Legislative Assembly of Ontario

AGRICULTURE FUNDING

ONTARIO GRAIN AND FEED DEALERS ASSOCIATION

ONTARIO FRUIT AND VEGETABLE GROWERS' ASSOCIATION

MINISTRY OF AGRICULTURE AND FOOD

CONTENTS

Monday 7 October 1991

Agriculture funding

Ontario Grain and Feed Dealers Association

Ontario Fruit and Vegetable Growers' Association

Ministry of Agriculture and Food

Adjournment

STANDING COMMITTEE ON RESOURCES DEVELOPMENT

Chair: Kormos, Peter (Welland-Thorold NDP)

Vice-Chair: Waters, Daniel (Muskoka-Georgian Bay NDP)

Arnott, Ted (Wellington PC)

Cleary, John C. (Cornwall L)

Dadamo, George (Windsor-Sandwich NDP)

Huget, Bob (Sarnia NDP)

Jordan, Leo (Lanark-Renfrew PC)

Klopp, Paul (Huron NDP)

Murdock, Sharon (Sudbury NDP)

Offer, Steven (Mississauga North L)

Ramsay, David (Timiskaming L)

Wood, Len (Cochrane North NDP)

Substitutions:

Coppen, Shirley (Niagara South NDP) for Mr Waters

Duignan, Noel (Halton North NDP) for Mr Dadamo

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

Hayes, Pat (Essex-Kent NDP) for Ms Murdock

Clerk pro tem: Manikel, Tannis

Staff: Luski, Lorraine, Research Officer, Legislative Research Service

The committee met at 1530 in committee room 1.

AGRICULTURE FUNDING

Resuming consideration of the designated matter, pursuant to standing order 123, related to the state of emergency and the income crunch in Ontario agriculture.

The Chair: I would like to make note, just for the sake of consistency, and knowing that a representative of the whip's office is here to not only hear this but perhaps read it once again later, that there is still orange juice being served on the side table. I guess orange juice in itself is not offensive, but it seems to me that Queen's Park could take leadership in making sure that the produce we grow here in Ontario is the produce that is provided to visitors and to staff and to participants in these meetings by way of refreshments. It is just a darn shame that we could not show more leadership in that regard. Perhaps the whip's office could use its resources to do something about that.

ONTARIO GRAIN AND FEED DEALERS ASSOCIATION

The Chair: Gentlemen, thank you for coming from the Ontario Grain and Feed Dealers Association. We have 30 minutes. If you would please tell us who you are, and then spend perhaps no more than the first 15 with your presentation so we have plenty of time for questioning and conversation afterwards.

Mr Thompson: Thank you very much. My name is Wes Thompson. I am currently president of the Ontario Grain and Feed Dealers Association. I have Jim Cunningham with me, our executive vice-president. We realize that some relief has been provided by the province to producers since our brief was developed and we understand that some federal support is in the works. However, we wanted to go through our presentation.

We welcome the opportunity you have provided for us to discuss with you some of the concerns we have as they relate to the deplorable state of affairs in the agricultural community, with particular emphasis on the livestock, grain and oilseed sectors. First, I would like to give you a little background on who we are. The Ontario Grain and Feed Dealers Association is a representative organization for some 580 firms located throughout Ontario that are engaged in grain handling, manufacture and distribution of animal feeds, medicated feed additives and animal health products, and that provide a complete line of products required by farmers in Ontario, including seed, fertilizer, chemicals, fuel, lumber, etc.

During 1990, our member firms handled and marketed in excess of seven million tonnes of grain, and total sales, including grain, feed, fertilizer and farm supplies, amounting to over $2 billion. We employ approximately 9,000 people and our total industry payroll exceeds $235 million. Our association and its members have always felt that the producers require our services in order to survive, and we in turn are very dependent on the producers' business in order for our industry to survive.

For instance, if, as in the case this year, the crop size is drastically reduced due to adverse growing conditions, the results are devastating to the grain elevator industry as well as to producers. As you can well understand, the potential for an elevator to generate revenue only exists when there is a crop to handle. In most cases where crop size is reduced to below-normal levels, the grain elevators stand to lose even more than the producers because, unlike the producers, the grain elevator operators are unable to insure against reduced volume of crop handling.

So we are really here to bring you two messages. Our first is that we do have a very sincere concern for the producers with the situation that exists in the grain and oilseed industry as far as volume of crops and low commodity prices are concerned and the effect that this is having on the producers' income. The livestock producers are also in many cases having a difficult time, even when the low commodity prices are taken into consideration. Quite often a producer who has livestock and grain can feed his grain and come out with a reasonable margin, but that is difficult today as well.

Our second concern is that if the producers are not able to make ends meet, many of our members will be caught without standing accounts for seed and fertilizer which were granted to help put in the crops in the first place. Second, the dealers will suffer from low volumes of grain handle which, in some cases, will certainly not be sufficient for them to allow for payment of their bills and cover their capital costs. In addition, the crops are much drier this year and the amount of artificial drying that will be required this year will be reduced significantly. Drying revenue will be drastically reduced. This does not augur well for the elevator operators who have expended significant capital on grain dryers and on computerized grain control systems which have been installed to save fuel and produce a better-quality product.

We are fully aware of the fact that the price problems in the grain and oilseed industry are not made-in-Canada problems. The major cause is the significant subsidy program being offered by the European Community and the United States. We are told by the producer organizations that the $93 million being released as an interim payment from the GRIP program falls far short of what they feel is necessary for their survival. The shortage, they say, is $124 million from what they originally asked for. Our association is not in a position to verify these figures, but it would seem to us that a good deal of work has gone into the development of these numbers and certainly there is a wide gap between what the producers say they need and what the government was prepared to put up.

In the interests of the citizens of Canada in the long term it is imperative that we maintain a healthy and viable agricultural industry. It would be totally unacceptable to allow further erosion of the industry and to eventually have to rely on imports. History will tell us that we must produce our own food. In order to achieve this, we must look at government assistance in times such as we are experiencing, as a necessity for survival.

Agriculture has been and always will be a very cyclic industry. Unfortunately the cycles have been somewhat eroded due to the intervention particularly of the EC and the USA with their subsidy programs. We do however feel that a cycle of sorts will continue and that when things start to improve in the agricultural sector it will be very important that the producers survive this downturn and that the dealers are there to serve them. Again, we would like to thank you for this opportunity to discuss the matter with you and we applaud the initiative you have taken in studying the serious farm income problem that exists today.

The Chair: Thank you for a well prepared and well said presentation. We have more than adequate time, some seven minutes for each caucus.

Mrs Fawcett: You cited here two main concerns. How does the announcement affect those two concerns? Does it adequately address them? Does it help out? Does it stop people from going under?

Mr Thompson: I expect it is going to make quite a difference. I cannot tell you whether it is enough or where it sits. It is going to make quite a difference. For instance, accounts receivable with members of our association in this past year have increased about 18% to 20%, which means that farmers are looking for longer-term credit than they would like to have. It is going up. We find that producers are making decisions on what to plant based on what they can afford to plant and not addressing the marketplace, and we think that is a real crime. So we were very happy to see some assistance.

Mr Cunningham: When you refer to financing, are you referring to the announcement that the provincial minister made last week?

Mrs Fawcett: Yes, I was.

Mr Cunningham: I think that basically the producers seem to be fairly happy with that in terms of the amount and what is expected from the province. Over the weekend -- we were talking about this a few minutes ago -- there was a leak that the feds had pretty well put the package together, although it was released by the Ontario Corn Producers' Association to Jim Romahn and it was reported in the Kitchener-Waterloo Record on Saturday that the amount they would be coming up with, together with the provincial amount, would bring them very close to the $124 million. If that is the case, then that is looking pretty good.

Apparently that was not etched in marble. There were a few little glitches that were to be worked out with the provinces, so I guess our quandary was whether we should bother to come down. But we did want to tell you that we are the other side of that service sector of the farming community. We are delighted that the farmers are being properly taken care of. I think that is extremely important because they are our customers. We are there to serve them. We need each other, as we said in our brief.

But our dealers are still going to suffer and we are going to have some mortality in our industry this year, there is no question about it, simply by virtue of the drop in the volume of grain to be handled. If you have not got the money to massage, you have not got anything to manage. If you have not put up grain in an elevator, you do not have any income.

The other thing is that there are some elevators that have actually put up brand-new grain dryers this year. Instead of corn coming in today at 24% to 26%, we are looking at corn under 15%, not requiring any drying at all. You put a $500,000 capital expenditure into a grain dryer and never start it up -- there is a factor built in to cover your capital cost, your labour and so on. Elevators need people around to handle the grain at the same time they handle the dryer. It is not there as a great money maker, but you have to have revenue to support the costs of having it there to provide the service when you need it. I would say virtually no soy beans were dried, no wheat was dried this year because of the dry season, and likely 40% of the corn will be dried at levels lower than normal. The rest will not be dried at all across the province, so it is a real impact on members of our association.

