Mr. Praznik for Mr. Faurschou

Mr. Leonard Gluska, Reeve, R.M. of Kelsey

Mr. Al Tymko, Reeve, R.M. of Brokenhead

Mr. Andy Baker, Private Citizen

Mr. Brad Mroz, Private Citizen

Mr. Bill Chuckry, Chuckry Farms

Mr. Claude Roeland, Private Citizen

Mr. Ken Yuill, Private Citizen

Mr. Brian Kelley, Private Citizen

Mr. Larry McGonigal, Private Citizen

Mr. Ian Robson, Private Citizen

All-Party Resolution on Federal Support for Agriculture; Proposition présentée par tous les partis au sujet de l'aide fédérale à l'agriculture

Mr. Chairperson: Good evening, everyone. Will the Standing Committee on Agriculture please come to order. Tonight the committee will be hearing public presentations regarding the provincial All-Party Resolution on Federal Support for Agriculture.

For the benefit of all in attendance this evening, I would like to take a moment now and review some general information regarding proceedings in this committee. First of all, all of the normal rules, traditions, and practices which apply to standing committee meetings held in the Legislature shall apply here tonight in this room.

Second, it was agreed by this committee at our organizational meeting on April 18 that members of the public would be allowed 15 minutes for presentations, followed by 5-minute question-and-answer sessions. While this agreement will apply to all meetings of this committee considering this matter, the committee did also agree to allow some flexibility to the 15- and 5-minute guidelines.

It was also agreed at the April 18 meeting that, following our usual practice, an individual may make no more than one presentation to the committee on this matter. Also, following our usual practice, it was agreed that presenters will appear before the committee in the same order as their registrations are received by the Clerk's office. In the case of presenters who are not in attendance this evening, but have their names called, the committee agreed to call the names twice during the meeting and then call them once again at subsequent meetings of the committee.

I would like to mention to the members of the public in attendance tonight that they are not to participate in the committee meeting by applauding or commenting from the audience. Also, for the information of the public, copies of the resolution under discussion here tonight are available from our staff table you may have noticed at the back. Copies of the resolution are there.

I would ask all those in attendance with cellphones to please turn off your ringers so that the proceedings are not interrupted. As a final point of information for all in attendance, this committee has been scheduled to meet again tomorrow night, Tuesday, May 1, at 6:30 p.m. in Winnipeg in Room 255 of the Manitoba Legislative Building.

I would like to take a moment now and introduce the members of the committee starting-yes, Mr. Penner?

Mr. Jack Penner (Emerson): Mr. Chairman, I wonder whether I might move a substitute.

Mr. Chairperson: Sure, go ahead.

Mr. Jack Penner: With leave of the committee, I would like to move that the honourable member for Lac du Bonnet (Mr. Praznik) replace the honourable member from Portage la Prairie (Mr. Faurschou) as member of the Standing Committee on Agriculture, effective April 30.

Mr. Chairperson: I would like to ask the committee, then, is it agreeable that the Member for Lac du Bonnet substitute for the Member for Portage la Prairie here at this committee meeting tonight? Is it agreed? [Agreed]

Welcome, Mr. Praznik. Welcome to Beausejour.

Mr. Chairperson: I would like to introduce the Leader of the Liberal Party, Member for River Heights, Mr. Jon Gerrard; as you know, from Lac du Bonnet, Mr. Darren Praznik; MLA for Emerson, Mr. Jack Penner; MLA for Morris, Mr. Frank Pitura; MLA for Ste. Rose, Mr. Glen Cummings; MLA for Arthur-Virden, Mr. Larry Maguire; the Minister of Agriculture and Food, Rosann Wowchuk; the MLA for Interlake, Tom Nevakshonoff; the MLA for Brandon-West, Scott Smith; the MLA for Rossmere, Harry Schellenberg; the MLA for Selkirk, Mr. Greg Dewar. My name is Stan Struthers, and I represent the constituency of Dauphin-Roblin.

I will now read the names of the persons who have registered to make public presentations this evening. Oh, I am sorry, Mr. Praznik.

Mr. Darren Praznik (Lac du Bonnet): Mr. Chair, thank you. Just on a matter of logistics. In speaking with a number of my constituents and neighbours who are here tonight who are not registered, and I know you will be reading through this list, there are eight presenters. But, I gather, just for their information, if anyone does want to be added to this list as the evening proceeds, they can do that, and perhaps, Mr. Chair, you might want to point out where they would register to add their names to the list. Thank you.

Mr. Chairperson: That is a good point. I think Mr. Praznik was reading ahead on my script here, because that is going to happen all in due course. But, as Mr. Praznik has indicated, if you want to register and make a presentation here tonight, you can register at the staff table at the back of the room. Thank you.

On our list so far we have Mr. Leonard Gluska, the Reeve of the R.M. of Kelsey; Mr. Al Tymko, Reeve of the R.M. of Brokenhead; we have Andy Baker, a private citizen; Brad Mroz, private citizen; John Sokal, Councillor of the R.M. of Springfield; Mr. Wayne Drul, Manitoba Vice-President of the United Grain Growers; Bill Chuckry of Chuckry Farms; Claude Roeland, a private citizen; and Brian Kelley and Ken Yuill presenting together.

If you want to register to make a presentation, please do so at the back with the staffperson there. Those are the persons registered to speak this evening. I would like to mention to presenters that 20 copies of any written version of presentations would be appreciated. If you require assistance with photocopying, please see our staff table at the back of the room. If there is anybody else in the audience that would like to register to make a presentation tonight, register at the staff table.

I would like to inform the committee that written submissions have been received from Mr. Roger Goethals, Reeve of the R.M. of Winchester, and from Julie Turenne Maynard, the Manitoba Chambers of Commerce. Also, I have been advised that Ian Robson, whose name was called at a previous meeting of this committee, has since requested to have his presentation accepted in written form. Copies of these briefs have been prepared and distributed to committee members. They are in front of you.

Is it the will of the committee for these written submissions to appear in the committee transcript for this meeting? [Agreed]

* (18:40)

I also want to here in Beausejour, as we have done in a previous meeting, indicate to presenters that if you choose, you can simply put your written submission forward and opt not to do your oral presentation. So you can put your written submission forward. We will accept that. It will be taken as part of the transcript for this committee if you do not wish to make your oral presentation.

I think that covers the basis for the housekeeping that we need to do. I will now call on Mr. Leonard Gluska, the Reeve of the R.M. of Kelsey, to present to the committee. Mr. Gluska? Following Mr. Gluska will be Mr. Al Tymko, so Reeve Tymko, you can be ready on deck.

Mr. Gluska, do you have a presentation to be handed out?

Mr. Leonard Gluska (Reeve, R.M. of Kelsey): Yes, there is one going around the table at the moment.

Mr. Chairperson: The floor is yours.

Mr. Gluska: Thank you, Mr. Struthers. I walked in here and the first thing I noticed was the fine designs on the wall, but it made me wonder whether that was an example or a silhouette of a setting sun and that would be symbolic to our state of agriculture right now.

Ladies and gentlemen of the Standing Committee on Agriculture for the Province of Manitoba, I have presented you with a text, that I, with your permission, will probably deviate from now and again, but I will try and contain myself to the text as I have presented it. I feel both privileged and re-inspired by the opportunity to make this presentation in regard to the catastrophic status of affairs in the grain and oilseed sector of our agricultural industry.

The passing of an all-party resolution dealing with this crisis in grain and oilseeds and the need for further support basically reaffirms my faith in the democracy as we know it in Canada, at least in this corner of the world. And, as I look at the copy of the resolution, I certainly want to-maybe it goes without saying, but I am here to speak in support of it.

This crisis can only be viewed, as we are today, on a global perspective and therefore a matter that is inherent that the Canadian government take the leadership in dealing with the challenges that have presented themselves on an international level.

I come here before you today from the perspective of the Reeve of the Rural Municipality of Kelsey. I am also active in various local and regional economic development boards over the years and other initiatives that are community and regional-based and provincial-wide. I am a member, presently, of the Churchill North Gateway Interim Committee. I am also an active grain producer and entrepreneur in the agricultural industry.

* (18:50)

In my presentation to you today, respected members of the standing committee, my intent is to focus on the gravity and the reality of the farming crisis in as objective a manner as the subject permits. Some of the things I am about to say you have all probably heard before, and I was inclined to say, well, you are going to hear it again, but I am not going to. What I am going to say is hopefully if you have heard it before, my presentation will help to sort of reinforce some of the facts and points that exist.

Now, let us look at the big picture. To make a statement citing that this crisis is the result of government mismanagement would be an understatement to say the very least. The crisis is a result of no management at all, and I say that with all due respect, and I will build on it as I go through the presentation. My presentation today will attempt to shed some light on the present snapshot of the current crisis in two parts: (1) the present realities, and (2) I am going to try and bring in some long-range perspectives.

Present realities. Presently the returns on grain and oilseeds are below the cost of production. These low commodity prices do not even come close to resembling the return on the investments or the replacement of the equipment, let alone meeting the base costs of the inputs. The increase in cost to the Canadian farmers for petroleum and fertilizer in one year was more than $1 billion, and at the same time commodity prices were falling.

The present ad-hoc programs have failed miserably in addressing the program in more than one way. The support level does not even come close to addressing the shortfall created by the increased cost of energy combined with the declined returns and commodities. The process is wrought with untested formulas, huge administrative costs and time delays. Thus, this results in promised aid arriving long after it was needed and also results in inequities in the distribution of this aid. And, as I was doing my research, I ran across something-I am going to deviate from my text here-that indicates to us that this is nothing new, the facts of problems with the formulas and the way things are being Band-Aided in the agricultural industry by attempts to try and make it survive.

I will quote you from a statement in the Western Producer in 1992: Farmers across Canada have grown so used to being trampled by bureaucracy and politicians, they will take anything lying down. If government announces a new program for agricultural assistance, they do it through all available media, screaming about the hundreds of millions of dollars they are spending. The next step, create a new bureaucracy to administer the program, and bang, half of the millions disappear, and as farmers we lie back and think that someone else will take care of the situation.

I think we have come to such a crisis in our agricultural industry here that the response I see is an all-party standing committee. Certainly there is recognition that these Band-Aid approaches just are not working.

I mentioned inequities. I want to refer just to one inequity in the last program we had running, I think it was called AIDA, in the way that people were treated that did not belong to NISA. They were penalized twice. First they did not receive the matching contribution dollars from the government, which is individual choice. They chose not to belong to NISA, so they did not get the matching dollars. But, secondly, if they were eligible for any aid from AIDA, they were deducted as if they had received NISA, had been in the NISA program. Again, both cases create a cash gain for the program being administered by the government. I do not understand what kind of thinking goes behind that. The cash advance program, I think, is a great program, but we have moved it now for the second year from the fall into the spring. Sure, this will help put the crop in the ground, but it is putting a crop in the ground that is not going to come back enough to cover the costs anyway. So where is that going? What is the sum of the realities of the spring advance? It could be creating a situation where you are digging the hole deeper.

* (19:00)

How much money will go towards clearing past-due fuel and crop input bills from the previous year? In the related agricultural industry that I have been involved in, I come into contact with a lot of farm gate people. We do some trucking; we do some custom herbicide application, so I have a large clientele, and these folks are all telling me the same story: Boy, I hope I can get the cash advance so I can pay my last year's fuel bill.

