Debates of Nov. 30th, 1998

Agriculture

[Jake Hoeppner, Reform, Portage—Lisgar, MB]

Mr. Speaker, I will add the 50 minutes to my hour. Then maybe we will get through this issue. It is a pleasure to say a few words but it is also a sad moment for me.

There is a crisis on the farm scene. Nobody doubts that. There is a bigger crisis in the Liberal front benches. I do not see any of them over there. That is where the crisis is. I am almost blind but I noticed it somehow.

I will read a couple of quotes. Since I was elected in 1993 we have worked on the agriculture committee. We pointed out to the government that we need a whole farm income support program. This is a question that was put by the member for Haldimand—Norfolk to the agriculture minister on February 9, 1994.

In the red book we promised a system of whole farm support that would help Canadian farmers who were in distress. This was in 1994. The agriculture minister replied:

I appreciate the question. Under the previous government in conjunction with provincial governments a process is under way to review and revamp Canadian farm income safety nets.

That has never been accomplished. Why not? In 1994 everybody knew that the Europeans had huge subsidies. The Europeans would not allow their farmers to get into a financial problem. They would support them. We had to be prepared to have some safety net programs in place.

How huge is this crisis in farming?

I was quite appreciative of the member for Yorkton—Melville when he started comparing prices. I know there are a lot of supply management people in this House who have been supporting that type of system. These are prices for their products. From a devilled egg that costs $1.60, they get 10 cents at the farm gate. From a whole quiche which costs $12.50, which has three eggs, 2 ounces of cheese and 16 ounces of milk, the farmer gets 92 cents. From a 6 ounce grilled breast of chicken, costing $8.20, the farmer gets 29 cents. This is in the supply management sector. When we go back to the wheat and the hogs, as the member for Yorkton—Melville pointed out, it is disaster.

I saw a letter from a farmer who said “If you can imagine, in 1981 I received $4 a bushel net initial for No. 3 hard spring wheat. Today I receive $1.80 for that same type of wheat”. It is not even one-half of what this farmer received in 1981.

We know what has happened to the price of fertilizer. We know what has happened to the price of equipment. We have a pretty good idea of what the cost/price squeeze is.

How are these farmers supposed to deal with this? Farmers have been looking far and wide to see if they can get better prices. It is astounding that the special crops industry has not done too badly. The canola prices this year are such that if it was not for that income I think 100% of the farms would be in crisis. At least they have some value from the special crops industry with which they can supplement their income.

In the 1992 crop year in Saskatchewan grain was damaged by frost. It looked like everything would be turned into feed. Saskatchewan farmers looked across the border and found a market where they realized they could pretty well double the price for their feed wheat. What did the grain companies and the wheat board do? They dumped 1.5 million bushels into that market and ruined it.

In 1993-94, when Manitoba had the fusarium problem, what happened? Farmers who found a market for that product were not allowed to sell to that market. It was demanded that they get an export licence from the wheat board and they were charged as much as $40 to $50 a tonne more for that grain than they got in the final return.

Farmers who did not abide the law and marketed it on their own wound up with huge penalties, fines and even jail terms. Is it democracy when farmers are in a financial bind and they know there is a market a dozen or two dozen miles way that they can access but are not allowed to? If they do, then they are put away.

One of the farmers drove all the way from Saskatchewan to the Manitoba border crossing to object and to protest. He got worse than the APEC protesters in Vancouver. He was not allowed to go back without paying a fine. He was fined $1,500 and was told to turn his car in. Andy McMechan, as we know, had some barley which no one could market for him. It was a specialty barley. He wound up in prison.

Farmers will find a remedy. I had at least half a dozen farmers phone me last week. They said “I don't need any money. If you can get me a guarantee that I can market my own grain, don't bother with any payments. We will make it. We will find a market and we will survive this crisis”.

How do we deal with this? On the one hand we have markets that have developed themselves because of crisis issues, but other markets are not allowed to be developed to the point where they pay properly. That more or less puts pressure on farmers to go to markets with decent prices so they can survive, make their farms viable and have more over-production.

The hog producers in Manitoba, Saskatchewan and Alberta did not want to get into these huge hog operations because they knew it would cost a small fortune to build the barns, but they had no way out. The feed grains were such a price that they could not afford to keep their farms viable. So with provincial encouragement they expanded and diversified. Today they are losing $50 to $60 a hog.

I ordered bacon and eggs for breakfast this morning and I figured I would get a plate full of bacon because pork is cheap. They could do away with the potatoes and give me the bacon. They could have taken that bacon off a live pig and it would not have lost a squeal. That is the amount of bacon I got. It was worthless. How do we deal with a situation like that? it is funny, but it is true. I did not have to swallow too hard to put those two thin little slices of bacon away with one swallow. Then I had the two eggs left with a bit of toast.

Guess what that toast costs at that restaurant? A bushel of wheat yields about 120 loaves of bread, which amounts to about two cents a loaf. If a loaf has 24 slices and I had two slices, there would be one-twelfth of a cent of wheat in that toast. How can the price of the breakfast be $5? I know the potatoes do not cost that. I am astounded. Farmers are supposed to survive and they are not supposed to be subsidized.

Mr. Hehn appeared before the standing committee. I asked him why we were not getting better prices for our wheat. He said they were pricing it at Thunder Bay. I asked him what if they priced it in Manitoba and he said that this was the price. The price of a bushel of wheat was initially $1.57 at the elevator. The buy-back price was $3.93 at Morris, not at Thunder Bay.

It does not make sense. Farmers cannot survive. Subsidies are part of the problem, but politics and the marketing system are probably more to blame than the Europeans and the Americans thrown together in one washtub.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Mr. Speaker, I will be sharing my time with the hon. member for Lambton—Kent—Middlesex.

I am pleased to have the opportunity to address the motion currently before the House.

Each day in this place we as parliamentarians collectively undertake to explore and debate numerous subjects of a widely varying degree of weight and sensitivity. This issue is perhaps one of the most consequential topics examined by this parliament. I do not wish to come off as sounding melodramatic, but each and every one of us likes to eat each and every day. It is for that very reason that we must decisively act now.

Tonight we are participating in an emergency debate. It is an emergency because Canadian farmers cannot wait six months for further action.

It is no understatement to say that Canadian agriculture today finds itself at a crossroads. The current crisis, if left unchecked, will without a doubt spell certain disaster or perhaps even a virtual collapse in market share for the small and medium sized members of this founding national industry.

I would venture to say that there should not be a single member of this House who is not cognizant of the massive financial challenges regularly faced by the farming communities across this land.

Drought, frost, disease, high overhead costs and fierce competition are all factors dealt with on a regular and recurring basis by our primary producers.

However, the impression should not be given that these challenges have not been without benefit. As a lifelong farmer myself, I can honestly say that, due in part to these daily complications, the Canadian agricultural industry has evolved into one of the most competitive and efficient of its kind in the world.

With that being said, when one adds new and complex problems such as low and dramatic vacillations in commodity prices upon the already heavily laden shoulders of our farmers, is it any wonder that we are now faced with a crisis.

I represent one of the largest agricultural producing constituencies east of the Manitoba border. In my home county, Huron county in southwestern Ontario, we have nearly half a million hogs, a number that exceeds the human population of Huron by a factor of 7.

With this in mind, people can understand that the current drop in the price of pork has devastated this commodity group. For those who might not be aware, only a few short months ago a pork farmer would receive somewhere in the neighbourhood of $2 per kilogram for his product. That same producer today would be fortunate to receive 60 cents.

The problem posed by this is that the input costs remain. It has been estimated that the average pork producer will take a loss of $60 for every fat hog sold at today's prices. I understand it is even higher than that.

Over the last number of days I have listened and corresponded with untold numbers of pork farmers in my riding of Huron—Bruce. We have been told that if we do not act immediately and if help does not coming right away, their doors will be closed by Christmas. They have no choices available. They cannot afford to keep their pigs and they cannot afford to sell them.

This is a sad reality, but worse is the statistical probability that this slump will expand into other sectors. Cash crops, beef, sheep and lamb are all at risk.

I think members would agree that failure is simply not an option for us. Surely adequately feeding our population should be paramount in the minds of any responsible legislator. In addition, we must also be aware that agriculture now enjoys the status of big business in Canada. In fact, in addition to employing thousands last year, it contributed approximately $20 billion to our national economic output.

The world population is expected to exceed seven billion by the year 2000, a fact that means global production of sustenance must increase exponentially. If given the chance, Canada can assume a leadership role in this endeavour.

The potential is endless only if we maintain a stable economic foothold in the markets. Our agriculture industry has already grown in leaps and bounds during the course of the 20th century, a trend that I strongly feel should be encouraged to continue.

Sadly, as we progress toward the next millennium, the days and the ways of the small family farm face the very real prospect of being moved out to pasture. We are approaching the proverbial fork in the road.

With the rapidly developing and expanding global economy, we can no longer blindly pump public money into controversial and bureaucratic ad hoc programs.

Farmers need a hand up, not a handout. Strategic investment into key areas of growth is essential. Failure to do so promises to be the final nail in the coffin, that of the family farm.

Members must understand that the family farm has been the backbone of the agriculture sector for over a century; a backbone that if broken will seriously cripple our nation's ability to ensure certain quality controls, availability and security.

