Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 3 - Evidence - Meeting of March 11, 2004
OTTAWA, Thursday, March 11, 2004
The Standing Senate Committee on Agriculture and Forestry, authorized to hear from time to time witnesses, including both individuals and representatives from organizations, on the present state and the future of agriculture and forestry in Canada, met this day at 8:30 a.m.
Senator Donald H. Oliver (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I to call to order the fifth meeting of the special study by the Standing Senate Committee on Agriculture and Forestry on the issues related to BSE.
Since the Senate returned in February, this committee has taken seriously the problem of BSE in Canada, which has had a devastating effect on farmers, the farm community, the economy, trade and rural communities, as well as a trickle-down effect on a number of other associated industries. It all began with just a single reported case of BSE on May 20, 2003.
The U.S. border remained closed to all Canadian beef exports until September 2003. Then the U.S. and others agreed to allow imports of Canadian boneless beef from animals younger than 30 months. There was then a subsequent discovery of a cow with BSE in Washington State.
Herd sizes continue to rise in all provinces in Canada, and the problem is still one of excruciation in Canada.
Over the last few weeks, we have heard from various witnesses who have described to us the hardships experienced by Canadian farmers. Among those who have appeared before our committee are Mr. John Kolk, Mr. Ed Fetting, officials from the Department of Agriculture and Agri-Food Canada and from the Canadian Food Inspection Agency, Mr. Jim Laws from the Canadian Meat Council, Neal Hardy from the Saskatchewan Association of Rural Municipalities, Stewart Briese from the Association of Manitoba Municipalities, Jack Hayden from the Alberta Association of Municipal Districts, Terry Hildebrandt from the Agricultural Producers Association of Saskatchewan, Bill Newton from the Western Stock Growers' Association and Marvin Shauf from the Canadian Federation of Agriculture.
Witnesses outlined for us the stressful and serious economic situation facing the Canadian beef industry and they raised several questions regarding trade and health issues, safety measures and compensation programs, as well as the price of beef.
This morning we are honoured to have with us the Minister of Agriculture and Agri-Food Canada, the Honourable Bob Speller. Accompanying the minister this morning are Mr. Samy Watson, Deputy Minister of the Department of Agriculture and Agri-Food Canada, and Mr. Richard Fadden, President of the Canadian Food Inspection Agency.
Minister Speller, we look forward to your remarks, following which honourable senators will have a number of questions. I know that your time here is limited to less than an hour, so we will try to keep our questions short.
The Honourable Bob Speller, P.C., M.P., Minister of Agriculture and Agri-Food Canada: It is a real pleasure for me to be here. I have known most of you for a number of years and I really appreciate the work that this committee is doing. If you want me to come back at another time to talk about issues outside the crisis that we are dealing with today, I would be more than pleased to do that, because there are a number of issues that I have dealt with in my consultations across the country that I think this committee could delve into. These are issues that need much more work than I have available to me today. I would not mind returning to talk with you about the future of agriculture rather than just the crisis that we are in today.
The Chairman: We would welcome that and we thank you very much for making that offer.
Mr. Speller: I know that you particularly want to hear the latest on the BSE situation. It has certainly taken a lot of my time over the past three months that I have been Minister of Agriculture.
One of my first duties after being selected to be Minister of Agriculture was to go to Saskatchewan to sign the Agricultural Policy Framework, APF, with Saskatchewan, the last province to do so. We set up the Canadian Agricultural Income Stabilization Program, CAIS, which I believe will help Canadian farmers across the country and which gives Canadian farmers permanent funding for disaster coverage. That is a very good part of the CAIS program.
The coverage will be based on need and not prorated, as previous programs have been. Due to prorating, in 2002 the Canadian Farm Income Program, CFIP, was short some $65 million. I do not think that program should be set up that way. I think programs should be set up to address existing needs. One of the new advantages of this CAIS program is that it will not be prorated as programs have been in the past.
I met with industry leaders at my national safety net advisory committee a few weeks ago, and we talked about the government's commitment to the annual review of CAIS. As you know, CAIS has been talked about throughout the agriculture community and a number of concerns about it were brought to me. Some of these concerns were addressed when I was in Saskatchewan and we agreed to work on a third amendment dealing with issues such as negative margins and a cap that moves from a little less than $1 million up to $3 million. That is good in response to the trouble we are having with agriculture today. In the hog and beef industries, a cap is very important.
We are in the process of getting provinces to sign on to that. To date, three have signed and three more are in the process of getting their cabinets to do so. We are looking for a commitment from the rest of the provinces to do so as well. I am hoping to get those commitments soon because I believe that the cap and the negative margins are needed today to deal with the crisis we are experiencing in agriculture, and I do say that it is a crisis. There is no question about that. With farm income at the levels they are today, agriculture is most certainly in crisis. If we can get a cap and negative margins covered under this new program, it will go a long way to alleviating the concerns of farmers with regard to income.
