Legislative Assembly of Ontario

AGRICULTURE FUNDING

ONTARIO AGRICULTURAL COMMODITY COUNCIL

CHRISTIAN FARMERS FEDERATION OF ONTARIO

NATIONAL FARMERS UNION

CONTENTS

Wednesday 25 September 1991

Agriculture funding

Ontario Agricultural Commodity Council

Christian Farmers Federation of Ontario

National Farmers Union

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:

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

Mancini, Remo (Essex South L) for Mr Ramsay

Clerk pro tem: Manikel, Tannis

Staff: Yeager, Lewis, Legislative Counsel

The committee met at 1603 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 have a couple of things to note at the outset. Welcome, of course, to people who have come here to Queen's Park this afternoon. I mention that there is coffee, tea, milk and fruit juices. It never fails to amaze me that at Queen's Park, of all places -- I appreciate that the fruit juices are from our Windsor-area processing company and that some of them are apple -- there is also some orange there, and I do not know of a whole lot of orange groves here in the province of Ontario. It is ironic that at a meeting of this sort, where we are talking about the agricultural community, we as a government could not show a little bit of leadership by ensuring that we are providing Ontario-based produce for refreshments during the course of these meetings.

Mr Mancini: I agree with you, Mr Chairman.

The Chair: The sad thing about it is that I got déjà vu, because it has been going that way for so long now that surely somebody can do something about it. As I say, it never fails to amaze me.

Mr Waters: Mr Chairman, with all due respect, you are the champion of great causes and I think that you are the person to go out there and fight this battle on behalf of the farmers and this committee.

The Chair: Is it any wonder why I put that on the record? That is first of all. So please make yourselves comfortable and get coffee, tea or juice.

We are considering a motion that was brought by Mr Cleary pursuant to section 123 of the standing orders. Basically, the area to be discussed is that in consideration of the state of emergency and the income crunch in Ontario agriculture, especially in the oilseed and grain seed sector, caused in part by the 35% drop in cash crop commodity prices, it has been requested that this inquiry and discussion take place. After hearing from all the participants, there will be discussion and a report prepared.

ONTARIO AGRICULTURAL COMMODITY COUNCIL

The Chair: The Ontario Agricultural Commodity Council is here. There are four of you. I would ask you to please tell us who you are and then commence with your comments, leaving hopefully a healthy part of the hour for us to ask questions and engage in dialogue with each of you.

Mr Jaques: We thank you for this opportunity. I am John Jaques from Thamesville, Ontario. I am an asparagus producer and chairman of the commodity council. On my left is George Dmetriuc, chairman of the wheat producers and a grain and oilseed grower. Glynn Waterton is a vice-chairman and he is from the pork board. Terry Daynard is a staff person from the corn producers and also a farmer himself. I will read through the brief, if that is all right, and then we should have a fair amount of time for questions after that.

The Ontario Agricultural Commodity Council is a coalition of 18 agricultural commodity organizations in Ontario. OACC members include almost every producer association or marketing board in the province concerned with the production and marketing of grain and oilseeds, for example, corn, soybeans, wheat, canola, oats and barley; horticultural crops -- there are over 120 different ones grown in Ontario; specialty crops such as white beans and coloured beans, and red meat, which is pork and beef. The names of the member organizations are listed at the back of the brief.

Although the Ontario Agricultural Commodity Council is not a member of the Ontario Federation of Agriculture, the two organizations work in close co-operation. OACC activities involve issues which tend to be commodity specific while the OFA is a general farm organization concerned with broader issues affecting farm families and the food producing industry of Ontario.

The Ontario Agricultural Commodity Council represents over 50,000 farmers through its member organizations. The annual farm-gate value of our produce is over $3 billion. This equates to about two thirds of the total farm production in this, Canada's most important agricultural province. The total value of primary agricultural production in Ontario, at about $5.3 billion this year, is almost 40% larger than the second-largest province, Alberta. To this must be added the large employment and monetary value associated with input suppliers and dependent food processors and marketers.

Thousands of Ontario's farmers are facing this year the worst economic conditions in memory. This is particularly so for grain and oilseed farmers, but the situation is a little better for horticulture and red meat, for example, pork and beef producers. The situation has been properly labelled a crisis by Ontario farm groups, the Canadian Minister of State (Grains and Oilseeds) and others familiar with the financial and social agony now tormenting the farming community in Ontario.

The desperate economic condition of Ontario farm families is a result of injurious internal trade and subsidy practices which have served to depress prices of many major Ontario farm commodities below levels which would otherwise prevail. Ontario grain and oilseed prices have fallen during 1991 from values which were already at or near all-time lows, measured in inflation-adjusted dollars, to levels as much as 30% lower.

Existing Canadian and Ontario income support programs have proven woefully inadequate to address the disastrous effect which this is having on the economic and social wellbeing of Ontario farm families and indeed on the entire fabric of rural southern Ontario. In some parts of Ontario, the problem has been rendered even more severe by the occurrence of hail or summer drought.

It must be emphasized that the problem is not the inherent inefficiency of Ontario farmers nor fundamental flaws in the agricultural fabric of this province. Despite public policies which hamper our competitiveness -- for example, pesticide policies, labour policies, etc -- Ontario farmers are known for their competitive efficiency and productivity. There are not large surpluses of the farm products which we produce. Our diversity and focus on value-adding -- and job-creating -- processing in Ontario versus raw product exports are the envy of other provinces.

Subsidy levels for Ontario farmers are markedly lower than in other Canadian provinces and far lower than in most other developed countries. This in fact is a dominant reason for present farm problems in Ontario. We can compete against other farmers; we cannot compete against other national, provincial or state treasuries without comparable support from our governments.

Because of the inadequacy of present farm income support programs, Canadian governments, both federal and provincial, have developed two new complementary income support programs for producers of grains and oilseeds and other farm commodities. Unfortunately, these new programs, commonly called the gross revenue insurance plan, or GRIP, and the net income stabilization account, which is called NISA, will not be fully operational for grains and oilseeds until the next crop marketing year. There is no plan to introduce GRIP for horticultural producers.

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The expectation of better support programs in future years is of little comfort to large numbers of Ontario farm families facing a desperate income situation in 1991 and the inability to protect themselves from creditors expecting near-term payment for 1991 cropping expenses. Without immediate help, thousands of Ontario farmers will not remain in business until next year or are likely to enter 1991-92 in such desperate financial condition that future survival is unlikely, even with the new support measures.

Recognizing the need to bridge the gap, Canadian agricultural ministers, including the Ontario Minister of Agriculture and Food, agreed upon principles for 1991 assistance at a meeting in Regina in March. The principles included the commitment that transitional assistance provided in 1991 as a bridge to new safety nets will be directed at providing a transition from income levels attained during the pre-GRIP-NISA period based on those expected with GRIP and NISA.

Calculations made by Ontario farm groups using government data show that total income for 1990-91 for corn, soybeans and winter wheat will be at least $124 million lower than what would have been the case if GRIP and NISA had been in place, and these calculations do not include income deficiencies associated with depressed marketings of other Ontario farm crops.

Ontario farm groups have recommended several mechanisms by which this shortfall can be met. We are asking the government of Canada to implement a number of measures including a top-up of benefits under the Agricultural Stabilization Act for 1990-91, for the final year of this program before GRIP enters as its replacement for 1991-92 and the increased payment via the first-year NISA program.

But agriculture is a shared jurisdiction and the provincial government is equally responsible for the wellbeing of Ontario food producers. The Ontario government has been also asked to recognize its responsibility to Ontario farmers by supporting the NISA program this year and by increasing payouts under the Ontario farm income stabilization plan for 1990-91. Drought and hail problems in 1991 have emphasized serious shortcomings in Ontario's crop insurance programs and these must be corrected immediately.

We acknowledge and are appreciative of the interim payments on the 1991-92 revenue insurance program for Ontario grain and oilseed producers announced on September 17. It must be stressed, however, that this constitutes assistance for low 1991-92 crop prices. Assistance for 1991-92 cannot and must not be portrayed as a solution to income problems associated with the previous crop year.

Finally, we emphasize that this is not a problem of a few farmers, as some have suggested, nor is it just confined to those with high debt loads. We become deeply concerned when government spokesmen talk of restricting assistance to those in need, implying that substantial numbers of producers do not fit this category.

How well would the rest of society function if it had experienced gross income reductions coupled with increased operating costs in the range of one third to two thirds? We submit there is scarcely a single commercial cash cropper in the province, one who depends on crops as a dominant source of his family income, who is not under major to severe financial strain because of the present conditions. Unless corrective action is taken immediately by governments, many of these farmers will not be around to take advantage of the new safety net programs next year or, alternatively, they will enter 1992 in such a desperate financial condition that the new programs will not prevent their ultimate demise.

At stake is the survival of many Ontario family farms, but it is more than that. It is a question of the extent to which the government of Ontario is willing to fight for the sustainability of crop farming in this province. It is a question also of the extent to which Ontarians value Ontario-grown food and whether they are willing to allow the continuation, or indeed the acceleration, of the trend for increased importation of foreign-grown and foreign-processed food.

