then make that kind of statement. This is ridiculous.

The government ripped out the Crow subsidy. It did not have time for transportation costs. It did not provide for any competition and so on. There has been so much misrepresentation on the part of the government in this debate that it needs to be corrected.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, my colleague demonstrates the passion with which some of us view this issue. He is very correct.

As I said in my presentation, I am the third generation on my family farm. When my grandfather arrived in this country he just barely settled on the farm and had to face the depression of the thirties. That pattern has repeated and repeated itself and every time the government came up with some emergency measure and promised a long term whole farm program of some sort to deal with the problems in agriculture, the cyclical nature of prices. Every time it has failed to do so.

We are asking the government to live up to the commitment it made in the election campaign and sit down with the stakeholders in this business to develop a long term whole farm program that will work, not to continue with ad hoc emergency programs that it keeps coming up with.

[Lee Morrison, Reform, Cypress Hills—Grasslands, SK]

Mr. Speaker, my colleagues have spoken at some length on the big agricultural picture. Others will probably do so. I will address a very specific problem which the government could solve quickly with a few strokes of the pen at no cost to the general public.

If the government would remove some of the obstacles it has created to value added activity, there would be immediate measurable benefits to prairie agriculture. I am not referring only to the onerous payroll taxes. These are not specific to agriculture when they are the bane of all entrepreneurs, not just farmers or farm enterprises.

I am referring to the requirement that grain used in production of food for export out of its province of origin is subject to the same freight and elevation charges as grain shipped to port position. This bizarre situation is actively hindering economic diversification and benefiting overseas processors of our grains.

Excessive freight and handling charges are the largest single component of a grain farmer's production costs. With the Crow benefit gone the prairie grain industry's best hope for long term survival is to get away from the century old mentality of exporting, to process more grain at home and to export more finished product.

Paying $30 or $35 a tonne to move a lesser quantity of high value finished product makes a lot more economic sense than shipping raw material to port position. The federal government does not force mining companies to ship unmilled ore or logging companies to ship only logs, although I would say that with the abysmally stupid softwood lumber agreement they are not allowed to add value beyond sawn lumber for the U.S. market. Sometimes I wonder whose side the government is on, but that is another debate for another day.

After a producer has paid the cost of trucking grain to a miller or maltster, which in some instances may be 200 or 300 kilometres from the farm, there is no logic or justification for hitting him with freight, elevation and terminal charges. Where is the incentive to deliver to a domestic facility when merely delivering the grain to the local elevator through the CWB for export, as is, gives the same net return?

The government rationalizes that the price received, for example, at the malting facilities at Biggar, Saskatchewan, has all the freight and handling charges built in and that the deduction is therefore only a bookkeeping exercise.

That is utter nonsense. To be sure, without government intervention through the board the market price in Biggar would probably, as the minister loves to reiterate, be lower than the Vancouver price including freight and elevation. Would it be $45 a tonne less? The maltsters' freight costs for exports are based on the quantity of product, not on the quantity of raw barley used in the process.

By the way did you know, Mr. Speaker, that a farmer receives six-tenths of one cent for the barley used to produce a bottle of beer? I thought I would just throw that in for your information. The minister himself stated three years ago:

As the cost of shipping raw unprocessed grain increases, the wisdom of shipping possibly lower volume but higher value processed grain product also increases. By further processing on the prairies the proportion of the value of the commodity which is spent on transportation is reduced, thereby improving returns to the local economy.

I could not have said it better. If the minister really believes what he said, why has he not initiated changes to the constipating regulations and enabled producers to benefit from that exercise? Obviously it would be nearly impossible to market all our export grain as pasta, flour or malt, but any significant increase would help to move us away from being hewers of wood and drawers of water.

Three years ago the minister's grain marketing panel recommended that organically produced grain be removed from board control. Polls have shown that the majority of board supporters would support that. Neither the board nor grain companies provide any service to organic farmers who must personally market and arrange shipment of bagged grain or flour, mostly for the yuppie market in the United States. Nevertheless their production is subject to the board's buyback provisions.

For example, Arnold Schmidt of Fox Valley, Saskatchewan, has been producing exceptionally high quality organically grown wheat for more than 10 years. There is a high demand for the raw grain and the flour milled on his farm. By the way, he employs five people in his operation to upgrade his product. There is high demand for his product not only in Canada but in the United States where it sells at a very good premium price. He never gets to see one penny of the premium because it is forcibly extracted from him for services that he does not receive.

To consummate a sale into the U.S., Mr. Schmidt is first required to go through the charade of selling to the wheat board. The grain does not actually pass through a grain elevator because even the slightest contamination by other grain would destroy its premium value. Nevertheless he has to pay the grain company about $200 for doing the government paperwork on a 20 tonne shipment. Then he pays the board a buyback premium of $2 a bushel.

Levying a huge charge for which the farmer receives absolutely nothing can only be described as extortion. When organized crime engages in activities of this nature the perpetrators sometimes go to prison, but for organic farmers the situation is reversed. Confiscation of the fruits of their labour by busy little bureaucrats is protected and enforced by the majesty of the law, but a producer who resists is subject to heavy fines. It is no wonder that the business of supplying certified organically grown wheat to the U.S. specialty market is stagnating when it could and should be the bright spot in our otherwise dismal agricultural picture.

Our trade competitors are giving their farmers multibillion dollar subsidies, and we are not asking for that. We know that Canada with its feeble economy could not possibly sustain a trade war with the economic giants with whom we have to compete. Only the Minister of Canadian Heritage is silly enough to think that we could do that. We are asking that the government stop beating up on the agricultural industry through its discriminatory regulations.

Farmers cannot fight on two fronts. They cannot simultaneously fight their foreign competitors and resist the encroachment of their own government into their operations.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I thoroughly enjoyed the member's comments. He has made an excellent point, one which has not been made thus far today.

I heard him speak on the issue of rail transportation in his part of Saskatchewan. Could he elaborate on the concerns farmers have about government policy with regard to rail line abandonment, on some of the problems that have been created because of the lack of competition in that area? Has he heard any concerns from his constituents with regard to the transportation problems they are encountering?