Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 7 - Evidence - Meeting of February 28, 2008
OTTAWA, Thursday, February 28, 2008
The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill C-44, An Act to amend the Agricultural Marketing Programs Act, met this day at 8:01 a.m. to give consideration to the bill; and to examine and report upon rural poverty in Canada.
Senator Joyce Fairbairn (Chair) in the chair.
[English]
The Chair: Good morning, senators, and good morning to those who have tuned in to watch the Standing Senate Committee on Agriculture and Forestry's hearings on rural poverty and rural decline.
Our committee was authorized in May 2006 to examine and report on rural poverty and rural decline. Since then, the committee has released an interim report. We have traveled to every province and territory in Canada, visited 20 rural communities and talked to approximately 300 individuals and organizations. In this, the final stage of our hearings, we are looking at what other countries have done to combat rural poverty and rural decline, and we are seeking to determine whether any of those efforts could be useful here in Canada.
This morning's witness is Dr. Mark Shucksmith, a professor of planning at Newcastle University in the United Kingdom. Professor Shucksmith is well positioned to help us. His research interests tie into some of the recurring themes in our study: poverty and rural exclusion in rural areas, rural development, agriculture policy and affordable rural housing.
Mark Shucksmith, Professor, Newcastle University, as an individual: Thank you very much for the invitation to help you with your inquiry. I have sent through some papers which I hope you have had a chance to at least skim through. The questions you are asking would probably keep me busy writing for several books and speaking to you for several days; I have merely scratched the surface in what I sent you.
I am aware that you have only limited time. I will highlight a few of the main points for just four or five minutes and then turn it over to you, if that is okay.
The Chair: That is just fine.
Mr. Shucksmith: Your first question was about halting rural decline and whether there are other countries that have managed to halt the decline in the rural population. This is a slightly odd question for us in the U.K. because our rural areas are growing. It is the urban areas that are declining. This is largely because people want to live in rural areas and are prepared to pay quite a lot of money to do so. The average house price in rural England is well above the average house price in urban England, reflecting that preference.
This has not always been the case. There was a turn around starting in about the 1970s. Since then, this trend has been apparent through all parts of the U.K. — England, Scotland, Wales and Northern Ireland.
There are trends within that. If you look at the details, the most accessible rural areas — which are most of our rural areas — are growing, and they are growing faster. The remoter rural areas, particularly in Scotland, are more variable, with some growing and some declining.
If you look at the statistics for the European Union, you find a much more variable picture, with the accessible rural areas in the richer countries growing while the remoter areas are declining in population. This is true in the far north in particular, but also true of the more agricultural areas in the south and east, in the poorer countries.
There are also differences at a micro-spatial level, even in the areas that are growing in aggregate. It may well be that there is a movement from the hinterland into the towns. That seems to be as a result of particular planning policies that, in the U.K. at least, try to prevent people living in rural areas. I can say more about that if you like.
You asked about the changing nature of rural policy and whether there has been a change from the emphasis on agricultural policy towards the sort of thing that the Organisation for Economic Co-operation and Defence, OECD, is now calling for in its new rural paradigm. Indeed, in the European Union, much has been said about this change and many claim that it is happening. In practice, however, agricultural interests have managed to keep hold of the budget and most of the money still goes to farmers. Very little goes towards the sorts of territorial rural development programs that the OECD has identified as perhaps paradigmatic of the future.
However, the agricultural policies have been shown in many studies to be very ineffective in addressing rural poverty. They go mainly to farmers rather than most people in rural areas, and farmers are fewer than 5 per cent of the rural population of rural areas. The money tends to go to the richer rural areas rather than the poorer rural areas. Therefore, they are not effective in terms of social justice, either.
There are policies which, with small budgets, have tried to take forward the OECD paradigm, notably the European Union's Community Initiative for rural development or LEADER program. I believe it is similar to the Community Futures Program you have there in Canada. I am happy to talk more about LEADER in response to questions.
Numerous studies have evaluated such programs, not only LEADER but similar approaches. We have tried to distil from those the key success factors in these territorial policies. I have outlined those in the evidence. Again, I would be happy to talk about those. That summarizes the successful rural policies to a large extent.
Another rural policy that seems to be successful and that may be of interest to you is the legislation in Scotland to promote land reform. It came in three or four years ago. Funds have been made available to help communities buy the landlord's interest in the estates on which they live in order to give them community ownership of the primary resource. That is progressing at a different pace in different places. However, the results are quite promising and fit in with an asset-based approach to rural development.
Turning to rural poverty, which is your primary focus, I would make an initial distinction between areas that are growing and those that are not. Those growing tend to be the most affluent areas in the U.K and are the accessible rural areas. They are not generally areas of rural poverty. The terms ``poverty'' and ``rural'' are not synonymous.
Within these generally affluent growing rural areas, nevertheless, there is a significant amount of poverty. The problem is not visible because it is not spatially concentrated. It is scattered and is within what are generally affluent areas. Therefore, ``poverty amongst affluence'' is the way I would characterize that. How to address it perhaps leads you away from area-based targeting towards more client- or customer-based measures. I can talk about some of those.