Most producers entered 2003 on a solid financial footing. Assets and net worth were up in 2002. So far, the income situation has not translated into producers falling behind in their obligations to the banks.
I understand that you will be hearing from the banks. I have had the opportunity to talk with officials from the banks about the situations that people from across the country spoke to me about, particularly problems that farmers and farm families are having with their local bankers. The bankers gave me their assurance that they would continue to work with these farm families to do what they can to help them over what we hope will be a short period of financial difficulty.
I want to talk a bit about the funding that the federal government has put into the program. As I have said, we have had, for the first time ever, negative farm income, and that at a time when payments out to farmers were close to $5 billion, the highest ever. Yet, we still had negative income during that time. That suggests to me that there are not only short-term problems but also that in some areas of agriculture there are some structural problems that we need to study seriously. As I said before, there are certain issues that I would encourage this committee to take on and examine. Some of the larger structural problems in agriculture and some of the challenges that we face might be good topics for this committee to look at.
About $3 billion of the $5 billion was paid through crop insurance — the National Income Stabilization Account, NISA, and CPIC. An additional $800 million came from the BSE recovery program and federal transitional funding. The balance was made up from various provincial programs. There is still more government assistance coming. The CAIS program is issuing interim payments and we also have payments under the Cull Animal Program.
A few weeks ago, I announced that the slaughter provision of this Cull Animal Program would be removed and that producers would receive the maximum assistance under this program. The Cull Animal Program is important because the 2003 farm income was depressed as a result of the BSE situation.
While Canadian cattle are not moving, we have made efforts to provide financial assistance. However, we recognize that the best solution is to reopen the border. I am glad to see that senators will travel in a group of parliamentarians to Washington next week to talk to Congressmen and Senators about this issue. Today, my officials are briefing that group and I would be more than pleased, if you have additional questions, to help you out. It would be good to get American Congressmen and Senators sitting down with their Canadian counterparts. It is sometimes difficult, in the work of parliamentarians on both sides of the border, to delve into an issue as deeply as we, who are involved in the Agriculture Committee, delve. I look forward to your report on the mood of the American Congress and Senate in respect of reopening the border.
When I first became minister, and shortly after the case of BSE in Washington State, I sat down with the cattlemen, members of the Canadian Federation of Agriculture and other farm groups across the country to ask them what the government could do to help. They told me that first and foremost we needed to market Canadian beef around the world. That is what I did. I took members of the Canadian Cattlemen's Association and others with me to Korea, Japan and Washington. We sat and talked about ways in which we could work together to open the borders to North American beef. The response, I thought, was good.
We had good results in both Korea and Japan. In Japan, we put a member of the Canadian Food Inspection Agency on the ground to help deal with the Asian market to ensure that we had a representative with the science background and knowledge to help to alleviate some of the concerns that Asian countries might have. In Washington, I met with both my Mexican and American counterparts. We worked through ways in which we could work together to normalize trade in beef. We agreed at that time to have officials meet to talk about ways that we could normalize this trade and about ways that we could work together on a North American basis to help market North American beef around the world and to work within the World Organization for Animal Health, OIE, the group of scientists that are regulating and monitoring BSE situations in countries around the world. We could work with them and gain recognition from them that in North America we have a different situation than other countries around the world have. We have had two cases of BSE and yet the risk factors in North America are nowhere near what they are in Europe and other countries that did not put that feed ban in place, as we did a number of years ago. We have worked hard with our colleagues. Last week we met with officials from the Canadian Food Inspection Agency, CFIA, from Health Canada and from Agriculture and Agri-Food Canada; and they will meet with their counterparts in the United States to continue to move this agenda forward.
I had an opportunity, as of yesterday, to talk to Ms. Ann Veneman, U.S. Secretary of Agriculture, about the most recent issue, which is their 30-day period of consultation in respect of live cattle going into the United States. I spoke strongly to the views and the position of the Canadian Cattlemen's Association and others to promote officials on both sides working closely together to ensure that the U.S. Department of Agriculture is well aware of Canada's strong position on the issue.
I believe that the work will be successful that is being done by officials from Agriculture and Agri-Food Canada and from the Canadian Food Inspection Agency; by parliamentarians, such as you; and by Canadian cattlemen and their close relationship with the National Cattlemen's Beef Association, NCBA, in the United States. We have a strong argument for reopening the border. I think that science, not politics, will prevail on this issue. The United States has said clearly to me, on a number of occasions, that they would like to have this issue dealt with on a scientific basis. They recognize, particularly because of some of the work done by the Prime Minister and the President, that we need to have a coordinated effort on BSE. I believe that that will help in terms of reopening the border.
Again, I thank you for this opportunity to appear before your committee today to discuss some of these issues. I would like to return to speak to the bigger picture. Perhaps we will have that opportunity soon.
The Chairman: Minister, thank you for your remarks. This committee is also doing a study on value-added to find ways to leave more money at the farm gate. We would be interested in hearing your views on what you think is important in that respect.