It is also a question of jobs. One job in five in Ontario depends on food and farming. Are governments willing to let these value-added jobs go down the drain, as well as the future of Ontario farmers?

Members of the Ontario Agricultural Commodity Council appreciate the opportunity to meet with the standing committee on resources development of the Ontario Legislature. Thank you very much, and if there are any questions, we can certainly try to answer those for you.

The Chair: Thank you, sir. I would note that the minister, Elmer Buchanan, has joined us once again. We appreciate his obvious interest in these discussions. We have got 15 minutes per caucus for conversation, so there is lots of time. People should not feel obliged to use all of it up, because they can always come back. Other things may come to mind as other people ask other questions. Mr Cleary.

Mr Cleary: Gentlemen, first of all I would like to thank you for your excellent brief. Your brief differs somewhat from a group that we had in here on Monday -- the Canadian Bankers' Association. You say in your brief, Ontario families will have a hard time to protect themselves from creditors. That differed somewhat from what the bankers had said. I have no difficulty with what you said, because I know it is right. They had said they did not see that it would be much harder collecting their loans this fall than it was in previous years. I have a number of other questions, but if you wanted to add anything to that --

Mr Dmetriuc: I do not know exactly what the specific comments were, but the reference to "it's going to be harder" -- it is going to be harder.

I cannot confirm what I am going to say in a moment because I have not had the time to do it within the last couple of days, but my understanding is that the minute the combine goes into the field, right now at harvest time, the banks are calling in their notes immediately. So in effect what they are doing is not giving the producers the opportunity to store. They have to sell at whatever price is available and they are going to get their money right out of the field. We will be following this up with some individuals who have indicated that that has already happened to them.

Now, what does that mean as far as the banking institutions are concerned? I am not really sure at this point. We have been told over the last month and a half that in actual fact a further 25% of the farmers who do have accounts in financial institutions will not qualify for credit for next year. That statement has already been made by banks. Whether that is a banking policy or whether that is an individual, I guess it depends on the extent to which they want to call in their outstanding debt.

Mr Daynard: Could I just add a couple of comments to that? It is our impression that banks are becoming less and less significant as a source of credit to the farm community. There is no question at all in the farm community that banks are reducing their exposure in the agricultural community and have been doing that steadily for a number of years. So they tend to represent a source of credit to farmers who still have a little better equity position than others. Everybody is moving downhill, but that is our impression. A high percentage of the credit to farmers at the moment comes from suppliers, fertilizer dealers, seed dealers, and so on in the community, and they do not have any great source of wealth that they can rely on, either, and they need payback fairly quickly.

An awful lot of farmers are operating with no source of credit at all. That is why we put in the comment about debt load. Some of them cannot get access to have a debt load and basically they are operating from hand to mouth. They hope they are going to be able to sell enough stuff to pay some bills.

I would also make the comment that George Dmetriuc and I sit on a national committee dealing with this that meets occasionally in Winnipeg, but not as often as we would like. There is a representative of the Canadian Bankers' Association on there, and that representative, whose name I have forgotten, has made it very clear that the Canadian Bankers' Association totally supports the grain farmers of Canada, understands their plight, and enjoins us in calling on governments to provide some assistance. We believe those kinds of statements made to us face-to-face represent the position of the bankers' association.

Mr Cleary: I understand from your brief that until the new programs fully kick out, you need another patch on the boot for this year to get your groups through to 1992.

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Mr Jaques: Just a comment on that: The new programs will kick in for some commodities. There are no new programs, other than NISA, for horticultural crops. We have been working hard on that, but at this point there is nothing available for horticultural producers. There is a light at the end of the tunnel for the grains. It certainly needs something to patch us up to get it through. We do not need a loan on next year's. The advance on the GRIP payment is certainly nice, but it is like saying, "Well, I know you need some cash now, so we are going to give you part of your next November paycheque now, but then next November you won't get any." So that is not a solution to the problem.

Mr Cleary: Everyone else is talking about cross-border shopping. Would you gentlemen care to comment on how that affects your groups?

Mr Jaques: It probably affects horticulture as much as anything. In horticulture we are not as concerned with the consumer driving across the bridge and picking up a bag of apples as we are our processors driving across the bridge and picking up semi loads because of the different standards in the US and in Canada.

I can give you a specific example of asparagus. The labour costs for asparagus in Washington state for harvesting are about a third of what they are here in Ontario. It is easy to say you should raise the price of your product. Our processor says: "Fine, you raise the price of the product, but it doesn't matter. I will just buy it out of Washington state." Our price is set by what they can land the product from the US for, and there is no complicated formula. If he can buy it from the US and land it here for 95 cents, he is not going to pay us 96, because he would not be competitive. So that is cross-border shopping, expanded a little bit.

Mr Mancini: I too think your brief is quite well done and right to the point. It has made some of the statements we have heard while we have been out in the farm community come to life right here in this committee. It is important to have your brief. It is important to have you say the things you have said because, as my colleague Mr Cleary stated earlier, we have been receiving conflicting advice.

I want to say to Mr Daynard that I am going to try to get you a copy of the brief from the Canadian Bankers' Association that was given to us, I believe, on Monday of this week. I think that you will find some of the statements that have been made in the brief very disturbing indeed. Not only did the Canadian Bankers' Association downplay the financial crisis in the farm community, it appeared to me anyway that they suggested that government assistance was an unnecessary intervention and would distort the marketplace. We have a different view, and I believe your view is different also. It is our view, and I believe your view, that the trade war between the United States of America and the European common market is what has already distorted the marketplace -- all the hidden subsidies that are given out.

I would like to also make a comment about your words on the advance GRIP payment. I agree with you entirely. To give you next year's money now and not have any for next November, I believe, while nice, is the wrong policy to follow. I would have hoped that if the promises made by the government had been kept, they would not be tapping into your next year's GRIP payment, because there would have been an extra $50 million there if the promises had been kept.

So I want to know from you, Mr Jaques, what are you going to do next year in November? What are you going to tell the organizations you represent next year in November when the advance payment has already been given to you, and you have already used it in order to continue your operations, when next November comes and there are no finances?

Mr Jaques: We are concerned that it is just going to keep on going. Next November we will borrow from the following year, and so on and so on. Our understanding from the governments was that there would be bridge financing to go from the pre-GRIP-NISA era to the GRIP-NISA era. There is a gap in there of a year. Unfortunately, it was one of the poorest years on record. If it had been an excellent year, I do not think there would have been any complaints. There would not have been anybody asking to borrow on next year's NISA or asking for extra funding. But it was not a bumper year. It was a terrible year, and it has put all of us in a hole that we just cannot seem to dig ourselves out of. Borrowing on next year's paycheque is going to help the cash-flow at the present time but we are going to have to pay the piper down the road somehow.

Mr Mancini: It is an interesting way to spend one's money -- spend the money that you do not have when you are not to receive it, and then when you are to receive it, not have the money you are to receive. That is quite an interesting way to handle one's finances.

Mr Daynard: Can I just make a couple of quick comments? I would hate to leave the impression that the groups we represent view banks as the heavies, as the bad people. We do not look at it that way. We see bankers making logical decisions. It is disappointing to us that they are moving out of agriculture, but we do not see that as the fundamental problem.

The fundamental problem is what is going on internationally. Unfortunately, we as farmers can only stick in this business if governments are prepared to at least go some of the distance to supporting us -- the same direction as elsewhere. We have all kinds of studies. We have American studies that show that some of our subsidy support levels in Ontario are a third of what they are in the United States. We have comparable Canadian data to show that support here is substantially less than it is in western Canada. Those are the things that frustrate us.

We are talking to federal and provincial governments. We are looking for assistance from both. We had the opportunity to meet with the standing committee on agriculture in Ottawa a short time ago. We were looking for some help. In the grains and oilseed sector anyway, we are relatively pleased with the support levels that are being provided -- some of the new programs for next year. There would not have been 1,000 farmers show up at supposedly a quiet meeting in Lucknow the other night if there was not a real problem out there. It is the frustration that they can see light at the end of the tunnel, to use an old cliché, but a lot of them are not going to make it.

Mrs Fawcett: The farmers in Northumberland have told me that the government's decision not to participate in NISA was a real blow in a lot of the farm areas. I am sure my area is not special. Is this right across Ontario? Had the government decided to participate, what help would this have been? I am trying to understand what the difference might have been.

Mr Dmetriuc: Each percentage point means $16 million to agriculture. That is based on the actual sale of products.

The Chair: Can you tell us what you mean by each percentage point?

Mr Dmetriuc: The NISA program makes provisions for the payment to primary producers, every farmer who files an income tax, of certain funds based on their netted-out income. For example, if the netted income is $100,000, then 1% would apply. Each 1% on a provincial basis represents $16 million.

We recognize that the government made the decision it has. We are disappointed because it would mean the injection of an additional 2.5% over and above what has been put forward by the federal government. We are looking at roughly $32 million to $45 million. That is what the implications are, but it is the decision the government has made.