In more remote areas where poverty is a more general experience, area-based approaches may be more appropriate. Even in those areas, there are people who are not poor and who are doing very well. An issue that arises is who captures area-based measures, particularly if they are competitive, challenge-funding measures. Do they reach the poorer residents of those places?
I have included statistics in the paper before you. I am able to discuss how we define income measures being introduced to try to address poverty in remote areas; issues around employment, unemployment and, especially, hidden unemployment; and welfare entitlements and how these have been shown to be claimed less in rural areas along with some reasons for that. I also look at housing and the issue of how poverty affects people at different stages of the life course.
Finally, I put together statistics from the European Union. The problem is that most EU statistics do not distinguish between urban and rural areas. Therefore, even though you may have statistics on poverty in different member states of the European Union and trends in those, it is rare that the statistics are disaggregated into rural and urban areas by any consistent definition.
I have recently completed a research project analyzing the European Quality of Life Survey that included a variable where respondents were asked to state whether they thought they were in an urban or a rural area. It is a subjective self-definition of rural and urban. It showed that, in the richer countries like the U.K, Germany and France, there was no difference in rates of poverty and quality of life between urban and rural residents. However, as you moved to progressively poorer countries, the difference between urban and rural residents in relation to poverty grew larger. In the poorer countries that have recently joined the European Union, incomes in urban areas were around three times as high as those in rural areas.
I will stop there and let you ask about that in which you are interested.
The Chair: Thank you, you are touching on areas that we have been listening to now for over a year. This is helpful indeed.
Senator Segal: Professor Shucksmith, I want to thank you for the excellent document you sent summarizing aspects of the evidence that you have shared with us this morning. It is an integrated analysis of rural development policy in your part of the world and is of immense value to us.
I want to ask about your own assessment of the framework of low, falling and absent incomes in the rural U.K. since you have done quite a tour d'horizon in your document of the various approaches that have been taken to date. These include the Labour government's approach to centres of growth that would willy-nilly trickle down to rural areas; commodity-based compensation for farmers where the focus is on the agricultural function as opposed to the income base per se in the rural areas; and, particularly, programs that appear to be working in some parts of Scotland. Your colleagues at the OECD appeared before us last week and talked in detail about how Scotland has been successful in some aspects of in-migration and growth for the rural areas.
Your paper is extremely careful in analyzing different approaches without expressing any bias on your part. It is remarkably bias-free. I personally would not have the skill to generate a paper so free of bias and analytically coherent.
I would be interested in what your bias may be, having looked at the various programs, especially between two options: commodity-based insurance and protection for the farming part of the community versus basic income floor approach. Mr. Churchill said that there should be no limit on how well people can do but there must be a floor beneath which no one is allowed to fall. I make the case he said that while in opposition as opposed to when in government.
I would like to know whether you have a bias, having looked at these programs and having the expertise and background you do. What do you think one might do first if one wanted to pierce the veil of rural poverty and begin to make a difference as quickly as possible? What would your own instinct be, based on everything you have seen?
Mr. Shucksmith: Thank you for your kind words.
The evidence is clear, not only for the U.K. but throughout the European Union, that commodity-based support tends to benefit richer farm households rather than poorer farm households. It tends to benefit richer areas rather than poorer areas.
The reasons for that may not be inherent to commodity pricing. It may be how it is being done. However, if you pay a subsidy related to how much you produce, those that produce more get more.
Similarly, it is a question of which enterprises are supported. In the European Union, the enterprises most highly supported are those in the original six member states, which are some of the richest countries. Therefore, you tend to get dairy, beef, cereals and milk heavily supported, whereas, you do not get that with olive oil, for example.
That is why you get regional bias arising from the types of commodities and the size of farms. Within a region, it would be those with the larger farms or the larger businesses who get the most support. I think the largest amount of support received by any farmer in Scotland is received by a multi-millionaire who is the chairman of the railway company. He is the person who receives more than a million pounds a year in agricultural support.
You could, in principle, have support to farmers that was not as highly subject to those problems. You could alter the commodities supported to favour those in poorer areas. You could have a cap on the amount of the support that any one farmer could receive. However, then you would not be able to do it only through the price mechanism. You would have to have an administrative way of achieving that. You could, indeed, have a graduated amount which gives greater levels of support for smaller producers pro rata than for higher levels of production.
One idea that is currently under discussion in the European Union and that is operated in the U.K., but only in the U.K., is to top slice the direct payments to farmers and use that money that is sliced off for territorial rural development measures and for supporting agri-environment public goods. Again, if that was done on the basis of outcomes rather than of profits foregone, it might assist poorer farmers in high nature value areas.
Turning to the other avenue that you suggested, the support of those with minimum incomes or minimum wages, I think the evidence is that those are highly effective. In the last 10 years, we have brought in a statutory minimum wage in the U.K. All the other EU countries had it already. The evidence shows that that is particularly effective in rural areas because wages tend to be low in agriculture, tourism and forestry industries. It affects people there; it takes them above the minimum wage and makes a real difference to their incomes.
The other main element of policy to do this has been a minimum income guarantee for families and pensioners. This has been especially effective in lifting more than 1 million pensioners in the U.K. out of poverty in the last three or four years. It means that they not only get the statutory pension, but they also get this top-up to bring their incomes above a minimum level.