Mr. Speller: The Honourable Ralph Ferguson, former member, and the Honourable Eugene Whelan, former senator, did good work in this area. It would be helpful to read Mr. Ferguson's report, Compare the Share, Phase I, update it and send those messages out. That would be important.
Senator Fairbairn: Mr. Speller, I know that you have regular daily tasks on agricultural issues and are currently embroiled in the pre-budget chats. We wish you well in your efforts because we are right behind you, every step of the way. I also thank your departmental staff and officials at CFIA for the help they have provided to this committee. Dr. George Luterbach from CFIA did remarkable work over the summer in Alberta.
With all of the activity and speculation in respect of reopening the border, which is rampant in my province, could you give us any sense of the kind of movement that would produce some positive results prior to next fall?
There is an attitude out there now that the science has been parked to the side and it is now a political question. I would like your views on that.
Mr. Speller: Thank you, frankly, for your advice through this whole process. I am a member and a boy from southwestern Ontario and it is good to get some of your insights into Western Canada and the beef situation there.
I had an opportunity to talk to Secretary Veneman, yesterday, on this issue and strongly put forward our case, the scientific case, in terms of getting that border open. They have brought forward a 30-day rule to look at the issue of live cattle for slaughter. We are dealing with the 30-month situation where, in that review, boxed beef over 30 months is now restricted. Of course, there is the bigger issue of the breeders, so there are a number of issues that come into play on this issue. All the science we have now suggests that there is absolutely no difference in the risk factors between Canada and the United States on this issue. We will be putting forward that position very strongly. Certainly, the Canadian Cattlemen's Association and other groups will be doing that. We have good support in the United States from a number of different avenues that are also putting pressure on Secretary Veneman to make changes.
They also said in this rule that they would look at these other issues in a further rule. In the future, there will be another rule and a final rule after this 30-day consultation period. This will address some of these other issues, such as feeders and breeders going in. We have an argument that suggests that the border should be wide open. Whether or not they will accept that at this time is unknown. They obviously have different views. They see different risk factors. However, if we can continue through work such as Senator Oliver and his group going down to Washington, the Canadian cattlemen working with their counterparts and Canadian industry working with their counterparts, there should be absolutely no reason why this border should not be opening.
Senator Fairbairn: Also, in Alberta, our municipal politicians — our mayors in southwestern Alberta from Lethbridge, from Medicine Hat, in the east and from Brooks that has the big packing plant — have spent some in the state of Washington for about a week going to various communities. They were surprised by the support that they were getting and the vigour of the people with which they were talking. These people were prepared to put pressure on their political associates as well.
Bluetongue and anaplasmosis have been a big problem for a long time. Since we are closing our border on those two issues, I know the cattlemen in my area of Canada feel strongly that the science has done its job and the time has come, perhaps, critically at this point, to show that we can do our part in border opening as well. Do you have a comment on that? I know you have been working on it and the department has and the food inspection agency has worked on it for quite a long time. Have you reached the point where we can actually deal with this in a positive way?
Mr. Speller: These are two separate issues. This issue was an issue that, obviously, has been around for some time. We had a consultation period that ended a few weeks ago. We made an announcement yesterday on this bluetongue and anaplasmosis that now allows cattle in from 39 different states. We will not be allowing cattle in from 11 high-risk states. These are states that do not ship cattle into Canada anyway. I will have Mr. Fadden talk about it a bit to tell you exactly what it is.
Mr. Richard B. Fadden, President, Canadian Food Inspection Agency: On the basis of the new science that the agency looked at and in taking into account the public comments, we have divided the United States cattle industry into high, medium and low risk. The science suggests that for 39 states where there is medium and low risk, the cattle will be allowed in without any testing. As long as they do not enter the national herd, the risks are reasonable. For those cattle in the 11 states that are categorized as high risk, they will still be allowed into Canada, but will spend 60 days in a low or medium risk state. We have had discussions with the United States authorities and they welcome this. I understand that the industry is also pleased. We will put into place an enforcement program to ensure that the rules that we are setting up, regarding the need to keep them out of the national herd, are respected. The cattlemen's association appreciates this and it will all come into effect on April 1.
Senator Gustafson: I would like to congratulate you on your appointment. You are a breath of fresh air. We look forward to your leadership in dealing with one of the most difficult times agriculture has been in across Canada for a long, long time.
I have three questions. First, there is the new program, the Canadian Agricultural Income Stabilization Program, or CAIS. There is one problem there that could be rectified. It is with regard to the margins. If there was a drought in a certain area and you had two or three bad years out of five years and you take out the high and the low years, there will not be much coverage left for that farmer who happened to be in that difficult situation. Is it possible that there could be some kind of adjustment made to that part of the program that could make it very positive?
