Legislative Assembly of Ontario

MINISTRY OF AGRICULTURE AND FOOD

CONTENTS

Wednesday 23 June 1993

Ministry of Agriculture and Food

Hon Elmer Buchanan, Minister

Ken Knox, assistant deputy minister, agriculture and rural division

Rita Burak, deputy minister

Bob Séguin, assistant deputy minister, policy and programs division

STANDING COMMITTEE ON ESTIMATES

*Chair / Président: Jackson, Cameron (Burlington South/-Sud PC)

Vice-Chair / Vice-Présidente: Arnott, Ted (Wellington PC)

*Abel, Donald (Wentworth North/-Nord ND

*Bisson, Gilles (Cochrane South/-Sud ND)

Carr, Gary (Oakville South/-Sud PC)

Elston, Murray J. (Bruce L)

*Haeck, Christel (St Catharines-Brock ND)

Jamison, Norm (Norfolk ND)

*Lessard, Wayne (Windsor-Walkerville ND)

Mahoney, Steven W. (Mississauga West/-Ouest L)

Ramsay, David (Timiskaming L)

Wiseman, Jim (Durham West/-Ouest ND)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Cleary, John C. (Cornwall L) for Mr Elston

Fawcett, Joan M. (Northumberland L) for Mr Mahoney

Klopp, Paul (Huron ND) for Mr Jamison

North, Peter (Elgin ND) for Mr Wiseman

Villeneuve, Noble (S-D-G & East Grenville/S-D-G & Grenville-Est PC) for Mr Arnott

Also taking part / Autres participants et participantes:

Murdoch, Bill (Grey PC)

Clerk / Greffière: Grannum, Tonia

The committee met at 1608 in committee room 2.

MINISTRY OF AGRICULTURE AND FOOD

The Chair (Mr Cameron Jackson): I'd like to call to order the standing committee on estimates. This is the first of our estimates as chosen by the committee and approved by the House. We will be commencing with seven and a half hours of the Ministry of Agriculture and Food.

We're very pleased to welcome the minister, the Honourable Elmer Buchanan. As you know, you have up to half an hour in the first rotation and then the two opposition critics will be afforded up to half an hour each and we'll proceed in that fashion.

Hon Elmer Buchanan (Minister of Agriculture and Food): I do have some staff in attendance. Perhaps I'll start off by introducing them.

Of course, most of you will know Rita Burak, who is the deputy minister, to my left; Ken Knox, assistant deputy minister, agriculture and rural division; Grahame Richards, who is the ADM, food industry division; Bob Séguin, ADM of policy and programs, and Bob is there; Norris Hoag, ADM of education, research and lab; David George, ADM of corporate services; Greg Brown, crop insurance and stabilization assistant general manager; Russell Duckworth, the chairman of the Ontario Farm Products Marketing Commission, a very important part of our operation, is not with us; Joan Krantzberg, director of the communications branch; David Thomson, director of resources and regulations branch; Len Roozen is here, director of policy analysis; Louise Stratford, legal services, is not with us yet; Richard Kirsh, general manager of financial planning secretariat; and Peter Rzadki, manager of policy coordinations, is behind me.

I'm very pleased to have this opportunity to present the 1993-94 estimates for the Ontario Ministry of Agriculture and Food.

Much has happened in the farming and food sector in the year since I last presented to this committee. Pressures brought on by global and domestic forces affecting the industry hit new heights in the past year. Specifically, we've had to deal with a sluggish recovery from the recession, uncertain trade relations and the demands of increasingly discriminating consumers.

In response, all of us -- farmers, food processors, workers, retailers and government -- have had to re-evaluate our priorities, refocus our efforts and reinforce our commitment to pursuing economic renewal and growth in the most forward-looking, cost-effective way possible.

At the same time, our rural communities recognize that they too have the resources and talents to regain their place as an integral part in the province's social and economic structure.

What we've seen and experienced over the past 12 months is not only a recognition that major change is taking place but a movement beyond this to dealing with change. Plans have been made, decisions taken and actions carried out throughout this sector, which is all too aware of the reality that it is no longer business as usual.

Intensifying competition from outside our borders has been a major factor in instilling a sense of urgency in our efforts to adjust and take charge of our future. The process has not been easy, and difficult choices have had to be made by everyone in view of the tight economic climate we've had to work in. But remarkably, out of the restructuring that is occurring has come a new cohesiveness. Rather than splinter into counterproductive camps, in several instances producers and processors, employers and workers, as well as farmers and other rural residents, have come together to share ideas and information on how they can thrive in a new, more competitive environment.

Today I'd like to take the committee through some of the ways my ministry has been an example of, and a catalyst for, reasoned approaches to change.

First I'd like to share with you an excellent example of the new spirit of cooperation that's growing in our industry. The Vision 2020 exercise started out as a way to get producers, processors, retailers, distributors and workers at a meeting where they could really talk to one another, find out what each other's needs were and perhaps find ways to make mutually beneficial alliances.

A conference was planned and presented in November by a committee of leaders drawn from the various parts of the food chain, including myself. The meetings were attended by an excellent cross-section of the entire industry, and with focused, lively table-group discussions, we all came out with more than just a better appreciation of one another; we came out with a sense of purpose and momentum to work together to deal with the challenges that we all share. That's why we've continued the process.

Just last week I met again with the Vision 2020 steering committee to be updated on their activities to pursue the Vision process and to plan for this year's conference. We're hoping to come up with a clear mission statement that can provide a substantial focus for the entire industry.

Since November, various industry players have taken it on themselves to open up the lines of communication between customers and suppliers throughout the food industry. It will be these industry-led efforts that will ultimately return this entire sector to long-term viability. I think the kinds of alliances being developed now will serve the entire industry well as it faces the increasingly intense competition for the consumer's food dollar. Recently, the ministry was restructured to improve our focus on serving clients in the context of the current economic realities.

After several months of assessing all of our services and programs and analysing long-term trends in the agriculture and food sector, we announced the changes in late April. Briefly, the changes include:

(1) Establishing a rural development secretariat to provide a stronger focus on encouraging rural communities towards self-directed economic renewal and investment in jobs. The secretariat draws on the existing staff and expertise and has field representatives as front-line contacts with local communities.

(2) We're consolidating the food standards and inspection services under the food industry division, which is responsible for market development and food industry competitiveness. This change puts together functions in the ministry that were already evolving closer together.

(3) We're incorporating the food and veterinary labs with the research and education functions.

(4) We're streamlining the agriculture and rural division to allow better communication among field offices and reduce the paper work for field staff. In this way, our technical experts have more time and flexibility to attend to the needs of farmers and rural communities.

These adjustments were made in order to position the ministry to deal effectively with current and future challenges in the industry and in the rural communities. They were made to maintain our high-quality service to the public while making the most of the taxpayers' dollar, and to ensure that the ministry was prepared to cope with government-wide measures to contain the provincial debt that we knew were on the way.

As the Finance minister has pointed out, we simply could not sustain a ballooning deficit which would hamper our ability in the long run to provide much-needed services. We had to act quickly and decisively, and my ministry has been able to respond with fairness and balance in its contributions to the overall government plans.

As you know, the deficit is being attacked on three fronts: controlling expenditures, raising revenues and negotiating a new social contract with the broader public sectors.

Under the expenditure control plan, the Ministry of Agriculture and Food contributed $52.9 million of its overall budget. While this is a significant sum, it is certainly no more than other ministries contributed. It amounts to 8.9% of our budget.

Our decisions on where the expenditure savings would come from were based on an examination of all our programs and services, as well as the ministry's internal operating expenses. As you may be well aware, about 70% of our budget goes directly to the farmers in the form of transfer payments.

I felt it was necessary to balance out fairly the effects of the reductions on both the industry and ministry staff, but I had to achieve my target. Closing the agricultural colleges at Centralia and New Liskeard and the associated veterinary laboratories was one of the most difficult decisions I've had to make as minister.

I simply could not justify, in these times of fiscal constraint, maintaining funding to five colleges, plus the agricultural diploma program at the University of Guelph, when both the number of farmers in the province and the number of students entering agricultural college have declined over the years. The combined enrolment of the colleges was about half their capacity for students. While I understand the disappointment and frustration of the colleges' staff, students and supporters, the closures were necessary.

As I said at the time, students going into their second year of study will graduate in 1994. Those who signed up at the two colleges will be offered opportunities at the other colleges. As for staff, we have set up redeployment teams to assist those affected by the closures with retraining plans, interviewing skills, résumé writing and job search techniques, as well as explain their entitlements under current legislation.

In terms of the colleges' research, extension and associated veterinary laboratory functions, consultations are under way between ministry staff and commodity groups to explore options for maintaining some services. Once these are complete, appropriate actions will be taken regarding these services.

