STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 27, 2001

• 0905

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

Pursuant again to Standing Order 108(2), today we're looking at the potato wart and how it has affected our trade with the United States, in the province of Prince Edward Island in particular.

Before we begin, I'd like to remind members—Mr. Calder just called me aside here—about some concerns from several of the parties about the questioning techniques we've been using. We're hoping that on Thursday, when we get back to a meeting in camera dealing with future business, we'll resolve that issue.

There are really two issues. There is the order of questioning, and second, a little problem with the steering committee and how that minute appeared. We've had three different clerks, and now that we have our permanent clerk back we want to get that fixed for future meetings. So I do apologize, as I did, Murray, last time with the committee before you came, and we'll try to work it as best we can. We weren't sure how that minute should have read, and with it, today we'll try to follow.

Howard, you have a quick question on that?

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): I have a quick comment, Mr. Chairman. The issue is being handled, in my understanding, with the House leaders, and there won't be any agreement at this committee without the agreement of the House leaders as to how this is going to work. We tried that at the initial meeting setting this up and it didn't work, and so I'm not sure what's going to happen at the steering committee on Thursday. But I want to give you notice, that's likely my position on it.

The Chair: Yes, thank you. I think we have worked fairly well. I don't think there has been any major problem with that, Murray, but we will try to do the best we can.

We welcome this morning the Deputy Minister of Agriculture. Thanks for coming. I know your time is very important to you and to our government, but at the same time, we have a very important issue to deal with here today.

Mr. Watson, we generally have a brief presentation, if you want to follow that method, and please introduce the members of your staff. Following your presentation we'll go to the Alliance for the first series of questions.

Welcome. The time is yours.

Mr. Samy Watson (Deputy Minister, Department of Agriculture and Agri-Food): I'm here today at your request to explain the government's response to the potato wart situation on Prince Edward Island.

I would like to introduce the officials here with me at the table. Dr. Douglas Hedley and Mary Komarynsky are with Agriculture and Agri-Food Canada's Farm Financial Programs Branch. They're involved in working with the province to develop the potato environmental disposal program. Bob Carberry is director of Plant Health and Production Division with the Canadian Food Inspection Agency. The agency's role is to implement science-based control measures. Claudio Vallée is from the Department of Foreign Affairs and International Trade. DFAIT has worked closely with Agriculture Canada and CFIA on the trade aspects of this issue.

We'll be explaining the approach that has been taken since the presence of potato wart was confirmed last October in a single field in Prince Edward Island. The response involved action on several fronts. First, CFIA officials took immediate steps to control the disease—and I'll explain in a few minutes the control measures that were carried out. Second, on the trade front, the government has pushed the United States, particularly the Department of Agriculture, the USDA, to recognize science and lift the import restrictions. These efforts are ongoing. Finally, the other track that has been pursued is the work with the province on the environmental disposal program for the surplus potatoes. That program is now in place, and I'll explain it in greater detail in a few minutes.

Let's go back to the beginning, with the discovery of the disease. On October 24 last year the Canadian Food Inspection Agency confirmed the presence of potato wart in a single field in Prince Edward Island. Two days later the agency notified the USDA. The agency immediately isolated the infected field and nearby buffer fields and destroyed infected material.

Following an audit on P.E.I., the USDA moved to prohibit the import of P.E.I. potatoes due to the outbreak. Meanwhile officials in Canada set out to determine if this was an isolated case. Test results, samples, and surveys of the field were supplied to federal, provincial, and U.S. authorities, as is required under continental and international plant health practices.

• 0910

The agency took 300,000 soil samples. These were combined into 10,000 separate soil tests. Of those only 15 confirmed the presence of potato wart, and all of the 15 were from one corner of the one field where it was originally discovered.

In light of the findings, Canada took the position that no restriction should exist on the movement of Canadian potatoes, with the exception of a buffer zone around the infected site. The priority for the federal government, the province, and the industry was to ensure continued access to the U.S. market for Canadian, as well as P.E.I., table and seed potatoes. Those efforts are continuing at both the official and the political levels.

On December 13 technical negotiations were carried out between CFIA and the USDA, resulting in written amendments to the import restrictions. Within two days, however, the USDA advised Canada that these measures would not be implemented, and on December 22 the USDA announced new temporary measures more onerous than the ones established the previous week. In January trade minister Pierre Pettigrew requested NAFTA consultations on the issue.

While technical negotiations continued, as officials sought improvements to the import requirements, officials also pursued options concerning the environmental disposal of potatoes that had been stockpiled as a result of being shut out of the U.S. market. Federal-provincial safety net programs already in place would deliver financial assistance to those who had experienced significant income declines, but the volume of surplus potatoes dictated the need for the development of a program for the disposal of that surplus in an environmentally controlled manner.

As you know, Mr. Chairman, agriculture is a shared jurisdiction, so there has been close collaboration with the Province of P.E.I. on this issue. In early January I met with my provincial counterpart and representatives of the P.E.I. Potato Board. The issues discussed included implementing existing federal-provincial safety net programs and reaching agreement on a program financed by both governments for disposing of surplus P.E.I. potatoes, while respecting the environment and Canada's international trade obligations. Following this initial meeting, discussions on the question of financial assistance began with all stakeholders, Agriculture and Agri-Food Canada, CFIA, the P.E.I. Ministry of Agriculture and Trade, representatives of the P.E.I. potato producers, and various other federal government departments and agencies.

In mid-March Mr. Vanclief announced $12.6 million in federal funding to assist in the disposal of surplus potatoes in an environmentally responsible manner, to be matched by up to $10 million from the Province of P.E.I. With the funding provided by the province, more than $22.6 million was made available to help producers cover the cost of disposing of potatoes. On top of the disposal funding, the minister announced federal funding of up to $1.5 million to help in the purchase and transportation of surplus P.E.I. potatoes to food banks across Canada.

Under existing safety nets, producers whose gross margins fall below 70% of their historic average will be compensated through the Canadian Farm Income Program. It's estimated the program will pay P.E.I. potato producers up to $20 million for 2000 and 2001. In addition, Mr. Vanclief announced earlier this month an increment of $500 million in federal funding for farm income. P.E.I.'s share is $5.4 million, and it's up to the province to decide what portion to target to potato producers. On top of that, Human Resources Development Canada put in place a $5 million farm employee support program to help farm workers whose jobs were affected by the impact of the U.S. restrictions.

In all, Mr. Chairman, the government's efforts have provided the scientific justification to normalize trade with the U.S., and we continue to pursue the case through NAFTA channels. We provided, through existing safety net programs, assistance to cover lost income by P.E.I. producers and farm workers, ensured that food banks across Canada had access to these surplus potatoes, and encouraged the disposal of excess potatoes in an environmentally sustainable manner.

Those are my remarks, Mr. Chairman. I'll be happy to answer questions from the committee members.

The Chair: Thank you, Mr. Watson.

Howard, are you leading off?

Mr. Howard Hilstrom: Thank you, Mr. Chairman, and thank you, gentlemen.

I would like to start off by saying that the Canadian Alliance certainly agrees with the general consensus that the Americans are in essence using a non-phytosanitary basis. They're not using science on this issue in restricting our potato imports to that country.

That said, we have to deal with the issue as it is, and I'm sure these talks are ongoing to have the issue resolved with the Americans. It's not working as well as it should be, the agreement we had with the U.S., that 24-point plan to deal with these issues before they blew up into actual trade restrictions.

• 0915

There are a couple of internal issues we need to clarify here. Members of the backbench or the government are saying that the bureaucrats are the big problem, not the ministers. I have been in the RCMP for many years and the minister, in my experience, has always been in charge of the bureaucrats.

Do you feel the minister is not in charge of the agriculture department, or do you believe he's calling the shots and you're taking orders from him, which is the way it should be?

Samy, I'd like you to answer that first.

Mr. Samy Watson: I'm accountable to the minister, and he is fulfilling his responsibilities as a cabinet minister of this government.

Mr. Howard Hilstrom: Okay. That's exactly the way I would expect it to be.

I understand the response to this was normal protocol for disease arising in any kind of an agricultural sector. Is this true? If any plant disease appears in Canada, there is a general protocol in operation.

Mr. Samy Watson: Yes.

Mr. Howard Hilstrom: Okay.

Since we're talking about emergency responses here, I'm going to divert slightly. This foot-and-mouth thing that's on the go, does the department have a written hard and fast emergency response plan from the first minute one case comes up in Canada?

Mr. Samy Watson: The CFIA does have that.

I'll ask Mr. Carberry, though livestock is not exactly his area. But perhaps he can answer on behalf of the Canadian Food Inspection Agency.

Mr. Howard Hilstrom: I don't want to go into a lot of detail, because we're dealing with potatoes, but is there a hard and fast written plan that will kick in the second...?

Mr. Robert Carberry (Director, Plant Health and Production Division, Canadian Food Inspection Agency): Yes, that's right. We do scenario tests and we're well prepared for it.

Mr. Howard Hilstrom: Okay.

First of all, let's get a picture here of how big this P.E.I. potato thing is. In relation to the exporting we primarily do to the U.S., what percentage of the total crop in P.E.I. is affected by the lack of sales through exports?

Mr. Robert Carberry: I can answer that from the disease standpoint first and then we can talk about the impact on trade.

Mr. Samy Watson: Sure.

Mr. Robert Carberry: From a disease standpoint, we've found only one field that actually has potato wart in it, and that is even isolated to one corner of one field. In total, there have only been about 100 tubers actually affected by the potato wart disease. That is the limit of the problem on the island. It's restricted to one field; we've put a one-half-mile buffer zone around that field. We've done testing outside the area, on contact fields where equipment has gone. We've found nothing.

From a phytosanitary standpoint, the actual problem is extremely limited and extremely small, just a couple of acres.