Now where is that going to put them next fall? They are done. They are already done now probably. In all likelihood, if that is the case, they are not going to get any new credit extensions anyhow. I do not know what the solution is there, but it certainly, again, is a Band-Aid type of approach to this problem.

What happens to the farm operator, and there are a lot of them out there, who has been having problems with time lines and previous cash advances? He, in all probability, cannot access the current spring cash advance. So maybe I guess he puts the lights out in his place.

If the agricultural crisis is going to be dealt with fairly, equitably and timely, an immediate payout of even the presently committed funds that have been committed need to be administered in a simple, efficient manner. There are existing models that have been practised in the past, both in Canada and in the United States, based on acreage payments. Acreage payments could be administered through crop insurance agencies in each province. The acreage records are already in place, the staff is already in place, the savings realized in eliminating another bureaucratic tier would contribute to actually aid the producers and not just appear to do that.

I want to share some statistics with you here after I say that the statements by the federal government that Canada cannot compete with the deep pockets of the U.S. and the European Union are not soundly based on any facts because the statistics I am presenting you on page 4 will tell you the story. Producer subsidy equivalents in the European Union in 1988 were 50 and in 1998 were 65. In the United States they were 39 in 1988 and 43 in 1998. In Canada they were 41 in 1988 and they are 18 in 1998. What does that tell you? Is there really a support program here of any kind? Absolutely not. The money is gone; it has dried up.

Table 2 is the one that makes the story a little clearer again, and maybe a little easier to understand. Farm support dollars per person: 1986 versus 1999 by countries. The European Union in 1986 contributed $325 to agricultural support in 1986 and $336 in 1999. They have remained constant. The United States in 1986 was $277, in 1999 was $350. They have seen the need; they have gone ahead and put it in there. Japan, $510 in 1986 and in 1999, $566; Canada, $268 in 1986, $163 in 1999.

The food basket that is used as a basis for calculating the COLA, the cost of living allowance, in Canada is the cheapest one in the world. It shows that the savings per week per citizen is a minimum of $3 which is equivalent to $156 U.S. per year.

Based on Table 2 that I just presented to you, ladies and gentlemen, the agricultural spending in 1999 agriculture was basically taxpayer neutral. Looking at it as the dollars that the agricultural programs are handing out coming from the taxpayer, basically they are nullified by the fact that the food is cheaper. However, consideration must be given to the fact that dollars earmarked for agriculture in a government's budget does not reach all farm gates. Therefore, based on the food basket, there is another message here. Each citizen in Canada is being subsidized by farmers in Canada, and that is said with all due respect. It is nobody's fault, that is just the way it is. This is indeed not surprising because we know worldwide that Canadian farmers are the top producers in the world in terms of efficiency in being able to produce good, high quality, safe food.

Let us look at some long-term perspectives. Let us examine what agricultural policy is and how it relates to other kinds of policies. Agricultural policy is a subset of the larger overall government policy. Since our government is elected by individual constituents, which is the public, then the government policy, in fact, is public policy. Therefore, all government portfolios, including agriculture, are mechanisms for developing public policy.

There is another type of policy at work parallel to government policies and that is developed in the boardrooms of major corporations. This corporate policy may be, on some occasions, parallel to public policy; however, the overriding concern in corporate policy development is the legal obligation to capture wealth. In most agricultural areas today, wealth is created, but it is captured elsewhere, and systematically it has taken and sucked out the old wealth from western Canada.

Mr. Chairman, I am out of time?

Mr. Chairperson: No, you have about half a minute.

Mr. Gluska: Oh, my. I just want to take-I cannot ask for an extension, can I? Do I need a motion from the standing committee?

Mr. Chairperson: You still have your five minutes for questions.

Mr. Jack Penner: Mr. Chairman, I would suggest that the committee give some leeway. I have paged through the report, and I think this is probably one of the better presentations that we have heard all night, and I would certainly want the gentleman to be able to have enough time to present it.

Hon. Rosann Wowchuk (Minister of Agriculture and Food): I would agree that Mr. Gluska should be able to finish his presentation, and we would waive our questions.

Mr. Gluska: I appreciate that because I just feel I am moving into the summary of what I have been building towards here.

Mr. Chairperson: Just before you move on Mr. Gluska, then we have agreement in the committee to waive our questions and have Mr. Gluska continue? [Agreed] You would have about five minutes and fifteen seconds then.

Mr. Gluska: I will try and tie it up in that time period. Thank you very much, Mr. Chairman and ladies and gentlemen of the committee.

* (19:10)

I think what I want to say here I am going to summarize in just a few words rather than going verbatim on the report in the interest of time. I talked about agricultural policy. Every nation has to address it as it relates because agricultural policy relates to a nation's sovereignty. There are other things that relate to a nation's sovereignty, which I will not build on, but it is in the text so it will become part of the records. A sovereign nation has to be able to control its debt, has to be able to maintain and protect its borders, has to be able to maintain an adequate source of energy and reserves, and maintain and guarantee a stable, national food supply. I wonder how many of those four points our nation is maybe slipping on. The fifth one is to maintain a water supply.

Let us look at agricultural policies and compare them to other parts of the world. In the European Union, their policy is called the farm pact. "Feed our own people" is the motto. European folks have experienced food shortages twice in this last century. They also want to guarantee a vibrant agricultural industry. They want to keep people in the rural areas rather than add to the problems in the urban areas.

The United States, the farm policy is feed the world. The United States Department of Agriculture is charged with the responsibility of carrying out agricultural policies that are set out five years in advance.

Let us look at the Canadian policy. Number one, right now there is no policy. Agricultural Income Disaster Assistance, our policy is a disaster. If we have a disaster, we have a policy. Since the GRIP program has expired, the AIDA program's underpinning design was based on disaster, and I know that folks that were in a disaster area did benefit by it somewhat, but this was not meant as a price support for commodities. If we look at the world as a whole, Canada is the only G-8 country without a food policy to address the cost of production and return on equity and labour.

Québec, in our own country, since 1974, has had a farm income stabilization program, and just a few pointers. Their program sets out seven years in advance planning of what may be coming in the future. The equalization income is based according to specialized workers in the rest of the economy of $49 000 a year. It has been in place since 1974. The agricultural sectors are commodity based not blanketed as all one industry.

We deserve, in Canada, an agricultural policy. No one wants a free ride. Farmers are probably the most sensitive of anybody to handouts or to the welfare mentality. The farm community deserves a policy because agriculture creates jobs, agriculture sustains communities, agriculture produces exports, agriculture is 12 percent of our GNP. Furthermore, Agriculture Canada employs 12 000 staff, 800 of those are economists throughout Canada.

Obviously none of our ag economists have been sensitive enough to the problems to inform their minister of the state of affairs. In all due respect to them, how can they be sensitive to that if there is no policy? How can employees be sensitive to any changes?

I just want to take another minute and talk to you about the production costs and how almost silly it sounds. A bushel of barley creates 333 bottles of beer. Out of that, $14.56 goes out of that sale towards federal and provincial taxes on one case. A quarter section of barley, on that basis, produces over $4 million.

Let us consider two scenarios. Mr. Chairman, what have I got? One minute. Thank you. If you take a one cent surcharge, well, call it what you want, on a bottle of beer, that would give you $3.33 per bushel. Add that to $2.30, it would give you $5.63 per bushel of barley.

A bushel of wheat produces 57 loaves of bread. A nickel would give you $2.85 more; it would give you over $5.00 a bushel for wheat. If that were the case, we would not be here, you would not be here, I would not be here talking about this. The western economy would be booming. There would be money; there would be jobs. The immediate answer is a cash distribution quickly. The long-term answer is a long-term policy.

Again I suggest that the distribution be based on an acreage payment, which seems to be simplest and the fairest because you are dealing with grain production. There are downsides to everything, but let us look at something that gives immediate cash to people in the agricultural community.

Unless the crisis is approached immediately at both levels of the senior government with a nonpartisan attitude, which you started here in forming the standing committee-my sincere hope is that this permeates the far east, meaning Ottawa, and hopefully this halts the decimation of our rural western Canada because if it does not, ladies and gentlemen of the Standing Committee on Agriculture, I want to leave you with a thought. We might as well go home now, and the last one to leave our rural communities has an important responsibility. They are going to be the ones that need to turn out the lights.

Thank you for your time and God bless.

Mr. Chairperson: Thank you, Mr. Gluska. We have agreed to forgo questions, previously agreed in the middle of your presentation. Thank you very much for attending here tonight.

Mr. Gluska: I just want to sincerely thank you for giving me the extension of time.

Mr. Chairperson: Okay, thank you very much. I have Reeve Al Tymko presenting next. On deck is Mr. Andy Baker. Reeve Tymko, do you have a presentation to be distributed to the members?

Mr. Al Tymko (Reeve, R.M. of Brokenhead): Yes, I do, but I will hold on to it for a while and present it to you later.

Mr. Chairperson: Okay, the floor is all yours.

Mr. Tymko: First of all, I would like to, on behalf the Town of Beausejour and the R.M. of Brokenhead, welcome everyone to our part of the country. I have to share with you that this is probably the most beautiful part of the province, this eastern part of the province. I think if you take a tour around the area, you, in fact, will believe what I am saying. Plus, I want to emphasize the fact that we have some of the most productive farmland in the whole province of Manitoba, which we are proud of, and we are proud of our farming community.

I would like to thank you for giving me the opportunity to make a presentation on behalf of the residents of the R.M. of Brokenhead, and on behalf of our council who authorized me to make this presentation. I am not sure where I stand. This is why I am sort of holding back with my document that I was going to hand out because with the comment that Mr. Penner made-he had indicated that was the best presentation he has ever seen. I am not sure whether, in fact, I want to hand my presentation out.

* (19:20)

I am taking a little different approach than, I am sure, a lot of the presentations you have heard from as far as agriculture is concerned. I know that the bottom line is that the farmers are not getting enough money for their product. If I might share with you a recent article in the Winnipeg Free Press, I do not know how many of you people have seen it. It is called: The java jolt. When I read it, I thought it was very, very appropriate for the type of things we are dealing with. This is written by Ilana Simon:

When the alarm clock goes off, the first most of us think about and long for is our morning cup of coffee. But, do you ever wonder where java jolt comes from and how much of what we, as consumers, pay for our coffee actually filters down to the farmers who grow and pick the coffee beans?

We can put in whatever words we want there, but I just thought this could fit in for grain farmers, cattle farmers, whatever it may be.

The answer is not a lot. Typically, a pound of 100% Colombian coffee sold in North America earns a coffee farmer less than 10 percent of the retail cost. Thousands of Central and South American small-scale coffee farmers are just struggling to get by.

I think that is the case in our farming community at this stage.

A few concerns before I get on with the other part of my presentation, and I guess this is a provincial concern as much as a federal concern, because my understanding is that education is both provincial and federal. But, in my opinion, we must sell the importance of agriculture to our people. It bothers me that agriculture is not a topic that is compulsory in our school curriculum. It is an optional part of our school curriculum.

We must make all people-city and rural-aware and knowledgeable of the importance of agriculture, and how it drives our economy. The lesson we might learn is: perhaps we look at our computers and our computer technology, and learn from them what did they use to sell our people in the whole computer industry. Perhaps we can use some of these methods in selling the need for our agricultural products.

