moved that the sixth report of the Standing Committee on Agriculture and Agri-Food presented on Wednesday, May 7, be concurred in.
Mr. Speaker, a motion was passed by the agriculture and agri-food committee on May 1. Specifically, the motion passed reads as follows:
The Standing Committee on Agriculture and Agri-food calls on the Federal Government to immediately implement an exit strategy for tobacco producers consistent with the most recent proposal they have submitted and that it be reported to the House.
After the motion was passed on May 1, I asked a question in the House related to this issue and based upon his answer to me, the Minister of Agriculture and Agri-Food has made it crystal clear that the government will not accede to the expressed majority wish of the members of the committee. The Minister of Agriculture and Agri-Food, in fact, referred to the past motion as a political stunt.
As the government has made it clear that it does not intend to abide by the clear wish of the all party committee, I am bringing this concurrence motion before the House of Commons and requesting that the motion as passed by the agriculture and agri-food committee be concurred in by the majority of members of the House.
Tobacco producers have been facing very difficult times for a lengthy period and, truly, they have experienced the proverbial perfect storm. So desperate has the situation been for many producers that some have, most regrettably, taken their own lives. Family members of those farmers who completely gave up hope are obviously reeling from their loss. Other tobacco farmers are barely hanging on and a very difficult situation confronts all tobacco producers, that is, those who are yet left in Canada.
Communities are coping with the severe economic downturn which has been experienced by tobacco farmers and, by extension, entire communities. I am referring in particular to communities in southwestern Ontario, which have for some decades relied upon a healthy economy generated by the production and sale of tobacco.
Currently, there are approximately 650 tobacco farmers in Canada, the vast majority of those being in Ontario, specifically southwestern Ontario. It is my understanding that there remains a single tobacco farmer on Prince Edward Island and that a handful yet grow tobacco in Quebec. As I have said, the overwhelming majority are in southwestern Ontario. There are about 1,500 quota owners and they too are facing tremendous economic uncertainty.
The fair question to be asked is what makes tobacco farmers unique. Obviously, many farmers, manufacturers and Canadians at large are facing economic challenges triggered by the high Canadian dollar relative to the U.S. dollar: competition, for instance, from manufacturing entities in countries such as China, India, Mexico and Brazil, which have become industrialized very quickly; high energy costs; and other factors.
Tobacco farmers are facing all of those challenges with tobacco being grown in other countries and imported into Canada by manufacturing entities, which are more and more purchasing imported product from other countries and no longer using domestic tobacco as they once did. Again, it is a fair question to ask: What makes the situation facing tobacco farmers unique to the point that they merit an exit strategy?
When I mention an exit strategy, tobacco producers are not seeking an extravagant payout or buyout from the federal government's general revenue. They well understand that the appropriate mechanism with which to implement an exit strategy is assistance over a period of time, ideally from the taxes generated by the sale of tobacco products. If that were to be the case, then smokers themselves would essentially be assisting tobacco farmers in leaving the industry.
Simply put, it is not an immediate buyout which tobacco farmers are requesting, though obviously that would not be turned down. Rather, tobacco producers are seeking an exit strategy which will provide them with funds for the next three to five years which will allow them to essentially retire their very heavy debt load.
Mr. Speaker, you will be aware that the federal government, through the Minister of Public Safety, has recently announced an intention to implement an enforcement strategy which will deal with the issue of illicit or contraband tobacco.
In correspondence received from the Minister of Public Safety, he wrote to me that:
--the illicit trade in tobacco products presents a serious threat to public safety and health in Canada.
The minister is absolutely correct in his observation. He has also appropriately commented that:
In addition to undermining the Government of Canada's ambitious health objectives, and resulting in hundreds of millions of dollars in federal and provincial revenue losses, the contraband tobacco trade damages legitimate business by creating an environment of unfair competition.
There is no other agricultural sector which faces such competition from any legal competitor. It is estimated that in the provinces of Ontario and Quebec close to 40% of tobacco consumed is contraband or illicit tobacco. This is, as that figure reflects, significant competition faced by tobacco producers; that is, they are facing competition from an illegal competitor which has grabbed almost 40% of the market share.
No other producers face this level of illegal competition. For instance, although hard working grape growers in Niagara face stiff competition from California, New Zealand and other countries, such competition is legal, as all grapes consumed in Canada to the best of my knowledge have been produced by a grower, domestic or otherwise, who is playing by the rules, who is producing and selling legally a product on which all appropriate taxes have been paid.
This is in direct contrast with tobacco producers who once again are dealing with very stiff competition from illegal sources.
