The committee will now consider the supplementary estimates of the Department of Agriculture.

DEPARTMENT OF AGRICULTURE Research-

5c. Administration, Operation and Maintenance- to extend the purposes of Vote 5 of the Main Estimates for 1967-68 to include a contribution of $10,000 to the Town of Kapuskasing towards the construction of a road, $1.

[The Assistant Deputy Chairman.]

Mr. McKinley:

Mr. Chairman, before these estimates pass I should like to make reference to a letter I received yesterday from the Ontario Cream Producers Association. That association is not very happy with the new dairy policy of the government, and I thought this would be a good opportunity to place their views before the minister, before he makes a final announcement of next year's dairy policy.

I should like to refer to some of the recommendations that they have to make. They have three main recommendations as cream producers about which they are deeply concerned. The first recommendation is for a quota cut-off level at which they would be eligible for subsidy payment. Second, they recommend a special subsidy of 5 cents per pound butterfat for farm-separated cream production. Canada imported butter last year, and hon. members know that our cream producers' cream goes entirely into the production of butter. Some butter is made from surplus powdered milk, but not all. Their third recommendation is for compensation for small producers who are not eligible for subsidy payments if cut-off quotas are applied by the Canadian Dairy Commission.

I should also like to refer to a press release dated Ottawa, March 6, 1968 which sets out the stand taken by the executive directors of the Dairy Farmers of Canada and the Federation of Agriculture, and reads as follows:

Mr. Glen Cole, president of Dairy Farmers of Canada, said today he particularly wished to emphasize that under no circumstances can Dairy Farmers of Canada support or countenance the imposition of subsidy cut-offs to small volume milk producers unless adequate compensation policies are at the same time implemented for them.

Highlights of the dairy policy demands discussed today by the executive of the Dairy Farmers of Canada and the Canadian Federation of Agriculture representatives with the Minister of Agriculture and the Canadian Dairy Commission were:

An increase in the level of federal support of the price of industrial milk to $5 per cwt., f.o.b. factory, (now $4.65) as a minimum requirement for meeting costs of production and income needs of dairy producers.

A special payment to shippers of farm separated cream of 5 cents per pound of butterfat, in addition to regular subsidy payments, as a minimum measure to correct the inequity under the program to cream shippers which the present policy established.

Return to inclusion in the subsidy program of fluid milk shippers who are dependent on industrial milk sales for a significant portion of their income, to eliminate the unfair discrimination existing here under the present program.

Cash compensation for small producers in cases where the Canadian Dairy Commission decides to cut them off from future federal support on the basis of their low production levels.

March 26, 1968

As I was saying, Mr. Chairman, these recommendations came to me from the Ontario Cream Producers Association through the Huron County Cream Producers, and I wished to draw them to the minister's attention before he announced the dairy policy for the year commencing on April 1.

Mr. Peters:

Mr. Chairman, a few brief words on this item. When the Liberal party in its 1965 election propaganda stated that it intended to put all small farmers out of business and leave only economic farm units in operation as a solution to agricultural problems, I felt at the time that this was doubtful of accomplishment and certainly of very questionable intent. However, it appears that the dairy policy that the government has been pursuing has accomplished just about that: it has put out of business a very large percentage of farmers. If it had not been for the intervention of a number of influential people last year 50 per cent of the farmers would have suffered a dislocation of their operations.

Mr. Clancy:

Oh, come on; get on with it.

Mr. Peters:

The member who made that interjection might be interested to read a report on the Canadian dairy industry, which was an ARDA project. This report went into the value of maintaining the family farm and also into some of the advantages of disposing of family farms.

This project was sponsored, Mr. Chairman, by the rural development branch of the Department of Forestry and Rural Development, and I should like to read part of a paragraph that is to be found at page 20 of the report:

The farms producing less than 50,000 lbs. of milk per farm should be actively discouraged from shipping milk or cream by a two pronged policy. One aspect would be aimed at non-commercial farms and would be part of a general development plan in areas of concentration of subsistence farms.

I presume that would be the ARDA plan.

The other would act through the price mechanism. By paying no subsidy whatever to farms shipping cream or milk in volumes less than 50,000, and by a program to consolidate small processing plants making it difficult to ship small amounts of cream particularly, it could be expected that the majority of farms with one or two cows and operating a substantial farm business in other directions, would no longer find it profitable to ship milk or cream.