I know that Ron had mentioned a lot about field costs and so on and so forth. The approach I am going to take a look at is that the end result is that the farmer is not getting enough for their product. We talk about input costs as far as the gasoline and diesel and fertilizer and so on and so forth, but in our particular part of the province here, which is Brokenhead, we have something that, I think, contributes to our input costs greatly and affects what we get for our product in the end, and that is the drainage. I am not sure whether this is strictly a provincial responsibility, or whether it is something that should be shared by the Province and the federal government. I know that Minister Wowchuk and Minister Ashton, in fact, have their report previously, but at this time I would like to share the report with you and address this concern.

Just a bit on the background, the R.M. of Brokenhead was formed in July 1900. It is currently made up of eight townships and 184 320 acres. The Brokenhead River basin separates two geological formations, namely, limestone to the west and the granite shield to the east. This results in the Brokenhead River being the drainage system for the adjacent lands. The meeting of these two formations results in some of the richest, highly productive and fertile growing land.

The economy of the R.M. of Brokenhead is predominantly agriculturally based, with the largest grain delivery point in southeastern Manitoba located near Beausejour.

Due to the fact that the Brokenhead River runs through the entire length of the municipality, this results in 12 third-order drains running through our municipality in order to reach the Brokenhead River. I think, if you check on the provincial map, in fact, the size of this municipality, we have the greatest number of third-order drains. These third-order drains drain water from the R.M.s of Lac du Bonnet, St. Clements, Reynolds, Springfield, the Town of Beausejour, as well as lands in the R.M. of Brokenhead.

With page 4, I think what I will do, I will just leave that, and you can read that at your leisure. We will go to page 5. This is where I feel that this affects our particular situation because what happens is that the farmers in our area are not on the same playing field as a lot of other farmers are because of the economic losses that result of the fact that we do not have the proper drainage. I know a lot of other areas are concerned with retention of water. In fact, we are faced with a dilemma where we end up having to deal with drainage.

For my particular presentation here, I chose two of the 12 third-order drains located in our municipality to justify and support the need for a comprehensive maintenance and capital upgrading of the provincial drains located within our municipal boundaries. The reason for my choices are as follows:

I chose the Bachman Drain, which is one of the longest drains. As well as one of the largest drainage basins located in our municipality, this drain was originally constructed to drain approximately five sections of land. But the drainage area has been increased to drain approximately 40 sections of land.

Now, what has happened is I sent out surveys to landowners and people that live along the Bachman Drain. The surveys were sent out, and the return, now, if you take a look at the figures there, the total losses are as follows. I will not go through all the details. There, again, you can read that.

In 1998, based on just the people that returned their surveys, there was an economic loss of $149,368. So, in 1998, our farming community, just along the Bachman Drain, had to recover that amount of money before they were on the same playing field as the rest of the people.

In 1999, the cost, there was $155,385. Now, these figures are all documented, sent in from the different farmers, which you will be able to take a look at a little further down.

In the year 2000, the loss, in fact, was $208,475. So the total crop lost from these surveys is $513,000 or half a million dollars in the last three years.

Again, I just wanted to emphasize that not all of the farmers had returned their surveys. So we are talking about a pretty significant loss for a very small number of people.

The above figures exclude input costs. That is just the loss of crops they had. Now, if the input costs are figured in, then the costs would be indicated on the following page, which I have done there. I have summarized them with the different years, 1998, 1999, and I have gone into the wheat crops, taken the total number of acres. There were, at times, the input costs for the different crops that were grown in there. You can see, in 1998, as well as losing the grain, they also lost in input costs $171,000 in 1998; in 1999, an input cost of $128,000; and in 2000, $192,000.

So, if you take a look at the summary at the bottom, the total input cost over the three years is approximately half a million dollars and from the loss of the crops is also half a million dollars. So in fact, for the Bachman Drain, there was basically $1 million that was lost. I guess the point I am making, that is $1 million that was lost strictly because we cannot get the water off the land.

Now, the Lydiatt drain is a short drain. It is one of the shortest drains and drains approximately two sections in our municipality, two sections and quite a number of sections in the R.M. of Springfield. Surveys were sent out to 17 landowners; 8 of the landowners returned their surveys. The others, I am not sure why they chose. I know that when I was gathering this survey, I was advised that it is probably best to have this information in before the Estimates go before the House, so that the people would have the information there before they do their Budget.

I realize that what I am dealing with, a lot of it is provincial, but I am not sure whether drainage, in fact, should be strictly a provincial responsibility. Or whether part of the costs that would be shared with the federal government should not come from that, whether it is from the Crow subsidization, whatever it may be, to deal with our particular dilemma here.

So, if you take a look at 1998, again, I want to emphasize there are only two sections of land. In '98, there was a $61,000 loss; '99, approximately $60,000; in the year 2000, $297,000. So, again, the total loss there in the last three years was $418,000. As my note I have made there, there are photographs and videos that are available so you can visually see what goes on there. We have that.

If we take a look at page 8, there again, the same summary, these are the input costs. The other ones were strictly crop losses. So, if you take a look at the input costs there, the input costs for the Lydiatt drain are $103,000, plus the $418,000 in crop. So the total estimated loss there is, again, half a million dollars for just two sections of land.

In our particular case because, in the Municipality of Brokenhead, I think that, if we generally speak about the drainage system that we have within the R.M. of Brokenhead, we would have to say it is quite good. But our problem runs into if we get our drains to the point where in fact they are good drains, we meet up with the provincial drains, which are the third-order drains. They cannot handle the water that we generate as well as all our surrounding municipalities. Now the biggest problem we end up with is that somewhere in the report here; I state it is just like because we are in the basin here, all our agricultural land. Which, again I have indicated to you, is some of the best agricultural land in the province. Because we are at the bottom end, we have to wait our turn before the water leaves us. It all comes down here. We have high elevation that way, that way, that way, from all ways. It inundates on us. We are in a holding pattern until the traffic leaves, and then our water goes down.

I know that for years-I am new at this game, but my predecessor, Clarence Baker , is here. I know that Clarence and the council at that time tried to update these drains as well, and we always seem to get the same answer.

Does that mean hi?

Mr. Chairperson: That means you are No. 1 with one minute left.

Mr. Tymko: I was wondering if I can get an evaluation up to now.

Mr. Chairperson: You probably will.

Mr. Tymko: I guess the answer we get back all the time is that there is no money. I guess I like some of the ideas that were presented here with the beer and so on, so forth; that if there was some sort of tax of that nature placed on it, in fact the farmers would have more disposable cash.

The other concern I have is that, for some reason, and I am not sure why, but every place we go, there seems to be a big push for conservation districts. I have to share with you that, in our particular municipality, we are not the same as the rest of the province. We have a unique, different situation here. We need drainage and not conservation districts. For some reason, it seems that every time we turn any place, it seems that the only way we can access funds is if we join a conservation district. We keep hearing this over and over again. Again, I want to emphasize every farmer is different, every farming operation is different, every municipality is different. Thank God we are different, but I have difficulty with people trying to come up with one solution for all of us.

We would love to bring in some of the alternative crops in our areas, but in order for us to bring in these alternative crops into the area, we do need better drainage. We can grow sunflowers. We can grow these specialty crops, but not under the current conditions where the water sits in and soaks out the crops for us.

Mr. Chairperson: I hate to do this to you, Mr. Tymko, but we have gone over time. There are just a couple of minutes left for some questions. I do have a speaking list of people who want to ask some questions, so if we could keep our statements short and sweet, maybe we will get most of them in.

Mr. Tymko: I do not see anybody big enough there to throw me out.

Ms. Wowchuk: Thank you, Mr. Tymko, and yours is also a very good presentation. What we find is each presenter seems to bring a different angle to it, and you brought the one of drainage, so I have a couple of questions that I want to ask you.

First of all, has this been an ongoing problem, or has it worsened over the last few years? Are you saying that the municipality is maintaining your part of the drainage system, but the provincial drains are the ones that are the problem?

Mr. Tymko: The provincial drains, in some cases, it has been 40 to 60 years since they have been maintained. They have been there, but nothing has been done.

Hon. Jon Gerrard (River Heights): Just a couple of questions to clarify a little bit about the size of the drainage issue. You talk about two of the twelve third-order drains, and the losses in those two areas are one million and half a million roughly. If the rest of the third-level drains were included, and there was a similar loss in those areas, you would end up with a total loss in the municipality of around $9 million. I do not know if these are the worst examples. Or whether they are reflective in terms of the kind of impact at the moment when it is difficult making a dollar in agriculture-the drainage and making sure that this is all the more critical, I would think.

* (19:30)

Mr. Tymko: I guess the thing is I just chose these drains simply because one was the shortest, and the other one was the longest and for no other reason, just to cite an example. But I have a letter here that I would like to leave with the Chair that I just received today. It is regarding a letter we got, and it has been sent to Oscar Lathlin, Minister of Conservation. It is regarding another provincial drain, just to sort of reiterate what I am saying.

Hon. Steve Ashton (Minister of Transportation and Government Services): Mr. Chairperson, I certainly can testify to the conditions of some of the drains with my involvement I guess on the Emergency Measures side. As you know, of course, we have had some increases here for the first time in quite some time in the maintenance budget. I am just wondering which of the provincial drains is the priority in this area in terms of maintenance. I have seen some of them directly, I know they are all priorities in a way, but which ones are the drains that are in the worst shape?

Mr. Tymko: I guess I would have to ask Clarence here which one does not need. They are all bad.

Mr. Praznik: Just two questions for the reeve. I think you gave a great presentation. Just two things and they are basically questions just to elaborate somewhat on what you said, Al, to give people a perspective of what we have faced in this area. When the Bachman Drain was originally dug, the area that it was draining was fairly small compared to today. Do you have the numbers on the additional number of acres that are now flowing into that Bachman Drain over the last, say, 20 years?

Mr. Tymko: On page 3, originally it was eight townships and-no, pardon me, wrong place. I have it in here. On page 5 it was originally set up to drain five sections of land, and now it drains approximately forty sections of land, and nothing has changed.

Mr. Praznik: Mr. Chair, just to make a point, it has not been added to.

The second question, Al, is you talked about innovative approaches and different things. Conservation districts are not meeting the tests for out here. Would you just take a moment to inform my colleagues about what you and a number of the other municipalities have done to co-ordinate your drainage activity in the last four or five years; where we have had that co-operation, because it is a different approach.

Mr. Tymko: In the area here, what we have formed is what we call a Northeast Agassiz Watershed. What we have, Mr. Chairperson, is the R.M. of St. Clements, Lac du Bonnet, Alexander, Brokenhead, Whitemouth, Reynolds and Springfield-as well as the town of Beausejour and, hopefully, Lac du Bonnet. What we do is we meet the third Wednesday of each month to take a look at the drainage issues which are specific to our area. I have to tell you that the meetings that I have attended to date, it has always been drainage. I think the point I want to make is that we are not opposed to the conservation part of it. If there is conservation, we believe that it has to be done. But the thing is in this whole process. I can understand the western part of the province, that conservation is probably a high priority, but here we have the reverse.

Mr. Chairperson: Mr. Penner, for a really quick one.

Mr. Jack Penner:: Just very, very quickly, could you tell us in one minute or less how you would formalize the process that you have been in, and what kind of funding mechanism you would need to be put in place that would give you the authority to do the assessments and the clean-outs?

Mr. Tymko: I am not sure what you are asking.