If something is not done immediately, I see Canada's farming industry then approaching the same slippery slope that our American neighbours fell victim to. Today U.S. corporate giants such as Tyson, Perdu Poultry and Archer, Daniels Midland have the ability to use their dominance and control over the food supply to hold the American consumer hostage. We simply cannot permit that situation to occur here.

We need look no further than our largest trading partner and neighbour to the south to see the potential danger lurking around the corner. In the United States farming is corporate territory controlled exclusively by market fluctuations, shareholders and large multinationals, a reality that should be unsettling to say the least.

There are those among us who believe that bigger is always better. To those people I would simply say that bigger can be good but it does not always mean more efficient. In actuality when a corporation reaches transnational status it usually means power, not necessarily accountability or effectiveness.

One only has to read the mission statement of corporations such as ADM, Monsanto or ConAgra to see that their primary objective is increasing the accumulation of wealth for their shareholders rather than advancing the business of farming for any greater purpose.

To that end I would draw attention to the fact that in the United States poultry industry 38 firms now have 240 processing plants that are responsible for almost 98% of all U.S. chicken. In reality there are only 38 chicken farmers in all of the United States.

In my riding of Huron—Bruce I have 150 operations. In fact, the U.S. chicken farmer is little more than a labourer who receives a meagre 3 cents to 4 cents per pound to grow broilers, a number that would certainly not be acceptable by our own chicken farmers.

It is also important to mention that this figure has remained virtually stagnant and unchanged since the mid-1980s. Stability is one thing, however the unfortunate reality is that the cost incurred by the American farmer has not remained static. Mortgages, taxes and land costs are on the rise. As a result their farmers are subjected to the whims of the corporate masters while being forced to take all the financial risks associated with managing a farming operation of this type. Even with their high risk factor they have no chance of increasing their own profitability, unlike our supply management sectors in Canada.

As unsavoury as this type of arrangement sounds, it is not isolated to the American poultry industry. To the contrary, it is the norm and not the exception in almost every facet of American agriculture. In sheep slaughter the largest four national producers control nearly 70% of all production. IBP, ConAgra, Cargill and Beef America command dominance over a whopping 78% of the entire American beef sector. In the U.S. 20 feed lots market over 50% of the fed beef. In turkey the four U.S. giants, Rocco Turkeys, Hormel, Carolina Turkeys and ConAgra, account for 35% of the business, and these numbers go on and on.

As a rural Canadian it frightens me to think we might be moving in the same direction but that is the reality of the situation currently before us. In a nutshell, if we fail to act immediately our small and medium size producers are doomed. With them out of the way their larger competition will simply move in and take over. Rural Canada then becomes a little more than a branch of corporate America.

I would simply ask all our colleagues to be aware of the gravity of the situation. Talk is cheap and the price of pork even cheaper. In a world of high input costs, unpredictable growing conditions, El Nino, taxes, the Asian flu and the like, the margin of profit for farmers is shrinking fast.

The real question is should we be asking ourself today where do we see Canadian agriculture in the next century. We have a reputation for quality. It could be said that even with the new high tech integration and massive demands on our time Canadian farmers are considered by the world to be among the best and the brightest. Our commitment to excellence is strong but help is needed if we are to continue to be outstanding in our field.

[Rose-Marie Ur, Liberal, Lambton—Kent—Middlesex, ON]

Mr. Speaker, this is an important debate tonight and I congratulate the member for South Shore for proposing it.

As members will know, headlines and news broadcasts every day and night highlight the farm income crisis. The family farm is under siege. Any sensible approach to helping with this crisis would involve examining the reasons behind the crisis because no farmer wants a subsidy and taxpayers from coast to coast to coast generally oppose multimillion dollar bailouts that would serve no useful purpose other than to neutralize the daily headlines calling for a quick fix.

This problem is international in nature and thus we must look at the big picture. To me a grain farmer in Saskatchewan is just as important as a hog farmer in Lambton—Kent—Middlesex in Ontario. I am confident the Minister of Agriculture and Agri-Food in co-operation with his provincial colleagues and with producers groups will arrive at an equitable solution that is fair both to the industry and to the Canadian taxpayer.

As I mentioned in the House this afternoon, pork producers, for example, are selling hogs for about half the cost of production. There is now a huge oversupply in the marketplace. With the 15% expansion in production in the past two years, with the weak demand and foreign subsidies further distorting the market, the farm income crisis is a complex problem with no easy answers.

There is a discussion on a combination of programs, including the use of the present system, the safety net. We have certainly heard very clearly from the farmers their desire for a national disaster program. In very severe situations this will kick in and give some support to the farmers when the current safety net system may not be sufficient. Grain and pork prices are at or are near historic lows. Farm income is also depressed for many producers of other commodities as well. While the effect is not apparent in provincial estimates of total farm income for provinces with diversified agriculture such as Ontario, the damage is every bit as severe for affected farmers in Ontario as any other province.

The Middlesex county portion of my riding produces more agriculture commodities than that of Nova Scotia, New Brunswick and Prince Edward Island. It is big business. My riding alone produces nearly half a million hogs per year. The pork industry supports $4.51 billion worth of economic activity in Ontario alone.

The proposed national disaster program should work well for many Ontario pork producers if it can be implemented quickly. At 56 cents a kilogram hog farmers are losing between $55 and $60 for every pig they send to market. A farmer with a 300 sow operation is now losing $1,000 a day. To find prices that low we have to dust off the history books as far as 1972, but even that is not a real comparison due to inflation. In 1972 a pickup cost $5,000. Today it can cost $25,000.

Several years ago agriculture economists predicted the Asian market would be an excellent place for Ontario pork. Saskatchewan even subsidized farmers to switch over to hogs. Not only did Ontario and Canadian farmers expand, so did the Americans. In the third week of October 1998 Ontario farmers shipped 104,000 head, the largest number of hogs ever sold during one week. In the United States weekly hog sales were also breaking records. Low demand is now resulting in low prices and oversupply. Meanwhile grocery store profits are up 20% for Loblaws, 21% for Empire and 38% for Oshawa Group. Someone is still making money but it sure is not the farmer.

I have also heard from farmers whose NISA accounts are drained, as well as their RRSPs.

I have heard from constituents on the other side of the issue who state that the pork industry expanded and some are still expanding, building bigger barns, now with a product for which there is no market, so why bail them out.

I received an e-mail today from a cash crop farmer in my riding: “I am puzzled. The North American pork industry is big, efficient and has been profitable. There is a speed bump in the market and there is this great cry for help from taxpayers. I support our agricultural community wholeheartedly but sometimes we in the farming business need to reassess our position. When corn prices are low and there are a lot of acres being planted in the U.S., farmers take a look and then they decide perhaps they should get their bean drills out and plant a few more acres of beans. Is the Government of Canada going to support the hog farmer enough, because they will need more than just this rescue package to make them world competitive?”

The situation is far different, however, for grains and oilseeds where the basic market problem involved huge U.S. and European subsidies which are likely to depress prices for longer durations.

A program such as the proposed disaster relief by the Canadian Federation of Agriculture would provide support at 70% of a three year average. It would only provide short term help for grain producers. GRIP uses a 15 year average.

Former grain stabilization programs which provided support at 100% in the prairie provinces and 90% in the rest of Canada were thrown out in 1991 because the five year averaging period was too short when grain prices are depressed for several successive years by foreign subsidy awards. It is a difficult situation to be sure with no easy answers. However, I am confident that the minister and his officials will provide a sensible approach to this issue.

We must also look beyond our borders. As members know, it took 45 years before agriculture became a formal part of the WTO agreement. But even with a foot in the door, much remains to be done. Many high tariff barriers remain in place. The procedures for enforcing agreements are very loose and backsliding is common.

The GATT has been revamped and the membership is now bigger and growing. Our country, as an efficient and profitable exporter, as an immense interest in the reform of agricultural trade barriers. It is also equally true that countries which protect their inefficient agriculture producers have an intense interest in maintaining trade barriers. The United States and the European Union in particular typically defend subsidies when the truth is that they hurt their own producers as much as they hurt ours.

If we understand the reasons for this contradiction, we would be well on the way to resolving many of the quandaries of international trade. We must address and develop a set of actions that will lead to more liberal trading arrangements for agriculture in the years ahead. Only then can we avoid the warped market we see today.

We need to find answers because they will form the building blocks in the construction of new rules for global trade in agriculture and a more prosperous future for all the farmers we represent.

In 1941 the Atlantic charter, which became the rationale for GATT, stated its aim was to ensure that after the war all countries “great or small, victor or vanquished, would enjoy access on equal terms to the trade into the raw materials of the world”.

Today that seems to be still a very big goal. Canadian farmers, like all farmers, understand they have a responsibility to feed the world and guarantee a secure future in food supplies. As we do that we have a responsibility to support our farmers through this difficult process, not to abandon the process.

The challenge for Canada and other countries over the next 52 years is quite simply how are we to feed a world of 10 billion people, the estimated population by the year 2050. What it means is we have to produce double the amount of food we do now. Even in the next 25 to 30 years the world will need to produce 300 million tonnes more of wheat, 260 tonnes more of corn and 16 million tonnes more of fish.