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Mr Cleary: In travelling around the province, and especially to agricultural groups that are thinking of expanding their operation, I find one of the reasons that concerns them is that they do not know what environmental legislation is coming down the pike. Would you gentlemen care to comment on that?

Mr Daynard: This is a concern to us. We are on the horns of a dilemma, as a lot of industry is. We think an agriculture and farm community is committed to the environment, as anybody is, and we think we have been committed that way a long time before it became fashionable. At the same time, we are not exactly in a wealthy position to adopt things if they are going to cost us money. If environmental improvements are identified -- and we think we are identifying an awful lot of them in the rural communities that are not very well recognized in urban centres -- and they are things we can do reasonably, we submit a lot of them are already doing them. If things are going to cost us a lot of money without offsetting compensation on an open border, they tend to be a recipe for us to go out of business, so we have some concerns at the same time. We have concerns about the environment we live in as well.

Mr Jordan: Thank you for your presentation. I find you state very clearly that you are efficient and can manage and compete, as far as competing against other farmers is concerned. Your main problem is that you cannot compete against other Canadian provinces where the subsidies are much higher. Are you saying to us that if this subsidy were levelled out so that you have a level playing field, your problems would be basically non-existent?

Mr Jaques: No, I do not think that is a true case. If the subsidies are more in some provinces than they are in Ontario, subsidies are a lot more in other countries than they are in Ontario. I think other provinces are receiving more money through the NISA program, for instance. Some provinces have decided to contribute to that, where the province of Ontario has not.

Mr Daynard: There have been several analyses on this. It depends a little bit from commodity to commodity, because they are not all going to be identical, but generally they show that if somehow, magically, we were to get rid of all this subsidization internationally, Ontario agriculture would shine because we have a very high, competitive efficiency. If you got rid of all the subsidies we probably would export horticulture products from here to California, and certainly in the grain sector and the red meat sector and a lot of others as well.

If you add up everything we have here, it would not bring us into the same league as the Americans, let alone the Europeans. We say at our level at the moment that we simply do not feel we have a chance, at least in the current year. We see it in 1991-92. The programs we have there will not bring us up to the level of the Americans, but we judge those. They are such that the reasonably capable farmer can have a chance at it, but the frustration is being this close and not being able to make it.

Mr Jordan: So the bottom line is that if it is going to be a long time before these subsidies are removed, if ever, then your objective should be that at least they tend to be equalized.

Mr Daynard: This same group had a meeting with Mr Buchanan last Thursday and the same question was asked, "What's the long-term plan?" It depends so much on what happens in international trade negotiations. If, as we hope, they do come to some kind of agreement for a phase-down, then we are quite ready to be a part of that. If there is no international agreement and agriculture is going to become permanently a ward of the state, then I guess the Ontario and Canadian governments have to decide whether they want to produce their own food as wards of the state, or import it all. That seems like the long-term decision. Hopefully some sanity is going to occur internationally and we will have some commitment to phase down, but certainly at the moment it is going the other way.

Mr Jordan: In the meantime we need immediate cash input to the program, whether you call it a subsidy or whatever.

Mr Daynard: An international trade minister talks to us about things that are happening internationally in the Canadian game plan, but farmers are saying at the moment that long-term planning for farmers is October.

Mr Arnott: Gentlemen, I thank you and congratulate you on an excellent brief, six pages of information that really puts the issue into focus for everyone, I think. I appreciate that.

Mr Daynard, in response to one of the questions you talked about the situation with respect to credit and suppliers extending credit, by and large. I think some of the members of this House from urban areas do not understand how important the farmers are as primary producers of wealth in rural Ontario. I think that has to be emphasized continually if we are going to get the help we need. If we are going to have survival in rural Ontario generally, economically, we have to have farmers who are in good financial shape.

The way I look at it, I think two big issues come out in your brief. First is the scope and urgency of the immediate problem, the immediate cash-flow crisis; and second, I am hearing from a lot of farmers in my own riding of Wellington county concern about potential legislation and regulations that may be forthcoming from this government that potentially will have a damaging impact on farmers. As for the labour law reforms, the minimum wage commitment the government has made, and pesticide guideline changes that I am very concerned about, I would like to hear your comments on both of those, but mainly the second issue, when we talk about potential undertakings of this government.

The Chair: You listed three.

Mr Arnott: The potential changes to legislation first of all; labour law reform, minimum wage; pesticides.

Mr Jaques: I will speak on the labour issue. In horticulture one of our major input costs is labour. I get some funny looks but, for instance, 56% of the cost of producing asparagus is labour. If the cost of labour, the cost of minimum wage -- most of our labour is based on minimum wage -- goes up 20%, that means my costs go up by 20%, and 56% of my input costs have just gone up by 20%.

Right now we are losing 10% of our growers a year who are just plowing out crops. They cannot produce crops and compete with the products coming in from the US. If the major input cost goes up by 20% across the board, you will just see the whole fruit and vegetable industry go down the tubes in Ontario. It will be a cottage industry. They will produce enough to sell at their farm gate, but you will not be able to buy Canadian fruit and vegetables in your grocery stores in Ontario.

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Mr Daynard: May I comment just a little on the pesticide situation? Some of the pesticide laws or regulations coming across are at our initiation. The one on certification was driven by the farmers. It took us enough work. We actually had to stage a press conference some time ago in Toronto to get government to move on that one. The Food Systems 2002 program of the Ministry of Agriculture and Food is something we have supported wholeheartedly. In fact, we have put our money in to support that program and are committed to doing it. If there are ways that realistically can reduce the use of this, we are all for it.

The thing that makes us nervous is statements that reduce pesticides as a goal in its own right, irrespective of everything else, some of the practices we see being used by people so that they can sell something as supposedly pesticide-free which we think are quite harmful to the environment. If you end up working a soil 10 times instead of once and use several gallons of diesel fuel so you can save an ounce of pesticide per acre, then we think you have to sit back and weigh those out. In some cases the balance is in favour of the reduced pesticide use. We do not happen to like being diesel fuel junkies either, and often that is a balance. If the goal is sustainable agriculture and better environmental quality and if we come from behind that -- and sometimes that means reduced pesticide use and sometimes it does not -- in principle there is a pretty good track record of us taking some major initiatives in this direction.

Mr Arnott: And labour law reform?

Mr Daynard: How can you add to what John has said? We do not want to be in a position to say that labour should make less money. Even if we felt that way, nobody is going to buy it anyway. But you have to recognize the other half of the coin, that in many cases a highly labour-intensive industry at the moment has to rely on labour coming in from Jamaica. We cannot get Canadians to work at that kind of work. It is just one more screw in the crank in a greater reliance on imported food.

Mr Arnott: In your own view, why did Ontario not participate in NISA this year?

Mr Daynard: Ontario's answer, and there is some credibility to this answer, is that it got relatively short warning and short notification as to what deal the federal government was going to impose. I think there is some fairness to that. The federal government said it would be providing short-term help and it came on, and we have supported the Ontario government saying that this constitutes some blackmail. At the same time, though, the farmers of Ontario asked the Ontario government to come into NISA months before the critical date was implied, and the ultimate 1% participation in NISA was not a surprise, as that had been in the works and proposed for a long time.

Mrs Fawcett asked a question, the one part that was not picked up on. If the Ontario government had gone in, we believe it would have cost the government about $16 million. The federal government would have thrown in another $8 million as well. We are going after that $8 million in any case, but we are still disappointed. We think it is a very good program and that it is trade-neutral. It is the kind of program we would like to see being in place internationally. It has good support internationally and we think it is the kind of program Ontario should be a proud, rather than a reluctant, participant in.

Mr Arnott: And other provinces did participate in NISA this year.

Mr Daynard: No. The only other province that has participated in NISA this year is Saskatchewan.

Mr Arnott: Would you presume they received better advance warning?

Mr Daynard: Maybe I would be safer to answer that question about November 1.

Mr Arnott: Okay. I have a comment and am requesting your comments in turn. When I hear comments that we cannot do this and we cannot do that because we have GATT obligations to be concerned about -- and you hear that from time to time as an argument opposed to providing emergency assistance for farmers specifically -- and you think about the way the Americans support their farmers -- I have never been to Europe, but when I speak to someone who has been there and hear of the level of prosperity European farmers have on very small tracts of land and the level of support they have from their governments, it is my view we should not worry about GATT. If it comes to that we probably should worry about it later, but I think we have to do something immediately. Is that a view shared by you people?

Mr Dmetriuc: I will try to answer that. We are active participants with the federal government in trying to establish a strategy for the GATT negotiations. We have been working with them now for a couple of years, as have other provinces. I know that Ontario has as well. We support the Canadian position. We are not concerned so much about the internal programs for producers and we really do not have that right. We can observe and we can comment on them.

What we are really faced with is the trade subsidy issue. Since we are an exporting province and Canada is an exporting country, we are faced with that competition. This committee will get some detailed figures as to how it affects individual commodities. But from a wheat perspective, for example, the US Export Enhancement Program is $10 short of our initial payment -- in other words, $65. This reflects in all the commodities, so our biggest concern at the international level is to try to get some type of reduction in those export subsidies.