Those measures have the additional advantage that, because they are client-related rather than area-based targeting, they are particularly effective at reaching people in rural areas, where poverty might be scattered amongst affluence. However, there may still be a need for additional promotion to ensure that if people have to claim rather than getting those benefits automatically, they become aware of the opportunities available to them.
Senator Callbeck: Thank you, professor, for your presentation and for the material that you have sent, which is extremely helpful.
I have a couple of brief questions. The first is on immigration. In Canada, 75 per cent of our immigrants come to the three largest centres, Vancouver, Toronto and Montreal. Is there a similar trend in the U.K., and do you know of any policies that have been successful in attracting immigrants to rural areas?
Mr. Shucksmith: That is a very good question. In the U.K., as with Canada, the main international immigration is to London. Within the U.K., it is outward from London. As people get higher incomes, they wish to and are able to move further out — similarly from our other cities.
While the main international immigration has been to London, that has changed a little bit in the last few years since the new member states joined the European Union and free migration within the European Union has been possible. I think the U.K. has imposed fewer restrictions than any other EU country on that migration between EU countries.
In the last few years, a large number of people — particularly from Poland and Lithuania and now, and probably in the future, from Romania and Bulgaria — have moved not only into the cities but also to work in agriculture and tourism in the rural areas. You find increasingly that in any hotel or bar in a rural area you are served by someone from Poland or Czech Republic or Lithuania.
You asked about policies. It is interesting that Highlands and Islands Enterprise, the economic development agency for the rural north of Scotland, has deliberately sought to attract Eastern European migrants — as has Scotland as a whole. The view in Scotland was that the country needed to increase its population and attract skilled people, and it was thought that these people would have those skills. They tend to come to manual working jobs, which are fairly low-paying jobs, but in the context of their own country, they are very highly paid jobs. Then as they learn the language and get integrated into the country, they either stay and, hopefully, move into fulfilling the potential they bring, or they move back.
It is a bit early to say what is going to happen in the long term, but the Highlands and Islands Enterprise strategy is to attract those people to stay, to make them feel really welcome and to grow the population of the Highlands and Islands from what was about 300,000 in 1970. It is approaching 400,000 now, and they aspire to have a population of 500,000, with this as the main strategy.
Senator Callbeck: My other question is on your LEADER program. You mentioned the Community Futures Program we have in Canada. I feel that has been very helpful for rural areas, in getting people to stay in the area and giving them more job opportunities. Are you familiar with our Community Futures Program?
Mr. Shucksmith: Not really, no.
Senator Callbeck: Did your LEADER program start in 1994?
Mr. Shucksmith: I think the first phase was 1990.
Senator Callbeck: Have you made changes to that program since 1990? Have you learned any lessons in the last 18 years, and if so, what are they?
Mr. Shucksmith: At the beginning it was a very small program. One academic described it as an almost homeopathic program because such small amounts of money were involved. It was seen as very successful in its first phase, largely without any evaluation being done.
The whole idea behind the program was that it made money available for people to pursue their own ideas. It was very different from previous schemes where there was money for building sheds, fences or whatever. It was money to bring people to work together. It was seen as successful by the European Commission and, as a result, more money and a lot more areas were included in the next two phases leading up right through to 2007.
However, at the same time, member states felt bypassed and threatened because this money was being given directly from Brussels to people in rural communities to do what they wanted. There was, in the second and third phases, an attempt by national governments to take back control and reduce the empowerment of communities. One lesson there is that it was seen as being particularly effective in the first stage, where communities were more empowered.
The broad lesson I would draw from that is that the LEADER discourse was to give power to people for bottom-up rural development; but that is not possible because you need top-down support as well. In so many of the mainstream programs and funding pipelines, the power and the control still rest at a higher level.
The real question is how can you build the capacity of people at a local level and how can you support that through the actions of government and other actors at a higher level. The interesting lessons are where we have experience on that.
I know I should be quick, but I would point you to the example of Finland as a country that has tried, perhaps more than any other, to mainstream LEADER. They have tried to build it in as a tier between village action movements and regional and national government as a means of articulating those. Every area of their country has a LEADER Community Initiative.
Senator St. Germain: Mr. Shucksmith, in your initial presentation, which was succinct and interesting, you mentioned land reform legislation in Scotland. I believe you said that this land is community held. How does that impact on the poorer segment of society in these respective areas?
Mr. Shucksmith: There is much history behind this, which I will not go into the details of. Broadly, you will be aware that people were cleared from the most fertile parts of the Highlands of Scotland, and many of them were transported to Canada, the U.S. and other countries.
The people who stayed behind remained on small holdings called ``crofts'' in a tenant relationship to the landlords, who usually are very large landowners. This legislation gave these tenants, who tended to have high levels of poverty, the right, through a referendum of majority in favour, to buy the landlord's interest collectively over all their holdings and common grazings as well. The landlord then becomes a community trust.