Mr. Howard Hilstrom: How many tonnes of export are affected? I've heard that 22% of P.E.I. potatoes get exported. Is that true, 22%?

Mr. Samy Watson: Well, 22% is the surplus P.E.I. has right now.

Mr. Howard Hilstrom: Okay. How much is exported to the United States?

Mr. Samy Watson: It's not just the export that's affected, right? There are limitations on movement inside Canada as well.

Let me go through the whole crop. Of its total crop, P.E.I. will sell about 47% to processing, 15% to table and seed markets, 6% seed for the next crop, and about 10% is culled. This leaves a 22% surplus.

The surplus is mostly table stock and some seed that had been destined for U.S. markets. The rest is from lost sales to the province due to the fear of further U.S. restrictions. Some growers who grew a specialty variety solely for the U.S. market are going to be more severely affected.

Processing is stable. Potatoes grown for processing have a stable market.

Mr. Howard Hilstrom: Okay.

As late as March 19, farmers were protesting in Charlottetown, I believe it was. They wanted $30 million. The government saw fit to give $12.6 million for disposal. How many tonnes of potatoes were intended for disposal?

I'm trying to sort out how you made these decisions. Why was it $12.6 million? Were there x numbers of tonnes to dispose of? Were the farmers to dispose of them or was the government going in to dispose of them?

How was this figure arrived at, and why wasn't the full $30 million given to this issue?

Mr. Samy Watson: I'll ask Mary to go through this, perhaps.

• 0920

Ms. Mary Komarynsky (Director General, Adaptation and Financial Guarantee Programs, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): As Mr. Watson pointed out, on January 10 we met with P.E.I. officials. At that time we discussed a surplus of 6.3 million hundredweight of potatoes, or 22% of the crop. We agreed with P.E.I. and the P.E.I. Potato Marketing Board that we would first analyse the statistics to ensure we were all working from the same slate.

Our calculations for disposal were based on the surplus of 6.3 million hundredweight.

Mr. Howard Hilstrom: Does every farm in P.E.I. have an excessive proportion of their production hurt by this ban or are some relatively isolated from it because their sales are mostly within the country to processors down there making potato chips and whatever else?

Ms. Komarynsky: As Mr. Watson pointed out—and once again I'll go over some of these stats—47% of the P.E.I. crop is sold for processing. In our analysis, the processing sector has not been affected. The surplus is mainly made up of table stock and some seed potatoes.

Mr. Howard Hilstrom: Just to finish setting the stage here—and I will certainly have more questions, I'm not sure how long you're here—what would be the average gross and net incomes for a potato farm in P.E.I.? We need this information, because it's my understanding that these farmers will be applying for compensation under the drop in income provisions of CFIP to make up the lost income caused by this ban on exports.

Could you explain that?

Mr. Douglas D. Hedley (Acting Assistant Deputy Minister, Policy Branch, Department of Agriculture and Agri-Food): Mr. Chairman, first of all, we went through all of the analysis indicated by Ms. Komarynsky, to look at, in addition to what happens in the market, what happens to our safety nets.

We anticipate that CFIP, the Canadian farm income program, will pay about $20 million over the 2000-01 tax year because of the potato problems in P.E.I. This is in addition to the existing payments that would have been made there.

In addition to that we have the NISA accounts for those farmers. We have looked very specifically at the NISA accounts for farmers who sell more than 50% of their product as potatoes. Their average NISA balances are currently at $85,000 per farm. That represents something on the order of 50% to 75% of their margin, leaving them in reasonably good shape.

Between CFIP and their NISA accounts, we think we have covered the hurt farmers would feel from the potato effect. When you look at all of the funding that will be going to P.E.I., the provincial money, the federal money that has been announced, as well as the safety net programs, we look at a package of about $50 million going to the province because of this issue.

The Chair: Thank you.

With that, Madam Tremblay, are you ready?

[Translation]

Ms. Suzanne Tremblay (Rimouski-Neigette-et-la-Mitis, BQ): Good morning, ladies and gentlemen.

I am currently reading more and more material on agriculture, globalization and related subjects. One thing that is pointed out over and over again by various authors is that, because Canada is an insignificant partner for the Americans, the Americans impose their laws on everything. Canada really has to go down on its knees to the United States. Canada is overpowered by the Americans and stuck with the Americans. I would like to believe that the authors are perhaps not aware of everything, but they are nevertheless Canadians.

Did we close our borders to American sheep, for instance, when it was discovered that they had scrapie on the other side? Did we react the same way as the Americans?

• 0925

In my part of the country, the softwood situation is causing terrible hardship. We went to the WTO three times. We won three times, but we have not received a bloody cent. The Americans always do as they please.

Have we not been cornered by the Americans? Is it true that we are so insignificant?

Mr. Claudio Vallée (Director, Technical Barriers and Regulations, Department of Foreign Affairs and International Trade): In general, our relations with the United States are very good. We are their main trading partner. Our bilateral trade exceeds one billion dollars per day, which is the highest figure for trade between two countries in the world. We cannot therefore say that it is insignificant.

Of course, in any relationship there is a certain amount of disagreement. Disputes are settled by applying the rules governing our trade. There are two main agreements: WTO and NAFTA agreements. It is true that we run into snags in managing these disputes, but generally speaking, a large share of trading activities are carried out without these trade agreements.

There are phytosanitary disagreements on both sides. We, for our part, have restricted the entry of many American products to Canada in the past, because of phytosanitary problems; they have done the same thing. We attempt to resolve disputes on the basis of science. Generally speaking, this works. However, there are many situations that are more difficult to resolve. We often have to settle disputes by applying the provisions of NAFTA or of the WTO. This has not yet been necessary in the case of phytosanitary disputes, but it is quite likely that we will have to go this route soon because of the potato issue.

Ms. Suzanne Tremblay: So, as we speak, no complaint has been submitted yet and, for the time being, there are no plans to submit one. Is that correct?

Mr. Claudio Vallée: We have asked for consultations. Therefore, we are attempting—like anyone who has to manage a dispute—to settle this matter without committing ourselves to a specific legal option. However, since the Americans do not appear to want to budge, we will ask that our rights be respected and we will lodge a complaint. It is in the cards. If the Americans do not give us some assurances in the next few days, we are seriously thinking of going ahead with this.

Ms. Suzanne Tremblay: Your deadline is in the next few days. Let me make a comparison with the softwood situation. We tried to reach an agreement with the Americans. We tried for months and months to negotiate an agreement. We then went to the WTO. We won every time, but they never paid a penny.

I don't understand that, given past experience, you have not yet learned your lesson. You know full well that the Americans will never give us anything; they want to have everything. They will never give anything to anyone. Why do we wait for so long before going out to do battle with them? That's what I don't understand. Why does it take us so much time? Why do we still trust them to reach a friendly agreement? That is not the way they think. That is not at all the way their minds work.

Mr. Claudio Vallée: We have settled minor disputes in the past. As for softwood lumber, I don't want to go into the details. We preferred to let this matter be decided by the agreements. Our industry pushed us to sign these bilateral agreements because it saw them as a lesser evil. The government therefore did what the industry wanted, at least in the case of the second regulatory agreement. We ourselves were prepared to go to the international tribunals, but the industry thought that there would be a downside for it if we took this route. So, it preferred an agreement reached without appealing to the tribunals, and we gave it what it wanted.

• 0930

[English]

The Chair: Mark.

Mr. Mark Eyking (Sydney—Victoria, Lib.): I am doing a bit of calculation here, Mr. Watson. We talked about 500 million hundredweight of potatoes. It would come to $12 million. When I do a quick calculation, it comes out to 2¢ a pound. If you multiply that, a fifty-pound bag would be a dollar.

I grow about a million pounds of turnips, or rutabagas, with the same kind of storage. We bring them in at the same time. I figure one dollar might cover the cost for three to five months of just storing the product—that's not the growing, harvesting, grading, and selling. The question is, where do we get the 2¢? That barely covers the storage cost. I could be off a bit, but that has been my experience.

Ms. Mary Komarynsky: Mr. Chair, in terms of the 2¢ or the $2 per hundredweight, our estimates were based on, first of all, 6.3 million hundredweight, as you indicated.

We looked at the cost of disposal. We worked with both P.E.I. officials and producer organizations to establish the cost of disposal. At that time, the cost of disposal ranged between 86¢ and a dollar. The cost of actually taking the snow off the fields, bringing in the potatoes, chopping them up, and dispersing them on the field, in our estimates were approximately a dollar per hundredweight.

We knew there would be some additional cost on top of that one dollar because with the P.E.I. Potato Marketing Board in their diversion program, both for the first round of diversion and the second round of diversion, it is very critical that the potatoes are traced back to the fields where they were grown or at least the zone where the potatoes came from. We knew that would add to the cost of the one-dollar disposal.

Secondly, as Mr. Watson pointed out, agriculture is a shared jurisdiction. We assumed in discussions with P.E.I. that there would be some cost sharing for the environmental disposal of potatoes. We wanted to have a price that would encourage disposal and compliance with the P.E.I. potato marketing diversion program, but at the same time not create a disincentive for potato producers to find markets if they could. That was how we calculated our costs.

Mr. Mark Eyking: My question should have been, why were they only covering the cost for disposal instead of some of the cost of production? Right now I'm realizing that the only money being paid was for disposal and not for helping with the cost of production.

Ms. Mary Komarynsky: In terms of our discussion with P.E.I., the cost of disposal was essentially for that. Both governments agreed there was a need, and an urgent need, to dispose of the surplus potatoes. In terms of the principles for this disposal assistance, one of the principles we set is if there is a drop in income, there are existing safety net programs available. The Canadian farm income program is available to help producers with drops in income. As the federal government, our policy is not to compensate for trade actions. The focus of our discussion on the $12.6 million, or the cost of disposal, was to help with the disposal of the surplus potatoes.

