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AGRICULTURE
Mr. Chairperson (Marcel Laurendeau): Good afternoon. Would the
Committee of Supply come to order, please. This section of the Committee of
Supply has been dealing with Estimates of the Department of Agriculture. Would
the minister's staff please enter the Chamber at this time.
We are on Resolution 3.3 Manitoba Agricultural Credit Corporation, Administration $3,086,100.
Hon. Harry Enns (Minister of Agriculture): Allow me just a few introductions. We have joining our deputy minister the chief executive officer and general manager, Gill Shaw; Karen McEachen, director of Finance and Administration; and Ms. Charlene Kibbins, director of Program Development. I want to just briefly indicate to members of the committee that it has been and is a busy year for the corporation with activities virtually running full steam in all the programs that they deliver, including the traditional loan portfolios that they afford and offer to Manitobans.
In addition, of course, there are some of the specialty programs, particularly those in livestock, that are becoming more and more part of the corporation's business venue. I will acknowledge prior to the honourable member for Swan River (Ms. Wowchuk), as my critic, to say that when dealing in the business the corporation is in, we do take risks, and we do have and suffer some losses from time to time. No doubt the honourable member will want to raise some of those issues.
In consideration of the size of the portfolio, just in short discussion with Mr. Shaw this morning, we are probably loaning out monies to the extent of some $40 million in the year. Is that not close, within the ballpark? The incidents of loss or failures is extremely small and low and certainly well within the acceptable range of financial institutions, be they private or government.
So, with those few comments, I invite the honourable member's scrutiny of this division of the Department of Agriculture.
Ms. Rosann Wowchuk (Swan River): I want to tell the minister that as I talk to farmers across the province about the Agricultural Credit Corporation, that most of the producers I have talked to have been very happy with the service that they have gotten from this department. There will always be those people when they get into difficulties who will have problems and, of course, there will have to be somebody to blame for the problems and in those times the corporation does come under criticism. When I have talked to people who are using the service, they have been happy with the service. Occasionally, there is a comment that it takes a while to get loans processed.
I guess there are a few general questions that I would like if I could have explanation on, one of them being: How would the minister describe the change in the direction of the corporation's lending? For example, one area that I want to ask about is, there used to be a long term lending program where farmers could borrow money over a long period of time. Has there been a change in policy in that area, and are there still long-term loans available, or has that policy of the corporation changed?
Mr. Enns: Mr. Chairman, no, there has been no basic or fundamental change to what I would describe as the bulk of the loans activity of the corporation. The long-term loans are still made available to farmers in the province of Manitoba. We still offer some encouragement to the young farmer who does business with the corporation in the form of a 2 percent reduction from the normal lending rate of the corporation, which admittedly is less than the 4 percent it was several years ago, but nonetheless it still is of significance. When taken over the period of 10 years, I believe, of the loan--five years of the loan, it can be a significant amount.
The honourable member may recall several years ago we did make some adjustments as adjustments have been made from time to time. We have expanded the limits of the loans. We have expanded such considerations as off-farm income in the past. We are not doing it now; this was done several years ago. We recognize that, in different circumstances, individuals, particularly young start-up farmers, have to have off-farm income to get started in the farming business. So where there were previously fairly restrictive provisions in dollar amounts as to what would disqualify an applicant from successfully obtaining credit from the corporation, those have been raised.
There has been, I think as well, some new emphasis placed in some of the ancillary programs, like our guarantee program where the corporation has wrestled with some of its traditional mandate, which as our honourable member would be well aware, was fairly restrictive. You had to be a farmer. You had to qualify under the criteria of what the Income Tax Act calls a farmer to be able to do business with the corporation, or for the corporation to do business with somebody.
What of course is happening, and particularly in the livestock area and predominantly in pork production, we are finding the coming together of the association of two, three, or four, five parties that form a group, an entity, and the corporation has had to make adjustments to their traditional mandate to enable us to do business with them and provide the guarantee portion of the program that we announced two years ago under the diversification program.
Those minor adjustments have been made, but to answer the honourable member's question, the program that is being offered is essentially the same with these few changes that I have indicated.
Ms. Wowchuk: Mr. Chairman, the corporation, from time to time, ends up repossessing land and holding a fair amount of it. There was a lease-back policy where you could get long-term lease-backs until the farmer got on to his feet, but as I look at Orders-in-Council, I see many more pieces of property in the possession of MACC now being sold back. Is it a change of policy that farmers have to take back the land sooner instead of having the long-term lease program to land that they were farming but had to have repossessed? Has there been a change in policy in the length of time that they can lease it? Is there pressure on the farmers to purchase the land at a sooner rate than it used to be?
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Mr. Enns: Mr. Chairman, we are continuing to try to work with producers who, for whatever reasons, find themselves in difficulty. There are several support programs in place. The Farm Mediation Board works with the individual farmers who find themselves in difficult financial situations, will often work with MACC and/or with private lenders to bring about a situation that enables the producer to carry on with his farming venture.
I am advised by staff that we will, and we still continue that program that, if indeed foreclosure is called for, the person is still offered the opportunity of a lease-back, with the provisions, I might add, if certain conditions are met, that he can purchase that land at some point in time in the tenure of that lease. Some of the Orders-in-Council that the honourable member refers to that she sees are in fact short term or lessees of Manitoba agricultural land taking up the option to purchase the land. There is a procedure in place. There are independent appraisals of these lands that are made, and if the lessor wants to lease those lands, then those lands are offered up for sale.
I can indicate just for the record what has been happening, and I am pleased to report that the incidence of foreclosures is going in the right direction. For instance, in 1992-93 the corporation foreclosed on some 39 property owners, farmers, and that has steadily decreased. In '93-94 it was 26; in '94-95, there were 20 foreclosures; had a little blurp in '95-96, some 21 foreclosures; and in '96-97 it is 15 foreclosures. So as serious as that always is to the individual farm family involved, the trend line is going the right way and the numbers are not great.
We are, further to her questions, actively as a corporation encouraging the sale, the purchase of these lands. For instance, we made a special provision--if I am not right, I am looking at my senior officers--that for instance in the manner, in the way the Crow benefit was paid back that in fact favoured the lessor to use those monies that kind of came unexpectedly from Ottawa to purchase his land.
Mr. Chairman, that accounts for some of the flurry or some of the additional flurry of land sales that occurred in the last part of this year, and we quite frankly, from our philosophical position, welcome that. While I have nothing but the greatest of respect for the general manager of the Agricultural Credit Corporation and his staff, I do not necessarily see them as being the largest landholders in the province of Manitoba. So I make no secret of the fact that we encourage the corporation to sell off the land that they do hold, and that has also happened. From the time that I came back into Agriculture in 1993, the corporation had title to very close to 100,000, 112,000 acres of land. That has steadily progressed. Last year the actual figures show that the corporation still had some 66,461 acres of land that were valued at some $12.6 million under their title. This year that has been further reduced to 46,888 acres or $8-million worth of land.
So the hope is, quite frankly, that the Manitoba Agricultural Corporation does what it does best--help with providing agricultural credit, particularly to our start-up farmers or some of the farmers that are having difficulty in getting a line of credit from the traditional private sector, you know, credit lending agencies. They come to us and hopefully we can help them, but I do not see them as a vehicle to garner more and more title of agricultural land and, in effect, create more and more tenants of our Manitoba farmers. I hold the view that a farmer and a farm family put their best efforts into the stewardship, husbanding of the land resources. If they have a full and direct interest that can only be gained when they own the land.
Ms. Wowchuk: Mr. Chairman, many times there are farm families who get into situations where they are not able to own the land and it does end up with a bank, and in this case with Manitoba Credit Corporation. What I was wanting to know from the minister is: What kind of pressure is put on farmers to purchase the land? Is the length of time lessened? If they have had a foreclosure, can they lease the land for five or 10 years or four years or is pressure put on them after a few years that they have to buy the land or it is sold to a neighbour or someone else who has an interest in it? Because, if that is what is happening, that indeed is not helping the farmers who face difficulty. I understand that there are occasions when that is what happens, that the length of time that they are able to lease the property has shortened and pressure is put on families to purchase this land or else let it go to someone else.
Mr. Enns: Mr. Chairman, the staff advises me that they have an opportunity to lease the land for a five-year period, and during that five-year period they have an opportunity to make arrangements to purchase it, if that is their will. They have a further opportunity to extend that five years by another three years to eight years, but during that last three years they have to be making arrangements to in fact purchase the land, begin some payments with respect to the purchasing of the land.
So, Mr. Chairman, yes, I suppose that could be described as some form of inducement or pressure, if you like. That can be viewed either way though. If the tenant is not happy with those terms, then there are, of course, numerous other opportunities for renting of farmland. We have a number of producers, particularly as the member is aware of, with some of the changes in farmlands ownership where we have people not necessarily farming the land, but renting out portions of the land. But the policy direction is to ownership.