The decision to reduce dairy inspection services was based on the maturity of the industry and the ministry's historically large contribution to the dairy sector in comparison to other commodity groups.

Ontario dairy farmers are scrupulous about the safety and quality of their product and have the expertise and technology to ensure high standards. We are working with the Ontario Dairy Herd Improvement Corp, the Ontario Milk Marketing Board and others to assure the public of an absolutely safe product. In addition, we are redirecting some resources to the new agriculture and food laboratory services centre in Guelph to enhance drug and contaminant testing and monitoring.

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In terms of the effects of expenditure controls in the program areas, I was able to retain the farm tax rebate program, the ministry's largest single expenditure, taking up more than 40% of our transfer payments at last year's level.

The land stewardship program had already accomplished much of what it was designed to do: encourage farmers to use environmentally sound practices. These efforts have been augmented recently through a coalition of farm groups that have designed and are testing the farm environmental agenda.

We also saved a substantial amount from the agricultural investment strategy. Three of the components under the strategy had already been announced. The commodity loan guarantee program, which offers farmers credit at reasonable rates on flexible terms, was left untouched. Indeed, we are anticipating doubling the number of loans extended by the Agricultural Commodity Corp in 1993-94 over last year. This is in spite of increased competition from the banking community. The reductions will not affect the amount of credit available to farmers, or the government guarantees offered under the private mortgage guarantee or the upcoming rural loan program.

Savings will be realized by temporarily suspending payments to contingency funds, reducing the commitment to the education and expertise program and deferring the farmer apprenticeship program.

We also deferred, but did not eliminate, the exit adjustment component of the federal-provincial tobacco adjustment strategy. In light of the current and projected markets for tobacco this year, this seemed a reasonable decision.

Internal operating expenditures will be reduced through implementing more efficient operating methods. Attrition, early retirement and redeployment of staff will be used as much as possible to meet expenditure reduction targets.

As I said previously, these were not easy decisions to make. The days when the economy was buoyant, revenues were high and the government continually introduced new programs and services are gone. I think they're gone for good. Now, even with a substantial economic recovery, the public will demand a full accounting from the government of the need for and uses to which its hard-earned dollars are spent.

This leads me into talking about an initiative which I'm confident will prove a winner, because it puts government revenue right back into the long-term economic renewal and jobs in the communities that it came from. The Jobs Ontario Community Action initiative was announced by my colleague the Minister of Finance in the recent budget. As you know, we have dedicated $300 million over the next three years for this initiative.

The idea behind it is to help communities help themselves to a better future. It is unique in that the ideas and plans for renewal must come from people living in our communities. I think this makes good sense. Development that proceeds from the grass roots will inevitably be more focused, practical and cost-effective, and it will generate a sense of pride and accomplishment that cannot occur when decisions are made at some far-away centre.

The government's role will be to ensure these communities have the freedom, information and skills to proceed. This means breaking down bureaucratic barriers while helping build partnerships among various interests in the community. It means providing opportunities for leadership training, more flexible financing tools, advice and assistance on strategic planning, and more.

My ministry, with its traditionally close ties to rural communities, will continue and augment its role as a catalyst for change in rural Ontario. We have the expertise, organization and contacts that come from decades of close association with the agriculture and food sector and the communities it supports and depends on.

Under the Jobs Ontario initiative, my ministry will be working closely with the ministries of Municipal Affairs, Economic Development and Trade; Culture, Tourism and Recreation; and others. This kind of interministerial cooperation is essential to avoid overlaps and ensure cohesiveness in the delivery of this initiative.

Our participation will be guided by the newly formed rural development secretariat that I spoke of earlier. The secretariat is supported by several local field staff called area contact team leaders, who are the front-line resource people for anyone interested in proposing development projects.

We have a head start in this regard, with programs in place that are designed to support the goals of community and economic development. The Ten Steps to Community Action program has been very successful in training new community leaders.

As you may know, this program brings together rural business people, teachers, workers, firefighters, farmers and others who are interested in renewing their community. The program gives them the opportunity to learn about leadership, organization, the administration of government, and building consensus in the community behind a cause. Not only do participants learn about these things, but often the people who take the course form the core of a network for community action.

Ten Steps has been very well received by the people who have completed the program. There are 25 projects on the go this year in various communities around the province, and more are asking for courses for next year.

In February, at the same time I announced funding for 18 of these projects, we contributed funding to two ethanol feasibility studies in the Chatham and Cornwall areas, the creation of the three local business directories and one strategic plan.

There are a number of other areas we've been working on to encourage self-reliance and economic renewal in our rural communities: first of all, by encouraging the formation of cooperatives, an excellent vehicle for farmers to pool their resources and energy, and local communities to benefit from economic spinoffs. Recently, my ministry established a marketing co-op advisory service to provide business development advice for new and existing co-ops. This service is designed to help people in our agrifood industry add value to their products, become more competitive in global markets and invest in jobs here at home.

Secondly, we're broadening the role of credit unions and caisses populaires as a source of credit for budding farm and rural businesses. Under the education and expertise component of the agricultural investment strategy, my ministry is offering agricultural lending training to staff of these facilities. At the same time, I've been working with the Minister of Financial Institutions on developing legislation that will broaden the powers of these organizations; that is, the credit unions and caisses populaires. With this program, we hope to increase the availability of and decrease the cost of farm credit in the province.

Thirdly, we're providing opportunities under the rural loan pool program, another part of the agricultural investment strategy. This component is aimed at channelling savings of rural residents into a rural loan pool which would offer credit to agricultural small business at reasonable rates and on flexible terms. With this program, we hope to encourage on-farm, value added ventures to stimulate the rural economy and investment in jobs. A pilot project will be announced very soon.

Rural community development, whether it's in Smiths Falls, Chatham or Parry Sound, depends on the willingness of rural residents, business people, farmers, schools and financial institutions and governments to work together for the good of the whole community.

No single person or government agency can prescribe a panacea that will guarantee instant success in creating economic activity or jobs or raising the quality of life in the towns and villages that dot our rural landscape. Each community, like each individual, has its own strengths, and progress likely won't be made in leaps and bounds but by building on small successes. But these small successes, when taken together, can change the rural landscape.

It will take patience, persistence, and a whole lot of good will to reverse the decades of neglect in many of our rural communities. But I think that now, with this government's recognition of the potential for growth in our small communities and with the increasing thrust for change we've seen among rural residents, we can and will make a difference.

Encouraging greater stability and growth in our agriculture and food sector goes hand in hand with bolstering our rural communities. While farming is not the sole reason for the existence of rural communities, it continues to play an integral role in their economic and social health.

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Our safety net programs, as you may know, are designed to protect our farmers from severe fluctuations in the market and in weather conditions. Last year the weather, for many farmers, was absolutely atrocious. The huge losses suffered in 1992 really tested our crop insurance program, and I'm pleased to say that it passed with flying colours. Claim totals for the 1992 crop year are estimated to reach about $145 million. This is massive, especially when you consider that the total for all previous claims since the program began in 1967 was about $500 million. That's the total accumulated claims. The protection was there when farmers needed it most.

Much of the credit must go to the work of Crop Insurance Commission of Ontario, which does a fine job of keeping the program attuned to the needs of farmers. The changes it made increasing coverage levels for many commodities was very timely, considering the devastation caused by the weather of 1992.

At the same time, I'm pleased to report that the net income stabilization account program, which allows farmers to accumulate funds during good years to offset losses in bad years, was extended to cover onions and white beans. The decision was made last November at a meeting of federal and provincial agricultural ministers. At the meeting, I once again strongly advocated the concept of extending this program to as many commodities as possible. Not only is this fairer to all farmers but it stands us in good stead in international trade relations.

As effective as they are, safety nets are not a total solution to all the challenges that face the industry. Farmers and food processors have had to struggle with the effects of economic stagnation, shifting international trade patterns and stiffening foreign competition for longer than most other sectors.

Since the early 1980s, there has been a significant decline in the number of farms, combined with downsizing and restructuring in the processing side of the sector. This has prompted individuals, groups and companies throughout the sector to focus in on strategies that will allow them to survive, compete and win markets.

Progressive farmers realize that in order to stay in business, they must know about market demand and strategic planning, along with the most effective techniques for raising crops and livestock. With their shrinking numbers, they recognize the value of banding together to share information, plan for the future and speak with a unified voice about those issues they confront as a group.

This is why I was so pleased recently to introduce the Farm Registration and Farm Organizations Funding Act. Stable funding, as it is known by the farming community, will ensure that Ontario's general farm organizations receive the kind of financial support they need to continue serving all Ontario farmers. It will also help the government do our job by providing accurate information about the farming community.