Mr. Jack Penner: Basically what I am asking is: what sort of a formalization of the initiative that you have already taken as a group would be required by the Province to initiate that kind of a process, and give you the authority by designation of grant funding to you? To give you the authority to make the decisions where the action should be taken on the total drainage system. Not that the Province would be involved other than funding you the amount of money needed, and then you would make the decisions. How could you formalize that?

* (19:40)

Mr. Tymko: I guess before the report was submitted, we in fact met formally with the people who made submissions to it, and the feedback we received from the people that were there, the approach of farmers that submitted surveys was that: If I lose $18,000 or $25,000 every year, I would be more than willing to present some of my economic loss because I have to put the input costs in there. Rather than losing the input costs every year, I would be prepared to sacrifice or put in some of my own money so that I can access other funds so that in fact we can fix up this drain once and for all; otherwise, I keep losing money year after year. It does not stop.

Mr. Chairperson: Thank you very much, Mr. Tymko. Seeing as I opened up this committee hearing in Dauphin by referring to it as God's country, I am glad you have balanced off east and west in this province with your bragging of your area. Thank you very much.

Just before we move on to Mr. Andy Baker, I want to introduce two more MLAs who have joined us here today, Ron Lemieux from La Verendrye and Steve Ashton from Thompson.

I would like to call Mr. Andy Baker to the microphone, please. Mr. Baker, do you have a document to be distributed?

Mr. Andy Baker (Private Citizen): No, I do not. This is not a very good time of the year for me. It is our first day out in the field. I had a lot of time to think about what I wanted to say, but it is not very easy to write stuff down when you are behind the wheel of a tractor.

Mr. Chairperson: Okay, you can proceed.

Mr. Baker: Really, I just wanted to bring one point to the committee, and that is the programs that we have had in the past as farmers and how beneficial they have been to me as a farmer. I think even though we all said GRIP was a good program, if we had kept GRIP and had kept it running, it probably would not be very useful to us right at this time because it had one fatal flaw. It had a declining coverage, so if we had gone five more years, our coverage, especially with rising input costs, would not really mean a lot to anybody. That is the problem with AIDA and now its predecessor, CFIP.

Last year we had a 50% drop in net income on our farm. Because of the declining incomes on the farm, we did not qualify for an AIDA or CFIP payment. This year I figured that I could go right to zero, I can have zero for a net income, and I still would not qualify because of the declining balance on your coverage. So that program obviously is not going to be much good for any farmers or any grain farmers for sure.

The one program that has been really useful to me as a farmer has been the NISA program, but it also has a flaw. Once you have a few bad years in a row, your account balances start dropping really drastically, and if we have one more bad year, our account balances are going to be too low to trigger any useful payments.

One easy solution to that problem would be to increase the amount of government contribution to the program. Right now the governments contribute 3 percent to the program. If we doubled that contribution to 6 percent and left the farmers at the same level, it is very easy to figure out the amount of money that has to be put in by governments. The good thing about the NISA program is that it does have caps. If you have good years, you get a large account balance and there are no government payouts, no more government payments made into those accounts. I do not see why governments would not like that. When times are good, it does not cost them any money.

I know lots of people argue about the amount of money that is in those accounts now and why is it not being utilized. I am not sure why any farmer would not want to take a program payment when it is triggered because obviously your income is low, you take out your government portion, pay your income tax at a low rate on that portion, and you use the money when you need it. If you left it sit in there and did not take it when you were allowed to, you would reach your account balance limit anyway and you would not get any more government contributions. If people want to leave their account balances in, that is fine by me. I know when I can trigger a payment, I take it. Obviously when I trigger it I need it, and I take it out. If there are farmers that do not need those payments and want to leave them in, governments will stop putting into those accounts once they reach their account balance limits.

That is pretty much all I have to say. I thank you for your time. I wish it had been a little bit earlier in the year that would have allowed us some time to really put the numbers down. I am open to any questions now.

Mr. Chairperson: Thank you, Mr. Baker.

Ms. Wowchuk: I would like to extend a thank you as well for your coming this evening and taking the time to get off the tractor. You are one of the lucky farmers who is already out on the land. That is not happening in very many parts of the province.

You talked about the programs that are not working, and AIDA is not working. There is a review of all those programs, there is a review of NISA going on, and hopefully some of the changes that you suggest will be made. But is what you are suggesting that we eliminate some of the other programs that are not working and use that money through NISA and increase the amount of money of the contribution through NISA and create a pool of funds for farmers in that fashion?

Mr. Baker: I know there are farmers that would say the AIDA or CFIP program has been of great benefit to them. But I think if the NISA program was enhanced, it could be of benefit to those producers too. When you look at how the CFIP or AIDA program has worked, it has worked for very, very few farmers.

I also sit on the Manitoba Safety Net Committee, and we have some of the figures from payments under the AIDA program. In the first year, 3 percent of the producers received the bulk of the money, and some of those cheques that were written were in excess of $300,000. Now, that does not benefit the farming community as a whole when that kind of money is going to so few producers. At that time, grain producers were in financial straits too, and we were not triggering any payments.

In that first year when I filled out my AIDA forms, I knew I would not collect, but I would have collected under that program if I had had-I had one bad year out of the three that went for my average. If I had had an extremely good year, the same kind of year as I had in those other two, I would have triggered a program payment. Even though I needed it less, because obviously I made more money in the previous years, I would have triggered a program payment. That just points out why that program did not work and why we have to do something that is going to benefit producers better than that program did.

Ms. Wowchuk: If you were making recommendations on how the Safety Net program should be changed, that would be one of the recommendations that you would be making, is to shift from look at the funds that are in AIDA or CFIP now and have them in a program that farmers could access in an easier way should they have a downturn.

Mr. Baker: Yes.

Mr. Larry Maguire (Arthur-Virden): Thank you, Andy. I just want to touch base or get a little bit further clarification on what you were thinking in regard to NISA. There is a good concept there. You were talking about increasing the program payments from 3 percent to 6 percent and keeping the caps, and of course the government does not pay in once you reach your cap, anyway, in those kinds of programs. Are you looking, or would you then recommend as well that if the government was going to increase its percentage of payment in, that you could look at increasing the cap as well?

Mr. Baker: The cap has not changed since NISA's inception, so I think just taking in the increase in costs on the farm, I think we would have to look at increasing the caps to keep the program meaningful. In ten more years the existing caps obviously would not mean a whole lot in the way our economy is going, so I would say we would have to review the caps on an ongoing basis.

And one other thing while we are talking about the review. I was really disappointed at the NISA review when it seemed to me after we had sat in the room for awhile and looked at what we were asked to review, that the Government was looking more at cutting the program than expanding it. That is really disheartening when you are asked to sit on a committee and you get in a room and you are discussing something, which I thought we were there to discuss improvements, not to try and convince governments to take more money out of the program.

Mr. Maguire: One of the things we have had presented to us at some of the locations has been the idea of the present programs that we have overlapping and taking away from AIDA, as far as income supports from various programs being added up and actually reducing payments and disaster mechanisms from the AIDA package. I am just wondering if you had any comments on that.

Mr. Baker: Are you talking about the CMAP payment, or something similar to that, detracting from what I would have received under an AIDA payment?

Mr. Maguire: Yes, that as well as some of the payments, particularly somewhere in the southeast as well as the southwest in '99 in regard to acreage payments that came out there and other sources of income, that when they are added into AIDA, really allow the federal government to pay less of the proportion of disaster funding that AIDA was put in place to do.

Mr. Baker: I do not agree with that happening and obviously it has. I am not sure how you could get around that entirely. I think it is just we have to have a program. The AIDA program or the CFIP program just are not going to work, period. That program has to be completely changed, dropped, and put into something useful. I realize the amount of effort it takes to try and come up with any kind of a program just by being on the Safety Net Committee. I can see it is not going to happen overnight, but I know there is a need to get money out to farmers overnight.

One of the things that could be done reasonably fast is to double the amount of government contributions to NISA and get the accounts built back up to where they are meaningful, especially to the younger farmers. I do not think it is a program that maybe the farmers that are closer to retirement are going to necessarily trigger, but the younger farmers definitely would.

One other point to would be that really, if there was a good NISA account balance of a retiring farmer and he was looking at passing this farm along to his son, what would be wrong with having a big account balance that could help him do that? That he could use as a retirement fund, and not have to put his son in debt or his daughter-whoever is taking over the farm-or else not be able to retire in the fashion he should be after working his whole life?

* (19:50)

So anybody who says those account balances are going to get too big and they are going to be used for retirement funds, well, what is wrong with that? We realize there is going to be a problem transferring that land in the future and this would just help to facilitate transfers.

Mr. Gerrard: You have done quite a good job of commenting on the programs. I would like your views on the CMAP program and how it worked in the payout of the $93 million which is coming from Manitoba, and the approach that was used for that. Whether that could be improved or whether that is the optimum way.

Mr. Baker: I think, judging from last year's program, last year's CMAP, I was really surprised at how fast the money came out to the farmers. I thought the Government did a really good job on arriving at a way to pay it and to get it out to farmers. I know at the Safety Net Committee we were talking about how it should be done, should it be done acreage-based? We already had the payout done through NISA the year before. That would obviously be the fastest way to do it. I did not have any disagreement with maintaining that payout fashion for this year.

Mr. Jack Penner: Good to see you again, Andy. It has been a while since we have been able to sit around the table to discuss matters such as this. When you sit on your Safety Net Committee, have you ever taken the opportunity to think outside of the programs that we have currently utilized in Manitoba and western Canada, and take a look at what some of the other provinces do, not only the provinces but indeed our American friends? They use the LDP program, their disaster program, land set-aside programs, plus eight other programs that I am aware of that they utilize-many of them being loans-type programs, therefore being GATT green. I wonder whether you have given any thought to the targeted kind of an LDP program that the Americans have used very successfully and that their farmers really have become quite attached to. Have you, as the Safety Net Committee, given any consideration to those kinds of programming and recommendations to your governments?

Mr. Baker: Actually, we have not. Part of the reason is that I have only been on the committee for just over a year now and most of the time on the committee we are dealing with programs that are already there and trying to improve them. We have not really had any time to sit down and try and design any other program.

I think when we look at the U.S. programs there is always the problem of what kind of budget we are going to be working with. If you are limited right off the start with the budget, obviously you are going to be limited in the design of the program too. That would probably facilitate designing a program if we knew what kind of budget the governments were prepared to put up to support agriculture.

Mr. Jack Penner: I think you point out the difficulty that we have as farmers when governments first set budgets and then asked committees such as yours to draw the parameters around those budgets. I think that is where we fail sometimes. I think we as politicians sometimes need to say to you as a committee you draft a program that would at least come to a close comparison to what our neighbours do under which we are attached to by trade agreements, be they FTA or the GATT or other trade agreements, but that we are attached to, and then give you the challenge to draft a program that would suffice to keep our farmers on the land, specifically our smaller family farms, and keep our communities viable. Has that discussion ever taken place in your committee, and have you ever challenged your ministers that you would like to do something like that?

Mr. Baker: Yes, we have discussed that about the amount of money that we would need if we were going to design a program, or the lack of money needed to design a program. I guess that is the problem we face is how do we get enough money to design an adequate program. How do we get enough money out of the federal government to design that program?

I know the provinces cannot do it on their own. There is no question about that. So I think we have to impress upon the fact that it is really a federal responsibility, as it is in Europe and the U.S., to support the farmers.