Mr Daynard: Do not forget, as well, what we are asking for here. The decision for the long term has effectively been made. The new programs are going to come in next year and they have been made nationally with GATT obligations in mind and so on. What we are asking here is for some help to get us through a gap.

Mr Dadamo: On page 4, you say that "we are asking the government of Canada to implement a number of measures, including the top-up of benefits under the Agricultural Stabilization Act program" and also "an increase in payments via the first-year net income stabilization account program." Obviously, you are a strong lobbying group and your voice is being heard in this province. To either one who would like to answer the question: What would you suggest that the province of Ontario do to co-ordinate something with the federal government to best help out the farmers?

Mr Daynard: I would say we are working on the federal government. We are working on the provincial government. We have come up with a list of what we think are relatively modest requests. On page 4, for example, we calculate the shortfall at $124 million. If you add up all the things we are asking from both levels of government, it is less than that amount of money for 1990-91. We have joined our counterparts in western Canada, because to some degree it is a national problem as well, in asking those, and we will work hard on the federal government. They had an emergency debate in the House of Commons all day last Thursday, and we will work hard there, but we think that the help we would like from folks like you is with the provincial government, and we will work as hard as we can on the federal government as well.

Mr Klopp: Maybe I might clarify something and then ask a question with respect to NISA. I appreciate Mr Daynard's comments that all of a sudden we are going to have a third line of defence through NISA, because I think you hit it about right. But in fairness to Elmer and maybe ourselves, we said early on that we think NISA needed some work done on it, like the beef and hog, and that program was going to have feed grains in it. Among a number of things was, what constitutes a minimum income before the pot you have put in place kicks in? We said quite early, along with about nine other provinces, that we wanted to work on that over the summer. Unfortunately, come April, it was decided the third line of defence would go through that, and it caught us off guard, as Terry pointed out.

One of the things that we are talking about is the crisis of the past life and what this committee was pulled together to try to get some push from all parties on. Coming from that point, a remark was made in here that we are looking at the situation where we do not have a large grain supply on hand right now in the world. We do not have a surplus in this province and, in fact, as you can see, we even import stuff in this province to a great extent.

Last fall people predicted and I was predicting, too -- hoping -- looking at this 1990 crop year with $2.70 corn and the $7-range soybeans, and unfortunately, as we have seen, the thing really tipped off even worse. That is our first line, our prices. The NISA program and the GRIP program are our second line of defences and maybe next summer the prices will get back up, who knows? But what do you think is the reason we are sitting this year with the lowest crop-on-hand reports and yet these prices went even lower than our people predicted last fall -- $2.75 corn, $7 soybeans are no panacea by any means, but even to go now at $2.30 and $2.45 and $6 for soybeans all summer. As one who held his corn all year, I am really living in this process. But what are your gut feelings on why this happened? Is it going to continue to happen?

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Mr Dmetriuc: I will try to answer that. I guess in effect it goes back to the international trade scenario. We now have in the international grains and oilseeds trade, a cheap-commodity philosophy. The subsidies actually are preceding the people who are going out trying to market their grains. I have had the opportunity to be in Cuba. I also had the opportunity to go, with the assistance of the Ontario government, to central Europe and they just shake their heads as to what is going on. I suppose we could say we are feeding the Third World at Third World prices. What we have not done is bridge the one-year gap, the 1990 gap, between the old support programs that we have internally and the new GRIP and NISA, and that is where we find ourselves as farmers.

The question was asked about changes in labour laws. As Terry has indicated, I do not think it is going to make a heck of a lot of difference what the government does as far as agricultural labour is concerned. The projections are right now that the average farmer in Canada will net out somewhere between $5,500 and $6,000 for his own use. This is what he is being faced with. Those are not just our projections as commodity organizations. The last ones came out of western Canada, which is saying exactly what we are saying. So if a farmer has $6,000 to net out for himself and his family, is he really going to hire anybody to do anything? That is what we are being faced with. The people we talked to over the last three weeks are not the farmers on the back roads who have nothing else to do. These are business people. These are people who run their own stores, their own support services. These are the guys who are going to go down the tube as well if there is no bridging.

The GATT negotiations Mr Klopp is concerned about: We are working on that and we hope we will be able to effectively put enough pressure on farmers in other countries to recognize what is happening to us. Then we are going to have to make a choice as to whether we are an exporting country or simply produce for our own use. That choice is being debated, the third line of defence, and it is a decision that is going to have to be made.

Mr Daynard: Some will be aware of this and some will not. It is not as simple as whether Ontario is a food-importing or an exporting province. Some things we are notable importers of, but three quarters of the wheat we produce in Ontario is typically exported, 80% of the white beans that are produced are exported, somewhere about a quarter to a third of the pork that is produced --

Mr Waterton: Thirty per cent of the pork is exported.

Mr Daynard: So we could say, if we were just going to feed Ontario we would have an awful lot of farmers go out of business or have just some horrendous costs in adjustment. There are some things that Mr Kormos said. It is a little hard to convert a pork farm into a citrus farm in Ontario. I guess if there is enough money, maybe you could find a way of doing it.

One other thing I was just going to say is, I have puzzled a lot as well. Why are the prices of grains so low when there is not an international shortage, or surplus of them? Our guess is one of the factors is that we have got two giants, the Europeans and the Americans at the moment, trying to see who is going to play chicken as they come down to the crunch in the GATT negotiations. Unfortunately, it looks like it may be the Ontario farmer who says "Chicken." We may not have been a target, but we are certainly proving to be a victim out of this. We do not see any alternative to this thing. If you want to keep agriculture in Ontario there is really no alternative to government providing some level of support. Hopefully we are making some progress internationally.

Mr Huget: I appreciate your coming and spending time with us and bringing this brief. It is very well done. I am one of these concrete and asphalt dwellers so I may be a little out of my element here, although not entirely. I was born in Saskatchewan and spent the first 20 years of my life there, so I have some understanding of what grain growers certainly are going through.

I cannot help but get the impression as we deal with, for example, the drought of 1991, the low prices of 1991, the depressed markets of 1991 and before that the problems of 1989 and the problems of 1988, that there is a pattern, that we are dealing with emergency after emergency. I really believe that we are not ever fundamentally dealing with the problem. I would like your opinion of what you feel the underlying problem is with agriculture in Canada and in Ontario.

Mr Jaques: I think we are dealing with the long-term problem with the safety nets, with the GRIP and NISA program, for those crops which are eligible for them. But I think we have to get across that bridge to them before we can use those safety nets. Right now, we still have nothing. It will be in place shortly for most of us, but right now there is nothing and I do not particularly like, when you have a drought or when you have a shortfall, to have to go to the government and say: "We need some ad hoc assistance right now. You know, we had a terrible year." I think the safety net programs and the crop insurance programs will address most of those problems, once they get fully implemented, as long as it is not a long-term downslide of prices, because then that will ratchet down the prices of the support. But I think we are all walking in the right direction. It is just that we need a little crutch to help us get to that light at the end of the tunnel.

Mr Daynard: To put it in perspective, ask yourself how well would the Canadian steel industry do if we had no import protection at all, because typically the duties on this are in the neighbourhood of 1% or so, and the subsidies on European steel were double the market value of steel in Canada. That is the sort of situation, with no limits on production, that we are facing with European pork coming in here, European beef attempting to come in here, European everything -- wine, cereal grains and so on -- and that is the situation, or almost as bad, from the United States or Japan. If you want to talk about high subsidies, Japan is at the top of the list, and the Swiss -- the people who are supposedly so efficient, and we can lick the pants off the Japanese in agriculture any day. Their efficiency cannot hold a candle to ours and that is the dilemma. But it happens year after year and then people say in the urban centres: "Boy, you farmers are sure inefficient. You can't compete." That is basically the situation that we face.

Mr Waters: I find it quite interesting and I would like to go down the road that Mr Cleary started, because I had that at the top of my list. I have a statement here from the bankers the other day. It said, "In general, we believe that Ontario agriculture is in good financial shape and considerably stronger than in the early to mid-1980s." Then I read your statement that says without immediate help, thousands of Ontario farmers will not remain in business until next year. Then I also recall, from the bankers' statement, that it takes three to four years from the time that a loan is flagged before they ever collect on that loan or foreclose.

We have gone through with just two groups. We have got totally opposite philosophies coming out here and ideas of what is happening in agriculture. So I would like a quick comment on that and then I would also like to know how we can assist farmers in a way that we are assured that you get the money instead of the processor or the banker. If I can get some comments on those.

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Mr Dmetriuc: I will just make a general comment. I am not a banker. I agree with what Terry has said. They provide a service. Their business is to make money; their business is not to lose money. I do not know how many portfolios they have, but their agricultural portfolios, I would suggest, are considerably less now than what they were in 1981.