While I acknowledge that it has been a rough ride getting this concept to the legislative stage, I think that now we have an effective method of securing muchneeded funding for the important research, education and policy advisory work of the general farm organizations.

I note that the leaders of the Ontario Federation of Agriculture, the Christian Farmers Federation of Ontario and the National Farmers Union, along with myself and my staff, have worked long hours together getting this legislation to this stage. I might add at this point that I also have worked with the opposition members from rural Ontario, who have been most helpful in getting this legislation to the stage it's at now. As with any major change, it took a lot of courage and diplomacy on all sides to arrive at a workable solution. In the end, I'm confident this legislation will benefit the farmers of Ontario.

Exciting events are happening as well in the food processing sector. This year the ministry released a report card on the food processing strategy, which was designed to improve the competitiveness of the industry while creating a viable and growing market for agriculture food products.

This strategy came out of the Food Industry Advisory Committee's work, which identified a number of concerns about competitiveness the industry had and potential responses to these concerns. Now in year three, the five-year strategy has brought together many stakeholders in the industry, including producers, processors, retailers and others, in an ambitious bid to retain and improve on Ontario's place as a vital food production centre.

The strategy tackles seven fundamental conditions that must be present for a firm or industry to maintain or increase its market share: competitively priced raw products; a conducive business climate; quality food products; education and training; research and development; skilled marketing and financial abilities; and efficient plants and equipment.

The report outlines some very encouraging results in every single category. I'm proud of my ministry's involvement in making them happen, and here are a few of the results.

In terms of competitive pricing, our Ontario Farm Products Marketing Commission has fostered better relations between producers and processors by helping establish 17 commodity advisory committees to work out issues of mutual concern.

Through the activities of our business development unit, the ministry has assisted education and training efforts by introducing more than 450 employees of Ontario food processors to 200 new processing technologies. More than 50 of the companies involved have adopted new technologies, resulting in the launch of eight new products.

In research and development, $3 million of our Ontario food processing research fund has supported 30 projects and leveraged $2.5 million in other funding and the in-kind contribution to processing research.

In terms of supporting marketing and financial management capabilities, my ministry continues an aggressive export development program. In the past two years, we've worked with more than 200 outgoing and incoming trade missions, involving nearly 2,000 participants from the agrifood industry. More than 40 destination markets were involved, resulting in total sales exceeding $220 million.

We have been helping Ontario food processing companies upgrade their technologies through the food industry financial assistance program. Since 1991, 42 farms have benefited from the $6.7 million allocated under the program, leveraging more than $56 million in private investment.

While we're working hard on a number of fronts at home to help the industry and rural communities survive and thrive in the 1990s, it is more than a little disconcerting that our international trade relations are in such disarray. The GATT negotiations drag on. The lack of action is causing grief, anxiety and, worst of all, continued low prices for many of our farm products.

The prospect of a new chair at the GATT may infuse some fresh ideas into the talks. However, it still seems as if many nations of the world are more interested in bickering than in coming to any agreement. In spite of all this, my ministry stands by our commitment to a fair and balanced outcome in these multilateral trade talks.

In direct contrast to the foot-dragging at the GATT is the runaway momentum of the North American free trade agreement, largely fuelled by our overly eager federal government. Recently, things have slowed down considerably, with the US insisting on side deals to compensate for an agreement that they know will put downward pressure on their environmental and labour standards. Even with these side deals, the people of Ontario believe that it is not a good agreement.

As you know, I chaired a committee that asked Ontarians just what they thought of the NAFTA. The answer is: Not much. People are still stinging from the Canada-US free trade agreement with its massive job losses and continuing trade harassments. They're not in any mood to exacerbate the situation by jumping into another deal that has few recognizable benefits and too many drawbacks.

For example, just last week yet another FTA panel on the US hog countervail ruled that our national tripart stabilization program, as it pertains to Canadian live swine exported to the US in 1989-90, is countervailable. This is in direct contrast to an earlier panel ruling that said the program was not countervailable. In the end, Ontario and Canadian swine producers have to suffer the consequences of unfair trade actions by our US neighbours, with reduced markets for their high-quality products. This is yet another example of how our industries, and particularly our farmers, have had to submit to antagonistic duties and long, drawn-out dispute resolution proceedings in the name of free trade. It makes you wonder where the "free" in the free trade agreement was supposed to come from.

In spite of the tough economic circumstances of the past year, some very encouraging changes are taking place. The various players in the industry are beginning to work together in profitable cooperation rather than antagonistic distrust. The ministry is streamlining and focusing more closely on the future and our clients' needs. Farmers are finding strength in numbers and the value of supporting their own efforts in research and education and providing the government with sound policy advice. Many rural communities are recognizing their own strengths and are building towards economic self-reliance and growth. Food processors are finding innovative strategic methods for increasing their productivity, efficiency and market share.

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I'm pleased that my ministry will continue playing an integral role in helping the industry and our rural communities to economic and social health and growth.

The Chair: Thank you very much, Minister. We have some minor adjustments to our regular rotation, and with the committee's indulgence we'll let Mr Villeneuve go next, with up to 30 minutes, and then we yield to the Liberals, who have two members who wish to contribute.

Mr Noble Villeneuve (S-D-G & East Grenville): Thank you very much, Mr Chair, Mr Minister and people with the Ministry of Agriculture and Food. It's always nice to get together with you, particularly following a couple of very difficult financial years, not only within the Ministry of Agriculture and Food but within the industry of agriculture and food and food processing.

The minister, I think, touched on a number of subjects that I certainly want to expand on a little bit. I guess just as you were winding up, Minister, it's interesting to note that you are very unhappy, based on the money that you spent with a government committee, and I emphasize a government committee, travelling the province, exploring the thoughts and activities surrounding NAFTA. I believe that in many instances, yes, the free trade deal did provide some awakening, if nothing else, to the fact that we cannot isolate ourselves. Certainly, in the most recent court decision I think, again, there's been a flip-flop there, and right now our producers stand again to lose.

However, there's been a marked increase in export activity in the food industry to the United States of America, I think in good proportion due primarily to the deal that is now in place. The minister decries the fact that there are extenuating discussions regarding the correction and the appeal process regarding countervailing or non-countervailing action. But we do have a so-called fast-track process within the free trade deal which is to some degree making those decisions come about quicker. Without the agreement, I don't know where we would be. We would probably be stuck in the courts for many years.

So those are some of the pros and cons. Yes, agriculture has had to adjust to some difficult decisions, as has basically the entire economy. We are in a worldwide recession, and certainly Canada and Ontario have felt the crunch of that recession.

Farmers, as we compare the social contract that the government is attempting to negotiate with the greater public service, have suffered considerable reductions in income over the last 12 or more years. We go back to the grain prices of the early 1980s, and we notice that those prices 12 and 13 years ago were considerably in excess of what they are right now. So farmers have suffered considerable reductions in gross and net incomes. Their costs of production have not decreased. They have had to do some belt tightening on an annual basis.

Following a year like last year, where the heat units were considerably less than they should have been and the moisture was considerably more -- and heaven forbid we're going into another year very similar to it again this year -- the anticipated costs of crop insurance were estimated to be somewhere around $100 million. I notice from the minister's comments that they're up to $145 million. If another year like that occurs, I believe we'll have to look at not only the crop insurance program but the third line of defence program, because that is probably going to be shaken right to its very roots.

Bill 162 is not within the Ministry of Agriculture and Food's purview -- it is very, very annoying to many people who are directly involved in earning a living in agriculture -- it is under the Ministry of Natural Resources. I'm not sure what sort of communications are occurring there between the Ministry of Natural Resources and the Ministry of Agriculture and Food.

We have had a number of very concerned bona fide farmers, particularly those in the production of native species deer, and I know the minister's concerned. I've had the opportunity of discussing it with him on a number of occasions. Certainly, Bill 162 is up in the imminent future for, I believe, second reading. There has not been a great deal of input and listening to by the Ministry of Natural Resources. In my opinion, they are encroaching on your ministry, sir, and I think we have to look at that very seriously.

The farm tax rebate has been frozen at $159 million, and we all know that the taxes will not be frozen as paid by the farmers. I think it leaves us in a very vulnerable position as people who earn a living in agriculture in that the farm tax rebate, to start with, is not a support program. It is simply a rebate of taxes that were paid, covering school tax on farm land and farm buildings.

I was personally very annoyed when the previous government brought it in and made it look like farm agriculture support. It never was and never was intended to be. That occurred and made the budget of your ministry, sir, in Agriculture and Food, look like it was handling and supporting agriculture to the tune of $160 million plus, when indeed it was simply a correcting of bookkeeping, a return of moneys that were paid by farmers.