Farmers understand this is attainable if they are paid a reasonable and fair price for their efforts. The people who eat the food must understand that as well.

Trade liberalization is the key to an efficient and affordable world food trading system. Unfair subsidies from the United States and the EU are trade distorting. We must all be committed to the reduction of trade subsidies, and the rest of the world, if it wants to be fed, will sooner or later need to come to grips with that.

Stepping on to the world stage, mixing it up with competitors such as the United States, Europe and Japan is a very rough environment and Canada has been succeeding. We are now experiencing a bump in the road with some prices hitting levels not seen since the Great Depression. Many would say this is a unique downturn under special circumstances that requires a national collective effort.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, I want to say a few words about the farm crisis we are facing which is particularly difficult in my home province of Saskatchewan where it has been hitting harder than in any other province in the country.

Farm income in Saskatchewan is down by 70% or 80%. The net farm income for grain farmers, I understand, is down by about $300 and some million. There is really a very severe crisis in the province of Saskatchewan and something has to be done about it in both the short run and in the long run. That is why this debate is very important this evening.

Over the last couple of months I have had a lot of farmers speak to me in my riding. My riding is roughly half of the city of Regina and half outside the city of Regina. I think we have something like 1,500 farm families in the riding.

We received a lot of calls and letters from these people saying that they were in dire straits. Much of what is happening is not the fault of the farmer. Two things have occurred that put the farmer in a very difficult position today. The main thing is the trade and subsidy war that is going on in Europe and the United States.

To give an idea of what I mean, the American farmer is subsidized five times higher than the Canadian farmer. Just this fall the U.S. Congress passed a bill that subsidized farmers in the United States by an additional $6 billion. The total American subsidy for farmers is $22 billion or five times higher than what the subsidies are in this country.

In the European Union wheat farmers are subsidized by a total of $205 per tonne. That is the subsidy in Europe. Against these odds it is no wonder that the price of grain without the subsidy is very low. Indeed it is below the cost of production. For that reason a lot of farmers are suffering.

There is a fellow in my riding from Balcarres named Lloyd Pletz. He has said publicly in the media “I am finished in the spring. I have no way to hang on”. He told a story in a press conference on October 16 organized by me and the member for Palliser. He talked about the farmers in his neighbourhood who were going bankrupt and were broke. They would have to sell their farms and get out of farming come next spring if there is no help on the way. He also talked about farm stress and difficulties in families.

There was another women named Mrs. Elder who operates a farm distress line. She said “My phone has never been ringing as much as it has been ringing this fall with people calling in. There are marriage breakdowns, financial difficulties, stress in the family, sicknesses and so on”.

We have a real crisis that is not of our own making as Canadian people. The question is what do we do about it. There are three things we have to do. One we are already doing. In the short run we need an emergency payout to farmers. I am talking primarily about cereal producers, grain producers and wheat producers but also about hog producers.

That issue is a bit different. Hog prices have fallen drastically mainly because of what has happened in Asia and the loss of that market because of collapse of the Asian currency and the Asian economy. The market is not there. Hopefully that will recover. There are signs that it might be recovering a bit in that part of the world.

We need an emergency payout to farmers to make sure they survive and can plant a crop next spring. We can afford that as country. We cannot afford not to do it as a country.

The Minister of Finance a few weeks ago announced that in the first six months of this year our surplus was running at $10.5 billion. The Minister of Finance should signal very quickly that several hundred million of that will be paid out by springtime to farmers in emergency aid. That will not only keep farmers on the land, which is important, but it will also provide jobs in the Canadian economy and a spin-off for people in the small towns and cities across the country.

Emergency aid of several hundreds of millions of dollars is needed to keep farmers on the land. We are running a surplus of some $10 billion at this time. Maybe it will be $15 billion, $20 billion or $25 billion by the end of the year. We do not know. Surely to goodness we can provide $700 million or $800 million to farmers between now and spring seeding time.

That is my basic plea this evening. We should do that and announce it before Christmas so farmers will know, their bankers will know and the credit unions which finance farm loans will know well ahead of time that a payment is coming. Then farmers will be able to afford to plant their crops in the spring. That is extremely important.

Another thing we need is a long term farm policy, a long term program that is put in place to handle a crisis like this one. I know this is being discussed in the agriculture committee and in other forums around the country. It should be a program based on the cost of production, so that if the cost of production falls radically and drastically as we have seen now there will be an automatic kick-in where the farmer then is supported up to the basic cost of production.

That is what we need in terms of a long term farm program so that there is something there. It would be a bit like the unemployment insurance program used to be for workers, something that was there in a time of crisis, in a time when the man or the woman lost his or her job so that there was something there. We need that too when it comes to agriculture in terms of the long run.

I also want to mention this evening the whole area of the trade wars. I know the government has spoken out on this matter. I know the foreign minister and the minister of agriculture are on their way to Washington tonight and tomorrow. I think we have to take a very aggressive role in the international community, in Washington, at the WTO, in GATT, in Europe and in the Council of Europe in speaking out against these subsidies that are killing the farmers of this country. We have to do that and I know our government is doing that.

Parliament should express itself very clearly from all parties in the House. The ministers should do that as often as they possibly can on behalf of our farmers. That is extremely important.

What is happening today is not the fault of our farmers. It is the fault of the treasuries of Europe and the treasury of Washington that are subsidizing their farmers to such a large degree that our farmers are going down. It is a crisis, unless one has been on the prairies, that might be difficult to visualize. It is the worse crisis facing farmers in my province since the Great Depression of the 1930s. That is without any exaggeration.

This has a tremendous spin-off in terms of the whole economy, the small towns and cities across the country. When farmers are going to lose their jobs or are worse off they do not spend money and everyone is worse off.

Why do we not unite in the House and send a very clear signal to the Minister of Finance and to the Treasury Board that part of the expected surplus this year should be spent before spring on an emergency payment to farmers?

[Some hon. members]

Hear, hear.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

I hear the members of the Liberal Party saying “Hear, hear”. I am glad to hear that. If we could somehow come to an agreement in the House through a unanimous vote of one sort or another we would send a signal to the minister and to cabinet that would be very worth while. Perhaps that is what we should talk about after this debate is over in terms of an all party agreement. It might be useful to pursue that. I am just thinking of it as I am on my feet.

This is where ideologies are set aside. We have our differences with different parties in the House, but this is a crisis all Canadians must get together to help resolve. We did it in the Saguenay. We did it in the Red River. We did it over the ice storm. I think we should do it now.

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

Mr. Speaker, it is a great privilege to speak in the House this evening on a crisis, it saddens me to say, of truly biblical proportions when we think about what is happening to our farmers in western Canada, central Canada and the maritimes.

My critic role in parliament is on fisheries and oceans. Probably some people may be asking why I would be discussing the farm crisis. I can tell people firsthand of the crisis that happened to the people of Newfoundland, Nova Scotia and the rest of the Atlantic provinces. That is happening to people in western Canada. That is happening to people in central Canada. That is exactly what is happening to farmers.

Farmers are the finest people in all of Canada when it comes to agricultural work. We are not just talking about people who work the land. We are talking about people who actually risk their lives every day because farming is one of the toughest occupations out there. They deserve our help and they need our help now.

In my 10 minutes I will read a letter from the minister of agriculture and food of Saskatchewan. This is a letter he has written to everyone in the House of Commons. Although he cannot be here to read it himself, I would like to read it for him because it states exactly what the problem is:

Dear House of Commons:

It is with regret that I have to write this letter to inform you about the serious situation facing Saskatchewan farmers.

I first want to point out that Saskatchewan farmers are among the most productive in the world. They are prepared to compete in world markets on a fair basis. However, current world markets are anything but fair. The United States and the European Union continue to provide massive subsidies on their production and exports. This has been a major factor in driving grain prices down over the last year.

The level of subsidies in the U.S. and EU can be illustrated by looking at information from the Organization for Economic and Co-operative Development (OECD). For wheat, the subsidy, as measured by a producer subsidy equivalent measure, was 10 per cent in Canada, 32 per cent in the U.S. and 36 per cent in the EU. This means a Saskatchewan farmer growing wheat has to compete against farmers getting 3.2 to 3.6 times as much assistance.

The impact of low prices is being felt in the agriculture sector and throughout the provincial economy. Farm incomes for 1998 are projected to drop $407 million from the five-year average. In 1999, they are projected to be $766 million below the five-year average. Clearly, our agriculture sector cannot be expected to handle this type of situation on its own.

There are two issues that need to be dealt with. One is the need for a long-term strategy to deal with multi-year disasters. Saskatchewan asked at the 1998 summer annual meeting of federal-provincial ministers for this to be addressed as we jointly negotiate a new five-year framework agreement to begin in the year 2000. The second and more pressing issue is the need for a short-term solution to the cash flow problem Saskatchewan producers are facing today.

I am seeking support for a disaster program to protect our farmers against the dramatic income drop. The program must be federally funded in the same way that the U.S. and EU fund their farm programs. Only the federal government has the fiscal ability to fund such a program. Saskatchewan is prepared to help our agriculture sector as much as possible. We do this by contributing 40 per cent of the costs to such programs as crop insurance and the Net Income Stabilization Account (NISA) program. We already fund agricultural programs at a much higher level relative to our tax base than any other government in Canada. In fact, it is over four times higher (on a per capita basis) than the federal government and the average support provided by all provinces. Saskatchewan clearly does not have the additional fiscal capacity to fund this type of disaster program.