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Mrs Fawcett: Almost adding insult to injury.

Mr Cunningham: It is wonderful for the farmers who are getting good yields and dry grain. That is a real plus for them because they do not have the shrink. The shrink is already out of it when they harvest it. And they do not have the cost of artificially drying it to keep it, so it is a great advantage for them and we are delighted from that side, but it is going to kill some of us. That is the problem.

Mr Cleary: In your brief you say, "During 1990, our member firms handled and marketed in excess of seven million tonnes of grain, and total sales including grain, feed, fertilizer and farm supplies amounted to over $2 billion." Is that all Canadian grain you handled?

Mr Cunningham: Yes, that is Ontario grain.

Mr Cleary: All Ontario grain. Okay, thank you.

Mr Cunningham: Incorporated in some of the feed would be western feed grains, as part of the total sales of feed, but for the grain, that is all Ontario-grown grains of all kinds.

Mr Cleary: Second, you mention in your brief financial problems and everything that goes with farming and agriculture; yet we had the Canadian Bankers' Association in here, probably two weeks ago, and they said they did not feel there would be much more of a problem this year than previous years in collecting their loans. I would just like your comments on that please.

Mr Cunningham: First of all, they are the first guys to grab the security. Do not forget that. They are never in the background on that. They grab the first chunk of security. We love the bankers, and they are wonderful people, but their security comes first. When we pick up financing, usually it is to help a farmer get his crop in. He has got all the financing he can get from the bank and credit union and everything else, and we put the money out for the seed and the fertilizer and try to take whatever security we can at that time. Usually the banks have section 176 of the Bank Act and all those good things in place long before we come along, and so we tend quite often to get on the tail end. They have been pretty good. We have personal property security agreements and this sort of thing that we can put in place, and if we get them put properly, they take precedent.

But what they may not have looked at totally is that their revenues are going to be down this year, because the crop forecasts have not been appreciably changed yet and you have disastrous prices. Now with these support programs coming along, I think they are likely right, and I think we have a lot better chance now of collecting our money because of the support programs the government has announced. That makes us feel good, but our accounts receivable are running higher now, as Wes said, by 18% to 22% over what they were a year ago, on a survey of our dealers.

Mr Jordan: On page 2 you mentioned the cattle industry is also having a problem. As I understand it, this new money from the government is not going to assist those people particularly. It has been pointed out to me that they pay up to $1.15 live weight for feeder cattle, and are being forced to sell at 80 cents. Would you care to comment on that?

Mr Cunningham: I guess basically our concern about the cattle industry in Ontario is, where is it? It is like the loony bird: There is not going to be one, just because of the figures you state.

Mr Jordan: Do we just sit by and let it go, or do we do something about it?

Mr Cunningham: I do not know. There sure has not been any money in it in the last few years, and it is a declining business. As those people get out of raising cattle, they are getting into cash crops.

Mr Jordan: Yes, but it is not declining at the counter where you pick it up in product.

Mr Cunningham: Oh, no. No prices go down at the consumer level. Corn is down $2 a bushel but you do not see pretty cheap corn flakes. Bread has not gone down a whole lot, but wheat has gone down a lot. I think you can take a look at the difference with the farm gate. There was an interesting analogy. One of the farmers who drew a line in the sand the other day up north said that back in the Dirty Thirties you could buy a really good-quality pair of work boots for a bushel of wheat, and today you cannot get a good pair of work boots for a ton of wheat. Those work boots would not be made in Canada today either. He did not say that, but I do. They would be made in Korea or somewhere else. That is scary. That is something you can get your arms around -- a bushel against a ton for a pair of work boots.

I guess our concern is, we believe that over the years it has been proper to be able to grow our own food. With the abundant good land that lies outdoors, somehow we have to do that. I think we have to make it possible to do that. There has been a lot of mortality in the farm industry and the farm sector. I think the farmers left out there today are the best farmers we have had in years and years because the weak ones have gone by the board, so there are damned good solid farmers out there, and they are having a hard time.

Mr Jordan: What we are really saying here is that the farmer who happens to have his own grain might get through by feeding it to the cattle, and come out all right, but the other ones --

Mr Cunningham: It used to work fairly well. It is even tough to do that today. It is tough to grow your own grain and put it through pigs today and make a fair buck. It used to be that you could do that. If you could not market it, you could market it through the animal and make a few bucks on the animal. That is tougher and tougher today too.

The supply control sectors, they are not too bad. You get the feather industry and the dairy industry. Depending on what the outcome of the GATT is, they are not too bad, but they have their concerns. If that article XI goes, that is not going to be the sweetest thing this side of heaven either.

Mr Jordan: Are you resigned to the fact that the beef industry has gone by the wayside and we cannot revive it?

Mr Cunningham: I hate to think it, but it does not look very good.

The Chair: We will have some time at the end, Mr Jordan, in the event that other matters come up that you want to talk about.

Mr Hayes: I guess if it were not for the Ontario Grain and Feed Dealers Association, a lot of farmers would be unable to put some of their seeds in or plant their crops. I noticed you had mentioned there are a lot of outstanding accounts. Do you have a rough figure in dollars what the outstanding accounts of the Ontario Grain and Feed Dealers Association would be, an approximate figure?

Mr Cunningham: We did a study about three years ago and we have not updated it. I have a fabulous memory but it is short. I cannot remember, Pat, but I certainly could dig out some pretty ballpark figures and shoot them down to Tannis, if you like.

Mr Hayes: I would like to have that information, if you could.

Mr Cunningham: Sure.

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Mr Hayes: I talked to one feed and grain operator who told me there are some farmers who are three months in arrears right now. Is that about the norm as far as the length of time is concerned?

Mr Thompson: Normally what happens, Mr Hayes, is that we provide credit for the goods we offer -- seed, fertilizer, that type of thing. There has always been a certain percentage, in my short history in this business, who got the products in the spring to put into the ground and said, "When we get the crop off in the fall, we will square up with you." It is normally an April, May, through to October, November type of arrangement.

The shift we have seen, though, is that of course the days do not change, but the number, the dollar figure, has gone up quite a bit just in the last year. I am sure there will be a certain percentage who will try to struggle through after harvest. With the support we have received recently, we are hoping that will alleviate the problem, that a fellow can go into a new year on level ground again and not have to carry the burden from this year.

Mr Hayes: Do all the dealers charge the same interest, for example?

Mr Thompson: I do not believe so.

Mr Hayes: What would that range be?

Mr Thompson: It generally runs over prime, that kind of thing.

Mr Cunningham: I think a reasonable rule of thumb would be about 2% over prime. Some would like to charge more. Some of the smaller dealers are paying that much and some of the larger dealers are getting it at prime. I would say that a dealer would likely try to get about 2% over whatever he is paying, and if he is paying 2% over prime, he has to get about 2% more, so that would be 4% over. It is awfully hard to say. It depends too on what you are financing. Some of them will take financing for seed and fertilizer for their spring plantings and plan to pay it out of wheat. If the wheat crop does not come off, it is extended into the fall and then it drags on and on. You can have a crop-out and they wind up never paying any interest at all. You could buy something on the first of the month and pay for it 59 days later and there is never an interest charge put on to the account. If it goes one more month, then there is two months' interest on it. It depends on the timing.

Mr Klopp: You mentioned supply management and a number of factors which are faring a little bit better because they have a bit of a formula in there at the farm gate, not unlike yourselves. You try to figure out your expenses and you need some profit. I do not think anybody minds that. As a person who has been around a lot of these elevators, you need to make a profit. So does the farmer, I guess.

We seem to be blaming a lot of this on the Europeans and the United States -- if they would just quit this war, everything would be fine, yet our grain stocks are down as low as they have been since the 1970s. At that time they said, "Produce, produce; commodities; good times are here for ever," and there was profit for everyone. We had a heck of a rally a few years ago with the drought, and the prices went to $10 for soy and $4 for corn, and if you hit it right, even higher. This time around it does not seem that the supply and demand is there. My question is, if tomorrow morning the European Community and the United States quit this war -- and that seems to be what everybody thinks the problem is -- would you see corn and soybeans going up at the farm-gate level?

Mr Cunningham: First of all, you are absolutely right in terms of the pipeline of grain. You are looking at 14 to l8 days' supply worldwide. That is as low as it has been in Lord alone knows when. It is a very tight supply.

Everything would tell us that soybeans should not be trading where they are trading today. They should be trading at likely $2 or $3 a bushel. As long as the products are being thrown on to the market and being subsidized throughout the world -- for instance, we are competitive on corn prices today, export, given the countervail duty and anything else. Our prices on corn are lower, low enough to hit the export market, but there is no market there. There should be, very close. If the subsidies go off, who knows? I think it eventually has to go. I am long-term bull. I am talking into the spring. I think prices will go up. I think they have to.

Mr Klopp: Even if they do not come to resolve it in Europe and the United States?

