Friday, May 24, 1996
LEGISLATIVE ASSEMBLY OF MANITOBA
Friday, May 24, 1996
The House met at 9 a.m.
ORDERS OF THE DAY
(Continued)
COMMITTEE OF SUPPLY
(Concurrent Sections)
AGRICULTURE
Mr. Deputy Chairperson (Ben Sveinson): Good morning. Will the Committee of Supply please come to order. The committee will be resuming consideration of the Estimates of the Department of Agriculture. When the committee recessed yesterday afternoon, it had been considering item 1.(b)(1) on page 13. Shall the item pass?
Ms. Rosann Wowchuk (Swan River): Mr. Chairman, when we ended our day yesterday, we were having a discussion on the new plans that this government has made with respect to the hog industry, and I was expressing concern with what I feel will be a negative impact on producers in Manitoba, hog producers.
One of the concerns that has been raised is that farmers are worried about getting into contracts. As we move into this vertical integration and farmers get into contracts with feed companies, they will have no avenue of appeal, no avenue of support, and I am told that there have been cases, at the present time, when contracts have been signed, but then the company, although having written the contract, as they get into it the company will pull away and not fulfill its part of the contract.
The suggestion has been made that--I would like to ask the minister if he has heard of this or whether he would consider expanding the role of the Farm Mediation Board so people who have contracts with feed companies will have an avenue of appeal or support if they get into difficulties. Has any consideration been given to that, and will the minister consider expanding that role so farmers can have an avenue of appeal?
Hon. Harry Enns (Minister of Agriculture): Mr. Chairman, I welcome the opportunity to have a general discussion about the issue, the development within the hog industry, issues such as vertical integration, which is of concern I know, in various parts of the farm community and obviously to this member of the committee. Allow me to deal just with the last issue that she raised first.
Certainly the Farm Mediation Board that has operated with some considerable success over the past decade, fortunately also its workload has decreased considerably, as the member would expect, in the last few years with things just looking a little brighter economically on the farms, but certainly that is a board, a committee established to assist, as mandated, farmers, farm families over difficult times that still occur. Regrettably we have some specific cases involving livestock farmers in the cattle industry, as the member would also understand, because of the current pricing situation, that are experiencing some serious difficulties.
The Farm Mediation Board does precisely what it is mandated to do. It will work directly with the farm families involved, will work with the various lending institutions with which they have become involved, both private and our own public institution, the Manitoba Agricultural Credit Corporation, and will, with the assistance of some dollars and resources available to them, in many instances find the difficult path through to avoid total collapse of the farm venture, or in some instances passing it on from the father to a younger generation.
Certainly with the Farm Mediation Board, we will continue doing that in any manner of disputes that farm families get themselves into, including the ones that the honourable member refers to, with respect to contractual arrangements that lead to financial difficulty for a farm family. I have no difficulty in seeing or, in fact, directing the Farm Mediation Board to include those kind of activities, and if need be, if we find that it requires some amendment to their administrative manual or how they operate that that could well be done.
But let me just respond very briefly on the overall issue. Before we rose the last time this committee met, the honourable member made mention about her concern about the development of the hog industry in the province, that she was watching the kind of developments that were taking place in other jurisdictions, notably South Carolina in the United States. As Minister of Agriculture, I do not hold out the model of hog production that has to a significant degree taken place in the United States. That form of integration is not one that is particularly appealing to me and, quite frankly, as the member correctly points out has created its own set of some very serious problems in that industry in that part of the world, both from an environmental point of view and from my point of view, and I think I share this with the member from a social point of view. I would prefer a more ongoing direct involvement of the independent family farm-type operation in farming, generally speaking, in the province.
I want to assure the honourable members that, certainly from the Department of Agriculture's point of view, from this government's point of view, we are not pointing or pushing production of hogs in any specific direction. I must report to you we have three very distinct types of hog operations in the province of Manitoba which you could classify in fairly definitive terms. We have, of course, the ongoing--and these are the largest number, although not producing the largest number of hogs--what you would call the traditional, independent family farm. Some are small, some are modest in size, some are pretty significant operations.
We have then, of course, what is somewhat unique to the province of Manitoba. We have a considerable concentration of hogs being produced upwards to 35, 37 percent of the total production by one identifiable group, the Hutterian brethren , which I am very familiar with having the privilege of having a goodly number of the colonies within the constituency of Lakeside, and they are kind of a distinct group. They operate somewhat differently, but they certainly refer to themselves as very independent and private and farm families. The fact that 15 or 20 families work co-operatively on these operations and building and running very sophisticated capital-intensive farm operations is a plus to the agricultural scene for the province of Manitoba.
We then have two other groups that are sometimes referred to as the integrators. They are groups of producers that have associated themselves with feed companies, and we only have the one group, the Puratone group, which comes under the description as an integrated operation, where the hogs, the people working in the barns are, in fact, employees of this company and they provide hog production, utilizing the feed that the company produces and utilizing the marketing skills of that company in an integrated way.
The other major group which often, regrettably, has been targeted by some producers as having the unfair ear of the government or of this minister is, of course, the group that refers to themselves as the Elite Swine growers, and my colleague, the chairman of this committee, is very familiar with them and has a number of those producers in his constituency. This is not an integrated operation, although they are associated with a feed company. They are a group of upwards to 100, 120, 140 independent private hog producers who have chosen to work together collectively to enhance their opportunities of accessing feed and other input costs at the lowest possible level, purchasing in bulk. They have chosen to use the management that is made available to them under that kind of an organization, and they have chosen to avail themselves of all the assists that modern hog production requires.
Mr. Chairman, I am being momentarily distracted from my otherwise brilliant dissertation on the hog industry by the appearance of our House leader in such colourful garb this morning. It dawns well for agriculture that, when I look outside, I see the sun shining and I see my House leader coming here and he virtually looks like a sunflower about to burst.
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But I conclude my comments about the hog industry. That generally describes the hog industry, and so we do not foresee and, in fact, there is solid reason to believe and we hear this from some of our American contacts--I have visited some of these super-integrated operations in Missouri and in Iowa, and the one group particularly is in serious financial problems, despite the fact that hog prices are at an all-time level. They have created for themselves some very difficult environmental issues when they congregate upwards to 100,000 hogs in one relatively small area. We do not see that as a model for Manitoba, and surprisingly the Americans are beginning to recognize that hogs, unlike the poultry industry, do not quite lend themselves to that kind of factory production. There is a greater requirement for management, a greater requirement for care involved with the production of hogs, which is often better achieved in smaller units.
Ms. Wowchuk: Mr. Chairman, I am sure that the farmers will be pleased that the minister will take into consideration to make amendments to the Farm Mediation Board if that would be necessary and meet the needs of farmers because, as I said, there is some concern that they may not have an avenue. If the minister would look at that, I would appreciate it.
The other concern that the producers have is that this is a new system that is being implemented, and there has to be some form of gauging whether this new system is working, some evaluation done, whether it is workable or not. I would ask the minister how his department intends to monitor since it has been his decision to move from single-desk selling to dual marketing and there is concern within the pork industry that this is not the best move. Will the department be monitoring the changes, and will there be any ability for producers to have a role in the monitoring? As the minister knows, there have been some producers who have been very active, first opposing the change and then, when there was no chance to stop the change to dual marketing, then the producers--there is a group of them that have been working hard to see that this will work in the best interest of the producers--want assurances that they will have some say that there will be monitoring and some comparisons to what is happening in other provinces as well.
So I ask the minister, are there any plans to put in place a system of monitoring to ensure that the new system is working well in the best interests of farmers, producers, and that these producers will have an opportunity to be involved along with government in the monitoring of the new system?
Mr. Enns: Mr. Chairman, I can assure the honourable member that certainly the kind of services that the Department of Agriculture, through its various specialties, will continue working with any farm production group in Manitoba. The swine industry, the hog industry, being one of the more important activities in the province, receives a great deal of attention from our department. We are working with the hog producers, working with the industry as a whole, to bring about a higher level of safety in the health of this very important food commodity.
We had a brief discussion the other day about the importance of ensuring, not only Manitoban and Canadian consumers, but our foreign customers about the fact that our pork is not only the best quality, but it also meets the very highest standards with respect to health. So, just now as we speak, through the work of our Animal Industry Branch, we are introducing what we call the PRE-HACCP program. It is a program of a great deal of producer involvement, education, designed to eliminate any problems of the inappropriate use of feed additives or drugs in the treatment of hogs and pork. These issues become very, very important to the overall well-being of the hog industry.
Now, the other issue, of course, that I want to keep pointing out--and I say this with a great deal of hope and conviction--Manitoba Pork as an organization will continue in its role of being a leader in the ongoing issues that are of concern to the producers that the honourable member refers to. Manitoba Pork, in my opinion, is a most appropriate vehicle through which producer concerns can continue to be discussed and resolved among themselves, and of course, come to the Department of Agriculture when necessary for further assistance in these areas.
As I indicated, Manitoba Pork is hopefully going to actively engage and be actively engaged in pursuing and meeting the challenges, trying to resolve some of the difficulties that perhaps are down the road for some of the producers; but, certainly, it will be business as usual from Manitoba Pork's point of view in these matters.
As I also indicated, I am pressing the department right now to conclude the necessary arrangements for such things as the universal levy to be applied to all hogs marketed in the province, whether they are marketed directly through Manitoba Pork or not. This would ensure that the financial resources are maintained for Manitoba Pork to carry on these services to their producers.
But, you know, in the final analysis, these are changes that are occurring. Hog producers, like any other producers in agriculture, are all facing the reality of the fact that they have to fine-tune their production, that they have to produce the kind of products on their farms for which they can find markets. Less and less will there be a reliance on government programs to support them.
I know that the member sits in the House with me, and we are often reminded of the very significant reductions in transfer payments from Ottawa in the areas of health, education and social services, upwards to $200 million. I remind this committee and the member that in that same period of time there has been an equally dramatic downsizing of Ottawa's contribution to Manitoba's agricultural economy in the order of $180 million, and what that means to our producers, whether it is in grain production or whether it is in specialty crop production or whether it is in livestock production, is that we have to develop in such a manner that most, if not all, of the income generated off of farm production does in fact come from the market.
Ms. Wowchuk: Mr. Chairman, the minister must realize that the proposal that is being made by pork producers and the request that is being made does not ask for funds. What they are asking for is that there be a process that they could have appeal if they are having difficulty with contracts through the Farm Mediation Board. They are also asking that there be some kind of criteria or gauging of the new system that is put in place and monitoring it and that they have the opportunity to be involved in this. Now, if the minister says that is the role of Manitoba Pork, I am sure Manitoba Pork will do some of it, but I do feel that there probably is a role also for government in this since the government is changing the system, the system that pork producers did not want changed.
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The government has taken the initiative to change that. There should be a role to ensure that what the government is doing here is working well, and I do not see that it will end up costing government money. It is an avenue for producers to be involved, to see that the monitoring is done properly, that the system is working, that perhaps there can be some evaluation charts set up for the first while to give the producers the assurances that they need, that they will be able to survive.
I throw out an example that has also been put in place in other places, that farmers can use and get supports. In North Carolina, for example, it is my understanding that they have a 1-800 number set up so that producers can call in when they are having difficulties, and resources or staff can help them through them or direct them or put them in contact with people that can help them. In particular, this is, as I referred to, a new system of contracting with large feed companies; that is an issue.
Here in Manitoba the suggestion has been made that we have a rural stress line. Hopefully, it will continue to operate, and it is a suggestion that has been made by producers that there are avenues that the government should be looking at. They should be looking at criteria to gauge the new system, to see that it is working, that producers who are doubtful right now are not put at a disadvantage with large feed companies, that we have a rural stress line. Perhaps, that could be put into consideration. Our rural stress line now deals with only health issues, but perhaps it is a way that farmers can have a tap into that line for other services.
These are issues that producers have raised with the new system, and I put these suggestions forward. I hope that the minister will consider them in ways, as we make the adjustment to the new system, that there can be safeguards in there, some avenues for producers to get information that they need, and avenues, if they run into difficulty, that they will not be left at the mercy of the larger corporations, the feed companies. That is where the fears are. Not so much the feed companies--I am sorry, Mr. Chairman, it is the contracts with the packing companies that are also a concern. Feed companies, packing companies, those are the kinds of things. I put those suggestions forward to the minister, and as we go through this process I hope that he will consider him.
Another issue that I want to raise that the minister raised briefly is when he talked about the large operations in the United States, that there are serious environmental issues. The minister is well aware that here in Manitoba there is a concern that as the hog operations become larger there will be problems with water tables and pollution. In the Interlake there have been some serious problems and people have been objecting to operations set up. Can the minister tell me what his department is doing or how you are addressing the concern about the possibilities of water pollution in some of the areas where there is a low water table that is very close to the surface and how that is being addressed, and, further, whether any consideration is being given by his department to limit the size of operations in areas where there is water sensitivity or community sensitivity where the facility is being proposed in close proximity to residential areas?
Mr. Enns: Mr. Chairman, just to conclude the issue that the honourable member raises, some of the concerns that she has heard from different producers as a result of the imminent change in the marketing structure of hogs in the province of Manitoba, allow me to assure the honourable members and the hog producers that the Department of Agriculture will continue to provide quality service to the producers involved. We will certainly be monitoring the situation very carefully. As I said before, it is an extremely important part of the agriculture industry in the province of Manitoba. We will probably be even more actively involved.
I know that one of the concerns that the producers have is that there be accurate pricing disclosure on a regular weekly or daily basis. That is being examined right now with Manitoba Pork. It may well be that our own Department of Agriculture through its Economics branch may, in the first phase, play a role in establishing that. We, after all, gather daily and weekly pricing on all manners of agricultural goods throughout the province, and it has been suggested to me by my staff that, to get it started, we may be playing that kind of role. This is an issue of importance to producers. They want to know, even with the larger production units, the contractual production units, what was this week's benchmark price for a hundred-point-something index hog and the likes of that.
With respect to the other issue, I want to commend staff in the department. We have worked very diligently on the issue and the sensitivity and the awareness of the side-product that is generated in hog production. It is referred to by some as waste or as a pollutant. I prefer to refer to it as nature's wonderful organic fertilizer alternative to run in competition with the chemical fertilizer companies of Simplot or Esso or others, and if properly managed by our soil specialists, if properly handled by our producers, it can be a tremendous assist in offsetting some of the high input costs that grain producers are facing, and to that end, we ran a very successful manure symposium.
I mean, to get over 300 people here from all parts of the world, United States, from England and from all across Canada to come and talk about such a politically sexy subject like hog manure is an accomplishment in itself, but it was an extremely successful symposium. I was regrettably--time only permitted a short visit on my part, but I was astounded by all what is happening and what is developing in that field. We have some of the best scientists, some of the best people in finding some very innovative ways of handling and extracting maximum benefits out of manure, and doing it in such a manner that it can be done safely, that it can be done without injuring the ground water supplies that are so important to all of us.
I think that with the combination of the things that we have done in the last relatively short period of time, we have introduced a Farm Practices Protection Act, we have specific guideline developments to would-be builders of hog operations--not just hog--or any livestock operations, we have, as I say, livestock waste legislation, we produce fact sheets, we have a technical review team that goes out and looks at operations and helps plan operations, and these kinds of measures are continually being strengthened.
My hope is that if we do this properly we will take some of the pressure off of local and municipal governments that often are the first to face this and who often respond in an understandable, although not always in the most informed way by simply denying an application for a project to proceed.
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This is a major part of the Department of Agriculture staff's undertaking, that is, from in the livestock area, and I can only tell the honourable member that when you come from different parts of the world where farming has been carried on in a much more intensive manner for a much longer period--and I refer of course specifically to my recent visit to China--I am amazed at how well they have learned to manage heavy applications of fertilizer, both chemical and organic, at the same time heavily dependent on ground water sources for irrigation, and taking three continuous crops off the same acre on a regular 12 month period. They have obviously got their nutrient requirements, soil, crop requirements down to a fine science that know exactly how much fertilizer they can apply for a given crop production so that those elements that could cause trouble by leaching into the ground water--just that that does not occur. They have been doing it for years and years and years.
Now if it can be done in those jurisdictions, then we have equally talented professional staff in the department, talented researchers in our universities, and farmers and producers on the land that can do it here in Manitoba.
Ms. Wowchuk: I have no doubt that we do have the people to do the work and we do have the people with the skills. All it takes is the will to do it. I am sure that if other countries are doing it, we can do it too, but we have to take those steps to ensure that we have the guidelines in place, the regulations in place and the information out to the producers as to how this should be done, because as the minister says, our water is very important, and we are looking at expanding, at growth in the hog industry. When you get large numbers of animals in a small area you do stand a risk.
