Canada's Farm Crisis

Statement by Hon. David Kilgour

MP for Edmonton Mill Woods - Beaumont

House of Commons, Ottawa

March 8, 2005

Madam Speaker, in this emergency debate I must, as an Alberta MP, add to what so many have said tonight. It is very unfortunate that the district court in Montana has succumbed to protectionist pressure. As my colleague has said, we should salute the Bush administration for appealing the decision.

The injunction comes despite the fact that the United States department of agriculture has said that Canadian beef is perfectly good and safe to eat. OISE has said it internationally. The United States Department of Agriculture ruling that Canada is a minimal risk region was further reinforced, as members will recall, when the USDA technical team came to Canada to assess the risk in January this year. The team found that Canada's inspection program was robust and found compliance with Canada's feed ban regulations to be effectively curbing the risk of BSE.

The continued imposition of this scientifically unwarranted ban is a further blow to an industry that is only just beginning to recover from the fallout of the initial border closure.

The continued closure of the border reinforces the need for us to take immediate action. It has become quite obvious that the “wait and see” approach which has currently been adopted will not save our beef industry. We cannot be content to sit around and wait while the USDA is caught up in legal wrangling to try to get the border open. Even though the USDA supports a science based approach and is pushing to get the border open, this will not help the thousands of producers who are in dire need of immediate assistance.

Thousands of producers are slowly bleeding to death as they incur costs on cattle that they cannot sell at current prices. Since the crisis began in March 2003, it has become clear that increasing domestic processing capacity is of absolute importance in order to cushion the beef industry against further system shocks. Yet here we are in the same situation again and there has been precious little, if any, processing capacity added. Clearly, the loan loss program, which has been referred to by members opposite, has done nothing to decrease our dependence on American processors. Not a red cent has been advanced under this program.

We must all acknowledge that the loan loss reserve is an inadequate solution. It is abundantly clear now that the lenders will only lend to projects that meet their risk criteria in the first place. In other words, the processing plants that receive loans would have received them regardless of whether there was a loan loss program in place.

Financing processing plants in light of all the unknown variables and the tight operating margins that characterize these operations constitute a level of risk with which lenders have clearly demonstrated they are reluctant to contend with.

We all agree that increasing domestic processing capacity is of paramount importance. I believe this, therefore, leaves us with only one option. The Government of Canada must make direct financial assistance in the form of grants and loans, available for processing plants. My colleagues from the agriculture committee on the opposite side know that the two plants in Alberta were helped mightily to get going by the Government of Alberta way back.

We have paid a high price for our dependence on our neighbor to the south and we can no longer afford not to be self-sufficient in terms of processing capacity.

Although budget 2005 addresses some of the issues facing farmers by committing to eliminate the CAIS deposit requirements and providing $73 million this year and a total of $104 million over four years for agricultural cash advances, much more needs to be done. The magnitude of the crisis facing farmers today demands far more assistance than has been offered in the budget.

I do not know if members knew this, but Agriculture Canada was already predicting a drop in national net farm income this year of 34%, making it one of the worst year's on record. The farm economy in Saskatchewan alone will be experiencing its third consecutive year of losses, putting the total loss over the last three years for Saskatchewan producers at a staggering $900 million. That is unimaginable to me. What is even more alarming is that the farm income predictions for this year were made under the assumptions that the border would open to Canadian cattle and the Canadian dollar would remain in the eighty cent area. Clearly, neither of these assumptions is valid and so the decline in farm income this year promises to be disastrous if further support is not provided to our farmers immediately.

The Government of Canada needs to do much more to help our producers get back on their feet before our wealth of agricultural expertise is lost as more and more people pull out of the industry or are forced out by bankruptcy.

A friend of mine, a three generation ranch farm, went into bankruptcy recently near Ponoka, Alberta. He has kids under 10, and his brothers are in difficulty. The whole community has been affected by the bankruptcy. To me it is an absolute tragedy that his financial institution could not have helped him get through this.

We have to support producers in this time of crisis so they can continue to leverage their competitive advantage in the production of capital intensive agriculture commodities and thus benefit from the continuing liberalization of global agricultural trade.

The competitive advantage of our producers is undeniable, especially when one considers that Canadians spend about 10.6% of their disposable income on food. The removal of trade barriers in global agricultural trade should be a boon for Canadian farmers and the Canadian economy, but this will only happen if we provide farmers with the support they need to get through the current crisis.

If this is not an emergency, then I do not know what is. I see no better time than now to take some of the $3 billion that has been earmarked for emergency situations and use it to alleviate the enormous crisis that farm families across the country are facing.

We can no longer stand by while an industry that provides the very nourishment that keeps us alive, an industry that makes up 8% of our economy and an industry that provides jobs for one in eight Canadians continues to be caught in a seemingly perpetual state of crisis. The time for action is now, and we must simply put a lot more money behind our farmers.