Mr Cunningham: We surely have a lot better chance if they get off that bandwagon. What is a bushel of anything worth today because of government intervention all over the world, including Canada? What is a product worth today?

Mr Klopp: Eighty dollars a tonne for wheat, I guess, because that is what they have to give it for to get it sold.

Mr Cunningham: It seems to me it has to be worth a lot more than that to the consumer when you take into account the cost of producing the product. That is what you are going to get for it. I am asking, what is a product worth when you get all these subsidies thrown in? Supply and demand should sort out what anything is worth. As soon as you get subsidies in there, the whole thing is thrown helter-skelter. I think that is the problem, and it has always been the problem.

The Chair: Mr Klopp, I want to interrupt you for a minute and indicate that first crack at the balance of time should go to Mr Jordan or other people who want to ask further questions.

Mr Jordan: The point you were just making with my colleague regarding the value of the product, has that been studied relative to the cost of production with a meaningful markup that you can function at without support?

Mr Cunningham: Yes, the Ontario Ministry of Agriculture and Food has done a lot of work -- and it does every year -- on what it costs to produce each grain, each animal. They do fact sheets on that.

Mr Jordan: So what is a bushel of wheat, then? Do you know? What is it?

Mr Cunningham: No, I have not got those figures with me.

Mr Thompson: I think there is a generic number that OMAF uses, but it can vary from farm to farm, depending on a producer's style of production and his overhead. I do not know what the rule of thumb is. It has been so long since we have seen those kinds of prices, it is a phantom thing. Corn, forinstance: The cost of production is probably in the order of $3.25 to $3.40 a bushel, and today that same corn is trading at about $2.25, $2.30, in there somewhere. So there is a huge discrepancy when the average in Ontario for corn production is a little over 100 bushels an acre. They are only losing about $100 an acre. It is a very discouraging business to be in.

The Chair: Gentlemen, I want to thank both of you on behalf of the committee for taking the time to come to us this afternoon. Your comments have been an important contribution to this whole process. There will be a report prepared by the committee, and I am hoping that you, like the other people who have participated, receive it as promptly as possible after it is prepared. I wish you well. Have a safe trip back to Cambridge and Blenheim.

Mr Cunningham: Thank you very much. We appreciate the opportunity to be here. Good luck in your deliberations.

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ONTARIO FRUIT AND VEGETABLE GROWERS' ASSOCIATION

The Chair: The next presentation is by the Ontario Fruit and Vegetable Growers' Association. Tell us who you are and please begin with your presentation. Try to restrict yourself to no more than 15 minutes so that we have enough time in the balance of the half hour for discussion and questions and dialogue.

Mr Porteous: Thank you, Mr Chairman. We will start with introductions; first, my colleagues.

Mr Glazer: I am Michael Glazer, with the association staff, executive vice-president.

Mr Forth: I am Ken Forth. I am a fruit and vegetable farmer from Wentworth county.

Mr Porteous: I am Ken Porteous. I come from Norfolk county. I am president of the Ontario Fruit and Vegetable Growers' Association, also vice-chairman of the Tender Fruit Producers' Marketing Board. I currently farm 350 acres of fruit. I am involved with Norfolk Fruit Growers, which markets 20% of the apples in Ontario, and Norfood Cherry Growers, which markets 25% of the cherries in Ontario.

Mr Chairman, thank you very much for the invitation to come before you, and I would also like to thank the members of the committee. We represent 10,500 fruit and vegetable growers in the province of Ontario. You all have the presentation before you, so we will just skim through that briefly and hit the high points. The commodities we represent are listed on page 2, and also the marketing boards and commissions we represent.

We have some specific problems in the horticulture industry that could probably be boiled down to income, income and income. One of the concerns we have is the proposed $6-an-hour wage rate. We find ourselves in a very difficult position in the horticulture industry. While we do not feel $6 an hour is probably inappropriate, there is the problem that we do not have income enough to service that wage rate.

When you stop and think about the tender fruit people and probably the fresh produce people in Ontario, 60% to 70% of their expenses are labour, and when many of these industries today are showing red lines, where you get the $6 becomes a very big problem. We have heard, by way of information, that there may be some sort of subsidy program to compensate the difference for growers; however, we do not know that this is, in fact, the case.

One of the problems we have is the fact that our competition in the United States and in Latin America have very different wage scales than we do. One of the problems that I have, I guess, in regard to the Latin American wages that we compete with, is the fact that we import product into Ontario and sell it in direct competition with ourselves. We talk about social justice, we talk about a $6 minimum wage, and yet when we import this product and consume it in Ontario, are we not, in fact, supporting repressive societies? We have a little problem with this.

In turn, with the American situation, where they have a reported minimum wage that is relatively close to ours, we have the problem that it is not enforced. We have the problem of illegal employees in the United States. It is very difficult to prove these kinds of things, but we know they are going on. It is a fact that they are going on, but when you try to send someone into the area, very few people will talk about it.

Another area that we are concerned with is crop protection and food safety. We have to compete with our friends across the border, where we have a free trade agreement. One of the key planks in the free trade agreement was harmonization of pesticides. We find they have pesticides available to them at a cheaper price, and also pesticides that are unavailable to us. I can give you an example of the pear industry that is on the verge of extinction because of a problem called pear psylla. In Canada, we cannot use a product that will control pear psylla, but they use that product in the United States. If you eliminate the pear-growing areas of Canada -- it affects BC as well as Ontario -- you will still consume amitraz, if you consume pears, because any pears that are imported into Canada have been sprayed with amitraz.

The other thing in regard to sprays and so forth is that I think growers themselves are very conscious of the environmental issues in regard to sprays. A considerable number of growers that I am involved with, at least, are enrolled in pest management programs that do tend to reduce the use of pesticides. After all, growers are one of the main beneficiaries in the reduction of pesticide usage, because pesticides cost a considerable amount of money. Anyone who can reduce their operating costs, I am sure, would be happy to do so.

The next heading is "Government's Commitment to Agriculture." This is a very real concern for us. In Canada today, I understand that the basic subsidies for all of agriculture are equivalent to the subsidies for the Toronto Transit Commission. Also, while we were grateful for the $35.5 million announced by the minister the other day, it is equivalent to roughly half the interest on the Dome. That puts agriculture in the proper light in comparison with our emphasis on other areas. If we cannot maintain our agricultural industry, we will become a second-rate country. In fact, I doubt we will exist as a country if we cannot feed ourselves. I think that is a primary goal that should have much more emphasis placed on it.

The interesting thing is that most growers are very self-sufficient, self-reliant, and believe in the free-enterprise system, as was demonstrated by the previous speaker. We do not wish to gain our income from subsidies, but rather would prefer to gain it from the marketplace. We find in the free trade agreement with the United States -- I will use the cherry industry as an example -- if the 2% overproduction in the United States, 2% of their total production, is dumped into the Canadian market, it is equivalent to all we produce. That is difficult to compete against.

We are concerned today with a crop insurance program that does not fit the needs of the agricultural industry. We are concerned about marketing issues. We are concerned about trade policies -- interprovincial, for example, when broccoli that is produced in Quebec sells for $8.50 on the Montreal market and yet sells on the Toronto market for $6. We are concerned about interprovincial trade. In fact, if it is selling for $6 on the Toronto market, it is actually being dumped if it is worth $8.50 on the Montreal market. Not only this, but try to sell broccoli on the Montreal market; you will not be able to do it, simply because the Quebec government gives support to agriculture.

Try to sell McIntosh apples during the season when they are being produced in Quebec. You will not get into that market; they will not allow you in. They will not allow you in because of restrictions? No, the chains will not buy because of pressure from the government. That is the problem.

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We do not have free trade within Canada. It is very difficult to have free trade internationally when we do not have free trade in our own country. Some solutions to the problems: third-line bridging finance for commodities experiencing depressed market prices; an enhanced net income stabilization account program for horticulture, which we have been discussing with the safety net committees; a perishable horticulture safeguard relief mechanism; harmonization of crop protection materials; and international trade and border decorum. Border decorum simply means a restriction of border crossings and tighter border control, because we -- meaning the industry -- have found product that has been imported illegally. I understand full well that the federal government has control over border points, but the province could do something in regard to putting pressure on them to enforce border points.

We touched on harmonization of crop protection materials in regard to amitraz. One of the biggest problems we have is that three federal government agencies control crop protection materials and they have difficulty speaking to one another, let alone coming up with a common policy. Each one guards each area jealously and as a result, producers in this country are suffering. One of the main things that could happen to make us more competitive with the Americans is to have harmonization of crop protection materials.

Whether or not you are a supporter of free trade, the deal is in place. We have to make sure that it is fair trade. We do not really have an objection to the deal as it is, except for the fact that it is not fair to our growers.

Thank you, Mr Chairman, for your attention. We would entertain any questions now.

The Chair: Thank you. We appreciate the compressed way in which you have presented your submission. It allows that much more time for comments. I should note that Norm Jamison is present this afternoon. Although not a member of the committee, he has taken time to attend because of his long-time interest in agriculture. Of course everybody here knows about his enthusiastic advocacy on behalf of farmers. We have six minutes per caucus available for questions and conversation.