Second, the younger farmers for the most part, who do not have a high balance in their Net Income Stabilization Account, NISA, to allow them into the program, need some way of making money. Has there been some consideration of changes there to give them more time? The farmers that have a well built-up NISA program have no problem. They just transfer the money. However, it will be very difficult for farmers that are in trouble to either borrow money or to get into the program. They are the farmers that need to be in the program. Those are the two questions on the program.
Third, I have a question on the global situation. We have been dealing with the fact that the Americans and the Europeans have been subsidizing and we have been told for 20 years that they will stop it. There is no indication, in my mind, that they are. We have to quit buying the misconception, at the expense of calling it a lie, that they will stop it. As Canadians, we must look at the whole global situation. For instance, durum wheat or hard wheat is priced at $2.50 a bushel. When you look across the border, they are getting $5 U.S. and more. We cannot survive the input costs in that.
Those are my three questions.
Mr. Speller: I know you have talked to me about these issues before. I believe that this CAIS program is an opportunity for us.
It gives us an opportunity of having it open ended, that dollars are now there for farmers and farm families. In terms of the margins, I agree with you that, for some, in setting up those margins, it will be difficult if they have had a few bad years. That is something I brought up to my national safety net advisory committee. We have a review process in place in which we will be reviewing this. I want to know if this program is working for farmers and if it is not, I want to make the changes to make it work for farmers. I understand that issue, and I will certainly continue to get my department to look at that. In terms of young farmers, this program is a lot better for young farmers than the other program. Now all they have to do is get the dollars for one and that carries them right through; but under NISA they have to build it up year after year and they would have nothing there to build up.
This program, overall, will be much better for younger farmers, in terms of giving them more time. Did I announce that for this year they have until December 31? I believe I did. They will get a payment before that. That payment, December 31, will carry them over into future years if they do not use it so actually, they do not have to pay for this year and yet they will get a payment. It is better for younger farmers in that way. That is an issue that would be great for this committee to look at. Are we doing what is necessary to get younger farmers into the industry? We all know the age of farmers in this country and the problem we have at that end. We all know, frankly, given the difficult times recently, that young farmers are sitting around the tables with their parents and looking at the struggles their parents are going through and saying why would they want to go through that.
What can we do as governments to encourage young farmers to come in? I have some ideas in my task force report that I will carry through with and that is the sort of issue that has been there constantly. It has been there since I have been involved. How do we encourage them? We have tried to do that under the Agriculture Policy Framework, APF. There are problems in the APF and I want to know if the programs will work. I want to know what your views are. I have not had the time, given some of the other issues of the day, to delve into that. That would be another good issue for this committee to look at.
In terms of global, I had an opportunity in Costa Rica to meet with my Cairnsgroup of colleagues, and you understand where Cairns comes from. Ambassador Robert Zellick from the United States was also there. The Americans constantly talk about export subsidies because that is something that the Europeans have. The Europeans talk about domestic support because that is something that the Americans have. Are we getting the two to agree? They are signalling a lot of talk but I have not seen any movement by either of them. In the short period of time that we have to get a decision on this prior to, obviously, an American election sometime later in the year, I am hoping that there will be a strong commitment from these countries to move.
Frankly, I do not see the process moving unless we get signals from both the United States and the European Union to move. For our part, we will continue to work with countries like the Cairns group of countries, the European Union and our American colleagues to try to get movement, recognizing that there is a new group called the G20 in this development obviously talking about development issues. I do not have a crystal ball. I believe it is important for Canada, being such a trading nation, particularly in agriculture — that we get movement, that we put effort in. I give you my assurance from my department's point of view that we will do everything we can to try to move the agenda forward.
Senator Sparrow: We look forward to working with you in this agriculture field. Before the meeting ends, would you touch on the hog problem crossing the American border now so we can have a little background information and what the plan might be.
I am somewhat concerned that the nation is trying to find culprits in the industry. We continually talk about the price being paid at the retail level. We are talking about profits in the packing industry and so on. I believe there are adjustments there, but I do not believe, through the whole process, that the people of Canada — consumers — are being robbed. I know that there are some discrepancies in pricing and so on, but I believe that the total industry is looking after the Canadians well and have done so in the past. We have had basically, an inexpensive food policy. We have had safe food. We have probably the finest beef in the world and we do not want to lose that, and we do not want that attitude lost on the Canadian public.
They have shown confidence in the industry. They have supported the industry, and increased the consumption of beef in this period of time, when it could have gone down. The confidence is there. I am afraid that we are looking for culprits and that will discourage the consumers. They will say they are being robbed and they will not buy beef any more, and so on. I want to stress that we have to get the message out that there really are no culprits in this process. It is really the border opening that will solve the problem and we will continue on, on a smooth process.
When the border does open, it would not solve the problem immediately. It will take time, in turn, to readjust and get back to where we were because of supplies and so forth. I throw that out and ask for your comments on both those issues.
Mr. Speller: In terms of the hog issue, this has just been another attempt by the United States to challenge us in terms of our programs here in Canada.