Mr. Mark Eyking: I guess the final answer is that we don't compensate for trade disputes. That's what it comes down to.

Ms. Mary Komarynsky: That's correct.

The Chair: We still have time. Do you want to identify what a trade dispute is as opposed to a problem? Is this the problem of trade?

Mr. Mark Eyking: I would hope that as a government we would respond more quickly when these trade disputes happen and would have a relief package for people who get hurt. Apparently right now it's not the policy.

That's a comment, not a question.

The Chair: Thanks, Mr. Eyking.

Now we'll go to Dick.

• 0935

Mr. Dick Proctor (Palliser, NDP): Thank you.

My question is, why don't you compensate on trade action?

Mr. Claudio Vallée: Well, the practice has been for governments not to compensate on other people's trade actions. Governments deal with sovereign governments and try to manage disputes and restore access. Individuals that are affected are dealt with by internal support programs.

Our industries get affected all the time. There are anti-dumping actions, countervailing actions taken against them. If we had to compensate all these industries, we would never finishing paying. There are all kinds of disputes around the world, and all kinds of restrictions are placed on Canadian products. I think the role of government is to open and clear these restrictions.

Mr. Dick Proctor: Okay. I appreciate that.

Mr. Watson, in his comment, talked about the government pushing the United States to recognize science and lift the import restrictions. Could you tell the committee what that pushing has consisted of?

Mr. Claudio Vallée: Well, we've met several times—I think three or four times—including unofficial consultations. We explained to the Americans. We went through our science. We explained our mitigated measures. We've indicated that our measures were in keeping with international obligations—the IPPC and other standard-setting organizations. The Americans did not disagree, but told us that they were seeking an additional level of comfort and that our measures still provided a certain element of risk. We see that risk as an element of speculative risk that is not borne through risk assessment measures. We told them so, and if they don't recant, we'll be putting that through the formal dispute resolution measures to explain to them.

Mr. Dick Proctor: Mr. Watson's statement says that in January Mr. Pettigrew requested NAFTA consultations on the issue. Were consultations the only option that was available to the Canadian government? Or could they have taken a more aggressive approach with the Americans on this issue?

Mr. Claudio Vallée: Through the formal legal process you have to start with consultations. If you don't resolve the issue by speaking, you can then refer the issue to the NAFTA commission where the three ministers get together and examine the problem. If they don't come to an agreement, then you can send the matter to a formal dispute resolution process.

There are two avenues open to us in this respect. One is to ask for a scientific panel. The other is to go through the normal dispute resolution method. Those two options are open to us and we're examining them right now.

Mr. Dick Proctor: But will you make a determination later as to which option you will pursue, if you have to make that decision?

Mr. Claudio Vallée: Well, we have a fairly good idea of what would be in our best interests, given the timeline. Our interest is to get P.E.I. potatoes moving, and therefore we would like to go to the option that is likely to give us the earliest resolution. We believe that through a scientific panel we could have this managed through the summer, so that we could have a decision—depending on terms and conditions and the selection of panellists—sometime by late summer or the beginning of fall. The other more lengthy dispute resolution could take us from fall into winter.

NAFTA is built-in like that, and the WTO as well. Generally it takes close to a year to get through a dispute resolution process. It's not fast, and I wish there was something faster, but negotiators were not able to develop those protocols.

• 0940

The Chair: Dick, do you have another question?

Mr. Dick Proctor: That's fine.

The Chair: Larry.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Certainly it seems that the rules should be a little different. Perhaps they could be a little different for food and for an item that would perish so quickly. I know it's shared jurisdiction and we're doing a little bit about this, but I'm wondering whether the department has looked at the long-lasting effect, the impact, on Prince Edward Island. I mean, spring is a little slow, but the planting season is soon upon us.

I'd like to get some comments on that, if I could, Mr. Chair.

Mr. Samy Watson: The issue here, one we continue to pursue, is whether it's a science panel or whether it's at the political level, this is also happening in terms of keeping the border open. Right now producers have decisions to make. There is no doubt about that. We're sensitive to that.

The markets that are moving for P.E.I. right now are the processing market, some overseas markets that are not in the United States, and domestic table stock, particularly as the central Canada markets start to create openings, which is the case right now. These are difficult decisions to make, and we are continuing to work as hard as we can with the United States to try to keep that border open. But there will be decisions to be made—business decisions to be made—in the next while.

Mr. Larry McCormick: And I'm sure, Mr. Chair, that the producers—the farmers—would surely support any help that the department can give as they make their decisions, because they seem to be so open to the rest of the world.

This is a two-part question, perhaps. Is there any more room for our potatoes here to go under the Canadian flag to other markets? You mentioned other markets are available and opening up a bit—Europe, for instance, and I'm wondering about everything from the Caribbean.

Mr. Samy Watson: We have an agrifood trade program where we have offered to work with P.E.I., and we have been working with them and other provinces. In particular, we've offered to work with P.E.I. in terms of establishing other markets around the world and providing some of the funding required to make the particular types of trade missions necessary to create markets for P.E.I. potatoes beyond that of the United States. That activity has started, in effect.

Mr. Larry McCormick: Thank you, Mr. Watson.

In terms of foreign affairs and trade, is there ever any difference in approach when it's a perishable commodity, especially food versus softwood lumber, as important as it is, and steel? Also, if the American decision is based solely on the fact that they have a large crop of potatoes and nothing to do with science—according to Suzanne or whomever said that—probably they're going to turn around and do this to another commodity tomorrow. Where are we standing on this and why are we not moving on?

Mr. Claudio Vallée: Well, we have to be clear. The Americans have never officially indicated that their actions are in response to the surplus—

Mr. Larry McCormick: And they never will, of course not. I wouldn't want to hold my breath waiting for it.

Mr. Claudio Vallée: The NAFTA has only provision for fast-tracking on perishables at the consultation stage. Once you get past that it's the normal timelines that come into effect. The added provisions that are here in terms of dealing with phytosanitary issues is that you can go to a scientific panel, which is a shorter timeframe than a normal panel route. This is an option that we will be looking at and consulting with industry in terms of getting their support for it.

Mr. Larry McCormick: Mr. Chair, I have just a last comment. If that is available and open, what's the downside to that? Why are we not started down that route?

Mr. Claudio Vallée: Well, we had engaged, with the new Clinton—

Mr. Larry McCormick: It's Bush.

Mr. Claudio Vallée: The problem was started by the Clinton administration. When we had consultations, we were told that it was a possibility that if we engaged the new administration properly that we might have some results.

• 0945

In fact, we did that. Basically, we had the Prime Minister, my minister, the Minister of Agriculture, ambassadors, and officials making the presentations.

We're done now. Those discussions now seem to suggest the Americans are entrenched. We will be putting forward one last point of view to them, basically giving them our bottom line. If we don't get a resolution within this week, then clearly we will be moving to a more formal approach.

Mr. Larry McCormick: I have a point of order, Mr. Chair.

I'm sure that, besides being done now, we would keep open the lines of communication and talk as we go on with these exercises.

Mr. Claudio Vallée: We're always doing so.

We need to bear in mind that President Bush is coming to Quebec City sometime in April for the Summit.

Mr. Larry McCormick: There will be quite a few people coming.

Mr. Claudio Vallée: It will be an opportunity for a bilateral discussion with the Prime Minister. We will again raise the issue.

Mr. Larry McCormick: Gracias.

The Chair: David.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): You mentioned there's a restriction on the movement of these potatoes in Canada. I'm wondering what those restrictions are and if you can explain why they're there.

Mr. Robert Carberry: The only restrictions we have in Canada are on the potatoes that are actually in the infected field and the small buffer zone around it. We have no restrictions beyond that. There is freedom of movement from the Canadian standpoint and the CFIA standpoint for the rest of those potatoes.

Mr. David Anderson: Those potatoes have been segregated?

Mr. Robert Carberry: That's correct. They've actually been destroyed. For anything off the contact fields, we even went a little further. We also destroyed them. We had controlled processing and sterilization of all the equipment afterwards.

However, the U.S. has imposed conditions on us with respect to restricting the movement of potatoes. Therein lies the problem. We don't see the risk. We're allowing freedom of movement. They're assessing the situation differently and they're placing restrictions on our domestic movement of potatoes. That has been one of the major issues of contention. That's what's creating some of the problems for domestic movement on the island right now.

Mr. David Anderson: I understand there are trade restrictions if you move those P.E.I. potatoes into Canadian processing and move the other potatoes into the United States. Does that conflict with the trade agreements that have been made?

Mr. Robert Carberry: Right now we are able to move the potatoes to processors under controlled conditions. There are no restrictions against those processed potatoes whatsoever and we would never anticipate any problems with the processed potatoes.

The U.S. is requiring that we certify the province of origin for all other exports to the U.S., but those other exports out of other provinces are still being allowed. We have to do a little bit of extra work to provide them with the assurance that they aren't from P.E.I. We are doing that and there is freedom of movement from other parts of Canada.

Mr. David Anderson: I'm just confused as to why we would sit for six months with potatoes in storage when you could have moved them other places, had them processed, and then replaced the potatoes into the United States from another area.

Mr. Robert Carberry: That's a marketing issue. With respect to our restrictions, we don't have any on those particular potatoes.

Mr. David Anderson: Who's responsible for the marketing at that level then?

Mr. Robert Carberry: I would think the P.E.I. Potato Board.

Mr. David Anderson: Okay.

I'd like to know what happened between December 13 and December 22. It sounded like you were close to an agreement with the Americans and then it fell apart. How did they change their position and what happened there?

Mr. Robert Carberry: We don't know for sure what happened. We tried to negotiate their import restrictions down. At no point did we agree with any of this because we found all of it to be excessive. We were attempting to negotiate some of the import restrictions away. We did get a written agreement from them on December 13. I would not leave the room until I had it from them.