Mr Jordan: Moving to some solutions to the problems you have identified, and referring to third-line bridge financing for depressed market prices, I would be interested in your enlarging on that, because it would seem to me that it affects the whole agricultural problem, whether it is beef, cash crop, or whatever.

Mr Porteous: Yes, you are absolutely right. Horticulture is really no different than the other products that are produced in this province and in fact in this country. We hear a great deal these days about grains and oilseeds. At times we think we in horticulture are a forgotten group. In fact horticulture has more farm-gate value in seven out of the ten provinces. There are only three provinces that have more farm-gate value in grains and oilseeds than in horticulture.

Regarding third-line bridging finance for commodities, I believe the Ontario Federation of Agriculture has come up with a figure of $124 million as necessary for a third-line defence situation in grains and oilseeds. We in horticulture have talked in terms of between $70 million and $100 million.

Mr Jordan: And this bridge financing, are you looking to government for this?

Mr Porteous: Yes.

Mr Jordan: Because it is going to be known as bridge financing, are you looking at some fixed interest rate over a period of time to carry you through?

Mr Porteous: That is one possibility. There is a need for stabilization of the industry. Fixed financing would certainly help, although that is less of a problem today than it was, say, a year or two ago. However, in a couple of years we could be back in the same position. That would be a long-term sort of thing we would benefit from. We consider third-line defence financing to get us over this immediate problem, because there is a horrendous cash flow problem out in the countryside.

I do not know if the members of the committee are aware -- it is something we do not like to talk a lot about -- there are people actually committing suicide on farms today because of finances. The problem is so great that by next spring, I venture to say, we will lose a good percentage of the growers in the horticulture industry. The need is for immediate financing. It is hoped that the federal government will come in and match the $35.5 million that was announced, but who knows?

Mr Jordan: You see also that the proposed change in the labour rate is going to have a real, significant effect on your operation.

Mr Porteous: That is right. I personally would like to compete with Stelco, General Motors and all the other industries in hiring labour, because the quality of labour we get is not nearly as good as we need and the reliability is not as good as we need. However, we have an income problem: People are going broke on the farms today paying the present labour rate. How do you improve that?

On the other hand, if you really are committed to an increase in the standard of living of people here, when you allow importation of food that is produced in countries where people are getting $3.50 a day, are you not condoning that kind of thing by allowing the importation? We all know that if the consumer is given a choice between buying cheap imported food and cheap Canadian food, we will lose every time if the imported food is cheaper. All you need to do is look at cross-border shopping with the illusion of cheaper food to see what is happening.

Mr Jordan: Yes, it is an illusion.

Mr Porteous: I have heard the figure that there is $2 difference in a $100 food basket of basic necessities. But people talk about milk being cheaper in the US. This is one of the things they hold up consistently. If you look at the deplorable conditions the dairy farmers in the US are in, the only thing people are doing is importing poverty. They ask, "Why can't I buy my food as cheaply as I do in the US?" I respond, "Why don't you go live there?"

Mr Klopp: Although I am not a food and vegetable grower, a lot of my family members and cousins do this work. I have gone there a few times and worked. One of the things that has really hit me over the last couple of years, and now as a member of Parliament, has been that I have had farmers who I thought were doing quite well in the vegetable business come up to me and say, "This year the bank's calling my loan." It makes you think a lot, hearing the other side of the story.

I asked one farmer where did he go wrong. He said, "Ten years ago you couldn't go wrong." He is a hard worker; he worked long hours and did everything right and had a few bad years. "We deal with the weather but we're willing to live with that." I asked, "What really started to go wrong?" He made the comment that when he first started he had 18 different stores he went to. They were not all owned individually, but there were 18 different store managers and about four or five companies, chains. He was allowed to deal with them. He made his own price, and sometimes they could deal.

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But over the last number of years those 18 stores are now owned all by one company, and those 18 store managers said: "We can't deal with you any more. You have to go to our central house." I am all for free enterprise; it is a great, wonderful thing. I am also for Santa Claus, but I found out after I was married that I have to buy the toys for my kids, as Santa Claus does not come down any more, which I am all for doing. He found out that with only one buyer they gave him a choice between this price, this price and this price, otherwise goodbye, because they import it. So then he tried to work in that deal and, as we can see, the proof is in the pudding. This year he had to refinance like a son of a gun.

You made a comment that the retailers are having resistance. My sense is the consumer wants a Canadian product. My question to you is: Do you think that we have to, as farmers, take on these conglomerates, get our own business and work at it, or what?

Mr Forth: I do not know how we start to take on the big conglomerates. Broccoli, for instance, is selling in Quebec at $8.50 and they may be selling the same broccoli in Toronto at $6.50. This year we said, "Send a trailer load to Provigo in Montreal for $5. Let's show them what is going on." They said, "That's fine. You can send it up there for $2 but they're not going to take it because the chain stores in Quebec have an allegiance to their Quebec farmers."

The chain stores in Toronto, by and large, have an allegiance to themselves, and they will buy wherever they can buy cheapest. We had a presentation when Mr Buchanan was in Essex a couple of weeks ago, by Zehrs. They will buy Canadian produce as long as it is as good and as cheap as imported produce. That is where our problem comes in. With all the different costs we have, in this province especially, we cannot compete with our counterparts in the United States especially.

I will name some of the things that have happened to us. You said, "What went wrong on the farm?" What went wrong on the farm was, we were done in slowly: Workers' compensation rates went up. We took it. Employer health tax came along. We took it. All of a sudden those little $2,000 costs on my farm became $30,000 or $40,000 total at the end of the year -- fuel tax, property tax, all those things that were beyond my control -- and now we are being asked to pay more on the minimum wage.

The statement has been made by your government that the change in the minimum wage will have a minimal effect on agriculture. A lot of people do not realize that the horticultural industry is so reliant on labour. I know you can run a 2,000-acre or 3,000-acre corn farm or a grain farm with two or three people, or some farmers do it themselves. But on a horticultural farm such as mine, which is a medium-sized horticultural farm, our labour bill every year is $300,000. If the wages go up 20%, it does not sound like a lot of money, but it is a lot of money to me. It is $60,000 that will not be there at the end of the year, and that is where we find ourselves in Ontario right now. Any little cost is the cost that puts it below the red line.

Mr Hayes: I will ask one short question. Dealing with pesticides, you are saying that the approach to registration and licensing has worked well in the past but can be improved upon. Can any of you make that recommendation to us so we can take a look at it, just what we should do as a government? What improvements really should be made?

I know that you are faced with a situation where there is produce coming into this country and you are not allowed to use the pesticides at the same time. But I do not think the answer is really to say, "Let's use the same pesticides,' if it is detrimental to people's health. We should not allow those commodities into our country with the pesticides that the farmers here are not allowed to use, and I agree with that. I just wonder, what do you think we should do? Do we have to have legislation or is it just cleaning up or a house-cleaning kind of thing that we have to do?

Mr Porteous: It is a very long and scientific answer. In the case of amitraz, for example, the reason they do not want to register it is that they claim it is hazardous to the operator. They asked them to do tests on it, one or maybe two applications. They did six application tests, and then they suggested that it was dangerous to the operator. Some of the products that you have to use because you have not got amitraz, such as Guthion, are also dangerous to the operator, and probably if they had to meet the same criteria today would not pass either.

There is no residue problem with amitraz. It is not harmful to the consumer, but it harmful to the operator, they say. Surely, if you are an operator, you should be taking precautions to protect yourself against this sort of thing. We have some responsibility for ourselves. This is where government steps in many times and says to us: "This is dangerous for you. You shouldn't use it." Okay. Give us the precautions, and we will take them.

For example, we have a problem with leaf miner in apples in Ontario. The reason I talk about these thing is that I am familiar with them. If we apply Dimilin to apple trees, we can eliminate the problem of leaf miner. It has been registered in Europe for 13 years. It has been registered in the United States for a couple. We cannot apply Dimilin in this country so we have to use other products and, as a result, we come along midway through the season and we find that we have leaf miner problems and we have to use Lannate.

Lannate is one of the most deadly chemicals that we have at our disposal. It is not operator-friendly at all. In fact, it kills everything you spray it on, but you only do this because of the fact that the infestation of leaf miner is so bad you are going to lose your crop. It is expensive, and you have to apply something. When we do that, we kill the predators, so then we have to come in with two sprays of miticide. If we had Dimilin, we would eliminate the use of Lannate plus two sprays of miticide, but we cannot get Dimilin registered because it is not operator-friendly.

I fail to see the logic. It does not make sense. It is costing Ontario producers money because we have to compete with people who can use it, it is costing the environment because of the fact that we have to use extra sprays, and at the same time they say, "The reason you can't use it is because it's not operator-friendly." But Lannate certainly is not operator-friendly and probably could not be registered today if they were applying to have it registered.