The position of tenants is unchanged but the landlord changes, no longer according to which private individual can afford it. Many of these are from overseas or they have made a lot of money from industry, for example. The position of landlord changes to a community trust and those trusts develop business plans and have charitable purposes. The heart of the objective is to try to address the kinds of issues that this committee is trying to address. They do that in many different ways, such as setting up community businesses, in particular wind farms these days, fish farms, hotels and tourism. They also try to offer an opportunity for people to build their own houses on serviced plots. The resulting revenue is reinvested in the community to try to keep the community business viable. It is a direct way of addressing rural poverty.
Senator St. Germain: Are you saying that the local government in the area not only purchases the land but also funds over and above that purchase, whether through the LEADER program or a community futures to assist those on the crofts?
Mr. Shucksmith: The communities have to buy the land at an open market price, and they are assisted in that with money from the lottery. The government directs the lottery to build the community Land Fund. There is doubt about the future of that because we are getting to the end of the lottery period of funding and we have to find a way to fund the Olympic Games, which is another call on that lottery funding. Therefore, that money is currently under threat.
In addition, and as you rightly guessed, using lottery funding as well as some of its own money, the government has backed a unit to support communities known as the Community Land Unit. This provides the animation, community agents and expertise to help communities think about a process to come together and decide whether they want to take this line, prepare a business plan and raise the money.
After the buyout, the Community Land Unit still exists to offer support, but its main effort is to help communities up to the point when they decide to buy the estates.
Senator Peterson: A couple of weeks ago, we had a discussion on poverty-level incomes with an individual from Australia. The number he had suggested was around $15,000. We looked at all the government programs and the money spent by government and divided it by the number of eligible families and it came out close to that number. Would this suggest that we have to be more precise and targeted in delivering these programs to those who need them?
Mr. Shucksmith: This debate continues. It may be that you have to think about which problem you are trying to address. The poverty line in the U.K. and in EU countries is a relative measure of 60 per cent of median household income. That is the standard definition. What absolute level that is varies greatly in different EU countries. In the poorer countries that level is lower than in the richer countries.
Whether you opt for general measures or means-tested targeted measures, there are pros and cons. In a means-tested measure, the money is concentrated on the people who truly need it, which is desirable. However, the onus is generally on the people to claim it. Definitive evidence is being published in England this year that take-up rates and claiming rates of welfare entitlements in rural areas are significantly lower than they are in urban areas, and for a number of reasons. First, the information is farther away, more often in the towns than in rural areas. Second, it is difficult to take a promotional campaign into the rural areas: everyone would be seen going to it, so of course they will not go.
Third, in rural areas of the U.K., people in poverty tend to be in private housing, whereas in the urban areas, people in poverty tend to be in social housing, non-profit housing or state housing. In state housing and non-profit housing, people are face-to-face with the welfare system because usually their rents are paid for them through the housing benefit system. That then alerts all the other agencies, and those people will receive all that they are entitled to. Those in rural areas and private housing are never brought into touch with those vectors, so there are advantages to targeting. However, it might work against people in rural areas, so you would have to think carefully about how to overcome that problem.
In the U.K., we tend to go for a mixture of the two. For example, child benefit is a universal entitlement which has been shown to be particularly effective in addressing child poverty because it tends to go to the woman rather than to the man in the household, even though it also goes to richer people who have children. Most other benefits are means- tested and targeted.
Senator Peterson: In Canada, as I presume in other countries as well, rural people are proud and independent. When it comes to poverty programs, it is more difficult to remain anonymous in a rural area than it is in an urban area.
Senator Mahovlich: A phenomenon happening in the United States is the move of business people from urban areas to rural areas because they can conduct their business on the Internet. I spent some time in the southern part of England recently where I did not witness any poverty. It was quite nice. There were many attractions, more than we have in Canada, and many beautiful gardens to visit. In fact, I ran into the ``Antiques Roadshow'', which was travelling to the Isle of Wight at the time.
Senator Segal: Were you a guest or an exhibit?
Senator Mahovlich: I was just roaming around.
Regardless, I would rather have my office in rural England than in London because of the traffic and everything. Are there many people living in the countryside who do their work there rather than in larger urban centres like London?
Mr. Shucksmith: Indeed there are. It is a growing trend, and I think it is important for the future. The Commission for Rural Communities, the agency for England in relation to rural areas, of which I am a board member, recently published a report, Under the Radar: Tracking and supporting rural home based business, specifically documenting that phenomenon. We talked about that as a lost city: if you add together all the people who work from home in rural England alone, it is greater than the workforce of Birmingham and Glasgow combined. Nobody has any policy for them. They are a problem for planners, who do not know whether to treat them as businesses or homes, yet it is a real phenomenon. The Internet facilitates that, and it is one of the factors in the prosperity of rural areas.
We talk about maybe trying to provide live-work units for some of the remoter areas as a way of trying to regenerate them. Research in this country shows that most of the new businesses are started by migrants to the area and a job is created for each person who moves in. Therefore, many people are employed in new businesses. It is a very important part of rural economic development.
I will come back to Rye in Sussex. You are quite right. In most of rural England, you would see the same: attractive areas and prosperity. You would not see in those communities the people who are below the poverty line. There are issues that may not be just about poverty. There may be difficulties around transportation, particularly amongst older people, because everyone else has two or three cars, so public transport might have disappeared. The presence of affluence itself may cause disadvantages for other social groups.