Let me just walk you back to 1981. Producers in Ontario received $4.25 a bushel for wheat. In 1991 producers are getting $2 a bushel. You relate that to what has happened in the early 1980s, and I personally went through that exercise. We are now going into the 1990s with a made-in-Canada recession which is affecting us. We are going into 1992 with a reduction in support programs. We are really the victims of a number of things, and agriculture, from a banking perspective from what I have been told, is not a high priority. We have asked those questions, but they related to the number of portfolios they have, which ones are sound. You will find talking to the individual producers -- and we are running into that right now this fall -- that producers are sowing wheat, bin-run, uncleaned, untreated, because they cannot afford to buy certified seed.

This province has one of the best programs for the development of new varieties of grains, with private enterprise, and the promotion of new varieties. I cannot deal specifically with your question. You have to ask those details of the banking association or the bankers themselves, or individual bankers. We go and talk to individual bankers, and when they refuse to answer the question, you know darned well what they are supposed to be telling you is something they do not want you to know.

The Chair: Gentlemen, you have been very, very helpful this afternoon. All of us appreciate your attending here, your contribution to this hearing process and I am trusting that you will receive a copy of this committee's report promptly, as promptly as governments can do anything, once it is prepared. Thank you very much for coming here this afternoon.

Mr Jaques: We appreciate the opportunity. Thank you very much.

CHRISTIAN FARMERS FEDERATION OF ONTARIO

The Chair: We have people speaking on behalf of the Christian Farmers Federation of Ontario, if you would come on up and have a seat. Once you are seated, tell us who you are and spend hopefully no more than 15 minutes on your comments so we can have some conversation. Welcome.

Mr Struetker: Mr Chairman, thank you for inviting us to put our views here. Our organization has about 700 members. To introduce myself, I am Arend Struetker, a dairy farmer from Moorefield in Wellington north.

Mrs Haagsma: I am Ann Haagsma, director of Christian Farmers Federation of Ontario, a pork producer from Oxford.

Mr van Donkersgoed: I am Elbert van Donkersgoed. I am on staff, working out of the office in Guelph.

The Chair: Research and policy director.

Mr van Donkersgoed: Yes, research and policy director. It is a substitute phrase for workhorse.

Mr Struetker: We appreciate him all the time.

This is for the standing committee on resources development of the Legislative Assembly of Ontario, re the income crunch in the grain and oilseed sector:

Our provincial board in its regular session on September 19, 1991, reviewed the current situation in grain and oilseed markets and this summer's production problems due to drought.

1990: Market returns and existing supports were inadequate during 1989 and 1990 for grain and oilseed producers. Special assistance is still required. Our preferred method of support is through the existing stabilization programs and the support amount should be enough to increase returns for 1990 production to 110% of the five-year average market price.

It is a matter of fairness and urgency that those who committed their resources and their labour and management skills to produce food in 1990 receive support comparable to what is now promised for 1991 and beyond. We need a firm commitment now. Those who worked and risked their assets in 1990 should be supported to a comparable level of the returns available to 1991 producers.

1991: We are very appreciative of the new programs, GRIP and NISA. They will provide a solid foundation for future support. This appreciation is qualified by the paper trail needed to participate in NISA. But we are uncomfortable with the expectations that the 1991 program will create. Our concerns are:

1. In the short term, GRIP support will include the good market price years of the late 1970s in its 15-year average. Thus the 1991 support level looks good, but the 15-year average will soon fade. Meanwhile, 1991 will have created unrealistic expectations about long-term GRIP support.

2. Paying part of farmer premiums for 1991 will probably also add unrealistic expectations.

3. Many of our members see the 1991 support levels as an incentive to produce. Land rents have increased this year. There should have been a production restriction or production reduction to balance the incentive. We do not expect the land rent increase to continue next year.

4. As program benefits decline in years to come, a perception of inadequacy will set in.

5. It is high time that program benefits recognized environmental stewardship, as well as production.

The 1991 farm crisis: We have not joined those farm groups who describe the 1991 production and market situation as a crisis. It is not that we disagree with their concerns, but they emphasize only half the story. A balanced overview of our present circumstances includes:

1. Grain producers are hard pressed at this time, since support levels for the past two crop years, and especially 1990, have been inadequate as a result of the continuing pressure on prices internationally.

2. Existing support programs and the emerging new ones have distorted and are distorting market signals to such an extent that we continue to be a part of surplus production. Land rents for good land have increased in response to this year's new guaranteed minimum return. The advance payments program is one of many factors contributing to delayed marketing of the 1990 crop. Ontario feed grain production has not declined in comparison to the decline in livestock -- cattle, dairy cows and hogs -- on feed in the province.

3. GRIP and NISA will create a temporary grain production distortion in Ontario as the programs capture the good returns of the late 1970s in averages. This will be followed by a decline in program benefits and a perception of inadequacy.

4. We express our cost of production in modest terms. Many of our members were able to lower their cost of production during the 1980s while improving productivity. As a result, 85% of the 15-year average price on 80% of production looks pretty good.

5. There is a perception among us that in the past, long-term assistance programs for western grain and oilseeds have consistently been better than support for Ontario grains and oilseeds. There exists among us a further perception that the new safety net programs have been designed to provide support comparable to what the west received in the past. These perceptions lead to the conclusion among us that Ontario will in fact receive higher support than in the past.

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6. Ontario needs to reduce grain production. We have fewer hogs, cattle and dairy cows. Those that remain make more efficient use of grains. The alternative is to boost livestock production and mixed farming.

7. There is drought hardship in many local situations, but we do not believe that problems are beyond the reach of the Crop Insurance Act and the new safety nets. We think that compassionate initiatives for areas of severe drought are appropriate, but they should be delivered within the existing program.

We support declaring certain districts disaster areas and creating two options for them (a) to allow this year's disastrously low yields to be excluded from the farm averages that form the basis of future insurable crops, and (b) to allow those who did not enrol in crop insurance or GRIP to enrol late with the condition that they be required to remain in both programs for a minimum of three years.

Conclusions:

1. When can we expect additional support for the 1990 crop and the removal of the present injustices?

2. Who is going to tell farm entrepreneurs that 1991 support levels under the new safety nets are temporary? The payout level in years to come will decline, and 1991 will not be a good year on which to judge the new safety net programs.

3. Can we expect production reduction and resource conservation to become part of the new programs?

4. Are you willing to support some compassionate assistance to areas of severe drought?

The Chair: Thank you. We have a considerable amount of time, approximately six minutes for each caucus for questions and comments. I want to thank you also for giving us the copies of Earthkeeping, which all the members received and I would recommend, especially the article on page 16, "We Are but Sojourners," as being a well-read and well-thought-out article commenting and referring to the Levitical injunctions, which is an interesting commentary in itself.

Mr Arnott: Thank you very much for your presentation. It is good to see you here. I want to ask you one question. You call the current situation an income crunch and not a crisis. I just wonder at what point in your definition of "crisis" this becomes a crisis. Are we approaching it or are we there tomorrow?

Mr van Donkersgoed: The choice of words has been mine in helping our board draft this document. We are very reluctant to use the word "crisis" at this time because we have been in this circumstance for most of the decade. Although at least the returns for 1991 are going to be better than they had been for a while because of the new programs, particularly GRIP is going to provide a reasonable support level, it is very clear to us that that support level is going to fade very fast and there is every reason to expect that in 1994 we are going to have the same problem.

We do not see on the immediate horizon nor even on the medium-term horizon a change in the circumstance that we face today. GRIP and the new programs will do well for 1991, but it will not be long and we have got more of the same of what we had in 1988 and 1989 and 1990 and all the way back to 1986 and 1987. You can go back to 1986. The situation, as far as we are concerned, we anticipate there is no immediate resolution to the situation in sight.

Mr Arnott: Would you concur that the problems we are experiencing presently are largely a function of the trade war between the European Community and the Americans?

Mr van Donkersgoed: We have loved to use that rhetoric, but personally no, I do not believe that. I am going to answer your question. Personally, as a policy adviser and a researcher, CFFO, the Christian farmers federation does not have any policy statements on that issue but simply answering the question as a researcher and an observer of the agricultural situation, then my response is no, that the dilemma is not simply a factor of the international trade war.

Mr Arnott: But partially?

Mr van Donkersgoed: A small partial. Not a large partial, a small partial.

Mr Arnott: Are you optimistic that there will be a positive resolution to that?

Mr van Donkersgoed: Let's say there is a positive resolution, whatever people consider a positive resolution. There is a lot of debate in the farm community about what would be a positive resolution to the international trade talks, but let's say it is a positive resolution that gets rid of export subsidies and the like that certainly have an influence on the lower prices. There is no expectation, on my part as a researcher and an observer of the agricultural situation, that it is going to dramatically turn around the price of grains in the world market. It would firm them up, it would improve them a little, but I would have no reason to expect it would increase the price of grains on the international market over what GRIP is providing in 1991 for corn, for example, the $3.38 a bushel. I would have no reason to expect the price for corn on the world market would go over that.

The reason for that is very simply that the ability to produce worldwide and the commitment to produce worldwide is so large that the production will stay there and the price will stay down. Just because you resolve some trade problems does not mean there is going to be a real cut in production worldwide, and prices are not going to improve until there is a cut in production somewhere. I have not heard of any farm group anywhere in the world that says it would be willing to be the one that is going to go out of business, so the prices are going to stay low.