One of the things that we see is that where there are proven statistics, proven figures in the United States where they have to register these products, we could simply take their statistics, and if they were satisfactory, we could adopt that standard. The problem we have in this country is that it takes as much money to register some of these products as the companies can get back in profits over many years because of the fact that we do not use a great volume of product in this country. That is part of our problem in the registration process. The companies have said simply to us: "Forget it. Who needs it?"

I will give you an example of what has happened in the apple industry that has cost me personally thousands of dollars. That was the elimination of Alar. Alar has now come up with a clean bill of health. Why did they cancel it? Because somebody screwed up. The figures were wrong. They were taken to an emotional public who are concerned about their food and safety of their food, and rightly so; but they took some figures that were wrong and now we have had the banning of a product that has been very useful in terms of storability, ripening ability and preventing drop of apples.

As a result, who has suffered? The growers have suffered. They have suffered to the extent that in the States there is a lawsuit going on at the present time with 60 Minutes for airing false information. This is the kind of thing we have to deal with, and we will probably never have Alar again because it is an emotional situation and nobody is going to accept it.

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Mr Cleary: One of the things I was going to touch on was pesticides, but that has already been discussed thoroughly. Last spring I spent some time out in some of those areas talking to some of the different growers. They led me to believe last spring that just a few cents' increase in the minimum wage would be enough to put them out of business.

Mr Porteous: I think it has gotten worse. Something that looked like a reasonable crop in July has turned into a kind of disaster this fall, not because of government policy or anything, but simply because of the weather. This is what we face, and few consumers realize that today you can have a great crop and tomorrow it is nothing. We do not have the kind of profit margins that we can fall back on. This is why it becomes so necessary to have improved crop insurance programs and so forth.

Mr Cleary: The asparagus growers mentioned that to me. The other thing I wanted your comments on is, as everyone knows, the loss leader on cross-border shopping is gasoline. I know there have been comparisons done on $100 worth of groceries on the American side and on this side and we are within a dollar or two, but gasoline is the one that puts them over the top, to get their gasoline at half the price or less. I would just like your comments on that.

Mr Porteous: If we are going to be competitive, we have to buy gasoline at the same price anybody else does.

Mr Cleary: You said in your brief that you were in favour of tighter border controls.

Mr Porteous: Yes.

Mr Cleary: I agree totally with that. I know there are some areas that will be very difficult to compete against. I guess we all know that. But out of your 10 groups here, some of them we should be capable of competing against. I would hope that, for instance, potatoes, we could do something there and salvage that particular commodity. I know the Chairman is looking at us because he wants to get on.

The Chair: No, Mr Cleary, you have time for another question and then Mrs Fawcett has a question.

Mr Cleary: You go ahead.

Mrs Fawcett: Do you still get a rebate of any kind on gasoline?

Mr Porteous: Yes, there is some. I think it is federal. I think it is two cents a litre or something like that. I do not do it, my wife does. I know it is less than it was.

Mrs Fawcett: It is less than it used to be.

Mr Porteous: Yes. I do not know what the provincial is.

Mrs Fawcett: Nobody knows?

The Chair: That is something we should inquire about and we will have an answer back to the committee.

Mrs Fawcett: Because if we do provincially, it is obviously not enough.

The Chair: Notwithstanding that, we have undertaken to inquire about that and report back to the committee.

Mr Klopp: If I remember, a couple years ago the provincial part of it was, you signed that it was for farm use. You did not get the rebate; it was automatically taken off at the farm pump.

The Chair: Let's find out. That way we will know. Anything else, Mrs Fawcett?

Mrs Fawcett: Not right now. I think everything I was going to question has been covered. I appreciate that you are in dire straits. Crop insurance is something I am wondering about as far as you people are concerned. I remember that was a concern last year and I assume not much has happened to change your concerns.

Mr Porteous: There have been some changes. Unfortunately I am not in possession of them at this point, but I understand there have been some changes that are coming down. We are working on that, but there still need to be more.

The Chair: Gentlemen, thank you very much for coming in to spend some time with us this afternoon and for your brief, which was well prepared and stated a number of points very clearly and skilfully. A report will be prepared once all of this process is over and hopefully you will have a copy of that report at least as soon as everybody else does and, perhaps fecklessly hopefully, a little sooner than some of us. Have safe trips home. All of us on the committee appreciate your input.

Mr Porteous: Good luck in your deliberations.

MINISTRY OF AGRICULTURE AND FOOD

The Chair: We are at that point in this afternoon's agenda where we are to hear from the Minister of Agriculture and Food, who is here along with the Deputy Minister of Agriculture and Food, Ms Rita Burak. We will devote the first portion of this next stage to the comments by Mr Buchanan. There will then be an opportunity for people to make points with the minister and pose questions to him and his staff.

Hon Mr Buchanan: I am pleased to be back with you again. This series of hearings of the resources development committee has been especially useful. I believe the presentations made here have brought into sharper focus the significant problems currently faced by the entire agriculture and food sector.

We are still struggling with many of the same challenges I outlined at the beginning of these hearings. Commodity prices continue to hover around near-record low levels, mainly because of the trade war raging between Europe and the United States. Objections by some participating countries in the GATT negotiations still threaten our vital supply management system. We are still also waiting for the federal government to fulfil its commitments to third-line defence programs to help farmers over this very rough economic period.

The Ontario government, however, has not stood still. I have met with many of the Ontario farm leaders and this government has listened to the pleas of Ontario farmers and farm families. We have backed up our commitment to revitalize the agriculture and rural communities of Ontario with a $35.5-million emergency assistance package.

As you know, we are directing the funding into five areas needing the most attention. First, we are adding $11 million to this year's farm interest assistance program. Second, we are allotting $15 million to grains and oilseed producers, which will equal their premiums under the farm income stabilization program. Third, we are putting $5 million into the pockets of producers of edible horticultural crops. Fourth, we are distributing about $1 million to apple, honey, onion and fur producers and negotiating with the federal government for their inclusion under the NISA program. Finally, we are providing $3.5 million to farmers and farm families experiencing financial stress not only from market prices but drought or other severe weather conditions.

I think the members of the committee can appreciate the importance this government attaches to our farmers and their communities. At a time when we are taking a hard look at our priorities and spending levels in all sectors of the economy, the Premier and cabinet have recognized the need for emergency help for our farmers. Cabinet heard the message from the rural members of our caucus loudly and clearly: Farmers are in need. They need help now. We heard that message from our MPPs in rural ridings and as a government we responded as quickly as we could.

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I was heartened by the positive response we received from the farming and commodity groups. Many farm leaders expressed their appreciation for this government's recognition of the seriousness of the farm situation and for our prompt ability to provide financial support in this time of need. Over these difficult times, it has also been encouraging to see the amount of solidarity among all farm groups. Farmers of cash crops and livestock and horticulture have all banded together. This kind of co-operative spirit is something I really hope continues long after our immediate challenges are over.

What continues to amaze and disappoint me, however, is the inaction on the part of the federal government. I do not think the farmers of this country could make any clearer the dire conditions they are in right now. They and we are waiting for some signal that Ottawa will come through on its promise for third-line defence assistance. Last Friday, the Prime Minister indicated in Winnipeg that an announcement on assistance was imminent. Indeed, there are reports in the farm press that a package has already been put together, but so far nothing is official. I fear the federal government is playing politics with the timing on this announcement. If Mr McKnight has a package to announce, he should do it now. The livelihood of thousands of Ontario farmers is hanging in the balance.

For the remainder of my time here today, I would like to talk about a second issue which is at the top of our agenda: supply management. On the same day I announced the emergency assistance package, I met with a number of farmers and farm leaders concerned with the status of supply management in the General Agreement on Tariffs and Trade. I said to them then, and I reiterate now, that the Ontario government remains firm in its commitment to preserving the supply management system and fully supports the strengthening and clarification of article XI under the GATT. I know this same message was made to this committee by Mr John Core, chair of the Ontario Milk Marketing Board.

As an NDP government, we see supply management as a fair and efficient way for farmers to earn a decent living from the marketplace. Our supply management system is one that has served our farmers well. The dairy industry has operated for 26 years under it. The system is held in high regard, even envied, by many other nations. However, some signatories to the GATT object to the import quota mechanism we have in place. Import quotas on food are acceptable under article XI when such food is subject to government support programs that restrict its production or sale.

The federal government has sent out disturbing signals that its support of supply management is wavering. In fact, in a recently released paper, Canadian Federalism and Economic Union, Ottawa charged that supply management is an obstacle to dismantling interprovincial trade barriers. I have written to Mr McKnight to express my full support for Canada's balanced GATT negotiating position. I have urged him to reaffirm his resolve and those of our negotiators on article XI. I was pleased to see Mr McKnight reinforce this strategic point in Geneva last week. I might add that I spoke with Mr McKnight on the phone on Friday, again to make my point that supply management was important for Ontario farmers and that we hoped he would live up to his commitment. He verbally reassured me that he would.