Ms. Wowchuk: Just briefly, I know that you have looked at safety net programs and had discussion on them. Do you think that it is important as we design safety net programs that we consider whether or not these programs are countervailable and whether there is going to be other problems that result for our producers, should we be challenged by other countries when we bring in a program.

Mr. Baker: I would love to say let us just design a program that is going to work and not worry about countervail. Obviously, that is not going to happen. The beef farmers are worried about duty, obviously for good reason; so are the hog farmers, but it does not much matter.

I just read an article in a farm magazine about losing the use of lindane as a seed treat for Canola. The reason we lost the use of it is not because of any trade issues. It is not available in the U.S., to U.S. farmers, so we are taking it off the market voluntarily so they do not complain that we have a lower cost of production and come up with some countervail. So really what is the difference what we design? I think the Americans are going to do what they want anyway. If we designed a program that we thought worked for our farmers and went ahead with it, I do not think they would have too much argument over that.

Mr. Frank Pitura (Morris): Andy, I just wanted to ask you, you were talking about having an enhanced NISA program with more dollars available in it. My question to you is: With the trigger mechanism on those programs, would you keep the existing triggers or would you make some recommendations in terms of modifying those triggers.

Mr. Baker: We would have to sit down and look at them. One of the good things about the program is there is a minimum income trigger, so no matter what happens you know you are going to have some money triggered, but I think we would probably have to sit and look at how the program does trigger so it does not fall into the same flaw that GRIP would have or that the CFIP program does.

Once the money was put in there, then I think we should do the review on NISA. Doing a review before it is going to be a useful program does not make a lot of sense. Let us commit money to the program, then let us do the review and make it work. I know it can. It already works. It is already a workable program. It just needs some more money and a little bit of fine-tuning and it would work just fine.

Mr. Chairperson: Thank you for your time tonight, Mr. Baker.

Mr. Baker: Thank you very much. Good night.

Mr. Chairperson: Mr. Brad Mroz, private citizen, and on deck, Mr. John Sokal, Councillor for Springfield. Mr. Mroz, do you have a presentation to be distributed.

Mr. Brad Mroz (Private Citizen): No, I do not.

Mr. Chairperson: Okay, the floor is all yours.

Mr. Mroz: Thanks, Mr. Chairman. I just have a few notes here, and thanks to all of you for coming out to Beausejour. There are just a few provincial issues I would like to talk about. I guess one that has been in the papers is, it seems that farmers in the past-because the education taxes are based mainly on land, and so forth-it seems that we are paying a disproportionate share of the education taxes. I am just thinking that maybe some of these taxes could be transferred more to the residential; that we would pay on our residential but not on our farmland as well. It is almost like we are being taxed extra for that.

Another thing, I have to also talk about the drainage systems. The province has to be putting more dollars into construction and maintenance of the provincial drains. It is just like our reeve, Mr. Tymko, was talking about here, that we are falling way behind in our area. I think my dad and a lot of the fellows for their whole life have been up against the bureaucracy. It seems like every four years there is another election and we start all over again. I think it is high time that things got looked after. The Bachman Drain is an example, and there are a lot of others in the area. It is our livelihood and it is costing us money for generations around here. It seems like we always get pushed to the side and forgotten about, but I hope that things can improve in this area as far as drainage goes.

There are a few issues on crop residue burning that the province has divided into zones. It just seems to me that there are a lot of fellows who are specialized into different crops and so forth, and they have to do some residue burning. There are days when these areas are maybe a little too large and climactic conditions are different. I am wondering if those areas could be maybe reduced. For example, our Red River southeast zone, I think it pretty well goes right to the border and all the way to the lakes. That is a pretty large area to have the same weather pattern affecting everybody. So I was just wondering if some of those issues could be looked at.

Another issue is our energy costs. I think that governments, federal and provincial, should be spending more time and effort into ethanol production, bio-diesel fuels, that we can use our own grains and renewable resources to produce our own energies. An example, you could be lowering taxes on these fuels to encourage production of them as well as lowering taxes at the pumps to encourage consumption of these fuels. If these governments were serious about helping out with our energy costs and having them renewable and generated in Canada, we could add a lot of jobs, we could reduce costs, and we could do much better for our provinces I think by using up some of our grains and products to produce these fuels, instead of relying on others. I do not think there is anybody who would disagree with that, but there seems to be a lot of talk about it but no action. I think it is time that we maybe take some steps forward and do something about this.

There is also this situation of our products, for example, malting barley. I am going to have to use that one. When a farmer grows 160 acres of malting barley, I think it is close to $2 million in taxes that are generated from that quarter section of land. We are barely breaking even growing these crops.

In 1997 alone, over $3 billion in federal and provincial taxes were collected from that barley. There are six years you can take from the period of 1987 to '97, over $17 billion in taxes were generated from products that farmers produced. That is just on the domestic beer sales. Those taxes do not include payroll taxes in the production of these products, the transportation and advertising on "Hockey Night in Canada" nationwide. None of that is included. It is just sales at the vendor.

The products that we produce are the products that are put into the system that the whole industry and the whole country benefit from-those products being in existence. It is we who are taking it on the chin trying to grow these products for everybody else in the system to benefit on. It is just a matter of having some of this money redistributed back into the western provinces and the Canadian provinces, that when things are down we could maybe receive some of the funds back that our products helped generate for the good of the country. When things are good, those monies in the general revenues are spent right throughout. So I think it is time some of the value of our products is coming back to where it is really needed. I can go on for more on that topic but it is just a matter of us providing products and everybody else benefiting from them.

I guess one of the biggest things that I think could probably help our prices is a set-aside program. The Americans use set-aside programs, and so do the Europeans. It seems like Canada for some reason does not have a set-aside that I am aware of. Some of the grains produced from these set-aside acres could be used in bio-diesel fuels, they could be used for ethanol production, they could go into grasses, but basically it would reduce supply and probably increase prices.

For example, if we could double the price of grains or triple them in Manitoba and Saskatchewan we could turn those two provinces into, instead of being have-not provinces-just look at Alberta, for instance. The natural resources are coming out of the ground. They have paid down their debt, they reduced their taxes, they have money for schools and roads and they have dollars to spend for everybody. It all came from the ground.

By increasing prices and the money that would be generated and the revenues from increasing commodity prices, the revenues and everything would show the increases from the land from Manitoba and Saskatchewan. We are being robbed in these two provinces. We have products that are valuable to the economy. We are just not being paid for them. If we were paid for them, those dollars could be redistributed back through the whole system.

The examples out west, it could happen to us. If we had cut back our production, I think things would have worked that way. Basically, that is about all I have to say. Thanks very much.

Mr. Chairperson: Thank you, Mr. Mroz.

Ms. Wowchuk: Thank you, Brad, for your presentation. You covered many good points. You have talked about the residue burning. Certainly those are good suggestions that should be reviewed. Also on the issue of ethanol and bio-diesel fuel, it is a suggestion that has been made by others and one that our government is committed to working towards.

The program I want to ask you a question about is the land set-aside. Many have talked about this program. I would ask you, in your view, when you go to a program of land set-aside, do you look at this as a program where the land would be just completely taken out of production, or do you see set-aside as putting it into hay or pasture where the farmer can continue to use it, and what kind of a payment do you see as being a viable amount in a set-aside that would be something that would be worthwhile for a farmer to consider?

Mr. Mroz: I believe if you take the acreages out of the major crops, those are the acreages we have to target, as far as the oilseeds and grains basically. They can also be put into crops for industrial purposes, such as ethanol, those kinds of things. Those programs alone would reduce production, right, or increase consumption, but I would say $60 to $80 an acre is what a farmer would need probably to maintain those acreages. There is talk about the carbon credits and the value to environment. These set-aside acres also pretty well have to be explained as to the benefits to the whole of society as well. There are areas where grasses can be planted; they could be put into other things as well.

Ms. Wowchuk: What you are talking about is mainly taking out of grains and oilseeds the areas that are having the most difficulty right now, and looking at alternates.

Mr. Mroz: I think so, yes.

* (20:00)

Mr. Praznik: Brad, you have some excellent ideas. When you are talking about education and drainage, I suspect that leads to a major rethink of our whole property tax system since provincial and municipal governments are sharing drainage and taxation, and we are seeing education as a shared responsibility and yet a standoff between the two. So a major rethink is probably something on the agenda.

I wanted to ask, though, about the ethanol. I gather, in developing alternative uses for the products we grow, seeing a change in the fuel tax rate that would result in ethanol being a penny or two a litre less than nonmixed gasoline because ethanol is really right now about a 10% mix if I am not mistaken, if we did see a provincial tax change or a federal tax change that would result in a penny or two differential, that, I would suspect, would lead to a huge demand for ethanol gasoline. I suspect that would be the only thing sold the province.

So your advice to a Minister of Finance considering that in an upcoming budget would be to look at having a differential between regular gas and gas with ethanol to create that new market?

Mr. Mroz: Yes, that is what I think. Whatever governments, federal or provincial, can do together. To, first of all, set things up so the industry can get started as far as producing more of the product, and then having a price structure in place where the consumers are going to be buying that product. It is a twofold thing. First you have to get the system going, and then setting up a demand where people will be purchasing it.

Mr. Gerrard: Just on the education taxes, it seems to me that it may not be quite as sort of complex to do as the member from Lac du Bonnet suggests. It could actually be done quite simply, either by eliminating the education tax on farmland or alternatively by providing a provincial rebate for the education tax on farmland. Do you want to comment?

Mr. Mroz: Well, whatever can be done. It just seems that we are paying on our residential plus our farmland. I am just thinking that there is a way that we could shift that over so it is more fair.

Mr. Ashton: I was quite intrigued by your discussion about what comes out of western Canada. I am just curious. Just the two quick questions I will ask are: if perhaps when we are looking at how we are going to deal with the agriculture situation, do you think that maybe we should start with looking at what happened when we eliminated the Crow rate-which essentially western Canada had a two-year buyout? There is $800 million, $900 million a year that used to come in a benefit to western Canada and now basically is sitting in Paul Martin's surplus every year.

I am wondering if you think maybe that is where we might want to start, because that was a direct benefit to western Canada and to agriculture, in particular.

Mr. Mroz: Absolutely. There was $720 million a year annually, and it was sold on a diversification and so forth. On our farm, I know at the time it was taken out I believe the figure I used at that time was a $140,000 increase in freight charges or $140,000 less for my wheat. That is just one farm, and you can check, the numbers are out there. Like, that is a huge hit, and we have all had to absorb that. The fact is we could not absorb it. We were told things will be better and we will diversify. Fellows around here backed out of wheat. They went into alfalfa seed. They went into other forages. They went into livestock. They have done everything, and all they have done is increased their debt load, and then the livestock prices crashed. Everything that was predicted as far as taking the Crow rate away and adding value, it added value to the agriculture industry but not the farmers.

I have not seen any grain prices, any livestock prices or anything really, really benefit long term from the removal of the Crow rate. Our transportation costs have gone up. Our roads have been pretty well demolished since then. I think they are going to get worse. So, absolutely, that is where the dollars could start to come from. There are a lot of other places.

Mr. Ashton: I appreciate your comment on the highways because that is the big challenge. The other question I had is, just to focus on immediate things that could be done, I am wondering if you think perhaps the federal government should treat farm fuel in the way in which the provincial government does. This is something that has been in place for many years, because one thing that just amazes me is the fact that despite the farm crisis farmers pay a heck of a lot of money to the federal government in fuel-related charges that they do not have to pay to the Province of Manitoba.