Mr Arnott: Early on in your brief you talk about how your preferred method of support is through the existing stabilization programs and support amounts should be enough to increase returns for 1990 production to 110% of the five-year average market price. Could you just elaborate a little further on that particular aspect?

Mr van Donkersgoed: That is our ballpark guess of what would bring us somewhat close to what 1991 programs will provide to those who are producing this year. We think it is fundamentally unfair that those who produced in 1990 are getting a lot less for their product. We have to be very honest about that. We are very dependent for our final returns on what governments are willing to do, but for some reason, those who worked hard in 1990 are getting a lot less than those who are working hard in 1991. We think that is fundamentally unfair and not something we can leave rest. We have said 110% of the five-year average is a ballpark figure of what 1991 programs will provide.

Mr Huget: I will ask you the same question I asked the previous group. Aside from the GRIP and the NISA issues, what else can we be doing to ensure the long-term problem-solving of agriculture in this province and in this country, because it is a nagging problem. I agree with your statement that 1991 is a problem but then so will 1994 be a problem. The point I am trying to get at is, how can we start to put in place a strategic plan to ensure the long-term viability of rural families and family farms in this country? What can we do to help that?

Mr Mancini: Give him a straight answer.

Mr van Donkersgoed: Give him a straight answer?

We are facing some dilemmas in agriculture in the countryside that are going to take us a while to work our way through. It is going to take help to get through the dilemmas without having devastating hurt on all sides. But somewhere along the line, we have to face some of the realities. The technology we have brought into agriculture allows the individual entrepreneur to manage a lot more, whether it be land, whether it be equipment, whether it be livestock. The individual entrepreneur is able to manage a lot more than in the past.

It means we need fewer people producing food. Although we have had a steady pace of the number of producers shrinking throughout the decade of the 1980s, the dilemma is that there is pressure for that pattern to continue. In the most recent conversation we have had at our board table, some of our board members were saying the speed in the 1990s is going to be faster than in the 1980s simply because of the rate of technology, the kind of people who have come into agriculture, their abilities to manage more and do better and be more productive. As a result, there is going to a constant squeeze on the lower-end family farmers who have not adopted the latest technology, who have not learned the latest management techniques. There is going to be a constant pressure on them economically.

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We do not always like reality, and what I am giving you here is some reality therapy. I do not like the reality. We do not like it around our board table but we believe it is necessary to understand what reality is. A key part of that reality for us is that in all likelihood the pace of pressure on those who have not kept up with the changes in agriculture in the 1990s is going to be greater than in the 1980s.

You may wish to assist people to stay even though they have not got the latest skills and they do not have the financial assets to purchase the latest technology, but from our perspective we are willing to come to terms with the fact that the future is for those who upgrade themselves, who become the better mangers and who are willing to risk their investment in the latest technology. We are willing to move in that direction. It is not going to be an easy direction to take, but we are willing to go in that direction because we believe we will be there. Those of us who do that, we believe, will be there no matter how some of these dilemmas, international agreements and the like sort themselves out.

That does not necessarily answer your question --

Mr Huget: No, it does not.

Mr van Donkersgoed: -- but it gives you my reality therapy.

Mr Struetker: We are willing to support that if the government hands out money, it goes to the farmers who can show that their business is viable and they can make it, not handing money across the board to everybody, to some people who should not be there any more and just keep them alive artificially. I think that is not right. We are thinking, in that direction, just to give the money to the people who are able to make it.

Mr Waters: I have to look back at my childhood. I spent many days stooking in a field and on a binder, but then after that, what came in was somebody in the community would have a threshing machine. When we went to modern technology, it seemed that every farmer along the road had his own piece of equipment to do that. I just wonder if maybe that is one of the things we should be doing. Rather than having the farmers go out and buy all of this fancy equipment that costs them hundreds of thousands of dollars, maybe we have missed the boat and should have gone into more co-operatives. I just want a comment on that. I am talking about the small farmer who has now got a combine out there that cost $150,000 or whatever -- I have no idea what they are worth but I know they are worth a lot -- who really probably could not afford it. In the old system they never did that.

Mr van Donkersgoed: I think your observation is correct. Part of the dilemma of the 1970s and why we ran into severe financial trouble in the 1980s is that in the 1970s we bought into big equipment in an enormous way, far beyond what it really took to take off crops or put them in, because everybody thought they were financially able to own their own equipment even if they did not need to use it to its full potential.

That is gone today. The margins have been tight enough long enough that this kind of development has totally been squeezed out of agriculture in the 1980s. As for the place of co-operative efforts, I think you should be aware that there are such co-operative efforts and there is an increasing number of farmers who, in the case of the larger equipment, the more expensive equipment, the $100,000 combines, have gone the route of simply having their work custom-done because it does not make sense for them to own the equipment. The arrangements of actually owning the equipment co-operatively, are not as great as the tendency towards using custom work.

Mr Cleary: Just to follow up on a few answers here, I am going to ask two questions at once. If the province were to offer some kind of assistance, what do you think it should be? If assistance were available to farmers, should there be stipulations attached to it, soil management and environmental practices and everything else that would go with it that a farmer should follow?

Mr van Donkersgoed: In connection with the first, we think the federal and provincial governments together should come up with 110% of the five-year average for the 1990 crop. I think the two of them should split that cost to bring that up.

In terms of future programs, we are very interested in looking at having stewardship-related components built into future programs. How you want to build them in is a question mark that needs a lot of conversation in the farm community but we support the principle.

Mr Cleary: In other words, for this particular year there should be a temporary patch put on the boot?

Mr van Donkersgoed: For 1990, we simply need to get the money out there. We do not suggest that there be anything attached for the 1990. There is nothing significant attached to 1991, but we think in the long term programs like GRIP need to have stewardship components. We are content to work on that over the long term. We should not rush into that. We need a lot of conversation in the farm community to develop that.

Mr Mancini: Elbert, you have been before many committees before and you have probably answered many of these same questions you have had put to you today many times before also. You have always been very straightforward and forthcoming, even though, on occasion, your views may not be in the mainstream, such as, as you mentioned earlier on, your views on the competition between the United States and Europe and what it is doing to Ontario farmers.

Specifically, what do you feel the cost of the 110% five-year average would be? Do you have a figure?

Mr van Donkersgoed: I have not crunched the number. I do not have a figure for you.

Mr Mancini: Do you have a guesstimate?

Mr van Donkersgoed: No, I will let somebody who is good at that figure it out for you.

Mr Mancini: We will get some ministry staff.

Mr van Donkersgoed: You are right. You ask somebody who will do a good job of that and whom you have confidence in. You would have them redo it anyway if I did give you a number.

Mr Mancini: Would we?

Mr van Donkersgoed: Somebody would.

Mr Mancini: Frankly, there has been a lot of talk lately about developing programs. The minister has talked about making sure something happens during this 1990 year so that the surviving farmers can take advantage of the new programs of 1992.

There has also been some talk about how we should give the money from the ministry to the farmers. Whenever I was involved in a program, I insisted that a cheque go from the Ministry of Agriculture and Food directly to the farm family or farm corporation or however the farm was set up to be operated. That leaves me in a slight dilemma because one of your colleagues said earlier on that we should not be supporting, in any way, farmers who are not going to make it to the next farming season. I was wondering how a computer would figure that out or how anyone would figure that out while we are down here developing a province-wide program. Believing that it would be very difficult or next to impossible to have that done, would your organization object then if a program were worked out that in fact covered all the farmers?

Mr van Donkersgoed: No, we would not object. We are just sharing with you where we are at philosophically. We are increasingly aware that for those for whom it has really become tough slugging, we would prefer to help them in ways that we needed help in the early 1980s; for example, to do other things.

Farm people, in a certain sense, are a unique group of people. Even if they have a difficult time making it as farmers, they nevertheless have skills that are very valuable elsewhere in society. Sometimes we underestimate that in the farm community, even if you may not quite have it to hold the management together on a farm, nevertheless you know what it means to work hard for a day and that is an asset in this society that is very valuable.

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Mr Mancini: One final short question if the Chairman will allow it: Has anyone from the ministry contacted your organization to obtain advice or to receive consultation?

Mr van Donkersgoed: I would say we have regular contact with the ministry, if that is what you --

Mr Mancini: In regard to the statements that have been made over the last few weeks that the minister is developing a program to provide financial assistance.

Mr van Donkersgoed: What you see here has also gone to the minister. We have had conversations with his people.

Mr Mancini: That is fine.

The Chair: I want to thank you very much for coming this afternoon, on behalf of the committee. We appreciate your contribution and thoughtful comments. As others have been told, we will try to make sure you get a copy of this report as soon as it is done. Have a good trip home.

NATIONAL FARMERS UNION

The Chair: We have the National Farmers Union visiting us this afternoon and I would ask that they come up and seat themselves, let us know who they are, and try to make their comments in no more than 15 minutes so that we have time for questions.