It's our understanding that there was apparently some pressure from the industry in the U.S. two days after objecting to the December 13 letter. Within 48 hours, we received notification from the U.S. that they would not be implementing those new revised import restrictions. It went back to an absolute ban at that point in time.

Mr. David Anderson: Okay.

Again, a couple of you have heard me talk about this before, but I do have a problem with the safety net programs responding as slowly as they do. These guys are going to take a major hit in their income levels this year. The response probably won't be until the middle of next year. Producers need money and they need it quickly when something like this happens to them. If there's a process of giving them the money ahead of time because you realize what the income drop is going to be, that may be one way of dealing with it. These guys can't wait until June and July of next year or October of next year to get the money that has come from the drop-off.

• 0950

Mr. Samy Watson: One safety net that is available is the NISA account, which takes about forty days on average to withdraw. About 10% of P.E.I. producers have availed themselves of NISA, at an average withdrawal of about $34,000. Another less than 1% have availed themselves of NISA at an average withdrawal of about $54,000.

The CFIP forms are available, and P.E.I. is starting to process those forms right now. CFIP is administered in P.E.I.

Mr. David Anderson: I would like to go back to a question Howard asked that wasn't answered, and that is about the average gross income and net income of your P.E.I. producers.

Mr. Samy Watson: The average? I can give you a set of ranges. There are 421 potato producers in P.E.I. About a third of those are in the $100,000 to $250,000 range.

Mr. David Anderson: This is gross income?

Mr. Samy Watson: Gross sales.

Another 108 are above $500,000. Another 100 are between $250,000 to $500,000. That's where the largest component is. Then about 108 producers are above $500,000. Those figures are for gross sales.

Mr. David Anderson: Howard, did you have any...?

Mr. Howard Hilstrom: No.

An hon. member: That's probably the end of his time.

The Chair: What year are you quoting, Mr. Watson?

Mr. Samy Watson: That's for 2000.

The Chair: The previous year?

Mr. Samy Watson: The previous year, yes.

The Chair: And that would compare with a five-year average?

Mr. Douglas Hedley: P.E.I. farm incomes have been both relatively stable and growing, in part because of reasonably good potatoes until this past year. There is really nothing in the P.E.I. industry that would suggest weakness in that income over the last few years.

NISA balances continue to rise in that province. They are some of the strongest we have in any province of Canada, with $53,000 in the average account in P.E.I., and $85,000 for those who sell more than half of their gross sales as potatoes.

The Chair: Thank you, David.

Mr. Howard Hilstrom: I think that's what we're getting at, Mr. Chairman. Stats Canada produces these figures all the time, and what we're trying to get at is the basis on which the department makes decisions on these income issues affecting farmers. That's why we asked for that information.

The Chair: Thank you, David and Howard.

Wayne.

Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

At a previous meeting, Mr. Chairman, I outlined my dissatisfaction with the performance of the department on this issue, so I'll not get into that again. But I would suggest that I think there's certainly a difference of opinion between Mary and I on where the P.E.I. government's position is on this, and the position of the P.E.I. Potato Board. I would therefore suggest that maybe you consider bringing those groups in, or have a teleconference call with them, because how you got....

On the agreement on the 2¢, what I'm hearing from you is certainly a different view from what I've heard from them on the amount of time to get it.

In your submission, Mr. Watson, you said:

Based on the findings, Canada took the position that no restrictions should exist on the movement of Canadian potatoes, with the exception of buffer zone around the infected site.

On what date did you make that decision?

Mr. Robert Carberry: To be reasonable, we needed to get our lab results in, so it would have been late November or early December when we were absolutely certain of our position.

We contended from the beginning that we had taken the appropriate measures to control the problem, in that we had detained any suspect fields. So, if you like, we were presenting that position from the beginning, but were absolutely certain of that position come late November or early December.

• 0955

Mr. Wayne Easter: Mr. Carberry, I think you had indicated the P.E.I. board basically voluntarily agreed not to ship potatoes to the rest of Canada in order to protect the interests of the rest Canada.

Mr. Chairman, the fact of the matter is, not only is the U.S. putting up a trade barrier here—you called it a trade action, but it's an illegal trade barrier—in keeping P.E.I. out of the market, they are in fact dictating agricultural policy within Canada itself through their threats that if Prince Edward Island ships beyond twenty-pound packs and seed to the rest of the country, the U.S. may retaliate against the other exporting provinces. Again, that is effectively dictating agricultural policy in Canada, and that's really worrisome.

But what makes me frustrated and angry, Mr. Chairman, is that, the fact of the matter is, because the board voluntarily agreed not to ship to the rest of the country, the rest of the provinces were able to ship $61 million worth of potatoes to the U.S. by about January 20.

Mary, am I correct in saying this was not factored into your considerations on the amount of assistance to the P.E.I. industry? We got no credit. Would we have been better off as a province by saying to heck with the rest of the country, and to ship—which we could have done—and then the country would have had a mess, instead of it being isolated to P.E.I.?

Ms. Mary Komarynsky: As I indicated, in terms of assistance that was provided, our discussions.... First of all, the $12.6 million was for environmental disposal. We also provided $1.5 million for the movement of potatoes to domestic food banks. In addition, we gave half a million dollars to the P.E.I. Potato Board to administer the disposal—

Mr. Wayne Easter: Mr. Chairman, I hate to interrupt, but my question was, in fact, whether any consideration was given to the fact that we voluntarily took the hit for the whole country in terms of the package to P.E.I.

Ms. Mary Komarynsky: As I indicated previously, Mr. Chair, there were a number of principles upon which we based our assistance. Existing safety nets do allow for any income drop, and are therefore in place to assist farmers who have an income drop no matter what the cause. As well, the federal government does not compensate for the results of any trade actions.

Mr. Wayne Easter: Thank you, Mr. Chairman.

I would just point out that when you did develop your package, you did say you considered taking the snow off the field.

I just want to put on the record, Mr. Chairman, that it has taken so long to get it together that we're not now dealing with snow, we're dealing with fields with frost out of them and we're dealing with mud. That's the reality of trying to get these potatoes moved in an environmentally sensitive way.

Mr. Vallée, you've indicated in your remarks that you told the Americans so, that their actions are illegal. I have two questions. First, what specific action have you taken to send the Americans a message that Canada is not going to stand by while they take this illegal action at our borders?

Secondly, Claudio, you know we've talked about this before. I think the Americans think we're a bunch of wimps when it comes to taking aggressive action on this trade issue. I agree with Suzanne on that point. What specific actions have we taken? We were talking in conference calls, I believe it was in mid-January, about doing blitzes at the border and about taking strong action. It seemed we had a consensus to do that, although I don't agree with the consensus approach when it comes to trade, because I think the federal government should provide leadership.

Second, on what authority and under what measures did the U.S. have the right to send us a message? They sent three truckers with truckloads of potatoes back in New Brunswick. One of them was a head guy in the potato organization. In B.C., they sent a truckload of potatoes back to the president of the B.C. potato growers association. That was to send us a message, and the consensus fell apart because of the fear in our industry across the country.

So what authority did they have to do that, or did they just do it? And what specific actions have we taken?

Mr. Claudio Vallée: In terms of what specific measures they took, there were clearly phytosanitary measures, which our colleagues from CFIA basically manage at the border.

• 1000

As the Department of Foreign Affairs, we have consistently suggested to CFIA and others that we enforce our laws at the border and ensure we utilize whatever phytosanitary measures we have in place and that we do the number of inspections that are necessary for potatoes and all of our horticultural crops from the U.S. That was discussed with industry, and CFIA put in place a series of measures, which they've been carrying out.

Mr. Wayne Easter: What are these series of measures?

Mr. Claudio Vallée: Bob, can you please explain.

The Chair: Because Wayne is from P.E.I., I've given him more than the five minutes. He's up to seven and a half now. Are we comfortable with that?

Mr. Howard Hilstrom: He can finish that.

An hon. member: Let him go.

Mr. Howard Hilstrom: No, don't let him go.

Some hon. members: Oh, oh!

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): He's on a roll, Mr. Chairman.

Mr. Robert Carberry: We have our own import restrictions and measures against U.S. potatoes because of the plant health risks. These are housed within two of our import directives, D-98-01 and D-96-05.

We've increased our surveillance of all potatoes coming into the country since late December. Since that time, we've looked at 100% of the bulk loads that have come into the country. They haven't numbered a lot at this point, only nine shipments. We have taken both tuber samples and soil samples from them, looking for plant health pests. In addition we're inspecting in every major destination marketplace in Canada on a weekly basis. To date we've looked at 196,473 tubers. We've taken a series of samples and sent them off to our laboratories. We've also taken soil samples out of trucks or bags to look for these types of problems. That's what we've done so far. A lot of those are still within the laboratory system, but we're increasing this vigilance and will keep it up for the upcoming months.

Mr. Wayne Easter: I never did get an answer on the American position. I know that for a truckload that was sent back to New Brunswick, when they went to the border, they said there was an 18% problem. The producer took it back, and two CFIA inspectors inspected that truck and said it was less than 3%. The same truckload went back to the border, and the American inspector said, this is 30%. They impounded the truck. He had to pay $600 to get the truck out of there. Why are they able to get away with that and we don't send them the same kind of message?

Mr. Robert Carberry: I'm aware of the particular situation that occurred in New Brunswick. I'm not aware of the one that occurred in British Columbia, which you mentioned earlier.

For the one in New Brunswick, you're right, basically this wasn't a phytosanitary issue but a quality issue. They have had a procedure at the New Brunswick border for years where they stop trucks coming out of the maritime provinces and do restricted inspections on them. They just take a few bags off the back of the truck, so it's not necessarily representative of what's in the load. At that point the truck driver has a choice: either continue with the shipment for a full inspection by USDA at destination, which would be more costly if there's a problem, or return the truck and regrade it, which is in fact what happened in this situation.