Similarly for housing in the southeast, southwest and east of England — and Rye would be a good example — research for the Commission for Rural Communities shows that, of the newly forming households over the next five years, 70 per cent will be unable to buy a house in rural areas of those regions. That will change the social composition of those places. Young people will not be able to afford to live there. You will have wealthy but aging communities. However, they will be very different from how they are now.
You have to ask: Is it to the advantage of the country to have whole areas that are almost like gated communities without the gates? They will be so socially imbalanced. What is the implication of that for the urban areas?
Senator Mahovlich: I hate to mention this, but I think it was 40 years ago I was in Folkestone, in the Dover area. Is that overpopulated now? I know it was very popular for tourism at that time. Do many people go there for retirement? It is very attractive, given the White Cliffs of Dover and the ocean.
Mr. Shucksmith: It is an attractive retirement area that has been dubbed ``Costa Geriatrica,'' to use the politically incorrect phrase. However, just north of Folkestone there are ex-industrial areas where there is poverty. There can be changes quite locally.
The Chair: I have a quick question on this discussion. How do rural areas in the United Kingdom stay rural if they are growing to the degree and in the way that you have been discussing? Such growth may indeed occur here in Canada. It has not happened yet, but it would be interesting to know.
Mr. Shucksmith: This is probably the biggest ongoing debate. Since the Second World War, we have had a policy in this country of urban containment expressed through very strict planning controls, which have presumed against allowing any development in the countryside. Initially it was to protect good farm land. However, even when we were producing huge surpluses in the European Union, the policy continued with a new justification: to protect the countryside for its own sake.
Of course, there are power relations in this situation. The wealthier people who are able to pay for an expensive house in a rural area have a strong incentive to vote in policies like that that prevent new houses being built. Those policies tend to ensure that the rural areas stay rural, at least in the sense of looking as if they do not have anything built on them.
It is impossible to preserve the countryside entirely, however, because while you may keep the land from being built upon, there are social changes as a result of those policies. As I have said, young people will not be there, and the shops that used to sell food and general goods turn into antique shops and other niche shops. That creates social disadvantage for those who do not have the ability to travel. Trying to preserve the look of the countryside is a real issue, and as a by-product, it is changing the social and economic nature of the countryside.
Senator Segal: I want to get the professor's counsel on the issue of population distribution.
I was informed just this week that the Swiss have had a very interesting policy of ensuring that people are evenly distributed. For example, close to 200,000 Kosovo Albanians are living in Switzerland now. They have immigrated there over the time of troubles and, while some have gone back to Kosovo, the larger number are still there. That is a very large number of immigrants for a country like Switzerland. However, they are evenly distributed in all the various cantons by a policy that encourages that.
You made reference to the desire to keep Eastern Europeans who have moved to the United Kingdom as permanent residents in the areas they have chosen. Does the U.K. have a policy that encourages, though incentives or other policy directives, new arrivals to distribute themselves into rural areas as well? Part of our challenge in Canada is that new arrivals typically will move to areas of high concentration where they will find people from their own part of the world. There they find camaraderie as well as social and economic opportunities. They do not move to places like rural Ontario or Prince Edward Island where their presence would largely be welcome and of great value but where they have no natural incentive to go. I am interested in whether the United Kingdom has tried distribution policies that have had any success.
Mr. Shucksmith: I do not think there have been any explicit policies to try to achieve that. You have to think in terms of the different waves of migration that we have had. This is, I should emphasize, a politically contentious issue, especially between the political right wanting to stop migration into the U.K., others who tolerate it and others again who might encourage it.
Certainly the Black and ethnic minorities who have come in from many of the former Commonwealth countries tend to be concentrated in major metropolitan areas, particularly in London, Birmingham and some of the Yorkshire cities as well. There are very few coloured faces in rural England or Scotland. As you said, that may be because it is natural to go to areas where there are others with whom you identify. It is a general feature in migration to go where you know someone or have family to get started. The distribution of mosques and so on may also be a factor. There has been no particular policy to try to address that.
With the new wave of immigration from Eastern Europe and with the enlargement of the European Union, immigration has been more widespread. The agricultural industry in many areas relies upon the migrant workforce and could not survive without it. Studies have been conducted on the experiences and difficulties of host communities trying to accommodate migrants. Those difficulties include, for example, how to ensure that migrants understand that they can go to the doctor for free and that they can get assistance in their own language.
Scotland is the only part of the U.K. I know that had a particular policy to try to attract such people. I do not think it was an explicit policy, but the government was very clever. First, they had an anti-racism campaign through television advertisements. Then, once everyone had become accustomed to the idea that they should not be racist, a campaign followed about how migrants or more population was needed. Following that, the solution was presented to attract Eastern European migrants. The ground was prepared.
However, I do not know of any particular incentives in any part of the U.K.
Senator Segal: I think in the Swiss case, there was a transition from guest worker to temporary resident to permanent resident. Has there been any focus in the U.K. on the guest worker per se and their transition or has the U.K. not depended upon guest worker intake to the extent other European countries have?