Mr. Mroz: Yes, that is another place, absolutely. They say one thing, they do another. The federal government has a lot of different ways that they could reduce our costs, and a lot of different revenue sources where they could pass the dollars back. It is like a neighbour of mine was saying: When there were farmers protesting this winter looking for additional funds to help us put a crop in the ground, and things were running short, there were a lot of farmers in the streets in Ottawa, right across the country and on the steps of the legislatures. Never once, and maybe I missed it but maybe you guys have seen it, that a lot of the public standing up and saying no, do not help the farmers out, do not help western Canada out.

It was not because people protested that the Government of Canada should not be helping agriculture; it was because they decided on their own. There was no pressure telling them not to. I could see it if the general public stood up and said: We do not want to support agriculture; we do not need it; and we do not want it. It is all coming from higher than that. You are right. They have a lot of ways to do it, and they are not doing it. That is their decision.

It is funny that they are sending the federal Fisheries and Oceans department, I think, to come out and maintain our drainage systems and to, I guess, oversee our drainage systems to make it harder, that we buy backhoes and we buy equipment to drain land out here. I think what is happening, and people can correct me if I am wrong, but the federal bureaucracy is coming out here and is going to start issuing permits and telling us what we can do with our equipment and how we can drain our land.

Those same federal Fisheries department people probably were the same ones that shut down the cod fishing industry in eastern Canada. You can just watch over the years how federal government dollars have been ratcheted down: removal of the Crow, removal of the two-price wheat system, not helping with farm fuels, not doing anything, and they are ratcheting down their support. Why do you think it was 90 million available this year in a program, 100 last year? If their trend is to ratchet down agricultural support, 90 is less than 100. That is their idea, that is their plan. They let the Fisheries department be overfished; they are letting us farm until they decide to shut us down.

Vanclief has been in the paper talking about transitional funding to help people get out of farming. There is no funding, there is no talk about keeping us in it. They are talking about getting us out. When they send the federal Fisheries department out here to western Canada, it sure looks like that is their plan.

Mr. Pitura: That is an interesting comment you had there. I am going to switch speed a bit and go back to this set-aside. On the set-aside program that you had mentioned, any thoughts about a minimum period of time that the land would have to be placed and set aside? I believe you mentioned $60 to $80 per acre payment. Would that be an annual payment or one payment for the entire time?

Mr. Mroz: I am thinking annual as far as land costs go. That is our land and we have payments to make and so forth, and I am thinking annual.

Could you repeat your question?

Mr. Pitura: On the set-aside program, was there any kind of minimum time that you were thinking about that land would have to be set aside, for three years, one year, five years?

Mr. Mroz: It would have to be a longer term. I do not know, I would think at least five or ten years probably. It would have to be something that you are committed to, that is what I would think.

Mr. Chairperson: Mr. Penner, for a quick one.

Mr. Jack Penner: I was really interested in your comment on education taxation and the removal of education taxation from farmland. I do not know what your tax levels on education are on your land over here, but around the Montcalm-Letellier area, where I farm, we pay between $7 and $8 an acre now on education tax alone. That becomes a very high cost per quarter for education. The amount of money that farmers contribute in that school division is an inordinate amount of tax for education. How would you design a new program of taxation that would eliminate the requirement of land to be taxed, and how would you fund it if you had your way?

Mr. Mroz: I would think I would probably do it over time. I would probably gradually take it off of land and transfer it over to residential. That is how I think I would do it, and spell it out, and over a 10-year, 5-year period that 20 percent of the education tax will be removed from farmland this year and placed on residential throughout the whole province. Put it up front and say what is happening and explain the reasons why. We have a house, and we have land too. Why are we over, double-I do not know if you call it double-taxed or what, disproportionate, I guess. I would do it over time, and I would do it gradually.

Mr. Chairperson: Thank you very much, Mr. Mroz, for your presentation, and have a good evening. Mr. John Sokal, the councillor for the R.M. of Springfield, with Mr. Wayne Drul on deck. Just for the information of the committee and also for the information of Mr. Tymko, I have copies of the letter that you tabled, and it is being distributed to all of the members of the committee.

Mr. Sokal, do you have a presentation to be distributed to members? Thank you very much. The floor is yours.

* (20:10)

Mr. John Sokal (Councillor, R.M. of Springfield): This presentation is to the Standing Committee on Agriculture, Manitoba Legislative Assembly, from the council of the Rural Municipality of Springfield, Oakbank, Manitoba, the subject being rural and agricultural crisis. The council of the Rural Municipality of Springfield is grateful for the opportunity to address the Standing Committee on Agriculture of the Manitoba Legislative Assembly relative to the ongoing crisis in rural Manitoba and this nation. The financial crisis in agriculture is far-reaching. Across Canada farmers are struggling to deal with weakening commodity prices and rising input costs. This is having a profound impact not only on producers and their families but also in the communities in which they live and work. This is not just an agricultural crisis, it is a crisis that threatens the social fabric of Canada itself.

Attached to this brief are copies of two resolutions enacted by the council of the Rural Municipality of Springfield on April 3. Both refer specifically to the local situation, while the resolutions make reference to only a handful of the numerous problems the agriculture sector generally is currently attempting to contend with.

Our producers are subject to all of the following: Prohibitive capital investments; extreme financial risks; world market conditions; international trade policies; foreign government subsidies; the loss of the Crow rate subsidy; rail line abandonment; closure of grain elevators; a deteriorating transportation infrastructure; labour disputes; decreasing numbers of family farms and increasing larger corporate farm units; a lack of tolerance and understanding from nonfarm residents; a shrinking labour pool; climate changes and meteorological conditions; diseases and pests; and overregulation.

An infusion of public money will be helpful in the short term. There are none more resilient than the farmer. Things will get better, is beginning to be heard emanating from their mouths again as they patiently wait for more favourable conditions before returning to their fields. In the long term, governments need to honour this resiliency, and not to seek to take advantage of it. Governments and society in general appear to be paying little heed or could not care less about the impact sustainable development policies and land-use regulations are having on the agricultural sector.

For example, Provincial Land Use policy No. 2: Prime agricultural land and viable lower class land should be maintained for economically sustainable and environmentally sound agricultural use and development.

You cannot have your cake and eat it too.

A healthy environment is essential for long-term economic development. This principle implicitly requires all Manitobans to unconditionally acknowledge responsibility for balance between environment and the economy. Every segment of society must be accountable for decisions and actions. Regrettably, there are too many people that expect the agricultural sector to bear the brunt of paying for today's ills. These same people also expect the farm community to pay the price to ensure the survival of the human race today, tomorrow and into the future-by forcing them to produce food products at a price and in a manner that is not sustainable of their economic viability. This is totally unacceptable, and must be changed. There is a dire need to work co-operatively. There must be a level playing field.

In an area like Springfield, our most valuable land is on flat terrain and consists of heavily impervious clay soils. Draining is essential to productivity. In the last 10 years the provincial budget for drain construction and maintenance has been slashed with the result that local authorities, the municipalities and conservation districts do not have the resources necessary to provide adequate drainage. The farm community consistently loses large amounts of money as a result. In Springfield there is a significant rural residential and hamlet development with the result that there are land use conflicts. The planning response is to restrict the ability of farmland owners to sell their valuable farmland for other development opportunities. At the same time proximity of residential uses and quality-of-life concerns restrict the farmer's ability to fully diversify their agricultural activities and to take full advantage of chemical herbicides and pesticides.

Farmers should be free to realize the maximum available value of their resources. Allow farmers to diversify. Compensate them if they are not allowed to. Protect them from those that are driving farmland values down by advancing schemes requiring measures to be initiated in the form of provincial land use policies, sustainable development policies, and municipal development plan policies-to prevent them from succeeding, while demanding at the same time that their own prosperity and lifestyles be protected and/or enhanced.

The family farm is in crisis. One in seven jobs in Manitoba depends on the production gained from soil and water resources. Manitoba's economic growth and competitiveness is tied directly to the growth and prosperity of agriculture.

The Rural Municipality of Springfield believes that action should be taken at all levels of government to protect and support the family farm, and commit ourselves to become more and better aware of the way in which our own spending priorities and regulations can be improved to lessen the burden.

Respectively submitted, Reeve and Councillors of the R.M. of Springfield.

Mr. Chairperson: Thank you very much, Mr. Sokal.

* (20:20)

Ms. Wowchuk: Mr. Sokal, thank you for your presentation. Again, you have outlined some of the issues that seem to be the most pressing here in this area of the province. I have a couple of questions to ask. I want to first ask about-you talk about the drainage issue, and many have talked about the drainage issue in this area and how important it is. We were also talking about the need to put money into safety-net programs. Is it your view that drainage is the most important issue, particularly in this area, and if that issue is addressed, then farmers will have a lot easier time making a living?

Mr. Sokal: I believe that both issues are important. I am not very fully conversant on the various programs that are available to all the farmers-NISA and GRIP and so forth. From my standpoint, I believe that drainage is quite an issue with our farming communities, and the fact that on the east side of Winnipeg and the west side of R.M. of Springfield, we do have quite great concerns about getting the water into the floodway. We are so close, within a half a mile, and that water just cannot get into that floodway when that floodway is empty. We do need improvements and drop structures all the way from the west side of the Bird's Hill Park, which adjoins St. Clements, all the way down beside Winnipeg and right down to the R.M. of Ritchot. There are many things that I have written down to be presented with our council with government resources, that in the future some of these things will have to be addressed in order to get the drainage back more into order.

The Cooks Creek Conservation District-they are quite responsible for a large portion of the drains in Springfield, and they go along to the Cooks Creek, through St. Clements, and then into the Red River. A lot of the properties are private property, and a lot of the people do have small forage crossings across, and there are various blockages in there. It is quite a problem in the last five years that I have been on council. It has been discussed: how do we get into that to get all this cleared out? Whether there should be easements or government possibly buy so much side acreage on each side of the creek, so that we can get drainage cleaned out in there. These are more issues that have to be addressed.

Mr. Jack Penner: Mr. Sokal, on the second page, first paragraph, you talk about the healthy environment that is essential for a long-term economic development in rural Manitoba. Last week in Brandon and Dauphin, we heard presenter after presenter articulate what the shortfalls would be this year if normal average crops were derived from the land based on costs that they already knew they would have. Can you give us an estimate as to what you think the per-acre losses will be and what would be required to underpin those losses this year alone by the federal and provincial governments?

Mr. Sokal: That I am not able to do. I have not done any studies as far as percentages, numbers or figures. I have not been very conversant with that part of it. I think some of the presenters prior to me gave very good presentations on facts and figures and numbers, which I guess from the municipality here we just gave in generalities. I guess possibly we should have gone into some of the figures too, to be a little bit more presentable on some of our comments over here. I think we failed a little bit somewhat in that regard.

Mr. Jack Penner: One last question. You talk about sustainable development, the need to fund sustainable development properly, and how the agricultural community contributes to sustainable development. When the minister's department, the Department of Agriculture, has estimated that the average losses for grain crops, barley, wheat, and Canola will range anywhere between $30 and $70 an acre this coming crop year, based on current numbers that we know. Would you agree that those numbers are relative in this area, and is that the kind of money that would be needed to ensure that farmers could be sustainable over the long period of time?