The Sewell report is very annoying to rural Ontario, including farmers. We cover a broader number of people here in the Sewell report in that the Sewell report, I gather, will be under administration by the Ministry of Municipal Affairs but certainly is going to shape the future and the future activity of rural Ontario. I think the Ministry of Agriculture and Food must get a lot more actively involved in whatever follows and is a continuum of the application of the Sewell report, the final edition of which was received at my office this week. I must confess I have not had the opportunity of looking at it as closely as I would have liked.

The labour changes that occurred under Bill 40, I gather, are now falling into line, as they will affect the food production and processing industry. The minister, in his opening remarks, alluded to becoming more efficient and more economically acceptable for our processors to stay in business.

Well, this law will be administered by the Ministry of Labour, again an encroachment on your ministry, sir. I have some difficulty in having labour police or whoever, with very little knowledge of the processing or the production of food, involved in imposing some requirements on our processors and our producers.

On the deadstock pickup area I have spoken to the minister on numerous occasions. He knows there's a problem. It's not been corrected. It's not been mentioned, but we do have a major problem here and I believe again a problem that seems to be at your doorstep. However, it involves Health, it involves Environment, it involves Municipal Affairs and I believe will have to be addressed in the very near future.

In the area that I live in and that I represent, we had a major landslide last Sunday, where approximately three kilometres of the South Nation River were totally clogged. There's been a backup to a depth of about 28 feet of water now in the South Nation River. It is starting to make its way through the earthslide, will create major problems for towns like Plantagenet that get their water supply from the South Nation.

I don't know how many dairy farmers are along the South Nation but I go back to the days when I worked for the Farm Credit Corp and that area was one where I did a lot of appraisal work and credit advising. That is the area known as the Champlain Sea. It was a salt water ocean many years ago. The South Nation River came through and drained it to the Ottawa and subsequently into the Atlantic.

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But what we have here in a lot of those dairy farming areas, if you go to any depth at all for a dug or a drilled well, you will get very heavy concentrations of salt. These dairy farmers have been using the South Nation River as their primary source of watering livestock. They have also in some cases been treating it and using it as their potable water. These people will be at someone's door in the very near future with a major problem.

I recall well the landslide again of 1971, much less in volume. But the South Nation, as you know, floods very intensively in the spring. What occurred was that the silting and the debris from the previous year's landslide was left on a lot of the farm land, ditches were blocked, new seeding was choked up with 10 to 12 inches of silt being left on top of the land. These are problems that the Ministry of Agriculture, along with the seven or eight other ministries, will definitely have to address in the imminent future.

I know there's some very close monitoring occurring right now by the South Nation River Conservation Authority, the Ministry of Health and the Ministry of Environment and Energy, but we've got to be ready for bad news on that one. I think the Ministry of Agriculture and Food has to be one of the lead ministries, because you're the ministry that does have the hands on in the area.

The restraints that occurred touched -- and the minister, I know, is very concerned -- about 10% in your ministry last year and another 10% this year. I was participating in the debate on Bill 48 last night and I have to compliment the minister and the ministry on adhering to the requests and the requirements as set out by the Minister of Finance.

But most other ministries within the government of Ontario did not suffer cutbacks. They actually cost considerably more to run in many instances. With a 10% cutback that you initiated and put into action last year and again this year, had every ministry within this province been able to adhere to those requirements, the government of Ontario would not have a deficit problem. We would be able to balance the budget. Now, it was done at the expense of many people who are involved directly and indirectly in agriculture, and certainly they were not the recipients, as I said earlier, of boom economic times.

In the dairy industry, which is probably one of the most stable within agriculture, there have been cutbacks in the market-sharing quota on an annual basis, save and excepting most recently when indeed they were able to continue. But we have to look at people who are having their ability to sell milk cut back by 4%, 5%, and 6% on an annual basis on the industrial portion of their production, and having to go back and purchase a quota to simply maintain their cash flow. They're going through some hard times.

The red meat producers are having a better year, but there never is a boom year in that particular industry, simply because prices, as soon as they get to the level where they have been for the last 10 years, receive some consumer resistance.

Do you want me to ask some questions? I have a number of questions I think are fairly legitimate. My colleague Mr Murdoch wants just a bit of time.

The Chair: Mr Villeneuve, you have up to 30 minutes in your opening statements to use in any way you wish. According to our clock, you have another 12 or 13 minutes.

Mr Villeneuve: Centralia and New Liskeard colleges have proposals now to cut costs quite considerably and maintain colleges. I must ask the minister and his staff, firstly, have you met with them to explore these possibilities? Secondly, when will you be able to do this? It's my understanding that the Minister of Northern Development and Mines and the Minister of Finance have been able to meet with large groups of local farmers. They were not in very good humour, but he did meet with them.

Your ministry has control of the budget that looks after these, and I would certainly look for your answer and this may well be coming shortly. When will you be able to meet with these two colleges that have had their fate pretty well upset by closure? Also, we have a number of students where we understand litigation is occurring, students who had been accepted at these colleges. First, is there indeed litigation? Second, what is the ministry doing to correct this or to address it?

Severe restraints have been imposed on the ministry and you've adhered to them. What's the status of the ethanol initiative? Certainly the two grants that were provided to Chatham and Cornwall were most welcome. We're ready to proceed now. Certainly the Cornwall area is ready to go. What sort of assistance would be available and forthcoming from the ministry?

The Fair Tax Commission has failed to propose any reforms to the taxation of agricultural land which is actively used in farming. Given that the municipal tax burden has been growing and that the budget for the farm property tax rebate program is frozen, has your ministry initiated any rebate on the reform to farm property taxes?

Ministry cutbacks have killed any chance for a conservation program for the agricultural land in the Niagara region. Do you, Minister, have any other proposals to deal with that situation? I believe you're aware -- I won't go into any great detail.

The food trade deficit: Trade with the US has shown dramatic improvement in Ontario's favour in recent years. I think several factors are responsible for that: a lower Canadian dollar and the free trade deal. Yet Ontario's trade deficit with the rest of the world has been going in the wrong direction. With Mexico in particular, our deficit is growing dramatically. I have tables here to prove that and I'm sure the minister knows that.

It would seem that free trade has helped to deal with the Americans, and we can bring up some negatives.

Mr Gilles Bisson (Cochrane South): You're talking about the steel industry --

Mr Villeneuve: Yes, I realize that, but we're talking about food, which to some people may not be very important, but we all sit down to three good meals a day and sometimes very much forget where they come from.

Minister, you toured the province with a group of government people and you have come out foursquare against NAFTA. I think we need more information on that.

Bills 63, 64 and 65 I believe we will be addressing a little bit more, but the future of AgriCorp -- it would be interesting to find out what your ministry intends to do there. What's the status of the legislation?

On the agricultural commodity program, what is the approximate value of loans processed to this point in 1993? I know it was initiated last year. It came in with a great deal of fanfare but there wasn't a very large amount of money that was used up. What is the uptake this year?

The tobacco industry: In May 1992 the Ministry of Agriculture and Food, along with Agriculture Canada, introduced an extension of the tobacco diversification program. The costs shared, the funding at $32 million, will be provided for farmers who diversify to other crops. What's happening in that particular area?

The community economic development program, which was announced by the Minister of Municipal Affairs, who also introduced Bill 40: I realize that you have sat down with the agricultural people and come up with something that appeared to be palatable. I'm not sure how well that will work. There's been some briefing but I wasn't able to attend the briefings, and I'm very concerned about that one, particularly the fact that it's being implemented by the Ministry of Labour.

I'd like to yield to my colleague from Grey here for the remainder of my time.

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Mr Bill Murdoch (Grey): Thanks, Noble. I just have two or three points that I'd like to bring up, and some of it is what Noble has already mentioned.

The Sewell report: I think there are a lot of problems with that. When he talks about farm severances and things like that, he never took in the economics of the farming. He didn't even look at that. It's fine to save good farm land, I agree, but we also have to have the farmers paid enough to keep to work on the farm. It's not just good enough to save the land; we've got to have somebody farming it. He didn't look into that when he talked in his report about severances in the rural area and things like that, so I think you have to take that into consideration when you look at the report and how it impacts this ministry. That was one.

Another one I wanted to note on the Sewell report, and Mr Penfold did some comments that finally came out that I think I'd like to put on the record, was that Grey county seemed to get blamed for all the severances in Ontario. We took the brunt of it up there, but if you notice, Mr Penfold said that if you take the size of Grey and look at other areas, other counties and other regions, Grey wasn't so bad after all, that there were six or seven other counties -- and we won't get into where they are -- that were as bad or as good, whichever way you wanted to take it, as Grey. For some reason they wanted to pick on Grey, and I guess it took a professional person to finally get it across to some of the bureaucrats here at Queen's Park that Grey wasn't the bad person in all this after all.