Still, the GATT negotiations will be tense. The opposition to our position is great, but I think that with the united front here in Ontario and across Canada we can and must defend the integrity of our supply management system and the mechanisms designed to protect our domestic industry. These are trying times in our agriculture and food sector. There is no doubt about that. We will have to work hard at creating solid, co-operative trade relations here at home so we can continue to compete effectively in the global market. We must continue pressing to alter the way agricultural business is conducted internationally, so our farmers are no longer put at the mercy of the trade practices of other countries.

The Ontario government has made substantial efforts to alleviate the situation here at home. The emergency assistance package, upcoming payouts under the interim GRIP and a pledge to strengthening our rural communities attest to our commitment to the revitalization of this important part of our society and economy. These efforts, together with a strong show of support for our supply management system in GATT negotiations and ongoing consultations among all participants will help us out of this current dire situation. More important, we can forge the ties we will need to build an economically viable agriculture and food system in which farmers, processors and others receive their fair share. Thank you very much, Mr Chairman.

Mr Cleary: Minister, there are a few things that I have been wondering about in your discussions with Mr McKnight. How does he react to all this American produce that is coming in -- we will talk about Ontario -- from the United States, and also, to the gasoline prices? I know we cannot blame Ontario for all of it, but we can blame it for part of the tax. I have been involved in agriculture all my life and I know that anything you buy or sell on a farm is moved from one place to another, so fuel does have a big cost in there.

Hon Mr Buchanan: To be honest with you, I certainly have not talked about gas prices with Mr McKnight. I recognize the importance of gas prices. People say that a significant part of the gas price is, of course, taxes. That is a federal and provincial matter. To equalize our gas prices with the United States, from an environmental perspective, might be a mistake. I think there are perhaps other avenues of addressing that concern. I guess in an ideal world farmers have costs and when they sell their products, whether it is grain or livestock, they could show a return or profit for their work, regardless of what the input costs were. That is not the situation we have, of course, in many commodities.

In terms of US produce coming into this country, one of the things we have been trying to do, and that I think is a responsibility of government, is to advertise more aggressively Ontario products, take every opportunity. That is not just government, but all members of this Legislature and farm leaders have a job to do in trying to advertise and promote Ontario produce and show that in many cases it is the superior product.

Recently, the launching of the orchard crisp campaign, for example, is an attempt to promote significantly, with dollars, Ontario produce. I think that is the way to go. Given that we are in a free trade agreement, we cannot stop the produce from coming in. I think promotion is the thing to do. You mentioned Mr McKnight. Maybe the feds have a role to play in that, promoting Ontario and Canadian produce as well.

Mr Cleary: I really agree with you. Advertising is sure working for the Americans. I agree that we had good ads too. But I will just talk about our part of Ontario right now, where the Americans are advertising 67-cents-a-pound turkeys. They are advertising $1.67-a-gallon milk and bread at a very minimum, something like 19 or 20 cents a loaf. Those are all loss-leaders to get them over there to buy $150 worth of groceries. Anything that is bought over there that is produced by the Americans is going to knock the tar out of our farmers. I think somebody has to do something. I am not blaming the provincial government for it; I am blaming governments in general. It is not going to get any better.

Hon Mr Buchanan: There needs to be some more work done on the actual savings of cross-border shopping, especially as it relates to food. I have been told, although I have not seen any lists, that people who have done very rough surveys say that if you buy all your groceries in the US, on $100, after the exchange, you are really probably going to save only about $2. If you go over and buy lots of milk and cheese and some of the other products that are significantly cheaper, and you mentioned turkeys as well, you can save more than that. But if you buy all your groceries, the saving is not as significant as what they are advertising, and that is not the image that many consumers in Ontario have. They think everything is going to be cheaper over there. In fact, some things are more expensive.

One other point, if I might, Mr Chair. On this issue of turkeys and so on, one of the things I object to and do not want to see us try to move to, is competing with those kinds of prices, whether it is loss leaders or whether it is the milk industry. I have talked to some farm leaders who were visiting the New England states and they talked to me about dairy farmers in the state of Vermont who were receiving food stamps. Now, I do not want to see our farm community trying to compete with an industry for a pricing level that is going to put them on food stamps or on social assistance. That is not the way to go. We have to do some other things, other than try to knock our prices and our producers down to a price that is the same as the milk in Atlanta, for example.

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Mr Cleary: I have a friend who is farming in New York state and he brings his friends into my office -- I am right on the border of another province -- the same as they bring their friends in from Quebec and tell how we are abusing them in Ontario, and probably we are.

These statistics on $100 worth of groceries that would run an average household -- there is only a $2 difference buying them in Massena, in our particular instance. That comparison was done by a group of business people on both sides. We have those comparisons, if you would like to see them. I think they are pretty accurate.

Hon Mr Buchanan: I would appreciate that. If that is the one that was done, I received it third hand, by word of mouth. I did not see a hard copy of the survey because it was an informal survey, I understand, but it was in the Cornwall area.

Mr Cleary: Right. That is the one.

The Chair: We have a lot of time left for discussion, so let's be a little bit flexible and perhaps instead of feeling compelled to use up all of the time, rotate the subject to what people might say. That way, as things develop, you can contribute to that part of it. Mrs Fawcett.

Mrs Fawcett: It is good to see you, Mr Minister. I, certainly, along with everyone, welcomed your announcement last week for farmers but, as always, it is never enough. Can you tell us what the holdup is with NISA, or some announcement on NISA? Is it a philosophical problem? Can you just tell us what you want to tell us, and what the holdup is? And then we will try to pick away at the real reasons.

Hon Mr Buchanan: I am starting to feel like the Treasurer does now every day, when people are looking for more. The reason we were not in initially -- and I will try not to repeat myself too many times -- is that we did not have time to respond to what was a revised NISA program. Originally, we did not go into NISA because we wanted to target the money a little more broadly and, we thought, in a better way. NISA, philosophically, is intended to be a program for people who have money to put away in the good years so they can pull it out of an account in the lean years. That is the intent of a NISA account.

With times as tough as they are now, it did not make sense to me to put money into that type of program. We put $50 million into interest assistance, rather than put some in NISA, because we thought we were doing more for those in greater need. Then Mr Mazankowski, who was still the minister, said, "Oh, by the way provinces, if you come in, we will chip in a bonus." He did not give me time, though, to respond. And this is the part of the story that I have said many times: that we did not have time to get in the program because of our budgetary process.

Mrs Fawcett: So it is still under consideration then.

Hon Mr Buchanan: We have said we will participate. We are participating this year. We have announced that we will put money in next year. By doing that, we allow the farmers to get about 3.5% from the federal government this year. Now, if we put in $18 million -- I think it would cost us -- the farmers would get another bonus.

The question that needs to be answered here is: Why did we not announce that we were putting $18 million into NISA this time? It is because it is targeted, and we wanted to do some things for the the horticultural people, the apples, honey, onion and fur people. We felt there was a need in some other areas. With the Agricultural Stabilization Act and some other things, we thought we were addressing the grains and oilseed sector. NISA is targeted to those people, so we tried to spread the money around a little bit more. That is why we did not go with NISA in this particular announcement.

The other thing is that Saskatchewan, which was already in prior to the changing of the program, is still the only province that is in. We are not out there being different or trying to be difficult. None of the other provinces have come in even though that incentive is on the table.

Mrs Fawcett: I notice that very often you come out with the figures for assistance a little bit late for farmers. In fact, I can give you an example of one farmer who was eligible for assistance last year when the base figure was $12,000 gross. Then it was moved up to $15,000, and he was short $500, because he did not really know enough in advance. Are you going to come out with those figures let's say before the spring, so that farmers know where they are going when they are planning their overall plans? Is there a hope that we can see some of those figures early?

Hon Mr Buchanan: I think what you have identified is a problem with ad hoc programs. We have had them provincially and we have had them federally in agriculture and in other sectors. The best way to address that is to get away from ad hockery and look at long-term programs, so that what is available this year will be available next year and the year after and you do not have to be looking to see that the criteria or the rules change. In fact, they did change significantly this year.

We tried to target our interest assistance to those who we thought were in greatest need, so that they got a little bit more. Actually, we were expecting to get more money to fewer people, to the ones that needed it the most. To do that, we targeted it a little bit more, we put caps on it, we looked at off-farm income being included. People who have off-farm income also have high interest, but they have a capacity sometimes to pay some of that, whereas those who do not have income have no way of paying it.

We did change some criteria, and I accept that as a criticism, but the best way for us to get away from it is to look at long-term programs. That is what we are looking at doing and what we have been working at over the summer, looking at long-term interest programs that we can announce consultations on this fall. Everybody will know what the criteria are and then we will hopefully get the funding in the spring.

Mrs Fawcett: Do you have up-to-date figures, as gloomy as they probably are, on the bankruptcy rates? Are there trends there? Are you tracking them and are the figures out?