Without intending to sound pessimistic and as appropriate as it is for the Minister of Public Safety to begin a study of how to deal with the issue of contraband tobacco, the reality is that such measures, if and when implemented, will not assist tobacco producers for some few years to come.
Their situation is dire now and needs immediate attention. It is absolutely no answer for the government to say to tobacco producers something like, “Just be patient. We will soon be eliminating contraband tobacco and all will be well again. So just please be patient”.
That would be naive in the extreme and I cannot imagine a responsible government in the face of the very negative circumstances facing tobacco producers providing that type of response.
In and of itself the very stiff competition being faced by tobacco farmers from an illegal competitor would be sufficient, even abundant justification for the federal government intervening to implement an exit strategy.
I should indicate that the province of Ontario for instance is prepared to assist tobacco producers in Ontario and it is prepared to assist to the extent of 40% of the cost of any exit strategy ultimately announced by the federal government. The Government of Ontario well understands the unique and very dire circumstances in which tobacco producers find themselves.
As I have said, even though the issue of contraband tobacco would be sufficient justification for intervention by the federal government, there is at least one other factor which makes tobacco producers unique; that is, the tremendous revenue generated by so-called sin taxes on the sale of tobacco.
Although I am stating the obvious and indicating that contraband tobacco escapes such taxes, as the sale of contraband is really all about evading taxes, there are still tremendous moneys realized by the federal government on the sale of tobacco. Some 60% of tobacco consumed in Ontario is still sold legally and about $2 billion is realized annually by the federal government on the sale of tobacco products.
There is no other commodity which generates such so-called sin taxes for the federal government. The federal government and, by extension, all taxpayers are the beneficiaries of well over $2 billion per year. Simply put, the federal government continues to profit and profit quite handsomely on the sale of tobacco products. Tobacco companies continue to realize significant profits from the sale of tobacco products.
Those persons involved in the sale of contraband tobacco are presumably realizing very significant profits. So it is not an exaggeration or an overstatement to say that the only sector which is not yielding a profit, significant or otherwise, and is in fact dealing with crushing, devastating financial losses is the sector involving legitimate tobacco growers in Canada.
The fact that contraband tobacco now has almost 40% of the market share makes the situation of tobacco farmers unique. The further fact that the federal government receives $2 billion in taxes on an annual basis from the sale of tobacco products also makes the situation of tobacco farmers unique.
In addition, only a few years ago, tobacco farmers were advised to reinvest in new machinery in order to meet what was anticipated to be a continuing demand for their domestic product. This is exactly what many farmers did and their average debt load is approaching $500,000. The machinery in which they invested, and invested heavily, is not able to be utilized for other commodities, and there is no market for used equipment which is designed for the production of tobacco.
Canada sits alone in many respects on this issue. Australia and the United States, for instance, have seen fit to implement an exit strategy for their tobacco producers. It is disappointing, to say the least, that the Conservative government has not seen fit to implement a similar exit strategy.
All that the federal government has done to this point is to suggest to tobacco producers that they try to access existing agricultural programs to help themselves. The current programs are not appropriate for tobacco farmers and I have been advised by tobacco producers and others that the suggestion by the federal government that tobacco farmers access existing programs is completely unhelpful.
I wish to advise members as to the position of the provincial government. Many months ago, the then minister of agriculture for Ontario, Leona Dombrowsky, stated:
I have written to [the minister]... Given the challenges facing the sector, I have encouraged the federal government to give serious consideration to the Tobacco Board's proposal for exit assistance.
Clearly, the Ontario government is prepared to participate in a plan this government endorses.
As I have indicated, entire communities have been crushed by the significant downturn in the tobacco industry. As the vice-chair of the Ontario Flue-Cured Tobacco Growers' Marketing Board, Richard VanMaele, said to the committee some months ago:
The local communities have based their economies around tobacco and the farmers have supported those communities. The unfortunate part now is that the farmer doesn't have the ability to support the community. The farmer is now in what you'd call survival mode, doing whatever he can to survive to the best of his ability. Unfortunately, it's the local community that's paying the ultimate price, whether stores or charitable organizations, even. You just don't have the dollars to put forward to help benefit your local people.
The council of the County of Brant, in which county several tobacco farmers reside, unanimously approved a resolution at its January 23, 2007 meeting. This was one year to the day after the current government was elected. The salient portions of the resolution are as follows:
Whereas the communities within the tobacco-growing regions of southwestern Ontario have now collectively felt the impact of the deterioration of this once strong rural economy;
And whereas this same deterioration continues to impact our infrastructure, our ability to supply increasing demands on our social system and most importantly, on the local individuals, services and commercial entities that service our population;...