Ms. Wowchuk: So is it that change in policy direction that has resulted in the lowering of the number of acres that are under the ownership of MACC? You have seen a reduction of over 50 percent since 1993 in the amount of land that is owned. Is it this policy that is a result of this? If it is the policy that has resulted in this, I would have to say to the minister that in cases where I have talked to people about this one, this policy has put tremendous pressure on people. Many times young families have land that their families have farmed for long periods of time, but because of financial difficulties they have had to let the land go. They still want to be operating that land and make a living and be active members of the community, but the pressure that has been put on them because of this change of policy has created difficulties for a lot of people and problems within communities where a family may have been operating the land for some time but, of course, the neighbour is interested in it as well. It goes up for sale and does put tremendous amount of pressure on families.
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Mr. Enns: Mr. Chairman, I stand to be corrected. I was not totally correct in my previous answer. The corporation does continue to provide long-term leases to those who choose to work under them, leases that run to the age of 65, and at which time they are then given preferential status to transfer that lease to a family member, if it can be established, to maintain continuity of family farming. We have 34 such long-term leases, not to be confused with what I was talking about earlier, the short-term, five-year lease. The short-term, five-year lease is a design to bring about, within the five years or extended perhaps to eight years, a resolution to the ownership question of that land. The party has within those eight years, if you like, time--and is in fact in a favoured position--to purchase that land. Very often this is the kind of situation where there has been a difficulty of foreclosure, something that has been arranged with the Mediation Board and so forth.
So there are, in fact, two types of lease programs that are being offered by the corporation. One is the long-term lease of which there are 34 involving some 13,646 acres, and we have currently on the books some 88 of the shorter term, five-year leases involving some 28,785 acres. So I would have to say, to answer the honourable member for Swan River (Ms. Wowchuk) more correctly, that there has really not been any great change in these policies.
What has happened, and that has happened not so much by any direction coming from the corporation or ourselves, is that there has been, obviously, a willingness on the part of more of the tenants to purchase their land. They have been given assistance with the payouts of the Crow benefit coming to them; a number of them took advantage of that. I would like to think that even just a somewhat healthier scene financially and some of the commodity prices have helped that along, and that explains the downward revision of the land controlled by the corporation.
Ms. Wowchuk: Is it not true, though, that a person cannot sign a long-term lease now? The long-term leases were from years gone by. The policy of this government at the present time is that the corporation right now is not to sign long-term leases. Anyone who has to lease their land has to do it for five or eight years, and if they cannot manage to purchase it, then it does go up for sale. This does indeed put pressure on those producers. So I would ask the minister: when was the last time a long-term lease was signed?
Mr. Enns: Mr. Chairperson, that probably would date to that period of enlightenment when the good people of Manitoba chose to vote for a Conservative government. There was a sudden change in philosophy, and I come by it honestly. I saw that tenant farming or collective farming in that great and beautiful country which I still fondly call my homeland, the Ukraine in southern Russia, did not work, has not worked for 70 years. My friends opposite have not quite cottoned on to that.
There was a deliberate policy to encourage tenant farming under the New Democratic Party governments. In fact, I should not say this because they think that I am spying on them, but I actually got one of their resolution books from one of their earlier conventions in the early '70s that said that farmland should be treated as a public utility; the government should confiscate all Manitoba farmland for $1 an acre, and it should be run by the Department of Agriculture through organizations like the Manitoba Agricultural Credit Corporation. I can recall somebody who is now my friend--you know, this is what happens when you travel on the road to Damascus and you make a sudden conversion--it was none other than your friend, my friend Sam Uskiw, who was then the Minister of Agriculture, a very energetic Minister of Agriculture for the then government, who proposed some of those options in the House.
As I am free to acknowledge as a democrat, that government is free to carry out and one would hope they would carry out principles that they stand for. They actively pursued and they actively directed the corporation to offer the lease option program. It was during that tenure of the corporation's life that very significant acres of land came into the possession of the corporation.
That is just a bit of history that I put on the record for your benefit. You were blissfully unaware of all these things happening at that time in Manitoba politics, and it is not the time to berate or to talk about those policies in the past, but the minister has persisted in asking a question, is there a change of policy, is there a change of direction. And there has been and I, in my own little style, am explaining, yes, there has been a fundamental change of policy that reflects the policy of this government that does not see the credit corporation as being the holder of significant amounts of agricultural land. We believe very strongly that our farm community agriculture is best served by independent free-standing farm families living on their own land. The corporation offers a variety of programs to assist them to get to that goal.
Ms. Wowchuk: I am glad Mr. Enns indicated this change of policy and he gave us some background information about NDP convention books, and I bet if we look back at some Conservative convention books we would see in those books that we will never privatize Manitoba Telephone and we will never privatize Hydro. As in all convention books, we see some very good resolutions, and it is good for people to have broad ideas. It does not necessarily mean that these are adopted as policy, and the minister would look at his own party because I am sure there are some resolutions in their convention book, if they have resolutions at their convention. I am not sure that they do, but at our conventions we have a very open discussion, and people are allowed to bring their thoughts to the floor and very democratically we decide whether or not they should be policy or not. That is the way our conventions work, and that is how resolutions get into our books.
The minister talks about changing policy, and as a result of this change of policy I want to ask the minister--because I believe we should be all working for what is best to keep the people on the farm and I know that this change in policy that they have made has caused hardship for some families. I wonder whether the minister could indicate whether the corporation can give any indication of how many farmers who were leasing land but, because of this change of policy, were then forced to consider buying it, were put out of the business of farming.
Mr. Enns: Mr. Chairman, staff advises me that there has been no such circumstance, certainly not one created by the corporation, that would put a long-term lessee in that position--[interjection] No, I am answering her question correctly. She is asking, because of the change of policy, how many people have been impacted by that. We have grandfathered, we have honoured all the long-term lessees that were signed in previous times.
What has happened is, and that accounts for the, admittedly, fairly dramatically change in acreage, that it has been attractive for people to buy the land, and it has been pointed out to me by my director that one of the reasons, of course, is the attractive interest rates that we currently enjoy. Now is a good time. Just as it is a good time for our city cousins to buy homes and things like that, it is a good time to take out a mortgage at these kinds of interest rates, you know, particularly when we have come through a cycle where we have seen double digits, 17, 18, 19, 20 percent interest rates. That is what drove not just farmers, that is what drove small businesses, that is what drove a lot of people off their land, out of their businesses and off the farms.
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So what we have done here is we have grandfathered all those people that had long-term leases, and I just repeat what I said a little while ago. We cannot, and we are not forcing any change on them. We are not putting any pressure on them to buy the land. They can lease that land as the original terms of the lease provided. They have that land until age 65 and then they can transfer it, still in lease--they do not have to sell it--transfer it to a family member. So I think that you cannot point to a single incident, we cannot point to a single incident, where this changed policy, which I acknowledge, has resulted in a long-term lessee facing the option either buy the land or I lose the land. That has not been the case.
Ms. Wowchuk: Mr. Chairman, either I did not state myself clearly or the minister did not understand my question. I was talking about the new policy that requires a person to, after five or eight years, purchase the land. I am looking at that one. I recognize that is much more attractive to purchase land now when interest rates are lower, and I am very pleased for people who can purchase the land.
What I am asking about is, you have had a change of policy that says you can lease this land for five years and get an extension for eight years, but there are still situations where those people cannot buy that land. What I am asking for is, does the corporation have any tracking on how many producers there are, how many farm families, who were forced into a situation where they had to let their land go due to foreclosure, then were in the situation where the land could only be leased for a short term? Has that resulted in people having to go out of business and let their farm operations go?
Mr. Enns: Well, Mr. Chairman, let us understand that the current policy is that we are not entering into any lease program with any people that we do business with. People come to the corporation to purchase, and we provide the credit under the terms that are available to them under the various programs that we offer.
The five-year lease, the short-term lease is really restricted only to those who have run into financial difficulty, and, in my judgment, they are then treated in a pretty generous way, with the emphasis being on giving them every opportunity, with the help of the Meditation--I cannot say those big words--Mediation Board to try to help that family stay on the farm. They intervene with the credit corporation. They will intervene with implement dealers like Mr. Tweed there, and they will intervene with the car dealers, they will intervene with the credit union or the banks, wherever they have credit problems, to try to work out a resolution to help them stay on the farm, during which time they have the opportunity to lease this land for a five-year period with the possibility extended for another three years to an eight-year period.
Quite frankly, Mr. Chairman, if the farmer, the farm family, cannot get themselves out of their difficulties in an eight-year period, it then really begs the question of whether they can.
(Mr. Mervin Tweed, Acting Chairperson, in the Chair)
I am very hesitant to be seen to be harsh on any individual farm family who runs into difficulties. There is enough high risk in agriculture for me to have every empathy and understanding of how regrettably, how easily that can happen from time to time, but nonetheless there has to be a level of individual responsibility in terms of their own farm management. We believe that the program that offers them an eight-year period, in effect, to come out of their difficulty and to get themselves back on course is a reasonable one and one that I am quite pleased to defend.
Ms. Wowchuk: Mr. Chairman, can the minister indicate whether there are ever exceptions made? If the corporation sees that, yes, eight years has gone by and this family is starting to get themselves on the road but still cannot quite see their way to making the move to purchase the property, are exceptions ever made and consideration given to have an extension on this?
Mr. Enns: Mr. Chairman, staff advises me that they have not had incidents like that reported to them. If she is asking me or is aware of a personal situation or one particular farm family that she is talking to us about, I would certainly welcome her to talk directly to the senior management of the corporation or make my office aware of it. Rules are rules, and rules are meant to be abided by, but the effort certainly is there, the effort certainly within the corporation and certainly from within the Department of Agriculture to walk a long, extra mile to try to ensure that a family can stay on their farm. I am sure that is the kind of understanding, you know, consideration that any party would receive.