Mr. Sokal: I believe so, but I think that more accounts would have to be taken into consideration with the rising costs of fuel last year, and also the increases in the fertilizer. It has been said by many producers in our areas that they are talking about a $25 per acre increase in this year's input into the crop, as compared to last year's. I am sure that would have to be taken into consideration.

Mr. Gerrard: When we were in Brandon, we heard that situations were so bad in some municipalities that there were large tracts of land-I think in Blanchard something like 100 quarter sections-which were up for sale or rent and there were no takers. Can you tell us a little bit whether there is anything approaching that in this area, or whether there are farmers who are deciding not to farm because the situation is so bad?

Mr. Sokal: In the last two to three years, some big farmers from abroad have come across into Springfield and have purchased large tracts of land. I have not been conversant with them to see how economic it has been for them in the last two to three years in the wet conditions that we have had. We do know that they have big equipment, big transportation facilities. I am just not too sure where their margins are as compared to the average family farm situation.

I believe that the second question was to do with tracts of land.

Mr. Gerrard: Whether in fact there were farmers who were looking at the situation and deciding it was so bad that it was not worth farming.

Mr. Sokal: There has been talk going around in Springfield that some of the producers are finding that they may be in a position where they may have to sell or put their land away for a while because of severe losses they have had in the last two years. Here again, I do not have any figures on their input costs and what their net gains were from it. I failed to do that part of my homework on there.

Mr. Praznik: I just wanted to make a quick comment. The Minister of Agriculture asked Mr. Sokal, in her first question, about whether solving the drainage problems would put us in better shape. Given that this is my home turf, I just wanted to assure that although drainage is important, the fundamental need to address the income issue, as I am sure Mr. Sokal would agree, is just paramount. The drainage is very important but without the income issue addressed, it really is a superfluous issue. Our farmers do not have the income to carry on. Drainage is very important, but what we are here for in the short term, increased support payment at this time is still the number one issue. I am sure Mr. Sokal would concur.

Mr. Chairperson: Mr. Sokal, do you have any statements?

Mr. Sokal: No, I concur with his statement. It has still been quite a priority with our producers in our area about the drainage issues, and we have to get them corrected in order that they can continue on.

Mr. Chairperson: Thank you very much, Mr. Sokal.

Mr. Sokal: Thank you.

Mr. Chairperson: I would like to call Mr. Wayne Drul to the microphone. On deck we have Mr. Bill Chuckry.

Mr. Drul, do you have a presentation to be distributed?

Mr. Wayne Drul (Manitoba Vice-President, United Grain Growers): Yes.

Mr. Chairperson: Thank you. Mr. Drul, we are all yours.

Mr. Drul: Thank you, Mr. Struthers, ladies and gentlemen of the Standing Committee. I will not be reading my entire presentation tonight, in the interest of time. I would like to just begin and thank you for this opportunity.

* (20:30)

UGG is one of the largest agri-business firms in western Canada, employing over 1500, including more than 500 in Manitoba. Founded in 1906, the company's core businesses include grain merchandising, farm-input sales and service, livestock production services, farm business communications, and farm financial services.

UGG is governed by a 15-member board of directors, including 12 elected farmers. The comments and recommendations we put forward here today are based upon policy resolutions adopted by UGG farmer members at our annual general meeting and advice we receive from our network of 105 policy advisors.

UGG is pleased to add its voice in support of the resolution put forward by your Committee. As your resolution properly notes, the financial difficulties facing prairie farmers are largely the result of decisions in policy areas that fall under federal jurisdiction. For this reason, UGG rejects the notion that federal support to farmers be cost-shared with the provinces on a 60-40 basis.

The reduction in federal farm income supports, shortcomings in federal agricultural policy, and the failure in international trade negotiations to adequately protect the interests of prairie grain producers are at the heart of the financial difficulties facing western farmers. We provide comment in each of these areas.

Under farm support, federal farm support in the Canadian agricultural industry has declined over the past decade. This is especially true for the three Prairie Provinces. A decade ago, federal government expenditures in support of agriculture in the three Prairie Provinces averaged $2.6 billion annually. Since then, federal expenditures have declined by 43 percent to $1.5 billion annually. The share of federal dollars going towards the three Prairie Provinces has also declined. Where we once received over 60 percent of federal contributions, Prairie Provinces now receive less than 55 percent of the federal spending in agriculture.

While the overall trend is disturbing, the decline in support to prairie agriculture is even more alarming when you consider that it is grain producers in the three Prairie Provinces that are bearing the brunt of low prices caused by international price distortions.

Western Canadian farmers are being hit particularly hard by the federal government's decision to sharply lower its level of farm support, without securing reciprocal agreement from the European Union, the United States and other countries to put support of their farmers on an equal footing with Canada. The production and trade-distorting policies of these other countries are widely acknowledged as a main cause of depressed farm incomes among prairie grain farmers. We note that the federal cutbacks in support of prairie grain, oilseeds and pulse producers were far in excess of Canada's commitments under the WTO agreement.

The U.S. marketing loan program is also having a serious detrimental impact on prairie farmers, particularly Canola producers. Under the program, the U.S. government establishes loan rates, which effectively provide a floor price for each commodity. These loan rates are established at a national level, and then are adjusted for each county, depending on the county's distance to the nearest terminal elevator. U.S. farmers can then trigger a loan deficiency payment whenever the county market price falls below the county loan rate established for that commodity.

The high U.S. loan rates encourage greater production, as more acreage is planted and farmers use more fertilizer and chemicals to boost yields than would otherwise be the case. In addition, the relatively high support price for soybeans is encouraging U.S. farmers to plant more soybeans, at the expense of corn, barley, and perhaps wheat. As you may know, Canola oil competes directly with soybean oil, and so increases in soybean production have a detrimental impact in Canola prices.

The pain for Canadian Canola producers does not end there. The high U.S. loan rate for Canola is also encouraging U.S. farmers to grow more Canola, when market signals would normally be telling them to cut back acreage.

We note as well that North Dakota county loan rates for Canola are somewhat above the national loan rate, ranging from U.S. $4.66 to $4.94 per bushel which, in Canadian funds is approximately $7.20 to $7.65 per bushel. By comparison, spot prices for Canola in southern Manitoba are currently about $5.80 per bushel. The forward price for fall delivery is approximately $5.65 per bushel. In other words, U.S. farmers can expect to receive almost $2.00 per bushel more for their Canola than their Canadian counterparts.

This wide disparity in expected market returns is reflected in seeded acreage intentions. Canadian Canola acreage in 2001 is expected to decline by 23 percent to approximately 9.3 million acres. This is on top of a 13% acreage decline in the previous year. By comparison, U.S. Canola acreage in 2001 is expected to increase by 21 percent to 1.9 million acres. This is on top of a 46% increase in the previous year.

Canadian farmers are left on their own to bear the full brunt of market distortions caused by the U.S. marketing loan program. In contrast, the U.S. government program not only shelters its farmers from low market prices, but aggravates the situation further by encouraging farmers to grow more Canola and soybeans than they would otherwise.

In our view, the Canadian government is not doing enough to address this situation. We recognize the Canadian government may be limited in its ability to convince the U.S. government to reign in its farm support but, at the very least, greater effort should be made to ensure the Americans do not support their farmers in a manner that is so blatantly production and trade distorting. Failing this, we believe the Canadian government has an obligation to provide offsetting trade equalization payments. We will have more to say on this later.

European oat subsidies. Western Canada has enjoyed good growth in the production, processing and export of oats since the crop was removed from the jurisdiction of the CWB in 1989. Despite this success, further expansion in the Canadian oat market is being undermined by American imports of highly-subsidized European oats. These subsidized oat imports negatively affect oat prices on both sides of the border and have limited Canadian oat exports to this important market.

UGG has raised this issue with the federal government on several occasions. However, there appears to be a little progress in resolving the issue. In December 1998, Canada and the United States signed a Record of Understanding concerning several cross-border agricultural issues. One of the commitments under the ROU was to work together to encourage the European Union not to subsidize oats exported to North America. To date, we have seen no evidence of progress on this issue. The Europeans continue to heavily subsidize oats exports to the U.S. In the current crop year, the Europeans have authorized shipments of 664 500 tonnes of subsidized oat exports in an average maximum subsidy level of $32 U.S. per tonne.

We find it incredible that U.S. and Canadian governments continue to allow European subsidized oat shipments to be freely exported to North American shores, to the clear detriment of North American oat producers.

In the interests of Manitoba producers, processors and exporters of oats, we would urge the Manitoba government to determine why there has been no progress on this file, and to seek compensation from the federal government if an end to these subsidized oat shipments is not in sight.

The grain industry in western Canada is primarily export-oriented and as such, securing higher prices for prairie farmers is highly dependent on obtaining unfettered access to foreign markets. The elimination of tariffs and other import restrictions on grain and grain products under the Canada-U.S. Free Trade Agreement has contributed to the strong growth in exports of most grain and grain-related products to the U.S. market over the past decade. However, Canadian governments must remain vigilant to ensure access to this important market is not compromised.

In this regard, we wish to acknowledge and thank Minister Wowchuk for the role she recently played in ensuring the North Dakota Legislature did not go forward with border measures that would have severely hindered the access of Canadian grain and grain products into the U.S. markets. While Canada has enjoyed success in securing improved access for grain and grain-related products into the U.S. and Mexico, tariff and non-tariff barriers in other countries remain high. In our view, the Canadian government has not been aggressive in seeking reductions in these tariffs, particularly in Asian and South American markets. While we are hopeful the negotiations under the proposed Free Trade Agreement of the Americas and the WTO will lead to improved access to markets over the long term, we believe the federal government should be engaging in more bilateral trade arrangements over the near term so as to reduce or eliminate many of these high-tariff barriers on grain and grain products.

* (20:40)

Across the Prairies, farmers are exempt from paying provincial taxes on farm-used fuel; however, farmers are not exempt from paying federal excise taxes on either diesel fuel or gasoline. The current rate is 4 cents per litre for diesel fuel and 10 cents per litre for gasoline. In our view, this represents an unwarranted tax burden. We can accept paying fuel taxes for that portion that relates to road travel. However, in the case of diesel fuel used by farmers, we estimate that 95 percent is used for field work. In our view, these fuel taxes represent an unwarranted tax on food production.

We note that the manufacturers of most other goods are not subject to this extra taxation. We further note that these taxes weigh disproportionately on prairie grain and oilseed producers which tend to be more fuel intensive than other types of farming operations. The Prairie Provinces have recognized the inappropriateness of taxing fuel consumed in farm operations. We believe this principle should also apply at the federal level and would encourage this committee to seek an exemption for all Canadian farmers.

Good roads are essential to ensuring Manitoba farmers have good access to competitive markets and competing businesses for both their farm inputs and production. In '99, UGG commissioned a study by the University of Manitoba Transport Institute to examine the relationship between fuel taxes and road expenditures. The study found that the Manitoba provincial government's expenditures on roads were in line with the fuel tax revenue. In '97-98, the Province of Manitoba spent $232 million on roads, or roughly $1.06 for every dollar of fuel tax revenue collected. This compares reasonably favourably to Saskatchewan and Alberta where provincial road expenditures as a proportion of fuel tax collections amounted to 68 cents for Saskatchewan and $1.18 in Alberta.

The picture at the federal level is much more dismal, however. The Transport Institute found that the federal government collects about $4.5 billion in road fuel taxes and yet spends only $200 million on road construction or less than a nickel for every dollar it collects in fuel tax revenue. On the Prairies, the amount spent by the federal government on roads is, or at least was at the time of the study, less than 2 cents for every dollar collected. We note, as well, that these federal taxes discriminate against businesses in rural areas where shipping distances to market are often greater.