When the truck came back, we did do the inspection. We found there wasn't the same degree of problem that the restricted inspection by the U.S. showed. They shipped it back up. The U.S. stopped it again, did another restricted inspection, and found another problem. At that point it was up to the truck driver either to move it through to destination or to bring it back. The truck driver chose to bring it back.

At that point I called my U.S. counterparts and said it appeared as if there was too high a level of vigilance occurring at the border point, that it was highly suspect to our potato industry here, and I asked that they please take measures to make sure they're implementing their regulations properly. Since then I understand there haven't been any problems, so hopefully that one went away.

Mr. Wayne Easter: But they succeeded in sending us a message, and it created the fear in the country that we didn't have the consensus to take the same kind of border action. I'd suggest, Mr. Carberry, that we do the same thing with California potatoes coming into Canada. Send them a message. It's high time we did.

The Chair: Thank you, Wayne.

We'll go next to Howard again.

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

Every province is producing potatoes, but especially Manitoba. My understanding is its production is as big as that of P.E.I. The P.E.I. guys have a real problem with the Americans, but in western Canada we have a heck of a problem with the Canadian Wheat Board. We can't take a load of wheat across the border, and the blasted Canadian government is the one that is stopping us from doing that. So we have problems both internally and externally.

1005

With regard to trade action, the Bloc member was talking about waging war. Mr. Easter talks in terms of shutting the border. Is it the minister's and the department's policy to manage this issue and to get our exports flowing again without causing mammoth problems? I'm suggesting that if anybody wants to escalate this trade war, it is going to cost us a lot more in agricultural exports than the value of exports to the U.S. right now.

Can you tell me what the export value is of P.E.I. potatoes to the United States, including seed and table potatoes? There must be a dollar figure.

Mr. Douglas Hedley: Mr. Chair, I don't have that number with me. We'd be happy to provide it, in terms of total exports out of P.E.I. or all of Canada. What I can tell you is that Canada is a major net exporter of potatoes to the U.S. and elsewhere. There's a huge surplus in our balance-of-trade account on potatoes.

Mr. Howard Hilstrom: I agree, Mr. Hedley. That's why I'm strongly suggesting and hoping the department agrees that in fact there is a very managed response to this and it's not one of escalation but instead one of negotiation. Can I have the reassurance that it is in fact one of negotiation? I hear this talk of super inspections of loads of potatoes coming in. I saw that before, and that concerns me, because if you start hitting back in an unfair way, you're just going to escalate that. Can I have the overall philosophy on this?

Mr. Robert Carberry: Claudio can probably answer the question with regard to the trade aspect.

I just want to clarify what measures the CFIA is taking. We are not stopping trucks at the border. We are meeting trucks at destination. We are not disrupting the normal flow of trade. We are catching those shipments at destination and taking samples from them. So with regard to disrupting trade in such a way that the U.S. government would feel we are retaliating, that's not occurring.

Mr. Howard Hilstrom: Have farmers in Prince Edward Island been told they shouldn't count on having an export market this fall as they're planting now in the spring? What are they being advised by the government as to the probability of them being able to export? Are they being advised anything?

Mr. Claudio Vallée: We have told them that the current provisions allow for some modicum of exports but they are restricted. The product has to be washed and be sprout inhibited, and it has to be sent in bags that are 20 pounds or less. Yes, it can be said to be a conditional export. There is as well movement to higher sizes of bags, but again with those conditions of sprouting and washing. The Americans have allowed us to ship from zone 4, which is a large part of P.E.I. seed potatoes, to the rest of Canada. So there is a modicum of capacity of export there.

Mr. Samy Watson: I would add that we're having regular conference calls with the industry—one is scheduled for next week—to keep them up to date on every conversation we're having and every attempt we're making with the United States. So we are working to keep the industry up to date.

I should reiterate that in terms of processing potatoes, which is 50% of the industry in P.E.I., that's stable. There is movement in Canada for table potatoes, and those are available as well. There are other country imports as well.

Mr. Howard Hilstrom: Certainly, the expectation has to be that this is going to be satisfactorily resolved without additional disputes arising.

Mr. Samy Watson: In answer to your earlier question, Mr. Hilstrom, in terms of the export numbers, in the case of potato and potato products, in 2000 Canada exported $741 million to the United States and we imported $203 million. So there is a trade surplus—this is not just P.E.I. numbers, it's all of Canada—of $538 million.

• 1010

The Chair: Mr. Watson, I am having some difficulty with this, and I wonder if there is any other witness in your group who can give us the value of the loss. This is the crux of the whole matter. How much did P.E.I. farmers lose in their exports as a result of the potato wart? Are you saying this morning that no one at the table has the value of the loss?

Ms. Komarynsky, you must have that in your discussions with P.E.I., because that's the central part of all of this. How much money did the industry of P.E.I. lose as a result of the restrictions by the United States government?

Mr. Samy Watson: As I think we indicated earlier, the result of this trade import restriction was that 22% of the crop is in surplus, 6.3 million hundredweight.

The Chair: What is it in value, though? You've put a value on what you offer the P.E.I. people, and you must have some idea of what they lost as compared with what you're willing to put forward. You must have that. Someone around the table must have that.

Mr. Howard Hilstrom: We need to know what the value of 6.3 million hundredweight is.

The Chair: Mr. Hedley.

Mr. Douglas Hedley: I'd like to see if I can help. Mr. Chairman, we've gone through a lot of analyses with P.E.I., and it would indicate that the total season losses, based on what has happened in the U.S., is approximately $18 million in P.E.I.'s case.

Mr. Wayne Easter: On a point of clarification, the biggest area of the loss—maybe I shouldn't say “biggest”—is in seed contracts. We've lost the table market, which is high-volume and high-priced market, in the November, December, January, and Thanksgiving-Christmas markets. There's a very good price that people have built up over the years, but seed producers are having their contracts cancelled and those seed prices range from maybe 11¢ to 17¢ a pound. In fact, I know of one producer growing nuclear seed stock who's getting 23¢ a pound.

In fact, one individual I know had seven contracts, one with the U.S. That, naturally, was cancelled. The other six were with Canada. He has only one left, and one of them was an $80,000 contract at 11¢ a pound into the province of Quebec. That's where the very substantial losses are. It's not in moving product into the U.S. markets, necessarily. It's due to other producers in Canada who buy P.E.I. seed who are fearful that if they buy P.E.I. seed, the Americans may not buy their product next year.

The Chair: Thanks, Mr. Easter.

I'm going to go to Bob next and then to Suzanne.

Mr. Bob Speller: I have a comment and a question, Mr. Chairman.

I'm interested in the question that was asked about what actions either international trade or CFIA have been taken with regard to the illegal and unfair actions of our American neighbours. I suppose there's really no answer to that, because you really can't come out and say “We're checking a few more shipments than maybe we normally would”, since it would certainly signal to the Americans that maybe you're doing something unfair, too. I take it, though, you get the message that members here are expressing in terms of what actions should be taken.

My question is on the whole question that the Government of Canada does not compensate for trade actions.

Mr. Vallée, you said that we have all these trade actions, but those actions are generally taken by companies; it's company to company, and it's about either anti-dumping or countervail. But in this case, it's the government that's not following the rules. It's unfairly not looking at the scientific evidence. This is not a private company-to-company matter, but it's because of the actions of a government that our farmers are being hurt.

I'm wondering what can governments do. If they can't compensate farmers to keep them in the business to make sure they're still around, then would it not be for governments around the world to say it's going to be a two-year process—I'm thinking more of little commodities that will get hurt even a lot worse—or a year-long process, we can wait them out, we can really damage their industry, because we decide that we're not going to base our decisions on scientific evidence, as the WTO or even NAFTA says we should?

• 1015

What other actions can government take if they're not going to support their industries in those circumstances?

Mr. Claudio Vallée: Basically, what governments do is they try to deal with issues through the proper dispute resolution measures, which lead to a finding of whether a country has contravened or not. If there is a country that has contravened the rules, there is a provision that the offending country must remove that rule. That's what both NAFTA and WTO say. If they don't, then you're allowed to retaliate appropriately. That's what we do normally and we have done in the case of the—

Mr. Bob Speller: But what do you do in the meantime? That's my question. I understand all the rules, you follow the rules and we go through it, but what does government do in the meantime with these poor producers who probably won't be able to farm?

Mr. Claudio Vallée: Governments take measures to assist, as they've done in terms of disposing of surpluses and so on. There is no difference in terms of managing international disputes, whether it's a phytosanitary measure or whether it's some government that's subsidized its grain producers more than another country.

Mr. Bob Speller: Or airplanes.

Mr. Claudio Vallée: The effects are the same, and governments don't go individually.

In terms of the aircraft, it's a little bit different there.

Mr. Bob Speller: I know.

Mr. Claudio Vallée: What the government did, it provided a loan to a company—

The Chair: Let's not get into this. Let's stay on topic.

Mr. Claudio Vallée: —and it's a different situation we're facing here. It's not at all in the same realm. The assistance to Bombardier was specific. It's a loan that the company has to repay and it's not deemed as assistance. It's the normal financing that is provided to companies under the rules of the EDC.

Mr. Bob Speller: My question is, why couldn't there be something similar, not something like that but something more than just getting rid of excess stock and 2¢ a pound? I would see a role for government to play when governments themselves—not companies, but governments themselves—blatantly disregard the rules. In a case like this, governments at all levels should be taking further action.

The Chair: Thanks, Bob. Are you done?

Mr. Bob Speller: Perhaps I can get a response from Mary on that. I'd like her response as well.

The Chair: You hope for a response.