I believe strongly that hogs have been traded fairly over the years. In fact, the hog industry has worked very hard with its American counterparts to make sure that what they do within Canada is well within the rules of both the North American Free Trade Agreement, NAFTA, and the World Trade Organization, WTO. We have asked for consultations, the first step in the process, and we will sit down with the Americans to try to figure out exactly where they believe they have a case.
I think that hogs in this country have been traded very fairly. I believe we have programs in place that are well within the rules of the WTO. I believe we will be successful in defending this. These situations are unfortunate. This should not be the way it is, particularly with such an open-trade border that we have now, but they do happen periodically. I will give you my assurance that I will work with our industry to make sure that they are able to put forward very strongly their case on this.
In terms of culprits, and consumer prices, I think this goes back, Senator Oliver, to what you said earlier. The part of the food dollar that goes to the farmers is so small, that, in fact, when the prices fell it did not have much of an impact; the prices that went to the farmer. If you could look at that issue, that would be good for our Canadian farmers and farm families.
In the other place, the place where I work, the committee there is looking at this issue, too. In fact they had committee hearings on this yesterday with some of the packers in to try to work through, themselves, where the food dollar is going. I have heard indications that, in fact, prices have come down somewhat. I have heard that there are reasons why, as you say, that it appears as if the price is not moving too much, that there are other costs the packers have had to absorb. I have asked, though, through our minister, that the Competition Bureau look at the situation. They are investigating to see whether there is any evidence to conduct an investigation. I have heard some of the complaints that are out there on this.
Given the work of the House of Commons standing committee, and I know the Alberta government is looking at it also, I believe it will be clearer to us exactly what has gone on since this situation started.
The Chairman: Minister, that will be an interesting segue to the next question from Senator Mercer, who has been asking questions on this topic for the past few days.
Mr. Speller: If I may add one thing, before the new senator gets on. Senator Sparrow made a good point in terms of the high quality of Canadian beef. We would not have been able to get this border open if Canadian consumers had not decided to stick with Canadian beef. In fact, consumers did not just stick with it, but consumption went up, and it went up because Canadians were happy with the regulatory system that we have here in this country. In fact, the CFIA, Dick Fadden, to my right, is responsible for that.
It is because we have those regulations and such high-quality food that we were able to do that. What I want to do, senators, is to build on that Canadian brand and to use that to market internationally. That is why it is critical that we get out and let consumers in Japan and other countries around the world know that not only do we have some of the highest quality beef in the world but some of the safest.
Senator Mercer: I am a little disappointed that I have become so predictable so early in my Senate career. However, Senator Sparrow is the dean of the Senate and I am the rookie. We disagree on this, however. I am not really looking for culprits, I am looking for answers and there may be some culprits in those answers.
The Consolidated Beef Industry Action Plan released in February points out a whole bunch of interesting points. The average gross margin in September to February 2004 was $431 a carcass. The margin was $144 per carcass one year prior to that, representing a 200 per cent increase. I have heard testimony at this committee, as well as the House of Commons committee on agriculture, that farmers are barely making it and some are not making it. We all agree with that. We agree about the quality of beef. I agree that Canadian consumers have done a great job in responding to the crisis, but the report suggests that packers simply discount the price they were prepared to pay for the cattle by the amount of the government support payment. This is a common criticism from producers that the money never reached them. What is even worse is that the prices that farmers are getting dropped more than 50 per cent between May and July 2003, according to the Statistics Canada report. As well, when I go to the grocery store every day — because I am trying to eat more beef, as my size will show, to help out the industry — to buy my steak for dinner, the cost has hardly changed and, indeed, in some cases, in certain cuts, it has moved up.
You have put $460 million into the BSE recovery program and you talked about consolidating all the numbers to about $800 million earlier. There are many expectations that farmers would incur the most benefit. However, I do not think this is the case.
Several times in this committee I have attempted to ascertain seemingly large discrepancies between prices paid to farmers for their product and prices paid to retailers, to the packers, and most importantly, prices paid by us, the consumers, because I think money is only going in from two areas — from the consumers and from the government. Consumers would be very happy if they thought that the prices they were paying were going to the farmers. There is a great deal of empathy from the consumers to the farmers and there is not a lot of empathy for the other people in the middle, the retailers or the packers.
My question to you really is, with all those statistics in mind, can you give us some insight into what you are doing? Can you provide the committee with exactly where the money went and to whom, or do we have to wait for the report you have asked for from the Competition Bureau? Perhaps you could tell us the status of that request.
Mr. Speller: The House of Commons standing committee is obviously looking at this. The Government of Alberta has done an investigation, too. I am hoping the Competition Bureau will look at it. My role now, and where I see it, frankly, is to not separate these groups — the farmers, the processors, the retailers — on this issue. My role is to try to work in a coordinated fashion with them to get that border open, and I will do that. What I am trying to do is draw them together, not separate them or to get into the battles that might be there. We need to move forward on issues such as this. We have done things like bring together something called the value chain round tables, where we get the farmers, the processors, and the retailers working together towards something.