I just wanted to note that, because we've been saying that for a long time but just couldn't seem to get that across, and maybe since Penfold was hired by the government, they'll listen to him.

Mr Wayne Lessard (Windsor-Walkerville): It wasn't a black and white situation.

Mr Murdoch: Well, maybe it wasn't, but whatever. It was grey, eh? I just wanted to get that on the record, because finally somebody listened to us.

Ms Christel Haeck (St Catharines-Brock): How dark is it?

Mr Murdoch: How dark is grey, yes. It's a light grey now with these other ones coming into it now, and we won't get into where they are, but I'm sure the minister will know.

The third point is that we've had some problems also in our area that in the past the government has always complained that we don't have enough zoning bylaws and stuff like that. Well, in Grey and Bruce now a couple of the municipalities are working on their zoning bylaws, and they get them all ready to go and, lo and behold, the Ministry of Agriculture is going to object to them because in them it says that 50 acres could be used as a viable farm. That's why they're objecting. They think it maybe has to be 100 or whatever. I'd like someone here to explain to me what acreage there needs to be for a viable farm, because if you're in asparagus I don't think you need 50 acres, but maybe you do if you're in something else.

So we have concerns in our riding on that. I hope the minister will look into that and have his staff do so. We seem to have a problem there. Sydenham, the township of which I was reeve for 10 years, has finally got a zoning bylaw all ready to go, and the only problem is that the Ministry of Ag and Food says, "Oh, oh, you can't do this because you have in there that 50 acres is a viable farm." Maybe you've already looked into that, but if you haven't, I hope you will. There also is another municipality in Bruce county -- I can't remember the name of it -- having the same problem.

Another one I wanted to mention is that the conservation authorities did come up with a program they thought could save the ministries a lot of money. Ag and Food was included in that, because sometimes the mandates of the conservation authority overlap with the Ministry of Ag and Food and I think in some cases money is wasted because both of them are trying to look after the same problem. Hopefully, the ministry will look at what the conservation authorities are coming up with to try to save money in not necessarily duplication of programs but overlapping of programs; maybe we can do them a little better and save money for both. I hope you'd look at that and maybe as the minister sit down with the Association of Conservation Authorities of Ontario some time and try and work out some of the problems they think they have.

The last one I want to mention is that Bill 162, and Noble mentioned that, I think is getting into your jurisdiction in some places. I understand that it's to come back for second reading and then maybe go out to the public, but hopefully somewhere along the line the two ministries can get together and try to solve the problems there so that the people who are affected by Bill 162, especially farmers -- that somehow it's taken out and looked after with a bill from the Ministry of Agriculture and Food or something like that; that at least you get your say in there and get that bill so it's better prepared. Those are the only things I want to put on the record. I thank you for the time. We're probably pretty nearly out of time anyway, by the look of the Chairman. I'll just thank you for listening to me.

The Chair: Thank you very much. Mr Villeneuve, there are about four minutes left.

Mr Villeneuve: If there are four minutes left, the one area I neglected to mention was the Ontario Stock Yards. The Ontario Stock Yards, I saw in a press release here, will be history at the end of the year. I would like to know, first of all, what did they cost the government directly, and what benefit will that be? I think there will be considerable benefits here once they are closed down.

I want the minister to know, and I'm sure he's probably well aware of it, that the farming community is split on the closure of the stock yards. We certainly have different producers, particularly sheep producers, who have used the Toronto stock yard to their advantage. I gather now that the processing of sheep is done basically 50% here in Toronto and 50% in other areas, but it's been a real good price-setter for the sheep industry. The livestock industry in eastern Ontario still likes that Toronto stock yard for finished steers. The areas west of Toronto use other areas, primarily Kitchener, and the electronic marketing system, which they find quite satisfactory.

So we do have some farmers who are at somewhat different conclusions. Eastern Ontario primarily and basically wants to see the stock yards stay open. Western Ontario doesn't care; as a matter of fact, probably is looking for them to close down. They will be closing down, I gather, and I would just like the minister to address that.

Mr Murdoch: Can I mention that Grey and Bruce also would like to see them stay open. That's something I missed too, Noble. I mentioned that in a statement in the House some time ago, that our sheep producers do feel they're well looked after at the Toronto stock yards. Hopefully, something can be done to help them out, because Grey and Bruce I think are the highest sheep-producing counties in Ontario so I hope the minister can do something to help them out.

Mr Villeneuve: Their politicians are not sheep.

The Chair: I believe that's a good note to end that round on. I will recognize Ms Fawcett.

Mrs Joan M. Fawcett (Northumberland): Thank you, Minister, for being here. I'm pleased to participate and put forward our party's concerns, and certainly the Liberal caucus does have a number of concerns with the NDP's proposed estimates for the Ministry of Agriculture and Food.

I think last year we had a 6% decrease in the funding in the ministry, and it was the first time there was a decline in Agriculture since the Tories had been in office; I know our government had increased the budget. Now here we are facing another reduction in the budget, and I know farmers everywhere are very, very concerned because it seems they always are bearing the brunt. We know the government does face severe financial pressures, but it would seem that the NDP has chosen the farmers to bear this brunt of the government's restraint.

While Agriculture's funding seems to be declining, some of the other ministries did see a slight increase. I wonder how the minister can justify a reduction in his budget when, for instance, the Minister of Consumer and Commercial Relations received a 1.7% increase and also Management Board received a 1.4% increase. We really feel that Agriculture cannot stand any more reductions.

I've noticed that the programs the Ministry of Agriculture does provide are well managed, especially, often, because it's the farmers who do manage them and they manage them well. I would hope that maybe we can explore more of those kinds of programs, because they are managed with a minimal cost.

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It would seem that this budget for the Ministry of Agriculture and Food is to be reduced by approximately 2.6%, or $15 million in operating and capital, whereas the overall government operating expenditures are decreasing by less than 0.2%. Agriculture spending is being cut by 10 times as much as the overall government operating budget. Again, we wonder why Agriculture is bearing the brunt.

Our caucus does recognize the need for restraint at this time. That is why, in the recent vote upstairs, we voted against Bill 48. We really feel you're not going to achieve the wonderful amount that you think you are going to achieve, and we feel there is another way. There's another way too that possibly you could have saved some of the money in the Agriculture budget, and that's if some of the other areas that happened over the two years had been managed differently.

For instance, there was the 14% raise in salaries and benefits for OPSEU, costing the taxpayers over $500,000 annually, and now we're trying to claw this back. And there are other things, like $26 million to buy out the private day care operators; that didn't really create anything, and certainly in rural Ontario day care is often a problem to provide and we really do need the option for the private sector to become involved. And I was glad to hear you mentioning Jobs Ontario. I keep hoping that really is going to get on track, but it just seems it's not flexible enough. Even the money that's allocated, that $1.1 billion, is sitting there not being used because of the restrictions and the inflexibility of the program.

So I hope things like that could be looked at instead of our constant cuts, it would seem, in the field of agriculture. You did mention that your crop insurance plan had passed with flying colours. I'm happy to hear that, but then I'm hearing from the apple growers that things are not just the best there, that while they did have a fair crop in some areas, I understand that there are just hundreds of bins that are no good because they've found that the apples are brown inside. A lot of the apple growers who have been hit hard are really devastated by the fact that what they thought they were going to sell is now absolutely useless. I hope we can really look at the crop insurance plan and make it better for the farmers.

I was glad also to hear of the minister's commitment in keeping Ontario's position in the GATT negotiations front and centre. There are a lot of farmers who are very, very concerned about that. It leaves them in such a state of not knowing whether to invest again, how much to invest and whether they really are going to be protected or whether the big hammer is just going to come down on them.

Farm tax rebate is always an interesting debate. We had rumours that maybe it was going to be wiped out this year and then we see that at least it is there. I'm wondering if the ministry is looking at a real, effective change in the taxation of farm land, how that is all being looked at. I really think that would be a good thing if we could just change that whole structure for the farmers: rather than making them afraid that it's going to be there or isn't going to be there and so on, just changing it once and for all to make it really effective.

On the college closures, I know that the minister had to really perhaps agonize over this one, being in the education field himself. I noted with interest that in the estimates design here the two colleges are still listed. I don't know, is that an omen?

Hon Mr Buchanan: They are still there. We haven't blown them off the map.

Mrs Fawcett: You haven't blown them off the map. You mean there's hope? Really? I don't have to be reading any more petitions? At any rate, it has been a blow. It's been a blow for the students; it's been a blow for the professors and teachers there.

I know the minister said the students presently enrolled in the college who wouldn't be graduating are going to be accommodated in the remaining colleges and I guess I wonder, is there going to be room? Is there going to be room in the different courses, because I'm sure there's maybe room in the actual college, but what happens if a course a student really needs is full? Has that all been taken into consideration as you close down the two colleges and what is being taught there?