Mr. Shucksmith: No. That in fact may be coming in the future. However, we signed up to allow free movement of workers within the European Union. Along with Ireland, we were the only ones who did not try to impose controls.
Anyone from other EU countries can come into the U.K., find a job and access state benefits, free medical care and everything else we offer. In the last two or three weeks, the government has proposed a probationary period. I am not sure of the details because I have not had a chance to look at it, but I think it would be a five-year probationary period during which you might have some rights and at the end of which you would be granted full rights.
Senator Segal: We have a robust agricultural guest worker program in Canada. We have a relatively large influx of workers from our Commonwealth Caribbean brothers and sisters and from parts of Central America to work in our tender fruit, tobacco and other sectors in Southern Ontario. They get health care and other provisions while they are here. However, I am unaware of any effort to have those migrant workers become permanent residents, although their work is necessary for the viability of some farming operations.
Senator Mahovlich: Within the European Union, is there an exodus of people from the U.K. to the southern part of Europe, where the climate is more suitable? Do people from the U.K. purchase properties there?
Mr. Shucksmith: Yes indeed. It is almost like the pattern I was describing earlier but in reverse. There are particular areas where the English concentrate in Spain on the Costa del Sol, in the Dordogne region of France and similar places. This has been facilitated in recent years not only by being a member of the European Union but also by the development of low-cost airlines like Ryanair and easyJet making it cheap to travel between the two. A significant number of people have a second home in those places and spend the whole winter there; as well, there are expatriate communities that move there permanently.
Senator Mahovlich: We have the problem in Canada of the exodus of people who go to Florida during the winter season.
The Chair: Thank you, Mr. Shucksmith. Listening to what you have to say is beneficial, because from the necessity of history, the U.K. is far beyond where we are. Things have certainly changed or we would not be having these hearings. They have taken on a life of their own in recent years. It is evident in our vast country as we find out that what we thought was there is not there anymore.
Mr. Shucksmith: Thank you. If you have anymore questions as a result of what you have read, please contact me and I will do my best to respond.
The Chair: We will indeed. Thank you very much.
Senators, next on today's agenda is Bill C-44, to amend the Agricultural Marketing Programs Act. We all know that the livestock industry has been struggling for some time, facing high feed costs and plummeting cattle and hog prices. This committee studied the issue last fall, tabled a report and included recommendations to help producers.
Bill C-44 is part of the government's response to the current crisis. We are very pleased, minister, to have you take time. I know you are in a hurry, so I will ask my colleagues to be as quick as possible in their questions so that we can get the full value of having you here, along with your colleagues.
In addition to Minister Ritz, we have Ms. Susie Miller, Director General, Food Value Chain Bureau, and Ms. Jody Aylard, Director General, Finance and Renewal Programs Directorate.
Welcome to our committee. All of us are very glad to have this piece of legislation.
Hon. Gerry Ritz, P.C., M.P., Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board: It is a pleasure to be back this morning to sit with you. I have a half hour on my schedule. I have the Prime Minister waiting after that, so if I am late, I will blame it on you.
I hope to impart some wisdom today and take my cold with me. There is a certain sense of urgency with this piece of legislation. As you know, we did pass it through the House at all stages on Monday. We are hopeful that we can move it through the Senate and have Royal Assent by the weekend. That will allow us to get the bills before Treasury Board so that we can flow this money to the livestock sector as soon in March as possible.
There is a deck in front of you. I will not go through it page by page unless you want me to. I am sure you have studied it. I thank you for the work you did last fall and the report you submitted. It was helpful in coming forward with this particular initiative.
The livestock sector told us two things when we started working on the situation late in the fall and early winter, as we got closer to this. They told us to work within existing programs and to keep the chance of countervail as slight as possible. That is the genesis of working through existing programs.
We have done that and hit the medium here that will give us the best bang for our buck. As far as dollars go, in a crisis of this magnitude, from a government perspective, it is not a lot of money. In total, we will be asking Treasury Board for less than $200 million — $144 million to cover off the changes to the Agricultural Marketing Programs Act legislation that you see before you, which allows us to call this a disaster and to change the disaster funding from a base of $25,000 per entity to $400,000, with the first $100,000 being interest-free. That is a huge change.
It also allows us to take second security to the financial and lending institutions out there, which keeps them happy. In prior submissions, as soon as we supplant the lending institutions, they become antsy and start to call in their notes, which makes the work we do null and void. This legislation allows us to take second chair, to take the second half of the inventory, and the lending institutions are quite happy with this. They are working with us hand in hand to maintain the industry as much as we can.
Those are the two major changes to the Agricultural Marketing Programs Act. It does allow me, as the Minister of Agriculture, along with the Minister of Finance, to make a call on an industry that is hitting this type of a crisis and put such legislation in place at that time as well. There is a three-year opportunity to do that.
That is the gist of the bill. As I said, it is not a large money ask — $144 million for the changes to the Agricultural Marketing Programs Act. We know the default rate will be higher because of the crisis. We also know the interest-free portion of the $100,000 has to be covered. That is what the $144 million seeks to do.
I am joined by Ms. Miller who will head up the cull sow program. That is a $50-million ask, which will be administered by the Canadian Pork Council. We think they can do that in a more expeditious way than we can. The money will flow to them in a trust arrangement and they will administer it.