Ms. Wowchuk: Mr. Chairman, there are several loan programs that fall under this corporation, and I would like to talk specifically about a couple of them and if the minister can tell us what has been happening with them. The first one I would like to talk about is the Guaranteed Feeder Association Loan Program. The program was started several years ago and, as I understand it, it is a loan guarantee program. Can the minister indicate what has been happening with that program? Can the minister indicate the number of feeder associations that have been established under the program, how successful it has been and whether any of them have run into difficulties?
Mr. Enns: Yes, we have a program that is specifically directed to the feeder business. I can report to the House that we have a program that provides for a borrowing cap of a participating member of $125,000 and an association of $5 million. So it is a significant program. We have some 13 such feeder co-op associations in the province, and they will vary in size. Some are fairly significant, four, five, eight to 10 members within an association.
They have the ability then within these caps, 125,000 per member or five million for the entire association, to get into the feeding of cattle in a pretty serious manner. They are spread throughout the province, in Carman, in Komarno, in Deloraine, Ste. Rose, Ridgeville, Riverton, Hamiota, Sifton, Dugald, Killarney, Austin, Beausejour and in Neepawa, just to give the honourable member some indication of their distribution across the province. Currently the actual number of members involved in these 13 associations is 329. That gives the honourable member some indication of the number of people associated in these 13 associations. They have a credit limit of some $16 million, $16,394,000, and currently they have availed themselves of some $9.6 million of that available $16-million line of credit. Am I reading that correct? I am.
This is where the corporation will assist an association, often work with their local credit union or with their bank and who does the actual borrowing. But there is no question that with the guarantor role that the government plays, where we guarantee up to 25 percent of the loan--and that is a hard guarantee--if for some reason the association defaults, then the public purse, through the Manitoba Agricultural Credit Corporation, is committed to providing 25 percent of the outstanding loan. As I indicated to the honourable members of the committee at the outset that regrettably we have had several failures. They are of different magnitude.
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We have had some difficulty at Ste. Rose. It is not all that serious. It is a case where one member of the association did not abide by the rules if you like or cattle were sold that should have been sold within the association. It has been a further complication because he owed money to a major feed supplier, Cargill. Cargill has put a lien or a hold on the funds. I say it is not that serious because the dollars are there. It is a question where the association is arguing with Cargill as to who has first rights to it. They have asked the department, they have asked the Manitoba Agricultural Credit Corporation for legal advice, and we are providing it, or we expressed a willingness to provide it. We have of course an interest in it that we know precisely the position of the creditors, banks, the corporation, and where we stand in the event of a default. All other cases were covered by the association or an insurance fund. They do have an insurance fund as an association.
(Mr. Chairperson in the Chair)
I am not at all discouraged by the fact that we have had a bit of difficulty. We have had a more serious problem with the association located at Vita, where I regret to say that some outright fraud and criminal action seems to have taken place. But I want to be very careful because the member will understand, I think, that we are probably heading into the courts with this, and I would not want to put inappropriate comments on the record. But it is certainly a situation there where our guarantor role has been called. We have provided that to the credit union in Vita that was the financier. So we have made good our role in that thing and of course are supportive in trying to recapture as much of the outstanding funds that we can.
But, having said all of that, I want to reiterate that I am satisfied that there have been some steps taken relatively immediately by the corporation in reviewing the contract, the contract form that we signed. We have made some basic alterations to the contracts and that the corporation has acted with all due diligence under the circumstances. I do not want to have these one or two difficulties discourage us from continuing to aggressively offer this program to Manitoba cattle producers. It is extremely important for us that we do what we can within our resources, encourage the return of the feedlot industry, the feeding industry in Manitoba.
I often get criticized as I travel through the different parts of the province of Manitoba for overemphasizing pork and other parts of the livestock industry in the province, and what are we doing as a government, what are we doing as a department to enhance the opportunities for a return of some greater, more significant beef processing in the province of Manitoba. It is shocking really when you consider the facts. In 1972-73, we were processing over half a million, 560,000-odd carcasses of beef in the province of Manitoba and four or five major processing firms, Swift, Canada Packers, Burns, several fairly significant independent packers.
That compares to the 35,000, 36,000 carcasses that we process today. A great number of good value-added jobs were lost when we, in essence, lost the beef processing industry to Alberta, and, correctly so, it is pointed out to me that we are not doing enough to recapture some of that beef processing and bring it back to our province of Manitoba.
Mr. Chairman, the first thing we have to do is we have to start feeding out more of our animals, because with the processing industry also went our calves. We are too many, and I hold up my hand; I am guilty of it too. Too many of us livestock producers are shipping our calves out. I do not fault anybody. It is the buyers from Alberta or the East or the U.S. that are at our auction rings in the fall and bidding on our calves. The result is though that we are not feeding out enough of our own animals. If you accept the fact that the same economics that make pork production so attractive apply to beef, over the long haul, beef, the finishing, the fattening of beef cattle would be just as attractive in Manitoba, more attractive in Manitoba than in other parts of the country just as it is for pork production.
We should be doing more to encourage that. That is why I want to encourage the corporation. I quite frankly look for support from the honourable member for Swan River (Ms. Wowchuk). I even look for support from her colleague the honourable member for Wellington (Ms. Barrett). I need the support of the honourable member for Wellington--[interjection] She wounds me by disparaging me by telling me she will withhold her support from me. But I know that the honourable member for Swan River will, with her skill and tact, convince members of her caucus to support this worthy program.
Ms. Wowchuk: Mr. Chairman, I can assure the Minister of Agriculture that my honourable colleague for Wellington (Ms. Barrett) is more than willing to support any initiative that will see industry grow in rural Manitoba in a sustainable way, that will encourage families to stay in rural Manitoba.
Mr. Chairman, we were talking about the feeder association and how that program works. I was not being critical of the program as the minister may have taken. What I am looking for is clarification on how the program operates. I am not looking for specific details. I was asking generally about what was happening and whether the programs were successful. I am pleased to see that out of the 13, 11, I believe it is, are running very well. Of course, we have to look at ways that we can get the beef industry to grow in this province and get the secondary jobs from it as well as we do from the hog industry. Not everybody in this province is going to raise hogs. There are many people in Manitoba who want to raise livestock. It is a very important part of the economy. If we can get them to a second stage, it only helps the economy of the province, and through feeder associations, if that is one way to do it, then that is very good.
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As I said, I am not interested in specific cases. I am looking for general information on how the program works. The minister used the example of a person in Ste. Rose who had moved outside the rules; well, I would, rather than referring to the person who in Ste. Rose, take any of those feeder associations. If one person did not hold up his or her part of the bargain and were not able to fulfill their part of the loan, is the minister saying that the rest of the association is then responsible to pick up that tab, or is there a pool of--the minister talked about insurance. So, if one person defaults, is it the insurance that covers it? Is it the other producers that cover it, or is it the corporation that is on the hook as well for 25 percent?
Mr. Enns: Mr. Chairman, for your information, I am pleased to, just in a more general way, say that in the first instance I do not know how well this program is being advertised, if you like. I know that through our Ag rep offices and through our livestock specialists, the Animal Industry Branch and others that the information on this program is made available, but in essence it works fairly simply. A group of producers, four or five, half a dozen of them, can sit down together over a cup of coffee in somebody's kitchen and decide to call on somebody from our department to explain the program to them.
There is certainly a kind of a self-examination that goes on as to whom you want to associate with, because it is a form of a co-op. You associate with people obviously that you feel comfortable with, but you then avail yourself to the opportunity of collectively going to the source of credit, to a private bank or the credit union with the support of the Manitoba Agricultural Credit Corporation to source significant sums of money, $125,000 per member, $5 million as a cap over the overall association.
There are different assurances that the associations have within themselves that cover some of the types of losses that are normal to the cattle feeding industry, but the kind of situation that we found ourselves with in Ste. Rose, something like that, is really a more serious role in the sense that part of the conditions of the associations that the cattle are sold under the name of the association and the monies in fact all come back to the association and then are distributed to the appropriate proportion to what a member has a share in the association to that member.
What has happened and partly because of I suppose not quite the degree of self-direction, self-supervision to begin with, these associations normally form a small, little executive. They have a secretary who looks after their record keeping and their accounts, their books, but what happens is that if care is not taken in one case or if it is deliberately that association members--you have to remember, these animals are not necessarily centrally housed. They are housed at different farm operations that reflect the membership of the association. If one of those members then chooses to ship a truckload of cattle unbeknownst to the association under a private and separate sales arrangement, that is a serious fault on the part of that member and puts in jeopardy the association. The association is responsible to the lender.
While the individual members have signed their John Henry's and they are governed by the caps, it is the association that makes the loan for a million dollars or for $700,000 or for $2 million to the credit union, which we guarantee 25 percent of. So it is the association that is left owing the money. We have looked at the contracts a little more carefully. We have made some alterations and changes. We feel more confident that we have corrected some ambiguity in the language or some loopholes and hopefully that that will not happen again.