This may be all well and good but for one fact, Mr. Chairman, and that is that we have not been able to compensate farmers whose operations have been dislocated. We may be well advised to discontinue the two to five

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cow farm operation, but we must offer an alternative to this. No one with any experience in mixed farming will say that the small farm with five or six cows cannot be economically operated. On that kind of farm there is no labour cost. The wife or kids milk the cows, and the cows are fed on a pasture that will grow very little, anyway. The milk from the cow is separated and the cream delivered to the local creamery, or butter is churned on the farm and the buttermilk used to feed the pigs or chickens. On that sort of farm the farmer probably gets a value of $1.09 in the utilization of his skim milk, and no other operation probably is as efficient in obtaining that sort of value from skim milk.

[DOT] (9:30 p.m.)

Cream producers and dairy producers want to know how the new program to begin on April 1 will compare with the program of other years. The minister intimated that before a farmer could receive a subsidy he must produce a minimum of 50,000 pounds of milk or its equivalent of 12,000 pounds of butterfat. Because of representations from many sources, that plan last year was not implemented. Instead, a farmer's minimum production in order to qualify for a subsidy continued on at 12,000 pounds of milk and 400 pounds of butterfat.

Oh, get off the pot.

Mr. Peters:

And if any milk is left over perhaps we could give it to our colleague.

I wonder whether the new program will allow farmers who have four or five cows either to get out of a dairy operation, if one can call it that where a man has four or five cows, or allow him to expand so that he can produce the minimum of 50,000 pounds of milk.

I now want to talk about some way to induce young people to take up farming. We shall reap many advantages if we devise some new way of valuing farm land. It should be valued on a different basis from that applied, say, to industrial or residential lands. Some way ought to be found of assisting people, possibly under some sort of lease, to take up farming and to make it pay. Every assistance ought to be given to young persons who want to enter farming, for the simple reason that many of them will never have enough money to buy a farm outright.

In northern Ontario new industries have been established. Timiskaming ranks among

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the top ten cheese producers in Ontario, simply because we now have a second cheese factory. Yet we have not arrived at a system of equalization of transportation grants and we are having difficulty in getting the money for an amalgamated milk plant that will handle fluid milk, secondary milk and cheese efficiently. It must be remembered that in Canada we face increasing competition from dairy producers from other countries.

Butter from New Zealand was selling in Vancouver at under 37 cents a pound. I am sure that no member of the house will deny that if farmers in this country could get only 37 cents a pound for their butter, they would stop making it. Clearly, butter and dairy products are traded on the international market, and since we intend to produce a great deal of butter we shall have to sell it elsewhere. Certainly our butter production can outstrip our consumption. I hope that when the minister announces his new program he will take into consideration the need to help those farmers who will be displaced because of the program.

That program can be of advantage. I hope the minister will announce what will happen to the 30 per cent of our farming population which engages in mixed farming. These people sell for cash one or two cans of cream a week. Their cows produce only enough milk in the winter for immediate family consumption. If these people are eliminated from the farming picture, who will replace them? They will be taken off the farms in a relatively short period because of relatively harsh measures.

Mr. Jorgenson:

I wish to deal for a few moments with the estimates before us. On March 5, when the minister spoke, he made a few statements I want to deal with. It has been a habit of the minister's, in our experience, to find some late hour in the evening to put a few remarks on the record that bear little relation to facts, and then to persuade the house leader not to bring that particular item back for several weeks, hoping that the members of this party will have forgotten some of the comments which have been made. I assure the minister, and I regret that he is not here, that I should now deal with some of his remarks of March 5.

Among other things he said that he had made as many speeches supporting agriculture as anyone in the house. I will not deny that. The fact remains that he has done as little for agriculture as any minister who has ever held that portfolio. The imagination he

has used in developing agricultural policy is about as barren as the imagination that goes into an Air Canada breakfast.

Nothing could be that bad.