The program has some retroactivity built into it, back to November 1 of last fall, when the crisis started to deepen and people saw themselves getting out of the industry. They dropped some hogs on the market. This will not see those cull sow hogs go into the feed chain at all. That would be countervailable. This will see them, at best, become dog food and be done away with in that way.
There is a value of $225 per sow attached to the program. If they received $100 last fall in marketing, that will be deducted from the $225 and they will retain the balance, so that each one will be brought up to that $225 figure. That is the genesis of the legislation. I would welcome any questions from the senators at this point.
Senator St. Germain: My question relates more to what we can do down the road, without interfering in the free market process, to get the returns to the producers up. The spread from what the consumer is paying for the product just does not make sense.
I know that entering into the free market process is dangerous and, for a lot of us, not politically acceptable management. However, with the cost of feed commodities going the way they are and with the pressure coming from biodiesel and ethanol and other factors, we have a serious problem. Is the government doing anything to try to reflect a better return for the producer? Is the problem compounded by the fact that there are so few processers?
Mr. Ritz: I wish we had a couple of days to discuss that. It is one of those enigmas wrapped in a conundrum.
The biggest problem we have in this country is that the food wholesale-retail sector is no longer Canadian. The vast majority of it is controlled by outside interests. Where they buy their product is not limited to the Canadian marketplace. They will import from all over the world.
Also, the consumer is demanding more and more products from around the globe. I know there are many initiatives. I was in your neck of the woods a couple of weeks ago, and they talked about the 100-mile diet, where you should shop and eat only what is grown within 100 miles. That is great around Abbottsford; it is a diverse area and there are a lot of things you can have, but it is impossible to get a good cup of coffee.
Consumers demand fresh pineapple, which we do not grow. You could list a myriad of things. There are some 10,000 importers of food stuffs in this country, which makes it difficult to curtail that.
The biggest change that the livestock sector has had foisted upon it is the rise in the Canadian dollar. I do not know how a government would drive that dollar back down to offset that. It is not feasible in world economics.
The best we can do is to keep our economic fundamentals right and get the taxes and the regulatory burdens down. We are addressing that in a separate initiative through the Canadian Food Inspection Agency, under my watch, to address the high cost of the regulatory and paper burden that we put on our livestock and processing sector.
We are in the final stages of looking at a comparison with the U.S. Department of Agriculture. In the process, we will make it available to the livestock sector to look at whether we hit all the items that we should have.
On the feedstock side, you mentioned biofuels and biodiesel. I personally do not buy into that yet. We are not producing enough product to make a difference on the Canadian market. The difference has been the American initiative, where all of their corn — every bushel — is going into ethanol. That has taken some of that cheaper corn that was sneaking across the border into our feedlots out of play. It also has driven up the cost of fertilizer because the Americans buy every gram of fertilizer that we produce, and it is making it tough for our guys to compete.
Having said that, I have seen studies from the Canadian Cattlemen's Association that show that the cost of a finished steer in Nebraska is $90 cheaper than in Canada because they have access to distillers grain. You cannot argue that biofuels will destroy the industry and, at the same time, say that it is cheaper to feed a steer in Nebraska because of biofuels.
It is cheaper in Nebraska than it is here because we are behind the curve. We did not get on the bandwagon five or six years ago, although we talked about it, but now we are catching up. Some tests are being done on distillers grain. Can we mix larger percentages into feed grains to bring those prices down?
I have pressed the Canadian Food Inspection Agency to register low-phytate barley, and they did so last year. For a number of years there was an argument to not allow that as a feedstock because it is considered a novel trade variety. That is out of the way now and the barley will be accessible to farmers this spring. Of course, we need a lot more barley in the ground this year in Western Canada. If we can and do move ahead with our barley marketing freedom, a ton more barley will go into the ground, which will start to feed the livestock market. Getting rid of the kernel visual distinguishability, KVD, out west will allow us to bring in new feedstock varieties, such as winter wheat, spring wheat and soft wheat, that will yield 70 to 80 bushels per acre on dry ground. Those are being developed at the University of Saskatchewan in Saskatoon and shipped into Montana and the Dakotas, because we cannot do it in Western Canada with KVD in place. Those are a few of the initiatives.
Senator Segal: Could you describe what will happen when this passes? What could I do to make my life easier when this bill is passed, perhaps this week, signed into law by the Governor General, if I were a hog producer in financial difficulty? How would a hog producer use the provisions in this bill, given the value of the dollar, input costs, energy costs and market access, to make his operation viable and sustainable?
Mr. Ritz: It would depend on whether we are talking about a sow breeder barn or a finishing barn. If a sow breeder barn sold some sows after November 1, 2007, for $60 to $70 per animal instead of the $225 that we are offering now, the producer will receive a top-up payment. He has only to show us the market receipts from the Canadian Pork Council and he will receive a top-up up to that $50-million figure. We are targeting 10 per cent of the sow herd. We have too many sows producing too many healthy piglets. Our genetics are such that we are over-producing, although I am not sure what the percentage is, and that is driving the market price down. It is a matter of addressing the number of sows that are producing.