Is there any way and have you thought of even correspondence courses? I know a few students expressed the problem to me that they won't be able to afford to go away to these colleges that are far away. Some of them come home on the weekend to help in the operation of their farms, so this is really going to be a problem for them. Is it possible that some of the courses can be taken by correspondence and, if so, are we looking at that?

On the stable funding, that's in an interesting state right now with whether or not -- and I'm glad to see my colleague has arrived. There seems to be certainly support for the bill and yet there are, as usual, the concerns expressed again over the mandatory vote that doesn't seem to be there.

I would like to say at this time -- and I can only go by the phone calls I received from members of the National Farmers Union. They called to say they were not invited to all of the meetings that were being staged and they felt they were shut out of the final decision on the stable funding bill. I was rather surprised that they were not invited to attend every meeting, if that is in fact true, if for no other reason than to just allow them to at least have their democratic say in this.

The section of the bill that says a review may take place in three years: I would really like to see that firmed up and say it will take place, that it really will be looked at in all aspects in three years.

I know that in the Ministry of Environment and Energy some of the laws that are coming forward, the environmental bill of rights, pesticide laws and so on are a concern to farmers because sometimes I think farmers feel laws are being created here at Queen's Park within four walls and with no real knowledge of what is happening on the farm and how they can even really adhere to some of the laws that are being asked of them.

I know the whole industry is going through difficult times and we know that revenues are fluctuating, but I guess we really again, as a caucus, want agriculture to be not one of the lowest priorities of this government but one of the highest ones since one in five jobs is related to agriculture, as we know, and there are so many spinoffs. I think these are just a few of the highlights.

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I have a couple of general questions and hopefully we can get into specifics later on, and I know my colleague may want to put a few things on the record too. But I guess I would like to know why Agriculture took a bigger hit than some of the other ministries and whether or not the minister supports the cuts the cabinet had to make.

Also, as far as the stockyards go, this does cut into the fact that they will be leaving the demand for lamb sales in Toronto going to serve the ethnic food market and wondering if something is going to be put in its place there for the sheep farmers because the sheep farmers are saying that the Toronto buyers will not go outside of Toronto to do this.

I'll turn it over now to my colleague because he may want to say a few things, I'm sure.

The Chair: Mr Cleary, welcome.

Mr John C. Cleary (Cornwall): Sorry I'm late.

Mrs Fawcett: An important meeting, I understand.

Mr Cleary: Anyway, I welcome this opportunity. I guess my colleague Joan has talked a little bit about the stable funding bill and what we'd like is an update on that, when that's going to happen or if it's going to happen. As Joan my colleague has said, there is a bit of opposition to it, and the farmers who have been talking to me would like an opportunity to have that explained to them in rural parts of Ontario.

I'm sorry I missed the first part of this, but the other thing I've been really concerned about is the dairy inspectors, and we would like the figure on that. We hear all kinds of numbers on how many dairy inspectors will be left in this province, and I have a feeling, the way my spies count them up, they can only count about nine or 10 that are left out of the 35.

Interjections.

The Chair: Let's allow Mr Cleary to make his presentation directly through the Chair, please.

Mr Cleary: I guess the other thing that surfaces in rural Ontario all the time is the ag offices. We would like to know what the ministry's intentions are in those offices. We hear little rumbles that we don't really like, and I guess it would be a good opportunity to ask that question. If there are plans for more closures, if there are plans for combining them, we would like to know that.

I guess another thing that we hear from time to time is about bankruptcy figures, and we would just like to know where they stand. You should have those figures now probably for 1992. We'd like to know if they're up or down and the state of that. We'd also like to ask a few questions about the long- and the short-term debts of the farmers.

Another thing we should also be concerned about is -- we have lots of questions on it -- the labour legislation. Is there an addition coming to the bill or is that going to be done by regulation, or how is that going to work? It's a big concern in some of the commodity groups. The farm community is having a very tough time to compete now. I guess we'd like to know if that's going to be separate legislation.

The other thing I would like to know, and we've been talking about it for some time, I get questioned on it reasonably often and I have to make my statement to the minister here: In April the minister told the silent majority that under Bill 42, if a farmer sent his cheque to a farm organization but marked it for direct deposit back to the farmer on the back of the cheque, he would still qualify for a valid fee payment. I guess that's kind of a question.

One other thing that they're concerned about: As you know, there have been a number of agricultural people, farmers working on some ethanol projects in this province. They are led to believe that there's going to be a new program out to assist them financially to get these plants under way. I'm just wondering if there was something we were missing on that. It's something similar, possibly, to the Ten Steps to Community Action program or one of these programs. We were just wondering how soon that might be available if that's the case.

Another thing we should mention here is that the ministry has conducted its own review of agricultural planning. I guess we would like an update on that if that's the case. Does the minister intend to bring those planning initiatives forward?

Another thing that we hear about is a reorganization in the Ministry of Agriculture and Food, a new rural development secretariat. I guess we would kind of like to know the job description and what they do.

Another thing that's on a lot of farmers' minds is the gross revenue insurance plan and municipal-industrial strategy for abatement. One thing, there have been some indications that some of the other provinces may drop out of GRIP. I was just wondering what Ontario's position is on that.

I don't know how much longer I've got here.

The Chair: Seven minutes.

Mr Cleary: Seven minutes? Do you want --

Mrs Fawcett: The only thing I would mention would be the Sewell report, whether the minister agrees with the Sewell report and whether he would like to see a few changes there.

Interjection.

The Chair: Please continue, Mr Cleary.

Mr Cleary: Okay. The other thing that's on a lot of the residents' minds is the farm tax rebate. We know it has been frozen for this year, and I guess we would like to know what the future of it is, if there is a future. We'd like some kind of indication from the minister of what might happen next year.

Under the stable funding, will there be any environmental issues or anything tied to this in this questionnaire that we're supposed to be getting or supposed to see which I don't know -- speaking for myself, I haven't seen it yet -- that will be going out?

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The other thing that I mentioned last night in the House was to do with the food industry development, where the budget announced that the government would be shutting down its foreign trade offices. I guess we would like to know how this is going to affect your ministry and how it's going to affect agriculture.

The other thing we should talk about -- and we've had some meetings with some of the residents of Ontario -- is that the minister decided to ban a number of the tests on animals under the new regulations to the Animals for Research Act. There are a number of different stories out there. While we've got the minister here, we should find out the right one.

My colleague has also mentioned the stockyards. That seemed to be a big concern to the sheep growers, especially in southwestern Ontario.

Mr Murdoch: Grey and Bruce too.

Mr Cleary: Grey and Bruce too? I'll let you handle that.

The other thing that we should bring up here -- it's been a big issue, although it may have died down a bit at the moment -- is the dead livestock removal, what the position is on that. I know we had talked to the minister, a colleague from the Conservative Party and myself, back some time ago, about that, and I was of the understanding that some of these problems might be ironed out on more of a permanent basis. Anyway, we'd just like an update on that.

I don't know, I guess the other thing we should try to get some kind of an update on is the crop insurance. Are there going to be any other commodities added to what's covered by crop insurance now? We'd just like a general update on that.

I thought I had a lot of questions and I run down here and now I'm out of questions at the moment, but I'm sure I'll have more whenever we come back.

The Chair: Thank you very much, Mr Cleary, Mrs Fawcett. Members of the committee, with the concurrence of the minister, who still has 30 minutes of time for his rebuttal, there has been some agreement that, due to Mr Villeneuve's being called upon by the Speaker to represent our Legislature at a function next week, we could yield 20 minutes of his time now, since he'll be unable to participate next week. That has agreement.

The Chair is working with the understanding that the committee wishes to go with regular rotation by time allocation to each of the caucuses. With that in mind, with your indulgence, we'll begin, and finish at 6 today, with Mr Villeneuve, if that's agreeable. The time will be made up, both for the minister and to resume the proper rotation. If there's no objection then, Mr Villeneuve and the minister please proceed.

Mr Villeneuve: Mr Chairman, I certainly appreciate the indulgence of the committee and you, sir, and the minister.

We've had a lot of problems with Ontario Farm-Start, a program that was initiated some years ago by a previous government. It became very complicated to administer. The beginning farmers assistance program, which has been in place for a number of years, probably somewhere about 10 years, appears to have worked reasonably well. Farm-Start is creating problems in that farmers have to reach a certain minimum income to qualify, and I believe the last window of opportunity has just gone by.

I've had a number of ag reps, and not only in my riding, but they have had some difficulty with the bureaucracy at 801 Bay Street in that the Farm-Start income picture from individual farmers is being gone through with a fine-tooth comb, mostly working against the beginning farmer.