Mr Pearce: Good afternoon. I am Perry Pearce; my co-worker, Ellard Powers. We are both with the National Farmers Union in Ontario. A brief has been circulated. We are not going to read the whole thing. I am just going to go through some key points and then spend our time on the recommendations, and then hopefully good, healthy discussion will take us from there.

Ontario, Region 3, the National Farmers Union welcomes this opportunity to be a witness before the Ontario standing committee on resources development. In its hearings related to the obviously disastrous economic climate in Ontario's farm community, it is our considered opinion that the ravages of the drought of the summer of 1991 was the final catalyst that screamed for attention in a failing industry.

Down at the bottom of the page: What is the state of emergency in Ontario agriculture? We believe farm families are under a stress never before experienced. Farm land is being abused to achieve maximum output. Off-farm income, equity and credit facilities are being exhausted to make up for the lack of farm income.

The National Farmers Union policy statement clearly points out our direction. Point 1 is: Orderly marketing is the cornerstone of NFU policy, and there are some points listed on how we believe it should be developed.

A recent press release by the NFU quotes Wayne Easter, our president, with the following statement: "Following the loss of the two-price wheat system, prices in Canada fell from $7 a bushel to $3.50." Yet a spokesman as quoted in the brief can state, "The (flour milling) industry needs a lower price to be competitive."

The reality is -- at the bottom -- presently the farmer gets six cents for a loaf of bread that is worth $1.39 at the retail store. How much lower is enough? We believe we are getting beyond that.

The free trade agreement, or CUSTA: Canadian farm families are now reduced to another commodity which can be exploited via the supply of cheap labour and raw products across borders. In the grains and oilseeds sector, in a recent court decision involving the Chicago Board of Trade and the American soybean farmers, the judge ruled that farmers have no right to complain about the decision of the Chicago Board of Trade, and that is the mechanism that we price our Ontario grains on.

Another point: Archer Daniel Midland, or its short form ADM, has confirmed it is importing canola seed from Poland for its Windsor crushing plant.

A few points on the beef industry: I think if you want to look at an Ontario agricultural industry that has gone through disastrous circumstances, it is the beef industry, and we have some points outlined here. We have nine plants that have closed in the last two years. The killing capacity has fallen to 11,000 head per week from a previous 25,000.

At the bottom of the next page, as cattle-raising declines, environmental concerns are raised with cattle farming being replaced by cash-crop farming. Poor crop rotation practices, increase in erosion and more chemical runoff are the results of losing a viable livestock industry, which leads to marginal land being put into cultivation.

Some points on supply management commodities: We believe Ontario consumers and farmers, which include chicken, turkey, egg and dairy, have over the last 20 years operated within a system that is mutually beneficial to both sectors, but the system is under pressure. We feel the system is falling victim to assaults from CUSTA, the industry task force report, the deputy minister's task force, GATT, Canadian import tribunal hearings and apathy and political naïveté of elected industry leaders and politicians.

I will read the complete recommendations; there are several points. The first one is:

(a) We believe this government should take an emergency look at the Ontario Bankruptcy Act that protects resources and the creative process that allows for due process in an Ontario court. We need to protect farm families from undue abuse. This may also work for other sectors such as forestry, plant closures and the trucking industry.

The Chair: If I can just help you clarify that for the benefit of the members, because you are quite right, the federal government right now is reviewing its Bankruptcy Act. So what you are suggesting is that the Ontario Ministry of Agriculture and Food should be providing some input into the federal government's review of its Bankruptcy Act.

Mr Pearce: No. I am saying Ontario should have its own day in court. We have seen the Parliament of Manitoba two or three years ago set up a family farm act, or something like that. If it is an Ontario resource, why do we have to go to a federal court?

The Chair: You mean the Family Farm Protection Act?

Mr Pearce: That is right.

The Chair: I was a little unclear here and I was just trying to maybe help clarify this for everybody.

Mr Pearce: I will move on:

(b) GRIP: This program must be strengthened and the cost of production plus a profit has to be incorporated. This may lead to implementing supply management of more commodities and concentration on domestic needs. In Ontario there are a few commodities with a surplus of production.

(c) We must require marketing boards in Ontario to assess their role in domestic and export sales on a yearly basis; simply ask, what is their mandate?

(d) The province needs complete data on the volume and type of agricultural products entering and leaving at US border points. An example is, what is the volume of soybeans crossing at the Windsor border point?

(e) Strong and very courageous leadership will be required to push these progressive reforms. We have seen this political courage before and the rewards were the implementation of supply management for dairy, poultry and eggs.

(f) Existing government programs must be reviewed in order to, wherever possible, build in returns reflecting the cost of production. A point here that is not in the printed text is the FIS, farm income stabilization. We would support a move to 110% as other groups are suggesting as a one-year emergency measure. We also believe great pressure must be brought on the federal government to do the same. We can have several different programs in agriculture. In the drought-stricken areas, such as Remo's riding, cash is needed today. We would hope that this government can announce a program this week.

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(g) More research has to be done at the farm level. Just a point here: Now we are going into what we believe is the rebuilding phase which I think must happen in agriculture. Many farmers have lost confidence in the present system. It should be directed at environmental, sustainable agriculture and geared for domestic production.

(h) The government must be willing to use outsiders who have proven track records in innovative and economically viable marketing techniques. There are some listed there. I am sure you can all read those.

In conclusion, competition cannot solve the problems that confront us today in agriculture. Government must recognize that in fulfilling the goals of production the needs of the people and the responsible use of our resources must also be credible objectives.

The deterioration and dismantling of the farm industry is occurring at an alarming rate. The loss of income security and bargaining power is stark evidence of the success of the corporate agenda in forcing the regression of food production to a total market economy.

Farmers to not want charity. Farmers take pride in producing a good crop. Farmers want to believe that they are an asset to their province and their country. Farmers need to receive fair prices for their products, and unless this truth is recognized, the economic outlook for the agriculture industry shall continue to decline and Ontario shall be the poorer for it. I thank you.

The Chair: We thank you, and particularly commend you for highlighting the brief and getting us right to the strong points.

Mr Huget: Thank you very much for coming today and providing this good presentation. In point (d) of your recommendations, you say that we need complete data on what volume and type of agricultural products enter and leave at US border points. Could you give me an idea, first of all, why we need to know this and what that data would do in terms of a long-term or a short-term strategy for agriculture?

Mr Pearce: I am very familiar with the soybean industry; I will use that as an example. This is a trading province and we do trade, but many times we sell products and we are buying the same product back at the same time.

Right now the grain industry would like to sell grain out of the province, but at the same time we have truckloads of soybeans and, at times, trainloads of soybeans crossing Windsor to enter a crushing plant at Windsor. So we need to know where this balance of trade all shakes out.

Some people would argue that we must trade. Well, maybe we do not necessarily have to trade; we have to manage what business we have at home. So that is why I am asking to take a look at that. I know federally it is collected, but nothing is done with it. It sits somewhere in Ottawa under Statscan and if you try to do number crunching on it -- I know, I have done it -- it is extremely vague. We need to clean that up and have greater detail on exactly where we stand on these commodities that move across the border.

Mr Huget: Your view is that that information should help us develop a better and more effective long-term as well as short-term strategy. Am I right on that?

Mr Pearce: Yes.

Mr Huget: I am interested as well in the decline of the packing plant and the beef industries in Ontario, and I share some personal experience in the drop in numbers from western Canada to eastern Canada. Is there any opportunity in the beef business to revive that business in Ontario, or is it going to the US and Alberta?

Mr Powers: That is part of my business as well.

Mr Huget: It was mine as well, sir.

Mr Powers: I am a feedlot operator and a cow-calf producer and, quite frankly, I have some very real concerns about whether or not the beef business in Ontario can be revived. It has just gone that far.

Not very long ago I met with the Deputy Minister of Agriculture and Food on another subject and she asked, from my observation in my capacity as the chairman of the livestock committee for the National Farmers Union, what advice I could offer her and the ministry on what they could do for the beef industry. Certainly large transfusions of money would help the beef industry, but we are six years too late in trying to do something for the beef industry in Ontario.

Back in 1984-85 there was an opportunity to try to maintain the semblance of a really good, healthy industry in Ontario. We had an opportunity then as farmers and we turned it down, that is, to establish a marketing agency which would at least have given us the opportunity for price discovery, which we do not have at the present time.

The beef industry is suffering even worse this year than it was last year. I am probably not telling some of you things you do not know, but in the last seven months, from January to today, the price of finished cattle in Ontario has dropped 21%. We are losing about $125 a head on every finished animal we send to market. We cannot stay in business very long and continue losing $125 a head. Those are not just my figures, those are figures you will get from any packer still operating in Ontario.

The few viable packers who are left are really concerned. They are concerned about the supply of animals. They are not getting an adequate supply of Ontario animals now. They are bringing them in from the United States and from western Canada or wherever they can source them. They see this supply dwindling even further. As it dwindles further, of course, it hurts us even more because more of them go out of business and as a result of that we have less competition.