Ms. Wowchuk: Mr. Chairman, I do not know if the minister has answered my question or made it more difficult for what I am trying to get at.
Can the minister explain? You have two lines here. The minister is saying that each member of an association can borrow up to $125,000, and then he talked about $5 million. Is the $5 million made up of different people borrowing $125,000? There are not two lines. There is not $125,000 and then another $5 million on top. It is made up of association members borrowing the money. The minister is nodding his head yes. Okay then.
I am just trying to get clarification on how the program works. Is there a restriction to the number of members that can be in an association? I guess I am asking because, if there is a restriction, if I look at it at $125,000 to a million, so you are saying it would be a limit of about 15-16 members to an association. If there is a limit of 15-16 members to an association can--
Mr. Enns: Mr. Chairman, 15 or 16 is the minimum; 15 is the minimum, and it could be any number between 15 and up. The $5 million is, in effect, the cap on the size of the association. These 15 people have an individual cap of $125,000. Some members may buy 40,000 head worth of cattle or 30,000 or 80,000, but to keep some level of constraint on the overall program on the individual basis, that cap is on the individual's $125,000. For the association, it is $5 million which is made up of these same dollars, but, in effect, you can add up--if every member takes up the cap to the cap $125,000, then how many members can you have in an association?
Ms. Wowchuk: Mr. Chairman, to borrow $125,000 is a lot of money. I am wondering what kind of guidelines the association puts in place. I understand that there are some regulations that you cannot borrow it all the first year. So can the minister indicate what kind of scrutiny the corporation puts on people, whether there are checks done as to whether they are involved in the cattle industry before this, or how do you ensure that you are not lending the money to somebody who does not understand livestock? How quickly can the person who is borrowing the money get to the $125,000? Do they get that all at once, or is there some staging that is done to get the money?
Mr. Enns: Well, Mr. Chairman, there are a number of steps that ensure that we have the kind of responsible people with cattle background in these associations. They have to, first of all, be accepted by the association themselves. It would seem obvious, and the honourable member is well aware that you are not going to associate yourself with known people who are suspect in this case. There are some very specific restraints, but I think they are kind of proper ones. For members feeding for the first time, a person could have spent a better part of his lifetime in the cattle industry but has never fed out any cattle, so there are limitations therefore. For members feeding for the first time, there is a $50,000 limit. Members who are feeding for more than one year but less than three years, it is $75,000. So there are steps as we are trying to bring about experiences and create a comfort level of the individual and a confidence level for all in the association that we are doing it.
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Secondly, of course, because they are getting their capital from a bank or from a credit union, they then have to pass muster. They have to go through the credit checks that are normal for any application for somebody making a $50,000 or $70,000 or $100,000 loan. They have to satisfy those requirements. We provide the information. They also have to not be indebted, to be in good standing with the Manitoba Agricultural Credit Corporation, and we do, in fact, provide further kind of credit information to the association. That has been part of the challenge that we have to look at within the department, although it is the Manitoba Agricultural Credit Corporation that is on the hook--if you like--in terms of providing the financial guarantee.
It is the Department of Agriculture employee who works--a gentleman, I think it is Mr. McNabb--out of our Animal Industry Branch that spends a great deal of time, works with these associations, sits down with them, meets with them, provides technical advice, provides farm programming advice. It is my concern sometimes that those activities have to be more closely co-ordinated with Manitoba Agricultural Credit Corporation who, after all, are the ones who are called upon if something goes wrong. I am satisfied that those are working out reasonably well at this time.
So it is a combination of, first of all, gaining acceptance amongst themselves, the group; 16 or 15 people have to feel pretty good about themselves. All 15 have to be approved as creditworthy by the credit-granting agency. They have to have a good standing with the Manitoba Agricultural Credit Corporation. They have to then agree to work with--and I do not want to say--I think the word supervision may be a little heavy, but certainly our department's and Manitoba's Agricultural Credit Corporation's interest, because they have a financial liability involved. We keep pretty close contact with these associations, and, if anything, I will challenge them that that contact be even more closer and co-ordinated because we do not want to see failures in the system.
I see this as a good opportunity to be a kind of model, the return of the feedlot industry into Manitoba. We watch, some with concern, but I, with a great deal of enthusiasm, the kind of coming together of three, four, five, six people that will form together as a group to take advantage of the opportunities in pork, for instance. They do it for several reasons. They do it so that they can pool together the necessary capital to get involved in today's modern pork industry. They also do it because it brings different expertise to the organization. They also do it because it spreads the risk. All of these things could apply to a major feedlot operation.
Half a dozen of our farmers or 15 of these farmers could come together, use their numbers to access the bigger amounts of money that are involved in running a major feedlot. I would like to think that the 11 associations that we are talking about here that are working with Manitoba Agricultural Credit Corporation and the Department of Agriculture could provide and are providing a model for the return of the feeding industry to Manitoba.
Ms. Wowchuk: Mr. Chairman, the minister indicated that a number of farmers could get together and form an association. Is this program restricted to farmers or can other people come into the program? For example, if the Minister of Justice, maybe the member for Wellington, new people who were involved in agriculture wanted to be involved in a feeder association, could they take a loan out that would be guaranteed by the Manitoba Agricultural Credit Corporation or is it restricted to people who are actively involved in farming?
Mr. Enns: Yes. There are some specific rules about eligibility. As I already said, members cannot already have a separate MACC stocker or guaranteed operating loan account. Two-thirds of the members of an association must own or lease a farm in Manitoba and have facilities to feed cattle, so there is room for nonfarm people providing again of course that they can convince a banker or a credit union that they ought to be worthy of $50,000 or $60,000 or $80,000 worth of credit for a cattle operation. Maximum of one-third membership can be persons with no land holdings but who feed cattle in custom feedlot. Members are required to place in the association's assurance fund 5 percent of the value of cattle purchased under the feeder agreement.
The member asked before about the responsibility about the payout. The first assets of course are the cattle themselves; then you have this assurance fund that the association provides; then we are fourth on the list or something like that. [interjection] Then the individual assurance funds, and at the end of the day, the fourth, the call is on the public purse to provide the 25 percent guarantee.
Ms. Wowchuk: The minister said that the corporation provides a hard guarantee for 25 percent and, if the association goes broke, that is when the corporation kicks in their funds to pick up the costs. That is not just money given away. If the association goes broke and the corporation does have to put in 25 percent, the MACC does try to recover that 25 percent. That is not a clear giveaway. I would like the minister to clarify that, because that seems to be the impression that some people have, that the government is guaranteeing a loan and, if there is going to be a loss, that it is going to be the government's loss. In actual fact the government is going to try to recover that money? Is that accurate to say?
Mr. Enns: It should be kept in mind that this is a guarantee made in the first instance to the lender, to the credit union, to the bank. We do that so that they will make their capital more readily accessible to the feeder association. When a loan is defaulted on we then have some 90 days and a claim is made. The claim will come from the lender, from the bank or the credit union and will notify Manitoba Agricultural Credit Corporation that they have a loan that is in default. We then have 90 days to do whatever can be done to try to correct the situation but, in the final analysis, after 90 days we have to honour our guarantee. We pay the lender out our full extent of the liability that we have undertaken. Then the lender--I do not know the word that is used--enables us, then we will continue to try to pursue the parties who are owing the money to do anything that we can to lessen the impact and the extent of monies that we are actually out of pocket.
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Ms. Wowchuk: When we look at the annual report of MACC and we see guaranteed loan activities and in 1995-96 we see some $45 million, that is the amount that is guaranteed. Can the minister give an indication under these loan-guaranteed programs, or is there a number that has actually been spent? Or would that would only show up when you have had to pay out on somebody that has defaulted in one of these programs? That is not the amount that has been spent, that is the amount that has been guaranteed, so what has been the cost to the corporation for these programs? When we look at the budget for MACC, what kind of money do you set aside each year for the operation of these guaranteed loan programs?
Mr. Enns: That was a question that I was hoping she would not ask. While I am waiting for the answer, I had the great pleasure of watching Gilbert and Sullivan's "Mikado" last night at the Pantages Theatre. What wonderful words of advice there were for our Minister of Justice (Mr. Toews), when I heard the Mikado talk about his object being sublime, that he shall achieve in time, to make the punishment fit the crime: "The punishment fit the crime; / And make each prisoner pent / Unwillingly represent / A source of innocent merriment! / Of innocent merriment!"
My, what a marvellous way that would be to control your gangs and all the other things, the flotsam, human problems, you have to put up with every day in life. It is a pleasure to have you join us here with the good and the virtuous people of Agriculture and learn where the real world really is.
I will have to go on for a little while yet because my staff has not got my answer yet.
An Honourable Member: Do you want a five-minute break?
Mr. Enns: That is a grand idea, Mr. Chairman. I think we can do it.
Mr. Chairperson: Is it the will of the committee to take a five-minute break?
The committee recessed at 3:44 p.m.
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After Recess
The committee resumed at 3:50 p.m.
Mr. Chairperson: The committee will come to order.
Mr. Enns: I can tell the honourable member that in the feeder association program we have only had one call on our guarantee and that was a sizable one of $527,669, and that involves the situation at Vita. We are now in the process of attempting to recover whatever portions of that amount that we can, but I will not suggest to the honourable member that that is a difficult situation there which possibly could lead to, as I say, some court action.