And whereas the Ontario Flue-cured Tobacco Growers' Marketing Board has developed, in consultation with and support from the growers that they represent, an “exit strategy” that proposes a responsible, dignified and absolute support mechanism for the individuals and families who have invested their livelihoods in the tobacco industry, and to the communities that their social and economic contributions have historically benefited;
Therefore be it resolved that, by support of this resolution, the Federal...Government...commit to and implement a full and complete “exit strategy”, similar in principle and objectives to the program introduced by the Ontario Flue-cured Tobacco Growers' Marketing Board....
The concern for tobacco producers goes back many months, to the point in time when there was a minister prior to the current minister.
An identical resolution was endorsed unanimously by the mayors and wardens of communities in Norfolk County, Oxford County, Elgin County and, as I have indicated, Brant County. The resolution was presented to Norfolk County council and was unanimously endorsed.
Brian Edwards, very involved with a group known as Tobacco Farmers in Crisis, appeared before the committee months ago and very eloquently and succinctly summarized the problem when he stated:
There is no requirement right now for a Canadian content, a percentage in the cigarette. Under the tobacco advisory committee, for a number of years there was a working relationship between the companies and the farmers and the government. Now that doesn't work.
We have an underground economy that has stolen market share from the legal producers, and these companies are reacting to this. If we're not going to get contraband back under control, these companies are going to leave Canada and they're going to leave us, as farmers, abandoned.
As the chair of the agriculture committee said at a time before he was promoted to his current position as Minister of Agriculture and Agri-Food:
We've just seen in the news today that Australia has settled. They've done it. Other countries have done it around the world....
There is a clear recognition and understanding on the part of this minister and this government that other countries have seen fit to implement an exit strategy for their tobacco growers.
Some Conservative politicians actually understand that something needs to be done on an immediate basis. For instance, Toby Barrett, the member of provincial Parliament representing the riding of Haldimand--Norfolk, said as far back as May 4, 2006, the following:
The last remaining farmers and their communities in Norfolk, Oxford, Elgin and Brant do need federal and provincial government help to make the transition to a post-tobacco economy. Previously, the federal and provincial governments put up $120 million in tobacco relief, buying out quotas, encouraging new businesses and crops, but now more help is needed as the industry disappears.
Member of provincial Parliament Toby Barrett went on to say:
The solution is a full exit plan, as in Australia and the United States. There is no turning back.
Mr. Barrett said that a little over two years ago.
A well-regarded reporter with the Expositor, a daily newspaper published in Brantford, has been writing a steady stream of articles about this issue. I would like to quote from an article which Michael-Allan Marion wrote on April 22, 2006:
Ontario tobacco board officials are breathing a sigh of relief at news that Ottawa is ready to start formal talks on a complete exit strategy for growers.
Fred Neukamm, chairman of the...Board, said he received a phone call directly from [the] Agriculture Minister...on Wednesday, confirming the department is ready to set up talks.
Here we are more than two years later and nothing has been done by this government, except to suggest to tobacco producers that they access existing programs.
At that same time, April 2006, the current Minister of Citizenship and Immigration, the member of Parliament for Haldimand—Norfolk, said:
The federal government is willing to consider a two-pronged approach. One of these prongs is going forward with a process. That's as far as things have got. That in itself is major progress, especially in this short a time. I'm pleased with the progress so far.
That is what the minister, the member for Haldimand—Norfolk, said in April 2006. Pleased she might have been with the progress as of April 2006, such as it was, nothing has happened for over two years.
All of the non-action by the federal government is in direct contrast to its statements, including statements from the current Minister of Agriculture and Agri-Food. The minister was asked at committee earlier this year what he intended to do for tobacco producers. The minister indicated that he would do something sooner rather than later and that we should all stay tuned.
Since then, we have stayed tuned. The minister has indicated, unfortunately, that there will be no exit strategy for tobacco producers and, once again, that they should look to existing programs.
During the last election campaign, various Conservative members of Parliament or candidates made it a priority to develop an exit strategy for tobacco farmers. For instance, the member for Haldimand—Norfolk proclaimed the Liberal Party's 2005 tobacco assistance program to be “paltry by international standards”. Presumably, the member was referring to the fact that Canada had not yet implemented a strategy for tobacco farmers commensurate with what had taken place in Australia and the United States.
It is regrettable that the Conservative government has not, 27 months later, implemented a program that would be commensurate with the programs provided by the governments of Australia and the United States.
Lastly, I would like to quote one tobacco farmer who wrote to me:
We are writing today to explain our desperate situation...We are now unable to grow tobacco because of the current quota situation and the presence of contraband tobacco. We have absolutely no way of servicing that amount of debt.
I will close there.