There is the public opinion right now that, with water tables close to the surface, we do run the risk of polluting those. I hope that the minister's department will continue to work on these issues and to give the producers the information that they need and put in place the guidelines, if there is need for stronger guidelines, particularly if we get to larger operations where there is a higher concentration of waste, that we have the guidelines to ensure that we do not, 10 or 20 years down the road, run into very serious problems. We have the ability, as the minister says. We have the skilled people. Let us ensure that it happens and put at ease the minds of those people who are right now having doubts about whether or not we can increase the population of the number of hogs in this province, the number of livestock.
As the minister has indicated, because of the Crow, we will have to make those changes. I hope that the minister will continue to ensure that there is staff within the Department of Agriculture that is working on that and pull the information together and make it available to people and ensure there are proper guidelines in place for this.
I want to move on to another area, Mr. Chairman. It is also a new policy that the government has taken on this year, so I believe this would probably be the appropriate area to ask these questions.
I believe that in January or December we had an announcement that this government was going to--after a lot of discussion on how farmers were going to be compensated for their crop losses, for their hay losses, and particularly in the Swan River area where there were serious problems with big game damage to fields of hay crops, the minister made an announcement that he was going to be introducing legislation that would allow for elk ranching in this province. I must say that came as quite a surprise because my understanding was that, if there was going to be elk ranching in this province, there would be public hearings, people would have a chance to have input into it.
In fact, I was also quite surprised because the minister himself had been quite opposed to elk ranching in the past. I believe that in 1992 he sent out a letter to a constituent of mine, indicating that he could not support elk ranching because of the risk of disease, because of just the risk to livestock. I want to ask the minister: What information had his department gathered that resulted in this policy change, that would see us moving toward elk ranching in this province? Whom did the minister have working on this issue, and what was the information that made it possible for the minister to change his mind so dramatically to go from opposing elk ranching to now bringing in legislation where we will have elk ranching in Manitoba?
Mr. Enns: Allow me to just further introduce some senior staff. We have with us at the table joining us Mr. Neil Hamilton, who is now the acting general manager of the Manitoba Crop Insurance Corporation. I should put on the record that it is with some regret that I announce to the committee that our former manager, Mr. Brian Manning, has left the corporation, has gone to continue to provide his talents and services to the farmers of Alberta. He received inducements to make that change.
As well, John Taylor, as the Director of the Animal Industry Branch, joins me . If we are going to be talking about elk ranching a little bit, it will be largely under the direction of Mr. Taylor's branch that the Department of Agriculture will entertain this new venture in agriculture. Mr. Chairman, I well recall having responded to different Manitobans on earlier occasions that elk ranching was not in the cards at that particular time by the government.
I do not recall--I would have to see that letter--that I have in a more direct and a personal way been opposed to elk ranching. I may well have stated some of the reasons of the day why the government of the day had chosen not to enter into that form of livestock activity. Be that as it may, the simple straightforward truth of the matter is it has a great deal to do with the different challenges that Manitoba Agriculture producers face generally with the loss of the Crow. The greater emphasis for allowing opportunities for various forms of farm diversification, in this case, the greater activity into the nontraditional use of nontraditional livestock as an alternative, became attractive to me.
I did not require too much convincing it would be a worthwhile initiative for Manitoba Agriculture to be engaged in. I think it was during a meeting at Portage la Prairie, a Manitoba pool meeting, that you indicated at that point in time that you thought the time had probably come where these kind of alternative forms of economic opportunities for Manitoba producers ought to be made available. So that is the short and sweet of it.
I consider this as an excellent opportunity, not for thousands but for a number of producers, not unlike the very significant and steady growth that we have seen in the bison livestock industry. We have now in excess of 50-55 bison farmers. Our herds are building up to the 6,000-7,000 level and these producers are finding this an excellent opportunity, both from the sale of breeding stock and in the increasing sale of the meat stock, as a ready market for it, particularly in Europe. I view the movement into elk ranching in much the same way.
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The other issue, and I say this with some understanding and empathy for the difficulties that my colleague, the Minister of Natural Resources (Mr. Driedger) was beginning to have and I, of course, having had the privilege of being involved in that department, had some appreciation for it. It was becoming increasingly more difficult for Manitoba to be the jurisdiction not permitting this kind of activity. Elk ranching is permitted in all the provinces to the west of us, Saskatchewan, Alberta, British Columbia. Elk ranching is permitted in Ontario. The only other jurisdiction that does not permit game farming of this kind is Newfoundland and yet by accident of geography, genetically we have the best elk. When a Manitoba elk is sold at an auction mart in Regina or Lloydminster or something like that, it commands a premium price. That must make it very difficult for the officers in the Department of Natural Resources to keep a lid on illegal poaching of the animals, illegal movement of the animals, for all of these reasons but triggered, if you like, because of the extra challenge put on Agriculture for diversification when the loss of that major support program, the Crow, was announced. That was when I--
Ms. Wowchuk: You caved in.
Mr. Enns: Well, the honourable member says that I caved in. They tell me of another great man. He was on the road to Damascus, I believe, where he made a significant change in his position and attitude that he had, but that was when I--and then, of course, it is amazing when you make that transition from the third floor where you are minister of wildlife, down to the first floor where you are Minister of Agriculture, you tend to look at things differently. You tend to look at opportunities that have significance and opportunity for primary producers.
These were the reasons that the changes were made.
Ms. Wowchuk: I believe it was back in '91-92, when the minister had indicated that he had concerns about disease and the transmission of disease from wildlife to domestic animals. At the time one of the concerns was tuberculosis and there was an outbreak of tuberculosis in elk in Alberta, and that was causing the concern about what would happen here in Manitoba.
Has that changed? Are those risks still there for disease outbreaks, as they were back in '91-92 or has that all been brought to an end, that causes the minister not to be as concerned about it as he was in the past?
Mr. Enns: Let us just separate the two issues with respect to the disease question that are often brought up when discussing domesticated elk or game farming. We have, of course, a situation that exists right now. We have in excess of 10,000 elk and white-tailed deer and other wildlife that are, as the member well knows coming from the area that she represents, freely roaming across the length and breadth of this province, freely intermingling with cattle herds that are now just being turned out to pasture.
We have no way of knowing what disease is being carried in these wild herds. Their argument can be made and is made by the people that are proposing the domestic elk ranching that there, in fact, will be a far higher level of control with respect to any disease that domestic elk may from time to time be in contact with or develop, as to how that would be passed onto our cattle herds for instance and our livestock herds. Lets understand that one picture.
The issue though in fairness to the honourable member's question, because it is a serious issue here and the director of the Animal Industry Branch is extremely well aware of it. We have taken a great deal of time in looking at how jurisdictions that are involved and in fact experiencing some of this difficulty, how they have coped with this matter. When the member sees the actual legislation and even more so further on in the regulations, she will see a great part of it is specifically directed to eliminate to the extent possible that all reasonable consideration can make these kind of dangers.
The issue really comes in when you are transferring animals from other jurisdictions and the risk of transferring in diseases in that manner, when animals are allowed to move from one province to another province, something like that. That is why there will be--and we do not have the legislation before us, we do not have the regulation before us, but certainly every consideration is given. If, for instance, we consider a jurisdiction that does not have its disease problem under control like the United States, we will simply not allow any transfer of animals from the United States into Manitoba. We will not allow a transfer of animals from other areas that we think there could be a problem, like Ontario, where there is reported some difficulties of some specific disease. Again, the director here could tell me the name of the disease--P. Tenuis, he says. If I say it fast, then you might believe me.
But these are the kinds of things that you will see throughout the act. No animal gets into the program without full range of testing, including not only the blood tests for different diseases but DNA testing. It will be a very sophisticated, very controlled program. I have the added confidence, and one of the advantages of being kind of the last jurisdiction to expand into this venture, we have been able to, and our officials have been able to, learn from some of the mistakes made when other jurisdictions, when Alberta, when Saskatchewan, went into this program. The member is right. They did have problems with their initial start-up of the program. We have gained from that experience, and I am satisfied that is reflected in the proposed legislation that is going to be presented to the House and certainly will be carried on through the regulations that will be developed.
But let me leave no misunderstanding. Officials that know more about it than I do indicate that because of the premium quality of the stock that we have, because of the abundance that we have, we have entered into a program with the Department of Natural Resources to partly relieve some of the pressure on the farmers who are in some instances being eaten out of house and home and badly needed hay supplies and causing my Crop Insurance Corporation no end of trouble. I am looking at my acting general manager of Manitoba Crop Insurance, but I think we are going to be spending upwards to a million dollars for claims. A lot of that, a big portion of it, is in the big animal claim. Of course a good portion of that, not exclusively, but a good portion of that is elk.
So it seems to me to make eminent sense to take some of these oversurplus animals in the wild in a controlled and in an orderly way and in a way that will be fully accountable to the general public, because after all this is public property if you like, and kick-start and begin the elk industry which I believe within a very few years will be a $60-million, $70-million, $80-million, $100-million industry. It has become that in those few short years in Saskatchewan and Alberta, and we have better elk.
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Ms. Wowchuk: The minister indicated that the starting of the industry was one way to alleviate a problem that farmers were facing because of depredation from elk. Will this legislation that the minister is proposing allow for the farming of other animals and the capture of other animals that could cause problems for farmers? For example, deer that are now, as the minister is well aware, in the western part of the province, in the Russell area, causing serious problems--in many areas. Is the legislation going to be open enough to deal with other wildlife, or is it specifically to deal with elk?
Mr. Enns: The legislation that will be presented will be broad enough to include other livestock in the future. It is generic in that sense. It is a livestock diversification act and as such could encompass other wildlife species as well. So that there is no misunderstanding, it is the intent and the direction, policy decision of the government at this time to deal specifically and exclusively with elk.
Ms. Wowchuk: We talked briefly about diseases, about tuberculosis and the problems that were in Alberta earlier on, and the minister indicates that those are under control. There has been another issue that has surfaced in the last little while, and I raised it briefly in the House with the minister the other day. That is the--is it BSE?--or mad cow disease that we are hearing about, and I want to ask the minister if his department has done research on that.
There was an article in the paper that there was a gag order on the Department of Agriculture in Manitoba, that people were not supposed to talk about the possibility of this disease. I think it is important that we do talk about it and just put clearly on the record what the implications are, if there are any risks or there are not any risks of this disease being in our wildlife and having any effect on our cattle herds. I think it is quite timely, since the minister is bringing in legislation to start elk ranching, that we get as much information as we can on the record and to the public as to whether there is any risk of this disease in Manitoba and whether there are any risks for our livestock industry.
Mr. Enns: Mr. Chairman, I suppose it is always difficult to eliminate with absolute certainty any risk. Life is a risk. We are all at risk. But I have to ask the honourable member--and she is aware of this--to look at the track record, to look at the mechanisms that both Agriculture Canada and the provincial veterinarian branches and health branches have set up and are in place to ensure that when a situation arises that it can be immediately responded to.
The honourable member will recall a fair bit of controversy some several years ago when there was an animal suspected, that had contact with a herd coming from England that is going through this difficulty now. Well, despite a great deal of pressure and local pressure and something like that, it was summarily handled. The animal was put down and any animals that he had come in contact with were put down.
We do not fool around with these issues. We have long memories. We remember when an embargo placed against our entire beef industry took place back in the '50s when we had an outbreak of foot and mouth disease, and the embargo just was dropped across the border and prices collapsed. So we have a very strong response to these kinds of problems.
The issue that the honourable member brings up here with the elk again, in my opinion, I take comfort from how the situation was dealt with. Here an animal was brought in from the United States originally--not to Manitoba, to Saskatchewan, and was suspected of having a disease problem. The system immediately moved in. The animal was put down. The animal was diagnosed and did in fact have a disease problem, but the system correctly contained it, correctly handled the matter.
I am trying to indicate to the honourable member that we cannot with absolute assurance rule out the possible reoccurrence of some disease at some point in time cropping up wherever there are livestock produced. But I do want, in particular, to ask the honourable member, who is one of the few agricultural spokespersons in Her Majesty's official opposition these days, to be extremely careful about the kind of statements that she--I have every respect for her or her group. Indeed, if they wish to oppose the introduction of elk ranching into the province of Manitoba, if they wish to oppose that as an individual or as a party position--but do not carelessly inject the concern or anxiety of what is causing the British beef farmers, for instance, untold difficulties right now. Do not inject that into the debate here.
The animal in question, the elk animal that had the problem, was imported from North Dakota in '89 as a juvenile. It was put down; it did not have the mad cow disease, as is being irresponsibly reported in the press. It is a disease that is somewhat similar to it, but it was not that specific disease. But, more importantly, it was immediately contained, immediately handled in a way that I think we as Canadians can take some comfort and some confidence in.
I repeat, it is not just a question of working with the provincial authorities. Agriculture Canada, through their system of controls and checks and inspections, plays a very big role in it, and it will be Agriculture Canada that will have to issue a certificate every time an elk is moved from a Manitoba elk farm to another jurisdiction; or an elk coming into Manitoba from another jurisdiction will have to not only pass our own provincial rules and regulations as to how they gain entry in the province, but the officials of Canada Health will be very directly involved.
Ms. Wowchuk: I would like to set the record straight. I am not using this as an excuse to oppose or support elk ranching. I am asking the minister for information to inquire as to what has been done in Manitoba and whether we are following this. I would hope the minister is not trying to say that I or one of my colleagues is trying to build this up into an issue. That is not my intent at all. I am looking for information to see how the department is handling this issue.
Mr. Enns: I accept that from the honourable member, whom I regard as an honourable member, and I appreciate her concerns for the agricultural industry as being precisely that.
Ms. Wowchuk: The minister talked about DNA testing of all animals. Can the minister indicate if that is going to be run by the Department of Agriculture, the federal government? Who is going to be doing the DNA testing, and what is the cost of setting up such a system?
Mr. Enns: Mr. Chairman, allow me just to further introduce Dr. Jim Neufeld, who has joined us; he is director of the Veterinary Branch and will be involved in the program. We will be hearing and seeing more of Dr. Neufeld too as we bring forward, as we introduce additional legislation with respect to animal care that Dr. Neufeld's branch specifically has been involved in drafting.
To the question about DNA testing, we will be using the lab facilities that are available to us in Saskatchewan, I understand. This is going to be part of the normal process for several reasons. First of all, we want to be absolutely certain that we maintain the integrity of the genetics of our herd. There have been instances where the elk, for instance, cross-breed with the red deer. That can happen, and that has happened in other jurisdictions. That produces smaller animals. That is why our elk are so prized because they are genetically superior
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But in the whole issue of the controls that the industry will require, we have to be able to, with integrity, maintain the claim that animals are not indiscriminately or illegally being taken from the wild and added to the domestic elk herds, that that always and only be done in very controlled and regulated ways so that the whole issue of an accurate inventory of the elk is very much part of the process. That will be accomplished both by a more standard testing and banding with the more traditional forms of identification, but each animal will have its own DNA imprint for inventory purposes.
(Mr. Peter Dyck, Acting Chairperson, in the Chair)
We have not totally explored all the opportunities in that area, but I believe very strongly that we have an opportunity of kind of running our domestic elk ranching as not unlike purebred cattle operations where if we accept the fact that genetically we have some of the finest elk on the continent, and we are going to the trouble of providing the blood tests and the blood proof of that through DNA testing and so forth, that we can in fact virtually have a certificate of genetic quality or purity travel with each animal and, in effect, establish much the same lines as a purebred cattle operation which would down the road continue to ensure that Manitoba elk ranchers, Manitoba elk, commanded premium prices in this business.
Ms. Wowchuk: The minister did not answer the question about the costs. I am wondering, what range of dollars we are looking at for this?
Also he mentioned keeping our stock pure here in this province like purebred stock. Will there be restrictions in place to prevent elk from coming in from other provinces? The minister indicated earlier they would not be allowed to come into the province--for disease purposes--but is he saying then that we will be raising Manitoba elk in Manitoba for export, but we will not be bringing in elk for crossbreeding? Also then what will happen with the elk that are already in captivity in Manitoba? Will they come under the testing that the minister is proposing that will be in this legislation? Will they be tested? How will those be handled?
Mr. Enns: Mr. Chairman, the honourable member should know me well enough by now that when I give a long-winded answer, it is usually because I do not want to answer the question that she asked, and usually it works, except that this time she has found me out.
My ever present and capable staff has informed me that in fact the total cost of these different test procedures, including the DNA testing and so forth, will be in the order of some $85, $88 per animal. So the honourable member can appreciate these are relatively sophisticated tests that are being undertaken, and these costs will be borne by the future elk farmer as these animals get registered into their program.
