Madam Speaker, it is my honour to rise today to discuss the very serious issue of the agricultural crisis. Let me begin by commending the opposition for bringing it to the attention of the House and for using one of its opposition days to discuss the issue.
As hon. members know, my riding in southwestern Ontario is one of the richest farm areas in the country. The counties of Elgin and Middlesex have a vast array of agricultural producers, whether in wheat, corn, soybeans, livestock or supply management. The health of the agricultural industry and its livelihood is a very critical issue to my riding, to my community and, as such, to me as well.
It is important when we define the problem, and it is a very real and serious problem, that we acknowledge that not all of agriculture is suffering. Certainly areas involved with supply management, whether dairy production, the feather industry or the production of eggs, continue to do reasonably well. That is because they are protected from the games foreign countries play in terms of increasing subsidies at a rapid rate. They know when they go to the marketplace that they will get a reasonable return for their production and one that will cover their production costs and allow them to feed their families and make a good living.
The other part of the farm sector that is doing well right now is the whole area of cattle. Hog production is also doing well because the prices those producers are enjoying are reasonably high.
Again, not all parts of the farm economy are in a crisis. It is a particular part of the farm economy. If we look at the numbers in Ontario we see that farm incomes went up last year, which is not what one would expect given world prices for grains and oilseeds and the awful weather we had in terms of a very wet spring.
Let me turn my comments to the issue at hand, which is the farm income crisis in the grains and oilseeds business. I will provide some statistics.
The Ontario average for the price of grain corn has dropped from $4.65 a bushel in 1995-96 to $2.85 a bushel. That is a huge drop in a very short period of time and farmers cannot make money at that price.
The Ontario average for the cash price of soybeans has dropped from $9.66 in 1995-96 to $6.90, which is more than a 30% drop in the space of about four to five years. At the same time, the cost of production has risen through the roof. Farmers are facing the lowest prices for their product, in nominal terms, for the last 27 years while incurring an increase in the cost of fertilizer. Fertilizer costs have gone up primarily due to the cost of oil that goes into making it.
Costs have increased for things like drying expenses. When harvest corn is taken from the field and shipped to market, it must be dried to prevent it from moulding on the way to market. Because of the high input costs involved in that and the low revenue, the farmers are suffering and going broke. They incur high costs for the rental of land and a variety of other costs.
The average cost of production for corn is estimated in Ontario at $3.50 per bushel. If one compares that with the number I gave previously, we see that the price farmers get for corn is $2.85 per bushel. The breakeven for soybeans is estimated to be $8 per bushel compared to the $6.90 per bushel. These numbers, as well as any, highlight the difficult times farmers are having. The worst part is the source of the problem: The Americans have increased subsidies to farmers fourfold over the last few years. They are paying their farmers to produce at a level that distorts the marketplace both in Canada and abroad.
The Americans have a policy of not giving up market share around the world, and they have gotten into the business of paying their farmers to produce without getting a normal price from the marketplace. For example, when Ontario corn farmers go to the marketplace they sell corn at a certain price. When American farmers go to the same marketplace they get a certain price plus a very high subsidy.
The market is not signalling to U.S. farmers or to European farmers that they should cut back production because the market is being distorted by high subsidies. Ontario farmers are extremely frustrated by this and by the fact that they have no hope or optimism that it will change.
A number of people have talked about signing new trade agreements that would bring in new rules so that subsidies would go down. Even if we did that, farmers in Europe or the U.S. would go through a period of adjustment, some say from five to ten years, but the Ontario corn and soybean farmers would get no immediate relief.
That highlights the level of frustration and how difficult the situation is. It indicates that the federal and provincial governments need to be cognizant that the situation has changed dramatically since 1993-94 when the Liberals first came into office. Our support for agriculture at the time, in terms of safety nets, was roughly $600 million. We did not hear squawking or complaints that it was too little money because the price farmers got from the marketplace compensated for the fact that they did not get subsidies.
They now find that when they go to the marketplace they cannot get a fair price so they are looking to the federal and provincial governments for help, as is their right.
I am happy to say that the federal government has responded. It may not have responded as aggressively or as generously as some farmers and farm organizations would have liked, but it moved the $600 million in safety net programs from the 1994-95 budget year and increased it by $500 million to what was then called AIDA.
AIDA was designed to deal with sudden and quick dramatic drops in price. It played an important role two or three years ago in maintaining a hog industry in my riding when the price of hogs fell through the floor and a number of livestock farmers were facing very difficult times. They made good use of AIDA, and I was pleased to see a government safety net program come into play. It was virtually put in as a permanent program. It is now a multi-year commitment that farmers can rely on for the next few years.
The minister just announced an increase of $500 million. One of the two debates surrounding that $500 million is whether it should be higher. As someone who represents a farm riding, I would have liked to have seen it higher, but I understand the government has a lot of competing calls on resources and it came up with $500 million.
However, if we go back to 1994-95, when we went from $600 million of total safety net programs, we added roughly $500 million to AIDA. We also increased our $600 million bottom line safety net programs by another $85 million. We have now increased it by another $500 million. In my view, that is not bad. We have almost tripled the support for agriculture and the safety net since I have been in office.
Other than the amount of money that we should be putting into agriculture, we also need to call on the government to make a multi-year commitment. The $500 million we have is a one year commitment. I will have an opportunity in a take note budget debate to talk about this, but if the Minister of Finance is taking note tonight I would tell him privately or publicly that we need to be more generous in our multi-year commitment to agriculture.
I understand the difficulties in making a decision now. We do not know where the economy is going. We do not know what resources the government will have in six, eight or nine months from now. However, I call on the government to be as generous as possible.
While I commend the opposition for what it has brought forward today, I should point out that it did not mention a word about increasing support to farmers during the campaign. The only party that had a coherent platform in terms of increasing cash support for farmers during the campaign was the Progressive Conservative Party. Its leader came down to my area in Woodstock and spoke about how we need to do more to support our farmers and he talked about increasing the budget. I never heard—