Mr. Speaker, under the bill the leading role of the Farm Credit Corporation would be expanded to allow the corporation to lend to businesses that were not necessarily directly involved in primary agriculture production and did not necessarily have farmers as their majority shareholders. This is the first of three major changes proposed in the amendments being put forward.
The leading role of the Farm Credit Corporation would be expanded to allow the corporation to provide equity financing. This would be accomplished by allowing farm credit to hold non-fixed assets, for example cattle, lend money on that basis and hold the cattle as collateral.
In my time in the Royal Canadian Mounted Police I had quite a bit to do with the federal Bankruptcy Act. There are a whole additional set of problems that come along with holding collateral that is not real estate or real property. This is the area that the Farm Credit Corporation is moving in. It may provide some opportunities but it also provides greater risk.
Bill C-25 would also formalize the Farm Credit Corporation's leasing ability, which could include farm land. One of the things in the bill is that there are no real limits or restrictions on FCC activities. It would allow the FCC to get into a lot of areas that maybe it traditionally was not in and would greatly expand its operations.
The bill would expand the focus of the Farm Credit Corporation beyond its original purpose to provide financial services only to family farms and businesses directly related to primary production. I do not believe it is valid to extend Farm Credit Corporation's involvement beyond farming operations.
In the context of the primary producer, will the farmer benefit? Will the farmer have to compete for the available credit? Will he or she end up in a cross-subsidization situation, where other agriculture businesses would be receiving the FCC funding at the non-primary producer level?
By extending the Farm Credit Corporation's lending abilities beyond primary production, the bill would bring the FCC more directly into competition with private lending institutions and would overlap with government institutions such as the Business Development Bank. We saw the influence that the Prime Minister had with the Business Development Bank in a negative way. We have to be concerned that the Farm Credit Corporation does not go down that same road.
Regarding competition with the banks, the Canadian Imperial Bank of Commerce, for instance, is very active in Selkirk—Interlake. We do not want to see competition from a government lending institution that would have the effect of reducing the ability of private institutions such as our locally owned and run credit unions to continue to be a part of the communities, carry out the funding and lending necessary and actually help stabilize our communities.
The Farm Credit Corporation is run out of Regina. Not every small community has a Farm Credit Corporation in town. That is why I caution about the Farm Credit Corporation getting into competition with banks and credit unions. It would be one area where expansion would create unfair competition or competition that would only be there because of government. This is a good reason to oppose the bill.
Bill C-25 would also formalize Farm Credit Corporation's ability to own or lease land. The FCC stated that this was not the intent of the amendment. It claimed the leasing provisions would be for equipment. However this is not clear in the legislation. It is not appropriate for the federal government to be an owner of Canadian farm land on a long term basis.
Allowing the FCC to permanently hold and lease land could result in the Canadian government's holding influencing the market value of farm land. Allowing the FCC to hold and lease land permanently may also provide the corporation with an incentive not to pursue every possible means to allow farmers experiencing financial difficulties to stay on the land.
I made the point and will come back to it over the next few minutes that the Farm Credit Corporation, like every other crown corporation, has as a portion of its mandate the implementation and carrying out of policy that comes directly out of the creator of the crown corporation, in this case the federal government.
Therefore, the Farm Credit Corporation is an instrument of the federal government. The policies and the dictates of the federal government change with the wind sometimes and sometimes for good reasons. However those changing dictates would have the Farm Credit Corporation carrying out government policy. I am not sure that it is always the best vehicle for government policy to be carried out through a lending institution like the Farm Credit Corporation.
Even under the current legislation, the Farm Credit Corporation has become a significant land holder. In the year 2000 the Farm Credit Corporation owned over 360,000 acres, 95% of which was held in Saskatchewan, the province that has been hardest hit by the farm income crisis
While it is impossible for it to avoid holding land for short periods of time, the act should and could explicitly state that the Farm Credit Corporation should divest of any holdings as quickly as possible. The question of having a time frame in there would also be worthwhile looking at. The price of land is determined by market value and that is established over the course of years. Therefore, a time frame could be included, not necessarily one year but five years, for the government to release its holdings of massive amounts of land for whatever reason would be reasonable.
Bill C-25, also extends the Farm Credit Corporation's lending ability into the area of equity financing. This would be done by allowing it to hold non-fixed assets, as an example cattle, as collateral for these loans. This change would allow the FCC to provide farm financing to primary producers who were not eligible under the current legislation. In many cases this would provide financing that would not be available from private lenders. This is a positive change to the legislation, providing the funding is limited to primary producers.
There are good parts to this bill but there is also some serious concern about the massive expanded role.
The Canadian Alliance policy on this issue states as follow:
We will foster a healthy economic environment for the benefit of consumers by pursuing free and open trade at home and abroad, including the elimination of inter-provincial trade barriers. We will withdraw government from areas of the economy where the private sector could deliver the same services more efficiently and will end the unfair practice of providing subsidies to industries, businesses and special interest groups.