I want to put that into context to within the $16 million that is currently out. The program has run for, I believe, three, four years now and has run at roughly speaking those levels, so that in the years '94-95 there were no defaults, and '95-96, no default. In '96-97 we have this one major default that I referred to. So in keeping with the overall, I think we have to keep that in some context. On the guaranteed loans program we have had five defaults for a dollar sum of $91,112 that the corporation had to stand good for.
Ms. Wowchuk: I would take it then that the minister is saying under the Diversification Loan Guarantee Program there have not been any defaults, and the corporation has not had to pick up any costs? Can the minister indicate, under the Diversification Loan Program--I think that would probably be the one that would cover this--has the corporation had any requests or has the corporation made any loans or investments into the Isobord plant that is being established in Elie at the present time, or is there any section under the corporation where money could be borrowed from it?
Mr. Enns: I am pleased to provide some additional information on the very exciting project that is currently under construction at Elie which will literally spin straw into gold as Rumpelstiltskin did many years ago in some of Grimms' fairytale books. The financial contribution on the part of the province--I know the member is not asking me directly, but it does not come from the Manitoba Agricultural Credit Corporation in any extent at all. The province is providing a $15-million payable loan to Isobord through programs being offered by Industry, Trade and Tourism.
The federal Farm Credit Corporation is providing through its offices loans to the farmers' straw co-op that has come together to provide the raw product for the plant, the straw for the plant, and that amounts to some $11 million or $12 million that individual members of the surrounding area--well, not just the surrounding area, it is actually quite a large area that is going to feed straw into that plant, but these producers have formed a co-op. They have worked with the federal credit corporation to, in essence, finance the cost of the building itself, the shell of the building, some $11 million or $12 million. But to indicate directly to the honourable member, Manitoba Agricultural Credit Corporation has no money in Isobord.
Ms. Wowchuk: Mr. Chairman, when we look at the loan diversification program, it was anticipated that this would be start-up money for various kinds of ventures to diversify the rural economy. When we heard the preliminary discussion it could be used for any number of things from potato production and storage, hog operation, beef feedlots. Can the minister indicate what kind of interest has been shown? I understand in the first year of operation there were three loans given. Has there been further interest and how many other loans have been made under the loan diversification program?
Mr. Enns: Mr. Chairman, I can report to the committee that to date there have been 11 loans approved for a total of some $7,105,000 since the inception of this program on December 31, 1995. The types of loans have been diversified, as the program calls for, one to a dairy operation for $165,000, a large hog operation, to five separate hog operations for a total of $5,355,000. To the enhancement of potato production there have been four potato loans made for a sum of $1,335,000, and we have an aquaculture loan, one, for $250,000. This one catches me by surprise, fish. We are into fish farming, okay.
Ms. Wowchuk: Mr. Chairman, I am pleased to see that there is another diversification in loans. At one time there used to be a loan that was a fish farming loan. I think it was under the department. As I looked through it I saw that I did not see it anywhere, and I guess there was no interest in it. So there was no interest. I would certainly encourage the corporation to encourage fish farming, because there are many parts of the province where people do make a living from fishing, but their livelihood, the opportunity for them to continue to make a living along those lines has been very difficult.
So I guess I would ask the minister what steps the corporation takes to make the people aware that opportunities are there for other diversification rather than the traditional agriculture? Is there any effort made to reach into the aboriginal community not only with fish farming but with other opportunities to involve them in the agriculture industry? So what efforts are made to expand the agriculture industry and encourage some of the people who are not traditionally in the production, involved in the production of food, rather they have been involved in the collection of food, to make that more available to them?
Mr. Enns: Mr. Chairman, I am delighted to talk about this particular program, because I acknowledge that when we announced this program in '95 that, you know, it was our best effort at that time. It was a start. It was kind of, I think, an immediate response to the news, the information, that had just been publicly made that Canada's longest standing support program, the Freight Assistance Program, the western grain transportation assistance program or the Crow as we all know it, was coming to an end, and it became immediately apparent that its impacts on Manitoba were particularly serious and that there would be and there will be and there are right now as I speak some very significant changes taking place on the landscape.
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I wanted the Manitoba Agricultural Credit Corporation to be part of that and, quite frankly, I see this as an area for significant growth for the corporation. I want that loan limit to be expanded from the present $10 million to $100 million, because we are going to see the kinds of things that are already happening only accelerate in the future. The honourable member talks about nontraditional types of involvement, and it is nontraditional, not just nontraditional for the producers out there, but nontraditional for the corporation as well, and it will be a challenge for us and for management to kind of roll with the punches and to anticipate what the needs are going to be out there. It will be nontraditional in the sense of who is going to be involved. There will be some different people involved.
It is of ongoing concern to all of us that we cannot as we are presently structured do an adequate job with respect to the aboriginal community. It has to do with some very understandable things. We simply cannot provide, we cannot find the kind of collateral that our own rules call for within the corporation to resolve these issues. I am advised by the manager that we are talking to the aboriginal communities. There are some programs on the horizon that I think will make that even more urgent that we come to some resolve of that issue.
I view, in recent years, we have added to the list of activities that the corporation is involved in that include such things as bison for instance. Allow me to take this opportunity to report that we have a small but vibrant and growing bison industry developing in the province of Manitoba. I believe we have some 80-85 producers involving upwards to 10,000 of those majestic beasts that used to roam the Great Plains country here in such large numbers, as some wit made it.
It can be argued that the coming of the railway to some extent helped extinguish those bisons along with some pretty indiscriminate hunting and slaughter of those great animals. Now that the railways are abandoning us, you know, the bison are coming back. Truly they are coming back, and I welcome them, and the corporation welcomes them. The corporation does do business with bison farmers in Manitoba, and I want to encourage them to do even more. They will become involved, I am sure, in due course with the fledgling elk farming business that is just in the process of being established in Manitoba, and it is particularly in that area that I am going to challenge the corporation to see whether or not we and our services cannot come to some arrangement that will enable us to provide satisfactory credit to aboriginal communities.
I am extremely proud that we have today at least three, if not several, more aboriginal communities who are showing a great deal of interest in elk ranching. I am hopeful that we can understand that there can only be one set of rules for elk farming in Manitoba and that the aboriginal community will have to accept and understand that, that this is not some--well, I have got to be careful because this is always put on record, and history records that I was going to say something disparaging about some of my sister departments, but I will not.
We in Agriculture run things one way, and the right way, and the Department of Agriculture wants to run a carefully managed, carefully controlled elk program that can meet our obligations to those who want to ensure that we have and maintain healthy animals in the wild, that there is no indiscriminate slippage between the wild and the domestic herds taking place and that the health of the animals is secure. All of those things are very much uppermost in our minds as we draft the regulations, as we draft the program that we are going to introduce.
What is extremely encouraging for me is that there is, in my opinion, a real opportunity for providing an economic opportunity for some of our First Nations people in this program. It is a kind of an operation that lends itself to their land base. It is a kind of an operation that they themselves feel comfortable with in terms of dealing with the wild animals. It is the kind of program that could very quickly mean that we could have on several First Nations reserves $1-million, $2-million, $3-million operations running, and, quite frankly, that would be a far greater contribution than we have made over the past number of years in 101 different types of programs of trying to bring about some economic viability to our aboriginal cousins.
So I think Agriculture will prove to be a leader in working with our aboriginal communities in this sense, and I look forward to the honourable member's support. The honourable member represents a party that is privileged to have several members of the First Nations people as colleagues in their caucus, and I think that they want to look extremely carefully at how this program is being administered and how this program is being introduced. I will acknowledge and accept that it is their democratic responsibility to criticize me, to criticize my department. Do not criticize my director for the Animal Industry Branch, Mr. John Taylor. He is rather sensitive about it, and his Australian background, you know, he is not used to the rough and tumble of politics in Manitoba. He is an honourable man, and I want you to take it easy on him. He is not worthy of that kind of abuse. But you can abuse me anytime you want on this issue. But I want you to support me at the end of the day. I want you to support this opportunity at the end of the day. I want you to support the aboriginal communities that are showing the interest in this program at the end of the day.
We have at Crane River the makings of a first-rate operation. They are co-operating with the Department of Natural Resources in housing the capture program we have at Pine Creek who have housed animals for us in the past year. We have people from the Waterhen that want to talk to us about this. Those are the band that has run a relatively successful bison operation and has done so for a number of years.
So I speak with some passion because I believe that this is for Agriculture. Not only are we providing a new and diversified program for any producers in Manitoba--and I acknowledge, Mr. Chairman, that it will only be a relatively small number of people that can avail themselves of this program or who want to--but there is a particular challenge to us in Agriculture, and a challenge to the corporation, that we find a way that we can provide some of the services that we provide to all other Manitobans; that we can provide some of the expertise, some of the credit management knowledge that the corporation has garnered over the past number of years and be helpful to aboriginal communities who wish to join us in this venture.
Ms. Wowchuk: I am very pleased to see the minister speak so passionately about aboriginal people and economic development for aboriginal people. I hope that he will take that same message to the rest of his colleagues in government, because certainly the activities we have seen by this government have not sent that same message to the aboriginal community, whether it be health care or education or those issues.
