Mr. Speaker, I welcome the opportunity to discuss the concerns that are being debated here today on the very serious situation of farm income for this year. I remind members that every time I have stood in the House in the last number of weeks to discuss this matter and answer questions, I have fully recognized the unfortunate situation of the farmers. I share with the farmers and members of the House their concerns over the difficulties of many of Canada's farmers today.
Today I hope to leave hon. members with a fuller appreciation of the situation which is without question a complex one. I know that they read the newspapers. And yes, I read the newspapers. Yes, I hear what is being said on TV. I want to show how closely the provincial governments, producer organizations and the federal government have worked over the last decade to put in place a pretty good system of safety nets to protect farm income.
With that I will say that there is no absolutely perfect safety net system in our lives, whether it be personal, or business or in government. That is why it was discussed at the federal-provincial ministers meeting this summer. That is why we have moved forward even faster. We saw what was coming with the financial situation of too many Canadian farmers this year. We moved forward and fast tracked the process of review of Canada's safety net system.
We have taken a pragmatic approach and will continue with a strategic approach to fiscal challenges across the country. As a result, Canada's economic fundamentals are sound and should we not all be thankful. As Canadians we are better able to address the worldwide financial situation than most other countries.
Canadian farmers have made a big contribution to that. They have made a big contribution in putting the federal books back in the black. That was the first step we had to take. We have recognized that as a result of the contributions from farmers and all Canadians we are all reaping the benefits of lower interest rates and low inflation. That certainly has an effect.
We are all aware that global markets are going through a period of incredible turmoil. This has affected the income of farmers. We plan to continue on the course we have charted for the future. We will continue to target our resources, to reduce taxes as we have in the past, to pay down public debt, to invest in the knowledge of our people and to safeguard and improve our health care system. All of these, including addressing the unfortunate situation of many Canadian farmers today, have to be our priorities.
There is no question that farm producers are dealing with the fallout from fluctuations in foreign markets. For example, in Asia and Russia less buying power translates into much lower sales of our food exports. It is higher with grain and lower with dairy products, but I remind the House and everybody watching that on average 48% or 49% of the farm gate income comes to Canada and those producers. We are in the export business. We have a tremendous ability to produce. We have to export the products or drastically cut our production, eat the products here at home and hope that nobody wants to compete with supplying that market. That is not the way to go. We have to work with the industry, and we do, to find the markets where the products can be sold at a profitable level or at the best price attainable at that time.
As we know, many prices are set by the world. All that is happening in the world translates into lower sales of food exports. It is affecting the income of many of our farmers. Combined with this is the reality of a cyclical downturn in prices for some commodities which always happens in agriculture. There are pockets of poor production in a country this size. There are not going to be top yields in every hectare or portion of the country every year. It means some farmers will have significant reductions in their income this year.
I stress that this situation is not universal. Not all regions or sectors are affected to the same degree. At the national level, recent numbers indicate that without question farmers will see a decrease in their income compared to the average over the last five years. I stress that is not the same in all regions and all sectors.
In particular the situation in Manitoba and Saskatchewan is severe because of the low prices for hogs, cattle and grains. We are all concerned about what lies ahead next year for these producers. Nobody is more concerned than I am.
I have said a number of times that I have asked all the farm leaders to come to Ottawa tomorrow. I am pleased that all the provincial ministers of agriculture will be here to discuss the nature and extent of the difficulties.
Our forecast was done in conjunction with all the provinces. When the final, most accurate numbers do become available, which are numbers that have been put together with the co-operation and agreement of the provinces, I will remind members that some of the numbers they have been stating in the last half hour in this House are incorrect. I hope they will look at those numbers when they become available.
I am not diminishing that there are some very severe areas. These forecasts will indicate what the market price picture is in affected areas. We have to also be aware that it may worsen in 1999.
That is the bad news. The other news is that because of the unfortunate reality that many farmers, including myself, went through in the 1980s, farmers are better prepared. They are not necessarily totally and fully prepared. That does not always happen as much as it should or as we would like to see, but they are better prepared for this cyclical downturn we are in at the present time. They have had a number of years of pretty good prices.
Farmers are very smart business people and many of them have been able to put their money to good use. They have looked at their balance sheets, have seized new ways of doing business, have learned to manage their operations better, have worked hard to get their costs down, have increased their productivity and have invested in new technology when the money was available so they could be prepared for the reality that is in agriculture. I hate that reality but it is there. I farmed for 25 years. Some years were better than others. Some commodities were better than others in some of those years but it goes up and down.
The farmers have taken advantage of this. They have used a lot of tools that the provincial and federal governments have helped them to put in place. They have diversified their operations and have been paying closer attention to market signals. They have been making decisions on growing what they know they can market and not trying to market what they like to grow. We know that and they know that. They have to look at the market and use their crystal ball the best they can.
I do not want to underestimate or not give enough credit to farmers. They deserve a pile of credit for the tough decisions they have made over the last decade. They have used their wisdom and most important their foresight after the disaster of 1980s. In doing so, on average the net farm worth in Canada is significantly higher than it was. Assets have reached historical highs and debt to equity ratio has been declining since 1991.
Many small farmers have sources of income outside the operation of their farm. This certainly helps. People will say that should not have to happen and I agree with them fully. However, I say to opposition members everywhere that it does not matter what business one goes into today, because of the overhead in starting up a business or however the finances are, many people need to address having other sources of income.
As I said, I farmed for 25 years. My wife taught school for a few of those years. My wife worked off the farm for a number of those years. One thing farmers know, is that it is a risky business. It is a business that is always at the mercy of global markets and mother nature. Unfortunately, that is not going to change.
What has changed is the way we deal with that. We have a number of tools in place. We are reviewing how they are being used and how they can be used. Each year the federal government has put $600 million into the safety net package. The provincial governments have put in another $400 million. We have crop insurance, companion programs and the NISA. As has been said, our safety net advisory committee is looking at how we use those and how we can maybe put in place a national disaster program in order to assist those farmers who need it right now.
There has been a lot of talk about this issue. I will leave no stone unturned as we go forward. I look forward to the contribution of members across the way. I know collectively we can turn every stone possible in order to assist those farmers who are suffering at the present time.