The other questions with respect to restrictions on the movement of elk, no, we intend to allow--and I want to be careful because this is at this point a conjecture, not all policy decisions have been arrived at. Of course, the act itself and the legislation itself has yet to be approved by the House. But the concern is the restriction of movement of elk is for care and concern about the potential disease problems, not to restrict the movement for trade problems. So in jurisdictions like Saskatchewan, Alberta, we will allow trade back and forth. We will allow trade into the United States, for instance. We will not allow imports from the United States, because we have concerns about the disease problems. I am looking at Dr. Taylor here to see whether I am reasonably on course but he seems to suggest that I am.
We, of course, certainly want to make it possible for Manitoba producers, when the industry is off and rolling, to maximize their returns in any manner they can. If selling offspring, selling some of the animals at some of the well-established sales, like the Regina Agribition generally conducts one every year, other ones in Alberta. I suspect that as our herd increases, Manitoba will be a favourite spot for Alberta ranchers and Saskatchewan ranchers and American ranchers to come to look for and to secure breeding stock from our genetically superior group of animals. Those are roughly some of the outlines of the program as I envisage it will develop.
The member raises the issue that is probably causing us some considerable concern about how we deal with some of the existing operations that are in place. We do not have that many but there are five or six operators that have, for one reason or other, been allowed to maintain elk in captivity under a permit by the Department of Natural Resources, and those issues are issues that have to be dealt with. I am extremely aware of the fact, particularly again in the honourable member's riding, that there is considerable concern about how they will be dealt with. I can only assure the honourable member that never fear, Enns is near. It will be done in a fair and accountable manner.
Ms. Wowchuk: The minister says they will be dealt with in a fair and accountable manner. I look forward to watching in what manner they are dealt with.
Has a decision been made as to how the animals that are in captivity now will be allocated, what price they will be, whether they will be auctioned or how these animals will be dispersed and when does the minister anticipate making a decision on how this will be done? I know that the legislation is not in place. In fact, some people will question whether or not there should have even been a capture this year because there is no legislation to deal with that. However, they have been captured. They are being held and they will have to be disposed of. So what kind of plans are in place as to how they will be distributed and what price will be set on them?
Mr. Enns: Well, Mr. Chairman, again--and certainly not to avoid answering to the best of my capability the honourable member's questions--but these are issues that are currently being debated with the staff as we develop the program. The member correctly points out we have yet to pass the legislation, never mind all the regulations, although these kind of issues are not necessarily reflected in the legislation. These are policy issues that the government and the department will have to deal with, but I will share with the honourable member and the committee members the kind of general policy direction that will guide us in the decision making.
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We wish to start the industry in Manitoba. So how do we best accomplish this, particularly if we have what our wildlife biologists tell us, surplus elk, that we can comfortably engage in a capture program. I leave aside for a moment the issue of whether or not to what extent that helps alleviate some of the big game damage to the farmers. That is incidental, but we have the wildlife population as such that we should be trimming it down. Now some argue, and certainly opponents to domestic elk ranching and proponents of, say, the Manitoba Wildlife Federation who oppose this movement say, well, just let the department issue more hunting licences. From an agricultural point of view now, I ask myself does it really make a great deal of sense for the Crown to get $35 through a hunting licence to shoot more of these elk, or does it make more sense to capture some of them and have the Crown get maybe $10,000 for them, if that is what their value is, particularly if we are trying to start an industry.
Now the issue is it is going to be--what is troubling me as the minister right now, I want to start and I want new entries into the business. It is going to be a route that will be a capital intensive farming operation to get into. Fencing requirements are going to be specific and expensive, so the issue that is before us and not yet resolved is should we allow the sale or the distribution of these original animals, the ones the member talks about that are in captivity, be made available to up-and-starting elk ranchers at a reduced cost other than the full market price, perhaps 65 percent or 60 percent of the market value price. Well, if we do that, then what guarantee do we have that somebody from Alberta, United States will not make a fast deal, everyone makes a fast dollar and we still do not have the elk to start the elk ranching industry. So then there are considerations--well, if there is any consideration of a subsidized price of some form or other, there has to be a mechanism in place that those elk cannot leave the province, that they in fact be here to propagate and to help kick-start the industry. So these are some of the thoughts that are being discussed with the senior staff people as we develop this program.
I cannot answer her definitively, because I do not have approval, or we have not come to the final determination precisely how it will be done, but this is the direction that we are going. We are talking, and again we seek the advice from staff.
We are thinking about putting up groups of animals of, say, three females and a male, offering an animal four, and we likely will have considerably more interest shown than there are animals, so it would likely be done by a draw system. When these animals are drawn, then only would they be able to get the animals if upon inspection they get the good housekeeping seal of approval that they have met the fencing requirements, they have met the land requirements. We say a minimal; I believe we are thinking about a minimal of 10 acres to begin with. We are talking fencing requirements, whether 8 or 9 ft. high. We are talking certain other provisions that have to be on the place before my wild and woolly Australian Director of the Animal Industry Branch goes out there and personally affixes his stamp of approval that this is now a bona fide Harry-Enns-approved elk ranch, and somewhere in the future in the Carberry Hills at dusk in the evening you will see a bronze statue to this little minister that will recall this momentous occasion, you know, when we introduced a new agricultural venture into Manitoba. That or they will just make a big potato spud out of me.
Ms. Wowchuk: Mr. Chairman, the minister indicates that lots of things are still not spelled out, but surely the government must have looked at the legislation in other provinces and how things are being done there. Can the minister indicate then which province is his government looking at modelling their legislation after?
Mr. Enns: I know that staff, and particularly Dr. Taylor, has spent considerable time in looking at and speaking directly to and visiting the operations both in Saskatchewan and Alberta and elsewhere. I think it is fair to say that because of the proximity and because of what we see developing in future trade patterns that it would be understandable that we would want to be most clearly in some harmony with those two provinces. But I think, as you would expect, we have also shared with them in the development of our own legislation, how our legislation was coming together. It has been reported back to me that they have said, gee, you are getting it right. That should not surprise anybody. After all, Saskatchewan I think has been in elk ranching since about 1986. Alberta may be a few years earlier, '82, '84. So they have had 10, 12 years experience in this, and they have been able to advise us when we sought advice that, well, if you are getting into it, we did this wrong, and we did that wrong. We have had difficulty in this area, and if they are kind of looking to amend their acts, we gleaned from that experience in the legislation that I will be presenting to the House very shortly.
So it is the best that Alberta has in place, the best that Saskatchewan has in place, plus the kinds of concerns that were generated in the branch itself.
Ms. Wowchuk: One of the concerns that some members of the public have raised is that once you have animals such as elk in captivity, it will lead to paid-for hunts on farms. Is there anything in the legislation, either in Saskatchewan or Alberta, that allows for on-farm hunts, and is that anything that this government is considering, or is that something that will be restricted through legislation in this province?
Mr. Enns: No, that is not being given any consideration and is not reflected in the legislation or regulations.
Ms. Wowchuk: Will the legislation prevent it from happening?
Mr. Enns: I am advised that, yes, it can be controlled by legislation.
Ms. Wowchuk: I know when the announcement was first made of the potential of elk ranching, the minister had indicated that there were a lot of calls to the department requesting information. Can the minister give an indication of how many people have made application? As the minister said, there will be more applications than there are elk available in this term, so how is it going to be decided? Maybe the minister has addressed it, that it will be by a draw system, but what kind of interest has there been from the public to establish elk ranching?
Mr. Enns: Mr. Chairman, we do not have any applications in hand at this particular point in time. That is understandable because the application form is yet to be devised, but I can certainly indicate to her that there has been a considerable amount of interest shown.
A new fledgling Manitoba Elk Association has been formed. They met at a meeting, I believe, in Dauphin earlier on in the year. Upwards to 100 persons indicated their more-than-just-passing interest by taking out a $100 membership fee to this new organization.
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I know that I have received directly to my office, and I suspect staff as well have received, inquiries, letters of intent, if you like, or letters of interest that, should elk ranching become a legal, acceptable farm program, they would be interested. We are, of course, keeping these letters on file. When the act is appropriately passed, when our application forms are in readiness, and when we have finally sorted out precisely how the draw, type of animals, how all that will be conducted, that we can provide it, then we will make that public. I expect there will be a considerable interest shown by Manitobans to enter into this activity.
(Mr. Deputy Chairperson in the Chair)
We have roughly speaking 100 to 114 animals in captivity that are going to be involved in this draw, so the member can quickly deduce, if we should decide in groupings, as I suggested, three females and one male, that is four animals--you know, four times into 114 or a little over 100--that means that we might have considerably fewer animals than we have interested parties. But we would devise a system that--as the member knows, it is our intention to run a capture program for the next five years, that persons would automatically drop off the list. We would try to be--staff would set the draw up in as fair a way as we can to those who are showing an interest.
Ms. Wowchuk: As the minister is aware, there is an interest from an aboriginal community, and in fact I believe the minister has met with the Pine Creek Band on several occasions to discuss their interest in establishing elk ranching. At the present time, the Pine Creek Band is holding the male elk.
Can the minister tell me whether in this legislation there are any provisions for aboriginal people to start up elk ranching, or whether they just become part of the draw system? Can the minister address that, please?
Mr. Enns: Well, Mr. Chairman, by coincidence, we just yesterday had a meeting with the representatives of the aboriginal community, which, regrettably, I could not attend, even though it was set up in my office. My deputy and other staff were there, along with my colleague the Minister of Natural Resources (Mr. Driedger) and the Minister of Northern and Native Affairs (Mr. Praznik).
I can report to the honourable member, and other members of the committee, that I really view this as an excellent opportunity for our aboriginal community to get a crack at being involved in something that could be economically to their benefit and one, I believe, that by location, by the level of management required to the maintenance of these herds, a very welcome economic opportunity for a group of Manitoba citizens who, I think we can all agree, have not had all the economic advantages available to them. I am very pleased that they have shown an interest in the program. We are using one of their facilities to board some of the captured elk. I believe it is the mature bull herd that we have in captivity that is being looked after or cared for us at the Pine Creek facility.
Their unique position, of course, with respect to constitutional and treaty rights to wildlife, I have every respect for, but it would appear to me that they also understand that those rights exist for hunting and for food purposes for their own consumption purposes and have not indicated that it is their will to use those rights to circumvent the rules and regulations that are being established by the Department of Agriculture in this program, in fact, quite the contrary.
Senior staff report to me that at a very positive meeting just held yesterday that they are more than prepared to work with the department, to work within the framework of the controls and restrictions that would have to be involved, just as any other elk operation. Now they have also requested--and I think that is a request that certainly will be taken seriously--to be involved in the future capture of elk and perhaps, in some way, be able to earn for return of their services, for return of the use of their facilities for the housing of some of these animals, by way of recompense, perhaps some animals instead of dollars. That, to me, is the first time we heard that proposal. It does not offend me. I think it is a question of again working with all the officials involved and coming to an agreement, that I welcome quite frankly those kinds of developments.
I am very pleased and I report to the committee that I am very delighted that the aboriginal communities are looking at this in what I regard as a responsible way, and I have every intention to direct the department and those who are administrating the program to work as diligently with any aboriginal group that is interested in elk ranching as with anybody else. I have a very empathetic approach to making this an opportunity for some sound economic development in communities and in areas where all too often the only other resource was the welfare cheque. I really look forward to it.
I want to challenge the New Democratic Party, who to my regret enjoys considerably more support within the aboriginal community and it is reflected in your membership--the member for Rupertsland (Mr. Robinson), the member for The Pas (Mr. Lathlin)--do not let your more militant environmentalists get in the way of sound policy making in this area. You look to your constituents as well. You have the privilege of representing, in the main, those parts of Manitoba that reflect the aboriginal vote and the aboriginal vote--and I take it with considerable pride and satisfaction--have written very supportive letters to me directly. They commend the government, my government, for moving in this direction and are looking forward to working with us in this direction. I solicit members' support in allowing this to happen.
Ms. Wowchuk: My understanding was that there was a group of aboriginal, different bands that were getting together to form a coalition, so to speak, and that they were going to put a united front together. Can the minister indicate, the meeting yesterday, was it with just the Pine Creek Band or was it a group coalition? Can the minister indicate, if possible, which bands were represented?
The minister talks about New Democrats having the support of the aboriginal vote. Yes, we have the support of the aboriginal vote, and I am quite proud to have that support and speak up on their issues. The minister should know that the Pine Creek Band is in my consitituency, and I have been in very close contact with the people on the band. I understand very much what it is that they are trying to do, but I also understand that there are some bands that are not in support of this issue. So if the minister could indicate whether this was the coalition they were meeting with, which bands were involved, and whether or not there have been--the minister indicated there have been letters of support, and I have seen the letters of support the Pine Creek Band got earlier on when they were looking at pursuing this venture--any letters from aboriginal bands who had been opposed to this proposal?
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Mr. Enns: Mr. Chairman, staff tells me that, and to the best of my knowledge, I have received no letter of concern or objection from an aboriginal group or band. With respect to the meetings that we are having right now, they are with a group. They have agreed to go back and present us with and work out a business plan, and we have given them the assurance that we would work with them positively and seriously to try to develop with them a business plan that would see them playing a role in the next capture program that would lead to their involvement in the elk program.
I think from our point of view it was significant that they understood that, to gain the full economic benefits of the program, you have to be in the mainstream of the program and play by the rules. Failing that, they run the risk of containing harassment if they were going to deal with illegal or under-the-table elk, claiming that as their constitutional right. That would be argued in front of the courts for years and years, but in the meantime would not really be full participants in the growing, multimillion dollar elk business across Canada.
It was very encouraging to me, and I know to my senior staff people, that that seemed to be an understanding by the aboriginal group at our meeting yesterday. So we look forward to working with them.
Mr. Deputy Chairperson: Would it be the will of the committee to take a 10-minute break?
Mr. Enns: Either that, or would it be the will of the committee to allow the honourable minister to have a cigarette?
Mr. Deputy Chairperson: Order, please. We will take a 10-minute break.
The committee recessed at 10:33 a.m.
________
After Recess
The committee resumed at 10:46 a.m.
Mr. Deputy Chairperson: We will resume the Estimates of the Department of Agriculture.
Ms. Wowchuk: Mr. Chairman, I want to ask the minister, the bands that have been in discussion with the minister's staff with respect to their role in the elk ranching industry, can the minister indicate whether these bands are from across the province, southern Manitoba, or whether bands from northern Manitoba are involved as well.
Mr. Enns: Mr. Chairman, the specific aboriginal groups that we met with represented the West Region Tribal Council, Crane River, Waterhen, Keesee-Elphinstone group.
Mr. Chairman, I wonder if I could just interrupt the honourable member for Swan River's examination of these Estimates to determine whether or not there is any disposition perhaps to deal with the items specifically, such as crop insurance or the Manitoba Agricultural Credit Corporation. If there are some specific questions, we could then dispense with the votes. We are at the hands of the committee members, but I know that the honourable member shares my concern; senior staff of both corporations are here. We could perhaps consider, if the member has specific questions to these two corporations, then indeed pass their appropriations, and they could go on with their business in providing the service to the people and farmers of Manitoba in their usual efficient way.
If that would meet with the honourable member's request, then we could carry on. Senior staff of course will be here, my deputy minister, assistant deputy ministers, with other issues involving the department. I put that out as a suggestion to the committee.
Ms. Wowchuk: Mr. Chairman, I would be quite happy to move to the Crop Insurance line.
Mr. Enns: I would then leave it to the member's choice. If she wishes to deal--do we look specifically with the issues of the Manitoba Agricultural Credit Corporation? We have the general manager and senior staff of the corporation available to us. Let us maybe turn to that, Chair. I know that is jumping a little bit, but we can arrange our schedule to do it that way,
Ms. Wowchuk: Mr. Chairman, I have no difficulty moving first to the Crop Insurance and then if we move to the MACC and then move on from there.
Mr. Deputy Chairperson: Okay, so we will move to 2.(a) Manitoba Crop Insurance Corporation, Administration. The minister's staff are moving up here.
Mr. Enns: Just by way of introduction to the Crop Insurance question, this of course is the area where, as has been noted by the opposition critic and indeed the farm press, where significant decrease, last year's print over this year's print, of some $10 million takes place. All of that is in the area of the termination of the GRIP program. The honourable member, I just would like to draw her attention to line (b) Premiums where the sizeable increase from $14 million to $35,700,000 is shown, represents the considerable enhancement, addition on the part of the province of Manitoba's share, and one that I can report is also being shared by the federal government to enable us to provide producers in Manitoba with what we believe to be the best Crop Insurance program that we could afford.
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I might indicate to the honourable member it took the combined efforts on the part of senior staff, board of directors at Manitoba Crop Insurance, to enable this transfer of funds to take place. The member might well suspect, and accurately so, that Treasury and Finance people viewed it somewhat differently. They thought with the termination of the GRIP program that those monies that were dedicated to the support of that program for the past five years would automatically return to consolidated revenue. It was my determination, and I was able to receive the kind of support in the development of the enhanced Crop Insurance program that we are offering, to take a significant portion, some $18 million, $20 million of that premium share.