The current farm income situation is a federal responsibility: the income problem is primarily a result of the use of subsidies by other countries and international trade is a federal responsibility; subsidization of our industry's competitors is primarily being provided by the national governments in both the EU and U.S.; only the federal government has the treasury that can deal with this type of problem; and the federal government chose to completely eliminate export subsidies in Canada prior to receiving the same commitments from other countries when it eliminated the Crow benefit. This federal decision has taken $320 million annually out of the pockets of Saskatchewan producers.

These large problems are clearly beyond the scope of an individual province. Saskatchewan cannot go to those farmers who have lost almost 70 per cent of their net income this year and to the 40 per cent of Saskatchewan people whose livelihoods are indirectly supported by agriculture in this province—and ask them for more tax dollars to fix a problem created by our federal government.

I agreed with federal government decisions to utilize Canadian taxpayers' dollars to help out the east coast fisheries through targeted transition funding; I agreed when they provided disaster relief to Manitoba during the flood; and I agreed when they assisted Ontario and Quebec after the ice storm. My hope now is that they can see their way clear to assist prairie producers during this period of severe financial hardship, a hardship caused through no fault of their own.

The federal government must take action to press the EU and U.S. to eliminate the use of trade distorting subsidies. They must be willing to protect industry during this income shortfall if the U.S. and EU subsidies continue. I need your help to ensure Canada puts as much pressure as possible on the EU and U.S. to reduce their production and trade distorting subsidies.

I do have confidence in the future of our industry. But it needs help to address periods of low incomes. I ask for your support in getting a short-term, disaster relief program in place before spring seeding in 1999.

This letter was signed by Saskatchewan Minister of Agriculture and Food Eric Upshall. What we are talking about are the finest farmers in the entire world. In fact, I would like to say that this crisis relates exactly to the fishing industry on the east coast.

In conclusion, farmers are going through the most devastating time of their lives in the hog producing industry. What have these farmers done? Some of them have actually given thousands of pounds of pork away to their local food banks. We are talking about not only the best farmers in the world, but the finest people in the world as well.

[John Maloney, Liberal, Erie—Lincoln, ON]

Mr. Speaker, I will be sharing my time this evening with my colleague from Etobicoke—Lakeshore. Later in the evening the House will also be hearing from my colleague from Scarborough East. It is important to note that these two members come from the largest urban centres in Canada and they are as concerned and as anxious about the plight of our farmers as members from rural areas.

The Ontario pork industry is suffering through a severe period of below cost of production pricing. The outlook for the next 6 to 10 months appears most unfavourable.

Many of our nation's pork producers are under financial stress. Some are facing bankruptcy and financial ruin. Last week I met with over 70 representatives of the pork industry from the Haldimand and Niagara regions. I would like to tell this parliament and the people of Canada about the crisis they are facing.

As of last week the price was 62 cents per kilogram. The five year price average is $1.65 per kilogram. Hogs are sold on a dressed weight basis of approximately 84 kilograms. The break-even cost, including feed plus variable and fixed costs, is about $1.50 per kilogram. At 62 cents per kilogram, feed costs for hogs are not being met, yet farmers are obliged to look after the welfare of the hogs plus cover the other variable and fixed costs. Simple mathematics tells the tale.

In the Niagara and Haldimand regions where my riding of Erie—Lincoln is located, pork producers produce upward of 38,000 hogs annually, plus weaner pigs and sows. This production translates into over $4 million directly into the economy of the region. The added value of further processing, transportation, assembly, jobs, et cetera, pushes the economic benefit well beyond the $4 million mark. This is an industry that my riding can ill afford to lose.

In Ontario pork producers pump $668 million directly into the economic activity of their local communities. Agriculture accounts for 13% of the gross domestic product of Ontario. The Ontario pork industry in total accounts for 43,000 jobs and $4.5 billion in the economic activity of our province. One out of every seven jobs in the agricultural sector is provided by the pork industry. As the House can see, the pork sector plays a very significant role in the economic activity of the province of Ontario.

The current depressed prices are taking a whopping $64,000 per week from my region of the economy and an incredible $8 million out of the Ontario economy each week. This not only affects the producers, it also affects the feed suppliers, equipment dealers, utility companies, et cetera.

What brought about the severe price drop? The answer is direct. Oversupply of hogs in the North American market. A rapid vast expansion in the United States and within Canada has pushed hog numbers beyond the capacity to consume, both domestically and in foreign countries.

Growth in Ontario has been somewhat modest, coming at the request of processors and government urging producers to tap into the Asian export markets. These markets have not developed as rapidly as hoped, largely due to the economic crisis in the Asia-Pacific region, an unexpected phenomenon that has occurred through no fault of the pork producers. Fortunately, the quality of pork produced in Ontario is still in demand, but not at the export levels hoped for.

Ontario pork producers are competitive. They have the skills, the genetics, the infrastructure and the land base to continue producing a high quality product recognized the world over. However, they cannot compete against subsidies outside of Ontario, be they in other provinces or the United States.

Pork producers in Ontario have little or no government assistance. The NISA program to which producers and governments contribute only have sufficient funds to cover two to three weeks of losses for the average producer. This is totally inadequate under the current circumstances.

During my meeting with representatives of the pork industry at my Smithville constituency office I was asked to make several requests of the federal government.

At the federal level producers across Canada are represented by the Canada Pork Council. They have asked that federal members of parliament talk with members of cabinet, especially non-rural members, to urge swift acceptance and passage of an all farm disaster relief program in order to get funds into the agricultural community by January 1999. This I have done.

Pork producers are used to and operate within a cyclic market. The present situation, however, is not a normal cycle in the pork industry. The crisis has caught everyone by surprise and is well beyond the disaster stage. It is now a catastrophe.

I believe that this government can and should assist pork producers in this period of unprecedented need. I also urge Canadians everywhere to do their part by including more pork in their diet. It is a truism that every little bit helps.

I have focused on the pork industry; however, this is not the only industry affected. Let me speak about the overall crisis.

For the many Canadians who may be listening to this important debate tonight I want to point out that many connections link rural and urban Canadians and all of us will be affected by the current problems in the agricultural sector.

Canadian farmers produce affordable and healthful food for our tables, along with many non-edible products such as ethanol motor fuel that contribute to a clean, sustainable environment.

Now that this combination of factors, including grain stock surpluses and financial political instability in Asia, Latin America and Russia, have decreased demand for our commodities and pushed prices to their lowest level in 20 years, today some farmers are experiencing a potentially disastrous cash crisis.

The Canadian agriculture and agri-food industry is the third largest employer in Canada. In addition to farmers, there are suppliers, processors, transporters, grocers and restaurant workers. The agriculture and agri-food industry generates about $95 billion in domestic retail and food service sales annually. Grains and oilseeds are among our leading agricultural exports. In 1996, the value of Canada's agricultural food exports was a record $19.9 billion, with half of the exports going to the United States.

The prairies, the bread basket of Canada, have been particularly hard hit by the low prices. Grain producers, especially those in Manitoba and Saskatchewan, are affected—and let us not forget Ontario—as are cattle producers and the hog farmers who I mentioned earlier.

On a national level, farm income is expected to be down 20% from 1997. Farmers in Manitoba are expected to see their incomes drop by 40% compared to the five year average. In Saskatchewan incomes are expected to be almost 70% below the five year average. With problems expected to continue through 1999, the situation requires a short term targeted response, but also demands long term solutions. It is a national problem requiring a national response.

At the request of the Minister of Agriculture and Agri-Food, industry leaders and provincial and federal representatives met in Ottawa on November 4 to look at farm income forecasts and discuss options to address the income crisis.

The Government of Canada is very concerned about the farm financial situation and realizes the sense of urgency and importance. It is indeed very urgent and very important. This is why farm income is currently one of the priorities being considered by cabinet today. I thank the minister and his staff for keeping us apprised of the developments.

I know that the minister has had ongoing discussions with industry and provincial counterparts about the problems Canadian producers are facing. I am confident that this work will continue with all stakeholders to put solutions into place, hopefully very soon.

I hope the minister understands the importance of giving farmers some indication before Christmas, if at all possible, not on whether there will or will not be additional support for farmers, but what the particulars are of this much needed all farm disaster relief program.

When such a program is announced, I urge all of my colleagues in this House to ensure that it receives the support it deserves. I urge this government to hold out a hand to a deserving group in need in Canada, our farmers.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I am pleased to participate in this debate on farm income.

This past weekend my constituents in the riding of Etobicoke—Lakeshore watched with great interest the various news reports on the serious situation facing farmers across the country.

Yes, we are an urban riding. Etobicoke—Lakeshore has no agricultural sector in its economic base. Economic activities in Etobicoke—Lakeshore are concentrated in the service and manufacturing sectors. Nonetheless, the issue at hand affects us all as Canadians.

Etobicoke—Lakeshore relies heavily on the agriculture base of the Canadian economy to provide it with fresh fruit, produce and other products. In light of this reality, I offer the support of the people of Etobicoke—Lakeshore to all of the farmers in Canada during this crisis.