I see my role as trying to coordinate this group to get them working together with their American counterparts to get the border open, but I have heard the concerns that you have expressed. That is why it is important that groups such as the Competition Bureau, the standing committee and others look at this. For my part, I believe it is important to spend all my efforts to get these groups working together towards getting that border open. Through the standing committee I think you will get most of the answers that you want.
Senator Mercer: You mentioned three groups, minister, but you left out the fourth group — the consumer. I believe you must factor that in because they are the people paying the taxes and giving you the money to be able to help the farmer.
Mr. Speller: That is why we are getting them together, because if not, if they are fighting within themselves, the consumers do not get the full value of the Canadian product. In fact, if they are not working together, consumers will be eating foreign products, frankly.
Senator St. Germain: I would like to make a comment, minister. I think that a lot of the success in dealing with a really tough issue can be attributed to a spokesperson who works in your department, and I think his name is Dr. Brian Evans. He did a tremendous job in communicating confidence. He really handled it in such a professional way. It was like dealing with Tylenol, when they had their problem. They killed people, but they are still the leading pain-killing product in the market today as far as sales are concerned because the crisis they had to deal with was managed so well.
Dr. Evans should really be complimented. I guess it was Mr. Fadden's department that did this, and I do not think we should forget this. It is easy for those of us in these high-profile roles to get credit, but it is the people in the ranks who often save the day, and I believe he did save the day for us in the way he conducted himself with such confidence.
I have two questions. One deals with the avian flu in the poultry industry, which concerns me because it is creating an added problem in regards to disease in our food chain. I would like you to comment on that.
However, my greatest concern — and I am wondering whether it is happening in the U.S. — is that we have the softwood lumber, where the producers have gained a position as a result of tariffs and what have you, and border closure and border control. How do we deal with this? If there were greater profits accruing to the cattle industry down there as a result of these problems, a political lobby could develop.
We have been told by several people that have appeared before us, who have been working with you, that this is really a political issue. However, you have pointed out that you are trying to keep it a scientific issue. That is the right way to go, but how are we dealing with that political issue? Agriculture is tough whatever country you are in, and if they would stand to benefit from border closures, I think we have to face that reality. That could rear its head in the cattle industry, as it has in the softwood lumber industry, where the tariffs are totally unjustified, as you know. Those are my questions.
Mr. Speller: Senator, I will most certainly pass on your comments to Dr. Brian Evans, and I am sure Mr. Fadden will give him a gold star too. He certainly helped me. As a new minister coming in and having this thrown at me, it was nice to have somebody there on the ground who knew the science and could explain it to Canadians. Sometimes, it was in scientific jargon, which I had to interpret, but most times it at least gave people the confidence —
Senator St. Germain: It is really not the message on television; it is how you convey it, as you know.
Mr. Speller: Yes, that is right.
I will turn things over to Mr. Fadden to discuss the avian flu, but I want talk about the political issue before I do that. There is no question that, for various reasons, there are those in the United States who would like to keep that border closed. We recognize that fact.
However, there are a couple of points. First of all, in discussions with the administration — right from Secretary Veneman, to U.S. Health and Human Services Secretary Tommy Thompson, to the President's discussion with the Prime Minister — there has been no indication that they look at this in a political manner, or in any manner other than a science-based manner. Certainly, they have worked through the process.
Mr. Fadden has had his CFIA people down, Health Canada has had their people down and we have had Agriculture and Agri-Food Canada people down working on that; and there has been no indication from them that this is the case. However, seeing as we do and looking at some of the statements by certain senators and other individuals within the United States, we recognize the problem is there.
That is why we have encouraged groups like the Canadian Cattlemen's' Association to work together with the National Cattlemen's Beef Association, NCBA, in terms of a coordinated effort. Our Canada-U.S. group is a good example of how we can deal with things like politics. We get our own parliamentarians talking to parliamentarians in the United States. We have had the Prime Minister talking with the President. Every cabinet minister who has gone down to the United States, or met American counterparts around the world, has talked about this issue. That is how you deal with the politics. You deal with it in that manner. We have a coordinated effort, working with the industry and the provinces. Provincial agriculture ministers went down and talked to their counterparts. So we have a full-court press in terms of making them recognize how important this issue is to Canada.
Would you talk about avian flu?
Mr. Fadden: Let me start by saying that avian flu is a kind of disease that affects birds. It has a number of varieties, some less, some more serious.
Over the years, there has been a lot of low-pathogenic avian flu around the world and it has never caused any particular concern. The concern now is because of some of the things that are happening in Asia. However, I want to stress that the strain we have in Canada is not the same strain as that found in Asia. The United States has had a couple of strains recently as well.
The strain that has been identified in British Columbia initially was low-pathogenic. That means it is does not infect and kill the birds quickly. Now there is an identified case of high-pathogenic avian influenza in British Columbia. This means the birds can get the disease quickly, and the death rate within flocks can go as high as 80 per cent.