We would urge your committee to take whatever action it feels necessary to ensure federal expenditures on prairie roads are increased. UGG believes that changes must be made under the Canadian Wheat Board Act that would remove the impediments to new generation co-ops and other value-added processing initiatives for wheat and barley on the Prairies. We believe these ventures offer farmers some genuine opportunities to add value and increase their farm incomes. We note, for example, that the Ontario wheat farmers are permitted to market 150 000 tonnes, or about 10 percent of their crop, directly to processors. We find it unacceptable that growers in one part of the country are accorded marketing opportunities that are denied to growers of the same commodity in another part of the country.

Intransigence on the part of the Canadian Wheat Board and the federal government is preventing these opportunities from being realized. We ask your committee to seek the elimination of these impediments to the expansion of the grain processing industry in western Canada.

For the above-noted reason, UGG believes the Prairie Provinces have a strong case for obtaining federal farm support far beyond what has been allocated to date. That said, we believe that the additional $500 million-as proposed in your resolution-is probably the most that might reasonably be expected, given today's political climate at the federal level.

As we noted earlier, given that the financial hardship facing prairie farmers is largely a result of federal policies, we do not believe there is any jurisdiction for a cost-sharing arrangement with the province or on any additional support payments. In our view, any farm support program should adhere to the following principles: the program should be production and enterprise neutral; should not encourage the growing of certain crops over others; nor should it encourage one type of farming operation over another.

Programs should ensure farmers continue to follow sound management practices. We believe that the equalization payments that NISA provides is an effective basis for the federal and provincial governments to provide additional income support to farmers, as has been the case under the Canada-Manitoba Adjustment Program. In our view, these adjustment programs generally fit the criteria as noted above, although we believe that some recognition should be given to those farmers who grow and feed their own grain to livestock.

I am going to skip over to our summary. A sharp decline in federal financial support to the farm sector, particularly to farmers in the Prairie Provinces. Over the past decade, federal support to prairie farmers has declined by 43 percent, despite the ongoing presence of highly distorting and price-depressing subsidies in our countries. The seemingly passive acceptance of the U.S. marketing loan program is strongly encouraging U.S. farmers to overproduce soybeans and Canola to the severe detriment of western Canadian Canola producers. The European Union continues to heavily subsidize owed exports to the United States, despite an agreement between Canada and the U.S. that greater efforts should be made to eliminate this practice. Tariff and non-tariff barriers for the grain and grain-related products remain high in many countries. The Canadian government does not appear to be aggressive in seeking the reduction, or elimination, of these trade barriers.

In conclusion, UGG believes that the arguments in favour of additional support for the federal government are well-founded and should be dealt with on an urgent basis. We add our voice and support of the all-party resolution. UGG remains committed to this industry and is optimistic with respect to its long-term future. Thank you for this opportunity to put forward our views. I look forward to any questions you may have.

Mr. Chairperson: Thank you very much, Mr. Drul. We have several people who are on the list with five minutes remaining. Ms. Wowchuk is first, followed by several people, so keep your speeches short and your one question succinct if you would, please.

Ms. Wowchuk: Mr. Chairman, if I could ask you a question. Mr. Drul has rushed through his presentation. Can you indicate whether his presentation will be printed completely in the report?

Mr. Chairperson: If there is leave of the committee, agreement of the committee, we can see that that happens. Is there leave for that to happen? [Agreed] We will start with the five minutes now.

Ms. Wowchuk: Mr. Chairman, I want to ask, through you to Mr. Drul. Have you looked at the safety net programs and have you thought about-there has been a lot of criticism of AIDA and I believe you said in your comments that AIDA has not been effective. Have you given any thought to what the best mechanism would be to deliver a program to farmers? Others have talked about enhancing NISA. Has UGG thought about what the mechanism would be for a long-term safety net program?

Mr. Drul: Yes, we have looked at this mechanism I guess for some time. I guess we feel that the NISA program has worked reasonably well. We could see adding to that program and we could also see taking funds from AIDA and the other programs, CMAP, is it-anyway, the other program, and administering that portion of the unused program so to speak through the NISA program. We feel that the NISA has been as fair as possibly can at this point in time. It is a good program and we should continue using it.

Mr. Ashton: I think my question has an area of direct interest. It should be of interest to everyone, and certainly the former Minister of Transportation and myself here, on fuel taxes. To be fair to the federal government, this year will be the first time there will be any federal money on the road system in Manitoba since 1996-the Grain Roads Program. It is about $6 million. You have documented what goes out. I am just wondering if you think that is sufficient? Or indeed, if you consider the fact the federal government takes out in fuel taxes in excess of $140 million every year; an amount that would be more than double our existing capital budget, whether in fact that is a very small start? Do you feel that they should be putting back far more than they are putting in this year on the Grain Roads Program?

Mr. Drul: Yes, I think that, overall, the funds that are collected by the federal government have been a very, very small proportion than was put out. Even $600 million today is not a whole lot of money in comparison to the money that is being collected. Our policy has always been if you put in a tax for a particular project that is earmarked for highways or what have you, road infrastructure, that is where those funds should be allocated. So, yes, our answer would be that we feel they are definitely under-what would be the proper word?-definitely not giving us the money that we deserve-

Floor Comment: They are ripping us off.

Mr. Drul: They are ripping us off.

* (20:50)

Mr. Praznik: Mr. Chair, I must say the current minister of highways and as the former minister of highways, this is an issue that we have talked about and are totally on side together, I believe, in advancing. The only place I disagree with the minister is he said it is about 147 million. I think his numbers are probably wrong for this year with the increased price of fuel and given the federal tax is based on a percentage, so it is probably 150 million, 160 million.

But I want to ask United Grain Growers a very pointed question. I have been urging this minister, and I think he is very interested in pursuing it and we have been kind of talking about this behind the scenes-but there really is a need for a major effort to lobby the federal government to move toward a dedicated fuel tax, putting their money into roads. I see Reeve Boznianin is here from Lac du Bonnet, Springfield. I have always argued they should get a share of that federal fuel tax as well. Would United Grain Growers give some thought to joining a national lobbying effort to take this cause up? I know the road builders are talking about that. There are other users, and if we do not make this a national issue, all we are going to continue to get are these ad hoc programs on roads while our infrastructure deteriorates, and my colleague is going to get $6 million which does not even buy him six miles of new highway. Is it something UGG would be prepared to consider?

Mr. Drul: Well, this would be something that I would definitely have to take up with the rest of my colleagues, no doubt. I would think, on the surface, it appears it would be a good thing, but as far as commenting what we would definitely do or not do is beyond me.

Floor Comment: But an interest.

Mr. Drul: Yes, definitely an interest.

Mr. Chairperson: The amount of time we had has expired. We still have three people on the speaking order. Can we move onto the next presenter and allow for other people to come in at that time? Would that be acceptable to the committee? [Agreed]

Thank you very much, Mr. Drul. Mr. Bill Chuckry of Chuckry Farms. On deck, be ready to go, Claude Roeland.

Good evening, Mr. Chuckry. Do you have a handout to be delivered to MLAs?

Mr. Bill Chuckry (Chuckry Farms): No, I do not.

Mr. Chairperson: Okay, the floor is all yours.

Mr. Chuckry: Good evening, Chairman, ladies and gentlemen of the Standing Committee on Agriculture and honourable Minister Wowchuk. I am a young producer who farms north of the community of Beausejour. I farm with my brother and my mother on a mixed-grain operation. I am married and I have two boys in my family. I am here to speak to you and to express my concerns as a producer about a suffering agricultural industry which I grew up with and love so very much.

My largest complaint is with our Crop Insurance Program. The problem with our current Crop Insurance Program is that it does not allow producers to have proper cost-of-production coverage. Our coverage is below the cost of production and it is not on a per acre basis. For example, if I grow four quarters-640 acres-of any particular crop-let us use Canola for an example-and one of those quarters drowns out, I receive zero return. If the other three quarters give me an average of 30 bushels an acre, I do not see any payment for my losses. Now to put those losses into perspective. One hundred and sixty acres of Canola costs $152.23 an acre based on operating level. Total operating costs are upward of $222 per acre. One hundred and sixty acres at $222 per acre is a net loss of $35,528 out of my pocket. Remembering that the larger the producer, the higher his losses could be, example, if he grew 10 quarters of Canola in that year and lost 2 quarters, he would receive no payment from Crop Insurance, and his losses would be over $70,000 net out of his pocket which cannot be recouped.

If I have one building and it is destroyed, my insurance company will pay me for that building. If I have four buildings and I lose one of them, my insurance company will pay me for that lost building. According to Crop Insurance standards, if I have four buildings and I lost one, I do not deserve any money because I still have three left. This is a fact. Crop insurance is also based on crop production on land or soil type. These are not fair coverages when the cost to produce is the same no matter what my soil type or land type is. Let us have proper insurance coverage against loss and implement an additional insurance program for commodity price stability. Give me cost of production. I will take care of my own profits. Producers must have long-term stability, one being cost of production, another one being commodity price stabilization, in order for the future of farming to prosper. A proper cost-of-production program-commodity stabilization program-which follows increased production costs is greatly needed, and will place needed funds into needy producers' hands at that time. It is because of these inadequacies of our present programs that the producers are so poor off today. Loss of a producer's crop, poor commodity prices equals bankruptcy. Thank you.

* (21:00)

Mr. Chairperson: Thank you, Mr. Chuckry. I have Mr. Gerrard, Mr. Maguire and Mr. Cummings, who did not get to speak when the last presenter made their presentations. If you three gentlemen are interested, I will take you first.

Mr. Gerrard: Your comments on crop insurance are quite incisive and instructive. Now, there would appear to be a couple of different approaches. One is to divide it up on a quarter basis or some other unit. So the question would be: What would be the unit of farmland that you would base it on? Or, alternatively, to increase the coverage from 80 percent up to 90 percent or 100 percent How would you change crop insurance to improve it?

Mr. Chuckry: Well, I think a very serious look has to be taken at the insurance program that is in place today. First off, when I have to pay costs on a per-acre basis, coverage should also go on a per-acre basis.

Now, as far as the level of coverage, let us remember that certain producers in different parts of this province can grow higher yielding crops. Not to say that land types do not change or govern maybe your production or bushels you can grow. At the same time, if a producer can only grow-let us say-a 30-bushel per acre crop of Canola, and if that production cost is $150 an acre, then allow him to buy or have $150 an acre of coverage. If he does not want $150 an acre of coverage, then allow him to have the amount of coverage he needs. In other words, if he is comfortable carrying $100-an-acre coverage, and it cost him $150, then he should be allowed to do that.

This is what happens with cost of production now. We producers have been pushing the far limits to grow the biggest crop we can. Commodity prices go in the toilet, we say we need more bushels to be able to make any money.

Now, to grow a 40 bushel per acre crop of Canola used to be unheard of 25 years ago. In this area up here, where we have good producing land, it can be done very easily. There are producers that can go to 50 bushels an acre. That is no lie, but remember one thing. The cost of fungicide is an added expense. The cost of having to put a sprayer in there again is an added expense. Wheat, disease, fusarium, malting barley, feed barley; all these have become additional costs to the producer. The producer knows his farm operatio