The member may recall that in the past five years the provincial share of support to the GRIP program amounted to about $32 million, $34 million. It is not a finite figure because the participation rate determined the final dollars, but it ranged in that $32 million to $34 million cost to the provincial Treasury to support the GRIP program that was in place for five years.
That program has ceased and been terminated, and we were able to convince my government, my Treasury Board to transfer a significant portion of that premium that previously went to the GRIP program over into line (b). That enables us to present what experience is indicating a fairly acceptable enhanced Crop Insurance program that is currently being offered to the producers in Manitoba.
I have already introduced Mr. Neil Hamilton who is currently the acting general manager of the corporation. Along with him is Mr. Henry Dribnenky, to my left, who is the director of Finance and Administration for the corporation, and Mr. Herb Sulkers who is director of field operations for the corporation.
Ms. Wowchuk: Mr. Chairman, I would like to spend a few minutes discussing GRIP. As the minister has indicated, the program has come to an end. When the program was established, we were told that it would be revenue neutral, and my understanding was that if there were surpluses in the program that those surpluses would go back to the producers.
Can the minister indicate whether there are surpluses in GRIP, and in what amounts and how the government plans to disburse those funds?
Mr. Enns: Mr. Chairman, staff advise me that understandably, although the program has terminated, absolute and final figures are not yet possible to establish, likely will not be established until the end of the year. In addition to that, there are some instances we have potential legal issues arising on, not many, but several cases that could impact on the final figures. I just want to put that on the record so that a year from now the honourable member does not hold me to the precise dollar figures that I am prepared to put on the record.
The member is correct; the conditions of the program's introduction called for any surpluses to be redisbursed to the participants in the program. I am advised that, as it now stands, the overall potential surplus is in the order of $63 million, $63.5 million. The producers' share of that would be 31 percent or some $19 million, $19.8 million, and again these are rounded off and not finite figures, and it is the intention of the corporation to return the producers' share to the producers.
I do not know whether a policy decision has been made as to precisely how that will be done, whether or not it may be offered to them as a discount on next year's contracts, or whether it is done by actual cheque rebate. I would seek the member's advice on that. The province, of course, shares some 24 percent or $15.5 million, and the federal government's share is the larger one because they are the larger contributor, some 44.4 percent, and will stand at the moment to receive some $28 million repayment out of the total surplus funds.
As I said briefly in the House yesterday, when I introduced the legislation to officially terminate the GRIP program, it is really quite a remarkable achievement that I want to acknowledge and put on the record. The program was introduced at a time when grain prices were severely depressed. It accomplished what the program set out to do. I know that it was born in some controversy; it was not the easiest program to explain to the producers at the farm and kitchen tables at that time. I have a great deal of admiration, and I want to acknowledge that, of the staff, particularly of the Manitoba Crop Insurance Corporation, who were stretched to provide the kind of extension work required to introduce a major program like this into the safety net of programs being offered.
I can report to you, and it is a source of considerable quiet satisfaction and pride, if you like, as you would expect for me, as a minister of the department and a Manitoba official, to hear consistently when I meet with my peers from Saskatchewan and Alberta and other parts of the country that in Manitoba the program probably was most effectively delivered and most effectively met the program aims in providing upwards to $800 million of money that was sorely needed. Quite frankly, there would be many operations not in business today had that program not been in place.
So I just take a moment of the committee's time to acknowledge the work of the corporation in this regard. I want to acknowledge the work of my own departmental staff who worked in a very co-ordinated way. We were able to introduce this major program without any great influx of additional staff or numbers. It was an imposition on everybody involved, but it worked. Of course, it was my privilege to join the Department of Agriculture just at the time that we were taking perhaps one of the most difficult harvests that in recent memory was the case for Manitoba producers, 1993. The wet conditions, the contaminated conditions of some of the soil, the first serious difficulties with fusarium and other issues, all of that drove this program into very considerable debt.
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It was only a year ago, I believe, prior to last crop, that we were still looking at about $150-odd-million of a deficit. The advice that I was getting from the corporation was, you know, difficult advice though, either push premiums up to an unacceptable high level to try to recover that debt, because the member is correct, the indication was at the time of the program's introduction to our respective Treasury Boards, whether federal or provincial, that it would be revenue neutral, that in the final analysis, at the conclusion of the program, it would have to be in balance or else provincial and federal Treasuries would have to pick up the shortfall.
So with some minor adjustments, and certainly the biggest adjustment coming from the marketplace in terms of grain prices, we were able to, within that short period of time, last year, a year from now with a $150-million-or-thereabouts deficit position, report to the committee that we can terminate the program with a $60-million, $63-million surplus, and everybody really has benefited from this program. As I said just briefly in the House yesterday, we sometimes can be so overly critical of whatever governments do, or its agencies. I think in this instance a great deal of satisfaction and indeed quiet pride can be associated with the manner and the way in which the program was handled, delivered and concluded in Manitoba.
Ms. Wowchuk: I too would like to say that staff certainly did work hard to get it through, and not only the Crop Insurance staff but the many other people who were seconded from different departments to deliver the program. It was an effort on all of their parts that made the delivery of the program that much easier.
The minister mentioned court cases that were still outstanding. I believe that the court case with respect to lentils was settled. Has that been paid out, or is that one of the court cases that is still being dealt with?
Mr. Enns: Staff can get me that information. I can indicate to the member's question that, yes, that issue was a significant issue and was settled, to my understanding. The further question was whether the actual payouts have been made. I am advised that payments were made in January of '95 of some $5.9 million, net payments. That was dispensed with.
Ms. Wowchuk: Earlier on there was a discussion about the Saskatchewan government trying to collect overpayments of GRIP funds to Saskatchewan farmers. Has there been an overpayment of funds to Manitoba farmers, and is the corporation trying to collect any of those funds, and how successful are you being?
Mr. Enns: Mr. Chairman, I first of all want to say that I am relieved that I am not in the position that the Saskatchewan minister is in right now, who is facing the not-too-pleasant task of sending out, I think, bills for overpayment of somewhat in excess of $11 million or $12 million, which, obviously, is not meeting with very favourable response, as the member can appreciate, by farmers who are now finding themselves paying for a program that is no longer in existence.
In Manitoba, yes, again, you have to remember, the nature of the program is such that it is possible to have that situation created, and we had overpayments in the 1994 year of some $1.5 million and notices for payment on those accounts had been out for some time. In the last year, it was a relatively small number covering some $140,000 of overpayments for which notices have also gone out. So it is a relatively modest adjustment to the program.
Ms. Wowchuk: Can the minister indicate how successful his department has been in collecting overpayments, and what steps are being taken in those areas where they meet with resistance to refund the money?
Mr. Enns: Mr. Chair, staff advises me that a combination of options is open to the corporation in the collection of these overpayment accounts. It is too early to indicate, in response to her question, what level of success or what degree of resistance is out there, but I am advised that there are, as I say, different options open to him. If, for instance, some of these accounts that have an overpayment due to owing and due to the corporation enter a claim in the coming cropping year, the most expedient way would be to adjust the claim to make the payment of the overpayment done; or, in the future, in the premium collection, addition or discount to the future premium claimant, a producer who wishes to continue to insure with the Manitoba Crop Insurance Corporation this year and is owing us some few dollars on an overpayment will probably find it tacked on to his premium as he buys his continuing insurance program.
So I think that, a year from now when next we meet, the corporation would be in a position to more definitively answer that question as to how the overpayment issue was resolved.
Ms. Wowchuk: Can the minister indicate how these overpayments are detected? Were they detected through audits or spot checks, or how was this determined?
Mr. Enns: Mr. Chair, the determination of an overpayment situation is arrived at in different ways--by audit, in some instances. Also, in the way the moving price of grain has moved in these last six months, it changes the payouts and the amounts owing. That is the only information I can give her.
Ms. Wowchuk: Mr. Chairman, I have some questions about the new Crop Insurance and Big Game Damage Compensation, and some of them overlap.
I would like to talk about the big game waterfowl damage committee report, a report that was put forward in November. The department, I believe, had a committee and made many recommendations. I would like to ask the minister where this report is, whether the report is a preliminary report, what action has been taken on this report and the recommendations, and what is being done to implement the recommendations. Which recommendations are going to be implemented? Which recommendations does the department feel are just beyond what they can cover?
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Mr. Enns: Mr. Chairman, I am advised that the report is currently before the board of directors of the Crop Insurance Corporation. It will receive due consideration at that level.
I am generally apprised of some of the recommendations. I believe there is a recommendation to harmonize the level of support being paid. There is some discrepancy of 5 percent or 10 percent in between the composition paid for waterfowl damage as compared to big game damage.
I am well aware, of course--the member has written me and we have heard from some of her producers--that the request is for 100 percent compensation for game damage, but I am awaiting further deliberation from the board of directors of the Crop Insurance Corporation and from the corporation management itself to finalize any decisions emanating from that report.
Ms. Wowchuk: Over the last year, more than a year, there has been a tremendous amount of pressure put on farmers across the province, but particularly in the western region of the province and in the Swan River area because of increased game numbers, increased elk, increased deer, and farmers are losing an awful lot of their hay supply. It is putting a tremendous amount of pressure on these people, because they put a lot of effort into putting up hay for their own livestock. They end up losing their hay and have to purchase it elsewhere. It ends up that the farmers of the area are paying the cost of providing feed for wildlife.
I know this is an overlap between Natural Resources and the Department of Agriculture, and Crop Insurance have been up to visit with people in the area. Has the minister been able to put forward, or has the department put forward any recommendations or a better resolution to this problem than we have had in the past? Because farmers have become so frustrated with the problem. In fact, the minister will, I am sure, remember of an incident where one of the farmers became so frustrated that he had to shoot one of the elk. This last winter, farmers have invited aboriginal people, who have the right to take wildlife all year round, to come onto their land to help dispose of some of the animals and resolve the problem, because they feel that they have not had a proper resolution of this problem by the department.
Can the minister tell us what steps his department has taken to a better resolution to this problem?
Mr. Enns: Mr. Chairman, of course I am very much aware of the situation particularly that developed this winter in the Swan River Valley area with the heavy concentration of big game, elk principally, but not exclusively. I have several comments to make in that regard. We are working, as the member suggests, with the Department of Natural Resources to look at what can be done to help alleviate the situation. I certainly share the general view that is often expressed to me by farmers that while they are by and large in accord with the kind of societal will, if you like, to maintain healthy wildlife herds whether they are waterfowl or deer or big game, but that they ought not to be asked to carry an inconsiderate amount of the cost.
It should not be at their expense. So that I am sympathetic to--and you know, we are constantly revising upwards the level of compensation and trying to fine-tune our programs of support. I do believe that--and I am challenging both Natural Resources and my own staff whether or not straight compensatory relief is the only solution--we ought to perhaps be looking at different forms of it. I know for instance that we have provided, through the Department of Natural Resources, relief from game damage to some of our nurseries in the province of Manitoba by financially contributing to and insisting in the building of appropriate fencing. We are engaged right now in the Department of Agriculture. And we talked about it just a little while ago, we believe that we can with reasonable confidence provide fencing that can keep elk in a particular place.
We ought to be perhaps looking at expending some of the monies, and the monies are getting serious. The Crop Insurance has adjusted its appropriation from $450,000 originally to upwards of $1 million for big game damage. Well, a million dollars can put up significant fencing that could provide more permanent relief and protection from big game damage. This requires also a little bit of co-operation from the farmers involved. I have some difficulty, and I express it, with 100 percent compensation because it seems to me that then does not put any onus on management of the hay assets if government is going to come in and provide you with 100 percent compensation.
I take this opportunity too to express some surprise and regret that some of the reaction on the part of some of her producers in this matter last year. We believed--and that was quite frankly one of the reasons why the Department of Natural Resources did, some would say perhaps prematurely, enter into an elk capture program when we had yet to resolve the issue of whether or not elk ranching would become a legal operation in the province through the necessary passing of legislation. But part of the reasons for the elk capture was to respond to what we acknowledged was becoming a situation that this winter particularly, the heavy winter that we had, the very healthy numbers of elk were moving out of traditional areas and just making themselves at home on farmland and helping themselves to the feed while they were at it.
But what was the farmers' reaction? I mean, if I discover somebody stealing out of my garage and the Winnipeg police come out and they take the culprit and take him out of my garage so he does not inflict any more damage to me, I do not threaten the Winnipeg police officer or whoever does that. But that in effect to some extent was happening in the Swan River Valley. Our people were there to try to remove the critters that were eating up their hay and were met with fierce resistance and interference. I could not quite understand that. I need to see a little more co-operation, quite frankly, particularly if we are talking about other kinds of programs. I appreciate that farmers like to say that it is their custom to leave their hay in their fields. Well, under those circumstances they may not be able to do that.
You know, the Red River farmers have to farm differently. They have had to, for instance, over the last decades, as my colleague, the member from Pembina (Mr. Dyck) knows, they cannot store their grain elevators just where they want to. They have to have them up on a rise of land or on a plateau that they built, you know, with some government assistance, by the way, in some of those instances, to store the grain to ensure that the grain is not in jeopardy, come the kind of flooding situation that we just experienced this past spring and can experience once a decade or twice a decade. Farmers in the upper Assiniboine Valley have to farm differently because of the flooding problems that they can expect from time to time. I suggest to you that farmers living adjacent to abundant wildlife areas, particularly in areas where they have protection like in the parks, the Duck, the Porcupine or Riding Mountain Park, and who are also engaged in livestock production and have hay supplies scattered throughout their farm, will have to think of making some management changes.
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So I welcome this kind of debate on the issue, and I assure the honourable member that I will be meeting with farmers individually and in groups in the course of the coming year in summer to see if we cannot work out in concert with Natural Resources a more adequate way of controlling this problem. I will lean on the corporation to ask them to perhaps consider using some of these monies in a manner that they perhaps have not used in the past to help in that effort. I think, you know, the Crop Insurance corporation will be flexible enough to say, if they can reduce their claim level from a million dollars to a more traditional $300,000 or $400,000, it is in our interest and the interests of the clients that they serve, to do so. If that means maybe making a contribution or working in concert with Natural Resources to do some protective fencing or to introduce some other program into that area, these are the kinds of innovative approaches that we will be trying to bring to resolve the issue.
Ms. Wowchuk: I am going to come to the defence of the farmers of Swan River, because I am not quite sure that the minister understands the situation there.
When the government made their announcement to move into the capture of elk, I called the Minister of Natural Resources (Mr. Driedger) and told him that there was going to be a problem here because the government, the Department of Agriculture and the Department of Natural Resources, were not listening to the producers and these farmers have been facing very serious problems, very serious losses.
The minister talks about fencing, hay, and that has been done. These elk are coming right into their yards, right next to their buildings. They have moved the hay off the field. It is not scattered all over the field. There are fields of alfalfa that are basically rutted up because the elk are in there eating right down to the ground, eating the crop and other crops as well. So it is not that the farmers are not managing well.
These farmers came to the department with many suggestions, a long list of suggestions of how the problem could be resolved. Instead of resolving the problem or listening to the producers, the minister made an announcement that there was going to be elk ranching. The farmers have no bargaining chips left. There was going to be elk ranching--that was the government's solution--without anybody addressing the problems that they were facing of the loss of their hay and compensation at a much lower rate than they could buy the hay back for, and they are out of pocket a tremendous amount of money.
These farmers have said they are not opposed to elk ranching. That is not their objective here. Their objective was to have their problem resolved, at least listened to, and that did not happen. I had indicated where there were farmers who have taken things into their own hands, one of them shooting an elk because he just could not take anymore losses. He could not afford to lose any more hay when he was not getting the support to buy the feed that he needed.
Farmers made suggestions. They suggested increasing the number of licences. They made suggestions to have landowners permits issued so that they could take an elk on their own property and then use that to divert elk, because when you take an elk and leave part of the carcass behind, the other elk will not come there as quickly. They made those kinds of suggestions. There were people who were interested in having elk taken and relocated to other areas to start up herds in there, but the government did not take that suggestion.
I think it is unfair to say that the people of Swan River did not accept this proposal as a solution, without looking at the reasons that they did not accept it. I think that the way the government handled the whole capture was not done well, whether it is the Department of Agriculture, Department of Natural Resources. We are very fortunate it did not result in a loss of life when we had that fire in that area. It is a very serious situation. My wish would have been that there would have been better consultation before the announcement of elk ranching was made, that there would have been a much greater effort put into resolving the problem that farmers are facing.