Ms. Mary Komarynsky: Mr. Speller, as I indicated, the existing safety net programs that were signed by federal and provincial ministers on July 2000 do provide support no matter what the cause. So P.E.I. producers can apply, as can all Canadian producers if their income drops, for the Canadian farm income program. As Mr. Watson indicated, P.E.I. producers are applying now. There have been information sessions in the last while to encourage them to get their applications in. But that is the purpose of existing safety net programs.

Mr. Bob Speller: I understand all those. They are available to all commodities. But the question is, why do we not make the distinction that this is a not a private but a government-to-government situation, between Agriculture Canada and the USDA? This is government-to-government breaking the rules and that's my only point.

Thank you, Mr. Chairman.

The Chair: Thanks, Bob.

Howard, and then Claude.

• 1020

Mr. Howard Hilstrom: Murray Calder is forever saying that he's a chicken rancher and I'm forever saying I'm a cattle rancher, and both statements are true. But certainly in regard to Mr. Speller's comments, in fact when we had the countervail issue with the R-CALF cattle in the United States, we as cattlemen across the country, including P.E.I., everybody who was affected, never got any compensation for the costs we incurred as individual producers when they were collecting that tariff against us going into the United States. So I would think that's probably a good policy, not to be trying to replace lost export earnings but to have effective safety net programs that kick in.

Has it been expressed to you by the Prince Edward Island Potato Board that in fact some farmers might go out of business down there because of this issue? Has that been expressed to anybody on the panel? My understanding was that only a portion of the production of a given farm really goes into that export market. Was that brought up as a concern?

Ms. Mary Komarynsky: Since the potato wart issue began, there have been concerns raised by both the P.E.I. government and the P.E.I. potato marketing board in terms of the economic situation of P.E.I. farmers.

Our meeting on January 10 with the Prince Edward Island Potato Board as well as the P.E.I. government was the first face-to-face meeting where they did go through the current situation for them. So, yes, it was expressed.

Mr. Howard Hilstrom: Okay.

The P.E.I. marketing board is certainly not a supply management type of operation. Do they have a bit of a formal function to try to match supply with projected demand? Do you know about that? It might be out of your area a bit.

Mr. Douglas Hedley: No, they do not have power to adjust supply to demand. They work with their growers in making sure they know what the markets are, particularly with the different kinds of markets, both domestic and offshore, for processing, table, and seed potatoes.

In response to an earlier question about the size of the exports from P.E.I. to the United States, we have volume numbers but we don't have value numbers with us. On a three-year average, those exports are approximately 2 million hundredweights out of a crop of about 29 million hundredweights. So you're talking something in the order of 6% to 7% of that market from P.E.I. going into the U.S. In terms of value, in all the analyses, as I indicated earlier, we feel that we have lost sales to the U.S. of about $18 million.

Mr. Howard Hilstrom: Has that little field, or little acre or two there, been sterilized to the point where you can now say that Canada has no potato wart? Is it possible to do that?

Mr. Robert Carberry: We've controlled all movement on or off that field, and we will be ordering that the field get out of potatoes. What we're looking at right now is treatment of the field to be able to eliminate all traces of potato wart, but it's unlikely that field will seed potatoes for at least the next 50 years. We're going to keep it out of production. That's normally the way we handle these types of things.

What we would be doing is working to provide international organizations with assurances that the rest of P.E.I., with the exception of that one field, is free from potato wart, re-establishing in international eyes the status of the P.E.I. island.

Mr. Howard Hilstrom: I have a really important reason for asking that, obviously, because we've seen in Manitoba that some diseases that were not there before have slowly started to come into the province, just like any disease. So I guess that's the assurance we'd like to have for the rest of the country, for Quebec and the maritime provinces, that in fact this is not going to be a problem in any other province. You can give us that assurance, I guess.

Mr. Robert Carberry: Yes, we've taken every measure to provide you with that assurance.

The Chair: Mr. Easter.

Mr. Wayne Easter: I would just point out that there's a chain-link security fence around that field. All the soil that came off that field, that went into the warehouses, was taken and buried. Immediately after it happened, a 24-hour security guard was put on that field by the farmer involved.

• 1025

Mr. Howard Hilstrom: That's what we're getting at. Certainly we want reassurance, just like we do with any disease, because the export markets for Canada are gigantically important in agricultural products—maybe a little bit less so in Quebec, but it's still very important even there. But for the rest of the country, exports are our lifeblood in agriculture.

The Chair: Thanks, Howard.

Claude is next.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): Mr. Vallée, I am going to repeat a question that was asked in part. I would like to have an answer that is quite clear, without going into specifics.

We have been talking for some time—it all started with Ms. Tremblay—about the difficulties between Canada and the United States. We have spoken of problems with softwood lumber, of economic disputes. We have touched on the potato issue. Agreements that were supposed to be reached collapsed within 15 days, and you think that it is because of pressure from producers. We raised other cases.

I have the impression that we are encountering more and more problems that have less to do with science and more to do with economics, because of the economic slump. The United States is taking certain measures in relation to Canada that are proving very expensive for our businesses and are costing us a lot of jobs.

My question is straightforward. Should the government of Canada contemplate... To a large extent, the ideas also come from the economic sector. People wonder why Canada should not contemplate taking more Draconian measures in relation to the United States. Are you contemplating this? Should you be contemplating this? I would like to have a straightforward answer.

Mr. Claudio Vallée: I have worked as a public official and been involved in trade policy for 30 years now, and I can tell you that the Canada-U.S. differences have remained more or less the same. There are always problems to be resolved. But trade has risen astronomically in the last 30 years. The problems can be attributed to the nature of American economic interests, to certain industries that want a certain amount of protection, that are not prepared to embrace free trade and have a certain amount of power, in the American Congress or elsewhere, to impose their point of view to a certain extent. There are no more disputes today than there were 30 years ago. It is therefore in the nature of things, but trade has grown in such a way that everyone recognizes the advantages it has brought.

During those years, we developed our legislative processes, our means to manage disputes using NAFTA or the WTO. We studied the rules during three or four years of negotiations. The goal is to ensure that the rules regarding animal or plant health are based as much as possible on science, but the science is not always clear when it comes to settling these disputes. The notions of risk must be taken into consideration. Different countries have different opinions about the correct definition of risk. Therefore, we must ask the advice of experts in the field, so that governments will be able to determine which side is right.

At present, in the case of potatoes, we are dealing with different levels of risk acceptance. Our American colleagues tell us that there is still some risk and that they are not yet prepared to accept the risk represented by seed potatoes for certain parts of Prince Edward Island. So they will not allow us to export these seed potatoes this year. We do not agree with their position, and we will have to call someone in to arbitrate on this issue. This arbitration must be done by independent scientists, third parties.

• 1030

Agreements governing these situations do make provision for this type of process, but it is a lengthy process, and the decisions are not made in a month or two. It takes nearly a year. So that is how we have to proceed. We try to make sure the dispute is based only on specific cases. We try to avoid any reference to other products and disputes. We prefer to deal with problems on the merits.

The Chair: Suzanne.

Ms. Suzanne Tremblay: Thank you, Mr. Chairman.

In the last Parliament, we passed legislation banning a certain fuel additive because it was harmful to the health of Canadians. An American manufacturer claimed we were preventing him from making money, because he planned to set up shop in Canada and put this product in our fuel. So he sued, and we had to pay him $13 million in damages based on hypothetical revenues.

Could our potato industry, in turn, file a lawsuit, which in this case would not be based on hypothetical revenues? We know exactly how much money this has cost it. Under the same treaty, if the treaty is fair, could the industry sue the Americans and claim compensation for the money their decision has cost us?

Mr. Claudio Vallée: The case you are referring to is a bit different. Chapter 11 of NAFTA contains provisions under which foreign investors can file a complaint if their interests are affected by internal measures. In this case, a Canadian investor doing potato business in the United States would have to file that complaint. In this case, given that the Americans have taken what they deem appropriate steps, I think it would not be very easy to prove that the steps taken were not justified. In the case you were referring to, there was an American investor who had invested in Canada.

Ms. Suzanne Tremblay: He had not yet invested. No investment had been made.

Mr. Claudio Vallée: I do not want to get into the details, but I think the situation is different.

Ms. Suzanne Tremblay: Mr. Chairman, I would like to make a brief comment.

I have been here for eight years, and I find it a pity that the Liberal Party did not keep a crucial promise it had made, not to sign the Free Trade Agreement. Whenever we get a result, the Americans are always the winners, and we are the losers.

The government talks of surpluses and tries to impress us by saying that we have in the order of $1 billion in trade with the Americans, but that is only as long as it suits them. When it no longer suits them, they will close their borders. They let us export goods to them, but only because they need them and cannot produce them themselves. It is not necessarily because they really like us a lot and want to help us. For them, big business is what it is all about. When it no longer suits them, they will seal off their borders. We will never get ahead this way. No matter how many witnesses we call, we will not solve any problems, and our farmers will be stuck with all the same problems. I fail to grasp why that has not yet been understood.

• 1035

[English]

The Chair: Thanks, Suzanne.

I have just a couple of quick questions about the transmission of the virus. What we're saying is that basically it's transmitted by the potato itself, or the soil attached to the potato, as it's moved from place A to place B. Is that correct? It can't move on clothing or on other materials?

Mr. Robert Carberry: It's a fungus, and there are two primary ways of moving it—soil movement or an infected potato that actually has the potato wart growth on it. It is not easily transmissible. It's not transmissible by wind. It is not a disease that's spread easily.

We have unique circumstances on the Island in that all the water flows directly into Malpeque Bay, into saltwater marshes. There's no risk from that standpoint. It's not something like the FMD situation we're dealing with now.

The Chair: Now the fungus is in other countries, including the United States. In terms of our trade, we export about 741 million and we bring back 203 million. Do any of those American potatoes come from states that have the potato wart?