The practical consequence of this in world trade terms is that if you have high-pathogenic avian influenza, basically your borders are closed to poultry exports. We have already been told that a number of countries have closed their borders to Canadian poultry products. In the case of the United States, however, it has been restricted to British Columbia.
Our policy is to stamp out the disease as soon as we possibly can whenever we can identify a case. It is in the interest of the industry to do the same thing. We do this by quarantining farms and depopulating. We have already depopulated the first farm that had avian influenza in British Columbia. The second farm was just identified, and instructions have been given to depopulate there as well. We are trying to quarantine, restrict movements and depopulate to the extent we can.
We are trying to formulate a package of proposals in the next little while that we will put to the minister, in terms of what we will do more globally. However, the basic approach is to stamp out the disease as fast as we possibly can. It is difficult to do because it is very contagious, but over the course of the next few weeks and months, we hope to stamp it out.
Under the terms of the World Health Organization for Animals, OIE, if you have a case of high-pathogenic avian influenza, you are supposed to take 90 days before you can declare yourself to be free of the disease. We hope to do it faster than that, but the key will be to try to stamp it out.
For depopulated flocks, there is compensation under the Health of Animals Act. For others affected by the shutdown in trade, it is more difficult. There are no provisions for immediate compensation. I hope that is helpful.
Mr. Speller: I want to go back to something Senator Mercer raised, because I just got a copy of the Calgary Sun today. It refers to the Competition Bureau and says, "Bureau spokesman Andre Leclair confirmed yesterday the organization is now in the throes of an investigation prompted by a request by Agriculture Minister Bob Speller..."
Senator St. Germain: Now that is action.
Senator Tkachuk: I love that word "depopulate." It sounds so much better than "kill chickens."
I have two questions and they have both to do with the trade issue. The first is in regard to bluetongue and anaplasmosis. How is the science going on that? That is our restriction. It is a trade irritant. What is our current position, and is there a resolution to that problem?
Mr. Speller: There is, in fact. I mentioned it earlier.
Senator Tkachuk: Sorry, I did not hear it.
Mr. Fadden: We have reviewed the science on this. In respect of anaplasmosis, we decided there are enough controls that can be imposed in-country to prevent the spread of the disease. Basically, we are saying that in respect of anaplasmosis, we are deregulating.
Concerning bluetongue, there is disagreement around the world on how serious a disease it is. The United States takes the view that it is not particularly dangerous. Other countries around the world do not agree.
Over the last couple of months, we have looked at how the disease is transmitted — it is transmitted through insect bites. One of the most significant factors in determining whether it can be transmitted to the Canadian herd is our climate. In a small part of British Columbia, we know it can be transmitted. However, it is important to remember that feeder cattle come into Canada for two purposes, to be fed and slaughtered or to be re-exported for slaughter. To the extent that some of these cattle may have the disease, it is not a particular worry for those who own and manage the national herd. We believe that if we impose sufficient controls to prevent these cattle from moving into the national herd, we will cut down on the transmission of the disease.
The bottom line is that there remains a risk. If we change the rules as the minister has effective April 1, there is a risk that bluetongue will be transmitted to the national herd. We will have to deal with that. There is also a risk that it could be transmitted to wildlife. Just about all of the consultations we have had, including with representatives of wildlife groups, the sheep industry and others, suggested that, on balance, the risk is sufficiently contained that we can open the border. The minister has effectively done that except for 11 states.
Mr. Speller: We announced that yesterday. That is probably why.
Senator Tkachuk: Let us start on April 7. We have all these restrictions that we have all been talking about, for example, cattle less than 30 months old, boneless meat, 36 weeks and then we have restrictions on some of their product. To help me and other members here, so that we have the time-frame of all that, if we start on April 7, which is a good time to start because it is the next comment period, what happens? What are the true consequences? What happens after that? What is the true time period for all of these things to be resolved if things go reasonably well? What is the next step? What are we dealing with on April 7? Are we dealing with live cattle or with calves? Take us through this, if you could.
Mr. Fadden: I can try.
Senator Tkachuk: That is good.
Mr. Fadden: First, we are dealing with the U.S. comment period. Once the comment period is closed the United States authorities, Secretary Veneman, is entitled to a reasonable period to look at the comments. They have indicated to us that they already considered the comments that were offered before Christmas. We are hopeful that their review period will be short. The United States authorities will have to decide. We hope, as the minister said, on the basis of the science, that they have no basis for keeping the border closed. They can take the comments and say the rule is appropriate and the secretary can promulgate the rule, in which case all of the changes in the regulations that are suggested in the new rule will come into effect at a date that they specify. They can also say that some of the comments are sufficiently important and we have to take more time to review them and only open some portion of the border.
It is difficult to answer your question in detail because it is part of the U.S. regulatory process and it is much like ours. They have a very complex and detailed process to go through.
Senator Tkachuk: I understand.