It is true, farmers have to change their practices in different areas. These farmers have, to a great degree. There is no hay scattered all over the field; hay is brought into the yards. They are trying to manage as best they can, but the numbers have increased to the point where it is a real problem for them. These farmers feel that their ability to manage is taken away from them. One of the farmers would very much like to try a practice of swathing his last crop of hay and leaving it in the field. I believe that is a new--I have read about it--practice which saves farmers a lot of money in the fall where they do not have to roll up the hay. It can be left on the field for feeding. But these farmers do not have that opportunity, because there is a problem that government is not resolving, and quite frankly, they do not believe that by capturing these few elk to start elk ranching is going to in any way solve their problem, whether it be the capture in the Swan River area that was unsuccessful this year or the proposed capture for the next five years which will take--if it is planned to take a couple of hundred each year--even that, if we do not look at other methods of resolving the problem and basically luring the herd back to its natural habitat, hopefully back into the mountain area.
I hope that the Minister of Agriculture will recognize this as a serious problem and will look at ways that it can be resolved. I look forward to hearing what proposals are to put funds into that area whether it be for lure crops or new habitat, but it is not fair to the producers that they have to have their rates on their crop insurance--first of all, that they have to bear the cost of feeding these herds and suffering the damage that they do and then have their crop insurance rates reduced because their averages, because of these losses, are not adjusted properly in the opinion of the farmers of the area. In fact, they feel that they are being penalized because of wildlife damage. I talked earlier about hay damage during winter months, but during the summer months it is on their crop. Because of wildlife damage, they are being penalized, and their coverage goes down.
Has any consideration been given to that as to how these people can be treated more fairly so that the numbers that they lose to wildlife damage are not subtracted from their yield averages, which drives their coverage up?
Mr. Enns: The corporation is well aware that farmers in that area have contended for some time that they are being treated, in their view, not correctly or fairly by the corporation, but the simple matter is that the rates reflect the risk. The resolution does not lie in tinkering with the actuarial figures that determine the premium's structure. It lies in the areas that we talked about just a little while ago in terms of managing the problem from everything from decreasing the number of elk in that area, enhancing the habitat for the elk in the area that they ought to be in, in the wooded and park areas, and perhaps in the greater harvest of animals through hunting. These are all issues that are more germane to the Department of Natural Resources, as I know that the honourable member is well aware.
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I do not wish to continue the debate with the honourable member on the actions of the farmers, but the simple truth of the matter is that we were prepared to take 300, 400, 500 elk out of the Swan River Valley and relieve that problem in January when the problems were just manifesting themselves, and the farmers would not let us on their land. They not only would not let us on their land, they participated in vandalizing those efforts when we tried to capture them. That is the matter that I am talking about. We were prepared to, in a much more meaningful way, resolve or try to address the issue.
I found that a surprising reaction on the part of somebody who is claiming damages. And, to link the question of elk ranching, the government decision was not made to go into elk ranching as a result of the situation in the Swan River Valley this winter. The government decision to go into elk ranching was made, appropriately enough, at the Elkhorn Resort at a cabinet and caucus retreat last August. Mr. Chairman, I look to you for advice. When were we there? It was a fine fall day, I believe. That was when the decision was made, well in advance of any difficulties experienced in the Swan River Valley.
Swan River Valley farmers thought that they could leverage the Department of Agriculture, the Manitoba government, at that particular time, and I think it is understandable that governments or government agencies and departments do not respond to that kind of pressure from a situation by trying to link the two programs together. We genuinely thought that this was an appropriate time to provide, not all, but some considerable assistance and relief to the growing number of elk that, as the member accurately describes, were coming out of the parkland area and out of the woods and making themselves at home on the farms and at the farmers' expense. But we were deliberately prevented from offering that relief by the very farmers who were claiming the damage.
Ms. Wowchuk: Mr. Chairman, just to set the record straight, I would like to tell the minister that, yes, farmers did resist having the Department of Natural Resources come onto their land to capture the elk, but there is absolutely no proof that farmers were involved in vandalism. I would very much like to set that record straight. No one knows who the vandalism was done by, and I would not want that attributed to farmers of the area because we do not know that.
Mr. Enns: I accept that statement on the record, and I certainly do not want to leave any impression that I know who did it. If she tells me that farmers were not involved, then I believe her because farmers are very close to the righteous; in most instances, sit right close behind the throne of God and, if you attribute that to your farmers in Swan River, I believe that.
Ms. Wowchuk: Mr. Chairman, I made that comment quite seriously, because it was a very serious incident and no one knows who was involved in it. It is unfair to attribute it to anyone without knowing it.
Back to the Crop Insurance and damages of wildlife, producers tell me that when they make application for the new Crop Insurance that they are prevented from getting the 80 percent coverage because they are being penalized. Their averages have been driven down because of wildlife damage, so they are being penalized twice. First of all, they have the losses and then when they go to apply for the higher crop insurance, they are not allowed to get it because their averages are lower than they should be. Why would they be penalized when they already have the losses because of the wildlife damage?
Mr. Enns: The acting general manager advised me that is not the case. We acknowledge that the big game damage is reflected in the average yield, but that in no way prevents them from subscribing to the 80 percent coverage, and 80 percent coverage in case of loss will be paid out and covered for.
It does not resolve the first issue that you raised. I know that there is an issue that the Crop Insurance people do not refute. If crop damage on a regular basis reduces the average yield in a given area, that is reflected in the premium structure. But I am sure that there is no further penalty and there is no prohibition for them accessing the now multi-tiered program selection of 50, 60, 70, 80 percent coverage.
Ms. Wowchuk: Mr. Chairman, I will maybe get back to my constituent who had indicated that was the case and we can have it looked into, because he has indicated that has prevented him from getting the 80 percent coverage.
Mr. Enns: Mr. Chairman, I would certainly invite the member to do that, to either direct the inquiry directly to me or directly to the Crop Insurance people for some further clarification.
Ms. Wowchuk: Can the minister indicate who determines the price that will be paid for wildlife damage--whether it is hay damage or grain damage--and what is that price in comparison to elevator price? For example, if it is wheat, what would be the price of wheat in the elevator versus what a producer is compensated, and the same thing with hay? What is the compensation for hay in a wildlife claim?
Mr. Enns: Mr. Chairman, with respect to grain, I am advised that we get that figure on the different grains from the federal government through their offices, and then we have to make the determination, as we had to make this year, based on our actuarial experience, on the available funding in the program, to what extent we can cover. There has been, and I know this has met with some disappointment or concern by farmers, an automatic 15 percent reduction from those established rates. That has been brought to my attention, and I am sure to the Crop Insurance management's attention, that has disappointed some subscribers, but it is all predicated on the amounts of dollars available to us. I remind the honourable members, as I indicated earlier, the overall envelope for safety programs has been significantly reduced.
We have an aggregate support level from the federal government of some $600 million, through which the provinces fund the NISA programs, the Crop Insurance programs, or any other companion programs in different jurisdictions, and that determines to a large extent the richness, if you like, of the program that we can offer. We are not prepared to let the federal government off the hook by picking up any federal government downsizing, but I can, for the benefit of the member and for the record, indicate to you that this year the '96 crop insurance dollar values have been placed for red spring wheat--myself being an old imperialist and great admirer of the Crown, I will use imperial measurements, bushels, feet, things like that, leave you to translate it to the metric tonnes, if you wish to--spring wheat at $3.62 a bushel; durum at $3.76 a bushel; prairie spring wheat at $3.40 a bushel; and so forth. There is a full listing of prices available, barley at $2.26, oats at $1.84 a bushel, which is considerably below the current value of oats, but these are the figures that are in use for the '96 crop year.
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Ms. Wowchuk: If the minister could clarify for me, then, the prices that are put into the crop insurance rates are determined by the government. It has nothing to do with the market value of grain. My understanding was that it was the market value and then you took a certain percentage of it.
Mr. Enns: Staff advise me that it does reflect the market value, and it is Agriculture Canada that sets this. Because these are fixed programs for which we charge fixed premiums, and the federal government's share of the premiums, the provincial government's share of the premiums, these are all determined in October, November, when we get to do our final Estimates review for this appropriation.
The member is aware of what has happened to grain prices in the interim not necessarily reflecting accurately the pricing regime that is now in place, but that has been the practice of Crop Insurance, and I am advised that is the same practice right across the country. The same method of choosing these figures is in place right across the country. Understandably the federal government has a continuing and we hope permanent role in providing the support to this program. They are a major player; they determine these prices.
Ms. Wowchuk: Getting back to compensation on hay losses for game, who determines the price of the value of that hay? I understand that the value that was used this year is lower than it was last year. How was that determination made?
Mr. Enns: The determination with respect to hay compensation is done by the corporation, but they do that working with the Department of Agriculture specialist officials, forage people. They then back off 15 percent. They begin with what quality alfalfa hay is market value at, again probably in the fall of the year. They have to sell a fixed insurance premium and a fixed premium rate. Under circumstances that prevailed this year both in grain and in hay as a result of the unusually long and difficult winter and regrettably tightened hay stocks, we are well aware that hay stocks that might have been available at $35 a tonne in September were probably closer to $50 or $60 a tonne in April or late March. But the corporation is not in a position to fix its premiums upwards to cover those higher. It is sold at premium coverage at that fixed price at the moment in time when that was, in their opinion, working with agricultural people, the Department of Agriculture, a fair and reasonable reflection of the market price of the feed.
I think that would be more or less the same response with respect to the grain prices, when one could not predict the continued upward spiral of grain prices that now make those grain price payments look somewhat considerably below market value.
Ms. Wowchuk: So the prices never reflect the--they are determined ahead of time. Does that mean that when we get into the next crop year and we have higher grain prices, adjustments will be made and it will be a higher coverage that is available?
Mr. Enns: It continues to be a combination, and I want to stress that the other part of the combination is the availability of federal dollars to work with. If there is ongoing pressure to further restrict the amounts of federal dollars available to the provinces for this program, that will be reflected in the level of compensation that the corporation will be capable of and have available for payment. We will certainly--I am sure as ministers when we meet in the beginning of July at our annual Agriculture ministers' meeting with Minister Goodale and our fellow ministers--no doubt, be spending some time on this issue as to how we can ensure that our basic support programs reflect the reality of today's agriculture and today's prices.
Ms. Wowchuk: The minister indicated that the big game compensation was in the range of a million dollars already. But when I look at the Estimates, I see that there is a budgeted amount of $450,000--or last year was budgeted $200,000 and only up to $450,000. Is the minister anticipating that things are going to get under control to the point where they will not have to spend that additional money, and how did you come up with the figure of only needing $450,000 if in fact the requirements are a lot more at this time?
Mr. Enns: Mr. Chairman, staff advises me that the $450,000 that the honourable member sees, that reflects, kind of, a five-year average that the corporation puts in. The million dollars that I referred to was the '95 actual claim and payout costs that we incurred and obviously had to adjust that figure upwards to cover that. But this reflects for the coming year, and it has been the practice to average it out over a five-year period.
Ms. Wowchuk: Just for clarification then, on the big game damage, is that solely a provincial responsibility or does the federal government contribute? I will go on to the next question. On the waterfowl damage, I understand that the federal government picks up a portion of it.
Mr. Enns: Mr. Chairman, the honourable member is correct. Unlike the waterfowl damage--there is federal participation in that program--whereas the big game damage is totally and solely provincial. That is one of the reasons, by the way, that in some of the other jurisdictions there is no big game damage compensation. Of course, it is an issue that I know is troublesome to the Saskatchewan farmers, and I see in the farm papers that that is reported. The Saskatchewan farmers tend to look at Manitoba with some envy that at least in Manitoba there is a Big Game program. The member is correct, that is totally borne by the provincial treasury.
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Ms. Wowchuk: With respect to the Waterfowl Compensation Agreement, again, there is a large increase in the amount that is anticipated. I would assume that is as a result of averaging as well, but can the minister indicate, with the wildlife damage he said it is upwards of a million dollars that has had to be paid out, what is happening with waterfowl damage? Has there been an increase in claims for waterfowl damage?
Mr. Enns: Again, Mr. Chairman, these actual claims can vary significantly depending on the year. If the harvest comes off, as it should, before the birds arrive, claims are considerably down. I am advised that the number of claims in '95-96 totalled some 69, for a total amount of $111,500; but, again, the corporation likes to use a five-year averaging technique, and it has been our experience that that $400,000 reflects that five-year averaging.
This year I might say, with the delayed seeding, the knowledge that the crops are going to be in the fields a little later on into the fall could likely be a heavier call on that account for that reason.
Ms. Wowchuk: So you anticipated $150,000 last year, and now you are anticipating $400,000 this year, because--I am sorry, you kind of lost me on that one. You said the five-year average is around $400,000, but you only budgeted $150,000 last year. Is that right, or am I misunderstanding?
Mr. Enns: Staff is losing me on this one too, but my acting general manager says, last year we did not use the five-year averaging; this year we are using the five-year averaging, and you figure it out.
They are using the five-year averaging for the first time, and their advice, their experience has been that this actually reflects, or close to, the five-year averaging cost of that program. Up until this year, we were going by on a year-to-year basis, and as I just indicated we have had--and particularly, in the last few years, the figures fluctuate. The year '95, the total cost was some $111,000, and so last year's appropriation adequately covered the program costs.
Ms. Wowchuk: I was not trying to be difficult, but I just could not quite understand what was happening, and I appreciate the staff sorting it out and clearing it up for me.
We have started into a new Crop Insurance Program, the enhanced Crop Insurance Program. Can the minister indicate what the response to the program has been? In particular, I am interested in the participation levels at the various levels. Particularly, are more people taking out crop insurance this time because there is a 50 percent coverage available, and what percentage of the people who are participating are opting for the higher level of coverage at 70 to 80 percent?
Mr. Enns: Mr. Chairman, I am advised that the final figures are not now available in terms of an acreage coverage, but they will be available, and certainly available to the member the latter part of July, but all indications are that the participation rate is up, that it will be all or exceed the combined participation of GRIP and Crop Insurance that was in effect the previous year, where we had coverage levels in the 70 percent range of acreage. Some 7.5 million acres were covered of the roughly 10 or 11 million acres that are seeded annually in the province. I would like to be able to provide the committee with those figures, but I certainly invite the honourable member to contact the corporation later on in the summer to have these figures accurately provided to her.
We are confident that the participation rate will be considerably higher. That, of course, was the objective, the realization that it is going to be very difficult for farmers to rely on ad hoc program support in times of difficulty in the future, either from the federal government or additional support from the provincial government; that is simply not in the cards. The financial pressures on all levels of government are such that that simply is not realistic to expect that.
I am referring to the kind of multimillion, billion dollar programs that we had not that long ago like the Drought Relief Program, the former Western Grain Stabilization Program. These kinds of resolutions to some of the difficulties in the high-risk business of agriculture are going to be very difficult to come by. I say that, irrespective of who is in government in Ottawa or here. It is reflected in the manner and the way in which different governments of different political persuasions are all roughly facing the same situations across this country, so we in Agriculture--and that is why we worked so diligently to ensure that we could come out of the GRIP program, for instance, with as much as we could to enhance our basic Crop Insurance program because it really becomes the main vehicle of support.
We realize that by offering the kind of 50 percent coverage, virtually premium free--50 percent is not very attractive coverage, but it is a basic coverage that is there for a disastrous crash. It is a significant addition to the program, allowing the farmers to tailor-make their insurance coverage, 60 percent, 70 percent or 80 percent. I pressed the corporation, quite frankly, to try to get to 90 percent, but, again, in the final analysis, we had to tailor our expectations to what was available, both federally and provincially.
I might tell the honourable member that I and Manitoba Agriculture and Manitoba Crop Insurance were under some criticism from some of our neighbouring jurisdictions, who feel that we have bitten off more than we can chew--that is probably not the appropriate way of saying it--that we are offering too rich a program to our farmers.
I make no apologies for that. The simple fact of the matter is that we have had better people running our Crop Insurance Corporation, we have had better track records of running our crop insurance. We have run it more, I believe, and I say this advisedly, whether Crop Insurance operated under the auspices of some of my predecessors of the honourable member's government or not. The Crop Insurance program was operated with a great deal more integrity and with considerably less interference, if you like, by policy makers, to maintain that track.
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The fact that we have offered this program for these many years and are not in serious financial difficulty, which is not the case for some of the other programs running in the country and who have had to evolve different kinds of programs, different kinds of support programs.
Mr. Deputy Chairperson: The hour being 12 noon, the committee will recess until 1 p.m.
The committee recessed at 12 p.m.
________
After Recess
The committee resumed at 1 p.m.
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Mr. Deputy Chairperson: Order, please. Will the Committee of Supply please come to order. This afternoon this section of the Committee of Supply, meeting in Room 255, will resume consideration of the Estimates of the Department of Agriculture. When the committee last sat, it had been considering item 2. Manitoba Crop Insurance Corporation (a) Administration on page 13 of the Estimates book. Shall the item pass?