Under this program, a finishing barn will have the cash flow and therefore the liquidity to hang on until the market cycle rights itself. Even short-term — next cycle — they are showing an increase of $20 to $30 per hog. That will begin to help us get back on top of the situation. It will give us time to address the feedstock hogs. The bill sends a signal that there is a future in the industry. Anybody who is serious about staying in the industry will have the tools to make the financial sector back up a little bit.
Certainly, on a case-by-case basis the odd farm will not be salvageable because their problems are so deep that this will not dig them out. However, the vast majority of people who see a strong, viable future in the industry will remain and will continue to produce the top-quality pigs that we have in Canada.
Senator Peterson: We all agree that the legislation is required and that the timing is critical. However, even with all our best intentions, I question whether we will get this done in time. Will this legislation be bankable for a producer?
Mr. Ritz: Absolutely. That was the whole point of the work we did with the Canadian Pork Council and the Canadian Cattlemen's Association. We pledged two years ago in our initial foray into government to eliminate the Canadian Agricultural Income Stabilization, CAIS, program. It is not bankable or predictable and it does not work. We have addressed that with the new Business Management Risk Suite of four programs: AgriInvest, AgriRecovery, AgriStability and AgriInsurance. Those programs will give producers a more bankable and predictable cash flow situation if and when there is a problem.
I welcomed your comments when the bill was introduced. Regarding the urgency of the situation, I completely agree with you. I would say the ball is in your court. You have the ability now to push the bill through as expeditiously as possible. It has gone through the House of Commons. I would certainly welcome the chance for the Canadian Pork Council and the Canadian Cattlemen's Association to tell you how urgent it is. I would love to see this have Royal Assent tomorrow, if at all possible. Then we could get the Treasury Board submissions, which are already written and set to go. We are ready to move ahead.
Senator Peterson: The financial institutions have bought into this.
Mr. Ritz: Yes, they have.
Senator Callbeck: When can producers expect to get any results from this?
Mr. Ritz: We are saying that we can roll it out in March. It is the Treasury Board submission, and you are familiar with that process.
Senator Callbeck: You say that this program can be rolled out in March and that the producers will be able to take advantage of it in March.
Mr. Ritz: Yes.
Senator Callbeck: That is great. When your parliamentary secretary spoke to this bill in the House of Commons when it was introduced, he said, I am told, that more assistance will be available to producers through the interim payments and the targeted advances under the AgriStability program. You have heard the concerns expressed by the Cattlemen's Association of Canada and by the Canadian Pork Council about this program. I am told that producers are still waiting for payment under that program going back to 2006 and 2007.
Mr. Ritz: Yes.
Senator Callbeck: Are you planning to speed up that program so that it can be delivered more quickly to the producers who need it right now?
Mr. Ritz: That is part of what we have done, senator. We have targeted advances even on the 2008 program. Our computer program and modelling will tell us roughly 50 per cent of what a producer will have access to. We have expedited those programs as fast as we can. We are dragging the anchor of the last two years of the CAIS program.
The problem the livestock industry was facing was that in taking a cash advance on 2007, it was scooped as soon as their final 2006 payment came out. That will no longer happen once this legislation is in place. That is the reason for doing this. The old program did not create the liquidity that farmers and producers required. That is why changes to the Agricultural Marketing Programs Act are needed — to give us the flexibility to give them the liquidity to move forward — and that is the urgency.
Senator Mahovlich: This committee visited a few hog farms, and some of those farmers have given up on their hog farms. What percentage of Canada's hog farmers have backed off and gone into something else? One farmer has gone into raising doves and he is guaranteed a price for them.
Mr. Ritz: Over what time frame? We had a meltdown in 1998 and another in 2003. How far back do you want to go?
Senator Mahovlich: Back to 2003 would be fine.
Mr. Ritz: In 2003, it was roughly 12 per cent, if I remember correctly. The percentage last year was 1.2.
Senator Mahovlich: With this bill, could we have saved those hog farmers?
Mr. Ritz: I am not sure that we could have saved them all. The average age of farmers is 61 years. For many it would not matter what kind of a program you have because many of them are looking toward retirement and not salvation. They are making those decisions. They are reading the market signals and adjusting accordingly. The problem was that our programs were distorting the figures and not allowing producers to make appropriate changes through proper market signal reads.
The Chair: Thank you, minister, for appearing this morning.
Mr. Ritz: It was a pleasure.
The Chair: It has made a lot of difference. We will get this done. I think we are as eager as you are to get this rolling. We will do our very best.
Jessica Richardson, Clerk of the Committee: Ms. Aylard, could you please stay in the room in case there are questions?
The Chair: Yes, there may be questions as we go through clause by clause.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-44, An Act to amend the Agricultural Marketing Programs Act?
Hon. Senators: Agreed.
The Chair: Thank you. Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 7 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 8 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Shall I report the bill as carried to the Senate?
Hon. Senators: Agreed. Immediately.
The Chair: Thank you very much, colleagues. This is a very important thing to get rolling, and we will get it done. Thank you very much, Ms. Aylard. I am sure you do not mind not getting any questions.
The committee adjourned.