Minister, you would know very well that a beginning farmer, if he has not netted $5,500, which is not a lot of money -- and we have bureaucrats going through their income and expense statements and disqualifying certain incomes, disqualifying certain expenditures, what have you.

I realize you have to answer to the auditor, I realize that you have a number of requirements but, in my opinion, there are certain instances where there is a bona fide farmer, he may have off-farm income, but he is within a whisker of qualifying and yet it's been difficult to deal with the bureaucrats. Could you comment on that?

Hon Mr Buchanan: Okay, briefly, and then I'm going to get somebody who may be able to help us with the details.

My so-called senior parliamentary assistant from Huron --

Mr Paul Klopp (Huron): What do you mean "so-called"?

Hon Mr Buchanan: He likes to be the senior PA -- brought this to my attention some time ago. We did put in place some streamlining of the process for Farm-Start. We were attempting to make it less bureaucratic once you were on the program so that there wasn't this long-drawn-out process each year. Once you were on the program and there was some sense that you were a farmer, you would be okay. But Ken Knox has come to the front. He can talk to us a little bit about what that looks like, perhaps, in an attempt to streamline it, because it is something we were aware of and we tried to address it.

I was a little surprised when you raised it, because that issue hasn't been brought to me recently. It was earlier on in my term, so I kind of wonder if it's still a problem.

Mr Villeneuve: Just to qualify that, it became a problem when certain people were attempting to qualify at the last window of opportunity, which occurred -- in April?

Mr Ken Knox: It would depend on their fiscal year, Noble, and when --

The Chair: I'm sorry, I must interrupt. Mr Knox, please introduce yourself fully for the benefit of the committee and for Hansard.

Mr Knox: Ken Knox, assistant deputy minister.

The program that, as the minister was talking about, is streamlining, we have made a lot of attempts to try and ensure that the hurdles the young farmers have had to go through, once they've demonstrated that they're good at bookkeeping and they're forthrightly interested in proceeding as a business -- I think a lot of those have been eliminated. A lot of those concerns were at the local level where farmers had to go in and meet with their ag office staff, and there was felt to be a fair bit of bureaucracy at that end.

The aspect you raise -- and if there are specific issues, I'll be glad to look into those and try and determine what the concern is on the eligibility -- the bureaucracy, as it were, the staff that review these and ensure they live up to the instructions of the order in council, and that's where the minimum income is -- I know that we have had some discussions, some that I've been involved in, where we've taken a look at some value added aspects where we could be more lenient, because it was obvious that the young farmer was making a bona fide attempt at making a go at farming, and we've been able to look at some of those value added things.

So within the order in council -- obviously we have to live within that, but if there is flexibility -- we'd be glad to look at any of the specific issues to try and iron out any problems.

Mr Villeneuve: I'll cite you a couple of examples that I had to live with. The second one that I will speak of I'm not sure if it has been resolved, but the first one was, the farmer wound up overwintering his neighbour's cattle because he had room and he had feed, and when he reported his income from that, custom-feeding became acceptable but simply feeding out cattle for his neighbour was not.

We established that indeed he was custom-feeding, ie, comparable to a feed lot where custom-feeding is accepted, but just feeding them out on a so-much-a-month basis, the bureaucracy was saying, "You're not taking a risk." That becomes a pretty fine line. The man needed income, had room in the barn, had feed in storage. Would it not make sense to do it? It's just that it was a misnomer. We managed to get accepted the fact that he was custom-feeding as opposed to whatever.

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The other one was a matter of the inventory of livestock purchased through the year. This young farmer purchased some brood cows that were not in very good shape. He did not pay a great deal of money for them but did feed them out, and came the end of his fiscal year, in his opinion and in his agricultural representative's opinion, the cattle had more than doubled in value.

The bureaucracy at the other end said: "Hey, you paid $500 for these cows. They're $500 cows." The reality is, the man fed them, increased their value, brought them close to calving, and there was a dispute there. I say at that point in time, and I don't know how tough the auditor is on you, but give the farmer a chance. He's trying. That was my plea.

Mr Knox: And was that one resolved?

Mr Villeneuve: I don't know.

Mr Knox: I'll be glad to look into that.

Mr Villeneuve: I understand that this farmer was at his last window of opportunity and was thinking very seriously of going through the appeal process. I don't know if he did or not. I lost track of him.

Mr Knox: That's right, there is the appeal process, but if we can get these things resolved and if it's a matter of interpretation of those kinds of fine lines, then obviously if the farmer did a good job, the local staff should be able to determine that.

Mr Villeneuve: It's when the local Agriculture and Food officials in the ag rep's office come to you and say, "Look, I've got a problem, I've attempted everything," you feel bad about it, because indeed they are as close as anyone to the scene. I would like that their recommendations be taken sometimes.

Mr Knox: We'll take it into account. I can talk to you about the individual case and bring you a progress report on that.

The Chair: Actually, in fairness, I'm yielding this time to Mr Villeneuve. I'm sorry to do that, Mr Murdoch. The minister has logged several of your questions and I thought in your presence you may have wanted to engage him in that dialogue.

Mr Villeneuve: I appreciate that.

The Chair: I don't mean to be rude to Mr Murdoch, but I'm trying to be helpful as your Chair. You can change that if you wish. Please proceed.

Hon Mr Buchanan: There are a few points that Mr Villeneuve raised that were not necessarily raised by the others in their questions. If I may, I will make some attempt to answer those.

One was on the commodity corporations in terms of how we're doing this year. Last year, in 1992, when we were very late in getting it running, there were 300 applications and about $16 million in loans. So far in 1993, there have been 425 applicants and about $30 million has gone out in loans. The expectation is that we could go with 600 applicants, which could increase it by another maybe $10 million, $15 million or $20 million, as an estimate. So it is still a successful program.

I would add that the numbers are not necessarily as high as we had expected, and this is my own personal view. I think part of it is the fact that this program is doing something that we thought it might, that is, it leverages some of the other lending institutions into becoming competitive for farmers so that we're not doing this ourselves.

The government is not in the business, but we are providing enough competition for some of the other lenders that are now giving farmers rates that are similar to what they're getting out of this program. Anyway, it's still a success I think in the fact that $30 million has gone out to over 425 applicants.

Mr Villeneuve: Could you possibly just clarify? A lot of people are saying, "Why only one bank involved?"

Hon Mr Buchanan: When we set this up, we basically tendered the process out and then we kind of negotiated to get the best rate. It's easier for us, when we're setting up a program, to deal with one institution than it is with several. We're doing the same thing with the rural loan pool. Again, we were looking for one institution that would deliver it at a good rate and we were looking at prime, trying to get something that is low as possible. It's easier for us to deal with one than to try to deal with all the banks and all the credit unions, and so on. It's basically in order to get the better rate.

Mr Villeneuve: The problem is that if I'm not dealing with that particular bank, I have to pretty well take all of my business to this one designated bank. It makes it a little awkward for some people.

Hon Mr Buchanan: The corporation, in our view, is able to handle the paperwork in order to accommodate that so that that person does not have to, you know, run to another town to look for a bank of that kind. They can deal with the corporation. I understand the impediment, but it isn't really as much of an impediment as even I thought it was initially because the corporation is able to process the paper and deal with it.

Another issue that you raised, I think alone, was the tobacco adjustment exit program. What's happening there is that $32 million, I believe, is the number that was committed from the province and the federal government. The federal government of course is looking at ways of restraining its budget as well and announced a 10% cut to a number of programs.

We weren't necessarily picking on tobacco here, but we realize that this year and last year the industry itself was not doing too badly. They were holding their own and would be able to provide themselves with sales in the export market. We did not think, in our consultations with the farmers and the tobacco board, that they were desperately in need of that money this year.

They wanted some guarantee there would be some money there in the future if there were more taxes coming or the industry was under more pressure, so we maintained the program. We just downsized the amount of money, and significantly this year, but we've kept some money in there for this year and future years. So we haven't just completely dismantled the program. It will be there, in our view, if they need it.

Mr Villeneuve: At a reducing rate.

Hon Mr Buchanan: Yes, and it's a program where if something hits, there's a disaster, hopefully both governments could move in and boost it up. So it's an existing program that we'll keep, but just at a reduced rate. We're also putting most of that money into looking at alternatives to tobacco and trying to put our efforts in there as opposed to simply just in export assistance or the exit part of it.

I think also you mentioned Bills 63, 64 and 65 and AgriCorp. The status of AgriCorp is that we intend to have that passed. Well, most of my bills I would like passed this session, including stable funding. AgriCorp is on my list that I make, it's on a non-controversial list for fast passage, and if we could find some time in the House to do that, we certainly would like to see it passed. It's our intent to do that. I think maybe if all of us talked to our House leaders about things like AgriCorp, we could get it through. We certainly would like to see it passed.