We are not advocating that the Farm Credit Corporation be eliminated or disbanded. We are putting in a caution to ensure that it does not provide unfair competition by getting into an area that is being well-serviced by the private sector.
Bill C-25 takes the primary focus of the Farm Credit Corporation away from providing credit to primary producers. The Canadian Alliance believes that this shift is wrong. Members who appeared before the Standing Committee on Agriculture and Agri-Food said this was not the case and that it would still focus on farmers as primary producers. However we all know that as policies change and the government dictates to the corporation what it is going to be doing, that focus could change. In fact it may no longer be the case that the primary producer is the main beneficiary of the Farm Credit Corporation.
When we speak of credit, I would like to deal for a minute on the present situation in agriculture in western Canada. It is more than credit that is needed there in regard to the overall agricultural farm policy and what can be done for the benefit of farmers. What is required is that the federal government get out of the way of farmers attempting to accomplish their economic objectives.
The minister responsible for the Canadian Wheat Board from Regina has the opportunity to take action with his cabinet and government to move the Canadian Wheat Board along on a voluntary basis to become a marketer for wheat and barley for those farmers who want to have their grain marketed through there. However for those farmers who do not, there should be a choice to market their grain otherwise.
The sole purpose of the Canadian Wheat Board Act is the orderly marketing of wheat and barley according to the various sections contained in the act. It is only incidental if it gets a good price and passes that price back to farmers. That is not its primary objective.
As in the Farm Credit Corporation, what is wrong with free enterprise like the rest of the grains, oilseeds and specialty crops are involved in? What is wrong with free enterprise in the marketing of the personal crops that a farmer grows on his or her farm? This is a major issue. Rather than looking at giving more loans to farmers as the government is saying under the Farm Credit Corporation and cash advance programs, it should be looking at what it could do to lower taxes and change marketing so that farmers can actually increase their incomes themselves.
There is not one other grain, oilseed or specialty crop that is fighting to get underneath the monopoly of the Canadian Wheat Board Act. If that does not tell the minister something then I do not know what does. It is one area that would lower the necessity for credit if farmers were able to increase the income that they could get from wheat and barley that are currently constrained under the Canadian Wheat Board.
At the present time the Canadian Wheat Board regulates all of Canada outside the designated area as to exports and export permits. The costs of these export permits and the administration of them are paid by farmers in the designated area. Money comes out of the pool account for a service that farmers are not getting in Manitoba, Saskatchewan and Alberta, but the service is being provided to farmers in other parts of the country. I am asking the auditor general to look into that. That issue will be coming up in the next few weeks and months in the House.
Even if the cost for the regulation outside the designated area was only one dollar, the real question is: Why should farmers in Manitoba, Saskatchewan and Alberta have to pay even one lousy dollar for a regulation that they receive no benefit from?
Another issue that will be raised over the upcoming weeks, and I am putting the wheat board minister on notice, is why a farmer has to buy back his own grain to export it or, in the case of organic flour producers, to mill it right in Canada? Obviously if Mr. or Mrs. Farmer could get a permit to export the grain or mill their own wheat there is nothing intrinsically wrong or evil in milling flour or exporting wheat.
The only conclusion that I could come to is that the minister responsible for the Canadian Wheat Board wants to keep farmers under the dictatorial powers of the Canadian Wheat Board, which it gets through the federal Government of Canada, by forcing the buyback provisions on to farmers. That way the minister is able to make sure that it is uneconomical for the farmer to have to sell his grain to the Canadian Wheat Board, buy it back and then export it.
We could talk about all the credit we want but there are many things like changes to the Canadian Wheat Board, including things such as getting rid of the four cent federal excise tax on fuel, that would help farmers directly today. The Farm Credit Corporation Act is supposed to be about helping farmers.
In addition, it is very important that all of us in the House of Commons speak out clearly and loudly to say that there are many other things that could be done to help our primary producers. We have to get on with it.
I was interested to hear the minister of agriculture's remarks. We get some of the real intent of why he put these amendments forward. I will mention just a couple of them.
He said in his speech that the corporation would assist a greater number of agriculture enterprises in creating jobs and economic growth in rural Canada. This points out that it is a clear instrument of government policy. The government is looking at somehow using the Farm Credit Corporation to move agriculture beyond the crisis to which the throne speech referred. I do not know whether additional bureaucracy and instructions from the minister would move agriculture beyond crisis. We should free our farmers up so that they would move beyond crisis if the government in some cases just plain gets out of their way.
The minister also said that there was a definite need for services that help farm families make the transition from one generation to the next, just as beginning farmers need help in getting a solid start. According to the Farm Credit Corporation, it said in committee that it had no plans to be involved in any transition project. The Farm Credit Corporation is supposed to be a self-funding institution. As a result, the question of whether or not the taxpayer would be exposed to a much greater risk is one that would have to be dealt with.