Mr. Jorgenson:

For a couple of years now we have been waiting for him to introduce policies that would benefit the industry. I am sure most members of this house who represent rural areas cannot but be impressed by the apprehension one finds among farmers. They do not know what the prospects for the coming year are. There is uncertainty about prices; there is even more uncertainty about markets. Added to this there has been a tremendous increase in agricultural costs since the present government took office. According to the figures put out by the Dominion Bureau of Statistics the increase in the index of farmers' costs has continued to take place at an alarming rate. I should like to put on record some figures relating to this increase.

[DOT] (9:40 p.m.)

In the year 1960, four years before the change of government, the index stood at 272.7. By 1963 it had risen slightly to 298.6. But from that point on, when the present government took office, a dramatic increase began. From 298.6 it has risen to 367.5, an increase of 69 points in four years-and about 40 of these points have accumulated in the last two years.

There is apprehension because this government has shown no initiative in the marketing of Canadian grain and because it had permitted prices to drop to levels which pose a serious problem to farmers in western Canada. The minister is found of quoting income figures. I note that he quoted either gross income figures or net income figures. These do not give a true picture of real farm income, which is related more closely to net realized income. The net income figures which the minister quoted and which seemed to show a remarkable increase in farm incomes take into consideration an accumulation of inventory. A farmer may not have been able to sell a bushel of wheat, as is the case this year, yet net income figures will show a substantial net income. In 1961, for example when the peak of the drought had been experienced, the carry-over on western farms amounted to something like 607 million bushels. It had dropped to about 391 million bushels by 1962. The net income shown for that year was $362 million, yet the real net income because of the change of inventory

March 26, 1968

was $670 million, a considerable increase over the net income figures the minister likes to quote. If the minister puts figures on record purporting to show the real income position of farmers he should use realized net income rather than net income figures alone.

The minister went on to accuse us on this side of opposing an increase in the minimum and maximum levels of wheat prices because we had criticized the government for its part in the lapse of the international wheat agreement. What nonsense. We have suggested on this side that those prices could have been increased under the old agreement. I am not saying the new agreement is not just as good as the old international wheat agreement, but there was no need to allow the agreement to lapse so that there was no protection for farmers during that period. Immediately after the announcement was made that the old agreement was to expire, prices began to fall. If there was ever any doubt in the minds of anyone in this country as to the value of an international commodity agreement, it must surely have been dissipated as a result of the experiences of the past year.

To suggest that we were somehow or other opposed to an increase in the price of wheat is an indication of the type of tactics the minister follows in this house when dealing with legitimate questions raised by members of the opposition. The minister went on to say as reported on page 7316 of Hansard for March 5:

I think this is very unfair criticism of the Canadian officials who carried on the negotiations-

He was speaking of the Kennedy round negotiations.

The ministers attended at the conclusion of the Kennedy round and claimed very little credit for the great success the Canadian negotiators achieved.

The minister's tactic was to slough oft his responsibilities on the negotiators, on the officials of the department who represented Canada during the Kennedy round, trying to convince the house that in some magic way he and his colleagues were absolved of their responsibilities and that the officials were the ones to blame, if indeed there was to be any blame. This was the attitude of the government when it took over, as far as the Canadian Wheat Board was concerned.

The present Minister of Finance fell over himself in his attempts to deprecate a former minister of agriculture, my hon. friend from Qu'Appelle, for having taken some responsibility for the selling of wheat during the period he was minister. The hon. gentleman said 27053-510

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the present government intended to let the wheat board take the credit for such things. Well, they let the wheat board take the credit, but they have also let it shoulder all the blame-blame which rightly belongs to them for failing to maintain price levels. No amount of sneaking and snivelling on the part of the minister can change this fact.

[DOT] (9:50 p.m.)

With regard to dairy policy I am as convinced as the hon. member for Timiskaming that it is a deliberate and calculated policy on the part of the government to eliminate as many farmers as possible. Somehow or other members of the government have listened to economists who preach the doctrine of bigness, and they believe that by reducing the number of farmers the same amount of income will be divided among fewer people and therefore the whole problem will be resolved. But it does not work out this way. In spite of the fact that there are fewer farmers, their net income is being reduced.

How far does one go? At what point do you reach a farm of sufficient size to be economic enough to produce an income capable of maintaining a farmer on the land? What has been the experience on some of the bigger farms in both Canada and the United States? In fact some of the millionaires who own farms in the United States and Canada have shown losses. If they cannot show a profit I do not know who can, because they have the wherewithall to equip themselves with the type of machinery and to pay for the inputs that are necessary for proper, maximum production.