Ms. Wowchuk: Mr. Chairman, I was asking questions about the enrolment in a new Crop Insurance program, enhanced Crop Insurance, trying to get a sense of how many people had enrolled because although the government has said that this is an enhanced program, a better program, my understanding from the producers that I have talked to, they have said that, in fact, it is not a better program, not better coverage in it for the money that they are paying. So I am trying to find the numbers that are available, but if the minister says those are not available until later on in the year, we will have to wait and do a proper assessment of the program after there are more accurate figures available. We were talking about the level of coverage, and the minister said that the coverage was based on the amount of dollars that were available. Is this a change in how the dollars were covered? Was it, in the past, under the old Crop Insurance that the coverage was based on market prices and now it is not based on market prices? Is that a change?
Mr. Enns: Mr. Chairman, I suppose we will have to wait until we have a year's experience of what we refer to as the enhanced Crop Insurance programs to see how successful the Crop Insurance Corporation has been in the presentation of this program. The honourable member has to appreciate that in the last five years you had a combination of an income insurance program known as GRIP, where the program established, according to dollars available, the price levels for various crops, grains particularly. Particularly in light of the kind of prices the marketplace was yielding, it is understandable that in the minds of subscribers that that had a more direct correlation to market prices.
The system has undergone fundamental change, and I keep repeating, I think the one thing that has to be kept in mind is that, while I rejoice along with everyone else in the grain industry the fact that the price recovery has been as strong as it is in these areas, we are selling an insurance program and that reflects the premium that is being charged for it, reflects the probable yield, the yield experience, the database that over the years the corporation has been able to establish over the various cropping districts of the province. I will not take issue with the honourable member. We can, if more funds were available either from the federal support program or the province, tailor and fix different levels of funding at different times. I am advised that we are carrying on a practice that has been well and long established whereby the department of Agriculture Canada sets the base price for us on which we then compute our coverage levels.
With some regret, probably the one item that is of most concern to subscribers is the need that was imposed on the corporation to deduct some 15 percent from those prices to ensure that we had an actuarially sound program. There is I think a misconception. We are trying to keep our data and coverage consistent with cost-of-production issues related to these crops. That can, particularly in a volatile market situation like that, be somewhat different than what the market in fact provides for the same crops. There is a difference, and I think subscribers have to keep that in mind.
Ms. Wowchuk: We look forward to the results of the first year and further discussion at that time. I want to ask the minister under the previous--when we had GRIP in place, there was a lot of staff that had to be seconded to help get the program off the ground, and there was concern raised by other areas of the agriculture industry, particularly the cattle producers, that staff was being taken away from doing the job that they were supposed to be doing in order to get GRIP off the ground.
Under the new program, has the Agriculture staff, the Crop Insurance staff been able to handle all the applications, or has there been the need to second people from other offices to work?
Mr. Enns: No, I am advised that in fact there are some staff reductions taking place. Coming back to the basic Crop Insurance program delivery with the enhanced features to it, they are well within the scope of the corporation to handle. That secondment of additional staff from the Department of Agriculture, the pressure was most keenly felt on those resources in the introductory years of GRIP when a considerable amount of extension work was involved in meeting with farmers and farmer groups and organizations in bringing about a level of understanding of the GRIP program and the combination of their GRIP program with the basic Crop Insurance program. Over the past year or so, the department staff have been able to, in an orderly way, more or less resume their original programming requirements that were called for in the various offices.
Ms. Wowchuk: I thank the minister for the answer. I want to ask the minister, occasionally audits are done on offices on how operations are being run, I understand. Were there audits being done this year of particular offices, what was the purpose of the audit, and was it done by an outside firm?
Mr. Enns: My staff advises me that there is, of course, the annual and regular auditing of the corporation as a whole done by the Provincial Auditor. In addition to that, the corporation carries out audits which the member would be familiar with of the individual producers and subscribers when there is a need for that, and I think there is some random auditing that is part and parcel of the checks and balances within the Crop Insurance program that are in place, but I am not aware of any additional type of auditing or outside auditing taking place--perhaps if the member could be more specific as to which office she is specifically referring to.
Ms. Wowchuk: It is my understanding that there was some auditing or checking up going on in some of the offices in rural Manitoba where outside people were brought in to check up on the records and the performance of some of the work that was being done by employees in the office, and I am quite curious to know what the purpose of that kind of an audit is, or inspection.
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Mr. Enns: Mr. Chairman, the acting general manager advises me that the only possible explanation for that occurring would be when the corporation has reasons to believe or to question whether or not a particular office handled a particular claim appropriately or whether there was some systemic problems on how claims were handled by a particular office. That would trigger an internal review of that office's functioning by the corporation, but I am advised that that is part of the normal management control within the corporation. It may be triggered by a complaint from a subscriber that his or her file was not being properly handled by a local office, and as you would expect, that it is management's function then to have senior people do a review, do an audit if you like, of how that particular suboffice or branch office of the corporation is conducting the affairs.
Ms. Wowchuk: Can the minister indicate whether there were many offices that had such problems this year that had to be inspected?
Mr. Enns: Senior staff advise me that they can only recall that happening in one particular office.
Ms. Wowchuk: Was that the Swan River office?
Mr. Enns: No, I am advised that was not the Swan River office.
Ms. Wowchuk: Well, I will then have to go back and get further information, because my understanding was that there was a detailed audit or inspection done of the Swan River office by outside people, and we were not quite sure what the problem was. We will find out and perhaps get back to your staff to get more detail on that.
I want to pose one more question on this area. Seeing the weather that we have and the delays that farmers are under, it is going to be very difficult, I would imagine, for some farmers to meet the deadlines that are required by their Crop Insurance claims. I would want to ask the minister if at this time any consideration is being given to extend the deadlines for seeding crops and what would have to be the process to do that.
Mr. Enns: Again, staff advises me that at this particular juncture, no consideration is being given for extending the current deadline dates that are in place. Allow me to, just for the record and for the member's information, indicate what some of those deadlines are: for barley, June 15; beans, June 5; another type of bean, FBZs and two and three, June 1; buckwheat, June 20; canola, June 10; another variety in Area B, June 5 for canola; June 20, June 15 for canola; canary seed, June 10; some of the basic grains, red spring wheat, June 15; all the cereals, the wheats, June 15. So this gives you some indication that weather permitting, and we hope that the weather will co-operate, these deadline dates can and will be met.
There is, understandably, a great deal of reluctance to tinker with these deadline dates. It opens up the corporation to challenges from those who have abided by these deadline dates and perhaps made cropping changes. It also should be borne in mind that it is not a decision that can be arbitrarily made in Manitoba. It has to be concurred in, my understanding is, with our other major partner, the federal government, and it is that kind of tinkering, if you like, that can get the corporation into serious difficulty in the actuarial soundness of the program that they are offering. It is my understanding that very few cropping adjustment plans have been changed as a result of the inclement weather. It is possible that, with some of the specialty crops, some of the pulse crops, which are some of the earlier dates, certainly a crop like corn, no doubt some decisions have been altered by producers as a result of the delayed seeding times this spring, but that is also hard to determine.
Quite frankly, in many instances we anticipated within the Department of Agriculture and the Crop Insurance Corporation itself that, for instance, we knew that considerably less acreage would be devoted to canola. That has as much to do with the strength of alternative crops and the more traditional crops. In some instances, from an agricultural point of view, we welcome that. It allows for more attention being paid to appropriate rotation of crops. There is some growing concern that, in the past few years where a crop like canola often was the only crop that was bringing a reasonable return, producers were not paying sufficient attention to crop rotation and inviting greater difficulty with the crop disease-wise and so forth. So it is my hope, Mr. Chairman, that our weather will co-operate, that these deadlines will stand. But the short answer to the member is, at this point there is not sufficient reason to consider altering these deadline dates.
(Mr. Peter Dyck, Acting Chairperson, in the Chair)
Ms. Wowchuk: I appreciate the minister's answer and, in fact, can understand why it would not be done very readily. I hope that with some co-operation we will not even have to address that at all. But the question is, has it ever been done before? The minister indicates that it would be difficult because you have to negotiate with the federal government on it, but has it been done before?
Mr. Enns: If my colleague from south central Manitoba, Turtle Mountain, Mr. Tweed, were here, he would remind me that last year we had areas that put considerable pressure on the corporation for moving backward some of the dates, but I am advised that it has not been done before and was not done under those circumstances last year as well.
The Acting Chairperson (Mr. Dyck): Item 2. Manitoba Crop Insurance (a) Administration $4,914,900--pass; (b) Premiums $35,700,000--pass; (c) Gross Revenue Insurance Plan-nil--pass; (d) Big Game Damage Compensation $450,000--pass; (e) Canada-Manitoba Waterfowl Damage Compensation Agreement $400,000--pass.
Resolution 3.2: RESOLVED that there be granted to Her Majesty a sum not exceeding $41,464,900 for Agriculture, Manitoba Crop Insurance Corporation $41,464,900, for the fiscal year ending the 31st day of March, 1997.
3. Manitoba Agricultural Credit Corporation (a) Administration $3,005,700.
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Ms. Wowchuk: Mr. Chairman, I have a few questions under the Agricultural Credit Corporation, and I would like to ask some questions about the new value-added diversification loan program. We heard a lot about the program; it took a long time to get the program established. If the minister can indicate to us what the applications have been for the program, how many there have been, and whether or not we have used up all the money in the program or there is still some available there.
Mr. Enns: Mr. Chair, let me just take this opportunity to again introduce, of course, our General Manager Mr. Gill Shaw to the committee. Accompanying him, Miss Charlene Kibbons, acting director of program development for MACC, and Mr. Marvin Richter is with us who is manager of the financial administration for the corporation.
The program that the member for Swan River refers to is, of course, a program that I describe as a modest contribution or effort on the part of the corporation to respond to the kind of general direction of the department and of the government in providing some assistance to various value-added operations that may take place in a province. The essence of the program is that the corporation uses its capital allotment to provide loan guarantees. Outer limits, the authority is for some $10 million of that to be used for that purpose.
I am told that we have currently some $2.2 million in new loans under this program, an additional $800,000 worth of additional loans that are, as we speak, under review. A total $3 million program would provide some $40 million in guarantees--of the total program if it was totally subscribed. The program is, understandably, just underway. It did take some time to develop. We had made other adjustments within the corporation's normal programming that I always considered and we certainly considered as being part and parcel of this, although not specifically of the loan guarantee program that the member is now asking about. But we made changes that enabled the corporation to more actively pursue some of the types of loans that they were now getting in. In terms of the kind of loans, it principally involved additional support for hog production and in potato production.
Ms. Wowchuk: When I look at the loan limits part of the regulation, it says a limit of $3 million, and that seems very large, with $10 million in the fund, if I am correct. Is there a risk with the limit of it being that high that it will end up being in the hands of very few getting loans and the smaller operations not being able to get loans? I am wondering if there is a risk of that happening and why that limit was set at $3 million, which is a fairly substantial amount of money.
Mr. Enns: I have to advise the honourable member that we begin by recognizing some other limitations to the program. The corporation is authorized to provide to a maximum of 25 percent guarantee of that $3 million capacity loan. The corporation is not loaning out money. The corporation is prepared to put a guarantee. Now, the accounting, the bookkeeping says that if we are accepting some liability of a loan, there has to be monies set aside within the corporation to offset that liability, and that is why the relatively modest $10 million set aside for that purpose. But if you recall that we are only guaranteeing 25 percent of an undertaking, so let us assume for a minute that a hog venture that is a million-dollar or a two million-dollar barn, the exposure of the corporation is 25 percent, and that then brings it, I am sure even the member will acknowledge, within the realities of the kind of value-added expansion that is indeed taking place in agriculture today.
The other area of course, and that is a concern to us, because the member is well aware of the commitments made by our major potato processing companies both at Portage la Prairie and at Carberry, for very significant increase in potato production, which we estimate within the department will require some additional 30,000 acres of potatoes to be produced in the province, and the demand is that they be acreages that have irrigation capacity on them. Getting into the potato business is a costly venture, just the equipment, the commitment, the irrigation equipment and so forth, and, again, you are very quickly up to some significant dollars, and that was viewed as a concern by the department. That is why we specifically directed the corporation that they be in a position to be of assistance through the use of this loan guarantee.
Just to give an indication, the highest guarantee given to date to an individual project was some $285,000, and the lowest was in the order of $40,000. That is 25 percent of it. Staff will help me in a minute. You know, that is not in keeping--under your normal loan programs, you have limitations of $200,000, $250,000, so that is not out of sync, if you like, with the normal loan activity of the corporation. But, as you can imagine, a $285,000 guarantee triggers, has made possible, a much larger investment on the part of the proponent from other lending sources or equity capital to get involved into a fairly major and significant production unit.
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Ms. Wowchuk: Under the eligibility of loans, it says, in the case of corporations, the corporation has no more than 15 shareholders, all who reside in Manitoba. Can the minister give an indication of how many corporations in Manitoba would fall within that? Would that restrict it more to smaller operations? I am looking to see how large an operation, for example, would it be possible for. I will use this hypothetically because I know McCain is not going to be coming for loans. I am sure they have other sources to get loans. Does that restrict, does it keep it down to a level where it would be your family corporations that would be able to borrow money from here, or what does that 15 shareholders describe? What kind of a corporation do you think would result and be able to get money because of that restriction?
(Mr. Deputy Chairperson in the Chair)
Mr. Enns: Mr. Chairman, what the corporation, what this program is attempting to respond to and anticipate the kind of future development that we are seeing on the landscape is the kind of coming together, if you like, of groups of, and particularly some of these more significant livestock ventures, whether it is in pork production or in establishing of a major feedlot, where we are seeing groups of producers, two, three, four, five banding together, co-operating together to undertake a major project within their area. It is a relatively arbitrary figure that the corporation has chosen, but certainly, with that view in mind, that we wish to keep the control of any entity very much in the local hands, very much in the primary producers' hands that that figure of 15 is there. We do not have any basic stats that we can provide the member with which would tell her what that excludes or does include.
It certainly is not, the old operating regime of the corporation is still very much family farm oriented, but it has changed somewhat and it has to be loosened up somewhat. I indicated, when I had the privilege of introducing the amendments to The Manitoba Agricultural Credit Corporation Act to the House yesterday, that some of the current regulations prohibit the corporation from being involved with anything other than a family farm, and that is not actually reflecting what is in some cases going on in the different communities. There may be a situation where four or five hog producers get together. There might be one or two businessmen from the community involved in jointly putting up a facility. We wish to enable this program to apply to that kind of development.
Ms. Wowchuk: Can the minister indicate then, would there be any restriction on the type of partnership? It could be a partnership--if these farmers or business people or whoever formed a co-op, would they be eligible for a loan as well, or would there be any restrictions on them?
Mr. Enns: My honourable staff advised me that it is not intended to have any restrictions apply. All applications under this program to date have been from individuals, family farms, and partnerships where several families are involved in a farm corporation, but certainly staff advises that there would be no prohibition to exclude a co-operative from applying. We have, of course, under our regular programming, considerable amounts of money, $15 million, $16 million, in our loans out to the feeder co-ops that have organized themselves in the co-op type fashion.
Ms. Wowchuk: The minister may have given this answer earlier on and I did not hear, so I will ask again, how many applications have been received? Of those, how many have been rejected, and about how long does it take to process an application?
Mr. Enns: Mr. Chairman, while I am getting some additional information that is being prepared for me, let me indicate a little bit more of the policy behind the program. What we were being told more and more often was that there was a gap, a credit gap, if you like, that hindered or blocked the development of some of these projects. A proponent who wishes to--and I will use hog production again as the example. Maybe he had proposals for a major hog expansion project, which, let us say, cost about a million dollars to proceed with. Our regular private lending institutions, banks, the credit unions, were in the practice of funding upwards to 60 percent, 65 percent of that kind of an undertaking. That left a significant amount, $400,000, for the proponent to come up with to get this project off the ground. That was pretty onerous. The attempt here was made to try to bridge that, and very often when the applicant goes to a private bank or a credit corporation with this kind of a proposal, the presence of MACC with their 25 percent loan guarantee bridges that gap.
In fact, we have also experienced in several instances where an application or a request for the credit corporation's involvement has been made, once the applicant pursued more diligently his efforts with his local bank or the credit union the project got off the bank without our loan guarantee, and, of course, that is quite satisfactory to us as well. So it is really used as an instrument to help nudge the private lenders to provide this agricultural credit. We are satisfied that there is sufficient capital out there. It has always been sometimes a problem to get them to lend it for agricultural projects and purposes. It has always been a bit of a--I suppose it is not that much of a mystery to me. You can borrow $30,000 or $40,000 to buy a new truck or vehicle a lot more easily than you can borrow $30,000 or $40,000 for a livestock or for an agricultural venture, and that is what this program is meant to help and, in a modest way, to overcome.