Hon Mr Buchanan: I do not have anything significant in the way of updates, but the deputy might be able to comment on that.

Ms Burak: We are tracking the number of bankruptcies and the number of increased cases going to the federal debt review board and we can provide you with a copy of that.

Mrs Fawcett: I would appreciate that. Thank you.

Mr Jordan: I would like to approach the subject of the proposed increases in electrical energy rates to the farmer. As you know, he is very dependent on electrical energy. In most locations generally, he does not have any option to use another fuel. As I see the proposal to date, he is going to bear the cost of a higher rate per kilowatt hour, because the minister feels that making it more expensive will encourage conservation. I do not deny that it will, but it is going to have a very detrimental effect on the operation of the farm.

I do not think fuel-shifting should basically take place, but that is beside the point. The minister is going to give me $2,000 to take an electric furnace out of my house and put a gas furnace in, because I am in a location where I do have the option, and then I am going to ask my farmer friend to subsidize me for that in his rate, when he is having trouble already trying to come through with a profit. Have you had communication with the other ministry?

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Hon Mr Buchanan: To be honest with you, this is something we have not had a lot of consultation on, the impact on what I would call rural Ontario. You refer to the farming community; I would make that a larger group and talk about rural Ontario and the effect it will have.

Certainly conservation is part of what is being proposed and I think both of us applaud that concept. I guess the challenge that faces me or faces the government as a whole is how do we address some of those concerns that you have raised in terms of the farmer who has no other options. Certainly they are going to be squeezed a little bit into conservation. I think all of us can do more in terms of turning the lights out and unplugging some of the things that we run that we do not need to. But at a time when farmers are under siege for some of their prices, I accept that we are going to need to look at how we counter that for the farmers and for some of the rural people who have no way of converting or conserving much more, although I think statistics show that there is a fair bit of room for conservation. The minister would not be bringing this forward if there was not the feeling that there is, in terms of efficiencies in light, heat, insulation and appliances, etc.

The other thing we have to worry about is covering the cost of what Ontario Hydro has to live with in terms of costs, which is not my field and I do not want to venture too far into that, but that is also part of it.

Mr Jordan: I realize that. I was just wondering if you were going to give some consideration to the farm section of rural Ontario, at least relative to that proposal for increased costs.

Hon Mr Buchanan: On an ongoing basis, we like to look at where the pressures are coming in the farm community. I am hearing from the horticultural side in some cases about labour costs, for example. In some of the other commodities they have drying costs. I remember last fall there was a fair bit of lobbying about increases in field prices for drying corn, etc. I think, as a government, we need to respond to what those pressures are. I would suggest that hog producers probably have as high an electrical bill as any commodity, barring the greenhouse side, although they may have other options for fuel.

I am certainly, and I believe this government is willing to look at where the pressure points are on farmers and respond to where those pressures are greatest. They will not be distributed equally across agriculture. They are going to be targeted in certain, in some cases, geographical areas, in other cases to certain types of producers, and I believe that we as a government will respond to those pressures when they become better known.

Mr Jordan: I have another quick question regarding the beef industry. It was pointed out earlier today that it was pretty well a write-off as far as being a sustainable business in the province of Ontario because of the history of the beef market. But as minister, sir, have you really written off the beef industry per se as something that cannot be directed or assisted to keep a viable business here in the province? We were relating to a few cattle at $1.15 live weight being sold at 80 cents and so on, just not a business that people can stay in any more.

Hon Mr Buchanan: No, we certainly have not written off the beef industry. In fact, we need to look at ways of supporting and enhancing the beef industry. Perhaps in the past we have not been competitive, if I could use that word, with the Alberta treasury, which has seen fit to subsidize very heavily the beef industry in Alberta in an attempt to shift part of that industry that used to be in Ontario to the western provinces and especially to Alberta. I am not willing to get into a bidding war with them, but we as a government do have to be concerned about the future of that industry.

I certainly have talked to many farmers about loading cattle and recognizing every one that got on the truck was another $50 that they had lost, or another sizeable dollar that they had actually lost. We all know that you cannot go on in any kind of business when you are losing money. So we need to look at ways of doing that.

The farm-fed grain issue which is under the net income stabilization account and the gross revenue insurance plan, two things that I lobbied hard for at the first ministers' meeting I attended -- because that was not as big an item with some of the other provinces as it was with us -- we have already attempted to include them in some of the programs; but I accept the fact that it is an industry under attack and it is going to need some support in the future.

Mr Wood: I know for a fact, having a brother and one sister who are still farming in southern Ontario and some nieces and nephews who are farming, they are quite pleased with the announcement that you brought forward of the large amount of money for the rural community and the farming industry.

We have just listened to a presentation from the Ontario Fruit and Vegetable Growers' Association; they made some comments that there is a type of dedication or commitment on the part of some of the chain stores and other stores in other provinces, particularly Quebec, that even if the prices are a little bit higher coming from the farmers, they will buy the produce and market it and sell it in the province of Quebec, whereas in Ontario that is not the case.

If there is a product from outside the country that can be put on the shelves cheaper than they can get it from the farmers in the province of Ontario, they will do that in the province of Ontario. That does not happen in the province of Quebec, and maybe it does not happen in some of the other provinces. It might be a dedication on the part of the chain stores and other stores that are marketing it.

I am just wondering, Mr Minister, if there is something we can do through publicity or through some type of legislation to encourage the marketing of Ontario produce in stores in the province of Ontario. I am sure this would help some of the concerns they mentioned about the labour rate going up. If the labour rate is going up, maybe they can get a higher price by not having to compete with produce coming in from outside the province, outside the country.

Hon Mr Buchanan: One of the things we have now is Foodland awards which we give out to various independents and chain stores. They are judged on how they promote Ontario produce in the store. People actually go and inspect what they are doing. They also provide pictures. In some cases they were asked to take pictures of their display at different times of the year. Then in the fall, there are awards given out to them provincially, and I am told this is a coveted award. I was at the luncheon last year and there was amazing attendance from all across the province. There were even people from Dryden who came down to accept this award so they could hang it in their store. It was seen as something they could hang proudly in their store.

We have had meetings with some of the chain stores and are working with them to encourage them to purchase Ontario produce when it is available, even if it is a little higher, and to promote Ontario produce. I can tell you there is some receptiveness to that.

When you compare us, however, with Quebec I think there is a little bit of a problem because there is much more of a cultural identity there, and we know from talking to other people that there is much more of a loyalty in that province to consuming food, and other things I might add, produced in Quebec. We are not as loyal in Ontario to our own manufacturing sector, nor are we as loyal to our own food sector. We have a job to do, all of us, in terms of educating people and trying to promote Ontario food.

If I might reiterate a little story that I heard from a friend of mine on the weekend who told me that his wife had seen the Foodland ads for tomatoes, which I am sure many people have seen -- he said she is not a very political person, but she went into her local store and asked the produce manager if those were Ontario tomatoes, and when she was told no, that they were not, she did not buy them. She went down the street to another chain and asked the same question to make sure she was buying Ontario tomatoes. The impact was because of the advertising.

That is just one small story in a small town in Ontario, but I think it makes the point that we have to educate people in the importance of this, and that they should be looking. If they get that message to the retailer, the retailers then, because they are interested in the bottom line, are going to be wanting to get more Ontario produce in their stores. Through that process of education I believe we can achieve a higher level of consumption of Ontario produce.

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Mr Wood: Thank you very much, Mr Minister. I am pleased that we are making an effort to promote Ontario goods. As the saying goes -- it goes back a number of years ago to when I first went into the workforce -- buy Canadian and promote Canada. We should be doing the same thing in Ontario.

Hon Mr Buchanan: I certainly think we need to do that in food and other products as well.

Mr Klopp: You are doing a great job.

Mr Cleary: Getting back to the beef industry, you know that farmers, not being able to compete and make a profit in the beef industry, are getting rid of their cow-calf operations; they are trying to plant cash crop which is just adding to the problem. One thing that used to work reasonably well, in my opinion, back a number of years ago was this $1.25 an hour they had for agriculture to hire students or to hire people on social assistance or whatever it might be.

I would be the last one to suggest that the farmers should have any more paperwork. If there were some dollars involved there, $1.25 an hour or $2 an hour for some of these crops, like in the presentations that were made earlier today like asparagus and those, it might soften the problem a bit.

Hon Mr Buchanan: Yes. We certainly know that there are a lot of people unemployed out there and they are receiving different kinds of assistance. I take it from your comments that some of that money could be redirected into assistance for farmers for employing people. I certainly have no problem at all with that. The challenge is to find a mechanism that works and, as I think you pointed out, not create a lot more paperwork for the farmer. That is a challenge that we face and something that I have indeed been thinking about as I from time to time hear about the increased labour costs in certain sectors of agriculture. Usually they are beating up on me because of increases in the minimum wage.