Mr. Robert Carberry: No, the U.S. has declared itself free of potato wart. They had a couple of outbreaks over the last few decades. They do not have potato wart in the U.S. right now.

The Chair: What was the date of the last outbreak?

Mr. Robert Carberry: It was 1993, I believe.

The Chair: So it's not that far away. Newfoundland had an outbreak at the turn of the century, and we still look back at that. Really, my question is, do any of those potatoes, those 203 million, come from a state that has had the potato wart in the last decade?

Mr. Robert Carberry: The U.S. outbreak was actually in non-commercial crops. It was in home gardens. So are there potatoes being exported from the states that had potato wart, Maryland and Pennsylvania. Yes, exports do occur.

The Chair: They do come to Canada.

Mr. Robert Carberry: That's right.

The Chair: Well, this seems like a very peculiar thought, in terms of the Americans and their attitude towards us. They had the wart less than 10 years ago, and we're continuing to import potatoes from those states—and meanwhile we're fearful of the Newfoundland situation that happened a century ago.

I understand the situation in P.E.I. was a former home garden, an area that was used for agriculture very recently. So that does create a few thoughts here.

There are other statistics to think about. For instance, how many farmers in P.E.I. have had their sales affected as a result of the potato wart? We heard there are about 421 of them, so are 100 affected, 200? Are they all involved with this? Do we have any information? And how many are exporting potatoes to the United States on an annual basis?

Mr. Douglas D. Hedley: Mr. Chairman, all I can tell you are the numbers we have on NISA accounts. A relatively high number of P.E.I. producers are on NISA accounts, about 1,100. In 1999, 421 of those had over 50% of their gross sales in potatoes. A great deal more than that have some potato sales, but it's not the majority of their sales.

The only thing I can say to you is that if half the crop is processing, then most farmers are going to have some processing potatoes. You've got a very small seed market, and a small table market. You will not have all producers involved in seed and table.

So a fairly large chunk of your P.E.I. farmers will be affected by the trade blockage on table and seed.

The Chair: So in effect, Mr. Hedley, it's more than the 421 farmers I originally thought. It could be 1,000 people. I'm trying to find out how many farms are really affected by this problem. Do we have 400, 200, do we have 1,000, 2,000? Could we have some information on that?

Mr. Wayne Easter: Mr. Chair, further to what Mr. Hedley has said, as I understand it, you're trying to deal with this from the NISA accounts. There are actually about 520 potato producers in P.E.I. registered through the board. Not everyone ships processing, nor does everyone ship table and seed. In fact, about half the industry—I think it's 48% to 52%—is mainly into processing, and 90% of their crop may go under contract. That might range from 50% to 90% of those producers.

• 1040

As I understand it from talking to the board, roughly 270 to 300 farmers are affected fairly severely by this particular problem. The processing industry isn't being hurt by this decision. The 10% that's not...but it would be wrong to say they've not been hurt. They could be, in some aspect, because let's say they have a contract for 80% to 90% of their crop. The 20% that normally goes on the open market could be affected in some way.

Howard, I just want to point out that I am a little concerned by the line of questioning that might suggest that when you weigh P.E.I.'s export against the export of other commodities.... I think you're saying that if you really challenge the Americans on this you run the risk of retaliation in other areas.

I see that as problematic. Look, you have to abide by the international rule of law, and the trade agreements we have. It doesn't matter how small the product is, you have to abide by those rules.

That was my concern, Claudio, in those conference calls. If we ever start trying to make decisions on consensus, and some people are fearful of what might happen.... I think when there's a violation of the trade rules, the Government of Canada has a responsibility to stand up and take action, not to make their decisions based on fear. I'm a little worried about that line of questioning.

Can somebody tell me how many U.S. states have quarantinable pests? I believe it's 37.

Mr. Robert Carberry: Yes, that number sounds right.

Mr. Wayne Easter: The chair's point on potato wart in the U.S. was that two or three states have had it as recently as 1993. In terms of their quarantinable pests, are we imposing on them anywhere near the same restrictions as they're imposing on us? We took 300,000 soil probes—Samy, you and I agree on this. I think CFIA and Agriculture Canada did a good job right off the mark, getting the soil samples and the scientific analysis done, so you could make the decision to say that we're within our rights to allow movement of product.

Mr. Robert Carberry: When we allow shipments of potatoes from states with various problems, we require them to take mitigative measures on our behalf to protect us from any risk. That's precisely the type of argument we've been taking in our negotiations with the U.S., that we want to be treated in the same way we treat them. I think that's been one of the strengths of our argument so far.

But I just want to reiterate that the U.S. restrictions on potatoes, outside that infected field and buffer zone, is a free area, in our minds. There should not be any restrictions against those potatoes at this time. What they're imposing on us right now is a precautionary measure, to address some uncertainty.

With respect to the measures they're taking, we continue to argue that we should be afforded the same type of treatment that we're affording them. It's based on good science, and these are legitimate measures to protect our territories from these types of problems.

Mr. Wayne Easter: Mr. Carberry, do I take it from your comments that the department, or the CFIA, takes the position that P.E.I potato producers could move their products in bulk to all Canadian domestic customers now, without the current washing and bagging in packages of less than 20 pounds?

Mr. Robert Carberry: We're not requiring any of those measures right now. We feel there's no plant health risk from areas outside the buffer zone and the field itself. The only restrictions are those that have been put in place by the Americans.

• 1045

The CFIA does not have the legislative ability to put those requirements on what we think are clean fields, so that has to be a decision made by the P.E.I. Potato Board and the provincial government, if they want to put those measures in place. We do not feel they are valid, and we continue to argue that they are not valid with the Americans.

Mr. Wayne Easter: I can't speak for the P.E.I. government, the board, but I don't think we want to put them in place. We see them as an unnecessary restriction. But if we lift them, we're still worried about the potential retaliation from the likes of Manitoba—we're doing a good deed to Manitoba and Alberta, Howard. But that's why it's continuing to be done, and my point earlier was that I don't think Prince Edward Island has been given credit for the fact that we've protected the interests of the rest of the country and continue to do so.

The question was raised earlier as to whether there are any producers in financial trouble. Well, the doors were closed on one farm a week ago Friday. Two farmers in the Kensington area have already advertised their land for lease this summer. I know another farmer who's basically under a suicide watch. These guys have aged ten years in the last three months. They're extremely distressed, and the mail we're getting from churches and others on the government's not coming through with a big enough package is pretty extensive. So there are serious financial problems. We've got to address them somehow.

I have a last point, Mr. Chair. The Americans sent scientists to Europe—I think most of us are aware of that—to look at how Europeans.... Holland has potato wart, and they export to the world, as do some other European countries. The American scientists went over, along with one of our own from the CFIA. I think we all held a lot of hope that this group would come back and report and say Canada is doing everything in its power to ensure that we're meeting all the requirements. That didn't happen. I understand that the Americans are not releasing that scientific report. Do you have any idea why not?

Mr. Robert Carberry: I don't have any idea why not. It was basically a report they were doing for their own purposes. They had a list of scientific questions they wanted to get scientific answers to. We were fortunate in that they allowed one of our scientists to go along. Our information from our scientist, who you can be sure I spoke to every day when he was in Europe, is that Canada's measures have been absolutely adequate. They've done more than what is done in Europe, and there were no scientific issues raised that would indicate Canada needs to do more in this situation.

There was also a feeling that some of the U.S. measures were excessive in this circumstance, and that was confirmed this week, unofficially, through our scientist with his colleagues in Europe. When we went to the meeting last week with the U.S., one of their scientists attended, and we were not given a full report of what happened there. They continue to hang their hat on the fact that there is still some level of uncertainty, notwithstanding all the good science, international protocols, and everything else.

I'd like to address one other issue that was raised by the chair a little earlier, and that is with respect to the potato wart finding in some of the U.S. states. My colleague just clarified it for me: that was actually in 1989. There were only eight spores found. They went through the eradication one of the other members was speaking of before, and five years after that they were declared free from the disease.

That's very different from the situation that exists on Newfoundland. We have had potato wart there since the turn of the century. We have not eradicated it and it remains under quarantine. We have control measures for potatoes and for vehicles moving off that island—in fact, they restrict potato movement off that island. So it's a very different situation in Newfoundland, compared with what happened in the U.S.

The U.S. situation is also one of our main negotiating points with the U.S. We want to be treated the same way they treated themselves, looking at the measures of control they put in place when they had a problem and what they did to declare eradication. We followed their protocol to the letter. In fact, the U.S. used our laboratories, because of our expertise with the disease in Newfoundland, when they were declaring their own eradication. These are all the types of arguments we're raising with them. Ultimately I hope it's going to rule the day, but at this point it hasn't worked to our advantage.

Mr. Wayne Easter: We'll have to get more aggressive, Mr. Chair, on the trade side.

• 1050

The Chair: I know it's very important this year, but next year and the year after, when we go back to market our potatoes again, the big thing is that we do have access to those United States markets. When they use that argument on us, we certainly can go back and say that we have done the same, and hopefully....

Howard.

Mr. Howard Hilstrom: That's why I was bringing up the whole eradication and sterilization issue on that particular land, and what was being done.

It's a good thing, ladies and gentlemen, we're coming to the end of this particular session of this agriculture committee meeting, because my good friend, Wayne Easter, dropped a couple of political land mines there—a slight bit of misinformation, maybe, regarding my position and the Canadian Alliance position in regard to agriculture exports and the actions that should be taken when an issue arises.

The fact of the matter is, the Canadian Alliance, and I, believe 100% in rules-based trading. We believe 100% in the provisions under NAFTA and the WTO. We encourage our government to fully utilize every one of these dispute settling mechanisms and every provision of those agreements to ensure that Canada stands up for our farmers and for ourselves.