Farming is one of those activities that is the mainstay for many communities. Indeed, without farming in various regions of the country many communities would cease to exist economically.

Etobicoke—Lakeshore cares about the livelihood of these communities. The problems they face concern us all. Communities across Canada are all a part of this economic system and when one part is affected it could lead to disruption throughout the entire system.

There is a food terminal in Etobicoke—Lakeshore that distributes food from all over the country to various local businesses so they, in turn, can supply all Etobians. I can only imagine the impact of this crisis on that operation at present.

I am encouraged by the spoken words, the passion and the conviction of the Minister of Agriculture and Agri-Food. His conviction as he faces this serious situation in farm income has buoyed my sentiments and stirred in me the fact that he is joining together with all partners to bring about a resolution. I know his commitment. I listened and my constituents listened. We know he will respond and that his response will be the assistance that farmers need.

A senior in my constituency asked why they are facing this problem. I will give a few answers, as I understand them.

Demand for key agricultural products in Asia and Russia has been drastically reduced as the buying power of consumers has shrunk. The global financial crisis in farm income here in Canada cannot be de-linked. Combine this with simultaneous cyclical price downturns in grain, hogs, cattle and pockets of poor production in some areas and we get a situation in which many producers are seeing a pretty significant reduction in income this year.

Some members of this House would argue that the answer to these problems is insulation from the global economy, but that reflects a simplistic view of the world rather than compassion for those affected by this crisis. Offering complaints cannot be equated with offering solutions, and people need workable solutions.

Talk of removing Canada from global markets, from international trade or from the need to export makes great rhetoric, but it will not make one iota of difference to the financial security of men and women working on Canadian farms, and neither will bland complaints about not getting everything we want, when we want it, from trade negotiations.

Let us do our farmers justice by limiting the rhetoric and instead working together to offer practical responses to a complicated problem. The responsibility of governing demands that we offer the pragmatic, not the dramatic.

As this government has done in the past, we will continue to work with farmers and provincial governments to put programs in place that are equitable and available to all in need, no matter what province they live in. We will work with those same partners to develop a strong, united and compelling position for international trade negotiations.

In bringing forth long term and short term responses to this serious situation we are committed to both collaboration and co-operation. We have our minister's word and I know our minister's word is meaningful.

Canadian farmers have a right to expect such an approach to this problem. There is no room for theatrics or one-upmanship given the nature and the magnitude of the problem. We need all members from all sides of the House to work together.

In studying this issue I discovered some facts. Our most recent farm income figures—and let me underline that these were developed with the provinces—show that at the national level overall net farm income is down 4% from the average of the last five years and down 20% from 1997. For a city girl, this is really terrible news.

Of course, that aggregate number hides the problems we know exist. Some parts of the country are suffering worse than others. Depending on the commodity, some producers are practically unaffected while others are hurting really badly.

We know that there are very serious problems in the hog and grains sectors. My colleagues who come from those sectors speak to me about it. The majority of hog producers are in Quebec, Ontario and Manitoba, but Prince Edward Island has significant hog production and has also been affected. The majority of grain farmers are in Saskatchewan, Manitoba and Alberta. There are also grain farmers in Ontario.

Meanwhile we must not forget that other producers have experienced serious drought and even outbreaks of disease, such as scrapie. This is the full context of the farm income situation and we must recognize all the forces at work. Doing this will help us to bring sense to the numbers.

Looking at these problems regionally, we see that in Prince Edward Island, Saskatchewan and Manitoba the situation is particularly serious. In fact, realized net farm income is forecast to be down 40% this year in P.E.I. and Manitoba, while in Saskatchewan farm income could fall almost 70% relative to the previous five year average. Unfortunately, current forecasts also predict that those who are having trouble this year are not likely to see improvements next year.

I know that there are a great many people in communities coast to coast who are facing hardship and are looking to the Government of Canada for relief and assistance. And there are other pressing issues that demand the attention of the federal government.

Politics is the art of making decisions. It is not running one against the other. We must find a way to do the best we can for all these people. The farm income situation is not one that the government is going to retreat from, any more than it will retreat in the face of any challenge. We want to fix this problem as quickly as possible in order to bring some sense of calm back to a sector that has become increasingly desperate in recent days.

Moving forward, not backward, requires partnership between all levels of government. This is what we must do. There is never a place for adversarial relationships between federal and provincial governments. In this situation the Minister of Agriculture and Agri-Food has made it clear that he wants to work with all in addressing the situation.

Together with farm organizations and all levels of government, we need to bring about a solution. Solutions will come from hard work and from working together and forming those partnerships. Effective programs will be produced by this approach.

Will it be flashy? No. Will it be a total cure? I think we must be humble. There are no quick, easy or total solutions. Workable and meaningful solutions do not have to be flashy or miraculous in order to make a difference. Making a difference is part of governing.

The Government of Canada is committed to making a difference in the farm income situation. All members on all sides of the House should join together in finding short term and long term solutions for our farmers.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, it is an honour to have the opportunity to participate in this evening's debate.

I want to congratulate my colleague the member for South Shore for moving this motion. I also want to congratulate my hon. colleague the member for Brandon—Souris, who is our agricultural critic, for the fine job he has done in terms of raising this issue and trying to express to Canadians the dire need that Canadian farmers are in.

What we are talking about in this debate is an issue of a pan-Canadian nature. This is not an issue where we are having a fluctuation or a downturn in the market. What we are seeing with respect to the income crisis which the farmers are enduring right now is a market collapse. This is a crisis.

In this House quite often we use words that may not actually fit the situation. However the situation our farmers are enduring from coast to coast, whether it be on the prairies or in my area of Atlantic Canada with respect to pork and hog production, is a crisis.

I will speak this evening about the pork industry. It has been devastated through the crisis we are enduring with respect to the commodity pricing. Farmers are in danger of losing their business. Just recently Charles Keats stated that he may lose his farm that has been in his family for six generations. He expects to lose at least $200,000 this year alone. That is the money he spends to operate his facility.

I worked in an industry where we had to market commodities. I understand that when $130 is needed to break even and the product is selling for $82, it does not take very long for it to have a very negative effect on the business.

This is not a negative effect on their business. This situation actually challenges their very existence.

Hog farming in the province of New Brunswick is a significant industry. There are 80 major farmers in the province who produce over 200,000 hogs per annum which means $25 million for the provincial domestic economy.

This affects the people in my riding of Fundy—Royal. Nearly half the farmers who exist in the province of New Brunswick are within a 30-mile radius of the town of Havelock which is in the heart of my riding. This does not just affect the individuals who work in the farming industry. There are individuals in my riding and a nearby riding and the riding of Moncton who work for Hub Meat Packers. Seven hundred people earn their living from that facility.

I was talking a few minutes ago with my colleague, the member for Pictou—Antigonish—Guysborough. I spoke about a few statistics which are paramount to this industry in terms of what is happening and that farmers are not getting the prices they used to get. Let us put some of this in perspective.

The price that farmers obtain for their hogs today is the same price that the hog farming industry obtained in 1944. The price of feed has not gone down. It is not at 1944 prices. Other commodities which farmers need to operate their business are not at 1944 prices.

I may have made a mistake in talking about statistics. What is at hand is that families from coast to coast are losing their livelihood. They are losing their ability to provide for their families, to pay for their homes and their car loans. They are giving up hope of having the opportunity to help their children who wish to go on to university or pursue some other discipline.

We are looking at a complete meltdown. It is the responsibility of the federal government in co-operation with its provincial cousins to ensure that the agriculture industry and Canadian farming goes on. This is a crisis. The income farmers are receiving is only 55% of what they received in 1997.

I want to talk about two particular programs which the Progressive Conservative government implemented between the years of 1984 and 1993. Those two programs are the net income stabilization plan, known as NISA, and the gross revenue insurance plan, known as GRIP.

I would hope that this crisis has demonstrated to my hon. colleagues on the other side of the House that we really do need to get a grip. I do not mean to be facetious. The government chose in terms of its program rationalization to keep NISA, which would affect the stabilization of pricing, and it did away with GRIP. GRIP was an assurance program so when there was a catastrophic change in terms of marketing, the federal government would be able to provide a bridge for the industry from one step to another. The government has chosen to abandon that program.

I will give due credit to the government of the day. There seems to be a consensus with my hon. colleagues in the Liberal Party that there is indeed a crisis and I applaud them for recognizing that. I can say that the farmers have been well aware of it for all too long.

The Liberal cabinet is on the verge of making some form of announcement to have an intervention. This announcement has to be a bankable one. When farmers go to the individuals to whom they owe money for feed, when they go to their banking institutions, the banks will understand that they can provide a bridge for the farmer to ensure the viability of their activity continues to go on.

Only a few hours ago I had the privilege to speak to a number of farmers who reside in my riding. I spoke to Mr. Bill Hart from Norton who told me that it is a very negative situation when he wakes up each day knowing that he is going to lose $1,000. Mr. Hart is not an affluent individual who trades in commodities left, right and centre. One thousand dollars is a very personal hit on him and his family.