Mr. Fadden: They have to take into account not only science but also the regulatory aspects.
After the period closes, the secretary has an opportunity to review those comments. We hope the decision will then be to make the rule permanent and that opens the border. If not, we will keep working away at it.
Senator Tkachuk: Will it open the border for everything?
Mr. Fadden: Whatever is in the rule, so this is not absolutely everything.
Senator Tkachuk: What does that mean?
Mr. Fadden: I did not bring the rule with me but it will open trade significantly between the U.S. and Canada. However, there are still concerns about live cattle over 30 months and a variety of things like this. The secretary has already indicated, and the minister mentioned it in his opening comments, that they are considering an additional rule to deal with those aspects that are not covered by this interim rule.
Senator Tkachuk: That will take us to what time period? What are we looking at, May or June?
Mr. Speller: It is hard to speculate on that. We will have to wait for 30 days exactly.
Senator Tkachuk: What is your hope, minister?
Mr. Speller: I am hopeful that the border will be open after April 7. In reality, we have the science that suggests that in fact that border should open.
Senator Tkachuk: Yes.
Mr. Speller: I see absolutely no reason after that time for the border not to open.
Senator Tkachuk: I am hoping for that, too.
Senator Hubley: Welcome, Minister Speller. Congratulations. We know the many challenges you are facing right across the country in agriculture. In Prince Edward Island, we have great concerns about our potato industry and now our pork industry but today we will look at BSE. The border opening will be the focus to which everyone is looking. We heard from the Saskatchewan Association of Rural Municipalities. It is to your credit that there is some optimism and hope out there now. When they made their presentation to us, their expectation was that the border might be open for sure in May or June of this year. That falls in line with what you were mentioning to Senator Tkachuk. The other issue that all of the presenters felt was necessary to mention was bridge financing. When we spoke to the Canadian Federation of Agriculture, they stated that for bridge financing it was important that the government act quickly in order to provide cash strategically to producers of animals of less than 30 months of age. This must preclude producers from being forced to sell and it must not encourage any acceleration in selling. It must facilitate producers to be able to make their own marketing choices.
Will the financing that we have through our programs address this concern?
Mr. Speller: We brought in programs. We have had the $520-million BSE program that started off and then we brought in another program, the cull cow program, which was $200 million. That program now required that, when I took the slaughter provision out, the whole dollar amount be given to the farmers.
Those dollars are given out, first, through the provinces being able to tell us how many cattle are out there. They are doing inventories. Those inventories are in the process of coming back in some provinces. They are a little late in other provinces. We will be able to get those dollars out once the provinces give us those inventories.
The price for fat cattle has increased over the past number of weeks, which is good. However, there still is a need out there for more dollars. I am working with my federal counterparts, at a time when there are budget discussions, to try to get as many dollars as I can out there.
In a bridge, it is critical that we help bridge farmers from now to September. When the full dollar amount of the CAIS program will come right now, they are eligible for interim payments up to 50 per cent. They know exactly what that amount will be and they are eligible to collect on that. Some of those dollars have gone out already but the full amount will not actually go out until the fall. It is critical that we bridge that period of time.
The Chairman: Honourable senators, the minister is over his time now and I know that there are two more senators who have not had a chance to ask a question in the first round. Minister, if you could give us another five minutes I could ask that Senator Callbeck go now.
Mr. Speller: Sure.
Senator Callbeck: I wish to follow up on Senator Hubley's question regarding the cash flow problem that farmers are experiencing. This is certainly true in our own Province of Prince Edward Island. Under the CAIS program, the farmers must contribute cash if they are to benefit. The idea was noted that rather than cash, perhaps a letter of credit would do. You were going to ask your officials to look into this. Where is it?
Mr. Speller: For this year, we took away that portion. I said that what they have to do now is put it off to December 31, when they actually have to put in that portion. Before that time they get a payment. They get a payment for 2003 and now they do not actually have to put the portion in to get it until December 31. This carries them over to next year.
What we will have in that process period of time is a review of the whole business risk management side. I have agreed, along with the Canadian farm groups and the provinces, to set up a review group that will help review the program to see whether or not it is appropriate to have that sort of provision in it. That review will be in well before this next year comes in. At that point, we will be able to make a decision on that.
There are some with the view that the farmer must have some sort of buy-in to this program. It comes down to the relationship between this sort of program and crop insurance and whether or not there are sufficient ties there to ensure that people are using crop insurance. There are a number of different issues but I want to have a review process in place that involves farm leaders in the industry to let them know whether or not that is the present thing to do. There will be plenty of time to do that.
The Chairman: Minister, on behalf of the committee, I want to thank you very much for coming here. You have given us excellent background. You can tell by the nature of the questions that this committee has a great interest in dialoguing with you some more. We would like to thank you on your kind offer to return, at which time we can discuss some of the structural changes we see in these problems, ways of rearranging some of the money that is paid out now and, perhaps, finding a better use for it.
The committee adjourned.