But I think there is something to be said for looking at how we can provide employment on farms and maybe give some of these people some training as well. The farmer could be involved in getting people interested in agriculture again. I have no problem with that. I think it is far better to do that and provide a useful service to produce food than to just let those people waste away without any work experience.

Mr Cleary: I think you are right to try to get them interested, because the age of the farmers in some counties is getting pretty high. The young people are moving away and we get up to an average of 45- or 46- or 48-year-olds trying to farm.

Hon Mr Buchanan: The other thing I would add though is, I have talked to some farm leaders and other farmers who tell me that it is difficult to get people to work on a farm at any price. That is why we have the offshore program for the harvesting of many of our crops. A dairy farmer in eastern Ontario in fact has told me how difficult it is to get a farmhand to work on a dairy farm. I think he was looking at paying something in the neighbourhood of $8 or $9 an hour. That is what he was willing to pay on kind of a salary basis, and he was having trouble keeping someone on the farm on a regular basis because that was not enough money and they were looking at doing other things.

So we have two problems: The work is difficult and it is hard to get people to work on a farm. But I think we need to continue to try to address that problem; otherwise, we are going to lose all the young people from farming and we are going to eventually start losing the farms and the farmers.

Mr Cleary: Just getting off the subject a hair there, back a number of years ago there were some people on the back road to me who tried to operate their farm. Their family had gone and they were 70 years old. Haying time was coming and the owner was interviewing a lot of young fellows. A young fellow said to him, "Yes, I'll come and work for you, but I only run the machines."

The Chair: I thought you were going to ask how European jurisdictions, especially, deal with that same phenomenon, and whether the ministry has any familiarity with that. I thought you were going to ask that.

Hon Mr Buchanan: Are you asking that now?

Ms Burak: I have not been authorized to do any out-of-province travel on this topic. We have done some research on the specific issue of labour rates and there is a study under way by the Federal-Provincial Agricultural Employment Committee, of which a spokesperson from the previous group is a member. So there is some work and some research being done on this subject. Again, when those reports are finished we would certainly be pleased to make them available.

The Chair: I do not think there are any of us who come from farming areas who do not share some dismay at the fact that it is not the factor so much of pay as it is of the nature of the work, be it young people or more mature people. Farmers just have one heck of a time getting people on their farms doing that work, notwithstanding that I did it as a youth.

Mrs Fawcett: The former group of presenters, the Ontario Fruit and Vegetable Growers' Association, brought up the problem of pesticides and chemicals and all of that. Are you working or trying to work with the Ministry of the Environment to bring a little common sense to that whole area of pesticides and how it really is devastating to the growers when all of a sudden something is banned that other jurisdictions are using, which really puts them behind the eight ball?

Hon Mr Buchanan: Yes. In fact, I believe about a year ago now, the Minister of the Environment was the very first minister I went to see after my appointment, because of concerns that I had already heard. There is a need to work with the Ministry of the Environment. When we get into the environment and we get into pesticide registration and some of those other issues, we get into a federal-provincial jurisdictional concern in terms of licensing. There is a group that has done some work in terms of putting in a task force report on how we can address the whole pesticide issue. Some of it is a matter of getting things registered here in Canada that are available in the US and in many cases are cheaper.

There is the other side of it where no one is really interested in getting something registered in Canada because of the limited size of the market. I am not sure how we address that. One possible solution was to allow farmers to go across the border and bring pesticides back. That is something that is being looked at. Whether or not that will ever be implemented I cannot say, because there is federal jurisdiction, there is provincial and I am sort of almost a lobbyist on the outside.

But I recognize the problems that are being faced. As I came in I heard about Alar. I recognize what happened there and how it happened and what pressure it is now putting on apple producers and that it is causing a financial hardship. I guess from my perspective what I need to continue to do is to work with the minister and try to be as strong a voice as possible for the agriculture and food industry in terms of trying to keep the fruit and vegetable people producing and giving them as much of an advantage as we can.

Mrs Fawcett: I should maybe have asked the producers, but do you have members of their group working with you? Is there dialogue back and forth and good communication there?

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Hon Mr Buchanan: Yes. I will let Rita answer that.

Ms Burak: On the report that the minister made reference to there was a very good piece of work done by a federal-provincial task force which comprised federal and provincial officials as well as farmers, environmentalists and others in the pesticides industry. In working up how some of those recommendations would be implemented, we have been working very closely with an organization called AGCare, which comprises farmers, to determine how those recommendations such as the ones the minister referenced could actually be implemented. That is still very much under discussion.

Mrs Fawcett: One concern has been raised, and I wonder if there is any truth to it, that there is going to be a bit of cross-compliance in some of the programs that are going to be available to farmers, that they will only be eligible if, let's say, they are okay as far as the pesticides they are using or whatever. Is there any comment on that?:

Hon Mr Buchanan: Yes, we are trying to bring the concept to the table when we are looking at new programs. We have not laid out that you do not use pesticides, you cannot use this or you cannot use that. What we have been attempting to do -- we have talked to the federal government in some of the programs we worked jointly on -- is to keep the concept of the environment up front. We do not, for example, want to be giving money to -- I do not want to pick on cash croppers, but we know there is a GRIP program and we know that in terms of having grassed waterways or setbacks from streams, for example, where maybe in the past the farmer has not been plowing right up to the stream, whether it has been fenced or not is another issue, we put something in place which encourages them to plant more acreage, so they plow up the grassed waterways and they plow up right close to the stream to make sure they expand their acreage by doing that.

Those kind of things we believe strongly; that is an example of something that would be in place and not be damaging to the environment. We are not looking at cutting or anything severe in terms of pesticide use or anything, but being basically concerned with the environment, aware of what is going on and being good environmentally, which I think farmers are.

Mr Jordan: I would again like to bring to the attention of the minister that the very specific problem in my riding is not only the beef farming financial condition, but the egg-producing market that they used in conjunction with that. They were able to sell their eggs to the general store, tourists and so on. The information I have been given is that there is a federal grading standard, an egg-grading standard by the federal government, but it is up to each province to enforce it. The information I am given is that your ministry is planning to enforce that come January 1992. It means a real loss of income to the farmers in my riding. I was wondering if you might clarify it.

Hon Mr Buchanan: Yes, I am aware of the concerns you raise. There are two of them in my own riding in Peterborough county which have gotten a substantial amount of press. Unfortunately, the ag rep, who is a provincial employee of course, is the one who delivered the message. I think it is unfortunate that our staff deliver some of this bad news when in fact it is a federal regulation.

My understanding, though, is that we are going to try to work and be effective in trying to do a little negotiating and have some flexibility. The reason this was brought in was for the safety component. I don't know whether you mentioned going to restaurants or not, but in terms of its personal use, there is going to be some flexibility. People are going to be allowed to continue, provided they were having it sold so that it was going to be resold in some way, whether through a corner store or as eggs on a breakfast menu. Those two that would be in place I think are acceptable to me. Those who are selling to their neighbours and have had customers for many years, whether they were picked up at the farm gate or delivered on a route -- as I used to remember selling eggs in town to people -- however many customers you have, I think those kind of sales are going to be allowed to continue.

Mr Jordan: They were selling to the general store and the tourist outlets and so on.

Hon Mr Buchanan: Yes. I think it is a matter of having the tourists come to the farm, which I would suggest is an excellent public relations exercise. If you can attract people to your farm to buy the eggs, that will still be allowed, but not through the corner store.

Mr Jordan: I am saying it is a federal thing.

Hon Mr Buchanan: It is.

Mr Jordan: The information they are giving me is that it is a federal standard for the grade, but it has to be enforced by the province and the province can choose to ignore it.

Hon Mr Buchanan: It is like saying the OPP can ignore every other speeder if they wished to. If we are given the responsibility of enforcing the act, then I guess the question you are putting is how stringent or how severe we are going to be. I have told you what my views are.

Mr Jordan: Yes.

Hon Mr Buchanan: So maybe we should just leave it at that.

Mr Jordan: All right. Thank you, sir.

Mr Cleary: You mentioned grassed waterways a few minutes ago. This has been going on for a considerable number of years. Is the Ministry of Natural Resources involved, too, in those discussions about grassed waterways?

Hon Mr Buchanan: I was giving that as an example of something I did not want in a program if I was giving out assistance, which would do anything with a program that would encourage people to start plowing them up and seeding them down with something. When it comes to waterways, if you get any fish in your waterways of any kind then, yes, MNR is certainly involved. I have had the concerns raised by farmers that once you get fish habitat into your farm in terms of waterways, you will have to deal with MNR.

The Chair: Ms Burak and Mr Buchanan, I want to thank you very much for coming this afternoon. Mr Buchanan, I think the committee appreciates your candour in response to the questions put to you. We appreciate your input to the committee process in that regard.

We will begin on Wednesday dealing with the substance of the presentations and discussing the nature of the report that will be made and we are confident that you will act appropriately -- what a wonderful phrase -- act appropriately upon receipt of that report. Thank you.

Hon Mr Buchanan: Thank you very much.

The committee adjourned at 1728.