We have had no applications refused to date. That does not mean that they have all been approved; I would believe that a number of them are under active review and development. I should also indicate to you that we are only acting there as a 25-percent player in these. The final determination as to whether a project and a loan is totally approved is really in the hands of a credit union manager or credit manager of one of the banks who are flowing the money. Manitoba Agricultural Credit Corporation is not called upon to flow the money. My hope is that no money will flow under this program. We are in a guarantor position to help encourage the credit union to look more benignly and more favourably on the application before them.
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So of six specific applications, five have been approved. None has been declined. There is more and more interest being shown in the program. We suspect that before too long we may well have reached the upper limits of our capacity.
The general manager informs me that, again, recognizing our own limitations in this program, when there is any probability or possibility that a program under Industry, Trade and technology, or under my colleague Mr. Derkach's Rural Development programs and some of the economic development and support programs that his shop has available to them, they are, of course, directed in that direction. It is really kind of a joint venture on the part of MACC's trying, if it is a worthy proposal for some value-added economic development within different parts of rural Manitoba, to see it proceeded with, whether they are an active player in it or not. The addition is, what this program enables MACC to do is, if called upon, to help bridge that credit hesitation, that is sometimes there, with their 25-percent guarantee.
Mr. Chairman, I was just double-checking with my officials, but I am told that if all the documentation is there and it is a co-operation of the private sector lender involved, the procedure can be very quick, within a week.
Ms. Wowchuk: I am pleased that the program is going as well as it has. We were long anticipating to see what the program would be, and I guess the extra work that it took to develop the program has paid off and has resulted in it going along smoothly.
I want to ask about one of the requirements under the eligibility of the borrower. It is: The applicant provides evidence satisfactory to the lender that the purposes for which the loan is made will comply with laws concerning the protection of the environment. Which laws are you referring to in particular in this legislation that have to be abided by with respect to protecting the environment?
Mr. Enns: Mr. Chairman, as I have indicated on other occasions and in different settings, there is a growing list of codes, if you could call them, in some instances, for instance, in how we conduct in various livestock operations for the raising of pork, for the raising of beef, for the raising of poultry, and some of these have become regulations that the Clean Environment people look at. So wherever there is a requirement that--for instance, it is a requirement that before a proposal for a lagoon associated with a hog operation is approved, it meets the specifications as laid down by the environment people.
What this means is that the corporation binds itself to not processing a loan automatically without being satisfied that the proposals that it is borrowing money on, or guaranteeing money on, meet all of these requirements. I think it is an appropriate co-ordination, if you will, of government agencies. It would be highly inappropriate for one government agency on the one hand to be, as a public policy, allowing public money to flow to a proposal that in some way was at variance with established laws with regard to the environment.
Those laws are changing monthly and yearly. They are becoming more codified, and we have some specific procedures. We have a technical review committee, for instance, composed of the departments of Agriculture, Environment and Industry that proposals or proponents of new projects are well advised to call on, in the first instance, to have an overview of their plans to ensure that their proposal meets with all the current laws and regulations that are on the books with respect to environment. That then assures them that they would not have trouble later on, on the land, when they approach the Manitoba Agricultural Credit Corporation for some support.
Ms. Wowchuk: So it would be the responsibility of the proponent to ensure that he or she was following the required laws; it would not be the responsibility of the corporation. For example, if someone was planning to build a hog barn, and I referred to the Interlake area earlier where there is water sensitivity. It would not be the responsibility of the corporation to check whether the applicant was meeting the requirements of the law. Is that accurate, or would the corporation have any responsibility to see that those guidelines were being followed?
Mr. Enns: I am aware that, certainly, the government-associated agency like the Manitoba Agricultural Credit Corporation has to be careful, and it restricts itself not to processing with any loan application that is at variance with any existing environmental regulation. That, in fact, is also practised by the private lending institutes, the banks and the credit unions. That is a relatively recent development, but private lending institutions are extremely sensitive to the fact that the environmental issues are to be taken seriously.
The member will be aware, we have different circumstances, for instance, where we have perhaps a land transaction taking place on which there might have been in the past some environmental problems associated, like a disused service station site where underground storage tanks have been in place. Banks or credit unions are very slow to come up with money or to loan money to a would-be purchaser unless the environmental issues have been dealt with. I know you, Mr. Chairman, are familiar with these circumstances. So lenders must satisfy and do their due diligence to satisfy themselves that there are no environmental transgressions implied in the development of a proposed project before they would authorize the lending of money to that proposal.
Now, having said all that, that does not--I know because the honourable member keeps referring to some specific situation in Interlake--not mean that certain groups of people will continue to perhaps object to a particular project or will question its appropriateness or its meeting all of the environmental conditions. But we have rules. We have regulations. I am satisfied that as long as they are met and dealt with--and a specific question to the corporation here was, do they abide by them, and I am advising the member they do and they have to.
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Ms. Wowchuk: Mr. Chairman, I am not referring to any particular project. It just comes to mind. Interlake and hog barns seem to come to mind when we talk about environmental issues, and I am not referring to specific issues. It seems like a good example when you are talking about hog barns, because there has been a lot of discussion about them.
Hypothetically, I guess, if there was a loan made and then there were environmental problems, would the corporation be liable in any way for having approved a loan and then resulting in a lawsuit resulting from that operation that was funded or guaranteed by the corporation?
Mr. Enns: My deputy minister informs me that it often is the practice that when a situation, a hypothetical one that she refers to, a lawsuit is launched against a project, that it is often done in a very wide fashion. Anybody associated with the development of the project including the lending agency--it could be the Manitoba Agricultural Credit Corporation--on the principle that you try to be as inclusive as possible when the lawsuit is launched and hope that some of it will stick somewhere and the suit will be successful.
Certainly, I know, and this is the big issue, the lender has of course another reason to be concerned, assuming that he is a principal supplier of the capital for that project. If a serious lawsuit is launched that could jeopardize the economic well-being of that project, the lender, for instance, is going to be out whatever monies the project received from the corporation, and that is something that in their due diligence prior to approval to a loan would all be taken under consideration.
I can only say, and I know this to be a fact, whether it is with the public sector or the private sector, that environmental issues are receiving higher and higher priorities and attention in these kinds of transactions.
Ms. Wowchuk: I raised the issue because I think it is a very important one and one that we are going to be challenged more and more with as we see expansion and growth in the agriculture industry in the province, one that I hope you will watch very carefully, and one that we are all going to have to address when it comes to environmental issues and developing laws that will meet the needs of all the people.
One other area I wanted to ask about on this program is the fees, and it says the lender may charge applicants a fee for a process of an application for a guaranteed loan. Does that lender mean the corporation can charge a fee for processing the loan, or does it mean that the bank can charge a loan? I am assuming it is the corporation and is this a normal process that the corporation charges a fee when a loan application is processed?
Mr. Enns: I am advised by staff that it is a fairly normal process for the private lender, who is after all the principal player in the provision of capital for this project, to charge a fee of some kind. My general manager reminds me that when the credit corporation involved has asked to be part of it with their loan guarantee program, they will bargain as hard as they can for the most attractive rates of interest and maintenance to the lowest level of any additional administrative or fee charges, because it is in their interest to see that the project has the best possible chance for economic success in order that their call on their guarantee will not be exercised and in that way providing a further service for the proponents of the project.
Let me also just take this occasion because the member is right, that the issue of making it possible for that promising expansion to take place in the hog industry has its challenges. I just want to solicit her support. I want her to be a beacon of light in that nether darkness of the New Democratic caucus, to shine away, agriculturally speaking, for the opportunities of the producers of Manitoba.
I cite this one case, the beautiful country of Denmark, hardly a Third World country. It decided in 1972--who is a major competitor of ours, by the way, in pork, considerably outdo us in the Japanese market--that beautiful little country was producing about 3 million or 4 million hog units per year in '72. They now produce 17 million hog units a year in that little country. I say this not to offend any Danes present, but I think you can take Denmark and drop it in Lake Winnipeg, and there would still be water all around it. It astounds me that that country, and I have had some experience travelling in that part of the world, Scandinavian, the northern European countries, are extremely conscious of the environment, in fact, in many instances lead in environmental issues with respect to what we in North America can learn.
Now, if it is possible for a country like Denmark to do that and beat us at selling pork to the Japanese--they have 34 percent of the Japanese import market for pork, the Japanese market being the largest market in the world. The United States has 16 percent. We dawdle along at 5 percent, and we are half a continent nearer, and besides the Japanese do not want to eat frozen pork anymore; they want chilled pork. So that distance makes it even more competitive for us. That is why I am so pleased with the announcement yesterday of major capacity being built in our province specifically targeted for chilled pork.
But I need somebody to carry that message, that light, Miss Agricultural Critic of Her Majesty's royal opposition. Begin with the serious and heart-to-heart talks with your colleague who has joined us at the committee here. There is a reluctance on the part of some in your group to fully appreciate these opportunities and the contribution. Agriculture being such a visible identifiable minority group needs all the support it can gather from all who have agriculture interests at heart--so ended that lesson.
Ms. Wowchuk: I think the minister has identified a country that has done very well in their hog production and has been able to manage their environment very well. I think that if Canada, where we have a much larger land base and have many, many opportunities to grow, if we would follow the example of that country and other countries and put in place regulations that would protect our environment, the agriculture community would not take some of the flak that they take for not having proper environment management.
I throw the ball back to the minister's court. As minister, I challenge you and I encourage you to bring forward guidelines and regulations that will give our industry the opportunities to grow in this province, and that we can meet the demands of the world market without having to have the displeasure of other people here in Manitoba who feel that our environmental standards are not high enough. The challenge is there for us. Let us do it. Let us see the industry grow, but let us do it in a way that will not be resentful to other people. We have the land base. If people in a country the size of Denmark can do it and not run into environmental problems, worry about the pollution of the water, surely we can do it here. It is not that you would not have the support of my colleagues on this. I can assure that wholeheartedly you would have the support.
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We in the New Democratic party very much want to see the agricultural industry grow. We want economic growth in this province. Let us take that opportunity and look at that country and other countries where there is growth. Let us put in place regulation so that years down the round we do not say, my goodness, we have made a mess. There are examples in other parts of the world. Let us take those examples and build the industry here in Manitoba. I assure you that the urban community would support us as rural members if we were going to do that.
So I put the challenge back to the minister. Let us do it. Let us put the regulations in place. Let us protect our environment and let us have the growth in Manitoba that we have in other countries. I look forward and I would support the minister wholeheartedly, as would my colleagues. So let us look for some new regulations. Let us look for the opportunity for real growth in this province.
Mr. Enns: Mr. Chairman, I can only say, yes, and thank you for those very appropriate remarks. I am particularly pleased at the number of our senior staff of the Department of Agriculture who are present to hear them. I think that they welcome that kind of unreserved and wholehearted support for the agricultural community coming from the official opposition, because it is important to all of us engaged in agriculture to do it right. I think the comments made by the member for Swan River (Ms. Wowchuk) are ones that are extremely appropriate to the case, and certainly I accept without reservation.
I know the direction, the emphasis that will be, through senior staff program development, precisely along those lines, and I look forward to continued demonstrations of that support that was just expressed here at this committee. Thank you.
Ms. Wowchuk: I am sure we will get another chance as we get under the livestock section of the Estimates to talk further about what plans the government has for further environmental protection so that our industries can grow in this province, and I look forward to that discussion with the minister.
I would like to talk about a few of the other areas under the loans programs that are offered right now, and earlier the minister espoused about the success of the Guaranteed Feeder Association Loan Program--or I mean it was another member for southern Manitoba who talked about the success of the program. I understand that there has been a fair amount of money lent out. I wonder if the minister could indicate--I believe there are 12 feeder associations in the province right now--of those, are there any of those feeder associations that are facing difficulty? Again, the livestock industry is facing a real challenge right now, and I, in my own constituency, have people who are in the feedlot industry, although they are not involved in associations. But this winter has been a very serious challenge to them, and I wonder what the status is of those feedlot associations that have got loans with the corporation right now.
Mr. Enns: Mr. Chairman, for the record and for the member's information, we have some 13 feeder associations in the province with a maximum credit line available to them of some $21 million. Actual principal and outstanding interest to date is some $11.5 million. The honourable member will be only too much aware that the cattle industry is probably going through some of its most difficult times right now, and it gives me no pleasure that the one aspect of agriculture that this minister is modestly engaged in is the one area of agriculture that is not doing well. Is there a message there for me? I do not know, but it is putting some considerable stress on the operators; extremely high feed grain prices, coupled with unsatisfactory livestock prices, have put considerable pressure on these associations.
However, I have a continuing optimism, and I continue to support the credit corporation's role in providing this assistance. Again, this is a situation where the most prudent use of the public funds available is through a loan guarantee. This $11.5 million is money that is loaned out, not by the corporation, but by private lending institutions, banks, credit unions. They feel more willing to do that because of the position that the MACC corporation takes with providing a back-up loan guarantee.
There is difficulty being experienced by the Ste. Rose district co-op feeder group that is, not, you know, an insurmountable problem. It is probably as much to do with the management problem, in that instance, more so than actual poor cattle prices. There is some difficulty with a particular member of that group that got himself involved with a major feed supplier, the Cargill people, and there is a dispute with respect to the disposal of funds accruing from a sale of cattle. That may or may not end up before the courts. While I am free to speak in some general way about it, I am simply not equipped to make a legal determination about that.
My hope is that this whole part of the agriculture industry will survive this difficult period, and perhaps, if we can see greater production of feed grains and some greater supply of feed grains that would moderate slightly the prices--although I hasten to add, I do not believe that any one part of agriculture should only profit or do well because of somebody else's hurt. The grain producers have waited a long time for these prices, and, quite frankly, it is for the meat prices to jump up to reflect adequately the cost of these productions that currently is being faced.
But I say, just in conclusion, consider that not that many years ago, in 1974-75, we were processing 560,000 beef carcasses in our processing plants in Manitoba, providing upwards to 8,000 jobs, well-paying jobs at Swifts , Canada Packers, Burns and a number of independent processors. Today we are processing 36,000, 35,000 beef carcasses in the province compared to over half a million 20 years ago. We will not regenerate that processing of beef until we have a healthy feeder industry going in the province, until we are, on a sustainable basis, providing 300,000, 400,000 carcasses of beef. That is when interest will be shown again in a serious way for beef processing to come and return to the province.
Ms. Wowchuk: I wonder if I might be able to ask a question just for clarification. The minister says this is a loan guarantee program. You guarantee the loans, and you are guaranteeing them for the 12 feeder associations right now. I do not quite understand. If you are guaranteeing the loan, are you putting out any money, or is it just that you have the money there to guarantee if it is needed?
Mr. Enns: It is much the same way. There is no actual money that is put out by the corporation. It is a 25 percent aggregate responsibility that the corporation underwrites with a private lending source.
Ms. Wowchuk: So in that particular line of the budget, where we see guaranteed feeder loans association and we see an amount of $21 million, does that mean the corporation does not actually spend that money, as you would not spend the money in the previous program that we talked about? Is it money that is there available if you need it, but you actually do not spend that money?
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Mr. Enns: The honourable member is right. We do not actually spend that money, but it is our potential liability. If the feeder co-ops take up the maximum credit line available to them, then our liability is such, and our accounting or auditing rules and regulations make it mandatory for us to show that as a liability.
Ms. Wowchuk: I thank you for that clarification. So you are saying the money shows up on the books, the corporation does not actually spend the money on those guarantees unless there is a default on one of the loans and then it has to be paid out, but it shows up. For example, in the previous year, and I am looking at the annual report now where we see $13 million--this year we see $21 million--those numbers are there as a guarantee--for example, the money last year, two years, was not spent unless there was somebody that defaulted on the loan.
Mr. Enns: The member is correct, and I am happy to report to her that to date there has been no call on the corporation for any portion of the guarantee that they have provided.
Ms. Wowchuk: I would like to refer to a couple of other programs that are under the corporation, for example, the land lease program. The corporation has been in the process of trying to dispose of much of the land that they have in their possession. This I must say has caused some farmers problems, in particular, when they have been leasing land and have had to purchase the land at a time before they were ready to, and it has caused problems and has resulted in some people not being able to maintain the land base that they had because of the government's decision to move towards selling off its leased land and getting rid of that package of land that they have.
Can the minister indicate whether that same process has been speeded up at all, or what has been happening with leased land? I understand there has been a fair amount disposed of. Can the minister indicate how much is left, and where we are, or if there are still long-term leases that are active and land not being sold off to farmers?