The doctrine that bigness is the answer to the farm problem must be destroyed before it destroys every farmer in the country. Recently the firm of Hedland and Menzies, which has been conducting a number of agricultural surveys throughout the country, undertook one for the county of Vulcan in Alberta. The purpose of the study was to determine whether or not increased acreage would result in increased income and productivity. The result showed that this was not the fact, that once you reached a certain point the net income levelled off and no matter how much bigger the farm grew beyond that point there was no appreciable increase in the net income. The conclusion was that an increase in productivity rather than an increase in farm size would be the better way of increasing a farmer's net return.

March 26, 1968

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In my view there is no point in considering transfer of capital into agriculture in order to increase gross income unless measures are taken to ensure that farm costs are not going to rise to the point where there is no net income left for the farmer. Since the present government took office farm costs have been rising at a much faster rate than farm income. The government has set up commissions to study the question of farm machinery prices and farm costs. Undoubtedly those studies are necessary because obviously members of the government do not have any ideas of their own. They have also set up a task for us to determine agricultural policy. I suppose that is necessary for the same reason, but time is running out on them.

On the prairies we are again in the midst of a drought cycle. Last year there was a serious drought, and a very serious depletion of subsoil moisture. If there is a recurrence of the very minimal rainfall that fell last year there will be almost total failure in various areas of the prairies. At present farmers are very reluctant to buy fertilizer because of the great risk involved this year due to the lack of moisture.

Farmers are very reluctant to undertake the inputs that they normally undertake in order to achieve maximum production, because of the risks that are involved. They are also reluctant to take a chance that the government will be able to sell their product once they have produced it. As I said when I began my remarks, Mr. Chairman, I have never known more apprehension on the part of farmers than I have found this year. Unless something is done, and done very soon, it is going to be reflected in a very substantial decrease in the number of farmers in this country, and in a greater problem in finding something whereby farmers can earn a living. The government has shown no initiative and no responsibility in dealing with this problem.

Mr. Ormislon:

Mr. Chairman-

Mr. Peters:

Ten o'clock.

Mr. Ormislon:

I do not wish to call it ten o'clock, Mr. Chairman. I have only a few minutes in which to make my remarks and I hope you will bear with me because I certainly agree with my hon. friend from Proven-cher when he says there is a great deal of apprehension in the agricultural industry today. There is no greater apprehension than among the turkey producers of this country.

Earlier today we asked a question of the minister on this subject, but he did not happen to be in the house. However this is a question which we have asked for months, urging that the government make some policy statement regarding the industry, which will give some satisfaction to those people who are engaged in that industry which means so much to the Canadian public. On several occasions the minister made statements, but they all seem to have fallen short of the need to give assurance to the Canadian turkey producers.

At this time, in the spring of the year, when we expect the industry to be flourishing, its production is falling far short of what is necessary. Orders for turkey poults this year are 26 per cent less than last year, showing the trend of dissatisfaction on the part of those engaged in the industry, and their reluctance to invest further in the business of producing turkeys. Certainly those people who have invested a great deal of money in the industry deserve some statement from the minister to assure them that they will be kept in business at a profitable level so that they can continue to render the service that they have given over the years to this country.

Mr. Grills:

Mr. Chairman, I know the hour is late and I know that everyone wants to get along with the work and get out of here. However, there is a problem which I am alarmed about, and I am sorry the minister is not in the chamber tonight-although, having listened to many of his speeches I have found that listening to an Arnprior lawyer does not give much direction to the farmers of the country. I do not mean to be critical, but I must be.

1 wish to quote from a letter which I received today from a constituent, which reads:

X am writing you today concerning the subsidy on milk.

Last year about this time I purchased this farm and on August 6th sent my first milk to-

And he mentions a cheese factory in Hastings county.

At that time X applied for the subsidy on my milk, only to learn that I had to send milk on or before July 1st to qualify for the subsidy in that dairy year.

I was wondering if there was any exemptions made to a person just starting to farm and sending milk for the first time. I have been buying cows at auction sales all winter and now have 26 and hope to have 30 by grass time. As I have been buying cows at auction sales I have no quota, that I might ordinarily have if I had bought a herd at one place.