The minister has put very good information on the record as far as his commitment to the aboriginal community and economic development, and something that I would support him on tremendously because I think that we have--and I represent a large number of aboriginal people who really do want the opportunity to take a share of economic development. The minister is well aware that those opportunities have not been there. Many doors have been shut in the face of aboriginal people. So I am very pleased that the minister is now saying that there will be opportunities.
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So I would like to ask the minister then, is the minister saying that this loan diversification program is available to people who live on reserves, to bands, to borrow money? If that is the case, what is the requirement on this loan? Is there a certain amount of money that they have to have down? Because I had a meeting with a group of aboriginal people just this last weekend who expressed a real frustration. They said that there are all kinds of opportunities, but every time we go to get started we have to have 20 or 25 percent down, and for them, this man said to me: Well, if I have to have $20,000, I will not be coming for a loan to get started.
It is a real difficulty and a real challenge that is facing the aboriginal community. Yes, they do want to be a part of it.
I have to say to the minister that not all of them want to be involved in the elk industry. Not all of them agree with what is happening, but there are other opportunities. I refer to the one with aquaculture. There are different things, and as government, as representatives of people, we have to work towards resolving that. But if this money, these loans--the diversification loan, the feeder association loan, stocker loans--are available to aboriginal people and to reserves, I am very pleased about it, and I would like to know what are the strings attached, what is required for them to access that money.
Mr. Enns: Mr. Chairman, I am well aware that the honourable member for Swan River (Ms. Wowchuk) has, as she indicated, significant experience with the aboriginal community, members within her constituency, and just in her overall experience in government. There is the one particular hurdle that is a very serious one. I am going to challenge my new colleague the Minister of Northern and Native Affairs who perhaps comes to government fresh with, one hopes and I know, the kind of enthusiasm of a new member to government, to try to resolve it. That is the question of security. It is not a question of not wishing to do business with an aboriginal First Nations client. There is the fundamental problem of security which we in the farm community kind of take for granted. The first thing that we put up for security is our land. Of course, as the member knows, that is not possible to do on a collective basis. We believe that there are ways around it, but there needs to be some action taken by the band, by the First Nations people themselves, in the coming to and the passing of some by-laws that will help us and help the corporation out of this dilemma to some extent, if we can. I have to be an optimist that we can find a way.
(Mr. Jack Penner, Acting Chairperson, in the Chair)
I agree that not all of them want to be in elk ranching, but, for instance, in elk ranching there is already a possible way out for them. My understanding is a negotiation, a discussion, that they are having with Natural Resources in terms of participating in capture of elk that we will, for instance, acknowledge and take in kind. If they are capturing elk, that they will retain a number of elk while giving up others to the government for distribution to future elk farmers. Particularly in the case of elk, it does not take too many animals to have all of a sudden an asset that is collateral able of $20,000, $30,000, $40,000. That, together, then starts making it easier for private lending agencies. I will challenge the corporation to see whether or not we cannot develop a program that when we can document some tangible assets, that is when the corporation will be able to provide support for them. I think that is a challenge that we face.
I know I speak with enthusiasm, but I do not want to underestimate the problems associated with it because one would think that surely we should have been smart enough to resolve them. Then, of course, not everybody is as radical as I am, in essence, a red Tory as I am. I am more radical than the socialists and the New Democrats are. I ran as leader for my party on the basis of abolishing the reserve system. I do not think the reserve system does the aboriginals any good. It is a form of apartheid that we have universally, internationally condemned, when it happened in another country like South Africa. That is part of the problem that we have and we will not resolve it, quite frankly, in this country unless Canadians are prepared to look at it seriously. However, I was defeated.
Ms. Wowchuk: I am pleased that the minister does recognize the challenges that the aboriginal community faces. I would ask the minister if he would take challenge a little further and see what can be done, or tell us what his department has been doing to meet the needs of aboriginal people. Has there been any consultation with various bands or the Assembly of Manitoba Chiefs to talk about the opportunities of moving into this diverse economy that we are talking about in Manitoba? What steps have been taken? Because it is one thing to say that you want to see the opportunities there and identify a challenge of assets, but what steps, or what direction is the minister giving the corporation to ensure that when we come back a year from now, there will be a program available under Manitoba Agricultural Corporation that will meet the needs and be friendly to the people?
What I am saying, we have to design a program that involves the people that have an interest, and we have to see what they are really interested in. Then that information has to be made available because I am sure that there is a very small number of people in the aboriginal community who know about any of these programs. So the challenge to the government is, how do we involve these people? What role is the minister willing to take to ensure that this community is involved, that they understand that there are programs available, that there are opportunities? You cannot push opportunities on to them. People have to take those opportunities, but you have to make it available to them. The corporation has to take some steps, if it is the will of government, to ensure that those doors are opened for the aboriginal community.
Mr. Enns: As I indicated the other day, I think it is always an advantage to have senior members, senior management from the corporation, hear this directly in this Chamber from all of the members, from opposition, that we double our efforts to try to bring about the greater opportunities on First Nations land.
Let me say, though, and I share her thoughts, let us not talk exclusively about elk ranching. We should be looking at the broad range of programs that could be of interest to them. Certainly within the cattle industry, the beef cattle industry, we have a number of first-rate, excellent aboriginal cattle producers in the province. Whether or not we can instill and use some of them as role models to develop, with our assistance, feeder associations or some stocker loan programs, or greater loans program, we would like to do that. I will challenge the department, the corporation, to take very seriously this challenge.
I know that we have some First Nations people that are heavily committed in the intensive business of potato production. We have several of them that are doing that very well. One of them just acquired one of the larger potato-producing farms. My former colleague, federal colleague Charlie Mayer, included amongst cattle operation some significant 400 or 500 acres of potato production.
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I just despair sometimes when we focus so much of government's resources, government's attention on government's direction, on trying to turn all of our First Nations people into social workers, trying to resolve all the complex problems of urban society with our First Nations people when, in fact, they are housed--I know, I am not blind to the fact of in-migration to the city of Winnipeg that is taking place--but their bases, their land bases, their 61 corporate farms, if you would like them, are scattered throughout rural Manitoba.
We really have not done a very good job about seeing how we can address our collective smarts in helping them cross that line that all of a sudden makes for some viable economic operations that do two things--earn some income in a part of our community that badly needs it and provide the impetus. Just as non-Native, rural people farmers, we decry the fact that our youngsters are leaving our farms, or there is not enough economic opportunity for them in the smaller communities in different parts of Manitoba. So they come to the cities, they migrate to the States, they migrate to other places. The same situation is implicit in the situation with the First Nations people. We have nothing or very little to offer them on their land base throughout rural Manitoba. We can only expect that in-migration into the urban centres to accelerate.
I think the Department of Agriculture, I think the corporation that is currently under review, could play a role in trying to reverse that. With your encouragement, I will take to my Cabinet, I will take to my government, the kind of thoughts that are being expressed to see whether or not we cannot more aggressively try to deal with some of these issues. There will, of course, be some risk in it. But nothing ventured, you know, nothing risked--nothing--I am not very good at these things. I can remember one time saying I will cross that bridge when you get to it. The way it came out with me is, I will cross that bridge when I find the river, or something like that. My wife still gives me problems about that. Anyway, you know what I mean. The corporation is hearing this, and I am going to challenge the management of the corporation to sit down and do some heavy-duty thinking. Challenge governments. They will come back and challenge governments. This is what has to happen for us to be able to employ our resources in some meaningful way within the aboriginal community, and that is a challenge that I will have to take with my colleagues in government.
Ms. Wowchuk: Mr. Chairman, it was with interest I listened to the minister say that when he ran for the leader of his party, he ran on the basis of abolishing reserves. I would like to ask the minister whether he has thought that through and what the solution would be.
You know, he is also talking about these corporate farms. Well, not very many people would want to, if they visited some of these areas, would not be very successful in farming on some of that rock that is out there. Many of these reserves are not on very good land, but if the minister talks about that his belief is we should be abolishing reserves, where will the land base come from then for these people to take part in--where will we have the land base for the herds of livestock or elk that we hope that these people will have the opportunity to partake in, because the way I see it, there is not really enough land there for them to establish. So I guess I would like the minister to maybe enlighten us a little bit more on what his views are as to what should happen. If he believes that reserves should be abolished, what would be the solution then to the land that would be required for all of these people to make a living in the many different ventures of agriculture that might be available to them?
Mr. Enns: Well, Mr. Chair, I should know better. You know, I have trouble walking and chewing gum at the same time, and I do not think, when I am standing on my feet, all that well either, but I think the honourable member for Swan River is kind of leading me on into what surely could become a bit of a political abyss that she would like me to fall into, but you know, we do strange and innovative things, particularly in the Department of Agriculture. We decide from time to time--we were worried about too many foreigners buying our land. We passed legislation in this Chamber that says foreigners cannot buy our land. If the issue is land and the way it is held by First Nations people that prevents banks, credit unions, Manitoba Agricultural Credit Corporation, FCC from doing business, from extending doing business with First Nations people, then we have to address that issue.