Clarifying that, Wayne said that he didn't like to speak for the P.E.I. Potato Board, and I'm certain he wasn't trying to speak for me either.

Before the committee ends, I'd just like to bring up—at the appropriate time, Mr. Chairman—one issue dealing with Thursday, if I could just have two minutes at the end of the session.

The Chair: Larry, did you have another point?

Mr. Larry McCormick: Thank you, Mr. Chair. I just had a short point on the importation of potatoes from the United States, some $200 million.

Does most of that happen in the next 75 days? As I see the red, white, and new potatoes in the supermarket—well, I haven't had time to go shopping, but I expect they're there—we're still waiting on Canadian or Ontario, or P.E.I.

Mr. Douglas Hedley: Mr. Chairman, I simply don't know the answer to that question. I would presume, as table potatoes, they would come in any time during the year. If they are seed—

Mr. Larry McCormick: Well, I doubt, Mr. Chair, although I don't know, that we import table potatoes from there. I mean, if you go to any supermarket in Canada we see all these new potatoes there. They're so nice. They're washed. They're from two states; 90% of them are from Florida and California, reds and whites.

The CFIA is stepping up all of the inspections and that, but 90 days from now, the U.S. is not going to be exporting much to us. Again, they're exporting new now. They don't need to import. They have too many potatoes. They still have too many potatoes. If we can't wrangle something out of them now, we're going to have a lot harder time 90 days from now.

Mr. Chair, thank you.

The Chair: David.

Mr. David Anderson: Well, this may be a bit of a rant, but I was just listening to some of the things we've heard this morning. We basically have no access to a market in the U.S. yet. We've heard that we have no government compensation for trade disputes. We're no closer to establishing regulations that work. We have no extra funding. We have no interest in challenging the U.S. We have no legal manoeuvres being considered. It seems as if we're in no hurry, and there's no change that I can see for the future.

Now, we spent a lot of money this morning in this room, and in the past six months, with this issue. Producers are basically in the same situation they were in six months ago, except now they have money to run potatoes through their snow blowers.

What have you learned from this, and really, what use have we been to producers? And I include all of us in that, not just you.

The Chair: Thanks, then, David.

Mr. David Anderson: I'm willing to listen to an answer. What have you learned?

Mr. Samy Watson: I guess we've learned a couple of things. One is that situations with the United States, particularly in a transition of government, are particularly difficult. Hopefully, in the next little while, we can open up this border, because it has serious implications for P.E.I., and particularly in this situation. It would help in terms of the fact that while we've focused all of our attention on the trade aspect in the early months, we started dealing with the environmental disposal assistance in January. That was completed in March.

• 1055

The other aspect about that is the need to work diligently at counterbalancing our trade effort and diversifying it with other partners in a stronger way than necessarily with the United States. I'll leave it at that.

Right now, in terms of all agrifood trade, about 61% is tied up with the United States, which is, in a way, lower than other products in Canada. In Canada, generally, about 85% is tied up with the United States. In agrifood it's 61%, but it does drive you towards being more aggressive in terms of finding other markets in the world to counterbalance that particular reliance on the U.S. market.

Mr. David Anderson: In some ways it reminds me of New Zealand. They were really dependent on the United Kingdom, but they've used that to expand their markets around the world. I think we probably need to do that.

The Chair: Wayne.

Mr. Wayne Easter: I appreciate the deputy minister's last answer there, but the situation the producers in Prince Edward Island are in is that they have to determine what seed they're going to buy. It is not unusual for some crop to be planted as early as April 16 or so.

Do you have any advice for producers in terms of where they can manoeuvre for this year?

Claudio alleged earlier that we might be looking at 18 months. The people on the ground are making some decisions, and they're being made now. They are making their financial arrangements. Warehouses are still full from last year—those who are not in the processing industry. Do you have any final words that the producers could look at to assist them in making those kinds of decisions?

Mr. Samy Watson: I guess I have a few things. One is processing in table, particularly since CFI indicated that, as Bob has said a number of times, there are no restrictions in terms of the Canadian market. The other aspect is that the processing is still stable.

In terms of other markets, that's something we've started. We need to find other export markets, overseas markets, beyond the United States, which we're working at right now. We are going to keep working with P.E.I., in terms of both the government and the producers, to continue our work with the United States and see when we can resolve that.

The 18-month aspect is if we go through the commission route—

Mr. Wayne Easter: NAFTA.

Mr. Samy Watson: —on the dispute settlement route.

While that's an option and it's there, the government is, as we speak, making a decision as to what's next. And it's not necessarily an either/or. A number of paths have to be taken concurrently, both at the political level and the officials level, in a more of a multi-pronged approach on this particular issue.

Mr. Robert Carberry: Perhaps I can add to that.

On March 19, the U.S.'s last set of import restrictions laid out a three-year timeline specific to seed, table, etc., that had a graduated loosening of measures. At this time, that's really our only fixed target. We're continuing to try to seek improvements to that and we're actively doing that today. But at this time, that's probably the best reference that the industry could use, with respect to the U.S. market, anyway.

Mr. Wayne Easter: That's Dunkel's letter, is it?

Mr. Robert Carberry: Dunkel's, that's right.

The Chair: One point probably that hasn't come up in our hearing this morning is the entire potato situation in terms of warehouses across the country. I think in the House, only recently, others have brought up that there is quite a surplus of potatoes across Canada. I'm not sure if anyone has those figures. But other provinces have expressed concerns.

It seems that the year 2000 was a difficult one for potato farmers—probably generally—and specifically this morning, we have looked at this P.E.I. situation, which was a double jeopardy in terms of surplus and also in terms of our trade with the United States.

• 1100

I think, David, we have learned a few things this morning. I know I did, and I think everyone around the table has gleaned some pretty important information.

I hope, Wayne, we have some assurances for your people back home that the Americans will be in a position to lift that. We have done it for them with their own states that have experienced this problem in the last decade—or in 1989, as you have suggested—and with that, we are hoping we can make arrangements to get that $20 million back to farmers in P.E.I. as regards their sales.

Are there any other concluding remarks?

Howard, you had a brief one here.

Mr. Howard Hilstrom: I'll defer to Mr. Hedley.

Did you have a concluding remark?

Mr. Douglas Hedley: Mr. Chairman, you were asking about the overall state of the market and stocks. First, I'll recognize that it was not just Canada that was facing a very heavy crop of potatoes this past year, it was the U.S. as well. The surplus in the U.S.—and they are dealing with some disposal down there, initially with food banks, although they are looking at other things in respect of support from Washington—is in fact equal to about two-thirds of the entire P.E.I. production, so they do have a similar problem.

When we look across Canada, our stocks aren't too far off normal right now, if you count the 3.3 million hundredweight to be disposed of. So whereas our stocks are coming back to normal, we still face a very heavy stock situation in the United States in the coming year, which will probably put downward pressure on prices across the board.

Mr. Larry McCormick: That sounds like grain.

The Chair: Thank you.

Howard.

Mr. Howard Hilstrom: Thank you.

It's always tough when Mother Nature is good to us, gives us good weather and good production, and we produce too much.

Minister Vanclief hangs on virtually every word that's said in this committee, listens to the advice on different things, and picks up little hints from us, as I'm sure he's picking up some things today.

The Chair: Are you saying he's a good minister, Howard, that he listens so intently to us?

Mr. Howard Hilstrom: Yes, I really believe he does. He listens to this agriculture committee, and we do get along pretty well.

I think the major issue we're dealing with now, on which we may be able to help the minister a little bit, is the foot and mouth problem. I wonder if the committee, on Thursday, would extend an invitation to the department, the CFIA in particular, to present to us their plan for any incidence in Canada of foot and mouth disease and just what their procedures would be. I think this would be very reassuring to Canadians and the agriculture sector generally. We have no witnesses coming, I believe, for Thursday, and seeing that the plan is already more or less written—I appreciate it will be changed as circumstances change—if we could have a briefing on that, I think it would be beneficial to everybody. What do the committee and the chairman think?

Mr. David Anderson: It's relevant right now, anyway.

Mr. Larry McCormick: My comment, Mr. Chair, is that even on this potato wart issue, when we talk about Newfoundland and so on, I'm hoping that when we, the consumers and citizens, see the horrific pictures on television of what's happening in Europe, we will pay a little more attention to all the situations.

From what I've seen, our CFIA is doing an excellent job in so many ways. I don't know whether they can be here on Thursday, but I think it would be very timely. I would agree that we should ask them to be here as soon as possible, because I know they have been very active on this file and I think it would be worthwhile, Mr. Chair.

The Chair: We have a bit of a problem with numbers here right now. Thursday was set aside for the steering committee. Tuesday the Wheat Board will be here, the grains people, and only for one hour.

Mr. Howard Hilstrom: On Thursday we have two hours set aside. As I say, unless there's something coming out of the House leader's office, I can't imagine we'll spend a whole lot of time discussing procedures of this committee. I would think we must have an hour to hear that presentation.

The Chair: I certainly recognize the relevance of it, but I don't have enough people at the table now to make a decision. That's the problem I have. I'll try to work something out with the department on that issue as soon as possible, and on Thursday we can discuss it further. If the department wants to volunteer something in the meantime, maybe we could look at it by making some phone calls. But I don't have enough here to make that decision. I'm sorry about that.

• 1105

On behalf of the committee, I'd like to thank our deputy minister and his staff, both at the table and in the room, for coming this morning. It's been, as mentioned before, a very difficult issue for the people of P.E.I., and we certainly acknowledge the fact that a very sincere effort has been made, probably not as timely as some people would like, but it has been a complicated issue. We can hope this will be the only year. As Suzanne said, she was here eight years. I hope we don't have to deal with potato wart again in the time that I'm here for the 37th Parliament.

With that, thank you for coming, and we hope the issue can be resolved for everybody's benefit.