I also had a conversation with Mr. Stephen Moffett who is one of the largest hog producers in Atlantic Canada. Mr. Moffett mentioned what we have touched upon which is the fact that the cuts that have been made to agriculture reflect what we have seen for that of rural Canada. The first hit the government of the day takes seems to hit that of rural Canada.

The Progressive Conservative Party is very proud to say that our new national leader, the Right Hon. Joe Clark, chose to make his first public impact as leader on this issue. The Canadian public should be very grateful for the leadership he has exhibited on this issue.

I am splitting my time with the member for Kings—Hants. In conclusion therefore, we have talked a lot about the commodity pricing that is affecting individuals whether they be in the prairie provinces, on the Atlantic coast or in the province of Quebec. The statistics get lost but what it means is complete devastation for an industry.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I commend the hon. member for Fundy—Royal for his words this evening.

I represent the riding of Kings—Hants. In that riding is the Annapolis Valley, an area known for its agriculture nationally and internationally. Nova Scotia has had two consecutive years of the worst droughts in over 50 years. Annapolis Valley has suffered dramatically based on weather conditions.

This is one issue that has affected our industry in our province dramatically. Currently there is federal-provincial finger pointing on this issue. At a time when it requires decisive action, at a time when we should be helping farmers, there is finger pointing between the feds and the provinces on the issue. The province of Nova Scotia is blaming the federal government. The federal Liberals are blaming the Liberals in Nova Scotia. It is not a very effective situation.

When we look on a national level, net farm income is down 55%. In 1998 cash receipts for instance in western Canada are down terribly. My hon. colleague from Fundy—Royal spoke of the pork industry. In Nova Scotia the pork industry is a $110 million industry currently with 1,500 jobs. If we allow our pork industry to disappear, it will be a significant loss to the province of Nova Scotia.

That is where we are at. It is not an issue of whether we can wait or whether the farm community on a national level can wait for assistance. Farmers need assistance now. This situation is not a time for dilly-dallying with the federal government. I commend the government that we are at the point now where there is a package being discussed at cabinet. We urge it to move quickly on that package.

It was interesting earlier hearing the Liberals, the patron saints of hypocrisy, who have backtracked on every major initiative in the red book from their opposition to the GST, their opposition to free trade, their opposition to deregulation and privatization. How dare they ever accuse any other party of betraying an election platform? They invented the notion. We see the Reform Party in an ideological box talking tax cuts for farmers at a time when farmers are facing bankruptcy. It is like throwing an anchor to a drowning man. Reformers say let us twist the arms of the Americans or the EU nations to get them to reduce their subsidies.

I am not disagreeing with the Reform Party that in the long term these steps have to be taken, but the fact is this has lasted for decades. The EU nations and the Americans are subsidizing significantly. It will take work but that will not help the farmers who are in crisis now.

They say they are opposed to bailouts. They probably would have opposed Roosevelt on the new deal. The fact is farmers need help now. While the Liberals dilly-dally and the Reformers pontificate about Adam Smith, farmers need help.

A nation's ability to produce food is fundamental. Frankly, current income support programs simply do not cut it. We need to act decisively. There is no time for this ideological warfare. Farmers need assistance.

The hon. member for Fundy Royal was speaking about the GRIP program which was gutted by the Liberals. On a national level if we look at some of the programs from the past, ultimately if we do not have sustainable long term programs that ensure there are funds and programs available for farmers in crisis we will always be back to this type of situation where we are trying to deal with a crisis on an ongoing basis.

This is an unprecedented crisis in recent history. We recognize that. We urge the Liberals to move quickly. This is not an issue for ideological wrangling. It is a time for us to do what is right and to help farmers.

In the Annapolis Valley we are seeing farmers go bankrupt at an unprecedented level. It happens every week that we are getting calls to our constituency offices and hearing stories of absolute heartache and devastation from family farms, farms that have been in these families for generations. There are seven or eight generation dairy farms that are facing devastation based on the current situation.

The pork industry is going downhill. The apple industry in the Annapolis Valley is facing significant challenges. We need a holistic program. We need to work in terms of foreign policy to address the subsidies issue globally. We need to address our tax policies in Canada and ensure that farmers and all business people are not impeding by an egregiously heavy tax burden. But in the short term we must do what is right. We must do what is important, help farmers who face a crisis right now.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I will be splitting my time with the member for Dufferin—Peel—Wellington—Grey, also known as the minister of feathers. Anything we want to know about feathers, that is the hon. member to speak to.

I am only the second urban member to speak on this. I want to acknowledge at the outset, as one of the hon. members asked me opposite, what in heaven's name does an urban member have to say about a farm issue.

The last farm exited Scarborough East about a generation and a half ago. It was probably my father's farm. At one point we were hog farmers and we followed that up subsequently with being market gardeners. I vividly recall doing rhubarb roots in November.

It was an awful experience. One did not have to do this for very long before realizing there was another way to make a living. The novelty of doing it wears off after a while.

I am actually the first generation not to own land and make a living from it. Some time during the next month I have to make a decision as to whether we will sell the family farm.

I can say unequivocally that the people of Scarborough East are not opposed to paying a fair price for the food they consume from Canadian farmers. That in some respects is the issue. While I speak from the vantage point of an urban member and a lapsed farmer, I want to address the issue of whether this is a crisis or a disaster as speaker after speaker has said.

I draw attention to the overview of the 1998-99 farm income forecast of NISA balances of October 30 prepared by the Minister of Agriculture and Agri-Food. If we look through the numbers for certain provinces one has to ask where is the crisis. The cash receipts for 1998 for the province of Ontario will be $6.7 billion, up approximately $400 million from the previous five year forecast. Income in 1998 will be the highest it has been in years previous. The average for the years 1993 to 1997 is $415 million. This year it will be $625 million for the province. The net income will be $674 million, up considerably over the $540 million average for the previous four years.

Hidden in the numbers are some sectoral problems, particularly in the area of hog production. If we look at the numbers there is a scheduled fall-off of about $270 million in one year. It will be concentrated in one sector. I believe that is where the crisis is.

As we move further west it is clear that the crisis gets deeper and deeper. In Manitoba the net income over the previous four years was $287 million. This year it will be $143 million falling down to $134 million, something in the order of a 40% fall-off from previous year averages. Then if we go further west to Saskatchewan the numbers become quite dramatic. The total net income for the average of 1993 through 1997 was $715 million. This year it will be $83 million. Next year it is projected to be $72 million. This is estimated to be something in the order of a 70% drop-off from the previous five year average. Clearly there is a crisis and an issue of great difficulty to individual farmers.

The numbers do not lie in these instances. There is a serious meltdown over the three provinces of Saskatchewan, Manitoba and Prince Edward Island. It is clearly directed to two sectors, the grain sector and the hog sector.

The question is whether the government should be panicked into a response. There are a number of serious issues among farmers particularly in Manitoba and Saskatchewan. The grain and hog sectors are very hard hit. There will be spill-overs into other areas and other sectors. There are vigilante people in the United States who have decided to take the law into their own hands and block access to markets. However, should the government panic as suggested by some members opposite?

Apparently the Reform Party's solution of tax cuts is the panacea to fit all evils. This is one idea that fits all issues. Tax cuts will not be too terribly useful to a farmer who has no income. Under the circumstances a tax cut is a meaningless solution.

The NDP, on the other hand, described this crisis as something comparable to the dirty thirties. I suggest that is hyperbole and not something that necessarily needs to be addressed. Its solution is to get into national programs and to look at subsidies. But if we look a little more carefully at subsidies, they do not really cut it. If I am reading correctly, the producers subsidy equivalents produced by the Minister of Agriculture and Agri-Food show that in the pork area where we subsidize the most we have the greatest problem.

Similarly, however, if we look at the wheat area where we subsidize the least, second only to Australia, that is also an area of problems, similarly with corn where we subsidize very little. We subsidize very little in barley and yet we still have problems in those areas.

It is quite clear from the statistics that even where we subsidize heavily there is no correlation between prosperity of farmers and absence of prosperity of farmers. Subsidies is not an area in which the government should go or be encouraged to go.

The government has taken something of a measured response to this issue. I suggest it is the right path to pursue. Its first response was with respect to the NISA program, a simple rainy day account to which farmers are entitled to contribute in the good years and followed up with a contribution by the government. This is the time to draw, and we heard the Minister of Agriculture and Agri-Food suggest the ability to draw will be eased in this situation.

The second area is crop insurance, also a voluntary program. It offers risk protection to agricultural producers who contribute one-third of the cost of the program. It is estimated that $430 million in direct payments will go to farmers this year.

There are a number of other programs into which the government enters along with the provincial government and I need not repeat those.

The minister has been meeting with representatives of financial institutions in order to mitigate the requirements of financial institutions and orderly programs with respect to debt management.

All these are measured and appropriate responses to a serious issue. So it is my view that the Government of Canada has shown its concern about the farm financial situation and realizes the sense of urgency and importance. This is why farm income is one of the priorities now being considered by cabinet ministers. The Minister of Agriculture and Agri-Food has kept his colleagues and government informed of the situation and is moving us toward a reasoned and measured solution.

No cause for panic. No cause for disaster. No cause for hyperbole. No cause to describe this as another dirty thirties revisited, but rather a measured and reasonable response.