So when I say abolition of the reserves, I am not saying that lightly. I am saying that for very hard political reasons. Now, I am also well aware that that maybe sets up a situation where they could lose their land, you know, but there are also legislative ways of putting down that land currently held by First Nations people, land that we are expanding to with the--finally this government, this government that is often abused and, regrettably, not supported by the First Nations people, we are resolving the long-outstanding land claims question now. The last 23 outstanding claims are being resolved. So is there not a way that we cannot devise legislation that will secure for First Nations people that essential land base? It might be a simple: that land cannot be sold to aboriginal people. If I can stop a Frenchman, a German and an Italian from owning land in Manitoba, and I can--[interjection] Pardon? We have the legislation to do that. We have legislation on the books to do that--then I can prevent a lawyer or a doctor or a businessman from buying up reserve land.
(Mr. Chairperson in the Chair)
But if we find some different way of doing it, I would enable Mr. Shaw and the corporation to find some way of providing collateral and providing money to do the kind of things that the honourable member just asked me to do for the First Nations people. I am just thinking out loud and thinking that we have to think differently than we have for the last 100 years, because what we have done for the last 50 or 100 years has not brought any satisfactory results.
Ms. Wowchuk: My understanding is that the royal commission has made recommendations on ways that we could address this where First Nations would be able to have the ability to deal with banks and credit corporations and credit unions. I hope that with the minister's words that would mean that he would be supporting the recommendations of the royal commission.
Is that the minister's indication, then, that we can expect him to show his support for the recommendations of the royal commission that would then open the doors and give the opportunities for his corporation, the Manitoba Agricultural Credit Corporation, and banks to then have the ability to do the kind of negotiation that is needed, that money can be lent and economic opportunities will be there for our First Nations people?
Mr. Enns: It is hard enough for any of us to make, you know, our farm units work economically. That is why we have farm credit corporations; that is why we have banks; that is why we have credit unions.
To ask First Nations people to try to do this without availing themselves of these services is really, you know, asking the impossible. We ought not to be surprised that you can drive through an area of Manitoba, and you see fairly successful farm operations, dairy operations, cattle operations, hog operations, and you come to a boundary of a reserve, and you drive through, and regrettably, you see used cars, a few homes, and maybe a little bit of gardening and that is it. You do not see farm equipment; you do not see cultivated land in too many instances, and that is the net end result of the system.
I thank the honourable member for her reminder of the Aboriginal Justice Inquiry commission report, and I will challenge particularly the corporation and the government to avail itself to those particular chapters that address that. It has been a longstanding problem, particularly for the government agencies involved in credit. I know that the same thing applies with the federal public lending institute, the federal farm credit service. They are in the same bind or in the same situation that our provincial corporation is in.
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Ms. Wowchuk: It is the royal commission report that I was referring to, and I hope that the minister's staff will look at that report. I hope that when we come back, or have the opportunity to look at the activities of this corporation when next we do Estimates, we will see some progress, and we will see a program there that will give the opportunity for aboriginal people to have availed to them services and opportunities to gain credit that the other Manitoba farmers do.
Mr. Chairperson: Shall the item pass--pass. Item 3.3 Net Interest Cost and Loan Guarantees $3,728,500--pass; Allowance for Doubtful Accounts $1,000,000--pass; Special Farm Assistance $100,000--pass.
Resolution 3.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $7,914,600 for Agriculture, Manitoba Agricultural Credit Corporation, for the fiscal year ending the 31st day of March, 1998.
We now move on to Resolution 3.4.
Item 4. Agricultural Development and Marketing (a) Administration. Does the honourable minister wish to wait for his staff?
Mr. Enns: Mr. Chairman, I am delighted to introduce some additional members of the department's senior staff. First of all, Dr. Jim Neufeld, who is director of our Veterinary Laboratory Branch, and the services housed on the campus at the University of Manitoba; and Dr. John Taylor, who is the director of the Animal Industry Branch; along with Mr. Dave Donaghy, and I think he was introduced before.
Ms. Wowchuk: Mr. Chairman, we have had some discussion on the livestock industry under the Agricultural Credit Corporation.
Earlier this year the minister had indicated at one point that he had done what he had to do in the hog industry, and he was now going to focus his attention to the livestock industry. Some of the producers said, well, heaven help us, he has changed the Hog Marketing Board when we did not want it. I wonder what his plans are for the livestock industry, and I say that tongue in cheek to the minister, but the minister did say that the livestock industry, the cattle industry needs much more attention than it is getting and it certainly does.
Many cattle producers have been through some very difficult times with price fluctuations, and the livestock industry has not grown as much as we would like to see it in this province. We are not feeding enough cattle in this province. We are certainly not processing them, they are all being shipped. The majority of the livestock is being shipped out of province or out of country and we are not getting the value-added jobs that we do have, so I would like to ask the minister if he can tell us what he envisions as happening, or what his plan is for the livestock industry, particularly the cattle industry in this province, that he believes should be happening or what supports he thinks should be in place to encourage more the finishing of livestock and perhaps going even farther where we would also be having the slaughter of livestock in this province.
Mr. Enns: Mr. Chairman, I think the honourable member is picking up from comments that I made at a livestock meeting that was held when there were many regional meetings that we hold during the wintertime in different parts of the province. In some cases we call them beef days; in other cases just livestock development days. This particular meeting was in Holland and that caught some notice in the farm press about my changing my emphasis in the year '97 to paying greater attention to the beef industry and that report is correct. I have asked and challenged the department, and we are looking at the host of programs that the Department of Agriculture is involved in with respect to beef cattle production, certainly with the view that our opportunities in beef cattle production are equally attractive, as in the case with pork. We should be examining ourselves about what some of the particular challenges there are in that part of the livestock industry, and how we as a department can, perhaps, be of some assistance.
It is also borne out of the fact I am a modest cattle producer myself, and I am sensitive to some of the criticism I was getting. We did, despite what the honourable member may think, a rather successful job in focusing on the pork industry in '96. I know that I took some action that was not universally applauded with respect to the marketing of hogs in the province of Manitoba, but overall, what the effort was meant to do was to focus and profile hog production in Manitoba. I believe we have done that with some success, not just in Manitoba but around the world.
The honourable member was present. The hog industry is inclusive of a whole number of factors--financial people, business people, feed people, packing people--along with the pork producers. We had a very successful Manitoba Pork Advantage launch at the Lombard Westin in the close of the year that was attended by well over 500 persons to help us focus on the opportunities in pork.
Understandably, people not involved in pork would remind me as I travelled through Manitoba that there are other aspects to the livestock industry other than the pork, and they are quite right. So I have challenged the department to let us take a hard look at beef production in the province in the year '97, and we are doing that. It is an internal examination of the programs that the department offers. It could be an opportunity for us to visit and talk to the organized cattle producing organizations, actually the Manitoba cattle producing organization. We will talk to the problems associated, what needs to happen to try to attract more processing into the industry.
We are working with the smaller regional packers. That seems to be the way, the only areas where some beef is being processed these days. But that simply is what is meant by those comments that we are focusing in on the beef industry. It is not be taken out of context. I say the same thing about hogs. We are saying we are focusing on the opportunities there are on that. I do not believe the department nor government should be actively intervening in the production of any of these commodities. All that generally happens is that markets get distorted, wrong signals get sent out, but the information has to be supplied and in some cases launched policies have to be made.
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We have to examine our policies in respect to how we manage our Crown lands within the department. We have to look at the policies that are being directed by the director of the Animal Industry Branch to see whether or not they are the kind of policies for the '90s and the year 2000 and what can we do to assist them.
We have an immediate problem right now in Dr. Neufeld's shop. There is pressure with some of the downsizing, if you like, or offloading of Ag Canada and some of the services that they have supplied, particularly in the livestock industry with respect to laboratory services, brucellosis testing and so forth; then all of a sudden find ourselves without the capacity to do the testing in Manitoba for the cattle that require those tests for export shipments and for other reasons. The challenge is right now to ensure that we can get that capacity developed right within our facility at the University of Manitoba and at our veterinary lab. This is what I mean by paying attention to the opportunities in beef cattle production.
The honourable member is right, of course, that we have had some difficult years, but she is wrong when she suggests that the cattle producers have not maintained and in fact, indeed, expanded their herds in the province. We are one of the few jurisdictions where that has happened. Virtually all other jurisdictions, not only in Canada but in the United States, have seriously downsized their cattle numbers, which speaks encouragingly for the future in terms of supply and demand and future prices, and I think the markets are starting to reflect that.
The conventional wisdom is that we have bottomed out from the difficult years that we have just experienced, and all market indicators are that we are moving into a stronger cattle cycle. Manitoba is well poised to take advantage of it. Our herds have not diminished. We have a record number of beef cows on our pastures and on our farms in Manitoba as I speak. I believe, and there are others that believe, that we could, through good and prudent management of our grasslands, also with the recognition that again the fuller impact of the loss of the Crow begins to manifest itself on some of the more marginal land that has been put into cereal production, goes out of cereal production or even some of the good land that is in cereal production.