March 26, 1963

When 1 applied for the subsidy they sent me back a card for my wallet with certificate of registration No if this is of any help.

[DOT] (10:00 p.m.)

He goes on to explain his grievance. I happen to know this young farmer, whose father was a farmer before him. He is a good farmer and an aggressive young man, who married and began farming last year. Because he began shipping milk on August 6 instead of on July 1 he received $1.21 per hundredweight, or whatever the amount of the subsidy is, less than his neighbour. I am wondering how the minister thinks he can explain a situation of this kind. The Canadian Dairy Commission has been set up and apparently the minister thinks he can hide behind that and use it as a smokescreen. He is pretty good at throwing up smokescreens. This type of situation must be ended or there will be more trouble. This is only one case. I have information concerning many others.

I do not understand how one can discriminate and say that because one man started milking his cows five weeks later than another he will receive no subsidy, even though he is producing the same quality of milk for the same purpose, and so on. It seems to me that the Canadian Dairy Commission would like to do a good job. The members of this commission are trying to do a good job, but they are given responsibility with very little authority. In addition they are given very little money with which to pay the subsidy. I believe it is high time this situation was explained. I have attempted to get an answer from the dairy commission. They just say that the situation is most unfortunate.

The minister has said that the Canadian farmer never had it so good. He has borrowed a great deal of money, is head over heels in debt, and yet the minister says he is prosperous. The minister expects the farmer to accept this type of legislation. This young man to whom I referred, up until the first of March had produced and shipped 70,000 pounds of milk. At $1 a hundred pounds he would have lost $700 that others received. I hope the minister will give some consideration to this because it is a continuing problem. Before the dairy policy for 1968-69 is announced I hope he will clean up some of last year's business.

The minister has eliminated the subsidy on premium cheese. This is discouraging. It takes away the incentive to produce good cheese in this country. Cheese is the balancing product of the dairy industry. It is difficult to have

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supply and demand in perfect balance; but cheese is the one product, because it can be kept for some time, which enables the dairy industry to have a certain amount of balance. The minister in his wisdom concerning agriculture, which I question, has eliminated the subsidy on premium cheese. In so doing he has destroyed the incentive. Within a year there will be a good deal of second grade cheese in the country which we will not know what to do with. I say that this is false economy.

There is a similar situation in respect of hogs. Everyone likes lean bacon. The housewife and others complain that the bacon is too fat. Yet the minister is reducing the subsidy on the type of hog that produces lean bacon. What type of common sense is this?

It appears that this is about as much as we can expect from a lawyer Minister of Agriculture. Let me say to his friend over there, who is sitting and listening, that I hope the department will give some consideration to reinstating these two policies, because the reductions involved do not amount to peanuts in the overall budget. He knows this, and I suggest that this government and this minister will not be very popular with a lot of people in our farm communities if something is not done to correct this situation.

Mr. Starr:

Mr. Chairman, I hope there is some disposition on the part of the committee to accept the suggestion I wish to make. If it meets with the approval of the committee perhaps we can sit until twelve o'clock, on the understanding that we will pass all the supplementary estimates this evening. In view of the fact that we have now discussed the supplementary estimates for a number of days, and in view of the fact that these items are similar to items on interim supply, perhaps we could agree to also pass interim supply before twelve o'clock.

Does the committee agree with the suggestion made by the hon. member, that we sit until twelve o'clock?

Mr. Peters:

No, Mr. Chairman, there is no agreement in that regard.

Mr. Knowles:

Perhaps the hon. member for Ontario was taking a bargaining position. We also are prepared to bargain. We suggest that we sit until eleven o'clock, or until the supplementary estimates of the Department of Agriculture have been passed. It is my belief that the supplementary estimates of the Post

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Office Department will not likely be debated, so they might be thrown in as well. We suggest that eleven o'clock is late enough for this debate.

Mr. Chairman, I do not think anything can be accomplished by that. Nothing was accomplished last night by sitting until eleven o'clock. We only completed one department. My suggestion is that we sit until twelve in order to complete the supplementary estimates and interim supply; otherwise there is no agreement.

Does the committee agree to the suggestion made by the house leader?