Mr. Enns: There have been no fundamental changes in policy with respect to land tenure that the corporation holds. The corporation continues to hold, for instance, some 44 long-term leases and is under no duress to shorten or sell those leases. Where the corporation is actively engaged in the sale of land is in the short-term leases, of which there are some 221 covering some 64,000 acres currently. Those short-term leases have provisions in their clauses that offer the lessor an opportunity to buy within that five-year period, and/or if the lessor chooses not to consider purchase, then at some point in time the corporation will under appropriate circumstances tender the land for sale. I can indicate to the honourable member that there has been considerable activity in this past year. Some 26,300 acres were sold in the '95-96 year. We began the year with some 90,000 acres under the control of the corporation, and they are now sitting with about 66,000 acres.
Some of this added activity, I might add, was spurred by the payout from the Crow benefit, and there was a specific condition that enabled the--or let me put it this way--that was beneficial to the purchase of the land in terms of the recipient of the Crow compensation package. You see it was for--as you know, under the federal regulations, the payout goes to the landowner. I did not particularly think that the Crown necessarily should be, as owners of 90,000 acres of land, retaining the Crow compensation payout. So a program was devised whereby it equally spreads that compensation over a period of years to the lessor, to the renter of the land, but it was made more attractive if indeed the person took the option to exercise his right to purchase the land. So we have had fairly major activity in the sale of land, as I say, from the beginning of the year where some 90,000 acres were under the control and ownership of the corporation to some 66,000 at the end of the year. We anticipate that trend will continue.
Ms. Wowchuk: Mr. Chairman, I wonder if the minister can indicate, he said there were 44 long-term leases. Is there any movement or plan to have those long-term leases come to an end and offer those lands up for purchases to the people who are leasing them?
Mr. Enns: Mr. Chairman, I am advised that these are long-term leases that are valid to the holder's 65th birthday, and then that party has a first opportunity to transfer control of the land to within the family, to his descendants, children. In any event, he has prior rights to further determination of that land, and I would assume that only if those rights were not exercised in some fashion would that land at some point come under the potential future sales policy of the corporation.
Mr. Deputy Chairperson: Order, please. Would the honourable member for Swan River bring that a little closer and more straight on. They are not quite picking you up that well.
Ms. Wowchuk: Mr. Chairman, I thank the minister for that information. It is an area that my colleague from the Interlake (Mr. Clif Evans) has some concern, and it has been brought to the minister's attention with respect to some of the long-term leases. Unfortunately, he will not be able to raise those issues today. Perhaps a little later on, when we get back to Estimates on Monday, he will have the opportunity to bring that matter to the minister's attention and forward it to the corporation to address on his behalf that there is some concern with respect to long-term leases and how they are disposed of. But I just want to make you aware that it is the member for the Interlake that has particular concerns there.
A little further on, I think every year at Estimates we talk about the fishing industry in this section of it, and the opportunities, the loan program that we have for fish farmers. Every time I look at the annual report, I see that there is not very much activity in this, and I see that there has been, I believe, an additional loan that has been made into the fish farming area, or are these two loans that have been there for some time?
Mr. Enns: I am advised that both of those loans were made through a single producer who has subsequently left the business, and there are no, in fact, outstanding fish loans at this time.
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Ms. Wowchuk: With the difficulties that we see with people that are in the fishing industry right now and the decreased stocks that we see in many of the lakes in the province, resulting in a very difficult livelihood for many people, is any effort being made on the part of the corporation or the Department of Agriculture to promote the fish farming industry in this province, and, if so, has any outreach work been done to aboriginal communities? As the minister is aware, particularly in my region, a majority of the fishermen are fishing people, are aboriginal, and I think that there are real opportunities when you look at what is happening with fish farming in other parts of the country. I am sure the minister could tell us about fish farming in Japan if he had the opportunity to look at it there. There are opportunities--yes, and China. Is anything being done to make the public aware that money is available for fish farming, and is anything being done to promote this kind of activity so we can have more economic development in the province as well as in the hog industry and livestock industry? Perhaps this is another area--and I say this in all sincerity. I wonder if anything is being done, and I would hope that we are promoting another venue for agriculture and value-added jobs in this province.
Mr. Enns: The honourable member's reminder of what I may or may not have experienced in some of my foreign travel reminds me that I did survive dining on scorpion on several occasions in the province of Hunan. They are lovely little critters, and, if roasted well and if their stingers, which they have still on them when you eat them, are pointing in a downward direction, it is not too bad on the top of your mouth; you can actually get them down.
Fishing, aquatic farming, I am aware, for instance, just recently, up not too far from, I believe, in the Hamiota area, there is a project that is underway, not through the auspices of the Department of Agriculture, but through Industry, Trade and Tourism. It is an intriguing proposal and certainly open and available to Manitobans if they choose to move into it. We have had little attempts at it in different places. I would have to say regrettably that it is fairly intensive management that is required when you move into this area. The other difficulty that we have in this climate is that it requires year round frost-free conditions to operate a program of this kind, and I do not know whether or not those are some of the reasons why it has not achieved any greater attraction for would-be fish farmers in the province.
The concern, of course, that I have, and she makes specific reference to the aboriginal community where, she is absolutely right, there are a lot of excellent fishermen in that community--our difficulty is that we are not fishing the stocks that we have and, in some cases, in abundance and for different reasons: transportation costs, marketing reasons--dare I mention that word--single selling desk. It does not seem to be working adequately, particularly for the aboriginal community. I say that advisedly. All I know is that they themselves have petitioned the federal minister and have received exemption from the single selling desk. I am referring to the Island Lake fisheries. A number of the tribal councils there have petitioned directly to the federal government, and they received exemption from the single selling desk, but it is a difficult situation. To freight transport fish from a distance from the North, where the fish are, often eats up any available profit to make it an economical venture, so I cannot add anything more to it.
I would certainly indicate to the member that the corporation would look at it as another agri-related venture, diversified venture. When I speak about increased livestock opportunities in the province of Manitoba, I mean to be very inclusive. I know that there is a tendency to focus on one species, like pork, like hogs. I am very inclusive in that terminology which includes everything from fish to elk to wild boar to bison and of course the traditional cattle and poultry and dairy and pork.
Bison is a very interesting and not heralded all that much growing success story in Manitoba. We have over 50 successful bison producers in the province raising some 6,000 animals in the province. In a remarkable way, we who are responsible for the virtual extinction of that noble species that roamed in the virtually unnumbered millions across the Great Plains area here, modern agriculture, which is often accused of not being appropriately in tune with the environmental requirements of today, is in fact responsible for the resurrection of that noble species, whose two fine edifices adorn our grand hallway every day as we walk into this humble place to decide the state of affairs of the good people of Manitoba.
Ms. Wowchuk: Mr. Chairman, the corporation also provides loans for the purchase of Crown lands, and I am not quite sure where we deal with Ag Crown lands. Has there been a change in the amount that is required in loans for Ag Crown lands?--because my understanding is that now that we have a value on aspen in this province, particularly in the central part of the province with respect to the increased value on the aspen, there is now an increased value being placed on Crown lands. Has that affected the amount of the loans that is required to purchase these lands?
Mr. Enns: Generally speaking, although the corporation gets involved from a financial point of view, when Crown lands are sold, it is done through the Department of Natural Resources. They will do appraisals of the land in question. I know that the corporation assists them at times like that, but whether or not the corporation gets involved in the actual provision of monies for a loan, they look at it purely from a point of view as the economic viability of the operation that they are supporting. When somebody comes in and wants to borrow and is asking the corporation for X number of dollars through a loan application, they are looking at the overall venture that it is being directed to.
Ms. Wowchuk: What I was asking was, has the amount of the loans increased because the value of Crown lands has increased? In other words, are people who are applying to buy Crown lands looking for larger loans? If that is not a question that can be answered from here, that is fine, but my understanding is that the value of Crown lands has increased through the Department of Natural Resources because of the value of the wood on the land. I am just looking whether that has meant an increase in the value of the loans that will be required from this department.
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Mr. Enns: I am advised by staff that the kind of information we have does not allow us to give you a definitive answer on that.
Ms. Wowchuk: I wonder if the minister can indicate, as we look at the Estimates book, where there has been a decrease in the amounts of doubtful accounts budgeted for. Last year we had $2 million budgeted for doubtful accounts. This year we are down to $1 million in the budget. Does that indicate that the $2 million was not spent last year, and they are now assuming that there is not going to be a need for that much money? Or why is there a change?
Mr. Enns: I can advise the member that the allowance for doubtful accounts--there has indeed been a 50 percent reduction to the level of $1 million--is the result in the improvement in the status of the accounts. Past year expenditures have been, '94-95, just under $900,000 to service that area of activity of the Crown. In '95-96, although the level has not yet been finalized, it is expected to drop significantly to just under $300,000, so that I would like to think that it reflects greater stability in the agricultural community and within the client structure of the corporation.
I would like to also remind the committee that, although this corporation and the people of Manitoba have an extended loan portfolio out under this program, the actual default is very small, in the order of 2.1 percent total outstanding, and you are considering that the corporation has its mandate to be and often is kind of the lender of last resort where the private lending institutions will think twice before providing the loan, the agricultural credit, to a farmer. We are also the lender of preference of the young start-up farmer. Again, that is part of the original mandate of the corporation.
But all of this kind of lending activity has a high risk as compared to the well-established, longer-established commercial farmer. I am looking at a gentleman like my colleague Peter George Dyck there who would be, of course, no risk, but, when you have the clientele specifically directed in that we are targeting the young start-up farmer, inexperienced farmer, very often to have a track record of such low defaults, 2 percent over the many millions of dollars, I ask the question, how many millions of dollars have we got out in any given year? A hundred and ninety-six millions of dollars of taxpayers' money is loaned out in this fashion in the support of agriculture, and the resultant end cost of that activity is a very modest, very nominal one.
Ms. Wowchuk: Mr. Chairman, the minister says, doubtful accounts are in a much better situation, and that is good to hear. I want to ask the minister if he can tell me what would happen in a case that a farmer was not happy with the way the corporation was run and sued the corporation for any amount of dollars and won the lawsuit. Would that come out of doubtful accounts, or does the corporation carry an insurance that would cover those kind of losses that the corporation might face?
Mr. Enns: Well, the first thing that the farmer does that is not happy with the way the corporation is run, he does not vote for me in the next election, and then he may want to sue the corporation. The corporation gets sued from time to time, but that is a normal, legal situation where the corporation either defends itself--we have been, although I do not think, there is very seldom--do you recall a case? Okay, I am advised that the losses, for instance, the $800,000-some that the corporation lost in '94-95, the anticipated $230,000-some that the corporation is projecting they will lose in the current year, are directly related to losses on loans that the corporation could no longer collect on, and not through any legal action or lawsuits.
Ms. Wowchuk: Mr. Chair, so it is not that there is a special line written into a budget each year that would allow for something like this; it is something that, when it happens, it is absorbed as a loss, right?
Mr. Enns: Yes.
Ms. Wowchuk: I wonder if we could just take a minute--if the minister could explain what the special farm assistance is for. Again, we see a decrease in the amount of money that is set aside there.
Mr. Enns: Those are the specific resources that are available to the Farm Mediation Board that are used, and used, I think, in a very constructive way to help a difficult situation, a farm family that is facing bankruptcy that, with the judicious use of this fund, it can help buy him the necessary arrangements or time with his creditors to keep the farm solvent. That figure is reducing considerably over the years as we are now asking for an allocation of only $155,000 as compared to even just a few years ago of $500,000 in '94-95, $600,000 in years '93-94. Last year it was $255,000, and this year we are projecting a requirement of $155,000.
Ms. Wowchuk: Mr. Chairman, I want to ask if I can ask a few questions about the legislation that the minister tabled yesterday with regard to the Agriculture Credit Corporation and the purpose of that legislation. Unfortunately, I was not in the House and I did not hear the details of the bill, but I understand it is to do with changing the guidelines on who is able to apply for funds through the credit corporation. I would appreciate if the minister would take a brief moment to explain.
Mr. Enns: The amendments that were introduced to the Legislature yesterday, if we put them in proper perspective, are in the first order of keeping--some housekeeping amendments, as we refer to them. In general, where the act was for today's circumstances too restrictive or too specific, we just broadened the language to include the kind of activities that are now taking place. For instance, where the act says that the credit corporation can provide loans for livestock, it specifically named cattle or hogs, but we are getting demands for bison, for wild boar and, I suppose, in the future, perhaps for elk. So those kinds of changes are being provided for in the amendments in the act that I tabled yesterday; some greater flexibility within the corporation to exercise within so that they have the legislative authority with the manner and way in which they will be handling their loan guarantees that could be, again, somewhat more inclusive, reflecting again the reality out there where the present act, in some instances, restricts the corporation to be involved with only those who are bona fide farm members. This could include in that association or co-op group or co-operative of 10 or 15 groups, some nonfarm members as well.
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Those are the kinds of changes that are included in the amendments. They are important to us. They helped bring the corporation into more adequately dealing with the kind of clients that they are receiving more and more of, and this will provide the legislative authority to do that.
Ms. Wowchuk: Mr. Chairman, I have a question with regard to the regulations and specifically the regulations under 31(1), “The corporation may, with the approval of the Lieutenant Governor in Council, make regulations” and “(h) respecting security to be given for loans or credit.” I am not quite sure what that regulation will result in, and I have questions with regard to that. The original regulations are being repealed, and these regulations are being put in. I am sure there must be a specific reason for changing these regulations, and that is the one in particular that I have a question about.
Mr. Enns: Mr. Chairman, first of all, of course, I would invite the honourable member to be absolutely satisfied about what is being done in the act and the subsequent regulations when we have the opportunity of looking at the act in committee clause by clause, and we have that opportunity to do that.
Just on the surface, listening to staff, the best answer that I can give is that the changes to the regulations only kind of reflect the changes that we are making to the act. Some of the regulations are probably as kind of species-specific in their wording and terminology as the act was, and in making these changes in the act, it was also necessary to make those kinds of changes in the regulations. Again, I am not getting an absolute clear signal on that, but certainly we can pursue that when we deal with the bill in committee.
Ms. Wowchuk: I appreciate that. I just want it put on the record that there is a concern about that part, and I am looking to see whether this is a major change, this is changing something dramatically in the act or whether this is just a minor regulation. I will take the minister's word for that and look forward to having further discussions on this as we get the spread sheets and the legislation, and then refer the replies to the person who has raised this issue with me.
Mr. Enns: We do not believe that is the case, that it is not a major change. In any event, as the member knows, no change can take place until the act has been changed and the regulations changed, so she can live in comfort till we meet some time in October to deal with the bills.
Ms. Wowchuk: I only have, I believe, one more question to ask with regard to MACC loans. I want to know if there are any restrictions made by the corporation with respect to lending money to people who are in the bee industry, apiary industry, or whether the corporation feels that this is a viable enough industry that they will take applications. Have there been applications made?
Mr. Enns: Mr. Chairman, the member provides me with an opportunity just to indicate some of the very changes we are bringing in the act is to broaden that act because often these are what would be described as part-time farmers, not eligible for loan assistance, and this would very much include the honey producers or would-be honey producers.
I want to indicate, the general manager tells me that we do make loans to honey producers, have several accounts on the books with honey producers. There is no prohibition against loaning money on an apiary operation. It is a sweet deal.
Ms. Wowchuk: I guess the people that had contacted us would fall into the category of part-time farmers. If this amendment, change to the legislation, is going to make that a possibility that they can borrow money, then I look forward to that. We will refer that information to them, and hopefully when the legislation is passed, they will have the opportunity to make contact with the corporation and get the funds that they need to establish their operation.
Mr. Enns: The honourable member will remember there are of course other restrictions and limitations, caps, as to the levels of loans that the corporation can make. They are fair issues to be subject to review from time to time. I know that, again in keeping with the reality of what is happening out there, there was a restriction for instance in the corporation being able to lend money to people who were making off-farm income and certain levels of income. Those have been modified and changed to help accommodate the different types of clients that from time to time come to MACC.
Mr. Deputy Chairperson: 3.3. Administration $3,005,700--pass; Net Interest Cost and Loan Guarantees $4,605,000--pass; Allowance for Doubtful Accounts $1,000,000--pass; Special Farm Assistance $100,000--pass.
Resolution 3.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $8,710,700 for Agriculture, Manitoba Agricultural Credit Corporation, for the fiscal year ending the 31st day of March, 1997.
Mr. Enns: Is there a consensus on the part of the committee to call it three o'clock?
Mr. Deputy Chairperson: Order, please. Is there a willingness within the committee that we call it three o'clock? Agreed?
Some Honourable Members: Agreed.
Mr. Deputy Chairperson: Agreed.