So I do not have a short answer, or a long answer -- sorry, that was a long answer -- but I would really like to have the opportunity to work more with the ministry on trying to develop more programs. I know it is difficult to talk about programs because it is more money and it is not a matter of just throwing more money at the industry; there are more things involved than that.

Mr Klopp: Just to keep on that note, you said the packers are losing $125, or the farmers?

Mr Powers: The farmers. I said most packing companies recognize that we are losing $125 a head.

Mr Klopp: Okay. Your comment to the deputy was that it is too late, we should have done something five years ago. Maybe I am an optimist -- I do not go out and just jump off the end of a cliff either -- but there is no such thing as, "It's too late." I made mistakes 10 years ago or I did things right 10 years ago, you never know. You are just saying, "Forget it; it's too late; we should have done it five years ago." Surely you can say, "There are 10 left; let's work at the 10 that are there." It is too bad we did not do it when there were 15, but surely today is today and there is something we can do. Think on the positive side. If there is not one, then fine, tell me, that is good, then I will ask somebody else.

Mr Powers: If I could not think positively I would not still be farming. We have to think really positively to stay in this business. But no, I did not intend to indicate that there was nothing we could do, but we were five years too late in trying to maintain the industry that we want in Ontario. The industry that I wanted in Ontario was an industry of the size we had five years ago. I think we can support an industry of that size, but I do not think we are ever going to get back to that size of industry; that is what I was saying.

Mr Klopp: Okay, so how do you get back to that size if you do not start doing something today? What are your ideas?

Mr Powers: We are never going to get back to that size. I am more concerned about trying to maintain the industry as it is now, and I think we have to take drastic action to do that.

Mr Cleary: Just to carry on from where Mr Klopp was talking, I agree it is late. I was in that business too for a lot of years, 30 years or more.

Mr Klopp: I am still in it.

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Mr Cleary: Good for you. Anyway, part of the problem is that a lot of people got out of the cow-calf operation and now they are planting their land in cash crop and it is causing more problems. We are getting into marginal land and so on. Anyway, I just had to get that on.

The other thing I would like your comments on is cross-border shopping. You touched on it. You mentioned chicken and a few other things, and I would just like your comments on that.

Mr Powers: I can give you mine first, and they are individual. If you earn your living in Canada, you should shop in Canada. If you want to shop in the United States, you should go and get a job in the United States and take out citizenship down there. It is just as simple as that.

Mr Pearce: It is an issue not discussed in my family because we know the answer, and that is the same.

Mr Cleary: I understand that you fully support marketing boards, and I guess a question I have to ask you is, what is your organization's opinion on the Ministry of Agriculture and Food's decision ordering the chicken marketing boards to reduce farmers' prices on chicken? You touched on that in your brief.

Mr Powers: I am sorry, sir, that is part of my role, as chairman of our livestock committee, but I could not give you an opinion that would represent our chicken producers and I do not want to give you a personal opinion on something like that.

Mr Powers: Okay.

Mrs Fawcett: Is that because it is so varied?

Mr Powers: Yes.

Mrs Fawcett: Everybody has many opinions.

Mr Powers: That is right.

Mr Mancini: I find the brief very clear and concise. I think the point that comes out, or jumps out at me anyway, and it is not a point we talk about enough, is that when we talk about helping farmers stay in business, we always talk about giving them 90% of their costs or less, or what have you. I am glad you mentioned in your brief that farmers deserve to make a profit, that a person needs to be rewarded for his work, and that governments in fact must be ever-vigilant to ensure that whole industries are not flushed down the toilet because of decisions made by other governments. We are losing a major industry here in Toronto because the government in Saskatchewan, just before an election, decided to come and rob us of an industry by offering a certain company quite a bit of money so that it would move, to take jobs right out from underneath our feet. I think all governments have to be ever-vigilant of that, and we have to stand up and say that is not what we think governments should be doing, especially one provincial government from another provincial government.

You said also in your brief, and I kind of liked it, "People have to stand up and be counted and decisions have to be made." I want to remind you that this government has stood up to be counted in several areas in its last year of office. They stood up for the nurses and guaranteed them huge increases in wages. They stood up for the doctors and made sure they are going to get huge increases in the next year. They are going to buy a portion of de Havilland to make sure de Havilland stays in Ontario and operates. They made Ontario Hydro invest huge sums of money to help out Elliot Lake. They stood up for the civil servants of the province of Ontario and made sure some of them got double the increases that people in the private sector got.

What I want the government to do is to adhere to the points you made in your brief and stand up for farmers the same way it has stood up for nurses, doctors, de Havilland, Elliot Lake and the civil servants. I think basically that is what your brief said today.

The Chair: We have just enough time for these people to respond, and I trust you want them to respond.

Mr Pearce: Thank you for your comments, Remo. As a matter of fact, I come from Remo's riding. We do not always agree on politics, but we do have good discussions.

When it comes to the topic of sharing the provincial purse, I agree with you on many points but, as a farmer, I guess I am probably a socialist also, because my business is feeding other people. I think we need more cash in the farm today, but where are we going tomorrow? I can understand the government's point of view when it says: "Look, enough's enough. We've already doled out a lot of money. Where are we going?" So I can only partially agree with you.

Mr Mancini: That is better than usual.

Mr Jackson: Thank you for your report, and especially the method in which you have summarized it. I would like to refer to your remark that in the beef industry they are losing $125 per head. When you arrive at that figure of $125, what all are you taking into consideration?

Mr Powers: At the present time, direct costs.

Mr Jordan: Labour?

Mr Powers: Yes, that would include hired labour, but hired labour is only a small component of total direct costs of beef producers, because most beef producers do not hire very much labour. The hired labour component is only about 11% of total labour costs in Ontario.

In actual fact -- and I want to be very quick about this, because we may want to talk about other things -- many producers bought cows last fall at $1.25 a head delivered. Those same producers are now selling those cows, delivered, for $1.33 a head dressed. That is 60% to 65% dressing weight. It does not take very much calculation to factor in $125-a-head loss on feeding costs and interest costs and a bit of hired labour.

Mr Jordan: What is that back down to live weight, if they were selling them live weight?

Mr Powers: About 75 cents.

Mr Jordan: Really?

Mr Powers: Yes, really.

Mr Jordan: And they paid $1.30?

Mr Powers: They paid $1.25. Many people bought a lot of stock. There were calves sold last month for $1.25. The average in the province was probably about $1.13, and that would include heifers. The heifers are selling for two cents less. It costs most of us five cents a pound dressed weight for transportation, so $1.33 the first of this week was $1.28 at the farm.

Mr Jordan: Just a short question related to that: It has been stated that when a good dairy cow starts to drop off in production, it goes to market for beef and provides lean meat to the many fast-food outlets and so on. Has that been a real problem to the beef industry as you know it?

Mr Powers: No, it has not been, because the beef industry has been on a slight expansionist role in terms of cows in Ontario. In addition to that, we have had a good market in the United States for dairy cows. In fact, about 50% of our dairy cows from Ontario go to the United States for slaughter.

Mr Arnott: Gentlemen, thank you very much for your presentation today. I want to ask a question with respect to a point you made on page 7. You talk about GRIP and it says, "This may lead to implementing supply management on more commodities and concentration on domestic needs."

I am a very strong supporter of the concept of supply management and our marketing board system, but I also understand the complexity and the difficulty of expanding it to certain commodities. That is something we went through with the beef industry fairly recently, in the last couple of years. What commodities are you talking about expanding it to, and how would you get around the obstacles that are inherent in that?

Mr Powers: One can use the term "supply management" or one can use the term "managed supply." It is conceptual, probably.

We are concerned that if you raise the returns in grains, through GRIP or through some other program, to a realistic level, then you will get an oversupply. One way of helping to manage that supply is to put restrictions on the volume that you will cover for each producer. That is a quick answer to one part of your question.

Mr Arnott: Okay. The second question, I guess, is, you call the present situation the "disastrous economic climate in Ontario's farming community." That is in your first paragraph. Yet if I am not mistaken, in the series of recommendations you are not requesting any new emergency direct financial assistance to farmers.

Mr Powers: Yes, 15%.

Mr Pearce: Yes, under the farm income support program and in areas affected by the drought, support of whatever happens, hopefully this week.

Mr Arnott: That is in the recommendations at the end?

Mr Pearce: The 15% and the drought did not get printed. You have to blame my wife, the editor, for that.

Mr Arnott: Thanks for clearing that up. I appreciate that.

Mr Pearce: That is the only reason. It was just a matter of time.

Mr Powers: I am a member of the Farm Income Stabilization Commission of Ontario, and the Farm Income Stabilization Act will not allow the act to pay more than 95% of the previous five-year average, but the government could decide to use the farm income stabilization commission as a vehicle to distribute the extra 15% that we are referring to.

The Chair: Gentlemen, thank you very much for your participation; once again, good insights that are valuable to us. We appreciate your coming to Queen's Park and hope you will receive a copy of the report promptly once it is prepared.

Mr Powers: Thank you very much.

The committee adjourned at 1802.