[Murray Calder, Liberal, Dufferin—Peel—Wellington—Grey, ON]

Mr. Speaker, I thank the hon. member for Scarborough East for sharing his time with me and also compliment the member for South Shore for having this emergency debate tonight.

I have been farming since 1974. From 1974 until 1985 I was a pig producer. We had about an 80 to a 90 sow farrow to finish operation and I can remember going through the farm crisis of the late 1970s and early 1980s. I can remember the pain, the loss of pride, the embarrassment and even the loss of the will to live. It was a very sad experience. It was an experience I will never forget and it is also an experience I do not want to see us go through again. But I believe right now we are on the threshold of exactly that.

That is one of the reasons why this government is working as best as it possibly can and as quickly as it possibly can to address this issue.

In the Globe and Mail underneath the national news it finally caught on and said “farming crisis to worsen” and then gave Statistics Canada data. I would like to read some of it because it is very scary.

In 1997 farmers' net farm income was just over $2 billion. That is down by 53.4% from the $4.3 billion they earned in 1996. The story is not in on what is going to happen this year. The Statistics Canada figures go on to state that wheat crops have fallen by 43.3% in the third quarter of this year. Revenues were sliced nearly in half to the tune of 45.5%. For barley the drop was 48.8%. For hog revenues it has fallen by 26.1%. It also noted that the wheat board's initial spring prices for this year were $130 a tonne, a drop of 24.4% from the year before.

When we got into the 11th hour of the negotiations in 1993, the axiom at that point was that low prices would stop low prices. Why do low prices exist today if that is the case? Obviously one cannot produce something for nothing for a very long period of time before one is broke. I saw enough farmers in the late 1970s and early 1980s have that happen to them.

I was part of the Farm Credit Corporation and the loans on my farm were locked in a fixed rate of interest of 12.5%. I saw interest rates go to 22%. That was when we got into the penny auctions. We saw sheriffs at the door and farm houses sealed up. Basically farmers left with the clothes on their backs. It was a very terrible time.

It is partially because of a combination of things. We have had financial and political instability within Europe, Latin America and Russia. This year, for instance, Russia's average harvest, which is not all that great, came in at 22% below its average in a normal year.

We are experiencing another trade war. I would like to read some data from the USDA that I have picked up surfing the net. I can also give information on what is happening in Europe. In the United States, underneath the FAIR act of 1998 there was $6 billion in product flexibility contracts, $1.5 billion in conservation reserve payments, $750 million in loan deficiency payments, for a total of $8.25 billion being injected into the farm economy in the United States.

Also, there were additional support payments of $2.8 billion for market loss, $1.5 billion for the 1998 crop losses, $875 million for multiple year crop losses, $200 million for livestock feed assistance, $200 million for U.S. dairy producers, $27 million for other disaster spendings for a total of $5.975 billion. That is referred to as the $6 billion farm aid package.

There is also $1 billion in taxes underneath a new law to producers. The total in the United States is $15.225 billion for 1998. That is one of the reasons production is up and prices are down. It is because of subsidies. These are subsidies the United States said it would do away with. Obviously it has not.

Let us take a look at Europe. Export subsidies as of November 19, 1998, are $47 Canadian for wheat.

There is a subsidy of $105 a tonne for barley and a subsidy of $138 a tonne for malt.

[An hon. member]

What about alfalfa?

[Murray Calder, Liberal, Dufferin—Peel—Wellington—Grey, ON]

I do not have an answer for that. The EU subsidizes wheat on average by $116 a tonne or $3.15 a bushel. The United States is subsidizing at a rate of $72 a tonne or $1.95 a bushel while Canada is subsidizing at a rate of $15 a tonne or 40 cents a bushel and Australia is subsidizing at rate of $13 a tonne or 35 cents a bushel. There is the problem.

The United States says it is the free trader of the world and wants to do away with subsidies. As far as I am concerned that is bovine fertilizer. We need what we are working toward right now, a national disaster program that would kick in and give support to farmers when the current safety net systems are not sufficient.

As a farmer I have taken a lot of phone calls from farmers in my area. I have been talking to guys who lived through the crisis with me in the late 1970s and early 1980s. It is not just the opposition that gets these phone calls. Members on this side get the phone calls too and we are acutely aware of what is going on out there.

I have spoken repeatedly on this issue over the past six weeks in national caucus. I have talked not only with the Prime Minister but with all cabinet ministers present at national caucus each Wednesday. They are all acutely aware of what is happening. We have to make sure as a government that in saving our farmers whatever we do and however we do it, and we will be doing that, it must be GATT green so that it does not trigger a countervail.

When I produced pigs back in the late 1970s to the mid-1980s countervails were absolute death to our industry because they would tie up production. I have been watching production in our country. We have looked at international trade and we have moved production in pork from $16 million a year to $19 million a year. That means we had better be exporting three million pigs or the floor will be blown out of the market. That is what is happening.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, I will be splitting the remaining 20 minutes with the members for Lakeland and Kootenay—Columbia. I am happy to take part in the debate this evening because it is of great importance to my riding of Peace River, Alberta which is mainly an agriculture producing riding. Farmers in Peace River country know full well the impact of the agriculture trade wars that have taken place in the past.

In order to talk about this issue we have to talk about the massive trade war that was taking place as a background to the Uruguay round negotiations in agriculture. Agriculture has been one of those mavericks that have not been under trade rules in the past. For over 50 years we have had trade rules with regard to industrial products and some services around the world. But agriculture was not brought under those trade rules until 1992 and only then it was a modest start. The backdrop was the massive trade war that was taking place during the 1980s. I know from my own experience, having farmed during that period, I certainly do not want to go back there again and be subject to those massive European and American subsidies. I do not want to, nor does my son, to go back to the situation where we have farm programs where we have to jump through all the hoops in order to qualify, in other words farming the program, growing wheat year after year with crop rotation which really it did not call for it at all. It was not a good agricultural practice.

We do not want to go back there. That is the setting for the Uruguay round that took place with the signing in 1992.

I have to remind the House that it was only a modest start. All farm countries recognize it was a modest start, that we had to at least get agriculture started. They used 1986 as the base year for calculating subsidies, one of the highest years in the history of agriculture subsidies in the world.

The idea was to get agriculture started, reduce some tariffs, reduce export subsidies by a modest amount, build in a future round which is the one we are talking about for 1999-2000 in order to make great progress. I guess I would have to say it is understandable that we are in the situation we are today.

Over 85% of the world trade in agriculture is still not subject to controls through rules. In addition, this has brought about a very stagnant farm net income situation. For the last 10 or 12 years we have had stagnant farm net income in Canada. The east Asian situation has hurt us further.

Here is the present situation. Farmers are hurting, net farm income has decreased and there is the continued big use of European and American subsidies, although they are staying within their limits on their program. That brings me to what we need to do to correct the situation.

We are talking about some kind of short term program, but that is not the answer for farmers in the long term. I would make the case that we have to work together with like minded countries to advance this farm negotiation that is going to be taking place at the World Trade Organization.

The Cairns Group has been very active in looking for trade liberalization. I would make the case that we have to also include the United States as an ally in reducing massive European subsidies. The reason I say that is I believe they are only basically responding in the United States to European subsidies, not really wanting to do it themselves, but Europe has the systemic problem of trade and agriculture subsidies. I believe it has the problem for a number of reasons such as a couple of world wars where it was short of food.

That does not excuse the European Union for producing beyond what it requires itself. That is what is happening these days. It is overproducing. Last year world wheat demand was down by 8% but what did we see from the European Union? A 30% increase in production. That is because farmers are getting these massive subsidies.

I suggest we have to co-operate with the United States. It is one of the world's biggest grain producers. I think it is in our interest to work together to try to convince the European Union to phase down these subsidies in the next round of the World Trade Organization talks to be taking place within the next year.

I suggest we might have to move outside the agriculture box in order to do that. We have to put some pressure on these people. We might have to talk about industrial tariffs. We might have to talk about security in things like NATO, intellectual property, services, all things the European Union would probably want. I think we have to be very forceful because our farmers simply cannot compete against the treasuries of the other countries. We can compete on the basis of production with anyone in the world but we cannot compete with the treasuries of the United States and Europe. It is in our interest to try to get some trade liberalization.

[Leon Benoit, Reform, Lakeland, AB]

Mr. Speaker, I will focus on a fairly narrow area.

The member for Peace River did an excellent job encapsulating the trade situation and what did not happen and what should have happened in that area, although when it came to the North American Free Trade Agreement and its predecessor, the Canada-U.S. Free Trade Agreement, Canadian negotiators in those agreements did an excellent job of negotiating.

We are very thankful for what they did. When it came to the GATT negotiations that ended in 1992 and were signed by the government in 1993, Canada took a very weak position. They did not negotiate in agriculture anything like they should have. As a result we ended up with a very weak result that is harming Canadian farmers right now.

Reformers came to the House in 1993. The campaign started in 1992, the year before the election. We came with a comprehensive agriculture policy which, if it were examined today, would demonstrate that it would deal very well with the problem that farmers are in. During that campaign and in the House Reform MP after Reform MP spoke out on what we saw as a policy that would have prevented the situation we see today.