I would quickly add that the AgriCorp relocation which was slated for Chatham -- those people will now, we believe, be housed in Guelph. So any of the jobs, the people will be now in Guelph which -- well, that's a matter of fact.

You had some other ones on here?

Mr Villeneuve: Yes, I'll just touch this one here. I don't know if your ministry has any available emergency funding, but with the landslide that we've had just north of my riding, which will be affecting quite a number of dairy farmers, what would be the mechanism here? I know they met yesterday and they were meeting again today. There are eight ministries involved and no one wants to take the lead. It's a hot potato right now. Certainly, providing potable water for dairy farms is of utmost importance.

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Ms Rita Burak: In most cases like this it's the Ministry of Municipal Affairs that should take the lead, because it has, as you would know, the enabling legislation that might come into play. I don't know that they've made a determination that this is an instance where they could bring that matching funding legislation into play, but under normal circumstances they would take the lead and other ministries would be involved. But we would certainly be following up on this and do what we can to assist the farmers who may be affected. But they would normally be in the lead position.

Mr Villeneuve: But we have the high profile of Agriculture and Food in all of these counties and an Ag rep in all instances who knows and is very knowledgeable of the problem. It's a hands-on deal. Municipal Affairs tends to be more remote, and you may have to provide some guidance, some assistance. It's nice to say enabling legislation and all the rest of it, but when you don't have any water for your livestock and you're in the milk production business, it doesn't much matter. You shouldn't shoot the messenger, but the first person you would go to is your Ag rep.

Hon Mr Buchanan: We hear what you're saying. In fact, we happen to believe that the Ag offices would make excellent information offices for the province of Ontario in terms of being able to get information out to other clients in rural Ontario. When we talk about rural community development, we're certainly aware that we have facilities. I'll maybe skip on to the question that was raised by Mr Cleary, I believe, in terms of the Ag offices in the future. Obviously, everyone's under pressure, every ministry, despite the fact that Agriculture and Food is very important. I think all of us, certainly, in this room recognize that.

We're looking at other things that can be done. There's a committee of deputies that is looking in terms of delivery of government services and how the agricultural offices could be an important component of that, to maintain them. Otherwise, there obviously is pressure in terms of combining some of the offices. We in fact are looking at that. We're trying to get to the point initially, though, where there's sort of one in each county or each region. But there are going to be additional pressures as to whether or not we maintain, as they currently exist, an office in every county. It may be maintained and it may be looked at, but when you're looking at savings, you obviously look at all of those things. But I certainly accept the point that farmers come to the Ag office. Whether it's within the jurisdiction of our ministry or not, they're certainly going to come there.

One of the things I've been working hard at on the community action, which was announced not by ourselves but by Municipal Affairs and by Ms Lankin, is that all ministries in rural Ontario will be able to respond to that program, so that if a group goes into an Ag office, they would be able to answer questions about that program. So we certainly are aware of the need for us to be able to respond on other issues.

Notwithstanding that fact, the deputy has said that other ministries will probably have the lead in terms of getting support and funding.

Mr Villeneuve: In Dundela and Dundas county we have some apple producers, and we have apple producers spread out throughout the province of Ontario. My colleague from the official opposition touched on it, but apple producers have been hit, particularly in certain areas, very, very hard. I understand that controlled-atmosphere apples wound up in the juicer and not even paying for the cost of storage, let alone the cost of production. How soon are we including apples under crop insurance? How close are we?

Hon Mr Buchanan: Apples do have a crop insurance plan. I believe it's not one that's not highly subscribed to, though --

Mr Villeneuve: That's what I mean.

Hon Mr Buchanan: -- that a number of the producers do not participate. It's perceived as being expensive, and that's especially true in the tender fruit industry. But certainly I'm aware, in the Collingwood area -- in Mr Murdoch's area, a number of farmers came to see me, and they do not have crop insurance because they generally have not been victimized by weather; they've always had good seasons. The other thing is it's fairly expensive, in their view, and they haven't bought crop insurance.

I don't know what the answer is. You can't necessarily make insurance more affordable when it's based on premiums and payouts and has to be actuarially sound, but I'm certainly aware of the problem --

Mr Villeneuve: Tripartite.

Hon Mr Buchanan: And tripartite -- sorry?

Mr Murdoch: What about the money that's in there from the province?

Hon Mr Buchanan: The money?

Mr Murdoch: That they put in.

Hon Mr Buchanan: I'm going to ask Mr Bob Séguin, who has been talking to the producers and looking at the fund and the payout and what we're going to do with the money in there, to respond. I think he's got some good things to say.

Mr Bob Séguin: Bob Séguin with the Ministry of Agriculture and Food, ADM for policy. Answering Mr Villeneuve's question on the browning issue that I believe Mrs Fawcett raised as well, we are working with the commission and looking at this issue -- what's causing the browning problem and having fresh apples turn into juice apples -- and looking at options that could help address it in future years.

The commission's well aware that it's been some dichotomies within its own organization that haven't enabled it to make use of the Crop Insurance Commission of Ontario, and likely they'll be approaching it again to see what coverage can be expanded in the future.

On tripartite stabilization, we have been in discussion with both the federal government, other provinces and the Ontario Apple Marketing Commission. The program ends June 30 of this year. We usually extend it because of disagreements among provinces about the length of term. We have been looking at a regional plan, much like the market revenue plan for crops, and that seems to have agreement among the other provinces and the other producers.

Our intention is to wind up the tripartite plan this year, pay out most of the funds according to a formula this year. There's a surplus in the fund this year in Ontario. They would get that surplus, or most of it. A small portion would roll over to a new plan that would start a day later. We effectively end one plan June 30 and start a regionalized plan with a new formula July 1. I'll offer the new plan to producers.

So they get in their program participation and either roll into a new plan or step aside the plan altogether.

Mr Villeneuve: Covering this year's crop, Mr Séguin?

Mr Séguin: Covering this year's crop.

Mr Villeneuve: Good.

Mr Séguin: So there'll be substantial amounts of money going to producers this fiscal year covering the 1992 crop that'll be needed for the crop problems they face this year.

Mr Murdoch: This was money they put in, isn't it?

Mr Séguin: Our moneys, the federal moneys and producer moneys.

Mr Murdoch: Yes, and the producers in Ontario who just wanted, hopefully, some of their money back?

Mr Séguin: And they will be getting it back.

Mr Murdoch: Okay, that's fine.

Mr Klopp: What a great government, huh?

Mr Villeneuve: That's what the Lieutenant Governor said.

The Chair: Mr Villeneuve, have you completed your questions?

Mr Villeneuve: Yes. I really appreciate the indulgence of the committee and I'm certain the minister will be providing me some answers to the broader questions that were asked and I look forward to those in due course.

The Chair: Any written responses to the questions are always very much appreciated by the committee and, in and of themselves, help for a more complete discussion when estimates reconvene on Tuesday, June 29. Final question, Mr Murdoch?

Mr Murdoch: I was just going to say maybe, then, to Elmer -- this is on the stable funding. John brought it up, the registration forms. People do ask me about what they're going to be like. I know we have to register now to get our tax rebate back. Are they going to be a long, complicated form, or is this going to be something simple?

Hon Mr Buchanan: Just very quickly, I've seen some drafts. We were going to take them out and sort of do a test with farm groups to say, "Is this all right?" so that we don't make any blunders here and put something on that they would object to -- and to make it simple, too. I'm very much in favour of very straightforward, one-page forms like we had on one farm interest assistance program that I was responsible for putting out. One of my first things was that it was very simple and straightforward. We hope to get something similar to that. So it'll be tested. We're not going to be going after information that's sensitive or delicate. Some people are afraid on that count and we're going to be very careful and not do that.

Mr Villeneuve: As a supplementary, can this be changed by regulation? It could be very simple going in; it could get very complicated a year or two down the road.

Hon Mr Buchanan: The application form?

Mr Villeneuve: The registration form.

Hon Mr Buchanan: The registration form would be noted in the regulations.

Ms Burak: Prescribed in the regs.

The Chair: Prescribed in the regs, we're advised by the deputy minister. Mr North, briefly.

Mr Peter North (Elgin): Just a quick question for the deputy. Who did you say generally took the lead on situations such as Mr Villeneuve has suggested?

Ms Burak: In situations where there is weather damage that impacts a community, it's normally the Ministry of Municipal Affairs that would take the lead to work with the local municipality to see what could be done by way of assistance. There is enabling legislation which belongs to that ministry that can be kicked in under certain circumstances. So that's why I made the reference to Municipal Affairs.

The Chair: Thank you very much. We have completed just under two hours of our estimates and this committee stands adjourned, to reconvene on Tuesday, June 29, immediately following routine proceedings.

The committee adjourned at 1801.