We are not going to be exporting much feed grain out of this province any more, period. We will export premium malting barley out of this province; we will export premium wheats out of this province, durums and the likes. We will export quality vegetable oils out of this province. We will export specialty crops, lentils, peas and beans, but it is going to be very difficult to export barley that is worth $2.20 or $2.30 or $2.10 or $1.80 a bushel and pay the freight bill. It is going to be very difficult to export utility wheat, wheat that might have been premium wheat worth $5 or $6 a bushel, hopefully $7 or $8 a bushel in the future, but if it has gone through some bad weather, which we can expect sometimes--and regrettably we are setting ourselves up with the late seeding season, certainly in the Red River Valley with the impending flood--that we could see a lot of good grain damaged by poor weather in the harvest season end up as feed wheat. That is the kind of grain that is going to be very difficult to move out of this province. It is just not going to pay the freight, and that is the kind of grain that we have to find a home for.
(Mr. Peter Dyck, Acting Chairperson, in the Chair)
The kind of cereal crop production agriculture we have, pretty well tells us that we are always going to have that kind of grain. We need to grow those grains in rotation. Even as I encourage producers to get into potatoes and into other crops, into canola and some other crops, but every crop needs its rotation. You can only grow potatoes once every four years in that acre of land. In between, the farmer puts in barley, he puts in other crops. That is why there are those that say that Manitoba could support a million beef cows. We certainly can do a much better job in backgrounding. I think our calves, instead of sending them out as 500-pounders, 600-pounders, getting them up to 800- and 850- and 900-pounders, then when we are one step away from finishing them, and when we start finishing consistently 200, 300, 350,000 beef animals, that is when we can knock on Mr. Cargill's door, that is when we can knock on Maple Leaf's door, that is when we can knock on somebody's else's door and say, gentlemen, it is time you brought a world-class beef processing plant that will employ 1,000 people and value-add them right here in Manitoba.
That is the future I think we should work towards. I know that is not going to happen overnight. It will happen maybe within a decade, and I intend to stick around till the end of that decade to make sure it happens.
Ms. Wowchuk: I would like to thank the minister for sharing his vision, but I want to say that if I did say that the number of livestock had decreased in this province, that was not my intention. I am well aware the number of livestock has increased and, in fact, many people have carried their herds over basically because they have not been able to sell them because there was a low price in there. I know that there is room for growth in the industry and I know that we have to look at other ways to use our grain. Certainly I have to agree with the minister that we will not be able to ship that barley out at the price we are getting for it. We are going to have to use it to a second stage then putting it through livestock. Whether it is hogs or cattle, we are going to see the dynamics of agriculture in this province change. We will, and I am sure that the changes that come about as farmers adjust will be good changes for the economy of the province. We will see it.
Earlier, under Agricultural Credit Corporation, we had talked about the aboriginal people and certainly livestock is also one of the opportunities that we would look at. There are many areas close to reserves that would certainly work as pasture.
One of the challenges that faces us as we move toward an increase in livestock and, in particular, as we move to an increase in hog production is one that we talked about yesterday when we were discussing the private member's resolution, increase of hog production, is waste management and how we address the whole issue of the location of these barns in sensitive areas where there is a problem with water. I heard the minister say yesterday, oh, well, if you do not like the barns in the Interlake we will move the barns out of the Interlake. That is not an answer, but we do have to have a plan in place about where these barns are going to be built, how we are going to manage the waste, and it is a very serious challenge for government.
I think it is wrong for government to say when the issue is raised, oh, you are against the industry, oh, we will move the hog barns. That is not the answer to this very serious situation. It is a matter of looking at the province as a whole and doing some planning of where the soil is conducive to these kinds of operations, where they make sense and where they do not make sense and having in place a government and a department that is willing to address this and show a leadership role and be prepared to say if there are plans for a hog barn to go in a particular area or other livestock operations, but I refer to hog operations in particular because they are the ones that require the most water and have a tremendous amount of waste from them. It is something the department has to address. We are going to have an increase in hog production. We are going to have an increase in other livestock production in this province.
(Mr. Chairperson in the Chair)
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I would ask the minister if he would share with us how his government plans to address this, not by saying, oh, well, you are against it so we are not going to build any hog barns there, oh, you are just anti livestock operation. As I say, this is a very serious issue and one that has to be addressed and one that we have to do a lot of education on. Those of us in the rural community have to be sensitive to other people who are living in the rural community, but we also have to be sensitive to the fact that there are people right across the province who are concerned about environment and how we are going to ensure that water qualities are not jeopardized, that water in lakes is not jeopardized.
How is the minister addressing this issue to ensure that we do see the industry grow at a reasonable rate and meet the demands of market, but also what safeguards is the government putting in place to ensure that there are not problems down the road?
Mr. Enns: Mr. Chairman, having the advantage and privilege of having introduced a set of Manitoba Department of Agriculture Estimates some many years ago, in '66, and doing it now is perhaps the best way I can answer the honourable member's question. I am going to read to her just some of the things that are happening in this regard on a daily basis in Agriculture. A lot of this, of course, is relatively new, and I am the first one to acknowledge that.
It was only several years ago that we passed a farm practices act, a protection act; we now have a board that sits, that listens to individual complaints. Neighbours, anybody who feels a farm operation is operating in a manner that is not acceptable to guidelines or to regulations has a formal body that is provided by statute authority to listen to these complaints and make rulings.
We have livestock waste legislation; we did not use to have that on our books. We have technical review teams. Virtually any serious operator that is now proposing to develop a hog barn or any livestock venture will come to the Department of Agriculture and will submit their plans to the technical review team, and we will provide them with the kind of information that steers them in the right direction. We held a very large manure management symposium in March of last year. Ten years ago, 15 years ago, we were not doing these kind of things in the Department of Agriculture.
We have courses for applicators for those who are using herbicides and pesticides in the province. We run, of course, all kinds of open houses on livestock environmental issues. We have a wide range of programs that are sponsored on our conservation program, the CMAAS program, over 80 programs, many of them dealing with various conservation aspects, but many of them having to do with manure handling and waste disposal. We communicate with producer groups; the Manitoba Agriculture staff is constantly involved with them.
We reach out to individual rural municipalities. We work with Manitoba Rural Development staff. We work with the Union of Manitoba Municipalities and other government departments. This is not just on an as-it-happens basis; this is on a regular basis.
Farm inspection services. Just to give you an indication of some idea of what happens on our dairy farms, farm inspection is provided by four farm inspectors. Two additional inspectors from the Food Quality and Product Development section assist with dairy farm inspections. Manitoba dairy farms are inspected to monitor compliance with regulations aimed at public health and safety. Bulk milk truck drivers are monitored for performance of duties such as sampling of quality and component testing. Bulk milk graders are trained and licensed by Manitoba Agriculture. Dairy inspectors maintain close liaison with the Manitoba milk producers to co-ordinate activities aimed at production of the safe supply of milk. Inspectors review lab results on raw milk quality and work with producers who fail to meet the standards. Information is provided by inspectors to producers contemplating either building or equipment changes. Inspectors assist in the adjudication of milk rejection for the dairy industry. Inspectors provide assistance to the Manitoba milk producers in selecting the Manitoba Dairy Farm Excellence Award.
In other words, the point that I am trying to get, Mr. Chairman, is that there are far more levels of on-hands supervision, inspection, direction being provided by the capable staff of the Manitoba Department of Agriculture in conjunction sometimes with the very commodity groups that we are inspecting. We are doing this in an increasing manner to answer the kind of concerns that Agriculture has to address in these days. Those concerns, we appreciate, are valid, and they are real, and because of the nature of agriculture and its changing pattern to larger units, it makes it even more important that we address these issues.
I simply want to indicate to the honourable member that while hogs, because of the nature and because of their profile and because of the expansion that is currently taking place, was the first target for our developing list of dos and don'ts regulations, guidelines if you like, as to how and where and under what circumstances you can properly operate a hog operation. We moved right away into the same kind of regulations for beef, for dairy, for poultry, for all livestock are covered with a published book of regulations that is available at every Ag rep office. Anybody that plans to go into these activities should avail themselves of them, or else they can find themselves in front of the Farm Practices Board, in trouble. I have a situation right now where a major hog barn is and may be closed down. It is going to cost somebody a great deal of money. It may end up into a messy court case. I hope that will not happen, but it will happen unless the operators, the managers of that operation, do not come fully into compliance with the regulations that have to be complied with.
Ms. Wowchuk: I guess, that is the kind of thing that I am raising with the minister and wondering what can be done to prevent this kind of situation from arising. What I am looking for is, is there any way that the department--or should the department in conjunction with the Department of Rural Development, or other departments, do the preliminary work ahead of time before someone ends up making these expensive investments in an area? I am assuming that this barn may be closed down maybe because of compliance. In most cases it has to do with water and sensitive areas.
Is there not a way that the Department of Agriculture along with other departments could do a better planning ahead of time? Maybe there should be a plan across the province where we would be spelling out where the sensitive areas are because of low water table or because of the quality of soil, that maybe barns or livestock operations should not be put in these kinds of areas to avoid just what the minister has referred to, and that being the possibility of a barn being closed down and a tremendous expense to the investor and, perhaps, expense to other people.
Mr. Enns: I think we have an understanding on the issue. I will just remind the honourable member that is precisely what the technical review committee that I referred to a moment ago is there for. They come to us. It is not a committee just composed entirely of Agriculture staff. It is also staff from the Department of Natural Resources with respect to water, because water is an important issue, as the member correctly--
Mr. Chairperson: Order, please. The hour being 5 p.m., time for private members' hour. Committee rise. Call in the Speaker.