I am not only talking about tough trade negotiations. I am talking about a specific program that we called the trade distortion adjustment program. This program would have taken part of the value of the Crow subsidy. We called for the subsidy to be eliminated. The Liberals eliminated it but they did not do a key thing we proposed they should do. They did not put a part of the capitalized value of the Crow subsidy into the trade distortion adjustment program, which would have provided money for the situation our farmers are in today. It would have provided money to directly compensate for damage to commodity prices which could be attributed to unfair trade practices and unfair subsidies in other countries.

The major cause of the crisis in grain farming, the single major cause, is unfair trade practices in Europe and to some extent in the United States, combined with import restrictions into Japan, Korea and other Asian countries. Those things more than anything else have led to the crisis we see today.

In my first speech in the House I proposed that the Liberal government adopt the trade distortion adjustment program. Dozens of times Reform MPs throughout the following years raised the issue until the Crow benefit was eliminated. However the money did not go into this program. There was a $1.2 billion political payout to farmers which did them very little good. I would argue that it split the farm community between renters and farmers actually farming the land.

The Liberal government is facing a situation right now that must be dealt with. It ignored what I believe was very good advice over those years, presented again and again and again. A strong sensible position was presented, a position which would have clearly helped deal with the current situation.

Under the plan that we proposed the capitalized value of the Crow benefit would have been somewhere between $7 billion and $9 billion in total. We recognized the deficit situation. Reform more than anybody recognized that the deficit had to be removed and pushed for it. We recognized that taxes were too high. Reform more than anybody called for tax reduction. Recognizing all of that, we called for only part of the capitalized value of the Crow benefit to go into this fund. Possibly $3 billion or $3.5 billion.

With the interest that would have accrued on that we would have a good sum of money in place right now which would have been available for farmers to compensate them not just in an ad hoc way. That is not what farmers want. Farmers do not want handouts. They want fair trade. When other countries are not trading in a fair way, farmers want some help to deal with that. That is precisely what the trade distortion adjustment program would have done.

The Liberals did not take our advice. It was not just advice coming from Reform MPs. It was coming from the farming community. They did not take our advice and as a result we are in a situation today where we are talking about another ad hoc payout and nothing to deal with the long term problem.

This type of a situation cannot recur every 10 years or so. That has happened for too long. Farmers should not have to face that time and again. I know in my life before politics I worked as a farm economist and I did business consulting with farmers. I sat across the table from 100 to 200 farmers, farm families at their kitchen tables, families facing a crisis just like this one today. Most of them lost their farms. There is nothing I want less in my life than to have to sit at the kitchen table with families that are losing their farms again.

What is to be done? The Liberals have to come up with the answer. Knowing they did not act in a responsible way over the last five years, it is up to them to come up with an answer or a solution. It cannot just be a short term payout. It has to be a long term solution to the problem. That is what they have to do. I will be watching. Farmers in my constituency will be watching to see what they do.

[Jim Abbott, Reform, Kootenay—Columbia, BC]

Mr. Speaker, I am proud to represent the farmers and ranchers of Kootenay—Columbia who are faced with the specific problem sourced and created by the Liberal government that relates to all farmers and many Canadians across Canada.

Ranching and farming are not nine to five jobs. They involve long, hard hours and hard work often seven days a week. Many farms and farmers have people off farm working in town at other jobs and using that money to subsidize the farms.

I am referring to the way in which Revenue Canada, under the control, jurisdiction and direction of the Liberal government, is “helping farmers” off the farm. It is bloodthirsty. It is making changes to the law retroactively. It shows absolutely no compassion or conscience while it is holding up the bank by robbing farmers of money they need to pay off bank loans and try to keep their heads above bankruptcy year after year.

Let me give the specifics of a case. I believe they would apply to all ranchers and farmers across Canada. In my constituency ranchers and farmers are cutting timber to enhance grazing or farmland. They consulted national and local accounting firms on how the money would be treated by Revenue Canada. They based their decision to proceed with the timber cut based on information confirmed by Revenue Canada.

In 1996 and prior years accountants confirmed with Revenue Canada the money was to be reported under capital gains and taxed accordingly. These are operations which do not normally depend on the cutting of timber for their livelihood but may exercise the option once or twice during the ownership of the property. It should be noted that from the cases received in my office not one individual purchased the property with the intent to remove the timber as a continuing trade or source of income.

In the 1996-97 year Revenue Canada made a decision to review a number of tax returns reporting money derived from timber sales and issued approximately 50 questionnaires to ranchers and farmers who had reported money from timber sales. An additional 50 questionnaires in early 1998 came out and more are anticipated. These tax returns were determined from cross-checks of names from the timber mark office in Victoria and Revenue Canada files. The timber mark list was obtained through a general memorandum of understanding between Revenue Canada and the province of B.C.

The 1993, 1994, 1995 and 1996 tax years were reviewed and reassessed according to the new interpretation by Revenue Canada. In June 1998 the Tax Court of Canada heard a case called the Larsen case and a decision was made in July in favour of taxpayer Larsen.

A decision has been made by the Minister of National Revenue to appeal the decision, which would require the case to be heard by the Federal Court of Appeal. A recent letter received in my office on another issue signed by the minister stated that where a taxpayer disagrees with the department's decision an appeal may be filed through the Tax Court of Canada.

The tax court is an independent tribunal and provides the appropriate means to settle an honest difference of opinion between Revenue Canada and the taxpayer. It is to be noted that the tax court found in favour of my taxpayer.

Similar cases were heard by the tax court in the early 1950s and 1970s and rulings were also in favour of the taxpayer. Even with that history, Revenue Canada insisted on presenting its case again and spending more taxpayers dollars fighting the hand that feeds it, the hand of the taxpayer.

Revenue Canada says there has not been a change in the legislation in question. The reason for the audits being done in 1996 and 1997 and to continue in 1998 is that in the past the amounts received from the sale of timber taken off the properties was insignificant according to Revenue Canada definition and therefore was never questioned as to whether it was treated as a capital gain against the cost base of the property.

In the 1990s the dollar value in the sale of timber has increased. Therefore Revenue Canada no longer considers the amounts to be insignificant. Consequently it is questionable if the amounts can be treated as a capital gain against the cost base of the property.

Initially our office was advised by Revenue Canada staff that the reassessments were nationwide and B.C. was the last area to be reviewed. It should be noted that this problem is not just a problem in British Columbia in my constituency. It is also a problem in the maritimes.

The point of my presentation is that the Liberals talk all the time about how they are helping people, how they are serving people. It was pointed out during the tenure of John Turner, when he was temporary prime minister of Canada, that serving the public is also a term that can be used for bulls.

A case scenario is one where there is a partnership of three individuals who were all reassessed. The initial appeal of capital gain treatment was rejected. The accountant was advised by Revenue Canada that the money should have been treated as revenue versus losses. These people are in a position where it will cost them more money to fight Revenue Canada than it would for them to comply with this reassessment by Revenue Canada.

A second case is of a retiree who is in a position where he is just not able to service the extra load dumped on him by Revenue Canada. We are talking about a potential bailout by the Liberals of a specific problem. I am talking about the problem for all ranchers and farmers across Canada, that Revenue Canada fundamentally is out of control when it does retroactive tax grabs. This is what I am speaking about.

The Liberals have to get it right. They have to treat ranchers, farmers, all taxpayers fairly.

[Mark Muise, Progressive Conservative, West Nova, NS]

Mr. Speaker, I rise on a point of order. Will the hon. member take questions?

[The Acting Speaker (Mr. McClelland)]

There are no questions or other motions during this period of debate according to the standing order under which it was promulgated. There are two minutes left in debate.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, plummeting prices for grains and hogs are causing great hardships for many farmers and their families. If government assistance is not available soon, a very bad situation will become worse.

I have received appeals and suggestions from Peterborough County Federation of Agriculture and I have spoken to hog farmers in my riding. They all emphasize that an extremely serious and worsening situation exists. They all stress that action is needed now before a catastrophe occurs. Hogs are being sold out of Peterborough county at a dead loss of tens of thousands of dollars. This is a matter which is out of the control of farmers.

Retail prices have not changed. It would be interesting to know what the processors, wholesalers and retailers are doing with the excess profits at this time when farmers are hurting. I urge the minister of agriculture to produce an income relief plan soon. I urge that this plan target producing farmers with a very great emphasis on small operators. I also urge that the plan be designed to lay the groundwork for much greater farm income security in the future.

Various groups, including the Canadian Federation of Agriculture, have made excellent suggestions in this regard for approaches which would not be subject to countervail.

This is a provincial and federal matter. I urge all the provinces to support any initiative which our minister proposes. It is important that the minister act as soon as possible. Even the news of an effective plan would give the banks confidence to hang in with our farmers.

I have spoken to the minister about this on a number of occasions. I know his heart is with all the farmers affected by this crisis and their families. I know he is working hard to produce an effective, far reaching plan of action. I urge him to act as soon as humanly possible.

Our thoughts and prayers are with all farmers and their families across Canada who are experiencing hardship at this time.

[An hon. member]

On a point of order, Mr. Speaker.

[The Acting Speaker (Mr. McClelland)]

I am sorry, we are not entertaining any points of order in this debate either.

It being after 10.30 p.m., pursuant to order made earlier this day, I declare the motion carried.

Accordingly this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 10.30 p.m.)